##### 



---

---

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(X BOX)    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 29, 2001

OR

(BOX)    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________

Commission file number 0-18446

Fairwood Corporation

---

(Exact name of registrant as specified in its charter)


|                                                                  |  |                                     
|----------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                          |  | 13-3472113                          
|                                                                  |  |                                     
|(State or other jurisdiction of
incorporation or organization)    |  | (I.R.S. Employer
Identification No.)
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |  |                                     
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|One Commerce Center
1201 N. Orange St., Suite 790, Wilmington, DE |  | 19801                               
|                                                                  |  |                                     
|(Address of principal executive offices)                          |  | (Zip Code)                          

(302) 884-6749

---

(Registrants telephone number, including area code)


Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

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, and (2) has been subject to such filing
requirements for the past 90 days. Yes   (X BOX)
        No   (BOX)

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practical date.

|                                   |  |                    |         | 
|---------------------------------- |  | ------------------ | ------- | 
|                                   |  | Outstanding at    
|Class                              |  | September 29, 2001
|                                   |  |                   
|Class A Voting, $.01 Par Value     |  |                    | 500     | 
|                                  
|                                  
|                                  
|                                  
|Class B Non-Voting, $.01 Par Value |  |                    | 999,800 | 



---

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##### 



FAIRWOOD CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars in thousands)

|                                       |                                                    |                      |        |               |        |              |        |       |        | 
|-------------------------------------- | -------------------------------------------------- | -------------------- | ------ | ------------- | ------ | ------------ | ------ | ----- | ------ | 
|                                       |                                                    |                      |        | September 29, |        | December 31,
|Assets                                 |                                                    | 2001                 |        | 2000         
|                                       |                                                    |                      |        |              
|                                       |                                                    |                      |        | (Unaudited)   |        |              |        |      
|Current Assets:                        |                                                    |                      |        |               |        |              |        |      
|                                      
|                                      
|                                      
|                                      
|                                       | Cash and cash equivalents                          |                      | $      | 5,853         |        |              |        | 4,580 |       
|                                       |                                                    |                      |        |               |        |              |        |      
|                                       | Trade accounts receivable                          |                      |        | 7,876         |        |              |        | 9,501 |       
|                                      
|                                      
|                                      
|                                      
|                                       | Less allowance for discounts and doubtful accounts |                      |        | 298           |        |              |        | 228   |       
|                                       |                                                    |                      |        |               |        |              |        |      
|                                       |                                                    |                      | 7,578  |               |        |              | 9,273  |      
|                                       |                                                    |                      |        |               |        |              |        |      
|                                       | Inventories                                        |                      |        | 7,882         |        |              |        | 7,605 |       
|                                      
|                                      
|                                      
|                                      
|                                       | Prepaid expenses and other current assets          |                      |        | 320           |        |              |        | 206   |       
|                                       |                                                    |                      |        |               |        |              |        |      
|                                       |                                                    | Total current assets |        |               | 21,633 |              |        |       | 21,664 | 
|                                       |                                                    |                      |        |               |        |              |        |      
|Property, plant and equipment, at cost |                                                    |                      | 6,077  |               |        |              | 8,327  |      
|                                      
|                                      
|                                      
|                                      
|                                       | Less accumulated depreciation and amortization     |                      |        | 4,380         |        |              |        | 5,512 |       
|                                       |                                                    |                      |        |               |        |              |        |      
|                                       |                                                    |                      | 1,697  |               |        |              | 2,815  |      
|                                       |                                                    |                      |        |               |        |              |        |      
|Other assets                           |                                                    |                      | 40     |               |        |              | 40     |      
|                                       |                                                    |                      |        |               |        |              |        |      
|                                       |                                                    | $                    | 23,370 |               |        |              | 24,519 |      
|                                       |                                                    |                      |        |               |        |              |        |      

(Continued)

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

- 2 -



---



##### 



FAIRWOOD CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (continued)
(Dollars in thousands)

