XML 42 R23.htm IDEA: XBRL DOCUMENT v3.20.1
Employee Benefit Plan Obligations
 12 Months Ended
Feb. 28, 2020
Retirement Benefits [Abstract]  
Employee Benefit Plan Obligations EMPLOYEE BENEFIT PLAN OBLIGATIONS
Employee Benefit Plan Obligations (net)
February 28,
2020
February 22,
2019
Defined contribution retirement plans
$
28.1

 
$
25.0

 
Post-retirement medical benefits
44.3

 
40.7

 
Defined benefit pension plans
61.8

 
57.3

 
Deferred compensation plans and agreements
58.8

 
55.7

 
 
$
193.0

 
$
178.7

 
 
 
 
 
 
Employee benefit plan obligations
 
 
 
 
Current portion
$
44.7

 
$
37.1

 
Long-term portion
148.3

 
141.6

 
 
$
193.0

 
$
178.7

 

 Defined Contribution Retirement Plans
Substantially all of our U.S. employees are eligible to participate in defined contribution retirement plans, primarily the Steelcase Inc. Retirement Plan (the “Retirement Plan”). Company contributions, including discretionary profit sharing and 401(k) matching contributions, and employee 401(k) pre-tax contributions fund the Retirement Plan. All contributions are made to a trust which is held for the sole benefit of participants. Company contributions for our defined contribution retirement plans are discretionary.
Total expense under all defined contribution retirement plans was $37.5 for 2020, $35.3 for 2019 and $33.7 for 2018. We expect to fund approximately $42.2 related to our defined contribution plans in 2021, including funding related to our 2020 discretionary profit sharing contributions.
Post-Retirement Medical Benefits
We maintain post-retirement benefit plans that provide medical and life insurance benefits to certain North American-based retirees and eligible dependents. The plans were frozen to new participants in 2003. We accrue the cost of post-retirement benefits during the service periods of employees based on actuarial calculations for each plan. These plans are unfunded, but a portion of our investments in COLI policies are intended to be utilized as a long-term funding source for these benefit obligations. See Note 10 for additional information. While we do not expect the timing of cash flows to closely match, we intend to hold the policies until maturity, and we expect the policies will generate insufficient cash to cover the obligation payments over the next several years and generate excess cash in later years.
Defined Benefit Pension Plans
Our defined benefit pension plans include various qualified foreign retirement plans as well as domestic non-qualified supplemental retirement plans that are limited to a select group of management approved by the Compensation Committee. The benefit plan obligations for the non-qualified supplemental retirement plans are primarily related to the Steelcase Inc. Executive Supplemental Retirement Plan. This plan is unfunded, but a portion of our investments in COLI policies are intended to be utilized as a long-term funding source for these benefit obligations. See Note 10 for additional information. The funded status of our defined benefit pension plans (excluding our investments in COLI policies) is as follows:
Defined Benefit Pension
Plan Obligations
February 28, 2020
February 22, 2019
Qualified Plans
Non-qualified
Supplemental
Retirement Plans
Qualified Plans
Non-qualified
Supplemental
Retirement Plans
Foreign
Foreign
Plan assets
$
31.3

 
$
—

 
$
30.0

 
$
—

 
Projected benefit plan obligations
49.5

 
33.0

 
44.7

 
31.5

 
Funded status
$
(18.2
)
 
$
(33.0
)
 
$
(14.7
)
 
$
(31.5
)
 
Current liability
(0.1
)
 
(2.8
)
 
(0.4
)
 
(3.8
)
 
Long-term liability
(18.1
)
 
(30.2
)
 
(14.3
)
 
(27.7
)
 
Total benefit plan obligations
$
(18.2
)
 
$
(33.0
)
 
$
(14.7
)
 
$
(31.5
)
 
Accumulated benefit obligation
$
44.6

 
$
32.9

 
$
23.7

 
$
31.3

 
 
Summary Disclosures for Defined Benefit Pension and Post-Retirement Plans
The following tables summarize our defined benefit pension and post-retirement plans.

