SECURITIES AND EXCHANGE
COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark
one)

(X)   ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(D) OF EXCHANGE ACT OF 1934         For the fiscal year ended December 31,
2003 or

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

For
the transition period from____________________to__________________

Commission
file number I-91

Furniture Brands
International, Inc.  (Exact Name of registrant as specified in its charter)

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|Delaware                                           |  | 43-0337683         
|(State or other jurisdiction of                    |  | (I.R.S. Employer   
|incorporation or organization)                     |  | Identification No.)
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|101 South Hanley Road, St. Louis, Missouri         |  | 63105              
|(Address of principal executive offices)           |  | (Zip Code)         
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|Registrants telephone number, including area code |  | (314) 863-1100     

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

|                                     |  | Name of each exchange on
|------------------------------------ |  | ------------------------
|Title of each class                  |  | which registered        
|Common Stock - $1.00 Stated Value    |  | New York Stock Exchange 
|with Preferred Stock Purchase Rights | 

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

None(Title of Class)

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

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

Indicate
by check mark whether the registrant is an accelerated  filer (as defined in Exchange Act
Rule 12b-2).    Yes X     No

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The
aggregate market value of the voting stock held by  non-affiliates of the registrant as
of June 30, 2003, was approximately $1,447,932,839.

Indicate
the number of shares  outstanding of each of the  registrants  classes of common stock,
as of the latest practicable date.

56,442,316 shares as of
February 29, 2004

DOCUMENTS INCORPORATED
BY REFERENCE

Portions of Definitive Proxy
Statement for Annual Meeting             of Stockholders on April 29,
2004.......................................................   Part III

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PART I

Item 1.     Business

(a)    General Development of Business

On April 16,  2003,  the Company
 announced  the  appointment  of Thomas G. Tilley,  Jr. as President  and Chief Executive
Officer of Thomasville Furniture Industries, Inc., a subsidiary of the Company.

On September 19, 2003, the Company
 announced that the Company and Haverty Furniture  Companies,  Inc. would end their
strategic alliance relationship, formed in February 1998, as of December 31, 2003.

On October  31,  2003,  the  Company
 announced  that  Highland  House,  a  division  of  Thomasville  Furniture Industries,
Inc., would cease operations at the end of 2003.

On November 4, 2003, the Company
 announced  that it would  strongly  oppose the efforts of a group of furniture
manufacturers to have tariffs imposed on residential bedroom furniture imported from
China.

On February 10, 2004, the Company
 announced the election of John T. (Tom) Foy as President and Chief  Operating Officer of
the Company.

On February 13, 2004,  the Company
 announced the  appointment of Randall C. (Randy) Spak as President and Chief Executive
Officer of Lane Furniture Industries, Inc., a subsidiary of the Company.

(c)    Narrative Description of Business

The  Company,  one of the largest
 manufacturers  of  residential  furniture in the United  States,  markets its products
 through  its  four  operating  subsidiaries:  Broyhill  Furniture  Industries,  Inc.;
 Lane  Furniture Industries, Inc.; Thomasville Furniture Industries, Inc., and HDM
Furniture Industries, Inc.

PRODUCTS

The Company  manufactures  and
 distributes (i) case goods,  consisting of bedroom,  dining room and living room
furniture,  (ii) stationary upholstery products,  consisting of sofas,  loveseats,
 sectionals and chairs, (iii) occasional  furniture,  consisting of wood, metal and glass
tables,  accent pieces,  home entertainment  centers and home  office  furniture,  (iv)
 recliners,  motion  furniture  and sleep  sofas,  and (v)  accessories.  The Companys
brand name positioning by price and product category is shown below.

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|            |                 |                 |                 |             |               
|----------- | --------------- | --------------- | --------------- | ----------- | --------------
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|            |                 |                 | UPHOLSTERY      |             |               
|PRICE       |                 |                 |                 | RECLINER/   |               
|CATEGORY    | CASE GOODS      | OCCASIONAL      | STATIONARY      | MOTION      | ACCESSORIES   
|            |                 |                 |                 |             |               
|PREMIUM     | Henredon        | Henredon        | Henredon        |             | Maitland-Smith
|            | Drexel Heritage | Drexel Heritage | Drexel Heritage |             |               
|            | Maitland-Smith  | Maitland-Smith  | Maitland-Smith  |             |               
|            | Hickory Chair   | Hickory Chair   | Hickory Chair   |             |               
|            |                 |                 | Pearson         |             |               
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|BEST        | Thomasville     | Thomasville     | Thomasville     | Thomasville |               
|            | Drexel Heritage | Drexel Heritage | Drexel Heritage |             |               
|            | Broyhill        | Broyhill        | HBF             |             |               
|            | HBF             |                 | Broyhill        |             |               
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|BETTER      | Drexel Heritage | Drexel Heritage | Drexel Heritage | Lane        |               
|            | Lane            | Lane            | Lane            | Broyhill    |               
|            | Broyhill        | Broyhill        | Broyhill        |             |               
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|GOOD        | Broyhill        | Broyhill        | Broyhill        | Lane        |               
|            |                 |                 |                 | Broyhill    |               
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|PROMOTIONAL | Founders        |                 |                 |             |               
|            | Vignettes       |                 |                 |             |               
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|RTA         | Creative        |                 |                 |             |               
|            | Interiors       |                 |                 |             |               

BROYHILL FURNITURE INDUSTRIES

Broyhill  produces  collections  of
 medium-priced  bedroom,  dining  room and living  area  furniture  aimed at
middle-income  consumers.  Broyhills wood furniture  offerings consist of bedroom,
 dining room and living room furniture,   occasional  tables,  accent  items,
 free-standing  home  entertainment  centers  and  home  office furniture.   Upholstered
 products  include  sofas,  sleep  sofas,  loveseats,  sectionals,  chairs,  and  fully
reclining  furniture  all  offered  in a variety of  fabrics  and  leathers.  Broyhills
 residential  furniture divisions  produce a wide range of furnishings in country,
 traditional,  European,  contemporary  and lifestyle designs.

The widely  recognized  Broyhill
 trademarks  include Broyhill and Broyhill  Indulgence.  The flagship  Broyhill product
line  concentrates  on bedroom,  dining room,  upholstered  and  occasional  furniture
 designed for the good and better price categories.  The Broyhill  Indulgence product
line enjoys an excellent  reputation for highly styled, case goods collections in the
best price category.

LANE FURNITURE INDUSTRIES

Lane  manufactures and markets a
broad range of high quality  furniture  targeting the good and better price
categories.  Lane targets niche markets with its three operating  divisions,  which
participate in such segments of the  residential  furniture  market as  reclining  chairs
and motion  furniture,  cedar chests and wicker and rattan.

Lanes  upholstery  division
 manufactures  and markets  reclining chairs and motion furniture in the good and
better  price  categories  under the Lane brand name.  Motion  furniture  consists of
sofas and loveseats with recliner-style  moving  parts  and  comfort  features.  Other
 upholstered  furniture  consists  of  wall  saver recliners,  pad-over chaise recliners,
 hi-leg recliners,  sleep sofas and motion sectionals.  Royal Development Company,  a
division  of Lane,  designs and  manufactures  the  mechanisms  used in Lanes  reclining
 furniture products.  The Lane Leather collection  represents an important source

---

of growth for Lanes upholstery division, as
leather is the  fastest-growing  category in upholstered  furniture.  The collection,
 priced in the better category comes in three styles  American  ranch,  American
 traditional and urban  contemporary.  Lane has also recently introduced a stationary
line of upholstered furniture which is enjoying good success.

Lanes wood  furniture  division
 markets cedar chests,  living room,  bedroom and dining room  furniture,  wall systems,
 desks,  console tables and mirrors and other  occasional wood pieces.  Sold under the
Lane brand name, the case goods collections and individual products are sold in the
good and better price categories.

Laneventure  manufactures  and
markets  moderately  priced wicker,  rattan,  bamboo,  exposed  aluminum and teak
furniture,  tables,  occasional wood pieces and two lines of upholstered  furniture under
the Laneventure  brand name. One line is comprised of  contemporary  and modern
 upholstered  furniture and metal and glass  occasional and  dining  room  tables,  and
the  other  which is  comprised  of  traditional  and  contemporary  upholstered
furniture,  primarily sofas,  loveseats,  chairs and ottomans.  Laneventure also
manufactures  outdoor and patio furniture  featuring  fast  drying  upholstered  cushions
 under the  sub-brand  name  WeatherMaster,  which has developed significant consumer
acceptance.

THOMASVILLE FURNITURE INDUSTRIES

Thomasville manufactures and
markets wood furniture, upholstered products and promotional/RTA furniture.
Thomasville markets its products primarily under the Thomasville brand name, and has
several other divisions which market products under separate brands. Thomasville
offers an assortment of upholstery and wood furniture under one brand name that
targets the best price category. Upholstery is primarily marketed in three major
styles: traditional, American traditional/country and casual/lifestyle contemporary.
Upholstery style is determined by both frame style and fabric or leather
selection. Thomasville's frame assortment allows the consumer to select from a wide
variety of different styles within the general style categories, and as much as 45% of
the Thomasville fabric and leather offering changes in a 12 month period, insuring
that the latest colors and textures are available. Wood furniture is primarily marketed
in four major styles: American traditional/country, 18thcentury, European traditional
and casual contemporary.

Pearson has been manufacturing and
selling  contemporary and traditional  styles of finely tailored  upholstered furniture
 including sofas,  loveseats,  chairs and ottomans for over 50 years.  Pearson  furniture
sells in the premium price category and is distributed to high-end furniture stores and
interior designers.

HBF manufactures and sells a line of
office furniture,  including chairs,  tables,  conference tables, desks and credenzas, in
the upper-middle price range.

Founders  offers  assembled  bedroom
 sets,  bookcases  and home  entertainment  centers  under the Founders and Vignettes
brand names to a variety of retailers for sale to consumer  end-users and certain
contract  customers. Creative  Interiors markets RTA  (ready-to-assemble)  furniture such
as home entertainment  centers,  bookcases, bedroom and kitchen/utility furniture and
computer desks under the Creative Interiors brand name.

HDM FURNITURE INDUSTRIES

HDM  Furniture  Industries  has
three  operating  subsidiaries:  Henredon  Furniture  Industries,  Inc.,  Drexel Heritage
Furniture Industries, Inc. and Maitland-Smith Furniture Industries, Inc.

Henredon  manufactures and markets
 bedroom,  dining room,  occasional and upholstered  furniture in the premium price
category.  Henredon  markets its furniture in 14 collections  and is the furniture
 licensee for the Ralph Lauren Home  Collection  and Historic  Natchez.  Henredon is an
industry  style and fashion  leader and provides the consumer  with unique and distinct
 products  ranging from  contemporary  to  traditional.  An agreement was signed in 2003
to launch the Barbara Barry brand.

---

Hickory Chair, an operating
division of Henredon, manufactures and markets traditional styles of upholstered
furniture, dining room collections and occasional tables in the best and premium
price categories. The Hickory Chair division has been crafting fine reproductions of
18thcentury furniture for over 80 years. For example, Hickory Chair offers the James
River collection which features reproductions of fine furnishings from Virginia
plantations, and the Mount Vernon collection, which features reproductions from
George Washingtons home. In October 2000, Hickory Chair introduced its Thomas O'Brien
collection, which includes upholstery, chairs, tables, beds and cabinetry in
O'Briens acclaimed warm modernist style.

Drexel Heritage launched its new
tri-branding  strategy in 2002, marketing case goods and upholstered  furniture under
three distinct  brands:  Heritage,  Drexel and dh. The price categories range from mid
to upper premium, targeting  female  consumers  from  27-year-olds  to  50-plus,  with
 beautifully  made and  designed  products. Furniture styles range from French and
European  traditional to contemporary and  transitional.  Drexel Heritage also
 manufactures and markets a line of sophisticated  and elegant  upholstery and case goods
under the Lillian August brand and produces  furniture for the  hospitality  and
government  markets.  Drexel  currently  produces approximately 25 collections with four
to six new collections offered each year.

Maitland-Smith is a leading
designer and manufacturer of best and premium hand crafted, antique-inspired
furniture, accessories and lighting, utilizing a wide range of unique materials,
including distinctive leather, fancy faced veneer, stone and hand-painted metal.
Maitland-Smith markets under the Maitland-Smith and LaBarge brand names. The
Maitland-Smith brand is inspired by designs from the master craftsmen of 17th, 18thand 19thcentury England. The LaBarge brand name emphasizes Continental European
design in mirrors and occasional furniture.

DISTRIBUTION

The  Companys  strategy of
targeting  diverse  distribution  channels  such as furniture  centers,  independent
dealers,  national and local chain  stores,  department  stores,  specialty  stores and
 decorator  showrooms is supported by dedicated  sales forces  covering each of these
 distribution  channels.  The Company  continues to explore opportunities to expand
international sales and to distribute through  non-traditional  channels such as
wholesale clubs and catalog retailers.

The Companys  breadth of product
and national scope of distribution  enable it to effectively  service national retailers
such as J.C. Penney and key regional retailers such as Havertys,  Raymour & Flanigan,
 Bloomingdales, Marshall  Field,  Dillards,  Breuners and Kittles.  The
 consolidation  of the retail  residential  furniture industry has made access to
distribution  channels an important  competitive  advantage for  manufacturers.  The
Company has  developed  dedicated  distribution  channels by expanding  its gallery
 programs and the network of independent  dealer-owned  dedicated retail  locations,
 such as Thomasville Home Furnishings  Stores and Drexel Heritage Home Inspiration
 Stores.  The Company primarily  distributes its products through a diverse network of
independently  owned retail locations,  which includes 190 freestanding  stores, 990
galleries and 704 furniture centers.

Broyhill,  Lane,  Thomasville and
Drexel  Heritage have all developed  gallery  programs with dedicated  dealers displaying
 furniture in complete room ensembles.  These retailers employ a consistent  showcase
gallery concept wherein  products are  displayed in complete  and fully  accessorized
 room  settings  instead of as  individual pieces.  This  presentation  format
 encourages  consumers  to purchase an entire room of  furniture  instead of individual
 pieces  from  different  manufacturers.  Each  operating  company  offers  substantial
 services  to retailers to support their marketing efforts,  including  coordinated
 national  advertising,  merchandising and display programs and extensive dealer training.

Thomasville Home Furnishings
 Stores,  Drexel Heritage Home Inspiration Stores, Lane Home Furnishings Stores and
Broyhill Home Collections  Stores are  retail  locations that exclusively  feature Thomasville,  Drexel Heritage,  Lane and Broyhill  furniture,
 respectively.

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The Company believes  distributing its products The Company believes  distributing its products through dedicated,  single-branded
stores strengthens brand awareness,  provides  well-informed and focused sales personnel
and encourages the purchase of multiple items per visit.

Showrooms for the national
 furniture  market are located in Thomasville and High Point,  North Carolina and for
regional markets in Atlanta, Georgia; Chicago, Illinois; San Francisco, California; and
Tupelo, Mississippi.

BROYHILL FURNITURE INDUSTRIES

One of Broyhills  principal
 distribution  channels is the Broyhill  Showcase  Gallery  program.  This program,
started in 1983,  involves 264 domestic and international  participating  dealer
 locations.  Each dealer in the Broyhill  Showcase  Gallery  program  owns  the  gallery
 and the  Broyhill  furniture  inventory.  The  program incorporates a core  merchandise
 program,  advertising  material  support,  in-store  merchandising  events and
educational  opportunities  for the retail store sales and management  personnel.  A
Broyhill  Showcase  Gallery consists of a minimum of 7,500 square feet of dedicated
 display  space.  Furniture is displayed in complete and fully accessorized room settings
instead of as individual pieces.

Introduced in 2001 as a dedicated
 distribution retail concept,  41 Broyhill Furniture  Showplaces are owned and operated
by retail  dealers who commit a minimum of 10,000  square feet of display  space to
Broyhill  products. This program also offers extensive merchandising and marketing
support.

In 2003,  Broyhill  opened the first
two  Broyhill  Home  Collections  Stores,  which are owned and  operated by retail
 dealers  who  commit a minimum  of  15,000  square  feet of  display  space to  Broyhill
 products  in a single-branded store environment. This program also offers extensive
merchandising and marketing support.

For the retailer  that is  currently
 not a  participant  in the Gallery,  Showplace or Home  Collections  Store programs,
 Broyhill offers the Broyhill Furniture Center Program.  This concept,  initiated in
1987, is designed to  strengthen  Broyhills  relationship  with these  retailers  by
 assisting  them in  overcoming  some of the significant  difficulties  in running an
independent  furniture  business.  The 704  participating  retailers in the Broyhill
 Furniture Center Program commit to a minimum of at least 2,500 square feet devoted
 exclusively to Broyhill products arranged in gallery-type room settings.  This program
includes  additional  marketing,  design and advertising  assistance.  The Company seeks
to develop these  relationships  so that some of these retailers may eventually become
 participants in the Broyhill Showcase Gallery,  Broyhill Furniture  Showplace or
Broyhill Home Collections Store programs.

LANE FURNITURE INDUSTRIES

Lane  distributes  its  products
  nationally  and  internationally   through  a  well-established   network  of
approximately  16,000  retail  locations.  A diverse  distribution  network is utilized
 in keeping  with Lanes strategy of supplying  customers with highly specialized
 products in selected niche markets.  This distribution network primarily  consists of
independent  furniture stores,  regional chains such as Havertys and Art Van, and
department store companies such as J.C. Penney, May Department Stores,  Federated
 Department Stores and Dillard's Department Stores.

Lane  has  established   specialty
 gallery  programs  with  439  participating   dealers.   This  includes  356
dealer-owned  Comfort Showcase Galleries and 71 Comfort Furnishings  Galleries
 established by Lanes Upholstery division.  These galleries average  approximately
 4,200 square feet of retail space  specifically  dedicated to the  display,   promotion
 and  sale  of  Lane  upholstery  and  wood  products.  Lane  is  developing  its  own
single-branded  stores program through  independent  retailers to complement but not
compete with their existing distribution networks. Lane currently has 4 such stores.

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THOMASVILLE FURNITURE INDUSTRIES

Thomasville products are offered at
535 independently-owned  and four Company-owned retail locations,  including 151
Thomasville  Galleries,  144 Thomasville Home Furnishings Stores and 244 authorized
dealers. The Thomasville Gallery  concept was  initiated  in 1983.  Thomasville
 Galleries  have an average  7,500  square feet of retail space  specifically  dedicated
 to  the  display,   promotion  and  sale  of  Thomasville  products.  The  first
Thomasville Home Furnishings  Store opened in 1988. The typical  Thomasville Home
Furnishings  Store is a 13,000 square  foot,  independently-owned  store  offering  a
broad  range  of  Thomasville  products,  presented  in a home-like setting by specially
trained salespersons.

Pearson  distributes its products
primarily through  premium-quality  dealers and the interior design trade. The Founders
 division  sells  promotional  furniture to a variety of retailers  for sale to consumer
 end-users and certain  contract  customers.  Promotional  furniture is sold to retail
 chains such as Badcock,  Value City, as well as independent  furniture  stores.
 Promotional  furniture is also sold in the  hospitality and health care markets of
Thomasvilles  contract  business.  The Creative  Interiors division sells RTA furniture
to customers which include  national  chains such as Target and Wal-Mart,  catalog
 showrooms,  discount mass  merchandisers, warehouse clubs and home furnishings retailers.

HDM FURNITURE INDUSTRIES

Henredon  distributes its products
through a network of  approximately  450 fine furniture  dealers,  department stores  and
 wholesale  showrooms  in this  country  and  abroad.  The  Ralph  Lauren  Home
 Collection  is also distributed  through Polo Ralph Lauren  retail  stores.  The typical
 Henredon  display is 3,000 to 8,000 square feet.  Henredon  dealers  include  Louis
Shanks of Texas,  Gabberts,  Kittles,  Boyles,  Robb & Stucky,  Baers, Treasures,
 Marshall  Field,  Richs,  Lazarus,  Macys West and  Dillards.  Hickory Chair
 distributes  through premium-quality  dealers  including  22  gallery  locations  as
 well  as  through  Henredons  Interior  Design showrooms.  Henredon  opened its first
 independently  owned  stores in 2003 and plans to expand this channel of
 distribution  over the next 3 years.  Henredon also opened two new wholesale  showrooms
 during 2003 in New York and Chicago and now operates 8 wholesale to the trade showrooms.

