STEELCASE INC (Form: 10-Q, Received: 01/07/2009 14:20:20)
Table of Contents

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
 
FORM 10-Q
 
     
þ
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
    For the quarterly period ended November 28, 2008
or
o
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from           to
 
Commission File Number 1-13873
 
 
 
 
STEELCASE INC.
(Exact name of registrant as specified in its charter)
 
     
Michigan
(State or other jurisdiction
of incorporation or organization)
  38-0819050
(I.R.S. employer identification no.)
901 44th Street SE
Grand Rapids, Michigan
(Address of principal executive offices)
 
49508
(Zip Code)
 
(Registrant’s telephone number, including area code) (616) 247-2710
None
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  þ      No  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
             
Large accelerated filer  þ
  Accelerated filer  o   Non-accelerated filer  o   Smaller reporting Company  o
    (Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o      No  þ
 
As of January 6, 2009, Steelcase Inc. had 78,127,932 shares of Class A Common Stock and 55,604,152 shares of Class B Common Stock outstanding.
 


 

 
STEELCASE INC.
FORM 10-Q

FOR THE QUARTER ENDED NOVEMBER 28, 2008

INDEX
 
               
          Page No.     
  Financial Information          
  Financial Statements     1    
    Condensed Consolidated Statements of Income for the Three and Nine Months Ended November 28, 2008 and November 23, 2007     1    
    Condensed Consolidated Balance Sheets as of November 28, 2008 and February 29, 2008     2    
    Condensed Consolidated Statements of Cash Flows for the Nine Months Ended November 28, 2008 and November 23, 2007     3    
    Notes to Condensed Consolidated Financial Statements     4    
  Management’s Discussion and Analysis of Financial Condition and Results of Operations     15    
  Quantitative and Qualitative Disclosures About Market Risk     24    
  Controls and Procedures     24    
               
  Other Information     25    
  Risk Factors     25    
  Unregistered Sales of Equity Securities and Use of Proceeds     25    
  Exhibits     25    
    26    
    27    
  EX-10.1
  EX-10.2
  EX-10.3
  EX-10.4
  EX-31.1
  EX-31.2
  EX-32.1


Table of Contents

 
PART I — FINANCIAL INFORMATION
 
Item 1.   Financial Statements:
 
STEELCASE INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in millions, except per share data)
 
                                         
      Three Months Ended        Nine Months Ended   
      November 28,
      November 23,
      November 28,
      November 23,
 
      2008       2007       2008       2007  
Revenue
    $ 811.3       $ 885.9       $ 2,528.9       $ 2,519.5  
Cost of sales
      577.0         589.1         1,736.8         1,680.9  
Restructuring costs
      3.8         (0.1 )       17.3         (0.1 )
                                         
Gross profit
      230.5         296.9         774.8         838.7  
Operating expenses
      214.6         244.2         673.4         682.7  
Restructuring costs
      0.9         —          3.6         —   
                                         
Operating income
      15.0         52.7         97.8         156.0  
Interest expense
      (4.3 )       (4.2 )       (12.8 )       (12.6 )
Other (expense) income, net
      (1.3 )       3.6         4.3         21.8  
                                         
Income before income tax expense
      9.4         52.1         89.3         165.2  
Income tax expense
      9.0         20.8         35.3         62.6  
                                         
Net income
    $ 0.4       $ 31.3       $ 54.0       $ 102.6  
                                         
Earnings per share:
                                       
Basic
    $ 0.00       $ 0.22       $ 0.40       $ 0.72  
                                         
Diluted
    $ 0.00       $ 0.22       $ 0.40       $ 0.71  
                                         
Dividends declared and paid per common share
    $ 0.15       $ 0.15       $ 0.45       $ 0.45  
                                         
 
See accompanying notes to the condensed consolidated financial statements.


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STEELCASE INC.
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
 
                     
      (Unaudited)
      (Restated)
 
      November 28,
      February 29,
 
      2008       2008  
ASSETS
Current assets:
                   
Cash and cash equivalents
    $ 163.4       $ 213.9  
Short-term investments
      56.6         50.1  
Accounts receivable, net
      368.3         397.0  
Inventories
      154.4         146.7  
Other current assets
      124.5         127.0  
                     
Total current assets
      867.2         934.7  
                     
Property and equipment, net
      464.7         478.4  
Company-owned life insurance
      184.1         210.6  
Goodwill and other intangible assets, net
      277.9         301.0  
Other assets
      165.3         199.7  
                     
Total assets
    $ 1,959.2       $ 2,124.4  
                     
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
                   
Accounts payable
    $ 237.4       $ 246.9  
Short-term borrowings and current maturities of long-term debt
      4.3         8.2  
Accrued expenses:
                   
Employee compensation
      149.4         181.3  
Employee benefit plan obligations
      32.2         39.0  
Other
      209.0         207.6  
                     
Total current liabilities
      632.3         683.0  
                     
Long-term liabilities:
                   
Long-term debt less current maturities
      251.0         250.5  
Employee benefit plan obligations
      180.3         183.4  
Other long-term liabilities
      84.9         96.6  
                     
Total long-term liabilities
      516.2         530.5  
                     
Total liabilities
      1,148.5         1,213.5  
                     
Shareholders’ equity:
                   
Common stock
      59.8         114.7  
Additional paid-in capital
      6.6         5.0  
Accumulated other comprehensive (loss) income
      (22.8 )       17.4  
Retained earnings
      767.1         773.8  
                     
Total shareholders’ equity
      810.7         910.9  
                     
Total liabilities and shareholders’ equity
    $ 1,959.2       $ 2,124.4  
                     
 
See accompanying notes to the condensed consolidated financial statements.


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STEELCASE INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
 
                     
      Nine Months Ended   
      November 28,
      November 23,
 
      2008       2007  
OPERATING ACTIVITIES
                   
Net income
    $ 54.0       $ 102.6  
Depreciation and amortization
      67.5         70.1  
Impairment of goodwill and intangible assets
      —          21.1  
Changes in operating assets and liabilities
      (25.6 )       (35.3 )
Other, net
      15.8         9.3  
                     
Net cash provided by operating activities
      111.7         167.8  
                     
INVESTING ACTIVITIES
                   
Capital expenditures
      (66.2 )       (52.6 )
Net purchases of investments
      (1.3 )       (43.1 )
Proceeds from disposal of fixed assets
      4.8         26.0  
Business divestitures (acquisitions), net of cash sold or acquired
      15.8         (7.6 )
Other, net
      11.7         11.9  
                     
Net cash used in investing activities
      (35.2 )       (65.4 )
                     
FINANCING ACTIVITIES
                   
Dividends paid
      (60.7 )       (64.9 )
Common stock repurchases
      (59.0 )       (124.5 )
Common stock issuances
      0.4         11.0  
Other, net
      (0.7 )       4.3  
                     
Net cash used in financing activities
      (120.0 )       (174.1 )
                     
Effect of exchange rate changes on cash and cash equivalents
      (7.0 )       12.1  
                     
Net decrease in cash and cash equivalents
      (50.5 )       (59.6 )
Cash and cash equivalents, beginning of period
      213.9         527.2  
                     
Cash and cash equivalents, end of period
    $ 163.4       $ 467.6  
                     
 
See accompanying notes to the condensed consolidated financial statements.


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STEELCASE INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
1.   BASIS OF PRESENTATION
 
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions in Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments) considered necessary for a fair presentation of the condensed consolidated financial statements have been included. Results for interim periods should not be considered indicative of results to be expected for a full year. Reference should be made to the consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended February 29, 2008 (“Form 10-K”).
 
The Condensed Consolidated Balance Sheet at February 29, 2008 was derived from the audited Consolidated Balance Sheet included in our Form 10-K. During Q2 2009, we determined that we had not appropriately recorded deferred tax liabilities on certain intangible assets acquired prior to February 29, 2008. Accordingly, we restated our February 29, 2008 balance sheet to correct goodwill and deferred tax liabilities related to prior acquisitions. These corrections increased goodwill by $35.4 ($32.8 in our Other category, $1.4 in our North America segment and $1.2 in our International segment) as reported in the Condensed Consolidated Balance Sheet as Goodwill and other intangibles, net and decreased deferred tax assets by a corresponding amount as reported in the Condensed Consolidated Balance Sheet as Other assets . We did not amend our February 29, 2008 Form 10-K or any other prior period filing, as these corrections were not considered material to the Consolidated Balance Sheet and had no impact on our Consolidated Statements of Income, earnings per share, retained earnings or our cash flows from operating, financing or investing activities.
 
As used in this Report, unless otherwise expressly stated or the content otherwise requires, all references to “Steelcase,” “we,” “our,” “Company” and similar references are to Steelcase Inc. and its majority-owned subsidiaries. In addition, reference to a year relates to the fiscal year, ended in February of the year indicated, rather than the calendar year. Additionally, Q1, Q2, Q3 and Q4 reference the first, second, third and fourth quarter, respectively, of the fiscal year indicated. All amounts are in millions, except share and per share data, data presented as a percentage or as otherwise indicated.
 
Certain amounts in the prior year’s financial statements have been reclassified to conform to the current year presentation.
 
2.   NEW ACCOUNTING STANDARDS
 
   SFAS No. 141(R)
 
In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 141(R), Business Combinations (“SFAS No. 141(R)”), to create greater consistency in the accounting and financial reporting of business combinations. SFAS No. 141(R) establishes principles and requirements for how the acquirer in a business combination (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any controlling interest, (ii) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase and (iii) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) applies to fiscal years beginning after December 15, 2008. Earlier adoption is prohibited.


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STEELCASE INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)
 
   SFAS No. 160
 
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — an Amendment of ARB No. 51 (“SFAS No. 160”), to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 establishes accounting and reporting standards that require (i) the ownership interest in subsidiaries held by parties other than the parent to be clearly identified and presented on the balance sheet within equity, but separate from the parent’s equity, (ii) the amount of net income attributable to the parent and the noncontrolling interest to be clearly identified and presented on the face of the statement of income and (iii) changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary to be accounted for consistently. SFAS No. 160 applies to fiscal years beginning after December 15, 2008. Earlier adoption is prohibited.
 
   FSP No. 157-2
 
In February 2008, the FASB issued FASB Staff Position on Statement 157, Effective Date of FASB Statement No. 157 (“FSP No. 157-2”). FSP No. 157-2 delays the effective date of SFAS No. 157, Fair Value Measurements (“SFAS No. 157”), for all nonfinancial assets and liabilities that are not remeasured at fair value on a recurring basis, to fiscal years beginning after November 15, 2008. Although we believe the adoption of SFAS No. 157 for nonfinancial assets and liabilities may impact the way in which we calculate fair value of goodwill, indefinite-lived intangible assets, and other long-lived assets, we do not believe the adoption of FSP No. 157-2 will have a material impact on our consolidated financial statements. We applied SFAS No. 157 to all other fair value measurements effective March 1, 2008. See Note 6 for additional information.
 
   SFAS No. 161
 
In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities — an Amendment of FASB Statement No. 133 (“SFAS No. 161”), to improve financial reporting of derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance and cash flows. SFAS No. 161 applies to fiscal years and interim periods beginning after November 15, 2008. We do not believe the adoption of this statement will have a material impact on our future disclosures.
 
   FSP No. 142-3
 
In April 2008, the FASB issued FASB Staff Position No. 142-3, Determination of the Useful Life of Intangible Assets (“FSP No. 142-3”), which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets . The intent of FSP No. 142-3 is to improve the consistency between the useful life of an intangible asset and the period of expected cash flows used to measure its fair value. FSP No. 142-3 applies to fiscal years beginning after December 15, 2008. Earlier adoption is prohibited. We do not believe the adoption of this statement will have a material impact on our financial statements.
 
   FSP No. 157-3
 
In October 2008, the FASB issued FASB Staff Position on Statement 157, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active (“FSP No. 157-3”), which clarifies the application of SFAS No. 157 and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that asset is not active. FSP No. 157-3 was effective on October 10, 2008, the date of issuance. The provisions of FSP No. 157-3 did not have


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STEELCASE INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)
 
a significant impact on the techniques used to value the fair value of our investments in auction rate securities and Canadian asset-backed commercial paper during Q3 2009 and did not have a material impact on our financial statements. See Note 6 for additional information.
 
   FSP No. FAS 140-4 and FIN 46(R)-8
 
In December 2008, the FASB issued FASB Staff Position No. FAS 140-4 and FIN 46(R)-8, Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities, to provide additional disclosures about transferors’ continuing involvements with transferred financial assets and involvement with variable interest entities. This pronouncement applies to fiscal years and interim periods beginning after December 15, 2008. We have not determined the effect, if any, the adoption of this statement will have on our future disclosures.
 
3.   BUSINESS DIVESTITURE
 
During Q2 2009, we sold Custom Cable Industries, Inc. (“Custom Cable”), a wholly-owned subsidiary in our North America segment. Total proceeds including limited seller financing are expected to aggregate $17.7. In connection with the sale, we recorded an operating loss of $1.8 within our Corporate costs during Q2 2009 and expect to record net tax benefits of approximately $2 during fiscal 2009. Our Condensed Consolidated Statement of Income for the nine months ended November 28, 2008 includes $11.2 of revenue, $3.9 of gross profit, $2.1 of operating expenses and $1.8 of operating income related to Custom Cable.
 
4.   EARNINGS PER SHARE
 
Basic earnings per share is based on the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share also includes the effects of shares and potential shares issued under our stock incentive plans. However, diluted earnings per share does not reflect the effects of 4.4 million options for 2009 and 3.4 million options for 2008 because those potential shares were not dilutive.
 
                                         
      Three Months Ended        Nine Months Ended   
      November 28,
      November 23,
      November 28,
      November 23,
 
Computation of Earnings per Share     2008       2007       2008       2007  
Net income
    $ 0.4       $ 31.3       $ 54.0       $ 102.6  
                                         
Weighted-average shares outstanding for basic earnings per share (in millions)
      133.8         140.9         134.8         143.1  
Effect of dilutive stock-based compensation (in millions)
      0.3         1.0         0.5         1.2  
                                         
Adjusted weighted-average shares outstanding for diluted earnings per share (in millions)
      134.1         141.9         135.3         144.3  
                                         
Earnings per share of common stock:
                                       
Basic
    $ 0.00       $ 0.22       $ 0.40       $ 0.72  
                                         
Diluted
    $ 0.00       $ 0.22       $ 0.40       $ 0.71  
                                         
Total shares outstanding at period end (in millions)
      133.7         141.4         133.7         141.4  
                                         


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STEELCASE INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)
 
5.   COMPREHENSIVE (LOSS) INCOME
 
Comprehensive (loss) income is comprised of net income and all changes to shareholders’ equity except those due to investments by, and distributions to, shareholders.
 
                     
      Three Months Ended  
      November 28,
      November 23,
 
Components of Comprehensive (Loss) Income     2008       2007  
Net income
    $ 0.4       $ 31.3  
Other comprehensive (loss) income:
                   
Foreign currency translation
      (36.7 )       13.3  
Derivative adjustments, net of tax of $0.0 and $(0.2)
      (0.1 )       0.3  
Unrealized net loss on investments, net of tax of $0.2 and $0.0
      (0.3 )       —   
Minimum pension liability, net of tax of $0.5 and $0.7
      (0.8 )       (1.2 )
                     
Total
      (37.9 )       12.4  
                     
Comprehensive (loss) income
    $ (37.5 )     $ 43.7  
                     
 
                     
      Nine Months Ended  
      November 28,
      November 23,
 
Components of Comprehensive Income     2008       2007  
Net income
    $ 54.0       $ 102.6  
Other comprehensive (loss) income:
                   
Foreign currency translation
      (39.6 )       26.5  
Derivative adjustments, net of tax of $0.1 and $(0.1)
      (0.2 )       0.1  
Unrealized net gain on investments, net of tax of $(1.5) and $0.0
      2.6         —   
Minimum pension liability, net of tax of $1.6 and $2.3
      (3.0 )       (3.8 )
                     
Total
      (40.2 )       22.8  
                     
Comprehensive income
    $ 13.8       $ 125.4  
                     
 
Foreign currency translation adjustments of $36.7 and $39.6 for the three and nine months ended November 28, 2008, respectively, reflect the impact of the decline in certain foreign currency values relative to the U.S. dollar during each period. As of November 28, 2008, approximately 30% of our net assets were denominated in currencies other than the U.S. dollar, the majority of which are denominated in Euros.
 
6.   FAIR VALUE
 
We adopted SFAS No. 157 as of March 1, 2008. SFAS No. 157 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. SFAS No. 157 also specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. In accordance with SFAS No. 157, fair value measurements are classified under the following hierarchy:
 
Level 1  — Quoted prices for identical instruments in active markets.


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STEELCASE INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)
 
Level 2  — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.
 
Level 3  — Model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable.
 
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.
 
