<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                   FORM 10-K
               ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                        THE SECURITIES EXCHANGE ACT OF
                        1934 For the Fiscal Year Ended
                               November 29, 1998

                        Commission File Number 1-10226

                          ROWE FURNITURE CORPORATION
            (Exact name of registrant as specified in its charter)

          Nevada                                              54-0458563
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                           Identification Number)

1650 Tysons Boulevard, Suite 710 McLean, Virginia                   22102
(Address of principal executive offices)                          (Zip Code)

      Registrant's telephone number, including area code: (703) 847-8670

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

     Title of Each Class               Name of Each Exchange on which Registered
     -------------------               -----------------------------------------
Common Stock, $1.00 par value                 New York Stock Exchange

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

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [_].

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of February 12, 1999 (the exclusion from such amount of the market
value of the shares owned by any person shall not be deemed to be an admission
by the registrant that such person is an affiliate of the registrant) was
$113,588,783.

     As of February 12, 1999, there were issued and outstanding 12,291,608
shares of the registrant's Common Stock.

                      DOCUMENTS INCORPORATED BY REFERENCE
     DOCUMENT                                             WHERE INCORPORATED
     --------                                             ------------------
Portions of the Annual Report for the year ended            Parts II and IV 
November 29, 1998 

Portions of the Annual Proxy                                Part III
Statement for the year ended November 29, 1998              
<PAGE>
 
                                    PART I

ITEM 1.   BUSINESS.

GENERAL

The Company is a designer and manufacturer of upholstered and leather furniture,
primarily consisting of sofas, loveseats and chairs. The Company's products are
sold primarily in the middle to upper-middle price range, with sofas customarily
retailing between $700 and $1,500. Additionally, the Company manufactures a
casual line of wood furniture and owns and operates a retail chain of furniture
stores under the name Home Elements.

The Company sells its manufactured products primarily through an exclusive sales
force of commissioned employees to over 1,000 national, regional and local
retailers consisting of furniture chains, independent furniture retailers,
warehouse showrooms, dedicated galleries and Company-owned Home Elements retail
furniture stores. The Company's manufacturing facilities consist of seven
production plants; located in Virginia (2), Missouri (2), North Carolina (2) and
California. In addition to manufacturing its own line of furniture, the Company
manufactures furniture frames and kiln-dries hardwood and pine lumber for
outside customers.

Rowe Furniture Corporation was founded as a furniture manufacturer in June,
1946, and its original manufacturing facility is located in Salem, Virginia. In
1968, the Company expanded its operations to the Midwest with the addition of
its first facility in Missouri.

The Company is incorporated under the laws of Nevada. Its principal executive
offices are located at 1650 Tysons Boulevard, McLean, Virginia 22102, and its
telephone number is (703) 847-8670. Unless the context indicates otherwise,
references herein to the "Company" include Rowe Furniture Corporation, its
predecessors, and its subsidiaries.

Effective December 3, 1995, the Company merged its then-existing four
manufacturing subsidiaries (Rowe Furniture Corporation-Virginia, Rowe Furniture
Corporation-Missouri, Salem Frame Company, Inc. and Himmelberger-Harrison
Company, Inc.) into a wholly-owned subsidiary, Rowe Manufacturing, Inc. On
December 1, 1997, all of the assets of Rowe Manufacturing, Inc., exclusive of
intellectual property, were transferred to a new wholly-owned subsidiary, Rowe
Industries, Inc. ("Rowe"). Rowe Manufacturing, Inc. was then merged into the
Company. These reorganizations were effected to simplify the organizational
structure and improve internal reporting. In January 1998, The Wexford
Collection, Inc. ("Wexford"), a new wholly-owned subsidiary was created to
acquire the assets and liabilities of J & M Designs, Ltd. Rowe Diversified,
Inc., a wholly-owned subsidiary, was created on June 12, 1998 to hold all
patents and trademarks for the Company. On October 31, 1998, the stock of The
Mitchell Gold Co. ("Mitchell Gold") was acquired and now Mitchell Gold operates
as a wholly-owned subsidiary of the Company. Also in

                                       2
<PAGE>
 
1998, the Company renamed its Company-owned retail stores to Home Elements, from
The Rowe ShowPlace, consistent with a new format for the business.

On August 25, 1998, the Company entered into an agreement with Storehouse, Inc.
("Storehouse"), a chain of 42 retail furniture stores, to invest $2.5 million in
the form of a subordinated loan and, subject to Storehouse's reaching certain
defined financial objectives, acquire all of its outstanding stock in 1999.
Should this acquisition be completed, the Company will significantly expand its
network of Company-owned retail furniture stores.

THE INDUSTRY

As reported by the American Furniture Manufacturers Association in December 1998
the following table sets forth estimated factory shipments for the domestic
furniture industry in general, and the upholstered furniture segment in
particular, during each of the four years ended December 31, 1998.

<TABLE> 
<CAPTION> 
                                        1995    1996    1997    1998*
                                        ----    ----    ----    -----
                                                (in billions)
     <S>                                <C>     <C>     <C>     <C> 
     Industry shipments                 $ 19.0  $ 20.0  $ 21.2  $ 24.0
     Upholstered furniture shipments       7.4     7.9     8.5    10.0
</TABLE> 

     *Estimated

The principal categories of furniture products include wood, upholstered and
metal furniture products. Of these categories, wood is the largest, representing
approximately half of total industry sales, while upholstered furniture
represents approximately 40% and metal and other products account for the
balance. Within each category, furniture manufacturers generally focus on
particular price ranges and styles.

