##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 WASHINGTON, D.C.
    20549
  Form 10-K
  (Mark one)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31,
    2010oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from
    to  Commission file number
    001-00091
  Furniture Brands International,
    Inc.
 (Exact Name of registrant as
    specified in its charter)
  Delaware(State or other jurisdiction
    of
    incorporation or organization)

43-0337683(I.R.S. Employer
    Identification No.)1 North Brentwood Blvd., St. Louis, Missouri(Address of principal
    executive offices)

63105(Zip Code)   Registrants telephone number, including area code
    (314) 863-1100
  SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE
    ACT:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock  $1.00 Stated Value

New York Stock Exchangewith Preferred Stock Purchase Rights   SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE
    ACT:
  None
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o(Do not check if a smaller
    reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
      55,325,419 shares
    as of February 28, 2011
  DOCUMENTS
    INCORPORATED BY REFERENCE




---



##### 





FURNITURE BRANDS
    INTERNATIONAL, INC.
  TABLE OF
    CONTENTS
   
 PagePART IItem 1.


Business


3Item 1A.


Risk Factors


8Item 1B.


Unresolved Staff Comments


13Item 2.


Properties


14Item 3.


Legal Proceedings


15Item 4.


Removed from
    Form 10-K
    requirements and reserved


15PART IIItem 5.


Market For Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


15Item 6.


Selected Financial Data


18Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


19Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


30Item 8.


Financial Statements and Supplementary Data


31Item 9.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


62Item 9A.


Controls and Procedures


62Item 9B.


Other Information


63PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


63Item 11.


Executive Compensation


63Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholders Matters


63Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


64Item 14.


Principal Accountant Fees and Services


64PART IVItem 15.


Exhibits and Financial Statement Schedules


65     2




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##### Table of Contents



PART I  Item 1.
    Business  Overview
      Brands and
    Products
    
    Broyhill has collections of mid-priced furniture, including both
    wood furniture and upholstered products, in a wide range of
    styles and product categories including bedroom, dining room,
    living room, occasional, youth, home office, and home
    entertainment.
    Lane focuses primarily on mid-priced upholstered furniture,
    including motion and stationary furniture with an emphasis on
    home entertainment and family rooms.
    Thomasville has both wood furniture and upholstered products in
    the mid- to upper-price ranges and also manufactures and markets
    ready-to-assemble
    furniture, as well as case goods for the hospitality and
    contract markets.
    Drexel Heritage markets both casegoods and upholstered furniture
    in categories ranging from mid- to premium-priced.
    Henredon specializes in both wood furniture and upholstered
    products in the premium-price category.
    Hickory Chair manufactures premium-priced wood and upholstered
    furniture, offering traditional and modern styles.
    Pearson offers contemporary and traditional styles of finely
    tailored upholstered furniture in the premium-price category.
    Laneventure markets a premium-priced outdoor line of wicker,
    rattan, bamboo, exposed aluminum, and teak furniture, as well as
    casual indoor home furnishings.
    Maitland-Smith designs and manufactures premium hand crafted,
    antique-inspired furniture, accessories, and lighting, utilizing
    a wide range of unique materials. Maitland-Smith markets under
    both the Maitland-Smith and LaBarge brand names.  Form 10-K.
 3




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##### Table of Contents



Distribution
                Manufacturing and
    Sourcing
  Form 10-K.
   4




---



##### Table of Contents



Raw Materials and
    Suppliers
      Marketing and
    Advertising
    Management and
    Employees
    Environmental
    matters
    Competition
   5




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##### Table of Contents



La-Z-Boy
  Backlog
    Trademarks and
    Trade Names
      Working
    Capital
  Form 10-K
  Internet
    Access
  Forms 10-K, 10-Q, 8-K, Form 10-K.
 6




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##### Table of Contents



Executive
    Officers
    Name

Age

Position HeldRalph P. Scozzafava


52


Chairman of the Board and Chief Executive OfficerSteven G. Rolls


56


Senior Vice President and Chief Financial OfficerMary E. Sweetman


47


Senior Vice President, Human ResourcesJon D. Botsford


56


Senior Vice President, General Counsel and Corporate SecretaryRaymond J. Johnson


55


Senior Vice President, Global Supply ChainVance C. Johnston


41


Senior Vice President, Growth and TransformationRichard R. Isaak


43


Controller and Chief Accounting OfficerGregory P. Roy


45


President-Lane Furniture Industries, Inc.Mark E. Stephens


42


President-Broyhill Furniture Industries, Inc.Edward D. Teplitz


49


President-Thomasville Furniture Industries, Inc. and Drexel
    Heritage Furniture IndustriesDaniel R. Bradley


54


President-Furniture Brands Designer Group   Ralph P. Scozzafava
  Steven G. Rolls
  Mary E. Sweetman
  Jon D. Botsford
  Raymond J. Johnson
 7




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##### Table of Contents



Vance C. Johnston
  Richard R. Isaak
  Gregory P. Roy
  Mark E. Stephens
  Edward D. Teplitz
  Daniel R. Bradley
    Item 1A.
    Risk
    Factors  The risks and uncertainties described below are those that we
    currently believe may materially affect our company. Additional
    risks and uncertainties that we are unaware of or that we
    currently deem immaterial also may become important factors that
    affect our company. You should carefully consider the risks
    described below in addition to all other information provided to
    you in this document and our subsequent filings with the
    Securities and Exchange Commission. Any of the following risks
    could materially and adversely affect our business, results of
    operations, and financial condition.
  Unfavorable
    economic conditions could result in a decrease in our future
    sales, earnings, and liquidity.
   8




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Market returns
    could have a negative impact on the return on plan assets for
    our qualified pension plan, which may require significant
    funding.
    Loss of market
    share and other financial or operational difficulties due to
    competition would likely result in a decrease in our sales and
    earnings.
   9




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An inability
    to forecast demand or respond to changes in consumer tastes and
    fashion trends in a timely manner could result in a decrease in
    our future sales and earnings.
    A change in
    our mix of product sales could result in a decrease in our
    future earnings.
    Business
    failures of large dealers, a group of customers or our own
    retail stores could result in a decrease in our future sales and
    earnings.
    Inventory
    write-downs or write-offs could result in a decrease in our
    earnings.
    Sales
    distribution realignments can result in a decrease in our sales
    and earnings.
    Manufacturing
    realignments and cost savings programs could result in a
    decrease in our near-term earnings and liquidity.
   10




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Reliance on
    offshore sourcing of our products subjects us to changes in
    local government regulations and currency fluctuations which
    could result in a decrease in our earnings.
    Our operations
    depend on production facilities located outside the United
    States which are subject to increased risks of disrupted
    production which could cause delays in shipments, loss of
    customers, and decreases in sales and earnings.
    Fluctuations
    in the price, availability, and quality of raw materials could
    cause delays in production and could increase the costs of
    materials which could result in a decrease in our sales and
    earnings.
    We are subject
    to litigation, environmental regulations, and governmental
    matters that could adversely impact our sales, earnings, and
    liquidity.
   11




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We may not
    realize the anticipated benefits of mergers, acquisitions, or
    dispositions.
    Loss of key
    personnel or the inability to hire qualified personnel could
    adversely affect our business.
    Impairment of
    our trade name intangible assets would result in a decrease in
    our earnings and net worth.
    Provisions in
    our certificate of incorporation and our shareholders
    rights plan could discourage a takeover and could result in a
    decrease in a potential acquirers valuation of our common
    stock.
   12




