<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)

[X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 29, 2001

                                       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            1-8884
                      --------------------------------

                              BUSH INDUSTRIES, INC.
------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

       Delaware                                         16-0837346
----------------------                      ----------------------------------
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

 One Mason Drive, Jamestown, New York                     14702
-----------------------------------------   ----------------------------------
  (Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including area code     (716) 665-2000
                                                   ---------------------------

Securities registered pursuant to Section 12(b) of the Act:

            Title of each class       Name of each exchange on which registered

         Class A Common Stock                  New York Stock Exchange
---------------------------------     -----------------------------------------

           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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X    No_____
                                      ---

<PAGE>

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]

As of December 29, 2001, 10,379,843 shares of Class A Common Stock were
outstanding and the aggregate market value (based on the closing price on the
New York Stock Exchange on December 28, 2001 which was $10.85 per share) of the
Class A Common Stock held by non-affiliates was approximately $55,565,000. As of
December 29, 2001, 3,395,365 shares of Class B Common Stock were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's definitive Proxy Statement for the Annual Meeting
of Stockholders scheduled to be held on May 16, 2002, are incorporated by
reference into Part III hereof. Certain exhibits listed in Part IV of this
Annual Report on Form 10-K are incorporated by reference from prior filings made
by the Registrant under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934.

                                        2

<PAGE>

                                     PART I
                                     ------

ITEM 1.  BUSINESS
------   --------

(a)  GENERAL DEVELOPMENT OF BUSINESS
     -------------------------------

     Bush Industries, Inc. (the "Company" or the "Registrant"), was incorporated
under the laws of the State of Delaware on February 5, 1985. The Company was a
successor to a corporation of the same name incorporated under the laws of the
State of New York in 1959. The Company's principal place of business is located
at One Mason Drive, Jamestown, New York 14702.

     On June 30, 1997, the Company acquired a 51% interest in the Rohr Gruppe, a
German furniture manufacturer, which name was subsequently changed to Rohr-Bush
GmbH & Co. ("Rohr-Bush"). On February 29, 2000, the Company executed a
definitive agreement with certain members of the Rohr family to acquire the
family's approximately 49% remaining interest in Rohr-Bush. The transaction
closed in October 2000. The Bush Furniture Europe segment is comprised of
Rohr-Bush.

     In July 2001, the Company announced a plan to reorganize its operations
into four operating segments based principally on the natural alignment of its
customers, markets and products. The four operating segments, which are
discussed in more detail below, are as follows: Bush Business Furniture, Bush
Furniture, Bush Furniture Europe, and Bush Technologies. This reorganization was
substantially completed by the end of 2001.

(b)  FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
     ---------------------------------------------

     The Company operates its business in four reportable segments: (1) Bush
Business Furniture, which concentrates on the business office and the home
office markets with sales to the office superstore and dealer channels; (2) Bush
Furniture, which focuses on home entertainment, home office and other home
furnishings products; (3) Bush Furniture Europe, which sells commercial, home
office and other furnishings in the European market; and (4) Bush Technologies,
which is focused on the cell phone accessories after-market, as well as the
utilization of surface technologies in automotive interiors, cosmetics, sporting
goods and consumer electronics. The Company operates several manufacturing and
warehouse facilities throughout North America and in Germany.

(c)  NARRATIVE DESCRIPTION OF BUSINESS
     ---------------------------------

     The Company's furniture segments are engaged primarily in the design,
manufacture and sale of ready-to-assemble ("RTA") and assembled furniture
products in various price ranges for both business and consumer use. The
Company's furniture product line includes audio/video home entertainment
centers, audio cabinets, television/VCR carts, wall units, bookcases, bedroom
furniture, computer desks and workstations, desks, hutches, armoires and file
cabinets.

                                        3

<PAGE>

     The Company's diverse RTA furniture product line is sold by all three
furniture segments. RTA product is designed for ease of assembly, to ensure that
such products can be readily assembled by following simple, easy to read
diagramed instructions, contained with each RTA product sold. To enhance
customer service, the Company maintains a toll-free number in the United States
to assist consumers with any questions with respect to the assembly of Bush
products. Assembled furniture sold by Bush Furniture Europe is designed to be a
high quality product that appeals to popular price points. Assembled commercial
office furniture sold by Bush Business Furniture is designed to meet industry
(ANSI/BIFMA) standards.

     The Company's surface technologies segment is engaged in the finishing and
decoration of various substrate materials through painting, the application of
the HydroGraFix process, and the use of advanced surface technologies. The
Company, through its wholly owned subsidiary, The ColorWorks, Inc., holds the
master license to the "HydroGraFix" film processing technology in the Western
Hemisphere, portions of Central Europe and South Africa. The HydroGraFix process
permits the decoration of a variety of geometric shapes, including complex
three-dimensional parts. Cellular phones, laptop computers, sporting goods such
as firearms and archery equipment, cosmetics and automotive interior components
are examples of major product lines decorated by Bush Technologies. With respect
to cell phones, Bush Technologies has also introduced the concept of being a
supplier of both functional accessories and decorated faceplates from multiple
manufactures to major retailers.

Marketing and Distribution

     The Company's furniture products are marketed to a variety of retailers for
sale to both business and consumer end-users. Bush Business Furniture's
customers include office superstores, office furniture retailers, wholesalers,
contract stationers and dealers. Bush Furniture's customers include national
chains, electronic and computer superstores, discount mass merchants, home
furnishings retailers, department stores, home improvement centers and
independent wholesale distributors. Bush Furniture Europe's customers include
buying groups, office furniture retailers, office supply superstores and home
furnishings retailers. The Company's furniture products are sold both through
independent manufacturers' representatives and directly by the Company's sales
personnel. The Company's furniture products are currently sold to approximately
2,200 customers, and the Company estimates that its products are currently
carried in approximately 12,000 retail outlets.

     Bush Technologies offers finishing and decorating processing services to
manufacturers and end-users of various products. Bush Technologies generally
provides such services directly and also sublicenses the "HydroGraFix" film
processing technology to third parties in varying fields of application and/or
geographic areas. Functional cell phone accessories and decorated faceplates
from multiple manufactures are sold to major retailers.

Sources and Availability of Raw Materials

     The Company purchases the raw materials used in the production of its
furniture at each manufacturing location from a variety of sources on a global
basis. The Company believes that none of the materials required for its
furniture manufacturing operations are proprietary in nature and that

                                        4

<PAGE>

an adequate supply of raw materials is available from multiple sources.

Trademarks and Design Patents

     The Company either owns or has applied for various trade names and
trademarks in the United States and abroad, for use with its furniture product
lines. The Company believes that its trade names and trademarks are well
recognized within the furniture industry. The Company also believes that the
loss of any trade name and/or trademark would not have a material adverse effect
on its business operations.

     In addition, the Company owns a variety of patents with respect to surface
technologies and the design and manufacture of certain furniture products. The
Company believes that the loss of any of its patents would not have a material
adverse effect on its business. The Company also relies on trade secrets and
confidentiality to protect the proprietary nature of its technology.

Seasonality

     The nature of the business in which the Company is engaged is not seasonal.

Customers

     For the fiscal year ended December 29, 2001, the Company had three
customers which accounted for approximately 14%, 14% and 12% of the Company's
total gross sales. No other single customer accounted for more than 10% of the
Company's total gross sales for the fiscal year ended December 29, 2001. While
the loss of any substantial customer could have a material short-term impact on
the Company's business, the Company believes that its diverse furniture
distribution channels would minimize the long-term impact of any such loss.

Backlog

     The Company believes that order backlog at any particular point in time is
not predictive of future sales performance since, as is standard in the
furniture industry, a customer may cancel a product order prior to shipment
without penalty. The Company has historically filled orders within approximately
one to six weeks of the receipt of a purchase order.

Government Contracts

     No material portion of the Company's business is subject to renegotiation
of profits or termination of contracts or subcontracts at the election of the
Government.

Competition

     The furniture market is highly competitive, and includes numerous entities,
some of which may have substantially greater financial and marketing resources
than the Company. The Company believes that the principal competitive factors in
the furniture industry marketplace are price, quality, function, innovative
product design, style, supply chain management and the ability to offer
customers a full product line. The Company's varied product line is designed
based on the foregoing factors to achieve customer satisfaction and,
accordingly, the Company believes that its products effectively compete in such
marketplace.

                                        5

<PAGE>

     Competition in the surface technology segment comes not only from other
manufacturers employing derivatives of the Company's production methods, but
also from alternative product design methods that are available to produce
decorated surfaces. The Company believes it provides high quality, cost
effective surface decorating through a wide range of options that include
painting, the application of the HydroGraFix process and the use of advanced
surface technologies.

Environmental Compliance

     Environmental aspects of the Company's business are regulated primarily by
federal and state laws and by the ordinances of the localities where the
Company's facilities are located. See Item 3, "Legal Proceedings", for
additional information regarding environmental compliance.

Employees

     As of the 2001 fiscal year end, the Company employed a total of
approximately 3,000 employees. Since Rohr-Bush is an active member of the German
employers' association for the wood and plastics processing industry, it is
governed by the collective bargaining agreements for this industry. There are no
other collective bargaining agreements covering any of the Company's employees.
The Company believes it has good employee relations.

                                        6

<PAGE>

(d)  FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC
     ------------------------------------------------
     OPERATIONS AND EXPORT SALES
     ---------------------------

     For the 2001 fiscal year ended December 29, 2001, the Company generated
domestic sales of approximately $280,689,000 (or approximately 81.2% of total
sales) and foreign sales of approximately $65,117,000 (or approximately 18.8% of
total sales). Of the total foreign sales, approximately $10,858,000 (or
approximately 3.1% of total sales) represented products exported by the Company
from the United States. For the 2000 fiscal year ended December 30, 2000 and the
1999 fiscal year ended January 1, 2000, the Company generated domestic sales of
approximately $384,171,000 and $359,073,000, respectively (or approximately
85.1% of total sales for the 2000 fiscal year and approximately 81.3% of total
sales for the 1999 fiscal year). Foreign sales for the fiscal years ended
December 30, 2000 and January 1, 2000, respectively, were approximately
$67,026,000 and $82,633,000 (or approximately 14.9% of total sales for the 2000
fiscal year and approximately 18.7% of total sales for the 1999 fiscal year). Of
such total foreign sales, approximately $11,170,000 and $11,909,000 represented
products exported by the Company from the United States for the fiscal years
ended December 30, 2000 and January 1, 2000, respectively (or approximately 2.5%
for the 2000 fiscal year and 2.7% for the 1999 fiscal year).

                                       7

<PAGE>

ITEM 2.  PROPERTIES
------   ----------

     The following table summarizes the Company's principal facilities as of
March 15, 2002. All properties primarily relate to the furniture segments,
except for the Greensboro, NC and Rutherfordton, NC facilities which relate to
the surface technologies segment.

<TABLE>
<CAPTION>
                                                              Approximate
Principal Character and                                            Square     Owned/Leased
use of Property                      Location                     Footage     (Lease Expiration Date)
-----------------------              --------                     -------     -----------------------
<S>                                  <C>                      <C>             <C>
Manufacturing, warehouse and
office facilities                    Erie, PA                   1,115,000     Owned (1)

Manufacturing, warehouse and
office facilities                    Mastholte, Germany           815,000     Owned

Manufacturing, warehouse and         Allen Street
office facilities                    Jamestown, NY                450,000     Owned

Manufacturing, warehouse and         Mason Drive
corporate office facilities          Jamestown, NY                440,000     Owned

Manufacturing and
warehouse facility                   St. Paul, VA                 285,000     Owned

Manufacturing facility               Mantinghausen, Germany       208,000     Owned

Warehouse facility                   Falconer, NY                 162,000     Leased (December 2005)

Manufacturing and warehouse          Tiffany Street
facility                             Jamestown, NY                145,000     Owned

Manufacturing facility               Tijuana, Mexico              135,000     Leased (September 2002)

Manufacturing and warehouse
facilities                           Greensboro, NC               125,000     Owned

Manufacturing facility               Little Valley, NY             78,000     Owned

Manufacturing facility               Rutherfordton, NC             26,000     Owned

Showroom                             High Point, NC                21,000     Leased (October 2005)

Sales office and
design studio                        Ft. Myers, FL                  4,000     Leased (March 2007)

Showroom                             Chicago, IL                    3,000     Leased (December 2005)
</TABLE>
_____________________________________
(1)  Legal title to the facility is in EIDCO, Inc. in accordance with the terms
     of low interest financing being provided by the Commonwealth of
     Pennsylvania.

