Raj Mehan James Patrick Hackett - Chief Executive Officer, President, Director and Member of Executive Committee David C. Sylvester - Chief Financial Officer and Senior Vice President

Matthew Schon McCall - BB&T Capital Markets, Research Division Budd Bugatch - Raymond James & Associates, Inc., Research Division Joshua Borstein - Longbow Research LLC Todd A. Schwartzman - Sidoti & Company, LLC

Good day, everyone, and welcome to Steelcase's Fourth Quarter Fiscal Year 2013 Conference Call. As a reminder, today's call is being recorded. For opening remarks and introductions, I would like to turn the conference over to Mr. Raj Mehan, Director of Investor Relations. You may begin.

Thank you, Mimi. Good morning, everyone. Thanks for joining us for the recap of our fourth quarter financial results. Here with me today are Jim Hackett, our President and Chief Executive Officer; Dave Sylvester, our Chief Financial Officer; Mark Mossing, Corporate Controller and Chief Accounting Officer; and Terry Lenhard, Vice President Finance for the Americas and EMEA. Our fourth quarter earnings release, which crossed the wires yesterday, is accessible on our website. This conference call is being webcast and this webcast is a copyrighted production of Steelcase Inc. Presentation slides that accompany this webcast are available on ir.steelcase.com and a replay of this call will also be posted on the site later today. Our discussion today may include references to non-GAAP financial measures and forward-looking statements. Reconciliations to the most comparable GAAP measures and the risks associated with the use of forward-looking statements are included in our earnings release and webcast slides. We're incorporating by reference into this conference call the text of our Safe Harbor statement included in yesterday's release. Following our prepared remarks, we'll respond to questions from investors and analysts. I'll now turn the call over to our President and CEO, Jim Hackett.

