SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

   (Mark one)

(X)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF EXCHANGE ACT OF 1934 For the
   fiscal year ended December 31, 2002 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
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 (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 (X)

     The aggregate  market value of the voting stock held by  non-affiliates  of
the registrant as of February 28, 2003, was approximately $1,008,961,889.


<PAGE>



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

                    56,277,066 shares as of February 28, 2003

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of Definitive Proxy Statement for Annual Meeting
   of Stockholders on April 24, 2003.................................   Part III


<PAGE>


                                     PART I

Item 1. Business

(c)  Narrative Description of Business

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

PRODUCTS

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


<TABLE>
<CAPTION>

                                                                              UPHOLSTERY
                                                                ----------------------------------------
PRICE                                                                               RECLINER/
CATEGORY                CASE GOODS          OCCASIONAL          STATIONARY          MOTION              ACCESSORIES
--------                ----------          ----------          ----------          ---------           -----------

<S>                        <C>                 <C>                 <C>                 <C>                  <C>
PREMIUM                 Henredon            Henredon            Henredon                                Maitland-Smith
                        Drexel  Heritage    Drexel  Heritage    Drexel Heritage
                        Maitland-Smith      Maitland-Smith      Maitland-Smith
                        Hickory Chair       Hickory Chair       Hickory Chair
                                                                Pearson


BEST                    Thomasville         Thomasville         Thomasville          Thomasville
                        Drexel Heritage     Drexel Heritage     Drexel Heritage
                        Broyhill            Broyhill            HBF
                        HBF                                     Broyhill
                                                                Highland House

BETTER                  Drexel Heritage     Drexel Heritage     Drexel Heritage     Lane
                        Lane                Lane                Lane                Broyhill
                        Broyhill            Broyhill            Broyhill
                                                                Highland House

GOOD                    Broyhill            Broyhill            Broyhill            Lane
                                                                                    Broyhill

PROMOTIONAL             Founders

RTA                     Creative
                         Interiors


</TABLE>

<PAGE>


BROYHILL FURNITURE INDUSTRIES

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

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

LANE FURNITURE INDUSTRIES

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

Lane's upholstery division  manufactures and markets reclining chairs and motion
furniture in the "good" and "better" price categories under the Lane brand name.
Motion  furniture  consists of sofas and loveseats  with  recliner-style  moving
parts and comfort features.  Other upholstered  furniture consists of wall saver
recliners,  pad-over chaise recliners,  hi-leg recliners, sleep sofas and motion
sectionals.   Royal  Development  Company,  a  division  of  Lane,  designs  and
manufactures the mechanisms used in Lane's  reclining  furniture  products.  The
Lane Leather  collection  represents  an  important  source of growth for Lane's
upholstery division,  as leather is the fastest-growing  category in upholstered
furniture. The collection, priced in the "better" category comes in three styles
- American ranch,  American  traditional and urban  contemporary.  Lane has also
recently introduced a stationary line of upholstered furniture which is enjoying
good success.

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

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

THOMASVILLE FURNITURE INDUSTRIES

Thomasville  manufactures and markets wood furniture,  upholstered  products and
promotional/RTA furniture.  Thomasville markets its products primarily under the
Thomasville  brand name, and has several other  divisions  which market products
under separate brands.  Thomasville  offers an assortment of upholstery and wood
furniture  under  one  brand  name  that  targets  the  "best"  price  category.
Upholstery is primarily  marketed in three major styles:  traditional,  American
traditional/country  and  casual/lifestyle  contemporary.  Upholstery  style  is
determined  by both frame style and fabric or leather  selection.  Thomasville's
frame assortment  allows the consumer to select from a wide variety of different
styles  within  the  general  style  categories,  and  as  much  as  45%  of the
Thomasville  fabric and leather offering changes in a 12 month period,  insuring
that the latest colors and textures are  available.  Wood furniture is primarily
marketed  in four major  styles:  American  traditional/country,  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 2000, Hickory
Chair  introduced its Thomas  O'Brien  collection,  which  includes  upholstery,
chairs,  tables,  beds and  cabinetry in O'Brien's  acclaimed  "warm  modernist"
style. A collection of case goods and  upholstery  designed by William Poole has
also been recently introduced.

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

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

Highland  House  manufactures  upholstered  products in the  "better" and "best"
price categories. Recent introductions include 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 and the Harrod's of  Knightsbridge  collection  which  includes
exclusive pieces based upon research from Harrod's Department Stores' archives.

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.

HDM FURNITURE INDUSTRIES

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

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

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

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

DISTRIBUTION

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

The Company's breadth of product and national scope of distribution enable it to
effectively  service  national  retailers  such as J.C.  Penney and key regional
retailers such as Havertys, Bloomingdale's, Marshall Field, Dillard's, Breuner's
and Kittle's. The consolidation of the retail residential furniture industry has
made access to  distribution  channels an important  competitive  advantage  for
manufacturers.  The Company has  developed  dedicated  distribution  channels by
expanding  its  gallery  programs  and the network of  independent  dealer-owned
dedicated retail  locations,  such as Thomasville  Home  Furnishings  Stores and
Drexel Heritage Home Inspiration  Stores. The Company primarily  distributes its
products  through a diverse  network of  independently  owned retail  locations,
which includes 216 freestanding stores, 929 galleries and 700 furniture centers.

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

Thomasville Home Furnishings  Stores and Drexel Heritage Home Inspiration Stores
are  dealer-owned,  free-standing  retail  locations  that  exclusively  feature
Thomasville and Drexel Heritage  furniture,  respectively.  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.

Haverty  Furniture  Companies,  Inc.  and the  Company  have  formed a strategic
alliance whereby Havertys  allocates up to one-half of the retail floor space in
all of its  stores to the  prominent  display  of  product  manufactured  by the
Company.  The Company also has a similar  strategic  alliance with Kittle's Home
Furnishings,  Inc. These alliances  advance the Company's  strategy of expanding
distribution and dedicated display space.

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

BROYHILL FURNITURE INDUSTRIES

One of  Broyhill's  principal  distribution  channels is the  Broyhill  Showcase
Gallery  program.  This  program,  started in 1983,  involves  319  domestic and
international  participating  dealer  locations.  Each  dealer  in the  Broyhill
Showcase Gallery program owns the gallery and the Broyhill furniture  inventory.
The  program  incorporates  a core  merchandise  program,  advertising  material
support,  in-store  merchandising  events and educational  opportunities for the
retail  store  sales and  management  personnel.  A  Broyhill  Showcase  Gallery
consists of a minimum of 7,500 square feet of dedicated display space. Furniture
is displayed  in complete and fully  accessorized  room  settings  instead of as
individual pieces.

Introduced  in 2001 as a  dedicated  distribution  retail  concept,  19 Broyhill
Furniture  Showplaces  are owned and  operated  by retail  dealers  who commit a
minimum  of 12,500  square  feet of display  space to  Broyhill  products.  This
program also offers extensive merchandising and marketing support.

In 2002,  Broyhill  introduced  the Broyhill Home  Collections  Store  dedicated
distribution retail concept.  Broyhill Home Collections stores will be owned and
operated  by a retail  dealer  who  commits a minimum of 20,000  square  feet of
display space to Broyhill products in a free-standing  store  environment.  This
program also offers extensive merchandising and marketing support.

For the retailer that is currently not a participant  in the gallery,  Showplace
or Home  Collections  Store programs,  Broyhill  offers the  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  four major  sales  events  per year,  monthly  promotional  themes and
professionally  prepared advertising and recognition on the local level. As part
of the Independent Dealer Program, Broyhill offers the Broyhill Furniture Center
Program  to 700  retailers  that  have  committed  at least  2,500  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,  Broyhill  Furniture
Showplace or Broyhill Home Collections Store programs.

LANE FURNITURE INDUSTRIES

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

Lane has established specialty gallery programs with 370 participating  dealers.
This  includes  321  dealer-owned   Comfort   Showcase   Galleries  and  Comfort
Furnishings Galleries established by Lane's Upholstery division. These galleries
average  approximately 4,200 square feet of retail space specifically  dedicated
to the display,  promotion and sale of Lane  upholstery and wood products.  Lane
plans to  develop  its own  free-standing  stores  program  through  independent
retailers  to  complement  but not  compete  with  their  existing  distribution
networks.

THOMASVILLE FURNITURE INDUSTRIES

Thomasville   products  are  offered  at  642   independently-owned   and  three
Company-owned  retail  locations,   including  173  Thomasville  Galleries,  162
Thomasville Home Furnishings Stores and 310 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.


Hickory Chair distributes through  premium-quality  dealers including 22 gallery
locations.  Pearson  distributes its products primarily through  premium-quality
dealers and the interior design trade. The Founders  division sells  promotional
furniture to a variety of retailers  for sale to consumer  end-users and certain
contract  customers.  Promotional  furniture  is sold to retail  chains  such as
Costco,  Value  City,  as  well as  independent  furniture  stores.  Promotional
furniture  is  also  sold  in  the   hospitality  and  health  care  markets  of
Thomasville's  contract  business.  The Creative  Interiors  division  sells RTA
furniture  to  customers  which  include  national  chains  such as  Target  and
Wal-Mart,  catalog showrooms,  discount mass merchandisers,  warehouse clubs and
home furnishings retailers.

HDM FURNITURE INDUSTRIES

Henredon  distributes its products through a network of  approximately  450 fine
furniture dealers, department stores and wholesale showrooms in this country and
abroad. The Ralph Lauren Home Collection is also distributed  through Polo Ralph
Lauren  retail  stores.  The typical  Henredon  display is 5,000 to 8,000 square
feet. Henredon dealers include Louis Shanks of Texas, Gabberts, Kittles, Boyles,
Baer's, Treasures,  Marshall Field, Bloomingdales,  Rich's, Lazarus, Macy's West
and Dillards.

Drexel  Heritage  products  are  offered  at  464  independently   owned  retail
locations,  including 45 Drexel Heritage galleries, 33 dedicated Drexel Heritage
Home Inspiration  stores and 386 authorized  dealers.  Drexel Heritage galleries
have an average of 6,000  square feet of  dedicated  space.  The typical  Drexel
Heritage  Home  Inspiration  store is a 14,000 square foot  independently  owned
store  offering  a broad  range of  Drexel  Heritage  products,  presented  in a
home-like setting by a salesperson or design consultant.

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

MARKETING AND ADVERTISING

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

BROYHILL FURNITURE INDUSTRIES

Broyhill's  advertising  programs  focus  on  translating  its  strong  consumer
awareness into increased sales.  Broyhill's  current marketing strategy features
national 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 and
product  lines.  Lane employs an  integrated  marketing/advertising  strategy in
which it coordinates magazine,  newspaper,  circular and television  advertising
with other  marketing  programs  to promote a single  product.  Each of the Lane
divisions advertises  extensively in trade and consumer  publications  targeting
various niche markets.

THOMASVILLE FURNITURE INDUSTRIES

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

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

Thomasville's other divisions (Hickory Chair, Pearson,  Highland House, Founders
and Creative Interiors) use or participate in various  advertising  publications
throughout the year.

