2014 ANNUAL REPORT
2014SC_AR_cover_2014May14.indd 3
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Financial Highlights
STOCK PERFORMANCE
($ DOLLARS)
500
450
400
350
300
250
200
150
100
50
0
02/27/09
02/26/10
02/25/11
02/24/12
02/22/13
02/28/14
S&P 500 Stock Index
Peer Group
Steelcase
NOTES:
1. This graph shows the yearly percentage change in cumulative total shareholder return, assuming a $100 investment on
February 27, 2009.
2. The S&P 500 Stock Index is used as a performance indicator of the overall stock market.
3. The Peer Group consists of three companies that manufacture office furniture and have industry characteristics that we
believe are similar to Steelcase. The peer group consists of Herman Miller, Inc., HNI Corporation and Knoll, Inc. The returns
of each company in this group are weighted by their relative market capitalization at the beginning of each fiscal year.
Kimball International, Inc. was included in the peer group in the Stock Performance Graph in our 2013 Annual Report;
however, that company has been excluded this year as we believe its charactertistics are no longer sufficiently similar to ours.
REVENUE
($ BILLIONS)
GROSS
MARGIN
NET INCOME
(LOSS)
CASH RETURNED
TO SHAREHOLDERS
(% OF REVENUE)
($ MILLIONS)
($ MILLIONS)
6
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1
2 3
.
0
3
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.
9
2
4
.
9
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.
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2
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$
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7
.
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8
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5
4
$
2
.
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5
$
FY:
10 11
12
13
14
FY:
10
11
12
13
14
FY:
11
12
13 14
FY:
10
11
12
13
14
)
6
.
3
1
$
(
Common Stock Repurchases
Dividends Paid
2013SC_AR_text_pages_2014May15.indd 2
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To our fellow shareholders:
Jim Hackett’s signature has been on every annual report since Steelcase became a public company in 1998, and it’s an
honor to follow him as CEO. Jim challenged us to constantly improve our competitive position in the midst of turbulent
economic cycles, to reinvent our business and to prepare for rapid changes in the world of work. Steelcase rose to
those challenges thanks to thousands of committed employees around the world and a strong management team that
largely remains in place.
I’ve worked directly for Jim each of my 17 years with the company. During that time I worked on strategy, research,
finance and – over the last eight years – sales, marketing and product development. As chief operating officer, I worked
to help Steelcase become more globally integrated, leveraging our best products and practices from around the world
to serve our customers and improve our financial performance.
Because I’ve been part of the leadership team all along, you should not expect my appointment to trigger any sudden
changes in our strategy. However, that strategy will continue to evolve, responding to the forces that will continue to
transform the workplace and reinforcing our determination to always be better.
Our performance
In fiscal year 2014, Steelcase reported $3 billion in annual revenue for the first time since we began to feel the impact
of the economic downturn in 2009. Your company reported net income of $87.7 million, or $0.69 per share. Adjusted
operating income grew 20 percent to $185.4 million.
We are very pleased with our results in the Americas, where we have achieved double-digit operating margins in recent
quarters. And we are aggressively pursuing growth and margin improvement strategies in other business segments
where we know we have opportunities to be better.
We were not profitable in EMEA. While this is related to current economic factors, we know that we must work to
improve our longer-term competitiveness. It will be a multi-year effort because it is not a matter of simply reducing
costs, but rather of reinventing our model to be even more relevant to customers and to better leverage our global
advantage.
We have been through this type of business reinvention before – and it worked. Beginning in 2001, we faced many
of these same challenges in the Americas, including excess manufacturing capacity and product complexity. Our
reinvention is the main reason why the Americas segment gained market share and, in this past year, achieved the
highest profitability since we’ve been a public company.
While EMEA is different than the Americas, the issues are similar. And we’re leveraging existing platforms and processes
– based on our experience and the needs of the market – instead of starting from scratch. We have a strong team
working on these improvements and are confident improved results will emerge.
Our view of the business
One of our most important objectives as a company – one of the ways we can be ahead – is to leverage our scale. We
are by far the largest competitor in our global industry, and in many countries we compete in a fragmented marketplace.
We have an opportunity to use our scale to deliver more value to customers and create a sustainable competitive
advantage.
That starts by leveraging our customer relationships and our network of people around the world who are serving each
customer. We leverage our scale with global product platforms and a multi-hub innovation network for new product
development. We have the size and capabilities to respond quickly.
When a major customer essentially doubled an already large order in mid-December, and asked for delivery before the
end of the calendar year, we were able to hit the deadline. We’re building an organization structure that allows us to
think strategically at a global level and execute quickly at the local level.
2013SC_AR_text_pages_2014May15.indd 3
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And we leverage the scale of our global research, applying those insights to inform our global and regional product
development. Customers look to Steelcase for help in understanding the future of work, workers and the workplace.
Yet as globalization and technology change at an exponential pace, we know we must work that much harder to
stay ahead in our view of the future.
By studying the ways people work – in social, spatial and informational contexts – we can understand and
recognize emerging patterns. We create value for customers when we translate these insights into tangible solutions
that address critical user needs and business issues. By doing so, we help our customers stay ahead.
As we work with leading organizations in a range of industries around the world, their CEOs are recognizing
execution alone is not enough. Their legacy products and patents are aging and disruptive competitors are
emerging. These organizations must maintain their momentum on execution, while creating a culture that can foster
innovation. They need to attract a new generation of workers with diverse skills and new expectations about how to
balance work and life.
These are the same challenges Steelcase faced over the past decade, on a journey towards being an insight-led,
globally integrated enterprise. We understand the challenges our global customers will experience – including
how to successfully lead globally distributed teams and mobile workers. We’ve also learned how changes to the
workplace can accelerate the evolution of processes and culture, in support of a company’s brand and strategy.
CEOs are calling people back to their offices, but many offices today don’t support the changing nature of work. For
years we have encouraged customers to open their spaces in order to enable greater collaboration and modernize
the real estate footprint. Our newest insights suggest the need for an even broader palette of choices, including
space for individuals and teams who need to focus without interruption. This identified need for privacy led us to
develop V.I.A.™, our new architectural portfolio. V.I.A. creates spaces for people to concentrate and collaborate.
In this vein, we are partnering with New York Times best-selling author Susan Cain, who has done extensive
research on the needs of introverts, to provide office workers more freedom in choosing the style of work that
helps them achieve their full potential. We will be introducing Susan Cain Quiet Spaces by Steelcase, a series of
applications designed to empower introverts.
What else can you expect from Steelcase in the coming year? We expect to continue to gain traction across
our distribution network with the new Gesture® chair, which launched in 2013. We have invested in expanding
our sales force in our strong Americas business, to support the growth opportunities in vertical markets such as
healthcare and education. We see new opportunities as our traditional healthcare customers compete for market
share and place a more holistic emphasis on wellbeing. Our Steelcase® Health business incorporates our legacy
Nurture® products and will be a platform for increased investment and growth. The global customers we serve are
expanding their own employment in fast-growing markets, and we are working to be ready to meet their needs.
Our investments in China, South Africa and Central Europe, for example, reflect opportunities we see to grow our
business in the medium term.
And these are just a few of the initiatives that we’re actively working on. I am delighted and honored to have the
chance to lead a company with such a rich history and so much potential for the future. Thank you for your support
of Steelcase, and we look forward to sharing our continued success.
James P. Keane
President and Chief Executive Officer
Steelcase Inc.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended February 28, 2014
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number 1-13873
____________________________
STEELCASE INC.
(Exact name of registrant as specified in its charter)
Michigan
(State or other jurisdiction of
incorporation or organization)
901 44th Street SE
Grand Rapids, Michigan
(Address of principal executive offices)
38-0819050
(IRS employer identification number)
49508
(Zip Code)
Registrant’s telephone number, including area code: (616) 247-2710
Securities registered pursuant to Section 12(b) of the Act:
Class A Common Stock
Title of each class
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes
No
No
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit and post such files). Yes
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
(Do not check if a smaller reporting company)
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
The aggregate market value of the voting and non-voting common equity of the registrant held by non-affiliates, computed by reference to the
closing price of the Class A Common Stock on the New York Stock Exchange, as of August 23, 2013 (the last day of the registrant’s most recently
completed second fiscal quarter) was approximately $1,288 million. There is no quoted market for registrant’s Class B Common Stock, but shares
of Class B Common Stock may be converted at any time into an equal number of shares of Class A Common Stock.
No
As of April 11, 2014, 90,617,740 shares of the registrant’s Class A Common Stock and 32,660,726 shares of the registrant’s Class B Common
Stock were outstanding.
Portions of the registrant’s definitive proxy statement for its 2014 Annual Meeting of Shareholders, to be held on July 16, 2014, are
incorporated by reference in Part III of this Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE:
STEELCASE INC.
FORM 10-K
YEAR ENDED FEBRUARY 28, 2014
TABLE OF CONTENTS
Part I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Part II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Part III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Part IV
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Supplementary Item. Executive Officers of the Registrant
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Item 15.
Exhibits, Financial Statement Schedules
Signatures
Schedule II
Index of Exhibits
Page No.
1
6
9
10
10
10
11
13
15
16
34
37
85
86
86
87
87
87
87
87
88
89
S-1
E-1
Item 1. Business:
PART I
The following business overview is qualified in its entirety by the more detailed information included
elsewhere or incorporated by reference in this Annual Report on Form 10-K (“Report”). As used in this Report,
unless otherwise expressly stated or the context otherwise requires, all references to “Steelcase,” “we,” “our,”
“Company” and similar references are to Steelcase Inc. and its subsidiaries in which a controlling interest is
maintained. Unless the context otherwise indicates, reference to a year relates to the fiscal year, ended in February
of the year indicated, rather than a calendar year. Additionally, Q1, Q2, Q3 and Q4 reference the first, second, third
and fourth quarter, respectively, of the fiscal year indicated. All amounts are in millions, except share and per share
data, data presented as a percentage or as otherwise indicated.
Overview
At Steelcase, our purpose is to unlock human promise by creating great experiences at work, wherever work
happens, and in environments that include education and healthcare. Through our family of brands that include
Steelcase®, Nurture®, Coalesse®, Details®, Designtex®, PolyVision® and Turnstone®, we offer a comprehensive
portfolio of solutions inspired by the insights gained from our human-centered research process and support the
social, economic and sustainable needs of people. We are a globally integrated enterprise, headquartered in Grand
Rapids, Michigan, U.S.A., with approximately 10,700 employees. Steelcase was founded in 1912, became publicly-
traded in 1998 and our stock is listed on the New York Stock Exchange under the symbol “SCS”.
Our growth strategy is to continue to translate our insights into products, applications and experiences that
will help the world’s leading organizations amplify the performance of their people, teams and enterprise and to
leverage our global scale. While continuing to build our own globally integrated enterprise, we also intend to grow
our presence in emerging markets.
Over the past several years, we have continued to invest in research and product development and have
launched new products, applications and experiences designed to address the significant trends that are impacting
the workplace, such as global integration, disruptive technologies, worker mobility, distributed teams and the need
for enhanced collaboration and innovation. We help our customers create workplace destinations that augment
human interaction by supporting the physical, cognitive and emotional needs of their people, while also optimizing
the value of their real estate investments.
Our global scale allows us to provide local differentiation, as we serve customers around the globe through
significant sales, manufacturing and administrative operations in the Americas, Europe and Asia. We market our
products and services primarily through a network of independent and company-owned dealers and also sell
directly to end-use customers. We extend our reach with a limited presence in retail and web-based sales channels.
Our Offerings
Our brands provide an integrated portfolio of furniture settings, user-centered technologies and interior
architectural products across a range of price points. Our furniture portfolio includes panel-based and freestanding
furniture systems and complementary products such as storage, tables and ergonomic worktools. Our seating
products include chairs which are highly ergonomic, seating that can be used in collaborative or casual settings and
specialty seating for specific vertical markets such as healthcare and education. Our technology solutions support
group collaboration by integrating furniture and technology. Our interior architectural products include full and partial
height walls and doors. We also offer services designed to reduce costs and enhance the performance of people,
wherever they work. Among these services are workplace strategy consulting, lease origination services, furniture
and asset management and hosted spaces.
Steelcase—Insight-led performance in an interconnected world
The Steelcase brand takes our insights and delivers high performance, sustainable work environments while
striving to be a trusted partner. Being a trusted partner means understanding and helping our customers and
partners who truly seek to elevate their performance. The Steelcase brand's core customers are leading
organizations (such as corporations, healthcare organizations, colleges/universities and government entities) that
are often large with complex needs and have an increasingly global reach. We strive to meet their diverse needs
1
while minimizing complexity by using a platform approach - from product components to common processes -
wherever possible.
Steelcase sub-brands include:
• Details, which researches, designs and markets worktools, personal lighting and furniture that provide
healthy and productive connections between people, their technology, their workplaces and their work.
• Nurture, which is focused on healthcare environments that can help make patients more comfortable,
caregivers more efficient and partners in care more receptive to healthcare delivery. Nurture brings a
holistic viewpoint to healthcare environments and works with patients and healthcare professionals to
develop valuable insights into environments that promote healing.
Coalesse—Insight-led inspiration
Coalesse is an award-winning brand of furnishings that expresses the new freedom of work. It is part of the
rapidly growing crossover market — homes and offices, meeting rooms and social spaces, private retreats and
public places — and is addressing the fluid intersections of work and life where boundaries are collapsing and
creativity is roaming.
Turnstone—Insight-led simplicity
Turnstone was created based on the belief that the world needs more successful entrepreneurs and small
businesses, and that great spaces to work can help that happen. Turnstone makes it easier for these companies to
create insight-led places to work using web-based tools or through our dealer channel.
Designtex
Designtex offers applied surface solutions that enhance environments and is a leading resource for applied
surface knowledge, innovation and sustainability. Designtex products are premium surface materials designed to
enhance seating, walls, work stations, floors and ceilings and can provide privacy, way-finding, motivation,
communications and artistic expression.
PolyVision
PolyVision is the world's leading supplier of ceramic steel surfaces to educational institutions and architectural
panels or special applications for commercial or infrastructure applications.
Reportable Segments
We operate on a worldwide basis within our Americas and EMEA reportable segments plus an “Other”
category. Additional information about our reportable segments, including financial information about geographic
areas, is contained in Item 7: Management’s Discussion and Analysis of Financial Condition and Results of
Operations and Note 18 to the consolidated financial statements.
Americas Segment
Our Americas segment serves customers in the United States (“U.S.”), Canada and Latin America. Our
portfolio of integrated architecture, furniture and technology products is marketed to corporate, government,
healthcare, education and retail customers through the Steelcase, Nurture, Coalesse, Details and Turnstone
brands.
We serve Americas customers mainly through approximately 400 independent and company-owned dealer
locations and we also sell directly to end-use customers. Our end-use customers are distributed across a broad
range of industries and vertical markets, including healthcare, higher education, insurance, financial services and
technology, but no industry or vertical market individually represented more than 13% of the Americas segment
revenue in 2014.
Each of our dealers maintains its own sales force which is complemented by our sales representatives who
work closely with our dealers throughout the selling process. The largest independent dealer in the Americas
accounted for approximately 6% of the segment’s revenue in 2014, and the five largest independent dealers
collectively accounted for approximately 18% of the segment’s revenue in 2014.
2
In 2014, the Americas segment recorded revenue of $2,154.4, or 72.1% of our consolidated revenue, and as
of the end of the year had approximately 6,800 employees, of which approximately 4,600 related to manufacturing.
The Americas office furniture industry is highly competitive, with a number of competitors offering similar
categories of products. The industry competes on a combination of insight, product performance, design, price and
relationships with customers, architects and designers. Our most significant competitors in the U.S. are Haworth,
Inc., Herman Miller, Inc., HNI Corporation and Knoll, Inc. Together with Steelcase, domestic revenue from these
companies represents approximately one-half of the U.S. office furniture industry.
EMEA Segment
Our EMEA segment serves customers in Europe, the Middle East and Africa primarily under the Steelcase
and Coalesse brands, with an emphasis on freestanding furniture systems, storage and seating solutions. Our
largest presence is in Western Europe, where we believe we have the leading market share in Germany, France
and Spain. In 2014, approximately 83% of EMEA revenue was from Western Europe. The remaining revenue was
from other parts of Europe, the Middle East and Africa. No individual country in the EMEA segment represented
more than 6% of our consolidated revenue in 2014.
We serve EMEA customers through approximately 400 independent and company-owned dealer locations. In
certain geographic markets, we sell directly to end-use customers. Our end-use customers are larger multinational,
regional or local companies spread across a broad range of industries and vertical markets, including financial
services, higher education, healthcare, government and technology. No single independent dealer in the EMEA
segment accounted for more than 3% of the segment’s revenue in 2014. The five largest independent dealers
collectively accounted for approximately 8% of the segment’s revenue in 2014.
In 2014, our EMEA segment recorded revenue of $566.9, or 19.0% of our consolidated revenue, and as of
the end of the year had approximately 2,200 employees, of which approximately 1,100 related to manufacturing.
The EMEA office furniture market is highly competitive and fragmented. We compete with many local and
regional manufacturers in many different markets. In several cases, these competitors focus on specific product
categories.
Other Category
The Other category includes Asia Pacific, Designtex and PolyVision.
Asia Pacific serves customers in the People’s Republic of China (including Hong Kong), India, Japan,
Australia, and other countries in southeast Asia, primarily under the Steelcase brand with an emphasis on furniture
systems and seating solutions. We sell directly and through approximately 50 independent and company-owned
dealer locations to end-use customers. Our end-use customers are larger multinational or regional companies
spread across a broad range of industries and are located in both established and emerging markets. Our
competition is fragmented and includes large global competitors as well as many regional and local manufacturers.
Designtex primarily sells textiles and wall covering products specified by architects and designers directly to
end-use customers through a direct sales force primarily in North America.
PolyVision manufactures ceramic steel surfaces for use in multiple applications, but primarily for sale to third-
party fabricators and distributors to create static whiteboards and chalkboards sold in the primary and secondary
education markets globally.
In 2014, the Other category accounted for $267.6, or 8.9% of our consolidated revenue, and as of the end of
the year had approximately 1,700 employees, of which approximately 900 related to manufacturing.
Corporate
Corporate expenses include unallocated portions of shared service functions such as information technology,
human resources, finance, executive, corporate facilities, legal and research.
3
Joint Ventures and Other Equity Investments
We enter into joint ventures and other equity investments from time to time to expand or maintain our
geographic presence, support our distribution network or invest in new business ventures, complementary products
and services. As of February 28, 2014, our investment in these unconsolidated joint ventures and other equity
investments totaled $53.0. Our share of the earnings from joint ventures and other equity investments is recorded in
Other income (expense), net on the Consolidated Statements of Income.
Customer and Dealer Concentrations
Our largest customer accounted for 1.0% of our consolidated revenue in 2014, and our five largest customers
collectively accounted for 3.1% of our consolidated revenue. However, these percentages do not include revenue
from various U.S. federal government agencies. In 2014, our sales to U.S. federal government agencies
represented approximately 3% of our consolidated revenue. We do not believe our business is dependent on any
single or small number of end-use customers, the loss of which would have a material adverse effect on our
business.
No single independent dealer accounted for more than 4% of our consolidated revenue in 2014. The five
largest independent dealers collectively accounted for approximately 13% of our consolidated revenue in 2014. We
do not believe our business is dependent on any single dealer, the loss of which would have a sustained material
adverse effect upon our business.
Working Capital
Our accounts receivable are from our dealers and direct-sale customers. Payment terms vary by country and
region. The terms of our Americas segment, and certain markets within the EMEA segment, encourage prompt
payment from dealers by offering an early settlement discount. Other international markets have, by market
convention, longer payment terms. We are not aware of any special or unusual practices or conditions related to
working capital items, including accounts receivable, inventories and accounts payable, which are significant to
understanding our business or the industry at large.
Backlog
Our products are generally manufactured and shipped within two to six weeks following receipt of order;
therefore, we do not view the amount of backlog at any particular time as a meaningful indicator of longer-term
shipments.
Global Manufacturing and Supply Chain
Manufacturing and Logistics
We have manufacturing operations throughout North America (in the United States and Mexico), Europe (in
France, Germany and Spain) and Asia (in China, Malaysia and India). Our global manufacturing operations are
centralized under a single organization to serve our customers’ needs across multiple brands and geographies.
Our manufacturing model is predominately make-to-order with lead times typically ranging from two to six
weeks. We manufacture our products using lean manufacturing principles, which allow us to maintain efficiencies
and cost savings by minimizing the amount of inventory on hand. As a result, we largely purchase direct materials
and components as needed to meet demand. We have evolved our manufacturing and supply chain systems
significantly over the last decade by implementing continuous one-piece flow, platforming our processes and
product offerings and developing a global network of integrated suppliers.
These changes to our manufacturing model have reduced the capital needs of our business, inventory levels
and the footprint of our manufacturing space and have allowed us to improve quality, delivery performance and the
customer experience. We continue to identify opportunities to improve the fitness of our business and strengthen
our long-term competitiveness. In 2014, we initiated procedures related to the closure of a manufacturing facility in
Germany and the establishment of a new manufacturing facility in the Czech Republic. In 2013, we substantially
completed a two-year project to close three North American manufacturing facilities and move production within
those facilities to other Steelcase locations in North America.
In addition to our ongoing focus on enhancing the efficiency of our manufacturing operations, we also seek to
reduce costs through our global sourcing effort. We have capitalized on raw material and component cost savings
4
available through lower cost suppliers around the globe. This global view of potential sources of supply has
enhanced our leverage with domestic supply sources, and we have been able to reduce cycle times through
improvements with our partners throughout the supply chain.
Our physical distribution system utilizes commercial transport, company-owned and dedicated fleet delivery
services. We have implemented a network of regional distribution centers to reduce freight costs and improve
service to our dealers and customers. Some of these distribution centers are located within our manufacturing
facilities, and we have engaged third-party logistics providers to operate some of these regional distribution centers.
Raw Materials
We source raw materials and components from a significant number of suppliers around the world. Those raw
materials include petroleum-based products, steel, other metals, wood, particleboard and other materials and
components. To date, we have not experienced any significant difficulties in obtaining these raw materials.
The prices for certain commodities such as steel, aluminum and other metals, wood, particleboard and
petroleum-based products have fluctuated in recent years due to changes in global supply and demand. Our global
supply chain team continually evaluates current market conditions, the financial viability of our suppliers and
available supply options on the basis of cost, quality and reliability of supply.
Research, Design and Development
Our extensive global research — a combination of user observations, feedback sessions and sophisticated
analysis — has helped us develop social, spatial and informational insights into work effectiveness. We maintain
collaborative relationships with external world-class innovators, including leading universities, think tanks and
knowledge leaders, to expand and deepen our understanding of how people work.
Understanding patterns of work enables us to identify and anticipate user needs across the globe. Our design
teams explore and develop prototypical solutions to address these needs. These solutions vary from furniture,
architecture and technology solutions to single products or enhancements to existing products, and across different
vertical market applications such as healthcare, higher education and professional services. Organizationally, global
design leadership directs strategy and project work, which is distributed to design studios around the world and
often involves external design services.
Our marketing team evaluates product concepts using several criteria, including financial return metrics, and
chooses which products will be developed and launched. Designers then work closely with engineers and suppliers
to co-develop products and processes that incorporate innovative user features with efficient manufacturing
practices. Products are tested for performance, quality and compliance with applicable standards and regulations.
Exclusive of royalty payments, we invested $35.9, $36.0 and $35.8 in research, design and development
activities in 2014, 2013 and 2012, respectively. We continue to invest approximately one to two percent of our
revenue in research, design and development each year. Royalties are sometimes paid to external designers of our
products as the products are sold. These costs are not included in research and development expenses.
Intellectual Property
We generate and hold a significant number of patents in a number of countries in connection with the
operation of our business. We also hold a number of trademarks that are very important to our identity and
recognition in the marketplace. We do not believe that any material part of our business is dependent on the
continued availability of any one or all of our patents or trademarks or that our business would be materially
adversely affected by the loss of any of such, except the “Steelcase,” “Nurture,” “Coalesse,” “Details,” “Designtex,”
“PolyVision” and “Turnstone” trademarks.
We occasionally enter into license agreements under which we pay a royalty to third parties for the use of
patented products, designs or process technology. We have established a global network of intellectual property
licenses with our subsidiaries.
Employees
As of February 28, 2014, we had approximately 10,700 employees, of which approximately 6,600 work in
manufacturing. Additionally, we had approximately 1,600 temporary workers who primarily work in manufacturing.
Approximately 100 employees in the U.S. are covered by collective bargaining agreements. Internationally, 2,000
5
employees are represented by workers' councils that operate to promote the interests of workers. Management
promotes positive relations with employees based on empowerment and teamwork.
Environmental Matters
We are subject to a variety of federal, state, local and foreign laws and regulations relating to the discharge of
materials into the environment, or otherwise relating to the protection of the environment (“Environmental Laws”).
We believe our operations are in substantial compliance with all Environmental Laws. We do not believe existing
Environmental Laws and regulations have had or will have any material effects upon our capital expenditures,
earnings or competitive position.
Under certain Environmental Laws, we could be held liable, without regard to fault, for the costs of
remediation associated with our existing or historical operations. We could also be held responsible for third-party
property and personal injury claims or for violations of Environmental Laws relating to contamination. We are a
party to, or otherwise involved in, proceedings relating to several contaminated properties being investigated and
remediated under Environmental Laws, including as a potentially responsible party in several Superfund site
cleanups. Based on our information regarding the nature and volume of wastes allegedly disposed of or released at
these properties, the total estimated cleanup costs and other financially viable potentially responsible parties, we do
not believe the costs to us associated with these properties will be material, either individually or in the aggregate.
We have established reserves that we believe are adequate to cover our anticipated remediation costs. However,
certain events could cause our actual costs to vary from the established reserves. These events include, but are not
limited to: a change in governmental regulations or cleanup standards or requirements; undiscovered information
regarding the nature and volume of wastes allegedly disposed of or released at these properties; and other factors
increasing the cost of remediation or the loss of other potentially responsible parties that are financially capable of
contributing toward cleanup costs.
Available Information
We file annual reports, quarterly reports, proxy statements and other documents with the Securities and
Exchange Commission (“SEC”) under the Securities Exchange Act of 1934 (the “Exchange Act”). The public may
read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE,
Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. Also, the SEC maintains an Internet website at www.sec.gov that contains
reports, proxy and information statements and other information regarding issuers, including Steelcase, that file
electronically with the SEC.
We also make available free of charge through our internet website, www.steelcase.com, our annual reports
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to these reports,
as soon as reasonably practicable after we electronically file such reports with or furnish them to the SEC. In
addition, our Corporate Governance Principles, Code of Ethics, Code of Business Conduct and the charters for the
Audit, Compensation and Nominating and Corporate Governance Committees are available free of charge through
our website or by writing to Steelcase Inc., Investor Relations, GH-3E-12, PO Box 1967, Grand Rapids, Michigan
49501-1967.
We are not including the information contained on our website as a part of, or incorporating it by reference
into, this Report.
Item 1A. Risk Factors:
The following risk factors and other information included in this Report should be carefully considered. The
risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we do
not know about currently, or that we currently believe are less significant, may also adversely affect our business,
operating results, cash flows and financial condition. If any of these risks actually occur, our business, operating
results, cash flows and financial condition could be materially adversely affected.
Our industry is influenced significantly by cyclical macroeconomic factors and secular changes that are
difficult to predict.
Our revenue is generated predominantly from the office furniture industry, and demand for office furniture is
influenced heavily by a variety of factors, including macroeconomic factors such as corporate profits, non-residential
fixed investment, white-collar employment and commercial office construction and vacancy rates. Increasingly,
6
advances in technology, the globalization of business, changing workforce demographics and shifts in work styles
and behaviors are changing the world of work and may have a significant impact on the types of workplace
products and services purchased by our customers, the level of revenue associated with our offerings and the
geographic location of the demand.
According to the U.S.-based Business and Institutional Furniture Manufacturers Association and European-
based Centre for Industrial Studies, the U.S. and European office furniture industries have gone through two major
downturns in recent history. Consumption declined by more than 30% and 20% from calendar year 2000 to 2003,
and again by over 30% and 23% from 2007 to 2009, in the U.S. and Europe, respectively. While the U.S. office
furniture industry has been recovering over the past four years, the European industry has remained in recession.
During these downturns, our revenue declined in similar proportion and our profitability was significantly reduced.
Although we have made a number of changes to adapt our business model to these cycles, our profitability could
be impacted in the future by cyclical downturns. In addition, the pace of industry recovery, by geography or vertical
market, may vary after a cyclical downturn. These macroeconomic factors are difficult to predict, and if we are
unsuccessful in adapting our business as economic cyclical changes occur, our results may be adversely affected.
Our continuing efforts to improve our business model could result in additional restructuring costs and
may result in customer disruption.
Over the past decade, we have implemented a number of restructuring actions to transform our business
through the reinvention of our industrial system and white collar processes and have significantly reduced our
manufacturing footprint. While we believe we have made substantial progress, we continue to evolve and optimize
our business model to be more flexible and agile in meeting changing demand, and incremental restructuring
actions may be necessary. We are engaged in a multi-year strategy in EMEA to improve revenue and the fitness of
our business model, which includes negotiations with regard to the closure of a manufacturing location in Germany
and the establishment of a new manufacturing facility in the Czech Republic. The success of our restructuring
initiatives is dependent on several factors, including our ability to negotiate with related works councils and manage
these actions without disrupting existing customer commitments or impacting operating efficiency. Further, these
actions may take longer than anticipated and may distract management from other activities, and we may not fully
realize the expected benefits of our restructuring activities, either of which would have a negative impact on our
profitability.
Failure to respond to changes in workplace trends and the competitive landscape may adversely affect
our revenue and profits.
Advances in technology, the globalization of business, changing workforce demographics and shifts in work
styles and behaviors are changing the world of work and may have a significant impact on the types of workplace
products and services purchased by our customers, the level of revenue associated with our offerings and the
geographic location of the demand. For example, in recent years, these trends have resulted in a reduction in the
amount of office floor space allocated per employee, a reduction in the number, size (and price) of typical
workstations and an increase in work occurring in more collaborative settings and in a variety of locations beyond
the traditional office. The confluence of these factors could attract new competitors from outside the traditional office
furniture industry, such as real estate management service firms, technology-based firms or general construction
contractors, offering products and services which compete with those offered by us and our dealers. In addition, the
traditional office furniture industry is highly competitive, with a number of competitors offering similar categories of
products. We compete on a variety of factors, including: brand recognition and reputation, insight from our research,
product design and features, price, lead time, delivery and service, product quality, strength of dealers and other
distributors and relationships with customers and key influencers, such as architects, designers and facility
managers. If we are unsuccessful in developing and offering products and services which respond to changes in
workplace trends and generate revenue to offset the impact of reduced numbers, size (and price) of typical
workstations, or we or our dealers are unsuccessful in competing with existing competitors and new competitive
offerings which could arise from outside our industry, our revenue and profits may be adversely affected.
We may not be able to successfully develop, implement and manage our diversification and growth
strategies.
Our longer-term success depends on our ability to successfully develop, implement and manage strategies
that will preserve our position as the world’s largest office furniture manufacturer, as well as expand our offerings
into adjacent and emerging markets. In particular, our diversification and growth strategies include:
7
•
•
•
•
•
translating our research regarding the world of work into innovative solutions which address market
needs,
continuing our expansion into adjacent markets such as healthcare clinical spaces and classrooms,
libraries and other educational settings and smaller companies,
growing our market share in markets such as China, India, Brazil, eastern, central and southern Europe,
Africa and the Middle East,
investing in acquisitions and new business ventures and
developing new alliances and additional channels of distribution.
If these strategies to diversify and increase our revenues are not sufficient, or if we do not execute these
strategies successfully, our profitability may be adversely affected.
We have been and expect to continue making investments in strategic growth initiatives and new product
development. If our return on these investments is lower, or develops more slowly, than we anticipate, our
profitability may be adversely affected.
We may be adversely affected by changes in raw material and commodity costs.
