OVERVIEW

The Company recorded net sales of $3,316.1 million for fiscal 2000 (“2000”) an increase of 20.9% over fiscal 1999 (“1999”) net sales of $2,742.5 million, primarily attributable to the acquisition of Steelcase Strafor S.A. and subsidiaries (“Steelcase Strafor”) and other domestic acquisitions. The Company consolidated the results of Steelcase Strafor for the final three quarters of 2000 after completing the acquisition of the remaining 50% equity interest in Steelcase Strafor on April 22, 1999. The acquisition was effective as of March 31, 1999 and has been accounted for under the purchase method of accounting in the accompanying consolidated financial statements as of February 25, 2000. The Company accounts for the results of operations of Steelcase Strafor on a two month lag. Excluding the impact of all acquisitions, the Company recorded net sales of $2,739.5 million for 2000, a decrease of 0.1% over 1999 net sales.

The Company recorded consolidated net income for 2000 of $184.2 million, or $1.21 per share (basic and diluted), which included a $15.0 million after-tax charge for material and installation costs associated with Pathways product line improvements. The earnings for 2000 decreased 16.8% from the $221.4 million, or $1.44 per share (basic and diluted), earned in 1999. In addition to the Pathways charge discussed above, the decrease in profitability was attributable to several factors which occurred during 2000 including:

• An unfavorable industry-pricing environment.
• The impact of new products – which typically have lower initial margins – in the sales mix.
• Major new product introduction and ramp up costs.
• The expected dilutive effect of the acquisition of Steelcase Strafor (approximately $.04 per share) due to the amortization of intangibles that resulted from the acquisition, as well as financing and interest costs arising from credit facilities used to fund the acquisition.