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Steelcase Inc. (“we”, “our”) is filing this exhibit to reflect changes to the presentation of our financial information as set forth in our Annual Report on Form 10-K for the fiscal year ended February 24, 2023 (“Report”) as filed on April 14, 2023, with the U.S. Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, as amended.

•Americas Segment - The Americas segment serves customers in the United States, Canada, the Caribbean Islands and Latin America with a comprehensive portfolio of furniture, architectural, textile and surface imaging products that are marketed to corporate, government, healthcare, education and retail customers primarily through the Steelcase, AMQ, Coalesse, Designtex, HALCON, Orangebox, Smith System and Viccarbe brands.

•International Segment - The International segment serves customers in Europe, the Middle East and Africa and Asia Pacific with a comprehensive portfolio of furniture and architectural products that are marketed to corporate, government, education and retail customers primarily through the Steelcase, Coalesse, Orangebox, Smith System and Viccarbe brands.

Accordingly, this exhibit updates the information in the following items as filed in the Report to reflect the changes made to our segment reporting:

•Part I. Item 1, Business;

•Part I. Item 2, Properties;

•Part II. Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations; and

•Part II. Item 8, Financial Statements and Supplementary Data.

Prior periods in this exhibit have been recast to conform with the realigned segments. The information included in this exhibit affects disclosures related to previously disclosed segment results and does not in any way restate or revise the consolidated financial position, results of operations or cash flows in any previously filed consolidated statements of income, consolidated statements of comprehensive income, consolidated balance sheets or consolidated statements of cash flows.

No items in the Report other than those identified above are being updated by this filing, and this filing does not reflect any subsequent information or events other than the revised segment reporting. This exhibit should be read in conjunction with the Report as filed, our Current Report on Form 8-K filed June 2, 2023 and our Quarterly Reports on Form 10-Q for the quarterly periods ended May 26, 2023 and August 25, 2023.

Item 1.Business:

The following business overview is qualified in its entirety by the more detailed information included elsewhere or incorporated by reference in this Annual Report on Form 10-K (“Report”). As used in this Report, unless otherwise expressly stated or the context otherwise requires, all references to “Steelcase,” “we,” “our,” “Company” and similar references are to Steelcase Inc., a Michigan corporation, and its subsidiaries in which a controlling interest is maintained. Unless the context otherwise indicates, reference to a year relates to the fiscal year, ended in February of the year indicated, rather than the calendar year, unless indicated by a month or specific date reference. Additionally, Q1, Q2, Q3 and Q4 reference the first, second, third and fourth quarter, respectively, of the fiscal year indicated. All amounts are in millions, except share and per share data, data presented as a percentage or as otherwise indicated.

At Steelcase, our purpose is to help people do their best work by creating places that work better. Through our family of brands that include Steelcase®, AMQ®, Coalesse®, Designtex®, HALCON™, Orangebox®, Smith System® and Viccarbe®, we offer a comprehensive portfolio of furniture and architectural products and services designed to help customers create workplaces that help people reach their full potential at work, wherever work happens. Our solutions are inspired by the insights gained from our human-centered research process. We are a globally integrated enterprise, headquartered in Grand Rapids, Michigan, U.S.A., with approximately 11,900 employees. Steelcase was founded in 1912 and became publicly traded in 1998, and our Class A Common Stock is listed on the New York Stock Exchange under the symbol “SCS”.

We focus on translating our research-based insights into products, applications and experiences that help organizations around the world amplify the performance of their people, teams and enterprise. We help our customers create office, healthcare and educational environments that support attraction and retention of talent, employee well-being and engagement, organizational culture and productivity, and other needs of their people, while also optimizing the value of their real estate investments. Our global scale and reach allow us to provide a consistent experience to global customers while offering local differentiation through our local dealer network. 

We market our products and services to businesses and organizations primarily through a network of dealers, and we also sell to consumers in markets around the world through web-based and retail distribution channels.

Our strategic priorities align with our purpose and reflect a set of choices which we believe will position us for growth. We are focused on leading the transformation of work, where employees shift between working in the office and working remotely over the course of a week. We aim to do this by offering innovative solutions to our customers that support the growing needs for privacy, social connection and collaboration in this new era of work. We also aim to deepen our presence in key adjacent growth opportunities, including certain geographic and vertical markets such as learning, health and home, and to enhance our capabilities to better serve smaller and mid-sized customers. We are focused on creating value by using our business to help organizations work better, through market-leading performance in our approach to our people, our products and the planet. Our strategic priorities also include profitability initiatives to drive fitness, reduce complexity and maximize efficiency, reallocating resources toward our highest priorities and maintaining a strong balance sheet to support our growth objectives.

Our brands provide a comprehensive portfolio of furniture and architectural products for individual and collaborative work across a range of price points. Our furniture portfolio includes furniture systems, seating, storage, fixed and height-adjustable desks, benches and tables and complementary products such as work accessories, lighting, mobile power and screens. Our seating products include task chairs which are highly ergonomic, seating that can be used in collaborative environments and casual settings and specialty seating for specific vertical markets such as education and healthcare. Our interior architectural products include full and partial height walls and free-standing architectural pods. We also offer services designed to enhance the performance of people, space and real estate. These services include workplace strategy consulting, lease origination services and furniture and asset management.

Steelcase leverages insights from user-centered research to help our customers create high performing and sustainable work environments. We strive to be a trusted partner by creating exceptional experiences for those who seek to use space as a strategic asset to elevate their performance, reinforce their organizational culture, support the well-being of their people and attract and retain talent. The Steelcase brand's core customers are leading organizations (such as corporations, government entities, schools, colleges and universities and healthcare organizations) that are forward-thinking, that are often large with ever-changing complex needs and that often have a global scale and operations.

Steelcase brand extensions include:

•Steelcase Learning, which works with leading educational institutions to create places that enhance the success, outcomes and well-being of students, educators and administrators.

•Steelcase Health, which works with leading healthcare organizations to create places that deliver greater connection, empathy and well-being for everyone involved in the experience of healthcare.

AMQ offers high-quality, affordable height-adjustable desking, benching, storage, screens, tables and seating for workstations, collaborative environments and training rooms. AMQ specializes in in-stock furniture that delivers in just ten business days, with adaptable and modern designs that fit contemporary, active office spaces, ideal for small and mid-sized businesses.

Led by intuition, backed by research and driven by design, Coalesse creates thoughtful furnishings that bring new life to the modern workplace and ancillary settings. The brand blends beauty and utility into their designs to help customers make great spaces that inspire great work, by empowering social connection, creative collaboration, focus and rejuvenation.