We procure raw materials (including petroleum-based products, steel, aluminum, other metals, wood and
particleboard) from a significant number of sources globally. These raw materials are not rare or unique to our
industry. The costs of these commodities, as well as fuel and energy costs, have fluctuated significantly in recent
years due to changes in global supply and demand, which can also cause supply interruptions. In the short-term,
rapid increases in raw material and commodity costs can be very difficult to offset with price increases because of
existing contractual commitments with our customers, and it is difficult to find effective financial instruments to
hedge against such changes. As a result, our gross margins can be adversely affected by short-term increases in
these costs. Also, if we are not successful in passing along higher raw material and commodity costs to our
customers over the longer-term because of competitive pressures, our profitability could be negatively impacted.
Our global presence subjects us to risks that may negatively affect our profitability and financial
condition.
We have manufacturing facilities and sales, administrative and shared services offices in many countries, and
as a result, we are subject to risks associated with doing business globally. Our success depends on our ability to
manage the complexity associated with designing, developing, manufacturing and selling our solutions in a variety
of countries. Our global presence is also subject to market risks, which in turn could have an adverse effect on our
results of operations and financial condition, including:
•
•
•
differing business practices, cultural factors and regulatory requirements,
fluctuations in currency exchange rates and currency controls,
political, social and economic instability, natural disasters, security concerns, including terrorist activity,
armed conflict and civil or military unrest, and global health issues and
•
intellectual property protection challenges.
We are increasingly reliant on a global network of suppliers.
Our migration to a less vertically integrated manufacturing model has increased our dependency on a global
network of suppliers. We are reliant on the timely flow of raw materials, components and finished goods from third-
party suppliers. The flow of such materials, components and goods may be affected by:
•
•
•
•
fluctuations in the availability and quality of raw materials,
the financial solvency of our suppliers and their supply chains,
disruptions caused by labor activities and
damage and loss of production from accidents, natural disasters and other causes.
Any disruptions in the supply and delivery of raw materials, component parts and finished goods or
deficiencies in our ability to manage our global network of suppliers could have an adverse impact on our business,
operating results or financial condition.
8
Disruptions within our dealer network could adversely affect our business.
We rely largely on a network of more than 800 independent dealer locations to market, deliver and install our
products to end-use customers. From time to time, we or a dealer may choose to terminate our relationship, or the
dealer could face financial insolvency or difficulty in transitioning to new ownership. Our business is influenced by
our ability to initiate and manage new and existing relationships with dealers, and establishing new dealers in a
market can take considerable time and resources. Disruption of dealer coverage within a specific local market could
have an adverse impact on our business within the affected market. The loss or termination of a significant number
of dealers or the inability to establish new dealers could cause difficulties in marketing and distributing our products
and have an adverse effect on our business, operating results or financial condition. In the event that a dealer in a
strategic market experiences financial difficulty, we may choose to make financial investments in the dealership,
which would reduce the risk of disruption but increase our financial exposure.
We may be required to record impairment charges related to goodwill and indefinite-lived intangible
assets which would adversely affect our results of operations.
We have net goodwill of $108.1 as of February 28, 2014. Goodwill and other acquired intangible assets with
indefinite lives are not amortized but are evaluated for impairment annually and whenever an event occurs or
circumstances change such that it is more likely than not that an impairment may exist. Poor performance in
portions of our business where we have goodwill or intangible assets, or declines in the market value of our equity,
may result in impairment charges, which would adversely affect our results of operations.
There may be significant limitations to our utilization of net operating loss carryforwards to offset future
taxable income.
We have deferred tax asset values related to net operating loss carryforwards (“NOLs”) residing primarily in
various non-U.S. jurisdictions totaling $90.9, against which valuation allowances totaling $76.2 have been recorded.
We may be unable to generate sufficient taxable income from future operations in the applicable jurisdictions, or
implement tax, business or other planning strategies, to fully utilize the recorded value of our NOLs. We have NOLs
in various currencies that are also subject to foreign exchange risk, which could reduce the amount we may
ultimately realize. Additionally, future changes in tax laws or interpretations of such tax laws may limit our ability to
fully utilize our NOLs.
Costs related to our participation in a multi-employer pension plan could increase.
Our subsidiary SC Transport Inc. contributes to the Central States, Southeast and Southwest Areas Pension
Fund, a multi-employer pension plan, based on obligations arising under a collective bargaining agreement with our
SC Transport Inc. employees. The plan is not administered by or in any way controlled by us. We have relatively
little control over the level of contributions we are required to make to the plan, and it is currently underfunded. As a
result, contributions are scheduled to increase, and we expect that contributions to the plan may be subject to
further increases. The amount of any increase or decrease in our required contributions to the multi-employer
pension plan will depend upon the outcome of collective bargaining, actions taken by trustees who manage the
plan, governmental regulations, the actual return on assets held in the plan, the continued viability and contributions
of other employers which contribute to the plan, and the potential payment of a withdrawal liability, among other
factors.
Under current law, an employer that withdraws or partially withdraws from a multi-employer pension plan may
incur a withdrawal liability to the plan, which represents the portion of the plan’s underfunding that is allocable to the
withdrawing employer under very complex actuarial and allocation rules. We could incur a withdrawal liability if we
substantially reduce the number of SC Transport Inc. employees. The most recent estimate of our potential
withdrawal liability is $24.7 as of February 28, 2014.
Item 1B. Unresolved Staff Comments:
None.
9
Item 2. Properties:
We have operations at locations throughout the U.S. and around the world. None of our owned properties are
mortgaged or are held subject to any significant encumbrance. We believe our facilities are in good operating
condition and, at present, are in excess of that needed to meet volume needs currently and for the foreseeable
future. Our global headquarters is located in Grand Rapids, Michigan, U.S.A. Our owned and leased principal
manufacturing and distribution center locations with greater than 100,000 square feet are as follows:
Segment/Category Primarily Supported
Number of Principal
Locations
Owned
Leased
Americas
EMEA
Other
Total
12
5
4
21
5
4
2
11
7
1
2
10
In 2014, we added one leased distribution facility and exited one owned manufacturing facility in the
Americas.
Item 3. Legal Proceedings:
We are involved in litigation from time to time in the ordinary course of our business. Based on known
information, we do not believe we are a party to any lawsuit or proceeding that is likely to have a material adverse
effect on the Company.
Item 4. Mine Safety Disclosures:
Not applicable.
10
Supplementary Item. Executive Officers of the Registrant:
Our executive officers are:
Name
Guillaume M. Alvarez
Sara E. Armbruster
Ulrich H. E. Gwinner
Nancy W. Hickey
James P. Keane
Hamid Khorramian
James N. Ludwig
Mark T. Mossing
Gale Moutrey
Lizbeth S. O’Shaughnessy
Eddy F. Schmitt
Allan W. Smith, Jr.
David C. Sylvester
Age
54
43
50
62
54
65
50
56
55
52
42
46
49
Senior Vice President, EMEA
Position
Vice President, Strategy, Research and New Business Innovation
President, Asia Pacific
Senior Vice President, Chief Administrative Officer
President and Chief Executive Officer, Director
Senior Vice President, Global Operations
Vice President, Global Design and Product Engineering
Corporate Controller and Chief Accounting Officer
Vice President, Communications
Senior Vice President, Chief Legal Officer and Secretary
Senior Vice President, Americas
Vice President, Global Marketing
Senior Vice President, Chief Financial Officer
Guillaume M. Alvarez has been Senior Vice President, EMEA since March 2014. Mr. Alvarez was Senior Vice
President, Sales, EMEA from October 2011 to March 2014, Vice President, Global Client Collaboration from May
2010 to October 2011 and Vice President, Global Alliances from May 2008 to May 2010. Mr. Alvarez has been
employed by Steelcase since 1984.
Sara E. Armbruster has been Vice President, Strategy, Research and New Business Innovation since
January 2014. Ms. Armbruster was Vice President, WorkSpace Futures and Corporate Strategy from May 2009 to
January 2014 and Vice President, Corporate Strategy from when she joined Steelcase in 2007 to May 2009.
Ulrich H. E. Gwinner has been President, Asia Pacific since March 2014. Mr. Gwinner was President,
Steelcase Asia Pacific from May 2007 to March 2014 and has been employed by Steelcase since 2000.
Nancy W. Hickey has been Senior Vice President, Chief Administrative Officer since November 2001 and has
been employed by Steelcase since 1986.
James P. Keane has been President and Chief Executive Officer since March 2014. Mr. Keane was
President and Chief Operating Officer from April 2013 to March 2014, Chief Operating Officer from November 2012
to April 2013 and President, Steelcase Group from October 2006 to November 2012. Mr. Keane became a member
of the Board of Directors of Steelcase in April 2013 and has been employed by Steelcase since 1997.
Hamid Khorramian has been Senior Vice President, Global Operations since March 2014. Mr. Khorramian
was Senior Vice President, Global Operations Officer from April 2012 to March 2014, Vice President, North
American Operations from June 2009 to April 2012 and Vice President, Manufacturing-North America from June
2004 to June 2009. Mr. Khorramian has been employed by Steelcase since 1977.
James N. Ludwig has been Vice President, Global Design and Product Engineering since March 2014. Mr.
Ludwig was Vice President, Global Design from March 2008 to March 2014 and has been employed by Steelcase
since 1999.
Mark T. Mossing has been Corporate Controller and Chief Accounting Officer since April 2008. Mr. Mossing
was Vice President, Corporate Controller from 1999 to April 2008 and has been employed by Steelcase since 1993.
Gale Moutrey has been Vice President, Communications since March 2014. Ms. Moutrey was Vice
President, Brand Communications from March 2001 to March 2014 and has been employed by Steelcase since
1984.
Lizbeth S. O’Shaughnessy has been Senior Vice President, Chief Legal Officer and Secretary since April
2011. Ms. O’Shaughnessy was Vice President, Chief Legal Officer and Secretary from 2007 to April 2011 and has
been employed by Steelcase since 1992.
11
Eddy F. Schmitt has been Senior Vice President, Americas since March 2014. Mr. Schmitt was Senior Vice
President, Sales and Distribution, Americas from February 2011 to March 2014 and Vice President, Sales, France
from June 2006 to February 2011. Mr. Schmitt has been employed by Steelcase since 2003.
Allan W. Smith, Jr. has been Vice President, Global Marketing since September 2013. Mr. Smith was Vice
President, Applications & Product Marketing-Steelcase Brand from January 2011 to September 2013, General
Manager, Furniture and Technology from June 2009 to January 2011 and Vice President, Marketing, Research &
Product Development-Europe from July 2006 to June 2009. Mr. Smith has been employed by Steelcase since
1991.
David C. Sylvester has been Senior Vice President, Chief Financial Officer since April 2011. Mr. Sylvester
was Vice President, Chief Financial Officer from 2006 to April 2011 and has been employed by Steelcase since
1995.
12
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
PART II
Equity Securities:
Common Stock
Our Class A Common Stock is listed on the New York Stock Exchange under the symbol “SCS.” Our Class B
Common Stock is not registered under the Exchange Act or publicly traded. See Note 14 to the consolidated
financial statements for additional information. As of the close of business on April 11, 2014, we had outstanding
123,278,466 shares of common stock with 7,162 shareholders of record. Of these amounts, 90,617,740 shares are
Class A Common Stock with 7,077 shareholders of record and 32,660,726 shares are Class B Common Stock with
85 shareholders of record.
Class A Common Stock
Per Share Price Range
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Fiscal 2014
High
Low
Fiscal 2013
High
Low
Dividends
$
$
$
$
15.60 $
12.16 $
15.89 $
16.95 $
13.23 $
13.76 $
9.81 $
7.96 $
9.82 $
7.63 $
11.25 $
9.17 $
16.77
13.60
13.95
10.98
The declaration of dividends is subject to the discretion of our Board of Directors and to compliance with
applicable laws. Dividends in 2014 and 2013 were declared and paid quarterly. The amount and timing of future
dividends depends upon our results of operations, financial condition, cash requirements, future business
prospects, general business conditions and other factors that our Board of Directors may deem relevant at the time.
Our unsecured revolving syndicated credit facility includes a restriction on the aggregate amount of cash
dividend payments and share repurchases we may make in any fiscal year. As long as our leverage ratio is less
than 2.50 to 1.00, there is no restriction on cash dividends and share repurchases. If our leverage ratio is between
2.50 to 1.00 and the maximum permitted under the facility, our ability to fund more than $35.0 in cash dividends and
share repurchases in aggregate in any fiscal year may be restricted, depending on our liquidity. As of February 28,
2014, our leverage ratio was less than 2.50 to 1.00. See Note 12 to the consolidated financial statements for
additional information.
During 2014 and 2013, we were in compliance with the covenants under the facility in place as of the
respective dates.
2014
2013
Total Dividends Paid
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Total
$
$
12.5 $
11.6 $
12.6 $
11.4 $
12.5 $
11.4 $
12.6 $
11.4 $
50.2
45.8
13
Fourth Quarter Share Repurchases
The following is a summary of share repurchase activity during Q4 2014:
(a)
Total Number of
Shares Purchased
(b)
Average Price
Paid per Share
3,398 $
18,591 $
1,164,744 $
1,186,733 (2)
14.80
14.98
14.32
(c)
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs (1)
(d)
Approximate Dollar
Value of Shares
that May Yet be
Purchased
Under the Plans
or Programs (1)
— $
16,790 $
1,164,744 $
1,181,534
109.9
109.7
93.0
Period
11/23/2013 - 12/27/2013
12/28/2013 - 01/24/2014
01/25/2014 - 02/28/2014
Total
_______________________________________
(1)
(2)
In December 2007, our Board of Directors approved a share repurchase program permitting the repurchase
of up to $250 of shares of our common stock. This program has no specific expiration date.
5,199 shares were repurchased to satisfy participants’ tax withholding obligations upon the vesting of
restricted stock unit grants, pursuant to the terms of our Incentive Compensation Plan.
14
Item 6. Selected Financial Data:
Financial Highlights
February 28,
2014
February 22,
2013
February 24,
2012
February 25,
2011
February 26,
2010
Year Ended
Operating Results:
Revenue
Gross profit
Operating income (loss)
Income (loss) before income tax expense
(benefit)
Net income (loss)
Supplemental Operating Data:
Restructuring costs
Goodwill and intangible asset impairment
charges
Share Data:
Basic earnings (loss) per common share
Diluted earnings (loss) per common share
Weighted average shares outstanding -
basic
Weighted average shares outstanding -
diluted
Dividends paid per common share
Balance Sheet Data:
Cash and cash equivalents
Short-term investments
Company-owned life insurance ("COLI")
Working capital (1)
Total assets
Total debt
Total liabilities
Total shareholders’ equity
Statement of Cash Flow Data:
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
________________________
$
2,988.9 $
2,868.7 $
2,749.5 $
2,437.1 $
2,291.7
945.2
165.9
147.2
87.7
866.0
59.3
54.9
38.8
809.7
97.1
82.0
56.7
717.5
51.5
51.4
20.4
649.8
(11.5)
(31.1)
(13.6)
$
$
$
$
$
(6.6) $
(34.7) $
(30.5) $
(30.6) $
(34.9)
(12.9)
(59.9)
—
—
—
0.70 $
0.69 $
0.30 $
0.30 $
0.43 $
0.43 $
0.15 $
0.15 $
(0.10)
(0.10)
126.0
127.4
131.9
132.9
132.9
127.3
129.1
131.9
132.9
0.40 $
0.36 $
0.24 $
0.16 $
201.8 $
150.4 $
112.1 $
142.2 $
119.5
154.3
351.7
1,726.7
287.0
1,049.6
677.1
100.5
225.8
293.8
1,689.6
289.0
1,021.6
668.0
79.1
227.6
240.2
1,678.9
291.5
992.4
686.5
350.8
223.1
275.5
1,974.4
546.8
1,278.1
696.3
132.9
0.20
111.1
68.2
209.6
222.9
1,655.1
300.8
979.6
675.5
$
178.8 $
187.3 $
101.7 $
72.7 $
(25.2)
(101.6)
(85.5)
(64.2)
203.2
(334.3)
(254.3)
211.1
(10.9)
(10.0)
13.0
(1) Working capital equals current assets minus current liabilities, as presented in the Consolidated Balance
Sheets.
15
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations:
The following review of our financial condition and results of operations should be read in conjunction with our
consolidated financial statements and accompanying notes thereto included elsewhere within this Report.
Non-GAAP Financial Measures
This item 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 consolidated
statements of income, balance sheets or statements of cash flows of the company. Pursuant to the requirements of
Regulation G, we have provided a reconciliation below of non-GAAP financial measures to the most directly
comparable GAAP financial measure.
The non-GAAP financial measures used are: (1) organic revenue growth (decline), which represents the
change in revenue over the prior year excluding estimated currency translation effects, the impacts of acquisitions
and divestitures and an additional week of revenue in 2014; and (2) adjusted operating income (loss), which
represents operating income (loss) excluding restructuring costs (benefits) and goodwill and intangible asset
impairment charges. 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.
Financial Summary
Results of Operations
Our reportable segments consist of the Americas segment, the EMEA segment and the Other category.
Unallocated corporate expenses are reported as Corporate.
Statement of Operations Data—
Consolidated
February 28,
2014
Year Ended
February 22,
2013
February 24,
2012
Revenue
Cost of sales
Restructuring costs (benefits)
Gross profit
Operating expenses
Goodwill and intangible asset impairment
charges
Restructuring costs
Operating income
Interest expense, investment income
(loss) and other income (expense), net
Income before income tax expense
Income tax expense
Net income
Earnings per share:
Basic
Diluted
$ 2,988.9
2,046.5
(2.8)
945.2
757.0
12.9
9.4
165.9
(18.7)
147.2
59.5
87.7
0.70
0.69
$
$
$
100.0% $ 2,868.7
100.0% $ 2,749.5
100.0%
68.5
(0.1)
31.6
25.3
0.4
0.3
5.6
(0.6)
5.0
2.0
3.0% $
1,987.8
14.9
866.0
727.0
59.9
19.8
59.3
(4.4)
54.9
16.1
38.8
$
$
0.30
0.30
69.3
0.5
30.2
25.3
2.1
0.7
2.1
(0.2)
1.9
0.5
1.4% $
$
$
1,913.6
26.2
809.7
708.3
—
4.3
97.1
(15.1)
82.0
25.3
56.7
0.43
0.43
69.6
1.0
29.4
25.8
—
0.1
3.5
(0.5)
3.0
0.9
2.1%
16
Organic Revenue Growth—Consolidated
Prior year revenue
Divestitures
Currency translation effects*
Prior year revenue, adjusted
Current year revenue
Dealer acquisitions
Impact of additional week **
Current year revenue, adjusted
Organic growth $
Organic growth %
________________________
Year Ended
February 28,
2014
$ 2,868.7
(6.3)
7.4
2,869.8
2,988.9
(11.4)
(42.0)
2,935.5
65.7
$
February 22,
2013
$ 2,749.5
(9.6)
(33.9)
2,706.0
2,868.7
(22.2)
—
2,846.5
140.5
$
2%
5%
* Currency translation effects represent the net effect of translating prior year foreign currency revenues using the
average exchange rate on a quarterly basis during the current year.
** 2014 included 53 weeks of revenue in the Americas and Other category. EMEA always ends its fiscal year on the
last day of February, so the comparison to the prior year is generally consistent.
Adjusted Operating Income —
Consolidated
February 28,
2014
Year Ended
February 22,
2013
February 24,
2012
Operating income
$
165.9
5.6% $
59.3
2.1% $
97.1
Add: goodwill and intangible asset
impairment charges
Add: restructuring costs
Adjusted operating income
Overview
12.9
6.6
185.4
$
0.4
0.2
59.9
34.7
2.1
1.2
—
30.5
6.2% $
153.9
5.4% $
127.6
3.5%
—
1.1
4.6%
During 2014, organic revenue growth was 2% compared to the prior year, which represented the fourth
consecutive year of organic growth. This growth is generally consistent with or better than global trends in our
industry and was driven in part by increased project business. We believe that our investments in research, product
development and other growth initiatives have helped drive our revenue growth faster than the rest of our industry
over the past three years. The Americas and the Other category posted organic revenue growth of 5%, and 2%,
respectively, while EMEA experienced an 8% organic revenue decline. The organic revenue growth in the
Americas represented the fourth consecutive year of organic revenue growth, while EMEA remains challenged by
the macroeconomic environment in Western Europe. The organic revenue growth in the Other category was
primarily driven by PolyVision.
Our consolidated adjusted operating income margin improved to 6.2% in 2014, compared to 5.4% in 2013
and 4.6% in 2012. The improvement was driven by strength in our Americas segment, which increased its adjusted
operating income margin over each of the past three years to a high of 11.5% in 2014, while our EMEA segment
reported an increase in adjusted operating losses in 2014. The Other category had a slight decline in its adjusted
operating income margin, as improvements at PolyVision were more than offset by declines in Asia Pacific and
Designtex.
In 2014, we continued taking steps to improve our operating fitness and our global competitiveness. This
included implementation of a number of restructuring actions in EMEA, the most significant of which was the
initiation of actions to close a manufacturing facility in Germany and the establishment of a new manufacturing
location in the Czech Republic.
2014 compared to 2013
We recorded net income of $87.7 in 2014 compared to net income of $38.8 in 2013. The increase in 2014
was driven in large part by improved operating results. The increase was also a result of year-over-year declines in
17
goodwill and other intangible asset impairment charges and restructuring costs, partially offset by higher non-
operating charges and a higher effective tax rate in 2014.
Operating income grew to $165.9 in 2014 compared to $59.3 in 2013. The 2014 adjusted operating income of
$185.4 represented an increase of $31.5 compared to the prior year. The improvement was driven by strength in
the Americas, partially offset by higher adjusted operating losses in EMEA and lower adjusted operating income in
the Other category.
Revenue for 2014 was $2,988.9 compared to $2,868.7 for 2013, representing organic revenue growth of 2%.
We realized organic growth of 5% in the Americas segment and 2% in the Other category while the EMEA segment
experienced an organic decline of 8%. Revenue continued to include a higher mix of project business from some of
our largest corporate customers.
Cost of sales decreased to 68.5% of revenue in 2014, an 80 basis point improvement compared to 2013.
The improvement was primarily driven by benefits associated with organic revenue growth, net pricing adjustments
and various other cost reductions in the Americas, partially offset by costs associated with the changes to the EMEA
manufacturing footprint and higher competitive discounting in EMEA and Asia Pacific.
Operating expenses of $757.0 increased by $30.0 in 2014 compared to 2013 but remained flat as a
percentage of sales. The year-over-year comparison included the following:
•
•
•
•
•
•
unfavorable foreign currency translation effects of $3.0,
costs of $3.7 related to dealer acquisitions, net of a divestiture,
approximately $10.3 of costs related to the additional week,
higher variable compensation expense of $2.9,
a reduction of $1.6 in environmental charges, and
other costs of $11.7 related to increased spending on marketing, product development and other
initiatives in the Americas, net of benefits from restructuring activities and other cost reduction efforts in
EMEA.
Goodwill and intangible asset impairment charges in 2014 totaled $12.9 and related to Asia Pacific within the
Other category. Goodwill impairment charges in 2013 totaled $59.9 and related to the EMEA segment and
Designtex within the Other category. See further details on these items in Note 10 to the consolidated financial
statements.
We recorded net restructuring costs of $6.6 in 2014 compared to $34.7 in 2013. The 2014 net charges
included the following:
•
•
•
severance and business exit costs of $7.9 associated with actions in the EMEA segment,
a gain of $4.5 related to the sale of a facility in the EMEA segment in connection with previously
announced restructuring actions and
business exit costs of $0.9 associated with the completion of the integration of PolyVision's global
technology business into the Steelcase Education Solutions group.
See further discussion and detail of these items in the Business Segment Disclosure analysis below and in
Note 20 to the consolidated financial statements.
Our 2014 effective tax rate was 40.4%, which is higher than the U.S. federal statutory tax rate of 35%. The
higher tax rate is being driven by the losses in EMEA, for which no tax benefit is recognized due to full valuation
allowances. Income taxes also reflect unfavorable adjustments to valuation allowances associated with deferred
tax assets, including tax loss carryforwards (primarily in EMEA) and the non-deductible nature of the goodwill
impairment charges in Asia Pacific, largely offset by an $8.5 benefit associated with a tax strategy in Asia Pacific.
See Note 15 to the consolidated financial statements for additional information.
2013 compared to 2012
We recorded net income of $38.8 in 2013 compared to net income of $56.7 in 2012. The results in 2013
reflected 5% organic revenue growth compared to 2012 and lower interest expense but included significant goodwill
impairment charges, tax valuation allowance adjustments and foreign tax credit benefits.
18
Operating income of $59.3 in 2013 compared to operating income of $97.1 in 2012. The 2013 adjusted
operating income of $153.9 represented an increase of $26.3 compared to the prior year, due to strength in the
Americas. partially offset by lower profitability in EMEA and the Other category.
Revenue for 2013 was $2,868.7 compared to $2,749.5 for 2012, representing organic revenue growth of 5%.
We realized organic growth of 7% in the Americas segment and 1% in the EMEA segment while the Other category
experienced a modest decline of 1%. Revenue continued to include a higher mix of project business from some of
our largest corporate customers.
Cost of sales decreased to 69.3% of revenue in 2013, a 30 basis point improvement compared to 2012.
Benefits from organic revenue growth, recent pricing adjustments (net of commodity cost changes) and
restructuring actions (net of related disruption costs) and other cost reductions in the Americas were partially offset
by an increase in lower-margin project business and higher competitive discounting in EMEA.
Operating expenses of $727.0 increased by $18.7 in 2013 compared to 2012 but decreased as a percentage
of sales to 25.3% in 2013 from 25.8% in 2012. The year-over-year comparison included the following:
•
•
•
•
•
•
higher variable compensation expense of $11.7,
favorable foreign currency translation effects of $9.3,
costs of $7.1 related to dealers acquired in 2013,
increased spending of approximately $7 on product development and other initiatives,
increased reserves of $3.6 for environmental remediation costs associated with a previously-owned
manufacturing site, and
$1.5 related to dealer divestitures.
Goodwill impairment charges in 2013 totaled $59.9 and related to the EMEA segment and Designtex within
the Other category. See further detail of these items in Note 10 to the consolidated financial statements.
We recorded restructuring costs of $34.7 in 2013 compared to $30.5 in 2012. The 2013 charges included the
following:
•
•
•
•
severance and business exit costs of $13.0 from the previously-announced closure of three
manufacturing facilities in North America (which are now substantially complete),
real estate impairment charges of $12.4 associated with the previously announced closure of our
Corporate Development Center,
severance and business exit costs of $3.8 associated with the EMEA headcount reductions and owned
dealer consolidations in Q4 2013 and
severance and business exit costs of $2.0 associated with the integration of PolyVision's global
technology business into the Steelcase Education Solutions group.
See further discussion and detail of these items in the Business Segment Disclosure analysis below and in
Note 20 to the consolidated financial statements.
Our 2013 effective tax rate was 29.3%, which is below the U.S. federal statutory tax rate of 35%. The
difference was primarily driven by a foreign tax benefit totaling $56.7, partially offset by unfavorable adjustments to
our valuation allowances associated with tax loss carry-forwards and other deferred tax assets and the non-
deductible nature of the goodwill impairment charges in EMEA. See Note 15 to the consolidated financial
statements for additional information.
19
Interest Expense, Investment Income (Loss) and Other Income (Expense), Net
Interest Expense, Investment Income (Loss) and Other Income (Expense), Net
Interest expense
Investment income (loss)
Other income (expense), net:
Equity in income of unconsolidated ventures
Miscellaneous, net
Total other income (expense), net
Year Ended
February 28,
2014
February 22,
2013
February 24,
2012
$
(17.8) $
(17.8) $
(25.6)
(0.3)
10.2
(10.8)
(0.6)
3.7
9.4
0.3
9.7
5.2
8.3
(3.0)
5.3
Total interest expense, investment income (loss) and other income
(expense), net
$
(18.7) $
(4.4) $
(15.1)
Miscellaneous other expense of $10.8 in 2014 included $6.0 of charges related to a minority equity
investment and $5.1 of foreign exchange losses compared to small foreign exchange gains in 2013. An investment
loss in 2014 compared to an investment gain in 2013. The decline was driven by reductions in the cash surrender
value of variable life COLI in 2014 compared to gains in 2013. Interest expense in 2012 includes $7.7 associated
with $250 of senior notes which matured and were repaid in Q2 2012.
Business Segment Disclosure
See Note 18 to the consolidated financial statements for additional information regarding our business
segments.
Americas
The Americas segment serves customers in the U.S., Canada 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, Nurture, Coalesse, Details and Turnstone brands.
Statement of Operations Data—
Americas
February 28,
2014
Year Ended
February 22,
2013
February 24,
2012
Revenue
Cost of sales
Restructuring costs
Gross profit
Operating expenses
Goodwill and intangible asset
impairment charges
Restructuring costs
Operating income
$ 2,154.4
1,438.2
0.7
715.5
467.1
—
1.0
247.4
$
100.0% $ 2,015.1
100.0% $ 1,868.4
100.0%
66.8
—
33.2
21.7
—
0.1
1,384.4
13.9
616.8
433.8
—
14.7
68.7
0.7
30.6
21.5
—
0.7
1,302.3
20.0
546.1
421.8
—
1.5
69.7
1.1
29.2
22.6
—
—
11.4% $
168.3
8.4% $
122.8
6.6%
20
Organic Revenue Growth—Americas
Prior year revenue
Divestitures
Currency translation effects*
Prior year revenue, adjusted
Current year revenue
Dealer acquisitions
Impact of additional week **
Current year revenue, adjusted
Organic growth $
Organic growth %
________________________
Year Ended
February 28,
2014
$ 2,015.1
February 22,
2013
$ 1,868.4
—
(6.3)
2,008.8
2,154.4
—
(36.2)
—
(0.6)
1,867.8
2,015.1
(10.5)
—
2,118.2
2,004.6
$
109.4
$
136.8
5%
7%
* Currency translation effects represent the net effect of translating prior year foreign currency revenues using the
average exchange rate on a quarterly basis during the current year.
** 2014 included 53 weeks of revenue.
Adjusted Operating Income—Americas
February 28,
2014
Year Ended
February 22,
2013
February 24,
2012
Operating income
$
247.4
11.4% $
168.3
8.4% $
122.8
Add: goodwill and intangible asset
impairment charges
Add: restructuring costs
Adjusted operating income
2014 compared to 2013
—
1.7
249.1
$
—
0.1
—
28.6
—
1.4
—
21.5
11.5% $
196.9
9.8% $
144.3
6.6%
—
1.1
7.7%
Operating income in the Americas grew to $247.4 in 2014, compared to $168.3 in 2013. Adjusted operating
income in 2014 grew to $249.1 from $196.9 in 2013, an increase of $52.2 or 26.5%. The improvement was driven
by organic revenue growth, improved customer mix, various cost reduction efforts in manufacturing and logistics
and net benefits from pricing adjustments and previous restructuring actions, offset in part by increased spending
on marketing, product development and other initiatives and the impact of a higher mix of lower margin project
business.
The Americas revenue represented 72.1% of consolidated revenue in 2014. Revenue for 2014 was $2,154.4
compared to $2,015.1 in 2013, an increase of $139.3 or 6.9%. After adjusting for currency translation effects and
the approximate impact of an additional week, organic revenue growth was $109.4 or 5%. Revenue growth in 2014
is categorized as follows:
• Product categories — Seven out of nine product categories grew in 2014, led by Architectural Solutions,
Details and Turnstone. The Wood and Nurture categories declined compared to the prior year.
• Vertical markets — Information Technology, Insurance, Technical and Professional and Education
experienced strong growth rates, while Energy, Federal Government and Financial Services declined.
• Geographic regions — All regions showed growth over 2013, led by the East Business Group.
• Contract type — The strongest growth came from project sales, while continuing business grew modestly
and marketing programs declined year-over-year.
Cost of sales improved to 66.8% of revenue in 2014 compared to 68.7% of revenue in 2013. The
improvement was largely driven by the benefits of organic revenue growth, improved customer mix, various cost
reduction efforts in manufacturing and logistics and net benefits from pricing adjustments and previous restructuring
actions.
21
Operating expenses increased by $33.3 in 2014 compared to 2013 primarily due to higher spending on
marketing, product development and other initiatives and the impact of the additional week. Operating expenses
increased slightly as a percentage of sales to 21.7% in 2014 from 21.5% in 2013.
