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                                 UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-K

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

For the fiscal year ended         DECEMBER 31, 1998 
                          -----------------------------------------------------

|_|    TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
       EXCHANGE ACT OF 1934 [No Fee Required]

For the transition period from_____________________ to _______________________

Commission file number             0-25246
                      ---------------------------------------------------------

                            WINSLOEW FURNITURE, INC.
             (Exact name of registrant as specified in its charter)

               FLORIDA                                        63-1127982
    (State or other jurisdiction                           (I.R.S. Employer
  of incorporation or organization)                       Identification No.)

160 VILLAGE STREET, BIRMINGHAM, ALABAMA                           35242
(Address of principal executive offices)                        (Zip Code)

      (Registrant's telephone number, including area code) (205) 408-7600

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

                                      NONE

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

                                                       Name on Each Exchange
      Title of Each Class                              on Which Registered
      -------------------                              ---------------------
        COMMON STOCK,
    $.01 PAR VALUE PER SHARE                          NASDAQ NATIONAL MARKET

         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 shares of Common Stock held by
non-affiliates of the registrant as of March 1, 1999, was approximately
$110,537,892 based on a $27.00 closing sale price for the Common Stock quoted
on the Nasdaq National Market System on such date. For purposes of this
computation, all executive officers, directors, and 5% beneficial owners are,
in fact, affiliates of the registrant.

         The number of shares of Common Stock, $.01 par value per share, of the
registrant outstanding as of March 1, 1999, was 7,181,908.

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                                 INDEX TO ITEMS

                                                                           Page
                                                                           ----

PART I

   ITEM 1.  Business......................................................... 3
   ITEM 2.  Properties.......................................................15
   ITEM 3.  Legal Proceedings................................................16
   ITEM 4.  Submission of Matters to a Vote of Security Holders..............16

PART II

   ITEM 5.  Market for the Registrant's Common Equity and Related 
              Stockholder Matters............................................17
   ITEM 6.  Selected Financial Data..........................................18
   ITEM 7.  Management's Discussion and Analysis of Financial Condition 
             and Results of Operations.......................................20
   ITEM 7A. Quantitative and Qualitative Disclosures About 
              Market Risk....................................................25
   ITEM 8.  Financial Statements and Supplementary Data......................26
   ITEM 9.  Changes in and Disagreements with Accountants on 
             Accounting and Financial Disclosure.............................45

PART III

   ITEM 10.  Directors and Executive Officers of the Registrant..............46
   ITEM 11.  Executive Compensation..........................................49
   ITEM 12.  Security Ownership of Certain Beneficial Owners and Management..53
   ITEM 13.  Certain Relationships and Related Transactions..................56

PART IV

   ITEM 14.  Exhibits, Financial Statement Schedules, and Reports 
               on Form 8-K...................................................57
   Signatures................................................................61


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                                     PART I

ITEM 1. BUSINESS

GENERAL

         WinsLoew designs, manufactures and distributes casual furniture,
contract seating and ready-to-assemble ("RTA") furniture.

         BUSINESS

         CASUAL FURNITURE. WinsLoew designs, manufactures and distributes
casual furniture for both the residential and contract markets. WinsLoew
constructs its residential products of extruded and tubular aluminum, wrought
iron and cast aluminum. WinsLoew marketed its residential products through
independent sales representatives primarily to specialty patio stores and
furniture stores. WinsLoew constructed its contract products of extruded,
tubular and cast aluminum, steel, wrought iron, wood and fiberglass. WinsLoew
marketed its contract products primarily through its in-house sales force,
primarily to apartment developers and management companies, hospitality
providers (hotel, motel, restaurants, country clubs and resorts), architectural
design firms, and city and state municipalities.

         CONTRACT SEATING. WinsLoew designs, and distributes contract seating
products constructed of contemporary, traditional and transitional styles of
wood and metal. Products include upholstered chairs, sofas and love seats
offered in a variety of finish and fabric options. WinsLoew designs its
contract seating products for use in the restaurant, lodging, office,
healthcare facilities and retail stores. WinsLoew assembles these products
pursuant to specific orders and distribute them to a broad customer base, which
includes architectural design firms, office furniture dealers, and restaurant
and lodging chains through independent sales organizations.

         RTA FURNITURE. WinsLoew's RTA products consist of promotionally priced
RTA "spindle" and "flatline" furniture and fully assembled case goods furniture
designed for household use. Products include corner spindle units, four drawer
chests, three drawer changing towers, coffee tables, end tables, entertainment
centers and tape storage units. Distribution is through mass merchants and
catalog wholesalers.

         HISTORY

         MERGER OF WINSTON AND LOEWENSTEIN. WinsLoew was formed in December
1994 through the merger of Winston Furniture Company, Inc. ("Winston") and
Loewenstein Furniture Group, Inc. ("Loewenstein") with and into WinsLoew, a
newly-formed corporation that was formed for the purpose of the merger. As a
result of the merger, (i) each outstanding share of Winston common stock was
converted into 1.00 shares of WinsLoew Common Stock, and each outstanding share
of Loewenstein common stock was converted into 1.05 shares of WinsLoew Common
Stock.

         WINSTON HISTORY. Winston, a designer, manufacturer and distributor of
casual furniture for both the residential and contract markets, began business
in October 1975 as a division of Marathon Corporation. In March 1986, Winston
management and certain other investors acquired the aluminum furniture business
of that division in a leveraged buyout. Winston acquired the wrought iron and
tubular steel furniture business of the Lyon-Shaw, Inc. a division of B.B.
Walker Company ("Lyon Shaw"), in November 1986. In August 1987, Winston
competed an initial public offering of its shares. In December 1988, Winston
management, other employees and affiliates of the Trivest Partnerships
purchased Winston in a leveraged buyout. Following the December 1988 buyout,
Winston expanded its manufacturing facilities, focused on its core business and
reduced its outstanding indebtedness. In February 1993, Winston competed its
initial public offering and used the net proceeds received therefrom to further
reduce outstanding indebtedness. In September 1994, Winston acquired
substantially all of the assets of Texacraft, Inc., a Texas corporation
("Texacraft"), which was a privately held manufacturer of aluminum furniture
for the contract market.


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         LOEWENSTEIN HISTORY. Loewenstein, Inc. was founded in 1967 and
acquired in February 1985 by Atlantis Plastics, Inc., a publicly-traded
plastics company and an affiliate of the Trivest Partnerships. In 1987 and
1988, Atlantis acquired (i) Southern Wood Products, Inc. ("Southern Wood"), a
manufacturer of promotionally priced RTA furniture; (ii) Gregson Furniture
Industries, Inc. ("Gregson"), a manufacturer of traditional and transitional
styled seating for the office and institutional markets; and (iii) Excel Office
and Contract, Inc. ("Excel"), a manufacturer of contemporary and traditional
styled seating for the office furniture market. Loewenstein, Inc., Southern
Wood, Gregson and Excel represented the furniture group of Atlantis (the
"Atlantis Furniture Group"). In April 1991, former management and employees of
the Atlantis Furniture Group and certain affiliates of the Trivest Partnerships
formed Loewenstein, which concurrently therewith purchased the Atlantis
Furniture Group. In September 1993, Loewenstein completed its initial public
offering of Loewenstein common stock and used the net proceeds to retire
substantially all of its outstanding indebtedness and for working capital. In
November 1993, Loewenstein acquired substantially all of the assets of
Shaffield Industries, Inc., a Tennessee corporation, and certain of its
affiliates (collectively, "Shaffield"). The assets acquired consisted of
substantially all of the assets used by Shaffield in its business as a
vertically-integrated manufacturer of RTA furniture, including futons, chairs,
tables and related accessories marketed under the trademark FROM THE SOURCE. In
February 1994, Loewenstein acquired New West Industries, a California
corporation ("New West"). New West was a manufacturer of RTA furniture,
including futons, chairs and related accessories.

         RECENT DEVELOPMENTS

         SALE OF EXCEL. During the fourth quarter of 1995, WinsLoew disposed of
the assets of its Excel business.

         SALE OF LYON SHAW. During the third quarter of 1997, WinsLoew disposed
of certain assets of its Lyon Shaw wrought iron furniture manufacturing
business in the casual furniture product line.

         TROPIC CRAFT ACQUISITION. During the third quarter of 1998, WinsLoew
acquired the stock of Villella, Inc. d.b.a. Tropic Craft Aluminum Furniture
Manufacturers ("Tropic Craft"), a manufacturer of aluminum casual furniture
sold into contract markets.

         POMPEII ACQUISITION. During the fourth quarter of 1998, WinsLoew
entered into a Stock Purchase Agreement with the shareholders of Miami Metal
Products, Inc. d.b.a. Pompeii Furniture Industries, a manufacturer of aluminum
casual furniture sold into contract and residential markets. The closing of the
Pompeii acquisition is expected to occur in the second quarter of 1999, once
certain conditions related to the Pompeii facility are met by the selling
shareholders.

         RTA OPERATIONS. During 1997, WinsLoew adopted a plan to dispose of its
"RTA" operations and recorded a pretax non-cash charge totaling $12.4 million
in the fourth quarter of 1997 relating to the disposal of the "RTA" operations.
During 1998, WinsLoew sold its equity interest in the Continental Engineering
subsidiary. In addition, WinsLoew liquidated the assets related to its New West
futon business. WinsLoew subsequently decided to retain its third "RTA" entity
(Southern Wood) due to improved profitability and, accordingly, has reclassed
its Southern Wood results to continuing operations.

         Reference is made to Note 2 of the Company's Consolidated Financial
Statements for additional information with respect to the Company's
discontinued operations, acquisitions and dispositions, including the completed
Tropic Craft acquisition.

         GOING PRIVATE TRANSACTION. On March 5, 1999, WinsLoew and Trivest 
Furniture Corporation (the "Purchaser"), a Florida corporation formed by Earl 
W. Powell of Trivest, Inc., who is also the Chairman of WinsLoew's Board of 
Directors, entered into an Agreement and Plan of Merger (the "Merger 
Agreement"), pursuant to which Mr. Powell, certain investment partnerships 
affiliated with Trivest, Inc. and certain members of WinsLoew's senior 
management will acquire WinsLoew in a merger transaction. Pursuant to the 
Merger Agreement, (i) the Purchaser will merge with and into WinsLoew (the 
"Merger"), with WinsLoew as the surviving corporation, (ii) each outstanding 
share of WinsLoew common stock (other than shares held by the Purchaser) will 
be converted into the right to receive $30.00 per share in cash, and (iii) each 
outstanding option to purchase WinsLoew common stock will be canceled and the 
holder thereof will receive a cash payment equal to the difference between $30 
and the exercise price of such option (collectively, the "Transactions"). The 
Merger Agreement was approved by a special committee of WinsLoew's Board of 
Directors acting on, among other things, an oral opinion received from its 
financial advisor, Mann, Armistead & Epperson, Ltd., Richmond, Virginia, that 
the Merger consideration is fair to WinsLoew's shareholders from a financial 
point of view. Consummation of the Merger and the other Transactions is 
subject, among other things, to (i) the approval of holders of a majority of 
the outstanding shares of WinsLoew's common stock, (ii) the receipt of the 
written fairness opinion of Mann, Armistead & Epperson, Ltd., (iii) the 
Purchaser obtaining adequate financing, and (iv) compliance with applicable 
regulatory and governmental requirements. Accordingly, there can be no 
assurance that the Merger will be consummated.

PRODUCT LINES

         WinsLoew has three principal product lines (Casual Furniture, Contract
Seating and RTA Furniture) that are produced or distributed in 8 manufacturing
locations as follows:


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<TABLE>
<CAPTION>


Division and Location            Principal Products                            Principal Customers
---------------------            ------------------                            -------------------

<S>                              <C>                                           <C>
CASUAL FURNITURE:

Winston                          Residential casual furniture constructed      Specialty patio stores and furniture
Haleyville, Alabama              of aluminum                                   stores
(2 locations)

Texacraft                        Contract casual furniture constructed of      Apartment developers and management
Houston, Texas                   aluminum, wrought iron, wood and              companies, hospitality providers and
                                 fiberglass                                    manufactures

Tropic Craft                     Contract casual furniture constructed of      Apartment developers and management
Ocala, Florida                   aluminum, wrought iron, wood and              companies, hospitality providers and
                                 fiberglass                                    manufactures

Winston International            Imported residential casual furniture         Specialty patio stores, department
Haleyville, Alabama              constructed of cast aluminum and wrought      stores and furniture stores
                                 iron

CONTRACT SEATING:

Loewenstein                      Contemporary, transitional and                Architectural design firms,
Pompano Beach, Florida           traditional seating for hospitality,          restaurant and lodging chains, office
                                 office and other institutional uses           furniture dealers and retail store
                                                                               planners

Gregson                          Traditional office and other                  Office furniture dealers and lodging
Liberty, North Carolina          institutional seating                         chains

RTA FURNITURE:

Southern Wood                    Promotional RTA furniture                     Mass merchandisers and catalog
Sparta, Tennessee                                                              wholesalers
(2 locations)

</TABLE>


COMPETITIVE STRENGTHS

         WinsLoew believes that it has the following competitive strengths.

         CASUAL FURNITURE

         Management attributes its historical success in the casual furniture
product line to its: (i) commitment to producing a quality product delivered
"in time and on time", (ii) emphasis on providing extensive customer service,
(iii) cost-efficient manufacturing operations, (iv) innovatively styled
products and merchandising programs, and (v) results-oriented management, team
philosophy and culture. Management believes that WinsLoew can continue the
growth it has experienced in the casual furniture line by capitalizing on its
existing distribution channels, manufacturing capabilities and reputation for
quality and customer service. Specifically, WinsLoew intends to grow in its
existing market through: (i) continued leadership in new products and
merchandising programs, (ii) expanding existing market penetration, (iii)
broadening distribution channels, and (iv) developing off season products for
its distribution channel and other channels.


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         CONTRACT SEATING

         WinsLoew is committed to providing value to its contract seating
customers by offering innovative designs, a broad range of high quality
products at competitive prices and responsive customer service with quick and
timely delivery. WinsLoew ensures that its products provide both superior
structural integrity and aesthetic styling through its adherence to strict
manufacturing and quality control standards and through its long-standing and
frequently exclusive relationships with a number of leading Italian designers
and manufacturers. These suppliers have extensive experience in the design,
engineering and production of contemporary and transitional-styled chairs. The
suppliers use steam-bending of solid wood components, intricate joinery and
other sophisticated manufacturing techniques generally unavailable in the
United States. In addition, WinsLoew's electrostatically applied, ultraviolet
cured wood finishing system produces one of the most consistent, durable and
vibrant finishes in the industry. The system also increases manufacturing
efficiency and reduces waste and air emissions. WinsLoew's commitment to
providing high levels of customer service is also typified by its policies of
paying freight charges if a guaranteed shipping date is missed and, under its
"Quick Ship" program, guaranteeing shipment of a significant portion of its
product line within 10 working days from receipt of a customer's order.

         WinsLoew offers a broad selection of wood, metal and upholstered
chairs, sofas and love seats designed for restaurant, lodging, office and other
institutional uses, with prices generally ranging from $150 to $550. WinsLoew's
custom design capabilities also allow it to modify styles, materials and
production in order to provide customers with products that meet particular
specifications. WinsLoew's strategy of offering a broad selection of product
styles and price ranges provides it with access to distribution channels
serving a variety of end users, including restaurants, hotels, healthcare
facilities, retail store planners, corporate offices, schools, sports
facilities, airport lounges and cruise lines.

         RTA FURNITURE

         WinsLoew's RTA furniture product line consists of promotionally priced
RTA products sold directly to mass merchandisers and catalog wholesalers under
the Southern Wood name. Southern Wood's low cost structure is based on its use
of inexpensive raw materials, its relatively low labor rates and its use of
equipment to achieve manufacturing efficiencies. WinsLoew believes that its
focused price strategy and its ability to quickly introduce and begin
manufacturing new products will allow the Company to maintain or increase its
market share.

BUSINESS STRATEGY

         CASUAL FURNITURE

         The business strategy of the casual division emphasizes the following
elements:

         EXPANSION OF SALES AND MARKET SHARE. WinsLoew's growth objectives for
the casual furniture line are primarily focused on areas where WinsLoew can
expand into new distribution channels, as well as capitalize on its existing
distribution channels, manufacturing capabilities and reputation for quality
and customer service, including: (i) new product introductions in WinsLoew's
extruded and tubular aluminum and International divisions, (ii) expansion into
new geographic areas, and (iii) increased sales to commercial customers such as
hotels, restaurants, country clubs, interior designers and apartment and hotel
developers.

         PROVIDE VALUE TO CUSTOMERS. WinsLoew is committed to providing value
to its retailing customers by designing and manufacturing high quality,
competitively priced products and responding to its customers' needs for "in
time and on time" delivery. WinsLoew maintains a strong customer service
orientation that is typified by its PDQ shipping program, where WinsLoew either
ships within 15 business days after credit approval or pays for the freight
costs. Quick delivery is particularly important to casual furniture retailers
because of the short selling season and the retailer's general desire to
minimize inventory levels. Another principal component of WinsLoew's marketing
strategy is its focus on special sales programs for customers. These programs
also reduce the effects of seasonality on WinsLoew's operations and minimize
WinsLoew's finished good inventory.



                                      6


<PAGE>   7

         COMMITMENT TO PRODUCT DEVELOPMENT. Management believes that the high
fashion style and variety of WinsLoew's casual furniture designs provide a
strong competitive advantage and WinsLoew therefore devotes significant
resources to new product development and introductions.

         COMMITMENT TO INDUSTRY LEADERSHIP. WinsLoew strives to establish a
reputation in the casual furniture and contract seating manufacturing industry
of superior products and service. For example, WinsLoew received the
prestigious "Manufacturer Leadership Award" for 1998 given by the Casual
Furniture Retailers Association. The Company has received this award three
times since its inception in 1990, when WinsLoew was the first recipient. The
award is voted upon by members of the Casual Furniture Retailers Association,
and the criteria include service, quality, ethics and product design, among
others. WinsLoew has been a finalist for the award every year.

         ENHANCED USE OF MANUFACTURING CAPABILITIES, WinsLoew operates
approximately 205,000 square feet of manufacturing space for casual furniture
products and produces most of such products from basic raw materials using
strict quality control measures. WinsLoew's vertical integration permits
WinsLoew to: (i) produce a variety of chairs, tables and other furniture
products, (ii) manufacture cushions and (iii) cut and assemble the fabric
covers that are combined with preassembled poles to produce outdoor umbrellas.
WinsLoew also maintains strict cost containment measures in order to ensure
that its products are manufactured in a cost-efficient manner.

         DEVELOP OR ACQUIRE COMPLEMENTARY PRODUCT LINES. WinsLoew continues to
seek opportunities to develop or acquire complementary product lines in order
to capitalize on its existing distribution channels, manufacturing capabilities
and reputation for quality and customer service.

