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                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                               ----------------

                                   FORM 10-K

                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended February 26, 1999

                        COMMISSION FILE NUMBER 1-13873

                                STEELCASE INC.
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

               MICHIGAN                              38-0819050
       (STATE OF INCORPORATION)         (IRS EMPLOYER IDENTIFICATION NUMBER)

           901 44TH STREET,                             49508
        GRAND RAPIDS, MICHIGAN                       (ZIP CODE)
    (ADDRESS OF PRINCIPAL EXECUTIVE
               OFFICES)

                                (616) 247-2710
                        (REGISTRANT'S TELEPHONE NUMBER)

          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:


<TABLE>
<CAPTION>
        TITLE OF EACH                                    NAME OF EACH EXCHANGE
            CLASS                                         ON WHICH REGISTERED
        -------------                                   -----------------------
      <S>                                               <C>
      Class A Common Stock............................. New York Stock Exchange
</TABLE>


           SECURITIES REGISTERED PURSUANT TO 12(G) OF THE ACT: NONE

  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X]  No [_]

  Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]

  As of May 10, 1999, the registrant had outstanding 23,825,633 shares of
Class A Common Stock and 129,593,062 shares of Class B Common Stock. The
aggregate market value of the Class A Common Stock held by non-affiliates of
the registrant was $465,120,395, computed by reference to the closing price of
the Class A Common Stock on that date as reported by the New York Stock
Exchange. Although there is no quoted market for registrant's Class B Common
Stock, shares of Class B Common Stock may be converted at any time into an
equal number of shares of Class A Common Stock. Using the closing price of the
Class A Common Stock on May 10, 1999, as reported by the New York Stock
Exchange as the basis of computation, the aggregate market value of the Class
B Common Stock held by non-affiliates on that date was $1,161,318,987.

                     DOCUMENTS INCORPORATED BY REFERENCE:

  Portions of the registrant's definitive proxy statement for its 1999 Annual
Meeting of Shareholders are incorporated by reference in Part III of this Form
10-K.

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                                    PART I


ITEM 1. BUSINESS:

GENERAL

  Steelcase Inc. (the "Company" or "Steelcase") is the world's largest
designer and manufacturer of products used to create high-performance work
environments. The Company's portfolio includes office furniture, furniture
systems, interior architectural products, technology products and related
products and services. The Company, its subsidiaries and unconsolidated joint
ventures have approximately 50 manufacturing plants and approximately 20,000
employees in 15 countries. Founded in Grand Rapids, Michigan in 1912,
Steelcase Inc. has led the office furniture industry in sales for 25
consecutive years. For the fiscal year ended February 26, 1999 ("1999"), the
Company's consolidated net sales were $2.74 billion and in the year ended
December 31, 1998, unconsolidated joint ventures in which the Company
generally holds 50% interests generated approximately $0.5 billion in net
sales.

  The Company offers its extensive range of products and services to
commercial and non-commercial organizations worldwide through a network of
independent dealers in approximately 680 locations. These dealers, in
conjunction with the Company's sales force, provide local expertise,
installation services and ongoing customer support services, remaining in
close contact with customers during and after the completion of a project to
help ensure customer satisfaction, offer ongoing services and encourage repeat
business. Steelcase has strong brand recognition and a reputation for quality
among architects, contract interior designers and corporate facility managers
who typically influence purchasing decisions. The Company's dealer network and
sales organization utilize Workplace Performance, a consultative process
supported by proprietary software-based tools, to help demonstrate early in
the planning process the impact of office space and the work environment on
productivity and occupancy costs.

  Steelcase's comprehensive portfolio of furniture products and workplace
related products and services, together with its extensive knowledge of work
environments, enables the Company to satisfy virtually all of its customers'
furniture-related needs. These needs include not only furniture and related
products but also initial workspace planning, rapid delivery and installation,
ongoing support services, furniture asset management, leasing and, if desired,
refurbishing or remanufacturing. The Company's primary product categories
include: (i) office furniture systems; (ii) seating products; (iii) group and
individual storage products, including filing units and cabinets; (iv) desk
and casegood products, such as bookcases and credenzas; (v) interior
architectural products; and (vi) technology products. The Company sells and
markets primarily steel and wood products under the Steelcase and Turnstone
brands as well as various other brand name products manufactured through joint
ventures such as Steelcase Strafor, licensing arrangements and the Steelcase
Design Partnership. Steelcase Strafor, a 50% owned joint venture with Strafor
Facom S.A., is a leading office furniture company in Europe. See Note 20 to
the Consolidated Financial Statements regarding the April 22, 1999 acquisition
by the Company of the remaining 50% equity interest in the joint venture from
Strafor Facom S.A.

  The Company also offers complementary product lines through the Steelcase
Design Partnership focusing on specialty markets, including product lines for
lobby and reception areas, cafeteria and informal gathering areas, private
offices, learning environments, executive conference areas, group work
environments, videoconferencing facilities and healthcare environments. The
Steelcase Design Partnership also provides surfacing materials for
hospitality, healthcare and contract markets, architectural millwork and
ergonomic tools for the workplace. In addition to its product offerings, the
Company provides services such as (i) furniture asset management through
Furniture Management Coalition ("FMC"), (ii) refurbishing and remanufacturing
through Revest Inc. ("Revest") and (iii) lease financing through Steelcase
Financial Services Inc. ("SFSI"), the Company's captive financing subsidiary.

  The Company operates in one business segment and three geographic markets--
the United States, International and Canada, and Europe. Certain information
with regard to the Company's operations in geographic markets is contained
elsewhere herein in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Note 18 to the Consolidated Financial
Statements.

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PRODUCTS AND SERVICES

  Steelcase provides a broad range of office furniture and related workplace
products and comprehensive support services to its customers on a project
basis and through ongoing contractual relationships.

 Products

  The Company offers an extensive range of office furniture and workplace
related products at a variety of price points, allowing customers to satisfy
virtually all of their office furniture-related work environment needs through
the Company and its dealers. The Company's primary product lines include: (i)
office furniture systems; (ii) seating; (iii) storage solutions; (iv) desks
and casegoods; (v) interior architectural products; and (vi) technology
products.

 Office Furniture Systems

  Since the mid-1980's, furniture systems have been the largest product
category in the office furniture industry, representing approximately one-
third of all office furniture sold in calendar 1998. Office furniture systems
consist of movable and reconfigurable components which may be used to create
work areas of variable sizes and configurations. Furniture systems generally
use movable panels for space division, for acoustic and visual privacy, for
structural support and as conduits for power, telephone and data cabling.
Furniture systems also include panel-supported and freestanding components
such as work surfaces, desks, returns, pedestals, drawers, binder bins,
filing, lighting fixtures and keyboard support shelves. Furniture systems
offer customers more flexibility and greater space efficiency than traditional
dry-wall-based private offices and undivided desk areas.

  Steelcase believes it is the market leader in this category, based on sales,
offering a broad range of aesthetic options, performance features,
applications and price points. Each Steelcase system also offers technology
management options to help ensure that phone, power and data lines are
effectively managed and available to the user. The Steelcase systems portfolio
includes five core product lines, Series 9000, Avenir, Context, Elective
Elements, and Montage. In addition, Answer, a Turnstone brand of systems
furniture, is targeted to more cost-conscious, high-growth customers. Each
line provides a combination of performance, aesthetics and price which allows
Steelcase to tailor systems solutions for each client. This breadth of the
systems portfolio, in combination with the Company's seating, storage and wood
product offerings, allows Steelcase and its dealers to provide comprehensive
office solutions.

 Seating

  Steelcase believes it is the world's largest office seating manufacturer and
a proven market leader in seating innovation. In 1973, the Company introduced
the first office chair to utilize a double plastic shell, a concept now
utilized in most office chairs. In the 1970's and 1980's, the Company was
among the first to develop ergonomic office chairs utilizing chair shapes,
materials and mechanisms designed to enhance worker productivity. The Company
believes its focus and research on materials, ergonomics, technology and work
processes, along with its broad platform of product styles and price points,
will enhance the Company's share of the seating market. The Company also
believes that Sensor, which has sold more than 4.8 million units since its
introduction in 1986, has sold more units than any other office chair in the
history of the office furniture industry, and that Criterion, introduced in
1989, is currently the largest selling office chair in the world on an annual
basis.

  The Company believes it offers the widest assortment of chair types and
chairs in the office furniture industry, providing chairs and other types of
seating for virtually every office need. The Company views most office seating
(excluding specialized uses such as stacking chairs or lounge seating) as
either high-performance or general use. The Company's primary seating products
are: Sensor, a high-performance chair with several models to meet the needs of
virtually everyone throughout an organization, and Criterion, a high-
performance chair with a wide variety of easy-to-use back, seat and arm
adjustments. In 1998 two exciting introductions from

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the Turnstone brand were the Uno chair, a general use model featuring
innovative design at an affordable price, and the Sweeper line, a family of
value-priced chairs with distinctive styling.

  The Company's other seating lines include: (i) general use chairs such as
Rally and Protege; (ii) Rapport, an office chair with a unique high-tech
aesthetic; (iii) Drive and Springboard, high-performance, value-priced chairs;
and (iv) Player, a side chair. In addition to these chairs, the Company offers
a number of other seating products including guest, executive, lounge,
stackable and collaborative or team-based offerings in both wood and non-wood
materials.

 Storage Solutions

  The Company believes it has been a leader in office storage products and
systems since the 1940's. Current product offerings include a broad variety of
vertical and lateral filing cabinets, bookcases and other types of storage
components. All product offerings are available in a wide range of color and
price options. The most popular lines, Series 800 and Series 900 lateral
files, have a very large installed base and are repeatedly cited in
independent surveys as the highest quality storage product among certain
segments.

  All the Company's office furniture systems offerings are complemented by a
full range of integrated storage solutions, including binder bins, storage
cabinets, personal storage towers, mobile and fixed pedestals and numerous
choices of lateral and vertical files coordinated in design, as well as
offering the same full range of color options. These products are available
fully assembled or as component parts for maximum customization. Moderately-
priced storage solutions, through the FirstFile series and the Activity
Products line, were introduced in 1995 to address the increasing need to
transport work items within and between individual and team settings.

 Desks and Casegoods

  The Company offers a wide variety of traditional, transitional and
contemporary desk and casegood products. These products offer a range of
solutions for private offices, team rooms and open plan environments. Desks
and casegoods are offered across many brands and in a variety of materials.
Steelcase offers these products in its wood collections CaneCreek, Broadmoor
and Stow Davis, providing a broad scope of style and performance options. In
addition, the Turnstone brand casegoods and desks are targeted to more cost-
conscious customers and are offered in laminate, wood, metal and home office
versions.

 Steelcase Design Partnership

  The Steelcase Design Partnership entities design, manufacture and market a
variety of award-winning office products for specialty markets that complement
other Steelcase products, providing the customer with a more comprehensive
portfolio of product choices. The Steelcase Design Partnership includes:

    Brayton. Brayton International Inc. offers a broad collection of lounge,
  executive, guest and healthcare seating, along with occasional tables.
  Brayton products span traditional, transitional and contemporary styling,
  featuring a wide range of finish options.

    Metro. Metropolitan Furniture Corporation offers a variety of products
  known for their contemporary style and designed to support and integrate
  technology in groupwork environments, videoconferencing facilities and
  private offices.

    Vecta. Vecta, a division of the Company, provides seating and table
  products designed for a variety of learning environments and conference,
  team and cafeteria areas. It offers a number of folding tables that support
  the flexibility requirements of training rooms.

    Details. Office Details Inc. offers innovative work tools, including
  keyboard support and desktop or wall-mounted organizational products and
  personal lighting designed to help improve the productivity and efficiency
  of people in the workplace.

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    Wigand. Wigand Corporation engineers and produces architectural woodwork
  for corporate headquarters, luxury hotels and professional workspaces.

 Steelcase Surfaces Partnership

    The Steelcase Surfaces Partnership began in January 1999 with the
  acquisition of J.M. Lynne Co., Inc.

    DesignTex. DesignTex Fabrics Inc. provides and designs textiles for
  seating upholstery, wallcovering and office panel systems, and serves
  contract, hospitality and healthcare markets.

    J.M. Lynne. J.M. Lynne Co., Inc. is a leading designer and distributor of
  vinyl wallcoverings for commercial environments.

 Pathways

  Pathways is a unique portfolio of integrated architectural products
including walls, doors, floors, lighting, furniture and technology products
designed to coordinate with existing Steelcase products as well as
competitors' products. Pathways products are designed to provide integrated
interiors, from wall to ceiling, particularly in buildings that can no longer
accommodate the wiring and cabling needs of today's technology driven
workplaces. Pathways interior architectural products accept all wiring and
cabling network components and are designed to integrate with the building
infrastructures for improved distribution of power and communications cabling.
The Company believes Pathways will be attractive to its existing customer base
as well as to real estate developers designing or retrofitting buildings. The
Company has completed its first year of offering Pathways products with nearly
$80 million in net sales and is continuing to add to the product portfolio.

 Services

  The Company utilizes its extensive knowledge of work processes and the local
expertise of its dealers to provide a range of services to customers,
including workplace planning, remanufacturing and refurbishing, furniture
management and lease financing. The Company believes services provided to its
customers during and after the furniture procurement process are becoming
increasingly important to customers and are key points of differentiation in
the marketplace. Many of the Company's dealers offer design and support
services, including project management and ongoing repair and maintenance, to
enhance long-term customer satisfaction and loyalty. The Company also offers
services on a nationwide basis to assist customers in addressing a range of
procurement-related issues. Revest remanufactures and refurbishes high quality
used office furniture, including systems products. The FMC division provides
coordinated furniture management services, such as warehousing, inventory
control and internal relocations, to customers with nationwide facilities.
Each customer is provided with a national representative who coordinates and
directs the various management services that are generally provided on a local
basis by Steelcase dealers. In addition to providing financing to dealerships,
SFSI provides customers with lease financing for products in connection with
the acquisition of office furniture. SFSI's net investment in leased assets
was $233.1 million as of February 26, 1999.

PRODUCT DESIGN AND DEVELOPMENT

  Steelcase has an extensive history of award-winning product designs. Since
1996, the Company has won 33 design awards for new products and enhancements
across its products lines. These awards include the Facilities Design and
Management Magazine Gold Award for Table Cable wire management systems in 1996
and the Industrial Designers Society of America ("IDSA") Silver Industrial
Design Excellence Award for its Stella adjustable keyboard shelf in 1997. In
1998, the Spinz chair from Brayton and the Kart chair from Vecta each received
Gold Awards for "Best of Neocon Show", the Rover seating series from Metro
received an award for "Best in Class--Furniture" from IDSA, the Pachinko 2
chair won the Good Design Award (or "G-mark") in Japan, and Turnstone was
awarded a Gold and a Silver, respectively, for the Uno chair and the Answer
office furniture system at the IIDEX Show in Canada.

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  In response to rapidly changing work environments, the Company has increased
research and development efforts in recent years and intends to introduce more
than 255 new products and product enhancements in calendar 1999. The Company
also leverages the expertise of its research and design staff and its
subsidiary, IDEO Product Development, Inc. ("IDEO"), to enhance existing
products and design new products to address evolving customer needs and
industry trends. In recent years, the Company's design efforts have focused on
the Pathways interior architectural elements as well as more traditional
systems furniture, seating and related products. The Company's research
efforts include on-site user observation, behavioral science studies and
anthropologic research, human factors research and technology trends studies.
The Corporate Development Center houses 10 laboratories in which the Company's
personnel conducted more than 26,000 product tests in calendar 1998 in such
areas as acoustics, lighting, ergonomics, flammability, product performance
and reliability. In addition to its own research, the Company commissions
research by academics and industry consultants.

SALES AND MARKETING

  The Company distributes its products through a worldwide network of
independent dealers in approximately 680 locations, including approximately
450 in the United States and Canada and approximately 230 throughout the rest
of the world. Each dealership has its own sales force which is supported by
the Company's sales representatives, who work closely with dealers throughout
the sales process. These dealers, in conjunction with the Company's sales
force, maintain close relationships with architects, contract interior
designers and corporate facility managers, who typically influence purchasing
decisions.

  Many customers conduct an extensive evaluation of available product options
prior to making an initial furniture purchase for a facility and the Company's
sales force and its dealers are becoming increasingly involved in the initial
stages of the planning process. Workplace Performance software-based tools are
employed to help the customer focus on specific business goals and to provide
possible configurations and product packages that will help customers achieve
those goals. Workplace Performance tools are also utilized to help the
customer and its architects and designers visualize and map potential work
environments. The sales process often involves a customer visit to the
Company's headquarters in Grand Rapids, Michigan, during which the Company's
sales staff and executive management, together with the dealers, demonstrate
the Company's latest product offerings in an active office environment.

  The Company's dealer network was started over 76 years ago, in 1922, as a
strategic way of growing the Company's product and service sales throughout
the United States with local, entrepreneurial representation. The Company
conducts dealer programs and training that expand the service and operations
capabilities of the dealers as well as the promotion of the Company's
products. The Company also conducts specific training seminars for significant
product introductions, such as Pathways. SFSI provides lines of credit, term
notes and project financing to the Company's dealers. SFSI's notes receivable
from the Company's dealers, the majority of which are secured, were $123.9
million as of February 26, 1999.

  The Company has experienced minimal turnover in its dealership network and
is not dependent on any one of its dealers.

MANUFACTURING

  The Company manufactures its products at 30 facilities in the United States,
Canada and Mexico and, through international subsidiaries, joint ventures and
licensing arrangements, at 20 facilities throughout the rest of the world. In
1987, the Company adopted world class manufacturing principles which utilize a
variety of production techniques, including cell or team manufacturing,
focused factories and rapid continuous improvement. This initiative has
evolved to include advanced planning and scheduling systems and is referred to
as the Steelcase Production System. The Company continually examines new
opportunities to consolidate its manufacturing and distribution operations to
improve efficiency. In 1994, 14 manufacturing facilities and seven
administrative and shipping facilities in the United States and Canada were
awarded registration to ISO 9001, an internationally developed set of facility
quality criteria. The Company continually examines new opportunities to

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consolidate its manufacturing and distribution operations to improve
efficiency. Substantially all plants "build to order" rather than to
"forecast", which directly reduces finished goods inventory levels and
emphasizes continuous improvement in set-up and delivery time to customers. As
a result of these and other order processing and customer service
improvements, the Company's average lead time, i.e., the time from order to
delivery, has been reduced in the United States and Canada. The Company has an
extensive distribution system in the United States and Canada and utilizes
both a company-owned trucking fleet and commercial transport and delivery
services in both the United States and abroad.

INTERNATIONAL OPERATIONS

 Steelcase Canada Limited

  Steelcase Canada Limited ("Steelcase Canada") operates in Canada, sourcing
its products through its manufacturing facility in Markham, Ontario and
through imports from Steelcase and the Steelcase Design Partnership entities.
Steelcase Canada has approximately 670 employees and dealers in approximately
30 locations. Steelcase Canada had more than a 20% market share of the
Canadian office furniture industry in calendar 1998 and generated $110.7
million in net sales for the year ended February 26, 1999.

 Steelcase International

  The Company conducts its non-European international operations primarily
through its Steelcase International operating group. The Company's products
are generally available throughout the world and are currently sold to
international customers in various countries, including Australia, Brazil,
China, Japan, Mexico, Saudi Arabia, Singapore, Thailand, United Arab Emirates
and Venezuela. In 1999, net sales derived from international customers outside
of Europe and Canada were $115.3 million. The Company's share of the office
furniture market in such countries is not material. Steelcase International
has approximately 560 employees.

  The Company exports its products to non-European markets. The Company
supplements this business with two manufacturing ventures in Brazil and Saudi
Arabia and with licensees in Japan, India and Colombia. In addition, the
Company acquired 25% of the total outstanding shares of its Thailand licensee,
Modernform Group Public Company Limited. Sales of the Company's products to
non-European international markets are made almost exclusively through the
Company's dealer network. As of February 26, 1999, the Company's international
dealer network outside of Europe and Canada was comprised of approximately 40
locations in the Pacific Rim, the Middle East, Latin America and Australia. Of
these, four are owned (Australia, Brazil, Mexico and Singapore) by the
Company, and the balance are authorized by agreement to distribute Steelcase
products.

 Steelcase Strafor S.A.

  The Company's European business is conducted almost entirely through
Steelcase Strafor S.A. ("Steelcase Strafor"), an unconsolidated 50% owned
joint venture with Strafor Facom S.A. Steelcase Strafor is a leading office
furniture company in Europe with net sales of approximately $506.9 million for
the year ended December 31, 1998. Steelcase Strafor has the leading market
share in France, with approximately 20% market share in calendar year 1998,
and its share is approximately 6% of the office furniture market in Europe.
Steelcase Strafor acquired Werndl BuroMobeL AG ("Werndl") in December 1998.
Munich-based Werndl is the second largest wood office furniture company in
Germany with annual sales in excess of $115.0 million.

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  Steelcase Strafor serves the European market with 15 manufacturing
facilities located in six countries, approximately 3,800 employees and a
network of independent dealers in approximately 190 locations. Steelcase
Strafor develops and manufactures its own office furniture products, under
such brand names as Steelcase Strafor, Strafor, Gordon Russell, Pohlschroder,
Waiko, Werndl, Sistemas and Airborne, and complements its product offerings
with Steelcase brand and Steelcase Design Partnership products. Steelcase
Strafor's products, although in large part purchased by European customers,
are generally available throughout the world. Steelcase Strafor generally does
not enter into formal agreements with its independent dealers.

  On April 22, 1999, the Company acquired the remaining 50% equity interest of
Steelcase Strafor held by Strafor Facom S.A. See Note 20 to the Consolidated
Financial Statements.

RAW MATERIALS AND SUPPLIERS

  The Company has focused on achieving purchasing economies by forming close
relationships with its major suppliers. The Company utilizes steel, lumber,
paper, paint, plastics, laminates, particleboard, veneers, glass, fabrics,
leathers and upholstery filling material. In an effort to promote close
relationships with its supply base, the Company continues to pursue several
initiatives, including (i) supply base integration through closer
collaboration, (ii) supplier certification in accordance with Company-issued
standards and (iii) the maintenance of open lines of communication with the
total supply base. In addition, the Company strives to include key suppliers
in the product development cycle so as to utilize their expertise and share
research and development costs. It is the Company's strategic plan to
integrate the best practices of all our facilities worldwide, maximize
efficiencies globally and provide unparalleled service. The Company believes
adequate sources are available for all of its raw materials.

INTELLECTUAL PROPERTY

  The Company has approximately 230 active U.S. utility patents and
approximately 160 active U.S. design patents relating to its current and
anticipated products. The Company also owns approximately 240 patents in a
number of foreign countries. The Company has been active in obtaining patents
since its inception and has filed an increasing number of patent applications
in recent years. The average remaining life for the patents in its U.S.
portfolio is approximately 10 years. Although the Company considers securing
and protecting its intellectual property rights to be important to its
business, the loss of any individual patent, or group of patents related to a
particular product, would not result in a material adverse effect on the
Company's financial condition or results of operations.

  The Company and its subsidiaries have registered various trademarks and
service marks in the United States and certain foreign countries. The U.S.
marks include Steelcase, Activity, Answer, Attwood, Avenir, Ballet, Brayton
International Collection, Broadmoor, CaneCreek, Context, Criterion, DesignTex,
Details, Elective Elements, Ellipse, FirstFile, Metro, Migrations, Montage,
Pathways, Personal Harbor, Player, Protege, Rally, Rapport, Sensor, Series
9000, Springboard, Stow Davis, Teamwork, Turnstone and Vecta. Steelcase
Strafor has various U.S. trademarks, including Strafor, Airborne and Gordon
Russell.

  The Company has established a global network of intellectual property
licenses with its affiliates. It also occasionally licenses its intellectual
property to selected third parties and occasionally enters into license
agreements under which it pays a royalty to third parties for the use of
patented products or process technology.

COMPETITION

  The office furniture market is highly competitive, with a number of
competitors offering similar products. In the contract segment of the market,
companies compete primarily on price, delivery and service, product design and
features, quality and the relationships developed between dealers and
customers. The Company's most significant competitors in its primary markets
are Herman Miller, Inc. ("Herman Miller"), Haworth, Inc. ("Haworth"), Knoll,
Inc. ("Knoll"), Kimball International, Inc. ("Kimball") and Hon Industries
Inc. ("Hon").

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Together, these companies represent a substantial portion of the market share
of the overall office furniture market. The Company also competes with many
other companies, such as Teknion Inc., Office Specialty and SMED.

