<PAGE>   1

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K


  (Mark One)

  [X]       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934
            For the fiscal year ended June 27, 1998

                                       OR

  [ ]       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: 0-22942

                             CONSO PRODUCTS COMPANY
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

       SOUTH CAROLINA                                      57-0986680
(State or other jurisdiction of                          (I.R.S. Employer
 incorporation or organization)                         Identification No.)

513 NORTH DUNCAN BYPASS, P.O. BOX 326, UNION, SC              29379
  (Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code (864) 427-9004

           Securities registered pursuant to Section 12(b) of the Act:
                                      None
           Securities registered pursuant to Section 12(g) of the Act:
                            NO PAR VALUE COMMON STOCK
                                (Title of class)

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 [ ]

The aggregate market value of shares of the Registrant's no par value Common
Stock, its only outstanding class of voting stock, held by non-affiliates of the
Registrant as of September 18, 1998, was $23,123,098.

The number of shares outstanding of the Registrant's no par value Common Stock,
its only outstanding class of common equity, as of September 18, 1998, was
7,411,882.

                       DOCUMENTS INCORPORATED BY REFERENCE

<TABLE>
<CAPTION>
<S>                                                                                              <C>
   Incorporated Document                                                                         Parts into which Incorporated
   1998 Annual Report to Shareholders for the fiscal year ended June 27, 1998                    Part II
   Proxy Statement for Annual Meeting of Shareholders to be held November 9, 1998                Part III
</TABLE>

                                       1

<PAGE>   2



PART I

ITEM 1. BUSINESS

GENERAL

    Conso Products Company, together with its subsidiaries (the "Company"),
is the world's largest manufacturer of decorative trimmings for the home
furnishings industry and, through its subsidiary, Simplicity Pattern Co., Inc.
("Simplicity"), is a leading producer of patterns and other instructional
material for home sewing of apparel, home decorating, and crafts. Conso
Products, including its British Trimmings subsidiary, produces and sells a full
range of knitted and woven fringes, decorative cords, tasseled accessories,
jacquard and other woven braids, and apparel trims, as well as sewing tapes and
supplies. Conso also distributes decorative window accoutrements and other home
furnishings accessories. Through a worldwide sales force the Company's products
are marketed to manufacturers, distributors and retailers. Manufacturing
facilities are located in the United States, the United Kingdom, Mexico, and
India.

    Conso's (through the parent company) US business, which can be traced back
to 1867, was acquired from Springs Industries, Inc. in 1986 when the parent
company was organized by a group of investors that included J. Cary Findlay, who
became its Chief Executive Officer and, subsequently, its sole shareholder. In
December 1993, the Company made its initial public offering of its Common Stock
and, using a portion of the proceeds of the offering, acquired British Trimmings
(Holdings) Limited, a privately held English company, which is now known as
"British Trimmings Limited" and is one of the leading producers of decorative
trimmings in the United Kingdom. In connection with the offering, Conso Products
Company changed its jurisdiction of incorporation from Delaware to South
Carolina. In June 1998, the Company completed the acquisition of Simplicity
Capital Corporation, the parent company of Simplicity Pattern Co., Inc. Unless
the context otherwise requires, all references in this report to "Conso" or
"Conso US" are to Conso Products Company, its Delaware predecessor, and its
majority-owned Mexico and India subsidiaries, all references to "British
Trimmings" are to British Trimmings Limited, its corporate predecessors and
subsidiaries, all references to "Simplicity" are to Simplicity Capital
Corporation and its subsidiaries, and all references to the "Company" include
Conso, British Trimmings, and Simplicity.

    The fiscal years ended June 27, 1998, June 28, 1997 and June 26, 1996 (all
consisting of 52 weeks) are referred to herein as the "1998 fiscal year" or
"fiscal 1998", the "1997 fiscal year" or "fiscal 1997", and the "1996 fiscal
year" or "fiscal 1996", respectively.

    Since acquiring British Trimmings, in connection with its public offering,
the Company has made several additional acquisitions.

    In May 1994, Conso acquired the assets of Conso Graber Canada, Inc., a
Canadian producer and distributor of decorative trimmings whose business had
once been under common ownership with Conso's. The assets were acquired at a
total cost of approximately $300,000 and consisted primarily of additional
equipment which is being used at the Company's existing locations. In June 1994,
British Trimmings acquired Wendy A. Cushing Limited and Wendy Cushing Trimmings
Limited, both English companies, for approximately $112,000. Wendy A. Cushing, a
leading designer of old world decorative trimmings, serves Conso US' and British
Trimmings' upper-end customers internationally. These companies maintain a
design studio in London and a showroom in Chelsea Harbour. In March 1996, the
Company acquired all of the assets of The Claesson Company in consideration of
the assumption of approximately $310,000 in liabilities. In connection with the
acquisition, Margareta Claesson joined Conso as Manager of the Decorative
Accessories Products Division. In September 1997, Conso acquired the assets of
HFDC, Inc., which designs and sells decorative home window fashion products,
primarily under the "DUITALL" name brand, for approximately $262,000, including
the assumption of certain liabilities. Stuart R. Fraker, HFDC's President,
joined Conso as Manager of this new division of home fashion products.

    In June 1998, Conso acquired all the outstanding common stock of Simplicity
Capital Corporation, the parent company of Simplicity Pattern Co., Inc. (the
operating company). The consideration paid was $33,600,000 (consisting of the
$33,000,000 cash purchase price and transaction expenses) plus the assumption of
certain of Simplicity's liabilities, for a total purchase price of $54,265,000.
Simplicity Pattern Co., Inc. was founded in 1927, and is one of the world's
largest producers of home sewing patterns. Simplicity designs its patterns in
New York and London, produces them in the United States and distributes them
worldwide.

                                       2

<PAGE>   3



    The Company's global growth strategy for the future includes:

    -   Additional business acquisitions as attractive opportunities are
        identified;

    -   Continual introduction of new decorative trimmings products and the
        cross-merchandising of existing products between Conso US and British
        Trimmings and through Simplicity publications;

    -   Expansion of the Company's existing decorative accessory products and
        identification, development and acquisition of additional products.

