SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

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

                    For the fiscal year ended January 1, 2000

                                       OR

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

Commission file number 1-7753

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

        Pennsylvania                                            25-1001433
------------------------------                              --------------------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

     10011 Pines Blvd., Pembroke Pines, Florida                   33024
     ------------------------------------------                ----------
      (Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code: (954) 436-8909

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

<TABLE>
<S>                                            <C>
         Title of each class                   Name of each exchange on which registered
         -------------------                   -----------------------------------------
Common Stock, Par Value $.20 Per Share                 American Stock Exchange
</TABLE>

Securities registered pursuant to Section 12(g) of the Act: NONE

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
                                     ---        ---

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]

Aggregate market value at March 14, 2000 of outstanding shares of Common Stock
other than shares held by officers, directors and their respective associates:
$13,111,681

Number of shares outstanding at March 14, 2000: 3,180,699

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

<PAGE>

NOTE: In this report, unless the context otherwise requires, Registrant or
Company means Decorator Industries, Inc. and its subsidiaries, herein sometimes
also called "Decorator Industries". Reference to a particular year or the
captions "For the Year" and "At Year End" refer to the fiscal periods as
follows:

                1999  -  52 weeks ended January 1, 2000
                1998  -  52 weeks ended January 2, 1999
                1997  -  53 weeks ended January 3, 1998
                1996  -  52 weeks ended December 28, 1996
                1995  -  52 weeks ended December 30, 1995
                1994  -  52 weeks ended December 31, 1994


                                     PART I

Item 1.  Business.

         The Company is engaged in the design, manufacture and sale of window
coverings, bedspreads, furniture and complementary products. These products are
sold to original equipment manufacturers of recreational vehicles and
manufactured housing and to the hospitality industry (motels/hotels) either
through distributors or directly to the customers.

         The Company has one industry segment and one class of products. The
business in which the Company is engaged is very competitive, and the Company
competes with manufacturers located throughout the country. However, no reliable
information is available to enable the Company to determine its relative
position among its competitors. The principal methods of competition are price,
design and service.

         During 1999, two customers, Fleetwood Enterprises and Champion
Enterprises, accounted for approximately 20% and 13% respectively of the
Company's total sales. In the event of the loss of one or both of these
customers, there would be a material adverse effect on the Company. Fleetwood
operates in the manufactured housing and recreational vehicle industries,
whereas Champion operates solely in manufactured housing. Purchasing decisions
are made at each individual plant of these customers. The Company services many
of these plants and considers each of the plants it services to be an
independent customer.

         The Company's backlog of orders at any given time is not material in
amount and is not significant in the business. No material portion of the
Company's sales or income is derived from customers in foreign countries.

         The chief raw materials used by the Company are largely fabrics made
from both natural and man-made fibers. The raw materials are obtained primarily
from converters and mills. The Company is not dependent upon one or a very few
suppliers. Most of its suppliers are large firms with whom, in the opinion of
management, the Company enjoys good relationships. The Company has never
experienced any significant shortage in its supply of raw materials.

         The Company has no significant patents, licenses, franchises,
concessions, trademarks or copyrights. Although the Company believes the
trademarks aid in identifying its products, it is unable to evaluate the
importance of the trademarks to its business. Expenditures for research and
development during 1999 and 1998 were not significant.

         Compliance with federal, state and local environmental protection
provisions will have no material effect upon the capital expenditures, earnings
or competitive position of the Company.

         The Company employs approximately 775 sales, production, warehouse and
administrative employees and also uses the services of independent sales
representatives.


<PAGE>

Item 2. Properties.

         The following table summarizes certain information concerning the
Company's properties:
<TABLE>
<CAPTION>
                                                                             Approx.
          Location                         Principal Use                    Square Feet      Owned/Leased
          --------                         -------------                    -----------      ------------
<S>                                <C>                                         <C>              <C>
Haleyville, Alabama                Offices, manufacturing and warehouse        54,000            Owned
Lakeland, Florida                  Offices, manufacturing and warehouse         7,500           Leased
Pembroke Pines, Florida            Offices                                      3,148           Leased
Eatonton, Georgia                  Offices, manufacturing and warehouse         5,000           Leased
Elkhart, Indiana                   Offices, manufacturing and warehouse        16,000           Leased
Elkhart, Indiana                   Offices, manufacturing and warehouse        35,000           Leased
Goshen, Indiana                    Offices, manufacturing and warehouse        55,700            Owned
Bossier, Louisiana                 Offices, manufacturing and warehouse        20,000            Owned
Salisbury, North Carolina          Offices, manufacturing and warehouse        22,500           Leased
Berwick, Pennsylvania              Offices, manufacturing and warehouse        12,500           Leased
Bloomsburg, Pennsylvania           Offices, manufacturing and warehouse        56,500            Owned
Memphis, Tennessee                 Offices, manufacturing and warehouse        14,000           Leased
Abbotsford, Wisconsin              Offices, manufacturing and warehouse        21,600           Leased
</TABLE>

         The Company considers that its offices, plants, machinery and equipment
are well maintained, adequately insured and suitable for their purposes and that
its plants are adequate for the presently anticipated needs of the business.

Item 3.  Legal Proceedings.

         None.

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

         None.


                                     PART II

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

         The Company's Common Stock is listed and traded on the American Stock
Exchange, AMEX symbol DII.

         Common Stock price information is set forth in the table below. Sales
prices have been adjusted for stock splits.
<TABLE>
<CAPTION>
                              1999 Sales Prices                        1998 Sales Prices
                              -----------------                        -----------------
                          High               Low                    High               Low
                          ----               ---                    ----               ---
<S>                      <C>                <C>                     <C>                <C>
First Quarter             8-1/4               6                      8-7/8             7-3/16
Second Quarter            7-5/8             6-3/16                  11-3/16            8-1/8
Third Quarter             7-5/16            5-5/16                  11-3/4             7-3/8
Fourth Quarter            5-7/8               5                      8-5/8             6-3/4
</TABLE>

         As of March 14, 2000, the Company had 385 shareholders of record of its
Common Stock.

         Total cash dividend payments were $.28 per share in 1999 and 1998.


                                        2

<PAGE>

                           DECORATOR INDUSTRIES, INC.

                         Item 6. Selected Financial Data

<TABLE>
<CAPTION>
                                            1999          1998            1997            1996          1995          1994
                                            ----          ----            ----            ----          ----          ----
<S>                                        <C>           <C>             <C>             <C>           <C>           <C>
FOR THE YEAR
    Net Sales                              $ 52,546,556  $ 51,966,829    $ 43,395,923    $ 38,649,687  $ 34,207,259  $ 33,246,590
    Income from Continuing Operations      $  2,552,278  $  3,080,895    $  3,035,257    $  3,065,220  $  2,414,678  $  2,823,770
    Net Income                             $  2,552,278  $  3,080,895    $  2,898,339    $  3,065,220  $  2,414,678  $  2,823,770
                                           ------------  -------------   -------------   ------------  ------------  -------------
AT YEAR-END
    Total Assets                           $ 21,665,523  $ 21,462,694    $ 20,301,268    $ 18,394,357  $ 16,415,659  $ 16,406,670
    Long-term Obligations                  $  1,814,169  $    463,037    $    506,169    $    549,433  $    587,084  $    629,450
    Long-term Debt/Total Capitalization          11.21%         2.89%           3.41%           4.05%         5.00%         5.27%
    Working Capital                        $  6,646,856  $  8,244,161    $  8,406,250    $  9,003,836  $  6,925,352  $  7,479,176
    Working Capital Ratio                        2.30:1        2.59:1          2.61:1          2.94:1        2.54:1        2.75:1
    Stockholders' Equity                   $ 14,364,969  $ 15,559,732    $ 14,347,297    $ 13,010,945  $ 11,147,754  $ 11,322,046
                                           ------------  -------------   -------------   ------------  ------------  -------------
PER SHARE
    Continuing Operations                         $0.76         $0.85           $0.82           $0.84         $0.60         $0.69
    Basic                                         $0.76         $0.85           $0.78           $0.84         $0.60         $0.69
    Diluted                                       $0.73         $0.79           $0.73           $0.78         $0.55         $0.62
    Book Value                                    $4.50         $4.37           $3.94           $3.52         $2.99         $2.71
    Cash Dividends Declared                       $0.28         $0.28           $0.28           $0.28         $0.27         $0.23
</TABLE>

Note:    Per share amounts, except for cash dividends, have been adjusted for
         five-for-four stock splits effective July 21, 1998 and June 13, 1997
         and a four-for-three stock split in June 1996.