         CONTRACT SEATING

         The business strategy of the contract seating division emphasizes the
following elements:

         HISTORICAL BASE BUSINESS. WinsLoew has historically concentrated its
base contract seating business on its project driven core seating market.
WinsLoew has based its growth in this market on its manufacturing capabilities
and its reputation for quality and customer service. Examples of programs which
have increased sales in this business are the Company's custom design services
and its Quick Ship program.

         LODGING BUSINESS. The Company supplies various seating products for
hotel rooms and common areas for lodging chains. The Company has based its
growth in this market on its reputation for quality, delivery and service.

         PRIVATE LABEL PROGRAM. WinsLoew offers a "private label" program
through which contract seating products are marketed to nationally recognized
designers and manufacturers of office furniture systems. WinsLoew believes that
its success in generating private label business is primarily attributable to
its proven ability to produce a quality product on short lead time, its
state-of-the-art finishing capabilities, its competitive prices and the direct
involvement of its senior executives in private label marketing.

         DEVELOP OR ACQUIRE COMPLEMENTARY PRODUCT LINES. WinsLoew continues to
seek opportunities to develop or acquire complementary product lines in order
to capitalize on its existing distribution channels, manufacturing capabilities
and reputation for quality and customer service.

         RTA FURNITURE

         The business strategy of the RTA division emphasizes the Company's
manufacturing flexibility and capabilities in order to broaden its line of
promotionally priced products. As a "niche player" in the RTA business, which
is dominated by several national large manufacturers and is experiencing a
trend toward consolidation, WinsLoew has positioned its RTA business to
manufacture and distribute products larger manufacturers do not emphasize. This
has broaden the Company's product line from just "spindle" products to
currently include both "flatline" and case goods.


                                       7

<PAGE>   8


PRODUCTS

         WinsLoew designs, manufactures and distributes three principal product
lines: (i) casual furniture for both the residential and contract markets; (ii)
contract seating designed for restaurant, lodging, office or other general
institutional use; and (iii) promotionally priced "RTA" furniture designed for
household use.

         CASUAL FURNITURE

         WinsLoew's casual furniture products for residential use consist
principally of medium to upper-medium priced indoor and outdoor furniture sold
under five brand names: "Winston" residential extruded and tubular aluminum
furniture, "Texacraft" contract casual furniture, "Tropic Craft" contract
casual furniture and "Winston International" imports casual furniture. WinsLoew
currently manufactures and sells numerous residential style collections that
include traditional, European, and contemporary design patterns. Within each
style collection there are multiple products including chairs, tables, chaise
lounges and accessory pieces such as ottomans, cocktail tables, end tables, tea
carts and umbrellas. WinsLoew offers extruded and tubular aluminum with glider
action, adjustable positions and rocking and swivel motions. WinsLoew's casual
seating products feature cushions and vinyl strapping in a variety of colors
and patterns. All of WinsLoew's casual furniture products feature a durable
painted finish, which is also offered in a wide selection of colors. The
suggested retail prices for a residential table and four chairs currently range
from approximately $600 to $1,400.

         WinsLoew's casual contract products include chairs, chaise lounges,
tables and umbrellas constructed of extruded, tubular and cast aluminum, steel,
wrought iron, wood and fiberglass. WinsLoew's casual contract products include
a selection of restaurant and outdoor seating and site furnishings. WinsLoew
markets casual contract products through Company employees and independent
sales representatives, primarily to apartment developers and management
companies, hospitality providers (hotel, motel, restaurants, country clubs, and
resorts), architectural design firms and city and state municipalities.

         WinsLoew continually reviews and evaluates its casual furniture
designs, and annually adds and discontinues designs it deems appropriate.
WinsLoew identifies trends in shapes, colors and patterns through independent
research, contacts with WinsLoew's dealers and the occasional use of
independent designers. Management also solicits opinions from its
manufacturer's representatives, dealers and employees prior to final design
selection. WinsLoew has generally replaced or modified approximately one-third
to one-half of its casual furniture product lines annually. The costs of
implementing these annual changes have historically included certain: (i)
research and development costs; (ii) capital expenditures for tooling; and
(iii) advertising and catalog expenses. Shipments of WinsLoew's new designs
generally begin in September of each year.

         CONTRACT SEATING

         WinsLoew's contract seating products (other than the casual contract
products described above) include wood, metal and upholstered chairs, as well
as reception area love seats and sofas. WinsLoew's broad product line consists
of numerous distinct models of chairs in contemporary, traditional and
transitional styles. WinsLoew's general merchandising strategy for contract
seating is to provide innovative seating products that are practical,
comfortable, sturdy and moderately priced.

         WinsLoew assembles wood frames and finishes them with one of
WinsLoew's numerous standard colors or, if requested, to the customer's
specification. WinsLoew's metal chairs are available in chrome or in a
selection of standard powder coat finishes. For upholstered products, the
customer may select from a number of catalog fabrics, vinyls and leathers or
may specify or supply its choice of materials. WinsLoew maintains an inventory
of unassembled chair components that enables it to respond quickly to large
quantity orders in a variety of finish and fabric combinations. See
"--Manufacturing."

         WinsLoew believes that an important element of its success in the
contract seating business is its long-standing and frequently exclusive
relationships with leading Italian design firms, as well as its proven ability

                                       8
<PAGE>   9


to offer innovative products that are sturdy, aesthetically appealing and
scaled for the United States market. WinsLoew bases this belief upon its
extensive industry experience and discussions with key customers, sales
representatives and competitors. WinsLoew continually reviews and reconsiders
its contract furniture designs, and annually adds and deletes designs as it
deems appropriate to address perceived marketing opportunities. WinsLoew
generally begins the design process by identifying marketing needs and
conceptualizing product ideas through regular meetings of its senior management
team. Reflecting its focus on both sales and manufacturing, WinsLoew also
solicits opinions with respect to trends in styles, colors and other design
elements from its sales representatives, customers, and employees prior to
final design selection. WinsLoew provides preliminary sketches to either
WinsLoew's manufacturing personnel or WinsLoew's European suppliers, who in
turn engineer the product's construction and produce one or more prototypes in
preparation for actual full-scale production. WinsLoew generally introduces new
products at national or regional furniture markets. WinsLoew's custom design
capabilities also allow it to modify styles, materials and production in order
to provide customers with products that meet their particular needs.

         RTA FURNITURE

         WinsLoew's RTA products include promotionally priced RTA "spindle" and
"flatline" furniture and fully assembled case goods furniture products designed
for household use. WinsLoew's promotionally priced "spindle" products include
ready to assemble items such as coffee tables, end tables, wall units and
rolling carts. "Flatline" products include ready to assemble items such as book
shelves, entertainment centers and tape storage units. Case goods products
include fully assembled four drawer chests and three drawer chest and changing
towers, with an optional hutch.

         WinsLoew's "spindle" and "flatline" products are sold in a box that
contains all components and hardware necessary for home-assembly. Case goods
are sold fully assembled and packaged, offering consumers a promotionally
priced alternative for household furniture.

MANUFACTURING

         CASUAL FURNITURE

         WinsLoew has manufacturing facilities for casual furniture products in
Haleyville, Alabama; Houston, Texas; and Ocala, Florida. The facilities in
Haleyville manufacture extruded and tubular aluminum casual furniture and most
related accessories, including cushions and umbrellas. In the Houston facility,
the Company manufactures extruded and tubular aluminum. In the Ocala facility,
the Company manufactures extruded and tubular aluminum, steel and wood
furniture. WinsLoew's goal at its facilities is to produce a high quality
product at the lowest possible manufacturing cost and deliver it in a timely
manner to dealers. WinsLoew's international products are manufactured in
Mexico. See "--Marketing and Sales."

         WINSTON DIVISION - HALEYVILLE, ALABAMA. WinsLoew's aluminum furniture
manufacturing facility in Haleyville manufactures goods exclusively to order.
WinsLoew normally ships products on the day completed, eliminating the need to
maintain finished goods inventory. WinsLoew provides timely delivery service by
typically shipping goods within three weeks after credit approval.

         In the manufacturing process, WinsLoew cuts extruded aluminum tubes to
size and shapes or bends them in specially designed machinery. The aluminum is
then welded to form a solid frame, and the frame is subjected to a grinding and
buffing process to eliminate any rough spots that may have been caused during
welding. After this process is completed, the frame is cleaned, painted in a
state-of-the-art powder coating system and heat cured. WinsLoew then adds vinyl
strapping, cushions, fabric slings, or other accessories to the finished frame,
as appropriate. WinsLoew then packages the product with umbrellas, tempered
glass and other accessories, as applicable, and ships it to the customer.


                                       9
<PAGE>   10

         WinsLoew extensively refurbished and modernized its Haleyville
facilities in late 1984 and significantly expanded them in 1990 and 1993.
WinsLoew believes that its Haleyville facilities are some of the most modern in
the casual aluminum furniture industry, and that the efficiencies attributable
to these plants are a significant factor in WinsLoew's relatively low
manufacturing costs.

         WinsLoew's vertical integration provides additional manufacturing
efficiencies. WinsLoew manufactures cushions for its aluminum furniture in
Haleyville, and, in addition, cuts, sews and assembles the fabric covers that
are combined with pre-assembled poles to produce outdoor umbrellas.

         WinsLoew believes that it manufactures the highest quality aluminum
casual furniture in its price range. WinsLoew welds, not rivets or bolts, the
major frame components of its aluminum furniture, thereby increasing the
durability and enhancing the appearance of the aluminum product line. The
powder coated painting process results in an attractive and durable finish. To
ensure that only the highest quality products are shipped to customers,
WinsLoew's quality control department has established control check points
where the quality of 100% of its aluminum products is examined during the
manufacturing process. These processes allow WinsLoew to offer a two-year frame
and finish guarantee on all of its aluminum products for residential use.
Warranty expense to date has been negligible.

         TEXACRAFT DIVISION - HOUSTON, TEXAS. WinsLoew's Houston facility
includes an aluminum furniture manufacturing facility with processes
essentially the same as WinsLoew's aluminum line in Haleyville. Additionally,
the Houston facility manufactures steel and wood furniture and includes a
fiberglass manufacturing facility for tables, umbrellas, and accessories.

         TROPIC CRAFT DIVISION - OCALA, FLORIDA. WinsLoew's Ocala facility
includes an aluminum furniture manufacturing facility with processes
essentially the same as WinsLoew's aluminum line in Haleyville.

         CONTRACT SEATING

         WinsLoew currently utilizes approximately 226,000 square feet of
manufacturing space for contract seating production in facilities located in
Florida and North Carolina.

         LOEWENSTEIN DIVISION - POMPANO BEACH, FLORIDA. This facility assembles
and finishes to customer order most of WinsLoew's contract seating products
(other than the casual contract products described above). WinsLoew purchases
component parts from a variety of suppliers, including a number of European
manufacturers, or manufactures. The principal elements of wood chair assembly
include: (i) frame glue-up, (ii) sanding, (iii) seat assembly (in which
upholstered seats are constructed from component bottoms, foam padding and
cloth coverings) and (iv) painting/lacquering. To provide consistency and speed
in this finishing process, WinsLoew utilizes a state-of-the-art conveyorized
paint line with electrostatic spray guns and a three-dimensional ultraviolet
drying system. For upholstered products, the specified fabric cloth is
stretched to the chair frame over foam padding. WinsLoew generally assembles
its metal chairs from imported components. After rework and leveling, WinsLoew
cartons its chairs to prevent damage in transportation. The manufacturing
process also includes a number of product inspections and other quality control
procedures.

         GREGSON DIVISION - LIBERTY, NORTH CAROLINA. This manufacturing
facility includes such operations as assembling, upholstering, and finishing.
While styling is continuously updated, the basic construction process does not
change significantly from year to year, which reduces the need for substantial
modifications to the production process. The Company is the process of
consolidating the manufacture of its contract products for the hospitality
market at the Gregson facility and the manufacture of all other contract
seating products at the Pompano Beach facility. Management expects this process
to be completed by the end of 1999.

         RTA FURNITURE

         SOUTHERN WOOD DIVISION - SPARTA, TENNESSEE. WinsLoew currently
utilizes approximately 158,000 square feet of manufacturing and warehouse space
for its RTA products. For the manufacture of its "spindle" products the 

                                      10
<PAGE>   11

Company uses high density particle board and dowels. The Company turns, stains
and lacquers all of the spindles. WinsLoew laminates the particle board with a
variety of wood grains and solid colors. WinsLoew individually boxes the
product with spindles and board, along with any necessary hardware and assembly
instructions. For "flatline" products WinsLoew individually boxes the cut
laminated particle board, along with necessary hardware and assembly
instructions. For case goods, the edges of the cut laminated particle board may
be "soft formed" for aesthetic value. The unit is then assembled using glue and
screws and utilizes quality components and hardware, such as self-closing
drawer runners, on all units. These fully assembled units are then packaged for
shipment.

         MANUFACTURING CAPACITY

         Management believes that the Company's manufacturing facilities in the
casual and contract seating product lines are currently operating, in the
aggregate, at approximately 75% of capacity, assuming a one-shift basis.
Management considers the Company's present manufacturing capacity to be
sufficient for the foreseeable future and believes that, by adding multiple
shift operations, the Company can significantly increase the total capacity of
its facilities to meet growing product demand with minimal additional capital
expenditures. In addition, the Company engages in an ongoing maintenance and
upgrading program, and considers its machinery and equipment to be in good
condition and adequate for the purposes for which they are currently used.

MARKETING AND SALES

         CASUAL FURNITURE

         WinsLoew markets its residential casual furniture products throughout
the United States, Canada and the Caribbean. WinsLoew currently makes
substantially all of its residential sales to customers located east of the
Rocky Mountains. WinsLoew markets residential products to approximately 800
active customers, including specialty patio stores, full-line furniture
retailers, and department stores. WinsLoew also sells its contract casual
products to certain commercial end-users such as hotels, restaurants, country
clubs, exporters, interior designers and developers of apartments and motels.

         WinsLoew sells substantially all of its residential products through
approximately 30 independent manufacturer's representatives. Each
representative: (i) promotes, solicits and sells WinsLoew's products in an
assigned territory, (ii) agrees to assist in the collection of receivables and
adjustment of any complaints with regard to his or her sales and (iii) receives
commissions based on the net sales made in his or her territory. WinsLoew
determines the prices at which its products will be sold and may refuse to
accept any orders submitted by a sales representative for credit-worthiness or
other reasons. WinsLoew's representatives may carry other products which do not
directly compete with WinsLoew's product lines. WinsLoew has long-standing
relationships with most of its representatives.

         WinsLoew's marketing program assists its representatives in various
ways, including: (i) holds exhibitions at national and regional furniture shows
and leases a year-round showroom at the Merchandise Mart in Chicago, Illinois,
(ii) provides retailers with annual four-color catalogs of its products, sample
materials illustrating available colors and fabrics, point of sale materials
and special sales brochures, (iii) provides information directly to
representatives at annual sales meetings attended by senior management and
manufacturing personnel, (iv) maintains a customer service department which
ensures that WinsLoew promptly responds to the needs and orders of WinsLoew's
customers, (v) maintains regular contact with key retailers and (vi) conducts
ongoing surveys to determine dealer satisfaction. WinsLoew markets its casual
contract products nationally through a team of company employed and independent
sales representatives.

         WinsLoew organized its Winston International division primarily for
the purpose of distributing casual furniture products that it does not
manufacture. Winston International's current product offerings include a line
of cast aluminum products. WinsLoew inventories, distributes and administers
this product line in Haleyville, Alabama.


                                      11
<PAGE>   12


         CONTRACT SEATING

         WinsLoew sells its contract seating products primarily to
architectural design firms, restaurant, lodging chains, office furniture
dealers and retail store planners. WinsLoew sells substantially all of its
contract seating products through approximately 40 independent sales
representative organizations that employ approximately 100 sales associates.
Each sales representative: (i) promotes and sells WinsLoew's products in an
assigned territory, (ii) assists WinsLoew in responding to customer service
request and (iii) receives commissions based on the net sales made in his or
her territory. WinsLoew determines the prices at which its products will be
sold, and may refuse to accept any orders submitted by a sales representative
for creditworthiness or other reasons.

         WinsLoew's marketing program assists its representatives in various
ways, including: (i) holds exhibitions at national shows, (ii) provides its
representatives and customers with four color catalogs of its products, (iii)
provides information to representatives at sales meetings and (iv) maintains a
customer service department that ensures WinsLoew promptly responds to the
needs and orders of customers.

         RTA FURNITURE

         WinsLoew sells its promotionally priced RTA furniture products through
independent sales representatives, primarily to mass merchandisers and catalog
wholesalers. WinsLoew prepares product catalogs and brochures as sales material
for its independent sales representatives. The Company maintains a customer
service department to ensure prompt response to the needs and orders of
customers. The Company also holds exhibitions at national furniture shows.

BACKLOG

         As of December 31, 1998, WinsLoew's backlog of orders was
approximately $21.8 million, compared to $17.6 million at December 31, 1997.
WinsLoew, in accordance with industry practice, generally permits orders to be
canceled prior to shipment without penalty. Management does not consider
backlog to be predictive of future sales activity because of WinsLoew's short
manufacturing cycle and delivery time, and, especially in the case of casual
furniture, the seasonality of sales.

RAW MATERIAL AND SOURCING

         WinsLoew manufactures most of its products to order from basic raw
materials, and, consequently, is able to avoid carrying large amounts of
finished goods inventory particularly in its casual and contract seating
product lines. WinsLoew also attempts to maintain minimum levels of raw
material inventory. WinsLoew's principal raw materials consist of extruded
aluminum tubes, steel rods, woven vinyl fabrics, paint/finishing materials,
vinyl strapping, cushion filler materials, cartons, glass table tops, component
parts for contract seating, particle board and other lumber products and
hardware. Although WinsLoew has no long-term supply contracts, it generally has
a number of sources for its raw materials and has not experienced any
significant problems in obtaining adequate supplies for its operations.
Nevertheless, the purchase of aluminum is, from time to time, highly
competitive, and its price, as a commodity, is subject to market conditions
beyond WinsLoew's control. In addition, fluctuations in lumber prices and the
costs of other raw materials have not historically had a material adverse
effect on WinsLoew's results of operations.

         However, future price increases may have a material adverse effect on
WinsLoew's financial condition and results of operations. Management believes
that WinsLoew's policy of maintaining several sources for most supplies
contributes to its ability to obtain competitive pricing.