The furniture industry historically has been cyclical, fluctuating with the
general economy. Management believes that the industry is significantly
influenced by consumer behavior and confidence, personal disposable income,
demographics, housing activity, interest rates, and credit availability. The
upholstered segment of the furniture industry generally has followed the same
trends as the rest of the furniture industry. There can be no assurance that an
economic downturn would not have a material adverse effect on the Company.

PRODUCT LINES

The Company's products encompass a full line of upholstered furniture including
sofas, loveseats, and chairs. The Company's products are available in over 900
different fabrics. Styles offered include traditional, contemporary and country.
The Company also produces a line of leather furniture in addition to a line of
casual wood furniture. Additionally, through its Home Elements retail stores,
the Company offers 

                                       3
<PAGE>
 
complementary accessory items such as lamps, rugs and tables from other
manufacturers.

The Company's product strategy is to provide a wide choice of furniture styles
and fabrics while providing high quality at competitive prices. The Company
continually reviews and evaluates its designs, and annually adds and
discontinues designs, as it deems appropriate. The Company identifies trends in
styles, colors and patterns through independent research, contacts with the
Company's customers and the occasional use of independent designers. Management
also solicits opinions from its customers and manufacturing and marketing
employees prior to final design selection.

MARKETING AND SALES

The Company has developed a broad and diverse national customer base. The
Company sells its products primarily through commissioned sales personnel who
are employees of the Company, dedicated to marketing the Company's products
exclusively. Management believes that this gives the Company a competitive
advantage over many of its competitors which sell their products through
independent sales representatives who represent more than one manufacturer. The
Company's products are sold to over 1,000 national, regional and local furniture
retailers, including Levitz, Jordan's Furniture, Star Furniture, Sears Homelife,
Crate & Barrel, Pottery Barn and Restoration Hardware.

While the Company sells its products throughout the United States, management
believes that there are opportunities for greater penetration in the regions
where the Company's products are currently not widely distributed. The Company
has targeted key retailers in these markets as opportunities for further growth.

The general marketing practice in the furniture industry is to exhibit products
at international and regional furniture markets. The Company displays its
product lines and introduces new products in April and October of each year at
an eight day furniture market held in High Point, North Carolina. The Company
maintains three showrooms totaling 75,000 square feet at the High Point market.
In addition, the Company has developed plans to increase sales in foreign
markets. Approximately 5% of 1998 sales were to customers located outside of the
United States.

RETAIL DISTRIBUTION

Despite the recent consolidation in the retail furniture industry, management
believes there are ample opportunities to expand the Company's retail
distribution network. The Company strives to maintain strong relationships with,
and increase sales to, its existing retailers. It also attempts to increase
sales by adding new retailers, particularly in geographic regions where its
products currently are not widely distributed, such as the Southwest and the
West. When adding retailers, the Company targets what it believes to be
financially sound retailers committed to progressive marketing approaches and
the desire to carry a significant portion of the Company's product line.

                                       4
<PAGE>
 
Dedicated Galleries. A major thrust of the Company's marketing program is to
-------------------
increase the number of dedicated, independently-owned, in-store, furniture
galleries. A dedicated gallery is an area within an independent retail furniture
store where the Company's products are displayed on an exclusive basis together
with other manufacturers' complementary furniture accessories. The Company
implemented the gallery program featuring the Company's furniture in order to
increase its market penetration. There are approximately 100 dedicated galleries
in operation. The gallery program accounted for more than 15% of the Company's
fiscal 1998 shipments. As such, a material reduction in sales at such stores may
have an adverse affect on the Company's results.

A dedicated gallery offers the retail customer a choice of a wide variety of
contemporary and traditional upholstered furniture styles, as well as
approximately 600 different fabrics. Most locations have a point-of-sale
computer system that displays any fabric on any style, allowing the consumer to
combine fabrics and styles and have an immediate picture of the finished
product. By choosing various combinations of style and fabric, the consumer is
able to customize his or her selection.

Home Elements. At fiscal year-end 1998, the Company owned and operated 12 Home
-------------
Elements retail stores with two additional locations added in early 1999. The
stores range in size from 5,000 to 9,000 sq. ft. and are primarily dedicated to
the sale of Company produced upholstery, leather and wood furniture.
Additionally, these stores sell a line of complementary products including
tables, lamps, rugs and accessories. Currently stores are located in Virginia
(6), Maryland (4), Tennessee (1) and Louisiana (3). The Company intends to
continue to expand this program with additional locations to be added in 1999.
In support of this expansion, the Company is adding additional personnel with
furniture retail experience. In 1998, Home Elements was one of the Company's ten
largest customers.

Key Customers. Rowe sells its products to over 1,000 accounts with normal credit
-------------
terms being net 30 days. Levitz Furniture ("Levitz"), the largest customer,
accounted for approximately 10% of 1998 shipments, down from approximately 16%
in 1997 and approximately 17% in 1996.

