FinanceLooker

Excrept from filing document 2024-02-23

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 25 2023 the last business day of the registrant s most recently completed second fiscal quarter was approximately 728 4 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
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 a Michigan corporation 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 the calendar year unless indicated by a month or specific date reference 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
At Steelcase our purpose is to help people do their best work by creating places that work better Through our family of brands that includes Steelcase AMQ Coalesse Designtex HALCON Orangebox Smith System and Viccarbe we offer a comprehensive portfolio of furniture and architectural products and services designed to help customers create workplaces that help people reach their full potential at work wherever work happens Our solutions are inspired by the insights gained from our human centered research process We are a global company headquartered in Grand Rapids Michigan U S A with approximately 11 300 employees Steelcase was founded in 1912 and became publicly traded in 1998 and our Class A Common Stock is listed on the New York Stock Exchange under the symbol SCS
We focus on translating our research based insights into products applications and experiences that help organizations around the world amplify the performance of their people teams and enterprises We help our customers create office healthcare and educational environments that support attraction and retention of talent employee well being and engagement organizational culture and productivity and other needs of their people while also optimizing the value of their real estate investments Our global scale and reach allow us to provide a consistent experience to global customers while offering local differentiation through our local dealer network and tailored solutions
We market our products and services to businesses and organizations primarily through a network of dealers and we also sell to consumers in markets around the world through web based and retail distribution channels
Our strategic priorities align with our purpose and reflect a set of choices which we believe will position us for growth We are focused on leading the transformation of work where employees shift between working in the office and working remotely over the course of a week We aim to do this by offering innovative solutions to our customers that support the growing needs for privacy social connection and collaboration in this new era of work We also aim to diversify the customers and markets we serve by deepening our presence in areas such as learning health home and small and mid sized customers We are focused on creating value by using our product designs and insights to help organizations work better through market leading performance in our approach to people and the planet Our strategic priorities also include profitability initiatives to drive fitness reduce complexity and maximize efficiency reallocating resources toward our highest priorities and maintaining a strong balance sheet to support our growth objectives
Our brands provide a comprehensive portfolio of furniture and architectural products for individual and collaborative work across a range of price points Our furniture portfolio includes furniture systems seating storage fixed and height adjustable desks benches and tables and complementary products such as work accessories lighting mobile power and screens Our seating products include task chairs which are highly ergonomic seating that can be used in collaborative environments and casual settings and specialty seating for specific vertical markets such as education and healthcare Our interior architectural products include full and partial height walls and free standing architectural pods We also offer services designed to enhance the performance of people space and real estate These services include workplace strategy consulting lease origination services and furniture and asset management
Steelcase leverages insights from user centered research to help our customers create high performing and sustainable work environments We strive to be a trusted partner by creating exceptional experiences for those who seek to use space as a strategic asset to elevate their performance reinforce their organizational culture support the well being of their people and attract and retain talent The Steelcase brand
s core customers are leading organizations such as corporations government entities schools colleges and universities and healthcare organizations that are forward thinking that are often large with ever changing complex needs and that often have a global scale and operations
AMQ offers high quality affordable products for collaborative environments training rooms private offices and work stations including height adjustable desking and benching seating screens and storage AMQ specializes in a 30 day design to installation customer experience with adaptable and modern designs that fit contemporary active office spaces ideal for small and mid sized businesses
Led by intuition backed by research and driven by design Coalesse creates thoughtful furnishings that bring new life to the modern workplace and ancillary settings The brand blends beauty and utility into its designs to help customers make great spaces that inspire great work by empowering social connection creative collaboration focus and rejuvenation
Designtex offers applied materials that enhance environments and is a leading resource for applied surfaces knowledge innovation and sustainability Designtex products include premium fabrics and surface materials and imaging solutions designed to enhance seating walls workstations and floors These materials provide privacy wayfinding motivation communications and artistic expression
HALCON is a designer and manufacturer of precision tailored wood furniture for the workplace HALCON specializes in custom wood and executive level tables credenzas and desks This furniture is of enduring quality backed by a genuine dedication to service and customization
Orangebox is a designer and manufacturer of furniture soft seating and free standing architectural pods for the changing workplace with a focus on Smartworking solutions furniture and architecture that fosters collaboration while providing contemporary aesthetics visual and acoustical privacy and commercial grade performance
Smith System is a leading designer and manufacturer of high quality furniture for the pre K 12 education market Smith System offers desking seating lounge and storage products Smith System designs and manufactures products that support inspired learning and better learning outcomes addressing the needs of the student the demands of the curriculum and the realities of space maintenance and budget
Viccarbe offers contemporary furniture for high performance collaborative and social spaces including contract hospitality retail and outdoor settings Viccarbe s collection is the result of years of collaboration with globally renowned designers
We maintain marketing partnerships with a number of companies including Blu Dot Bolia Carl Hansen Son Crestron EMU Established Sons Extremis FLOS the Frank Lloyd Wright Foundation Goodee Kartell Kwickscreen Logitech m a d Mattiazzi Microsoft Moduform Moooi Nanimarquina PolyVision Snowsound Tom Dixon VergeSense West Elm and Zoom These partnerships are intended to allow us to market additional products and services to our dealers and customers that are complementary to our products and services and leverage our scale These partnerships take several forms the most common of which involves us purchasing and reselling the partner s products to our dealers and customers In other situations we market the partner s products to our dealers and customers and receive a fee from the partner and we may also transport and deliver those products to our dealers and customers for a fee We also have marketing partnerships where we co develop products with our partner that we manufacture or source from third parties or where we and our partner agree to co market our products and services to customers Most of our marketing partnerships are on a regional basis
We operate on a global basis within our Americas and International reportable segments In Q1 2024 we realigned our reportable segments for financial reporting purposes as a result of changes in how we monitor business performance and allocate resources to support our top strategic priorities Additional information about our reportable segments including financial information about geographic areas and specific product categories is contained in Item 7
Our Americas segment serves customers in the United States U S Canada the Caribbean Islands and Latin America with a comprehensive portfolio of furniture architectural textile and surface imaging products that are marketed to corporate government healthcare education and retail customers primarily through the Steelcase AMQ Coalesse Designtex HALCON Orangebox Smith System and Viccarbe brands
We serve Americas customers mainly through approximately 380 Steelcase independent and company owned dealer locations and other non aligned dealers and we also sell directly to end use customers Our end use customers tend to be larger multinational regional or local companies and are distributed across a broad range of industries including education financial services flexible real estate government healthcare information technology insurance manufacturing and retail In the Americas segment no industry individually represented more than 17 of the segment s revenue in 2024
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 Steelcase dealer in the Americas accounted for approximately 6 of the segment s revenue in 2024 and the five largest independent Steelcase dealers collectively accounted for approximately 16 of the segment s revenue in 2024
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 service and relationships with customers architects and designers Our most significant competitors in the U S are MillerKnoll Inc Haworth Inc and HNI Corporation
Our International segment serves customers in Europe the Middle East and Africa EMEA and Australia China India Japan Korea and other countries in Southeast Asia Asia Pacific with a comprehensive portfolio of furniture and architectural products that are marketed to corporate government education and retail customers primarily through the Steelcase Coalesse Orangebox Smith System and Viccarbe brands
We serve International customers mainly through approximately 390 independent and company owned Steelcase dealer locations and other non aligned dealers and we also sell directly to end use customers The largest independent Steelcase dealer in the International segment accounted for approximately 3 of the segment s revenue in 2024 The five largest Steelcase independent dealers collectively accounted for approximately 10 of the segment s revenue in 2024 Our end use customers tend to be larger multinational regional or local companies spread across a broad range of industries and vertical markets including education financial services flexible real estate government healthcare and information technology
The office furniture markets in EMEA and Asia Pacific are highly competitive and fragmented We compete with many local and regional manufacturers in many different markets In several cases these local competitors focus on specific product categories
We occasionally enter into joint ventures and other equity investments to expand or maintain our geographic presence support our distribution network or invest in new business ventures complementary products or services As of February 23 2024 our investments in these unconsolidated joint ventures and other equity investments totaled
Our largest customer accounted for approximately 2 of our consolidated revenue in 2024 and our five largest customers collectively accounted for approximately 6 of our consolidated revenue However these percentages do not include revenue from various U S federal government agencies In 2024 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 Steelcase dealer accounted for more than 4 of our consolidated revenue in 2024 The five largest independent Steelcase dealers collectively accounted for approximately 12 of our consolidated revenue in 2024 We do not believe our business is dependent on any single independent dealer the loss of which would have a sustained material adverse effect on our business
We have manufacturing and distribution operations throughout North America in the U S and Mexico Europe in the Czech Republic France Germany Spain and the U K and in Asia in China India and Malaysia Our global manufacturing and distribution operations are largely centralized under a single organization to serve our customers needs across multiple brands and geographies
Our manufacturing model is predominately make to order with standard lead times that typically range from four to six weeks During 2022 and 2023 our manufacturing operations and lead times were negatively impacted by supply chain disruptions and we increased our levels of inventory on hand to mitigate challenges associated with purchasing raw materials and components in a timely manner During 2024 supplier lead times shortened which enabled us to reduce our levels of inventory We manufacture our products using lean manufacturing principles including continuous one piece flow and platformed processes and products which allow us to achieve efficiencies and cost savings and minimize the amount of inventory on hand We largely purchase direct materials and components from a global network of integrated suppliers as needed to meet demand We also purchase finished goods manufactured by third parties predominately on a make to order basis
We focus on enhancing the efficiency of our manufacturing operations and we also seek to reduce costs through our global sourcing effort We leverage our global presence and footprint to capture raw material and component cost savings available through lower cost suppliers around the globe We focus on our reliability and business continuity which may at times require localizing supply chains and enhancing capabilities to deliver complete and on time orders to our customers We also incorporate innovation sustainability and other environmental social and governance factors when making supplier selection decisions
Our physical distribution system utilizes commercial transport dedicated fleet and company owned delivery services We utilize a network of regional distribution centers in the Americas and EMEA to minimize freight and delivery costs and improve service to our dealers and customers
Approximately 58 of our cost of sales in 2024 related to raw materials components and finished goods purchased from a significant number of suppliers around the world The raw materials that we purchase and that are used in the manufacture of the components and finished goods that we purchase include steel petroleum based products including plastics and foam aluminum other metals wood and particleboard Our global supply chain team continually evaluates current market conditions the financial viability of our suppliers and available supply options on the basis of quality reliability of supply and cost
Our extensive global research a combination of user observations feedback sessions and sophisticated analyses 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 which vary from furniture and architectural solutions to single products or enhancements to existing products and across different vertical market applications such as healthcare and education Organizationally global design leadership directs project work which is distributed to design studios around the world and sometimes 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 local standards and regulations
We incurred 48 2 44 4 and 45 4 in research design and development expenses in 2024 2023 and 2022 respectively In addition we sometimes pay royalties to external designers of our products as the products are sold and these costs are not included in research and development expenses
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 AMQ Coalesse Designtex HALCON Orangebox and Smith System 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 none of which are considered material to our business
We aspire to be a people centered purpose driven company where our employees feel they belong and can be proud of their work At Steelcase we believe that together we will help protect the planet through our environmental commitments help our people thrive and sustain a culture of trust and integrity to drive towards ethical business outcomes The following core values guide our commitments and actions
We believe our employees are our greatest asset and we are dedicated to the continuous learning and professional development of every employee We invest in our employees through multiple avenues including providing competitive pay and benefits sharing profits through our annual bonus programs offering career development and professional training programs providing inspiring and supportive spaces for our employees to work and collaborate and offering a range of services to support our employees physical emotional cognitive and financial well being
