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Table of Contents

 
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 August 23, 2019
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.
(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)
(616247-2710
(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 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”, “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 September 17, 2019, Steelcase Inc. had 88,820,592 shares of Class A Common Stock and 28,290,960 shares of Class B Common Stock outstanding.
 


Table of Contents

STEELCASE INC.
FORM 10-Q


FOR THE QUARTERLY PERIOD ENDED August 23, 2019

INDEX

 
 
Page No. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.
Financial Statements:

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

 
Three Months Ended
Six Months Ended
 
August 23,
2019
August 24,
2018
August 23,
2019
August 24,
2018
Revenue
$
998.0

 
$
875.8

 
$
1,822.3

 
$
1,629.8

 
Cost of sales
664.5

 
587.2

 
1,230.4

 
1,103.3

 
Gross profit
333.5

 
288.6

 
591.9

 
526.5

 
Operating expenses
248.2

 
220.7

 
479.0

 
435.3

 
Operating income
85.3

 
67.9

 
112.9

 
91.2

 
Interest expense
(6.7
)
 
(4.9
)
 
(13.4
)
 
(9.3
)
 
Investment income
1.5

 
0.5

 
2.5

 
1.5

 
Other income, net
2.0

 
3.7

 
4.2

 
7.0

 
Income before income tax expense
82.1

 
67.2

 
106.2

 
90.4

 
Income tax expense
21.6

 
18.1

 
27.9

 
24.3

 
Net income
$
60.5

 
$
49.1

 
$
78.3

 
$
66.1

 
Earnings per share:
 

 
 

 
 

 
 

 
Basic
$
0.50

 
$
0.41

 
$
0.65

 
$
0.56

 
Diluted
$
0.50

 
$
0.41

 
$
0.65

 
$
0.56

 
Dividends declared and paid per common share
$
0.1450

 
$
0.1350

 
$
0.2900

 
$
0.2700

 
    

See accompanying notes to the condensed consolidated financial statements.

1

Table of Contents

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

 
Three Months Ended
Six Months Ended
 
August 23,
2019
August 24,
2018
August 23,
2019
August 24,
2018
Net income
$
60.5

 
$
49.1

 
$
78.3

 
$
66.1

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

 
(0.1
)
 
0.3

 
Pension and other post-retirement liability adjustments
(0.3
)
 
(0.8
)
 
(0.5
)
 
(1.6
)
 
Derivative amortization
0.2

 

 
0.4

 

 
Foreign currency translation adjustments
(6.4
)
 
(6.4
)
 
(14.3
)
 
(18.6
)
 
Total other comprehensive income (loss), net
(6.7
)
 
(7.0
)
 
(14.5
)
 
(19.9
)
 
Comprehensive income
$
53.8

 
$
42.1

 
$
63.8

 
$
46.2

 

See accompanying notes to the condensed consolidated financial statements.


2

Table of Contents

STEELCASE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
 
(Unaudited)
 
 
August 23,
2019
February 22,
2019
ASSETS
 
Current assets:
 

 
 

 
Cash and cash equivalents
$
229.1

 
$
261.3

 
Accounts receivable, net of allowances of $10.0 and $8.7
467.3

 
390.3

 
Inventories
243.1

 
224.8

 
Prepaid expenses
27.5

 
19.5

 
Other current assets
46.3

 
52.7

 
Total current assets
1,013.3

 
948.6

 
Property, plant and equipment, net of accumulated depreciation of $980.9 and $1,009.3
447.2

 
455.5

 
Company-owned life insurance ("COLI")
156.2

 
156.1

 
Deferred income taxes
130.5

 
135.8

 
Goodwill
239.5

 
240.8

 
Other intangible assets, net of accumulated amortization of $61.3 and $55.8
111.0

 
119.3

 
Investments in unconsolidated affiliates
53.3

 
56.9

 
Right-of-use operating lease assets
215.6

 

 
Other assets
28.4

 
29.4

 
Total assets
$
2,395.0

 
$
2,142.4

 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
Current liabilities:
 