Assets and liabilities measured at fair value in our Condensed Consolidated Balance Sheet as of November 28, 2008 are summarized below:
 
                                         
Fair Value of Financial Instruments     Level 1       Level 2       Level 3       Total  
Assets:
                                       
Managed investment portfolio
    $ 51.9       $ —        $ —        $ 51.9  
Auction rate securities
      —          —          23.7         23.7  
Available-for-sale securities
      4.7         —          —          4.7  
Canadian asset-backed commercial paper
      —          —          3.3         3.3  
Foreign exchange forward contracts
      —          8.6         —          8.6  
Privately-held equity investments
      —          —          0.3         0.3  
                                         
Total assets
    $ 56.6       $ 8.6       $ 27.3       $ 92.5  
                                         
 
   Managed Investment Portfolio and Available-for-Sale Securities
 
Our managed investment portfolio consists of short-term investments in U.S. Treasury, U.S. Government agency and corporate debt instruments. Fair values for investments in our managed investment portfolio and our available-for-sale securities are based upon valuations for identical instruments in active markets.
 
   Auction Rate Securities
 
As of November 28, 2008, we held auction rate securities (“ARS”) totaling $26.5 of par value for which the auction market remains effectively shut-down. We have the intent and ability to hold these securities until a recovery in market value occurs given our current liquidity and capital structure. Our estimates of the fair value of these securities have been based on assumptions we believe market participants would use in pricing the assets in a current transaction, which could change significantly over time based on market conditions.
 
During Q3 2009, we determined through published reports and other data that the issuer of one of our ARS invested a material portion of their investment portfolio in asset-backed securities and other low-grade investments. The parent of this issuer carries a non-investment grade credit rating from Standard & Poor’s. The par value of this security was $3.3 and we estimated the market value as of November 28, 2008 to approximate $2.5 based on a discounted cash flow model using a risk premium and discount rate commensurate with the risk related to the security. As a result of our analysis, we recorded a $0.8 other-than-temporary impairment to this ARS during Q3 2009.
 
During Q3 2009, we reduced our reserve for unrealized losses on our other ARS investments by $0.6 based on an increase in the estimated fair value of these securities. As of November 28, 2008, we have unrealized losses related to these securities of $2.0 recorded in Accumulated other comprehensive


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STEELCASE INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)
 
(loss) income on the Condensed Consolidated Balance Sheet, as we believe the impairments are temporary. We concluded no other-than-temporary impairment loss occurred on these securities as of the end of Q3 2009 as we believe the decline in market value is due to general market conditions and not specific underlying credit issues.
 
   Canadian Asset-Backed Commercial Paper
 
As of November 28, 2008, we held one investment in Canadian asset-backed commercial paper (“ABCP”) with an original par value of Canadian $5.0. As a result of a lack of liquidity in the Canadian ABCP market, the ABCP did not settle on maturity and is considered to be in default. We recorded an impairment of our investment in Q4 2008 of Canadian $0.9. A restructuring plan was approved by the Superior Court of Ontario in June 2008. Under the restructuring, we will exchange our ABCP for a bundle of new long-term floating-rate notes. Consummation of the restructuring has been delayed as a result of additional legal actions and turmoil in global financial markets. As a result of a recent agreement by the Canadian federal government and some Canadian provincial governments to provide financial support to the restructuring, we now expect to receive replacement securities under a revised restructuring plan during Q4 2009.
 
Using a discounted cash flow analysis, based on the types of securities we expect to receive from the restructuring plan, we evaluated our investment for impairment as of November 28, 2008. Our analysis concluded that no additional impairment was necessary.
 
   Foreign Exchange Forward Contract
 
From time to time, we enter into forward contracts to mitigate the risk of translation into U.S. dollars of certain foreign-denominated net income, assets and liabilities. We primarily hedge intercompany working capital loans and certain forecasted currency flows from intercompany transactions. The fair value of foreign exchange forward contracts is based on a valuation model that discounts cash flows resulting from the differential between the contract price and the market-based forward rate.
 
   Privately-Held Equity Investments
 
Privately-held equity investments are carried at the lower of cost or estimated fair value. For these non-quoted investments, we review the underlying performance of the privately-held companies to determine if potential declines in estimated fair value exist and are other than temporary.
 
Below is a roll-forward of assets and liabilities measured at fair value using Level 3 inputs for the nine months ended November 28, 2008.
 
                               
              Canadian
         
              Asset-Backed
      Privately-
 
      Auction Rate
      Commercial
      Held Equity
 
Rollforward of Fair Value Using Level 3 Inputs     Securities       Paper       Investments  
Balance as of March 1, 2008
    $ 23.9       $ 4.1       $ 1.7  
Reclassified to Level 1 available-for-sale securities
      —          —          (1.3 )
Unrealized loss on investments
      (0.2 )       —          (0.1 )
Reclassified to other-than-temporary impairment
      0.8         —          —   
Other-than-temporary impairment
      (0.8 )       —          —   
Currency translation adjustment
      —          (0.8 )       —   
                               
Balance as of November 28, 2008
    $ 23.7       $ 3.3       $ 0.3  
                               


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STEELCASE INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)
 
7.   INVENTORIES
 
Following is a summary of inventories as of November 28, 2008 and February 29, 2008:
 
                     
      November 28,
      February 29,
 
Inventories     2008       2008  
Finished goods
    $ 100.6       $ 87.9  
Work in process
      20.5         20.9  
Raw materials
      67.1         67.5  
                     
        188.2         176.3  
LIFO reserve
      (33.8 )       (29.6 )
                     
      $ 154.4       $ 146.7  
                     
 
The portion of inventories determined by the LIFO method aggregated $57.4 as of November 28, 2008 and $54.4 as of February 29, 2008.
 
8.   COMPANY-OWNED LIFE INSURANCE
 
Investments in company-owned life insurance policies (“COLI”) were made with the intention of utilizing them as a long-term funding source for post-retirement medical benefits, deferred compensation and supplemental retirement plan obligations, which at November 28, 2008 aggregated $207.7, with a related deferred tax asset of $79.6. However, they do not represent a committed funding source for these obligations. They are subject to claims from creditors, and we can designate them to another purpose at any time.
 
Following is a summary of COLI as of November 28, 2008 and February 29, 2008:
 
                                       
      Ability to Choose
          Target Asset
    November 28,
      February 29,
 
Type     Investments     Net Return     Allocation     2008       2008  
Whole Life Insurance Policies     No ability     A set dividend rate periodically adjusted by insurance companies     Not Applicable     $ 104.7       $ 100.8  
Variable Life Insurance Policies     Can allocate across a set of choices provided by the insurance companies     Fluctuates depending on changes in market interest rates and equity values     25% Fixed
Income
75% Equity
      79.4         109.8  
                                       
                        $ 184.1       $ 210.6  
                                       
 
During Q3 2009, significant declines in global equity markets had the effect of reducing the cash surrender value of our variable life insurance policies by $(28.8). During that same period, the cash surrender value associated with our whole life policies increased by $1.3. The net changes in cash surrender value, normal insurance expenses and any death benefit gains are generally allocated 60% to Cost of sales and 40% to Operating expenses on the Condensed Consolidated Statements of Income. This allocation is consistent with the costs associated with the long-term employee benefit obligations that COLI is intended to fund.


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STEELCASE INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)
 
9.   EMPLOYEE BENEFIT PLAN OBLIGATIONS
 
                                         
      Three Months Ended  
                      Post-Retirement
 
      Pension Plans       Plans  
      November 28,
      November 23,
      November 28,
      November 23,
 
Components of Expense     2008       2007       2008       2007  
Service cost
    $ 0.5       $ 0.6       $ 0.2       $ 0.3  
Interest cost
      1.2         1.2         2.1         1.9  
Amortization of prior year service gain
      —          —          (1.8 )       (1.8 )
Expected return on plan assets
      (0.8 )       (1.0 )       —          —   
Adjustment due to plan curtailment
      —          —          —          (0.4 )
Amortization of unrecognized net actuarial loss
      0.1         0.1         —          —   
                                         
Net expense
    $ 1.0       $ 0.9       $ 0.5       $ —   
                                         
 
                                         
      Nine Months Ended  
                      Post-Retirement
 
      Pension Plans       Plans  
      November 28,
      November 23,
      November 28,
      November 23,
 
Components of Expense     2008       2007       2008       2007  
Service cost
    $ 1.5       $ 1.7       $ 0.7       $ 0.9  
Interest cost
      3.7         3.5         6.2         5.7  
Amortization of prior year service gain
      —          —          (5.3 )       (5.3 )
Expected return on plan assets
      (2.6 )       (2.8 )       —          —   
Adjustment due to plan curtailment
      —          —          —          (0.9 )
Amortization of unrecognized net actuarial loss
      0.3         0.2         (0.1 )       —   
                                         
Net expense
    $ 2.9       $ 2.6       $ 1.5       $ 0.4  
                                         
 
We expect to contribute approximately $3 to our pension plans and $12 to our post-retirement benefit plans during 2009. As of November 28, 2008, contributions of approximately $1.7 and $8.8 have been made to the respective plans.
 
We expect to receive approximately $1.2 in Medicare Part D subsidy reimbursements during 2009 of which we have received $0.5 during the first three quarters of 2009.
 
10.   PRODUCT WARRANTY
 
The accrued liability for warranty costs, included within Accrued expenses: Other on the Condensed Consolidated Balance Sheets, is based on an estimated amount needed to cover future warranty obligations for products sold as of the balance sheet date and is determined by historical product data and management’s knowledge of current events and actions.
 
           
Product Warranty     Amount  
Balance as of February 29, 2008
    $ 21.6  
Accruals for warranty charges
      7.8  
Settlements and adjustments
      (10.0 )
           
Balance as of November 28, 2008
    $ 19.4  
           


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STEELCASE INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)
 
11.   INCOME TAXES
 
Our year-to-date effective tax rate increased to 42.5% at November 28, 2008 from 33% at August 29, 2008, primarily as a result of the large, non-tax deductible COLI losses incurred during Q3 2009.
 
We recorded $9.0 of income tax expense in Q3 2009 which included:
 
  •  a year-to-date adjustment of $7.6 to increase tax expense for the first half of fiscal 2009 to our current estimated effective tax rate of 42.5%;
 
  •  Q3 2009 income tax expense of $4.0, or 42.5% of the quarter’s pre-tax income; and
 
  •  certain favorable adjustments, totaling $(2.6), which resulted from changes in estimates associated with our fiscal 2008 tax returns, and the retroactive reinstatement of the U.S. research tax credit to January 1, 2008.
 
Our effective tax rate estimate does not assume any significant change (positive or negative) in cash surrender value of COLI during the fourth quarter. Non-deductible COLI losses have the effect of increasing our effective tax rate, while non-taxable COLI income has the opposite effect.
 
Our federal income tax returns for fiscal years 2004 through 2008 are currently under examination by the Internal Revenue Service (“IRS”) in connection with our participation in the Compliance Assurance Process. We expect the IRS examination to close in Q4 2009; however, at this time it is not possible to estimate any potential impact on fiscal 2009 income tax expense.
 
12.   REPORTABLE SEGMENTS
 
We operate within two reportable segments (North America and International), plus an “Other” category. Our Other category includes the Coalesse Group (formerly the Premium Group), PolyVision and IDEO subsidiaries. Unallocated corporate expenses are reported as Corporate.
 
Prior to 2009, the Other category also included our Financial Services subsidiary. In recent years, we have significantly reduced the capital invested in, and related operations of, Financial Services. We now use third parties to provide lease funding to customers and have reduced the nature and level of financing services provided to our dealers. As a result, we integrated the remaining operations of Financial Services into the North America segment beginning in Q1 2009. Due to the change in the nature of the operations, we have not reclassified prior year financial results of Financial Services to North America; accordingly, the 2008 financial results remain in the Other category.


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STEELCASE INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)
 
Revenue and operating income (loss) for the three and nine months ended November 28, 2008 and November 23, 2007 and total assets as of November 28, 2008 and February 29, 2008 by segment are presented below:
 
                                         
      Three Months Ended       Nine Months Ended  
      November 28,
      November 23,
      November 28,
      November 23,
 
Reportable Segment Income Statement Data     2008       2007       2008       2007  
Revenue
                                       
North America
    $ 443.1       $ 500.0       $ 1,373.5       $ 1,462.4  
International
      236.0         230.8         742.0         615.6  
Other
      132.2         155.1         413.4         441.5  
                                         
Consolidated revenue
    $ 811.3       $ 885.9       $ 2,528.9       $ 2,519.5  
                                         
Operating income (loss)
                                       
North America
    $ 3.2       $ 52.6       $ 77.6       $ 136.4  
International
      19.4         20.2         44.7         39.2  
Other
      (3.1 )       (12.9 )       (5.9 )       1.1  
Corporate
      (4.5 )       (7.2 )       (18.6 )       (20.7 )
                                         
Consolidated operating income
    $ 15.0       $ 52.7       $ 97.8       $ 156.0  
                                         
 
                     
      November 28,
      February 29,
 
Reportable Segment Balance Sheet Data     2008       2008  
              (Restated)  
Total assets
                   
North America
    $ 769.5       $ 793.7  
International
      469.6         546.8  
Other
      269.4         309.7  
Corporate
      450.7         474.2  
                     
Consolidated total assets
    $ 1,959.2       $ 2,124.4  
                     
 
13.   RESTRUCTURING ACTIVITIES
 
We announced specific actions in March 2008 targeted toward further modernizing our industrial system, rebalancing our workforce to better align with our growth opportunities and improving the profitability at PolyVision. We currently estimate these actions to cost approximately $30, or $10 less than initially estimated. However, we continue to estimate the related savings will approximate $40 on an annualized basis. The March 2008 announcement includes the following actions:
 
  •  Within the North America segment, we are closing one manufacturing facility and transferring its production, along with certain products from another facility, to other manufacturing facilities within our network. We expect these actions to be completed by the end of Q4 2009. During Q3 2009, we recorded $1.4 in costs associated with these actions which included employee termination costs, impairment of certain fixed assets and relocation costs. We have incurred a cumulative total of $10.4 in costs related to this initiative during 2009.
 
  •  Within the Other category, we are closing our Oakland, California (Metro) manufacturing facility, as we continue to consolidate front office and manufacturing operations within other Coalesse Group and North America locations. We expect to complete this initiative by the end of Q4 2009. We recorded a charge of $2.3 during Q3 2009, and we have incurred a cumulative total of $9.3 in costs related to employee termination, relocation and impairment of certain fixed assets in connection with this initiative.


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STEELCASE INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)
 
 
  •  Also within the Other Category, we closed a PolyVision facility during Q1 2009. This closure was linked to a decision to exit a portion of the public-bid contractor whiteboard fabrication business where profit margins are the lowest. During 2009, we incurred cumulative employee termination and relocation costs of $1.2 associated with this action. We also recorded a credit of $0.9 in Q2 2009 related to the disposition of a product line within PolyVision’s business.
 
  •  We launched various white-collar “reinvention” initiatives across our business in an effort to curb the automatic replacement of future attrition and retirements and to rebalance our global workforce to better align with our growth opportunities. In connection with these efforts, we expect to reduce our existing white-collar workforce by approximately 100 jobs by the end of 2009. Some of those jobs will relocate to a company-owned shared service center, some to third parties and some may be eliminated as we continue to modernize our processes. We incurred $0.3 in costs in Q3 2009, for a cumulative total of $4.0 in employee termination costs associated with these initiatives during 2009.
 
In December 2008, we announced a series of new actions to consolidate additional manufacturing and distribution facilities in North America, reduce our white-collar workforce and other operating costs globally, and continue and expand our white-collar reinvention initiatives. We expect these recently announced restructuring initiatives to cost between $20 and $25 and generate up to $40 of annualized savings once completed. The majority of these actions are expected to be completed during the next six months, while the white-collar reinvention initiatives are expected to take place throughout fiscal 2010. In Q3 2009, we incurred $0.7 in employee termination costs associated with these actions.
 
These restructuring costs and other less significant items are summarized in the following table:
 
                                         
      Three Months Ended       Nine Months Ended  
      November 28,
      November 23,
      November 28,
      November 23,
 
Restructuring Costs     2008       2007       2008       2007  
Cost of sales:
                                       
North America
    $ 1.9       $ 0.3       $ 9.8       $ 2.0  
International
      —          (0.5 )       (0.4 )       (2.1 )
Other
      1.9         0.1         7.9         —   
                                         
        3.8         (0.1 )       17.3         (0.1 )
                                         
Operating expenses:
                                       
North America
      —          —          1.4         —   
International
      0.2         —          1.0         —   
Other
      0.7         —          1.2         —   
                                         
        0.9         —          3.6         —   
                                         
Totals
    $ 4.7       $ (0.1 )     $ 20.9       $ (0.1 )
                                         
 
Below is a summary of the net additions, payments and adjustments to the restructuring reserve balance during 2009:
 
                               
              Business Exits
         
      Workforce
      and Related
         
Restructuring Reserve     Reductions       Costs       Total  
Reserve balance as of February 29, 2008
    $ 2.5       $ 2.6       $ 5.1  
Additions, net
      16.5         4.4         20.9  
Payments, net
      (12.3 )       (1.4 )       (13.7 )
Adjustments
      (0.3 )       (2.0 )       (2.3 )
                               
Reserve balance as of November 28, 2008
    $ 6.4       $ 3.6       $ 10.0  
                               


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The reserve balance as of November 28, 2008 is primarily related to employee termination costs associated with our restructuring activities announced in March 2008.
 
Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations:
 
This management’s discussion and analysis of financial condition and results of operations should be read in conjunction with our February 29, 2008 Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission on April 28, 2008. 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. 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.
 
Financial Summary
 
Results of Operations
 
                                                                                 
      Three Months Ended       Nine Months Ended  
      November 28,
      November 23,
      November 28,
      November 23,
 
Income Statement Data     2008       2007       2008       2007  
Revenue
    $ 811.3         100.0 %     $ 885.9         100.0 %     $ 2,528.9         100.0 %     $ 2,519.5         100.0 %
Cost of sales
      577.0         71.1         589.1         66.5         1,736.8         68.7         1,680.9         66.7  
Restructuring costs
      3.8         0.5         (0.1 )       —          17.3         0.7         (0.1 )       —   
                                                                                 
Gross profit
      230.5         28.4         296.9         33.5         774.8         30.6         838.7         33.3  
Operating expenses
      214.6         26.5         244.2         27.6         673.4         26.6         682.7         27.1  
Restructuring costs
      0.9         0.1         —          —          3.6         0.1         —          —   
                                                                                 
Operating income
      15.0         1.8         52.7         5.9         97.8         3.9         156.0         6.2  
Interest expense and other (expense) income, net
      (5.6 )       (0.7 )       (0.6 )       (0.1 )       (8.5 )       (0.4 )       9.2         0.4  
                                                                                 
Income before income tax expense
      9.4         1.1         52.1         5.8         89.3         3.5         165.2         6.6  
Income tax expense
      9.0         1.1         20.8         2.3         35.3         1.4         62.6         2.5  
                                                                                 
Net income
    $ 0.4         —        $ 31.3         3.5 %     $ 54.0         2.1 %     $ 102.6         4.1 %
                                                                                 
 
Overview
 
Q3 2009 net income decreased to $0.4, or $0.00 per share, compared to $31.3, or $0.22 per share, in the same quarter last year. The decrease in the quarter was largely the result of lower volume within our North America segment and Other category and a $27.5 charge related to a reduction in cash surrender value of our company-owned life insurance policies (“COLI”). Higher commodity cost inflation which continues to out-pace recent pricing actions, increased restructuring costs and lower interest income also contributed to the decline in net income, but to a smaller extent. Q3 2008 included a $21.1 impairment charge at PolyVision, which is included in the Other category. Net income decreased by $48.6 during the first three quarters of 2009 to $54.0, or $0.40 per diluted share, compared to $102.6, or $0.71 per diluted share, in the same period last year primarily due to the same factors noted above for the Q3 2009 decrease in net income.
 
Revenue was $811.3 in Q3 2009, compared to $885.9 in the same quarter last year. The overall global economic slowdown and factors contributing to the turmoil in the capital markets are influencing the current demand for office furniture. During the quarter, the rapid acceleration of the credit crisis in North America contributed to revenue decreasing by 11.4% in our North America segment and 14.8% in our Other category. Revenue in our International segment increased 2.3%, despite negative currency translation effects compared to the prior year. In total, third quarter revenue included approximately $18


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of unfavorable currency translation effects versus the same quarter last year and a minimal net impact from acquisitions and dispositions during the last four quarters.
 
Year-to-date revenue increased slightly compared to the same period last year. Revenue increased by 20.5% in our International segment offset in part by decreases of 6.1% and 6.4% in our North America segment and Other category, respectively, compared to the same period last year. Year-to-date revenue included approximately $35 of net favorable currency translation effects and an unfavorable impact of $15 related to net dispositions during the last four quarters.
 
Cost of sales, which is reported separately from restructuring costs, increased as a percentage of revenue by 460 basis points during Q3 2009 and 200 basis points year-to-date, compared to the same periods last year, primarily due to a significant decline in the cash surrender value of COLI in Q3 2009 and higher commodity cost inflation, which has out-paced recent pricing actions for the last two quarters. Additionally, lower fixed cost absorption related to lower volume also had the effect of increasing cost of sales as a percentage of revenue in Q3 2009 compared to the prior year.
 
Operating expenses, which are reported separately from restructuring costs, decreased by $29.6 in Q3 2009 and by $9.3 year-to-date compared to the same periods last year. The decrease in the quarter was primarily due to $21.1 of impairment charges recorded in the Other category in Q3 2008 and lower variable compensation expense, partially offset by declines in the cash surrender value of COLI. For year-to-date 2009, the decrease in operating expenses in Q3 2009 was partially offset by increases during the first half of 2009, which included unfavorable currency translation effects, increased product development and showroom spending, increased spending related to the launch of our Coalesse brand and additional growth-related spending in Asia.
 
Q3 2009 operating income was $15.0, a decrease of $37.7 compared to the prior year. Year-to-date operating income was $97.8, a decrease of $58.2 compared to the prior year.
 
Restructuring costs of $4.7 incurred in Q3 2009 and $20.9 year-to-date primarily related to the restructuring activities we announced in March 2008. See Note 13 to the condensed consolidated financial statements for additional information.
 
We increased our year-to-date effective tax rate in Q3 2009 to 42.5% reflecting the impact of the significant non-deductible COLI losses during Q3 2009. In addition, we recorded favorable tax adjustments totaling $2.6 resulting from changes in estimates associated with our fiscal 2008 U.S. tax returns and the retroactive reinstatement of the U.S. research tax credit to January 1, 2008. We currently expect our effective tax rate to approximate 42.5% in Q4 2009; however, continued volatility in COLI results and the potential finalization of a multi-year audit with the Internal Revenue Service in the U.S. could impact this estimate.


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Interest Expense and Other (Expense) Income, Net
 
                                         
      Three Months Ended       Nine Months Ended  
      November 28,
      November 23,
      November 28,
      November 23,
 
Interest Expense and Other (Expense) Income, Net     2008       2007       2008       2007  
Interest expense
    $ (4.3 )     $ (4.2 )     $ (12.8 )     $ (12.6 )
                                         
Other income, net:
                                       
Interest income
      1.0         5.7         4.5         18.5  
Equity in income of unconsolidated ventures
      1.1         1.1         3.4         3.3  
Elimination of minority interest in consolidated dealers
      (1.0 )       (1.6 )       (3.5 )       (5.5 )
Foreign exchange (loss) gain
      (2.6 )       1.5         (3.7 )       2.9  
Other income (expense), net
      0.2         (3.1 )       3.6         2.6  
                                         
Total other (expense) income, net
      (1.3 )       3.6         4.3         21.8  
                                         
Total interest expense and other (expense) income, net
    $ (5.6 )     $ (0.6 )     $ (8.5 )     $ 9.2  
                                         
 
Interest income in Q3 2009 and year-to-date was lower than the prior year due to lower average cash balances resulting from the payment of a $1.75 per share special cash dividend in Q4 2008 and lower interest rates earned on those balances. Foreign exchange losses in Q3 2009 and year-to-date resulted from the strengthening of the U.S. dollar compared to European and Canadian currencies, whereas foreign exchange gains in 2008 occurred when the U.S. dollar weakened compared to those currencies.
 
Business Segment Review
 
See additional information regarding our business segments in Note 12 to the condensed consolidated financial statements.
 
North America
 
                                                                                 
      Three Months Ended       Nine Months Ended  
      November 28,
      November 23,
      November 28,
      November 23,
 
Income Statement Data — North America     2008       2007       2008       2007  
Revenue
    $ 443.1         100.0 %     $ 500.0         100.0 %     $ 1,373.5         100.0 %     $ 1,462.4         100.0 %
Cost of sales
      333.0         75.2         341.2         68.2         965.3         70.3         994.9         68.0  
Restructuring costs
      1.9         0.4         0.3         0.1         9.8         0.7         2.0         0.2  
                                                                                 
Gross profit
      108.2         24.4         158.5         31.7         398.4         29.0         465.5         31.8  
Operating expenses
      105.0         23.7         105.9         21.2         319.4         23.3         329.1         22.5  
Restructuring costs
      —          —          —          —          1.4         0.1         —          —   
                                                                                 
Operating income
    $ 3.2         0.7 %     $ 52.6         10.5 %     $ 77.6         5.6 %     $ 136.4         9.3 %
                                                                                 
 
Operating income was 0.7% of revenue in Q3 2009 compared to 10.5% of revenue in the same quarter last year. Year-to-date operating income was 5.6% of revenue compared to 9.3% of revenue in the prior year. The decrease was due to lower fixed cost absorption related to lower volume, decreases in the cash surrender value of COLI, higher commodity cost inflation, which has out-paced recent pricing actions for the last two quarters, and increased restructuring costs.
 
North America revenue, which accounted for approximately 54% of consolidated year-to-date revenue, decreased by 11.4% from the prior year quarter and 6.1% year-to-date. The decrease in revenue during the first two quarters of 2009 was primarily due to decreased project business in the financial services sector; however, in Q3 2009, revenue declines became more broad based, negatively impacting many other vertical


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markets and most geographic regions throughout the U.S. These declines were partially offset by relative stability in the higher education, federal government, healthcare and technical/professional sectors. Order rates deteriorated significantly through the quarter, and we witnessed an increase in project deferrals and cancellations as business capital spending declined. Net dispositions had the effect of decreasing revenue by approximately $8 during Q3 2009 and $42 year-to-date as compared to the same periods last year. Currency translation had the effect of decreasing revenue by approximately $5 during Q3 2009 and increasing revenue by approximately $1 year-to-date as compared to the same periods last year.
 
Cost of sales increased as a percentage of revenue by 700 basis points in the current quarter versus the same quarter last year and by 230 basis points year-to-date. In addition to the COLI losses previously referenced, increases in cost of sales were driven by lower fixed cost absorption related to lower volume and increased commodity cost inflation which has out-paced recent pricing actions for the last two quarters. The year-to-date deterioration was partially offset by a favorable property tax settlement recorded in the first quarter and continued plant efficiencies in the first half of the year.
 
Operating expenses decreased by $0.9 during Q3 2009 and $9.7 year-to-date compared to the same periods last year, but increased as a percentage of revenue due to volume reductions. The quarter and year-to-date decreases in operating expense dollars were primarily due to lower variable compensation expense and lower operating expenses related to the sale of a non-core business, which were partially offset by decreases in cash surrender value of COLI and increased spending on a sales and dealer conference during Q3 2009. Q3 2008 benefited from reductions in variable compensation expense associated with the impairment charges recorded in the Other category.
 
Restructuring costs of $1.9 incurred in Q3 2009 and $11.2 year-to-date primarily related to the restructuring activities we announced in March 2008. See Note 13 to the condensed consolidated financial statements for additional information.
 
International
 
                                                                                 
      Three Months Ended       Nine Months Ended  
      November 28,
      November 23,
      November 28,
      November 23,
 
Income Statement Data — International     2008       2007       2008       2007  
Revenue
    $ 236.0         100.0 %     $ 230.8         100.0 %     $ 742.0         100.0 %     $ 615.6         100.0 %
Cost of sales
      155.5         65.9         150.9         65.4         500.2         67.4         407.0         66.1  
Restructuring credits
      —          —          (0.5 )       (0.2 )       (0.4 )       —          (2.1 )       (0.3 )
                                                                                 
Gross profit
      80.5         34.1         80.4         34.8         242.2         32.6         210.7         34.2  
Operating expenses
      60.9         25.8         60.2         26.0         196.5         26.5         171.5         27.8  
Restructuring costs
      0.2         0.1         —          —          1.0         0.1         —          —   
                                                                                 
Operating income
    $ 19.4         8.2 %     $ 20.2         8.8 %     $ 44.7         6.0 %     $ 39.2         6.4 %
                                                                                 
 
International reported operating income of 8.2% of revenue in Q3 2009 compared to 8.8% of revenue in the same quarter last year. Year-to-date operating income was 6.0% of revenue compared to 6.4% of revenue in the prior year. Benefits associated with improved fixed cost leverage related to higher volume were more than offset by increases in cost of sales due to commodity cost inflation, unfavorable currency impacts in the United Kingdom and the dilutive impact of consolidating an acquisition.
 
International revenue represented approximately 29% of consolidated year-to-date revenue. Revenue increased 2.3% from the same quarter last year and 20.5% year-to-date. The Q3 2009 revenue growth included increases in the United Kingdom, Mexico, India, Algeria, the region encompassing the former Soviet Union and the Middle East, and decreases in Spain, France and Japan. The year-to-date revenue growth also reflected increases in Germany and China. Currency translation had the effect of decreasing revenue by approximately $13 during Q3 2009 but increasing revenue by approximately $34 year-to-date as compared to the same periods last year. Net acquisitions completed during the last four quarters had the effect of increasing revenue by approximately $8 during Q3 2009 and $27 year-to-date as compared to the same periods last year.


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Cost of sales as a percentage of revenue increased by 50 basis points in Q3 2009 and 130 basis points year-to-date compared to 2008. The deterioration was primarily due to commodity cost inflation, unfavorable currency impacts in the United Kingdom and the dilutive impact of consolidating an acquisition.
 
Operating expenses increased by $0.7 during Q3 2009 and $25.0 year-to-date compared to the same periods last year. The year-to-date increase was driven by unfavorable currency translation effects, net acquisitions completed during the last four quarters and additional growth-related spending in Asia.
 
Other
 
                                                                                 
      Three Months Ended       Nine Months Ended  
      November 28,
      November 23,
      November 28,
      November 23,
 
Income Statement Data — Other     2008       2007       2008       2007  
Revenue
    $ 132.2         100.0 %     $ 155.1         100.0 %     $ 413.4         100.0 %     $ 441.5         100.0 %
Cost of sales
      88.5         67.0         97.0         62.5         271.3         65.6         279.0         63.2  
Restructuring costs
      1.9         1.4         0.1         0.1         7.9         1.9         —          —   
                                                                                 
Gross profit
      41.8         31.6         58.0         37.4         134.2         32.5         162.5         36.8  
Operating expenses
      44.2         33.4         70.9         45.7         138.9         33.6         161.4         36.6  
Restructuring costs
      0.7         0.5         —          —          1.2         0.3         —          —   
                                                                                 
Operating (loss) income
    $ (3.1 )       (2.3 )%     $ (12.9 )       (8.3 )%     $ (5.9 )       (1.4 )%     $ 1.1         0.2 %
                                                                                 
 
Our Other category includes the Coalesse Group, PolyVision and IDEO subsidiaries. Q3 2009 revenue decreased 14.8% from the same quarter last year and 6.4% year-to-date. The decrease in revenue includes the effects of our decision earlier in 2009 to exit a portion of the PolyVision public bid contractor whiteboard fabrication business, as well as the transfer of corporate whiteboard and certain other corporate technology products to the Steelcase brand in the North America segment during the first six months of 2009. In addition, the weakening economy in the U.S. contributed to decreases in revenue in the Coalesse Group and IDEO. As discussed in Note 12 to the condensed consolidated financial statements, prior to 2009, the Other category also included our Financial Services subsidiary. The Other category included approximately $2 of operating income from Financial Services in Q3 2008 and $7 in the first three quarters of 2008, which primarily related to residual gains from early lease terminations we had originated and funded in prior years.
 
The operating loss for the Other category was $3.1 during Q3 2009 and $5.9 year-to-date, representing an improvement of $9.8 and decrease of $7.0, compared to the respective prior periods.
 
The Q3 and year-to-date 2009 operating losses for the Other category primarily related to lower operating income performance within the Coalesse Group and restructuring costs within the Coalesse Group and PolyVision. Additionally, Q3 and year-to-date 2009 do not benefit from prior year gains within Financial Services and include a negative impact from transferring certain PolyVision product lines to the Steelcase brand. The operating loss in Q3 2008 was primarily due to a $21.1 goodwill and intangible asset impairment-related charge.
 
The Coalesse Group recorded lower operating income in Q3 and year-to-date 2009 versus the same periods last year due to lower volume, higher cost of sales as a result of temporary inefficiencies associated with the consolidation of manufacturing activities announced in March 2008, higher commodity costs and increased operating expense investments related to the launch of the Coalesse brand and various new products.
 
Net restructuring costs of $2.6 in Q3 2009 and $9.1 year-to-date 2009 primarily related to the closure of two manufacturing facilities: one within the Coalesse Group and one at PolyVision.


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Corporate
 
                                         
      Three Months Ended     Nine Months Ended
      November 28,
    November 23,
    November 28,
    November 23,
Income Statement Data — Corporate     2008     2007     2008     2007
Operating expenses
    $ 4.5       $ 7.2       $ 18.6       $ 20.7  
                                         
 
The decrease in corporate expenses was primarily due to lower variable compensation expense. Approximately 85% of corporate expenses are charged to the operating segments as part of a corporate allocation. Unallocated portions of these expenses are considered general corporate costs and are reported as Corporate. Corporate costs include executive and portions of shared service functions such as information technology, human resources, finance, legal, research and development and corporate facilities.
 
