[LOGO]

                         PULASKI FURNITURE CORPORATION

                               1995 ANNUAL REPORT


OFFICERS

BERNARD C. WAMPLER
      Chairman of the Board and
          Chief Executive Officer

JOHN G. WAMPLER
      President and Chief Operating
          Officer

IRA S. CRAWFORD
      Vice President-
          Administration; Secretary

RANDOLPH V. CHRISLEY
      Vice President-
          Sales

JAMES H. KELLY
      Vice President-
          Product Development

JASON A. GIBBS
      Treasurer, Controller and
          Assistant Secretary

JAMES W. PEELE
      Vice President-
          Manufacturing

DIRECTORS

BERNARD C. WAMPLER
      Chairman of the Board and
          Chief Executive Officer

CLIFFORD A. CUTCHINS, III*
      Retired Chairman of the Board of
          Sovran Financial Corporation,
          Norfolk, Va.

JOHN D. MUNFORD*
      Retired Vice Chairman of Union
          Camp Corporation, Franklin, Va.

JOHN W. STANLEY
      Retired Chairman of the Board of Blue
          Ridge Transfer Company, Inc.,
          Roanoke, Va.

JOHN G. WAMPLER
      President and Chief Operating Officer
          of Pulaski Furniture Corporation

HARRY H. WARNER*
      Financial Consultant, Lexington, Va.

HUGH V. WHITE, JR.
      Partner of Hunton & Williams-
          Attorneys, Richmond, Va.
-----------
*Member of Audit Committee

TABLE OF CONTENTS

Message to Stockholders.....................................  1
General Information ........................................  2
Selected Financial Data ....................................  3
Management's Discussion and Analysis .......................  4
Consolidated Balance Sheets.................................. 6
Consolidated Statements of Income and
    Retained Earnings........................................ 8
Consolidated Statements of Cash Flows........................ 9
Notes to Consolidated Financial Statements...................10
Report of Independent Auditors................Inside Back Cover

CORPORATE DATA

CORPORATE OFFICES
Pulaski Furniture Corporation
One Pulaski Square
P.O. Box 1371
Pulaski, Virginia 24301
(540) 980-7330

STOCK TRANSFER AGENT AND
  DIVIDEND DISBURSING AGENT
First Union National Bank
of North Carolina
Two First Union Center, M-12
Charlotte, NC 28288
(800) 829-8432

STOCK LISTING
Traded Over-The-Counter
NASDAQ Symbol-PLFC

LEGAL COUNSEL
Hunton & Williams
Richmond, Virginia

ANNUAL MEETING
The Annual Meeting of Stockholders of Pulaski Furniture Corporation will be
held on Friday, February 9, 1996 at 10 a.m. at the Roanoke Airport Marriott,
Roanoke, Virginia.

ADDITIONAL INFORMATION
A copy of Form 10-K,  the Annual Report filed with the  Securities  and Exchange
Commission,  is available  without charge to  stockholders  upon written request
directed to the  Corporation,  attention  Secretary.

[PHOTO GOES HERE]

This piece was selected by Home Magazine to receive a 1995 American  Furniture
award. The award recognizes and honors excellence and creativity in American
design. The Croquet Information Center was chosen because its design so clearly
responds to the demands for form and function  required by today's  lifestyles.
The Croquet  Information  Center acknowledges  that the  kitchen is family
central.  This  practical  desk holds family files, messages, and cookbooks in
one functional piece. It's sized to fit even a nook or cranny.

MESSAGE TO STOCKHOLDERS

      In  Megatrends,   a  well-read  book  published  in  1983,  John  Naisbitt
encouraged us to think  globally and act locally.  When  reflecting on 1995, and
thinking about the challenges  facing our industry and your  Corporation,  it is
obvious that just thinking  globally and acting  locally is not enough.  We must
excel in both arenas.  The world has gotten  smaller,  and it has effected major
changes in our industry.  Your  Corporation  is prepared to perform well in this
new environment.

      Nineteen  ninety-five was a challenging  year for furniture  manufacturers
because of limited  growth.  Business for the industry as a whole increased less
than 3 percent and actually saw a decline in shipped units.  In addition to this
challenge,  consumers shopped for furniture intermittently  throughout the year,
which  resulted  in  significant  peaks  and  valleys  of  demand.   Given  this
background,  we are pleased to report  that your  Corporation  outperformed  the
industry.  Sales increased to $172,842,000 from $148,698,000 in 1994. Net Income
increased to $4,475,000 compared to $3,168,000 for 1994.

      The improved performance required significant  contributions from the many
stakeholders  of your  Corporation.  It  started  with our  employees  and sales
representatives, at all levels of the Corporation, who worked together as a team
to  produce  quality  products  and to  place  those  products  with  the  right
retailers.  It continued with our suppliers,  who helped us to control inflation
and to provide well-made components and appropriate  services. Of course, it was
all made possible by our  customers,  who  represent  the best  retailers in our
industry. Their vast command of market share allowed us to grow this year.

      Your Corporation worked in all 50 states, several territories, and over 30
foreign countries in 1995. We need a worldwide network of customers,  employees,
suppliers,  and partners to meet the  challenges of the future.  A great deal of
the Corporation's resources have been employed in recent years to help establish
the right network. We are starting to reap more of the benefits of this network.
Our export  sales grew in 1995 and  remained  at 6 percent of total  sales.  Our
import business showed another year of gains and will continue to grow as we use
it to augment our  domestic  production  and to increase  our market  share with
American retailers.

      We divested  ourselves  of the  Corporation's  holdings  in  Triwood.  The
changes  in our  product  line  have  resulted  in  decreased  demand  for  this
facility's product so it made sense to deploy company assets elsewhere.  We sold
our share of Triwood  above its value on our books which  resulted in a one time
gain of $327,986.

      When we think about 1996,  we  anticipate a business  climate that will be
very similar to 1995.  Influences  such as lower  interest  rates and  continued
strong housing starts will be positive for our industry;  however, high consumer
debt could have a negative  impact.  Your Corporation will strive to make 1996 a
more successful year.

      The Board of Directors  increased the first  quarter  dividend to $.16 per
share in 1996 from $.15 per share for the first quarter of 1995.