Our leaders play a critical role in curating our culture and we have established a set of leadership pillars and accompanying learning and development activities designed to promote empathic leadership and align leader actions with our core values and the culture we strive to create These pillars are
We strive to create an environment where employees around the globe are valued respected accepted and encouraged to be authentic and to fully participate in our organization We believe our culture helps to unlock each employee s unique contributions and amplifies the power of the individual to better serve our customers and the communities in which we live and work We are committed to advancing diversity equity and inclusion through the following key objectives
Learning is how we work and how we lead We aspire to be a learning organization that builds capabilities for the evolving needs of our business and adapts our culture as a competitive advantage Developing our talent in consistent ways is essential to our business strategy and we are continually focused on providing all our employees with the resources they need to reach their full potential We approach talent development through a variety of tools practices and experiences including
This philosophy is achieved through competitive pay and benefits and a variety of other offerings such as career development and well being initiatives We review pay ranges annually and adjust pay as needed to ensure external competitiveness and internal equity We also share profits with both salaried and hourly employees through our annual bonus programs We believe our philosophy helps promote a culture where our employees feel they are supported and that their contributions are valued
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 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 the loss of other potentially responsible parties that are financially capable of contributing toward cleanup costs and other factors increasing the cost of remediation
We file annual reports quarterly reports current reports proxy statements and other documents with the U S Securities and Exchange Commission SEC under the Securities Exchange Act of 1934 as amended the Exchange Act The SEC maintains an Internet website at
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
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 Corporate Business Development 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 U S A 49501 1967
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 not material 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
Advances in technology changing workforce demographics remote work shifts in work styles and behaviors and the globalization of business have been changing the world of work and impacting the types and amounts of workplace products and services purchased by our customers In recent years these trends have resulted in changes such as
These trends have also had an impact on our competitive landscape including 1 the emergence of smaller office furniture competitors 2 increased competition from residential furniture and technology companies 3 diversification by competitors into other industries 4 consolidation in our industry and 5 an increase in customers outsourcing workplace management to real estate management service firms and flexible real estate providers
We compete on a variety of factors including brand recognition and reputation insights from our research the breadth of our global reach and product portfolio product design and features price lead time delivery and service product quality strength of our dealer network and other distributors relationships with customers and key influencers such as architects designers and real estate managers and our commitments to sustainable product design and reducing our environmental impact If we are unsuccessful in continuing to develop and offer a wide variety of solutions which respond to changes in workplace trends or if we or our dealers are unsuccessful in competing with existing competitors and new competitive offerings which arise from outside our industry our results of operations may be adversely affected
Our revenue is generated predominantly from the office furniture industry and demand for office furniture is influenced by macroeconomic factors such as corporate profits non residential fixed investment white collar employment and commercial office construction and vacancy rates which can be difficult to predict The office furniture industry has experienced periodic major declines in demand driven by economic downturns in the Americas EMEA and Asia Pacific During these downturns our revenue declined substantially and our profitability was significantly reduced Our revenues and profitability can be and currently are being impacted by adverse changes in these macroeconomic factors Adaptations of our business to changing macroeconomic factors can result in material restructuring costs and if we are unsuccessful in making such adaptations our operating results may be adversely affected
developing offerings to support hybrid work including enhanced applications to support individual privacy and focused work and partnering with technology companies to create integrated collaborative solutions
growing our market share with existing dealers and large corporate customers in addition to serving smaller and mid sized customers and growing our market share in learning and healthcare environments and
We and our suppliers purchase raw materials including steel plastics foam 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 freight energy labor and other input costs can fluctuate due to changes in global regional or local supply and demand larger currency movements and changes in tariffs and trade barriers which can also cause supply interruptions
In the short term significant increases in raw material commodity and other input 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 in the short term by significant increases in these costs If we are not successful in passing along higher raw material commodity and other input costs to our customers over the longer term because of competitive pressures our profitability could be negatively impacted
damage or loss of production from accidents natural disasters severe weather events pandemics security concerns including terrorist activity armed conflict and civil or military unrest trade embargoes changes in tariffs systems and equipment failures or disruptions cyberattacks or security breaches and other causes
Any disruptions or fluctuations in the supply and delivery of raw materials components 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
We manufacture most of our products on a regional basis and as a result we often export products from where they are manufactured to where they are sold within the region We also source raw materials components and finished goods from a global network of suppliers In particular in 2024 approximately 34 of the products we sold to customers in the U S including U S government agencies were manufactured outside of the U S predominantly by our subsidiaries in Mexico which operate as maquiladoras Changes in tariffs or trade agreements could impact the cost of importing our products into the countries where they are sold and the cost of raw materials and components sourced from other countries which in turn could adversely impact our gross margins and our price competitiveness In addition changes in U S government procurement rules requiring a certain amount of domestic content in finished goods or requiring finished goods to be produced in the U S could have an adverse impact on our business operating results or financial condition
Most of our products are currently produced in only one location in each of the three geographic regions in which we operate the Americas EMEA and Asia Pacific certain components are manufactured in only one location globally and our manufacturing model is predominately make to order As a result any issue which impacts the production capabilities of one of our manufacturing locations such as natural disasters severe weather events pandemics disruptions in the supply of materials or components systems and equipment failures or disruptions caused by labor activities could have an adverse impact on our business operating results or financial condition
We rely largely on a network of independent dealers to market deliver and install our products and disruptions and increasing consolidations within our dealer network could adversely affect our business
Our business is dependent on our ability to manage our relationships with our independent dealers 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 and establishing a new dealer 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 Alternatively we may elect to purchase and operate dealers in certain markets which would also require use of our capital and increase our financial exposure
We rely on our dealers to sell deliver and install products to our customers and their ability to perform and their financial conditions could be affected by events such as natural disasters severe weather events pandemics systems and equipment failures or disruptions cyberattacks or security breaches A significant disruption in the operations of our dealers could have an adverse impact on our business operating results or financial condition
In certain cases our diversification and growth strategies into adjacent markets are driving the need for our dealers to invest in additional resources to support our products and markets Some of our smaller dealers do not have the scale to support such investments and as a result we have seen and may continue to see increased consolidation within our dealer network This increased concentration and size of dealers could increase our exposure to the risks discussed above
We have manufacturing facilities sales locations and 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 business operating results or financial condition including
We primarily sell our products in U S dollars and euros but we generate some of our revenues and pay some of our expenses in other currencies Revenue recorded in currencies other than the U S dollar and the euro represented approximately 11 of our consolidated revenue in 2024 While we seek to manage our foreign exchange risk largely through operational means by matching revenue with same currency costs 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 use foreign currency derivatives to hedge some of the near term volatility of these exposures
We operate globally in multiple currencies but we translate our results into U S dollars for reporting purposes and thus our reported results may be positively or negatively impacted by the strengthening or weakening of the other currencies in which we operate against the U S dollar
In addition we face restrictions in certain countries that limit or prevent the transfer of funds to other countries or the exchange of the local currency to other currencies which could have a negative impact on our profitability We also face risks associated with fluctuations in currency exchange rates that may lead to a decline in the value of the funds held in certain jurisdictions as well as the value of intercompany balances denominated in foreign currencies
We have net goodwill of 274 8 as of February 23 2024 Goodwill is not amortized but is evaluated for impairment annually in Q4 or 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 including failure to achieve projected performance from acquisitions or declines in the market value of our equity may result in impairment charges which would adversely affect our results of operations
We have deferred tax assets related to net operating loss NOL and tax credit carryforwards totaling 33 4 and 12 7 respectively against which valuation allowances totaling 4 3 have been recorded NOL carryforwards are primarily related to foreign jurisdictions Tax credit carryforwards consist of U S foreign tax credits and foreign investment tax credits We may be unable to generate sufficient taxable income from future operations in the jurisdictions in which we maintain deferred tax assets related to NOL and tax credit carryforwards or implement tax business or other planning strategies to fully utilize the recorded value of our NOL and tax credit carryforwards These deferred tax assets are recorded 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 NOL and tax credit carryforwards
We are subject to income taxes in the U S and various foreign jurisdictions Our future effective tax rate could be affected by changes in the mix of our earnings in countries with differing statutory tax rates changes in the valuation of our deferred tax assets and liabilities or changes in tax laws or their interpretation In addition such tax law changes if enacted could have a material adverse effect on our business operating results or financial condition A reduction in applicable tax rates may require us to revalue and write down our net deferred tax assets As of February 23 2024 we had net deferred tax assets of 108 6 and approximately 68 of our net deferred tax assets were subject to recovery in the U S
We are reliant on a global ERP system to support processes critical to our manufacturing operations financial reporting and executive decision making In Q3 2024 we entered the application development phase of a multi year phased implementation of a new cloud based ERP system which is expected to replace our current ERP system and various other supporting systems for operating and financial processes We expect to deploy the new ERP system beginning in 2026
ERP system implementations are complex and require a significant amount of time and expenditure Significant investment of internal and external resources has been and will continue to be required for successful
implementation Unforeseen complexity or delay in implementation could result in significant cost overruns and additional time investment from resources that could otherwise focus on other strategic priorities which in turn could have an adverse effect on our business operating results or financial condition
The implementation of our new ERP system will also require reengineering of many of our operating and financial processes The transformation of these processes involves risks inherent in a large scale conversion including loss of information significant change management potential disruption to our normal operations and other unforeseen challenges If the new ERP system does not operate as intended or work in concert with reengineered processes we could experience a material adverse effect on our business financial reporting or internal control
We rely on the integrity and security of our information technology systems and our business could be materially adversely impacted by extended disruptions significant security breaches or other compromises of these systems
We rely on information technology systems including cloud based systems operated by third parties to run and manage our business and to process maintain and safeguard information essential to our business as well as information relating to our customers dealers suppliers and employees These systems are vulnerable to events beyond our reasonable control including cyberattacks and security breaches the need for system upgrades and support telecommunication and internet failures natural disasters and power loss Such events could result in operational slowdowns shutdowns or other difficulties loss of revenues or market share compromise or loss of sensitive or proprietary information destruction or corruption of data costs of remediation upgrades repair or recovery breaches of obligations to third parties under privacy laws or contracts or damage to our reputation or customer relationships each of which depending on the extent or duration of the event could materially adversely impact our business operating results or financial condition In the case of systems operated by third parties we rely on the security programs maintained by those parties We maintain insurance coverage which may cover some of these risks subject to the terms and conditions of the applicable policies but such coverage may not be available or sufficient to cover all of the losses that may arise
We sell enterprise resource planning software and software as a service offerings to our dealers In connection with some of these offerings we collect and store data belonging to our dealers and we rely on third parties such as cloud hosting providers and other service providers to perform some of our obligations If the security measures we and our third party vendors use are breached if there are errors in our software or if there are any service interruptions caused by other events our offerings may not operate properly dealer data could be lost or compromised and our dealers businesses may be disrupted In such events we may incur legal liabilities lost business or harm to our brand reputation which could have a material negative impact on our business operating results or financial condition
