<PAGE>

                                                                    EXHIBIT (13)


Stock Price and Dividend Data
-----------------------------

<TABLE>
<CAPTION>
                                        Market Price       Dividends
                 Quarter Ended         High       Low    Paid Per Share
<S>              <C>                  <C>        <C>     <C>
2000             February 27          9.6250     7.3750    $ 0.035
                 May 28               7.6870     3.8125      0.035
                 August 28            4.8125     3.8125      0.035
                 December 3           4.6250     2.8125      0.035
                                                           -------
                                                           $ 0.140
                                                           =======

1999             February 28          12.750     8.9375    $ 0.032
                 May 30               11.875     9.0625      0.032
                 August 29            10.500     8.1875      0.032
                 November 28           9.500     7.6250      0.032
                                                           -------
                                                           $ 0.127
                                                           =======
</TABLE>

Stock prices and dividends paid per share have been adjusted to give retroactive
effect to a 10% stock dividend declared on November 2, 1999.

The Company's shares are traded on the New York Stock Exchange under the symbol
ROW. On December 3, 2000, the Company had approximately 1,000 stockholders of
record.

--------------------------------------------------------------------------------


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


RESULTS OF OPERATIONS

Year Ended December 3, 2000

Compared to Year Ended November 28, 1999

Net shipments in 2000 increased by $71,632,000, or 25.9%, to $348,398,000 from
$276,766,000 in 1999. Included in net shipments were a full twelve months of
operations at Storehouse, Inc. ("Storehouse"), which was acquired August 1, 1999
(see Note 2 of the consolidated financial statements). Excluding Storehouse, net
shipments increased 2.3% in 2000. The increase in net shipments was primarily
due to increases at The Mitchell Gold Company ("Mitchell Gold") and Home
Elements, Inc. ("Home Elements").
<PAGE>

Gross profit in 2000 increased by $33,802,000, or 38.8%, to $120,882,000 from
$87,080,000 in 1999. As a percentage of shipments, gross profit in 2000
increased to 34.7% from 31.5% in 1999. Excluding the effects of Storehouse,
gross profit as a percentage of shipments ("gross margin") decreased slightly,
from 29.5% in 1999 to 29.4% in 2000. This decrease was primarily due to costs
associated with the new manufacturing facility in Elliston, Virginia, including
rent, moving costs, and efficiency losses during the transition. Also impacting
gross profit margins were increased health and medical costs, particularly at
Rowe Furniture. Management anticipates that gross margins will continue to
increase, as efficiency improves, health care costs are contained at Rowe
Furniture and as the mix of sales shifts to more retail sales at substantially
higher profit margins.

Selling and administrative expenses in 2000 increased by $39,875,000, or 63.0%,
to $103,177,000 from $63,302,000 in 1999. Of this increase, $32,600,000
represents a full year of costs at Storehouse in 2000, compared to four months
included in 1999; $2,900,000 results from growth at Home Elements in support of
new stores; $1,500,000 results from growth and increased sales at Mitchell Gold;
and the remaining $2,200,000 represents increased salaries and benefits, as well
as increased provisions for losses on receivables at Rowe Furniture, and
increased corporate expenses at Rowe Companies. Also included in 2000 were
approximately $692,000 in pre-opening expenses that, under new accounting
guidance, were expensed as incurred. The Company provided $1,200,000 for
potential losses on receivables, including the Heilig-Meyers and other
bankruptcy filings. Management anticipates that selling and administrative
expenses will increase with the full year impact of new retail stores, and as
infrastructure improvements are made at Storehouse.

Operating income in 2000 decreased by $6,073,000 to $17,705,000 from $23,778,000
in 1999. Increases in gross profits, primarily from sales at Storehouse, were
offset by selling and administrative expenses at Storehouse and other
subsidiaries noted above.

Interest expense in 2000 increased by $2,136,000 to $4,267,000 from $2,131,000
in 1999 due to increased borrowings used to finance the Storehouse acquisition,
higher interest rates during much of the year (on average, approximately 110
basis points higher during the year), and an increase in the LIBOR spread based
on the Company's financial ratios.

Net other income decreased by $455,000 from $1,870,000 in 1999 to $1,415,000 in
2000. Increases in rental income from investment properties were offset by the
absence in 2000 of certain non-recurring transactions at Storehouse.

The Company's effective tax rate increased from 36.8% during 1999 to 39.9% in
2000. This increase is primarily attributable to the impact of increased,
non-deductible goodwill charges relative to the lower level of pre-tax income
between 1999 and 2000.

Net earnings from continuing operations declined in 2000 by $5,923,000, from
$14,857,000 in 1999 to $8,934,000. Lower operating income, higher interest
expense and lower other income accounted for the decline.
<PAGE>

During the fourth quarter of 2000, the Company announced its intention to
discontinue manufacturing operations at Wexford. Declining sales (primarily due
to order flow disruptions resulting from prior manufacturing problems),
increased provisions for sales returns, labor and overhead losses due to low
sales volume and efficiency issues, resulted in substantially lower operating
results in 2000. Impairment losses on goodwill and property and equipment, as
well as costs to dispose excess inventory and severance costs to the employees,
resulted in a $3.6 million after-tax charge on the disposal.

Year Ended November 28, 1999

Compared to Year Ended November 29, 1998

Net shipments in 1999 increased by $96,407,000, or 53.5%, to $276,766,000 from
$180,359,000 in 1998. Included in net shipments were operations at newly
acquired subsidiaries, including 12 months of operations at Mitchell Gold versus
one month in 1998 and four months of operations at Storehouse, acquired August
1, 1999. Excluding these new subsidiaries, net shipments in 1999 increased 9.5%
versus 1998. Management believes that shipments increased primarily from the
addition of new dealers, increased purchases by existing customers and favorable
product mix.

Gross profit in 1999 increased by $37,403,000, or 75.3%, to $87,080,000 from
$49,677,000 in 1998. As a percentage of shipments, gross profit in 1999
increased to 31.5% from 27.5% in 1998. Excluding the effect of the acquisition
of Storehouse, gross profit as a percentage of shipments increased to 29.5%.
Management believes that this increase was primarily a result of improved
product mix and improved manufacturing efficiencies, particularly at Rowe
Furniture, and increased sales at Home Elements stores.

Selling and administrative expenses in 1999 increased by $30,932,000, or 95.6%
to $63,302,000 from $32,370,000 in 1998. Of this increase, $21,500,000
represented costs at newly acquired subsidiaries Storehouse and Mitchell Gold;
$5,000,000 resulted from new stores opened in late 1998 and throughout 1999 at
Home Elements, including staff expansion to support the growth in 1999 and
further anticipated growth in 2000; and the remaining $4,500,000 resulted from
increased direct selling expenses, the expansion of corporate staff to
coordinate and monitor the activities of the subsidiaries and the gain on the
sale of Levitz Furniture receivables in 1998.

Operating income in 1999 increased by $6,471,000, or 37.4%, to $23,778,000 from
$17,307,000 in 1998. The increase related to higher shipments and gross profit
at Rowe Furniture, as well as the favorable operating results of Mitchell Gold.

Interest expense in 1999 increased by $1,904,000, or 839%, to $2,131,000 from
$227,000 in 1998. The increase in interest expense results from borrowings
incurred to finance the acquisition in late 1998 of Mitchell Gold and the
acquisition in 1999 of Storehouse, as well as to finance capital expenditures
and treasury stock repurchases. Essentially all of the Company's long-term debt
is at floating rates tied to LIBOR.
<PAGE>

Other income in 1999 increased by $828,000, or 79.5% to $1,870,000 from
$1,042,000 in 1998. Virtually all of this increase resulted from certain
non-recurring transactions at Storehouse and the write-down of investment
property of $288,000 in 1998.

Net earnings from continuing operations increased by $3,662,000, or 32.7% to
$14,857,000 from $11,195,000 in 1998. Included in net earnings in 1998 was
approximately $0.02 per share after-tax gain on sale of a receivable, partially
offset by an increase in reserve for bad debts, write-down of investment
property and other charges.

Liquidity and Capital Resources

The Company has historically financed its operations and capital requirements
primarily with internally generated funds. To fund the acquisitions of Wexford
and Mitchell Gold in 1998, followed by Storehouse in 1999, the Company entered
into two revolving bank loan agreements in November 1998 and July 1999 for
$25,000,000 each. In addition, during 1999, the Company leased a new plant to
replace its Salem, Virginia, upholstery plant (see Notes 2, 6 & 9 of the
consolidated financial statements).

Net cash provided by operating activities was $14,398,000, $12,124,000 and
$3,011,000 in 2000, 1999 and 1998, respectively. Fluctuations in net cash
provided by operating activities are primarily the result of changes in net
income and changes in working capital accounts, including improved collection
efforts over receivables in 2000, better control over inventory levels in 2000
and a reduction of supplier payables and payments to eliminate factoring loans
at Wexford during 1998. Charge-offs (excluding recoveries) as a percentage of
net shipments increased from 0.08% in 1998, to 0.13% in 1999, to 0.28% in 2000.
The increase in 2000 was primarily due to the Heilig-Meyers bankruptcy filing.

Net cash used in investing activities was $14,294,000, $17,703,000 and
$19,893,000 for 2000, 1999 and 1998, respectively. Capital expenditures were
$9,155,000, $8,830,000 and $6,951,000 for 2000, 1999 and 1998, respectively.
Expenditures in 2000 were made for a production planning and scheduling system
to improve management of the production process and inventory, and to fund new
retail store openings. Expenditures for 1999 and 1998 were incurred primarily in
connection with the expansion of the Company's production capacity and additions
of equipment and information systems, including upgrades and replacements
associated with Year 2000 requirements.

Management anticipates that the Company's capital expenditures for 2001 will
approximate $5,000,000. These expenditures include final costs for the
production planning and scheduling system referred to above, continuing upgrades
and improvements to information systems and several additional retail locations
at Home Elements and Storehouse.

During 2000, the Company paid $5,000,000 under the interim earn-out provisions
of the Mitchell Gold purchase agreement. The Company also invested $8,892,000
(net of cash acquired) and $12,942,000 in 1999 and 1998, respectively, to
acquire new businesses, including Storehouse in 1999 and Mitchell Gold and
Wexford in 1998.
<PAGE>

Financing activities provided (utilized) net cash of ($1,815,000), $8,203,000
and $18,512,000 in 2000, 1999 and 1998, respectively. This includes the
revolving bank loans entered into during 1999 and 1998, offset by the reduction
of higher rate debt at Storehouse in 1999, as well as repurchases of the
Company's common stock and dividends paid to stockholders. During 2001, the
$3,000,000 of convertible debentures issued in conjunction with the Mitchell
Gold acquisition will mature. Based upon the Company's current stock price, it
is anticipated that a cash payment will be made to retire this debt at maturity.