Restructuring costs of $1.7 incurred in 2014 were primarily related to the completion of the integration of
PolyVision's global technology business into the Steelcase Education Solutions group.
2013 compared to 2012
Operating income in the Americas grew to $168.3 in 2013, compared to $122.8 in 2012. Adjusted operating
income in 2013 grew to $196.9 from $144.3 in 2012, an increase of $52.6 or 36.5%. This increase was primarily
driven by organic revenue growth, year-over-year benefits from improved pricing (net of commodity cost changes)
and benefits from restructuring actions (net of related disruption costs) but impacted by a higher mix of lower-
margin project business from some of our largest corporate customers.
The Americas revenue represented 70.2% of consolidated revenue in 2013. Revenue for 2013 was $2,015.1
compared to $1,868.4 in 2012, an increase of $146.7 or 7.9%. After adjusting for currency translation effects and a
dealer acquisition, organic revenue growth was $136.8 or 7%. Revenue growth in 2013 is categorized as follows:
• Product categories—Substantially all product categories grew in 2013. Revenue growth rates were
strongest in the Technology and Details categories, while Seating and Coalesse also exceeded the
overall average for the year.
• Vertical markets—Strength in the Energy, Insurance Services, Manufacturing and Information Technology
sectors more than offset continued weakness in the U.S. Federal Government sector.
• Geographic regions—All regions showed growth over 2012, with notable strength in the West Business
Group.
• Contract type—The strongest growth came from our project sales, but revenue from continuing
agreements and marketing programs also grew over the prior year.
Cost of sales decreased to 68.7% of revenue in 2013 compared to 69.7% of revenue in 2012. Benefits from
organic revenue growth, improved pricing (net of commodity cost increases) and restructuring actions (net of
related disruption costs) were partially offset by a higher mix of lower-margin project business (which was
somewhat offset by a lower mix of federal government business in the U.S.).
Operating expenses increased by $12.0 in 2013 compared to 2012 primarily due to higher variable
compensation expense of $12.8. Operating expenses decreased as a percentage of sales to 21.5% in 2013 from
22.6% in 2012.
Restructuring costs of $28.6 incurred in 2013 included $13.0 associated with the North America plant
closures announced in Q4 2011 and a $12.4 impairment charge in conjunction with the previously announced
closure of our Corporate Development Center.
EMEA
The EMEA segment serves customers in Europe, the Middle East and Africa primarily under the Steelcase
and Coalesse brands, with an emphasis on freestanding furniture systems, seating and storage solutions.
Statement of Operations Data—EMEA
February 28,
2014
Year Ended
February 22,
2013
February 24,
2012
Revenue
Cost of sales
Restructuring costs (benefits)
Gross profit
Operating expenses
Goodwill and intangible asset impairment
charges
Restructuring costs
Operating loss
$
566.9
100.0 % $
594.8
100.0 % $
610.5
100.0 %
429.5
(3.6)
141.0
164.2
—
8.2
(31.4)
$
75.8
(0.6)
24.8
29.0
—
1.4
434.0
1.0
159.8
171.6
35.1
4.0
73.0
0.2
26.8
28.8
5.9
0.7
432.9
5.0
172.6
179.5
—
3.0
70.9
0.8
28.3
29.4
—
0.5
(5.6)% $
(50.9)
(8.6)% $
(9.9)
(1.6)%
22
Organic Revenue Growth (Decline)—EMEA
Prior year revenue
Dealer divestiture
Currency translation effects*
Prior year revenue, adjusted
Current year revenue
Dealer acquisitions
Impact of additional week**
Current year revenue, adjusted
Organic growth (decline) $
Organic growth (decline) %
________________________
Year Ended
$
February 28,
2014
594.8
(6.3)
15.9
604.4
566.9
(11.4)
—
555.5
(48.9)
$
$
February 22,
2013
610.5
(1.0)
(33.4)
576.1
594.8
(11.7)
—
583.1
7.0
$
(8)%
1%
* Currency translation effects represent the net effect of translating prior year foreign currency revenues using the
average exchange rate on a quarterly basis during the current year.
** EMEA always ends its fiscal year on the last day of February, so the comparison to the prior year is generally
consistent.
Adjusted Operating Income (Loss)—EMEA
February 28,
2014
Year Ended
February 22,
2013
February 24,
2012
Operating loss
$
(31.4)
(5.6)% $
(50.9)
(8.6)% $
(9.9)
(1.6)%
Add: goodwill and intangible asset
impairment charges
Add: restructuring costs
Adjusted operating loss
2014 compared to 2013
—
4.6
(26.8)
$
—
0.8
35.1
5.0
5.9
0.9
—
8.0
—
1.3
(4.8)% $
(10.8)
(1.8)% $
(1.9)
(0.3)%
EMEA reported an operating loss of $31.4 in 2014 compared to an operating loss of $50.9 in 2013. The 2013
operating loss included goodwill impairment charges of $35.1. The adjusted operating loss of $26.8 in 2014
represented an increase of $16.0 compared to 2013. Overall, the increased loss was primarily driven by the organic
revenue decline (including higher levels of competitive discounting) and costs associated with the changes in the
EMEA manufacturing footprint, offset in part by benefits from restructuring activities and other cost reduction efforts.
EMEA revenue represented 19.0% of consolidated revenue in 2014. Revenue for 2014 was $566.9 compared
to $594.8 in 2013. Organic revenue declined 8% after adjusting for currency translation effects and dealer
acquisitions, net of a divestiture. During 2014, growth in the export markets of the central, eastern and southern
parts of Europe (as a group) was more than offset by declines across Western Europe, most notably France and
Germany.
Cost of sales increased to 75.8% of revenue in 2014, a 280 basis point deterioration compared to 2013. The
deterioration was driven by lower absorption of fixed costs associated with the organic revenue decline (including
higher levels of competitive discounting), costs associated with the changes in the EMEA manufacturing footprint
and various inefficiencies in manufacturing and logistics.
Operating expenses decreased by $7.4 in 2014 as $4.1 of additional operating expenses related to dealer
acquisitions, net of a divestiture, and unfavorable currency translation effects were more than offset by the benefits
from recent restructuring activities and other cost reduction efforts. Operating expenses as a percentage of sales
rose slightly to 29.0% in 2014 from 28.8% in 2013.
Net restructuring costs of $4.6 incurred in 2014 were primarily associated with the reorganization of the sales,
marketing and support functions in France, partially offset by a gain on the sale of a facility in connection with
previously announced restructuring actions.
23
2013 compared to 2012
EMEA reported an operating loss of $50.9 in 2013 compared to an operating loss of $9.9 in 2012. The 2013
results included $35.1 of goodwill impairment charges. The adjusted operating loss of $10.8 represented an
increase of $8.9 compared to 2012. Overall, the increased loss was primarily driven by a higher mix of lower-margin
project business and higher competitive discounting.
EMEA revenue represented 20.8% of consolidated revenue in 2013. Revenue for 2013 was $594.8 compared
to $610.5 in 2012. Organic revenue growth was 1% after adjusting for currency translation effects and dealer
acquisitions, net of a divestiture. During 2013, all regions achieved mid-single digit organic growth except for Iberia
and Northern Europe which declined 12% and 1%, respectively.
Cost of sales increased to 73.0% of revenue in 2013, a 210 basis point deterioration compared to 2012. The
deterioration was mainly due to a higher mix of lower-margin project business and higher competitive discounting.
Operating expenses decreased by $7.9 in 2013, primarily driven by $9.6 of favorable foreign currency
translation effects and benefits from restructuring activities and other cost reduction efforts, partially offset by the
impact of net acquisitions and higher employee expenses, including variable compensation expense.
Restructuring costs of $5.0 incurred in 2013 primarily related to local headcount reductions and owned dealer
consolidations.
Other
The Other category includes Asia Pacific, Designtex and PolyVision. Asia Pacific serves customers in Asia
and Australia primarily under the Steelcase brand with an emphasis on freestanding furniture systems, storage and
seating solutions. Designtex designs and sells surface materials including textiles and wall coverings which are
specified by architects and designers directly to end-use customers primarily in North America. PolyVision
manufactures ceramic steel surfaces for use in multiple applications, but primarily for sale to third-party fabricators
and distributors to create static whiteboards and chalkboards sold in the primary and secondary education markets
globally.
Statement of Operations Data—Other
February 28,
2014
Year Ended
February 22,
2013
February 25,
2011
$
267.6
100.0 % $
258.8
100.0 % $
270.6
100.0%
Revenue
Cost of sales
Restructuring costs
Gross profit
Operating expenses
Goodwill and intangible asset impairment
charges
Restructuring costs (benefits)
Operating income (loss)
$
178.8
0.1
88.7
84.3
12.9
0.2
(8.7)
66.8
—
33.2
31.5
4.8
0.1
169.4
—
89.4
83.6
24.8
1.1
65.5
—
34.5
32.3
9.6
0.4
(3.2)% $
(20.1)
(7.8)% $
178.4
1.2
91.0
76.6
—
(0.2)
14.6
65.9
0.4
33.7
28.3
—
—
5.4%
24
Organic Revenue Growth (Decline)—Other
Prior year revenue
Divestiture
Currency translation effects*
Prior year revenue, adjusted
Current year revenue
Dealer acquisitions
Impact of additional week **
Current year revenue, adjusted
Organic growth (decline) $
Organic growth (decline) %
________________________
Year Ended
February 28,
2014
258.8
$
February 22,
2013
270.6
$
—
(2.2)
256.6
267.6
—
(5.8)
(8.6)
0.1
262.1
258.8
—
—
261.8
258.8
$
5.2
$
(3.3)
2%
(1)%
* Currency translation effects represent the net effect of translating prior year foreign currency revenues using the
average exchange rate on a quarterly basis during the current year.
** 2014 included 53 weeks of revenue.
Adjusted Operating Income—Other
February 28,
2014
Year Ended
February 22,
2013
February 25,
2011
Operating income (loss)
$
(8.7)
(3.2)% $
(20.1)
(7.8)% $
14.6
Add: goodwill and intangible asset
impairment charges
Add: restructuring costs
Adjusted operating income
2014 compared to 2013
12.9
0.3
4.5
$
4.8
0.1
1.7 % $
24.8
1.1
5.8
9.6
0.4
—
1.0
2.2 % $
15.6
5.4%
—
0.4
5.8%
The Other category reported an operating loss of $8.7 in 2014 compared to an operating loss of $20.1 in
2013. The 2014 results included goodwill and intangible asset impairment charges of $12.9, compared to a goodwill
impairment charge of $24.8 in 2013. Adjusted operating income decreased by $1.3 primarily driven by a higher
operating loss in Asia Pacific and lower operating income at Designtex, partially offset by higher operating income
at PolyVision.
Revenue of $267.6 in 2014 increased by $8.8 compared to revenue of $258.8 in 2013. Excluding currency
translation effects and the approximate impact of the additional week, organic revenue grew $5.2 or 2%, driven by
PolyVision.
Cost of sales increased to 66.8% of revenue in 2014, a 130 basis point deterioration compared to 2013. The
erosion in 2014 was primarily driven by higher competitive discounting in Asia Pacific.
Operating expenses increased by $0.7 to $84.3 in 2014 compared to $83.6 in 2013. The increase was
primarily driven by sales and marketing investments at Designtex, partially offset by cost reduction efforts in Asia
Pacific.
2013 compared to 2012
The Other category reported an operating loss of $20.1 in 2013 compared to operating income of $14.6 in
2012. The 2013 results included a goodwill impairment charge of $24.8. Adjusted operating income decreased by
$9.8 primarily due to lower revenue in Asia Pacific, as well as higher operating expenses across the category.
Revenue of $258.8 in 2013 decreased by $11.8 compared to revenue of $270.6 in 2012. Excluding the
decrease in revenue due to the divestiture of a small division at PolyVision and currency translation effects, organic
revenue declined $3.3, or 1%, driven by a slowdown in demand in the Asia Pacific region.
25
Cost of sales as a percent of revenue decreased by 40 basis points in 2013 compared to 2012. The
improvement was primarily due to growth in higher-margin continuing business at Designtex, partially offset by a
higher mix of lower-margin project business in Asia Pacific.
Operating expenses increased by $7.0 to $83.6 in 2013 compared to $76.6 in 2012. The increase was driven
by higher variable compensation and employee-related costs across the category.
Corporate
Corporate expenses include unallocated portions of shared service functions such as information technology,
human resources, finance, executive, corporate facilities, legal and research.
Operating expenses
Statement of Operations Data—Corporate
Year Ended
February 28,
2014
February 22,
2013
February 24,
2012
$
41.4 $
38.0 $
30.4
The increase of $3.4 in 2014 was primarily due to higher earnings associated with deferred compensation
and higher variable compensation expense. Operating expenses in 2013 included a $3.6 increase in reserves for
environmental remediation costs associated with a previously-owned manufacturing site. The remaining increase in
2013 primarily related to higher variable compensation expense.
Liquidity and Capital Resources
Liquidity
Based on current business conditions, we target a range of $75 to $150 in cash and cash equivalents and
short-term investments to fund day-to-day operations, including seasonal disbursements, particularly the annual
payment of accrued variable compensation and retirement plan contributions in Q1 of each fiscal year, when
applicable. In addition, we may carry additional liquidity for potential investments in strategic initiatives and as a
cushion against economic volatility.
Liquidity Sources
Cash and cash equivalents
Short-term investments
Company-owned life insurance
Availability under credit facilities
Total liquidity
February 28,
2014
February 22,
2013
$
201.8 $
119.5
154.3
163.6
$
639.2 $
150.4
100.5
225.8
174.2
650.9
As of February 28, 2014, we held a total of $321.3 in cash and cash equivalents and short-term investments.
The majority of our short-term investments are located in the U.S. Of our total $201.8 cash and cash equivalents,
69% was located in the U.S. and the remaining 31%, or $63.5, was located outside of the U.S., primarily in France,
China, Hong Kong and Malaysia. The amounts located outside the U.S. would be taxable if repatriated to the U.S.,
but we do not anticipate repatriating such amounts or needing them for operations in the U.S. Such amounts are
considered available to repay intercompany debt, available to meet local working capital requirements or
permanently reinvested in foreign subsidiaries.
The majority of our short-term investments are maintained in a managed investment portfolio, which primarily
consists of U.S. agency debt securities and corporate debt securities.
Our investments in COLI policies are intended to be utilized as a long-term funding source for long-term
benefit obligations. However, COLI can be used as a source of liquidity if needed. We believe the financial strength
of the issuing insurance companies associated with our COLI policies is sufficient to meet their obligations. COLI
investments are recorded at their net cash surrender value. See Note 9 to the consolidated financial statements for
more information.
Availability under credit facilities may be reduced by the use of cash and cash equivalents and short-term
investments for purposes other than the repayment of debt as a result of constraints related to our maximum
leverage ratio covenant. See Liquidity Facilities for more information.
26
The following table summarizes our consolidated statements of cash flows:
Net cash flow provided by (used in):
Cash Flow Data
Operating activities
Investing activities
Financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Cash provided by operating activities
Cash Flow Data—Operating Activities
Net income
Depreciation and amortization
Goodwill and intangible asset impairment charges
Deferred income taxes
Restructuring costs
Non-cash stock compensation
Changes in accounts receivable, inventories and accounts payable
Changes in employee compensation liabilities
Changes in other operating assets and liabilities
Other
Year Ended
February 28,
2014
February 22,
2013
February 24,
2012
$
178.8 $
187.3 $
(25.2)
(101.6)
(0.6)
51.4
150.4
(85.5)
(64.2)
0.7
38.3
112.1
$
201.8 $
150.4 $
101.7
203.2
(334.3)
(0.7)
(30.1)
142.2
112.1
Year Ended
February 28,
2014
February 22,
2013
February 24,
2012
$
87.7 $
38.8 $
60.0
12.9
14.1
6.6
16.8
(16.1)
5.5
(6.8)
(1.9)
58.3
59.9
(3.0)
34.7
9.6
(7.3)
5.8
(9.1)
(0.4)
56.7
56.4
—
13.6
30.5
11.6
(11.1)
(32.5)
(23.1)
(0.4)
Net cash provided by operating activities
$
178.8 $
187.3 $
101.7
Cash provided by operating activities decreased slightly in 2014 when compared to 2013. The change in
cash provided by operating activities in 2013 compared to 2012 was primarily due to an increase in cash generated
from operating results after consideration of the non-cash goodwill impairment charges.
Cash provided by (used in) investing activities
Cash Flow Data—Investing Activities
Capital expenditures
Proceeds from disposal of fixed assets
Purchases of investments
Liquidations of investments
Liquidations of COLI
Acquisitions, net of cash acquired
Other
Net cash provided by (used in) investing activities
February 28,
2014
Year Ended
February 22,
2013
February 24,
2012
$
$
(86.8) $
9.5
(146.7)
122.3
74.5
—
2.0
(25.2) $
(74.0) $
15.5
(78.6)
62.6
—
(6.2)
(4.8)
(85.5) $
(64.9)
11.7
(195.8)
466.1
—
(20.9)
7.0
203.2
Capital expenditures in 2014 were primarily related to investments in manufacturing operations, product
development, corporate facilities and showrooms. During 2014, we reduced our COLI investments by withdrawing
basis of $74.5 (tax-free), and we reinvested the proceeds in short term investments.
27
In 2012, purchases and liquidations of investments activity increased due to our use of the proceeds from the
issuance of $250 in senior notes in Q4 2011 and the subsequent repayment of $250 in senior notes in Q2 2012.
Cash used in financing activities
Cash Flow Data—Financing Activities
Year Ended
February 28,
2014
February 22,
2013
Repayments of short-term and long-term debt
$
(2.0) $
(2.3) $
February 24,
2012
(256.0)
Dividends paid
Common stock repurchases
Excess tax benefit from vesting of stock awards
Net cash used in financing activities
(50.2)
(49.9)
0.5
(45.8)
(19.9)
3.8
(31.7)
(47.7)
1.1
$
(101.6) $
(64.2) $
(334.3)
We paid dividends of $0.10, $0.09 and $0.06 per common share during each quarter in 2014, 2013 and 2012,
respectively. On March 25, 2014, our Board of Directors declared a dividend of $0.105 per common share to be
paid in Q1 2015.
During 2014, 2013 and 2012, we made common stock repurchases of $49.9, $19.9, and $47.7, respectively,
all of which related to our Class A Common Stock. As of February 28, 2014, we had $93.0 of remaining availability
under the $250 share repurchase program approved by our Board of Directors in Q4 2008.
Share repurchases of Class A Common Stock to enable participants to satisfy tax withholding obligations
upon vesting of restricted stock and restricted stock units, pursuant to the terms of our Incentive Compensation
Plan, were $6.6, $3.0 and $0.1 in 2014, 2013 and 2012, respectively.
In Q2 2012, we repaid $250.0 of senior notes at face value.
Capital Resources
Off-Balance Sheet Arrangements
We are contingently liable under loan and lease guarantees for certain Steelcase dealers in the event of
default or non-performance of the financial repayment of a liability. In certain cases, we also guarantee completion
of contracts by our dealers. Due to the contingent nature of guarantees, the full value of the guarantees is not
recorded on our Consolidated Balance Sheets; however, when necessary, we record reserves to cover potential
losses. As of February 28, 2014 and February 22, 2013, there were no reserves for guarantees recorded on our
Consolidated Balance Sheets.
Contractual Obligations
Our contractual obligations as of February 28, 2014 were as follows:
Contractual Obligations
Total
Less than
1 Year
1-3
Years
3-5
Years
After 5
Years
Long-term debt and short-term borrowings
$
287.0 $
2.6 $
33.9 $
0.2 $
250.3
Payments Due by Period
Estimated interest on debt obligations
Operating leases
Committed capital expenditures
Purchase obligations
Other liabilities
115.4
170.9
34.4
55.6
3.2
17.2
37.5
34.4
41.0
3.2
Employee benefit and compensation obligations
266.9
109.3
34.2
54.4
—
7.6
—
43.3
31.9
37.6
—
6.6
—
27.2
32.1
41.4
—
0.4
—
87.1
Total
$
933.4 $
245.2 $
173.4 $
103.5 $
411.3
Total consolidated debt as of February 28, 2014 was $287.0. Of our total debt, $249.9 is in the form of term
notes due in 2021 and $35.8 is related to financing secured by our two corporate aircraft.
28
We have commitments related to certain sales offices, showrooms, warehouses and equipment under non-
cancelable operating leases that expire at various dates through 2025. Minimum payments under operating leases,
net of sublease rental income, are presented in the contractual obligations table above.
Committed capital expenditures represent obligations we have related to property, plant and equipment
purchases.
We define purchase obligations as non-cancelable signed contracts to purchase goods or services beyond
the needs of meeting current backlog or production.
Other liabilities represent obligations for foreign exchange forward contracts.
Employee benefit obligations represent contributions and benefit payments expected to be made for our post-
retirement, pension, deferred compensation, defined contribution, severance arrangements and variable
compensation plans. Our obligations related to post-retirement benefit plans are not contractual, and the plans
could be amended at the discretion of the Compensation Committee of our Board of Directors. We limited our
disclosure of contributions and benefit payments to 10 years as information beyond this time period was not
available. See Note 13 to the consolidated financial statements for additional information.
The contractual obligations table above is current as of February 28, 2014. The amounts of these obligations
could change materially over time as new contracts or obligations are initiated and existing contracts or obligations
are terminated or modified. We anticipate the cash expected to be generated from future operations, current cash
and cash equivalents and short-term investment balances, funds available under our credit facilities and funds
available from COLI to be sufficient to fulfill our existing contractual obligations.
Liquidity Facilities
Our total liquidity facilities as of February 28, 2014 were:
Liquidity Facilities
Global committed bank facility
Various uncommitted lines
Total credit lines available
Less: borrowings outstanding
Available capacity
February 28,
2014
$
$
125.0
38.6
163.6
—
163.6
We have a $125 global committed five-year unsecured revolving syndicated credit facility which was entered
into in 2013. The facility requires us to satisfy financial covenants including a maximum leverage ratio covenant
and a minimum interest coverage ratio covenant. Additionally, the facility requires us to comply with certain other
terms and conditions, including a restricted payment covenant which establishes a maximum level of dividends and/
or other equity-related distributions or payments (such as share repurchases) we may make in a fiscal year. As of
February 28, 2014, we were in compliance with all covenants under the facility.
The various uncommitted lines may be changed or canceled by the applicable lenders at any time. There
were no outstanding borrowings on uncommitted facilities as of February 28, 2014. In addition, we have a revolving
letter of credit agreement for $13.5 of which $11.3 was utilized primarily related to our self-insured workers’
compensation programs as of February 28, 2014. There were no draws on our standby letters of credit during 2014.
Total consolidated debt as of February 28, 2014 was $287.0. Our debt primarily consists of $249.9 in term
notes due in Q4 2021 with an effective interest rate of 6.6%. In addition, we have a term loan with a balance as of
February 28, 2014 of $35.8. This term loan has a floating interest rate based on 30-day LIBOR plus 3.35% and is
due in Q2 2017. The term notes are unsecured, the term loan is secured by two corporate aircraft, and neither the
term notes nor the term loan contain financial covenants or are cross-defaulted to other debt facilities.
See Note 12 to the consolidated financial statements for additional information.
Liquidity Outlook
Our current cash and cash equivalents and short-term investment balances, funds available under our credit
facilities, funds available from COLI and cash generated from future operations are expected to be sufficient to
29
finance our known or foreseeable liquidity needs. We believe the timing, strength and continuity of the economic
recovery across the geographies we serve remain uncertain which may challenge our level of cash generation from
operations. We continue to maintain a conservative approach to liquidity and have flexibility over significant uses of
cash including our capital expenditures and discretionary operating expenses.
Our significant funding requirements include operating expenses, non-cancelable operating lease obligations,
capital expenditures, variable compensation and retirement plan contributions, dividend payments and debt service
obligations.
We expect capital expenditures to total between $90 to $100 in 2015 compared to $87 in 2014. This amount
includes the establishment of a new manufacturing location in the Czech Republic, global upgrades to various
manufacturing technologies and investments in showrooms. We closely manage capital spending to ensure we are
making investments that we believe will sustain our business and preserve our ability to introduce innovative new
products.
On March 25, 2014, we announced a quarterly dividend on our common stock of $0.105 per share, or $12.9,
to be paid in Q1 2015. Future dividends will be subject to approval by our Board of Directors and compliance with
the restricted payment covenant of our credit facilities.
Critical Accounting Estimates
Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our
consolidated financial statements and accompanying notes. Our consolidated financial statements were prepared in
accordance with accounting principles generally accepted in the United States of America. These principles require
the use of estimates and assumptions that affect amounts reported and disclosed in the consolidated financial
statements and accompanying notes. Although these estimates are based on historical data and management’s
knowledge of current events and actions it may undertake in the future, actual results may differ from the estimates
if different conditions occur. The accounting estimates that typically involve a higher degree of judgment and
complexity are listed and explained below. These estimates were discussed with the Audit Committee of our Board
of Directors and affect all of our segments.
Goodwill and Other Intangible Assets
Goodwill represents the difference between the purchase price and the related underlying tangible and
identifiable intangible net asset values resulting from business acquisitions. Annually in Q4, or earlier if conditions
indicate it is necessary, the carrying value of the reporting unit is compared to an estimate of its fair value. If the
estimated fair value of the reporting unit is less than the carrying value, goodwill is impaired and is written down to
its estimated fair value. Goodwill is assigned to and the fair value is tested at the reporting unit level. In 2014, we
evaluated goodwill and intangible assets using five reporting units where goodwill is recorded: Americas, EMEA and
Asia Pacific, Designtex and PolyVision within the Other category.
Annually in Q4, or earlier if conditions indicate it is necessary, we also perform an impairment analysis of our
intangible assets not subject to amortization using an income approach based on the cash flows attributable to the
related products. An impairment loss is recognized if the carrying amount of a long-lived asset exceeds its
estimated fair value. In testing for impairment, we first determine if the asset is recoverable and then compare the
discounted cash flows over the asset’s remaining life to the carrying value.
During Q4 2014, we performed our annual impairment assessment of goodwill in our reporting units, and in
Q3 2014, we completed an interim evaluation of our Asia Pacific reporting unit (within the Other category). In the
first step to test for potential impairment, we measured the estimated fair value of our reporting units using a
discounted cash flow (“DCF”) valuation method and reconciled the sum of the fair values of our reporting units to
our total market capitalization plus a control premium (our “adjusted market capitalization”). The control premium
represents an estimate associated with obtaining control of the company in an acquisition of the outstanding shares
of Class A Common Stock and Class B Common Stock. The DCF analysis used the present value of projected cash
flows and a residual value. Considerable management judgment is necessary to evaluate the impact of operating
changes and to estimate future cash flows in measuring fair value. Assumptions used in our impairment valuations,
such as forecasted growth rates and cost of capital, are consistent with our current internal projections.
As part of the annual reconciliation to our adjusted market capitalization, we made adjustments to the
discount rates used in calculating the estimated fair value of the reporting units. The discount rates ranged from
30
12.6% to 16.0%. Due to the subjective nature of this reconciliation process, these assumptions could change over
time, which may result in future impairment charges.
In Q3 2014, as a result of our interim testing of our Asia Pacific reporting unit, we recorded a $12.3
impairment charge for goodwill, and there is no remaining net goodwill in the Asia Pacific reporting unit as of
February 28, 2014. Additionally, a charge of $0.6 was recorded in Asia Pacific for impairment of other intangible
assets. See further details in Note 10 to the consolidated financial statements. There were no other impairments for
our remaining reporting units in 2014.
In Q4 2013, our annual goodwill impairment analysis resulted in impairment charges of $59.9 for goodwill
related to EMEA and Designtex within the Other category as discussed in Note 10 to the consolidated financial
statements. There were no other impairments for our remaining reporting units.
As of February 28, 2014, we had remaining goodwill and net intangible assets recorded on our Consolidated
Balance Sheets as follows:
Reportable Segment
Americas
EMEA
Other category
Total
Goodwill
Other Intangible
Assets, Net
$
$
89.6 $
—
18.5
108.1 $
9.7
1.9
5.0
16.6
As of the valuation date, the enterprise value available for goodwill determined as described above is in
excess of the underlying reported value of goodwill as follows:
Americas
Other category
Reportable Segment
Enterprise Value
Available in Excess
of Goodwill
$
1,234.0
55.0
For each reporting unit, the excess enterprise value available for goodwill is primarily driven by the residual
value of future years. Thus, increasing the discount rate by 1%, leaving all other assumptions unchanged, would
reduce the enterprise value in excess of goodwill to the following amounts:
Americas
Other category
Reportable Segment
Enterprise Value
Available in Excess
of Goodwill
$
1,056.0
43.0
After recording impairment charges discussed above, no reporting units would have had goodwill balances in
excess of enterprise value available for goodwill based on the sensitivity analysis above.
See Note 2 and Note 10 to the consolidated financial statements for additional information.
Income Taxes
Our annual effective tax rate is based on income, statutory tax rates and tax planning strategies in various
jurisdictions in which we operate. Tax laws are complex and subject to different interpretations by the taxpayer and
respective governmental taxing authorities. Significant judgment is required in determining our tax expense and in
evaluating tax positions. Tax positions are reviewed quarterly and balances are adjusted as new information
becomes available.
We are audited by the U.S. Internal Revenue Service under the Compliance Assurance Process (“CAP”).
Under CAP, the U.S. Internal Revenue Service works with large business taxpayers to identify and resolve issues
prior to the filing of a tax return. Accordingly, we expect to record minimal liabilities for U.S. Federal uncertain tax
positions. Tax positions are reviewed regularly for state, local and non-U.S. tax liabilities associated with uncertain
tax positions. Our liability for uncertain tax positions in these jurisdictions is $2.2.
31
Deferred income tax assets and liabilities are recognized for the estimated future tax consequences
attributable to temporary differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which the temporary differences are expected to reverse. In
evaluating our ability to recover deferred tax assets within the jurisdiction from which they arise, we consider all
positive and negative evidence. These assumptions require significant judgment and are developed using forecasts
of future taxable income that are consistent with the internal plans and estimates we are using to manage the
underlying business. Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in
the future.
In 2014, we implemented tax planning strategies resulting in a $20.2 worthless stock deduction and a $1.7
bad debt deduction that will reduce our 2014 U.S. tax liabilities by $8.5. The deductions relate to the liquidation of
certain subsidiaries in the Asia Pacific region. The ability to take the tax deductions hinges on a number of factors,
including the solvency of the subsidiaries and the characterization of the transaction. We have analyzed all of the
issues and assert that it is more likely than not that we are entitled to both the worthless stock deduction and the
bad debt deduction. Therefore, it is appropriate to include the benefit in our 2014 consolidated financial statements.
In 2013, we implemented tax planning strategies resulting in excess foreign tax credits of $57.6. More
specifically, we converted a wholly owned French holding company from a disregarded entity to a controlled foreign
corporation for U.S. tax purposes, and the conversion caused outstanding intercompany debt to be treated as a
deemed dividend taxable in the U.S. Foreign taxes paid on the income that generated the deemed dividend
exceeded the U.S. tax cost creating excess foreign tax credits of $56.7. Other cash dividends received from our
Canadian subsidiary resulted in excess foreign tax credits of $0.9.
Future tax benefits of tax losses are recognized to the extent that realization of these benefits is considered
more likely than not. As of February 28, 2014, we recorded tax benefits from operating loss carryforwards of $90.9,
but we have also recorded valuation allowances totaling $76.2, which reduced our recorded tax benefit to $14.7. It
is considered more likely than not that a $14.7 cash benefit will be realized on these carryforwards in future periods.
This determination is based on the expectation that related operations will be sufficiently profitable or various tax,
business and other planning strategies will enable us to utilize the carryforwards. To the extent that available
evidence raises doubt about the realization of a deferred tax asset, a valuation allowance is established or adjusted.
Additionally, we have deferred tax assets related to tax credit carryforwards of $23.6. The majority of these
credit carryforwards are the result of a tax planning strategy entered into during 2013. We expect to utilize $17.7
with the filing of our 2014 tax return. The U.S. foreign tax credit carryforward period is 10 years and utilization of
foreign tax credits is restricted to 35% of foreign source taxable income in that year. We have projected our pretax
domestic earnings and foreign source income based on historical results and expect to fully utilize the remaining
excess foreign tax credits (as well as the remaining other credits) within the allowable carryforward period. As noted
above regarding operating loss carryforwards, a valuation allowance will be established on the credit carryforwards
if their expected realization changes.