Product defects can occur within our own product development and manufacturing processes or through our reliance on third parties for product development and manufacturing activities We incur various expenses related to product defects including product warranty costs product recall and retrofit costs and product liability costs which can have an adverse impact on our results of operations In addition the reputation of our brands may be diminished by product defects and recalls
We maintain a reserve for our product warranty costs based on certain estimates and our knowledge of current events and actions While we continue to make significant investments to improve product quality our actual warranty costs may exceed our reserve resulting in a need to increase our accruals for warranty charges We purchase insurance coverage to reduce our exposure to significant levels of product liability claims and maintain a reserve for our self insured losses based upon estimates of the aggregate liability using claims experience and actuarial assumptions Incorrect estimates or any significant increase in the rate of our product defect expenses could have a material adverse effect on our results of operations
We use a combination of people processes and technologies to monitor and mitigate cybersecurity threats which include end point monitoring vulnerability assessments and penetration testing We leverage a variety of cybersecurity services tools and techniques designed to identify and assess cybersecurity threats and take preemptive action to reduce and where possible eliminate the potential impacts
Our cybersecurity processes are based on the cybersecurity standards set by the Center for Internet Security and the National Institute of Standards and Technology NIST We regularly engage outside assessors and consultants to identify potential cybersecurity risks and suggest best practices
We maintain a Cybersecurity Incident Response Plan based on NIST s incident handling framework to guide our response to cybersecurity threats The plan includes procedures to triage assess severity and remediate events in our information technology infrastructure Annually we engage third party experts to conduct penetration testing inside our network
For data and information that is maintained for us outside our network we conduct security and privacy assessments of vendors who hold sensitive data and manage critical platforms We maintain written agreements that govern third party access to our network and protection of our information and we conduct annual reviews of appropriate access We require our suppliers to agree to our Supplier Code of Conduct which includes cybersecurity requirements We include the assessment of cybersecurity risk as part of our overall enterprise risk management strategy
We rely on the integrity and security of our information technology systems and our business could be adversely impacted by extended disruptions significant security breaches or other compromises of these systems
for further information on the risks we face from cybersecurity threats We believe that to date such risks have not materially affected and are not believed to be reasonably likely to materially affect us our business strategy results of operations or financial condition
The Audit Committee of our Board of Directors is responsible for the oversight of our cybersecurity risk management At least twice per year our Chief Technology Officer CTO and Chief Information Security Officer CISO provide a cybersecurity update to our Audit Committee which includes the results of penetration testing cybersecurity simulations and training as well as key initiatives and the progress against those initiatives updates on the changes in trends of cybersecurity threats and the steps management is taking to address cybersecurity risks
Our CTO and CISO manage our cybersecurity strategy Our CTO has over 13 years of experience in information security and risk management and reports directly to our President and Chief Executive Officer Our CISO has over 10 years of experience in information security and risk management including at a federal law enforcement agency and has a Master of Science degree in Cybersecurity
Our CTO and CISO lead our Cybersecurity Incident Response Plan management of cybersecurity incidents with a cross functional team to assess the potential materiality of cybersecurity events and to report on the detection analysis containment and eradication of and recovery from such events As the severity of events meet certain criteria as specified by the Incident Response Plan those events are escalated to senior levels of management and reported to our Disclosure Committee and the Audit Committee Our Disclosure Committee is responsible for the oversight of controls and procedures related to the public disclosure of material cybersecurity incidents
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 sufficient to meet our 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
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
has been President and Chief Executive Officer since October 2021 Ms Armbruster was Executive Vice President from April 2021 to October 2021 and Vice President Strategy Research and Digital Transformation from February 2018 to April 2021 Ms Armbruster has been employed by Steelcase since 2007
has been Vice President Chief People Officer since February 2024 Ms Flynn was Vice President Global Talent Management from March 2020 to February 2024 and Vice President WorkSpace Futures Research from June 2015 to March 2020 Ms Flynn has been employed by Steelcase since 2011
has been Vice President Corporate Controller Chief Accounting Officer since January 2023 Ms McGrath was Vice President Finance from January 2022 to January 2023 and Vice President Finance EMEA and Asia Pacific from June 2018 to January 2022 Ms McGrath has been employed by Steelcase since 2011
has been Vice President Chief Technology Officer since October 2021 Mr Miller was Vice President Chief Information Officer from February 2018 to October 2021 and has been employed by Steelcase since 1999
has been Senior Vice President President Americas and Chief Product Officer since February 2024 Mr Smith was Senior Vice President Chief Revenue Officer from October 2021 to February 2024 and Vice President Global Marketing from September 2013 to October 2021 Mr Smith has been employed by Steelcase since 1991
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 and there is no established public trading market See Note 15 to the consolidated financial statements for additional information As of the close of business on April 9 2024 we had outstanding 114 728 958 shares of common stock with 4 628 shareholders of record Of these amounts 94 458 144 shares are Class A Common Stock with 4 565 shareholders of record and 20 270 814 shares are Class B Common Stock with 63 shareholders of record
The following graph shows the yearly percentage change in cumulative shareholder return assuming a 100 00 investment on February 22 2019 The S P 500 Stock Index is used as a performance indicator of the overall stock market The Peer Group consists of two companies that manufacture office furniture and have industry characteristics that we believe are similar to Steelcase The peer group consists of HNI Corporation and MillerKnoll Inc Prior to their merger on July 19 2021 the peer group included both Herman Miller Inc and Knoll Inc and prior to HNI Corporation s acquisition of Kimball International Inc on June 1 2023 the peer group included both HNI Corporation and Kimball International Inc The returns of each company in this group are weighted by their relative market capitalization at the beginning of each fiscal year
In January 2016 the Board of Directors approved a share repurchase program announced on January 19 2016 permitting the repurchase of up to 150 of shares of our common stock In October 2023 the Board of Directors approved a share repurchase program announced on October 30 2023 permitting the repurchase of up to 100 of shares of our common stock
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
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 The non GAAP financial measures used are 1 organic revenue growth decline 2 adjusted operating income loss and 3 adjusted earnings per share Pursuant to the requirements of Regulation G we have provided a reconciliation of each of the non GAAP financial measures to the most directly comparable GAAP financial measures in the tables below These measures are supplemental to and should be used in conjunction with the most comparable GAAP financial measures Management uses these non GAAP financial measures to monitor and evaluate financial results and trends See
The current year results of operations are presented in comparison to the prior year within the sections below For a discussion of the 2023 results of operations in comparison to 2022 see Management s Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Annual Report on Form 10 K which was updated by Exhibit 99 1 to our Current Report on Form 8 K filed on September 22 2023 to conform with our reportable segments reflected herein
In 2024 our earnings improved compared to 2023 despite a decline in revenue primarily driven by continued benefits from the pricing actions we implemented over the previous two years in response to significant inflationary pressures Many of the supply chain disruptions we experienced in 2023 abated and we made additional operational improvements Volume declined year over year as industry demand remained soft In response to the softening demand in certain markets in our International segment we implemented restructuring actions in EMEA and Asia Pacific
We achieved modest order growth adjusted for the impact of divestitures and currency translation effects in the Americas in 2024 compared to 2023 offset by order declines in International Year over year order growth in the Americas improved over the course of the year with growth of 12 in the second half of the year compared to a decline of 7 in the first half of the year Order fulfillment patterns continued to shorten in 2024 and order backlog of approximately 625 at the end of 2024 was 8 lower than at the end of 2023
Our liquidity increased 237 8 during 2024 driven by our improved earnings and a reduction in working capital as we decreased inventory levels as supply chain disruptions abated and we also generated 49 4 of proceeds from the sale of fixed assets During 2024 we invested in our business transformation initiative as we entered the application development phase for our new ERP system We expect to have significant additional investments and expenditures for this initiative in 2025 and expect to deploy the new ERP system beginning in 2026
We recorded net income of 81 1 and diluted earnings per share of 0 68 in 2024 compared to net income of 35 3 and diluted earnings per share of 0 30 in 2023 Operating income of 117 8 in 2024 represented an improvement of 52 3 compared to operating income of 65 5 in the prior year The improvement was driven by higher pricing benefits partially offset by the impacts of lower volume and higher operating expenses We reported adjusted operating income of 157 5 and adjusted earnings per share of 0 93 in 2024 compared to adjusted operating income of 107 5 and adjusted earnings per share of 0 56 in the prior year
Revenue of 3 159 6 in 2024 represented a decline of 73 0 or 2 compared to the prior year Revenue declined by approximately 9 due to lower volume net of the impact of an acquisition and divestitures which was partially offset by approximately 6 revenue growth from higher pricing benefits and 14 1 of favorable currency translation effects Revenue decreased by 1 in the Americas and 7 in International On an organic basis revenue in 2024 represented a decline of 2 compared to the prior year with revenue approximately flat in the Americas and an 8 decline in International
Cost of sales as a percentage of revenue improved by 360 basis points in 2024 compared to the prior year The improvement was driven by the higher pricing benefits partially offset by the impacts of lower volume unfavorable business mix and 15 3 of higher variable compensation expense We also realized approximately 24 of savings from operational improvements which were mostly offset by higher employee costs Cost of sales as a percentage of revenue improved by 380 basis points in the Americas and by 300 basis points in International
Operating expenses included 4 8 of gains related to the sale of land and other fixed assets and 6 1 of gains primarily related to the sale of aircraft and other aviation assets in 2024 compared to 12 9 of gains on sales of fixed assets primarily land in 2023 In addition operating expenses in 2024 reflected a 9 5 benefit from a decrease in the valuation of a contingent earnout liability compared to 5 2 of expense from an increase in the valuation of a contingent earnout liability in 2023 See Note 7 to the consolidated financial statements for additional information
Investment income increased by 5 5 in 2024 compared to 2023 due to a higher level of cash and cash equivalents and improved investment returns Miscellaneous income expense net included a 1 7 impairment on a cost method investment in 2024 and included a 2 2 gain on the sale of an investment in an unconsolidated affiliate in 2023
The Americas segment serves customers in the U S Canada the Caribbean Islands and Latin America with a comprehensive portfolio of furniture architectural textile and surface imaging products that are marketed to corporate government healthcare education and retail customers primarily through the Steelcase AMQ Coalesse Designtex HALCON Orangebox Smith System and Viccarbe brands
Operating income in the Americas increased by 66 4 in 2024 compared to the prior year The increase was driven by higher pricing benefits and lower restructuring costs partially offset by the impacts of lower volume and higher operating expenses Adjusted operating income of 159 6 in 2024 represented an improvement of 44 8 compared to the prior year
The Americas revenue represented 76 6 of consolidated revenue in 2024 In 2024 revenue decreased by 16 4 or 1 compared to the prior year Revenue declined by approximately 7 due to lower volume net of the impact of an acquisition and divestitures which was partially offset by approximately 6 revenue growth from higher pricing benefits On an organic basis revenue declined 5 4 in 2024 compared to the prior year
Cost of sales as a percentage of revenue improved by 380 basis points in 2024 compared to the prior year The improvement was driven by the higher pricing benefits partially offset by the impacts of lower volume unfavorable business mix and 14 4 of higher variable compensation expense We also realized approximately 23 of savings from operational improvements which were mostly offset by higher employee costs
Operating expenses in 2024 also included 4 2 of gains related to the sale of land and other fixed assets and 6 1 of gains primarily related to the sale of aircraft and other aviation assets compared to 12 9 of gains on sales of fixed assets primarily land in 2023 In addition operating expenses in 2024 reflected a 4 7 benefit from a decrease in the valuation of a contingent earnout liability compared to 2 6 of expense from an increase to this liability in 2023
The International segment serves customers in EMEA and Asia Pacific with a comprehensive portfolio of furniture and architectural products that are marketed to corporate government education and retail customers primarily through the Steelcase Coalesse Orangebox Smith System and Viccarbe brands
The operating loss in International increased by 14 1 in 2024 compared to the prior year The increase was driven by restructuring costs and the impacts of lower volume partially offset by higher pricing benefits The adjusted operating loss of 2 1 in 2024 represented an improvement of 5 2 compared to the prior year
International revenue represented 23 4 of consolidated revenue in 2024 In 2024 revenue decreased by 56 6 or 7 compared to the prior year Revenue declined by approximately 16 due to lower volume net of the impact of a divestiture which was partially offset by 7 revenue growth from higher pricing benefits and approximately 17 of favorable currency translation effects On an organic basis revenue declined 63 3 or 8 in 2024 compared to the prior year
Cost of sales as a percentage of revenue improved by 300 basis points in 2024 compared to the prior year The improvement was driven by the higher pricing benefits lower overhead costs and additional operational improvements partially offset by the impacts of lower volume
We define organic revenue growth decline as revenue growth decline excluding the impact of acquisitions and divestitures and foreign currency translation effects Organic revenue growth decline is calculated by adjusting prior year revenue to include revenues of acquired companies prior to the date of the company s acquisition to exclude revenues of divested companies and to use current year average exchange rates in the calculation of foreign denominated revenue We believe organic revenue growth decline is a meaningful metric to investors as it provides a more consistent comparison of our revenue to prior periods as well as to industry peers
