UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



☑						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November ~~22, 2019~~

27, 2020



or
☐						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~~.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	49508
(Address of principal executive offices)		(Zip Code)

(~~616~~) (616) 247-2710

(Registrant's telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to ~~section~~Section 12(b) of the Act:



Title of each class	Trading symbol(s)	Name of each exchange on which registered
Class A Common Stock	SCS	New York Stock Exchange

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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☑ No ☐

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”,~~filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth 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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of December ~~16, 2019,~~18, 2020, Steelcase Inc. had ~~89,437,711~~88,362,019 shares of Class A Common Stock and ~~27,764,289~~26,546,657 shares of Class B Common Stock outstanding.

Table of Contents

STEELCASE INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED November ~~22, 2019~~27, 2020

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 27 , 2020 and November 22 , 2019 ~~and November 23, 2018~~	1
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended November 27 , 2020 and November 22 , 2019 ~~and November 23, 2018~~	2
	Condensed Consolidated Balance Sheets as of November ~~22, 2019~~27 , 2020 and February ~~22, 2019~~28, 2020	3
	Condensed Consolidated Statements of Changes in Shareholders' Equity for the Three and Nine Months Ended November 27 , 2020 and November 22 , 2019 ~~and November 23, 2018~~	4
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended November 27 , 2020 and November 22 , 2019 ~~and November 23, 2018~~	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2017
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3027
Item 4.	Controls and Procedures	3128

PART II	Other Information	3228
Item 1A.	Risk Factors	3228
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3229
Item 6.	Exhibits	3230
Signatures		3331

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements:

~~Item 1.~~

~~Financial Statements:~~

STEELCASE INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in millions, except per share data)


	Three Months Ended				Nine Months Ended
	November 27, 2020		November 22, 2019		November 27, 2020		November 22, 2019
Revenue	$	617.5	$	955.2	$	1,919.1	$	2,777.5
Cost of sales	437.3		639.1		1,339.7		1,869.5
Restructuring costs	2.3		0		9.2		0
Gross profit	177.9		316.1		570.2		908.0
Operating expenses	168.8		241.0		498.5		720.0
Goodwill impairment charge	0		0		17.6		0
Restructuring costs	9.1		0		17.8		0
Operating income	0		75.1		36.3		188.0
Interest expense	(6.6)		(6.7)		(20.7)		(20.1)
Investment income	0.2		1.3		1.2		3.8
Other income, net	2.2		4.1		7.0		8.3
Income (loss) before income tax expense (benefit)	(4.2)		73.8		23.8		180.0
Income tax expense (benefit)	(6.3)		18.9		4.3		46.8
Net income	$	2.1	$	54.9	$	19.5	$	133.2
Earnings per share:
Basic	$	0.02	$	0.46	$	0.17	$	1.11
Diluted	$	0.02	$	0.46	$	0.17	$	1.11
Dividends declared and paid per common share	$	0.100	$	0.145	$	0.270	$	0.435

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

Three Months Ended Nine Months Ended
November 22,
2019 November 23,
2018 November 22,
2019 November 23,
2018
Revenue $ 955.2
$ 901.0
$ 2,777.5
$ 2,530.8

Cost of sales 639.1
622.7
1,869.5
1,726.0

Gross profit 316.1
278.3
908.0
804.8

Operating expenses 241.0
232.9
720.0
668.2

Operating income 75.1
45.4
188.0
136.6

Interest expense (6.7 ) (4.7 ) (20.1 ) (14.0 )
Investment income 1.3
0.2
3.8
1.7

Other income, net 4.1
4.3
8.3
11.3

Income before income tax expense 73.8
45.2
180.0
135.6

Income tax expense 18.9
7.9
46.8
32.2

Net income $ 54.9
$ 37.3
$ 133.2
$ 103.4

Earnings per share:

Basic $ 0.46
$ 0.31
$ 1.11
$ 0.87

Diluted $ 0.46
$ 0.31
$ 1.11
$ 0.87

Dividends declared and paid per common share $ 0.145
$ 0.135
$ 0.435
$ 0.405

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

STEELCASE INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(in millions)


	Three Months Ended				Nine Months Ended
	November 27, 2020		November 22, 2019		November 27, 2020		November 22, 2019
Net income	$	2.1	$	54.9	$	19.5	$	133.2
Other comprehensive income (loss), net:
Unrealized gain (loss) on investments	0.3		(0.1)		0.2		(0.2)
Pension and other post-retirement liability adjustments	(0.3)		(1.1)		(1.1)		(1.6)
Derivative amortization	0.3		0.3		0.7		0.7
Foreign currency translation adjustments	7.2		6.4		20.7		(7.9)
Total other comprehensive income (loss), net	7.5		5.5		20.5		(9.0)
Comprehensive income	$	9.6	$	60.4	$	40.0	$	124.2

Three Months Ended Nine Months Ended
November 22,
2019 November 23,
2018 November 22,
2019 November 23,
2018
Net income $ 54.9
$ 37.3
$ 133.2
$ 103.4

Other comprehensive income (loss), net:
Unrealized gain (loss) on investments (0.1 ) (0.2 ) (0.2 ) 0.1

Pension and other post-retirement liability adjustments (1.1 ) (1.1 ) (1.6 ) (2.7 )
Derivative amortization 0.3
—
0.7
—

Foreign currency translation adjustments 6.4
(6.5 ) (7.9 ) (25.1 )
Total other comprehensive income (loss), net 5.5
(7.8 ) (9.0 ) (27.7 )
Comprehensive income $ 60.4
$ 29.5
$ 124.2
$ 75.7

See accompanying notes to the condensed consolidated financial statements.

STEELCASE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
(Unaudited)
November 22,
2019 February 22,
2019
ASSETS
Current assets:

Cash and cash equivalents $ 367.7
$ 261.3

Accounts receivable, net of allowances of $10.3 and $8.7 447.8
390.3

Inventories 248.3
224.8

Prepaid expenses 22.9
19.5

Other current assets 45.6
52.7

Total current assets 1,132.3
948.6

Property, plant and equipment, net of accumulated depreciation of $997.8 and $1,009.3 446.1
455.5

Company-owned life insurance ("COLI") 159.9
156.1

Deferred income taxes 120.4
135.8

Goodwill 240.5
240.8

Other intangible assets, net of accumulated amortization of $64.6 and $55.8 109.9
119.3

Investments in unconsolidated affiliates 56.8
56.9

Right-of-use operating lease assets 231.9
—

Other assets 26.0
29.4

Total assets $ 2,523.8
$ 2,142.4

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:

Accounts payable $ 281.3
$ 241.2

Short-term borrowings and current portion of long-term debt 2.6
4.1

Current operating lease obligations 39.7
—

Accrued expenses:

Employee compensation 160.9
168.1

Employee benefit plan obligations 37.7
37.1

Accrued promotions 36.7
27.7

Customer deposits 26.0
20.0

Product warranties 13.3
16.4

Income taxes payable 19.6
3.5

Other 89.6
77.1

Total current liabilities 707.4
595.2

Long-term liabilities:

Long-term debt less current maturities 481.5
482.9

Employee benefit plan obligations 137.1
141.6

Long-term operating lease obligations 209.2
—

Other long-term liabilities 56.9
72.9

Total long-term liabilities 884.7
697.4

Total liabilities 1,592.1
1,292.6

Shareholders’ equity:

Additional paid-in capital 26.0
16.4

Accumulated other comprehensive loss (56.3 ) (47.3 )
Retained earnings 962.0
880.7

Total shareholders’ equity 931.7
849.8

Total liabilities and shareholders’ equity $ 2,523.8
$ 2,142.4

Table of Contents

STEELCASE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)


	(Unaudited)
	November 27, 2020		February 28, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	484.4	$	541.0

Accounts receivable	283.6		381.8
Allowance for doubtful accounts	(9.3)		(9.4)
Inventories	235.0		215.0

Prepaid expenses	19.3		21.6

Other current assets	71.8		38.8
Total current assets	1,084.8		1,188.8
Property, plant and equipment, net of accumulated depreciation of $1,040.2 and $977.7	415.3		426.3
Company-owned life insurance ("COLI")	167.7		160.0
Deferred income taxes	110.9		124.6
Goodwill	215.3		233.6
Other intangible assets, net of accumulated amortization of $68.8 and $56.7	91.3		102.9
Investments in unconsolidated affiliates	55.4		52.3
Right-of-use operating lease assets	213.1		237.9
Other assets	31.5		39.0
Total assets	$	2,385.3	$	2,565.4
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	200.8	$	244.3
Short-term borrowings and current portion of long-term debt	2.6		2.9
Current operating lease obligations	41.9		43.1
Accrued expenses:
Employee compensation	95.2		191.7
Employee benefit plan obligations	24.0		44.7
Accrued promotions	30.4		35.3
Customer deposits	59.9		28.6


Other	114.2		100.3
Total current liabilities	569.0		690.9
Long-term liabilities:
Long-term debt less current maturities	480.2		481.4
Employee benefit plan obligations	147.9		148.3
Long-term operating lease obligations	191.4		214.0
Other long-term liabilities	49.0		60.4
Total long-term liabilities	868.5		904.1
Total liabilities	1,437.5		1,595.0
Shareholders’ equity:

Additional paid-in capital	3.5		28.4
Accumulated other comprehensive income (loss)	(48.8)		(69.3)
Retained earnings	993.1		1,011.3
Total shareholders’ equity	947.8		970.4
Total liabilities and shareholders’ equity	$	2,385.3	$	2,565.4

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

STEELCASE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

(in millions, except share and per share data)


	Three Months Ended						Nine Months Ended							Three Months Ended				Nine Months Ended
	November 22, 2019			November 23, 2018			November 22, 2019			November 23, 2018				November 27, 2020		November 22, 2019		November 27, 2020		November 22, 2019
Changes in common shares outstanding:													Changes in common shares outstanding:
Common shares outstanding, beginning of period	117,243,960			116,683,614			116,766,610			116,157,443			Common shares outstanding, beginning of period	114,776,546		117,243,960		117,202,000		116,766,610
Common stock issuances	10,167			12,969			33,039			39,798			Common stock issuances	21,351		10,167		48,241		33,039
Common stock repurchases	(177,123		)	(29,745		)	(524,379		)	(275,408		)	Common stock repurchases	(44,201)		(177,123)		(3,288,795)		(524,379)
Performance units issued as common stock	—			—			—			209,353			Performance units issued as common stock	0		0		174,888		0
Restricted units issued as common stock	116,094			98,461			917,828			634,113			Restricted units issued as common stock	139,114		116,094		756,476		917,828
Common shares outstanding, end of period	117,193,098			116,765,299			117,193,098			116,765,299			Common shares outstanding, end of period	114,892,810		117,193,098		114,892,810		117,193,098

Changes in paid-in capital (1):													Changes in paid-in capital (1):
Paid-in capital, beginning of period	$	26.5		$	16.2		$	16.4		$	4.6		Paid-in capital, beginning of period	$	1.7	$	26.5	$	28.4	$	16.4
Common stock issuances	0.2			0.2			0.6			0.6			Common stock issuances	0.2		0.2		0.6		0.6
Common stock repurchases	(2.8		)	(0.6		)	(8.7		)	(4.1		)	Common stock repurchases	(0.4)		(2.8)		(36.8)		(8.7)
Performance units and restricted stock units expense	2.1			2.3			13.7			14.8			Performance units and restricted stock units expense	2.0		2.1		11.3		13.7
Other	—			0.3			4.0			2.5			Other	0		0		0		4.0
Paid-in capital, end of period	26.0			18.4			26.0			18.4			Paid-in capital, end of period	3.5		26.0		3.5		26.0

Changes in accumulated other comprehensive income (loss):													Changes in accumulated other comprehensive income (loss):
Accumulated other comprehensive income (loss), beginning of period	(61.8		)	(30.2		)	(47.3		)	(10.3		)	Accumulated other comprehensive income (loss), beginning of period	(56.3)		(61.8)		(69.3)		(47.3)
Other comprehensive income (loss)	5.5			(7.8		)	(9.0		)	(27.7		)	Other comprehensive income (loss)	7.5		5.5		20.5		(9.0)

Accumulated other comprehensive income (loss), end of period	(56.3		)	(38.0		)	(56.3		)	(38.0		)	Accumulated other comprehensive income (loss), end of period	(48.8)		(56.3)		(48.8)		(56.3)

Changes in retained earnings:													Changes in retained earnings:
Retained earnings, beginning of period	924.5			852.8			880.7			819.0			Retained earnings, beginning of period	1,002.7		924.5		1,011.3		880.7
Net income	54.9			37.3			133.2			103.4			Net income	2.1		54.9		19.5		133.2
Dividends paid	(17.4		)	(16.0		)	(51.9		)	(48.3		)	Dividends paid	(11.7)		(17.4)		(31.8)		(51.9)
Common stock repurchases													Common stock repurchases	—		0		(5.9)		0
Retained earnings, end of period	962.0			874.1			962.0			874.1			Retained earnings, end of period	993.1		962.0		993.1		962.0
Total shareholders' equity	$	931.7		$	854.5		$	931.7		$	854.5		Total shareholders' equity	$	947.8	$	931.7	$	947.8	$	931.7


~~(1)~~	~~Shares of our Class A and Class B common stock have no par value; thus, there are no balances for common stock.~~

(1)Shares of our Class A and Class B common stock have no par value; thus, there are no balances for common stock.

See accompanying notes to the condensed consolidated financial statements.

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

Nine Months Ended
November 22,
2019 November 23,
2018
OPERATING ACTIVITIES

Net income $ 133.2
$ 103.4

Depreciation and amortization 62.9
60.5

Non-cash stock compensation 14.3
15.4

Equity in income of unconsolidated affiliates (9.9 ) (11.1 )
Dividends received from unconsolidated affiliates 8.8
6.9

Other 10.3
(12.8 )
Changes in operating assets and liabilities:

Accounts receivable (60.8 ) (99.7 )
Inventories (25.2 ) (52.3 )
Other assets 12.1
4.7

Accounts payable 41.6
45.6

Employee compensation liabilities (8.8 ) (13.5 )
Employee benefit obligations (5.7 ) (3.7 )
Customer deposits 6.2
(4.8 )
Income taxes payable 16.0
(0.4 )
Accrued expenses and other liabilities 23.8
7.9

Net cash provided by operating activities 218.8
46.1

INVESTING ACTIVITIES

Capital expenditures (49.1 ) (56.8 )
Proceeds from disposal of fixed assets 1.0
20.3

Proceeds from COLI policies 1.2
21.5

Acquisitions, net of cash acquired —
(226.2 )
Other 0.8
(6.3 )
Net cash used in investing activities (46.1 ) (247.5 )
FINANCING ACTIVITIES

Dividends paid (51.9 ) (48.3 )
Common stock repurchases (8.7 ) (4.1 )
Borrowings on lines of credit —
291.8

Repayments on lines of credit —
(264.4 )
Repayments of long-term debt (2.0 ) (2.0 )
Other (1.5 ) 0.5

Net cash used in financing activities (64.1 )
(26.5 )
Effect of exchange rate changes on cash and cash equivalents (0.8 ) (3.3 )
Net increase (decrease) in cash, cash equivalents and restricted cash 107.8
(231.2 )
Cash and cash equivalents and restricted cash, beginning of period (1) 264.8
285.6

Cash and cash equivalents and restricted cash, end of period (2) $ 372.6
$ 54.4

Table of Contents

~~(1)~~

~~These amounts include restricted cash of $3.5 and $2.5 as of February 22, 2019 and February 23, 2018, respectively.~~

STEELCASE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in millions)


~~(2)~~	~~These amounts include restricted cash of $4.9 and $3.4 as of November 22, 2019 and November 23, 2018, respectively.~~


	Nine Months Ended
	November 27, 2020		November 22, 2019
OPERATING ACTIVITIES
Net income	$	19.5	$	133.2
Depreciation and amortization	64.1		62.9
Goodwill impairment charge	17.6		0

Restructuring costs	27.0		0
Deferred income taxes	17.9		13.9

Non-cash stock compensation	11.9		14.3

Equity in income of unconsolidated affiliates	(6.7)		(9.9)
Dividends received from unconsolidated affiliates	5.2		8.8
Other	(12.4)		(3.6)
Changes in operating assets and liabilities:
Accounts receivable	105.2		(60.8)
Inventories	(16.4)		(25.2)

Other assets	(22.9)		12.1
Accounts payable	(47.0)		41.6
Employee compensation liabilities	(130.5)		(8.8)

Employee benefit obligations	(25.2)		(5.7)
Customer deposits	30.4		6.2

Accrued expenses and other liabilities	(0.5)		39.8
Net cash provided by operating activities	37.2		218.8
INVESTING ACTIVITIES
Capital expenditures	(32.1)		(49.1)
Proceeds from disposal of fixed assets	7.3		1.0





Other	7.0		2.0
Net cash used in investing activities	(17.8)		(46.1)
FINANCING ACTIVITIES
Dividends paid	(31.8)		(51.9)
Common stock repurchases	(42.7)		(8.7)


Borrowings on lines of credit	250.0		0
Repayments on lines of credit	(250.0)		0




Other	(2.1)		(3.5)
Net cash used in financing activities	(76.6)		(64.1)
Effect of exchange rate changes on cash and cash equivalents	1.8		(0.8)
Net increase (decrease) in cash, cash equivalents and restricted cash	(55.4)		107.8
Cash and cash equivalents and restricted cash, beginning of period (1)	547.1		264.8
Cash and cash equivalents and restricted cash, end of period (2)	$	491.7	$	372.6

(1)These amounts include restricted cash of $6.1 and $3.5 as of February 28, 2020 and February 22, 2019, respectively.

