Raj Mehan James Patrick Hackett - Chief Executive Officer, Director and Member of Executive Committee David C. Sylvester - Chief Financial Officer and Senior Vice President Terry Lenhardt

Budd Bugatch - Raymond James & Associates, Inc., Research Division Matthew Schon McCall - BB&T Capital Markets, Research Division Joshua Borstein - Longbow Research LLC Todd A. Schwartzman - Sidoti & Company, LLC John Sullivan

Good day, everyone, and welcome to Steelcase's Third Quarter Fiscal 2014 Conference Call. As a reminder, today's call is being recorded. For opening remarks and introductions, I'd like to turn the conference call over to Mr. Raj Mehan, Director of Investor Relations.

Thank you, Karen. Good morning, everyone and happy holidays. Thank you for joining us for the recap of our third quarter financial results. Here with me today are Jim Hackett, our Chief Executive Officer; Dave Sylvester, our Chief Financial Officer; Mark Mossing, Corporate Controller and Chief Accounting Officer; and Terry Lenhardt, Vice President, Finance for the Americas, EMEA and Asia-Pacific. Our third quarter earnings release, which crossed the wires yesterday, is accessible on our website. This conference call is being webcast, and this webcast is a copyrighted production of Steelcase Inc. The presentation slides that accompany this webcast are available on ir.steelcase.com, and a replay of this call will also be posted to the site later today. Our discussion today may include references to non-GAAP financial measures and forward-looking statements. Reconciliations to the most comparable GAAP measures and the risks associated with the use of forward-looking statements are included in our earnings release and webcast slides. We are incorporating, by reference into this conference call, the text of our Safe Harbor statement, included in yesterday's release. Following our prepared remarks, we'll respond to questions from investors and analysts. And with that -- then, I'll now turn the call over to our Chief Executive Officer, Jim Hackett.