  In Europe, which is a highly competitive, fragmented market, Steelcase
Strafor generally competes with other European-based enterprises with a
significant European presence, including the Samas-Groep N.V. The Company also
manufactures and sells office furniture in other parts of the world through
wholly-owned operations, joint ventures, licensing arrangements and
independent dealerships. The Company does not have a significant share of the
market in any of the countries in which it offers its products outside the
United States, Canada and Europe. The office furniture market in most of these
countries is highly competitive, price sensitive, fragmented and served
primarily by local companies of varying size and capability. Although some are
significant in size, particularly in Japan, they generally do not compete
outside of their own country. The Company's other major competitors in the
non-European international markets generally are other North American office
furniture companies such as Herman Miller, Haworth and Teknion Inc., although
the Company does encounter local competition in most markets.

ENVIRONMENTAL MATTERS

  The Company is subject to a variety of federal, state, local and foreign
laws and regulations relating to the use, storage, handling, generation,
transportation, treatment, emission, discharge, disposal and remediation of,
and exposure to, hazardous and non-hazardous substances, materials and wastes
("Environmental Laws"). The Company believes that its operations are in
substantial compliance with all Environmental Laws.

  Under the Clean Air Act Amendments of 1990, the United States Environmental
Protection Agency ("EPA") is required to promulgate various emission
standards, including the National Emission Standards for Hazardous Air
Pollutants ("NESHAPs"), for certain sources of hazardous air pollutants,
including the wood and metal furniture manufacturing industries. NESHAPs for
the wood furniture manufacturing industry required reduction by November 1997
of emissions of certain volatile organic compounds found in the coatings,
stains and adhesives used by the Company. Compliance with the wood furniture
NESHAP has not materially affected the Company. The EPA is expected to
promulgate NESHAPs for the metal furniture industry by November 2000. The
Company intends to continue to participate actively in negotiations relating
to these regulations because of their potential significance to the Company's
operations. The Company cannot estimate the effects of compliance with the
metal furniture NESHAPs or other future Clean Air Act Requirements.

  Under certain Environmental Laws, the Company could be held liable, without
regard to fault, for the costs of remediation associated with its existing or
historical operations. The Company could also be held responsible for third-
party property and personal injury claims or for violations of Environmental
Laws relating to such contamination. The Company is a party to, or otherwise
involved in, legal proceedings relating to several contaminated properties
being investigated and remediated under state or Federal law. Based on its
present information regarding the nature and volume of its wastes allegedly
disposed or released at these properties, the number of other financially
viable potentially responsible parties, and the total estimated cleanup costs,
the Company does not believe that the costs associated with these properties
will be material, either individually or in the aggregate.

  The Company has received a Letter of Violation, and has been engaged in
negotiations with the Michigan Department of Environmental Quality ("MDEQ"),
regarding alleged malfunctions of a single piece of equipment at its Systems I
plant. The Company has also been engaged in negotiations with MDEQ regarding
MDEQ's interpretation of Volatile Organic Compound ("VOC") emission limits for
adhesives operations at the Company's Systems I plant. The Company does not
believe that either of these matters will individually involve a fine at or
above $100,000. However, the Company believes that the matters may be resolved
in a single consent decree which could require the Company to pay a fine of up
to or slightly above $100,000. At this time, the Company does not believe that
the cost of implementing a compliant adhesive's process will be material.

  The Company has been engaged in negotiations regarding operational and
record keeping requirements for one piece of pollution control equipment and
associated coating lines at the Company's Kentwood, Michigan, Context Plant.
At the time the Company discovered and self-reported the issues at the Context
plant, it also

                                       9

<PAGE>

discovered and self-reported deficiencies in reporting VOC emissions from its
Grand Rapids and Kentwood, Michigan facilities. The Company also received a
Letter of Violation regarding alleged deficiencies in its compliance with
record-keeping requirements documenting compliance with the cleaning wash-off
solvent usage and leak inspection and maintenance requirements of the NESHAPs
for Wood furniture. Because it is currently in negotiations with the MDEQ
regarding resolving these issues in a single consent decree, the Company
cannot estimate the costs of resolving these matters, which are potentially
subject to substantial state and federal penalties. The Company believes,
however, based upon the nature of the alleged violations, negotiations to
date, its compliance history and its continuing good faith efforts to comply
with all applicable environmental requirements, that it will be able to
resolve this matter without incurring a material fine.

  The above forward-looking statements concerning the materiality of the cost
associated with contaminated properties and the Company's ability to resolve
the above described MDEQ Letter of Violation involve certain risks that could
cause actual results to vary from the stated expectations. Factors affecting
such risks include future governmental regulations and/or cleanup standards or
requirements, undiscovered information regarding the nature and volume of
wastes allegedly disposed of or released at these properties or other factors
increasing the cost of remediation or the loss of other financially viable
potentially responsible parties to contribute towards cleanup costs.

EMPLOYEES

  As of February 26, 1999, the Company had approximately 16,200 employees,
including approximately 10,500 hourly and approximately 5,700 salaried
employees. Employees covered by collective bargaining agreements constitute
less than 10% of the Company's employees. Management believes that the
Company's relations with its employees are good. In addition, the Company's
joint ventures have approximately 3,900 employees.


I
TEM 2. PROPERTIES:

  The Company maintains its corporate headquarters in Grand Rapids, Michigan,
and conducts operations at locations throughout the United States and, through
its wholly-owned subsidiaries and joint ventures, has manufacturing facilities
in Brazil, Canada, France, Germany, Mexico, Morocco, Portugal, Saudi Arabia,
Spain, Thailand and the United Kingdom. These office, showroom, manufacturing
and distribution facilities total approximately 24 million square feet, of
which approximately 7 million square feet are leased.


                                      10

<PAGE>

  The Company's principal office, manufacturing and distribution facilities
(300,000 square feet or larger) as of February 26, 1999 are as follows:


<TABLE>
<CAPTION>
                            APPROXIMATE   OWNED
                              SQUARE        OR
     LOCATION                 FOOTAGE     LEASED    DESCRIPTION OF USE
     --------               -----------   ------    ------------------
   <S>                      <C>           <C>       <C>
   Grand Rapids, Michigan..    383,000     Owned    Corporate Headquarters
   Grand Rapids, Michigan..    896,000     Owned    Chair Manufacturing
   Grand Rapids, Michigan..    445,000(1)  Owned    Chair Manufacturing
   Grand Rapids, Michigan..    824,000     Owned    Desk Manufacturing
   Grand Rapids, Michigan..    786,000     Owned    Distribution Center
   Grand Rapids, Michigan..    867,000     Owned    File Manufacturing
   Grand Rapids, Michigan..    950,000     Owned    Systems Manufacturing
   Grand Rapids, Michigan..    748,000(2)  Owned    Systems Manufacturing
   Gaines Township, Michi-
    gan....................    599,000     Owned    Corporate Development Center
   Kentwood, Michigan......    666,000     Owned    Computer Furniture Manufacturing
   Kentwood, Michigan......    789,000     Owned    Context Manufacturing
   Kentwood, Michigan......    886,000     Owned    Panel Manufacturing
   Kentwood, Michigan......  1,118,000     Owned    Distribution Center
   Kentwood, Michigan......    433,000    Leased    Wood Furniture Manufacturing
   Lowell, Michigan........    480,000     Owned    Attwood Manufacturing
   Athens, Alabama.........    777,000    Leased    Manufacturing
   Tustin, California......  1,044,000     Owned    Manufacturing
   Fletcher, North Caroli-
    na.....................    895,000     Owned    Wood Furniture Manufacturing
   Grand Prairie, Texas....    320,000     Owned    Vecta Manufacturing
   Markham, Ontario........    725,000     Owned    Steelcase Canada Manufacturing
   Strasbourg, France......    386,000     Owned(3) Manufacturing
   Dortmund, Germany.......    300,000     Owned(3) Manufacturing
   Durlangen, Germany......    415,000     Owned(3) Manufacturing
   Madrid, Spain...........    358,000     Owned(3) Manufacturing
   Rosenheim, Germany......    368,700     Owned(3) Manufacturing and Offices
</TABLE>

- --------
(1) This location is mostly vacant due to the consolidation of the two chair
    manufacturing facilities and is reserved for future production needs.
(2) Approximately 175,000 square feet is currently utilized for distribution,
    150,000 square feet for showroom, 58,000 square feet for manufacturing,
    64,000 square feet for construction of the Company's Corporate Learning
    and Development Center and the balance for commercial leasing.
(3) Through Steelcase Strafor.


ITEM 3. LEGAL PROCEEDINGS:

  The Company is involved in litigation from time to time in the ordinary
course of its business. The Company is not a party to any lawsuit or
proceeding which, in the opinion of management based on known information, is
likely to have a material adverse effect on the Company. For a description of
matters relating to the Company's compliance with applicable environmental
laws, rules and regulations, see "Environmental Matters" in Item 1 of this
report.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:

  None.

                                      11

<PAGE>

ITEM 4(A). EXECUTIVE OFFICERS OF REGISTRANT:

  Set forth below is certain information regarding the executive officers of
the Company.


<TABLE>
<CAPTION>
   NAME                     AGE                               POSITION
   ----                     ---                               --------
   <S>                      <C> <C>
   Robert A. Ballard.......  63 Executive Vice President, Business Operations
   Robert W. Black.........  39 Vice President, European Ventures
   William P. Crawford.....  56 President and Chief Executive Officer, Steelcase Design Partnership
   Mark T. Greiner.........  47 Vice President, Chief Information Officer
   James P. Hackett........  44 President and Chief Executive Officer
   James P. Keane..........  39 Vice President, Corporate Strategy, Research and Development
   Alwyn Rougier-Chapman...  60 Senior Vice President-Finance, Chief Financial Officer and Treasurer
   John L. Stasiw..........  45 Vice President and General Manager, Steelcase International
   James R. Stelter........  43 Senior Vice President, Sales, Marketing and Dealer Alliances
</TABLE>


  Robert A. Ballard has been Executive Vice President, Business Operations of
the Company since 1996. From 1994 until 1996, Mr. Ballard held the position of
Senior Vice President, Manufacturing Operations.

  Robert W. Black has been Vice President, European Ventures since 1998. From
1996 to 1998, Mr. Black served as Vice President, Marketing. From 1995 to 1996
Mr. Black has also served as Vice President, Corporate Strategy and
Development and from 1994 to 1995 Vice President, Corporate and Service
Marketing.

  William P. Crawford has been President and Chief Executive Officer,
Steelcase Design Partnership since 1991. Mr. Crawford also serves on the Board
of Directors of Old Kent Financial Corporation, a bank holding company that
serves as trustee for the Company's retirement and 401(k) funds.

  Mark T. Greiner has been Vice President and Chief Information Officer since
1996. From 1994 to 1996, Mr. Greiner served as Vice President, Corporate
Marketing Communications and Media Technology.

  James P. Hackett has been President and Chief Executive Officer of the
Company since 1994. From 1993 through 1994, Mr. Hackett held the positions of
President, Turnstone Inc., Executive Vice President, Steelcase Ventures and
Executive Vice President and Chief Operating Officer. Mr. Hackett also serves
on the Board of Directors of Old Kent Financial Corporation.

  James P. Keane has been Vice President, Corporate Strategy, Research and
Development of the Company since 1998. Mr. Keane held the position of Vice
President, Corporate Strategy and Development from January 1997 to 1998. From
1992 until January 1997, Mr. Keane was Vice President and Chief Financial
Officer of Cloud Corporation, a packaging company.

  Alwyn Rougier-Chapman has been Senior Vice President--Finance of the Company
since 1983 and Chief Financial Officer and Treasurer of the Company since
1994.

  John L. Stasiw has been Vice President and General Manager, Steelcase
International since March 1997. From 1995 to March 1997, Mr. Stasiw served as
Vice President, Strategic Supply Chain Management of the Company and, from
1994 to 1995, as President of the Company's lighting group.

  James R. Stelter has been Senior Vice President, Sales, Marketing and Dealer
Alliances of the Company since March 1998 and Senior Vice President, Turnstone
since 1996. From 1993 until 1998, Mr. Stelter held the position of Senior Vice
President, Wood Furniture.

                                      12

<PAGE>


                                    PART II


ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS:

  The Class A Common Stock of the Company is listed on the New York Stock
Exchange under the symbol "SCS". The Class B Common Stock of the Company is
neither registered under the Securities Exchange Act of 1934 nor publicly
traded.

  As of May 10, 1999, the Company had outstanding 23,825,633 shares of Class A
Common Stock with 14,645 shareholders of record thereof and 129,593,062 shares
of Class B Common Stock with 261 shareholders of record thereof, in each case
not including persons or entities holding stock in nominee or street name
through brokers or banks.

  The following table shows the price range of the Class A Common Stock, as
reported by the New York Stock Exchange, for the year ended February 26, 1999
and for the portion of the fourth quarter ended February 27, 1998 following
the Company's initial public offering (the only period during fiscal 1998 in
which the Company's Class A Common Stock was publicly traded).


<TABLE>
<CAPTION>
                                                                    CLASS A
                                                                 COMMON STOCK
                                                                  PRICE RANGE
                                                                ---------------
                                                                 HIGH     LOW
                                                                ------- -------
      <S>                                                       <C>     <C>
      FISCAL 1999
      1st Quarter.............................................. $38.375 $28.000
      2nd Quarter.............................................. $29.875 $18.125
      3rd Quarter.............................................. $19.750 $12.750
      4th Quarter.............................................. $18.438 $13.313
      FISCAL 1998
      4th Quarter (from February 17, 1998)..................... $36.250 $33.000
</TABLE>


  The Company intends to continue to pay regular quarterly dividends. However,
the declaration and payment of dividends by the Company are subject to the
discretion of the Board of Directors and to compliance with applicable law.
The determination of the timing and amount of future dividends, if any, will
depend upon, among other things, the Company's results of operations,
financial condition, cash requirements, future business prospects, general
business conditions and other factors that the Board may deem relevant at the
time. See Item 6 of this Report, "Selected Financial Data" and Note 2 thereto.
The aggregate dividends paid in the years ended February 26, 1999 and February
27, 1998 are set forth below (in millions):


<TABLE>
<CAPTION>
        YEAR ENDING                                                       TOTAL
        -----------                                                       ------
        <S>                                                               <C>
        1999............................................................. $ 63.1
        1998.............................................................  210.9
</TABLE>


                                      13

<PAGE>


ITEM 6. SELECTED FINANCIAL DATA


                             FINANCIAL HIGHLIGHTS
                     (IN MILLIONS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                          FEBRUARY 26, FEBRUARY 27, FEBRUARY 28, FEBRUARY 23, FEBRUARY 28,
                              1999         1998       1997(1)        1996         1995
                          ------------ ------------ ------------ ------------ ------------
<S>                       <C>          <C>          <C>          <C>          <C>
STATEMENT OF INCOME DATA
Net sales...............    $2,742.5     $2,760.0     $2,408.4     $2,155.9     $2,048.7
Net sales increase
 (decrease).............       (0.6%)        14.6%        11.7%         5.2%        13.0%
Gross profit............    $  989.4     $1,003.4     $  856.8     $  687.7     $  596.9
Gross profit--% of net
 sales..................        36.1%        36.4%        35.6%        31.9%        29.1%
Operating income........    $  317.2     $  317.4     $  141.6     $  163.6     $   78.2
Operating income--% of
 net sales..............        11.6%        11.5%         5.9%         7.6%         3.8%
Net income .............    $  221.4     $  217.0     $   27.7     $  123.5     $   64.2
Net income --% of net
 sales..................         8.1%         7.9%         1.2%         5.7%         3.1%
EARNINGS PER SHARE
 (BASIC AND DILUTED)
Net income .............    $   1.44     $   1.40     $   0.18     $   0.80     $   0.42
Weighted average shares
 outstanding............       153.8        154.8        154.7        154.6        154.6
Dividends per share of
 common stock(2)........    $   0.41     $   1.36     $   0.27     $   0.26     $   0.21
BALANCE SHEET DATA
Working Capital.........    $  290.6     $  355.1     $  474.6     $  475.6     $  476.4
Assets..................    $2,182.5     $2,007.2     $1,922.1     $1,884.5     $1,761.8
Liabilities.............    $  682.5     $  674.8     $  542.1     $  490.9     $  459.6
Shareholders' Equity....    $1,500.0     $1,332.4     $1,380.0     $1,393.6     $1,302.2
STATEMENT OF CASH FLOW
 DATA
Net cash provided by
 operating activities...    $  307.7     $  333.4     $   80.8     $  200.7     $   42.2
Depreciation and
 amortization...........    $  107.0     $   95.3     $   93.4     $   92.5     $   97.0
Capital expenditures....    $  170.4     $  126.4     $  122.0     $  104.6     $   94.8
Dividends paid(2).......    $   63.1     $  210.9     $   41.8     $   39.8     $   32.3
</TABLE>

- --------
(1) During 1997, the Company concluded a 17-year patent litigation which, net
    of reserves, reduced net income by $123.5 million. See Note 13 to the
    Consolidated Financial Statements.
(2) During 1998, the Company paid a special dividend in the aggregate amount
    of $150.9 million, or approximately $0.97 per share of common stock. See
    Note 4 to the Consolidated Financial Statements.

                                      14

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

OVERVIEW

  The Company recorded consolidated net income for 1999 in the amount of
$221.4 million, or $1.44 per share (basic and diluted). This performance
occurred during a period in which the office furniture industry softened due
to global economic turmoil and significant domestic merger and acquisition
activity, resulting in relatively flat consolidated and pro forma worldwide
net sales levels for the fiscal year. Further, gross profit margins declined
in the second half of the year, averaging 36.1% for 1999 compared with 36.4% a
year ago due primarily to costs associated with the consolidation of two
manufacturing facilities and the launch of new products.

  However, management held the line on operating expenses and delivered a
second consecutive year in which earnings performance set a new benchmark. The
Company utilized a hiring delay, redeployment, discretionary spending
controls, a voluntary leave program and other cost containment efforts, which,
when coupled with the variable nature of bonus and incentive compensation
programs, enabled achievement of the results without sacrificing long-term
strategic efforts or jeopardizing its relations with employee-shareholders. In
addition, the provision for income taxes benefited from the favorable
resolution of income tax litigation dating back to 1989, which contributed to
a reduced effective tax rate for 1999 and resulted in interest income of $5.8
million.

  In a year in which the office furniture industry as a whole was slowed by
macroeconomic factors and the Company's consolidated and pro forma worldwide
net sales were relatively flat with 1998, the Company nonetheless made
significant progress in 1999 towards fulfilling its vision to TRANSFORM THE
WAYS PEOPLE WORK . . . TO HELP THEM WORK MORE EFFECTIVELY THAN THEY EVER
THOUGHT THEY COULD and its long-term objective to grow the business.
Significant highlights include:

  .  The Company launched Pathways Bundle I, a portfolio of integrated
     architectural products including panels, floor and lighting systems,
     furniture, power and communication elements designed to coordinate with
     existing Steelcase products, as well as competitors' products. First
     year net sales reached nearly $80 million.

  .  Further, the Company prepared for its fiscal 2000 introduction and
     launch of the Leap chair and the next generation of Pathways (Bundle
     II), both of which will be shown at NeoCon '99. Management believes the
     Leap chair will improve its offerings in seating, which are currently
     led by Criterion and Sensor.

  .  The Company initiated several acquisitions, including complete ownership
     of (i) Steelcase Strafor, the Company's European joint venture
     originally formed by Steelcase Inc. and Strafor Facom S.A. in 1974, (ii)
     Werndl BuroMobeL AG, the second largest wood office furniture
     manufacturer in Germany, and (iii) J.M. Lynne, a leading designer and
     distributor of vinyl wall coverings based in New York, and partial
     ownership of (i) Microfield Graphics, an Oregon-based developer and
     manufacturer of computer conferencing and group communication products,
     (ii) Clestra Hauserman, a leading provider of steel moveable walls and
     partitions based in Ohio, and (iii) Modernform Group Public Company
     Limited, the Company's office furniture manufacturing partner located in
     Bangkok, Thailand.

                                      15

<PAGE>

RESULTS OF OPERATIONS

  The following table sets forth consolidated statement of income data as a
percentage of net sales for 1999, 1998 and 1997. In addition, 1999 and 1998
consolidated statement of income data is presented versus the prior year.


<TABLE>
<CAPTION>
                                       YEAR ENDED                  INCREASE (DECREASE)
                         -------------------------------------- -------------------------
                         FEB 26, 1999 FEB 27, 1998 FEB 28, 1997 1999 VS 1998 1998 VS 1997
                         ------------ ------------ ------------ ------------ ------------
<S>                      <C>          <C>          <C>          <C>          <C>
Net sales...............    100.0%       100.0%       100.0%        (0.6)%       14.6%
Cost of sales...........     63.9         63.6         64.4         (0.2)%       13.2%
                            -----        -----        -----        ------        ----
Gross profit............     36.1         36.4         35.6         (1.4)%       17.1%
Selling, general and
 administrative
 expenses...............     24.5         24.9         26.2         (2.0)%        8.8%
Patent litigation
 expense................      --           --           3.5           --          --
                            -----        -----        -----        ------        ----
Operating income........     11.6         11.5          5.9         (0.1)%        n/m
Patent litigation
 interest expense.......      --           --          (4.6)          --          --
Other income, net.......      0.7          0.8          0.9        (10.6)%        5.6%
                            -----        -----        -----        ------        ----
Income before provision
 for income taxes and
 equity in net income of
 joint ventures and
 dealer transitions.....     12.3         12.3          2.2         (0.8)%        n/m
Provision for income
 taxes..................      4.5          4.7          1.0         (4.6)%        n/m
                            -----        -----        -----        ------        ----
Income before equity in
 net income of joint
 ventures and dealer
 transitions............      7.8          7.6          1.2           1.6%        n/m
Equity in net income of
 joint ventures and
 dealer transitions.....      0.3          0.3          --           12.7%        --
                            -----        -----        -----        ------        ----
Net income..............      8.1%         7.9%         1.2%          2.0%        n/m
                            =====        =====        =====        ======        ====
</TABLE>

- --------
n/m = not meaningful

NET SALES

  In accordance with Statement of Financial Accounting Standards No. 131,
Disclosure about Segments of an Enterprise and Related Information, the
Company operates on a worldwide basis within a single reportable segment, the
office furniture industry. The office furniture segment includes all of the
Company's operating segments within consolidated net sales except for services
and other businesses, plus the unconsolidated net sales of its European joint
venture, Steelcase Strafor. Net sales from all other unconsolidated joint
ventures and dealer transitions are not material.

  The Company offers its extensive range of products and services to
commercial and non-commercial organizations worldwide through a network of
independent dealers in approximately 680 locations (including approximately
230 outside of North America). These dealers, in conjunction with the
Company's sales force, provide local expertise, installation services and
ongoing customer support services, remaining in close contact with customers
during and after the completion of a project to help ensure customer
satisfaction, offer ongoing services and encourage repeat business.

                                      16

<PAGE>

  The following table sets forth consolidated and pro forma worldwide net
sales by geographical segment for 1999, 1998 and 1997 (in millions). In
addition, 1999 and 1998 geographical segments are presented versus the prior
year.


<TABLE>
<CAPTION>
                                        YEAR ENDED                  INCREASE (DECREASE)
                          -------------------------------------- -------------------------
                          FEB 26, 1999 FEB 27, 1998 FEB 28, 1997 1999 VS 1998 1998 VS 1997
                          ------------ ------------ ------------ ------------ ------------
<S>                       <C>          <C>          <C>          <C>          <C>
Domestic--U.S. only.....    $2,390.4     $2,375.0     $2,050.1        0.6%        15.8%
International and Cana-
 da.....................       226.0        250.6        224.5       (9.8)%       11.6%
Services and other busi-
 nesses.................       126.1        134.4        133.8       (6.2)%        0.4%
                            --------     --------     --------       ----         ----
Consolidated net sales..    $2,742.5     $2,760.0     $2,408.4       (0.6)%       14.6%
                            --------     --------     --------       ----         ----
Steelcase Strafor(1)....       506.9        468.6        448.3        8.2%(2)      4.5%(2)
                            --------     --------     --------       ----         ----
Worldwide net sales(3)..    $3,249.4     $3,228.6     $2,856.7        0.6%        13.0%
                            ========     ========     ========       ====         ====
</TABLE>

- --------
  (1)Steelcase Strafor net sales have been adjusted from amounts previously
  reported in order to conform the classifications of sales deductions with
  those reflected in the Company's consolidated net sales. These
  reclassifications were identified in connection with the Company's April
  22, 1999 acquisition of Strafor Facom's 50% interest in Steelcase Strafor.
  See Notes 8 and 20 to the Consolidated Financial Statements.

  (2)In local currency, Steelcase Strafor net sales increased 9.8% in 1999
  and 19.1% in 1998.

  (3)Worldwide net sales include, on a pro forma basis, the Company's
  consolidated net sales plus those of its unconsolidated European joint
  venture, Steelcase Strafor. Net sales of all other unconsolidated joint
  ventures and dealer transitions are not material.