Liquidity and Capital Resources
 
The following table summarizes our statements of cash flows for the nine months ended November 28, 2008 and November 23, 2007:
 
                     
      Nine Months Ended  
      November 28,
      November 23,
 
Cash Flow Data     2008       2007  
Net cash provided by (used in):
                   
Operating activities
    $ 111.7       $ 167.8  
Investing activities
      (35.2 )       (65.4 )
Financing activities
      (120.0 )       (174.1 )
Effect of exchange rate changes on cash and cash equivalents
      (7.0 )       12.1  
                     
Net decrease in cash and cash equivalents
      (50.5 )       (59.6 )
Cash and cash equivalents, beginning of period
      213.9         527.2  
                     
Cash and cash equivalents, end of period
    $ 163.4       $ 467.6  
                     
 
We believe we currently need approximately $50 of cash to fund the day-to-day operations of our business. Our current target is to maintain a minimum of $100 of additional cash and short-term investments as available liquidity for funding investments in growth initiatives and as a cushion against volatility in the economy. Our actual cash and short-term investment balances will fluctuate from quarter to quarter as we plan for and manage certain seasonal disbursements, particularly the annual payment of accrued variable compensation and retirement plan contributions in Q1. These are general guidelines; we may modify our approach in response to changing market conditions or opportunities. As of the end of Q3 2009, we held a total of $220.0 in cash and short-term investments.
 
Cash provided by operating activities
 
                     
      Nine Months Ended  
      November 28,
      November 23,
 
Cash Flow Data — Operating Activities     2008       2007  
Net income
    $ 54.0       $ 102.6  
Depreciation and amortization
      67.5         70.1  
Impairment of goodwill and intangible assets
      —          21.1  
Changes in operating assets and liabilities
      (25.6 )       (35.3 )
Other, net
      15.8         9.3  
                     
Net cash provided by operating activities
    $ 111.7       $ 167.8  
                     
 
Net cash provided by operating activities decreased during the first three quarters of 2009 primarily related to lower profitability.


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Cash used in investing activities
 
                     
      Nine Months Ended  
      November 28,
      November 23,
 
Cash Flow Data — Investing Activities     2008       2007  
Capital expenditures
    $ (66.2 )     $ (52.6 )
Net purchases of investments
      (1.3 )       (43.1 )
Proceeds from disposal of fixed assets
      4.8         26.0  
Business divestitures (acquisitions), net of cash sold or acquired
      15.8         (7.6 )
Other, net
      11.7         11.9  
                     
Net cash used in investing activities
    $ (35.2 )     $ (65.4 )
                     
 
Net cash used in investing activities during the first three quarters of 2009 primarily related to capital expenditures. The increase in capital expenditures compared to the prior year is primarily related to an $11.8 progress payment in Q2 2009 associated with a replacement corporate aircraft. Business divestitures in the current year related primarily to the sale of a non-core business in our North America segment in Q2 2009.
 
Cash used in financing activities
 
                     
      Nine Months Ended  
      November 28,
      November 23,
 
Cash Flow Data — Financing Activities     2008       2007  
Dividends paid
    $ (60.7 )     $ (64.9 )
Common stock repurchases
      (59.0 )       (124.5 )
Common stock issuances
      0.4         11.0  
Other, net
      (0.7 )       4.3  
                     
Net cash used in financing activities
    $ (120.0 )     $ (174.1 )
                     
 
The primary uses of cash in financing activities continue to relate to dividends and share repurchases.
 
We paid dividends of $0.15 per common share during each of the first three quarters of 2009 and 2008. On December 18, 2008, our Board of Directors declared a dividend of $0.08 per common share to be paid in Q4 2009.
 
During the first three quarters of 2009, we repurchased 5.1 million shares of common stock for $59.0, which included $24.2 repurchased under a $100 share repurchase program completed in March 2008. As of the end of Q3 2009, we had $215.1 remaining availability under the $250 share repurchase program approved by our Board of Directors in December 2007. We have no outstanding share repurchase commitments.
 
Share repurchases of Class A common stock to enable participants to satisfy tax withholding obligations upon vesting of restricted stock and restricted stock units, pursuant to the terms of our Incentive Compensation Plan, were $1.7 and $2.8 for the first three quarters of 2009 and 2008, respectively.
 
Off-Balance Sheet Arrangements
 
During the first three quarters of 2009, no material change in our off-balance sheet arrangements occurred.


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Contractual Obligations
 
During the first three quarters of 2009, there were no material changes to our contractual obligations.
 
Goodwill and Other Intangible Assets
 
As of November 28, 2008, Goodwill and other intangible assets, net , as reported on the Condensed Consolidated Balance Sheets aggregated $277.9. We analyze our goodwill and other non-amortized intangible assets for impairment on an annual basis during Q4 (Q3 for PolyVision) or more frequently if impairment indicators are present. Such indicators of impairment include, but are not limited to, changes in general business conditions and reductions in expected operating results or cash flows related to such assets.
 
During Q3 2009, we experienced a significant decline in the price of our publicly-traded Class A common stock and, accordingly, a significant decline in our market capitalization. We believe the decline in our stock price was principally driven by the current economic environment and the extraordinary declines in worldwide stock markets as a whole. We do not believe that these events impact the fair value of our reporting units with allocated goodwill; however, they would impact our ability to reconcile the fair value of our reporting units to our market capitalization. As part of our annual goodwill impairment test, we will prepare a reconciliation of the fair value of our reporting units to our market capitalization. As a result of this reconciliation process, and if our stock price remains at current levels for a more extended period of time, it is possible that we could identify factors impacting enterprise value that have not yet been reflected in our assessment of reporting unit fair value. Any consequent reduction in the estimated fair value of our reporting units as a result of the identification of such factors could result in a non-cash goodwill impairment charge.
 
Liquidity Facilities
 
Our total liquidity facilities as of November 28, 2008 consisted of:
 
           
Liquidity Facilities     Amount  
Global committed bank facility
    $ 200.0  
Various uncommitted lines
      106.5  
           
Total credit lines available
      306.5  
Less:
         
Borrowings outstanding
      4.6  
Standby letters of credit
      21.4  
           
Available capacity (subject to covenant constraints)
    $ 280.5  
           
 
We have the option of increasing the global committed bank facility from $200 to $300, subject to customary conditions. Borrowings under this facility are unsecured and unsubordinated. There are currently no borrowings outstanding under this facility, and the facility matures in Q2 2011. The facility requires us to satisfy two financial covenants: a maximum leverage ratio covenant, which is measured by the ratio of debt to trailing four quarter EBITDA (as defined in the credit agreement) and is required to be less than 3:1, and a minimum interest coverage ratio, which is measured by the ratio of trailing four quarter EBITDA (as defined in the credit agreement) to trailing four quarter interest expense and is required to be greater than 4:1. We were in compliance with all covenants under this facility and our other financing facilities during Q3 2009, and they are fully available for our use, although the various uncommitted lines are subject to change or cancellation by the banks at any time. Subsequent to November 28, 2008, an existing standby letter of credit for self-insured workers’ compensation was reissued under our global committed bank facility which reduced our available credit line by $18.4.
 
Total consolidated debt as of November 28, 2008 was $255.3. Our debt primarily consisted of $249.6 in term notes due in 2012 with an effective interest rate of 6.3%. The term notes contain no financial covenants.


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We currently have investments in auction rate securities (“ARS”) and one Canadian asset-backed commercial paper (“ABCP”) investment with a total par value of $30.5 and an estimated fair value of $27.0. These securities are included in Other assets on the Condensed Consolidated Balance Sheets due to the tightening of the U.S. credit markets and lack of liquid markets for ARS or Canadian ABCP. We intend to hold these investments until the market recovers and do not anticipate the need to sell these investments in order to operate our business. See Note 6 to the condensed consolidated financial statements for additional information.
 
The deterioration in the global economy and recent related decline in global equity markets has adversely impacted our revenue and operating profitability, particularly in North America. Accordingly, we have initiated a variety of actions to conserve cash and maintain liquidity.
 
  •  In December 2008, we announced a series of new actions to consolidate additional manufacturing and distribution facilities in North America, reduce our white-collar workforce and other operating costs globally, and continue and expand our white-collar reinvention initiatives. We expect these recently announced restructuring initiatives to cost between $20 and $25 and generate up to $40 of annualized savings once completed. See Note 13 to the condensed consolidated financial statements for additional information.
 
  •  In December 2008, our Board of Directors declared a cash dividend on our common stock of $0.08 per share, compared to quarterly dividends of $0.15 per share paid in 2008 and year-to-date 2009.
 
  •  During Q3 2009, we reduced the level of share repurchases compared to recent quarters.
 
  •  We expect to reduce our level of capital expenditures in 2010 to approximately $50, as compared to an expected $100 for 2009, with a significant portion dedicated to product development efforts.
 
The current cash and short-term investment balances, cash generated from future operations, funds available under existing credit facilities and funds available from COLI and other long term investments are expected to be sufficient to finance our known or foreseeable liquidity needs.
 
Our long-term debt rating is BBB with a stable outlook from Standard & Poor’s and Baa3 with a negative outlook from Moody’s Investor Services.
 
Recently Issued Accounting Standards
 
See Note 2 to the condensed consolidated financial statements.
 
Forward-looking Statements
 
From time to time, in written and oral statements, we discuss our expectations regarding future events and our plans and objectives for future operations. These forward-looking statements generally are accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “possible,” “potential,” “predict,” “project,” or other similar words, phrases or expressions. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to vary from our expectations because of factors such as, but not limited to, competitive and general economic conditions domestically and internationally; acts of terrorism, war, governmental action, natural disasters and other Force Majeure events; changes in the legal and regulatory environment; our restructuring activities; currency fluctuations; changes in customer demand; and the other risks and contingencies detailed in this Report, our most recent Annual Report on Form 10-K 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.


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Item 3.   Quantitative and Qualitative Disclosures About Market Risk:
 
The nature of market risks (i.e., the risk of loss arising from adverse changes in market rates and prices) faced by us at November 28, 2008 is the same as disclosed in our Annual Report on Form 10-K for the year ended February 29, 2008. The principal market risks to which we are exposed include foreign exchange risk, interest rate risk and fixed income and equity price risk.
 
Foreign Exchange Risk
 
During the first three quarters of 2009, no material change in foreign exchange risk occurred.
 
Interest Rate Risk
 
During the first three quarters of 2009, no material change in interest rate risk occurred.
 
Fixed Income and Equity Price Risk
 
During the first three quarters of 2009, no material change in fixed income and equity price risk occurred.
 
Item 4.   Controls and Procedures:
 
(a)  Disclosure Controls and Procedures.   Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of November 28, 2008. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of November 28, 2008, 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)  Internal Control Over Financial Reporting.   There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during our third fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


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PART II.  OTHER INFORMATION
 
Item 1A.   Risk Factors:
 
The following risk factor supplements those risk factors discussed in Part  I, Item 1A, Risk Factors , of our Annual Report on Form 10-K for the year ended February 29, 2008.
 
The effect of deteriorating global economic conditions and financial markets may adversely affect our business.
 
The recent distress in the financial markets has resulted in extreme volatility in the capital markets and diminished liquidity and credit availability. There can be no assurance that our liquidity will not be adversely affected by changes in the financial markets and the global economy. In addition, deterioration in our financial results could negatively impact our credit ratings. The tightening of the credit markets or a downgrade in our credit ratings could increase our borrowing costs and make it more difficult for us to access funds, to refinance our existing indebtedness, to enter into agreements for new indebtedness or to obtain funding through the issuance of securities.
 
In addition, the credit crisis is having a significant negative impact on many businesses around the world. The credit crisis could adversely impact our customers, dealers and suppliers as follows:
 
  •  If our customers have difficulty in accessing the necessary liquidity for their operations, they may be unable to allocate capital for the purchase of our products and services, or they may be unable to pay amounts owed to our dealers or us.
 
  •  We rely largely on a network of independent and company-owned dealers to market, deliver and install our products to customers. Customer concentration within some of our dealers is relatively high. If our dealers are unable to access liquidity or become insolvent, they could be unable to deliver required products and services and unable to pay amounts owed to us.
 
  •  If our suppliers are unable to access liquidity or become insolvent, they could be unable to deliver raw materials or component parts and labor. In addition, some of our suppliers also serve the automotive industry. Any adverse impacts to the automotive industry, as a result of the economic slowdown or credit crisis, could have a ripple effect on these suppliers which could adversely impact their ability to supply us necessary parts or labor. Any such disruptions could negatively impact our ability to deliver products and services to our dealers and/or customers, which in turn could have an adverse impact on our business, operating results or financial condition.
 
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds:
 
Issuer Purchases of Equity Securities
 
The following is a summary of share repurchase activity during Q3 2009.
 
                                         
                              (d)
 
                      (c)
      Approximate Dollar
 
                      Total Number of
      Value of Shares
 
                      Shares Purchased as
      that May Yet be
 
      (a)
      (b)
      Part of Publicly
      Purchased
 
      Total Number of
      Average Price
      Announced Plans
      Under the Plans
 
Period     Shares Purchased       Paid per Share       or Programs (1)       or Programs (1)  
8/30/08 — 10/3/08
      —        $ —          —        $ 220.0  
10/4/08 — 10/31/08
      557,700       $ 8.75         557,700       $ 215.1  
11/1/08 — 11/28/08
      —        $ —          —        $ 215.1  
                                         
Total
      557,700       $ 8.75         557,700            
                                         
 
 
(1) In December 2007, our Board of Directors approved a share repurchase program permitting the repurchase of up to $250 of shares of our common stock. This program has no specific expiration date.
 
Item 6.   Exhibits:
 
See Exhibit Index.


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SIGNATURES
 
Pursuant to the requirements 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.
 
STEELCASE INC.
 
By: 
/s/   Mark T. Mossing
Mark T. Mossing
Corporate Controller and
Chief Accounting Officer
(Duly Authorized Officer and
Principal Accounting Officer)
 
Date: January 7, 2009


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Exhibit Index
 
           
Exhibit
     
No.     Description
  10 .1     Steelcase Inc. Restoration Retirement Plan, as amended and restated effective January 1, 2009(1)
  10 .2     Non-Employee Director Deferred Compensation Plan, as amended and restated effective January 1, 2009(1)
  10 .3     Steelcase Inc. Deferred Compensation Plan, as amended and restated effective January 1, 2009(1)
  10 .4     2009-1 Amendment to the Steelcase Inc. Deferred Compensation Plan, as amended and restated effective January 1, 2009
  31 .1     Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  31 .2     Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  32 .1     Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
(1) These documents were previously filed as the like-numbered exhibits to our 10-Q for the quarter ended August 29, 2008 and are being refiled to correct an error in the versions previously filed.


27

EXHIBIT 10.1
STEELCASE INC.
RESTORATION RETIREMENT PLAN
Restated Effective January 1, 2009

 


 

TABLE OF CONTENTS
         
    Page
Article 1 Establishment and Purpose
    1  
 
       
1.1 History of the Plan
    1  
1.2 This Document
    1  
1.3 Purpose
    1  
1.4 Status of Plan Under ERISA
    1  
1.5 Compliance With Section 409A
    1  
 
       
Article 2 Definitions
    1  
 
       
Article 3 Administration of Plan
    8  
 
       
3.1 Administrative Committee
    8  
3.2 Responsibility; Indemnification
    8  
 
       
Article 4 Eligibility
    8  
 
       
4.1 Participation
    8  
4.2 Termination of Participation
    9  
 
       
Article 5 Vesting
    9  
 
       
5.1 Vesting Service
    9  
5.2 Vested Percentage
    9  
 
       
Article 6 Benefits
    9  
 
       
6.1 Amount and Form of Benefit
    9  
6.2 Payment of Pre-2005 Accounts
    10  
6.3 Payment of Post-2004 Account
    10  
6.4 Forfeiture of Benefits
    11  
 
       
Article 7 Change In Control
    12  
 
       
7.1 Vesting
    12  
7.2 Payment
    12  
 
       
Article 8 Amendment and Termination
    12  
 
       
8.1 Amendment
    12  
8.2 Termination
    12  
 
       
Article 9 General Provisions
    13  
 
       
9.1 No Right to Participate
    13  
9.2 No Employment Right
    13  
9.3 No Assignment or Transfer
    13  
9.4 Withholding and Payroll Taxes
    13  
9.5 Incompetent Payee
    13  
9.6 Governing Law
    13  

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    Page
9.7 Construction
    14  
9.8 Disputes
    14  
 
       
Signature
    14  

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STEELCASE INC.
RESTORATION RETIREMENT PLAN
Article 1
Establishment and Purpose
           1.1 History of the Plan
          Steelcase Inc. (the “Company”) established the Steelcase Inc. Restoration Retirement Plan (the “Plan”) as of March 1, 1998. The Plan has periodically been amended.
           1.2 This Document
          By this document, the Company is amending and restating the Plan as of January 1,2009.
           1.3 Purpose
          The Company desires to retain the services of a select group of executives who contribute to the profitability and success of the Company. The Company maintains the Plan to restore, to an extent, the retirement benefits lost by executives due to the limits on the Compensation that may be considered under qualified retirement plans by the Internal Revenue Code.
           1.4 Status of Plan Under ERISA
          The Plan is intended to be “unfunded” and maintained “primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” for purposes of ERISA. Accordingly, the Plan is not intended to be covered by Parts 2 through 4 of Subtitle B of Title I of ERISA. The existence of any Trust Fund is not intended to change this characterization of the Plan.
           1.5 Compliance with Section 409A
          To the extent the Plan provides deferred compensation under Section 409A of the Internal Revenue Code, the Plan is intended to comply with Section 409A. The Plan is intended to be interpreted consistent with the requirements of Section 409 A of the Internal Revenue Code.
Article 2
Definitions
          The following terms shall have the definition stated, unless the context requires a different meaning:

 


 

           2.1 Account
          “Account” means the bookkeeping account set up by the Company to record amounts contributed under Section 6.1.
           2.2 Administrative Committee
          “Administrative Committee” means the Chief Executive Officer, the Chief Financial Officer, the Chief Administrative Officer and the Assistant Secretary of the Company and/or any other individuals designated by the Compensation Committee of the Company’s Board of Directors to administer this Plan and any other plan designated by the Compensation Committee.
           2.3 Affiliate
          “Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations of the Exchange Act.
           2.4 Beneficial Owner or Beneficial Ownership
          “Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to such term in the Rule 13d-3 of the General Rules and Regulations of the Exchange Act.
           2.5 Beneficiary
          “Beneficiary” means the individual, trust, or other entity designated by the Participant to receive any amounts payable with respect to the Participant under the Plan after the Participant’s death. A Participant may designate or change a Beneficiary by filing a signed designation with the Administrative Committee in a form approved by the Administrative Committee. A Participant’s will is not effective for this purpose. If the Participant has not designated a Beneficiary or none so designated survive, the Beneficiary will be the Participant’s surviving Spouse, if any; otherwise the Participant’s children, including those by adoption, dividing the distribution equally among the Participant’s children, with the living issue of any deceased child taking their parent’s share by right of representation; if none, the Participant’s parents, in equal shares; if none, the Participant’s living brothers and sisters in equal shares; if none the Participant’s estate, if under active administration, and if not, the Participant’s heirs under the laws of Intestacy of the State of Michigan. Notwithstanding the above, if the Participant designates his or her Spouse as a Beneficiary, and the Participant later divorces that Spouse, the Participant’s designation of his or her Spouse as Beneficiary shall be null and void, and the portion of the Participant’s benefits that would, but for this provision, be payable to the Participant’s Spouse will be payable instead as designated in the Participant’s designation of Beneficiary as if the Spouse had predeceased the Participant.