As of February 28, 2014, we have recorded valuation allowances totaling $81.8 against deferred tax assets,
including net operating losses of $76.0 and other deductible temporary tax differences of $5.8. The $14.7 of
deferred tax assets related to net operating losses for which there is no valuation allowance recorded as of
February 28, 2014 is anticipated to be realized through future operating profits. Our judgment related to the
realization of deferred tax assets is based on current and expected market conditions and could change in the
event market conditions and our profitability in these jurisdictions differ significantly from our current estimates.
A 10% decrease in the expected amount of cash benefit to be realized on the carryforwards would have
resulted in a decrease in net income for 2014 of approximately $4.
See Note 15 to the consolidated financial statements for additional information.
32
Pension and Other Post-Retirement Benefits
We sponsor a number of domestic and foreign plans to provide pension, medical and life insurance benefits
to retired employees. As of February 28, 2014 and February 22, 2013, the benefit obligations, fair value of plan
assets and funded status of these plans were as follows:
Fair value of plan assets
Benefit plan obligations
Funded status
Defined Benefit
Pension Plans
Post-Retirement
Plans
February 28,
2014
February 22,
2013
February 28,
2014
February 22,
2013
$
$
55.0 $
103.5
(48.5) $
50.2 $
101.7
(51.5) $
— $
69.1
(69.1) $
—
77.3
(77.3)
The post-retirement medical and life insurance plans are unfunded. As of February 28, 2014, approximately
68% of our unfunded defined benefit pension obligations related to our non-qualified supplemental retirement plan
that is limited to a select group of management approved by the Compensation Committee. Our investments in
whole life and variable life COLI policies with a net cash surrender value of $154.3 as of February 28, 2014 are
intended to be utilized as a long-term funding source for post-retirement medical benefits, deferred compensation
and supplemental retirement plan obligations. The asset values of the COLI policies are not segregated in a trust
specifically for the plans, thus are not considered plan assets. Changes in the values of these policies have no
effect on the post-retirement benefits expense, defined benefit pension expense or benefit obligations recorded in
the consolidated financial statements.
We recognize the cost of benefits provided during retirement over the employees’ active working lives.
Inherent in this approach is the requirement to use various actuarial assumptions to predict and measure costs and
obligations many years prior to the settlement date. Key actuarial assumptions that require significant management
judgment and have a material impact on the measurement of our consolidated benefits expense and benefit
obligations include, among others, the discount rate and health cost trend rates. These and other assumptions are
reviewed with our actuaries and updated annually based on relevant external and internal factors and information,
including, but not limited to, benefit payments, expenses paid from the fund, rates of termination, medical inflation,
technology and quality care changes, regulatory requirements, plan changes and governmental coverage changes.
To conduct our annual review of discount rates, we perform a matching exercise of projected plan cash flows
against spot rates on a yield curve comprised of high quality corporate bonds as of the measurement date (the
Ryan ALM Top Third curve as of February 28, 2014 and the Ryan ALM 45/95 curve as of February 22, 2013). The
measurement dates for our retiree benefit plans are consistent with our fiscal year-end. Accordingly, we select
discount rates to measure our benefit obligations that are consistent with market indices at the end of each fiscal
year.
Based on consolidated benefit obligations as of February 28, 2014, a one percentage point decline in the
weighted-average discount rate used for benefit plan measurement purposes would have changed the 2014
consolidated benefits expense by less than $1 and the consolidated benefit obligations by less than $13. All
obligation-related experience gains and losses are amortized using a straight-line method over the average
remaining service period of active plan participants.
To conduct our annual review of healthcare cost trend rates, we model our actual claims cost data over a
historical period, including an analysis of pre-65 versus post-65 age groups and other important demographic
components of our covered retiree population. This data is adjusted to eliminate the impact of plan changes and
other factors that would tend to distort the underlying cost inflation trends. Our initial healthcare cost trend rate is
reviewed annually and adjusted as necessary to remain consistent with recent historical experience and our
expectations regarding short-term future trends. As of February 28, 2014, our initial rate of 7.04% for pre-age 65
retirees was trended downward by each year, until the ultimate trend rate of 4.50% was reached. The ultimate trend
rate is adjusted annually, as necessary, to approximate the current economic view on the rate of long-term inflation
plus an appropriate healthcare cost premium. Post-age 65 trend rates are not applicable after 2012 due to our
change to a fixed subsidy for post-age 65 benefits.
Based on consolidated benefit obligations as of February 28, 2014, a one percentage point increase or
decrease in the assumed healthcare cost trend rates would have changed the 2013 consolidated benefits expense
by less than $1 and changed the consolidated benefit obligations by less than $1. All experience gains and losses
33
are amortized using a straight-line method, over at least the minimum amortization period prescribed by accounting
guidance.
Despite the previously described policies for selecting key actuarial assumptions, we periodically experience
material differences between assumed and actual experience. Our consolidated unamortized prior service credits
and net experience gains recorded in Accumulated other comprehensive income (loss) on the Consolidated
Balance Sheets were $24.5 as of February 28, 2014 and $23.4 as of February 22, 2013.
See Note 13 to the consolidated financial statements for additional information.
Forward-Looking Statements
From time to time, in written and oral statements, we discuss our expectations regarding future events and
our plans and objectives for future operations. These forward-looking statements discuss goals, intentions and
expectations as to future trends, plans, events, results of operations or financial condition, or state other information
relating to us, based on current beliefs of management as well as assumptions made by, and information currently
available to, us. 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. Although we believe these forward-looking statements are reasonable, they are
based upon a number of assumptions concerning future conditions, any or all of which may ultimately prove to be
inaccurate. Forward-looking statements involve a number of risks and uncertainties that could cause actual results
to vary from our 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; our restructuring activities; changes in raw
materials and commodity costs; currency fluctuations; changes in customer demands; and the other risks and
contingencies detailed in this Report and our other filings with the SEC. We undertake no obligation to update,
amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
Recently Issued Accounting Standards
See Note 3 to the consolidated financial statements for information regarding recently issued accounting
standards.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk:
We are exposed to market risks from foreign currency exchange, interest rates, commodity prices and fixed
income and equity prices, which could affect our operating results, financial position and cash flows.
Foreign Currency Exchange Risk
We are exposed to foreign currency exchange rate risk primarily on sales commitments, anticipated sales
and purchases and assets and liabilities denominated in currencies other than the U.S. dollar. In 2014, 2013 and
2012, we transacted business in 16 primary currencies worldwide, of which the most significant were the U.S.
dollar, the euro, the Canadian dollar and the pound sterling. Revenue from foreign locations represented
approximately 32% of our consolidated revenue in 2014, 34% in 2013 and 36% in 2012. We actively manage the
foreign currency exposures that are associated with committed foreign currency purchases and sales created in the
normal course of business at the local entity level. Exposures that cannot be naturally offset within a local entity to
an immaterial amount are often hedged with foreign currency derivatives or netted with offsetting exposures at other
entities. We do not use derivatives for trading or speculative purposes. Our results are affected by the strength of
the currencies in countries where we manufacture or purchase goods relative to the strength of the currencies in
countries where our products are sold.
We estimate that an additional 10% strengthening of the U.S. dollar against local currencies would have
increased operating income by approximately $1 in 2014 and $2 in 2013 and decreased operating income by
approximately $2 in 2012. These estimates assume no changes other than the exchange rate itself. However, this
quantitative measure has inherent limitations. The sensitivity analysis disregards the possibility that rates can move
in opposite directions and that gains from one currency may or may not be offset by losses from another currency.
The translation of the assets and liabilities of our international subsidiaries is made using the foreign currency
exchange rates as of the end of the fiscal year. Translation adjustments are not included in determining net income
but are included in Accumulated other comprehensive income (loss) within shareholders’ equity on the
34
Consolidated Balance Sheets until a sale or substantially complete liquidation of the net investment in the
international subsidiary takes place. In certain markets, we could recognize a significant gain or loss related to
unrealized cumulative translation adjustments if we were to exit the market and liquidate our net investment. As of
February 28, 2014 and February 22, 2013, the cumulative net currency translation adjustments reduced
shareholders’ equity by $19.5 and $23.6, respectively.
Foreign currency exchange gains and losses reflect transaction gains and losses, which arise from monetary
assets and liabilities denominated in currencies other than a business unit’s functional currency. For 2014, net
transactions losses were $5.1. For 2013, net transaction gains were $1.2 and for 2012, net transaction losses were
$0.3.
See Note 2 to the consolidated financial statements for additional information.
Interest Rate Risk
We are exposed to interest rate risk primarily on our short-term and long-term investments and short-term
and long-term borrowings. Our short-term investments are primarily invested in U.S. agency debt securities, U.S.
government debt securities and corporate debt securities. Additionally, we held auction rate securities with a par
value of $11.7 as of February 28, 2014. These investments are classified as long-term since no liquid markets
currently exist for these securities. The risk on our short-term and long-term borrowings is primarily related to a loan
with a balance of $35.8 and $38.4 as of February 28, 2014 and February 22, 2013, respectively. This loan bears a
floating interest rate based on 30-day LIBOR plus 3.35%.
We estimate a 1% increase in interest rates would have increased our net income by approximately $1 in
2014, 2013 and 2012, mainly as a result of higher interest income on our investments. Significant changes in
interest rates could have an impact on the market value of our managed fixed-income investment portfolio.
However, this quantitative measure has inherent limitations since not all of our investments are in similar asset
classes. In addition, our investment manager actively manages certain investments, thus our results could be better
or worse than market returns. As of February 28, 2014, approximately 42% of our fixed-income investments mature
within one year, approximately 25% in two years, approximately 27% in three years and approximately 6% in four or
more years.
See Note 6 and Note 12 to the consolidated financial statements for additional information.
Commodity Price Risk
We are exposed to commodity price risk primarily on our raw material purchases. These raw materials are not
rare or unique to our industry. The cost of steel, aluminum, other metals, wood, particleboard, petroleum-based
products and other commodities, such as fuel and energy, has fluctuated significantly in recent years due to
changes in global supply and demand. Our gross margins could be affected if these types of costs continue to
fluctuate. We actively manage these raw material costs through global sourcing initiatives and price increases on
our products. However, in the short-term, rapid increases in raw material costs can be very difficult to offset with
price increases because of contractual agreements with our customers, and it is difficult to find effective financial
instruments to hedge against such changes.
As a result of changes in commodity costs, cost of sales decreased approximately $3 during 2014, and cost
of sales increased approximately $2 and $38 during 2013 and 2012, respectively. The decrease in commodity costs
during 2014 was driven primarily by lower steel and fuel costs. We estimate that a 1% increase in commodity
prices, assuming no offsetting benefit of price increases, would have decreased our operating income by
approximately $12, $12 and $11 in 2014, 2013 and 2012, respectively. This quantitative measure has inherent
limitations given the likelihood of implementing pricing actions to offset significant increases in commodity prices.
Fixed Income and Equity Price Risk
We are exposed to fixed income and equity price risk primarily on the cash surrender value associated with
our investments in variable life COLI policies. During Q4 2014, our investments in variable life COLI policies were
allocated at approximately 50% fixed income and 50% equity. During Q4 2012 through Q3 2014, the majority of our
investments in variable life COLI policies were in fixed income securities. Prior to Q4 2012, this allocation had been
set at 80% fixed income and 20% equity.
35
We estimate a 10% adverse change in the value of the equity portion of our variable life COLI investments
would reduce our net income by approximately $2 in 2014, would not have been material in 2013 and would have
reduced our net income by approximately $2 in 2012. However, given that a portion of the investments in COLI
policies are intended to be utilized as a long-term funding source for deferred compensation obligations, any
adverse change in the equity portion of our variable life COLI investments may be partially offset by favorable
changes in deferred compensation liabilities. We estimate that the risk of changes in the value of the variable life
COLI investments due to other factors, including changes in interest rates, yield curve and portfolio duration, would
not have a material impact on our results of operations or financial condition. This quantitative measure has
inherent limitations since not all of our investments are in similar asset classes.
See Note 6 and Note 9 to the consolidated financial statements for additional information.
36
Item 8. Financial Statements and Supplementary Data:
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining effective internal control over financial reporting.
This system is designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with accounting principles generally
accepted in the United States of America.
Our internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of
our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with accounting principles generally accepted in the United States of America,
and that receipts and expenditures are being made only in accordance with authorizations of management and the
Board of Directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, a system of internal control over financial reporting can provide only
reasonable assurance and may not prevent or detect all misstatements. Further, because of changes in conditions,
effectiveness of internal control over financial reporting may vary over time.
Management assessed the effectiveness of the system of internal control over financial reporting based on
the framework in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this assessment, management determined that our system
of internal control over financial reporting was effective as of February 28, 2014.
Deloitte & Touche LLP, the independent registered certified public accounting firm that audited our financial
statements included in this annual report on Form 10-K, also audited the effectiveness of our internal control over
financial reporting, as stated in their report which is included herein.
37
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
STEELCASE INC.
GRAND RAPIDS, MICHIGAN
We have audited the internal control over financial reporting of Steelcase Inc. and subsidiaries (the
“Company”) as of February 28, 2014, based on criteria established in Internal Control—Integrated Framework
(1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's
management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit included
obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the
company’s principal executive and principal financial officers, or persons performing similar functions, and effected
by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of
collusion or improper management override of controls, material misstatements due to error or fraud may not be
prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal
control over financial reporting to future periods are subject to the risk that the controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of February 28, 2014, based on the criteria established in Internal Control—Integrated Framework
(1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated financial statements and financial statement schedule as of and for the year
ended February 28, 2014 of the Company and our report dated April 17, 2014 expressed an unqualified opinion on
those financial statements and financial statement schedule.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Grand Rapids, Michigan
April 17, 2014
38
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
STEELCASE INC.
GRAND RAPIDS, MICHIGAN
We have audited the accompanying consolidated balance sheets of Steelcase Inc. and subsidiaries (the
“Company”) as of February 28, 2014 and February 22, 2013, and the related consolidated statements of income,
comprehensive income, changes in shareholders’ equity, and cash flows for each of the three years in the period
ended February 28, 2014. Our audits also included the financial statement schedule listed in the Index at Item 15.
These financial statements and financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on the financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial
position of Steelcase Inc. and subsidiaries at February 28, 2014 and February 22, 2013 and the results of their
operations and their cash flows for each of the three years in the period ended February 28, 2014, in conformity
with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial
statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the Company’s internal control over financial reporting as of February 28, 2014, based on the
criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated April 17, 2014 expressed an unqualified opinion
on the Company's internal control over financial reporting.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Grand Rapids, Michigan
April 17, 2014
39
STEELCASE INC.
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data)
Year Ended
Revenue
Cost of sales
Restructuring costs (benefits)
Gross profit
Operating expenses
Goodwill and intangible asset impairment charges
Restructuring costs
Operating income
Interest expense
Investment income (loss)
Other income (expense), net
Income before income tax expense
Income tax expense
Net income
Earnings per share:
Basic
Diluted
February 28,
2014
2,988.9 $
February 22,
2013
2,868.7 $
February 24,
2012
2,749.5
$
2,046.5
1,987.8
1,913.6
(2.8)
945.2
757.0
12.9
9.4
165.9
(17.8)
(0.3)
(0.6)
147.2
59.5
14.9
866.0
727.0
59.9
19.8
59.3
(17.8)
3.7
9.7
54.9
16.1
$
$
$
87.7 $
38.8 $
0.70 $
0.69 $
0.30 $
0.30 $
26.2
809.7
708.3
—
4.3
97.1
(25.6)
5.2
5.3
82.0
25.3
56.7
0.43
0.43
See accompanying notes to the consolidated financial statements.
40
STEELCASE INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
Net income
Other comprehensive income (loss), gross:
Unrealized gain (loss) on investments
Pension and other post-retirement liability adjustments
Derivative adjustments
Foreign currency translation adjustments
Total other comprehensive income (loss), gross
Other comprehensive income (loss), tax (expense) benefit:
Unrealized gain (loss) on investments
Pension and other post-retirement liability adjustments
Derivative adjustments
Foreign currency translation adjustments
Total other comprehensive income (loss), tax (expense) benefit
Other comprehensive income (loss), net:
Unrealized gain (loss) on investments
Pension and other post-retirement liability adjustments
Derivative adjustments
Foreign currency translation adjustments
Total other comprehensive income (loss), net
Comprehensive income
Year Ended
February 28,
2014
February 22,
2013
February 24,
2012
$
87.7 $
38.8 $
56.7
0.3
1.1
—
4.1
5.5 $
(0.1)
(0.4)
—
—
(0.5) $
0.2
0.7
—
4.1
5.0 $
2.5
—
—
(5.8)
(3.3) $
(0.9)
(0.8)
—
—
(1.7) $
1.6
(0.8)
—
(5.8)
(5.0) $
(0.7)
0.5
(0.2)
0.8
0.4
0.3
(0.6)
0.1
—
(0.2)
(0.4)
(0.1)
(0.1)
0.8
0.2
92.7 $
33.8 $
56.9
$
$
$
$
See accompanying notes to the consolidated financial statements.
41
STEELCASE INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
ASSETS
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, net of allowances of $13.0 and $14.5
Inventories
Deferred income taxes
Prepaid expenses
Other current assets
Total current assets
Property, plant and equipment, net of accumulated depreciation of $1,140.8 and
$1,221.4
Company-owned life insurance ("COLI")
Deferred income taxes
Goodwill
Other intangible assets, net of accumulated amortization of $41.8 and $46.6
Investments in unconsolidated affiliates
Other assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Short-term borrowings and current portion of long-term debt
Accrued expenses:
Employee compensation
Employee benefit plan obligations
Customer deposits
Product warranties
Other
Total current liabilities
Long-term liabilities:
Long-term debt less current maturities
Employee benefit plan obligations
Other long-term liabilities
Total long-term liabilities
Total liabilities
Shareholders’ equity:
Preferred stock-no par value; 50,000,000 shares authorized, none issued and
outstanding
Class A common stock-no par value; 475,000,000 shares authorized, 89,909,946
and 86,010,584 issued and outstanding
Class B common stock-no par value; 475,000,000 shares authorized, 32,966,818
and 39,154,003 issued and outstanding
Additional paid-in capital
Accumulated other comprehensive income (loss)
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
February 28,
2014
February 22,
2013
$
$
$
201.8 $
119.5
306.8
151.5
56.0
19.3
35.0
889.9
377.0
154.3
85.1
108.1
16.6
53.0
42.7
1,726.7 $
212.5 $
2.6
152.8
26.1
16.0
17.5
110.7
538.2
284.4
151.1
75.9
511.4
1,049.6
—
—
150.4
100.5
287.3
137.5
56.2
17.9
28.8
778.6
353.2
225.8
101.7
121.4
19.2
53.3
36.4
1,689.6
198.6
2.6
129.4
23.8
13.5
14.1
102.8
484.8
286.4
158.0
92.4
536.8
1,021.6
—
—
—
—
0.8
676.3
677.1
1,726.7 $
—
27.2
(4.2)
645.0
668.0
1,689.6
$
See accompanying notes to the consolidated financial statements.
42
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(in millions, except share and per share data)
STEELCASE INC.
Common
Shares
Outstanding
Class A
Common
Stock
Class B
Common
Stock
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Total
Shareholders’
Equity
February 25, 2011
Common stock issuance
Common stock repurchases
Tax effect of exercise of stock awards
Restricted stock units issued as common stock
18,166
Performance units and restricted stock units expense
132,234,568
$
48.5
$
— $
20.2
$
0.6
$
627.0
$
38,888
0.3
(5,802,293)
(47.7)
1.1
11.3
0.2
(31.7)
56.7
Other comprehensive income
Dividends paid ($0.24 per share)
Net income
February 24, 2012
Common stock issuance
Common stock repurchases
Tax effect of exercise of stock awards
Performance units issued as common stock
Restricted stock units issued as common stock
Performance units and restricted stock units expense
Other comprehensive income (loss)
Dividends paid ($0.36 per share)
Net income
February 22, 2013
Common stock issuance
Common stock repurchases
Tax effect of exercise of stock awards
Performance units issued as common stock
Restricted stock units issued as common stock
Performance units and restricted stock units expense
Other repurchases related to stock vested not yet issued
Other comprehensive income
Dividends paid ($0.40 per share)
Net income
February 28, 2014
126,489,329
$
1.1
$
— $
32.6
$
0.8
$
652.0
$
43,238
(2,346,590)
(1.1)
763,425
215,185
0.3
(18.8)
3.8
9.3
125,164,587
$
— $
— $
27.2
$
(4.2) $
645.0
$
(5.0)
(45.8)
38.8
31,790
(3,619,817)
1,018,500
281,704
0.5
(43.7)
0.5
16.3
(0.8)
(6.2)
5.0
(50.2)
87.7
122,876,764
$
— $
— $
— $
0.8
$
676.3
$
696.3
0.3
(47.7)
1.1
11.3
0.2
(31.7)
56.7
686.5
0.3
(19.9)
3.8
9.3
(5.0)
(45.8)
38.8
668.0
0.5
(49.9)
0.5
16.3
(0.8)
5.0
(50.2)
87.7
677.1
See accompanying notes to the consolidated financial statements.
43
STEELCASE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Goodwill and intangible asset impairment charges
Loss (gain) on disposal of fixed assets
Deferred income taxes
Restructuring costs
Non-cash stock compensation
Equity in income of unconsolidated affiliates
Dividends received from unconsolidated affiliates
Other
Changes in operating assets and liabilities, net of acquisitions, divestitures and
deconsolidations:
Accounts receivable
Inventories
Other assets
Accounts payable
Employee compensation liabilities
Employee benefit obligations
Accrued expenses and other liabilities
Net cash provided by operating activities
INVESTING ACTIVITIES
Capital expenditures
Proceeds from disposal of fixed assets
Purchases of investments
Liquidations of investments
Liquidations of COLI
Acquisitions, net of cash acquired
Other
Net cash provided by (used in) investing activities
FINANCING ACTIVITIES
Dividends paid
Common stock repurchases
Excess tax benefit from vesting of stock awards
Borrowings of long-term debt, net of issuance costs
Repayments of long-term debt
Borrowings of lines of credit
Repayments of lines of credit
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Supplemental Cash Flow Information:
Income taxes paid, net of refunds received
Interest paid, net of amounts capitalized
$
$
$
Year Ended
February 28,
2014
February 22,
2013
February 24,
2012
$
87.7
$
38.8
$
56.7
60.0
12.9
(1.7)
14.1
6.6
16.8
(10.2)
6.2
3.8
(15.7)
(13.1)
(6.6)
12.7
5.5
(4.1)
3.9
178.8
(86.8)
9.5
(146.7)
122.3
74.5
—
2.0
(25.2)
(50.2)
(49.9)
0.5
0.6
(2.5)
0.2
(0.3)
(101.6)
(0.6)
51.4
150.4
58.3
59.9
1.6
(3.0)
34.7
9.6
(9.4)
5.4
2.0
(12.8)
2.1
2.4
3.4
5.8
(2.9)
(8.6)
187.3
(74.0)
15.5
(78.6)
62.6
—
(6.2)
(4.8)
(85.5)
(45.8)
(19.9)
3.8
0.3
(2.6)
1.5
(1.5)
(64.2)
0.7
38.3
112.1
201.8
$
150.4
$
56.4
—
4.6
13.6
30.5
11.6
(8.3)
5.8
(2.5)
8.0
(17.1)
7.3
(2.0)
(32.5)
(0.4)
(30.0)
101.7
(64.9)
11.7
(195.8)
466.1
—
(20.9)
7.0
203.2
(31.7)
(47.7)
1.1
0.2
(255.5)
—
(0.7)
(334.3)
(0.7)
(30.1)
142.2
112.1
33.1
17.4
$
$
9.4
17.4
$
$
10.7
26.2
See accompanying notes to the consolidated financial statements.
44
STEELCASE INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
NATURE OF OPERATIONS
Steelcase is the global leader in furnishing the work experience in office environments. Founded in 1912, we
are headquartered in Grand Rapids, Michigan, U.S.A. and employ approximately 10,700 employees. We operate
manufacturing and distribution center facilities in 21 principal locations. We distribute products through various
channels, including independent and company-owned dealers, in more than 800 locations throughout the world,
and have led the global office furniture industry in revenue every year since 1974. We operate under the Americas
and EMEA reportable segments plus an “Other” category. Additional information about our reportable segments is
contained in Note 18.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Steelcase Inc. and its subsidiaries. We
consolidate entities in which we maintain a controlling interest. All material intercompany transactions and balances
have been eliminated in consolidation. We also consolidate variable interest entities when appropriate.
Investments in entities where our equity ownership falls between 20% and 50%, or where we otherwise have
significant influence, are accounted for under the equity method of accounting. All other investments in
unconsolidated affiliates are accounted for under the cost method of accounting. These investments are reported as
Investments in unconsolidated affiliates on the Consolidated Balance Sheets, and income from equity method and
cost method investments are reported in Other income (expense), net on the Consolidated Statements of Income.
See Note 11 for additional information.
Fiscal Year
Our fiscal year ends on the last Friday in February with each fiscal quarter typically including 13 weeks. The
fiscal year ended February 28, 2014 contained 53 weeks, with Q4 2014 containing 14 weeks. The fiscal years
ended February 22, 2013 and February 24, 2012 contained 52 weeks. Reference to a year relates to the fiscal year,
ended in February of the year indicated, rather than the calendar year, unless indicated by a specific date.
Additionally, Q1, Q2, Q3 and Q4 reference the first, second, third and fourth quarter, respectively, of the fiscal year
indicated. All amounts are in millions, except share and per share data, data presented as a percentage or as
otherwise indicated.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the amounts and
disclosures in the consolidated financial statements and accompanying notes. Although these estimates are based
on historical data and management’s knowledge of current events and actions we may undertake in the future,
actual results may differ from these estimates under different assumptions or conditions.
Foreign Currency
For most international operations, local currencies are considered the functional currencies. We translate
assets and liabilities of these subsidiaries to their U.S. dollar equivalents at exchange rates in effect as of the
balance sheet date. Translation adjustments are not included in determining net income, but are recorded in
Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets until a sale or substantially
complete liquidation of the net investment in the international subsidiary takes place. We translate Consolidated
Statements of Income accounts at average exchange rates for the applicable period.
Foreign currency transaction gains and losses, net of derivatives, arising primarily from changes in exchange
rates on foreign currency denominated intercompany loans and other intercompany transactions and balances
between foreign locations, are recorded in Other income (expense), net.
Cash and Cash Equivalents
Cash and cash equivalents include demand bank deposits and highly liquid investment securities with an
original maturity of three months or less. Cash equivalents are reported at cost and approximate fair value.
45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
Outstanding checks in excess of funds on deposit are classified as Accounts payable on the Consolidated Balance
Sheets. Our restricted cash balance as of February 28, 2014 and February 22, 2013 was $9.0 and $3.5,
respectively, and consisted primarily of funds held in escrow for construction in progress and potential future
workers’ compensation claims. Our restricted cash balance is classified in Other assets on the Consolidated
Balance Sheets.
Allowances for Credit Losses
Allowances for credit losses related to accounts receivable and notes receivable are maintained at a level
considered by management to be adequate to absorb an estimate of probable future losses existing at the balance
sheet date. In estimating probable losses, we review accounts that are past due or in bankruptcy. We consider an
accounts receivable or notes receivable balance past due when payment is not received within the stated terms.
We review accounts that may have higher credit risk using information available about the debtor, such as financial
statements, news reports and published credit ratings. We also use general information regarding industry trends,
the economic environment and information gathered through our network of field-based employees. Using an
estimate of current fair market value of any applicable collateral and other credit enhancements, such as third party
guarantees, we arrive at an estimated loss for specific concerns and estimate an additional amount for the
remainder of trade balances based on historical trends and other factors previously referenced. Receivable
balances are written off when we determine the balance is uncollectible. Subsequent recoveries, if any, are credited
to bad debt expense when received.
Concentrations of Credit Risk
Our trade receivables are primarily due from independent dealers who, in turn, carry receivables from their
customers. We monitor and manage the credit risk associated with individual dealers and direct customers where
applicable. Dealers are responsible for assessing and assuming credit risk of their customers and may require their
customers to provide deposits, letters of credit or other credit enhancement measures. Some sales contracts are
structured such that the customer payment or obligation is direct to us. In those cases, we may assume the credit
risk. Whether from dealers or customers, our trade credit exposures are not concentrated with any particular entity.
Inventories
Inventories are stated at the lower of cost or market. The Americas segment primarily uses the last in, first out
(“LIFO”) method to value its inventories. The EMEA segment values inventories primarily using the first in, first out
method. Businesses within the Other category primarily use the first in, first out or the average cost inventory
valuation methods. See Note 7 for additional information.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Major improvements that materially extend the useful lives
of the assets are capitalized. Expenditures for repairs and maintenance are charged to expense as incurred.
Depreciation is provided using the straight-line method over the estimated useful lives of the assets.
Long-lived assets such as property, plant and equipment are tested for impairment when conditions indicate
that the carrying value may not be recoverable. We evaluate several conditions, including, but not limited to, the
following: a significant decrease in the market price of an asset or an asset group; a significant adverse change in
the extent or manner in which a long-lived asset is being used, including an extended period of idleness; and a
current expectation that, more likely than not, a long-lived asset or asset group will be sold or otherwise disposed of
significantly before the end of its previously estimated useful life. We review the carrying value of our long-lived
assets held and used using estimates of future undiscounted cash flows. If the carrying value of a long-lived asset
is considered impaired, an impairment charge is recorded for the amount by which the carrying value of the long-
lived asset exceeds its estimated fair value.
When assets are classified as “held for sale,” losses are recorded for the difference between the carrying
amount of the property, plant and equipment and the estimated fair value less estimated selling costs. Assets are
considered “held for sale” when it is expected that the asset is going to be sold within twelve months. See Note 8 for
additional information.
46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
Operating Leases
Rent expense under operating leases is recorded on a straight-line basis over the lease term unless the lease
contains an escalation clause which is not fixed and determinable. The lease term begins when we have the right to
control the use of the leased property, which is typically before rent payments are due under the terms of the lease.
If a lease has a fixed and determinable escalation clause, the difference between rent expense and rent paid is
recorded as deferred rent. Rent expense under operating leases that do not have an escalation clause or where
escalation is based on an inflation index is expensed over the lease term as it is payable. See Note 17 for additional
information.
Goodwill and Other Intangible Assets
Goodwill represents the difference between the purchase price and the related underlying tangible and
identifiable intangible net asset values resulting from business acquisitions. Annually in Q4, or earlier if conditions
indicate it is necessary, the carrying value of the reporting unit is compared to an estimate of its fair value. If the
estimated fair value of the reporting unit is less than the carrying value, goodwill is impaired and is written down to
its estimated fair value. Goodwill is assigned to and the fair value is tested at the reporting unit level. We evaluate
goodwill and intangible assets using five reporting units where goodwill is recorded: the Americas, EMEA, Asia
Pacific, Designtex and PolyVision. See Note 10 for additional information.
Other intangible assets subject to amortization consist primarily of proprietary technology, trademarks,
customer relationships and non-compete agreements and are amortized over their estimated useful economic lives
using the straight-line method. Other intangible assets not subject to amortization, consisting of certain trademarks,
are accounted for and evaluated for potential impairment in a manner consistent with goodwill. See Note 10 for
additional information.
Contingencies
Loss contingencies are accrued if the loss is probable and the amount of the loss can be reasonably
estimated. Legal costs associated with potential loss contingencies are expensed as incurred. We are involved in
litigation from time to time in the ordinary course of our business. Based on known information, we do not believe
we are party to any lawsuit or proceeding, individually and in the aggregate, that is likely to have a material adverse
impact on the consolidated financial statements.
Self-Insurance
We are self-insured for certain losses relating to domestic workers’ compensation, product liability, and
employee medical, dental, and short-term disability claims. We purchase insurance coverage to reduce our
exposure to significant levels of these claims. Self-insured losses are accrued based upon estimates of the
aggregate liability for uninsured claims incurred as of the balance sheet date using current and historical claims
experience and certain actuarial assumptions. These estimates are subject to uncertainty due to a variety of factors,
including extended lag times in the reporting and resolution of claims, and trends or changes in claim settlement
patterns, insurance industry practices and legal interpretations. As a result, actual costs could differ significantly
from the estimated amounts. Adjustments to estimated reserves are recorded in the period in which the change in
estimate occurs.