Thank you, Raj. Well, the news is that Steelcase continued its positive momentum both from an operating standpoint and from a reputation standpoint. And it shouldn't be obscured by all the adjustments in the past quarter because as you read our earnings release, you'll see there is a higher degree of complexity involved. There's a series of significant accounting charges and adjustments led to a reported loss to the fourth quarter. And I do say reported loss because the actual underlying economics of the business are quite positive. But these charges and adjustments are taken very seriously and each one has underlying details that Dave Sylvester will cover for you in a few moments. Now our revenue is better than the outlook we shared last quarter as both the Americas and EMEA segments posted organic revenue growth. The Americas segment continues to be our strongest performer with just over 10% adjusted operating income margin and 5% organic sales growth in this last fourth quarter. This made the 12th quarter in a row of organic revenue growth following the financial crisis. From our own surveillance, this continues as an important trend of Steelcase leading our industry from a growth standpoint. The confidence that we've been feeling about our performance is being reflected this quarter by press outside the company. For example, you may have seen the media coverage of our new seating product, it's the Gesture chair, G-E-S-T-U-R-E, and of note, is our related research about new postures that emerged with the adoption of mobile smartphones and tablets. We deliberately took a new approach to this global product rollout. Our strategy was to begin building interest well before the traditional NeoCon positioning where we traditionally launch new products and where Gesture will be one of the several new products featured in our showroom in June. In fact, the Gesture launch has been extremely successful, with press coverage ranging from The Wall Street Journal in the U.S. to the leading consumer magazine in Germany and dozens of articles and posts on important blogs around the world. A product like Gesture benefits from social media. The smartness of its design actually becomes a key part of the message. When this kind of buzz is built around its make up, it does make the desirability of the product much higher. And this was a considered approach that works best when you really do have something great to promote. And I will submit to the listeners that this will be the single, most comfortable chair folks have ever sat in, and we look forward to showing it to you at NeoCon. We're pleased with inclusion this month in the FORTUNE magazine list of Most Admired Companies, where we were fourth in the sizable home equipment and furnishing section and the only office furniture company mentioned at all. Now while these lists do come and go, it's rewarding to see the resurgence of our company make its way in the consciousness of those who bode on these rankings. In another publication that evaluates our more traditional competitors, Steelcase was ranked among the top 3 brands in 11 different categories by Contract Magazine, which put us at the top level more often than any other company. And our continuing U.S. market share gains, which we talk about often, have provided additional evidence that our brand is making significant strides with renewed strength. Well, this brings me back to the strength of our brand and our business in EMEA. As the recent news from Cypress shows that economic conditions in Europe remain highly volatile and unpredictable. And our business results in recent history, of course, confirm that. In the longer-term, however, we believe we can be profitable in this market and that Europe is key to our building to support global customers, I'm certain of this. The role of management in an environment like Europe, where the sands are shifting, is to make sure that the business model is defined for fitness to ensure its ability to compete, support our customer requirements and attract or retain quality employees and build shareholder value. As you know, we've been working on our business model in EMEA for the past several quarters. We began 2 years ago when we expanded Jim Keane's responsibility to include EMEA oversight. This was an important first step to globally integrate our marketing, product development, engineering and design teams. And time today doesn't allow a broader discussion, but there's evidence that the higher performing global companies that you would follow in all business are the ones who have mastered the integration of these functions as they do business around the flat world. Jim's ascension to COO last fall allowed us to further consolidate focus and direction, which helps expedite the proposed improvements. Now despite all the economic volatility, we did grow revenue organically in EMEA in fiscal 2013. Now granted that was only 1% growth, but any growth in this environment is a testament to our people, our strategy and an improving business model. There is more than a strong coincidence of this improvement tied to the appointment of Guillaume Alvarez as the leader of sales and distribution in EMEA approximately 18 months ago. Now in addition, we have nearly completed the implementation of our new distribution strategy in Paris and are already seeing signs of renewed strength in this important market. At the same time, we reduced year-over-year operating expenses, and this was before these Parisian acquisitions, by approximately $4 million. And this was not an easy feat in the midst of the business model transformation and certain wage increases that were negotiated with most work councils in the region. There is another important point in EMEA results and it has to do with variable compensation. We've chosen to use a global metric for incentive comp so bonuses in EMEA and the Americas and Asia are all based on Steelcase Inc. performance. And we've done this for the past several years, but it's even more important now as we do what I just mentioned a moment ago and leverage global platforms to compete around the world. It also serves to keep our people engaged on our broader strategies. First, just kind of simply hunkering down, limiting investment to ride out the storm. For fiscal 2013, this amounted to a $10 million in EMEA expense, or approximately $2 million higher than the prior year. So it's a real cost. And we're not asking that to be set aside or discounted in any way, but it's important that you understand our comp strategy. These costs are, like our activity to launch Coalesse in the EMEA region or expansions in emerging markets, certainly investments for the long term. And that also affects any assessment of our current results. Now with that said, I want to make you aware that over the past few months, we have reduced headcount in EMEA by approximately 60 full-time equivalent positions. These eliminations resulted from local actions taking in a few countries and it included attrition, expiration of what we call temporary contracts and workforce reductions. These were largely driven by the deep recession that you saw in Spain and the consolidation of these recently acquired viewers in Paris. In addition though, we began consultations just yesterday with the works council in France on a project to restructure sales, marketing and some important support areas, which could lead to elimination of approximately 30 additional positions. With the ongoing uncertainty in EMEA, we're still confident about global growth in this new fiscal year. Well, our industry is now professing it will grow, and we expect Steelcase to grow even faster. Our first quarter outlook reflects some customer hesitancy around both domestic and international fiscal issues, but it does appear the impact is fading, and we'll tell you that our project pipeline is robust. We're continuing to expand our opportunities by making these new inroads in markets like education, expanding the Coalesse brand in Europe and the introduction of new products like Gesture. So we're looking forward to a strong year. And on that note, I will turn it over to our Chief Financial Officer, Dave Sylvester. David C. Sylvester: Thank you, Jim. I will start with a few high-level comments about the fourth quarter results and balance sheet, provide some additional color commentary around our order patterns and outlook for the first quarter of fiscal 2014, and then we'll move to your questions. As Jim mentioned, there are many things to understand as it relates to the results of the fourth quarter. But when you sift through the complexity, we believe there are 4 important takeaways. First, the Americas achieved organic revenue growth for the 12th consecutive quarter and continued to gain market share in the U.S. And this was accomplished despite the general challenges of fourth quarter seasonality in our business, the effects of the fiscal cliff in the U.S. over the last several months and the tough prior year comparison, which included $9.5 million of initial revenue from 2 particularly large projects in the energy sector. I will mention these 2 orders a few different times in my remarks today as they are relatively material to our year-over-year comparisons, and we believe the information may be helpful to you in completing your analysis of our results. Second, the Americas posted an adjusted operating income margin of 10.1% in the fourth quarter, representing a 370-basis-point improvement compared to last year. We grew the top line by 5% organically and expanded our gross margins due to year-over-year pricing benefits and net savings associated with our manufacturing consolidation in North America, which is now substantially complete. Plus, we reduced spending compared to the prior year, which