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           2.6 Board or Board of Directors
          “Board” or “Board of Directors” means the Board of Directors of the Company.
           2.7 Change in Control
          “Change in Control” of the Company shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:
           (a) Any Person (other than any Initial Holder or Permitted Transferee):
           (1) Is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (1) of paragraph (c) below; and
           (2) The combined voting power of the securities of the Company that are Beneficially Owned by such Person exceeds the combined voting power of the securities of the Company that are Beneficially Owned by all Initial Holders and Permitted Transferees at the time of such acquisition by such Person or at any time thereafter; or
           (b) The following individuals cease for any reason to constitute a majority of the number of Directors then serving: individuals who, on the date hereof, constitute the Board and any new Director (other than a Director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of Directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the Directors then still in office who either were Directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or
           (c) There is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with or involving any other corporation, other than:
           (1) A merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereto), at least fifty-five percent (55%) of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or

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           (2) A merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person (other than an Initial Holder or Permitted Transferee) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliates) representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities; or
           (d) The shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least fifty-five percent (55%) of the combined voting power of the voting securities of which are owned by shareholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.
          However, in no event shall a Change in Control be deemed to have occurred, with respect to a Participant, if the Participant is part of a purchasing group which consummates the Change in Control transaction. A Participant shall be deemed “part of a purchasing group” for purposes of the preceding sentence if the Participant is an equity participant in the purchasing company or group (except for: (i) passive ownership of less than three percent (3%) of the stock of the purchasing company; or (ii) ownership of equity participant in the purchasing company or group which is otherwise not significant, as determined prior to the Change in Control by a majority of the non-employee continuing Directors).
          Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership, directly or indirectly, in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.
           2.8 Company
          “Company” means Steelcase Inc.
           2.9 Compensation
          “Compensation” has the same meaning given to it under the Steelcase Inc. Retirement Plan, except that it is not limited as required by Internal Revenue Code Section 401(a)(17).
           2.10 Determination Period
          “Determination Period” means the Calendar Year preceding the Calendar Year during which an Employee has a Separation from Service.

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           2.11 Director
          “Director” means any individual who is a member of the Board.
           2.12 Eligible Compensation
          “Eligible Compensation” means a Participant’s Compensation in excess of the limit described in Internal Revenue Code Section 40l(a)(17) during a Fiscal Year, but not in excess of twice that limit.
           2.13 Employee
          “Employee” means any individual who is on the payroll of the Company or a Related Employer and is considered to be a common-law employee of the Company or a Related Employer. An individual who is treated by the Company or a Related Employer as an independent contractor for tax purposes is not an Employee.
           2.14 ERISA
          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
           2.15 Exchange Act
          “Exchange Act” means the Securities and Exchange Act of 1934, as amended from time to time, or any successor act thereto.
           2.16 Initial Holder
          “Initial Holder” shall have the meaning set forth in the Second Restated Articles of Incorporation of the Company.
           2.17 Key Employee
          “Key Employee” means any Employee who at any time during the Determination Period was:
           (a) An officer of the Company or a Related Employer whose annual Compensation from the Company and all Related Employer is more than $145,000 (as adjusted under Section 416(i)(l) of the Internal Revenue Code for Plan Years beginning after December 31, 2007);
           (b) A person having more than a 5% ownership interest in the Company or a Related Employer; or
           (c) A person having more than a 1% ownership interest in the Company or a Related Employer and whose annual Compensation from the Company and all Related Employers is more than $150,000.

-5-


 

          The determination of who is a Key Employee shall be made in accordance with Sections 409A and 416(i)(l) of the Internal Revenue Code and the applicable regulations and guidance.
           2.18 MIP
          “MIP” means the Steelcase Inc. Management Incentive Plan.
           2.19 Participant
          “Participant” means an Employee who is a member of the MIP for the full Fiscal Year and whose Compensation is in excess of the compensation limit specified in Internal Revenue Code Section 401 (a)(l7).
           2.20 Permitted Transferee
          “Permitted Transferee” shall have the meaning set forth in the Second Restated Articles of Incorporation of the Company and include a Permitted Trustee solely in its capacity as a trustee of a Permitted Trust.
           2.21 Permitted Trust
          “Permitted Trust” shall have the meaning set forth in the Second Restated Articles of Incorporation of the Company.
           2.22 Permitted Trustee
          “Permitted Trustee” shall have the meaning set forth in the Second Restated Articles of Incorporation of the Company.
           2.23 Person
          “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof, except that such term shall not include:
           (a) The Company or any of its subsidiaries;
           (b) A trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates;
           (c) An underwriter temporarily holding securities pursuant to an offering of such securities; or
           (d) A corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

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           2.24 Plan Year
          “Plan Year” means the fiscal year of the Company, as in effect from time to time, or such other 12-month period as the Compensation Committee of the Board of Directors of the Company shall establish.
           2.25 Pre-2005 Account
          “Pre-2005 Account” means the vested amount that was credited to the Participant’s Account on December 31, 2004, as adjusted for earnings or losses under Section 6.1(b).
           2.26 Post-2004 Account
          “Post-2004 Account” means the amount credited to the Participant’s Account minus the Participant’s Pre-2005 Account.
           2.27 Related Employer
          “Related Employer” means
           (a) Any member of a controlled group of corporations in which the Company is a member, as defined in Section 414(b) of the Internal Revenue Code; or
           (b) Any other trade or business under common control of or with the Company, as defined in Section 414(c) of the Internal Revenue Code.
           2.28 Separation from Service
          “Separation from Service” means a “separation from service” under Section 409A of the Internal Revenue Code. Generally, this occurs if the Employee is reasonably anticipated to have a substantial permanent reduction in the bona fide level of services provided to the Company and all Related Employers (whether provided as an employee or an independent contractor). The reduction shall be “substantial” only if the reduced bona fide level of services is less than 20% of the average bona fide level of services provided by the Employee to the Company and all Related Employers during the immediately preceding 36 months (or the Participant’s entire period of service, if less than 36 months).

-7-


 

           2.29 Spouse
          “Spouse” means the husband or wife to whom a Participant is married on the date benefit payments are scheduled to begin to the Participant. The legal existence of the spousal relationship shall be governed by the law of Michigan.
Article 3
Administration of Plan
           3.1 Administrative Committee
          The Plan shall be administered by the Administrative Committee. The Administrative Committee shall have full discretionary authority in the operation and administration of the Plan. The Administrative Committee shall act by vote or consent of a majority of its members. To the extent necessary or appropriate, the Administrative Committee will adopt rules, policies, and forms for the administration, interpretation, and implementation of the Plan. All decisions, determinations, and interpretations of the Plan by the Administrative Committee shall be final and binding on all parties. The Administrative Committee may delegate any of its responsibilities to others and may allocate any of its responsibilities among its members.
          A member of the Administrative Committee shall not participate in and shall not be counted as a member with respect to any action of the Administrative Committee directly affecting only that member.
           3.2 Responsibility; Indemnification
          A member of the Administrative Committee shall not be personally responsible or liable for any act or omission in connection with performance of powers or duties or the exercise of discretion or judgment in the administration and implementation of the Plan. The Company shall hold harmless and indemnify each member of the Administrative Committee, and any other individual exercising delegated authority or responsibility with respect to the Plan, from any and all liabilities and costs arising from any act or omission related to the performance of duties or the exercise of discretion and judgment with respect to the Plan.
Article 4
Eligibility
           4.1 Participation
          Participation in the Plan is limited to Employees designated by the Administrative Committee for participation in the MIP and whose Compensation exceeds the limit in Internal Revenue Code Section 401(a)(17).

-8-


 

           4.2 Termination of Participation
          Participation in the Plan shall terminate upon the earlier of the date the Participant is not an Employee and has been paid the full amount due under the Plan or the date of the Participant’s death. Active participation by any Employee will cease if the Employee no longer meets the criteria for participation in Section 4.1 above, and any Employee’s active participation may be terminated by the Administrative Committee at any time. If an Employee’s active participation terminates, subsequent employment by the Employee with the Company or a Related Employer will continue to count for vesting purposes.
Article 5
Vesting
           5.1 Vesting Service
          A Participant’s years of vested service for purposes of determining the vesting percentage under the Plan shall be equal to the “Years of Vested Service” as determined and defined under the Steelcase Inc. Retirement Plan.
           5.2 Vested Percentage
          The Participant’s vested percentage shall be determined by the following schedule:
     
Years of Vested Service   Vested Percentage
Less than 2 years
      0%
2 years or more
  100%
Article 6
Benefits
           6.1 Amount and Form of Benefit
           (a) Principal Credits The Company shall credit to the Participant’s Account for each Fiscal Year a percentage of the Participant’s Eligible Compensation that is equal to the percentage of Compensation allocated to the Participant’s account under the Steelcase Inc. Retirement Plan for that Fiscal Year, taking into account only the Participant’s Compensation up to the Internal Revenue Code Section 401(a)(17) limit. Contributions will be deemed to have been credited as of the last day of each Fiscal Year, and will only be credited if the Participant is still employed and still a member of the MIP on that last day.
           (b) Investment Credits Each Participant’s Account shall be credited with earnings or debited with losses at a rate equal to the Participant’s actual rate of return on the assets credited to the Participant’s Account in the Steelcase Inc. Retirement

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Plan. On and after the date of the Participant’s Separation from Service, however, no earnings or losses will be credited.
           6.2 Payment of Pre-2005 Accounts
           (a) During Life The vested portion of the Participant’s Pre-2005 Account shall be paid or begin to be paid on or about the April 1 following the end of the Fiscal Year in which the Participant has a Separation from Service. A Participant may elect, subject to the approval of the Administrative Committee, to have the payment made in either of the following ways or any combination thereof:
           (1) In one lump sum, or
           (2) In annual installments over four years using the “declining digits” method (i.e., the first payment is 1 / 4 of the vested portion of the Pre-2005 Account balance, the second 1 / 3 of the remaining vested balance, the third 1 / 2 of the remaining vested balance and the fourth the entire remaining vested balance).
          The Participant’s election under this Section shall be filed in writing with the Administrative Committee. The Participant’s initial election shall be effective if filed with the Administrative Committee within 30 days of the date the Administrative Committee provides notice of the election to the Participant, but in any event prior to the date payment would otherwise be made. Elections filed after that time, and any change in an election, shall be effective only if the individual remains employed for the following 12-month period.
           (b) Death In the event of the death of a Participant before payment of all benefits due, the vested amount remaining in the Participant’s Pre-2005 Account will be paid to the Participant’s Beneficiary in a single lump sum or in annual installments over a four year period, using the declining digits method, provided the Participant so elected in accordance with subsection (a) above.
           (c) Cash Outs Notwithstanding anything in this Section 6.2 to the contrary, the Administrative Committee may elect to distribute the entire vested balance of the Participant’s Pre-2005 Account in a single lump sum payment to the Participant or his or her Beneficiary if the vested balance of the Participant’s Pre-2005 Account is less than $50,000, or in the event of the Participant’s Total Disability or death.
           6.3 Payment of Post-2004 Account
           (a) During Life The vested portion of the Participant’s Post-2004 Account shall be paid or begin to be paid on the April 1 following the end of the Fiscal Year in which the Participant has a Separation from Service. A Participant may elect to have the payment made in either of the following ways or any combination thereof:
           (1) In one lump sum, or

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           (2) In annual installments over four years using the “declining digits” method (i.e., the first payment is 1 / 4 of the vested portion of the Post-2004 Account balance, the second 1 / 3 of the remaining vested balance, the third 1 / 2 of the remaining vested balance and the fourth the entire remaining vested balance).
          The Participant’s election under this Section shall be filed in writing with the Administrative Committee. The Participant’s election shall be effective if filed with the Administrative Committee by the later of December 31, 2008 or the last day of the Fiscal Year preceding the first Fiscal Year for which an amount is credited to the Participant’s Account. If no timely election is made by a Participant, payment shall be made in one lump sum payment.
           (b) Death In the event of the death of a Participant before payment of all benefits due, the vested amount remaining in the Participant’s Post-2004 Account will be paid to the Participant’s Beneficiary in a single lump sum or in annual installments over a four year period, using the declining digits method, provided the Participant so elected in accordance with subsection (a) above.
           (c) Key Employees Notwithstanding the preceding provisions of this Section 6.3, no payment shall be made from a Key Employee’s Post-2004 Account for at least six months after such Key Employee’s Separation from Service, unless the Participant dies prior to the end of the six-month period.
           6.4 Forfeiture of Benefits
          The non-vested portion of the Participant’s Account shall be forfeited upon the commencement of payments to the Participant or his or her Beneficiary pursuant to Section 6.2. A Participant’s right to any portion of his or her Account remaining under this Plan shall be forfeited upon occurrence of any of the following events:
           (a) Termination for Cause Termination of the Participant’s employment for cause, as determined in the sole discretion of the Administrative Committee.
           (b) Competition The Participant directly or indirectly engages in competition with the Company or any Related Employer at any time during employment with the Company or a Related Employer, or during the three-year period following termination of employment with the Company or a Related Employer, without prior approval of the Administrative Committee. A Plan Participant engages in competition if that person participates directly or indirectly in the manufacturing, design or distribution of any products of the same type as those of the Company or a Related Employer, including, but not limited to, office furniture, office systems or architectural products, or the providing of any related services, for or on behalf of any person or entity other than the Company or a Related Employer and their authorized dealers, at any location within or without the United States of America. It is intended that this definition shall be enforced to the fullest extent permitted by law. If any part of this definition shall be construed to be invalid or unenforceable, in whole or in part, then such definition shall be

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construed in a manner so as to permit its enforceability to the fullest extent permitted by law.
Article 7
Change In Control
           7.1 Vesting
          A Participant shall be 100% vested upon a Change in Control.
           7.2 Payment
          Upon a Change in Control, amounts credited to the Participant’s Account shall be paid in a single lump sum as soon as reasonably practicable, but in no event later than 60 days following the date of the Change in Control; provided, however, that Participants’ Accounts that are in payment status under Section 6.2 or 6.3 of the Plan shall continue to be paid in annual installments in accordance with Section 6.2 or 6.3 of the Plan.
Article 8
Amendment and Termination
           8.1 Amendment
          This Plan may be amended in any manner at any time by the Board of Directors of the Company. No amendment may, however, decrease or eliminate the Account of a Participant as of the date of the amendment.
           8.2 Termination
          The Plan may be terminated at any time by the Board of Directors of the Company. Upon termination of the Plan, the Board shall specify the extent to which the Pre-2005 Accounts of Participants employed by the Company or a Related Employer shall be preserved or terminated. Upon termination of the Plan, all benefits of previously retired and deceased Participants that are being paid or are payable at a future date and all Post-2004 Accounts shall continue to be paid in accordance with the terms of the Plan in effect at the time of termination. However, the Board of Directors may pay the Accounts of previously retired and deceased Participants and all Post-2004 Accounts to Participants immediately after the Plan is terminated if the payment is permitted by Internal Revenue Code Section 409 A.

