STEELCASE INC, S-1, 1997-12-05

STEELCASE INC
S-1, 1997-12-05

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 5, 1997

REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

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

MICHIGAN 2522 38-0819050
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NUMBER)
INCORPORATION OR CLASSIFICATION NUMBER)
ORGANIZATION)

901 44TH STREET
GRAND RAPIDS, MICHIGAN 49508
(616) 247-2710
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

JON D. BOTSFORD, ESQ.
GENERAL COUNSEL AND SECRETARY
STEELCASE INC.
901 44TH STREET
GRAND RAPIDS, MICHIGAN 49508
(616) 246-9600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

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

COPIES TO:

KRIS F. HEINZELMAN, ESQ. ROBERT M. THOMAS, JR., ESQ.
CRAVATH, SWAINE & MOORE SULLIVAN & CROMWELL
825 EIGHTH AVENUE 125 BROAD STREET
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10004
(212) 474-1000 (212) 558-4000

JEREMIAH T. MULLIGAN, ESQ. KEVIN SHERIDAN, ESQ. HUGH H. MAKENS, ESQ.
CURTIS, MALLET, PREVOST- ROBERTS, SHERIDAN & WARNER NORCROSS & JUDD LLP
COLT & MOSLE KOTEL 900 OLD KENT BUILDING
101 PARK AVENUE, 36TH 12 EAST 49TH STREET 111 LYON STREET, N.W.
FLOOR NEW YORK, NEW YORK 10017 GRAND RAPIDS, MICHIGAN
NEW YORK, NEW YORK 10178 (212) 299-8600 49503
(212) 696-6000 (616) 752-2000

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date hereof.

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

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]

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

CALCULATION OF REGISTRATION FEE

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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(1) REGISTRATION FEE
- -------------------------------------------------------------------------------
<S> <C> <C>
Class A Common Stock....................... $10,000,000 $2,950
- -------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED , 1997

SHARES
[LOGO] STEELCASE INC.
CLASS A COMMON STOCK

-----------

Of the shares of Class A Common Stock offered, shares are being
offered hereby in the United States and shares are being offered in a
concurrent international offering outside the United States. The initial public
offering price and the aggregate underwriting discount per share will be
identical for both Offerings. See "Underwriting".

All of the shares of Class A Common Stock offered hereby are being sold by
the Selling Shareholders. See "Principal and Selling Shareholders". The Company
will not receive any of the proceeds from the sale of the shares.

After giving effect to the Recapitalization, the Company will have two
classes of authorized common stock, Class A Common Stock and Class B Common
Stock. Except with respect to voting and conversion, the rights of the holders
of Class A Common Stock and Class B Common Stock are substantially identical.
Each share of Class B Common Stock is entitled to 10 votes and each share of
Class A Common Stock is entitled to one vote. Upon completion of the Offerings,
the holders of Class B Common Stock will retain approximately % of the
combined voting power of both classes of Common Stock. See "Description of
Capital Stock".

Prior to the Offerings, there has been no public market for the Class A
Common Stock. It is currently estimated that the initial public offering price
per share will be between $ and $ . For factors to be considered in
determining the initial public offering price, see "Underwriting".

SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE CLASS A COMMON STOCK.

Application will be made to list the Class A Common Stock on the New York
Stock Exchange under the symbol "SCS".
-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-----------

<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT(1) SHAREHOLDERS(2)
-------------- ------------ -------------------
<S> <C> <C> <C>
Per Share....................... $ $ $
Total(3)........................ $ $ $
</TABLE>
- -----
(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933.

(2) Before deducting estimated expenses of $ payable by the Selling
Shareholders.

(3) The Selling Shareholders have granted the U.S. Underwriters an option for
30 days to purchase up to an additional shares of Class A Common Stock
at the initial public offering price per share, less the underwriting
discount, solely to cover over-allotments. Additionally, the Selling
Shareholders have granted the International Underwriters a similar option
with respect to an additional shares as part of the concurrent
international offering. If such options are exercised in full, the total
initial public offering price, underwriting discount and proceeds to
Selling Shareholders will be $ , $ , and $ , respectively. See
"Underwriting".
-----------

The shares offered hereby are offered severally by the U.S. Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that
certificates of the shares will be ready for delivery in New York, New York on
or about , 1998, against payment therefor in immediately available funds.
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY

-----------

The date of this Prospectus is , 1998.
<PAGE>

STEELCASE

[DIAGRAM]
[DEPICTING PATENT DIAGRAM OF METAL WASTE BASKET]

The first first . . .

and there have been many, many more . . .

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

Steelcase(R), Activity(TM), Avenir(R), Ballet(R), Broadmoor(R),
CaneCreek(R), Context(R), Criterion(R), DesignTex(R), Details(R), Elective
Elements(R), Ellipse(R), FirstFile(R), Metro(R), Migrations(R), Montage(TM),
Pathways(R), Personal Harbor(R), Player(R), Protege(R), Rally(R), Rapport(R),
Sensor(R), Series 9000(R), Springboard(R), Stow Davis(R), Teamwork(R),
Turnstone(R) and Vecta(R) are trademarks of Steelcase Inc. and its
subsidiaries. Strafor(R), Airborne(R) and Gordon Russell(R) are trademarks of
Steelcase Strafor, S.A. Softboard(TM) is a trademark of Microfield Graphics,
Inc. and Environmentally Intelligent(TM) is a trademark of McDonough Braungart
Design Chemistry, L.L.C.

CERTAIN PERSONS PARTICIPATING IN THE OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON
STOCK, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS
IN SUCH SECURITIES, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH
THE OFFERINGS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".

2
<PAGE>

. . . 85 YEARS OF INSPIRATION

[PHOTO OF A VINTAGE DELIVERY
TRUCK]

early delivery system to first
industry dealer network
established in 1922

[PHOTO]

manufactured Frank Lloyd Wright-
designed desk, precursor to
systems furniture, for S.C.
Johnson & Sons in 1937

[PHOTO]

first standard sizing of desks

[PHOTO]

Context, an award-winning
furniture system designed to
support teamwork and
collaboration

[PHOTO]

Criterion, the Company's best-
selling chair today, designed to
meet customer health, safety and
comfort needs

[PHOTO]

Award-winning Personal Harbor
workspace for individual and
team environments

[PHOTO]

Sunshine Styling -- the addition
of color to office furniture in
the early 1950's

[PHOTO]

Series 9000 -- the largest
selling office furniture system
in the industry, continually
enhanced and supported for 25
years

[PHOTO OF A TRACTOR-TRAILER IN FRONT OF SEARS TOWER]

Steelcase furnishes 44 floors of
Chicago's Sears Tower in 1973,
setting a standard for the
industry in manufacturing and
delivery capabilities
<PAGE>

[PHOTO]

Details computer support
worktools are designed to help
prevent repetitive stress
injuries

[PHOTO]

Metro's Teamwork system with
Softboard, an electronic white
board with software that records
and transmits information to
personal computers

[PHOTO]

Migrations from Brayton --
seating for lounge and team
areas

William McDonough Collection
from DesignTex, the first
Environmentally Intelligent
compostible upholstery fabrics

[PHOTO]

established first acoustical
testing laboratory in the
industry in mid-1970's

[PHOTO]

Sensor, high performance
ergonomic seating; more than 4
million units sold worldwide
since 1986

[PHOTO]

Corporate Development Center --
a creative workplace for
Steelcase research, design,
engineering and marketing
personnel

[PHOTO]

TNT -- the newest furniture
system from Steelcase Strafor,
with elegant styling for the
European market

[PHOTO]

Vecta Ballet table -- an award-
winning folding table for
conference centers and training
rooms

[PHOTO]

the Pathways portfolio uses a
design logic to create total
interior space solutions
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements
included elsewhere in this Prospectus. Unless otherwise indicated, the
information contained in this Prospectus assumes that the Underwriters' over-
allotment options are not exercised and gives effect to the recapitalization
(the "Recapitalization") described under "Description of Capital Stock--
Recapitalization". As used herein in conjunction with any given year, the term
"Fiscal" refers to the fiscal year of the Company, which prior to March 1995
ended on February 28 and thereafter ends on the last Friday in February. For
example, Fiscal 1996 ended on February 23, 1996. See Note 1 to Consolidated
Financial Statements of the Company included elsewhere in this Prospectus.

THE COMPANY

Steelcase Inc. ("Steelcase" or the "Company") is the world's largest
manufacturer and provider of office furniture, office furniture systems and
related products and services. The Company has led the U.S. office furniture
industry in sales for 24 consecutive years and believes it has the industry's
largest base of installed products. In Fiscal 1997, the Company's consolidated
net sales were $2.4 billion and in the year ended December 31, 1996,
unconsolidated joint ventures in which the Company generally holds 50%
interests generated approximately $0.5 billion in net sales.

To enhance its industry leadership position, the Company focuses on research,
development and design methods that analyze individual and group work processes
to create work environments that enable workers to perform more effectively.
Since 1994, the Company has won 24 design awards for new products and product
enhancements across its product lines. In calendar 1998, the Company plans to
introduce more than 75 new products and product enhancements, including
Pathways, a unique portfolio of products that, in addition to office furniture
and work tools, will include architectural elements such as interior walls and
floors designed to integrate entire work spaces. Pathways is designed to be
compatible with the Company's current products.

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 675 locations. These dealers provide local expertise
and ongoing customer support services and remain in close contact with
customers during and after the completion of a project to help ensure customer
satisfaction and to 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 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, including Series 9000, Avenir, Context,
Elective Elements and Montage; (ii) seating products, including Sensor,
Criterion, Rally and Springboard; (iii) group and individual storage products,
including filing units and cabinets; and (iv) desk and casegood products,

3
<PAGE>

such as bookcases and credenzas. 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, S.A. ("Steelcase Strafor"), the Company's 50% joint venture with
Strafor Facom S.A., licensing arrangements and the Steelcase Design
Partnership, a group of six Steelcase entities that focuses on specialty
markets (the "Steelcase Design Partnership").

INDUSTRY DYNAMICS

The Business and Institutional Furniture Manufacturer's Association ("BIFMA")
reports that U.S. office furniture industry shipments totaled approximately $10
billion in calendar 1996 and grew at a compound annual growth rate ("CAGR") of
approximately 7.2% over the three-year period ended December 31, 1996. Strong
growth continued in 1997, with BIFMA reporting that U.S. office furniture
industry shipments increased $1.1 billion, or 14.9%, to $8.5 billion for the
nine-month period ended September 30, 1997, from $7.4 billion for the
comparable period in the prior year.

Overall growth in the office furniture industry is primarily a function of
increased white-collar employment, increased commercial construction and
increased capital spending. The Company believes that certain other recent
trends are also affecting, and will continue to affect, the demand for the
Company's products and services. The growing use and integration of technology,
changes in organizational structures and work processes, greater awareness of
health and safety issues and continued focus on cost efficiency are driving
businesses to increasingly pursue more effective ways to support their workers
and utilize their existing work spaces. The Company believes these trends will
increase demand for its existing products and services and will create
opportunities to introduce new products and to develop new markets.

COMPETITIVE STRENGTHS

The Company believes it will continue to be the leader in its industry as a
result of the following competitive strengths:

MARKET LEADERSHIP AND STRONG BRAND FRANCHISE. The Company has maintained the
largest total market share of any manufacturer in the U.S. office furniture
industry since 1973. In calendar 1996, based on BIFMA statistics, the Company
had a market share of approximately 20%, nearly twice that of its nearest
competitor. "Steelcase" is the most widely recognized brand name in the
industry, and the Company believes it has earned a reputation for producing a
broad range of high quality office furniture and related products. The
Company's industry leadership and brand recognition are key marketing tools for
expanding its customer base and entering new markets and market segments.

LONG-TERM CUSTOMER RELATIONSHIPS; LARGE INSTALLED BASE. The Company, together
with its dealer network, has developed strong, long-term relationships with a
large number of commercial and non-commercial organizations. As a result of its
sales leadership and these long-term relationships, the Company believes it has
the largest base of installed products in the U.S. office furniture industry.
Through this installed base, the Company generates significant annual sales
from repeat and expansion orders. By purchasing additional Steelcase products,
these customers ensure compatibility and conformity with existing products and
retain the local Steelcase dealer as a single contact for ongoing services. The
Company believes that as its existing customers expand and reconfigure their
workplaces their need for additional Steelcase products and dealer services
will increase.

GLOBAL DEALER NETWORK. The Company's strong relationships with its worldwide
network of independent dealers in approximately 675 locations, built over many
years of consistent partnership,

4
<PAGE>

allow the Company to focus on the core functions of design, manufacturing and
distribution while benefiting from the dealers' local market expertise and
ongoing customer support. This network, which includes dealers in more than 200
locations outside of the United States and Canada, complements the Company's
global distribution capability and enables Steelcase to address the product and
support service needs of its multinational customers in virtually any non-
domestic market. The Company's relationships with its dealers are typically
long-term in nature, providing continuity in customer relationships and a
strong foundation of product knowledge. In addition, the dealers, together with
the Company's sales representatives, maintain close relationships with local
architects, contract interior designers and corporate facility managers who
typically influence purchasing decisions.

LEADERSHIP IN DESIGN, RESEARCH AND INNOVATION. The Company utilizes its
extensive knowledge of work processes, its ongoing research and its user-
centered design methodology to create innovative products and concepts which
address evolving customer needs. The Company's Corporate Development Center
provides a creative environment for 750 of the Company's research, design,
engineering and marketing personnel and houses ten laboratories for testing
sound, lighting, ergonomics, flammability and product durability. The Company's
personnel use the Corporate Development Center to conduct over 14,000 product
tests annually. Since 1994, the Company has won 24 design awards for new
products and product enhancements across its product lines. The Company,
through its commitment to design, research and innovation, has developed a
strong reputation among, and close ties with, leading independent architectural
and design firms and design schools which play a significant role in the
industry.

KNOWLEDGE OF WORKPLACE NEEDS; CONSULTATIVE MARKETING APPROACH. The Company,
through ongoing research and interaction with its broad customer base, has
gained an extensive knowledge of how people work and how businesses can use
furniture and related products to facilitate more effective work processes. In
1995, the Company introduced Workplace Performance, a consultative process
supported by proprietary software-based tools that incorporates an extensive
database of customer information and industry research and trends. With the aid
of Workplace Performance, the Company's dealers and salesforce work with
customers early in the planning process to illustrate possible work space
configurations and product packages that help the customers improve their
productivity and lower their occupancy costs. The Company believes that its
ability to provide more comprehensive support to customers in the early stages
of the planning process is a significant competitive advantage.

MANUFACTURING AND DISTRIBUTION CAPABILITY. The Company believes it has the
largest office furniture manufacturing capacity in the world with more than 50
manufacturing facilities, including those operated by joint ventures. In
addition, the Company has an extensive distribution system in the United States
and Canada and uses commercial transport and delivery services in both the
United States and abroad. The Company's products, including those offered by
the Company's joint ventures, are generally available throughout the world.

CORPORATE CULTURE. Management believes that the Company's corporate culture
and values strengthen relationships with employees, customers, dealers and the
communities in which it operates. For Steelcase employees, this corporate
culture fosters loyalty and productivity as demonstrated by the fact that the
Company's employees in the United States and Canada have an average tenure of
approximately 12 years. As an example of its commitment to its employees, the
Company will grant at the time of the Offerings (as defined herein) to each of
approximately 15,000 employees 10 shares of Class A Common Stock (as defined
herein) and an immediately exercisable option to purchase a maximum of 100
shares of Class A Common Stock at a purchase price equal to 85% of the initial
public offering price.

5
<PAGE>

GROWTH STRATEGY

Steelcase's objectives are to strengthen its industry leadership position and
increase its revenues and profitability. To achieve these objectives, the
Company will:

FOCUS ON PRODUCT INNOVATION. The Company intends to strengthen its leadership
position in the office furniture industry and increase its revenues through the
development of aesthetically pleasing and technologically-sophisticated new
products and product enhancements. In Fiscal 1995, 1996 and 1997, the Company
spent approximately $40 million, $50 million and $65 million, respectively, on
research and development. In calendar 1998, the Company plans to introduce more
than 75 new products and product enhancements, including Pathways and Answer,
an office furniture systems line under the Turnstone brand which is designed to
work with Pathways. The Company's user-centered design efforts address
significant workplace trends and result in products that support individual
worker needs, including health, safety and comfort. In addition, these products
integrate technology and further support the new work processes being adopted
by organizations. The Company believes its new products and product
enhancements will offer superior flexibility and help its customers improve
organizational performance, better utilize their work space and work more
effectively.

PURSUE NEW MARKET OPPORTUNITY--PATHWAYS. In addition to enhancing its
existing product categories, the Company intends to leverage its extensive
knowledge of work processes to penetrate new markets and develop new market
segments for the work environment. The Company recently developed Pathways, a
unique portfolio of products and architectural elements designed to create
total interior space solutions. Pathways is designed to enable customers to
create, outfit and reconfigure technologically-sophisticated work environments
faster and more economically than they can today. Pathways uses a design logic
that makes its architectural elements and other products compatible with the
Company's current products, as well as competitors' products. The Pathways
portfolio includes removable, reconfigurable architectural elements such as
floor and wall systems, power, lighting and complementary furniture and work
tools. The Company believes Pathways offers a superior means to integrate all
workplace elements, including building operating systems, and accommodate all
technological workplace needs. As a result, the Company believes Pathways
represents a significant opportunity for increased sales from customer projects
which involve new construction or building refurbishment. The Company expects
to begin shipping Pathways products in the first quarter of calendar 1998.

LEVERAGE INSTALLED BASE THROUGH KNOWLEDGE OF WORK. As a result of its sales
leadership and long-term relationships with many of its customers, the Company
believes it has the largest base of installed products in the industry. The
Company believes its knowledge of work has enabled it to develop a strong
reputation for improving workplace effectiveness and performance through the
integration of people, processes, technology and work space. As a result, the
Company's customers increasingly look to the Company and its dealers for advice
and consultation on general workplace issues in addition to furniture. This
offers the Company the opportunity to analyze customers' needs and to offer
solutions that include the application of the Company's products across all of
its product lines. The Company intends to increase sales to its existing
customers by capitalizing on its broad range of product solutions and its
Workplace Performance consultative approach, as well as new product
applications, to drive incremental growth across all product categories.

6
<PAGE>

addition, the Company intends to increase its percentage of a dealer's sales by
continually enhancing and expanding its portfolio of knowledge, products and
services to ensure that dealers can satisfy virtually all of a customer's
furniture-related needs through sales of Steelcase products. As the Company
broadens its portfolio, it also supports dealers in expanding their customer
base. For example, the Company's Turnstone brand product offering allows
dealers to compete effectively in the value-priced market segment.

PURSUE STRATEGIC ACQUISITIONS, JOINT VENTURES AND ALLIANCES. The Company has
historically acquired companies with complementary or ancillary businesses or
products, entered into joint ventures and established strategic or commercial
alliances with various companies. The Company will continue to evaluate similar
transactions that it believes are consistent with its growth strategy or
otherwise present attractive opportunities for growth, entry into new markets
or introduction of new products.

ENHANCE GLOBAL PRESENCE. The Company intends to support the existing global
operations of its Steelcase International operating unit ("Steelcase
International") and of Steelcase Strafor by investing in product development
for regional market needs, expanding existing dealer operations and services
and developing alliances to penetrate further the markets served by the
Company. In addition, the Company intends to support the worldwide needs of its
multinational customers as they expand their global operations, as well as
service local organizations in regional markets.

7
<PAGE>

THE OFFERINGS(1)

Class A Common Stock offered by the Selling Shareholders(2):

U.S. Offering...... shares
International
Offering........... shares
---------
Total............ shares
=========

Common Stock to be outstanding after the Offerings:

Class A Common
Stock.............. shares(2)(3)
Class B Common
Stock.............. shares(4)
---------
Total............ shares
=========

Voting Rights......... There will be two classes of common stock outstanding
after the Offerings: class A common stock ("Class A
Common Stock") entitled to one vote per share and
class B common stock ("Class B Common Stock")
entitled to 10 votes per share. Class A Common Stock
and Class B Common Stock generally will vote as a
single class with respect to all matters submitted to
a vote of shareholders. The Class A Common Stock and
the Class B Common Stock are collectively referred to
in this Prospectus as "Common Stock". See
"Description of Capital Stock--Class A Common Stock
and Class B Common Stock".

Conversion............ 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 of the Company),
(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 on 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). See "Description of Capital Stock--
Class A Common Stock and Class B Common Stock".

Use of Proceeds....... All of the proceeds from the sale of the shares
of Class A Common Stock offered hereby will be
received by the Selling Shareholders. See "Use of
Proceeds".

Proposed New York
Stock Exchange
("NYSE") symbol...... SCS
- --------
(1) The offering of shares of Class A Common Stock initially being offered
in the United States (the "U.S. Offering") and the concurrent offering of
shares of Class A Common Stock initially being offered outside the
United States (the "International Offering") are collectively referred to
as the "Offerings".
(2) Excludes up to shares of Class A Common Stock that may be sold by the
Selling Shareholders pursuant to the Underwriters' over-allotment options.
See "Underwriting".
(3) Includes up to 150,000 shares of Class A Common Stock which will be granted
to certain employees of the Company at the time of the Offerings (the
"Employee Stock Grant"). Excludes (i) up to 2,800,000 shares of Class A
Common Stock issuable upon the exercise of incentive options to be granted
to designated employees pursuant to the Incentive Compensation Plan (as
defined herein) at the time of the Offerings at an exercise price equal to
the initial public offering price and (ii) up to 1,500,000 shares of Class
A Common Stock to be sold upon the exercise of options to be granted to
certain employees pursuant to the Purchase Plan (as defined herein) at the
time of the Offerings (the "Employee Discount Option Grant") which will be
immediately exercisable at 85% of the initial public offering price. See
"Management--Stock Incentive Plans". The Company intends to purchase the
shares of Class A Common Stock for the Employee Stock Grant and the
Employee Discount Option Grant from the Selling Shareholders at the same
price at which the shares of Class A Common Stock are being sold to the
Underwriters in the Offerings.
(4) Includes shares of Class B Common Stock to be issued upon conversion of
the Company's existing class A preferred stock, par value $100 per share
("Existing Class A Preferred Stock"), and existing class B preferred stock,
par value $50 per share ("Existing Class B Preferred Stock", and, together
with the Existing Class A Preferred Stock, the "Existing Preferred Stock"),
in connection with the Recapitalization (assuming an initial public
offering price per share of $ ). See "Description of Capital Stock--
Recapitalization".

8
<PAGE>

SUMMARY FINANCIAL DATA

The following table sets forth certain summary financial data of the Company.
The summary is qualified in its entirety by, and should be read in conjunction
with, "Selected Financial Data", "Management's Discussion and Analysis of
Financial Condition and Results of Operations", and the Consolidated Financial
Statements of the Company included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED(2)
-------------------------------------- ---------------------
FEBRUARY 28, FEBRUARY 23, FEBRUARY 28, AUGUST 23, AUGUST 29,
1995 1996 1997(1) 1996 1997
------------ ------------ ------------ ---------- ----------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $2,048.7 $2,155.9 $2,408.4 $1,152.1 $1,358.5
Cost of sales........... 1,451.8 1,468.2 1,551.6 749.0 857.1
-------- -------- -------- -------- --------
Gross profit............ 596.9 687.7 856.8 403.1 501.4
Selling, general and ad-
ministrative expenses.. 518.7 524.1 630.4 306.6 325.3
Patent litigation ex-
pense(3)............... -- -- 84.8 -- --
-------- -------- -------- -------- --------
Operating income........ 78.2 163.6 141.6 96.5 176.1
Patent litigation inter-
est expense(3)......... -- -- (111.7) -- --
Other income, net....... 27.1 24.0 21.4 11.5 10.2
-------- -------- -------- -------- --------
Income before provision
for income taxes and
equity in net income
(loss) of joint ven-
tures and dealer tran-
sitions................ 105.3 187.6 51.3 108.0 186.3
Provision for income
taxes.................. 40.9 68.1 23.6 42.1 71.6
Equity in net income
(loss) of joint
ventures and dealer
transitions............ (0.2) 4.0 -- 1.7 (1.1)
-------- -------- -------- -------- --------
Net income.............. $ 64.2 $ 123.5 $ 27.7 $ 67.6 $ 113.6
======== ======== ======== ======== ========
UNAUDITED PRO FORMA PER
SHARE DATA(4):
Net income............. $ $
Pro forma adjustment
for conversion of
Existing Preferred
Stock.................
-------- --------
Net income (loss)
attributable to
holders of Common
Stock................. $ $
======== ========
Net income (loss) per
share of Common
Stock................. $ $
======== ========
Weighted average shares
of Common Stock
outstanding ..........
======== ========
</TABLE>

<TABLE>
<CAPTION>
AUGUST 29, 1997(2)
----------------------
PRO
ACTUAL FORMA(5)
----------- ----------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital........................................... $ 533.9 $
Total assets.............................................. 2,064.8
Total liabilities......................................... 614.9
Shareholders' equity...................................... 1,449.9
</TABLE>
- -------
(1) Fiscal 1997 included 53 weeks.
(2) Unaudited.
(3) See Note 10 to Consolidated Financial Statements of the Company included
elsewhere in this Prospectus.
(4) The unaudited pro forma net income (loss) per share data gives effect to
the Recapitalization (assuming an initial public offering price of $ per
share for purposes of converting the Existing Preferred Stock) as if the
Recapitalization had occurred on February 24, 1996. Because of the
significant impact of the Recapitalization on net income (loss) per share
of Common Stock, historical amounts have not been presented. See
"Description of Capital Stock--Recapitalization" and Note 2 to Consolidated
Financial Statements of the Company included elsewhere in this Prospectus.
(5) The unaudited pro forma balance sheet data gives effect to (i) the
declaration and payment of a special dividend in the amount of $750 per
share, or $150.9 million in the aggregate, payable on January 9, 1998 to
holders of Common Stock as of December 2, 1997 (the "Special Dividend") and
(ii) the Company's intention to purchase 1,650,000 shares of Class A Common
Stock for the Employee Stock Grant and the Employee Discount Option Grant
from the Selling Shareholders at the same price at which the shares of
Class A Common Stock are being sold to the Underwriters in the Offerings
(assuming an initial public offering price of $ per share) as if the
Special Dividend and such purchases had occurred as of August 29, 1997. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources", "Management--Stock Incentive
Plans" and Note 2 to Consolidated Financial Statements of the Company
included elsewhere in this Prospectus.

9
<PAGE>

RISK FACTORS

Prospective investors should consider carefully the following risk factors
in addition to other information set forth in this Prospectus prior to making
an investment in the Class A Common Stock offered hereby.

STRONG COMPETITION

The office furniture industry is highly competitive, with a number of
competitors offering similar products. 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, in certain segments, Hon Industries Inc. ("Hon"). Each of
these competitors has a substantial installed base of products which can be a
source of significant future sales through repeat and expansion orders. These
competitors' products have strong acceptance in the marketplace, and such
competitors could develop alternative product designs which could give them a
competitive advantage over the Company. The Company also faces significant
price competition from its competitors and may encounter competition from new
market entrants. There can be no assurance that the Company will be able to
compete successfully in its markets in the future. See "Business--
Competition".

RISKS ASSOCIATED WITH ACHIEVING AND MANAGING GROWTH

As part of its growth strategy, the Company seeks to increase its revenues
and profitability through the introduction of innovative new products in both
existing and new markets. In particular, with the introduction of the Pathways
product portfolio scheduled for first shipment in the first quarter of
calendar 1998, the Company intends to enter the market for architectural
elements such as floor, wall and lighting systems and power and communications
infrastructure which is now served primarily by a portion of the construction
industry. There can be no assurance that the Company's new products will
achieve the same degree of success as that achieved by the Company's products
historically or that the Company's success will be replicated in new markets.

The Company also intends to pursue acquisitions, joint ventures and
alliances. The Company has historically acquired companies with complementary
businesses or products and entered into strategic joint ventures and alliances
with various companies. There can be no assurance that the Company will be
able to continue to identify attractive opportunities or enter into any such
transactions in the future. In addition, if an acquisition is completed, there
can be no assurance that the Company will be able to successfully integrate
the acquired entity into the Company's operations.

In addition, factors beyond the Company's control, including general
economic factors and business conditions in the markets or affecting the
customers served by the Company, may affect the Company's ability to achieve
and implement its growth strategy. See "Business--Growth Strategy".

ECONOMIC FACTORS AFFECTING THE OFFICE FURNITURE INDUSTRY

Fluctuations in office furniture industry revenues may be affected by a
variety of macroeconomic factors such as white-collar employment levels,
commercial construction and capital spending, as well as industry factors such
as technology demands, corporate organizational restructuring, health and
safety concerns and a continued focus on cost efficiency. There can be no
assurance that current or future economic or industry trends will not have an
adverse effect on the Company's financial condition or results of operations.
See "Business--Industry Dynamics".

NON-BINDING DEALERSHIP ARRANGEMENTS

The Company relies almost entirely on a network of independent dealers for
the marketing of its products to customers. The Company's domestic dealers and
many of its non-domestic dealers operate without written contracts, but are
subject to a uniform set of guidelines prescribed by the Company. There can be
no assurance that certain dealers will not choose to end their relationships

10
<PAGE>

with the Company or be terminated by the Company or that any replacements in
geographic areas covered by these dealers will be satisfactory. There can also
be no assurance that the loss or termination of dealers will not result in an
adverse effect on the Company's financial condition or results of operations.
See "Business--Sales and Marketing".

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS

The Company conducts business in countries outside the United States, which
exposes the Company to fluctuations in foreign currency exchange rates. In
Fiscal 1997, approximately 9.3% of the Company's consolidated revenues
originated outside the United States, the majority of which were denominated
in currencies other than U.S. dollars. The Company's production costs, profit
margins and competitive position in foreign markets are affected by the
strength of the currencies in countries where it manufactures or purchases
goods relative to the strength of the currencies in countries where its
products are sold. The Company from time to time reviews its foreign currency
exposure and evaluates whether it should enter into hedging transactions.
Although the Company hedges the majority of its transactional foreign currency
exposure, fluctuations in foreign currency exchange rates could still have an
adverse effect on the Company's financial condition or results of operations.

The Company's international operations are subject to other risks, such as
the imposition of government controls, export license requirements, inflation,
tariff or taxes and other trade barriers, difficulties in staffing and
managing international operations, price, wage and exchange controls, and
political, social and economic stability. There can be no assurance that these
and other factors will not have an adverse effect on the Company's financial
condition or results of operations.

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 waste.
The nature of the Company's existing and historical operations exposes the
Company to the risk of liabilities, claims and pollution control requirements
for a wide variety of environmental matters, including compliance with future
Clean Air Act requirements which are potentially significant to the Company's
operations and liability for releases and emissions of hazardous substances,
materials and waste. Although liabilities, claims and requirements relating to
environmental matters have not materially affected the Company to date, there
can be no assurance that they will not have a material adverse effect on the
Company's financial condition or results of operations. See "Business--
Environmental Matters".

CONTROL BY EXISTING SHAREHOLDERS

The Company has two classes of voting stock: the Class A Common Stock being
offered hereby, which is entitled to one vote per share, and the Class B
Common Stock, which is entitled to 10 votes per share. Upon completion of the
Offerings, the holders of Class B Common Stock will have % of the total
outstanding voting power of the Company. As a result, these shareholders will
have significant influence on the direction and policies of the Company and,
if they choose to act in concert, will be able to elect all the members of the
Company's Board of Directors (the "Board") and to control the approval of
important corporate transactions and other matters requiring no more than
majority shareholder approval. See "Principal and Selling Shareholders" and
"Description of Capital Stock--Class A Common Stock and Class B Common Stock".

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offerings, the Company will have outstanding
shares of Common Stock, consisting of the shares of Class A Common Stock
offered hereby (assuming no

11
<PAGE>

exercise of the Underwriters' over-allotment options), shares of Class A
Common Stock granted pursuant to the Employee Stock Grant and shares of
Class B Common Stock (including shares of Class B Common Stock issuable
upon conversion of the Existing Preferred Stock in the Recapitalization,
assuming an initial public offering price per share of $ ). In addition, the
Company will grant immediately exercisable options to purchase a maximum of
1,500,000 shares of Class A Common Stock pursuant to the Employee Discount
Option Grant and options to purchase up to 2,800,000 shares of Class A Common
Stock pursuant to the Incentive Compensation Plan. See "Management--Stock
Incentive Plans".

Subject to the lock-up provision described in the paragraph below, all the
shares of Class A Common Stock offered in the Offerings, all the shares of
Class A Common Stock granted to employees in connection with the Offerings and
all the shares of Class A Common Stock issued upon exercise of the options
described above will be freely transferable without restriction or further
registration under the Securities Act of 1933 (the "Securities Act"), except
that any shares purchased by "affiliates" of the Company, as that term is
defined in Rule 144 under the Securities Act ("Rule 144"), generally may only
be sold subject to certain restrictions as to timing, manner and volume. Any
share of Class A Common Stock outstanding as a result of the conversion of
shares of Class B Common Stock subsequent to the Offerings and all the shares
of Class B Common Stock, representing % of the outstanding Common Stock upon
completion of the Offerings, will be deemed to be "restricted securities"
under the Securities Act. However, beginning approximately 90 days after the
consummation of the Offerings, such shares of Common Stock, other than those
held by "affiliates" and shares held by a former employee of the Company,
will be freely tradeable pursuant to Rule 144(k) under the Securities Act.

The Company, its directors and its executive officers, and certain of its
shareholders who will represent in the aggregate % of the outstanding Common
Stock after the Offerings, have agreed, subject to certain exceptions
(including a transfer by sale or gift so long as the transferee agrees in
writing to the same terms binding the transferor), not to, directly or
indirectly, sell, offer to sell, transfer or otherwise dispose of any of the
economic consequences of ownership of any securities of the Company for a
period of 180 days after the date of this Prospectus without the prior written
consent of Goldman, Sachs & Co.

No prediction can be made as to the effect, if any, that subsequent sales of
shares of Common Stock or the availability of shares for sale will have on the
market price of the Class A Common Stock. Nevertheless, sales of significant
numbers of shares of Common Stock in the public market could adversely affect
the market price of the Class A Common Stock and could impair the Company's
ability to raise capital through an offering of its equity securities. See
"Shares Eligible for Future Sale" and "Underwriting".

DIVIDENDS

The Company has paid regular dividends in the past and intends to continue
to pay dividends following the Offerings. However, there can be no assurance
as to the amount and frequency of any such dividend or that a dividend will be
paid at all due to factors relating to the Company or the economy generally.
See "Dividend Policy".

CERTAIN ANTI-TAKEOVER MATTERS

The Company's Second Restated Articles of Incorporation (the "Articles") and
Amended By-laws (the "By-laws") contain certain provisions that may discourage
other persons from attempting to acquire control of the Company. These
provisions include, but are not limited to, a staggered Board, the
authorization of the Board to issue shares of undesignated preferred stock in
one or more series without the specific approval of the holders of Common
Stock, the establishment of advance notice

12
<PAGE>

requirements for director nominations and actions to be taken at annual
meetings and the requirement that two-thirds of the shareholders entitled to
vote at a meeting are required to approve any change to the By-laws and
certain provisions of the Articles. In addition, the Articles and the By-laws
permit special meetings of the shareholders to be called only by the Company's
Chief Executive Officer or upon request by a majority of the Board and deny
shareholders the ability to call such meetings. Such provisions, as well as
the provisions of the Michigan Business Combination Act (the "MBCA") to which
the Company is subject, could impede a merger, takeover or other business
combination involving the Company or discourage a potential acquiror from
making a tender offer or otherwise attempting to obtain control of the
Company. In certain circumstances, such provisions may inhibit or discourage
takeover attempts and could reduce the market value of the Class A Common
Stock. See "Description of Capital Stock--Certain Anti-Takeover Matters".