Drexel Heritage products are offered
at 510 independently  owned retail locations,  including 69 Drexel Heritage galleries,
 38 dedicated Drexel Heritage Home  Inspiration  stores and 403 authorized  dealers.
 Drexel Heritage galleries  have an  average  of  6,500  square  feet of  dedicated
 space.  The  typical  Drexel  Heritage  Home Inspiration  store is a 14,600 square foot
 independently  owned store offering a broad range of Drexel Heritage products, presented
in a home-like setting by a salesperson or design consultant.

Maitland-Smith  distributes its
products  nationally and internationally  through a well-established  network of high-end
retail furniture stores,  designer  showrooms,  antique dealers and specialty gift
stores.  The dealers are selected to preserve and enhance the prestige and reputation of
the Maitland-Smith brand name.

MARKETING AND ADVERTISING

Advertising  is used to increase
 consumer  awareness of the  Companys  brand names and is targeted to specific consumer
 segments  through  national  and  regional  television  as well as leading  shelter and
other  popular magazines such as Better Homes and Gardens,  People and Good
 Housekeeping.  Each operating company uses focused advertising  in major  markets to
create  buying  urgency  around  specific  sale  events and to provide  dealer location
 information,  enabling  retailers  to be listed  jointly in  advertisements  for
 maximum  advertising efficiency  and  shared  costs.  Each  operating  company  seeks to
 increase  consumer  buying  and  strengthen relationships with retailers through
cooperative  advertising and selective  promotional  programs,  and focuses its marketing
 efforts on prime potential  customers  utilizing  information  from databases and from
callers to each  operating  companys  toll-free  telephone  number.  Extensive use of
Internet  web-based  technology  for customer and consumer awareness and service is also
used by each operating company.

---

BROYHILL FURNITURE INDUSTRIES

Broyhills  advertising  programs
 focus on translating  its strong  consumer  awareness  into increased  sales. Broyhills
 current  marketing   strategy  features  a  national  print  advertising   program  and
 traditional promotional  programs such as furniture  giveaways on television game
shows and  dealer-based  promotions such as product mailings,  local television,
 newspaper and brochures.  The national print advertising program, which consists of
multi-page  layouts,  is designed to appeal to the consumers  desire for decorating
 assistance and increased  confidence  in making the  decision  to  purchase  a big
 ticket  product  such as  furniture.  These advertisements  are run in publications
 such as Good  Housekeeping and Better Homes and Gardens which appeal to Broyhills
consumer base. Game show promotions,  a long-standing  Broyhill  tradition,  include
popular programs such as Wheel of Fortune and The Price is Right. An extensive  public
 relations  campaign also exposes Broyhill products in leading magazine and newspaper
editorial features.

LANE FURNITURE INDUSTRIES

Lanes marketing  approach  reflects
the diversity of its various  divisions and product lines.  Lane employs an integrated
 marketing/advertising  strategy in which it coordinates magazine, newspaper, circular
and television advertising  with other marketing  programs to promote a single product.
 Each of the Lane divisions  advertises extensively in trade and consumer publications
targeting various niche markets.

THOMASVILLE FURNITURE INDUSTRIES

Thomasvilles  current  advertising
 appears on national  network and cable  television  during peak promotional periods.
 The  campaign  emphasizes  Thomasville  fashion  and  quality  leadership  through the
use of dramatic commercials  featuring  individual,  high quality wood and upholstery
 pieces.  National cable networks  include A&E, The Discovery  Channel,  CNN, CNN
Headline  News, The Weather  Channel,  TNN, The Travel  Channel,  TBS and Entertainment
Network.

To help retailers sell its product
 through to consumers,  Thomasville  offers a full  twelve-month  schedule of promotional
support which includes promotional  concepts,  selected product discounts,  cooperative
 advertising funds, and a complete  advertising  package with color newspaper  layouts
plus radio and television  commercials dealers can use as supplied.  Thomasville  runs
 national  sales  events to coincide  with major  industry  sale periods.  These events
include national print ads or Thomasville-designed newspaper inserts for dealer use.

Thomasvilles  other  divisions
 (Pearson,  Founders  and  Creative  Interiors)  use or  participate  in various
advertising publications throughout the year.

HDM FURNITURE INDUSTRIES

Henredons  national  advertising
 is  focused in  magazines  such as  Architectural  Digest and House & Garden. Henredon
 produces full color  catalogs in support of each  collection  and maintains a web site
which  provides the consumer the opportunity to view all current  collections,  order
catalogs and locate dealers in their local trading areas.

Drexel Heritage  offers a fully
 integrated  marketing  program that includes  national brand  advertising and a full
calendar of  promotional  events.  These events  include  themed  promotional  concepts,
 selected  product discounts,  cooperative  advertising  support and a complete
 advertising  marketing  portfolio.  This portfolio includes  dealer  television
  commercials,   consumer  sales  circulars,   direct  mail  postcards,   newspaper
advertisements, radio commercials, in-store events and a complete in-store point of sale
package.

Maitland-Smith  has  chosen to do
little  advertising  over the  years.  This  approach  has  created an aura of mystique
 around the brand  that adds to its charm and has worked  well  within  its  dealer
 base.  Promotional activities  with  dealers  are  designed  to  preserve  and  enhance
 Maitland-Smiths  brand  name in the  home furnishings industry.

---

MANUFACTURING

Broyhill  operates  14  finished
 case  goods  and  upholstery  production  and  warehouse  facilities  totaling
approximately  5.0 million  square  feet.  All  finished  good plants are  located in
North  Carolina.  Broyhill pioneered the use of mass production  techniques in the
furniture  industry and by utilizing  longer  production runs achieves economies of scale.

Lane operates 8 upholstery
 production and warehouse  facilities in Mississippi and North Carolina totaling over 3.7
million square feet.  Significant capital  expenditures have been made to acquire
 technologically  advanced manufacturing equipment, which has increased factory
productivity as well as capacity.

Thomasville  manufactures  or
assembles its products at 14 finished  case goods and  upholstery  production  and
warehouse  facilities  located in North Carolina and Virginia,  totaling  approximately
4.8 million square feet. Each plant is specialized,  manufacturing  premium furniture
 products  allowing more efficient  production runs while maintaining high quality
standards.

The manufacturing  process for
 Thomasvilles  Founders and Creative  Interiors  divisions are highly automated. Large
 fiberboard and  particleboard  sheets are  machine-finished  in long  production  runs,
then stored using highly  automated  assembly lines.  Completed  goods are either
 assembled  (Founders) or flat packed  (Creative Interiors)  and stored in an automated
 warehouse to provide  quicker  delivery to customers.  Ninety percent of Creative
Interiors products are shipped within 14 days of production.

Henredon  manufactures  in 5  case
 goods  and  upholstery  production  and  warehouse  facilities  encompassing
approximately  2.2  million  square  feet all  located  in North  Carolina.  Henredon  is
a leader  in  cellular manufacturing which allows for the efficient production of
relatively small production runs.

Drexel  Heritage  operates  5  case
 goods  and  upholstery  production  and  warehouse  facilities  that  total
approximately  1.8 million  square feet.  All  facilities  are located in western North
 Carolina  except for an upholstery  plant located in High Point,  North  Carolina.  Each
facility is specialized to manufacture  premium quality furniture in a cellularized
manufacturing environment.

Maitland-Smith  and LaBarge
 products are  manufactured  at facilities in the  Philippines  and Indonesia and by
selected  sub-contractors  located  throughout  Asia,  Italy  and  Mexico.  Each
 production  facility  utilizes specialized craftsmen to produce premium home furnishings
products.

RAW MATERIALS AND SUPPLIERS

The raw  materials  used by the
 Company  in  manufacturing  its  products  include  lumber,  veneers,  plywood,
fiberboard,  particleboard,  paper, hardware,  adhesives,  finishing materials,  glass,
mirrored glass, fabrics, leathers,  metals,  stone,  synthetics and upholstered  filling
material (such as synthetic fibers, foam padding and polyurethane  cushioning).  The
various types of wood used in the Companys  products  include cherry,  oak, maple, pine
and pecan,  which are purchased  domestically,  and mahogany,  which is purchased
 abroad.  Fabrics, leathers and other raw  materials are  purchased  both  domestically
 and abroad.  Management  believes that its supply sources for those materials are
adequate.

The  Company  has  an  agreement
 with  Furniture  Brands  Import  Services   Organization   (formerly   Outlook
International,  Ltd.) which is the exclusive  representative  for the Company for the
manufacture of products in the Far East.  Furniture Brands Import Services,  an
independently owned company,  provides sourcing assistance, product quality control and
other import-related services to the Company.

The Company has strategic  alliances
with several  foreign  manufacturers  whereby the operating  companies have the ability
to purchase, on a coordinated basis, a significant portion of the foreign  manufacturers
 capacity, subject to quality control and delivery  standards.  While an alliance
 represents a significant  portion of the foreign manufacturers  operations,  no one
foreign manufacturer  represents a material portion of the Companys consolidated import
requirements.

---

The Company has no long-term  supply
 contracts and has  experienced  no  significant  problems in supplying its operations.
 Although the Company has strategically  selected  suppliers of raw materials,  the
Company believes that there are a number of other sources available,  contributing to its
ability to obtain  competitive  pricing for raw materials.  Raw materials prices
 fluctuate over time depending upon factors such as supply,  demand and weather.
 Increases in prices may have a short-term impact on the Companys profit margins for its
products.

The majority of raw materials for
 promotional and RTA products are purchased  domestically,  although paper and certain
hardware is purchased  abroad.  The Company  believes,  however,  that its proximity to
and relationship with suppliers are  advantageous for the sourcing of such materials.  In
addition,  by combining the purchase of various raw materials (such as foam,  cartons,
 springs and fabric) and services,  the operating  companies have been able to realize
cost savings.

ENVIRONMENTAL MATTERS

The Company is subject to a
wide-range of federal,  state and local laws and regulations  relating to protection of
the environment,  worker health and safety and the emission,  discharge,  storage,
 treatment and disposal of hazardous  materials.  These laws include the Clean Air Act of
1970, as amended,  the Resource  Conservation and Recovery  Act,  the  Federal  Water
 Pollution  Control  Act  and  the  Comprehensive  Environmental,  Response, Compensation
 and  Liability  Act  (Superfund).  Certain of the  Companys  operations  use glues
and  coating materials that contain chemicals that are considered  hazardous under
various  environmental laws.  Accordingly, the Company closely  monitors  environmental
 performance at all of its facilities.  The Company  believes it is in  substantial
 compliance  with all  environmental  laws.  While the Company  may be required to make
 capital investments at some of its facilities to ensure  compliance,  the Company
 believes it will continue to meet all applicable  requirements  in a timely  fashion and
that the cost  required to meet these  requirements  will not materially affect its
financial condition or its results of operations.

The Company has been  identified as
a  potentially  responsible  party  (PRP) at a number of superfund  sites. The Company
 believes  that its  liability  with respect to most of the sites is de minimis,  and the
Company is entitled to  indemnification  by others with respect to liability at certain
 sites.  The Company  believes that any  liability  as a PRP with  regard to the
 superfund  sites  will not have a material  adverse  effect on its financial condition
or results of operations.

COMPETITION

The residential  furniture
 manufacturing  industry is highly  competitive.  The Companys products compete with
products made by a number of furniture  manufacturers,  including La-Z-Boy Incorporated,
 Ethan Allen Interiors, Inc. and Ashley Furniture  Industries,  Inc., as well as
approximately  600 smaller  producers.  The elements of competition include pricing,
styling, quality and marketing.

EMPLOYEES

As of December 31, 2003, the Company
employed  approximately  20,250 people.  None of the Companys employees is represented
by a union.

BACKLOG

The combined  backlog of the
 Companys  operating  companies as of December 31, 2003  aggregated  approximately $312
million compared to approximately $284 million as of December 31, 2002.

RISK FACTORS

The  Companys  operating  results
are subject to quarterly and annual  fluctuations  as a result of a number of factors.
Such factors include:

---

An economic downturn could result in
a decrease in the Companys sales and earnings.

The residential  furniture industry
has historically been subject to cyclical  variations in the general economy and to
uncertainty  regarding  future economic  prospects.  Economic  downturns  could affect
consumer  spending habits by decreasing  the overall  demand for home  furnishings.  Such
events would also impact  retailers,  the Companys primary customers, resulting in a
decrease in sales and earnings.

Loss of market share due to
competition would result in a decrease in future sales and earnings.

The residential  furniture
 manufacturing  business is highly  competitive and fragmented.  The Company competes
with many other manufacturers some of which offer widely advertised,  well known,
 branded products.  The highly competitive  nature of the industry  means the Company is
constantly  subject to the risk of losing market share to those privately held
competitors who have lower sales and  profitability  targets.  As a result,  the Company
may not be able to maintain or to raise the prices of its  products in response to such
 inflationary  pressures as increasing  costs.  Also due to the large number of
 competitors  and their wide range of product  offerings, the Company may not be able to
 differentiate  its  products  (through  styling,  finish and other  construction
techniques) from those of its competitors.

Failure to  anticipate  or respond
to changes in consumer  tastes and fashion  trends in a timely  manner could result in a
decrease in future sales and earnings.

Residential  furniture is a highly
styled  product  subject to fashion trends and  geographic  consumer  tastes. Consumer
 tastes and fashion  trends can change  rapidly.  If the Company is unable to  anticipate
or respond to changes in  consumer  tastes and  fashion  trends in a timely  manner it
may lose sales and be faced with excess inventory  (both raw materials  and finished
 goods).  Disposal of excess  inventory may result in a decrease in sales and earnings.

Failure to achieve the Companys
 projected mix of product sales could result in a decrease in its future sales and
earnings.

Some of the  Companys  products
 are sold for a higher  profit than other of its  products.  An increase in the sales of
lower  profit  products  at the  expense  of the  sales of higher  profit  products
 could  result in a decrease in earnings.

Business failures of large customers
could result in a decrease in the Companys future sales and earnings.

Although the Company has no
customers who  individually  represent  10% or more of its total annual  sales,  the
possibility  of  business  failures  of large  customers  could  result in a decrease  in
its  future  sales and earnings in that these sales are difficult to replace.

Distribution  realignments and cost
savings programs can result in a decrease in the Companys  near-term sales and earnings.

At times it is necessary for the
Company to discontinue  certain  relationships  with customers  (retailers) who do not
meet its growth and profitability  standards.  Until realignment is established,  there
can be a decrease in near-term sales and earnings.  The Company continually reviews
 relationships with its customers  (retailers) and future realignments are possible based
upon such ongoing reviews.

Manufacturing realignments could
result in a decrease in the Companys near-term earnings.

The  Company  continually  reviews
 its  domestic  manufacturing   operations  and  offshore  (import)  sourcing
capabilities.  Effects of periodic  manufacturing  realignments  and cost  savings
 programs  could  result in a decrease in near-term  earnings until the expected cost
 reductions are achieved.  Such programs can include the consolidation  and integration
of

---

facilities,  functions,  systems and procedures.  Certain products may also be shifted from domestic
 manufacturing  to offshore  sourcing.  Such actions may not be accomplished as quickly
as anticipated and the expected cost reductions may not be achieved in full.

Increased  reliance on offshore
 (import)  sourcing of various  products could  adversely  affect the Companys ability
to service customers which could result in a decrease in sales.

During the last several years,  the
Company has been  increasing its offshore  (import)  capabilities to provide flexibility
in product  programs and pricing to meet  competitive  pressures.  The mix of various
 product lines has been moving from  domestically  manufactured to offshore  sourced.
 Offshore (import) sourcing is subject to political  instability  in countries  where
 contractors  and  suppliers  are located and possible  delay due to managing at a
distance.  Either could make it more  difficult  for the Company to service its
 customers.  Other risks include the imposition of regulations and quotas relating to
imports;  duties,  taxes and other charges on imports; and, significant  fluctuation of
the value of the U.S. dollar against foreign currencies,  all of which could increase
costs and decrease earnings.

Fluctuations  in the price,
 availability  and quality of raw  materials could cause delay which could result in a
decrease in the Companys sales and increase costs which would result in a decrease in
earnings.

Fluctuations  in  the  price,
 availability  and  quality  of  the  raw  materials  that  the  Company  uses  in
manufacturing  residential  furniture  could have a negative effect on its cost of sales
and ability to meet the demands of  customers  (retailers).  Inability  to meet the
 demands of  customers  could  result in the loss of future sales. The Company uses
various types of wood,  fabrics,  leathers,  glass,  upholstered filling material and
other raw materials in  manufacturing  furniture.  The costs to manufacture  furniture
depend in part on the market prices of the raw materials used to produce the  furniture.
 The Company may not be able to pass along to its customers all or a portion of the costs
of higher raw materials due to competitive and marketing pressures.

A successful  product  liability
 claim brought against the Company in excess of available  insurance  coverage would
result in a decrease in earnings  and any claim or product  recall that  results in
 significant  adverse publicity against the Company may result in a decrease in sales and
earnings.

The Company  faces the business
 risk of exposure to product  liability  claims in the event that the use of any of its
products  results in personal injury or property  damage.  In the event that any of its
products prove to be defective,  the Company may be required to recall or redesign such
products.  The Company maintains insurance against  product  liability  claims,  but
there can be no  assurance  that such  coverage  will  continue  to be available on terms
acceptable to it or that such coverage will be adequate for liabilities actually incurred.

Future  acquisitions  and
 investment  could  result in dilution  to  earnings  per share and a decrease in the
valuation of the Companys common stock.

As part of the  Companys  business
 strategy,  it has made and  expects to continue  to make  acquisitions  and investments
 in businesses  that offer  complementary  products.  Risks  commonly  encountered  in
 acquisitions include  the  possibility  that the  Company  pays more than the  acquired
 company  or assets  are  worth,  the difficulty of assimilating the operations and
personnel of the acquired  business,  the potential  disruption of our ongoing  business
and the distraction of management  from ongoing  business.  Consideration  paid for
future acquisitions could be in the form of cash or stock or a combination thereof.
 Dilution to existing  stockholders and to earnings per share may result in connection
with any such future acquisition.

Impairment of goodwill and other
intangible assets would result in a decrease in earnings.

Current  accounting  rules require
that goodwill and other  intangible  assets with  indefinite  useful lives no longer be

---

amortized,  but instead be tested for  impairment  at least  annually.  The  Company has
 substantial goodwill  and other  intangible
 assets  which  based upon the  outcome of the annual  test could  result in the
write-down of all or a portion of these assets and a corresponding reduction in earnings
and net worth.

Certain  anti-takeover  provisions
 and  preferred  stock could result in a decrease in a potential  acquirers valuation of
the Companys common stock.

Certain  provisions of the
 Companys  Certificate  of  Incorporation  could make it more  difficult for a third
party to acquire  control of the Company,  even if such change in control would be
 beneficial to  stockholders. Also,  the  Certificate  of  Incorporation  allows the
 Company to issue  preferred  stock  without  stockholder approval. Such issuances could
also make it more difficult for a third party to acquire the Company.

INTERNET ACCESS

Forms 10-K,  10-Q,  8-K and all
 amendments to those reports are available  without charge through the Companys Internet
web site as soon as  reasonably  practicable  after  electronically  filed with,  or
furnished  to, the Securities & Exchange Commission. The Companys website can be
accessed at www.furniturebrands.com.

