# Business Segment Disclosure

See Note 21 to the consolidated financial statements for additional information regarding our business segments.

# Americas

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 and Orangebox brands.

<table><tr><td rowspan="2">Statement of Operations Data—
Americas</td><td colspan="6">Year Ended</td></tr><tr><td colspan="2">February 22,
2019</td><td colspan="2">February 23,
2018</td><td colspan="2">February 24,
2017</td></tr><tr><td>Revenue</td><td>$ 2,470.2</td><td>100.0%</td><td>$ 2,193.8</td><td>100.0%</td><td>$ 2,231.9</td><td>100.0%</td></tr><tr><td>Cost of sales</td><td>1,673.5</td><td>67.7</td><td>1,450.8</td><td>66.1</td><td>1,456.2</td><td>65.3</td></tr><tr><td>Restructuring costs</td><td>—</td><td>—</td><td>—</td><td>—</td><td>2.6</td><td>0.1</td></tr><tr><td>Gross profit</td><td>796.7</td><td>32.3</td><td>743.0</td><td>33.9</td><td>773.1</td><td>34.6</td></tr><tr><td>Operating expenses</td><td>586.8</td><td>23.8</td><td>561.6</td><td>25.6</td><td>534.2</td><td>23.9</td></tr><tr><td>Operating income</td><td>$   209.9</td><td>8.5%</td><td>$   181.4</td><td>8.3%</td><td>$    238.9</td><td>10.7%</td></tr></table>

<table><tr><td rowspan="2">Organic Revenue Growth (Decline)—Americas</td><td colspan="2">Year Ended</td></tr><tr><td>February 22,
2019</td><td>February 23,
2018</td></tr><tr><td>Prior year revenue</td><td>$ 2,193.8</td><td>$ 2,231.9</td></tr><tr><td>Acquisitions</td><td>84.4</td><td>4.5</td></tr><tr><td>Divestiture</td><td>(13.6)</td><td>(8.3)</td></tr><tr><td>Currency translati*on effects</td><td>(2.3)</td><td>2.0</td></tr><tr><td> Prior year revenue, adjusted</td><td>2,262.3</td><td>2,230.1</td></tr><tr><td>Current year revenue</td><td>2,470.2</td><td>2,193.8</td></tr><tr><td>Organic growth (decline) $</td><td>$   207.9</td><td>$   (36.3)</td></tr><tr><td>Organic growth (decline) %</td><td>9%</td><td>(2)%</td></tr></table>

\* Currency translation effects represent the net effect of translating prior year foreign currency revenues using the average exchange rate on a monthly basis during the current year.

# 2019 compared to 2018

Operating income in the Americas increased by \$28.5 in 2019 compared to the prior year. The comparison was negatively impacted by \$8.4 related to the pension charge and favorably impacted by a \$5.0 gain on the sale of property, net of the related variable compensation effects. The increase in 2019 operating income was driven by higher revenue and lower operating expenses as a percentage of revenue, partially offset by higher cost of sales as a percentage of revenue.

The Americas revenue represented 71.7% of consolidated revenue in 2019. Revenue for 2019 of \$2,470.2 represented an increase of \$276.4 or 13% compared to 2018. The growth in 2019 was driven primarily by overall industry growth and increased project opportunities, improvements in our competitive win rates, recent acquisitions and benefits from recent list price adjustments. After adjusting for an \$84.4 year-over-year impact of acquisitions, a\$13.6 unfavorable impact of a divestiture and \$2.3 of unfavorable currency translation effects, the organic revenue growth in 2019 was \$207.9 or 9% compared to the prior year.

Cost of sales in 2019 was 67.7% of revenue which compared to 66.1% of revenue in 2018. Cost of sales as a percentage of revenue increased by 160 basis compared to the prior year, with 40 basis points attributable to the pension charge. The year-over-year comparison reflected the following:

• unfavorable shifts in business mix,

• approximately \$43 of higher commodity, freight and labor (other than annual merit increases) costs, partially offset by approximately \$32 of benefits from pricing actions,

• approximately \$9 of benefits associated with cost reduction efforts, net of additional overhead investments and annual merit labor cost increases, and

• higher absorption of fixed costs.

Operating expenses in 2019 increased by \$25.2, but decreased 180 basis points as a percentage of revenue, compared to the prior year. The increase was due to \$27.2 from acquisitions (including \$9.4 of amortization expense), net of a divestiture and \$8.9 of higher variable compensation expense, partially offset by a \$7.5 gain on the sale of property, \$3.7 of lower severance costs and \$2.6 of lower product development expenses.

# 2018 compared to 2017

Operating income in the Americas decreased by \$57.5 in 2018 compared to the prior year. The decline was driven by lower sales volume, higher cost of sales as a percentage of revenue and higher operating expenses.

The Americas revenue represented 71.8% of consolidated revenue in 2018. Revenue for 2018 of \$2,193.8 represented a decrease of \$38.1 or 2% compared to 2017, reflecting ongoing shifts in demand patterns. The decrease in revenue was driven by subdued demand from large customers. Growth from our new products and solutions was partially offset by a decline in demand for legacy furniture applications. After adjusting for an \$8.3 unfavorable impact of a divestiture, a \$4.5 impact of an acquisition and \$2.0 of favorable currency translation effects, the organic revenue decline in 2018 was \$36.3 or 2% compared to the prior year.

Cost of sales in 2018 was 66.1% of revenue which compared to 65.3% of revenue in 2017. The year-over-year comparison reflected the following:

• approximately \$10 of higher commodity costs,

• higher investments in support of product development and manufacturing agility,

• unfavorable shifts in business mix,

• approximately \$17 of benefits associated with ongoing cost reduction efforts,

• favorability related to improvements in negotiated customer pricing, and

• approximately \$5 of lower warranty costs compared to the prior year.

Operating expenses in 2018 increased by \$27.4, or 170 basis points as a percentage of revenue, compared to the prior year. The increase was driven by approximately \$34 of higher investments in product development, sales, marketing and information technology that support our growth strategies, \$3.8 of severance costs in 2018 and a \$1.5 impairment related to an asset held for sale, partially offset by approximately \$9 of lower variable compensation expense.