Designtex offers applied materials that enhance environments and is a leading resource for applied surfaces knowledge, innovation and sustainability. Designtex products include premium fabrics and surface materials and imaging solutions designed to enhance seating, walls, workstations and floors. These materials provide privacy, wayfinding, motivation, communications and artistic expression.

HALCON is a designer and manufacturer of precision-tailored wood furniture for the workplace. HALCON specializes in custom wood and executive-level tables, credenzas, and desks. This furniture is of enduring quality, backed by a genuine dedication to service and customization.

Orangebox is a designer and manufacturer of furniture, soft seating, and free-standing architectural pods for the changing workplace with a focus on "Smartworking" solutions: furniture and architecture that fosters collaboration while providing contemporary aesthetics, visual and acoustical privacy and commercial-grade performance.

Smith System is a leading designer and manufacturer of high-quality furniture for the pre-K-12 education market. Smith System offers desking, seating, lounge and storage products. Smith System designs and manufactures products that support inspired learning and better learning outcomes – addressing the needs of the student, the demands of the curriculum and the realities of space, maintenance and budget.

Viccarbe offers contemporary furniture for high-performance collaborative and social spaces, including contract, hospitality, retail and outdoor settings. Viccarbe's collection is the result of years of collaboration with globally renowned designers.

We maintain marketing partnerships with a number of companies, including Blu Dot, Bolia, Carl Hansen & Son, Crestron, EMU, Established & Sons, Extremis, FLOS, the Frank Lloyd Wright Foundation, Goodee, Kartell, Logitech, m.a.d. furniture, Mattiazzi, Microsoft, Moooi, Nanimarquina, PolyVision, Tom Dixon, West Elm and Zoom. These partnerships are intended to allow us to market additional products and services to our dealers and customers that are complementary to our products and services and leverage our scale. These partnerships take several forms, the most common of which involves us purchasing and reselling the partner’s products to our dealers and customers. In other situations, we market the partner’s products to our dealers and customers and receive a fee from the partner, and we typically transport and deliver those products to our dealers and customers for a fee. We also have marketing partnerships where we co-develop products with our partner that we manufacture or source from third parties or where we and our partner agree to co-market our products and services to customers. Most of our marketing partnerships are on a regional basis. 

We operate on a global basis within our Americas and International reportable segments. Additional information about our reportable segments, including financial information about geographic areas and specific product categories, is contained in Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Note 4 and Note 20 to the consolidated financial statements.

Our Americas segment serves customers in the United States (“U.S.”), Canada, the Caribbean Islands and Latin America with a comprehensive portfolio of furniture, architectural, textile and surface imaging products that are marketed to corporate, government, healthcare, education and retail customers primarily through the Steelcase, AMQ, Coalesse, Designtex, HALCON, Orangebox, Smith System and Viccarbe brands.

We serve Americas customers mainly through approximately 380 Steelcase independent and company-owned dealer locations and other non-aligned dealers, and we also sell directly to end-use customers. Our end-use customers tend to be larger multinational, regional or local companies and are distributed across a broad range of industries and vertical markets, including education, financial services, flexible real estate, government, healthcare, information technology, insurance, retail and manufacturing.

Each of our dealers maintains its own sales force which is complemented by our sales representatives who work closely with our dealers throughout the selling process. The largest independent Steelcase dealer in the Americas accounted for approximately 5% of the segment’s revenue in 2023, and the five largest independent Steelcase dealers collectively accounted for approximately 18% of the segment’s revenue in 2023.

The Americas office furniture industry is highly competitive, with a number of competitors offering similar categories of products. The industry competes on a combination of insight, product performance, design, price, service and relationships with customers, architects and designers. Our most significant competitors in the U.S. are MillerKnoll, Inc., Haworth, Inc. and HNI Corporation.

Our International segment serves customers in Europe, the Middle East and Africa ("EMEA") and Australia, China, India, Japan, Korea and other countries in Southeast Asia ("Asia Pacific"), with a comprehensive portfolio of furniture and architectural products that are marketed to corporate, government, education and retail customers primarily through the Steelcase, Coalesse, Orangebox, Smith System and Viccarbe brands.

We serve International customers mainly through approximately 390 independent and company-owned Steelcase dealer locations and other non-aligned dealers, and we also sell directly to end-use customers. The largest independent Steelcase dealer in the International segment accounted for approximately 3% of the segment’s revenue in 2023.

The five largest Steelcase independent dealers collectively accounted for approximately 10% of the segment’s revenue in 2023. Our end-use customers tend to be larger multinational, regional or local companies spread across a broad range of industries and vertical markets, including education, financial services, flexible real estate, government, healthcare and information technology.

The office furniture market in EMEA and Asia Pacific is highly competitive and fragmented. We compete with many local and regional manufacturers in many different markets. In several cases, these local competitors focus on specific product categories.

We occasionally enter into joint ventures and other equity investments to expand or maintain our geographic presence, support our distribution network or invest in new business ventures, complementary products or services. As of February 24, 2023, our investments in these unconsolidated joint ventures and other equity investments totaled $51.1. Our share of the earnings from joint ventures and other equity investments is recorded in Other income, net in the Consolidated Statements of Income. See Note 12 to the consolidated financial statements for additional information.

Our largest customer accounted for approximately 2% of our consolidated revenue in 2023, and our five largest customers collectively accounted for approximately 6% of our consolidated revenue. However, these percentages do not include revenue from various U.S. federal government agencies. In 2023, our sales to U.S. federal government agencies represented approximately 3% of our consolidated revenue. We do not believe our business is dependent on any single or small number of end-use customers, the loss of which would have a material adverse effect on our business.

No single independent Steelcase dealer accounted for more than 4% of our consolidated revenue in 2023. The five largest independent Steelcase dealers collectively accounted for approximately 14% of our consolidated revenue in 2023. We do not believe our business is dependent on any single independent dealer, the loss of which would have a sustained material adverse effect on our business.

We have manufacturing and distribution operations throughout North America (in the U.S. and Mexico), Europe (in the Czech Republic, France, Germany, Spain and the U.K.) and in Asia (in China, India and Malaysia). Our global manufacturing and distribution operations are largely centralized under a single organization to serve our customers’ needs across multiple brands and geographies.

Our manufacturing model is predominately make-to-order with standard lead times that typically range from four to six weeks. We manufacture our products using lean manufacturing principles, including continuous one-piece flow and platformed processes and products, which allow us to achieve efficiencies and cost savings and minimize the amount of inventory on hand. We largely purchase direct materials and components from a global network of integrated suppliers as needed to meet demand. We also purchase finished goods manufactured by third parties predominately on a make-to-order basis.

