SECURITIES AND EXCHANGE COMMISSION
                                               WASHINGTON, D.C.  20549

                                                      FORM 10-K

(Mark one)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
    OF 1934
    For the fiscal year ended December 31, 1999 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)



            Delaware                                   43-0337683
---------------------------------                   -----------------
(State or other jurisdiction of                     (I.R.S. Employer
 incorporation or organization)                    Identification No.)

101 South Hanley Road, St. Louis, Missouri               63105
------------------------------------------          -----------------
(Address of principal executive offices)               (Zip Code)

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 [ ]

     The aggregate  market value of the voting stock held by  non-affiliates  of
the registrant as of February 29, 2000, was approximately $789,303,042.
<PAGE>

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

                    49,374,923 shares as of February 29, 2000

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of Definitive Proxy Statement for Annual Meeting
            of Stockholders on April 27, 2000 ...................      Part III



<PAGE>

                                     PART I
                                     ------

Item 1. Business
----------------

(a)     General Development of Business

On February 10, 1999, the Company and Benchmark Home Furnishings, Inc. announced
a cooperative  effort to develop a 160,000 square foot Benchmark store in Kansas
City dedicated exclusively to products manufactured by the Company.

On February 17, 1999, the Company and Kittle's Home Furnishings,  Inc. announced
a strategic  alliance  whereby  Kittle's has agreed to expand its  commitment to
products manufactured by the Company.

On February 26, 1999, the Company and Outlook  International,  Ltd. announced an
agreement in which Outlook will act as exclusive  representative for the Company
for manufacture of products in the Far East.

On June  10,  1999,  the  Company  and  America's  Research  Group  announced  a
comprehensive  agreement  whereby  America's  Research Group will provide a wide
range of consumer research  services on an exclusive basis.  These services will
include  consumer  research on new product  lines before they are  introduced at
market, and post-market retailer and consumer evaluation. The services will also
include surveys on the general  population or targeted segments on any number of
issues,  including satisfaction with certain products, the effect of advertising
programs, brand name recognition and consumer preferences with respect to retail
furniture displays.

In November of 1999,  Thomasville  Furniture  Industries,  Inc. signed a license
agreement with Home Depot, the world's largest home improvement retailer.  Under
the agreement,  Home Depot will sell high-quality  kitchen and bathroom cabinets
under the Thomasville brand name beginning in mid-2000.

On January 10, 2000, Thomasville Furniture Industries,  Inc. announced a license
agreement with Harrods  Department Store, under which Highland House, a division
of Thomasville,  will design and manufacture the Harrods Of  Knightsbridge  Fine
Furniture Collection.

(c)  Narrative Description of Business

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

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 tables, accent pieces, home entertainment centers
and home office furniture, and (iv) recliners, motion furniture and sleep sofas.
The  Company's  brand name  positioning  by price and product  category is shown
below.
<TABLE>
<CAPTION>


                                                                               UPHOLSTERY
                                                                     ----------------------------------
                                                                                          RECLINER/
PRICING CATEGORY          CASE GOODS            OCCASIONAL           STATIONARY           MOTION
----------------          ----------            ----------           ----------           -------------
<S>                          <C>                   <C>                <C>                     <C>
PREMIUM                   Thomasville           Thomasville          Thomasville

BEST                      Thomasville           Thomasville          Thomasville          Thomasville
                          Lane                  Lane                 Lane                 Lane
                          Broyhill              Broyhill             Broyhill             Broyhill

BETTER                    Lane                  Lane                 Lane                 Lane
                          Broyhill              Broyhill             Broyhill             Broyhill

GOOD                      Broyhill              Broyhill             Broyhill             Broyhill
                          Lane                                                            Lane

PROMOTIONAL               Founders

RTA                       Creative Interiors
</TABLE>



BROYHILL FURNITURE INDUSTRIES

Broyhill produces collections of medium-priced bedroom, dining room, upholstered
and occasional  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
Signature  Series.  The flagship  Broyhill product line concentrates on bedroom,
dining room,  upholstered and occasional  furniture  designed for the "good" and
"better" price categories.  The Broyhill Signature Series product line enjoys an
excellent reputation for classically styled,  complete furniture  collections in
the "best" price category.

LANE FURNITURE INDUSTRIES

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

Action Industries manufactures and markets reclining chairs and motion furniture
in the "good,"  "better" and "best" price  categories under the Lane brand name.
Motion  furniture  consists of sofas and loveseats  with  recliner-style  moving
parts and comfort  features,  wall saver recliners,  pad-over chaise  recliners,
hi-leg recliners,  sleep sofas and motion sectionals.  Royal Development Company
designs and  manufactures  the mechanisms used in Action  Industries'  reclining
furniture products.

In March of 1999,  Action introduced the Lane Leather  collection.  Lane Leather
represents  an  important  source of growth as  leather  is the  fastest-growing
category in upholstered furniture. The collection, priced in the "best" category
comes  in  three  styles  -  American  Ranch,  American  Traditional  and  Urban
Contemporary.

Lane  Division  manufactures  and sells cedar chests,  living room,  bedroom and
dining room furniture, wall systems, desks, console tables and mirrors and other
occasional  wood  pieces.  Lane  Division  furniture is sold in the "better" and
"best" price categories.

Laneventure manufactures and markets moderately priced wicker, rattan and bamboo
furniture,   tables,  occasional  wood  pieces  and  two  lines  of  upholstered
furniture.  One  line  is  comprised  of  contemporary  and  modern  upholstered
furniture and metal and glass occasional and dining 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 names
WeatherMaster  and  Weathercraft,  which  have  developed  significant  consumer
acceptance.  In 1999 Laneventure  entered two new markets - exposed aluminum and
teak.

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.  Thomasville offers an assortment of upholstery and wood
under one brand name that  targets the "best" and  "premium"  price  categories.
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,  18th century,
European traditional and casual contemporary.

Hickory  Chair  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 18th century 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 of 1999,
Hickory  Chair  introduced  its  Thomas  O'Brien   collection,   which  includes
upholstery,  chairs,  tables,  beds and  cabintry in O'Brien's  acclaimed  "warm
modernist"  style.  Hickory Chair also  introduced  Grand Vista, a collection of
larger scale, casual reproductions from the Museum of Santa Fe.

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-medium price range.

Highland  House  manufactures  upholstered  products in the  "better" and "best"
price  categories.  During 1999,  Highland House  introduced the Rue de Provence
collection  of  Provencal  French  bedroom  pieces,   occasional  furniture  and
upholstery  pieces that use unique fabric  selections  supplied  exclusively  to
Highland House from southern France.

Founders offers assembled bedroom sets, bookcases and home entertainment centers
under the  Founders  brand name 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.

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,  HomeLife  and
Heilig-Meyers  and key  regional  retailers  such  as  Havertys,  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  program  and the  network of  independent  dealer-owned
dedicated retail  locations,  such as Thomasville Home Furnishings  Stores.  The
Company    distributes    its   products    through   a   diverse   network   of
independently-owned  retail locations,  which includes 120 free-standing stores,
1,148 galleries and 523 furniture centers.

Haverty  Furniture  Companies,  Inc.  and the  Company  have  formed a strategic
alliance whereby Havertys will allocate up to one-half of the retail floor space
in all of its stores to the  prominent  display of product  manufactured  by the
Company. This alliance advances the Company's strategy of expanding distribution
and dedicated display space.

In February of 1999, the Company and Benchmark Home Furnishings,  Inc. announced
a cooperative  effort to develop a 160,000 square foot Benchmark store in Kansas
City dedicated exclusively to products manufactured by the Company.

In February of 1999, the Company and Kittle's Home Furnishings, Inc. announced a
strategic  alliance  whereby  Kittle's  has agreed to expand its  commitment  to
products manufactured by the Company.

Broyhill,  Lane  and  Thomasville  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.  The 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 are  dealer-owned,  free-standing  retail
locations that exclusively feature Thomasville  furniture.  The Company believes
distributing its products through  dedicated,  free-standing  stores strengthens
brand  awareness,   provides  well-informed  and  focused  sales  personnel  and
encourages  the purchase of multiple  items per visit.  Management  is currently
evaluating   similar   opportunities  to  jointly  market  Broyhill,   Lane  and
Thomasville products in dealer-owned retail stores.

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

BROYHILL FURNITURE INDUSTRIES

One of  Broyhill's  principal  distribution  channels is the  Broyhill  Showcase
Gallery  program.  This  program,  started in 1983,  involves  345  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.  The average  Broyhill  Showcase
Gallery consists of 7,500 square feet of dedicated  display space.  Furniture is
displayed  in  complete  and fully  accessorized  room  settings  instead  of as
individual pieces.

For the retailer  that is currently not a  participant  in the gallery  program,
Broyhill offers the Independent Dealer 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.  Participating  retailers  in the  Independent
Dealer Program commit to a minimum,  pre-selected lineup of Broyhill merchandise
and, in return,  receive a detailed,  step-by-step,  year-round  advertising and
merchandising  plan.  The program  includes  three major sales  events per year,
monthly   promotional  themes  and  professionally   prepared   advertising  and
promotional  materials  at  nominal  cost in  order  to help  increase  consumer
recognition  on the local  level.  As part of the  Independent  Dealer  Program,
Broyhill offers the Broyhill Furniture Center Program to 523 retailers that have
committed at least 2,000 square feet exclusively to Broyhill  products  arranged
in gallery-type room settings.  This program includes all of the benefits of the
Independent Dealer Program,  plus 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 program.

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,  HomeLife,  May Department  Stores,  Federated  Department
Stores and Dillard Department Stores.

Lane has established specialty gallery programs with 509 participating  dealers.
This includes 242 dealer-owned Comfort Showcase Galleries  established by Action
Industries.  The Comfort Showcase Galleries average  approximately  4,200 square
feet of retail space specifically  dedicated to the display,  promotion and sale
of Action  Industries'  products.  Lane's other gallery programs consist of Lane
Division  galleries which display Lane case goods and upholstered  furniture and
Cedar Chest Boutiques.