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A change in
    control could limit the use of our net operating loss carry
    forwards and decrease a potential acquirers valuation of
    our businesses, both of which could decrease our liquidity and
    earnings.
    If we and our
    dealers are not able to open new stores or effectively manage
    the growth of these stores, our ability to grow sales and
    profitability could be adversely affected.
    We may not be
    able to comply with our debt agreement or secure additional
    financing on favorable terms or generate sufficient profit to
    meet our future capital needs, which could significantly
    adversely impact our liquidity and our business.
  Form 10-K.
    Item 1B.
    Unresolved
    Staff Comments   13




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##### Table of Contents



Item 2.
    Properties    LeaseFloor Space

Owned

ExpirationLocation

Type of Facility

(Sq. ft.)

or Leased

DateSt. Louis, MO

Headquarters


53,467



Leased



2019Saltillo, MS

Upholstery plant/distribution center


830,200



OwnedTupelo, MS

Upholstery plant/distribution center


715,951



OwnedConover, NC

Upholstery plant/distribution center


347,500



OwnedHigh Point, NC

Upholstery plant/distribution center


178,500



OwnedLenoir, NC

Upholstery plant


395,000



OwnedConover, NC

Upholstery plant


192,015



OwnedConover, NC

Upholstery plant


123,200



OwnedMt. Airy, NC

Upholstery plant


102,500



OwnedLongview, NC

Upholstery plant


334,000



Leased



2015Appomattox, VA

Case goods plant/distribution center


829,800



OwnedLenoir, NC

Case goods plant/distribution center


828,000



OwnedThomasville, NC

Case goods plant


325,000



OwnedHickory, NC

Case goods plant/upholstery plant/distribution center


519,011



OwnedHigh Point, NC

Component plant


187,162



OwnedRutherfordton, NC

Distribution center


1,009,253



OwnedThomasville, NC

Distribution center


731,000



OwnedMorganton, NC

Distribution center


513,800



OwnedLenoir, NC

Distribution center


312,632



OwnedRialto, CA

Distribution center


703,176



Leased



2012Lenoir, NC

Distribution center


502,420



Leased



2013Wren, MS

Distribution center


494,813



Leased



2012Lenoir, NC

Distribution center


205,964



Leased



2021Verona, MS

Distribution center/offices


423,392



OwnedThomasville, NC

Offices/showroom


256,000



OwnedHigh Point, NC

Offices/showroom


100,000



OwnedLenoir, NC

Offices


136,000



OwnedCebu, Philippines

Case goods plant


480,338



OwnedTambak Aji, Indonesia

Case goods plant/distribution center


381,978



OwnedSemarang, Indonesia

Case goods plant/distribution center


330,000



OwnedDongguan, China

Offices


159,000



Leased



2013    14




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##### Table of Contents



Floor spaceLocation

Property Description

(sq. ft.)Morganton, NC

Manufacturing Facility


874,506Pontotoc, MS

Manufacturing Facility


369,899Lenoir, NC

Manufacturing Facility


268,172Conover, NC

Manufacturing Facility


159,000Allentown, PA

Warehouse


105,000Lenoir, NC

Truck Maintenance Facility


96,000     Item 3.
    Legal
    Proceedings  Form 10-K
  Item 4.
    Removed
    from
    Form 10-K
    requirements and reserved. PART II  Item 5.
    Market
    For Registrants Common Equity, Related Stockholder
    Matters, and Issuer Purchases of Equity
    Securities  1)
    Market
    Information  Form 10-K
  Holders
    Dividends
   15




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##### Table of Contents



Form 10-K.
  Form 10-K.
  Performance
    Graph
    COMPARISON OF 5
    YEAR CUMULATIVE TOTAL RETURN*
    Among Furniture Brands International, Inc., the S&P 500
    Index
    and the Dow Jones US Furnishings Index
  
 * $100 invested on 12/31/05 in
    stock or index, including reinvestment of dividends.
    Fiscal year ending December 31.
  Copyright©

    2010 S&P, a division of The McGraw-Hill Companies Inc. All
    rights reserved.
    Copyright©

    2010 Dow Jones & Co. All rights reserved.
 16




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##### Table of Contents



2)
    Repurchase of
    Equity Securities    Total Number of


Maximum NumberTotal





Shares Purchased as


of Shares that MayNumber of


Average


Part of Publicly


Yet Be PurchasedShares


Price Paid


Announced Plans or


Under the Plans orPurchased


per Share(1)


Programs


Programs.October 2010:October 1, 2010 through
    October 31, 2010


217


$
5.72



(2
)


(2
)November 2010:November 1, 2010 through
    November 30, 2010


1,078



4.94



(2
)


(2
)December 2010:December 1, 2010 through
    December 31, 2010


217



4.54



(2
)


(2
)Total


1,512


$
4.99     (1)
    
    Shares valued at the average of the high and low prices of
    common stock as reported by the New York Stock Exchange on the
    vesting date.(2)
    
    We did not have any publicly announced plan or program to
    repurchase equity securities during the quarter ended
    December 31, 2010. 17




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##### Table of Contents



Item 6.
    Selected
    Financial Data  FIVE-YEAR
    CONSOLIDATED FINANCIAL REVIEW
  Year Ended December 31,2010


2009


2008


2007


2006(Dollars in thousands except per share data)Summary of operations(1)(2):Net sales

$
1,159,934


$
1,224,370


$
1,743,176


$
2,082,056


$
2,361,680Gross profit


276,314



230,000



314,535



416,095



507,875Selling, general, and administrative expenses


320,226



363,636



524,457



462,334



432,336Interest expense


3,172



5,342



12,510



37,388



17,665Earnings (loss) from continuing operations before income tax
    expense (benefit)


(47,920
)


(176,479
)


(418,958
)


(80,478
)


72,699Income tax expense (benefit)


(8,894
)


(67,793
)


(3,157
)


(29,261
)


22,784Net earnings (loss) from continuing operations


(39,026
)


(108,686
)


(415,801
)


(51,217
)


49,915Net earnings from discontinued operations










29,920



5,568



5,140Net earnings (loss)

$
(39,026
)

$
(108,686
)

$
(385,881
)

$
(45,649
)

$
55,055Per share of common stock:Net earnings (loss)  diluted:Continuing operations

$
(0.76
)

$
(2.25
)

$
(8.53
)

$
(1.06
)

$
1.02Discontinued operations










0.61


$
0.12


$
0.11Total

$
(0.76
)

$
(2.25
)

$
(7.92
)

$
(0.94
)

$
1.13Dividends

$



$



$
0.12


$
0.64


$
0.64Weighted average common shares  diluted (in thousands)


51,116



48,302



48,739



48,446



48,753Other information(2):Working capital(3)

$
286,363


$
326,952


$
458,376


$
712,455


$
752,618Property, plant, and equipment, net

$
124,866


$
134,352


$
150,864


$
178,564


$
221,398Capital expenditures

$
21,930


$
9,777


$
18,977


$
14,374


$
24,713Total assets

$
676,413


$
758,105


$
999,518


$
1,463,078


$
1,558,203Long-term debt

$
77,000


$
78,000


$
160,000


$
280,000


$
300,800Shareholders equity

$
259,567


$
262,791


$
366,494


$
844,766


$
910,715     (1)
    
    The companys fiscal year ends on December 31. The
    subsidiaries included in the consolidated financial statements
    report their results of operations as of the Saturday closest to
    December 31. Accordingly, the results of operations of our
    subsidiaries periodically include a 53-week fiscal year. Fiscal
    year 2008 was a 53-week fiscal year for our subsidiaries.(2)
    