      We thank our  stockholders  and  Board of  Directors  for their  continued
support.
                                                        Sincerely,



                                                        /s/ Bernard C. Wampler
                                                        Bernard C. Wampler
                                                        Chairman and CEO



                                                        /s/ John G. Wampler
                                                        John G. Wampler
                                                        President and COO


                               [PHOTO GOES HERE]

                                       1

<PAGE>


PULASKI FURNITURE CORPORATION AND SUBSIDIARIES

GENERAL INFORMATION

          Organized in Virginia in 1955, the Corporation  manufactures and sells
medium-priced  wooden bedroom,  dining room and occasional furniture produced in
its manufacturing plants located in Pulaski, Dublin, and Martinsville, Virginia.
The  Corporation  also has a veneer  plant  located in Dublin,  Virginia,  which
produces veneer used at all manufacturing  plants.  The  Corporation's  Ridgeway
Clock  Company  plant  manufactures  grandfather,  mantel and wall clocks and is
located in Ridgeway,  Virginia.  The  Corporation's  Craftique plant in Mebane,
North  Carolina  produces  solid  mahogany  bedroom,  dining room and occasional
furniture.  The Corporation  leases a building of  approximately  100,000 square
feet  in  Christianburg,   Virginia  to  house  the   Corporation's   upholstery
operations.

          At the end of 1995 fiscal year,  2,827,882 shares of the Corporation's
10 million authorized shares of Common Stock were outstanding.  In addition, the
Corporation  has authorized one million shares of Cumulative  Preferred stock of
which no shares were outstanding.

MARKET AND DIVIDEND INFORMATION

          Pulaski Furniture Corporation's stock is listed on the NASDAQ National
Market System, which is the most active listing of over-the-counter  quotations.
During  the  fiscal  year  1995,  the  Corporation  believes  that  Wheat  First
Securities,  Inc., of Richmond,  Virginia,  was the most active market-maker for
the stock.  The Corporation had  approximately  875 stockholders of record as of
October 29,  1995.  The range of closing  sales prices as reported by the NASDAQ
and cash  dividends  for the last two fiscal  years are listed in the  following
chart. The market quotations reflect interdealer prices, without retail mark-up,
mark-down or commissions and may not necessarily represent actual transactions.

                                           SALES PRICES OF COMMON STOCK
                           1995                    1994               DIVIDENDS
 FISCAL                                                               DECLARED
QUARTER                HIGH     LOW             HIGH    LOW         1995   1994

First...              20.50    16.00           27.00  18.625        $0.15  $0.14
Second..              21.375   17.50           26.75  22.75         $0.15  $0.14
Third...              20.00    17.00           23.50  18.00         $0.15  $0.14
Fourth..              18.50    16.00           21.00  17.50         $0.15  $0.14


                               [PHOTO GOES HERE]

Pulaski's  Collector  Curios are  available  in a variety of styles and finishes
featuring  mirrored  backs  and  canister  lighting  that  create  the  ultimate
showcase.


                                       2


<PAGE>


SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>

                                                                  YEARS ENDED
                                OCTOBER 29,      OCTOBER 30,      OCTOBER 31,     NOVEMBER 1,      NOVEMBER 3,
                                   1995             1994             1993            1992             1991

<S>                             <C>             <C>             <C>               <C>              <C>
Net Sales ..................    $172,842,105    $148,698,029    $137,650,721      $123,918,019     $120,575,933
Net Income .................       4,475,171       3,168,494       4,352,176         2,599,059        1,800,066
Earnings Per Share .........            1.56            1.10            1.53              0.91             0.63
Total Assets................     118,675,813     112,750,099      99,336,183        91,075,577       92,074,129
Long-Term Debt..............      29,354,804      31,398,173      20,357,425        22,369,346       23,878,691
Cash Dividends Per Share....            0.60            0.56            0.52              0.52             0.52
Book Value Per Share........           19.78           18.69           18.29             17.38            16.98
Net Working Capital.........      51,787,988      47,203,234      44,291,637        43,682,801       43,317,362
Current Ratio...............             2.9             3.1             3.1               3.9              4.0

</TABLE>



QUARTERLY RESULTS OF  OPERATIONS (UNAUDITED)

          The following is a tabulation of the  unaudited  quarterly  results of
operations  for the fiscal  years ended  October 29, 1995 and October 30,  1994.
(dollars in thousands, except earnings per share).

<TABLE>
<CAPTION>

                                    FIRST               SECOND          THIRD              FOURTH
                                   QUARTER              QUARTER        QUARTER             QUARTER            TOTAL
                                (12 WEEKS IN        (12 WEEKS IN     (12 WEEKS IN        (16 WEEKS IN     (52 WEEKS IN
                                1995 AND 1994       1995 AND 1994    1995 AND 1994       1995 AND 1994    1995 AND 1994

<S>                                <C>                 <C>              <C>                 <C>              <C>
October 29, 1995
   Net Sales.............          $41,270             $38,989          $30,236             $62,347          $172,842
   Gross Profit..........            8,238               7,390            7,390             $10,978            33,996
   Net Income............            1,373               1,094             (602)             $2,610             4,475
   Earnings per share....             0.48                0.38            (0.21)               0.91              1.56

October 30, 1994
   Net Sales.............          $32,150             $32,901          $27,691             $55,956          $148,698
   Gross Profit..........            6,410               6,685            5,085               9,121            27,301
   Net Income............            1,125(1)              877              319                 847             3,168(1)
   Earnings per share....             0.39(1)             0.30             0.11                0.30              1.10(1)

</TABLE>


(1)  Net income includes the cumulative  effect of accounting  change for income
     taxes. The cumulative  effect of the accounting change increased net income
     by $396,092 or $0.14 per share.

                                       3

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION

1995 COMPARED TO 1994

      The improvement in earnings from 1994 to 1995 and  particularly the fourth
quarter of 1995 was primarily  attributable to the increase in sales, and to the
lower cost of products sold as a percentage of sales.

      Net  sales  increased  16.2%  or  $24,144,076   from  1994  to  1995.  The
Corporation  shipped  approximately  29% more units in 1995 at an  average  unit
price of  approximately  7.5% less.  The large increase in units shipped and the
lower unit price was  attributable  primarily  to  products  produced in the new
factory.  The new factory in Pulaski began operations in May, 1994, and produces
occasional  furniture.  Export sales for fiscal 1994 and 1995 were approximately
6% of net sales.