                                       8

<PAGE>

ITEM 3.  LEGAL PROCEEDINGS
------   -----------------

     On June 17, 1996, an approximate five-mile long area in Little Valley, New
York was added to the federal Superfund national priorities list, and with
respect thereto, the Company is not aware of any potentially responsible parties
having been identified as of the date hereof. In December 1996, the Company
responded to a request for information from the United States Environmental
Protection Agency ("EPA"), relating to the Company's Little Valley, New York
property. No assurance can be given that the Company's response will be
sufficient for the EPA, or that the EPA will not pursue further inquiries. The
Company understands that the EPA has provided the New York State Department of
Environmental Conservation ("DEC") with comments on the investigatory work
developed and implemented by the Company with respect to a DEC Order on Consent,
as more fully described below. Previously, in November 1995, the Company was
notified by the DEC of an alleged violation of a certain environmental
regulation concerning the presence of contaminates in the groundwater, including
trichloroethene, beneath the Company's property located in Little Valley, New
York.

     Between November 1995 and March 1999, the Company and the DEC had
discussions concerning the scope of a work plan to conduct a subsurface
investigation at the property. Those discussions resulted in the Company
entering into an Order on Consent with the DEC to perform investigatory work as
set forth in a work plan. As a result of the implementation of the work under
the DEC Order on Consent, a groundwater evaluation report was submitted to the
DEC on July 6, 1999. The Company received comments on the groundwater evaluation
from the DEC on or about September 30, 1999, which included a request for
additional information and investigatory work. During November and December
1999, the Company's consultant implemented that additional investigatory work,
and submitted a revised groundwater evaluation report to the DEC on February 21,
2000. That report was approved by the DEC on March 31, 2000. As a result of that
approval, on July 6, 2000, the Company's consultant submitted a remediation
report which evaluated the potential for unacceptable risk to human health or
the environment, and evaluated remedial alternatives. The report included a
recommended course of action, with supporting rationale. The Company is awaiting
the DEC's response.

     By letter dated July 7, 2000, the EPA requested access to the Company's
property in Little Valley to implement additional environmental sampling. The
Company, the EPA and the DEC representatives discussed this request for access
and related technical aspects. By letter dated August 23, 2000, the Company
indicated to the EPA that it would not refuse access for the EPA or its
authorized representatives or contractors to implement the investigatory work,
and requested a number of tasks be completed prior to and after entry. The EPA
mobilized in mid-November 2000, and implemented the work during various times
through early January 2001. The Company also took additional environmental
samples at this time. Except for one subsequent site walk over by the EPA, the
Company has not received any further information or requests from the EPA with
respect to its sampling or otherwise. Although no assurance can be given, the
Company believes that its financial statements will not be materially adversely
affected by the foregoing.

                                        9

<PAGE>

     The Company has also become aware of the possible presence of certain
levels of contaminates on the Greensboro, North Carolina property owned by The
ColorWorks, Inc., a wholly owned subsidiary of the Company. The Company has
procured a $20,000,000 environmental insurance policy relating thereto. The
Company is responsible for certain deductibles under the insurance policy and,
in the unlikely event any such environmental costs are not covered by insurance,
the Company may be responsible for certain costs. However, based on an initial
assessment of the situation, the Company believes, although no assurance can be
given, that the Company's financial statements will not be materially adversely
affected by the foregoing.

     As of December 29, 2001, the Company is a party to various other legal
proceedings arising in the ordinary course of business. The Company believes
that these pending actions would not materially adversely affect the Company's
financial statements.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------   ---------------------------------------------------

     No matters were submitted to a vote of the stockholders of the Company
during the fourth quarter of the fiscal year ended December 29, 2001.

                                       10

<PAGE>

                                     PART II
                                     -------

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
------   ---------------------------------------------
         RELATED STOCKHOLDER MATTERS
         ---------------------------

     (a) Market Information.   The Company's Class A Common Stock is traded on
         ------------------
the New York Stock Exchange. The Company's Class B Common Stock is not publicly
traded.

     The following table sets forth the high and low sales prices of the
Company's Class A Common Stock, as reported on the New York Stock Exchange for
the periods indicated:

Quarter                                                     High         Low
----------------------------------                         ------      ------

January 1, 2000 - March 31, 2000                           $17.13      $12.06
April 1, 2000 - June 30, 2000                              $17.88      $12.94
July 1, 2000 - September 30, 2000                          $16.19      $11.31
October 1, 2000 - December 31, 2000                        $12.94      $10.25

January 1, 2001 - March 31, 2001                           $15.30      $11.44
April 1, 2001 - June 30, 2001                              $16.05      $12.30
July 1, 2001 - September 30, 2001                          $13.25      $ 8.10
October 1, 2001 - December 31, 2001                        $12.05      $ 8.10

     (b) Holders. As of December 29, 2001, the number of holders of record of
         -------
the Company's Class A Common Stock was approximately 430. The Company believes
that there are approximately an additional 1,200 holders who own shares of the
Company's Class A Common Stock in street name. As of the same date, there were
approximately 17 holders of record of the Company's Class B Common Stock.

     (c) Dividends. The Company instituted a quarterly cash dividend for holders
         ---------
of Class A and Class B Common Stock during the fourth quarter of 1992. Dividends
have been declared and paid for each succeeding quarter. The Company declared
cash dividends of $0.05 per share in each quarter of 2000 and 2001.

     The determination as to the payment and the amount of future cash dividends
will depend upon the Company's then current financial condition, capital
requirements, results of operations and other factors deemed relevant by the
Company's Board of Directors. In addition, a certain loan agreement to which the
Company is a party limits the amount of cash dividends that the Company can
declare, and also imposes certain conditions with respect thereto. The Company's
Certificate of Incorporation, as amended, also provides that any dividends paid
on Class A Common Stock must be at least equal to the dividends paid on the
Company's Class B Common Stock on a per share basis. Moreover, no dividend may
be paid to Class B stockholders without first being paid to Class A
stockholders.

                                       11

<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA
------   -----------------------

     The following selected financial data of the Company for the 1997 through
2001 fiscal years has been derived from the Consolidated Financial Statements of
the Company. This selected financial data should be read in conjunction with the
Consolidated Financial Statements and notes thereto included elsewhere herein.

<TABLE>
<CAPTION>
                                                                (In Thousands, except share and per share data)
                                                                -----------------------------------------------
                                                    2001             2000             1999             1998             1997
                                                    ----             ----             ----             ----             ----
<S>                                             <C>              <C>              <C>              <C>              <C>
Earnings Data
------------------------------------------

Net Sales ................................      $   345,806      $   451,197      $   441,706      $   413,527      $   325,289
Earnings Before
Income Taxes .............................      $     1,694      $    37,309      $    11,856      $    18,361      $    34,978
Net Earnings .............................      $       257      $    22,777      $     5,762      $    11,482      $    22,120

Earnings Per Share
     Basic ...............................      $      0.02      $      1.66      $      0.42      $      0.83      $      1.64
     Diluted .............................      $      0.02      $      1.60      $      0.40      $      0.78      $      1.52

Number of Weighted Average Class A
and Class B Shares Outstanding
     Basic ...............................       13,720,085       13,680,629       13,878,060       13,824,331       13,464,479
     Diluted .............................       14,106,573       14,209,311       14,412,660       14,747,523       14,523,356

Balance Sheet Data
------------------------------------------

Working Capital ..........................      $    43,523      $    56,235      $    40,456      $    40,046      $    28,111
Total Assets .............................      $   321,177      $   366,551      $   329,581      $   329,130      $   243,778
Long-term Debt ...........................      $   121,118      $   140,376      $   124,765      $   121,054      $    56,955
Stockholders' Equity .....................      $   139,973      $   141,710      $   124,579      $   123,619      $   112,430
</TABLE>

                                       12

<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         ---------------------------------------------------------------
         RESULTS OF OPERATIONS
         ---------------------

General

     The Company operates its business in four reportable segments: (1) Bush
Business Furniture, which concentrates on the business office and the home
office markets with sales to the office superstore and dealer channels; (2) Bush
Furniture, which focuses on home entertainment, home office and other home
furnishings products; (3) Bush Furniture Europe, which sells commercial, home
office and other furnishings in the European market; and (4) Bush Technologies,
which is focused on the cell phone accessories after-market, as well as the
utilization of surface technologies in automotive interiors, cosmetics, sporting
goods and consumer electronics. The Company operates several manufacturing and
warehouse facilities throughout North America and in Germany.

     On June 30, 1997, the Company acquired a 51% interest in the Rohr Gruppe, a
German furniture manufacturer, which name was subsequently changed to Rohr-Bush
GmbH & Co. ("Rohr-Bush"). On February 29, 2000, the Company executed a
definitive agreement with certain members of the Rohr family to acquire the
family's approximately 49% remaining interest in Rohr-Bush. This transaction
closed in October 2000.

     In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 141, "Business Combinations"
(SFAS No. 141), and Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" (SFAS No. 142). The FASB also issued
Statement of Financial Accounting Standards No. 143, "Accounting for Obligations
Associated with the Retirement of Long-Lived Assets" (SFAS No. 143), and
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" (SFAS No. 144), in August and
October 2001, respectively.

     SFAS No. 141 requires the purchase method of accounting for business
combinations initiated after June 30, 2001 and eliminates the
pooling-of-interest method. The Company does not believe that the adoption of
SFAS No. 141 will have a material impact on its financial statements.

     Effective December 30, 2001 (the first day of fiscal 2002), the Company
adopted SFAS No. 142. Under the new rules, the Company will no longer amortize
goodwill and other intangible assets with indefinite lives, but such assets will
be subject to periodic testing for impairment. On an annual basis, and when
there is reason to suspect that their values have been diminished or impaired,
these assets must be tested for impairment, and write-downs to be included in
results from operations may be necessary. SFAS No. 142 also requires the Company
to complete a transitional goodwill impairment test six months from the date of
adoption. Any goodwill impairment loss recognized as a result of the
transitional goodwill impairment test will be recorded as a cumulative effect of
a change in accounting principle no later than the end of fiscal year 2002. The
Company is currently evaluating, but has not yet determined, the impact of SFAS
No. 142 on its financial position and results of operations. However, the
Company expects that a substantial amount of its intangible assets will no
longer be amortized. Goodwill and other intangible assets subject to SFAS No.
142

                                       13

<PAGE>

were approximately $15 million as of December 29, 2001 and the associated
amortization was approximately $1.4 million in fiscal year 2001.

     SFAS No. 143 establishes accounting standards for the recognition and
measurement of an asset retirement obligation and its associated asset
retirement cost. It also provides accounting guidance for legal obligations
associated with the retirement of tangible long-lived assets. SFAS No. 143 is
effective in fiscal years beginning after June 15, 2002, with early adoption
permitted. The Company expects that the provisions of SFAS No. 143 will not have
a material impact on its consolidated results of operations and financial
position upon adoption. The Company plans to adopt SFAS No. 143 effective
December 29, 2002 (the first day of fiscal 2003).

     SFAS No. 144 establishes a single accounting model for the impairment or
disposal of long-lived assets, including discontinued operations. SFAS No. 144
superseded Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
(SFAS No. 121), and APB Opinion No. 30, "Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions". The provisions of
SFAS No. 144 are effective in fiscal years beginning after December 15, 2001,
with early adoption permitted, and in general are to be applied prospectively.
Effective December 30, 2001 (the first day of fiscal 2002), the Company adopted
SFAS No. 144 and does not expect that the adoption will have a material impact
on its consolidated results of operations and financial position.

     Except for the historical information contained herein, the matters
discussed in this Annual Report on Form 10-K constitute "forward-looking
statements" within the meaning of the Federal Private Securities Litigation
Reform Act of 1995. Forward-looking statements involve known and unknown risks
and uncertainties, which may cause the Company's actual results in future
periods to differ materially from forecasted results. Forward-looking statements
include statements regarding the intent, belief, projected or current
expectations of the Company or its Officers (including statements preceded by,
followed by or including forward-looking terminology such as "may," "will,"
"should," "believe," "expect," "anticipate," "estimate," "continue" or similar
expressions or comparable terminology), with respect to various matters. The
Company cannot guarantee future results, levels of activity, performance or
achievements. Factors that could cause or contribute to such differences
include, but are not limited to, economic, competitive, governmental and
technological factors affecting the Company's operations, markets, products,
services and prices, and other factors discussed in the Company's filings with
the Securities and Exchange Commission.