HDM FURNITURE INDUSTRIES

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

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

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

MANUFACTURING

Broyhill operates 15 finished case goods and upholstery production and warehouse
facilities  totaling over 5.0 million  square feet. All finished good plants are
located  in  North  Carolina.  Broyhill  pioneered  the use of  mass  production
techniques in the furniture  industry and by utilizing  longer  production  runs
achieves economies of scale.

Lane operates 7 upholstery  production  and warehouse  facilities in Mississippi
and North Carolina  totaling over 2.9 million square feet.  Significant  capital
expenditures have been made to acquire  technologically  advanced  manufacturing
equipment which has increased factory productivity as well as capacity.

Thomasville manufactures or assembles its products at 18 finished case goods and
upholstery  production  and warehouse  facilities  located in North Carolina and
Virginia,  totaling  approximately  6.5  million  square  feet.  Each  plant  is
specialized,  manufacturing  premium furniture  products allowing more efficient
production runs while maintaining high quality standards.

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

Henredon  manufactures  in 4 case goods and upholstery  production and warehouse
facilities  encompassing  approximately  1.7 million  square feet all located in
North Carolina.  Henredon is a leader in cellular manufacturing which allows for
the efficient production of relatively small production runs.

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

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

RAW MATERIALS AND SUPPLIERS

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

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

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

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

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

ENVIRONMENTAL MATTERS

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

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

COMPETITION

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

EMPLOYEES

As of December 31, 2002, the Company employed  approximately 23,600 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,
2002  aggregated  approximately  $284  million  compared to  approximately  $290
million as of December 31, 2001.

RISK FACTORS

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

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

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

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

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

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

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

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

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

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

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

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

At times it is necessary for the Company to  discontinue  certain  relationships
with  customers  (retailers)  who do  not  meet  its  growth  and  profitability
standards.  Until  realignment  is  established,  there  can  be a  decrease  in
near-term  sales and earnings.  The  continuation  in 2001 of such a realignment
program  was in part  responsible  for the 10.6%  decrease in its sales for that
year.  The  Company  continually   reviews   relationships  with  its  customers
(retailers)  and  future  realignments  are  possible  based  upon such  ongoing
reviews.

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

The  Company  continually  reviews its  domestic  manufacturing  operations  and
offshore  (import)  sourcing  capabilities.  Effects of  periodic  manufacturing
realignments  and cost savings  programs could result in a decrease in near-term
earnings  until the expected cost  reductions  are  achieved.  Such programs can
include the consolidation and integration of facilities,  functions, systems and
procedures.  Certain products may also be shifted from domestic manufacturing to
offshore  sourcing.   Such  actions  may  not  be  accomplished  as  quickly  as
anticipated and the expected cost reductions may not be achieved in full.


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

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

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

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

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

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

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

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

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

Current  accounting rules require that goodwill and other intangible assets with
indefinite  useful  lives no longer be  amortized,  but  instead  be tested  for
impairment at least  annually.  The Company has  substantial  goodwill and other
intangible  assets  which based upon the outcome of the annual test could result
in the  write-down  of all or a  portion  of these  assets  and a  corresponding
reduction in earnings and net worth.

The Company's  current policy of not paying cash dividends means the only way to
realize a return on investment in its common stock is to sell it at a profit.

Currently,  the only way a stockholder will realize a return on their investment
in the Company's common stock is to sell the stock at a profit.

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

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

INTERNET ACCESS

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


<PAGE>

<TABLE>
<CAPTION>


ITEM 2. Properties

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



    <S>                       <C>                                      <C>                        <C>
Division/Location       Type of Facility                        Floor Space (sq.ft.)          Owned or Leased
-----------------       ----------------                        --------------------          ---------------
Furniture Brands:
St. Louis, MO            Headquarters                                      26,800                   Leased

Broyhill:
Lenoir, NC               Headquarters                                     136,000                    Owned
Lenoir, NC               Case goods plant/warehouse                       312,632                    Owned
Lenoir, NC               Case goods plant/warehouse                       628,000                    Owned
Rutherfordton, NC        Case goods plant/warehouse                       575,656                    Owned
Lenoir, NC               Case goods plant/warehouse                       419,000                    Owned
Lenoir, NC               Case goods plant/warehouse                       390,020             Owned/Leased
Rutherfordton, NC        Upholstery plant/warehouse                       433,597                    Owned
Conover, NC              Case goods plant/warehouse                       316,542                    Owned
Lenoir, NC               Case goods plant/warehouse                       772,757                    Owned
Lenoir, NC               Upholstery plant/warehouse                       252,380                    Owned
Taylorsville, NC         Upholstery plant/warehouse                       212,754                    Owned
Lenoir, NC               Warehouse                                        124,700                    Owned
Lenoir, NC               Warehouse                                         96,000                    Owned
Lenoir, NC               Warehouse                                        252,250                   Leased
Lenoir, NC               Warehouse                                        205,964                   Leased
Chino, CA                Warehouse                                         79,456                   Leased

Drexel Heritage:
Drexel, NC               Offices                                           25,000                    Owned
Marion, NC               Case goods plant                                 501,133                    Owned
Morganton, NC            Upholstery plant                                 144,869                    Owned
High Point, NC           Upholstery plant                                 280,650                    Owned
Hildebran, NC            Case goods plant                                 360,710                    Owned
Morganton, NC            Warehouse                                        501,800                    Owned
High Point, NC           Headquarters/showroom                            100,000                    Owned

Henredon:
Morganton, NC            Headquarters/
                           casegoods plant/warehouse                      898,690                    Owned
Spruce Pine, NC          Case goods plant/warehouse                       553,180                    Owned
High Point, NC           Upholstery plant                                 125,803                    Owned
Mt. Airy, NC             Upholstery plant                                 102,500                    Owned

Lane:
Tupelo, MS               Headquarters/
                           upholstery plant/warehouse                     715,951                    Owned
Saltillo, MS             Upholstery plant/warehouse                       570,328                    Owned
Verona, MS               Upholstery plant/warehouse                       413,000                    Owned
Pontotoc, MS             Upholstery plant/warehouse                       369,216                    Owned
High Point, NC           Plant                                            187,162                    Owned
Conover, NC              Upholstery plant                                 351,015                    Owned
Conover, NC              Upholstery plant/warehouse                       347,500                    Owned

Maitland-Smith:
High Point, NC           Headquarters/warehouse                           220,000                   Leased
Cebu, Philippines        Case goods plant                                 398,377                    Owned
Semarang, Indonesia      Plant/warehouse                                  128,925                   Leased

Thomasville:
Thomasville, NC          Headquarters/ Showroom                           256,000                    Owned
Thomasville, NC          Case goods plant/warehouse                       373,000                    Owned
Thomasville, NC          Case goods plant                                 240,000                    Owned
Thomasville, NC          Case goods plant                                 325,000                    Owned
Thomasville, NC          Case goods plant                                 309,850                    Owned
Lenoir, NC               Case goods plant/warehouse                       828,000                    Owned
Winston-Salem, NC        Case goods plant/warehouse                       706,000                    Owned
Statesville, NC          Upholstery plant                                 158,600                    Owned
Troutman, NC             Upholstery plant                                 238,200                    Owned
Conover, NC              Upholstery plant                                 123,200                    Owned
Hickory, NC              Upholstery plant                                  58,700                    Owned
Thomasville, NC          Warehouse                                        731,000                    Owned
Appomattox, VA           Case goods plant/warehouse                       829,800                    Owned
Carysbrook, VA           Case goods plant                                 189,000                    Owned
Hickory, NC              Upholstery plant/warehouse                       209,800                   Leased
Conover, NC              Case goods plant/warehouse                       260,000                    Owned
Hickory, NC              Upholstery plant/warehouse                       519,011                    Owned
Hickory, NC              Case goods/upholstery
                           plant/warehouse                                211,391                    Owned
High Point, NC           Upholstery plant/warehouse                       178,500                    Owned

</TABLE>


The Tupelo,  Mississippi  facility is  encumbered  by a mortgage  and first lien
securing  revenue bonds.  The Company believes its properties are generally well
maintained,  suitable  for its  present  operations  and  adequate  for  current
production  requirements.  Productive  capacity and extent of utilization of the
Company's facilities are difficult to quantify with certainty because in any one
facility maximum capacity and utilization varies periodically depending upon the
product that is being manufactured, the degree of automation and the utilization
of the labor force in the facility.  In this context, the Company estimates that
overall its production  facilities were utilized during 2002 at a moderate level
of  productive  capacity  and  believes  that in  conjunction  with  its  import
capabilities the Company's facilities have the capacity, if necessary, to expand
production to meet anticipated product requirements.

Item 3.  Legal Proceedings
--------------------------

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

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

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

Not applicable.


<PAGE>

                                    PART II

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

As of February 28, 2003,  there were  approximately  1,980  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 15 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, 2001 and 2002.


<PAGE>


<TABLE>
<CAPTION>


Item 6. Selected Financial Data

                     FIVE-YEAR CONSOLIDATED FINANCIAL REVIEW

------------------------------------------- ----------------------------------------------------------------------------------------
                                                                          Year Ended December 31,
(Dollars in thousands                       ----------------------------------------------------------------------------------------
 except per share data)                              2002             2001              2000              1999              1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>              <C>              <C>               <C>                <C>
Summary of operations:
  Net sales                                     $ 2,397,709      $ 1,891,313       $ 2,116,239       $ 2,088,112       $ 1,960,250
  Gross profit                                      633,558          466,794           546,859           550,312           515,512
  Interest expense                                   21,732           21,984            36,389            37,577            43,455
  Earnings before income tax
    expense and extraordinary item                  184,424           87,694           165,997           176,764           152,143
  Income tax expense                                 65,593           29,664            57,574            64,854            54,205
  Earnings before extraordinary item                118,831           58,030           108,423           111,910            97,938
  Extraordinary item                                    -                -              (2,522)              -                 -
  Net earnings                                  $   118,831      $    58,030       $   105,901       $   111,910       $    97,938

Per share of common stock - diluted:
  Earnings before extraordinary item            $      2.11      $      1.13       $      2.15       $      2.14       $      1.82
  Extraordinary item                                     -                -              (0.05)              -                 -
  Net earnings                                  $      2.11      $      1.13       $      2.10       $      2.14       $      1.82

Weighted average common shares
  - diluted (in thousands)                           56,387           51,325            50,443            52,335            53,809

Other information:
  Working capital                               $   652,095      $   603,420       $   548,463       $   518,036       $   509,148
  Property, plant and equipment, net                333,371          321,640           303,235           297,746           293,777
  Capital expenditures                               50,214           22,991            53,310            48,951            44,358
  Total assets                                    1,567,402        1,503,489         1,304,838         1,288,834         1,303,204
  Long-term debt                                    374,800          454,400           462,000           535,100           589,200
  Shareholders' equity                          $   869,515      $   759,659       $   583,905       $   474,197       $   413,509
====================================================================================================================================
</TABLE>



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


General

The following  analysis of the results of operations and financial  condition of
the  Company  should  be read in  conjunction  with the  consolidated  financial
statements and related  notes.  In addition,  management  believes the following
factors have had a significant effect on its recent financial statements.