      Cost of products sold decreased from 81.64% of net sales in fiscal 1994 to
80.33% of net sales in fiscal 1995. The  percentage  decreases were primarily in
factory labor, factory supplies, fuel and insurance.

      There was no appreciable difference in selling, general and administrative
expenses as a percentage of net sales between fiscal 1995 and fiscal 1994.

      The increase in interest expense in fiscal 1995 from fiscal 1994 reflected
the  increase  in  average  outstanding  debt and  higher  interest  rates.  The
Corporation's average amount of outstanding  indebtedness for borrowed money was
$41,675,218 in fiscal 1995 and $37,919,172 in fiscal 1994. The weighted  average
borrowing  rates for the three fiscal  years of 1993,  1994 and 1995 were 5.13%,
4.77% and 6.44% respectively.  The weighted averages excluding the interest rate
swap costs would have been 3.26%,  3.74% and 5.94%. The interest rate swap costs
increased interest expense by $439,932,  $389,925 and $206,595 in 1993, 1994 and
1995 respectively.

      Net  income was  reduced  by  approximately  $63,000  for fiscal  1995 and
$10,000 for fiscal 1994, as a result of the Corporation's proportionate share of
the losses incurred by the Triwood,  Inc. joint venture. On October 6, 1995, the
Corporation  sold its  proportionate  share of the  investment  in Triwood,  and
recorded a gain of $327,986, which is included in other income.

1994 COMPARED TO 1993

      The decrease in income before  cumulative  effect of accounting  change of
$1,579,774 from 1993 to 1994 was attributed mostly to increases in manufacturing
costs and selling and  administrative  costs,  not adequately  absorbed by price
increases,  and also  attributed  to start  up costs of  approximately  $780,000
related to a new plant.

      Net sales increased 8.0% or $11,047,308 from 1993 to 1994. The Corporation
shipped  approximately  4% more  units  in  1994 at an  average  unit  price  of
approximately   3.0%  more.   Export   sales  for  fiscal  1993  and  1994  were
approximately 6% of net sales.

      The  increase in cost of  products  sold as a  percentage  of net sales in
fiscal 1994  compared with fiscal 1993 was primarily due to increases in factory
labor,  factory supplies,  and the cost of employee  insurance.  The increase in
factory  labor was caused by an  overall  increase  in the number of  employees,
primarily relating to the new plant, and to rate increases.

      The  increase  in  selling,  general  and  administrative  expenses  as  a
percentage  of net sales in fiscal 1994 from fiscal 1993,  was due  primarily to
increases in expenses related to marketing,  information systems and the cost of
employee  insurance.  The increase in marketing expenses was caused by increased
emphasis on the  promotion  and  marketing of the  Corporation's  products.  The
increase in information systems expenses was caused primarily by improvements in
the manufacturing and administrative systems.

      The increase in interest expense in fiscal 1994 from fiscal 1993 reflected
the increase in average  outstanding  debt  partially  offset by lower  interest
rates. The Corporation's average amount of outstanding indebtedness for borrowed
money was  $37,919,172  in fiscal  1994 and  $23,545,048  in  fiscal  1993.  The
weighted  average  borrowing  rates for the three fiscal years of 1992, 1993 and
1994 were 5.36%, 5.13% and 4.77%  respectively.  The weighted averages excluding
the  interest  rate swap costs  would  have been  4.03%,  3.26% and  3.74%.  The
interest rate swap costs increased  interest  expense by $330,020,  $439,932 and
$389,925 in 1992, 1993 and 1994 respectively.

      The increase in  miscellaneous  other  income  reflects a gain of $691,000
from  insurance  proceeds  related to storm damage of the contents of a finished
goods warehouse.

      Net  income  was  reduced by  approximately  $10,000  for fiscal  1994 and
$65,000 for fiscal 1993, as a result of the Corporation's proportionate share of
the losses incurred by the Triwood, Inc. joint venture.

      The cumulative  effect of accounting  change in 1994 was a net addition to
income of $396,092,  and is described  in Note 7 of the  Consolidated  Financial
Statements.

      The  Financial  Accounting  Standards  Board  released  the  Statement  of
Financial  Accounting  Standards No. 119 "Disclosure about Derivative  Financial
Instruments   and  Fair  Value".   and  No.  123   "Accounting  for  Stock-based
Compensation".  The Company is required to adopt these standards in fiscal years
1995 and 1996.  The adoption will not have any material  impact on the Company's
operations or financial position.

CAPITAL RESOURCES, LIQUIDITY AND EFFECTS OF INFLATION

      Net Cash from  Operating  Activities  for the year  totaled  approximately
$2,080,000.   Accounts  receivable  increased  approximately   $2,246,000,   and
inventories increased approximately $6,466,000. These increases were the primary
reasons for the short-term borrowings during the year.


                                       4
<PAGE>


      The Corporation has short-term  lines of credit totaling  $16,000,000 with
interest not to exceed prime rates. At October 29, 1995, which was approximately
the middle of the Corporation's  heaviest  shipping season,  the Corporation had
$12,000,000 outstanding under these credit lines.

      Because of the  available  lines of credit,  the  strong  working  capital
position,  and its ability to generate cash through operations,  the Corporation
believes it has adequate  liquidity to meet its  short-term  and long-term  debt
obligations,  cover its capital expenditures, pay cash dividends and to continue
controlled  growth  indefinitely.  The  Corporation  has no plans to borrow  any
additional long-term debt or to sell additional equity securities.

      The  Corporation  uses the LIFO method of accounting for its  inventories.
Under  this  method,  the  cost  of  products  sold  reported  in the  financial
statements  approximates  current costs and thus reduces  distortion in reported
income due to increasing costs. Under the LIFO method, the Corporation increased
its inventory reserve in 1995 by approximately  $1,075,000,  the effect of which
decreased net income by approximately $726,000 or 25 cents per share.

      The charges to operations  for  depreciation  represent the  allocation of
historical  costs  incurred over past years and are  significantly  less than if
they  were  based  on  current  cost  of  productive  capacity  being  consumed.
Construction of the Corporation's Dublin,  Virginia plant was completed in 1973,
the  Martinsville  plant was renovated in 1974, and the renovation and expansion
of the Pulaski  facilities  were completed in 1986,  with further  expansions in
1988 and 1994.  The Ridgeway  division was acquired in 1985,  and the  Craftique
division was acquired in 1988.  The  Accentrics  division  began  operations  in
leased facilities in November 1989.