We define adjusted operating income loss as operating income loss excluding amortization of purchased intangible assets and restructuring costs We define adjusted earnings per share as earnings per share on a diluted basis excluding amortization of purchased intangible assets and restructuring costs net of related income tax effects
We may record intangible assets such as backlog dealer relationships trademarks know how and designs and proprietary technology when we acquire companies We allocate the fair value of purchase consideration to net tangible and intangible assets acquired based on their estimated fair values The fair value estimates for these intangible assets require management to make significant estimates and assumptions which include the useful lives of intangible assets We believe that adjusting for amortization of purchased intangible assets provides a more consistent comparison of our operating performance to prior periods as well as to industry peers As our business strategy in recent years has included an increased number of acquisitions intangible asset amortization has become more significant
Restructuring costs may be recorded as our business strategies change or in response to changing market trends and economic conditions We believe that adjusting for restructuring costs which are primarily associated with business exit and workforce reduction costs provides a more consistent comparison of our operating performance to prior periods as well as to industry peers
Cash and cash equivalents are used 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 During normal business conditions we target a range of 75 to 175 for cash and cash equivalents to fund operating requirements In addition we may carry additional liquidity for potential investments in strategic initiatives and as a cushion against economic volatility and from time to time we may allow our cash and cash equivalents to temporarily fall below our targeted range to fund acquisitions and other growth initiatives
As of February 23 2024 we held a total of 318 6 in cash and cash equivalents Of that total 85 was located in the U S and the remaining 15 or 48 8 was located outside of the U S primarily in China including Hong Kong Mexico India the U K and Malaysia
Company owned life insurance COLI investments are recorded at their net cash surrender value Our investments in COLI policies are intended to be utilized as a long term funding source for long term benefit obligations However COLI can also be used as a source of liquidity We believe the financial strength of the issuing insurance companies associated with our COLI policies is sufficient to meet their obligations See Note 10 to the consolidated financial statements for additional information
In 2024 our improved operating results drove a significant increase in cash Additionally we generated cash from working capital primarily due to decreased levels of inventory and normalized supplier lead times related to supply chain improvements and improvements in the number of days sales outstanding in accounts receivable In 2023 cash was used to meet working capital requirements primarily due to increased levels of inventory which were purchased to mitigate the impacts of supply chain disruptions and we received 33 5 related to the carryback of our 2021 tax loss in the U S Annual payments related to accrued variable compensation and retirement plan contributions totaled 77 3 in 2024 compared to 32 4 in the prior year
Capital expenditures in 2024 primarily related to investments in manufacturing operations information technology and customer facing facilities and showrooms In 2024 proceeds from the disposal of fixed assets primarily included 36 0 of proceeds from the sale of aircraft and other aviation assets and 12 5 from the sale of fixed assets and land In 2023 proceeds from the disposal of fixed assets included 7 0 related to the sale of land and other investing activities included 12 2 of proceeds from COLI policies
During 2024 and 2023 we made common stock repurchases of 4 2 and 3 9 respectively all of which related to our Class A Common Stock and were made to satisfy participants tax withholding obligations upon the issuance of shares under equity awards pursuant to the terms of our Incentive Compensation Plan
We have a 300 0 global committed bank facility in effect through 2029 As of February 23 2024 there were no borrowings outstanding under the facility there were 0 1 in letters of credit reducing our availability and we were in compliance with all covenants under the facility
We have unsecured uncommitted short term credit facilities available for working capital purposes with various financial institutions with a total U S dollar borrowing capacity of up to 3 8 and a total foreign currency borrowing capacity of up to 18 1 as of February 23 2024 These credit facilities have no stated expiration date but may be changed or canceled by the banks at any time As of February 23 2024 there were no borrowings outstanding under these uncommitted facilities
As of February 23 2024 our total liquidity which is comprised of cash and cash equivalents and the net cash surrender value of COLI aggregated to 485 5 Our liquidity position funds available under our credit facilities and cash generated from future operations are expected to be sufficient to finance our known and foreseeable liquidity needs including our material cash requirements
We have no principal obligations on our debt during 2025 through 2028 and 446 3 due in 2029 Interest obligations on our debt are estimated to be approximately 23 in each year until maturity See Note 13 to the consolidated financial statements for additional information
We have commitments related to corporate offices sales offices showrooms manufacturing and distribution facilities vehicles and equipment under non cancelable operating leases that expire at various dates through 2035 Minimum payments under our operating lease obligations are estimated to be 52 3 during 2025 and 154 6 thereafter See Note 18 to the consolidated financial statements for additional information
We have obligations related to contributions and benefit payments expected to be made for post retirement pension and defined contribution plans and deferred compensation plans Our obligations related to post retirement benefit plans are not contractual and the plans could be amended at the discretion of our Compensation Committee Payments related to post retirement and pension plans are estimated to be 8 3 during 2025 and 56 3 from 2026 through 2034 Our deferred compensation obligations are estimated to be 4 9 during 2025 and 44 3 thereafter See Note 14 to the consolidated financial statements for additional information
We also have other planned material usages of cash which we consider discretionary This includes plans for capital expenditures which are expected to be approximately 40 to 50 in 2025 We also expect to incur approximately 35 in 2025 of capitalizable costs for cloud computing arrangements related to the implementation of our new ERP system See Note 2 to the consolidated financial statements for additional information on our accounting policy related to cloud computing arrangements In addition we fund dividend payments as and when approved by our Board of Directors On March 20 2024 we announced a quarterly dividend on our common stock of 0 10 per share or approximately 11 to be paid in Q1 2025
The amounts included above are as of February 23 2024 Our material cash requirements are subject to fluctuation based on business requirements economic volatility or investments in strategic initiatives 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
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 both of our segments
We allocate the fair value of purchase consideration to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is allocated to goodwill The allocation of the purchase consideration requires management to make significant estimates and assumptions especially with respect to intangible assets These estimates are reviewed with our advisors and can include but are not limited to future expected cash flows related to acquired dealer relationships trademarks and know how designs and require estimation of useful lives and discount rates Our estimates of fair value are based upon assumptions believed to be reasonable but which are inherently uncertain and unpredictable and as a result actual results may differ from these estimates During the measurement period which is up to one year from the acquisition date we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill Upon the conclusion of the measurement period any subsequent adjustments are recorded to earnings
Annually in Q4 or earlier if conditions indicate it is necessary the carrying value of each 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 the difference is recorded as an impairment charge Goodwill is assigned to and the fair value is tested at the reporting unit level In 2024 we evaluated goodwill using nine reporting units the Americas EMEA Asia Pacific Designtex AMQ Smith System Orangebox U K Viccarbe and HALCON
During Q4 2024 we performed our annual impairment assessment of goodwill in our reporting units In the test for potential impairment we measured the estimated fair values of our reporting units under an income based approach by using a discounted cash flow DCF valuation method The DCF analysis calculated the present value of projected cash flows and a residual value using discount rates that ranged from 11 to 13 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 DCF valuations such as discount rates forecasted revenue growth rates expected operating margins and estimated capital investment are consistent with our internal projections as of the time of the assessment These assumptions could change over time which may result in future impairment charges We corroborated the results of the DCF analysis with a market based approach that used observable comparable company information to support the appropriateness of the fair value estimates There were no impairment charges recorded for any reporting units in 2024 If we had concluded that it was appropriate to increase the discount rate in our analysis by 100 basis points to estimate the fair value of each reporting unit the fair value of each of our reporting units would still have exceeded its carrying value
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 measuring our expected ability to realize deferred tax assets and evaluating our tax positions
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
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 expectations 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 as of the time of the evaluation Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future A 1 change in statutory tax rates used to compute our deferred tax assets and liabilities would have increased or decreased our income tax expense in 2024 by approximately 3 9
Future tax benefits are recognized to the extent that realization of these benefits is considered more likely than not As of February 23 2024 we recorded tax benefits from net operating loss carryforwards of 33 4 We also have recorded valuation allowances totaling 4 3 against these assets which reduced our recorded tax benefit to 29 1 It is considered more likely than not that a 29 1 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 would be established or adjusted A change in judgment regarding our expected ability to realize deferred tax assets would be accounted for as a discrete tax expense or benefit in the period in which it occurs
Additionally we have deferred tax assets related to tax credit carryforwards of 12 7 comprised primarily of U S foreign tax credits and investment tax credits granted by the Czech Republic The U S foreign tax credit carryforward period is 10 years Utilization of foreign tax credits is restricted to 21 of foreign source taxable income in that year We have projected our pretax domestic earnings and foreign source income and expect to utilize 9 4 of excess foreign tax credits within the allowable carryforward periods The carryforward period for the Czech Republic investment tax credits is also 10 years We have projected our pretax earnings in the Czech Republic and expect to utilize the 3 3 of credits within the allowable carryover period Valuation allowances are recorded to the extent realization of the tax credit carryforwards is not more likely than not
We sponsor a number of domestic and foreign plans to provide pension medical and life insurance benefits to retired employees As of February 23 2024 and February 24 2023 the fair value of plan assets benefit plan obligations and funded status of these plans were as follows
The post retirement medical and life insurance plans are unfunded As of February 23 2024 approximately 73 of our unfunded defined benefit pension obligations is related to our non qualified supplemental retirement plan that is limited to a select group of management approved by the Compensation Committee of our Board of Directors The post retirement medical and life insurance plans were frozen to new participants in 2003 The non qualified supplemental retirement plan was frozen to new participants in 2016 and the benefits were capped for existing participants A portion of our investments in whole life and variable life COLI policies with a net cash surrender value of 166 9 as of February 23 2024 are intended to be utilized as a long term funding source for post retirement medical benefits deferred compensation and defined benefit pension plan obligations The asset values of the COLI policies are not segregated in a trust specifically for the plans and thus are not considered plan assets Changes in the values of these policies are recorded in operating expenses but 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 care 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 plan rates of termination medical inflation 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 The measurement dates for our retiree benefit plans are consistent with the last day in February Accordingly we select discount rates to measure our benefit obligations that are consistent with market indices at the end of February In 2024 the weighted average discount rate used to determine the estimated fair value of our defined benefit pension plan obligations and the weighted average discount rate used to determine the estimated fair value of our post retirement plan obligations remained consistent compared to the prior year
Based on consolidated benefit obligations as of February 23 2024 a one percentage point decline in the discount rate used for benefit plan measurement purposes would have changed the 2024 consolidated benefit obligations by approximately 8 All obligation related actuarial 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 the pre 65 age group 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 healthcare 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 23 2024 our initial rate of 7 00 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 as our plan provides a fixed subsidy for post age 65 benefits
Despite the previously described policies for selecting key actuarial assumptions we periodically experience material differences between assumed and actual experience Our consolidated net unamortized prior service costs of 0 9 and net actuarial losses of 9 1 related to our defined benefit pension plans and net actuarial gains of 14 6 related to our post retirement plans are recorded in
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 target 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 differ materially from those in the forward looking statements and 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 pandemics and other Force Majeure events cyberattacks changes in the legal and regulatory environment changes in raw material commodity and other input costs currency fluctuations changes in customer demand and the other risks and contingencies detailed in this Report and our other filings with the Securities and Exchange Commission We undertake no obligation to update amend or clarify forward looking statements whether as a result of new information future events or otherwise
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
We are exposed to foreign currency exchange rate risk primarily on sales and cost commitments anticipated sales and purchases assets and liabilities denominated in currencies other than the functional currency of the operating entity We seek to manage our foreign exchange risk largely through operational means including matching revenue with same currency costs and assets with same currency liabilities We transacted business globally in 15 primary currencies in 2024 and 2023 of which the most significant were the U S dollar the euro the Canadian dollar the U K pound sterling the Mexican peso the Chinese renminbi the Indian rupee the Australian dollar and