Acquisition

On December 28, 2001, the Company acquired  substantially  all of the assets and
liabilities of Henredon Furniture  Industries,  Drexel Heritage  Furnishings and
Maitland-Smith.  Since the  acquisition  occurred  near the last business day of
2001, it is reflected in the Company's consolidated balance sheet as of December
31, 2001; however, the Company's  consolidated results of operations for 2001 do
not include any of the operations of the acquired companies.  The purchase price
of the acquisition was $287.1 million,  consisting of $176.5 million in cash and
4.0 million shares of the Company's common stock.

Restructuring

During 2001,  the Company  implemented  a plan to reduce its domestic case goods
manufacturing  capacity.  This plan  included  the  closing of 12  manufacturing
facilities and a permanent reduction of approximately 20% of the Company's total
employment.  Pretax  restructuring and impairment  charges of $26.4 million were
recorded in 2001, consisting of $5.9 million charged to cost of operations, $2.5
million  charged to  selling,  general  and  administrative  expenses  and $18.0
million in asset impairment charges.


<PAGE>


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 2002, 2001, and 2000.
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------
(Dollars in millions)                                            Year Ended December 31,
                                   -------------------------------------------------------------------------------------
                                              2002                         2001                         2000
                                   ---------------------------- ---------------------------- ---------------------------
                                                         % of                          % of                         % of
                                         Dollars    Net Sales          Dollars    Net Sales      Dollars       Net Sales
------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>             <C>           <C>            <C>        <C>             <C>
Net sales                               $2,397.7        100.0%        $1,891.3       100.0%     $2,116.2        100.0%
Cost of operations                       1,721.7         71.8          1,387.6        73.4       1,529.9         72.3
Selling, general and
  administrative
  expenses                                 424.3         17.7            330.8        17.5         335.6         15.9
Depreciation and
  amortization                              49.3          2.1             55.8         2.9          58.1          2.7
Asset impairment charges                     -             -              18.0         1.0           -             -
------------------------------------------------------------------------------------------------------------------------
Earnings from
  operations                               202.4          8.4             99.1         5.2         192.6          9.1
Interest expense                            21.7          0.9             22.0         1.2          36.4          1.7
Other income, net                            3.7          0.2             10.6         0.6           9.8          0.4
------------------------------------------------------------------------------------------------------------------------
Earnings before income tax
  expense and extraordinary item           184.4          7.7             87.7         4.6         166.0          7.8
Income tax expense                          65.6          2.7             29.7         1.5          57.6          2.7
------------------------------------------------------------------------------------------------------------------------
Net earnings before
  extraordinary item                      $118.8          5.0%          $ 58.0         3.1%        $108.4        5.1%
========================================================================================================================
Gross profit 1                            $633.6         26.4%          $466.8        24.7%        $546.8       25.8%
========================================================================================================================

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

   -------------------------------------------------------------------------------------------------------------------
   (Dollars in millions)                                                       Year Ended December 31,
                                                              --------------------------------------------------------
                                                                           2002               2001               2000
   -------------------------------------------------------------------------------------------------------------------
   Net sales                                                           $2,397.7           $1,891.3           $2,116.2
   Cost of operations                                                   1,721.7            1,387.6            1,529.9
   Depreciation (associated with cost of goods sold)                       42.4               36.9               39.5
   -------------------------------------------------------------------------------------------------------------------
   Gross profit                                                          $633.6             $466.8             $546.8
   ===================================================================================================================
</TABLE>

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

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

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

     Selling, general and administrative expenses increased to $424.3 million in
2002 from  $330.8  million  in 2001.  The large  increase  was the result of the
Company's acquisition of HDM. As a percentage of net sales, selling, general and
administrative expenses rose modestly from 17.5% in 2001 to 17.7% in 2002.

     Depreciation  and amortization for 2002 was $49.3 million compared to $55.8
million in 2001, a decrease of 11.7%. The large decrease occurred because of the
adoption  of  Statement  of  Financial   Accounting  Standards  No.  142,  which
eliminated  the  amortization  of  goodwill  and other  intangible  assets  with
indefinite  lives. This decrease was partially offset by the acquisition of HDM.
The amount of  depreciation  and  amortization  attributed to goodwill and other
intangible assets with indefinite lives in 2001 was $12.1 million.

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

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

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

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

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

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

     Net sales for 2001 were $1,891.3  million  compared to $2,116.2  million in
2000, a decrease of $224.9  million or 10.6%.  The decrease in net sales was due
to the general  economic  slowdown which began in the third quarter of 2000, the
failure  of several  large  customers  and the  continuation  of an  established
program of  discontinuing  relationships  with  retailers  that did not meet the
Company's standards.

     Cost of  operations  for 2001 was  $1,387.6  million  compared  to $1,529.9
million for 2000, a decrease of 9.3%.  Cost of operations as a percentage of net
sales increased from 72.3% for 2000 to 73.4% for 2001 primarily due to decreased
plant  utilization  resulting from the sales volume decrease and a focus on more
imported products as well as the restructuring charges.

     Selling, general and administrative expenses decreased to $330.8 million in
2001 from $335.6  million in 2000, a decrease of 1.4%.  As a  percentage  of net
sales, selling,  general and administrative  expenses rose from 15.9% in 2000 to
17.5% in 2001 due to the sales  decrease,  an increase in bad debt expense,  and
the restructuring charges.

     Depreciation  and amortization for 2001 was $55.8 million compared to $58.1
million in 2000, a decrease of 4.1%.  The decrease in  depreciation  expense was
due to lower capital expenditures and the restructuring.

     Interest expense for 2001 totaled $22.0 million compared with $36.4 million
in 2000. The decrease in interest  expense reflects the Company's debt reduction
program and lower interest rates.

     Other income,  net for 2001 totaled $10.6 million  compared to $9.8 million
for 2000. For 2001, other income consisted of interest on short-term investments
of $0.8 million,  other  miscellaneous  income and expense  items  totaling $1.8
million and  non-operating  income of $8.0  million.  The  non-operating  income
results  from the sale of the  Company's  investment  in a company  which leases
exhibition space to furniture and accessory  manufacturers,  partially offset by
additions to reserves related to certain discontinued operations.

     Income tax expense for 2001 totaled $29.7  million,  producing an effective
tax rate of 33.8%  compared  with an effective  tax rate of 34.7% for 2000.  The
effective  tax rate for 2001 was  favorably  impacted by an adjustment to income
tax accruals resulting from the completion of certain Federal income tax audits.

     Net earnings per common share before  extraordinary item on a diluted basis
were $1.13 and $2.15 for 2001 and 2000,  respectively.  Weighted  average shares
used in the  calculation of net earnings per common share on a basic and diluted
basis were 50,357,000 and 51,325,000 in 2001,  respectively,  and 49,532,000 and
50,443,000 in 2000, respectively.

     Gross profit for 2001 was $466.8  million  compared with $546.8 million for
2000, a decrease of 14.6%.  The decrease in gross profit margin to 24.7% in 2001
from 25.8% in 2000 was  primarily  due to the decreased  plant  utilization  and
restructuring charges noted earlier.

Financial Condition and Liquidity

Liquidity

     Cash and cash  equivalents  at December  31,  2002  totaled  $15.1  million
compared to $15.7 million at December 31, 2001.  For 2002,  net cash provided by
operating  activities  totaled  $112.7  million.  Net  cash  used  by  investing
activities totaled $47.3 million.  Net cash used by financing activities totaled
$66.0 million.

     Working  capital was $652.1 million at December 31, 2002 compared to $603.4
million at December  31,  2001.  The current  ratio was 4.3-to-1 at December 31,
2002 compared to 4.4-to-1 at December 31, 2001. The increase in working  capital
between years is the result of the Company's  expanding import program which has
increased inventory levels.

     At December 31, 2002,  long-term debt totaled  $374.8  million  compared to
$454.4 million at December 31, 2001. The decrease in indebtedness  was funded by
cash flow from operations. The Company's  debt-to-capitalization ratio was 30.1%
at December 31, 2002 compared to 37.4% at December 31, 2001.

Financing Arrangements

     To meet short-term  capital and other financial  requirements,  the Company
maintains a $630.0 million  revolving  credit facility with a group of financial
institutions.  The revolving  credit facility allows for the issuance of letters
of credit and cash  borrowings.  Letter of credit  outstanding are limited to no
more than $150.0 million,  with cash  borrowings  limited only by the facility's
maximum  availability less letters of credit outstanding.  On December 31, 2002,
there were $370.0  million in cash  borrowings  and $35.5  million in letters of
credit  outstanding,  leaving an excess of $224.5  million  available  under the
facility.

     Cash borrowings under the revolving credit facility bear interest at a base
rate or at an adjusted  Eurodollar rate plus an applicable  margin which varies,
depending upon the type of loan the Company executes. The applicable margin over
the base rate and Eurodollar rate is subject to adjustment  based upon achieving
certain  credit  ratings.  At December 31,  2002,  loans  outstanding  under the
revolving  credit  facility  consisted of $360.0  million  based on the adjusted
Eurodollar  rate and $10.0 million based on the base rate,  which in conjunction
with the interest rate swaps have a weighted average interest rate of 5.07%.

     The Company believes that its revolving credit facility, together with cash
generated from operations,  will be adequate to meet liquidity  requirements for
the foreseeable future.

Other

Market Risk

     The Company is exposed to market risk from changes in interest  rates.  The
Company's exposure to interest rate risk consists of its floating rate revolving
credit facility. This risk is managed using interest rate swaps to fix a portion
of the Company's  floating rate long-term  debt.  Based upon a hypothetical  ten
percent  increase in interest rates,  the potential  impact to the Company's net
earnings would be $0.1 million.

Funded Status of the Defined Benefit Pension Plan

     As of  December  31,  2002,  the  accumulated  benefit  obligation  of  the
Company's  defined  benefit  pension plan  exceeded the fair value of the plan's
assets.  As a result,  the Company  recognized  an  additional  minimum  pension
liability of $42.5  million,  $26.5  million net of tax. The after tax charge is
recorded as a component of other comprehensive income.

Critical Accounting Policies

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

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

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

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

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

Recently Issued Statements of Financial Accounting Standards

     In June 2001,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset
Retirement  Obligations,  effective  for fiscal years  beginning  after June 15,
2002. SFAS No. 143 addresses  financial  accounting  requirements for retirement
obligations  associated with long-lived assets. The Company does not believe the
adoption  of  this  statement  will  have a  material  impact  on its  financial
statements.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets,  which addresses the impairment or disposal of
long-lived assets and the reporting of discontinued operations.  This statement,
which must be adopted in 2003, is not expected to have a material  impact on the
Company's financial statements.

     In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal  Activities,  which  addresses  financial  accounting  and
reporting for costs associated with exit and disposal activities initiated after
December 31, 2002.  The Company does not believe the adoption of this  statement
will have a material impact on its financial statements.