Thank you, Raj, and good morning. Happy holidays to everyone. Our results today mirrored the previous quarter's headlines, which were strong growth, operating performance in the Americas and continuing challenges in EMEA and Asia-Pacific. And since our report to you on the results of the second quarter, we have announced as we said we would and taken additional steps in our reinvention of the European business model. We announced plans at that time to build a new facility in the Czech Republic, and we announced we would close one of the factories in Germany. And we know it's extremely disruptive to people's lives anytime we close a plant, but this footprint shift is critical to the long-term competitive position of our company. Our team that is working on this remains disciplined about following all the important protocols for a change like this in Europe. Now as mentioned in the last call, we've also been working on additional restructuring of the sales support and marketing functions in EMEA as well. This involves the building of a platform to drive further growth and revenue and make us more agile, with local sales teams backed by a network of resources that cross national boundaries. These steps are a part of our multiyear strategy to transform our European business model. And this has been informed by our successful experience in the Americas. Asia-Pacific in this release is a different issue. We're not realizing the growth targets we have set for ourselves, the macroeconomics and foreign currency impacts are also playing a negative role. You've seen that our results this quarter included an impairment charge, and Dave will provide background on that in a few moments. We still anticipate growth in the long-term in Asia-Pacific, and it is a vital market for our global position. But I don't want a discussion of these other segments to shroud what is really the strong performance in the Americas, where we saw organic revenue growth of 11%, and operating income margin approached nearly 12%. This is continuing evidence that our message is gaining traction, leading organizations, as I've said, are ready to modernize their spaces where they work and a very nature of how they work, and they are turning to trusted brand of Steelcase. They're responding to our insights, and they're responding to the innovation displayed in our new products. You'll recall the new Gesture Chair, it's now shipping to a new product from Turnstone called the Buoy seating. It was a finalist in 2 design award competitions. It was also recognized this month in several holiday buying guides as a great gift. With that, I'll turn it over to Dave Sylvester, our Chief Financial Officer, and I will be back at the end with some additional thoughts. Dave? David C. Sylvester: Thank you, Jim. I will start with a few high-level comments about the third quarter results and balance sheet, provide some additional color, commentary around our order patterns and outlook for the fourth quarter of fiscal 2014, and then we'll move to your questions. On the third quarter results, I will first talk about the results versus our expectations and then move into the year-over-year and sequential quarter comparisons. Overall, reported earnings per share were lower than our expectations despite revenue slightly exceeding the range we communicated last quarter. The biggest factor impacting earnings were the impairment charges in Asia-Pacific, which had the net effect of reducing earnings by $0.10 per share. We also had favorable tax adjustments of $4 million in the quarter, which had the effect of increasing earnings per share by approximately $0.03. From a revenue perspective, in developing our revenue forecast, we factored in some concerns around EMEA uncertainty and the potential U.S. government shutdown, though neither ended up having much impact in the quarter. We estimate third quarter revenue in the Americas may have been modestly impacted by the U.S. federal government shutdown, but we had stronger-than-expected revenue from our own dealers in the quarter, which we estimate offset any shutdown impact on revenue. Otherwise, all business units reported revenue largely consistent with their forecast for the quarter. From an adjusted operating income perspective, results were below our expectations, primarily due to lower-than-anticipated gross margins in the Americas, EMEA and Asia-Pacific. For the Americas, we experienced a higher mix of business from large projects and our own dealers and a different mix of business among vertical markets than we have forecasted. In EMEA and Asia-Pacific, the shortfalls were linked to adjustments of reserves for slow-moving component part inventory and customer sales allowances. We estimate these items increased the adjusted operating losses in EMEA and Asia-Pacific by approximately $2.8 million. Below operating income, non-operating results were positively impacted by favorable joint venture income and lower miscellaneous expenses compared to a typical quarter. Lastly, the effective income tax rate approximated our estimate of 40%, but there were a couple of significant components, which largely offset each other. That is the non-deductibility of the Asia-Pacific impairment charges was largely offset by other net discrete tax benefits, mostly associated with tax planning strategies. A little more color on the segments. In the Americas, double-digit sales growth drove double-digit adjusted operating income margin as a percent of sales. The gross margin shortfalls I just discussed were offset by lower operating expenses. As a result, adjusted operating income of $67 million and the operating margin of 11.9% were consistent with our expectations. For EMEA, the adjusted operating loss was better than expected as the gross margin pressures were more than offset by lower-than-expected spending. While the 2% organic revenue decline was slightly better than our expectations, the order decline of 10% in EMEA was worse than expected, thereby impacting quarter-end backlog and dampening the outlook for the fourth quarter. Regarding the other category, we expected Asia-Pacific, Designtex and PolyVision in total to make a little money in the quarter, and instead, they posted an adjusted operating loss of $500,000. The difference was largely related to the slow-moving inventory reserve adjustment we recorded in Asia-Pacific. Lastly, corporate costs were somewhat higher than expected, primarily due to higher accrued earnings and deferred compensation. On a year-over-year basis, revenue in the third quarter grew 8% organically, and adjusted operating income increased by approximately $9.5 million or 21%. Higher operating income in the Americas was offset by lower operating results in EMEA and the other category. In addition, corporate costs were higher in the current year compared to the prior year. Organic revenue growth in the Americas of approximately 11% represented the 15th consecutive quarter of year-over-year growth and reflected a higher mix of business associated with large projects and significant growth in our own dealers. Beyond the positive impact of revenue growth, including ongoing benefits from price adjustments, the Americas operating results also benefited from continuous cost-reduction efforts across manufacturing and distribution, as well as benefits associated with the North American plant consolidations we completed within the past 12 months. These benefits were reduced in part by higher operating expenses related to marketing product development and other initiatives as some of our new products like the Gesture Task Chair are beginning to reach their launch dates. For EMEA, lower operating expenses linked to our cost-reduction efforts were more than offset by a number of factors, including the effects of the 2% organic revenue decline in the quarter, including higher levels of competitive discounting. The adjustments to inventory reserves and customer sales allowances previously mentioned, inefficient logistics and initial disruption costs associated with our announcement to close a manufacturing facility in Germany. Regarding the other category, the year-over-year comparison reflects 3 different situations. First, the PolyVision Surfaces business remains strong, posting a double-digit operating income margin, again, this quarter. Second, we are investing in a number of initiatives across Designtex, which is dampening their profitability in the short term, but expected to strengthen their position in the market over the longer term. These initiatives are already gaining momentum. Third, Asia-Pacific remains in a lull, with packets of strength in some markets being more than offset by weakness in China and other markets. As a result of the weakness in this region and the inventory adjustment previously mentioned, we posted adjusted operating losses in Asia-Pacific again this quarter. We continue to remain[ph] a positive longer-term view across this region, but because our profitability more recently falling below expectations and a reduced outlook over the nearer term, we conducted an assessment of our goodwill and intangible assets for that business and concluded they were impaired. Thus, we recorded $12.9 million of goodwill and intangible asset impairment charges in the current quarter. Lastly, as it relates to corporate