was relatively high due to the level of investments and product development and other initiatives we were making at that time, many of which are coming to market now through NeoCon in June. Third, while we remain concerned about the overall results in EMEA, our fourth quarter organic growth of 3% and adjusted operating income of $0.8 million were somewhat better than expected. However, we did post a full year adjusted operating loss of $10.8 million this year, and we expect losses in the first quarter of fiscal 2014. Accordingly, we have continued to reconfigure the EMEA business, eliminating approximately 60 full-time equivalent positions during the fourth quarter. These eliminations, as Jim said, resulted from local actions taken by a few countries and included attrition, expiration of fixed-term temporary contracts and workforce reductions. And the actions were largely driven by the deep recession in Spain and consolidation of the recently acquired dealers in Paris. In addition, yesterday, we initiated formal discussions with French works councils regarding a project to improve our global competitiveness by reorganizing the sales, marketing and support functions in France, which could further reduce our organization by approximately 28 positions. Fourth, we completed a legal entity reorganization in EMEA during the fourth quarter which resulted in a $56.7 million foreign tax credit benefit, which can be used to offset U.S. taxes on foreign source income. We booked the benefit during the fourth quarter and expect to utilize approximately $20 million of the credit in connection with the completion of our tax return for fiscal 2013. To summarize, our performance in the Americas remains strong and we continue to face a challenging environment in EMEA. However, we took more significant steps this quarter to improve our EMEA business model and we implemented the legal entity reorganization that is expected to result in significant cash benefits for Steelcase over the next couple of years. Now I will cover some of the other significant items we recorded during the fourth quarter beyond the foreign tax credit benefit I just summarized. First, we recorded goodwill impairment charges related to EMEA and Designtex totaling $59.9 million. The EMEA charge was driven in part by the operating loss we recorded this year, which compared unfavorably to the expectations we have at the beginning of the year. In addition, the near-term outlook for Western Europe remains heavily challenged by macroeconomic headwinds, which are likely to negatively impact the level of near-term profitability we would expect to achieve with our current business model. Regarding Designtex, the impairment was largely driven by lower-than-expected operating performance in the current year and significant future investment required to strengthen our product offering, marketing and overall brand image Second, we recorded net unfavorable adjustments to our valuation allowances associated with tax loss carryforwards and other deferred tax assets in EMEA, which totaled $42.4 million. For reasons similar to those driving our goodwill impairment charge in EMEA, we increased our tax valuation allowances to 100% of our net operating loss carryforwards and other deferred tax assets primarily in France, which resulted in a $47.3 million charge in the fourth quarter. Currently, we are allowed to carryforward the net operating loss benefits indefinitely but their utilization in any given year is limited to 50% of taxable income. Because of our recent losses in France and the uncertain outlook for Western Europe in general, we increased our valuation allowances associated with these carryforward benefits and other deferred tax assets to 100% during the quarter. However, our allowance position does not limit, in any way, our ability to utilize these benefits once our legal entity in France is profitable. Partially offsetting the $47.3 million charge was a $4.9 million reduction to our tax valuation allowances in the U.K., which was driven by more consistent levels of profitability in certain legal entities associated with our U.K. business. Third, we recorded a $3.6 million increase in reserves for environmental remediation costs associated with the previously owned manufacturing site. While the sale occurred more than 6 years ago, we retained responsibility for environmental remediation associated with pollution, which we believe occurred sometime during the 1960s or 1970s. We have included a webcast slide which summarizes the income statement consequences of these items, which when aggregated with the foreign tax credit benefit, have the net effect of reducing earnings in the fourth quarter by approximately $0.31 per share. The effect of these items in the aggregate on variable compensation expense in the fourth quarter was relatively small as the impact of the goodwill impairment charges will be recognized for compensation purposes over a 5-year period beginning in fiscal 2013 consistent with prior practice. The restructuring costs in the quarter were higher than our expectations primarily due to a $12.4 million real estate impairment charge in the Americas and a $4.2 million relating to restructuring activities in EMEA. These activities were initiated during the quarter and are expected to yield annualized savings beginning in fiscal 2014 of approximately $3 million. We did not incur any restructuring costs in the current quarter associated with our formal discussions with French works councils, which began yesterday, as these potential actions require consultation with them prior to implementation. These consultations could lead to additional restructuring costs and results in a few million dollars of additional annualized savings in subsequent quarters. As it relates to the remaining restructuring costs in the quarter, they were related to the North American plant consolidations, which are now largely complete. We estimate annualized savings will approximate $30 million once the remaining savings are realized and local supply chains have been more completely established, which we estimate will take place over the next 2 quarters. During the fourth quarter, year-over-year benefits realized of approximately $7 million were reduced by approximately $2 million of additional freight costs linked to supply chains which have not yet been localized in the new manufacturing locations. That is a lot to digest, there's no question about it. But we believe it is important to absorb this information separately in order to better understand the underlying operating results of Steelcase as adjusted operating income, which includes both restructuring costs and goodwill impairment charges of $34.6 million, or 4.8% of sales, represented a year-over-year improvement of $11.6 million, or 150 basis points relative to sales. The improvement was driven largely by the following factors. First, the 4% consolidated organic revenue growth in the quarter included volume benefits as well as improved price yield compared to the prior year while our global commodity costs reflected modest deflation. Second, net savings related to our North America plant consolidations contributed approximately $5 million. Third, spending in the current year was lower compared to the prior year. These year-over-year benefits were muted by the fact that we continue to experience a higher mix of large project business globally, which continues to be somewhat offset by a lower mix of Federal government business in the U.S. In addition, the current quarter results included the additional environmental reserves I previously mentioned. On a sequential basis, fourth quarter adjusted operating income declined by $9.8 million compared to the third quarter. Higher corporate costs, which included the additional environmental reserves were the biggest driver of the lower profitability. In addition, we experienced the higher mix of large project business and higher manufacturing overhead in the fourth quarter as compared to the third quarter. One other quick comment on income tax expense in the quarter. In addition to the tax items I already mentioned, we also recorded the benefit associated with the retroactive reinstatement of the U.S. research credit. But this was largely offset by a few unfavorable discrete adjustments during the quarter. Moving to the balance sheet and cash flow. We generated $58 million of cash from operations during the fourth quarter, with more than 1/3 coming from working capital reductions linked to typical seasonality. Capital expenditures totaled $24 million during the fourth quarter and $74 million for the full fiscal year. We expect similar to slightly higher levels of capital expenditures in fiscal 2014 as investments and manufacturing technologies and product development are expected to remain relatively high. We returned approximately $11 million to shareholders in the fourth quarter through the payment of the cash dividend of $0.09 per share. Yesterday, the Board of Directors approved a quarterly dividend of $0.10 per share to be paid mid-April. We did not repurchase any shares during the quarter. As it relates to order patterns, I will start with the Americas where our orders in the fourth quarter were flat with the prior year, which included orders from 2 particularly large projects in the energy sector. Adjusted for orders from these 2 organizations, the Americas experienced approximately 4% year-over-year order growth in the fourth quarter. Order patterns in the quarter reflected single-digit growth in December and single-digit declines in January and February, but grew in February adjusted for the orders from the 2 large energy companies. Also, total order growth in the current quarter continued to be negatively impacted by declines within