Rowe's ten largest customers, including Levitz, accounted for approximately 30%
of 1998 shipments. Other than Levitz, no customer accounted for more than 5% of
1998 shipments. On September 5, 1997, Levitz filed for protection under Chapter
11 bankruptcy and subsequently announced the closing of a significant number of
store locations, which upon closing adversely impacted Rowe's business with
Levitz. While it is anticipated that the percentage of Company shipments in
future periods to Levitz will decline as additional store closings are
implemented, the Company expects to more than offset the decline through
shipments to new accounts, increased shipments by Home Elements as new store
locations are opened and through increased business with existing dealers. While
the loss of Levitz or other large customers could have a material adverse effect
on its business, management believes that dependence on any

                                       5
<PAGE>
 
one customer will diminish as the Company diversifies its customer base and the
markets served.

While Rowe continues to sell to Levitz as an open account (in 1997, Rowe
recorded an unusual charge of $3.9 million for the writeoff of Levitz receivable
as a result of the Chapter 11 filing, and in 1998 the receivable was sold for
$1.8 million), the Company has purchased insurance in the amount of $1.2
million with an expiration date of July 3, 1999 to help protect this exposure.
While such risk coverage has been available in recent periods at a reasonable
cost, the Company may not be able to secure similar coverage at a reasonable
cost when the existing insurance expire.

While the Company has historically had a diverse customer base, with only one
customer, Levitz, accounting for 10% or more of its annual volume, Mitchell
Gold has a limited customer base of approximately 60 accounts, of which three
accounts, Restoration Hardware, Crate & Barrel and Pottery Barn together
comprise approximately 70% of its annual volume. While the relationship with
these three companies is considered excellent and growing, the loss of business
with any of these customers will naturally adversely impact the performance of
this subsidiary.

MANUFACTURING AND DISTRIBUTION

The Company manufactures its products in seven production facilities, of which
six are owned and one is leased. Two facilities manufacture upholstered
furniture; one facility manufactures upholstery and leather furniture; one
facility manufacturers wood furniture and one facility is used for frame storage
and assembly. The remaining two facilities manufacture upholstery frames and
wood components in addition to kiln-drying lumber for outside customers. Total
manufacturing space is approximately 1.4 million square feet.

Manufacturing Process. The Company utilizes a vertically integrated
---------------------
manufacturing process which includes kiln-drying of hardwood, wood milling,
frame construction, fabric and leather cutting, sewing, foam cutting and
filling, upholstery and final assembly of the upholstered product. 
Rowe utilizes computer-aided design patterns and CNC Routers to manufacture
frames for upholstered furniture and utilizes specialized machines in the fabric
cutting process which facilitate design work, help maximize fabric yield, and
increase the efficiency of the assembly process. The completed pieces of
upholstered furniture are then cleaned, inspected and packed for shipping.
Additionally, Wexford utilizes advanced technology in its manufacturing of wood
furniture with the recent addition of a GreCon Dimter cutting system.

Manufacturing Efficiencies. Management has taken a number of steps to improve
--------------------------
Rowe's manufacturing efficiencies, including implementation of computerized
systems in its manufacturing facilities to more effectively manage its
inventories, purchasing, labor and manufacturing processes; the development of
its employee involvement program; and the establishment of new internal systems
to control overhead and material usage. In addition, the Company has added
modern equipment, such as computerized routers utilized in its milling
operations and new computerized cover 

                                       6
<PAGE>
 
cutting machines that enhance efficiencies. Management believes through a
combination of increased efficiencies, improved product quality, accelerated
deliveries and stable pricing, the Company will maintain a competitive advantage
in marketing its products.

Product Quality and Value. The Company is committed to providing high quality,
-------------------------
value oriented furniture at competitive prices. Management believes the Company
adheres to strict quality standards in all aspects of design and production,
including material selection, frame design and construction, workmanship, and
appearance. Product quality improvements in recent years include better
undercarriage construction, the use of higher quality cushioning materials and
improved fabric matching. A lifetime, limited warranty applicable to most of the
Company's products covering the frames, springs, mechanisms and selected
cushions reflects the Company's commitment to high quality. The Company has been
successful in providing this quality while generally holding prices constant in
recent years.

Employee Involvement and Compensation. A key aspect of Rowe's manufacturing
-------------------------------------
process is its employee involvement and compensation program. This program
involves workers in the improvement of the manufacturing process by providing
incentives to increase productivity, to reduce costs and to improve quality.
Rowe encourages employees to participate in decision-making and compensates
employees based primarily on hourly rates plus bonuses for productivity
improvements and cost reductions on a facility-wide basis. Management believes
that this program provides incentive for employees to contribute to
facility-wide efficiency, quality improvements and cost reductions. Since
implementation of the program, Rowe has experienced a significant increase in
employee suggestions leading to efficiency improvements and cost reductions. On
a facility-wide basis, 1998 incentive bonuses ranged up to approximately 15% of
hourly compensation. Salaried employees also participate in this program;
however, their bonuses cannot exceed the highest amount paid to an hourly
employee. At Mitchell Gold, a piece-work system is the primary method of
compensation for production employees, and an hourly rate compensation system is
utilized at Wexford.

Dedication to Customer Service. The Company is dedicated to providing a high
------------------------------
level of service to all its customers. The Company maintains close contact and
communicates frequently with its customers in order to better identify,
understand and meet their needs. Management believes the utilization of
Company-employed sales persons enables it to better communicate with its
customers.

Important aspects of the Company's service to certain customers include its
automated order entry, bar coding and electronic data interchange systems. These
systems give customers the ability to place orders directly, and allows the
Company to monitor the status of orders and track inventory and sales activity.
The Company is in the process of enhancing the capabilities of these systems and
increasing the number of customers who utilize them. In addition, the Company
has introduced point-of-sale computer systems into its Home Elements stores and
other dealer locations that allow retailers to display for consumers full-color
pictures of various combinations of furniture styles and 

                                       7
<PAGE>
 
fabric patterns. The Company has established regional repair service centers so
that it can respond quickly to consumers' needs.