ITEM 2.    Properties

The Company owns or leases the
following principal plants, offices and warehouses.

|                  |                            |             |                
|----------------- | -------------------------- | ----------- | ---------------
|                  |                            |             |                
|Division/Location | Type of Facility           | Floor Space | Owned or Leased
|                  |                            | (sq.ft.)    |                
|                  |                            |             |                
|                  |                            |             |                
|                  |                            |             |                
|                  |                            |             |                
|                  |                            |             |                
|                  |                            |             |                
|Furniture Brands: |                            |             |                
|St. Louis, MO     | Headquarters               | 26,800      | Leased         
|                  |                            |             |                
|                  |                            |             |                
|                  |                            |             |                
|                  |                            |             |                
|                  |                            |             |                
|                  |                            |             |                
|                  |                            |             |                
|                  |                            |             |                
|                  |                            |             |                
|Broyhill:         |                            |             |                
|Lenoir, NC        | Headquarters               | 136,000     | Owned          
|Lenoir, NC        | Case goods plant/warehouse | 312,632     | Owned          
|Lenoir, NC        | Case goods plant/warehouse | 628,000     | Owned          
|Lenoir, NC        | Case goods plant/warehouse | 419,000     | Owned          
|Lenoir, NC        | Case goods plant/warehouse | 390,020     | Owned/Leased   
|Conover, NC       | Case goods plant/warehouse | 316,542     | Owned          
|Lenoir, NC        | Case goods plant/warehouse | 772,757     | Owned          
|Rutherfordton, NC | Upholstery plant/warehouse | 433,597     | Owned          
|Lenoir, NC        | Upholstery plant/warehouse | 252,380     | Owned          
|Taylorsville, NC  | Upholstery plant/warehouse | 212,754     | Owned          
|Rutherfordton, NC | Warehouse                  | 575,656     | Owned          
|Lenoir, NC        | Warehouse                  | 96,000      | Owned          
|Lenoir, NC        | Warehouse                  | 252,250     | Leased         
|Lenoir, NC        | Warehouse                  | 205,964     | Leased         
|Chino, CA         | Warehouse                  | 79,456      | Leased         
|                  |                            |             |                
|                  |                            |             |                
|                  |                            |             |                
|                  |                            |             |                
|                  |                            |             |                
|                  |                            |             |                
|                  |                            |             |                
|                  |                            |             |                
|                  |                            |             |                
|Drexel Heritage:  |                            |             |                
|Marion, NC        | Case goods plant           | 501,133     | Owned          
|Hildebran, NC     | Case goods plant           | 360,710     | Owned          
|                 

---

|                    |                                       |             |                
|------------------- | ------------------------------------- | ----------- | ---------------
|                    |                                       |             |                
|Division/Location   | Type of Facility                      | Floor Space | Owned or Leased
|                    |                                       | (sq.ft.)    |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|Morganton, NC       | Upholstery plant                      | 144,869     | Owned          
|High Point, NC      | Upholstery plant                      | 280,650     | Owned          
|Morganton, NC       | Warehouse/offices                     | 513,800     | Owned          
|High Point, NC      | Headquarters/showroom                 | 100,000     | Owned          
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|Henredon:           |                                       |             |                
|Morganton, NC       | Headquarters/                         |             |                
|                    | casegoods plant/warehouse             | 898,690     | Owned          
|Spruce Pine, NC     | Case goods plant/warehouse            | 553,180     | Owned          
|High Point, NC      | Upholstery plant                      | 125,803     | Owned          
|Mt. Airy, NC        | Upholstery plant                      | 102,500     | Owned          
|Hickory, NC         | Upholstery plant/warehouse            | 519,011     | Owned          
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|Lane:               |                                       |             |                
|Tupelo, MS          | Headquarters/                         |             |                
|                    | upholstery plant/warehouse            | 715,951     | Owned          
|Saltillo, MS        | Upholstery plant/warehouse            | 825,328     | Owned          
|Verona, MS          | Upholstery plant/warehouse            | 413,000     | Owned          
|Pontotoc, MS        | Upholstery plant/warehouse            | 358,652     | Owned          
|Wren, MS            | Warehouse                             | 494,813     | Leased         
|High Point, NC      | Plant                                 | 187,162     | Owned          
|Conover, NC         | Upholstery plant                      | 351,015     | Owned          
|Conover, NC         | Upholstery plant/warehouse            | 347,500     | Owned          
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|Maitland-Smith:     |                                       |             |                
|High Point, NC      | Headquarters/warehouse                | 220,000     | Leased         
|Cebu, Philippines   | Case goods plant                      | 398,377     | Owned          
|Semarang, Indonesia | Plant/warehouse                       | 128,925     | Leased         
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|                    |                                       |             |                
|Thomasville:        |                                       |             |                
|Thomasville, NC     | Headquarters/ Showroom                | 256,000     | Owned          
|Thomasville, NC     | Case goods plant/warehouse            | 373,000     | Owned          
|Thomasville, NC     | Case goods plant                      | 325,000     | Owned          
|Thomasville, NC     | Case goods plant                      | 309,850     | Owned          
|Lenoir, NC          | Case goods plant/warehouse            | 828,000     | Owned          
|Statesville, NC     | Upholstery plant                      | 158,600     | Owned          
|Troutman, NC        | Upholstery plant                      | 238,200     | Owned          
|Conover, NC         | Upholstery plant                      | 123,200     | Owned          
|Hickory, NC         | Upholstery plant                      | 58,700      | Owned          
|Hickory, NC         | Upholstery plant/warehouse            | 209,800     | Leased         
|Thomasville, NC     | Warehouse                             | 731,000     | Owned          
|Appomattox, VA      | Case goods plant/warehouse            | 829,800     | Owned          
|Carysbrook, VA      | Case goods plant                      | 189,000     | Owned          
|Hickory, NC         | Case goods/upholstery plant/warehouse | 211,391     | Owned          
|High Point, NC      | Upholstery plant/warehouse            | 178,500     | Owned          

---

The Tupelo,  Mississippi  facility
is  encumbered  by a mortgage  and first lien  securing  revenue  bonds.  The Company
 believes  its  properties  are  generally  well  maintained,  suitable for its present
 operations  and adequate for current  production  requirements.  Productive  capacity
and extent of utilization of the Companys facilities  are  difficult  to  quantify  with
 certainty  because  in any one  facility  maximum  capacity  and utilization  varies
 periodically  depending  upon  the  product  that is  being  manufactured,  the  degree
 of automation  and the  utilization  of the labor force in the  facility.  In this
context,  the Company  estimates that overall its production  facilities  were utilized
 during 2003 at a moderate  level of productive  capacity and believes that in
conjunction  with its import  capabilities the Companys  facilities have the capacity,
 if necessary, to expand production to meet anticipated product requirements.

Item 3.    Legal Proceedings

The  Company  is or may  become a
 defendant  in a number of  pending or  threatened  legal  proceedings  in the ordinary
 course of  business.  In the opinion of  management,  the ultimate  liability,  if any,
of the Company from all such proceedings will not have a material  adverse effect upon
the consolidated  financial  position or results of operations of the Company and its
subsidiaries.

The Company is also subject to
regulation  regarding  environmental  matters,  and is a party to certain actions related
 thereto.  For  information  regarding  environmental  matters,  see Item 1.  Business -
 Environmental Matters.

Item 4.    Submission of Matters to a
Vote of Security Holders

Not applicable.

PART II

Item 5. Market for The Registrants
 Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

As of February 29, 2004, there were
approximately 1,800 holders of record of Common Stock.

Shares of the Companys Common
Stock are traded on the New York Stock Exchange.  The reported high and low sale prices
 for  the  Companys  Common  Stock  on the  New  York  Stock  Exchange  is  included  in
 Note 14 to the consolidated financial statements of the Company.

The Company  began paying cash
 dividends on its Common  Stock  during the fourth  quarter of 2003.  The current rate is
 $0.125  per  share  per  quarter.  Additional  information  concerning  dividends  may
be  found in the following  sections of this Form 10-K, which are incorporated  herein by
reference:  Consolidated  Statement of Cash Flows and Quarterly  Financial
 Information (Note 14) in Item 8. Financial  Statements and Supplementary Data.

---

Item 6.    Selected Financial Data

FIVE-YEAR CONSOLIDATED
FINANCIAL REVIEW

|                      
|----------------------
|(Dollars in thousands 
|except per share data)

|                                   |  |  |   | 2003      |  |   | 2002      |  |   | 2001      |  |   | 2000      |   |   | 1999      | 
|---------------------------------- |  |  | - | --------- |  | - | --------- |  | - | --------- |  | - | --------- | - | - | --------- | 
|Summary of operations:             |  |  |   |           |  |   |           |  |   |           |  |   |           |   |   |           | 
|Net sales                          |  |  | $ | 2,367,738 |  | $ | 2,397,709 |  | $ | 1,891,313 |  | $ | 2,116,239 |   | $ | 2,088,112 | 
|Gross profit                       |  |  |   | 614,776   |  |   | 633,558   |  |   | 466,794   |  |   | 546,859   |   |   | 550,312   | 
|Interest expense                   |  |  |   | 19,384    |  |   | 21,732    |  |   | 21,984    |  |   | 36,389    |   |   | 37,577    | 
|Earnings before income tax         |  |  |   |           |  |   |           |  |   |           |  |   |           |   |   |           | 
|expense and extraordinary item     |  |  |   | 149,224   |  |   | 184,424   |  |   | 87,694    |  |   | 165,997   |   |   | 176,764   | 
|Income tax expense                 |  |  |   | 54,651    |  |   | 65,593    |  |   | 29,664    |  |   | 57,574    |   |   | 64,854    | 
|Earnings before extraordinary item |  |  |   | 94,573    |  |   | 118,831   |  |   | 58,030    |  |   | 108,423   |   |   | 111,910   | 
|Extraordinary item                 |  |  |   | --        |  |   | --        |  |   | --        |  |   | (2,522    | ) |   | --        | 
|Net earnings                       |  |  | $ | 94,573    |  | $ | 118,831   |  | $ | 58,030    |  | $ | 105,901   |   | $ | 111,910   | 
|                                   |  |  |   |           |  |   |           |  |   |           | 
|                                   |  |  |   |           |  |   |           |  |   |           | 
|                                   |  |  |   |           |  |   |           |  |   |           | 
|                                   |  |  |   |           |  |   |           |  |   |           | 
|                                   |  |  |   |           |  |   |           |  |   |           | 
|                                   |  |  |   |           |  |   |           |  |   |           | 
|Per share of common stock          |  |  |   |           |  |   |           |  |   |           |  |   |           |   |   |           | 
|- diluted:                         |  |  |   |           |  |   |           |  |   |           |  |   |           |   |   |           | 
|Earnings before extraordinary item |  |  | $ | 1.68      |  | $ | 2.11      |  | $ | 1.13      |  | $ | 2.15      |   | $ | 2.14      | 
|Extraordinary item                 |  |  |   | --        |  |   | --        |  |   | --        |  |   | (0.05     | ) |   | --        | 
|Net earnings                       |  |  | $ | 1.68      |  | $ | 2.11      |  | $ | 1.13      |  | $ | 2.10      |   | $ | 2.14      | 
|                                   |  |  |   |           |  |   |           |  |   |           | 
|                                   |  |  |   |           |  |   |           |  |   |           | 
|                                   |  |  |   |           |  |   |           |  |   |           | 
|                                   |  |  |   |           |  |   |           |  |   |           | 
|                                   |  |  |   |           |  |   |           |  |   |           | 
|                                   |  |  |   |           |  |   |           |  |   |           | 
|Weighted average common shares     |  |  |   |           |  |   |           |  |   |           |  |   |           |   |   |           | 
|- diluted (in thousands)           |  |  |   | 56,256    |  |   | 56,387    |  |   | 51,325    |  |   | 50,443    |   |   | 52,335    | 
|                                   |  |  |   |           |  |   |           |  |   |           | 
|                                   |  |  |   |           |  |   |           |  |   |           | 
|                                   |  |  |   |           |  |   |           |  |   |           | 
|                                   |  |  |   |           |  |   |           |  |   |           | 
|                                   |  |  |   |           |  |   |           |  |   |           | 
|                                   |  |  |   |           |  |   |           |  |   |           | 
|Other information:                 |  |  |   |           |  |   |           |  |   |           |  |   |           |   |   |           | 
|Working capital                    |  |  | $ | 703,233   |  | $ | 652,095   |  | $ | 603,420   |  | $ | 548,463   |   | $ | 518,036   | 
|Property, plant and equipment, net |  |  |   | 310,563   |  |   | 333,371   |  |   | 321,640   |  |   | 303,235   |   |   | 297,746   | 
|Capital expenditures               |  |  |   | 41,451    |  |   | 50,214    |  |   | 22,991    |  |   | 53,310    |   |   | 48,951    | 
|Total assets                       |  |  |   | 1,578,259 |  |   | 1,567,402 |  |   | 1,503,489 |  |   | 1,304,838 |   |   | 1,288,834 | 
|Long-term debt                     |  |  |   | 303,200   |  |   | 374,800   |  |   | 454,400   |  |   | 462,000   |   |   | 535,100   | 
|Shareholders equity               |  |  | $ | 966,902   |  | $ | 869,515   |  | $ | 759,659   |  | $ | 583,905   |   | $ | 474,197   | 
|                                   |  | 

Item 7.    Management's Discussion and
Analysis of Results of Operations and Financial Condition

Overview

Furniture
 Brands  International,  Inc.  (the  Company)  is  one of the  largest  home
 (residential) furniture  manufacturers in the United States.  The Company markets its
products through four primary  operating subsidiaries:  Broyhill Furniture  Industries,
 Inc.; Lane Furniture  Industries,  Inc.;  Thomasville  Furniture Industries,  Inc.; and
HDM Furniture  Industries,  Inc. The Company  manufactures,  sources (i.e.,  imports) and
distributes  (i) case goods,  consisting  of bedroom,  dining room and living room
 furniture,  (ii)  stationary upholstery  products,  consisting  of sofas,  loveseats,
 sectionals  and chairs,  (iii)  occasional  furniture, consisting  of wood,  metal  and
glass  tables,  accent  pieces,  home  entertainment  centers  and home  office
furniture, (iv) recliners, motion furniture and sleep sofas, and (v) accessories.

The
Company  sells its  products  through  diverse  distribution  channels  consisting  of
 independent furniture  dealers,  national  and local  chain  stores,  department
 stores,  specialty  stores  and  decorator showrooms.  In recent  years,  the  Company
has focused its  distribution  growth on  single-branded,  dedicated furniture  centers,
 galleries  and stores,  taking  advantage of its strong brand names and breadth of
product. Most  recently,  the Company has  announced its  long-term  strategy is to focus
more heavily on  single-branded stores, both independently and Company-owned.

---

To
gain access to the premium price point segment of the home  furniture  market in the
United  States, on  December  28,  2001,  the  Company  acquired  substantially  all of
the assets and  liabilities  of Henredon Furniture  Industries,  Drexel Heritage
Furnishings and Maitland-Smith  (collectively HDM Furniture  Industries, Inc.).  The
purchase price of the acquisition  was $287.6 million,  consisting of $177.0 million in
cash and 4.0 million  shares of the Companys  common  stock.  The  acquisition
 established  the Company as the  residential furniture industrys only full-line
resource in all middle and upper price categories.

During
the past three years, the residential  furniture market in the United States has been
negatively impacted by the general  economic  slowdown,  as well as a structural shift to
offshore  sourcing  (primarily to Asia, but also to other countries with  comparatively
 low labor costs) of various products  particularly  case goods (wood  furniture).  As a
result,  domestic  manufacturing  capacity  utilization  has been trending  down, hurting
the operating profitability of many companies in the industry.

In
reaction to this change in sourcing  activity,  the Company has been  implementing  a
plan to reduce its  domestic  case goods  manufacturing  capacity.  This plan has
 included  the  closing  of 21  manufacturing facilities.  In 2003, pretax restructuring
and impairment charges of $17.8 million were recorded,  consisting of $7.1 million
 charged to cost of operations  and $10.7 million  charged to selling,  general and
 administrative expenses.  Pretax  restructuring  and impairment  charges of $26.4
million were recorded in 2001,  consisting of $5.9 million  charged to cost of operations
 and $20.5 million  charged to selling,  general and  administrative expenses. The
Company believes it has completed the bulk of its domestic manufacturing reorganization
efforts.

To
take advantage of its strong brand names and overall  breadth of product,  the Company
has initiated a store  development  program in order to gain better  control and to
 accelerate  the growth rate of its retail distribution.  This program  will expand the
number of stores  dedicated to selling  exclusively  the  Companys brands.  Currently,
 there are 191 dedicated  stores,  four of which are owned by the Company,  with a
long-term goal of over four hundred stores, many of which may be owned by the Company.

---

Results of Operations

As an aid to understanding the
Company's  results of operations on a comparative  basis, the following table has been
prepared to set forth certain statements of operations and other data for 2003, 2002, and
2001.

|                     
|---------------------
|(Dollars in millions)

| | 2003 | 2002 | 2001
| | ---- | ---- | ----

|                                    |  |  |   |         |  |  | % of      |   |   |         |  |  | % of      |   |   |         |  |  | % of      |  
|----------------------------------- |  |  | - | ------- |  |  | --------- | - | - | ------- |  |  | --------- | - | - | ------- |  |  | --------- | -
|                                    |  |  |   | Dollars |  |  | Net Sales |   |   | Dollars |  |  | Net Sales |   |   | Dollars |  |  | Net Sales |  
|Net sales                           |  |  | $ | 2,367.7 |  |  | 100.0     | % | $ | 2,397.7 |  |  | 100.0     | % | $ | 1,891.3 |  |  | 100.0     | %
|Cost of operations                  |  |  |   | 1,711.4 |  |  | 72.3      |   |   | 1,721.7 |  |  | 71.8      |   |   | 1,387.6 |  |  | 73.4      |  
|Selling, general and                |  |  |   |         |  |  |           |   |   |         |  |  |           |   |   |         |  |  |           |  
|administrative                      |  |  |   |         |  |  |           |   |   |         |  |  |           |   |   |         |  |  |           |  
|expenses                            |  |  |   | 440.3   |  |  | 18.6      |   |   | 424.3   |  |  | 17.7      |   |   | 348.8   |  |  | 18.5      |  
|Depreciation and                    |  |  |   |         |  |  |           |   |   |         |  |  |           |   |   |         |  |  |           |  
|amortization                        |  |  |   | 50.9    |  |  | 2.1       |   |   | 49.3    |  |  | 2.1       |   |   | 55.8    |  |  | 2.9       |  
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|Earnings from operations            |  |  |   | 165.1   |  |  | 7.0       |   |   | 202.4   |  |  | 8.4       |   |   | 99.1    |  |  | 5.2       |  
|Interest expense                    |  |  |   | 19.4    |  |  | 0.8       |   |   | 21.7    |  |  | 0.9       |   |   | 22.0    |  |  | 1.2       |  
|Other income, net                   |  |  |   | 3.5     |  |  | 0.1       |   |   | 3.7     |  |  | 0.2       |   |   | 10.6    |  |  | 0.6       |  
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|Earnings before income tax          |  |  |   |         |  |  |           |   |   |         |  |  |           |   |   |         |  |  |           |  
|expense                             |  |  |   | 149.2   |  |  | 6.3       |   |   | 184.4   |  |  | 7.7       |   |   | 87.7    |  |  | 4.6       |  
|Income tax expense                  |  |  |   | 54.6    |  |  | 2.3       |   |   | 65.6    |  |  | 2.7       |   |   | 29.7    |  |  | 1.5       |  
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|Net earnings                        |  |  | $ | 94.6    |  |  | 4.0       | % | $ | 118.8   |  |  | 5.0       | % | $ | 58.0    |  |  | 3.1       | %
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|Earnings per common share - diluted |  |  | $ | 1.68    |  |  | --        |   | $ | 2.11    |  |  | --        |   | $ | 1.13    |  |  | --        |  
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|Gross profit 1                      |  |  | $ | 614.8   |  |  | 26.0      | % | $ | 633.6   |  |  | 26.4      | % | $ | 466.8   |  |  | 24.7      | %
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  |  |   |         |  | 
|                                    |  | 

|1 |  | The
Company believes that gross profit provides useful information regarding a companys
financial performance. Gross profit has been calculated by subtracting cost of operations
and the portion of depreciation associated with cost of goods sold from net sales.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                     
|---------------------
|(Dollars in millions)

|                                                  |  |  |   | 2003    |  |   | 2002    |  |   | 2001    | 
|------------------------------------------------- |  |  | - | ------- |  | - | ------- |  | - | ------- | 
|Net sales                                         |  |  | $ | 2,367.7 |  | $ | 2,397.7 |  | $ | 1,891.3 | 
|Cost of operations                                |  |  |   | 1,711.4 |  |   | 1,721.7 |  |   | 1,387.6 | 
|Depreciation (associated with cost of goods sold) |  |  |   | 41.5    |  |   | 42.4    |  |   | 36.9    | 
|                                                  |  |  |  
|Gross profit                                      |  |  | $ | 614.8   |  | $ | 633.6   |  | $ | 466.8   | 
|                                                  |  |  |  
|                                                  |  | 

Year Ended December 31, 2003
Compared to Year Ended December 31, 2002

Net
sales for 2003 were  $2,367.7  million  compared to $2,397.7  million in 2002,  a
decrease of $30.0 million  or  1.2%.  2003  was the  third  consecutive  difficult  year
for the  residential  furniture  industry primarily  due to weak consumer  demand for
furniture   particularly  at the upper-end  price points.  However, positive
 comparisons were achieved during the latter part of the year as consumers  reacted
favorably to better economic conditions and financial markets.