                                        3
<PAGE>

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

Liquidity and Financial Resources:

         The Company's financial condition continues to be strong, as evidenced
by the following statistical measures:

         1) Working capital at January 1, 2000 was $6,646,856 compared to
            $8,244,161 at January 2, 1999.

         2) The current ratio was 2.30:1 at year-end 1999 compared to 2.59:1 at
            year-end 1998.

         3) The liquid ratio changed to 1.18:1 at year-end 1999 from 1.49:1 at
            year-end 1998.

         4) The long-term debt ratio was at 11.21% January 1, 2000 compared to
            2.89% a year earlier, due to the debt incurred on the new Goshen,
            Indiana facility in 1999.

         A significant use of working capital was made for purchases of Common
Stock to be held for the treasury ($2,878,679).

         Accounts receivable decreased $121,879 (3%) and inventories increased
$14,077 (.2%).

         Capital expenditures for 1999 were $2,234,157 which included $1,500,000
for the construction of a new building in Goshen, Indiana. This building
replaced a leased facility. During 1999, the Company was awarded an industrial
revenue bond in the amount of $1,500,000, the net proceeds of which were used
for the funding of this building and the purchase of equipment at this location.

         Management does not foresee any events which will adversely affect its
liquidity during 2000. The Company's financial condition and available borrowing
capacity is more than adequate to finance internal growth and any additional
acquisitions of businesses.

Results of Operations:

         The following table shows the percentage relationship to net sales of
certain items in the Company's Statement of Earnings:
<TABLE>
<CAPTION>
                                                         1999               1998                1997
                                                         ----               ----                ----
<S>                                                      <C>                <C>                 <C>
Net sales.......................................         100.0%             100.0%              100.0%
Cost of products sold...........................          78.7               78.0                75.4
Selling and administrative expenses.............          13.5               13.1                14.5
Interest and investment income..................           (.1)               (.4)                (.8)
Interest expense................................            .1                  -                  .1
Income from continuing operations...............           4.9                5.9                 7.0
Net income......................................           4.9                5.9                 6.7
</TABLE>

                                        4

<PAGE>

1999 vs. 1998

Net sales for the year 1999 were $52,546,556 compared to 1998 sales of
$51,966,829. Increased sales to the recreational vehicle market were offset by
reduced sales to the manufactured housing market. The Company's sales to the
manufactured housing market were adversely affected by a decline in manufactured
housing production, caused by an excess dealer inventory of manufactured homes.

Cost of goods sold as a percentage of sales increased to 78.7% in 1999 from
78.0% in 1998. This increase is largely attributable to (1) a change in the
product mix including the increased sales to recreational vehicle manufacturers
and (2) productivity issues resulting in excessive labor costs.

Selling and administrative expenses as a percentage of sales increased slightly
in 1999 to 13.5% from 13.1% in 1998. The increase results largely from
additional personnel and the relocation of the Goshen facility.

Interest and investment income decreased by $144,000 in 1999 because investable
balances were lower in 1999 than in 1998 and the market downturn caused the
Company to recognize a market loss of $94,000 in 1999 versus a loss of $32,000
in 1998.

The provision for income taxes as a percentage of pre-tax income increased to
37.8% compared to 35.8% in 1998. The 1998 rate was lower due to a stock option
tax benefit that did not occur in 1999.

1998 vs. 1997

Net sales for the year 1998 were $51,966,829, an increase of 20% compared to the
1997 sales of $43,395,923. The increase in sales dollars came from both the
businesses acquired in 1997 (46% of the increase) and the older businesses (54%
of the increase). Most of the increased sales were to recreational vehicle
manufacturers.

Cost of goods sold as a percentage of sales increased to 78.0% in 1998 from
75.4% in 1997. This increase is largely attributable to (1) a change in the
product mix including the increased sales to recreational vehicle manufacturers
and (2) productivity issues resulting in excessive labor costs and (3) market
conditions which have resulted in a lowering of operating margins.

Selling and administrative expenses as a percentage of sales decreased
significantly in 1998 to 13.1% from 14.5% in 1997. This decrease is a result of
fixed costs being spread over increased sales.

Interest and investment income decreased by $150,000 in 1998 because investable
balances were lower in 1998 than in 1997 and the market downturn caused the
Company to recognize a market loss of $32,000 in 1998 versus a market gain of
$71,000 in 1997.

The provision for income taxes as a percentage of pre-tax income increased
slightly to 35.8% compared to 35.1% in 1997.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

         Not applicable.

Item 8.  Financial Statements and Supplementary Data.

         The financial statements and reports of independent certified public
accountants listed in Item 14(a) of this report are filed under this Item 8.


                                        5

<PAGE>

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

         None.


                                    PART III

Item 10.  Directors and Executive Officers of the Registrant.

         Information concerning the directors and executive officers of the
Company is set forth below.

         William A. Bassett, age 63, has been President and a director of the
Company since 1980, Chief Executive Officer since February 1993 and Chairman of
the Board since January 1994.

         Michael S. Baxley, age 43, has been Executive Vice President of the
Company since January 1999 and was appointed a director on August 2, 1999. He
was employed as Executive Vice President for the Apparel Group of Scovill
Fasteners, Inc., a manufacturer of apparel and industrial fasteners, from
February 1997 to July 1998. Previously he was in various management positions
with ACD Tridon, a subsidiary of Devtek (Automotive products), Johnston &
Murphy, a division of Genesco (Footwear), Fruit of the Loom (Apparel), Procter &
Gamble (Consumer Products) and the U.S. Navy.

         Michael K. Solomon, age 50, has been Vice President of the Company
since November 1994, Treasurer and Chief Financial Officer of the Company since
1985 and a director of the Company since 1987.

         William A. Johnson, age 40, was appointed an officer of the Company on
June 12, 1998. He has been Controller since January 6, 1997. From 1993 until
1996, he held various financial positions with Security Management Corporation.

         Jerome B. Lieber, age 79, has been Secretary and a director of the
Company since 1961. He is Senior Counsel to the law firm of Klett Rooney Lieber
& Schorling, a Professional Corporation, Pittsburgh, Pennsylvania, which serves
as general counsel to the Company. Mr. Lieber previously had been a senior
partner in that firm.

         Joseph N. Ellis, age 71, has been a director of the Company since 1993.
He founded LaSalle-Deitch Co., Inc. a distributor of products for the
manufactured housing and recreational vehicle industry, in 1963 and served as
its President, Chief Executive Officer and Chairman from 1971 until his
retirement in 1992. Mr. Ellis is currently a management consultant.

         Ellen Downey, age 47, has been a director of the Company since 1997.
She served as a director of FRD Acquisition Corporation from 1996 to 1998. Ms.
Downey was employed by Ryder System, Inc. in various financial positions from
1978 to 1991 and from 1991 to 1993 served as Vice President and Treasurer of
that company.

         Thomas L. Dusthimer, age 65, has been a director of the Company since
1997. Since 1992 he has served as a consultant to and director of Key Bank
(Elkhart, Indiana District). From 1973 until his retirement in 1992, Mr.
Dusthimer served in various executive positions, including President, Chief
Executive Officer and Chairman, with Ameritrust Indiana Corporation and
Ameritrust National Bank.


                                        6

<PAGE>

Item 11.  Executive Compensation.

         The following table shows the compensation of the named executive
officers of the Company for each of the last three fiscal years.