                                       14

<PAGE>

Results of Operations

     The following table shows the approximate percentage of certain items
included in the Consolidated Statements of Earnings relative to net sales for
the fiscal years indicated:

<TABLE>
<CAPTION>
                                                                  Percentage of Net Sales
                                                               ----------------------------
                                                                2001       2000      1999
                                                               ------    -------   --------
<S>                                                            <C>       <C>       <C>
Net Sales                                                      100.0%     100.0%     100.0%
Cost of Sales                                                   73.0%      68.2%      70.1%
                                                               -----     ------    -------
     Gross Profit                                               27.0%      31.8%      29.9%

Selling, General and Administrative Expenses                    24.0%      21.7%      22.9%
Restructuring                                                    0.0%       0.0%       2.2%
Gain on Sale of Assets                                           0.0%      (0.8)%      0.0%
                                                               -----     ------    -------
     Operating Income                                            3.0%      10.9%       4.8%

Interest Expense                                                 2.5%       2.6%       2.1%
                                                               -----     ------    -------
Earnings Before Income Taxes                                     0.5%       8.3%       2.7%

Income Taxes                                                     0.4%       3.3%       1.4%
                                                               -----     ------    -------
     Net Earnings                                                0.1%       5.0%       1.3%
                                                               =====     ======    =======
</TABLE>

     The following paragraphs provide an analysis of the changes in net sales,
selected cost and expense items, and net earnings for fiscal years 1999 through
2001.

Results of Operations: Fiscal 2001 Compared to Fiscal 2000

     The Company's net sales for the 2001 fiscal year compared to the 2000
fiscal year decreased $105,391,000, or approximately 23.4%, to $345,806,000. The
sales decrease primarily reflects a decrease in orders from the Company's North
American furniture customers due to the economic slowdown. Sales were also
negatively impacted by the inventory rationalization programs undertaken at the
office superstores in the second quarter of fiscal year 2001 and by customer
delays in new product launches at Bush Technologies.

     The Company's cost of sales were $252,424,000 in fiscal year 2001 compared
to $307,686,000 in fiscal year 2000, or a decrease of $55,262,000. This decrease
primarily reflects the lower sales levels as compared to the prior year. The
cost of sales as an approximate percentage of net sales increased by 4.8% from
68.2% in 2000 to 73.0% in 2001. The increase in cost of sales as a percentage of
net sales primarily reflects lower absorption of manufacturing overhead as a
result of decreased production volumes, both as the result of the decreased
sales levels and the reduction of finished goods inventory levels, and as a
result of a $5,226,000 pre-tax, non-cash inventory write-down in the fourth
quarter of fiscal year 2001.

     For 2001, selling, general and administrative expenses decreased by
$14,795,000 compared to 2000. The decrease in selling, general and
administrative expenses was primarily the result of a reduction in various
selling expenses such as commissions, marketing and promotional incentives.

                                       15

<PAGE>

These reductions were a result of both the Company's lower sales volumes and as
a result of a change in sales terms with two customers. This change, in which
various marketing and promotional incentives were replaced with a reduction in
sales prices to the two customers, had no impact on net earnings, but resulted
in a decrease in selling, general and administrative expenses and a
corresponding decrease in net sales. Since this change occurred in mid fiscal
year 2000, it impacted the second half of such year and all of fiscal year 2001.
Selling, general and administrative expenses increased as an approximate
percentage of net sales from 21.7% in 2000 to 24.0% in 2001.

     Interest expense decreased to $8,553,000 in 2001 (or approximately 2.5% of
net sales) from $11,890,000 in 2000 (or approximately 2.6% of net sales). The
decrease in interest expense was primarily due to decreases in the interest
rates paid on the Company's revolving credit facility.

     The Company's overall effective federal, state and local tax rate increased
from 39.0% in 2000 to 84.8% in 2001. The increase was primarily due to the
effects of permanent non-deductible items (such as certain travel and
entertainment expenses and the amortization of certain goodwill costs), fixed
taxes (such as Delaware franchise taxes) and a change in the mix of the
allocation of income for state income tax purposes. The impact of these items
was exaggerated by the lower level of earnings before income taxes upon which
the effective tax rates are computed.

     For 2001, the Company generated net earnings after taxes of $257,000 (or
$0.02 basic earnings per share and $0.02 diluted earnings per share), as
compared to $22,777,000 (or $1.66 basic earnings per share and $1.60 diluted
earnings per share) for 2000.

Results of Operations: Fiscal 2000 Compared to Fiscal 1999

     The Company's net sales for the 2000 fiscal year compared to the 1999
fiscal year increased $9,491,000, or approximately 2.1%, to $451,197,000. Strong
sales gains were achieved in the surface technologies segment. Furniture sales
were slightly below fiscal year 1999 levels due primarily to a general softening
of the economy in the second half of 2000, which created a sluggish retail sales
environment, inventory adjustments from several of our large customers and lower
sales in Bush Furniture Europe, which was part of the planned downsizing made as
part of the 1999 restructuring.

     The Company's cost of sales were $307,686,000 in fiscal year 2000 compared
to $309,794,000 in fiscal year 1999, or a decrease of $2,108,000. The cost of
sales as an approximate percentage of net sales decreased by 1.9% from 70.1% in
1999 to 68.2% in 2000. Cost of sales decreased on higher sales volume as a
result of improved gross margins, primarily as a result of a mix into sales in
the surface technologies segment and improved gross margins in Bush Furniture
Europe.

     For 2000, selling, general and administrative expenses decreased by
$3,024,000 compared to 1999. The decrease in selling, general and administrative
expenses was primarily a result of a change in the sales terms with two
customers. This change had no impact on net earnings, but resulted in a decrease
in selling, general and administrative expenses and a corresponding decrease

                                       16

<PAGE>

in net sales. Selling, general and administrative expenses decreased as an
approximate percentage of net sales from 22.9% in 1999 to 21.7% in 2000.

     Interest expense increased to $11,890,000 in 2000 (or approximately 2.6% of
net sales) from $9,430,000 in 1999 (or approximately 2.1% of net sales). The
increase in interest expense was primarily due to both an increase in average
debt, primarily related to the Company's capital expenditures and an increase in
average inventory levels, and higher average interest rates paid on the
Company's revolving credit facility.

     The Company's overall effective federal, state and local tax rate decreased
from 51.4% in 1999 to 39.0% in 2000. The rate in fiscal year 1999 was
uncharacteristically high primarily due to the impact of the lower deferred tax
rates attributable to the then 51% owned Rohr-Bush subsidiary and the
relationship of the Rohr-Bush operating loss to consolidated income.

     During the first quarter of 1999, the Company finalized plans to
restructure certain of its operations, resulting in non-recurring restructuring
costs amounting to $9,672,000 being charged to expense in 1999. As of January 1,
2000, all components of the restructuring were complete and the only liability
remaining for the restructuring was $1,685,000 for severance to terminated
employees. Cash paid to severed employees totaled $1,685,000 in the first half
of fiscal year 2000, resulting in no remaining liability at December 30, 2000.

     In December 2000, the Company sold substantially all of the assets of its
retail service business, a division of the Company, to a third party in exchange
for shares of stock of the purchaser. Net sales of this retail service business
were not significant to the consolidated financial statements. The Company
recorded the shares of stock received at the fair value of approximately
$5,000,000, which resulted in a pre-tax gain of $3,618,000. The investment is
included in other assets on the consolidated balance sheet since the Company
expects to hold the investment on a long-term basis. The cost method is used to
account for this investment because the Company does not have the ability to
exercise significant influence over the purchaser's operating and financial
policies.

     For 2000, the Company generated net earnings after taxes of $22,777,000 (or
$1.66 basic earnings per share and $1.60 diluted earnings per share), as
compared to $5,762,000 (or $0.42 basic earnings per share and $0.40 diluted
earnings per share) for 1999. This was an approximate 295.3% increase in net
earnings.

Liquidity and Capital Resources

     Working capital at fiscal year end 2001 decreased $12,712,000 over fiscal
year end 2000, primarily as a result of a decease in accounts receivable and
inventories partially offset by decreases in other accrued liabilities, accounts
payable and income taxes payable and an increase in prepaid expenses and other
current assets. Inventory was reduced as production levels in fiscal year 2001
were reduced to attain the desired reduction in finished goods inventory and as
a result of a $5,226,000 pre-tax, non-cash inventory write-down in the fourth
quarter of fiscal year 2001. Accounts receivable, other accrued liabilities and
accounts payable decreased primarily as a result

                                       17

<PAGE>

of lower sales volumes and accounts receivables were further reduced by efforts
to expedite their collection. Incomes taxes payable decreased as a result of the
Company's decreased earnings, and the increase in prepaid expenses and other
current assets primarily represents an overpayment of taxes refunded in the
first quarter of fiscal year 2002. Total assets at fiscal year end 2001
decreased $45,374,000 over fiscal year end 2000 primarily as a result of a
decrease in accounts receivable and inventories, as discussed above, and a
decrease in property, plant and equipment which reflects capital expenditures
that are less than the level of depreciation. Total liabilities at fiscal year
end 2001 decreased by $43,637,000, as compared to fiscal year end 2000. Such
decrease in total liabilities was due primarily to decreases in other accrued
liabilities, accounts payable and income taxes payable, as described above, and
a decrease in long-term debt.

     During fiscal year 2001, the Company expended $9,444,000 on capital
expenditures. Capital expenditures for 2002 are currently forecasted to be
approximately $7 million. In 2001, the Company received $1,160,000 from the
exercise of stock options by employees, received a tax benefit of $185,000 from
the exercise of such options and paid four quarterly dividends totaling
$2,741,000 to its stockholders. The cash dividend for each of the quarters in
2001 was $0.05 per share. Cash flows provided by operating activities in excess
of other cash flow requirements were primarily used to pay down long-term debt.

     The Company has a revolving credit facility, initially dated as of June 26,
1997 and as amended, with JPMorgan Chase Bank and other lending institutions. In
fiscal year 2001 the Company entered into a sixth amendment, dated as of
December 28, 2001. This amendment modified certain covenants of the Company
under the credit facility, modified the pricing grid to reflect the newly
permitted ratios, granted a security interest in all domestic tangible personal
property and intangible assets of the Company, extended the maturity date of the
loan from June 30, 2003 to June 30, 2004 and modified the amount of money the
Company can borrow under the credit facility from an aggregate $210,000,000 to
an aggregate $173,000,000.

     The credit facility provides for revolving credit loans, swing line loans
and multi-currency loans, within the parameters described below. The loan is due
June 30, 2004 with a balloon payment of the then remaining principal and any
accrued interest. The Company has classified all of the line of credit as
long-term debt, as there are no required principal payments due within the next
12 months. At the Company's option, borrowings may be effectuated, subject to
certain conditions, on a NYBOR rate, an eurocurrency rate for dollars, an
applicable eurocurrency rate for certain foreign currencies, a money market
rate, or an alternative base rate. Eurocurrency loans bear interest at the then
current applicable LIBOR rate, plus an applicable margin. The applicable margin,
which pertains only to LIBOR and NYBOR rate loans, varies from 1.5% to 3.5%,
depending upon the Company's ability to satisfy certain quarterly financial
tests. In addition, the credit agreement permits the Company to request the
issuance of up to a maximum of $20,000,000 in letters of credit, which issuance
will be deemed part of the $173,000,000 maximum amount of borrowing permitted
under the credit facility.

     The line of credit agreement, as amended, provides for achieving certain
consolidated cash flow coverage and leverage ratios, prescribes minimum
consolidated net worth requirements, limits

                                       18

<PAGE>

capital expenditures and new leases and provides for certain other affirmative
and restrictive covenants. The Company is in compliance with all of these
requirements. In addition, the credit agreement limits the amount of cash
dividends that the Company can declare, and also imposes certain conditions with
respect thereto.

