31.3.2004: Meldung: Steelcase Inc.: Fourth Quarter and Full Fiscal Year 2004 Results
Monday March 29, 6:53 pm ET
GRAND RAPIDS, Mich.-- March 29, 2004--Steelcase Inc. (NYSE:SCS - News) today reported revenue totaling $563.4 million for its fourth quarter ended Feb. 27, 2004. Revenue for this 13-week quarter was 9.7 percent less than the prior year 14-week quarter. Excluding the impact of the extra week, revenue declined by 2.7 percent. Also, fourth quarter revenue benefited by $12.1 million versus the prior year from favorable currency translation effects in the company"s International segment. Fourth quarter revenues were below the company"s previous estimates.
Two of the company"s segments showed year-on-year revenue increases in the quarter, adjusting for the extra week in the fourth quarter of fiscal 2003. On this basis, International sales were up 10.5 percent compared to the prior year, with a modest 1.0 percent increase over the prior year without the currency translation benefit. Adjusting for the extra week, Steelcase Design Partnership sales increased 2.6 percent versus the prior year - the first year-on-year increase for that segment since the fourth quarter of fiscal 2001 - while revenues for the North America segment declined 8.9 percent in the same period.
Steelcase reported a net loss of $(18.4) million, or $(0.13) per share for the fourth quarter of fiscal 2004. The net loss before cumulative effect of accounting change related to FIN 46, "Consolidation of Variable Interest Entities," was $(14.2) million, or $(0.10) per share, in line with the company"s prior estimate of $(0.06) to $(0.11) per share. Reported results include the effect of lower revenues, continued pricing pressure and ongoing inefficiencies related to plant consolidations. In the previous year, Steelcase reported net income of $17.6 million, or $0.12 per share, driven primarily by a gain from the sale of real estate and a curtailment gain on post-retirement benefits.
Reported results reflect after-tax restructuring and other charges of $(13.0) million, primarily related to the North America and International segments. These charges were less than anticipated because severance costs that were originally expected in the fourth quarter, related to previously announced plant consolidations, are now expected to be booked in fiscal 2005. The company benefited from favorable tax liability adjustments totaling $15.9 million after-tax. These adjustments, which were higher than anticipated, related to a recently completed tax audit and to the year-end reconciliation of the tax provision and related liability. The total of these charges and tax adjustments resulted in a net after-tax gain of $2.9 million, compared to the company"s previous estimate of $(3) to $(8) million in after-tax charges.
During the quarter, the company adopted FIN 46, which required the company to capitalize leases related to the company aircraft. The rule change had no impact on cash flow, but had the effect of increasing fixed assets by $41.3 million and debt by $48.0 million. The pre-tax difference of $6.7 million resulted in a $4.2 million after-tax charge which was reflected as a cumulative effect of accounting change.
Unrelated to FIN 46, the company also consolidated the balance sheets of eight dealers due to a change in the nature of the company"s control of these dealerships. The company"s investments in these dealerships were previously reported using the equity method. This consolidation had no effect on total shareholders" equity, but did increase total assets and total liabilities by approximately $11 million. There was no effect on revenue or net income (loss) in the fourth quarter.
Fiscal Year 2004 Results
The company reported fiscal 2004 revenue of $2.35 billion. Revenue for this 52-week year was 7.3 percent less than the prior 53-week year. Excluding the impact of the extra week, revenue declined by 5.6 percent. Fiscal 2004 revenue benefited by $77.1 million versus the prior year from favorable currency translation effects in the International segment.
Steelcase reported a net loss of $(23.2) million, or $(0.16) per share in fiscal 2004 compared with a net loss of $(266.1) million, or $(1.80) per share in the prior year. The net loss from continuing operations was $(41.4) million or $(0.28) per share in fiscal 2004 compared to $(40.9) million or $(0.28) per share in fiscal 2003.