    -   Continued expansion of the Company's customer base, including increased
        sales to manufacturers, distributors, high-end designers and mass
        merchandisers;

    -   Expanded international production and distribution operations, as well
        as increased export sales.

    With the acquisition of Simplicity, the Company is focusing on the use of
patterns and the Simplicity name and its other publications to promote its
existing products and additional products which may be developed or acquired.

INDUSTRY

    The decorative trimmings industry constitutes a small portion of the home
furnishings industry. The Company's management is not aware of any definitive
published data on the size of the decorative trimmings industry. Both Conso US
and British Trimmings have many competitors for various parts of their
businesses; however, many of these competitors are small and most do not offer
the same breadth or depth of collections or ranges.

    Demand for Conso US' and British Trimmings' products varies as fashion
trends in home furnishings and the relative cost of various product changes.
Total demand is also affected by population growth and demographics, consumer
spending and confidence in the economy, levels of disposable income, geographic
mobility of consumers, housing starts, and residential housing sales. The
Company believes that it has been able to increase the demand for decorative
trimmings, and therefore expand the market, through aggressive merchandising
support of resellers and education of end-users as to applications for its
products. The acquisition of Simplicity enables the Company to elevate the
support of merchandisers and education of end-users through publications and
materials in regular direct contact with the end consumer, and through the use
of a widely recognized and well-respected brand name. Accordingly, the Company
intends to aggressively pursue the further promotion of Simplicity's
publications and its name to promote the Company's other products.

    While the Company's primary product has been textile related, management
views the Company as a consumer products company. With some reduction in the
growth in revenues from Conso products, the Company is increasing its focus on
acquisitions, with attention given to companies that have a focus on home
decorating and can expand its existing products and product offerings. The
acquisition of Simplicity confirms the consumer products focus and positions the
Company to pursue the expansion of its business in this arena.

    The home sewing and crafts industry, which Simplicity competes in, is
comprised primarily of retail store customers, and includes a variety of
products including fabric, patterns, notions, crafts and other related supplies.
The pattern segment represents a relatively small, niche market within the home
sewing and crafts industry.

    The Company's management is not aware of any definitive published data on
the size of the pattern industry or the revenues of its competitors. However,
the Company believes that, based on the number of Simplicity products and its
competitors products seen in retail stores, it is one of the largest producers
of patterns in the world.

    The home sewing and craft industry has significant overlap with the home
decorating industry in which the Company has a significant presence with its
trimmings and decorative hardware products. The Company is using this overlap,
and the cross-merchandising of products through selling materials and patterns,
to increase the presence of its products, including patterns within both the
home decorating and home sewing and crafts industries.

                                       3

<PAGE>   4

PRODUCTS

    The decorative trimmings produced and sold by both Conso US and British
Trimmings include various fringes, cords and tasseled accessories that are used
on the edges of chairs, sofas, decorative pillows, draperies and other home
furnishings. Fringes may include a brush fringe or ruche around the edge of a
pillow or a heavy bullion fringe around the base of a sofa. Tassel fringe is
often used to edge draperies and decorative pillows. Knitted and woven braids
produced by both companies are used to border or frame pillows, curtains and
upholstered pieces. Cord without a lip or flange may be used to border a mirror
or a room and can be used to hang pictures and mirrors.

    British Trimmings also produces and sells apparel trimmings. Apparel
fashions produced and distributed by British Trimmings include sequin and
glitter trimmings, gimp trims and froggings. Some of the braids and other stock
products that are produced by both Conso US and British Trimmings are also used
in apparels.

    Conso US also produces and sells sewing tapes and cords, and distributes
other sewing and workroom supplies purchased from others. Conso US and British
Trimmings import and distribute accessories for window furnishings and other
decorative accessories for the home.

    With the acquisition of Simplicity, the Company has expanded its products to
include patterns. The pattern products of Simplicity are produced and sold under
the Simplicity, New Look, and Style brand names. The Simplicity brand is one of
the most respected, well-known names in the home sewing and crafts industry.
Simplicity offers approximately 1,500 patterns for sales and updates over 500 of
those designs each year to respond to market trends and keep its design
selection fresh. The patterns available from Simplicity offer consumers a wide
selection of fashion apparel, home decorating, crafts, and costume designs.

    Consumers use patterns to construct fashion apparel, home sewing, craft and
costume items. An outline and instruction guide for a garment or craft shape is
designed and printed on paper. The outline is used as a blueprint which
consumers place on the fabric to properly guide the cutting of the fabric into
pieces. Using the instructions, the consumers then sew the appropriate pieces
together as noted. Simplicity is noted for superior, easy-to-follow instructions
that simplify the entire sewing process.

    Operations for Simplicity for fiscal 1998 (from the period of acquisition or
June 19, 1998 through June 27, 1998) are not material and are not included in
the operations of the Company. Revenues for Simplicity, consisting primarily of
revenues from sales of Simplicity's publications, including patterns, on a pro
forma basis for the 1998 fiscal year was $53,657,000.

                                       4

<PAGE>   5


    The following table sets forth, for the periods indicated, certain
information relating to sales of Conso's and British Trimmings' product lines
for the current and prior two fiscal years:

<TABLE>
<CAPTION>
                                                                        FISCAL YEARS ENDED
           ----------------------------------------------------------------------------------------------------------------
                                                 JUNE 27, 1998              JUNE 28, 1997               JUNE 29, 1996
                                           ---------------------       --------------------        --------------------
                                                                      (DOLLARS IN THOUSANDS)
<S>                                        <C>            <C>          <C>            <C>          <C>           <C>
           Catalog Trims:
               Conso US                    $31,880         44.3%       $32,988         44.9%       $32,096         45.4%
               British Trimmings            11,469         16.0         10,548         14.4          9,541         13.5
               Wendy Cushing Trimmings         982          1.4            912          1.2            685          1.0