costs, the $3.4 million increase compared to the prior year was primarily driven by higher accrued earnings on deferred compensation and other items related to long-term employee benefits. Sequentially, compared to the second quarter, the impacts of a shift in business among vertical markets and a higher mix of business from our own dealers in the Americas, more than offset benefits associated with the seasonal revenue growth in EMEA. For reference, the impact of the inventory charges and customer sales allowances in the current quarter was modestly higher than the environmental charges we took in the second quarter. Restructuring costs in the quarter were consistent with our expectations and were mostly attributable to the EMEA activities, which were initiated during the first quarter and are now complete. Regarding the actions we announced on October 19, we have initiated procedures with the applicable works councils regarding the closure of a manufacturing facility in Germany. These discussion are in the early stages of the process, and thus, we do not have anything to report other than what was included in the 8-K filed in October. Regarding our intention to establish a new manufacturing location in the Czech Republic, the contracts were signed earlier this week, and we expect to begin construction following the holidays. We continue to anticipate approximately $10 million in annualized savings from these actions once fully implemented by the end of fiscal 2016. These actions, in addition to previously announced actions, are part of our ongoing multiyear EMEA strategy to improve revenue and the fitness of our business model. We anticipate the EMEA segment will continue to report adjusted operating losses until the benefits of the multiyear EMEA strategy are more fully realized and the overall economic environment in Western Europe improves. Now I will spend a few minutes on income taxes. Again, last quarter, we communicated that we expected to record an effective tax rate of approximately 40% in the third quarter. This estimate did not anticipate the impact of a nondeductible impairment in Asia-Pacific or the other discrete tax items referenced in the release. However, the effects of these items largely offset each other. Accordingly, a reported effective tax rate did end up approximating 40%. Looking forward, we are forecasting 42% for the fourth quarter and currently modeling approximately 40% for next fiscal year. Many variables impact these estimates each quarter, so we cannot predict our effective tax rate with certainty, but we do expect a higher rate, while EMEA is generating net operating losses in certain markets, in which we are not recording any related deferred tax benefits. Moving to the balance sheet and cash flow. We generated $80 million of cash from operations during the third quarter. Working capital increased by $25 million in the quarter, primarily due to seasonal revenue growth in EMEA and the timing of shipments in Asia-Pacific. Capital expenditures totaled $16 million during the third quarter, and we are expecting to spend approximately $30 million in the fourth quarter, including down payments on the new facility in Eastern Europe. We reduced our variable life company-owned life insurance or COLI balances this quarter by reduce -- by withdrawing $75 million of bases tax-free, investing the cash proceeds in short-term investments. Over the last 15 years, with reductions in our employee base and reductions in our long-term benefit obligations, we reached a point where our COLI assets far exceeded our net obligations. This reduction in COLI is to move us back to a lower, more reasonable level of capital allocated to offset the obligations. We returned approximately $13 million to shareholders in the quarter through the payment of a cash dividend of $0.10 per share. And yesterday, the Board declared the same level of dividend to be paid in the fourth quarter. As it relates to our order patterns, I will start with the Americas where our orders in the third quarter grew approximately 9% compared to the prior year. Total order growth met our expectations, but order patterns within the quarter were a little unusual. Orders grew slightly in September and then fell by a mid-single digit rate in October before strengthening considerably in November. In fact, orders in November grew 33% compared to a modest decline in the prior year. And customer order backlog for the Americas ended the quarter up approximately 15% compared to the prior year. We suspect the U.S. government shutdown may have had the effect of deferring some level of orders from September and October to November. Across "types" in the Americas, project business remains strong, growing at a strong double-digit percentage rate, while orders from our marketing programs aimed at smaller day-to-day business and orders from continuing agreements grew at single-digit rates compared to the prior year. Vertical market order growth rates in the Americas were the strongest in the insurance, state and local government and information technology sectors. Energy, health care, education and federal government also grew, while manufacturing, financial services and technical professional posted declines against the prior year. Switching to EMEA. Order patterns in constant currency remained mixed, declining by approximately 10% in total compared to the prior year. We experienced order growth in Iberia and the export markets of Eastern, Central and Southern parts of Europe. Orders in Germany were down a couple of percent, while orders in the Middle East and Africa, Northern Europe and France declined more significantly. Customer order backlog for EMEA ended the quarter down approximately 9% compared to the prior year. Within the Other category, orders grew by 11% at Designtex and 4% at PolyVision, while orders in Asia-Pacific were down 10%. We are continuing to monitor the Chinese market closely as order patterns have remained relatively soft, and we expect challenges in Japan and India, given the recent currency devaluations and the fact that our business models in those markets are largely dependent on imports. To summarize, our order patterns and quarter-end backlog in the Americas remain solid. We continue to face a challenging environment in EMEA, and we are keeping a closer eye on Asia-Pacific as the lull in demand in that market is now extended for nearly 2 years. Turning to the fourth quarter. We expect to report revenue between $760 million and $785 million, which compares to $721 million in the fourth quarter of fiscal 2013. After giving effect to currency assumptions, a recent divestiture and an estimate of revenue associated with an extra week, we estimate organic revenue growth in the fourth quarter will approximate 1% to 4% compared to the prior year. Sequentially, the fourth quarter revenue estimate represents a range of down 6% to 9% on an organic basis, which is somewhat higher than typical seasonality due to expected weakness in EMEA, particularly in Germany and in the Middle East and Africa, both of which are facing prior year comparisons that included several large projects. The projected revenue in the fourth quarter reflects an estimate of $35 million related to an extra week in the Americas and other category compared to the prior year. EMEA always ends its fiscal year on the last day of February, so the comparison to the prior year is generally consistent. But Q4 of 2014 will include an extra week for EMEA compared to Q3 2014, increasing the sequential comparison related to the extra week to $45 million. As we've finished the fiscal year, we expect another strong quarter in the Americas. However, we estimate our adjusted operating loss in EMEA could exceed $10 million in the fourth quarter, dampening our consolidated results more significantly than in the third quarter. As it relates to restructuring costs, our earnings estimate does not contemplate any significant charges related to our proposed actions in Germany as we are in the early stages of discussions with related works councils. However, our earnings estimate does anticipate significant restructuring benefits related to expected gains from the sale of 2 previously closed facilities. These sales are expected to generate nearly $25 million of cash once the transactions are closed in the fourth quarter. In addition, the estimate for earnings includes higher operating expenses as compared to the third quarter, including costs associated with the extra week and incremental variable compensation expense associated with the restructuring benefits. We estimate the extra week will have the effect of increasing operating expenses by approximately $12.5 million, sequentially, compared to the third quarter and $9 million compared to the prior year. In addition, we estimate the restructuring gains in the fourth quarter will have the net effect of increasing variable compensation expense by approximately $4.5 million. Finally, our fourth quarter earnings estimate contemplates an effective income tax rate of approximately 42%, as I previously mentioned. As a result of these factors, we expect to report fourth quarter earnings within the range of $0.22 to $0.25 per share, including net restructuring benefits of approximately $0.07 per share. From there, we will turn it over for questions.