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Article 9
General Provisions
           9.1 No Right to Participate
          Nothing in this Plan shall be deemed or interpreted to provide a Participant or any non-participating Employee with any contractual right to participate in or receive benefits of the Plan. The right to participate and the duration of active participation shall be determined in the sole discretion of the Administrative Committee.
           9.2 No Employment Right
          Participation in this Plan shall not be construed as constituting a commitment, guarantee, agreement, or understanding of any kind that the Company or a Related Employer or any subdivision of the Company or a Related Employer will continue to employ any individual, and this Plan shall not be construed or applied as any type of employment contract or obligation. Nothing herein shall abridge or diminish the rights of the Company or a Related Employer or any employing subdivision of the Company or a Related Employer to determine the terms and conditions of employment of any Participant or other Employee or to terminate the employment of any Participant or other Employee with or without cause at any time.
           9.3 No Assignment or Transfer
          Neither a Participant nor any Beneficiary or other representative of a Participant shall have any right to assign, transfer, attach, or hypothecate any amount or credit, potential payment, or right to future payments or any other benefit provided under this Plan. Payment of any amount due or to become due under this Plan shall not be subject to the claims of creditors of the Participant or to execution by attachment or garnishment or any other legal or equitable proceeding or process.
           9.4 Withholding and Payroll Taxes
          The Company shall deduct from any payment made under this Plan all amounts required by federal, state, and local tax laws to be withheld and shall subject any payments made under the Plan to all applicable payroll taxes and assessments.
           9.5 Incompetent Payee
          If the Administrative Committee determines that a person entitled to a payment hereunder is incompetent, it may cause benefits to be paid to another person or entity for the use or benefit of the Participant or the Participant’s Beneficiary at the time or times otherwise payable hereunder, in total discharge of the Plan’s obligations to the Participant or Beneficiary.
           9.6 Governing Law
          The provisions of the Plan shall be construed and governed under the laws of the State of Michigan, except to the extent preempted by ERISA or other federal laws.

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           9.7 Construction
          The singular includes the plural, and the plural includes the singular, and terms connoting gender include both the masculine and feminine, unless the context clearly indicates the contrary. Capitalized terms, except those at the beginning of a sentence or part of a heading, have the meaning defined in the Plan.
           9.8 Disputes
          In the event of any dispute under this Plan, the Administrative Committee will afford the individual affected with a right to a review that complies with the claim review procedures of ERISA. The Administrative Committee has the full discretionary authority to consider and resolve any and all questions regarding the Plan and the Administrative Committee’s decision is intended to be binding on all provided the Administrative Committee members act in good faith and do not engage in intentional wrongdoing.
Signature
          The Company has signed the amended and restated Steelcase Inc. Restoration Retirement Plan this 3 rd day of October, 2008.
             
    STEELCASE INC.
 
           
    By:   /s/ Nancy W. Hickey
         
 
      Its:   Sr. VP, CAO
 
           

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EXHIBIT 10.2
STEELCASE INC.
NON-EMPLOYEE DIRECTOR
DEFERRED COMPENSATION PLAN
(Restated Effective as of January 1, 2009)

 


 

TABLE OF CONTENTS
         
    Page
Article 1 Establishment and Purpose
    1  
 
       
1.1 History of Plan
    1  
1.2 Purpose
    1  
1.3 This Document
    1  
1.4 Status of Plan Under ERISA
    1  
1.5 Compliance with Section 409A
    1  
 
       
Article 2 Definitions
    1  
 
       
Article 3 Participation
    5  
 
       
Article 4 Director Payment and Deferrals
    5  
 
       
4.1 Participant Election Between Deferral and Stock
    5  
4.2 Participant Election Between Cash and Deferral
    5  
4.3 Initial and Subsequent Election Periods
    6  
 
       
Article 5 Deferral Account
    6  
 
       
5.1 Deferral Accounts
    6  
5.2 Debits/Credits to Deferral Accounts
    6  
5.3 Investment Media
    6  
 
       
Article 6 Payments
    7  
 
       
6.1 Timing
    7  
6.2 Form of Payment
    7  
6.3 Payment Medium
    8  
 
       
Article 7 Miscellaneous
    8  
 
       
7.1 No Trust
    8  
7.2 Nonforfeitability
    8  
7.3 Spendthrift Provision
    8  
7.4 Successors, Etc
    9  
7.5 Severability
    9  
7.6 Governing Law
    9  
7.7 Number Construction
    9  
7.8 Amendment and Termination of Plan
    9  
7.9 Interpretation and Implementation
    9  
7.10 Administrative Committee
    10  
7.11 Claims and Appeals
    10  
 
       
Signature
    10  

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Article 1
Establishment and Purpose
           1.1 History of Plan
          Steelcase Inc. (the “Company”) established the Steelcase Inc. Non-Employee Director Deferred Compensation Plan. The Plan was established as of June 23, 1999 and has been periodically amended.
           1.2 Purpose
          The Company adopted the Plan to provide its Non-Employee Directors who participate in the Plan with the opportunity to defer a portion of their Directors Fees and have additional retirement income.
           1.3 This Document
          By this document, the Company is amending and restating the Plan as of January 1, 2009.
           1.4 Status of Plan Under ERISA
          Because the Plan does not cover employees, the Plan is not intended to be covered by any part of ERISA. The existence of any Trust Fund is not intended to change this characterization of the Plan.
           1.5 Compliance with Section 409A
          To the extent the Plan provides deferred compensation under Section 409A of the Internal Revenue Code, the Plan is intended to comply with Section 409A. The Plan is intended to be interpreted consistent with the requirements of Section 409A of the Internal Revenue Code.
Article 2
Definitions
          The following words and phrases, wherever capitalized, shall have the following meanings, unless the context requires otherwise:
           2.1 Administrative Committee
          “Administrative Committee” means a committee consisting of the Company’s Chief Executive Officer, Chief Financial Officer, Chief Administrative Officer and the Assistant Secretary of the Company and/or any other individuals designated by the Compensation Committee of the Company’s Board of Directors.

 


 

           2.2 Beneficiary
          “Beneficiary” means the individual, trust, or other entity designated by the Participant to receive any amounts payable with respect to the Participant under the Plan after the Participant’s death. A Participant may designate or change a Beneficiary by filing a signed designation with the Administrative Committee on a form approved by the Administrative Committee. A Participant’s will is not effective for this purpose. If the Participant has not designated a Beneficiary or none so designated survive, the Beneficiary will be the Participant’s surviving Spouse, if any; otherwise the Participant’s children, including those by adoption, dividing the distribution equally among the Participant’s children, with the living issue of any deceased child taking their parent’s share by right of representation; if none, the Participant’s parents, in equal shares; if none, the Participant’s living brothers and sisters in equal shares; if none the Participant’s estate, if under active administration, and if not, the Participant’s heirs under the laws of Intestacy of the State of Michigan. Notwithstanding the above, if the Participant designates the Participant’s Spouse as a Beneficiary, and the Participant later divorces that Spouse, the Participant’s designation of the Spouse as Beneficiary shall be null and void, and the portion of the Participant’s benefits that would, but for this provision, be payable to the Participant’s Spouse will be payable instead as designated in the Participant’s designation of Beneficiary as if the Spouse had predeceased the Participant.
           2.3 Deferral Account
          “Deferral Account” means the bookkeeping account established by the Administrative Committee with respect to the Participant pursuant to Article 5 for the purpose of recording the amount of the Director’s Fees being deferred pursuant to this Plan and the amount of any earnings, profits, gains or losses credited/debited thereto pursuant to Article 5. A Participant’s Deferral Account shall be divided into a Pre-2005 Deferral Account and a Post-2004 Deferral Account.
           2.4 Deferral Date
          “Deferral Date” means the date the amount of deferred Director’s Fees otherwise would have been paid to the Participant but for the Participant’s deferral of the payment of such fees under Article 4.
           2.5 Determination Period
          “Determination Period” means the Calendar Year preceding the Calendar Year during which an Employee has a Separation from Service.
           2.6 Director’s Fees
          “Director’s Fees” means any amount payable to a Participant for service as a Non-Employee Director, including quarterly retainer fees and fees for meetings of the Board of Directors or any Committee of the Board of Directors.

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           2.7 Election Period
          “Election Period” means the period designated by the Administrative Committee before each Plan Year during which elections under Article 4 must be made with respect to that Plan Year. For a new Participant, the Election Period means the first 30 days of participation in the Plan. For all other Participants, the Election Period shall end no later than December 31 of the calendar year preceding the first day of the Plan Year.
           2.8 Key Employee
          “Key Employee” means any Non-Employee Director who at any time during the Determination Period was:
           (a) An officer of the Company or a Related Employer whose annual Compensation from the Company and all Related Employers is more than $145,000 (as adjusted under Section 416(i)(l) of the Internal Revenue Code for Plan Years beginning after December 31, 2007);
           (b) A common law employee of the Company or a Related Employer having more than a 5% ownership interest in the Company or a Related Employer; or
           (c) A common law employee of the Company or a Related Employer having more than a 1% ownership interest in the Company or a Related Employer and whose annual Compensation from the Company and all Related Employers is more than $150,000.
          The determination of who is a Key Employee shall be made in accordance with Sections 409A and 416(i)(l) of the Internal Revenue Code and the applicable regulations and guidance.
           2.9 Non-Employee Director
          “Non-Employee Director” means any individual who serves as a member of the Board of Directors of the Company and who is not an employee of the Company or any Related Employer.
           2.10 Participant
          “Participant” means a Non-Employee Director of the Company who participates in the Plan pursuant to Article 3.
           2.11 Payment Date
          “Payment Date” means the date payment of a Deferral Account is made pursuant to Section 6.1.

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           2.12 Performance Deferral
          “Performance Deferral” means the amount of a Participant’s quarterly retainer fees deferred, if any, pursuant to Section 4.1. The Performance Deferral includes the mandatory deferrals that were required under the Plan for periods prior to September 1, 2003.
           2.13 Plan Year
          “Plan Year” means the fiscal year of the Company, as in effect from time to time, or such other 12-month period as the Compensation Committee of the Board of Directors of the Company shall establish.
           2.14 Pre-2005 Account
          “Pre-2005 Account” means the vested amount that was credited to the Participant’s Account on December 31, 2004, as adjusted for earnings or losses under Section 5.2.
           2.15 Post-2004 Account
          “Post-2004 Account” means the amount credited to the Participant’s Account minus the Participant’s Pre-2005 Account.
           2.16 Related Employer
          “Related Employer” means:
           (a) Any member of a controlled group of corporations in which the Company is a member, as defined in Section 414(b) of the Internal Revenue Code; or
           (b) Any other trade or business under common control of or with the Company, as defined in Section 414(c) of the Internal Revenue Code.
           2.17 Separation from Service
          “Separation from Service” means a “separation from service” under Section 409A of the Internal Revenue Code. Generally, this occurs if the Non-Employee Director resigns from the Board of Directors of the Company, is not re-elected to the Board of Directors of the Company or ceases being a member of the Board of Directors of the Company for any other reason.

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           2.18 Spouse
          “Spouse” means the husband or wife to whom a Participant is married on the date benefit payments are scheduled to begin to the Participant. The legal existence of the spousal relationship shall be governed by the law of Michigan.
           2.19 Valuation Date
          “Valuation Date” means the last day of the Plan Year, or such other dates as may be designated by the Administrative Committee.
Article 3
Participation
          A Non-Employee Director shall participate in the Plan on the first day of the individual’s term as a Non-Employee Director. A member of the Board of Directors of the Company who becomes a Non-Employee Director after the first day of his or her first term as a member of the Board of Directors of the Company shall become a Participant on the day after the Valuation Date coincident with or following the date the Participant becomes a Non-Employee Director.
Article 4
Director Payment and Deferrals
           4.1 Participant Election Between Deferral and Stock
          Fifty percent (50%) of the Participant’s quarterly retainer fees shall not be paid in the form of cash, but shall instead be deferred and distributed later to the Participant (or in the event of the Participant’s death, to his or her Beneficiary) in accordance with the provisions of Article 6 of this Plan. Notwithstanding the preceding sentence, a Participant may elect during the applicable Election Period to receive such amount in the form of Steelcase Inc. Class A Common Stock in lieu of deferral.
           4.2 Participant Election Between Cash and Deferral.
          During the applicable Election Period, a Participant may elect a percentage (in one percent (1%) increments, up to one hundred percent (100%)) of the Participant’s Director’s Fees remaining following application of Section 4.1, to be earned in the following Plan Year, that shall not be paid in cash, but shall instead be deferred and distributed later to the Participant (or in the event of the Participant’s death, to his or her Beneficiary) in accordance with the provisions of Article 6. All elections under this Section 4.2 shall be made separately with respect to the Participant’s meeting fees and the portion of quarterly retainer fees remaining following application of Section 4.1.

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           4.3 Initial and Subsequent Election Periods
          Any elections made pursuant to Sections 4.1 and 4.2 by a new Participant during the Participant’s initial Election Period shall apply only to Director’s Fees earned for the remainder of the Plan Year following the date of the election and shall be irrevocable. All other deferral elections are irrevocable after the December 31 preceding the first day of the Plan Year for which they are in effect. Elections shall remain in effect for all subsequent Plan Years unless a new election is made during a subsequent Election Period.
Article 5
Deferral Account
           5.1 Deferral Accounts
          The Administrative Committee shall establish a Deferral Account for each Participant. The portion of each Participant’s Director’s Fees deferred pursuant to Article 4 shall be credited to the Participant’s Deferral Account as of the applicable Deferral Date. The Administrative Committee shall maintain records for each Deferral Account until the balance of the Deferral Account has been paid in full pursuant to Article 6. The Administrative Committee shall provide each Participant with a written statement reflecting the amounts credited to his or her Deferral Account at least annually. The Administrative Committee may engage the services of any third parties it deems appropriate to provide assistance with record keeping.
           5.2 Debits/Credits to Deferral Accounts
          As of each Valuation Date subsequent to the establishment of the Participant’s Deferral Account, until such time as the Deferral Account is paid to the Participant, the Administrative Committee shall credit/debit the Deferral Account with earnings, profits, gains or losses that would have been credited/debited if assets equal to the balance of the Deferred Account had been invested since the preceding Valuation Date in the investment media described in Section 5.3.
           5.3 Investment Media
          The Administrative Committee, in its sole discretion may periodically designate certain mutual funds or other investment media among which the Participant may request that his or her Deferral Account should, for the purposes of Section 5.2, be deemed invested. Current investment media include a Steelcase Stock Fund, an index equity fund, a balanced fund and a money market fund. The Steelcase Stock Fund valuation will be based on the weighted average price of the stock traded on the relevant Deferral Date or Valuation Date. The Performance Deferral shall be deemed invested in the Steelcase Stock Fund. The remainder of the Participant’s Deferral Account shall be deemed invested as the Participant elects. The Participant may alter his or her selection among the investment media either for the Participant’s existing Deferral Account balance and/or future deferrals in one percent increments (or such other increments that the Administrative Committee may specify) once each Plan Year (or at such other intervals as the Administrative Committee may specify); provided that Performance Deferral, as adjusted pursuant to Section 5.2, must remain deemed invested in the Steelcase

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Stock Fund. In the absence of any written direction, the Participant’s entire Deferral Account shall be deemed invested in the Steelcase Stock Fund. A Participant’s deemed investment selection shall remain in effect until changed by the Participant.
          The Administrative Committee may elect either to invest funds equal to the amounts credited to the Participant’s Deferral Account as elected by the Participant, invest funds targeted to pay Plan obligations in any other manner or not make investments in connection with Plan obligations. The actual investment shall not affect the obligation of the Company to provide a benefit as if the Deferral Account were actually invested as suggested by the Participant. The Administrative Committee shall establish such procedures and forms as are appropriate to implement the fund selection process of this Section 5.3.
Article 6
Payments
           6.1 Timing
          The Participant’s Deferral Account shall be paid or begin to be paid to the Participant, or to his or her Beneficiary in the event of the Participant’s death, no later than 90 days after the end of the Plan Year during which the Participant has a Separation from Service. The amount to be paid shall be determined by the value of the Participant’s Deferral Account as of the last day of that Plan Year. In no event, however, will any payment be made to a Key Employee earlier than the six-month anniversary of the date of the Participant’s Separation from Service, unless the Participant dies prior to the end of the six-month period. The delay of a payment as a result of the Key Employee rule will not delay the payment of any future payment to which the Participant is entitled.
           6.2 Form of Payment
          The Participant may elect the period over which the balance in his or her Deferral Account shall be paid by the Company to the Participant (or to his or her Beneficiary, in the event of the Participant’s death) from among the following:
           (a) One lump sum, or
           (b) Annual installment payments over five years, or
           (c) Annual installment payments over ten years.
          The Participant’s election with respect to Directors Fees earned prior to January 1, 2005 must be made prior to the Plan Year during which the Participant ceases to be a member of the Board of Directors of the Company. The Participant’s election with respect to Directors Fees earned on or after January 1, 2005 must be made during the first Election Period that applies to Directors Fees earned after December 31, 2004, during which the Non-Employee Director is a Participant. Any election made after the dates set forth above shall not be effective.