Another special emphasis of the Company's customer service is the prompt
delivery of its products, a significant portion of which are manufactured and
shipped generally within 30 days of receipt of an order. The Company's order
entry, credit approval, manufacturing and shipping systems are all designed to
provide prompt delivery to its customers.

Computer Systems. Rowe makes extensive use of a computerized management
----------------
information system (MIS) in the manufacturing process. The MIS, which includes
software developed by Rowe, helps manage order entry, purchasing, labor,
inventories, receivables and product shipments. Management believes that its MIS
is advanced by furniture industry standards; however, the Company intends to
continue to upgrade the system by developing and/or purchasing new software to
handle new applications and additional demands of anticipated future growth.

Manufacturing Capacity. The Company primarily operates its manufacturing
----------------------
facilities on a one-shift, five day per week basis, however, partial or full
second shifts are in operation at five of its facilities. Management believes
that the Company could expand production within existing facilities without
substantial capital expenditures by increasing personnel on first and second
shifts. However, to meet anticipated growth for year 2000 and beyond, and to
lower production costs, the Company is currently planning for (1) a replacement
production facility for its Salem, VA upholstery plant on which construction
should begin in 1999; (2) an anticipated expansion in 2000 of its upholstery
plant in Poplar Bluff, MO; and (3) the purchase and/or construction of an
additional upholstery production facility, most likely in 2000. In December
1998, the new 265,000 sq. ft. production facility for Mitchell Gold was
completed and occupied. This facility has significant expansion capability which
the Company believes will be utilized over the next several years. Additional
capacity in Rowe's two frame facilities to handle growth, including the
potential manufacture of frames for Mitchell Gold, will be accomplished through
the addition of personnel and the purchase of capital equipment including
additional CNC routers.

Backlog. The Company generally manufactures its products in response to actual
-------
customer orders and typically ships the finished product within 30 days
following receipt of the related order, depending upon fabric availability.
Accordingly, the level of backlog at any particular time is limited, and is not
necessarily indicative of the level of future shipments. The Company's backlog
of unshipped orders was approximately $22 million as of November 29, 1998
compared to $14.4 million as of November 30, 1997. Year-end 1998 numbers include
the applicable backlog for Wexford and Mitchell Gold, both of which were not
included in 1997. The Company anticipates that 100% of the backlog as of
November 29, 1998 will be shipped in 1999.

Distribution. Rowe's products are primarily shipped to its customers through a
------------
dedicated carriage service with a nationally recognized truck leasing company.
Under this agreement, Rowe's products are delivered in accordance with Rowe's

                                       8
<PAGE>
 
specifications on a modern fleet of over-the-road tractors and trailers that
prominently display the Company's name. Management believes that this agreement
offers Rowe favorable terms, allows it to meet its delivery deadlines and
improves the Company's name recognition. This agreement has been recently
extended and it is anticipated that a new agreement will be executed in 1999.
West Coast shipments are provided by what management believes to be a favorable
arrangement for carriage of Rowe's products with a third party motor carrier.
International shipments of upholstered furniture are primarily shipped in full
containers utilizing third-party freight forwarders. Approximately 90% of Rowe's
fiscal year 1998 shipments were delivered under these arrangements. Both Wexford
and Mitchell Gold primarily ship product via common-carriers utilizing either
full or partial loads.

RAW MATERIALS

The raw materials used by the Company include fabrics, leather, lumber, plywood,
polyurethane foam, metal components, mattresses and finishing materials, and in
the case of Mitchell Gold, assembled frames. Other than lumber and fabric, all
raw materials used by the Company are generally available on an "as needed"
basis. The Company maintains what it believes to be an adequate supply of raw
materials in inventory.

The Company currently obtains its raw materials from a limited number of
suppliers, and in the case of hardwood plywood, primarily from a single
supplier. However, management does not believe the Company is dependent upon a
single supplier for any of its materials, as substitute suppliers are available.
Management believes that its sources of raw materials are adequate and that it
forms strong relationships with its suppliers and negotiates favorable prices
for its raw materials.

To improve quality, maximize the opportunities to implement labor saving
technology, hedge against the potential of rising wood costs and free up kiln
capacity, Rowe has increased the substitution of hardwood plywood for hardwood
in certain aspects of the construction of its furniture frames. Because plywood
construction is less labor-intensive, and in many respects more structurally
sound than hardwood construction, this method has improved product quality while
helping to reduce overall cost.

GOVERNMENTAL REGULATIONS AND ENVIRONMENTAL CONSIDERATIONS

The Company's operations are required to meet federal, state and local
regulatory standards in the areas of safety, health and environmental pollution
controls. Historically, compliance with these standards has not had a material
adverse effect on the Company's operations. Management believes that the
Company's plants are in compliance in all material respects, with applicable
federal, state and local laws and regulations concerned with safety, health and
environmental protection.

The Company currently anticipates increased federal and state environmental and
health and safety regulations affecting the furniture industry, particularly
regarding emissions from paint and finishing operations and wood dust levels in
the 

                                       9
<PAGE>
 
manufacturing process. Any such additional regulations could affect the
Company's wood milling and finishing operations. The industry and its suppliers
are attempting to develop water-based finishing materials to replace commonly
used organic-based finishes which are a major source of regulated emissions. The
Company cannot at this time estimate the impact of any new regulations on the
Company's operations or the costs of compliance.