Restructuring and other charges in fiscal 2004 totaled $(45.4) million pre-tax. This includes $(40.6) million charged to cost of sales and $(9.1) million charged to operating expenses. The company also recorded $4.3 million of gains in non-operating income. The charges were primarily for severance and asset impairments related to workforce reductions and the company"s ongoing facility rationalization and consolidation initiatives. The non-operating gains were primarily generated from real estate and leased asset sales.
Steelcase increased cash and cash equivalents to $262 million at the end of fiscal 2004, more than doubling the $129 million at the end of fiscal 2003. Debt outstanding was $354 million, including $48 million related to the effect of implementing FIN 46, as previously mentioned.
"We continued to strengthen our balance sheet this quarter," said James Keane, chief financial officer. "We have the highest cash balance since Steelcase became a public company."
"We knew this past year would be a time to focus on restructuring and cost reduction," said Jim Hackett, president and chief executive officer. "We made substantial progress on the reinvention of many aspects of our industrial system and, at the same time, continued to invest in our future."
Order rates in North America have strengthened in March, in line with seasonal patterns. For the first quarter of fiscal 2005, Steelcase expects revenues to be slightly higher than in the fourth quarter of fiscal 2004, and compared to the same period in the prior year. This would be the first quarterly year-on-year sales increase for the company in three years. This estimate does not take into account the newly consolidated dealerships discussed earlier, which will add approximately $15 to $25 million of revenue per quarter, with no corresponding impact on net income.
The company anticipates a first quarter after-tax loss in the range of $(0.09) to $(0.14) per share. Included in this estimate are restructuring charges in the range of $(3) to $(6) million after-tax and a $(2) to $(3) million after-tax impact of rising steel prices.
To offset the impact of these price increases, Steelcase recently announced a temporary surcharge on customer orders placed after April 25, 2004. The surcharge is not expected to materially affect first quarter revenue.
Fiscal 2005 revenue, excluding revenue from newly consolidated dealers, is expected to be higher than in fiscal 2004, but lower than originally estimated. Second-half revenue is expected to be stronger than the first half of the year. After the first quarter, which is discussed above, quarterly revenue is expected to be approximately at the level needed to break even before restructuring charges. For the year, the company expects to report a net loss, including restructuring costs that are estimated at $(10) to $(15) million after-tax. The net loss is expected to be a significant improvement over fiscal 2004. Rising steel costs and continued pricing pressure are expected to negatively impact variable margins early in the year, while previously announced manufacturing consolidation will reduce fixed costs later in the year.
Mr. Hackett concluded, "I"m extremely proud of Steelcase employees, who have continued to focus on improving profitability in a challenging economic climate, and I"m pleased that we"re now seeing indications that the recession in our industry is abating and we see modest revenue improvement in the coming year. We have strategies in place to grow revenue regardless of when the industry rebounds. We are targeting key market segments and launching new products at NeoCon that will expand our ability to help customers address workplace effectiveness and efficiency."
Steelcase will webcast its conference call reviewing fourth quarter and full year fiscal 2004 financial results on Tuesday, March 30, at 11:00 a.m. EDT. Links to the webcast are available at www.steelcase.com. Accompanying presentation slides will be available on the company"s website shortly before the start of the webcast. A replay of the webcast can be accessed on the site after the call through April 30, 2004.
About Steelcase Inc.
Steelcase Inc. helps individuals and organizations around the world to work more effectively by providing knowledge, products and services that enable customers and their consultants to create work environments that integrate architecture, furniture and technology. Founded in 1912 and headquartered in Grand Rapids, Michigan, the company has led the global office furniture industry in sales every year since 1974. Its product portfolio includes interior architectural products, furniture systems, technology products, seating, lighting, storage and related products and services. Fiscal 2004 revenue was approximately $2.35 billion. Steelcase Inc. and its subsidiaries have dealers in more than 900 locations, manufacturing facilities in over 50 locations and approximately 14,000 employees around the world. The company"s Class A Common Stock trades on the NYSE under the symbol SCS.
Investor Contact -
Raj Mehan, Investor Relations, 616-698-4734
Media Contact -
Jeanine Hill, Communications, 616-698-3765
Source: Steelcase Inc.