         A significant portion of the Loewenstein raw materials consist of
component chair parts purchased from several Italian manufacturers. WinsLoew
views its suppliers as "partners" and works with such suppliers on an ongoing
basis to design and develop new products. WinsLoew believes that these
cooperative efforts, its long-standing relationships with these suppliers and
its experience in conducting on-site, quality control inspections provide it
with a competitive advantage over many other furniture manufacturers, including
a competitive 

                                      12

<PAGE>   13

purchasing advantage in times of product shortages. In addition, in the case of
Italian and European suppliers, WinsLoew generally contracts for its purchases
of such component parts in such manner as to minimize its exposure to foreign
currency fluctuations. Although WinsLoew has close working relationships with
its foreign suppliers, WinsLoew's future success may depend, in part, on
maintaining such or similar relationships. Given the special nature of the
manufacturing capabilities of these suppliers, in particular certain
wood-bending capabilities, and sources of specialized wood types, the
Loewenstein division could experience a disruption in their operations in the
event of any required replacement of such suppliers. Situations beyond
WinsLoew's control, including political instability, significant and prolonged
foreign currency fluctuations, economic disruptions, the imposition of tariffs
and import and export controls, changes in government policies and other
factors may have a material adverse effect on WinsLoew.

FURNITURE INDUSTRY AND COMPETITION

         The furniture industry is cyclical and affected by changes in general
economic conditions, consumer confidence and discretionary income, interest
rate levels, and credit availability. Weather conditions during the peak retail
selling season and the resulting impact on consumer purchases of outdoor
furniture products also affect sales of casual furniture products.

         The furniture industry is highly competitive and includes a large
number of manufacturers, none of which dominate the market. Certain of the
companies which compete directly with WinsLoew may have greater financial and
other resources than WinsLoew. Based on its extensive industry experience,
management believes that competition in casual furniture and contract seating
is generally a function of product design, construction quality, prompt
delivery, product availability, customer service and price. Management
similarly believes that competition in WinsLoew's promotional price niche of
the RTA furniture industry is limited, and is based primarily on prompt
delivery, product availability, customer service and price.

         WinsLoew believes that it successfully competes in the furniture
industry primarily on the basis of its innovatively styled product offerings
and merchandising programs, the quality of its products, and WinsLoew's
emphasis on providing high levels of customer service. While sales of imported,
foreign-produced casual furniture have increased significantly in recent years,
WinsLoew's sales have not been adversely affected because such foreign products
are generally: (i) limited in design, styles and colors, (ii) of lesser quality
than WinsLoew's products, (iii) marketed in the lower-end price range and (iv)
not supported with competitive customer service and responsiveness to
customers' needs for quick delivery.

TRADEMARKS AND PATENTS

         WinsLoew has registered the following trademarks with the United
States Patent and Trademark Office: WINSTON, LOEWENSTEIN/OGGO, GREGSON,
SOUTHERN WOOD PRODUCTS, and LECASSO. Management believes that WinsLoew's
trademark position is adequately protected in all markets in which WinsLoew
does business. WinsLoew also believes that its various trade names are
generally well recognized by dealers and distributors, and are associated with
a high level of quality and value.

         WinsLoew holds several design and utility patents, and has
applications pending for issuance of other design and utility patents. Since
WinsLoew believes that it is an innovator of styles and designs, it is the
Company's policy to apply for design and utility patents for those designs
which it believes may be of significance to WinsLoew.

EMPLOYEES

         At December 31, 1998, WinsLoew had approximately 1,124 full-time
employees, of whom 17 were employed in management, 203 in sales, general, and
administrative positions, and 904 in manufacturing, shipping, and warehouse
positions.


                                      13
<PAGE>   14

         The only employees subject to collective bargaining agreements are
approximately 123 of WinsLoew's hourly employees in Haleyville, Alabama, who
are represented by the Retail, Wholesale, and Department Store Union. The labor
agreement between WinsLoew and such union, which expires on July 31, 2001,
provides that there shall be no strikes, slowdowns or lockouts. WinsLoew
considers its employee relations to be good.

ENVIRONMENTAL MATTERS

         WinsLoew's management believes that WinsLoew complies in all material
respects with all applicable federal, state and local provisions relating to
the protection of the environment. The principal environmental regulations that
apply to WinsLoew govern air emissions, water quality and the storage and
disposition of solvents. Compliance with environmental protection laws and
regulations has not had a material adverse impact on WinsLoew's financial
condition or results of operations in the past and is not expected to have a
material adverse impact in the future.

                                      14
<PAGE>   15


ITEM 2.  PROPERTIES

         The following table provides information with respect to each of the
Company's facilities:

<TABLE>
<CAPTION>
                                                           Appr.                      Owned          Lease
                                                       Building Area    Appr. Land      or         Expiration
     Location          Division        Primary Use         (Feet)      Area (Acres)   Leased          Date
----------------    -------------     -------------   --------------   ------------   -----         ----------

<S>                       <C>          <C>                  <C>             <C>         <C>           <C>
Hoover, AL                All          Headquarters         9,800           2.0         Owned         N/A

Haleyville, AL          Winston       Manufacturing       155,000            17         Owned         N/A
                                       and Offices

Haleyville, AL          Winston         Warehouse          20,000             1         Owned         N/A

Haleyville, AL          Winston        Sewing Plant        30,000             1         Owned         N/A

Chicago, IL         Casual Division    Merchandise         12,000           N/A         Leased      8/31/02
                                      Mart Showroom

Houston, TX            Texacraft      Manufacturing        89,500           N/A         Leased      4/15/05
                                       and Offices

Ocala, FL            Tropic Craft     Manufacturing        49,000           7.4         Owned         N/A
                                       and Offices

Pompano Beach, FL     Loewenstein     Manufacturing       100,000          13.8         Owned         N/A
                                       and Offices

Pompano Beach, FL     Loewenstein       Warehouse           6,500           N/A         Leased        MTM

Liberty, NC             Gregson       Manufacturing       126,000           9.5         Owned         N/A
                                       and Offices

Sparta, TN             Southern       Manufacturing        94,300          10.0         Owned         N/A
                         Wood          and Offices

Sparta, TN             Southern       Manufacturing        63,260          32.9         Owned         N/A
                         Wood          and Offices

</TABLE>

         For additional information with respect to the Company's lease
obligations, see Note 8 of Notes to the Company's Consolidated Financial
Statements included in this Annual Report on Form 10-K.

         Substantially all of the Company's assets are currently pledged as
collateral for a credit facility. See Note 4 of the Notes to the Company's
Consolidated Financial Statements included in this Annual Report on Form 10-K.


                                      15

<PAGE>   16


ITEM 3.  LEGAL PROCEEDINGS

         From time to time, the Company is subject to legal proceedings and
other claims arising in the ordinary course of its business. The Company
maintains insurance coverage against potential claims in an amount which it
believes to be adequate. Based primarily on discussions with counsel and
management familiar with the underlying disputes, the Company believes that it
is not presently a party to any litigation, the outcome of which would have a
material adverse effect on its business or operations.

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

         None


                                      16

<PAGE>   17


                                    PART II

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

         The Company's Common Stock has been traded on the Nasdaq National
Market under the symbol "WLFI" since January 1, 1995. The following table sets
forth, for the period indicated, the high and low sales price per share of
Common Stock as reported by the Nasdaq National Market System:

                                            High                   Low
                                            ----                   ---
   1997
   ----
     First Quarter...................     $ 11 7/8            $  8 1/8
     Second Quarter..................     $ 11                $  8 3/8
     Third Quarter...................     $ 15                $ 10 15/16
     Fourth Quarter..................     $ 16 13/16          $ 13 5/16

   1998
   ----

     First Quarter...................     $ 20 5/8            $ 13 3/4
     Second Quarter..................     $ 29                $ 20 11/16
     Third Quarter...................     $ 28 3/4            $ 15 1/2
     Fourth Quarter..................     $ 26 1/2            $ 17 7/8

         As of March 1, 1999, there were approximately 105 holders of record of
Common Stock and approximately 1,550 persons or entities holding Common Stock
in nominee name. The closing sale price per share for the Common Stock on March
1, 1999 was $27.00

         The Company has not declared nor paid any cash dividends on its Common
Stock, does not anticipate that any dividends will be declared nor paid in the
foreseeable future, and intends to retain earnings to finance the development
and expansion of the Company's operations. In addition, the Company's payment
of dividends is also restricted under the terms of its credit facilities (see
Note 4 of Notes to the Company's Consolidated Financial Statements).



                                      17
<PAGE>   18


ITEM 6.  SELECTED FINANCIAL DATA

         The following selected consolidated financial data are derived from
the Consolidated Financial Statements of WinsLoew. The following data has been
restated to reflect Southern Wood as a continuing operation (see Note 2 of
Notes to Consolidated Financial Statements). The following selected
consolidated financial data should be read in conjunction with WinsLoew's
Consolidated Financial Statements and related Notes, "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the other
financial information included herein.

<TABLE>
<CAPTION>

                                                                      Years Ended December 31,
                                                 -------------------------------------------------------------------
                                                      1998           1997          1996        1995        1994
                                                 ------------   ------------   -----------  ----------  ------------
                                                              (In thousands, except per share amounts)

<S>                                                   <C>            <C>          <C>         <C>          <C>    
INCOME STATEMENT DATA:
Net sales                                             $141,360       $122,145     $117,405    $110,887     $95,561
Cost of sales                                           87,232         79,431       78,029      78,710      65,060
                                                  ------------   ------------   ----------   ----------  ---------
   Gross profit                                         54,128         42,714       39,376      32,177      30,501
Selling, general and administrative expenses            23,124         21,427       21,472      19,303      16,303
Amortization                                             1,122            992        1,444       2,087       2,000
Non-recurring charges                                       --             --           --          --         917
                                                  ------------   ------------   ----------   ----------  ---------
   Operating income                                     29,882         20,295       16,460      10,787      11,281
Interest expense                                           635          2,296        3,083       3,841       2,795
                                                  ------------   ------------   ----------   ----------  ---------
Income from continuing operations before income
   taxes and extraordinary item                         29,247         17,999       13,377       6,946       8,486
Provision for income taxes                              10,947          6,838        4,834       3,489       3,068
                                                  ------------   ------------   ----------   ----------  ---------
Income from continuing operations before
   extraordinary item                                   18,300         11,161        8,543       3,457       5,418
Income (loss) from discontinued operations, net
   of taxes                                                 --           (718)        (259)     (9,199)        934
Gain (loss) from sale of discontinued
   operations, net of taxes                              2,031         (8,200)          --          --          --
Extraordinary item                                          --             --           --       1,698          --
                                                  ------------   ------------   ----------   ----------  ---------
Net income (loss)                                      $20,331         $2,243       $8,284     ($4,044)     $6,352
                                                  ============   ============   ==========  ===========  =========

Basic earnings (loss) per share:
   Income from continuing operations before
     extraordinary item                                  $2.46          $1.49        $0.98       $0.38       $0.56
   Income (loss) from discontinued operations,
     net of taxes                                           --          (0.09)       (0.03)      (1.02)       0.10
   Gain (loss) from sale of discontinued
     operations, net of taxes                             0.27          (1.10)          --          --          --
   Extraordinary item                                       --             --           --        0.19          --
                                                  ------------   ------------   ----------   ----------  ---------
   Net income (loss)                                     $2.73          $0.30        $0.95      ($0.45)      $0.66
                                                  ============   ============   ==========  ===========  =========
Weighted average shares                                  7,450          7,484        8,724       9,029       9,655
                                                  ============   ============   ==========  ===========  =========
Diluted earnings (loss) per share:
   Income from continuing operations before
     extraordinary item                                  $2.40          $1.48        $0.98       $0.38       $0.56
   Income (loss) from discontinued operations,
     net of taxes                                           --          (0.10)       (0.03)      (1.02)       0.10
   Gain (loss) from sale of discontinued
     operations, net of taxes                             0.27          (1.08)          --          --          --
   Extraordinary item                                       --             --           --        0.19          --
                                                  ------------   ------------   ----------   ----------  ---------
   Net income (loss)                                     $2.67          $0.30        $0.95       ($0.45)     $0.66
                                                  ============   ============   ==========  ===========  =========

Weighted average shares and common share
   equivalents outstanding                               7,624          7,563        8,730       9,029       9,655
                                                  ============   ============   ==========  ===========  =========


</TABLE>

                                      18
<PAGE>   19


<TABLE>
<CAPTION>
                                                                          December 31,
                                                 ----------------------------------------------------------------
                                                    1998         1997          1996         1995         1994
                                                 ------------ ------------  -----------  -----------  -----------
                                                                         (In thousands)

<S>                                                  <C>          <C>          <C>          <C>          <C>    
BALANCE SHEET DATA:
Working capital                                      $25,840      $29,937      $40,102      $58,785      $37,711
Total assets                                          84,553       80,414       99,950      104,004      111,054
Long-term debt (less current portion)                  1,400       15,908       38,726       40,130       39,094
Total debt                                             1,447       16,423       40,681       41,941       40,893
Stockholders' equity                                  66,226       51,026       48,400       53,228       60,680

</TABLE>




                                      19


<PAGE>   20


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

GENERAL

         WinsLoew is comprised of companies engaged in the design, manufacture
and distribution of casual furniture and contract seating furniture. WinsLoew's
casual furniture products are distributed through independent manufacturer's
representatives and are constructed of extruded and tubular aluminum and cast
aluminum. These products are distributed through fine patio stores, department
stores and full line furniture stores nationwide. WinsLoew's contract seating
products are distributed to a broad customer base, which includes architectural
design firms and restaurant and lodging chains.

         During 1997 the Company adopted a plan to dispose of its RTA
operations. WinsLoew's RTA products included ergonomically-designed computer
workstations, which the Company denoted as "space savers", promotionally-priced
coffee and end tables, wall units and rolling carts and an extensive line of
futons, futon frames and related accessories. Distribution of RTA furniture
products was primarily through mass merchandisers, catalogue wholesalers and
specialty retailers. As a result of this decision, the Company recorded a
pre-tax non-cash charge totaling $12.4 million in the fourth quarter of 1997
relating to the disposal of the RTA operations. The charge can be summarized as
follows:

  Write-off of goodwill in connection with sale of assets      $ 3,902,000
  Reduction of inventory value                                   2,791,000
  Reduction of property to net realizable value                  2,067,000
  Reduction of accounts receivable value                         1,390,000
  Other liabilities / reserves                                   1,050,000
  Accrual for losses through disposition                         1,200,000
                                                             =============
  Total                                                        $12,400,000
                                                             =============

         The Company planned to sell two of the businesses and liquidating the
assets related to the futon business. During 1998 the Company sold one of the
businesses, completed the liquidation of the futon business and decided to
retain its Southern Wood business due to improved profitability (see Note 2 to
Notes to the Consolidated Financial Statements).

         The amounts reflected hereafter include Southern Wood as a continuing
operation.

RESULTS OF OPERATIONS

         The following table sets forth net sales, gross profit and gross
margin as a percent of net sales for the years ended December 31, 1998, 1997
and 1996 for each of the Company's product lines (in thousands, except for
percentages):

<TABLE>
<CAPTION>
                              1998                           1997                         1996
                  -------------------------     -----------------------------   ----------------------------
                     Net       Gross    Gross       Net       Gross    Gross      Net       Gross    Gross
                    Sales      Profit   Margin     Sales      Profit   Margin    Sales      Profit   Margin
                  ----------- --------- -------- ----------- --------- ------------------- --------- --------
<S>                  <C>       <C>        <C>       <C>       <C>        <C>      <C>       <C>        <C>  
Casual furniture     $59,733   $28,227    47.3%     $56,363   $24,164    42.9%    $58,066   $23,812    41.0%
Contract seating      69,938    23,439    33.5%      58,386    17,256    29.6%     48,629    14,126    29.0%
RTA                   11,689     2,462    21.1%       7,396     1,294    17.5%     10,710     1,438    13.4%
                    --------   -------             --------   -------            --------   -------        
Total               $141,360   $54,128    38.3%    $122,145   $42,714    35.0%   $117,405   $39,376    33.5%
                    ========   =======             ========   =======            ========   =======        
</TABLE>

         The following table sets forth certain information relating to the
Company's operations expressed as a percentage of the Company's net sales:


                                      20
<PAGE>   21


<TABLE>
<CAPTION>

                                                                   For the Years Ended December 31,
                                                            -----------------------------------------------
                                                                1998             1997             1996
                                                            --------------    ------------     ------------
<S>                                                               <C>             <C>             <C>  
Gross profit                                                      38.3%           35.0%           33.5%
Selling, general and administrative expense                       16.4%           17.5%           18.3%
Amortization                                                       0.8%            0.8%            1.2%
Operating income                                                  21.1%           16.6%           14.0%
Interest expense                                                   0.4%            1.9%            2.6%
Provision for income taxes                                         7.7%            5.6%            4.1%
Income from continuing operations before extraordinary
     item                                                         12.9%            9.1%            7.3%
Loss from discontinued operations, net of taxes                     --            (0.6%)          (0.2%)
Gain (loss) from sale of discontinued operations, net of
     taxes                                                         1.4%           (6.7%)            --
Net income                                                        14.4%            1.8%            7.1%

</TABLE>

COMPARISON OF YEARS ENDED DECEMBER 31, 1998 AND 1997

         NET SALES. WinsLoew's consolidated net sales for 1998 increased $19.2
million or 15.7% to $141.4 million, compared to $122.1 million in 1997. The
casual product line sales increased by 17.9%, after excluding sales for the
Company's wrought iron business sold during 1997. The Company believes that due
to its high quality and innovative designs, existing retail customers have
continued to allocate more floor space, requiring larger inventories of the
Company's casual aluminum furniture. The contract seating product line
experienced a sales increase of 19.8% due to growth in the core business and
increased demand from the lodging industry. The RTA product line experienced a
sales increase of 58.0% due to increased demand as the Company broadened it's
product offering to include additional flat-line products and case goods which
allowed the Company to enter new markets.

         GROSS PROFIT. Consolidated gross profit increased $11.4 million in
1998 to $54.1 million compared to $42.7 million in 1997. The casual, contract
seating and RTA product lines improved gross profits in 1998 due to greater
operating efficiencies, increased sales volumes and improved raw material
costs.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $1.7 million in 1998, compared to 1997, due
to commissions expense and other variable costs related to the increased sales
volume in 1998.

         AMORTIZATION. Amortization expense increased $130,000 in 1998,
compared to 1997, due to amortization of goodwill related to the Tropic Craft
acquisition.

         OPERATING INCOME. As a result of the above, WinsLoew recorded
operating income of $29.9 million (21.1% of net sales) in 1998, compared to
operating income of $20.3 million (16.6% of net sales) in 1997.

         INTEREST EXPENSE. WinsLoew's interest expense decreased $1.7 million
in 1998, compared to 1997. The Company has reduced its debt by $15.0 million
from December 31, 1997.

         PROVISION FOR INCOME TAXES. WinsLoew's effective tax rate from
continuing operations of 37.4% in 1998 and 38.0% in 1997 is greater than the
federal statutory rate due to the effect of state income taxes and
non-deductible goodwill amortization.


                                      21

<PAGE>   22

COMPARISON OF YEARS ENDED DECEMBER 31, 1997 AND 1996

         NET SALES. WinsLoew's consolidated net sales for 1997 increased $4.7
million or 4.0% to $122.1 million, compared to $117.4 million in 1996. The
casual product line sales increased by 7.6% after excluding sales for the
Company's wrought iron business sold during 1997. The Company believes that due
to its high quality and innovative designs, existing retail customers have
allocated more floor space, requiring larger inventories of the Company's
casual aluminum furniture. The contract seating product line experienced a
sales increase of 20.1% due to growth in the core business and increased demand
from the lodging industry. The RTA product line experienced a sales decrease of
30.9% due to the loss of a major customer.