     Inflation affects the Company's business principally in the form of cost
increases from materials and wages. Historically, the Company has generally been
able to offset these cost increases by improved productivity, cost and waste
reduction, more effective purchasing practices, and to a lesser extent, price
increases.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------  ----------------------------------------------------------

     Market risk represents the risk of loss that may impact the consolidated
financial position, results of operations or cash flows of the Company. The
Company is exposed to market risk in the areas of interest rates and foreign
currency exchange rates.

     The Company's exposure to market risk for changes in interest rates relates
primarily to the Company's revolving credit facility due to its variable
pricing. Based on the outstanding balance of long-term debt at fiscal year end
2001, a one percentage point change in interest rates would result in annual
interest expense fluctuating approximately $1.2 million.

     The Company's exposure to foreign currency exchange risk relates primarily
to the cost of imported supplies and the cost/profitability of exported items,
the income statement and cash flow impact of converting foreign currency
denominated profit/loss into U.S. dollars and the balance sheet impact of
converting foreign currency denominated assets and liabilities into U.S.
dollars. The Company does not believe that a reasonably possible change of 10%
in any foreign currency exchange rate will materially affect the financial
position of the Company.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
------   -------------------------------------------

     The financial information required by Item 8 is included elsewhere in this
Report (see Part IV, Item 14).

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
------   ---------------------------------------------------------------
         FINANCIAL DISCLOSURE
         --------------------

     None.

                                       19

<PAGE>

                                    PART III
                                    --------

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
-------  --------------------------------------------------

     The information required by Item 10 is hereby incorporated by reference
from the Registrant's definitive Proxy Statement for the Annual Meeting
scheduled to be held on May 16, 2002, under the caption, "Election of
Directors", to be filed by the Registrant.

ITEM 11. EXECUTIVE COMPENSATION
-------  ----------------------

     The information required by Item 11 is hereby incorporated by reference
from the Registrant's definitive Proxy Statement for the Annual Meeting
scheduled to be held on May 16, 2002, under the caption, "Executive
Compensation", to be filed by the Registrant.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
-------  ------------------------------------------------------------------
         RELATED STOCKHOLDER MATTERS
         ---------------------------

     The information required by Item 12 is hereby incorporated by reference
from the Registrant's definitive Proxy Statement for the Annual Meeting
scheduled to be held on May 16, 2002, under the caption, "Security Ownership of
Management and Principal Stockholders", to be filed by the Registrant.

ITEM 13. CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
-------  ---------------------------------------------

     The information required by Item 13 is hereby incorporated by reference
from the Registrant's definitive Proxy Statement for the Annual Meeting
scheduled to be held on May 16, 2002, under the caption "Certain Transactions",
to be filed by the Registrant.

                                       20

<PAGE>

                                     PART IV
                                     -------

ITEM 14.          EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
--------          --------------------------------------------
                  REPORTS ON FORM 8-K
                  -------------------

(A)       The consolidated balance sheets as of December 29, 2001 and December
          30, 2000 and the related consolidated statements of earnings,
          stockholders' equity, cash flows and financial statement schedule for
          each of the three years in the period ended December 29, 2001 are
          filed as part of this report:

 (1)      Financial Statements                                     Page
          --------------------                                     -----

Independent Auditors' Report ...................................... F-1
Consolidated Balance Sheets ....................................... F-2
Consolidated Statements of Earnings ............................... F-3
Consolidated Statements of Stockholders' Equity ................... F-4
Consolidated Statements of Cash Flows ............................. F-5
Notes to Consolidated Financial Statements ........................ F-6

(2)       Consolidated Financial Statement Schedules
          ------------------------------------------

Schedule II - Valuation and Qualifying Accounts ................... S-1

     All other schedules are omitted because they are not applicable, or not
required because the required information is included in the Consolidated
Financial Statements or notes thereto.

(3)      Exhibits
         --------

3.1      Certificate of Incorporation. (1)

3.2      Amendment to Certificate of Incorporation, dated June 30, 1994. (6)

3.3      Amendment to Certificate of Incorporation, dated July 9, 1993.  (4)

3.4      By-Laws, as amended. (1) (14)

3.5      Amendment to By-Laws, dated July 18, 2001

10.1     The Registrant's 1985 Stock Plan, as amended. (4)

10.2     The Registrant's 1985 Incentive Stock Option Plan, as amended. (4)

                                       21



<PAGE>

10.3  Lease Agreement between County of Chautauqua Industrial Development Agency
      and the Registrant dated January 1, 1990. (2)

10.4  Employment Agreement between the Registrant and Paul S. Bush dated July
      29, 1992, as amended. (3)

10.5  Employment Agreement between the Registrant and Robert L. Ayres dated July
      29, 1992, as amended. (3)

10.6  Employment Agreement between the Registrant and Lewis H. Aronson dated
      July 29, 1992, as amended. (3)

10.7  Amendment, dated as of February 26, 2000, to Employment Agreement between
      the Registrant and Lewis H. Aronson dated July 29, 1992, as amended.

10.8  Employment Agreement between the Registrant and Gregory P. Bush dated
      October 10, 2000.

10.9  Employment Agreement between the Registrant and Larry C. Genareo dated
      October 16, 2000.

10.10 Employment Agreement between the Registrant and Neil A. Frederick dated
      October 16, 2000.

10.11 Split Dollar Insurance Agreements between the Registrant and Paul S. Bush
      dated November 1, 1990 and March 15, 1991 and related Collateral
      Assignment Agreements of same dates. (3)

10.12 Split Dollar Insurance Agreement between the Registrant and Robert L.
      Ayres dated December 19, 1991 and related Collateral Assignment Agreement.
      (3)

10.13 Performance Bonus Plan. (5)

10.14 The Registrant's 1995 Stock Plan. (7)

10.15 The Registrant's 1999 Stock Plan.  (12)

10.16 Stock Redemption Agreement between the Registrant and Paul S. Bush dated
      July 10, 1997.  (8)

10.17 Credit and Guarantee Agreement, dated as of June 26, 1997, by and among
      the Registrant, as Borrower, the Lenders party thereto from time to time,
      The Chase Manhattan Bank as administrative agent and Mellon Bank, N.A., as
      co-agent. (8)

                                       22


<PAGE>

10.18 First Amendment, dated as of August 17, 1998, to the Credit and Guarantee
      Agreement dated as of June 26, 1997. (9)

10.19 Second Amendment, dated as of December 31, 1998, to the Credit and
      Guarantee Agreement dated as of June 26, 1997. (10)

10.20 Third Amendment, dated as of March 31, 1999, to the Credit and Guarantee
      Agreement dated as of June 26, 1997. (11)

10.21 Fourth Amendment, dated as of February 29, 2000, to the Credit and
      Guarantee Agreement dated as of June 26, 1997. (13)

10.22 Fifth Amendment, dated as of May 2, 2000, to the Credit and Guarantee
      Agreement dated as of June 26, 1997. (15)

10.23 Sixth Amendment, dated as of December 28, 2001, to the Credit and
      Guarantee Agreement dated as of June 26, 1997. (16)

21.1  List of Subsidiaries of Registrant.

23.1  Consent of Deloitte & Touche LLP, independent auditors.

__________________________

(1)   Incorporated by reference to the Registrant's Registration Statement on
      Form S-1 dated March 14, 1985 (File No. 2-96428).

(2)   Incorporated by reference to Registrant's Annual Report on Form 10-K for
      the fiscal year ended December 29, 1989.

(3)   Incorporated by reference to the Registrant's Annual Report on Form 10-K
      for the fiscal year ended January 2, 1993.

(4)   Incorporated by reference to the Registrant's Annual Report on Form 10-K
      for the fiscal year ended January 1, 1994.

(5)   Incorporated by reference to the Registrant's definitive Proxy Statement,
      dated May 16, 1994.

(6)   Incorporated by reference to the Registrant's Annual Report on Form 10-K
      for the fiscal year ended December 31, 1994.

(7)   Incorporated by reference to the Registrant's definitive Proxy Statement,
      dated March 29, 1995.

(8)   Incorporated by reference to the Registrant's Current Report on Form 8-K,
      filed September 10, 1997.

(9)   Incorporated by reference to the Registrant's Current Report on Form 8-K,
      filed September 14, 1998.

                                       23


<PAGE>

(10) Incorporated by reference to the Registrant's Current Report on Form 8-K,
     filed March 10, 1999.

(11) Incorporated by reference to the Registrant's Current Report on Form 8-K,
     filed June 15, 1999.

(12) Incorporated by reference to the Registrant's Registration Statement on
     Form S-8 dated November 3, 1999 (File No. 333-90255).

(13) Incorporated by reference to the Registrant's Current Report on Form 8-K,
     filed March 17, 2000.

(14) Incorporated by reference to the Registrant's Annual Report on Form 10-K
     for the fiscal year ended January 1, 2000.

(15) Incorporated by reference to the Registrant's Current Report on Form 8-K,
     filed June 5, 2000.

(16) Incorporated by reference to the Registrant's Current Report on Form 8-K,
     filed March 14, 2002.


(B)  Reports on Form 8-K.
     --------------------
     During the first quarter of fiscal year 2002, an 8-K was filed on March 14,
     2002 regarding an amendment to the Company's existing credit facility with
     JPMorgan Chase Bank and other lending institutions.

                                       24

<PAGE>

                                   SIGNATURES

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

                                                      REGISTRANT:

                                                      BUSH INDUSTRIES, INC.


March 19, 2002                                        By /s/Paul S. Bush
                                                         -----------------------
                                                         Paul S. Bush,
                                                         Chief Executive Officer


          Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
       SIGNATURE                                        TITLE                                        DATE
       ---------                                        -----                                        ----
<S>                                          <C>                                              <C>
/s/Paul S. Bush
-----------------------------------
Paul S. Bush                                 Chief Executive Officer and
                                             Chairman of the Board
                                             of Directors                                     March 19, 2002


/s/Robert L. Ayres
-----------------------------------
Robert L. Ayres                              President,
                                             Chief Operating Officer
                                             and Director                                     March 19, 2002


/s/Lewis H. Aronson
-----------------------------------
Lewis H. Aronson                             Corporate Executive Vice President
                                             and Director                                     March 19, 2002


/s/Douglas S. Bush
-----------------------------------
Douglas S. Bush                              Vice President of Merchandising
                                             and Director                                     March 19, 2002
</TABLE>


                                       25




<PAGE>

<TABLE>
<S>                                          <C>                                               <C>
/s/Gregory P. Bush
---------------------------------
Gregory P. Bush                              President - Bush Furniture
                                             and Director                                      March 19, 2002


/s/Neil A. Frederick
---------------------------------
Neil A. Frederick                            Chief Financial Officer,
                                             Treasurer, Corporate Vice President
                                             and Director                                      March 19, 2002


/s/Donald F. Hauck
---------------------------------
Donald F. Hauck                              Senior Vice President
                                             and Director                                      March 19, 2002


/s/Paul A. Benke
---------------------------------
Paul A. Benke                                Director                                          March 19, 2002


/s/Jerald D. Bidlack
---------------------------------
Jerald D. Bidlack                            Director                                          March 19, 2002


/s/David G. Dawson
---------------------------------
David G. Dawson                              Director                                          March 19, 2002


/s/Robert E. Hallagan
---------------------------------
Robert E. Hallagan                           Director                                          March 19, 2002


/s/Erland E. Kailbourne
---------------------------------
Erland E. Kailbourne                         Director                                          March 19, 2002
</TABLE>

                                       26



<PAGE>

INDEPENDENT AUDITORS' REPORT


Board of Directors and Stockholders
Bush Industries, Inc.
Jamestown, New York

We have audited the accompanying consolidated balance sheets of Bush Industries,
Inc. and subsidiaries (the "Company") as of December 29, 2001 and December 30,
2000, and the related consolidated statements of earnings, stockholders' equity,
and cash flows for each of the three years in the period ended December 29,
2001. Our audits also included the financial statement schedule listed in the
Index at Item 14 (A)(2). These financial statements and financial statement
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these 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, such consolidated financial statements present fairly, in all
material respects, the financial position of Bush Industries, Inc. and
subsidiaries as of December 29, 2001 and December 30, 2000, and the results of
their operations and their cash flows for each of the three years in the period
ended December 29, 2001 in conformity with accounting principles generally
accepted in the United States of America. Also, in our opinion, such financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.