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

Outlook

     Order trends in the fourth  quarter of 2002 continued to be positive in the
middle and upper-middle price categories.  While the Company has yet to see such
a turnaround at the upper end, the cost savings  initiatives  undertaken  during
the year should position it for strong  operating  profit margin  improvement as
that price category begins to turn as well.  Business  overall is expected to be
essentially  flat for the  first  half of 2003,  with a  recovery  beginning  at
mid-year  and  accelerating  through the second  half.  The Company is currently
projecting diluted earnings per common share of $2.40-$2.50 for the full year.

     Capital  expenditures  are forecasted at $40.0 million to $50.0 million for
2003, with depreciation  expense  anticipated to be approximately $55.0 million.
Selling,  general and  administrative  expenses  for the year are expected to be
17.75% - 18.25% of net sales.  Based upon  current  interest  rates and budgeted
debt reduction,  interest expense is expected to be approximately  $21.0 million
for 2003.  The Company  expects to generate in excess of $100.0  million in cash
flow from  operations,  the  majority of which will be used to reduce  long-term
debt.

Forward-Looking Statements

     The Company herein has made  forward-looking  statements within the meaning
of the "safe harbor" provisions of the Private Securities  Litigation Reform Act
of 1995. These forward-looking  statements include the Company's expected sales,
earnings  per share,  profit  margins,  and cash  flows,  the effects of certain
manufacturing  realignments and other business strategies, the prospects for the
overall  business  environment,   and  other  statements  containing  the  words
"expects," "anticipates,"  "estimates," "believes," and words of similar import.
The Company cautions investors that any such forward-looking  statements are not
guarantees  of future  performance  and that  certain  factors may cause  actual
results to differ materially from those in the forward-looking  statements. Such
factors include, but are not limited to: changes in economic conditions; loss of
market share due to competition;  failure to anticipate or respond to changes in
consumer tastes and fashion trends;  failure to achieve projected mix of product
sales;  business  failures of large customers;  distribution  and  manufacturing
realignments and cost savings programs;  increased reliance on offshore (import)
sourcing of various products; fluctuations in the cost, availability and quality
of raw  materials;  product  liability  uncertainty;  impairment of goodwill and
other intangible  assets.  Other risk factors may be listed from time to time in
the Company's  future public releases and SEC reports.  See "Risk Factors" under
Item 1. for a more detailed explanation of the Company's risk factors.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

     The Company is exposed to market risk from changes in interest  rates.  The
Company's  exposure to interest  rate risk consists of its floating rate Secured
Credit  agreement.  This risk is  managed  using  interest  rate  swaps to fix a
portion of the Company's floating rate long-term debt. Based upon a hypothetical
ten percent increase in interest rates the potential impact to the Company's net
earnings would be $0.4 million.

Item 8.  Financial Statements and Supplementary Data

<PAGE>

<TABLE>
<CAPTION>


                           CONSOLIDATED BALANCE SHEETS

--------------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>                      <C>
(Dollars in thousands)                                                        December 31,             December 31,
                                                                                     2002                     2001
--------------------------------------------------------------------------------------------------------------------
Assets
Current assets:
  Cash and cash equivalents                                                    $   15,074               $   15,707
  Receivables, less allowances of $20,751
    ($18,841 at December 31, 2001)                                                375,050                  359,493
  Inventories (Note 5)                                                            432,104                  369,773
  Deferred income taxes                                                            17,768                   26,160
  Prepaid expenses and other current assets                                         9,463                    7,582
--------------------------------------------------------------------------------------------------------------------
    Total current assets                                                          849,459                  778,715
Property, plant and equipment:
  Land                                                                             22,217                   18,090
  Buildings and improvements                                                      245,686                  240,554
  Machinery and equipment                                                         393,034                  346,460
--------------------------------------------------------------------------------------------------------------------
                                                                                  660,937                  605,104
  Less accumulated depreciation                                                   327,566                  283,464
--------------------------------------------------------------------------------------------------------------------
    Net property, plant and equipment                                             333,371                  321,640
Goodwill (Note 6)                                                                 184,480                  156,435
Other intangible assets (Note 6)                                                  171,008                  210,870
Other assets                                                                       29,084                   35,829
--------------------------------------------------------------------------------------------------------------------
                                                                               $1,567,402               $1,503,489
====================================================================================================================

Liabilities and Shareholders' Equity
Current liabilities:
  Accounts payable                                                               $ 90,134               $   83,508
  Accrued employee compensation                                                    31,531                   23,815
  Accrued interest expense                                                          3,018                    2,805
  Other accrued expenses                                                           72,681                   65,167
--------------------------------------------------------------------------------------------------------------------
    Total current liabilities                                                     197,364                  175,295
Long-term debt (Note 7)                                                           374,800                  454,400
Deferred income taxes                                                              58,850                   69,032
Other long-term liabilities                                                        66,873                   45,103

Shareholders' equity:
  Preferred stock, authorized 10,000,000 shares,
    no par value - issued, none                                                        -                        -
  Common stock, authorized 200,000,000 shares,
    $1.00 stated value - issued 56,277,066
    shares at December 31, 2002 and 2001(Note 8)                                   56,277                   56,277
  Paid-in capital                                                                 221,696                  219,469
  Retained earnings                                                               639,334                  520,503
  Accumulated other comprehensive income                                          (35,917)                  (5,108)
  Treasury stock at cost
    (627,884 shares at December 31, 2002 and
     1,664,666 shares at December 31, 2001)                                       (11,875)                 (31,482)
--------------------------------------------------------------------------------------------------------------------
  Total shareholders' equity                                                      869,515                  759,659
--------------------------------------------------------------------------------------------------------------------
                                                                               $1,567,402               $1,503,489
====================================================================================================================

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,
                                                                 ----------------------------------------------------
                                                                            2002             2001               2000
---------------------------------------------------------------------------------------------------------------------

<S>                                                                   <C>              <C>               <C>
Net sales                                                             $2,397,709       $1,891,313        $2,116,239

Costs and expenses:
  Cost of operations                                                   1,721,714        1,387,632         1,529,874

  Selling, general and administrative expenses                           424,329          330,835           335,596

  Depreciation and amortization                                           49,266           55,767            58,155

  Asset impairment charges (Note 3)                                         -              18,000              -
---------------------------------------------------------------------------------------------------------------------

Earnings from operations                                                 202,400           99,079           192,614

Interest expense                                                          21,732           21,984            36,389

Other income, net                                                          3,756           10,599             9,772
---------------------------------------------------------------------------------------------------------------------

Earnings before income tax expense and
  extraordinary item                                                     184,424           87,694           165,997

Income tax expense (Note 9)                                               65,593           29,664            57,574
---------------------------------------------------------------------------------------------------------------------

Earnings before extraordinary item                                       118,831           58,030           108,423
Extraordinary item - early extinguishment
  of debt, net of income tax benefit (Note 12)                              -                -               (2,522)
---------------------------------------------------------------------------------------------------------------------
Net earnings                                                          $  118,831       $   58,030        $  105,901
=====================================================================================================================

Earnings per common share - basic (Note 8):
  Earnings before extraordinary item                                  $     2.14       $     1.15        $     2.19
  Extraordinary item - early extinguishment of debt                          -                -               (0.05)
---------------------------------------------------------------------------------------------------------------------
Earnings per common share - basic                                     $     2.14       $     1.15        $     2.14
=====================================================================================================================

Earnings per common share - diluted (Note 8):
  Earnings before extraordinary item                                  $     2.11       $     1.13        $     2.15
  Extraordinary item - early extinguishment of debt                          -                -               (0.05)
---------------------------------------------------------------------------------------------------------------------
Earnings per common share - diluted                                   $     2.11       $     1.13        $     2.10
=====================================================================================================================

  See accompanying notes to consolidated financial statements.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                      CONSOLIDATED STATEMENTS OF CASH FLOWS


---------------------------------------------------------------- ----------------------------------------------------
(Dollars in thousands)                                                         Year Ended December 31,
                                                                 ----------------------------------------------------
                                                                            2002             2001              2000
---------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S>                                                                   <C>               <C>               <C>
  Net earnings                                                        $  118,831        $  58,030         $ 105,901
  Adjustments to reconcile net earnings
    to net cash provided by operating activities:
     Net loss on early extinguishment of debt                                -                -               2,522
     Depreciation and amortization                                        49,266           55,767            58,155
     Asset impairment charges                                                -             18,000               -
     Other, net (includes gains on sale of investments)                   (1,545)         (11,586)            1,602
     (Increase) decrease in receivables                                  (15,557)          41,502            (6,419)
     (Increase) decrease in inventories                                  (62,331)          33,070            (9,059)
     Increase in prepaid expenses and
       intangible and other assets                                       (22,614)          (6,789)           (7,737)
     Increase (decrease) in accounts payable,
       accrued interest expense and other accrued expenses                30,204            7,224            (9,226)
     Increase (decrease) in net deferred tax liabilities                  16,270           (8,356)           (2,788)
     Increase (decrease) in other long-term liabilities                      212           (2,156)             (807)
---------------------------------------------------------------------------------------------------------------------
  Net cash provided by operating activities                              112,736          184,706           132,144
---------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
  Acquisition of business, net of cash acquired                              -           (176,235)              -
  Proceeds from the disposal of assets                                     2,924           18,197               316
  Additions to property, plant and equipment                             (50,214)         (22,991)          (53,310)
---------------------------------------------------------------------------------------------------------------------
  Net cash used by investing activities                                  (47,290)        (181,029)          (52,994)
---------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
  Payments for debt issuance costs                                           -                -              (2,090)
  Additions to long-term debt                                                -            140,000           486,500
  Payments of long-term debt                                             (79,600)        (147,600)         (559,600)
  Proceeds from the issuance of treasury stock                            13,521            5,024             3,237
---------------------------------------------------------------------------------------------------------------------
  Net cash used by financing activities                                 ( 66,079)          (2,576)          (71,953)
---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents                        (633)           1,101             7,197
Cash and cash equivalents at beginning of period                          15,707           14,606             7,409
---------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                           $    15,074        $  15,707         $  14,606
=====================================================================================================================
Supplemental Disclosure:
  Cash payments for income taxes, net                                $    36,807        $  26,083         $  63,120
=====================================================================================================================
  Cash payments for interest                                         $    20,673        $  28,940         $  30,873
=====================================================================================================================
  Issuance of common stock for acquisition                           $      -           $ 110,640         $    -
======================================================================================================================

See accompanying notes to consolidated financial statements.