  During 1999, the Company, along with the U.S. office furniture industry
overall, experienced a slowdown in its growth. For 1998 and 1997, the
Company's consolidated net sales grew faster than the industry, increasing by
14.6% and 11.7%, respectively. However, during 1999 consolidated net sales
were essentially flat, lagging U.S. industry growth, which as reported by The
Business and Institutional Furniture Manufacturers' Association ("BIFMA")
approximated 7.8% for the calendar year ended December 31, 1998. Pro forma
worldwide net sales, which reflect Steelcase Strafor as if the joint venture
were consolidated, generally followed the same trend line as consolidated net
sales. However, within Europe, Steelcase Strafor experienced a greater growth
rate over the three year period in local currency due to a strengthening
economy and the success of new product introductions. The growth has been
spread across most key markets, as well as Eastern Europe and other new
markets that the joint venture has pursued in the past three years.

  Domestic--U.S. only. The Company's largest market, the U.S., includes the
following Steelcase operations: Steel, the Steelcase Design Partnership
("SDP"), Turnstone, Steelcase Wood and Revest. While substantially all U.S.
net sales are processed and serviced through the dealer network, the Company
segregates dealer sales between those contracted solely by its dealers--its
primary U.S. distribution channel, and those contracted directly by the
Company--typically large corporate account business. Fluctuations within the
different operations and distribution channels have resulted in U.S. net sales
growth rates of 0.6%, 15.8% and 8.3% in 1999, 1998 and 1997, respectively.

  For 1999, 1998 and 1997, sales contracted solely by the Company's dealers
grew by approximately six percent, 12 percent and 14 percent, respectively.
Large corporate account business in the same periods experienced double-digit
growth in 1998 and 1997, and a double-digit decline in 1999. Other
distribution channels include government, education and institution, and other
sectors, none of which significantly impacted U.S. growth trends in the
reported periods. U.S. net sales growth in 1998 and 1997 resulted primarily
from increases in unit sales across most product categories reflecting strong
industry fundamentals. In 1999, the industry began to soften due to the
financial volatility in Asian and Latin American markets, which, along with a
high level of domestic merger and acquisition activity within the U.S. Fortune
500 companies, contributed to the double-digit decline in the Company's large
corporate account business channel. Management believes that the uncertainties
posed by these global economics significantly influenced corporate capital
spending decisions,

                                      17

<PAGE>

thereby causing delays of anticipated projects throughout the course of 1999.
While some of these projects are beginning to resurface during the current
year, many remain delayed, possibly due to ongoing global economic uncertainty
and general corporate concern over the potential impact of Year 2000 issues
and their disruption on the business world.

  In 1998 and 1997, the Company's Steel operations, which include its primary
product lines (office furniture systems, seating, storage solutions, interior
architectural products, and desks and casegoods), benefited from strong
industry fundamentals, resulting in growth in unit sales across most product
categories. In 1999, as the industry softened, these product categories were
impacted by the deferred spending actions within the Company's large corporate
account business, resulting in declines across the same product categories
that benefited from a strong industry in 1998 and 1997. However, in 1999, the
Company continued to experience double-digit growth in all other U.S.
operations. Acquisitions did not have a material impact on U.S. net sales for
any of the reported periods.

  International and Canada. In 1998 and 1997, the International and Canadian
segment experienced growth of 11.6% and 19.0%, respectively, due to strong
export sales to both Latin America and the Middle East in both years, office
furniture industry growth in Canada in 1998 and acquisitions in 1997. In 1999,
the International and Canadian segment decreased 9.8% due to several factors
including: first, although Canadian net sales in local currency increased 6.0%
for the year, unfavorable exchange rates entirely offset the growth; second,
the Company experienced a reduction in export projects to Latin America and
flat sales in Asia due to local economic conditions; and third, the Company's
Japanese subsidiary was reorganized during the third quarter of 1998 and as a
result now receives royalty income instead of recording the related net sales.

  Services and other businesses. Services and other businesses, which more
than doubled in 1997, were virtually flat in 1998 and declined by 6.2% in
1999, were impacted by an acquisition at the beginning of 1997 and the
disposal of a product line and distributor within the Company's marine
business at the end of the third quarter of 1998.

GROSS PROFIT

  The Company's gross profit as a percentage of net sales decreased slightly
in 1999 to 36.1% from 36.4% in 1998, after increasing in 1998 and 1997. These
improvements reflect increased overhead absorption through increased sales and
the impact of a cost reduction program, initiated in 1996, designed to improve
raw materials sourcing, contain costs and rationalize facilities. In the first
two years of the cost reduction program, the Company was able to reap
significant benefits by improving raw materials sourcing, leveraging the net
sales growth by simultaneously containing costs and beginning to streamline
manufacturing processes by culling low volume surface materials, such as
laminates, fabrics and paints. In 1998 and 1999, however, efforts to reduce
costs and improve efficiencies began to require upfront commitment of expenses
and capital, replacement of various manufacturing equipment, changes in
significant processes and consolidation of certain facilities. At the same
time, the Company has been in the midst of launching the largest new product
portfolio in its history, experiencing expected disruptions and various
inefficiencies. As a result, the benefits to be realized by most of the cost
reduction efforts made in 1998 and 1999 are expected to occur in future
periods, in some cases simply as time passes, but in others only as the
Company's Steel operations experience unit sales growth. During the three-year
period, pricing has not had a significant impact on gross margins; however,
the Company continues to experience pressure on its discounts, especially as
the industry softened during the current year.

  In prior years, the Company reported identifiable costs associated with
furniture distribution process changes, the restructuring and disposition of a
non-furniture related manufacturing facility, certain manufacturing equipment
write-offs and other matters, which aggregated $18.3 million for 1998 and $4.5
million for 1997. Management believes that costs similar to 1998 have been
incurred during 1999, including the impacts of launching new products and the
consolidation of the Company's chair plants.


                                      18

<PAGE>

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

  Selling, general and administrative expenses as a percentage of net sales
decreased to 24.5% in 1999 from 24.9% in 1998 and 26.2% in 1997, reflecting
management's cost containment and resource redeployment efforts. During the
three-year period, investments in information systems and new product
research, development and launch have been significant and increasing.
However, the Company has been focused on redeployment of resources in support
of its strategic initiatives and therefore has been able to improve its
operating expense leverage. In addition, the structure of the Company's
management incentive plan, which is predominantly based on growth in the
Company's performance, contributed to the current year's achievement of 24.5%
through a reduction in management bonuses.

  In 1998, the Company reported that selling, general and administrative costs
included aggregate costs of $11.0 million relating to the restructuring of a
foreign subsidiary, the relocation of a showroom facility and the initial
public offering and receipt by the Company of a net litigation settlement in
the amount of $9.8 million. In addition, the Company reported in prior years
that 1997 included a subsidiary restructuring charge and an intangible asset
write-off aggregating approximately $8.6 million. There were no similar costs
or litigation settlements of a material nature in 1999.

PATENT LITIGATION EXPENSES

  In December 1996, the Company concluded a 17-year patent litigation, which,
net of reserves, reduced 1997 net income by $123.5 million, or $0.80 per share
(basic and diluted). See Note 13 to the Consolidated Financial Statements of
the Company.

OTHER INCOME, NET AND INCOME TAXES

  Overall, other income, net did not vary significantly during the three-year
period. However, 1999 includes $5.8 million of interest income recorded in
connection with the favorable resolution of income tax litigation discussed
below. Other income, net is expected to be impacted in fiscal 2000 due to the
acquisitions referenced above, including the remaining 50% of Steelcase
Strafor, which was financed through cash and short-term borrowings that the
Company expects to refinance in the first half of fiscal 2000 as it finalizes
its borrowing structure.

  Income tax expense as a percentage of income before taxes ("the effective
tax rate") approximated 37.0% in 1999, 38.5% in 1998 and 46.0% in 1997. During
1999, the provision for income taxes benefited from the favorable resolution
of income tax litigation dating back to 1989, primarily related to investment
tax credits and accelerated depreciation on the Company's Corporate
Development Center. The resolution of these matters contributed to a reduced
effective tax rate for 1999 and resulted in interest income of $5.8 million.
These tax matters increased 1999 consolidated net income by $6.2 million, or
$0.04 per share (basic and diluted). The effective tax rate in 1997 was
primarily attributable to the reduced level of income as a result of patent
litigation expenses. The Company's effective income tax rate is expected to
increase as a result of the acquisition and consolidation of Steelcase
Strafor, due to higher tax rates throughout most of Europe and the recording
of non-deductible goodwill.

NET INCOME

  For the reasons set forth above, net income and earnings per share (basic
and diluted) increased over the three-year period at a compound annual growth
rate in excess of 20%. Excluding the impact of patent litigation expenses in
1997, which reduced net income by $123.5 million, net income growth by period
approximated 2.0% in 1999, 43.5% in 1998 and 22.4% in 1997.


                                      19

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

  Historically, the Company's cash and capital requirements have been
satisfied through cash generated from operating activities. Through February
1999, the Company had no long-term debt. However, due to the payment of the
special dividend in the fourth quarter of 1998 and the level of capital
expenditures and acquisitions in 1999, cash, cash equivalents and short-term
investments were less than $80.0 million as of February 26, 1999. Further, on
April 22, 1999, the Company acquired the remaining 50% equity interest of
Steelcase Strafor held by Strafor Facom S.A. The purchase price approximated
$225.2 million and was funded by approximately $75.1 million from existing
cash balances and approximately $150.1 million of short-term borrowings that
the Company expects to refinance in the first half of fiscal 2000 as it
finalizes its borrowing structure. See Note 20 to the Consolidated Financial
Statements. These borrowings, in addition to cash generated from future
operations, are expected to be sufficient to finance the known or foreseeable
future liquidity and capital needs of the Company.

  CASH PROVIDED BY OPERATING ACTIVITIES

  Cash provided by operating activities totaled $307.7 million for 1999,
$333.4 million for 1998 and $80.8 million for 1997. These funds resulted
primarily from net income excluding non-cash charges such as depreciation and
amortization, net of increases in accounts receivable and notes receivable and
leased assets. The Company continues to invest in its leasing portfolio, which
includes both direct financing and operating leases of office furniture
products. The Company's net investment in leased assets increased from $165.8
million as of February 27, 1998 to $233.1 million as of February 26, 1999.
Operationally, management continues to closely monitor its accounts receivable
and inventories, attempting to maximize the number of inventory turns per year
and minimize the impact of increasing international receivables, which
typically have longer payment terms than domestic dealers. The number of days
that the accounts receivable arising from sales to domestic dealers remain
outstanding continues to approximate 30 days.

  CASH USED IN INVESTING ACTIVITIES

  Cash used in investing activities totaled $290.0 million in 1999, $149.9
million in 1998 and $75.4 million in 1997. The increases have resulted from
increases in capital expenditures, joint venture transactions and corporate
acquisitions.

  The Company's capital expenditures were $170.4 million in 1999, $126.4
million in 1998 and $122.0 million in 1997, reflecting investments in excess
of depreciation for each of the last three years. Capital expenditures
continue to include increased investments in manufacturing equipment expected
to improve productivity and safety, increase capacity, decrease the impact on
the surrounding environments in which the Company operates and facilitate the
launch of new products. In addition, 1999 reflects the purchase of two
facilities in the San Francisco Bay area for approximately $26.0 million.
These facilities will be used to relieve local production constraints and
relocate the west coast Work Life Center to Palo Alto, California. Further,
1999 reflects initial investments in the Company's Corporate Learning and
Development Center, the space for which is being constructed using vacant
manufacturing space and Pathways-based products. The Company expects capital
expenditures in fiscal 2000 to equal or exceed 1999 levels due to the planned
construction of a new wood facility, which is expected to approximate $34.0
million, and the continued investment in new product development, information
systems and corporate and showroom facilities.

  Joint venture transactions in the three-year period include repayment of a
note receivable from Steelcase Strafor in 1997 in the amount of $43.0 million
and issuance of a note receivable to the joint venture in 1999 in the amount
of $66.4 million to equalize lending levels between the Company and Strafor
Facom S.A. and fund in part the acquisition of Werndl BuroMobeL AG by
Steelcase Strafor.

  Corporate acquisitions, aggregating $57.2 million in 1999, reflect the
complete ownership of J.M. Lynne and the partial ownership of Microfield
Graphics, Clestra Hauserman and the Modernform Group Public Company Limited.

                                      20

<PAGE>

  CASH USED IN FINANCING ACTIVITIES

  Cash used in financing activities totaled $53.3 million in 1999, $254.4
million in 1998 and $40.4 million in 1997, reflecting dividends paid and
certain common stock transactions.

  Quarterly dividends per share of common stock were $0.41 in 1999, $0.39 in
1998 and $0.27 in 1997. In addition, the Company paid a special dividend in
1998 in the aggregate amount of $150.9 million, or approximately $0.97 per
share of common stock.

  During 1999, eligible employees purchased shares of Class A Common Stock
pursuant to the terms of the Employee Discount Option Grant, resulting in
proceeds to the Company of $24.8 million. The shares for this grant, along
with the shares for the Employee Stock Grant issued in 1998, were purchased by
the Company from the selling shareholders in the initial public offering for
$43.5 million. In addition, the Company repurchased 794,300 shares of Class A
Common Stock for $15.0 million in 1999 under a three million share repurchase
program authorized by the Board of Directors on June 17, 1998. Management
anticipates that the stock repurchase program will not reduce the Company's
tradable share float in the long run as it expects that Class B Common Stock
will continue to convert to Class A Common Stock over time. Since the initial
public offering in February 1998, approximately 9.3 million shares of common
stock have converted from Class B to Class A.

YEAR 2000 READINESS

  The Company is actively engaged in replacing or modifying all business
software applications as well as manufacturing and other equipment with
embedded technology that could fail or generate erroneous results by or at the
Year 2000 ("Year 2000 issues"), an issue affecting Steelcase Inc. and most
other companies. The Company intends that its business application systems,
technical infrastructure components, and manufacturing equipment be Year 2000
ready by the end of June of 1999. However, management views the process of
assessing and remediating Year 2000 issues as an ongoing process which will
require continued focus, testing and verification throughout calendar 1999.

  The Company's Year 2000 readiness effort is comprised of five phases defined
below:

    Awareness: Activities to ensure management and all affected employees are
  aware that Year 2000 issues exist.

    Assessment: Includes the inventory of all potentially affected hardware,
  software, and embedded technology equipment, along with a determination as
  to whether or not they may be impacted by the Year 2000 issues.

    Remediation: Repairs, replacement, and/or modifications to eliminate the
  Year 2000 issues in hardware, software or equipment.

    Testing: Testing of the hardware, software or equipment to determine if
  the remediation was successful.

    Implementation: Moving the hardware, software or equipment from a test
  status or test location to production usage.

  Although the Company's individual business units, majority-owned
subsidiaries and unconsolidated joint ventures may be individually at
different stages of readiness, the following comments summarize Steelcase
Inc.'s state of readiness with respect to Year 2000 issues.

  Since 1994, the Company has been selectively replacing business software
applications with SAP, a Year 2000 compliant comprehensive information
management system. This project is part of a strategic business plan to
upgrade the overall capabilities of the Company's business application
systems. Costs to date specifically to address Year 2000 issues, separate from
SAP implementations, have approximated $10 million. Future costs anticipated
to remedy Year 2000 issues have been budgeted and are not expected to exceed
an additional $10 million. Further, various individual business units,
majority-owned subsidiaries and unconsolidated joint ventures are engaged in
the implementation of Year 2000 compliant enterprise software systems.

                                      21

<PAGE>

  In late 1995, the Company began its efforts to address those business
applications which might not be replaced in time with equivalent SAP systems
by engaging a third party specializing in the modification of business
software applications. The engagement lasted through December 1997, at which
time the majority of remediation efforts related to those business software
applications were substantially complete. Since that time, the Company has
been testing those business software applications and as of February 26, 1999
had substantially completed the initial testing of those software
applications.

  In December 1997, the Company established a Program Management Office
("PMO"), reporting to the Chief Information Officer of the Company. The PMO
has the responsibility to provide oversight for the Company's Year 2000
readiness program that consists of the five phases noted above. These five
phases will be employed for the following areas: business application
software, manufacturing and other equipment with embedded chip technology, and
evaluation and due diligence with respect to the Company's supply chain and
distribution channel. The PMO is also responsible for periodic status
reporting to the Company's executive management and to the Board of Directors.
In addition, the Year 2000 PMO is providing oversight for the development and
execution of contingency and business continuity planning efforts, which have
begun in a number of the Company's business units.

  As of February 26, 1999, the Company had completed the assessment phase for
the majority of its manufacturing facilities having embedded technology. The
assessment resulted in minimal findings of non-compliance. The Company's
manufacturing equipment is generally Year 2000 ready and is not anticipated to
require significant reprogramming or replacement. Remediation and testing of
the equipment identified as needing some reprogramming or replacement is
expected to be substantially complete by mid-calendar year 1999.

  The Company initiated formal communications with production suppliers in
January 1998 and with its dealer network in May 1998, inquiring as to their
state of readiness. As of February 26, 1999, over 4,000 suppliers have been
contacted, and from the responses received to date, the Company believes that
its supply chain partners are actively seeking to become Year 2000 ready. The
Company has initiated further in-depth analyses of the readiness of
approximately 150 key suppliers. In addition, as of February 26, 1999, a
majority of the dealers, both international and domestic, had responded,
mostly with favorable self-assessment ratings. Many governmental agencies,
however, may not be Year 2000 compliant. It is difficult for Steelcase Inc.
and most other companies to assess the likelihood, or the impact, if any, on
their businesses, of such entities' failure to be Year 2000 compliant.

  The Company presently believes that, upon completion of its current plans
for remediation of its business software applications as well as manufacturing
and other equipment with embedded technology, Year 2000 issues will not
present a materially adverse risk to the Company's future consolidated results
of operations, liquidity or capital resources. However, if such planned
remediation is not completed in a timely manner, the level of timely
compliance by key suppliers or dealers is not sufficient, or if unforeseen
circumstances arise, Year 2000 issues could have a material impact on the
Company's operations including, but not limited to, delays in shipments of
products resulting in loss of revenues, increased operating costs, loss of
customers or suppliers, or other significant disruptions to the Company's
business. The Company believes that its Year 2000 readiness program, including
contingency and business continuity plans under development, should generally
reduce the extent of materially adverse effects that Year 2000 related
disruptions may have upon the Company.

  Contingency and business continuity planning activities have been initiated
in various business areas within the Company. Additional planning will occur
as the Company identifies those circumstances that would require development
of a contingency and business continuity plan. The Company believes
contingency and business continuity planning efforts to be ongoing activities,
subject to frequent review throughout calendar year 1999.

EURO CONVERSION

  On January 1, 1999, eleven of the fifteen member countries of the European
Union established fixed conversion rates between their existing sovereign
currencies and the Euro. There will be a transition period from January 1,
1999 through January 1, 2002, at which time all legal tender will convert to
the Euro. The Company's primary exposure to the Euro conversion is
concentrated in Steelcase Strafor.

                                      22

<PAGE>

  In December 1997, Steelcase Strafor created an internal Euro committee, a
pan-European multifunctional team whose goal was to determine the impact of
this currency change on products, markets, and information systems. At this
time, Steelcase Strafor is preparing an implementation of unified price lists
for dealers. The aim is to have three commercial zones in Europe within the
three-year transition period, but no change is expected in calendar 1999.
Steelcase Strafor is adapting and migrating its internal system in order to be
Euro compliant by the end of calendar 1999. Steelcase Strafor is also
assisting and educating its dealers to become Euro compliant. Training for
employees will begin during the transition period. The transition period is
anticipated to resolve difficulties in handling local currencies and the Euro
simultaneously, while remaining flexible to the market. Steelcase Strafor sees
the primary financial impact of the Euro conversion to be potential savings on
foreign exchange hedging and commissions. Based on the Euro Committee's work
to date, the Company does not expect the Euro conversion to have a material
impact on Steelcase Strafor's financial position, or on the Company as a
whole.

SAFE HARBOR PROVISION

  There are certain forward-looking statements under the Overview, Liquidity
and Capital Resources, Year 2000, and Euro Conversion sections, particularly
those with respect to the Company's future product offerings and liquidity and
capital needs; future capital expenditures; conversion of Class B common
shares to Class A common shares; the expected ability of and costs to the
Company and its key customers, dealers and suppliers to successfully manage
Year 2000 issues; and the impact of the Euro conversion on the financial
position of Steelcase Strafor and the Company. Such statements involve certain
risks and uncertainties that could cause actual results to vary from stated
expectations. The Company's performance may differ materially from that
contemplated by such statements for a variety of reasons, including, but not
limited to, competitive and general economic conditions; changes in customer
order patterns; continued success in technological advances, including
development and implementation of new processes and strategic products for
specific market segments; the ability to grow new businesses and successfully
integrate and operate any acquired businesses; the impact on the Company's
business due to internal systems or systems of suppliers, key customers,
dealers and other third parties adversely affected by Year 2000 issues; costs,
including claims, due to Year 2000 issues and remediation efforts; the future
success of new products and their impact on our manufacturing processes; the
impact of the Euro conversion and other risks detailed in this Report, and the
Company's other filings with the Securities and Exchange Commission.

RECENTLY ISSUED ACCOUNTING STANDARDS

  In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities. This statement establishes accounting and
reporting standards for derivative instruments, requiring recognition of the
fair value of all derivatives as assets or liabilities on the balance sheet.
This statement is effective for fiscal years beginning after June 15, 1999.
Management intends to adopt the provisions of SFAS No. 133 during fiscal 2001.
The impact of this pronouncement on the Company's financial results is
currently being evaluated.


I
TEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:

  The Company has evaluated possible disclosures required under this item, and
has determined that no material market, interest rate, or foreign currency
risk exists that would require disclosure.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:

  The financial statements and supplementary data required by the Item are
included in the Consolidated Financial Statements set forth on pages F-1
through F-28, attached hereto and found immediately following the signature
page of this Report.

                                      23

<PAGE>


                                   PART III


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE:

  None.


ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT:

  The information required by Item 10 which is not included in Part I hereof,
is contained in the Company's Proxy Statement for the 1999 Annual Meeting of
Shareholders to be held June 23, 1999 (the "Proxy Statement"), under the
captions "Election of Directors" and "Other Matters--Section 16(a) Beneficial
Ownership Reporting Compliance", and is incorporated herein by reference.


ITEM 11. EXECUTIVE COMPENSATION:

  The information required by Item 11 is contained in the Proxy Statement,
under the captions "Information Concerning Meetings of the Board of Directors,
Board Committees and Director Compensation", "Executive Compensation" and
"Compensation Committee Interlocks and Insider Participation", and is
incorporated herein by reference.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:

  The information required by Item 12 is contained in the Proxy Statement,
under the caption "Beneficial Security Ownership" and is incorporated herein
by reference.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:

  None.

                                    PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K:

  (A) FINANCIAL STATEMENTS AND SCHEDULES

    1. FINANCIAL STATEMENTS (F-1 TO F-28)

    The following consolidated financial statements of the Company are
    filed as part of this Report:

    --Report of Independent Certified Public Accountants

    --Consolidated Statements of Income for the Years Ended February 26,
     1999, February 27, 1998 and February 28, 1997

    --Consolidated Balance Sheets as of February 26, 1999 and February 27,
     1998

    --Consolidated Statements of Changes in Shareholders' Equity for the
     Years Ended February 26, 1999, February 27, 1998 and February 28, 1997

    --Consolidated Statements of Cash Flows for the Years Ended February
     26, 1999, February 27, 1998 and February 28, 1997

    --Notes to Consolidated Financial Statements

    2. FINANCIAL STATEMENT SCHEDULES (S-1)

    Schedule II--Valuation and Qualifying Accounts

      All other schedules have been omitted because they are not applicable
    or the required information is shown in the Consolidated Financial
    Statements or notes thereto.

  (B) REPORTS ON FORM 8-K FILED DURING THE QUARTER ENDING FEBRUARY 26, 1999

      Form 8-K filed February 17, 1999 relating to the Company's intent to
    acquire the remaining 50% equity interest of Steelcase Strafor from
    Strafor Facom S.A.