Deloitte & Touche LLP

Buffalo, New York
February 1, 2002

                                       F-1

<PAGE>

BUSH INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 29, 2001 AND DECEMBER 30, 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                               (In Thousands)

ASSETS                                                                                  2001                    2000
<S>                                                                                   <C>                    <C>
CURRENT ASSETS:
  Cash and cash equivalents                                                          $    1,589              $    1,225
  Accounts receivable (less allowance for doubtful accounts of
    $979 on December 29, 2001 and $1,341 on December 30, 2000)                           16,872                  38,110
  Inventories                                                                            55,297                  74,838
  Prepaid expenses and other current assets                                              11,491                   9,389
                                                                                     ----------              ----------
          Total current assets                                                           85,249                 123,562

PROPERTY, PLANT AND EQUIPMENT, NET                                                      207,334                 213,619

OTHER ASSETS                                                                             28,594                  29,370
                                                                                     ----------              ----------

TOTAL ASSETS                                                                         $  321,177              $  366,551
                                                                                     ==========              ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                                                   $   17,184              $   25,860
  Income taxes                                                                               43                   2,705
  Other accrued liabilities                                                              24,052                  38,329
  Current portion of long-term debt                                                         447                     433
                                                                                     ----------              ----------
           Total current liabilities                                                     41,726                  67,327

DEFERRED INCOME TAXES                                                                    11,123                  10,664
OTHER LONG-TERM LIABILITIES                                                               7,237                   6,474
LONG-TERM DEBT                                                                          121,118                 140,376
                                                                                     ----------              ----------
          Total liabilities                                                             181,204                 224,841
                                                                                     ----------              ----------
COMMITMENTS (Note 6)

STOCKHOLDERS' EQUITY:
  Common Stock - Class A                                                                  1,077                   1,063
  Common Stock - Class B                                                                    340                     340
  Paid-in capital                                                                        22,916                  21,585
  Retained earnings                                                                     123,164                 125,648
  Accumulated other comprehensive income                                                  1,666                   2,197
                                                                                     ----------              ----------
           Subtotal                                                                     149,163                 150,833
  Less treasury stock, at cost                                                           (5,775)                 (5,497)
  Less notes receivable related to common stock                                          (3,415)                 (3,626)
                                                                                     ----------              ----------
          Total stockholders' equity                                                    139,973                 141,710
                                                                                     ----------              ----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                           $  321,177              $  366,551
                                                                                     ==========              ==========
</TABLE>

See notes to consolidated financial statements.

                                      F-2

<PAGE>

BUSH INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 29, 2001, DECEMBER 30, 2000 AND JANUARY 1, 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                  (In Thousands, except share and per share data)

                                                                     2001                  2000              1999
<S>                                                           <C>                 <C>                  <C>
NET SALES                                                      $     345,806       $      451,197       $     441,706
                                                              --------------      ---------------      --------------

COSTS AND EXPENSES:
  Cost of sales                                                      252,424              307,686             309,794
  Selling, general and administrative                                 83,135               97,930             100,954
  Interest expense                                                     8,553               11,890               9,430
  Restructuring                                                            0                    0               9,672
  Gain on sale of assets                                                   0               (3,618)                  0
                                                              --------------      ---------------      --------------
                                                                     344,112              413,888             429,850
                                                              --------------      ---------------      --------------

EARNINGS BEFORE INCOME TAXES                                           1,694               37,309              11,856

INCOME TAXES                                                           1,437               14,532               6,094
                                                              --------------      ---------------      --------------

NET EARNINGS                                                   $         257       $       22,777       $       5,762
                                                              ==============      ===============      ==============

EARNINGS PER SHARE:
  Basic                                                        $        0.02       $         1.66       $        0.42
  Diluted                                                      $        0.02       $         1.60       $        0.40

WEIGHTED AVERAGE SHARES
  OUTSTANDING:
  Basic                                                           13,720,085           13,680,629          13,878,060
  Diluted                                                         14,106,573           14,209,311          14,412,660
</TABLE>

See notes to consolidated financial statements.

                                       F-3

<PAGE>

BUSH INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 29, 2001, DECEMBER 30, 2000 AND JANUARY 1, 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                            (In Thousands, except share data)


                                                 Common Stock - Par Value $.10
                                           -------------------------------------------
                                                 Class A              Class B            Paid-in    Retained     Comprehensive
                                           --------------------  ---------------------
                                             Shares     Amount      Shares     Amount    Capital    Earnings     Income (Loss)

<S>                                        <C>         <C>         <C>           <C>    <C>        <C>           <C>
BALANCE, JANUARY 2, 1999                   10,544,838   $1,054     3,395,365   $  340   $ 20,656   $  102,629
  Acquisition of treasury stock                     -        -             -        -          -            -
  Sale of stock to employees                        -        -             -        -         88            -
  Exercise of stock options                     9,618        1             -        -         58            -
  Tax benefit from exercise of
   stock options                                    -        -             -        -         24            -
  Dividends paid                                    -        -             -        -          -       (2,776)
  Comprehensive income:
    Net earnings                                    -        -             -        -          -        5,762      $  5,762
    Other comprehensive income:
      Foreign currency translation                  -        -             -        -          -            -         1,987
      Minimum pension liability                     -        -             -        -          -            -            10
                                          -----------   ------   -----------   ------   --------   ----------      --------
        Total comprehensive income                                                                                 $  7,759
                                                                                                                   ========

BALANCE, JANUARY 1, 2000                   10,554,456    1,055     3,395,365      340     20,826      105,615
  Acquisition of treasury stock                     -        -             -        -          -            -
  Payments received for notes
    receivable                                      -        -             -        -          -            -
  Stock applied to notes receivable                 -        -             -        -          -            -
  Exercise of stock options                    77,485        8             -        -        651            -
  Tax benefit from exercise of
    stock options                                   -        -             -        -        108            -
  Dividends paid                                    -        -             -        -          -       (2,744)
  Comprehensive income:
    Net earnings                                    -        -             -        -          -       22,777       $22,777
    Other comprehensive income:
      Foreign currency translation                  -        -             -        -          -            -           448
      Minimum pension liability                     -        -             -        -          -            -            16
                                          -----------   ------   -----------   ------   --------   ----------      --------
        Total comprehensive income                                                                                 $ 23,241
                                                                                                                   ========

BALANCE, DECEMBER 30, 2000                 10,631,941    1,063     3,395,365      340     21,585      125,648
  Payments received for notes
   receivable                                       -        -             -        -          -            -
  Stock applied to notes receivable                 -        -             -        -          -            -
  Stock received from escrow
   account                                          -        -             -        -          -            -
  Exercise of stock options                   136,302       14             -        -      1,146            -
  Tax benefit from exercise of
   stock options                                    -        -             -        -        185            -
  Dividends paid                                    -        -             -        -          -       (2,741)
  Comprehensive income (loss):
    Net earnings                                    -        -             -        -          -          257      $    257
    Other comprehensive income (loss):
      Foreign currency translation                  -        -             -        -          -            -          (528)
      Minimum pension liability                     -        -             -        -          -            -            (3)
                                          -----------   ------   -----------   ------   --------   ----------      --------
        Total comprehensive loss                                                                                   $   (274)
                                                                                                                   ========

BALANCE, DECEMBER 29, 2001                 10,768,243   $1,077     3,395,365  $   340   $ 22,916   $  123,164
                                          ===========   ======   ===========  =======   ========   ==========

<CAPTION>
                                         Accumulated
                                             Other
                                         Comprehensive       Treasury Stock        Notes
                                                          --------------------
                                         Income (Loss)      Shares    Amount    Receivable
<S>                                      <C>              <C>         <C>       <C>
BALANCE, JANUARY 2, 1999                   $   (264)         63,479   $    796    $    -
  Acquisition of treasury stock                   -         287,008      4,106         -
  Sale of stock to employees                      -        (268,574)    (3,756)    3,844
  Exercise of stock options                       -               -          -         -
  Tax benefit from exercise of
   stock options                                  -               -          -         -
  Dividends paid                                  -               -          -         -
  Comprehensive income:
    Net earnings                                  -               -          -         -
    Other comprehensive income:
      Foreign currency translation            1,987               -          -         -
      Minimum pension liability                  10               -          -         -
                                           --------       ---------   --------    ------
        Total comprehensive income

BALANCE, JANUARY 1, 2000                      1,733          81,913      1,146     3,844
  Acquisition of treasury stock                   -         269,363      4,167         -
  Payments received for notes
    receivable                                    -               -          -       (34)
  Stock applied to notes receivable               -          14,530        184      (184)
  Exercise of stock options                       -               -          -         -
  Tax benefit from exercise of
    stock options                                 -               -          -         -
  Dividends paid                                  -               -          -         -
  Comprehensive income:
    Net earnings                                  -               -          -         -
    Other comprehensive income:
      Foreign currency translation              448               -          -         -
      Minimum pension liability                  16               -          -         -
                                           --------       ---------   --------    ------
        Total comprehensive income


BALANCE, DECEMBER 30, 2000                    2,197         365,806      5,497     3,626
  Payments received for notes
   receivable                                     -               -          -       (45)
  Stock applied to notes receivable               -          14,776        166      (166)
  Stock received from escrow
   account                                        -           7,818        112         -
  Exercise of stock options                       -               -          -         -
  Tax benefit from exercise of
   stock options                                  -               -          -         -
  Dividends paid                                  -               -          -         -
  Comprehensive income (loss):
    Net earnings                                  -               -          -         -
    Other comprehensive income (loss):
      Foreign currency translation             (528)              -          -         -
      Minimum pension liability                  (3)              -          -         -
                                           --------       ---------   --------    ------

        Total comprehensive loss

BALANCE, DECEMBER 29, 2001                 $  1,666         388,400   $  5,775    $3,415
                                           ========       =========   ========    ======
</TABLE>

See notes to consolidated financial statements.

                                      F-4

<PAGE>

BUSH INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 29, 2001, DECEMBER 30, 2000 AND JANUARY 1, 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                   (In Thousands)
                                                                                        2001            2000           1999
<S>                                                                                  <C>             <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net earnings                                                                       $      257      $  22,777      $     5,762
  Adjustments to reconcile net earnings to net cash
  provided by operating activities:
    Depreciation and amortization                                                        19,647         18,666           17,203
    Deferred income taxes                                                                   471          3,161           (1,558)
    Gain on sale of assets                                                                    0         (3,618)               0
  Changes in assets and liabilities affecting cash flows,
    net of acquisitions:
      Accounts receivable                                                                21,442         (4,309)           7,514
      Inventories                                                                        20,047        (21,078)           4,304
      Prepaid expenses and other current assets                                          (3,259)            92           (2,807)
      Accounts payable                                                                   (9,462)         5,929          (12,077)
      Income taxes                                                                       (1,342)         1,662            1,929
      Other accrued liabilities                                                         (14,310)           (39)           9,272
                                                                                   --------------  -----------     ------------
Net cash provided by operating activities                                                33,491         23,243           29,542
                                                                                   --------------  -----------     ------------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
  Capital expenditures                                                                   (9,444)       (33,301)         (31,663)
  Acquisition of business, net of cash                                                        0         (6,457)               0
  Increase in other assets                                                                 (719)        (1,070)          (1,125)
                                                                                   ------------    -----------     ------------
Net cash used for investing activities                                                  (10,163)       (40,828)         (32,788)
                                                                                   ------------    -----------     ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayments of long-term debt                                                          (21,127)          (495)            (707)
  Proceeds from long-term debt                                                                0         22,977           10,106
  Purchase of Class A Stock for treasury                                                      0         (4,167)          (4,106)
  Exercise of stock options                                                               1,160            659               59
  Dividends paid ($0.20 per share)                                                       (2,741)        (2,744)          (2,776)
  Payments received for notes receivable                                                     45             34                0
                                                                                   ------------    -----------     ------------
Net cash (used for) provided by financing activities                                    (22,663)        16,264            2,576
                                                                                   ------------    -----------     ------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                                    (301)          (158)           1,138
                                                                                   ------------    -----------     ------------
NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS                                                                      364         (1,479)             468


CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                              1,225          2,704            2,236
                                                                                   -------------   -----------     ------------

CASH AND CASH EQUIVALENTS, END OF YEAR                                               $    1,589      $   1,225      $     2,704
                                                                                   ==============  ===========     ============
</TABLE>

See notes to consolidated financial statements.