Our total reserve for estimated domestic workers’ compensation claims incurred as of February 28, 2014 and
February 22, 2013 was $14.6 and $15.9, respectively. Our reserve for estimated domestic workers’ compensation
claims expected to be paid within one year as of February 28, 2014 and February 22, 2013 was $5.0 and $4.8,
respectively, and is included in Accrued expenses: Other on the Consolidated Balance Sheets, while our reserve for
estimated domestic workers’ compensation claims expected to be paid beyond one year is included in Other long-
term liabilities on the Consolidated Balance Sheets.
Our reserve for estimated product liability claims incurred as of February 28, 2014 and February 22, 2013
was $5.8 and $5.3, respectively, and is included in Accrued expenses: Other on the Consolidated Balance Sheets.
The estimate for employee medical, dental, and short-term disability claims incurred as of February 28, 2014
and February 22, 2013 was $2.8 and $3.0, respectively, and is recorded within Accrued expenses: Other on the
Consolidated Balance Sheets.
47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
Product Warranties
We offer warranties ranging from 12 years to lifetime for most products, subject to certain exceptions. These
warranties provide for the free repair or replacement of any covered product, part or component that fails during
normal use because of a defect in materials or workmanship. The accrued liability for product warranties is based
on an estimated amount needed to cover product warranty costs, including product recall and retrofit costs incurred
as of the balance sheet date determined by historical claims experience and our knowledge of current events and
actions.
Roll-Forward of Accrued
Liability for Product Warranties
Year Ended
February 28,
2014
February 22,
2013
February 24,
2012
Balance as of beginning of period
$
31.1 $
29.9 $
Accruals related to product warranties, recalls and retrofits
Adjustments related to changes in estimates
Reductions for settlements
Currency translation adjustments
Balance as of end of period
16.2
4.6
(14.9)
0.3
10.7
(0.3)
(9.4)
0.2
$
37.3 $
31.1 $
31.3
11.1
1.9
(14.4)
—
29.9
Our reserve for estimated settlements expected to be paid beyond one year as of February 28, 2014 and
February 22, 2013 was $19.8 and $17.0, respectively, and is included in Other long-term liabilities on the
Consolidated Balance Sheets.
Pension and Other Post-Retirement Benefits
We sponsor a number of domestic and foreign plans to provide pension benefits and medical and life
insurance benefits to retired employees. We measure the net over-funded or under-funded positions of our defined
benefit pension plans and post-retirement benefit plans as of the fiscal year end and display that position as an
asset or liability on the Consolidated Balance Sheets. Any unrecognized prior service credit (cost), experience gains
(losses) or transition obligation is reported as a component of Accumulated Other Comprehensive Income (Loss),
net of tax, in shareholders’ equity. See Note 13 for additional information.
Environmental Matters
Environmental expenditures related to current operations are expensed or capitalized as appropriate.
Expenditures related to an existing condition allegedly caused by past operations, and not associated with current
or future revenue generation, are expensed. Generally, the timing of these accruals coincides with completion of a
feasibility study or our commitment to a formal plan of action. Liabilities are recorded on a discounted basis as site-
specific plans indicate the amount and timing of cash payments are fixed or reliably determinable. We have ongoing
monitoring and identification processes to assess how the activities, with respect to the known exposures, are
progressing against the accrued cost estimates, as well as to identify other potential remediation sites that are
presently unknown. The liability for environmental contingencies included in Accrued expenses: Other on the
Consolidated Balance Sheets was $6.6 and $5.6 as of February 28, 2014 and February 22, 2013, respectively.
These liabilities were discounted using a rate of 3.6% and 3.2% as of February 28, 2014 and February 22, 2013,
respectively. Our undiscounted liabilities were $8.5 and $7.2 as of February 28, 2014 and February 22, 2013,
respectively. Based on our ongoing evaluation of these matters, we believe we have accrued sufficient reserves to
absorb the costs of all known environmental assessments and the remediation costs of all known sites.
Asset Retirement Obligations
We record all known asset retirement obligations for which the liability’s fair value can be reasonably
estimated. We also have known conditional asset retirement obligations that are not reasonably estimable due to
insufficient information about the timing and method of settlement of the obligation. Accordingly, these obligations
have not been recorded in the consolidated financial statements. A liability for these obligations will be recorded in
the period when sufficient information regarding timing and method of settlement becomes available to make a
reasonable estimate of the liability’s fair value. In addition, there may be conditional asset retirement obligations we
have not yet discovered, and therefore, these obligations also have not been included in the consolidated financial
statements.
48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
Revenue Recognition
Revenue consists substantially of product sales and related service revenue. Product sales are reported net
of discounts and are recognized when title and risks associated with ownership have passed to the dealer or
customer. Typically, this is when product is shipped to the dealer. When product is shipped directly to an end
customer, revenue is typically recognized upon delivery or upon acceptance by the end customer. Revenue from
services is recognized when the services have been rendered. Total revenue does not include sales tax, as we
consider ourselves a pass-through entity for collecting and remitting sales taxes.
Cost of Sales
Cost of sales includes material, labor and overhead. Included within these categories are such items as
compensation expense, depreciation, facilities expense, inbound freight charges, warehousing costs, shipping and
handling expenses, warranty expense, internal transfer costs and other costs of our distribution network.
Operating Expenses
Operating expenses include selling, general and administrative expenses not directly related to the
manufacturing of our products. Included in these expenses are items such as compensation expense, depreciation,
facilities expense, research and development expense, rental expense, royalty expense, information technology
services, legal and other professional services and travel and entertainment expense.
Research and Development Expenses
Research and development expenses, which are expensed as incurred, were $35.9 for 2014, $36.0 for 2013
and $35.8 for 2012. Royalties are sometimes paid to external designers of our products as the products are sold.
These costs are not included in the research and development expenses.
Income Taxes
Deferred income tax assets and liabilities are recognized for the estimated future tax consequences
attributable to temporary differences between the consolidated financial statements carrying amounts of existing
assets and liabilities and their respective tax bases. These deferred income tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are
expected to reverse. The effect of a change in tax rates on deferred income tax assets and liabilities is recognized
in income in the period that includes the enactment date.
We have net operating loss carryforwards available in certain jurisdictions to reduce future taxable income.
Future tax benefits associated with net operating loss carryforwards are recognized to the extent that realization of
these benefits is considered more likely than not. This determination is based on the expectation that related
operations will be sufficiently profitable or various tax, business and other planning strategies will enable us to
utilize the net operating loss carryforwards. In making this determination we consider all available positive and
negative evidence. To the extent that available evidence raises doubt about the realization of a deferred income tax
asset, a valuation allowance is established.
We recognize the tax benefits from uncertain tax positions only if it is more likely than not that the tax position
will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax
benefits from uncertain tax positions recognized are reflected at the amounts most likely to be sustained on
examination. See Note 15 for additional information.
Share-Based Compensation
Our share-based compensation consists of restricted stock units and performance units. Our policy is to
expense share-based compensation using the fair-value based method of accounting for all awards granted,
modified or settled.
Restricted stock units and performance units are credited to equity as they are expensed over the requisite
service periods based on the grant-date fair value of the shares expected to be issued. See Note 16 for additional
information.
49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
Financial Instruments
The carrying amounts of our financial instruments, consisting of cash and cash equivalents, accounts and
notes receivable, accounts and notes payable and certain other liabilities, approximate their fair value due to their
relatively short maturities. Our short-term investments, foreign exchange forward contracts and long-term
investments are measured at fair value on the Consolidated Balance Sheets. Our total debt is carried at cost and
was $287.0 and $289.0 as of February 28, 2014 and February 22, 2013, respectively. The fair value of our total
debt is measured using a discounted cash flow analysis based on current market interest rates for similar types of
instruments and was approximately $327 and $321 as of February 28, 2014 and February 22, 2013, respectively.
The estimation of the fair value of our total debt is based on Level 2 fair value measurements.
See Note 6 and Note 12 for additional information.
We periodically use derivative financial instruments to manage exposures to movements in interest rates and
foreign exchange rates. The use of these financial instruments modifies the exposure of these risks with the
intention to reduce our risk of short-term volatility. We do not use derivatives for speculative or trading purposes.
Foreign Exchange Forward Contracts
A portion of our revenue and earnings is exposed to changes in foreign exchange rates. We seek to manage
our foreign exchange risk largely through operational means, including matching same currency revenue with same
currency costs and same currency assets with same currency liabilities. Foreign exchange risk is also managed
through the use of derivative instruments. Foreign exchange forward contracts serve to mitigate the risk of
conversion or translation of certain foreign denominated net income, assets and liabilities. We primarily use
derivatives for intercompany loans and certain forecasted transactions. The foreign exchange forward contracts
relate principally to the euro, Mexican peso, Canadian dollar, pound sterling and Australian dollar and have maturity
dates less than one year. See Note 6 for additional information.
Assets and liabilities related to derivative instruments as of February 28, 2014 and February 22, 2013 are
summarized below:
Consolidated Balance Sheets
Other current assets
Accrued expenses
Total net fair value of derivative instruments (1)
________________________
February 28,
2014
February 22,
2013
$
$
0.3 $
(3.2)
(2.9) $
1.3
(1.9)
(0.6)
(1) The notional amounts of the outstanding foreign exchange forward contracts were $122.4 as of February 28,
2014 and $115.0 as of February 22, 2013.
Net gains (losses) recognized from derivative instrument activity in 2014, 2013 and 2012 are summarized
below:
Gain (Loss) Recognized in Consolidated Statements of Income
Cost of sales
Operating expenses
Other income (expense), net
Total net gains (losses)
3.
NEW ACCOUNTING STANDARDS
February 28,
2014
Year Ended
February 22,
2013
February 24,
2012
$
$
(0.1) $
—
(3.5)
(3.6) $
0.2 $
0.1
(0.5)
(0.2) $
0.3
0.1
4.8
5.2
In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The guidance
requires an entity to present significant amounts reclassified out of accumulated other comprehensive income by
the respective line items of net income if the amount is reclassified to net income in its entirety in the same reporting
period. This presentation may be either on the face of the statement where net income is presented or as a
separate disclosure in the notes to the financial statements. For other significant amounts not required to be
50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
reclassified in their entirety to net income in the same reporting period, a cross reference to other disclosures that
provide additional detail about the reclassification amounts is required. The Company adopted these provisions in
Q1 2014, applied prospectively. This update impacts disclosures only, and therefore adoption did not have an
impact on our consolidated financial position, results of operations or cash flows. The disclosures required by this
update are included in Note 5.
4.
EARNINGS PER SHARE
Earnings per share is computed using the two-class method. The two-class method determines earnings per
share for each class of common stock and participating securities according to dividends or dividend equivalents
and their respective participation rights in undistributed earnings. Participating securities include performance units
and restricted stock units in which the participants have non-forfeitable rights to dividends or dividend equivalents
during the performance period. Diluted earnings per share includes the effects of certain performance units in which
the participants have forfeitable rights to dividends or dividend equivalents during the performance period.
Net income
Computation of Earnings per Share
Adjustment for earnings attributable to participating securities
Net income used in calculating earnings per share
Weighted-average common shares outstanding including participating
securities (in millions)
Adjustment for participating securities (in millions)
Shares used in calculating basic earnings per share (in millions)
Effect of dilutive stock-based compensation (in millions)
Shares used in calculating diluted earnings per share (in millions)
Earnings per share:
Basic
Diluted
Total common shares outstanding at period end (in millions)
Anti-dilutive options and performance units excluded from computation
of diluted earnings per share (in millions)
Year Ended
February 28,
2014
February 22,
2013
February 24,
2012
$
$
$
$
87.7 $
38.8 $
(1.4)
(0.6)
86.3 $
38.2 $
126.0
(1.9)
124.1
1.3
125.4
127.4
(1.8)
125.6
1.7
127.3
0.70 $
0.69 $
0.30 $
0.30 $
122.9
125.2
56.7
(1.0)
55.7
131.9
(2.3)
129.6
—
129.6
0.43
0.43
126.5
0.1
—
3.5
5.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table summarizes the changes in accumulated balances of other comprehensive income
(loss) for 2014:
Balance as of February 22, 2013
Other comprehensive income before
reclassifications
Amounts reclassified from accumulated other
comprehensive income (loss)
Net current period other comprehensive
income
Pension and
other post-
retirement
liability
adjustments
Derivative
adjustments
Foreign
currency
translation
adjustments
Total
0.6 $
18.9 $
(0.1) $
(23.6) $
(4.2)
Unrealized
gain on
investments
$
0.3
(0.1)
0.2
6.4
(5.7)
0.7
—
—
—
4.1
—
4.1
10.8
(5.8)
5.0
0.8
Balance as of February 28, 2014
$
0.8 $
19.6 $
(0.1) $
(19.5) $
51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table provides details about reclassifications out of accumulated other comprehensive
income (loss) for 2014:
STEELCASE INC.
Amount Reclassified from
Accumulated Other
Comprehensive Income (Loss)
Detail of Accumulated Other Comprehensive
Income (Loss) Components
Unrealized gains on investments
Amortization of pension and other post-retirement liability
adjustments
Actuarial losses
Actuarial losses
Prior service credit
Prior service credit
Total reclassifications
6.
FAIR VALUE
Year Ended
February 28,
2014
Affected Line in the
Consolidated Statements of
Income
(0.1) Other income
— Income tax expense
(0.1) Net income
0.3 Cost of sales
1.2 Operating expenses
(4.3) Cost of sales
(4.8) Operating expenses
1.9 Income tax expense
(5.7) Net of tax
(5.8)
$
$
Fair value measurements are classified under the following hierarchy:
Level 1 — Inputs based on quoted market prices for identical assets or liabilities in active markets at the
measurement date.
Level 2 — Inputs based on quoted prices for similar instruments in active markets; quoted prices for
identical or similar instruments in markets that are not active; and model-derived valuations in which all
significant inputs or significant value-drivers are observable in active markets.
Level 3 — Inputs reflect management’s best estimate of what market participants would use to price the
asset or liability at the measurement date in model-driven valuations. The inputs are unobservable in the
market and significant to the instrument’s valuation.
Fair value measurements are classified according to the lowest level input or value-driver that is significant to
the valuation. A measurement may therefore be classified within Level 3 even though there may be other significant
inputs that are readily observable.
52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
Assets and liabilities measured at fair value in our Consolidated Balance Sheets as of February 28, 2014 and
February 22, 2013 are summarized below:
Fair Value of Financial Instruments
Level 1
Level 2
Level 3
Total
February 28, 2014
Assets:
Cash and cash equivalents
Restricted cash
Managed investment portfolio and other investments
Corporate debt securities
U.S. agency debt securities
U.S. government debt securities
Asset backed securities
Municipal debt securities
Other investments
Foreign exchange forward contracts
Auction rate securities
Canadian asset-backed commercial paper restructuring
notes
Liabilities:
Foreign exchange forward contracts
$
201.8 $
9.0
—
—
7.8
—
—
—
—
—
—
— $
—
48.0
48.9
—
5.6
3.4
5.8
0.3
—
3.7
— $
201.8
—
—
—
—
—
—
—
—
9.6
—
9.0
48.0
48.9
7.8
5.6
3.4
5.8
0.3
9.6
3.7
$
$
$
218.6 $
115.7 $
9.6 $
343.9
— $
— $
(3.2) $
(3.2) $
— $
— $
(3.2)
(3.2)
Fair Value of Financial Instruments
Level 1
Level 2
Level 3
Total
February 22, 2013
Assets:
Cash and cash equivalents
Restricted cash
Managed investment portfolio and other investments
Corporate debt securities
U.S. agency debt securities
U.S. government debt securities
Asset backed securities
Municipal debt securities
Other investments
Foreign exchange forward contracts
Auction rate securities
Canadian asset-backed commercial paper restructuring
notes
$
150.4 $
3.5
—
—
4.4
—
—
—
—
—
—
— $
—
30.3
44.1
—
5.5
14.1
2.1
1.3
—
—
— $
150.4
—
—
—
—
—
—
—
—
9.8
3.5
3.5
30.3
44.1
4.4
5.5
14.1
2.1
1.3
9.8
3.5
Liabilities:
Foreign exchange forward contracts
158.3 $
97.4 $
13.3 $
269.0
— $
— $
(1.9) $
(1.9) $
— $
— $
(1.9)
(1.9)
$
$
$
53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
Managed Investment Portfolio and Other Investments
Our managed investment portfolio consists of U.S. agency debt securities, U.S. government debt securities,
corporate debt securities, asset backed securities and municipal debt securities, and our investment manager
operates under a mandate to keep the average duration of investments under two years. Our managed investment
portfolio and other investments are considered available-for-sale. Fair values for these investments are based upon
valuations for identical or similar instruments in active markets, with the resulting net unrealized holding gains or
losses reflected net of tax as a component of Accumulated other comprehensive income (loss) on the Consolidated
Balance Sheets.
The cost basis for these investments, determined using the specific identification method, was $119.0 and
$99.9 as of February 28, 2014 and February 22, 2013, respectively. Gross unrealized gains were $0.2 for 2014 and
2013. As of February 28, 2014, approximately 42% of the debt securities mature within one year, approximately
25% in two years, approximately 27% in three years and approximately 6% in four or more years.
Foreign Exchange Forward Contracts
From time to time, we enter into forward contracts to mitigate the risk of translation into U.S. dollars of certain
foreign-denominated net income, assets and liabilities. We primarily hedge intercompany working capital loans and
certain forecasted currency flows from intercompany transactions. The fair value of foreign exchange forward
contracts is based on a valuation model that discounts cash flows resulting from the differential between the
contract price and the market-based forward rate.
Auction Rate Securities
As of February 28, 2014, we held auction rate securities (“ARS”) totaling $11.7 of par value. Historically,
liquidity for these securities was provided through a Dutch auction process that reset the applicable interest rate at
pre-determined short-term intervals. The auctions failed in 2008 and are not being conducted at this time. While
there has been no payment default with respect to our remaining ARS, these investments are not widely traded and
therefore do not currently have a readily-determinable market value. We receive higher penalty interest rates on the
securities ranging from 30-day LIBOR plus 2.0 to 2.5%. We have the intent and ability to hold these securities until
recovery of market value or maturity, and we believe the current inability to easily liquidate these investments will
have no impact on our ability to fund our ongoing operations. During 2013, one issuance held in our portfolio was
redeemed at par for $5.0 in proceeds.
To estimate fair value, we used an internally-developed discounted cash flow analysis. Our discounted cash
flow analysis considers, among other factors, (i) the credit ratings of the ARS, (ii) the credit quality of the underlying
securities or the credit rating of issuers, (iii) the estimated timing and amount of cash flows and (iv) the formula
applicable to each security which defines the penalty interest rate and (v) discount rates equal to the sum of (a) the
yield on U.S. Treasury securities with a term through the estimated workout date plus (b) a risk premium based on
similarly rated observable securities. These assumptions are based on our current judgment and our view of current
market conditions. Based upon these factors, ARS with an original par value of approximately $11.7 have been
adjusted to an estimated fair value of $9.6 as of February 28, 2014.
We periodically review our investment portfolio to determine if any investment is other-than-temporarily
impaired due to changes in credit risk or other potential valuation concerns. Since the inception of our ARS
investments, we have recorded other-than-temporary impairment losses and unrealized gains of $2.5 and $0.4,
respectively. The investments other-than-temporarily impaired as of February 28, 2014 were impaired due to
general credit declines, and the impairments were recorded in Investment income in the Consolidated Statements
of Income. Unrealized gains are recorded in Accumulated other comprehensive income (loss) on the Consolidated
Balance Sheets. The unrealized gains are due to changes in interest rates and are expected to fluctuate over the
contractual term of the instruments. The use of different assumptions could result in a different valuation and
additional impairments. For example, an increase to the discount rate of 100 basis points would reduce the
estimated fair value of our investment in ARS by approximately $0.5.
We continue to monitor the market for ARS and consider the impact, if any, on the estimated fair value of
these investments. If current market conditions deteriorate further, or the anticipated recovery in market values does
not occur, we may be required to record additional other-than-temporary impairments and/or unrealized impairment
losses.
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
Canadian Asset-Backed Commercial Paper Restructuring Notes
As of February 28, 2014, we held four floating-rate Canadian asset-backed commercial paper restructuring
notes with a combined par value of Canadian $4.4. These notes replaced an investment in Canadian asset-backed
commercial paper, which, as a result of a lack of liquidity in the market, failed to settle on maturity and went into
default. We recorded an other-than-temporary impairment of our investment in 2008 of $0.9. During 2013, one note
held in our portfolio matured and was redeemed at par for $0.5 in proceeds.
The restructuring notes were issued under the court-approved restructuring entity, Master Asset Vehicle II, in
2009. We hold a class A-1 note, a class A-2 note, a class B note and a class C note. The class A-1 note is rated
“AA” by Dominion Bond Rating Service and equals 75% of the par value of the notes; the class A-2 note is rated “A”
by Dominion Bond Rating Service and equals 19% of the par value. The class B and class C notes carry no rating
and approximate 6% of the par value of the notes. The notes pay interest quarterly at a rate equal to the Canadian
Bankers Acceptance Rate less 50 basis points.
In 2014, these assets were transferred out of Level 3 primarily as the result of increased market liquidity and
price transparency.
Below is a roll-forward of assets and liabilities measured at estimated fair value using Level 3 inputs for the
years ended February 28, 2014 and February 22, 2013:
Roll-forward of Fair Value Using Level 3 Inputs
Balance as of February 24, 2012
Unrealized gain on investments
Sale of investments
Maturities of investments
Currency translation adjustment
Balance as of February 22, 2013
Unrealized gain (loss) on investments
Currency translation adjustment
Transfers out of Level 3
Balance as of February 28, 2014
Auction Rate
Securities
Canadian
Asset-Backed
Commercial
Paper
$
12.9 $
1.9
(5.0)
—
—
9.8 $
(0.2)
—
—
9.6 $
$
$
4.1
—
—
(0.5)
(0.1)
3.5
0.5
(0.3)
(3.7)
—
There were no other-than-temporary impairments or transfers into Level 3 during either 2014 or 2013. It is the
Company's policy to value any transfers between levels of the fair value hierarchy based on end of period fair
values.
7.
INVENTORIES
Raw materials
Work in process
Finished goods
Less: LIFO reserve
Inventories
February 28,
2014
February 22,
2013
$
$
73.1 $
12.2
87.7
173.0
21.5
151.5 $
58.7
13.2
87.0
158.9
21.4
137.5
The portion of inventories determined by the LIFO method aggregated to $70.8 and $70.2 as of February 28,
2014 and February 22, 2013, respectively.
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
8.
PROPERTY, PLANT AND EQUIPMENT
Property, Plant and Equipment
Land
Buildings and improvements
Machinery and equipment
Furniture and fixtures
Leasehold improvements
Capitalized software
Construction in progress
Accumulated depreciation
Estimated
Useful Lives
(Years)
February 28,
2014
February 22,
2013
10 – 40
3 – 15
5 – 8
3 – 10
3 – 10
$
41.3 $
490.7
709.2
55.9
52.6
128.7
39.4
1,517.8
(1,140.8)
$
377.0 $
38.6
526.3
715.4
68.0
53.0
139.0
34.3
1,574.6
(1,221.4)
353.2
A majority of the net book value of property, plant and equipment as of February 28, 2014 relates to
machinery and equipment of $152.7 and buildings and improvements of $103.2. A majority of the net book value of
property, plant and equipment as of February 22, 2013 relates to machinery and equipment of $126.6 and building
and improvements of $118.1. Depreciation expense on property, plant and equipment was $56.3 for 2014, $53.6 for
2013 and $52.7 for 2012. The estimated cost to complete construction in progress was $34.4 and $22.2 as of
February 28, 2014 and February 22, 2013, respectively. There were no interest costs capitalized in construction in
progress in 2014 or 2013, and there was $0.8 capitalized in 2012.
In 2013, we recognized a $12.4 impairment charge in conjunction with the previously announced closure of
our Corporate Development Center. The decline in market value of the facility and the completion of employee
relocations out of the facility led to the charge in 2013. This charge was included in Restructuring costs in the
Consolidated Statements of Income. See Note 20 for further details.
Included in Other current assets on the Consolidated Balance Sheets as of February 28, 2014 is $5.3 of
buildings and improvements that is classified as assets “held for sale”.
9.
COMPANY-OWNED LIFE INSURANCE
Our investments in company-owned life insurance (“COLI”) policies are recorded at their net cash surrender
value.
Prior to Q3 2014, our investments in whole life COLI policies were intended to be utilized as a long-term
funding source for post-retirement medical benefits, deferred compensation and supplemental retirement plan
obligations, and our investments in variable life COLI policies were primarily considered a source of corporate
liquidity.
During Q3 2014, we reduced the variable life COLI balances by withdrawing basis of $74.5 (tax-free) and
invested the cash proceeds in short-term investments. The remaining investments in whole life and variable life
COLI policies are intended to be utilized as a long-term funding source for post-retirement medical benefits,
deferred compensation and supplemental retirement plan obligations, which as of February 28, 2014 aggregated
approximately $150, with a related deferred tax asset of approximately $55. The designations of our COLI
investments as funding sources for our benefit obligations do not result in these investments representing a
committed funding source for these obligations. They are subject to claims from creditors, and we can designate
them to another purpose at any time.
The costs associated with the long-term benefit obligations that the investments are intended to fund are
recorded in Operating expenses on the Consolidated Statements of Income. As these costs exceed the net returns
in cash surrender value, normal insurance expenses and any death benefit gains (“COLI income”) related to our
investments in COLI policies, we began recording all COLI income in Operating expenses on the Consolidated
Statements of Income during Q3 2014.
The balances of our COLI investments as of February 28, 2014 and February 22, 2013 were as follows:
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
Type
Whole life
COLI policies
Ability to Choose
Investments
No ability
Variable life
COLI policies
Can allocate
across a set of
choices provided
by the insurance
companies
Net Return
A rate of return
set periodically
by the
insurance
companies
Fluctuates
depending on
performance of
underlying
investments
Target Asset
Allocation as of
February 28, 2014
Not applicable
Net Cash Surrender Value
February 28,
2014
February 22,
2013
$
114.3 $
109.6
50% fixed
income; 50%
equity
40.0
116.2
$
154.3 $
225.8
Following is a summary of the allocation of COLI income for 2014, 2013 and 2012:
COLI Income
Whole Life
Policies
Variable Life
Policies
Total
2014
Cost of sales
Operating expenses
Operating income
Investment income (loss)
Income before income tax expense
2013
Cost of sales
Operating expenses
Operating income
Investment income
Income before income tax expense
2012
Cost of sales
Operating expenses
Operating income
Investment income
Income before income tax expense
$
$
$
$
$
$
0.6 $
4.5
5.1
—
5.1 $
1.2 $
4.6
5.8
—
5.8 $
1.0 $
4.1
5.1
—
5.1 $
— $
0.9
0.9
(1.8)
(0.9) $
— $
—
—
3.0
3.0 $
— $
—
—
3.2
3.2 $
0.6
5.4
6.0
(1.8)
4.2
1.2
4.6
5.8
3.0
8.8
1.0
4.1
5.1
3.2
8.3
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
10. GOODWILL & OTHER INTANGIBLE ASSETS
A summary of the changes in goodwill during the years ended February 28, 2014 and February 22, 2013, by
reportable segment, is as follows:
Goodwill
Americas
EMEA
Other
Total
Goodwill
Accumulated impairment losses
Balance as of February 24, 2012
Acquisitions (1)
Impairments (2)
Currency translation adjustments
Goodwill
Accumulated impairment losses
Balance as of February 22, 2013
Impairments (3)
Currency translation adjustments
Goodwill
Accumulated impairment losses
Balance as of February 28, 2014
________________________
$
$
92.4 $
259.9 $
116.8 $
469.1
(1.7)
(229.9)
(60.9)
(292.5)
90.7 $
30.0 $
55.9 $
176.6
—
—
(0.3)
92.1
(1.7)
4.4
(35.1)
0.7
265.0
(265.0)
—
(24.8)
(0.1)
116.7
(85.7)
4.4
(59.9)
0.3
473.8
(352.4)
$
90.4 $
— $
31.0 $
121.4
—
(0.8)
91.3
(1.7)
—
—
265.0
(265.0)
(12.3)
(0.2)
116.5
(98.0)
(12.3)
(1.0)
472.8
(364.7)
$
89.6 $
— $
18.5 $
108.1
(1)
(2)
(3)
In 2013, we made various immaterial acquisitions resulting in additions to goodwill in the EMEA segment.
In 2013, we recorded goodwill impairment charges in both our EMEA and Designtex reporting units. See
further details below.
In 2014, we recorded goodwill impairment charges in our Asia Pacific reporting unit. See further details
below.
Our goodwill impairment evaluation is a two step process. In step one, we compare the fair value of each
reporting unit to its carrying value. If the fair value of the reporting unit exceeds the carrying value, goodwill is not
impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value, we
perform step two to measure the amount of impairment loss, if any. In step two, the reporting unit's fair value is
allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a
hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit
was being acquired in a business combination. If the implied fair value of the reporting unit's goodwill is less than
the carrying value, the difference is recorded as an impairment loss.
We estimated the fair value of our reporting units using the income approach, which calculates the fair value
of each reporting unit based on the present value of its estimated future cash flows. Cash flow projections are
based on management's estimates of revenue growth rates and operating margins, taking into consideration
industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted
for the relevant risk associated with business-specific characteristics and the uncertainty related to the business's
ability to execute on the projected cash flows. The estimation of the fair value of our reporting units represents a
Level 3 measurement.
In Q3 2014, we determined that it was more likely than not that the fair value of our Asia Pacific reporting unit
(in the Other category) had fallen below its carrying value. The decline in the estimated fair value of the Asia Pacific
reporting unit was driven in part by continued quarterly operating losses during 2014, which were substantially
below previous expectations. These losses were primarily the result of lower than expected revenue in most
markets, especially China, Australia and Japan. The sales shortfalls were partially due to the impact of weaker than
expected economic conditions in the region. During Q3 2014, senior management completed a comprehensive
review of the Asia Pacific business unit during a visit to the region, including an update of our near-term financial
projections, taking into consideration current industry and market conditions and business model challenges facing
the Asia Pacific business unit. As a result, we determined that lower levels of near-term revenue growth and
profitability were more likely than not and thus, we completed an interim goodwill impairment evaluation for the Asia
Pacific reporting unit. Based on the step one and step two analyses, we recorded a $12.3 goodwill impairment
58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
charge in Q3 2014, and there was no remaining net goodwill in the Asia Pacific reporting unit as of February 28,
2014. We tested the recoverability of the Asia Pacific long-lived assets (other than goodwill and intangible assets)
and concluded that these assets were not impaired.
In Q4 2013, we completed our annual goodwill impairment analysis and concluded that the fair value of our
EMEA reporting unit (in the EMEA segment) and the Designtex reporting unit (in the Other category) were below
their respective carrying values. The decline in the estimated fair value of the EMEA reporting unit was driven in
part by the operating loss we recorded in 2013. In addition, the near-term outlook for Western Europe remained
heavily challenged by macroeconomic headwinds. Therefore, in Q4 2013, we determined that these factors were
likely to negatively impact the level of near-term profitability we would expect to achieve with our current business
model. The projections used in our impairment model reflected our assumptions regarding revenue growth rates,
economic and market trends, cost structure and other expectations about the anticipated short-term and long-term
operating results of the EMEA reporting unit. Based on the step one and step two analyses, we recorded a $35.1
goodwill impairment charge in 2013, and there was no remaining net goodwill in the EMEA reporting unit as of
February 28, 2014 and February 22, 2013. Additionally, we tested the recoverability of the EMEA long-lived assets
(other than goodwill) and concluded that these assets were not impaired.