 
 

 
Accounts payable
$
277.0

 
$
241.2

 
Short-term borrowings and current portion of long-term debt
3.1

 
4.1

 
Current operating lease obligations
36.3

 

 
Accrued expenses:
 

 
 

 
Employee compensation
124.0

 
168.1

 
Employee benefit plan obligations
30.2

 
37.1

 
Accrued promotions
35.3

 
27.7

 
Customer deposits
27.1

 
20.0

 
Product warranties
13.9

 
16.4

 
Income taxes payable
16.4

 
3.5

 
Other
81.2

 
77.1

 
Total current liabilities
644.5

 
595.2

 
Long-term liabilities:
 

 
 

 
Long-term debt less current maturities
481.9

 
482.9

 
Employee benefit plan obligations
132.6

 
141.6

 
Long-term operating lease obligations
193.1

 

 
Other long-term liabilities
53.7

 
72.9

 
Total long-term liabilities
861.3

 
697.4

 
Total liabilities
1,505.8

 
1,292.6

 
Shareholders’ equity:
 

 
 

 
Additional paid-in capital
26.5

 
16.4

 
Accumulated other comprehensive loss
(61.8
)
 
(47.3
)
 
Retained earnings
924.5

 
880.7

 
Total shareholders’ equity
889.2

 
849.8

 
Total liabilities and shareholders’ equity
$
2,395.0

 
$
2,142.4

 
See accompanying notes to the condensed consolidated financial statements.

3

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
Six Months Ended
 
August 23,
2019
August 24,
2018
August 23,
2019
August 24,
2018
Changes in common shares outstanding:
 
 
 
 
 
 
 
 
Common shares outstanding, beginning of period
117,313,755

 
116,680,035

 
116,766,610

 
116,157,443

 
Common stock issuances
11,475

 
13,140

 
22,872

 
26,829

 
Common stock repurchases
(117,953
)
 
(9,561
)
 
(347,256
)
 
(245,663
)
 
Performance units issued as common stock

 

 

 
209,353

 
Restricted units issued as common stock
36,683

 

 
801,734

 
535,652

 
Common shares outstanding, end of period
117,243,960

 
116,683,614

 
117,243,960

 
116,683,614

 
 
 
 
 
 
 
 
 
 
Changes in paid-in capital (1):
 
 
 
 
 
 
 
 
Paid-in capital, beginning of period
$
25.9

 
$
12.6

 
$
16.4

 
$
4.6

 
Common stock issuances
0.2

 
0.2

 
0.4

 
0.4

 
Common stock repurchases
(1.9
)
 
(0.1
)
 
(5.9
)
 
(3.5
)
 
Performance units and restricted stock units expense
2.3

 
3.5

 
11.6

 
12.5

 
Other

 

 
4.0

 
2.2

 
Paid-in capital, end of period
26.5

 
16.2

 
26.5

 
16.2

 
 
 
 
 
 
 
 
 
 
Changes in accumulated other comprehensive income (loss):
 
 
 
 
 
 
 
 
Accumulated other comprehensive income (loss), beginning of period
(55.1
)
 
(23.2
)
 
(47.3
)
 
(10.3
)
 
Other comprehensive income (loss)
(6.7
)
 
(7.0
)
 
(14.5
)
 
(19.9
)
 
Accumulated other comprehensive income (loss), end of period
(61.8
)
 
(30.2
)
 
(61.8
)
 
(30.2
)
 
 
 
 
 
 
 
 
 
 
Changes in retained earnings:
 
 
 
 
 
 
 
 
Retained earnings, beginning of period
881.2

 
819.7

 
880.7

 
819.0

 
Net income
60.5

 
49.1

 
78.3

 
66.1

 
Dividends paid
(17.2
)
 
$
(16.0
)
 
(34.5
)
 
(32.3
)
 