           Manufacturers' Specials:
               Conso US                     12,464         17.3         12,572         17.1         12,397         17.5
               British Trimmings             5,659          7.9          5,804          7.9          6,056          8.6
               Wendy Cushing Trimmings         619          0.9            677          0.9            616          0.9
           Decorative Accessories            1,740          2.4          1,376          1.9            865          1.2
           Workroom supplies                 4,459          6.2          4,557          6.2          4,593          6.5
           Apparel Fashions                    422          0.6          2,062          2.8          2,368          3.3
           Other miscellaneous                                                                                         
               products                      2,167          3.0          1,951          2.7          1,497          2.1
                                           -------        -----        -------        -----        -------        ----- 
           Total                           $71,861        100.0%       $73,447        100.0%       $70,714        100.0%
                                           =======        =====        =======        =====        =======        ===== 
</TABLE>

    Details of operations and assets for the separate Conso and British
Trimmings companies and details of assets for the separate Simplicity domestic
and foreign operations are presented in the Company's Notes to Consolidated
Financial Statements for the fiscal years Ended June 27, 1998, June 28, 1997 and
June 29, 1996.

PRODUCT DESIGN AND DEVELOPMENT

    Because the demand for decorative trimmings is based upon fashion appeal to
home furnishings manufacturers, interior designers and ultimately consumers, the
success of the Company's decorative trimmings business is dependent upon its
ability to design and develop a broad range of attractive products in a wide
array of colors and color combinations (known as "colorways"). Conso US' current
stock product lines of decorative trimmings include numerous items in various
yarns, stylings and colorways comprising over 19,000 stock keeping units
("SKUs"), and British Trimmings currently stocks products comprising over 3,100
SKUs. Both Conso US and British Trimmings develop and market lines of
complementary products in various stylings and colorways as "collections" or
"ranges." Both businesses also manufacture custom trimmings as specified by
their customers.

    Since 1987, Conso's management has developed decorative trimmings products
in response to national market research and customer demand. The first line was
the "Empress Collection," introduced in 1987 for the medium price range market.
Wesley Mancini, a prominent designer of home furnishings fabrics, was engaged to
color the first 13 colorways in the line and develop additional lines. Conso US
has also introduced 15 additional collections of decorative trimmings in
different yarns and colorways for various markets and price points, including
the "Imperial Collection" designed by Mr. Mancini and introduced in 1989 for the
higher price range market. The "Princess Collection", developed in 1989, and the
"Louis XVII Collection", introduced in 1993 and designed by Louis Nicole,
another well-known home furnishings designer, are marketed in the lower to
medium price range for major retailers. In 1997, the Company added the "Cabaret"
collection to meet market demand for a new look in the home furnishings market.

    British Trimmings has offered its "Tudor Range" since 1990 and introduced
its "Elizabethan Range" in 1993, both of which are aimed at the medium price
range market. The Tudor Range was expanded with additional colorways in 1992 and
1994. The Elizabethan Range, based on historical trimmings as would be found in
a 15th century English mansion, emphasizes Britain's heritage in marketing
British trimmings in home furnishings worldwide. In 1996, British Trimmings
introduced its "Bloomsbury Range", aimed at the upper end market. In 1997,
British Trimmings introduced "Cambridge" and "Oxford" ranges to aggressively
pursue the upholstery market.

    In 1998, existing collections for both Conso and British Trimmings were
updated with new stylings and colors and an additional line is being developed
for introduction in 1999, with a focus on international trends.

     Since sewing is an alternative to buying ready made items, Simplicity
pattern designs must closely resemble silhouettes and prints produced by
competitors in the apparel, home furnishings and craft industries. Simplicity is
continuously developing designs into patterns in New York and London to ensure
fresh new products for all its pattern brands. The Simplicity design team visits
key

                                       5

<PAGE>   6

domestic and European fashion centers and subscribes to a variety of
international fashion, color and silhouette reports. Based upon this information
and historical sales data, new pattern designs are created. The Company uses
both staff and contract designers. Simplicity updates its pattern brands
(Simplicity, Style and New Look) several times a year to offer the latest
"looks" available.

MARKETING AND SALES

    Conso US' decorative trimmings marketing program is directed by a marketing
department assisted by a graphic design team and sample department. The
marketing department is responsible for trade shows, advertising, sample binders
and cards, displays, videos, catalogs, brochures and other selling aids as well
as the development of new stock products.

    To market its collections of decorative trimmings, Conso US has created
special sample binders for most collections. The binders allow the easy removal
and use of sample cards, as well as the insertion of cards for new colorways and
stylings added to the collections in later years. Conso US also distributes a
color wholesale catalog produced annually by its graphic design team, as well as
other brochures, sample cards and selling aids, and advertises its products in
major trade publications.

    Since the acquisition of British Trimmings, the Company has established a
marketing department at British Trimmings, that works closely with and reports
to the Conso US marketing group. British Trimmings also uses sample books and
cards as its primary selling aids, as well as brochures and other materials
produced by its in-house printing operation at its Leek, England facility.
British Trimmings' first wholesale color catalog was introduced in January 1995
and is produced annually.

    Conso US displays its products at showrooms located at its New York sales
office and at the Furniture Mart in Hickory, North Carolina and its Miami
international sales office. British Trimmings maintains showrooms at its
Stockport and London manufacturing facilities and Wendy Cushing Trimmings has a
showroom at Chelsea Harbour in London. In 1998, the Company displayed (or is
scheduled to display) the products of both Conso US and British Trimmings at a
total of five trade shows in the United States, three in Europe, one in
Singapore, and one in Dubai.

    Conso US' products are marketed and sold through a sales force of
representatives located in various major cities, sales personnel that travel
internationally, and through foreign independent sales representatives. British
Trimmings has sales personnel operating mainly out of its Stockport, England
offices, and uses independent sales representatives located in foreign
countries. Wendy Cushing Trimmings is serviced by a sales representative in the
United Kingdom and through designer (agent) showrooms in the United States and
Canada. Since the Company's most significant sales presence is in the US and UK,
the Company focuses its international sales efforts (other than sales into the
UK) into three major sales regions: the Western Hemisphere (including Canada and
Latin and South America), Europe and the Middle East (including Africa, and
excluding the UK), and the Pacific Rim (including Australia and New Zealand).
The Company has international sales managers who are responsible for
implementing the sales and marketing programs for the foreign geographic regions
and directing services to these regions from international sales office in
Miami, Florida, for Latin America and the Caribbean and in Stockport for
Continental Europe, the Pacific Rim and the Middle East.