      The  replacement  costs for assets  acquired  in prior  years will  likely
exceed the original costs of the replaced  assets.  However,  increased costs of
replacement  assets will  result in higher  depreciation  charges  which will be
taken into consideration in setting pricing policies. Provision for depreciation
for fiscal 1995 was approximately $5,243,000.

       The Corporation's financial statements are prepared in accordance with
generally accepted accounting principles using historical costs, which are
not adjusted to reflect changes in purchasing power. However, use of the LIFO
method of valuing inventories in the Corporation's financial statements
compensates for some of the effects of inflation.

DISCUSSION-FOURTH QUARTER

      The increase in sales in the fourth  quarter ended  October 29, 1995,  was
due  primarily to the  increased  demand for the  Corporation's  furniture.  The
increase in earnings was due primarily to the increase in sales.

      The Board of  Directors  at its December 8, 1995,  meeting  increased  the
dividend to 16 cents per common share payable on January 2, 1996 to stockholders
of record  December 15, 1995, and authorized the purchase by the  Corporation of
up to 200,000 shares of its common stock presently outstanding.


                               [PHOTO GOES HERE]


                                  HOME OFFICE

The new Home  Office/Library  Collection  is targeted for the customer  that is
seeking unparalleled elegance,  distinctive styling and functionally  engineered
cases to accommodate the latest computer  equipment.  This Armoire features file
drawer,  pull-out  keyboard and printer  shelves,  bulletin  board,  CD and disk
storage, surge protected control center and faux book doors.


                               [PHOTO GOES HERE]


                                       5

Consolidated Balance Sheets

<TABLE>
<CAPTION>

                                                                                October 29     October 30
                                                                                   1995            1994

<S>                                                                            <C>            <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents...............................................     $ 1,721,546    $ 1,088,322
  Short-term investments..................................................          14,615         64,615
  Trade receivables, less allowance of
       $1,000,000 in 1995 and 1994........................................      35,674,329     33,427,941
  Inventories:
       Finished furniture.................................................      22,936,830     18,084,326
       Furniture in process...............................................       4,422,309      4,302,708
       Lumber and purchased veneers.......................................       5,260,981      4,290,592
       Manufacturing supplies.............................................       7,788,751      7,265,510
                                                                                40,408,871     33,943,136
  Prepaid expenses........................................................         407,186        465,309
  Deferred income taxes...................................................         578,727        493,064
                                                      TOTAL CURRENT ASSETS      78,805,274     69,482,387

PROPERTY, PLANT AND EQUIPMENT:
  Land....................................................................         640,979        640,979
  Buildings...............................................................      31,179,684     30,903,196
  Machinery and equipment.................................................      49,029,973     46,896,444
  Furniture, fixtures and office equipment................................       3,510,526      3,096,041
  Vehicles................................................................         651,732        660,439
                                                                                85,012,894     82,197,099
  Less allowances for depreciation........................................      46,118,654     41,128,037
                                                                                38,894,240     41,069,062
OTHER ASSETS:
  Investment in and advances to investee company..........................                      1,235,170
  Cash surrender value of life insurance,
       less loans of $728,408 in 1995 and $625,445 in 1994................         976,299        963,480
                                                                                   976,299      2,198,650
                                                                              $118,675,813   $112,750,099
</TABLE>


                                       6

<TABLE>
<CAPTION>

                                                              OCTOBER 29       OCTOBER 30
                                                                 1995             1994
<S>                                                          <C>             <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
   Accounts payable and accrued expenses:
     Accounts payable.......................................  $ 9,764,380    $  8,543,642
     Wages and commissions..................................    2,213,933       2,395,963
     Payroll taxes and taxes withheld from employees........      733,928         578,601
                                                               12,712,241      11,518,206
   Notes Payable............................................    12,000,00       8,000,000
   Current portion of long-term debt........................    2,047,618       2,004,249
        Federal and state income taxes......................      257,427         756,693
                             TOTAL CURRENT LIABILITIES         27,017,286      22,279,148

DEFERRED COMPENSATION.......................................    2,268,749       1,937,923
DEFERRED INCOME TAXES.......................................    4,094,245       3,871,331
LONG-TERM DEBT..............................................   29,354,804      31,398,173
STOCKHOLDERS' EQUITY:
  Common Stock (authorized 10,000,000 shares, issued
    shares, 2,827,882 in 1995 and 2,849,159 in 1994)........    5,827,093       6,084,210
  Retained earnings.........................................   50,296,885      47,529,123
  Unamortized restricted stock..............................     (183,249)       (349,809)
  Total stockholders' equity................................   55,940,729      53,263,524

                                                             $118,675,813    $112,750,099
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                       7

<PAGE>



CONSOLIDATED STATEMENTS OF INCOME AND
RETAINED EARNINGS

<TABLE>
<CAPTION>
                                                                                         Years Ended
                                                              OCTOBER 29                 OCTOBER 30          OCTOBER 31
                                                                 1995                       1994                1993
<S>                                                           <C>                       <C>                 <C>
Net sales..................................................   $172,842,105              $148,698,029        $137,650,721
Cost of products sold......................................    138,845,650               121,397,370         109,369,585
                                                                33,996,455                27,300,659          28,281,136
Selling, general and administrative expenses...............     25,122,493                22,223,313          20,302,921

                                                                 8,873,962                 5,077,346           7,978,215
Other income:
        Interest...........................................         27,940                   134,866             146,570
        Miscellaneous......................................        600,559                   698,291              62,917

                                                                   628,499                   833,157             209,487
                                                                 9,502,461                 5,910,503           8,187,702

Other deductions
        Interest expense...................................      2,738,021                 1,748,330           1,296,464
        Miscellaneous......................................         68,613                    39,693              59,310
        Proportionate share of loss in investee company....         63,156                    10,078              64,752