Retained earnings, end of period
924.5

 
852.8

 
924.5

 
852.8

 
Total shareholders' equity
$
889.2

 
$
838.8

 
$
889.2

 
$
838.8

 
_______________________________________
(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.


4

Table of Contents

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

 
Six Months Ended
 
August 23,
2019
August 24,
2018
OPERATING ACTIVITIES
 

 
 

 
Net income
$
78.3

 
$
66.1

 
Depreciation and amortization
41.4

 
38.7

 
Non-cash stock compensation
12.0

 
12.9

 
Equity in income of unconsolidated affiliates
(5.7
)
 
(6.8
)
 
Dividends received from unconsolidated affiliates
8.2

 
7.1

 
Other
2.1

 
(11.2
)
 
Changes in operating assets and liabilities:
 

 
 

 
Accounts receivable
(82.2
)
 
(99.8
)
 
Inventories
(20.5
)
 
(38.0
)
 
Other assets
3.9

 
6.7

 
Accounts payable
37.8

 
45.6

 
Employee compensation liabilities
(46.1
)
 
(40.1
)
 
Employee benefit obligations
(17.7
)
 
(18.7
)
 
Customer deposits
7.4

 
(7.0
)
 
Income taxes payable
13.0

 
0.1

 
Accrued expenses and other liabilities
10.9

 
6.1

 
Net cash provided by (used in) operating activities
42.8

 
(38.3
)
 
INVESTING ACTIVITIES
 

 
 

 
Capital expenditures
(32.5
)
 
(41.5
)
 
Proceeds from COLI policies
1.1

 
20.7

 
Acquisitions, net of cash acquired

 
(149.5
)
 
Other
1.8

 
1.9

 
Net cash used in investing activities
(29.6
)
 
(168.4
)
 
FINANCING ACTIVITIES
 

 
 

 
Dividends paid
(34.5
)
 
(32.3
)
 
Common stock repurchases
(5.9
)
 
(3.5
)
 
Borrowings on lines of credit

 
76.9

 
Repayments on lines of credit

 
(66.7
)
 
Repayments of long-term debt
(1.3
)
 
(1.3
)
 
Other
(1.0
)
 

 
Net cash used in financing activities
(42.7
)

(26.9
)
 
Effect of exchange rate changes on cash and cash equivalents
(1.4
)
 
(2.8
)
 
Net decrease in cash, cash equivalents and restricted cash
(30.9
)
 
(236.4
)
 
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)
$
233.9

 
$
49.2

 
_______________________________________
(1)
These amounts include restricted cash of $3.5 and $2.5 as of February 22, 2019 and February 23, 2018, respectively.
(2)
These amounts include restricted cash of $4.8 and $3.5 as of August 23, 2019 and August 24, 2018, 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.

5

Table of Contents

STEELCASE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions in Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments) considered necessary for a fair presentation of the condensed consolidated financial statements have been included. Results for interim periods should not be considered indicative of results to be expected for a full year. Reference should be made to the consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended February 22, 2019 (“Form 10-K”). The Condensed Consolidated Balance Sheet as of February 22, 2019 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
Adoption of New Accounting Standards
In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220), to address the impact of the U.S. Tax Cuts and Jobs Act (the “Tax Act”) on tax effects presented in other comprehensive income. The amended guidance allows a reclassification from accumulated other comprehensive income to retained earnings for the tax effects of items within accumulated other comprehensive income resulting from the Tax Act. We adopted this guidance in Q1 2020 and elected to not reclassify these amounts to retained earnings as the effect 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 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 an effect on our consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes a new lease accounting model for lessees. The 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. We adopted this guidance and related amendments in Q1 2020 and it resulted in an increase in the assets and liabilities on our Condensed Consolidated Balance Sheet. See Note 9 for additional information.