the U.S. Federal government sector, which marks the seventh consecutive quarter of year-over-year declines in this vertical market. Customer order backlog for the Americas ended the quarter down approximately 3% compared to the prior year or up approximately 5% adjusted for orders associated with the 2 large energy companies. Across quote types, orders from continuing agreements and from our marketing programs grew modestly while project-related orders declined approximately 2% or were up approximately 4% adjusted for orders associated with the 2 large energy companies. Critical market order growth rates in the Americas were the strongest in the insurance services, information technology, manufacturing and financial services sectors while education, healthcare, state and local government and U.S. Federal government posted notable percentage declines in this quarter. The energy sector declined significantly due to a very strong prior year comparison, which will continue through the first quarter of fiscal 2014 given the 2 particularly large projects won last year. Switching to EMEA. Order patterns in constant currency remained mixed, growing by approximately 1% in total compared to the prior year. We experienced high single-digit growth -- percentage order growth in Germany and low single-digit percentage order growth in France and the export markets of eastern, central and southern parts of Europe as a group. Orders in Iberia and the Middle East and Africa as a group declined modestly, while Northern Europe declined by a more significant percentage compared to the prior year. Across the quarter, orders were quite strong in February following weakness early in the quarter, which helped to drive customer order backlog for EMEA at the end of the quarter, up approximately 18% compared to the prior year. However, through the first 3 weeks of March, orders have returned to weaker patterns, reflecting ongoing volatility across the region. Within the other category, orders grew modestly at Designtex while orders at PolyVision declined modestly. For Asia Pacific, orders for the quarter were down a little more than 10% due to a weak December. For the balance of the quarter, order growth was pretty good. And through the first 3 weeks of March, the trend has continued, suggesting the headwinds we have experienced for the past 12 months may be subsiding. To summarize, our order patterns and quarter-end backlog in the Americas remain solid, though the calculated year-over-year growth rate is tempered by the strength last year in the energy sector. And we continue to face a challenging environment in EMEA but the volatility in our order patterns netted to relatively flat again this year, for this quarter. And within the other category, Asia seems to be strengthening. Turning to the first quarter. We expect to report revenue between $680 million and $705 million, including approximately $2 million from dealer acquisitions net of the divestiture. This compares to $675 million in the first quarter of fiscal 2013, which included revenue of approximately $20 million from the 2 large projects in the energy sector mentioned previously. Currency assumptions included in our revenue estimate represent insignificant effects on the year-over-year and sequential quarter comparisons. After giving effect to these items, we estimate organic revenue growth in the first quarter will approximate 0% to 4% compared to the prior year or approximately 3% to 7% before consideration of the 2 large projects in the energy sector last year. Sequentially, the first quarter revenue estimates represent an organic decline of between 2% and 6%, somewhat higher than typical seasonality. We expect the mix of project business in general across the Americas, EMEA and Asia Pacific to remain relatively high and thus continue to negatively impact our gross margin and operating income in the first quarter. And we expect the costs associated with our product development efforts and other initiatives to increase our operating expenses somewhat compared to the fourth quarter. As it relates to our North America plant consolidations, we expect the final savings to be realized in the first quarter and start up and other related costs to reduce modestly compared to the fourth quarter, resulting in year-over-year benefits in the first quarter of approximately $5 million. In addition, our first quarter earnings estimate anticipates year-over-year improvements in price yield associated with pricing actions taken in prior years. With respect commodity costs, our earnings estimate contemplates modest commodity cost inflation, whether compared sequentially to the fourth quarter or versus the prior year. Finally, our first quarter earnings estimate contemplates an effective tax rate of approximately 35%. As a result of these factors, we expect to report our first quarter earnings within a range of $0.09 to $0.13 per share including restructuring costs of approximately $0.02 per share. This compares to $0.10 per share in the first quarter of the prior year, which included restructuring costs of approximately $0.03 per share. For fiscal 2014 in total, we believe the U.S. contract office furniture industry will reflect modest growth, and we are continuing to target growth rates in excess of industry averages. We believe our growth in the Americas will continue to be driven by business from our largest corporate customers as the number and estimated size of large projects in our pipeline today is considerably higher than our pipeline 1 year ago. In addition, the average potential revenue value per markup has increased compared to the prior year. The timing, however, is a little bit different. In fiscal 2013, we shipped our 2 largest projects in the first half of the year, and this year, the timing of large projects looks to be more heavily weighted toward the back half of the year. For EMEA, we continue to believe volatility will play a role across the region, but in total, we are forecasting EMEA to be relatively flat, again, in fiscal 2014. Asia, on the other hand, is expected to rebound back to solid growth rates. One other point about revenue for fiscal 2014 is that we will have an extra week in the fourth quarter given our policy to close of fiscal year on the last Friday in February. So we expect revenue growth next year with the majority of it expected to come from the Americas and Asia as well as the extra week. Plus, we expect to expand our adjusted operating income margin again in fiscal 2014. We expect approximately $20 million to $25 million of year-over-year benefits associated with the completion of our manufacturing consolidation in North America, integration of the PolyVision technology business into the Steelcase Education Solutions group and the restructuring activities launched during the fourth quarter in EMEA. How much we are able to expand our operating margins in fiscal 2014 will be a function of many things, including volume and pricing, the level of EMEA volatility, the mix of project business, the pace of inflation, the successful completion of our restructuring activities and the level of investments in future growth ideas. With last item, I want to spend a few minutes talking more about. As we have stated many times, we believe staying invested in a variety of growth initiatives at the worst of the recession is a key reason why we have been able to gain market share over the last 2 fiscal years. In our webcast slides, we included a fiscal 2013 roll forward of operating expenses compared to the prior year, which highlights changes due to foreign currency translation effects, acquisitions and divestitures, variable compensation expenses and other items. In this roll forward, you'll note another NetCon totaling $7 million, which compares to an increase of $20 million in fiscal 2012. You can think of these amounts as the levels of costs, which were invested back into the business since the recession to sustain our momentum in the market and support future revenue growth. We have planned to invest approximately $20 million or more in fiscal 2013, but with the quarter results in EMEA and Asia Pacific facing a low-end demand during the current year, we pulled back on spending around the world in order to cushion the effect of lower-than-expected results in these businesses. For fiscal 2014, we expect to reinstate many of the investments that we've -- that were delayed in 2013 and add a few additional strategies, all targeted to sustain our momentum in the market. As a result, however, you should anticipate that 1 year from now, this other net category within the operating expense roll forward will aggregate a number of between $25 million and $30 million. The payback for these investments will come from our ability to sustain momentum with our growing global customer base and to continue growing faster than industry averages. A way for you to evaluate the future prospects from this next level of investment is to witness what we're bringing to market now through our global launch of Gesture and will bring to market at NeoCon in June. These launches are from the investments we made during the downturn as well as over the last couple of years. Beyond Gesture, which is a big-enough deal on its own, we plan to unveil a few other surprising new products applications and experiences come June 10 through the 12th. So despite some of the noise in the current quarter results, we had a solid quarter. And despite a first quarter outlook that is somewhat less than consensus estimates, we expect another solid year in fiscal 2014. Net-net, the business is in great shape, and we are positioned the best we have been in a long time to take advantage of the opportunities around the world. From there, we will turn it over for questions.