</TABLE>



<PAGE>

<TABLE>
<CAPTION>


                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY


----------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)                                                             Year Ended December 31,
                                                                 -----------------------------------------------------
                                                                            2002             2001               2000
----------------------------------------------------------------------------------------------------------------------
Common Stock:
<S>                                                                    <C>              <C>                <C>
  Beginning balance                                                    $  56,277        $  52,277          $  52,277
  Stock issued for acquisition of business                                   -              4,000                -
----------------------------------------------------------------------------------------------------------------------
  Ending balance                                                       $  56,277        $  56,277          $  52,277
----------------------------------------------------------------------------------------------------------------------

Paid-In Capital:
  Beginning balance                                                    $ 219,469        $ 118,360          $ 120,326
  Stock plans activity (Note 8)                                            2,227           (5,531)            (1,966)
  Stock issued for acquisition of business                                   -            106,640                -
----------------------------------------------------------------------------------------------------------------------
  Ending balance                                                       $ 221,696        $ 219,469          $ 118,360
----------------------------------------------------------------------------------------------------------------------

Retained Earnings:
  Beginning balance                                                    $ 520,503        $ 462,473          $ 356,572
  Net earnings                                                           118,831           58,030            105,901
----------------------------------------------------------------------------------------------------------------------
  Ending balance                                                       $ 639,334        $ 520,503          $ 462,473
----------------------------------------------------------------------------------------------------------------------

Accumulated Other Comprehensive Income:
  Beginning balance                                                    $  (5,108)       $     -            $     -
  Other comprehensive income                                             (30,809)          (5,108)               -
----------------------------------------------------------------------------------------------------------------------
  Ending balance                                                       $ (35,917)       $  (5,108)         $     -
----------------------------------------------------------------------------------------------------------------------

Treasury Stock:
  Beginning balance                                                    $ (31,482)       $ (49,205)         $ (54,978)
  Stock plans activity (Note 8)                                           19,607           17,723              5,773
----------------------------------------------------------------------------------------------------------------------
  Ending balance                                                       % (11,875)       $ (31,482)         $ (49,205)
----------------------------------------------------------------------------------------------------------------------

Total Shareholders' Equity                                             $ 869,515        $ 759,659          $ 583,905
======================================================================================================================



Comprehensive Income:
  Net earnings                                                          $118,831         $ 58,030           $105,901
  Other comprehensive income, net of tax:
    Cumulative effect of adopting SFAS No. 133                               -              2,960                -
    Financial instruments accounted for as hedges                         (3,872)          (8,068)               -
    Minimum pension liability                                            (26,512)             -                  -
    Foreign currency translation                                            (425)             -                  -
----------------------------------------------------------------------------------------------------------------------
    Other comprehensive income                                           (30,809)          (5,108)               -
----------------------------------------------------------------------------------------------------------------------
                                                                       $  88,022         $ 52,922           $105,901
======================================================================================================================

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 one of the largest home furniture manufacturers in the United
     States.  During the year ended  December  31,  2002,  the  Company had four
     primary operating subsidiaries:  Broyhill Furniture Industries,  Inc.; Lane
     Furniture Industries,  Inc.; Thomasville Furniture Industries, Inc. and HDM
     Furniture Industries, Inc.

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

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

2.   Significant Accounting Policies

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

     Use of Estimates

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

     Principles of Consolidation

          The  consolidated  financial  statements  include the  accounts of the
     Company and all of its subsidiaries. All material intercompany transactions
     are eliminated in consolidation. The Company's fiscal year ends on December
     31.  The  operating  companies  included  in  the  consolidated   financial
     statements report their results of operations as of the Saturday closest to
     December  31.  Accordingly,  the results of  operations  will  periodically
     include a 53-week  fiscal  year.  Fiscal  years 2002,  2001,  and 2000 were
     52-week years. Fiscal year 2003 will include 53 weeks.

     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. Inventories are regularly reviewed for obsolescence and appropriate
     adjustments recorded, if necessary, to ensure their value is recoverable.

     Property, Plant and Equipment

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

     Intangible Assets

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

     Fair Value of Financial Instruments

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

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

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

     Revenue Recognition

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

     Advertising Costs

          Advertising costs are expensed when  advertisements are first aired or
     distributed.  Advertising  costs  for  2002,  2001 and 2000  were  $72,243,
     $57,453 and $57,111, respectively.


      Income Taxes

          Deferred tax assets and  liabilities  are recognized for the estimated
     future tax consequences  attributable to differences  between the financial
     statement  carrying  amounts of existing  assets and  liabilities and their
     respective  tax 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  prior-year  amounts have been  reclassified to conform to the
     current year presentation.

3.   Restructuring and Asset Impairment Charges

          During  2001,  the Company  implemented  a plan to reduce its domestic
     case goods  manufacturing  capacity.  This plan  included the closing of 12
     manufacturing  facilities and a permanent reduction of approximately 20% of
     the company's total employment. Pretax restructuring and impairment charges
     of $26,352 were recorded  during 2001 of which  $18,000  related to a fixed
     asset  impairment  charge for properties and machinery and equipment of the
     closed  facilities.  The balance,  consisting of $5,913  charged to cost of
     operations  and  $2,439  charged to  selling,  general  and  administrative
     expenses,  related  to  employee  severance  and  benefits  costs and plant
     shutdown costs.

          Real estate with a carrying value of $7,387 and $8,665 was included in
     other  assets as of  December  31, 2002 and 2001,  respectively.  No events
     occurred  during the year ended  December 31, 2002 that would  indicate the
     need for a change in the carrying value of these assets.

          Restructuring  charges  included in other accrued expenses were $0 and
     $1,000 at December 31, 2002 and 2001, respectively.

4.  Acquisition of Business

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


<PAGE>

<TABLE>
<CAPTION>


    The fair value of the assets acquired and liabilities assumed at the date of the acquisition were as follows:
-------------------------------------------------------------------------------------------------------------------

<S>                                                                                                       <C>
Accounts receivable                                                                                       $  48,998
Inventories                                                                                                 108,388
Other current assets                                                                                          2,522
Property, plant and equipment                                                                                81,843
Goodwill                                                                                                     28,737
Other intangible assets                                                                                      51,100
Other long-term assets                                                                                        1,289
--------------------------------------------------------------------------------------------------------------------
  Total assets acquired                                                                                   $ 322,877
--------------------------------------------------------------------------------------------------------------------
Current liabilities                                                                                       $  32,181
Other long-term liabilities                                                                                   3,056
--------------------------------------------------------------------------------------------------------------------
  Total liabilities assumed                                                                                  35,237
--------------------------------------------------------------------------------------------------------------------

  Net assets acquired                                                                                     $ 287,640
====================================================================================================================
</TABLE>



          The total  acquisition  cost exceeded the fair value of the net assets
     acquired by $28,737  with such amount  being  allocated  to  goodwill.  The
     determination  of the final fair values of assets and liabilities  resulted
     in adjustments  consisting of changes from initially  recorded values as of
     December 28, 2001  resulting in increases in property,  plant and equipment
     and trademarks of $13,748 and $51,100,  respectively.  Adjustments to other
     balance sheet accounts were individually immaterial.

          The  following  unaudited  summary,  prepared  on a pro  forma  basis,
     combines the consolidated results of operations of the Company for 2001 and
     2000  with  those  of the  acquired  companies  as if the  transaction  had
     occurred at the beginning of each year presented.

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------------
                                                                              Year Ended December 31,
                                                                ----------------------------------------------------
                                                                                    2001                       2000
--------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                        <C>
Net sales                                                                     $2,311,647                 $2,620,151
Earnings before extraordinary item                                                68,260                    127,507
Net earnings                                                                  $   68,260                 $  124,985

Net earnings per common share - diluted:
  Earnings before extraordinary item                                          $     1.23                 $     2.34
  Net earnings                                                                $     1.23                 $     2.30
-------------------------------------------------------------------------------------------------------------------

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

5.   Inventories

         Inventories are summarized as follows:

--------------------------------------------------------------------------------------------------------------------
                                                                            December 31,               December 31,
                                                                                   2002                       2001
--------------------------------------------------------------------------------------------------------------------
Finished products                                                              $244,193                   $187,523
Work-in-process                                                                  65,196                     69,507
Raw materials                                                                   122,715                    112,743
--------------------------------------------------------------------------------------------------------------------
                                                                               $432,104                   $369,773
====================================================================================================================



6.   Goodwill and Other Intangible Assets

         Goodwill and other intangible assets include the following:

--------------------------------------------------------------------------------------------------------------------
                                                                            December 31,               December 31,
                                                                                   2002                       2001
--------------------------------------------------------------------------------------------------------------------
Goodwill                                                                       $267,218                   $239,173
Less: accumulated amortization                                                   82,738                     82,738
--------------------------------------------------------------------------------------------------------------------
  Goodwill                                                                     $184,480                   $156,435
====================================================================================================================

--------------------------------------------------------------------------------------------------------------------
Trademarks and tradenames                                                      $207,928                   $156,828
Intangible assets from acquisition                                                 -                        90,962
--------------------------------------------------------------------------------------------------------------------
                                                                                207,928                    247,790
Less: accumulated amortization                                                   36,920                     36,920
--------------------------------------------------------------------------------------------------------------------
  Other intangible assets                                                      $171,008                   $210,870
====================================================================================================================
</TABLE>


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

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------------
                                                                             Year Ended December 31,
                                                               -----------------------------------------------------
                                                                           2002             2001               2000
--------------------------------------------------------------------------------------------------------------------
Earnings before extraordinary item:
<S>                                                                  <C>               <C>               <C>
  As reported                                                        $  118,831        $   58,030        $  108,423
  Exclude amortization of goodwill
    and other intangible assets (net
    of income tax benefit)                                                 -               11,162            11,162
--------------------------------------------------------------------------------------------------------------------
                                                                     $  118,831        $   69,192        $  119,585
====================================================================================================================

Net earnings per common share before extraordinary item - basic:
  As reported                                                        $     2.14        $     1.15        $     2.19
  As adjusted                                                        $     2.14        $     1.37        $     2.41

Net earnings per common share before extraordinary item - diluted:
  As reported                                                        $     2.11        $     1.13        $     2.15
  As adjusted                                                        $     2.11        $     1.35        $     2.37
====================================================================================================================
</TABLE>



<PAGE>



7.   Long-Term Debt

          Long-term debt consists of the following:
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------------
                                                                               December 31,            December 31,
                                                                                      2002                    2001
--------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>                     <C>
Revolving credit facility (unsecured)                                            $ 370,000               $ 440,000
Other                                                                                4,800                  14,400
--------------------------------------------------------------------------------------------------------------------
                                                                                 $ 374,800               $ 454,400
====================================================================================================================
</TABLE>

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

     Revolving Credit Facility

          The revolving credit facility is unsecured, with a total commitment of
     $630,000.  The  facility  allows for issuance of letters of credit and cash
     borrowings.  Letter  of credit  outstandings  are  limited  to no more than
     $150,000,  with cash  borrowings  limited  only by the  facility's  maximum
     availability less letters of credit outstanding.

          Currently,  for letter of credit  issuances,  a fee of 0.75% per annum
     (subject  to  increase/decrease  based upon the Company  achieving  certain
     credit  ratings  from  Standard & Poor's and  Moody's) is assessed  for the
     account of the  lenders  ratably.  A further  fee of 0.125% is  assessed on
     standby   letters  of  credit   representing  a  facing  fee.  A  customary
     administrative  charge for processing  letters of credit is also payable to
     the relevant issuing bank.  Letter of credit fees are payable  quarterly in
     arrears.