                                      24

<PAGE>

  (C) EXHIBITS REQUIRED BY SECURITIES AND EXCHANGE COMMISSION REGULATION S-K


<TABLE>
<CAPTION>
 EXHIBIT
   NO.                                 DESCRIPTION
 -------                               -----------
 <C>     <S>
   3.1   --Second Restated Articles of Incorporation of the Company(1)
   3.2   --Amended By-laws of the Company, as amended March 24, 1999
  10.1   --Deferred Compensation Agreement dated January 12, 1998, between
          Steelcase Inc. and James Hackett(2)
  10.2   --Deferred Compensation Agreement dated January 12, 1998, between
          Steelcase Inc. and Robert Ballard(2)
  10.3   --Deferred Compensation Agreement dated January 12, 1998, between
          Steelcase Inc. and Alwyn Rougier-Chapman(3)
  10.4   --Steelcase Inc. Restoration Retirement Plan
  10.5   --Steelcase Inc. Incentive Compensation Plan(1)
  10.6   --Amended and Restated Steelcase Inc. Management Incentive Plan(3)
  10.7   --Steelcase Inc. 1994 Executive Supplemental Retirement Plan(3)
  10.8   --Deferred Compensation Agreement dated May 4, 1998, between Steelcase
          Inc. and William P. Crawford(4)
  10.9   --Stock Purchase Agreement between Steelcase Inc. and Strafor Facom
          S.A. dated as of April 21, 1999(5)
  21.1   --Subsidiaries of the Registrant
  23.1   --Consent of BDO Seidman, LLP
  27.1   --Financial Data Schedule
</TABLE>

- --------
(1) Incorporated by reference to the like numbered exhibit to the Company's
    Registration Statement on Form S-1 (#333-41647) as filed with the
    Securities and Exchange Commission ("Commission") on December 5, 1997.

(2) Incorporated by reference to the like numbered exhibit to Amendment 2 to
    the Company's Registration Statement on Form S-1 (#333-41647) as filed
    with the Commission on January 20, 1998.

(3) Incorporated by reference to the like numbered exhibit to Amendment 1 to
    the Company's Registration Statement on Form S-1 (#333-41647) as filed
    with the Commission on January 14, 1998.

(4) Incorporated by reference to the like numbered exhibit to the Company's
    annual report on Form 10-K for the fiscal year ended February 27, 1998, as
    filed with the Commission on May 28, 1998.

(5) Incorporated by reference to Exhibit 2.1 to the Company's current report
    on Form 8-K dated April 22, 1999, as filed with the Commission, on May 7,
    1999.

                                      25

<PAGE>

                                 STEELCASE INC.

                       CONSOLIDATED STATEMENTS OF INCOME
                      (IN MILLIONS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                        YEAR ENDED
                                          --------------------------------------
                                          FEBRUARY 26, FEBRUARY 27, FEBRUARY 28,
                                              1999         1998         1997
                                          ------------ ------------ ------------
<S>                                       <C>          <C>          <C>
Net sales...............................    $2,742.5     $2,760.0     $2,408.4
Cost of sales...........................     1,753.1      1,756.6      1,551.6
                                            --------     --------     --------
Gross profit............................       989.4      1,003.4        856.8
Selling, general and administrative
 expenses...............................       672.2        686.0        630.4
Patent litigation expense...............         --           --          84.8
                                            --------     --------     --------
Operating income........................       317.2        317.4        141.6
Patent litigation interest expense......         --           --        (111.7)
Other income, net.......................        20.2         22.6         21.4
                                            --------     --------     --------
Income before provision for income taxes
 and equity in net income of joint
 ventures and dealer transitions........       337.4        340.0         51.3
Provision for income taxes..............       124.9        130.9         23.6
                                            --------     --------     --------
Income before equity in net income of
 joint ventures and dealer transitions..       212.5        209.1         27.7
Equity in net income of joint ventures
 and dealer transitions.................         8.9          7.9          --
                                            --------     --------     --------
Net income..............................    $  221.4     $  217.0     $   27.7
                                            ========     ========     ========
Earnings per share (basic and diluted)..    $   1.44     $   1.40     $   0.18
                                            ========     ========     ========
</TABLE>


  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-1

<PAGE>

                                 STEELCASE INC.

                          CONSOLIDATED BALANCE SHEETS
                        (IN MILLIONS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                      FEBRUARY 26, FEBRUARY 27,
                                                          1999         1998
                                                      ------------ ------------
<S>                                                   <C>          <C>
                       ASSETS
Current assets:
  Cash and cash equivalents..........................   $   67.5     $  103.1
  Short-term investments.............................        8.6         13.0
  Accounts receivable, less allowances of $27.6 and
   $31.8.............................................      348.9        364.3
  Notes receivable and leased assets.................      140.4        142.1
  Income taxes receivable............................        --          32.8
  Inventories........................................       96.5        105.8
  Prepaid expenses...................................        6.8          7.5
  Deferred income taxes..............................       68.7         56.4
                                                        --------     --------
Total current assets.................................      737.4        825.0
                                                        --------     --------
Property and equipment, net..........................      739.0        671.2
Notes receivable and leased assets...................      209.1        158.0
Joint ventures and dealer transitions................      210.4        115.9
Deferred income taxes................................       40.5         50.0
Goodwill and other intangible assets, net of
 accumulated amortization of $25.6 and $21.5.........       99.6         66.3
Other assets.........................................      146.5        120.8
                                                        --------     --------
Total assets.........................................   $2,182.5     $2,007.2
                                                        ========     ========
</TABLE>


  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-2

<PAGE>

                                 STEELCASE INC.

                          CONSOLIDATED BALANCE SHEETS
                        (IN MILLIONS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                      FEBRUARY 26, FEBRUARY 27,
                                                          1999         1998
                                                      ------------ ------------
<S>                                                   <C>          <C>
        LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Accounts and notes payable..........................   $  102.1     $  117.8
 Accrued expenses:
  Employee compensation..............................       92.8        103.9
  Employee benefit plan obligations..................       51.8         59.1
  Other..............................................      200.1        189.1
                                                        --------     --------
Total current liabilities............................      446.8        469.9
                                                        --------     --------
Long-term liabilities:
  Employee benefit plan obligations..................      222.8        191.2
  Other long-term liabilities........................       12.9         13.7
                                                        --------     --------
Total long-term liabilities..........................      235.7        204.9
                                                        --------     --------
Total liabilities....................................      682.5        674.8
                                                        --------     --------
Commitments and contingencies
Shareholders' equity:
 Preferred Stock--no par value; 50,000,000 shares
  authorized, none issued and outstanding............        --           --
 Class A Common Stock--no par value; 475,000,000
  shares authorized, 23,676,407 and 14,122,040 issued
  and outstanding....................................       78.0         41.1
 Class B Common Stock--no par value; 475,000,000
  shares authorized, 129,942,288 and 139,245,676
  issued and outstanding.............................      301.4        328.5
 Accumulated other comprehensive income..............      (15.0)       (14.5)
 Retained earnings...................................    1,135.6        977.3
                                                        --------     --------
Total shareholders' equity...........................    1,500.0      1,332.4
                                                        --------     --------
Total liabilities and shareholders' equity...........   $2,182.5     $2,007.2
                                                        ========     ========
</TABLE>


  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-3

<PAGE>

                                 STEELCASE INC.

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                 (IN MILLIONS)


<TABLE>
<CAPTION>
                           COMMON STOCK     ACCUMULATED OTHER               TOTAL         TOTAL
                          ----------------    COMPREHENSIVE   RETAINED  SHAREHOLDERS' COMPREHENSIVE
                          CLASS A  CLASS B       INCOME       EARNINGS     EQUITY        INCOME
                          -------  -------  ----------------- --------  ------------- -------------
<S>                       <C>      <C>      <C>               <C>       <C>           <C>
February 23, 1996.......  $  --    $408.9        $  0.8       $  983.9    $1,393.6
Common stock issuance...                                           1.4         1.4
Other comprehensive
 income.................                           (0.9)                      (0.9)      $ (0.9)
Dividends paid..........                                         (41.8)      (41.8)
Net income..............                                          27.7        27.7         27.7
                          ------   ------        ------       --------    --------       ------
February 28, 1997.......     --     408.9          (0.1)         971.2     1,380.0       $ 26.8
                                                                                         ======
Common stock conversion.    36.9    (36.9)                                     --
Common stock repurchase.            (43.5)                                   (43.5)
Employee stock grant....     4.2                                               4.2
Other comprehensive
 income.................                          (14.4)                     (14.4)      $(14.4)
Dividends paid..........                                        (210.9)     (210.9)
Net income..............                                         217.0       217.0        217.0
                          ------   ------        ------       --------    --------       ------
February 27, 1998.......    41.1    328.5         (14.5)         977.3     1,332.4       $202.6
                                                                                         ======
Common stock conversion.    27.1    (27.1)                                     --
Common stock repurchase.   (15.0)                                            (15.0)
Common stock issuance...    24.8                                              24.8
Other comprehensive
 income.................                           (0.5)                      (0.5)      $ (0.5)
Dividends paid..........                                         (63.1)      (63.1)
Net income..............                                         221.4       221.4        221.4
                          ------   ------        ------       --------    --------       ------
February 26, 1999.......  $ 78.0   $301.4        $(15.0)      $1,135.6    $1,500.0       $220.9
                          ======   ======        ======       ========    ========       ======
</TABLE>


  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-4

<PAGE>

                                 STEELCASE INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN MILLIONS)


<TABLE>
<CAPTION>
                                                       YEAR ENDED
                                         --------------------------------------
                                         FEBRUARY 26, FEBRUARY 27, FEBRUARY 28,
                                             1999         1998         1997
                                         ------------ ------------ ------------
<S>                                      <C>          <C>          <C>
OPERATING ACTIVITIES
Net income.............................     $221.4       $217.0       $ 27.7
Adjustments to reconcile net income to
 net cash provided by operating
 activities:
  Depreciation and amortization........      107.0         95.3         93.4
  Pension and postretirement benefit
   costs...............................       22.7         17.9         16.2
  Loss on disposal of assets...........        --           4.3         14.0
  Employee stock grant.................        --           4.2          --
  Deferred income taxes................       (2.7)        (4.7)         1.8
  Equity in net income of joint
   ventures and dealer transitions.....       (8.9)        (7.9)         --
  Changes in operating assets and
   liabilities, net of corporate
   acquisitions:
    Accounts receivable................       15.4        (36.7)       (59.9)
    Notes receivable and leased assets.      (52.2)       (69.3)       (45.9)

    Inventories........................        9.3          2.2         31.5
    Prepaid expenses and other assets..      (20.6)         3.7         (3.5)
    Accounts and notes payable.........      (15.7)        12.7         12.3
    Accrued expenses and other
     liabilities.......................       32.0         94.7         (6.8)
                                            ------       ------       ------
Net cash provided by operating
 activities............................      307.7        333.4         80.8
                                            ------       ------       ------
INVESTING ACTIVITIES
Capital expenditures...................     (170.4)      (126.4)      (122.0)
Proceeds from the sale of facilities...        --           1.2          7.5
Net change in investments..............        4.4        (20.7)         6.6
Joint ventures and dealer transitions..      (66.8)         0.8         36.5
Corporate acquisitions, net of cash
 acquired..............................      (57.2)        (4.8)        (4.0)
                                            ------       ------       ------
Net cash used in investing activities..     (290.0)      (149.9)       (75.4)
                                            ------       ------       ------
FINANCING ACTIVITIES
Common stock issuance..................       24.8          --           1.4
Common stock repurchase................      (15.0)       (43.5)         --
Dividends paid.........................      (63.1)      (210.9)       (41.8)
                                            ------       ------       ------
Net cash used in financing activities..      (53.3)      (254.4)       (40.4)
                                            ------       ------       ------
Net decrease in cash and cash
 equivalents...........................      (35.6)       (70.9)       (35.0)
Cash and cash equivalents, beginning of
 year..................................      103.1        174.0        209.0
                                            ------       ------       ------
Cash and cash equivalents, end of year.     $ 67.5       $103.1       $174.0
                                            ======       ======       ======
</TABLE>


  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-5

<PAGE>

                                STEELCASE INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS

  Steelcase Inc. and its majority-owned subsidiaries (the "Company") represent
the world's largest manufacturer and provider of office furniture, office
furniture systems and related products and services. The Company manufactures
at 30 facilities in the United States, Canada and Mexico and, through
international subsidiaries, joint ventures and licensing arrangements, at
approximately 20 facilities throughout the rest of the world. The Company
distributes its products through a worldwide network of independent dealers in
approximately 680 locations including approximately 450 in the United States
and Canada and approximately 230 throughout the rest of the world. The Company
operates on a worldwide basis within a single industry segment.

  Steelcase Strafor, a 50% owned joint venture with Strafor Facom S.A., is a
leading office furniture company in Europe with 15 manufacturing facilities
and dealers in more than 200 locations. See Note 20 regarding the April 22,
1999 acquisition by the Company of the remaining 50% equity interest in the
joint venture from Strafor Facom S.A.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Principles of Consolidation

  The consolidated financial statements include the accounts of Steelcase Inc.
and its majority-owned subsidiaries, except for dealers which the Company has
acquired with the intention of reselling as soon as practicable ("dealer
transitions"). All significant intercompany accounts, transactions and profits
have been eliminated in consolidation. Foreign currency-denominated assets and
liabilities are translated into U.S. dollars at the exchange rates existing at
the balance sheet date. Income and expense items are translated at the average
exchange rates during the respective periods. Translation adjustments
resulting from fluctuations in the exchange rates are recorded in accumulated
other comprehensive income, a separate component of shareholders' equity.
Gains and losses resulting from exchange rate fluctuations on transactions
denominated in currencies other than the functional currency are not material.

  The Company's investments in joint ventures and dealer transitions are
carried at its equity in the net assets of those entities primarily based on
audited financial statements for each applicable year.

 Year End

  The Company's year-end is the last Friday in February with each fiscal
quarter including 13 weeks, except for the quarter ended February 28, 1997
which included 14 weeks. Fiscal years presented herein include the 52-week
periods ended February 26, 1999 and February 27, 1998, and the 53-week period
ended February 28, 1997.

 Revenue Recognition

  Net sales include product sales, service revenues and leasing revenues.
Product sales and service revenues are recognized as products are shipped and
services are rendered. Leasing revenue includes interest earned on the net
investments in leased assets, which is recognized over the lease term as a
constant percentage return. Service and leasing revenues are not material.

 Cash Equivalents

  Cash equivalents consist of highly liquid investments, primarily interest-
earning deposits, treasury notes and commercial paper, with an original
maturity of three months or less. Cash equivalents are reported at amortized

                                      F-6

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
cost, which approximates market, and approximated $72.9 million and $119.1
million as of February 26, 1999 and February 27, 1998, respectively.

 Long-term Investments

  The Company accounts for its long-term investments, in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 115, Accounting for
Certain Investments in Debt and Equity Securities. The Company currently
classifies its investments as available-for-sale or held-to-maturity.
Investments classified as available-for-sale approximated $5.5 million as of
February 26, 1999. There were no investment balances classified as available-
for-sale at February 27, 1998. Gross unrealized gains and losses, net of
taxes, are credited or charged to accumulated other comprehensive income, a
separate component of shareholders' equity. Investments classified as held-to-
maturity typically include treasury notes, tax-exempt municipal bonds and
other debt securities which the Company has the positive intent and ability to
hold until maturity. These investments are reported at amortized cost.
Investments classified as long-term mature over the next five years.

 Inventories

  Substantially all inventories are valued based upon last-in, first-out
("LIFO") cost, not in excess of market.

 Property and Equipment

  Property and equipment are stated at cost and depreciated using the
straight-line method over the estimated useful lives of the assets, which
average 26 years for buildings and improvements and eight years for all other
property and equipment. In addition, internal-use software applications and
related development efforts are capitalized and amortized over the estimated
useful lives of the applications, which do not exceed five years except for
certain business application systems which approximate ten years. Software
maintenance, Year 2000 related matters and training costs are expensed as
incurred.

 Corporate-Owned Life Insurance

  The Company carries investments in corporate-owned life insurance ("COLI")
policies, which were purchased to fund employee benefit plan obligations. The
assets are recorded at their net cash surrender values as reported by the
issuing insurance companies associated with the COLI.

 Goodwill and Other Intangible Assets

  Goodwill and other intangible assets resulting from business acquisitions
are stated at cost and amortized on a straight-line basis over a period of 15
years if acquired subsequent to February 28, 1995, or 40 years if acquired
prior thereto. Amortization expense approximated $4.1 million, $4.2 million
and $4.0 million for 1999, 1998 and 1997, respectively.

  The Company reviews long-lived assets, including goodwill and other
intangible assets, for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be fully recoverable. If
it is determined that an impairment loss has occurred based on expected future
cash flows, a current charge to income is recognized.

 Product Related Expenses

  Research and development expenses, which are expensed as incurred,
approximated $75.0 million, $70.0 million and $65.0 million for 1999, 1998 and
1997, respectively.

                                      F-7

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

 Self-Insurance

  The Company is self-insured for certain losses relating to workers'
compensation claims, employee medical benefits and product liability claims.
The Company has purchased stop-loss coverage in order to limit its exposure to
any significant levels of workers' compensation and product liability claims.
Self-insured losses are accrued based upon the Company's estimates of the
aggregate liability for uninsured claims incurred using certain actuarial
assumptions followed in the insurance industry and the Company's historical
experience.

  The accrued liabilities for self-insured losses included in other accrued
expenses in the accompanying consolidated balance sheets are as follows (in
millions):


<TABLE>
<CAPTION>
                                                       FEBRUARY 26, FEBRUARY 27,
                                                           1999         1998
                                                       ------------ ------------
   <S>                                                 <C>          <C>
   Workers' compensation claims.......................    $18.6        $16.8
   Product liability claims...........................     11.5         11.5
                                                          -----        -----
                                                          $30.1        $28.3
                                                          =====        =====
</TABLE>


  The Company maintains a Voluntary Employees' Beneficiary Association
("VEBA") to fund employee medical claims covered under self-insurance. The
estimates for incurred but not reported medical claims, which have been fully
funded by the Company in the VEBA, approximated $7.9 million and $8.0 million
as of February 26, 1999 and February 27, 1998, respectively.

 Product Warranty

  The Company offers a lifetime warranty on Steelcase brand products, subject
to certain exceptions, which provides for the free repair or replacement of
any covered product or component that fails during normal use because of a
defect in design, materials or workmanship. Accordingly, the Company provides,
by a current charge to operations, an amount it estimates will be needed to
cover future warranty obligations for products sold. The accrued liability for
warranty costs included in other accrued expenses in the accompanying
consolidated balance sheets approximated $20.6 million and $21.3 million as of
February 26, 1999 and February 27, 1998, respectively.

 Environmental Matters

  Environmental expenditures that relate to current operations are expensed or
capitalized as appropriate. Expenditures that relate to an existing condition
allegedly caused by past operations, that are not associated with current or
future revenue generation, are expensed. Liabilities are recorded when
material environmental assessments and remedial efforts are probable, and the
costs can be reasonably estimated. Generally, the timing of these accruals
coincides with completion of a feasibility study or the Company's commitment
to a formal plan of action. The accrued liability for environmental
contingencies included in other accrued expenses in the accompanying
consolidated balance sheets approximated $10.7 million and $11.7 million as of
February 26, 1999 and February 27, 1998, respectively. Based on the Company's
ongoing oversight of these matters, the Company believes that it has accrued
sufficient reserves for remediation costs of all known sites.

 Advertising

  Advertising costs, which are expensed as incurred, approximated $11.3
million, $7.9 million and $6.0 million for 1999, 1998 and 1997, respectively.

                                      F-8

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

 Income Taxes

  Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases, and are measured using enacted tax rates expected to
apply to taxable income in the years in which the temporary differences are
expected to reverse.

 Earnings Per Share

  Basic earnings per share is based on the weighted average number of shares
of common stock outstanding during each period. It excludes the dilutive
effects of additional common shares that would have been outstanding if the
shares, under the Company's Stock Incentive Plans, had been issued. Diluted
earnings per share includes the effects of the Company's Stock Incentive
Plans. The weighted average number of shares outstanding for basic and diluted
calculations were 153.8 million, 154.8 million and 154.7 million for 1999,
1998 and 1997, respectively.

 Stock-Based Compensation

  SFAS No. 123, Accounting for Stock-Based Compensation, encourages entities
to record compensation expense for stock-based employee compensation plans at
fair value, but provides the option of measuring compensation expense using
the intrinsic value method prescribed in Accounting Principles Board ("APB")
Opinion No. 25, Accounting for Stock Issued to Employees. The Company has
elected to account for its Stock Incentive Plans in accordance with APB
Opinion No. 25. Pro forma results of operations for the Company, as if the
fair value method prescribed by SFAS No. 123 had been used to account for its
Stock Incentive Plans, are presented in Note 12.

 Fair Value of Financial Instruments

  The carrying amount of the Company's financial instruments, consisting of
cash equivalents, investments, accounts and notes receivable, accounts and
notes payable and certain other liabilities, approximate their fair value due
to their relatively short maturities.

 Accounting for Derivative Instruments and Hedging Activities

  In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. This statement
establishes accounting and reporting standards for derivative instruments,
requiring recognition of the fair value of all derivatives as assets or
liabilities on the balance sheet. This statement is effective for fiscal years
beginning after June 15, 1999. Management intends to adopt the provisions of
SFAS No. 133 during fiscal 2001. The impact of this pronouncement on the
Company's financial results is currently being evaluated.

 Use of Estimates

  The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts and disclosures in the consolidated
financial statements and accompanying notes. Although these estimates are
based on management's knowledge of current events and actions it may undertake
in the future, they may ultimately differ from actual results.

3. COMPREHENSIVE INCOME

  Pursuant to SFAS No. 130, Reporting Comprehensive Income, the Company has
reported the components of total comprehensive income in the accompanying
consolidated statements of shareholders' equity. Total

                                      F-9

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
comprehensive income is comprised of net income and all changes to
shareholders' equity, except those due to investments by owners and
distributions to owners. For the Company, other comprehensive income consists
of foreign currency translation adjustments, unrealized gain (loss) on
investments, and minimum pension liabilities, as follows (in millions):


<TABLE>
<CAPTION>
                                                     YEAR ENDED
                                       --------------------------------------
                                       FEBRUARY 26, FEBRUARY 27, FEBRUARY 28,
                                           1999         1998         1997
                                       ------------ ------------ ------------
   <S>                                 <C>          <C>          <C>
   Other comprehensive income/(loss),
    net of tax:
     Foreign currency translation
      adjustments.....................    $ 0.7        $(14.4)      $(0.9)
     Unrealized loss on investments...     (0.7)          --          --
     Minimum pension liabilities......     (0.5)          --          --
                                          -----        ------       -----
   Other comprehensive income.........    $(0.5)       $(14.4)      $(0.9)
                                          =====        ======       =====
</TABLE>


4. INITIAL PUBLIC OFFERING

  On September 17, 1997, the Board of Directors of the Company (the "Board")
authorized management to begin the process necessary for registration of the
Company's Common Stock under the Securities Act of 1933, as amended, in order
to permit the Company's shareholders to make a U.S. and international public
offering (the "Offerings") of a portion of their shares (the "Selling
Shareholders"). On October 27, 1997, the Board (i) declared a special dividend
in the aggregate amount of $150.9 million, which was paid on January 9, 1998
to Common Stock holders of record as of December 2, 1997 (the "Special
Dividend") and (ii) approved a proposal which was presented to the
shareholders by proxy and subsequently approved on December 2, 1997 at a
special meeting. In general, the approved proposal (a) effected a
recapitalization of the Company's capital stock (the "Recapitalization"), (b)
made certain other changes to the Restated Articles of Incorporation and By-
laws which are typical of public companies and (c) provided for the adoption
of equity-based incentive and investment plans for employees of the Company
(collectively, the "Stock Incentive Plans").

  While the Stock Incentive Plans became effective upon approval by the
Company's shareholders on December 2, 1997, the Recapitalization and other
changes to the Restated Articles of Incorporation and By-laws became effective
upon their filing with the State of Michigan which occurred on February 20,
1998. The Offerings, which occurred on February 18, 1998 and closed on
February 25, 1998, included 13,972,500 shares of Class A Common Stock at an
initial public offering price per share of $28.00. In addition, the Company
purchased 1,650,000 shares of Class B Common Stock from the Selling
Shareholders at the same price at which the shares of Class A Common Stock
were sold to the Underwriters in the Offerings to fulfill the Employee Stock
Grant and the Employee Discount Option Grant (the "Stock Repurchase")
discussed in Note 12. This Stock Repurchase aggregated $43.5 million.

                                     F-10

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. INVENTORIES

  Inventories consist of (in millions):


<TABLE>
<CAPTION>
                                                       FEBRUARY 26, FEBRUARY 27,
                                                           1999         1998
                                                       ------------ ------------
   <S>                                                 <C>          <C>
   Finished goods.....................................    $ 40.9       $ 42.9
   Work in process....................................      32.3         30.8
   Raw materials......................................      70.8         83.7
                                                          ------       ------
                                                           144.0        157.4
   LIFO reserve.......................................     (47.5)       (51.6)
                                                          ------       ------
                                                          $ 96.5       $105.8
                                                          ======       ======
</TABLE>


  The effect of LIFO liquidations on net income was $4.1 million, $0.6 million
and $5.4 million for 1999, 1998 and 1997, respectively.