ABSENCE OF PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offerings, there has been no public market for the Class A
Common Stock, and there can be no assurance that an active trading market for
the Class A Common Stock will develop or be sustained. The initial public
offering price of the Class A Common Stock will be determined by negotiations
among the Company, the Selling Shareholders (or their representatives), the
U.S. Underwriters and the International Underwriters based upon several
factors and will not necessarily reflect the market price of the Class A
Common Stock after the Offerings. The price at which the Class A Common Stock
will trade in the marketplace will depend upon a number of factors, including
variations in the Company's financial and operating results, changes in
earnings estimates by industry research analysts, investors' perceptions of
the Company and general economic, industry and market conditions. In addition,
the stock market has from time to time experienced extreme price and volume
fluctuations. These market fluctuations may adversely affect the market price
of the Class A Common Stock. See "Underwriting".

13
<PAGE>

THE COMPANY

The Company was founded in 1912 and initially focused on manufacturing high
quality metal office products. Over time, the Company expanded its product
offerings and built a strong distribution system to support its high quality
manufacturing operations in the United States and Canada. With the growth of
office furniture systems sales in the late 1970's, the U.S. office furniture
industry grew rapidly from $0.8 billion in 1970 to $3.3 billion in 1980,
according to BIFMA statistics. During this time, Steelcase gained market share
by focusing on sales of systems products and investing in additional
manufacturing capacity. During the 1970's and 1980's, the Company expanded
globally, with the establishment of joint ventures in Europe and Japan, while
continuing to invest in additional manufacturing capacity. During the 1980's,
the Company also increased its emphasis on design, with the formation in 1987
of the Steelcase Design Partnership, and on research, with the opening in 1989
of its Corporate Development Center. The Company introduced its award-winning
Sensor seating line in 1986 and Context systems line in 1989. In the 1990's,
the Company has increased its focus on manufacturing quality and efficiency,
has enhanced its product portfolio, has continued its commitment to research
and design and has continued its global expansion.

The Company markets its products and services throughout the world as
follows:

STEELCASE U.S. Steelcase U.S. ("Steelcase U.S.") operations include
approximately 13,500 employees, 34 manufacturing and distribution facilities,
20 regional sales offices and dealers in more than 400 locations. Steelcase
U.S. also includes the Steelcase Design Partnership, a group of six Steelcase
entities that serves specialty markets. These entities operate autonomously
but have access to corporate engineering and research resources, and their
products are offered by the Company's dealer network to complement the
Steelcase brand product base.

STEELCASE CANADA. Steelcase Canada, Ltd., a wholly owned subsidiary
("Steelcase Canada"), primarily operates as an extension of Steelcase U.S. in
the Canadian markets, sourcing its sales both through its manufacturing
facility in Markham, Ontario and through imports from Steelcase U.S. Steelcase
Canada has approximately 580 employees and dealers in more than 40 locations.

STEELCASE INTERNATIONAL. Steelcase International coordinates sales,
manufacturing, distribution and marketing of all Steelcase products throughout
Asia, Latin America, the Middle East and the Far East. Steelcase International
conducts these activities partly through U.S.-based operations and partly
through Steelcase subsidiaries and joint ventures in Australia, Brazil, China,
Japan, Mexico, Saudi Arabia and Thailand. Steelcase International also
manufactures products through licensing arrangements in Colombia, India, Japan
and Thailand. Steelcase International has approximately 420 employees and
dealers in more than 40 locations.

STEELCASE STRAFOR. Steelcase Strafor, a 50% joint venture with Strafor Facom
S.A., is a leading office furniture company in Europe with net sales of
approximately $0.5 billion in the year ended December 31, 1996. Steelcase
Strafor primarily serves the European market with 14 manufacturing facilities,
approximately 3,900 employees and dealers in more than 170 locations.

SERVICES AND OTHER BUSINESSES. Steelcase also has service-oriented divisions
or subsidiaries such as Furniture Management Coalition ("FMC") and Steelcase
Financial Services Inc. ("SFSI"). In addition, IDEO Product Development, Inc.,
a subsidiary of the Company ("IDEO"), provides product design services to the
Company and third parties. Attwood Corporation, a subsidiary of the Company,
provides thermoplastic injection moldings parts to the Company and is a
leading manufacturer of marine hardware and accessories. These divisions and
subsidiaries include approximately 1,300 employees and four manufacturing
facilities.

The Company's headquarters are located at 901 44th Street, Grand Rapids,
Michigan 49508 (telephone number: (616) 247-2710).

14
<PAGE>

USE OF PROCEEDS

All of the shares of Class A Common Stock being offered in the Offerings are
being sold by the Selling Shareholders. The Company will not receive any of
the proceeds from the sale of such shares.

DIVIDEND POLICY

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 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. The aggregate dividends paid on outstanding common stock in each quarter
in Fiscal 1995, 1996 and 1997 and in the first two quarters of Fiscal 1998 are
set forth below. Per share amounts are not presented because the Company does
not believe such amounts will be meaningful following the Recapitalization.
See the Consolidated Financial Statements of the Company included elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER FISCAL YEAR
------------- -------------- ------------- -------------- -----------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
FISCAL 1995............. $ 3.1 $ 3.1 $3.2 $3.2 $12.6
FISCAL 1996............. 5.0 5.0 5.0 5.1 20.1
FISCAL 1997............. 5.0 5.0 5.0 7.1 22.1
FISCAL 1998............. 10.0 10.1
</TABLE>

15
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
August 29, 1997 (i) on an actual basis and (ii) on a pro forma basis giving
effect to the declaration and payment of the Special Dividend, the
Recapitalization and the Offerings, as if the Special Dividend, the
Recapitalization and the Offerings had occurred as of such date. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources", "Description of Capital Stock--
Recapitalization", "Underwriting" and Notes 2 and 9 to Consolidated Financial
Statements of the Company included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AUGUST 29, 1997
------------------
PRO
ACTUAL FORMA
--------- -------
(IN MILLIONS)
<S> <C> <C>
SHAREHOLDERS' EQUITY:
Preferred Stock--Class A, $100 par value; actual: 20,000
shares authorized, 7,672.5 shares issued and outstanding... $ 0.8 $
Preferred Stock--Class B, $50 par value; actual: 200,000
shares authorized, 196,490 shares issued and outstanding... 9.8
Preferred Stock--no par value; pro forma: 50,000,000 shares
authorized, none issued and outstanding.................... --
Common Stock--$50 par value; actual: 220,000 shares
authorized, 201,150 shares issued and outstanding.......... 10.0
Class A Common Stock--no par value; pro forma: 475,000,000
shares authorized, issued and outstanding (1)(2)........ --
Class B Common Stock--no par value; pro forma: 475,000,000
shares authorized, issued and outstanding (3) .......... --
Additional paid-in capital.................................. 5.1
Cumulative translation adjustment........................... (13.9)
Retained earnings........................................... 1,438.1
--------- -----
Total shareholders' equity................................ $ 1,449.9 $
========= =====
</TABLE>
- --------
(1) Excludes up to shares of Class A Common Stock that may be sold by the
Selling Shareholders pursuant to the Underwriters' over-allotment options.
See "Underwriting".
(2) Includes up to 150,000 shares of Class A Common Stock which will be
granted pursuant to the Employee Stock Grant. Excludes (i) up to 2,800,000
shares of Class A Common Stock issuable upon the exercise of incentive
options to be granted to designated employees pursuant to the Incentive
Compensation Plan at the time of the Offerings at an exercise price equal
to the initial public offering price and (ii) up to 1,500,000 shares of
Class A Common Stock to be sold upon the exercise of options to be granted
pursuant to the Employee Discount Option Grant. See "Management--Stock
Incentive Plans". The Company intends to purchase the shares of Class A
Common Stock for the Employee Stock Grant and the Employee Discount Option
Grant from the Selling Shareholders at the same price at which the shares
of Class A Common Stock are being sold to the Underwriters in the
Offerings.
(3) Includes shares of Class B Common Stock to be issued upon conversion
of the Existing Preferred Stock in connection with the Recapitalization
(assuming an initial public offering price per share of $ ). See
"Description of Capital Stock--Recapitalization".

16
<PAGE>

SELECTED FINANCIAL DATA

The following selected financial data of the Company is qualified by
reference to and should be read in conjunction with the Consolidated Financial
Statements of the Company and other financial data included elsewhere in this
Prospectus. The data set forth below (except for the financial data as of
August 29, 1997 and for the six months ended August 23, 1996 and August 29,
1997) have been derived from financial statements audited by BDO Seidman, LLP,
independent certified public accountants. Consolidated balance sheets as of
February 23, 1996 and February 28, 1997, and the related consolidated
statements of income and of cash flows for each of the three years in the
period ended February 28, 1997 are included elsewhere in this Prospectus. The
financial data as of August 29, 1997, and for the six months ended August 23,
1996, and August 29, 1997, has been derived from the Company's unaudited
financial statements which, in the opinion of management, have been prepared
on the same basis as the audited financial statements and include all
adjustments (consisting of normal recurring adjustments) necessary to present
fairly the information set forth below. These historical results are not
necessarily indicative of the results to be expected in the future. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED(2)
---------------------------------------------------------------- ---------------------
FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 23, FEBRUARY 28, AUGUST 23, AUGUST 29,
1993 1994 1995 1996 1997(1) 1996 1997
------------ ------------ ------------ ------------ ------------ ---------- ----------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $1,758.6 $1,813.7 $2,048.7 $2,155.9 $2,408.4 $1,152.1 $1,358.5
Cost of sales........... 1,228.1 1,268.6 1,451.8 1,468.2 1,551.6 749.0 857.1
-------- -------- -------- -------- -------- -------- --------
Gross profit............ 530.5 545.1 596.9 687.7 856.8 403.1 501.4
Selling, general and
administrative
expenses(3)............ 421.1 500.0 518.7 524.1 630.4 306.6 325.3
Patent litigation ex-
pense(4)............... -- 12.0 -- -- 84.8 -- --
-------- -------- -------- -------- -------- -------- --------
Operating income........ 109.4 33.1 78.2 163.6 141.6 96.5 176.1
Patent litigation inter-
est expense(4)......... -- (3.0) -- -- (111.7) -- --
Other income, net....... 10.7 16.3 27.1 24.0 21.4 11.5 10.2
-------- -------- -------- -------- -------- -------- --------
Income before provision
for income taxes,
equity in net income
(loss) of joint
ventures and dealer
transitions, and
cumulative effect of
accounting changes..... 120.1 46.4 105.3 187.6 51.3 108.0 186.3
Provision for income
taxes.................. 41.6 17.8 40.9 68.1 23.6 42.1 71.6
-------- -------- -------- -------- -------- -------- --------
Income before equity in
net income (loss) of
joint ventures and
dealer transitions, and
cumulative effect of
accounting changes..... 78.5 28.6 64.4 119.5 27.7 65.9 114.7
Equity in net income
(loss) of joint
ventures and dealer
transitions(3)......... (0.6) (30.6) (0.2) 4.0 -- 1.7 (1.1)
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
cumulative effect of
accounting changes..... 77.9 (2.0) 64.2 123.5 27.7 67.6 113.6
Cumulative effect of ac-
counting changes(5).... -- (68.1) -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)....... $ 77.9 $ (70.1) $ 64.2 $ 123.5 $ 27.7 $ 67.6 $ 113.6
======== ======== ======== ======== ======== ======== ========
UNAUDITED PRO FORMA PER
SHARE DATA(6):
Net income............. $ $
Pro forma adjustment
for conversion of
Existing Preferred
Stock.................
-------- --------
Net income (loss) at-
tributable to holders
of Common Stock....... $ $
======== ========
Net income (loss) per
share of Common
Stock................. $ $
======== ========
Weighted average shares
of Common Stock out-
standing..............
======== ========
</TABLE>

17
<PAGE>

<TABLE>
<CAPTION>
AUGUST 29, 1997(2)
----------------------
FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 23, FEBRUARY 28, PRO
1993 1994 1995 1996 1997 ACTUAL FORMA(7)
------------ ------------ ------------ ------------ ------------ ----------- ----------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......... $ 484.0 $ 385.7 $ 476.4 $ 475.6 $ 474.6 $ 533.9 $
Total assets............ 1,634.5 1,703.8 1,761.8 1,884.5 1,922.1 2,064.8
Total liabilities(5).... 254.1 439.4 459.6 490.9 542.1 614.9
Shareholders' equity.... 1,380.4 1,264.4 1,302.2 1,393.6 1,380.0 1,449.9
</TABLE>
- --------
(1) Fiscal 1997 included 53 weeks.
(2) Unaudited.
(3) During Fiscal 1994, the Company and Steelcase Strafor recorded
restructuring and unusual charges related to plant closings and
consolidations, severance payments, fixed asset write-downs, intangible
asset write-offs, reorganization related costs and certain environmental
matters. These charges increased selling, general and administrative
expenses and equity in net loss of joint ventures by approximately $56.2
million and $20.0 million, respectively.
(4) See Note 10 to Consolidated Financial Statements of the Company included
elsewhere in this Prospectus.
(5) Effective March 1, 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions, for its domestic unfunded
postretirement health care and life insurance programs, and SFAS No. 109,
Accounting for Income Taxes. The cumulative effects of adopting SFAS No.
106 and SFAS No. 109 were to decrease and increase net income during
Fiscal 1994 by $70.0 million and $1.9 million, respectively.
(6) The unaudited pro forma net income (loss) per share data gives effect to
the Recapitalization (assuming an initial public offering price of $ per
share for purposes of converting the Existing Preferred Stock) as if the
Recapitalization had occurred on February 24, 1996. Because of the
significant impact of the Recapitalization on net income (loss) per share
of Common Stock, historical amounts have not been presented. See
"Description of Capital Stock--Recapitalization" and Note 2 to
Consolidated Financial Statements of the Company included elsewhere in
this Prospectus.
(7) The unaudited pro forma balance sheet data gives effect to (i) the
declaration and payment of the Special Dividend in the amount of $750 per
share, or $150.9 million in the aggregate, and (ii) the Company's
intention to purchase 1,650,000 shares of Class A Common Stock for the
Employee Stock Grant and the Employee Discount Option Grant from the
Selling Shareholders at the same price at which the shares of Class A
Common Stock are being sold to the Underwriters in the Offerings (assuming
an initial public offering price of $ per share) as if the Special
Dividend and such purchases had occurred as of August 29, 1997. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations--Liquidity and Capital Resources", "Management--Stock
Incentive Plans" and Note 2 to Consolidated Financial Statements of the
Company included elsewhere in this Prospectus.

18
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the Company's financial condition and results of
operations should be read in conjunction with "Selected Financial Data" and
the Consolidated Financial Statements of the Company included elsewhere in
this Prospectus.

OVERVIEW

For operating purposes, the Company's business includes four geographic
segments: the U.S. market, the Canadian market, the European market and all
other international markets. U.S. net sales include office furniture sold
within the country through Steelcase U.S., as well as revenues generated from
the Company's service-oriented and non-furniture related businesses. Non-
domestic net sales include office furniture sold through Steelcase Canada and
Steelcase International. The Company reflects Steelcase Strafor in its
consolidated financial statements pursuant to the equity method of accounting
and therefore does not consolidate the joint venture's results of operations
with that of its own. See Note 6 to Consolidated Financial Statements of the
Company included elsewhere in this Prospectus. Steelcase Strafor has not had a
material impact on net income during the periods discussed herein due
primarily to a weak European economy.

According to BIFMA, U.S. office furniture industry shipments totaled
approximately $10 billion in calendar 1996 and grew at a CAGR of approximately
7.2% over the three-year period ended December 31, 1996. Strong growth
continued in 1997, with BIFMA reporting that U.S. office furniture industry
shipments increased $1.1 billion, or 14.9%, to $8.5 billion for the nine-month
period ended September 30, 1997, from $7.4 billion for the comparable period
in the prior year. Management believes this growth has been a function of
increased white-collar employment, increased commercial construction and
increased capital spending and recent changes in the workplace, including the
growing use and integration of technology, changes in organizational
structures and work processes, greater awareness of health and safety issues
and continued focus on cost efficiency.

The Company has outperformed the U.S. industry average with U.S. office
furniture net sales growth of 8.3% in Fiscal 1997 and 19.8% during the six
months ended August 29, 1997. Over the three-year period ended February 28,
1997, consolidated net sales grew at a CAGR of approximately 10.0%. The growth
occurred both in U.S. office furniture net sales, with a CAGR of 9.1%, and in
non-domestic office furniture net sales, with a CAGR of 19.5%. The Company's
net sales primarily represent sales to its dealers. The Company builds to
order, with relatively short lead times, and sales in a quarter predominantly
depend on customer orders received by dealers during that quarter. Therefore,
the Company does not have any significant long-term inventory and backlog.

Gross margins have improved to 35.6% for Fiscal 1997 from 29.1% for Fiscal
1995 and to 36.9% for the six months ended August 29, 1997 from 35.0% for the
comparable period in the prior year. This improvement reflects increased
overhead absorption through increased sales and the impact of a cost reduction
program, initiated in Fiscal 1996, designed primarily to improve raw materials
sourcing, contain costs and rationalize facilities. The gross margin
improvement has been slightly offset by selling, general and administrative
expenses which increased to 26.2% of net sales for Fiscal 1997 from 25.3% of
net sales for Fiscal 1995 reflecting strategic investments in new product
developments, such as Pathways, and in information systems, such as SAP, a
comprehensive information management system ("SAP") supplied by SAP AG. As a
result of the improvements in gross margin net of the increases in selling,
general and administrative expenses, operating margins have improved
significantly to 9.4% (excluding patent litigation) for Fiscal 1997 from 3.8%
for Fiscal 1995 and to 13.0% for the six months ended August 29, 1997 from
8.4% for the comparable period in the prior year.

19
<PAGE>

RESULTS OF OPERATIONS

The following table sets forth consolidated statement of income data as a
percentage of net sales for Fiscal 1995, 1996 and 1997 and the six months
ended August 23, 1996 and August 29, 1997.

SIX MONTHS ENDED AUGUST 29, 1997 COMPARED TO SIX MONTHS ENDED AUGUST 23, 1996

NET SALES. Net sales increased $206.4 million, or 17.9%, to $1,358.5 million
for the six months ended August 29, 1997, from $1,152.1 million for the six
months ended August 23, 1996. The Company's U.S. net sales increased $191.4
million, or 18.2%, to $1,240.8 million and non-domestic net sales increased
$15.0 million, or 14.6%, to $117.7 million, respectively, from the comparable
period in the prior year. The growth in the U.S. business has been driven
primarily by increases in unit sales across most product lines reflecting
strong industry fundamentals. The non-domestic net sales growth resulted from
industry growth in Canada and strong export sales to both Latin America and
the Middle East.

GROSS PROFIT. The Company's gross profit increased $98.3 million, or 24.4%,
to $501.4 million for the six months ended August 29, 1997, from $403.1
million for the six months ended August 23, 1996. As a percentage of net
sales, gross profit increased to 36.9% for the six months ended August 29,
1997 from 35.0% for the six months ended August 23, 1996. The improvement
resulted primarily from the increased unit sales volume in the period without
a comparable increase in overhead, as well as continued success of the Fiscal
1996 cost reduction program.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $18.7 million, or 6.1%, to $325.3 million
for the six months ended August 29, 1997, from $306.6 million for the six
months ended August 23, 1996. As a percentage of net sales, the Company's
selling, general and administrative expenses decreased to 23.9% for the six
months ended August 29, 1997 from 26.6% for the six months ended August 23,
1996, reflecting management's cost containment efforts. The decrease was
partially offset by investments in new product development and information
systems. In addition, selling, general and administrative expenses for the six
months ended August 29, 1997, include receipt by the Company of a net
litigation settlement in the amount of $9.8 million while selling, general and
administrative expenses for the six months ended August 23,

20
<PAGE>

1996 include a subsidiary restructuring charge and an intangible asset write-
off aggregating approximately $8.6 million.

OTHER INCOME, NET. Other income, net decreased $1.3 million, or 11.3%, to
$10.2 million for the six months ended August 29, 1997 from $11.5 million for
the six months ended August 23, 1996 primarily as a result of losses incurred
on dealer transitions, which are dealerships that the Company has acquired
with the intention of reselling as soon as practicable.

PROVISION FOR INCOME TAXES. Income tax expense for the six months ended
August 29, 1997 was 38.5% of income before taxes as compared to 39.0% for the
six months ended August 23, 1996.

NET INCOME. For the reasons set forth above, net income increased $46.0
million, or 68.0%, to $113.6 million for the six months ended August 29, 1997
from $67.6 million for the six months ended August 23, 1996.

YEAR ENDED FEBRUARY 28, 1997 COMPARED TO YEAR ENDED FEBRUARY 23, 1996

Fiscal 1997 included 53 weeks while Fiscal 1996 included 52 weeks. See Note
1 to Consolidated Financial Statements of the Company included elsewhere in
this Prospectus.

NET SALES. Net sales increased $252.5 million, or 11.7%, to $2,408.4 million
for Fiscal 1997 from $2,155.9 million for Fiscal 1996. The Company's U.S. net
sales increased $216.7, or 11.0%, to $2,183.9 million and non-domestic net
sales increased $35.8 million, or 19.0%, to $224.5 million, respectively from
Fiscal 1996. The U.S. net sales growth resulted from increases in unit sales
across most product categories reflecting strong industry fundamentals and, in
part, from acquisitions. The non-domestic net sales growth resulted from
acquisitions and strong export sales to both Latin America and the Middle
East.

GROSS PROFIT. The Company's gross profit increased $169.1 million, or 24.6%,
to $856.8 million for Fiscal 1997 from $687.7 million for Fiscal 1996. As a
percentage of net sales, gross profit increased to 35.6% for Fiscal 1997 from
31.9% for Fiscal 1996. The improvement during Fiscal 1997 primarily resulted
from increased unit sales volume growth while overhead costs remained
relatively fixed due to a full year's impact of the Fiscal 1996 cost reduction
program.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $106.3 million, or 20.3%, to $630.4 million
for Fiscal 1997 from $524.1 million for Fiscal 1996. As a percentage of net
sales, selling, general and administrative expenses increased to 26.2% for
Fiscal 1997 from 24.3% for Fiscal 1996. The increase was attributable
primarily to increased investments in new product development and information
systems, as well as acquisitions and international expansion. The Company also
absorbed $8.6 million of charges related to a subsidiary restructuring and an
intangible asset write-off in Fiscal 1997 and $6.6 million of charges relating
to the restructuring of a foreign subsidiary and termination of a management
incentive compensation program in Fiscal 1996.

PATENT LITIGATION. In December 1996, the Company concluded a 17-year patent
litigation with Haworth resulting in a lump sum payment by the Company to
Haworth. See Note 10 to the Consolidated Financial Statements of the Company
included elsewhere in this Prospectus.

OTHER INCOME, NET. Other income, net decreased $2.6 million, or 10.8%, to
$21.4 million for Fiscal 1997 from $24.0 million for Fiscal 1996 primarily as
a result of losses incurred on dealer transitions and decreased interest
income.

PROVISION FOR INCOME TAXES. Income tax expense for Fiscal 1997 was 46.0% of
income before taxes as compared to 36.3% for Fiscal 1996. The increase in the
effective tax rate was primarily

21
<PAGE>

attributable to the impact of recurring non-deductible expenses relative to
the level of income for each of the respective periods.

NET INCOME. For the reasons set forth above, primarily patent litigation,
net income decreased $95.8 million, or 77.6% to $27.7 million for Fiscal 1997
from $123.5 million for Fiscal 1996.

YEAR ENDED FEBRUARY 23, 1996 COMPARED TO YEAR ENDED FEBRUARY 28, 1995

NET SALES. Net sales increased $107.2 million, or 5.2%, to $2,155.9 million
for Fiscal 1996 from $2,048.7 million for Fiscal 1995. The Company's U.S. net
sales increased $86.4 million, or 4.6%, to $1,967.2 million and non-domestic
net sales increased $20.8 million, or 12.4%, to $188.7 million, respectively
from Fiscal 1995. A significant portion of the growth in the Company's U.S.
net sales was due to a price increase, while non-domestic net sales grew
primarily as a result of industry growth in Canada and the consolidation of
operations in Japan due to an increase in the Company's ownership interest.

GROSS PROFIT. The Company's gross profit increased $90.8 million, or 15.2%,
to $687.7 million for Fiscal 1996 from $596.9 million for Fiscal 1995. As a
percentage of net sales, gross profit increased to 31.9% for Fiscal 1996 from
29.1% for Fiscal 1995. This improvement was driven by a number of factors
including plant rationalization and productivity gains achieved as a result of
the cost reduction program initiated in Fiscal 1996.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $5.4 million, or 1.0%, to $524.1 million for
Fiscal 1996 from $518.7 million for Fiscal 1995. As a percentage of net sales,
selling, general and administrative expenses decreased to 24.3% for Fiscal
1996 from 25.3% for Fiscal 1995. Included in selling, general and
administrative expenses are $6.6 million of charges relating to the
restructuring of a foreign subsidiary and termination of a management
incentive compensation program in Fiscal 1996 and $24.5 million of charges
relating to voluntary severance packages and an equipment write-off associated
with the termination of a product development program in Fiscal 1995. The
increase after excluding these charges, primarily resulted from increased
investments in new product development and information systems, and the
consolidation of operations in Japan.

OTHER INCOME, NET. Other income, net decreased $3.1 million, or 11.4%, to
$24.0 million for Fiscal 1996 from $27.1 million for Fiscal 1995. The decrease
is attributable to a gain realized on the sale of stock reduced by losses on
dealer transitions completed during Fiscal 1995, net of increased interest
income earned in Fiscal 1996.

PROVISION FOR INCOME TAXES. Income tax expense for Fiscal 1996 was 36.3% of
income before taxes as compared to 38.8% for Fiscal 1995. The decrease in the
effective tax rate is primarily attributable to the impact of recurring non-
deductible expenses relative to the level of income for each of the respective
periods and an increase in certain tax credits available to the Company in
Fiscal 1996.

NET INCOME. For the reasons set forth above, net income increased $59.3
million, or 92.4%, to $123.5 million for Fiscal 1996 from $64.2 million for
Fiscal 1995.

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company's cash and capital requirements have been
satisfied through cash generated from operating activities. The Company has no
long-term debt. Cash, cash equivalents and short-term investments were $301.9
million at August 29, 1997. After payment of the Special Dividend described
below, these funds, 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.

22
<PAGE>

The Company's capital expenditures were $122.0 million in Fiscal 1997
compared to $104.6 million in Fiscal 1996 and $94.8 million in Fiscal 1995.
Capital expenditures for the six months ended August 29, 1997, were $49.0
million and the Company estimates that capital expenditures for Fiscal 1998
will exceed $125.0 million. These capital expenditures include increased
investments in manufacturing equipment expected to improve productivity and
safety, increase capacity, and facilitate the first shipment of Pathways
products which is scheduled for the first quarter of calendar 1998. In
addition, capital expenditures for Fiscal 1996 and Fiscal 1997 reflect costs
associated with replacing the Company's aircraft and investing in corporate
and showroom facilities. The Company expects capital expenditures to continue
to be significant due to the Company's continued investment in new product
development, SAP implementation and new manufacturing equipment intended to
increase plant capacity. While the costs of purchasing and implementing SAP
will be capitalized and amortized over the software's expected useful life,
certain modifications, year 2000 related matters, data preparation, training
and other costs, will be expensed as incurred. The Company expects its year
2000 date conversion to be completed on a timely basis.

The Special Dividend in the amount of $750 per share, or $150.9 million in
the aggregate, was declared by the Company's Board of Directors on October 27,
1997 and is payable on January 9, 1998 to Common Stock holders of record as of
December 2, 1997.

CASH PROVIDED BY OPERATING ACTIVITIES. Cash provided by operating activities
totaled $195.7 million for the six months ended August 29, 1997, $80.8 million
for Fiscal 1997, $200.7 million for Fiscal 1996 and $42.2 million for Fiscal
1995. Cash from operating activities resulted primarily from net income,
excluding non-cash items, such as depreciation and amortization, net of
increases in accounts and notes receivable and leased assets.

CASH USED IN INVESTING ACTIVITIES. Cash used in investing activities totaled
$67.3 million for the six months ended August 29, 1997 and was comprised
primarily of capital expenditures and net increases in investments. Cash used
in investing activities totaled $75.4 million for Fiscal 1997 and was
comprised primarily of capital expenditures, net of a repayment of a note
receivable from Steelcase Strafor. Cash used in investing activities totaled
$115.9 million for Fiscal 1996 and was comprised primarily of capital
expenditures and acquisitions. Cash used in investing activities totaled $68.7
million for Fiscal 1995 and was comprised primarily of capital expenditures,
net of proceeds from the sale of facilities.

CASH USED IN FINANCING ACTIVITIES. Cash used in financing activities totaled
$29.9 million for the six months ended August 29, 1997, $40.4 million for
Fiscal 1997, $39.8 million for Fiscal 1996 and $33.0 million for Fiscal 1995.
The cash was used primarily to fund quarterly dividends paid by the Company.

INFLATION

The Company believes that inflation has not had a material effect on its
overall financial condition or results of operations during the six months
ended August 29, 1997 and Fiscal 1997, 1996 and 1995. While the Company has
experienced inflationary increases in compensation-related and certain raw
material costs, it has also experienced certain decreases in other raw
material costs.

RECENTLY ISSUED ACCOUNTING STANDARDS

Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per
Share, establishes standards for computing and presenting earnings per share
and simplifies the standards previously found in APB Opinion No. 15, which has
been superseded. It replaces the presentation of primary earnings per share
with a presentation of basic earnings per share, which excludes dilution and
is computed by dividing net income attributable to holders of common stock by
the weighted-average number of shares of common stock outstanding for the
period. Diluted earnings per share is computed

23
<PAGE>

in a similar manner to fully diluted earnings per share pursuant to APB
Opinion No. 15. This Statement is effective for the Company for Fiscal 1998
and is not expected to have a material effect on the Company's consolidated
financial statements.

SFAS No. 130, Reporting Comprehensive Income, establishes standards for
reporting and display of comprehensive income, its components and accumulated
balances in a financial statement that is displayed with the same prominence
as other financial statements. Comprehensive income is defined to include all
changes in equity except those resulting from investments by owners and
distributions to owners. This Statement is effective for the Company for
Fiscal 1999 and requires comparative information for earlier years to be
restated.

SFAS No. 131, which supersedes SFAS No. 14, Financial Reporting for Segments
of a Business Enterprise, establishes standards for the way that public
enterprises report information about operating segments in annual and interim
financial statements. It also establishes new standards for disclosures
regarding products and services, geographic areas and major customers. This
statement is effective for the Company for Fiscal 1999.

The Company's consolidated balance sheets and the related consolidated
statements of income, changes in shareholders' equity and cash flows will not
be affected by implementation of SFAS No. 130 and SFAS No. 131.

24
<PAGE>

BUSINESS

GENERAL

Steelcase is the world's largest manufacturer and provider of office
furniture, office furniture systems and related products and services. The
Company has led the U.S. office furniture industry in sales for 24 consecutive
years and believes it has the industry's largest base of installed products.
In Fiscal 1997, the Company's consolidated net sales were $2.4 billion and in
the year ended December 31, 1996, unconsolidated joint ventures in which the
Company generally holds 50% interests generated approximately $0.5 billion in
net sales.

To enhance its industry leadership position, the Company focuses on
research, development and design methods that analyze individual and group
work processes to create work environments that enable workers to perform more
effectively. Since 1994, the Company has won 24 design awards for new products
and product enhancements across its product lines. In calendar 1998, the
Company plans to introduce more than 75 new products and product enhancements,
including Pathways, a unique portfolio of products that, in addition to office
furniture and work tools, will include architectural elements such as interior
walls and floors designed to integrate entire work spaces. Pathways is
designed to be compatible with the Company's current products.

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 675 locations. These dealers provide
local expertise and ongoing customer support services and remain in close
contact with customers during and after the completion of a project to help
ensure customer satisfaction and to 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.

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, video conferencing 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 FMC,
(ii) refurbishing and remanufacturing through Revest Inc. ("Revest") and (iii)
lease financing through SFSI.

25
<PAGE>

INDUSTRY DYNAMICS

BIFMA reports that U.S. office furniture industry shipments totaled
approximately $10 billion in calendar 1996 and grew at a CAGR of approximately
7.2% over the three-year period ended December 31, 1996. Strong growth
continued in 1997, with BIFMA reporting that U.S. office furniture industry
shipments increased $1.1 billion, or 14.9%, to $8.5 billion for the nine-month
period ended September 30, 1997, from $7.4 billion for the comparable period
in the prior year.

Overall growth in the office furniture industry is primarily a function of
increased white-collar employment, increased commercial construction and
increased capital spending. The Company believes that certain other recent
trends are also affecting, and will continue to affect, the demand for the
Company's products and services. The growing use and integration of
technology, changes in organizational structures and work processes, greater
awareness of health and safety issues and continued focus on cost efficiency
are driving businesses to increasingly pursue more effective ways to support
their workers and utilize their existing work spaces. The Company believes
these trends will increase demand for its existing products and services and
will create opportunities to introduce new products and to develop new
markets.

INTEGRATING TECHNOLOGY. The rapidly growing role of technology in the
workplace has placed greater demand on the infrastructure of the office
environment. Organizations must provide workers with ready access to
technology interfaces at their individual workstations as well as in the
increasing number of team workspaces. Many companies have also found that
their existing buildings and space division cannot provide sufficient capacity
and flexibility to support changes in workplace technology. Steelcase
continues to enhance its existing product lines to accommodate technological
changes, and the Company's new product development will focus on work process
improvements linked to technology integration. The Company's Pathways
portfolio is designed to be integrated with building infrastructures for
improved distribution of power and communications cabling.

CHANGES IN WORK PROCESSES. Businesses are increasingly changing their
organizational structures from a hierarchical model to flatter functional
models in order to focus on the work needs of the individual. Additionally,
there is a broader range of work being performed by individuals and teams
across many levels within organizations. Traditional office layouts are being
replaced with product applications that allow space to be easily reconfigured
to the specific needs of groups and individuals. The Company believes that
these trends have significant implications for the physical work environment
and will increase the demand for products such as those offered by the Company
that accommodate these new organizational structures and provide increasingly
flexible support for both individual and group work environments.

INCREASED AWARENESS OF HEALTH AND SAFETY ISSUES. Businesses are increasingly
focused on the health, safety and comfort of office workers and are paying
closer attention to how physical environments affect those issues.
Ergonomically-designed furniture products and work tools can reduce the risk
of injury associated with certain repetitive work processes and the lost time
caused by those injuries. In addition, such products provide for greater
comfort and can create enhanced productivity. Steelcase believes that this
heightened focus will drive demand for its broad range of ergonomically-
designed products.