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                                      Long-Term
                                                                                    Compensation
                                                   Annual Compensation                 Awards
                                        ------------------------------------------  -------------
Name and                         Fiscal                                               Optioned        All Other Com-
Principal Position                Year   Salary($)(1)    Bonus($)    Other($)(2)      Shares(#)      pensation($)(3)
------------------                ----   ------------    --------    -----------      ---------      ---------------
<S>                               <C>       <C>           <C>          <C>             <C>                <C>
William A. Bassett(4)             1999      285,000        87,074         *            12,500             36,745
Chairman of the Board,
President and Chief
Executive Officer
                                  1998      262,000       127,000      89,977          31,250             36,745
                                  1997      249,712       123,000      87,723           ----              34,745

Michael S. Baxley(5)              1999      161,925        39,183         *            20,000              ----
Executive Vice President

Michael K. Solomon                1999      118,820        20,000         *             5,000              1,553
Vice President, Treasurer and
Chief Financial Officer
                                  1998      114,650        24,000         *            12,500                447
                                  1997      112,370        25,550         *             ----               ----
</TABLE>
------------------------
(1)      The fiscal year 1997 was a 53-week fiscal period.
(2)      Medical/dental reimbursement plan payments, country club memberships,
         relocation bonus, personal use of Company vehicles, and payments made
         in accordance with Company policy for disqualifying sales of Common
         Stock acquired upon the exercise of a qualified stock option. For 1998
         and 1997, payments to Mr. Bassett for such sales were $86,106 and
         $84,289, respectively. These payments provided net benefits to the
         company of $16,359 for 1998 and $16,383 for 1997. An asterisk indicates
         that the total of other annual compensation for that year was less than
         10% of salary and bonus for that year.
(3)      Premiums paid by the Company on life and long-term disability insurance
         policies and Company contributions to the 401(k) Retirement Savings
         Plan.
(4)      The Company has an employment agreement with Mr. Bassett which provides
         for an annual salary of not less than $214,200. The agreement expires
         July 1, 2004.
(5)      The Company has an employment agreement with Mr. Baxley which provides
         a weekly salary of $3,175 and upon Mr. Baxley's termination, a
         continuation of salary and benefits for 12 months.

         The Company's medical and dental reimbursement plan provides
reimbursement to the corporate and certain divisional officers of the Company
and their dependents (as defined in Section 152 of the Internal Revenue Code)
for their medical and dental expenses. Benefits under the plan are limited to
10% of the participant's compensation during the plan year. The plan also
prohibits any participant from receiving "double reimbursement"; i.e., if a
participant receives reimbursement from another source, he or she must remit to
the Company benefits received under the plan.

         On September 1, 1998 the Company began a 401(k) Retirement Savings Plan
available to all eligible employees. To be eligible for the plan, the employee
must be at least 21 years of age and have completed one year of employment.
Eligible employees may contribute up to 15% of their earnings with a maximum of
$10,000 for 1999 based on the Internal Revenue Service annual contribution
limit. The Company will match 25% of the first 4% of the employee's
contributions up to 1% of the employee's earnings. Contributions are invested at
the direction of the employee in one or more funds. Company contributions begin
to vest after three years.


                                        7
<PAGE>

         The Company's 1984 Incentive Stock Option Plan, which expired February
22, 1994, authorized the granting to key employees of options to purchase up to
804,976 shares (as adjusted for stock splits) of the Company's Common Stock. The
purchase price of optioned shares was the fair market value of the Common Stock
on the date of grant, and the maximum term of the options is ten years; in the
case of options granted to employees who owned more than 10% of the outstanding
Common Stock, however, the purchase price was 110% of the fair market value of
the Common Stock on the date of grant and the term of the options is five years.
The number of optioned shares and the purchase price per share are subject to
adjustment for stock splits, stock dividends, reclassifications and the like.

         On April 3, 1995 the board of directors adopted, and on June 5, 1995
the stockholders approved, the Company's 1995 Incentive Stock Option Plan (the
"1995 Plan") which has a term of ten years. The 1995 Plan authorizes the
issuance of up to 520,830 shares (as adjusted for stock splits) of Common Stock
pursuant to stock options granted to key employees of the Company. The purchase
price of optioned shares must be the fair market value of the Common Stock on
the date of grant, and the maximum term of the options is ten years; in the case
of options granted to employees who own more that 10% of the outstanding Common
Stock, however, the purchase price must be 110% of the fair market value of the
Common Stock on the date of grant and the term of the option cannot exceed five
years. The number of shares that may be issued under the 1995 Plan, the number
of optioned shares and the purchase price per share are subject to adjustment
for stock splits, stock dividends, reclassifications and the like.

         The following table provides information on options granted to the
named executive officers in fiscal 1999 under the Company's 1995 Incentive Stock
Option Plan:

                        OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
                                                                                     Potential Realizable Value at
                                                                                     Assumed Annual Rates of Stock
                                                                                     Price Appreciation for Option
                                 Individual Grants                                             Term (2)
--------------------------------------------------------------------------------------------------------------------
                                    Percent of Total
                                        Options
                          Options      Granted to
                          Granted     Employees in    Exercise Price   Expiration
Name                     (Shs) (1)       1999          Per Share (1)      Date            5%              10%
----                     ---------       ----          -------------      ----           -----           -----
<S>                       <C>            <C>              <C>           <C>             <C>            <C>
William A. Bassett        12,500         12.7%            $7.00         6/10/2009       $55,028        $139,452
Michael S. Baxley         15,000         15.3%            $7.875        1/04/2009       $74,288        $188,261
                           5,000          5.1%            $7.00         6/10/2009       $22,011         $55,781
Michael K. Solomon         5,000          5.1%            $7.00         6/10/2009       $22,011         $55,781
</TABLE>
--------------------------
(1)  Options heretofore granted under the 1995 Incentive Stock Option Plan have
     a ten year term and vest 20% each year beginning at the end of the first
     year.
(2)  Potential realizable value is based on the assumption that the market price
     of the Common Stock appreciates at the annual rates shown (compounded
     annually) from the date of grant until the end of the ten year option term.
     Potential realizable value is shown net of exercise price. These numbers
     are calculated based on the regulations promulgated by the Securities and
     Exchange Commission and do not reflect the Company's estimate of future
     stock price growth.


                                        8
<PAGE>

         The following table sets forth information concerning the exercise of
stock options during fiscal 1999 by the named executive officers and the value
of their unexercised, in-the-money stock options at the end of that fiscal year
(January 1, 2000). All options outstanding at January 1, 2000, except for those
granted after fiscal 1995, were exercisable at any time prior to their
respective expiration dates.

                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
                                   Shares                            Optioned          Value of
                                  Acquired           Value           Shares at        Options at
Name                             on Exercise      Realized ($)     01/01/00 (#)     01/01/00($)(1)
----                             -----------      ------------     ------------     --------------
<S>                                <C>              <C>              <C>                 <C>
William A. Bassett                 20,000           108,600          144,579(2)          312,959
                                                                      31,250(3)           ----
Michael S. Baxley                   ----              ----             3,000(2)           ----
                                                                      17,000(3)           ----
Michael K. Solomon                  8,000            59,940           49,494(2)           81,001
                                                                      12,500(3)           ----
</TABLE>
--------------------------
(1)  Assumes a market value of $5.3125 per share, which was the last reported
     sale price on the American Stock Exchange on December 31, 1999.
(2)  Exercisable.
(3)  Unexercisable.


Compensation of Directors

         Directors who are not employees of the Company are paid a fee of
$10,000 per year for their services as directors. The fee is paid quarterly in
shares of the Company's Common Stock valued at their closing price on the
American Stock Exchange on the third business day following the release of sales
and earnings for the preceding fiscal year. Under the Company's Stock Plan for
Non-Employee Directors, such directors may elect to defer receipt of their
shares, until after they leave the Board, by having them delivered to the Trust
established under the Plan. Members of the audit committee are paid ($1,000 per
meeting for chairman and $500 per meeting for other members) for attending audit
committee meetings.


                                        9

<PAGE>

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

         Information concerning the common stockholding at March 15, 2000 of the
directors and named executive officers of the Company, and the directors and
executive officers as a group, is set forth in the following table. Unless
otherwise indicated, each stockholder has sole voting and investment power with
respect to the shares listed.
<TABLE>
<CAPTION>
Name or Group                            Shares Beneficially Owned         Percent of Class (1)
-------------                            -------------------------         --------------------
<S>                                             <C>                                 <C>
William A. Bassett                               382,572(2)                         11.60%
Michael S. Baxley                                  4,000(3)                         ------
Michael K. Solomon                               102,933(4)                          3.20%
Jerome B. Lieber                                  13,705(5)(6)                      ------
Joseph N. Ellis                                    2,500(6)                         ------
Ellen Downey                                       1,562(6)                         ------
Thomas L. Dusthimer                                1,250(6)                         ------
All directors and executive
officers as a group                              511,024(7)                         15.28%
</TABLE>
----------------------------
(1)      Shares which the named stockholder has the right to acquire within 60
         days are deemed outstanding for the purpose of computing that
         stockholder's percentage.
(2)      Includes 124,579 optioned shares which may be acquired within 60 days
         and 20,051 shares held as Trustee of the trust established under the
         Company's Stock Plan for Non-Employee Directors (the "Trust"). Mr.
         Bassett disclaims beneficial ownership of the shares he holds as
         Trustee.
(3)      Includes 3,000 optioned shares, which may be acquired within 60 days.
(4)      Includes 35,204 optioned shares, which may be acquired within 60 days.
(5)      Includes 5,040 shares held in a charitable trust as to which Mr. Lieber
         disclaims beneficial ownership.
(6)      Excludes shares held in the Trust for his or her account.
(7)      Includes 165,283 optioned shares, which may be acquired within 60 days.