6. PROPERTY AND EQUIPMENT, NET

  Property and equipment, net consist of (in millions):


<TABLE>
<CAPTION>
                                                       FEBRUARY 26, FEBRUARY 27,
                                                           1999         1998
                                                       ------------ ------------
   <S>                                                 <C>          <C>
   Land...............................................  $    43.3    $    35.5
   Buildings and improvements.........................      650.8        626.0
   Machinery and equipment............................      984.7        927.4
   Furniture and fixtures.............................       72.1         69.9
   Leasehold improvements.............................       45.8         36.2
   Capitalized software...............................       59.8         37.4
   Construction in progress...........................       82.2         77.2
                                                        ---------    ---------
                                                          1,938.7      1,809.6
   Accumulated depreciation and amortization..........   (1,199.7)    (1,138.4)
                                                        ---------    ---------
                                                        $   739.0    $   671.2
                                                        =========    =========
</TABLE>


  Depreciation and amortization expense approximated $102.9 million, $91.1
million and $89.4 million for 1999, 1998 and 1997, respectively. Construction
in progress consists of numerous equipment and facility projects, none of
which are individually material.

                                     F-11

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

7. NOTES RECEIVABLE AND LEASED ASSETS

  Notes receivable and leased assets consist of (in millions):


<TABLE>
<CAPTION>
                                                       FEBRUARY 26, FEBRUARY 27,
                                                           1999         1998
                                                       ------------ ------------
   <S>                                                 <C>          <C>
   Notes receivable:
     Project financing................................    $ 19.3       $ 38.6
     Asset-based lending..............................      63.4         51.5
     Ownership transition financing...................      41.2         54.6
   Net investment in leased assets....................     233.1        165.8
   Allowance for losses...............................      (7.5)       (10.4)
                                                          ------       ------
                                                           349.5        300.1
   Current portion....................................     140.4        142.1
                                                          ------       ------
   Long-term portion..................................    $209.1       $158.0
                                                          ======       ======
</TABLE>


  Notes receivable include three distinct programs of dealer financing:
project financing, asset-based lending and ownership transition financing.
Through these programs, the Company helps dealers secure interim financing,
establish working capital lines of credit, finance ownership changes and
restructure debt.

  The terms of notes receivable range from a few months for project financing
to 10 years for certain ownership transition financing. Interest rates are
both floating and fixed, reaching up to 12% as of February 26, 1999. The loans
are generally secured by certain dealer assets and, in some cases, the common
stock of the dealership. Unused asset-based lending credit lines approximated
$45.0 million as of February 26, 1999, subject to available collateral. These
commitments generally expire in one year and are reviewed periodically for
renewal.

  The Company's net investment in leased assets includes both direct financing
and operating leases. Direct financing leases consist of the present value of
the future minimum lease payments receivable (typically over three to five
years) plus the present value of the estimated residual value (collectively
referred to as the net investment). Residual value is an estimate of the fair
value of the leased equipment at the end of the lease term, which the Company
records based on market studies conducted by independent third parties.
Operating leases as of February 26, 1999 and February 27, 1998 were not
material.

8. JOINT VENTURES AND DEALER TRANSITIONS

  The Company's investments in and advances to its unconsolidated joint
ventures and dealer transitions are summarized as follows (in millions):


<TABLE>
<CAPTION>
                                                       FEBRUARY 26, FEBRUARY 27,
                                                           1999         1998
                                                       ------------ ------------
   <S>                                                 <C>          <C>
   Investment in Steelcase Strafor(1).................    $121.5       $101.8
   Steelcase Strafor note receivable(1)...............      66.4          --
   Investments in dealer transitions..................       7.1          9.6
   Other joint ventures and alliances.................      15.4          4.5
                                                          ------       ------
                                                          $210.4       $115.9
                                                          ======       ======
</TABLE>

- --------
(1) See Note 20 regarding the April 22, 1999 acquisition by the Company of the
    remaining 50% equity interest in the joint venture from Strafor Facom S.A.

                                     F-12

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

  During 1999 and 1998, foreign currency translation adjustments of $5.0
million and $(11.1) million, respectively, resulting from foreign currency
denominated assets and liabilities of Steelcase Strafor and related
fluctuations in exchange rates, were charged directly to accumulated other
comprehensive income, a separate component of shareholders' equity in the
accompanying consolidated balance sheets.

  In December 1998, the Company issued a note receivable to Steelcase Strafor
in the amount of $66.4 million to equalize lending levels between Steelcase
Inc. and Strafor Facom S.A. and fund in part the acquisition of Werndl
BuroMobeL AG ("Werndl") by the joint venture. Werndl is the second largest
wood office furniture manufacturer in Germany with annual net sales in excess
of $115.0 million.

  Investments in dealer transitions represent dealers which the Company has
acquired with the intention of reselling as soon as practicable. Accordingly,
the Company recognizes its share of earnings and losses from dealer
transitions pursuant to the equity method of accounting. Accounts and notes
receivable from these dealers approximated $25.0 million and $23.6 million as
of February 26, 1999 and February 27, 1998, respectively.

  Other joint ventures and alliances include Steelcase Jeraisy Ltd.
("Jeraisy"), the Modernform Group Public Company Limited, Clestra Hauserman
and Microfield Graphics. With the exception of Jeraisy, all of the other joint
ventures and alliances occurred in 1999.

  The Company's equity in net income of joint ventures and dealer transitions
consists of (in millions):


<TABLE>
<CAPTION>
                                                      YEAR ENDED
                                        --------------------------------------
                                        FEBRUARY 26, FEBRUARY 27, FEBRUARY 28,
                                            1999         1998         1997
                                        ------------ ------------ ------------
   <S>                                  <C>          <C>          <C>
   50% share of Steelcase Strafor net
    income.............................    $ 8.9         $5.6        $ 2.0
   Net income (loss) of dealer
    transitions........................      0.1          2.0         (1.7)
   Other joint ventures, net...........     (0.1)         0.3         (0.3)
                                           -----         ----        -----
                                           $ 8.9         $7.9        $ --
                                           =====         ====        =====
</TABLE>


  Summarized financial information for Steelcase Strafor, as of December 31,
1998 and 1997 and the three years ended December 31, 1998, is as follows (in
millions):


<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                                  -------------
                                                                   1998   1997
                                                                  ------ ------
   <S>                                                            <C>    <C>
   Balance Sheet:
     Current assets.............................................. $300.0 $268.7
     Property and equipment, net.................................  146.6  126.5
     Other assets................................................  180.3   99.4
                                                                  ------ ------
        Total assets.............................................  626.9  494.6
                                                                  ------ ------
     Current liabilities.........................................  294.5  197.9
     Long-term liabilities.......................................  108.7   93.2
                                                                  ------ ------
        Total liabilities........................................  403.2  291.1
                                                                  ------ ------
        Net assets............................................... $223.7 $203.5
                                                                  ====== ======
</TABLE>


                                     F-13

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


<TABLE>
<CAPTION>
                                                         YEAR ENDED DECEMBER 31,
                                                         -----------------------
                                                           1998    1997    1996
                                                         ------- ------- -------
   <S>                                                   <C>     <C>     <C>
   Results of Operations:
     Net sales(1)....................................... $ 506.9 $ 468.6 $ 448.3
     Operating income(1)................................    33.3    26.5    27.2
     Net income.........................................    17.9    11.2     4.0
</TABLE>

- --------
(1) Steelcase Strafor net sales and operating income have been adjusted from
    amounts previously reported in order to conform the classifications of
    certain sales deductions and other charges with those reflected in the
    Company's consolidated financial statements. These reclassifications were
    identified in connection with the Company's April 22, 1999 acquisition of
    Strafor Facom's 50% equity interest in Steelcase Strafor. See Note 20.

9. OTHER ASSETS

  Other assets consist of (in millions):


<TABLE>
<CAPTION>
                                                       FEBRUARY 26, FEBRUARY 27,
                                                           1999         1998
                                                       ------------ ------------
   <S>                                                 <C>          <C>
   Corporate-owned life insurance.....................    $113.5       $ 95.0
   Long-term investments..............................      12.9         16.9
   Other..............................................      20.1          8.9
                                                          ------       ------
                                                          $146.5       $120.8
                                                          ======       ======
</TABLE>


10. EMPLOYEE BENEFIT PLAN OBLIGATIONS

  Employee benefit plan obligations consist of (in millions):


<TABLE>
<CAPTION>
                                                      FEBRUARY 26, FEBRUARY 27,
                                                          1999         1998
                                                      ------------ ------------
   <S>                                                <C>          <C>
   Profit-sharing plans..............................    $ 38.4       $ 44.3
   Management incentive and deferred compensation
    plans............................................      56.1         39.9
   Pension and postretirement plans:
     Pension benefits................................      18.4         15.7
     Postretirement benefits.........................     161.7        150.4
                                                         ------       ------
                                                          274.6        250.3
   Current portion...................................      51.8         59.1
                                                         ------       ------
   Long-term portion.................................    $222.8       $191.2
                                                         ======       ======
</TABLE>


 Profit-Sharing Plans

  Substantially all employees are covered under the Steelcase Inc. Employees'
Profit-Sharing Retirement Plan and the Steelcase Inc. Employees' Money
Purchase Plan or under similar subsidiary plans. Annual Company contributions
under the Steelcase Inc. Employees' Profit-Sharing Retirement Plan and similar
subsidiary plans are discretionary and declared by the Board at the end of
each fiscal year. Under the Steelcase Inc. Employees' Money Purchase Plan,
annual Company contributions are required in the amount of 5% of eligible
annual

                                     F-14

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
compensation. Total expense under these plans approximated $70.1 million,
$79.4 million and $67.2 million for 1999, 1998 and 1997, respectively.

 Management Incentive and Deferred Compensation Plans

  The amended and restated Management Incentive Plan is an annual and long-
term incentive compensation program that provides eligible key employees with
cash payments based upon the achievement by the Company of specified financial
performance goals measured by Economic Value Added ("EVA"), as defined in the
plan.

  Annual bonuses are payable after the end of the fiscal year and, therefore,
are included in accrued compensation in the accompanying consolidated balance
sheets, whereas long-term bonus amounts are paid out over a subsequent three-
year period. The Company has future retirement obligations to certain
employees in return for agreeing not to receive part of their compensation for
a period of three to five years. Compensation withheld has been invested in
corporate-owned life insurance, which is expected to be sufficient to cover
such future obligations.

  Long-term management incentive and deferred compensation expense
approximated $28.9 million, $21.2 million and $7.7 million for 1999, 1998 and
1997, respectively.

 Pension and Postretirement Benefits

  During 1999, the Company adopted SFAS No. 132, Employers' Disclosures about
Pensions and Other Postretirement Benefits, which revised and standardized
disclosures for pension and other postretirement benefit plans.

  The Company's pension plans include a non-qualified supplemental retirement
plan that is limited to a select group of management or highly compensated
employees. The obligations under this plan and other defined benefit plans at
its subsidiaries are included in the pension disclosure.

  The Company and certain of its subsidiaries have postretirement benefit
plans that provide medical and life insurance benefits to retirees and
eligible dependents. The Company accrues the cost of postretirement insurance
benefits during the service lives of employees based on actuarial calculations
for each plan.

                                     F-15

<PAGE>

                                 STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

  The following sets forth the revised disclosure requirements of SFAS No. 132
(in millions):


<TABLE>
<CAPTION>
                                   PENSION PLANS         POSTRETIREMENT PLANS
                             ------------------------- -------------------------
                             FEBRUARY 26, FEBRUARY 27, FEBRUARY 26, FEBRUARY 27,
                                 1999         1998         1999         1998
                             ------------ ------------ ------------ ------------
   <S>                       <C>          <C>          <C>          <C>
   CHANGE IN BENEFIT
    OBLIGATIONS:
   Benefit obligations,
    beginning of year......     $ 20.9       $ 19.5      $ 180.2      $ 151.5
   Service cost............        2.0          0.9          5.5          3.8
   Interest cost...........        2.5          1.4         12.5         11.8
   Amendments..............       14.3          --           1.9          9.3
   Net actuarial loss for
    prior year.............        0.6          0.8          --          11.5
   Plan participant's
    contributions..........        --           --           2.1          1.5
   Benefits paid...........       (2.3)        (1.7)       (10.0)        (9.2)
                                ------       ------      -------      -------
   Benefit obligations, end
    of year................       38.0         20.9        192.2        180.2
                                ------       ------      -------      -------
   CHANGE IN PLAN ASSETS:
   Fair value of plan
    assets, beginning of
    year...................        3.8          3.5          --           --
   Actual return on plan
    assets.................        0.5          0.2          --           --
   Employer contributions..        4.2          1.8          7.9          7.6
   Plan participant's
    contributions..........        0.3          --           2.1          1.5
   Benefits paid...........       (2.3)        (1.7)       (10.0)        (9.1)
   Other...................        8.3          --           --           --
                                ------       ------      -------      -------
   Fair value of plan
    assets, end of year....       14.8          3.8          --           --
                                ------       ------      -------      -------
   Funded status...........      (23.2)       (17.1)      (192.2)      (180.2)
   Unrecognized prior
    service cost...........        --           --          10.1          9.2
   Unrecognized transition
    obligation.............        4.0          0.3          --           --
   Unrecognized net
    actuarial loss.........        1.5          1.5         20.4         20.6
                                ------       ------      -------      -------
   Net amount recognized...     $(17.7)      $(15.3)     $(161.7)     $(150.4)
                                ======       ======      =======      =======
   AMOUNTS RECOGNIZED IN
    THE CONSOLIDATED
    BALANCE SHEETS:
   Accrued benefit plan
    obligations............     $(18.4)      $(15.7)     $(161.7)     $(150.4)
   Prepaid pension costs...        0.2          0.4          --           --
   Accumulated other
    comprehensive income...        0.5          --           --           --
                                ------       ------      -------      -------
   Net amount recognized...     $(17.7)      $(15.3)     $(161.7)     $(150.4)
                                ======       ======      =======      =======
</TABLE>


                                      F-16

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


<TABLE>
<CAPTION>
                                                           YEARS ENDED
                          -----------------------------------------------------------------------------
                                      PENSION PLANS                       POSTRETIREMENT PLANS
                          -------------------------------------- --------------------------------------
                          FEBRUARY 26, FEBRUARY 27, FEBRUARY 28, FEBRUARY 26, FEBRUARY 27, FEBRUARY 28,
                              1999         1998         1997         1999         1998         1997
                          ------------ ------------ ------------ ------------ ------------ ------------
<S>                       <C>          <C>          <C>          <C>          <C>          <C>
COMPONENTS OF EXPENSE:
Service cost............      $2.0         $0.9         $0.9        $ 5.5        $ 3.8        $ 3.0
Interest cost...........       2.5          1.4          1.4         12.5         11.8         11.2
Amortization of prior
 year service cost......       --           --           --           0.8          0.3          --
Expected return on plan
 assets.................      (0.9)        (0.3)        (0.3)         --           --           --
Amortization of
 transition obligation..       0.3          --           --           --           --           --
Recognized net actuarial
 (gain) loss............      (0.2)         --           --           0.2          --           --
                              ----         ----         ----        -----        -----        -----
Net expense.............      $3.7         $2.0         $2.0        $19.0        $15.9        $14.2
                              ====         ====         ====        =====        =====        =====
WEIGHTED-AVERAGE
 ASSUMPTIONS:
Discount rate...........      7.00%        7.00%        7.00%        7.00%        7.00%        7.75%
Expected return on plan
 assets.................      7.50%        8.00%        8.00%         --           --           --
Rate of salary
 progression............      4.50%        4.50%        4.50%        4.50%        4.50%        5.00%
</TABLE>


  The assumed health care cost trend was 7.0% for 1999, gradually declining to
5.0% in 2004 and thereafter. A one percentage point change in assumed health
care cost trend rates would have the following effects:


<TABLE>
<CAPTION>
                                                 ONE PERCENTAGE ONE PERCENTAGE
                                                 POINT INCREASE POINT DECREASE
                                                 -------------- --------------
   <S>                                           <C>            <C>
   Effect on total of service and interest cost
    components..................................     $ 1.9          $ (1.7)
   Effect on postretirement benefit obligation..     $23.4          $(20.7)
</TABLE>


11. CAPITAL STRUCTURE

  In connection with the 1998 Offerings discussed in Note 4, the Company
effected a Recapitalization of its capital stock. Pursuant to the
Recapitalization, which has been given retroactive effect in the accompanying
consolidated financial statements, the following occurred:

  (i) to facilitate the Stock Split described below and future issuances of
capital stock, the total number of authorized shares of capital stock of the
Company was increased to one billion, consisting of 475,000,000 shares of
Class A Common Stock, 475,000,000 shares of Class B Common Stock and
50,000,000 shares of Preferred Stock, issuable in series;

  (ii) each of the existing shares of Common Stock was converted into one
share of Class B Common Stock, and the Class B Common Stock resulting from
that conversion was split on a 700-for-1 basis (the "Stock Split"), effected
as a stock dividend of 699 additional shares of Class B Common Stock for each
outstanding share; and

  (iii) immediately following the Stock Split, each of the existing shares of
Class A Preferred Stock and Class B Preferred Stock (collectively, the
"Existing Preferred Stock") was converted into that number of shares of Class
B Common Stock determined by dividing their redemption values ($103 and
$2,000, respectively) by the initial public offering price of $28 per share of
Class A Common Stock.

 Terms of Class A Common Stock and Class B Common Stock

  Each share of Class A Common Stock sold in the Offerings resulted from the
conversion of one share of Class B Common Stock concurrently with the
consummation of such sale. The holders of Common Stock are

                                     F-17

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
generally entitled to vote as a single class on all matters upon which
shareholders have a right to vote, subject to the requirements of the
applicable laws and the rights of any series of Preferred Stock to a separate
class vote. Each share of Class A Common Stock entitles its holder to one
vote, and each share of Class B Common Stock entitles its holder to 10 votes.
The Class B Common Stock is convertible into Class A Common Stock on a share-
for-share basis (i) at the option of the holder thereof at any time, (ii) upon
transfer to a person or entity which is not a Permitted Transferee (as defined
in the Second Restated Articles of Incorporation), (iii) with respect to
shares of Class B Common Stock acquired after the Recapitalization, at such
time as a corporation, partnership, limited liability company, trust or
charitable organization ceases to be 100% controlled by Permitted Transferees
and (iv) on the date which the number of shares of Class B Common Stock
outstanding is less than 15% of the then outstanding shares of Common Stock
(without regard to voting rights).

  Except for the voting and conversion features, the terms of Class A Common
Stock and Class B Common Stock are generally similar. That is, the holders are
entitled to equal dividends when declared by the Board and generally will
receive the same per share consideration in the event of a merger, and be
treated on an equal per share basis in the event of a liquidation or winding
up of the Company. In addition, the Company is not entitled to issue
additional shares of Class B Common Stock, or issue options, rights or
warrants to subscribe for additional shares of Class B Common Stock, except
that the Company may make a pro rata offer to all holders of Common Stock of
rights to purchase additional shares of the class of Common Stock held by
them.

 Preferred Stock

  The Second Restated Articles of Incorporation authorize the Board, without
any vote or action by the shareholders, to create one or more series of
Preferred Stock up to the limit of the Company's authorized but unissued
shares of Preferred Stock and to fix the designations, preferences, rights,
qualifications, limitations and restrictions thereof, including the voting
rights, dividend rights, dividend rate, conversion rights, terms of redemption
(including sinking fund provisions), redemption price or prices, liquidation
preferences and the number of shares constituting any series.

12. STOCK INCENTIVE PLANS

  The Stock Incentive Plans for employees and affiliates of the Company
include the Steelcase Inc. Employee Stock Purchase Plan (the "Purchase Plan")
and the Steelcase Inc. Incentive Compensation Plan (the "Incentive
Compensation Plan").

 Employee Stock Purchase Plan

  The Company has reserved a maximum of 1,500,000 shares of Class A Common
Stock for use under the Purchase Plan, which is intended to qualify under
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code").
Pursuant to the Purchase Plan, each eligible employee, as of the start of any
purchase period, will be granted an option to purchase a designated number of
shares of Class A Common Stock. The purchase price of shares of Class A Common
Stock to participating employees will be designated by the Compensation
Committee but in no event shall be less than 85% of the lower of the fair
market values of such shares on the first and last trading days of the
relevant purchase period. However, no employee may purchase shares under the
Purchase Plan in any calendar year with an aggregate fair market value (as
determined on the first day of the relevant purchase period) in excess of
$25,000. The Board may at any time amend or terminate the Purchase Plan.

  The initial purchase period under the Purchase Plan began on the date of the
pricing of the Offerings in 1998 and ended on April 17, 1998. Eligible
employees who wished to participate in the Purchase Plan were allowed to
purchase by April 17, 1998 a maximum of 100 shares of Class A Common Stock at
85% of the initial

                                     F-18

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
public offering price (the "Employee Discount Option Grant"). The Company
granted approximately 15,000 employees the option to participate in the
Purchase Plan during the initial purchase period, which resulted in the
issuance of 1,045,279 shares of Class A Common Stock and the receipt by the
Company of related proceeds approximating $24.8 million. Pursuant to APB
Opinion No. 25, the Employee Discount Option Grant did not result in any
compensation expense to be recognized by the Company.

 Incentive Compensation Plan

  The Company has reserved for issuance under the Incentive Compensation Plan
a maximum of 150,000 shares of Class A Common Stock for a special one-time
grant on the date of the pricing of the Offerings plus an additional 6,134,727
shares of Common Stock. The Compensation Committee will have full authority,
subject to the provisions of the Incentive Compensation Plan, to determine,
among other things, the persons to whom awards under the Incentive
Compensation Plan ("Awards") will be made, the exercise price, vesting, size
and type of such Awards, and the specific performance goals, restrictions on
transfer and circumstances for forfeiture applicable to Awards.

  Awards may be made to employees and non-employee directors of the Company or
its affiliates. A variety of Awards may be granted under the Incentive
Compensation Plan including stock options, stock appreciation rights ("SARs"),
restricted stock, performance shares, performance units, cash-based awards,
phantom shares and other share-based awards as the Compensation Committee may
determine. Stock options granted under the Incentive Compensation Plan may be
either incentive stock options intended to qualify under Section 422 of the
Code or non-qualified stock options not so intended. The Board may amend or
terminate the Incentive Compensation Plan.

  In the event of a "change of control," as defined in the Incentive
Compensation Plan, (i) all outstanding options and SARs granted under the
Incentive Compensation Plan will become immediately exercisable and remain
exercisable throughout their entire term, (ii) any performance-based
conditions imposed with respect to outstanding Awards shall be deemed to be
fully earned and a pro rata portion of each such outstanding Award granted for
all outstanding performance periods shall become payable in shares of Class A
Common Stock, in the case of Awards denominated in shares of Class A Common
Stock, and in cash, in the case of Awards denominated in cash, with the
remainder of such Award being canceled for no value and (iii) all restrictions
imposed on restricted stock that are not performance-based shall lapse.

  Concurrent with the Offerings in 1998, the Company issued 10 shares of Class
A Common Stock each to certain employees of the Company and its subsidiaries
as designated by the Compensation Committee (the "Employee Stock Grant"). The
Employee Stock Grant included 149,540 shares of Class A Common Stock in the
aggregate and resulted in $4.2 million of compensation expense which was
recognized by the Company in 1998 upon issuance.

  In addition, the Company issued options to purchase 2,661,000 shares of
Class A Common Stock to certain employees and non-employee directors of the
Company in connection with the Offerings in 1998. These stock options have an
exercise price equal to the initial public offering price per share of $28.00
and will typically vest over a period of five years. In 1999, the Company
issued options to purchase 9,350 shares of Class A Common Stock with an
exercise price equal to $36.50 per share and a vesting period of five years.
Pursuant to APB Opinion No. 25, these stock options did not result in any
material compensation expense recognized by the Company. As of February 26,
1999, there had been no exercises or terminations of options since their
issuance and there were 3,464,377 options available for future issuance.