The amount outstanding under the Company's lines of credit was $4,000,000 at
December 3, 2000. The Company had lines of credit totaling $18,000,000 at
December 3, 2000.

The Company believes that net cash provided by operating activities and
available lines of credit will be adequate to fund anticipated growth and to
meet the Company's foreseeable capital requirements and operating needs through
2001.

The Company's bank financing agreements contain financial covenants. In
anticipation of being out of compliance with these covenants, the Company
requested and received waivers from the lending institutions for the third
quarter of 2000. With the decision to discontinue operations at Wexford, the
Company incurred a significant loss on the disposal that was recorded in the
fourth quarter, causing the Company to be out of compliance. Subject to the
execution of final documents, the Company received waivers from the lending
institutions for the fourth quarter ending December 3, 2000, and modified the
agreements going forward to exclude losses related to the disposal of Wexford.
In conjunction with these discussions, in February 2001, the Company agreed to
add additional ranges to the borrowing agreements whereby higher interest rates
would be applicable should financial performance, as measured by funded debt to
EBITDA, exceeds 2.75x. The Company granted the lending institutions a security
interest in certain non-real estate assets of the Company. The Company also
extended the term of the revolving loan issued in November 1998 by one year to
March 31, 2003, and converted $8 million of its available short-term lines of
credit to revolving bank debt maturing in March 2002.

New Accounting Standards

In December 1999, the staff of the Securities and Exchange Commission released
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition," to provide
guidance on the recognition, presentation and disclosure of revenues in
financial statements. The Company believes that its revenue recognition
practices are in conformity with the guidelines in SAB 101 and that this
pronouncement will have no material impact on its financial statements.

In March 2000, the FASB released Interpretation No. 44, "Accounting for Certain
Transactions involving Stock Compensation: an interpretation of APB Opinion No.
25." Interpretation No. 44 provides clarification of certain issues, such as the
determination of who is an employee, the criteria for determining whether a plan
qualifies as a non-compensatory plan, the accounting consequence of various
modifications to the terms of a previously fixed stock option or award and the
accounting for an exchange of stock compensation awards in a business
combination. The Company believes that its practices are in conformity with this
guidance, and therefore Interpretation No. 44 has no impact on its financial
statements.
<PAGE>

In September 2000, the Emerging Issues Task Force ("EITF") reached a consensus
regarding Issue 00-10, "Accounting for Shipping and Handling Fees and Costs,"
which requires any shipping and handling costs billed to customers in a sales
transaction to be classified as revenue. The Company will adopt Issue 00-10 in
the first quarter of 2001, and does not expect it to have a material impact on
the Company's consolidated statements of income.

Interest Risk Disclosures

Because the Company's obligations under its term loans, revolving loans, lines
of credit and industrial revenue bonds bear interest at variable rates, the
Company is sensitive to changes in prevailing interest rates. A 10% fluctuation
in market interest rates would result in a change of approximately $420,000 in
interest expense during the 2001 fiscal year.

Forward Looking Statements

Certain portions of this report, particularly the Notes to the Consolidated
Financial Statements and the Management's Discussion and Analysis of Financial
Condition and Results of Operations, contain forward-looking statements. These
statements can be identified by the use of future tense or dates or terms such
as "believe," "expect," "anticipate," or "plan." Important factors could cause
actual results to differ materially from those anticipated by some of the
statements made in this report. Some of the factors include, among other things,
changes from anticipated levels of sales, whether due to future national or
regional economic and competitive conditions, customer acceptance of existing
and new products or otherwise; pending or future litigation; pricing pressures
due to excess capacity; raw material cost increases; transportation cost
increases; the inability of a major customer to meet its obligations; loss of
significant customers in connection with a merger or acquisition, bankruptcy or
otherwise; actions of current or new competitors; increased advertising costs
associated with promotional efforts; change of tax rates; change of interest
rates; future business decisions and other uncertainties, all of which are
difficult to predict and many of which are beyond the control of the Company.
<PAGE>

The Rowe Companies Annual Report 2000
Five Year Summary

<TABLE>
<CAPTION>
                                                                            2000(1)  1999(1)(2)  1998(1)(3)     1997        1996
                                                                         (53 weeks)  (52 weeks)  (52 weeks)  (52 weeks)  (52 weeks)
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                   (in thousands, except per share amounts)
<S>                                                                       <C>        <C>         <C>         <C>          <C>
Net shipments                                                             $ 348,398   $ 276,766   $ 180,359   $ 144,118   $ 142,723
Gross profit                                                                120,882      87,080      49,677      38,954      37,593
Operating income                                                             17,705      23,778      17,307       8,775      10,248
Net earnings from continuing operations (4)(5)                                8,934      14,857      11,195       6,286       7,052
Net earnings (4)(5)                                                       $   3,544   $  13,901   $  11,200   $   6,286   $   7,052


Working capital                                                           $  31,008   $  33,959   $  30,473   $  17,404   $  18,232
Total assets                                                                164,584     168,580     110,462      63,710      64,280
Long-term debt                                                               52,761      54,608      33,796           -           -
Stockholders' equity                                                      $  55,422   $  54,659   $  45,236   $  39,442   $  40,188


Ratio of current assets to current liabilities                             1.6 to 1    1.6 to 1    2.2 to 1    1.9 to 1    1.9 to 1
Ratio of cash and receivables to current liabilities                       0.7 to 1    0.8 to 1    1.3 to 1    1.1 to 1    1.3 to 1


Net earnings from continuing operations per common share - basic          $    0.68   $    1.11   $    0.82   $    0.44   $    0.48
Net earnings per common share - basic                                     $    0.27   $    1.04   $    0.82   $    0.44   $    0.48
Weighted average common shares                                               13,152      13,426      13,672      14,250      14,707
Net earnings from continuing operations per common share
  assuming dilution                                                       $    0.66   $    1.04   $    0.79   $    0.43   $    0.47
Net earnings per common share assuming dilution                           $    0.27   $    0.98   $    0.79   $    0.43   $    0.47
Weighted average common shares and equivalents                               13,703      14,372      14,128      14,666      15,117
Cash dividends paid per share                                             $    0.14   $    0.13   $    0.11   $    0.09   $    0.07
</TABLE>

Weighted average shares and earnings per share amounts have been adjusted to
give retroactive effect to a 10% stock dividend declared November 2, 1999.

(1)  The 2000, 1999, and 1998 results have been restated to reflect the
     discontinuation of operations at The Wexford Collection, Inc. (See Note 2
     of the consolidated financial statements).

(2)  The 1999 amounts include Storehouse, Inc., acquired August 1, 1999 (See
     Note 2 of the consolidated financial statements).

(3)  The 1998 amounts include The Wexford Collection, Inc., acquired January 1,
     1998 and The Mitchell Gold Co., acquired October 31, 1998 (See Note 2 of
     the consolidated financial statements).

(4)  The results of operations for 1998 include an after-tax gain of
     approximately $0.02 per share reflecting the sale of Levitz Furniture
     receivable, partially offset by an increase in reserve for bad debts,
     write-down of investment property and other charges.

(5)  The results of operations for 1997 include unusual charges, net of taxes,
     of $2.7 million, or $0.19 per share, primarily associated with the
     write-off of a receivable from Levitz Furniture.
<PAGE>

The Rowe Companies Annual Report 2000
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                   12/3/00    11/28/99
--------------------------------------------------------------------------------------------------------
                                                                                       (in thousands)
<S>                                                                               <C>         <C>
ASSETS (Note 6)
CURRENT ASSETS
Cash and cash equivalents                                                         $   3,393    $   5,104
Accounts receivable (net of allowance
  for losses of $1,856 in 2000 and $864 in 1999) (Note 13)                           30,892       38,340
Inventories (Notes 1 & 3)                                                            41,297       41,381
Deferred income taxes (Note 12)                                                       2,057          238
Prepaid expenses and other                                                            3,884        3,098
                                                                                  ---------    ---------
    Total current assets                                                             81,523       88,161
                                                                                  ---------    ---------

PROPERTY AND EQUIPMENT (Notes 1 & 4)                                                 36,117       36,186
                                                                                  ---------    ---------

OTHER ASSETS
Cash value of life insurance (Note 7)                                                 3,975        3,874
Investment property (net of accumulated depreciation of
  $6,403 in 2000 and $2,657 in 1999) (Notes 1 & 9)                                    8,484        7,629
Goodwill (net of amortization of $1,827 in 2000 and $977 in 1999) (Notes 1 & 2)      30,357       27,938
Miscellaneous                                                                         4,128        4,792
                                                                                  ---------    ---------
    Total other assets                                                               46,944       44,233
                                                                                  ---------    ---------
                                                                                  $ 164,584    $ 168,580
                                                                                  =========    =========
LIABILITIES
CURRENT LIABILITIES
Current maturities of long-term debt (Note 6)                                     $   3,299    $     353
Short-term bank borrowings (Note 5)                                                   4,000        4,164
Accounts payable                                                                     24,621       28,436
Accrued expenses:
  Compensation                                                                        3,254        3,769
  Income taxes                                                                          770        1,783
  Other                                                                               6,336        6,823
Customer deposits                                                                     7,515        8,620
Deferred compensation - current portion (Note 7)                                        720          254
                                                                                  ---------    ---------
    Total current liabilities                                                        50,515       54,202

LONG-TERM DEBT (Note 6)                                                              52,761       54,608
DEFERRED COMPENSATION (Note 7)                                                        4,225        4,035
DEFERRED INCOME TAXES (Note 12)                                                       1,661        1,076
                                                                                  ---------    ---------
    Total liabilities                                                               109,162      113,921
                                                                                  ---------    ---------

COMMITMENTS AND CONTINGENCIES (Notes 2, 7, 8, 9 & 10)

STOCKHOLDERS' EQUITY (Note 11)
COMMON STOCK; par value $1 per share, 50,000,000 authorized shares                   16,520       16,513
CAPITAL IN EXCESS OF PAR VALUE                                                       23,083       23,039
RETAINED EARNINGS                                                                    37,772       36,077
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Note 10)                                 (32)          --
LESS TREASURY STOCK                                                                 (21,921)     (20,970)
                                                                                  ---------    ---------
    Total stockholders' equity                                                       55,422       54,659
                                                                                  ---------    ---------
                                                                                  $ 164,584    $ 168,580
                                                                                  =========    =========
</TABLE>