COMPETITION

The furniture industry is highly competitive and includes a large number of
manufacturers. The market in which the Company competes includes a large number
of manufacturers of upholstered and wood furniture. Certain of the Company's
competitors have greater financial resources than the Company. Management
believes that the high quality, design and competitive pricing of the Company's
products, the Company's reputation among retailers and the Company's commitment
to customer service have enabled the Company to compete successfully in this
market.

EMPLOYEES

As of November 29, 1998, the Company employed approximately 2,700 full-time
employees, of which 300 are in management, supervisory and sales positions. None
of the Company's employees are covered under a collective bargaining agreement.
The Company considers its employee relations to be good.

TRADEMARKS

The Company has registered its "Rowe", "A Whole New Way to Buy Furniture", "The
Rowe ShowPlace", "The ShowPlace Coordinated Home Furnishings by Rowe", "Rowe
First in Fashion", "Regency Manor", "The Rowe ShowMe Machine", "Limited
Editions" and "The ShowPlace" trademarks with the United States Patent and
Trademark Office. Applications for registration of the Company's "Cover Ups",
"Comfortable Stuff", "Comfortable Stuff by Rowe", "Mitchell Gold" "Robin Bruce"
and "Home Elements" trademarks are pending before the United States Patent and
Trademark Office. In connection with the Company's acquisition of J & M Designs,
Ltd., the Company also owns the "The Wexford Collection" and "The Wexford Group"
trademarks, which are registered with the United States Patent and Trademark
Office and the California Secretary of State. In addition, the Company has
certain of its trademarks registered in Australia, Canada and Mexico, and
applications for registration of certain of the Company's trademarks are pending
in Australia, Canada, Germany and the European Community. Management believes
that its trademark position is adequately protected in all markets in which the
Company does business. Management also believes that the Company's trade names
are recognized by dealers and distributors and are associated with a high level
of quality and value.

                                       10
<PAGE>
 
INSURANCE

The Company maintains what management believes is a complete liability and
property insurance program. Additionally, the Company maintains a self-insurance
program for that portion of health care costs not covered by insurance.

FINANCING

The Company utilizes bank financing to partially fund working capital
requirements, capital investments, a stock repurchase program, investments in
other companies and funding of acquisitions. In 1998, overall funding
requirements increased and the Company entered into a borrowing arrangement in
November 1998 in the form of a $25 million revolving loan. Beyond this
financing, the Company maintains committed credit lines in the amount of $40
million through four banks. At year-end 1998, the $25 million revolving loan was
fully utilized and $2.1 million of committed credit lines were outstanding.

The Company is currently negotiating an additional bank revolving credit
facility in anticipation of closing the acquisition of Storehouse in 1999. As
previously indicated, the Company has invested $2.5 million in Storehouse, a 42
store chain of furniture stores and, subject to Storehouse reaching certain
financial objectives for the year ending April 30, 1999, is committed to
purchase 100% of the outstanding shares of this company.

In conjunction with the purchase of Mitchell Gold, the Company guaranteed and
assumed responsibility for the $6.0 million Industrial Revenue Bond used to
finance the construction of a new production facility.

As a result of the $25 million revolving loan entered into in November 1998, the
previously indicated Industrial Revenue Bond for Mitchell Gold, new financing to
fund the anticipated purchase of Storehouse and increased working capital
requirements, interest expense in 1999 will significantly increase over the
level incurred in 1998.

GOODWILL

The Company recognized approximately $2.6 million in goodwill from the
acquisition of Wexford and approximately $10 million in goodwill from the
acquisition of Mitchell Gold. Additional goodwill will be incurred if the
Storehouse acquisition is completed in 1999. Given the timing of the
acquisitions in 1998 and the possible acquisition of Storehouse in 1999, the
charge to the Company in 1999 for goodwill will increase significantly.

                                       11
<PAGE>
 
ITEM 2.  PROPERTIES.

The following table sets forth certain information concerning the Company's
manufacturing facilities:

<TABLE>
<CAPTION> 
                                                                                             Approximate
                                                                                                 Size in
Location                                    Description                                      Square Feet
--------                                    -----------                                      -----------
<S>                                         <C>                                              <C>    
Salem, Virginia                             Administrative Office
                                            and Manufacturing                                    335,000
Salem, Virginia                             Manufacturing                                        241,000
Poplar Bluff, Missouri                      Manufacturing                                        300,000
Morehouse, Missouri                         Manufacturing                                        136,000
Carson, California                          Administrative Office
                                            and Manufacturing                                    103,000
Taylorsville, N. Carolina (2)               Administrative Office
                                            and Manufacturing                                    315,000
</TABLE> 

In addition, the Company leases executive offices in McLean, Virginia. The
Company considers its manufacturing and office facilities to be adequate and
well-maintained.