    The key selling tools for Simplicity are the pattern catalogs that are
prominently displayed and available for viewing by consumers at retail
locations. The pattern catalog shows one or more pictures of all pattern designs
available in each brand. Auxiliary catalogs also are produced to highlight
specific merchandise categories such as children's apparel, holiday costumes,
home decorating and crafts, and to increase retail presence and save consumers
shopping time when looking for specific types of patterns.

    The pattern catalogs and sales of patterns are supplemented periodically by
the use of model garments and other in-store sales materials such as posters,
wall charts and easels which provide a picture of selected new pattern designs,
and through the use of box-out displays. Box-outs are used for seasonal patterns
such as those for the Halloween, Christmas and Easter holidays, and for new
fashion trends in order to attract impulse sales, increase retail presence and
for special joint marketing programs with fabric companies.

    Simplicity also uses a variety of marketing tools to make its products
available directly to consumers such as an internet home page, direct marketing
programs, telemarketing and repeat customer programs to increase sales.

    Retail customers frequently use pattern promotions through price discounting
to generate store traffic and drive the sales of other sewing products such as
fabrics, notions and craft items. It is common for retail customers to sell
patterns at up to 50% off the

                                       6

<PAGE>   7

suggested retail price. Retail customers also use pricing below this level for
selected promotional events. Newspaper ads and color circulars featuring
pictures of selected pattern designs of Simplicity are used by retail customers
to promote patterns.

ORDER PROCESSING AND CUSTOMER SERVICE

    Most of Conso US' and British Trimmings' orders are received directly from
customers by customer service representatives in offices in Union, South
Carolina and Stockport, England. Roughly half of the customer orders are
received by facsimile transmission, the balance by telephone. The customer
service operations include representatives for domestic stock orders,
representatives who process international orders, representatives who handle
manufacturing specials orders, and representatives who handle custom orders,
other than manufacturing special orders.

    Because most of Conso US' and British Trimmings' customer orders are for
stock items and because prompt response to customer orders is critical to
customer satisfaction, Conso US and British Trimmings emphasize customer service
and prompt fulfillment of orders. To that end, Conso US and British Trimmings
maintain large inventories of stock items in a wide range of colors and color
combinations, and have implemented computerized order entry, production,
inventory management and shipping systems, including a computerized factory
order materials requisition program and pre-established minimum and maximum
formulas for levels of inventories based on sales history and forecasts for each
SKU. These systems enable Conso US and British Trimmings to better anticipate
future demand by customers for each of its SKU's and to minimize backorders.

    Simplicity receives all of its orders directly from retail customers and
processes these orders promptly through its computerized systems. Most orders in
the United States are received through electronic data interchange and are
fulfilled within one week. Simplicity maintains a complete inventory of each
pattern design and a customer service department in all major market regions.

CUSTOMERS

    The Conso US' and British Trimmings' products are sold worldwide to
manufacturers, distributors and retailers, including manufacturers of
upholstered furniture, draperies, bedding, decorative pillows and other home
furnishings; trim, fabric and workroom supply distributors; and major retailers,
retail fabric store chains and interior designers. The following table sets
forth, for the periods indicated, certain information relating to sales of
products to the Company's three major categories of customers:

<TABLE>
<CAPTION>
                                                                 FISCAL YEARS ENDED
                      ------------------------------------------------------------------------------------------
                                          JUNE 27, 1998             JUNE 28, 1997            JUNE 29, 1996
                                       ------------------       -------------------      -------------------
                                                               (DOLLARS IN THOUSANDS)
                      <S>              <C>          <C>         <C>           <C>        <C>           <C>
                      Manufacturers    $ 27,696      38.6%      $ 31,108       42.3%     $ 30,476       43.1%
                      Distributors       30,996      43.1         30,013       40.8        28,199       39.9
                      Retailers          13,169      18.3         12,326       16.9        12,039       17.0
                                       --------     -----       --------      -----      --------      ----- 
                      Total            $ 71,861     100.0%      $ 73,447      100.0%     $ 70,714      100.0%
                                       ========     =====       ========      =====      ========      ===== 
</TABLE>

    Simplicity sells direct to retail customers who sell home sewing products
such as fabric, notions, crafts and other supplies to consumers. Retail
customers consist of fabric store chains, discount stores and chains and
independent fabric and craft stores. A total of approximately 8,900 retail
locations world-wide are serviced directly by Simplicity. While Conso and
British Trimmings have not had any one customer that would make up more than 10%
of their business, Simplicity's five largest retail customers represent
approximately 60% of its sales. Accordingly, the acquisition of Simplicity will
increase the Company's reliance for revenues from certain individual customers
in the pattern segment and retail customer base. The acquisition of Simplicity
will take revenues of the Company's smallest customer segment, the retail
segment, and propel it to the largest segment. Simplicity has one customer
(Wal-Mart) which represents more than 10% (approximately 14%) of the revenues of
the Company for fiscal 1998 on a pro forma combined basis. Operations for
Simplicity for fiscal 1998 (from the period of acquisition or June 19, 1998
through June 27, 1998) are not material and are not included in the operations
of the Company for the current fiscal year. Revenue for Simplicity, which
results from sales to retailers on a pro forma basis for the 1998 fiscal year
was $53,657,000.

    At June 27, 1998, the Company had approximately 5,000 customer accounts with
open balances. Open customer orders at June 27, 1998 were $3.6 million as
compared to $3.7 million at June 28, 1997. The Company expects that
substantially all of the open orders at June 27, 1998 will be recognized as
revenue within the first quarter.