[Operator Instructions] Our first question comes from the line of Budd Bugatch from Raymond James. Budd Bugatch - Raymond James & Associates, Inc., Research Division: Jim Hackett, congratulations to you, on a terrific tenure. I still guess this is -- I think it is your last conference call. Is that correct? Or am I wrong?

It is, Budd. I'm going to make some comments at the end, but that's very kind of you, and happy holidays to you as well. Budd Bugatch - Raymond James & Associates, Inc., Research Division: I'm -- I hope that's not one of my questions. I guess, my question or my first question is the organic growth in the fourth quarter is expected of 1% to 4%, and I know you gave us some details, David, about the ending backlogs and orders for the third quarter in each of the segments. Can you maybe parse what you're thinking of organic growth is by segment? David C. Sylvester: Well, we don't like to give that much color by segment, but what you can imagine is that we're anticipating relatively significant growth in the Americas and likely not anticipating any growth in EMEA. And then in the other category, it's kind of a mixed bag. Budd Bugatch - Raymond James & Associates, Inc., Research Division: And if I'm not mistaken, I think in the Middle East, there's some issues with delays. Can you quantify that for us and maybe tell us what the impact might be in 2015? David C. Sylvester: Yes. It's -- what we're seeing is the Middle East and Africa revenue relative to last year was down quite considerably or is expected to be down, sorry, is expected to be down considerably in the fourth quarter compared to last year. And what we've continued to see in that part of the world is a significant amount of delays in installation. So these are not delayed orders. We have the orders, we produce the product in many cases, and we're ready to install it, but the buildings themselves are behind schedule. So what I've -- what we're seeing and what I imagine is that we are going to -- we could see a shift from the fourth quarter into the first quarter of anywhere in the neighborhood of $5 million to $10 million in revenue. Now we don't know how much of Q2 will shift or Q1 will shift to Q2, et cetera, but we are definitely seeing a pattern in the last couple of quarters of delays due to the fact that buildings are not getting done on schedule. Budd Bugatch - Raymond James & Associates, Inc., Research Division: Does that partially explain some of the growth in inventories? Is that already in inventory? David C. Sylvester: Yes, a little bit. If you see in the queue that finished goods has actually increased, that would be a driver of that.

And our next question comes from the line of Matt McCall from BB&T Capital Markets. Matthew Schon McCall - BB&T Capital Markets, Research Division: Jim, let me say as well. Well, I've been doing work with you over the past, I guess decade or so now. And we will not old to say that. But -- and best of luck in your next endeavor, whatever that may be.

You bet. Thank you, Matt. Matthew Schon McCall - BB&T Capital Markets, Research Division: So the European initiatives and Dave, I know you said there's something you won't comment incrementally on, but can you talk about kind of the structural -- just big picture. Maybe this is for you, Jim. The structural shifts and maybe what the next steps are going to be. And if you could give us an idea of where you'd like to see profitability and over what time frame. David C. Sylvester: Matt, I -- you are persistent, I'll give you that. You've asked that question several times. I've given you the same answer every time, and unfortunately, I'm going to do the same thing again today. We're just really not prepared to talk about any additional activities we may or may not take or even be contemplating. What you -- what I will tell you is what I've told you before is we're in the middle of a multiyear strategy to reinvent our EMEA business. And that reinvention, you'll recall, is to bring their strategy more on platform with the rest of the organization, where we're trying shift their focus from, let's say, a midsized national type companies to be more strategically focused on large leading organizations and supporting them with innovation and products that are introduced off of global platforms. We think that that will over time allow us to reduce some of our product complexity that exists in the business, but we don't know that definitively. And if that does, if we are successful in doing that, then we'll see a transformation in EMEA like what we've seen in the Americas that we were -- with that focus on the large leading organizations, we can take out some of the complexity in our product offering, as well as in our manufacturing footprint, which just puts benefits on top of benefits. But we're kind of 3 to 3.5 years in to what I've consistently said as a 4- to 6-year journey. So it's going to play out with each announcement that we make, but today, we're not prepared to talk about anything incremental to what's been talked about probably.

