GRAND RAPIDS, Michigan, December 22, 2008 (PRNewswire-FirstCall) – Steelcase Inc. (NYSE: SCS) today reported net income of $0.4 million for the third quarter of fiscal 2009, slightly ahead of the company’s updated estimates. Current quarter results included a $(27.5) million pre-tax charge related to a decrease in the cash surrender value of company-owned life insurance policies (COLI) and $(4.7) million of pre-tax restructuring costs. The company reported net income of $31.3 million, or $0.22 per share, in the third quarter of the prior year.

Steelcase reported revenue totaling $811.3 million for its third quarter of fiscal 2009, compared to $885.9 million in the prior year. Revenue declined 8.4 percent driven largely by declines of 11.4 percent in the North America segment and 14.8 percent in the Other category. As compared to the prior year, third quarter revenue was negatively impacted by approximately $(18) million from currency translation effects.

“The impact of the recent financial crisis is being felt around the world and has significantly affected the demand patterns in our industry,” said James P. Hackett, president and chief executive officer. “The restructuring actions we announced recently are designed to mitigate the shorter-term pressures on our profitability while continuing to improve the fitness of our business over the longer-term.”

Cost of sales increased to 71.1 percent in the third quarter from 66.5 percent in the prior year. Cost of sales in the current quarter was negatively impacted by the decrease in cash surrender value of COLI, higher commodity costs and lower overhead absorption related to lower volume.

Operating expenses decreased by $29.6 million to $214.6 million, or 26.5 percent of revenue compared to 27.6 percent in the prior year. Compared to the prior year, current quarter operating expenses included increases associated with the decline in cash surrender value of COLI and decreases related to lower variable compensation expense. Operating expenses in the prior year included a non-cash impairment charge of $(21.1) million.

Cash and short-term investments increased $91.3 million in the third quarter to $220.0 million. During the current quarter, the company paid a $0.15 per share quarterly dividend aggregating $20.2 million and repurchased 557,700 shares at a total cost of $4.9 million. On December 18, 2008, the Company’s Board of Directors declared a quarterly cash dividend of $0.08 per share to be paid on or before January 15, 2009, to shareholders of record as of December 29, 2008. Total debt at the end of the quarter was $255.3 million.

“We believe that the slowing of the global economy and related uncertainty will lead to significant reduction in industry demand for the next several quarters,” said David C. Sylvester, vice-president and chief financial officer. “Accordingly, we have been preparing for a difficult year in fiscal 2010, but we believe the strength of our balance sheet will allow us to continue investing in growth initiatives that will further strengthen our leadership position coming out of this economic cycle.”

Steelcase expects fourth quarter revenue to be within a range of $650 million to $700 million (including approximately $(50) million of negative impacts from currency translation and dispositions within the past twelve months) compared to $901 million in the prior year. The fourth quarter of the prior year included approximately $65 million of revenue from an extra week of shipments due to the timing of the fiscal 2008 year-end.

Steelcase expects to report a net loss within a range of $(0.04) to $(0.10) per share in the fourth quarter including approximately $(9) million in after-tax restructuring costs. In addition, the company anticipates approximately $5 to $10 million of commodity cost inflation in the fourth quarter compared to the prior year. The company reported net income of $30.6 million, or $0.22 per share, in the fourth quarter of the prior year.

“Typically, we update our three-year plan during the third quarter of each fiscal year,” said Mr. Sylvester. “While the strategic direction of the company has not changed, at this time we are no longer providing a longer-term target for operating income margin, given the current economic environment.”

Mr. Hackett concluded, “Our experience in the last downturn provides a solid platform from which to manage the business. I continue to be impressed with the resiliency of every single Steelcase employee, in the midst of these challenging times, to keep building a strong and profitable company.”

	(Unaudited)									(Unaudited)
	Three Months Ended									Nine Months Ended
	November 28, 2008			November 23, 2007			% Change			November 28, 2008			November 23, 2007			% Change

Revenue
North America (1)	$	443.1		$	500.0			(11.4	%)	$	1,373.5		$	1,462.4			(6.1	%)
International (2)		236.0			230.8			2.3	%		742.0			615.6			20.5	%
Other (3)		132.2			155.1			(14.8	%)		413.4			441.5			(6.4	%)
Consolidated Revenue	$	811.3		$	885.9			(8.4	%)	$	2,528.9		$	2,519.5			0.4	%