The decline in the estimated fair value of the Designtex reporting unit was largely driven by lower than
expected operating performance in 2013 and the significant future investment required to strengthen our product
offering, marketing and overall brand image. The projections used in our impairment model reflected our
assumptions regarding revenue growth rates, market trends, business mix, cost structure and other expectations
about the anticipated short-term and long-term operating results of the Designtex reporting unit. The decline in the
fair value of the Designtex reporting unit, as well as the allocation of fair value to unrecognized intangible assets in
step two of the goodwill impairment test, resulted in an implied fair value of goodwill below the carrying value of the
goodwill for the Designtex reporting unit. As a result, we recorded a goodwill impairment charge of $24.8, and the
remaining net goodwill in the Designtex reporting unit was $10.7 as of February 28, 2014 and February 22, 2013.
Based on the results of the annual impairment tests, we concluded that no other goodwill impairment existed
apart from the impairment charges discussed above. The excess of fair value over carrying value for each of our
reporting units as of the annual testing date ranged from approximately 73% to approximately 189% of carrying
value. We will continue to evaluate goodwill, on an annual basis in Q4, and whenever events or changes in
circumstances, such as significant adverse changes in business climate or operating results, changes in
management's business strategy or significant declines in our stock price, indicate that there may be a potential
indicator of impairment.
As of February 28, 2014 and February 22, 2013, our other intangible assets and related accumulated
amortization consisted of the following:
Other Intangible Assets
Intangible assets subject to
amortization:
Proprietary technology
Trademarks
Non-compete agreements
Other
Intangible assets not subject to
amortization:
Trademarks
February 28, 2014
February 22, 2013
Weighted
Average
Useful Life
(Years)
Gross
Accumulated
Amortization
Net
Gross
Accumulated
Amortization
Net
9.7 $ 22.8 $
20.8 $
2.0 $ 22.8 $
19.7 $
10.0
6.1
5.2
10.7
1.3
11.0
45.8
10.7
1.1
9.2
41.8
—
0.2
1.8
4.0
13.3
2.6
14.5
53.2
13.3
2.4
11.2
46.6
3.1
—
0.2
3.3
6.6
n/a
12.6
$ 58.4 $
—
12.6
12.6
—
12.6
41.8 $ 16.6 $ 65.8 $
46.6 $ 19.2
In 2014, we recorded a charge of $0.6 in Asia Pacific for impairment of other intangible assets. In 2013 and
2012, no intangible asset impairment charges were recorded.
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
We recorded amortization expense on intangible assets subject to amortization of $2.1 in 2014, $3.0 in 2013
and $3.0 for 2012. Based on the current amount of intangible assets subject to amortization, the estimated
amortization expense for each of the following five years is as follows:
Year Ending in February
Amount
2015
2016
2017
2018
2019
$
$
1.7
1.5
0.6
0.2
—
4.0
Future events, such as acquisitions, dispositions or impairments, may cause these amounts to vary.
11.
INVESTMENTS IN UNCONSOLIDATED AFFILIATES
We enter into joint ventures and other equity investments from time to time to expand or maintain our
geographic presence, support our distribution network or invest in new business ventures, complementary products
and services. Equity method investments were $46.7 and $47.5 as of February 28, 2014 and February 22, 2013,
respectively. Cost method investments were $6.3 and $5.8 as of February 28, 2014 and February 22, 2013. Our
investments in unconsolidated affiliates primarily consist of IDEO, dealer relationships and manufacturing joint
ventures. Our investments in unconsolidated affiliates and related direct ownership interests are summarized below:
Investments in Unconsolidated Affiliates
IDEO
Dealer relationships:
Equity method investments
Cost method investments
Total dealer relationships
Manufacturing joint ventures:
Equity method investments
Other
February 28, 2014
February 22, 2013
Investment
Balance
Ownership
Interest
Investment
Balance
Ownership
Interest
$
17.4 20%
$
16.1 20%
17.8 20%-40%
18.4 20%-40%
5.8 Less than 10%
5.8 Less than 10%
23.6
24.2
11.5 25%-49%
0.5 1%-39%
8.3 25%-49%
4.7 8%-39%
Total investments in unconsolidated affiliates
$
53.0
$
53.3
Our equity in earnings of unconsolidated affiliates is recorded in Other income (expense), net on the
Consolidated Statements of Income and is summarized below:
Equity in earnings of unconsolidated affiliates
Year Ended
February 28,
2014
February 22,
2013
February 24,
2012
IDEO
Dealer relationships
Manufacturing joint ventures
Other
$
2.7 $
2.6 $
3.1
5.7
(1.3)
3.9
3.4
(0.5)
Total equity in earnings of unconsolidated affiliates
$
10.2 $
9.4 $
2.5
3.1
2.7
—
8.3
Additionally, during 2014 we recorded a $6.0 other-than-temporary loss on the value of an equity method
investment and related notes receivable in Other income (expense), net.
IDEO
IDEO LP is an innovation and design firm that uses a human-centered, design-based approach to generate
new offerings and build new capabilities for its customers. IDEO serves Steelcase and a variety of other
60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
organizations within consumer products, financial services, healthcare, information technology, government,
transportation and other industries. We own a 20% equity interest in IDEO.
STEELCASE INC.
Dealer Relationships
We have invested in dealers from time to time to expand or maintain our geographic presence and support
our distribution network. These dealer relationships may include asset-based lending and term financing as a result
of the dealer facing financial difficulty or facing difficulty in transitioning to new ownership. We choose to make
financial investments in these dealers to address these risks or continue our presence in a region as establishing
new dealers in a market can take considerable time and resources.
Manufacturing Joint Ventures
We have entered into manufacturing joint ventures from time to time to expand or maintain our geographic
presence. The manufacturing joint ventures primarily consist of Steelcase Jeraisy Company Limited, which is
located in Saudi Arabia and is engaged in the manufacturing of wood and metal office furniture systems,
accessories and related products for the region.
The summarized financial information presented below represents the combined accounts of our equity
method investments in unconsolidated affiliates.
Consolidated Balance Sheets
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total long-term liabilities
Total liabilities
Statements of Income
Revenue
Gross profit
Income before income tax expense
Net income
February 28,
2014
February 22,
2013
$
$
$
$
148.8 $
29.7
178.5 $
72.4 $
21.7
143.5
38.2
181.7
82.1
19.9
94.1 $
102.0
Year Ended
February 28,
2014
February 22,
2013
February 24,
2012
$
450.7 $
515.9 $
141.3
36.0
32.5
151.6
34.4
31.6
472.9
140.6
33.1
30.2
Dividends received from our investments in unconsolidated affiliates were $6.2, $5.4 and $5.8 in 2014, 2013
and 2012, respectively. We had sales to our unconsolidated affiliates of $222.3, $247.3 and $219.3 in 2014, 2013
and 2012, respectively. Amounts due from our unconsolidated affiliates were $13.2 and $24.4 as of February 28,
2014 and February 22, 2013, respectively.
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
12. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Debt Obligations
Interest Rate Range as
of February 28, 2014
Fiscal Year
Maturity Range
February 28,
2014
February 22,
2013
U.S. dollar obligations:
Senior notes (1)
Revolving credit facilities (2)(4)
Notes payable (3)
Capitalized lease obligations
Foreign currency obligations:
Revolving credit facilities (4)
Notes payable
Capitalized lease obligations
Total short-term borrowings and long-term debt
Short-term borrowings and current portion of
long-term debt (5)
Long-term debt
________________________
6.375%
2021 $
249.9 $
249.9
LIBOR + 3.35%
6.0%-6.5%
2018
2017
2014-2016
6.0%- 8.0%
1.9%
2019
—
35.8
0.2
285.9
—
0.3
0.8
—
38.4
0.4
288.7
—
0.3
—
287.0
289.0
2.6
2.6
$
284.4 $
286.4
(1) We have $250 of unsecured unsubordinated senior notes, due in February 2021 (“2021 Notes”). The 2021
Notes were issued at 99.953% of par value. The bond discount of $0.1 and direct debt issue costs of $3.0
were deferred and are being amortized over the life of the 2021 Notes. Although the coupon rate of the 2021
Notes is 6.375%, the effective interest rate is 6.6% after taking into account the impact of the discount, debt
issuance costs and the deferred loss on interest rate locks related to the debt issuance. The 2021 Notes rank
equally with all of our other unsecured unsubordinated indebtedness, and they contain no financial
covenants. We may redeem some or all of the 2021 Notes at any time. The redemption price would equal the
greater of (1) the principal amount of the notes being redeemed; or (2) the present value of the remaining
scheduled payments of principal and interest discounted to the redemption date on a semi-annual basis at
the comparable U.S. Treasury rate plus 45 basis points; plus, in both cases, accrued and unpaid interest. If
the notes are redeemed within 3 months of maturity, the redemption price would be equal to the principal
amount of the notes being redeemed plus accrued and unpaid interest. Amortization expense related to the
discount and debt issuance costs on the 2021 Notes was $0.3 in 2014, 2013 and 2012.
(2) We have a $125 global committed five-year bank facility which was entered into in Q1 2013. As of February
28, 2014 and February 22, 2013, there were no borrowings outstanding under the facility, our availability was
not limited, and we were in compliance with all covenants under the facility.
In addition, we have a $13.5 unsecured committed revolving bank facility which is utilized primarily for
standby letters of credit in support of our self-insured workers’ compensation program. As of February 28,
2014 and February 22, 2013, we had $11.3 and $12.1, respectively, in outstanding standby letters of credit
against this facility. We had no draws against our standby letters of credit during 2014 or 2013.
(3) We have a note payable with an original amount of $47.0 at a floating interest rate based on 30-day LIBOR
plus 3.35%. The loan has a term of seven years and requires fixed monthly principal payments of $0.2 based
on a 20-year amortization schedule with a $30 balloon payment due in Q2 2017. The loan is secured by two
corporate aircraft, contains no financial covenants and is not cross-defaulted to our other debt facilities.
(4) We have unsecured uncommitted short-term credit facilities of up to $3.5 of U.S. dollar obligations and
unsecured uncommitted short-term credit facilities of up to $35.1 of foreign currency obligations with various
financial institutions as of February 28, 2014. Interest rates are variable and determined at the time of
borrowing. These credit facilities have no stated expiration date but may be changed or canceled by the
banks at any time. There were no borrowings on these facilities as of February 28, 2014 and February 22,
2013.
(5) The weighted-average interest rate for short-term borrowings and the current portion of long-term debt was
3.5% as of February 28, 2014 and 3.8% as of February 22, 2013.
62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
The annual maturities of short-term borrowings and long-term debt for each of the following five years are as
follows:
2015
2016
2017
2018
2019
Thereafter
Global Credit Facility
Year Ending in February
Amount
$
$
2.6
2.6
31.3
0.1
0.1
250.3
287.0
Our $125 committed five-year unsecured revolving syndicated credit facility expires in 2018. At our option,
and subject to certain conditions, we may increase the aggregate commitment under the facility by up to $75 by
obtaining at least one commitment from a lender.
We can use borrowings under the facility for general corporate purposes, including friendly acquisitions. Interest
on borrowings under the facility is based on the rate, as selected by us, between the following two options:
• The greatest of the prime rate, the Federal fund effective rate plus 0.5%, and the Eurocurrency rate for a
one month interest period plus 1%, plus the applicable margin as set forth in the credit agreement; or
• The Eurocurrency rate plus the applicable margin as set forth in the credit agreement.
The facility requires us to satisfy two financial covenants:
• A maximum leverage ratio covenant, which is measured by the ratio of (x) indebtedness (as determined
under the credit agreement) less excess liquidity (as determined under the credit agreement) to (y) the
trailing four quarter Adjusted EBITDA (as determined under the credit agreement) and is required to be no
greater than 3:1. (In the context of certain permitted acquisitions, we have a one-time ability, subject to
certain conditions, to increase the maximum ratio to 3.25 to 1.0 for four consecutive quarters).
• A minimum interest coverage ratio covenant, which is measured by the ratio of (y) trailing four quarter
Adjusted EBITDA (as determined under the credit agreement) to (z) trailing four quarter interest expense
and is required to be no less than 3.5:1.
The facility requires us to comply with certain other covenants, including a restriction on the aggregate amount
of cash dividend payments and share repurchases in any fiscal year. In general, as long as our leverage ratio is less
than 2.50 to 1.00, there is no restriction on cash dividends and share repurchases. If our leverage ratio is between
2.50 to 1.00 and the maximum then permitted, our ability to pay more than $35.0 in cash dividends and share
repurchases in aggregate in any fiscal year may be restricted, depending on our liquidity. As of February 28, 2014,
our leverage ratio was less than 2.50 to 1.00.
As of February 28, 2014 and February 22, 2013, we were in compliance with all covenants under the facility.
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
13. EMPLOYEE BENEFIT PLAN OBLIGATIONS
Employee Benefit Plan Obligations
Defined contribution retirement plans
Post-retirement medical benefits
Defined benefit pension plans
Deferred compensation plans and agreements
Current portion
Long-term portion
Defined Contribution Retirement Plans
February 28,
2014
February 22,
2013
$
15.0 $
69.1
48.5
42.7
175.3
26.1
$
149.2 $
13.3
77.3
51.5
39.5
181.6
23.8
157.8
Substantially all of our U.S. employees are eligible to participate in defined contribution retirement plans,
primarily the Steelcase Inc. Retirement Plan (the “Retirement Plan”). Company contributions, including discretionary
profit sharing and 401(k) matching contributions, and employee 401(k) pre-tax contributions fund the Retirement
Plan. All contributions are made to a trust which is held for the sole benefit of participants. Company contributions for
this plan are discretionary and can be declared by the Compensation Committee of our Board of Directors any time
during each fiscal year. Our other defined contribution retirement plans provide for matching contributions and/or
discretionary contributions declared by management.
Total expense under all defined contribution retirement plans was $22.6 for 2014, $19.0 for 2013 and $16.3 for
2012. We expect to fund approximately $24.6 related to our defined contribution plans in 2015, including funding
related to our discretionary profit sharing contributions.
Post-Retirement Medical Benefits
We maintain post-retirement benefit plans that provide medical and life insurance benefits to certain North
American-based retirees and eligible dependents. The plans were frozen to new participants in 2003. We accrue the
cost of post-retirement benefits during the service periods of employees based on actuarial calculations for each
plan. These plans are unfunded, but our investments in COLI policies are intended to be utilized as a long-term
funding source for these benefit obligations. See Note 9 for additional information. While we do not expect the timing
of cash flows to closely match, we intend to hold the policies until maturity, and we expect the policies will generate
insufficient cash to cover the obligation payments over the next several years and generate excess cash in later
years.
In Q4 2012, we changed the model of the post-retirement benefit plan and cost-sharing provisions for the
post-65 retiree population. This change resulted in a company-provided fixed subsidy towards post-retirement
healthcare benefits for eligible retirees. This amendment resulted in a decrease in the accumulated post-retirement
projected benefit obligation of $20.9. In Q4 2013, due to a change in the participation assumption resulting from
actual participation rates during the year, the accumulated post-retirement projected benefit obligation was reduced
by $12.4.
The Medicare Prescription Drug Improvement and Modernization Act of 2003 (the “Medicare Act”) entitles
employers who provide certain prescription drug benefits for retirees to receive a federal subsidy, thereby creating
the potential for benefit cost savings. We provide retiree drug benefits through our U.S. post-retirement benefit plans
that exceed the value of the benefits that will be provided by Medicare Part D. We are not eligible to receive a tax
deduction for the portion of prescription drug expenses reimbursed under the Medicare Part D subsidy.
Defined Benefit Pension Plans
Our defined benefit pension plans include various qualified domestic and foreign retirement plans as well as
non-qualified supplemental retirement plans that are limited to a select group of management approved by the
Compensation Committee. The benefit plan obligations for the non-qualified supplemental retirement plans are
primarily related to the Steelcase Inc. Executive Supplemental Retirement Plan. This plan is unfunded, but our
investments in COLI policies are intended to be utilized as a long-term funding source for these benefit obligations.
See Note 9 for additional information. The funded status of our defined benefit pension plans (excluding our
investments in COLI policies) is as follows:
64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
February 28, 2014
February 22, 2013
Defined Benefit Pension
Plan Obligations
Qualified Plans
Domestic
Foreign
Non-qualified
Supplemental
Retirement
Plans
Qualified Plans
Domestic
Foreign
Non-qualified
Supplemental
Retirement
Plans
Plan assets
Projected benefit plan obligations
Funded status
Long-term asset
Current liability
Long-term liability
Total benefit plan obligations
Accumulated benefit obligation
$
$
$
$
$
8.8 $
9.3
(0.5) $
— $
—
(0.5)
(0.5) $
9.3 $
46.2 $
61.3
— $
8.7 $
41.5 $
32.9
9.9
58.1
—
33.7
(15.1) $
(32.9) $
(1.2) $
(16.6) $
(33.7)
1.6 $
— $
— $
0.2 $
(0.1)
(16.6)
(15.1) $
55.9 $
(3.3)
(29.6)
(32.9) $
30.4 $
—
(1.2)
(0.1)
(16.7)
(1.2) $
(16.6) $
9.9 $
53.5 $
—
(2.8)
(30.9)
(33.7)
31.6
As of February 28, 2014, we had one qualified foreign plan in an over funded status, as plan assets of $13.8
exceeded projected benefit plan obligations of $12.2 by $1.6.
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Summary Disclosures for Defined Benefit Pension and Post-Retirement Plans
The following tables summarize our defined benefit pension and post-retirement plans.
STEELCASE INC.
Changes in Assets, Benefit Obligations and Funded Status
Change in plan assets:
Defined Benefit
Pension Plans
Post-Retirement
Plans
February 28,
2014
February 22,
2013
February 28,
2014
February 22,
2013
Fair value of plan assets, beginning of year
$
50.2
$
49.1
$
— $
Actual return on plan assets
Employer contributions
Plan participants’ contributions
Estimated Medicare subsidies received
Currency changes
Benefits paid
Fair value of plan assets, end of year
Change in benefit obligations:
Benefit plan obligations, beginning of year
Service cost
Interest cost
Amendments
Net actuarial (gain) loss
Plan participants’ contributions
Medicare subsidies received
Curtailment
Currency changes
Other adjustments
Benefits paid
Benefit plan obligations, end of year
Funded status
Amounts recognized on the Consolidated Balance Sheets:
Prepaid pension costs
Current liability
Long-term liability
Net amount recognized
Amounts recognized in accumulated other comprehensive
income—pretax:
Actuarial loss (gain)
Prior service cost (credit)
Total amounts recognized in accumulated other comprehensive
income—pretax
Estimated amounts to be amortized from accumulated other
comprehensive income into net periodic benefit cost over
the next fiscal year:
Actuarial loss (gain)
Prior service cost (credit)
Total amounts recognized in accumulated other comprehensive
income—pretax
66
$
$
$
$
$
$
$
5.4
3.6
—
—
1.2
(5.4)
55.0
4.5
3.7
—
—
(1.6)
(5.5)
50.2
101.7
95.0
3.5
3.5
0.1
(0.8)
—
—
(0.1)
2.2
(1.2)
(5.4)
3.0
3.7
—
6.3
—
—
—
(1.1)
0.4
(5.6)
103.5
101.7
—
5.6
2.9
0.1
—
(8.6)
—
77.3
0.8
2.8
—
(5.7)
2.9
0.1
—
(0.5)
—
(8.6)
69.1
(48.5) $
(51.5) $
(69.1) $
1.6
$
0.2
$
— $
(3.4)
(46.7)
(2.9)
(48.8)
(4.7)
(64.4)
(48.5) $
(51.5) $
(69.1) $
19.2
$
22.3
$
(8.3) $
0.6
0.7
(36.0)
—
—
5.8
5.9
1.2
—
(12.9)
—
90.9
0.9
3.8
—
(12.4)
5.9
1.2
—
(0.1)
—
(12.9)
77.3
(77.3)
—
(4.6)
(72.7)
(77.3)
(2.4)
(45.2)
19.8
$
23.0
$
(44.3) $
(47.6)
$
0.7
0.1
$
1.2
0.1
(0.5) $
(9.1)
0.8
$
1.3
$
(9.6) $
0.2
(9.1)
(8.9)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
Components of
Expense
February 28,
2014
February 22,
2013
February 24,
2012
February 28,
2014
February 22,
2013
February 24,
2012
Pension Plans
Year Ended
Post-Retirement Plans
Year Ended
$
3.5 $
3.0 $
2.1 $
0.8 $
0.9 $
Components of expense:
Service cost
Interest cost
Amortization of net loss
Amortization of prior year service
cost (credit)
Expected return on plan assets
Adjustment due to plan curtailment
Adjustment due to plan settlement
Adjustment due to special
termination benefits
Other
Net expense (credit) recognized in
Consolidated Statements of Income
Other changes in plan assets and
benefit obligations recognized in
other comprehensive income
(pre-tax):
Net loss (gain)
Prior service cost (credit)
Amortization of gain (loss)
Amortization of prior year service
credit (cost)
Other
Total recognized in other
comprehensive income
Total recognized in net periodic
benefit cost and other
comprehensive income (pre-tax)
3.5
1.2
0.1
(2.9)
(0.1)
0.1
—
(0.8)
4.6
(3.2)
0.1
(1.3)
(0.1)
(0.3)
(4.8)
3.7
1.1
0.1
(2.6)
—
0.1
—
—
5.4
4.8
—
(1.1)
(0.1)
—
3.6
4.2
0.5
0.2
(3.2)
—
—
—
—
2.8
0.2
(9.2)
—
—
—
—
—
3.8
0.2
(9.3)
—
(0.1)
0.1
—
—
1.0
5.6
0.1
(8.6)
—
(2.9)
—
0.1
—
3.8
(5.4)
(4.4)
(4.7)
8.9
0.1
(0.5)
(0.2)
—
8.3
(5.7)
—
(0.2)
9.2
—
3.3
(12.4)
—
(0.3)
9.4
—
0.9
(20.9)
(0.6)
12.0
—
(3.3)
(8.6)
$
(0.2) $
9.0 $
12.1 $
(2.1) $
(7.7) $
(13.3)
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
Pension and Other Post-Retirement Liability Adjustments
Balance as of February 24, 2012
Amortization of prior service cost (credit) included in net periodic pension
cost
Net prior service (cost) credit during period
Net actuarial gain (loss) arising during period
Amortization of net actuarial (gain) loss included in net periodic pension
cost
Net actuarial gain (loss) during period
Foreign currency translation adjustments
Current period change
Balance as of February 22, 2013
Prior service (cost) credit arising during period
Amortization of prior service cost (credit) included in net periodic pension
cost
Net prior service (cost) credit during period
Net actuarial gain (loss) arising during period
Amortization of net actuarial (gain) loss included in net periodic pension
cost
Net actuarial gain (loss) during period
Other
Foreign currency translation adjustments
Current period change
Balance as of February 28, 2014
Before Tax
Amount
Tax (Expense)
Benefit
$
23.4 $
(3.7) $
Net of
Tax Amount
19.7
(9.3)
(9.3)
7.6
1.4
9.0
0.3
—
3.5
3.5
(3.9)
(0.5)
(4.4)
0.1
(0.8)
$
23.4 $
(4.5) $
(0.1)
(9.1)
(9.2)
8.9
1.5
10.4
0.3
(0.4)
1.1
—
3.5
3.5
(3.5)
(0.5)
(4.0)
—
0.1
(0.4)
$
24.5 $
(4.9) $
(5.8)
(5.8)
3.7
0.9
4.6
0.4
(0.8)
18.9
(0.1)
(5.6)
(5.7)
5.4
1.0
6.4
0.3
(0.3)
0.7
19.6
Weighted-Average
Assumptions
February 28,
2014
February 22,
2013
February 24,
2012
February 28,
2014
February 22,
2013
February 24,
2012
Pension Plans
Year Ended
Post-Retirement Plans
Year Ended
Weighted-average assumptions
used to determine benefit
obligations:
Discount rate
Rate of salary progression
Weighted-average assumptions
used to determine net periodic
benefit cost:
Discount rate
Expected return on plan assets
Rate of salary progression
3.80%
2.70%
3.60%
3.00%
4.20%
2.90%
4.31%
3.82%
4.34%
3.70%
4.90%
3.10%
4.20%
5.00%
2.90%
5.10%
3.10%
3.00%
3.82%
4.31%
5.30%
The measurement dates for our retiree benefit plans are consistent with our fiscal year-end. Accordingly, we
select discount rates to measure our benefit obligations that are consistent with market indices at the end of each
year. In evaluating the expected return on plan assets, we considered the expected long-term rate of return on plan
assets based on the specific allocation of assets for each plan, an analysis of current market conditions and the
views of leading financial advisors and economists.
The assumed healthcare cost trend was 7.04% for pre-age 65 retirees as of February 28, 2014, gradually
declining to 4.50% after six years. As of February 22, 2013, the assumed healthcare cost trend was 7.51% for pre-
age 65 retirees, gradually declining to 4.50% after seven years. Post-age 65 trend rates are not applicable due to
68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
the Company moving to a fixed subsidy for post-age 65 benefits. A one percentage point change in assumed
healthcare cost trend rates would have had the following effects as of February 28, 2014:
Health Cost Trend Sensitivity
Effect on total of service and interest cost components
Effect on post-retirement benefit obligation
Plan Assets
One percentage
point increase
$
— $
One percentage
point decrease
—
$
0.3 $
(0.3)
The investments of the domestic plans are managed by third-party investment managers. The investment
strategy for the domestic plans is to maximize returns while taking into consideration the investment horizon and
expected volatility to ensure there are sufficient assets to pay benefits as they come due.
The investments of the foreign plans are managed by third-party investment managers. These investment
managers follow local regulations; we are not actively involved in the investment strategies. In general, the
investment strategy is designed to accumulate a diversified portfolio among markets, asset classes or individual
securities in order to reduce market risk and assure that the pension assets are available to pay benefits as they
come due.
Our pension plans’ weighted-average investment allocation strategies and weighted-average target asset
allocations by asset category as of February 28, 2014 and February 22, 2013 are reflected in the following table. The
target allocations are established by the investment committees of each plan in consultation with external advisors
after consideration of the associated risk and expected return of the underlying investments.
February 28, 2014
February 22, 2013
Asset Category
Actual
Allocations
Target
Allocations
65%
24
2
9
54%
33
4
9
Actual
Allocations
63%
25
2
10
Target
Allocations
53%
33
4
10
100%
100%
100%
100%
Equity securities
Debt securities
Real estate
Other (1)
Total
________________________
(1) Represents guaranteed insurance contracts, money market funds and cash.
69
STEELCASE INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The fair value of the pension plan assets as of February 28, 2014 and February 22, 2013, by asset category
are as follows:
Fair Value of Pension Plan Assets
Level 1
Level 2
Level 3
Total
February 28, 2014
$
0.1 $
— $
— $
0.1
Cash and cash equivalents
Equity securities:
U.S. large-cap
U.S. small-cap
U.S. index
International
Fixed income securities:
Bond funds
Other investments:
Group annuity contract (1)
Insurance products
Guaranteed insurance contracts (2)
Property funds
Fair Value of Pension Plan Assets
Cash and cash equivalents
Equity securities:
U.S. large-cap
U.S. small-cap
U.S. index
International
Fixed income securities:
Bond funds
Other investments:
Group annuity contract (1)
Insurance products
Guaranteed insurance contracts (2)
Property funds
________________________
0.9
0.9
1.0
—
—
—
—
—
24.9
8.5
—
—
—
—
—
—
—
—
0.9
3.8 $
—
13.9
—
—
47.3 $
2.3
—
1.6
—
3.9 $
0.9
0.9
1.0
24.9
8.5
2.3
13.9
1.6
0.9
55.0
February 22, 2013
Level 1
Level 2
Level 3
Total
$
$
0.1 $
— $
— $
0.9
0.7
1.0
—
—
—
—
—
0.8
—
—
—
20.9
8.0
—
13.7
—
—
—
—
—
—
—
2.4
—
1.7
—
0.1
0.9
0.7
1.0
20.9
8.0
2.4
13.7
1.7
0.8
50.2
$
3.5 $
42.6 $
4.1 $
(1) Group annuity contracts are valued utilizing a discounted cash flow model. The term “cash flow” refers to the
future principal and interest payments we expect to receive on a given asset in the general account. The model
projects future cash flows separately for each investment period and each category of investment.
(2) Guaranteed insurance contracts are valued at book value, which approximates fair value, and are calculated
using the prior year balance plus or minus investment returns and changes in cash flows.
There were no transfers between Level 1 and Level 2 of the fair value hierarchy for any periods presented.
70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
Below is a roll-forward of plan assets measured at estimated fair value using Level 3 inputs for the years
ended February 28, 2014 and February 22, 2013:
Balance as of February 24, 2012
Roll-forward of Fair Value Using Level 3 Inputs
Unrealized return on plan assets, including changes in foreign exchange rates
Purchases, sales, and other, net
Balance as of February 22, 2013
Unrealized return on plan assets, including changes in foreign exchange rates
Purchases, sales, and other, net
Balance as of February 28, 2014
Group
Annuity
Contract
$
$
$
2.4 $
0.2
(0.2)
2.4 $
0.1
(0.2)
2.3 $
Guaranteed
Insurance
Contracts
2.0
—
(0.3)
1.7
0.1
(0.2)
1.6
We expect to contribute approximately $6 to our pension plans and fund approximately $5 related to our post-
retirement plans in 2015. The estimated future benefit payments under our pension and post-retirement plans are as
follows:
Post-retirement Plans
Year Ending in February
2015
2016
2017
2018
2019
2020 - 2024
Before
Medicare Act
Subsidy
Medicare Act
Subsidy
Pension Plans
$
6.7 $
4.9 $
4.6
4.7
4.7
4.8
24.5
After Medicare
Act Subsidy
4.8
(0.1) $
(0.1)
(0.1)
(0.1)
(0.1)
(0.1)
4.5
4.6
4.6
4.7
24.4
5.3
5.3
5.6
7.0
35.6
Multi-Employer Pension Plan
Our subsidiary SC Transport Inc. contributes to the Central States, Southeast and Southwest Areas Pension
Fund based on obligations arising from a collective bargaining agreement covering certain SC Transport Inc.
employees. This plan provides retirement benefits to participants based on their service to contributing employers.
The benefits are paid from assets held in trust for that purpose. Trustees are appointed by employers and unions;
however, we are not a trustee. The trustees typically are responsible for determining the level of benefits to be
provided to participants as well as for such matters as the investment of the assets and the administration of the
plan.
Based on the most recent information available, we believe that the projected benefit obligations in this multi-
employer plan significantly exceed the value of the assets held in trust to pay benefits. Because we are one of a
number of employers contributing to this plan, it is difficult to ascertain what the exact amount of the under-funding
would be, although we anticipate the contribution per participating employee will increase at each contract
renegotiation. We believe that funding levels have not changed significantly since year-end.
The risks of participating in a multi-employer plan are different from the risks associated with single-employer
plans in the following respects:
• Assets contributed to the multi-employer plan by one employer may be used to provide benefits to
employees of other participating employers.
•
•
If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be
borne by the remaining participating employers.
If a participating employer chooses to stop participating in a multi-employer plan or otherwise has
participation in the plan drop below certain levels, that employer may be required to pay the plan an
amount based on the underfunded status of the plan, referred to as a withdrawal liability.
Our participation in this plan is outlined in the tables below. Expense is recognized at the time our
contributions are funded, in accordance with applicable accounting standards. Any adjustment for a withdrawal
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
liability would be recorded at the time the liability is both probable and can be reasonably determined. The most
recent estimate of our potential withdrawal liability is $24.7.
EIN - Pension
Plan Number
Plan
Month /
Day End
Date
366044243-001
12/31
Pension
Protection Act
Zone Status (1)
2013
Red
2012
Red
FIP/RP Status
Pending /
Implemented
(2)
Implemented
Contributions
2014
$0.3
2013
$0.3
2012
$0.5
Surcharges
Imposed or
Amortization
Provisions
No
Pension Fund
Central States, Southeast and
Southwest Areas Pension
Fund
________________________
(1) The most recent Pension Protection Act Zone Status available in 2013 and 2012 relates to the plan's two most
recent fiscal year-ends. The zone status is based on information received from the plan certified by the plan’s
actuary. Among other factors, red zone status plans are generally less than 65 percent funded and are
considered in critical status.
(2) The FIP/RP Status Pending/Implemented column indicates plans for which a financial improvement plan or a
rehabilitation plan is either pending or has been implemented by the trustees of the plan.