the Malaysian ringgit Revenue from foreign locations represented approximately 29 of our consolidated revenue in 2024 and approximately 30 in 2023 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 netted with offsetting exposures at other entities or hedged with foreign currency derivatives We do not use foreign currency 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 16 5 in 2024 and by approximately 14 3 in 2023 These estimates assume no changes other than the U S dollar exchange rate itself However this quantitative measure has inherent limitations The sensitivity analysis disregards the possibility that U S dollar and other exchange 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 completed 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
within shareholders equity on the 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 23 2024 and February 24 2023 the cumulative net currency translation adjustments reduced shareholders equity by 68 5 and 76 0 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 and are recorded in
We are exposed to interest rate risk primarily on our cash and cash equivalents and short term and long term borrowings Our cash equivalents are primarily held in money market funds invested in U S government debt securities The risk on our short term and long term borrowings was primarily related to a floating interest rate loan that was repaid in 2024 The loan had a balance of 32 2 as of February 24 2023 The loan bore a floating interest rate based on 30 day LIBOR plus 1 20
We estimate a 1 increase in interest rates would have increased our net income by approximately 1 in 2024 and by less than 1 in 2023 primarily as a result of higher interest income on our cash equivalents and borrowings However this quantitative measure has inherent limitations since not all of our investments are in similar asset classes and our borrowings and investment balances can fluctuate throughout the year
We are exposed to commodity price risk on raw material component and finished good purchases The raw materials that we purchase and that are used in the manufacture of the components and finished goods are not rare or unique to our industry The cost of steel petroleum based products including plastics and foam aluminum other metals wood particleboard and other commodities such as fuel and energy have fluctuated due to changes in global supply and demand Our gross margins could be affected if these types of costs continue to fluctuate or changes in global supply and demand force us to procure materials from outside our current supply chains We actively manage these raw material costs through global sourcing initiatives and price increases on our products However in the short term significant increases in raw material costs commodity and other input 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
The increase in commodity costs during 2023 was driven primarily by commodities fuel and logistics We estimate that an additional 1 increase in commodity prices assuming no offsetting benefit of price increases would have decreased our operating income by approximately 11 in 2024 and by approximately 13 in 2023 This quantitative measure has inherent limitations given the likelihood of implementing pricing actions to offset significant increases in commodity prices
We are exposed to fixed income and equity price risk primarily on the net cash surrender value associated with our investments in variable life COLI policies which totaled 60 0 as of February 23 2024 Our variable life COLI policies were allocated at approximately 60 fixed income and 40 equity investments as of February 23 2024
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 3 in 2024 and approximately 4 in 2023 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 and the related earnings associated with these obligations are driven by participant investment elections that often include equity market allocations any adverse change in the equity portion of our variable life COLI investments may be partially offset by reductions 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
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
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 23 2024
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
issued by the Committee of Sponsoring Organizations of the Treadway Commission COSO In our opinion the Company maintained in all material respects effective internal control over financial reporting as of February 23 2024 based on criteria established in
We have also audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the consolidated financial statements as of and for the year ended February 23 2024 of the Company and our report dated April 12 2024 expressed an unqualified opinion on those financial statements
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 are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audit in accordance with the standards of the PCAOB 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 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 its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
We have audited the accompanying consolidated balance sheets of Steelcase Inc and subsidiaries the Company as of February 23 2024 and February 24 2023 the related consolidated statements of income comprehensive income loss changes in shareholders equity and cash flows for each of the three years in the period ended February 23 2024 and the related notes and the schedules listed in the Index at Item 15 collectively referred to as the financial statements In our opinion the financial statements present fairly in all material respects the financial position of the Company as of February 23 2024 and February 24 2023 and the results of its operations and its cash flows for each of the three years in the period ended February 23 2024 in conformity with accounting principles generally accepted in the United States of America
We have also audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the Company s internal control over financial reporting as of February 23 2024 based on criteria established in
issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 12 2024 expressed an unqualified opinion on the Company s internal control over financial reporting
These financial statements are the responsibility of the Company s management Our responsibility is to express an opinion on the Company s financial statements based on our audits We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud Our audits included performing procedures to assess the risks of material misstatement of the financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the financial statements We believe that our audits provide a reasonable basis for our opinion
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that 1 relates to accounts or disclosures that are material to the financial statements and 2 involved our especially challenging subjective or complex judgments The communication of critical audit matters does not alter in any way our opinion on the financial statements taken as a whole and we are not by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates
The Company s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value The Company used the discounted cash flow model to estimate fair value which requires management to make significant estimates and assumptions related to discount rates forecasted revenue growth rates and expected operating margins Changes in these assumptions could have a significant impact on either the fair value the amount of any goodwill impairment charge or both The Company corroborates the results determined using an income based approach with a market based approach that uses observable comparable company information to support the appropriateness of the fair value estimates Based on the results of the Company s annual goodwill impairment evaluation the Company concluded that no goodwill impairment existed for the year ended February 23 2024 The consolidated goodwill balance was 274 8 million as of February 23 2024 of which 31 5 million was allocated to the AMQ Reporting Unit AMQ
We identified goodwill for AMQ as a critical audit matter because of the significant judgments made by management to estimate the fair value of AMQ given the sensitivity of operating changes on future cash flows for this reporting unit This required a high degree of auditor judgment and an increased extent of effort including the need to involve our fair value specialists when performing audit procedures to evaluate the reasonableness of management s estimates and assumptions related to forecasted revenue growth rates and expected operating margins and the selection of the discount rate
Our audit procedures related to forecasted revenue growth rates expected operating margins and the selection of the discount rate used by management to estimate the fair value of AMQ included the following among others
We tested the effectiveness of controls over management s goodwill impairment evaluation including those over the determination of the fair value of AMQ such as controls related to forecasted revenue growth rates and expected operating margins and the selection of the discount rate
principal locations We distribute products through various channels including Steelcase independent and company owned dealers in approximately 770 locations throughout the world We operate under the Americas and International reportable segments See Note 20 for additional information related to our reportable segments
The consolidated financial statements include the accounts of Steelcase Inc and its subsidiaries We consolidate entities in which we maintain a controlling interest All 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
Our fiscal year ends on the last Friday in February with each fiscal quarter typically including 13 weeks The fiscal years ended February 23 2024 February 24 2023 and February 25 2022 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 month or specific date reference 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
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
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 Outstanding checks in excess of funds on deposit are classified as
on the Consolidated Balance Sheets Our restricted cash balance as of February 23 2024 and February 24 2023 was 7 3 and 6 8 respectively and consisted primarily of funds held in escrow for potential future workers compensation and product liability claims Our restricted cash balance is classified in
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
Our trade receivables are due from independent dealers as well as direct customers We monitor and manage the credit risk associated with individual dealers and direct customers 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 typically assume the credit risk Whether from dealers or direct customers our trade credit exposures are not concentrated with any particular entity or industry
Inventories are stated at the lower of cost or net realizable value The Americas segment primarily uses the last in first out LIFO and the first in first out FIFO methods to value its inventories The International segment values inventories primarily using FIFO See Note 8 for additional information
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 recorded using the straight line method over the estimated useful lives of the assets See Note 9 for additional information
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 held and used long lived assets utilizing 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 there is an active program to locate a buyer and the asset is available for immediate sale in its present condition and is expected to be sold within twelve months
We capitalize implementation costs of a cloud computing arrangement with a useful life greater than one year consistent with the capitalization criteria used for internal use software Costs incurred during the application development phase subject to certain exceptions are capitalized after the preliminary project phase is completed and management commits to funding the project Capitalized costs include fees paid to consultants to implement the software payroll and payroll related costs of employees to the extent of the time spent directly on the project and interest costs if appropriate Capitalized costs are recorded to
Capitalization of costs ceases at the point when the software associated with the cloud computing arrangement is ready for its intended use Subsequent enhancements or upgrades are capitalized only to the extent that they add significant new functionality and maintenance costs are expensed as incurred Amortization of capitalized costs is recorded over the initial term of the related cloud computing arrangement including renewal periods that are reasonably certain to be exercised
In Q3 2024 we entered the application development phase of a multi year phased implementation of a new enterprise resource planning ERP system which is expected to replace our current ERP system and various other supporting systems for operating and financial processes As of February 23 2024 we have capitalized 12 3 of costs related to development activities incurred in the implementation of the new ERP system Capitalized costs associated with other cloud computing arrangements were immaterial as of February 23 2024 and February 24 2023
Goodwill represents the difference between the purchase price and the related underlying tangible and identifiable intangible net asset fair values resulting from business acquisitions We evaluate goodwill for impairment annually in Q4 or earlier if conditions indicate there may be potential for impairment such as significant adverse changes in business climate or operating results changes in our strategy significant declines in our stock price or other triggering events Goodwill is assigned to and the fair value is tested at the reporting unit level 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 the difference is recorded as an impairment charge We estimate 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 rates used are based on the estimated weighted average cost of capital adjusted for the relevant risk associated with business specific characteristics and the uncertainty related to the reporting units ability to execute on the projected cash flows We corroborate the results determined using the income approach with a market based approach that uses observable and comparable company information to support the appropriateness of the fair value estimates The estimation of the fair value of our reporting units represents a Level 3 measurement
In 2024 and 2023 we evaluated goodwill and intangible assets using nine reporting units the Americas EMEA Asia Pacific Designtex AMQ Smith System Orangebox U K Viccarbe and HALCON See Note 11 for additional information
Other intangible assets subject to amortization consist primarily of dealer relationships trademarks know how designs and proprietary technology and are amortized over their estimated useful economic lives using the straight line method Other intangible assets not subject to amortization are accounted for and evaluated for potential impairment using an income approach based on the cash flows attributable to the related products See Note 11 for additional information
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
We are self insured for certain losses relating to domestic workers compensation and product liability claims We purchase insurance coverage to reduce our exposure to significant levels of uncertainty for 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 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 trends or changes in claim settlement patterns insurance industry practices and legal interpretations As a result actual costs could differ from the estimated amounts Adjustments to estimated reserves are recorded in the period in which the change in estimate occurs
We offer warranties ranging from three years to lifetime for most of our 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
We use an actuarial model to estimate our product warranty liability using actual paid claims over at least ten years and other actuarial assumptions which provide a basis for expected future losses using actuarial assumptions
These estimates are subject to uncertainty due to a variety of factors including changes in claim rates and patterns 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 Changes in claims experience or trends that impact our estimated product warranty liability are recorded to
Initial quality claims are related to product damage during delivery or installation As of February 23 2024 and February 24 2023 we included claims for initial quality within our product warranty liability which is included in
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 end of each fiscal year and display that position as an asset or liability on the Consolidated Balance Sheets Any unrecognized prior service credit cost or actuarial gains losses are reported net of tax as a component of
Environmental expenditures related to current operations are expensed as incurred Expenditures related to an existing condition allegedly caused by past operations and not associated with current or future revenue generation are typically recognized upon completion of a feasibility study or our commitment to a formal plan of action Liabilities are recorded on a discounted basis when site specific plans indicate the amount and timing of cash payments which are fixed and reliably determinable We have ongoing monitoring and identification processes to assess how known exposures are progressing against the accrued cost estimates as well as processes to identify other potential exposures