FOCUS ON COST AND EFFICIENCY. Businesses are increasingly considering
workplace design as a key factor in reducing occupancy costs and achieving
productivity gains. The Company believes that these concerns will continue to
drive the demand for its new products and product applications that integrate
technology, processes, people and space to improve the work environment and
increase worker effectiveness.

26
<PAGE>

COMPETITIVE STRENGTHS

The Company believes it will continue to be the leader in its industry as a
result of the following competitive strengths:

MARKET LEADERSHIP AND STRONG BRAND FRANCHISE. The Company has maintained the
largest total market share of any manufacturer in the U.S. office furniture
industry since 1973. In calendar 1996, based on BIFMA statistics, the Company
had a market share of approximately 20%, nearly twice that of its nearest
competitor. "Steelcase" is the most widely recognized brand name in the
industry, and the Company believes it has earned a reputation for producing a
broad range of high quality office furniture and related products. The
Company's industry leadership and brand recognition are key marketing tools
for expanding its customer base and entering new markets and market segments.

LONG-TERM CUSTOMER RELATIONSHIPS; LARGE INSTALLED BASE. The Company,
together with its dealer network, has developed strong, long-term
relationships with a large number of commercial and non-commercial
organizations. As a result of its sales leadership and these long-term
relationships, the Company believes it has the largest base of installed
products in the U.S. office furniture industry. Through this installed base,
the Company generates significant annual sales from repeat and expansion
orders. By purchasing additional Steelcase products, these customers ensure
compatibility and conformity with existing products and retain the local
Steelcase dealer as a single contact for ongoing services. The Company
believes that as its existing customers expand and reconfigure their
workplaces their need for additional Steelcase products and dealer services
will increase.

GLOBAL DEALER NETWORK. The Company's strong relationships with its worldwide
network of independent dealers in approximately 675 locations, built over many
years of consistent partnership, allow the Company to focus on the core
functions of design, manufacturing and distribution while benefiting from the
dealers' local market expertise and ongoing customer support. This network,
which includes dealers in more than 200 locations outside of the United States
and Canada, complements the Company's global distribution capability and
enables Steelcase to address the product and support service needs of its
multinational customers in virtually any non-domestic market. The Company's
relationships with its dealers are typically long-term in nature, providing
continuity in customer relationships and a strong foundation of product
knowledge. In addition, the dealers, together with the Company's sales
representatives, maintain close relationships with local architects, contract
interior designers and corporate facility managers who typically influence
purchasing decisions.

LEADERSHIP IN DESIGN, RESEARCH AND INNOVATION. The Company utilizes its
extensive knowledge of work processes, its ongoing research and its user-
centered design methodology to create innovative products and concepts which
address evolving customer needs. The Company's Corporate Development Center
provides a creative environment for 750 of the Company's research, design,
engineering and marketing personnel and houses ten laboratories for testing
sound, lighting, ergonomics, flammability and product durability. The
Company's personnel use the Corporate Development Center to conduct over
14,000 product tests annually. Since 1994, the Company has won 24 design
awards for new products and product enhancements across its product lines. The
Company, through its commitment to design, research and innovation, has
developed a strong reputation among, and close ties with, leading independent
architectural and design firms and design schools which play a significant
role in the industry.

27
<PAGE>

information and industry research and trends. With the aid of Workplace
Performance, the Company's dealers and salesforce work with customers early in
the planning process to illustrate possible work space configurations and
product packages that help the customers improve their productivity and lower
their occupancy costs. The Company believes that its ability to provide more
comprehensive support to customers in the early stages of the planning process
is a significant competitive advantage.

MANUFACTURING AND DISTRIBUTION CAPABILITY. The Company believes it has the
largest office furniture manufacturing capacity in the world with more than 50
manufacturing facilities, including those operated by joint ventures. In
addition, the Company has an extensive distribution system in the United
States and Canada and uses commercial transport and delivery services in both
the United States and abroad. The Company's products, including those offered
by the Company's joint ventures, are generally available throughout the world.

CORPORATE CULTURE. Management believes that the Company's corporate culture
and values strengthen relationships with employees, customers, dealers and the
communities in which it operates. For Steelcase employees, this corporate
culture fosters loyalty and productivity as demonstrated by the fact that the
Company's employees in the United States and Canada have an average tenure of
approximately 12 years. As an example of its commitment to its employees, at
the time of the Offerings the Company will grant to each of approximately
15,000 employees 10 shares of Class A Common Stock and an immediately
exercisable option to purchase a maximum of 100 shares of Class A Common Stock
at a purchase price equal to 85% of the initial public offering price.

GROWTH STRATEGY

Steelcase's objectives are to strengthen its industry leadership position
and increase its revenues and profitability. To achieve these objectives, the
Company will:

FOCUS ON PRODUCT INNOVATION. The Company intends to strengthen its
leadership position in the office furniture industry and increase its revenues
through the development of aesthetically pleasing and technologically-
sophisticated new products and product enhancements. In Fiscal 1995, 1996 and
1997, the Company spent approximately $40 million, $50 million and $65
million, respectively, on research and development. In calendar 1998, the
Company plans to introduce more than 75 new products and product enhancements,
including Pathways and Answer, an office furniture systems line under the
Turnstone brand which is designed to work with Pathways. The Company's user-
centered design efforts address significant workplace trends and result in
products that support individual worker needs, including health, safety and
comfort. In addition, these products integrate technology and further support
the new work processes being adopted by organizations. The Company believes
its new products and product enhancements will offer superior flexibility and
help its customers improve organizational performance, better utilize their
work space and work more effectively.

28
<PAGE>

integrate all workplace elements, including building operating systems, and
accommodate all technological workplace needs. As a result, the Company
believes Pathways represents a significant opportunity for increased sales
from customer projects which involve new construction or building
refurbishment. The Company expects to begin shipping Pathways products in the
first quarter of calendar 1998.

LEVERAGE INSTALLED BASE THROUGH KNOWLEDGE OF WORK. As a result of its sales
leadership and long-term relationships with many of its customers, the Company
believes it has the largest base of installed products in the industry. The
Company believes its knowledge of work has enabled it to develop a strong
reputation for improving workplace effectiveness and performance through the
integration of people, processes, technology and work space. As a result, the
Company's customers increasingly look to the Company and its dealers for
advice and consultation on general workplace issues in addition to furniture.
This offers the Company the opportunity to analyze customers' needs and to
offer solutions that include the application of the Company's products across
all of its product lines. The Company intends to increase sales to its
existing customers by capitalizing on its broad range of product solutions and
its Workplace Performance consultative approach, as well as new product
applications, to drive incremental growth across all product categories.

LEVERAGE DEALER NETWORK AND INCREASE SALES OPPORTUNITIES. To leverage
further its strong dealer network, the Company intends to continue to invest
in dealer programs and training that expand the service and operations
capabilities of its dealers as well as promote Steelcase products. In
addition, the Company intends to increase its percentage of a dealer's sales
by continually enhancing and expanding its portfolio of knowledge, products
and services to ensure that dealers can satisfy virtually all of a customer's
furniture-related needs through sales of Steelcase products. As the Company
broadens its portfolio, it also supports dealers in expanding their customer
base. For example, the Company's Turnstone brand product offering allows
dealers to compete effectively in the value-priced market segment.

PURSUE STRATEGIC ACQUISITIONS, JOINT VENTURES AND ALLIANCES. The Company has
historically acquired companies with complementary or ancillary businesses or
products, entered into joint ventures and established strategic or commercial
alliances with various companies. The Company will continue to evaluate
similar transactions that it believes are consistent with its growth strategy
or otherwise present attractive opportunities for growth, entry into new
markets or introduction of new products.

ENHANCE GLOBAL PRESENCE. The Company intends to support the existing global
operations of Steelcase International and Steelcase Strafor, the Company's 50%
joint venture with Strafor Facom S.A., by investing in product development for
regional market needs, expanding existing dealer operations and services and
developing alliances to penetrate further the markets served by the Company.
In addition, the Company intends to support the worldwide needs of its
multinational customers as they expand their global operations, as well as
service local organizations in regional markets.

PRODUCTS AND SERVICES

Steelcase provides a broad range of office furniture and related products
and comprehensive support services to its customers as part of specific
projects and ongoing contractual relationships.

PRODUCTS

The Company offers an extensive range of office furniture and related
products at a variety of price points, allowing customers to satisfy virtually
all of their office furniture-related work environment needs

29
<PAGE>

through the Company and its dealers. The Company's primary product lines
include: (i) office furniture systems; (ii) seating; (iii) storage solutions;
and (iv) desks and casegoods.

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 1996. 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 is the market leader based on sales in this category, 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 Company's continued enhancement of Series 9000, a
panel-based system, and introduction of new furniture systems lines over the
years has allowed it to present a significantly wider selection of furniture
systems lines and componentry than any one competitor. The Company's furniture
systems product lines include:

SERIES 9000. Series 9000 is the Company's flagship furniture system,
representing the office furniture industry's largest selling product line. The
Company believes Series 9000 is the most comprehensive furniture system
product line in the industry. Series 9000 offers broad flexibility of
application, extensive technological capabilities and the ability to withstand
repeated reconfigurations. Because of its many options, Series 9000 is
installed by many different customers in a broad variety of facilities.

AVENIR. Avenir is a foundation system that offers simplicity, versatility
and value. Avenir provides a broad variety of panel, component and surface
material options. With universal panel connectors and fully assembled storage
options, Avenir is easy to install and reconfigure.

CONTEXT. Context is a unique furniture system which is built around
freestanding core desk units rather than panels or panel-supported components,
and utilizes screens for visual privacy. Context offers enhanced communication
and collaboration capabilities, as well as stackable privacy, high-image
aesthetics and technological support. Context is also suitable for private
offices.

ELECTIVE ELEMENTS. Elective Elements is a wood panel-based furniture system
known for its executive image, design versatility and solid performance.
Elective Elements' solutions can be tailored with an extensive palette of
finishes and an expanded range of components to create high-performance
environments.

MONTAGE. Montage is the Company's furniture system that emphasizes
architectural beauty and appeal, featuring versatility and progressive design
with a distinctive aesthetic style. Montage uses a frame and tile system which
provides stackable space division and flowing work surfaces and allows for
adaptation to changing interaction needs by increasing or reducing frame
heights.

PERSONAL HARBOR. Personal Harbor workspace is designed to support
individuals in highly collaborative team environments with the added benefit
of visual and acoustic privacy. Its compact

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<PAGE>

workspace utilizes flexible work surfaces, shelving and storage space to
maximize individual effectiveness.

SEATING

Steelcase 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 and
its broad platform of product styles and price points will maintain and
enhance the Company's share of the seating market. The Company also believes
that Sensor, which has sold more than 4 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 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. Sensor is marketed as a high-performance chair with several models
to meet the needs of virtually everyone throughout an organization. It has a
patented, flexing inner shell and a sophisticated synchro-tilt mechanism
designed to adjust with each movement of the user.

CRITERION. Criterion is marketed as a high-performance chair with a wide
variety of easy-to-use back, seat and arm adjustments. Criterion is one of the
first chairs on the market to offer an adjustable seat depth and adjustable
arm width to accommodate a wide range of body sizes and shapes.

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) Springboard, a high-performance, value-priced chair; 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 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.

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. Recent
introductions include moderately-priced storage solutions through its
FirstFile series and the Activity Products line, introduced in 1995 to address
the increasing need to transport work items within and between individual and
team settings. Certain new products scheduled for introduction in calendar
1998 are designed to coordinate with Turnstone and Pathways products.

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<PAGE>

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 INTERNATIONAL. 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, video conferencing 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.

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

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.

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

PATHWAYS

Pathways is a unique portfolio of integrated architectural elements
including wall, floor and lighting systems, furniture, power and
communications elements designed to coordinate with existing Steelcase
products as well as competitors' products. The Company believes that Pathways
will be attractive to its existing customer base as well as to real estate
developers designing or retrofitting buildings. The Company has successfully
tested prototype Pathways in a customer location and expects to begin shipping
Pathways products in the first quarter of calendar 1998.

Pathways is designed to provide total interior space solutions, from wall to
wall and floor to ceiling, particularly in buildings that can no longer
accommodate the wiring and cabling needs of today's technology-driven
workplaces. Pathways architectural elements accept all wiring and cabling
network components and are designed to integrate with building infrastructures
for improved distribution of power and communications cabling.

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<PAGE>

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 Company estimates that
shipments of remanufactured office furniture would have increased the $10
billion in U.S. office furniture industry shipments as reported by BIFMA by
approximately 5-10%. 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 approximated
$138.1 million as of August 29, 1997.

PRODUCT DESIGN AND DEVELOPMENT

Steelcase has a long history of award-winning product designs. Since 1994,
the Company has won 24 design awards for new products and enhancements across
its products lines, including the Industrial Designers Society of America
("IDSA") Gold Industrial Design Excellence Award for its Personal Harbor
workspace in 1995, the Facilities Design and Management Magazine Gold Award
for Table Cable wire management systems in 1996, and the IDSA Silver
Industrial Design Excellence Award for its Stella adjustable keyboard shelf in
1997.

In response to rapidly changing work environments, the Company has increased
research and development efforts in recent years and intends to introduce more
than 75 new products and product enhancements in calendar 1998. The Company
leverages the expertise of its research and design staff and its subsidiary,
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 architectural elements as well as more
traditional furniture 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. In addition to
its own research, the Company commissions research by academics and industry
consultants. The Corporate Development Center houses 10 laboratories which the
Company's personnel use to conduct over 14,000 product tests annually in such
areas as sound, lighting, ergonomics, flammability and product durability.

SALES AND MARKETING

The Company distributes its products through a worldwide network of
independent dealers in approximately 675 locations including more than 450 in
the United States and Canada and more than 200 throughout the rest of the
world. Each dealership has its own salesforce which is supported by the
Company's sales representatives, who work closely with dealers throughout the
sales process. The dealers, together with the Company's sales representatives,
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
salesforce and its dealers are increasingly

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<PAGE>

becoming 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 75 years ago 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 promote Company 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 secured notes receivable from the Company's
dealers approximated $141.4 million as of August 29, 1997.

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

MANUFACTURING

The Company manufactures at 31 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. 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 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 to four to six weeks in the United States and
Canada. The Company has an extensive distribution system in the United States
and Canada and utilizes commercial transport and delivery services in both the
United States and abroad.

INTERNATIONAL OPERATIONS

STEELCASE CANADA

Steelcase Canada operates as an extension of Steelcase U.S. in the Canadian
markets, sourcing its sales through its manufacturing facility in Markham,
Ontario and through imports from Steelcase U.S. Steelcase Canada has
approximately 580 employees and dealers in more than 40 locations. Steelcase
Canada had more than 18.0% market share of the Canadian office furniture
industry in calendar 1996 and generated $97.9 million in net sales for Fiscal
1997.

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 outside of Europe, including
Australia, Brazil, China, Japan, Mexico, Saudi Arabia and Thailand. In Fiscal
1997, net sales derived from sales to international customers outside of
Europe and Canada were $126.6 million, or 5.3%, of

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<PAGE>

the Company's consolidated net sales. The Company's share of the office
furniture market in such markets is not material. Steelcase International has
approximately 420 employees.

The Company competes in non-European markets by exporting its products
abroad. The Company supplements this business with two manufacturing ventures
in Brazil and Saudi Arabia and with licensees in Japan, Thailand, India and
Colombia. Sales of the Company's products to non-European international
markets are made almost exclusively through the Company's dealer network. As
of October 31, 1997, the Company's international dealer network outside of
Europe and Canada was comprised of more than 40 locations in the Pacific Rim,
the Middle East, Latin America and Australia.

STEELCASE STRAFOR

The Company's European business is conducted almost entirely through
Steelcase Strafor. Steelcase Strafor is a leading office furniture company in
Europe with net sales of approximately $500 million in the year ended December
31, 1996. Steelcase Strafor has the leading market share in France, with more
than 18.0% in calendar year 1996, but its share is below 10% of the office
furniture market in all other countries in which it operates. In Fiscal 1997,
the Company's interest in Steelcase Strafor resulted in $2.0 million of net
income. Steelcase Strafor sells products throughout Europe and North Africa.

Steelcase Strafor serves the European market with 14 manufacturing
facilities located in six countries, approximately 3,900 employees and a
network of independent dealers in more than 170 locations. Steelcase Strafor
develops and manufactures its own office furniture products under such brand
names as Steelcase Strafor, Strafor, Gordon Russell, Pohlschroder, Waiko, 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.

PROPERTIES

The Company maintains its corporate headquarters in Grand Rapids, Michigan
and conducts its operations at locations throughout the United States and,
through its wholly owned subsidiaries and joint ventures, has manufacturing
facilities in Canada, Mexico, Saudi Arabia, Brazil, France, Germany, Portugal,
Spain, the United Kingdom and Morocco. These office, manufacturing and
distribution facilities total approximately 23 million square feet, of which
approximately 7 million square feet are leased.

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<PAGE>

The Company's principal office, manufacturing and distribution facilities
(300,000 square feet or larger) as of November 30, 1997, are as follows:

<TABLE>
<CAPTION>
APPROXIMATE
SQUARE OWNED 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 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(1) 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...... 421,000 Leased Wood Furniture Manufacturing
Lowell, Michigan........ 480,000 Owned Attwood Manufacturing
Athens, Alabama......... 777,000 Owned 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(2) Manufacturing
Dortmund, Germany....... 300,000 Owned(2) Manufacturing
Durlangen, Germany...... 415,000 Owned(2) Manufacturing
Madrid, Spain........... 358,000 Owned(2) Manufacturing
</TABLE>
- --------
(1) Approximately 100,000 square feet are currently utilized for
manufacturing. The remainder of the facility is idle or being used for
storage.
(2) Through Steelcase Strafor.

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 has pursued several
initiatives over the past three years, 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. The Company believes
adequate sources are available for all of its raw materials.

INTELLECTUAL PROPERTY

The Company has approximately 160 active U.S. utility patents and
approximately 80 active U.S. design patents relating to its current and
anticipated products. The Company also owns approximately 220 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

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<PAGE>

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, Avenir, Ballet, 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, Haworth, Knoll, Kimball and, in certain market segments,
Hon. 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 in specific product categories.

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. The Company's 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. The Company's costs and
expenses relating to Environmental Laws are included in the Company's general
operating budget or in the operating budgets of certain subsidiaries or
divisions and are typically incurred as part of projects that involve adding
production capacity and output or implementing new production processes.
Although liabilities, claims and pollution control requirements relating to
Environmental Laws have not materially affected the Company to date, there can
be no assurance that they will not have a material adverse effect on the
Company's business, financial condition or results of operations in the
future.

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

37
<PAGE>

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.

To resolve allegations made by the Michigan Department of Environmental
Quality ("MDEQ") (formerly known as the Michigan Department of Natural
Resources) concerning the hazardous waste management program at the Company's
Grand Rapids, Michigan facilities, the Company entered into a Consent Order
with the MDEQ in 1995 pursuant to which the Company agreed, among other
things, to pay a $150,000 stipulated penalty. In lieu of this penalty, the
MDEQ approved the Company's proposal to conduct a Supplemental Environmental
Project ("SEP"), which involved implementing an improved cleaning process for
ancillary production equipment. Notwithstanding its significant cost, to date,
this process has not functioned satisfactorily. The Company is evaluating the
SEP, and in the event that it determines that the SEP no longer meets the
Company's objectives, the Company may elect to implement an alternative
process or to negotiate with the MDEQ regarding payment of the stipulated
penalty.

EMPLOYEES

As of October 31, 1997, the Company had approximately 15,800 employees,
including approximately 10,900 hourly and approximately 4,900 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 4,000 employees.

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.

38
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information with respect to the
directors and executive officers of the Company as of December 2, 1997.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Robert C. Pew II(1)(2).... 74 Chairman of the Board and Director
Peter M. Wege(3).......... 77 Vice Chairman of the Board and Director
James P. Hackett(1)(2).... 42 President, Chief Executive Officer and Director
Robert A. Ballard......... 62 Executive Vice President--Business Operations
Alwyn Rougier-Chapman..... 58 Senior Vice President--Finance, Chief Financial
Officer and Treasurer
James G. Mitchell......... 48 Senior Vice President--Sales, Marketing and
Dealer Alliances
William P. Crawford(2).... 54 President and Chief Executive Officer--
Steelcase Design Partnership and Director
James R. Stelter.......... 42 Senior Vice President--Wood Furniture and
Turnstone
Robert W. Black........... 38 Vice President--Marketing
Ann C. Jarvis............. 51 Vice President--Advanced Concepts and Design
James P. Keane............ 38 Vice President--Corporate Strategy and
Development
Richard B. Yeates......... 37 Vice President and General Sales Manager
John L. Stasiw............ 43 Vice President and General Manager--Steelcase
International
Nancy W. Hickey........... 46 Vice President--Dealer and Customer Alliances
Jon D. Botsford........... 43 General Counsel and Secretary
Robert C. Pew III(1)(2)... 46 Director
Peter M. Wege II(1)(2).... 48 Director
David D. Hunting, Jr.(3).. 71 Director
Frank H. Merlotti(1)(2)... 71 Director
P. Craig Welch, Jr.(3).... 53 Director
</TABLE>
- --------
(1) Member of the Executive Committee (Mr. Merlotti, Chairman).
(2) Member of the Compensation Committee (Mr. Merlotti, Chairman).
(3) Member of the Audit Committee (Mr. Hunting, Chairman).

Robert C. Pew II has been the Chairman of the Board since 1974 and a member
of the Board since 1960. From 1952 to 1989, Mr. Pew held various positions at
the Company, including President from 1966 to 1979 and Chief Executive Officer
from 1966 to 1988.

Peter M. Wege has been Vice Chairman of the Board since 1985 and a member of
the Board since 1948. Since joining the Company in 1947, Mr. Wege has held
various positions, including Secretary from 1961 to 1985.

James P. Hackett has been President and Chief Executive Officer of the
Company since 1994. Mr. Hackett was elected to the Board in 1994. Since
joining the Company in 1981, Mr. Hackett has held various positions, including
Executive Vice President and Chief Operating Officer of Steelcase U.S. and
President of Turnstone Inc. Prior to 1981, he held a variety of sales and
management positions at The Procter & Gamble Company. Since 1995, Mr. Hackett
has been a member of the

39
<PAGE>

Board of Directors of Old Kent Financial Corporation, a banking firm that
serves as trustee for the Company's retirement and 401(k) funds. Mr. Hackett
is also Chair of the Institute of Design Board of Overseers at the Illinois
Institute of Technology, and is a member of the Board of Directors of Spectrum
Health, the largest healthcare system serving western Michigan.

Robert A. Ballard has been Executive Vice President--Business Operations of
the Company since 1996. Since joining the Company in 1967, Mr. Ballard has
held various positions, including Senior Vice President--Manufacturing
Operations, Senior Vice President of the Steelcase Systems business unit and
President of Steelcase Canada.

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
after having joined the Company in 1981. Mr. Rougier-Chapman served as
Secretary of the Company on an interim basis for part of 1997 until Mr.
Botsford's appointment in December. From 1975 to 1981, Mr. Rougier-Chapman was
a partner with the accounting firm of BDO Seidman, LLP.

James G. Mitchell has been Senior Vice President--Sales, Marketing and
Dealer Alliances of the Company since 1995. Mr. Mitchell joined the Company in
1993 as President of Steelcase Canada. From 1989 to 1993, he held various
positions at Tambrands Inc., a consumer products company.

William P. Crawford has been President and Chief Executive Officer--
Steelcase Design Partnership since 1991. Mr. Crawford was elected to the Board
in 1979. From 1986 to 1991, he served as President of Stow & Davis Furniture
Company, a manufacturer of fine wood furniture, which was acquired by the
Company in 1985. Mr. Crawford also serves on the Board of Directors of Old
Kent Financial Corporation.

James R. Stelter has been Senior Vice President--Wood Furniture since 1993
and Senior Vice President--Turnstone since 1996. Since joining the Company in
1977, Mr. Stelter has held various positions, including President of Brayton
International Inc. from 1989 to 1993.

Robert W. Black has been Vice President--Marketing of the Company since
1996. Since joining the Company in 1994, Mr. Black has also served as Vice
President--Corporate Strategy and Development and Vice President--Corporate
and Service Marketing. From 1988 to 1994, Mr. Black was a senior engagement
manager at the consulting firm of McKinsey & Company, Inc.

Ann C. Jarvis has been Vice President--Advanced Concepts and Design of the
Company since 1996. Since joining the Company in 1976, Ms. Jarvis has held
various positions, including Senior Marketing Manager and Vice President--
Product Marketing and Design.

James P. Keane has been Vice President--Corporate Strategy and Development
of the Company since January 1997. From 1992 to January 1997, Mr. Keane was
Vice President and Chief Financial Officer of Cloud Corporation, a packaging
company. From 1987 to 1992, Mr. Keane was a senior engagement officer at the
consulting firm of McKinsey & Company, Inc.

Richard B. Yeates has been Vice President and General Sales Manager of the
Company since January 1997. Since joining the Company in 1982, Mr. Yeates has
held various positions, including Vice President and General Manager of
Steelcase International and Director of the Steelcase Export and Worldwide
Services division.

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. From 1987 to 1994, Mr.
Stasiw held various positions at Philips Lighting Co., a wholly owned
subsidiary of Philips International N.V., including Vice President and General
Manager and Director of Business Groups.

40
<PAGE>

Nancy W. Hickey has been Vice President--Dealer and Customer Alliances for
the Company since 1994. In 1997, Ms. Hickey also became responsible for FMC.
Prior to joining the Company in 1989, Ms. Hickey held sales and marketing
management positions at Philips Information Systems, a division of Philips
International N.V.

Jon D. Botsford has been General Counsel and Secretary of the Company since
December 1997. From 1985 to December 1997, Mr. Botsford held various positions
at the Company, including Assistant General Counsel and Assistant Secretary.

Robert C. Pew III has been a member of the Board since 1987. From 1974 to
1984 and from 1988 to 1994, Mr. Pew held various positions at the Company,
including President of Steelcase North America and Executive Vice President--
Operations.

Peter M. Wege II has been a member of the Board since 1979. Mr. Wege has
been President and Chief Executive Officer of S & G Technologies Incorporated,
a supplier of lubrication and maintenance monitoring equipment for industrial
conveyors, since 1992, as well as several other companies since 1990. From
1981 to 1989, he held various positions at the Company, including President of
Steelcase Canada.

David D. Hunting, Jr., has been a member of the Board since 1960. After
joining the Company in 1948, Mr. Hunting held various positions, including
Executive Vice President--Subsidiaries, from 1981 until his retirement in
1989.

Frank H. Merlotti has been a member of the Board since 1973. After joining
the Company in 1961, Mr. Merlotti held various positions, including President
and Chief Operating Officer of the Company from 1980 and Chief Executive
Officer from 1988, in each case until 1991. Subsequent to his retirement, Mr.
Merlotti served as President and Chief Executive Officer of the Company on an
interim basis for part of 1994 until Mr. Hackett's appointment.

P. Craig Welch, Jr., has been a member of the Board since 1979. From 1967 to
1987, Mr. Welch held various positions at the Company, including Director of
Information Services, Director of Production Inventory Control and Manager of
Manufacturing Systems Data Processing.

Mr. Robert C. Pew II is the father of Robert C. Pew III and the uncle of
William P. Crawford and P. Craig Welch, Jr. Messrs. Pew III, Crawford and
Welch are first cousins. Mr. Peter M. Wege is the son of Peter M. Wege, Sr.,
who co-founded the Company in 1912, and the father of Peter M. Wege II.

It is expected that following consummation of the Offerings the Company will
increase the size of the Board by the appointment of two independent outside
directors.

Pursuant to the Articles and By-laws of the Company, beginning with the 1998
annual meeting of shareholders, the Board will be divided into three classes
of directors, denoted as Class I, Class II and Class III, serving staggered
three-year terms with one class elected each year. The initial terms of the
Class I, Class II and Class III directors will expire at the annual meeting of
the shareholders of the Company in 1999, 2000 and 2001, respectively. Officers
are elected by and serve at the discretion of the Board. See "Description of
Capital Stock--Certain Anti-Takeover Matters".

BOARD COMMITTEES

The Executive Committee exercises all the powers of the Board in the
management of the business affairs and property of the Company during
intervals between regular meetings of the Board.

The Audit Committee reviews the internal accounting procedures of the
Company and consults with and reviews the services provided by the Company's
independent public accountants.

41
<PAGE>

The Compensation Committee makes general policy and administrative decisions
relating to compensation and benefits for the Company's employees and
directors. Following completion of the Offerings, the Board of Directors
intends to change the members of the Compensation Committee to comply with the
Securities and Exchange Commission (the "Commission") and Internal Revenue
Service ("IRS") regulations.

Compensation Committee Interlocks and Insider Participation. Mr. Hackett,
President and Chief Executive Officer of the Company, is a member of the
Compensation Committee.
DIRECTORS' COMPENSATION

Directors who are not compensated as employees of the Company receive an
annual retainer fee in the amount of $20,000 as well as additional payments of
$1,500 for each Board meeting attended and $1,000 for each Committee meeting
attended, except that the Chairman of the Board receives only an annual
retainer fee in the amount of $40,000. Directors who are compensated as
employees of the Company receive no additional compensation for services
rendered as a director. All directors are eligible to participate in the
Steelcase Inc. Incentive Compensation Plan. See "Stock Incentive Plans--
Compensation Plan". The Company also reimburses each director for out-of-
pocket expenses incurred in connection with attending meetings of the Board and
its Committees.

EXECUTIVE COMPENSATION

The following table sets forth the compensation for Fiscal 1997, paid or
awarded to the Company's Chief Executive Officer and each of its four other
most highly compensated executive officers (collectively, the "Named Executive
Officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------
OTHER LONG-TERM
NAME AND PRINCIPAL FISCAL ANNUAL COMPENSATION ALL OTHER
POSITION YEAR SALARY(1) BONUS COMPENSATION(2) PAYOUTS(3) COMPENSATION(4)
------------------ ------ --------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
James P. Hackett
President, Chief
Executive Officer and
Director............... 1997 $561,538 $626,999 $26,539 $241,267 $18,750
Robert A. Ballard
Executive Vice
President--Business
Operations............. 1997 333,884 296,433 7,811 71,007 18,750
Alwyn Rougier-Chapman
Senior Vice President--
Finance, Chief
Financial Officer and
Treasurer.............. 1997 252,211 173,116 7,303 66,392 18,750
James G. Mitchell
Senior Vice President--
Sales, Marketing and
Dealer Alliances....... 1997 254,318 174,675 7,661 69,643 18,750
Robert W. Black
Vice President--
Marketing.............. 1997 235,900 161,974 5,018 45,620 18,750
</TABLE>
- -------
(1) Includes withholding amounts under the 401(k) Plan (as defined herein) and
deferred compensation under the applicable deferred compensation agreement
of the Named Executive Officer, if any.
(2) Represents earnings on amounts accrued under the Management Incentive Plan
(as defined herein). The interest rate on such amounts is based on the
Company's annual return on equity.
(3) Amounts paid from the long-term component of the Management Incentive Plan
in March 1997.
(4) Includes contribution amounts made by the Company to the Profit-Sharing
Plan (as defined herein) and the Money Purchase Plan (as defined herein).
These amounts contributed by the Company for each of the Named Executive
Officers are $11,250 and $7,500, respectively.

42
<PAGE>

EMPLOYMENT AGREEMENTS

The Company has not entered into written employment agreements with any of
the Named Executive Officers.

OPTION GRANTS

The Named Executive Officers do not currently hold any options to purchase
common stock of the Company, nor were any Named Executive Officers granted any
such options in Fiscal 1997. In connection with the Offerings, the Named
Executive Officers will be granted options to purchase an aggregate of
shares of Class A Common Stock, with James P. Hackett receiving an option to
purchase up to shares, Robert A. Ballard receiving an option to purchase up
to shares, Alwyn Rougier-Chapman receiving an option to purchase up to
shares, James G. Mitchell receiving an option to purchase up to shares and
Robert W. Black receiving an option to purchase up to shares. Each of these
options will have an exercise price equal to the initial public offering price
set forth on the cover of this Prospectus and these options will vest over a
five-year period.

STOCK INCENTIVE PLANS

The Steelcase Inc. Employee Stock Purchase Plan (the "Purchase Plan") and
the Steelcase Inc. Incentive Compensation Plan (the "Incentive Compensation
Plan" and, together with the "Purchase Plan," the "Stock Incentive Plans")
were adopted by the Company and its shareholders on December 2, 1997. The
Stock Incentive Plans provide the employees of the Company and its designated
subsidiaries an opportunity to invest in shares of Class A Common Stock. In
some instances, these purchases may be on terms more favorable than would
otherwise be available. The Company believes that, by aligning the interests
of the participants and the Company, the implementation of the Stock Incentive
Plans will strengthen the commitment of the participants to the Company's
success.

PURCHASE PLAN

The Company will reserve a maximum of 1,500,000 shares of Class A Common
Stock for use under the Purchase Plan, subject to equitable adjustments as the
Compensation Committee (as defined above) may deem necessary to prevent
dilution or the enlargement of rights of participants as a result of, among
other things, changes in the Company's capitalization or corporate structure.
The Purchase Plan will be administered by the Compensation Committee and 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. Payments for shares purchased under the
Purchase Plan will be made in the time and manner specified by the
Compensation Committee. An employee may terminate his or her participation in
the Purchase Plan by giving a notice of withdrawal to the Company or
designated subsidiary (as defined in the Purchase Plan), as the case may be,
sufficiently in advance of the last trading day of the relevant purchase
period, and all funds contributed to date will be refunded to such employee.

Employees are eligible to participate in the Purchase Plan if they (i) are
customarily employed by the Company or any designated subsidiary for more than
five months in any calendar year, (ii) are not members of a collective
bargaining unit that has rejected participation in the Purchase Plan and (iii)
will not, immediately upon purchasing shares under the Purchase Plan, own
directly or indirectly 5% or more of the total combined voting power of all
outstanding shares of all classes of stock of the Company or any designated
subsidiary. Notwithstanding the foregoing, no employee may purchase

43
<PAGE>

shares under the Purchase Plan (or any other plan of the Company or a
designated subsidiary intended to qualify under Section 423 of the Code) 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. Participation
in the Purchase Plan ends automatically upon termination of employment with
the Company or designated subsidiary. Rights granted under the Purchase Plan
are not transferable other than by will or the laws of descent and
distribution.

The purchase period for the Employee Discount Option Grant will begin on the
date of the pricing of the Offerings (the "IPO Date") and end on the date 70
days after the IPO Date, or if such date is not a business day, the first
business day following such date, or such other date as the Compensation
Committee may designate. Eligible employees who wish to participate in the
Employee Discount Option Grant may purchase by the last day of such period a
maximum of 100 shares of Class A Common Stock at 85% of the initial public
offering price. The Company estimates that as of the IPO Date there will be
approximately 15,000 employees eligible to participate in the Employee
Discount Option Grant.

The Board may at any time amend or terminate the Purchase Plan so long as
such amendment or termination does not result in the failure of rights issued
under the Purchase Plan to meet the requirements for employee stock purchase
plans as defined in Section 423 of the Code.