                                     F-19

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

 SFAS No. 123 Pro Forma Data

  As discussed in Note 2, the Company accounts for its Stock Incentive Plans
in accordance with APB Opinion No. 25. Accordingly, no compensation expense
has been recognized for the Employee Discount Option Grant or the Company's
employee stock options. If the Company had recognized compensation expense
based upon the fair value of the Employee Discount Option Grant and the
Company's employee stock options at the date of grant and their respective
vesting periods, as prescribed by SFAS No. 123, the Company's net income and
earnings per share would have been as follows:


<TABLE>
<CAPTION>
                                                       FEBRUARY 26, FEBRUARY 27,
                                                           1999         1998
                                                       ------------ ------------
   <S>                                                 <C>          <C>
   Pro forma net income (in millions).................    $219.6       $212.8
   Pro forma earnings per share (basic and diluted)...    $ 1.43       $ 1.37
</TABLE>


  The estimated fair value of the Employee Discount Option Grant approximated
the 15% discount discussed above. The fair value of the Company's stock
options was estimated at the date of the grant using the Black-Scholes option
pricing model with the following weighted average assumptions:


<TABLE>
<CAPTION>
                                                       FEBRUARY 26, FEBRUARY 27,
                                                           1999         1998
                                                       ------------ ------------
   <S>                                                 <C>          <C>
   Risk-free interest rate............................       5.6%         5.5%
   Dividend yield.....................................       1.4%         1.4%
   Volatility.........................................      32.4%        30.0%
   Average expected term (years)......................       6.8          6.8
   Fair value of options granted......................    $14.16       $10.60
</TABLE>


13. PATENT LITIGATION EXPENSE

  In November 1985, a suit was filed against the Company alleging infringement
of two patents covering powered panels used in furniture systems sold since
1978. The trial court ruled for the Company. The plaintiff subsequently
appealed to the U.S. Court of Appeals for the Federal Circuit, which reversed
the trial court's decision in January 1989, and held that the Company
infringed. Upon remand for determination of damages, the parties consented to
the appointment of a Special Master to oversee further proceedings, including
the binding, non-appealable determination of damages for the established
infringement and resolution of related issues. The proceedings concluded in
December 1996 resulting in a lump sum payment by the Company to the plaintiff
in the amount of $211.5 million, representing $96.8 million in damages and
$114.7 million in interest which accrued over the 17 years covered by the
litigation. The charges reflected in the accompanying consolidated statement
of income for 1997 are net of reserve estimates provided during 1994, which
represented management's best estimate of the outcome of the proceedings at
that time.

                                     F-20

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

14. OTHER INCOME, NET

  Other income, net consists of (in millions):


<TABLE>
<CAPTION>
                                                        YEAR ENDED
                                          --------------------------------------
                                          FEBRUARY 26, FEBRUARY 27, FEBRUARY 28,
                                              1999         1998         1997
                                          ------------ ------------ ------------
   <S>                                    <C>          <C>          <C>
   Interest income.......................    $23.2        $29.2        $26.6
   Interest income from tax litigation...      5.8          --           --
   Loss on dealer transitions............     (2.2)        (1.8)        (2.5)
   Interest expense......................      --          (1.7)        (2.1)
   Miscellaneous-net.....................     (6.6)        (3.1)        (0.6)
                                             -----        -----        -----
                                             $20.2        $22.6        $21.4
                                             =====        =====        =====
</TABLE>


15. INCOME TAXES

  The provision for income taxes on income before equity in net income of
joint ventures and dealer transitions consists of (in millions):


<TABLE>
<CAPTION>
                                                        YEAR ENDED
                                          --------------------------------------
                                          FEBRUARY 26, FEBRUARY 27, FEBRUARY 28,
                                              1999         1998         1997
                                          ------------ ------------ ------------
   <S>                                    <C>          <C>          <C>
   Current income taxes:
     Federal.............................    $115.7       $115.7       $17.6
     State and local.....................       9.0          9.5         4.2
     Foreign.............................       2.9         10.4         --
                                             ------       ------       -----
                                              127.6        135.6        21.8
                                             ------       ------       -----
   Deferred income taxes:
     Federal.............................      (3.1)        (0.8)       (1.4)
     State and local.....................      (0.3)        (0.3)        0.5
     Foreign.............................       0.7         (3.6)        2.7
                                             ------       ------       -----
                                               (2.7)        (4.7)        1.8
                                             ------       ------       -----
                                             $124.9       $130.9       $23.6
                                             ======       ======       =====
</TABLE>


  Undistributed earnings of foreign joint ventures and subsidiaries are not
material.

                                     F-21

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

  Temporary differences between the financial statement carrying amounts and
tax bases of assets and liabilities that give rise to significant portions of
deferred income taxes relate to the following (in millions):


<TABLE>
<CAPTION>
                                                       FEBRUARY 26, FEBRUARY 27,
                                                           1999       1998(1)
                                                       ------------ ------------
   <S>                                                 <C>          <C>
   Deferred income tax assets:
     Employee benefit plan obligations................    $107.9       $ 94.5
     Reserves and allowances..........................      29.2         34.5
     Foreign losses...................................       5.8          9.0
     Other............................................      12.3          7.2
                                                          ------       ------
   Total deferred income tax assets...................     155.2        145.2
   Deferred income tax liabilities:
     Property and equipment...........................     (39.6)       (32.7)
     Net leased assets................................      (6.4)        (6.1)
                                                          ------       ------
   Net deferred income tax assets.....................     109.2        106.4
   Current portion....................................      68.7         56.4
                                                          ------       ------
   Non-current portion................................    $ 40.5       $ 50.0
                                                          ======       ======
</TABLE>

- --------
(1) Certain prior year amounts have been reclassified to conform with the
    current year presentation.

  The Company has recorded a deferred tax asset as of February 26, 1999 of
$5.8 million reflecting the benefit of foreign operating loss carry-forwards
that expire over the next five years. Realization is dependent on future
taxable income of the related foreign operations and tax planning strategies
available to the Company. Although realization is not assured, management
believes it is more likely than not that deferred tax assets will be realized.

  The effective income tax rate on income before equity in net income of joint
ventures and dealer transitions varied from the statutory federal income tax
rate as set forth in the following table:


<TABLE>
<CAPTION>
                                                       YEAR ENDED
                                         --------------------------------------
                                         FEBRUARY 26, FEBRUARY 27, FEBRUARY 28,
                                             1999         1998         1997
                                         ------------ ------------ ------------
   <S>                                   <C>          <C>          <C>
   Statutory federal income tax rate....     35.0%        35.0%        35.0%
   State and local income taxes.........      2.5          2.7          4.3
   Tax exempt interest..................      --          (0.2)        (1.3)
   Goodwill and intangible asset
    amortization and write-offs.........      0.3          0.2          5.0
   Research and development credit......     (0.4)        (0.6)         --
   Other, net...........................     (0.4)         1.4          3.0
                                             ----         ----         ----
   Effective income tax rate............     37.0%        38.5%        46.0%
                                             ====         ====         ====
</TABLE>


  During 1999, the provision for income taxes benefited from the favorable
resolution of income tax litigation dating back to 1989, primarily related to
investment tax credits and accelerated depreciation on the Company's Corporate
Development Center. The resolution of these tax matters contributed to a
reduced effective tax rate for 1999 and resulted in interest income of $5.8
million.

  The Company made income tax payments of $59.3 million, $116.0 million and
$44.0 million during 1999, 1998 and 1997, respectively.

                                     F-22

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

16. FINANCIAL INSTRUMENTS, CONCENTRATIONS OF CREDIT RISK AND OFF-BALANCE-SHEET
        RISK

  Financial instruments, which potentially subject the Company to
concentrations of investment and credit risk, primarily consist of cash
equivalents, investments, accounts receivable, notes receivable and leased
assets and corporate-owned life insurance policies. The Company places its
cash with high-quality financial institutions and invests in high-quality
securities and commercial paper. The Company limits its exposure, by policy,
to any one financial institution or debtor.

  The Company's customers consist primarily of independent dealers in the
office furniture industry. They are dispersed globally, but primarily across
all North American geographic areas. All probable uncollectible accounts and
notes receivable and leased assets have been appropriately considered in
establishing the allowances for losses. In general, the Company obtains
security interests in the assets of the customer. However, these security
interests are generally secondary to the interests of the customer's primary
lenders.

  Guarantees of debt obligations are conditional commitments issued by the
Company to guarantee the performance of certain unconsolidated dealers and
joint ventures to a third party. These guarantees are primarily issued to
support private borrowing arrangements. The Company has guaranteed
approximately $30.6 million and $39.3 million of debt obligations of
unconsolidated dealers and joint ventures as of February 26, 1999 and February
27, 1998, respectively. Although this amount represents the maximum exposure
to loss, management believes the actual risk of loss to be insignificant.

  The Company uses financial instruments, principally forward contracts and
swaps, to manage foreign currency exposures related to purchases and sales.
These contracts hedge transactions and balances for periods and amounts
consistent with its committed exposures and do not constitute investments
independent of these exposures. The Company does not use these financial
instruments for speculative or trading purposes. Gains and losses on currency
forward contracts and swaps that are designated and effective as hedges of
anticipated transactions, for which a firm commitment has been attained, are
deferred and recognized in income in the same period that the underlying
transactions are settled, and generally offset. Forward contracts and swaps
outstanding as of February 26, 1999 and February 27, 1998 were not material.

17. COMMITMENTS AND CONTINGENCIES

  The Company leases certain sales offices, showrooms and equipment under non-
cancelable operating leases that expire at various dates through 2013. Minimum
annual rental commitments under non-cancelable operating leases that have
initial or remaining lease terms in excess of one year as of February 26,
1999, are as follows (in millions):


<TABLE>
<CAPTION>
   YEAR ENDING                                                            AMOUNT
   -----------                                                            ------
   <S>                                                                    <C>
   2000.................................................................. $22.2
   2001..................................................................  16.6
   2002..................................................................  13.5
   2003..................................................................  12.9
   2004..................................................................  10.1
   Thereafter............................................................  24.0
                                                                          -----
                                                                          $99.3
                                                                          =====
</TABLE>


  Rent expense under all operating leases approximated $42.5 million, $47.0
million and $45.3 million for 1999, 1998 and 1997, respectively.

                                     F-23

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

  The Company is involved in litigation from time to time in the ordinary
course of its business. Based on known information, management believes that
the Company is not currently party to any material litigation.

18. OPERATING SEGMENTS

  Effective for the year ended February 26, 1999, the Company adopted SFAS No.
131, Disclosure about Segments of an Enterprise and Related Information. In
accordance with SFAS No. 131, the Company operates on a worldwide basis within
a single reportable segment, the office furniture industry. The office
furniture segment includes several consolidated operating segments and one
joint venture that manufacture an extensive range of steel and wood office
furniture products. The nature of the products, production processes, types of
customers and methods of distribution are consistent across segments and
therefore have been aggregated into one reported segment. The Company's
primary product lines include office furniture systems, seating, storage
solutions, desks and casegoods, and interior architectural products. Net sales
derived from services and other businesses primarily include marine
accessories and design, financial and consulting services.

  The Company evaluates performance and allocates resources based on net
income or loss. The accounting policies of the reportable segments are the
same as those described in the summary of significant accounting policies
included elsewhere herein. Management views interest income, interest expense,
and certain other non-operating costs as being associated with the office
furniture segment since this segment is the Company's primary activity and
accounts for the majority of the Company's net sales, assets and net income.

  The following sets forth reportable segment data reconciled to the
consolidated financial statements for the three years ended February 26, 1999,
February 27, 1998, and February 28, 1997 (in millions):


<TABLE>
<CAPTION>
                             OFFICE     SERVICES AND                CONSOLIDATED
   1999                     FURNITURE OTHER BUSINESSES ELIMINATIONS    TOTALS
   ----                     --------- ---------------- ------------ ------------
   <S>                      <C>       <C>              <C>          <C>
   Net sales............... $3,123.3       $126.1        $(506.9)     $2,742.5
   Net income..............    215.8          5.6            --          221.4
   Total assets............  2,247.1        595.1         (659.7)      2,182.5
   Capital expenditures....    191.0          7.9          (28.5)        170.4
   Depreciation and
    amortization...........    119.7          9.8          (22.5)        107.0

<CAPTION>
                             OFFICE     SERVICES AND                CONSOLIDATED
   1998                     FURNITURE OTHER BUSINESSES ELIMINATIONS    TOTALS
   ----                     --------- ---------------- ------------ ------------
   <S>                      <C>       <C>              <C>          <C>
   Net sales............... $3,094.3       $134.4        $(468.6)     $2,760.0
   Net income..............    215.3          1.7            --          217.0
   Total assets............  1,971.8        530.0         (494.6)      2,007.2
   Capital expenditures....    129.5         10.8          (13.9)        126.4
   Depreciation and
    amortization...........    110.5          9.1          (24.3)         95.3

<CAPTION>
                             OFFICE     SERVICES AND                CONSOLIDATED
   1997                     FURNITURE OTHER BUSINESSES ELIMINATIONS    TOTALS
   ----                     --------- ---------------- ------------ ------------
   <S>                      <C>       <C>              <C>          <C>
   Net sales............... $2,722.9       $133.8        $(448.3)     $2,408.4
   Net income..............     25.1          2.6            --           27.7
   Total assets............  1,984.1        433.8         (495.8)      1,922.1
   Capital expenditures....    113.7         20.2          (11.9)        122.0
   Depreciation and
    amortization...........    112.7          7.3          (26.6)         93.4
</TABLE>


  Office furniture reflects the accounts of Steelcase Strafor, the Company's
50% owned joint venture in Europe, as if the joint venture had been
consolidated in each of the years 1999, 1998 and 1997. These combined results
do not give effect to the April 22, 1999 acquisition of the remaining 50%
equity interest from Strafor

                                     F-24

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Facom S.A. and the resulting adjustments reflected in the unaudited pro forma
data presented in Note 20. Eliminations include the removal of Steelcase
Strafor data in order to reconcile with consolidated totals.

  Total assets within services and other businesses includes notes receivable
and leased assets as described in Note 7.

  Reportable geographic information is as follows (in millions):


<TABLE>
<CAPTION>
                                                        YEAR ENDED
                                          --------------------------------------
                                          FEBRUARY 26, FEBRUARY 27, FEBRUARY 28,
                                              1999         1998         1997
                                          ------------ ------------ ------------
   <S>                                    <C>          <C>          <C>
   Net Sales:
     United States.......................   $2,516.5     $2,509.4     $2,183.9
     International and Canada(1).........      226.0        250.6        224.5
                                            --------     --------     --------
       Total.............................   $2,742.5     $2,760.0     $2,408.4
                                            ========     ========     ========
   Long-lived Assets:
     United States.......................   $  953.2     $  819.9     $  787.9
     International and Canada(1).........       31.9         38.4         31.2
                                            --------     --------     --------
       Total.............................   $  985.1     $  858.3     $  819.1
                                            ========     ========     ========
</TABLE>

- --------
(1) Excludes Steelcase Strafor, the Company's 50% owned joint venture in
    Europe.

  Net sales are attributable to countries based on the location of the
customer.

19. ACQUISITIONS

  The Company acquired certain assets and liabilities of J.M. Lynne Company, a
New York Corporation, which designs and distributes vinyl wall coverings for
commercial environments. The acquisition of J.M. Lynne Company, which was
effective January 4, 1999, was completed for $36.0 million in cash and was
accounted for under the purchase method of accounting. As a result of this
acquisition, the Company recorded an intangible asset of $29.4 million for the
excess of the purchase price over the estimated fair value of net assets
acquired. The intangible asset is being amortized over 15 years.

                                     F-25

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

20. SUBSEQUENT EVENT

  On April 22, 1999, the Company entered into an Agreement to acquire the
remaining 50% equity interest of Steelcase Strafor held by Strafor Facom S.A.
The purchase price approximated $225.2 million and was funded by approximately
$75.1 million from existing cash balances and approximately $150.1 million of
short-term borrowings that the Company expects to refinance in the first half
of fiscal 2000 as it finalizes its borrowing structure. The acquisition will
be accounted for using the purchase method of accounting and Steelcase
Strafor, now being a wholly-owned subsidiary of the Company, will be
consolidated with the results of the Company beginning in fiscal 2000. The
following unaudited pro forma data summarize the combined balance sheets and
results of operations of the Company and Steelcase Strafor as if the
acquisition had occurred at the beginning of 1999 (in millions, except per
share amounts).


<TABLE>
<CAPTION>
                                                                    FEBRUARY 26,
                                                                        1999
                                                                    ------------
   <S>                                                              <C>
   Balance Sheet:
     Current assets................................................   $  970.4
     Property and equipment, net...................................      882.5
     Other assets..................................................      865.3
                                                                      --------
        Total assets...............................................    2,718.2
                                                                      --------
     Current liabilities...........................................      690.9
     Long-term liabilities.........................................      533.4
                                                                      --------
        Total liabilities..........................................    1,224.3
                                                                      --------
        Net assets.................................................   $1,493.9
                                                                      ========
</TABLE>



<TABLE>
<CAPTION>
                                                                     YEAR ENDED
                                                                    FEBRUARY 26,
                                                                        1999
                                                                    ------------
   <S>                                                              <C>
   Results of Operations:
     Net sales.....................................................   $3,344.4
     Gross profit..................................................    1,176.6
     Operating income..............................................      351.1
     Net income....................................................      215.3
                                                                      --------
     Earnings per share (basic and diluted)........................   $   1.40
                                                                      ========
</TABLE>


                                     F-26

<PAGE>

                                STEELCASE INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

21. QUARTERLY RESULTS (UNAUDITED)

  The following shown below sets forth summary unaudited information on a
quarterly basis for the Company (in millions, except per share amounts):


<TABLE>
<CAPTION>
                                        FIRST  SECOND   THIRD  FOURTH
   1999                                QUARTER QUARTER QUARTER QUARTER  TOTAL
   ----                                ------- ------- ------- ------- --------
   <S>                                 <C>     <C>     <C>     <C>     <C>
   Net sales.......................... $672.3  $704.0  $687.6  $678.6  $2,742.5
   Gross profit.......................  253.2   265.2   240.7   230.3     989.4
   Operating income...................   78.3    91.8    76.8    70.3     317.2
   Net income.........................   54.0    62.7    57.4    47.3     221.4
   Earnings per share (basic and
    diluted)..........................   0.35    0.41    0.37    0.31      1.44

<CAPTION>
                                        FIRST  SECOND   THIRD  FOURTH
   1998                                QUARTER QUARTER QUARTER QUARTER  TOTAL
   ----                                ------- ------- ------- ------- --------
   <S>                                 <C>     <C>     <C>     <C>     <C>
   Net sales.......................... $663.2  $695.3  $702.0  $699.5  $2,760.0
   Gross profit.......................  241.5   259.9   242.6   259.4   1,003.4
   Operating income...................   76.9    99.2    68.8    72.5     317.4
   Net income.........................   47.2    66.3    49.8    53.7     217.0
   Earnings per share (basic and
    diluted)..........................   0.30    0.43    0.32    0.35      1.40
</TABLE>


  During the third quarter of 1999, the Company benefited from the successful
resolution of income tax litigation, which contributed to a reduction in the
overall effective income tax rate expected for 1999 and resulted in interest
income, resulting in an increase in net income of $6.2 million.

  During the second quarter of 1998, the Company received a net litigation
settlement in the amount of $9.8 million. In addition, during the third
quarter of 1998, the Company incurred incremental costs in the aggregate
amount of $15.8 million related to furniture distribution process changes, the
restructuring and disposition of a non-furniture related manufacturing
facility, the relocation of a showroom facility and certain manufacturing
equipment write-offs. Finally, during the fourth quarter of 1998, the Company
incurred incremental costs of $7.6 million related to the Employee Stock Grant
and the initial public offering.

                                     F-27

<PAGE>

 
             REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

STEELCASE INC.
GRAND RAPIDS, MICHIGAN

  We have audited the accompanying consolidated balance sheets of Steelcase
Inc. and subsidiaries as of February 26, 1999 and February 27, 1998, and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for each of the three years in the period ended February 26, 1999.
Our audits also included the financial statement schedule for the three years
in the period ended February 26, 1999 as listed in Item 14(a). These financial
statements and schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
schedule based on our audits.

  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
schedule are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and schedule. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements and schedule.
We believe that our audits provide a reasonable basis for our opinion.

  In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Steelcase
Inc. and subsidiaries as of February 26, 1999 and February 27, 1998, and the
results of their operations and their cash flows for each of the three years
in the period ended February 26, 1999, in conformity with generally accepted
accounting principles. Also, in our opinion, the financial statement schedule
presents fairly, in all material respects, the information set forth therein.

BDO Seidman, LLP

Grand Rapids, Michigan
March 19, 1999, except for

Note 20 which is as of April 22, 1999

              MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

  The consolidated financial statements and other financial information
contained in this annual report were prepared by management in conformity with
generally accepted accounting principles. In preparing these financial
statements, reasonable estimates and judgments have been made when necessary.

  Management is responsible for establishing and maintaining a system of
internal control designed to provide reasonable assurance as to the integrity
and reliability of the financial records. The concept of reasonable assurance
recognizes that there are inherent limitations in any control system and that
the cost of maintaining a control system should not exceed the expected
benefits to be derived therefrom. Management believes its system of internal
control effectively meets its objective of reliable financial reporting.

  The Audit Committee of the Board of Directors meets periodically with
management and the independent accountants to review and discuss audit
findings and other financial and accounting matters. The independent
accountants have free access to the Audit Committee, with and without
management present, to discuss the results of their audit work.

  The Company's independent accountants are engaged to audit the Company's
consolidated financial statements and schedule, in accordance with generally
accepted auditing standards for the purpose of expressing an opinion on the
financial statements and schedule.

James P. Hackett                          Alwyn Rougier-Chapman
President and                             Senior Vice President--Finance,
Chief Executive Officer                   Chief Financial Officer and
                                          Treasurer

                                     F-28

<PAGE>


                                  SIGNATURES

  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                          Steelcase Inc.

                                               /s/ Alwyn Rougier-Chapman
                                          By: _________________________________
                                                   Alwyn Rougier-Chapman
                                               Senior Vice President--Finance
                                                Chief Financial Officer and
                                                         Treasurer

Date: May 27, 1999

  Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated:


<TABLE>
<CAPTION>
              SIGNATURE                               TITLE
              ---------                               -----

<S>                                    <C>                                  <C>
       /s/ James P. Hackett            President, Chief Executive Officer
______________________________________  and Director (Principal Executive
           JAMES P. HACKETT             Officer)

    /s/ Alwyn Rougier-Chapman          Senior Vice President--Finance,
______________________________________  Chief Financial Officer and
        ALWYN ROUGIER-CHAPMAN           Treasurer (Principal Financial
                                        Officer and Principal Accounting
                                        Officer)

          /s/ David Bing               Director
______________________________________
              DAVID BING
     /s/ William P. Crawford           Director
______________________________________
         WILLIAM P. CRAWFORD



        /s/ Earl D. Holton             Chairman of the Board of Directors
______________________________________  and Director
            EARL D. HOLTON
    /s/ David D. Hunting, Jr.          Director
______________________________________
        DAVID D. HUNTING, JR.



      /s/ Frank H. Merlotti            Director
______________________________________
          FRANK H. MERLOTTI


       /s/ Robert C. Pew II            Director, Chairman Emeritus
______________________________________
           ROBERT C. PEW II



      /s/ Robert C. Pew III            Director
______________________________________
          ROBERT C. PEW III
        /s/ Peter M. Wege              Vice Chairman of the Board of
______________________________________  Directors and Director
            PETER M. WEGE




       /s/ Peter M. Wege II            Director
______________________________________
           PETER M. WEGE II




     /s/ P. Craig Welch, Jr.           Director
______________________________________
         P. CRAIG WELCH, JR.
</TABLE>


Date: May 26, 1999

                                      26

<PAGE>

                                                                     SCHEDULE II

                                 STEELCASE INC.

                       VALUATION AND QUALIFYING ACCOUNTS
                                 (IN MILLIONS)


<TABLE>
<CAPTION>
 COLUMN A                  COLUMN B        COLUMN C         COLUMN D      COLUMN E
 --------                 ---------- --------------------- ----------   -------------
                                           ADDITIONS
                                     ---------------------
                          BALANCE AT   CHARGED    CHARGED
                          BEGINNING  TO COSTS AND TO OTHER               BALANCE AT
DESCRIPTION               OF PERIOD    EXPENSES   ACCOUNTS DEDUCTIONS   END OF PERIOD
- -----------               ---------- ------------ -------- ----------   -------------
<S>                       <C>        <C>          <C>      <C>          <C>
Reserves deducted in the
 consolidated balance
 sheet from the assets
 to which they apply:
  Year ended February
   26, 1999:
    Allowances for
    losses on Accounts
    Receivable..........    $31.8        $3.6                $  7.8 (A)     $27.6
    Allowances for
    losses on Notes
    Receivable..........    $10.4        $2.2                $  5.1 (A)     $ 7.5
  Year ended February
   27, 1998:
    Allowances for
    losses on Accounts
    Receivable..........    $23.0        $6.7                 $(2.1)        $31.8
    Allowances for
    losses on Notes
    Receivable..........    $ 9.2        $3.0                $  1.8 (A)     $10.4
  Year ended February
   28, 1997:
    Allowances for
    losses on Accounts
    Receivable..........    $20.4        $4.8                $  2.2 (A)     $23.0
    Allowances for
    losses on Notes
    Receivable..........    $ 9.1        $7.7                $  7.6 (A)     $ 9.2
</TABLE>

    --------
    Note (A)--Excess of accounts
    written off over recoveries.