THOMASVILLE FURNITURE INDUSTRIES

Thomasville  products are offered at 675  independently-owned  retail locations,
including 235 Thomasville Galleries, 120 Thomasville Home Furnishings Stores and
320 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  15,000   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.   Hickory   Chair  also   distributes   through
premium-quality dealers including 59 gallery locations.

Thomasville's  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 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.
Thomasville's Creative Interiors division sells RTA furniture to customers which
include national chains such as Wal-Mart and Target, catalog showrooms, discount
mass merchandisers, warehouse clubs and home furnishings retailers.

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.   The  Company  seeks  to  increase   consumer   buying  and   strengthen
relationships  with  retailers  through  cooperative  advertising  and selective
promotional  programs.  The  Company  focuses  its  marketing  efforts  on prime
potential  consumers  utilizing  information  from databases and from callers to
each operating company's toll-free telephone number.

BROYHILL FURNITURE INDUSTRIES

Broyhill's  advertising  programs  focus  on  translating  its  strong  consumer
awareness into increased sales.  Broyhill's  current marketing strategy features
national  cable  television  advertising,  in  addition  to its  national  print
advertising  program and  traditional  promotional  programs  such as  furniture
"giveaways" on television game shows and dealer-based promotions such as product
mailings 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.
Action Industries 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.  The other Lane divisions
began using television advertising in 1998. These commercials featured the Eddie
Bauer  Lifestyles  by  Lane  collection,  produced  by  the  Lane  Division  and
Laneventure.  Each of the Lane  divisions  advertises  extensively  in trade and
consumer publications targeting various niche markets.

THOMASVILLE FURNITURE INDUSTRIES

Thomasville's  current  advertising  appears in  gardening,  lifestyle,  travel,
epicurean,  arts/culture  and women's special interest  magazines,  and national
cable  television  commercials  during peak  promotional  periods.  The campaign
emphasizes  Thomasville  fashion  and  quality  leadership  through  the  use of
dramatic  photographs  featuring  individual,  high quality wood and  upholstery
pieces.   The  campaign  includes   advertising  in  the  following   magazines:
Architectural  Digest,  Traditional  Home,  Country  Gardens,  Better  Homes and
Gardens, In Style, Martha Stewart Living, Travel & Leisure, Smithsonian,  Vanity
Fair,  Food & Wine and  Mirabella.  National  cable  networks  include  A&E, The
Discovery   Channel,   CNN,  CNN  Headline  News,  The  Weather  Channel,   TNN,
Nickelodeon, The Travel Channel, TBS and Entertainment Network.

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

MANUFACTURING

Broyhill operates 17 finished case goods and upholstery production and warehouse
facilities totalling over 4.9 million square feet. All finished goods 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 10 finished  case goods and  upholstery  production  and warehouse
facilities  in Virginia,  North  Carolina  and  Mississippi  totalling  over 4.5
million square feet. Since the late 1980s, 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 21 finished case goods and
upholstery  production  and  warehouse  facilities  located  in North  Carolina,
Virginia,  and Tennessee  totalling over 7.2 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  Creative  Interiors  division is
highly automated. Large fiberboard and particleboard sheets are machine-finished
in long  production  runs,  then  stored  and held  for  assembly  using  highly
automated assembly lines.  Completed goods are stored in an automated  warehouse
to provide quicker delivery to customers.  Ninety percent of Creative  Interiors
products are shipped within 14 days of production.

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 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.

On February 26, 1999, the Company and Outlook  International,  Ltd. announced an
agreement in which Outlook will act as exclusive  representative for the Company
for the manufacture of products in the Far East.

Other than Outlook International,  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 margins for its products.

The  majority  of  supplies  for  promotional  and RTA  products  are  purchased
domestically,   although  paper  and  certain  hardware  is  purchased   abroad.
Management  believes,  however,  that its  proximity to and  relationships  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,  Broyhill,  Lane,  and  Thomasville  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,  management  closely  monitors the  Company's
environmental  performance  at all of its  facilities.  Management  believes the
Company 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 amount of money 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. Management
believes that any liability as a PRP with regard to the superfund sites will not
have a  material  adverse  effect  on the  financial  condition  or  results  of
operations of the Company.

COMPETITION

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

EMPLOYEES

As of December 31, 1999, the Company employed  approximately 21,400 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,
1999  aggregated  approximately  $206 million,  compared to  approximately  $220
million as of December 31, 1998.

<PAGE>

Item 2.  Properties
--------------------

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


<TABLE>
<CAPTION>

<S>                     <C>                       <C>                         <C>         <C>
                                                                             Floor       Owned
                                                Type of                      Space         or
Division              Location                  Facility                  (Sq. Ft.)      Leased
--------              --------                  --------                  ---------      ------

Furniture Brands      St. Louis, MO             Headquarters               26,800        Leased

Broyhill              Lenoir, NC                Headquarters               136,000        Owned

Broyhill              Lenoir, NC                Plant/Warehouse            312,632        Owned

Broyhill              Newton, NC                Plant/Warehouse            382,626        Owned

Broyhill              Lenoir, NC                Plant/Warehouse            628,000        Owned

Broyhill              Rutherfordton, NC         Plant/Warehouse            575,656        Owned

Broyhill              Lenoir, NC                Plant/Warehouse            419,000        Owned

Broyhill              Lenoir, NC                Plant/Warehouse            390,020        Owned/
                                                                                           Leased

Broyhill              Conover, NC               Plant/Warehouse            316,542        Owned

Broyhill              Lenoir, NC                Plant/Warehouse            516,439        Owned

Broyhill              Lenoir, NC                Plant/Warehouse            256,318        Owned

Broyhill              Lenoir, NC                Plant                       56,250        Owned

Broyhill              Lenoir, NC                Plant/Warehouse            252,380        Owned

Broyhill              Taylorsville, NC          Plant/Warehouse            212,754        Owned

Broyhill              Lenoir, NC                Plant                      124,700        Owned

Broyhill              Marion, NC                Plant                       22,712        Owned

Broyhill              Lenoir, NC                Warehouse                   96,000        Owned

Broyhill              Lenoir, NC                Warehouse                  252,250        Leased

Broyhill              Lenoir, NC                Warehouse                  124,200        Leased

Lane                  Altavista, VA             Plant/Warehouse          1,091,600        Owned

Lane                  Altavista, VA             Headquarters                62,000        Owned

Lane                  Conover, NC               Plant/Warehouse            348,180        Owned

Lane                  Conover, NC               Plant                      195,130        Owned

Lane                  Rocky Mount, VA           Plant/Warehouse            598,962        Owned

Lane                  Rocky Mount, VA           Plant                       50,300        Owned

Lane                  High Point, NC            Plant                      187,162        Owned

Lane                  Pontotoc, MS              Plant/Warehouse            358,652        Owned
<PAGE>

Lane                  Verona, MS                Plant/Warehouse            410,000        Owned

Lane                  Saltillo, MS              Plant/Warehouse            570,328        Owned

Lane                  Tupelo, MS                Plant/Warehouse            712,675        Owned

Thomasville           Thomasville, NC           Headquarters/              256,000        Owned
                                                   Showroom

Thomasville           Thomasville, NC           Plant/Warehouse            412,000        Owned

Thomasville           Thomasville, NC           Plant                      240,000        Owned

Thomasville           Thomasville, NC           Plant                      325,000        Owned

Thomasville           Thomasville, NC           Plant                      309,850        Owned

Thomasville           Lenoir, NC                Plant/Warehouse            828,000        Owned

Thomasville           Winston-Salem, NC         Plant/Warehouse            706,000        Owned

Thomasville           West Jefferson, NC        Plant/Warehouse            223,545        Owned

Thomasville           Johnson City, TN          Plant/Warehouse            284,120        Owned

Thomasville           Statesville, NC           Plant                      158,600        Owned

Thomasville           Troutman, NC              Plant                      238,200        Owned

Thomasville           Conover, NC               Plant                      123,200        Owned

Thomasville           Hickory, NC               Plant                       58,700        Owned

Thomasville           Hickory, NC               Plant                       98,700        Owned

Thomasville           Thomasville, NC           Warehouse                  731,000        Owned

Thomasville           Appomattox, VA            Plant/Warehouse            804,000        Owned

Thomasville           Carysbrook, VA            Plant                      189,000        Owned

Thomasville           Hickory, NC               Plant/Warehouse            215,500        Leased

Thomasville           Conover, NC               Plant/Warehouse            231,250        Owned

Thomasville           Hickory, NC               Plant/Warehouse            641,214        Owned

Thomasville           Hickory, NC               Plant/Warehouse            179,902        Owned

Thomasville           High Point, NC            Plant/Warehouse            163,500        Owned
--------------------------
</TABLE>


The Tupelo,  Mississippi  facility is  encumbered  by a mortgage  and first lien
securing industrial 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 effectively utilized during 1999 at moderate to high
levels 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.

<PAGE>

                                     PART II
                                     -------

Item 5.  Market for The Registrant's Common Equity and Related Stockholder
--------------------------------------------------------------------------
Matters
-------

As of February 29, 2000,  there were  approximately  2,300  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 10 to the  consolidated  financial
statements of the Company.

The Company has not paid cash dividends on its Common Stock during the two years
ended December 31, 1998 and 1999.

A discussion of restrictions  on the Company's  ability to pay cash dividends is
included in Note 6 to the consolidated financial statements of the Company.