INCENTIVE COMPENSATION PLAN

The Company will reserve for issuance under the Incentive Compensation Plan
a maximum of 150,000 shares of Class A Common Stock for the Employee Stock
Grant plus an
additional number of shares equal to 4% of the total outstanding shares of
Common Stock as of the IPO Date. The Incentive Compensation Plan will be
administered by the Compensation Committee. 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 subsidiaries or affiliates and other individuals designated by the
Compensation Committee. 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 nonqualified stock options not so intended.

Provisions regarding the extent to which a participant shall have the right
to exercise and/or receive payment for any Award following termination of the
participant's employment, directorship or other relationship with the Company
shall be determined at the discretion of the Board. 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. The Board may make equitable adjustments,
including with respect to the number and kind of

44
<PAGE>

shares issuable under, and the exercise price relating to, Awards as the Board
may deem necessary to prevent dilution or enlargement of the rights of
participants under the Incentive Compensation Plan as a result of changes in
the Company's corporate structure or capitalization.

Awards under the Incentive Compensation Plan are not transferable other than
by will or by the laws of descent and distribution, unless otherwise provided
by the Board. The Board may amend or terminate the Incentive Compensation Plan
so long as no amendment shall be made without shareholder approval if such
approval is necessary to comply with any applicable regulatory or tax
requirements. Notwithstanding the foregoing, in no event may an Award be
granted under the Incentive Compensation Plan on or after December 2, 2007.

Concurrently with the Offerings, the Company expects to effect the Employee
Stock Grant consisting of the gift of 10 shares of Class A Common Stock to
each employee of the Company and its subsidiaries as the Compensation
Committee shall designate. The number of eligible employees for this special
one-time grant is estimated to be approximately 15,000.

Section 162(m) of the Code generally disallows a publicly-held corporation a
deduction for compensation in excess of $1 million per year paid to the Named
Executive Officers. Based upon a special transition rule contained in the
Treasury regulations issued pursuant to Section 162(m) of the Code that
applies to private corporations that complete an initial public offering, and
assuming no material modifications to the Incentive Compensation Plan, the
Company intends to treat all payments made to the Named Executive Officers
under the Incentive Compensation Plan until the annual meeting of shareholders
of the Company held in the year 2002 as not subject to the deduction
limitations of Section 162(m) of the Code. The deductibility of payments made
under the Incentive Compensation Plan resulting in total covered compensation
in excess of $1 million for the Named Executive Officers following the annual
meeting of shareholders of the Company held in the year 2002 and thereafter
will depend on whether the Company and the Incentive Compensation Plan comply
with the performance-based compensation exception to Section 162(m).

MANAGEMENT INCENTIVE PLAN

The Amended and Restated Steelcase Inc. Management Incentive Plan (the
"Management Incentive Plan") is an annual and long-term incentive compensation
program that provides eligible key employees of the Company and its
subsidiaries with cash payments based upon the achievement by the Company of
specified financial performance goals as measured by Economic Value Added
("EVA") (as defined in the Management Incentive Plan). The Management
Incentive Plan is administered by the Compensation Committee.

Each year the Compensation Committee establishes target incentives in the
form of target percentages of base salary. Actual incentive percentages and
related incentive pay will be higher or lower than these targets depending on
the actual performance of the Company, which is measured in terms of EVA. EVA
is a profit measurement that reflects all the costs of operating the Company
as a business, including the cost of capital. At the end of the Fiscal year,
actual EVA performance is calculated, compared to EVA targets and a bonus
multiple is derived. The bonus multiple is then multiplied by an employee's
target incentive percentage to arrive at the employee's actual incentive
percentage. The actual incentive percentage is then multiplied by base pay to
determine an employee's total annual and long-term incentive pay for that
Fiscal year.

Incentive compensation for a given year has an annual component, which
rewards managers based on the current year financial performance of the
Company, and a long-term component, which rewards managers for making
decisions that effect the long-term success and strength of the Company.
Annual bonuses are payable after the end of the Fiscal year, whereas long-term
bonus amounts are paid out over a three-year period commencing after the end
of the year following the year in which the incentive amount is earned. The
long-term amounts are paid in substantially equal

45
<PAGE>

installments over the three-year payment period and unpaid long-term amounts
are adjusted based on the Company's return on equity as determined each Fiscal
year.

The Management Incentive Plan may be amended or terminated by the Board so
long as such amendment or termination shall not reduce or eliminate amounts
credited to the long-term incentive compensation accounts of participants as
of the end of the Fiscal year preceding the later of the date on which the
amendment or termination became effective or was adopted. The Management
Incentive Plan is not intended to qualify as an "employee benefit plan" within
the meaning of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). In addition, the Company intends to treat all payments to the Named
Executive Officers pursuant to the Management Incentive Plan as not subject to
the limitations of Section 162(m) of the Code pursuant to the transition rule
described above under "Incentive Compensation Plan".

The following table sets forth long-term compensation amounts earned by the
Named Executive Officers for Fiscal 1997.

LONG-TERM INCENTIVE PLAN--AWARDS IN FISCAL 1997

<TABLE>
<CAPTION>
PERFORMANCE
PERIOD
UNTIL ESTIMATED FUTURE
NAME MATURATION TARGETED PAYOUTS(1)
- ---- ----------- -------------------
<S> <C> <C>
James P. Hackett................................ 3 years $1,039,496
Robert A. Ballard............................... 3 years 373,764
Alwyn Rougier-Chapman........................... 3 years 234,676
James G. Mitchell............................... 3 years 236,899
Robert W. Black................................. 3 years 199,388
</TABLE>
- --------
(1) This amount represents the long-term component of compensation earned
under the Management Incentive Plan. Such amount is payable in equal
annual installments over a three-year period beginning in March 1998.
Unpaid amounts are adjusted based on the Company's return on equity as
determined each Fiscal year.

RETIREMENT PLANS

The Steelcase Inc. Employees' Profit-Sharing Retirement Plan, as restated
and amended (the "Profit-Sharing Plan"), the Steelcase Inc. Employees' Money
Purchase Plan, as restated and amended (the "Money Purchase Plan", and the
Steelcase Inc. 401(k) Retirement Plan, as restated and amended (the "401(k)
Plan" and, together with the Profit-Sharing Plan and the Money Purchase Plan,
the "Retirement Plans"), are qualified retirement plans available to Named
Executive Officers and all other eligible employees (together, the
"Participants") of adopting divisions and subsidiaries of the Company.

Annual contributions by the Company ("Employer Contributions"), if any, are
declared by the Board at the end of each Fiscal year. Employer Contributions
under the Profit-Sharing Plan are at the discretion of the Company, although
historically, in all but a few years, the Company has contributed the maximum
permissible under the Code. Under the Money Purchase Plan, annual Employer
Contributions are required in the amount of 5% of eligible annual
compensation. Pursuant to the 401(k) Plan, employees may also make non-
matching contributions. Contributions to the Retirement Plans for highly
compensated employees are limited as required under the Code and its
regulations. The contribution amounts for the Named Executive Officers are
noted in the Summary Compensation Table under "All Other Compensation".

Contributions to the Retirement Plans are made to a trust where the funds
are invested in available investment options selected by the Participant and
managed by the trustee. The trust may

46
<PAGE>

be invested and reinvested in common or preferred stocks, bonds, mortgages,
leases, notes, debentures, mutual funds, guaranteed investment contracts and
other contracts and funds of insurance companies, other securities and other
real or personal property. The account balances grow until finally
distributed. Under the Profit-Sharing Plan and the Money Purchase Plan,
vesting occurs on a scaled basis, beginning with 20% after 3 years and fully
vesting after seven years. Notwithstanding the following, a participant's
vested percentage shall be 100% upon the earlier of the Participant's normal
retirement date or the date the Participant's employment terminated due to
death or total disability. Account balances in the 401(k) Plan are always 100%
vested. Upon the occurrence of a distributive event, a Participant may elect
to receive funds according to the respective plans' provisions. Pursuant to
these provisions, a Participant is also entitled to rollover eligible
distribution amounts into another eligible retirement plan.

The Company may amend the Retirement Plans and their associated trusts,
retroactively or prospectively, in its sole discretion, except where
prohibited by the Code or ERISA, and so long as such amendment does not
exclude a Participant, reduce a Participant's account, reduce a Participant's
vested percentage or modify the vesting schedule for a Participant eligible
under the Retirement Plans prior to the effective date of the amendment. The
Retirement Plans may be merged or consolidated, or their assets and
liabilities may be transferred, in whole or in part, to another qualified
retirement plan. The Company also reserves the right to terminate the
Retirement Plans and their associated trusts, or to cease or suspend further
contributions, upon which occurrence accounts of Participants shall become
nonforfeitable. The Retirement Plans are qualified retirement plans and trusts
under Section 401 of the Code, ERISA and all Regulations issued thereunder.

SUPPLEMENTAL PLAN

The Steelcase Inc. 1994 Executive Supplemental Retirement Plan (the
"Supplemental Plan") is a nonqualified deferred compensation and supplemental
retirement plan that is limited to a select group of management or highly
compensated employees. The Supplemental Plan is intended to attract and retain
highly qualified corporate executives and to enable such executives to devote
their full-time efforts to the Company by providing, in consideration of these
efforts, supplemental retirement income. The Supplemental Plan is administered
by the Compensation Committee.

An employee who is an officer of the Company elected by the Board and
designated by the Compensation Committee is eligible to participate in the
Supplemental Plan. Each participant, or in the event of such participant's
death his or her surviving spouse, will, upon the earliest to occur of (x) the
date on which such participant retires and has attained "normal retirement"
age (65) or "early retirement" age (the date on which the sum of such
participant's age and years of service equals 80) and (y) the date of such
participant's death become entitled to receive (i) five annual payments (the
"Five-Year Benefit") each equal to 70% of the participant's average base
salary for the three consecutive calendar years prior to retirement or death
multiplied by such participant's vested percentage and (ii) 15 annual payments
(the "15-Year Benefit") each equal to $50,000 multiplied by the participant's
vested percentage, in each case commencing on March 1 following the date such
participant attains age 65 or the date of such participant's death, as
applicable. In the event of early retirement, a participant may, with the
consent of the Compensation Committee, elect (the "Early Payment Election") to
receive the total amount of the Five-Year Benefit and/or the 15-Year Benefit
through payments of reduced annual income benefits commencing on March 1
following such retirement and ending on the date that the final annual payment
would have been paid if no Early Payment Election had been made. A
participant's vested percentage begins at 20% after three completed years of
service following such participant's eligibility under the Supplemental Plan
and increases by 20% increments annually until it becomes fully vested upon
seven completed years of service following such eligibility. The right to
receive payments under the Supplemental Plan, however, shall be forfeited upon
the occurrence of (i) the termination of a participant's employment prior to

47
<PAGE>

satisfaction of the conditions for either of normal retirement or early
retirement, (ii) termination of a participant's employment for cause, (iii)
the death of a participant without a surviving spouse or the death of a
participant's surviving spouse following the death of such participant and
(iv) without the consent of the Board, a participant's employment by or
performance of services for a competitor of the Company, its subsidiaries or
affiliates or a participant's engagement in competition with the Company, its
subsidiaries or affiliates.

The following table sets forth the estimated annual income benefits payable
upon satisfaction of Supplemental Plan requirements to each of the Named
Executive Officers, or his surviving spouse, during the five-year period
following the commencement of payments under the Supplemental Plan, assuming
that no Early Payment Election is made:

PENSION PLAN TABLE

FINAL YEARS OF SERVICE(1)
AVERAGE --------------------------------------------------------------------
COMPENSATION 7 OR
(3 YEARS) 3 4 5 6 MORE
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$700,000 $108,000 $216,000 $324,000 $432,000 $540,000
650,000 101,000 202,000 303,000 404,000 505,000
600,000 94,000 188,000 282,000 376,000 470,000
550,000 87,000 174,000 261,000 348,000 435,000
500,000 80,000 160,000 240,000 320,000 400,000
450,000 73,000 146,000 219,000 292,000 365,000
400,000 66,000 132,000 198,000 264,000 330,000
350,000 59,000 118,000 177,000 236,000 295,000
300,000 52,000 104,000 156,000 208,000 260,000
250,000 45,000 90,000 135,000 180,000 225,000
200,000 38,000 76,000 114,000 152,000 190,000
</TABLE>
- --------
(1) These amounts are not subject to any deduction for Social Security or
other offset amounts.

Assuming that no Early Payment Election is made, for years 6 to 15 following
the commencement of payments under the Supplemental Plan, the annual income
benefits to each of the Named Executive Officers, or his surviving spouse, is
$50,000 multiplied by such Named Executive Officer's vested percentage.

As of the date of this Prospectus, the completed years of service under the
Supplemental Plan for each of the Named Executive Officers are as follows:
James P. Hackett (7), Robert A. Ballard (11) Alwyn Rougier-Chapman (14), James
G. Mitchell (2) and Robert W. Black (0).

The Supplemental Plan is intended to qualify as an unfunded plan within the
meaning of ERISA. The Board has full authority to amend or terminate the
Supplemental Plan at any time.

DEFERRED COMPENSATION AGREEMENTS

Each of James P. Hackett, Robert A. Ballard, Alwyn Rougier-Chapman and James
G. Mitchell (the "Executives") has entered into deferred compensation
agreements (each, a "Deferred Compensation Agreement") with the Company,
entitling each of them to defer a portion of their future compensation until
after their retirement or death. Such agreements are, and will continue to be,
limited to a select group of management or highly compensated employees. The
Board has full power and authority to interpret, construe and administer these
agreements.

The deferred amounts are deducted equally from each Executive's bi-weekly
payroll over a three- to five-year deferral period. If complete deferrals are
made from an Executive's compensation over the

48
<PAGE>

course of the deferral period, and if the Executive lives until age 70, the
Company will make corresponding annual payments to the Executive for fifteen
years commencing in the month of March after the Executive's 70th birthday. If
the Executive dies before reaching age 70, the Company will make the above
payments, in the same manner and over the same time period, to the beneficiary
designated by the Executive. If the Executive's compensation is not sufficient
to make the deferral from compensation with respect to any year, for any
reason other than death or discharge for cause, no further deferrals will be
made and the Company will make payments to the Executive on the number of
years with respect to which complete deferrals were made. Such payments will
be made in the manner and over the time period provided in the agreement. If
an Executive is discharged for cause, an amount equal to the compensation
actually deferred, if any, shall be paid to the Executive, without interest,
in five equal annual payments commencing after the discharge.

Entitlement to payments under the agreements is subject to a scaled vesting
requirement during the five years following the completed deferral period. If
an Executive ends his employment with the Company during the five year vesting
period for a reason other than qualified retirement, disability or death, the
Executive is entitled to receive a designated vested percentage of the above
payments, to be made in the same manner and over the same time period as
described in the previous paragraph. Amounts deferred under these agreements
are not subject to withdrawal, assignment, transfer, sale, pledge,
encumbrance, alienation or charge by any Executive or beneficiary.

The Company may use the funds deferred under these agreements in any manner
it desires. The Company may invest the funds, at its convenience, to assist in
providing the benefits promised under the agreements. In addition, the
Company, in its sole discretion, may establish a trust to assist in meeting
its obligations under these agreements and other similar agreements. The Board
has the power to amend these agreements, provided that no amendment shall have
any material, adverse effect on an Executive unless the Executive consents to
such amendment in writing, and provided that no amendment would alter the
irrevocable nature of the election to defer compensation.

The deferred compensation agreements are intended to qualify as unfunded
plans within the meaning of ERISA.

49
<PAGE>

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of Common Stock on a pro forma basis giving effect to the
Recapitalization (assuming an initial public offering price of $ for
purposes of converting Existing Preferred Stock) as if it occurred on ,
1997 and as adjusted to reflect the sale of the shares of Class A Common Stock
in the Offerings by (i) each person or entity known by the Company to
beneficially own more than 5% of Common Stock, (ii) each of the Company's
directors, (iii) each Named Executive Officer, (iv) all directors and
executive officers of the Company as a group and (v) each Selling Shareholder.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERINGS(1) OFFERINGS(1)
---------------------- NUMBER OF SHARES ----------------------
NAME NUMBER PERCENTAGE TO BE SOLD NUMBER PERCENTAGE
- ---- --------- ----------- ---------------- --------- -----------
<S> <C> <C> <C> <C> <C>
DIRECTORS, EXECUTIVE
OFFICERS AND
5% SHAREHOLDERS:
Robert C. Pew II........ % %
Peter M. Wege...........
William W. Idema (2) ...
Mary I. Pew (3) ........
James P. Hackett........
Robert A. Ballard.......
Alwyn Rougier-Chapman ..
James G. Mitchell.......
William P. Crawford.....
Robert W. Black.........
Robert C. Pew III.......
Peter M. Wege II........
David D. Hunting, Jr. ..
Frank H. Merlotti.......
P. Craig Welch, Jr. ....
Directors and executive
officers as a group
(20 persons)...........
SELLING SHAREHOLDERS:
Peter Martin Wege Trust
(4)....................
The Wege Foundation
(5)....................
Peter M. Wege Charitable
Remainder Trust........
William W. Idema Trust
(4)....................
John R. Hunting Charita-
ble Remainder
Unitrust # 1 (4).......
John R. Hunting Charita-
ble Remainder
Unitrust # 2 (4).......
John R. Hunting Charita-
ble Remainder
Unitrust # 3 (4).......
John R. Hunting Charita-
ble Remainder
Unitrust # 4 (4).......
John R. Hunting Charita-
ble Remainder
Unitrust # 5 (4).......
John R. Hunting Charita-
ble Remainder
Unitrust # 6 (4).......
Keith and Marie Ambs....
Robert E. Hubling (4)...
Michael D. Olds.........
Ray Mortimer Olds Trust-
ee.....................
S. Suzanne Olds Revoca-
ble Trust..............
Mitchell Partners, L.P.
.......................
Larry J. and Sally K.
Robson.................
Earl G. Sullivan Trust
(4)....................
</TABLE>
(Footnotes on next page)

50
<PAGE>

- --------
(1) Pursuant to Commission regulations, shares are deemed to be "beneficially
owned" by a person if such person directly or indirectly has or shares the
power to vote or dispose of such shares or the right to acquire the power
to vote or dispose of such shares within 60 days, including any right to
acquire through the exercise of any option, warrant or right, whether or
not such person has any pecuniary interest in such shares.
(2) Address to be provided by Amendment.
(3) Address to be provided by Amendment.
(4) Shares are held of record by Trent & Co., as nominee.
(5) Peter M. Wege, Vice Chairman of the Board and a director of the Company,
and Peter M. Wege II, a director of the Company, are trustees of The Wege
Foundation.

51
<PAGE>

DESCRIPTION OF CAPITAL STOCK

RECAPITALIZATION

Concurrently with the consummation of the Offerings, the Recapitalization
will occur pursuant to which the following will occur:

(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 will be 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 201,150 shares of common stock, par value $50
per share (the "Existing Common Stock"), will be converted into one share
of Class B Common Stock, and the Class B Common Stock resulting from that
conversion will be split (the "Stock Split") through a stock dividend of
additional shares of Class B Common Stock for each then outstanding
share; and

(iii) concurrently with the Stock Split, (a) each of the 7,672.5 shares
of Existing Class A Preferred Stock will be converted into that number of
shares of Class B Common Stock determined by dividing (x) $103 by (y) the
price per share of Class A Common Stock set forth on the cover page of this
Prospectus and (b) each of the 196,490 shares of Existing Class B Preferred
Stock will be converted into that number of shares of Class B Common Stock
determined by dividing (x) $2,000 by (y) the price per share of Class A
Common Stock set forth on the cover page of this Prospectus.

Each share of Class B Common Stock to be sold in the Offerings will
automatically convert into one share of Class A Common Stock immediately prior
to the consummation of such sale.

After giving effect to the Recapitalization, the authorized capital stock of
the Company will consist of: (i) 475,000,000 shares of Class A Common Stock,
(ii) 475,000,000 shares of Class B Common Stock and (iii) 50,000,000 shares of
Preferred Stock, issuable in series. Upon completion of the Offerings, there
will be outstanding shares of Class A Common Stock (assuming no exercise
of Underwriters' over-allotment options) and shares of Class B Common
Stock, and no Preferred Stock will be outstanding. The following summary
description of the capital stock of the Company is qualified in its entirety
by reference to the Articles and the By-laws, a copy of each of which is filed
as an exhibit to the Registration Statement on Form S-1 of which this
Prospectus forms a part.

CLASS A COMMON STOCK AND CLASS B COMMON STOCK

VOTING. The holders of Common Stock will generally be 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. Unless otherwise required by law, and
so long as their rights would not be adversely affected, the holders of Common
Stock will not be entitled to vote on any amendment to the Articles that
relates solely to the terms of one or more outstanding series of Preferred
Stock.

DIVIDENDS AND OTHER DISTRIBUTIONS. The holders of Class A Common Stock and
Class B Common Stock will be entitled to equal dividends when declared by the
Board of Directors, except that all dividends payable in Common Stock will be
paid in the form of Class A Common Stock to holders of Class A Common Stock
and in the form of Class B Common Stock to holders of Class B Common Stock.
Neither class of Common Stock may be split, divided or combined unless the
other class is proportionally split, divided or combined.

52
<PAGE>

In the event of a liquidation or winding up of the Company, the holders of
Class A Common Stock and Class B Common Stock will be treated on an equal per
share basis, and will be entitled to receive all of the remaining assets of
the Company following distribution of the preferential and/or other amounts to
be distributed to the holders of Preferred Stock.

ISSUANCE OF CLASS B COMMON STOCK, OPTIONS, RIGHTS OR WARRANTS. Subject to
certain provisions regarding dividends and other distributions described
above, the Company will not be 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. The Class A Common Stock and the
Class B Common Stock will be treated equally with respect to any offer by the
Company to holders of Common Stock of options, rights or warrants to subscribe
for any other capital stock of the Company.

MERGER. In the event of a merger, the holders of Class A Common Stock and
Class B Common Stock will be entitled to receive the same per share
consideration, if any, except that if such consideration includes voting
securities (or the right to acquire voting securities or securities
exchangeable for or convertible into voting securities), the Company may (but
is not required to) provide for the holders of Class B Common Stock to receive
consideration entitling them to 10 times the number of votes per share as the
consideration being received by holders of the Class A Common Stock.

CONVERSION OF CLASS B COMMON STOCK. The Class B Common Stock will be
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 Articles), (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).

In general, Permitted Transferees will include natural persons who receive
shares of Class B Common Stock in the Recapitalization, their spouses,
ancestors and descendants, their descendant's spouses and certain charitable
organizations and trusts (including charitable trusts) or other entities
controlled by such persons. Natural persons will be deemed to have received
shares of Class B Common Stock in the Recapitalization to the extent shares
are received by record nominees for, and certain trusts or accounts for the
benefit of or established by, such persons. In general, corporations,
partnerships and limited liability companies which receive Class B Common
Stock in the Recapitalization will not be entitled to acquire additional
shares of Class B Common Stock unless such entities are 100% controlled by
Permitted Transferees.

PREEMPTIVE RIGHTS. The holders of shares of capital stock of the Company
will not have any preemptive rights with respect to any new issuance of
capital stock of the Company.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is BankBoston, N.A.

PREFERRED STOCK

The Company may issue up to 50,000,000 shares of Preferred Stock in one or
more series. The Board of Directors has the authority, without any vote or
action by the shareholders, to create one or

53
<PAGE>

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. Upon
the completion of the Offerings, there will be no shares of Preferred Stock
outstanding. See "--Certain Anti-Takeover Matters--Blank Check Preferred
Stock".

LIMITATION OF LIABILITY

The Articles provide that, to the fullest extent permitted by the Michigan
Business Corporation Act or any other applicable laws, directors of the
Company will not be personally liable to the Company or its shareholders for
any acts or omissions in the performance of their duties. Such limitation of
liability does not affect the availability of equitable remedies such as
injunctive relief or rescission. These provisions will not limit the liability
of directors under federal securities laws.

CERTAIN ANTI-TAKEOVER MATTERS

BUSINESS COMBINATION ACT

The Company is subject to the provisions of Chapter 7A (the "Business
Combination Act") of the Michigan Business Corporation Act. In general,
subject to certain exceptions, the Business Combination Act prohibits a
Michigan corporation from engaging in a "business combination" with an
"interested shareholder" for a period of five years following the date that
such shareholder became an interested shareholder, unless (i) prior to such
date the board of directors of the corporation approved the business
combination or (ii) on or subsequent to such date the business combination is
approved by at least 90% of the votes of each class of the corporation's stock
entitled to vote and by at least two-thirds such voting stock not held by the
interested shareholder or such shareholder's affiliates. The Business
Combination Act defines a "business combination" to include certain mergers,
consolidations, dispositions of assets or shares and recapitalizations. An
"interested shareholder" is defined by the Business Combination Act to include
a beneficial owner, directly or indirectly, of 10% or more of the voting power
of the outstanding voting shares of the corporation.

ARTICLE AND BY-LAW PROVISIONS

The Articles and By-laws include a number of provisions that may have the
effect of encouraging persons considering unsolicited tender offers or other
unilateral takeover proposals to negotiate with the Board rather than pursue
non-negotiated takeover attempts. These provisions include a classified Board,
an advance notice requirement for director nominations and actions to be taken
at annual meetings of shareholders, the inability of the shareholders to call
a special meeting of the shareholders, the requirements for approval by 66
2/3% of the shareholder votes to amend the By-laws or certain provisions of
the Articles, removal of a director only for cause and the availability of
authorized but unissued blank check Preferred Stock.

CLASSIFIED BOARD OF DIRECTORS

The Articles establish a classified Board, which will take effect at the
1998 annual meeting of shareholders. The Board will be divided into three
classes of approximately equal size, and at the 1998 annual meeting the
shareholders will elect directors for terms expiring in 1999 (Class I), 2000
(Class II) and 2001 (Class III). Thereafter, subject to the right of holders
of any series of Preferred Stock to elect directors, shareholders will elect
one class constituting approximately one-third of the Board for a three-year
term at each annual meeting of shareholders. See "Management--Directors and
Executive Officers". As a result, at least two annual meetings of shareholders
may be required for the shareholders to change a majority of the Board. The
classification of directors will effectively make it

54
<PAGE>

more difficult to change the composition of the Board of Directors and will
instead promote a continuity of existing management.

ADVANCE NOTICE REQUIREMENT

The By-laws set forth advance notice procedures with regard to shareholder
proposals relating to the nomination of candidates for election as directors
or new business to be presented at meetings of shareholders. These procedures
provide that notice of such shareholder proposals must be timely given in
writing to the Secretary of the Company prior to the meeting at which the
action is to be taken. Generally, to be timely, notice must be received at the
principal executive offices of the Company not less than 70 days nor more than
90 days prior to the meeting. The advance notice requirement does not give the
Board of Directors any power to approve or disapprove shareholder director
nominations or proposals but may have the effect of precluding the
consideration of certain business at a meeting if the proper notice procedures
are not followed.

SPECIAL MEETINGS OF SHAREHOLDERS.

The By-laws do not grant the shareholders the right to call a special
meeting of shareholders. Under the By-laws, special meetings of shareholders
may be called only by the Company's Chief Executive Officer or a majority of
the Board of Directors.

AMENDMENT OF ARTICLES AND BY-LAWS

The Articles and the By-laws require the affirmative vote of at least 66
2/3% of the voting power of all outstanding shares of capital stock entitled
to vote to amend or repeal certain provisions of the Articles, including those
described above, or any by-law. This requirement will render more difficult
the dilution of the anti-takeover effects of the Articles and the By-laws.

REMOVAL OF DIRECTORS ONLY FOR CAUSE

The Articles permit shareholders to remove directors only for cause and only
by the affirmative vote of the holders of a majority of the voting power of
the outstanding shares of capital stock of the Company entitled to vote. This
provision may restrict the ability of a third party to remove incumbent
directors and simultaneously gain control of the Board of Directors by filling
the vacancies created by removal with its own nominees.

BLANK CHECK PREFERRED STOCK

The Articles provide for 50,000,000 authorized shares of Preferred Stock,
none of which has been issued. The existence of authorized but unissued
Preferred Stock may enable the Board of Directors to render more difficult or
discourage an attempt to obtain control of the Company by means of a merger,
tender offer, proxy contest or otherwise. For example, if in the due exercise
of its fiduciary obligations, the Board of Directors were to determine that a
takeover proposal is not in the Company's best interests, the Board of
Directors could cause shares of Preferred Stock to be issued without
shareholder approval in one or more private offerings or other transactions
that might dilute the voting or other rights of the proposed acquirer or
insurgent shareholder or shareholder group. In this regard, the Articles grant
the Board of Directors broad power to establish the rights and preferences of
authorized and unissued Preferred Stock. The issuance of shares of Preferred
Stock pursuant to the Board of Directors' authority described above could
decrease the amount of earnings and assets available for distribution to
holders of Common Stock and adversely affect the rights, including voting
rights in the event a particular series of Preferred Stock is given a
disproportionately large number of votes per share, of such holders and may
have the effect of delaying, deferring or preventing a change in control of
the Company that may be favored by certain shareholders. The Board of
Directors does not currently intend to seek shareholder approval prior to any
issuance of Preferred Stock, unless required by law.

55
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offerings, the Company will have outstanding
shares of Common Stock, consisting of the shares of Class A Common Stock
offered hereby (assuming no exercise of the Underwriters' over-allotment
options), shares of Class A Common Stock granted pursuant to the Employee
Stock Grant and shares of Class B Common Stock (excluding shares of Class B
Common Stock issuable to current holders of Class A Preferred Stock and Class B
Preferred Stock in the Recapitalization). In addition, the Company will grant
immediately exercisable options to purchase a maximum of 1,500,000 shares of
Class A Common Stock pursuant to the Employee Discount Option Grant and options
to purchase up to 2,800,000 shares of Class A Common Stock pursuant to the
Incentive Compensation Plan. See "Management--Stock Incentive Plans".

Subject to the lock-up provisions discussed in the paragraph below, all the
shares of Class A Common Stock sold in the Offerings, all of the shares of
Class A Common Stock granted to the employees in connection with the Offerings
and all the shares of Class A Common Stock issued upon the exercise of options
discussed above will be freely transferable without restriction or further
registration under the Securities Act, except that any shares purchased by
"affiliates" of the Company, as that term is defined in Rule 144, may generally
only be sold subject to certain restrictions as to timing, manner and volume.
Any shares of Class A Common Stock outstanding as a result of the conversion of
shares of Class B Common Stock subsequent to the Offerings and all the shares
of Class B Common Stock, representing % of the outstanding Common Stock upon
completion of the Offerings, will be deemed to be "restricted securities" under
the Securities Act. However, beginning approximately 90 days after the
consummation of the Offerings, such shares of Common Stock, other than those
held by "affiliates" and shares held by a former employee of the Company,
will be freely tradeable pursuant to Rule 144(k) (described below).

The Company, its directors, its executive officers and certain of its
shareholders, together representing % of the outstanding Common Stock after
the Offerings have, subject to certain exceptions (including a transfer by sale
or gift so long as the transferee agrees in writing to the same terms binding
the transferor), agreed with representatives of the Underwriters not to,
directly or indirectly, sell, or otherwise transfer any of the economic
consequences of ownership of, any shares of Common Stock for a period of 180
days after the date of this Prospectus without the prior written consent of
Goldman, Sachs & Co. See "Underwriting."

In general, under Rule 144 as currently in effect, a shareholder, including
an "affiliate", who has beneficially owned his or her restricted securities (as
that term is defined in Rule 144) for at least one year from the later of the
date such securities were acquired from the Company or (if applicable) the date
they were acquired from an affiliate is entitled to sell, within any three-
month period, a number of such shares that does not exceed the greater of 1% of
the then outstanding shares of Common Stock or the average weekly trading
volume in the Common Stock during the four calendar weeks preceding the date on
which notice of such sale was filed under Rule 144, provided certain
requirements concerning availability of public information, manner of sale and
notice of sale are satisfied. The Company will satisfy the availability of
public information requirement approximately 90 days after the consummation of
the Offerings. In addition, under Rule 144(k), if a period of at least two
years has elapsed between the later of the date restricted securities were
acquired from the Company or (if applicable) the date they were acquired from
an affiliate of the Company, a shareholder who is not an affiliate of the
Company at the time of sale and has not been an affiliate of the Company for at
least three months prior to the sale is entitled to sell the shares immediately
without compliance with the foregoing requirements under Rule 144.

Except as indicated above, the Company is unable to estimate the amount,
timing and nature of future sales of outstanding Common Stock. Prior to the
Offerings, there has been no public market for the Common Stock, and no
prediction can be made as to the effect, if any, that market sales of shares

56
<PAGE>

of Common Stock or the availability of shares for sale will have on the market
price of the Class A Common Stock prevailing from time to time. Nevertheless,
sales of significant numbers of shares of Common Stock in the public market
could adversely affect the market price of the Class A Common Stock and could
impair the Company's ability to raise capital through an offering of its equity
securities. See "Risk Factors--Shares Eligible for Future Sale" and
"Underwriting".

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following general discussion summarizes the material U.S. Federal income
and estate tax consequences of the purchase, ownership and disposition of Class
A Common Stock by a "Non-U.S. Holder". For purposes of this discussion, a "Non-
U.S. Holder" is a person or entity that, for U.S. Federal income tax purposes,
is either a non-resident alien individual, a foreign corporation, a foreign
partnership or a foreign estate or trust in each case not subject to U.S.
Federal income tax on a net income basis in respect of income or gain with
respect to Class A Common Stock. An individual may be deemed to be a resident
alien (as opposed to a non-resident alien) by virtue of being present in the
United States on at least 31 days during the calendar year and for an aggregate
of 183 days during the calendar year and the two preceding calendar years
(counting, for such purposes, all the days present in the current year, one-
third of the days present in the immediately preceding year and one-sixth of
the days present in the second preceding year). In addition to the "substantial
presence test" described in the immediately preceding sentence, an individual
may be treated as a resident alien if he or she (i) meets a lawful permanent
residence test (a so-called "green card" test) or (ii) elects to be treated as
a U.S. resident and meets the "substantial presence test" in the immediately
following year. Generally, resident aliens are subject to U.S. Federal income
and estate tax in the same manner as U.S. citizens and residents.

This discussion is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), final, temporary and proposed regulations promulgated thereunder
and administrative and judicial interpretations thereof, all as in effect on
the date hereof and all of which are subject to change, possibly with
retroactive effect. This discussion does not address all aspects of Federal
income and estate taxation that may be relevant in light of a Non-U.S. Holder's
particular facts and circumstances (such as being a U.S. expatriate) and does
not address any tax consequences arising under the laws of any state, local or
foreign taxing jurisdiction.

The Company has not and will not seek a ruling from the Internal Revenue
Service (the "IRS") with respect to the U.S. Federal income and estate tax
consequences described below and as a result, there can be no assurance that
the IRS will not disagree with or challenge any of the conclusions set forth in
this discussion.

EACH PROSPECTIVE NON-U.S. HOLDER IS ADVISED TO CONSULT ITS OWN TAX ADVISOR
WITH RESPECT TO THE TAX CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF
CLASS A COMMON STOCK.