The following table describes the expiration of the collective bargaining agreement associated with the multi-
employer plan in which we participate:
Pension Fund
Total Collective
Bargaining
Agreements
Central States, Southeast and Southwest Areas Pension Fund
1
Expiration
Date
3/31/2018
% of Associates
Under Collective
Bargaining
Agreement
Over 5%
Contribution
2014
0.2%
No
At the date the financial statements were issued, the Form 5500 was not available for the plan year ending in
2013.
Deferred Compensation Programs
We maintain four deferred compensation programs. The first deferred compensation program is closed to new
entrants. In this program, certain employees elected to defer a portion of their compensation in return for a fixed
benefit to be paid in installments beginning when the participant reaches age 70. Under the second plan, certain
employees may elect to defer a portion of their compensation. The third plan is intended to restore retirement
benefits that would otherwise be paid under the Retirement Plan, but are precluded as a result of the limitations on
eligible compensation under Internal Revenue Code Section 401(a)(17). Under the fourth plan, our non-employee
directors may elect to defer all or a portion of their board retainer and committee fees. The deferred amounts in the
last three plans earn a return based on the investment option selected by the participant.
These deferred compensation obligations are unfunded, but our investments in COLI policies are intended to
be utilized as a long-term funding source for these deferred compensation obligations. See Note 9 for additional
information.
Deferred compensation expense, which represents annual participant earnings on amounts that have been
deferred, and restoration retirement benefits were $5.0 for 2014, $4.8 for 2013 and $2.2 for 2012.
14. CAPITAL STRUCTURE
Terms of Class A Common Stock and Class B Common Stock
The holders of common stock are generally entitled to vote as a single class on all matters upon which
shareholders have a right to vote, subject to the requirements of applicable laws and the rights of any outstanding
series of preferred stock to vote as a separate class. Each share of Class A Common Stock entitles its holder to one
vote and each share of Class B Common Stock entitles its holder to 10 votes. Each share of Class B Common
Stock is convertible into a share of Class A Common Stock on a one-for-one basis (i) at the option of the holder at
any time, (ii) upon transfer to a person or entity which is not a Permitted Transferee (as defined in our Second
Restated Articles of Incorporation, as amended), (iii) with respect to shares of Class B Common Stock acquired
after February 20, 1998, at such time as a corporation, partnership, limited liability company, trust or charitable
organization holding such shares ceases to be controlled or owned 100% by Permitted Transferees and (iv) on the
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
date on which the number of shares of Class B Common Stock outstanding is less than 15% of all of the then
outstanding shares of common stock (calculated without regard to voting rights).
Except for the voting and conversion features described above, the terms of Class A Common Stock and
Class B Common Stock are generally similar. That is, the holders are entitled to equal dividends when declared by
the Board of Directors and generally will receive the same per share consideration in the event of a merger and be
treated on an equal per share basis in the event of a liquidation or winding up of the Company. In addition, we are
not entitled to issue additional shares of Class B Common Stock, or issue options, rights or warrants to subscribe
for additional shares of Class B Common Stock, except that we may make a pro rata offer to all holders of common
stock of rights to purchase additional shares of the class of common stock held by them, and any dividend payable
in common stock will be paid in the form of Class A Common Stock to Class A holders and Class B Common Stock
to Class B holders. Neither class of stock may be split, divided or combined unless the other class is proportionally
split, divided or combined.
Preferred Stock
Our Second Restated Articles of Incorporation, as amended, authorize our Board of Directors, without any
vote or action by our shareholders, to create one or more series of preferred stock up to the limit of our authorized
but unissued shares of preferred stock and to fix the designations, preferences, rights, qualifications, limitations and
restrictions thereof, including the voting rights, dividend rights, dividend rate, conversion rights, terms of redemption
(including sinking fund provisions), redemption price or prices, liquidation preferences and the number of shares
constituting any series.
Share Repurchases and Conversions
During 2014, we repurchased 3.6 million shares of our Class A Common Stock for $49.9. During 2013, we
repurchased 2.3 million shares of our Class A Common Stock for $19.9. During 2014 and 2013, 6.2 million and 2.1
million shares of our Class B Common Stock were converted to Class A Common Stock, respectively.
15.
INCOME TAXES
Provision for Income Taxes
The provision for income taxes on income before income taxes consists of:
Provision for Income Taxes—Expense
February 28,
2014
Year Ended
February 22,
2013
February 24,
2012
Current income taxes:
Federal
State and local
Foreign
Deferred income taxes:
Federal
State and local
Foreign
Income tax expense
$
26.8 $
12.1 $
13.5
5.1
45.4
9.3
0.1
4.7
14.1
1.4
5.6
19.1
(48.8)
3.1
42.7
(3.0)
$
59.5 $
16.1 $
—
0.4
11.3
11.7
18.0
2.5
(6.9)
13.6
25.3
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Income taxes were based on the following sources of income (loss) before income tax expense:
STEELCASE INC.
Source of Income (Loss) Before Income Tax Expense
Domestic
Foreign
February 28,
2014
Year Ended
February 22,
2013
February 24,
2012
$
$
164.7 $
(17.5)
147.2 $
83.8 $
(28.9)
54.9 $
63.8
18.2
82.0
The total income tax expense we recognized is reconciled to that computed by applying the U.S. federal
statutory tax rate of 35% as follows:
Income Tax Provision Reconciliation
Tax expense at the U.S. federal statutory rate
Foreign subsidiary liquidation (1)
Foreign dividends, less applicable foreign tax credits (2)
Valuation allowance provisions and adjustments (3)
Goodwill impairment (4)
COLI income (5)
State and local income taxes, net of federal
Foreign operations, less applicable foreign tax credits (6)
Research tax credit
Tax reserve adjustments
Sale of subsidiary (7)
Other
Total income tax expense recognized
________________________
Year Ended
February 28,
2014
February 22,
2013
February 24,
2012
$
51.5 $
19.2 $
28.7
(7.7)
0.2
8.4
2.7
(1.5)
6.6
2.1
(1.4)
0.2
—
(1.6)
—
(57.6)
40.0
12.3
(3.1)
2.9
2.5
(1.9)
0.7
—
1.1
—
1.3
0.7
—
(2.9)
1.9
0.7
(1.6)
1.1
(2.3)
(2.3)
$
59.5 $
16.1 $
25.3
(1)
In 2014, a group of foreign subsidiaries was liquidated for tax purposes, triggering a U.S. worthless stock
deduction equal to the remaining tax basis in the group and a U.S. deduction for uncollectible intercompany
balances due from the group.
(2) Foreign tax credit carryforwards of $21.0 are expected to be utilized within the remaining allowable 10 year
carryfoward period. The foreign tax credit carryforwards were generated in 2013 when we converted a wholly
owned French holding company from a disregarded entity to a controlled foreign corporation for U.S. tax
purposes, and that conversion caused outstanding intercompany debt to be treated as a deemed dividend
taxable in the U.S. Foreign taxes paid on the income that generated the deemed dividend exceeded the U.S.
tax cost creating an excess foreign tax credit of $56.7. Additionally, other cash dividends received from our
Canadian subsidiary resulted in excess foreign tax credits of $0.9 in 2013.
(3) The valuation allowance provisions were based on current year activity, and the valuation allowance
adjustments were based on various factors, which are further detailed below.
(4) The impairment charges related to goodwill recorded in purchase accounting are non-deductible.
(5) The net returns in cash surrender value, normal insurance expenses and death benefit gains related to our
investments in COLI policies are non-taxable.
(6) The foreign operations, less applicable foreign tax credits amount includes the rate differential on foreign
operations, U.S. tax cost of foreign branches and the impact of rate reductions in foreign jurisdictions.
(7)
In Q2 2012, we completed the sale of PolyVision’s remaining low margin whiteboard fabrication business in
Europe to a third party for proceeds totaling $2.3. The transaction included the sale of PolyVision SAS
(France) and PolyVision A/S (Denmark). Basis differences resulted in a tax benefit of $2.3.
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
Deferred Income Taxes
The significant components of deferred income taxes are as follows:
Deferred Income Taxes
February 28,
2014
February 22,
2013
Deferred income tax assets:
Employee benefit plan obligations and deferred compensation
$
113.5 $
Foreign and domestic net operating loss carryforwards
Reserves and accruals
Tax credit carryforwards
Other, net
Total deferred income tax assets
Valuation allowances
Net deferred income tax assets
Deferred income tax liabilities:
Property, plant and equipment
Intangible assets
Total deferred income tax liabilities
Net deferred income taxes
Net deferred income taxes is comprised of the following components:
Deferred income tax assets—current
Deferred income tax assets—non-current
Deferred income tax liabilities—current
Deferred income tax liabilities—non-current
89.8
23.1
23.6
15.8
265.8
(81.8)
184.0
29.7
16.2
45.9
90.7
85.0
26.5
60.2
6.1
268.5
(70.4)
198.1
31.7
14.2
45.9
$
$
138.1 $
152.2
56.0 $
85.1
0.1
2.9
56.2
101.7
—
5.7
In general, it is our practice and intention to reinvest the earnings of our non-U.S. subsidiaries in those
operations. Under U.S. GAAP, we are generally required to record U.S. deferred taxes on the anticipated
repatriation of foreign income as the income is recognized for financial reporting purposes. An exception under
certain accounting guidance permits us not to record a U.S. deferred tax liability for foreign income that we expect
to reinvest in foreign operations and for which remittance will be postponed indefinitely. If it becomes apparent that
some or all undistributed income will be remitted in the foreseeable future, the related deferred taxes are recorded
in that period. In determining indefinite reinvestment, we regularly evaluate the capital needs of our foreign
operations considering all available information, including operating and capital plans, regulatory capital
requirements, debt requirements and cash flow needs, as well as, the applicable tax laws to which our foreign
subsidiaries are subject. We expect existing foreign cash, cash equivalents and cash flows from future foreign
operations to be sufficient to fund foreign operations. Debt and capital financing are available from the U.S. in the
event foreign circumstances change. In addition, we expect our existing domestic cash balances and availability of
domestic financing sources to be sufficient to fund domestic operating activities for at least the next 12 months and
thereafter for the foreseeable future. Should we require more capital in the U.S. than is available domestically, we
could repatriate future earnings from foreign jurisdictions, which could result in higher effective tax rates. As of
February 28, 2014, we have not made a provision for U.S. or additional foreign withholding taxes on approximately
$144.7 of unremitted foreign earnings we consider permanently reinvested. We believe the U.S. tax cost, net of
related foreign tax credits, on the unremitted foreign earnings would be approximately $15 if the amounts were not
considered permanently reinvested.
We establish valuation allowances against deferred tax assets when it is more likely than not that all or a
portion of the deferred tax asset will not be realized. All evidence, both positive and negative, is identified and
considered in making the determination. Future realization of the existing deferred tax asset ultimately depends, in
part, on the existence of sufficient taxable income of appropriate character within the carryforward period available
under tax law applicable in the jurisdiction in which the losses were incurred.
At February 28, 2014, the valuation allowance of $81.8 is comprised of $81.4 relating to foreign deferred tax
assets, of which $70.4 relates to our French subsidiaries. In 2014, we recorded a net increase of $11.4 related to
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
the valuation allowance, of which $5.9 related to our French subsidiaries. In 2013, we recorded a net increase of
$40.0 to the valuation allowance, which was comprised primarily of an increase in the valuation allowance on
deferred tax assets in France of $44.2 and a decrease in the valuation allowance on deferred tax assets in the U.K.
of $4.9.
In 2013, the deferred tax assets related to our French subsidiaries were fully reserved. Therefore, in 2014,
the increase in the valuation allowance is due to additional current year losses. The valuation allowances of the
remaining entities increased due to updated assessments about the ultimate realization of the related deferred tax
assets.
In updating our assessment of the ultimate realization of deferred tax assets, we considered the following
factors:
•
•
•
•
the nature, frequency and severity of cumulative financial reporting losses in recent years,
the predictability of future operating income,
prudent and feasible tax planning strategies that could be implemented, to protect the loss of the
deferred tax asset and
the effect of reversing taxable temporary differences.
Based on our evaluation of these factors, particularly increasing cumulative losses and the continuing inability
to materially achieve sales and profit projections, we were unable to assert that it is more likely than not that the
deferred tax assets in France, our owned dealer in the U.K., Morocco, the Netherlands, Hong Kong and Belgium
would be realized as of February 28, 2014.
Current Taxes Payable or Refundable
Income taxes currently payable or refundable are reported on the Consolidated Balance Sheets as follows:
Current Income Taxes
Other current assets:
Income taxes receivable
Accrued expenses:
Income taxes payable
Net Operating Loss and Tax Credit Carryforwards
Operating loss and tax credit carryforwards expire as follows:
February 28,
2014
February 22,
2013
$
$
3.9 $
2.6 $
4.7
2.7
Year Ending February
2015
2016
2017
2018
2019-2034
No expiration
Valuation allowances
Net benefit
Net Operating Loss
Carryforwards (Gross)
Tax Effected Net Operating Loss
Carryforwards
Federal
$ — $ — $
State
International
Federal
State
International
Total
1.0 $ — $ — $
0.3 $
0.3 $
Tax Credit
Carryforwards
—
—
—
—
—
—
—
— 140.6
—
—
$ — $ 140.6 $
5.8
2.0
4.1
16.2
259.3
288.4
—
—
—
—
—
—
—
—
—
—
3.3
—
3.3
1.7
0.6
1.2
4.3
79.5
87.6
1.7
0.6
1.2
7.6
79.5
90.9
(0.6)
(75.6)
(76.2)
$ — $
2.7 $
12.0 $ 14.7 $
—
—
—
21.0
2.6
23.6
—
23.6
Future tax benefits for net operating loss and tax credit carryforwards are recognized to the extent that
realization of these benefits is considered more likely than not. It is considered more likely than not that a benefit of
$38.3 will be realized on these net operating loss and tax credit carryforwards. This determination is based on the
expectation that related operations will be sufficiently profitable or various tax, business and other planning
strategies available to us will enable utilization of the carryforwards. We assess the available positive and negative
evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets.
Valuation allowances are recorded to the extent that realization of these carryovers is not more likely than not.
76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
Uncertain Tax Positions
We are subject to taxation in the U.S. and various states and foreign jurisdictions with varying statutes of
limitation. Tax years that remain subject to examination by major tax jurisdictions include, the United States 2014,
Canada 2009 through 2014, France 2010 through 2014 and Germany 2009 through 2014. We adjust these
reserves, as well as the related interest and penalties, in light of changing facts and circumstances.
We are audited by the U.S. Internal Revenue Service under the Compliance Assurance Process (“CAP”).
Under CAP, the U.S. Internal Revenue Service works with large business taxpayers to identify and resolve issues
prior to the filing of a tax return. Accordingly, we record minimal liabilities for U.S. Federal uncertain tax positions.
We recognize interest and penalties associated with uncertain tax positions in income tax expense, and these
items were insignificant for 2014, 2013 and 2012.
As of February 28, 2014 and February 22, 2013, the liability for uncertain tax positions, including interest and
penalties, reported on the Consolidated Balance Sheets was as follows:
Liability for Uncertain Tax Positions
Other accrued expenses
Other long-term liabilities
February 28,
2014
February 22,
2013
$
$
— $
2.2
2.2 $
0.3
1.6
1.9
A reconciliation of the beginning and ending balances of unrecognized tax benefits is as follows:
Unrecognized Tax Benefits
Balance as of beginning of period
Gross increases—tax positions in prior period
Gross decreases—tax positions in prior period
Gross increases—tax positions in current period
Lapse of statute of limitations
Balance as of end of period
Year Ended
February 28,
2014
February 22,
2013
February 24,
2012
$
12.2 $
11.5 $
0.4
—
0.1
—
1.6
(0.9)
—
—
$
12.7 $
12.2 $
0.1
—
—
11.5
(0.1)
11.5
Unrecognized tax benefits of $2.2, if favorably resolved would affect our effective tax rate. We do not expect
the balance of unrecognized tax benefits to significantly increase or decrease within the next year.
We have taken tax positions in a non-U.S. jurisdiction that do not meet the more likely than not test required
under the uncertain tax position accounting guidance. Since the tax positions have increased net operating loss
carryforwards, the underlying deferred tax asset is shown net of the liability for uncertain tax positions. If we prevail
on these tax positions, which total $10.5, the resolution of these items would not impact tax expense, since the
positions were taken in countries where we have recorded full valuation allowances.
16. SHARE-BASED COMPENSATION
The Steelcase Inc. Incentive Compensation Plan (the “Incentive Compensation Plan”) provides for the
issuance of share-based compensation awards to employees and members of the Board of Directors. There are
25,000,000 shares of Class A Common Stock reserved for issuance under our Incentive Compensation Plan, with
11,317,414 and 12,751,324 shares remaining for future issuance under our Incentive Compensation Plan as of
February 28, 2014 and February 22, 2013, respectively.
A variety of awards may be granted under the Incentive Compensation Plan including stock options, stock
appreciation rights (“SARs”), restricted stock, restricted stock units, performance shares, performance units, cash-
based awards, phantom shares and other share-based awards. Outstanding awards under the Incentive
Compensation Plan vest over a period of one, three or five years or at the time a participant becomes a qualified
retiree. Stock options granted under the Incentive Compensation Plan may be either incentive stock options
intended to qualify under Section 422 of the Code or non-qualified stock options not so intended. The Board may
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
amend or terminate the Incentive Compensation Plan at its discretion subject to certain provisions as stipulated
within the plan.
Share-based awards currently outstanding under the Incentive Compensation Plan are as follows:
Total Outstanding Awards
Performance units (1)
Restricted stock units
Total outstanding awards
________________________
February 28,
2014
1,833,288
2,001,758
3,835,046
(1) This amount includes the maximum number of shares that may be issued under outstanding performance
unit awards; however, the actual number of shares which may be issued will be determined based on the
satisfaction of certain criteria, and therefore may be significantly lower.
The share-based compensation awards outstanding as of February 28, 2014 consist of restricted stock units
and performance units, and the majority of the outstanding awards are held by our executive officers.
In the event of a “change of control,” as defined in the Incentive Compensation Plan,
•
if at least six months have elapsed following the award date, any performance-based conditions imposed
with respect to outstanding awards shall be deemed to be fully earned and a pro rata portion of each
such outstanding award granted for all outstanding performance periods shall become payable in shares
of Class A Common Stock; and
•
all restrictions imposed on restricted stock units that are not performance-based shall lapse.
Performance Units
Performance units have been granted only to our executive officers. These awards are earned after a three-
year performance period and only if the performance criteria stated in the applicable award are achieved. After
completion of the performance period, the number of performance units earned will be issued as shares of Class A
Common Stock. The aggregate number of shares of Class A Common Stock that ultimately may be issued under
performance units where the performance period has not been completed ranges from 0 to 1,833,288 shares as of
February 28, 2014. The awards will be forfeited if a participant leaves the company for reasons other than
retirement, disability or death or if the participant engages in any competition with us, as defined in the plan and
determined by the Administrative Committee in its discretion.
A dividend equivalent is calculated based on the actual number of units earned at the end of the performance
period, equal to the dividends that would have been payable on the earned units had they been held during the
entire performance period as Class A Common Stock. At the end of the performance period, the dividend
equivalents are paid in the form of cash or Class A Common Stock at the discretion of the Board of Directors.
Half of the performance units granted in 2014 can be earned based on our three-year average return on
invested capital ("ROIC PSUs"), which is a performance condition. The number of shares that may be earned under
the ROIC PSUs can range from 0% to 200% of the target amount. The ROIC PSUs are expensed and recorded in
Additional paid-in capital on the Consolidated Balance Sheets over the performance periods based on the
probability that the performance condition will be met. The expense recorded will be adjusted as the estimate of the
total number of ROIC PSUs that will ultimately be earned changes. The weighted average grant date fair value per
share of ROIC PSUs granted was $12.66. The fair value is equal to the closing price on the date of the grant.
The remaining half of the performance units granted in 2014 and all performance units granted in 2013 and
2012 can be earned based on achievement of certain total shareholder return results relative to a comparison group
of companies ("TSR PSUs"), which is a market condition. The number of units that may be earned under the TSR
PSUs can range from 0% to 200% of the target amount. The TSR PSUs are expensed and recorded in Additional
paid-in capital on the Consolidated Balance Sheets over the performance periods. Based on actual performance
results, the 2012 TSR PSUs were earned at 106.6% of the target level and 453,627 shares of Class A Common
Stock were issued to participants in Q1 2015.
78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
The fair values of the the TSR PSUs were calculated on their respective grant dates using the Monte Carlo
simulation model, which resulted in a fair value of $5.7, $6.4 and $8.1 for years 2014, 2013 and 2012, respectively.
The Monte Carlo simulation was computed using the following assumptions:
Three-year risk-free interest rate (1)
Expected term
Estimated volatility (2)
________________________
2014 Awards
0.3%
2013 Awards
0.5%
2012 Awards
1.4%
3 years
44.7%
3 years
49.8%
3 years
50.9%
(1) Based on the U.S. Government bond benchmark on the grant date.
(2) Represents the historical price volatility of the Company’s Class A Common Stock for the three-year period
preceding the grant date.
The Monte Carlo simulation resulted in the following weighted-average grant date fair values:
Grant Date Fair Value per TSR PSU
Weighted-average grant date fair value per share of TSR PSUs granted
during 2014, 2013 and 2012
Year Ended
February 28,
2014
February 22,
2013
February 24,
2012
$
15.50 $
11.92 $
16.57
The total performance units expense and associated tax benefit in 2014, 2013 and 2012 are as follows:
Performance Units
Expense
Tax benefit
The 2014 activity for performance units is as follows:
Nonvested as of February 22, 2013
Maximum Number of Nonvested Units
Granted
Vested
Forfeited
Adjustments (1)
Nonvested as of February 28, 2014
________________________
Year Ended
February 28,
2014
February 22,
2013
February 24,
2012
$
6.0 $
2.3
5.5 $
3.0
8.1
1.2
Total
1,932,030 $
839,448
(453,627)
(87,100)
(397,463)
1,833,288
Weighted-Average
Grant Date
Fair Value per Unit
13.96
14.08
16.56
13.02
16.56
14.04
(1) Adjustments were due to the number of shares earned under the 2012 award at the end of the performance
period being less than the maximum.
As of February 28, 2014, there was $2.4 of remaining unrecognized compensation cost related to nonvested
performance units. That cost is expected to be recognized over a remaining weighted-average period of 1.7 years.
The total fair value of performance units vested was $6.7, $14.0 and $7.0 during 2014, 2013 and 2012,
respectively.
Restricted Stock Units
Restricted stock units (“RSUs”) have restrictions on transfer which lapse one, three or five years (depending
on the terms of the individual grant) after the date of grant, at which time RSUs are issued as unrestricted shares of
Class A Common Stock. These awards are subject to forfeiture if a participant leaves the company for reasons
other than retirement, disability, death or termination by us without cause prior to the vesting date. RSUs are
79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
expensed and recorded in Additional paid-in capital on the Consolidated Balance Sheets over the requisite service
period based on the value of the shares on the grant date.
Grant Date Fair Value per Share
Weighted-average grant date fair value per share of RSUs granted
during 2014, 2013 and 2012
Year Ended
February 28,
2014
February 22,
2013
February 24,
2012
$
13.46 $
9.66 $
9.64
The total RSUs expense and associated tax benefit in 2014, 2013 and 2012 is as follows:
Restricted Stock Units
Expense
Tax benefit
Year Ended
February 28,
2014
February 22,
2013
February 24,
2012
$
10.3 $
3.3
3.8 $
1.2
3.2
1.0
Holders of RSUs receive cash dividends equal to the dividends we declare and pay on our Class A Common
Stock, which are included in Dividends paid on the Consolidated Statements of Cash Flows.
The 2014 activity for RSUs is as follows:
Nonvested as of February 22, 2013
Nonvested Units
Granted
Vested
Forfeited
Nonvested as of February 28, 2014
Weighted-Average
Grant Date
Fair Value
per Share
9.42
13.46
8.71
10.42
11.71
Total
1,221,227 $
1,097,941
(266,704)
(50,706)
2,001,758
There was $8.8 of remaining unrecognized compensation cost related to RSUs as of February 28, 2014. That
cost is expected to be recognized over a weighted-average period of 2.1 years.
The total fair value of restricted stock and RSUs vested was $4.2, $1.7 and $0.8 during 2014, 2013 and 2012,
respectively.
Unrestricted Share Grants
Under the Incentive Compensation Plan, unrestricted shares may be issued to members of the Board of
Directors as compensation for director’s fees, as a result of directors’ elections to receive unrestricted shares in lieu
of cash payment. We granted a total of 31,790, 43,238 and 38,888 unrestricted shares at a weighted average grant
date fair value per share of $14.82, $9.62 and $8.39 during 2014, 2013 and 2012, respectively.
17. COMMITMENTS
We lease certain sales offices, showrooms, warehouses and equipment under non-cancelable operating
leases that expire at various dates through fiscal year 2025. During the normal course of business, we have entered
into sale-leaseback arrangements for certain facilities. Accordingly, these leases are accounted for as operating
leases and the related gains from the sale of the properties are recorded as deferred gains and are amortized over
the lease term. Total deferred gains are included as a component of Other long-term liabilities, on the Consolidated
Balance Sheets and amounted to $10.1 as of February 28, 2014 and $14.2 as of February 22, 2013.
Rent expense under all non-cancelable operating leases, net of sublease rental income and excluding lease
impairment charges recorded as restructuring costs, was $51.4, $53.0 and $50.0 for 2014, 2013 and 2012,
respectively. Sublease rental income was $4.9, $5.7 and $7.8 for 2014, 2013 and 2012, respectively. Lease
impairment charges recorded as restructuring costs were $0.5, $0.0 and $3.0 for 2014, 2013 and 2012,
respectively.
80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
Our estimated future minimum annual rental commitments and sublease rental income under non-cancelable
operating leases are as follows:
Year Ending in February
Minimum annual
rental commitments
Minimum annual
sublease rental income
2015
2016
2017
2018
2019
Thereafter
$
$
41.3 $
35.8
24.7
26.9
14.4
44.4
187.5 $
Minimum annual
rental commitments, net
37.5
32.6
21.8
24.5
13.1
41.4
170.9
(3.8) $
(3.2)
(2.9)
(2.4)
(1.3)
(3.0)
(16.6) $
We have outstanding capital expenditure commitments of $34.4.
18. REPORTABLE SEGMENTS
Our reportable segments consist of the Americas segment, the EMEA segment and the Other category.
Unallocated corporate expenses are reported as Corporate.
The Americas segment serves customers in the U.S., Canada 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, Nurture, Coalesse, Details and Turnstone brands.
The EMEA segment serves customers in Europe, the Middle East and Africa primarily under the Steelcase
and Coalesse brands, with an emphasis on freestanding furniture systems, storage and seating solutions.
The Other category includes Asia Pacific, Designtex and PolyVision. Asia Pacific serves customers in Asia
and Australia primarily under the Steelcase brand with an emphasis on freestanding furniture systems, storage and
seating solutions. Designtex designs and sells surface materials including textiles and wall coverings which are
specified by architects and designers directly to end-use customers primarily in North America. PolyVision
manufactures ceramic steel surfaces for use in multiple applications, but primarily for sale to third-party fabricators
and distributors to create static whiteboards and chalkboards sold in the primary and secondary education markets
globally.
We primarily review and evaluate operating income by segment in both our internal review processes and for
external financial reporting. We also allocate resources primarily based on operating income. Total assets by
segment include manufacturing and other assets associated with each segment.
Corporate costs include unallocated portions of shared service functions such as information technology,
human resources, finance, executive, corporate facilities, legal and research. Corporate assets consist primarily of
unallocated cash and investment balances and COLI balances.
No single customer represented more than 5% of our consolidated revenue in 2014, 2013 or 2012.
81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
Operating Segment Data
Americas
EMEA
Other
Corporate
Consolidated
Fiscal 2014
Revenue
Operating income (loss)
Total assets
Capital expenditures
Depreciation & amortization
Fiscal 2013
Revenue
Operating income (loss)
Total assets
Capital expenditures
Depreciation & amortization
Fiscal 2012
Revenue
Operating income (loss)
Total assets
Capital expenditures
Depreciation & amortization
$
2,154.4 $
566.9 $
267.6 $
— $
2,988.9
247.4
901.4
59.8
41.5
(31.4)
288.6
19.3
12.8
(8.7)
159.9
7.7
5.7
(41.4)
376.8
—
—
165.9
1,726.7
86.8
60.0
$
2,015.1 $
594.8 $
258.8 $
— $
2,868.7
168.3
876.6
50.9
38.6
(50.9)
278.1
15.1
13.1
(20.1)
155.9
7.9
6.1
(38.0)
379.0
0.1
0.5
$
1,868.4 $
122.8
610.5 $
(9.9)
860.6
46.6
36.6
326.3
12.7
13.4
270.6 $
— $
14.6
179.0
4.4
6.1
(30.4)
313.0
1.2
0.3
59.3
1,689.6
74.0
58.3
2,749.5
97.1
1,678.9
64.9
56.4
The accounting policies of each of the reportable segments are the same as those described in Note 2.
Revenue comparisons have been impacted by divestitures and deconsolidations along with currency translation
effects. In addition, operating income (loss) has been significantly impacted by goodwill impairment charges and
restructuring costs. See Notes 10 and 20 for additional information.
Reportable geographic information is as follows:
Reportable Geographic Data
Revenue:
United States
Foreign locations
Long-lived assets:
United States
Foreign locations
February 28,
2014
Year Ended
February 22,
2013
February 24,
2012
$
$
$
$
2,020.3 $
968.6
2,988.9 $
1,881.3 $
987.4
2,868.7 $
1,751.0
998.5
2,749.5
603.2 $
124.8
728.0 $
666.1 $
127.1
793.2 $
688.7
151.5
840.2
Revenue is attributable to countries based on the location of the customer. No country other than the
U.S. represented greater than 10% of our consolidated revenue or long-lived assets in 2014, 2013 or 2012. In
2014, foreign revenues and long-lived assets represented approximately 32% and 17% of consolidated amounts,
respectively. Our EMEA business is spread across a number of geographic regions, with Western Europe
representing approximately 83% of EMEA revenue in 2014.
82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
Our global product offerings consist of furniture, interior architecture, technology and services. These product
offerings are marketed, distributed and managed primarily as a group of similar products on an overall portfolio
basis. The following is a summary of net sales by product category. As product line information is not readily
available for the Company as a whole, this summary represents a reasonable estimate of revenue by product
category based on the best information available:
Year Ended
Product Category Data
Systems and storage
Seating
Other (1)
Total
________________________
February 28,
2014
1,354.8 $
February 22,
2013
1,358.7 $
February 24,
2012
1,306.1
$
888.6
745.5
840.7
669.3
821.6
621.8
$
2,988.9 $
2,868.7 $
2,749.5
(1) Other consists primarily of consolidated dealers, textiles and surface materials, worktools, architecture,
technology, and other uncategorized product lines, and services, none of which are individually greater than
10% of consolidated revenue.
19. DIVESTITURES AND ACQUISITIONS
Divestiture of PolyVision Division
In Q2 2012, we completed the sale of PolyVision’s remaining low margin whiteboard fabrication business in
Europe to a third party for proceeds totaling $2.3. The transaction included the sale of PolyVision SAS (France) and
PolyVision A/S (Denmark) and resulted in a loss of $0.9 recorded in Restructuring costs on the Consolidated
Statements of Income.
Our Consolidated Statements of Income included the following related to PolyVision SAS and PolyVision A/S:
PolyVision SAS and PolyVision A/S
Revenue
Gross profit
Operating income
Dealer Acquisition
Year Ended
February 24,
2012
$
8.6
1.6
0.1
In Q1 2012, Red Thread Spaces LLC (“Red Thread”), formerly known as Office Environments of New
England, LLC, a wholly-owned subsidiary of Steelcase Inc., acquired substantially all the assets of bkm Total Office
(“BKM”) for cash consideration of approximately $18.7. Red Thread and BKM, both authorized Steelcase dealers,
combined to create a regional enterprise supporting workplace needs that offer a broadened portfolio of products
and services and expanded geographical coverage in New England. The final purchase price allocation resulted in
goodwill and intangible asset valuations of $2.0 and $0.3, respectively. The combined dealers are included in the
Americas segment. The purchase of BKM did not have a material impact on our consolidated financial statements.