---

Cost
of  operations  for 2003 was  $1,711.4  million  compared  to  $1,721.7  million in 2002.
 Cost of operations as a percentage of net sales  increased  from 71.8% for 2002 to 72.3%
for 2003.  The increase in cost of operations as a percentage of net sales was due to $7.1 million of  restructuring  charges in 2003 as well as the
residual effects of lowering domestic manufacturing capacity to meet sourcing
requirements.

Selling,
 general and  administrative  expenses increased to $440.3 million in 2003 from $424.3
million in 2002.  As a  percentage  of net sales,  these  expenses  increased  from 17.7%
in 2002 to 18.6% in 2003.  The increase was due to $10.7 million in asset  impairment and
 restructuring  costs  recorded in 2003.  Other major expense  increases  included
 pensions  (due  primarily to actuarial  assumption  changes) and  advertising  (to
promote the Companys various brands).

Interest
 expense for 2003 totaled  $19.4 million  compared to $21.7  million in 2002.  The
decrease in interest expense reflects the Companys long-term debt reduction program and
lower interest rates.

Other
 income,  net for 2003 totaled $3.5 million  compared to $3.7 million for 2002.  For
2003,  other income  consisted  of interest on  short-term  investments  of $0.7 million
and other  miscellaneous  income and expense items totaling $2.8 million.

Income
tax expense for 2003 totaled $54.6  million,  producing an effective tax rate of 36.6%
 compared with an effective  tax rate of 35.6% for 2002.  The increase in the  effective
 tax rate for 2003 was the result of reduced  state  income tax credits  derived  from
 certain  industrial  revenue  bonds,  which the Company is repaying according to
established amortization schedules.

Earnings
 per common  share on a diluted  basis  were $1.68 and $2.11 for 2003 and 2002,
 respectively. Weighted  average  shares  used in the  calculation  of  earnings  per
 common  share on a  diluted  basis  were 56,255,788 in 2003 and 56,386,827 in 2002,
 respectively.  The reduction in average shares was due to the impact of stock options
using the treasury method of calculation. No stock repurchases occurred in 2003 or 2002.

Gross
profit for 2003 was $614.8  million  compared  with $633.6  million for 2002, a decrease
of 3.0%. The decrease in gross profit margin from 26.4% in 2002 to 26.0% in 2003 was
 primarily  due to asset  impairment and restructuring costs previously discussed.

Year Ended December 31, 2002
Compared to Year Ended December 31, 2001

Net
sales for 2002 were $2,397.7  million  compared to $1,891.3  million in 2001, an increase
of $506.4 million or 26.8%.  Excluding the  acquisition of HDM, which the Company
 acquired as of the close of business on December 28, 2001, the Company's  sales
 (Broyhill,  Lane and  Thomasville)  showed growth of 6.4% for the year. The increase in
net sales  (excluding the acquired  companies) was primarily due to strong  performances
 at the mid-level price points, partially offset by weak activity in the upper-end
product categories.

Cost
of  operations  for 2002 was  $1,721.7  million  compared to $1,387.6  million in 2001.
 The large increase was the result of the  Companys  acquisition  of HDM.  Cost of
operations as a percentage of net sales decreased  from 73.4% for 2001 to 71.8% for 2002.
 This decrease was the result of increased  plant  utilization arising from the sales
volume  increase,  the favorable  impact from the 2001  restructuring  activities  and an
increase in sourcing of lower cost imported products.

Selling,
 general and  administrative  expenses increased to $424.3 million in 2002 from $348.8
million in 2001.  The large increase was the result of the Companys  acquisition of HDM.
 Included in 2001 was an asset impairment charge of $18.0 million. As a percentage of net
sales, selling,  general and administrative  expenses (excluding the asset impairment
charges) rose modestly from 17.5% in 2001 to 17.7% in 2002.

Depreciation
 and amortization for 2002 was $49.3 million compared to $55.8 million in 2001, a
decrease of 11.7%.  The large decrease  occurred because of the adoption of Statement of
Financial  Accounting  Standards No. 142, which

---

eliminated the amortization of goodwill
and other intangible assets with indefinite  lives. This
decrease  was  partially  offset  by the  acquisition  of HDM.  The  amount  of
 depreciation  and  amortization attributed to goodwill and other intangible assets with
indefinite lives in 2001 was $12.1 million.

Interest
 expense for 2002 totaled  $21.7 million  compared to $22.0  million in 2001.  The
decrease in interest  expense  reflects the Companys debt reduction program and lower
interest rates,  partially offset by increased indebtedness due to the acquisition of HDM.

Other
income,  net for 2002 totaled $3.7 million  compared to $10.6 million for 2001.  For
2002,  other income  consisted  of interest on  short-term  investments  of $1.2 million
and other  miscellaneous  income and expense items totaling $2.5 million.  Other income,
 net in 2001 included  non-operating  income of $8.0 million related to the sale of the
 Companys  investment in a company  which leases  exhibition  space to furniture and
accessory manufacturers, partially offset by additions to reserves related to certain
discontinued operations.

Income
tax expense for 2002 totaled $65.6  million,  producing an effective tax rate of 35.6%
 compared with an effective tax rate of 33.8% for 2001. The effective tax rates for both
periods were  adversely  impacted by  provisions  for state and local income taxes.  The
effective tax rate for 2001 was favorably  impacted by an adjustment to income tax
accruals resulting from the completion of certain Federal income tax audits.

Earnings
 per common  share on a diluted  basis  were $2.11 and $1.13 for 2002 and 2001,
 respectively. Weighted  average shares used in the  calculation of earnings per common
share on a basic and diluted basis were 55,507,000 and 56,387,000 in 2002, respectively,
and 50,357,000 and 51,325,000 in 2001, respectively.

Gross
profit for 2002 was $633.6  million  compared with $466.8 million for 2001, an increase
of 35.7%. The increase  resulted  primarily from the acquisition of HDM. The increase in
gross profit margin from 24.7% in 2001 to 26.4% in 2002 was primarily due to increased
plant  utilization  arising from the sales volume increase, the  favorable  impact  from
the 2001  restructuring  activities,  and an  increase  in  sourcing  of lower cost
imported products.  In addition,  the high-end products produced by the HDM companies
 typically generate higher gross margins.

Financial Condition and Liquidity

Liquidity

Cash
and cash  equivalents  at December 31, 2003 totaled  $71.7  million  compared to $15.1
 million at December 31, 2002. For 2003, net cash provided by operating  activities
 totaled $172.5  million.  Net cash used by investing  activities  totaled $39.0 million.
 Net cash used by financing  activities  totaled $76.9 million. The  increase  in cash
 and cash  equivalents  at the end of 2003  came  from the  Companys  completion  of its
deleveraging  program.  During the second half of 2003, the Company began  accumulating
cash and investing it in short-term institutional money market funds.

Working
 capital was $703.2  million at December  31, 2003  compared to $652.1  million at
December 31, 2002.  The current  ratio was  4.8-to-1 at December  31, 2003  compared to
4.3-to-1 at December  31,  2002.  The increase in working capital between years resulted
from the increase in cash and cash equivalents.

At
December 31, 2003,  long-term debt totaled $303.2 million compared to $374.8 million at
December 31, 2002.   The   decrease   in   indebtedness   was   funded   by  cash  flow
 from   operations.   The   Companys debt-to-capitalization  ratio was 23.9% at December
31, 2003  compared to 30.1% at December  31, 2002.  As noted above,  the  Company  has
 completed  its  deleveraging  program  except for  required  amortization  of certain
industrial revenue bonds.

---

Financing Arrangements

To
meet short-term  capital and other financial  requirements,  the Company  maintains a
$550.0 million revolving  credit  facility with a group of financial  institutions.  The
revolving  credit  facility (which was refinanced  on December 18, 2003)  allows for the
issuance of letters of credit and cash  borrowings.  Letter of credit  outstandings  are
limited to no more than  $150.0  million,  with cash  borrowings  limited  only by the
facilitys  maximum  availability  less letters of credit  outstanding.  On December 31,
2003, there were $300.0 million in cash  borrowings  and $22.4  million in  letters of
credit  outstanding,  leaving an excess of $227.6 million available under the facility
for future liquidity needs.

Cash
 borrowings  under the  revolving  credit  facility bear interest at a base rate or at an
adjusted Eurodollar rate plus an applicable  margin which varies,  depending upon the
type of loan the Company  executes. The  applicable  margin over the base rate and
 Eurodollar  rate is subject to adjustment  based upon  achieving certain credit ratings.
 At December 31, 2003, loans outstanding  under the revolving credit facility  consisted
of $300.0 million based on the adjusted  Eurodollar rate which in conjunction  with the
interest rate swaps have a weighted average interest rate of 6.08%.

The
Company  believes that its revolving credit  facility,  together with its historically
 strong cash generation from operations,  will be adequate to meet liquidity
 requirements for the foreseeable future.  These requirements  would include normal,
 historical  capital  expenditure  levels as well as the Companys  recently implemented
 cash dividend  program.  The following table  summarizes the cash payments related to
the Company's outstanding contractual obligations:

|                                      |  |  |   | Less   |  |   |       |  |   |       |  |   | More   |  |   |       | 
|------------------------------------- |  |  | - | ------ |  | - | ----- |  | - | ----- |  | - | ------ |  | - | ----- | 
|                                      |  |  |   | than 1 |  |   | 1-3   |  |   | 4-5   |  |   | than 5 |  |   |       | 
|                                      |  |  |   | year   |  |   | years |  |   | years |  |   | years  |  |   | Total | 
|Long-term debt obligations            |  |  | $ | 1.6    |  | $ | 1.6   |  | $ | 301.6 |  | $ | --     |  | $ | 304.8 | 
|Operating lease  obligations  (net of |  |  |   |        |  |   |       |  |   |       |  |   |        |  |   |       | 
|subleases)                            |  |  |   | 24.7   |  |   | 31.5  |  |   | 22.0  |  |   | 38.9   |  |   | 117.1 | 
|Purchase obligations (1)              |  |  |   | --     |  |   | --    |  |   | --    |  |   | --     |  |   | --    | 
|                                      |  |  | $ | 26.3   |  | $ | 33.1  |  | $ | 323.6 |  | $ | 38.9   |  | $ | 421.9 | 

|(1) |  | The
Company is not a party to any long-term  supply  contracts with respect to the purchase
of raw materials or finished goods.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------

Other

Market Risk

The
 Company is exposed to market  risk from  changes in  interest  rates.  The  Companys
 exposure to interest  rate risk  consists  of its  floating  rate  revolving  credit
 facility.  This risk is managed  using interest rate swaps to fix a portion of the
Companys  floating rate  long-term  debt.  Currently  interest rate swaps fix the entire
outstanding  balance on the revolving credit facility;  therefore,  an increase in
interest rates would have no impact on the Companys net earnings.

Funded Status of the Defined Benefit
Pension Plan

As
of December 31, 2003, the accumulated  benefit  obligation of the Companys  defined
benefit pension plan exceeded the fair value of the plan's  assets.  As a result,  the
minimum  pension  liability  increased by $2.7 million.  Total minimum  pension
 liability at December 31, 2003 was $45.1 million,  $28.2 million,  net of tax. The after
tax charge is recorded as a component of other comprehensive income.

---

Critical Accounting Policies

The
preparation of financial statements in conformity with accounting  principles generally
accepted in the United States of America  requires  management to make  estimates and
 assumptions  that affect the reported amounts of assets and  liabilities  and
 disclosure  of  contingent  assets and  liabilities  at the date of the financial
 statements  and the  reported  amounts of revenues and expenses  during the reported
 period.  Actual results  are  likely  to  differ  from  those  estimates,  but
 management  believes  such  differences  are not significant.

Revenue
 Recognition-The  Company  recognizes  revenue  (sales) when finished  goods are shipped,
 with appropriate provisions for returns and uncollectible accounts.

Allowance
for Doubtful  Accounts-The Company maintains an allowance for doubtful accounts for
estimated losses  resulting  from the inability of the Companys  customers to make
required  payments.  The allowance for doubtful  accounts is based upon the review of
specific  customer  account  balances and an overall aging of the accounts receivable.

Inventories-Inventories
 are stated at the lower of cost (first-in,  first-out) or market.  Inventories are
regularly  reviewed for obsolescence and appropriate  adjustments  recorded,  if
necessary,  to insure their value is recoverable.

Long-lived
 Assets-Long-lived  assets,  which consist  primarily of goodwill,  trademarks and
property, plant and equipment,  are reviewed for impairment whenever events or changes in
business  circumstances indicate the carrying  values of the assets may not be
recoverable.  Impairment  losses are recognized if expected future cash flows of the
related assets are less than the carrying value.

Retirement
 Plans-The  Company  uses various  assumptions  to calculate  retirement  plan  expenses
and obligations.  These assumptions  include discount rate,  expected return on plan
assets and rate of compensation increases. The Company believes the assumptions used are
reasonable;  however,  differences in actual experience or a change in assumptions would
impact the calculated  obligation and future expenses.  For example, a 25 basis point
 reduction in the discount rate would  increase the  accumulated  benefit  obligation by
$10.0 million and result in an additional charge (net of tax benefits) to shareholders
equity of $6.2 million.

Recently Issued Statements of
Financial Accounting Standards

In
December  2003,  the  Financial  Accounting  Standards  Board (FASB)  issued  Statement
of Financial Accounting  Standards (SFAS) No. 132,  Employers  Disclosure about Pensions
and Other  Postretirement  Benefits (an amendment of SFAS Nos. 87, 88 and 106). This
statement  revises  employers  disclosures about pension plans and other  postretirement
 benefit plans. The statement is effective for financial  statements with fiscal years
ending after December 15, 2003;  therefore,  the required  disclosures are included in
the Notes to Consolidated Financial Statements.

In
 December  2003,  the FASB issued a revised  FASB  Interpretation  No.  (FIN) 46,
 Consolidation  of Variable  Interest  Entities.  FIN 46  clarifies  the  application  of
 Accounting  Research  Bulletin  No.  51, Consolidated   Financial   Statements,   to
 certain  entities  in  which  equity  investors  do  not  have  the characteristics  of
a controlling  financial interest or do not have sufficient equity at risk for the entity
to finance its  activities  without  additional  subordinated  financial  support.  The
 statement is effective for financial  statements  issued  after  December  31,  2003.
 The Company has not  created any  variable  interest entities and the adoption of FIN 46
will have no impact on the Companys consolidated financial statements.

---

In
December 2002, the FASB issued SFAS No. 148  Accounting for  Stock-Based  Compensation 
Transition and Disclosure.  SFAS No. 148 amends SFAS No. 123  Accounting for Stock-Based
 Compensation in that it provides transition  methods for entities that voluntarily
 change to the fair value method of accounting for stock based compensation  and requires
 additional  disclosures.  The Company has adopted the disclosure  provisions of SFAS No.
148.

Outlook

Order
trends in the latter part of 2003 were positive in the middle and  upper-middle  price
categories and involved both upholstery and case goods  business.  While the Company
 remains  cautious in its outlook,  it appears that 2004 will begin on a positive note.
 With this in mind on January 28, 2004,  the Company  announced it expected  diluted
 earnings per common share for the first quarter of 2004 to be in the $0.50 to $0.53
range. On February  27, 2004,  the Company  updated its outlook to $0.55 to $0.57.  The
Company  will provide  earnings guidance on a quarter-by-quarter basis until better
visibility is achieved with respect to the full year 2004.

Forward-Looking Statements

The
 Company  herein  has made  forward-looking  statements  within the  meaning  of the
safe  harbor provisions of the Private  Securities  Litigation Reform Act of 1995.
These  forward-looking  statements include the  Companys  expected  sales,  earnings per
share,  profit  margins,  and cash flows,  the effects of certain manufacturing
 realignments and other business strategies,  the prospects for the overall business
 environment, and other  statements  containing the words  expects,  anticipates,
 estimates,  believes,  and words of similar import.  The Company cautions investors
that any such  forward-looking  statements are not guarantees of future  performance  and
that certain  factors may cause actual results to differ  materially  from those in the
forward-looking  statements.  Such factors include, but are not limited to: changes in
economic conditions; loss of market share due to  competition;  failure to anticipate or
respond to changes in consumer tastes and fashion trends;  failure to achieve projected
mix of product sales;  business failures of large customers;  distribution and
manufacturing  realignments and cost savings programs;  increased  reliance on offshore
(import) sourcing of various  products;  fluctuations  in the cost,  availability  and
quality of raw  materials;  product  liability uncertainty;  impairment  of goodwill and
other  intangible  assets.  Other risk factors may be listed from time to time in the
Companys  future public  releases and SEC reports.  Please refer to the Companys
 Annual Report on Form 10-K for a more detailed explanation of the Companys risk factors.

Item 7A.    Quantitative and
Qualitative Disclosures About Market Risk

The
 Company is exposed to market  risk from  changes in  interest  rates.  The  Company's
 exposure to interest rate risk consists of its floating rate Secured Credit  agreement.
 This risk is managed using interest rate swaps to fix a portion of the Companys
 floating rate long-term debt.  Currently,  interest rate swaps fix the entire
 outstanding  balance on the revolving  credit  facility;  therefore,  an increase in
interest  rates would have no impact on the Companys net earnings.

---

Item 8.    Financial Statements and
Supplementary Data

CONSOLIDATED BALANCE
SHEETS

|                                              
|----------------------------------------------
|(Dollars in thousands)                        
|                                              
|Assets                                        
|Current assets:                               
|Cash and cash equivalents                     
|Receivables, less allowances of $19,378       
|($20,751 at December 31, 2002)                
|Inventories (Note 5)                          
|Deferred income taxes                         
|Prepaid expenses and other current assets     
|Total current assets                          
|Property, plant and equipment:                
|Land                                          
|Buildings and improvements                    
|Machinery and equipment                       
|                                              
|Less accumulated depreciation                 
|Net property, plant and equipment             
|Goodwill (Note 6)                             
|Other intangible assets (Note 6)              
|Other assets                                  
|                                              
|                                              
|                                              
|                                              
|                                              
|Liabilities and Shareholders Equity          
|Current liabilities:                          
|Accounts payable                              
|Accrued employee compensation                 
|Accrued interest expense                      
|Other accrued expenses                        
|Total current liabilities                     
|Long-term debt (Note 7)                       
|Deferred income taxes                         
|Other long-term liabilities                   
|                                              
|                                              
|                                              
|                                              
|                                              
|                                              
|                                              
|                                              
|Shareholders equity:                         
|Preferred stock, authorized 10,000,000 shares,
|no par value  issued, none                   
|Common stock, authorized 200,000,000 shares,  
|$1.00 stated value  issued 56,277,066        
|shares at December 31, 2003 and 2002(Note 8)  
|Paid-in capital                               
|Retained earnings                             
|Accumulated other comprehensive income        
|Treasury stock at cost                        
|(330,409 shares at December 31, 2003 and      
|627,884 shares at December 31, 2002)          
|Total shareholders equity                    
|                                              

See accompanying notes to
consolidated financial statements.

---

CONSOLIDATED STATEMENTS
OF OPERATIONS

|                                            
|--------------------------------------------
|(Dollars in thousands except per share data)

|                                             |  |  |   | 2003      |  |   | 2002      |  |   | 2001      | 
|-------------------------------------------- |  |  | - | --------- |  | - | --------- |  | - | --------- | 
|                                            
|Net sales                                    |  |  | $ | 2,367,738 |  | $ | 2,397,709 |  | $ | 1,891,313 | 
|                                            
|Costs and expenses:                          |  | 
|Cost of operations                           |  |  |   | 1,711,422 |  |   | 1,721,714 |  |   | 1,387,632 | 
|                                            
|Selling, general and administrative expenses |  |  |   | 440,267   |  |   | 424,329   |  |   | 348,835   | 
|                                            
|Depreciation and amortization                |  |  |   | 50,923    |  |   | 49,266    |  |   | 55,767    | 
|                                            
|Earnings from operations                     |  |  |   | 165,126   |  |   | 202,400   |  |   | 99,079    | 
|                                            
|Interest expense                             |  |  |   | 19,384    |  |   | 21,732    |  |   | 21,984    | 
|                                            
|Other income, net                            |  |  |   | 3,482     |  |   | 3,756     |  |   | 10,599    | 
|                                            
|Earnings before income tax expense           |  |  |   | 149,224   |  |   | 184,424   |  |   | 87,694    | 
|                                            
|Income tax expense (Note 9)                  |  |  |   | 54,651    |  |   | 65,593    |  |   | 29,664    | 
|                                            
|Net earnings                                 |  |  | $ | 94,573    |  | $ | 118,831   |  | $ | 58,030    | 
|                                            
|Earnings per common share  basic (Note 8)   |  |  | $ | 1.70      |  | $ | 2.14      |  | $ | 1.15      | 
|Earnings per common share  diluted (Note 8) |  |  | $ | 1.68      |  | $ | 2.11      |  | $ | 1.13      | 
|                                             |  | 

See
accompanying notes to consolidated financial statements.