         GROSS PROFIT. Consolidated gross profit increased $3.3 million in 1997
to $42.7 million compared to $39.4 million in 1996. The casual and contract
seating product lines improved gross profits in 1997 due to greater operating
efficiencies, increased sales volumes (after excluding sales for the Company's
Lyon Shaw wrought iron business sold in 1997) and improved raw material costs.
The RTA product line experienced a 10.0% decrease in gross profit in 1997 due
to lower sales volume.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased $45,000 in 1997, compared to 1996, due to
various cost reduction programs which more than offset commission expense and
other variable costs related to the increased sales volume in 1997.

         AMORTIZATION. Amortization expense decreased $452,000 due to the
intangible assets that became fully amortized in 1996.

         OPERATING INCOME. As a result of the above, WinsLoew recorded
operating income of $20.3 million (16.6% of net sales) in 1997, compared to
operating income of $16.5 million (14.0% of net sales) in 1996.

         INTEREST EXPENSE. WinsLoew's interest expense decreased $787,000 in
1997, compared to 1996. The Company reduced its debt by $24.3 million from
December 31, 1996 to December 31, 1997.

         PROVISION FOR INCOME TAXES. WinsLoew's effective tax rate from
continuing operations of 38.0% in 1997 and 36.1% in 1996 is greater than the
federal statutory rate due to the effect of state income taxes and
non-deductible goodwill amortization.

SEASONALITY AND QUARTERLY INFORMATION

         The furniture industry is cyclical and sensitive to changes in general
economic conditions, consumer confidence, and discretionary income, interest
rate levels and credit availability.

         Sales of casual products are typically higher in the second quarter
and fourth quarters of each year, primarily as a result of the following: (i)
high retail demand for casual furniture in the second quarter, preceding the
summer months and (ii) the impact of special sales programs on fourth quarter
sales. The Company's casual product sales can also be affected by weather
conditions during the peak retail selling season and the resulting impact on
consumer purchases of outdoor furniture products. During the third quarter of
1997, the Company sold its Lyon Shaw wrought iron division (See Note 3 of the
Notes to the Consolidated Financial Statements).

         The following table presents the Company's unaudited quarterly data
for 1998 and 1997. Such operating results are not necessarily indicative of
results for future periods. WinsLoew believes that all necessary and normal
recurring adjustments have been included in the amounts in order to present
fairly and in accordance with generally accepted accounting principles the
selected quarterly information when read in conjunction with WinsLoew's
Consolidated Financial Statements included elsewhere herein. The following data
has been restated to reflect Southern Wood as a continuing operation.


                                      22
<PAGE>   23
<TABLE>
<CAPTION>

                                                           (In thousands, except per share amounts)

1998 QUARTERS                                       First          Second            Third          Fourth
                                                ------------    ------------    -------------    ------------
<S>                                               <C>             <C>              <C>             <C>    
Net sales                                         $27,576         $42,892          $36,258         $34,634
Gross profit                                        9,630          16,740           13,527          14,231
Operating income                                    4,871          10,282            6,265           8,464
Interest expense (income)                             333             354              137            (189)
Income from continuing operations                   2,873           6,199            3,791           5,437
Gain on sale of discontinued operations                --              --               --           2,031

Net income                                         $2,873          $6,199           $3,791          $7,468
                                                ============    ============     ============    ============

Basic earnings per share:
   Income from continuing operations(1)             $0.38           $0.83            $0.51           $0.75
   Gain on sale of discontinued
      operations                                       --              --               --            0.27
                                                ------------     -----------    -------------    ------------
   Net income(1)                                    $0.38           $0.83            $0.51           $1.02
                                                ============     ===========    =============    ============
Weighted average shares                             7,535           7,513            7,468           7,296
                                                ============     ===========    =============    ============

Diluted earnings per share:
   Income from continuing operations                $0.37           $0.80            $0.50           $0.73
   Gain on sale of discontinued
      operations                                       --              --               --            0.27
                                                ------------     -----------    -------------    ------------
   Net income                                       $0.37           $0.80            $0.50           $1.00
                                                ============     ===========    =============    ============
Weighted average shares and common share
 equivalents outstanding                            7,683           7,722            7,647           7,453
                                                ============     ===========    =============    ============
</TABLE>

<TABLE>
<CAPTION>


1997 QUARTERS                                       First            Second          Third          Fourth
                                                  -----------      ------------    -----------    -----------
<S>                                                <C>               <C>             <C>            <C>    
Net sales                                          $24,682           $39,854         $29,523        $28,086
Gross profit                                         7,519            15,020          10,073         10,102
Operating income                                     2,592             8,313           4,440          4,950
Interest expense                                       857               645             590            204
Income from continuing operations                    1,047             4,729           2,355          3,030
Loss from discontinued operations                     (229)             (225)            (73)          (191)
Loss on sale of discontinued operations                 --                --              --         (8,200)
Net income (loss)                                     $818            $4,504          $2,282        ($5,361)
                                                  ===========      ============    ===========    ===========

Basic earnings (loss) per share:
   Income from continuing operations(1)              $0.14             $0.63            $0.31         $0.40
   Loss from discontinued operations(1)              (0.03)            (0.03)           (0.01)        (0.03)
   Loss on sale of discontinued operations(1)           --                --              --          (1.09)
                                                  -----------      ------------    -----------    -----------
   Net income (loss)                                 $0.11             $0.60            $0.30        ($0.72)
                                                  ===========      ============    ===========    ===========
Weighted average shares                              7,443             7,456           7,508          7,524
                                                  ===========      ============    ===========    ===========
Diluted earnings (loss) per share:
   Income from continuing operations                 $0.14             $0.63           $0.31          $0.40
   Loss from discontinued
      operations                                     (0.03)            (0.03)          (0.01)        (0.03)
    Loss on sale of discontinued
      operations(1)                                     --                --              --         (1.07)
                                                  -----------      ------------    -----------    -----------
   Net income (loss)(1)                              $0.11             $0.60           $0.30        ($0.70)
                                                  ===========      ============    ===========    ===========
Weighted average shares and common share
 equivalents outstanding                             7,495             7,502           7,602          7,630
                                                  ===========      ============    ===========    ===========
</TABLE>

-----------
(1)  Quarter amounts do not add to annual figures due to rounding.



                                      23


<PAGE>   24

LIQUIDITY AND CAPITAL RESOURCES

         The Company's short-term cash needs are primarily for working capital
to support its debt service, accounts receivable and inventory requirements.
The Company has historically financed its short-term liquidity needs with
internally generated funds and revolving line of credit borrowings. At December
31, 1998, the Company had $25.8 million of working capital and $18.4 million of
unused and available funds under its credit facilities.

         The Company has a senior credit facility with a consortium of banks
and other institutional lenders. The facility, which matures in February 2001
and is collateralized by substantially all of the assets of the Company,
consists of a revolving line of credit, term loan and an acquisition line of
credit. The working capital revolving line of credit allows the Company to
borrow funds up to a certain percentage of eligible inventories and accounts
receivable. The $12.5 million acquisition line of credit can be used for
capital expenditures and purchases of the Company's common stock.

         In June 1996, WinsLoew amended its senior credit facility to provide
the Company with a variable amount available under the revolving line of credit
(see Note 4 to the Consolidated Financial Statements). Due to the seasonal
nature of the casual furniture product line, WinsLoew's cash requirements are
usually greater in the first quarter of each year. The June 1996 amendment
allows the amount available to fluctuate with the seasonal nature of the
Company's business. After the first quarter of each year, the Company's cash
requirements from its credit line decline. By use of a variable amount of
credit availability, the Company can avoid the cost of an available but unused
line of credit. At December 31, 1998, from an available maximum line of credit
of $40 million, WinsLoew has elected to set the amount available at $35
million.

         WinsLoew's senior credit facility allows the Company to borrow under
its line of credit to purchase shares of the Company's common stock (see Note 5
of Notes to the Consolidated Financial Statements). As of December 31, 1998,
there was $6.1 million available for such repurchases.

         CASH FLOWS FROM OPERATING ACTIVITIES. Net cash provided by operations
increased to $31.1 million in 1998 primarily due to improved profitability from
continuing operations.

         CASH FLOWS FROM INVESTING ACTIVITIES. During 1998, the Company spent
$0.9 million on capital expenditures and $9.3 million on the purchase of Tropic
Craft (see Note 3 to the Consolidated Financial Statements).

         At December 31, 1998, the Company had no material commitments for
capital expenditures.

         CASH FLOWS FROM FINANCING ACTIVITIES. During 1998, The Company used
the cash generated by operations to repay $15.0 million of debt and purchase
$6.1 million of the Company's common stock (see Note 5 of Notes to the
Consolidated Financial Statements).

FOREIGN EXCHANGE FLUCTUATIONS AND EFFECTS OF INFLATION

         WinsLoew purchases some raw materials from several Italian suppliers.
These purchases expose the Company to the effects of fluctuations in the value
of the U.S. dollar versus the Italian lira. If the U.S. dollar declines in
value versus the Italian lira, the Company will pay more in U.S. dollars for
these purchases. To reduce its exposure to loss from such potential foreign
exchange fluctuations, the Company will occasionally enter into foreign
exchange forward contracts. These contracts allow the Company to buy Italian
lira at a predetermined exchange rate, thereby transferring the risk of
subsequent exchange rate fluctuations to a third party. However, if the Company
is unable to continue such forward contract activities, and the Company's
inventories increase in connection with expanding sales activities, a weakening
of the U.S. dollar against the Italian lira could result in reduced gross
margins. The Company elected to hedge a portion of its exposure to purchases
made in 1998 by entering into foreign currency forward contracts. At December
31, 1998, the Company did not have any forward 

                                      24


<PAGE>   25

contracts outstanding. The Company did not incur significant gains or losses
from these foreign currency transactions.

         Inflation has not had a significant impact on the Company in the past
three years, nor is it expected to have a significant impact in the foreseeable
future.

YEAR 2000

         The Company began an assessment of the Year 2000 issue on its systems
in mid 1995. Based on the assessment, the Company determined that it was
necessary to replace portions of its software and hardware so that those
systems will properly utilize dates beyond December 31, 1999. To date,
approximately 91% of the Company's continuing operations business critical
systems have been remediated and tested at a cost of approximately $0.5
million, which was provided by internally generated funds. This process is
projected to be completed by mid to late 1999 at minimal additional cost.

         The Company has contacted its significant suppliers and customers
concerning Year 2000 compliance. Based on these discussions the Company is not
aware of any supplier or customer with a Year 2000 issue that would materially
impact the Company's financial position, results of operations or liquidity.
However, WinsLoew has no means of ensuring that suppliers or customers will be
Year 2000 ready. The effect of non-compliance by third parties is not
determinable.

         Management believes that it has substantially completed an effective
program to resolve the Year 2000 issue in a timely manner. In the event that
the Company is unable to complete the program or if the program is not
successful, management believes that it has established adequate contingency
plans involving manual systems, maintaining increased inventory levels and
adjusting staffing levels for it's business critical systems and that such an
event would not materially impact the Company's financial position. However,
disruptions in the general economy resulting from Year 2000 issues could
adversely affect the Company.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The information required by this item is contained in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
in Note 1 of the Company's Consolidated Financial Statements.


                                      25

<PAGE>   26


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                           Page
                                                                           ----

Report of Ernst & Young LLP, Independent Auditors.......................    27

Consolidated Balance Sheets as of December 31, 1998 and 1997............    28

Consolidated Statements of Income For the Years Ended December 31,
   1998, 1997 and 1996..................................................    29

Consolidated Statements of Stockholders' Equity For the Years
   Ended December 31, 1998, 1997 and 1996...............................    30

Consolidated Statements of Cash Flows For the Years Ended 
   December 31, 1998, 1997 and 1996.....................................    31

Notes to Consolidated Financial Statements..............................    32



                                      26


<PAGE>   27


               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

STOCKHOLDERS OF WINSLOEW FURNITURE, INC.

We have audited the accompanying consolidated balance sheets of WinsLoew
Furniture, Inc. and Subsidiaries as of December 31, 1998 and 1997, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the three years in the period ended December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of WinsLoew
Furniture, Inc. and Subsidiaries at December 31, 1998 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles.

                                            /s/ Ernst & Young LLP

Birmingham, Alabama
January 29, 1999



                                      27


<PAGE>   28


                   WINSLOEW FURNITURE, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
(In thousands except share and per share amounts)                                December 31,
                                                                         ---------------------------
                                                                           1998              1997
                                                                         ----------        ---------
<S>                                                                         <C>                <C> 
ASSETS
Cash and cash equivalents                                                $   1,475         $    707
Accounts  receivable,  less  allowances  for  doubtful  accounts  of
   $1,694 and $788 at December 31, 1998 and 1997, respectively              23,647           22,031
Inventories                                                                 12,206           10,433
Prepaid expenses and other current assets                                    4,638            7,409
Net assets of discontinued operations                                           --            1,470
                                                                         ----------        ---------
       Total current assets                                                 41,966           42,050

Net assets of discontinued operations                                           --            4,548
Property, plant and equipment, net                                          13,948           12,023
Goodwill, net                                                               27,176           21,021
Other assets, net                                                            1,463              772
                                                                         ----------        ---------
                                                                           $84,553          $80,414
                                                                         ==========        =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt                                              $47              $515
Accounts payable                                                             4,377             3,395
Other accrued liabilities                                                    9,952             8,203
Net liabilities of discontinued operations                                   1,750                --
                                                                         ----------        ---------
       Total current liabilities                                            16,126            12,113

Long-term debt, net of current portion                                       1,400            15,908
Deferred income taxes                                                          801             1,367
                                                                         ----------        ---------
       Total liabilities                                                    18,327            29,388
                                                                         ----------        ---------
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred  stock, par value $.0l per share, 5,000,000 shares
   authorized, none issued                                                      --                --
Common stock -- par value $.0l per share, 20,000,000 shares authorized, 
   7,294,408 and 7,526,508 shares issued and
   outstanding at December 31, 1998 and 1997, respectively                      73                75
Additional paid-in capital                                                  19,797            24,926
Retained earnings                                                           46,356            26,025
                                                                         ----------        ---------
Total stockholders' equity                                                  66,226            51,026
                                                                         ----------        ---------
                                                                           $84,553           $80,414
                                                                         ==========        =========

</TABLE>

                            See accompanying notes.



                                      28

<PAGE>   29


                    WINSLOEW FURNITURE, INC AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>


(In thousands except per share amounts)                        Year Ended December 31,
                                                      ----------------------------------------
                                                        1998          1997            1996
                                                      ---------    ----------     ---------

<S>                                                   <C>           <C>            <C>      
Net sales                                             $ 141,360     $ 122,145      $ 117,405
Cost of sales                                            87,232        79,431         78,029
                                                      ---------    ----------     ----------
     Gross profit                                        54,128        42,714         39,376
Selling, general and administrative expenses             23,124        21,427         21,472
Amortization                                              1,122           992          1,444
                                                      ---------    ----------     ----------
     Operating income                                    29,882        20,295         16,460
Interest expense                                            635         2,296          3,083
                                                      ---------    ----------     ----------
     Income from continuing operations before
       income taxes                                      29,247        17,999         13,377
Provision for income taxes                               10,947         6,838          4,834
                                                      ---------    ----------     ----------
     Income from continuing operations                   18,300        11,161          8,543
Loss from discontinued operations,
       net of taxes                                          --          (718)          (259)
Gain (loss) from sale of discontinued operations,
       net of taxes                                       2,031        (8,200)            --
                                                      ---------    ----------     ----------
     Net income                                       $  20,331     $   2,243      $   8,284
                                                      =========    ==========     ==========
Basic earnings (loss) per share:
   Income from continuing operations                  $    2.46     $    1.49      $    0.98
   Loss from discontinued operations,
       net of taxes                                          --         (0.09)         (0.03)
   Gain (loss) from sale of discontinued
       operations, net of taxes                            0.27         (1.10)            --
                                                      ---------    ----------     ----------
     Net income                                       $    2.73     $    0.30      $    0.95
                                                      =========    ==========     ==========
   Weighted average number of shares                      7,450         7,484          8,724
                                                      =========    ==========     ==========
Diluted earnings (loss) per share:
   Income from continuing operations                  $    2.40     $    1.48      $    0.98
   Loss from discontinued operations,
       net of taxes                                          --         (0.10)         (0.03)
   Gain (loss) from sale of discontinued
       operations, net of taxes                            0.27         (1.08)            --
                                                      ---------    ----------     ----------
     Net income                                       $    2.67     $    0.30      $    0.95
                                                      =========    ==========     ==========
   Weighted average number of shares and
       common stock equivalents                           7,624         7,563          8,730
                                                      =========    ==========     ==========


</TABLE>


                            See accompanying notes.



                                      29
<PAGE>   30


                   WINSLOEW FURNITURE, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>


(In Thousands Except Share Amounts)                 Common Stock           Additional
                                                 --------------------       Paid-in        Retained
                                                 Shares        Amount        Capital       Eearnings      Total
                                                --------       ------      ----------     ----------      -----

<S>                                       <C>                <C>          <C>             <C>           <C>          
BALANCE, DECEMBER 31, 1995                8,967,112           $   90      $   37,640      $   15,498     $   53,228

Exercise of stock options                    25,100               --             187              --            187
Repurchase and cancellation of stock       (576,925)              (6)         (3,958)             --         (3,964)
Repurchase and cancellation of stock 
     from affiliated company               (933,504)              (9)         (9,326)             --         (9,335)
Net income                                       --               --              --           8,284          8,284
                                          ---------           ------      ----------      ----------     ---------- 
BALANCE, DECEMBER 31, 1996                7,481,783               75          24,543          23,782         48,400

Exercise of stock options                    94,725                1             872              --            873
Repurchase and cancellation of stock        (50,000)              (1)           (489)             --           (490)
Net income                                       --               --              --           2,243          2,243
                                          ---------           ------      ----------      ----------     ---------- 
BALANCE, DECEMBER 31, 1997                7,526,508               75          24,926          26,025         51,026

Exercise of stock options                    63,900                1             924              --            925
Repurchase and cancellation of stock       (296,000)              (3)         (6,053)             --         (6,056)
Net income                                       --               --              --          20,331         20,331
                                          ---------           ------      ----------      ----------     ---------- 
BALANCE, DECEMBER 31, 1998                7,294,408           $   73      $   19,797      $   46,356     $   66,226
                                          =========           ======      ==========      ==========     ========== 

</TABLE>


                            See accompanying notes.