And I would just add, Matt that if I step back and just think about Europe as a market and what those countries are doing to right themselves from the banking crisis, there is a lot of progress has been made. I said on the business roundtable and part and parcel to the discussion with the Federal Reserve Chairman 2 weeks ago was European banking situation and their health. And that, of course, radiates through the rest of the economy and builds confidence. It's taking longer to fix that problem in Europe than it did in the U.S. We can declare victory in the U.S. with our banking system. It's probably the strongest it's ever been in a long time. Europe can't say that yet, but it's a lot stronger than it was just a few years ago. No one's talking about the Union breaking up. The credit systems are back to normal as much as they can be. And now that's in economic engine. I'm not advising you of something you don't already read about. But, I guess, if you think about the backdrop of that evolution that they've just described that Steelcase is going through against -- as Europe finds its way into its kind of next year of expansion, I'm certain about a couple of things. One is, the nature of what we do is really valued there, and it's tied to the promise of new kinds of working spaces, given the way technologies altered things as we've said here. So that's a good thing. We're not betting on something unusual as we cross boundaries like that. The second thing is, when we started this initiative that is being detailed to you as we can, that's the limitation, there is a different spirit in the sense of the kind of the design ethos, which is this notion of a globally-integrated enterprise. And having the benefit of, I guess, I would call the benefit of being able to sit in this job for a number of years, we're as clear as we've ever been for about the potential to design and instrument a global system. And there is a lot of progress there. It's a lot easier to do with things like telepresence and the kinds of tools that we've put in to connect and communicate. So you have the market moving that way. You have the company in a better shape. And then the third thing which should be pointed out is we know how to do this. We do know how to change an industrial footprint to build a competitive and compelling offer to our customers. And so we know how to do that. We know how to translate that to make that work. What we can't overcome is when you have these economic cyclical kinds of issues. And we have worked really hard as those who follows with that kind of tenure, to design of business, it's much more resilient through these kinds of cycles. Europe was the last phase of that that needed to be addressed. And part of its lag isn't a function of not knowing what to do or courage, it's the -- it's kind of an unforgiving economic challenge. Because of the nature of the systems, the paybacks are harder to identify. But we are not kicking the can down the road, so to speak, and we know that the competitive imperative -- we use that word because it really is the spirit of what we're doing -- is certain in our board's mind and the descending CEO and then the ascending CEO for the company. So I want to build confidence that this isn't a black box issue. And it starts to get revealed as we go through the protocols, and that's why Dave has to give you that answer. David C. Sylvester: And, Matt, other part of your question about what we're targeting. We know that in order to return our cost of capital on that business, we've got to be in the 6% operating income range, so that's clearly what we're focusing on as a minimum target. Matthew Schon McCall - BB&T Capital Markets, Research Division: Okay, perfect. Very helpful, both of you. And when you look at the strength of the orders, and I'm curious about the makeup of that order book, are you seeing anything? I ask this question often as well, but -- I'm persistent on many fronts. But when you look at the makeup of the order book, is it -- are you seeing more projects related to new buildings that are going up? Are you seeing anything that's giving you more comfort that the office modernization secular trend we talk about often is potential gaining momentum? Is the order book telling you anything about what's going on?

Matt, this is Terry. As you know, we look at our orders in a number of different ways. Getting back to Jim's comment about being less impacted by cycles, we really strive to -- striven to be more diversified. And quote types is one thing you mentioned, and we did see strong double-digit growth in projects. We don't track on how much of that's renovation versus new construction. But clearly, projects have been strong and continue to be strong. Third quarter was very good. But we also look at across our business groups in the Americas. There's 3 business groups on geographic -- in the geographic regions, and all 3 of them grew, their orders grew in the quarter. And if you dig under that, 9 out of the 13 regions we track grew. So it's broad-based growth geographically. And on verticals, we used to be focused on just a few verticals. Now we track 10 that are fairly even in size, and 7 out of those orders grew, and 7 out of the 10 verticals last quarter as well. And finally, across our product categories and solutions, every one of those product categories, their orders grew last quarter. So, however you cut it, our orders grew last quarter.