<PAGE>
<TABLE>

Item 6.  Selected Financial Data
--------------------------------
<CAPTION>

                     FIVE-YEAR CONSOLIDATED FINANCIAL REVIEW

     <S>                                     <C>        <C>       <C>        <C>         <C>

----------------------------------------------------------------------------------------------
(Dollars in thousands                                    Year Ended December 31,
 except per share data)                      1999       1998       1997       1996       1995a
----------------------------------------------------------------------------------------------
Summary of operations:

  Net sales                            $2,088,112 $1,960,250 $1,808,276 $1,696,795 $1,073,889
  Gross profit                            550,312    515,512    450,690    431,473    291,237
  Interest expense                         37,577     43,455     42,747     45,217     33,845
  Earnings before income tax
    expense, and extraordinary

    item                                  176,764    152,143    107,254     88,292     57,038
  Income tax expense                       64,854     54,205     40,201     34,070     22,815
  Earnings from continuing
    operations                            111,910     97,938c    67,053     54,222     34,223b
  Extraordinary item                          -          -          -       (7,417)    (5,815)
  Net earnings                         $  111,910 $   97,938 $   67,053 $   46,805 $   28,408

  Per share of common stock
    - diluted:
    Earnings from continuing

      operations                       $     2.14 $     1.82c$     1.15 $     0.88 $     0.67b
    Extraordinary item                         -          -          -       (0.12)     (0.11)
    Net earnings                       $     2.14 $     1.82 $     1.15 $     0.76 $     0.56

    Weighted average common shares

      - diluted (in thousands)             52,335     53,809     58,473     61,946     50,639

Other information:

  Working capital                      $  518,036 $  509,148 $  482,288 $  462,661 $  455,036
  Property, plant and equipment,
    net                                   297,746    293,777    294,061    301,962    306,406
  Capital expenditures                     48,951     44,358     40,004     40,344     35,616
  Total assets                          1,288,834  1,303,204  1,257,236  1,269,204  1,291,739
  Long-term debt                          535,100    589,200    667,800    572,600    705,040
  Shareholders' equity                 $  474,197 $  413,509 $  323,322 $  419,657 $  301,156
=================================================================================================
</TABLE>

(a)  On December 31, 1995,  the Company  purchased  Thomasville.  The  Company's
     results of  operations  for 1995 do not  include any of the  operations  of
     Thomasville,  since the acquisition occurred as of the last business day of
     the year.

b)   Earnings from continuing operations before gain on insurance settlement,
     net of income tax expense,  and  earnings per common share from  continuing
     operations before gain on insurance settlement,  net of income tax expense,
     were  $29,463  and  $0.58,  respectively.

(c)  Earnings from continuing operations before nonrecurring gain, net of income
     tax  expense,  and earnings  per common  share from  continuing  operations
     before  nonrecurring  gain,  net of income tax  expense,  were  $90,077 and
     $1.67, respectively.

 <PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and
-----------------------------------------------------------------------
Results of Operations
---------------------
<TABLE>
<CAPTION>

                       OPERATIONS AND FINANCIAL CONDITION

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 1999, 1998, and 1997.


------------------------------------------------------------------------------------------------------------------------
(Dollars in millions)                                             Year Ended December 31,

                                     -----------------------------------------------------------------------------------
                                                1999                        1998                        1997
                                     -----------------------------------------------------------------------------------
                                                      % of                        % of                       % of
                                                       Net                         Net                        Net
                                      Dollars        Sales        Dollars        Sales        Dollars       Sales
------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>             <C>         <C>             <C>         <C>            <C>
Net sales                            $2,088.1        100.0%      $1,960.2        100.0%      $1,808.3       100.0%
Cost of operations                    1,498.6         71.8        1,406.4         71.7        1,319.5        73.0
Selling, general and
  administrative

  expenses                              321.2         15.4          314.8         16.1          286.1        15.8
Depreciation and
  amortization                           56.5          2.7           55.5          2.8           56.0         3.1
------------------------------------------------------------------------------------------------------------------------
Earnings from
  operations                            211.8         10.1          183.5          9.4          146.7         8.1
Interest expense                         37.6          1.8           43.5          2.2           42.7         2.4
Other income, net                         2.6          0.1           12.1          0.6            3.3         0.2
------------------------------------------------------------------------------------------------------------------------
Earnings before   income tax
expense                                 176.8          8.5          152.1          7.8          107.3         5.9
Income tax expense                       64.9          3.1           54.2          2.8           40.2         2.2
------------------------------------------------------------------------------------------------------------------------
Net earnings                         $  111.9          5.4%      $   97.9          5.0%          67.1         3.7%
========================================================================================================================
Gross profit(1)                      $  550.3         26.4%      $  515.5         26.3%      $  450.7        24.9%
========================================================================================================================

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.
</TABLE>
<TABLE>
<CAPTION>

             (Dollars in millions)                                           Year Ended December 31,
                                                                    --------------------------------------------------
                                                                           1999           1998            1997
             ---------------------------------------------------------------------------------------------------------
               <S>                                                         <C>            <C>             <C>
             Net sales                                                 $2,088.1       $1,960.2        $1,808.3
             Cost of operations                                         1,498.6        1,406.4         1,319.5
             Depreciation (associated with cost of goods sold)             39.2           38.3            38.1
             ---------------------------------------------------------------------------------------------------------
             Gross profit                                              $  550.3       $  515.5        $  450.7
             =========================================================================================================
</TABLE>

     Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

     Net sales for 1999 were $2,088.1  million  compared to $1,960.2 million for
1998, an increase of $127.9 million or 6.5%. The improved sales  performance for
1999 occurred at each operating company and ranged,  in varying degrees,  across
all product  lines.  The  increase in net sales was achieved  through  continued
introductions  of new  products,  emphasis on the  Company's  brand  names,  and
expansion of distribution.

     Cost of  operations  for 1999 was  $1,498.6  million  compared  to $1,406.4
million for 1998, an increase of 6.6%. Cost of operations as a percentage of net
sales  increased  from  71.7%  for 1998 to 71.8%  in 1999  primarily  due to the
disposal of low-margin and nonproductive  inventories at less than normal profit
margins, and to a lesser degree, from short-term manufacturing inefficiencies at
several plants caused by an evolving change in case goods product mix.

<PAGE>

     Selling, general and administrative expenses increased to $321.2 million in
1999 from $314.8  million in 1998,  an increase of 2.0%.  As a percentage of net
sales,  selling,  general and  administrative  expenses decreased from 16.1% for
1998 to 15.4% for 1999 because of continued tight control over expenses.

     Depreciation  and amortization for 1999 was $56.5 million compared to $55.5
million  in  1998,  an  increase  of  1.8%.  The  amount  of  depreciation   and
amortization  attributed  to the  "fresh-start"  reporting was $13.2 million and
$13.7 million in 1999 and 1998, respectively.

     Interest expense for 1999 totaled $37.6 million compared with $43.5 million
in 1998. The decrease in interest  expense reflects the Company's debt reduction
program and reduced interest rates.

     Other income,  net for 1999 totaled $2.6 million  compared to $12.1 million
for 1998, which included a nonrecurring cash dividend of $9.4 million. For 1999,
other income consisted of interest on short-term investments of $0.4 million and
other miscellaneous income and expense items totaling $2.2 million.

     Income tax expense for 1999 totaled $64.9  million,  producing an effective
tax rate of 36.7%  compared  with an effective  tax rate of 35.6% for 1998.  The
effective  tax  rates  for both  periods  were  adversely  impacted  by  certain
nondeductible expenses incurred and provisions for state and local income taxes.
The effective tax rate for 1998 was favorably impacted by the nontaxable portion
of the $9.4 million cash dividend.

     Net earnings  per common share on a diluted  basis were $2.14 and $1.82 for
1999 and 1998,  respectively.  Weighted  average shares  outstanding used in the
calculation  of net earnings per common share on a basic and diluted  basis were
50,968,000 and 52,335,000 in 1999,  respectively,  and 52,095,000 and 53,809,000
in 1998, respectively.

     Gross profit for 1999 was $550.3  million  compared with $515.5  million in
1998, an increase of 6.8%.  The increase in gross profit margin to 26.4% in 1999
from  26.3%  in 1998 was due to  improved  manufacturing  capacity  utilization,
partially  offset by an inventory  reduction  program and a change in case goods
product mix.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

     Net sales for 1998 were $1,960.2  million  compared to $1,808.3 million for
1997, an increase of $151.9 million or 8.4%. The improved sales  performance for
1998 occurred at each operating company and ranged,  in varying degrees,  across
all product  lines.  The  increase in net sales was achieved  through  continued
introductions  of new  products,  emphasis on the  Company's  brand  names,  and
expansion of distribution.

     Cost of  operations  for 1998 was  $1,406.4  million  compared  to $1,319.5
million for 1997, an increase of 6.6%. Cost of operations as a percentage of net
sales  decreased  from 73.0% for 1997 to 71.7% in 1998 primarily due to improved
manufacturing  capacity  utilization,  reduced stock keeping units,  and ongoing
cost reduction programs.

     Selling, general and administrative expenses increased to $314.8 million in
1998 from $286.1  million in 1997, an increase of 10.0%.  As a percentage of net
sales,  selling,  general and  administrative  expenses increased from 15.8% for
1997 to 16.1% for 1998 because of tight spending controls implemented during the
fourth  quarter  of  1997  to  help  offset  an  operational   restructuring  at
Thomasville and a temporary promotional product mix change.

     Depreciation  and amortization for 1998 was $55.5 million compared to $56.0
million in 1997, a decrease of 0.9%. The amount of depreciation and amortization
attributable to the "fresh-start"  reporting was $13.7 million and $16.4 million
in 1998 and 1997, respectively.

     Interest expense for 1998 totaled $43.5 million compared with $42.7 million
in 1997. The increase in interest  expense  reflects  additional  long-term debt
incurred  at the end of the  second  quarter of 1997 to  finance  the  Company's
repurchase of approximately 10.8 million shares of its common stock.

     Other income,  net for 1998 totaled $12.1 million  compared to $3.3 million
for 1997. For 1998, other income consisted of interest on short-term investments
of $0.9 million, a cash dividend  (nonrecurring) of $9.4 million received by the
Company relating to its minority investment in a company which leases exhibition
space to furniture and accessory  manufacturers,  and other miscellaneous income
and expense items totaling $1.8 million.

     Income tax expense for 1998 totaled $54.2  million,  producing an effective
tax rate of 35.6%  compared  with an effective  tax rate of 37.5% for 1997.  The
effective  tax  rates  for both  periods  were  adversely  impacted  by  certain
nondeductible expenses incurred and provisions for state and local income taxes.
The effective tax rate for 1998 was favorably  impacted by the reduced effect of
the nondeductible expenses as a percentage of pretax earnings and the nontaxable
portion of the $9.4 million cash dividend.