         FMR Corp. of Boston, Massachusetts, has furnished the Company a copy of
its Schedule 13G dated February 14, 2000 in which it reported that as of
December 31, 1999 Fidelity Management & Research Company, a wholly-owned
subsidiary of FMR Corp. and a registered investment adviser, had sole investment
power with respect to 200,015 shares (6.29%) of the Company's Common Stock.

         First Manhattan Co. of New York, New York has furnished the Company a
copy of its Schedule 13G dated February 9, 2000 in which it reported beneficial
ownership of a total of 261,868 shares (8.23%) of the Company's Common Stock
including sole power to vote and dispose of 17,112 shares, shared power to vote
236,401 shares and shared power to dispose of 244,756 shares. First Manhattan is
a registered broker-dealer and investment adviser.

         Heartland Advisors, Inc. of Milwaukee, Wisconsin, a registered
investment adviser, has furnished the Company a copy of its Schedule 13G dated
January 12, 2000 in which it reported that it had sole dispositive power with
respect to 349,600 shares (10.99%) of the Company's Common Stock.

Item 13.  Certain Relationships and Related Transactions.

         None.


                                       10

<PAGE>

                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)      The following documents are filed as a part of this report:
         ----------------------------------------------------------

         Financial Statements and Schedules
         ----------------------------------

         (1) Independent Auditors' Report

         (2) Balance Sheets - January 1, 2000 and January 2,1999

         (3) Statements of Earnings for the three fiscal years ended January 1,
             2000

         (4) Statements of Stockholders' Equity for the three fiscal years ended
             January 1, 2000

         (5) Statements of Cash Flows for the three fiscal years ended January
             1, 2000

         (6) Notes to the Financial Statements

         (7) Independent Auditors' Report on Financial Statement Schedule

         Schedule VIII - Valuation and Qualifying Accounts

         All other schedules are omitted because they are not required or are
         inapplicable or the information is included in the financial statements
         or notes thereto.

         Exhibits
         --------

         3A       Articles of Incorporation as amended to date, filed as Exhibit
                  3A to Form 10-K for the fiscal year ended December 28, 1985
                  and incorporated herein by reference.

         3B.1     By-laws as amended to date, filed as Exhibit 3B.1 to Form 10-Q
                  for the Quarter ended July 2, 1988 and incorporated herein by
                  reference.

         10E      Lease dated February 9, 1984 between registrant, as lessee,
                  and Leon and Eleanor Bradshaw covering property at 500 North
                  Long Street, Salisbury, North Carolina, filed as Exhibit
                  10(b)(4)(iv) to Registration Statement No. 2-92853 and
                  incorporated herein by reference.

         10H      Lease Agreement dated December 13, 1983 covering property at
                  101 West Linden Street, Abbotsford, Wisconsin, and assignment
                  thereof to the registrant, as lessee, dated October 2, 1985,
                  filed as Exhibit 10H to Form 10-K for the fiscal year ended
                  December 28, 1985 and incorporated herein by reference.

         10H.1    Lease Modification Agreement dated May 20, 1988 regarding
                  Exhibit 10H, filed as Exhibit 10H.1 to Form 10-K for the
                  fiscal year ended December 31, 1988 and incorporated herein by
                  reference.


                                       11

<PAGE>

         10H.2    Lease Modification Agreement dated September 30, 1996
                  regarding Exhibit 10H, filed as Exhibit 10H.2 to Form 10-K for
                  the fiscal year ended December 28, 1996 and incorporated
                  herein by reference.

         10K.1    1984 Incentive Stock Option Plan, as amended to date, filed as
                  Exhibit 10K.1 to Form 10-Q for the quarter ended October 3,
                  1987 and incorporated herein by reference.*

         10M.1    Medical and Dental Reimbursement Plan, as amended to date,
                  filed as Exhibit 10M.1 to Form 10-K for the fiscal year ended
                  January 3, 1987 and incorporated herein by reference.*

         10T      Employment Agreement dated August 2, 1994 between the
                  registrant and William Bassett, filed as Exhibit 10T to Form
                  10-Q for the quarter ended July 2, 1994 and incorporated
                  herein by reference.*

         10U      1995 Incentive Stock Option Plan, filed as Exhibit 10U to Form
                  10-K for the fiscal year ended December 30, 1995 and
                  incorporated herein by reference.*

         10V      Purchase and Sale Agreement dated March 14, 1997 between the
                  registrant and Specialty Window Coverings Corp. filed as
                  Exhibit 10V to Form 10-K for the fiscal year ended December
                  28, 1996, and incorporated herein by reference.

         10W      Stock Plan for Non-employee Directors and related Grantor
                  Trust Agreement, filed as Exhibit 10W to Form 10-Q for the
                  quarter ended June 28, 1997 and incorporated herein by
                  reference.*

         10X      Employment Agreement dated January 5, 1999 between the
                  registrant and Michael S. Baxley, filed herewith.*

         11O      Computation of diluted income per share, filed herewith.

         23A      Consent of Independent Auditors, filed herewith.

         27L      Financial Data Schedule, filed herewith.

         -----------------------
         *Management contract or compensatory plan.


         (b) Reports on Form 8-K
             -------------------

             No reports on Form 8-K were filed during the last quarter of 1999.


                                       12

<PAGE>

                                   SIGNATURES

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



                                                     DECORATOR INDUSTRIES, INC.
                                                            (Registrant)


                                                     By: /s/ Michael K. Solomon
                                                         -----------------------
                                                             Michael K. Solomon
                                                               Vice President

Dated:   March 24, 2000

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Name                                Title                            Signature                Date
----                                -----                            ---------                ----
<S>                         <C>                            <C>                            <C>
William A. Bassett          Chairman, President,           /s/ William A. Bassett         March 24, 2000
                            Chief Executive Officer        --------------------------
                            and Director


Michael S. Baxley           Executive Vice President       /s/ Michael S. Baxley          March 24, 2000
                            and Director                   --------------------------


Michael K. Solomon          Vice President, Treasurer,     /s/ Michael K. Solomon         March 24, 2000
                            Principal Financial and        --------------------------
                            Accounting Officer,
                            And Director


Jerome B. Lieber            Director                       /s/ Jerome B. Lieber           March 24, 2000
                                                           --------------------------

Joseph N. Ellis             Director                       /s/ Joseph N. Ellis            March 24, 2000
                                                           --------------------------

Ellen Downey                Director                       /s/ Ellen Downey               March 24, 2000
                                                           --------------------------

Thomas Dusthimer            Director                       /s/ Thomas Dusthimer           March 24, 2000
                                                           --------------------------
</TABLE>



                                       13

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors
  and Stockholders of
Decorator Industries, Inc.

         We have audited the accompanying balance sheets of Decorator
Industries, Inc. as of January 1, 2000 and January 2, 1999 and the related
statements of earnings, stockholders' equity and cash flows for each of the
three fiscal years in the period ended January 1, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Decorator
Industries, Inc. as of January 1, 2000 and January 2, 1999, and the results of
its operations and its cash flows for each of the three fiscal years in the
period ended January 1, 2000 in conformity with generally accepted accounting
principles.