During 2023, our manufacturing operations continued to be negatively impacted by supply chain disruptions that we began experiencing in 2022, including the lack of availability of certain raw materials and components, labor shortages and shipping delays across long distance supply chains. We increased our levels of inventory on hand to mitigate challenges associated with purchasing raw materials and components in a timely manner. During the second half of 2023, the extended shipping times in our long distance supply chain started to ease.

We focus on enhancing the efficiency of our manufacturing operations, and we also seek to reduce costs through our global sourcing effort. We focus on platforming our product offering and capturing raw material and component cost savings available through lower cost suppliers around the globe. These efforts enhance our leverage with supply sources. We also focus on our reliability which may, at times, require localizing supply chains and enhancing capabilities to deliver complete and on-time orders to our customers.

Our physical distribution system utilizes commercial transport, dedicated fleet and company-owned delivery services. We utilize a network of regional distribution centers in the Americas and EMEA to minimize freight and delivery costs and improve service to our dealers and customers.

Approximately 61% of our cost of sales in 2023 related to raw materials, components and finished goods purchased from a significant number of suppliers around the world. The raw materials that we purchase and that are used in the manufacture of the components and finished goods that we purchase include steel, petroleum-based products (including plastics and foam), aluminum, other metals, wood and particleboard. Our global supply chain team continually evaluates current market conditions, the financial viability of our suppliers and available supply options on the basis of quality, reliability of supply and cost. During 2023, the availability of some materials was negatively impacted by supply chain disruptions as discussed above. In addition, the prices for many of the raw materials, components and finished goods we purchase have increased as a result of significant inflationary pressures over the last two years.

Our extensive global research—a combination of user observations, feedback sessions and sophisticated analyses—has helped us develop social, spatial and informational insights into work effectiveness. We maintain collaborative relationships with external world-class innovators, including leading universities, think tanks and knowledge leaders, to expand and deepen our understanding of how people work.

Understanding patterns of work enables us to identify and anticipate user needs across the globe. Our design teams explore and develop prototypical solutions to address these needs, which vary from furniture and architectural solutions to single products or enhancements to existing products and across different vertical market applications such as healthcare and education. Organizationally, global design leadership directs project work, which is distributed to design studios around the world and sometimes involves external design services.

Our marketing team evaluates product concepts using several criteria, including financial return metrics, and chooses which products will be developed and launched. Designers then work closely with engineers and suppliers to co-develop products and processes that incorporate innovative user features with efficient manufacturing practices. Products are tested for performance, quality and compliance with applicable local standards and regulations.

We incurred $44.4, $45.4 and $48.1 in research, design and development expenses in 2023, 2022 and 2021, respectively. In addition, we sometimes pay royalties to external designers of our products as the products are sold, and these costs are not included in research and development expenses.

We generate and hold a significant number of patents in a number of countries in connection with the operation of our business. We also hold a number of trademarks that are very important to our identity and recognition in the marketplace. We do not believe that any material part of our business is dependent on the continued availability of any one or all of our patents or trademarks or that our business would be materially adversely affected by the loss of any of such, except the “Steelcase,” "AMQ," “Coalesse,” "Designtex," "HALCON," “Orangebox,” and “Smith System” trademarks.

We occasionally enter into license agreements under which we pay a royalty to third parties for the use of patented products, designs or process technology. We have established a global network of intellectual property licenses with our subsidiaries.

We aspire to be a people-centered, purpose-driven company where our employees feel they belong and can be proud of their work. At Steelcase, we believe that together we will help protect the planet through our environmental commitments, help our people thrive, and sustain a culture of trust and integrity to drive towards ethical business outcomes. The following core values guide our commitments and actions:

•act with integrity,

•tell the truth,

•keep commitments,

•treat people with dignity and respect,

•promote positive relationships,

•protect the environment, and

•excel.

We believe our employees are our greatest asset, and we are dedicated to the continuous learning and professional development of every employee. We invest in our employees through multiple avenues, including providing competitive pay and benefits, sharing profits through our annual bonus programs, offering career development and professional training programs, providing inspiring and supportive spaces for our employees to work and collaborate and offering a range of services to support our employees' physical, emotional, cognitive and financial well-being.

Our leaders play a critical role in curating our culture, and we have established a set of leadership pillars and accompanying learning and development activities designed to promote empathic leadership and align leader actions with our core values and the culture we strive to create. These pillars are:

•build strong teams,

•unite in purpose,

•create clarity,

•cultivate resilience, and

•deliver results.

We strive to create an environment where employees around the globe are valued, respected, accepted and encouraged to be authentic and to fully participate in our organization. We believe our unique culture helps to unlock each employee's unique contributions and amplifies the power of the individual to better serve our customers and the communities in which we live and work. We are committed to advancing diversity, equity and inclusion through the following key objectives:

•build diverse teams that reflect our communities,

•ensure equitable access to development opportunities across the organization, and

•create a culture of inclusion that promotes curiosity and creativity.

Learning is how we work and how we lead. We aspire to be a learning organization that builds capabilities for the evolving needs of our business and adapts our culture as a competitive advantage. Developing our talent in consistent ways is essential to our business strategy, and we are continually focused on providing all our employees with the resources they need to reach their full potential. We approach talent development through a variety of tools, practices and experiences, including:

•connecting our employees to digital learning experiences to help them thrive,

•identifying sought-out skills from our employees and designing learning paths related to these skills,

•emphasizing an environment that values learning as an everyday practice across the organization, and

•holding frequent and purposeful conversations between employees and leaders that inspire achievement and growth.

Our compensation and benefits programs are designed to attract, retain and motivate talented employees. Our philosophy is to:

•value the contribution of our employees,

•motivate achievement of strategic objectives that will contribute to our company’s success, and

•share profits through broad-based incentive arrangements designed to reward performance for all employees.

This philosophy is achieved through competitive pay and benefits and a variety of other offerings such as career development and well-being initiatives. We review pay ranges annually and adjust pay as needed to ensure external competitiveness and internal equity. We also share profits with both salaried and hourly employees through our annual bonus programs. We believe our philosophy helps promote a culture where our employees feel they are supported and that their contributions are valued.

As of February 24, 2023, we had approximately 11,900 employees, of which approximately 7,100 work in manufacturing and distribution and approximately 300 are part-time. Additionally, we had approximately 1,000 temporary workers who primarily work in manufacturing. Approximately 40 employees in the U.S. are covered by collective bargaining agreements. Outside the U.S., approximately 2,600 employees are represented by unions or workers' councils that operate to promote the interests of workers.