Operating Income
North America	$	3.2		$	52.6					$	77.6		$	136.4
International		19.4			20.2						44.7			39.2
Other		(3.1	)		(12.9	)					(5.9	)		1.1
Corporate (4)		(4.5	)		(7.2	)					(18.6	)		(20.7	)
Consolidated Operating Income	$	15.0		$	52.7					$	97.8		$	156.0

Operating Income Percent		1.8	%		5.9	%					3.9	%		6.2	%

	(Unaudited)									(Unaudited)
	Three Months Ended									Nine Months Ended
	November 28, 2008				November 23, 2007					November 28, 2008				November 23, 2007

Revenue	$	811.3	100.0	%	$	885.9		100.0	%	$	2,528.9	100.0	%	$	2,519.5		100.0	%
Cost of sales		577.0	71.1			589.1		66.5			1,736.8	68.7			1,680.9		66.7
Restructuring costs (benefits)		3.8	0.5			(0.1	)	-			17.3	0.7			(0.1	)	-
Gross profit		230.5	28.4			296.9		33.5			774.8	30.6			838.7		33.3
Operating expenses		214.6	26.5			244.2		27.6			673.4	26.6			682.7		27.1
Restructuring costs		0.9	0.1			-		-			3.6	0.1			-		-
Operating income	$	15.0	1.8	%	$	52.7		5.9	%	$	97.8	3.9	%	$	156.0		6.2	%

Gross profit, as reported	$	230.5	28.4	%	$	296.9		33.5	%	$	774.8	30.6	%	$	838.7		33.3	%
Restructuring costs (benefits)		3.8	0.5			(0.1	)	-			17.3	0.7			(0.1	)	-
Gross profit, excluding
restructuring items	$	234.3	28.9	%	$	296.8		33.5	%	$	792.1	31.3	%	$	838.6		33.3	%

Operating income, as reported	$	15.0	1.8	%	$	52.7		5.9	%	$	97.8	3.9	%	$	156.0		6.2	%
Restructuring costs (benefits)		4.7	0.6			(0.1	)	-			20.9	0.8			(0.1	)	-
Operating income, excluding
restructuring items	$	19.7	2.4	%	$	52.6		5.9	%	$	118.7	4.7	%	$	155.9		6.2	%

	(Unaudited)								(Unaudited)
	Three Months Ended								Nine Months Ended
	November 28, 2008				November 23, 2007				November 28, 2008				November 23, 2007

Revenue	$	443.1	100.0	%	$	500.0	100.0	%	$	1,373.5	100.0	%	$	1,462.4	100.0	%
Cost of sales		333.0	75.2			341.2	68.2			965.3	70.3			994.9	68.0
Restructuring costs		1.9	0.4			0.3	0.1			9.8	0.7			2.0	0.2
Gross profit		108.2	24.4			158.5	31.7			398.4	29.0			465.5	31.8
Operating expenses		105.0	23.7			105.9	21.2			319.4	23.3			329.1	22.5
Restructuring costs		-	-			-	-			1.4	0.1			-	-
Operating income	$	3.2	0.7	%	$	52.6	10.5	%	$	77.6	5.6	%	$	136.4	9.3	%

Gross profit, as reported	$	108.2	24.4	%	$	158.5	31.7	%	$	398.4	29.0	%	$	465.5	31.8	%
Restructuring costs		1.9	0.4			0.3	0.1			9.8	0.7			2.0	0.2
Gross profit, excluding
restructuring items	$	110.1	24.8	%	$	158.8	31.8	%	$	408.2	29.7	%	$	467.5	32.0	%

Operating income, as reported	$	3.2	0.7	%	$	52.6	10.5	%	$	77.6	5.6	%	$	136.4	9.3	%
Restructuring costs		1.9	0.4			0.3	0.1			11.2	0.8			2.0	0.2
Operating income, excluding
restructuring items	$	5.1	1.1	%	$	52.9	10.6	%	$	88.8	6.4	%	$	138.4	9.5	%

	(Unaudited)									(Unaudited)
	Three Months Ended									Nine Months Ended
	November 28, 2008				November 23, 2007					November 28, 2008					November 23, 2007

Revenue	$	236.0	100.0	%	$	230.8		100.0	%	$	742.0		100.0	%	$	615.6		100.0	%
Cost of sales		155.5	65.9			150.9		65.4			500.2		67.4			407.0		66.1
Restructuring benefits		-	-			(0.5	)	(0.2	)		(0.4	)	-			(2.1	)	(0.3	)
Gross profit		80.5	34.1			80.4		34.8			242.2		32.6			210.7		34.2
Operating expenses		60.9	25.8			60.2		26.0			196.5		26.5			171.5		27.8
Restructuring costs		0.2	0.1			-		-			1.0		0.1			-		-
Operating income	$	19.4	8.2	%	$	20.2		8.8	%	$	44.7		6.0	%	$	39.2		6.4	%