The environmental liabilities were discounted using a rate of 3 5 as of February 23 2024 and February 24 2023 Our undiscounted liabilities were 3 1 and 3 6 as of February 23 2024 and February 24 2023 respectively Based on our ongoing evaluation of these matters we believe we have accrued sufficient reserves to cover the costs of all known environmental assessments and the remediation costs of all known sites
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
Our revenue consists substantially of product sales and related service revenue Product sales are reported net of discounts and are recognized when control consisting of the rights and obligations associated with the sale passes to the purchaser For sales to our dealers this typically occurs when product is shipped from our manufacturing or distribution facilities In cases where we sell directly to customers control is typically transferred upon delivery to the customer and in some cases following installation and acceptance by the customer Service revenue is recognized when the services have been rendered We account for shipping and handling activities as fulfillment activities even if those activities are performed after the control of the product has been transferred We expense shipping and handling costs at the time revenue is recognized Revenue does not include sales tax or any other taxes assessed by a governmental authority that are imposed on and concurrent with a specific sale such as use excise value added and franchise taxes collectively referred to as consumption taxes We consider ourselves a pass through entity for collecting and remitting these consumption taxes
Cost of sales includes material labor freight and overhead incurred directly related to the procurement manufacturing and delivery of our products Included within these categories are such items as employee compensation expense logistics costs including shipping and handling costs facilities expense depreciation contract labor costs and warranty expense
Operating expenses include selling general and administrative expenses not directly related to the procurement manufacturing and delivery of our products Included in these expenses are items such as employee compensation expense facilities expense depreciation research and development expense royalty expense information technology services professional services and travel and entertainment expense
Research and development expenses which we define as expenses related to the investigative activities we conduct to lead to the development of new products and to improve existing products and procedures are expensed as incurred and were 48 2 for 2024 44 4 for 2023 and 45 4 for 2022
Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to temporary differences between the carrying amounts of existing assets and liabilities recorded in the consolidated financial statements 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 the Consolidated Statements of Income in the period that includes the enactment date
We establish valuation allowances against deferred tax assets when it is more likely than not that all or a portion of the deferred tax assets 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 depends in part on the existence of
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 within the carryforward period 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 record reserves for uncertain tax positions except to the extent it is more likely than not that the tax position will be sustained on audit based on the technical merits of the position Periodic changes in reserves for uncertain tax positions are reflected in the provision for income taxes See Note 16 for additional information
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 shareholders equity as they are expensed over the related service periods based on the grant date fair value of the shares expected to be issued and the achievement of certain performance conditions respectively See Note 17 for additional information
We have operating leases for corporate offices sales offices showrooms manufacturing and distribution facilities vehicles and equipment We record a right of use asset and corresponding lease liability for operating leases with terms greater than one year Lease terms utilized in determining right of use assets and lease liabilities include the noncancellable portion of the underlying leases along with any reasonably certain lease periods associated with available renewal periods Our leases do not contain any residual value guarantees or material restrictive covenants As most of our leases do not provide an implicit discount rate we use an estimated incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments The estimated incremental borrowing rate represents the estimated rate of interest we would have had to pay to borrow on a collateralized basis an amount equal to the lease payments for a similar period of time
We do not separate non lease components of a contract from the lease components to which they relate for all classes of lease assets except for embedded leases which were immaterial in 2024 See Note 18 for additional information
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 foreign exchange forward contracts long term investments and contingent earnout liability are measured at fair value on the Consolidated Balance Sheets Our total debt is carried at cost and was 446 3 and 481 2 as of February 23 2024 and February 24 2023 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 423 0 and 405 9 as of February 23 2024 and February 24 2023 respectively The estimation of the fair value of our total debt is based on Level 2 fair value measurements See Note 7 and Note 13 for additional information
We may 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 volatility We do not use derivatives for speculative or trading purposes
We evaluate contractual obligations to transfer additional cash to the sellers of companies we acquire as either a compensation arrangement or contingent consideration We evaluate these obligations based on the terms and
duration of continuing employment of the sellers post acquisition the linkage to the underlying valuation of the acquired company and the obligations taken in the context of other contracts or agreements Compensation arrangements are recorded in
as services are rendered post acquisition Contingent consideration obligations are recorded at fair value as of the acquisition dates At each subsequent reporting date changes in the fair value of the liabilities are recorded to
For most foreign operations local currencies are considered the functional currencies We translate assets and liabilities of our foreign 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
on the Consolidated Balance Sheets unless and until a sale or a 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 derivative impacts 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
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 revenues with same currency costs and assets with same currency liabilities Foreign exchange risk is also partially managed through the use of derivative instruments Foreign exchange forward contracts serve to reduce the risk of conversion or remeasurement of certain foreign denominated transactions assets and liabilities We primarily use derivatives for intercompany transactions including loans and certain forecasted currency flows from foreign denominated transactions The foreign exchange forward contracts primarily relate to the Mexican peso the euro the United Kingdom U K pound sterling the Canadian dollar the Australian dollar the Hong Kong dollar the Malaysian ringgit and the Chinese renminbi See Note 7 for additional information
We evaluate all Accounting Standards Updates ASUs issued by the Financial Accounting Standards Board FASB for consideration of their applicability to our consolidated financial statements We have assessed all ASUs issued but not yet adopted and concluded that those not disclosed are either not applicable to us or are not expected to have a material effect on our consolidated financial statements
Effective Q1 2024 we adopted ASU No 2022 04 Liabilities Supplier Finance Programs Subtopic 405 50 which is intended to enhance transparency of supplier finance programs by requiring disclosure of key terms amounts outstanding including a rollforward of outstanding amounts and a description of where such amounts are presented in the consolidated financial statements
We participate in a supplier finance program in Spain offered by a third party financial institution The program allows participating suppliers the ability to finance our payment obligations prior to their scheduled due dates at a discounted price set by the financial institution We have extended payment terms with suppliers that have voluntarily chosen to participate in the program The outstanding amount of program obligations is reported in
which is intended to improve disclosures related to significant segment expenses and the information used by the chief operating decision maker CODM to assess segment performance and to allocate resources The guidance is effective for fiscal years beginning after December 15 2023 and interim periods within fiscal years beginning after December 15 2024 We expect the adoption of this guidance will modify our disclosures but we do not expect it to have a material effect on our consolidated financial statements
which is intended to improve income tax disclosures specifically related to additional detail required in the effective tax rate reconciliation and the disaggregation of income taxes paid The guidance is effective for fiscal years beginning after December 15 2024 We expect the adoption of this guidance will modify our disclosures but we do not expect it to have a material effect on our consolidated financial statements
The other product category data by segment consists primarily of third party products textiles and surface materials worktools architecture and other uncategorized product lines and services less promotions and incentives on all product categories
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 represent restricted stock units in which the participants have non forfeitable rights to 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 dividend equivalents during the performance period
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
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
We occasionally enter into forward contracts to reduce the impact of foreign currency fluctuations on foreign denominated transactions assets and liabilities We primarily use derivatives for intercompany transactions including loans and certain forecasted currency flows from foreign denominated transactions The fair value of foreign exchange forward contracts is based on a valuation model that calculates the differential between the contract price and the market based forward rate as of the balance sheet date
There were no other than temporary impairments or transfers into or out of Level 3 during either 2024 or 2023 Our policy is to value any transfers between levels of the fair value hierarchy based on end of period fair values
As of February 23 2024 we held an auction rate security ARS investment with a total par value of 3 2 and a fair value of 2 8 The difference between par value and fair value is comprised of other than temporary impairment losses recorded in previous fiscal years and unrealized gains on our ARS investment of 0 9 and 0 5 respectively The unrealized gains are due to changes in interest rates and are expected to fluctuate over the contractual term of the investment Unrealized gains and losses are recorded in
The ARS investment is not widely traded and therefore does not currently have a readily determinable market value To estimate fair value we used an internally developed discounted cash flow analysis which considers amongst other factors i the credit ratings of the ARS ii the credit quality of the underlying securities or the credit ratings of issuers iii the estimated timing and amount of cash flows iv the formula applicable to the 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
A deterioration in market conditions or the use of different assumptions could result in a different valuation of the investment An increase to the discount rate of 100 basis points would reduce the estimated fair value of our ARS investment by approximately 0 3
In connection with the acquisition of Viccarbe Habitat S L Viccarbe in Q3 2022 up to an additional 14 1 or 13 0 is payable to the sellers based upon the achievement of certain revenue and operating income targets over a three year period ending in 2025 This amount was considered to be contingent consideration and was treated for accounting purposes as part of the total purchase price of the acquisition We used the Monte Carlo simulation model to calculate the fair value of the contingent consideration as of the acquisition date which represents a Level 3 measurement At each subsequent reporting date changes in the fair value of the liability are recorded to
As of February 23 2024 the fair value of the contingent consideration was 0 0 based upon updated projections for the Viccarbe business over the earnout period The settlement of the contingent consideration could vary from this estimate based upon actual operating performance of the business during the earnout period compared to the underlying assumptions used in the estimation of fair value including revenue and operating income projections and changes to discount rates
The majority of the net book value of our property plant and equipment relates to machinery and equipment and buildings and improvements As of February 23 2024 and February 24 2023 the net book value of our machinery and equipment totaled 141 6 and 140 4 respectively and buildings and improvements totaled 92 1 and 94 6 respectively Depreciation expense on property plant and equipment was 66 0 67 0 and 67 5 for 2024 2023 and 2022 respectively The estimated cost to complete construction in progress was 32 2 and 38 0 as of February 23 2024 and February 24 2023 respectively
Our investments in COLI are intended to be utilized as a long term funding source for post retirement medical benefits deferred compensation and defined benefit pension plan obligations The designation of our COLI investments as funding sources for our long term benefit plan obligations does not result in these investments representing a committed funding source for these obligations We can designate any portion of them to another purpose at any time
In 2023 we reallocated 15 2 of goodwill from the International segment to the Americas segment corresponding to a portion of the goodwill recognized in the acquisition of Viccarbe The reallocation was triggered by changes in our management structure and allocation of resources to the Viccarbe business post acquisition The amount of the reallocation was based on the relative fair value of the Viccarbe business reported within the Americas segment We performed an impairment test immediately prior to and subsequent to the reallocation of goodwill and concluded no impairment existed
We evaluate goodwill for impairment annually in Q4 or earlier if there is a triggering event that indicates there may be a potential for impairment See Note 2 for additional information Based on the results of our annual impairment tests we concluded that no goodwill impairment existed as of February 23 2024 and February 24 2023
In 2024 2023 and 2022 no intangible asset impairment charges were recorded We recorded amortization expense on intangible assets subject to amortization of 17 2 in 2024 22 8 in 2023 and 14 8 in 2022 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
We occasionally enter into joint ventures and other equity investments to expand or maintain our geographic presence support our distribution network or invest in new business ventures complementary products and services Our investments in unconsolidated affiliates and related direct ownership interests are summarized below
We have occasionally entered into manufacturing joint ventures to expand or maintain our geographic presence Our only current manufacturing joint venture is Steelcase Jeraisy Company Limited which is located in the Kingdom of Saudi Arabia and is engaged in the manufacturing of wood and metal office furniture systems seating accessories and related products for the Kingdom
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 In Q2 2023 we divested our remaining interest in IDEO
In 2019 we issued 450 0 of unsecured unsubordinated senior notes due in January 2029 2029 Notes The 2029 Notes would rank equally with any other unsecured unsubordinated indebtedness and they contain no financial covenants The 2029 Notes were issued at 99 213 of par value The bond discount of 3 5 and direct debt issuance costs of 4 0 were deferred and are being amortized over the life of the 2029 Notes Although the coupon rate of the 2029 Notes is 5 125 the effective interest rate is 5 6 after taking into account the impact of the direct debt issuance costs a deferred loss on an interest rate lock related to the debt issuance and the bond discount Amortization expense related to the discount and debt issuance costs on the 2029 Notes was 0 8 and 0 7 in 2024 and 2023 respectively