(2)These amounts include restricted cash of $7.3 and $4.9 as of November 27, 2020 and November 22, 2019, respectively.

Restricted cash primarily represents funds held in escrow for potential future workers’ compensation and product liability claims. Restricted cash is included as part of Other assets in the Condensed Consolidated Balance Sheets.

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


1.	~~BASIS OF PRESENTATION~~

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 ~~22, 2019~~28, 2020 (“Form 10-K”). The Condensed Consolidated Balance Sheet as of February ~~22, 2019~~28, 2020 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~~

2.NEW ACCOUNTING STANDARDS

Adoption of New Accounting Standards

In ~~February 2018,~~December 2019, the Financial Accounting Standards Board ~~(“FASB”~~("FASB") issued Accounting Standards Update ~~(“ASU”~~("ASU") No. ~~2018-02,~~ 2019-12,Income ~~Statement - Reporting Comprehensive Income~~Taxes (Topic ~~220)~~740), which is intended to ~~address the impact~~enhance various aspects of the ~~U.S. Tax Cuts and Jobs Act (the “Tax Act”) on tax effects presented~~accounting for income taxes. The new guidance updates the calculation of income taxes in ~~other comprehensive income. The amended guidance allows a reclassification from accumulated other comprehensive income to retained earnings~~an interim period when year-to-date losses exceed the anticipated loss for the ~~tax effects of items within accumulated other comprehensive income resulting from the Tax Act.~~year. We adopted this guidance in Q1 ~~2020 and elected to not reclassify these amounts to retained earnings as the effect~~2021 on ~~our consolidated financial statements was not material.~~

~~In June 2018, the FASB issued ASU 2018-07,~~ ~~Compensation - Stock Compensation (Topic 718),~~ ~~which simplifies certain aspects~~a prospective basis. The adoption of ~~the accounting for nonemployee share-based payment transactions resulting from expanding the scope of~~ ~~Topic 718, Compensation - Stock Compensation~~, to include share-based payment transactions for acquiring goods and services from nonemployees. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor's own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, ~~Revenue from Contracts with Customers. We adopted~~ this guidance ~~in Q1 2020, and the adoption~~ did not have ana material effect on our consolidated financial statements.

In ~~February~~June 2016, the FASB issued ASU No. ~~2016-02,~~2016-13, ~~Leases~~Financial Instruments - Credit Losses (Topic ~~842)~~326), which ~~establishes~~replaces the incurred loss impairment methodology in current GAAP with a new lease accounting model for lessees. The core principle of the new lease standard is to increase the decision usefulness and comparability among organizations by recognizing right-of-use assets and lease obligations on the balance sheet with additional qualitative and quantitative disclosures. The standard is designed to create greater comparability for financial statement users across industries and jurisdictions and also requires enhanced disclosures.methodology that reflects expected credit losses. We adopted this guidance ~~and related amendments~~ in Q1 ~~2020 and it resulted in an increase in the assets and liabilities~~2021 using a modified retrospective transition approach. The adoption of this guidance did not have a material effect on our ~~Condensed Consolidated Balance Sheet. See Note~~ 9consolidated financial statements. We estimate our allowance for ~~additional information.~~

~~Table~~doubtful accounts based upon several factors, including customer credit quality and historical write-off trends. We also use general information regarding industry trends, the economic environment and information gathered through our network of ~~Contents~~field-based employees. The adoption of this guidance did not significantly impact our accounting policies or methods utilized to determine the allowance for doubtful accounts.

~~STEELCASE INC.~~

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

Accounting Standards Issued But Not Yet Adopted

In August 2018, the FASB issued ASU No. 2018-14, Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans, which amends ASC 715-20, Compensation - Retirement Benefits - Defined Benefit Plans - General. The amended guidance modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans by removing and adding certain disclosures for these plans. The eliminated disclosures include (a) the amounts in accumulated other comprehensive income expected to be recognized in net periodic benefit costs over the next fiscal year and (b) the effects of a one percentage point change in assumed health care cost trend rates on the net periodic benefit costs and the benefit obligation for post-retirement health care benefits. Additional disclosures include descriptions of significant gains and losses affecting the benefit obligation for the period. The amended guidance is effective for fiscal years ending after December 15, 2020. The adoption of this guidance will modify our disclosures but is not expected to have a material effect on our consolidated financial statements.

~~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, 2019. We are currently evaluating the impactTable of ~~this standard on our consolidated financial statements.~~Contents

STEELCASE INC.


3.	~~REVENUE~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3.REVENUE

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				Nine Months Ended				Product Category Data	Three Months Ended				Nine Months Ended
	November 22, 2019		November 23, 2018		November 22, 2019		November 23, 2018			November 27, 2020		November 22, 2019		November 27, 2020		November 22, 2019
Americas									Americas
Desking, benching, systems and storage	$	351.7	$	337.6	$	1,058.5	$	906.6	Desking, benching, systems and storage	$	202.8	$	351.7	$	681.9	$	1,058.5
Seating	197.3		195.5		588.6		541.4		Seating	121.3		197.3		412.8		588.6
Other (1)	141.9		105.5		359.6		380.5		Other (1)	92.3		141.9		286.8		359.6
EMEA									EMEA
Desking, benching, systems and storage	66.1		49.6		187.0		174.3		Desking, benching, systems and storage	48.5		66.1		140.3		187.0
Seating	60.7		33.1		174.0		121.4		Seating	61.7		60.7		138.5		174.0
Other (1)	41.6		88.2		122.9		145.8		Other (1)	33.1		41.6		89.9		122.9
Other									Other
Desking, benching, systems and storage	16.7		13.8		46.9		41.6		Desking, benching, systems and storage	12.4		16.7		33.5		46.9
Seating	21.4		26.4		65.3		67.9		Seating	17.2		21.4		48.1		65.3
Other (1)	57.8		51.3		174.7		151.3		Other (1)	28.2		57.8		87.3		174.7
	$	955.2	$	901.0	$	2,777.5	$	2,530.8		$	617.5	$	955.2	$	1,919.1	$	2,777.5


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

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

~~Table of Contents~~

~~STEELCASE INC.~~

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

Reportable geographic information is as follows:


Reportable Geographic Revenue	Three Months Ended				Nine Months Ended
	November 27, 2020		November 22, 2019		November 27, 2020		November 22, 2019
United States	$	392.9	$	705.4	$	1,314.0	$	1,922.1
Foreign locations	224.6		249.8		605.1		855.4
	$	617.5	$	955.2	$	1,919.1	$	2,777.5

Reportable Geographic Revenue Three Months Ended Nine Months Ended
November 22,
2019 November 23,
2018 November 22,
2019 November 23,
2018
United States $ 705.4
$ 586.0
$ 1,922.1
$ 1,640.1

Foreign locations 249.8
315.0
855.4
890.7

$ 955.2
$ 901.0
$ 2,777.5
$ 2,530.8

Contract Balances

At times, we receive payments 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 nine months ended November ~~22, 2019~~27, 2020 are as follows:

Customer Deposits
Balance as of February 22, 2019 $ 20.0

Increases due to deposits received 23.3

Revenue recognized (17.3 )
Balance as of November 22, 2019 $ 26.0


4.	~~EARNINGS PER SHARE~~Customer Deposits
Balance as of February 28, 2020	$	28.6
Recognition of revenue related to beginning of year customer deposits	(25.7)
Customer deposits received, net of revenue recognized during the period	57.0
Balance as of November 27, 2020	$	59.9

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STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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
Computation of Earnings per Share	November 27, 2020		November 22, 2019		November 27, 2020		November 22, 2019
Net income	$	2.1	$	54.9	$	19.5	$	133.2
Adjustment for earnings attributable to participating securities	0		(1.1)		(0.4)		(2.6)
Net income used in calculating earnings per share	$	2.1	$	53.8	$	19.1	$	130.6
Weighted-average common shares outstanding including participating securities (in millions)	117.7		119.5		117.4		119.6
Adjustment for participating securities (in millions)	(2.9)		(2.3)		(2.5)		(2.3)
Shares used in calculating basic earnings per share (in millions)	114.8		117.2		114.9		117.3
Effect of dilutive stock-based compensation (in millions)	0.3		0.6		0.3		0.5
Shares used in calculating diluted earnings per share (in millions)	115.1		117.8		115.2		117.8
Earnings per share:
Basic	$	0.02	$	0.46	$	0.17	$	1.11
Diluted	$	0.02	$	0.46	$	0.17	$	1.11
Total common shares outstanding at period end (in millions)	114.9		117.2		114.9		117.2
Anti-dilutive performance units excluded from the computation of diluted earnings per share (in millions)	0		0		0		0

Three Months Ended Nine Months Ended
Computation of Earnings per Share November 22,
2019 November 23,
2018 November 22,
2019 November 23,
2018
Net income $ 54.9
$ 37.3
$ 133.2
$ 103.4

Adjustment for earnings attributable to participating securities (1.1 ) (0.8 ) (2.6 ) (2.1 )
Net income used in calculating earnings per share $ 53.8
$ 36.5
$ 130.6
$ 101.3

Weighted-average common shares outstanding including participating securities (in millions) 119.5
119.2
119.6
119.0

Adjustment for participating securities (in millions) (2.3 ) (2.5 ) (2.3 ) (2.4 )
Shares used in calculating basic earnings per share (in millions) 117.2
116.7
117.3
116.6

Effect of dilutive stock-based compensation (in millions) 0.6
0.3
0.5
0.3

Shares used in calculating diluted earnings per share (in millions) 117.8
117.0
117.8
116.9

Earnings per share:

Basic $ 0.46
$ 0.31
$ 1.11
$ 0.87

Diluted $ 0.46
$ 0.31
$ 1.11
$ 0.87

Total common shares outstanding at period end (in millions) 117.2
116.8
117.2
116.8

Anti-dilutive performance units excluded from the computation of diluted earnings per share (in millions) —
0.2
—
0.2

5.ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

~~Table of Contents~~

~~STEELCASE INC.~~

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


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 ~~22, 2019:~~27, 2020:


	Unrealized gain (loss) on investments		Pension and other post-retirement liability adjustments		Derivative amortization		Foreign currency translation adjustments		Total
Balance as of August 28, 2020	$	(0.2)	$	(3.9)	$	(8.2)	$	(44.0)	$	(56.3)
Other comprehensive income (loss) before reclassifications	0.3		(0.1)		0		7.2		7.4
Amounts reclassified from accumulated other comprehensive income (loss)	0		(0.2)		0.3		0		0.1
Net current period other comprehensive income (loss)	0.3		(0.3)		0.3		7.2		7.5
Balance as of November 27, 2020	$	0.1	$	(4.2)	$	(7.9)	$	(36.8)	$	(48.8)

Unrealized gain (loss) on investments Pension and other post-retirement liability adjustments Derivative amortization Foreign currency translation adjustments Total
Balance as of August 23, 2019 $ (0.1 ) $ 9.2
$ (9.2 ) $ (61.7 ) $ (61.8 )
Other comprehensive income (loss) before reclassifications (0.1 ) (0.6 ) —
6.4
5.7

Amounts reclassified from accumulated other comprehensive income (loss) —
(0.5 ) 0.3
—
(0.2 )
Net current period other comprehensive income (loss) (0.1 ) (1.1 ) 0.3
6.4
5.5

Balance as of November 22, 2019 $ (0.2 ) $ 8.1
$ (8.9 ) $ (55.3 ) $ (56.3 )

Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the nine months ended November ~~22, 2019:~~27, 2020:


	Unrealized gain (loss) on investments		Pension and other post-retirement liability adjustments		Derivative amortization		Foreign currency translation adjustments		Total
Balance as of February 28, 2020	$	(0.1)	$	(3.1)	$	(8.6)	$	(57.5)	$	(69.3)
Other comprehensive income (loss) before reclassifications	0.2		(0.4)		0		20.7		20.5
Amounts reclassified from accumulated other comprehensive income (loss)	0		(0.7)		0.7		0		0
Net current period other comprehensive income (loss)	0.2		(1.1)		0.7		20.7		20.5
Balance as of November 27, 2020	$	0.1	$	(4.2)	$	(7.9)	$	(36.8)	$	(48.8)

Unrealized gain (loss) on investments Pension and other post-retirement liability adjustments Derivative amortization Foreign currency translation adjustments Total
Balance as of February 22, 2019 $ —
$ 9.7
$ (9.6 ) $ (47.4 ) $ (47.3 )
Other comprehensive income (loss) before reclassifications 0.3
0.2
—
(7.9 ) (7.4 )
Amounts reclassified from accumulated other comprehensive income (loss) (0.5 ) (1.8 ) 0.7
—
(1.6 )
Net current period other comprehensive income (loss) (0.2 ) (1.6 ) 0.7
(7.9 ) (9.0 )
Balance as of November 22, 2019 $ (0.2 ) $ 8.1
$ (8.9 ) $ (55.3 ) $ (56.3 )

~~Table of Contents~~

~~STEELCASE INC.~~

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

The following table provides details about reclassifications out of accumulated other comprehensive income (loss) for the three and nine months ended November ~~22, 2019~~27, 2020 and November ~~23, 2018:~~22, 2019:

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 22,
2019 November 23,
2018 November 22, 2019 November 23, 2018
Amortization of pension and other post-retirement liability adjustments
Actuarial losses (gains) $ (0.8 ) $ (0.9 ) $ (2.3 ) $ (2.6 ) Other income, net
Prior service cost (credit) (0.1 ) (0.6 ) (0.2 ) (1.8 ) Other income, net
0.4
0.4
0.7
1.0
Income tax expense
(0.5 ) (1.1 ) (1.8 ) (3.4 )

Derivative amortization 0.4
—
1.0
—
Interest expense
(0.1 ) —
(0.3 ) —
Income tax expense
0.3
—
0.7
—

Realized gain on sale of investment —
—
(0.7 ) —
Investment income
—
—
0.2
—
Income tax expense
—
—
(0.5 ) —

Foreign currency translation —
—
—
0.1
Other income, net

Total reclassifications $ (0.2 ) $ (1.1 ) $ (1.6 ) $ (3.3 )


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 27, 2020		November 22, 2019			November 27, 2020			November 22, 2019
Amortization of pension and other post-retirement liability adjustments
Actuarial losses (gains)	$	(0.3)	$	(0.8)			$	(0.9)		$	(2.3)	Other income, net
Prior service cost (credit)	0		(0.1)				(0.1)			(0.2)		Other income, net
	0.1		0.4				0.3			0.7		Income tax expense (benefit)
	(0.2)		(0.5)				(0.7)			(1.8)

Derivative amortization	0.4		0.4				1.0			1.0		Interest expense
	(0.1)		(0.1)				(0.3)			(0.3)		Income tax expense (benefit)
	0.3		0.3				0.7			0.7

Realized gain on sale of investment	0		0				0			(0.7)		Investment income
	0		0				0			0.2		Income tax expense (benefit)
	0		0				0			(0.5)

Total reclassifications	$	0.1	$	(0.2)			$	0		$	(1.6)

Table of Contents


6.	~~FAIR VALUE~~

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 foreign exchange forward contracts and long-term investments are measured at fair value in the Condensed Consolidated Balance Sheets.