                                      30

<PAGE>   31


                   WINSLOEW FURNITURE, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
(In thousands)                                                                            Year Ended December 31,
                                                                                   ------------------------------------
                                                                                     1998          1997          1996
                                                                                   --------     ---------      --------
<S>                                                                                <C>           <C>           <C>     
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                      $ 20,331      $  2,243      $  8,284
   Adjustments to reconcile net income to net cash
      provided by operating activities:
   Depreciation and amortization                                                      2,618         2,634         2,979
   Provision for losses on accounts receivable                                        1,331            42         1,759
   Change in net assets held for sale                                                 6,743        14,710         1,591
   Changes in operating assets and liabilities,
       net of effects from acquisitions and dispositions:
     Accounts receivable                                                             (2,210)        1,875          (617)
     Inventories                                                                     (1,164)        1,182           288
     Prepaid expenses and other current assets                                        2,779        (3,871)           50
     Other assets                                                                       843           691          (144)
     Accounts payable                                                                   792          (591)        1,841
     Other accrued liabilities                                                         (357)        3,386          (497)
     Deferred income taxes                                                             (566)         (310)          690
                                                                                   --------      --------      --------
     Total adjustments                                                               10,809        19,748         7,940
                                                                                   --------      --------      --------
       Net cash provided by operating activities                                     31,140        21,991        16,224
                                                                                   --------      --------      --------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures, net of disposals                                              (942)         (425)       (1,351)
   Proceeds from disposition of business                                                 --         2,119            --
   Investment in subsidiary                                                          (9,323)           --            --
                                                                                   --------      --------      --------
       Net cash provided by (used in) investing activities                          (10,265)        1,694        (1,351)
                                                                                   --------      --------      --------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net payments under revolving credit agreements                                   (10,837)      (19,872)          (65)
   Payments on long-term debt                                                        (4,139)       (4,386)       (4,225)
   Proceeds from issuance of common stock, net                                          925           873           187
   Repurchase and cancellation of stock                                              (6,056)         (490)       (3,964)
   Repurchase and cancellation of stock from affiliated company                          --            --        (9,335)
   Proceeds front issuance of long-term debt                                             --            --         3,030
                                                                                   --------      --------      --------
       Net cash used in financing activities                                        (20,107)      (23,875)      (14,372)
                                                                                   --------      --------      --------
       Net increase (decrease) in cash and cash equivalents                             768          (190)          501
Cash and cash equivalents at beginning of year                                          707           897           396
                                                                                   --------      --------      --------
Cash and cash equivalents at end of year                                           $  1,475      $    707      $    897
                                                                                   ========      ========      ========
SUPPLEMENTAL DISCLOSURES:
   Interest paid                                                                   $    695      $  2,318      $  3,296
   Income taxes paid                                                               $  9,579      $  6,048      $  3,937
                                                                                   ========      ========      ========
   Investing activities included the acquisition of Tropic Craft in 1998. 
   Assets acquired, liabilities assumed and consideration paid was as follows:
   Fair value of assets acquired                                                   $ 10,078
   Cash acquired                                                                        (43)
   Liabilities assumed                                                                 (712)
                                                                                   --------
                                                                                   $  9,323
                                                                                   ========

</TABLE>


                            See accompanying notes.

                                      31


<PAGE>   32


WINSLOEW FURNITURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The consolidated financial statements include the accounts of WinsLoew
Furniture, Inc. ("WinsLoew") and its subsidiaries (the "Company"). All material
intercompany balances and transactions have been eliminated.

BUSINESS

WinsLoew is comprised of companies engaged in the design, manufacture and
distribution of casual, contract seating and ready-to-assemble ("RTA")
furniture. WinsLoew's casual furniture products are distributed through
independent manufacturer's representatives, and are constructed of extruded and
tubular aluminum, wrought iron and cast aluminum. These products are
distributed through fine patio stores, department stores and full line
furniture stores nationwide. WinsLoew's contract seating products are
distributed to a customer base which includes architectural design firms,
restaurant and lodging chains. WinsLoew's RTA products include promotionally
priced coffee and end tables, wall units and rolling carts. Distribution of RTA
furniture products is primarily through mass merchandisers, catalogue
wholesalers and specialty retailers. The Company performs periodic credit
evaluations of its customers' financial condition and determines if collateral
is needed on a customer by customer basis.

CASH AND CASH EQUIVALENTS

The Company classifies as cash and cash equivalents all highly liquid
investments which have maturities at the date of purchase of three months or
less. The Company maintains its cash in bank deposit accounts which, at times,
may exceed the federally insured limits. The Company has not experienced any
losses in such accounts. The Company's cash balance at December 31, 1998
includes $1.0 million in an escrow account pending final purchase price
adjustments related to the sale of a discontinued operation (see Note 2).

INVENTORIES

Inventories are stated at the lower of cost or market. Cost is determined
utilizing the first-in, first-out ("FIFO") and weighted average methods.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost. The Company provides for
depreciation on a straight-line basis over the following estimated useful
lives: building and improvements, 8 to 40 years; manufacturing equipment, 2 to
10 years; office furniture and equipment, 3 to 7 years; and vehicles, 3 to 5
years.

GOODWILL

Goodwill is amortized on a straight-line basis over forty years from the date
of the respective acquisition. The carrying value of goodwill is reviewed if
the facts and circumstances suggest it may be impaired. If the review, using
undiscounted cash flows over the remaining amortization period, indicates that
the cost of goodwill will not be recoverable, the Company's carrying value are
reduced.


                                      32
<PAGE>   33

DEFERRED COSTS (OTHER ASSETS)

Loan acquisition costs and related legal fees, included in other assets, are
deferred and amortized over the respective terms of the related debt.

INCOME TAXES

Deferred income taxes are provided for temporary differences between the basis
of assets and liabilities for financial reporting purposes and the related
basis for income tax purposes in accordance with the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 109, ACCOUNTING FOR INCOME TAXES.

EARNINGS PER SHARE

In 1997, the Financial Accounting Standards Board issued SFAS No. 128, EARNINGS
PER SHARE. Statement 128 replaced the calculation of primary and fully diluted
earnings per share with basic and diluted earnings per share. Unlike primary
earnings per share, basic earnings per share excludes any dilutive effects of
options, warrants and convertible securities. Diluted earnings per share is
very similar to the previously reported fully diluted earnings per share. All
earnings per share amounts for all periods have been presented, and where
appropriate, restated to conform to SFAS No. 128 requirements.

The numerators for the earnings per share calculation are set forth on the face
of the accompanying income statements. The only difference between the
denominator for the basic and dilutive calculations are the number of shares
added to basic for the dilutive effect of employee stock options.

REVENUE RECOGNITION

Sales are recorded at time of shipment from the Company's facilities to
customers.

USE OF ESTIMATES

The preparation of the consolidated financial statements requires the use of
estimates in the amounts reported. Actual results could differ from those
estimates.

ACCOUNTING FOR STOCK-BASED COMPENSATION PLANS

The Company follows the provisions of Accounting Principles Board (APB) Opinion
No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES and related Interpretations to
account for its stock option plan. Under provisions of APB No. 25, no
compensation expense has been recognized for stock option grants.

FOREIGN CURRENCY FORWARD CONTRACTS

The Company has exposure to losses which may result from settlement of certain
raw materials purchases denominated in a foreign currency. To reduce this
exposure, the Company has entered into forward contracts to buy foreign
currency. These forward contracts are accounted for as hedges, therefore, gains
and losses from settlement of the forward contracts are used to offset gains
and losses from settlement of the liability for the purchased raw materials.
Gains and losses are recognized in the same period in which gains or losses
from the raw material purchases are recognized. The Company is exposed to
losses on the forward contracts in the event it does not purchase the raw
materials, however, the Company does not anticipate this event.

At December 31, 1998 the Company did not have any forward contracts
outstanding. There were no significant deferred gains or (losses) and actual
gains (losses) included in cost of sales were ($12,000), $30,000 and $15,000
for the years ended December 31, 1998, 1997 and 1996, respectively.

                                      33
<PAGE>   34

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARD

In 1998, the Company adopted SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION. The standard establishes principles for the
disclosure of information about operating segments in financial statements. The
adoption did not have any effect on the Company's primary financial statements,
but did effect the disclosure of segment information contained in Note 9.

2. DISCONTINUED OPERATIONS

During 1997 the Company adopted a plan to dispose of its RTA operations.
WinsLoew's RTA products included ergonomically-designed computer workstations,
which the Company denoted as "space savers", promotionally-priced coffee and
end tables, wall units and rolling carts and an extensive line of futons, futon
frames and related accessories. Distribution of RTA furniture products was
primarily through mass merchandisers, catalogue wholesalers and specialty
retailers. As a result of this decision, the Company recorded a pre-tax
non-cash charge totaling $12.4 million ($8.2 million net of taxes) in the
fourth quarter of 1997 relating to the disposal of the RTA operations. The
charge can be summarized as follows:

    Write-off of goodwill in connection with sale of assets      $ 3,902,000
    Reduction of inventory value                                   2,791,000
    Reduction of property to net realizable value                  2,067,000
    Reduction of accounts receivable value                         1,390,000
    Other liabilities / reserves                                   1,050,000
    Accrual for losses through disposition                         1,200,000
                                                              ==============
    Total                                                        $12,400,000
                                                              ==============

The Company planned to sell two of the businesses and liquidate the assets
related to the futon business. During 1998 the Company sold one of the
businesses, completed the liquidation of the futon business and decided to
retain its Southern Wood business due to improved profitability.

As a condition of the sale mentioned above, WinsLoew is required to hold in
escrow $1.0 million of the sales proceeds to provide indemnification to the
purchaser for claims arising from the date of purchase to December 31, 1999.



                                      34
<PAGE>   35


The operating results of the discontinued operations are summarized as follows
(dollars in thousands, except for per share amounts):

<TABLE>
<CAPTION>
                                                     For the Years Ended December 31,
                                         ---------------------------------------------------------
                                              1998                1997                 1996
                                         ----------------    ---------------      ----------------

<S>                                        <C>                 <C>                  <C>      
Net sales                                  $   4,432           $  15,921            $  26,574
Income before taxes                               --              (1,178)                (385)
Net loss                                          --                (718)                (259)
Net loss per share - diluted               $      --              ($0.10)              ($0.03)

</TABLE>

The net assets of the discontinued operations at December 31, 1998 and 1997 are
as follows:

(In thousands)                                     1998                1997
                                              -------------        ------------
Current assets                                  $      --          $    3,449
Current liabilities, including reserve
   for estimated losses through
   disposal date                                   (1,750)             (1,979)
                                              =============        ============
Net assets/liabilities of discontinued
   operations, current                            ($1,750)         $    1,470
                                              =============        ============

Property, net                                   $      --          $      478
Goodwill, net                                          --               4,018
Other assets                                           --                  52
                                              =============        ============
Net assets of discontinued
   operations, non-current                      $      --          $    4,548
                                              =============        ============

The total assets and liabilities of the subsequently retained Southern Wood
operation for the period classified as a discontinued operation were $4.0
million and $1.1 million, respectively, at December 31, 1997.

The operating results of the subsequently retained Southern Wood operation for
each of the years the operation was reported as a discontinued operation are
summarized as follows (dollars in thousands, except for per share amounts):

<TABLE>
<CAPTION>
                                                     For the Years Ended December 31,
                                         ---------------------------------------------------------
                                              1998                1997                 1996
                                         ----------------    ---------------      ----------------

<S>                                        <C>                 <C>                  <C>       
Net sales                                  $   11,689          $    7,396           $   10,710
Income before taxes                             1,004                 399                   30
Net income                                        611                 247                   18
Net income per share - diluted             $     0.08          $     0.03           $       --

</TABLE>

During 1998, the Company recorded pre-tax income from the disposition of
discontinued operations totaling $3.2 million ($2.0 million net of taxes). The
components are as follows:

Reversal of reserves related to Southern Wood             $   2,425,000
Gain on liquidation of Futon operations                       1,857,000
Loss on sale of remaining RTA operation                      (1,093,000)
                                                        ---------------
Total                                                     $   3,189,000
                                                        ===============

                                      35


<PAGE>   36

As a result of the Board's decision to retain Southern Wood, the consolidated
financial statements for 1997 and 1996 have been reclassified to reflect the
results of operations and assets and liabilities, net of reserves for
discontinued operations, of Southern Wood as a continuing operation.

3.  ACQUISITION AND DISPOSITION

During the third quarter of 1997 the Company disposed of certain assets of its
wrought iron business in the casual furniture product line. The sale generated
proceeds of $2.1 million. This business accounted for net sales of $5.7 million
and $11.0 million in the years ended December 31, 1997 and 1996, respectively.
The operating income of this business was not material to consolidated
operating income. During the third quarter of 1997, the Company recorded
approximately $230,000 of costs associated with the sale in selling, general
and administrative expenses.

In June 1998, the Company purchased all of the stock of Villella, Inc. d/b/a
Tropic Craft Aluminum Furniture Manufacturers ("Tropic Craft") for $9.3
million. In addition, the seller will be entitled to receive a contingent
purchase price payment of up to $1.0 million upon achievement of targeted
earning performance with respect to the years ending June 30, 1999 and June 30,
2000. Tropic Craft is engaged in the design and manufacture of contract casual
furniture. The acquisition resulted in goodwill of $6.9 million. Funds for the
acquisition were provided under WinsLoew's credit facility. The acquisition was
accounted for under the purchase method and, accordingly, the operating results
of Tropic Craft have been included in the consolidated operating results since
the date of acquisition.

The following unaudited pro forma information has been prepared assuming that
the acquisition of Tropic Craft occurred on January 1, 1997. Permitted pro
forma adjustments include only the effects of events directly attributable to
the transaction that are factually supportable and expected to have a
continuing impact. The pro forma results are not necessarily indicative of what
actually would have occurred if the acquisition had been in effect for the
entire period presented. In addition, they are not intended to be a projection
of future results and do not reflect any synergies that might be achieved from
combined operations.

(In thousands, except per share amounts)

                                           For the Years Ended December 31,
                                        ---------------------------------------
                                               1998                  1997
                                        -----------------     -----------------
Net sales                                     $144,752              $127,108
Income from continuing
   operations                                  $18,946               $11,298
Net income                                     $20,977                $2,380
Income from continuing
   operations per share - diluted                $2.49                 $1.49
Net income per share - diluted                   $2.76                 $0.32



                                      36
<PAGE>   37


4.  LONG-TERM DEBT

Long-term debt consisted of the following at December 31, 1998 and 1997:

(In thousands)                                  1998                1997
                                           ----------------    ----------------

Revolving line of credit                         $1,400              $1,546
Term loan                                            --               2,287
Acquisition line of credit                           --              12,500
Other                                                47                  90
                                              ----------           ---------
                                                  1,447              16,423
Less: current portion                                47                 515
                                             ----------           ---------
                                                 $1,400             $15,908
                                             ==========           =========

SENIOR CREDIT FACILITIES

The Company's senior credit facility, as amended, provides for $62.5 million
which matures in February 2001, and is collateralized by substantially all of
the assets of the Company. The facility consists of a working capital revolving
line of credit (maximum of $40 million), a term loan (originally $10 million)
and an acquisition line of credit (maximum of $12.5 million). The working
capital revolving line of credit allows the Company to borrow funds up to a
certain percentage of eligible inventories and accounts receivable. The term
loan requires quarterly repayments. The acquisition line of credit converts to
a term loan with principal payments due in quarterly installments.
Additionally, a payment equal to 50% of cash flow, as defined, is required for
each year within 90 days of year-end. WinsLoew's amended senior credit facility
provides the Company with a variable amount available under the revolving line
of credit. Effective each June 30, the maximum amount available under its
revolving line of credit is $20 million. The Company may, at its option, elect
to increase the revolving line of credit at each December 31 through the
following June 30 to a maximum of $40 million. As of December 31, 1998,
WinsLoew elected to increase the revolving line of credit to $35 million.

The WinsLoew's senior credit facility allows the Company to borrow up to $10
million under its line of credit to purchase shares of the Company's common
stock (see Note 5 below). At December 31, 1998 there was $6.1 million available
for this purpose.

The interest rates on the components of the senior credit facility are either
the base rate plus a spread, or the LIBOR rate plus a spread, as elected by the
Company. The spread is determined by the leverage ratio, as defined, for the
twelve month period ending each quarter. At December 31, 1998, the loans are
priced at the base rate plus 0.25% (8.25% at December 31, 1998). If any LIBOR
loans been outstanding at December 31, 1998 they would have been priced at the
LIBOR rate plus 1.25%. In addition, WinsLoew pays an unused facility fee of
 .375% per annum on a quarterly basis in arrears.

The agreement requires the Company to meet certain financial ratios for
leverage, interest coverage, tangible net worth and includes other provisions
generally common in such agreements including restrictions on dividends,
additional indebtedness and capital expenditures. At December 31, 1998, the
Company was in compliance with its debt covenants. The carrying value of the
revolving line of credit approximated its fair value at December 31, 1998.


                                      37

<PAGE>   38


5.  CAPITAL STOCK

On January 23, 1998, the Board approved a plan authorizing the repurchase of
1,000,000 shares of the Company's stock in the open market at times and prices
deemed advantageous. During 1998, the Company retired 296,000 shares of common
stock purchased for $6.1 million. Subsequent to December 31, 1998 the Company
has purchased 92,500 shares at a cost of $2.6 million. Currently, under the
Board approved repurchase plan, there are 611,500 shares available for
repurchase.