DIVIDENDS

Dividends paid with respect to the Class A Common Stock to a Non-U.S. Holder
generally will be subject to U.S. Federal withholding tax at a 30% rate or such
lower rate as may be specified by an applicable income tax treaty. For purposes
of determining whether tax with respect to dividends paid on or before December
31, 1998 is to be withheld at a 30% rate or a reduced rate as specified by an
income tax treaty, the Company ordinarily will presume that dividends paid to
an address in a foreign country are paid to a resident of such country absent
knowledge that such presumption is not warranted. However, under final
regulations with respect to withholding, backup withholding and information
reporting issued by the IRS on October 6, 1997 (the "Final Regulations"), in
order to claim the benefit of a tax treaty with respect to dividends paid after
December 31, 1998, a Non-U.S. Holder

57
<PAGE>

of Class A Common Stock will have to comply with certain certification
requirements. In addition, the Final Regulations require, in the case of Class
A Common Stock held by a foreign partnership, that (x) the certification
requirements described in the previous sentence be provided by the partners
rather than by the foreign partnership and (y) the partnership provide certain
information, including a U.S. taxpayer identification number. A look-through
rule applies in the case of tiered partnerships.

Upon the filing of an IRS Form 4224 with the Company or its dividend paying
agent, there will be no withholding tax with respect to dividends that are
effectively connected with the Non-U.S. Holder's conduct of a trade or business
within the United States (and that are attributable to a U.S. permanent
establishment of such holder, if an applicable income tax treaty so requires as
a condition for the non-U.S. holder to be subject to U.S. income tax on a net
income basis in respect of such dividends). Instead, the effectively connected
dividends will be subject to U.S. Federal income tax in the same manner as
dividends paid to a U.S. resident. A non-U.S. corporation receiving effectively
connected dividends also may be subject to an additional "branch profits tax"
which is imposed, under certain circumstances, at a 30% rate (or such lower
rate as may be specified by an applicable treaty) of the non-U.S. corporation's
effectively connected earnings and profits, subject to certain adjustments.

A Non-U.S. Holder of Class A Common Stock that is eligible for a reduced rate
of U.S. withholding tax pursuant to a tax treaty may obtain a refund of any
excess amounts currently withheld by filing an appropriate claim for refund
with the IRS.

SALE OR DISPOSITION OF CLASS A COMMON STOCK

A Non-U.S. Holder generally will not be subject to U.S. Federal income or
withholding tax on any gain recognized on the sale or other disposition of
Class A Common Stock unless (i) the gain is effectively connected with the
conduct of a trade or business of such Non-U.S. Holder within the United States
(which gain, in the case of a foreign corporation, must also be taken into
account for branch profits tax purposes); (ii) in the case of a Non-U.S. Holder
who is an individual and holds the Class A Common Stock as a capital asset
(within the meaning of Section 1221 of the Code), such holder is present in the
United States for 183 or more days in the taxable year of the disposition and
either (a) has a "tax home" for Federal income tax purposes in the United
States or (b) has an office or other fixed place of business in the United
States to which the gain is attributable; or (iii) the Company is or has been a
"U.S. real property holding corporation" within the meaning of Section
897(c)(2) of the Code at any time within the shorter of the five-year period
preceding such disposition or such Non-U.S. Holder's holding period. The
Company believes it currently is not a U.S. real property holding corporation
and does not anticipate becoming such a corporation. Further, even if the
Company were to become a U.S. real property holding corporation, any gain
recognized by a Non-U.S. Holder still would not be subject to U.S. tax if the
shares were considered to be "regularly traded" (within the meaning of
applicable U.S. Treasury regulations) on an established securities market
(e.g., the NYSE, on which the Class A Common Stock will be listed), and the
Non-U.S. Holder did not own, directly or indirectly, at any time during the
five-year period ending on the date of the disposition, more than 5% of the
Class A Common Stock.

BACKUP WITHHOLDING AND REPORTING REQUIREMENTS

The Company must report annually to the IRS and to each Non-U.S. Holder the
amount of dividends paid to, and the tax withheld with respect to, such holder,
regardless of whether any tax was actually withheld. This information may also
be made available to the tax authorities in the Non-U.S. Holder's country of
residence. United States backup withholding (which generally is imposed at a
31% rate) generally will not apply to the payment of dividends with respect to
Class A Common Stock to a Non-U.S. Holder at an address outside the United
States on or before December 31, 1998. Under the Final Regulations, the payment
of dividends with respect to Class A Common Stock to a Non-U.S. Holder at an
address outside the United States after December 31, 1998 may be subject to 31%

58
<PAGE>

backup withholding unless such Non-U.S. Holder satisfies certain certification
requirements. See the discussion above with respect to the rules applicable to
foreign partnerships under the Final Regulations.

Information reporting and 31% backup withholding will apply to the payment of
the proceeds of a sale of Class A Common Stock to or through a U.S. office of a
broker unless the disposing Non-U.S. Holder certifies as to its non-U.S. status
under penalties of perjury or otherwise establishes an exemption. A Non-U.S.
Holder may establish non-U.S. status by filing IRS Form W-8 with the broker.
Generally, U.S. information reporting and 31% backup withholding will not apply
to a payment of disposition proceeds if the payment is made outside the U.S.
through a non-U.S. office of a non-U.S. broker. However, U.S. information
reporting requirements (but not backup withholding) will apply to a payment of
disposition proceeds outside the United States if (i) the payment is made
through an office outside the United States of a broker that is either (a) a
U.S. Person, (b) a foreign person 50% or more of whose gross income from all
sources for the three-year period ending with the close of its taxable year
preceding the payment (or for such part of the period that the broker has been
in existence) is derived from activities which are effectively connected with
the conduct of a trade or business within the United States or (c) a
"controlled foreign corporation" for U.S. Federal income tax purposes and (ii)
the broker fails to maintain documentary evidence that the holder is a Non-U.S.
Holder and that certain conditions are met, or that the holder otherwise is
entitled to an exemption.

Backup withholding is not an additional tax. Amounts withheld under the
backup withholding rules are generally allowable as a refund or credit against
such Non-U.S. Holder's Federal income tax liability, if any, provided that the
required information is furnished to the IRS.

FEDERAL ESTATE TAX CONSEQUENCES

An individual Non-U.S. Holder who is treated as the owner of or has made
certain lifetime transfers of an interest in Class A Common Stock will be
required to include the value thereof in such individual's gross estate for
U.S. Federal estate tax purposes, and may be subject to U.S. Federal estate tax
unless an applicable estate tax treaty provides otherwise.

THE FOREGOING DISCUSSION IS A SUMMARY OF THE PRINCIPAL FEDERAL INCOME AND
ESTATE TAX CONSEQUENCES OF THE OWNERSHIP, SALE OR OTHER DISPOSITION OF CLASS A
COMMON STOCK BY NON-U.S. HOLDERS. ACCORDINGLY, INVESTORS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION AND EFFECT OF THE FINAL
REGULATIONS AND THE FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND
DISPOSITION OF CLASS A COMMON STOCK, INCLUDING THE APPLICATION AND EFFECT OF
THE LAWS OF ANY STATE, LOCAL, FOREIGN OR OTHER TAXING JURISDICTION.

VALIDITY OF CLASS A COMMON STOCK

The Company has been represented by Cravath, Swaine & Moore, New York, New
York, and with respect to matters of Michigan law by Honigman Miller Schwartz
and Cohn, Detroit, Michigan. The validity of the Class A Common Stock will be
passed on for the Underwriters by Sullivan & Cromwell, New York, New York in
reliance on Honigman Miller Schwartz and Cohn for all matters pertaining to
Michigan law. Certain legal matters will be passed upon for the Selling
Shareholders by Curtis, Mallet, Prevost-Colt & Mosle, New York, New York,
Roberts, Sheridan & Kotel, New York, New York, and Warner Norcross & Judd LLP,
Grand Rapids, Michigan.

59
<PAGE>

EXPERTS

The Consolidated Financial Statements and schedule of the Company included in
this Prospectus and in the Registration Statement have been audited by BDO
Seidman, LLP, independent certified public accountants, to the extent and for
the periods set forth in their reports appearing elsewhere herein and in the
Registration Statement, and are included in reliance upon such reports given
upon the authority of said firm as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a Registration Statement (which term shall include all
amendments, exhibits and schedules thereto) on Form S-1 under the Securities
Act with respect to the shares of Class A Common Stock offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, omits
certain of the information contained in the Registration Statement. Reference
is hereby made to the Registration Statement for further information with
respect to the Company and the Class A Common Stock offered hereby. Any
statements contained herein concerning the provisions of any contract or other
document are not necessarily complete, and where such contract or other
document is an exhibit to the Registration Statement, each such statement is
qualified by the provisions in such exhibit, to which reference is hereby made.
The Commission maintains a Web site at http://www.sec.gov that contains the
Registration Statement. Copies of the Registration Statement may be examined or
copied at the Public Reference Section of the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of
the Commission located at 7 World Trade Center, Suite 1300, New York, New York
10048 and at Citicorp Center, 500 Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies can also be obtained by mail at prescribed rates. Requests
should be directed to the Commission's Public Reference Section, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Company intends to
furnish to its shareholders annual reports containing audited financial
statements and a report thereon expressed by independent certified accountants
and quarterly reports for the first three quarters of each fiscal year
containing unaudited interim financial information.

60
<PAGE>

STEELCASE INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of Independent Certified Public Accountants......................... F-2
Consolidated Statements of Income for the Years Ended February 28, 1995,
February 23, 1996 and February 28, 1997 and for the Six Months Ended
August 23, 1996 and August 29, 1997 ...................................... F-3
Consolidated Balance Sheets as of February 23, 1996 and February 28, 1997
and as of August 29, 1997................................................. F-4
Consolidated Statements of Changes in Shareholders' Equity for the Years
Ended
February 28, 1995, February 23, 1996 and February 28, 1997 and for the Six
Months Ended August 29, 1997.............................................. F-6
Consolidated Statements of Cash Flows for the Years Ended February 28,
1995,
February 23, 1996 and February 28, 1997 and for the Six Months Ended
August 23, 1996 and August 29, 1997....................................... F-7
Notes to Consolidated Financial Statements................................. F-8
</TABLE>

F-1
<PAGE>

STEELCASE INC.

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 23, 1996 and February 28, 1997, 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 28, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
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 are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. 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 23, 1996 and February 28, 1997, and the
results of their operations and their cash flows for each of the three years
in the period ended February 28, 1997, in conformity with generally accepted
accounting principles.

BDO SEIDMAN, LLP

Grand Rapids, Michigan
March 21, 1997

F-2
<PAGE>

STEELCASE INC.

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

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
-------------------------------------- ---------------------
FEBRUARY 28, FEBRUARY 23, FEBRUARY 28, AUGUST 23, AUGUST 29,
1995 1996 1997 1996 1997
------------ ------------ ------------ ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales............... $2,048.7 $2,155.9 $2,408.4 $1,152.1 $1,358.5
Cost of sales........... 1,451.8 1,468.2 1,551.6 749.0 857.1
-------- -------- -------- -------- --------
Gross profit............ 596.9 687.7 856.8 403.1 501.4
Selling, general and ad-
ministrative expenses.. 518.7 524.1 630.4 306.6 325.3
Patent litigation ex-
pense
(Note 10).............. -- -- 84.8 -- --
-------- -------- -------- -------- --------
Operating income........ 78.2 163.6 141.6 96.5 176.1
Patent litigation inter-
est expense (Note 10).. -- -- (111.7) -- --
Other income, net (Note
11).................... 27.1 24.0 21.4 11.5 10.2
-------- -------- -------- -------- --------
Income before provision
for income taxes and
equity in net income
(loss) of joint
ventures and dealer
transitions............ 105.3 187.6 51.3 108.0 186.3
Provision for income
taxes (Note 12)........ 40.9 68.1 23.6 42.1 71.6
-------- -------- -------- -------- --------
Income before equity in
net income (loss) of
joint ventures and
dealer transitions..... 64.4 119.5 27.7 65.9 114.7
Equity in net income
(loss) of joint ven-
tures and dealer tran-
sitions (Note 6)....... (0.2) 4.0 -- 1.7 (1.1)
-------- -------- -------- -------- --------
Net income.............. $ 64.2 $ 123.5 $ 27.7 $ 67.6 $ 113.6
======== ======== ======== ======== ========
Net income per share of
Common Stock........... $ 222 $ 517 $ 40 $ 288 $ 516
======== ======== ======== ======== ========
Weighted average shares
of Common Stock
outstanding............ 200,828 200,732 200,906 200,732 201,150
======== ======== ======== ======== ========
</TABLE>

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

F-3
<PAGE>

STEELCASE INC.

CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
FEBRUARY 23, FEBRUARY 28, AUGUST 29,
1996 1997 1997
------------ ------------ -----------
ASSETS
------ (UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents.............. $ 209.0 $ 174.0 $ 272.5
Short-term investments................. 15.3 13.6 29.4
Accounts receivable, less allowances
for losses of $20.4 and $23.0......... 267.3 327.6 356.0
Notes receivable and leased assets
(Note 5).............................. 101.4 124.9 132.1
Income tax receivable.................. -- 22.6 --
Inventories (Note 3)................... 138.8 108.0 105.2
Prepaid expenses....................... 8.8 5.8 7.4
Deferred income taxes (Note 12)........ 50.7 48.1 50.4
-------- -------- --------
Total current assets..................... 791.3 824.6 953.0
-------- -------- --------
Property and equipment, net (Note 4)..... 624.3 644.7 647.4
Notes receivable and leased assets (Note
5)...................................... 76.3 98.7 137.7
Joint ventures and dealer transitions
(Note 6)................................ 163.4 126.1 111.6
Deferred income taxes (Note 12).......... 47.3 53.6 43.3
Goodwill and other intangible assets, net
of accumulated amortization of $23.9 and
$17.3................................... 79.1 69.5 68.6
Other assets (Note 7).................... 102.8 104.9 103.2
-------- -------- --------
Total assets............................. $1,884.5 $1,922.1 $2,064.8
======== ======== ========
</TABLE>

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

F-4
<PAGE>

STEELCASE INC.

CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
FEBRUARY 23, FEBRUARY 28, AUGUST 29,
1996 1997 1997
------------ ------------ -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------ (UNAUDITED)
<S> <C> <C> <C>
Current liabilities:
Accounts and notes payable............. $ 91.8 $ 105.1 $ 109.5
Accrued expenses:
Employee compensation................ 60.7 76.5 127.0
Employee benefit plan obligations
(Note 8)............................ 36.8 43.1 35.2
Other................................ 126.4 125.3 147.4
-------- -------- --------
Total current liabilities................ 315.7 350.0 419.1
-------- -------- --------
Long-term liabilities:
Employee benefit plan obligations (Note
8).................................... 162.4 176.6 180.4
Other long-term liabilities............ 12.8 15.5 15.4
-------- -------- --------
Total long-term liabilities.............. 175.2 192.1 195.8
-------- -------- --------
Total liabilities........................ 490.9 542.1 614.9
-------- -------- --------
Commitments and contingencies (Notes 2,
13 and 14)
Shareholders' equity (Notes 2 and 9):
Preferred Stock--Class A, $100 par
value; 20,000 shares authorized,
7,672.5 shares issued and
outstanding........................... 0.8 0.8 0.8
Preferred Stock--Class B, $50 par
value; 200,000 shares authorized,
196,490 shares issued and
outstanding........................... 9.8 9.8 9.8
Common Stock--$50 par value; 220,000
shares authorized, 200,732 and 201,150
shares issued and outstanding......... 10.0 10.0 10.0
Additional paid-in capital............. 3.7 5.1 5.1
Cumulative translation adjustment...... 0.8 (0.1) (13.9)
Retained earnings...................... 1,368.5 1,354.4 1,438.1
-------- -------- --------
Total shareholders' equity............... 1,393.6 1,380.0 1,449.9
-------- -------- --------
Total liabilities and shareholders' equi-
ty...................................... $1,884.5 $1,922.1 $2,064.8
======== ======== ========
</TABLE>

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

F-5
<PAGE>

STEELCASE INC.

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

<TABLE>
<CAPTION>
PREFERRED STOCK ADDITIONAL CUMULATIVE TOTAL
--------------- COMMON PAID-IN TRANSLATION RETAINED SHAREHOLDERS'
CLASS A CLASS B STOCK CAPITAL ADJUSTMENT EARNINGS EQUITY
------- ------- ------ ---------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
February 28, 1994....... $0.8 $9.8 $10.0 $3.7 $(13.5) $1,253.6 $1,264.4
Redemption of Preferred
Stock.................. (0.7) (0.7)
Foreign currency
translation
adjustment............. 6.6 6.6
Preferred Stock
dividends.............. (19.7) (19.7)
Common Stock dividends.. (12.6) (12.6)
Net income.............. 64.2 64.2
---- ---- ----- ---- ------ -------- --------
February 28, 1995....... 0.8 9.8 10.0 3.7 (6.9) 1,284.8 1,302.2
Foreign currency
translation
adjustment............. 7.7 7.7
Preferred Stock
dividends.............. (19.7) (19.7)
Common Stock dividends.. (20.1) (20.1)
Net income.............. 123.5 123.5
---- ---- ----- ---- ------ -------- --------
February 23, 1996....... 0.8 9.8 10.0 3.7 0.8 1,368.5 1,393.6
Issuance of Common
Stock.................. 1.4 1.4
Foreign currency
translation
adjustment............. (0.9) (0.9)
Preferred Stock
dividends.............. (19.7) (19.7)
Common Stock dividends.. (22.1) (22.1)
Net income.............. 27.7 27.7
---- ---- ----- ---- ------ -------- --------
February 28, 1997....... 0.8 9.8 10.0 5.1 (0.1) 1,354.4 1,380.0
Foreign currency
translation
adjustment............. (13.8) (13.8)
Preferred Stock
dividends.............. (9.8) (9.8)
Common Stock dividends.. (20.1) (20.1)
Net income.............. 113.6 113.6
---- ---- ----- ---- ------ -------- --------
August 29, 1997
(unaudited)............ $0.8 $9.8 $10.0 $5.1 $(13.9) $1,438.1 $1,449.9
==== ==== ===== ==== ====== ======== ========
</TABLE>

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

F-6
<PAGE>

STEELCASE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
-------------------------------------- ---------------------
FEBRUARY 28, FEBRUARY 23, FEBRUARY 28, AUGUST 23, AUGUST 29,
1995 1996 1997 1996 1997
------------ ------------ ------------ ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income.............. $ 64.2 $ 123.5 $ 27.7 $ 67.6 $113.6
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization.......... 97.0 92.5 93.4 46.0 46.4
Postretirement benefit
cost.................. 13.9 13.9 14.2 7.4 7.5
Loss on disposal of
assets................ 11.0 4.6 14.0 9.8 0.8
Deferred income
taxes................. 0.4 (12.2) 1.8 (1.8) 8.0
Equity in net loss
(income) of joint
ventures and dealer
transitions........... 0.2 (4.0) -- (1.7) 1.1
Changes in operating
assets and
liabilities, net of
corporate
acquisitions:
Accounts receivable.. (65.6) 25.9 (59.9) (31.7) (28.4)
Notes receivable and
leased assets....... (60.2) (63.4) (45.9) 0.9 (46.2)
Inventories.......... (36.4) 15.5 31.5 18.8 2.8
Prepaids and other
assets.............. 12.1 3.8 (3.5) 6.9 (0.4)
Accounts and notes
payable............. 15.1 0.1 12.3 (4.5) 4.4
Accrued expenses..... (8.5) 0.7 (9.6) 21.7 83.6
Other long-term
liabilities......... (1.0) (0.2) 4.8 6.0 2.5
------ ------- ------- ------ ------
Net cash provided by
operating activities... 42.2 200.7 80.8 145.4 195.7
------ ------- ------- ------ ------
INVESTING ACTIVITIES
Capital expenditures.... (94.8) (104.6) (122.0) (82.9) (49.0)
Proceeds from the sale
of facilities.......... 25.7 -- 7.5 -- --
Net change in
investments............ (13.1) 5.3 6.6 6.0 (15.3)
Joint ventures and
dealer transitions..... 13.5 (2.6) 36.5 -- (3.0)
Corporate acquisitions,
net of cash acquired... -- (14.0) (4.0) -- --
------ ------- ------- ------ ------
Net cash used in
investing activities... (68.7) (115.9) (75.4) (76.9) (67.3)
------ ------- ------- ------ ------
FINANCING ACTIVITIES
Issuance (redemption) of
stock.................. (0.7) -- 1.4 -- --
Payment of dividends.... (32.3) (39.8) (41.8) (19.9) (29.9)
------ ------- ------- ------ ------
Net cash used in
financing activities... (33.0) (39.8) (40.4) (19.9) (29.9)
------ ------- ------- ------ ------
Net increase (decrease)
in cash and cash
equivalents............ (59.5) 45.0 (35.0) 48.6 98.5
Cash and cash
equivalents, beginning
of period.............. 223.5 164.0 209.0 209.0 174.0
------ ------- ------- ------ ------
Cash and cash
equivalents, end of
period................. $164.0 $ 209.0 $ 174.0 $257.6 $272.5
====== ======= ======= ====== ======
</TABLE>

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

F-7
<PAGE>

STEELCASE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

Steelcase Inc. (the "Company") is the world's largest manufacturer and
provider of office furniture, office furniture systems and related products
and services. The Company manufactures at 31 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. The
Company distributes its products through a worldwide network of independent
dealers in approximately 675 locations including more than 450 in the United
States and Canada and more than 200 throughout the rest of the world. The
Company operates on a worldwide basis within a single industry segment.

Steelcase Strafor, a 50% joint venture with Strafor Facom S.A., is a leading
office furniture company in Europe with 14 manufacturing facilities and
dealers in more than 170 locations.

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"). During the three years in the period ended February 28, 1997,
the Company closed a series of non-dealer acquisitions, none of which were
material individually, or in the aggregate, to the financial position or
results of operations of the Company. 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 as a 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.

FISCAL YEAR END AND UNAUDITED INTERIM RESULTS

Effective March 1, 1995, the Company changed its fiscal year-end from
February 28 to the last Friday of February. In addition, the Company
standardized its fiscal quarters to include 13 weeks, except for the quarter
ended February 28, 1997 which included 14 weeks. Accordingly, Fiscal 1996
included 52 weeks, while Fiscal 1997 included 53 weeks. As used herein, in
conjunction with any given year, the term "Fiscal" refers to the fiscal year
of the Company. For example, Fiscal 1996 ended on February 23, 1996.

The results of operations for the six months ended August 29, 1997 are not
necessarily indicative of the results to be expected for Fiscal 1998. All
information as of August 29, 1997 and for the six months ended August 23, 1996
and August 29, 1997 is unaudited but, in the opinion of management, includes
all adjustments (consisting of normal recurring adjustments) necessary to
present fairly the financial condition, results of operations and cash flows
of the Company.

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.

F-8
<PAGE>

STEELCASE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

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
cost and approximated $235.8 million and $191.5 million as of February 23,
1996 and February 28, 1997, respectively.

INVESTMENTS

Investments typically include 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; gross unrealized
gains and losses are insignificant.

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. Software maintenance, year 2000 related
matters and training costs are expensed as incurred.

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 $3.1 million, $2.6 million
and $4.0 million for Fiscal 1995, 1996 and 1997, respectively.

LONG-LIVED ASSETS

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. The adoption of
Statement of Financial Accounting Standards (SFAS) No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,
during Fiscal 1997, did not have a material impact on the financial condition
or results of operations of the Company.

PRODUCT RELATED EXPENSES

Research and development expenses, which are expensed as incurred,
approximated $40 million, $50 million and $65 million for Fiscal 1995, 1996
and 1997, respectively.

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

F-9
<PAGE>

STEELCASE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

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 23, FEBRUARY 28,
1996 1997
------------ ------------
<S> <C> <C>
Workers' compensation claims....................... $15.1 $16.1
Product liability claims........................... 10.2 9.6
----- -----
$25.3 $25.7
===== =====
</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 have been fully funded by the
Company as of February 23, 1996 and February 28, 1997.

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 sales returns and allowances, 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 $6.7 million and $15.7
million as of February 23, 1996 and February 28, 1997, 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 do not contribute to 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 $11.5 million and $11.2 million as of
February 23, 1996 and February 28, 1997, respectively. Based on the Company's
ongoing oversight of these matters, the Company believes that it has accrued
sufficient reserves to absorb the remediation costs of all known sites.

ADVERTISING

Advertising costs, which are expensed as incurred, approximated $4.0
million, $9.0 million and $6.0 million for Fiscal 1995, 1996 and 1997,
respectively.

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.

F-10
<PAGE>

STEELCASE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NET INCOME PER SHARE OF COMMON STOCK

Net income per share of Common Stock is computed by dividing net income,
after deducting preferred stock dividends, by the weighted average number of
shares outstanding during each respective period.

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 long-term liabilities, approximates their fair
value.

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 reported 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.

2. INITIAL PUBLIC OFFERING (UNAUDITED)

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 amount of $750 per share, or $150.9 million in total, payable on
January 9, 1998 to Common Stock holders of record as of December 2, 1997 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 will (a) effect a recapitalization of the Company's
capital stock (the "Recapitalization"), (b) make certain other changes to the
Restated Articles of Incorporation and By-laws which are typical of public
companies and (c) provide 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 will become
effective upon their filing with the State of Michigan which is expected to
occur concurrently with the consummation of the Offerings. Completion of the
Offerings remains subject to satisfactory completion of the registration and
offering process.

RECAPITALIZATION

Pursuant to the Recapitalization, the following will occur:

(ii) each existing share of Common Stock will be converted into one share
of Class B Common Stock, and the Class B Common Stock resulting from that
conversion will be split (the

F-11
<PAGE>

STEELCASE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

"Stock Split") through a stock dividend of additional shares of Class B
Common Stock for each then outstanding share; and

(iii) concurrent with the Stock Split, each of the existing shares of
Class A Preferred Stock and Class B Preferred Stock will be 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 per share of Class A Common Stock.

Each share of Class B Common Stock to be sold in the Offerings will
automatically convert into one share of Class A Common Stock immediately prior
to the consummation of such sale. While the Common Stock conversions will
result in reclassifications between Common Stock and additional paid-in
capital, the Preferred Stock conversions will increase Common Stock by $393.8
million, decrease Class A Preferred Stock and Class B Preferred Stock by $0.8
million and $9.8 million, respectively, and result in a reduction of retained
earnings in the amount of $383.2 million.

Terms of Class A Common Stock and Class B Common Stock

The holders of Common Stock will generally be 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 holders to one vote, and each share of Class B Common Stock
entitles its holder to 10 votes.

The Class B Common Stock will be 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
will be entitled to equal dividends when declared by the Board, generally
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 will not be 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.

F-12
<PAGE>

STEELCASE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

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").

Purchase Plan

The Company will reserve 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 will begin on the date
of the pricing of the Offerings and end on the date 70 days thereafter.
Eligible employees who wish to participate in the Purchase Plan may purchase
by the last day of such period a maximum of 100 shares of Class A Common Stock
at 85% of the initial public offering price (the "Employee Discount Option
Grant"). The Company estimates that as of the date of the pricing of the
Offerings there will be approximately 15,000 employees eligible to participate
in the Purchase Plan during the initial purchase period.

Incentive Compensation Plan

The Company will reserve 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 number of
shares equal to 4% of the total outstanding shares of Common Stock as of such
date. 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 nonqualified 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

F-13
<PAGE>

STEELCASE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

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, the Company expects to issue 10 shares of
Class A Common Stock each to certain employees of the Company and its
subsidiaries as the Compensation Committee shall designate (the "Employee
Stock Grant"). The number of eligible employees for this special one-time
grant is estimated to be approximately 15,000.

The Company intends to purchase the shares of Class A Common Stock for the
Employee Discount Option Grant and the Employee Stock Grant from the Selling
Shareholders at the same price at which the shares of Class A Common Stock are
being sold to the Underwriters in the Offerings.

3. INVENTORIES

Inventories consist of (in millions):

<TABLE>
<CAPTION>
FEBRUARY 23, FEBRUARY 28, AUGUST 29,
1996 1997 1997
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Finished goods......................... $ 50.3 $ 44.3 $ 52.9
Work in process........................ 32.3 30.8 30.6
Raw materials.......................... 109.5 84.1 73.1
------ ------ ------
192.1 159.2 156.6
LIFO reserve........................... (53.3) (51.2) (51.4)
------ ------ ------
$138.8 $108.0 $105.2
====== ====== ======
</TABLE>

The effect of LIFO liquidations on net income was $2.9 million and $5.4
million for Fiscal 1996 and 1997, respectively, and was not significant for
Fiscal 1995.

4. PROPERTY AND EQUIPMENT

Property and equipment consist of (in millions):

<TABLE>
<CAPTION>
FEBRUARY 23, FEBRUARY 28, AUGUST 29,
1996 1997 1997
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Land................................. $ 33.7 $ 35.5 $ 35.5
Buildings and improvements........... 588.9 610.7 611.5
Machinery and equipment.............. 859.5 918.4 923.7
Furniture and fixtures............... 69.5 70.4 71.4
Leasehold improvements............... 38.9 39.0 38.9
Software............................. 14.6 26.9 31.1
Construction in progress............. 80.2 45.6 69.5
-------- -------- --------
1,685.3 1,746.5 1,781.6
Accumulated depreciation and amorti-
zation.............................. 1,061.0 1,101.8 1,134.2
-------- -------- --------
$ 624.3 $ 644.7 $ 647.4
======== ======== ========
</TABLE>

Depreciation and amortization expense approximated $93.9 million, $89.9
million and $89.4 million for Fiscal 1995, 1996 and 1997, respectively.
Construction in progress consists of numerous equipment and facility projects,
none of which are material individually or in the aggregate.

F-14
<PAGE>

STEELCASE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. NOTES RECEIVABLE AND LEASED ASSETS

The components of notes receivable and leased assets are summarized as
follows (in millions):

<TABLE>
<CAPTION>
FEBRUARY 23, FEBRUARY 28, AUGUST 29,
1996 1997 1997
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Notes receivable:
Project financing................... $ 40.7 $ 30.4 $ 31.6
Asset-based lending................. 31.7 57.3 48.0
Ownership transition financing:
Dealer transitions................ 23.3 44.9 44.8
Independent dealers............... 48.8 11.0 17.0
Net investment in leased assets....... 42.3 89.2 138.1
Allowance for losses.................. (9.1) (9.2) (9.7)
------ ------ ------
177.7 223.6 269.8
Less current portion.................. 101.4 124.9 132.1
------ ------ ------
Long-term portion..................... $ 76.3 $ 98.7 $137.7
====== ====== ======
</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 28, 1997. The loans
are secured by certain dealer assets and, in some cases, the common stock of
the dealership. Unused asset-based lending credit lines approximated $36.1
million as of February 28, 1997, 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. The Company
records residual values based on market studies conducted by independent third
parties. Operating leases as of February 23, 1996 and February 28, 1997 were
not material.

6. 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 23, FEBRUARY 28, AUGUST 29,
1996 1997 1997
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Investment in Steelcase Strafor....... $107.0 $107.3 $ 95.1
Note receivable--Steelcase Strafor.... 43.0 -- --
Investments in dealer transitions..... 10.0 16.3 11.6
Other joint ventures.................. 3.4 2.5 4.9
------ ------ ------
$163.4 $126.1 $111.6
====== ====== ======
</TABLE>

F-15
<PAGE>

STEELCASE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

During Fiscal 1996 and 1997, translation adjustments of $5.6 million and
$(0.2) million, respectively, resulting from foreign currency denominated
assets and liabilities of Steelcase Strafor and related fluctuations in
exchange rates, were charged directly to a component of shareholders' equity
in the accompanying consolidated balance sheets. In addition, the Company
reduced its investment in Steelcase Strafor by $1.4 million during Fiscal 1997
for dividends received from the joint venture.

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.

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

Summarized financial information for Steelcase Strafor, as of December 31,
1995 and 1996 and the three years ended December 31, 1996, is as follows (in
millions):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1995 1996
------ ------
<S> <C> <C>
Balance Sheet:
Current assets............................................... $273.6 $278.9
Property and equipment....................................... 162.7 148.7
Other assets................................................. 98.1 103.0
------ ------
Total assets............................................... 534.4 530.6
------ ------
Current liabilities.......................................... 221.5 229.3
Long-term liabilities........................................ 97.7 85.0
------ ------
Total liabilities.......................................... 319.2 314.3
------ ------
Net assets................................................. $215.2 $216.3
====== ======
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Results of Operations:
Revenues.......................................... $ 415.7 $ 471.0 $ 494.9
Operating income.................................. 19.4 25.0 27.6
Net income (loss)................................. (1.7) 7.8 4.0
</TABLE>

F-16
<PAGE>

STEELCASE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

7. OTHER ASSETS

Other assets consist of (in millions):

<TABLE>
<CAPTION>
FEBRUARY 23, FEBRUARY 28, AUGUST 29,
1996 1997 1997
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Cash surrender value of life insur-
ance............................... $ 64.9 $ 79.0 $ 81.6
Long-term investments............... 30.6 11.6 8.5
Other............................... 7.3 14.3 13.1
------ ------ ------
$102.8 $104.9 $103.2
====== ====== ======
</TABLE>

Long-term investments as of February 28, 1997 primarily include treasury
notes which mature over the next three years.

8. EMPLOYEE BENEFIT PLAN OBLIGATIONS

Employee benefit plan obligations consist of (in millions):

<TABLE>
<CAPTION>
FEBRUARY 23, FEBRUARY 28, AUGUST 29,
1996 1997 1997
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Profit-sharing and pension plans...... $ 26.7 $ 32.5 $ 24.8
Postretirement insurance benefits..... 135.8 143.1 146.8
Management incentive and executive
supplemental retirement and deferred
compensation plans................... 36.7 44.1 44.0
------ ------ ------
199.2 219.7 215.6
Current portion....................... 36.8 43.1 35.2
------ ------ ------
Long-term portion..................... $162.4 $176.6 $180.4
====== ====== ======
</TABLE>

PROFIT-SHARING AND PENSION 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 discretionary Company
contributions under the Steelcase Inc. Employees' Profit-Sharing Retirement
Plan and similar subsidiary plans are 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
compensation. Total expense under these plans approximated $47.7 million,
$58.9 million and $67.2 million for Fiscal 1995, 1996 and 1997, respectively.

POSTRETIREMENT INSURANCE BENEFITS

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. The following table sets forth
the plans' combined accumulated postretirement benefit obligation (in
millions):

F-17
<PAGE>

STEELCASE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
FEBRUARY 23, FEBRUARY 28,
1996 1997
------------ ------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees and dependents........................ $ 55.3 $ 72.4
Employees fully eligible....................... 24.8 26.0
Employees not yet fully eligible............... 72.4 53.1
------ ------
152.5 151.5
Unrecognized loss................................ (16.7) (8.4)
------ ------
Accrued postretirement benefit obligation........ $135.8 $143.1
====== ======
</TABLE>

The Company charges postretirement benefit costs as accrued, based on
actuarial calculations for each plan. Net postretirement benefit cost charged
to income includes the following components (in millions):
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------------
FEBRUARY 28, FEBRUARY 23, FEBRUARY 28,
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
Service cost for benefits earned
during the period.................. $ 3.6 $ 3.2 $ 3.0
Interest cost on the accumulated
postretirement benefit obligation.. 10.1 10.7 11.2
Amortization of unrecognized loss... 0.2 -- --
----- ----- -----
Net postretirement benefit cost..... $13.9 $13.9 $14.2
===== ===== =====
</TABLE>

The significant assumptions used in determining the accumulated
postretirement benefit obligation were as follows:
<TABLE>
<CAPTION>
FEBRUARY 23, FEBRUARY 28,
1996 1997
------------ ------------
<S> <C> <C>
Discount rate...................................... 7.75% 7.75%
Rate of salary progression......................... 5.00% 5.00%
</TABLE>

The weighted average annual assumed rate of increase in the per capita cost
of covered benefits (estimate of medical inflation rate) is 8.0% for Fiscal
1998, gradually declining to 5.5% in Fiscal 2004 and thereafter. The health
care cost trend rate assumption has a significant effect on the amounts
reported. For example, a 1.0% increase in the assumed medical inflation rate
would increase the accumulated postretirement benefit obligation at February
28, 1997, by approximately $18.3 million and the annual net postretirement
benefit cost by approximately $1.6 million.