Our total debt is carried at cost and was ~~$484.1~~$482.8 and ~~$487.0~~$484.3 as of November ~~22, 2019~~27, 2020 and February ~~22, 2019~~,28, 2020, 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 $540~~$556.7 and ~~$492~~$560.0 as of November ~~22, 2019~~27, 2020 and February ~~22, 2019~~,28, 2020, 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.

~~Table of Contents~~

~~STEELCASE INC.~~

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

Assets and liabilities measured at fair value as of November ~~22, 2019~~27, 2020 and February ~~22, 2019~~28, 2020 are summarized below:


	November 27, 2020
Fair Value of Financial Instruments	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	484.4	$	0	$	0	$	484.4
Restricted cash	7.3		0		0		7.3







Foreign exchange forward contracts	0		3.1		0		3.1
Auction rate securities	0		0		2.4		2.4

	$	491.7	$	3.1	$	2.4	$	497.2
Liabilities:
Foreign exchange forward contracts	$	0	$	(0.8)	$	0	$	(0.8)
	$	0	$	(0.8)	$	0	$	(0.8)



	February 28, 2020
Fair Value of Financial Instruments	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	541.0	$	0	$	0	$	541.0
Restricted cash	6.1		0		0		6.1







Foreign exchange forward contracts	0		1.2		0		1.2
Auction rate securities	0		0		2.1		2.1

	$	547.1	$	1.2	$	2.1	$	550.4
Liabilities:
Foreign exchange forward contracts	$	0	$	(0.5)	$	0	$	(0.5)
	$	0	$	(0.5)	$	0	$	(0.5)

November 22, 2019
Fair Value of Financial Instruments Level 1 Level 2 Level 3 Total
Assets:

Cash and cash equivalents $ 367.7
$ —
$ —
$ 367.7

Restricted cash 4.9
—
—
4.9

Foreign exchange forward contracts —
1.3
—
1.3

Auction rate securities —
—
2.0
2.0

$ 372.6
$ 1.3
$ 2.0
$ 375.9

Liabilities:
Foreign exchange forward contracts $ —
$ (0.3 ) $ —
$ (0.3 )
$ —
$ (0.3 ) $ —
$ (0.3 )

February 22, 2019
Fair Value of Financial Instruments Level 1 Level 2 Level 3 Total
Assets:

Cash and cash equivalents $ 261.3
$ —
$ —
$ 261.3

Restricted cash 3.5
—
—
3.5

Foreign exchange forward contracts —
3.9
—
3.9

Auction rate securities —
—
3.9
3.9

$ 264.8
$ 3.9
$ 3.9
$ 272.6

Liabilities:

Foreign exchange forward contracts $ —
$ (0.5 ) $ —
$ (0.5 )
$ —
$ (0.5 ) $ —
$ (0.5 )

Below is a roll-forward of assets and liabilities measured at fair value using Level 3 inputs for the nine months endedNovember ~~22, 2019~~:27, 2020:


Roll-Forward of Fair Value Using Level 3 Inputs	Auction Rate Securities
Balance as of February 28, 2020	$	2.1
Unrealized gain on investments	0.3

Balance as of November 27, 2020	$	2.4

Roll-Forward of Fair Value Using Level 3 Inputs Auction Rate Securities
Balance as of February 22, 2019 $ 3.9

Unrealized gain on investments 0.3

Redemption of auction rate securities (2.2 )
Balance as of November 22, 2019 $ 2.0

Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


7.	7.INVENTORIES

Inventories November 22,
2019 February 22,
2019
Raw materials and work-in-process $ 120.7
$ 118.3

Finished goods 147.9
127.2

268.6
245.5

Revaluation to LIFO 20.3
20.7

$ 248.3
$ 224.8


Inventories	November 27, 2020		February 28, 2020
Raw materials and work-in-process	$	130.8	$	122.0
Finished goods	123.3		112.8
	254.1		234.8
Revaluation to LIFO	19.1		19.8
	$	235.0	$	215.0

The portion of inventories determined by the LIFO method was ~~$107.4~~$106.5 and ~~$96.9~~$93.8 as of November 27, 2020 and February 28, 2020, respectively.

8.GOODWILL

A summary of the changes in goodwill balances during the nine months ended November ~~22, 2019~~27, 2020, by reportable segment, are as follows:


Goodwill	Americas		EMEA		Other		Total
Goodwill	$	206.1	$	283.5	$	47.9	$	537.5
Accumulated impairment losses	(1.7)		(265.0)		(37.2)		(303.9)
Balance as of February 28, 2020	204.4		18.5		10.7		233.6
Impairment charge (1)	0		(17.6)		0		(17.6)
Currency translation adjustments	0.2		(0.9)		0		(0.7)
Goodwill	206.3		282.6		47.9		536.8
Accumulated impairment losses	(1.7)		(282.6)		(37.2)		(321.5)
Balance as of November 27, 2020	$	204.6	$	0	$	10.7	$	215.3

_______________________________________

(1)In Q1 2021, we recorded a goodwill impairment charge in the EMEA segment related to the Orangebox U.K. reporting unit.

We evaluate goodwill for impairment annually in Q4, or earlier if conditions indicate it is necessary. In Q1 2021, we determined that a triggering event occurred which resulted in an interim impairment evaluation of goodwill for each of our reporting units. During Q1 2021, the market price of our Class A Common Stock declined significantly in connection with overall stock market trends related to the global economic impact of the COVID-19 pandemic. The reduction in revenue in Q1 2021 and changes to our forecasted revenue growth rates and expected operating margins related to the economic disruption of the COVID-19 pandemic were also factors that led to the completion of our interim impairment analysis.

For goodwill, we compare the fair value of each reporting unit to its carrying value. If the fair value of the reporting unit exceeds the carrying value, goodwill is not impaired, and no further testing is required. If the fair value of the reporting unit is less than the carrying value, the difference is recorded as an impairment loss. We estimate the fair value of our reporting units using the income approach, which calculates the fair value of each reporting unit based on the present value of its estimated future cash flows. Cash flow projections are based on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. For the evaluation that we conducted in Q1 2021, such conditions included the deterioration of industry and market conditions driven by the COVID-19 pandemic. The discount rates used are based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the reporting units' ability to execute on the projected cash flows. In certain circumstances, we corroborate the results determined using the income approach with a market-based approach that uses observable comparable company information to support the appropriateness of the fair value estimates.

Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As a result of our goodwill impairment testing, we determined that the carrying value of the Orangebox U.K. reporting unit (included in the EMEA segment) exceeded its fair value, resulting in a $17.6 goodwill impairment charge in Q1 2021. Following the charge, the reporting unit had no remaining goodwill. During Q1 2021, we also tested the recoverability of the Orangebox U.K. long-lived assets (other than goodwill) and concluded that those assets were not impaired.

For each of our other reporting units, we determined that the fair value of the reporting unit substantially exceeded its carrying value, and no goodwill impairment existed. We also determined that no impairment existed related to the long-lived asset groups for any of our other reporting units.

9.~~February 22, 2019~~SHORT-TERM BORROWINGS

Our $250.0 committed unsecured revolving syndicated credit facility expires in 2025. At our option, and subject to certain conditions, we may increase the aggregate commitment under the facility by up to $125.0 by obtaining at least one commitment from one or more lenders. During Q1 2021, we borrowed $250.0 under the facility and repaid $5.0. During Q2 2021, we repaid the remaining balance of $245.0 under the facility, and there were no borrowings outstanding under the facility as of November 27, 2020.

The facility does not include any restrictions on cash dividend payments or share repurchases. As of November 27, 2020, we were in compliance with all covenants under the facility.

10.INCOME TAXES

In Q1 2021, the U.S. government enacted tax legislation to provide economic stimulus and support to businesses during the COVID-19 pandemic, referred to as the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"). In connection with our analysis of the impact of the CARES Act, we recorded a net tax benefit of $8.7 during the nine months ended November 27, 2020, ~~respectively.~~driven primarily by provisions within the CARES Act which enable companies to carry back tax losses to years prior to the enactment of the Tax Cuts and Jobs Act when the federal statutory income tax rate was 35%.

We have historically calculated the provision for income tax expense (benefit) during interim periods by applying an estimate of the annualized effective tax rate for the full fiscal year to the pre-tax income (loss) for the year-to-date period. In Q1 2021, we utilized the year-to-date actual effective tax rate to calculate our income tax expense (benefit), as we determined that it was the most reliable estimate of the annual effective tax rate. In Q2 2021 and Q3 2021, as a result of improved pre-tax income, we applied the estimated annualized effective tax rate for the fiscal year to pre-tax income for the year-to-date period to calculate our income tax expense.

11.SHARE-BASED COMPENSATION

Performance Units

During the nine months ended November ~~22, 2019,~~27, 2020, we ~~granted 98,867~~issued two sets of performance units ~~("PSUs"~~(“PSUs”) ~~which are~~to certain employees. The first set, consisting of 303,973 PSUs, will be earned at the end of 2021 (the “2021 Short-Term PSUs”), and the second set, consisting of 529,500 PSUs, will be earned over a three-year performance period of 2021 through 2023 (the “2021 Long-Term PSUs”). The 2021 Short-Term PSUs will be earned based on our Compensation Committee’s qualitative assessment of management’s performance in 2021 in a number of specified areas (collectively, the “2021 Performance Measures”). The 2021 Long-Term PSUs will be earned based on achievement of certain performance conditions and then modified based on achievement of certain total shareholder return results relative to a ~~market condition.~~comparison group of companies. The performance conditions for the 2021 Long-Term PSUs consist of the 2021 Performance Measures and performance conditions for 2022 and 2023 which will be established by the Compensation Committee in future periods. Due to the qualitative assessment, these awards are not considered granted under GAAP. When the Compensation Committee determines whether or not, and to what extent, the 2021 Performance Measures have been met, the 2021 Short-Term PSUs and one-third of the 2021 Long-Term PSUs will be considered granted. Once granted, the expense for these awards iswill be determined based on the ~~probability that the performance conditions will be met~~target achieved and the fair value of the market ~~condition. We used~~condition on the ~~Monte Carlo simulation model to calculate the fair value of the market condition.~~grant date. The ~~total weighted-average grant date fair value for these PSUs was $16.21 per unit. The PSUs are expensed and~~expense will be recorded in Additional paid-in capital on the Condensed Consolidated Balance ~~Sheets.~~Sheets over the remaining performance period, if any.

~~The weighted-average grant date fair values were determined using the following assumptions:~~Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	~~2020 Awards~~
~~Three-year risk-free interest rate (1)~~	~~2.3~~	%
~~Expected term~~	~~3 years~~
~~Estimated volatility (2)~~	~~32.5~~	%

During the nine months ended November 22, 2019, we issued 296,600 PSUs to certain employees which will be earned over a three-year performance period of 2020 through 2022 (the “2020 Long-Term PSUs”). The 2020 Long-Term PSUs will be earned based on achievement of certain performance conditions and then modified based on achievement of certain total shareholder return results relative to a comparison group of companies. The performance conditions for the first year of the performance period were established in Q1 2020, and accordingly, 98,867 of the 2020 Long-Term PSUs were considered granted in Q1 2020. The 2021 Performance Measures have been established as the performance conditions for the second year of the performance period of the 2020 Long-Term PSUs, and accordingly, no additional portion of such awards have been considered granted. When the Compensation Committee determines whether or not, and to what extent, the 2021 Performance Measures have been met, an additional one-third of these awards will be considered granted. Once granted, the expense for these awards will be determined based on the target achieved and the fair value of the market condition on the grant date. The expense will be recorded in Additional paid-in capital on the Condensed Consolidated Balance Sheets over the remaining performance period. The performance conditions for 2022 for these awards will be established by the Compensation Committee in future periods.


~~(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.~~

The total PSU expense and associated tax benefit for all outstanding awards for the three and nine months ended November 27, 2020 and November 22, 2019 ~~and November 23, 2018~~ are as follows:

Three Months Ended Nine Months Ended
Performance Units November 22,
2019 November 23,
2018 November 22,
2019 November 23,
2018
Expense $ 0.3
$ 0.3
$ 2.0
$ 3.8

Tax benefit —
—
0.5
1.1


	Three Months Ended				Nine Months Ended
Performance Units	November 27, 2020		November 22, 2019		November 27, 2020		November 22, 2019
Expense	$	0.1	$	0.3	$	0.4	$	2.0
Tax benefit	0		0		0.1		0.5

As of November ~~22, 2019,~~27, 2020, there was ~~$0.6~~$0.2 of remaining unrecognized compensation cost related to nonvested PSUs, which is expected to be recognized over a remaining weighted-average period of ~~1.5~~1.0 years.

~~The~~There were no PSU ~~activity~~grants, vestings or forfeitures for the nine months ended November ~~22, 2019 is as follows:~~

Maximum Number of Shares That May Be Issued Under Nonvested Units Total
Weighted-Average
Grant Date
Fair Value per Unit
Nonvested as of February 22, 2019 676,800
$ 18.50
Granted 237,280
16.21
Nonvested as of November 22, 2019 914,080
$ 18.93

~~Table of Contents~~

~~STEELCASE INC.~~

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

27, 2020.

Restricted Stock Units

During the nine months ended November ~~22, 2019,~~27, 2020, we awarded ~~842,609~~1,371,077 restricted stock units ("RSUs")~~. These~~ to certain employees. RSUs have restrictions on transfer which lapse three years after the date of grant, at which time the ~~units~~RSUs will be issued as unrestricted shares of Class A Common Stock. RSUs are expensed and recorded in Additional paid-in capital on the Condensed Consolidated Balance Sheets over the requisite service period based on the value of the ~~underlying~~ shares on the date of grant.

The total RSU expense and associated tax benefit for all outstanding awards for the three and nine months ended November 27, 2020 and November 22, 2019 ~~and~~ ~~November 23, 2018~~ are as follows:

Three Months Ended Nine Months Ended
Restricted Stock Units November 22,
2019 November 23,
2018 November 22,
2019 November 23,
2018
Expense $ 1.8
$ 2.0
$ 11.7
$ 11.0

Tax benefit 0.5
0.6
3.1
3.0


	Three Months Ended				Nine Months Ended
Restricted Stock Units	November 27, 2020		November 22, 2019		November 27, 2020		November 22, 2019
Expense	$	1.9	$	1.8	$	10.9	$	11.7
Tax benefit	0.5		0.5		2.8		3.1

As of November ~~22, 2019~~,27, 2020, there was ~~$8.4~~$8.1 of remaining unrecognized compensation cost related to nonvested RSUs, which is expected to be recognized over a weighted-average period of ~~1.9~~2.0 years.