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          In the event the Participant fails to timely elect the form of payment for his or her Pre-2005 Deferral Account or Post-2004 Deferral Account, his or her Pre-2005 Deferral Account balance and/or Post-2004 Deferral Account balance shall be paid in one lump sum. The benefit of a Participant who has elected an installment payment option and dies after beginning to receive installment payments shall continue to be paid to the Participant’s Beneficiary in such installments. The Participant may designate a form of payment for death benefits to be paid in the event the Participant dies before benefits to him or her begin that is different than the election for the payments to be made during the Participant’s lifetime.
           6.3 Payment Medium
          The payments made by the Company with respect to the Participant’s Deferral Account pursuant to Sections 6.1 and 6.2 above shall be made in cash (reduced by applicable tax withholdings). Annual payments made in accordance with Sections 6.2(b) and 6.2(c) shall be in an amount equal to a percentage of the Participant’s Deferral Account balance as of the Valuation Date on or immediately preceding the Payment Date, determined by dividing that balance by the remaining years of the payment term.
Article 7
Miscellaneous
           7.1 No Trust
          Nothing contained in this Plan and no action taken pursuant to the provisions hereof shall create or deem to create a trust of any kind, or a fiduciary relationship between the Company and the Participant, the Participant’s Beneficiary or any other person. To the extent that any person acquires the right to receive benefits from the Company under this Plan, such right shall be no greater than the right of any other unsecured general creditor of the Company, and such person shall have no claim on, or any beneficial interest in, any assets of the Company. The Company may establish bookkeeping reserves or any funding media, including grantor trusts, to cover its obligation to make the payments contemplated under Article 6, but amounts designated in such bookkeeping reserves or contained in such funding media as are established shall remain solely those of the Company and shall be subject to the claims of the creditors of the Company until actually paid to the Participant or to the Participant’s Beneficiary. The provisions of this Plan do not operate as a guarantee that sufficient assets will exist for the Company to pay any Plan benefits.
           7.2 Nonforfeitability
          The Participant’s rights to any payments under this Plan shall at all times be nonforfeitable.
           7.3 Spendthrift Provision
          Benefits, payments, proceeds, claims, rights or interest of the Participant or the Participant’s Beneficiary to or under this Plan shall not be subject in any manner to any claims, attachments or encumbrances due to the death, contracts, liabilities, engagements or torts of the

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Participant or the Participant’s Beneficiary, directly or indirectly, or be subject to any claim of any creditor of the Participant or the Participant’s Beneficiary, through legal process or otherwise; nor shall the Participant or the Participant’s Beneficiary be able or permitted in any manner to transfer, encumber, pledge, anticipate, alienate, sell, or assign any such benefits, payments, proceeds, claims, rights or interest, contingent or otherwise.
           7.4 Successors, Etc.
          This Plan shall be binding upon and benefit the Company and its successors, and the Participant and the Participant’s Beneficiary, their heirs and personal representatives, all in accordance and subject to the terms of this Plan.
           7.5 Severability
          Each provision of this Plan shall be independent of and separable from every other provision of this Plan and should any provision of this Plan be deemed or be declared to be contrary to or unenforceable under any law, whether constitutional, statutory or otherwise, all of the remaining provisions of this Plan shall remain in full force and effect.
           7.6 Governing Law
          This Plan shall be governed in all respects, whether as to validity, construction, capacity, performance or otherwise, under the laws of the State of Michigan, except to the extent superseded by federal law.
           7.7 Number Construction
          In all cases where they would so apply, words used in the singular shall be construed to include the plural.
           7.8 Amendment and Termination of Plan
          The Compensation Committee of the Board of Directors may amend or terminate this Plan at any time. The amendment or termination of the Plan shall not reduce amounts already credited to the Participant’s Deferral Account. In the event the Plan is terminated, the Administrative Committee may, in its sole discretion, immediately distribute the balance of the Participant’s Pre-2005 Deferral Account.
          The Participant shall be entitled to receive the amount credited to his Post-2004 Deferral Account upon satisfying the requirements for payment of benefits under the Plan. However, the Company may pay the Participant the amount credited to the Participant’s Post-2004 Deferral Account at any time after the Plan is terminated if the payment is permitted by Section 409A of the Internal Revenue Code.
           7.9 Interpretation and Implementation
          The Administrative Committee shall have exclusive and final authority and sole and absolute discretion with respect to (a) the interpretation and implementation of the terms and

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provisions of this Plan, (b) exercising any of its powers or duties under this Plan and (c) the adoption or amendment of such procedures or practices as it deems necessary, helpful or appropriate, for purposes of administering this Plan.
           7.10 Administrative Committee
          The Administrative Committee may delegate any of its powers, authorities or responsibilities under the Plan to any other person or committee so designated by it in writing. The Administrative Committee may employ the agents or advisors it deems appropriate to fulfill its duties under the Plan. No member of the Administrative Committee shall be personally liable to any person for any action taken or omitted in connection with performing its duties under the Plan, unless due to that member’s own willful misconduct, gross negligence, or lack of good faith.
           7.11 Claims and Appeals
          In the event Participants or Beneficiaries believe they are entitled to a payment from the Company that has not been made, they may submit a claim for benefits to the Administrative Committee. Any denial of a claim shall be made by the Administrative Committee in writing and shall specify the Plan provisions upon which the denial is based and any additional information or documentation which the Participant or Beneficiary would need to submit to perfect his or her claim. The Participant or Beneficiary may appeal in writing to the Administrative Committee any denial of his or her claim within 90 days following the denial, and shall include any additional information or documentation helpful to support the claim. The Administrative Committee’s decision shall be made in writing within a reasonable time period following receipt of the appeal and shall be final and binding on the Participant, any Beneficiary and the Company.
Signature
     The Company has signed the amended and restated Steelcase Inc. Non-Employee Director Deferred Compensation Plan this 3 rd day of October,   2008.
                         
                STEELCASE INC.
 
                       
Attest: By:   /s/ John Hagenbush       By:   /s/ Nancy W. Hickey
                 
 
  Its: Director Global Compensation           Its: Sr. VP, CAO

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EXHIBIT 10.3
STEELCASE INC.
DEFERRED COMPENSATION PLAN
Restated Effective January 1, 2009

 


 

TABLE OF CONTENTS
         
    Page  
Article 1 Establishment and Purpose
    1  
 
       
1.1 History of the Plan
    1  
1.2 This Document
    1  
1.3 Purpose
    1  
1.4 Status of Plan Under ERISA
    1  
1.5 Compliance with Section 409A
    1  
 
       
Article 2 Definitions
    1  
 
       
Article 3 Eligibility
    6  
 
       
Article 4 Deferral of Base Salary or Bonus
    7  
 
       
4.1 Deferral Elections
    7  
4.2 Changes and Revocations in Elections
    7  
 
       
Article 5 Deferral Account
    7  
 
       
5.1 Deferral Accounts
    7  
5.2 Debits/Credits to Deferral Accounts
    8  
5.3 Investment Media
    8  
 
       
Article 6 Payments
    9  
 
       
6.1 Timing
    9  
6.2 Form for Payment
    9  
6.3 Payment Medium
    9  
 
       
Article 7 Miscellaneous
    10  
 
       
7.1 No Trust
    10  
7.2 Funding Arrangements
    10  
7.3 Nonforfeitability
    11  
7.4 Spendthrift Provision
    11  
7.5 Successors, Etc
    11  
7.6 Severability
    11  
7.7 Governing Law
    11  
7.8 No Employment Rights
    11  
7.9 Number Construction
    12  
7.10 Amendment and Termination of Plan
    12  
7.11 Extension of Coverage
    12  
7.12 Interpretation and Implementation
    12  
7.13 Administrative Committee
    12  
7.14 Claims and Appeals
    13  
7.15 Other Benefits
    13  

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    Page  
Signature
    13  

-ii-


 

STEELCASE INC.
DEFERRED COMPENSATION PLAN

Article 1
Establishment and Purpose
  1.1   History of the Plan
          Steelcase Inc. (the “Company”) established the Steelcase Inc. Deferred Compensation Plan (the “Plan”) effective as of September 1, 1999. The Plan has periodically been amended.
  1.2   This Document
          By this document, the Company is amending and restating the Plan as of January 1, 2009.
  1.3   Purpose
          The Company desires to retain the services of a select group of executives who contribute to the profitability and success of the Company. The Company maintains the Plan to provide the executives who participate in the Plan with the opportunity to defer a portion of their Compensation.
  1.4   Status of Plan Under ERISA
          The Plan is intended to be “unfunded” and maintained “primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” for purposes of ERISA. Accordingly, the Plan is not intended to be covered by Parts 2 through 4 of Subtitle B of Title I of ERISA. The existence of any Trust Fund is not intended to change this characterization of the Plan.
  1.5   Compliance with Section 409A
          To the extent the Plan provides deferred compensation under Section 409A of the Code, the Plan is intended to comply with Section 409A. The Plan is intended to be interpreted consistent with the requirements of Section 409A of the Code.
Article 2
Definitions
          The following words and phrases, wherever capitalized, shall have the following meanings, unless the context requires otherwise:

 


 

  2.1   Administrative Committee
          “Administrative Committee” means the Chief Executive Officer, the Chief Financial Officer, the Chief Administrative Officer and the Assistant Secretary of the Company and/or any other individuals designated by the Compensation Committee of the Company’s Board of Directors to administer this Plan and any other plan designated by the Compensation Committee.
  2.2   Base Salary
          “Base Salary” means a Participant’s regular salary (unreduced by any deferrals made on a pre-tax basis to any plan under Code Sections 401(k) or 125), exclusive of any Bonus, deferred compensation payments, fringe benefits, and other special items, such as stock options.
  2.3   Beneficiary
          “Beneficiary” means the individual, trust, or other entity designated by the Participant to receive any amounts payable with respect to the Participant under the Plan after the Participant’s death. A Participant may designate or change a Beneficiary by filing a signed designation with the Administrative Committee on a form approved by the Administrative Committee. A Participant’s will is not effective for this purpose. If the Participant has not designated a Beneficiary or none so designated survive, the Beneficiary will be the Participant’s surviving Spouse, if any; otherwise the Participant’s children, including those by adoption, dividing the distribution equally among the Participant’s children, with the living issue of any deceased child taking their parent’s share by right of representation; if none, the Participant’s parents, in equal shares; if none, the Participant’s living brothers and sisters in equal shares; if none the Participant’s estate, if under active administration, and if not, the Participant’s heirs under the laws of Intestacy of the State of Michigan. Notwithstanding the above, if the Participant designates his or her Spouse as a Beneficiary, and the Participant later divorces that Spouse, the Participant’s designation of his or her spouse as Beneficiary shall be null and void, and the portion of the Participant’s benefits that would, but for this provision, be payable to the Participant’s Spouse will be payable instead as designated in the Participant’s designation of Beneficiary as if the Spouse had predeceased the Participant.
  2.4   Bonus
          “Bonus” means, with respect to any Plan Year, the annual bonus paid to the Participant for the Company’s related fiscal year under the Steelcase Inc.’s Management Incentive Plan, excluding the long-term incentive portion of such bonus, and any additional amount which is designated by the Administrative Committee as a bonus available for deferral for that Plan Year for purposes of this Plan.
  2.5   Code
          “Code” means the Internal Revenue Code of 1986, as amended.
          

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  2.6   Company
          “Company” means Steelcase Inc.
  2.7   Competition
          “Competition” means directly or indirectly engaging in competition with the Company or any subdivision, subsidiary or affiliate of the Company at any time during employment with the Company or during the three (3) year period following termination of employment with the Company, without prior approval of the Administrative Committee. A Plan Participant engages in competition if that person participates directly or indirectly in the manufacture, design or distribution of any products of the same type as those of the Company, including, but not limited to, office furniture, office systems or architectural products, or the providing of any related services, for or on behalf of any person or entity other than the Company and its authorized dealers, at any location within or without the United States of America. It is intended that this definition shall be enforced to the fullest extent permitted by law. If any part of this definition shall be construed to be invalid or unenforceable, in whole or in part, then such definition shall be construed in a manner so as to permit its enforceability to the fullest extent permitted by law.
  2.8   Deferral Account
          “Deferral Account” means the bookkeeping account established by the Administrative Committee with respect to the Participant pursuant to Article 5 for the purpose of recording the amount of the Participant’s Base Salary and Bonus being deferred pursuant to this Plan and the amount of any earnings, profits, gains or losses credited/debited thereto pursuant to Article 5.
  2.9   Deferral Date
          “Deferral Date” means the date on which the deferred portion of the Base Salary and/or Bonus would have been paid to the Participant had the Participant not made an election to defer under Section 4.1.
  2.10   Deferral Period
          “Deferral Period” means the interval between the Deferral Date and the first Payment Date.
  2.11   Deferral Year
          “Deferral Year” means a Plan Year during which Base Salary or Bonus is earned by a Participant and is deferred pursuant to Article 4.
  2.12   Determination Period
          “Determination Period” means the Calendar Year preceding the Calendar Year during which an Employee has a Separation from Service.
          

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  2.13   Disabled or Disability
          “Disabled” or “Disability” means the Participant meets one of the following requirements:
           (a) The Participant is unable to engage in any substantial gainful activity by reason of any medically determinable mental or physical impairment which can be expected to result in death or can be expected to last for a continuous period of at least 12 months; or
           (b) The Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under a Company-sponsored disability plan.
          The existence of a Disability shall be established by the certification of a physician or physicians selected by the Plan Administrator, unless the Plan Administrator determines that an examination is unnecessary. Alternatively, a Participant shall be considered to have a Disability if the Participant is determined to be disabled by the Social Security Administration.
  2.14   Election Period
          “Election Period” means the once-per-year period designated by the Administrative Committee before each Deferral Year during which elections under Article 4 and Article 6 must be made with respect to that Deferral Year. The Election Period shall end no later than December 31 of the calendar year preceding the first day of the Deferral Year.
  2.15   Employee
          “Employee” means any individual who is on the payroll of the Company or a Related Employer and is considered to be a common-law employee of the Company or a Related Employer. An individual who is treated by the Company or a Related Employer as an independent contractor for tax purposes is not an Employee.
  2.16   ERISA
          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
  2.17   Gross Misconduct
          “Gross Misconduct” means any conduct determined to be “gross misconduct” by the Administrative Committee.

-4-


 

  2.18   Key Employee
          “Key Employee” means any Employee who at any time during the Determination Period was:
           (a) An officer of the Company or a Related Employer whose annual Compensation from the Company and all Related Employers is more than $145,000 (as adjusted under Section 416(i)(l) of the Code for Plan Years beginning after December 31, 2007);
           (b) A person having more than a 5% ownership interest in the Company or a Related Employer; or
           (c) A person having more than a 1% ownership interest in the Company or a Related Employer and whose annual Compensation from the Company and all Related Employers is more than $150,000.
          The determination of who is a Key Employee shall be made in accordance with Sections 409A and 416(i)(l) of the Code and the applicable regulations and guidance.
  2.19   Participant
          “Participant” means an Employee who:
           (a) Participates in the Steelcase Inc. Management Incentive Plan and has a minimum Base Salary in an amount determined by the Administrative Committee; or
           (b) Is designated by the Administrative Committee as eligible to participate in the Plan for a particular period; and
           (c) Consents in writing to the Company’s purchase and ownership of insurance on his or her life.
A list of the Participants for each Deferral Year shall be maintained by the Administrative Committee and is hereby incorporated by reference.
  2.20   Payment Date
          “Payment Date” means the date payments of a Deferral Account commence pursuant to Section 6.1 and each annual anniversary of that date.
  2.21   Plan
          “Plan” means the Steelcase Inc. Deferred Compensation Plan.
          

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  2.22   Plan Year
          “Plan Year” means the fiscal year of the Company, as in effect from time to time, or such other 12-month period as the Compensation Committee of the Board of Directors of the Company shall establish.
  2.23   Related Employer
          “Related Employer” means:
           (a) Any member of a controlled group of corporations in which the Company is a member, as defined in Section 414(b) of the Code; or
           (b) Any other trade or business under common control of or with the Company, as defined in Section 414(c) of the Code.
  2.24   Separation from Service
          “Separation from Service” means a “separation from service” under Section 409A of the Code. Generally, this occurs if the Employee is reasonably anticipated to have a substantial permanent reduction in the bona fide level of services provided to the Company and all Related Employers (whether provided as an employee or an independent contractor). The reduction shall be “substantial” only if the reduced bona fide level of services is less than 20% of the average bona fide level of services provided by the Employee to the Company and all Related Employers during the immediately preceding 36 months (or the Participant’s entire period of service, if less than 36 months).
  2.25   Spouse
          “Spouse” means the husband or wife to whom a Participant is married on the date benefit payments are scheduled to begin to the Participant. The legal existence of the spousal relationship shall be governed by the law of Michigan.
Article 3
Eligibility
          Prior to the Election Period before each Deferral Year, the Administrative Committee shall identify the Participants who shall be eligible to make an election to defer their Base Salary and/or Bonus for the following Deferral Year.