MANAGEMENT INCENTIVE AND EXECUTIVE SUPPLEMENTAL RETIREMENT AND DEFERRED
COMPENSATION PLANS

Management Incentive Plan

The Amended and Restated Steelcase Inc. Management Incentive Plan is an
annual and long-term incentive compensation program that provides eligible key
employees of the Company with cash payments based upon the achievement by the
Company of specified financial performance goals as 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 three-year period commencing after the end of the year
following the year in which the incentive

F-18
<PAGE>

STEELCASE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

amount is earned. The long-term amounts are paid in substantially equal
installments over the three-year payment period and unpaid long-term amounts
are adjusted based on the Company's return on equity as determined each year.

Prior to implementation of the long-term component of the Management
Incentive Plan, the Company had similar agreements with certain employees
providing for incentive payments based on the change each year in the book
value, as defined in the plan, of the Company's Common Stock. This plan was
terminated during Fiscal 1996 and all remaining participant balances are being
paid over a four-year period which began March 1996.

Executive Supplemental Retirement Plan

In general, upon satisfying the requirements of the Supplemental Plan
executives are entitled to receive five annual payments each equal to 70% of
the participant's average base salary for the three consecutive years prior to
retirement or death and 15 annual payments each equal to $50,000 multiplied by
the participant's vested percentage. A participant's vested percentage begins
at 20% after three completed years of service following such participant's
eligibility under the Supplemental Plan and increases by 20% increments
annually until it becomes fully vested upon seven completed years of service
following such eligibility.

Deferred Compensation Agreements

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 total executive supplemental retirement
and deferred compensation expense approximated $6.2 million, $13.5 million and
$9.7 million for Fiscal 1995, 1996 and 1997, respectively.

9. PREFERRED AND COMMON STOCK

Class A Preferred Stock pays dividends at a rate of 5% per year and is
redeemable at the option of the Board at $103 per share. The dividends are
cumulative and will be paid, or set aside, before any distribution on Class B
Preferred Stock or Common Stock is declared.

Class B Preferred Stock pays dividends at a rate of $100 per year and is
redeemable at the option of the Board at $2,000 per share. The dividends are
cumulative and will be paid, or set aside, before any distribution on Common
Stock is declared.

See Note 2 to Consolidated Financial Statements regarding the
Recapitalization which is expected to occur concurrently with the consummation
of the Offerings.

F-19
<PAGE>

STEELCASE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10. PATENT LITIGATION

In November 1985, Haworth, Inc. ("Haworth") filed suit 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. Haworth
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 Haworth 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 Fiscal 1997 are net of reserve estimates
provided during Fiscal 1994, which represented management's best estimate of
the outcome of the proceedings at that time.

11. OTHER INCOME, NET

Other income, net consists of (in millions):

12. INCOME TAXES

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

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

F-20
<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 23, FEBRUARY 28, AUGUST 29,
1996 1997 1997
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Deferred income tax assets:
Employee benefit plan obligations.. $ 65.1 $ 71.6 $ 72.7
Accrued compensation............... 7.1 7.9 10.3
Reserves and allowances............ 33.6 33.1 34.2
Foreign losses..................... 6.2 8.2 7.2
Other.............................. 7.7 10.9 7.8
------ ------ ------
Total deferred income tax assets..... 119.7 131.7 132.2
Deferred income tax liability--
property and equipment.............. (21.7) (30.0) (38.5)
------ ------ ------
Net deferred income tax assets....... 98.0 101.7 93.7
Current portion...................... 50.7 48.1 50.4
------ ------ ------
Non-current portion.................. $ 47.3 $ 53.6 $ 43.3
====== ====== ======
</TABLE>

The Company has recorded a deferred tax asset as of February 28, 1997 of
$8.2 million reflecting the benefit of foreign operating loss carryforwards
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 all of the deferred tax assets will
be realized. Accordingly, no valuation allowance has been established for the
deferred tax assets.

The effective income tax rate on income before equity in net income (loss)
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 28, FEBRUARY 23, FEBRUARY 28,
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
Statutory federal income tax rate... 35.0% 35.0% 35.0%
State and local income taxes........ 1.1 2.6 4.3
Tax exempt interest................. (0.6) (0.2) (1.3)
Goodwill and intangible asset
amortization and write-offs........ 0.6 0.3 5.0
Research and development credit..... (0.5) (1.6) --
Other............................... 3.2 0.2 3.0
---- ---- ----
Effective income tax rate........... 38.8% 36.3% 46.0%
==== ==== ====
</TABLE>

The Company made income tax payments of $50.7 million, $78.1 million and
$44.0 million during Fiscal 1995, 1996 and 1997, respectively.

F-21
<PAGE>

STEELCASE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

13. 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 and notes receivable and leased
assets. 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 environment industry. They are dispersed globally, primarily across all
North American geographic areas. All probable uncollectible accounts and notes
receivable and leased assets have been appropriately considered in
establishing the allowance for losses. In general, the Company obtains
security interests in the assets of the customer. These security interests are
generally secondary to the interest 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 $28.0 million and $34.0 million of debt obligations of
unconsolidated dealers and joint ventures as of February 23, 1996 and February
28, 1997, 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 23, 1996 and February 28, 1997 were not material.

14. COMMITMENTS AND CONTINGENCIES

The Company leases certain sales offices, showrooms and equipment under
noncancelable operating leases that expire at various dates through Fiscal
2005. Minimum annual rental commitments under noncancelable operating leases
that have initial or remaining lease terms in excess of one year as of
February 28, 1997, are as follows (in millions):

<TABLE>
<CAPTION>
FISCAL AMOUNT
------ ------
<S> <C>
1998.................................................................. $23.0
1999.................................................................. 13.0
2000.................................................................. 10.0
2001.................................................................. 7.0
2002.................................................................. 5.0
Thereafter............................................................ 10.0
-----
$68.0
=====
</TABLE>

F-22
<PAGE>

STEELCASE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Rent expense under all operating leases approximated $31.7 million, $38.7
million and $45.3 million for Fiscal 1995, 1996 and 1997, respectively.

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.

15. UNAUDITED QUARTERLY RESULTS

The following sets forth summary unaudited information on a quarterly basis
for the Company (in millions):

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
FISCAL 1996 QUARTER QUARTER QUARTER QUARTER TOTAL
----------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Net sales......................... $535.2 $544.1 $548.9 $527.7 $2,155.9
Gross profit...................... 168.4 180.6 166.6 172.1 687.7
Operating income.................. 45.3 51.5 35.3 31.5 163.6
Net income........................ 30.0 38.0 25.9 29.6 123.5
<CAPTION>
FIRST SECOND THIRD FOURTH
FISCAL 1997 QUARTER QUARTER QUARTER QUARTER TOTAL
----------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Net sales......................... $572.2 $579.9 $623.0 $633.3 $2,408.4
Gross profit...................... 197.6 205.5 221.3 232.4 856.8
Operating income (loss)........... 51.1 45.4 (21.7) 66.8 141.6
Net income (loss)................. 36.7 30.9 (76.3) 36.4 27.7
<CAPTION>
SIX MONTHS ENDED FIRST SECOND
AUGUST 29, 1997 QUARTER QUARTER TOTAL
---------------- ------- ------- --------
<S> <C> <C> <C>
Net sales......................... $663.2 $695.3 $1,358.5
Gross profit...................... 241.5 259.9 501.4
Operating income.................. 76.9 99.2 176.1
Net income........................ 47.3 66.3 113.6
</TABLE>

During the second quarter of Fiscal 1997, one of the Company's subsidiaries
recorded a restructuring charge, including an intangible asset write-off,
aggregating approximately $8.6 million. In addition, during the third quarter
of Fiscal 1997, certain patent litigation was resolved. See Note 10 to
Consolidated Financial Statements.

F-23
<PAGE>

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Selling Shareholders have agreed to sell to each of the U.S. Underwriters
named below, and each of such U.S. Underwriters, for whom Goldman, Sachs &
Co., Bear, Stearns & Co. Inc., Morgan Stanley & Co. Incorporated and Smith
Barney Inc. are acting as representatives, has severally agreed to purchase
from the Selling Shareholders, the respective number of shares of Class A
Common Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
CLASS A
UNDERWRITER COMMON STOCK
----------- ------------
<S> <C>
Goldman, Sachs & Co. ...........................................
Bear, Stearns & Co. Inc. .......................................
Morgan Stanley & Co. Incorporated...............................
Smith Barney Inc................................................
----
Total.........................................................
====
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all of the shares offered
hereby, if any are taken.

The U.S. Underwriters propose to offer the shares of Class A Common Stock in
part directly to the public at the initial public offering price set forth on
the cover page of this Prospectus and in part to certain securities dealers at
such price less a concession of $ per share. The U.S. Underwriters may
allow, and such dealers may reallow, a concession not in excess of $ per
share to certain brokers and dealers. After the shares of Class A Common Stock
are released for sale to the public, the offering price and other selling
terms may from time to time be varied by the representatives.

The Company and the Selling Shareholders have entered into an underwriting
agreement (the "International Underwriting Agreement") with the underwriters
of the international offering (the "International Underwriters") providing for
the concurrent offer and sale of shares of Class A Common Stock by the
Selling Shareholders in an international offering outside the United States.
The offering price and aggregate underwriting discounts and commissions per
share for the two offerings are identical. The closing of the offering made
hereby is a condition to the closing of the international offering, and vice
versa. The representatives of the International Underwriters are Goldman Sachs
International, Bear, Stearns International Limited, Morgan Stanley & Co.
International Limited and Smith Barney Inc.

Pursuant to an Agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the Offerings, each of the
U.S. Underwriters named herein has agreed that, as a part of the distribution
of the shares offered hereby and subject to certain exceptions,

U-1
<PAGE>

it will offer, sell or deliver the shares of Class A Common Stock, directly or
indirectly, only in the United States of America (including the States and the
District of Columbia), its territories, its possessions and other areas subject
to its jurisdiction (the "United States") and to U.S. persons, which term shall
mean, for purposes of this paragraph: (a) any individual who is a resident of
the United States or (b) any corporation, partnership or other entity organized
in or under the laws of the United States or any political subdivision thereof
and whose office most directly involved with the purchase is located in the
United States. Each of the International Underwriters has agreed pursuant to
the Agreement Between that, as a part of the distribution of the shares offered
as a part of the International Offering, and subject to certain exceptions, it
will (i) not, directly or indirectly, offer, sell or deliver shares of Class A
Common Stock (a) in the United States or to any U.S. persons or (b) to any
person who it believes intends to reoffer, resell or deliver the shares in the
United States or to any U.S. persons, and (ii) cause any dealer to whom it may
sell such shares at any concession to agree to observe a similar restriction.

Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of share of
Class A Common Stock as may be mutually agreed. The price of any shares so sold
shall be the initial public offering price, less an amount not greater that the
selling concession.

The Selling Shareholders have granted the U.S. Underwriters an option
exercisable for 30 days after the date of this Prospectus to purchase up to an
aggregate of additional shares of Class A Common Stock solely to cover
over-allotments, if any. If the U.S. Underwriters exercise their over-allotment
option, the U.S. Underwriters have severally agreed, subject to certain
conditions, to purchase approximately the same percentage thereof that the
number of shares to be purchased by each of them, as shown in the foregoing
table, bears to the shares of Class A Common Stock offered. The Selling
Shareholders have granted the International Underwriters a similar option to
purchase up to an aggregate of additional shares of Class A Common Stock.

The Company, its directors and its executive officers, and certain of its
shareholders who represent in the aggregate % of the outstanding common stock
after the Offerings, have agreed that, during the period beginning from the
date of this Prospectus and continuing to and including the date 180 days after
the date of this Prospectus, it will not, directly or indirectly, offer,
pledge, sell, contract to sell or otherwise dispose of any securities of the
Company outstanding as of the date of this Prospectus or enter into any swap or
other arrangement that transfers, in whole or in part, the economic
consequences of ownership of any securities of the Company, without the prior
written consent of Goldman, Sachs & Co., other than (i) on the conversion or
exchange of convertible or exchangeable securities outstanding on the date of
this Prospectus to be issued in the Recapitalization, (ii) the shares of Class
A Common Stock offered in connection with the Offerings or the Shares of Common
Stock sold to the Company or (iii) the transfer of securities of the Company by
sale or gift, provided the transferee agrees in writing to the same terms and
conditions binding the transferor.

In connection with the Offerings, the Underwriters may purchase and sell the
Class A Common Stock in the open market. These transactions may include over-
allotment and stabilizing transactions and purchases to cover syndicate short
positions created in connection with the Offerings. Stabilizing transactions
consist of certain bids or purchases for the purpose of preventing or retarding
a decline in the market price of the Class A Common Stock; and syndicate short
positions involve the sale by the Underwriters of a greater number of Class A
Common Stock than they are required to purchase from the Selling Shareholders
in the Offerings. The Underwriters also may impose a penalty bid, whereby
selling concessions allowed to syndicate members or other broker-dealers in
respect of the securities sold in the Offerings for their account may be
reclaimed by the syndicate if such securities are repurchased by the syndicate
in stabilizing or covering transactions. These activities may stabilize,
maintain or otherwise affect the market price of the Class A Common Stock,
which may be higher than the price that might otherwise prevail in the open
market; and these activities, if commenced, may be

U-2
<PAGE>

discontinued at any time. These transactions may be effected on the NYSE, the
over-the-counter market or otherwise.

The representatives of the Underwriters have informed the Company that they
do not expect sales to accounts over which the Underwriters exercise
discretionary authority to exceed five percent of the total number of shares of
Class A Common Stock offered by them.

Prior to the Offerings, there has been no public market for the Class A
Common Stock. The initial public offering price will be negotiated among the
Company, the Selling Shareholders (or their representatives), and the
representatives of the U.S. Underwriters and the International Underwriters.
Among the factors to be considered in determining the initial public offering
price of the Class A Common Stock, in addition to prevailing market conditions,
will be the Company's historical performance, estimates of the business
potential and earnings prospects of the Company, an assessment of the Company's
management and the consideration of the above factors in relating to market
valuation of companies in related businesses.

The Class A Common Stock will be listed on the NYSE under the symbol "SCS".
In order to meet one of the requirements for listing the Class A Common Stock
on the NYSE, the U.S. Underwriters have undertaken to sell lots of 100 or more
shares to a minimum of 2,000 beneficial holders.

Each of the Company and the Selling Shareholders has agreed to indemnify the
several U.S. Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933. In addition, the Company has agreed to
indemnify the Selling Shareholders against certain liabilities, including
liabilities under the Securities Act of 1933.

U-3
<PAGE>

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

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN
WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO ITS DATE.

-----------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 10
The Company.............................................................. 14
Use of Proceeds.......................................................... 15
Dividend Policy.......................................................... 15
Capitalization........................................................... 16
Selected Financial Data.................................................. 17
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 19
Business................................................................. 25
Management............................................................... 39
Principal and Selling Shareholders....................................... 50
Description of Capital Stock............................................. 52
Shares Eligible for Future Sale.......................................... 56
Certain United States Federal Income Tax Considerations.................. 57
Validity of Class A Common Stock......................................... 59
Experts.................................................................. 60
Available Information.................................................... 60
Index to Consolidated Financial Statements............................... F-1
Underwriting............................................................. U-1
</TABLE>

THROUGH AND INCLUDING , 1998 (THE 25TH DAY AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE CLASS A COMMON STOCK,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER
A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

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

STEELCASE INC.

CLASS A COMMON STOCK

-----------

[LOGO]

-----------

GOLDMAN, SACHS & CO.

BEAR, STEARNS & CO. INC.

MORGAN STANLEY DEAN WITTER

SALOMON SMITH BARNEY

REPRESENTATIVES OF THE UNDERWRITERS

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

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than the
underwriting discounts and commissions. All amounts shown are estimates except
for the Securities and Exchange Commission registration fee, the NYSE filing
fee and the NASD filing fee.

<TABLE>
<S> <C>
SEC Registration Fee................................................. $2,950
NASD Filing Fee...................................................... 1,500
NYSE Listing Fee..................................................... *
Transfer Agent and Registrar Fees.................................... *
Accounting Fees and Expenses......................................... *
Legal Fees and Expenses(1)........................................... *
Printing, Engraving and Mailing Expenses............................. *
Miscellaneous........................................................ *
------
Total.............................................................. $ *
======
</TABLE>
- --------
*To be filed by amendment.

(1)Approximately $ will be paid by the Selling Shareholders.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 561 of the Michigan Business Corporation Act ("Section 561")
provides that a Michigan corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (whether civil, criminal, administrative
or investigative), other than an action by or in the right of the corporation,
by reason of the fact that he or she is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if the person acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation or its shareholders, and with respect to
any criminal action or proceeding, if the person had no reasonable cause to
believe his or her conduct was unlawful. In addition, Section 561 provides
that a Michigan corporation may indemnify a person who was or is a party or is
threatened to be made a party to a threatened, pending or completed action or
suit by or in the right of the corporation by reason of the fact that he or
she is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
partner, trustee, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees) and amounts paid in settlement actually and reasonably incurred by the
person in connection with the action or suit, if the person acted in good
faith and in a manner the person reasonably believed to be in or not opposed
to the best interests of the corporation or its shareholders. Section 561 does
not permit indemnification for a claim, issue or matter in which the person
has been found liable to the corporation unless application for
indemnification is made to, and approved by, the court conducting the
proceeding or another court of competent jurisdiction.

The Registrant's Articles provide that, to the fullest extent permitted by
the Michigan Business Corporation Act, no director of the Registrant shall be
personally liable to the Registrant or its shareholders for or with respect to
any acts or omissions in the performance of his or her duties as a

II-1
<PAGE>

director of the Registrant. The Registrant's By-laws generally provide that,
to the fullest extent permitted by the Michigan Business Corporation Act, the
Registrant shall (i) indemnify any person 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 Registrant, or is or was serving at the request of the Registrant 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, or by reason of
anything done by such person in such capacity (collectively, "Covered
Matters") and (ii) pay or reimburse the reasonable expenses incurred by such
person in connection with any Covered Matter in advance of final disposition
of such Covered Matter. In addition, the Registrant's By-laws allow the
Registrant's Board of Directors to authorize such other indemnification to
directors, officers, employees and agents by insurance, contract or otherwise
as is permitted by law.

The foregoing statements are subject to the detailed provisions of the
Michigan Business Corporation Act, the Registrant's Articles and the
Registrant's By-laws.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

On October 29, 1996, the Company sold 418 shares of common stock, par value
$50.00 per share, to certain officers of the Company for an aggregate purchase
price of $1,463,000, pursuant to an exemption from registration under Section
4(2) of the Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits. The following is a complete list of Exhibits filed as part of
this Registration Statement.

EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
1.1* --Form of Underwriting Agreement
1.2* --Form of International Underwriting Agreement
3.1 --Second Restated Articles of Incorporation of the Registrant
3.2 --Amended By-laws of the Registrant
4.1* --Specimen Certificate for shares of Class A Common Stock of the
Registrant
5.1* --Opinion of Honigman Miller Schwartz and Cohn with respect to
the validity of the Class A Common Stock being offered
10.1* --Deferred Compensation Agreement between Steelcase Inc. and
James P. Hackett
10.2* --Deferred Compensation Agreement between Steelcase Inc. and
Robert A. Ballard
10.3* --Deferred Compensation Agreement between Steelcase Inc. and
Alwyn Rougier-Chapman
10.4* --Deferred Compensation Agreement between Steelcase Inc. and
James G. Mitchell
10.5 --Steelcase Inc. Incentive Compensation Plan
10.6* --Amended and Restated Steelcase Inc. Management Incentive Plan
10.7* --Steelcase Inc. 1994 Executive Supplemental Retirement Plan
11.1 --Statement Regarding Computation of Net Income Per Share of
Common Stock
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
21.1 --Subsidiaries of the Registrant
23.1* --Consent of Honigman Miller Schwartz and Cohn (included in
Exhibit 5.1)
23.2 --Consent of BDO Seidman, LLP
24.1 --Power of Attorney (included on Page II-4)
27.1 --Financial Data Schedule
</TABLE>

- --------
* To be filed by amendment.

(b) Financial Statement Schedules

Schedule II--Valuation and Qualifying Accounts (included on Page S-2)

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

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions contained in the Articles and the By-
laws of the Registrant and the laws of the State of Michigan, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreements, respectively,
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-3
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF GRAND
RAPIDS, STATE OF MICHIGAN, ON THIS 5TH DAY OF DECEMBER, 1997.

STEELCASE INC.

By: /s/ James P. Hackett
----------------------------------
Name: James P. Hackett
Title: President and Chief
Executive Officer

POWER OF ATTORNEY AND SIGNATURES

We, the undersigned officers and directors of Steelcase Inc., hereby
severally constitute and appoint James P. Hackett and Alwyn Rougier-Chapman,
and each of them singly, our true and lawful attorneys with full power to
them, and each of them singly, to sign for us and in our names in the
capacities indicated below, any and all pre-effective and post-effective
amendments to this Registration Statement and any and all registration
statements relating to said Registration Statement that are to be effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, and generally to do all such things in our names and on our behalf in
our capacities as officers and directors to enable Steelcase Inc. to comply
with the provisions of the Securities Act of 1933, as amended, and all
requirements of the Securities and Exchange Commission, hereby ratifying and
confirming our signatures as they may be signed by our said attorneys, or any
of them, to said Registration Statement and any and all amendments thereto.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED BELOW ON THIS 5TH DAY OF DECEMBER, 1997.

SIGNATURE TITLE

/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/ William P. Crawford President and Chief Executive
- ------------------------------------- Officer--Steelcase Design
(WILLIAM P. CRAWFORD) Partnership and Director

II-4
<PAGE>

SIGNATURE TITLE

/s/ Robert C. Pew II Chairman of the Board of Directors
- ------------------------------------- and Director
(ROBERT C. PEW II)

/s/ Peter M. Wege Vice Chairman of the Board of
- ------------------------------------- Directors and Director
(PETER M. WEGE)

/s/ Robert C. Pew III Director
- -------------------------------------
(ROBERT C. PEW III)

/s/ Peter M. Wege II Director
- -------------------------------------
(PETER M. WEGE II)

/s/ David D. Hunting, Jr. Director
- -------------------------------------
(DAVID D. HUNTING, JR.)

/s/ Frank H. Merlotti Director
- -------------------------------------
(FRANK H. MERLOTTI)

/s/ P. Craig Welch, Jr. Director
- -------------------------------------
(P. CRAIG WELCH, JR.)

II-5
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE

Steelcase Inc.
Grand Rapids, Michigan

The audit referred to in our report to Steelcase Inc. dated March 21, 1997,
which is contained in the Prospectus constituting a part of this Registration
Statement, included the audit of the financial statement schedule listed under
item 16(b) for each of the three years in the period ended February 28, 1997.
The financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on the financial
statement schedule based on our audit.

In our opinion, the financial statement schedule presents fairly, in all
material respects, the information set forth therein.

BDO SEIDMAN, LLP

BDO Seidman, LLP
Grand Rapids, Michigan
March 21, 1997

S-1
<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 ---------------------------------
BEGINNING CHARGED TO COSTS CHARGED TO OTHER BALANCE AT
DESCRIPTION OF PERIOD AND 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 28,
1997:
Allowances for losses
on Accounts
Receivable............ $20.4 $4.8 $2.2(A) $23.0
Allowance for losses on
Notes Receivable...... $ 9.1 $7.7 $7.6(A) $ 9.2
Year ended February 28,
1996:
Allowances for losses
on Accounts Receivable
...................... $14.7 $8.7 $3.0(A) $20.4
Allowance for losses on
Notes Receivable...... $ 9.1 $2.0 $2.0(A) $ 9.1
Year ended February 28,
1995:
Allowances for losses
on Accounts
Receivable............ $14.7 $3.1 $3.1(A) $14.7
Allowance for losses on
Notes Receivable...... $10.2 $2.3 $3.4(A) $ 9.1
</TABLE>

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

S-2
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S> <C>
1.1* --Form of Underwriting Agreement
1.2* --Form of International Underwriting Agreement
3.1 --Second Restated Articles of Incorporation of the
Registrant
3.2 --Amended By-laws of the Registrant
4.1* --Specimen Certificate for shares of Class A Common Stock
of the Registrant
5.1* --Opinion of Honigman Miller Schwartz and Cohn with respect
to the validity of the Class A Common Stock being offered
10.1* --Deferred Compensation Agreement between Steelcase Inc.
and James P. Hackett
10.2* --Deferred Compensation Agreement between Steelcase Inc.
and Robert A. Ballard
10.3* --Deferred Compensation Agreement between Steelcase Inc.
and Alwyn Rougier-Chapman
10.4* --Deferred Compensation Agreement between Steelcase Inc.
and James G. Mitchell
10.5 --Steelcase Inc. Incentive Compensation Plan
10.6* --Amended and Restated Steelcase Inc. Management Incentive
Plan
10.7* --Steelcase Inc. 1994 Executive Supplemental Retirement
Plan
11.1 --Statement Regarding Computation of Net Income Per Share
of Common Stock
21.1 --Subsidiaries of the Registrant
23.1* --Consent of Honigman Miller Schwartz and Cohn (included in
Exhibit 5.1)
23.2 --Consent of BDO Seidman, LLP
24.1 --Power of Attorney (included on Page II-4)
27.1 --Financial Data Schedule
</TABLE>
- --------
* To be filed by amendment.

<PAGE>

EXHIBIT 3.1

SECOND RESTATED ARTICLES OF INCORPORATION
------------------------------------------
OF STEELCASE INC.*
-----------------

ARTICLE I

The name of this corporation (hereinafter called the
"Corporation") is:

STEELCASE INC.

ARTICLE II

The purpose or purposes of this Corporation are as follows:

To manufacture, sell and deal in furniture and similar articles
and for any other lawful purpose under the laws of the State of
Michigan.

In general, to carry on any business in connection therewith and
incident thereto not forbidden by the laws of the State of
Michigan and with all the powers conferred upon corporations by
the laws of the State of Michigan.

ARTICLE III

The location of the registered office is: 901 - 44th Street,
S.E., Grand Rapids, Kent County, Michigan 49508.

The Post Office address of the registered office is: P.O. Box
1967, Grand Rapids, Michigan 49501.

ARTICLE IV

The name of the resident agent is: Jon D. Botsford.

ARTICLE V

Capital Stock
-------------

SECTION 1. Authorized Stock; No Pre-emptive Rights.
----------------------------------------

The maximum number of shares of capital stock which this
Corporation shall have authority to issue is One Billion (1,000,000,000)
consisting of Four Hundred

* The Second Restated Articles of Incorporation of Steelcase Inc. will become
effective upon filing with the Secretary of the State of Michigan.
<PAGE>

Seventy-Five Million (475,000,000) shares of class A common stock (the
"Class A Common Stock"), Four Hundred Seventy-Five Million (475,000,000)
shares of class B common stock (the "Class B Common Stock") and Fifty
Million (50,000,000) shares of preferred stock (the "Preferred Stock"),
issuable in series as herein after provided. The Class A Common Stock and
the Class B Common Stock are hereinafter referred to collectively as the
"Common Stock".

The holders of shares of capital stock now or hereafter
outstanding shall have no pre-emptive right to purchase or have offered to
them for purchase any shares of Preferred Stock, Common Stock or other
equity securities issued or to be issued by the Corporation. The
preferences, qualifications, limitations, restrictions and the special or
relative rights in respect of the shares of each class are set forth in the
following Sections.

SECTION 2. Preferred Stock.
----------------

The following series of Preferred Stock are authorized:

(i) Twenty thousand (20,000) shares of Class A Preferred Stock,
par value $100 per share ("Class A Preferred Stock"); and

(ii) Two hundred thousand (200,000) shares of Class B Preferred
Stock, par value $50 per share ("Class B Preferred Stock").

The relative rights, preferences, qualifications, limitations and
restrictions of the Class A Preferred Stock and Class B Preferred Stock are
set forth in Article XV to these Second Restated Articles of Incorporation,
subject to conversion as provided in Article XIV.

The Board of Directors is hereby expressly authorized, by
resolution or resolutions, to provide, out of the unissued shares of
Preferred Stock, for one or more series of Preferred Stock and, with
respect to each such additional series, to fix the number of shares
constituting such series and the designation of such series, the voting
powers (if any) of the shares of such series, and the relative rights,
preferences and limitations of the shares of such series. The designation
and relative rights and preferences of each such series of Preferred Stock
and the qualifications, limitations or restrictions thereof, if any, which
may differ from those of any and all other series at any time outstanding,
shall be set forth in a certificate which shall be filed in accordance with
the applicable provisions of Michigan law so as to constitute an amendment
to these Second Restated Articles of Incorporation.

Shares of Preferred Stock, regardless of series, that are
converted into other securities or other consideration shall be retired and
canceled and shall have the status of authorized but unissued shares of
Preferred Stock, without designation as to series.

2
<PAGE>

SECTION 3. Common Stock.
-------------

A. Voting Rights.
--------------

Subject to applicable law and the rights of any outstanding
series of Preferred Stock to vote as a separate class or series, the shares
of Class A Common Stock and Class B Common Stock shall vote together as a
class and shall have the following voting rights:

(i) Each share of Class A Common Stock shall entitle the holder
thereof to one (1) vote upon all matters upon which shareholders have
the right to vote; and

(ii) Each share of Class B Common Stock shall entitle the holder
thereof to ten (10) votes upon all matters upon which shareholders
have the right to vote;

provided, however, that, except as otherwise required by law, holders
-------- -------
of Class A Common Stock and Class B Common Stock, as such, shall not
be entitled to vote on any amendment to these Second Restated Articles
of Incorporation that relates solely to the terms of one or more
outstanding series of Preferred Stock unless such amendment would
adversely affect the rights of the Common Stock of either class, in
which case the class or classes so affected shall be entitled to a
class vote thereon.

The Corporation may, as a condition to counting the votes cast by
any holder of shares of Class B Common Stock, require proof as set forth in
Section 3.E.8 below that the shares of Class B Common Stock held by such
holder have not been converted into shares of Class A Common Stock.

B. Dividends and Distributions.
----------------------------

Subject to the preferential and other dividend rights of any
outstanding series of Preferred Stock, holders of Class A Common Stock and
Class B Common Stock shall be entitled to such dividends and other
distributions in cash, stock or property of the Corporation as may be
declared thereon by the Board of Directors from time to time out of assets
or funds of the Corporation legally available therefor. No dividend or
other distribution may be declared or paid on any share of Class A Common
Stock unless a like dividend or other distribution is simultaneously
declared or paid, as the case may be, on each share of Class B Common
Stock, nor shall any dividend or other distribution be declared or paid on
any share of Class B Common Stock unless a like dividend or other
distribution is simultaneously declared or paid, as the case may be, on
each share of Class A Common Stock, in each case without preference or
priority of any kind. All dividends and distributions on the Class A
Common Stock and Class B Common Stock payable in Common Stock of the
Corporation shall be made in shares of Class A Common Stock and Class B
Common Stock, respectively. In no event will shares of either class of
Common

3
<PAGE>

Stock be split, divided or combined unless the outstanding shares of the
other class of Common Stock shall be proportionately split, divided or
combined.

In the event of a transaction as a result of which the shares of
Class A Common Stock are converted into or exchanged for one or more other
securities, cash or other property (a "Class A Conversion Event"), then
from and after such Class A Conversion Event, a holder of Class B Common
Stock shall be entitled to receive, upon the conversion of such Class B
Common Stock pursuant to Section 3.E. of this Article V, the amount of such
securities, cash and other property that such holder would have received if
the conversion of such Class B Common Stock had occurred immediately prior
to the record date (or if there is no record date, the effective date) of
the Class A Conversion Event. This paragraph shall be applicable in the
same manner to all successive conversions or exchanges of securities issued
pursuant to any Class A Conversion Event.

No adjustments in respect of dividends shall be made upon the
conversion of any share of Class B Common Stock; provided, however, that if
-------- -------
a share shall be converted after the record date for the payment of a
dividend or other distribution on shares of Class B Common Stock but before
such payment, then the record holder of such share at the close of business
on such record date shall be entitled to receive the dividend or other
distribution payable on such share of Class B Common Stock on the payment
date notwithstanding the conversion thereof.

C. Options, Rights or Warrants.
----------------------------

Subject to Section 3.B., the Corporation will not be 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 Corporation may make a pro rata offer to all holders of
Common Stock of rights to subscribe for additional shares of the class of
Common Stock held by them. The Corporation may make offerings of options,
rights or warrants to subscribe for shares of any class or classes of
capital stock (other than Class B Common Stock) to all holders of Class A
Common Stock or Class B Common Stock if an identical offering is made
simultaneously to all the holders of the other class of Common Stock. All
offerings of options, rights or warrants shall offer the respective holders
of Class A Common Stock and Class B Common Stock the right to subscribe at
the same rate per share.

D. Merger.
-------

In the event of a merger of the Corporation with or into another
entity (whether or not the Corporation is the surviving entity), the
holders of each share of Class A Common Stock and Class B Common Stock
shall be entitled to receive the same per share consideration as the per
share consideration, if any, received by the holders of each share of the
other class of Common Stock; provided that, if such consideration shall
--------
consist in any part of voting securities (or of options or warrants to
purchase, or of

4
<PAGE>

securities convertible into or exchangeable for, voting securities), then
the Corporation may provide in the applicable merger agreement for the
holders of shares of Class B Common Stock to receive, on a per share basis,
voting securities with ten (10) times the number of votes per share as
those voting securities to be received by the holders of shares of Class A
Common Stock (or options or warrants to purchase, or securities convertible
into or exchangeable for, voting securities with ten (10) times the number
of votes per share as those voting securities issuable upon exercise of the
options or warrants to be received by the holders of the shares of Class A
Common Stock, or into which the convertible or exchangeable securities to
be received by the holders of the shares of Class A Common Stock may be
converted or exchanged).

E. Conversion of Class B Common Stock.
-----------------------------------

1. Voluntary Conversion. Each share of Class B Common Stock
---------------------
shall be convertible, at the option of its record holder, into one validly
issued, fully paid and non-assessable share of Class A Common Stock at any
time.