                                                                 2,869,790                 1,798,101           1,420,526

Income before income taxes and cumulative effect
  of accounting change.....................................      6,632,671                 4,112,402            6,767,176
Income taxes...............................................      2,157,500                 1,340,000            2,415,000
Income before cumulative effect of accounting change.......      4,475,171                 2,772,402            4,352,176
Cumulative effect of accounting change.....................                                  396,092
Net income.................................................      4,475,171                 3,168,494            4,352,176
Retained earnings at beginning of year.....................     47,529,123                45,959,916           43,074,546
Cash dividends (per share: 1995-$.60
  1994 - $.56; 1993 - $.52)................................     (1,707,409)               (1,599,287)          (1,466,806)
Retained earnings at end of year...........................   $ 50,296,885              $ 47,529,123        $  45,959,916
EARNINGS PER SHARE
Income before cumulative effect of accounting change.......         $1.56                   $0.96                   $1.53
Cumulative effect of accounting change.....................                                  0.14
Net income.................................................         $1.56                   $1.10                   $1.53
</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                       8


CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                         YEARS ENDED
                                                                  OCTOBER 29              OCTOBER 30        OCTOBER 31
                                                                     1995                    1994              1993

<S>                                                               <C>                   <C>                  <C>
OPERATING ACTIVITIES
   Net income..............................................       $  4,475,171           $  3,168,494        $4,352,176
   Adjustments to reconcile net income to
    net cash provided by operating activities:
     Provision for depreciation and amortization...........          5,242,754              4,495,436         3,724,465
     Provision for deferred income taxes...................            137,251               (196,084)         (462,000)
     Provision for deferred compensation...................            330,826                139,470           276,714
     Proportionate share of loss in investee company.......             63,156                 10,078            64,752
     Gain on sale of investee company......................           (327,986)
     Loss on sale of property, plant and equipment.........             28,370                 13,636            59,296
     Cumulative effect of accounting change................                                  (396,092)
     Changes in operating assets and liabilities:
     Increase in trade receivables.........................         (2,246,388)            (2,597,950)       (3,044,925)
             Increase in inventories.......................         (6,465,735)            (3,165,285)       (4,693,333)
             Increase (decrease) in accounts payable
                and accrued expenses.......................          1,194,035                661,436          (224,393)
             Increase (decrease) in federal income taxes
                payable....................................           (499,266)              (618,516)          540,601
             Other.........................................            148,267                (54,636)         (167,496)
                  NET CASH PROVIDED BY OPERATING ACTIVITIES          2,080,455              1,459,987           425,857
INVESTING  ACTIVITIES
   Purchases of property, plant and equipment..............         (2,950,513)            (13,554,857)      (5,036,788)
   Proceeds from sale of property, plant and equipment.....             20,772                  27,246           48,375
   Proceeds from sale of investee stock and
             collection of advances........................          1,500,000
   Purchases of investments................................                                                  (2,240,000)
   Sales of investments....................................             50,000                 142,000        2,431,200
                     NET CASH USED IN INVESTING  ACTIVITIES         (1,379,741)            (13,385,611)      (4,797,213)

FINANCING  ACTIVITIES
   Issuance of common stock................................            422,632                 590,278          716,166
   Repurchase of common stock..............................           (679,750)               (656,891)        (541,144)
   Payment of dividends....................................         (1,707,409)             (1,599,287)      (1,466,806)
   Proceeds from long-term debt............................                                 13,000,000
   Payments on long-term debt..............................         (2,000,000)             (2,001,203)      (1,500,002)
   Increase in notes payable...............................          4,000,000               1,000,000        7,000,000
   Other...................................................           (102,963)                (16,658)         (27,417)
                  NET CASH PROVIDED BY FINANCING ACTIVITIES            (67,490)             10,316,239        4,180,797
          INCREASE (DECREASE) IN CASH  AND CASH EQUIVALENTS            633,224              (1,609,385)        (190,559)
   Cash and cash equivalents at beginning of year..........          1,088,322               2,697,707        2,888,266
                   CASH AND CASH EQUIVALENTS AT END OF YEAR         $1,721,546             $ 1,088,322       $2,697,707
</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       9


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES

      BUSINESS: The Corporation is engaged exclusively in the production and
sale of furniture products.

      FISCAL YEAR: The Corporation uses a 52-53 week year. All fiscal years
presented include 52 weeks.

      PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of the Corporation and its  wholly-owned  subsidiaries,  Craftique,
Inc.,  and Pulaski  Foreign Sales  Corporation,  Inc.  Significant  intercompany
accounts and  transactions  have been  eliminated.  The Corporation  owned until
October,  1995 a 25% interest in Triwood,  Inc. which is accounted for under the
equity method.

      CASH EQUIVALENTS: The Corporation considers all highly liquid
investments with a maturity of three months or less when purchased to be cash
equivalents.

      INVESTMENTS: Investments, which consist principally of tax exempt
bonds, are stated at cost which approximates market.

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

      PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are stated
at cost. Depreciation has been computed on a straight-line basis over the
estimated useful lives of the related assets.

      EARNINGS PER SHARE:  Earnings per share are computed based on the weighted
average  number  of  common  and  common   equivalent   shares  (stock  options)
outstanding during each year.

      RECLASSIFICATION: Certain reclassifications were made in prior years'
financial statements to conform to the 1995 presentation.

NOTE 2. INVENTORIES

Current cost of the LIFO inventories exceeded the carrying amount by
approximately $14,852,000 and $13,777,000 at October 29, 1995 and October 30,
1994, respectively.

NOTE 3. FINANCING  ARRANGEMENTS  AND COMMITMENTS

Long-term debt consists of the following:


                                                    OCTOBER 29      OCTOBER 30
                                                       1995            1994
Industrial Development Revenue Notes,
      due in installments of $5,000,000
      in 2004 and 2009..............                 $10,000,000    $10,000,000
Notes payable under revolving credit facility          9,000,000      9,000,000
Notes payable to bank, due in quarterly
      installments of $428,572 beginning
      December, 1995 through December, 2002           12,000,000     13,000,000
Notes payable to banks, due in varying
      quarterly installments through
      October, 2000.................                     402,422      1,245,268
Notes payable  at 3% interest to the Town of
      Pulaski, Virginia, due in quarterly
      installments through April 30, 1995                               157,154
                                                      31,402,422     33,402,422
Less current maturities.............                   2,047,618      2,004,249
                                                     $29,354,804    $31,398,173

      Future maturities of long-term debt at October 29, 1995 are as follows:


      1996.....................................                     $ 2,047,618
      1997.....................................                      10,783,375*
      1998.....................................                       1,714,286
      1999.....................................                       1,714,286
      2000.....................................                       1,714,286
      2001 and thereafter......................                      13,428,571
                                                                    $31,402,422

      * Of this amount,  $9,000,000  is extended  automatically  unless the bank
providing the revolving credit facility gives notice of termination as described
below.