---

CONSOLIDATED STATEMENTS
OF CASH FLOWS

|                       |  |  |  |                        
|---------------------- |  |  |  | -----------------------
|(Dollars in thousands) |  |  |  | Year Ended December 31,

|                                                      |  |  |   | 2003     |   |   | 2002    |   |   | 2001     |  
|----------------------------------------------------- |  |  | - | -------- | - | - | ------- | - | - | -------- | -
|Cash flows from operating activities:                 |  |  |   |          |   |   |         |   |   |          |  
|Net earnings                                          |  |  | $ | 94,573   |   | $ | 118,831 |   | $ | 58,030   |  
|Adjustments to reconcile net earnings                 |  |  |   |          |   |   |         |   |   |          |  
|to net cash provided by operating activities:         |  |  |   |          |   |   |         |   |   |          |  
|Depreciation and amortization                         |  |  |   | 50,923   |   |   | 49,266  |   |   | 55,767   |  
|Other, net (includes gains and losses on investments) |  |  |   | 10,352   |   |   | (1,545  | ) |   | 6,414    |  
|(Increase) decrease in receivables                    |  |  |   | 8,602    |   |   | (15,557 | ) |   | 41,502   |  
|(Increase) decrease in inventories                    |  |  |   | 17,420   |   |   | (62,331 | ) |   | 33,070   |  
|(Increase) decrease in prepaid expenses and           |  |  |   |          |   |   |         |   |   |          |  
|intangible and other assets                           |  |  |   | 4,003    |   |   | (22,614 | ) |   | (6,789   | )
|Increase (decrease) in accounts payable,              |  |  |   |          |   |   |         |   |   |          |  
|accrued interest expense and other accrued expenses   |  |  |   | (12,243  | ) |   | 30,204  |   |   | 7,224    |  
|Increase (decrease) in net deferred tax liabilities   |  |  |   | 736      |   |   | 16,270  |   |   | (8,356   | )
|Increase (decrease) in other long-term liabilities    |  |  |   | (1,913   | ) |   | 212     |   |   | (2,156   | )
|Net cash provided by operating activities             |  |  |   | 172,453  |   |   | 112,736 |   |   | 184,706  |  
|Cash flows from investing activities:                 |  |  |   |          |   |   |         |   |   |          |  
|Acquisition of business, net of cash acquired         |  |  |   | --       |   |   | --      |   |   | (176,235 | )
|Proceeds from the disposal of assets                  |  |  |   | 2,495    |   |   | 2,924   |   |   | 18,197   |  
|Additions to property, plant and equipment            |  |  |   | (41,451  | ) |   | (50,214 | ) |   | (22,991  | )
|Net cash used by investing activities                 |  |  |   | (38,956  | ) |   | (47,290 | ) |   | (181,029 | )
|Cash flows from financing activities:                 |  |  |   |          |   |   |         |   |   |          |  
|Payments for debt issuance costs                      |  |  |   | (1,709   | ) |   | --      |   |   | --       |  
|Additions to long-term debt                           |  |  |   | 300,000  |   |   | --      |   |   | 140,000  |  
|Payments of long-term debt                            |  |  |   | (371,600 | ) |   | (79,600 | ) |   | (147,600 | )
|Payments of cash dividends                            |  |  |   | (6,975   | ) |   | --      |   |   | --       |  
|Proceeds from the issuance of treasury stock          |  |  |   | 3,381    |   |   | 13,521  |   |   | 5,024    |  
|Net cash used by financing activities                 |  |  |   | (76,903  | ) |   | (66,079 | ) |   | (2,576   | )
|Net increase (decrease) in cash and cash equivalents  |  |  |   | 56,594   |   |   | (633    | ) |   | 1,101    |  
|Cash and cash equivalents at beginning of period      |  |  |   | 15,074   |   |   | 15,707  |   |   | 14,606   |  
|Cash and cash equivalents at end of period            |  |  | $ | 71,668   |   | $ | 15,074  |   | $ | 15,707   |  
|Supplemental Disclosure:                              |  | 
|Cash payments for income taxes, net                   |  |  | $ | 53,296   |   | $ | 36,807  |   | $ | 26,083   |  
|Cash payments for interest expense                    |  |  | $ | 20,192   |   | $ | 20,673  |   | $ | 28,940   |  
|Issuance of common stock for acquisition              |  |  | $ | --       |   | $ | --      |   | $ | 110,640  |  
|                                                      |  | 

See
accompanying notes to consolidated financial statements.

---

CONSOLIDATED STATEMENTS
OF SHAREHOLDERS' EQUITY

|                       |  |  |  |                        
|---------------------- |  |  |  | -----------------------
|(Dollars in thousands) |  |  |  | Year Ended December 31,

|                                              |  |  |   | 2003    |   |   | 2002    |   |   | 2001    |  
|--------------------------------------------- |  |  | - | ------- | - | - | ------- | - | - | ------- | -
|Common Stock:                                 |  |  |   |         |   |   |         |   |   |         |  
|Beginning balance                             |  |  | $ | 56,277  |   | $ | 56,277  |   | $ | 52,277  |  
|Stock issued for acquisition of business      |  |  |   | --      |   |   | --      |   |   | 4,000   |  
|Ending balance                                |  |  | $ | 56,277  |   | $ | 56,277  |   | $ | 56,277  |  
|Paid-In Capital:                              |  |  |   |         |   |   |         |  
|Beginning balance                             |  |  | $ | 221,696 |   | $ | 219,469 |   | $ | 118,360 |  
|Stock plans activity (Note 8)                 |  |  |   | (308    | ) |   | 2,227   |   |   | (5,531  | )
|Stock issued for acquisition of business      |  |  |   | --      |   |   | --      |   |   | 106,640 |  
|Ending balance                                |  |  | $ | 221,388 |   | $ | 221,696 |   | $ | 219,469 |  
|Retained Earnings:                            |  |  |   |         |   |   |         |   |   |         |  
|Beginning balance                             |  |  | $ | 639,334 |   | $ | 520,503 |   | $ | 462,473 |  
|Net earnings                                  |  |  |   | 94,573  |   |   | 118,831 |   |   | 58,030  |  
|Cash dividends (per share: 2003 - $0.125)     |  |  |   | (6,975  | ) |   | --      |   |   | --      |  
|Ending balance                                |  |  | $ | 726,932 |   | $ | 639,334 |   | $ | 520,503 |  
|Accumulated Other Comprehensive Income:       |  |  |   |         |   |   |         |   |   |         |  
|Beginning balance                             |  |  | $ | (35,917 | ) | $ | (5,108  | ) | $ | --      |  
|Other comprehensive income                    |  |  |   | 4,471   |   |   | (30,809 | ) |   | (5,108  | )
|Ending balance                                |  |  | $ | (31,446 | ) | $ | (35,917 | ) | $ | (5,108  | )
|Treasury Stock:                               |  |  |   |         |   |   |         |   |   |         |  
|Beginning balance                             |  |  | $ | (11,875 | ) | $ | (31,482 | ) | $ | (49,205 | )
|Stock plans activity (Note 8)                 |  |  |   | 5,626   |   |   | 19,607  |   |   | 17,723  |  
|Ending balance                                |  |  | $ | (6,249  | ) | $ | (11,875 | ) | $ | (31,482 | )
|Total Shareholders Equity                    |  |  | $ | 966,902 |   | $ | 869,515 |   | $ | 759,659 |  
|Comprehensive Income:                         |  |  |   |         |   |   |         |   |   |         |  
|Net earnings                                  |  |  | $ | 94,573  |   | $ | 118,831 |   | $ | 58,030  |  
|Other comprehensive income, net of tax:       |  | 
|Cumulative effect of adopting SFAS No. 133    |  |  |   | --      |   |   | --      |   |   | 2,960   |  
|Financial instruments accounted for as hedges |  |  |   | 6,342   |   |   | (3,872  | ) |   | (8,068  | )
|Minimum pension liability                     |  |  |   | (1,658  | ) |   | (26,512 | ) |   | --      |  
|Foreign currency translation                  |  |  |   | (213    | ) |   | (425    | ) |   | --      |  
|Other comprehensive income                    |  |  |   | 4,471   |   |   | (30,809 | ) |   | (5,108  | )
|                                              |  |  | $ | 99,044  |   | $ | 88,022  |   | $ | 52,922  |  

See
accompanying notes to consolidated financial statements.

---

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

(Dollars in thousands
except per share data)

1.    The Company

Furniture
 Brands  International,  Inc.  (referred to herein as the  Company)  is one of the
largest home furniture  manufacturers  in the United  States.  During the year ended
December 31, 2003, the Company had four primary operating  subsidiaries:  Broyhill
Furniture Industries,  Inc.; Lane Furniture  Industries,  Inc.; Thomasville Furniture
Industries, Inc. and HDM Furniture Industries, Inc.

On
 December  28,  2001,  the Company  acquired  through a wholly  owned  subsidiary   HDM
 Furniture Industries,  Inc. - substantially all of the assets and liabilities of
Henredon  Furniture  Industries,  Drexel Heritage  Furnishings  and  Maitland-Smith.
 Since the  acquisition  occurred prior to the last business day of 2001, it was
 reflected in the  Companys  consolidated  balance  sheet as of December 31, 2001;
 however,  the Companys  consolidated  results of  operations  for 2001 do not include
any of the  operations of the acquired companies.

Substantially
 all of the Companys sales are made to unaffiliated  furniture  retailers.  The Company
has a diversified  customer base with no one customer  accounting for 10% or more of
consolidated net sales and no particular  concentration  of credit risk in one economic
sector.  Foreign  operations and net sales are not material.

2.    Significant Accounting Policies

The
significant accounting policies of the Company are set forth below.

Use of Estimates

The
preparation of financial  statements in conformity with accounting  principles  generally
accepted in the  United  States of America  requires  management  to make  estimates  and
 assumptions  that  affect the reported  amounts of assets and liabilities and disclosure
of contingent  assets and liabilities at the date of the financial  statements and the
reported  amounts of sales and expenses  during the reported  period.  Actual results
 are  likely to  differ  from  those  estimates,  but  management  believes  such
 differences  are not significant.

Principles of Consolidation

The
 consolidated   financial  statements  include  the  accounts  of  the  Company  and  all
 of  its subsidiaries.  All material  intercompany  transactions are eliminated in
 consolidation.  The Companys fiscal year ends on December 31. The operating  companies
 included in the consolidated  financial  statements  report their  results  of
 operations  as of the  Saturday  closest  to  December  31.  Accordingly,  the  results
 of operations  will  periodically  include a 53-week  fiscal year.  Fiscal year 2003 was
a 53-week year and fiscal years 2002 and 2001 were 52-week years.

Cash and Cash Equivalents

The
Company  considers all short-term  investments  with an original  maturity of three
months or less to be cash equivalents.

Inventories

Inventories
 are  stated  at the  lower of cost  (first-in,  first-out)  or  market.  Inventories
 are regularly reviewed for obsolescence and appropriate  adjustments recorded, if
necessary,  to insure their value is recoverable.

---

Property, Plant and Equipment

Property,
 plant and equipment are recorded at cost when acquired.  Depreciation  is calculated
 using both  accelerated  and  straight-line  methods based on the estimated  useful
lives of the  respective  assets, which  generally range from 3 to 45 years for buildings
and  improvements  and from 3 to 12 years for machinery and  equipment.  Long-lived
 assets  are  reviewed  for  impairment  whenever  events or  changes  in  business
circumstances  indicate  the  carrying  value of the  assets  may not be  recoverable.
 Impairment  losses  are recognized if expected future cash flows of the related assets
are less than their carrying value.

Intangible Assets

Intangible
 assets  consist of  goodwill  and  trademarks.  Effective  with the  Companys  adoption
of Statement of Financial  Accounting  Standards (SFAS) No. 142, Goodwill and Other
Intangible Assets, on January 1, 2002,  goodwill and intangible assets with indefinite
lives are no longer  amortized,  but instead tested for impairment.  Prior to adoption of
SFAS No. 142, goodwill and trademarks were amortized on a straight-line  basis over 20 to
40-year  periods.  Intangible  assets are be reviewed for impairment  annually or
whenever  events or changes  in  business  circumstances  indicate  the  carrying  value
 of the  assets  may  not  be  recoverable. Impairment  losses are  recognized  if future
 cash  flows of the  related  assets are less than their  carrying values.

Fair Value of Financial Instruments

The
Company  considers the carrying  amounts of cash and cash  equivalents,  receivables,
 and accounts payable to approximate fair value because of the short maturity of these
financial instruments.

Amounts
 outstanding  under  long-term  debt  agreements  are considered to be carried on the
financial statements at their estimated fair values because they accrue  interest at
rates which generally  fluctuate with interest rate trends.

The
Company  periodically  uses interest rate swap  agreements  (derivative  financial
 instruments) to hedge risk  associated  with its floating rate long-term  debt.
 Effective  January 1, 2001, the Company adopted SFAS No.  133,  Accounting  for
 Derivative  Instruments  and  Hedging  Activities,  which  requires  that all
derivative  instruments  be  recorded  on the  balance  sheet  as an asset  or  liability
 with any gain or loss recorded as a component of accumulated other comprehensive  income
until recognized in earnings.  The fair value of the swap  agreements  is based upon
quoted  market  prices.  The net amount to be paid or received  under the interest  rate
swap  agreements is recorded as a component of interest  expense.  The fair value of the
interest rate swap agreements is included in other long-term liabilities as of December
31, 2003 and 2002.

Revenue Recognition

The
Company recognizes sales when finished goods are shipped,  with appropriate  provisions
for returns and uncollectible accounts.

Advertising Costs

Advertising
 production costs are expensed when  advertisements  are first aired or distributed.
 Total advertising costs for 2003, 2002 and 2001 were $77,124, $72,243 and $57,453,
respectively.

Income Taxes

Deferred
 tax  assets  and  liabilities  are  recognized  for the  estimated  future  tax
 consequences attributable  to  differences

---

between  the  financial  statement
 carrying  amounts  of  existing  assets  and liabilities and their  respective
tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates in
effect for the year in which those  temporary  differences  are  expected to be
 recovered  or settled. The effect of a change in tax rates on  deferred  tax  assets and
 liabilities  is  recognized  in income in the period that includes the enactment date.

Stock-Based Compensation

The
Company  accounts for  stock-based  compensation  using the intrinsic value method as
prescribed by Accounting  Principles Board Opinion No. 25. Had compensation  cost for the
Companys  stock-based  compensation plan been  determined  consistent with SFAS No. 123,
the Companys net earnings and net earnings per share would have been as follows:

| |  |                        
| |  | -----------------------
| |  | Year Ended December 31,

|                              |  |  |   | 2003   |  |   | 2002    |  |   | 2001   | 
|----------------------------- |  |  | - | ------ |  | - | ------- |  | - | ------ | 
|                             
|                             
|                             
|                             
|Net Earnings                  |  |  |   |        |  |   |         |  |   |        | 
|As reported                   |  |  | $ | 94,573 |  | $ | 118,831 |  | $ | 58,030 | 
|Pro forma                     |  |  | $ | 89,297 |  | $ | 113,539 |  | $ | 52,648 | 
|                             
|                             
|                             
|Earnings per share - basic:   |  |  |   |        |  |   |         |  |   |        | 
|As reported                   |  |  | $ | 1.70   |  | $ | 2.14    |  | $ | 1.15   | 
|Pro forma                     |  |  | $ | 1.60   |  | $ | 2.05    |  | $ | 1.05   | 
|                             
|                             
|                             
|Earnings per share - diluted: |  |  |   |        |  |   |         |  |   |        | 
|As reported                   |  |  | $ | 1.68   |  | $ | 2.11    |  | $ | 1.13   | 
|Pro forma                     |  |  | $ | 1.60   |  | $ | 2.02    |  | $ | 1.04   | 
|                              |  | 

The
 weighted  average  fair value of options  granted is  estimated  as of the date of grant
using the Black-Scholes option pricing model with the following weighted average
assumptions:

|                        |  |      |   |      |   |      |  
|----------------------- |  | ---- | - | ---- | - | ---- | -
|                       
|                        |  | 2003 |   | 2002 |   | 2001 |  
|                       
|Risk free interest rate |  | 3.0  | % | 4.3  | % | 4.9  | %
|Expected dividend yield |  | 0.0  | % | 0.0  | % | 0.0  | %
|Expected life (years)   |  | 6.0  |   | 6.0  |   | 6.0  |  
|Expected volatility     |  | 50.0 | % | 49.0 | % | 47.0 | %
|                       

Reclassification

Certain
prior year amounts have been reclassified to conform to the current year presentation.

3.    Restructuring and Asset
Impairment Charges

During
2003,  the Company  continued the  restructuring  of its domestic  manufacturing
 capacity which began in 2001.  The  restructuring  in 2003  included  the  closing  of
four  manufacturing  facilities  and the realignment  of two  other  facilities,  as well
as  asset  impairment  charges  related  to the  write-down  of previously  closed
 facilities  in order to  accelerate  their  disposal.  Pretax  restructuring  of $8,415
 and impairment  charges of $9,438 were recorded  during 2003 of which $7,151 was charged
to cost of  operations  and $10,702 was charged to selling, general and administrative
expenses.

During
2001, the Company implemented a plan to reduce its domestic case goods  manufacturing
 capacity. This plan included the closing of 12 manufacturing  facilities and a permanent
 reduction of  approximately  20% of the  Company's  total  employment.  Pretax
 restructuring  and  impairment  charges of $26,352 were  recorded during 2001 of which
 $18,000  related to a fixed asset  impairment  charge for  properties  and  machinery
 and equipment  of the closed  facilities  and is included  in selling,  general  and
 administrative  expenses.  The balance,  consisting  of $5,913  charged to cost of
 operations

---

and  $2,439 charged to  selling,  general  and
administrative expenses, related to employee severance and benefits costs and plant
shutdown costs.

Real
estate with a carrying  value of $7,223 and $7,387 was included in other assets as of
December 31, 2003 and 2002,  respectively.  As noted  previously,  the Company  recorded
 impairment  charges  during 2003 to write-down all such facilities to net realizable
value to enable an acceleration of the disposal process.

There
were no restructuring charges included in other accrued expenses at December 31, 2003 and
2002.

4.    Acquisition of Business

On
 December  28,  2001,  the  Company  acquired  through a wholly  owned  subsidiary   HDM
 Furniture Industries,  Inc.  substantially  all of the assets and liabilities of
Henredon  Furniture  Industries,  Drexel Heritage  Furnishings  and  Maitland-Smith  for
 $287,640.  The  acquisition  established  the  Company  as  the residential  furniture
 industry's  only  full-line  resource  in all middle  and upper  price  categories.  The
purchase price,  including capitalized expenses of approximately $2,000,  consisted of
$177,000 paid in cash and four million  shares of the  Companys  common  stock  valued
at $110,640.  The value of the common stock issued was  determined  based on the average
 market  price over the two-day  period  before and after the terms of the acquisition
 were agreed to and  announced.  Since the  acquisition  occurred  prior to the last
business day of 2001,  it was  reflected in the  Companys  consolidated  balance  sheet
as of December 31, 2001;  however,  the Companys  consolidated  results of  operations
 for 2001 do not include any of the  operations  of the acquired companies.

The
following unaudited summary,  prepared on a pro forma basis,  combines the consolidated
 results of operations of the Company for 2001 with those of the acquired  companies as
if the  transaction  had occurred at the beginning of 2001.

| | 
| | 
| | 
| | 
| | 

|Net sales                            |  |  | $ | 2,311,647 | 
|------------------------------------ |  |  | - | --------- | 
|Net earnings                         |  |  |   | 68,260    | 
|Earnings per common share  diluted: |  |  | $ | 1.23      | 

Such
pro forma amounts are not necessarily  indicative of what actual results of operations
 might have been if the acquisition had been effective at the beginning of the year
presented.