Defined Benefit
Pension Plans
Post-Retirement
Plans
February 28,
2020
February 22,
2019
February 28,
2020
February 22,
2019
Change in plan assets:
 
 
 
 
 
 
 
 
Fair value of plan assets, beginning of year
$
30.0

 
$
33.1

 
$
—

 
$
—

 
Actual return on plan assets
1.6

 
0.3

 
—

 
—

 
Employer contributions
4.9

 
4.3

 
4.0

 
3.6

 
Plan participants’ contributions
—

 
—

 
1.9

 
1.9

 
Currency changes
(0.3
)
 
(2.0
)
 
—

 
—

 
Benefits paid
(4.9
)
 
(5.7
)
 
(5.9
)
 
(5.5
)
 
Fair value of plan assets, end of year
31.3

 
30.0

 
—

 
—

 
Change in benefit obligations:
 
 
 
 
 
 
 
 
Benefit plan obligations, beginning of year
76.2

 
80.1

 
40.7

 
43.4

 
Service cost
1.8

 
2.2

 
0.1

 
0.1

 
Interest cost
2.0

 
2.1

 
1.6

 
1.6

 
Amendments
—

 
1.0

 
—

 
—

 
Net actuarial (gain) loss
8.2

 
(0.2
)
 
5.9

 
(0.8
)
 
Plan participants’ contributions
—

 
—

 
1.9

 
1.9

 
Currency changes
(0.8
)
 
(3.3
)
 
—

 
—

 
Benefits paid
(4.9
)
 
(5.7
)
 
(5.9
)
 
(5.5
)
 
Benefit plan obligations, end of year
82.5

 
76.2

 
44.3

 
40.7

 
Funded status
$
(51.2
)
 
$
(46.2
)
 
$
(44.3
)
 
$
(40.7
)
 
Amounts recognized on the Consolidated Balance Sheets:
 
 
 
 
 
 
 
 
Long-term asset
$
—

 
$
—

 
$
—

 
$
—

 
Current liability
(2.9
)
 
(4.2
)
 
(3.3
)
 
(3.4
)
 
Long-term liability
(48.3
)
 
(42.0
)
 
(41.0
)
 
(37.3
)
 
Net amount recognized
$
(51.2
)
 
$
(46.2
)
 
$
(44.3
)
 
$
(40.7
)
 
Amounts recognized in accumulated other comprehensive income (loss) —pretax:
 
 
 
 
 
 
 
 
Actuarial loss (gain)
$
20.3

 
$
12.8

 
$
(13.6
)
 
$
(22.9
)
 
Prior service cost
0.7

 
0.6

 
—

 
—

 
Total amounts recognized in accumulated other comprehensive income (loss) —pretax
$
21.0

 
$
13.4

 
$
(13.6
)
 
$
(22.9
)
 
Estimated amounts to be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year:
 
 
 
 
 
 
 
 
Actuarial loss (gain)
$
1.1

 
$
0.4

 
$
(2.1
)
 
$
(3.4
)
 
Prior service credit
(0.1
)
 
(0.1
)
 
—

 
—

 
Total amounts recognized in accumulated other comprehensive income (loss) —pretax
$
1.0

 
$
0.3

 
$
(2.1
)
 
$
(3.4
)
 



Pension Plans
Post-Retirement Plans
Year Ended
Year Ended
February 28,
2020
February 22,
2019
February 23,
2018
February 28,
2020
February 22,
2019
February 23,
2018
Components of expense (1):
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
1.8

 
$
2.2

 
$
2.7

 
$
0.1

 
$
0.1

 
$
0.2

 
Interest cost
2.0

 
2.1

 
2.1

 
1.6

 
1.6

 
1.7

 
Amortization of net loss (gain)
0.4

 
0.3

 
0.5

 
(3.3
)
 
(3.8
)
 
(3.7
)
 
Amortization of prior year service credit
(0.1
)
 
(0.2
)
 
(0.2
)
 
—

 
(2.2
)
 
(7.0
)
 
Expected return on plan assets
(1.3
)
 
(1.5
)
 
(1.4
)
 
—

 
—

 
—

 
Settlement
—

 
—

 
7.1

 
—

 
—

 
—

 
Net expense (credit) recognized in Consolidated Statements of Income
2.8

 
2.9

 
10.8

 
(1.6
)
 
(4.3
)
 
(8.8
)
 
Other changes in plan assets and benefit obligations recognized in other comprehensive income (pre-tax):
 
 
 
 
 
 
 
 
 
 
 
 
Net actuarial loss (gain)
7.9

 
1.0

 
(4.3
)
 
5.9

 
(0.8
)
 