    Results of operations for all periods presented have been
    restated to reflect the classification of Hickory Business
    Furniture (HBF) as a discontinued operation. HBF was
    sold in the first quarter of 2008.(3)
    
    Includes current portion of long term debt of $17.0 million
    in 2009, $30.0 million in 2008, $20.8 million in 2007,
    and $10.8 million in 2006. 18




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##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND RESULTS OF OPERATIONS
  Forward-Looking
    Statements
  Form 10-K.
  Overview
      Form 10-K.
  Business Trends
    and Strategy
       19




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##### Table of Contents




    We incurred costs of $8.3 million in 2010, reduced from
    $11.3 million in 2009, related to downtime in our factories.
    We incurred expense of $6.8 million in 2010, reduced from
    $16.0 million in 2009, which related primarily to occupancy
    costs, lease termination costs, and lease liabilities for closed
    retail locations.
    We incurred charges of $6.7 million in 2010 and
    $33.0 million in 2009 to reduce the carrying value of
    inventory to market value, driven by our efforts to accelerate
    the sale of slow-moving inventory.
    We incurred charges of $5.9 million in 2010 and
    $9.1 million in 2009 related to reductions in workforce of
    direct labor employees and indirect support employees in our
    manufacturing facilities and employees in our administrative
    offices.
    We incurred costs and charges of $4.0 million in 2010
    compared to $3.2 million in 2009, associated with the
    closing of manufacturing facilities and related impairment
    charges on idle facilities.        
    More product launches driven by a multi-stage product
    development process that blends the decades of experience of our
    designers, merchandisers, marketers and dealers with proven
    consumer research methodologies that are new to the furniture
    industry.
    Increased support of our retail partners with a larger
    investment in national television and print advertising,
    innovative promotions and a web presence that drives consumer
    traffic to their locations.
    Further reductions to manufacturing costs through the
    implementation of lean and cellular manufacturing methods and
    through strategic sourcing relationships with suppliers that
    leverage the companys scale.   20




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##### Table of Contents



Results of
    Operations
    Year Ended December 31,2010


2009


2008% of





% of





% ofNet





Net





NetDollars


Sales


Dollars


Sales


Dollars


SalesNet sales

$
1,159.9



100.0
%

$
1,224.4



100.0
%

$
1,743.2



100.0
%Cost of sales


883.6



76.2



994.4



81.2



1,428.7



82.0Gross Profit


276.3



23.8



230.0



18.8



314.5



18.0Selling, general, and administrative expenses


320.2



27.6



363.6



29.7



524.4



30.1Impairment of goodwill


















166.7



9.6Impairment of trade names


1.1



0.1



39.1



3.2



35.3



2.0Loss from operations


(45.0
)


(3.9
)


(172.7
)


(14.1
)


(411.9
)


(23.6
)Interest expense


3.2



0.3



5.3



0.4



12.5



0.7Other income, net


0.3



0.0



1.5



0.1



5.4



0.3Loss from continuing operations before income tax benefit


(47.9
)


(4.1
)


(176.5
)


(14.4
)


(419.0
)


(24.0
)Income tax benefit


(8.9
)


(0.8
)


(67.8
)


(5.5
)


(3.2
)


(0.2
)Net loss from continuing operations

$
(39.0
)


(3.4
)%

$
(108.7
)


(8.9
)%

$
(415.8
)


(23.8
)%Net loss per common share  diluted:Net loss from continuing operations

$
(0.76
)





$
(2.25
)





$
(8.53
)   Year Ended
    December 31, 2010 Compared to Year Ended December 31,
    2009
         21




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Year Ended
    December 31, 2009 Compared to Year Ended December 31,
    2008
                 22




---



##### Table of Contents



Retail Results of
    Operations
  Form 10-K,
  Thomasville


All Other RetailStores(a)


Stores(b)Year Ended December 31,


Year Ended December 31,2010


2009


2010


2009(Dollars in millions)Net sales

$
107.8


$
84.9


$
39.9


$
43.0Cost of sales


63.8



49.8



24.8



28.2Gross profit


44.0



35.1



15.1



14.8SG&A expenses  open stores


62.1



55.3



22.3



27.8Operating loss  open stores(c)


(18.1
)


(20.2
)


(7.2
)


(13.0
)SG&A expenses  closed stores










6.8



16.0Operating loss(c)

$
(18.1
)

$
(20.2
)

$
(14.0
)

$
(29.0
)Number of open stores and showrooms at end of period


48



49



19



22Number of closed locations at end of period










27



31Same-store-sales(d):Annual percentage increase (decrease)


18.8
%


(20.3
)%


(e
)


(e
)Number of stores


46



25     a)
    
    This supplemental data includes company-owned Thomasville retail
    store locations that were open at the end of 2010 and 2009.b)
    
    This supplemental data includes all company-owned retail stores
    other than open Thomasville stores (all other retail
    stores). Selling, general and administrative
    expenses  closed stores includes occupancy costs,
    lease termination costs, and costs associated with closed store
    lease liabilities.c)
    
    Operating loss does not include our wholesale profit on the
    above retail net sales.d)
    
    The same-store-sales percentage is based on sales from stores
    that have been in operation and company-owned for at least
    15 months.e)
    
    Same-store-sales information is not meaningful and is not
    presented for all other retail stores because results include
    retail store locations of multiple brands, including eight
    Drexel Heritage stores, two Lane stores, one Henredon store, one
    Broyhill store, and seven Designer Showrooms at
    December 31, 2010; and it is not our long-term strategic
    initiative to grow non-Thomasville company-owned retail store
    locations.   23




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Financial
    Condition and Liquidity
  Liquidity
          Form 10-Q
 24




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##### Table of Contents



Financing
    Arrangements
    December 31,


December 31,2010


2009Asset-based loan

$
77.0


$
95.0Less: current maturities






17.0Long-term debt

$
77.0


$
78.0             1 2
 25




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##### Table of Contents



Form 10-K
  Form 10-Q
  Funded Status
    of Qualified Defined Benefit Pension Plan
     26




---



##### Table of Contents



Contractual
    Obligations and Other Commitments
    Less








MoreThan 1


1-3


4-5


Than 5Year


Years


Years


Years


TotalLong-term debt obligations:Asset-based loan

$



$
77.0


$



$



$
77.0Interest expense(1)


1.6



1.0











2.6Operating lease obligations (net of subleases)(2)


43.3



69.0



39.2



30.0



181.5Purchase obligations(3)


















$
44.9


$
147.0


$
39.2


$
30.0


$
261.1     (1)
    
    Interest payments calculated at rates in effect at
    December 31, 2010.(2)
    
    Operating lease obligations (net of subleases) includes open and
    closed store operating lease obligations as well as equipment
    operating lease obligations.(3)
    
    We are not a party to any long-term supply contracts. We do, in
    the normal course of business, initiate purchase orders for the
    procurement of finished goods, raw materials, and other
    services. All purchase orders are based upon current
    requirements and are fulfilled within a short period of time.    Off-Balance
    Sheet Arrangements
    Critical
    Accounting Policies
   27




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##### Table of Contents



Revenue
    Recognition
    Allowance for
    Doubtful Accounts
    Inventories
  (first-in,
  Intangible
    Assets
       28