In addition to its manufacturing and office facilities, the Company owns the
following properties that are held for investment and are leased on a net basis:

<TABLE>
<CAPTION>
                                                                 Approximate
                               Lease                                 Size in
Location                       Expires            Description    Square Feet
--------                       -------            -----------    -----------
<S>                            <C>                <C>            <C> 
Christiansburg, Virginia       Various thru
                               02-28-02           Industrial         79,000*
Jessup, Maryland               Various thru       Office/
                               12-31-04           Industrial        180,000
Sylmar, California             03-31-04           Industrial        115,000
</TABLE> 

*12,000 square feet is currently leased

Investment properties located in Christiansburg, Virginia and Sylmar, California
were originally acquired by the Company between 1972 and 1985 for utilization as
manufacturing facilities. In past years, the Company ceased utilizing these
facilities for its own operations and determined that the best return on these
properties could be realized by leasing them to third parties. In February 1995,
the Company completed the sale of a 175,000 square foot warehouse in Sylmar,
California. The warehouse had been held by the Company as investment property.
The after-tax gain was approximately $3.0 million, net of lost rents during the
disposition period. In June of 1995, the Company purchased other rental
income-producing property in Jessup, Maryland to permit a "tax-deferred"
exchange with the proceeds realized from this transaction. A retail property
located in Leesburg, Florida, which was acquired in 1984, 

                                       12
<PAGE>
 
was sold during fiscal year 1997. In 1998, the value of the the investment
property in Christiansburg, Virginia was written down by $288,000 to more
appropriately reflect current value as new tenants have not been secured to
occupy leasable space. Aggregate rental income from investment properties, net
of commissions, was $1,422,000, $1,399,000 and $ 1,412,000 in 1996, 1997 and
1998, respectively.

ITEM 3.  LEGAL PROCEEDINGS.

There are no pending legal proceedings, other than routine litigation incidental
to the business of the Company. While the outcome of these routine legal
proceedings cannot be predicted with certainty, it is the opinion of management
that the resolution of these legal proceedings should not have a material
adverse effect on the Company's financial position.

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

No matter was submitted to a vote of security holders, through the solicitation
of proxies, or otherwise, during the quarter ended November 29, 1998.

                                       13
<PAGE>
 
                                    Part II

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

         (a)  The information contained under the caption "Stock Price and
Dividend Data" on page 20 in the Annual Report to Stockholders for the fiscal
year ended November 29, 1998 is included in Exhibit 13 hereto and incorporated
herein by reference.

         (b)  Approximate Number of Equity Security Holders.

                                       Approximate Number of Record
         Title of Class                Holders as of November 29, 1998
         --------------                -------------------------------

         Common Stock, par value                           1,000
         $1.00 per share

ITEM 6.  SELECTED FINANCIAL DATA.

The information contained under the caption "Five-year Summary" on page 8 in the
Annual Report to Stockholders for the fiscal year ended November 29, 1998 is
included in Exhibit 13 hereto and incorporated herein by reference.

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

The management's discussion and analysis of financial condition and results of
operations section on pages 9 and 10 of the Annual Report to Stockholders for
the fiscal year ended November 29, 1998 is included in Exhibit 13 hereto and
incorporated herein by reference.


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

INTEREST RISK DISCLOSURES

Because the Company's obligations under its 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 not have a material impact on earnings during the 1999
fiscal year.

FORWARD LOOKING INFORMATION

Certain portions of this report, and particularly the Notes to the Consolidated
Financial Statements and the Management's Discussion and Analysis of Financial
Condition and Results of Operations in Part II of this report and the portions
of Item II in Part I contain forward looking statements. These statements can be
identified by the use of future 

                                       14
<PAGE>
 
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.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The following information on pages 11 to 20 in the Annual Report to Stockholders
of the fiscal year ended November 29, 1998 is included in Exhibit 13 hereto and
incorporated herein by reference:

         Consolidated Balance Sheets - - November 29, 1998 and November 30, 1997

         Consolidated Statements of Income - -
           Years Ended November 29, 1998, November 30, 1997 and December 1, 1996

         Consolidated Statements of Stockholders' Equity - -
           Years Ended November 29, 1998, November 30, 1997 and December 1, 
           1996.

         Consolidated Statements of Cash Flows --
           Years Ended November 29, 1998, November 30, 1997 and December 1,
           1996.

         Notes to Consolidated Financial Statements (includes selected quarterly
           financial data)

         Report of Independent Certified Public Accountants

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

         None

                                       15
<PAGE>
 
                                   PART III

Notwithstanding anything below to the contrary, the Report of the Compensation
and Stock Option Committees and the Performance Graph contained on pages 13
through 15 of the Company's 1999 Annual Meeting Proxy Statement are not
incorporated by reference in this Form 10-K.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS.

The information required by Item 10 is contained in the Company's 1999 Annual
Meeting Proxy Statement and is incorporated herein by reference. Such Proxy
Statement will be filed with the Securities and Exchange Commission not later
than 120 days after the Company's fiscal year end.

ITEM 11.  EXECUTIVE COMPENSATION.

The information required by Item 11 is contained in the Company's 1999 Annual
Meeting Proxy Statement and is incorporated herein by reference. Such Proxy
Statement will be filed with the Securities and Exchange Commission not later
than 120 days after the Company's fiscal year end.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information required by Item 12 is contained in the Company's 1999 Annual
Meeting Proxy Statement and is incorporated herein by reference. Such Proxy
Statement will be filed with the Securities and Exchange Commission not later
than 120 days after the Company's fiscal year end.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by Item 13 is contained in the Company's 1999 Annual
Meeting Proxy Statement and is incorporated herein by reference. Such Proxy
Statement will be filed with the Securities and Exchange Commission not later
than 120 days after the Company's fiscal year end.