20. RESTRUCTURING ACTIVITIES
In Q4 2014, we recognized a $4.5 gain related to the sale of a facility in the EMEA segment in connection
with previously announced restructuring actions.
In Q3 2014, we announced restructuring actions in EMEA to safeguard our global competitiveness through
changes in our EMEA manufacturing footprint. We have initiated procedures related to the closure of a
manufacturing facility in Germany and the establishment of a new manufacturing location in the Czech Republic. In
connection with this project, we expect to incur approximately $20 to $25 of cash restructuring costs, with
approximately $15 to $20 related to employee termination costs and approximately $5 related to business exit and
other related costs. We incurred $0.7 of business exit and other related costs in the EMEA segment in connection
with these actions in 2014.
83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
STEELCASE INC.
In Q1 2014, we announced restructuring actions in EMEA to reorganize the sales, marketing and support
functions in France. In Q2 2014, we completed negotiations with the works councils related to these actions. We
currently estimate the cash restructuring costs associated with these actions will approximate $9, with
approximately $8 related to employee termination costs and approximately $1 of business exit and other related
costs. We incurred $6.3 of employee termination costs, $0.9 of business exit and other related costs related to
these actions in 2014.
In Q4 2013, we recognized a $12.4 impairment charge in the Americas segment in conjunction with the
previously announced closure of our Corporate Development Center. The impairment charge was calculated as the
amount by which the carrying value of the building exceeded its fair value as of February 22, 2013. The fair value
of the building was based on a third-party appraisal which included an evaluation of quoted market prices for similar
properties.
In Q4 2013, we completed restructuring actions in EMEA to consolidate owned dealers and eliminate 60 full-
time equivalent positions. These eliminations resulted from local actions taken by a few countries and included
attrition, expiration of fixed-term, temporary contracts and workforce reductions. We incurred $3.8 related to these
restructuring actions in 2013.
In Q2 2013, we announced plans to integrate PolyVision's global technology business into the Steelcase
Education Solutions group. We incurred $0.9 of business exit and other related costs in the Americas segment
related to this restructuring plan during 2014. We incurred $1.4 of employee termination costs and $0.6 of business
exit and other related costs in the Americas segment in 2013. These restructuring actions are complete.
In Q2 2012, we announced the closure of our Morocco manufacturing facility within our EMEA segment. In
conjunction with the closure, we recorded $6.8 of employee termination costs, $0.3 of business exit and other
related costs, and a $4.1 gain related to the sale of the facility. These restructuring actions are complete.
In Q2 2012, we completed the sale of PolyVision’s remaining low margin whiteboard fabrication business in
Europe to a third party which resulted in a net loss of $0.9 recorded in the Other category during 2012.
In Q4 2011, we announced the planned closure of three additional manufacturing facilities in North America.
This project is now complete. The restructuring costs associated with these actions were $41.0, with $28.4 related
to workforce reductions and $12.6 related to costs associated with manufacturing consolidation and production
moves. During 2013 and 2012, we incurred $4.2 and $14.3 of employee termination costs, respectively. During
2013 and 2012, we incurred $8.8 and $3.6 of business exit and other related costs, respectively.
Restructuring costs are summarized in the following table:
Restructuring Costs
February 28,
2014
Year Ended
February 22,
2013
February 24,
2012
Cost of sales
Americas
EMEA
Other
Operating expenses
Americas
EMEA
Other
$
0.7 $
13.9 $
(3.6)
0.1
(2.8)
1.0
8.2
0.2
9.4
1.0
—
14.9
14.7
4.0
1.1
19.8
$
6.6 $
34.7 $
20.0
5.0
1.2
26.2
1.5
3.0
(0.2)
4.3
30.5
84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Below is a summary of the charges, payments and adjustments to the restructuring reserve balance during
2014, 2013 and 2012:
STEELCASE INC.
Reserve balance as of February 25, 2011
Restructuring Reserve
Additions
Payments
Adjustments
Reserve balance as of February 24, 2012
Additions
Payments
Adjustments
Reserve balance as of February 22, 2013
Additions
Payments
Adjustments
Reserve balance as of February 28, 2014
Workforce
Reductions
Business Exits
and Related
Costs
Total
$
$
$
$
25.7 $
25.6
(38.2)
(0.2)
12.9 $
11.5
(16.4)
(0.2)
7.8 $
7.4
(6.8)
(0.7)
7.7 $
1.3 $
4.9
(6.9)
5.4
4.7 $
23.2
(24.1)
(0.5)
3.3 $
3.7
(5.6)
0.6
2.0 $
27.0
30.5
(45.1)
5.2
17.6
34.7
(40.5)
(0.7)
11.1
11.1
(12.4)
(0.1)
9.7
The workforce reductions reserve balance as of February 28, 2014 primarily relates to restructuring actions in
EMEA. The adjustments to the business exits and related costs in 2012 primarily relate to a $4.1 gain associated
with the sale of a facility in Morocco.
21. UNAUDITED QUARTERLY RESULTS
Unaudited Quarterly Results
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Total
2014
Revenue
Gross profit
Operating income
Net income
Basic earnings per share
Diluted earnings per share
2013
Revenue
Gross profit
Operating income (loss)
Net income (loss)
Basic earnings (loss) per share
Diluted earnings (loss) per share
$
667.1 $
757.6 $
784.8 $
779.4 $
2,988.9
209.7
244.3
242.8
248.4
20.4
13.2
0.10
0.10
52.0
27.6
0.22
0.22
39.3
23.0
0.18
0.18
54.2
23.9
0.19
0.19
945.2
165.9
87.7
0.70
0.69
$
675.2 $
744.9 $
727.2 $
721.4 $
2,868.7
196.0
228.1
225.9
19.3
13.2
0.10
0.10
46.8
29.5
0.23
0.23
38.4
23.6
0.19
0.18
216.0
(45.2)
(27.5)
(0.22)
(0.22)
866.0
59.3
38.8
0.30
0.30
Revenue comparisons have been impacted by divestitures and deconsolidations along with currency
translation effects. In addition, operating income (loss) has been significantly impacted by goodwill impairment
charges and restructuring costs. See Notes 10 and 20 for further details.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure:
None.
85
Item 9A. Controls and Procedures:
(a) Disclosure Controls and Procedures. Our management, under the supervision and with the participation of
our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as amended), as of February
28, 2014. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of
February 28, 2014, our disclosure controls and procedures were effective in (1) recording, processing, summarizing
and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit
under the Exchange Act and (2) ensuring that information required to be disclosed by us in such reports is
accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.
(b) Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we have included a report of management’s
assessment of the design and effectiveness of our internal control over financial reporting as part of this Report.
The independent registered public accounting firm of Deloitte & Touche LLP also attested to, and reported on, the
effectiveness of our internal control over financial reporting. Management’s report and the independent registered
public accounting firm’s attestation report are included in this Report in Item 8: Financial Statements and
Supplementary Data under the captions entitled “Management’s Report on Internal Control Over Financial
Reporting” and “Report of Independent Registered Public Accounting Firm.”
(c) Internal Control Over Financial Reporting. There were no changes in our internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our fourth fiscal quarter that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information:
Effective April 17, 2014, our Board of Directors approved an amendment to our Amended By-Laws. The
amendment consisted of changes to Sections 2.01 and 2.04 of the By-Laws to expressly permit shareholder
meetings to be conducted by remote communication, with the means of such remote communication to be included
in the written notice of the meeting given to shareholders. The Amended By-Laws, as amended, are filed as Exhibit
3.2 attached hereto and incorporated herein by reference.
86
PART III
Item 10. Directors, Executive Officers and Corporate Governance:
Certain information regarding executive officers required by this Item is set forth as a Supplementary Item at
the end of Part I of this Report. Other information required by this item is contained in Item 1: Business under the
caption “Available Information” or will be contained in our 2014 Proxy Statement under the captions “Proposal 1 —
Election of Directors,” “Committees of the Board of Directors,” “Other Corporate Governance Matters” and
“Section 16(a) Beneficial Ownership Reporting Compliance” and is incorporated into this Report by reference.
Item 11. Executive Compensation:
The information required by Item 11 will be contained in our 2014 Proxy Statement, under the captions
“Committees of the Board of Directors,” “Director Compensation,” “Compensation Committee Report,”
“Compensation Discussion and Analysis” and “Executive Compensation, Retirement Programs and Other
Arrangements” and is incorporated into this Report by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters:
The information required by Item 12 that is not listed below will be contained in our 2014 Proxy Statement,
under the caption “Stock Ownership of Management and Certain Beneficial Owners,” and is incorporated into this
Report by reference.
Securities authorized for issuance under equity compensation plans as of February 28, 2014 are as follows:
Plan Category
Equity compensation plans approved by
security holders
Equity compensation plans not approved by
security holders
Total
________________________
Number of securities
to be issued upon
exercise
of outstanding
warrants and rights
Weighted-average
exercise price of
outstanding
warrants and rights
Number of securities
remaining available for
future issuance under
equity compensation
plans
(excluding securities
reflected in the
second column)
3,835,046 (1)
n/a (2)
11,317,414
—
3,835,046
n/a
n/a
—
11,317,414
(1) This amount includes the maximum number of shares that may be issued under outstanding performance
units; however, the actual number of shares which may be issued will be determined based on the
satisfaction of certain criteria, and therefore may be significantly lower.
(2) The weighted average exercise price excludes performance units and restricted stock units, as there is no
exercise price associated with these awards. The only outstanding warrants or rights are performance units
and restricted stock units.
All equity awards were granted under our Incentive Compensation Plan. See Note 16 to the consolidated
financial statements for additional information.
Item 13. Certain Relationships and Related Transactions, and Director Independence:
The information required by Item 13 will be contained in our 2014 Proxy Statement, under the captions
“Director Independence” and “Related Person Transactions” and is incorporated into this Report by reference.
Item 14. Principal Accounting Fees and Services:
The information required by Item 14 will be contained in our 2014 Proxy Statement under the caption “Fees
Paid to Principal Independent Auditor” and is incorporated into this Report by reference.
87
PART IV
Item 15. Exhibits, Financial Statement Schedules:
(a) Financial Statements and Schedules
The following documents are filed as part of this report:
1. Consolidated Financial Statements (Item 8)
• Management’s Report on Internal Control Over Financial Reporting
• Reports of Independent Registered Public Accounting Firm
• Consolidated Statements of Income for the Years Ended February 28, 2014, February 22, 2013 and
February 24, 2012
• Consolidated Statements of Comprehensive Income for the Years Ended February 28, 2014, February
22, 2013 and February 24, 2012
• Consolidated Balance Sheets as of February 28, 2014 and February 22, 2013
• Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended February 28,
2014, February 22, 2013 and February 24, 2012
• Consolidated Statements of Cash Flows for the Years Ended February 28, 2014, February 22, 2013 and
February 24, 2012
• Notes to the Consolidated Financial Statements
2. Financial Statement Schedules (S-1)
Schedule II—Valuation and Qualifying Accounts
All other schedules required by Form 10-K have been omitted because they are not applicable or the required
information is disclosed elsewhere in this Report.
3. Exhibits Required by Securities and Exchange Commission Regulation S-K
See Index of Exhibits
(b) Exhibits
The response to this portion of Item 15 is submitted as a separate section of this Report. See Item 15(a)(3)
above.
(c) Financial Statement Schedules
The response to this portion of Item 15 is submitted as a separate section of this Report. See Item 15(a)(2)
above.
88
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
STEELCASE INC.
By:
/s/ MARK T. MOSSING
Mark T. Mossing
Corporate Controller and
Chief Accounting Officer
(Duly Authorized Officer and
Principal Accounting Officer)
Date: April 17, 2014
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant in the capacities and on the dates indicated:
Signature
/s/ JAMES P. KEANE
James P. Keane
/s/ DAVID C. SYLVESTER
David C. Sylvester
/s/ MARK T. MOSSING
Mark T. Mossing
/s/ LAWRENCE J. BLANFORD
Lawrence J. Blanford
/s/ WILLIAM P. CRAWFORD
William P. Crawford
/s/ CONNIE K. DUCKWORTH
Connie K. Duckworth
/s/ JAMES P. HACKETT
James P. Hackett
/s/ R. DAVID HOOVER
R. David Hoover
/s/ DAVID W. JOOS
David W. Joos
/s/ ELIZABETH VALK LONG
Elizabeth Valk Long
/s/ ROBERT C. PEW III
Title
President and Chief Executive Officer,
Director (Principal Executive Officer)
Senior Vice President, Chief Financial
Officer (Principal Financial Officer)
Corporate Controller and Chief Accounting
Officer (Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
Robert C. Pew III
Chair of the Board of Directors, Director
/s/ CATHY D. ROSS
Cathy D. Ross
/s/ PETER M. WEGE II
Peter M. Wege II
/s/ P. CRAIG WELCH, JR.
P. Craig Welch, Jr.
/s/ KATE PEW WOLTERS
Kate Pew Wolters
Director
Director
Director
Director
89
Date
April 17, 2014
April 17, 2014
April 17, 2014
April 17, 2014
April 17, 2014
April 17, 2014
April 17, 2014
April 17, 2014
April 17, 2014
April 17, 2014
April 17, 2014
April 17, 2014
April 17, 2014
April 17, 2014
April 17, 2014
SCHEDULE II
STEELCASE INC.
VALUATION AND QUALIFYING ACCOUNTS
Allowance for Losses on Accounts Receivable
Balance as of beginning of period
Additions:
Charged to costs and expenses
Charged to other accounts
Deductions (1)
Other adjustments (2)
Balance as of end of period
________________________
(1) Primarily represents excess of accounts written off over recoveries.
(2) Primarily currency translation adjustments.
Valuation Allowance for Deferred Income Tax Assets
Balance as of beginning of period
Additions:
Charged to costs and expenses
Charged to other accounts
Deductions and expirations
Other adjustments (1)
Balance as of end of period
________________________
(1) Primarily currency translation adjustments.
February 28,
2014
Year Ended
February 22,
2013
February 24,
2012
$
$
$
14.5 $
19.6 $
23.1
2.7
0.1
(4.6)
0.3
13.0 $
2.8
0.3
(7.9)
(0.3)
14.5 $
2.0
(0.2)
(4.7)
(0.6)
19.6
February 28,
2014
Year Ended
February 22,
2013
February 24,
2012
$
70.4 $
34.5 $
34.9
8.9
—
(0.5)
3.0
40.0
—
(4.4)
0.3
$
81.8 $
70.4 $
2.5
—
(1.8)
(1.1)
34.5
S-1
Exhibit
No.
3.1
3.2
4.1
4.2
4.3
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
Index of Exhibits
Description
Second Restated Articles of Incorporation of the Company, as amended (1)
Amended By-laws of Steelcase Inc., as amended April 17, 2014
Indenture for Senior Debt Securities, dated as of August 7, 2006 among Steelcase Inc.
as Issuer and JP Morgan Trust Company, National Association as Trustee (2)
Form of Global Note Representing 6.375% Senior Notes Due 2021 (3)
Officers’ Certificate of Steelcase Inc. establishing the terms of the 6.375% Senior Notes
Due 2021 (4)
Amended and Restated Credit Agreement, dated as of March 19, 2012 among
Steelcase Inc. and JPMorgan Chase Bank, NA., as Administrative Agent; Bank of
America, NA., Fifth Third Bank and Wells Fargo Bank, NA as Documentation Agents and
certain other lenders (5)
Steelcase Inc. Restoration Retirement Plan (6)
Steelcase Inc. Deferred Compensation Plan (7)
2009-1 Amendment to the Steelcase Inc. Deferred Compensation Plan (8)
2013-1 Amendment to the Steelcase Inc. Deferred Compensation Plan (9)
Deferred Compensation Agreement dated January 12, 1998, between Steelcase Inc.
and James P. Hackett (10)
2009-1 Amendment to Deferred Compensation Agreement dated January 12, 1998,
between Steelcase Inc. and James P. Hackett (11)
Deferred Compensation Agreement dated May 4, 1998, between Steelcase Inc. and
William P. Crawford (12)
Steelcase Inc. Non-Employee Director Deferred Compensation Plan, as amended and
restated effective July 10, 2012 (13)
Steelcase Inc. Executive Severance Plan (14)
2009-1 Amendment to the Steelcase Inc. Executive Severance Plan (15)
2010-1 Amendment to the Steelcase Inc. Executive Severance Plan (16)
2010-2 Amendment to the Steelcase Inc. Executive Severance Plan (17)
Steelcase Inc. Executive Supplemental Retirement Plan, as amended and restated as of
March 27, 2003 (18)
2006-1 Amendment to the Steelcase Inc. Executive Supplemental Retirement Plan (19)
2006-2 Amendment to the Steelcase Inc. Executive Supplemental Retirement Plan (20)
2009-1 Amendment to the Steelcase Inc. Executive Supplemental Retirement Plan (21)
2012-1 Amendment to the Steelcase Inc. Executive Supplemental Retirement Plan (22)
Steelcase Inc. Management Incentive Plan, as amended and restated as of
February 24, 2012 (23)
Steelcase Inc. Incentive Compensation Plan, as amended and restated as of February
27, 2010 (24)
Steelcase Inc. Incentive Compensation Plan Form of Performance Units Agreement (FY
2012) (25)
Steelcase Inc. Incentive Compensation Plan Form of Performance Units Agreement (FY
2013) (26)
Steelcase Inc. Incentive Compensation Plan Form of Performance Units Agreement
(TSR) (FY 2014) (27)
Steelcase Inc. Incentive Compensation Plan Form of Performance Units Agreement
(ROIC) (FY 2014) (28)
Steelcase Inc. Incentive Compensation Plan Form of Performance Units Agreement
(TSR) (FY 2015)
Steelcase Inc. Incentive Compensation Plan Form of Performance Units Agreement
(ROIC) (FY 2015)
Steelcase Inc. Incentive Compensation Plan Form of Restricted Stock Units Agreement
E-1
Exhibit
No.
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
10.36
21.1
23.1
31.1
31.2
32.1
101.INS
101.SCH
101.CAL
101.LAB
101.PRE
101.DEF
Description
Summary of Steelcase Benefit Plan for Outside Directors (29)
Summary of Compensation for the Board of Directors of Steelcase Inc., as updated
January 8, 2014
Aircraft Time-Sharing Agreement, dated December 15, 2005, between Steelcase Inc.
and James P. Hackett (30)
Aircraft Time-Sharing Agreement, dated December 15, 2005, between Steelcase Inc.
and James P. Hackett (31)
Amendment to Aircraft Time-Sharing Agreement, dated May 18, 2009, between
Steelcase Inc. and James P. Hackett (32)
Second Amendment to Aircraft Time-Sharing Agreement, dated November 9, 2011,
between Steelcase Inc. and James P. Hackett (33)
Agreement dated March 8, 2013 between Steelcase Inc. and Sara E. Armbruster (34)
Letter Agreement dated July 17, 2013 between Steelcase Inc. and James P. Hackett
(35)
Letter Agreement dated October 9, 2013 between Steelcase Inc. and James P. Keane
(36)
Subsidiaries of the Registrant
Consent of Deloitte & Touche LLP
Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
XBRL Instance Document
XBRL Schema Document
XBRL Calculation Linkbase Document
XBRL Labels Linkbase Document
XBRL Presentation Linkbase Document
XBRL Definition Linkbase Document
________________________
(1) Filed as Exhibit 3.1 to the Company’s Form 8-K, as filed with the Commission on July 15, 2011 (commission
file number 001-13873), and incorporated herein by reference.
(2) Filed as Exhibit No. 4.1 to the Company’s Form 8-K, as filed with the Commission on August 7, 2006
(commission file number 001-13873), and incorporated herein by reference.
(3) Filed as Exhibit No. 4.2 to the Company’s Form 8-K, as filed with the Commission on February 3, 2011
(commission file number 001-13873), and incorporated herein by reference.
(4) Filed as Exhibit No. 4.3 to the Company’s Form 8-K, as filed with the Commission on February 3, 2011
(commission file number 001-13873), and incorporated herein by reference.
(5) Filed as Exhibit No. 10.1 to the Company's Form 8-K, as filed with the Commission on March 22, 2012
(commission file number 001-13873), and incorporated herein by reference.
(6) Filed as Exhibit No. 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended
November 28, 2008, as filed with the Commission on January 7, 2009 (commission file number 001-13873),
and incorporated herein by reference.
(7) Filed as Exhibit No. 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended
November 28, 2008, as filed with the Commission on January 7, 2009 (commission file number 001-13873),
and incorporated herein by reference.
(8) Filed as Exhibit No. 10.4 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended
November 28, 2008, as filed with the Commission on January 7, 2009 (commission file number 001-13873),
and incorporated herein by reference.
E-2
(9) Filed as Exhibit No. 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended
August 24, 2012, as filed with the Commission on October 1, 2012 (commission file number 001-13873), and
incorporated herein by reference.
(10) Filed as Exhibit No. 10.1 to Amendment 2 to the Company's Registration Statement on Form S-1, as filed with
the Commission on January 20, 1998 (commission file number 333-41647), and incorporated herein by
reference.
(11) Filed as Exhibit No. 10.8 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended
August 29, 2008, as filed with the Commission on October 7, 2008 (commission file number 001-13873), and
incorporated herein by reference.
(12) Filed as Exhibit No. 10.8 to the Company’s Annual Report on Form 10-K for the fiscal year ended
February 27, 1998, as filed with the Commission on May 28, 1998 (commission file number 001-13873), and
incorporated herein by reference.
(13) Filed as Exhibit No. 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended
August 24, 2012, as filed with the Commission on October 1, 2012 (commission file number 001-13873), and
incorporated herein by reference.
(14) Filed as Exhibit No. 10.1 to the Company’s Form 8-K, as filed with the Commission on February 9, 2007
(commission file number 001-13873), and incorporated herein by reference.
(15) Filed as Exhibit No. 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended
August 29, 2008, as filed with the Commission on October 7, 2008 (commission file number 001-13873), and
incorporated herein by reference.
(16) Filed as Exhibit No. 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended
August 28, 2009, as filed with the Commission on October 5, 2009 (commission file number 001-13873), and
incorporated herein by reference.
(17) Filed as Exhibit No. 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended
November 27, 2009, as filed with the Commission on January 5, 2010 (commission file number 001-13873),
and incorporated herein by reference.
(18) Filed as Exhibit No. 10.19 to the Company’s Annual Report on Form 10-K for the fiscal year ended
February 28, 2003, as filed with the Commission on May 16, 2003 (commission file number 001-13873), and
incorporated herein by reference.
(19) Filed as Exhibit No. 10.33 to the Company’s Annual Report on Form 10-K for the fiscal year ended
February 25, 2005, as filed with the Commission on May 6, 2005 (commission file number 001-13873), and
incorporated herein by reference.
(20) Filed as Exhibit No. 10.01 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended
May 27, 2005, as filed with the Commission on July 1, 2005 (commission file number 001-13873), and
incorporated herein by reference.
(21) Filed as Exhibit No. 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended
August 29, 2008, as filed with the Commission on October 7, 2008 (commission file number 001-13873), and
incorporated herein by reference.
(22) Filed as Exhibit No. 10.18 to the Company’s Annual Report on Form 10-K for the fiscal year ended
February 24, 2012, as filed with the Commission on April 23, 2012 (commission file number 001-13873), and
incorporated herein by reference.
(23) Filed as Exhibit No. 10.1 to the Company’s Form 8-K, as filed with the Commission on July 16, 2012
(commission file number 001-13873), and incorporated herein by reference.
(24) Filed as Exhibit No. 10.1 to the Company's Form 8-K, as filed with the Commission on June 30, 2010
(commission file number 001-13873), and incorporated herein by reference.
(25) Filed as Exhibit No. 10.1 to the Company's Form 8-K, as filed with the Commission on April 15, 2011
(commission file number 001-13873), and incorporated herein by reference.
(26) Filed as Exhibit No. 10.1 to the Company's Form 8-K, as filed with the Commission on April 13, 2012
(commission file number 001-13873), and incorporated herein by reference.
(27) Filed as Exhibit No 10.25 to the Company's Form 10-K, as filed with the Commission on April 19, 2013
(commission file number 001-13873), and incorporated herein be reference.
E-3
(28) File as Exhibit No 10.26 to the Company's Form 10-K, as filed with the Commission on April 19, 2013
(commission file number 001-13873), and incorporated herein be reference.
(29) Filed as Exhibit No. 10.42 to the Company’s Annual Report on Form 10-K for the fiscal year ended
February 26, 2010, as filed with the Commission on April 26, 2010 (commission file number 001-13873), and
incorporated herein by reference.
(30) Filed as Exhibit No. 10.1 to the Company’s Form 8-K, as filed with the Commission on January 30, 2006
(commission file number 001-13873), and incorporated herein by reference.
(31) Filed as Exhibit No. 10.2 to the Company’s Form 8-K, as filed with the Commission on January 30, 2006
(commission file number 001-13873), and incorporated herein by reference.
(32) Filed as Exhibit No. 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended
May 29, 2009, as filed with the Commission on July 1, 2009 (commission file number 001-13873), and
incorporated herein by reference.
(33) Filed as Exhibit No. 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended
November 25, 2011, as filed with the Commission on January 4, 2012 (commission file number 001-13873),
and incorporated herein by reference.
(34) Filed as Exhibit No. 10.1 to the Company's Quarterly Report on the Form 10-Q for the quarterly period ended
May 24, 2013, as filed with the Commission on June 25, 2013 (commission file number 001-13873), and
incorporated herein by reference.
(35) Filed as Exhibit No. 10.1 to the Company's Form 8-K, as filed with the Commission on July 17, 2013
(commission file number 001-13873), and incorporated herein by reference.
(36) Filed as Exhibit No. 10.1 to the Company's Form 8-K, as filed with the Commission on October 10, 2013
(commission file number 001-13873), and incorporated herein by reference.
E-4
Directors and Executive Officers
DIRECTORS
Lawrence J. Blanford 1
Retired; formerly President
and Chief Executive Officer,
Green Mountain Coffee Roasters, Inc.
David W. Joos 1, 2
Chairman of the Board,
CMS Energy Corporation and
Consumers Energy Company
William P. Crawford
Retired; formerly President
and Chief Executive Officer,
Steelcase Design Partnership
Connie K. Duckworth 2, 4
Chairman and
Chief Executive Officer,
ARZU, Inc.
James P. Hackett 3
Vice Chair,
Steelcase Inc.
R. David Hoover 2, 3, 4
Retired; formerly President
and Chief Executive Officer,
Ball Corporation
EXECUTIVE OFFICERS
Guillaume M. Alvarez
Senior Vice President,
EMEA
Sara E. Armbruster
Vice President,
Strategy, Research and
New Business Innovation
Ulrich H. E. Gwinner
President, Asia Pacific
Nancy W. Hickey
Senior Vice President,
Chief Administrative Officer
James P. Keane
President and
Chief Executive Officer
James P. Keane
President and
Chief Executive Officer,
Steelcase Inc.
Elizabeth Valk Long 1, 3, 4
Retired; formerly
Executive Vice President,
Time Inc.
Robert C. Pew III 3
Chair of the Board of
Directors, Steelcase Inc.;
Private Investor
Cathy D. Ross 1, 3
Executive Vice President
and Chief Financial Officer,
Federal Express Corporation
Hamid Khorramian
Senior Vice President,
Global Operations
James N. Ludwig
Vice President, Global Design
and Product Engineering
Mark T. Mossing
Corporate Controller and
Chief Accounting Officer
Gale Moutrey
Vice President,
Communications
Lizbeth S. O’Shaughnessy
Senior Vice President,
Chief Legal Officer
and Secretary
Peter M. Wege II 1, 4
Chairman of the
Board of Directors,
Contract Pharmaceuticals
Limited
P. Craig Welch, Jr. 2, 4
Member Manager,
Honzo Fund, LLC
Kate Pew Wolters 2
Philanthropist;
President, Kate and
Richard Wolters Foundation
Eddy F. Schmitt
Senior Vice President, Americas
Allan W. Smith, Jr.
Vice President,
Global Marketing
David C. Sylvester
Senior Vice President,
Chief Financial Officer
1 = Audit Committee
2 = Compensation Committee
3 = Executive Committee
4 = Nominating and Corporate Governance Committee
2013SC_AR_text_pages_2014May15.indd 6
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Corporate Information
Global Headquarters
Steelcase Inc.
901 44th Street
Grand Rapids, MI 49508
Phone: (616) 247-2710
Products and Services
For the address and telephone
number of your nearest
Steelcase dealer or for information
about our products, please
call (800) 333-9939 or visit our
website at www.steelcase.com.
Common Stock Data
Steelcase Inc. Class A Common
Stock is listed on the New York
Stock Exchange under the
symbol SCS. The Class B
Common Stock is not publicly
traded but is convertible into
Class A Common Stock on a
one-for-one basis.
Shareholder Account Inquiries
Registered shareholders can
access their account online. Log
on to www.shareowneronline.com
to view share balance, change
address, complete certain
transactions and get answers to
other stock-related inquiries.
You can also write or call the
Steelcase transfer agent at:
Wells Fargo Bank, N.A.
Shareowner Services
P.O. Box 64874
St. Paul, MN 55164-0874
Phone: (866) 457-8829
Outside the continental
U.S. and Canada:
(651) 450-4064
Independent Auditors
Deloitte & Touche LLP
38 Commerce, SW
Suite 600
Grand Rapids, MI 49503
Phone: (616) 336-7900
Shareholder Reports and
Investor Inquiries
You can request copies of financial
documents, such as this annual
report and Form 10-K, free of
charge, by contacting:
Steelcase Inc.
Investor Relations
GH-3E-12
P.O. Box 1967
Grand Rapids, MI 49501-1967
Phone: (616) 247-2200
Fax: (616) 247-2627
Email: ir@steelcase.com
Investor Relations on the Web
If you wish to review investor
information as soon as it becomes
available, please visit ir.steelcase.com.
You can subscribe to email alerts
and receive notification whenever
events, SEC filings or news releases
are posted to the website. You may
also submit requests for printed
financial materials.
Corporate Responsibility Report
This report details our efforts to
protect the environment and
be good corporate citizens.
You can read the report online at
www.steelcase.com/responsibility.
Annual Meeting
The annual meeting of Steelcase
shareholders will be held on
Wednesday, July 16, 2014, at
11 a.m. EDT via a live webcast at
www.virtualshareholdermeeting.com/
scs2014.
Contact the Steelcase
Board of Directors
To report issues about Steelcase
accounting, internal controls and
procedures, auditing matters or other
concerns to the Board of Directors or
Audit Committee, write to:
Steelcase Board of Directors
Chair of the Board/
Lead Non-Management Director
c/o Steelcase Inc.
P.O. Box 1967
Grand Rapids, MI 49501-1967
Phone (800) 437-6167
(in the U.S., Canada or Mexico)
Collect (704) 943-1134
(from outside the United States)
Certifications
Steelcase has included as Exhibits
31.1 and 31.2 to its Annual Report on
Form 10-K for fiscal year 2014 filed
with the Securities and Exchange
Commission all required certifications
of the Steelcase Chief Executive
Officer and Chief Financial Officer
regarding the quality of the company’s
public disclosures in its fiscal
2014 reports in accordance with
Section 302 of the Sarbanes-Oxley
Act of 2002. In July 2013, the
Steelcase Chief Executive Officer
provided to the New York Stock
Exchange (NYSE), the annual CEO
certification regarding Steelcase
compliance with the NYSE’s corporate
governance listing standards.
Forward-looking Statements
Certain statements in this document
are “forward-looking statements”
within the meaning of the Private
Securities Litigation Reform Act.
These statements are based
on management’s current
expectations and are subject to
uncertainty and changes in
circumstances. Actual results may
differ materially from those included
in these statements due to a variety
of factors. For more information
about forward-looking statements
and the factors that may cause
actual results to vary, please see the
Forward-looking Statements section
in our Annual Report on Form 10-K,
which is included herein.
2013SC_AR_text_pages_2014May15.indd 7
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steelcase.com
© 2014 Steelcase Inc. All rights reserved.
This report was printed in the U.S.A. on recycled paper. Trademarks used herein are property of Steelcase Inc. or their respective owners.
2014SC_AR_cover_2014May14.indd 2
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