                                                   LOUIS PLUNG & COMPANY, LLP
                                                   Certified Public Accountants


Pittsburgh, Pennsylvania
February 14, 2000




                                       F-1

<PAGE>
<TABLE>
<CAPTION>
                           DECORATOR INDUSTRIES, INC.
                                 BALANCE SHEETS

                                                                              Fiscal Year End
                        ASSETS                                            1999               1998
                        ------                                            ----               ----
<S>                                                                   <C>                 <C>
Current Assets:
    Cash and Cash Equivalents                                            $484,328         $2,633,999
    Short-term Investments                                              1,455,796            861,032
    Accounts Receivable, less allowance for
        doubtful accounts ($158,996 and $111,706)                       3,725,556          3,847,435
    Inventories                                                         5,739,303          5,725,226
    Other Current Assets                                                  372,258            349,394
                                                                      -----------        -----------
Total Current Assets                                                   11,777,241         13,417,086
                                                                      -----------        -----------

Property and Equipment:
    Land, Buildings & Improvements                                      4,123,189          2,676,183
    Machinery, Equipment, Furniture and Fixtures                        4,808,280          4,124,579
                                                                      -----------        -----------
Total Property and Equipment                                            8,931,469          6,800,762
    Less:  Accumulated Depreciation and Amortization                    3,104,989          2,635,683
                                                                      -----------        -----------
Net Property and Equipment                                              5,826,480          4,165,079
                                                                      -----------        -----------
Goodwill, less accumulated
    Amortization of $1,189,871 and $1,070,336                           3,648,965          3,288,582
Other Assets                                                              412,837            591,947
                                                                      -----------        -----------
Total Assets                                                          $21,665,523        $21,462,694
                                                                      ===========        ===========


                   LIABILITIES & STOCKHOLDERS' EQUITY
                   ----------------------------------
Current Liabilities:
    Accounts Payable                                                   $3,100,681         $2,869,889
    Current Maturities of Long-term Debt                                  103,871             43,133
    Accrued Expenses:
        Compensation                                                    1,278,660          1,373,572
        Other                                                             647,173            886,331
                                                                      -----------        -----------
Total Current Liabilities                                               5,130,385          5,172,925
                                                                      -----------        -----------

Long-Term Debt                                                          1,814,169            463,037
Deferred Income Taxes                                                     356,000            267,000
                                                                      -----------        -----------
Total Liabilities                                                       7,300,554          5,902,962
                                                                      -----------        -----------

Stockholders' Equity
    Common stock $.20 par value: Authorized shares, 10,000,000;
       Issued shares, 4,408,831 and 4,373,916                             881,766            874,784
    Paid-in Capital                                                     1,427,788          1,396,137
    Retained Earnings                                                  18,368,158         16,756,377
                                                                      -----------        -----------

    Less:  Treasury stock, at cost:  1,219,801 and 812,500 shares       6,312,743          3,467,566
                                                                      -----------        -----------
Total Stockholders' Equity                                             14,364,969         15,559,732
                                                                      -----------        -----------
Total Liabilities and Stockholders' Equity                            $21,665,523        $21,462,694
                                                                      ===========        ===========
</TABLE>


               The accompanying notes are an integral part of the
                             financial statements.


                                       F-2
<PAGE>

                           DECORATOR INDUSTRIES, INC.
                             STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
                                                                    For the Fiscal Year
                                                                    -------------------
                                                            1999            1998            1997
                                                            ----            ----            ----
<S>                                                      <C>             <C>             <C>
Net Sales                                                $52,546,556     $51,966,829     $43,395,923
Cost of Products Sold                                     41,329,724      40,546,325      32,736,117
                                                        ------------     -----------     -----------
Gross Profit                                              11,216,832      11,420,504      10,659,806
Selling and Administrative Expenses                        7,095,639       6,806,968       6,303,975
                                                        ------------     -----------     -----------
Operating Income                                           4,121,193       4,613,536       4,355,831
Other Income (Expense):
    Interest and Investment Income                            50,183         194,456         344,559
    Interest Expense                                         (70,098)         (9,097)        (24,133)
                                                        ------------     -----------     -----------
Earnings Before Income Taxes                               4,101,278       4,798,895       4,676,257
Provision for Income Taxes                                 1,549,000       1,718,000       1,641,000
                                                        ------------     -----------     -----------
Income from Continuing Operations                          2,552,278       3,080,895       3,035,257
Loss on Discontinued Operations, less
    applicable income tax of $83,000                         -----           -----          (136,918)
                                                        ------------     -----------     -----------
Net Income                                                $2,552,278      $3,080,895      $2,898,339
                                                        ============     ===========     ===========

Earnings Per Share:
    Continuing Operations                                      $0.76           $0.85         $0.82 *
                                                               =====           =====         =====
    Basic                                                      $0.76           $0.85         $0.78 *
                                                               =====           =====         =====
    Diluted                                                    $0.73           $0.79         $0.73 *
                                                               =====           =====         =====

Average Number of Shares Outstanding:
    Basic                                                  3,378,721       3,631,457     3,714,838 *
    Diluted                                                3,517,681       3,880,619     3,968,380 *
</TABLE>

* Restated to reflect the five-for-four stock splits effective July 21, 1998 and
  June 13, 1997.


               The accompanying notes are an integral part of the
                             financial statements.

                                       F-3
<PAGE>

                           DECORATOR INDUSTRIES, INC.
                       STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                         COMMON             PAID-IN            RETAINED           TREASURY
                                         STOCK              CAPITAL            EARNINGS             STOCK               TOTAL
                                         -----              -------            --------             -----               -----
<S>                                     <C>               <C>                <C>                <C>                  <C>
Balance at
December 28, 1996                       $545,095          $1,546,152         $12,478,624        $(1,558,926)         $13,010,945

Transactions for 1997
    Net profit                                                                 2,898,339                               2,898,339

    Issuance of stock for
    exercise of options                    9,273              61,356                                                      70,629

    Issuance of stock for
    directors compensation                                    19,330                                 15,539               34,869

    Stock option tax
    benefit                                                   26,000                                                      26,000

    Purchase of common
    stock for treasury                                                                             (903,659)            (903,659)

    Dividends paid                                                              (788,694)                               (788,694)

    Record stock split                   138,426            (139,558)                                                     (1,132)
                                        --------          ----------         -----------         ----------          -----------
Balance at
January 3, 1998                         $692,794          $1,513,280         $14,588,269        $(2,447,046)         $14,347,297

Transactions for 1998
    Net profit                                                                 3,080,895                               3,080,895

    Issuance of stock for
    exercise of options                    7,138              14,731                                                      21,869

    Issuance of stock for
    directors compensation                                    28,377                                 23,720               52,097

    Stock option tax
    benefit                                                   16,350                                                      16,350

    Purchase of common
    stock for treasury                                                                           (1,044,240)          (1,044,240)

    Dividends paid                                                              (912,787)                               (912,787)

    Record stock split                   174,852            (176,601)                                                     (1,749)
                                        --------          ----------         -----------         ----------          -----------
Balance at
January 2, 1999                         $874,784          $1,396,137         $16,756,377        $(3,467,566)         $15,559,732

Transactions for 1999
    Net profit                                                                 2,552,278                               2,552,278

    Issuance of stock for
    exercise of options                    6,982              11,850                                                      18,832

    Issuance of stock for
    directors compensation                                    19,801                                 33,503               53,304

    Purchase of common
    stock for treasury                                                                           (2,878,680)          (2,878,680)

    Dividends paid                                                              (940,497)                               (940,497)
                                        --------          ----------         -----------         ----------          -----------
Balance at
January 1, 2000                         $881,766          $1,427,788         $18,368,158        $(6,312,743)        $14,364,969
                                        ========          ==========         ===========         ==========          ===========
</TABLE>

               The accompanying notes are an integral part of the
                             financial statements.