See notes to consolidated financial statements
<PAGE>

The Rowe Companies Annual Report 2000
Consolidated Statements of Income and Comprehensive Income

<TABLE>
<CAPTION>
                                                                                      Year Ended
---------------------------------------------------------------------------------------------------------------
                                                                         12/3/00       11/28/99       11/29/98
                                                                       (53 weeks)     (52 weeks)     (52 weeks)
---------------------------------------------------------------------------------------------------------------
                                                                       (in thousands, except per share amounts)
<S>                                                                    <C>            <C>            <C>
Net shipments (Notes 2 & 13)                                            $ 348,398      $ 276,766      $ 180,359
Cost of shipments                                                         227,516        189,686        130,682
                                                                        ---------      ---------      ---------
   Gross profit                                                           120,882         87,080         49,677
Selling and administrative expenses                                       103,177         63,302         32,370
                                                                        ---------      ---------      ---------
   Operating income                                                        17,705         23,778         17,307
Interest expense                                                           (4,267)        (2,131)          (227)
Other income, net (Note 9)                                                  1,415          1,870          1,042
                                                                        ---------      ---------      ---------
   Earnings from continuing operations before taxes                        14,853         23,517         18,122
Taxes on income (Note 12)                                                   5,919          8,660          6,927
                                                                        ---------      ---------      ---------

Net earnings from continuing operations                                     8,934         14,857         11,195

Discontinued operations (Note 2):
Income(loss) from discontinued operations of Wexford,
   less tax expense(benefit) of $(954), $(549), and $3, respectively       (1,829)          (956)             5
Loss on disposal of Wexford, including provision for
   $490 of operating losses, net of tax benefit of $(1,894)                (3,561)            --             --
                                                                        ---------      ---------      ---------

Net earnings                                                            $   3,544      $  13,901      $  11,200
                                                                        ---------      ---------      ---------

Other comprehensive income, net of tax:

Fair market value adjustments on derivatives (Note 1)                         (32)            --             --
                                                                        ---------      ---------      ---------

Comprehensive income                                                    $   3,512      $  13,901      $  11,200
                                                                        =========      =========      =========


Net earnings from continuing operations per common share (Note 1)       $    0.68      $    1.11      $    0.82
                                                                        =========      =========      =========

Net earnings per common share (Note 1)                                  $    0.27      $    1.04      $    0.82
                                                                        =========      =========      =========

  Weighted average common shares                                           13,152         13,426         13,672
                                                                        =========      =========      =========

Net earnings from continuing operations per common
  share assuming dilution (Note 1)                                      $    0.66      $    1.04      $    0.79
                                                                        =========      =========      =========

Net earnings per common share assuming dilution (Note 1)                $    0.27      $    0.98      $    0.79
                                                                        =========      =========      =========

  Weighted average common shares and equivalents                           13,703         14,372         14,128
                                                                        =========      =========      =========
</TABLE>

See notes to consolidated financial statements
<PAGE>

The Rowe Companies Annual Report 2000
Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                                                                                             Year Ended
                                                                                   12/3/00     11/28/99     11/29/98
                                                                                ----------   ----------   ----------
                                                                                (53 weeks)   (52 weeks)   (52 weeks)
--------------------------------------------------------------------------------------------------------------------
                                                                                            (in thousands)
<S>                                                                             <C>          <C>          <C>
Increase (Decrease) in Cash
Cash flows from operating activities:
   Cash received from customers                                                  $ 364,863    $ 282,710    $ 189,437
   Cash paid to suppliers and employees                                           (340,033)    (262,017)    (180,372)
   Income taxes paid, net of refunds                                                (6,183)      (7,726)      (6,403)
   Interest paid                                                                    (5,693)      (2,686)        (694)
   Interest received                                                                   288          159          337
   Other receipts - net                                                              1,156        1,684          706
                                                                                 ---------    ---------    ---------
Net cash and cash equivalents provided by operating activities                      14,398       12,124        3,011
                                                                                 ---------    ---------    ---------
Cash flows from investing activities:
   Proceeds from sale of property and equipment                                         21           19           --
   Capital expenditures                                                             (9,155)      (8,830)      (6,951)
   Payments to acquire businesses (Note 2)                                          (5,160)      (8,892)     (10,442)
   Investment in Storehouse, Inc. (Note 2)                                              --           --       (2,500)
                                                                                 ---------    ---------    ---------
Net cash used in investing activities                                              (14,294)     (17,703)     (19,893)
                                                                                 ---------    ---------    ---------
Cash flows from financing activities:
   Net borrowings (payments) under line of credit                                     (164)       2,071          362
   Proceeds from issuance of long-term debt                                         13,020       25,132       25,000
   Payments to reduce long-term debt                                               (11,922)     (14,522)      (1,444)
   Proceeds from issuance of common stock                                               51          460          968
   Dividends paid                                                                   (1,849)      (1,714)      (1,498)
   Purchase of treasury stock                                                         (951)      (3,224)      (4,876)
                                                                                 ---------    ---------    ---------
Net cash provided by (used in) financing activities                                 (1,815)       8,203       18,512
                                                                                 ---------    ---------    ---------
Net increase (decrease) in cash and cash equivalents                                (1,711)       2,624        1,630
Cash at beginning of year                                                            5,104        2,480          850
                                                                                 ---------    ---------    ---------
Cash at end of year                                                              $   3,393    $   5,104    $   2,480
                                                                                 =========    =========    =========

--------------------------------------------------------------------------------------------------------------------

Reconciliation of Net Earnings to Net Cash Provided by Operating Activities


Net earnings                                                                     $   3,544    $  13,901    $  11,200
                                                                                 ---------    ---------    ---------
Adjustments to reconcile net earnings to net cash
provided by operating activities, net of disposition of business:
  Loss on disposition of Wexford                                                     5,455           --           --
  Depreciation and amortization                                                      8,581        6,165        3,773
  Provision for deferred compensation                                                  816        1,083          762
  Payments made for deferred compensation                                             (160)        (319)        (590)
  Deferred income taxes                                                             (2,099)        (472)         545
  Provision for losses on accounts receivable (recoveries)                           1,485          413       (1,285)
  Loss on disposition of assets                                                         29            4           --

  Change in operating assets and liabilities net of effects of acquisition and
  disposition of businesses:
    Decrease (increase) in accounts receivable                                       5,564       (9,379)      (3,963)
    Decrease (increase) in inventories                                                (832)      (5,692)      (2,164)
    Decrease (increase) in prepaid expenses and other                                 (887)        (795)        (468)
    Decrease (increase) in other assets                                                472       (1,210)         378
    Increase (decrease) in accounts payable                                         (4,750)       3,830       (2,549)
    Increase (decrease) in accrued expenses                                         (1,715)       2,170       (2,619)
    Increase (decrease) in customer deposits                                        (1,105)       2,425           (9)
                                                                                 ---------    ---------    ---------
         Total adjustments                                                          10,854       (1,777)      (8,189)
                                                                                 ---------    ---------    ---------
Net cash provided by operating activities                                        $  14,398    $  12,124    $   3,011
                                                                                 =========    =========    =========

Supplemental Disclosures of Cash Flows:
Fair value of assets acquired other than cash                                                 $  37,272    $  31,955
Liabilities assumed                                                                             (28,380)     (18,513)
Convertible debentures issued                                                                         -       (3,000)
                                                                                              ---------    ---------
Payments to acquire businesses                                                                $   8,892    $  10,442
                                                                                              =========    =========
</TABLE>

See notes to consolidated financial statements
<PAGE>

The Rowe Companies Annual Report 2000
Consolidated Statements of Stockholders' Equity

<TABLE>
<CAPTION>
                                               Year Ended December 3, 2000, November 28, 1999 and November 29, 1998
                                           ---------------------------------------------------------------------------
                                                       Common Stock                                 Treasury Stock
                                           ---------------------------------------                --------------------
                                                                      Capital in                                        Accumulated
                                             Shares      $1 Par        Excess of     Retained     Number of            Comprehensive
                                             Issued       Value        Par Value     Earnings       Shares     Cost    Income (Loss)
----------------------------------------------------------------------------------  ------------  ----------------------------------
                                                        (in thousands, except share and per share amounts)
<S>                                       <C>           <C>          <C>           <C>          <C>           <C>      <C>
Balance at November 30, 1997              14,667,783    $ 14,668     $ 8,633       $ 29,011     2,124,261     $ 12,870      $     -
   Acquisition of treasury stock                                                                  516,958        4,876
   Cash dividends paid, $0.11 per share                                              (1,498)
   Exercise of stock options                 238,012         238         730
   Net earnings for the year ended
      November 29, 1998                                                              11,200
                                          ----------  ----------   ---------   ------------   -----------   ----------   ----------
Balance at November 29, 1998              14,905,795      14,906       9,363         38,713     2,641,219       17,746            -
   Acquisition of treasury stock                                                                  324,592        3,224
   Cash dividends paid, $0.13 per share                                              (1,714)
   Exercise of stock options                 106,104         106         354
   10% stock dividend (Note 1)             1,501,063       1,501      13,322        (14,823)      286,318
   Net earnings for the year ended
       November 28, 1999                                                             13,901
                                          ----------  ----------   ---------   ------------   -----------   ----------   ----------
Balance at November 28, 1999              16,512,962      16,513      23,039         36,077     3,252,129       20,970            -
   Acquisition of treasury stock                                                                  153,818          951
   Cash dividends paid, $0.14 per share                                              (1,849)
   Exercise of stock options                   7,185           7          44
   Fair market value change on derivatives                                                                                      (32)
   Net earnings for the year ended
       December 3, 2000                                                               3,544
                                          ----------  ----------   ---------   ------------   -----------   ----------   ----------

Balance at December 3, 2000               16,520,147    $ 16,520    $ 23,083       $ 37,772     3,405,947     $ 21,921    $     (32)
                                          ==========  ==========   =========   ============   ===========   ==========   ==========
</TABLE>

See notes to consolidated financial statements
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of Significant Accounting Policies

Description of Business- The Rowe Companies (the "Company") consists of three
manufacturing subsidiaries - Rowe Furniture, Inc. ("Rowe"), The Mitchell Gold
Company ("Mitchell Gold"), and The Wexford Collection, Inc. ("Wexford") - and
two retail furniture chains - Storehouse, Inc. ("Storehouse") and Home Elements,
Inc. ("Home Elements"). Storehouse and Home Elements stores are geographically
distributed across the mid-Atlantic, southeastern, and southwestern United
States. The manufacturing subsidiaries sell upholstered, leather and casual wood
furniture throughout the United States and in some international markets. On
November 10, 2000, the Company announced its intention to discontinue operations
at Wexford and sell the assets. See Note 2.