So we don't track it. Terry is right about that. But anecdotally, it does feel like we're seeing more orders than, let's say, a year or 2 ago that are related to new construction. And I will say that, again, it's anecdotally. But just yesterday, we were awarded a multiyear, multimillion dollar contract that's related to new construction. And if I process some of the large customer visits that I have been associated with, which is only a fraction of the customer visits that come through, I would say it feels like there is a few more new construction-related projects that are visiting us than, say, a couple of years ago. But again, it's anecdotal. So...

And our next question comes from the line of Josh Borstein from Longbow Research. Joshua Borstein - Longbow Research LLC: Getting back to Europe. On a macro level, it seems like things are starting to turn a little bit, but for your customers, perhaps, they're getting a little bit worse. Just what are you seeing from some of the leading indicators in Europe that you look at with respect to what they're telling you about conditions right now?

Well, I'm going to let Terry speak about the company. I want to state the macro with you. And because of some other duties I have, I get to see that some of the consumer businesses, where, if you just take automotive for example, like when the U.S. hit its doldrums in 2008, and there were -- the nature of incentives and things like that, low interest rates allowed some markets to have impetus to improve demand, we're seeing that in Europe. We're seeing some industries of, what we would say, have bottomed out, and they're starting to pick up. We tend to lag. I just want to point that out. When you look at our industry, we go in later, we come out later. So Terry, talk a little bit about where we are maybe in this cycle in Europe.

Sure. Thanks, Jim. We've been large business in U.K. and in Spain and France and Germany. So if you look at Spain, it's been the biggest decline. We are actually seeing strong signs that, that market decline has bottomed out, and we actually saw some growth last quarter and expect to see some next quarter. It's not a lot, but if -- but we're seeing that bottoming out and seeing some positive signs. In the U.K. over the last 6 months, we've seen strong signs that's bottoming out, and there are strong sales activity, particularly in the London area, as some banks start to looking at their businesses. They're buying a little bit more. Germany as well would bump up against some big business from last year, but it looks like that markets bottomed out, and we're seeing some good sales activities. And surveys with our dealers there show them being more optimistic than they have been. And we're still seeing declines in France, which is a big market for us, partly because, perhaps, we go after more mid-market and government business, but we were seeing larger declines there. That's established Western European part of the business. We're still seeing good strong growth, and essentially Europe, Southern Europe, and strong sales activity in Middle East although that business gets chunky. As they talk to you, we've had some projects delay there due to construction. Joshua Borstein - Longbow Research LLC: And then can you just remind us of the savings that you expect in EMEA in fiscal '15? I know you mentioned that $10 million from what's going on in Germany that, I think, is more of a fiscal '16 savings. So what do you have down the road in fiscal '15 here? David C. Sylvester: I think, we will see a couple of few million dollars of incremental savings from some of the actions that we've taken this year and completed. Joshua Borstein - Longbow Research LLC: Okay. And then just sticking on expenses for a little bit. You're spending an incremental $25 million to $30 million here in fiscal '14 on a number of initiatives, and I'm certainly cognitive those investments would fuel the growth of the company. So my question is how we should we think about these expenses. Looking into '15, are they incremental in the sense that they're more onetime in nature and should go away, or should we expect a similar level of investment next year as well? David C. Sylvester: Well, the first thing I would do, Josh, is to point you to our webcast slides, where we give you a sense of the year-to-date operating expense comparison, so through 3 quarters. I think it's on Page 8 of the webcast slides. What we show you is what is driving operating expenses up versus last year, so we break out currency translations and dealer acquisitions and variable compensation and any unusual items, which kind of leaves an all other bucket. And that all other bucket, we then describe as representing -- largely representing our incremental investments that we're making in the business. So through 3 quarters, that's $13 million. So it will be -- it will go up again next quarter. But I don't think it's going to be in the neighborhood of the $25 million to $30 million that we initially estimated coming into the fiscal year. And I think that's because we've not performed in all of our markets as we expected, so we've pulled back wherever possible. That said, we continue to gain market share in the U.S., which we estimate that we do, and we feel pretty good about some of our growth ideas. So we're going to continue to invest. I'm not ready today to size that, but we will be investing incrementally next year. The reason I'm not ready to size it today is we are in the midst of our planning process that will finish in the next month or 2. So come March, I'll be able to give you more color about next fiscal year. But you should definitely plan on some level of incremental investment. I'd be surprised if we were at the $30 million range or something like that relative to this year, but it could be a reasonably high number in the 20s or something like that. Joshua Borstein - Longbow Research LLC: And then just last, could you remind us of the expected savings in '15 that might help offset some of those investments? David C. Sylvester: Yes. So we'll have -- in EMEA, we'll have some miscellaneous or restructuring benefits, but also across the business we continue to target just general cost reduction or ongoing efficiency gains. And I'm not ready to size those today either, but we would certainly be targeting more than $10 million. Joshua Borstein - Longbow Research LLC: Okay. And I know, in the past quarters, you've kind of offered the level of investment, $25 million to $30 million, which would be offset by some savings, I think, it was in the neighborhood of $20 million. Could you put a similar number on what you expect next year? David C. Sylvester: Yes, we'll do that next quarter. So directionally, I'm trying to help you that don't plan on operating expenses or incremental investments next year being higher than $30 million. But I wouldn't plan on them being lower than $20 million. And then for cost reductions, very high-level thinking at the moment would be we'll be pursuing more than $10 million. But I don't know whether it'll be much more than $10 million or a little more than $10 million. We'll try to tight -- we'll definitely tighten that up for all of you in 90 days.