6.  INCOME TAXES

The provision (benefit) for income taxes consisted of the following:

<TABLE>
<CAPTION>
                                                    For the Years Ended December 31,
                                         --------------------------------------------------------
(in thousands)                                1998                1997                 1996
                                         ----------------    ---------------      ----------------
<S>                                         <C>                 <C>                <C>
Provision for taxes related to
   continuing operations                    $ 10,947             $  6,838           $  4,834
Benefit for taxes related to
   discontinued operations                      (375)                  --               (126)
Provision (benefit) for taxes related
to loss on sale of discontinued
operations
                                               1,158                (4,200)               --
                                            ========              ========          ========
Total provision for taxes                   $ 12,105              $  2,263          $  4,708
                                            ========              ========          ========

</TABLE>


<TABLE>
<CAPTION>

                                                    For the Years Ended December 31,
                                         --------------------------------------------------------
(in thousands)                                1998                1997                 1996
                                         ----------------    ----------------     ---------------
<S>                                              <C>                  <C>                 <C>   
Federal:
   Current                                       $10,128              $3,985              $4,478
   Deferred                                          856              (1,936)               (251)
State:
   Current                                           989                 496                 542
   Deferred                                          132                (282)                (61)
                                          ----------------    ----------------    ----------------
                                                 $12,105              $2,263              $4,708
                                         ================    ================     ================
</TABLE>



At December 31, 1998 and 1997, deferred tax assets and liabilities consisted of
the following:

<TABLE>
<CAPTION>
(in thousands)
                                                                        1998                 1997
                                                                   ----------------     ---------------
<S>                                                                          <C>                 <C>  
Deferred tax assets:
   Capitalized inventory costs                                               $ 173               $ 415
   Reserves and accruals                                                     2,894               3,660
   State net operating loss carryforwards                                      304                 344
                                                                   ----------------     ---------------
Deferred tax assets                                                          3,371               4,419
                                                                   ----------------     ---------------
Deferred tax liabilities:
   Intangible asset basis difference                                          (191)                (98)
   Excess of tax over book depreciation                                       (611)             (1,194)
   Prepaid expenses                                                            (94)                (93)
   Other                                                                      (504)                (75)
                                                                   ----------------     ---------------
   Deferred tax liabilities                                                 (1,400)             (1,460)
                                                                   ================     ===============
Deferred income taxes, net                                                  $1,971              $2,959
                                                                   ================     ===============

</TABLE>

                                      38

<PAGE>   39
<TABLE>
<CAPTION>

                                                                        1998                 1997
                                                                   ----------------     ---------------
<S>                                                                          <C>                 <C>  
Included in:
   Other current assets/liabilities                                         $2,772              $4,326
   Deferred income taxes                                                      (801)             (1,367)
                                                                   ================     ===============
                                                                            $1,971              $2,959
                                                                   ================     ===============
</TABLE>


The following table summarizes the differences between the federal income tax
rate and the Company's effective income tax rate for financial statement
purposes:

<TABLE>
<CAPTION>
                                              For the Years Ended December 31,
                                         -------------------------------------------
                                            1998            1997            1996
                                         -----------     -----------     -----------
<S>                                           <C>             <C>             <C>  
Federal income tax rate                       35.0%           34.0%           34.0%
State income taxes                             3.4%            4.7%            2.2%
Goodwill amortization                          2.1%            9.3%            2.0%
Other                                         (3.4%)           2.2%           (2.0%)
                                         ===========      ==========     ===========
Effective tax rate                            37.1%           50.2%           36.2%
                                         ===========      ==========     ===========
</TABLE>


7.  RELATED PARTY TRANSACTIONS

In October 1994, WinsLoew entered into a ten-year agreement (the "Investment
Services Agreement") with Trivest, Inc. ("Trivest"). Trivest and the Company
have certain common shareholders, officers and directors. Pursuant to the
Investment Services Agreement, Trivest provides corporate finance, financial
relations, strategic and capital planning and other management advice to the
Company. The base compensation is $500,000, subject to cost of living increases
and increases for additional businesses acquired. For 1998, 1997 and 1996, the
amount expensed was $641,000, $628,000 and $604,000, respectively. In 1996, the
Company retired 933,504 shares of its common stock purchased from an affiliated
company at $10 per share.

8.  COMMITMENTS AND CONTINGENCIES

LEASES

The Company leases certain office space, manufacturing facilities and various
items of equipment under operating leases. Some leases for office and
manufacturing space contain renewal options and provisions for increases in
minimum payments based on various measures of inflation. Rental expense
amounted to approximately $830,000, $769,000, and $792,000 for the years ended
December 31, 1998, 1997 and 1996, respectively. Operating lease agreements in
effect at December 31, 1998, have the following remaining minimum payment
obligations:

(In thousands)

1999                                                $765
2000                                                 740
2001                                                 744
2002                                                 714
2003                                                 306
2004 - 2007                                          757


                                      39
<PAGE>   40


EMPLOYMENT AGREEMENTS

The Company has employment agreements with certain employees. The agreements
provide for minimum salary levels and bonuses based on a percentage of pre-tax
operating income, as defined in the agreements.

EMPLOYEE BENEFIT PLANS

The Company has an employee benefit plan established under the provisions of
Section 401(k) of the Internal Revenue Code. Full-time employees who meet
various eligibility requirements may voluntarily participate in the plan. The
plan provides for voluntary employee contributions through salary reduction, as
well as discretionary employer contributions. Company contributions were
$161,000 and $143,000 in 1998 and 1997, respectively.

STOCK OPTION PLAN

In 1994, the Company established a Stock Option Plan (the "Plan") as a means to
retain and motivate key employees and directors. The Compensation Committee of
the Board of Directors administers and interprets the Plan and is authorized to
grant options to all eligible employees of the Company and non-employee
directors. The Plan provides for both incentive stock options and non-qualified
stock options. Options are granted under the Plan on such terms and at such
prices as determined by the Compensation Committee, except that the per share
exercise price of incentive stock options cannot be less than the fair market
value of the Company's common stock on the date of grant. The Company has
reserved 1,500,000 shares of common stock for issuance upon exercise of stock
options. All options which have been granted have a term of ten years and vest
ratably over five years.

Pro forma net income and earnings per share have been determined as if the
Company had accounted for its employee stock options as compensation expense
based on their fair value. Fair value was estimated at the date of grant using
a Black-Scholes option pricing model for 1998, 1997 and 1996 assuming a
risk-free interest rate of 4.83%, 6.45% and 6.2% for 1998, 1997 and 1996,
respectively, a volatility factor for the Company's common stock of .608, .411
and .532 in 1998, 1997 and 1996, respectively and a weighted-average expected
life of the options of six years. The pro forma information is not likely to be
representative of the effects of options on pro forma net income in future
years because the Company is required to include only options granted since
1994 in the pro forma information.

<TABLE>
<CAPTION>
                                                         For the Years Ended December 31,
                                                ----------------------------------------------------
                                                    1998                1997               1996
                                                --------------     ---------------    ----------------
<S>                                                   <C>                  <C>                 <C>   
(In thousands)
Pro forma net income                                  $20,035              $2,068              $8,198
                                                ==============     ===============    ================
Pro forma income (loss) per share, diluted:
   Income from continuing operations                  $  2.36               $ 1.45             $ 0.97
   Loss from discontinued operations,
       net of taxes                                        --                (0.09)             (0.03)
   Gain (loss) from sale of discontinued
       operations, net of taxes                          0.27                (1.08)                --
                                                ==============     ===============    ================
   Net income                                         $  2.63               $ 0.28             $ 0.94
                                                ==============     ===============    ================

</TABLE>



                                      40

<PAGE>   41


Information with respect to WinsLoew's Plan is as follows:

<TABLE>
<CAPTION>

                                                    1998
                                     -----------------------------------
                                                      Weighted Average
                                                       Exercise Price
                                        Options             Price               1997                1996
                                     ---------------  ------------------   ----------------   -----------------

<S>                            <C>           <C>           <C>                    <C>                <C>    
Options outstanding at January 1             784,850       $      9.19            671,550            738,450
Granted                                       40,000       $     20.62            250,000             25,000
Exercised                                    (63,900)      $      8.25            (94,725)           (25,100)
Canceled                                     (18,050)      $      9.29            (41,975)           (66,800)
                                        ------------                          ============       ============
Options outstanding at December 31           742,900       $      9.89            784,850            671,550
                                        ============                          ============       ============
Exercise prices per share               $5.88-$23.44                          $5.88-$16.06       $5.88-$11.63
Options exercisable at December 31           422,060       $      9.20             407,100            480,400
                                        ============                          ============       ============
Options available for grant at
     December 31                             573,375                               595,325            803,350
                                        ============                          ============       ============

</TABLE>

Information with regard to options outstanding and exercise price at December
31 is as follows:

<TABLE>
<CAPTION>
                                                                                       Options Exercisable
                                                                                       at December 31, 1998
                                                                                      ----------------------
                                                                         Weighted
                      Weighted                                           Average
                       Average           Options Outstanding            Remaining                  Weighted
                      Exercise    -----------------------------------     Life                     Average
   Exercise Price      Price        1998        1997         1996      at 12/31/98     Shares       Price
-------------------  -----------  ----------  ----------  -----------  -------------  ----------  ----------
<S>                       <C>       <C>         <C>           <C>              <C>    <C>           <C>
  $5.88 - $6.67           $6.16     255,800     291,850      356,250         6.1       160,240       $6.20
       8.66                8.66       8,200      10,250       10,250         6.2         4,920        8.66
  10.00 - 10.50           10.35     240,900     284,750      158,550         7.3       104,900       10.16
  11.13 - 11.63           11.56     163,000     163,000      146,500         5.4       145,000       11.61
      12.63               12.63      20,000      20,000           --         8.6         4,000       12.63
      16.06               16.06      15,000      15,000           --         8.9         3,000       16.06
      17.00               17.00      17,500          --           --         9.0            --          --
      23.44               23.44      22,500          --           --         9.4            --          --
                                  ==========  ==========  ===========               ==========
      Total                9.89     742,900     784,850      671,550         7.0       422,060        9.20
                                  ==========  ==========  ===========               ==========
</TABLE>


The estimated weighted average fair value of options granted in 1998 is $12.51
per option. The weighted average remaining contractual life for options granted
in 1998 is 9.3 years.

LITIGATION AND LIABILITY CLAIMS

The Company is, from time to time, involved in routine litigation including
general liability and worker's compensation claims. It is the opinion of
management that sufficient insurance has been purchased to cover current and
potential general liability and worker's compensation claims. None of such
litigation in which the Company is presently involved is believed to be
material to its liquidity, financial position or results of operations.


                                      41

<PAGE>   42


9. OPERATING SEGMENTS

The Company has three segments organized and managed based on the products
sold. These reportable segments are described in Note 1.

The Company evaluates performance and allocates resources based on gross
profit. The accounting policies are the same as those described in the summary
of significant accounting policies. There are no intersegment sales/transfers.
Export revenues are not material.

<TABLE>
<CAPTION>
                                                           For the Years Ended December 31,
                                                -------------------------------------------------------
                                                    1998                1997                1996
                                                --------------     ---------------    -----------------
(In thousands)

<S>                                                   <C>                 <C>                  <C>    
REVENUES:
Casual products                                  $     59,733       $      56,363      $        58,066
Contract seating products                              69,938              58,386               48,629
Ready to assemble products                             11,689               7,396               10,710
                                                --------------     ---------------    -----------------
        Total revenues                           $    141,360       $     122,145      $       117,405
                                                ==============     ===============    =================

SEGMENT GROSS PROFIT:
Casual products                                  $     28,227       $      24,164      $        23,812
Contract seating products                              23,439              17,256               14,126
Ready to assemble products                              2,462               1,294                1,438
                                                --------------     ---------------    -----------------
         Total segment gross profit                    54,128              42,714               39,376
Reconciling items:
Selling and general and administrative
   expenses                                            23,124              21,427               21,472
Amortization                                            1,122                 992                1,444
                                                --------------     ---------------    -----------------
Operating income                                       29,882              20,295               16,460
Interest expense, net                                     635               2,296                3,083
                                                --------------     ---------------    -----------------
 Income from continuing operations before
   income taxes                                   $    29,247        $     17,999       $       13,377
                                                ==============     ===============    =================
DEPRECIATION AND AMORTIZATION:
Casual products                                        $1,550              $1,532               $1,956
Contract seating products                                 425                 411                  360
Ready to assemble products                                309                 341                  349
                                                --------------     ---------------    -----------------
       Total                                            2,284               2,284                2,665
Reconciling items:
Corporate                                                 334                 350                  314
                                                --------------     ---------------    -----------------
Total depreciation and amortization               $     2,618         $     2,634        $       2,979
                                                ==============     ===============    =================
</TABLE>


                                      42

<PAGE>   43



<TABLE>
<CAPTION>
                                                           For the Years Ended December 31,
                                                -----------------------------------------------------
                                                    1998                1997                1996
                                                --------------     ---------------    ---------------
<S>                                                     <C>           <C>                 <C>
EXPENDITURES  FOR (DISPOSAL OF) LONG LIVED
   ASSETS, NET:
Casual products                                     $    (24)         $     790           $    629
                                                                                  
Contract seating products                                                   
                                                         129                236                162 
Ready to assemble products                                                 
                                                         103               (576)                61
                                                --------------     ---------------    ---------------
       Total                                             208                450                852
Reconciling items:
Corporate                                                734                (25)               499
                                                --------------     ---------------    ---------------
Total  expenditures for long lived assets,
   net                                              $    942           $    425           $  1,351
                                                ==============     ===============    ===============

SEGMENT ASSETS:
Casual products                                     $ 51,880           $ 41,964           $ 48,086
Contract seating products                             23,486             21,836             22,372
Ready to assemble products                             6,496              3,974              6,246
        Total                                         81,862             67,774             76,704
Reconciling items:
Corporate                                              2,691              6,622              2,518
Assets held for sale                                      --              6,018             20,728
                                                --------------     ---------------    ---------------
Total consolidated assets                           $ 84,553           $ 80,414           $ 99,950
                                                ==============     ===============    ===============
</TABLE>




The Company has one contract seating customer that accounted for 17%, 16% and
10% of consolidated revenues in the years ended December 31, 1998, 1997 and
1996, respectively.

10.  SUPPLEMENTAL INFORMATION

The following balance sheet captions are comprised of the items specified
below:

                                                       December 31,
                                         ------------------------------------
                                              1998                1997
                                         ----------------    ----------------
(In thousands)

Inventories:

Raw materials                               $      9,288        $      8,146
Work in process                                    1,521               1,089
Finished goods                                     1,397               1,198
                                         ----------------    ----------------
                                            $     12,206        $     10,433
                                         ================    ================




                                      43

<PAGE>   44



                                                     December 31,
                                         ------------------------------------
                                              1998                1997
                                         ----------------    ----------------
(In thousands)
Property, plant and equipment:

Land                                              $2,628           $1,834
Building and improvements                         10,838            9,273
Manufacturing equipment                            9,464            9,146
Office equipment                                   1,953            1,776
Construction in progress                              81               74
Vehicles                                             176              141
                                         ----------------    ---------------
                                                  25,140           22,244
Accumulated depreciation                         (11,192)         (10,221)
                                         ----------------    ---------------
                                                 $13,948          $12,023
                                         ================    ===============

Other accrued liabilities:

Compensation, commissions and
   employee benefits                              $3,063           $2,324
Customer deposits                                  1,749            1,559
Income taxes                                       1,546              971
Interest                                              24               88
Other                                              3,570            3,261
                                         ----------------    ---------------
                                                  $9,952           $8,203
                                         ================    ===============

Depreciation expense for continuing operations was $1,496,000, $1,642,000, and
$1,535,000 for the years ended December 31, 1998, 1997 and 1996, respectively.

Accumulated amortization at December 31, 1998 and 1997 related to goodwill was
$6,348,000 and $5,564,000, respectively. Accumulated amortization at December
31, 1998 and 1997 related to other intangible assets was $1,110,000 and
$773,000, respectively.

11.  SUBSEQUENT EVENTS

In January 1999, the Company entered into a non-binding letter of intent (the
"letter") to pursue a potential merger in which the Company's public
shareholders would receive $30.00 per share in cash. The purchasing entity
would be formed by the Chairman of the Board of Directors and other members of
management. A Special Committee of the Company's Board of Directors was
established to review the proposal and it has recommended the letter.

The letter permits the Company to solicit and consider superior proposals
subject to the payment of a termination fee to the management group upon the
acceptance of another offer. The proposed merger is subject to, among other
things, approval by the Company's shareholders and the Special Committee.
Accordingly, there can be no assurance that the merger will be consummated.



                                      44

<PAGE>   45


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

         No events nor occurrences required to be disclosed in this Item 9 have
occurred.










                                      45

<PAGE>   46


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The executive officers and directors of the Company are as follows:

<TABLE>
<CAPTION>
                Name                     Age               Position
--------------------------------         ---     ------------------------------
<S>                                       <C>    <C>
Earl W. Powell...................         60     Chairman of the Board
Bobby Tesney.....................         54     President, Chief Executive Officer and Director
R. Craig Watts...................         45     Executive Vice President -- Contract Seating
Stephen C. Hess..................         50     Executive Vice President  -- Casual Furniture
Vincent A. Tortorici, Jr.........         45     Vice President and Chief Financial Officer
Jerry C. Camp....................         33     Vice President -- Operations
William F. Kaczynski, Jr.........         39     Director
Phillip T. George, M.D...........         59     Director
Peter W. Klein...................         43     Director
William H. Allen, Jr.............         63     Director
Sherwood M. Weiser...............         68     Director
M. Miller Gorrie.................         63     Director
James S. Smith...................         70     Director
Henry C. Cheek...................         73     Director
</TABLE>

         The Company was formed in September 1994, and in December 1994 the
Company merged with each of Winston and Loewenstein. Each of the Company's
directors and executive officers were also directors or officers of Winston
and/or Loewenstein, as described below. Prior to the merger, each of Winston
and Loewenstein were publicly held corporations whose common stock traded on
the Nasdaq National Market.

         Mr. Powell, Chairman of the Board of the Company since October 1994,
serves as President and Chief Executive Officer of Trivest, Inc. ("Trivest"),
which is a private investment firm specializing in management services and
acquisitions, dispositions and leveraged buyouts, which was formed by Messrs.
Powell and George in 1981. Trivest is an affiliate of the Trivest Partnerships
and Trivest Manager. Mr. Powell has also served as Chairman of the Board of
Atlantis Plastics, Inc., an American Stock Exchange company whose subsidiaries
are engaged in the plastics industry ("Atlantis"), since founding that company
in February 1984, as Chief Executive of Atlantis from its organization until
February 1995 and as President of Atlantis from November 1993 to February 1995.
Mr. Powell has served as Chairman of the Board of Biscayne Apparel, Inc., a
company whose principal subsidiaries are engaged in the apparel industry
("Biscayne"), since October 1985 and presently serves as Chief Executive
Officer of Biscayne. The common stock of Biscayne is quoted on the NASD OTC
Bulletin Board. Biscayne filed a voluntary Chapter 11 bankruptcy petition in
February 1999. Mr. Powell also served as Chairman of the Board of Winston from
December 1988 to December 1994, Chairman of the Board of Loewenstein from
February 1985 to December 1994 and as Loewenstein's President and Chief
Executive Officer from May 1994 to December 1994. From 1971 until 1985, Mr.
Powell was a partner with KPMG Peat Marwick, Certified Public Accountants
("Peat Marwick"), where his positions included serving as managing partner of
Peat Marwick's Miami office.


                                      46

<PAGE>   47

         Mr. Tesney, President, Chief Executive Officer and a director of the
Company since October 1994, served as President, Chief Executive Officer and a
director of Winston from December 1993 to December 1994, General Manager of
Winston from 1985 to December 1993 and as Senior Vice President-Operations of
Winston from January to December 1993. Mr. Tesney also served as Vice President
of Winston from 1979 until January 1992.

         Mr. Watts, Executive Vice President-Contract Seating of the Company
since October 1994, served as a director of Loewenstein from December 1990 to
December 1994, and was appointed Loewenstein's Executive Vice
President-Contract Seating in May 1993, after serving as Vice President since
May 1991. Mr. Watts also serves as the President and Chief Operating Officer of
the Company's Loewenstein and Gregson divisions, and has served in a number of
management positions since joining Loewenstein in April 1981.

         Mr. Hess, the Company's Executive Vice President-Casual Furniture
since October 1994, served as Winston's Executive Vice President from December
1993 to December 1994, Winston's Senior Vice President-Marketing and Sales from
January 1992 to September 1993, and as Winston's Vice President-Marketing and
Sales from January 1983 until January 1992.