                                       F-4
<PAGE>

                           DECORATOR INDUSTRIES, INC.
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                      For the Fiscal Year
                                                                                      -------------------
                                                                         1999                1998                  1997
                                                                         ----                ----                  ----
<S>                                                                      <C>                 <C>                  <C>
Cash Flows From Operating Activities:
    Net Income                                                           $2,552,278          $3,080,895           $2,898,339
    Adjustments to Reconcile Net Income to Net Cash
    Provided by Operating Activities:
        Depreciation and Amortization                                       682,821             569,681              517,258
        Provision for Losses on Accounts Receivable                          93,000              68,471               (4,000)
        Deferred Taxes                                                       64,000              41,000               72,000
        (Gain) Loss on Disposal of Assets                                   (10,579)             (5,206)               6,849
    Increase (Decrease) from Changes in:
        Accounts Receivable                                                  28,879            (272,403)              25,210
        Inventory                                                           (14,077)         (1,146,845)            (951,927)
        Prepaid Expenses                                                      2,136            (137,969)              20,844
        Other Assets                                                        179,110            (417,547)             (33,808)
        Accounts Payable                                                    230,792            (244,772)             490,109
        Accrued Expenses                                                   (334,070)            180,185              106,977
                                                                         ----------         -----------           ----------
Net Cash Provided by Operating Activities                                 3,474,290           1,715,490            3,147,851
                                                                         ----------         -----------           ----------

Cash Flows From Investing Activities:
    Capital Expenditures                                                 (2,234,157)         (1,166,032)            (537,555)
    Proceeds from Property Dispositions                                      20,049              16,742              125,827
    Short-term Investments                                                 (594,764)          1,145,850              532,731
    Note Receivable                                                          ------              60,000               80,000
    Net Cash Paid for Acquisitions                                           ------              ------           (3,300,096)
    Deferred Purchase Price Payments                                       (479,918)           (385,030)              ------
                                                                         ----------         -----------           ----------
Net Cash Used in Investing Activities                                    (3,288,790)           (328,470)          (3,099,093)
                                                                         ----------         -----------           ----------

Cash Flows From Financing Activities:
    Long-term Debt Payments                                                 (88,130)            (42,422)             (43,264)
    Proceeds on debt from new building                                    1,500,000
    Dividend Payments                                                      (940,497)           (912,787)            (788,694)
    Proceeds from Exercise of Stock Options                                  18,832              21,869               70,627
    Cash in Lieu of Fractional Shares                                        ------              (1,749)              (1,132)
    Issuance of Stock for Director's Compensation                            53,304              52,097               34,869
    Stock Option Tax Benefit                                                 ------              16,350               26,000
    Purchase of Common Stock for Treasury                                (2,878,680)         (1,044,240)            (903,659)
                                                                         ----------         -----------           ----------
Net Cash Used in Financing Activities                                    (2,335,171)         (1,910,882)          (1,605,253)
Net Increase (Decrease) in Cash and Cash Equivalents                     (2,149,671)           (523,862)          (1,556,495)
Cash and Cash Equivalents at Beginning of Year                            2,633,999           3,157,861            4,714,356
                                                                         ----------         -----------           ----------
Cash and Cash Equivalents at End of Period                                 $484,328          $2,633,999           $3,157,861
                                                                         ==========         ===========           ==========

Supplemental Disclosures of Cash Flow Information:
Cash Paid for:
    Interest                                                                $71,639             $25,630              $26,893
    Income Taxes                                                         $1,423,178          $1,794,790           $1,534,242
</TABLE>

               The accompanying notes are an integral part of the
                             financial statements.

                                       F-5
<PAGE>

                           DECORATOR INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS

(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Nature of Operations

         The Company is engaged in the design, manufacture and sale of window
         coverings, bedspreads, furniture and complementary products. These
         products are sold to original equipment manufacturers of recreational
         vehicles and manufactured housing and to the hospitality industry
         (motels/hotels) either through distributors or directly to the
         customers.

         The Company has one industry segment and one class of products. The
         business in which the Company is engaged is very competitive, and the
         Company competes with manufacturers located throughout the country.
         However, no reliable information is available to enable the Company to
         determine its relative position among its competitors. The principal
         methods of competition are price, design and service.

         Principles of Consolidation

         The consolidated financial statements include the accounts of the
         Company and all subsidiary companies. All significant intercompany
         accounts and transactions have been eliminated in consolidation.

         Fiscal Year

         The Company's fiscal year is a 52-53 week period ending the Saturday
         nearest to December 31, which results in every sixth year containing 53
         weeks. Fiscal year 1999 was a 52-week period ending January 1, 2000;
         1998 was a 52-week period ending January 2, 1999 and 1997 was a 53-week
         period ending January 3, 1998.

         Inventories

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

         Property and Depreciation

         Buildings and equipment are stated at cost, and depreciated on both
         straight-line and accelerated methods over estimated useful lives.
         Leasehold improvements are capitalized and amortized over the assets'
         estimated useful lives or remaining terms of leases, if shorter.
         Equipment is depreciated over 3-10 years, buildings over 20-30 years
         and leasehold improvements over 5-10 years.

         Excess of Cost over Net Assets Acquired

         The excess of investment costs over the fair value of net assets
         related to the acquisitions of Haleyville Manufacturing (1973), Liberia
         Manufacturing (1985), Paragon Interiors (1995), Specialty Windows
         (1997) and Southern Interiors (1997) are being amortized over a period
         of 40 years. Amortization of $119,535 was charged to income during
         fiscal year ended January 1, 2000, $106,870 in fiscal year ended
         January 2, 1999, and $89,242 in fiscal year ended January 3, 1998.


                                       F-6
<PAGE>

                           DECORATOR INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS

(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         The Company evaluates the impairment of goodwill on the basis of
         whether goodwill is recoverable from the projected undiscounted net
         income before goodwill amortization of the related assets.

         Reclassification

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

         Cash and Cash Equivalents

         For purposes of the consolidated statements of cash flows, the Company
         considers all highly liquid investments with a maturity of three months
         or less at the time of purchase to be cash equivalents.

         Cash and cash equivalents consist of the following:

                                                 1999              1998
                                                 ----              ----
               General Funds                   $(152,789)          $33,363
               Demand Notes                      ------          1,700,000
               Repurchase agreements             637,117           900,636
                                              ----------        ----------
                                                $484,328        $2,633,999
                                              ==========        ==========

         The demand notes are guaranteed by letters-of-credit.

         Short-term Investments

         Short-term investments are categorized as trading securities. The
         estimated fair values of the company's trading securities, which are
         the amounts reflected in the balance sheet, are based on quoted market
         prices. A loss of $94,013 is included in income for the year ended
         January 1, 2000 compared to a loss of $32,020 for the year ended
         January 2, 1999.

         Deferred Income Taxes

         The Company accounts for income taxes in accordance with the Statement
         of Financial Accounting Standards No. 109 "Accounting for Income
         Taxes," which requires the recognition of deferred tax liabilities and
         assets at currently enacted tax rates for the expected future tax
         consequences of events that have been included in the financial
         statements or tax returns.

         Credit Risk

         The Company sells primarily on thirty day terms. The Company's
         customers are spread over a wide geographic area. As such the Company
         believes, that it does not have an abnormal concentration of credit
         risk within any one geographic area.


                                       F-7

<PAGE>

                           DECORATOR INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS

(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Estimates

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect certain reported amounts and disclosures.

         Fair Value of Financial Instruments

         Marketable securities are carried at fair value. All other financial
         instruments are carried at amounts believed to approximate fair value.

         Stock Split

         The Company declared a five-for-four stock split effective July 21,
         1998. Per share and share data have been adjusted to reflect this stock
         split.

         Earnings Per Share

         Basic earnings per share is computed by dividing net income by
         weighted-average number of shares outstanding. Diluted earnings per
         share includes the dilutive effect of stock options. See note 11
         "Earnings Per Share" for computation of EPS.

         Stock Based Compensation

         In accordance with the provisions of SFAS No. 123, the Company follows
         the intrinsic value based method of accounting as prescribed by APB 25,
         "Accounting for Stock Issued to Employees," for its stock-based
         compensation. Accordingly, no compensation cost is recognized.

         Segment Information

         The Company has one business segment, the interior furnishings
         business, and follows the requirements of SFAS No. 131, "Disclosures
         about Segments of an Enterprise and Related Information."

         Recent Accounting Developments

         The following Statements of Financial Accounting Standards (SFAS) were
         issued by the Financial Accounting Standards Board. These statements
         will have no effect on the Company.

         SFAS No. 134, "Accounting for Mortgage-Backed Securities Retained after
         the Securitization of mortgage Loans Held for Sale by a Mortgage
         Banking Enterprise" issued October 1998.

         SFAS No. 135, "Recission of FASB No. 75 and Technical Corrections"
         issued February 1999.

         SFAS No. 136, "Transfers of Assets to a Not-for-Profit Organization or
         Charitable Trust That Raises or Holds Contributions for Others" issued
         June 1999.

         SFAS No. 137, "Accounting for Derivatives Instruments and Hedging
         Activities--Deferral of the Effective Date of FASB Statement No.
         133--an amendment of FASB Statement No. 133" issued June 1999.