We are subject to a variety of federal, state, local and foreign laws and regulations relating to the discharge of materials into the environment, or otherwise relating to the protection of the environment (“Environmental Laws”). We believe our operations are in substantial compliance with all Environmental Laws. We do not believe existing Environmental Laws have had or will have any material effects upon our capital expenditures, earnings or competitive position.

Under certain Environmental Laws, we could be held liable, without regard to fault, for the costs of remediation associated with our existing or historical operations. We could also be held responsible for third-party property and personal injury claims or for violations of Environmental Laws relating to contamination. We are a party to, or otherwise involved in, proceedings relating to several contaminated properties being investigated and remediated under Environmental Laws, including as a potentially responsible party in several Superfund site cleanups. Based on our information regarding the nature and volume of wastes allegedly disposed of or released at these properties, the total estimated cleanup costs and other financially viable potentially responsible parties, we do not believe the costs to us associated with these properties will be material, either individually or in the aggregate. We have established reserves that we believe are adequate to cover our anticipated remediation costs. However, certain events could cause our actual costs to vary from the established reserves. These events include, but are not limited to: a change in governmental regulations or cleanup standards or requirements; undiscovered information regarding the nature and volume of wastes allegedly disposed of or released at these properties; the loss of other potentially responsible parties that are financially capable of contributing toward cleanup costs; and other factors increasing the cost of remediation.

We file annual reports, quarterly reports, current reports, proxy statements and other documents with the U.S. Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The SEC maintains an Internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers, including Steelcase, that file electronically with the SEC. We also make available free of charge through our internet website, www.steelcase.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to these reports, as soon as reasonably practicable after we electronically file such reports with or furnish them to the SEC. In addition, our Corporate Governance Principles, Code of Ethics, Code of Business Conduct and the charters for the Audit, Compensation, Corporate Business Development and Nominating and Corporate Governance Committees are available free of charge through our website or by writing to Steelcase Inc., Investor Relations, GH-3E-12, PO Box 1967, Grand Rapids, Michigan, U.S.A. 49501-1967.

We are not including the information contained on our website as a part of, or incorporating it by reference into, this Report.

Item 2.Properties:

We have operations at locations throughout the U.S. and around the world. None of our owned properties are mortgaged or are held subject to any significant encumbrance. We believe our facilities are in good operating condition and, at present, are sufficient to meet our volume needs currently and for the foreseeable future. Our global headquarters is located in Grand Rapids, Michigan, U.S.A. Our owned and leased principal manufacturing and distribution center locations with greater than 100,000 square feet are as follows:

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations:

The following review of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and accompanying notes thereto included elsewhere within this Report.

This item contains certain non-GAAP financial measures. A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the consolidated statements of income, balance sheets or statements of cash flows of the company. The non-GAAP financial measures used are (1) organic revenue growth, (2) adjusted operating income (loss) and (3) adjusted earnings per share. Pursuant to the requirements of Regulation G, we have provided a reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP financial measures in the tables below. These measures are supplemental to, and should be used in conjunction with, the most comparable GAAP financial measures. Management uses these non-GAAP financial measures to monitor and evaluate financial results and trends. See Non-GAAP Financial Measures for a description of these measures and why management believes they are also useful to investors.

Our reportable segments consist of the Americas segment and the International segment.

The current year results of operations are presented in comparison to the prior year within the sections below. For a discussion of the 2022 results of operations in comparison to 2021, see "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our 2022 Annual Report on Form 10-K (which discussion reflects our former reportable segments as presented in such report and not our realigned reportable segments reflected herein).

In 2023, our revenue, gross margin and earnings per share improved compared to the prior year as year-over-year pricing benefits exceeded year-over-year inflation impacts. During 2022 and the first half of 2023, broad-based supply chain disruptions, such as labor shortages and delays in long distance supply chains, impacted our ability to manufacture and complete deliveries to our customers, and we experienced significant inflation in steel, fuel and other commodities. In response to the inflationary pressures, we implemented multiple list price increases globally in 2022 and 2023 and a temporary surcharge in the Americas in 2023. As of the end of 2023, the benefits of our cumulative pricing actions approximated the cumulative inflation we incurred over the past two years, and we expect to have continued gross margin improvement from our pricing actions in 2024. In addition, supply chain disruptions began to ease in the second half of 2023 which led to reduced lead times and faster order fulfillment.

Our 17% revenue growth in 2023 was driven by the benefits of our pricing actions and increased volume, including revenue from our acquisition of HALCON in Q2 2023. We had a strong order backlog at the start of the year and broad-based order growth in the first half of the year. In Q3 2023, orders declined compared to the prior year in connection with softening industry demand patterns, and in Q4 2023, the year-over-year order declines improved compared to Q3 2023, primarily due to increased project orders from large corporate customers. At the end of the year, our backlog of customer orders was approximately $690, which was 14% lower than the prior year. In response to the softening demand patterns in Q3 2023, we took actions to reduce our operational spending which included workforce reductions in the Americas and actions to wind down our customer aviation function.

We recorded net income of $35.3 and diluted earnings per share of $0.30 in 2023 compared to net income of $4.0 and diluted earnings per share of $0.03 in 2022. Operating income of $65.5 in 2023 represented an increase of $45.4 compared to the prior year. The increase was driven by higher pricing benefits, net of inflation, higher volume, partially offset by higher operating expenses and $19.2 of restructuring costs related to workforce reductions in the Americas and wind down of our customer aviation function. We reported adjusted operating income of $107.5 and adjusted earnings per share of $0.56 in 2023, and we had adjusted operating income of $34.9 and adjusted earnings per share of $0.13 in the prior year.

Revenue of $3,232.6 in 2023 represented an increase of $459.9 or 16.6% compared to the prior year, driven by growth across all segments. Approximately $325 of the increase was related to higher pricing benefits, and approximately $210 was related to higher volume (which included approximately $65 from acquisitions), partially offset by approximately $78 of unfavorable currency translation effects. Revenue increased by 22.1% in the Americas and 2.4% in International. Organic revenue growth was $480.3 or 17% compared to the prior year, with 19% in the Americas and 12% in International.

Cost of sales as a percentage of revenue improved by 100 basis points in 2023 compared to the prior year. The improvement was driven by approximately $170 of higher pricing benefits, net of inflation, and the benefits of higher volume, partially offset by approximately $33 of higher fixed overhead costs and labor inefficiencies and $18.2 of higher variable compensation expense.