---



##### Table of Contents



Closed Retail
    Locations
    Retirement
    Plans
        Recently Issued
    Statements of Financial Accounting Standards
   29




---



##### Table of Contents



Form 10-K.
  The FASB
    Accounting Standards Codification and the Hierarchy of
    Generally Accepted Accounting Principles, a replacement of FASB
    Statement No. 162
    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk   30




---



##### 



Item 8.
    Financial
    Statements and Supplementary Data  FURNITURE BRANDS
    INTERNATIONAL, INC.
  Index to
    Consolidated Financial Statements and Schedules
   
 Page No.Report of Independent Registered Public
    Accounting Firm


32Consolidated Financial Statements:Consolidated Balance Sheets as of
    December 31, 2010 and 2009


33Consolidated Statements of Operations for each of
    the years in the three-year period ended December 31,
    2010


34Consolidated Statements of Cash Flows for each of
    the years in the three-year period ended December 31,
    2010


35Consolidated Statements of Shareholders
    Equity and Comprehensive Loss for each of the years in the
    three-year period ended December 31, 2010


36Notes to Consolidated Financial Statements


37Consolidated Financial Statement Schedules:Schedule IIValuation and qualifying accounts


66   31




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm           Internal Control 
    Integrated Framework
  KPMG
    LLP
    32




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  CONSOLIDATED BALANCE SHEETS
 December 31,


December 31,2010


2009(Dollars in thousands except per share data)ASSETSCurrent assets:Cash and cash equivalents

$
51,964


$
83,872Receivables, less allowances of $18,076 ($26,225 at
    December 31, 2009)


112,939



125,513Income taxes receivable


1,596



58,976Inventories


249,691



226,078Prepaid expenses and other current assets


11,242



9,274Total current assets


427,432



503,713Property, plant, and equipment, net


124,866



134,352Trade names


86,508



87,608Other assets


37,607



32,432Total assets

$
676,413


$
758,105LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current maturities of long-term debt

$



$
17,000Accounts payable


79,846



83,813Accrued employee compensation


18,336



21,036Other accrued expenses


42,887



54,912Total current liabilities


141,069



176,761Long-term debt


77,000



78,000Deferred income taxes


23,114



25,737Pension liability


104,736



135,557Other long-term liabilities


70,927



79,259Shareholders equity:Preferred stock, 10,000,000 shares authorized, no par
    value  none issued






Common stock, 200,000,000 shares authorized,
    $1.00 stated value  60,614,741 shares
    issued at December 31, 2010 and 56,482,541 shares
    issued at December 31, 2009


60,615



56,483Paid-in capital


210,945



224,133Retained earnings


228,803



267,829Accumulated other comprehensive loss


(115,675
)


(111,471
)Treasury stock at cost 5,586,251 shares at
    December 31, 2010 and 7,797,319 shares at
    December 31, 2009


(125,121
)


(174,183
)Total shareholders equity


259,567



262,791Total liabilities and shareholders equity

$
676,413


$
758,105    33




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  CONSOLIDATED STATEMENTS OF
    OPERATIONS
  Year Ended December 31,2010


2009


2008(In thousands except per share data)Net sales

$
1,159,934


$
1,224,370


$
1,743,176Cost of sales


883,620



994,370



1,428,641Gross profit


276,314



230,000



314,535Selling, general, and administrative expenses


320,226



363,636



524,457Impairment of goodwill










166,680Impairment of trade names


1,100



39,050



35,271Operating loss


(45,012
)


(172,686
)


(411,873
)Interest expense


3,172



5,342



12,510Other income, net


264



1,549



5,425Loss from continuing operations before income tax benefit


(47,920
)


(176,479
)


(418,958
)Income tax benefit


(8,894
)


(67,793
)


(3,157
)Net loss from continuing operations


(39,026
)


(108,686
)


(415,801
)Net earnings from discontinued operations










29,920Net loss

$
(39,026
)

$
(108,686
)

$
(385,881
)Net earnings (loss) per common share  basic and
    diluted:Net loss from continuing operations

$
(0.76
)

$
(2.25
)

$
(8.53
)Net earnings from discontinued operations










0.61Net loss

$
(0.76
)

$
(2.25
)

$
(7.92
)Weighted average shares of common stock outstanding:Basic and diluted


51,116



48,302



48,739    34




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  CONSOLIDATED STATEMENTS OF CASH
    FLOWS
  Year Ended December 31,2010


2009


2008(Dollars in thousands)Cash flows from operating activities:Net loss

$
(39,026
)

$
(108,686
)

$
(385,881
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Depreciation and amortization


23,851



24,682



29,049Compensation expense (credit) related to stock option grants and
    restricted stock awards


2,512



(524
)


4,310Gain on sale of discontinued operations










(48,109
)Impairment of intangible assets


1,100



39,050



201,951Other, net


(691
)


(399
)


12,618Changes in operating assets and liabilities:Accounts receivable


12,573



50,764



110,073Income taxes receivable


57,381



(20,886
)


(31,041
)Inventories


(23,613
)


126,944



66,548Prepaid expenses and other assets


(1,565
)


5,164



4,741Accounts payable and other accrued expenses


(18,756
)


(32,769
)


24,295Deferred income taxes


(2,560
)


(8,034
)


41,799Other long-term liabilities


(5,905
)


2,293



11,029Net cash provided by operating activities


5,301



77,599



41,382Cash flows from investing activities:Acquisition of stores, net of cash acquired










(14,659
)Proceeds from the sale of business, net of cash sold










73,359Proceeds from the disposal of assets


2,779



4,480



3,363Additions to property, plant, equipment, and software


(21,930
)


(9,777
)


(18,977
)Net cash provided (used) by investing activities


(19,151
)


(5,297
)


43,086Cash flows from financing activities:Payments of long-term debt


(18,000
)


(95,000
)


(110,800
)Restricted cash used for the payment of long-term debt










20,000Payments of cash dividends










(5,844
)Other


(58
)


(10
)


(8
)Net cash used in financing activities


(18,058
)


(95,010
)


(96,652
)Net decrease in cash and cash equivalents


(31,908
)


(22,708
)


(12,184
)Cash and cash equivalents at beginning of year


83,872



106,580



118,764Cash and cash equivalents at end of year

$
51,964


$
83,872


$
106,580Supplemental Disclosure:Cash payments (refunds) for income taxes, net

$
(63,294
)

$
(36,731
)

$
2,039Cash payments for interest expense

$
2,780


$
5,234


$
13,372    35




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  CONSOLIDATED STATEMENTS OF SHAREHOLDERS
    EQUITY AND
 COMPREHENSIVE
    LOSS
  Year Ended December 31,2010


2009


2008(Dollars in thousands)Common Stock:Beginning balance

$
56,483


$
56,483


$
56,483Pension contribution activity


4,132







Ending balance

$
60,615


$
56,483


$
56,483Paid-In Capital:Beginning balance

$
224,133


$
224,419


$
226,773Stock plans activity


4,764



(286
)


(2,354
)Pension contribution activity


(17,952
)






Ending balance

$
210,945


$
224,133


$
224,419Retained Earnings:Beginning balance

$
267,829


$
376,515


$
768,731Net loss


(39,026
)


(108,686
)


(385,881
)Adjustment to adopt EITF
    06-4










(491
)Cash dividends (per share 2008-$0.12)










(5,844
)Ending balance

$
228,803


$
267,829


$
376,515Accumulated Other Comprehensive Loss:Beginning balance

$
(111,471
)

$
(116,988
)