                                       7

<PAGE>   8

EXPORTS

    Approximately 91% of Conso US' sales of $52.3 million for fiscal 1998
were to US customers; the remainder was export sales, primarily to customers in
Canada and Central and South America. Approximately 80% of British Trimmings'
sales of $19.6 million for fiscal 1998 were to customers in the United Kingdom,
with the remainder being export sales primarily to customers in other European
countries. Operations for Simplicity for fiscal 1998 (from the date of
acquisition or June 19, 1998 through June 27, 1998) are not material and are
excluded from the operations of the Company. Exports represented approximately
20% of Simplicity's sales for the 1998 fiscal year.

    The following table sets forth for the periods indicated the Company's sales
outside the United States and the United Kingdom and as a percentage of total
Company sales, by geographic region (and excluding Simplicity operations):

<TABLE>
<CAPTION>
                                                            FISCAL YEARS ENDED
               --------------------------------------------------------------------------------------------------------
                                                     JUNE 27, 1998          JUNE 28, 1997            JUNE 29, 1996
                                                  ------------------      -----------------       -----------------
                                                                        (DOLLARS IN THOUSANDS)
               <S>                                <C>           <C>       <C>          <C>        <C>           <C> 
               Western Hemisphere                 $ 4,138        5.8%     $ 3,985       5.4%      $ 3,020       4.3%
               Europe and Middle East               2,841        4.0        2,683       3.7         2,324       3.3
               Pacific Rim                          1,541        2.1        1,787       2.4         1,250       1.8
                                                  -------       ----      -------       ----      -------       --- 
               Total                              $ 8,520       11.9%     $ 8,455       11.5%     $ 6,594       9.4%
                                                  =======       ====      =======       ====      =======       === 
</TABLE>


MANUFACTURING AND RAW MATERIALS

    Conso US and British Trimmings purchase undyed yarns, some dyed yarns and
other supplies, and manufacture their trimmings products through various
processes. Because of the variety of products they manufacture, Conso US and
British Trimmings employ a wide range of machinery and equipment in their
operations. Each business uses the generally available techniques for weaving,
knitting and braiding yarns, as well as processes for making tassel fringe, ball
and knotted fringes, laminated trims, cords and stud tapes. Much of the
machinery is developed and often constructed in their own engineering
departments. Conso US and British Trimmings have developed their own adaptations
of machinery for specific products or types of products to provide greater
speed, flexibility or novelty in production. Both Conso US and British Trimmings
employ their own staffs to continually evaluate alternative raw materials and
processes, the use of new textile technology and in-house machinery improvement.

    Both Conso US and British Trimmings have their own dyehouse facilities, with
space available to add additional dyeing equipment as necessary. This enables
both businesses to dye their own yarns quickly and assure better consistency of
color. In addition, commission dyehouses are available to both businesses when
demand exceeds in-house capacity.

    In the US, Conso is in the construction phase of a new 33,000 square foot
dyehouse facility with an estimated cost of $3.8 million and has completed a new
86,000 square foot distribution center at a total cost (including certain
additional distribution related equipment) of $4.5 million. Both of these
facilities are located adjacent to the existing main plant in Union, SC. The
dyehouse construction is scheduled to be completed by the end of calendar year
1998.

    Certain of Conso's products require handwork assembly. Most of the handwork
is done at Conso US' facility in Juarez, Mexico, and on a piece work basis by
home workers directed from the Stockport and London facilities of British
Trimmings. In July 1997, the Company leased facilities in Coimbatore, India
which house handwork operations primarily for the UK market. Operations at this
facility began in January of 1998 with significant product shipments being
received beginning in the July of 1998. The addition of this facility will allow
the Company to be more competitive with certain low priced products.

    The various departments in each of Conso US' and British Trimmings'
manufacturing plants operate one to three shifts per day, five or six days per
week, depending upon market conditions and customer orders.

    The raw materials used by Conso US in its manufacturing operations include
spun rayon, spun and filament polyester, cotton and acetate yarns. The primary
yarns used by British Trimmings are spun rayon and filament viscose rayon. These
yarns are commodities generally available as needed from various suppliers
located throughout the world. The Company expects that yarn supplies will
continue to be available as needed for the Company's operations. Changes in the
price of cotton, wood pulp and petrochemicals, the

                                       8

<PAGE>   9

base materials for most of the Company's yarns, however, could cause significant
changes in the Company's raw material costs, and there can be no assurance that
there will not be any changes in the availability, price or quality of any raw
materials.

    The two key components of a pattern are printed tissue paper containing the
outline of the garment, craft or home decorating item and the written
instructions printed on newsprint. Simplicity owns and occupies a facility of
approximately 740,000 square feet in Niles, Michigan. This facility operates
principally on a one shift, five day a week basis, although certain departments
sometimes operate on a two or three shift basis. At its Niles facility,
Simplicity operates a paper mill and printing operation for the production of
tissue and printing of patterns and instructions. Simplicity out-sources the
printing of its pattern catalogs.

    Principal raw materials for Simplicity are paper, pulp, wood, recycled
paper, ink and corrugate and the Company believes that an ample supply of these
raw materials will continue to be available. However, changes in the price of
paper, wood pulp, ink and the price and availability of recycled paper and other
supplies related to its operations could cause significant changes in the
Company's raw material costs, and there can be no assurance that there will not
be any changes in the availability, price or quality of any raw materials.

COMPETITION

    While the business of manufacturing decorative trimmings for the home
furnishings industry is competitive, and includes many relatively small
producers with limited product lines or products designed for the lower end of
the market, there are a few US domestic or foreign manufacturers of substantial
size. The Company is the largest manufacturer of decorative trimmings for the
home furnishings industry in the world and is aware of no more than four other
major producers with which it competes for customers worldwide. In the Company's
trimmings segment, which is a relatively small, niche market within the home
decorating industry, the Company has fragmented competition coming from a large
number of smaller competitors with more limited product breadth or depth of
collections or ranges. However, the pattern segment, is dominated by a
relatively small number of companies. The pattern segment includes four major
producers, whose combined sales account for the majority of worldwide pattern
revenues. The three producers with the most significant portion of their
revenues believed to be generated in the United States include Simplicity,
McCall Pattern Company and Butterick Company, Inc. The fourth producer, Burda,
is headquartered in Germany, and has historically maintained a strong presence
in Europe, and other foreign markets.