Gross profit, as reported	$	80.5	34.1	%	$	80.4		34.8	%	$	242.2		32.6	%	$	210.7		34.2	%
Restructuring benefits		-	-			(0.5	)	(0.2	)		(0.4	)	-			(2.1	)	(0.3	)
Gross profit, excluding
restructuring items	$	80.5	34.1	%	$	79.9		34.6	%	$	241.8		32.6	%	$	208.6		33.9	%

Operating income, as reported	$	19.4	8.2	%	$	20.2		8.8	%	$	44.7		6.0	%	$	39.2		6.4	%
Restructuring costs (benefits)		0.2	0.1			(0.5	)	(0.2	)		0.6		0.1			(2.1	)	(0.3	)
Operating income, excluding
restructuring items	$	19.6	8.3	%	$	19.7		8.6	%	$	45.3		6.1	%	$	37.1		6.1	%

Other

	(Unaudited)										(Unaudited)
	Three Months Ended										Nine Months Ended
	November 28, 2008					November 23, 2007					November 28, 2008					November 23, 2007

Revenue	$	132.2		100.0	%	$	155.1		100.0	%	$	413.4		100.0	%	$	441.5	100.0	%
Cost of sales		88.5		67.0			97.0		62.5			271.3		65.6			279.0	63.2
Restructuring costs		1.9		1.4			0.1		0.1			7.9		1.9			-	-
Gross profit		41.8		31.6			58.0		37.4			134.2		32.5			162.5	36.8
Operating expenses		44.2		33.4			70.9		45.7			138.9		33.6			161.4	36.6
Restructuring costs		0.7		0.5			-		-			1.2		0.3			-	-
Operating (loss) income	$	(3.1	)	(2.3	%)	$	(12.9	)	(8.3	%)	$	(5.9	)	(1.4	%)	$	1.1	0.2	%

Gross profit, as reported	$	41.8		31.6	%	$	58.0		37.4	%	$	134.2		32.5	%	$	162.5	36.8	%
Restructuring costs		1.9		1.4			0.1		0.1			7.9		1.9			-	-
Gross profit, excluding
restructuring items	$	43.7		33.0	%	$	58.1		37.5	%	$	142.1		34.4	%	$	162.5	36.8	%

Operating (loss) income, as reported	$	(3.1	)	(2.3	%)	$	(12.9	)	(8.3	%)	$	(5.9	)	(1.4	%)	$	1.1	0.2	%
Restructuring costs		2.6		1.9			0.1		0.1			9.1		2.2			-	-
Operating (loss) income, excluding
restructuring items	$	(0.5	)	(0.4	%)	$	(12.8	)	(8.2	%)	$	3.2		0.8	%	$	1.1	0.2	%

Steelcase will discuss third quarter fiscal 2009 results and its business outlook on a conference call and webcast at 11:00 a.m. EST today. Links to the webcast are available at http://www.steelcase.com/ir. Supporting presentation slides will be available on the company’s website prior to the conference call.

This earnings release contains certain non-GAAP financial 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 statement of income, balance sheet or statement of cash flows of the company. Pursuant to the requirements of Regulation G, the company has provided a reconciliation above of non-GAAP financial measures to the most directly comparable GAAP financial measure.

The non-GAAP financial measures used within the company’s earnings release are: third quarter and nine months year-to-date gross profit, excluding restructuring items for the current and prior year in dollars and as a percentage of revenue, and third quarter and nine months year-to-date operating income, excluding restructuring items, for the current and prior year in dollars and as a percentage of revenue, on a consolidated basis and for each business segment. 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.

From time to time, in written and oral statements, the company discusses its expectations regarding future events and its plans and objectives for future operations. These 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. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to vary from the company’s expectations because of factors such as, but not limited to, competitive and general economic conditions domestically and internationally; acts of terrorism, war, governmental action, natural disasters and other Force Majeure events; changes in the legal and regulatory environment; restructuring activities; currency fluctuations; changes in customer demands; and the other risks and contingencies detailed in the company’s most recent Annual Report on Form 10-K and its other filings with the Securities and Exchange Commission. Steelcase undertakes no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

Steelcase, the global leader in the office furniture industry, helps people have a better work experience by providing products, services and insights into the ways people work. The company designs and manufactures architecture, furniture and technology products. Founded in 1912 and headquartered in Grand Rapids, Michigan, Steelcase (NYSE:SCS) serves customers through a network of over 600 independent dealers and approximately 13,500 employees worldwide. Fiscal 2008 revenue was $3.4 billion. Learn more at http://www.steelcase.com.