~~The RSU activity for the~~ ~~nine months endedNovember 22, 2019~~ ~~is as follows:~~

Nonvested Units Total
Weighted-Average
Grant Date
Fair Value
per Unit
Nonvested as of February 22, 2019 1,721,896
$ 15.39
Granted 842,609
15.84
Vested (153,777 ) 14.07
Forfeited (38,503 ) 15.26
Nonvested as of November 22, 2019 2,372,225
$ 15.64

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STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The RSU activity for the nine months ended November 27, 2020 is as follows:


9.	~~LEASES~~

~~Accounting Policies~~


Nonvested Units	Total	Weighted-Average Grant Date Fair Value per Unit
Nonvested as of February 28, 2020	1,761,124	$	15.28
Granted	1,371,077	9.49
Vested	(149,625)	15.12
Forfeited	(42,668)	14.34
Nonvested as of November 27, 2020	2,939,908	$	12.60

~~In Q1 2020, we adopted ASU 2016-02,~~

12.~~Leases (Topic 842)~~ ~~and related amendments ("ASC 842") on a prospective basis. The effects of the initial application of ASC 842 did not result in a cumulative adjustment to retained earnings.~~LEASES

We have operating leases for corporate offices, sales offices, showrooms, manufacturing facilities, vehicles and equipment that expire at various dates through 2031. Certain lease agreements include contingent rental payments based on per unit usage over contractual levels (e.g., miles driven or machine hours used) and others include rental payments adjusted periodically for inflationary indexes. Additionally, some leases include options to renew or terminate the leases which can be exercised at our discretion. The lease terms utilized in determining right-of-use assets and lease liabilities include the noncancellable portion of the underlying leases along with any reasonably certain lease periods associated with available renewal periods. Our leases do not contain any residual value guarantees or material restrictive covenants. As most of our leases do not provide an implicit discount rate, we use an estimated incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. The estimated incremental borrowing rate represents the estimated rate of interest we would have had to pay to borrow on a collateralized basis an amount equal to the lease payments for a similar period of time.

As a result of the COVID-19 pandemic, the FASB staff issued a question and answer document (the "Staff Q&A") on the application of lease accounting guidance related to lease concessions provided as a result of the pandemic. The Staff Q&A provides interpretive guidance allowing companies the option to account for lease concessions related to the pandemic consistent with how those concessions would be accounted for under ASU 2016-02, Leases (Topic 842), as though enforceable rights and obligations for those concessions existed at the beginning of the contract (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). This interpretive guidance was issued in order to reduce the costs and complexities of applying lease modification accounting under Topic 842 to leases impacted by the effects of the pandemic. We have elected to apply the interpretive guidance provided in the Staff Q&A to rent deferrals and abatements received related to the pandemic. Accordingly, we have not remeasured the related right-of-use asset or lease liability for the affected leases. The lease concessions were not material for the nine months ended November 27, 2020.

The components of lease expense are as follows:

Three Months Ended Nine Months Ended
November 22,
2019 November 22,
2019
Operating lease cost $ 13.0
$ 37.6

Sublease rental income (0.4 ) (0.8 )
$ 12.6
$ 36.8


	Three Months Ended				Nine Months Ended
	November 27, 2020		November 22, 2019		November 27, 2020		November 22, 2019
Operating lease cost	$	12.8	$	13.0	$	38.8	$	37.6
Sublease rental income	(0.7)		(0.4)		(1.6)		(0.8)
	$	12.1	$	12.6	$	37.2	$	36.8

Supplemental cash flow and other information related to leases are as follows:

Three Months Ended Nine Months Ended
November 22,
2019 November 22,
2019
Cash flow information:
Operating cash flows used for operating leases $ 9.5
$ 32.9

Leased assets obtained in exchange for new operating lease obligations $ 25.6
$ 83.8


	Three Months Ended				Nine Months Ended
	November 27, 2020		November 22, 2019		November 27, 2020		November 22, 2019
Cash flow information:
Operating cash flows used for operating leases	$	12.6	$	9.5	$	37.3	$	32.9
Leased assets obtained in exchange for new operating lease obligations	$	0.7	$	25.6	$	2.6	$	83.8



	November 22, 2019
	November 22, 2019
~~Other information:~~
~~Weighted-average remaining term~~	~~7.4 years~~
~~Weighted-average discount rate~~	~~4.1~~	%

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STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

November 27,
2020

November 22,
2019

Other information:

Weighted-average remaining term

6.7 years

7.4 years

Weighted-average discount rate

4.0

4.1

The following table summarizes the future minimum lease payments as of November ~~22, 2019:~~27, 2020:


Fiscal year ending in February	Amount (1)		Fiscal year ending in February	Amount (1)
2020	$	11.9
2021	47.2		2021	$	12.6
2022	43.6		2022	48.6
2023	37.6		2023	42.0
2024	32.5		2024	36.6
2025			2025	34.2
Thereafter	116.2		Thereafter	92.6
Total lease payments	289.0		Total lease payments	266.6
Less interest	40.1		Less interest	33.3
Present value of lease liabilities	$	248.9	Present value of lease liabilities	$	233.3


(1)	~~Lease payments include~~ Lease payments includeoptions to extend lease terms that are reasonably certain of being exercised. The payments exclude legally binding ~~minimum lease payments for leases signed but not yet commenced.~~

~~The following table summarizes future~~ minimum lease payments ~~as of February 22, 2019, before adoption of ASC 842:~~

Fiscal Year Ending in February Minimum annual
rental commitments Minimum annual
sublease rental income Minimum annual
rental commitments, net
2020 $ 46.0
$ (0.6 ) $ 45.4

2021 41.7
(0.3 ) 41.4

2022 40.5
(0.2 ) 40.3

2023 36.5
(0.2 ) 36.3

2024 28.0
(0.2 ) 27.8

Thereafter 72.2
(0.6 ) 71.6

$ 264.9
$ (2.1 ) $ 262.8

for leases signed but not yet commenced.

~~Practical Expedients Elected~~13.REPORTABLE SEGMENTS

~~We elected the following practical expedients as a result of adopting ASC 842:~~

We elected not to separate non-lease components of a contract from the lease components to which they relate for all classes of lease assets except for embedded leases, which were immaterial in Q1 2020.

We elected the package of practical expedients available for transition which allowed us not to reassess (1) whether previously assessed contracts contain leases, (2) the classification of the leases as operating or finance and (3) the amount of initial direct costs associated with the leases.

~~We elected not to recognize a right-of-use asset or lease liability for short-term leases that have a lease term of 12 months or less.~~

~~We elected not to assess whether land easements that were not previously accounted for as leases are or contain a lease.~~

~~We elected not to use hindsight in determining the lease term and in assessing the likelihood that a lessee purchase option will be exercised.~~

~~Table of Contents~~

~~STEELCASE INC.~~

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

~~10. ACQUISITIONS~~

~~Orangebox~~

In Q3 2019, we acquired Orangebox Group Limited ("Orangebox"), a manufacturer of task seating, architectural pods, privacy solutions and collaborative furniture based in the United Kingdom ("U.K."). The transaction included the purchase of all of the outstanding capital stock of Orangebox for $78.9 (or £60.0) less an adjustment for working capital of $0.5 in an all-cash transaction. An additional $3.9 (or £3.0) is payable to one of the sellers over three years, contingent upon the achievement of certain business performance obligations. The acquisition was funded by borrowings under our global committed bank facility. The goodwill resulting from the acquisition relates to the expected ability to provide customers with a broader range of furniture designed to boost collaboration at work and supplement our innovative product development.

Tangible assets and liabilities of Orangebox 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. On the acquisition date, we recorded $42.2 related to identifiable intangible assets, $23.4 related to goodwill and $16.7 related to tangible assets. The tangible assets mainly consisted of working capital (primarily accounts receivable, inventory and current liabilities), property, plant and equipment (primarily the land, building and equipment of two manufacturing locations in the U.K.) and deferred tax liabilities. Goodwill was recorded in EMEA and the Americas segments in the amounts of $18.8 and $4.6, respectively. The goodwill is not deductible for U.K. or U.S. income tax purposes. Intangible assets are principally related to dealer relationships, the Orangebox trade name and internally-developed know-how and designs, which will be amortized over periods ranging between 9 to 11 years. The purchase accounting for the Orangebox acquisition was completed during the current year.

~~The following table summarizes the acquired identified intangible assets and the respective fair value and useful life of each asset at the date of acquisition:~~

Other Intangible Assets Weighted
Average
Useful Life
(Years) Fair Value

Dealer relationships 10.9 $ 23.0

Trademark 9.0 13.2

Know-how/designs 9.0 5.0

Other 0.2 1.0

$ 42.2

~~The fair value of the acquired intangible assets will be amortized on a straight-line basis over the remaining useful lives. The estimated amortization expense for the next five years is as follows:~~

Fiscal Year Ending in February Amount
2020 $ 4.2

2021 4.1

2022 4.1

2023 4.1

2024 4.1

$ 20.6

~~Table of Contents~~

~~STEELCASE INC.~~

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

~~Smith System~~

In Q2 2019, we acquired Smith System Manufacturing Company ("Smith System"), a Texas-based manufacturer of desking, seating and storage for the pre-K-12 education market. The transaction included the purchase of all of the outstanding capital stock of Smith System for $140.0, payable in cash, plus a net adjustment for working capital of $8.4. In addition, we funded $5.0 to a third-party escrow account, which is payable to the seller at the end of two years based on continued employment. The acquisition was funded through a combination of domestic cash on-hand and short-term borrowings under our global credit facility.

Smith System is an industry leader in the U.S. pre-K-12 education market. The acquisition is expected to advance our growth strategy in the education and office markets particularly as it relates to learning environments and collaborative spaces. The goodwill resulting from the acquisition is primarily related to the growth potential of Smith System as we offer their products through our distribution network.

Tangible assets and liabilities of Smith System 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. On the acquisition date, we recorded $44.1 related to identifiable intangible assets, $79.3 related to goodwill and $25.0 related to tangible assets, mainly consisting of working capital items such as accounts receivable, inventory and current liabilities. The entire amount recorded to goodwill is deductible for U.S. income tax purposes and is recorded in the Americas segment. Intangible assets are principally related to internally-developed know-how and designs, dealer relationships and the Smith System trade name, which will be amortized over periods ranging between 9 to 11 years. The purchase accounting for the Smith System acquisition was completed during the current year.

~~The following table summarizes the acquired identified intangible assets and the respective fair value and useful life of each asset at the date of acquisition:~~

Other Intangible Assets Weighted
Average
Useful Life
(Years) Fair Value

Know-how/designs 9.0 $ 16.0

Dealer relationships 11.0 12.0

Trademark 9.0 12.0

Other 0.9 4.1

$ 44.1

Fiscal Year Ending in February Amount
2020 $ 4.8

2021 4.4

2022 4.2

2023 4.2

2024 4.2

$ 21.8

~~Table of Contents~~

~~STEELCASE INC.~~

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


~~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,~~ Smith System, AMQ, Turnstone and Orangebox brands.

The EMEA segment serves customers in Europe, the Middle East and Africa primarily under the Steelcase, Orangebox and Coalesse brands, with an emphasis on freestanding furniture systems, storage and seating solutions.

The Other category includes Asia Pacific ~~Designtex~~ and ~~PolyVision.~~Designtex. 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. In 2020, the Other category also included PolyVision ~~manufactures ceramic steel surfaces for use in various applications globally, including static whiteboards and chalkboards~~which was 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.during Q4 2020.

We primarily review and evaluate revenue and operating income by segment in both our internal review processes and for our external financial reporting. We also allocate resources primarily based on revenue and 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 and cash equivalents, COLI balances, fixed assets and right-of-use assets related to operating leases.

~~Revenue and operating income (loss) for the~~ ~~three and nine months endedNovember 22, 2019~~ ~~and~~ ~~November 23, 2018~~ ~~and total assets as of~~ ~~November 22, 2019~~ ~~and~~ ~~February 22, 2019~~ ~~by segment are presented below:~~

Three Months Ended Nine Months Ended
Reportable Segment Statement of Operations Data November 22,
2019 November 23,
2018 November 22,
2019 November 23,
2018
Revenue

Americas $ 690.9
$ 638.6
$ 2,006.7
$ 1,828.5

EMEA 168.4
170.9
483.9
441.5

Other 95.9
91.5
286.9
260.8

$ 955.2
$ 901.0
$ 2,777.5
$ 2,530.8

Operating income (loss)

Americas $ 74.7
$ 52.0
$ 197.4
$ 158.9

EMEA 6.3
(0.7 ) 1.6
(8.4 )
Other 3.3
4.2
14.5
10.6

Corporate (9.2 ) (10.1 ) (25.5 ) (24.5 )
$ 75.1
$ 45.4
$ 188.0
$ 136.6

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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 27, 2020 and November 22, 2019 and total assets as of November 27, 2020 and February 28, 2020 by segment are presented below:

Reportable Segment Balance Sheet Data November 22,
2019 February 22,
2019
Total assets

Americas $ 1,097.9
$ 1,044.4

EMEA 474.0
420.1

Other 294.4
220.4

Corporate 657.5
457.5

$ 2,523.8
$ 2,142.4


	Three Months Ended				Nine Months Ended
Reportable Segment Statement of Operations Data	November 27, 2020		November 22, 2019		November 27, 2020		November 22, 2019
Revenue
Americas	$	416.4	$	690.9	$	1,381.5	$	2,006.7
EMEA	143.3		168.4		368.7		483.9
Other	57.8		95.9		168.9		286.9
	$	617.5	$	955.2	$	1,919.1	$	2,777.5
Operating income (loss)
Americas	$	13.8	$	74.7	$	84.9	$	197.4
EMEA	(3.7)		6.3		(31.8)		1.6
Other	(2.2)		3.3		(2.7)		14.5
Corporate	(7.9)		(9.2)		(14.1)		(25.5)
	$	0	$	75.1	$	36.3	$	188.0


Reportable Segment Balance Sheet Data	November 27, 2020		February 28, 2020
Total assets
Americas	$	1,038.8	$	1,067.3
EMEA	413.9		454.5
Other	214.1		225.6
Corporate	718.5		818.0
	$	2,385.3	$	2,565.4

14. RESTRUCTURING ACTIVITIES

In Q2 2021, our Board of Directors approved a series of restructuring actions in response to continued order declines in the Americas compared to the prior year and continued economic uncertainty related to the COVID-19 pandemic. The restructuring actions included early retirements and voluntary and involuntary terminations of approximately 300 salaried employees and early retirements of approximately 160 hourly employees. We incurred $11.4 and $27.0 in restructuring costs in the Americas segment in connection with these actions during the three and nine months ended November 27, 2020, respectively, consisting of cash severance payments and payment of other separation-related benefits. We expect all of the actions to be completed by the end of 2021.

The following table details the changes in the restructuring reserve balance as of November 27, 2020:


~~Item 2.~~	~~Management’s Discussion and Analysis~~Workforce reductions
Balance as of ~~Financial Condition and Results~~February 28, 2020	$	0
Restructuring costs	27.0
Payments	(25.5)
Balance as of ~~Operations:~~November 27, 2020	$	1.5

Table of Contents

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 ~~22, 2019~~.28, 2020. 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 ~~Measure~~Measures

This item contains acertain non-GAAP financial ~~measure.~~measures. A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the condensed consolidated statements of income, balance sheets or statements of cash flows of the company. Pursuant to the requirements of Regulation G, we have provided a reconciliation below of the non-GAAP financial ~~measure~~measures to the most directly comparable GAAP financial measure.

The non-GAAP financial ~~measure~~measures used isare (1) organic revenue ~~growth (decline),~~decline, which represents the change in revenue excluding the impacts of acquisitions and divestitures and estimated currency translation effects, and ~~the impacts of acquisitions~~(2) adjusted operating income (loss), which represents operating income (loss) excluding goodwill impairment charges and ~~divestitures. This measure is~~restructuring costs. These measures are presented because management uses this information to monitor and evaluate financial results and trends. Therefore, management believes this information is also useful for investors.