    Smaller producers of decorative trimmings often have focused on longer
production run business with manufacturers at lower prices, frequently using
lower quality products. The Company believes that the continued slow-down in the
rate of growth of sales of decorative trimmings to manufacturers this past
fiscal year may be partially attributable to competition from these smaller
producers. From time to time, the Company develops new products to provide
alternatives to products manufactured by these smaller producers and may use its
operations in Mexico and India to manufacture goods to compete with these
producers.

    During the current fiscal year, the Conso US and British Trimmings
experienced increased price competition on sales of certain manufacturing
special items and hand assembled products, to an extent, by low price goods
being manufactured by smaller competitors and from low price goods being
imported from the Far East. Consequently, in August 1997, the Company announced
the formation of India Trimmings (Private) Limited to produce hand assembled
products in India. The Mexico plant continues to produce many of the hand
assembled products sold in the US. The North American Free Trade Agreement
("NAFTA") and the General Agreement on Trade and Tariffs ("GATT") could increase
US competition for sales of Conso US' products as well. While the Company
believes that the elimination of international trade barriers under both GATT
and NAFTA will be beneficial to it as it implements its strategy of expanding
its worldwide operations, there can be no assurance that increased US
competition from foreign manufacturers as a result of NAFTA or GATT or any other
trade related agreements would not have a material adverse effect on its
business.

    There are a number of large manufacturers of textiles, home furnishings and
other products with resources substantially greater than those of the Company
who have the ability to enter the decorative trimmings, hardware or pattern
businesses by either establishing their own operations or acquiring and
combining other existing operations. Management is aware of no current plans by
any such manufacturer to enter the decorative trimmings or patterns businesses.

    The Company has recently acquired companies, which focus on decorative
hardware items, and is marketing and distributing these items to its existing
customer base. The decorative hardware industry is a much larger industry than
trimmings or patterns with several, already well established manufacturers. The
Company intends to compete in this market through the continuous introduction

                                       9

<PAGE>   10

of new products and product stylings and through cross-merchandising through its
selling materials and publications and to its existing customer base.

    The Company, in its trimmings business, its decorative hardware business,
and its newly acquired patterns business competes on the basis of styling,
selection, color, delivery, price and customer service. The Company believes
that its ability to promptly fill customer orders, due to its large inventory,
its production and inventory management systems, its customer service and sales
staff and its control over availability of yarn colors for trimmings, production
of its own paper for patterns, its breadth of product offerings and focus on
product design, presentation, and cross-merchandising gives it a competitive
advantage and is valued by its customers.

EMPLOYEES

    As of June 27, 1998, Conso US had 645 full-time employees, of whom 532 were
hourly employees and 113 were salaried employees. In addition, 350 contract
workers at Conso US' assembly plant in Juarez, Mexico work under the supervision
of a Conso US manager in a "Maquiladora" operation, which provides for contract
labor in accordance with certain Mexican regulations and India Trimmings employs
105 full-time employees at its manufacturing facility in Coimbatore, India. None
of Conso US employees are represented by a union. Conso US' management considers
its relationship with its personnel to be good. While Conso US has historically
had a high turnover rate among its hourly employees during the first three
months of employment, Conso US has been able to attract and retain qualified
personnel.

    As of June 27, 1998, British Trimmings had 383 full-time employees, of whom
281 were hourly employees and 102 were salaried employees. Approximately 38% of
the employees of British Trimmings are represented by the Union of Textile
Workers (the "Union"). British Trimmings and the Union agreed in February 1998
to the annual renewal of their contract for the year ending December 31, 1998,
with an increase of 3% in the basic wage rate. Although any strike or other
disruption of operations by members of the Union could have a material adverse
effect on the Company, the Union has represented the production workers of
British Trimmings for at least 29 years, during which time there has never been
a strike or work stoppage.

    As of June 27, 1998, Simplicity had approximately 450 employees, of whom 214
were represented by labor unions and 236 were non-union. Most union employees
are located in the Niles, Michigan facility. Union contracts covering these
union employees expire on January 31, 2000. Although any strike or other
disruption of operations by members of unions could have a material adverse
effect on the Company, Simplicity has not experienced any work stoppages in
recent years and believes relations with all of its employees are good.

GOVERNMENTAL REGULATION

    The business and operations of the Company are subject to governmental
regulation, including employee health and safety laws and regulations; laws and
regulations governing employment practices, wages and hours, and employee
benefits; and environmental laws and regulations. The Company believes it is in
compliance in all material respects with applicable laws and regulations
(including those regulating the discharge of materials into the environment or
otherwise relating to the protection of the environment), and that such
compliance has not materially affected its business or required major capital
expenditures. Future changes in laws and regulations or any determination that
the Company is not in compliance with applicable laws and regulations could have
a material adverse effect on the Company.

TRADEMARKS

    Conso has registered the trademarks CONSO(R) for its products and
CLAESSON(R) for decorative hardware items, and British Trimmings has registered
the trademarks SPECTRUM(R) for lace, braids and woven labels and POLYUROCOL(R)
for certain yarns and threads in the United Kingdom. In September 1997, the
Company acquired substantially all of the assets of HFDC, Inc, including its
registered trademarks DUITALL FABRIC MASTER(R) and CLEARWARE DECORATING
SYSTEMS(R).

     Simplicity has registered its trademarks SIMPLICITY, NEW LOOK, STYLE and
ITS SO EASY, ITS SIMPLICITY for its pattern products and licensing rights. Other
trademarks utilized by Simplicity are also registered. Simplicity enters into
the use of other trademarks periodically as business opportunities dictate and
operates an aggressive program for pursuing the registration and defense of such
trademarks. Such defense has included legal action and related costs.

                                       10

<PAGE>   11

ITEM 2.  PROPERTIES

    The following table sets forth the location, utilization and approximate
size in square feet of floor space of the principal facilities of Conso, British
Trimmings and Simplicity, and whether they are owned or leased.