                                       16
<PAGE>
 
                                    PART IV

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

     (a)  1.   Financial Statements:

               The consolidated balance sheets as of November 29, 1998 and
               November 30, 1997 and the related consolidated statements of
               income, stockholders' equity, cash flows and notes to
               consolidated financial statements for each of the three years in
               the period ended November 29, 1998 together with the report of
               BDO Seidman, LLP dated January 8, 1999, appearing in the 1998
               Annual Report to Stockholders are incorporated herein by
               reference. The following additional financial data should be read
               in conjunction with the consolidated financial statements in such
               1998 Annual Report to Stockholders.

          2.   Financial Statement Schedules:

               Report of Independent Certified Public Accountants on Financial
               Statement Schedule. 

               Schedule II-Valuation and Qualifying Accounts.

               Schedules other than those listed above are omitted for the
               reason that they are not required or are not applicable, or the
               required information is shown in the consolidated financial
               statements and notes thereto.

          3.   Exhibits:

Exhibit
Number         Exhibit
------         -------
3.1            Articles of Incorporation of the Company (incorporated by
               reference to the Company's Registration Statement on Form S-1 No.
               33-74504 filed with the Securities and Exchange Commission on
               January 27, 1994)

3.2            By-laws of the Company (incorporated by reference to the
               Company's Registration Statement on Form S-1 No. 33-74504 filed
               with the Securities and Exchange Commission on January 27, 1994)

4              Specimen Stock Certificate (incorporated by reference to the
               Company's Registration Statement on Form 8-A filed with the
               Securities and Exchange Commission on January 5, 1994)

10.1           Rowe Furniture Corporation 1983 Stock Option and Incentive Plan
               (incorporated by reference to the Company's Registration
               Statement on Form S-1 No. 33-74504 filed with the Securities and
               Exchange Commission on January 27, 1994)

                                       17
<PAGE>
 
10.2           Rowe Furniture Corporation 1993 Stock Option and Incentive Plan
               (incorporated by reference to the Company's registration
               Statement on Form S-8 No. 2-94943 filed with the Securities and
               Exchange Commission on October 18, 1993)

10.3           Rowe Furniture Corporation Merged 401(k) and Employee Stock
               Ownership Plan dated December 1, 1991 (incorporated by reference
               to the Company's Registration Statement on Form S-1 No. 33-74504
               filed with the Securities and Exchange Commission on January 27,
               1994)

10.4           Rowe Furniture Corporation Amended and Restated Supplemental
               Executive Retirement Plan II (incorporated by reference to the
               Company's Registration Statement on Form S-1 No. 33-74504 filed
               with the Securities and Exchange Commission on January 27, 1994)

10.5           Employment Agreement dated December 6, 1984 between the Company
               and Mr. Harvey I. Ptashek (incorporated by reference to the
               Company's Registration Statement on Form S-1 No. 33-74504 filed
               with the Securities and Exchange Commission on January 27, 1994)


10.6           Employment Agreement dated December 5, 1985 between the Company
               and Mr. Arthur H. Dunkin (incorporated by reference to the
               Company's Registration Statement on Form S-1 No. 33-74504 filed
               with the Securities and Exchange Commission on January 27, 1994)

10.7           Rowe Furniture Corporation Cash-or-Deferred Non-Qualified
               Executive Retirement Plan (incorporated by reference to the
               Company's Form 10-K filed with the Securities and Exchange
               Commission on February 27, 1995)

10.8           Employment Agreement dated February 2, 1998 between the Company
               and Mr. Gerald M. Birnbach (incorporated by reference to the
               Company's Form 10-K filed with the Securities and Exchange
               Commission on February 12, 1998)

13             Portions of the Annual Report for the year ended November 29,
               1998
               
21             List of Subsidiaries

23             Consent of BDO Seidman, LLP

27             Financial Data Schedule

          (b)  Reports on Form 8-K.

         On November 16, 1998, a Form 8-K was filed reporting that on October
30, 1998, Rowe Furniture Corporation (the "Company") completed its acquisition
of The

                                       18
<PAGE>
 
Mitchell Gold Co., Inc. ("MGC") pursuant to the Stock Purchase Agreement dated
September 25, 1998, among the Company, MGC, and the two stockholders of MGC,
Mitchell S. Gold and Robert T. Williams, Jr. (the "Agreement"), The acquisition
was effected through the purchase by the Company of all the issued and
outstanding shares of the capital stock of MGC from Mr. Gold and Mr. Williams in
exchange for a purchase price consisting of (i) an initial payment of $13
million, comprised of (1) $10 million in cash and (2) $3 million of convertible
debentures, (ii) an interim earn-out amount, if earned of $5 million and (iii) a
long-term earn-out amount, if earned, up to a maximum of $19 million (total 
maximum purchase price $32 million). The Agreement was included as an exhibit to
the Company's Current Report on Form 8-K filed on October 7, 1998. The Company
funded the $10 million cash portion of the initial payment by drawing upon an
existing line of credit made in the ordinary course of business by a bank. MGC,
a manufacturer of upholstered furniture, is now operated as a wholly-owned
subsidiary of the Company.