5.    Inventories

Inventories
are summarized as follows:

|                  |  |  |   |              |  |   |              | 
|----------------- |  |  | - | ------------ |  | - | ------------ | 
|                  |  |  |   | December 31, |  |   | December 31, | 
|                  |  |  |   | 2003         |  |   | 2002         | 
|Finished products |  |  | $ | 252,582      |  | $ | 244,193      | 
|Work-in-process   |  |  |   | 52,513       |  |   | 65,196       | 
|Raw materials     |  |  |   | 109,589      |  |   | 122,715      | 
|                  |  |  | $ | 414,684      |  | $ | 432,104      | 

---

6.    Goodwill and Other
Intangible Assets

Goodwill
and other intangible assets include the following:

| |  | 
| |  | 
| |  | 

|                               |  |  |   | 2003    |  |   | 2002    | 
|------------------------------ |  |  | - | ------- |  | - | ------- | 
|Goodwill                       |  |  | $ | 266,527 |  | $ | 267,218 | 
|Less: accumulated amortization |  |  |   | 82,738  |  |   | 82,738  | 
|Goodwill                       |  |  | $ | 183,789 |  | $ | 184,480 | 
|                               |  |  |   |         |  |   |         | 
|Trademarks and trade names     |  |  | $ | 206,179 |  | $ | 207,928 | 
|Less: accumulated amortization |  |  |   | 36,508  |  |   | 36,920  | 
|Other intangible assets        |  |  | $ | 169,671 |  | $ | 171,008 | 
|                               |  | 

On
January 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible
Assets.  SFAS No. 142 requires  that  goodwill and other  intangible  assets with
 indefinite  lives no longer be  amortized,  but instead be tested annually for
impairment or whenever events or changes in business  circumstances  indicate the
carrying value of the assets may not be  recoverable.  No impairment was recorded in 2003
or 2002. The Companys other intangible  assets consist of trademarks and trade names all
having  indefinite lives. The following table presents net earnings on a  comparative
 basis,  after  adjusting  to exclude the  amortization  of goodwill and other intangible
assets:

| |  |  |  |                        
| |  |  |  | -----------------------
| |  |  |  | Year Ended December 31,

|                                     |  |  |   | 2003   |  |   | 2002    |  |   | 2001   | 
|------------------------------------ |  |  | - | ------ |  | - | ------- |  | - | ------ | 
|                                    
|Net earnings:                        |  |  |   |        |  |   |         |  |   |        | 
|As reported                          |  |  | $ | 94,573 |  | $ | 118,831 |  | $ | 58,030 | 
|Exclude amortization of goodwill     |  |  |   |        |  |   |         |  |   |        | 
|and other intangible assets (net     |  |  |   |        |  |   |         |  |   |        | 
|of income tax benefit of $2,383)     |  |  |   | --     |  |   | --      |  |   | 11,162 | 
|                                    
|                                     |  |  | $ | 94,573 |  | $ | 118,831 |  | $ | 69,192 | 
|                                    
|Earnings per common share  basic:   |  |  |   |        |  |   |         |  |   |        | 
|As reported                          |  |  | $ | 1.70   |  | $ | 2.14    |  | $ | 1.15   | 
|As adjusted                          |  |  | $ | 1.70   |  | $ | 2.14    |  | $ | 1.37   | 
|                                    
|Earnings per common share  diluted: |  |  |   |        |  |   |         |  |   |        | 
|As reported                          |  |  | $ | 1.68   |  | $ | 2.11    |  | $ | 1.13   | 
|As adjusted                          |  |  | $ | 1.68   |  | $ | 2.11    |  | $ | 1.35   | 

7.    Long-Term Debt

Long-term
debt consists of the following:

|                                      |  | 
|------------------------------------- |  | 
|                                      |  | 
|                                      |  | 
|                                     
|Revolving credit facility (unsecured) |  | 
|Other                                 |  | 
|                                      |  | 

The
following discussion summarizes certain provisions of the long-term debt.

---

Revolving Credit Facility

On
December 18, 2003, the Company  refinanced its revolving  credit  facility with a group
of financial institutions.  The new facility is an unsecured  revolving  credit  facility
with a commitment of $550,000 and a maturity  date of June 7, 2008.  The  facility
 allows for  issuance  of letters of credit and cash  borrowings. Letter of credit
 outstandings  are limited to no more than $150,000,  with cash borrowings  limited only
by the facility's maximum availability less letters of credit outstanding.

Currently,
 for letter of credit  issuances,  a fee of 1.00% per annum  (subject  to
 increase/decrease based upon the Company  achieving  certain  credit  ratings from
 Standard & Poors and Moodys) is assessed for the  account  of the  lenders  ratably.
 A further  fee of 0.125%  is  assessed  on  standby  letters  of credit representing a
facing fee. A customary  administrative  charge for processing  letters of credit is also
payable to the relevant issuing bank.  Letter of credit fees are payable quarterly in
arrears.

Cash
 borrowings  under the  revolving  credit  facility bear interest at a base rate or at an
adjusted Eurodollar rate plus an applicable  margin which varies,  depending upon the
type of loan the Company  executes. The  applicable  margin over the base rate and
 adjusted  Eurodollar  rate is subject to  adjustment  based upon achieving  certain
credit ratings.  At December 31, 2003, loans  outstanding under the revolving credit
facility consisted of $300,000 based on the adjusted  Eurodollar  rate, which in
conjunction with the interest rate swaps have a weighted average interest rate of 6.08%.

At
 December  31,  2003,  there  were  $300,000  of cash  borrowings  and  $22,396 in
letters of credit outstanding  under the revolving credit facility,  leaving an excess of
$227,604  available for future liquidity needs.

The
revolving credit facility has no mandatory principal payments;  however,  the commitment
matures on June 7, 2008.  The  facility  requires  the  Company to meet  certain
 financial  covenants  including a minimum consolidated  net worth  ($775,000 as of
December 31, 2003) and maximum  leverage  ratio (ratio of  consolidated debt to
 consolidated  EBITDA (as defined in the credit  agreement)  of 2.75 to 1). In  addition,
 the  facility requires  repayment  upon the  occurrence  of a change of control of the
Company.  As of December 31, 2003,  the Company was in compliance with all financial
covenants.

Other

Other
 long-term  debt consists of various  industrial  revenue bonds with interest  rates
ranging from approximately 6.6% to 7.0%.

Interest Rate Swap Agreements

In
May 2001, in order to reduce the impact of changes in interest  rates on its floating
rate long-term debt, the Company  entered into three interest rate swap  agreements  each
having a notional  amount of $100,000 and a  termination  date in May 2004.  The Company
 pays the  counterparties  a blended  fixed rate of 4.93% per annum and receives payment
based upon the floating three-month LIBOR rate.

8.    Common Stock

The
Companys restated certificate of incorporation  includes  authorization to issue up to
200 million shares of common  stock with a $1.00 per share stated  value.  As of December
 31,  2003,  56,277,066  shares of common stock were issued.

The
Company has been  authorized by its Board of Directors to repurchase  its common stock
from time to time in open market or privately  negotiated  transactions.  Common stock
 repurchases  are recorded as treasury stock and may be used for  general  corporate
 purposes.  As of  December  31,  2003,  the  Company has Board of Directors
authorization for the repurchase of an additional $100,000 of its common stock.

---

Shares
of common stock were reserved for the following purposes at December 31, 2003:

|                      |  | Number of Shares | 
|--------------------- |  | ---------------- | 
|Common stock options: | 
|Granted               |  | 4,172,909        | 
|Available for grant   |  | 2,256,875        | 
|                      |  | 6,429,784        | 

The
 Company  has  outstanding  option  grants  pursuant  to the 1992  Stock  Option  Plan
and the 1999 Long-Term Incentive Plan.  These  plans  are  administered  by the
 Executive  Compensation  and  Stock  Option  Committee  of the Board of Directors  and
permit  certain key  employees to be granted  nonqualified  options,  performance-based
 options, restricted  stock,  or  combinations  thereof.  Options  must be issued at
market value on the date of grant and expire in a maximum of ten years.  On April 25,
2002,  stockholders  approved an amendment to the 1999 Long-Term Incentive  Plan.  The
 amendment  provided for an increase in the number of shares  reserved  for issuance
 from 2,250,000 to 4,950,000 shares of common stock.

In
2003, the Company issued 4,000 shares of restricted  stock. The restricted  shares vest
over various periods  from three to five years.  The  deferred  compensation  cost is
amortized to expense over the period of time the restrictions are in place and the
unamortized  portion is classified as a reduction of  paid-in-capital in the Companys
consolidated balance sheets.

Changes
in options granted and outstanding are summarized as follows:

| |  |  |                        
| |  |  | -----------------------
| |  |  | Year Ended December 31,

| |  |  | 2003 | 2002 | 2001
| |  |  | ---- | ---- | ----

|                         |  |  |  |           |   |   | Average |  |  |           |   |   | Average |  |  |           |   |   | Average | 
|------------------------ |  |  |  | --------- | - | - | ------- |  |  | --------- | - | - | ------- |  |  | --------- | - | - | ------- | 
|                         |  |  |  | Shares    |   |   | Price   |  |  | Shares    |   |   | Price   |  |  | Shares    |   |   | Price   | 
|                        
|Beginning of period      |  |  |  | 3,610,984 |   | $ | 20.36   |  |  | 4,298,916 |   | $ | 17.55   |  |  | 4,345,634 |   | $ | 13.61   | 
|Granted                  |  |  |  | 988,300   |   |   | 21.54   |  |  | 425,900   |   |   | 34.67   |  |  | 954,900   |   |   | 24.00   | 
|Exercised                |  |  |  | (299,475  | ) |   | 11.29   |  |  | (996,782  | ) |   | 13.57   |  |  | (937,093  | ) |   | 5.36    | 
|Cancelled                |  |  |  | (126,900  | ) |   | 24.80   |  |  | (117,050  | ) |   | 27.16   |  |  | (64,525   | ) |   | 24.48   | 
|                        
|End of period            |  |  |  | 4,172,909 |   | $ | 21.16   |  |  | 3,610,984 |   | $ | 20.36   |  |  | 4,298,916 |   | $ | 17.55   | 
|                        
|Exercisable at           |  |  |  |           |   |   |         |  |  |           |   |   |         |  |  |           |   |   |         | 
|end of period            |  |  |  | 2,252,259 |   |   |         |  |  | 2,038,134 |   |   |         |  |  | 2,324,391 |   |   |         | 
|                        
|Weighted average fair    |  |  |  |           |   |   |         |  |  |           |   |   |         |  |  |           |   |   |         | 
|value of options granted |  |  |  |           |   | $ | 10.89   |  |  |           |   | $ | 18.08   |  |  |           |   | $ | 12.40   | 
|                        

Summarized
 information  regarding  stock  options  outstanding  and  exercisable  at December 31,
2003 follows:

| |  |  |  |             |  |            
| |  |  |  | ----------- |  | -----------
| |  |  |  | Outstanding |  | Exercisable

|Range of  |  |  |  |           |  |  | Average     |  |   |         |  |  |           |  |   |         | 
|--------- |  |  |  | --------- |  |  | ----------- |  | - | ------- |  |  | --------- |  | - | ------- | 
|Exercise  |  |  |  |           |  |  | Contractual |  |   | Average |  |  |           |  |   | Average | 
|Prices    |  |  |  | Shares    |  |  | Life        |  |   | Price   |  |  | Shares    |  |   | Price   | 
|Up to $10 |  |  |  | 177,959   |  |  | 1.0         |  | $ | 8.28    |  |  | 177,959   |  | $ | 8.28    | 
|$10 - $20 |  |  |  | 1,177,400 |  |  | 3.7         |  |   | 14.96   |  |  | 1,035,575 |  |   | 14.72   | 
|$20 - $30 |  |  |  | 2,407,450 |  |  | 6.6         |  |   | 22.91   |  |  | 898,700   |  |   | 23.66   | 
|Over $30  |  |  |  | 410,100   |  |  | 6.6         |  |   | 34.24   |  |  | 140,025   |  |   | 33.49   | 
|          |  |  |  | 4,172,909 |  |  | 5.6         |  | $ | 21.16   |  |  | 2,252,259 |  | $ | 18.95   | 

---

Weighted
 average  shares used in the  computation  of basic and diluted  earnings per common
share for 2003, 2002, and 2001 are as follows:

| |  |  |                        
| |  |  | -----------------------
| |  |  | Year Ended December 31,

|                                  |  |  |  | 2003       |  |  | 2002       |  |  | 2001       | 
|--------------------------------- |  |  |  | ---------- |  |  | ---------- |  |  | ---------- | 
|Weighted average shares used for  |  |  |  |            |  |  |            |  |  |            | 
|basic earnings per common share   |  |  |  | 55,736,871 |  |  | 55,506,837 |  |  | 50,356,763 | 
|Effect of dilutive securities:    |  |  |  |            |  |  |            |  |  |            | 
|Stock options                     |  |  |  | 518,917    |  |  | 879,990    |  |  | 968,227    | 
|Weighted average shares used for  |  |  |  |            |  |  |            |  |  |            | 
|diluted earnings per common share |  |  |  | 56,255,788 |  |  | 56,386,827 |  |  | 51,324,990 | 

Excluded
from the  computation  of diluted  earnings per common share were options to purchase
 432,600 and  441,900  shares at an average  price of $33.94 and $34.19  per share
 during  2003 and 2002,  respectively. These  options  have been  excluded  from the
diluted  earnings  per share  calculation  since  their  impact is anti-dilutive.

9.    Income Taxes

Income
tax expense is comprised of the following:

| |  |  |  |                        
| |  |  |  | -----------------------
| |  |  |  | Year Ended December 31,

|                |  |  |   | 2003   |  |   | 2002   |  |   | 2001   |  
|--------------- |  |  | - | ------ |  | - | ------ |  | - | ------ | -
|Current:        |  | 
|Federal         |  |  | $ | 49,124 |  | $ | 45,208 |  | $ | 34,672 |  
|State and local |  |  |   | 4,633  |  |   | 3,307  |  |   | 562    |  
|Foreign         |  |  |   | 158    |  |   | 808    |  |   | --     |  
|                |  |  |   | 53,915 |  |   | 49,323 |  |   | 35,234 |  
|Deferred        |  |  |   | 736    |  |   | 16,270 |  |   | (5,570 | )
|                |  |  | $ | 54,651 |  | $ | 65,593 |  | $ | 29,664 |  

The
following table  reconciles the differences  between the federal  corporate  statutory
rate and the Company's effective income tax rate:

| |  |  |                        
| |  |  | -----------------------
| |  |  | Year Ended December 31,

|                                                |  |  |  | 2003 |   |  | 2002 |   |  | 2001 |  
|----------------------------------------------- |  |  |  | ---- | - |  | ---- | - |  | ---- | -
|Federal corporate statutory rate                |  |  |  | 35.0 | % |  | 35.0 | % |  | 35.0 | %
|State and local income taxes, net of            |  |  |  |      |   |  |      |   |  |      |  
|federal tax benefit                             |  |  |  | 2.1  |   |  | 1.2  |   |  | 0.4  |  
|Nondeductible amortization of intangible assets |  |  |  | --   |   |  | --   |   |  | 2.9  |  
|Adjustments to income tax accruals              |  |  |  | --   |   |  | --   |   |  | (4.3 | )
|Other                                           |  |  |  | (0.5 | ) |  | (0.6 | ) |  | (0.2 | )
|Effective income tax rate                       |  |  |  | 36.6 | % |  | 35.6 | % |  | 33.8 | %

---

The
sources of the tax effects for temporary  differences that give rise to the deferred tax
assets and liabilities were as follows:

|                                          |  | 
|----------------------------------------- |  | 
|                                          |  | 
|                                          |  | 
|Deferred tax assets attributable to:      |  | 
|Expense accruals                          |  | 
|Valuation allowances                      |  | 
|Asset impairment charges                  |  | 
|Employee pension and other benefit plans  |  | 
|Other                                     |  | 
|Total deferred tax assets                 |  | 
|Deferred tax liabilities attributable to: |  | 
|Fair value adjustments                    |  | 
|Depreciation                              |  | 
|Inventory costs capitalized               |  | 
|Other                                     |  | 
|Total deferred tax liabilities            |  | 
|Net deferred tax liabilities              |  | 

10.    Employee Benefits

The
Company  sponsors or contributes  to retirement  plans covering  substantially  all
employees.  The total cost of all plans for 2003, 2002, and 2001 was $10,678, $7,075, and
$1,425, respectively.

Company-Sponsored Defined Benefit
Plans

Employees
are covered  primarily by  noncontributory  plans,  funded by Company  contributions to
trust funds,  which are held for the sole benefit of employees.  Cash contributions to
the trust funds during 2003 and 2002 were $10,000 and $15,000,  respectively.  The
Company  expects to make an additional  cash  contribution of $15,000  during the first
 quarter of 2004.  Monthly  retirement  benefits  are based upon  service and pay with
employees  becoming  vested upon completion of five years of service.  Annual plan
benefit  payments to retirees and/or beneficiaries are expected to approximate $23,000
for the next ten years.

The
investment  objective of the trust funds is to ensure,  over the long-term  life of the
trusts,  an adequate  asset balance to support the benefit  obligations  to
 participants,  retirees and  beneficiaries.  In meeting  this  objective,  the  Company
 seeks to achieve  investment  returns at or above  selected  benchmarks consistent  with
a prudent level of  diversification.  The Company  retains  registered  investment
 advisors to manage  specific  asset  classes.  Investment  advisors are selected  from
 established  and  financially  sound organizations  with proven records in managing
funds in the  appropriate  asset class.  Investment  advisors are given strict investment
guidelines and performance benchmarks.

Annual
cost for defined benefit plans is determined using the projected unit credit  actuarial
 method. Prior  service  cost is  amortized  on a  straight-line  basis  over the
 average  remaining  service  period of employees expected to receive benefits.

---

It
is the  Companys  practice to fund pension  costs to the extent that such costs are tax
 deductible and in  accordance  with  ERISA.  The  assets  of the  various  plans
 include  corporate  equities,  government securities,  corporate debt  securities and
insurance  contracts.  The table below  summarizes the funded status of the
Company-sponsored defined benefit plans.

|                                                 |  | 
|------------------------------------------------ |  | 
|                                                 |  | 
|                                                 |  | 
|Change in projected benefit obligation:          |  | 
|Projected benefit obligation  beginning of year |  | 
|Service cost                                     |  | 
|Interest cost                                    |  | 
|Plan amendments                                  |  | 
|Actuarial loss                                   |  | 
|Benefits paid                                    |  | 
|Projected benefit obligation  end of year       |  | 
|Change in plan assets:                           |  | 
|Fair value of plan assets  beginning of year    |  | 
|Actual return on plan assets                     |  | 
|Employer contributions                           |  | 
|Benefits paid                                    |  | 
|Fair value of plan assets  end of year          |  | 
|Funded status                                    |  | 
|Fair value adjustment                            |  | 
|Recognition of minimum liability                 |  | 
|Unrecognized net actuarial loss                  |  | 
|Unrecognized prior service cost                  |  | 
|Accrued pension cost                             |  | 
|Accumulated Benefit Obligation                   |  | 

The fair value adjustment relates to
the Companys 1992 reorganization.

The
asset allocation for the Companys defined benefit plans are as follows:

| |  |  |  |                          
| |  |  |  | -------------------------
| |  |  |  | Percentage of Plan Assets

|                  |  |  |  |        |   |  | December 31, |   |  | December 31, |  
|----------------- |  |  |  | ------ | - |  | ------------ | - |  | ------------ | -
|                  |  |  |  | Target |   |  | 2003         |   |  | 2002         |  
|Equity securities |  |  |  | 55.0   | % |  | 55.5         | % |  | 48.5         | %
|Debt securities   |  |  |  | 45.0   | % |  | 44.5         | % |  | 51.5         | %
|                  |  |  |  | 100.0  | % |  | 100.0        | % |  | 100.0        | %

Net
periodic pension cost for 2003, 2002, and 2001 included the following components:

| |  |  |  |                        
| |  |  |  | -----------------------
| |  |  |  | Year Ended December 31,

|                                                  |  |  |   | 2003    |   |   | 2002    |   |   | 2001    |  
|------------------------------------------------- |  |  | - | ------- | - | - | ------- | - | - | ------- | -
|Service cost-benefits earned during the period    |  |  | $ | 11,521  |   | $ | 11,033  |   | $ | 9,372   |  
|Interest cost on the projected benefit obligation |  |  |   | 23,795  |   |   | 23,378  |   |   | 23,315  |  
|Expected return on plan assets                    |  |  |   | (28,725 | ) |   | (30,544 | ) |   | (32,655 | )
|Net amortization and deferral                     |  |  |   | 355     |   |   | (1,736  | ) |   | (2,291  | )
|Net periodic pension expense (income)             |  |  | $ | 6,946   |   | $ | 2,131   |   | $ | (2,259  | )

---

Actuarial
assumptions used to determine costs and benefit obligations are as follows:

|                                                 |  |      |   |      |   |      |  
|------------------------------------------------ |  | ---- | - | ---- | - | ---- | -
|                                                 |  | 2003 |   | 2002 |   | 2001 |  
|Expected long-term rate of return on plan assets |  | 8.00 | % | 8.50 | % | 9.00 | %
|Weighted average discount rate                   |  | 6.25 | % | 6.75 | % | 7.25 | %
|Long-term rate of compensation increase          |  | 4.00 | % | 4.50 | % | 4.50 | %

The
expected  long-term rate of return  assumption was developed  through analysis of
historical market returns, current market conditions and the funds past experience.