                                       F-8

<PAGE>

                           DECORATOR INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS

(2)      ACQUISITIONS AND DIVESTITURES

         As of March 15, 1997, the Company acquired the business and certain
         assets of Specialty Window Coverings Corp. for $2,455,783. Additional
         consideration of $639,417 was paid based on Specialty's earnings over
         the two years ending April 3, 1999. Specialty is an Elkhart, Indiana
         based manufacturer of pleated shades for the recreational vehicle
         market.

         As of May 12, 1997, the Company acquired the business and certain
         assets of Southern Interiors, Inc. for $844,313 and future
         consideration, not to exceed $500,000, based on Southern's sales over
         the three years ending July 1, 2000. Southern is located in Memphis,
         Tennessee and manufactures draperies for the hospitality market from
         fabric supplied by its customers, largely hotel design and supply
         firms.

         These acquisitions have been included in the consolidated financial
         statements from the dates of acquisition. They have been accounted for
         as a purchase. In each case, the purchase price has been allocated to
         the underlying assets based upon their estimated fair values at the
         date of acquisition. The excess of purchase price over the fair value
         of the net assets acquired ("goodwill") is $1,965,743 and $596,050
         respectively, which is being amortized over 40 years.

         In December 1997 the Company decided to discontinue the manufacturing
         and sale of products for the retail market. This resulted in an
         after-tax loss of $136,918 on net sales of $412,492.

         The cash payments for deferred purchase price of $479,918 and $385,030
         represents the additional consideration paid for the acquisitions of
         Specialty Window Coverings and Southern Interiors. Additional
         consideration may be due Southern after July 1, 2000.

(3)      INVENTORIES

         Inventories consisted of the following classifications:

                                                    1999             1998
                                                    ----             ----
               Raw materials & supplies          $5,363,747       $5,462,938
               In process & finished goods          375,556          262,288
                                                 ----------       ----------
                                                 $5,739,303       $5,725,226
                                                 ==========       ==========

(4)      LEASES

         The Company leases certain buildings and equipment used in its
         operations. Building leases generally provide that the Company bears
         the cost of maintenance and repairs and other operating expenses. Rent
         expense was $519,971 in 1999, $478,635 in 1998 and $361,558 in 1997.

         Commitments under these leases extend through November 2006 and are as
follows:

                                            2000              $440,649
                                            2001              $280,020
                                            2002              $158,155
                                            2003               $85,244
                                            2004               $62,379
                                      Thereafter              $119,560


                                       F-9

<PAGE>

                           DECORATOR INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS

(5)      COMMITMENTS

         The Company has commitments under certain employment and non-compete
         agreements entered into with individuals in management positions. The
         commitments under these agreements are payable $396,550, $214,200 and
         $214,200, respectively, from 2000 through 2002 and $321,300 thereafter.

(6)      SIGNIFICANT CUSTOMERS

         Sales to Fleetwood Enterprises accounted for 20.3%, 20.1% and 22.6% of
         Company sales in 1999, 1998 and 1997, respectively. Fleetwood operates
         in the manufactured housing and recreational vehicle industries. Sales
         to Champion Enterprises accounted for 12.7%, 13.5% and 14.2% of Company
         sales in 1999, 1998 and 1997 respectively. Champion operates solely in
         the manufactured housing industry. Purchasing decisions are made at
         each individual plant of these customers. The Company services many of
         these plants and considers each of the plants it services to be an
         independent customer.

 (7)     LONG TERM-DEBT AND CREDIT ARRANGEMENTS

         Long-term debt consists of the following:
<TABLE>
<CAPTION>
                                                                                       1999               1998
                                                                                       ----               ----
<S>                                                                                    <C>                <C>
        Note payable in monthly payments of $2,088 at 4% interest. Term is 15
        years. This note is secured by the first mortgage on the Bloomsburg, PA
        building.                                                                       $163,040          $181,170

        Bond payable in monthly installments through November 2008.  The
        interest rate is variable and is currently less than 4%.  This bond is
        secured by the Company's Bloomsburg, PA property.                                300,000           325,000

        Bond payable in quarterly installments through March 2014.  The interest
        rate is variable and is currently less than 4%.  This bond is secured by
        the Company's Goshen, IN property.                                             1,455,000            ------
                                                                                      ----------          --------
                                                                                       1,918,040           506,170
        Less amount due within one year                                                  103,871            43,133
                                                                                      ----------          --------
                                                                                      $1,814,169          $463,037
                                                                                      ==========          ========
</TABLE>

         The principal payments on long-term debt for the five years subsequent
         to January 1, 2000 are as follows:

                                  2000             $103,871
                                  2001             $104,640
                                  2002             $105,440
                                  2003             $126,273
                                  2004             $127,140


                                      F-10

<PAGE>

                           DECORATOR INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS

(8)      EMPLOYEE BENEFIT PLANS

         On September 1, 1998 the Company began a 401(k) Retirement Savings Plan
         available to all eligible employees. To be eligible for the plan, the
         employee must be at least 21 years of age and have completed 1 year of
         employment. Eligible employees may contribute up to 15% of their
         earnings with a maximum of $10,000 for 1999 based on the Internal
         Revenue Service annual contribution limit. The Company will match 25%
         of the first 4% of the employee's contributions up to 1% of each
         employee's earnings. Contributions are invested at the direction of the
         employee to one or more funds. Company contributions begin to vest
         after three years. Company contributions to the plan were $59,745 in
         1999 and $19,000 in 1998.

(9)      STOCK OPTIONS

         At January 1, 2000, the Company had options outstanding under two fixed
         stock option plans, which are described below. The Company applies APB
         Opinion 25 and related Interpretations in accounting for its plans.
         Accordingly, no compensation cost has been recognized for its fixed
         stock option plans. Had compensation cost for the Company's two fixed
         stock option plans been determined based on the fair value at the grant
         dates for awards under these plans consistent with the method of SFAS
         No. 123, the Company's net income and earning[s] per share would have
         been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
                                                               1999                 1998               1997
                                                               ----                 ----               ----
<S>                                                         <C>                  <C>                <C>
        Pro forma net income                                $2,426,020           $3,026,032         $2,844,631
        Pro forma earnings per share:
            Basic                                              $0.72               $0.83               $0.77
            Diluted                                            $0.69               $0.78               $0.72
</TABLE>

         During the initial phase-in period of SFAS No. 123 the pro forma
         disclosure may not be representative of the impact on the net income in
         future years.

         Under the 1984 Incentive Stock Option Plan, which expired in 1994, the
         Company granted options to its employees for 804,976 shares (as
         adjusted for stock splits). Under the 1995 Incentive Stock Option Plan,
         the company may grant options to its key employees for up to 520,830
         (as adjusted for stock splits) shares of common stock. Under both
         plans, the exercise price of the option equals the fair market price of
         the Company's stock on the date of the grant and an option's maximum
         term is 10 years. Under the 1995 Incentive Stock Option Plan 260,410
         (as adjusted for stock splits) shares were granted in 1996, 7,813 (as
         adjusted for stock splits) shares were granted in 1997, 168,750 (as
         adjusted for stock splits) shares were granted in 1998 and 98,250
         shares were granted in 1999. The options granted in 1997 and 1996 vest
         20% each year starting with the date of the grant. The options granted
         in 1999 and 1998 vest 20% each year beginning at the end of the first
         year.


                                      F-11

<PAGE>

                           DECORATOR INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS

(9)      STOCK OPTIONS (Continued)

         The fair value of 1996 and 1997 option grants are estimated on the date
         of grant using the Flexible Binomial options-pricing method with the
         following weighted-average assumptions used for the grants in 1997 and
         1996: dividend yield of 3.6 percent for all years; expected volatility
         of 40.6 percent for all years; risk-free interest rate of 6.4 percent
         for all years; and expected life of 3.7 years for all grants. The 1998
         grant used the Black-Sholes options-pricing method with the following
         weighted-average assumptions: dividend yield of 2.6 percent; expected
         volatility of 47.7 percent; risk-free interest rate of 5.6 percent; and
         expected life of 5 years. The 1999 grant used the Black-Sholes
         options-pricing method with the following weighted-average assumptions:
         dividend yield of 2.5 percent; expected volatility of 42.8 percent;
         risk-free interest rate of 5.8 percent; and expected life of 5 years.