We may redeem some or all of the 2029 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 40 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
We have a 300 0 global committed bank facility which expires in 2029 This facility which was entered into in Q4 2024 amended and restated our prior 250 0 global committed bank facility which was scheduled to expire in 2025 At our option and subject to certain conditions we may increase the aggregate commitment under the facility by up to 150 0 by obtaining at least one commitment from one of the lenders We can use borrowings under the facility for general corporate purposes including friendly acquisitions Interest on borrowings is based on the rate as selected by us from the following options with all capitalized terms having the meanings provided in the credit agreement
A maximum net leverage ratio covenant which is measured by the ratio of x Indebtedness less Unrestricted Cash to y trailing four fiscal quarter Adjusted EBITDA and is required to be less than 3 5 1 In the context of certain permitted acquisitions we have the ability subject to certain conditions to increase the maximum ratio to 4 0 1 for four consecutive quarters
A minimum interest coverage ratio covenant which is measured by the ratio of y trailing four quarter Adjusted EBITDA to z trailing four quarter Interest Expense and is required to be no less than 3 0 1
Our subsidiary Smith System Manufacturing Company guarantees all obligations under the facility and we have pledged 65 of the voting interests in our subsidiary Steelcase Holding SAS to secure all obligations under the facility
During 2024 we borrowed and repaid 69 0 under the prior facility to fund our operations and the balloon payment of 31 8 for a note payable that matured during the year As of February 23 2024 there were no borrowings outstanding under the facility there were 0 1 in letters of credit reducing our availability and we were in compliance with all covenants under the facility As of February 24 2023 there were no borrowings outstanding under the prior facility our ability to borrow under the prior facility was not limited and we were in compliance with all covenants under the prior facility
As of February 23 2024 we have unsecured uncommitted short term credit facilities with various financial institutions with up to 3 8 of U S dollar obligations and up to 18 1 of foreign currency obligations available for working capital purposes 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 23 2024 or February 24 2023
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 contributions fund the Retirement Plan All contributions are made to a trust which is held for the sole benefit of participants
Total expense under all defined contribution retirement plans was 38 4 for 2024 26 1 for 2023 and 17 1 for 2022 We expect to fund approximately 39 9 related to our defined contribution plans in 2025 including funding related to our 2024 discretionary profit sharing contributions
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 Our investments in COLI policies are intended to be utilized as a long term funding source for these benefit obligations See Note 10 for additional information
Our defined benefit pension plans include various qualified foreign retirement plans as well as domestic 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 which is unfunded was frozen to new participants in 2016 and the benefits were capped for existing participants The funded status of our defined benefit pension plans excluding our investments in COLI policies is as follows
1 In 2024 and 2023 the net actuarial loss gain includes amounts resulting from changes in actuarial assumptions utilized to calculate our benefit plan obligations such as weighted average discount rates and recent census data
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 consider 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 6 83 for pre age 65 retirees as of February 23 2024 gradually declining to 4 50 after seven years As of February 24 2023 the assumed healthcare cost trend was 7 30 for pre age 65 retirees gradually declining to 4 50 after eight years Post age 65 trend rates are not applicable as our plan provides a fixed subsidy for post age 65 benefits
In 2023 we entered into a contract with an insurer to annuitize our U K defined benefit pension plan covering 100 of the membership in the plan This agreement or buy in resulted in an exchange of plan assets for an annuity that covers our future projected benefit obligations The initial value of the asset associated with this contract was equal to the premium paid to the insurer to secure the insurance policy The value of the asset is adjusted each reporting period for changes in financial assumptions such as discount rates and inflation indices The asset represents a Level 3 measurement as there are no observable inputs with the valuation of the contract
We anticipate the buyout of the plan and transfer of future benefit obligations of plan participants to be completed in 2025 The non cash settlement charge will be recorded when the buyout is completed and is expected to be approximately 12
Our pension plans weighted average investment allocation strategies and weighted average target asset allocations by asset category as of February 23 2024 and February 24 2023 are reflected in the following table
We expect to contribute approximately 4 7 to our pension plans and fund approximately 3 6 related to our post retirement plans in 2025 The estimated future benefit payments under our pension and post retirement plans are as follows
One of our subsidiaries SC Transport Inc previously contributed to the Central States Southeast and Southwest Areas Pension Fund the Fund a multi employer pension plan based on obligations arising under a collective bargaining agreement that covered SC Transport Inc employees and retirees 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
In 2019 the Fund asserted that SC Transport Inc s absence of hiring additional union employees over the past ten years constituted an adverse selection practice under the Fund and if not remedied would result in an assessment of a withdrawal liability As a result of the Fund s assertion SC Transport Inc recorded an 11 2 charge related to its estimated future obligations under a withdrawal from the Fund to be paid out in installments over a period of up to 20 years The withdrawal liability was discounted using a rate of 3 5 The balance of the liability as of February 23 2024 was 9 2
In 2020 SC Transport Inc withdrew from the Fund and the Fund issued a final assessment of our withdrawal liability We appealed the amount of the assessment by the Fund In 2024 we prevailed in arbitration on our claim and the Fund appealed the arbitrator s decision The amount that may ultimately be required to settle any potential obligation may be lower or higher than our estimated liability which we will adjust if needed if and when additional information becomes available
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 These deferred compensation obligations are unfunded
Deferred compensation expense gain which represents annual participant earnings on amounts that have been deferred and expense gains related to restoration retirement benefits were 7 7 for 2024 2 9 for 2023 and 2 0 for 2022
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 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 our 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 Steelcase Inc 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
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
For income tax purposes our domestic operations act as the global principal in our supply chain with routine income earned by our foreign operations for contract manufacturing and sales and distribution functions The result is that our foreign operations earn consistent income and our domestic operations earn the resulting variable residual income
In 2024 we recorded a decrease in the fair value of the contingent consideration liability related to the acquisition of Viccarbe which is nontaxable In 2023 we recorded an increase in the fair value of this liability which is non deductible for tax purposes
Based on our evaluation of these factors particularly cumulative losses we were unable to assert that it is more likely than not that the deferred tax assets in a manufacturing facility in China and sales offices in Australia Hong Kong and Morocco would be realized as of February 23 2024
We have the ability to repatriate foreign subsidiary earnings to our U S parent without incurring additional U S federal income tax beyond foreign currency exchange impacts We have recorded deferred income taxes related to withholding and other taxes where appropriate on earnings of subsidiaries not expected to be permanently reinvested However we have not recorded deferred taxes on any remaining historical outside basis differences in non U S subsidiaries as we continue to assert indefinite reinvestment on those basis differences
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 41 8 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 realization of these carryforwards is not more likely than not
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 U S 2023 and 2024 Canada 2020 through 2024 France 2020 through 2024 and Germany 2015 through 2024 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 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 a 2 0 liability for uncertain tax positions as of February 23 2024 No other material amounts are recorded as a liability for uncertain tax positions including interest and penalties on the Consolidated Balance Sheets
Unrecognized tax benefits of 2 0 if favorably resolved would be recorded as an income tax benefit We do not expect the amount of unrecognized tax benefits to significantly change due to expiring statutes or audit activity in the next twelve months
The Steelcase Inc Incentive Compensation Plan the Incentive Compensation Plan provides for the issuance of share based compensation awards to employees and members of our Board of Directors As of February 23 2024 there were 5 179 745 shares of Class A Common Stock authorized for future issuance under the Incentive Compensation Plan
A variety of awards may be granted under the Incentive Compensation Plan including stock options stock appreciation rights restricted stock restricted stock units performance shares performance units cash based awards phantom shares and other share based awards Our Board of Directors may amend or terminate the Incentive Compensation Plan at its discretion subject to certain provisions as stipulated within the plan
any performance based conditions imposed on outstanding awards will be deemed to be immediately prior to the change in control the greater of 1 the applicable performance achieved through the date of the change in control or 2 the target level of performance and
all restrictions imposed on all outstanding awards of restricted stock units and performance units will lapse if either 1 the awards are assumed by an acquirer or successor and the awardee experiences a qualifying termination during the two year period following the change in control or 2 the awards are not assumed by an acquirer or successor
This amount represents 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 conditions and therefore may be significantly lower
In 2024 2023 and 2022 we issued performance units PSUs to certain employees which are earned over a three year performance period based on performance conditions established annually by the Compensation Committee within the first three months of the applicable fiscal year as follows
The number of PSUs earned is modified based on achievement of certain total shareholder return results relative to a comparison group of companies which is a market condition When the performance conditions for a fiscal year are established one third of the PSUs issued are considered granted Therefore each of the three fiscal years within the performance period is considered an individual tranche of the award referred to as Tranche 1 Tranche 2 and Tranche 3 respectively
In 2024 the performance conditions were established for Tranche 1 of the 2024 PSUs Tranche 2 of the 2023 PSUs and Tranche 3 of the 2022 PSUs and accordingly such tranches were considered granted in 2024
on the Consolidated Balance Sheets over the remaining performance period The expense for PSUs is determined based on the probability that the performance conditions will be met and if applicable the fair value of the market condition on the grant date For participants who are or become retirement eligible during the performance period the PSUs are expensed over the period ending on the date the participant becomes retirement eligible 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 Incentive Compensation Plan
We used the Monte Carlo simulation model to calculate the fair value of the market conditions on the respective grant dates which resulted in a total fair value of 4 5 3 5 and 2 3 for the PSUs with market conditions granted in 2024 2023 and 2022 respectively The Monte Carlo simulation was computed using the following assumptions
After completion of the performance period the number of PSUs earned will be issued as shares of Class A Common Stock Based on actual results the 2022 PSUs were earned at 84 5 of the target level as modified and 378 811 shares of Class A Common Stock were issued to participants under such awards The aggregate number of shares of Class A Common Stock that ultimately may be issued under PSUs that have been granted where the performance period has not been completed ranged from 0 to 1 299 988 shares as of February 23 2024
A dividend equivalent is calculated based on the actual number of PSUs earned at the end of the performance period equal to the dividends that would have been payable on the earned PSUs 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
The total fair value of PSUs vested during 2024 2023 and 2022 was 4 9 2 1 and 2 5 respectively The fair value was determined based upon the closing price of shares of our Class A Common Stock on the date that the Compensation Committee certified the awards
During 2024 we awarded 1 786 505 restricted stock units RSUs to certain employees RSUs have restrictions on transfer which lapse up to three years after the date of grant at which time RSUs are issued as unrestricted shares of Class A Common Stock RSUs are expensed and recorded in
on the Consolidated Balance Sheets over the requisite service period based on the value of the shares on the grant date For participants who are or become retirement eligible during the service period for awards that are considered retirement eligible the RSUs are expensed over the period ending on the date the participant becomes retirement eligible Typically these 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 Incentive Compensation Plan
The total fair value of RSUs vested was 23 2 10 1 and 10 1 during 2024 2023 and 2022 respectively The fair value was determined based upon the closing price of shares of our Class A Common Stock on the dates the awards vested
Under the Incentive Compensation Plan unrestricted shares of our Class A Common Stock may be issued to members of our Board of Directors as compensation for director s fees We granted a total of 131 013 109 090 and 61 360 unrestricted shares at a weighted average grant date fair value per share of 8 53 9 67 and 13 81 during 2024 2023 and 2022 respectively
We have operating leases for corporate offices sales offices showrooms manufacturing and distribution facilities vehicles and equipment that expire at various dates through 2035 Certain lease agreements include contingent rental payments based on per unit usage over contractual levels e g miles driven or machine hours operated and others include rental payments adjusted periodically for inflationary indexes Additionally some leases include options to renew or terminate the leases which can be exercised at our discretion
In Q3 2022 we acquired Viccarbe a Spanish designer of contemporary furniture for high performance collaborative and social spaces The transaction included the purchase of all the outstanding capital stock of Viccarbe for 34 9 or 30 0 in an all cash transaction using cash on hand Up to an additional 14 1 or 13 0 is payable to the sellers based upon the achievement of certain revenue and operating income targets over a three year period This amount was considered to be contingent consideration and was treated for accounting purposes as part of the total purchase price of the acquisition At each reporting date the contingent consideration liability is remeasured and changes to the fair value are recognized in
As of February 23 2024 the fair value of the contingent consideration was 0 0 See Note 7 for additional information An additional amount of up to 6 5 or 6 0 is also payable to the sellers based upon the achievement of certain milestones and continued employment over a five year period which is being estimated and expensed over the service period on a straight line basis