[Operator Instructions] Our next question comes from the line of Todd Schwartzman from Sidoti & Company. Todd A. Schwartzman - Sidoti & Company, LLC: And David, I think this may speak to the guidance that you just gave regarding investments, but I'm particularly interested in the expectations in '15, but also in fiscal '16 for a product -- new development, for modeling purposes. How should we think about that? David C. Sylvester: Our products are beginning to launch. We intentionally control the ramp-up of them in the early months and even in the early couple of quarters as we're feeding dealer showrooms, as we're working out any bugs in the manufacturing production lines and supply base. But then our expectation would be that they ramp up considerably. Now you're going to want me to size considerably, which I'm not going to do, but -- and for one reason is it's very difficult to estimate. As an example, the Gesture chair we have high expectations of, but it could exceed those expectations if the revenue translates anywhere -- anything similar to how it's been talked about in the media. There has been, I think, a couple hundred publications about Gesture and the research behind it. If that translates to revenue, it could be very interesting. But we have no forecast that, that can translate media publications to number of task chairs sold. And in a similar way, if I think about V.I.A., the architectural wall that we introduced at NeoCon in June, we have some estimates on that that are quite interesting over the next couple of years as we bring that to market. But again, depending on how that is positioned among customers and how new construction takes off, that could be very meaningful. It's just very hard to predict. We'll give you color as it's playing out, and -- but we won't be able to really predict with certainty the level of volume in the next year or 2. Todd A. Schwartzman - Sidoti & Company, LLC: All right. You have talked about EMEA's operating -- adjusted operating losses possibly exceeding $10 million in Q4. Where does that fall -- that, say, $10 million number, where does that fall in the $0.22 to $0.25 GAAP EPS guidance? David C. Sylvester: What do you mean the GAAP... Todd A. Schwartzman - Sidoti & Company, LLC: In other words, is that commensurate with the low end? Is that worst case scenario, the $10 million? Is that somewhere towards the midpoint? Or how should we think about it? David C. Sylvester: It's down the middle. Todd A. Schwartzman - Sidoti & Company, LLC: Okay. Long term, thinking out many years, how lofty is it or how realistic a goal is it to expect to see the EMEA's profit contribution commensurate with its revenue contribution as a percentage of Steelcase consolidated? David C. Sylvester: Are you asking about revenue as a percentage of totals? Todd A. Schwartzman - Sidoti & Company, LLC: Yes, I mean just margin wise. I mean, to what extent can you -- what are your opportunities to considerably narrow, if not eliminate that gap with North America? David C. Sylvester: Well -- I mean, we're losing money today. So for me to sit here and imagine that we could get to double-digit operating income like we're doing in the Americas, I think, it's way early for me to think about that. We do have ideas that get us to a point that we believe, with some volume improvement, we can return our cost of capital, which is, again, in this kind of 6% operating income range. Beyond that, it's really highly dependent on what level of volume we see and also how our products that are being launched globally really take root and the sales organization transforms this strategy to be focused more on large, leading organizations. There is a lot of variables at play. I think, fundamentally, if Europe will be challenged to reach the same level of performance that the Americas are achieving right now, simply because of the nationalistic structure in EMEA, we have said this before, we're several legal entities that are required to file separate statutory financial statements and separate tax returns and are governed by separate laws within those jurisdictions. That level of complexity is always going to -- well, at least for the foreseeable future is going to be in front of us in Europe. And that has a taxing effect on our operating margins relative to the U.S., where we're essentially one legal entity filing 1 return with the federal government.