|                                             |                                                        |                                            |                           |          |               |         |              |          |         |         | 
|-------------------------------------------- | ------------------------------------------------------ | ------------------------------------------ | ------------------------- | -------- | ------------- | ------- | ------------ | -------- | ------- | ------- | 
|                                             |                                                        |                                            |                           |          | September 29, |         | December 31,
|Liabilities and Deficit                      |                                                        | 2001                                       |                           | 2000    
|                                             |                                                        |                                            |                           |         
|                                             |                                                        |                                            |                           |          | (Unaudited)   |         |              |          |        
|Current Liabilities:                         |                                                        |                                            |                           |          |               |         |              |         
|                                            
|                                            
|                                            
|                                            
|                                             | Current maturities of long-term debt:                  |                                            |                           |          |               |         |              |          |        
|                                            
|                                            
|                                            
|                                            
|                                             |                                                        | Revolving credit                           |                           | $        | 457,463       |         |              |          |        |        
|                                            
|                                            
|                                            
|                                            
|                                             |                                                        | Senior subordinated debentures             |                           |          | 80,000        |         |              |          |        |        
|                                            
|                                            
|                                            
|                                            
|                                             |                                                        | Senior subordinated pay-in-kind debentures |                           |          | 105,853       |         |              |          | 105,853 |        
|                                            
|                                            
|                                            
|                                            
|                                             |                                                        | Merger debentures                          |                           |          | 62,928        |         |              |          | 62,928  |        
|                                            
|                                            
|                                            
|                                            
|                                             | Accrued interest                                       |                                            |                           | 209,629  |               |         |              | 176,408  |        
|                                            
|                                            
|                                            
|                                            
|                                             | Accounts payable                                       |                                            |                           | 2,207    |               |         |              | 1,972    |        
|                                            
|                                            
|                                            
|                                            
|                                             | Due to affiliate                                       |                                            |                           | 3,959    |               |         |              | 3,976    |        
|                                            
|                                            
|                                            
|                                            
|                                             | Accrued expenses                                       |                                            |                           | 2,692    |               |         |              | 3,224    |        
|                                            
|                                            
|                                            
|                                            
|                                             | Federal and state income taxes                         |                                            |                           | 133      |               |         |              | 133      |        
|                                             |                                                        |                                            |                           |          |               |         |              |          |         |        
|                                             |                                                        |                                            | Total current liabilities |          |               | 924,864 |              |          |         | 354,494 | 
|                                             |                                                        |                                            |                           |          |               |         |              |          |         |        
|Long-term debt:                              |                                                        |                                            |                           |          |               |         |              |         
|                                            
|                                            
|                                            
|                                            
|                                             | Revolving credit                                       |                                            |                           |         |               |         |              | 429,772  |        
|                                            
|                                            
|                                            
|                                            
|                                             | Senior subordinated debentures                         |                                            |                           |         |               |         |              | 80,000   |        
|                                             |                                                        |                                            |                           |          |               |         |              |          |         |        
|                                             |                                                        |                                            |                          |          |               |         | 509,772      |         
|                                             |                                                        |                                            |                           |          |               |         |              |          |         |        
|Other liabilities                            |                                                        |                                            | 3,338                     |          |               |         | 3,403        |         
|                                             |                                                        |                                            |                           |          |               |         |              |          |         |        
|Redeemable preferred stock:                  |                                                        |                                            |                           |          |               |         |              |         
|                                            
|                                            
|                                            
|                                            
|                                             | Junior preferred, cumulative, par value $.01 per share |                                            |                           | 100      |               |         |              | 100      |        
|                                             |                                                        |                                            |                           |          |               |         |              |          |         |        
|Common stock and other shareowners deficit: |                                                        |                                            |                           |          |               |         |              |         
|                                            
|                                            
|                                            
|                                            
|                                             | Common stock and additional paid-in capital            |                                            |                           | 55,948   |               |         |              | 55,948   |        
|                                            
|                                            
|                                            
|                                            
|                                             | Accumulated other comprehensive loss -                 |                                            |                           |          |               |         |              |          |        
|                                            
|                                            
|                                            
|                                            
|                                             |                                                        | Minimum pension liability                  |                           |          | (2,102        | )       |              |          | (2,102  | )      
|                                            
|                                            
|                                            
|                                            
|                                             | Accumulated deficit                                    |                                            |                           | (958,778 | )             |         |              | (897,096 | )      
|                                             |                                                        |                                            |                           |          |               |         |              |          |         |        
|                                             |                                                        |                                            | (904,932                  | )        |               |         | (843,250     | )       
|                                             |                                                        |                                            |                           |          |               |         |              |          |         |        
|                                             |                                                        | $                                          | 23,370                    |          |               |         | 24,519       |         
|                                             |                                                        |                                            |                           |          |               |         |              |          |         |        

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

- 3 -



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##### 



FAIRWOOD CORPORATION AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(In thousands)

|                                             |  |                    |         |                   |  |               |         |               |  |  |         |   |  |  |         |  
|-------------------------------------------- |  | ------------------ | ------- | ----------------- |  | ------------- | ------- | ------------- |  |  | ------- | - |  |  | ------- | -
|                                             |  | Three Months Ended |         | Nine Months Ended
|                                             |  |                    |         |                  
|                                             |  | September 29       |         | September 30,     |  | September 29, |         | September 30,
|                                             |  | 2001               |         | 2000              |  | 2001          |         | 2000         
|                                             |  |                    |         |                   |  |               |         |              
|Net sales                                    |  | $                  | 12,301  |                   |  |               | 14,894  |               |  |  | 39,561  |   |  |  | 43,404  |  
|                                             |  |                    |         |                   |  |               |         |               |  |  |         |   |  |  |         |  
|Cost of sales                                |  |                    | 10,075  |                   |  |               | 11,645  |               |  |  | 32,195  |   |  |  | 34,433  |  
|                                            
|                                            
|                                            
|                                            
|Selling, administrative and
general expenses |  |                    | 2,411   |                   |  |               | 2,200   |               |  |  | 7,279   |   |  |  | 7,153   |  
|                                             |  |                    |         |                   |  |               |         |               |  |  |         |   |  |  |         |  
|                                             |  |                    | 12,486  |                   |  |               | 13,845  |               |  |  | 39,474  |   |  |  | 41,586  |  
|                                             |  |                    |         |                   |  |               |         |               |  |  |         |   |  |  |         |  
|Operating income (loss)                      |  |                    | (185    | )                 |  |               | 1,049   |               |  |  | 87      |   |  |  | 1,818   |  
|                                            
|                                            
|                                            
|                                            
|Interest income                              |  |                    | 50      |                   |  |               | 30      |               |  |  | 169     |   |  |  | 107     |  
|                                            
|                                            
|                                            
|                                            
|Interest on indebtedness                     |  |                    | (19,580 | )                 |  |               | (21,304 | )             |  |  | (60,932 | ) |  |  | (63,880 | )
|                                            
|                                            
|                                            
|                                            
|Other income (expense)                       |  |                    | (903    | )                 |  |               | 14      |               |  |  | (903    | ) |  |  |        |  
|                                             |  |                    |         |                   |  |               |         |               |  |  |         |   |  |  |         |  
|Loss before income taxes                     |  |                    | (20,618 | )                 |  |               | (20,211 | )             |  |  | (61,579 | ) |  |  | (61,955 | )
|                                            
|                                            
|                                            
|                                            
|Provision for income taxes                   |  |                    |        |                   |  |               |        |               |  |  |        |   |  |  |        |  
|                                             |  |                    |         |                   |  |               |         |               |  |  |         |   |  |  |         |  
|Net loss                                     |  | $                  | (20,618 | )                 |  |               | (20,211 | )             |  |  | (61,579 | ) |  |  | (61,955 | )
|                                             |  |                    |         |                   |  |               |         |               |  |  |         |   |  |  |         |  