6

Table of Contents
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, with early adoption permitted for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We are currently evaluating the impact of this standard on our consolidated financial statements.
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
Six Months Ended
August 23,
2019
August 24,
2018
August 23,
2019
August 24,
2018
Americas
 
 
 
 
 
 
 
 
Desking, benching, systems and storage
$
396.0

 
$
311.0

 
$
706.8

 
$
569.0

 
Seating
219.6

 
188.0

 
391.3

 
345.9

 
Other (1)
123.9

 
155.1

 
217.7

 
275.0

 
EMEA
 
 
 
 
 
 
 
 
Desking, benching, systems and storage
58.9

 
61.9

 
120.9

 
124.7

 
Seating
53.3

 
44.1

 
113.3

 
88.3

 
Other (1)
42.0

 
27.2

 
81.3

 
57.6

 
Other
 
 
 
 
 
 
 
 
Desking, benching, systems and storage
15.7

 
20.1

 
30.2

 
27.8

 
Seating
24.4

 
30.3

 
43.9

 
41.5

 
Other (1)
64.2

 
38.1

 
116.9

 
100.0

 

$
998.0

 
$
875.8

 
$
1,822.3

 
$
1,629.8

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


7

Table of Contents
STEELCASE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Reportable geographic information is as follows:
Reportable Geographic Revenue
Three Months Ended
Six Months Ended
August 23,
2019
August 24,
2018
August 23,
2019
August 24,
2018
United States
$
680.8

 
$
582.8

 
$
1,216.7

 
$
1,054.1

 
Foreign locations
317.2

 
293.0

 
605.6

 
575.7

 
 
$
998.0

 
$
875.8

 
$
1,822.3

 
$
1,629.8

 


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 six months ended August 23, 2019 are as follows:
 
Customer Deposits
Balance as of February 22, 2019
$
20.0

 
Increases due to deposits received
23.6

 
Revenue recognized
(16.5
)
 
Balance as of August 23, 2019
$
27.1

 

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
Six Months Ended
Computation of Earnings per Share
August 23,
2019
August 24,
2018
August 23,
2019
August 24,
2018
Net income
$
60.5

 
$
49.1

 
$
78.3

 
$
66.1

 
Adjustment for earnings attributable to participating securities
(1.3
)
 
(1.0
)
 
(1.5
)
 
(1.3
)
 
Net income used in calculating earnings per share
$
59.2

 
$
48.1

 
$
76.8

 
$
64.8

 
Weighted-average common shares outstanding including participating securities (in millions)
119.7

 
119.2

 
119.6

 
119.0

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

 
116.7

 
117.3

 
116.7

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

 

 
0.5

 

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

 
116.7

 
117.8

 
116.7

 
Earnings per share:
 

 
 

 
 

 
 

 
Basic
$
0.50

 
$
0.41

 
$
0.65

 
$
0.56

 
Diluted
$
0.50

 
$
0.41

 
$
0.65

 
$
0.56

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

 
116.7

 
117.2

 
116.7

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

 
0.5

 

 
0.5

 


8

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 August 23, 2019:
 
Unrealized gain (loss) on investments
Pension and other post-retirement liability adjustments
Derivative amortization
Foreign currency translation adjustments
Total
Balance as of May 24, 2019
$
0.1

 
$
9.5

 
$
(9.4
)
 
$
(55.3
)
 
$
(55.1
)
 
Other comprehensive income (loss) before reclassifications
0.3

 
0.5

 

 
(6.4
)
 
(5.6
)
 
Amounts reclassified from accumulated other comprehensive income (loss)
(0.5
)
 
(0.8
)
 
0.2

 

 
(1.1
)
 
Net current period other comprehensive income (loss)
(0.2
)
 
(0.3
)
 
0.2

 
(6.4
)
 
(6.7
)
 
Balance as of August 23, 2019
$
(0.1
)
 
$
9.2

 
$
(9.2
)
 
$
(61.7
)
 
$
(61.8
)
 

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the six months ended August 23, 2019:
 
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
0.4

 
0.8

 

 
(14.3
)
 
(13.1
)
 
Amounts reclassified from accumulated other comprehensive income (loss)
(0.5
)
 
(1.3
)
 
0.4

 

 
(1.4
)
 