[Operator Instructions] Our first question comes from Matt McCall of BB&T Capital Markets. Matthew Schon McCall - BB&T Capital Markets, Research Division: So Dave, you gave some color on the pipeline on a year-over-year basis. I think you talked about revenue per -- available revenue per markup, it's higher on a year-over-year basis. Maybe, and this might be for you, Jim, if you just step back 3 months and given all that we just talked about, can you talk about the outlook, I mean, the outlook for construction that I see on the office side is very strong. It seems like it's gotten a little bit better. So can you talk about how you view specifically North America and maybe just talk about contracts today and the outlook for, say, the next 12 months versus say 3, 6 months ago? What have you seen transpire?

Matt, the seduction here for me to just riff for a moment on the macro is just too strong so I won't do a lot of it because I know you guys all can read. But I'm just doing this for our top leadership yesterday. There's a narrative out there that is talking about -- with the Energy Policy issues allowing natural gas to change, have our dependency, the manufacturing sector growing, having -- it's not nearly back where it is, but it's improving, the banking stability in terms of tangible networks of banks, insurance companies, did -- by the way, a lot of these are our customers. I see a narrative that I'm going to continue with you, which is, I said, here before the companies can't escape the fact that there are spaces are out of date and this happened over the last few years. Mobile computing and global kind of connectedness is just forcing this, and I've been sharing this on the call. We keep referring to our gains because we've been telling the story earlier coming out of the recession. And there's no need for us to think that that's dampened at all. There's blips here and there that we think we understand what's happened. And in our industry, I think, the government spending was in so many of our competitors’ numbers, and as that slowed down, you start to see the industry, correctly. But I do believe in the forecast of the industry now responding to what I'm saying where the corporate potential is as good as it's been and certainly since the banking crisis. Now there's some evidence that capital spending and things like that, because the tax questions are being discussed, but I -- in all the groups I hang out with and customers I see, I don't see a dampening in the longer term. I'm going to ask Dave just to translate that because this first quarter thing is important to get right and I'll let him attract that -- address that, pardon me. David C. Sylvester: [indiscernible] I mean, Jim gave a lot of color on how he sees and I'm sure you feel the same way about the macro environment. It's not anything to be all that excited about but there's certainly positive signs that it should continue. I think that's been feeding the construction reference that you just made that it's strengthening. And I think the evidence of that showing up in our business is the fact that our pipeline today versus 1 year ago has more projects in it of larger end and the average value of the projects are higher. And what backs that up even further is as we look at mock-ups that we're doing today, the average dollar value associated with those mock-ups is up versus 1 year ago. So it's not just top or the large projects. There's actual mock-up activity that's going on that's supporting that theory as well. And then I think the other data point that's out there, I don't mean to endorse it because we don't have a public view about calendar 2014 but the data point that is out there is -- definitely has the industry growing close to I think 10% in 2014. So that is very likely linked to what you're seeing from a construction standpoint on this space coming online in the near term. Matthew Schon McCall - BB&T Capital Markets, Research Division: Okay. The next question's on margin, then I know I only get 1 more, so I'm going to try to have a couple of parts here. Can you talk about the incremental spending, can you -- maybe in general terms, should we look at this, I think, you said $25 million to $30 million, is that investment that's going to be recurring investment? Is it people or is it more investment in new products? How should we look at kind of the outyear relative to that number? And then maybe speak to expectations for EMEA profitability given what you've done there or your expectations you're profitable and maybe if I could throw in one more, the incremental margin assumption that you think is reasonable for the base growth in '14?