2. Voluntary Conversion Procedure. At the time of a voluntary
-------------------------------
conversion, the record holder of shares of Class B Common Stock shall
deliver to the principal office of the Corporation or any transfer agent
for shares of the Class A Common Stock (i) the certificate or certificates
representing the shares of Class B Common Stock to be converted, duly
endorsed in blank or accompanied by proper instruments of transfer and (ii)
written notice to the Corporation stating that the record holder elects to
convert such share or shares and stating the name or names (with addresses)
and denominations in which the certificate or certificates representing the
shares of Class A Common Stock issuable upon the conversion are to be
issued and including instructions for the delivery thereof. Conversion
shall be deemed to have been effected at the time when delivery is made to
the Corporation or its transfer agent of such written notice and the
certificate or certificates representing the shares of Class B Common Stock
to be converted, and as of such time each Person named in such written
notice as the Person to whom a certificate representing shares of Class A
Common Stock is to be issued, shall be deemed to be the holder of record of
the number of shares of Class A Common Stock to be evidenced by that
certificate. Upon such delivery, the Corporation or its transfer agent
shall promptly issue and deliver at the stated address of such record
holder of shares of Class A Common Stock a certificate or certificates
representing the number of shares of Class A Common Stock to which such
record holder is entitled by reason of such conversion, and shall cause
such shares of Class A Common Stock to be registered in the name of the
record holder.

3. Automatic Conversion.
---------------------

(a) Subject to paragraph (c) below, in the event of any Transfer
(as hereinafter defined) of any share of Class B Common Stock to any Person
other than a Permitted Transferee (as hereinafter defined), such share of
Class B Common Stock shall automatically, without any further action,
convert into one share of Class A Common Stock. In addition, upon any
Change of Control (as hereinafter defined) of any corporation, partnership,
limited liability company, trust or charitable organization which

5
<PAGE>

is a record holder of any share of Class B Common Stock, such share of
Class B Common Stock shall automatically convert into a share of Class A
Common Stock. Notwithstanding the foregoing, an Initial Holder shall not be
subject to automatic conversion pursuant to this paragraph 3(a) with
respect to the shares of Class B Common Stock acquired by such Initial
Holder pursuant to Article XIV hereof (and any additional shares
distributed to such Initial Holder with respect to such shares pursuant to
Section 3.B. hereof), but only so long as such Initial Holder remains the
sole Beneficial Owner of such shares.

(b) Each share of Class B Common Stock shall automatically
convert into one share of Class A Common Stock on the first date on which
the number of shares of Class B Common Stock then outstanding is less than
15% of all the then outstanding shares of Common Stock (calculated without
regard to the difference in voting rights between the classes of Common
Stock) without any further action on the part of the Corporation or any
other Person.

(c) Notwithstanding anything to the contrary set forth in this
Section 3 of this Article V, a holder of shares of Class B Common Stock may
pledge such holder's shares of Class B Common Stock to a financial
institution pursuant to a bona fide pledge of such shares of Class B Common
Stock as collateral security for any indebtedness or other obligation of
any Person (the "Pledged Stock") due to the pledgee or its nominee;
provided, however, that (i) such shares shall not be voted by or registered
-------- -------
in the name of the pledgee and shall remain subject to the provisions of
this Section 3.E. and (ii) upon any foreclosure, realization or other
similar action by the pledgee, such Pledged Stock shall automatically
convert into shares of Class A Common Stock on a share for share basis
unless all right, title and interest in such Pledged Stock shall be
Transferred concurrently by the pledgee or the purchaser in such
foreclosure to a Permitted Transferee.

(d) The foregoing automatic conversion events described in this
paragraph 3 shall be referred to hereinafter as "Events of Automatic
Conversion." The determination of whether an Event of Automatic Conversion
shall have occurred will be made by the Board of Directors or a committee
thereof in accordance with paragraph 8 below.

4. Automatic Conversion Procedure. Any conversion pursuant to
-------------------------------
an Event of Automatic Conversion shall be deemed to have been effected at
the time the Event of Automatic Conversion occurred (the "Conversion
Time"). At the Conversion Time, the certificate or certificates that
represented immediately prior thereto the shares of Class B Common Stock
which were so converted (the "Converted Class B Common Stock") shall,
automatically and without further action, represent the same number of
shares of Class A Common Stock. Holders of Converted Class B Common Stock
shall deliver their certificates, duly endorsed in blank or accompanied by
proper instruments of transfer, to the principal office of the Corporation
or the office of any transfer agent for shares of the Class A Common Stock,
together with a notice setting out the name or names (with addresses) and
denominations in which the certificate or certificates representing such
shares of Class A Common Stock are to be issued and including

6
<PAGE>

instructions for delivery thereof. Upon such delivery, the Corporation or
its transfer agent shall promptly issue and deliver at such stated address
to such holder of shares of Class A Common Stock a certificate or
certificates representing the number of shares of Class A Common Stock to
which such holder is entitled by reason of such conversion, and shall cause
such shares of Class A Common Stock to be registered in the name of such
holder. The Person entitled to receive the shares of Class A Common Stock
issuable upon such conversion shall be treated for all purposes as the
record holder of such shares of Class A Common Stock at and as of the
Conversion Time, and the rights of such Person as a holder of shares of
Class B Common Stock that have been converted shall cease and terminate at
and as of the Conversion Time, in each case without regard to any failure
by such holder to deliver the certificates or the notice required by this
Section.

5. Unconverted Shares; Notice Required. In the event of the
------------------------------------
conversion of less than all the shares of Class B Common Stock evidenced by
a certificate surrendered to the Corporation in accordance with the
procedures of this Section 3.E., the Corporation shall execute and deliver
to or upon the written order of the holder of such unconverted shares,
without charge to such holder, a new certificate evidencing the number of
shares of Class B Common Stock not converted.

6. Retired Shares. Shares of Class B Common Stock that are
---------------
converted into shares of Class A Common Stock as provided herein shall be
retired and canceled and shall have the status of authorized but unissued
shares of Class B Common Stock.

7. Reservation. The Corporation shall at all times reserve and
------------
keep available, out of its authorized and unissued shares of Class A Common
Stock, for the purposes of effecting conversions, such number of duly
authorized shares of Class A Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of Class B
Common Stock. All the shares of Class A Common Stock so issuable shall,
when so issued, be duly and validly issued, fully paid and non-assessable,
and free from liens and charges with respect to such issuance.

8. Determination of Voting Rights And Events of Automatic
------------------------------------------------------
Conversion. The Board of Directors of the Corporation or a duly authorized
-----------
committee thereof shall have the power to determine, in good faith after
reasonable inquiry, whether an Event of Automatic Conversion has occurred
with respect to any share of Class B Common Stock. A determination by the
Board of Directors of the Corporation or such committee that an Event of
Automatic Conversion has occurred shall be conclusive. As a condition to
counting the votes cast by any holder of shares of Class B Common Stock at
any annual or special meeting of shareholders, or in connection with any
written consent of shareholders, or as a condition to registration of
transfer of shares of Class B Common Stock, or for any other purpose, the
Board of Directors or a duly authorized committee thereof, in its
discretion, may require the holder of such shares to furnish such
affidavits or other proof as the Board of Directors or such committee deems
necessary or advisable to determine whether an Event of Automatic
Conversion shall have occurred. If the Board of Directors or such
committee shall determine that a holder has substantially failed to comply
promptly with any request by the Board of Directors or such committee for
such proof, such shares shall be entitled to one (1) vote per

7
<PAGE>

share until such time as the Board of Directors or such committee shall
determine that such holder has complied with such request. The Board of
Directors or a committee thereof may exercise the authority granted by this
paragraph 8 through duly authorized officers or agents.

9. Definitions. For purposes of this Section E:
------------

(a) Ancestor. The term "Ancestor" with respect to any natural
---------
person shall mean and include the blood ancestors of such person. A
natural person adopted pursuant to a Permitted Adoption shall have the same
status and benefits, and all relationships to or through such person shall
be determined in the same manner, as if such person were a child of the
blood of such person's adoptive parent or parents rather than of such
person's natural parents.

(b) Beneficial Owner. A Person shall be deemed the "Beneficial
-----------------
Owner" of, and to "Beneficially Own" and to have "Beneficial Ownership" of,
any share (i) which such Person has the power to vote or dispose, or to
direct the voting or disposition of, directly or indirectly, through any
agreement, arrangement or understanding (written or oral), or (ii) which
such Person has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (written or oral), or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise.

(c) Beneficiary. The term "Beneficiary" with respect to any
------------
trust means any Person to whom a current distribution (whether mandatory or
discretionary) of income or principal could be made.

(d) Change Of Control. The term "Change of Control" shall mean
------------------
(i) in the case of a corporation, partnership or limited liability company,
such time as any such corporation, partnership or limited liability company
shall cease to be a Controlled Entity; (ii) in the case of a trust, such
time as such trust shall cease to be a Permitted Trust; or (iii) in the
case of a charitable organization, such time as such charitable
organization shall cease to be a Permitted Charitable Foundation.

(e) Controlled Entity. A corporation, partnership or limited
------------------
liability company shall be deemed to be a "Controlled Entity" if (but only
if) one or more Permitted Transferees (i) constitute a majority of the
members of the board of directors (or a committee performing similar
functions), if any, and (ii) own, directly or indirectly, one hundred
percent (100%) of the outstanding capital stock of such corporation or the
general and limited partnership or limited liability company interests of
such partnership or limited liability company, as the case may be.

(f) Descendant. The term "Descendant" with respect to any
-----------
natural person shall mean and include the blood descendants of such person.
A natural person adopted pursuant to a Permitted Adoption shall have the
same status and benefits, and all relationships to or through such person
shall be determined in the same manner, as if such

8
<PAGE>

person were a child of the blood of such person's adoptive parent or
parents rather than of such person's natural parents.

(g) Determination Time. The term "Determination Time" means,
-------------------
with respect to any share of capital stock of the Corporation, the time at
which such share of capital stock is converted into Class B Common Stock
pursuant to Article XIV of these Second Restated Articles of Incorporation.

(h) Initial Holder. The term "Initial Holder" shall mean (i)
---------------
each Person in whose name one or more shares of Class B Common Stock are
registered at the Determination Time, (ii) each joint owner of a share of
Class B Common Stock at the Determination Time, (iii) each minor who is the
beneficiary at the Determination Time of a Uniform Gifts to Minors Act
account under which the custodian, in such capacity, is an Initial Holder
and (iv) the settlor of any trust which is an Initial Holder or any
Beneficiary at the Determination Time of any Irrevocable Trust which is an
Initial Holder. A Person will cease to be an Initial Holder once that
Person no longer holds of record or beneficially any Class B Common Stock.
For purposes of the definition of "Initial Holder", if any shares of Class
B Common Stock are registered in the name of a Nominee at the Determination
Time, such shares shall be deemed to be registered in the name of the
Person for whom such Nominee is acting.

(i) Irrevocable Trust. A trust shall be deemed to be an
------------------
"Irrevocable Trust" if such trust is not, and can not be amended or revised
to become, revocable at any time after the Initial Date by the Person or
Persons who established such trust.

(j) Nominee. The term "Nominee" shall mean a partnership or
--------
other entity that is acting as a bona fide nominee for the registration of
record ownership of securities Beneficially Owned by another Person.

(k) Permitted Adoption. A "Permitted Adoption" of a natural
-------------------
person shall have occurred solely if a decree or order of adoption shall
have been made by a duly constituted court or other authority authorized by
law to effect adoptions prior to such person attaining the age of twenty-
one (21) years.

(l) Permitted Charitable Foundation. A charitable foundation
--------------------------------
shall be deemed to be a "Permitted Charitable Foundation" if (but only if)
such charitable foundation (i) is a charitable organization qualifying for
tax-exempt status for Federal income tax purposes under Section 501(c)(3)
of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) is
classified as a "private foundation" under Section 509 of the Code and
(iii) has as a majority of (x) its members (if any) and board of directors
or board of trustees or (y) its trustees, one or more of the Persons
described in clause (i), (ii), or (iii) of the definition of "Permitted
Transferee" if the charitable organization is a not-for-profit organization
or charitable trust, as the case may be.

9
<PAGE>

(m) Permitted Estate. The term "Permitted Estate" shall mean
-----------------
the estate of any Initial Holder or of any Person described in clause (ii)
of the definition of "Permitted Transferee", provided that a majority of
the executors, administrators or personal representatives of such estate
are (i) one or more of the Persons described in clause (i), (ii) or (iii)
of the definition of "Permitted Transferee", (ii) one or more licensed
attorneys who acted as the personal attorney or attorneys of such Initial
Holder or other Person or (iii) a commercial bank or trust company
regularly engaged in the business of acting as an executor or administrator
and having net capital in excess of U.S. $10 million.

(n) Permitted Transferee. The term "Permitted Transferee"
---------------------
shall mean:

(i) any natural person who is an Initial Holder;

(ii) the spouse of an Initial Holder referred to in the
foregoing clause (i), any Descendant or Ancestor of such an
Initial Holder and the spouse of any Descendant of such an
Initial Holder;

(iii) a corporation, partnership or limited liability
company which is a Controlled Entity;

(iv) a Permitted Trust;

(v) a Permitted Charitable Foundation;

(vi) a Permitted Estate; or

(vii) the Corporation and each of its direct or indirect
majority-owned subsidiaries.

(o) Permitted Trust. A trust (including a voting trust) shall
----------------
be deemed to be a "Permitted Trust" if (but only if) such trust (i) has as
a majority of its trustees Permitted Trustees (provided that such condition
--------
shall continue to be satisfied for thirty days following the death,
resignation, removal or incapacity of a Permitted Trustee that would
otherwise result in the failure to satisfy this condition) and (ii) either
(x) has no Beneficiary other than a Permitted Transferee, (y) is a
charitable remainder annuity or unitrust meeting the requirements of
Section 664 of the Code and under which no annuity or unitrust payment will
be payable to a Person other than a Permitted Transferee or (z) is a
charitable lead annuity or unitrust under which the annuity or unitrust
payments qualify for a charitable deduction under Section 2522(c) of the
Code and under which no portion of the remainder interest after the
charitable lead term will be payable to (or held for the benefit of) any
Person other than a Permitted Transferee.

(p) Permitted Trustee. The term "Permitted Trustee" with
------------------
respect to any trust shall mean (i) a Permitted Transferee, (ii) a licensed
attorney acting as the personal attorney for a natural person who is a
Permitted Transferee and is also the settlor of such

10
<PAGE>

trust and (or in the case of the death of the settlor, was acting as the
personal attorney for such settlor at the time of his death) and (iii) a
commercial bank or trust company

regularly engaged in the business of acting as a trustee and having net
capital in excess of U.S. $10 million.

(q) Person. The term "Person" means any natural person,
-------
corporation, association, partnership, limited liability company,
organization, business, government or political subdivision thereof or
governmental agency.

(r) Transfer. The term "Transfer" shall mean any sale, transfer
---------
(including a transfer made in whole or in part without consideration as a
gift), exchange, assignment, pledge, encumbrance, alienation or any other
disposition or hypothecation of record ownership or of Beneficial Ownership
of any share, whether by operation of law or otherwise; provided, however,
-------- -------
that (i) a pledge of any share made in accordance with the provisions of
paragraph (c) of Section 3.E and (ii) a grant of a proxy with respect to
any share to a Person designated by the Board of Directors of the
Corporation who is soliciting proxies on behalf of the Corporation shall
not be considered a "Transfer"; and provided further that in the case of
any transferee of record ownership that is a Nominee, such Transfer of
record ownership shall be deemed to be made to the Person or Persons for
whom such Nominee is acting.

10. Stock Legend. The Corporation shall include on the
-------------
Certificates representing the shares of Class B Common Stock subject
thereto a legend referring to the restrictions on transfer and registration
of transfer imposed by this Section 3.E.

11. Taxes. The issuance of a certificate for shares of Class A
------
Common Stock upon conversion of shares of Class B Common Stock shall be
made without charge for any stamp or other similar tax in respect of such
issuance. However, if any such certificate is to be issued in a name other
than that of the holder of the shares of Class B Common Stock converted,
the Person or Persons requesting the issuance thereof shall pay to the
Corporation the amount of any tax which may be payable in respect of any
Transfer involved in such issuance or shall establish to the satisfaction
of the Corporation that such tax has been paid or is not required to be
paid.

F. Liquidation.
------------

In the event of any voluntary or involuntary liquidation,
distribution or winding up of the Corporation, after distribution in full
of the preferential and/or other amounts to be distributed to the holders
of shares of any outstanding series of Preferred Stock, the holders of
shares of Class A Stock and Class B Common Stock shall be entitled to
receive all of the remaining assets of the Corporation available for
distribution to its shareholders, ratably in proportion to the number of
shares of Common Stock held by them. In any such distribution shares of
Class A Common Stock and Class B Common Stock shall be treated equally on a
per share basis.

11
<PAGE>

ARTICLE VI

Purchase of Shares by Corporation
---------------------------------

The Corporation may purchase any shares of outstanding capital stock
of the Corporation or the right to purchase any such shares of capital stock
from any holder thereof on terms and conditions established by the Board of
Directors.

ARTICLE VII

Board of Directors
------------------

SECTION 1. Number and Terms.
-----------------

Except as otherwise fixed by or pursuant to the provisions of these
Second Restated Articles of Incorporation relating to the rights of the holders
of any series of Preferred Stock, the number of directors of the Corporation
shall be determined by resolution adopted by a majority of the entire Board of
Directors, but the number shall not be less than three, provided that the term
of a director shall not be affected by any decrease in the number of directors
so made by the Board of Directors. The term of each director of the Corporation
shall expire at the next annual meeting of shareholders following such
director's election and until such director's successor shall have been elected
and qualified; provided, however, that, at the annual meeting of shareholders
-------- -------
occurring in 1998, the directors, other than those who may be elected by the
holders of any series of Preferred Stock pursuant to the terms of these Second
Restated Articles of Incorporation, shall be classified, with respect to the
time for which they severally hold office, into three classes, as nearly equal
in number as possible, one class of directors to be originally elected for a
term expiring at the next succeeding annual meeting of shareholders, the second
class of directors to be originally elected for a term expiring at the second
succeeding annual meeting of shareholders and the third class of directors to be
originally elected for a term expiring at the third succeeding annual meeting of
shareholders, with each class to hold office until its successors are duly
elected and qualified. Except as specifically contemplated by the prior sentence
and other than with respect to any directors elected by the holders of any
series of Preferred Stock pursuant to the terms of these Second Restated
Articles of Incorporation, at each annual meeting of the shareholders of the
Corporation, the date of which shall be fixed by or pursuant to the By-laws of
the Corporation, the successors of the class of directors whose term expires at
that meeting shall be elected to hold office for a term expiring at the third
succeeding annual meeting of shareholders. If the number of directors is changed
by the Board of Directors of the Corporation, any newly created directorships or
any decrease in directorships shall be so apportioned among the classes as to
make all classes as nearly equal in number as possible; provided, however, that
-------- -------
no decrease in the number of directors shall shorten the term of any incumbent
director. The election of directors need not be by written ballot.

12
<PAGE>

SECTION 2. Vacancies.
----------

Except as otherwise provided for or fixed by or pursuant to the
provisions of these Second Restated Articles of Incorporation relating to the
rights of the holders of any series of Preferred Stock, any vacancy on the Board
of Directors of the Corporation resulting from death, resignation, removal or
other cause and any newly created directorship resulting from any increase in
the authorized number of directors between meetings of shareholders shall be
filled only by the affirmative vote of a majority of all the directors then in
office, even though less than a quorum, and any director so chosen shall hold
office for the remainder of the full term of the class of directors in which the
vacancy occurred or the new directorship was created and until a successor is
duly elected and qualified or until his or her earlier death, resignation or
removal from office in accordance with these Second Restated Articles of
Incorporation or any applicable law or pursuant to an order of a court. If there
are no directors in office, then an election of directors may be held in the
manner provided by applicable law.

SECTION 3. Notice.
-------

Advance notice of nominations for the election of directors shall be
given in the manner and to the extent provided in the By-laws of the
Corporation.

SECTION 4. Removal.
--------

Except as otherwise provided for or fixed by or pursuant to the
provisions of these Second Restated Articles of Incorporation relating to the
rights of the holders of any series of Preferred Stock, any director may be
removed from office only for cause and only by the affirmative vote of the
holders of a majority of the combined voting power of the then outstanding
shares of stock of the Corporation entitled to vote for the election of
directors, voting together as a single class. For purposes of this Section (4),
"cause" shall mean the willful and continuous failure of a director to
substantially perform such director's duties to the Corporation (other than any
such failure resulting from incapacity due to physical or mental illness) or the
willful engaging by a director in gross misconduct materially and demonstrably
injurious to the Corporation.

ARTICLE VIII

Shareholder Action; No Cumulative Voting
----------------------------------------

SECTION 1. Meetings; Unanimous Written Consent.
------------------------------------

Subject to the rights of the holders of any outstanding series of
Preferred Stock, any action required or permitted to be taken by the
shareholders of the Corporation must be effected (i) at a duly called annual or
special meeting of shareholders of the Corporation or (ii) by unanimous written
consent of all shareholders entitled to vote on

13
<PAGE>

such action. Subject to the rights of the holders of any outstanding series of
Preferred Stock, special meetings of shareholders of the Corporation may be
called only by the Board of Directors pursuant to a resolution approved by a
majority of the entire Board of Directors or by the Chief Executive Officer of
the Corporation. Notwithstanding the foregoing, whenever the holders of any one
or more outstanding series of Preferred Stock shall have the right, voting
separately by class or series, as applicable, to elect directors at an annual or
special meeting of shareholders, the calling of special meetings of the holders
of such class or series shall be governed by the terms of the applicable
resolution or resolutions of the Board of Directors establishing such series of
Preferred Stock pursuant to ARTICLE V of these Second Restated Articles of
Incorporation.

SECTION 2. No Cumulative Voting.
---------------------

Shares of capital stock of the Corporation shall not be entitled to
cumulative voting.

ARTICLE IX

Michigan Business Combination Act
---------------------------------

Pursuant to Section 783 of the Michigan Business Corporation Act, the
Corporation hereby elects to be subject to the provisions of Section 780 of the
Michigan Business Corporation Act.

ARTICLE X

By-laws
-------

The power to adopt, alter, amend or repeal the By-laws of the
Corporation shall be vested in the Board of Directors. Without limiting the
foregoing, the shareholders of the Corporation may adopt, amend or repeal the
By-laws of the Corporation only by the affirmative vote of holders of at least
66-2/3% of the combined voting power of the then outstanding shares of capital
stock of all classes and series of the Corporation entitled to vote generally on
matters requiring the approval of shareholders, voting together as a single
class.

ARTICLE XI

Amendments
----------

In addition to any requirements of law and any other provisions of
these Second Restated Articles of Incorporation (and notwithstanding the fact
that a lesser percentage may be specified by law or these Second Restated
Articles of Incorporation),

14
<PAGE>

the affirmative vote of the holders of 66-2/3% or more of the combined voting
power of the then outstanding shares of capital stock of all classes and series
of the Corporation entitled to vote generally on matters requiring the approval
of shareholders, voting together as a single class (a "Supermajority Vote"),
shall be required to (i) alter, amend or repeal, or adopt any provision of these
Second Restated Articles of Incorporation which is inconsistent with, any
provision of Sections 2 and 3 of Article V and Articles VII, VIII, IX or X
hereof or this ARTICLE XI and (ii) approve any merger of the Corporation which
would, directly or indirectly, have the effect of making changes to these Second
Restated Articles of Incorporation that would require a Supermajority Vote if
effected directly as an amendment to these Second Restated Articles of
Incorporation.

ARTICLE XII

Limitation of Liability
-----------------------

To the full extent permitted by the Michigan Business Corporation Act
or any other applicable laws presently or hereafter in effect, no director of
the Corporation shall be personally liable to the Corporation or its
shareholders for or with respect to any acts or omissions in the performance of
his or her duties as a director of the Corporation. Any repeal or modification
of this Article XII by the shareholders of the Corporation shall not adversely
affect the right or protection of a director of the Corporation existing at the
time of such repeal or modification with respect to acts or omissions occurring
prior to such repeal or modification.

ARTICLE XIII

Date of Incorporation; Term
---------------------------

The date of incorporation is March 16, 1912.

The term of the corporate existence is perpetual.

ARTICLE XIV

Effective Time; Conversion of Capital Stock
-------------------------------------------

SECTION 1. Effective Time.
---------------

This certificate of Amendment will become effective upon filing (the
"Effective Time").

15
<PAGE>

SECTION 2. Conversion of Old Common Stock.
-------------------------------

Upon the Effective Time, each issued and outstanding share of common
stock, $50 par value ("Old Common Stock"), shall be converted into one share of
class B common stock ("Class B Common Stock"). Each person that was a record
holder of Old Common Stock immediately prior to the Effective Time shall,
immediately after the Effective Time, be treated for all purposes as the record
holder of an equal number of shares of Class B Common Stock. Each certificate
that represented shares of Old Common Stock immediately prior to the Effective
Time shall, immediately after the Effective Time, represent an equal number of
shares of Class B Common Stock. Upon surrender of the certificates formerly
representing Old Common Stock, such holder shall be entitled to receive new
certificates representing the appropriate number of shares of Class B Common
Stock. It is understood that the Board of Directors of the Corporation may
declare a dividend payable in shares of Class B Common Stock that will be
effective immediately upon the conversion of Old Common Stock into Class B
Common Stock as provided in this Section 2.

SECTION 3. Conversion of Class A Preferred Stock and Class B Preferred
-----------------------------------------------------------
Stock.
- ------

Upon the closing (the "Closing Time") of an initial public offering of
the Class A Common Stock that is registered with the Securities and Exchange
Commission under the Securities Act of 1933 (the "IPO"), (i) each issued and
outstanding share of Class A Preferred Stock shall be converted into that number
of shares of Class B Common Stock determined by dividing (1) the sum of 103% of
the par value thereof ($103) by (2) the initial public offering price per share
of Class A Common Stock specified in the final prospectuses for the IPO (the
"IPO Price") and (ii) each issued and outstanding share of Class B Preferred
Stock shall be converted into that number of shares of Class B Common Stock
determined by dividing (1) the sum of $2,000 by (2) the IPO Price; provided,
--------
however, that (a) no fractional shares of Class B Common Stock shall be issued;
- -------
(b) fractional shares of Class B Common Stock which would otherwise be issued to
an individual record holder of shares of Class A Preferred Stock or Class B
Preferred Stock shall be aggregated to the extent possible into whole shares of
Class B Common Stock; and (c) after giving effect to clause (b), each holder of
shares of Class A Preferred Stock or Class B Preferred Stock who would otherwise
be entitled to receive a fraction of a share of Class B Common Stock shall
receive cash consideration equal to the product of such fraction and the IPO
Price. The Corporation will pay any accrued and unpaid dividends to the Closing
Time on the Class A Preferred Stock and Class B Preferred Stock in cash to the
persons who were the record holders thereof immediately prior to the Closing
Time. Each Person that was a record holder of Class A Preferred Stock or Class B
Preferred Stock immediately prior to the Closing Time shall, immediately after
the Closing Time, be treated as the record holder of the number of shares of
Class B Common Stock determined pursuant to the provisions of this Section 3.
Each certificate that represented shares of Class A Preferred Stock or Class B
Preferred Stock immediately prior to the Closing Time shall, immediately after
the Closing Time, represent the number of whole shares of Class B Common Stock
into which the shares of Class A Preferred

16
<PAGE>

Stock or Class B Preferred Stock represented by such certificate shall have been
converted. Upon surrender of the certificates formerly representing Class A
Preferred Stock or Class B Preferred Stock, such holder shall be entitled to
receive new certificates representing the appropriate number of shares of Class
B Common Stock and any cash consideration in lieu of fractional shares owed to
such holder as provided in clause (c) of the proviso to the first sentence of
this Section 3. Shares of Class B Common Stock issued upon the conversion of
Class A Preferred Stock or Class B Preferred Stock pursuant to this Section 3
shall not be entitled to receive the dividend, if any, referred to in the last
sentence of Section 2 of this Article XIV.

ARTICLE XV

Class A and Class B Preferred Stock
-----------------------------------

SECTION 1. Dividends on Class A and Class B Preferred Stock.
-------------------------------------------------

A. Class A Preferred Stock.
------------------------

The holders of the Class A Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, out of any assets or
funds of the Corporation at the time legally available for the payment of
dividends under the laws of the State of Michigan, dividends at the rate of five
percent (5%) per annum, payable quarterly on dates to be fixed by the Board of
Directors of the Corporation. No dividends shall be paid upon the Class B
Preferred Stock or the Common Stock of the Corporation in any fiscal year unless
and until in the same fiscal year of payment, the Board of Directors shall have
declared and paid or set aside for payment upon the Class A Preferred Stock, a
dividend amount of five percent (5%) per annum.

Dividends on the Class A Preferred Stock shall be cumulative from and
after December 1, 1953, so that, if in any quarterly dividend period or periods,
dividends on the outstanding Class A Preferred Stock at the rate of five percent
(5%) of the par value thereof per annum shall not have been paid or set apart
for payment, the deficiency shall be paid or set apart for payment, but without
interest, before any distribution, whether by way of dividends or otherwise,
shall be declared or paid upon or set apart for the Class B Preferred Stock or
the Common Stock, or any other stock of the corporation, except stock having a
preference over or being on a parity with the Class A Preferred Stock. The term
"accrued" as hereinafter applied to dividends on the Class A Preferred Stock
shall mean the amount which shall be equal to the sum of all accumulated
dividends as set forth in this paragraph, from the date from which such
dividends shall have become cumulative, but without interest thereon, less the
aggregate amount of all cumulative dividends theretofore paid or declared or set
apart for payment on the Class A Preferred Stock.

B. Class B Preferred Stock. The holders of the Class B Preferred
------------------------
Stock shall be entitled to receive, when and as declared by the Board of
Directors, out of any

17
<PAGE>

assets or funds of the Corporation at the time legally available for the
payment of dividends under the laws of the State of Michigan, dividends at
the rate of One Hundred Dollars ($100.00) per Class B Preferred Share per
annum, payable quarterly on dates to be fixed by the Board of Directors of
the Corporation. No dividends shall be paid upon the Common Stock of the
Corporation in any fiscal year unless and until in the same fiscal year of
payment, the Board of Directors shall have declared and paid or set aside
for payment upon the Class B Preferred Stock, a dividend at such rate.

Dividends on the Class B Preferred Stock shall be cumulative from
and after May 6, 1992, so that, if in any quarterly dividend period or
periods, dividends on the outstanding Preferred Stock at the rate of One
Hundred Dollars ($100.00) per Preferred Share per annum shall not have been
paid or set apart for payment, the deficiency shall be paid or set apart
for payment, but without interest, before any distribution, whether by way
of dividends or otherwise, shall be declared or paid upon or set apart for
the Common Stock, or any other stock of the Corporation, except stock
having a preference over or being on a parity with the Class B Preferred
Stock. The term "accrued" as hereinafter applied to dividends on the Class
B Preferred Stock shall mean the amount which shall be equal to the sum of
all accumulated dividends as set forth in this paragraph, from the date
from which such dividends shall have become cumulative, but without
interest thereon, less the aggregate amount of all cumulative dividends
theretofore paid or declared or set apart for payment.

SECTION 2 Preference on Liquidation.
--------------------------

A. Class A Preferred Stock.
------------------------

In the event of any liquidation, dissolution or winding up of the
Corporation, the holders of the Class A Preferred Stock shall be entitled,
before any of the assets of the Corporation shall be distributed among or
paid over to the holders of the Class B Preferred Stock or Common Stock, to
be paid in full an amount equal to One Hundred Dollars ($100.00) per share,
plus an amount equal to all cumulative unpaid dividends thereon.

B. Class B Preferred Stock.
------------------------

In the event of any liquidation, dissolution or winding up of the
Corporation, the holders of the Class B Preferred Stock shall be entitled,
before any of the assets of the Corporation shall be distributed among or
paid over to the holders of the Common Stock, to be paid in full in an
amount equal to Two Thousand Dollars ($2,000.00) per share, plus an amount
equal to all cumulative unpaid dividends thereon.

18
<PAGE>

SECTION 3 Redemption of Class A and Class B Preferred Stock.
--------------------------------------------------

A. Class A Preferred Stock.
------------------------

The Class A Preferred Stock may be redeemed in whole or in part on any
dividend payment date at the option of the Board of Directors upon not less
than thirty (30) days' prior notice to the holders of record of the Class A
Preferred Stock given in such manner and form and on such other terms and
conditions as may be prescribed by resolution of the Board of Directors, by
payment in cash for each share of the Class A Preferred Stock to be
redeemed, the sum of one hundred three percent (103%) of the par value,
plus an amount equal to dividends accrued thereon up to the date of
redemption. If less than all the outstanding shares are to be redeemed,
the shares to be redeemed may be either (i) shares selected pro rata or by
lot, or (ii) share or shares of any particular shareholder or shareholders
designated by the Board of Directors. From and after the date fixed in any
such notice as the date of redemption (unless default shall be made by the
Corporation in the payment of the redemption price), all dividends on the
Class A Preferred Stock thereby called for redemption shall cease to accrue
and all rights of the holders thereof as shareholders of the Corporation,
except the right to receive the redemption price, shall cease and
determine.

B. Class B Preferred Stock.
------------------------

The Class B Preferred Stock may be redeemed in whole or in part on any
dividend payment date at the option of the Board of Directors upon not less
than thirty (30) days' prior notice to the holders of record of the Class B
Preferred Stock given in such manner and form and on such other terms and
conditions as may be prescribed by resolution of the Board of Directors, by
payment in cash for each share of the Class B Preferred Stock to be
redeemed, the sum of Two Thousand Dollars ($2,000.00) per share, plus an
amount equal to dividends accrued thereon up to the date of redemption. If
less than all the outstanding shares are to be redeemed, the shares to be
redeemed may be either (i) shares selected pro rata or by lot, or (ii)
share or shares of any particular shareholder or shareholders designated by
the Board of Directors. From and after the date fixed in any such notice
as the date of redemption (unless default shall be made by the Corporation
in the payment of the redemption price), all dividends on the Class B
Preferred Stock thereby called for redemption shall cease to accrue and all
rights of the holders thereof as shareholders of the Corporation, except
the right to receive the redemption price, shall cease and determine.

19
<PAGE>

SECTION 4. Voting Rights.
--------------

Except as otherwise provided by the laws of the State of
Michigan, the holders of the Class A Preferred Stock and Class B Preferred
Stock shall have no voting power.

Signed: _________________ , 1998

(Corporate Seal)

STEELCASE INC.

By:
-----------------------------------------
(Signature of President)

<PAGE>

EXHIBIT 3.2

AMENDED

BY-LAWS

STEELCASE INC.*

As of , 1998

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.

* The Amended By-laws of Steelcase Inc. will become effective upon the filing of
the Second Restated Articles of Incorporation of Steelcase Inc. with the
Secretary of the State of Michigan.
<PAGE>

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).

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.

2
<PAGE>

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.

(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

3
<PAGE>

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.

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.

4
<PAGE>

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.

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.

5
<PAGE>

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 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.

6
<PAGE>

(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.

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.

7
<PAGE>

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.

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.

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

8
<PAGE>

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.

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

9
<PAGE>

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 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

10
<PAGE>

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.

ARTICLE VIII

Certificates of Stock
---------------------

SECTION 8.01. Form. Every holder of stock in the corporation
-----
shall be entitled 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 of the corporation.
The certificate may, but need not, be sealed with the seal of the
corporation, or a facsimile thereof.

SECTION 8.02. Facsimile Signatures. Where a certificate is
---------------------
countersigned by a transfer agent or an assistant transfer agent, or
registered by a registrar other than the corporation or its employee, the
signatures of the officers may be facsimile. In case any officer who has
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 by the corporation with the same effect as if he were such
officer at the date of issue.

11
<PAGE>

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.