Cost of sales as a percentage of revenue improved by 190 basis points in the Americas but increased by 160 basis points in International.

Operating expenses increased by $95.8 in 2023, but decreased by 90 basis points as a percentage of revenue, compared to the prior year. Operating expenses in 2023 included:

•$38.8 of higher variable compensation expense,

•$28.4 of higher marketing, product development and sales expenses,

•$24.4 from acquisitions,

•approximately $13 of higher spending in other functional areas and employee costs, and

•a $5.2 increase in the valuation of a contingent earnout liability,

•partially offset by $17.2 of favorable currency translation effects.

We recorded restructuring costs of $19.2 in the Americas in 2023. See Note 21 to the consolidated financial statements for additional information.

Our 2023 effective tax rate was 31.6% compared to a 2022 effective tax rate of (150.0)%, which included $3.6 of discrete tax benefits. See Note 16 to the consolidated financial statements for additional information.

Interest expense in 2023 increased compared to 2022 due to borrowings under our global committed credit facility in 2023. Total other income, net in 2023 increased compared to 2022 driven by a $4.5 increase in income recorded from our unconsolidated affiliates related to our dealer investments and manufacturing joint venture.

See Note 20 to the consolidated financial statements for additional information regarding our business segments.

Operating income in the Americas increased by $56.2 in 2023 compared to the prior year. The increase was driven by higher pricing benefits, net of inflation, and higher volume, partially offset by higher operating expenses. The 2023 results included $19.2 of restructuring costs. Adjusted operating income of $114.8 in 2023 represented an improvement of $83.1 compared to the prior year.

The Americas revenue represented 75.4% of consolidated revenue in 2023. In 2023, revenue of $2,436.2 represented an increase of $441.1 or 22.1% compared to the prior year. The increase included approximately $255 related to higher pricing benefits and approximately $190 related to higher volume (including approximately $55 from acquisitions). Organic revenue growth in 2023 was $392.8 or 19% compared to the prior year.

Cost of sales as a percentage of revenue improved by 190 basis points in 2023 compared to the prior year. The improvement was driven by approximately $155 of higher pricing benefits, net of inflation, and the benefits of higher volume, partially offset by approximately $31 of higher fixed overhead costs and labor inefficiencies and $16.1 of higher variable compensation expense.

Operating expenses increased by $92.3 in 2023, but decreased by 100 basis points as a percentage of revenue, compared to the prior year. Operating expenses in 2023 included:

•$30.9 of higher variable compensation expense,

•$20.5 from acquisitions,

•$17.5 of higher marketing, product development and sales expenses,

•approximately $17 of higher spending in other functional areas, primarily information technology, facilities and strategy, and employee costs, and

•a $2.6 increase in the valuation of a contingent earnout liability.

The operating loss in International increased by $10.8 in 2023 compared to the prior year. The decline was driven by higher cost of sales, primarily due to higher inflation, and higher operating expenses. The adjusted operating loss of $7.3 in 2023 represented a decline of $10.5 compared to the prior year.

International revenue represented 24.6% of consolidated revenue in 2023. In 2023, revenue of $796.4 represented an increase of $18.8 or 2.4% compared to the prior year. The increase was driven by broad-based growth across all EMEA markets and growth in India. Revenue increased by approximately $70 related to higher pricing benefits and by approximately $20 related to higher volume (including approximately $11 from an acquisition), mostly offset by approximately $74 of unfavorable currency translation effects. Organic revenue growth in 2023 was $87.5 or 12% compared to the prior year.

Cost of sales as a percentage of revenue increased by 160 basis points in 2023 compared to the prior year. The increase was driven by approximately $50 of higher inflation, approximately $5 of higher overhead costs and freight and labor inefficiencies and approximately $4.2 of unfavorable currency impacts, partially offset by approximately $70 of higher pricing benefits and the benefits of higher volume.

Operating expenses increased by $3.5 in 2023, but decreased by 20 basis points as a percentage of revenue, compared to the prior year. Operating expenses in 2023 included:

•$7.9 of higher variable compensation expense,

•approximately $7 of higher spending and employee costs,

•$3.9 from an acquisition, and

•a $2.6 increase in the valuation of a contingent earnout liability,

•offset by approximately $18 of favorable currency translation effects.

The non-GAAP financial measures used in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are: (1) organic revenue growth, (2) adjusted operating income (loss) and (3) adjusted earnings per share.

We define organic revenue growth as revenue growth excluding the impact of acquisitions and divestitures and foreign currency translation effects. Organic revenue growth is calculated by adjusting prior year revenue to include revenues of acquired companies prior to the date of the company's acquisition, to exclude revenues of divested companies and to use current year average exchange rates in the calculation of foreign-denominated revenue. We believe organic revenue growth is a meaningful metric to investors as it provides a more consistent comparison of our revenue to prior periods as well as to industry peers.

We define adjusted operating income (loss) as operating income (loss) excluding amortization of purchased intangible assets, goodwill impairment charges and restructuring costs. We define adjusted earnings per share as earnings per share excluding amortization of purchased intangible assets, goodwill impairment charges and restructuring costs, net of related income tax effects.

•Amortization of purchased intangible assets: We may record intangible assets (such as backlog, dealer relationships, trademarks, know-how and designs and proprietary technology) when we acquire companies. We allocate the fair value of purchase consideration to net tangible and intangible assets acquired based on their estimated fair values. The fair value estimates for these intangible assets require management to make significant estimates and assumptions, which include the useful lives of intangible assets. We believe that adjusting for amortization of purchased intangible assets provides a more consistent comparison of our operating performance to prior periods as well as to industry peers. As our business strategy in recent years has included an increased number of acquisitions, intangible asset amortization has become more significant.

•Goodwill impairment charges: Goodwill represents the difference between the purchase price and the related underlying tangible and identifiable intangible net asset fair values resulting from business acquisitions. We evaluate goodwill for impairment annually in Q4, or earlier if conditions indicate that there may be a potential for impairment, and goodwill impairment charges may be recorded as a result of these assessments. We believe that adjusting for goodwill impairment charges provides a more consistent comparison of our operating performance to prior periods as well as to industry peers.

•Restructuring costs: Restructuring costs may be recorded as our business strategies change or in response to changing market trends and economic conditions. We believe that adjusting for restructuring costs, which are primarily associated with business exit and workforce reduction costs, provides a more consistent comparison of our operating performance to prior periods as well as to industry peers.