$
(26,965
)Other comprehensive income (loss)


(4,204
)


5,517



(90,023
)Ending balance

$
(115,675
)

$
(111,471
)

$
(116,988
)Treasury Stock:Beginning balance

$
(174,183
)

$
(173,935
)

$
(180,256
)Stock plans activity


(2,310
)


(248
)


6,321Pension contribution activity


51,372







Ending balance

$
(125,121
)

$
(174,183
)

$
(173,935
)Total Shareholders Equity

$
259,567


$
262,791


$
366,494Comprehensive Loss:Net loss

$
(39,026
)

$
(108,686
)

$
(385,881
)Other comprehensive income (loss), net of tax:Pension liability


(5,705
)


4,330



(85,632
)Foreign currency translation


1,501



1,187



(4,391
)Other Comprehensive Income (Loss)


(4,204
)


5,517



(90,023
)Total Comprehensive Loss

$
(43,230
)

$
(103,169
)

$
(475,904
)    36




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in
    thousands except per share data)
  1.
    THE
    COMPANY        2.
    SIGNIFICANT
    ACCOUNTING POLICIES        Cash and Cash
    Equivalents
    Allowance for
    Doubtful Accounts
   37




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Inventories
  (first-in,
  Property,
    Plant, and Equipment
    Fair Value of
    Financial Instruments
      Revenue
    Recognition
    Advertising
    Costs
    Reclassifications
    205-20 Discontinued Operations
  3.
    ACQUISITIONS   38




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      4.
    RESTRUCTURING AND
    ASSET IMPAIRMENT CHARGES      Year Ended December 31,2010


2009


2008Restructuring charges:Facility costs to shutdown, cleanup, and vacate

$



$
250


$
586Termination benefits


5,858



9,119



13,132Closed store occupancy and lease costs


6,782



16,008



37,053Loss (gain) on the sale of assets


(1,050
)


337



(724
)11,590



25,714



50,047Impairment charges


4,046



2,608



18,317$
15,636


$
28,322


$
68,364Statement of Operations classification:Cost of sales

$
4,472


$
8,215


$
7,007Selling, general, and administrative expenses


11,164



20,107



61,357$
15,636


$
28,322


$
68,364      39




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2010


2009Accrual for closed store lease liabilities at beginning of
    period:

$
26,645


$
27,918Charges to expense


2,426



7,537Less cash payments


7,367



8,810Accrual for closed store lease liabilities at end of period

$
21,704


$
26,645       MinimumLeasePayments -Year

Closed Stores2011

$
8,0832012


8,2852013


8,1852014


7,0742015


3,760thereafter


1,833$
37,220     Year Ended December 31,2010


2009Accrual for termination benefits at beginning of period

$
4,138


$
10,012Charges to expense


5,858



9.119Less cash payments


5,046



14,993Accrual for termination benefits at end of period

$
4,950


$
4,138     5.
    INVENTORIES    December 31,


December 31,2010


2009Finished products

$
156,129


$
142,982Work-in-process


16,395



15,320Raw materials


77,167



67,776$
249,691


$
226,078  40




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  6.
    PROPERTY, PLANT,
    AND EQUIPMENT    December 31,


December 31,2010


2009Land

$
11,375


$
15,318Buildings and improvements


190,855



186,884Machinery and equipment


217,404



251,046419,634



453,248Less accumulated depreciation


294,768



318,896$
124,866


$
134,352     7.
    TRADE
    NAMES    December 31,


December 31,2010


2009Beginning balance

$
87,608


$
127,300Impairment


(1,100
)


(39,050
)Income tax benefit of deductible goodwill






(642
)Ending balance

$
86,508


$
87,608        41




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        8.
    LONG-TERM
    DEBT    December 31,


December 31,2010


2009Asset-based loan

$
77,000


$
95,000Less: current maturities






17,000Long-term debt

$
77,000


$
78,000            42




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Form 10-K
  Form 10-Q
  9.
    LIQUIDITY     43




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Form 10-Q
  10.
    EMPLOYEE
    BENEFITS    Year Ended December 31,2010


2009


2008Defined benefit plans

$
10,911


$
7,038


$
3,906Defined contribution plan (401k plan)  company match


6,522



7,269



9,245Other


491



604



425$
17,924


$
14,911


$
13,576   Company-Sponsored
    Defined Benefit Plans
     44




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      December 31, 2010


December 31, 2009Qualified


Non-Qualified


Qualified


Non-QualifiedPlan


Plan


Plan


PlanProjected benefit obligation:Beginning of year

$
421,013


$
21,034


$
400,291


$
21,366Service cost


2,419







2,306



2Interest cost


24,656



1,197



24,681



1,258Actuarial loss


13,912



688



17,030



548Benefits paid


(24,587
)


(2,223
)


(23,402
)


(2,140
)Curtailments










107



End of year

$
437,413


$
20,696


$
421,013


$
21,034Fair value of plan assets:Beginning of year

$
305,525


$



$
284,376


$
Actual return on plan assets


27,839







44,551



Employer contributions


43,961



2,223







2,140Benefits paid


(24,587
)


(2,223
)


(23,402
)


(2,140
)End of year

$
352,738


$



$
305,525


$
Accrued pension cost

$
84,675


$
20,696


$
115,488


$
21,034Accumulated benefit obligation

$
437,413


$
20,696


$
420,732


$
21,034    45




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2010


2009


2008Service cost-benefits earned during the period

$
2,419


$
2,308


$
3,539Interest cost on the projected benefit obligation


25,853



25,939



25,740Expected return on plan assets


(24,909
)


(26,139
)


(27,610
)Net amortization and deferral


7,480



4,821



2,685Curtailment (gain)/loss


68



109



(448
)Net periodic pension expense

$
10,911


$
7,038


$
3,906       Year Ended December 31,2010


2009


2008Current year actuarial loss

$
13,252


$
493


$
89,413Amortization of actuarial loss


(7,453
)


(4,794
)


(2,631
)Amortization of prior service cost


(94
)


(29
)


(296
)Total recognized in other comprehensive loss

$
5,705


$
(4,330
)

$
86,486     December 31,


December 31,2010


2009Net actuarial loss

$
137,681


$
131,882Prior service cost






94Tax benefits


(19,536
)


(19,536
)$
118,145


$
112,440       2010

2009

2008Assumptions used to determine net pension expense for the year
    ended December 31:Expected long-term rate of return on plan assets


7.50
%


7.50
%


7.50
%Average discount rate


6.00
%


6.25
%


6.25
%Long-term rate of compensation increase


1.50
%


1.50
%


3.50
%Assumptions used to determine benefit obligation as of December
    31:Average discount rate


5.75
%


6.00
%


6.25
%Long-term rate of compensation increase


N/A



1.50
%


1.50
%  46




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Percentage of Plan AssetsDecember 31,


December 31,Target


2010


2009Global equity securities


50-60
%


63
%


56
%Fixed income securities


40-50
%


37
%


44
%100
%


100
%       Fair Value of Plan Assets as of December 31, 2010Total


Level 1


Level 2


Level 3Furniture Brands common stock

$
31,488


$
31,488


$



$
Interests in pooled funds:Short term investment funds


10,554







10,554



Domestic large cap equity funds


139,605







139,605



Domestic midcap equity funds


17,978







17,978



International equity funds


31,974







31,974



Fixed income funds


121,139







121,139



Total fair value of plan assets

$
352,738


$
31,488


$
321,250


$
   47




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair Value of Plan Assets as of December 31, 2009Total