(1.2
)
 
Prior service cost (credit)
—

 
1.0

 
—

 
—

 
—

 
—

 
Amortization of gain (loss)
(0.4
)
 
(0.3
)
 
(0.5
)
 
3.4

 
3.8

 
3.7

 
Amortization of prior year service credit
0.1

 
0.2

 
0.2

 
—

 
2.2

 
7.0

 
Losses recognized as part of the curtailment / settlement
—

 
—

 
(7.3
)
 
—

 
—

 
—

 
Prior service cost recognized as a part of curtailment / settlement
—

 
—

 
—

 
—

 
—

 
—

 
Other
—

 
—

 
—

 
—

 
0.1

 
—

 
Total recognized in other comprehensive income
7.6

 
1.9

 
(11.9
)
 
9.3

 
5.3

 
9.5

 
Total recognized in net periodic benefit cost and other comprehensive income (pre-tax)
$
10.4

 
$
4.8

 
$
(1.1
)
 
$
7.7

 
$
1.0

 
$
0.7

 

________________________
(1)
The non-service cost components of net pension and post-retirement credit in all years presented are included in Other income, net. See Note 3 for additional information related to the adoption of ASU 2017-07.
Pension and Other Post-Retirement Accumulated Other Comprehensive Income (Loss) Changes
Before Tax
Amount
Tax (Expense)
Benefit
Net of
Tax Amount
Balance as of February 23, 2018
$
16.1

 
$
(1.4
)
 
$
14.7

 
Prior service (cost) credit from plan amendment arising during period
(1.0
)
 
0.2

 
(0.8
)
 
Amortization of prior service cost (credit) included in net periodic pension cost
(2.5
)
 
0.6

 
(1.9
)
 
   Net prior service (cost) credit during period
(3.5
)
 
0.8

 
(2.7
)
 
Net actuarial gain (loss) arising during period
(0.2
)
 
(0.1
)
 
(0.3
)
 
Amortization of net actuarial (gain) loss included in net periodic pension cost
(3.5
)
 
1.0

 
(2.5
)
 
Gain/losses recognized as a part of the settlement
—

 
—

 
—

 
   Net actuarial gain (loss) during period
(3.7
)
 
0.9

 
(2.8
)
 
Foreign currency translation adjustments
0.6

 
(0.1
)
 
0.5

 
   Current period change
(6.6
)
 
1.6

 
(5.0
)
 
Balance as of February 22, 2019
$
9.5

 
$
0.2

 
$
9.7

 
Amortization of prior service cost (credit) included in net periodic pension cost
(0.1
)
 
—

 
(0.1
)
 
   Net prior service (cost) credit during period
(0.1
)
 
—

 
(0.1
)
 
Net actuarial gain (loss) arising during period
(13.9
)
 
3.4

 
(10.5
)
 
Amortization of net actuarial (gain) loss included in net periodic pension cost
(3.0
)
 
0.7

 
(2.3
)
 
Gains (losses) recognized as a part of the settlement
—

 
—

 
—

 
   Net actuarial gain (loss) during period
(16.9
)
 
4.1

 
(12.8
)
 
Foreign currency translation adjustments
0.1

 
—

 
0.1

 
   Current period change
(16.9
)
 
4.1

 
(12.8
)
 
Balance as of February 28, 2020
$
(7.4
)
 
$
4.3

 
$
(3.1
)
 
Weighted-Average
Assumptions
Pension Plans
Post-Retirement Plans
Year Ended
Year Ended
February 28,
2020
February 22,
2019
February 23,
2018
February 28,
2020
February 22,
2019
February 23,
2018
Weighted-average assumptions used to determine benefit obligations:
 
 
 
 
 
 
 
 
 
 
 
 
Discount rate
1.70
%
 
2.90
%
 
2.90
%
 
2.58
%
 
4.08
%
 
3.97
%
 
Rate of salary progression
3.50
%
 
3.60
%
 
3.60
%
 
 
 
 
 
 
 
Weighted-average assumptions used to determine net periodic benefit cost:
 
 
 
 
 
 
 
 
 
 
 
 
Discount rate
2.70
%
 
2.90
%
 
2.80
%
 
4.06
%
 
3.95
%
 
3.84
%
 
Expected return on plan assets
3.00
%
 
4.60
%
 
4.80
%
 
 
 