Cash and cash equivalents are used to fund day-to-day operations, including seasonal disbursements, particularly the annual payment of accrued variable compensation and retirement plan contributions in Q1 of each fiscal year. During normal business conditions, we target a range of $75 to $175 for cash and cash equivalents to fund operating requirements. In addition, we may carry additional liquidity for potential investments in strategic initiatives and as a cushion against economic volatility, and from time to time, we may allow our cash and cash equivalents to temporarily fall below our targeted range to fund acquisitions and other growth initiatives.

As of February 24, 2023, we held a total of $90.4 in cash and cash equivalents. Of that total, 52% was located in the U.S. and the remaining 48%, or $43.0, was located outside of the U.S., primarily in China (including Hong Kong), Mexico, India, Malaysia and the U.K.

Company-owned life insurance ("COLI") investments are recorded at their net cash surrender value. Our investments in COLI policies are intended to be utilized as a long-term funding source for long-term benefit obligations. However, COLI can also be used as a source of liquidity. We believe the financial strength of the issuing insurance companies associated with our COLI policies is sufficient to meet their obligations. See Note 10 to the consolidated financial statements for additional information.

Availability under credit facilities may be reduced related to compliance with applicable covenants. See Liquidity Facilities for more information.

The following table summarizes our consolidated statements of cash flows:

In 2023, cash provided by operating activities improved compared to the prior year, driven by the benefits of higher net income and continued focus on controlling working capital despite the impacts of supply chain disruptions. Annual payments related to accrued variable compensation and retirement plan contributions totaled $32.4 in 2023 compared to $50.4 in the prior year. In 2023, we received $33.5 related to the carryback of our 2021 tax loss in the U.S., and we paid $14.7 of severance and other separation-related benefits and business exit costs related to restructuring activities in our Americas segment. See Note 21 to the consolidated financial statements for additional information.

Capital expenditures in 2023 primarily related to investments in manufacturing operations, product development, customer-facing facilities and information technology. Proceeds from the disposal of fixed assets included $7.0 and $17.2 related to the sale of land in 2023 and 2022, respectively.

In 2023, we acquired HALCON using cash and borrowings under our global committed credit facility. See Note 19 to the consolidated financial statements for additional information.

The following table details dividends paid per common share during each quarter of 2023 and 2022:

During 2023 and 2022, we made common stock repurchases of $3.9 and $55.2, respectively, all of which related to our Class A Common Stock. These common stock repurchases included repurchases of $3.9 and $6.0 in 2023 and 2022, respectively, which were made to satisfy participants' tax withholding obligations upon the issuance of shares under equity awards, pursuant to the terms of our Incentive Compensation Plan.

As of February 24, 2023, we had $6.4 of remaining availability under the $150 share repurchase program approved by our Board of Directors in 2016.

Our total liquidity facilities as of February 24, 2023 were as follows:

We have a $250.0 global committed bank facility in effect through 2025. As of February 24, 2023, there were no borrowings outstanding under the facility, our availability to borrow under the facility was not limited, and we were in compliance with all covenants under the facility.

We have an $8.0 committed bank facility related to a subsidiary. As of February 24, 2023, there were $3.5 in borrowings outstanding under the facility and our availability to borrow under the facility was not limited.

We have unsecured uncommitted short-term credit facilities available for working capital purposes with various financial institutions with a total U.S. dollar borrowing capacity of up to $3.8 and a total foreign currency borrowing capacity of up to $11.4 as of February 24, 2023. These credit facilities have no stated expiration date but may be changed or canceled by the banks at any time. As of February 24, 2023, there were no borrowings outstanding under these uncommitted facilities.

Total consolidated debt as of February 24, 2023 was $481.2. Our debt primarily consists of $445.5 in term notes due in 2029 with an effective interest rate of 5.6%. In addition, we have a term loan with a balance as of February 24, 2023 of $32.2. This term loan has a floating interest rate based on 30-day LIBOR plus 1.20% and is due in Q1 2024.

The term notes are unsecured, and the term loan is secured by our two corporate aircraft. The term notes and the term loan contain no financial covenants and are not cross-defaulted to our other debt facilities.

See Note 13 to the consolidated financial statements for additional information.

At February 24, 2023, our total liquidity, which is comprised of cash and cash equivalents and the cash surrender value of COLI, aggregated to $247.7. Our liquidity position, funds available under our credit facilities, cash generated from future operations and proceeds from assets held for sale are expected to be sufficient to finance our known and foreseeable liquidity needs, including our material cash requirements.

Our material committed cash requirements are as follows:

•Debt: Principal obligations on our debt are $35.7 during 2024 and $445.5 thereafter. Interest obligations on our debt are estimated to be $23.4 during 2024 and approximately $23 in each year thereafter until maturity. See Note 13 to the consolidated financial statements for additional information.

•Operating leases: We have commitments related to corporate offices, sales offices, showrooms, manufacturing and distribution facilities, vehicles and equipment under non-cancelable operating leases that expire at various dates through 2036. Minimum payments under our operating lease obligations are estimated to be $52.5 during 2024 and $188.0 thereafter. See Note 18 to the consolidated financial statements for additional information.

•Employee benefit and compensation obligations: We have obligations related to contributions and benefit payments expected to be made for post-retirement, pension and defined contribution plans and deferred compensation plans. Our obligations related to post-retirement benefit plans are not contractual, and the plans could be amended at the discretion of our Compensation Committee. Payments related to post-retirement and pension plans are estimated to be $8.1 during 2024 and $57.5 from 2025 through 2033. See Note 14 to the consolidated financial statements for additional information. Our deferred compensation obligations are estimated to be $6.2 during 2024 and $39.6 thereafter. See Note 17 to the consolidated financial statements for additional information.

We also have other planned material usages of cash which we consider discretionary. This includes plans for capital expenditures, which are expected to be approximately $70 to $80 in 2024. In addition, we fund dividend payments as and when approved by our Board of Directors. On March 22, 2023, we announced a quarterly dividend on our common stock of $0.10 per share, or approximately $11, to be paid in Q1 2024.

The amounts included above are as of February 24, 2023. Our material cash requirements are subject to fluctuation based on business requirements, economic volatility or investments in strategic initiatives. The amounts of these obligations could change materially over time as new contracts or obligations are initiated and existing contracts or obligations are terminated or modified.

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our consolidated financial statements and accompanying notes. Our consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America. These principles require the use of estimates and assumptions that affect amounts reported and disclosed in the consolidated financial statements and accompanying notes. Although these estimates are based on historical data and management’s knowledge of current events and actions it may undertake in the future, actual results may differ from the estimates if different conditions occur. The accounting estimates that typically involve a higher degree of judgment and complexity are listed and explained below. These estimates were discussed with the Audit Committee of our Board of Directors and affect both of our segments.