But -- and I want to comment, because I think it's a great question. It's probably a different call with the U.S. ambassador to these different countries and their peers that look back because you are asking a fundamental question about European competitiveness versus America. And its, again, with the blessing of being able to sit here almost 20 years, there were times when we sat here and didn't think America was creating the kind of advantage that it had been used to as it related to Europe. And so you can see this back and forth as they think about their logical position in the kind of a world GDP. And as a consequence, that's causing Eastern Europe expansion. And we've got to say to ourselves we look down the road. The nature of those growth markets will make a difference in uplifting the margin of what has historically been Western Europe and now becomes Europe Europe. The other thing is that -- I've said this often in my remarks that the nature of the way the world's fusing together from a work perspective. So if you thought about calls that might be on, where, let's say, it's confectionery products or candy, and there is no reason that the platforms other than from a production advantage ought to be shared between the U.S. and Europe, the consumption isn't tied together. And in our world, it is. These companies that we do business with, European and Western companies, do want to build standards and relationships with a brand like Steelcase. So this is a huge advantage, as I was talking earlier, that we would talk about 10 years ago we now have. We now have this global platform. And so as you're trying to imagine the margin effects of that, we haven't had a proxy for that in the past. When we did business in Europe before, we did not have these platform structures. So the logic follows if we get the footprint right and we get the product offering right. Jim Keane is going to talk to you all about the strategy to grow demand there. We think we can grow share, grow demand. I mean, quite candidly, imagine the kind of numbers we're talking about suffering through, what do you think about the proprietary European companies are doing? They don't have an Americas business, so there is a lot of strife that is opportunity for a company like Steelcase. And so I leave you with a sense of optimism. I love how Dave is describing how it's hard to predict, because there is a lot of moving pieces. But I want you to feel a sense of confidence from us that we can get this business to be -- return its cost of capital. That's subjective. David C. Sylvester: Hey, Todd, do you want to talk just a second about the vertical market shift? I know you had a question last night that I deferred to today on the call. You were asking last night about the margin change in the Americas between the second quarter and the third quarter. And we've commented in the release and webcast slides and in my scripted remarks that it was largely driven by a vertical market shift. So to give you a little bit more color on that, again, from Q2 to Q3, the education vertical market represented 9 percentage points less of the vertical -- of the mix of total. So if it was x percent in Q2 and y percent in Q3, the difference was 9%, less; and that was replaced by financials and insurance and government; as well as we had a higher mix of owned dealer revenue. So that mix from education to those 3 other areas is really what drove the gross margins in the Americas going from 34.4% to 32.7% or something like that. Todd A. Schwartzman - Sidoti & Company, LLC: That is most helpful. One last question. Just in the U.S., over the last couple of years in terms of your market share gains, which product categories do you think you've made the most headway?

It's -- if you think about BIFMA breaks down between tables and workstations as one and seating as another, and then storage and wood as the third and fourth, we've gained share, quite a bit of share in the workstations and tables and as well as seating and storage, and holding about the same in wood. So a pretty broad-based improvement in our market share.

And our next question comes from the line of John Sullivan from Olstein Capital.

Hi. I just had a quick question on the growth in accounts receivable relative to sales in the quarter. Both on a year-over-year and sequential basis, it seems to have outpaced sales a little bit. Just was wondering if there was any clarity as to why and maybe over the next quarter or 2 if we can expect this to kind of get them back in line with sales growth. David C. Sylvester: Yes, it's really -- this is Dave. It's really related to the timing of shipments. So the sequential increase in receivables was largely driven by the EMEA seasonal improvement in revenue from Q2 to Q3. And their DSO is a bit longer than the U.S. And also in Asia, we had more shipments happened in November than in September and October. So it's really linked to that, and that's having an effect on the year-over-year comparison as well.

Okay. So maybe fourth quarter, first quarter next year we should see a little bit more of a tighter spread there? David C. Sylvester: I would imagine, yes.

Thank you. And that concludes our question-and-answer session for today. I would like to turn the conference back to Mr. Jim Hackett, CEO, for any concluding remarks.

Thank you, and thanks, all, for your attention today. As we've said back and forth, this will be my last analyst call as CEO for Steelcase. And the nature of this form is that feelings rarely get a seat at the fax table. I hope you'll permit me a moment to share some feeling with you. There is really 3 things. First is, I do believe that Steelcase has an extraordinary history and is a first-class enterprise. Even during the years of restructuring our business, our customers would constantly remind me of the quality of the company with whom they did business with. And it did much to lift my spirits in our most difficult times because one realizes we get to serve in an important and historic business. I want to thank you for being professional and very fair in your assessment of our company. And after so many years as a private company, I believe our maturation into a public company is complete. Second, I am the product of wonderful parents who themselves managed through difficult economic times in their lives. And what I learned from them was you can always really be cynical and downtrodden, but it takes leadership with inspiration and hope to imagine the brighter side of things. And I believe that I've always seen the promise of our company. We're seeing the emergence of things in the technology world that are just so powerful, but Steelcase kind of remains committed to helping unlock human promise. Missions like these inspire our people to come to work every day. And third, I believe we are extremely fortunate to have Jim Keane to take the reins of this 101-year-old company in March 2014 and demonstrate to you what I've known about him for 15 years. He has unheralded bandwidth to help us compete in an ever-demanding world. His integrity is what you've come to expect from a trusted brand like ours, and his team is the best we have fielded in a generation. So there is, as my mom and dad would say, a lot to be optimistic about in our business. And I hope there is an equal amount of optimism for you and your families at this special time of the year. Thank you so much, and happy holidays to everybody.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may now disconnect. Everyone, have a good day.