Financial Summary

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

Results of Operations


	Three Months Ended								Nine Months Ended
Statement of Operations Data	November 27, 2020				November 22, 2019				November 27, 2020				November 22, 2019
Revenue	$	617.5	100.0	%	$	955.2	100.0	%	$	1,919.1	100.0	%	$	2,777.5	100.0	%
Cost of sales	437.3		70.9		639.1		66.9		1,339.7		69.8		1,869.5		67.3
Restructuring costs	2.3		0.3		—		—		9.2		0.5		—		—
Gross profit	177.9		28.8		316.1		33.1		570.2		29.7		908.0		32.7
Operating expenses	168.8		27.3		241.0		25.2		498.5		26.0		720.0		25.9
Goodwill impairment charge	—		—		—		—		17.6		0.9		—		—
Restructuring costs	9.1		1.5		—		—		17.8		0.9		—		—
Operating income	—		—		75.1		7.9		36.3		1.9		188.0		6.8
Interest expense	(6.6)		(1.1)		(6.7)		(0.7)		(20.7)		(1.2)		(20.1)		(0.7)
Investment income	0.2		—		1.3		0.1		1.2		0.1		3.8		0.1
Other income, net	2.2		0.4		4.1		0.4		7.0		0.4		8.3		0.3
Income (loss) before income tax expense (benefit)	(4.2)		(0.7)		73.8		7.7		23.8		1.2		180.0		6.5
Income tax expense (benefit)	(6.3)		(1.0)		18.9		2.0		4.3		0.2		46.8		1.7
Net income	$	2.1	0.3	%	$	54.9	5.7	%	$	19.5	1.0	%	$	133.2	4.8	%
Earnings per share:
Basic	$	0.02			$	0.46			$	0.17			$	1.11
Diluted	$	0.02			$	0.46			$	0.17			$	1.11

Table of Contents

Three Months Ended Nine Months Ended
Statement of Operations Data November 22,
2019 November 23,
2018 November 22,
2019 November 23,
2018
Revenue $ 955.2
100.0 % $ 901.0
100.0 % $ 2,777.5
100.0 % $ 2,530.8
100.0 %
Cost of sales 639.1
66.9
622.7
69.1
1,869.5
67.3
1,726.0
68.2

Gross profit 316.1
33.1
278.3
30.9
908.0
32.7
804.8
31.8

Operating expenses 241.0
25.2
232.9
25.9
720.0
25.9
668.2
26.4

Operating income 75.1
7.9
45.4
5.0
188.0
6.8
136.6
5.4

Interest expense (6.7 ) (0.7 ) (4.7 ) (0.5 ) (20.1 ) (0.7 ) (14.0 ) (0.5 )
Investment income 1.3
0.1
0.2
—
3.8
0.1
1.7
0.1

Other income, net 4.1
0.4
4.3
0.5
8.3
0.3
11.3
0.4

Income before income tax expense 73.8
7.7
45.2
5.0
180.0
6.5
135.6
5.4

Income tax expense 18.9
2.0
7.9
0.9
46.8
1.7
32.2
1.3

Net income $ 54.9
5.7 % $ 37.3
4.1 % $ 133.2
4.8 % $ 103.4
4.1 %
Earnings per share:

Basic $ 0.46

$ 0.31

$ 1.11
$ 0.87

Diluted $ 0.46

$ 0.31

$ 1.11
$ 0.87


Q3 2021 Organic Revenue Decline	Americas			EMEA			Other			Consolidated
Q3 2020 revenue	$	690.9		$	168.4		$	95.9		$	955.2

Divestiture	—			—			(14.9)			(14.9)
Currency translation effects*	0.2			10.2			0.6			11.0
Q3 2020 revenue, adjusted	691.1			178.6			81.6			951.3
Q3 2021 revenue	416.4			143.3			57.8			617.5


Organic decline $	$	(274.7)		$	(35.3)		$	(23.8)		$	(333.8)
Organic decline %	(40)		%	(20)		%	(29)		%	(35)		%

* Currency translation effects represent the estimated net effect of translating Q3 2020 foreign currency revenues using the average exchange rates during Q3 2021.


Year-to-date 2021 Organic Revenue Decline	Americas			EMEA			Other			Consolidated
Year-to-date 2020 revenue	$	2,006.7		$	483.9		$	286.9		$	2,777.5

Divestiture	—			—			(48.2)			(48.2)
Currency translation effects*	(2.0)			8.1			(1.8)			4.3
Year-to-date 2020 revenue, adjusted	2,004.7			492.0			236.9			2,733.6
Year-to-date 2021 revenue	1,381.5			368.7			168.9			1,919.1

Organic decline $	(623.2)			(123.3)			(68.0)			(814.5)
Organic decline %	(31)		%	(25)		%	(29)		%	(30)		%

* Currency translation effects represent the estimated net effect of translating year-to-date 2020 foreign currency revenues using the average exchange rates during year-to-date 2021.


Reconciliation of Operating Income to Adjusted Operating Income	Three Months Ended								Nine Months Ended
	November 27, 2020				November 22, 2019				November 27, 2020				November 22, 2019
Operating income	$	—	—	%	$	75.1	7.9	%	$	36.3	1.9	%	$	188.0	6.8	%
Add: goodwill impairment charge	—		—		—		—		17.6		0.9		—		—
Add: restructuring costs	11.4		1.8		—		—		27.0		1.4		—		—
Adjusted operating income	$	11.4	1.8	%	$	75.1	7.9	%	$	80.9	4.2	%	$	188.0	6.8	%

Q3 2020 Organic Revenue Growth (Decline) Americas EMEA Other Consolidated
Q3 2019 revenue $ 638.6
$ 170.9
$ 91.5
$ 901.0

Acquisition 0.7
5.0
—
5.7

Currency translation effects* (0.5 ) (7.1 ) (0.6 ) (8.2 )
Q3 2019 revenue, adjusted 638.8
168.8
90.9
898.5

Q3 2020 revenue 690.9
168.4
95.9
955.2

Organic growth (decline) $ $ 52.1
$ (0.4 ) $ 5.0
$ 56.7

Organic growth (decline) % 8 % 0 % 6 % 6 %

* Currency translation effects represent the estimated net effect of translating Q3 2019 foreign currency revenues using the average exchange rates during Q3 2020.

Year-to-date 2020 Organic Revenue Growth Americas EMEA Other Consolidated
Year-to-date 2019 revenue $ 1,828.5
$ 441.5
$ 260.8
$ 2,530.8

Acquisitions 43.6
45.0
—
88.6

Divestiture —
(0.9 ) —
(0.9 )
Currency translation effects* (2.2 ) (24.6 ) (4.0 ) (30.8 )
Year-to-date 2019 revenue, adjusted 1,869.9
461.0
256.8
2,587.7

Year-to-date 2020 revenue 2,006.7
483.9
286.9
2,777.5

Organic growth $ $ 136.8
$ 22.9
$ 30.1
$ 189.8

Organic growth % 7 % 5 % 12 % 7 %

* Currency translation effects represent the estimated net effect of translating year-to-date 2019 foreign currency revenues using the average exchange rates during year-to-date 2020.

Overview

During 2021, the COVID-19 pandemic, actions taken by various governments and third parties to combat the spread of COVID-19 and the related global economic uncertainty resulted in significant declines in our revenue and orders compared to the prior year. We took a number of actions to conserve capital and reduce our cost structure in response to such events, including significantly reducing salaries in the first half of the year and substantially reducing discretionary spending. By the end of Q2 2021, we restored most of our global salaried workforce to full pay, and in Q2 and Q3 2021, we implemented workforce reductions in the Americas which lowered our annualized costs by approximately $40. We recorded $11.4 and $27.0 of restructuring costs in Q3 2021 and year-to-date 2021, respectively, related to the workforce reductions.

In Q3 ~~2020,~~2021, our revenue declined 35% compared to the prior year, and we ~~reported revenue growth of 6% and an~~had break-even operating ~~income margin of 7.9%, driven by the higher revenue and lower cost of sales as a percentage of revenue.~~income. The revenue ~~growth~~decline was driven by the ~~Americas and reflected strong industry growth, benefits~~impacts of the COVID-19 pandemic, as well as a delay of approximately $60 of revenue to Q4 2021 due to a temporary global operations shutdown we implemented to protect our systems during a cyberattack we experienced during the quarter. The impact of the decline in revenue was partially mitigated by savings from ~~pricing~~cost reduction actions and ~~favorable timing~~lower variable compensation expense.

Table of shipments. Cost of sales as a percentage of revenue improved by 220 basis points (with 110 basis points attributable to the impact of a pension charge in the prior year). The remaining improvement was driven by the realization of pricing actions, lower commodity costs (compared to significant inflation in the prior year) and benefits from higher volume. The results reflected our continued focus to drive growth through expanding our product offering while executing on initiatives to improve the fitness of our cost structure.Contents

Q3 ~~2020~~2021 Compared to Q3 ~~2019~~2020

We recorded net income of $2.1 and diluted earnings per share of $0.02 in Q3 2021 compared to net income of $54.9 and diluted earnings per share of $0.46 in the prior year. The Q3 ~~2020~~2021 results included restructuring costs of $11.4 in the Americas segment which had the effect of decreasing diluted earnings per share by $0.06, net of related tax benefits. Break-even operating income in Q3 2021 represented a $75.1 decline from the prior year. The decrease was driven by the impact of lower revenue and restructuring costs, partially offset by cost reduction actions implemented across all segments and lower variable compensation expense. Excluding the impact of the restructuring costs, adjusted operating income of $11.4 in Q3 2021 represented a decrease of $63.7 compared to the prior year.

Revenue of $617.5 in Q3 2021 represented a decrease of $337.7 or 35% compared to the prior year. The decline was broad-based across all segments, driven by reduced demand due to underlying economic uncertainty related to the COVID-19 pandemic, and approximately $60 of shipments were delayed to Q4 2021 as a result of the temporary operations shutdown in Q3 2021. Revenue declined by 40% in the Americas, 15% in EMEA and 40% in the Other category compared to the prior year. After adjusting for a $14.9 impact from the divestiture of PolyVision in Q4 2020 and $11.0 of currency translation effects, the organic revenue decline was $333.8 or 35% compared to the prior year. The organic revenue decline was 40% in the Americas, 20% in EMEA and 29% in the Other category compared to the prior year.

Cost of sales as a percentage of revenue increased by 400 basis points to 70.9% of revenue in Q3 2021 compared to Q3 2020. The increase was driven by lower revenue, as well as approximately $12 of higher costs related to direct labor and logistics, of which approximately $4 was related to the temporary operations shutdown, partially offset by approximately $16 of lower overhead costs, of which approximately $7 was attributable to lower wage and benefit expenses as a result of workforce reductions, and $10.8 of lower variable compensation expense. Cost of sales as a percentage of revenue increased by 320 basis points in the Americas, 590 basis points in EMEA and 200 basis points in the Other category.

Operating expenses of $168.8 in Q3 2021 represented a decrease of $72.2 compared to the prior year. The decrease was driven by an approximately $29 reduction in discretionary spending, $25.5 of lower variable compensation expense and approximately $12 of lower wage and benefit expenses as a result of workforce reductions.

We recorded restructuring costs of $11.4 in the Americas segment in Q3 2021 related to workforce reduction actions taken as a result of reduced demand due to the COVID-19 pandemic. See Note 14 to the condensed consolidated financial statements for further information.

We recorded a tax benefit of $6.3 in Q3 2021 compared to tax expense of $18.9 in the prior year. The Q3 2021 amount was primarily driven by benefits available under the U.S. Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). See Note 10 to the condensed consolidated financial statements for further details.

Year-to-Date 2021 Compared to Year-to-Date 2020

We recorded year-to-date 2021 net income of ~~$37.3~~$19.5 and diluted earnings per share of ~~$0.31 in~~$0.17, compared to year-to-date 2020 net income of $133.2 and diluted earnings per share of $1.11. In year-to-date 2021, the ~~prior year. The prior year~~ results ~~included an $11.2~~included: (1) a goodwill impairment charge related to ~~participation in a multi-employer pension plan,~~the EMEA segment, which had the effect of decreasing net income ~~by$5.5 after taking into account~~by $17.6 and diluted earnings per share by $0.15, and (2) restructuring costs in the ~~related variable compensation~~Americas segment, which had the effect of decreasing net income by $16.5 and ~~tax effects. Operating~~diluted earnings per share by $0.14. Year-to-date 2021 operating income of ~~$75.1~~$36.3 represented a decrease of $151.7 compared to the prior year. The decrease was due to lower revenue across all segments, restructuring costs and the goodwill impairment charge, partially offset by lower operating expenses and overhead costs. Excluding the impact of the restructuring costs and the impairment charge, adjusted operating income decreased by $107.1 compared to the prior year.

Year-to-date 2021 revenue of $1,919.1 represented a decrease of $858.4 or 31% compared to year-to-date 2020. The decline was broad-based across all segments due to the impacts of the COVID-19 pandemic. Revenue declined by 31% in ~~Q3 2020~~ ~~represented an increase~~the Americas, 24% in EMEA and 41% in the Other category. After adjusting for a $48.2 impact from the divestiture of ~~$29.7,~~PolyVision and $4.3 of currency translation effects, the organic revenue decline was $814.5 or ~~290 basis points~~30% compared to the prior year. The organic revenue decline was 31% in the Americas, 25% in EMEA and 29% in the Other category.

Table of Contents

Cost of sales as a percentage of revenue ~~compared~~increased by 250 basis points to ~~the prior year, which was negatively impacted by $7.5 due to the pension charge, net~~69.8% of ~~the related variable compensation effect. The increase~~revenue in ~~operating income was driven by higher revenue and lower cost of sales and operating expenses as a percentage of revenue.~~

~~Revenue of $955.2 in~~ ~~Q3 2020~~ ~~represented an increase of $54.2 or 6%~~year-to-date 2021 compared to the prior year. The increase was driven by ~~growth in~~lower revenue, as well as approximately $24 of higher costs related to direct labor and logistics, of which approximately $4 was related to the ~~Americas, including benefits from price list adjustments and favorable shipment timing, caused in part by the timing of the U.S. Thanksgiving holiday (which fell~~temporary operations shutdown in Q3 2021, partially offset by approximately $32 of ~~the prior year compared~~lower overhead costs, of which approximately $15 was attributable to Q4lower wage and benefit expenses related to workforce reductions and temporary salary reductions, pricing benefits and $20.0 of the current year). Revenue grew 8% in the Americas and 5% in the Other category, while EMEA revenue declined by 1% compared to the prior year. After adjusting for a $5.7 impact of an acquisition and $8.2 of unfavorable currency translation effects, organic revenue growth was $56.7 or 6% compared to the prior year. Organic revenue growth was 8% in the Americas and 6% in the Other category, while EMEA revenue was flat on an organic basis.

lower variable compensation expense. Cost of sales as a percentage of revenue ~~decreased by 220 basis points to 66.9% of revenue in~~ ~~Q3 2020~~ ~~compared to~~ ~~Q3 2019~~, with 110 basis points of the improvement attributable to the pension charge in the prior year. The remaining decrease was driven by pricing benefits, lower commodity costs, and higher absorption of fixed costs, partially offset by unfavorable shifts in business mix (which included growth in third-party products and services, which have a lower than average gross margin). Cost of sales as a percentage of revenue decreasedincreased by 210 basis points in the Americas, ~~350~~370 basis points in EMEA and 10190 basis points in the Other category.

Operating expenses of ~~$241.0~~$498.5 in ~~Q3 2020~~year-to-date 2021 represented ~~an increase~~a decrease of ~~$8.1 but a decline of 70 basis points as a percentage of revenue~~$221.5 compared to the prior year. The ~~increase~~decrease was driven ~~primarily~~ by ~~$3.9~~approximately $88 of reduced discretionary spending, approximately $55 of lower wage and benefit expenses related to workforce reductions and temporary salary reductions and $48.8 of lower variable compensation expense. Operating expenses also included $6.7 of gains from the sale of land and $4.2 of higher ~~investments~~COLI income in ~~product development, sales and marketing and $3.8~~year-to-date 2021.

We recorded restructuring costs of ~~higher variable compensation expense.~~$27.0 in the Americas segment in year-to-date 2021 related to workforce reduction actions taken as a result of reduced demand due to the COVID-19 pandemic. See Note 14 to the condensed consolidated financial statements for further information.