     Net earnings  per common share on a diluted  basis were $1.82 and $1.15 for
1998 and 1997,  respectively.  Weighted  average shares  outstanding used in the
calculation  of net earnings per common share on a basic and diluted  basis were
52,095,000 and 53,809,000 in 1998,  respectively,  and 56,438,000 and 58,473,000
in 1997, respectively.

     Gross profit for 1998 was $515.5  million  compared with $450.7  million in
1997, an increase of 14.4%. The increase in gross profit margin to 26.3% in 1998
from  24.9%  in 1997 was due to  improved  manufacturing  capacity  utilization,
reduced stock keeping units, and ongoing cost reduction programs.

Financial Condition and Liquidity

Liquidity

     Cash and cash  equivalents  at  December  31,  1999  totaled  $7.4  million
compared to $13.2 million at December 31, 1998.  For 1999,  net cash provided by
operating  activities  totaled  $148.6  million.  Net  cash  used  by  investing
activities totaled $48.5 million.  Net cash used in financing activities totaled
$105.9 million, including the net payment of $54.1 million of long-term debt and
the repurchase of 3.1 million shares of common stock for $59.7 million.

     Working  capital was $518.0 million at December 31, 1999 compared to $509.1
million at December  31,  1998.  The current  ratio was 4.4-to-1 at December 31,
1999 compared to 4.1-to-1 at December 31, 1998.  The modest  increase in working
capital  between  years  is  primarily  the  result  of the  Company's  focus on
efficient management of individual working capital components.

     At December 31, 1999,  long-term debt totaled  $535.1  million  compared to
$589.2 million at December 31, 1998. The decrease in indebtedness  was funded by
cash flow from operations. The Company's  debt-to-capitalization ratio was 53.0%
at December 31, 1999 compared to 58.8% at December 31, 1998.

Financing Arrangements

     To meet short-term  capital and other financial  requirements,  the Company
maintains  a $600.0  million  revolving  credit  facility as part of its Secured
Credit  Agreement with a group of financial  institutions.  The revolving credit
facility  allows for both  issuance  of  letters of credit and cash  borrowings.
Letter of credit  outstandings  are limited to no more than $60.0 million.  Cash
borrowings are limited only by the facility's maximum  availability less letters
of credit  outstanding.  At December 31, 1999, there were $317.5 million of cash
borrowings  outstanding under the revolving credit facility and $39.8 million in
letters of credit  outstanding,  leaving an excess of $242.7  million  available
under the revolving credit facility.

     The Company  believes  its Secured  Credit  Agreement,  together  with cash
generated from operations,  will be adequate to meet liquidity  requirements for
the foreseeable future.

Recently Issued Statements of Financial Accounting Standards

     In June, 1998 the Financial  Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS No. 133) "Accounting for Derivative
Instruments and Hedging Activities." This statement  standardized the accounting
for derivative  instruments  by requiring that an entity  recognize the items as
assets and  liabilities in the statement of financial  position and measure them
at fair value.  SFAS No. 133 was to become  effective for fiscal years beginning
after June 15, 1999;  however,  in June, 1999 Statement of Financial  Accounting
Standards No. 137 was issued  extending the effective date to June 15, 2000. The
company  does not believe the  adoption of this  statement  will have a material
impact on its financial statements.

Forward-Looking Statements

     From time to time,  the Company may make  statements  which  constitute  or
contain  "forward-looking"  information  as that term is defined in the  Private
Securities  Litigation  Reform  Act of 1995 or by the  Securities  and  Exchange
Commission  in its  rules,  regulations,  and  releases.  The  Company  cautions
investors that any such  forward-looking  statements made by the Company are not
guarantees of future  performance and that actual results may differ  materially
from those in the forward-looking statements.

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.  Interest rate swaps are used to reduce the Company's exposure
to increases in interest rates.

<PAGE>

Item 8. Financial Statements and Supplementary Data

<TABLE>
<CAPTION>

                           CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
(Dollars in thousands)                            December 31,     December 31,
                                                         1999             1998
--------------------------------------------------------------------------------
Assets
Current assets:

<S>                                                <C>              <C>
  Cash and cash equivalents                        $    7,409       $   13,220
  Receivables, less allowances of $19,057
  ($18,333 at December 31, 1998)                      345,385          324,164
  Inventories (Note 3)                                285,395          307,382
  Prepaid expenses and other current assets            33,711           31,107
--------------------------------------------------------------------------------
    Total current assets                              671,900          675,873
Property, plant and equipment:
  Land                                                 18,930           16,757
  Buildings and improvements                          204,177          188,874
  Machinery and equipment                             322,527          294,282
--------------------------------------------------------------------------------
                                                      545,634          499,913
  Less accumulated depreciation                       247,888          206,136
--------------------------------------------------------------------------------
    Net property, plant and equipment                 297,746          293,777
Intangible assets (Note 4)                            303,446          316,998
Other assets                                           15,742           16,556
--------------------------------------------------------------------------------
                                                   $1,288,834       $1,303,204
================================================================================
Liabilities and Shareholders' Equity
Current liabilities:

  Accounts payable                                 $   73,617       $   67,381
  Accrued employee compensation                        28,450           35,758
  Accrued interest expense                              1,762            5,608
  Other accrued expenses                               50,035           57,978
--------------------------------------------------------------------------------
    Total current liabilities                         153,864          166,725
Long-term debt (Note 5)                               535,100          589,200
Other long-term liabilities                           125,673          133,770

Shareholders' equity:

  Preferred stock, authorized 10,000,000 shares,
    no par value - issued, none                           -                -
  Common stock, authorized 100,000,000 shares,
    $1.00 stated value - issued 52,277,066
    shares at December 31, 1999 and 1998 (Note 6)      52,277          52,277
  Paid-in capital                                     120,326         127,513
  Retained earnings                                   356,572         244,662
  Treasury stock at cost
    (2,907,059 shares at December 31, 1999 and
     525,000 shares at December 31, 1998)             (54,978)        (10,943)
--------------------------------------------------------------------------------
    Total shareholders' equity                        474,197          413,509
--------------------------------------------------------------------------------
                                                   $1,288,834       $1,303,204
================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                      CONSOLIDATED STATEMENTS OF OPERATIONS
------------------------------------------------------------------------------------------------
(Dollars in thousands except per share data)

                                                                    Year Ended December 31,
                                                              ----------------------------------
                                                              1999          1998         1997
------------------------------------------------------------------------------------------------
<S>                                                     <C>           <C>          <C>
Net sales                                               $2,088,112    $1,960,250   $1,808,276

Costs and expenses:

  Cost of operations                                     1,498,622     1,406,434    1,319,455

  Selling, general and administrative expenses             321,205       314,837      286,086

  Depreciation and amortization (includes
    $13,155, $13,670 and $16,369 related to
    fair value adjustments)                                 56,528        55,469       55,995
------------------------------------------------------------------------------------------------
Earnings from operations                                   211,757       183,510      146,740

Interest expense                                            37,577        43,455       42,747

Other income, net                                            2,584        12,088        3,261
------------------------------------------------------------------------------------------------
Earnings before income tax expense                         176,764       152,143      107,254

Income tax expense (Note 7)                                 64,854        54,205       40,201
------------------------------------------------------------------------------------------------
Net earnings                                            $  111,910    $   97,938   $   67,053
================================================================================================
Net earnings per common share - basic (Note 6)          $     2.20    $     1.88   $     1.19
================================================================================================
Net earnings per common share - diluted (Note 6)        $     2.14    $     1.82   $     1.15
================================================================================================

See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
------------------------------------------------------------------------------------------------
(Dollars in thousands)

                                                                    Year Ended December 31,
                                                              ----------------------------------
                                                              1999          1998        1997
------------------------------------------------------------------------------------------------
Cash flows from operating activities:

<S>                                                       <C>           <C>         <C>
  Net earnings                                            $111,910      $ 97,938    $ 67,053
  Adjustments to reconcile net earnings
    to net cash provided by operating activities:
    Depreciation of property, plant and equipment           44,468        43,409      43,935
    Amortization of intangible and other assets             12,060        12,060      12,060
    Noncash interest and other expense                       2,172         2,107       1,297
    Increase in receivables                                (21,221)      (30,189)    (10,558)
    (Increase) decrease in inventories                      21,987       (20,336)     (5,939)
    (Increase) decrease in prepaid expenses and
      intangible and other assets                           (2,872)       (3,055)      3,655
    Increase (decrease) in accounts payable, accrued
      interest expense and other accrued expenses          (12,861)       29,704      (7,405)
    Increase (decrease)in net deferred tax liabilities      (5,390)        2,624      (8,056)
    Increase (decrease) in other long-term
      liabilities                                           (1,687)       (2,956)      7,669
------------------------------------------------------------------------------------------------
  Net cash provided by operating activities                148,566       131,306     103,711
------------------------------------------------------------------------------------------------
Cash flows from investing activities:
  Proceeds from the disposal of assets                         451         1,233         732
  Additions to property, plant and equipment               (48,951)      (44,358)    (40,004)
-------------------------------------------------------------------------------------------------
  Net cash used by investing activities                    (48,500)      (43,125)    (39,272)
-------------------------------------------------------------------------------------------------
Cash flows from financing activities:
  Payments for debt issuance costs                             -          (1,684)     (3,342)
  Additions to long-term debt                                  -         218,000     220,000
  Payments of long-term debt                               (54,100)     (295,800)   (124,800)
  Proceeds from the issuance of common stock                   -           3,192      10,734
  Payment for the repurchase and retirement
    of common stock                                            -             -      (168,056)
  Proceeds from the issuance of treasury stock               7,943           -           -
  Purchase of treasury stock                               (59,720)      (10,943)        -
  Payments for the repurchase of common stock warrants         -             -        (5,187)
  Payments for common stock offering expenses
    of selling shareholders                                    -             -          (879)
-------------------------------------------------------------------------------------------------
  Net cash used by financing activities                   (105,877)      (87,235)    (71,530)
-------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents        (5,811)          946      (7,091)
Cash and cash equivalents at beginning of period            13,220        12,274      19,365
-------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                $  7,409      $ 13,220    $ 12,274
=================================================================================================
Supplemental Disclosure:
  Cash payments for income taxes, net                     $ 68,100      $ 49,889    $ 40,639
=================================================================================================
  Cash payments for interest                              $ 40,070      $ 42,974    $ 40,707
=================================================================================================