Tangible assets and liabilities of Viccarbe were valued as of the acquisition date using a market analysis and intangible assets were valued using a discounted cash flow analysis which represents a Level 3 measurement On the acquisition date we recorded 11 7 related to identifiable intangible assets 25 8 related to goodwill and 5 1 related to tangible assets The tangible assets mainly consisted of working capital primarily accounts receivable inventory and accounts payable and property plant and equipment Additionally we recorded a deferred tax liability in the amount of 2 9 associated with the tax basis difference in acquired book assets The goodwill was recorded in the International segment as of the acquisition date and is not deductible for income tax purposes in Spain The goodwill resulting from the acquisition is primarily related to the growth potential of Viccarbe and our intention to expand the manufacturing of Viccarbe products in geographic regions outside of the International segment and to offer Viccarbe products through our global distribution network As such we reallocated a portion of the goodwill to the Americas segment during 2023 based on the relative fair value of the Viccarbe business reported within the Americas segment as of the date of the acquisition Intangible assets are principally related to the Viccarbe trademark dealer relationships and internally developed know how and designs which will be amortized over periods ranging from 9 to 13 years from the date of acquisition The purchase price allocation for the Viccarbe acquisition was completed during 2023
The fair values of the purchased intangible assets are being amortized on a straight line basis over their useful lives The following table summarizes the estimated future amortization expense for the next five years as of February 23 2024
In Q2 2023 we acquired HALCON a Minnesota based designer and manufacturer of precision tailored wood furniture for the workplace The transaction included the purchase of all the outstanding membership interests of HALCON for 127 5 less customer deposits of 24 3 plus an adjustment of 1 9 for working capital The acquisition was funded using a combination of cash on hand and borrowings under our global committed bank facility An additional amount of 2 0 is also payable to a seller based upon continued employment over a three year period which is being expensed over the service period on a straight line basis
Tangible assets and liabilities of HALCON were valued as of the acquisition date using a market analysis and intangible assets were valued using a discounted cash flow analysis which represents a Level 3 measurement On the acquisition date we recorded 51 8 related to identifiable intangible assets 36 6 related to goodwill and 16 7 related to tangible assets The tangible assets mainly consisted of property plant and equipment of 30 6 working capital primarily inventory of 12 8 and customer deposits of 24 3 The goodwill was recorded in the Americas segment and is deductible for U S income tax purposes The goodwill resulting from the acquisition is primarily related to the growth potential of HALCON expected to be driven by new product development geographic expansion and the integration of HALCON products into our dealer network Intangible assets are principally related to dealer relationships the HALCON trademark and internally developed know how and designs which are being amortized over periods ranging from 9 to 10 years from the date of acquisition We also acquired a backlog of orders which shipped throughout 2023 The purchase price allocation for the HALCON acquisition was completed during 2024
The fair values of the purchased intangible assets are being amortized on a straight line basis over their useful lives The following table summarizes the estimated future amortization expense for the next five years as of February 23 2024
As of the end of Q1 2024 we realigned our reportable segments for financial reporting purposes as a result of changes in how we monitor business performance and allocate resources to support our top strategic priorities During Q1 2024 we simplified our internal reporting to summarize the results of all brands by geography including utilization of previously unallocated Corporate expenses This change is parallel to the organizational structure that is used by our Chief Executive Officer in the capacity as CODM for making operating and investment decisions and assessing business performance
The operating segments regularly reviewed by the CODM are 1 the Americas 2 Europe the Middle East and Africa EMEA and 3 Asia Pacific Asia Pacific serves customers in Australia China India Japan Korea and other countries in Southeast Asia We primarily review and evaluate revenue gross profit and operating income loss by these segments in our internal review processes and reporting We also allocate resources among these segments primarily based on revenue gross profit and operating income loss Total assets by segment include manufacturing and other assets associated with each segment
For purposes of segment reporting externally we have aggregated the EMEA and Asia Pacific operating segments as an International segment based upon their similarity in quantitative and qualitative characteristics as defined in the Accounting Standards Codification ASC 280
We evaluated the economic similarity of these operating segments including patterns and trends for revenue gross profit and operating income loss in addition to the similarity in the nature of products and services types of customers and production and distribution processes in these regions We concluded that these operating segments met the criteria for aggregation consistent with the basic principles and objectives of segment reporting described in ASC 280 The change in our reportable segments did not result in a change to our reporting units for purposes of goodwill impairment testing
The Americas segment serves customers in the U S Canada the Caribbean Islands and Latin America with a comprehensive portfolio of furniture architectural textile and surface imaging products that are marketed to corporate government healthcare education and retail customers primarily through the Steelcase AMQ Coalesse Designtex HALCON Orangebox Smith System and Viccarbe brands
The International segment serves customers in EMEA and Asia Pacific with a comprehensive portfolio of furniture and architectural products that are marketed to corporate government education and retail customers primarily through the Steelcase Coalesse Orangebox Smith System and Viccarbe brands
In Q4 2024 we initiated a series of restructuring actions to enhance our long term operational effectiveness in Asia Pacific These actions involve the involuntary terminations of approximately 100 positions in Asia Pacific We expect to incur restructuring costs of approximately 4 in the International segment related to these actions consisting of cash severance payments other separation related benefits and other related costs We recorded 2 5 related to employee termination costs and 0 4 related to the impairment of a right of use operating lease asset in the International segment for these actions during 2024
In Q4 2024 we initiated restructuring actions to move a regional distribution center in the Americas segment These actions involve the involuntary terminations of approximately 50 to 55 positions and the relocation of approximately 15 to 20 positions in the Americas segment We expect to incur restructuring costs of approximately 3 in the Americas segment related to these actions consisting of cash severance payments other separation related benefits and other related costs We incurred restructuring costs of 0 7
In Q3 2024 we initiated a series of restructuring actions to reallocate production of our product portfolio across our industrial footprint to take advantage of manufacturing centers of excellence These actions involve the involuntary terminations of approximately 15 positions in the Americas segment We expect to incur restructuring costs of approximately 2 to 3 in the Americas segment related to these actions consisting of cash severance payments other separation related benefits and other related costs We incurred restructuring costs of 1 1 in the Americas segment for these actions during 2024 We expect these actions to be substantially completed by the end of 2025
In Q1 2024 we announced a series of restructuring actions in response to continued decline in order volume persisting inflationary pressures and decreasing plant utilization These actions involve the involuntary terminations of approximately 40 to 50 salaried roles in EMEA the elimination of approximately 240 positions in Asia Pacific and the involuntary terminations of approximately 30 employees in the Americas segment in connection with the closing of our regional distribution center in Atlanta Georgia We expect to incur restructuring costs of approximately 16 to 18 in the International segment and approximately 1 in the Americas segment related to these actions consisting of cash severance payments and other separation related benefits We incurred restructuring costs of 16 3 in the International segment and 0 5 in the Americas segment for these actions during 2024 These actions are substantially complete
In Q4 2023 we initiated a series of restructuring actions primarily related to the wind down of our customer aviation function in connection with our strategy to reinvent our go to market model and create new customer experiences The restructuring actions included terminations of approximately 25 salaried employees in the Americas segment We incurred 1 0 and 3 6 of restructuring costs in the Americas segment for these actions during 2024 and 2023 respectively consisting of cash severance payments and other separation related benefits These restructuring actions are complete
In Q3 2023 our Board of Directors approved restructuring actions to reduce operational spending across certain functions in response to a decline in order volume and lower than expected return to office trends in the Americas segment The restructuring actions included terminations of approximately 130 salaried employees in the Americas segment In 2023 we incurred 10 9 of restructuring costs related to these actions in the Americas segment consisting of cash severance payments and other separation related benefits These restructuring actions are complete
In Q4 2022 our Board of Directors approved restructuring actions related to the exit of our technology business in connection with our strategy to shift from offering a portfolio of technology products toward partnering with technology companies to create integrated collaborative solutions The restructuring actions primarily included involuntary terminations of the majority of salaried employees of the business and the termination of supplier and customer contracts related to the business We incurred 4 7 in restructuring costs in the Americas segment related to these actions primarily consisting of cash severance payments and payment of other business exit costs In 2023 we recorded 1 8 related to employee termination costs 2 4 related to business exit and other related costs and 0 5 related to the impairment of a right of use operating lease asset which was utilized by our technology business These restructuring actions are complete
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 of February 23 2024 Based on such evaluation our Chief Executive Officer and Chief Financial Officer concluded that as of February 23 2024 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
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
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
or will be contained in our 2024 Proxy Statement under the captions Proposal 1 Election of Directors Committees of the Board of Directors and Other Corporate Governance Matters and is incorporated into this Report by reference
The information required by Item 11 will be contained in our 2024 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
The information required by Item 12 that is not listed below will be contained in our 2024 Proxy Statement under the caption Stock Ownership of Management and Certain Beneficial Owners and is incorporated into this Report by reference
This amount reflects the outstanding restricted stock units and 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 conditions and therefore may be significantly lower
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 options warrants or rights are performance units and restricted stock units
The information required by Item 13 will be contained in our 2024 Proxy Statement under the captions Director Independence and Related Person Transactions and is incorporated into this Report by reference
Fourth Amended and Restated Credit Agreement dated as of February 7 2024 among Steelcase Inc JPMorgan Chase Bank N A as Administrative Agent Bank of America N A as Syndication Agent HSBC Bank USA National Association as Documentation Agent and certain other lenders
Filed as Exhibit 4 3 to the Company s Annual Report on Form 10 K for the fiscal year ended February 28 2020 as filed with the Commission on April 27 2020 commission file number 001 13873 and incorporated herein by reference
Filed as Exhibit 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
Filed as Exhibit 10 2 to the Company s Quarterly Report on Form 10 Q for the quarterly period ended August 28 2015 as filed with the Commission on September 29 2015 commission file number 001 13873 and incorporated herein by reference
Filed as Exhibit 10 1 to the Company s Quarterly Report on Form 10 Q for the quarterly period ended August 25 2017 as filed with the Commission on September 20 2017 commission file number 001 13873 and incorporated herein by reference
Filed as Exhibit 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
Filed as Exhibit 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
Filed as Exhibit 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
Filed as Exhibit 10 1 to the Company s Quarterly Report on Form 10 Q for the quarterly period ended November 28 2014 as filed with the Commission on December 23 2014 commission file number 001 13873 and incorporated herein by reference
Filed as Exhibit 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
17 Filed as Exhibit 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
18 Filed as Exhibit 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
19 Filed as Exhibit 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
20 Filed as Exhibit 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
21 Filed as Exhibit 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
22 Filed as Exhibit 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
23 Filed as Exhibit 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
24 Filed as Exhibit 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
26 Filed as Exhibit 10 21 to the Company s Annual Report on Form 10 K for the fiscal year ended February 24 2023 as filed with the Commission on April 14 2023 commission file number 001 13873 and incorporated herein by reference
29 Filed as Exhibit 10 2 to the Company s Quarterly Report on Form 10 Q for the quarterly period ended November 26 2021 as filed with the Commission on December 20 2021 commission file number 001 13873 and incorporated herein by reference
30 Filed as Exhibit 10 27 to the Company s Annual Report on Form 10 K for the fiscal year ended February 25 2022 as filed with the Commission on April 15 2022 commission file number 001 13873 and incorporated herein by reference
31 Filed as Exhibit 10 28 to the Company s Annual Report on Form 10 K for the fiscal year ended February 25 2022 as filed with the Commission on April 15 2022 commission file number 001 13873 and incorporated herein by reference
32 Filed as Exhibit 10 29 to the Company s Annual Report on Form 10 K for the fiscal year ended February 25 2022 as filed with the Commission on April 15 2022 commission file number 001 13873 and incorporated herein by reference
33 Filed as Exhibit 10 29 to the Company s Annual Report on Form 10 K for the fiscal year ended February 24 2023 as filed with the Commission on April 14 2023 commission file number 001 13873 and incorporated herein by reference
34 Filed as Exhibit 10 30 to the Company s Annual Report on Form 10 K for the fiscal year ended February 24 2023 as filed with the Commission on April 14 2023 commission file number 001 13873 and incorporated herein by reference
35 Filed as Exhibit 10 31 to the Company s Annual Report on Form 10 K for the fiscal year ended February 28 2020 as filed with the Commission on April 27 2020 commission file number 001 13873 and incorporated herein by reference
36 Filed as Exhibit 10 1 to the Company s Quarterly Report on Form 10 Q for the quarterly period ended August 28 2020 as filed with the Commission on September 25 2020 commission file number 001 13873 and incorporated herein by reference
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
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 and in the capacities and on the dates indicated

Company Name	STEELCASE INC Vist SEC web-site
Category	OFFICE FURNITURE (NO WOOD)
Trading Symbol	SCS