Note 11

EMPLOYEE BENEFIT PLAN OBLIGATIONS

Employee benefit plan obligations consist of:

Profit-Sharing Plans

Substantially all North American employees are covered under the Steelcase Inc. Employees’ Profit-Sharing Retirement Plan and the Steelcase Inc. Employees’ Money Purchase Plan or under similar subsidiary plans. Annual Company contributions under the Steelcase Inc. Employees’ Profit-Sharing Retirement Plan and similar subsidiary plans are discretionary and declared by the Compensation Committee 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 $65.9 million, $70.1 million and $79.4 million for 2000, 1999 and 1998, respectively.

Management Incentive and Deferred Compensation Plans

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

Annual bonuses are payable after the end of the fiscal year and therefore, are included in accrued compensation in the accompanying consolidated balance sheets. 75% of the long-term bonus amounts are paid out over a subsequent three-year period and 25% are paid in Company stock options, which vest over 3 years. 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 primarily been invested in corporate-owned life insurance, which is expected to be sufficient to cover such future obligations.

Management incentive and deferred compensation expense approximated $23.9 million, $28.9 million and $21.2 million for 2000, 1999 and 1998, respectively.

Pension and Postretirement Benefits

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

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

The following sets forth the disclosure requirements of SFAS No. 132:

(in millions)
	Pension Plans		Postretirement Plans
	Feb 25, 2000	Feb 26, 1999	Feb 25, 2000	Feb 26, 1999
CHANGE IN BENEFIT OBLIGATIONS:
Benefit obligations at beginning of year	$ 38.0)	$ 20.9)	$ 192.2)	$ 180.2)
Service cost	3.6)	2.0)	5.7)	5.5)
Interest cost	4.6)	2.5)	13.2)	12.5)
Amendments	(1.3)	14.3)	(6.0)	1.9)
Net actuarial (gain) loss for prior year	(2.7)	0.6)	7.9)	—
Plan participant's contributions	0.2)	—	2.5)	2.1)
Acquisitions (see Note 19)	33.5)	—	—	—
Currency changes	0.4)	—	—	—
Benefits paid	(4.5)	(2.3)	(10.2)	(10.0)
Benefit obligations, end of year	71.8)	38.0)	205.3)	192.2)
CHANGE IN PLAN ASSETS:
Fair value of plan assets, beginning of year	14.8)	3.8)	—	—
Actual return on plan assets	1.2)	0.5)	—	—
Employer contributions	2.5)	4.2)	7.6)	7.9)
Plan participant's contributions	1.0)	0.3)	2.4)	2.1)
Acquisitions (see Note 19)	21.1)	—	—	—
Currency changes	1.3)	—	—	—
Benefits paid	(4.1)	(2.3)	(10.0)	(10.0)
Other	—	8.3)	—	—
Fair value of plan assets, end of year	37.8)	14.8)	—	—
Funded status	(34.0)	(23.2)	(205.3)	(192.2)
Unrecognized prior service cost	2.6)	—	—	10.1)
Unrecognized transition obligation	0.2)	4.0)	1.6)	—
Unrecognized net actuarial loss	0.7)	1.5)	27.8)	20.4)
Net amount recognized	$ (30.5)	$ (17.7)	$ (175.9)	$ (161.7)
AMOUNTS RECOGNIZED IN THE CONSOLIDATED BALANCE SHEETS:
Accrued benefit plan obligations	$ (31.6)	$ (18.4)	$ (175.9)	$ (161.7)
Prepaid pension costs	0.9)	0.2)	—	—
Intangible assets	0.2)	—	—	—
Accumulated other comprehensive income	—	0.5)	—	—
Net amount recognized	$ (30.5)	$ (17.7)	$ (175.9)	$ (161.7)

(in millions)
	Pension Plans			Postretirement Plans
Year ended	Feb 25, 2000	Feb 26, 1999	Feb 27,  1998	Feb 25, 2000	Feb 26,  1999	Feb 27,  1998
COMPONENTS OF EXPENSE:
Service cost	$ 3.6)	$ 2.0)	$ 0.9)	$ 5.7)	$ 5.5)	$ 3.8)
Interest cost	4.6)	2.5)	1.4)	13.2)	12.5)	11.8)
Amortization of prior year service cost	—	—	—	0.6)	0.8)	0.3)
Expected return on plan assets	(2.5)	(0.9)	(0.3)	—	—	—
Amortization of transition obligation	0.3)	0.3)	—	0.5)	—	—
Recognized net actuarial (gain) loss	0.1)	(0.2)	—	0.2)	0.2)	—
Net expense	$ 6.1)	$ 3.7)	$ 2.0)	$ 20.2)	$ 19.0)	$ 15.9)
WEIGHTED-AVERAGE ASSUMPTIONS:
Discount rage	7.00%	7.00%	7.00%	8.00%	7.00%	7.00%
Expected return on plan assets	5.00%	7.50%	8.00%	—	—	—
Rate of salary progression	5.25%	4.50%	4.50%	4.50%	4.50%	4.50%

The assumed health care cost trend was 7.5% for 2000, gradually declining to 5.0% in 2005 and thereafter. A one percentage point change in assumed health care cost trend rates would have the following effects:

(in millions)
	One percentage point increase	One Percentage point decrease
Effect on total of service    and interest cost components	$   2.1	$   (1.9)
Effect on post retirement    benefit obligation	$ 19.3	$ (17.5)