         A summary of the status of the Company's outstanding stock options as
         of January 1, 2000, January 2, 1999 and January 3, 1998, and changes
         during the years ending on those dates is presented below:
<TABLE>
<CAPTION>
                                                        1999                     1998                     1997
                                                        ----                     ----                     ----
                                                            Exercise                 Exercise                 Exercise
                                               Shares(1)    Price(2)    Shares(1)    Price(2)    Shares(1)    Price(2)
                                               ---------    --------    ---------    --------    ---------    --------
         <S>                                    <C>          <C>         <C>           <C>        <C>          <C>
         Outstanding at beginning of year       554,507      $5.03       424,124       $3.40      508,212      $3.09
         Granted                                 98,250      $7.13       168,750       $8.10        7,813      $7.28
         Exercised                              (33,040)     $0.57       (38,367)      $0.57      (68,980)     $1.02
         Forfeited                                ----        ----        ----         ----       (22,921)     $4.82
                                                -------                  -------                  -------
         Outstanding at year-end                619,717      $5.60       554,507       $5.03      424,124      $3.40

         Options exercisable at year-end        335,428                  285,242                  274,129
         Weighted-average fair value of
         options granted during the year         $2.59                    $3.21                    $1.68
</TABLE>

         The following information applies to fixed stock options outstanding at
         January 1, 2000:

            Number outstanding (1)                               619,717
            Range of exercise prices                             $0.57 to $8.10
            Weighted-average exercise price                      $5.60
            Weighted-average remaining contractual life          6.7 years
         -----------------------
         (1) As adjusted for the five-for-four stock splits in June 1997 and
             July 1998.
         (2) Based on the weighted-average exercise price.

(10)     INCOME TAXES

         A summary of income taxes from continuing operations is as follows:
<TABLE>
<CAPTION>
                                                   1999                    1998                      1997
                                                   ----                    ----                      ----
        <S>                                    <C>                      <C>                       <C>
        Current:
           Federal                             $1,222,000               $1,410,000                $1,322,000
           State                                  263,000                  275,000                   247,000
        Deferred                                   64,000                   33,000                    72,000
                                               ----------               ----------                ----------
        Total                                  $1,549,000               $1,718,000                $1,641,000
                                               ==========               ==========                ==========
</TABLE>


                                      F-12

<PAGE>

                           DECORATOR INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS

(10)     INCOME TAXES (Continued)

         Temporary differences between the financial statement carrying amounts
         and tax bases of assets and liabilities that give rise to net deferred
         income tax liability relate to the following:
<TABLE>
<CAPTION>
                                                                                     1999              1998
                                                                                     ----              ----
<S>                                                                                <C>               <C>
        Property and equipment, due to differences in depreciation                 $307,000          $241,000
        Inventories, due to additional cost
            recorded for income tax purposes                                        (24,000)          (17,000)
        Accounts receivable, due to allowance
            for doubtful accounts                                                   (60,000)          (42,000)
        Accrued liabilities, due to expenses not yet
            deductible for income tax purposes                                       13,000           (18,000)
                                                                                   --------           -------

        Net deferred income tax liability                                          $236,000          $164,000
                                                                                   ========          ========
</TABLE>

         The net deferred income tax liability is presented in the balance
         sheets as follows:

                                         1999              1998
                                         ----              ----
        Current Asset                  $120,000          $103,000
        Long-term Liability             356,000           267,000

         The effective income tax rate varied from the statutory Federal tax
         rate as follows:

                                         1999             1998          1997
                                         ----             ----          ----
        Federal statutory rate           34.0%           34.0%         34.0%
        State income taxes, net of
            federal income tax benefit    4.4             4.0           3.8
        Other                            (0.6)           (2.2)         (2.7)
                                         -----           -----         ----
        Effective income tax rate        37.8%           35.8%         35.1%
                                         =====           =====         =====

 (11)    EARNINGS PER SHARE

         In accordance with SFAS No. 128, the following is a reconciliation of
         the numerators and denominators of the basic and diluted EPS
         computations.
<TABLE>
<CAPTION>
                                                             1999                  1998                  1997
                                                             ----                  ----                  ----
<S>                                                       <C>                   <C>                  <C>
        Numerator:
            Net income                                    $2,552,278            $3,080,895           $2,898,339
                                                          ==========            ==========           ==========
        Denominator:
            Weighted-average number of
            common shares outstanding                      3,378,721             3,631,457            3,714,838

            Dilutive effect of
            stock options on net income                      138,960               249,162              253,542
                                                           ---------            ----------           ----------

                                                           3,517,681             3,880,619            3,968,380
                                                          ==========            ==========           ==========

        Diluted earnings per share:                          $0.73                 $0.79                $0.73
                                                             =====                 =====                =====
</TABLE>

                                      F-13

<PAGE>

                           DECORATOR INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS

 (12)    QUARTERLY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
                                               First           Second           Third           Fourth
         1999                                 Quarter          Quarter         Quarter          Quarter           Year
         ----                                 -------          -------         -------          -------           ----
         <S>                                 <C>              <C>             <C>              <C>             <C>
         Net Sales                           $13,211,871      $14,382,345     $13,171,213      $11,781,127     $52,546,556
         Gross Profit                         $2,896,838       $3,228,929      $2,676,641       $2,414,424     $11,216,832
         Net Income                             $703,016         $844,679        $558,267         $446,316      $2,552,278
         Earnings Per
         Common Share:
             Basic                                 $0.20            $0.25           $0.17            $0.14           $0.76
             Diluted                               $0.19            $0.24           $0.16            $0.14           $0.73
         Average Common
         Shares Outstanding:
             Basic                             3,526,904        3,418,314       3,335,317        3,234,350       3,378,721
             Diluted                           3,694,190        3,575,523       3,479,267        3,321,742       3,517,681
<CAPTION>
                                               First           Second           Third           Fourth
         1998                                 Quarter          Quarter         Quarter          Quarter           Year
         ----                                 -------          -------         -------          -------           ----
         <S>                                 <C>              <C>             <C>              <C>             <C>
         Net Sales                           $12,649,704      $13,709,226     $13,210,272      $12,397,627     $51,966,829
         Gross Profit                         $2,986,507       $3,009,633      $2,795,094       $2,629,270     $11,420,504
         Net Income                             $879,888         $911,903        $711,515         $577,589      $3,080,895
         Earnings Per
         Common Share:
             Basic                                 $0.24            $0.25           $0.20            $0.16           $0.85
             Diluted                               $0.22            $0.23           $0.19            $0.15           $0.79
         Average Common
         Shares Outstanding:
             Basic                             3,655,994        3,662,245       3,639,427        3,573,056       3,631,457
             Diluted                           3,885,200        3,948,675       3,918,211        3,775,283       3,880,619
</TABLE>


                                      F-14


<PAGE>


                     REPORT OF INDEPENDENT AUDITORS' REPORT
                         ON FINANCIAL STATEMENT SCHEDULE




The Board of  Directors
  and Stockholders of
Decorator Industries, Inc.



         The audit referred to in our opinion dated February 14, 2000 of the
financial statements as of January 1, 2000 and for each of the three fiscal
years then ended includes the related supplemental financial schedule as listed
in item 14 (a), which, when considered in relation to the basic financial
statements, presents fairly in all material respects the information shown
therein.

                                                    LOUIS PLUNG & COMPANY, LLP
                                                    Certified Public Accountants




Pittsburgh, Pennsylvania
February 14, 2000







                                      F-15


<PAGE>
                           DECORATOR INDUSTRIES, INC.
                SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                COLUMN A                       COLUMN B                  COLUMN C                 COLUMN D          COLUMN E
                                                                        Additions
                                                                    (1)              (2)
                                                                Charged to       Charged to
                                              Balance at           Costs            Other                          Balance at
                                              Beginning             And           Accounts       Deductions           End
Description                                   of Period          Expenses         Described       Described        of Period
-----------                                   ---------          --------         ---------       ---------        ---------
<S>               <C>                          <C>                <C>                <C>         <C>                <C>
DEDUCTED FROM ASSETS
 TO WHICH THEY APPLY:

ALLOWANCE FOR
DOUBTFUL ACCOUNTS

                  1999                         $111,706           $93,963            -0-         $46,673(A)         $158,996

                  1998                          218,018            68,471            -0-         174,783(A)          111,706

                  1997                          232,302            (4,000)           -0-          10,284(A)          218,018

(A) Write-off bad debts
</TABLE>







                                      F-16