                                      F-5

<PAGE>

BUSH INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 29, 2001, DECEMBER 30, 2000 AND JANUARY 1, 2000
-------------------------------------------------------------------------------


1.    DESCRIPTION OF BUSINESS AND SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES

      Principles of Consolidation - The consolidated financial statements
      consist of Bush Industries, Inc. and its majority-owned subsidiaries
      (collectively, the "Company"). All significant intercompany accounts and
      transactions have been eliminated.

      Nature of Operations - The Company is a diversified global furniture
      manufacturer and supplier of surface technologies. The Company operates
      its business in four reportable segments: (1) Bush Business Furniture,
      which concentrates on the business office and the home office markets with
      sales to the office superstore and dealer channels; (2) Bush Furniture,
      which focuses on home entertainment, home office and other home
      furnishings products; (3) Bush Furniture Europe, which sells commercial,
      home office and other furnishings in the European market; and (4) Bush
      Technologies, which is focused on the cell phone accessories after-market,
      as well as the utilization of surface technologies in automotive
      interiors, cosmetics, sporting goods and consumer electronics. The Company
      operates several manufacturing and warehouse facilities throughout North
      America and in Germany.

      Cash Equivalents - The Company considers all highly liquid investments
      with a maturity of three months or less at the time of purchase to be cash
      equivalents.

      Inventories - Inventories, consisting of raw materials, work-in-progress
      and finished goods, have been stated at the lower of cost or market as
      determined by the first-in, first-out method.

      Property, Plant and Equipment - Property, plant and equipment is carried
      at cost. Depreciation is computed by the straight-line method over the
      estimated useful lives of the assets, which are as follows: buildings and
      improvements 10-50 years; machinery and equipment 3-20 years;
      transportation equipment 3-7 years; office equipment 3-10 years; and
      leasehold improvements 3-10 years or the lease term, if less. Construction
      in progress is recorded in property, plant and equipment and amounted to
      $7,500,000 and $29,124,000 at December 29, 2001 and December 30, 2000,
      respectively. Interest associated with construction indebtedness is
      capitalized. Interest amounting to approximately $971,000, $1,984,000 and
      $1,333,000 associated with construction in progress was capitalized for
      2001, 2000 and 1999, respectively.

      The cost of repairs and maintenance is charged to expense as incurred.
      Renewals and betterments are capitalized. Upon retirement or sale of an
      asset, its cost and related accumulated depreciation or amortization are
      removed from the accounts and any gain or loss is recorded in income or
      expense. The Company continually reviews property, plant and equipment to
      determine that the carrying values have not been impaired by estimating
      the future undiscounted cash flows expected to result from the use of the
      property, plant and equipment.

                                      F-6

<PAGE>

      Other Assets - Other assets consist primarily of goodwill, cash value of
      officer's life insurance policies, investment at cost, and certain
      intangible assets. Goodwill is being amortized on a straight-line basis
      generally over 15 years. Intangible amortization expense was $1,523,000,
      $1,613,000 and $1,524,000 for 2001, 2000 and 1999, respectively. The
      Company continually reviews its long-lived assets to determine that the
      carrying values have not been impaired whenever significant events or
      changes occur which might impair recovery of their recorded costs. The
      Company measures expected future cash flows and compares them to the
      carrying amount of the asset to determine whether any impairment loss is
      to be recognized.

      Fair Value of Financial Instruments - The fair value of financial
      instruments is determined by reference to various market data and other
      valuation techniques, as appropriate. Unless otherwise disclosed, the fair
      value of short-term instruments approximates their recorded values due to
      the short-term nature of the instruments. The fair value of long-term debt
      instruments approximates their recorded values primarily due to interest
      rates approximating current rates available for similar instruments.

      Foreign Currency Translation - Essentially all assets and liabilities are
      translated into U.S. dollars at year-end exchange rates, while elements of
      the income statement and cash flow statement are translated at average
      exchange rates in effect during the year. Adjustments arising from the
      translation of net assets located outside the United States are recorded
      as a component of comprehensive income.

      Stock-Based Compensation - The Company accounts for stock-based
      compensation in accordance with Statement of Financial Accounting
      Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS No.
      123). As permitted in that standard, the Company has elected to continue
      to follow the recognition provisions of Accounting Principles Board (APB)
      Opinion No. 25, "Accounting for Stock Issued to Employees," and related
      interpretations in accounting for employee stock-based compensation. No
      employee stock-based compensation expense was recorded for the years ended
      December 29, 2001, December 30, 2000 and January 1, 2000.

      Income Taxes - Deferred taxes are recorded for temporary differences
      between the financial reporting and tax basis of assets and liabilities
      using the anticipated tax rate when taxes are expected to be paid or
      recovered. A valuation allowance is recorded to reduce the carrying
      amounts of deferred tax assets unless it is more likely than not that such
      assets will be realized.

      Supplemental Cash Flow Information - Cash paid for interest, net of
      amounts capitalized was $8,650,000, $11,772,000 and $10,835,000 and cash
      paid for income taxes was $6,301,000, $9,783,000 and $5,714,000 in 2001,
      2000 and 1999, respectively.

      Revenue Recognition - Revenues are recognized when products are shipped.
      Provisions for discounts, rebates to customers, returns and other
      adjustments are provided for in the same period the related sales are
      recorded.

      Financial Statement Year End - The Company's year end is the closest
      Saturday to December 31. Fiscal years for the consolidated financial
      statements included herein ended on December 29, 2001 (52 weeks), December
      30, 2000 (52 weeks) and January 1, 2000 (52 weeks). The accounts of two of
      the Company's wholly-owned subsidiaries, Rohr-Bush GmbH & Co. and
      Bush-Viotechnik GmbH, have been consolidated on the basis of a year ending
      in October. Such fiscal period corresponds with those companies' fiscal
      year end.

                                      F-7

<PAGE>

     Earnings Per Share (EPS) - Basic EPS excludes dilution and is computed by
     dividing net income by the weighted average number of shares outstanding
     for the period. Diluted EPS reflects the potential dilution that could
     occur if securities or other contracts to issue common stock were exercised
     or converted into common stock. The dilutive effect of outstanding options
     issued by the Company are reflected in diluted EPS using the treasury stock
     method. Under the treasury stock method, options will only have a dilutive
     effect when the average market price of common stock during the period
     exceeds the exercise price of the options. There were 168,859, 133,983 and
     104,019 stock options excluded from the computation of diluted earnings per
     share due to their antidilutive effect in 2001, 2000 and 1999,
     respectively.

     Comprehensive Income - Comprehensive income includes all changes in
     stockholders' equity during the period except those resulting from
     investments by owners and distribution to owners. The Company's
     comprehensive income includes net earnings, an amount for foreign currency
     translation and a minimum pension liability adjustment.

     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 effect
     the reported amounts of revenues and expenses during the reported period
     and the reported amounts of assets and liabilities and disclosure of
     contingent assets and liabilities at the date of the financial statements.
     Actual results could differ from those estimates.

     Recent Accounting Pronouncements - In July 2001, the Financial Accounting
     Standards Board (FASB) issued Statement of Financial Accounting Standards
     No. 141, "Business Combinations" (SFAS No. 141), and Statement of Financial
     Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS
     No. 142). The FASB also issued Statement of Financial Accounting Standards
     No. 143, "Accounting for Obligations Associated with the Retirement of
     Long-Lived Assets" (SFAS No. 143), and Statement of Financial Accounting
     Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
     Assets" (SFAS No. 144), in August and October 2001, respectively.

     SFAS No. 141 requires the purchase method of accounting for business
     combinations initiated after June 30, 2001 and eliminates the
     pooling-of-interest method. The Company does not believe that the adoption
     of SFAS No. 141 will have a material impact on its financial statements.

     Effective December 30, 2001 (the first day of fiscal 2002), the Company
     adopted SFAS No. 142. Under the new rules, the Company will no longer
     amortize goodwill and other intangible assets with indefinite lives, but
     such assets will be subject to periodic testing for impairment. On an
     annual basis, and when there is reason to suspect that their values have
     been diminished or impaired, these assets must be tested for impairment,
     and write-downs to be included in results from operations may be necessary.
     SFAS No. 142 also requires the Company to complete a transitional goodwill
     impairment test six months from the date of adoption. Any goodwill
     impairment loss recognized as a result of the transitional goodwill
     impairment test will be recorded as a cumulative effect of a change in
     accounting principle no later than the end of fiscal year 2002. The Company
     is currently evaluating, but has not yet determined, the impact of SFAS No.
     142 on its financial position and results of operations. However, the
     Company expects that a substantial amount of its intangible assets will no
     longer be amortized. Goodwill and other intangible assets subject to SFAS
     No. 142 were approximately $15 million as of December 29, 2001.

                                       F-8

<PAGE>

     SFAS No. 143 establishes accounting standards for the recognition and
     measurement of an asset retirement obligation and its associated asset
     retirement cost. It also provides accounting guidance for legal obligations
     associated with the retirement of tangible long-lived assets. SFAS No. 143
     is effective in fiscal years beginning after June 15, 2002, with early
     adoption permitted. The Company expects that the provisions of SFAS No. 143
     will not have a material impact on its consolidated results of operations
     and financial position upon adoption. The Company plans to adopt SFAS No.
     143 effective December 29, 2002 (the first day of fiscal 2003).

     SFAS No. 144 establishes a single accounting model for the impairment or
     disposal of long-lived assets, including discontinued operations. SFAS No.
     144 superseded Statement of Financial Accounting Standards No. 121,
     "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
     Assets to Be Disposed Of"(SFAS No. 121), and APB Opinion No. 30, "Reporting
     the Results of Operations - Reporting the Effects of Disposal of a Segment
     of a Business, and Extraordinary, Unusual and Infrequently Occurring Events
     and Transactions." The provisions of SFAS No. 144 are effective in fiscal
     years beginning after December 15, 2001, with early adoption permitted, and
     in general are to be applied prospectively. Effective December 30, 2001
     (the first day of fiscal 2002), the Company adopted SFAS No. 144 and does
     not expect that the adoption will have a material impact on its
     consolidated results of operations and financial position.

2.   INVENTORIES

     Inventories consist of (in thousands):

                                                    December 29,    December 30,
                                                        2001            2000

       Raw materials                                 $  16,137       $  13,421
       Work in progress                                  5,570           5,452
       Finished goods                                   33,590          55,965
                                                     ---------       ---------

       Total                                         $  55,297       $  74,838
                                                     =========       =========
3.   PROPERTY, PLANT AND EQUIPMENT, NET

     Property, plant and equipment consist of:

                                                    December 29,    December 30,
                                                        2001            2000
                                                           (in thousands)

       Land                                          $   6,173       $   5,934
       Building and improvements                       124,082         120,503
       Machinery and equipment                         189,117         181,629
       Transportation equipment                          1,103           1,160
       Office equipment                                 14,942          12,838
       Leasehold improvements                            1,466           1,403
                                                     ---------       ---------
                                                       336,883         323,467
       Less accumulated depreciation                  (129,549)       (109,848)
                                                     ---------       ---------

       Total                                         $ 207,334       $ 213,619
                                                     =========       =========
     Depreciation expense was $18,124,000, $17,053,000 and $15,679,000 for 2001,
     2000 and 1999, respectively.