Net current period other comprehensive income (loss)
(0.1
)
 
(0.5
)
 
0.4

 
(14.3
)
 
(14.5
)
 
Balance as of August 23, 2019
$
(0.1
)
 
$
9.2

 
$
(9.2
)
 
$
(61.7
)
 
$
(61.8
)
 
















9

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 six months ended August 23, 2019 and August 24, 2018:
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
Six Months Ended
August 23,
2019
August 24,
2018
August 23, 2019
August 24, 2018
Amortization of pension and other post-retirement liability adjustments
 
 
 
 
 
 
 
 
 
Actuarial losses (gains)
$
(0.8
)
 
$
(0.8
)
 
$
(1.5
)
 
$
(1.7
)
 
Other income, net
Prior service cost (credit)
(0.1
)
 
(0.6
)
 
(0.1
)
 
(1.2
)
 
Other income, net
 
0.1

 
0.3

 
0.3

 
0.6

 
Income tax expense
 
(0.8
)
 
(1.1
)
 
(1.3
)
 
(2.3
)
 
 
 

 


 
 
 
 
 

Derivative amortization
0.3

 

 
0.6

 

 
Interest expense
 
(0.1
)
 

 
(0.2
)
 

 
Income tax expense
 
0.2

 

 
0.4

 

 
 
 
 
 
 
 
 
 
 
 
 
Realized gain on sale of investment
(0.7
)
 

 
(0.7
)
 

 
Investment income
 
0.2

 

 
0.2

 

 
Income tax expense
 
(0.5
)
 

 
(0.5
)
 

 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation

 
0.1

 

 
0.1

 
Other income, net
 
 
 
 
 
 
 
 
 
 
Total reclassifications
$
(1.1
)
 
$
(1.0
)
 
$
(1.4
)
 
$
(2.2
)
 


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 $485.0 and $487.0 as of August 23, 2019 and February 22, 2019, 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 $544 and $492 as of August 23, 2019 and February 22, 2019, 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.

10

Table of Contents
STEELCASE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Assets and liabilities measured at fair value in the Consolidated Balance Sheets as of August 23, 2019 and February 22, 2019 are summarized below:
 
August 23, 2019
Fair Value of Financial Instruments
Level 1
Level 2
Level 3
Total
Assets:
 

 
 

 
 

 
 

 
Cash and cash equivalents
$
229.1

 
$

 
$

 
$
229.1

 
Restricted cash
4.8

 

 

 
4.8

 
Foreign exchange forward contracts

 
1.7

 

 
1.7

 
Auction rate securities

 

 
2.0

 
2.0

 
 
$
233.9

 
$
1.7

 
$
2.0

 
$
237.6

 
Liabilities:
 
 
 
 
 
 
 
 
Foreign exchange forward contracts
$

 
$
(0.4
)
 
$

 
$
(0.4
)
 
 
$

 
$
(0.4
)
 
$

 
$
(0.4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 six months ended August 23, 2019:
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 August 23, 2019
$
2.0

 


11

Table of Contents
STEELCASE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

7.
INVENTORIES
Inventories
August 23,
2019
February 22,
2019
Raw materials and work-in-process
$
129.0

 
$
118.3

 
Finished goods
134.3

 
127.2

 
 
263.3

 
245.5

 
Revaluation to LIFO
20.2

 
20.7

 
 
$
243.1

 
$
224.8

 

The portion of inventories determined by the LIFO method was $103.8 and $96.9 as of August 23, 2019 and February 22, 2019, respectively.
8.     SHARE-BASED COMPENSATION
Performance Units
During the six months ended August 23, 2019, we granted 98,867 performance units ("PSUs") which are earned over a three-year period based on performance conditions and then modified based on a market condition. The expense for these awards is determined based on the probability that the performance conditions will be met and the fair value of the market condition. We used the Monte Carlo simulation model to calculate the fair value of the market condition. The total weighted-average grant date fair value for these PSUs was $16.21 per unit. The PSUs are expens