Level 1


Level 2


Level 3Interests in pooled funds:Short term investment funds

$
10,636


$



$
10,636


$
Domestic large cap equity funds


123,908







123,908



Domestic midcap equity funds


22,791







22,791



International equity funds


25,461







25,461



Fixed income funds


122,729







122,729



Total fair value of plan assets

$
305,525


$



$
305,525


$
     Year

Amount2011

$
27,9102012

$
28,4282013

$
28,9882014

$
29,5652015

$
30,1702016  2020

$
157,762   Defined
    Contribution Plan
    11.
    STOCK OPTIONS,
    RESTRICTED STOCK, AND RESTRICTED STOCK UNITS   48




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    WeightedWeighted


AverageAverage


Remaining


AggregateExercise


Contractual


IntrinsicShares


Price


Term (Years)


ValueOutstanding at December 31, 2009


3,072,717


$
18.06Granted


651,720



6.43Exercised






Forfeited or expired


(1,103,170
)


16.15Outstanding at December 31, 2010


2,621,267


$
15.97



5.0


$
92Exercisable at December 31, 2010


1,584,027


$
21.80



3.8


$
22       2010

2009

2008Risk-free interest rate


1.8
%


2.3
%


2.6
%Expected dividend yield


0.0
%


0.0
%


1.4
%Expected life (in years)


4.0



4.1



5.1Expected volatility


91.8
%


91.3
%


41.1
%        49




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    WeightedAverageGrant-DateShares


Fair ValueOutstanding at December 31, 2009


197,553


$
9.48Granted


791,826



7.82Vested


(68,599
)


11.00Forfeited


(93,822
)


8.76Outstanding at December 31, 2010


826,958


$
7.85           Units with


Units withShare Price


Share PriceObjective of


Objective of$6.26


$9.39Outstanding at December 31, 2009


1,259,958



1,259,958Granted






30,000Vested


(1,259,958
)


Forfeited






(39,935
)Outstanding at December 31, 2010






1,250,023      50




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Risk-free interest rate


1.0
%Expected dividend yield


0.0
%Expected volatility


102.4
%     12.
    COMMON
    STOCK        Year Ended December 31,2010


2009


2008Weighted average shares used for basic earnings (loss) per
    common share


51,115,516



48,302,027



48,738,788Effect of dilutive securities:Stock options










Weighted average shares used for diluted earnings (loss) per
    common share


51,115,516



48,302,027



48,738,788      51




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        13.
    INCOME
    TAXES  Year Ended December 31,2010


2009


2008Loss from continuing operations before income tax benefit:United States operations

$
45,062


$
168,429


$
411,558Foreign operations


2,858



8,050



7,400$
47,920


$
176,479


$
418,958     Year Ended December 31,2010


2009


2008Current:Federal

$
(5,031
)

$
(55,800
)

$
(50,186
)State and local


(1,436
)


(3,467
)


(600
)Foreign


81



493



539(6,386
)


(58,774
)


(50,247
)Deferred


(2,508
)


(9,019
)


47,090Income tax benefit

$
(8,894
)

$
(67,793
)

$
(3,157
)  52




---



##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2010


2009


2008Federal corporate statutory rate


(35.0
)%


(35.0
)%


(35.0
)%State and local income taxes, net of federal tax benefit


(4.0
)


(9.2
)


(1.0
)Foreign rate differential


1.3



2.1



0.6Non-deductible goodwill










6.4Valuation allowance


20.4



5.3



28.2Other


(1.3
)


(1.6
)


(0.0
)Effective income tax rate


(18.6
)%


(38.4
)%


(0.8
)%     December 31,


December 31,2010


2009Deferred tax assets attributable to:Expense accruals

$
48,716


$
60,619Employee pension and other benefit plans


44,816



58,059Property, plant, and equipment


933



3,240Goodwill


3,638



5,884Net operating loss and tax credit carry forward


77,076



38,320Other


7,498



8,311Total deferred tax assets


182,677



174,433Deferred tax liabilities attributable to:Intangible assets


(26,404
)


(27,023
)Inventory costs capitalized


(2,325
)


(1,019
)Prepaid expenses


(2,495
)


(2,153
)Total deferred tax liabilities


(31,224
)


(30,195
)Valuation allowance


(174,630
)


(169,975
)Net deferred tax liabilities

$
(23,177
)

$
(25,737
)        53




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##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      non-U.S. income
    2010


2009


2008Beginning balance  January 1

$
8,301


$
10,297


$
9,559Tax positions related to prior yearsAdditions


24



22



1,173Reductions


(48
)


(201
)


Tax positions related to current yearAdditions


32



151



1,567Reductions










Settlements


(139
)






(419
)Lapses in statute of limitations


(1,416
)


(1,968
)


(1,583
)Ending balance  December 31

$
6,754


$
8,301


$
10,297       14.
    OTHER LONG-TERM
    LIABILITIES   54




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##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   15.
    OTHER
    COMPREHENSIVE INCOME (LOSS)    Year Ended December 31,2010


2009


2008Pension liability

$
(5,705
)

$
4,330


$
(86,486
)Foreign currency translation


1,501



1,187



(4,391
)(4,204
)


5,517



(90,877
)Income tax benefit










(854
)$
(4,204
)

$
5,517


$
(90,023
)     December 31,


December 31,2010


2009Pension liability

$
(118,145
)

$
(112,440
)Foreign currency translation


2,470



969$
(115,675
)

$
(111,471
)   16.
    LEASES    Year Ended December 31,2010


2009


2008Rent expense

$
63,846


$
77,956


$
91,433Sublease income


(8,388
)


(7,547
)


(8,692
)Net rent expense

$
55,458


$
70,409


$
82,741       Minimum


Minimum


TotalLease


Lease


Minimum





Net MinimumPayments


Payments


Lease


Sublease


LeaseYear

Open Facilities


Closed Stores


Payments


Income


Payments2011

$
42,794


$
8,083


$
50,877


$
7,627


$
43,2502012


36,972



8,285



45,257



7,209



38,0482013


28,317



8,185



36,502



5,538



30,9642014


21,246



7,074



28,320



4,158



24,1622015


12,697



3,760



16,457



1,372



15,085thereafter


28,142



1,833



29,975







29,975$
170,168


$
37,220


$
207,388


$
25,904


$
181,484  55




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##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    17.
    CONTINGENT
    LIABILITIES        2010


2009


2008Beginning balance

$
5,462


$
10,662


$
11,024Additions to reserves


8,192



10,777



19,014Less deductions from reserves


9,146



15,977



19,376Ending balance

$
4,508


$
5,462


$
10,662  56




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##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  18.
    OTHER INCOME,
    NET    2010


2009


2008Interest income

$
1,368


$
1,982


$
2,845Other, net


(1,104
)


(433
)


2,580$
264


$
1,549


$
5,425   19.
    DISCONTINUED
    OPERATIONS  Discontinued
    Operations.
    :
  2010


2009


2008Net sales

$



$



$
15,348Earnings before income tax expense










1,734Net earnings

$



$



$
1,052   20.
    CHANGE IN
    ESTIMATES      21.
    RECENTLY ISSUED
    STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS   57




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##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          The FASB
    Accounting Standards Codification and the Hierarchy of
    Generally Accepted Accounting Principles, a replacement of FASB
    Statement No. 162
    22.
    CORRECTION OF
    IMMATERIAL ERRORS   58