          Cash borrowings under the revolving credit facility bear interest at a
     base rate or at an adjusted Eurodollar rate plus an applicable margin which
     varies,  depending  upon  the  type  of  loan  the  Company  executes.  The
     applicable  margin  over the  base  rate and  adjusted  Eurodollar  rate is
     subject to adjustment  based upon  achieving  certain  credit  ratings.  At
     December 31, 2002,  loans  outstanding  under the revolving credit facility
     consisted  of $360,000  based on the adjusted  Eurodollar  rate and $10,000
     based on the base rate,  which in conjunction  with the interest rate swaps
     have a weighted average interest rate of 5.07%.

          At December  31,  2002,  there were  $370,000 of cash  borrowings  and
     $35,491  in  letters  of  credit  outstanding  under the  revolving  credit
     facility, leaving an excess of $224,509 available under the facility.

          The revolving  credit  facility has no mandatory  principal  payments;
     however,  the commitment matures on June 7, 2005. The facility requires the
     Company  to  meet   certain   financial   covenants   including  a  minimum
     consolidated  net worth  ($640,000  as of  December  31,  2002) and maximum
     leverage  ratio  (ratio of  consolidated  debt to  consolidated  EBITDA (as
     defined in the credit  agreement) of 2.75 to 1). In addition,  the facility
     requires  repayment  upon the  occurrence  of a change  of  control  of the
     Company.  As of December 31, 2002,  the Company was in compliance  with all
     financial covenants.

     Other

          Other long-term debt consists of various industrial revenue bonds with
     interest rates ranging from approximately 6.6% to 9.0%.

     Interest Rate Swap Agreements

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

     Other Information

          The Company has no mandatory  long-term  debt payments  until 2005, at
     which time $370,000 matures.

8.   Common Stock

          The  Company's   restated   certificate  of   incorporation   includes
     authorization  to issue up to 200  million  shares of common  stock  with a
     $1.00 per share stated value. As of December 31, 2002, 56,277,066 shares of
     common stock were issued.

          The  Company  has  been  authorized  by  its  Board  of  Directors  to
     repurchase  its common  stock from time to time in open market or privately
     negotiated transactions.  Common stock repurchases are recorded as treasury
     stock and may be used for general  corporate  purposes.  As of December 31,
     2002, the Company has Board of Directors'  authorization for the repurchase
     of an additional $100,000 of its common stock.

          Shares of common  stock were  reserved for the  following  purposes at
     December 31, 2002:

<TABLE>
<CAPTION>
                                                                                                   Number of Shares
--------------------------------------------------------------------------------------------------------------------
Common stock options:
<S>                                                                                                       <C>
  Granted                                                                                                 3,610,984
  Available for grant                                                                                     3,136,750
--------------------------------------------------------------------------------------------------------------------
                                                                                                          6,747,734
====================================================================================================================

</TABLE>

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

          In 2002,  the Company  issued 40,000 shares of restricted  stock.  The
     restricted  shares vest over various periods from three to five years.  The
     deferred  compensation cost is amortized to expense over the period of time
     the restrictions are in place and the unamortized  portion is classified as
     a  reduction  of  paid-in-capital  in the  Company's  consolidated  balance
     sheets.

     Changes in options granted and outstanding are summarized as follows:
<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------
                                                                Year Ended December 31,
                                   ----------------------------------------------------------------------------------
                                               2002                       2001                        2000
                                   -----------------------------------------------------------------------------------
                                                      Average                    Average                     Average
                                         Shares         Price       Shares         Price        Shares         Price
                                   -------------- ------------ ------------- ------------ -------------- ------------
<S>                                   <C>              <C>       <C>              <C>        <C>              <C>
Beginning of period                   4,298,916        $17.55    4,345,634        $13.61     4,027,063        $12.67
Granted                                 425,900         34.67      954,900         24.00       734,600         16.70
Exercised                              (996,782)        13.57     (937,093)         5.36      (305,300)         6.83
Cancelled                              (117,050)        27.16      (64,525)        24.48      (110,729)        18.60
---------------------------------------------------------------------------------------------------------------------
End of period                         3,610,984        $20.36    4,298,916        $17.55     4,345,634        $13.61
=====================================================================================================================
Exercisable at
   end of period                      2,038,134                  2,324,391                   2,591,726
=====================================================================================================================
Weighted average fair
   value of options granted                            $18.08                     $12.40                      $ 9.52
=====================================================================================================================
</TABLE>



<PAGE>


          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,
                                                     ----------------------------------------------------------------
                                                                     2002                 2001                  2000
---------------------------------------------------------------------------------------------------------------------
Net earnings
<S>                                                            <C>                  <C>                  <C>
  As reported                                                  $  118,831           $   58,030           $   105,901
  Pro forma                                                       113,539               52,648               101,819

Net earnings per share - basic
  As reported                                                  $     2.14           $     1.15           $      2.14
  Pro forma                                                          2.05                 1.05                  2.06

Net earnings per share - diluted
  As reported                                                  $     2.11           $     1.13           $      2.10
  Pro forma                                                          2.02                 1.04                  2.05
=====================================================================================================================

          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:

---------------------------------------------------------------------------------------------------------------------
                                                                    2002                 2001                  2000
---------------------------------------------------------------------------------------------------------------------
Risk free interest rate                                              4.3%                 4.9%                  5.7%
Expected dividend yield                                              0.0%                 0.0%                  0.0%
Expected life (years)                                                6.0                  6.0                   7.0
Expected volatility                                                 49.0%                47.0%                 47.0%
=====================================================================================================================
</TABLE>

          Summarized   information   regarding  stock  options  outstanding  and
     exercisable at December 31, 2002 follows:
<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------
                                                Outstanding                                        Exercisable
                                 --------------------------------------                -----------------------------
Range of                                        Average
Exercise                                    Contractual        Average                                       Average
Prices                            Shares           Life          Price                         Shares          Price
---------------------------------------------------------------------------------------------------------------------
<S>   <C>                        <C>                <C>         <C>                           <C>             <C>
Up to $10                        310,084            1.6         $ 7.74                        310,084         $ 7.74
$10 - $20                      1,332,975            4.6          14.79                      1,028,675          14.23
$20 - $30                      1,526,025            6.1          23.79                        652,575          23.59
Over $30                         441,900            7.6          34.19                         46,800          31.38
---------------------------------------------------------------------------------------------------------------------
                               3,610,984            5.3         $20.36                      2,038,134         $16.63
=====================================================================================================================
</TABLE>

          Weighted  average shares used in the  computation of basic and diluted
     net earnings per common share for 2002, 2001, and 2000 are as follows:
<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------
                                                                         Year Ended December 31,
                                                     ----------------------------------------------------------------
                                                                     2002                2001                   2000
                                                     --------------------- ------------------- ----------------------
Weighted average shares used for
<S>                                                            <C>                 <C>                    <C>
  basic net earnings per common share                          55,506,837          50,356,763             49,531,931
Effect of dilutive securities:
  Stock options                                                   879,990             968,227                910,805
---------------------------------------------------------------------------------------------------------------------
Weighted average shares used for
  diluted net earnings per common share                        56,386,827          51,324,990             50,442,736
=====================================================================================================================
</TABLE>

          Excluded from the computation of diluted net earnings per common share
     were options to purchase  441,900 and 79,000  shares at an average price of
     $34.19 and  $30.84  per share  during  2002 and 2001,  respectively.  These
     options have been excluded from the diluted earnings per share  calculation
     since their impact is anti-dilutive.

9.   Income Taxes

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

---------------------------------------------------------------------------------------------------------------------
                                                                         Year Ended December 31,
                                                     ----------------------------------------------------------------
                                                                    2002                2001                   2000
---------------------------------------------------------------------------------------------------------------------
Current:
<S>                                                              <C>                 <C>                    <C>
  Federal                                                        $45,208             $34,672                $55,191
  State and local                                                  3,307                 562                  5,171
  Foreign                                                            808                 -                      -
---------------------------------------------------------------------------------------------------------------------
                                                                  49,323              35,234                 60,362
Deferred                                                          16,270              (5,570)                (2,788)
---------------------------------------------------------------------------------------------------------------------
                                                                 $65,593             $29,664                $57,574
=====================================================================================================================


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

---------------------------------------------------------------------------------------------------------------------
                                                                         Year Ended December 31,
                                                     ----------------------------------------------------------------
                                                                  2002                2001                   2000
---------------------------------------------------------------------------------------------------------------------

Federal corporate statutory rate                                  35.0%               35.0%                  35.0%
State and local income taxes, net of
  federal tax benefit                                              1.2                 0.4                    1.7
Nondeductible amortization of intangible assets
                                                                    -                  2.9                    1.5
Dividend exclusion                                                  -                   -                    (1.1)
Adjustments to income tax accruals                                  -                 (4.3)                    -
Other                                                             (0.6)               (0.2)                  (2.4)
---------------------------------------------------------------------------------------------------------------------
Effective income tax rate                                         35.6%               33.8%                  34.7%
=====================================================================================================================

</TABLE>

          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,
                                                                                   2002                       2001
--------------------------------------------------------------------------------------------------------------------
Deferred tax assets attributable to:
<S>                                                                            <C>                        <C>
  Expense accruals                                                             $ 15,284                   $ 16,579
  Valuation allowances                                                           13,770                     16,858
  Asset impairment charges                                                        2,852                      6,193
  Employee pension and other benefit plans                                       12,406                      1,375
  Fair market value adjustments - receivables                                       -                        1,453
  Other                                                                           1,942                      2,567
--------------------------------------------------------------------------------------------------------------------
  Total deferred tax assets                                                      46,254                     45,025
--------------------------------------------------------------------------------------------------------------------
Deferred tax liabilities attributable to:
  Fair value adjustments                                                        (68,532)                   (73,109)
  Depreciation                                                                  (10,011)                    (7,828)
  Inventory costs capitalized                                                    (1,299)                       -
  Other                                                                          (7,494)                    (6,960)
--------------------------------------------------------------------------------------------------------------------
  Total deferred tax liabilities                                                (87,336)                   (87,897)
--------------------------------------------------------------------------------------------------------------------
  Net deferred tax liabilities                                                 $(41,082)                  $(42,872)
====================================================================================================================
</TABLE>

10.  Employee Benefits

          The Company  sponsors or  contributes  to  retirement  plans  covering
     substantially  all employees.  The total cost of all plans for 2002,  2001,
     and 2000 was $7,075, $1,425, and $2,090, respectively.

     Company-Sponsored Defined Benefit Plans

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

          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.