         Mr. Tortorici, the Company's Vice President and Chief Financial
Officer since October 1994, served as Winston's Vice President-Finance and
Administration and Chief Financial Officer from March 1988 to December 1994.
Mr. Tortorici is a certified public accountant and was employed by Arthur
Andersen & Co. from 1976 until March 1988.

         Mr. Camp, the Company's Vice President - Operations since September
1998, served as the Company's Director of Safety, Environmental and Human
Resources from October 1994 to September 1998, served as Director of
Engineering at Winston from September 1988 to October 1994, and served in
various other capacities with Winston, including Project Engineer, from May
1984 to September 1988.

         Mr. Kaczynski was elected director of the Company in January 1998. Mr.
Kaczynski has served as an executive officer of Trivest since January 1998 and
is presently a Managing Director. From July 1996 until December 1997, he was
Chief Financial Officer of WebSite Management Company, Inc. d/b/a FlashNet
Communications, an Internet service provider. From May 1994 until July 1996, he
was Chief Financial Officer of Colorado Mountain Express, Inc., an airport
transportation company. Prior to that he was with Heller Financial, Inc. from
1986 until 1994, most recently as Senior Vice President-Corporate Finance
Group, Dallas, Texas.

         Dr. George, a director of the Company since October 1994, served as a
director of Winston from October 1989 to December 1994 and as a director of
Loewenstein from February 1985 to December 1994. Dr. George also serves as the
Vice Chairman of the Board of Trivest, the Vice Chairman of the Board and
Chairman of the Executive Committee of the Board of Directors of Atlantis, and
as a Director of Biscayne. Biscayne filed a voluntary Chapter 11 bankruptcy
petition in February 1999. Dr. George's executive position with Trivest has
been his principal occupation since retiring from the private practice of
plastic and reconstructive surgery in February 1986.

         Mr. Klein, a director of the Company since October 1994, served as a
director of Winston from December 1988 to December 1994 and as a director of
Loewenstein from May 1993 to December 1994. Mr. Klein has served as an
executive officer of Trivest since May 1986 and is presently a Managing
Director and the General Counsel of Trivest. Prior to joining Trivest, Mr.
Klein practiced law in Chicago, Illinois and Cleveland, Ohio.

         Mr. Allen, a director of the Company since October 1994, served as a
director of Loewenstein from September 1993 to December 1994. Mr. Allen serves
as Vice Chairman of NationsBank Florida, and served as Chairman of the Board
and Chief Executive Officer of Intercontinental Bank, a Nasdaq National Market
company headquartered in Miami, Florida, since April 1987 until its merger with
NationsBank South in December 1994. Mr. Allen also serves as a director of
American Bankers Insurance Group, a New York Stock Exchange company
headquartered in Miami, Florida, and Decorator Industries, Inc., traded on the
American Stock Exchange, headquartered in Hollywood, Florida.


                                      47
<PAGE>   48

         Mr. Weiser, a director of the Company since October 1994, has been,
since 1970, the Chairman of the Board, President and Chief Executive Officer of
CHC International, Inc., a leading hotel and casino development and management
company that does business as "Carnival Hotels and Casinos," and its
predecessors. Mr. Weiser also serves as a director of Carnival Corporation, a
cruise line traded on the New York Stock Exchange, Wyndam International, Inc.,
traded as a paired share real estate investment trust on the New York Stock
Exchange, and Mellon United National Bank, a New York Stock Exchange company.

         Mr. Gorrie, a director of the Company since October 1994, served as a
director of Winston from February 1993 to December 1994 and from May 1986 to
December 1988. Mr. Gorrie has been Chairman of Brasfield & Gorrie General
Contractor, Inc., a diversified general contractor based in Birmingham,
Alabama, since 1964. Mr. Gorrie is a director of Colonial Properties Trust, a
real estate investment trust traded on the New York Stock Exchange.

         Mr. Smith, a director of the Company since October 1994, served as a
director of Winston from February 1993 to December 1994, and as a director of
Biscayne from June 1986 to February 1992. Mr. Smith has been engaged in private
investment activities as his principal occupation for more than the prior five
years. Mr. Smith served as Executive Vice President of Stephens, Inc., an
investment banking firm based in Little Rock, Arkansas, from January 1985 until
May 1987. Mr. Smith has also served as President of the Arnold D. Frese
Foundation since March 1979.

         Mr. Cheek, a director of the Company since October 1994, served as a
director of Winston from February 1993 to December 1994. Mr. Cheek has been
engaged in private investment activities as his principal occupation for more
than the prior five years. From 1951 until his retirement in 1984, Mr. Cheek
was Vice President of U.S. Industries, Inc., a diversified holding company and
served as Chief Executive Officer of its Furniture Group. Mr. Cheek served as a
director of Winston from May 1987 through December 1988.


                                      48


<PAGE>   49


ITEM 11. EXECUTIVE COMPENSATION

         SUMMARY COMPENSATION TABLE

         The following table sets forth compensation awarded to, earned by or
paid to the Company's Chief Executive Officer, and each of the Company's other
executive officers whose total 1998 salary and bonus from the Company was
$100,000 or more (the Chief Executive Officer and such other executive officer
are referred to herein as the "Named Executive Officers").

<TABLE>
<CAPTION>
                                                                                                        Long Term
                                                                                                       Compensation
                                                                                                      -------------
                                                           Annual Compensation                            Awards
                                       ---------------------------------------------------------      -------------
                                                                                    Other Annual        Number of
                                       Fiscal Year      Salary          Bonus      Compensation(1)   Options Granted
                                       -----------    ---------      ---------     ---------------   ---------------
     Name and Principal Position                                                          (1)
--------------------------------------
<S>                                       <C>         <C>             <C>              <C>                <C>
BOBBY TESNEY.......................       1998        $250,150        $250,150         $104,236               --
   President and Chief Executive          1997         245,000         183,750           49,221           40,000
   Officer                                1996         216,400         162,300           28,240               -- 
STEPHEN C. HESS....................       1998         204,200         173,570           42,256               --
   Executive  Vice President --           1997         200,000         150,000           20,935           30,000
   Casual Furniture                       1996         178,218         133,663           18,606               --
VINCENT A. TORTORICI, JR...........       1998         148,050          96,233           15,784               --
   Vice President and Chief               1997         145,000          72,500           12,669           25,000
   Financial Officer                      1996         129,900          64,950            8,718               --
R. CRAIG WATTS.....................       1998         185,824         157,803           21,067               --
   Executive Vice President --            1997         181,830         136,373           19,343           25,000
   Contract Seating                       1996         166,138         121,103           20,357               --
JERRY C. CAMP......................       1998          94,096          28,800            7,820               --
   Vice President -- Operations           1997          85,770           8,900            5,908            5,000
                                          1996          71,850           7,185            5,195               --


</TABLE>

---------------------
(1)  "Other Annual Compensation" represents amount paid by the Company on
     behalf of the Named Executive Officer under the Company's Non-Qualified
     Supplemental Executive Retirement Plan established in October 1996. Under
     the terms of this Plan, selected employees make after-tax contributions of
     their salary to one or more investment alternatives available under such
     Plan. The Company then matches the employee contribution (up to 10% of
     compensation on an after-tax basis) depending on the employee's length of
     service (up to 50% for 15 years of continuous service). The employee is
     vested at all times in the deferred compensation and is vested immediately
     in the matching contribution.

         OPTION GRANTS

         No stock options were granted to any Named Executive Officers in 1998.


                                      49
<PAGE>   50


         AGGREGATED 1998 FISCAL YEAR-END OPTION VALUE TABLE

         The following table sets forth certain information concerning
unexercised stock options held by the Named Executive Officers as of December
31, 1998. No stock options were exercised by such persons during 1998. All
"unexercisable" options will become fully exercisable and cancelled in exchange
for cash payments pursuant to the Merger. See "THE MERGER -- Cash-out of
WinsLoew Stock Options."

<TABLE>
<CAPTION>
                                                Number of Securities                    Value of Unexercised
                                           Underlying Unexercised Options               In-the Money Options
                                                At December 31, 1998                    At December 31, 1998
                                          --------------------------------        --------------------------------
                Name                      Exercisable        Unexercisable        Exercisable        Unexercisable
--------------------------------------    -----------        -------------        -----------        -------------
<S>                                           <C>                 <C>             <C>                   <C>     
Bobby Tesney......................            73,000              52,000          $1,263,625            $922,000
Stephen C. Hess...................            51,000              34,000             849,750             589,000
Vincent A. Tortorici, Jr..........            30,000              30,000             536,250             525,000
R. Craig Watts....................            55,175              30,000           1,020,335             525,000
Jerry C. Camp.....................             4,500               4,000              68,063              64,000

</TABLE>

         401 (k) PLAN

         Effective January 1, 1997, the WinsLoew Furniture, Inc. 401 (k) Plan
was established. Employees of the Company and its subsidiaries are eligible to
participate in the Plan following the later to occur of (i) the employee's
completion of one year of service or (ii) the employee's 21st birthday.
Eligible employees may make a salary reduction contributions to the Plan on a
pretax basis. For each calendar year, the Company and the other participating
employees may make matching contributions to the Plan based on a discretionary
matching percentage to be determined each year by the Company. In addition, the
Company and the other participating employers may make a discretionary profit
sharing contribution to the plan on behalf of each participant who completes
more than 500 hours of service during the year or who is employed on the last
day of the year. This latter contribution is allocated proportionately based on
each participants compensation. An employee's vested benefits are payable upon
his retirement, death, disability, or other termination of employment or upon
the attainment of age 59-1/2. An employee is always fully vested in his account
balance attributable to his own contributions to the Plan. The employee's
interest in the account attributable to his employers contributions and
earnings thereon becomes fully vested upon the earlier of the attainment of his
normal retirement date (age 65), his death, his permanent and total disability,
or his completion of six years of service. If an employee terminates employment
for reasons other than retirement, death, or disability, his vested interest is
based on a graduated vesting schedule which provides for 20% vesting after two
years of service and 20% for each year thereafter. Nonvested amounts are 
forfeited.

         LONG TERM INCENTIVE AND PENSION PLANS

         The Company has no Long Term Incentive or Pension Plans.

         DIRECTOR COMPENSATION

         During 1996 and the first quarter of 1997, the Company paid each
director who was neither an employee of the Company nor Trivest an annual
retainer of $10,000, an additional retainer of $2,500 for serving on the
Compensation Committee, a $500 fee for each meeting of the Board of Directors
attended and, unless held on the same day as a Board meeting, $500 for each
committee meeting attended. The Company also reimburses all directors for
expenses incurred in connection with their activities as directors.

         Additionally, prior to 1997, on March 31 of each year, each director
who was neither an employee of the Company nor Trivest received automatic
grants of options to purchase 5,000 shares of Common Stock pursuant to the
Company's 1994 Stock Option Plan. Such options become exercisable at the rate
of 20% per year on each anniversary of the date of grant, and have an exercise
price equal to the fair market value of Common Stock on the date of grant. The
unexercised portion of any such option will terminate upon the earliest to
occur of the 


                                      50


<PAGE>   51


following: (i) the expiration of 10 years from the date of grant of the option,
(ii) twelve months after the date on which the optionee ceases to be a director
by reason of the death or disability of the optionee, or (iii) three months
after the optionee ceases to be a director for any other reason. In addition,
each other director of the Company is eligible to receive discretionary grants
of options pursuant to such plan. These automatic grants were terminated in
connection with the adoption of the Amended and Restated 1994 Stock Option Plan
by the Board of Directors in January 1997.

         The Board of Directors approved new compensation policies effective
April 1, 1997. Directors who are neither employees of the Company nor Trivest
are paid a $2,500 cash fee for each meeting attended in person and a $500 cash
fee for each meeting attended by telephone. In addition, each member of the
Compensation and Audit Committee receives a $2,500 annual retainer, payable
quarterly in advance.

         In addition, during 1998 each of the Company's directors was granted
options to purchase 2,500 shares of Common Stock pursuant to the Company's
Amended and Restated 1994 Stock Option Plan for each meeting of the Board of
Directors attended by him. There were two meetings of the Board of Directors in
1998. Such options become exercisable at the rate of 20% per year on each
anniversary of the date of grant and have an exercise price equal to the fair
market value of the Common Stock on the date of grant. The unexercised portion
of such options will terminate on the earliest to occur of the following (i)
the expiration of 10 years from the date of grant of the option, (ii) twelve
months after the date on which the optionee ceases to be a director by reason
of the death or disability of the optionee, or (iii) except as otherwise may be
determined by the Board, three months after the date on which the optionee
ceases to be a director for any other reason. The unvested portion of the
foregoing options will become fully vested in the event of a change in control
of the Company.

         EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN 
         CONTROL ARRANGEMENTS

         Effective January 1, 1995, the Company entered into five-year
employment agreements with each of Messrs. Tesney, Watts, Hess and Tortorici
(as amended, the "Employment Agreement"). The Employment Agreements provide for
the Company to pay Messrs. Tesney, Watts, Hess and Tortorici base salaries of
$200,000, $150,000, $165,000 and $120,000, respectively, in each case subject
to annual cost of living adjustments. The Employment Agreements also provide
for annual incentive compensation payments of a portion of the executive's then
base salary (100% in the case of Mr. Tesney, 85% in the case of each of Messrs.
Hess and Watts, and 65% in the case of Mr. Tortorici) based on the operating
earnings (adjusted to exclude the effect of goodwill amortization) of (i) the
Company, in the case of Messrs. Tesney and Tortorici, (ii) the Company's
Contract Seating divisions, in the case of Mr. Watts,) and (iii) the Company's
Casual Furniture divisions, in the case of Mr. Hess. None of such officers will
receive any incentive compensation payment under his Employment Agreement for
any particular year unless the relevant operating earnings for such year are at
least 75% of the "target earnings" for such year. Target earnings for 1998 were
set by the Compensation Committee of the Board. Each Employment Agreement also
provides that the executive will receive six months base salary if his
employment is terminated without "cause" (as defined), and prohibits the
executive from directly or indirectly competing with the Company for one year
after termination of his employment (six months if he is terminated by the
Company without "cause"). The Employment Agreements were approved by the
Compensation Committee of the Company's Board of Directors.

         Each of the Named executive Officers holds options to purchase Common
Stock under the company's Amended and restated 1994 Stock Option Plan. To the
extent not already exercisable, such options generally become exercisable upon
(i) a reorganization, merger, consolidation or other form of corporate
transaction with respect to which ownership of a majority of the voting power
of the Common Stock is transferred, (ii) liquidation or dissolution of the
Company or (iii) the sale of all or substantially all of the Company's assets.

         COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         Mr. Powell, the Company's Chairman, also serves on the Board of
Directors of CHC International, Inc., a hotel and casino development and
management company. Mr. Weiser, a director and member of the 


                                      51

<PAGE>   52


Compensation Committee of the Company, serves as Chairman of the Board,
President and Chief Executive Officer of CHC International, Inc. See
"--Directors and Executive Officers of WinsLoew."






                                      52



<PAGE>   53


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of March 1, 1999 by (i) each person
known by the Company to beneficially own more than five percent of the
outstanding shares of Common Stock, (ii) each director of the Company, (iii)
each "Named Executive Officer" of the Company (as defined below in "Executive
Compensation-Summary Compensation Table"), and (iv) all directors and executive
officers of the Company as a group:

<TABLE>
<CAPTION>
                                                                                   Beneficial Ownership
                                                                                    of Common Stock(2)
                                                                           -----------------------------------
                                                                           Number of Shares         Percentage
                                                                           ----------------         ----------
<S>           <C>                                                             <C>                        <C>  
Earl W. Powell(3)(4)..............................................            1,999,187                  27.7%
Phillip T. George, M.D.(3)(5).....................................            1,865,283                  25.9%
Trivest Group, Inc.(3)(6).........................................              908,455                  12.6%
FMR Corp.(7)......................................................              596,200                   8.3%
Trivest Special Situations Fund 1985, L.P.(3)(8)..................              542,816                   7.6%
Heartland Advisors, Inc.(9).......................................              229,300                   3.2%
R. Craig Watts(10)................................................              173,237                   2.4%
M. Miller Gorrie(11)..............................................              155,950                   2.2%
Bobby Tesney(12)..................................................              134,693                   1.9%
Stephen C. Hess(13)...............................................               87,602                   1.2%
Vincent A. Tortorici, Jr.(14).....................................               51,950                  *
James S. Smith(15)................................................               35,000                  *
Henry C. Cheek(16)................................................               21,000                  *
Sherwood M. Weiser(17)............................................               17,175                  *
William H. Allen, Jr.(18).........................................               10,550                  *
Peter W. Klein(3)(19).............................................                8,050                  *
Jerry C. Camp(20).................................................                6,262                  *
William F. Kaczynski, Jr.(3)(21)..................................                  500                  *
All directors and executive officers as a group (14 persons)(22)..            2,863,012                  37.9%

</TABLE>

-------------------------
(*)    Less than 1%

(1)  Except as  otherwise  indicated  below,  the  address  of each  beneficial
     owner is 160  Village  Street, Birmingham, Alabama 35242.

(2)  Except as otherwise indicated below, all shares are owned directly and
     each person has sole voting and investment power with respect to all
     shares. For purposes of this table, a person is deemed to have "beneficial
     ownership" of any shares as of a given date which the person has the right
     to acquire within 60 days after such date. For purposes of computing the
     outstanding shares held by each person named above on a given date, any
     shares which such person has the right to acquire within 60 days after
     such date are deemed to be outstanding, but are not deemed to be
     outstanding for the purpose of computing the percentage ownership of any
     other person. However, the table does not reflect the acceleration of
     stock options vesting that will result from the Merger. See "THE MERGER --
     Cash-out of WinsLoew Stock Options."


                                      53
<PAGE>   54


(3)  The beneficial owner's address is 2665 South Bayshore Drive, Suite 800, 
     Miami, Florida 33133.

(4)  Includes 259,135 shares owned directly, 36,625 shares subject to
     exercisable options granted under the Company's stock option plan, 662,484
     shares held of record by Trivest Fund I, Ltd., 245,971 shares held of
     record by Trivest Equity Partners I, Ltd., 116,459 shares held of record
     by Trivest Principals' Fund 1988, of which Mr. Powell is a general
     partner, 542,816 shares owned of record by Trivest Special Situations Fund
     1985, L.P. ("TSSF") (see note (8)) and 135,697 shares owned of record by
     Trivest Annuity Fund, Ltd.("Annuity Fund") . The General Partner of
     Annuity Fund is Trivest Plan Sponsor, Inc. ("Trivest Plan Sponsor").
     Messrs. Powell and George are executive officers and directors of Trivest
     Plan Sponsor and beneficially own 100% of its outstanding stock.

