Steelcase Inc.
Mar 26, 1998
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Steelcase Inc. Reports Record Sales and Profits for Fiscal Year Ended February 27, 1998

 

GRAND RAPIDS, MI, March 26, 1998-Steelcase Inc. (NYSE:SCS) today reported record consolidated net sales and record consolidated net income for its fiscal year ended February 27, 1998. This financial announcement is Steelcase's first since becoming a publicly-held company on February 18, 1998.

The record net sales of $2.76 billion represented an increase of 14.6 percent over the prior year. This increase is Steelcase's second consecutive double digit growth year for net sales and the third within the past five years. In addition, gross margins improved for the third consecutive year from 29.1 percent in Fiscal 1995 to 36.4 percent in Fiscal 1998. The record net income for the year was $217.0 million, or $1.40 per share, compared with $27.7 million, or $0.18 per share, a year ago.

The company also announced fourth quarter net sales of $699.5 million, up 10.5 percent from $633.3 million for the fourth quarter of Fiscal 1997. Net income for the fourth quarter rose 47.1 percent to $53.7 million or $0.35 per share, compared with $36.5 million, or $0.24 per share, for the fourth quarter of Fiscal 1997.

The Steelcase Board of Directors also declared a dividend of $0.10 per share payable on May 15, 1998 to shareholders of record on May 4,1998.

"While a robust economy contributed to our record year, other factors were more important," said Steelcase Inc. President and Chief Executive Officer James P. Hackett. "Our industry leadership, strong brand franchise, and long-term customer relationships enabled us to capitalize on the new ways people are working and on our knowledge of workplace needs.

"Operationally, the company also continued to focus on raw materials sourcing, cost containment, facility rationalization, and labor efficiencies thereby improving our gross profit margin. Finally, these results were achieved while making significant investments in new product development and launch activities, as well as new information systems."

Chief Financial Officer Alwyn Rougier-Chapman noted that Fiscal 1997 contained 53 weeks and Fiscal 1998 contained 52 weeks. (Steelcase Inc.'s fiscal year ends the last Friday of February.) Net sales, if adjusted for this difference, would have demonstrated and even better growth rate of 16.7 percent. Net income growth, adjusting Fiscal 1997 for patent litigation expenses, was 43.5 percent.

Steelcase Inc. is the world's leading designer and manufacturer of office furniture. Fiscal 1998 worldwide sales, including those of joint ventures, are $3.26 billion.

Financial highlights for the quarter and the year ended February 27, 1998 follow:
Steelcase Inc.


Consolidated Income Statements
(In millions, except per share data)
  Quarter Ended Year Ended
  February 28,
1997

February 27,


1998

February 28,
1997

February 27,
1998

Net sales


Cost of sales
$633.3
400.9

$699.5
440.1



$2,408.4
1,551.6

$2,760.0


1,756.6

Gross profit 232.4 259.4 856.8 1,003.4
Selling, general
and administrative


expenses
Patent litigation
expense
165.5

186.9



630.4

686.0

Operating income
66.9 72.5 141.6 317.4
Patent litigation
interest expense
    (111.7)  
Other income, net 3.0



6.9

21.4

22.6



Income before pro-
vision for income
taxes and equity in


net income (loss) of joint ventures and
dealer transitions
69.9 79.4 51.3 340.0
Provision for
income taxes
32.2

30.6

23.6

130.9



Income before equity
in net income (loss)
of joint ventures


and dealer transitions
37.7 48.8 27.7 209.1
Equity in net income
(loss) of joint ventures
and dealer transitions
(1.2)

4.9



7.9



Net income $36.5

$53.7



$27.7

$217.0

Basic and diluted net income
income per share
$0.24

$0.35
$0.18

$1.40



Weighted average
shares (1)
154.9



154.7

154.7

154.8



(1) Gives effect to recapitalization, which include a conversion of preferred stock and occurred concurrent with the initial public offering, as if such recapitalization occurred as of the beginning of the year ended February 28, 1997.