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------
                                                                            December 31,                December 31,
                                                                                   2002                        2001
---------------------------------------------------------------------------------------------------------------------
Change in projected benefit obligation:
<S>                                                                            <C>                         <C>
  Projected benefit obligation - beginning of year                             $332,181                    $323,511
  Service cost                                                                   11,033                       9,372
  Interest cost                                                                  23,378                      23,315
  Plan amendments                                                                   374                          -
  Actuarial (gain) loss                                                           1,761                      (4,759)
  Benefits paid                                                                 (19,443)                    (19,258)
---------------------------------------------------------------------------------------------------------------------
    Projected benefit obligation - end of year                                 $349,284                    $332,181
---------------------------------------------------------------------------------------------------------------------
Change in plan assets:
  Fair value of plan assets - beginning of year                                $320,133                    $354,356
  Actual return on plan assets                                                  (24,771)                    (16,284)
  Employer contributions                                                         16,230                       1,319
  Benefits paid                                                                 (19,443)                    (19,258)
---------------------------------------------------------------------------------------------------------------------
    Fair value of plan assets - end of year                                    $292,149                    $320,133
---------------------------------------------------------------------------------------------------------------------
Funded status                                                                  $(57,135)                   $(12,048)
Fair value adjustment                                                           (14,292)                    (15,783)
Recognition of minimum liability                                                (42,487)                        -
Unrecognized net actuarial loss                                                  79,154                      20,177
Unrecognized prior service cost                                                   1,033                         824
---------------------------------------------------------------------------------------------------------------------
    Accrued pension cost                                                       $(33,727)                  $  (6,830)
=====================================================================================================================


The fair value adjustment relates to the Company's 1992 reorganization.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


     Net periodic  pension cost for 2002,  2001, and 2000 included the following
components:

--------------------------------------------------------------------------------------------------------------------
                                                                            Year Ended December 31,
                                                             -------------------------------------------------------
                                                                        2002               2001               2000
--------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>                <C>                <C>
Service cost-benefits earned during the period                      $ 11,033           $  9,372           $  8,665
Interest cost on the projected benefit obligation                     23,378             23,315             22,522
Expected return on plan assets                                       (30,544)           (32,655)           (31,840)
Net amortization and deferral                                         (1,736)            (2,291)            (2,914)
--------------------------------------------------------------------------------------------------------------------
Net periodic pension (income) expense                               $  2,131           $ (2,259)          $ (3,567)
====================================================================================================================

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

--------------------------------------------------------------------------------------------------------------------
                                                                         2002              2001               2000
--------------------------------------------------------------------------------------------------------------------
Expected long-term rate of return on plan assets                        8.50%              9.00%              9.00%
Weighted average discount rate                                          6.75%              7.25%              7.25%
Long-term rate of compensation increase                                 4.50%              4.50%              4.50%
--------------------------------------------------------------------------------------------------------------------
</TABLE>

          For 2003 the Company intends to adjust the long-term rate of return to
     8.00% and the long-term expected rate of compensation increase to 4.00%.

     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.

<TABLE>
<CAPTION>

11.  Other Comprehensive Income

     Other comprehensive income consists of the following:

--------------------------------------------------------------------------------------------------------------------
                                                                            Year Ended December 31,
                                                             -------------------------------------------------------
                                                                        2002               2001               2000
--------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                 <C>               <C>
Change in market value of financial instruments
  accounted for as hedges                                          $  (5,957)          $ (7,858)         $     -
Minimum pension liability                                            (42,487)               -                  -
Foreign currency valuation                                              (425)               -                  -
--------------------------------------------------------------------------------------------------------------------
                                                                     (48,869)            (7,858)               -
Income tax benefit                                                   (18,060)            (2,750)               -
--------------------------------------------------------------------------------------------------------------------
                                                                    $(30,809)          $ (5,108)         $     -
====================================================================================================================


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

--------------------------------------------------------------------------------------------------------------------
                                                                                 December 31,          December 31,
                                                                                        2002                  2001
--------------------------------------------------------------------------------------------------------------------
Market value of financial instruments accounted for as hedges                       $ (8,980)             $ (5,108)
Minimum pension liability                                                            (26,512)                  -
Foreign currency valuation                                                              (425)                  -
--------------------------------------------------------------------------------------------------------------------
                                                                                    $(35,917)             $ (5,108)
====================================================================================================================
</TABLE>


<page>

12.  Extraordinary Item - Early Extinguishment of Debt

          In  conjunction  with  the June 7,  2000  refinancing  of an  existing
     secured  credit  agreement,  the Company  charged to results of  operations
     $2,522,  net of income tax  benefit of $1,520,  representing  the  deferred
     financing  fees and expenses  pertaining to the  refinanced  facility.  The
     charge was recorded as an extraordinary item.

13.  Commitments and Contingent Liabilities

          Certain of the Company's  real  properties  and equipment are operated
     under lease  agreements.  Rental  expense under  operating  leases  totaled
     $26,882,  $18,900,  and $18,514  for 2002,  2001,  and 2000,  respectively.
     Annual  minimum  payments  under  operating  leases  are  $22,210  $18,082,
     $12,203,  $9,144,  and $8,287 for 2003 through 2007,  respectively.  Future
     minimum lease payments under operating  leases,  reduced by minimum rentals
     from subleases of $7,875 at December 31, 2002, aggregate $98,281.

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

          The  Company  has  provided  guarantees  related  to store  leases for
     certain independent dealers opening Thomasville Home Furnishings Stores and
     Drexel Heritage Home Inspiration  Stores.  The guarantees range from one to
     fifteen years and generally  require the Company to make lease  payments in
     the event of default by the dealer.  In the event of  default,  the Company
     has the right to  assign  or assume  the  lease.  The  total  future  lease
     payments guaranteed at December 31, 2002 were $90,249. The Company believes
     the risk of significant loss from these lease guarantees is remote.

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

14.  Other Income, Net

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

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

          For 2000,  other  income,  net  consisted  of interest  on  short-term
     investments of $538, a cash dividend  (nonrecurring)  of $7,642 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 $1,592.



15.  Quarterly Financial Information (Unaudited)
<TABLE>
<CAPTION>

         Following is a summary of unaudited quarterly information:

------------------------------------------------------------------------------------------------------------------
                                                         Fourth            Third          Second            First
                                                        Quarter          Quarter         Quarter          Quarter
==================================================================================================================
Year ended December 31, 2002:
<S>                                                   <C>              <C>            <C>               <C>
  Net sales                                           $ 595,491        $ 563,246      $  604,511        $ 634,461
  Gross profit                                          154,077          147,978         164,336          167,167
  Net earnings                                        $  29,317        $  24,658      $   32,085        $  32,771

  Net earnings per common share:
    Basic                                             $    0.53        $    0.44      $     0.58        $    0.59
    Diluted                                           $    0.52        $    0.44      $     0.57        $    0.58

  Common stock price range:
    High                                              $   28.00        $   29.00      $    42.30        $   41.94
    Low                                               $   19.02        $   22.34      $    30.25        $   32.00
==================================================================================================================
Year ended December 31, 2001:
  Net sales                                           $ 476,801        $ 448,682      $  459,648        $ 506,182
  Gross profit                                          114,417          112,321         114,725          125,331
  Net earnings                                        $  22,831        $  13,871      $    1,647        $  19,681

  Net earnings per common share:
    Basic                                             $    0.45        $    0.27      $     0.03        $    0.39
    Diluted                                           $    0.44        $    0.27      $     0.03        $    0.39

  Common stock price range:
    High                                              $   32.41        $   29.17      $    28.00        $   26.76
    Low                                               $   18.91        $   18.25      $    22.55        $   20.44
------------------------------------------------------------------------------------------------------------------
</TABLE>


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

         The Company has not paid cash dividends on its common stock during the
three years ended December 31, 2002. The closing market price of the Company's
common stock on December 31, 2002 was $23.85 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 sections  entitled  "Nominees" and "Section 16(a) Beneficial  Ownership
Reporting Compliance" of the Company's Definitive Proxy Statement for the Annual
Meeting of Stockholders on April 24, 2003 are incorporated herein by reference.

<TABLE>
<CAPTION>

Executive Officers of the Registrant
        <S>                        <C>      <C>                                                 <C>                <C>
                                                                                                Current         Appointed
       Name                        Age    Position                                            Positions        or Elected
       ----                        ---    --------                                            ---------        ----------

       *Wilbert G. Holliman        65     President of the Subsidiary -                                              1989
                                           Action Industries, Inc.
                                           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

       John T. Foy                 55     President and Chief Executive
                                           Officer of the Operating Company -
                                           Lane Furniture Industries, Inc.                           X               1996

       Christian J. Pfaff          54     President and Chief Executive
                                           Officer of the Operating Company-
                                           Thomasville Furniture Industries, Inc.                    X               1997

       Dennis R. Burgette          55     President and Chief Executive
                                           Officer of the Operating Company -
                                           Broyhill Furniture Industries, Inc.                       X               2000

       C. Jeffrey Young            52     President and Chief Executive
                                           Officer of the Operating Company-
                                           Drexel Heritage Furniture Industries, Inc.                X               2002

       Seamus Bateson              52     President and Chief Executive Officer of
                                           the Operating Company-Maitland-Smith
                                           Furniture Industries, Inc.                                X               1999

       Michael K. Dugan            62     President and Chief Executive Officer of the
                                           Operating Company-Henredon Furniture
                                           Industries, Inc.                                          X               1987

       Lynn Chipperfield           51     General Counsel                                                            1993
                                          Vice-President                                                             1996
                                          Secretary                                                                  1996
                                          Senior Vice President                                      X               2000
                                          Chief Administrative Officer                               X               2000

       David P. Howard             52     Controller                                                                 1990
                                          Vice-President                                             X               1991
                                          Chief Financial Officer                                    X               1994
                                          Treasurer                                                  X               1996

       Steven W. Alstadt           48     Controller                                                 X               1994
                                          Chief Accounting Officer                                   X               1994


-----------------------
*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,  except  Seamus  Bateson who
became President and Chief Executive Officer of Maitland-Smith in 1999 and prior
thereto was President of Rubbermaid Asia Pacific (a manufacturer and marketer of
consumer products) and C. Jeffrey Young who became President and Chief Executive
Officer of Drexel  Heritage in 2002 and prior  thereto was  President  and Chief
Executive Officer of Lexington Furniture Industries.

Item 11. Executive Compensation

     The sections entitled "Executive Compensation", "Executive Compensation and
Stock Option  Committee  Report on  Executive  Compensation",  "Stock  Options",
"Retirement  Plans",  "Incentive  Agreements"  and  "Performance  Graph"  of the
Company's  Definitive  Proxy Statement for the Annual Meeting of Stockholders on
April 24, 2003 are incorporated herein by reference.

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

     The section entitled "Security Ownership" of the Company's Definitive Proxy
Statement  for  the  Annual  Meeting  of  Stockholders  on  April  24,  2003  is
incorporated herein by reference.