      The Industrial  Development  Revenue  Notes,  which may be called prior to
maturity,  bear interest at tax-exempt  market rates.  Interest cost  (including
related letter of credit and servicing  fees) averaged 4.78% during 1995. At the
option of the  Corporation,  or if called  prior to  maturity,  the notes may be
placed  with a bank under a letter of credit  arrangement.  In this  event,  the
notes would bear interest at two-thirds of the prime rate.

      The  Corporation  has a note and revolving  credit  agreement  with a bank
which  provides  for $10  million  in  notes  supported  by a  revolving  credit
facility.  The notes bear interest at current  market rates  (averaged  6.04% in
1995) and are renewable on an annual basis subject to minimum annual  reductions
of long term debt. The agreement  requires annual commitment fees of one quarter
of one percent of the total  amount of the  revolving  credit  facility.  At the
option of the bank, the revolving  credit facility may be terminated on February
28 of any year if the bank gives  notice of  termination  not later than 60 days
before March 1 of the preceding year.

      The  Corporation  has a  term  loan  agreement  with a  bank  that  had an
outstanding  amount of $12 million at October 29, 1995.  The note bears interest
at a variable rate not to exceed LIBOR plus 3/8% (averaged  6.36% in 1995).  The
agreement  requires  annual  commitment fees of one eighth of one percent of the
unused commitment.

      Notes payable to banks bear  interest at variable  rates not to exceed the
London Interbank Offered Rate (LIBOR) plus five-eighths of one percent.
The average interest rate for the year was 6.92%.

      To manage the interest rate exposure under its long-term obligations,  the
Corporation has entered into a swap agreement with a major financial institution
in the  notional  amount of $8 million.  Under the terms of the  agreement,  the
Corporation  makes  payments at a fixed rate  (8.87%) and  receives  payments at
variable rates based on LIBOR,  the net of which is included as an adjustment to
interest expense. The weighted average variable rate received by the Corporation
was 2.58%, 4.00%, and 3.37% for 1995, 1994 and 1993, respectively.  The increase
to interest expense totaled  $206,595,  $389,925 and $439,932 for 1995, 1994 and
1993, respectively.

      The agreements  contain  various  conditions  which  provide,  among other
things,  restrictions relating to the maintenance of working capital, payment of
dividends and additional  indebtedness.  The  Corporation was in compliance with
these  conditions  at October 29, 1995. At October 29, 1995,  retained  earnings
available for payment of dividends amounted to approximately $21,934,000.

      Under short term line of credit  arrangements,  the Corporation may borrow
up to $16 million at October 29, 1995 which would bear  interest at rates not to
exceed the prime rate.  At October 29,  1995,  the  Corporation  had $12 million
outstanding under these arrangements.

      In connection with the purchase of inventory from foreign suppliers,
the Corporation has available letters of credit of approximately $11 million,
with $8.1 million outstanding at October 29, 1995.

                                       10

      Interest paid in 1995, 1994, and 1993 was $2,715,441, $1,691,686, and
$1,316,104, respectively. Of these amounts, $104,399 was capitalized during
1994.

NOTE  4. COMMON STOCK

      Changes in Common Stock for the two years in the period ended 1995 were as
follows:

                                                             COMMON STOCK
                                                          SHARES      AMOUNT
BALANCE AT OCTOBER 31, 1993.......................      2,814,776   $5,645,373
      Shares issued under Salaried Employee
        Stock Purchase Plan.......................         20,914      388,163
      Common Stock acquired and retired...........        (27,331)    (656,891)
      Shares issued under Stock Incentive 
        Plan for Non-Employee Directors...........            800       20,800
      Shares issued under Stock Incentive Plan....         12,500      181,315
      Restricted shares issued under Stock
        Incentive Plan............................         27,500      505,450
BALANCE AT OCTOBER 30, 1994.......................      2,849,159   $6,084,210
      Shares issued under Salaried
        Employee Stock Purchase Plan..............         19,923      405,632
      Common Stock acquired and retired...........        (42,000)    (679,750)
      Shares issued under Stock Incentive Plan
        for Non-Employee Directors................            800       17,000
BALANCE AT OCTOBER 29, 1995.......................      2,827,882   $5,827,092

      In 1988,  as part of a  shareholder  rights  plan,  the Board of Directors
declared a dividend  distribution of one preferred share purchase right for each
outstanding share of common stock.

      Each right entitles its holder to buy one  one-hundredth of a share of the
Corporation's Series A Cumulative Preferred Stock at an exercise price currently
in excess of market value.  The rights will become  exercisable only if a person
or  group  acquires  or  obtains  the  right  to  acquire,  20% or  more  of the
Corporation's  common stock (an "Acquiring  Person") or commences a tender offer
that  would  result  in the  offeror  owning  30% or more  of the  Corporation's
outstanding common stock ("Triggering  Events"). If an Acquiring Person acquires
30% or more of the  Corporation's  common  stock or  engages  in  certain  other
transactions  with the  Corporation,  each right will entitle the holder,  other
than an Acquiring Person, to acquire the Corporation's  Series A Preferred Stock
or, at the option of the  Corporation,  other  securities or property,  having a
value equal to twice the right's exercise price. Likewise, if the Corporation is
acquired in a merger or other business  combination,  or the  Corporation  sells
more than 50% of its  earnings  power or assets,  each right  will  entitle  the
holder,  other than an Acquiring Person, to purchase securities of the acquiring
entity with a market value equal to twice the right's exercise price. The rights
expire December 15, 1997, and are subject to redemption at the discretion of the
Corporation's Board of Directors at a price of $0.01 per right  within 10 days
following  the occurrence  of a  Triggering  Event,  subject to  extension of
the period by the Board of  Directors.  The  Corporation  has  authorized  one
million  shares of cumulative  preferred  stock,  of which 500,000  shares have
been  designated as Series A Cumulative  Preferred Stock reserved for issuance
upon exercise of such rights.

NOTE 5. STOCK PURCHASE AND INCENTIVE PLANS

      The Salaried Employees Stock Purchase Plan provides for the sale of Common
Stock annually based on payroll deductions of up to 8% of employee  compensation
at a price equal to 70.7% of market price on the date of purchase.  Compensation
expense  recognized  in 1995,  1994,  and 1993 related to the Plan was $179,003,
$171,554, and $164,075,  respectively. At October 29, 1995, 25,297 shares are to
be issued pursuant to the Plan's provisions, after which there will remain
36,166 shares available for purchase in the future.