 
 
 
 
Rate of salary progression
3.50
%
 
3.40
%
 
3.50
%
 
 
 
 
 
 
 

The measurement dates for our retiree benefit plans are consistent with our fiscal year-end. Accordingly, we select discount rates to measure our benefit obligations that are consistent with market indices at the end of each year. In evaluating the expected return on plan assets, we consider the expected long-term rate of return on plan assets based on the specific allocation of assets for each plan, an analysis of current market conditions and the views of leading financial advisors and economists.
The assumed healthcare cost trend was 6.51% for pre-age 65 retirees as of February 28, 2020, gradually declining to 4.50% after eight years. As of February 22, 2019, the assumed healthcare cost trend was 6.75% for pre-age 65 retirees, gradually declining to 4.50% after nine years. Post-age 65 trend rates are not applicable as our plan provides a fixed subsidy for post-age 65 benefits. A one percentage point change in assumed healthcare cost trend rates would have had the following effects as of February 28, 2020:
Health Cost Trend Sensitivity
One percentage
point increase
One percentage
point decrease
Effect on total of service and interest cost components
$
—

 
$
—

 
Effect on post-retirement benefit obligation
$
0.1

 
$
(0.1
)
 

Plan Assets
The investments of the foreign plans are managed by third-party investment managers who follow local regulations. In general, the investment strategy is designed to accumulate a diversified portfolio among markets, asset classes or individual securities in order to reduce market risk and assure that the pension assets are available to pay benefits as they come due.
Our pension plans’ weighted-average investment allocation strategies and weighted-average target asset allocations by asset category as of February 28, 2020 and February 22, 2019 are reflected in the following table. The target allocations are established by the investment committees of each plan in consultation with external advisors after consideration of the associated risk and expected return of the underlying investments.
Asset Category
February 28, 2020
February 22, 2019
Actual
Allocations
Target
Allocations
Actual
Allocations
Target
Allocations
Equity securities
60
%
 
40
%
 
80
%
 
55
%
 
Debt securities
35

 
30

 
16

 
30

 
Real estate
4

 
—

 
4

 
—

 
Other (1)
1

 
30

 
—

 
15

 
Total
100
%
 
100
%
 
100
%
 
100
%
 
________________________
(1)
Represents money market funds and cash.
The fair value of the pension plan assets as of February 28, 2020 and February 22, 2019, by asset category are as follows:
Fair Value of Pension Plan Assets
February 28, 2020
Level 1
Level 2
Level 3
Total
Cash and cash equivalents
$
0.2

 
$
—

 
$
—

 
$
0.2

 
Equity securities:
 
 
 
 
 
 
 
 
International
—

 
18.9

 
—

 
18.9

 
Fixed income securities:
 
 
 
 
 
 
 
 
Bond funds
—

 
11.1

 
—

 
11.1

 
Other investments:
 
 
 
 
 
 
 
 
Property and property funds
—

 
1.1

 
—

 
1.1

 
 
$
0.2

 
$
31.1

 
$
—

 
$
31.3

 
Fair Value of Pension Plan Assets
February 22, 2019
Level 1
Level 2
Level 3
Total
Cash and cash equivalents
$
—

 
$
—

 
$
—

 
$
—

 
Equity securities:
 
 
 
 
 
 
 
 
International
—

 
24.5

 
—

 
24.5

 
Fixed income securities:
 
 
 
 
 
 
 
 
Bond funds
—

 
4.4

 
—

 
4.4

 
Other investments:
 
 
 
 
 
 
 
 
Property and property funds
—

 
1.1

 
—

 
1.1

 
 
$
—

 
$
30.0

 
$
—

 
$
30.0

 

There were no transfers between Level 1 and Level 2 of the fair value hierarchy for any periods presented.
Below is a roll-forward of plan assets measured at estimated fair value using Level 3 inputs for the year ended February 22, 2019:
Roll-forward of Fair Value Using Level 3 Inputs
Group Annuity Contract
Guaranteed
Insurance
Contracts
Balance as of February 23, 2018
$
—

 
$
0.4

 
Purchases, sales, and other, net
—

 
(0.4
)
 
Balance as of February 22, 2019
$
—

 
$
—

 

We expect to contribute approximately $3.6 to our pension plans and fund approximately $3.4 related to our post-retirement plans in 2021. The estimated future benefit payments under our pension and post-retirement plans are as follows:
 