Principles of Consolidation- The consolidated financial statements include the
accounts of the Company and its subsidiaries. All material intercompany
transactions and balances have been eliminated.

Revenue Recognition- The manufacturing subsidiaries recognize sales when
products are shipped and invoiced to customers. The retail subsidiaries
recognize sales when the goods are delivered to the customer or services have
been rendered. Customer deposits represent cash received for items not currently
in inventory and items on hand but not yet delivered to the customer.

Credit Risk- Substantially all of the company's trade accounts receivable are
from companies in the retail furniture industry. Management periodically
performs credit evaluations of its customers and generally does not require
collateral. The Company uses credit insurance to minimize the risk on certain
accounts. The Company has no concentrated credit risk with an individual
customer except as described in Note 13.

Use of 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.
Accordingly, actual results could differ from those estimates.

Inventories- Inventories are valued at the lower of cost or market. All
subsidiaries utilize the first-in, first-out (FIFO) method to compute cost
except for Storehouse, which utilizes the last-in, first-out (LIFO) method.

Property, Equipment and Depreciation- Property and equipment are stated at cost.
For financial reporting purposes, depreciation is computed over the estimated
useful lives of the assets using primarily the straight-line method. Accelerated
methods are used for income tax purposes. Assets are depreciated for financial
reporting purposes based on estimated useful lives as follows: buildings and
improvements (5 to 45 years); machinery and equipment (3 to 10 years), and
leasehold improvements (terms of leases).

Long-Lived Assets- Long-lived assets, such as property and equipment, are
evaluated for impairment when events or changes in circumstances indicate that
the carrying amount of the assets may not be recoverable through the estimated
undiscounted future cash flows from the use of these assets. When any such
impairment exists, the related assets will be written down to fair value. As
further disclosed in Note 2, the Company recognized an impairment loss related
to the closing of Wexford.

Fair Value of Financial Instruments- Financial instruments of the Company
include long-term debt and line of credit agreements. Based upon the current
borrowing rates available to the Company, estimated fair values of these
financial instruments approximate their recorded carrying amounts. The Company
also holds an interest rate swap contract and one interest rate collar contract.
See Note 10 for information concerning the fair value of these financial
instruments.

Intangible Assets- Intangible assets consist principally of values assigned to
the excess of cost over the fair value of net assets acquired (Goodwill). These
assets are being amortized using the straight-line method over 25 years. The
Company evaluates the carrying amount of goodwill based on profitability
projections and estimated cash flows. If estimated future cash flows are not
sufficient to recover the carrying amounts of goodwill, the assets will be
written down to fair value. As further disclosed in Note 2, the Company
recognized an impairment loss related to the closing of Wexford.
<PAGE>

Advertising Costs- Costs incurred for advertising are expensed when incurred.
Costs incurred under cooperative advertising programs are recognized when the
related revenues are recognized. The charges to expense were $14,623,000,
$8,176,000 and $4,357,000 in 2000, 1999 and 1998, respectively.

Derivatives- The Company utilizes derivative financial instruments to reduce
interest rate risks. The Company does not hold or issue derivative financial
instruments for trading purposes. In June 1998, the Financial Accounting
Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which was amended in June 2000 by SFAS No.
138. SFAS No. 133, as amended, establishes accounting and reporting standards
for derivative instruments and hedging activities. They require that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial condition and measure those instruments at fair value. Changes in the
fair value of those instruments will be reported in earnings or other
comprehensive income depending on the use of the derivative and whether it
qualifies for hedge accounting. The accounting for gains and losses associated
with changes in the fair value of the derivative and the effect on the
consolidated financial statements will depend on its hedge designation and
whether the hedge is highly effective in achieving offsetting changes in the
fair value of cash flows of the asset or liability hedged. The Company adopted
SFAS 133, as amended, in the fourth quarter of fiscal 2000. See Note 10.

Income Taxes- Income taxes are calculated using the liability method specified
by SFAS No. 109, "Accounting For Income Taxes."

Comprehensive Income (Loss)- The Company adopted SFAS No. 130, "Reporting
Comprehensive Income" during the fourth quarter of 2000. The Company has
reported the components of comprehensive income in the Consolidated Statements
of Stockholders' Equity. Comprehensive income is defined as the change in equity
(net assets) of a business enterprise during a period from transactions and
other events and circumstances from non-owner sources. It includes all changes
in equity during a period except those resulting from investments by owners and
distributions to owners. For the Company, other comprehensive income (loss)
consists of changes in the fair market value of derivatives. Prior to the fourth
quarter of 2000, the Company had no derivative financial instruments or items of
other comprehensive income.

Earnings Per Share- The Company computes basic earnings per share based upon the
weighted average shares outstanding during the period. Outstanding stock options
and convertible debentures, which are dilutive, are treated as common stock
equivalents for purposes of computing diluted earnings per share. In November,
1999, the Company's Board of Directors declared a 10% stock dividend. All
earnings per share, weighted average share amounts, dividends paid per share and
stock option amounts have been restated to reflect the stock dividend.

                                               2000     1999      1998
                                               ----     ----      ----
                                                   (in thousands)

Net earnings available to basic shares       $ 3,544   $13,901   $11,200
Add interest expense on assumed conversion
  of convertible debentures, net of tax          132       132        11
                                             -------   -------   -------
Net earnings available to diluted shares     $ 3,676   $14,033   $11,211
                                             =======   =======   =======

Weighted average common shares
  outstanding (Basic)                         13,152    13,426    13,672
Effect of dilutive stock options and
  convertible debentures                         551       946       456
                                             -------   -------   -------
Weighted average common shares and
  equivalents outstanding (Diluted)           13,703    14,372    14,128
                                             =======   =======   =======

Statement of Cash Flows- For purpose of the Statement of Cash Flows, the Company
considers all highly liquid debt instruments purchased with an original maturity
of three months or less to be cash equivalents.

Fiscal Year- The Company's accounting fiscal year end is the Sunday of each year
closest to November 30. Fiscal 2000 contained 53 weeks, whereas fiscal years
1999 and 1998 each contained 52 weeks.
<PAGE>

Reclassifications- Certain prior year amounts have been reclassified to conform
to current year presentation. The reclassifications have no effect on the
results of operations previously reported.

Note 2 - Acquisitions and Disposals

On January 1, 1998, the Company acquired, through a newly created subsidiary,
The Wexford Collection, Inc., the assets and assumed certain liabilities of J &
M Designs, Ltd.-Carson, California, a manufacturer of solid wood reproductions.
The purchase price included a cash payment of $200,000. The Company accounted
for the acquisition using the purchase method of accounting.

On November 10, 2000, the Company announced its intention to discontinue
manufacturing operations at Wexford and deploy its resources in other segments
that offer the greatest potential. The Company anticipates selling the
manufacturing assets and subleasing the building to a third party. This sale is
expected to close during the first quarter of fiscal year 2001. The Company
recorded a $3.6 million charge, net of taxes, during the fourth quarter to cover
the costs of the closure and disposal of the remaining assets. This transaction
has been reflected as a discontinued operation and income statements have been
restated for 1998, 1999 and prior quarters for 2000. Included in the balance
sheet at December 3, 2000, were assets of Wexford of $3.0 million, including
receivables of $1.3 million, property, plant and equipment of $1.2 million, and
inventory and other assets of approximately $500,000. Net revenues at Wexford
were $11,606,000 in 2000, $12,898,000 in 1999 and $13,401,000 in 1998.
Discontinued operations resulted in a loss per common share of $0.41 in 2000,
$0.07 in 1999 and $0.00 in 1998. On a diluted basis, loss per share was $0.39 in
2000, $0.06 in 1999, and $0.00 in 1998.

On October 31, 1998, the Company acquired all of the issued and outstanding
common stock of Mitchell Gold, a privately owned company located in North
Carolina. The purchase price of Mitchell Gold consisted of an initial payment of
$13 million, comprised of $10 million in cash and $3 million of convertible
debentures. During 2000, a $5 million payment was made in accordance with the
interim earn-out provisions of the purchase agreement. Additional earn-out
provisions allow for a maximum purchase price of $32 million if certain earnings
targets are attained over a four or five year period. The Company accounted for
the acquisition using the purchase method of accounting. Goodwill related to
this acquisition was approximately $15,000,000 at December 3, 2000.

On August 1, 1999, the Company completed the acquisition of Storehouse, a
privately owned, 43 store chain of retail furniture stores headquartered in
Atlanta, Georgia. Storehouse has operations throughout the mid-atlantic,
northeast, southeast and southwestern United States. The purchase price for
Storehouse consisted of $11.7 million in cash and the assumption of $12.7
million in debt. The Company utilized a $25 million unsecured revolving credit
facility to fund the cash purchase price and retire the debt, including $2.5
million previously loaned by the Company in the form of a subordinated note. The
Company accounted for the acquisition using the purchase method of accounting.
Goodwill related to this acquisition was approximately $15,000,000 at December
3, 2000.

Each of the above companies is now operated as a wholly-owned subsidiary of the
Company, and their operations are included in the Consolidated Statements of
Income and Comprehensive Income from the dates of acquisition.
<PAGE>

Note 3 - Inventories


Inventory components are as follows:


                                  2000                   1999
                                  ----                   ----
                                       (in thousands)
Retail merchandise             $18,645                $18,000
Finished goods                   3,164                  3,166
Work-in-process                  4,742                  4,391
Raw materials                   14,746                 15,824
                               -------                -------
Total inventories              $41,297                $41,381
                               =======                =======

Included in retail merchandise was $14,260,000 for 2000 and $15,110,000 for 1999
of inventory valued by Storehouse using the LIFO method to determine cost. Had
this inventory been valued using FIFO, retail merchandise and total inventories
would have increased by $302,000 and $60,000, respectively, over the amounts
shown above.