We allocate the fair value of purchase consideration to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is allocated to goodwill. The allocation of the purchase consideration requires management to make significant estimates and assumptions, especially with respect to intangible assets.

These estimates are reviewed with our advisors and can include, but are not limited to, future expected cash flows related to acquired dealer relationships, trademarks and know-how/designs and require estimation of useful lives and discount rates. Our estimates of fair value are based upon assumptions believed to be reasonable but which are inherently uncertain and unpredictable, and as a result, actual results may differ from these estimates. During the measurement period, which is up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. During 2023, we acquired HALCON. See Note 19 to the consolidated financial statements for additional information.

Annually in Q4, or earlier if conditions indicate it is necessary, the carrying value of each reporting unit is compared to an estimate of its fair value. If the estimated fair value of the reporting unit is less than the carrying value, the difference is recorded as an impairment charge. Goodwill is assigned to and the fair value is tested at the reporting unit level. In 2023, we evaluated goodwill using nine reporting units: the Americas, EMEA, Asia Pacific, Designtex, AMQ, Smith System, Orangebox U.K., Viccarbe and HALCON.

During Q4 2023, we performed our annual impairment assessment of goodwill in our reporting units. In the test for potential impairment, we measured the estimated fair values of our reporting units using a discounted cash flow (“DCF”) valuation method. The DCF analysis calculated the present value of projected cash flows and a residual value using discount rates that ranged from 12% to 14%. Considerable management judgment is necessary to evaluate the impact of operating changes and to estimate future cash flows in measuring fair value. Assumptions used in our DCF valuations, such as discount rates, forecasted revenue growth rates, expected operating margins and estimated capital investment, are consistent with our internal projections as of the time of the assessment. If we had concluded that it was appropriate to increase the discount rate in our analysis by 100 basis points to estimate the fair value of each reporting unit, the fair value of each of our reporting units would still have exceeded its carrying value. These assumptions could change over time, which may result in future impairment charges. We corroborated the results of the DCF analysis with a market-based approach that used observable comparable company information to support the appropriateness of the fair value estimates. There were no impairment charges recorded for any reporting units in 2023.

As of February 24, 2023, we had remaining goodwill recorded on our Consolidated Balance Sheet as follows:

As of the valuation date, the fair value of each reporting unit exceeded its carrying value by at least 20%. See Note 2 and Note 11 to the consolidated financial statements for additional information.

Our annual effective tax rate is based on income, statutory tax rates and tax planning strategies in various jurisdictions in which we operate. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining our tax expense, measuring our expected ability to realize deferred tax assets and evaluating our tax positions.

We are audited by the U.S. Internal Revenue Service under the Compliance Assurance Process (“CAP”). Under CAP, the U.S. Internal Revenue Service works with large business taxpayers to identify and resolve issues prior to the filing of a tax return. Accordingly, we expect to record minimal liabilities for U.S. Federal uncertain tax positions. Tax positions are reviewed regularly for state, local and non-U.S. tax liabilities associated with uncertain tax positions.

Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse. In evaluating our ability to recover deferred tax assets within the jurisdiction from which they arise, we consider all positive and negative evidence. These expectations require significant judgment and are developed using forecasts of future taxable income that are consistent with the internal plans and estimates we are using to manage the underlying business as of the time of the evaluation.

Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. A 1% change in statutory tax rates used to compute our deferred tax assets and liabilities would have increased or decreased our income tax expense in 2023 by approximately $3.6.

Future tax benefits are recognized to the extent that realization of these benefits is considered more likely than not. As of February 24, 2023, we recorded tax benefits from net operating loss carryforwards of $36.5. We also have recorded valuation allowances totaling $3.1 against these assets, which reduced our recorded tax benefit to $33.4. It is considered more likely than not that a $33.4 cash benefit will be realized on these carryforwards in future periods. This determination is based on the expectation that related operations will be sufficiently profitable or various tax, business and other planning strategies will enable us to utilize the carryforwards. To the extent that available evidence raises doubt about the realization of a deferred tax asset, a valuation allowance would be established or adjusted. A change in judgment regarding our expected ability to realize deferred tax assets would be accounted for as a discrete tax expense or benefit in the period in which it occurs.

Additionally, we have deferred tax assets related to tax credit carryforwards of $17.9 comprised primarily of U.S. foreign tax credits, U.S. general business credits and investment tax credits granted by the Czech Republic. The U.S. foreign tax credit and general business credit carryforward periods are 10 and 20 years, respectively. Utilization of foreign tax credits is restricted to 21% of foreign source taxable income in that year. We have projected our pretax domestic earnings and foreign source income and expect to utilize $9.5 of excess foreign tax credits and $4.1 of general business credits within the allowable carryforward periods. The carryforward period for the Czech Republic investment tax credits is also 10 years. We have projected our pretax earnings in the Czech Republic and expect to utilize the entire $4.3 of credits within the allowable carryover period. Valuation allowances are recorded to the extent realization of the tax credit carryforwards is not more likely than not.

See Note 16 to the consolidated financial statements for additional information.

We sponsor a number of domestic and foreign plans to provide pension, medical and life insurance benefits to retired employees. As of February 24, 2023 and February 25, 2022, the fair value of plan assets, benefit plan obligations and funded status of these plans were as follows:

The post-retirement medical and life insurance plans are unfunded. As of February 24, 2023, approximately 75% of our unfunded defined benefit pension obligations is related to our non-qualified supplemental retirement plan that is limited to a select group of management approved by the Compensation Committee of our Board of Directors. The post-retirement medical and life insurance plans were frozen to new participants in 2003. The non-qualified supplemental retirement plan was frozen to new participants in 2016, and the benefits were capped for existing participants. A portion of our investments in whole life and variable life COLI policies with a net cash surrender value of $157.3 as of February 24, 2023 are intended to be utilized as a long-term funding source for post-retirement medical benefits, deferred compensation and defined benefit pension plan obligations. The asset values of the COLI policies are not segregated in a trust specifically for the plans and thus are not considered plan assets. Changes in the values of these policies have no effect on the post-retirement benefits expense, defined benefit pension expense or benefit obligations recorded in the consolidated financial statements.

We recognize the cost of benefits provided during retirement over the employees’ active working lives. Inherent in this approach is the requirement to use various actuarial assumptions to predict and measure costs and obligations many years prior to the settlement date. Key actuarial assumptions that require significant management judgment and have a material impact on the measurement of our consolidated benefits expense and benefit obligations include, among others, the discount rate and health care cost trend rates. These and other assumptions are reviewed with our actuaries and updated annually based on relevant external and internal factors and information, including, but not limited to, benefit payments, expenses paid from the plan, rates of termination, medical inflation, regulatory requirements, plan changes and governmental coverage changes.