Our year-to-date 2021 effective tax rate in ~~Q3 2020~~was ~~25.6%~~18.1% compared to a ~~Q3 2019~~year-to-date 2020 effective tax rate of ~~17.5%~~26.0%. ~~Q3 2019~~The year-to-date 2021 tax rate reflected the ~~impact~~non-deductible nature of ~~a $3.6 favorable adjustment~~the goodwill impairment charge recorded ~~during the quarter.~~

~~Year-to-Date 2020 Compared to Year-to-Date 2019~~

~~We recorded~~ ~~year-to-date 2020~~ ~~net income~~in Q1 2021 as well as $10.5 of ~~$133.2 and diluted earnings per share of $1.11, compared to~~ ~~year-to-date 2019~~ ~~net income of $103.4 and diluted earnings per share of $0.87. The prior year results were negatively impacted by $5.5~~benefits related to the ~~pension charge,~~restructuring costs and $8.7 of other net ofbenefits primarily related ~~variable compensation and income tax effects.~~ ~~Year-to-date 2020~~ ~~operating income increased $51.4 to $188.0 compared~~ to the ~~prior year. The increase was driven by the same factors as the quarter.~~

~~Year-to-date 2020~~ ~~revenue of $2,777.5 represented an increase of $246.7 or 10% compared to~~ ~~year-to-date 2019~~. The increase was driven by industry growth, acquisitions and market share gains in the Americas and certain other markets around the world. Revenue grew 10% in the Americas, 10% in EMEA and 10% in the Other category. After adjusting for an $88.6 impact of acquisitions, a $0.9 unfavorable impact of a divestiture and $30.8 of unfavorable currency translation effects, organic revenue growth was $189.8 or 7%. Organic revenue growth was 7% in the Americas, 5% in EMEA and 12% in the Other category.

~~Cost of sales decreased by 90 basis points to 67.3% of revenue in~~ ~~year-to-date 2020~~ ~~compared to~~ ~~year-to-date 2019, with 40 basis points of the improvement attributable~~CARES Act. See Note 10 to the pension charge in the prior year. The remaining decrease was primarily due to an improvement of 20 basis points in the Americas and 70 basis points in EMEA. The year-over-year comparisons reflected the same factors as the quarter.condensed consolidated financial statements for further details.

~~Operating expenses of $720.0 in~~ ~~year-to-date 2020~~ represented an increase of $51.8 but a decline of 50 basis points as a percentage of revenue compared to the prior year, which included a $7.5 gain on the sale of property. The remaining increase was primarily due to $28.6 from acquisitions, $7.7 of higher investments in sales, marketing and product development and $6.7 of higher variable compensation expense.

~~Our~~ ~~year-to-date 2020~~ ~~effective tax rate was 26.0% compared to a~~ ~~year-to-date 2019~~ ~~effective tax rate of 23.7%. The increase was due to the same factor as the quarter.~~

Interest Expense, Investment Income and Other Income, Net


	Three Months Ended				Nine Months Ended
Interest Expense, Investment Income and Other Income, Net	November 27, 2020		November 22, 2019		November 27, 2020		November 22, 2019
Interest expense	$	(6.6)	$	(6.7)	$	(20.7)	$	(20.1)
Investment income	0.2		1.3		1.2		3.8
Other income (expense), net:
Equity in income of unconsolidated affiliates	2.6		4.1		6.6		9.8
Foreign exchange gains (losses)	0.1		0.1		(1.0)		0.2
Net periodic pension and post-retirement credit, excluding service cost	—		0.2		(0.1)		0.7
Miscellaneous income (expense), net	(0.5)		(0.3)		1.5		(2.4)
Total other income, net	2.2		4.1		7.0		8.3
Total interest expense, investment income and other income, net	$	(4.2)	$	(1.3)	$	(12.5)	$	(8.0)

Three Months Ended Nine Months Ended
Interest Expense, Investment Income and Other Income, Net November 22,
2019 November 23,
2018 November 22,
2019 November 23,
2018
Interest expense $ (6.7 ) $ (4.7 ) $ (20.1 ) $ (14.0 )
Investment income 1.3
0.2
3.8
1.7

Other income (expense), net:

Equity in income of unconsolidated affiliates 4.1
4.3
9.8
11.1

Foreign exchange gains 0.1
(0.4 ) 0.2
0.1

Net periodic pension and post-retirement credit, excluding service cost 0.2
0.9
0.7
2.8

Miscellaneous, net (0.3 ) (0.5 ) (2.4 ) (2.7 )
Total other income, net 4.1
4.3
8.3
11.3

Total interest expense, investment income and other income, net $ (1.3 ) $ (0.2 ) $ (8.0 ) $ (1.0 )

~~The increase~~Investment income decreased by $1.1 and $2.6, respectively, in ~~interest expense in~~ Q3 ~~2020~~2021 and year-to-date ~~2020~~ ~~was~~2021 compared to the prior year due to ~~the higher level of outstanding debt following the issuance of new term notes~~lower market interest rates. Other income, net decreased by $1.9 in ~~the fourth quarter of~~Q3 2021 compared to the prior ~~year.~~year primarily due to lower income from unconsolidated affiliates. Year-to-date 2021 other income, net decreased by $1.3 compared to the prior year primarily due to lower income from unconsolidated affiliates and foreign exchange losses, partially offset by a $2.8 gain related to additional proceeds from the partial sale of an unconsolidated affiliate in 2018.

Business Segment Review

See Note 1113 to the condensed consolidated financial statements for additional information regarding our business segments.

Americas

Table of Contents


	Three Months Ended								Nine Months Ended									Three Months Ended								Nine Months Ended
Statement of Operations Data — Americas	November 22, 2019				November 23, 2018				November 22, 2019				November 23, 2018				Statement of Operations Data — Americas	November 27, 2020				November 22, 2019				November 27, 2020				November 22, 2019
Revenue	$	690.9	100.0	%	$	638.6	100.0	%	$	2,006.7	100.0	%	$	1,828.5	100.0	%	Revenue	$	416.4	100.0	%	$	690.9	100.0	%	$	1,381.5	100.0	%	$	2,006.7	100.0	%
Cost of sales	459.3		66.5		437.9		68.6		1,339.0		66.7		1,234.1		67.5		Cost of sales	290.4		69.7		459.3		66.5		950.8		68.8		1,339.0		66.7
Restructuring costs																	Restructuring costs	2.3		0.6		—		—		9.2		0.7		—		—
Gross profit	231.6		33.5		200.7		31.4		667.7		33.3		594.4		32.5		Gross profit	123.7		29.7		231.6		33.5		421.5		30.5		667.7		33.3
Operating expenses	156.9		22.7		148.7		23.3		470.3		23.5		435.5		23.8		Operating expenses	100.8		24.2		156.9		22.7		318.8		23.1		470.3		23.5
Goodwill impairment charge																	Goodwill impairment charge	—		—		—		—		—		—		—		—
Restructuring costs																	Restructuring costs	9.1		2.2		—		—		17.8		1.3		—		—
Operating income	$	74.7	10.8	%	$	52.0	8.1	%	$	197.4	9.8	%	$	158.9	8.7	%	Operating income	$	13.8	3.3	%	$	74.7	10.8	%	$	84.9	6.1	%	$	197.4	9.8	%


Reconciliation of Operating Income to Adjusted Operating Income — Americas	Three Months Ended								Nine Months Ended
	November 27, 2020				November 22, 2019				November 27, 2020				November 22, 2019
Operating income	$	13.8	3.3	%	$	74.7	10.8	%	$	84.9	6.1	%	$	197.4	9.8	%
Add: goodwill impairment charge	—		—		—		—		—		—		—		—
Add: restructuring costs	11.4		2.8		—		—		27.0		2.0		—		—
Adjusted operating income	$	25.2	6.1	%	$	74.7	10.8	%	$	111.9	8.1	%	$	197.4	9.8	%

Operating income in the Americas ~~increased~~declined by ~~$22.7 and $38.5, respectively,~~$60.9 in Q3 ~~2020~~ ~~and~~ ~~year-to-date 2020~~2021 compared to the prior year. The ~~comparisons were positively impacted~~Q3 2021 results included $11.4 of restructuring costs. The remaining decline was driven by ~~$8.4 related to a pension charge, net~~lower revenue, partially offset by cost reductions. Excluding the impact of ~~variable compensation effects~~the restructuring costs, adjusted operating income decreased by $49.5 in Q3 ~~2019. Adjusted for~~2021 compared to the ~~pension charge, operating~~prior year. Operating income ~~increased~~in year-to-date 2021 decreased by ~~$14.3 and $30.1, respectively, in~~ ~~Q3 2020~~ ~~and~~ ~~year-to-date 2020~~$112.5 compared to the prior year. The ~~increases were~~decrease was driven by ~~higher~~the same factors as the quarter. Excluding the impact of the restructuring costs, year-to-date 2021 adjusted operating income decreased by $85.5 compared to the prior year.

The Americas revenue represented 67.4% of consolidated revenue in Q3 2021. Q3 2021 revenue of $416.4 represented a decrease of $274.5 or 40% compared to the prior year. The decrease was driven by reduced industry demand due to the ongoing uncertainty related to the COVID-19 pandemic and ~~lower cost~~approximately $50 of delayed shipments as a result of the temporary operations shutdown during Q3 2021. Year-to-date 2021 revenue of $1,381.5 represented a decrease of $625.2 or 31% compared to year-to-date 2020. The decrease was driven by the same factors as the quarter.

Cost of sales ~~and operating expenses~~ as a percentage of revenue increased by 320 basis points in Q3 2021 compared to Q3 2020. The increase was driven by lower revenue, as well as approximately $11 of higher costs related to direct labor and logistics, of which approximately $3 was related to the ~~prior year.~~

~~The Americas~~temporary operations shutdown, partially offset by approximately $15 of lower overhead costs, of which approximately $7 was attributable to lower wage and benefit expenses related to workforce reductions and $9.8 of lower variable compensation expense. Year-to-date 2021 cost of sales as a percentage of revenue ~~represented 72.3% of consolidated revenue in~~ ~~Q3 2020~~. ~~Q3 2020~~ ~~revenue of $690.9 represented an increase of $52.3 or 8%~~increased by 210 basis points compared to the prior year. The increase was driven by ~~industry growth~~the lower revenue, as well as approximately $16 of higher costs related to direct labor and benefits from price list adjustments, and the current quarter benefited from favorable timing of shipments compared to the prior year, due in part to the timing of the Thanksgiving holiday (which fell in Q3 of the prior year compared to Q4 of the current year). After adjusting for a $0.7 impact of an acquisition and $0.5 of unfavorable currency translation effects, organic revenue growth in ~~Q3 2020~~ ~~was $52.1 or 8% compared to the prior year.~~

~~Year-to-date 2020~~ ~~revenue of $2,006.7 represented an increase of $178.2 or 10% compared to year-to-date 2019. The increase was driven~~logistics, partially offset by ~~industry growth, acquisitions and market share gains. After adjusting for a $43.6 impact of acquisitions and $2.2 of unfavorable currency translation effects,~~ ~~year-to-date 2020~~ ~~organic revenue growth was $136.8 or 7% compared to the prior year.~~

~~Cost of sales as a percentage of revenue decreased by 210 basis points in~~ ~~Q3 2020~~ ~~compared to~~ ~~Q3 2019, with 160 basis points of the improvement attributable to the pension charge in the prior year. The remaining decrease was driven by approximately $13 of~~ pricing benefits, approximately $8$27 of lower ~~commodity~~overhead costs, ~~and higher absorption~~ of ~~fixed costs, partially offset by unfavorable shifts in business mix.~~ ~~Year-to-date 2020~~ ~~cost of sales as a percentage of revenue decreased by 80 basis points compared to the prior year, with 60 basis points of the decrease~~which approximately $13 was attributable to ~~the pension charge. The remaining decrease was driven by approximately $36 of pricing benefits, approximately $12~~lower wage and benefit expenses related to workforce reductions and temporary salary reductions and $17.9 of lower ~~commodity costs and higher absorption of fixed costs, partially offset by unfavorable shifts in business mix.~~variable compensation expense.

Operating expenses in Q3 ~~2020~~ ~~increased~~2021 decreased by ~~$8.2 but declined by 60 basis points as a percentage of revenue~~$56.1 compared to the prior year. The ~~increase~~decrease was driven by ~~$4.4~~approximately $23 of ~~higher investments in product development, sales and marketing and $3.6 in higher~~lower discretionary spending, $19.9 of lower variable compensation ~~expense.~~ expense and approximately $9 of lower wage and benefit expenses related to workforce reductions. Year-to-date ~~2020~~2021 operating expenses ~~increased~~decreased by ~~$34.8 but declined by 30 basis points as a percentage of revenue~~$151.5 compared to the prior ~~year, which~~year. The decrease was driven by approximately $60 of lower discretionary spending, $38.2 of lower variable compensation expense and approximately $36 of lower wage and benefit expenses related to workforce reductions and temporary salary reductions. Operating expenses also included ~~a $7.5 gain~~$6.7 from gains on the sale of ~~property. The remaining increase was driven by $12.0 from acquisitions, $7.2~~land in year-to-date 2021.

We recorded restructuring costs of ~~higher investments~~$11.4 in ~~product development, sales~~Q3 2021 and ~~marketing and $3.3~~$27.0 in year-to-date 2021 related to workforce reduction actions taken as a result of ~~higher variable compensation expense.~~reduced demand due to the COVID-19 pandemic. See Note 14 to the condensed consolidated financial statements for further information.

Table of Contents

EMEA


	Three Months Ended								Nine Months Ended
Statement of Operations Data — EMEA	November 27, 2020				November 22, 2019				November 27, 2020				November 22, 2019
Revenue	$	143.3	100.0	%	$	168.4	100.0	%	$	368.7	100.0	%	$	483.9	100.0	%
Cost of sales	107.7		75.2		116.7		69.3		276.4		75.0		345.0		71.3
Restructuring costs	—		—		—		—		—		—		—		—
Gross profit	35.6		24.8		51.7		30.7		92.3		25.0		138.9		28.7
Operating expenses	39.3		27.4		45.4		27.0		106.5		28.8		137.3		28.4
Goodwill impairment charge	—		—		—		—		17.6		4.8		—		—
Restructuring costs	—		—		—		—		—		—		—		—
Operating income (loss)	$	(3.7)	(2.6)	%	$	6.3	3.7	%	$	(31.8)	(8.6)	%	$	1.6	0.3	%

Three Months Ended Nine Months Ended
Statement of Operations Data — EMEA November 22,
2019 November 23,
2018 November 22,
2019 November 23,
2018
Revenue $ 168.4
100.0 % $ 170.9
100.0 % $ 483.9
100.0 % $ 441.5
100.0 %
Cost of sales 116.7
69.3
124.5
72.8
345.0
71.3
321.9
72.9

Gross profit 51.7
30.7
46.4
27.2
138.9
28.7
119.6
27.1

Operating expenses 45.4
27.0
47.1
27.6
137.3
28.4
128.0
29.0

Operating income (loss) $ 6.3
3.7 % $ (0.7 ) (0.4 )% $ 1.6
0.3 % $ (8.4 ) (1.9 )%


Reconciliation of Operating Income (Loss) to Adjusted Operating Income (Loss) — EMEA	Three Months Ended								Nine Months Ended
	November 27, 2020				November 22, 2019				November 27, 2020				November 22, 2019
Operating income (loss)	$	(3.7)	(2.6)	%	$	6.3	3.7	%	$	(31.8)	(8.6)	%	$	1.6	0.3	%
Add: goodwill impairment charge	—		—		—		—		17.6		4.8		—		—
Add: restructuring costs	—		—		—		—		—		—		—		—
Adjusted operating income (loss)	$	(3.7)	(2.6)	%	$	6.3	3.7	%	$	(14.2)	(3.8)	%	$	1.6	0.3	%

~~Operating~~EMEA operating income declined by $10.0 in ~~EMEA in~~ Q3 ~~2020~~ was $6.3 compared to an operating loss of $0.7 in the prior year, which included $1.4 of initial effects of purchase accounting related to an acquisition. The improvement was driven by lower cost of sales and operating expenses as a percentage of revenue. Operating income in ~~year-to-date 2020~~ ~~was $1.6 compared to an operating loss of $8.4 in the prior year. The improvement was due to higher revenue and lower cost of sales and operating expenses as a percentage of revenue.~~

~~EMEA revenue represented 17.6% of consolidated revenue in~~ ~~Q3 2020~~. ~~Q3 2020~~ ~~revenue of $168.4 represented a decrease of $2.5 or 1%~~2021 compared to the prior year. The decrease was driven by ~~$7.1 of unfavorable currency translation effects and~~ lower revenue, ~~in France,~~ partially offset by ~~growth~~lower operating expenses. Operating income declined by $33.4 in year-to-date 2021 compared to the prior year. The decline was driven by lower revenue and a $17.6 goodwill impairment charge related to the Orangebox U.K. reporting unit in Q1 2021, partially offset by lower operating expenses. Excluding the impact of the goodwill impairment charge, the year-to-date 2021 adjusted operating loss of $14.2 represented a decline of $15.8 compared to the prior year.