(5)  Includes 136,641 shares owned directly, 1,965 shares held of record by Dr.
     George as custodian for his minor children under the Florida Uniform Gifts
     to Minors Act as to which Dr. George disclaims beneficial ownership,
     23,250 shares subject to exercisable options under the Company's stock
     option plan, 662,484 shares held of record by Trivest Fund I, Ltd.,
     245,971 shares held of record by Trivest Equity Partners I, Ltd., 116,459
     shares held of record by Trivest Principals' Fund 1988, of which Dr.
     George is a general partner, 542,816 shares of record owned by TSSF (See
     note (8)), and 135,697 shares owned of record by Annuity Fund. The General
     Partner of Annuity Fund is Trivest Plan Sponsor. Messrs. Powell and George
     are executive officers and directors of Trivest Plan Sponsor and
     beneficially own 100% of its outstanding stock.

(6)  Trivest Group, Inc. serves as the sole general partner of Trivest 1988
     Fund Managers, Ltd., which in turn is the sole general partner of (i)
     Trivest Fund I, Ltd., a privately held investment partnership that holds
     of record 662,484 shares of Common Stock, and (ii) Trivest Equity Partners
     I, Ltd., a privately held investment partnership that holds of record
     245,971 shares of Common Stock. Messrs. Powell and George are executive
     officers and directors of Trivest Group, Inc. and beneficially own 100% of
     its outstanding capital stock.

(7)  The address for FMR Corp. is 82 Devonshire Street, Boston, Massachusetts 
     02109.

(8)  The general partner of TSSF is Trivest Associates, L.P. ("Associates"), a
     Florida limited partnership whose general partner is Trivest, Inc. Messrs.
     Powell and George are executive officers and directors of Trivest Inc. and
     beneficially own 100% of its outstanding capital stock. Messrs. Powell and
     George are also limited partners of Associates.

(9)  The address for Heartland Advisors, Inc. is 790 North Milwaukee Street, 
     Milwaukee, Wisconsin 53202.

(10) Includes 113,062 shares owned directly and 60,175 shares subject to
     exercisable options granted under the Company's Stock Option Plan. Mr.
     Watts' address is 1801 N. Andrews Extension, Pompano Beach, Florida 33061.

(11) Includes 62,750 shares owned directly and 14,500 shares subject to
     exercisable options granted under the Company's stock option plan and
     78,700 shares owned by Brasfield & Gorrie, General Contractors,
     Incorporated. Mr. Gorrie's address is c/o Brasfield and Gorrie, 729 South
     30th Street, Birmingham, Alabama 35223.

(12) Includes 51,693 shares owned directly and 83,000 shares subject to 
     exercisable  options granted under the Company's stock option plan.

(13) Includes 31,602 shares owned directly and 56,000 shares subject to 
     exercisable options granted under the Company's stock option plan.

(14) Includes 16,950 shares owned directly and 35,000 shares subject to 
     exercisable options granted under the
     Company's stock option plan.

                                      54
<PAGE>   55

(15) Includes 20,000 shares owned directly and 15,000 shares subject to
     exercisable options granted under the Company's stock option plan. Mr.
     Smith's address is Suite 916, 10 Rockefeller Plaza, New York, New York
     10020.

(16) Includes 6,000 shares owned directly and 15,000 shares subject to
     exercisable options granted under the Company's stock option plan. Mr.
     Cheek's address is 3713 Fairway Drive, DCBE, Granbury, Texas 76049.

(17) Includes 5,675 shares held by Mr. Weiser's wife, 2,000 shares owned
     directly and 9,500 shares subject to exercisable options granted under the
     Company's stock option plan. Mr. Weiser's address is 3250 Mary Street, 5th
     Floor, Miami, Florida 33133.

(18) Includes 1,050 shares owned directly and 9,500 shares subject to
     exercisable options granted under the Company's stock option plan. Mr.
     Allen's address is c/o Nations Bank South, 200 S.E. 1st Street, Suite 800,
     Miami, Florida 33131.

(19) Represents 8,050 shares subject to exercisable options granted under the 
     Company's stock option plan.

(20) Includes 1,762 shares owned directly and 4,500 shares subject to 
     exercisable  options  granted under the Company's stock option plan.

(21) Includes 500 shares subject to exercisable options.

(22) Includes an aggregate of 361,100 shares subject to exercisable options
     granted under the Company's stock option plan, 1,024,914 shares owned of
     record by Trivest Fund I, Ltd., Trivest Equity Fund I, Ltd., and Trivest
     Principals' Fund 1988 and 678,513 shares owned of record by TSSF and
     Annuity Fund. See notes (4), (5), (6) and (7).





                                      55

<PAGE>   56


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         INVESTMENT SERVICES AGREEMENT. In December 1994, the Company entered
into a ten-year investment Services Agreement with Trivest (the "Investment
Services Agreement), pursuant to which Trivest provides corporate finance,
strategic and capital planning and other management advice to the Company,
including (i) conducting relations on behalf of the Company with accountants,
attorneys, financial advisors and other professionals, (ii) providing reports
to the Company with respect to the value of its assets, and (iii) rendering
advice with respect to acquisitions, dispositions, financings and refinancings.
Pursuant to the Investment Services Agreement, Trivest receives a base annual
fee of $500,000 (in 1994), subject to cost-of-living increases. In addition,
for each additional business acquired by the Company, Trivest's base
compensation will generally be increased by the greater of (i) $100,000, and
(ii) the sum of 5% of the additional business's projected annual earnings
before income taxes, interest expense and amortization of goodwill ("EBITA")
for the fiscal year in which it is acquired up to $2.0 million of EBITA, plus
3.5% of EBITA in excess of $2.0 million. Moreover, subject to the approval of
the Company's board (including a majority of disinterested directors), for each
acquisition or disposition of any business operation by the Company introduced
or negotiated by Trivest, Trivest will generally receive a fee of up to 3% of
the purchase price. The Company paid Trivest $640,980 for services rendered
under the Investment Services Agreement during 1998.

         Pursuant to an amendment entered into between Trivest and the Company
as of March 5, 1999, the parties agreed that (i) no such fee would be payable
to Trivest with respect to the Merger, (ii) if the Termination Fee is paid in
connection with a Superior Proposal pursuant to the Merger Agreement, no such
fee shall be payable with respect to such Superior Proposal under the
Investment Services Agreement, and (iii) Trivest shall not be reimbursed under
the Investment Services Agreement for any expenses related to the Merger or a
Superior Proposal. See "SPECIAL FACTORS--Background" and "THE
MERGER--Termination."

         TRIVEST LEGAL DEPARTMENT. Trivest maintains an internal legal
department. The Trivest legal department accounts for its time on an hourly
basis and bills Trivest and its affiliates, including the Company, for services
rendered at prevailing rates. In 1998, the Company paid Trivest $40,516.25 for
services rendered by the Trivest legal department. The Company believes that
the fees charged by the Trivest legal department in 1998 were no less favorable
to the Company than fees charged by unaffiliated third parties for similar
services.



                                      56


<PAGE>   57


                                    PART IV

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

              (a)     Documents filed as part of this report:

                      (1)      FINANCIAL STATEMENTS:

                               Reference is made to the index set forth on page
                               26 of this Annual Report on Form 10-K

                      (2)      FINANCIAL STATEMENTS SCHEDULES:

                               The following consolidated financial statement
                               schedule is filed herewith:

                                                                    Sequential
                                                                    Page Number
                                                                    -----------
             Schedule II-- Valuation and Qualifying Accounts............62

         Any required information not included in the above-described schedule
is included in the consolidated financial statements and notes thereto
contained herein. All other schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange Commission are
not required under the related instructions are otherwise not applicable and
therefore have been omitted.

                      (3)      EXHIBITS: (An asterisk to the left of an exhibit
                               number denotes a management contract or
                               compensatory plan or arrangement required to be
                               filed as an exhibit to the Annual Report on Form
                               10-K)

<TABLE>
<CAPTION>
Exhibit             Description
-------             -----------
<S>                 <C>
    2.1             Agreement  and Plan of Merger,  dated as of  September 30,  1994,  by and among  Registrant,  Old
                      Winston and Old Loewenstein(1)

    2.2             Agreement  and Plan of Merger,  dated as of March 5, 1999,  between  the  Registrant  and Trivest
                      Furniture Corporation. (2.1)(10)

    3.1             Registrant's Articles of Incorporation(1)

    3.2             Registrant's Bylaws(1)

  *10.1             Registrant's 1994 Stock Option Plan, As Amended and Restated Effective January 23, 1997(6)
   10.2             Form of  Indemnification  Agreement  between  the  Registrant  and certain of its  directors  and

                      executive officers, and schedule of parties thereto (10.2)(2)

  *10.3             Employment  Agreements  between the Registrant and each of Bobby Tesney, R. Craig Watts,  Stephen
                      C. Hess, and Vincent A. Tortorici, Jr. (10.3)(2)

  *10.4             Investment Services Agreement, dated December 16,  1994, between the Registrant and Trivest, Inc.
                      (10.6)(2)
</TABLE>


                                      57


<PAGE>   58
<TABLE>
<CAPTION>
Exhibit             Description
-------             -----------
<S>                 <C>
   10.5             Agreement,  dated August 1, 1996, between Winston and the Retail, Wholesale, and Department Store
                      Union, AFL-CIO (10.8)(1)
   10.6             Lease, dated May 24, 1996, between LaSalle National Bank and Winston (10.7)(6)

   10.7             Business Lease, dated November 18, 1993, between Loewenstein and Emanuel Vanzo (10.21)(2)

   10.8             Lease Agreement by and between Teacher  Insurance and Annuity  Association and Winston  Furniture
                      Company of Alabama, Inc., commencing December 15, 1995 (10.23)(4)

   10.9             Lease Agreement, dated as of January 11,  1989, between W. Leslie Pelio and Michael Haworth d/b/a
                      Simworth, as amended (10.29)(2)
   10.10            Standard Industrial Lease Multi-tenant,  dated as of June 1997, between The Mutual Life Insurance
                      Company of New York and Continental Engineering Group, Inc., d/b/a Microcenter(7)

   10.11            Stock Purchase Agreement among WinsLoew  Furniture,  Inc.,  Continental  Engineering Group, Inc.,
                      and certain Shareholders, dated February 15, 1995 (10.31)(3)

   10.12            Credit Agreement,  dated  February 2,  1995, among the Registrant,  its subsidiaries,  and Heller
                      Financial, Inc. (10.32)(3)

   10.13            First  Amendment  to  Credit  Agreement,  dated  February 22,  1995,  among the  Registrant,  its
                      subsidiaries, and Heller Financial, Inc. (10.17)(4)

   10.14            Second Amendment to Credit Agreement,  dated May 8, 1995, among the Registrant, its subsidiaries,
                      and Heller Financial, Inc. (10.18)(4)

   10.15            Third  Amendment  to  Credit  Agreement,  dated  November 15,  1995,  among the  Registrant,  its
                      subsidiaries, and Heller Financial, Inc. (10.19)(4)

   10.16            Fourth  Amendment  to Credit  Agreement,  dated  November 20,  1995,  among the  Registrant,  its
                      subsidiaries, and Heller Financial, Inc. (10.20)(4)

   10.17            Fifth  Amendment  to  Credit  Agreement,   dated  June 30,  1996,  among  the  Registrants,   its
                      subsidiaries, and Heller Financial, Inc. (10.21)(5)

   10.18            Sixth  Amendment  to  Credit  Agreement,   dated  July 1,   1996,  among  the  Registrants,   its
                      subsidiaries, and Heller Financial, Inc. (10.22)(5)

   10.19            Seventh  Amendment to Credit  Agreement,  dated  January 27,  1997,  among the  Registrants,  its
                      subsidiaries, and Heller Financial, Inc. (10.20)(6)

  *10.20            Registrant's Non-Qualified Supplemental Retirement Plan for Key Employees (10.22)(6)

   10.21            Eighth  Amendment  to  Credit  Agreement,  dated  May  22,  1998,  between  the  Registrant,  its
                      subsidiaries and Heller Financial, Inc. (8)

   10.22            Stock  Purchase  Agreement,  dated as of June 30,  1998,  between the  Registrant  and  Vertiflex
                      Company (11)

</TABLE>

                                      58

<PAGE>   59
<TABLE>
<CAPTION>
Exhibit             Description
-------             -----------
<S>                 <C>
   10.23            Stock  Purchase  Agreement,  dated as of June 30,  1998,  between  Winston  Furniture  Company of
                      Alabama, Inc. and Thomas Villella. (2.1)(9)

   10.24            Contract for Sale and Purchase,  dated as of June 30, 1998, between Villella,  Inc. and Thomas L.
                      Villella, as Trustee of the Thomas L. Villella Family Trust dated August 5, 1991 (2.2)(9)

   10.25            Stock  Purchase  Agreement,  dated as of November 23, 1998,  among Winston  Furniture  Company of
                      Alabama, Inc., Miami Metal Products,  Inc., Industrial Mueblera Pompeii de Mexico, S.A. de C.V.
                      and the Sellers named therein (11)

  *10.26            Amendment  No. 1 to  Investment  Services  Agreement,  dated as of March  5,  1998,  between  the
                      Registrant and Trivest II, Inc. (11)

   21.1             Registrant's Subsidiaries(11)

   23.1             Consent of Ernst & Young LLP, Independent Auditors(11)
</TABLE>
---------------

(1)  Incorporated by reference to the exhibits, shown in parentheses and filed
     with the Registrant's Registration Statement on Form S-4 (No. 33-85476).

(2)  Incorporated by reference to the exhibits, shown in parentheses and filed
     with the Registrant's Annual Report on Form 10-K for the year ended
     December 31, 1994.

(3)  Incorporated by reference to the exhibits, shown in parentheses and filed
     with the Registrant's Report on Form 8-K filed April 7, 1995.

(4)  Incorporated by reference to the exhibits, shown in parentheses and filed
     with the Registrant's Annual Report on Form 10-K for the year ended
     December 31, 1995.

(5)  Incorporated by reference to the exhibits, shown in parentheses and filed
     with the Registrant's Report on Form 10-Q for the quarter ended June 28,
     1996.

(6)  Incorporated by reference to the exhibits, shown in parentheses and filed
     with the Registrant's Annual Report on Form 10-K for the year ended
     December 31, 1996.

(7)  Incorporated by reference to the exhibits, shown in parentheses and filed
     with the Registrant's Annual Report on Form 10-K for the year ended
     December 31, 1997.

(8)  Incorporated by reference to the exhibits, shown in parentheses and filed
     with the Registrant's Report on Form 10-Q for the quarter ended June 26,
     1998.

(9)  Incorporated by reference to the exhibits, shown in parentheses and filed
     with the Registrant's Report on Form 8-K filed July 14, 1998.

(10) Incorporated by reference to the exhibits, shown in parentheses and filed
     with the Registrant's Report on Form 8-K filed March 11, 1999.

(11)     Filed herewith.

              (b)     REPORTS ON FORM 8-K

                      No reports on Form 8-K were filed by the Registrant
                      during the last quarter of the period covered by this
                      report.

                                      59
<PAGE>   60

              (c)     EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K

                      The index to exhibits that are listed in Item 14(a)(3) of
                      this report and not incorporated by reference follows the
                      "Signatures" section hereof and is incorporated herein by
                      reference.

              (d)     FINANCIAL STATEMENTS SCHEDULES REQUIRED BY REGULATION S-X

                      The financial statement schedules required by Regulation
                      S-X are included herein. See Item 14(a)2 for index.



                                      60

<PAGE>   61


                                   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.

                                       WINSLOEW FURNITURE, INC.

Date:  March 29, 1999                  By:/S/BOBBY TESNEY    
                                          ------------------------------------
                                          Bobby Tesney
                                          President and Chief Executive Officer

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

<TABLE>
<CAPTION>

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

<S>                                       <C>                                      <C>

/S/BOBBY TESNEY                           
----------------------------------        President, Chief Executive Officer
Bobby Tesney                               and Director (Principal Executive
                                                       Officer)
/S/VINCENT A. TORTORICI, JR.
----------------------------------        Vice President and Chief Financial
Vincent A. Tortorici, Jr.                  Officer (Principal Financial and
                                           Accounting Officer)

/S/EARL W. POWELL
----------------------------------        Chairman of the Board
Earl W. Powell

/S/PHILLIP T. GEORGE, M.D.
----------------------------------        Director
Phillip T. George, M.D.

/S/WILLIAM F. KACZYNSKI, JR.
----------------------------------        Director
William F. Kaczynski, Jr.

/S/PETER W. KLEIN
----------------------------------        Director
Peter W. Klein

/S/M. MILLER GORRIE
----------------------------------        Director
M. Miller Gorrie

/S/JAMES S. SMITH
----------------------------------        Director
James S. Smith

/S/HENRY C. CHEEK
----------------------------------        Director
Henry C. Cheek

/S/WILLIAM H. ALLEN, JR.
----------------------------------        Director
William H. Allen, Jr.

/S/SHERWOOD M. WEISER
----------------------------------        Director
Sherwood M. Weiser


</TABLE>


                                      61

<PAGE>   62
                SCHEDULE II - VALUATION OF QUALIFYING ACCOUNTS
                           WINSLOEW FURNITURE, INC.
                               December 31, 1998

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------------------
      COL. A                            COL. B                  COL. C          COL. D                  COL. E         COL. F
----------------------------------------------------------------------------------------------------------------------------------
                                                                      Additions
                                   Balance at          --------------------------------------------
                                   Beginning                  Charged to        Charged to                           Balance at
Description                        of Period               Costs and Expense   Other Accounts        Deductions     End of Period
----------------------------------------------------------------------------------------------------------------------------------

<S>                                 <C>                      <C>                                      <C>         <C>        
Year Ended December 31, 1996
Allowance for doubtful accounts     $   464,000          $ 1,759,000                    --           ($191,000)(1)    $ 2,032,000
                                    ===========          ===========           ===========         ===========        ===========

Year Ended December 31, 1997
Allowance for doubtful accounts     $ 2,032,000          $    42,000                    --         ($1,286,000)(1)    $   788,000
                                    ===========          ===========           ===========         ===========        ===========

Year Ended December 31, 1998
Allowance for doubtful accounts     $   788,000          $ 1,331,000                   --           ($425,000)(1)    $ 1,694,000
                                    ===========          ===========           ===========         ===========        ===========

Year Ended December 31, 1996
Allowance for excess and 
 obsolete inventory                 $   660,000          $   680,000                    --           ($851,000)(2)    $   489,000
                                    ===========          ===========           ===========         ===========        ===========
Year Ended December 31, 1997
Allowance for excess and 
  obsolete inventory                $   489,000          $ 1,267,000                   --          ($1,382,000)(2)    $   374,000
                                    ===========          ===========           ===========         ===========        ===========

Year Ended December 31, 1998
Allowance for excess and 
  obsolete inventory                $   374,000          $   702,000                   --           ($581,000)(2)     $   495,000
                                    ===========          ===========           ===========         ===========        ===========


</TABLE>
----------------------
    (1)  Uncollectible accounts receivable written-off.
    (2)  Excess and obsolete inventory written-off