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

- 4 -



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##### 



FAIRWOOD CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)

|                                                 |                                                                             |                                                                  |                                           |         |                   |        |               |         |     |        |  
|------------------------------------------------ | --------------------------------------------------------------------------- | ---------------------------------------------------------------- | ----------------------------------------- | ------- | ----------------- | ------ | ------------- | ------- | --- | ------ | -
|                                                 |                                                                             |                                                                  |                                           |         | Nine Months Ended
|                                                 |                                                                             |                                                                  |                                           |         |                  
|                                                 |                                                                             |                                                                  |                                           |         | September 29,     |        | September 30,
|                                                 |                                                                             |                                                                  |                                           |         | 2001              |        | 2000         
|                                                 |                                                                             |                                                                  |                                           |         |                   |        |              
|Cash flows from operating activities:            |                                                                             |                                                                  |                                           |         |                   |        |               |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Net loss                                                                    |                                                                  | $                                         | (61,579 | )                 |        |               | (61,955 | )  
|                                                
|                                                
|                                                
|                                                
|                                                 | Adjustments to reconcile net loss to net cash
used in operating activities: |                                                                  |                                           |         |                   |        |               |         |    
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                             | Depreciation and amortization                                    |                                           |         | 244               |        |               |         | 278 |       
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                             | Loss
on write down of capital lease                              |                                           |         | 907               |        |               |         |    |       
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                             | Changes in assets and liabilities, net of effect
of disposition: |                                           |         |                   |        |               |         |     |       
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                             |                                                                  | Accounts receivable                       |         |                   | 1,695  |               |         |     | (1,292 | )
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                             |                                                                  | Inventories                               |         |                   | (277   | )             |         |     | (1,315 | )
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                             |                                                                  | Prepaid expenses and other current assets |         |                   | (114   | )             |         |     | (104   | )
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                             |                                                                  | Accounts payable                          |         |                   | 132    |               |         |     | (609   | )
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                             |                                                                  | Accrued expenses                          |         |                   | 32,689 |               |         |     | 17,124 |  
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                             |                                                                  | Other, net                                |         |                   | (65    | )             |         |     | 944    |  
|                                                 |                                                                             |                                                                  |                                           |         |                   |        |               |         |    
|Cash used  operating activities                 |                                                                             |                                                                  | (26,368                                   | )       |                   |        | (46,929       | )      
|                                                 |                                                                             |                                                                  |                                           |         |                   |        |               |         |    
|Cash flows from investing activities:            |                                                                             |                                                                  |                                           |         |                   |        |               |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Capital expenditures                                                        |                                                                  |                                           | (33     | )                 |        |               | (153    | )  
|                                                 |                                                                             |                                                                  |                                           |         |                   |        |               |         |    
|Cash provided (used)  investing activities      |                                                                             |                                                                  | (33                                       | )       |                   |        | (153          | )      
|                                                 |                                                                             |                                                                  |                                           |         |                   |        |               |         |    
|Cash flows from financing activities:            |                                                                             |                                                                  |                                           |         |                   |        |               |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from revolving credit                                              |                                                                  |                                           | 27,691  |                   |        |               | 45,472  |    
|                                                
|                                                
|                                                
|                                                
|                                                 | Repayment of affiliate advances                                             |                                                                  |                                           | (17     | )                 |        |               | (68     | )  
|                                                 |                                                                             |                                                                  |                                           |         |                   |        |               |         |    
|Cash provided  financing activities             |                                                                             |                                                                  | 27,674                                    |         |                   |        | 45,404        |        
|                                                 |                                                                             |                                                                  |                                           |         |                   |        |               |         |    
|Increase (decrease) in cash and cash equivalents |                                                                             |                                                                  | 1,273                                     |         |                   |        | (1,678        | )      
|                                                
|                                                
|                                                
|                                                
|Cash and cash equivalents:                       |                                                                             |                                                                  |                                           |         |                   |        |               |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Beginning of period                                                         |                                                                  |                                           | 4,580   |                   |        |               | 5,135   |    
|                                                 |                                                                             |                                                                  |                                           |         |                   |        |               |         |    
|                                                 | End of period                                                               |                                                                  | $                                         | 5,853   |                   |        |               | 3,457   |    
|                                                 |                                                                             |                                                                  |                                           |         |                   |        |               |         |    
|Supplemental schedule of cash flow information   |                                                                             |                                                                  |                                           |         |                   |        |               |        
|                                                
|                                                
|                                                
|                                                
|Cash paid during year for:                       |                                                                             |                                                                  |                                           |         |                   |        |               |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Interest                                                                    |                                                                  | $                                         | 27,711  |                   |        |               | 45,491  |    
|                                                
|                                                
|                                                
|                                                
|                                                 | Income tax refunds (payments), net                                          |                                                                  |                                           |        |                   |        |               | 38      |    

Supplemental schedule of noncash operating and financing activities

In the nine month periods ending September 29, 2001 and September 30, 2000 the
Company recognized $103 thousand and $85 thousand, respectively, of accrued
dividends payable to shareholders, which dividends have not been paid.

Cash and cash equivalents include cash in banks and highly-liquid short-term investments
having a maturity of three months or less on date of purchase.