Matt, while Dave's pulling up the specifics, what I want to -- your instincts on this are in the right direction, which is with the kind of product launches that we have undertaken and now are completing, we're at the point where what we call the implementation phase has higher spending in it. There is always this great question that says do you expect that to deflate after they're done? And that we've been really careful to not add a lot of fixed cost to the enterprise because of just going to -- the pit going to the python so to speak. So I'm confident that the implementation costs explain some of the inflation. I'm also certain though that some of the new things that we're working on, I'm as excited about as I've been in the last 19 years, and so there's development costs starting on now, next round ideas. But I'll let Dave explain how you kind of look at the exit of the implementation costs and then the entrance in the development costs and see where that might take us. David C. Sylvester: Yes, Matt. On what's driving the investments, I really think of them as maybe 3 broad buckets of product development, some marketing, and frankly, new ideas. And it's the last piece that I actually hope does drive longer-term increases in fixed cost because it will -- that will be -- we'll only do that if those ideas actually are playing out. As we've talked in the past, we have our hands in a number of different areas where we're trying to evaluate where work is going as well as we're continuing to invest to feed the existing core business. And we're also taking advantage of the fact that our brand is strengthening and we're trying to get that a little bit well -- more well-known around the world, that there is a new Steelcase in town. And so we're investing across all those fronts. So today, I would tell you that the $25 million to $30 million, the majority of it is non people but our hope is that it does translate into people as some of the new ideas play out into future business models. On the EMEA profitability question, I don't want to give a full year outlook for EMEA profitability, but I do think that they're going to be challenged certainly for the next year or 2 to present any kind of meaningful profit improvement. We've certainly improved the business. The fact that we grew the top line this year while we were reducing operating expenses, I think, is a testament to the team. Yes, the overall level of profitability was higher -- or loss was higher this year versus last year, but a lot of that is driven by the mix of business and some of the pricing competitiveness that we face in that market. So we feel like the performance of the business is getting a little bit better. We've got some actions we launched in the quarter that will continue to improve the results, but we're not planning for a miraculous turnaround in the results in the near term. It's going to continue to require long-term investments and improvements in our fitness as well as growth from the top line. And lastly on the incremental margin piece that you asked, I still think that the 25% plus or minus is a reasonable number to assume before any consideration of incremental investment in our business. Again, why is that a little bit lower than the 30% we've talked about in the past? And that's simply because the weight of project business is higher now than continuing when in a normal environment they tend to contribute about the same amount to our business.