      Under the Stock  Incentive  Plan, as amended in 1989,  key employees  were
granted  options to purchase  Common Stock at a price  determined by a committee
appointed by the Board of Directors or determined pursuant to a formula approved
by the committee. The committee was also able to grant stock appreciation rights
(SARs) in relation to the grants of stock  options.  The stock  options and SARs
expire ten years after the date of grant.

      At  October  29,  1995,  outstanding  options  and SARs  under  the  Stock
Incentive Plan were as follows:

                              NUMBER OF SHARES          OPTION PRICE OR
      DATE                     AND SARS UNDER       FAIR MARKET VALUE AT GRANT
     GRANTED                       OPTION                   PER SHARE

December 6, 1986.......             5,000                     18.75
December 3, 1987.......             5,000                     15.00
December 8, 1988.......            22,500                     17.375
December 8, 1989.......            22,500                     18.75
December 7, 1990.......            22,500                     16.125
December 6, 1991.......            20,000                     14.75

      All shares  under option at October 29, 1995 are  exercisable.  All shares
issued upon  exercise of options  during the three years ended  October 29, 1995
related to options granted between December 5, 1985 and December 6, 1991.

      The Stock Incentive Plan, as amended in 1991, permits the committee of the
Board of  Directors to make awards of the  Corporation's  common stock upon such
terms and conditions as may be established  by the  committee.  Restrictions  on
shares  issued  under  the plan  lapse at the rate of 20% of the stock per year.
Upon  issuance  of  restricted  stock  under  the  plan,  unearned  compensation
equivalent to the market value at the date of grant is charged to  stockholders'
equity  and  subsequently  amortized  on  the  ratable  vesting  period  method.
Amortization  of  $166,560  and  $291,321  was  recorded in fiscal 1995 and 1994
respectively.  At October 29, 1995,  there were  156,000  shares  available  for
future issuance.

      In October 1995, the Financial Accounting Standards Board issued Statement
of Financial  Accounting  Standards (SFAS) No. 123,  "Accounting for Stock-Based
Compensation,"   which  established   accounting  and  reporting  standards  for
stock-based  employee  compensation plans. The new standard encourages companies
to adopt a fair value method of accounting  for an employee  stock  compensation
plan. However, it also allows companies to continue to measure compensation cost
using the intrinsic value based method  prescribed by APB Opinion No. 25 so long
as certain  pro forma  disclosures  are made in the  footnotes.  SFAS No. 123 is
effective for fiscal years beginning after December 15, 1995, the  Corporation's
1997 fiscal year. The Corporation has not determined the method it will use, and
the precise future effect of these rules on the Corporation's reported operating
results will depend upon the method adopted.


NOTE 6. PENSION PLAN

      The Corporation has a defined benefit pension plan covering  substantially
all of its  employees.  The  benefits  are  based on years  of  service  and the
employee's  highest five year average  compensation.  The Corporation's  funding
policy is to  contribute  annually the amount  required to fund current  service
cost plus an  amortization  of prior service cost and actuarial gains and losses
over approximately 30 years to the extent such amounts are currently  deductible
for federal income tax purposes.  Contributions are intended to provide not only
for  benefits  attributed  to service to date but also for those  expected to be
earned in the future.

      The  following  table  sets  forth the plan's  funded  status and  amounts
recognized in the consolidated balance sheets:

                                                      OCTOBER 29    OCTOBER 30
                                                          1995         1994
Actuarial present value of benefit obligation:
      Accumulated benefit obligation, including
      vested benefits of $8,689,660 and
      $7,947,566 in 1995 and 1994, respectively.       $ 8,852,453  $ 8,093,025
Projected benefit obligation for service
      rendered to date..............                   $11,964,876  $11,069,551
Plan assets at fair value...........                    11,801,453    9,884,534
Projected benefit obligation (greater) than
      plan assets...................                      (163,423)  (1,185,017)
Unrecognized net loss from past experience
      different from that assumed...                       190,308    1,388,507
Unrecognized net asset at
      November 2, 1987..............                      (350,639)    (400,730)
Net pension liability recognized
      in balance sheet..............                     $(323,754) $  (197,240)

Net pension cost included the following components:

                                      1995        1994         1993
Service cost.................... $  513,188   $ 458,138   $  395,793
Interest cost on projected
      benefit obligation........    814,413     690,469      629,933
Actual gain on plan assets...... (1,948,326)    (86,444)    (737,221)
Net amortization and deferral...  1,104,832    (699,131)      16,067
Net periodic pension cost....... $  484,107   $ 363,032   $  304,572

      Assumptions used in accounting for the pension plan were:

                                                   1995      1994        1993

Weighted average discount rate................     7.50%     7.50%       7.50%
Rate of increase in compensation level.......      6.0%      6.0%        6.0%
Expected long term rate of return on assets..      8.0%      8.0%        8.0%

      Approximately  99.7% of plan assets at October  29,  1995 are  invested in
listed  stocks and bonds,  and the  remaining  plan  assets are held in interest
bearing investments, primarily a common trust fund.

      The  Corporation   also  sponsors  an  unfunded   Supplemental   Executive
Retirement Program (SERP), which is a nonqualified plan that provides additional
retirement  benefits to certain key  employees.  Pension  expense  recognized in
1995,  1994 and 1993 related to the SERP was  $305,652,  $247,173 and  $321,563,
respectively.  At October 29, 1995,  the projected  benefit  obligation for this
plan totaled $2,438,763,  of which an unrecognized net obligation of $67,411 and
unamortized  prior  service cost of $380,106 are subject to later  amortization.
The remaining  $1,991,246 is an additional  pension liability  recognized in the
balance sheet at October 29, 1995.

NOTE 7. INCOME TAXES

          Effective  November 1, 1993,  the  Corporation  adopted  Statement  of
Financial  Accounting  Standards  No. 109,  "Accounting  for Income Taxes" (SFAS
109).  Under SFAS 109, the  liability  method is used in  accounting  for income
taxes.  Under this method,  deferred tax assets and  liabilities  are determined
based on  differences  between  financial  reporting and tax bases of assets and
liabilities  and are measured  using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. Prior to the adoption of
SFAS 109, income tax expense was determined using the deferred method.  Deferred
tax expense was based on the items of income and expense  that were  reported in
different years in the financial statements and tax returns and were measured at
the tax rate in effect in the year the difference originated.