EMEA revenue represented 23.2% of consolidated revenue in Q3 2021. Q3 2021 revenue of $143.3 represented a decrease of $25.1 or 15% compared to the prior year. The decrease was broad-based across most markets due to reduced demand from the COVID-19 pandemic and approximately $10 of delayed shipments as a result of the temporary operations shutdown during Q3 2021, partially offset by approximately $17 of shipments for a project in the ~~United Kingdom and~~education sector that was in the order backlog at the beginning of the quarter. Year-to-date 2021 revenue ~~from an acquisition. After adjusting for~~declined by $115.2 or 24% compared to the prior year. The decrease was driven by the same factors as the quarter.

Cost of sales as a ~~$5.0 impact~~percentage of ~~an acquisition and $7.1 of unfavorable currency translation effects, EMEA revenue was flat on an organic basis. For~~ ~~year-to-date 2020~~, revenue increased by ~~$42.4 or 10%~~590 basis points to 75.2% of revenue in Q3 2021 compared to the prior year. The increase was driven by lower revenue ~~from an acquisition~~ and ~~growth across most markets, partially offset by $24.6~~unfavorable shifts in business mix (which included a higher mix of ~~unfavorable currency translation effects. After adjusting for a $45.0impact of an acquisition, $24.6of unfavorable currency translation effects and a $0.9 unfavorable impact of a divestiture, year-to-date 2020 organic revenue growth was $22.9 or 5% compared to the prior year.~~

project business). Cost of sales as a percentage of revenue ~~decreased 350~~increased by 370 basis points to ~~69.3%~~75.0% of revenue in ~~Q3 2020~~year-to-date 2021 compared to the prior year. The ~~improvement~~increase was driven by ~~approximately $2 of pricing benefits, approximately $2 of benefits associated with cost reduction efforts~~lower revenue and ~~favorable~~unfavorable shifts in business ~~mix. Cost~~mix, partially offset by approximately $5 of ~~sales as a percentage of revenue~~lower overhead costs.

Operating expenses in Q3 2021 decreased ~~160 basis points to 71.3% of revenue in~~ ~~year-to-date 2020~~by $6.1 compared to the prior year. The decrease was driven by approximately $7$4 from lower discretionary spending, $2.5 of ~~pricing benefits~~lower variable compensation expense and aapproximately $2 of lower ~~cost~~wage and benefit expenses, partially offset by $2.8 of ~~sales as a percentage of revenue at the acquired company compared to the rest of the segment.~~

currency translation effects. Operating expenses in ~~Q3 2020~~for year-to-date 2021 decreased by ~~$1.7, or 60 basis points as a percentage of revenue~~$30.8 compared to the prior year. The decrease ~~in operating expenses in~~ ~~Q3 2020~~was driven by ~~$1.6~~approximately $20 from lower discretionary spending, approximately $8 of ~~favorable currency translation effects. Operating~~lower wage and benefit expenses ~~for~~ ~~year-to-date 2020~~ ~~increased by $9.3 but decreased by 60 basis points as a percentage~~primarily related to temporary work hour reductions and $5.4 of ~~revenue compared to the prior year. The increase was driven by $16.6 from the acquisition, partially offset by $5.9~~lower variable compensation expense.

Table of ~~favorable currency translation effects.~~Contents

Other

The Other category in 2021 includes Asia Pacific ~~Designtex~~ and ~~PolyVision.~~Designtex. 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. In 2020, the Other category also included PolyVision which was sold during Q4 2020. 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.


	Three Months Ended								Nine Months Ended
Statement of Operations Data — Other	November 27, 2020				November 22, 2019				August 28, 2020				November 22, 2019
Revenue	$	57.8	100.0	%	$	95.9	100.0	%	$	168.9	100.0	%	$	286.9	100.0	%
Cost of sales	39.2		67.8		63.1		65.8		112.5		66.6		185.5		64.7
Restructuring costs	—		—		—		—		—		—		—		—
Gross profit	18.6		32.2		32.8		34.2		56.4		33.4		101.4		35.3
Operating expenses	20.8		36.0		29.5		30.8		59.1		35.0		86.9		30.2
Goodwill impairment charge	—		—		—		—		—		—		—		—
Restructuring costs	—		—		—		—		—		—		—		—
Operating income (loss)	$	(2.2)	(3.8)	%	$	3.3	3.4	%	$	(2.7)	(1.6)	%	$	14.5	5.1	%

Three Months Ended Nine Months Ended
Statement of Operations Data — Other November 22,
2019 November 23,
2018 November 22,
2019 November 23,
2018
Revenue $ 95.9
100.0 % $ 91.5
100.0 % $ 286.9
100.0 % $ 260.8
100.0 %
Cost of sales 63.1
65.8
60.3
65.9
185.5
64.7
170.0
65.2

Gross profit 32.8
34.2
31.2
34.1
101.4
35.3
90.8
34.8

Operating expenses 29.5
30.8
27.0
29.5
86.9
30.2
80.2
30.7

Operating income $ 3.3
3.4 % $ 4.2
4.6 % $ 14.5
5.1 % $ 10.6
4.1 %


Reconciliation of Operating Income (Loss) to Adjusted Operating Income (Loss) — Other	Three Months Ended								Nine Months Ended
	November 27, 2020				November 22, 2019				November 27, 2020				November 22, 2019
Operating income (loss)	$	(2.2)	(3.8)	%	$	3.3	3.4	%	$	(2.7)	(1.6)	%	$	14.5	5.1	%
Add: goodwill impairment charge	—		—		—		—		—		—		—		—
Add: restructuring costs	—		—		—		—		—		—		—		—
Adjusted operating income (loss)	$	(2.2)	(3.8)	%	$	3.3	3.4	%	$	(2.7)	(1.6)	%	$	14.5	5.1	%

~~Operating~~The Other category posted an operating loss of $2.2 in Q3 2021 compared to operating income of $3.3 in the prior year, which included $1.2 from PolyVision. The remaining decline was driven by lower revenue, partially offset by lower operating expenses. Year-to-date 2021 operating results decreased by $17.2 compared to the prior year. The prior year results included $5.6 from PolyVision and the remaining decrease was driven by the same factors as the quarter.

Revenue in the Other category represented 9.4% of consolidated revenue in Q3 ~~2020~~ ~~decreased by $0.9~~2021. Q3 2021 revenue of $57.8 represented a decrease of $38.1 or 40% compared to the prior year. The decrease was driven by ~~higher operating expenses across all three businesses.~~ ~~Year-to-date 2020~~ ~~operating income increased by $3.9 compared to the prior year, driven primarily by higher~~lower revenue in both Asia Pacific and ~~Designtex.~~

~~Revenue in~~Designtex as a result of reduced demand due to the ~~Other category represented 10.1%~~COVID-19 pandemic and a $14.9 impact from the PolyVision divestiture. After adjusting for the $14.9 impact of ~~consolidated~~the divestiture and $0.6 of currency translation effects, the organic revenue in ~~Q3 2020~~. ~~Q3 2020~~ ~~revenue of $95.9 represented an increase of $4.4~~decline was $23.8 or 5%29% compared to the prior year. ~~The increase was driven by strength in Asia Pacific (led by India and Australia, partially offset by China) and Designtex.~~ Year-to-date ~~2020~~2021 revenue of ~~$286.9~~$168.9 represented ~~an increase~~a decrease of ~~$26.1~~$118.0 or ~~10%~~41%, compared to the prior year. The ~~increase~~decline was driven ~~primarily~~ by ~~strength~~the same factors as the quarter. After adjusting for the $48.2 impact of the divestiture and $1.8 of currency translation effects, the organic revenue decline was $68.0 or 29%, compared to the prior year.

Operating expenses in ~~Asia Pacific (led~~Q3 2021 decreased by ~~India)~~$8.7 compared to the prior year. The decrease was driven by approximately $4 from lower discretionary spending and ~~Designtex.~~a $2.9 impact from the PolyVision divestiture. Operating expenses for year-to-date 2021 decreased by $27.8 compared to the prior year, driven by approximately $10 of lower discretionary spending, a $8.8 impact from the PolyVision divestiture and approximately $6 of lower wage and benefit expenses related to temporary salary reductions.

Corporate

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.

Table of Contents


	Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
Statement of Operations Data — Corporate	November 22, 2019		November 23, 2018		November 22, 2019		November 23, 2018		Statement of Operations Data — Corporate	November 27, 2020		November 22, 2019			November 27, 2020	November 22, 2019
Operating expenses	$	9.2	$	10.1	$	25.5	$	24.5	Operating expenses	$	7.9	$	9.2			$	14.1	$	25.5

The decrease in operating expenses in Q3 ~~2020~~2021 compared to the prior year was ~~due primarily to COLI income in the current year compared to COLI losses in the prior year, partially offset~~driven by ~~higher deferred~~$2.0 of lower variable compensation ~~expense. For year-to-date 2020, operating expenses increased compared to the prior year, due primarily to higher~~expense and $1.2 of lower deferred compensation expense, partially offset by $1.8 of lower COLI income. The decrease for year-to-date 2021 was driven by $4.2 of higher COLI ~~income.~~income, $3.0 of lower variable compensation expense, lower wage and benefit expenses related to temporary salary reductions and lower discretionary spending, partially offset by an $1.2 increase in deferred compensation expense.

Liquidity and Capital Resources

~~Based on current business conditions, we target a range of $75 to $175 in cash~~Cash and cash equivalents ~~and short-term investments~~are used 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. During normal business conditions, we target a range of $75 to $175 in cash and cash equivalents to fund operating requirements. In addition, we may carry additional liquidity for potential investments in strategic initiatives and as a cushion against economic volatility, and from time to time, we may allow our cash and cash equivalents ~~and short-term investments~~ to temporarily fall below our targeted range to fund acquisitions and other growth initiatives.


Liquidity Sources	November 22, 2019		February 22, 2019		Liquidity Sources	November 27, 2020		February 28, 2020
Cash and cash equivalents	$	367.7	$	261.3	Cash and cash equivalents	$	484.4	$	541.0

Company-owned life insurance	159.9		156.1		Company-owned life insurance	167.7		160.0
Availability under credit facilities	228.6		227.9		Availability under credit facilities	267.9		273.3
Total liquidity	$	756.2	$	645.3
Total liquidity sources available					Total liquidity sources available	$	920.0	$	974.3

As of November ~~22, 2019~~,27, 2020, we held a total of ~~$367.7~~$484.4 in cash and cash equivalents. Of that total, ~~approximately 85%~~88% was located in the U.S. and the remaining ~~15%~~12% was located ~~outside of the U.S.,~~ primarily in China ~~the U.K.~~(including Hong Kong), Mexico, ~~Hong Kong~~India, Malaysia and ~~Malaysia.~~the U.K.

COLI investments are 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 benefit obligations. However, COLI can also be used as a source of liquidity. We believe the financial strength of the issuing insurance companies associated with our COLI policies is sufficient to meet their obligations.

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 months ended November 27, 2020 and November 22, ~~2019 and November 23, 2018:~~2019:


	Nine Months Ended
Cash Flow Data	November 27, 2020		November 22, 2019
Net cash provided by (used in):
Operating activities	$	37.2	$	218.8
Investing activities	(17.8)		(46.1)
Financing activities	(76.6)		(64.1)
Effect of exchange rate changes on cash and cash equivalents	1.8		(0.8)
Net increase (decrease) in cash, cash equivalents and restricted cash	(55.4)		107.8
Cash, cash equivalents and restricted cash, beginning of period	547.1		264.8
Cash, cash equivalents and restricted cash, end of period	$	491.7	$	372.6

Nine Months Ended
Cash Flow Data November 22,
2019 November 23,
2018
Net cash provided by (used in):

Operating activities $ 218.8
$ 46.1

Investing activities (46.1 ) (247.5 )
Financing activities (64.1 ) (26.5 )
Effect of exchange rate changes on cash and cash equivalents (0.8 ) (3.3 )
Net increase (decrease) in cash, cash equivalents and restricted cash 107.8
(231.2 )
Cash, cash equivalents and restricted cash, beginning of period 264.8
285.6

Cash, cash equivalents and restricted cash, end of period $ 372.6
$ 54.4

Table of Contents

Cash provided by operating activities


	Nine Months Ended
Cash Flow Data — Operating Activities	November 27, 2020		November 22, 2019
Net income	$	19.5	$	133.2
Depreciation and amortization	64.1		62.9
Goodwill impairment charge	17.6		—
Restructuring costs	27.0		—
Changes in accounts receivable, inventories and accounts payable	41.8		(44.4)
Employee compensation liabilities	(130.5)		(8.8)
Employee benefit obligations	(25.2)		(5.7)
Customer deposits	30.4		6.2
Changes in other operating assets and liabilities	(7.5)		75.4
Net cash provided by operating activities	$	37.2	$	218.8

Nine Months Ended
Cash Flow Data — Operating Activities November 22,
2019 November 23,
2018
Net income $ 133.2
$ 103.4

Depreciation and amortization 62.9
60.5

Non-cash stock compensation 14.3
15.4

Other 9.2
(17.0 )
Changes in accounts receivable, inventories and accounts payable (44.4 ) (106.4 )
Changes in employee compensation liabilities (8.8 ) (13.5 )
Employee benefit obligations (5.7 ) (3.7 )
Changes in other operating assets and liabilities 58.1
7.4

Net cash provided by operating activities $ 218.8
$ 46.1

~~Cash provided~~In year-to-date 2021, we generated cash from working capital, primarily driven by ~~operating activities~~collections on accounts receivable. We also offered deposit incentives to our dealers which drove a significant increase in customer deposits in Q1 and Q2 2021, which moderated in Q3 2021 as the incentives were discontinued. In year-to-date 2020, ~~as compared to year-to-date 2019 was~~we utilized cash in working capital, primarily driven by strong ~~earnings~~revenue growth ~~a decrease~~during that period. Annual payments related to accrued variable compensation and retirement plan contributions, typically made in Q1 each year, totaled $148.0 in year-to-date 2021 compared to $114.3 in year-to-date 2020. In year-to-date 2021, we paid $25.5 related to severance and other separation-related benefits for workforce reductions in our Americas segment which is reflected in the ~~use of working capital and timing related to estimated income tax payments and~~change in employee compensation liabilities. Changes in other operating assets and ~~liabilities.~~liabilities in year-to-date 2021 reflects a net $31.2 increase in income taxes receivable.

Cash used in investing activities


	Nine Months Ended
Cash Flow Data — Investing Activities	November 27, 2020		November 22, 2019
Capital expenditures	$	(32.1)	$	(49.1)
Proceeds from disposal of fixed assets	7.3		1.0





Other	7.0		2.0
Net cash used in investing activities	$	(17.8)	$	(46.1)

Nine Months Ended
Cash Flow Data — Investing Activities November 22,
2019 November 23,
2018
Capital expenditures $ (49.1 ) $ (56.8 )
Proceeds from disposal of fixed assets 1.0
20.3

Proceeds from COLI policies 1.2
21.5

Acquisitions, net of cash acquired —
(226.2 )
Other 0.8
(6.3 )
Net cash used in investing activities $ (46.1 ) $ (247.5 )

InCapital expenditures in year-to-date ~~2020, capital expenditures~~2021 were lower compared to the prior year due to our continued focus on reduced spending and were primarily related to investments in manufacturing operations, product development and customer-facing ~~facilities and product development.~~

~~Proceeds from our COLI policies were lower~~facilities. We sold land for proceeds of $7.1 in year-to-date ~~2020 as compared to~~2021. Other investing activities in year-to-date ~~2019 due to lower policy maturities.~~

2021 included $3.3 of additional proceeds from the partial sale of an unconsolidated affiliate in 2018.