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##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    23.
    QUARTERLY
    FINANCIAL INFORMATION  (UNAUDITED)    Fourth

Third

Second

FirstQuarter

Quarter

Quarter

QuarterYear ended December 31, 2010:Net sales

$
276,093


$
271,987


$
289,463


$
322,391Gross profit

$
50,079


$
67,395


$
74,391


$
84,449Net earnings (loss)

$
(44,677
)

$
(2,094
)

$
4,248


$
3,497Earnings (loss) per common share  Diluted

$
(0.82
)

$
(0.04
)

$
0.09


$
0.07Common stock price range:High

$
5.98


$
6.13


$
9.30


$
7.15Low

$
4.37


$
4.53


$
5.22


$
4.09Year ended December 31, 2009:Net sales

$
285,574


$
293,662


$
288,263


$
356,871Gross profit

$
20,289


$
67,742


$
61,628


$
80,341Net earnings (loss)

$
(64,981
)

$
(23,536
)

$
(15,993
)

$
(4,176
)Earnings (loss) per common share  Diluted

$
(1.35
)

$
(0.48
)

$
(0.33
)

$
(0.09
)Common stock price range:High

$
5.70


$
6.04


$
4.44


$
2.99Low

$
3.61


$
2.47


$
1.54


$
0.70         
    We incurred costs of $2,162 in 2010, reduced from $4,124 in
    2009, related to downtime in our factories.
    We incurred expense of $3,252 in 2010, reduced from $10,725 in
    2009, which related primarily to occupancy costs, lease
    termination costs, and lease liabilities for closed retail
    locations.
    We incurred charges of $3,686 in 2010, compared to $3,608 in
    2009, related to accounts receivable. 59




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##### Table of Contents



FURNITURE BRANDS
    INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    We incurred charges of $6,734 in 2010 and $32,981 in 2009 to
    reduce the carrying value of inventory to market value, which
    was driven by our efforts to accelerate the sale of slow-moving
    inventory.
    We incurred charges of $4,809 in 2010 and $4,877 in 2009 related
    to reductions in workforce of direct labor employees and
    indirect support employees in our manufacturing facilities and
    employees in our administrative offices.
    We incurred costs and charges of $834 in 2010, compared to
    $2,950 in 2009, associated with the closing of manufacturing
    facilities and related impairment charges on idle facilities.
    We incurred charges of $1,100 in 2010 and $39,050 in 2009
    related to impairment of our intangible assets.
    We recorded an adjustment to correct immaterial errors from
    prior periods that increased selling, general and administrative
    expenses by $10,479 in 2009. We concluded that the impact on the
    current and prior periods was not material. See Note 22.
    Correction of Immaterial Errors for further information.
    In 2010 we recorded an income tax benefit of $1,706 compared to
    $69,969 in 2009. In both periods, the income tax benefit of net
    operating loss carry forwards generated during the period was
    offset by the recording of a valuation allowance. The income tax
    benefit recognized in 2009 was driven by additional net
    operating losses generated during the period and our ability to
    utilize remaining carry back capacity from previous tax years as
    a result of the Worker, Home Ownership, and Business Assistance
    Act of 2009.   60




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
     Internal Control  Integrated Framework
        Internal Control 
    Integrated Framework
    KPMG
    LLP
    61




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements With Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  (a)
    Managements
    Report on Internal Control over Financial Reporting  Rule 13a-15(f)
              Form 10-K.
  (b)
    Changes in
    Internal Control over Financial Reporting    (c)
    Evaluation of
    Disclosure Controls and Procedures   62




---



##### Table of Contents



Rules 13a-15(e) 15d-15(e) Form 10-K.
    Item 9B.
    Other
    Information    PART III
  Item 10.
    Directors,
    Executive Officers and Corporate Governance  Form 10-K
  www.furniturebrands.com
  Item 11.
    Executive
    Compensation  Form 10-K
  Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholders Matters   63




---



##### Table of Contents



Equity
    Compensation Plan Information
    (C)Number of Securities(A)

(B)

Remaining Available forNumber of Securities

Weighted-Average

Future Issuanceto be Issued Upon

Exercise Price of

Under EquityExercise

Outstanding

Compensation Plansof Outstanding Options,

Options,

(Excluding SecuritiesPlan Category

Warrants and Rights

Warrants and Rights

Reflected in Column (A))Equity compensation
    plans approved by
    security holders


3,261,128
(1)


15.97



3,559,885
(2)Equity compensation
    plans not approved
    by security holders










Total


3,261,128
(1)


15.97



3,559,885
(2)     (1)
    
    Consists of 2,621,267 shares of common stock underlying
    outstanding options granted under our 1992 Stock Option Plan,
    our 1999 Long-Term Incentive Plan, our 2008 Incentive Plan and
    our 2010 Omnibus Incentive Plan, 584,216 shares underlying
    performance shares granted under our 2010 Omnibus Incentive Plan
    and 55,645 shares underlying restricted stock units granted
    under our 2005 Restricted Stock Plan for Outside Directors. The
    performance shares represent the maximum number of shares of
    common stock that may be issued upon the vesting of these
    performance shares if maximum three-year performance goals are
    achieved in 2012. The performance shares and restricted stock
    are disregarded for purposes of computing the weighted-average
    exercise price in column (B) above.(2)
    
    Consists of 2,063,063 shares available for grant under our
    2010 Omnibus Incentive Plan and 1,496,822 shares available
    for grant under our 2010 Employee Stock Purchase Plan.  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   64




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules    Financial Statements:
              Financial Statement Schedules:
      Exhibits:
  Form 10-K.
 65




---



##### Table of Contents



Schedule II



FURNITURE BRANDS
    INTERNATIONAL, INC.Valuation and Qualifying Accounts AdditionsBalance at


Charged to


Deductions


Balance atBeginning


Costs and


From


End ofDescription

of Period


Expenses


Reserves


Period(Dollars in thousands)Allowances deducted from receivables on balance sheet:Year Ended December 31, 2010

$
26,225


$
9,172


$
(17,321
)

$
18,076Year Ended December 31, 2009

$
34,372


$
23,712


$
(31,859
)

$
26,225Year Ended December 31, 2008

$
45,467


$
60,054


$
(71,149
)

$
34,372  66




---



##### Table of Contents



SIGNATURES
    Furniture Brands International, Inc.By: /s/  Ralph
    P.
    ScozzafavaRalph
    P. ScozzafavaDate: March 3, 2011

Chairman of the Board and Chief Executive Officer     Signature

Title

Date/s/  Ralph
    P. ScozzafavaRalph
    P. Scozzafava

Chairman of the Board, Chief Executive Officer and Director 
    (Principal Executive Officer)

March 3, 2011/s/  Steven
    G. RollsSteven
    G. Rolls

Chief Financial Officer
    (Principal Financial Officer)

March 3, 2011/s/  Richard
    R. IsaakRichard
    R. Isaak

Controller
    (Principal Accounting Officer)

March 3, 2011/s/  Wilbert
    G. Holliman, Jr.Wilbert
    G. Holliman, Jr.

Director

March 3, 2011/s/  John
    R. Jordan, Jr.John
    R. Jordan, Jr.