                                      S-1

<PAGE>

                               INDEX OF EXHIBITS


<TABLE>
<CAPTION>
 EXHIBIT
   NO.                                 DESCRIPTION
 -------                               -----------
 <C>     <S>
   3.1   --Second Restated Articles of Incorporation of the Company(1)
   3.2   --Amended By-laws of the Company, as amended March 24, 1999
  10.1   --Deferred Compensation Agreement dated January 12, 1998, between
          Steelcase Inc. and James Hackett(2)
  10.2   --Deferred Compensation Agreement dated January 12, 1998, between
          Steelcase Inc. and Robert Ballard(2)
  10.3   --Deferred Compensation Agreement dated January 12, 1998, between
          Steelcase Inc. and Alwyn Rougier-Chapman(3)
  10.4   --Steelcase Inc. Restoration Retirement Plan
  10.5   --Steelcase Inc. Incentive Compensation Plan(1)
  10.6   --Amended and Restated Steelcase Inc. Management Incentive Plan(3)
  10.7   --Steelcase Inc. 1994 Executive Supplemental Retirement Plan(3)
  10.8   --Deferred Compensation Agreement dated May 4, 1998, between Steelcase
          Inc. and William P. Crawford(4)
  10.9   --Stock Purchase Agreement between Steelcase Inc. and Strafor Facom
          S.A. dated as of April 21, 1999(5)
  21.1   --Subsidiaries of the Registrant
  23.1   --Consent of BDO Seidman, LLP
  27.1   --Financial Data Schedule
</TABLE>

- --------
(1) Incorporated by reference to the like numbered exhibit to the Company's
    Registration Statement on Form S-1 (#333-41647) as filed with the
    Securities and Exchange Commission ("Commission") on December 5, 1997.

(2) Incorporated by reference to the like numbered exhibit to Amendment 2 to
    the Company's Registration Statement on Form S-1 (#333-41647) as filed
    with the Commission on January 20, 1998.

(3) Incorporated by reference to the like numbered exhibit to Amendment 1 to
    the Company's Registration Statement on Form S-1 (#333-41647) as filed
    with the Commission on January 14, 1998.

(4) Incorporated by reference to the like numbered exhibit to the Company's
    annual report on Form 10-K for the fiscal year ended February 27, 1998, as
    filed with the Commission on May 28, 1998.

(5) Incorporated by reference to Exhibit 2.1 to the Company's current report
    on Form 8-K dated April 22, 1999, as filed with the Commission, on May 7,
    1999.

                                      E-1





<PAGE>


                                                                     Exhibit 3.2



                                    AMENDED

                                    BY-LAWS

                                       of

                                 STEELCASE INC.

                              As of March 24, 1999



                                   ARTICLE I

                                    Offices


               SECTION 1.01.  Offices. The corporation may have offices at such
     places both within and without the State of Michigan as the board of
     directors may from time to time determine or the business of the
     corporation may require.



                                   ARTICLE II

                            Meetings of Shareholders


               SECTION 2.01.  Times and Places of Meetings.  Meetings of the
     shareholders shall be held at such times and places as may be fixed from
     time to time by the board of directors, within or without the State of
     Michigan.

               SECTION 2.02.  Annual Meeting.  An annual meeting of the
     shareholders for election of directors and for such other business as may
     come before the meeting shall be held each year at such time on such
     business day and in such month as may be designated by the board (provided
     that each successive annual meeting shall be held within 15 months of the
     preceding annual meeting).

               SECTION 2.03.  Special Meetings.  Special meetings of the
     shareholders may be called by the board of directors or by the Chief
     Executive Officer, and shall be held on such date as may be specified in
     the notice of the meeting.

               SECTION 2.04.  Notice of Meetings.  Written notice of all
     meetings of shareholders,
 stating the time, place and purposes thereof,
     shall be given to each shareholder of record entitled to vote thereat, at
     least 10 but not more than 60 days before the date fixed for the meeting,
     either personally or by mail (notice by mail shall be deemed given when
     mailed).

                                       1

<PAGE>

               SECTION 2.05.  Quorum.  The holders of a majority of the voting
     power of shares entitled to vote thereat, present in person or represented
     by proxy, shall constitute a quorum at all meetings of the shareholders for
     the transaction of business, except as otherwise provided by statute or by
     the Articles of Incorporation; provided, however, that when any specified
     action is required to be voted upon by a class or series of shares voting
     as a class or series, the holders of a majority of the shares of such class
     or series shall constitute a quorum for the transaction of such specified
     action.  If there shall be no quorum, the shares present by majority vote
     may adjourn the meeting from time to time, without notice other than
     announcement at the meeting, until a quorum shall be present, when any
     business may be transacted which might have been transacted at the meeting
     as first convened had there been a quorum.  However, if after the
     adjournment the board fixes a new record date for the adjourned meeting,
     notice of the time, place and purposes of such meeting shall be given to
     each shareholder of record on the new record date.  Once a quorum shall
     have been determined to be present, the shareholders present in person or
     by proxy at any meeting may continue to do business until adjournment,
     notwithstanding the withdrawal of enough shareholders to leave less than a
     quorum.

               SECTION 2.06.  Vote Required.  When an action, other than the
     election of directors, is to be taken by vote of the shareholders, it shall
     be authorized by a majority of the votes cast by the holders of shares
     entitled to vote thereon, unless a greater plurality is required by the
     Articles of Incorporation or express provision of statute.  Except as
     otherwise provided by the Articles of Incorporation, directors shall be
     elected by a plurality of the votes cast at an election.

               SECTION 2.07.  Voting Rights. With respect to any matter for
     which shareholders are entitled to vote, each shareholder shall be
     entitled, in person or by proxy, to cast the number of votes specified for
     such matter in the Articles of Incorporation with respect to the number of
     shares of capital stock held by such person.

               SECTION 2.08.  Order of Business.  (a) At each meeting of the
     shareholders, the Chairman of the Board or, in the absence of the Chairman
     of the Board, the Chief Executive Officer, or in the absence of both the
     Chairman and the Chief Executive Officer, such person as shall be selected
     by the Board shall act as chairman of the meeting.  The order of business
     at each such meeting shall be as determined by the chairman of the meeting.
     The chairman of the meeting shall have the right and authority to prescribe
     such rules, regulations and procedures and to do all such acts and things
     as are necessary or desirable for the proper conduct of the meeting,
     including, without limitation, the establishment of procedures for the
     maintenance of order and safety, limitations on the time allotted to
     questions or comments on the affairs of the Corporation, restrictions on
     entry to such meeting after the time prescribed for the commencement
     thereof, and the opening and closing of the voting polls.

                                       2

<PAGE>

               (b) At any annual meeting of shareholders, only such business
     shall be conducted as shall have been brought before the annual meeting (i)
     by or at the direction of the chairman of the meeting or (ii) by any
     shareholder who is a holder of record at the time of the giving of the
     notice provided for in this Section 2.08, who is entitled to vote at the
     meeting and who complies with the procedures set forth in this Section
     2.08.

               (c) For business to be properly brought before an annual meeting
     by a shareholder, the shareholder must have given written notice thereof,
     either by personal delivery or by United States mail, postage prepaid, to
     the Secretary of the Corporation (the "Secretary") at the principal
     executive offices of the Corporation, not less than 70 days nor more than
     90 days prior to the anniversary date of the immediately preceding annual
     meeting; provided, however, that in the event that the date of the annual
     meeting is more than 30 days earlier or more than 60 days later than such
     anniversary date, notice by the shareholder must be so given not earlier
     than the 90th day prior to such annual meeting and not later than the close
     of business on the later of the 70th day prior to such annual meeting or
     the tenth day following the day on which public announcement of the date of
     such meeting is first made.  Any such notice shall set forth as to each
     matter the shareholder proposes to bring before the annual meeting (a) a
     brief description of the business desired to be brought before the annual
     meeting and the reasons for conducting such business at the annual meeting;
     (b) the name and address, as they appear on the Corporation's books, of the
     shareholder proposing such business; (c) the class and number of shares of
     the Corporation which are beneficially owned by the shareholders; (d) any
     material interest of the shareholder in such business; and (e) if the
     shareholder intends to solicit proxies in support of such shareholder's
     proposal, a representation to that effect.  The foregoing notice
     requirements shall be deemed satisfied by a shareholder if the shareholder
     has notified the Corporation of his or her intention to present a proposal
     at an annual meeting and such shareholder's proposal has been included in a
     proxy statement that has been prepared by management of the Corporation to
     solicit proxies for such annual meeting; provided, however, that if such
     shareholder does not appear or send a qualified representative, as
     determined by the chairman of the meeting, to present such proposal at such
     annual meeting, the Corporation need not present such proposal for a vote
     at such meeting, notwithstanding that proxies in respect of such vote may
     have been received by the Corporation.  No business shall be conducted at
     an annual meeting of shareholders except in accordance with this Section
     2.08, and the chairman of any annual meeting of shareholders may refuse to
     permit any business to be brought before an annual meeting without
     compliance with the foregoing procedures or if the shareholder solicits
     proxies in support of such shareholder's proposal without such shareholder
     having made the representation required by clause (e) of the preceding
     sentence.

                                       3

<PAGE>

                                  ARTICLE III

                                  Record Date


               SECTION 3.01.  Fixing of Record Date by Board.  For the purpose
     of determining shareholders entitled to notice of and to vote at a meeting
     of shareholders or an adjournment thereof, or to express consent or to
     dissent from a proposal without a meeting, or for the purpose of
     determining shareholders entitled to receive payment of a dividend or
     allotment of a right, or for the purpose of any other action, the board of
     directors may fix, in advance, a date as the record date for any such
     determination of shareholders.  The date shall not be more than 60 nor less
     than 10 days before the date of the meeting, nor more than 60 days before
     any other action.

               SECTION 3.02.  Provision for Record Date in the Absence of Board
     Action.  If a record date is not fixed by the board of directors (a) the
     record date for determination of shareholders entitled to notice of or to
     vote at a meeting of shareholders shall be the close of business on the
     day next preceding the day on which notice is given, or, if no notice is
     given, the day next preceding the day on which the meeting is held; and (b)
     the record date for determining shareholders for any purpose other than
     that specified in subsection (a) shall be the close of business on the day
     on which the resolution of the board relating thereto is adopted.

               SECTION 3.03.  Adjournments.  When a determination of
     shareholders of record entitled to notice of or to vote at a meeting of
     shareholders has been made as provided in this Article III, the
     determination applies to any adjournment of the meeting, unless the board
     fixes a new record date for the adjourned meeting.



                                   ARTICLE IV

                                   Directors


               SECTION 4.01.  Number of Directors.  The number of directors
     which shall constitute the whole board shall be determined from time to
     time by resolution of the board of directors in accordance with the
     provisions of Article VII of the Articles of Incorporation.

               SECTION 4.02.  Vacancies.  Vacancies shall be filled in
     accordance with the provisions of Section 2 of Article VII of the Articles
     of Incorporation.

               SECTION 4.03.  Powers.  The business of the corporation shall be
     managed by its board of directors which may exercise all such powers of the
     corporation and do all such lawful acts and things as are not by statute or
     by the Articles of Incorporation or by these By-laws directed or required
     to be exercised or done by the shareholders.

                                       4

<PAGE>

               SECTION 4.04.  Fees and Expenses.  The directors may be paid
     their expenses, if any, of attendance at each meeting of the board of
     directors and may be paid a fixed sum for attendance at each meeting of the
     board of directors or a stated salary or other compensation as a director.
     No such payment shall preclude any director from serving the corporation in
     any other capacity and receiving compensation therefor.  Members of special
     or standing committees may be allowed like compensation for attending
     committee meetings.

               SECTION 4.05.  Resignation.  Any director may resign at any time
     and such resignation shall take effect upon receipt thereof by the
     corporation, or such subsequent time as set forth in the notice of
     resignation.

               SECTION 4.06.  Qualifications.  A director need not be a
     shareholder, a citizen of the United States or a resident of the State of
     Michigan.

               SECTION 4.07.  Notification of Nominations.  (a) Subject to the
     rights of the holders of any series of Preferred Stock, nominations for the
     election of directors may be made by the Board or by any shareholder who is
     a shareholder of record at the time of giving of the notice of nomination
     provided for in this Section 4.07 and who is entitled to vote for the
     election of directors.  Any shareholder of record entitled to vote for the
     election of directors at a meeting may nominate persons for election as
     directors only if timely written notice of such shareholder's intent to
     make such nomination is given, either by personal delivery or by United
     States mail, postage prepaid, to the Secretary.  To be timely, a
     shareholder's notice must be delivered to or mailed and received at the
     principal executive offices of the Corporation (i) with respect to an
     election to be held at an annual meeting of shareholders, not less than 70
     nor more than 90 days prior to the anniversary date of the immediately
     preceding annual meeting; provided, however, that in the event that the
     date of the annual meeting is more than 30 days earlier or more than 60
     days later than such anniversary date, notice by the shareholder to be
     timely must be so given not earlier than the 90th day prior to such annual
     meeting and not later than the close of business on the later of the 70th
     day prior to such annual meeting or the 10th day following the day on which
     public announcement of the date of such meeting is first made and (ii) with
     respect to an election to be held at a special meeting of shareholders for
     the election of directors, not earlier than the 90th day prior to such
     special meeting and not later than the close of business on the later of
     the 60th day prior to such special meeting or the 10th day following the
     day on which public announcement is first made of the date of the special
     meeting and of the nominees to be elected at such meeting.  Each such
     notice shall set forth:  (a) the name and address of the shareholder who
     intends to make the nomination and of the person or persons to be
     nominated; (b) a representation that the shareholder is a holder of record
     of stock of the Corporation entitled to vote at such meeting and intends to
     appear in person or by proxy at the meeting to nominate the person or
     persons specified in the notice; (c) a description of all arrangements or
     understandings between the shareholder and each nominee and any other
     person or persons (naming such person or persons) pursuant to which the
     nomination or nominations are to be made by the shareholder; (d) such other
     information regarding each nominee proposed by such shareholder as would
     have been required to be included in a

                                       5

<PAGE>

     proxy statement filed pursuant to the proxy rules of the Securities and
     Exchange Commission had each nominee been nominated, or intended to be
     nominated, by the Board; (e) the consent of each nominee to serve as a
     director of the Corporation if so elected and (f) if the shareholder
     intends to solicit proxies in support of such shareholder's nominee(s), a
     representation to that effect. The chairman of the meeting may refuse to
     acknowledge the nomination of any person not made in compliance with the
     foregoing procedure or if the shareholder solicits proxies in favor of such
     shareholder's nominee(s) without having made the representation required by
     the immediately preceding sentence. Only such persons who are nominated in
     accordance with the procedures set forth in this Section 4.07 shall be
     eligible to serve as directors of the Corporation.

               (b) Notwithstanding anything in the immediately preceding
     paragraph of this Section 4.07 to the contrary, in the event that the
     number of directors to be elected to the Board of Directors of the
     Corporation at an annual meeting of shareholders is increased and there is
     no public announcement naming all of the nominees for directors or
     specifying the size of the increased Board of Directors made by the
     Corporation at least 70 days prior to the first anniversary of the
     preceding year's annual meeting, a shareholder's notice required by this
     Section 4.07 shall also be considered timely, but only with respect to
     nominees for any new positions created by such increase, if it shall be
     delivered to or mailed to and received by the secretary at the principal
     executive offices of the Corporation not later than the close of business
     on the 10th day following the day on which such public announcement is
     first made by the Corporation.

               SECTION 4.08.  Maximum Age of Nominees for Director.   No person
     shall be eligible for election or appointment as a director after attaining
     the age of 75.

                                       6

<PAGE>

                                   ARTICLE V

                             Meetings of Directors


               SECTION 5.01.  Places of Meetings.  The board of directors of the
     corporation may hold meetings, both regular and special, either within or
     without the State of Michigan.

               SECTION 5.02.  First Meeting of Newly Elected Board.  The first
     meeting of each newly elected board of directors shall be held following
     the annual meeting of shareholders, and no notice of such meeting shall be
     necessary to the newly elected directors in order legally to constitute the
     meeting, provided a quorum shall be present.  In the event such meeting is
     not held immediately following the annual meeting of shareholders, the
     meeting may be held at such time and place as shall be specified in a
     notice given as hereinafter provided for special meetings of the board of
     directors, or as shall be specified in a written waiver signed by all of
     the directors.

               SECTION 5.03.  Regular Meetings.  Regular meetings of the board
     of directors may be held without notice at such time and at such place as
     shall from time to time be determined by the board.

               SECTION 5.04.  Special Meetings.  Special meetings of the board
     may be called by the Chief Executive Officer or Secretary or by a majority
     of the directors then in office, on two days' notice to each director,
     either personally or by mail or by facsimile.

               SECTION 5.05.  Purpose Need Not Be Stated.  Neither the business
     to be transacted at, nor the purpose of, any regular or special meeting of
     the board of directors need be specified in the notice of such meeting.

               SECTION 5.06.  Quorum.  At all meetings of the board a majority
     of the total number of directors then in office shall constitute a quorum
     for the transactions of business, and the acts of a majority of the
     directors present at any meeting at which there is a quorum shall be the
     acts of the board of directors, except as may be otherwise specifically
     provided by applicable law or by the Articles of Incorporation.  If a
     quorum shall not be present at any meeting of the board of directors, the
     directors present thereat may adjourn the meeting from time to time,
     without notice other than announcement at the meeting, until a quorum shall
     be present.

               SECTION 5.07.  Action Without a Meeting.  Unless otherwise
     restricted by the Articles of Incorporation or these By-laws, any action
     required or permitted to be taken at any meeting of the board of directors
     or of any committee thereof may be taken without a meeting, if, before or
     after the action, a written consent thereto is signed by all members of the
     board or of such committee, as the case may be, and such written consent is
     filed with the minutes or proceedings of the board or committee.  Such
     consent shall have the same effect as a vote of the board or committee for
     all purposes.

                                       7

<PAGE>

               SECTION 5.08.  Meeting by Telephone or Similar Equipment.  The
     board of directors or any committee designated by the board of directors
     may participate in a meeting of such board, or committee, by means of
     conference telephone or similar communications equipment by means of which
     all persons participating in the meeting can hear each other, and
     participation in a meeting pursuant to this Section shall constitute
     presence in person at such meeting.

               SECTION 5.09.  Waiver of Notice.  Attendance of a director at a
     meeting of the board or any committee constitutes a waiver of notice of the
     meeting, except where a director attends a meeting for the express purpose
     of objecting to the transacting of any business because the meeting is not
     lawfully called or convened.  Notice of any meeting of the board or a
     committee need not be given to any person entitled thereto who waives such
     notice in writing, either before or after the meeting.

                                       8

<PAGE>

                                   ARTICLE VI

                            Committees of Directors


               SECTION 6.01.  Executive Committee of the Board.  The board of
     directors may appoint an Executive Committee of the Board whose membership
     shall consist of such members of the board of directors as it may deem
     advisable from time to time to serve during the pleasure of the board.  The
     board of directors may also appoint directors to serve as alternates for
     members of the Executive Committee of the Board in the absence or
     disability of regular members.  The board of directors may fill any
     vacancies in the Executive Committee of the Board as they occur.  The
     Executive Committee of the Board, if there be one, shall have and may
     exercise the powers of the board of directors in the management of the
     business affairs and property of the corporation during the intervals
     between meetings of the board of directors, subject to applicable law and
     to such limitations and control as the board of directors may impose from
     time to time.

               SECTION 6.02.  Other Committees.  The board of directors may
     designate such other committees as it may deem appropriate, and such
     committees shall exercise the authority delegated to them.

               SECTION 6.03.  Meetings.  Each committee provided for above shall
     meet as often as its business may require and may fix a day and time for
     regular meetings, notice of which shall not be required.  Whenever the day
     fixed for a meeting shall fall on a holiday, the meeting shall be held on
     the business day following or on such other day as the committee may
     determine.  Special meetings of committees may be called by any member, and
     notice thereof may be given to the members by mail, telephone or facsimile.
     A majority of its members shall constitute a quorum for the transaction of
     business of any of the committees.

               SECTION 6.04.  Substitutes.  In the absence or disqualification
     of a member of a committee, the members thereof present at a meeting and
     not disqualified from voting, whether or not they constitute a quorum, may
     unanimously appoint another member of the board to act at the meeting in
     place of such absent or disqualified member.

                                       9

<PAGE>

                                  ARTICLE VII

                                   Officers


               SECTION 7.01.  Appointment.  The board of directors at its first
     meeting after the annual meeting of shareholders, or as soon as practicable
     after the election of directors in each year, shall appoint a Chief
     Executive Officer and may elect a Chairman of the Board and any number of
     Vice Chairmen of the Board.  The board of directors may also appoint a
     President and one or more Vice Presidents and shall appoint a Secretary and
     a Treasurer.  None of such officers, except the Chairman of the Board and
     any Vice Chairman of the Board, need be members of the board.  The board
     from time to time may appoint such other officers as they may deem proper.
     The dismissal of an officer, the appointment of an officer to fill the
     place of one who has been dismissed or has ceased for any reason to be an
     officer, the appointment of any additional officers, and the change of an
     officer to a different or additional office, may be made by the board of
     directors at any later meeting.  Any two or more offices may be filled by
     the same person.

               SECTION 7.02.  Term of Office.  Each officer shall hold office at
     the pleasure of the board.  The board of directors may remove any officer
     for cause or without cause.  Any officer may resign his office at any time,
     such resignation to take effect upon receipt of written notice thereof by
     the corporation unless otherwise specified in the resignation.  If any
     office becomes vacant for any reason, the vacancy may be filled by the
     board.

               SECTION 7.03.  Chairman of the Board.  The Chairman of the Board,
     if there be one, shall, when present, preside at all meetings of the
     directors and shareholders.  He shall have such other duties and powers as
     may be imposed or given by the board.

               SECTION 7.04.  Vice Chairmen of the Board.  Each Vice Chairman of
     the Board shall have such powers and perform such duties as may be assigned
     to him from time to time by the Chairman of the Board or the board of
     directors.

               SECTION 7.05.  The Chief Executive Officer.  The Chief Executive
     Officer shall have final authority, subject to the control of the board of
     directors, over the general policy and business of the corporation and
     shall have the general control and management of the business and affairs
     of the corporation.  Unless there shall be a Chairman of the Board, or, if
     there be one, in the event of his death, resignation, absence or inability
     to act, the Chief Executive Officer shall preside at all meetings of the
     shareholders, and, if he shall be a director, at all meetings of the board
     of directors.  The Chief Executive Officer shall have the power, subject to
     the control of the board of directors, to appoint or discharge and to
     prescribe the duties and to fix the compensation of such agents and
     employees of the corporation as he may deem necessary.  He shall have the
     authority to appoint or suspend the duties of officers on an interim basis,
     and the authority to establish compensation for corporate officers subject
     to the control of the board.  He shall make and sign bonds, mortgages and
     other contracts and agreements in

                                       10

<PAGE>

     the name and on behalf of the corporation, except when he or the board of
     directors by resolution instruct the same to be done by some other officer
     or agent. He shall see that all orders and resolutions of the board of
     directors are carried into effect and shall perform all other duties
     necessary or appropriate to his office, subject, however, to his right and
     the right of the directors to delegate any specific powers to any other
     officer or officers of the corporation.

               SECTION 7.06.  The President.  The President shall be the chief
     operating officer of the corporation and shall have general supervision of
     the day-to-day business of the corporation; and shall, in the absence of
     the Chief Executive Officer, perform the duties and exercise the powers of
     the Chief Executive Officer, and shall perform such other duties and have
     such other powers as the Chief Executive Officer or the board of directors
     may prescribe from time to time.

               SECTION 7.07.  Vice Presidents.  Each Vice President shall have
     such title and powers and perform such duties as may be assigned to him
     from time to time by the Chief Executive Officer or the board of directors.

               SECTION 7.08.  Secretary.  The Secretary shall cause to be
     maintained minutes of all meetings of the board and of the shareholders and
     shall keep a record of all votes at such meetings.  The Secretary shall
     give, or see to the giving of notice of all meetings of the shareholders
     and of the board of directors, and shall perform such other duties as may
     be prescribed by the board of directors or the President.

               SECTION 7.09.  Treasurer.  The Treasurer shall have the custody
     of the corporate funds and securities, except as otherwise provided by the
     board, and shall deposit all moneys and other valuable effects in the name
     and to the credit of the corporation in such depositories as may be
     designated by the board of directors.  He shall disburse the funds of the
     corporation as may be ordered by the board.

               SECTION 7.10.  Assistant Secretaries and Treasurers.  There may
     be elected one or more Assistant Secretaries and Assistant Treasurers who
     may, in the absence, disability or nonfeasance of the Secretary or
     Treasurer, respectively perform the duties and exercise the powers of such
     persons.

               SECTION 7.11.  Other Officers.  All other officers, as may from
     time to time be appointed by the board of directors pursuant to this
     Article, shall perform such duties and exercise such authority as the board
     of directors or the Chief Executive Officer shall prescribe.