See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
------------------------------------------------------------------------------------------------
(Dollars in thousands)                     Common    Paid-In   Retained   Treasury
                                            Stock    Capital   Earnings      Stock      Total
------------------------------------------------------------------------------------------------
<S>                                       <C>       <C>         <C>       <C>        <C>
Balance December 31, 1996                 $61,432   $278,554    $79,671   $    -     $419,657

Net earnings                                                     67,053                67,053
Common stock activity:
  Repurchase of common stock
    - 10,842,299 shares                   (10,842)  (157,214)                        (168,056)
  Stock plans activity (Note 6)               174      1,302                            1,476
  Warrant exercises - 1,298,498 shares      1,298      7,960                            9,258
  Warrant purchases - 650,071 shares                  (5,187)                          (5,187)
  Retirement of common stock
    - 58,824 shares                           (59)        59                              -
Common stock offering expenses of
  selling shareholders                                  (879)                            (879)
------------------------------------------------------------------------------------------------
Balance December 31, 1997                  52,003    124,595    146,724        -      323,322

Net earnings                                                     97,938                97,938
Common stock activity:
  Stock plans activity (Note 6)               274      2,918                            3,192
  Purchase of treasury stock
    - 525,000 shares                                                       (10,943)   (10,943)
-------------------------------------------------------------------------------------------------
Balance December 31, 1998                  52,277    127,513    244,662    (10,943)   413,509

Net earnings                                                    111,910               111,910
Common stock activity:
  Stock plans activity (Note 6)                       (7,187)               15,685      8,498
  Purchase of treasury stock
    - 3,123,200 shares                                                     (59,720)   (59,720)
-------------------------------------------------------------------------------------------------
Balance December 31, 1999                 $52,277   $120,326   $356,572   $(54,978)  $474,197
=================================================================================================

See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>

                   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 the largest home furniture manufacturer in the United States.
     During the year ended  December  31,  1999,  the Company had three  primary
     operating subsidiaries: Broyhill Furniture Industries, Inc.; Lane Furniture
     Industries, Inc.; and Thomasville Furniture Industries, Inc.

          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  section.  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 generally
     accepted  accounting  principles  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  could  differ  from  those
     estimates.

     Principles of Consolidation

          The  consolidated  financial  statements  include the  accounts of the
     Company and all 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  years 1999,  1998,  and 1997 were
     52-week, 52-week and 53-week years, respectively.

     Cash and Cash Equivalents

          The Company  considers  all  short-term  investments  with an original
     maturity  of  three  months  or  less to be  cash  equivalents.  Short-term
     investments are recorded at amortized cost, which approximates market.

     Inventories

          Inventories are stated at the lower of cost  (first-in,  first-out) or
     market.

     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.

     Intangible Assets

          The excess of cost over net assets  acquired  in  connection  with the
     acquisition of Thomasville totaled $93,110.  This intangible asset is being
     amortized on a straight-line basis over a 40-year period.

          The Company emerged from Chapter 11 reorganization  effective with the
     beginning  of  business on August 3, 1992.  In  accordance  with  generally
     accepted  accounting   principles,   the  Company  was  required  to  adopt
     "fresh-start" reporting which included adjusting all assets and liabilities
     to their fair values as of the effective  date.  The ongoing  impact of the
     adoption of fresh-start  reporting is reflected in the financial statements
     for all years presented.

          As a result of adopting  fresh-start  reporting,  the Company recorded
     reorganization  value in excess of amounts allocable to identifiable assets
     of  approximately  $146,000.  This intangible asset is being amortized on a
     straight-line basis over a 20-year period.

          Also in connection  with the adoption of  fresh-start  reporting,  the
     Company  recorded  approximately  $156,800 in fair value of trademarks  and
     trade names based upon an independent appraisal.  Such trademarks and trade
     names are being amortized on a straight-line basis over a 40-year period.

          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 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 were entered into  recently  and/or  accrue  interest at rates
     which generally fluctuate with interest rate trends.

          Interest rate swap  agreements used by the Company to fix the interest
     rate on a portion of its floating rate  long-term debt are accounted for on
     the accrual  basis.  Amounts to be paid or received under the interest rate
     swap  agreements  are  recognized  in income  as  adjustments  to  interest
     expense.  The fair value of the interest  rate swap  agreements at December
     31, 1999 exceeded the book value by  approximately  $4.4 million.  The fair
     value of the interest rate swap agreements is based upon market quotes from
     the counterparties.

     Revenue Recognition

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

     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 basis.  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.

     Reclassification

          Certain 1998 and 1997 amounts have been reclassified to conform to the
     1999 presentation.


<PAGE>

3.    Inventories

          Inventories are summarized as follows:

      --------------------------------------------------------------------------
                                                     December 31,   December 31,
                                                            1999           1998
      --------------------------------------------------------------------------
      Finished products                                 $112,389       $122,993
      Work-in-process                                     58,479         57,915
      Raw materials                                      114,527        126,474
      --------------------------------------------------------------------------
                                                        $285,395       $307,382
      ==========================================================================

4.    Intangible Assets

          Intangible assets include the following:

      --------------------------------------------------------------------------
                                                     December 31,   December 31,
                                                            1999           1998
      --------------------------------------------------------------------------
      Intangible assets, at cost:
      Reorganization value in excess of amounts
        allocable to identifiable assets                $146,063       $146,063
        Trademarks and trade names                       156,828        156,828
      Excess of cost over net assets acquired             93,110         93,110
      --------------------------------------------------------------------------
                                                         396,001        396,001
      Less accumulated amortization                       92,555         79,003
      ==========================================================================
                                                        $303,446       $316,998

5.    Long-Term Debt

          Long-term debt consists of the following:


      --------------------------------------------------------------------------
                                                     December 31,   December 31,
                                                            1999           1998
      --------------------------------------------------------------------------
      Secured credit agreement:
        Revolving credit facility                        $317,500      $370,000
        Term loan facility                                200,000       200,000
      Other                                                17,600        19,200
      --------------------------------------------------------------------------
                                                         $535,100      $589,200
      ==========================================================================

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

     Secured Credit Agreement

     The Secured Credit Agreement  consists of a revolving credit facility and a
     term loan facility.  The revolving credit facility is a five-year  facility
     with a commitment of $600,000.  The revolving  credit  facility  allows for
     issuance  of  letters  of  credit  and cash  borrowings.  Letter  of credit
     outstandings  are  limited to no more than  $60,000,  with cash  borrowings
     limited only by the facility's maximum  availability less letters of credit
     outstanding.

          Under  the  letter  of  credit  facility,  a fee of  0.875%  per annum
     (subject to reduction  based upon the Company  achieving  certain  leverage
     ratios) 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 London  Interbank  Offered Rate (LIBOR) plus an
     applicable margin which varies, depending upon the type of loan the Company
     executes.  The applicable margin over the base rate and LIBOR is subject to
     adjustment based upon achieving  certain  leverage ratios.  At December 31,
     1999 loans  outstanding  under the revolving  credit facility  consisted of
     $310,000  based on the LIBOR rate and $7,500 based on the base rate,  for a
     weighted average interest rate of 7.04%.

          At December  31,  1999,  there were  $317,500 of cash  borrowings  and
     $39,789  in  letters  of  credit  outstanding  under the  revolving  credit
     facility, leaving an excess of $242,711 available under the facility.

          The revolving  credit  facility has no mandatory  principal  payments;
     however,  the  commitment  matures on September 15, 2001. In addition,  the
     facility  requires  principal  payments  from a portion of the net proceeds
     realized from (i) the sale,  conveyance or other  disposition of collateral
     securing  the debt,  or (ii) the sale by the Company for its own account of
     additional  subordinated  debt and/or shares of its preferred and/or common
     stock.

          On June 27, 1997, the Company amended the Secured Credit  Agreement to
     include a new term loan  facility of $200,000.  The term loan facility is a
     non-amortizing  ten-year  facility,  bearing  interest  at a base rate plus
     0.75% or at an adjusted  LIBOR rate plus 1.75%,  depending upon the type of
     loan the Company  executes.  At December  31, 1999,  all loans  outstanding
     under the term loan  facility  were based on the LIBOR rate at an  interest
     rate of 8.31%.

          The  common  stock of the  Company's  principal  subsidiaries  and the
     accounts  receivable and inventories of the subsidiaries  have been pledged
     as security for the Secured Credit Agreement.  The Secured Credit Agreement
     defines events of default and contains a number of  restrictive  covenants,
     including  covenants limiting capital  expenditures and incurrence of debt,
     and  requiring the Company to achieve  certain  financial  ratios,  some of
     which become more restrictive over time.

     Other

          Other long-term debt consists of various industrial revenue bonds with
     interest rates ranging from approximately 4.0% to 9.0%. Mandatory principal
     payments are required through 2008.

     Interest Rate Swap Agreements

          The Company has entered into various  interest rate swap agreements to
     reduce  the  impact of  changes  in  interest  rates on its  floating  rate
     long-term  debt. The following  table  summarizes the terms of the interest
     rate swap agreements in effect during 1999.

            Notional Amount     Maturity Date     Fixed Rate     Floating Rate
     ---------------------------------------------------------------------------
                   $100,000     February 1999          5.14%     3-month LIBOR
                   $200,000     February 1999          5.14%     3-month LIBOR
                   $300,000      January 2002          5.50%     3-month LIBOR

     In June 1999,  the  Company  executed a partial  unwind of  $100,000 of the
     $300,000  swap  agreement  maturing  in  January  2002.  The gain  from the
     transaction  is being  amortized  over the remaining  life of the swap. The
     swap  agreements  effectively  convert a portion of the Company's  floating
     rate long-term  debt to a fixed rate.  The Company pays the  counterparties
     the fixed rate and  receives  payments  based upon the floating  rate.  The
     Company  is exposed to credit  loss in the event of  nonperformance  by the
     counterparties; however, nonperformance is not anticipated.