     On January 14, 1999, a Form 8K/A was filed reporting that as previously
reported, on October 31, 1998, Rowe Furniture Corporation (the "Company")
completed its acquisition of The Mitchell Gold Co., Inc. ("MGC") pursuant to the
Stock Purchase Agreement, dated September 25, 1998. Pursuant to the requirements
of the Securities and Exchange Act of 1934, the Registrant amended Item 7.
Financial Statements and Exhibits of its Report on Form 8-K dated October 31,
1998 to include the financial statements and pro forma financial information
required as part of this item as a exhibit to the amendment to the Company's
Report on Form 8-K dated October 31, 1998 to include the following items: (1)
Pro Forma Financial Statements (Unaudited), Pro Forma Combined Financial
Statements - Introduction, Pro Forma Combined Balance Sheet as of August 30,
1998, Pro Forma Combined Statement of Income for the nine months ended August
30, 1998, Pro Forma Combined Statement of Income for the year ended November 30,
1997, Notes to Pro Forma Combined Financial Statements. (2) The Mitchell Gold
Co. - Audited Financial Statements and Notes to Audited Financial Statements,
Independent Accountants' Report, Balance Sheets as of April 30, 1998 and 1997,
Statements of Income for the years ended April 30, 1998 and 1997, Statements of
Retained Earnings for the years ended April 30, 1998 and 1997, Statements of
Cash Flows for the years ended April 30, 1998 and 1997, Summary of Accounting
Policies, Notes to Financial Statements and (3) The Mitchell Gold Co. Unaudited
Financial Statements, Balance Sheets as of August 30, 1998 and 1997 (Unaudited),
Statements of Income for the four months ended August 30, 1998 and 1997
(Unaudited), Statements of Cash Flows for the four months ended August 30, 1998
and 1997 (Unaudited).

                                       19
<PAGE>
 
                                  SIGNATURES


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

                                   ROWE FURNITURE CORPORATION


                                   By: /s/ ARTHUR H. DUNKIN
                                      ----------------------------------  
February 19, 1999                      A. H. Dunkin, Secretary-Treasurer

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

Signature                       Title                               Date
---------                       -----

                              Chairman of the Board
/s/ GERALD M. BIRNBACH        President, Director             February 19, 1999
------------------------
G. M. Birnbach                (Principal Executive Officer)


/s/ RICHARD E. CHENEY         Director                        February 19, 1999
------------------------
R. E. Cheney


                              Secretary-Treasurer, Director
/s/ ARTHUR H. DUNKIN          (Principal Financial and        February 19, 1999
------------------------
A. H. Dunkin                  Accounting Officer)


/s/ HARVEY I. PTASHEK         Director                        February 19, 1999
------------------------
H. I. Ptashek

                                       20
<PAGE>
 
/s/ CHARLES T. ROSEN          Director                      February 19, 1999
-----------------------
C. T. Rosen


/s/ KEITH J. ROWE             Director                      February 19, 1999
-----------------------
K. J. Rowe


/s/ SIDNEY J. SILVER          Director                      February 19, 1999
-----------------------
S. J. Silver


/s/ ALLAN TOFIAS              Director                      February 19, 1999
-----------------------
Allan Tofias


/s/ GERALD O. WOODLIEF        Director                      February 19, 1999
-----------------------
G. O. Woodlief

                                       21
<PAGE>
 
              REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
                        ON FINANCIAL STATEMENT SCHEDULE

Rowe Furniture Corporation
Salem, Virginia

The audits referred to in our report dated January 8, 1999, relating to the
consolidated financial statements of Rowe Furniture Corporation, which is
contained in Item 8 of this Form 10-K (incorporated in Item 8 of the Form 10-K
by reference to the annual report of stockholders for the year ended November
29, 1998) included the audit of the financial statement schedule listed in the
accompanying index. The financial statement schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion on the
financial statement schedule based upon our audits.

In our opinion such financial statement schedule presents fairly, in all
material respects, the information set forth therein.

High Point, North Carolina                                /s/ BDO SEIDMAN, LLP
                                                          --------------------
January 8, 1999                                           BDO SEIDMAN, LLP

                                       22
<PAGE>
 
                          ROWE FURNITURE CORPORATION
                               AND SUBSIDIARIES

                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

 FOR THE YEARS ENDED NOVEMBER 29, 1998, NOVEMBER 30, 1997 AND DECEMBER 1, 1996

                            (Thousands of Dollars)
<TABLE> 
<CAPTION> 
     COL. A                      COL. B                     COL. C                           COL. D                     COL. E
------------------------------------------------------------------------------------------------------------------------------------
                                                               ADDITIONS
                                                  ---------------------------------------
                                                              (1)             (2)
                                                                                 CHARGED TO
                                BALANCE AT CHARGED TO       CHARGED TO                OTHER                           BALANCE AT
                                 BEGINNING COSTS AND         COSTS AND             ACCOUNTS          DEDUCTIONS -         END OF
DESCRIPTION                      OF PERIOD EXPENSES           EXPENSES           (DESCRIBE)          (DESCRIBE)           PERIOD
------------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>                        <C>                  <C>                 <C>                  <C>      
Allowance for doubtful
Accounts - 1998             $               316        $       (1,285)      $             -     $     (1,844)(A)     $       875
                                                                                                               
Allowance for doubtful
Accounts - 1997             $               300        $        3,918       $             -     $       3,902(B)     $       316

Allowance for doubtful
Accounts - 1996             $               300        $          490       $             -     $         490(C)     $       300
</TABLE> 
                                                  
(A)  Accounts charged off less bad debt recoveries of $1,980,000

(B)  Accounts charged off less bad debt recoveries of $274,000

(C)  Accounts charged off less bad debt recoveries of $69,000