Our next question comes from Budd Bugatch of Raymond James. Budd Bugatch - Raymond James & Associates, Inc., Research Division: I guess, I'm going to just take a larger step back at something that I've had a hot button on for a while. Jim, as you know, and I would hope that maybe you could define for us what success will be ultimately in EMEA or -- and when is patience of you or the board -- really essentially come to an end on that and maybe how long do we wait for success to develop?

I would say that the focus on growth fitness and global integration is going to lead us to successful implementation. EMEA 2.0, this is the first phase that we just announced, it's not a restructuring of our business. It's a reinvention to transform the way we work and allow us to focus more on our customers. It's about improving our success by doing things differently. In an environment where we don't expect organic growth, we're planning that the stress to stay there. And furthermore, it's a significant part of our strategy to focus on the leading organizations. We have some skills, Bud, in handling global accounts, so it's about redeploying our resources and not about overall workforce reduction. In every region, we need the organization we can afford and we need to support the growth opportunities we see in these different market situations. David C. Sylvester: Yes, Bud, it's Dave. I'll just add that if it was simply about cost reduction and trying to make more money with the current business model in the EMEA, our patience would have worn thin long ago, but we're not focused simply on the short term. What we continue to focus on is how do we integrate Europe with the broader organization globally and drive consistent strategies that are winning in a very, very nice way in Americas across the globe. And that requires more surgical reconfiguration of our business model, and it starts with the reorganization that Jim was referencing earlier. So while we believe in the long-term strategy, that affords us more patience than simply trying to make more money now in the current business model. So you have to believe in the long-term strategy. Budd Bugatch - Raymond James & Associates, Inc., Research Division: And I think I do, and I just wanted to make sure I understand and I'm going to come back and ask that question again, what defines success. Because I congratulate you on the thoughtfulness on which you've approached the issue that you have in Europe, in that area, but ultimately, we have to get to some sort of financial success. You've done that very well in the states by approaching your business model and having to really redefine that over the last 12 years or so. Now you got to do it in Europe and so the question is do you get to the same operating margin? Do you get the same return on capital? Is that the ultimate goal here? Or is it something less down the road? And even if it takes the same length of time it's taking here to redo the business model, that's kind of my question. [indiscernible]

Well, I think, we said on previous calls that we will be challenged to produce the same level of operating income that we are doing in the Americas. We haven't given up on that, but I think we'll be challenged. I think you for EMEA, given the state that they're in at the moment, it's more realistic to talk about incremental steps. And incremental steps are -- we believe any business that we have in our company has to return its cost of capital. So we had to figure out how to get this business in an acceptable time frame to a mid- to high-single digit operating income in order to drive a good return on invested capital. And that's going -- again, there's -- there are different ways to try to approach that. We've taken the longer, more strategic view because we believe in the globally integrated enterprise to support our growing global customer base. David C. Sylvester: And Bud, in the impairment exercise, I was a voice in the room as you were suggesting about the future, I made this comment that when you think of the terminal value of the second-largest GDP in the world, you cannot imagine that never growing again. I mean, it's even with its sovereign debt challenges, its governing problems, it is still a massive part of the world's GDP. And so I'm a voice in every meeting I'm in saying that, that terminal value is there. And the journey for the company to take care of what it can take care of is certain and you got to believe the market is -- and particularly think of a market for creative class knowledge workers across industries. This is almost an easy assessment. Now the hard work is as you laid out. Let me add, a second thing is that the company's conscience on all this kind of stuff. The way it deals with its people, the role they play, helping build this better model is a really important thing and we mastered that here in the U.S. and it’s going to be really important in Europe. And we've got a lot of experience in Europe. We are not a new company there. We've been there over 30 years. We have people in my governing structure that are ex pats in the U.S. from Europe. These are really solid business people. So this is probably what you -- and you and I retired one day in subsequent generations of the companies are mixed up with people from all over the world and the governance. And they do know how to deal with the markets around the world. And because Europe seemingly hasn't gotten the declaration it deserves like you're asking for, I want to assure you that in our boardroom and in our management teams, it is getting all that attention. Budd Bugatch - Raymond James & Associates, Inc., Research Division: I appreciate the thoughtfulness on which you've approached all the issues that Steelcase has found and I just -- I hope at some point in time down the road you can share with us a little bit more with what the ultimate game plan in EMEA looks like with some maybe some more specificity. And I know that's hard to do with the current political and worker environments you have there now and the issues you have today, but somewhere down the road, I hope that becomes something with -- that becomes something the investment community can be a party to.