STEELCASE INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in millions, except per share data)

	Three Months Ended						Nine Months Ended
	November 28,			November 23,			November 28,			November 23,
	2008			2007			2008			2007

Revenue	$	811.3		$	885.9		$	2,528.9		$	2,519.5
Cost of sales		577.0			589.1			1,736.8			1,680.9
Restructuring costs (benefits)		3.8			(0.1	)		17.3			(0.1	)
Gross profit		230.5			296.9			774.8			838.7
Operating expenses		214.6			244.2			673.4			682.7
Restructuring costs		0.9			-			3.6			-
Operating income		15.0			52.7			97.8			156.0
Interest expense		(4.3	)		(4.2	)		(12.8	)		(12.6	)
Other (expense) income, net		(1.3	)		3.6			4.3			21.8
Income before income taxes		9.4			52.1			89.3			165.2
Income tax expense		9.0			20.8			35.3			62.6
Net income	$	0.4		$	31.3		$	54.0		$	102.6

Basic and diluted per share data:
Basic earnings per share	$	0.00		$	0.22		$	0.40		$	0.72
Diluted earnings per share	$	0.00		$	0.22		$	0.40		$	0.71
Dividends declared and paid per common share	$	0.15		$	0.15		$	0.45		$	0.45
Weighted average shares outstanding - basic		133.8			140.9			134.8			143.1
Weighted average shares outstanding - diluted		134.1			141.9			135.3			144.3

	(Unaudited)			(Restated)
	November 28,			February 29,
ASSETS	2008			2008
Current assets:
Cash and cash equivalents	$	163.4		$	213.9
Short-term investments		56.6			50.1
Accounts receivable, net		368.3			397.0
Inventories		154.4			146.7
Other current assets		124.5			127.0
Total current assets		867.2			934.7

Property and equipment, net		464.7			478.4
Company-owned life insurance		184.1			210.6
Goodwill and other intangible assets, net		277.9			301.0
Other assets		165.3			199.7
Total assets	$	1,959.2		$	2,124.4

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	237.4		$	246.9
Short-term borrowings and current portion of long-term debt		4.3			8.2
Accrued expenses:
Employee compensation		149.4			181.3
Employee benefit plan obligations		32.2			39.0
Other		209.0			207.6
Total current liabilities		632.3			683.0

Long-term liabilities:
Long-term debt less current maturities		251.0			250.5
Employee benefit plan obligations		180.3			183.4
Other long-term liabilities		84.9			96.6
Total long-term liabilities		516.2			530.5
Total liabilities		1,148.5			1,213.5

Shareholders’ equity:
Common stock		59.8			114.7
Additional paid in capital		6.6			5.0
Accumulated other comprehensive income		(22.8	)		17.4
Retained earnings		767.1			773.8
Total shareholders’ equity		810.7			910.9

Total liabilities and shareholders’ equity	$	1,959.2		$	2,124.4

	Nine Months Ended
	November 28,			November 23,
	2008			2007

OPERATING ACTIVITIES
Net income	$	54.0		$	102.6
Depreciation and amortization		67.5			70.1
Impairment of goodwill and intangible assets		-			21.1
Changes in operating assets and liabilities		(25.6	)		(35.3	)
Other, net		15.8			9.3

Net cash provided by operating activities		111.7			167.8

INVESTING ACTIVITIES
Capital expenditures		(66.2	)		(52.6	)
Changes in investments, net		(1.3	)		(43.1	)
Proceeds from the disposal of fixed assets		4.8			26.0
Other, net		27.5			4.3

Net cash used in investing activities		(35.2	)		(65.4	)

FINANCING ACTIVITIES
Dividends paid		(60.7	)		(64.9	)
Common stock repurchases		(59.0	)		(124.5	)
Common stock issuances		0.4			11.0
Other, net		(0.7	)		4.3

Net cash used in financing activities		(120.0	)		(174.1	)

Effect of exchange rate changes on cash and cash equivalents		(7.0	)		12.1

Net decrease in cash and cash equivalents		(50.5	)		(59.6	)
Cash and cash equivalents, beginning of period		213.9			527.2
Cash and cash equivalents, end of period	$	163.4		$	467.6