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

- 5 -



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##### 



FAIRWOOD CORPORATION AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements



|1. |  | In the opinion of management, the accompanying unaudited
condensed consolidated financial statements include all adjustments,
consisting of only normal recurring adjustments, necessary to present
fairly the results of operations for the three and nine months ended
September 29, 2001 and September 30, 2000, the financial position at
September 29, 2001 and December 31, 2000 and the cash flows for the
nine months ended September 29, 2001 and September 30, 2000.
The results of operations for the three and nine month periods
ended September 29, 2001 are not necessarily indicative of the
results to be expected for the full year.                                                                                                                      
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|  
|2. |  | The accompanying unaudited condensed consolidated
financial statements should be read in conjunction with
Fairwood Corporations (Fairwood or Company) audited
consolidated financial statements included in the 2000
annual report on Form 10-K. Fairwood is a holding company
as is its subsidiary, Consolidated Furniture Corporation
(Consolidated Furniture) which is the parent of Furniture
Comfort Corporation (Furniture Comfort), formerly Futorian
Furnishings, Inc., whose operating division, Barcalounger
Division (Barcalounger) manufactures motion upholstered
residential furniture.                                                                                                                                                              
|  
|   |  | On October 9, 2001, pursuant to an Exchange Agreement,
Consolidated Furniture transferred all of the outstanding capital
stock of its wholly-owned direct subsidiary Furniture Comfort
Corporation (Fairwood's only remaining operating subsidiary) to Court Square Capital Limited as payment in full
of $24 million of the principal amount outstanding under the Credit
Agreement dated September 22, 1989 (the Credit Agreement) among
Consolidated Furniture (then Mohasco Corporation) and certain of its
affiliates, as borrowers, and to CSCL (then known as Citicorp Capital
Investors Limited), as lender. As a result of this transaction Fairwood no longer has any operations and its activities
will be limited to liquidating its remaining legal entities.
|  
|3. |  | Fairwoods comprehensive loss includes a minimum pension
liability on its subsidiaries retirement plan, which is calculated
and reported annually. As a result, the minimum pension liability
has no effect on the quarterly unaudited condensed consolidated
statements of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|4. |  | All inventories (materials, labor and overhead) are valued at
the lower of cost or market using the last-in, first-out (LIFO) method.
The components of inventory, in thousands, are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|                                   |  |                    |       |                   |  |  |       | 
|---------------------------------- |  | ------------------ | ----- | ----------------- |  |  | ----- | 
|                                   |  | September 29, 2001 |       | December 31, 2000
|                                   |  |                    |       |                  
|                                   |  | (Unaudited)        |       |                   |  | 
|Raw materials                      |  | $                  | 4,506 |                   |  |  | 4,334 | 
|                                  
|                                  
|                                  
|                                  
|In process                         |  |                    | 2,048 |                   |  |  | 1,838 | 
|                                  
|                                  
|                                  
|                                  
|Finished goods                     |  |                    | 2,865 |                   |  |  | 2,770 | 
|                                   |  |                    |       |                   |  |  |       | 
|Inventories at
first-in, first out |  |                    | 9,419 |                   |  |  | 8,942 | 
|                                  
|                                  
|                                  
|                                  
|LIFO reserve                       |  |                    | 1,537 |                   |  |  | 1,337 | 
|                                   |  |                    |       |                   |  |  |       | 
|Inventories at LIFO                |  | $                  | 7,882 |                   |  |  | 7,605 | 
|                                   |  |                    |       |                   |  |  |       | 

- 6 -



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##### 



FAIRWOOD CORPORATION AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements



|5. |  | In the second quarter of 1999, Fairwood paid an estimated tax liability
to the Internal Revenue Service (IRS) arising out of an IRS
examination. Fairwood continues to be obligated to the extent of any
adjustment by the IRS to the interest component of the settlement and
the state tax effect of this settlement. An accrual for additional
interest of $4.1 million and taxes of $0.1 million remains at September
29, 2001. These accruals for interest and taxes are included in accrued
interest and Federal and state income taxes, respectively, on the
accompanying consolidated balance sheet. The Company has not reached
final settlement with all taxing authorities, therefore the amount of
the accruals are subject to change.                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | No provision for Federal income taxes has been provided during the
three months ended September 29, 2001 and September 30, 2000, as the
Company is in a net operating loss carryforward position, and the
valuation allowance has been increased to offset any future benefit
from this position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|6. |  | On April 1, 1995 and each semi-annual interest payment date thereafter,
Fairwood failed to make the required interest payments due on its
senior subordinated pay-in-kind debentures and merger debentures
(collectively, the Fairwood Debentures) and Fairwood does not expect
to make the cash interest payments required under the Fairwood
Debentures on any future semi-annual interest payment date. Accrued
interest of $189.2 million on the Fairwood Debentures, which includes
$114.8 million due to Court Square Capital Limited (CSCL), is
included in accrued interest on the accompanying unaudited condensed
consolidated balance sheet as of September 29, 2001. On January 3,
1996, certain holders of the Fairwood public debentures (the
Bondholders) filed an involuntary Chapter 7 petition against Fairwood
in the United States Bankruptcy Court for the Southern District of New
York (the Bankruptcy Court.) Fairwood, Consolidated Furniture and
certain Citicorp affiliates filed a motion in response to the
involuntary filing seeking to dismiss the petition. By order dated
December 4, 1996, the Bankruptcy Court denied the motion to dismiss the
petition.
|  
|   |  | Thereafter, on December 26, 1996, Fairwood exercised its right to
convert the Chapter 7 case to a case under Chapter 11. Through May 9, 2001, Fairwood continued to operate as a debtor in possession under
Section 1108 of the Bankruptcy Code. The Chapter 11 case pertained only
to Fairwood Corporation. Fairwood Corporations direct and indirect
subsidiaries, including Consolidated Furniture Corporation, Furniture
Comfort Corporation, as well as its operating division, Barcalounger,
were not parties to the bankruptcy. In April 1997, the Bondholders
filed a motion with the Bankruptcy Court seeking to convert Fairwoods
Chapter 11 case to a case under Chapter 7 or, alternatively, for the
appointment of a Chapter 11 trustee. By order dated March 2, 1999, the
Bondholders motion to convert the case or, alternatively, for the
appointment of a Chapter 11 trustee, was denied in its entirety. On
March 10, 2000, the District Court entered an Order affirming the
Bankruptcy Courts decision in all respects. By notice dated April 11,
2000, the Bondholders have appealed the District Courts decision to
the Second Circuit Court of Appeals.                