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.

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

12
<PAGE>

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.

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

13
<PAGE>

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.

<PAGE>

EXHIBIT 10.5

Incentive Compensation Plan

Steelcase Inc.

December 2, 1997
<PAGE>

Contents

- --------------------------------------------------------------------------------
<S> <C>
Article 1. Establishment, Objectives, and Duration 1

Article 2. Definitions 1

Article 3. Administration 5

Article 4. Shares Subject to the Plan and Maximum Awards 5

Article 5. Eligibility and Participation 7

Article 6. Stock Options 7

Article 7. Stock Appreciation Rights 8

Article 8. Restricted Stock 9

Article 9. Performance Units, Performance Shares, and Cash-Based Awards 10

Article 10. Phantom Shares 11

Article 11. Other Share-Based Awards 11

Article 12. Performance Measures 11

Article 13. Beneficiary Designation 12

Article 14. Deferrals 12

Article 15. Rights of Employees/Directors 13

Article 16. Change in Control 13

Article 17. Amendment, Modification, and Termination 14

Article 18. Withholding 15

Article 19. Indemnification 15

Article 20. Successors 15

Article 21. Legal Construction 15
</TABLE>

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Steelcase Inc. Incentive Compensation Plan

Article 1. Establishment, Objectives, and Duration

1.1 Establishment of the Plan. Steelcase Inc., a Michigan corporation
(hereinafter referred to as the "Company"), hereby establishes an incentive
compensation plan to be known as the "Steelcase Inc. Incentive Compensation
Plan" (hereinafter referred to as the "Plan"), as set forth in this document.
The Plan permits the grant of Nonqualified Stock Options, Incentive Stock
Options, Stock Appreciation Rights, Restricted Stock, Performance Shares,
Performance Units, Cash-Based Awards, Phantom Shares and Share-Based Awards.

The Plan shall become effective on the date of approval by the Company's
shareholders (the "Effective Date") and shall remain in effect as provided in
Section 1.3 hereof.

1.2. Objectives of the Plan. The objectives of the Plan are to optimize the
profitability and growth of the Company through annual and long-term incentives
which are consistent with the Company's goals and which link the personal
interests of Participants to those of the Company's stockholders; to provide
Participants with an incentive for excellence in individual performance; and to
promote teamwork among Participants.

The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants who make
significant contributions to the Company's success and to allow Participants to
share in the success of the Company.

1.3. Duration of the Plan. The Plan shall commence on the Effective Date,
as described in Section 1.1 hereof, and shall remain in effect, subject to the
right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 17 hereof, until all Shares subject to it shall have been
purchased or acquired according to the Plan's provisions under Awards
denominated in Shares, and with respect to all Awards, in no event may an Award
be granted under the Plan on or after the tenth anniversary of the Effective
Date.

Article 2. Definitions

Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized:

2.1. "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations of the Exchange Act.

2.2. "Award" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock, Performance Shares, Performance Units, Cash-
Based Awards, Phantom Shares or Other Share-Based Awards.

2.3. "Award Agreement" means an agreement entered into by the Company and
each Participant setting forth the terms and provisions applicable to
Awards granted under this Plan.

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2.4. "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act.

2.5 "Board" or "Board of Directors" means the Board of Directors of the
Company.

2.6 "Cash-Based Award" means an Award granted to a Participant, as
described in Article 9 herein.

2.7. "Change in Control" of the Company shall be deemed to have occurred as
of the first day (the "Date of Determination") that any one or more of
the following conditions shall have been satisfied:

(a) Any Person (other than those Persons owning stock of the Company
as of the day before the IPO Date, or other than a trustee or
other fiduciary holding securities under an employee benefit plan
of the Company, or a corporation owned directly or indirectly by
the stockholders of the Company in substantially the same
proportions as their ownerships of stock of the Company): (i)
becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing thirty percent (30%) or
more of the combined voting power of the Company's then
outstanding securities; and (ii) such Person's ownership as of the
Date of Determination exceeds the combined voting power
beneficially owned as of the Date of Determination by the
stockholders who were also stockholders of the Company on the day
before the IPO Date; or

(b) During any period of two (2) consecutive years (not including any
period prior to the IPO Date), individuals who at the beginning of
such period constitute the Board (and any new Director, whose
election was approved by a vote of at least two-thirds (2/3) of
the Directors then still in office who either were Directors at
the beginning of the period or whose election or nomination for
election was so approved), cease for any reason to constitute a
majority thereof; or

(c) The stockholders of the Company approve: (i) a plan of complete
liquidation of the Company; or (ii) an agreement for the sale or
disposition of all or substantially all the Company's assets; or
(iii) a merger, consolidation, or reorganization of the Company
with or involving any other corporation, other than a merger,
consolidation, or reorganization that would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at
least sixty-five percent (65%) of the combined voting power of the
voting securities of the Company (or such surviving entity)
outstanding immediately after such merger, consolidation, or
reorganization.

However, in no event shall a "Change in Control" be deemed to have
occurred, with respect to a Participant, if the Participant is part of
a purchasing group which consummates the Change-in-Control transaction.
A Participant shall be deemed "part of a purchasing group" for purposes
of the preceding sentence if the Participant is an equity participant
in

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the purchasing company or group (except for: (i) passive ownership of
less than three percent (3%) of the stock of the purchasing company; or
(ii) ownership of equity participant in the purchasing company or group
which is otherwise not significant, as determined prior to the Change
in Control by a majority of the nonemployee continuing Directors).

2.8. "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

2.9. "Committee" means any committee appointed by the Board to administer
Awards to Employees, as specified in Article 3 herein. Any such
committee shall be comprised entirely of Directors who are considered
"outside directors" under Section 162(m) of the Code.

2.10. "Company" means Steelcase Inc., a Michigan corporation, including any
and all Subsidiaries and Affiliates, and any successor thereto as
provided in Article 20 herein.

2.11. "Covered Employee" means a Participant who, as of the date of vesting
and/or payout of an Award, as applicable, is one of the group of
"covered employees," as defined in the regulations promulgated under
Code Section 162(m), or any successor statute.

2.12. "Director" means any individual who is a member of the Board of
Directors of the Company or any Subsidiary or Affiliate; provided,
however, that any Director who is employed by the Company or any
Subsidiary or Affiliate shall be considered an Employee under the Plan
and shall not be considered a Director.

2.13. "Effective Date" shall have the meaning ascribed to such term in
Section 1.1 hereof.

2.14. "Employee" means any employee of the Company or its Subsidiaries or
Affiliates. Directors who are employed by the Company shall be
considered Employees under this Plan.

2.15. "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.

2.16. "Fair Market Value" shall be determined on the basis of the opening
sale price on the principal securities exchange on which the Shares are
traded or, if there is no such sale on the relevant date, then on the
last previous day on which a sale was reported; if the security is not
listed for trading on a national securities exchange, the fair market
value of a security as determined in good faith by the Board.

2.17. "Freestanding SAR" means an SAR that is granted independently of any
Options, as described in Article 7 herein.

2.18. "Incentive Stock Option" or "ISO" means an option to purchase Shares
granted under Article 6 herein and which is designated as an Incentive
Stock Option and which is intended to meet the requirements of Code
Section 422.

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<PAGE>

2.19. "Insider" shall mean an individual who is, on the relevant date, an
officer, director or more than ten percent (10%) beneficial owner of
any class of the Company's equity securities that is registered
pursuant to Section 12 of the Exchange Act, all as defined under
Section 16 of the Exchange Act.

2.20. "IPO Date" mean the first day on which Shares are publicly traded on
the New York Stock Exchange.

2.21. "Nonqualified Stock Option" or "NQSO" means an option to purchase
Shares granted under Article 6 herein and which is not intended to
meet the requirements of Code Section 422.

2.22. "Option" means an Incentive Stock Option or a Nonqualified Stock
Option, as described in Article 6 herein.

2.23. "Option Price" means the price at which a Share may be purchased by a
Participant pursuant to an Option.

2.24. "Participant" means an Employee, Director, or other individual
designated by the Board who has been selected to receive an Award or
who has an outstanding Award granted under the Plan.

2.25. "Performance-Based Exception" means the performance-based exception
from the tax deductibility limitations of Code Section 162(m).

2.26. "Performance Share" means an Award granted to a Participant, as
described in Article 9 herein.

2.27. "Performance Unit" means an Award granted to a Participant, as
described in Article 9 herein.

2.28. "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock is limited in some way (based on the
passage of time, the achievement of performance goals, or upon the
occurrence of other events as determined by the Board, at its
discretion), and the Shares are subject to a substantial risk of
forfeiture, as provided in Article 8 herein.

2.29. "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d) thereof.

2.30. "Phantom Shares" means an Award granted to a Participant pursuant to
Article 10 herein.

2.31. "Restricted Stock" means an Award granted to a Participant pursuant to
Article 8 herein.

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<PAGE>

2.32. "Share-Based Award" means an Award granted to a Participant pursuant
to Article 11 herein.

2.33. "Shares" means the shares of Class A Common Stock of the Company.

2.34. "Stock Appreciation Right" or "SAR" means an Award, granted alone or
in connection with a related Option, designated as an SAR, pursuant to
the terms of Article 7 herein.

2.35. "Subsidiary" means any corporation, partnership, joint venture, or
other entity in which the Company has a fifty percent (50%) or greater
voting interest.

2.36. "Tandem SAR" means an SAR that is granted in connection with a related
Option pursuant to Article 7 herein, the exercise of which shall
require forfeiture of the right to purchase a Share under the related
Option (and when a Share is purchased under the Option, the Tandem SAR
shall similarly be canceled).

Article 3. Administration

3.1. General. The Plan shall be administered by the Board, or (subject to
the following) by any Committee appointed by the Board. The members of the
Committee shall be appointed from time to time by, and shall serve at the
discretion of, the Board of Directors. The Board may delegate to the Committee
any or all of the administration of the Plan; provided, however, that the
administration of the Plan with respect to Awards granted to Directors may not
be so delegated. To the extent that the Board has delegated to the Committee
any authority and responsibility under the Plan, all applicable references to
the Board in the Plan shall be to the Committee. The Committee shall have the
authority to delegate administrative duties to employees, officers or Directors
of the Company.

3.2. Authority of the Board. Except as limited by law or by the Certificate
of Incorporation or Bylaws of the Company, and subject to the provisions herein,
the Board shall have full power to select Employees and Directors and other
individuals who shall participate in the Plan; determine the sizes and types of
Awards; determine the terms and conditions of Awards in a manner consistent with
the Plan; construe and interpret the Plan and any agreement or instrument
entered into under the Plan; establish, amend, or waive rules and regulations
for the Plan's administration; and (subject to the provisions of Article 17
herein) amend the terms and conditions of any outstanding Award as provided in
the Plan. Further, the Board shall make all other determinations which may be
necessary or advisable for the administration of the Plan. As permitted by law
(and subject to Section 3.1 herein), the Board may delegate its authority as
identified herein.

3.3. Decisions Binding. All determinations and decisions made by the Board
pursuant to the provisions of the Plan and all related orders and resolutions of
the Board shall be final, conclusive and binding on all persons, including the
Company, its stockholders, Directors, Employees, Participants, and their estates
and beneficiaries.

Article 4. Shares Subject to the Plan and Maximum Awards

4.1. Number of Shares Available for Grants. Subject to adjustment as
provided in Section 4.2 herein, the number of Shares hereby reserved for
issuance to Participants under the Plan shall be one hundred fifty thousand
(150,000) Shares for a special one-time grant of Shares to

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<PAGE>

Participants on the IPO Date, plus four percent (4%) of the total outstanding
shares of Company common stock as of the IPO Date; no more than two million
(2,000,000) of which may be granted in the form of Restricted Shares. Shares
available under the Plan shall be now or hereafter issued or authorized but
unissued. The Board shall determine the appropriate methodology for calculating
the number of shares issued pursuant to the Plan. Unless and until the Board
determines that an Award to a Covered Employee shall not be designed to comply
with the Performance-Based Exception, the following rules shall apply to grants
of such Awards under the Plan:

(a) Stock Options: The maximum aggregate number of Shares that may be
granted in the form of Stock Options, pursuant to any Award
granted in any one fiscal year to any one single Participant shall
be five hundred thousand (500,000).

(b) SARs: The maximum aggregate number of Shares that may be granted
in the form of Stock Appreciation Rights, pursuant to any Award
granted in any one fiscal year to any one single Participant shall
be five hundred thousand (500,000).

(c) Restricted Stock: The maximum aggregate grant with respect to
Awards of Restricted Stock granted in any one fiscal year to any
one Participant shall be two hundred thousand (200,000).

(d) Performance Shares/Performance Units and Cash-Based Awards: The
maximum aggregate payout (determined as of the end of the
applicable performance period) with respect to Cash-Based Awards
or Awards of Performance Shares or Performance Units granted in
any one fiscal year to any one Participant shall be equal to the
value of two hundred fifty thousand (250,000) Shares.

(e) Phantom Shares: The maximum aggregate payout (determine at the end
of the applicable Performance Period) with respect to Phantom
Shares granted in any one fiscal year to any one Participant shall
be equal to the value of two hundred fifty thousand (250,000)
Shares.

(f) Other Share-Based Awards: The maximum aggregate number of Shares
that may be granted in the form of Other Share-Based Awards,
pursuant to any Award granted in any one fiscal year to an one
single Participant shall be two hundred thousand (200,000).

4.2. Adjustments in Authorized Shares. In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Code Section
368) or any partial or complete liquidation of the Company, such adjustment
shall be made in the number and class of Shares which may be delivered under
Section 4.1, in the number and class of and/or price of Shares subject to
outstanding Awards granted under the Plan, and in the Award limits set forth in
Section 4.1 as may be determined to be appropriate and equitable by the Board,
in its sole discretion, to prevent dilution or enlargement of rights; provided,
however, that the number of Shares subject to any Award shall always be a whole
number.

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<PAGE>

Article 5. Eligibility and Participation

5.1. Eligibility. Persons eligible to participate in this Plan include all
Employees, Directors, and other individuals designated by the Board.

5.2. Actual Participation. Subject to the provisions of the Plan, the Board
may, from time to time, select from all eligible Employees, Directors, and other
individuals designated by the Board, those to whom Awards shall be granted and
shall determine the nature and amount of each Award.

Article 6. Stock Options

6.1. Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Participants in such number, and upon such terms, and
at any time and from time to time as shall be determined by the Board, provided,
however, that no Director shall be granted any ISO.

6.2. Award Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, termination and transferability
rights, and such other provisions as the Board shall determine. The Award
Agreement also shall specify whether the Option is intended to be an ISO within
the meaning of Code Section 422, or an NQSO whose grant is intended not to fall
under the provisions of Code Section 422.

6.3. Option Price. The Option Price for each grant of an Option under this
Plan shall be at least equal to one hundred percent (100%) of the Fair Market
Value of a Share on the date the Option is granted.

6.4. Duration of Options. Each Option granted to a Participant shall expire
at such time as the Board shall determine at the time of grant; provided,
however, that no Option shall be exercisable later than the tenth (10th)
anniversary date of its grant.

6.5. Exercise of Options. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Board shall in each instance approve, which need not be the same for each
grant or for each Participant.

6.6. Payment. Options granted under this Article 6 shall be exercised by
the delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.

The Option Price upon exercise of any Option shall be payable to the Company
in full either: (a) in cash or its equivalent, or (b) by tendering previously
acquired Shares having an aggregate Fair Market Value at the time of exercise
equal to the total Option Price (provided that the Shares which are tendered
must have been held by the Participant for at least six (6) months prior to
their tender to satisfy the Option Price), or (c) by a combination of (a) and
(b).

The Board also may allow cashless exercise as permitted under Federal Reserve
Board's Regulation T, subject to applicable securities law restrictions, or by
any other means which the Board determines to be consistent with the Plan's
purpose and applicable law.

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<PAGE>

Subject to any governing rules or regulations, as soon as practicable after
receipt of a written notification of exercise and full payment, the Company
shall deliver to the Participant, in the Participant's name, Share certificates
in an appropriate amount based upon the number of Shares purchased under the
Option(s).

6.7. Restrictions on Share Transferability. The Board may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares.

Article 7. Stock Appreciation Rights

7.1. Grant of SARs. Subject to the terms and conditions of the Plan, SARs
may be granted to Participants at any time and from time to time as shall be
determined by the Board. The Board may grant Freestanding SARs, Tandem SARs, or
any combination of these forms of SAR.

The Board shall have complete discretion in determining the number of SARs
granted to each Participant (subject to Article 4 herein) and, consistent with
the provisions of the Plan, in determining the terms and conditions pertaining
to such SARs.

The grant price of a Freestanding SAR shall equal the Fair Market Value of a
Share on the date of grant of the SAR. The grant price of Tandem SARs shall
equal the Option Price of the related Option.

7.2. Exercise of Tandem SARs. Tandem SARs may be exercised for all or part
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.

Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than one hundred
percent (100%) of the difference between the Option Price of the underlying ISO
and the Fair Market Value of the Shares subject to the underlying ISO at the
time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only
when the Fair Market Value of the Shares subject to the ISO exceeds the Option
Price of the ISO.

7.3. Exercise of Freestanding SARs. Freestanding SARs may be exercised upon
whatever terms and conditions the Board, in its sole discretion, imposes upon
them.

7.4. SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement
that shall specify the grant price, the term of the SAR, and such other
provisions as the Board shall determine.

7.5. Term of SARs. The term of an SAR granted under the Plan shall be
determined by the Board, in its sole discretion; provided, however, that such
term shall not exceed ten (10) years.

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<PAGE>

7.6. Payment of SAR Amount. Upon exercise of an SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:

(a) The difference between the Fair Market Value of a Share on the
date of exercise over the grant price; by

(b) The number of Shares with respect to which the SAR is exercised.

At the discretion of the Board, the payment upon SAR exercise may be in cash,
in Shares of equivalent value, or in some combination thereof. The Board's
determination regarding the form of SAR payout shall be set forth in the Award
Agreement pertaining to the grant of the SAR.

Article 8. Restricted Stock

8.1. Grant of Restricted Stock. Subject to the terms and provisions of the
Plan, the Board, at any time and from time to time, may grant Shares of
Restricted Stock to Participants in such amounts as the Board shall determine.

8.2. Restricted Stock Agreement. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Award Agreement that shall specify the Period(s)
of Restriction, the number of Shares of Restricted Stock granted, and such other
provisions as the Board shall determine.

8.3. Other Restrictions. Subject to Article 12 herein, the Board shall
impose such other conditions and/or restrictions on any Shares of Restricted
Stock granted pursuant to the Plan as it may deem advisable including, without
limitation, a requirement that Participants pay a stipulated purchase price for
each Share of Restricted Stock, restrictions based upon the achievement of
specific performance goals (Company-wide, divisional, and/or individual), time-
based restrictions on vesting following the attainment of the performance goals,
and/or restrictions under applicable federal or state securities laws.

The Company may retain the certificates representing Shares of Restricted
Stock in the Company's possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied.

Except as otherwise provided in this Article 8, Shares of Restricted Stock
covered by each Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after the last day of the applicable Period of
Restriction.

8.4. Voting Rights. Participants holding Shares of Restricted Stock granted
hereunder may be granted the right to exercise full voting rights with respect
to those Shares during the Period of Restriction.

8.5. Dividends and Other Distributions. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder may be
credited with regular cash dividends paid with respect to the Shares while they
are so held. The Board may apply any restrictions to the dividends that the
Board deems appropriate. Without limiting the generality of the preceding
sentence, if the grant or vesting of Restricted Shares granted to a Covered
Employee is designed to comply with

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<PAGE>

the requirements of the Performance-Based Exception, the Board may apply any
restrictions it deems appropriate to the payment of dividends declared with
respect to such Restricted Shares, including, without limitation, that the
dividends and/or the Restricted Shares maintain eligibility for the Performance-
Based Exception.

Article 9. Performance Units, Performance Shares, and Cash-Based Awards

9.1. Grant of Performance Units/Shares and Cash-Based Awards. Subject to
the terms of the Plan, Performance Units, Performance Shares, and/or Cash-Based
Awards may be granted to Participants in such amounts and upon such terms, and
at any time and from time to time, as shall be determined by the Board.

9.2. Value of Performance Units/Shares and Cash-Based Awards. Each
Performance Unit shall have an initial value that is established by the Board at
the time of grant. Each Performance Share shall have an initial value equal to
the Fair Market Value of a Share on the date of grant. Each Cash-Based Award
shall have a value as may be determined by the Board. The Board shall set
performance goals in its discretion which, depending on the extent to which they
are met, will determine the number and/or value of Performance Units/Shares and
Cash-Based Award that will be paid out to the Participant. For purposes of this
Article 9, the time period during which the performance goals must be met shall
be called a "Performance Period."

9.3. Earning of Performance Units/Shares and Cash-Based Awards. Subject to
the terms of this Plan, after the applicable Performance Period has ended, the
holder of Performance Units/Shares and Cash-Based Awards shall be entitled to
receive payout on the number and value of Performance Units/Shares and of Cash-
Based Awards earned by the Participant over the Performance Period, to be
determined as a function of the extent to which the corresponding performance
goals have been achieved.

9.4. Form and Timing of Payment of Performance Units/Shares and
Cash-Based Awards. Payment of earned Performance Units/Shares and Cash-Based
Awards shall be made in lump-sum payments at such time or times designated by
the Board following the close of the applicable Performance Period. Subject to
the terms of this Plan, the Board, in its sole discretion, may pay earned
Performance Units/Shares and Cash-Based Awards in the form of cash or in Shares
(or in a combination thereof) which have an aggregate Fair Market Value equal to
the value of the earned Performance Units/Shares and Cash-Based Awards at the
close of the applicable Performance Period plus or minus any investment return
from the close of the Performance Period to the date of payment as determined by
the Board in its discretion. Such Shares may be granted subject to any
restrictions deemed appropriate by the Board. The determination of the Board
with respect to the form and timing of payout of such Awards shall be set forth
in the Award Agreement pertaining to the grant of the Award.

At the discretion of the Board, Participants may be entitled to receive any
dividends declared with respect to Shares which have been earned in connection
with grants of Performance Units and/or Performance Shares which have been
earned, but not yet distributed to Participants (such dividends shall be subject
to the same accrual, forfeiture, and payout restrictions as apply to dividends
earned with respect to Shares of Restricted Stock, as set forth in Section 8.5
herein). In addition, Participants

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<PAGE>

may, at the discretion of the Board, be entitled to exercise their voting rights
with respect to such Shares.

Article 10. Phantom Shares

10.1 Grant of Phantom Shares. Subject to the terms of the Plan, Phantom
Shares may be granted to Participants in such amounts and upon such terms, and
at any time and from time to time, as shall be determined by the Board.

10.2 Value of Phantom Shares. Each Phantom Share shall have an initial
value equal to the Fair Market Value of a Share on the date of grant. The Board
shall establish the terms and conditions of such Award, including any vesting
provisions.

10.3 Earning of Phantom Shares. Subject to the terms of this Plan, the
holder of any vested Phantom Shares shall be entitled to receive payout on the
number and value of Phantom Shares earned by the Participant over the
Performance Period, to be determined by the extent to which the corresponding
performance goals have been achieved.

10.4 Form and Timing of Payment of Performance Units/Shares. Payment of
earned Phantom Shares shall be made in a single lump sum at such time as
designated by the Board. Subject to the terms of this Plan, the Board, in its
sole discretion, may pay earned Phantom Shares in the form of cash or in Shares
(or in a combination thereof) which have an aggregate Fair Market Value equal to
the value of the earned Phantom Shares at such time as designated by the Board.
Such Shares may be granted subject to any restrictions deemed appropriate by the
Board. The determination of the Board with respect to the form of payout of
such Awards shall be set forth in the Award Agreement pertaining to the grant of
the Award.

At the discretion of the Board, Participants may be entitled to receive any
dividends declared with respect to Shares which have been earned in connection
with grants of Phantom Shares which have been earned, but not yet distributed to
Participants (such dividends shall be subject to the same accrual, forfeiture,
and payout restrictions as apply to dividends earned with respect to Shares of
Restricted Stock, as set forth in Section 8.5 herein).

Article 11. Other Share-Based Awards

Subject to the terms of the Plan, the Board may grant other Share-Based
Awards under this Plan, including without limitation, those Awards pursuant to
which Shares are acquired or may in the future be acquired. The Board, in its
sole discretion, shall determine the terms and conditions of such other Share-
Based Awards.

Article 12. Performance Measures

Unless and until the Board proposes for shareholder vote and shareholders
approve a change in the general performance measures set forth in this Article
12, the attainment of which may determine the degree of payout and/or vesting
with respect to Awards to Covered Employees which are designed to qualify for
the Performance-Based Exception, the performance measure(s) to be used for
purposes of such grants shall be chosen from among:

11
<PAGE>

(a) Earnings per share;

(b) Net income (before or after taxes);

(d) Cash flow return on investments which equals net cash flows divided by
owners equity;

(e) Earnings before or after taxes;

(f) Gross revenues;

(g) Share price (including, but no limited to, growth measures and total
shareholder return); and

(h) Economic value added.

The Board shall have the discretion to adjust the determinations of the
degree of attainment of the preestablished performance goals; provided, however,
that Awards which are designed to qualify for the Performance-Based Exception,
and which are held by Covered Employee, may not be adjusted upward (the Board
shall retain the discretion to adjust such Awards downward).

In the event that applicable tax and/or securities laws change to permit
Board discretion to alter the governing performance measures without obtaining
shareholder approval of such changes, the Board shall have sole discretion to
make such changes without obtaining shareholder approval. In addition, in the
event that the Board determines that it is advisable to grant Awards which shall
not qualify for the Performance-Based Exception, the Board may make such grants
without satisfying the requirements of Code Section 162(m).

Article 13. Beneficiary Designation

Each Participant under the Plan may, from time to time, name any beneficiary
or beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or
she receives any or all of such benefit. Each such designation shall revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Company, and will be effective only when filed by the Participant in writing
with the Company during the Participant's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate.

Article 14. Deferrals

The Board may permit or require a Participant to defer such Participant's
receipt of the payment of cash or the delivery of Shares that would otherwise be
due to such Participant by virtue of the exercise of an Option or SAR, the lapse
or waiver of restrictions with respect to Restricted Stock, or the satisfaction
of any requirements or goals with respect to Performance Units/Shares. If any
such

12
<PAGE>

deferral election is required or permitted, the Board shall, in its sole
discretion, establish rules and procedures for such payment deferrals.

Article 15. Rights of Employees/Directors

15.1. Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of the
Company.

15.2. Participation. No Employee or Director shall have the right to be
selected to receive an Award under this Plan, or, having been so selected, to be
selected to receive a future Award.

15.3 Termination of Employment/Directorship/Relationship. Each
Participant's Award Agreement shall set forth the extent to which the
Participant shall have the right to exercise and/or receive payment for any
Award following termination of the Participant's employment or directorship
with the Company, or termination of relationship with the Company. Such
provisions shall be determined in the sole discretion of the Board, shall be
included in the Award Agreement entered into with each Participant, need not be
uniform among Awards and may reflect distinctions based on the reasons for
termination.

15.4 Nontransferability. Except as otherwise provided in a Participant's
Award Agreement, Awards may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by the laws of decent
and distribution. Further, except as otherwise provided in a Participant's
Award Agreement, a Participant's rights under the Plan shall be exercisable
during the Participant's lifetime only by the Participant or the Participant's
legal representative.

Article 16. Change in Control

16.1. Treatment of Outstanding Awards. Upon the occurrence of a Change in
Control, unless otherwise specifically prohibited under applicable laws, or by
the rules and regulations of any governing governmental agencies or national
securities exchanges:

(a) Any and all Options and SARs granted hereunder shall become
immediately exercisable, and shall remain exercisable throughout
their entire term;

(b) Any restriction periods and restrictions imposed on Restricted
Shares which are not performance-based shall lapse;

(c) The target payout opportunities attainable under all outstanding
Awards of performance-based Restricted Stock, Performance Units,
Performance Shares, and Cash-Based Awards and Share-Based Awards
shall be deemed to have been fully earned for the entire Performance
Period(s) as of the effective date of the Change in Control. The
vesting of all Awards denominated in Shares shall be accelerated as
of the effective date of the Change in Control, and there shall be
paid out to Participants within thirty (30) days following the
effective date of the Change in Control a pro rata number of shares
based upon an assumed achievement of all relevant targeted
performance goals and upon the length of time within the Performance
Period which has elapsed prior to the Change in Control. Awards

13
<PAGE>

denominated in cash shall be paid pro rata to participants in cash
within thirty (30) days following the effective date of the Change
in Control, with the proration determined as a function of the
length of time within the Performance Period which has elapsed prior
to the Change in Control, and based on an assumed achievement of all
relevant targeted performance goals.

16.2. Termination, Amendment, and Modifications of Change-in-Control
Provisions. Notwithstanding any other provision of this Plan (but subject to
the limitations of Section 17.3 hereof) or any Award Agreement provision, the
provisions of this Article 16 may not be terminated, amended, or modified on or
after the date of a Change in Control to affect adversely any Award theretofore
granted under the Plan without the prior written consent of the Participant with
respect to said Participant's outstanding Awards; provided, however, the Board
may terminate, amend, or modify this Article 16 at any time and from time to
time prior to the date of a Change in Control.

16.3. Pooling of Interests Accounting. Notwithstanding any other provision
of the Plan to the contrary, in the event that the consummation of a Change in
Control is contingent on using pooling of interests accounting methodology, the
Board may take any action necessary to preserve the use of pooling of interests
accounting.

Article 17. Amendment, Modification, and Termination

17.1. Amendment, Modification, and Termination. Subject to Section 17.3 and
17.4, the Board may at any time and from time to time, alter, amend, suspend or
terminate the Plan in whole or in part, provided that no amendment shall be made
without shareholder approval if such approval is necessary to comply with any
applicable tax or regulatory requirements. Prior to such approval, Awards may
be made under the Plan expressly subject to such approval.

17.2. Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Board may make adjustments in the terms and conditions
of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in
Section 4.2 hereof) affecting the Company or the financial statements of the
Company or of changes in applicable laws, regulations, or accounting principles,
whenever the Board determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan; provided that no such adjustment shall be
authorized to the extent that such authority would be inconsistent with the
Plan's meeting the requirements of Section 162(m) of the Code.

17.3. Awards Previously Granted. Notwithstanding any other provision of the
Plan to the contrary (but subject to Sections 4.2 and 16.3 hereof), no
termination, amendment, or modification of the Plan shall adversely affect in
any material way any Award previously granted under the Plan, without the
written consent of the Participant holding such Award.

17.4. Compliance with Code Section 162(m). At all times when Code Section
162(m) is applicable, all Awards granted under this Plan shall comply with the
requirements of Code Section 162(m); provided, however, that in the event the
Board determines that such compliance is not desired with respect to any Award
or Awards available for grant under the Plan, then compliance with Code Section
162(m) will not be required. In addition, in the event that changes are made to
Code

14
<PAGE>

Section 162(m) to permit greater flexibility with respect to any Award or Awards
available under the Plan, the Board may, subject to this Article 17, make any
adjustments it deems appropriate.

Article 18. Withholding

18.1. Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of this Plan.

18.2. Share Withholding. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock,
or upon any other taxable event arising as a result of Awards granted hereunder,
Participants may elect, subject to the approval of the Board, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax which could be imposed on the transaction.
All such elections shall be irrevocable, made in writing, signed by the
Participant, and shall be subject to any restrictions or limitations that the
Board, in its sole discretion, deems appropriate.

Article 19. Indemnification

Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgment in any such action, suit, or proceeding against him or her, provided he
or she shall give the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not be exclusive
of any other rights of indemnification to which such persons may be entitled
under the Company's Articles of Incorporation of Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

Article 20. Successors

All obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.

Article 21. Legal Construction

21.1. Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

15
<PAGE>

21.2. Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

21.3. Requirements of Law. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

21.4. Securities Law Compliance. With respect to Insiders, transactions
under this Plan are intended to comply with all applicable conditions or Rule
16b3 or its successors under the 1934 Act. To the extent any provision of the
plan or action by the Board fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Board.

21.5. Governing Law. To the extent not preempted by federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the state of Michigan.

<PAGE>

EXHIBIT 11.1

STEELCASE INC.

STATEMENT REGARDING COMPUTATION OF NET INCOME PER SHARE OF COMMON STOCK
(IN MILLIONS, EXCEPT SHARE DATA)

<PAGE>

EXHIBIT 21.1

SUBSIDIARIES OF THE REGISTRANT

1. Anderson Desk Inc., a California corporation

2. Attwood Corporation, a Michigan corporation

3. Brayton International Inc., a North Carolina corporation

4. DesignTex Fabrics, Inc., a New York corporation

5. Metropolitan Furniture Corporation, a California corporation

6. Office Details Inc., a Michigan corporation (d/b/a Details)

7. Revest Inc., a Texas corporation

8. Steelcase Canada Ltd., a Canadian corporation

9. Steelcase Financial Services Inc., a Michigan corporation

10. Wigand Corporation, a Colorado corporation

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Steelcase Inc.
Grand Rapids, Michigan

We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement on Form S-1 of Steelcase Inc. of our report dated March
21, 1997 relating to the consolidated financial statements of Steelcase Inc.
which is contained in that Prospectus, and of our report dated March 21, 1997
relating to the financial statement schedule which is contained in Part II of
the Registration Statement. We also consent to the references to us under the
captions "Selected Financial Data" and "Experts" in the Prospectus.

/s/ BDO Seidman, LLP
By___________________________________
BDO SEIDMAN, LLP

Grand Rapids, Michigan
December 5, 1997

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STEELCASE
INC.'S FINANCIAL STATEMENTS FOR THE YEAR ENDED FEBRUARY 23, 1996, FEBRUARY 28,
1997 AND THE SIX MONTHS ENDED AUGUST 29, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000

<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR 6-MOS
<FISCAL-YEAR-END> FEB-23-1996 FEB-28-1997 FEB-27-1998
<PERIOD-START> MAR-01-1995 FEB-24-1996 MAR-01-1997
<PERIOD-END> FEB-23-1996 FEB-28-1997 AUG-29-1997
<CASH> 209 174 273
<SECURITIES> 15 14 29
<RECEIVABLES> 389 473 514
<ALLOWANCES> 20 20 25
<INVENTORY> 139 108 105
<CURRENT-ASSETS> 791 825 953
<PP&E> 1,685 1,747 1,782
<DEPRECIATION> 1,061 1,102 1,134
<TOTAL-ASSETS> 1,885 1,922 2,065
<CURRENT-LIABILITIES> 316 350 419
<BONDS> 0 0 0
0 0 0
11 11 11
<COMMON> 10 10 10
<OTHER-SE> 1,373 1,359 1,429
<TOTAL-LIABILITY-AND-EQUITY> 1,885 1,922 2,065
<SALES> 2,156 2,408 1,359
<TOTAL-REVENUES> 2,156 2,408 1,359
<CGS> 1,468 1,552 857
<TOTAL-COSTS> 1,468 1,552 857
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 11 13 3
<INTEREST-EXPENSE> 2 114 1
<INCOME-PRETAX> 188 51 186
<INCOME-TAX> 68 24 72
<INCOME-CONTINUING> 124 28 114
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 124 28 114
<EPS-PRIMARY> 517 40 516
<EPS-DILUTED> 517 40 516

</TABLE>