Other Retirement Plans and Benefits

In
addition to defined benefit plans,  the Company makes  contributions to defined
 contribution  plans and  sponsors  employee  savings  plans.  The cost of these  plans
is  included  in the total cost for all plans reflected above.

11.    Other Comprehensive Income

Other
comprehensive income consists of the following:

| |  |  |  |                        
| |  |  |  | -----------------------
| |  |  |  | Year Ended December 31,

|                                                              |  |  |   | 2003   |   |   | 2002    |   |   | 2001   |  
|------------------------------------------------------------- |  |  | - | ------ | - | - | ------- | - | - | ------ | -
|Change in market  value of  financial  instruments  accounted |  |  |   |        |   |   |         |   |   |        |  
|for as hedges                                                 |  |  | $ | 9,757  |   | $ | (5,957  | ) | $ | (7,858 | )
|Minimum pension liability                                     |  |  |   | (2,658 | ) |   | (42,487 | ) |   | --     |  
|Foreign currency valuation                                    |  |  |   | (213   | ) |   | (425    | ) |   | --     |  
|                                                              |  |  |   | 6,886  |   |   | (48,869 | ) |   | (7,858 | )
|Income tax  expense (benefit)                                 |  |  |   | 2,415  |   |   | (18,060 | ) |   | (2,750 | )
|                                                              |  |  | $ | 4,471  |   | $ | (30,809 | ) | $ | (5,108 | )

The
components of accumulated other comprehensive income, each presented net of tax, are as
follows:

|                                                              |  | 
|------------------------------------------------------------- |  | 
|                                                              |  | 
|                                                              |  | 
|Market value of financial instruments accounted for as hedges |  | 
|Minimum pension liability                                     |  | 
|Foreign currency valuation                                    |  | 
|                                                              |  | 

12. Commitments and Contingent
Liabilities

Certain
of the Companys  real  properties and equipment are operated  under lease  agreements.
 Rental expense under operating leases totaled  $30,541,  $26,882,  and $18,900 for 2003,
2002, and 2001,  respectively. Annual minimum  payments under operating leases are
$27,845,  $20,849,  $17,493,  $15,152,  and $13,834 for 2004 through 2008,  respectively.
 Future minimum lease payments under operating  leases,  reduced by minimum rentals from
subleases of $32,350 at December 31, 2003, aggregate $117,086.

In
 November  2002,  the FASB  issued  Interpretation  No. 45 (FIN  45),  Guarantors
 Accounting  and Disclosure  Requirements  for  Guarantees,  Including  Indirect
 Guarantees  of  Indebtedness  of Others.  This interpretation  expands the  disclosure
 requirements  to be made by a  guarantor  about its  obligations  under certain
 guarantees  that it has issued.  The  disclosure  requirements  are effective for
periods  ending after December 15, 2002. FIN 45 also requires a guarantor to recognize,
 at the inception of a guarantee,  a liability for the fair value of the obligation for
guarantees issued or modified after December 31, 2002.

---

The
Company has provided  guarantees  related to store leases for certain  independent
 dealers opening Company-branded  stores (e.g.,  Thomasville Home Furnishings  Stores).
 The guarantees range from one to fifteen years and  generally  require the Company to
make lease  payments in the event of default by the dealer.  In the event of default,
 the  Company has the right to assign or assume the lease.  The total  future  lease
 payments guaranteed  at December 31, 2003 were  $94,876.  The Company  believes the risk
of  significant  loss from these lease guarantees is remote.

The
Company is or may become a defendant in a number of pending or threatened legal
 proceedings in the ordinary  course of  business.  In the opinion of  management,  the
ultimate  liability,  if any, of the Company from all such proceedings will not have a
material  adverse effect upon the consolidated  financial  position or results of
operations of the Company and its subsidiaries.

13.    Other Income, Net

Other
income, net for 2003 and 2002 consisted of interest on short-term  investments of $718
and $1,220 and other miscellaneous income and expense items totaling $2,764 and $2,536,
respectively.

For
 2001,  other  income,  net  consisted  of  interest  on  short-term  investments  of
 $844,  other miscellaneous  income and expense items totaling $1,755 and  non-operating
 income of $8,000.  The non-operating income  resulted  from the sale of the  Companys
 investment  in a company  which  leases  exhibition  space to furniture  and  accessory
 manufacturers,   partially  offset  by  additions  to  reserves  related  to  certain
discontinued operations.

---

14.    Quarterly Financial Information
(Unaudited)

Following
is a summary of unaudited quarterly information:

|                                    |  |  |   |        
|----------------------------------- |  |  | - | -------
|                                    |  |  |   | Fourth 
|                                    |  |  |   | Quarter
|Year ended December 31, 2003:       |  |  |   |        
|Net sales                           |  |  | $ | 616,862
|Gross profit                        |  |  |   | 159,835
|Net earnings                        |  |  | $ | 22,612 
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|Earnings per common share:          |  |  |   |        
|Basic                               |  |  | $ | 0.41   
|Diluted                             |  |  | $ | 0.40   
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|Dividends declared per common share |  |  | $ | 0.125  
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|Common stock price range:           |  |  |   |        
|High                                |  |  | $ | 29.42  
|Low                                 |  |  | $ | 22.75  
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|Year ended December 31, 2002:       |  |  |   |        
|Net sales                           |  |  | $ | 595,491
|Gross profit                        |  |  |   | 154,077
|Net earnings                        |  |  | $ | 29,317 
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|Earnings per common share:          |  |  |   |        
|Basic                               |  |  | $ | 0.53   
|Diluted                             |  |  | $ | 0.52   
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|Dividends declared per common share |  |  |   | --     
|                                   
|Common stock price range:           |  |  |   |        
|High                                |  |  | $ | 28.00  
|Low                                 |  |  | $ | 19.02  

Net
earnings and earnings per common share  diluted for the second,  third and fourth
 quarter of 2003 include  restructuring  and asset impairment  charges of $2,618,  $2,243
and $12,992 ($1,663,  $1,425 and $8,249 net of income tax benefits) and $0.03, $0.02 and
$0.15, respectively.

Earnings
per common share were computed  independently for each of the quarters  presented.  The
sum of the  quarters  may not equal the total year  amount  due to the impact of
 computing  average  quarterly  shares outstanding for each period.

In
the fourth  quarter of 2003, the Company  commenced a cash dividend  program with an
initial rate of $0.50 per common share on an annual basis.  The closing  market price of
the Companys  common stock on December 31, 2003 was $29.33 per share.

---

Item 9.    Changes in and Disagreements
With Accountants on Accounting and Financial Disclosure

Not
applicable.

Item 9A.    Controls and Procedures

| | (a) |  | The
Companys  chief executive  officer and chief  financial  officer have concluded that the
Companys               disclosure  controls and procedures are effective based on their
 evaluation of these controls and               procedures at the end of the period
covered by this report.
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) |  | There
have been no  significant  changes in the  Companys  internal  controls or in other
factors that               could significantly affect these controls subsequent to the
date of their evaluation.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

PART III

Item 10.    Directors and Executive
Officers of the Registrant

The
sections entitled "Nominees" and "Section 16(a) Beneficial  Ownership  Reporting
 Compliance" of the Company's  Definitive  Proxy Statement for the Annual Meeting of
Stockholders on April 29, 2004 are  incorporated herein by reference.

Executive Officers of the Registrant

| |  |  |                       |  |  |  |     |  |                                            |  |  | Current   |  |  |  | Appointed  | 
| |  |  | --------------------- |  |  |  | --- |  | ------------------------------------------ |  |  | --------- |  |  |  | ---------- | 
| |  |  | Name                  |  |  |  | Age |  | Position                                   |  |  | Positions |  |  |  | or Elected | 
|
|
|
|
|
|
| |  |  | *Wilbert G. Holliman  |  |  |  | 66  |  | President of the Subsidiary -              |  |  |           |  |  |  | 1989       | 
| |  |  |                       |  |  |  |     |  | Action Industries, Inc.                    |  |  |           |  |  |  |            | 
| |  |  |                       |  |  |  |     |  | Chief Executive Officer of                 |  |  |           |  |  |  |            | 
| |  |  |                       |  |  |  |     |  | the Subsidiary  Action                    |  |  |           |  |  |  |            | 
| |  |  |                       |  |  |  |     |  | Industries, Inc.                           |  |  |           |  |  |  | 1994       | 
| |  |  |                       |  |  |  |     |  | Director                                   |  |  | X         |  |  |  | 1996       | 
| |  |  |                       |  |  |  |     |  | President                                  |  |  |           |  |  |  | 1996       | 
| |  |  |                       |  |  |  |     |  | Chief Executive Officer                    |  |  | X         |  |  |  | 1996       | 
| |  |  |                       |  |  |  |     |  | Chairman of the Board                      |  |  | X         |  |  |  | 1998       | 
|
|
|
|
|
|
| |  |  | John T. Foy           |  |  |  | 56  |  | President and Chief Executive              |  |  |           |  |  |  |            | 
| |  |  |                       |  |  |  |     |  | Officer of the Operating Company -         |  | 
| |  |  |                       |  |  |  |     |  | Lane Furniture Industries, Inc.            |  |  |           |  |  |  | 1996       | 
| |  |  |                       |  |  |  |     |  | President                                  |  |  | X         |  |  |  | 2004       | 
| |  |  |                       |  |  |  |     |  | Chief Operating Officer                    |  |  | X         |  |  |  | 2004       | 
|
|
|
|
|
|
| |  |  | Thomas G. Tilley, Jr. |  |  |  | 57  |  | President and Chief Executive              |  |  |           |  |  |  |            | 
| |  |  |                       |  |  |  |     |  | Officer of the Operating Company-          |  | 
| |  |  |                       |  |  |  |     |  | Thomasville Furniture Industries, Inc.     |  |  | X         |  |  |  | 2003       | 
|
|
|
|
|
|
| |  |  | Dennis R. Burgette    |  |  |  | 56  |  | President and Chief Executive              |  |  |           |  |  |  |            | 
| |  |  |                       |  |  |  |     |  | Officer of the Operating Company -         |  | 
| |  |  |                       |  |  |  |     |  | Broyhill Furniture Industries, Inc.        |  |  | X         |  |  |  | 2000       | 
|
|
|
|
|
|
| |  |  | Randall C. Spak       |  |  |  | 49  |  | President and Chief Executive              |  |  |           |  |  |  |            | 
| |  |  |                       |  |  |  |     |  | Officer of the Operating Company -         |  | 
| |  |  |                       |  |  |  |     |  | Lane Furniture Industries, Inc.            |  |  | X         |  |  |  | 2004       | 
|
|
|
|
|
|
| |  |  | C. Jeffrey Young      |  |  |  | 53  |  | President and Chief Executive              |  |  |           |  |  |  |            | 
| |  |  |                       |  |  |  |     |  | Officer of the Operating Company-          |  | 
| |  |  |                       |  |  |  |     |  | Drexel Heritage Furniture Industries, Inc. |  |  | X         |  |  |  | 2002       | 
|
|
|
|
|
|
| |  |  | Seamus Bateson        |  |  |  | 53  |  | President and Chief Executive              |  |  |           |  |  |  |            | 
| |  |  |                       |  |  |  |     |  | Officer of the Operating Company-          |  | 
| |  |  |                       |  |  |  |     |  | Maitland-Smith Furniture Industries, Inc.  |  |  | X         |  |  |  | 1999       | 
|
|
|
|
|
|
| |  |  | Michael K. Dugan      |  |  |  | 63  |  | President and Chief Executive              |  |  |           |  |  |  |            | 
| |  |  |                       |  |  |  |     |  | Officer of the Operating Company-          |  | 
| |  |  |                       |  |  |  |     |  | Henredon Furniture Industries, Inc.        |  |  | X         |  |  |  | 1987       | 
|
|
|
|
|
|
| |  |  | Lynn Chipperfield     |  |  |  | 52  |  | General Counsel                            |  |  |           |  |  |  | 1993       | 
| |  |  |                       |  |  |  |     |  | Vice-President                             |  |  |           |  |  |  | 1996       | 
| |  |  |                       |  |  |  |     |  | Secretary                                  |  |  |           |  |  |  | 1996       | 
| |  |  |                       |  |  |  |     |  | Senior Vice President                      |  |  | X         |  |  |  | 2000       | 
| |  |  |                       |  |  |  |     |  | Chief Administrative Officer               |  |  | X         |  |  |  | 2000       | 

---

| |  |  |                   |  |  |  |     |  |                          |  |  | Current   |  |  |  | Appointed  | 
| |  |  | ----------------- |  |  |  | --- |  | ------------------------ |  |  | --------- |  |  |  | ---------- | 
| |  |  | Name              |  |  |  | Age |  | Position                 |  |  | Positions |  |  |  | or Elected | 
|
|
|
|
|
|
| |  |  | David P. Howard   |  |  |  | 53  |  | Controller               |  |  |           |  |  |  | 1990       | 
| |  |  |                   |  |  |  |     |  | Vice-President           |  |  | X         |  |  |  | 1991       | 
| |  |  |                   |  |  |  |     |  | Chief Financial Officer  |  |  | X         |  |  |  | 1994       | 
| |  |  |                   |  |  |  |     |  | Treasurer                |  |  | X         |  |  |  | 1996       | 
|
|
|
|
|
|
| |  |  | Steven W. Alstadt |  |  |  | 49  |  | Controller               |  |  | X         |  |  |  | 1994       | 
| |  |  |                   |  |  |  |     |  | Chief Accounting Officer |  |  | X         |  |  |  | 1994       | 

____________________

*Member
of the Executive Committee

There are no family relationships
between any of the executive officers of the Registrant.

The executive  officers are elected
at the  organizational  meeting of the Board of Directors  which follows the annual
meeting of stockholders and serve for one year and until their successors are elected and
qualified.

Each of the executive  officers has
held the same position or other  positions with the same employer during the past five
years,  except Seamus Bateson who became President and Chief Executive  Officer of
 Maitland-Smith  in 1999 and prior  thereto was  President  of  Rubbermaid  Asia  Pacific
(a  manufacturer  and marketer of consumer products),  C. Jeffrey Young who became
President,  Chief Executive Officer of Drexel Heritage in 2002 and prior thereto was
President and Chief Executive Officer of Lexington  Furniture  Industries and Thomas G.
Tilley, Jr., who  became  President  and Chief  Executive  Officer  of  Thomasville  in
2003 and prior  thereto  held  senior management posts with Masco Home Furnishings,
Century Furniture Industries and La-Z-Boy Incorporated.

Code of Corporate Conduct

The
Company has adopted a code of business  conduct for  directors,  officers  (including the
Companys principal  executive officer,  principal  financial officer and controller) and
employees,  known as the Code of Corporate Conduct. Stockholders may request a free copy
of the Code of Corporate Conduct from:

| |                                     
| | ------------------------------------
| |                                     
| | Furniture Brands International, Inc.
| | 101 S. Hanley Road                  
| | St. Louis, MO 63105                 
|
| | Attn: Corporate Secretary           
| | 314-863-1100                        

Audit Committee and Audit Committee
Financial Expert

The
sections entitled Board of Directors and Committees and Principal  Auditor Fees and
Services of the Companys Proxy Statement for the Annual Meeting of Stockholders on
April 29, 2004 are  incorporated  herein by reference.

Item 11.    Executive Compensation

The
sections  entitled  Executive  Compensation,  Executive  Compensation and Stock Option
Committee Report  on  Executive   Compensation,   Stock  Options,   Retirement
 Plans,   Incentive  Agreements  and Performance Graph of the Companys  Definitive
Proxy Statement for the Annual Meeting of Stockholders on April 29, 2004 are incorporated
herein by reference.

---

Item 12.    Security Ownership of
Certain Beneficial Owners and Management and Related Stockholders Matters

The
section entitled  Security  Ownership of the Companys  Definitive Proxy Statement for
the Annual Meeting of Stockholders on April 29, 2004 is incorporated herein by reference.

Equity Compensation
Plan Information

The following table sets forth
aggregate information regarding the Companys equity compensation plans as of December
31, 2003:

|                     |  |  |  |                         |  |   |                      |  |  |                         | 
|-------------------- |  |  |  | ----------------------- |  | - | -------------------- |  |  | ----------------------- | 
|                     |  |  |  |                         |  |   |                      |  |  | Number of securities    | 
|                     |  |  |  |                         |  |   |                      |  |  | remaining available for | 
|                     |  |  |  |                         |  |   |                      |  |  | future issuance under   | 
|                     |  |  |  | Number of securities to |  |   | Weighted-average     |  |  | equity compensation     | 
|                     |  |  |  | be issued upon exercise |  |   | exercise price of    |  |  | plans (excluding        | 
|                     |  |  |  | of outstanding options, |  |   | outstanding options, |  |  | securities reflected in | 
|Plan Category        |  |  |  | warrants and rights     |  |   | warrants and rights  |  |  | column (1))             | 
|                     |  |  |  | (a)                     |  |   | (b)                  |  |  | (c)                     | 
|Equity compensation  |  |  |  |                         |  |   |                      |  |  |                         | 
|plans approved by    |  |  |  |                         |  |   |                      |  |  |                         | 
|security holders (1) |  |  |  | 4,220,575               |  | $ | 21.16                |  |  | 2,256,875               | 
|                    
|                    
|                    
|                    
|                    
|                    
|Equity compensation  |  |  |  |                         |  |   |                      |  |  |                         | 
|plans not approved   |  |  |  |                         |  |   |                      |  |  |                         | 
|by security holders  |  |  |  | --                      |  |   | --                   |  |  | --                      | 
|                    
|                    
|                    
|                    
|                    
|                    
|Total                |  |  |  | 4,220,575               |  | $ | 21.16                |  |  | 2,256,875               | 

| | (1)      Includes |  | the
Companys 1992 Stock Option Plan and 1999 Long-Term Incentive Plan. Included in
column (a) are 47,666 shares of restricted common stock that have been awarded and that
vest over a period from 1 to 4 years. These shares of restricted common stock were
disregarded for purposes of computing the weighted-average exercise price in column (b).
| | ----------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Annually, the Board of Directors
determines the amount of fees to be paid to non-employee Directors, including an award of
restricted shares of Company common stock, as described under Compensation of Board
of Directors in the 2004 Proxy Statement, hereby incorporated by reference. These
shares are purchased in open-market transactions.

Annually, Lane Furniture Industries,
Inc., a subsidiary of the Company, awards a limited number of shares of Company common
stock to a few of its truck drivers as safety awards. 345 shares of the Companys
common stock were issued as safety awards in 2003. These shares are purchased in open
market transactions.

Information regarding the 1992 Stock
Option Plan and 1999 Long-Term Incentive Plan set forth in Note 8 of Notes to Consolidated
Financial Statements is hereby incorporated by reference.

Item 13. Certain
Relationships and Related Transactions

The
section Certain Relationships and Related Transactions of the Companys
Definitive Proxy Statement for the Annual Meeting of Stockholders on April 29, 2004 is
incorporated herein by reference.

---

Item 14. Principal
Accountant Fees and Services

The
section Principal Auditor Fees and Services of the Companys Definitive
Proxy Statement for the Annual Meeting of Stockholders on April 29, 2004 is incorporated
herein by reference.