I'll take that as a challenge.

Our next question comes from David MacGregor from Longbow Research. Joshua Borstein - Longbow Research LLC: This is Josh Borstein in for David. In the Americas you saw some nice operating margin improvement in the year and just given everything you guys have done over the past year, do you anticipate the 10% operating margin range to be achievable in fiscal year '14 as well?

That's certainly our objective. Joshua Borstein - Longbow Research LLC: Okay. And then just looking at some of the different types of business. In 3Q, you noted that continuing business grew at the same rate or better compared to project business, and that was the first time in several quarters you had noted. Was it again the case here in 4Q? David C. Sylvester: Well, as I mentioned in the Americas, the year-over-year growth rates in project business were affected by these orders from the energy sector last year. So adjusted for that, we had 4% growth, I think, in project before those 2 large projects last year. And I think continuing was about the same, maybe a tad less, but yes, the point -- I guess, the overall point is pretty much the same, that continuing is starting to grow now more consistently like projects. But it's only 2 quarters in a row, too. Joshua Borstein - Longbow Research LLC: Okay, and then just last now. On GSA, could you say how much it was down in the quarter and whether you saw any impact from sequestration?

I did not say specifically and now we're kind of looking at each other in the room to see if we have the data point. We can follow-up with you, Josh, on that. David C. Sylvester: So far, Josh, we haven't -- so you know we did certainly did see a slowdown in the day-to-day GSA business. We expect that more going into FY '14, but we also expect that to be offset by an increase, actually, in project business of Federal government, with this smaller than usual in project business this year that we just finished in Federal government and we expect that to grow quite a bit next year. Joshua Borstein - Longbow Research LLC: And any idea right now how much the percentage of business is related to GSA? David C. Sylvester: Of our Federal government -- of our total sales or Federal government? Joshua Borstein - Longbow Research LLC: Of the total. David C. Sylvester: It's very small of our total Steelcase sales.

Have low-single digit... David C. Sylvester: Yes, low-single digits.

[Operator Instructions] Our next question comes from Todd Schwartzman of Sidoti & Company. Todd A. Schwartzman - Sidoti & Company, LLC: I was also interested in the GSA. But also, if you could speak a little bit about the health care that was called out as one of the relative laggers. Was there any noise from 1 year ago there? What were the drivers of that particular vertical?

No, not any significant noise last year that would have driven the health care decline this quarter. I think it's just vertical that has continued to struggle a bit. I don't know, David, if you want to add anything. David C. Sylvester: We have had 6 consecutive quarters, I believe, of growth in healthcare so there's compounds there and some high comparables. Last few quarters, it's slowed down, and it's down a bit. We're seeing fewer projects recently in the healthcare sector. Todd A. Schwartzman - Sidoti & Company, LLC: So it's not legislation-based that you could point to, put your finger on? David C. Sylvester: No, there could be a small piece from the VAP [ph], but it's not a material impact of our healthcare sales right now. Todd A. Schwartzman - Sidoti & Company, LLC: Okay. Regarding OpEx for the first quarter, up sequentially from Q4, is that on a percent-of-sales basis or in dollars?

Dollars. Todd A. Schwartzman - Sidoti & Company, LLC: Okay. And I wondered if you could just repeat a couple of numbers for me, CapEx for the year and also the anticipated savings from the headcount reduction in EMEA.

CapEx for fiscal 2014, we would put in a $75 million to $80 million range plus or minus. So my comments in scripted remarks were that we spent $74 million this year. We expect to spend that or something higher. So you're not going to be far-off if you're $75 million to $80 million. And the savings from the actions that we launched in EMEA during the quarter, we estimate to be about $3 million annualized and should start pretty quick in the first quarter. And that has nothing to do with the consultations that we started yesterday in France. Those would be separate if implemented.

Thank you. I'm showing no further questions in the queue at this time. I'll hand the call back to Mr. Hackett for closing remarks.

I just want to summarize by saying that our people have done a great job. We finished a really good year. We declared a good bonus for them. And we had a great meeting yesterday where we opened our innovation center here in Grand Rapids that's part of a global network of development nodes. And this was a really big day for us because it's kind of a statement in the future. So any of you ever get here, we'd love to have you see what we've been doing to change our Grand Rapids spaces and confirm why we're so optimistic about the future. Thank you for your attention today.

Thank you. Ladies and gentlemen, this concludes the conference for today. You may all disconnect, and have a wonderful day.