<TABLE>
<CAPTION>
                                                                                                  OWNED OR         SQUARE
LOCATION                     UTILIZATION                                                           LEASED           FEET
--------                     -----------                                                          --------         ------
<S>                          <C>                                                                   <C>             <C>
CONSO:
  Union, SC (Main Plant)     Offices, production, distribution and dyehouse facility               Owned           340,000
  Union, SC (Annex Plant)    Warehousing and yarn processing                                       Owned           101,000
  New York, NY               Showroom and sales office                                             Leased(1)         2,780
  Hickory, NC                Showroom and sales office                                             Leased(2)           514
  Miami, FL                  Showroom and sales office                                             Leased(3)           980
  Juarez, Mexico             Assembly plant                                                        Leased(4)        41,680
  Coimbatore, India          Assembly plant                                                        Leased(5)        14,762
BRITISH TRIMMINGS:
  Stockport                  Offices and production facilities (six buildings at one location)     Owned           185,000
  Leek, England              Warehousing, dyehouse and production facility                         Owned            43,000
  Leek, England              Printing operation                                                    Leased(6)         2,000
  London, England            Assembly operation                                                    Owned            20,000
  London, England            Chelsea Harbour showroom                                              Leased(7)           384
  London, England            Chelsea Harbour showroom                                              Leased(8)           835
SIMPLICITY:
  New York, NY               Offices                                                               Leased(9)        41,000
  Toronto, Canada            Offices                                                               Leased(10)        1,300
  Biantyre, Scotland         Warehouse and offices                                                 Leased(11)       41,000
  London, England            Offices                                                               Leased(12)        1,400
  Revesby, Australia         Warehouse and offices                                                 Leased(13)       25,000
  Auckland, New Zealand      Offices                                                               Leased(14)        1,922
  Niles, Michigan            Manufacturing and distribution facility                               Owned           740,000

(1)  This facility is leased for a term expiring April 30, 1999.
(2)  This facility is leased on a month-to-month basis.
(3)  This facility is leased for a term expiring August 31, 2000.
(4)  This facility is leased for a term expiring December 31, 1999.
(5)  This facility is leased for a term expiring July 1, 2000.
(6)  This facility's lease expires June 18, 2002.
(7)  This facility's lease expired on November 16, 1997, but is currently being renewed for a term up to 10 years.
(8)  This facility is leased for a term expiring December 24, 2001.
(9)  This facility is leased for a term expiring November 30, 2010, but has an option buyout in 2003.
(10) This facility is leased for a term expiring April 30, 1999.
(11) This facility is leased for a term expiring July 20, 2003.
(12) This facility is leased on a six months notice cancelable lease.
(13) This facility is leased for a term expiring September 30, 1999. 
(14) This facility is leased for a term expiring November 1, 1999.
</TABLE>

    Certain of the Company's owned manufacturing facilities are subject to liens
securing its bank indebtedness. The principal manufacturing facilities are of
brick construction, are sprinklered and are generally in satisfactory operating
condition and repair. Conso US' main plant and annex plant in Union were
constructed at various times from 1959 to 1967, from 1964 to 1983, and from 1996
to present, respectively; British Trimmings' Stockport facilities were
constructed at various times between the 1920's and 1979, its Leek dyehouse and
production facilities were constructed in the 1920's and 1970's, respectively,
and its new London facility was constructed in 1980. Simplicity's plant in Niles
was constructed at various times from 1931 to 1936, from 1946 to 1953, and from
1961 to 1976. The Company believes that the facilities are suitable for their
present use. In the US, Conso completed construction of a new 86,000 square foot
distribution center in July 1997, with a total cost of $4.5 million, and has
started construction of a new 33,000 square foot dyehouse facility with an
estimated cost of $3.8 million. Both of these facilities are located adjacent to
the existing main plant in Union, SC and the dyehouse facility is scheduled to
be completed during the calendar year 1998. These expansions will free up
approximately 65,000 square feet for much needed additional production and
office space. The Company will consider additional capital expenditures for
building expansions or business acquisitions as opportunities arise.

ITEM 3.  LEGAL PROCEEDINGS

                                       11

<PAGE>   12

         Not applicable.

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

         Not applicable.

                                       12

<PAGE>   13



                                     PART II

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

    The information appearing (a) under the caption "Stock Price & Shareholder
Information", (b) in Note 9 under the caption "Capital Stock", and (c) in Note 1
under the caption "Organization and Summary of Significant Accounting Policies"
in the Notes to Consolidated Financial Statements in the Company's 1998 Annual
Report to Shareholders is incorporated herein by reference.

    The Company has not sold any securities during the past three years in
transactions not registered under the Securities Act except as follows: On July
1, 1998, the Company purchased real property owned jointly by J. Cary Findlay
and Konstance J. K. Findlay, each of whom is a director and executive officer of
the Company, in exchange for shares of the Company's Common Stock. The Company
issued 78,788 shares of Common Stock to Mr. Findlay and Ms. Findlay jointly as
consideration for the acquisition of the real property in reliance upon an
exemption from registration under Section 4(2) of the Securities Act. Such
consideration was based upon a closing price of the Common Stock of $8.25 on
July 1, 1998 and a value of $650,000 (the Findlays' cost basis) for the real
property.

ITEM 6.  SELECTED FINANCIAL DATA.

    The information appearing (a) under the caption "Selected Financial Data"
and (b) in Note 9 under the caption "Capital Stock" in the Notes to Consolidated
Financial Statements in the Company's 1998 Annual Report to Shareholders is
incorporated herein by reference.

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

    The information appearing under the caption "Management's Discussion and
Analysis of Financial Conditions and Results of Operations" in the Company's
1998 Annual Report to Shareholders is incorporated herein by reference.