               SECTION 7.12.  Absence of Officer.  In the case of the absence of
     any officer, or for any other reason that the board may deem sufficient,
     the Chief Executive Officer or the board may delegate for the time being
     the powers or duties of such officer to any other officer or to any
     director.

                                       11

<PAGE>

                                  ARTICLE VIII

                             Certificates of Stock


               SECTION 8.01.  Form.  Every holder of stock in the corporation
     shall be entitled on request to have a certificate, signed by, or in the
     name of the corporation by, the Chairman of the Board, the Chief Executive
     Officer, the President or a Vice President, and by the Treasurer, or an
     Assistant Treasurer, or the Secretary, or an Assistant Secretary, of the
     corporation, certifying the number of shares owned by such holder.  The
     certificates may, but need not, be sealed with the seal of the corporation,
     or a facsimile thereof.

               SECTION 8.02.  Facsimile Signatures.  Any signature on a stock
     certificate may be a facsimile.  In case any officer who signed, or whose
     facsimile signature has been placed upon a certificate, shall have ceased
     to be such officer before such certificate is issued, it may be issued with
     same effect as if he were such officer at the date of issue.

               SECTION 8.03.  Substituted Certificates.  The officers may direct
     a new certificate or certificates to be issued in place of any certificate
     or certificates theretofore issued by the corporation alleged to have been
     lost or destroyed, upon the making of an affidavit of that fact by the
     person claiming the certificate of stock to be lost or destroyed.  When
     authorizing such issue of a new certificate or certificates, the board of
     directors may, in its discretion and as a condition precedent to the
     issuance thereof, require the owner of such lost or destroyed certificate
     or certificates, or his legal representative, to advertise the same in such
     manner as it shall require and/or to give the corporation a bond in such
     sum as it may direct as indemnity against any claim that may be made
     against the corporation on account of the certificate alleged to have been
     lost or destroyed, or the issuance of such new certificate.

               SECTION 8.04.  Registered Owner.  The corporation shall be
     entitled to recognize the exclusive right of a person registered on its
     books as the owner of shares to receive dividends, to vote as such owner
     and to have all of the other rights and responsibilities of the owner of
     such shares, and shall not be bound to recognize any equitable or other
     claim to or interest in such share or shares on the part of any other
     person, whether or not it shall have express or other notice thereof,
     except as otherwise provided by statute.

                                       12

<PAGE>

                                   ARTICLE IX

                                Indemnification


     The Corporation shall, to the fullest extent authorized or permitted by the
     Michigan Business Corporation Act, (a) indemnify any person, and his or her
     heirs, personal representatives, executors, administrators and legal
     representatives, who was, is, or is threatened to be made, a party to any
     threatened, pending or completed action, suit or proceeding (whether civil,
     criminal, administrative or investigative) by reason of the fact that such
     person is or was a director, officer or employee of the Corporation, or is
     or was serving at the request of the Corporation as a director, officer,
     employee or agent of another corporation (including a subsidiary
     corporation), limited liability company, partnership, joint venture, trust,
     employee benefit plan or other enterprise, whether or not for profit, or by
     reason of anything done by such person in such capacity (collectively,
     "Covered Matters") and (b) pay or reimburse the reasonable expenses
     incurred by such person and his or her heirs, executors, administrators and
     legal representatives in connection with any Covered Matter in advance of
     final disposition of such Covered Matter.  The Corporation may provide such
     other indemnification to directors, officers, employees and agents by
     insurance, contract or otherwise as is permitted by law and authorized by
     the Board of Directors.

                                       13

<PAGE>

                                   ARTICLE X

                           Subsidiaries and Divisions


               SECTION 10.01.  Divisional Officers.  The board of directors or
     the Chief Executive Officer may, as they shall deem necessary, designate
     certain individuals as divisional officer.  Any titles given to divisional
     officers may be withdrawn at any time, without cause, by the board of
     directors or the Chief Executive Officer.  A divisional officer may, but
     need not be, a director or an executive officer of the corporation.  All
     divisional officers shall perform such duties and exercise such authority
     as the board of directors or the Chief Executive Officer shall prescribe.

               SECTION 10.02.  Subsidiaries.  The Chief Executive Officer, or
     any other officer, agent or proxy appointed by the board of directors may
     vote the shares of stock owned by the corporation in any subsidiary,
     whether wholly or partly owned by the corporation, in such manner as they
     may deem in the best interests of the corporation, including, without
     limitation, for the election of directors of any such subsidiary
     corporation, or for any amendments to the charter or by-laws of any such
     subsidiary corporation, or for the liquidation, merger or sale of assets of
     any subsidiary corporation.  The board of directors or the Chief Executive
     Officer may cause to be elected to the board of directors of any such
     subsidiary corporation such persons as they shall designate, any of whom
     may be, but need not be, directors, executive officers or other employees
     or agents of the corporation.  The board of directors or the Chief
     Executive Officer may instruct the directors of any such subsidiary
     corporation as to the manner in which they are to vote upon any issue
     properly coming before them as the directors of such subsidiary
     corporation, and such directors shall have no liability to the corporation
     as the result of any action taken in accordance with such instructions.

               SECTION 10.03.  Divisional and Subsidiary Officers Not Officers
     of the Corporation.  Divisional officers, and the officers of any
     subsidiary corporation, shall not, by virtue of holding such title and
     position, be deemed to be officers of the corporation, nor shall any such
     divisional officer or officer of a subsidiary corporation, unless he shall
     also be a director or executive officer of the corporation, be entitled to
     have access to any files, records or other information relating or
     pertaining to the corporation, its business and finances.



                                   ARTICLE XI

                         Control Share Acquisition Act


               The Corporation hereby elects not to be subject to the provisions
     of the Stacey, Bennet, and Randall Shareholder Equity Act under the
     Michigan Business Corporation Act.

                                       14

<PAGE>

                                  ARTICLE XII

                               General Provisions


               SECTION 12.01.  Checks.  All checks, drafts or demands for money
     and notes of the Corporation must be signed by such officer or officers or
     such other person or persons as the board of directors from time to time
     designates.  All funds of the Corporation not otherwise employed shall be
     deposited or used as the board of directors from time to time designates.

               SECTION 12.02.  Fiscal Year.  The fiscal year of the corporation
     shall end on the last day of February of each year or on such other date as
     may be fixed by resolution of the board of directors.

               SECTION 12.03.  Seal.  The corporate seal, if any, shall have
     inscribed thereon the name of the corporation.  The seal may be used by
     causing it or a facsimile thereof to be impressed or affixed or reproduced
     or otherwise.

               SECTION 12.04.  Dividends.  Dividends upon the capital stock of
     the corporation, subject to the provisions of the Articles of
     Incorporation, if any, may be declared by the board of directors at any
     regular or special meeting, pursuant to law.  Dividends may be paid in
     cash, in property or in shares of capital stock, subject to the provisions
     of the Articles of Incorporation.

               SECTION 12.05.  Voting Shares of Another Corporation.  Shares of
     any other corporation owned by this corporation shall be voted in the
     manner provided in Section 10.02 of Article X with respect to the voting of
     shares in subsidiaries.



                                  ARTICLE XIII

                                   Amendments


          Article XIII.  Any By-law (other than this Article XIII) may be
     adopted, repealed, altered or amended by a majority of the entire Board at
     any meeting thereof. The shareholders of the Corporation shall have the
     power to amend, alter or repeal any provision of these By-laws only to the
     extent and in the manner provided in the Articles of Incorporation.



                                       15



<PAGE>

                                                                    EXHIBIT 10.4

                                 STEELCASE INC.

                           RESTORATION RETIREMENT PLAN

                             EFFECTIVE March 1, 1998

<PAGE>

                   STEELCASE INC. RESTORATION RETIREMENT PLAN

                                Table of Contents


                                                                        Page

PREAMBLE                                                                  1

SECTION 1:  ESTABLISHMENT OF PLAN                                         1

1.1    Plan Document                                                      1

1.2    Effective Date                                                     1

1.3    Nature of Plan                                                     1


SECTION 2:  DEFINITIONS                                                   1

2.1    Account                                                            1

2.2    Beneficiary                                                        2

2.3    Committee                                                          2

2.4    Fiscal Year                                                        2

2.5    Participant                                                        2

2.6    Spouse                                                             2

2.7    Total Disability                                                   2


SECTION 3:  ADMINISTRATION OF PLAN                                        3

3.1    Administrative Committee                                           3

3.2    Responsibility; Indemnification                                    3


SECTION 4:  ELIGIBILITY                                                   3

4.1    Participation                                                      3

4.2    Termination of Participation                                       3


                                        i

<PAGE>

                                                                       Page

SECTION 5:  VESTING                                                       4

5.1    Vesting Service                                                    4

5.2    Vested Percentage                                                  4

5.3    Retirement, Death and Disability                                   4


SECTION 6:  BENEFITS                                                      4

6.1    Amount and Form of Benefit                                         4

6.2    Payment                                                            5

6.3    Forfeiture of Benefits                                             5


SECTION 7:  AMENDMENT AND TERMINATION                                     6

7.1    Amendment                                                          6

7.2    Termination                                                        6


SECTION 8:  GENERAL PROVISIONS                                            6

8.1    No Right to Participate                                            6

8.2    No Employment Right                                                6

8.3    No Assignment or Transfer                                          6

8.4    Withholding and Payroll Taxes                                      7

8.5    Incompetent Payee                                                  7

8.6    Governing Law                                                      7

8.7    Construction                                                       7

8.8    Disputes                                                           7




                                       ii

<PAGE>

                   STEELCASE INC. RESTORATION RETIREMENT PLAN

                                    Preamble

              This STEELCASE INC. RESTORATION RETIREMENT PLAN ("Plan") is a
deferred compensation
 and retirement plan for certain employees of Steelcase
Inc. ("Steelcase"). The Plan was established to restore, to an extent,
retirement benefits lost by employees due to the limits imposed by the Internal
Revenue Code on the dollar amount of compensation that may be considered by
qualified plans.



SECTION 1:    ESTABLISHMENT OF PLAN

              1.1   Plan Document

              This instrument, as amended from time to time, shall constitute
the governing document of the Plan.

              1.2   Effective Date

              The effective date of this Plan is March 1, 1998.

              1.3   Nature of Plan

              This Plan is intended to be a plan described in Sections 201(2),
301(a)(3), and 402(a)(l) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), which means it is unfunded and limited to a select group
of highly compensated and/or management employees. This Plan also is intended as
a program that is not subject to limitations applicable to benefits provided
through employee benefit plans qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended ("Code"). A Participant shall be an unsecured
general creditor of Steelcase with respect to payment of any benefit under the
Plan. The right of a Participant or Beneficiary to be paid a benefit under the
terms of the Plan shall be no greater than the right of any other general,
unsecured creditor of Steelcase.



SECTION 2:    DEFINITIONS

              The following terms shall have the definition stated, unless the
context requires a different meaning:

              2.1   Account

              "Account" means the account set up by Steelcase to receive amounts
contributed under Section 6.1.

                                       -1-

<PAGE>

              2.2   Beneficiary

              "Beneficiary" means the individual, trust, or other entity
designated by the Participant to receive any amounts payable with respect to the
Participant under the Plan after the Participant's death. A Participant may
designate or change a Beneficiary by filing a signed designation with the
Committee in a form approved by the Committee. A Participant's Will is not
effective for this purpose. If the Participant has not designated a Beneficiary
or none so designated survive, the Beneficiary will be the Participant's
surviving Spouse, if any; otherwise the Participant's children, including those
by adoption, dividing the distribution equally among the Participant's children,
with the living issue of any deceased child taking their parent's share by right
of representation; if none, the Participant's parents, in equal shares; if none,
the Participant's living brothers and sisters in equal shares; if none the
Participant's estate, if under active administration, and if not, the
Participant's heirs under the laws of Intestacy of the State of Michigan.

              2.3   Committee

              "Committee" means the Compensation Committee of the Board of
Directors of Steelcase Inc.

              2.4   Fiscal Year

              "Fiscal Year" means the financial reporting and taxable year of
Steelcase Inc.

              2.5   Participant

              "Participant" means an employee who is a member of the Management
Incentive Plan for the full Fiscal Year and whose compensation is in excess of
the compensation limit specified in Internal Revenue Code Section 401(a)(17).

              2.6   Spouse

              "Spouse" means the husband or wife to whom a Participant is
married on the date benefit payments are scheduled to begin to the Participant.
The legal existence of the spousal relationship shall be governed by the law of
Michigan.

              2.7   Total Disability

              "Total Disability" means a physical or mental condition which
totally and presumably permanently prevents an individual from performing the
duties of the Participant's employment. The determination of Disability shall be
made by the Committee through procedures established for that purpose and on the
basis of reasonable medical examinations. The cost of any medical examination
ordered by the Committee shall be an expense of administration of the Plan.



                                       -2-

<PAGE>

SECTION 3:    ADMINISTRATION OF PLAN

              3.1   Administrative Committee

              The Plan shall be administered by the Committee. The Committee
shall have full discretionary authority in the operation and administration of
the Plan. The Committee shall act by vote or consent of a majority of its
members. To the extent necessary or appropriate, the Committee will adopt rules,
policies, and forms for the administration, interpretation, and implementation
of the Plan. All decisions, determinations, and interpretations of the Plan by
the Committee shall be final and binding on all parties. The Committee may
delegate any of its responsibilities to others and may allocate any of its
responsibilities among its members.

              A member of the Committee shall not participate in and shall not
be counted as a member with respect to any action of the Committee directly
affecting only that member.

              3.2   Responsibility; Indemnification

              A member of the Committee shall not be personally responsible or
liable for any act or omission in connection with performance of powers or
duties or the exercise of discretion or judgment in the administration and
implementation of the Plan. Steelcase shall hold harmless and indemnify each
member of the Committee, and any other individual exercising delegated authority
or responsibility with respect to the Plan, from any and all liabilities and
costs arising from any act or omission related to the performance of duties or
the exercise of discretion and judgment with respect to the Plan.



SECTION 4:    ELIGIBILITY

              4.1   Participation

              Participation in the Plan is limited to individuals designated by
the Committee for participation in the Management Incentive Plan and whose
compensation exceeds the limits in Internal Revenue Code Section 401(a)(17).

              4.2   Termination of Participation

              Participation in the Plan shall terminate upon the earlier of the
date the Participant is not an Employee and has been paid the full amount due
under the Plan or the date of the Participant's death. Active participation by
any individual will cease if the individual no longer meets the criteria for
participation in section 4.1 above, and any individual's active participation
may be terminated by the Committee at any time. If active participation
terminates, subsequent employment will continue to count for vesting purposes.




                                       -3-

<PAGE>

SECTION 5:    VESTING

              5.1   Vesting Service

              A Participant's years of vesting service will be equal to the time
elapsed from his date of hire by Steelcase or any member of its controlled
group, through the date of termination of such employment, and disregarding
employment preceding any break in continuous employment. Only full years are
counted.

              5.2   Vested Percentage

              The Participant's vested percentage shall be determined by the
following schedule:

              Years of Vesting Service                   Vested Percentage
              Less than 3 years                                  0%
              3 years, but less than 4 years                    20%
              4 years, but less than 5 years                    40%
              5 years, but less than 6 years                    60%
              6 years, but less than 7 years                    80%
              7 years or more                                  100%

              5.3   Retirement, Death and Disability

              A Participant shall be 100% vested upon attainment of age 65 while
employed by Steelcase or any member of its controlled group, or in the event of
the Participant's Total Disability or death while so employed.


SECTION 6:    BENEFITS

              6.1   Amount and Form of Benefit

              (1) Steelcase shall credit to the Participant's Account a
percentage of "Eligible Compensation" that is equal to the percentage of
compensation allocated to the Participant's account under Steelcase's qualified
profit sharing and money purchase pension plans for that year, determined with
respect to the compensation taken into account under the qualified plans. A
Participant's "Eligible Compensation" is base pay and annual bonus actually paid
during the fiscal year, and will exclude other forms of compensation. "Eligible
Compensation" is only the Participant's compensation in excess of the limit
described in Internal Revenue Code Section 401(a)(17) but not in excess of twice
that limit. Contributions will be deemed to have been credited as of the last
day of each fiscal year, and will only be credited if the Participant is still
employed and still a member of the MIP on that last day.

              (2) The Account shall be credited with earnings for each fiscal
year at a rate equal to the Participant's actual rate of return on investments
to the Participant's credit under Steelcase's qualified money purchase pension
and profit sharing plans. On and after the date of the Participant's termination
of employment, however, no earnings will be credited.

                                       -4-


<PAGE>

              6.2   Payment

                    i.  During Life

              Amounts credited to the Participant's Account shall be paid or
begin on or about the April 1 following the Fiscal Year in which termination of
employment occurs. A Participant may elect, subject to the approval of the
Committee, to have the payment made in either of the following ways or
any combination thereof:

                        (a) In lump sum, or

                        (b) In annual installments over four years using the
"declining digits" method (i.e., the first payment is 1/4 of the account
balance, the second 1/3 of the remaining balance, the third 1/2 of the remaining
balance, and the fourth the entire remaining balance).

              The Participant's election under this Section shall be filed in
writing with the Committee. The Participant's initial election shall be
effective if filed with the Committee within thirty days of the date the
Committee provides notice of the election to the Participant, but in any event
prior to the date payment would otherwise be made. Elections filed after that
time, and any change in an election, shall be effective only if the individual
remains employed for the following 12 month period.

                   ii. Death. In the event of death of a Participant before
payment of all benefits due, any amount remaining in the Participant's account
will be made to the Participant's Beneficiary in a single lump sum or in annual
installments over a four year period, using the declining digits method,
provided the Participant so elects.

              6.3   Forfeiture of Benefits.

              A Participant's right to vested benefit payments remaining unpaid
under this Plan shall be forfeited upon occurrence of any of the following
events:

                   i. Termination for Cause. Termination of the Participant's
employment for cause, as determined in the sole discretion of the Committee.

                   ii. Competition. If the Participant directly or indirectly
engages in competition with Steelcase or any subdivision, subsidiary, or
affiliate of Steelcase or becomes employed by or performs services for any
person or entity engaged in competition with Steelcase or any subdivision,
subsidiary, or affiliate of Steelcase without prior approval of the Board of
Directors of Steelcase. A Participant engages in competitive activity if the
Participant is engaged in self-employment or employment other than with
Steelcase, its affiliates or distributors, in the manufacture, design or
distribution of office furniture or office systems, or by providing services to
entities which are engaged in such manufacture design or distribution. By way of
example, such entities include, but are not limited to, Herman Miller, Haworth,
Hon, Knoll and U.S. Office Products and their affiliates and dealers. The
ownership of a 5% or greater interest in any entity engaged in competitive
activities will be deemed the equivalent of actual employment or
self-employment.

                                       -5-

<PAGE>

SECTION 7:    AMENDMENT AND TERMINATION

              7.1   Amendment

              This Plan may be amended in any manner at any time by the Board of
Directors of Steelcase. No amendment may, however, decrease or eliminate the
account of a Participant as of the date of the amendment.

              7.2   Termination

              The Plan may be terminated at any time by the Board of Directors
of Steelcase. Upon termination of the Plan, the Board shall specify the extent
to which benefits of Participants employed by Steelcase shall be preserved or
terminated. Upon termination of the Plan, all benefits of previously retired and
deceased Participants that are being paid or are payable at a future date shall
continue to be paid in accordance with the terms of the Plan in effect at the
time of termination.



SECTION 8:    GENERAL PROVISIONS

              8.1   No Right to Participate

              Nothing in this Plan shall be deemed or interpreted to provide a
Participant or any non-participating Employee with any contractual right to
participate in or receive benefits of the Plan. The right to participate and the
duration of active participation shall be determined in the sole discretion of
the Committee.

              8.2   No Employment Right

              Participation in this Plan shall not be construed as constituting
a commitment, guarantee, agreement, or understanding of any kind that Steelcase
or any subdivision of Steelcase will continue to employ any individual, and this
Plan shall not be construed or applied as any type of employment contract or
obligation. Nothing herein shall abridge or diminish the rights of Steelcase or
the employing subdivision of Steelcase to determine the terms and conditions of
employment of any Participant or other Employee or to terminate the employment
of any Participant or other Employee with or without cause at any time.

              8.3   No Assignment or Transfer

              Neither a Participant nor any beneficiary or other representative
of a Participant shall have any right to assign, transfer, attach, or
hypothecate any amount or credit, potential payment, or right to future payments
or any other benefit provided under this Plan. Payment of any amount due or to
become due under this Plan shall not be subject to the claims of creditors of
the Participant or to execution by attachment or garnishment or any other legal
or equitable proceeding or process.



                                       -6-

<PAGE>

              8.4   Withholding and Payroll Taxes

              Steelcase shall deduct from any payment made under this Plan all
amounts required by federal, state, and local tax laws to be withheld and shall
subject any payments made under the Plan to all applicable payroll taxes and
assessments.

              8.5   Incompetent Payee

              If the Committee determines that a person entitled to a payment
hereunder is incompetent, it may cause benefits to be paid to another person or
entity for the use or benefit of the Participant or the Participant's
beneficiary at the time or times otherwise payable hereunder, in total discharge
of the Plan's obligations to the Participant or beneficiary.

              8.6   Governing Law

              The provisions of the Plan shall be construed and governed under
the laws of the State of Michigan.

              8.7   Construction

              The singular includes the plural, and the plural includes the
singular, and terms connoting gender include both the masculine and feminine,
unless the context clearly indicates the contrary. Capitalized terms, except
those at the beginning of a sentence or part of a heading, have the meaning
defined in the Plan.

              8.8   Disputes.

              In the event of any dispute under this Plan, the Committee will
afford the individual affected with a right to a review that complies with the
claim review procedures of ERISA. The Committee has the full discretionary
authority to consider and resolve any and all questions regarding the Plan and
the Committee's decision is intended to be binding on all in the absence of lack
of good faith or in the event of intentional wrongdoing by members of the
Committee.

              IN WITNESS WHEREOF, Steelcase has adopted and executed this Plan
pursuant to the authority of its Board of Directors this 24th day of February,
1999.

                                       STEELCASE INC.

                                       By /s/ James P. Hackett
                                         --------------------------------------
                                          James P. Hackett

                                       Its President & Chief Executive Officer
ATTEST:

/s/ Jon D. Botsford
- -------------------
Jon D. Botsford

Its Secretary


                                      -7-



<PAGE>

                                                                    EXHIBIT 21.1

                        Subsidiaries of the Registrant

1.  Steelcase Canada Ltd., a Canadian corporation

2.  Steelcase Financial Services Inc., a Michigan corporation





<PAGE>

                                                                    Exhibit 23.1

Consent of Independent Certified Public Accountants


Steelcase, Inc.
Grand Rapids, Michigan

We consent to the incorporation by reference and use of our report dated March
19, 1999, except for Note 20, which is dated as of April 22, 1999, relating to
the consolidated financial statements and schedule of Steelcase Inc. included in
the Company's Annual Report on Form 10-K for the year ended February 26, 1999 in
the previously filed Registration Statements for the Company's Steelcase Inc.
Incentive Compensation Plan (Registration No. 333-46711) and Steelcase Inc.
Employee Stock Purchase Plan (Registration No. 333-46713).


BDO SEIDMAN,LLP



Grand Rapids, Michigan
May 27, 1999













<TABLE> <S> <C>


<PAGE>

<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
STEELCASE INC'S FINANCIAL STATEMENTS FOR THE YEAR ENDED FEBRUARY 26, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                         FEB-26-1999
<PERIOD-START>                            FEB-28-1998
<PERIOD-END>                              FEB-26-1999
<CASH>                                             68
<SECURITIES>                                        9
<RECEIVABLES>                                     489
<ALLOWANCES>                                       28
<INVENTORY>                                        97
<CURRENT-ASSETS>                                  737
<PP&E>                                          1,939
<DEPRECIATION>                                  1,200
<TOTAL-ASSETS>                                  2,183
<CURRENT-LIABILITIES>                             447
<BONDS>                                             0
<PREFERRED-MANDATORY>                               0
<PREFERRED>                                         0
<COMMON>                                          379
<OTHER-SE>                                      1,121
<TOTAL-LIABILITY-AND-EQUITY>                    2,183
<SALES>                                         2,743
<TOTAL-REVENUES>                                2,743
<CGS>                                           1,753
<TOTAL-COSTS>                                   1,753
<OTHER-EXPENSES>                                    0
<LOSS-PROVISION>                                    6
<INTEREST-EXPENSE>                                  0
<INCOME-PRETAX>                                   337
<INCOME-TAX>                                      125
<INCOME-CONTINUING>                               221
<DISCONTINUED>                                      0
<EXTRAORDINARY>                                     0
<CHANGES>                                           0
<NET-INCOME>                                      221
<EPS-BASIC>                                    1.44
<EPS-DILUTED>                                    1.44

</TABLE>