Fiscal Year Ending in February
Pension Plans
Post-retirement Plans
 
 
2021
$
3.6

 
$
3.4

 
 
2022
3.5

 
3.4

 
 
2023
4.1

 
3.4

 
 
2024
4.9

 
3.4

 
 
2025
4.5

 
3.3

 
 
2026 - 2030
22.4

 
14.5

 
Multi-Employer Pension Plan
Our subsidiary, SC Transport Inc., previously contributed to the Central States, Southeast and Southwest Areas Pension Fund (the "Fund") based on an obligation arising from a collective bargaining agreement ("CBA") that covered SC Transport Inc. employees and retirees. Under current law, an employer that withdraws or partially withdraws from a multi-employer pension plan may incur a withdrawal liability to the plan, which represents the portion of the plan’s underfunding that is allocable to the withdrawing employer under very complex actuarial and allocation rules. 
In 2019, the Fund asserted that SC Transport Inc.'s absence of hiring additional union employees over the past ten years, coupled with restructuring of SC Transport Inc.'s business, constituted an adverse selection practice under the Fund and, if not remedied, would result in an assessment of a withdrawal liability. As a result of the Fund's assertion, SC Transport Inc. recorded an $11.2 charge in 2019, which was based on our best estimate from our analysis of available information and pension regulations which specify that the liability will be paid out in installments over a period of up to 20 years. The withdrawal liability was discounted using a rate of 3.5%. The balance of the liability at February 28, 2020 was $10.6.
In 2020, SC Transport Inc. finalized a new CBA with its employees that no longer requires it to contribute to the fund after March 31, 2019 due to its withdrawal from the Fund. We notified the Fund of the new CBA, and the Fund issued a final assessment of our withdrawal liability during 2020. We appealed the amount of the assessment by the Fund and are now awaiting arbitration proceedings. The amount that may ultimately be required to settle any potential obligation may be lower or higher than our estimated liability, which we will adjust if needed, if and when additional information becomes available. If the Fund were to experience a mass withdrawal within three years from the date of our withdrawal, our liability could increase by approximately $13. A mass withdrawal could occur if all participating employers in the Fund withdraw at the same time, if the trustees terminate the Fund or if all union employees decertify the union. Our participation in this plan during 2019 and 2018 is outlined in the table below. Expense was recognized at the time our contributions were funded, in accordance with applicable accounting standards.
Pension Fund
EIN - Pension Plan Number
Plan Month / Day End Date
Pension Protection Act Zone Status (1)
FIP/RP Status Pending / Implemented (2)
Contributions
Surcharges Imposed or Amortization Provisions
2019
2018
2019
2018
Central States, Southeast and Southwest Areas Pension Fund
366044243-001
12/31
Red
Red
Implemented
$0.2
$0.2
No
________________________
(1)
The most recent Pension Protection Act Zone Status available in 2019 and 2018 relates to the plan's two most recent fiscal year-ends. The zone status is based on information received from the plan certified by the plan’s actuary. Among other factors, red zone status plans are generally less than 65 percent funded and are considered in critical status.
(2)
The FIP/RP Status Pending/Implemented column indicates plans for which a financial improvement plan or a rehabilitation plan is either pending or has been implemented by the trustees of the plan.
Deferred Compensation Programs
We maintain four deferred compensation programs. The first deferred compensation program is closed to new entrants. In this program, certain employees elected to defer a portion of their compensation in return for a fixed benefit to be paid in installments beginning when the participant reaches age 70. Under the second plan, certain employees may elect to defer a portion of their compensation. The third plan is intended to restore retirement benefits that would otherwise be paid under the Retirement Plan but are precluded as a result of the limitations on eligible compensation under Internal Revenue Code Section 401(a)(17). Under the fourth plan, our non-employee directors may elect to defer all or a portion of their board retainer and committee fees. The deferred amounts in the last three plans earn a return based on the investment option selected.
These deferred compensation obligations are unfunded, but a portion of our investments in COLI policies are intended to be utilized as a long-term funding source for these deferred compensation obligations. See Note 10 for additional information.
Deferred compensation expense, which represents annual participant earnings on amounts that have been deferred, and expense related to restoration retirement benefits were $3.3 for 2020, $4.6 for 2019 and $5.9 for 2018.