     Other Information

          Maturities  of  long-term  debt are $0,  $317,500,  $0, $0, and $0 for
     years 2000 through 2004, respectively.

 6.  Common Stock

          The  Company's   restated   certificate  of   incorporation   includes
     authorization  to issue up to 100.0  million  shares of common stock with a
     $1.00 per share stated value. As of December 31, 1999, 52,277,066 shares of
     common stock were issued and outstanding.  It is not presently  anticipated
     that dividends will be paid on common stock in the  foreseeable  future and
     certain of the debt  instruments  to which the Company is a party  restrict
     the payment of dividends.

          Since  October  1998,  the  Board  of  Directors  has  authorized  the
     repurchase of up to $105,000 of the Company's  common stock with the latest
     authorization  expiring in September  2000.  As of December  31, 1999,  the
     Company has repurchased 3,648,200 shares for $70,663.

<PAGE>

          Shares of common  stock were  reserved for the  following  purposes at
     December 31, 1999:

     ---------------------------------------------------------------------------
                                                                          Number
                                                                       of Shares
     ---------------------------------------------------------------------------
      Common stock options:
        Granted                                                        4,027,063
        Available for grant                                            2,330,986
     ---------------------------------------------------------------------------
                                                                       6,358,049
     ===========================================================================

          On April 29, 1999,  stockholders approved the 1999 Long-Term Incentive
     Plan. The plan provided for a total of 2,250,000  shares plus all remaining
     shares  available  for  grant or which  become  available  for grant due to
     cancellation  under the 1992 Stock Option Plan. The plan is administered by
     the  Executive  Compensation  and Stock  Option  Committee  of the Board of
     Directors  and permits  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.

          In 1999, the Company  granted 79,000 shares of restricted  stock.  The
     restricted shares vest over various periods from 2 to 5 years. The deferred
     compensation  expense 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:
<TABLE>
<CAPTION>
     ---------------------------------------------------------------------------------------------------
                                                           Year Ended December 31,
                                           1999                     1998                  1997
                                    ------------------     --------------------    ---------------------
                                               Average                  Average                  Average
                                      Shares     Price         Shares     Price         Shares     Price
     ---------------------------------------------------------------------------------------------------
      <S>                            <C>          <C>         <C>          <C>         <C>          <C>
     Beginning of period           4,018,581    $ 9.37      3,897,930    $ 7.48      3,859,476    $ 6.63
     Granted                         772,600     23.49        436,500     23.02        292,500     16.36
     Exercised                      (662,141)     6.02       (273,546)     4.81       (173,964)     3.93
     Cancelled                      (101,977)     7.91        (42,303)     5.56        (80,082)     6.62
     ---------------------------------------------------------------------------------------------------
     End of period                 4,027,063    $12.67      4,018,581    $ 9.37      3,897,930    $ 7.48
     ===================================================================================================
     Exercisable at
       end of period               2,342,822                2,261,639                1,979,287
     ===================================================================================================
      Weighted average fair
       value of options granted                 $13.03                   $11.04                   $ 7.54
     ===================================================================================================
</TABLE>


          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:

<TABLE>
<CAPTION>

     --------------------------------------------------------------------------------------
                                                        Year Ended December 31,
                                                    ---------------------------------------
                                                         1999        1998         1997
     --------------------------------------------------------------------------------------
      Net earnings
      <S>                                              <C>            <C>          <C>
        As reported                                  $  111,910     $97,938      $67,053
        Pro forma                                       108,600      96,180       65,907

      Net earnings per share - basic
        As reported                                  $     2.20     $  1.88      $  1.19
        Pro forma                                          2.13        1.85         1.17

      Net earnings per share - diluted
        As reported                                  $     2.14     $  1.82      $  1.15
        Pro forma                                          2.10        1.80         1.13
     ======================================================================================
</TABLE>


          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:  risk free interest rate of 5.00%,
     5.50%, and 6.00% in 1999, 1998, and 1997,  respectively;  expected dividend
     yield of 0% for all  years;  expected  life of 7 years  for all  years  and
     expected  volatility  of 46%,  35%,  and  30% for  1999,  1998,  and  1997,
     respectively.

<PAGE>

          Summarized   information   regarding  stock  options  outstanding  and
     exercisable at December 31, 1999 follows:

<TABLE>
<CAPTION>

      --------------------------------------------------------------------------------------------------------------------
                                                      Outstanding                                   Exercisable
                                -------------------------------------     ------------------------------------------------
      Range of                                         Average
      Exercise                                     Contractual             Average                                 Average
      Prices                        Shares                Life               Price                 Shares            Price
      --------------------------------------------------------------------------------------------------------------------
        <S>                      <C>                       <C>              <C>                 <C>                <C>
      Up to $10                  1,868,663                 3.3              $ 5.55              1,658,922          $ 5.35
      $10 - $20                  1,003,100                 5.9               12.82                595,600           12.79
      Over  $20                  1,155,300                 7.7               24.06                 88,300           24.66
      --------------------------------------------------------------------------------------------------------------------
                                 4,027,063                 5.2              $12.67              2,342,822          $ 7.97
      ====================================================================================================================
</TABLE>



          Weighted  average shares used in the  computation of basic and diluted
     net earnings per common share for 1999, 1998, and 1997 are as follows:

<TABLE>
<CAPTION>
      --------------------------------------------------------------------------------------
                                                         Year Ended December 31,
                                                  ------------------------------------------
            <S>                                        <C>           <C>          <C>
                                                       1999          1998         1997
      --------------------------------------------------------------------------------------
      Weighted average shares used for
        basic net earnings per common share        50,967,973    52,095,451   56,438,465
      Effect of dilutive securities:
        Stock options                               1,366,611     1,713,515    1,447,624
        Warrants                                          -             -        587,105
      --------------------------------------------------------------------------------------
      Weighted average shares used for
        diluted net earnings per common share      52,334,584    53,808,966   58,473,194
      ======================================================================================
</TABLE>

          Excluded from the computation of diluted net earnings per common share
     were options to purchase 1,100,300 shares at an average price of $24.21 per
     share during 1999.

          At December 31, 1996, the Company had  outstanding  approximately  2.0
     million warrants to purchase common stock at $7.13 per share. The warrants,
     which included a five-year call protection which expired on August 3, 1997,
     were redeemed on August 15, 1997.

 7. Income Taxes

          Income tax expense was comprised of the following:
<TABLE>
<CAPTION>

     -----------------------------------------------------------------------------------
                                                        Year Ended December 31,
                                                 ---------------------------------------
      <S>                                                <C>         <C>         <C>
                                                        1999        1998        1997
     -----------------------------------------------------------------------------------
     Current:
      Federal                                        $62,108     $46,257     $43,680
      State and local                                  8,136       5,324       4,577
     -----------------------------------------------------------------------------------
                                                      70,244      51,581      48,257
     Deferred                                         (5,390)      2,624      (8,056)
     -----------------------------------------------------------------------------------
                                                     $64,854     $54,205     $40,201
     ===================================================================================
</TABLE>

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

<TABLE>
<CAPTION>

    ------------------------------------------------------------------------------------
                                                       Year Ended December 31,
                                                 ---------------------------------------
        <S>                                             <C>          <C>          <C>
                                                       1999         1998         1997
    ------------------------------------------------------------------------------------
    Federal corporate statutory rate                   35.0%        35.0%        35.0%
    State and local income taxes, net of
      federal tax benefit                               2.5          1.8          2.3
    Amortization of excess reorganization value         1.5          1.7          2.4
    Other                                              (2.3)        (2.9)        (2.2)
    ------------------------------------------------------------------------------------
    Effective income tax rate                          36.7%        35.6%        37.5%
    ====================================================================================
</TABLE>

<PAGE>

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

<TABLE>
<CAPTION>

     -----------------------------------------------------------------------------------
                                                          December 31,    December 31,
        <S>                                                      <C>             <C>
                                                                 1999            1998
     -----------------------------------------------------------------------------------
     Deferred tax assets:

      Expense accruals                                       $ 17,873        $ 20,296
      Valuation reserves                                       10,318           6,737
      Employee postretirement benefits other than pensions      2,927           3,134
      Inventory costs capitalized                               2,757           3,429
      Employee pension plans                                    2,121           2,139
      Other                                                     2,632           1,648
     -----------------------------------------------------------------------------------
        Total deferred tax assets                              38,628          37,383
     -----------------------------------------------------------------------------------
     Deferred tax liabilities:
      Fair value adjustments                                  (71,422)        (73,867)
      Depreciation                                             (8,428)         (7,924)
      Fair market value adjustments - accounts receivable      (5,060)         (7,421)
      Other                                                   (10,484)        (10,327)
     -----------------------------------------------------------------------------------
        Total deferred tax liabilities                        (95,394)        (99,539)
     -----------------------------------------------------------------------------------
        Net deferred tax liabilities                         $(56,766)       $(62,156)
     ===================================================================================

</TABLE>

          The net deferred  tax  liabilities  are  included in the  consolidated
     balance sheets as follows:

<TABLE>
<CAPTION>

    --------------------------------------------------------------------------------
                                                          December 31,   December 31,
      <S>                                                        <C>            <C>
                                                                 1999           1998
    --------------------------------------------------------------------------------
    Prepaid expenses and other current assets                $ 25,605       $ 24,914
    Other long-term liabilities                               (82,371)       (87,070)
    --------------------------------------------------------------------------------
                                                             $(56,766)      $(62,156)
    ================================================================================
</TABLE>

 8. Employee Benefits

          The Company  sponsors or  contributes  to  retirement  plans  covering
     substantially  all employees.  The total cost of all plans for 1999,  1998,
     and 1997 was $5,649, $7,773, and $8,412, respectively.

     Company-Sponsored Defined Benefit Plans

          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.