- 7 -



---



##### 



FAIRWOOD CORPORATION AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements



|   |  | By order dated May 9, 2001 the Bankruptcy Court dismissed Fairwoods
Chapter 11 case and that order has become final. It is not yet known
what further action, if any, the Bondholders will or could take. The
Company has not yet determined what affect this dismissal will have on
the Company going forward.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|7. |  | Consolidated Furnitures revolving credit under its Credit Agreement
with CSCL, an affiliate, and senior subordinated debentures mature on
January 2, 2002 and, accordingly, have been classified as current
liabilities in the accompanying unaudited condensed consolidated
balance sheet as of September 29, 2001. As of September 29, 2001
Consolidated Furniture was not in compliance with certain financial
covenants and the revolving credit and senior subordinated debentures
are in technical default. Consolidated Furniture may attempt to
negotiate an extension of these maturity dates with CSCL or refinance
such indebtedness prior to January 2, 2002. However, there can be no
assurance that if Consolidated Furniture attempts to negotiate such an
extension that it will be successful, or that the terms of such
extension or refinancing will not be on terms less favorable than those
currently in place.
|  
|   |  | Fairwoods failure to make the April 1, 1995 and subsequent period
interest payments constitutes an event of default which permits the
acceleration of the Fairwood Debentures by the demand of the holders of
the requisite aggregate principal amount of the debentures. Upon
acceleration, the Fairwood Debentures would be currently due and
payable. Accordingly, the Fairwood Debentures have been classified as
current liabilities in the accompanying condensed consolidated balance
sheets as of September 29, 2001 (unaudited) and December 31, 2000.                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |  | The Companys outstanding indebtedness includes its senior subordinated
pay-in-kind debentures and merger debentures (collectively, the
Fairwood Debentures).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|8. |  | Prior to Furniture Comforts sale of its Stratford operating division,
Fairwoods reportable segments were two strategic business units that
offered different products. They were managed separately because each
business had distinctly different markets and they had separate
marketing and manufacturing facilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   |  | The segment financial information, in thousands, is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

Nine months ended September 29, 2001
(unaudited)

|                                 |  |           |   |              |  |           |        |              |  |        |         |   |  |   |   |  |  |   |         |  
|-------------------------------- |  | --------- | - | ------------ |  | --------- | ------ | ------------ |  | ------ | ------- | - |  | - | - |  |  | - | ------- | -
|                                 |  | Stratford |   | Barcalounger |  | Corporate |        | Eliminations |  | Totals
|                                 |  |           |   |              |  |           |        |              |  |       
|Revenues from external
customers |  | $         |  |              |  | $         | 39,561 |              |  | $      |        |   |  | $ |  |  |  | $ | 39,561  |  
|                                
|                                
|                                
|                                
|Interest expense
(income), net   |  |           |  |              |  |           | (139   | )            |  |        | 60,902  |   |  |   |  |  |  |   | 60,763  |  
|                                
|                                
|                                
|                                
|Segment profit (loss)            |  |           |  |              |  |           | 2,474  |              |  |        | (64,053 | ) |  |   |  |  |  |   | (61,579 | )

- 8 -



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##### 



FAIRWOOD CORPORATION AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Nine months ended September 30, 2000
(unaudited)

|                                 |  |           |      |              |  |           |        |              |  |        |         |   |  |   |   |  |  |   |         |  
|-------------------------------- |  | --------- | ---- | ------------ |  | --------- | ------ | ------------ |  | ------ | ------- | - |  | - | - |  |  | - | ------- | -
|                                 |  | Stratford |      | Barcalounger |  | Corporate |        | Eliminations |  | Totals
|                                 |  |           |      |              |  |           |        |              |  |       
|Revenues from external
customers |  | $         |     |              |  | $         | 43,404 |              |  | $      |        |   |  | $ |  |  |  | $ | 43,404  |  
|                                
|                                
|                                
|                                
|Interest expense
(income), net   |  |           | 1    |              |  |           | (46    | )            |  |        | 63,818  |   |  |   |  |  |  |   | 63,773  |  
|                                
|                                
|                                
|                                
|Segment profit (loss)            |  |           | (469 | )            |  |           | 3,790  |              |  |        | (65,276 | ) |  |   |  |  |  |   | (61,955 | )

Three months ended September 29, 2001
(unaudited)

|                                 |  |           |   |              |  |           |        |              |  |        |         |   |  |   |   |  |  |   |         |  
|-------------------------------- |  | --------- | - | ------------ |  | --------- | ------ | ------------ |  | ------ | ------- | - |  | - | - |  |  | - | ------- | -
|                                 |  | Stratford |   | Barcalounger |  | Corporate |        | Eliminations |  | Totals
|                                 |  |           |   |              |  |           |        |              |  |       
|Revenues from external
customers |  | $         |  |              |  | $         | 12,301 |              |  | $      |        |   |  | $ |  |  |  | $ | 12,301  |  
|                                
|                                
|                                
|                                
|Interest expense
(income), net   |  |           |  |              |  |           | (41    | )            |  |        | 19,571  |   |  |   |  |  |  |   | 19,530  |  
|                                
|                                
|                                
|                                
|Segment profit (loss)            |  |           |  |              |  |           | 691    |              |  |        | (21,309 | ) |  |   |  |  |  |   | (20,618 | )