PART IV

Item 15.    Exhibits, Financial
Statement Schedules, and Reports on Form 8-K

(a)    
          List of documents filed as part of this report:

1.    Financial Statements:

| | Consolidated
balance sheets, December 31, 2003 and 2002
| | -------------------------------------------------------

| | Consolidated
statements of operations for each of the years in the three-year period  ended December
31, 2003
| | -------------------------------------------------------------------------------------------------------------

| | Consolidated
statements of cash flows for each of the years in the three-year period ended December
31, 2003
| | ------------------------------------------------------------------------------------------------------------

| | Consolidated
statements of shareholders equity for each of the years in the three-year period
ended December 31, 2003
| | ----------------------------------------------------------------------------------------------------------------------

| | Notes
to consolidated financial statements
| | ------------------------------------------

| | Independent
Auditors Report
| | ----------------------------

2.    Financial Statement Schedules:

| | Valuation
and qualifying accounts (Schedule II).
| | ------------------------------------------------

All other schedules are omitted as
the required information is presented in the consolidated financial statements or related
notes or are not applicable.

| | 3.              Exhibits:
| | -------------------------

The following exhibits are filed
herewith or are incorporated by reference to exhibits previously filed with the SEC. The
Company shall furnish copies of exhibits for a reasonable fee (covering the expense of
furnishing copies) upon request.

| |  | 3(a) |  | Restated
Certificate of Incorporation of the Company, as amended. (Incorporated           by
reference to Exhibit 3 (a) to Furniture Brands International, Inc.s
          Quarterly Report on Form 10-Q for the quarter ended March 31, 2002)
| |  | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 3(b) |  | By-Laws of the Company revised and amended to May 6, 1998. (Incorporated by
          reference to Exhibit 3(a) to Furniture Brands International, Inc.s
          Quarterly Report on Form 10-Q for the quarter ended March 31, 1998)
| |  | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 3(c) |  | Rights Agreement, dated as of July 30, 1998, between the Company and Bank of
          New York, as Rights Agent. (Incorporated by reference to Exhibit 4 (b) to
          Furniture Brands International, Inc.s Report on Form 10-Q for the quarter
          ended June 30, 1998)
| |  | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

| |  | 3(d) |  | Certificate of Designations, Preferences and Rights of Series A Junior
          Participating Preferred Stock of the Company. (Incorporated by reference to
          Exhibit 4(c) to Furniture Brands International, Inc.s Report on Form 10-Q
          for the quarter ended June 30, 1998)
| |  | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 4(a) |  | Credit Agreement, dated December 18, 2003, among the Company, Broyhill
          Furniture Industries, Inc., Drexel Heritage Furniture Industries, Inc., Henredon
          Furniture Industries, Inc., Lane Furniture Industries, Inc., Maitland-Smith
          Furniture Industries, Inc. and Thomasville Furniture Industries, Inc. as
          Borrowers, Various Lenders, The Bank of Tokyo-Mitsubishi, Ltd., Chicago Branch
          and The Bank of New York, as Co-Documentation Agents, Suntrust Bank and Wachovia
          Bank, National Association, as Co-Syndication Agents, Deutsche Bank AG, New York
          Branch, as Administrative Agent, and Deutsche Bank Securities, Inc., as Sole
          Lead Arranger and Sole Book Manager (Incorporated by reference to Exhibit 4 to
          Furniture Brands International, Inc.s Report on Form 8-K, dated January 21, 2004)
| |  | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(a) |  | Furniture Brands International, Inc.s 1992 Stock Option Plan, as amended.
          (Incorporated by reference to Exhibit 10 (a) to Furniture Brands International,
          Inc.s Form 10-Q for the quarter ended March 31, 2000) *
| |  | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(b) |  | Furniture Brands International, Inc.s 1999 Long-Term Incentive Plan, as
          amended. (Incorporated by reference to Exhibit 4(f) to Furniture Brands
          International, Inc.s Registration Statement on Form S-8, File No.
          333-100133) *
| |  | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(c) |  | Form of Indemnification Agreement between the Company and the Companys
          directors. (Incorporated by reference to Exhibit 10(c) to Furniture Brands
          International Inc.s Annual Report on Form 10-K for the year ended December
          31, 2001) *
| |  | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(d) |  | Written description of bonus plan for management personnel of Lane Furniture
          Industries, Inc. (Incorporated by reference to Exhibit 10(e) to Furniture Brands
          International, Inc.s Annual Report on Form 10-K for the year ended
          December 31, 1994) *
| |  | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(e) |  | Furniture Brands International, Inc. Restricted Stock Plan for Outside
          Directors, dated as of July 29, 1997. * (Incorporated by reference to Exhibit
          10(e) to Furniture Brands International, Inc. Annual Report on Form 10-K for the
          year ended December 31, 2002) *
| |  | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(f) |  | Retirement Plan for directors. (Incorporated by reference to Exhibit 10 (g) to
          Furniture Brands International, Inc.s Annual Report on Form 10-K for the
          year ended December 31, 1994) *
| |  | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(g) |  | First Amendment to Retirement Plan for Directors. (Incorporated by reference to
          Exhibit 10 (e) to Furniture Brands International, Inc.s Annual Report on
          Form 10-K the year ended December 31, 1994) *
| |  | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(h) |  | Furniture Brands International, Inc. Executive Incentive Plan, as amended on
          October 25, 2001. (Incorporated by reference to Exhibit 10(g) to Furniture
          Brands International Inc.s Annual Report on Form 10-K for the year ended
          December 31, 2001) *
| |  | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(i) |  | Broyhill Furniture Industries, Inc. Executive Incentive Plan, as amended on
          January 24, 2002. (Incorporated by reference to Exhibit 10(h) Furniture Brands
          International Inc.s Annual Report on Form 10-K for the year ended December
          31, 2001) *
| |  | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

| |  | 10(j) |  | Thomasville Furniture Industries, Inc. Executive Incentive Plan, as amended on
          January 24, 2002. (Incorporated by reference to Exhibit 10(i) Furniture Brands
          International Inc.s Annual Report on Form 10-K for the year ended December
          31, 2001) *
| |  | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(k) |  | Henredon Furniture Industries, Inc. Executive Incentive Plan, dated January 24,
          2002. (Incorporated by reference to Exhibit 10(j) Furniture Brands International
          Inc.s Annual Report on Form 10-K for the year ended December 31, 2001) *
| |  | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(l) |  | Drexel Heritage Furniture Industries, Inc. Executive Incentive Plan, dated
          January 24, 2002. (Incorporated by reference to Exhibit 10(k) to Furniture
          Brands International Inc.s Annual Report on Form 10-K for the year ended
          December 31, 2001) *
| |  | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(m) |  | Maitland-Smith Furniture Industries, Inc. Executive Incentive Plan, dated
          January 24, 2002. (Incorporated by reference to Exhibit 10(l) to Furniture
          Brands International Inc.s Annual Report on Form 10-K for the year ended
          December 31, 2001) *
| |  | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(n) |  | Employment Agreement, dated as of January 1, 2000, between the Company and
          Wilbert G. Holliman. (Incorporated by reference to Exhibit 10 (j) to Furniture
          Brands International, Inc.s Annual Report on Form 10-K for the year ended
          December 31, 1998) *
| |  | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(o) |  | Employment Agreement, dated as of February 10, 2004, between the Company and
          John T. Foy. *
| |  | ----- |  | -----------------------------------------------------------------------------------------------------

| |  | 10(p) |  | Employment Agreement, dated as of August 1, 1996, between the Company and Lynn
          Chipperfield. (Incorporated by reference to Exhibit 10 (c) to Furniture Brands
          International, Inc.s Annual Report on Form 10-K for the year ended
          December 31, 1996) *
| |  | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(q) |  | Employment Agreement, dated as of August 1, 1996, between the Company and David
          P. Howard. (Incorporated by reference to Exhibit 10 (d) to Furniture Brands
          International, Inc.s Annual Report on Form 10-K for the year ended
          December 31, 1996) *
| |  | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(r) |  | Employment Agreement, dated as of January 1, 2000, between the Company and
          Dennis R. Burgette. (Incorporated by reference to Exhibit 10 (p) to Furniture
          Brands International, Inc.s Annual Report on Form 10-K for the year ended
          December 31, 1998) *
| |  | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(s) |  | Employment Agreement, dated as of April 16, 2003, between Thomasville Furniture Industries, Inc. and
          Thomas G. Tilley, Jr. *
| |  | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------

---

| |  | 10(t) |  | Employment Agreement, dated as of February 13, 2004, between Lane Furniture
          Industries, Inc. and Randall C. Spak. *
| |  | ----- |  | -----------------------------------------------------------------------------------------------------------------------------

| |  | 10(u) |  | Form of Agreement Not To Compete between the Company and
Wilbert G. Holliman, Dennis R. Burgette, John T. Foy, David P. Howard, and Lynn Chipperfield.
          (Incorporated by reference to Exhibit 10 (r) to Furniture Brands International,
          Inc.s Annual Report on Form 10-K for the year ended December 31, 1998) *
| |  | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(v) |  | Furniture Brands Supplemental Executive Retirement Plan, dated as of January 1,
          2002. (Incorporated by reference to Exhibit 10(v) to Furniture Brands
          International, Inc.s Annual Report on Form 10-K for the year ended
          December 31, 2002) *
| |  | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(w) |  | Broyhill
Furniture Industries, Inc. Supplemental Retirement Income Plan, dated as of
October 31, 2001. (Incorporated by reference to Exhibit 10(w) to Furniture Brands
International, Inc.s Annual Report on Form 10-K for the year ended
December 31, 2002) *
| |  | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10(x) |  | Lane Furniture Industries, Inc. Supplemental Executive Retirement Plan, dated
          as of January 1, 2003. (Incorporated by reference to Exhibit 10(x) to Furniture
          Brands International, Inc.s Annual Report on Form 10-K for the year ended
          December 31, 2002) *
| |  | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 14 |  | Code
of Corporate Conduct
| |  | -- |  | -------------------------

| |  | 21 |  | List
of Subsidiaries of the Company
| |  | -- |  | -----------------------------------

| |  | 23 |  | Consent
of KPMG LLP
| |  | -- |  | -------------------

| |  | 31 |  | Certifications
of W.G. Holliman,  Chief Executive Officer of the Company, and David P. Howard, Chief Financial Officer of the Company,
Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002.
| |  | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 32 |  | Certifications of W.G. Holliman,  Chief Executive Officer of the Company, and David P.
Howard,  Chief Financial Officer of the Company,  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
| |  | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

*Indicates
management contact or compensatory plan, contract or arrangement



(b)    
          Reports on Form 8-K.

| |  | A |  | Form
8-K was filed on October 28, 2003 announcing commencement of a cash dividend program with
an initial rate of $0.50 per common share on an annual basis and announcing third quarter
and nine month operating results and projections for the fourth quarter and full year
2003 earnings per share. A Form 8-K was filed on December 10, 2003 affirming earlier
projections for the fourth quarter and full year 2003. A Form 8-K was filed on January
21, 2004 announcing the refinancing of its unsecured, revolving credit facility. A Form
8-K was filed on January 28, 2004 announcing fourth quarter and full year operating
results and projections for the first quarter 2004. A Form 8-K/A was filed on February
20, 2004 announcing the election of John T. (Tom) Foy as Chief Operating Officer of the
Company, the nomination of John T. (Tom) Foy and Aubrey B. Patterson to serve on the
Board of Directors of the Company and the election of Randall C. Spak, as President and
Chief Executive Officer of Lane Furniture Industries, Inc. A Form 8-K was filed on March
1, 2004 revising projections for the first quarter 2004.
| |  | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

FURNITURE BRANDS
INTERNATIONAL, INC. AND SUBSIDIARIES

Index to consolidated
Financial Statements and Schedules

|                                                                                     | 
|------------------------------------------------------------------------------------ | 
|                                                                                     | 
|                                                                                     | 
|                                                                                     | 
|Consolidated Financial Statements:                                                   | 
|Consolidated Balance Sheets as of December 31, 2003 and 2002                         | 
|                                                                                     | 
|Consolidated Statements of Operations for each of the years in the three-year period | 
|ended December 31, 2003                                                              | 
|                                                                                     | 
|Consolidated Statements of Cash Flows for each of the years in the three-year period | 
|ended December 31, 2003                                                              | 
|                                                                                     | 
|Consolidated Statements of Shareholders Equity for each of the years in the three-  | 
|year period ended December 31, 2003                                                  | 
|                                                                                     | 
|Notes to Consolidated Financial Statements                                           | 
|                                                                                     | 
|Financial Statement Schedule                                                         | 
|                                                                                     | 
|Independent Auditors Report                                                         | 
|                                                                                     | 
|Consolidated Financial Statement Schedules:                                          | 
|                                                                                     | 

|                                  |  |         
|--------------------------------- |  | --------
|                                  |  | Schedule
|Valuation and qualifying accounts |  | II      
|                                  | 

---

Schedule II

FURNITURE BRANDS
INTERNATIONAL, INC. AND SUBSIDIARIES

Valuation and
Qualifying Accounts

| |  |  |  | (Dollars in Thousands) | 
| |  |  |  | ---------------------- | 

|                                |  |  |   |            |  |   |           |  |   | Additions  |  |   |            |   |  |     |  |   |         | 
|------------------------------- |  |  | - | ---------- |  | - | --------- |  | - | ---------- |  | - | ---------- | - |  | --- |  | - | ------- | 
|                                |  |  |   | Balance at |  |   |           |  |   | Charged to |  |   | Deductions |   |  |     |  |   | Balance | 
|                                |  |  |   | Beginning  |  |   | Acquired  |  |   | Costs and  |  |   | from       |   |  |     |  |   | at End  | 
|Description                     |  |  |   | of Period  |  |   | Companies |  |   | Expenses   |  |   | Reserves   |   |  |     |  |   | Period  | 
|                                |  | 
|Year Ended December 31, 2003    |  |  |   |            |  |   |           |  |   |            |  |   |            |   |  |     |  |   |         | 
|Allowances deducted from        |  |  |   |            |  |   |           |  |   |            |  |   |            |   |  |     |  |   |         | 
|receivables on balance sheet:   |  |  |   |            |  |   |           |  |   |            |  |   |            |   |  |     |  |   |         | 
|Allowance for doubtful accounts |  |  | $ | 13,717     |  | $ | --        |  | $ | 3,830      |  | $ | (4,260     | ) |  | (a) |  | $ | 13,287  | 
|Allowance for cash discounts/   |  |  |   |            |  |   |           |  |   |            |  |   |            |   |  |     |  |   |         | 
|chargebacks/other               |  |  |   | 7,034      |  |   | --        |  |   | 978        |  |   | (1,921     | ) |  | (b) |  |   | 6,091   | 
|                                |  |  | $ | 20,751     |  | $ | --        |  | $ | 4,808      |  | $ | (6,181     | ) |  |     |  | $ | 19,378  | 
|Year Ended December 31, 2002    |  |  |   |            |  |   |           |  |   |            |  |   |            |   |  |     |  |   |         | 
|Allowances deducted from        |  |  |   |            |  |   |           |  |   |            |  |   |            |   |  |     |  |   |         | 
|receivables on balance sheet:   |  |  |   |            |  |   |           |  |   |            |  |   |            |   |  |     |  |   |         | 
|Allowance for doubtful accounts |  |  | $ | 12,564     |  | $ | --        |  | $ | 8,321      |  | $ | (7,168     | ) |  | (a) |  | $ | 13,717  | 
|Allowance for cash discounts/   |  |  |   |            |  |   |           |  |   |            |  |   |            |   |  |     |  |   |         | 
|chargebacks/other               |  |  |   | 6,277      |  |   | --        |  |   | 3,222      |  |   | (2,465     | ) |  | (b) |  |   | 7,034   | 
|                                |  |  | $ | 18,841     |  | $ | --        |  | $ | 11,543     |  | $ | (9,633     | ) |  |     |  | $ | 20,751  | 
|Year Ended December 31, 2001    |  |  |   |            |  |   |           |  |   |            |  |   |            |   |  |     |  |   |         | 
|Allowances deducted from        |  |  |   |            |  |   |           |  |   |            |  |   |            |   |  |     |  |   |         | 
|receivables on balance sheet:   |  |  |   |            |  |   |           |  |   |            |  |   |            |   |  |     |  |   |         | 
|Allowance for doubtful accounts |  |  | $ | 17,906     |  | $ | 2,084     |  | $ | 15,417     |  | $ | (22,843    | ) |  | (a) |  | $ | 12,564  | 
|Allowance for cash discounts/   |  |  |   |            |  |   |           |  |   |            |  |   |            |   |  |     |  |   |         | 
|chargebacks/other               |  |  |   | 5,169      |  |   | 2,416     |  |   | 1,263      |  |   | (2,571     | ) |  | (b) |  |   | 6,277   | 
|                                |  |  | $ | 23,075     |  | $ | 4,500     |  | $ | 16,680     |  | $ | (25,414    | ) |  |     |  | $ | 18,841  | 

| | (a)    Uncollectible
account written off, net of recoveries.(b)    Cash
discounts taken by customers and claims allowed to customers.
| | -------------------------------------------------------------------------------------------------------------------------------------

See accompanying independent auditors report.

---

INDEPENDENT AUDITORS
REPORT

The Board of Directors and
ShareholdersFurniture Brands International, Inc.:

We
have audited the accompanying  consolidated balance sheets of Furniture Brands
 International,  Inc. and  subsidiaries  as of December 31, 2003 and 2002,  and the
related  consolidated  statements  of  operations, shareholders  equity,  cash flows and
the related  financial  statement  schedule  for each of the years in the three-year
 period ended December 31, 2003.  These  consolidated  financial  statements and
financial  statement schedule are the  responsibility  of the Companys  management.  Our
 responsibility is to express an opinion on these consolidated financial statements and
financial statement schedule based on our audits.

We
conducted our audits in accordance with auditing  standards  generally accepted in the
United States of America.  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 Furniture  Brands
 International,  Inc. and  subsidiaries  as of December 31, 2003 and 2002,  and the
results of their  operations  and their cash flows for each of the years in the
three-year period ended December 31, 2003, in conformity with accounting  principles
 generally  accepted in the United States of America.  Also, in our opinion,  the related
financial statement schedule,  when considered in relation to the basic  consolidated
 financial  statements taken as a whole,  present fairly, in all material respects, the
information set forth therein.

As
described in Note 6 to the  consolidated  financial  statements,  the Company  adopted
 Statement of Financial  Accounting  Standards No. 142 Goodwill and Other Intangible
 Assets in the year ending December 31, 2002.

KPMG LLP

St. Louis, Missouri January 28, 2004

---

SIGNATURES

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

| |    |                                     
| | -- | ------------------------------------
| |    |                                     
| |    | Furniture Brands International, Inc.
| |    | (Registrant)                        
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | By | /s/ Wilbert G. Holliman             
| |    | Chairman of the Board and           
| |    | Chief Executive Officer             

Date:   March 12, 2004

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
indicated on March 12, 2004.

|                           |                              
|-------------------------- | -----------------------------
|                           |                              
|Signature                  | Title                        
|                           |                              
|                           |                              
|                           | Chairman of the Board        
|/s/  Wilbert G. Holliman   | (Principal Executive Officer)
|Wilbert G. Holliman        |                              
|                           |                              
|                           |                              
|/s/  Katherine Button Bell | Director                     
|Katherine Button Bell      |                              
|                           |                              
|                           |                              
|/s/ John R. Jordan, Jr     | Director                     
|John R. Jordan, Jr         |                              
|                           |                              
|                           |                              
|/s/  Donald E. Lasater     | Director                     
|Donald E. Lasater          |                              
|                           |                              
|                           |                              
|/s/  Lee M. Liberman       | Director                     
|Lee M. Liberman            |                              
|                           |                              
|                           |                              
|/s/  Richard B. Loynd      | Director                     
|Richard B. Loynd           |                              
|                           |                              
|                           |                              
|/s/ Bob L. Martin          | Director                     
|Bob L. Martin              |                              
|                           |                              
|                           |                              
|/s/  Albert E. Suter       | Director                     
|Albert E. Suter           

---

|                      |                               
|--------------------- | ------------------------------
|                      |                               
|Signature             | Title                         
|                      |                               
|                      |                               
|                      | Vice-President and Treasurer  
|/s/  David P. Howard  | (Principal Financial Officer) 
|David P. Howard       |                               
|                      |                               
|                      |                               
|                      | Controller                    
|/s/ Steven W. Alstadt | (Principal Accounting Officer)
|Steven W. Alstadt     |