-6-


 

Article 4
Deferral of Base Salary or Bonus
  4.1   Deferral Elections
          During the Election Period for the first Deferral Year in which a Participant is eligible to participate in the Plan, the Participant may elect a specified dollar amount of his or her Base Salary and/or a specified percentage (in whole percentages only) of his or her Bonus to be earned in the following Deferral Year which shall not be paid in cash, but shall instead be deferred and distributed to the Participant (or in the event of the Participant’s death, to his or her Beneficiary) in accordance with the provisions of Article 6. The minimum annual deferral amount is $2,500. The maximum annual deferral amount is 25% of the Participant’s Base Salary and 50% of the Participant’s Bonus. The Administrative Committee may further limit or increase, at any time prior to the expiration of an Election Period, the maximum amount of Base Salary or Bonus that can be deferred by any Participant annually in the following Deferral Years. Any election to defer shall not be effective unless the Participant also completes any forms as may be required by the Administrative Committee, including, but not limited to, the selection of investment media in which his or her Deferral Account shall be deemed invested pursuant to Section 5.3 and any life insurance forms.
          Any deferral election made by a Participant for a Deferral Year shall continue in effect for all subsequent Deferral Years unless the Participant completes a new election form and delivers it to the Administrative Committee during a subsequent Election Period.
  4.2   Changes and Revocations in Elections
          Elections may not be changed on or after the last day of the Election Period for the Deferral Year for which they are in effect. Notwithstanding the preceding sentence, if a Participant receives a hardship withdrawal under the Steelcase Inc. Retirement Plan, the Participant’s deferral election under the Plan shall be cancelled and no additional amount of the Participant’s Base Salary or Bonus shall be deferred until the later of the six-month anniversary of the date the hardship distribution was made and the first day of the Plan Year beginning after the hardship distribution was made.
Article 5
Deferral Account
  5.1   Deferral Accounts
          The Administrative Committee shall establish a Deferral Account for each Participant. The portion of each Participant’s Base Salary and Bonus deferred pursuant to Article 4 shall be credited to his or her Deferral Account as of the applicable Deferral Date. The Administrative Committee may establish subaccounts within each Deferral Account for each Deferral Year, as may be necessary to properly record each Participant’s deferral. The Administrative Committee shall maintain records for each Deferral Account and any

-7-


 

subaccounts until the balance of the Deferral Account has been paid in full pursuant to Article 6. The Administrative Committee may engage the services of any third parties it deems appropriate to provide assistance with record keeping.
  5.2   Debits/Credits to Deferral Accounts
          As of the dates as may be designated by the Administrative Committee subsequent to the establishment of the Participant’s Deferral Account, until the first day of the Plan Year following the Participant’s Separation from Service, death, or Disability, the Administrative Committee shall credit/debit the Deferral Account with earnings, profits, gains or losses that would have been credited/debited if assets equal to the balance of the Deferral Account had been invested in certain designated mutual funds or other investment media. Thereafter, the Administrative Committee shall credit the Deferral Account with a rate of interest to be determined by the Administrative Committee until the entire Deferral Account is distributed. In the event the Participant is terminated from employment on account of Gross Misconduct or subsequent to his or her termination of employment engages in Competition with the Company, the Participant’s Deferral Account to be paid pursuant to Article 6 shall be reduced by any credits previously made to the Deferral Account under this Section 5.2 (but shall reflect debits if the Participant’s Deferral Account is less than the total amount of the Participant’s Elective Deferrals).
  5.3   Investment Media
          The Administrative Committee, in its sole discretion, may periodically designate certain mutual funds or other investment media (having varying risk/return characteristics) from which the Participant may request that his or her Deferral Account should, for purposes of Section 5.2, be deemed invested. The Participant may request that he or she be permitted to alter his or her selection among any such funds, either for the Participant’s existing Deferral Account balance and/or future deferrals, in one percent increments (or in such other increments as the Administrative Committee may specify), once in each Plan Year quarter (or at other intervals selected by the Administrative Committee), to be effective as of the first day of the next Plan Year quarter (or at other times specified by the Administrative Committee). Subaccounts within each Deferral Account shall be deemed invested pro rata within the funds selected by the Participant. The Administrative Committee may elect either to invest deferred amounts as elected by the Participant, invest the deferred amounts in any other manner or not invest the deferred amounts. The actual investment of any Deferral Account shall not affect the obligation of the Company to provide a benefit as if the Deferral Account were actually invested as suggested by the Participant. The Administrative Committee shall establish such procedures and forms as are appropriate to implement the fund selection process of this Section 5.3.

-8-


 

Article 6
Payments
  6.1   Timing
          The Participant’s Deferral Account shall be paid or begin to be paid to the Participant, or to his or her Beneficiary in the event of his or her death, as soon as administratively feasible, but no later than 60 days, following the end of the Plan Year in which the Participant has a Separation from Service, becomes Disabled, or dies. In no event, however, will any payment be made to a Key Employee earlier than the six-month anniversary of the date of the Participant’s Separation from Service, unless the Participant dies prior to the end of the six-month period. The delay of a payment as a result of the Key Employee rule will not delay the payment of any future payment to which the Participant is entitled.
  6.2   Form for Payment
          The Participant shall elect in writing, as part of his or her initial deferral election under Section 4.1, the period over which the balance of his or her Deferral Account shall be paid by the Company to the Participant (or in the event of his or her death, to his or her Beneficiary) from among the following:
  (a)   One lump sum,
 
  (b)   Annual payments over a period of five years, or
 
  (c)   Annual payments over a period of ten years;
provided, however, that the Administrative Committee shall distribute the entire nonforfeitable balance of the Deferral Account, as described in Section 7.3, in a single lump sum payment to the Participant or his or her Beneficiary if the balance of the Deferral Account is less than $10,000 at the time of the initial payment. The Participant is permitted to change his or her election one time, but a change of election shall not be effective unless the Participant remains employed with the Company or a Related Employer for at least 12 months after the change of election is filed with the Administrative Committee.
          In the event a Participant changes his or her payment election, the Participant’s Deferral Account will be paid or begin to be paid as soon as administratively feasible following the end of the fifth Plan Year following the Plan Year which includes the Participant’s Separation from Service.
  6.3   Payment Medium
          The payments made by the Company with respect to the Participant’s Deferral Account pursuant to Sections 6.1 and 6.2 above shall be made in cash (reduced by applicable tax withholdings) and annual payments made in accordance with Section 6.2(b) or (c) shall be in an amount equal to a percentage of his or her relevant subaccount balance on the relevant Payment

-9-


 

Date, determined by dividing the subaccount balance at the applicable Payment Date by the total remaining years of the payout term.
     Example: Assume the Participant elected a five-year payout. An amount equal to the subaccount balance would be paid out as indicated below.
         
    Percentage of
Payment Date   Sub-Account Balance Paid
First Payment Date
    20 %
Second Payment Date
    25 %
Third Payment Date
    33 1 / 3 %
Fourth Payment Date
    50 %
Fifth Payment Date
    100 %
Article 7
Miscellaneous
  7.1   No Trust
          Nothing contained in this Plan and no action taken pursuant to the provisions hereof shall create or deem to create a trust of any kind, or a fiduciary relationship between the Company and the Participant, his or her Beneficiary or any other person. To the extent that any person acquires the right to receive benefits from the Company under this Plan, such right shall be no greater than the right of any other unsecured general creditor of the Company, and such person shall have no claim on, or any beneficial interest in, any assets of the Company. The Company may establish bookkeeping reserves or any funding media, including grantor trusts, to cover its obligation to make the payments contemplated under Article 6, but amounts designated in such bookkeeping reserves or contained in such funding media as are established shall remain solely those of the Company and shall be subject to the claims of the creditors of the Company until actually paid to the Participant or his or her Beneficiary. The provisions of this Plan do not operate as a guarantee that sufficient assets will exist for the Company to pay any Plan benefits.
  7.2   Funding Arrangements
          It is the Company’s intention that the amounts deferred under this Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA. All such amounts shall continue for all purposes to be part of the general funds of the Company and the Plan shall constitute a mere promise by the Company to make benefit payments in the future. The Company may, but is not required to, deposit in an insurance contract(s) or a trust, amounts sufficient to pay benefits under the Plan. Any trust created by the Company and any assets held by the trust to assist the Company in meeting its obligations under the Plan will conform to the terms of the model trust as described in Revenue Procedure 92-64. Any amounts deposited in an insurance contract or trust will be subject to the Company’s general creditors in the event of the Company’s insolvency or under such other circumstances as may be specified by the insurance contract or trust agreement.

-10-


 

  7.3   Nonforfeitability
          The Participant’s rights to any payments under this Plan, shall at all times be nonforfeitable, except that in the event the Participant’s employment is terminated for Gross Misconduct, or the Participant engages in Competition with the Company subsequent to his or her termination of employment, the Participant shall forfeit any earnings credited to his or her Deferral Account and the Participant shall be entitled only to the lesser of the amount of Bonus and Base Salary he or she has deferred under the Plan and the balance of his Deferral Account on the Payment Date.
  7.4   Spendthrift Provision
          Benefits, payments, proceeds, claims, rights or interest of the Participant or his or her Beneficiary to or under this Plan shall not be subject in any manner to any claims, attachments or encumbrances due to the death, contracts, liabilities, engagements or torts of the Participant or his or her Beneficiary, directly or indirectly, or be subject to any claim of any creditor of the Participant or his or her Beneficiary, through legal process or otherwise; nor shall the Participant or his or her Beneficiary be able or permitted in any manner to transfer, encumber, pledge, anticipate, alienate, sell, or assign any such benefits, payments, proceeds, claims, rights or interest, contingent or otherwise.
  7.5   Successors, Etc
          This Plan shall be binding upon and benefit the Company and its successors, and the Participant and his or her Beneficiary, their heirs and personal representatives, all in accordance and subject to the terms of this Plan.
  7.6   Severability
          Each provision of this Plan shall be independent of and separable from every other provision of this Plan and should any provision of this Plan be deemed or be declared to be contrary to or unenforceable under any law, whether constitutional, statutory or otherwise, all of the remaining provisions of this Plan shall remain in full force and effect.
  7.7   Governing Law
          This Plan shall be governed in all respects, whether as to validity, construction, capacity, performance or otherwise, under the laws of the State of Michigan, except to the extent superseded by federal law.
  7.8   No Employment Rights
          The Participant’s relationship with the Company is that of an employee at will and the Company may terminate his or her employment with the Company at any time, with or without cause, except as may otherwise be set forth in a separate written agreement with the Participant. Nothing contained in this Plan shall be construed as conferring upon the Participant the right to continue in the employ of the Company as an executive or in any other capacity. For

-11-


 

purposes of this Section 7.8, the term “Company” includes any subsidiary or affiliate of the Company that employs the Participant.
  7.9   Number Construction
          In all cases where they would so apply, words used in the singular shall be construed to include the plural.
  7.10   Amendment and Termination of Plan
          The Company may amend or terminate this Plan at any time with respect to amounts not yet credited to the Participant’s Deferral Account; provided however, no such termination shall affect the Participant’s interest in amounts previously deferred. In the event the Plan is terminated, the Company may, in its sole discretion, immediately distribute the balance of the Participants’ Deferral Accounts regardless of the Deferral Periods elected pursuant to Section 6.1, provided the payment is permitted under Code Section 409A and is made in compliance with the final regulations under Code Section 409A.
  7.11   Extension of Coverage
          The Compensation Committee of the Board of Directors may, in its discretion, authorize extension of Plan coverage to eligible Employees of entities related to the Company.
  7.12   Interpretation and Implementation
          The Administrative Committee shall have exclusive and final authority and sole and absolute discretion with respect to:
           (a) The interpretation and implementation of the terms and provisions of this Plan;
           (b) Exercising any of its powers or duties under this Plan; and
           (c) The adoption or amendment of such procedures or practices as it deems necessary, helpful or appropriate, for purposes of administering this Plan.
  7.13   Administrative Committee
          The Administrative Committee may delegate any of its powers, authorities or responsibilities under the Plan to any other person or committee so designated by it in writing. The Administrative Committee may employ the agents or advisors it deems appropriate to fulfill its duties under the Plan. No member of the Administrative Committee shall be personally liable to any person for any action taken or omitted in connection with performing its duties under the Plan, unless due to that member’s own willful misconduct, gross negligence, or lack of good faith. Members of the Administrative Committee shall not participate in any action with respect to benefits they may receive as Participants in the Plan.
          

-12-


 

  7.14   Claims and Appeals
          In the event a Participant or Beneficiary believes he or she is entitled to a payment from the Company which has not been made, he or she may submit a claim for benefits to the Administrative Committee. Any denial of the claim shall be made by the Administrative Committee in writing and shall specify the Plan provisions upon which the denial is based and any additional information or documentation which the Participant would need to submit to perfect his or her claim. The Participant may appeal in writing to the Administrative Committee any denial of his or her claim within 90 days following the denial, and shall include any additional information or documentation helpful to support his or her claim. The Administrative Committee’s decision shall be made in writing within 90 days of receipt of the appeal and shall be final and binding on the Participant and the Company.
  7.15   Other Benefits
          Any other benefits which are based on the Participant’s compensation level (e.g.. disability, life, or pension benefits) shall be construed to be based on the Participant’s compensation before reduction under this Plan, except to the extent such construction would conflict with the terms of that benefit plan. If a conflict exists, the Company shall use its best efforts to revise the other plan to the extent permitted by law.
Signature
          The Company has signed the amended and restated Steelcase Inc. Deferred Compensation Plan this 3rd day of October,    2008.
         
  STEELCASE INC.
 
 
  By:   /s/ Nancy W. Hickey    
    Its: Sr. VP, CAO   
       
 

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EXHIBIT 10.4
2009-1 AMENDMENT
TO THE
STEELCASE INC. DEFERRED COMPENSATION PLAN
(Effective as of September 1, 1999)
          This 2009-1 Amendment to the Steelcase Inc. Deferred Compensation Plan (“Plan”) is adopted by Steelcase Inc.
          Pursuant to Section 6.10 of the Plan, Steelcase Inc. amends the Plan as follows:
A.
          Effective November 1, 2008, a new Section 5.5 is added as follows:
           5.5 Special Distribution Election
          A Participant may make a special one-time election, no later than December 31, 2008, to change the date and form of payment of all or a portion of the Participant’s Deferral Account. A Participant who elects to change the date or form of distribution of all or a portion of his or her Deferral Account under this Section 5.5 shall receive his or her distribution as elected, provided that the date of payment shall be no earlier than January 1, 2009. Notwithstanding the preceding provisions of this Section 5.5, the current deferral election of a Participant who elects to change the date or form of distribution of all or a portion of his or her Deferral Account shall continue in effect for the remainder of the Plan Year beginning March 1, 2008. In addition, a Participant who elects to change the date or form of payment of all or a portion of his or her Deferral Account may still elect to defer a portion of his or her Base Salary or Bonus to be earned during any Plan Year beginning on or after March 1, 2009 by making an election in accordance with Section 4.1 during the Election Period applicable to such Plan Year.
B.
          In all other respects, the Plan shall be unchanged.
Signature
          Steelcase Inc. executes this 2009-1 Amendment to the Steelcase Inc. Deferred Compensation Plan on the date stated below.
         
  STEELCASE INC.
 
 
Dated: December 22, 2008   By   /s/ Nancy W. Hickey    
    Nancy W. Hickey   
       
         
  Its   Senior Vice President    
    Chief Administrative Officer   
       
 

EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
SARBANES-OXLEY ACT SECTION 302
I, James P. Hackett, certify that:
     1) I have reviewed this quarterly report on Form 10-Q of Steelcase Inc.;
     2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
     3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
     4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
          a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
          b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
          c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
          d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
          a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
          b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
         
     
  /s/ James P. Hackett    
  Name:    James P. Hackett    
  Title:    President and Chief Executive Officer
 
  Date:   January 7, 2009    

         
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
SARBANES-OXLEY ACT SECTION 302
I, David C. Sylvester, certify that:
     1) I have reviewed this quarterly report on Form 10-Q of Steelcase Inc.;
     2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
     3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
     4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
          a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
          b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
          c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
          d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
          a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
          b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
         
     
  /s/ David C. Sylvester    
  Name:    David C. Sylvester    
  Title:    Vice President, Chief Financial Officer  
  Date:   January 7, 2009    

         
EXHIBIT 32.1
CERTIFICATION OF CEO AND CFO PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
     In connection with the Quarterly Report on Form 10-Q of Steelcase Inc. (the “Company”) for the period ended November 28, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), James P. Hackett, as Chief Executive Officer of the Company, and David C. Sylvester, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on his knowledge:
     (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
         
     
  /s/ James P. Hackett    
  Name:    James P. Hackett    
  Title:    President and Chief Executive Officer    
  January 7, 2009    
 
     
  /s/ David C. Sylvester    
  Name:    David C. Sylvester    
  Title:    Vice President, Chief Financial Officer    
  January 7, 2009    
 
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.