Three months ended September 30, 2000
(unaudited)

|                                 |  |           |      |              |  |           |        |              |  |        |         |   |  |   |   |  |  |   |         |  
|-------------------------------- |  | --------- | ---- | ------------ |  | --------- | ------ | ------------ |  | ------ | ------- | - |  | - | - |  |  | - | ------- | -
|                                 |  | Stratford |      | Barcalounger |  | Corporate |        | Eliminations |  | Totals
|                                 |  |           |      |              |  |           |        |              |  |       
|Revenues from external
customers |  | $         |     |              |  | $         | 14,894 |              |  | $      |        |   |  | $ |  |  |  | $ | 14,894  |  
|                                
|                                
|                                
|                                
|Interest expense
(income), net   |  |           |     |              |  |           | (11    | )            |  |        | 21,285  |   |  |   |  |  |  |   | 21,274  |  
|                                
|                                
|                                
|                                
|Segment profit (loss)            |  |           | (101 | )            |  |           | 1,419  |              |  |        | (21,529 | ) |  |   |  |  |  |   | (20,211 | )

- 9 -



---



##### 



Item 2.

FAIRWOOD CORPORATION AND SUBSIDIARIES

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Certain information in this quarterly report on Form 10-Q, including but not
limited to the Managements Discussion and Analysis of Financial Condition and
Results of Operations, may constitute forward-looking statements as such term is
defined in Section 27A of the Securities Act of 1933 (the Securities Act) and
Section 21E of the Securities Exchange Act of 1934. Certain forward-looking
statements can be identified by the use of forward-looking terminology such as,
believes, expects, may, will, should, seeks, approximately,
intends, plans, estimates, or anticipates or the negative thereof or
derivatives thereof or other comparable terminology, or by discussions of
strategy, plans or intentions. Forward-looking statements involve risks and
uncertainties, including those described in the Companys Annual Report on Form
10-K for the year ended December 31, 2000, which could cause actual results to
be materially different than those in the forward-looking statements. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. The Company assumes no obligation to
update such information.

Liquidity and Capital Resources

At September 29, 2001, the Company had long-term debt of approximately $706.2
million, all of which is classified as current liabilities and of which
approximately $643.3 is owed to Court Square Capital Limited (CSCL), an
affiliate. Long-term debt was approximately $678.6 million at December 31, 2000,
of which $168.8 million was current and approximately $615.7 million was owed to
CSCL. Accrued interest on long-term debt was approximately $205.5 million and
$176.4 million at September 29, 2001 and December 31, 2000, respectively.
Approximately $131.2 million and $106.1 million of the accrued interest was owed
to CSCL at September 29, 2001 and December 31, 2000, respectively. The Companys
outstanding indebtedness includes its senior subordinated pay-in-kind debentures
and merger debentures (collectively, the Fairwood Debentures). Fairwood had
the option during the first five years to pay interest on the Fairwood
Debentures either through cash payments or through the distribution of
additional securities. During such five-year period, Fairwood distributed
additional securities in satisfaction of its interest obligations.

Fairwood is a holding company with no operations. Prior to October 9, 2001 Fairwood
had effectively no cash flow from its subsidiaries because the cash produced by the operations of
the subsidiaries is not expected to be sufficient to permit the subsidiaries to
transfer funds to Fairwood. Fairwoods sole asset is the stock of Consolidated
Furniture, its wholly-owned subsidiary. Fairwoods obligations under the
Fairwood Debentures are collateralized by Fairwoods pledge of its interest in
Consolidated Furnitures capital stock. CSCL, as holder of Fairwoods senior
subordinated pay-in-kind debentures, has a first priority collateral interest in
all of the outstanding capital stock of Consolidated Furniture, and the holders
of the merger debentures have a second priority collateral interest in such
capital stock. The Fairwood Debentures are obligations of Fairwood.

- 10 -



---



##### 



Consolidated Furniture is not an obligor under the Fairwood Debentures. However,
Consolidated Furniture is an obligor under a revolving credit agreement with
CSCL (the Credit Agreement). The Credit Agreement does not permit Consolidated
Furniture to borrow funds and transfer them to Fairwood to enable Fairwood to
make cash interest payments on the Fairwood Debentures. The borrowings under the
Credit Agreement are collateralized by substantially all of the assets of
Consolidated Furniture. Consolidated Furniture is also a holding company without
operations.

On October 9, 2001, pursuant to an Exchange Agreement, Consolidated Furniture transferred all of the outstanding
capital stock of its wholly-owned direct subsidiary Furniture Comfort Corporation (Fairwoods only remaining
operating subsidiary) to Court Square Capital Limited as payment in full of $24 million of the principal
amount outstanding under the Credit Agreement dated September 22, 1989 (the Credit Agreement) among Consolidated
Furniture (then Mohasco Corporation) and certain of its affiliates, as borrowers, and to CSCL (then known as
Citicorp Capital Investors Limited), as lender.

On April 1, 1995 and each semi-annual interest payment date thereafter, Fairwood
failed to make the required interest payments due on the Fairwood Debentures and
Fairwood does not expect to make the cash interest payments required under the
Fairwood Debentures on any future semi-annual interest payment date. Accrued
interest of $189.2 million on the Fairwood Debentures, which includes $114.8
million due to CSCL, is included in accrued interest in the accompanying
unaudited condensed consolidated balance sheet as of September 29, 2001.