Note 4- Property and Equipment

Property and equipment consists of the following:

                                        2000                  1999
                                        ----                  ----
                                             (in thousands)

Land                                 $   642               $   683
Buildings and improvements            19,118                23,318
Leasehold improvements                 8,853                 6,664
Machinery and equipment               44,481                41,756
Construction-in-process                3,319                 1,117
                                     -------               -------
                                      76,413                73,538
Less accumulated depreciation         40,296                37,352
                                     -------               -------
Net property and equipment           $36,117               $36,186
                                     =======               =======
Note 5- Short-Term Borrowings

The Company has unsecured short-term lines of credit of $18,000,000 with banks
at rates not to exceed the prime interest rate. The following summarizes
aggregate short-term borrowings:

<TABLE>
<CAPTION>
                                                          2000      1999        1998
                                                          ----      ----        ----
                                                                (in thousands)
<S>                                                     <C>        <C>        <C>
Amount outstanding at year end                          $ 4,000    $ 4,164    $ 2,093

Maximum amount outstanding at any month end               9,378      9,813     12,956

Average borrowings (based on weighted daily balances)     6,852      5,615      9,255

Weighted average interest rate during the year              7.9%       5.7%       6.1%

Weighted average interest rate at year end                  7.3%       6.0%       5.7%
</TABLE>
<PAGE>

Note 6- Long-Term Debt

Long-term debt consists of the following:

                                       2000       1999
                                       ----       ----
                                      (in thousands)

Revolving bank loans                $47,659    $46,207
Industrial revenue bond               5,335      5,565
Convertible debentures                3,000      3,000
Other                                    66        189
                                    -------    -------
                                     56,060     54,961
Less current maturities               3,299        353
                                    -------    -------
Total long-term debt                $52,761    $54,608
                                    =======    =======

In November 1998 and July 1999, as amended in October, 2000, the Company
executed agreements for revolving bank loans payable in full on April 30, 2002,
and July 31, 2002, respectively. The agreements require quarterly interest
payments at the London Interbank Offering Rate ("LIBOR") plus a spread ranging
from .35% to 2.50%. The proceeds from the loans were used to provide working
capital for the Company and its subsidiaries, fund the initial purchase price of
Mitchell Gold and provide funding for the acquisition and retirement of long-
term debt of Storehouse.

The Company's bank financing agreements contain financial covenants. In
anticipation of being out of compliance with these covenants, the Company
requested and received waivers from the lending institutions for the third
quarter of 2000. With the decision to discontinue operations at Wexford, the
Company incurred a significant loss on the disposal that was recorded in the
fourth quarter, causing the Company to be out of compliance. Subject to the
execution of final documents, the Company received waivers from the lending
institutions for the fourth quarter ending December 3, 2000, and modified the
agreements going forward to exclude losses related to the disposal of Wexford.
In conjunction with these discussions, in February 2001, the Company agreed to
add additional ranges to the borrowing agreements whereby higher interest rates
would be applicable should financial performance, as measured by funded debt to
EBITDA, exceeds 2.75x. The Company granted the lending institutions a security
interest in certain non-real estate assets of the Company. The Company also
extended the term of the revolving loan issued in November 1998 by one year to
March 31, 2003 and converted $8 million of its available short-term lines of
credit to revolving bank debt maturing in March 2002.

The industrial revenue bond proceeds were used to construct a new manufacturing
and office facility for Mitchell Gold. Annual principal payments are required
ranging from $235,000 to $405,000 through 2017. Interest rates range from 3.0%
to 5.0%. The bonds are collateralized primarily by the new facility.

The convertible debentures were issued in connection with the acquisition of
Mitchell Gold as part of the initial purchase amount. The convertible debentures
can be converted to 393,444 shares of the Company's common stock at any time
after October 31, 1999, and prior to maturity at October 31, 2001. The
debentures bear interest at the rate of 7% payable quarterly.

The aggregate annual maturities of long-term debt during each of the five fiscal
years subsequent to December 3, 2000 are approximately $3,299,000 in 2001;
$47,906,000 in 2002; $255,000 in 2003; $260,000 in 2004; $270,000 in 2005; and
$4,070,000 thereafter.

Note 7 - Deferred Compensation Plans

Effective December 1, 1986, as amended in 1991, the Company established deferred
compensation contracts for certain officers of the Company. The contracts fixed
a minimum level for retirement benefits to be paid to participants based on age
at retirement with the Company. The contracts are not funded. Charges to expense
were $114,000 in 2000, $100,000 in 1999 and $101,000 in 1998.
<PAGE>

The Company also has deferred compensation agreements with key employees.
Vesting is based upon age and years of service. Life insurance contracts have
been purchased which may be used to fund these agreements. The charges to
expense were $147,000 in 2000, $140,000 in 1999 and $140,000 in 1998.

The Company has non-qualified retirement plans for certain personnel. The plans
enable participants to defer income on a pre-tax basis and are not funded. The
Company matches a portion of the deferral for certain participants. The charges
to expense were $396,000 in 2000, $377,000 in 1999 and $168,000 in 1998.

Note 8- Employee Benefit Plans

The Company maintains 401(k) and savings plans that cover substantially all
employees. Contributions to the plans were $696,000 in 2000, $621,000 in 1999,
and $531,000 in 1998.

Note 9- Commitments and Contingencies

Operating Leases

The Company is obligated under long-term real estate leases for offices,
warehouses, showrooms and retail locations expiring at various dates through
2018 with certain renewal options. Certain of the lease agreements for store
locations have, in addition to base rental, contingent rentals based on sales
volume and payments based on a pro-rata distribution of the expenses associated
with common areas. Rental payments charged to expense were $13,211,000 in 2000,
$5,532,000 in 1999 and $2,205,000 in 1998. The increases for 2000 and 1999
reflect additional rental costs at Storehouse and in 2000, rent for the Elliston
facility, as discussed below.

The Company is a lessor of its investment properties primarily under long-term
operating leases. The lease arrangements generally have initial terms of three
to twelve years and some contain provisions to increase the monthly rentals at
specific intervals. Rental income, net of commissions, was $1,570,000 in 2000,
$1,437,000 in 1999 and $1,412,000 in 1998 and is included in other income in the
accompanying Consolidated Statements of Income and Comprehensive Income. Since
June 2000, investment properties include the Company's former manufacturing
facility located in Salem, Virginia.

Minimum lease commitments at December 3, 2000, under long-term operating leases
are as follows:

                                 Lease Expense         Lease Income
                                 -------------         ------------
2001                             $14,105,000            1,564,000
2002                              13,041,000            1,469,000
2003                              12,387,000            1,239,000
2004                              11,259,000              835,000
2005                               7,499,000              143,000
Thereafter                        16,836,000                   --
                                 -----------          -----------
                                 $75,127,000          $ 5,250,000
                                 ===========          ===========

In August 1999, as amended in October 2000, the Company executed an agreement to
enter into a five-year lease of a new manufacturing facility in Elliston,
Virginia. Funding under the agreement was $25 million. Payments under this lease
are based on the funded amount times LIBOR plus a spread ranging from .35% to
2.50%. Upon expiration of the lease, the Company has the option to purchase the
property, or the facility can be sold to a third party with the Company's
guarantee of a residual value of not less than 85% of the total cost. The above
table of minimum lease commitments excludes any payment related to this
guarantee. The agreement contains financial covenants including ratios on
leverage to cash flow, debt to total capitalization and interest coverage. With
the decision to discontinue operations at Wexford, the Company incurred a
significant loss on the disposal that was recorded in the fourth quarter,
causing the Company to be
<PAGE>

out of compliance. Subject to the execution of final documents, the Company
received a waiver from the lending institution at December 3, 2000, and modified
the agreement going forward, relating to the loss on disposal of Wexford. In
addition, the Company is obligated through a dedicated contract carriage
agreement for delivery services for periods ranging from five to nine years.
Current monthly expense is $280,000 plus a variable mileage charge.

Health Insurance Plan

The Company and its subsidiaries maintain self-insurance programs for that
portion of health care costs not covered by insurance. The Company is liable for
claims from $30,000 up to $100,000 per person annually, and aggregate claims
ranging from $600,000 up to $7,500,000 in 2000. Self-insurance costs are accrued
based upon the aggregate of the liability for reported claims and an estimated
liability for claims incurred but not reported.

Employment Agreements

The Company has employment agreements with certain key officers of the Company,
which provide for salary continuation of two years in the event of termination
of employment without cause. In addition, the Company has an agreement with an
officer, which provides annual compensation of $792,000, adjusted for changes in
the consumer price index, through November 30, 2004. Payments under this
agreement were $822,000 in 2000 and $802,000 in 1999.

In connection with the acquisitions in 1998 and 1999, the Company's subsidiaries
have employment agreements with certain key officers for periods of three to
five years with salaries up to $275,000.

Litigation

The Company has been named as a defendant in various lawsuits arising in the
ordinary course of business. It is not possible at the present time to estimate
the ultimate outcome of these actions; however, management believes that the
resulting liability, if any, will not be material based on the Company's
previous experience with lawsuits of these types.

Note 10 -Interest Rate Hedging

During the fourth quarter of fiscal 2000, the Company entered into two contracts
to hedge the interest rate risk exposure on the Elliston plant lease. As
discussed in Note 9, payments under this lease are based on LIBOR plus a spread.
To hedge the risk of increasing interest rates, the Company entered into a $20
million notional principal interest rate swap that effectively converted the
floating rate LIBOR-based payments to fixed payments at 6.805% plus the spread
calculated under the lease agreement. This agreement expires in August 2004. At
December 3, 2000, LIBOR was 6.73%, resulting in an increase to the monthly
interest cost of $1,250. In accordance with SFAS 133, as amended, the Company
recorded a liability for the present value of the increase in interest over the
remaining term of the lease of approximately $48,000, net of taxes of
approximately $16,000. This amount is reflected in other comprehensive income,
as the Company has designated the contract as a cash flow hedge.

In addition to the interest rate swap referred to above, the Company entered
into an interest rate collar on $5 million notional principal which limits the
float on the remainder of the lease balance between a floor of 5.75% plus a
spread, and a cap of 8.25% plus a spread. This agreement expires in April 2003.
As LIBOR is between the floor and cap rates established by this agreement, no
value has been established for this contract.

Note 11 -Stock Option Plans

The Company has two stock option plans as described below. The Company applies
APB Opinion 25, "Accounting for Stock Issued to Employees," and related
Interpretation in accounting for the plans. Under APB Opinion 25, because the
exercise price of the Company's employee stock options equals the market price
of the underlying stock on the date of grant, no compensation cost is
recognized.