          As permitted by SFAS 109, the  Corporation  has elected not to restate
the financial statements of any prior years. The cumulative effect of the change
increased net income for 1994 by $396,092 (or $.14 per share).

          The provisions for income taxes consisted of the following:

                                                                  DEFERRED
                                            LIABILITY METHOD       METHOD
                                            1995         1994       1993
Current:
      Federal..........                 $1,871,828   $1,495,441  $2,741,186
      Tax credits......                    (86,583)     (97,467)   (144,186)
                                         1,785,245    1,397,974   2,597,000
State..................                    235,004      138,110     280,000
                                         2,020,249    1,536,084   2,877,000
Deferred:
      Federal..........                    108,755     (175,974)   (409,369)
      State............                     28,496      (20,110)    (52,631)
                                           137,251     (196,084)   (462,000)
                                        $2,157,500   $1,340,000  $2,415,000

      The total provision for income taxes varied from the U.S. federal
statutory rate for the following reasons:

                                              1995       1994       1993
Statutory federal income tax rate...          34.0%      34.0%      34.0%
Tax credits.........................          (1.3)      (1.6)      (1.4)
State income tax, net of federal tax benefit   2.6        1.9        2.2
Change in valuation allowance.......          (3.8)
Other...............................           1.0       (1.7)        .9
Effective tax rate..................          32.5%      32.6%      35.7%

      Deferred income taxes reflect the net tax effects of temporary differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes. Significant components of
the deferred tax liabilities and assets are as follows:

                                                    OCTOBER 29,    OCTOBER 30,
                                                       1995          1994
Deferred tax liabilities:
      Depreciation...............................  $(4,914,903)   $(4,584,441)
      Inventory valuation........................      (15,103)       (31,487)
         Total deferred tax liabilities..........   (4,930,006)    (4,615,928)

                                       12

Deferred tax assets:
      Deferred compensation.........                   835,761        744,597
      Receivable allowance..........                   368,380        368,380
      Investment and advances to investee company..                   250,442
      Net operating loss carryforwards.............    132,522        166,944
      Other........................................    210,347        124,684
      Total deferred tax assets....................  1,547,010      1,655,047
      Valuation allowance for deferred tax assets..   (132,522)      (417,386)
      Net deferred tax assets......................  1,414,488      1,237,661
      Net deferred liabilities.....................$(3,515,518)   $(3,378,267)
      Deferred tax liability.......................$(4,094,245)   $(3,871,331)
      Deferred tax assets..........................    578,727        493,064
      Net deferred tax liability...................$(3,515,518)   $(3,378,267)


      The valuation allowance was reduced in 1995 by $250,442 as a result of
the collection of advances to and sale of investment in the investee company.

      At October 29, 1995, the Corporation has net operating tax loss
carryforwards  of  approximately  $2,600,000  for state income tax purposes that
expire in years 1996 through 2000.

      Deferred income taxes result from timing differences in the recognition of
income and expenses for financial  reporting  and tax  purposes.  The sources of
these differences and the net tax provisions for the year ended October 31, 1993
are:
                                             DEFERRED METHOD
                                                   1993
Depreciation........................          $  (311,126)
Pension Expense.....................               40,058
Deferred Compensation...............             (167,789)
Other...............................              (23,143)
                                              $  (462,000)

      The Corporation made income tax payments of $2,520,000, $2,155,000, and
$2,324,000, in 1995, 1994, and 1993, respectively.

NOTE 8. CONCENTRATION OF CREDIT RISK

      Pulaski Furniture manufactures medium-priced bedroom, dining room and
occasional furniture for a variety of customers in the retail furniture
industry. Ridgeway Clock manufactures grandfather, mantel and wall clocks.
Craftique produces solid mahogany bedroom, dining room and occasional
furniture. Substantially all of the Corporation's accounts receivable are due
from companies in the retail furniture industry. Management periodically
performs credit evaluations of its customers and generally does not require
collateral.

NOTE 9. OTHER INCOME

      Other  income  for 1995  includes a gain of  $327,986  for the sale of the
Corporation's investment in the investee company on October 6, 1995.

      In August,  1994, the contents of one of the Corporation's  finished goods
warehouses  was  damaged by a storm.  The  Corporation  has  received  insurance
proceeds equal to the wholesale value of the inventory destroyed. Accordingly, a
gain of $691,000 on the insurance  settlement is included in other income on the
1994 Consolidated Statements of Income.

REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS

Board of Directors and Stockholders
Pulaski Furniture Corporation

      We have audited the  accompanying  consolidated  balance sheets of Pulaski
Furniture  Corporation  and  Subsidiaries as of October 29, 1995 and October 30,
1994, and the related  consolidated  statements of income and retained  earnings
and cash flows for each of the three years in the period ended October 29, 1995.
These  financial   statements  are  the   responsibility  of  the  Corporation'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 financial statements referred to above present fairly,
in all  material  respects,  the  consolidated  financial  position  of  Pulaski
Furniture Corporation and Subsidiaries at October 29, 1995 and October 30, 1994,
and the  consolidated  results of their operations and their cash flows for each
of the three  years in the period  ended  October 29,  1995 in  conformity  with
generally accepted accounting principles.

      As discussed in Note 7 to the financial statements,  effective November 1,
1993, the Corporation changed its method of accounting for income taxes.

                                                        /s/ Ernest & Young LLP
                                                            Ernest & Young LLP

Winston-Salem, North Carolina
November 22, 1995

                              [Inside Back Cover]


                                 [PULASKI LOGO]


                               [ACCENTRICS LOGO]


                                [CRAFTIQUE LOGO]


                                [RIDGEWAY LOGO]


PLANTS LOCATED AT PULASKI, MARTINSVILLE, DUBLIN, RIDGEWAY AND CHRISTIANSBURG,
VIRGINIA AND MEBANE, NORTH CAROLINA


                                    [PHOTO]


Ridgeway's Croquet Floor Clock features a triple chime movement, brass finish
dial with blue moon, Croquet emblem embossed on a polished brass bob and beveled
glass. Beautifully carved foliate posts accent the Newport Cherry finish.