                      Equity Compensation Plan Information

The following table sets forth aggregate information regarding the Company's
equity compensation plans as of December 31, 2002:

<TABLE>
<CAPTION>
             <S>                             <C>                              <C>                       <C>
                                                                                                  Number of securities
                                                                                               remaining available for
                                                                                                 future issuance under
                                    Number of securities to              Weighted-average          equity compensation
                                    be issued upon exercise             exercise price of             plans (excluding
                                    of outstanding options,          outstanding options,      securities reflected in
        Plan Category                warrants and rights             warrants and rights              column (1))
    ---------------------         -------------------------      -------------------------     ------------------------
                                            (a)                              (b)                          (c)
Equity compensation
  plans approved by
  security holders (1)                            3,670,317                        20.36                    3,136,750

Equity compensation
  plans not approved
  by security holders                                  -                            -                            -

Total                                             3,670,317                        20.36                    3,136,750

     (1)  Includes  the  Company's  1992 Stock  Option  Plan and 1999  Long-Term
          Incentive Plan. Included in column (a) are 59,333 shares of restricted
          common stock that have been awarded and that vest over a period from 1
          to 4 years.  These shares of restricted  common stock were disregarded
          for  purposes of  computing  the  weighted-average  exercise  price in
          column (b).

</TABLE>

Annually,  the Board of  Directors  determines  the amount of fees to be paid to
non-employee  Directors,  including  an award of  restricted  shares of  Company
common stock,  as described  under  "Compensation  of Board of Directors" in the
2003  Proxy  Statement,  hereby  incorporated  by  reference.  These  shares are
purchased in open-market transactions.

Annually, Lane Furniture Industries, Inc., a subsidiary of the Company, awards a
limited  number of shares of Company  common stock to a few of its truck drivers
as safety awards. 150 shares of the Company's common stock were issued as safety
awards in 2002. These shares are purchased in open market transactions.

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

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

         None.

Item 14. Controls and Procedures
--------------------------------

     (a)  The Company's chief executive officer and chief financial officer have
          concluded  that the Company's  disclosure  controls and procedures are
          effective  based on their  evaluation of these controls and procedures
          within 90 days of the date of this report.

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


<PAGE>



                                     PART IV

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


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

     1.   Financial Statements:

          Consolidated balance sheets, December 31, 2002 and 2001

          Consolidated  statements  of  operations  for each of the years in the
          three-year period ended December 31, 2002

          Consolidated  statements  of cash  flows  for each of the years in the
          three-year period ended December 31, 2002

          Consolidated  statements of shareholders' equity for each of the years
          in the three-year period ended December 31, 2002

          Notes to consolidated financial statements

          Independent Auditors' Report

     2.   Financial Statement Schedules:

          Valuation and qualifying accounts (Schedule II).

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

     3.   Exhibits:

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

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

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

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

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

          4(a) Credit  Agreement,  dated as of June 7, 2000,  among the Company,
               Broyhill Furniture  Industries,  Inc., Lane Furniture Industries,
               Inc.,  Thomasville Furniture  Industries,  Inc., Various Lenders,
               First  Union  National  Bank,  as  Documentation  Agent,  Bank of
               America,  N.A.,  as  Syndication  Agent and Deutsche Bank AG, New
               York Branch, 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,
               2000.)

          4(b) Registration  Rights  Agreement,  made  and  entered  into  as of
               December 28, 2001, by and among the Company,  Henredon  Furniture
               Industries,    Inc.,   Drexel   Heritage    Furnishings,    Inc.,
               Maitland-Smith,  Inc.,  Maitland-Smith Pacific, LTD and Lifestyle
               Furnishings  International,  Ltd.  (Incorporated  by reference to
               Exhibit 4 to Furniture  Brands  International,  Inc.'s  Report on
               Form 8-K, dated January 11, 2002, as amended on March 14, 2002.)

               No other  long-term  debt  instruments  are filed since the total
               amount of securities  authorized  under any such  instrument does
               not  exceed  10% of the  total  assets  of the  Company  and  its
               subsidiaries  on a  consolidated  basis.  The  Company  agrees to
               furnish a copy of such  instruments  to the Securities & Exchange
               Commission upon request.

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

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

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

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

         10(e) Furniture Brands  International,  Inc.  Restricted Stock Plan for
               Outside Directors, dated as of July 29, 1997. *

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

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

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

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

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

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

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

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

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

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

         10(q) Employment  Agreement,  dated as of January 29, 1998, between the
               Company 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(r) Employment  Agreement,  dated as of January 1, 2000,  between the
               Company and Dennis R.  Burgette.  (Incorporated  by  reference to
               Exhibit 10 (p) to Furniture Brands  International,  Inc.'s Annual
               Report on Form 10-K for the year ended December 31, 1998.) *

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

         10(t) Form of Split Dollar  Agreement and Premium  Retrieval  Agreement
               between the Company and Wilbert G. Holliman. *

         10(u) Form of Split Dollar  Agreement and Premium  Retrieval  Agreement
               between  the  Company  and  Dennis  R.  Burgette,  John  T.  Foy,
               Christian J. Pfaff and Lynn Chipperfield. *

         10(v) Furniture Brands  Supplemental  Executive  Retirement Plan, dated
               as of January 1, 2002.

         10(w) Broyhill  Furniture  Industries,   Inc.  Supplemental  Retirement
               Income Plan, dated as of October 31, 2001.

         10(x) Lane   Furniture   Industries,    Inc.   Supplemental   Executive
               Retirement Plan, dated as of January 1, 2003.

         21    List of Subsidiaries of the Company

         23    Consent of KPMG LLP

         99(a) Certification of W.G.  Holliman,  Chief Executive  Officer of the
               Company,  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
               to Section 906 of the Sarbanes-Oxley Act of 2002.

         99(b) Certification of David P. Howard,  Chief Financial Officer of the
               Company,  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
               to Section 906 of the Sarbanes-Oxley Act of 2002.

     *Indicates management contact or compensatory plan, contract or arrangement

(b)  Reports on Form 8-K.

          A Form 8-K was filed on October 25, 2002 announcing  third quarter and
          nine month  operating  results and  projections for the fourth quarter
          and full  year  2002  earnings  per  share.  A Form  8-K was  filed on
          December 10, 2002 affirming earlier projections for the fourth quarter
          and  full  year  2002.  A Form  8-K was  filed  on  January  28,  2003
          announcing   fourth  quarter  and  full  year  operating  results  and
          projections  for the first  quarter and full year 2003. A Form 8-K was
          filed on March 4, 2003 revising  projections for the first quarter and
          full year 2003.




<PAGE>

<TABLE>
<CAPTION>



                                FURNITURE BRANDS INTERNATIONAL, INC. AND SUBSIDIARIES

                              Index to consolidated Financial Statements and Schedules




                                                                                                         Page No.
   Consolidated Financial Statements:

              <S>                                                                                          <C>
     Consolidated Balance Sheets as of December 31, 2002 and 2001                                           26

     Consolidated Statements of Operations for Each of the years in the three-year period
         ended December 31, 2002                                                                            27

     Consolidated Statements of Cash Flows for each of the years in the three-year period
        ended December 31, 2002                                                                             28

     Consolidated Statements of Shareholders' Equity for each of the years in the three-
        year period ended December 31, 2002                                                                 29

     Notes to Consolidated Financial Statements                                                             30

     Financial Statement Schedule                                                                           46

     Independent Auditors' Report                                                                           52

   Consolidated Financial Statement Schedules:
                                                       Schedule
                                                       --------
     Valuation and qualifying accounts                    II                                                51


</TABLE>





<PAGE>
<TABLE>
<CAPTION>


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


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



                                                                               (Dollars in Thousands)
                                                ------------------------------------------------------------------------------------
                                                                                     Additions
                                                     Balance at                      Charged to      Deductions           Balance at
                                                     Beginning        Acquired        Cost and          from                End of
Description                                          of Period        Companies       Expenses        Reserves              Period
<S>                                                     <C>              <C>             <C>             <C>                  <C>
-----------                                          ---------        ---------      ----------      ----------           ----------

Year Ended December 31, 2002
----------------------------

      Allowances deducted from
         receivables on balance sheet:
      Allowance for doubtful accounts                   $12,564       $     -           $  8,321       $  (7,168)  (a)       $13,717
      Allowance for cash discounts/
        chargebacks/other                                 6,277             -              3,222          (2,465)  (b)         7,034
                                                        -------       ----------         -------       ----------            -------
                                                        $18,841       $     -            $11,543       $  (9,633)            $20,751
                                                        =======       ==========         =======       ==========            =======
Year Ended December 31, 2001
----------------------------

     Allowances deducted from
        receivables on balance sheet:
     Allowance for doubtful accounts                    $17,906         $  2,084         $15,417        $(22,843)  (a)       $12,564
     Allowance for cash discounts/
       chargebacks/other                                  5,169            2,416           1,263          (2,571)  (b)         6,277
                                                       --------         --------         -------        ---------            -------
                                                        $23,075         $  4,500         $16,680        $(25,414)            $18,841
                                                        =======         ========         =======        =========            =======

Year Ended December 31, 2000
----------------------------

     Allowances deducted from
        receivables on balance sheet:
     Allowance for doubtful accounts                   $15,960        $     -            $12,002        $(10,056)  (a)       $17,906
     Allowance for cash discounts/
        chargebacks/other                                 3,097             -              3,470          (1,398)  (b)         5,169
                                                        -------       ----------         -------        ---------            -------
                                                        $19,057       $     -            $15,472        $(11,454)            $23,075
                                                        =======       ==========         =======        =========            =======



(a)  Uncollectible account 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, 2002 and 2001,
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, 2002.  These  consolidated  financial
statements  and  financial  statement  schedule  are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated  financial statements and financial statement schedule based on our
audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material  respects,  the financial  position of Furniture
Brands  International,  Inc. and  subsidiaries as of December 31, 2002 and 2001,
and the results of their  operations  and their cash flows for each of the years
in the three-year  period ended December 31, 2002, in conformity with accounting
principles  generally  accepted in the United  States of America.  Also,  in our
opinion,  the related financial statement schedule,  when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.

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






 KPMG LLP


St. Louis, Missouri
January 22, 2003




<PAGE>







                                   SIGNATURES
                                   ----------

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

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


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

Date:   March 25, 2003


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities indicated on March 25, 2002.

<TABLE>
<CAPTION>

                           <S>                                        <C>
                        Signature                                    Title
                        ---------                                    -----

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

/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/  Albert E. Suter                                                 Director
-----------------------------------------------------------
Albert E. Suter


<PAGE>



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

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

</TABLE>



<PAGE>


                                 CERTIFICATIONS
                                 --------------


I, Wilbert G. Holliman, certify that:


1.   I have  reviewed  this  annual  report  on Form  10-K of  Furniture  Brands
     International, Inc.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     annual  report  whether or not there were  significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


March 25, 2003



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


<PAGE>



I, David P. Howard, certify that:


1.   I have  reviewed  this  annual  report  on Form  10-K of  Furniture  Brands
     International, Inc.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a)   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               annual report is being prepared;

          b)   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

          c)   presented  in  this  annual  report  our  conclusions  about  the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

          a)   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b)   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     annual  report  whether or not there were  significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


March 25, 2003


                            By /s/ David P. Howard
                              -------------------------------------
                                   David P. Howard
                                   Vice President, Treasurer
                                   and Chief Financial Officer