There can be no assurance that Fairwood will be able to continue as a going
concern. On January 3, 1996, certain holders of the Fairwood public debentures
(the Bondholders) filed an involuntary Chapter 7 petition against Fairwood in
the United States Bankruptcy Court for the Southern District of New York (the
Bankruptcy Court.) Fairwood, Consolidated Furniture and certain Citicorp
affiliates filed a motion in response to the involuntary filing seeking to
dismiss the petition. By order dated December 4, 1996, the Bankruptcy Court
denied the motion to dismiss the petition.

Thereafter, on December 26, 1996, Fairwood exercised its right to convert the
Chapter 7 case to a case under Chapter 11. Through May 9, 2001, Fairwood continued to operate as a debtor in possession under Section 1108 of the
Bankruptcy Code. The Chapter 11 case pertained only to Fairwood Corporation.
Fairwood Corporations direct and indirect subsidiaries, including Consolidated
Furniture Corporation, Furniture Comfort Corporation, as well as its operating
division, Barcalounger, were not parties to the bankruptcy. In April 1997, the
Bondholders filed a motion with the Bankruptcy Court seeking to convert
Fairwoods Chapter 11 case to a case under Chapter 7 or, alternatively, for the
appointment of a Chapter 11 trustee. By order dated March 2, 1999, the
Bondholders motion to convert the case or, alternatively, for the appointment
of a Chapter 11 trustee, was denied in its entirety. On March 10, 2000, the
District Court entered an Order affirming the Bankruptcy Courts decision in all
respects. By notice dated April 11, 2000, the Bondholders have appealed the
District Courts decision to the Second Circuit Court of Appeals.

By order dated May 9, 2001 the Bankruptcy Court dismissed Fairwoods Chapter 11
case and that order has become final. It is not yet known what further action,
if any, the Bondholders will or could take. The Company has not yet determined
what affect this dismissal will have on the Company going forward.

Fairwoods failure to make the April 1, 1995 and subsequent period interest
payments constitutes an event of default which permits the acceleration of the
Fairwood Debentures by the demand of the holders of the requisite aggregate
principal amount of the debentures, subject to a 180-day acceleration blockage
provision. Upon acceleration, the Fairwood Debentures would be due and payable.
Accordingly, the Fairwood Debentures have been classified as current liabilities
in the accompanying unaudited condensed consolidated balance sheet as of
September 29, 2001.

- 11 -



---



##### 



Subsequent to the transfer of the Furniture Comfort Corporation stock in payment in full of $24 million of Consolidated Furnitures debt the company no longer has any source of operating cash flows to service its debt obligations.
Throughout 2000 and the first nine months of 2001, Consolidated Furniture funded interest
obligations related to long-term indebtedness on the revolving line of credit
and the senior subordinated debentures through increased borrowings from CSCL
under the Credit Agreement. Borrowings from CSCL during the first nine months of
2001 were approximately $27.7 million.
Repayment of $24 million was made through the transfer of the
outstanding stock of furniture Comfort Corporation to
CSCL during the first nine months of 2001. Consolidated Furniture is dependent
upon CSCL for funding of its debt service costs. CSCL has in the past increased
its revolving credit line to Consolidated Furniture in order for Consolidated
Furniture to meet its debt service obligations on the revolving line of credit
and the senior subordinated debentures. However, there can be no assurance that
CSCL will continue to increase its revolving credit line to Consolidated
Furniture to allow Consolidated Furniture to meet its debt service obligations
on the revolving line of credit and the senior subordinated debentures. Under
the Credit Agreement, Consolidated Furniture and its subsidiaries are generally
restricted from transferring moneys to Fairwood with the exception of amounts
for (a) specified administrative expenses of Fairwood and (b) payment of income
taxes. The senior subordinated debentures and the Fairwood Debentures also have
certain restrictions as to the payment and transfer of moneys.

Consolidated Furnitures revolving credit and senior subordinated debentures
mature on January 2, 2002 and, accordingly, have been classified as current
liabilities in the accompanying unaudited condensed consolidated balance sheet
as of September 29, 2001. As of September 29, 2001 Consolidated Furniture was
not in compliance with certain financial covenants and the revolving credit and
senior subordinated debentures is in technical default. Consolidated Furniture
may attempt to negotiate an extension of these maturity dates with CSCL or
refinance such indebtedness prior to January 2, 2002. However, there can be no
assurance that if Consolidated Furniture attempts to negotiate such an extension
that it will be successful, or that the terms of such extension or refinancing
will not be on terms less favorable than those currently in place.

For a discussion of the status of the IRS examination, refer to Fairwoods
consolidated financial statements as of December 31, 2000 included in Fairwoods
Form 10-K, and footnote 5 to Fairwoods condensed consolidated financial
statements included herein.

Results of Operations

Three Months Ended September 29, 2001 Versus Three Months Ended September 30, 2000

The following discussion presents the material changes in results of operations,
which have occurred in the third quarter of 2001 in comparison to the same
period in 2000.

- 12 -



---



##### 



Net sales on a consolidated basis were approximately $12.3 million in the third
quarter of 2001, a decrease of 17.4% from last years third quarter consolidated
net sales of approximately $14.9 million. This decrease in sales reflects a
decrease in sales volume of 18.2% in the third quarter of 2001 versus 2000
partially offset by an increase of 1.0% in the average selling prices. The
increase in average selling price is the result of price increases, with the
results being reflected with July 2000 shipments. The decrease in sales volume
is the result of the downturn in the economy, which had a major impact on the
furniture industry during the third quarter of 2001.

Cost of sales on a consolidated basis decreased 12.9% in the third quarter of
2001 to $10.1 million, or 82.1% of net sales, as compared to $11.6 million, or
77.9% of net sales, in 2000. The increase in cost of sales as a percentage of
net sales was primarily the result of increased costs in 2001 for employee
hospitalization insurance and increases in customer service expenses.