Director

March 3, 2011/s/  Ira
    D. KaplanIra
    D. Kaplan

Director

March 3, 2011/s/  Ann
    S. LieffAnn
    S. Lieff

Director

March 3, 2011/s/  Maureen
    A. McGuireMaureen
    A. McGuire

Director

March 3, 2011/s/  Aubrey
    B. PattersonAubrey
    B. Patterson

Director

March 3, 2011 67




---



##### Table of Contents



Signature

Title

Date/s/  George
    E. RossGeorge
    E. Ross

Director

March 3, 2011/s/  Alan
    G. SchwartzAlan
    G. Schwartz

Director

March 3, 2011/s/  James
    M. ZimmermanJames
    M. Zimmerman

Director

March 3, 2011  68




---



##### Table of Contents



EXHIBIT INDEX
  IncorporatedFiled with



by ReferenceExhibit



the Form



Filing Date with

ExhibitIndex No.

Exhibit Description

10-K

Form

the SEC

No.3
.1

Restated Certificate of Incorporation of the Company, as amended



10-Q

May 14, 2002

33
.2

By-Laws of the Company, as amended effective as of August 5, 2010



8-K

August 10, 2010

3.13
.3

Certificate of Designation Series B Junior Participating
    Preferred Stock of the Company



8-K

August 4, 2009

3.14
.1

Amended and Restated Stockholder Rights Agreement, dated as of
    February 26, 2010, between the Company and American Stock
    Transfer and Trust Company, LLC, as Rights Agent



8-K

March 1, 2010

4.110
.1*

1999 Long-Term Incentive Plan, as amended



S-8

September 27, 2002

4(f)10
.2*

Form of Stock Option Grant Letter



8-K

February 2, 2005

10(b)10
.3*

Form of Restricted Stock Grant Letter



8-K

February 11, 2005

10(c)10
.4*

2005 Long-Term Performance Bonus Plan



8-K

May 3, 2005

10(a)10
.5*

2008 Incentive Plan



S-8

December 19, 2008

4.110
.6*

Form of Restricted Stock Unit Agreement under the 2008 Incentive
    Plan



8-K

December 22, 2008

10.110
.7*

Form of Restricted Stock Award Agreement under the 2008
    Incentive Plan



10-Q

May 8, 2009

10.410
.8*

Form of Nonqualified Stock Option Agreement under the 2008
    Incentive Plan



10-Q

May 8, 2009

10.510
.9*

Form of Performance Based Restricted Stock Award Agreement under
    the 2008 Incentive Plan



10-Q

May 8, 2009

10.610
.10*

2010 Omnibus Incentive Plan



S-8

May 6, 2010

4.110
.11*

Form of Restricted Stock Award Agreement under the 2010 Omnibus
    Incentive Plan



8-K

May 11, 2010

10.210
.12*

Form of Restricted Stock Unit Agreement under the 2010 Omnibus
    Incentive Plan



8-K

May 11, 2010

10.310
.13*

Form of Nonqualified Stock Option Agreement under the 2010
    Omnibus Incentive Plan



8-K

May 11, 2010

10.410
.14*

Form of Incentive Stock Option Agreement under the 2010 Omnibus
    Incentive Plan



8-K

May 11, 2010

10.510
.15*

Form of Performance Share Agreement under the 2010 Omnibus
    Incentive Plan



8-K

May 11, 2010

10.610
.16*

2010 Employee Stock Purchase Plan



S-8

May 6, 2010

4.210
.17

Form of Indemnification Agreement between the Company and the
    Companys directors



10-Q

August 7, 2009

10.110
.18*

Amended and Restated Restricted Stock Plan for Outside
    Directors, dated as of May 7, 2009



10-Q

August 7, 2009

10.210
.19*

Amended and Restated Executive Employment Agreement dated
    February 4, 2010, between the Company and Ralph P.
    Scozzafava



8-K

February 10, 2010

10.110
.20*

Form of Change of Control Agreement effective as of
    January 1, 2011



8-K

August 10, 2010

10.110
.21*

Executive Severance Plan effective July 1, 2010



8-K

March 1, 2010

10.1 69




---



##### Table of Contents



IncorporatedFiled with



by ReferenceExhibit



the Form



Filing Date with

ExhibitIndex No.

Exhibit Description

10-K

Form

the SEC

No.10
.22*

Furniture Brands Supplemental Executive Retirement Plan, dated
    as of January 1, 2002



10-K

March 25, 2003

10(v)10
.23*

First Amendment to the Furniture Brands Supplemental Executive
    Retirement Plan, effective December 31, 2005



10-Q

May 8, 2009

10.110
.24*

Second Amendment to the Furniture Brands Supplemental Executive
    Retirement Plan, effective January 1, 2005



10-Q

May 8, 2009

10.210
.25*

Third Amendment to the Furniture Brands Supplemental Executive
    Retirement Plan, effective March 14, 2008



10-Q

May 8, 2009

10.310
.26*

Deferred Compensation Plan, restated effective January 1,
    2011



10-Q

November 5, 2010

10.510
.27*

Agreement between W.G. Holliman and the Company dated as of
    June 23, 2008



10-K

March 3, 2010

10.2410
.28+

Credit Agreement, dated August 9, 2007, among the Company,
    Broyhill Furniture Industries, Inc., HDM Furniture Industries,
    Inc., Lane Furniture Industries, Inc., and Thomasville Furniture
    Industries, Inc, the Loan Parties named therein (collectively,
    the Loan Parties), the Lender Parties thereto, and
    JPMorgan Chase Bank, N.A., as Administrative Agent



10-Q

November 5, 2010

10.410
.29

First Amendment, dated March 17, 2008, to Credit Agreement,
    dated August 9, 2007, among the Company, the Loan Parties,
    the Lender Parties thereto, and JPMorgan Chase Bank, N.A., as
    Administrative Agent



10-Q

May 12, 2008

10.210
.30

Amendment No. 2 to Credit Agreement and Waiver, dated
    February 20, 2009, among the Company, the Loan Parties, the
    Lender Parties thereto, and JPMorgan Chase Bank, N.A., as
    Administrative Agent



10-K

March 2, 2009

10.2710
.31

Waiver dated as of September 24, 2010, among the Company,
    the Loan Parties, the Lender Parties thereto, and JPMorgan Chase
    Bank, N.A., as Administrative Agent



8-K

September 27, 2010

10.110
.32

Registration Rights Agreement dated May 21, 2010, between
    the Company and Evercore Trust Company, N.A.



8-K

May 24, 2011

10.110
.33

Registration Rights Agreement dated September 2, 2010,
    between the Company and Evercore Trust Company, N.A.



8-K

September 3, 2010

10.121
.1

List of Subsidiaries of the Company

X23
.1

Consent of Independent Registered Public Accounting Firm

X31
.1

Certification of Chief Executive Officer of the Company,
    Pursuant to
    Rule 13a-14(a)/15d-14(a)

X31
.2

Certification of Chief Financial Officer (Principal Financial
    Officer) of the Company, Pursuant to
    Rule 13a-14(a)/15d-14(a)

X 70




---



##### Table of Contents



IncorporatedFiled with



by ReferenceExhibit



the Form



Filing Date with

ExhibitIndex No.

Exhibit Description

10-K

Form

the SEC

No.32
.1

Certification of Chief Executive Officer of the Company,
    Pursuant to 18 U.S.C. Section 1350

X32
.2

Certification of Chief Financial Officer (Principal Financial
    Officer) of the Company, Pursuant to 18 U.S.C.
    Section 1350

X     *
    
    Indicates management contract or compensatory plan, contract or
    arrangement.+
    
    A request for confidential treatment has been submitted with
    respect to this exhibit. The copy filed as an exhibit omits the
    information subject to the request for confidential treatment. 71