<PAGE>
<TABLE>
<CAPTION>

    --------------------------------------------------------------------------------
                                                          December 31,   December 31,
         <S>                                                     <C>            <C>
                                                                 1999           1998
    --------------------------------------------------------------------------------
    Change in projected benefit obligation:

      Projected benefit obligation - beginning of year       $284,498       $273,487
      Service cost                                              8,379          7,419
      Interest cost                                            21,905         19,856
      Actuarial loss                                           17,204            168
      Benefits paid                                           (17,166)       (16,432)
      Other                                                    (1,064)           -
    --------------------------------------------------------------------------------
        Projected benefit obligation - end of year           $313,756       $284,498
    --------------------------------------------------------------------------------
    Change in plan assets:
      Fair value of plan assets - beginning of year          $332,541       $306,797
      Actual return on plan assets                             44,731         41,591
      Employer contributions                                      687            585
      Benefits paid                                           (17,166)       (16,432)
      Other                                                     1,097            -
    --------------------------------------------------------------------------------
        Fair value of plan assets - end of year              $361,890       $332,541
    --------------------------------------------------------------------------------
      Funded status                                          $ 48,134       $ 48,043
      Unrecognized net gain                                   (49,006)       (49,236)
      Unrecognized prior service cost                           1,480            975
    --------------------------------------------------------------------------------
        Prepaid (accrued) pension cost                       $    608       $   (218)
    ================================================================================
</TABLE>

          Net  periodic  pension  cost for 1999,  1998,  and 1997  included  the
     following components:

<TABLE>
<CAPTION>

   -----------------------------------------------------------------------------------
                 <S>                                    <C>         <C>        <C>
                                                            Year Ended December 31,
                                                      --------------------------------
                                                         1999         1998       1997
   -----------------------------------------------------------------------------------
    Service cost-benefits earned during the period    $ 8,379      $ 7,419    $ 7,120
    Interest cost on the projected benefit obligation  21,905       19,856     19,026
    Expected return on plan assets                    (29,193)     (25,464)   (23,115)
    Net amortization and deferral                      (1,230)        (224)       212
   -----------------------------------------------------------------------------------
    Net periodic pension expense (income)             $  (139)     $ 1,587    $ 3,243
   ===================================================================================
</TABLE>

          Employees are covered primarily by  noncontributory  plans,  funded by
     Company  contributions to trust funds,  which are held for the sole benefit
     of employees.  Monthly  retirement  benefits are based upon service and pay
     with employees becoming vested upon completion of five years of service.

          The expected  long-term rate of return on plan assets was 9.0% in 1999
     and 8.5% in 1998 and 1997.  Measurement of the projected benefit obligation
     was based upon a weighted  average  discount  rate of 7.25% and a long-term
     rate of compensation increase of 4.5% for all years presented.

     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.

9.  Commitments and Contingent Liabilities

          Certain of the Company's  real  properties  and equipment are operated
     under lease  agreements.  Rental  expense under  operating  leases  totaled
     $17,417, $16,537 and $15,699 for 1999, 1998, and 1997, respectively. Annual
     minimum  payments  under  operating  leases are $13,928,  $11,043,  $9,586,
     $8,286, and $6,401 for 2000 through 2004, respectively.

          The  Company  has  provided  guarantees  related  to store  leases for
     certain  independent  dealers opening  Thomasville Home Furnishings Stores.
     The total  future  lease  payments  guaranteed  at  December  31, 1999 were
     $20,157.

          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.

10. Quarterly Financial Information (Unaudited)

          Following is a summary of unaudited quarterly information:

<TABLE>
<CAPTION>


     ----------------------------------------------------------------------------------------------------------------------
                                                          Fourth             Third             Second               First
                                                         Quarter           Quarter            Quarter             Quarter
     ----------------------------------------------------------------------------------------------------------------------
     Year ended December 31, 1999:
      <S>                                                 <C>                <C>                <C>                 <C>
      Net sales                                        $521,169           $512,980           $520,061            $533,902
      Gross  profit                                     135,706            134,679            138,236             141,691
      Net  earnings                                    $ 29,151           $ 27,460           $ 27,592            $ 27,707

      Net earnings per common share:
          Basic                                        $   0.59           $   0.53           $   0.54            $   0.54
          Diluted                                      $   0.58           $   0.52           $   0.52            $   0.52

      Common stock price range:
          High                                         $  22.00           $  27.50           $  27.88            $  27.88
          Low                                          $  17.44           $  17.06           $  19.63            $  20.94
      =======================================================================================================================
      Year ended December 31, 1998:
        Net sales                                      $497,628           $487,178           $470,146            $505,298
        Gross profit                                    130,996            128,258            125,435             130,823
        Net earnings                                   $ 24,669           $ 30,548           $ 21,107            $ 21,614

      Net earnings per common share:

        Basic                                          $   0.48           $   0.58           $   0.40            $   0.41
        Diluted                                        $   0.46           $   0.57           $   0.39            $   0.40

      Common stock price range:

          High                                         $  27.25           $  30.69           $  33.69            $  32.56
          Low                                          $  13.50           $  19.50           $  23.06            $  19.56
      ======================================================================================================================
</TABLE>


     The  Company has not paid cash  dividends  on its common  stock  during the
     three years ended  December  31,  1999.  The  closing  market  price of the
     Company's common stock on December 31, 1999 was $22.00 per share.

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

     Not applicable

<PAGE>

                                    PART III
                                    --------

Item 10. Directors and Executive Officers of the Registrant

     The section entitled "Nominees" of the Company's Definitive Proxy Statement
for the Annual Meeting of Stockholders on April 27, 2000 is incorporated  herein
by reference.
<TABLE>
<CAPTION>

Executive Officers of the Registrant

                                                                      Current    Appointed
          <S>              <C>           <C>                           <C>         <C>
         Name              Age         Position                     Positions   or Elected
         ----              ---         --------                     ---------   ----------
*Wilbert G. Holliman       62       President of the Subsidiary -
                                     Action Industries, Inc.                     1989
                                    Chief Executive Officer of
                                     the Subsidiary - Action
                                     Industries, Inc.                            1994
                                    Director                          X          1996
                                    President                         X          1996
                                    Chief Executive Officer           X          1996
                                    Chairman of the Board             X          1998

*Richard B. Loynd          72       Chairman of the Board of the
                                      Former Subsidiary - Converse Inc.          1982
                                       Vice-President                            1987
                                       Director                       X          1987
                                       President                                 1989
                                       Chief Operating Officer                   1989
                                       Chief Executive Officer                   1989
                                       Chairman of the Board                     1990
                                       Chairman of the Executive
                                         Committee                    X          1998

 John T. Foy               52       President and Chief Executive
                                      Officer of the Subsidiary -
                                      Action Industries, Inc.         X          1996

 Christian J. Pfaff        51       President and Chief Executive
                                      Officer of the Subsidiary -
                                      Thomasville Furniture Industries,
                                      Inc.                            X          1997

 Dennis R. Burgette        52       President and Chief Executive
                                      Officer of the Subsidiary -
                                      Broyhill Furniture Industries,
                                      Inc.                           X           1999

 Lynn Chipperfield         48       General Counsel                              1993
                                      Vice-President                             1996
                                      Secretary                      X           1996
                                      Senior Vice President          X           2000
                                      Chief Administrative Officer   X           2000

 David P. Howard           49       Controller                                   1990
                                      Vice-President                 X           1991
                                      Chief Financial Officer        X           1994
                                      Treasurer                      X           1996

 Steven W. Alstadt         45       Controller                       X           1994
                                     Chief Accounting Officer        X           1994


<PAGE>

Retired as an officer of the Company on December 31, 1998.

Brent B. Kincaid           67       President and Chief Executive
                                      Officer of the Subsidiary -
                                      Broyhill Furniture Industries, Inc.        1992
                                      Director                                   1997
-------------------------
* Member of the Executive Committee
</TABLE>


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.

Item 11.  Executive Compensation
--------------------------------

     The sections entitled "Executive Compensation", "Executive Compensation and
Stock  Option  Committee  Report  on  Executive   Compensation",   "Compensation
Committee Interlocks and Insider  Participation",  "Stock Options",  "Retirement
Plans",   "Incentive  Agreements"  and  "Performance  Graph"  of  the  Company's
Definitive  Proxy  Statement for the Annual Meeting of Stockholders on April 27,
2000 are incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

     The section entitled "Security Ownership" of the Company's Definitive Proxy
Statement  for the  Annual  Meeting  of  Stockholders  on  April  27,  2000,  is
incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions
--------------------------------------------------------

     None.

<PAGE>

                                     PART IV
                                     -------

Item 14.  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, 1999 and 1998

               Consolidated  statements of  operations  for each of the years in
               the three-year period ended December 31, 1999

               Consolidated  statements  of cash  flows for each of the years in
               the three-year period ended December 31, 1999

               Consolidated  statements of shareholders'  equity for each of the
               years in the three-year period ended December 31, 1999

               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:

          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 September 30, 1996.)

          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
               Quarterly  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 as of November 17, 1994, as amended and
               restated as of December  29, 1995;  September  6, 1996;  June 27,
               1997;  and July 14, 1998 among the  Company,  Broyhill  Furniture
               Industries,  Inc., Lane Furniture Industries,  Inc.,  Thomasville
               Furniture  Industries,  Inc., Various Banks,  Credit Lyonnais New
               York  Branch,  as  Documentation  Agent,  Nationsbank,  N.A.,  as
               Syndication  Agent and Bankers Trust Company,  as  Administrative
               Agent.  (Incorporated  by  reference to Exhibit 4(a) to Furniture
               Brands  International,  Inc.'s  Quarterly Report on Form 10-Q for
               the quarter ended June 30, 1998.)

          4(b) First  Amendment,  dated  as of  November  22,  1999,  to  Credit
               Agreement, dated as of November 17, 1994, as amended and restated
               as of December 29, 1995,  September 6, 1996,  June 27, 1997,  and
               July 14, 1998 among the Company,  Broyhill Furniture  Industries,
               Inc.,  Lane Furniture  Industries,  Inc.,  Thomasville  Furniture
               Industries,  Inc., Various Banks, Credit Lyonnais New York Branch
               as Documentation Agent,  NationsBank,  N.A., as Syndication Agent
               and Bankers Trust Company, as Administrative Agent.