Selling, administrative and general expenses on a consolidated basis for the
third quarters of 2001 and 2000 were approximately $2.4 million and $2.2
million, respectively, representing an increase of 9.1%. This increase is due
primarily to costs incurred to effect the transfer of Furniture Comfort
Corporation to CSCL on October 9, 2001.

Interest expense, was approximately $19.6 million and $21.3 million for the
third quarters of 2001 and 2000, respectively, a decrease of 8.5%. The decrease
was primarily due to decreased interest rates during 2001 partially offset by
borrowings on the Credit Agreement.

Nine Months Ended September 29, 2001 Versus Nine Months Ended September 30, 2000

The following discussion presents the material changes in results of operations,
which have occurred in the first nine months of 2001 in comparison to the same
period in 2000.

Net sales on a consolidated basis were approximately $39.6 million in the first
nine months of 2001, a decrease of 8.8% from last years first nine months
consolidated net sales of approximately $43.4 million. This decrease in sales
reflects a decrease in sales volume of 12.9% in the first nine months of 2001
versus 2000 partially offset by an increase of 4.7% in the average selling
prices. The decrease in sales volume is the result of the downturn in the
economy, which had a major impact on the furniture industry during the second
and third quarters of 2001.

Cost of sales on a consolidated basis decreased 6.4% in first nine months of
2001 to approximately $32.2 million, or 81.3% of net sales, as compared to $34.4
million, or 79.3% of net sales, in 2000. The increase in cost of sales as a
percentage of net sales was primarily the result of decreases in production,
which reduced overhead absorption, and increases in costs for group
hospitalization insurance.

Selling, administrative and general expenses on a consolidated basis for the
first nine months of 2001 and 2000 were approximately $7.3 million and $7.2
million, respectively, representing an increase of 1.4%.

- 13 -



---



##### 



Interest expense, was approximately $60.9 million and $63.9 million for the
first nine months of 2001 and 2000, respectively, a decrease of 4.7%. The
decrease was primarily due to decreased interest rates during 2001 partially
offset by borrowings on the Credit Agreement.

With the exception of adjustments resulting from the IRS settlement, no
provision for Federal income taxes has been provided during the nine months
ended September 29, 2001 and September 30, 2000, as the Company is in a net
operating loss carryforward position, and the valuation allowance has been
increased to offset any future benefit from this position.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Fairwood is exposed to risks related to fluctuations in interest rates on the
Credit Agreement. Fairwood does not utilize interest rate swaps, forwards or
option contracts on foreign currencies or commodities, or other types of
derivative instruments. Fairwood has other borrowing facilities, however these
have fixed interest rates.

For fixed rate debt, changes in interest rates generally affect the fair value
of the underlying indebtedness, but not earnings or cash flows. Conversely, for
variable rate debt, changes in interest rates generally do not impact fair
value, but do affect future earnings and cash flows.

Assuming the amount outstanding under the Credit Agreement remains at $457.5
million, the balance at September 29, 2001, each one percentage point increase
in the prime interest rate would result in an increase in interest expense for
the coming year of approximately $4.6 million. The fixed rate debt includes the
following (in thousands):

|                                                     |  |        |         |                       |  |               |        |  
|---------------------------------------------------- |  | ------ | ------- | --------------------- |  | ------------- | ------ | -
|                                                     |  |        |         |                       |  | Interest rate
|                                                     |  | Amount |         | At September 29, 2001
|                                                     |  |        |         |                      
|Senior subordinated debentures, due 2002             |  | $      | 80,000  |                       |  |               | 18     | %
|                                                    
|                                                    
|                                                    
|                                                    
|Senior subordinated pay-in-kind
debentures, due 2001 |  |        | 105,853 |                       |  |               | 15-1/2 | %
|                                                    
|                                                    
|                                                    
|                                                    
|Merger debentures, due 2004                          |  |        | 62,928  |                       |  |               | 16-7/8 | %
|                                                     |  |        |         |                       |  |               |        |  
|                                                     |  | $      | 248,781 |                       |  |               |        |  
|                                                     |  |        |         |                       |  |               |        |  

The fair value of the fixed rate debt, and changes in fair value due to fluctuations
in market rates cannot be reasonably estimated considering Fairwoods ongoing
financial difficulties.

Part II OTHER INFORMATION

Item 1. Legal Proceedings



| |  | Reference is made to Item 3, Legal Proceedings, previously reported in the
Registrants Form 10-K for the year ended December 31, 2000 for a description
of pending legal action.                           
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | There are certain legal proceedings arising out of the normal course of business,
the financial risk of which are not considered material in relation to the consolidated
financial position of the Company.

- 14 -



---



##### 



Item 6. Exhibits and Reports on Form 8-K



| | (a) |  | Exhibits                                                                                                                                                                  
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | None                                                                                                                                                                      
|
| | (b) |  | Reports on Form 8-K                                                                                                                                                       
|
| |     |  | Filed October 24, 2001 regarding transfer of all of the stock of
Furniture Comfort Corporation in settlement of $24 million under
the existing Revolving Credit Agreement.

- 15 -



---



##### 



FAIRWOOD CORPORATION AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements 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.

| |  |                                                                                          
| |  | -----------------------------------------------------------------------------------------
| |  | FAIRWOOD CORPORATION                                                                     
| |  |                                                                                          
| |  | (Registrant)                                                                             
|
|
|
|
| |  |                                                                                          
|
|
|
|
| |  | /s/ John B. Sganga                                                                       
| |  |                                                                                          
| |  | John B. Sganga
Chief Financial Officer,
Executive Vice President,
Secretary and Treasurer

Date: November 13, 2001

- 16 -