                                       F-9

<PAGE>

4.   OTHER ACCRUED LIABILITIES

     Other accrued liabilities consist of (in thousands):

<TABLE>
<CAPTION>
                                                                                December 29,    December 30,
                                                                                    2001            2000
<S>                                                                              <C>             <C>
       Payroll, profit sharing and related liabilities                           $   10,302      $   12,983
       Commissions and sales related expenses                                        10,835          23,321
       Other                                                                          2,915           2,025
                                                                                 ----------      ----------

       Total                                                                     $  24,052       $   38,329
                                                                                 ==========      ==========
</TABLE>

5.    LONG-TERM DEBT

      Long-term debt consists of:

<TABLE>
<CAPTION>
                                                                                December 29,    December 30,
                                                                                    2001            2000
                                                                                      (in thousands)
<S>                                                                              <C>             <C>
       Revolving credit facility with the first contractual principal payment
         due June 2004.                                                          $  117,129      $  135,940

       Pennsylvania Industrial Development Authority loan, issued
         October 3, 1996, interest at a rate of 3%. Monthly principal and
         interest payments of $13,812 are due through 2011.                           1,420           1,541

       Pennsylvania Industrial Development Authority loan, issued
         February 26, 1997, interest at a rate of 3.75%. Monthly
         principal and interest payments of $14,544 are due through 2012.             1,483           1,600

       Pennsylvania Sunny Day Loan Fund loan, issued June 27, 1996,
         interest at a rate of 3%. Monthly principal and interest payments
         of $13,812 are due through 2011.                                             1,379           1,501

       Pennsylvania Machinery & Equipment Loan Fund loan, issued
         November 6, 1996, interest at a rate of 3%. Monthly principal
         and interest payments of $6,707 are due through 2003.                          154             227
                                                                                 ----------      ----------
       Total debt                                                                   121,565         140,809
       Less current portion                                                            (447)           (433)
                                                                                 ----------      ----------

       Total long-term debt                                                      $  121,118      $  140,376
                                                                                 ==========      ==========
</TABLE>

                                      F-10

<PAGE>

     The Company has a revolving credit facility with a consortium of banks.
     Effective December 28, 2001, the Company entered into an amendment to its
     revolving credit facility which modified the aggregate commitments under
     the amended revolving credit facility to $173.0 million from $210.0
     million. In addition, certain financial covenant ratios were amended. The
     amended revolving credit facility is available through June 30, 2004 and
     borrowings are secured by all domestic tangible personal property and
     intangible assets of the Company. The Company classifies borrowings under
     the facility as long-term because there are no contractual obligations for
     repayment until June 30, 2004. Interest is payable on the average daily
     balance of loans outstanding, primarily on a NYBOR based rate (4.63% at
     December 29, 2001) and a rate based on an eurocurrency rate for certain
     foreign currencies (6.50% at December 29, 2001). In addition, the credit
     agreement permits the Company to request the issuance of up to a maximum
     of $20.0 million in letters of credit, which issuance will be deemed part
     of the $173.0 million maximum amount of borrowing permitted under the
     credit facility. As of December 29, 2001, letters of credit amounting to
     approximately $4.6 million were outstanding.

     The revolving credit facility provides for achieving certain consolidated
     cash flow coverage and leverage ratios, prescribes minimum consolidated
     net worth requirements, limits capital expenditures and new leases and
     provides for certain other affirmative and restrictive covenants. In
     addition, the revolving credit facility provides for certain limitations
     of the amount of cash dividends that the Company can declare.

     A five-year summary of aggregate principal payments on outstanding
     long-term debt is (in thousands):


        2002                                                         $      447
        2003                                                                462
        2004                                                            117,526
        2005                                                                410
        2006                                                                423
        Thereafter                                                        2,297
                                                                     ----------

        Total                                                        $  121,565
                                                                     ==========


6.    COMMITMENTS

      The Company has incurred rental expense for manufacturing and warehouse
      space and equipment. A summary of rent expense follows (in thousands):

                                                2001         2000          1999

        Real estate                          $  1,882     $  1,094     $  1,310
        Equipment                               2,372        2,259        2,156

      Minimum future obligations over the next five years under operating leases
      that have initial or remaining noncancelable terms in excess of one year
      are summarized as follows (in thousands):


        2002                                                           $  2,837
        2003                                                              1,059
        2004                                                                754
        2005                                                                508
        2006                                                                228

                                      F-11

<PAGE>

7.    INCOME TAXES

      The provision for income taxes is as follows (in thousands):

<TABLE>
<CAPTION>
                                                             2001         2000           1999
 <S>                                               <C>        <C>             <C>
        Current:
         Federal                                          $  528      $  10,041      $   6,867
         State                                               438          1,330            785
                                                          ------      ---------      ---------
                                                             966         11,371          7,652
                                                          ------      ---------      ---------

        Deferred:
         Federal                                             844          2,786            584
         State                                                87            326             60
         Foreign                                            (460)            49         (2,202)
                                                          ------      ---------      ---------
                                                             471          3,161         (1,558)
                                                          ------      ---------      ---------

        Total                                             $1,437      $  14,532      $   6,094
                                                          ======      =========      =========
</TABLE>

        The types and tax effects of temporary differences included in deferred
        tax assets and liabilities are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                     2001          2000
<S>                                                                              <C>            <C>
        Deferred Tax Assets:
          Accounts receivable                                                    $       348    $      473
          Accrued expenses                                                             2,910         3,687
          Inventories                                                                  1,984         2,310
          Deferred income                                                                343           390
          State investment and federal minimum tax credit carryforward                 8,112         3,048
          Subsidiary net operating loss carryforward                                   3,477         3,256
                                                                                 -----------    ----------
                                                                                      17,174        13,164

        Deferred Tax Liabilities:
          Property, plant and equipment                                              (15,740)      (14,482)
          Other assets                                                                (1,313)       (1,360)
                                                                                 -----------    ----------

         Subtotal                                                                        121        (2,678)



        Total valuation allowance                                                     (7,474)       (3,048)
                                                                                 -----------    ----------

        Net deferred tax liability                                               $    (7,353)   $   (5,726)
                                                                                 ===========    ==========

<CAPTION>
                                                                                     2001          2000
<S>                                                                              <C>            <C>
        Reported as (in thousands):
          Current asset (included in prepaid expenses
            and other current assets)                                            $     3,770    $    4,938
          Long-term liability                                                        (11,123)      (10,664)
                                                                                 -----------    ----------

        Net deferred tax liability                                               $    (7,353)   $   (5,726)
                                                                                 ===========    ==========
</TABLE>

                                      F-12

<PAGE>

      The Company has recorded a valuation allowance primarily in anticipation
      that certain state investment tax credits will expire prior to their
      usage. State investment and subsidiary net operating loss carryforwards of
      approximately $7.5 million and $10.0 million begin to expire in 2003 and
      2011, respectively. Substantially all of the subsidiary net operating loss
      carryforwards are a result of foreign operations and have no expiration
      date.

      The provision for income taxes differs in each of the years from the
      federal statutory rate due to the following:

                                                   2001        2000       1999

      Statutory rate                               35.0%       35.0%      35.0%
      State taxes, net of federal benefits         25.2         2.8        4.4
      Effect of non-deductible costs               19.1         0.9        2.6
      Effect of foreign tax rates                   2.0         0.5        8.9
      Other, net                                    3.5        (0.2)       0.5
                                                -------      ------      ------

      Effective tax rate                           84.8%       39.0%      51.4%
                                                =======      ======      ======


      The Company realized tax benefits amounting to $185,000, $108,000 and
      $24,000 as the result of stock option transactions during 2001, 2000 and
      1999, respectively. The benefit has been credited to paid-in capital and
      is not reflected in the current year provision for taxes.

8.    CAPITAL STOCK

      The authorized capital stock of the Company consists of 20,000,000 shares
      of Class A Common Stock, $.10 par value, and 6,000,000 shares of Class B
      Common Stock, $.10 par value. Dividends may be declared and paid on Class
      A Common Stock without being paid on Class B Common Stock. No dividend may
      be paid on Class B Common Stock without equal amounts paid concurrently on
      Class A Common Stock. Holders of Class A Common Stock have one-tenth vote
      per share and are entitled to elect at least 25% of the Board of Directors
      as long as the number of outstanding shares of Class A Common Stock is at
      least 10% of the total of all Common Stock outstanding. Holders of Class B
      Common Stock have one vote per share.

      The Company has a stock redemption agreement with the principal
      shareholder, which provides that upon his death the Company may be
      required to redeem a portion of the Company's stock then owned by the
      shareholder's estate. The redemption price per share shall be determined
      at the then market price based upon a thirty day average prior to the
      closing of any such stock redemption. The amount of the redemption is
      limited to approximately $21.4 million which will be funded by the
      proceeds from life insurance policies maintained on the life of the
      principal shareholder. The shareholder's estate can request the Company to
      redeem shares under the agreement until the maximum time period permitted
      to pay estate taxes has elapsed.

      In October 1999, the Company sold 268,574 shares of common stock at fair
      value to certain employees of the Company in exchange for notes
      receivable. Repayment of the notes will commence in the fourth quarter of
      2003 through payroll deductions.

                                      F-13

<PAGE>

9. STOCK PLANS

   The Company currently has two open stock plans which provide for the
   issuance of Class A Common Stock. As of December 29, 2001, there were
   609,465 shares of Class A Common Stock available for issuance under the
   1995 Stock Plan and 166,961 shares of Class A Common Stock under the 1999
   Stock Plan. Incentive Stock Options granted under the 1995 Stock Plan must
   have an option price of at least 100% (110% for stockholders with more
   than 10% of the total combined voting power) of the fair market value of
   the Class A Common Stock on the date of the grant. The option price of the
   Non-Qualified Stock Options granted pursuant to this plan shall be
   determined by the Compensation Committee of the Board of Directors, in its
   sole discretion. The vesting of outstanding stock options vary, however,
   they generally vest over a two to seven year period and expire ten years
   from the date of grant. No option can be exercised within one year after
   the date of grant. Under the 1999 Stock Plan, shares may be awarded for
   such consideration as determined by the Company.

   As of December 29, 2001, there were outstanding options to purchase
   1,256,577 shares of Class A Common Stock under the current and prior plans
   at prices ranging from $8.91 to $29.93 that were vested and could be
   exercised. Of these outstanding options, 1,211,827 have an exercise price
   of $8.91.

   The following is a summary of option transactions:

<TABLE>
<CAPTION>
                                                                 2001             2000              1999
      <S>                                                  <C>               <C>              <C>
      Options outstanding, beginning of year                  1,483,411         1,555,131        1,574,889
      Options granted                                            68,000            30,000           15,500
      Options exercised/cancelled                              (160,709)         (101,720)         (35,258)
                                                            -----------         ---------        ---------

      Options outstanding, end of year                        1,390,702         1,483,411        1,555,131
                                                            ===========         =========       ==========
</TABLE>

   All of the options outstanding expire at various dates from 2003 through
   2011. The option price of the shares subject to options exercised in 2001
   ranged from $1.69 to $10.86. The weighted-average exercise prices of options
   were $8.51, $8.50 and $6.12 for fiscal years 2001, 2000 and 1999,
   respectively. The weighted-average grant-date fair value of options granted
   were $12.98, $13.88 and $10.34 for fiscal years 2001, 2000 and 1999,
   respectively.

   In addition to the options granted under the aforementioned plans, the
   Company has outstanding 48,376 shares (all exercisable) subject to
   non-qualifying options granted to certain key individuals which can be
   exercised through 2003 at an exercise price of $8.91.

   Pro forma information regarding net earnings and earnings per share is
   required by SFAS No. 123 and has been determined as if the Company had
   accounted for its employee stock options and awards under the fair value
   method of that standard. The fair value of those options were estimated at
   the date of grant using a Black-Scholes option pricing model with the
   following weighted-average assumptions for the years ended December 29, 2001,
   December 30, 2000 and January 1, 2000, respectively: risk free interest rate
   of 5.02%, 6.37% and 6.55%; dividend yield of 1.59%, 1.45% and 1.45%;
   volatility factors of the expected market price of the Company's common stock
   of 46%, 34% and 44%; and a weighted-average expected life of seven years for
   all three years.

   For purposes of pro forma disclosures, the estimated fair value of the
   options is amortized to expense over the options' vesting period. The
   Company's pro forma net earnings, basic and diluted earnings per share for
   the years ended December 29, 2001, December 30, 2000 and January 1, 2000 were
   $214,000, $0.02 and $0.02; $22,615,000, $1.65 and $1.59; and $5,729,000,
   $0.41 and $0.40, respectively.

                                      F-14

<PAGE>

10. PENSIONS

    The Company sponsors a defined benefit plan for eligible non-U.S. employees
    at its German facility.