Under the 1993 incentive stock option plan, as amended, 3,264,937 shares of
unissued common stock or treasury stock have been made available for grants.
These options were granted at market value on the date of grant and have been
adjusted for stock splits and dividends. The vesting on these options range from
immediate to up to ten years and are exercisable for a term of eight to ten
years from the date of grant.
<PAGE>

Under the 1983 incentive stock option plan, as amended, 3,132,420 shares of
unissued common stock or treasury stock were available for grants. These options
are exercisable for a term of ten years from the date of grant. These options
were granted at market value on the date of grant and have been adjusted for
stock splits and dividends. Effective January 28, 1993, no further options may
be granted under this plan.

SFAS 123, "Accounting for Stock-Based Compensation," requires the Company to
provide pro forma information regarding net income and earnings per share as if
compensation costs for the Company's stock option plans had been determined in
accordance with the fair value based method prescribed in SFAS 123. The Company
estimated the fair value of each stock option at the grant date by using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 2000, 1999 and 1998, respectively; dividend yield
of 1.5%, 1.5% and 1.0%; expected volatility of 56.6%, 45.6% and 42.0%; risk-free
interest rates of 6.0%, 6.0% and 5.2%; and expected lives of four years.

Under the accounting provisions of SFAS 123, the Company's net income and
earnings per share would have been reduced to the pro forma amounts indicated
below:

                                     2000             1999             1998
-------------------------------------------------------------------------------
Net earnings
    As reported                   $3,544,000      $13,901,000      $11,200,000
    Pro forma                     $3,166,000      $12,756,000      $10,474,000

Net earnings per common share
    As reported                   $     0.27      $      1.04      $      0.82
    Pro forma                     $     0.24      $      0.95      $      0.77

Net earnings per common share
assuming dilution
    As reported                   $     0.27      $      0.98      $      0.79
    Pro forma                     $     0.24      $      0.90      $      0.74


A summary of the status of the Company's two fixed stock option plans, as of the
balance sheet date and changes during the years ending on those dates, is
presented below:

<TABLE>
<CAPTION>
                                  December 3, 2000             November 28, 1999              November 29, 1998
-----------------------------------------------------------------------------------------------------------------------
                                          Weighted                      Weighted                       Weighted
                                          Average                       Average                        Average
                                          Exercise                      Exercise                       Exercise
                          Shares          Price         Shares          Price             Shares       Price
-----------------------------------------------------------------------------------------------------------------------
<S>                    <C>               <C>          <C>            <C>                <C>           <C>
Outstanding
 at beginning
 of year                2,105,198        $   7.37     1,569,613      $   6.01           1,094,823     $  4.69
  Granted                 169,000            8.23       774,466          9.69             744,028        7.18
  Exercised                (7,185)           7.05      (116,824)         3.94            (261,813)       3.70
  Forfeited              (256,712)           8.35      (122,057)         7.84              (7,425)      10.68
                       ----------                     ---------                         ---------
Outstanding
 at end of year         2,010,301        $   7.32     2,105,198      $   7.37           1,569,613     $  6.01
                       ==========                     =========                         =========
Weighted-average
 fair value of
 options granted
 during the year         $   3.72                        $ 2.35                           $  4.01
                       ==========                     =========                         =========
</TABLE>
<PAGE>

The following table summarizes information about fixed stock options outstanding
at December 3, 2000.

<TABLE>
<CAPTION>
                                          Options Outstanding                            Options Exercisable
-----------------------------------------------------------------------------------------------------------------------
Range                      Number           Weighted              Weighted            Number            Weighted
of                         Outstanding at   Average               Average             Exercisable       Average
Exercise                   December 3,      Remaining             Exercise            December 3,       Exercise
Prices                     2000             Contractual Life      Price               2000              Price
-----------------------------------------------------------------------------------------------------------------------
<S>                          <C>                    <C>            <C>                  <C>             <C>
$0.79 - $2.79                126,580                2              $1.94                126,580         $1.94
 3.86 -  5.00                382,348                4               4.67                375,682          4.67
 6.25 -  6.93                373,142                7               6.58                373,142          6.58
 7.30 -  8.18                272,691                8               7.76                165,143          7.76
 8.38 -  9.60                577,515                8               9.04                504,542          9.01
10.28 - 12.05                278,025                7              10.41                 48,858         10.85
                           ---------                                                  ---------

                           2,010,301                               $7.32              1,593,947        $ 6.78
                           =========                                                  =========
</TABLE>

Note 12- Taxes on Income

Provisions for income taxes in the Consolidated Statements of Income consisted
of the following components:

                            2000           1999           1998
                            ----           ----           ----

Current                 $ 5,062,000    $ 8,575,000    $ 6,385,000

Deferred                 (1,991,000)      (464,000)       545,000
                        -----------    -----------    -----------

Total taxes on income   $ 3,071,000    $ 8,111,000    $ 6,930,000
                        ===========    ===========    ===========


Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of the assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The source of
the temporary differences and their effects on deferred taxes were as follows:

                                                     2000          1999
                                                     ----          ----

Bad debt reserve                                $   788,000    $   330,000
Deferred compensation                             1,931,000      1,685,000
Net operating loss carryforwards                     54,000        479,000
Goodwill                                            771,000             --
Other                                               874,000        708,000
                                                -----------    -----------
Gross deferred tax assets                         4,418,000      3,202,000
                                                -----------    -----------

Receivables                                         315,000        632,000
Inventories                                         122,000        641,000
Property and equipment                            1,576,000        541,000
Investment property                               2,009,000      2,179,000
Other                                                    --         47,000
                                                -----------    -----------

Gross deferred tax liabilities                    4,022,000      4,040,000
                                                -----------    -----------

Net deferred tax asset (liability)              $   396,000    $  (838,000)
                                                ===========    ===========

Included in the balance sheet:
  Deferred income tax-current                   $ 2,057,000    $   238,000
  Deferred income tax liabilities-non-current    (1,661,000)    (1,076,000)
                                                -----------    -----------
  Net deferred tax asset (liability)            $   396,000    $  (838,000)
                                                ===========    ===========

At December 3, 2000, the Company had net operating loss carryforwards for income
tax purposes of $138,000 that will expire in fiscal 2016.
<PAGE>

The following summary reconciles taxes at the federal statutory tax rate with
the actual taxes:

                                     2000           1999           1998
                                     ----           ----           ----

Income tax expense, computed
    at the statutory rate        $ 2,315,000    $ 7,704,000    $ 6,245,000
State income taxes, net of
    federal income tax benefit       357,000        558,000        480,000
Goodwill                             435,000        231,000             --
Life insurance transactions          (56,000)       (65,000)       (41,000)
Other items, net                      20,000       (317,000)       246,000
                                 -----------    -----------    -----------

Total taxes on income            $ 3,071,000    $ 8,111,000    $ 6,930,000
                                 ===========    ===========    ===========


Note 13- Major Customer Information

Shipments to the Company's top three customers as a percent of net shipments
were 15% in 2000, 17% in 1999 and 19% in 1998. Shipments to the Company's top
ten customers, as a percent of net shipments, amounted to 28% in 2000, 31% in
1999 and 30% in 1998. Receivables from the Company's top three customers as a
percent of year-end receivables amounted to 28% in 2000 and 25% in 1999.

Note 14 -Segment Reporting

The Company's operations are classified into two business segments; wholesale
and retail home furnishings. Prior to the acquisition of Storehouse, the Company
reported its operations as one segment, wholesale home furnishings.

The wholesale home furnishings segment manufactures upholstered furniture.
Upholstered furniture includes sofas, loveseats, occasional chairs and sleep
sofas, covered with fabric or leather.

The retail home furnishings segment sells home furnishings and accessories to
customers through Company-owned stores. These products consist of upholstered
furniture (primarily obtained from related companies), casegoods and home
accessories.

The other category is comprised of additional subsidiaries reviewed by
management including parent company expenses.
<PAGE>

<TABLE>
<CAPTION>
                                           Wholesale       Retail
                                              Home          Home
                                          Furnishings    Furnishings                   Inter-segment
                                            Segment        Segment         Other        Eliminations         Consolidated
                                            -------        -------         -----        ------------         ------------
2000                                                    (in thousands)
<S>                                        <C>           <C>             <C>            <C>                  <C>
Net shipments                              $ 253,079      $ 122,050      $      --       $  (26,731)         $  348,398
Interest expense                               2,304          1,600            363               --               4,267
Depreciation and amortization                  4,739          3,064            314               --               8,117
Pre-tax net earnings(loss)
  from continuing operations                  17,647         (2,554)            25             (265)             14,853

Capital expenditures                           4,982          3,325            719               --               9,026
Total assets                                 115,782         47,844         96,051          (98,089)            161,588

1999

Net shipments                              $ 239,324      $  50,446      $      --       $  (13,004)         $  276,766
Interest expense                               1,907            443             --             (219)              2,131
Depreciation and amortization                  4,199          1,241            253               --               5,693
Pre-tax net earnings(loss)                    23,889         (1,528)         1,481             (325)             23,517

Capital expenditures                           6,871          1,485            171               --               8,527
Total assets                                 109,344         48,892         94,125          (92,698)            159,663

1998

Net shipments                              $ 172,692      $  13,389      $      --       $   (5,722)         $  180,359
Interest expense                                 227             --             --               --                 227
Depreciation and amortization                  2,723            249            501               --               3,473
Pre-tax net earnings(loss)                    16,242           (325)         2,502             (297)             18,122

Capital expenditures                           4,665            389            139               --               5,193
Total assets                                  88,363          4,246         68,933          (59,652)            101,890
</TABLE>

The consolidated amounts for capital expenditures and total assets exclude
amounts for the discontinued Wexford segment. Capital expenditures at Wexford
were $129,000, $303,000 and $1,758,000 for 2000, 1999 and 1998, respectively.
Total assets at Wexford were $2,996,000, $8,917,000 and $8,572,000 for 2000,
1999, and 1998, respectively. Depreciation and amortization at Wexford were
$464,000, $472,000 and $300,000 for 2000, 1999 and 1998, respectively.
<PAGE>

Note 15 - Quarterly Financial Information

<TABLE>
<CAPTION>
Quarter                                     First       Second        Third       Fourth(1)
---------------------------------------------------------------------------------------------
                                          (Unaudited, in thousands, except per share amounts)
<S>                                      <C>          <C>          <C>          <C>
2000
Net shipments                             $   83,820   $   84,182   $   83,137   $   97,259
Gross profit                                  29,768       29,452       28,806       32,856
Net earnings from continuing operations        2,819        1,449        1,033        3,633
Net earnings                                   2,392        1,184          652         (684)
Net earnings from continuing operations
    per common share                            0.21         0.11         0.08         0.28
Net earnings (loss) per common share            0.18         0.09         0.05        (0.05)
Net earnings from continuing operations
   per common share assuming dilution           0.20         0.11         0.08         0.27
Net earnings (loss) per common share
   assuming dilution                            0.17         0.09         0.05        (0.05)

1999
Net shipments                             $   56,912   $   60,297   $   66,955   $   92,602
Gross profit                                  15,967       17,498       21,020       32,595
Net earnings from continuing operations        3,142        3,204        3,213        5,298
Net earnings                                   3,092        3,042        2,923        4,844
Net earnings from continuing operations
   per common share                             0.23         0.24         0.24         0.40
Net earnings per common share                   0.23         0.23         0.22         0.36
Net earnings from continuing operations
   per common share assuming dilution           0.22         0.22         0.23         0.38
Net earnings per common share
  assuming dilution                             0.21         0.21         0.21         0.35
</TABLE>

Earnings per share calculations for each of the quarters are based on the
weighted average shares outstanding for each period. The sum of the quarters may
not necessarily be equal to the full year earnings per share amounts.