Cash used in financing activities


	Nine Months Ended
Cash Flow Data — Financing Activities	November 27, 2020		November 22, 2019
Dividends paid	$	(31.8)	$	(51.9)
Common stock repurchases	(42.7)		(8.7)
Borrowings on lines of credit	250.0		—
Repayments on lines of credit	(250.0)		—
Other	(2.1)		(3.5)
Net cash used in financing activities	$	(76.6)	$	(64.1)

Nine Months Ended
Cash Flow Data — Financing Activities November 22,
2019 November 23,
2018
Dividends paid $ (51.9 ) $ (48.3 )
Common stock repurchases (8.7 ) (4.1 )
Net borrowings and repayments of debt (2.0 ) 25.4

Other (1.5 ) 0.5

Net cash used in financing activities $ (64.1 ) $ (26.5 )

We paid dividends of $0.07, $0.10 and $0.10 per common share in Q1 2021, Q2 2021 and Q3 2021, respectively, and $0.145 per common share in each of Q1 2020, Q2 2020 and Q3 ~~2020~~2020.

During year-to-date 2021, we borrowed and ~~$0.135 per common share in each~~subsequently repaid $250.0 on our global credit facility.

Table of ~~Q1 2019, Q2 2019 and Q3 2019.~~Contents

In year-to-date ~~2020,~~2021, we repurchased ~~524,379~~3,288,795 shares of Class A common stock, ~~274,379~~288,795 of which were made to satisfy participants' tax withholding obligations upon the issuance of shares under equity awards, pursuant to the terms of our Incentive Compensation Plan. In year-to-date ~~2019,~~2020, we ~~made~~repurchased 524,379 shares of Class A common stock, ~~repurchases of 275,408 shares, 265,847~~279,379 of which were made to satisfy participants' tax withholding obligations upon the issuance of shares under equity ~~awards.~~awards, pursuant to the terms of our Incentive Compensation Plan.

As of November ~~22, 2019,~~27, 2020, we had ~~$95.0~~$56.4 of remaining availability under the $150 share repurchase program approved by our Board of Directors in 2016.

Off-Balance Sheet Arrangements

During Q3 ~~2020~~,2021, no material change in our off-balance sheet arrangements occurred.

Contractual Obligations

During year-to-date 2021, ~~Q3 2020~~we borrowed and subsequently repaid $250.0 on our global credit facility.~~, no material change in our contractual obligations occurred.~~See Liquidity Facilities for more information.

Liquidity Facilities

Our total liquidity facilities as of November ~~22, 2019~~27, 2020 were:


Liquidity Facilities	November 27, 2020
Global committed bank facility	$	250.0

Various uncommitted lines	20.1
Total credit lines available	270.1
Less: Other guarantees	(2.2)
Available capacity	$	267.9

Liquidity Facilities November 22,
2019
Global committed bank facility $ 200.0

Various uncommitted lines 28.6

Total credit lines available 228.6

Less: Borrowings outstanding —

Available capacity $ 228.6

We have a ~~$200~~$250.0 global committed five-year bank facility ~~which expires~~ in ~~2022.~~effect through 2025. As of November ~~22, 2019,~~27, 2020, there were no borrowings outstanding under the ~~facility,~~facility and $2.2 of guarantees reducing our ~~availability was not limited, and~~availability. As of November 27, 2020, we were in compliance with all covenants under the facility. ~~Future availability under the facility may be reduced related to compliance with applicable covenants.~~

~~The~~Our various uncommitted lines may be changed or canceled by the banks at any time. There were no borrowings outstanding under the uncommitted facilities as of November ~~22, 2019.~~27, 2020.

In addition, we have credit agreements totaling ~~$45.6~~$37.3 which can be utilized to support letters of credit, bank guarantees or foreign exchange contracts. Letters of credit and bank guarantees of ~~$11.9~~$12.4 were outstanding under these facilities as of November ~~22, 2019.~~27, 2020. There were no draws on our ~~standby~~ letters of credit during year-to-date ~~2020~~2021 or year-to-date ~~2019.~~2020.

Total consolidated debt as of November ~~22, 2019~~27, 2020 was ~~$484.1.~~$482.8. Our debt primarily consists of ~~$443.1~~$443.8 in term notes due in 2029 with an effective interest rate of 5.6%. In addition, we have a term loan with a balance as of November ~~22, 2019~~27, 2020 of ~~$40.8.~~$38.1. This term loan has a floating interest rate based on 30-day LIBOR plus 1.20% and is due in 2024. The term notes are unsecured, and the term loan is secured by 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~~At November 27, 2020, our total liquidity position, comprised of cash, ~~and~~ cash equivalents and the cash surrender value of COLI, aggregated to $652.1. Our liquidity position, 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. ~~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 operating expenses, non-cancelable operating lease obligations, capital expenditures, variable compensation and retirement plan contributions, dividend payments and debt service obligations.

We ~~expect~~have flexibility over some of these uses of cash, including capital expenditures and discretionary operating expenses, to ~~total approximately $70 to $80 in 2020~~preserve our liquidity position, and we expect our capital expenditures in 2021 will not exceed $50 compared to ~~$81~~$73.4 in ~~2019. This amount includes investments~~2020.

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During Q1 2021, in response to the COVID-19 pandemic and related economic uncertainty, we took a number of actions to protect our liquidity, including borrowing under our global credit facility, temporarily reducing pay for most of our salaried workforce, eliminating travel and events, overtime, temporary labor and annual merit increases, and scaling back project spending. During Q2 2021, as we were able to resume our manufacturing ~~operations, product development~~activities globally and our ~~customer-facing facilities.~~revenue improved, we repaid all outstanding borrowings under our global credit facility, and by Q3 2021, we restored most of our global salaried workforce to full pay. In Q2 and Q3 2021, we implemented workforce reductions in our Americas segment, and we expect to maintain the majority of our other cost reduction efforts during the remainder of 2021.

On December 17, ~~2019,~~2020, we announced a quarterly dividend on our common stock of ~~$0.145~~$0.10 per share, or approximately ~~$17.0,~~$12, to be paid in Q4 ~~2020.~~2021. Future dividends will be subject to approval by our Board of Directors.

Critical Accounting Estimates

During Q3 ~~2020~~,2021, 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, pandemics and other Force Majeure events; the COVID-19 pandemic and the actions taken by various governments and third parties to combat the pandemic; changes in the legal and regulatory environment; changes in raw material, commodity and other input 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:~~

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 ~~22, 2019~~27, 2020 is the same as disclosed in our Annual Report on Form 10-K for the year ended February ~~22, 2019~~.28, 2020. 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 ~~2020~~,2021, no material change in foreign exchange risk occurred.

Interest Rate Risk

During Q3 ~~2020~~,2021, no material change in interest rate risk occurred.

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Commodity Price Risk

During Q3 ~~2020~~,2021, no material change in commodity price risk occurred.

Fixed Income and Equity Price Risk

During Q3 ~~2020~~,2021, no material change in fixed income and equity price risk occurred.

Item 4.Controls and Procedures:


~~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”~~"Exchange Act")), as of November ~~22, 2019~~.27, 2020. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of November ~~22, 2019~~,27, 2020, 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 ~~13a15(f)~~13a-15(f) and 15d-15(f) under the Exchange Act) during our third fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION


~~Item 1A.~~	~~Risk Factors~~

Item 1A. Risk Factors:

For a more detailed explanation of the risks affecting our business, please refer to the Risk Factors section in our Form 10-K for the fiscal year ended February ~~22, 2019.~~28, 2020. There ~~has~~have not been aany material ~~change~~changes to the risk factors set forth in our Form 10-K for the fiscal year ended February ~~22, 2019.~~28, 2020, except for the following risk factors which supplement and update the risk factors previously disclosed and should be considered in conjunction with the Risk Factors section in our Form 10-K for the fiscal year ended February 28, 2020:

The COVID-19 pandemic has had, and is expected to continue to have, a significant and adverse effect on our business.

The COVID-19 pandemic and the actions taken by various governments and third parties to combat the spread of COVID-19 (including, in some cases, mandatory quarantines and other suspensions of non-essential business operations) caused significant disruptions in our manufacturing and distribution operations and supply chains during Q1 2021 and required many office workers globally to work from home on a temporary basis, which has had a negative impact on global demand for our industry. In response to these developments, we took a number of actions to reduce our spending, including temporary and permanent layoffs, temporary pay reductions and reduced spending on product development and strategic initiatives. These actions have had and may continue to have a negative impact on our employee retention and our growth strategies in the future.

The economic impacts of the COVID-19 pandemic have had a negative impact on many of our customers, particularly those in the retail, hospitality, automotive, aviation, energy and flexible real estate sectors, and thus has negatively affected our revenues and may increase credit risk for us and our dealers. In addition, the actions being taken by governments and third parties to prevent the spread of COVID-19 have resulted in increased working from home for an extended period of time, which has been impacting and may continue to impact overall demand for office furniture and our revenue.

The severity of these various impacts on our business will depend in part on the extent and duration of government quarantine or stay-at-home orders, the timing of when companies have their employees return to the office, the availability of government benefits and other stimulus efforts to mitigate the effects of the COVID-19 pandemic and the speed of the recovery of economic conditions globally and locally, all of which are highly uncertain and out of our control. The impacts of COVID-19 are far-reaching, and the duration and intensity of the impact on our business, our industry and the global economy are not yet fully known.

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~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds:~~

We rely on the integrity and security of our information technology systems, and our business could be materially adversely impacted by extended disruptions, significant security breaches or other compromises of these systems.

We rely on information technology systems to operate and manage our business and to process, maintain and safeguard information essential to our business as well as information relating to our customers, dealers, suppliers and employees. These systems are vulnerable to events beyond our reasonable control, including cyberattacks and security breaches, telecommunication and internet failures, natural disasters and power loss. Such events could result in operational slowdowns, shutdowns or other difficulties; loss of revenues or market share; compromise or loss of sensitive or proprietary information; destruction or corruption of data; costs of remediation, repair or recovery; breaches of obligations to third parties under privacy laws or contracts; or damage to our reputation or customer relationships; each of which, depending on the extent or duration of the event, could materially adversely impact our business, operating results or financial condition.

In October 2020, we detected a cyberattack that resulted in unauthorized access to our information technology systems. To protect our systems during that cyberattack, we temporarily shut down our global operations, which resulted in a delay of approximately $60 in revenue from Q3 2021 to Q4 2021; however, we do not believe this incident had or will have a materially adverse impact on our business, operating results or financial condition or the effectiveness of our internal controls.

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 2021:


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)
8/29/2020 - 10/2/2020	3,241	$	12.34	—	$	56.4
10/3/2020 - 10/30/2020	38,275	$	10.70	—	$	56.4
10/31/2020 - 11/27/2020	2,685	$	10.44	—	$	56.4
Total	44,201	(2)		—

(1)~~Q3 2020~~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.

(2):All of these shares were repurchased to satisfy participants’ tax withholding obligations upon the issuance of shares under equity awards, pursuant to the terms of our Incentive Compensation Plan.

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)
8/24/2019 - 9/27/2019 142,575
$ 15.41
142,575
$ 95.0
9/28/2019 - 10/25/2019 34,277
$ 18.04
—
$ 95.0
10/26/2019 - 11/22/2019 271
$ 17.95
—
$ 95.0
Total 177,123
(2) 142,575

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Item 6.Exhibits:


~~(1)~~Exhibit No.			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. On June 25, 2019, we entered into a stock repurchase agreement with an independent third-party broker under which the broker is authorized to repurchase up to 1,500,000 shares of our common stock on our behalf during the period from June 26, 2019 through December 26, 2019, subject to certain price, market and volume constraints specified in the agreement. The agreement was established in accordance with Rule 10b5-1 of the Exchange Act. Shares purchased under the agreement are part of our share repurchase program approved in January 2016.Description


~~(2)~~	~~34,548 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:~~



~~Exhibit~~ ~~No.~~		~~Description~~

~~10.1~~31.1	~~Summary of Steelcase Benefit Plan for Outside Directors~~
~~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.SCH~~101.INS		Inline XBRL ~~Taxonomy Extension~~Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Schema Document
101.CAL		Inline XBRL ~~Taxonomy Extension~~ Calculation Linkbase Document
101.LAB		Inline XBRL ~~Taxonomy Extension Label Linkbase~~Labels LInkbase Document
101.PRE		Inline XBRL ~~Taxonomy Extension~~ Presentation Linkbase Document
101.DEF		Inline XBRL ~~Taxonomy Extension~~ Definition Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

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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/ ~~David C. Sylvester~~Robin L. Zondervan
			~~David C. Sylvester~~Robin L. Zondervan ~~Senior Vice President,~~Corporate Controller and Chief ~~Financial~~Accounting Officer (Duly Authorized Officer and Principal ~~Financial~~Accounting Officer)

Date: December ~~19, 2019~~

22, 2020



	Customer Deposits
Balance as of February 22, 2019	$	20.0
Increases due to deposits received	23.3
Revenue recognized	(17.3		)
Balance as of November 22, 2019	$	26.0



	November 22, 2019
Fair Value of Financial Instruments	Level 1		Level 2			Level 3		Total
Assets:
Cash and cash equivalents	$	367.7	$	—		$	—	$	367.7
Restricted cash	4.9		—			—		4.9
Foreign exchange forward contracts	—		1.3			—		1.3
Auction rate securities	—		—			2.0		2.0
	$	372.6	$	1.3		$	2.0	$	375.9
Liabilities:
Foreign exchange forward contracts	$	—	$	(0.3	)	$	—	$	(0.3	)
	$	—	$	(0.3	)	$	—	$	(0.3	)



	February 22, 2019
Fair Value of Financial Instruments	Level 1		Level 2			Level 3		Total
Assets:
Cash and cash equivalents	$	261.3	$	—		$	—	$	261.3
Restricted cash	3.5		—			—		3.5
Foreign exchange forward contracts	—		3.9			—		3.9
Auction rate securities	—		—			3.9		3.9
	$	264.8	$	3.9		$	3.9	$	272.6
Liabilities:
Foreign exchange forward contracts	$	—	$	(0.5	)	$	—	$	(0.5	)
	$	—	$	(0.5	)	$	—	$	(0.5	)



Maximum Number of Shares That May Be Issued Under Nonvested Units	Total	Weighted-Average Grant Date Fair Value per Unit
Nonvested as of February 22, 2019	676,800	$	18.50
Granted	237,280	16.21
Nonvested as of November 22, 2019	914,080	$	18.93



Fiscal Year Ending in February	Minimum annual rental commitments		Minimum annual sublease rental income			Minimum annual rental commitments, net
2020	$	46.0	$	(0.6	)	$	45.4
2021	41.7		(0.3		)	41.4
2022	40.5		(0.2		)	40.3
2023	36.5		(0.2		)	36.3
2024	28.0		(0.2		)	27.8
Thereafter	72.2		(0.6		)	71.6
	$	264.9	$	(2.1	)	$	262.8



Other Intangible Assets	Weighted Average Useful Life (Years)	Fair Value
Other Intangible Assets	Weighted Average Useful Life (Years)	Fair Value
Dealer relationships	10.9	$	23.0
Trademark	9.0	13.2
Know-how/designs	9.0	5.0
Other	0.2	1.0
		$	42.2



Fiscal Year Ending in February	Amount
2020	$	4.2
2021	4.1
2022	4.1
2023	4.1
2024	4.1
	$	20.6