    The following are reconciliations of the benefit obligation, the funded
    status of the plan, and the amounts recognized in the consolidated balance
    sheets (in thousands):

<TABLE>
<CAPTION>
                                                                                   2001          2000
     <S>                                                                        <C>          <C>
      Change in benefit obligation:
        Benefit obligation at beginning of year                                 $   5,362     $    6,059
        Service cost                                                                   58            116
        Interest cost                                                                 335            342
        Foreign currency exchange rate changes                                        147         (1,187)
        Actuarial gain                                                                154            205
        Benefits paid                                                                (176)          (173)
                                                                                ---------     ----------

      Benefit obligations at end of year                                            5,880          5,362
                                                                                ---------     ----------

      Funded status (the plan is unfunded)                                         (5,880)        (5,362)
        Unrecognized net actuarial gain                                               154            205
                                                                                ---------     ----------

      Net amount recognized                                                     $  (5,726)    $   (5,157)
                                                                                =========     ==========
</TABLE>

    Amounts recognized in the balance sheets consist of:

<TABLE>
<CAPTION>
                                                                                   2001          2000
      <S>                                                                       <C>           <C>
      Accrued benefit liability (included in other long-term liabilities)       $  (5,794)    $   (5,222)
      Accumulated other comprehensive loss                                             68             65
                                                                                ----------    ----------

      Net amount recognized                                                     $  (5,726)    $   (5,157)
                                                                                ==========    ==========
</TABLE>

    There were no plan assets at December 29, 2001 and December 30, 2000. The
    plan is funded to the extent of benefits paid.

    Weighted average assumptions for the years ended:

<TABLE>
<CAPTION>
                                                                      2001         2000          1999
      <S>                                                             <C>         <C>            <C>
      Discount rate                                                   6.00%        6.00%         6.00%
      Rate of increase in compensation levels                         2.50%        2.50%         2.50%
</TABLE>

    Components of net periodic benefit cost consisted of the following (in
thousands):

<TABLE>
<CAPTION>
                                                                      2001         2000         1999
      <S>                                                           <C>         <C>        <C>
      Service cost                                                  $   58      $   116    $     143
      Interest cost                                                    335          342          381
                                                                    ------     -------     ---------

      Net periodic benefit cost                                     $  393      $   458    $     524
                                                                    ======     ========    =========
</TABLE>

                                      F-15

<PAGE>

      The Company also sponsors defined contribution plans which cover
      substantially all of the Company's eligible U.S. employees. The plans
      provide for a general employer contribution, a wage reduction feature
      under Section 401(k) and a matching contribution. The general employer
      contribution provides for a discretionary Company contribution of the
      Company's Class A common stock. The matching contribution is made on
      behalf of each eligible participant who makes a wage reduction
      contribution. This matching contribution is made in cash and includes
      certain limitations. Net pension cost related to the plans was $1,276,000,
      $1,366,000 and $1,462,000 for the years ended December 29, 2001, December
      30, 2000 and January 1, 2000, respectively.

11.   BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION

      During 2001, the Company announced a plan to reorganize its operations
      into four operating segments based principally on the natural alignment of
      its customers, markets and products. This reorganization was substantially
      completed by the end of 2001. Accordingly, the segment information for the
      prior years has been restated to conform to the current operating
      structure. Inter-segment sales were made at prices approximating current
      market value. Certain expenses relating to the North American furniture
      segments, Bush Business Furniture and Bush Furniture, were allocated to
      these two segments based on certain percentages and assumptions that the
      Company believes are reasonable.

      In evaluating segment performance, management focuses on earnings from
      operations before income taxes. The earnings before income taxes exclude
      nonrecurring charges such as restructuring charges and gains or losses on
      the sale of assets. The accounting policies of the segments are the same
      as those described in Note 1.

      An analysis and reconciliation of the Company's business segment
      information to the respective information in the consolidated financial
      statements is as follows (all dollars are in thousands):

                                      F-16

<PAGE>

<TABLE>
<CAPTION>
                                                      2001        2000           1999
<S>                                                <C>          <C>            <C>
Net sales from external customers:
  Bush Business Furniture                           $152,080      $221,936     $205,159
  Bush Furniture                                     114,432       142,093      150,647
  Bush Furniture Europe                               54,287        55,858       70,726
  Bush Technologies                                   25,007        31,310       15,174
                                                    --------      --------     --------
Consolidated total                                  $345,806      $451,197     $441,706
                                                    ========      ========     ========
Inter-segment sales:
  Bush Business Furniture                           $      -      $      -     $      -
  Bush Furniture                                           -             -            -
  Bush Furniture Europe                                4,084        16,060        1,662
  Bush Technologies                                      179         1,143          872
                                                    --------      --------     --------
Total                                               $  4,263      $ 17,203     $  2,534
                                                    ========      ========     ========
Segment earnings (loss) before income taxes:
  Bush Business Furniture                           $  1,450      $ 17,285     $ 14,454
  Bush Furniture                                      (1,919)        6,954       16,747
  Bush Furniture Europe                               (3,423)          416      (10,610)
  Bush Technologies                                    5,586         9,036          937
                                                    --------      --------     --------
                                                       1,694        33,691       21,528
  Gain on sale of assets                                   -         3,618            -
  Restructuring charge                                     -             -       (9,672)
                                                    --------      --------     --------
Consolidated total                                  $  1,694      $ 37,309     $ 11,856
                                                    ========      ========     ========
Interest expense:
  Bush Business Furniture                           $  3,458      $  6,020     $  3,986
  Bush Furniture                                       2,473         3,461        2,647
  Bush Furniture Europe                                2,384         2,006        2,173
  Bush Technologies                                      238           403          624
                                                    --------      --------     --------
Consolidated total                                  $  8,553      $ 11,890     $  9,430
                                                    ========      ========     ========
Depreciation and amortization:
  Bush Business Furniture and Bush Furniture (1)    $ 15,501      $ 14,022     $ 12,118
  Bush Furniture Europe                                3,248         3,500        3,649
  Bush Technologies                                      898         1,144        1,436
                                                    --------      --------     --------
Consolidated total                                  $ 19,647      $ 18,666     $ 17,203
                                                    ========      ========     ========
Capital expenditures for long-lived assets:
  Bush Business Furniture and Bush Furniture (1)    $  3,763      $ 25,344     $ 30,735
  Bush Furniture Europe                                4,470         4,608          812
  Bush Technologies                                    1,211         3,349          116
                                                    --------      --------     --------
 Consolidated total                                 $  9,444      $ 33,301     $ 31,663
                                                    ========      ========     ========
</TABLE>
                                     F-17

<PAGE>

                                                    December 29,    December 30,
                                                       2001            2000

Identifiable assets:
  Bush Business Furniture and Bush Furniture (1)    $243,383        $291,228
  Bush Furniture Europe                               56,054          52,737
  Bush Technologies                                   21,740          22,586
                                                    --------        --------

Consolidated total                                  $321,177        $366,551
                                                    ========        ========

(1) The Company's North American furniture segments, Bush Business Furniture and
    Bush Furniture, share certain productive assets. These productive assets
    manufacture components for both Bush Business Furniture and Bush Furniture
    products. As a result, expenses related to depreciation and amortization,
    and capital expenditures for long-lived assets are not allocated between
    these two furniture segments. Further, identifiable assets are not
    allocated between Bush Business Furniture and Bush Furniture.

The Company's geographic operations outside of the United States principally
include Germany. The Company's products are sold throughout the world. Net sales
by geographic area are presented by attributing net sales to external customers
based on the domicile of the selling location in thousands:

                                          2001        2000        1999

Net sales by geographic area:
  United States                         $291,547    $395,341    $370,982
  Germany                                 54,259      55,856      70,724
                                        --------    --------    --------

  Total                                 $345,806    $451,197    $441,706
                                        ========    ========    ========

                                             December 29,     December 30,
                                                2001              2000

Long-lived assets by geographic area:
  United States                               $193,289          $204,513
  Germany                                       42,639            38,476
                                              --------          --------

  Total                                       $235,928          $242,989
                                              ========          ========


Electronic and office product superstores and mass merchandisers, throughout the
United States and furniture stores in Europe, comprise a significant portion of
the Company's customer base. The Company performs ongoing credit evaluations of
its customers' financial condition and, generally, requires no collateral from
its customers. Although the Company's exposure to credit risk associated with
nonpayment by customers is affected by conditions or occurrences within the
retail industry, the majority of trade receivables were current at December 29,
2001. The Company has one United States customer that accounted for total gross
sales of approximately 14% in 2001, 20% in 2000 and 21% in 1999, and
approximately 5% and 13% of accounts receivable at December 29, 2001 and
December 30, 2000, respectively. The Company has a second United States customer
that accounted for total gross sales of approximately 14% in 2001, 18% in 2000
and 16% in 1999, and approximately 13% and 12% of accounts receivable at
December 29, 2001 and December 30, 2000, respectively. The Company has a third
United States customer that accounted for total gross sales of approximately 12%
in 2001, and approximately 15% of accounts receivable at December 29, 2001.
Gross sales for this third customer did not exceed 10% in 2000 or 1999.

                                      F-18

<PAGE>

12.   ACQUISITIONS

      In October 2000, the Company acquired the 49% minority interest in
      Rohr-Bush GmbH & Co. and, as a result, the Company owns 100% of Rohr-Bush
      GmbH & Co. The purchase price has been allocated primarily to property,
      plant and equipment based on fair market value at the date of acquisition
      in accordance with the purchase method of accounting. The purchase price,
      including transaction costs, amounted to approximately $6.5 million.

13.   RESTRUCTURING

      During the first quarter of 1999, the Company finalized plans to
      restructure certain of its operations resulting in non-recurring
      restructuring costs amounting to $9,672,000 being charged to expense in
      1999. All components of the restructuring were completed in 1999 with
      severance payments completed during the first half of fiscal year 2000.

14.   SALE OF ASSETS

      In December 2000, the Company sold substantially all of the assets of its
      retail service business, a division of the Company, to a third party in
      exchange for shares of stock of the purchaser. Net sales of this retail
      service business were not significant to the consolidated financial
      statements. The Company recorded the shares of stock received at fair
      value of approximately $5.0 million, which resulted in a pre-tax gain of
      approximately $3.6 million. The investment is included in other assets on
      the consolidated balance sheets since the Company expects to hold the
      investment on a long-term basis. The cost method is used to account for
      this investment because the Company does not have the ability to exercise
      significant influence over the purchaser's operating and financial
      policies.

15.   QUARTERLY SALES AND EARNINGS DATA - UNAUDITED

<TABLE>
<CAPTION>
                                              (In Thousands, except per share data)
                                             4th Qtr.      3rd Qtr.   2nd Qtr.   1st Qtr.
      <S>                                   <C>            <C>        <C>        <C>
      2001

      Net sales                             $ 84,950       $ 80,614   $ 75,614   $104,628
      Gross profit                            16,365  (a)    22,757     22,489     31,771
      Net earnings (loss)                     (5,926) (a)       849      1,421      3,913
      Earnings (loss) per share - basic        (0.43)          0.06       0.10       0.29
      Earnings (loss) per share - diluted      (0.43) (b)      0.06       0.10       0.28

      2000

      Net sales                             $118,033       $106,130   $104,868   $122,166
      Gross profit                            39,477         34,241     32,360     37,433
      Net earnings                             9,096  (c)     6,270      3,409      4,002
      Earnings per share - basic                0.67           0.46       0.25       0.29
      Earnings per share - diluted              0.65           0.44       0.24       0.28
</TABLE>

     (a)  Fourth quarter 2001 gross profit and net loss includes a $5.2 million
          pre-tax non-cash inventory write down.

     (b)  Fourth quarter 2001 diluted earnings per share were calculated using
          basic weighted average shares outstanding because using diluted
          weighted average shares outstanding would have been antidilutive.

     (c)  Fourth quarter 2000 net earnings includes a pre-tax gain on sale of
          assets of $3,618,000.

                                     ******

                                      F-19

<PAGE>

SCHEDULE II

                        VALUATION AND QUALIFYING ACCOUNTS
                                 (In Thousands)

<TABLE>
<CAPTION>
                          Col. B
                        Balance at                                                          Col. D             Col. E
Col. A                  Beginning                          Col. C                        Deductions -        Balance at
Description             of Period                         Additions                      Describe (1)      End of Period
                                         ----------------------------------------------
                                                                     Charged to
                                             Charged to            Other Accounts-
                                          Costs & Expenses            Describe
<S>                      <C>              <C>                      <C>                   <C>                <C>
Allowance for
  doubtful accounts


Fiscal 2001              $ 1,341             $    810                 $    0             $    1,172          $      979


Fiscal 2000              $ 1,911             $    833                 $    0             $    1,403          $    1,341


Fiscal 1999              $ 1,905             $    690                 $    0             $      684          $    1,911
</TABLE>


(1)  Accounts written off, net of collections on accounts receivable previously
     written off

                                       S-1