(1) The fourth quarter of fiscal year 2000 includes an adjustment for the
discontinued operations of Wexford. All prior quarters presented have been
restated.

Note 16 - Recent Accounting Pronouncements

In December 1999, the staff of the Securities and Exchange Commission released
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition," to provide
guidance on the recognition, presentation and disclosure of revenues in
financial statements. The Company believes that its revenue recognition
practices are in conformity with the guidelines in SAB 101 and that this
pronouncement will have no material impact on its financial statements.

In March 2000, the FASB released Interpretation No. 44, "Accounting for Certain
Transactions involving Stock Compensation: an interpretation of APB Opinion No.
25." Interpretation No. 44 provides clarification of certain issues, such as the
determination of who is an employee, the criteria for determining whether a plan
qualifies as a non-compensatory plan, the accounting consequence of various
modifications to the terms of a previously fixed stock option or award and the
accounting for an exchange of stock compensation awards in a business
combination. The Company
<PAGE>

believes that its practices are in conformity with this guidance, and therefore
Interpretation No. 44 has no impact on its financial statements.

In September 2000, the Emerging Issues Task Force ("EITF") reached a consensus
regarding Issue 00-10, "Accounting for Shipping and Handling Fees and Costs,"
which requires any shipping and handling costs billed to customers in a sales
transaction to be classified as revenue. The Company will adopt Issue 00-10 in
the first quarter of fiscal 2001, and does not expect it to have a material
impact on the Company's consolidated statements of income.

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The management of The Rowe Companies is responsible for the accuracy and
consistency of all the information contained in the annual report, including all
accompanying consolidated financial statements. The statements have been
prepared to conform with generally accepted accounting principles and include
amounts based on management's estimates and judgments.

The Rowe Companies maintains a system of internal accounting controls designed
to provide reasonable assurance that financial records are accurate, Company
assets are safeguarded and financial statements present fairly the consolidated
financial position of the Company.

The Audit Committee of the Board of Directors, composed solely of outside
directors, reviews the scope of audits and the findings of the independent
certified public accountants. The auditors meet regularly with the Audit
Committee to discuss audit and financial issues.

BDO Seidman, LLP, the Company's independent certified public accountants, has
audited the financial statements prepared by management. Their opinion on the
financial statements is presented as follows.

Gerald M. Birnbach                             Michael M. Thurmond
Chairman of the Board and President            Chief Financial Officer,
                                               Secretary-Treasurer

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


The Rowe Companies
McLean, Virginia

We have audited the accompanying consolidated balance sheets of The Rowe
Companies and subsidiaries as of December 3, 2000 and November 28, 1999, and the
related consolidated statements of income and comprehensive income,
stockholders' equity and cash flows for each of the three years in the period
ended December 3, 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.
<PAGE>

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of The Rowe Companies
and subsidiaries at December 3, 2000 and November 28, 1999, and the results of
their operations and their cash flows for each of the three years in the period
ended December 3, 2000, in conformity with accounting principles generally
accepted in the United States of America.

High Point, North Carolina                                   BDO SEIDMAN, LLP
February 12, 2001
<PAGE>

The Rowe Companies Annual Report 2000
Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                                                            Year Ended
                                                                                  12/3/00     11/28/99        11/29/98
                                                                             -------------  ----------      ----------
                                                                                (53 weeks)   (52 weeks)     (52 weeks)
----------------------------------------------------------------------------------------------------------------------
                                                                                            (in thousands)
<S>                                                                          <C>            <C>             <C>
Increase (Decrease) In Cash
Cash flows from operating activities:
   Cash received from customers                                                  $ 364,863    $ 282,710    $ 189,437
   Cash paid to suppliers and employees                                           (340,033)    (262,017)    (180,372)
   Income taxes paid, net of refunds                                                (6,183)      (7,726)      (6,403)
   Interest paid                                                                    (5,693)      (2,686)        (694)
   Interest received                                                                   288          159          337
   Other receipts - net                                                              1,156        1,684          706
                                                                                 ---------    ---------    ---------
Net cash and cash equivalents provided by operating activities                      14,398       12,124        3,011
                                                                                 ---------    ---------    ---------
Cash flows from investing activities:
   Proceeds from sale of property and equipment                                         21           19            -
   Capital expenditures                                                             (9,155)      (8,830)      (6,951)
   Payments to acquire businesses (Note 2)                                          (5,160)      (8,892)     (10,442)
   Investment in Storehouse, Inc. (Note 2)                                               -            -       (2,500)
                                                                                 ---------    ---------    ---------
Net cash used in investing activities                                              (14,294)     (17,703)     (19,893)
                                                                                 ---------    ---------    ---------
Cash flows from financing activities:
   Net borrowings (payments) under line of credit                                     (164)       2,071          362
   Proceeds from issuance of long-term debt                                         13,020       25,132       25,000
   Payments to reduce long-term debt                                               (11,922)     (14,522)      (1,444)
   Proceeds from issuance of common stock                                               51          460          968
   Dividends paid                                                                   (1,849)      (1,714)      (1,498)
   Purchase of treasury stock                                                         (951)      (3,224)      (4,876)
                                                                                 ---------    ---------    ---------
Net cash provided by (used in) financing activities                                 (1,815)       8,203       18,512
                                                                                 ---------    ---------    ---------
Net increase (decrease) in cash and cash equivalents                                (1,711)       2,624        1,630
Cash at beginning of year                                                            5,104        2,480          850
                                                                                 ---------    ---------    ---------
Cash at end of year                                                              $   3,393    $   5,104    $   2,480
                                                                                 =========    =========    =========

----------------------------------------------------------------------------------------------------------------------

Reconciliation of Net Earnings to Net Cash Provided by Operating Activities



Net earnings                                                                     $   3,544    $  13,901    $  11,200
                                                                                 ---------    ---------    ---------
Adjustments to reconcile net earnings to net cash
provided by operating activities, net of disposition of business:
  Loss on disposition of Wexford                                                     5,455            -            -
  Depreciation and amortization                                                      8,581        6,165        3,773
  Provision for deferred compensation                                                  816        1,083          762
  Payments made for deferred compensation                                             (160)        (319)        (590)
  Deferred income taxes                                                             (2,099)        (472)         545
  Provision for losses on accounts receivable (recoveries)                           1,485          413       (1,285)
  Loss on disposition of assets                                                         29            4            -

  Change in operating assets and liabilities net of effects of acquisition and
  disposition of businesses:
    Decrease (increase) in accounts receivable                                       5,564       (9,379)      (3,963)
    Decrease (increase) in inventories                                                (832)      (5,692)      (2,164)
    Decrease (increase) in prepaid expenses and other                                 (887)        (795)        (468)
    Decrease (increase) in other assets                                                472       (1,210)         378
    Increase (decrease) in accounts payable                                         (4,750)       3,830       (2,549)
    Increase (decrease) in accrued expenses                                         (1,715)       2,170       (2,619)
    Increase (decrease) in customer deposits                                        (1,105)       2,425           (9)
                                                                                 ---------    ---------    ---------
         Total adjustments                                                          10,854       (1,777)      (8,189)
                                                                                 ---------    ---------    ---------
Net cash provided by operating activities                                        $  14,398    $  12,124    $   3,011
                                                                                 =========    =========    =========

Supplemental Disclosures of Cash Flows:
Fair value of assets acquired other than cash                                                 $  37,272    $  31,955
Liabilities assumed                                                                             (28,380)     (18,513)
Convertible debentures issued                                                                         -       (3,000)
                                                                                              ---------    ---------
Payments to acquire businesses                                                                $   8,892    $  10,442
                                                                                              =========    =========
</TABLE>

See notes to consolidated financial statements
<PAGE>

The Rowe Companies Annual Report 2000
Five Year Summary

<TABLE>
<CAPTION>
                                                                             2000(1)   1999(1)(2) 1998(1)(3)    1997       1996
                                                                            (53 weeks) (52 weeks) (52 weeks) (52 weeks) (52 weeks)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                   (in thousands, except per share amounts)
<S>                                                                         <C>        <C>        <C>        <C>        <C>
Net shipments                                                                $348,398   $276,766   $180,359   $144,118   $142,723
Gross profit                                                                  120,882     87,080     49,677     38,954     37,593
Operating income                                                               17,705     23,778     17,307      8,775     10,248
Net earnings from continuing operations (4)(5)                                  8,934     14,857     11,195      6,286      7,052
Net earnings (4)(5)                                                          $  3,544   $ 13,901   $ 11,200   $  6,286   $  7,052


Working capital                                                              $ 31,008   $ 33,959   $ 30,473   $ 17,404   $ 18,232
Total assets                                                                  164,584    168,580    110,462     63,710     64,280
Long-term debt                                                                 52,761     54,608     33,796          -          -
Stockholders' equity                                                         $ 55,422   $ 54,659   $ 45,236   $ 39,442   $ 40,188


Ratio of current assets to current liabilities                               1.6 to 1   1.6 to 1   2.2 to 1   1.9 to 1   1.9 to 1
Ratio of cash and receivables to current liabilities                         0.7 to 1   0.8 to 1   1.3 to 1   1.1 to 1   1.3 to 1


Net earnings from continuing operations per common share - basic             $   0.68   $   1.11   $   0.82   $   0.44   $   0.48
Net earnings per common share - basic                                        $   0.27   $   1.04   $   0.82   $   0.44   $   0.48
Weighted average common shares                                                 13,152     13,426     13,672     14,250     14,707
Net earnings from continuing operations per common share assuming dilution   $   0.66   $   1.04   $   0.79   $   0.43   $   0.47
Net earnings per common share assuming dilution                              $   0.27   $   0.98   $   0.79   $   0.43   $   0.47
Weighted average common shares and equivalents                                 13,703     14,372     14,128     14,666     15,117
Cash dividends paid per share                                                $   0.14   $   0.13   $   0.11   $   0.09   $   0.07
</TABLE>

Weighted average shares and earnings per share amounts have been adjusted to
give retroactive effect to a 10% stock dividend declared November 2, 1999.