          4(c) Agreement  to furnish upon  request of the  Commission  copies of
               other  instruments  defining  the rights of holders of  long-term
               debt of the  Company  and its  subsidiaries  which  debt does not
               exceed  10%  of  the  total   assets  of  the   Company  and  its
               subsidiaries on a consolidated basis.  (Incorporated by reference
               to Exhibit 4(c) to Furniture Brands International,  Inc.'s Annual
               Report on Form 10-K for the year ended February 28, 1981.)

          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, 1999.)

          10(b)Furniture Brands  International  Inc.'s 1999 Long-Term  Incentive
               Plan  (Incorporated  by reference  to Exhibit  10(b) to Furniture
               Brands  International,  Inc.'s  Quarterly Report on Form 10-Q for
               the quarter ended March 31, 1999.)

          10(c)Form  of  Indemnification   Agreement  between  the  Company  and
               Richard  B.  Loynd,  Donald  E.  Lasater  and  Lee  M.  Liberman.
               (Incorporated  by reference to Exhibit 10(h) to Furniture  Brands
               International,  Inc.'s  Annual  Report  on Form 10-K for the year
               ended February 29, 1988.)

          10(d)Written  description  of bonus plan for  management  personnel of
               The Lane  Company,  Incorporated.  (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, 1995.)

          10(e)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(f)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 for the year ended December 31,
               1997.)

          10(g)Furniture Brands International, Inc. Executive Incentive Plan, as
               amended.

          10(h)Broyhill Furniture  Industries,  Inc.  Executive  Incentive Plan.
               (Incorporated  by reference to Exhibit 10(i) to Furniture  Brands
               International,  Inc.'s  Annual  Report  on Form 10-K for the year
               ended December 31, 1994.)
<PAGE>

          10(i)Thomasville Furniture  Industries,  Inc. Executive Incentive Plan
               (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, 1996.)

          10(j)Employment Agreement,  dated as of April 29, 1997, between Action
               Industries,  Inc. and John T. Foy.  (Incorporated by reference to
               Exhibit 10(d) to Furniture Brands  International Inc.'s Quarterly
               Report on Form 10-Q for the quarter ended March 31, 1997.)

          10(k)Employment  Agreement,  dated as of January 1, 1999,  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(l)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 Quarterly
               Report on Form 10-Q for the quarter ended September 30, 1996.)

          10(m)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 Quarterly
               Report on Form 10-Q for the quarter ended September 30, 1996.)

          10(n)Employment  Agreement,  dated as of January 1, 2000  between  the
               Company and Richard B. Loynd.

          10(o)Employment  Agreement,  dated as of  January  29,  1998,  between
               Thomasville  Furniture  Industries,  Inc. and Christian J. Pfaff.
               (Incorporated  by reference to Exhibit 10(o) to Furniture  Brands
               International  Inc.'s  Annual  Report  on Form  10-K for the year
               ended December 31, 1997.)

          10(p)Employment  Agreement,  dated  as of  January  1,  1999,  between
               Broyhill  Furniture  Industries,  Inc.  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(q)Form of Agreement Not To Compete  between the Company and Wilbert
               G. Holliman, Dennis R. Burgette, John T. Foy, Christian J. Pfaff,
               David  P.  Howard,  Lynn  Chipperfield  and  Steven  W.  Alstadt.
               (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.)

          21   List of Subsidiaries of the Company

          23   Consent of KPMG LLP

          27   Financial Data Schedule

          99(a)Distribution  and Services  Agreement,  dated  November 17, 1994,
               between the Company and Converse Inc.  (Incorporated by reference
               to Exhibit 99(a) to Furniture Brands International, Inc.'s Annual
               Report on Form 8-K, dated December 2, 1994.)

          99(b)Tax Sharing  Agreement,  dated  November  17,  1994,  between the
               Company and Converse Inc.  (Incorporated  by reference to Exhibit
               99(b) to Furniture Brands International,  Inc.'s Annual Report on
               Form 8-K, dated December 2, 1994.)

          99(c)Amendment  to Tax Sharing  Agreement,  dated as of  February  21,
               1996,  between the Company and  Converse  Inc.  (Incorporated  by
               reference  to Exhibit  99(e) to Furniture  Brands  International,
               Inc.'s Annual Report on Form 10-K for the year ended December 31,
               1996.)

(b)      Reports on Form 8-K.

          A Form 8-K was not  required  to be filed  during  the  quarter  ended
          December 31, 1999.

          SHAREHOLDERS  REQUESTING  COPIES  OF  EXHIBITS  TO FORM  10-K  WILL BE
          SUPPLIED ANY OR ALL SUCH EXHIBITS AT A CHARGE OF TEN CENTS PER PAGE.
<PAGE>

              FURNITURE BRANDS INTERNATIONAL, INC. AND SUBSIDIARIES

             Index to Consolidated Financial Statements and Schedule

                                                                          Page
                                                                           No.
                                                                           ---
Consolidated Financial Statements:

  Consolidated Balance Sheets as of December 31, 1999 and 1998             18

  Consolidated  Statements of Operations  for each of the years in the
  three-year period ended December 31, 1999                                19

  Consolidated Statements of Cash Flows for each of the years in the
  three-year period ended December 31, 1999                                20

  Consolidated Statements of Shareholders' Equity for each of the
  years in the three-year period ended December 31, 1999                   21

  Notes to Consolidated Financial Statements                               22

  Financial Statement Schedule                                             33

  Independent Auditors' Report                                             39

Consolidated Financial Statement Schedules:

                                                       Schedule
   Valuation and qualifying accounts                     II               38

<PAGE>
<TABLE>
<CAPTION>

                                                                                                        Schedule II
                                                                                                        -----------


              FURNITURE BRANDS INTERNATIONAL, INC. AND SUBSIDIARIES
                        Valuation and Qualifying Accounts

                                                                            (Dollars in Thousands)
------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>                  <C>              <C>                  <C>
                                                                          Additions
                                                      Balance at         Charged to        Deductions         Balance at
                                                       Beginning          Costs and              from             End of
Description                                            of Period           Expenses          Reserves             Period
-----------                                           ----------        -----------        ----------         ----------
Year Ended  December 31, 1999
-----------------------------
  Allowances  deducted from
  receivables on balance sheet:
         Allowance for doubtful accounts                 $15,293            $ 2,362          $(1,695)  (a)       $15,960
         Allowance for cash discounts/
           chargebacks                                     3,040              1,364           (1,307)  (b)         3,097
                                                         -------            -------          -------             -------
                                                         $18,333            $ 3,726          $(3,002)            $19,057
                                                         =======            =======          =======             =======

Year Ended  December 31, 1998
-----------------------------
  Allowances  deducted from
  receivables on balance sheet:
         Allowance for doubtful accounts                 $11,765            $ 5,054         $ (1,526)  (a)       $15,293
         Allowance for cash discounts/
           chargebacks                                     2,028              1,555             (543)  (b)         3,040
                                                         -------            -------         --------             -------
                                                         $13,793            $ 6,609         $ (2,069)            $18,333
                                                         =======            =======         ========             =======

Year Ended  December 31, 1997
-----------------------------
  Allowances deducted from
  receivables on balance sheet:
         Allowance for doubtful accounts                 $17,054            $ 5,098         $(10,387)  (a)       $11,765
         Allowance for cash discounts/
           chargebacks                                     2,070                754             (796)  (b)         2,028
                                                         -------            -------         --------             -------
                                                         $19,124            $ 5,852         $(11,183)            $13,793
                                                         =======            =======         ========             =======



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

See accompanying independent auditors' report.

</TABLE>

<PAGE>

                                      INDEPENDENT AUDITORS' REPORT

      The Board of Directors and Shareholders
      Furniture Brands International, Inc.:

          We have  audited  the  accompanying  consolidated  balance  sheets  of
     Furniture  Brands  International,  Inc. and subsidiaries as of December 31,
     1999 and 1998,  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,
     1999.  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 generally accepted auditing
     standards.  Those  standards  require that we plan and perform the audit to
     obtain reasonable assurance about whether the financial statements are free
     of material  misstatement.  An audit includes  examining,  on a test basis,
     evidence   supporting   the  amounts  and   disclosures  in  the  financial
     statements. An audit also includes assessing the accounting principles used
     and  significant  estimates made by  management,  as well as evaluating the
     overall  financial  statement  presentation.  We  believe  that our  audits
     provide a reasonable basis for our opinion.

          In our opinion,  the  consolidated  financial  statements  referred to
     above present fairly, in all material  respects,  the financial position of
     Furniture  Brands  International,  Inc. and subsidiaries as of December 31,
     1999 and 1998, and the results of their operations and their cash flows for
     each of the years in the  three-year  period ended  December  31, 1999,  in
     conformity  with  generally  accepted  accounting  principles.  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.

                                               KPMG LLP

      St. Louis, Missouri
      January 27, 2000

<PAGE>

                                   SIGNATURES

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

                                       Furniture Brands International, Inc.
                                       ------------------------------------
                                                  (Registrant)

                                        By  /s/ Wilbert G. Holliman
                                        ---------------------------
                                          Chairman of the Board,
                                            President and Chief
                                            Executive Officer

Date:  March 28, 2000

     Pursuant to the  requirement 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 28, 2000.

               Signature                                      Title
               ---------                                      -----
/s/ Wilbert G. Holliman                           President and Director
(Wilbert G. Holliman)                             (Principal Executive Officer)

/s/ Katherine Button Bell                          Director
(Katherine Button Bell)

/s/ Bruce A. Karsh                                 Director
(Bruce A. Karsh)

/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/ Malcolm Portera                                Director
(Malcolm Portera)

/s/ Albert E. Suter                                Director
(Albert E. Suter)

<PAGE>

               Signature                                      Title
               ---------                                      -----

/s/ David P. Howard                                Vice-President and Treasurer
(David P. Howard)                                  (Principal Financial Officer)

/s/ Steven W. Alstadt                             Controller
(Steven W. Alstadt)                               (Principal Accounting Officer)