To conduct our annual review of discount rates, we perform a matching exercise of projected plan cash flows against spot rates on a yield curve comprised of high-quality corporate bonds as of the measurement date (the Ryan ALM Top Third curve). The measurement dates for our retiree benefit plans are consistent with the last day in February. Accordingly, we select discount rates to measure our benefit obligations that are consistent with market indices at the end of February. In 2023, the weighted average discount rate used to determine the estimated fair value of our defined benefit pension plan obligations was increased to 4.80% from 2.50%. The weighted-average discount rate used to determine the estimated fair value of our post-retirement plan obligations was increased to 5.47% from 3.38%. Selecting these discount rates in 2023 resulted in a $13.1 actuarial gain recorded related to our defined benefit pension plan obligations and a $4.9 actuarial gain recorded related to our post-retirement plan obligations.

Based on consolidated benefit obligations as of February 24, 2023, a one percentage point decline in the discount rate used for benefit plan measurement purposes would have changed the 2023 consolidated benefit obligations by approximately $7. All obligation-related actuarial gains and losses are amortized using a straight-line method over the average remaining service period of active plan participants.

To conduct our annual review of healthcare cost trend rates, we model our actual claims cost data over a historical period, including an analysis of the pre-65 age group and other important demographic components of our covered retiree population. This data is adjusted to eliminate the impact of plan changes and other factors that would tend to distort the underlying healthcare cost inflation trends. Our initial healthcare cost trend rate is reviewed annually and adjusted as necessary to remain consistent with recent historical experience and our expectations regarding short-term future trends. As of February 24, 2023, our initial rate of 7.50% for pre-age 65 retirees was trended downward by each year, until the ultimate trend rate of 4.50% was reached. The ultimate trend rate is adjusted annually, as necessary, to approximate the current economic view on the rate of long-term inflation plus an appropriate healthcare cost premium. Post-age 65 trend rates are not applicable as our plan provides a fixed subsidy for post-age 65 benefits.

Despite the previously described policies for selecting key actuarial assumptions, we periodically experience material differences between assumed and actual experience. Our consolidated net unamortized prior service costs of $0.5 and net actuarial losses of $8.7 related to our defined benefit pension plans and net actuarial gains of $18.3 related to our post-retirement plans, are recorded in Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets.

See Note 14 to the consolidated financial statements for additional information.

From time to time, in written and oral statements, we discuss our expectations regarding future events and our plans and objectives for future operations. These forward-looking statements discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to us, based on current beliefs of management as well as assumptions made by, and information currently available to, us. Forward-looking statements generally are accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “possible,” “potential,” “predict,” “project,” "target" or other similar words, phrases or expressions. Although we believe these forward-looking statements are reasonable, they are based upon a number of assumptions concerning future conditions, any or all of which may ultimately prove to be inaccurate. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements and vary from our expectations because of factors such as, but not limited to, competitive and general economic conditions domestically and internationally; acts of terrorism, war, governmental action, natural disasters, pandemics and other Force Majeure events; cyberattacks; changes in the legal and regulatory environment; changes in raw material, commodity and other input costs; currency fluctuations; changes in customer demand; and the other risks and contingencies detailed in this Report and our other filings with the Securities and Exchange Commission. We undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

See Note 3 to the consolidated financial statements for information regarding recently issued accounting standards.

Item 8.Financial Statements and Supplementary Data:

Management is responsible for establishing and maintaining effective internal control over financial reporting. This system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Our internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect all misstatements. Further, because of changes in conditions, effectiveness of internal control over financial reporting may vary over time.

Management assessed the effectiveness of the system of internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management determined that our system of internal control over financial reporting was effective as of February 24, 2023.

Deloitte & Touche LLP, the independent registered certified public accounting firm that audited our financial statements included in this annual report on Form 10-K, also audited the effectiveness of our internal control over financial reporting, as stated in their report which is included herein.

To the Shareholders and the Board of Directors of Steelcase Inc.

We have audited the accompanying consolidated balance sheets of Steelcase Inc. and subsidiaries (the "Company") as of February 24, 2023 and February 25, 2022, the related consolidated statements of income, comprehensive income (loss), changes in shareholders' equity, and cash flows, for each of the three years in the period ended February 24, 2023, and the related notes and the schedules listed in the Index at Item 15 (not presented herein) (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 24, 2023 and February 25, 2022, and the results of its operations and its cash flows for each of the three years in the period ended February 24, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of February 24, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 14, 2023 (not presented herein), expressed an unqualified opinion on the Company's internal control over financial reporting.

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. The Company used the discounted cash flow model to estimate fair value, which requires management to make significant estimates and assumptions related to discount rates, forecasted revenue growth rates and expected operating margins. Changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, or both. The Company corroborates the results determined using the income approach with a market-based approach that uses observable comparable company information to support the appropriateness of the fair value estimates. Based on the results of the Company’s annual goodwill impairment evaluation, the Company concluded that no goodwill impairment existed for the year ended February 24, 2023.

The consolidated goodwill balance was $276.8 million as of February 24, 2023, of which $31.5 million was allocated to the AMQ Reporting Unit (“AMQ”).

We identified goodwill for AMQ as a critical audit matter because of the significant judgments made by management to estimate the fair value of AMQ given the sensitivity of operating changes on future cash flows for this reporting unit. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to forecasted revenue growth rates and expected operating margins and the selection of the discount rate.

Our audit procedures related to forecasted revenue growth rates, expected operating margins and the selection of the discount rate used by management to estimate the fair value of AMQ included the following, among others:

•We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of AMQ, such as controls related to forecasted revenue growth rates and expected operating margins and the selection of the discount rate.

•We evaluated management’s ability to accurately forecast revenue growth rates and operating margins by comparing actual results to management’s historical forecasts.

•We evaluated the reasonableness of management’s forecasted revenue growth rates and expected operating margins by comparing the forecasts to:

–Historical revenues and operating margins.

–Internal communications to management and the Board of Directors.

–Forecasted information included in Company press releases as well as in analyst and industry reports.

•With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and (2) discount rate by:

–Testing the source information underlying the determination of the discount rate and the mathematical accuracy of the calculation.

–Developing a range of independent estimates and performing a sensitivity analysis and comparing those to the discount rate selected by management.

We have served as the Company's auditor since 2009.