(1)  The 2000, 1999, and 1998 results have been restated to reflect the
     discontinuation of operations at The Wexford Collection, Inc. (See Note 2
     of the consolidated financial statements).

(2)  The 1999 amounts include Storehouse, Inc., acquired August 1, 1999 (See
     Note 2 of the consolidated financial statements).

(3)  The 1998 amounts include The Wexford Collection, Inc., acquired January 1,
     1998 and The Mitchell Gold Co., acquired October 31, 1998 (See Note 2 of
     the consolidated financial statements).

(4)  The results of operations for 1998 include an after-tax gain of
     approximately $0.02 per share reflecting the sale of Levitz Furniture
     receivable, partially offset by an increase in reserve for bad debts,
     write-down of investment property and other charges.

(5)  The results of operations for 1997 include unusual charges, net of taxes,
     of $2.7 million, or $0.19 per share, primarily associated with the
     write-off of a receivable from Levitz Furniture.
<PAGE>

The Rowe Companies Annual Report 2000
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                 12/3/2000     11/28/1999
---------------------------------------------------------------------------------------------------------
                                                                                     (in thousands)
<S>                                                                               <C>          <C>
ASSETS (Note 6)
CURRENT ASSETS
Cash and cash equivalents                                                         $   3,393    $   5,104
Accounts receivable (net of allowance
   for losses of $1,856 in 2000 and $864 in 1999) (Note 13)                          30,892       38,340
Inventories (Notes 1 & 3)                                                            41,297       41,381
Deferred income taxes (Note 12)                                                       2,057          238
Prepaid expenses and other                                                            3,884        3,098
                                                                                  ---------    ---------
   Total current assets                                                              81,523       88,161
                                                                                  ---------    ---------

PROPERTY AND EQUIPMENT (Notes 1 & 4)                                                 36,117       36,186
                                                                                  ---------    ---------

OTHER ASSETS
Cash value of life insurance (Note 7)                                                 3,975        3,874
Investment property (net of accumulated depreciation of
  $6,403 in 2000 and $2,657 in 1999) (Notes 1 & 9)                                    8,484        7,629
Goodwill (net of amortization of $1,827 in 2000 and $977 in 1999) (Notes 1 & 2)      30,357       27,938
Miscellaneous                                                                         4,128        4,792
                                                                                  ---------    ---------
   Total other assets                                                                46,944       44,233
                                                                                  ---------    ---------
                                                                                  $ 164,584    $ 168,580
                                                                                  =========    =========

LIABILITIES
CURRENT LIABILITIES
Current maturities of long-term debt (Note 6)                                     $   3,299    $     353
Short-term bank borrowings (Note 5)                                                   4,000        4,164
Accounts payable                                                                     24,621       28,436
Accrued expenses:
   Compensation                                                                       3,254        3,769
   Income taxes                                                                         770        1,783
   Other                                                                              6,336        6,823
Customer deposits                                                                     7,515        8,620
Deferred compensation - current portion (Note 7)                                        720          254
                                                                                  ---------    ---------
     Total current liabilities                                                       50,515       54,202

LONG-TERM DEBT (Note 6)                                                              52,761       54,608
DEFERRED COMPENSATION (Note 7)                                                        4,225        4,035
DEFERRED INCOME TAXES (Note 12)                                                       1,661        1,076
                                                                                  ---------    ---------
     Total liabilities                                                              109,162      113,921
                                                                                  ---------    ---------

COMMITMENTS AND CONTINGENCIES (Notes 2, 7, 8, 9 & 10)

STOCKHOLDERS' EQUITY (Note 11)
COMMON STOCK; par value $1 per share, 50,000,000 authorized shares                   16,520       16,513
CAPITAL IN EXCESS OF PAR VALUE                                                       23,083       23,039
RETAINED EARNINGS                                                                    37,772       36,077
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Note 10)                                 (32)          --
LESS TREASURY STOCK                                                                 (21,921)     (20,970)
                                                                                  ---------    ---------
     Total stockholders' equity                                                      55,422       54,659
                                                                                  ---------    ---------
                                                                                  $ 164,584    $ 168,580
                                                                                  =========    =========
</TABLE>

See notes to consolidated financial statements
<PAGE>

The Rowe Companies Annual Report 2000
Consolidated Statements of Income and Comprehensive Income

<TABLE>
<CAPTION>
                                                                                    Year Ended
-------------------------------------------------------------------------------------------------------------
                                                                       12/3/2000     11/28/1999   11/29/1998
                                                                       (53 weeks)    (52 weeks)   (52 weeks)
-------------------------------------------------------------------------------------------------------------
                                                                     (in thousands, except per share amounts)
<S>                                                                  <C>             <C>          <C>
Net shipments (Notes 2 & 13)                                            $ 348,398    $ 276,766    $ 180,359
Cost of shipments                                                         227,516      189,686      130,682
                                                                        ---------    ---------    ---------
   Gross profit                                                           120,882       87,080       49,677
Selling and administrative expenses                                       103,177       63,302       32,370
                                                                        ---------    ---------    ---------
   Operating income                                                        17,705       23,778       17,307
Interest expense                                                           (4,267)      (2,131)        (227)
Other income, net (Note 9)                                                  1,415        1,870        1,042
                                                                        ---------    ---------    ---------
   Earnings from continuing operations before taxes                        14,853       23,517       18,122
Taxes on income (Note 12)                                                   5,919        8,660        6,927
                                                                        ---------    ---------    ---------

Net earnings from continuing operations                                     8,934       14,857       11,195

Discontinued operations (Note 2):
Income(loss) from discontinued operations of Wexford,
    less tax expense(benefit) of $(954), $(549), and $3, respectively      (1,829)        (956)           5
Loss on disposal of Wexford, including provision for
   $490 of operating losses, net of tax benefit of $(1,894)                (3,561)          --           --
                                                                        ---------    ---------    ---------

Net earnings                                                            $   3,544    $  13,901    $  11,200
                                                                        ---------    ---------    ---------

Other comprehensive income, net of tax:

Fair market value adjustments on derivatives (Note 1)                         (32)          --           --
                                                                        ---------    ---------    ---------

Comprehensive income                                                    $   3,512    $  13,901    $  11,200
                                                                        =========    =========    =========


Net earnings from continuing operations per common share (Note 1)       $    0.68    $    1.11    $    0.82
                                                                        =========    =========    =========

Net earnings per common share (Note 1)                                  $    0.27    $    1.04    $    0.82
                                                                        =========    =========    =========

  Weighted average common shares                                           13,152       13,426       13,672
                                                                        =========    =========    =========

Net earnings from continuing operations per common
   share assuming dilution (Note 1)                                     $    0.66    $    1.04    $    0.79
                                                                        =========    =========    =========

Net earnings per common share assuming dilution (Note 1)                $    0.27    $    0.98    $    0.79
                                                                        =========    =========    =========

  Weighted average common shares and equivalents                           13,703       14,372       14,128
                                                                        =========    =========    =========
</TABLE>

See notes to consolidated financial statements
<PAGE>

The Rowe Companies Annual Report 2000
Consolidated Statements of Stockholders' Equity

<TABLE>
<CAPTION>
                                                       Year Ended December 3, 2000, November 28, 1999 and November 29, 1998
                                               -------------------------------------------------------------------------------------
                                                              Common Stock                                Treasury Stock
                                               -------------------------------------------    --------------------------------------
                                                                                Capital in                              Accumulated
                                               Shares      $1 Par     Excess of  Retained     Number of                Comprehensive
                                               Issued      Value      Par Value  Earnings       Shares        Cost     Income (Loss)
------------------------------------------------------------------------------- ----------    --------------------     -------------
                                                                (in thousands, except share and per share amounts)
<S>                                          <C>           <C>        <C>       <C>           <C>           <C>        <C>
Balance at November 30, 1997                 14,667,783    $ 14,668   $  8,633   $ 29,011     2,124,261     $ 12,870      $   -
   Acquisition of treasury stock                                                                516,958        4,876
   Cash dividends paid, $0.11 per share                                            (1,498)
   Exercise of stock options                    238,012         238        730
   Net earnings for the year ended
      November 29, 1998                                                            11,200
                                             ----------    --------   --------   --------     ---------     --------      -----
Balance at November 29, 1998                 14,905,795      14,906      9,363     38,713     2,641,219       17,746          -
   Acquisition of treasury stock                                                                324,592        3,224
   Cash dividends paid, $0.13 per share                                            (1,714)
   Exercise of stock options                    106,104         106        354
   10% stock dividend (Note 1)                1,501,063       1,501     13,322    (14,823)      286,318
   Net earnings for the year ended
       November 28, 1999                                                           13,901
                                             ----------    --------   --------   --------     ---------     --------      -----
Balance at November 28, 1999                 16,512,962      16,513     23,039     36,077     3,252,129       20,970          -
   Acquisition of treasury stock                                                                153,818          951
   Cash dividends paid, $0.14 per share                                            (1,849)
   Exercise of stock options                      7,185           7         44
   Fair market value change on derivatives                                                                                  (32)
   Net earnings for the year ended
       December 3, 2000                                                             3,544
                                             ----------    --------   --------   --------     ---------     --------      -----

Balance at December 3, 2000                  16,520,147    $ 16,520   $ 23,083   $ 37,772     3,405,947     $ 21,921      $ (32)
                                             ==========    ========   ========   ========     =========     ========      =====
</TABLE>

See notes to consolidated financial statements