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

    The information appearing under the caption "Management's Discussion and
Analysis of Financial Conditions and Results of Operations - Quantitative and
Qualitative Disclosures about Market Risk" in the Company's 1998 Annual Report
to Shareholders is incorporated herein by reference.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

    The information appearing under the caption "Consolidated Balance Sheets",
"Consolidated Statements of Operations", "Consolidated Statements of
Shareholders' Equity", "Consolidated Statements of Cash Flows", "Notes to
Consolidated Financial Statements", and "Independent Auditors' Report" in the
Company's 1998 Annual Report to Shareholders is incorporated herein by
reference. See also the report of Grant Thornton dated September 5, 1997
relating to (a) the consolidated balance sheet of British Trimmings ("BT") at
June 28, 1997 and (b) the related consolidated statements of income and cash
flow of BT for the years ended June 28, 1997 and June 29, 1996 included
herewith.

                                       13

<PAGE>   14



                                                     [Grant Thornton Letterhead]

INDEPENDENT AUDITORS' REPORT
REGARDING BRITISH TRIMMINGS LIMITED
TO THE DIRECTORS OF CONSO PRODUCTS COMPANY

We have audited the consolidation packages consisting of the consolidated
balance sheet at 28 June 1997 and the related consolidated statements of income
and cashflow of British Trimmings Limited for the years ended 28 June 1997 and
29 June 1996 expressed in pounds sterling. All information included in the
consolidation packages is the responsibility of the Company's management. Our
responsibility is to express an opinion on the consolidation packages based on
our audits.

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

The consolidation packages have been prepared on the basis of accounting
principles generally accepted in the United States of America for the purpose of
inclusion in the consolidated financial statements of Conso Products Company for
the years ended 28 June 1997 and 29 June 1996 and are intended solely for that
purpose.

In our opinion, the consolidation packages referred to above, expressed in
pounds sterling, are suitable for inclusion in the consolidated financial
statements of Conso Products Company for the years ended 28 June 1997 and 29
June 1996 and present fairly, in all material respects, the information shown
therein.


/s/ GRANT THORNTON
------------------------


GRANT THORNTON
REGISTERED AUDITORS
CHARTERED ACCOUNTANTS
MANCHESTER
UNITED KINGDOM

5 September 1997

                                       14

<PAGE>   15



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

     On December 5, 1997, the Company's Audit Committee and its Board of
Directors approved expanding the engagement of Deloitte & Touche LLP, the
Company's principal accountant, to include the audit of the financial statements
of British Trimmings Limited, a significant subsidiary of the Company, for the
fiscal year ending June 27, 1998. For more than the previous two fiscal years,
the financial statements of British Trimmings Limited had been audited by Grant
Thornton and, in its audit reports as principal accountant for the Company,
Deloitte & Touche LLP had expressed reliance on the reports of Grant Thornton as
to British Trimmings Limited. As a result of the expansion of the engagement of
Deloitte & Touche LLP, Grant Thornton was no longer engaged to audit the
financial statements of British Trimmings Limited, but may be engaged to provide
or continue to provide other accounting services for the Company and its
subsidiaries.

    Neither the principal accountants' reports on the financial statements of
the Company nor Grant Thornton's reports on the financial statements of British
Trimmings Limited for the two most recent fiscal years ended June 28, 1997
contained an adverse opinion or a disclaimer of opinion or was qualified or
modified as to uncertainty, audit scope or accounting principles.

    During the Company's two most recent fiscal years ended June 28, 1997 and
subsequent periods, (1) there were no disagreements with Grant Thornton on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure which disagreement(s), if not resolved to the
satisfaction of Grant Thornton, would have caused it to make reference to the
subject matter of the disagreement(s) in its report, and (2) no "reportable
event" (as defined in Item 304(a)(1)(v) of Regulation S-K) occurred.

    As the Company's principal accountant, Deloitte & Touche LLP was regularly
consulted by the Company as to various accounting, auditing and financial
reporting matters during the two most recent fiscal years and subsequent interim
periods prior to the expansion of its engagement to include the audit of British
Trimmings Limited; however, none of the matters as to which the Company
consulted Deloitte & Touche LLP during such periods were with regard to the
application of accounting principles to specified transactions or the type of
audit opinions that might be rendered on the Company's financial statements, in
either case as related only to British Trimmings Limited.

                                       15

<PAGE>   16



                                    PART III

ITEMS 10-13

    Items 10 through 13 are incorporated herein by reference to the sections
captioned "Principal Shareholders", "Election of Directors", "Executive
Officers", "Compensation Committee Interlocks and Insider Participation",
"Executive Compensation", "Director Compensation", "Employment Agreements", and
"Section 16(a) Beneficial Ownership Reporting Compliance" on pages 2 - 12 of the
Company's definitive Proxy Statement for the Annual Meeting of Shareholders to
be held November 9, 1998, which was filed with the Commission on September 25,
1998.

                                     PART IV

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

(a)  Financial Statements, Financial Statement Schedules and Exhibits

      List the following documents filed as a part of this report:

         1.       Financial Statements.

                  The following consolidated financial statements of the Company
                  are included as part of Exhibit 13 thereof:

                  Report of Deloitte & Touche LLP

                  Consolidated Balance Sheets as of June 27, 1998 and June 28,
                  1997

                  Consolidated Statements of Operations for fiscal years ended
                  June 27, 1998, June 28, 1997, and June 29, 1996

                  Consolidated Statements of Shareholders' Equity for the fiscal
                  years ended June 27, 1998, June 28, 1997, and June 29, 1996

                  Consolidated Statements of Cash Flows for the fiscal years
                  ended June 27, 1998, June 28, 1997, and June 29, 1996

                  Notes to Consolidated Financial Statements

                  The report of Grant Thorton is included in response to Item 8
                  hereof.

         2.       Financial Statement Schedules.

                  Financial statement schedules are omitted because the
                  information is either not required or is otherwise included in
                  the Company's Consolidated Financial Statements or the Notes
                  thereto.

         3.       Exhibits.

                                       16

<PAGE>   17







<TABLE>
<CAPTION>
                                 Exhibit
                                  Number   Exhibit Description
                                 --------  -------------------

                                   <S>     <C>
                                       2   Stock Purchase Agreement dated June 10, 1998 among the Company,
                                           Simplicity Capital Corporation, and the Sellers, Sellers Representative
                                           and Escrow Agent named herein (1)

                                     3.4   Articles of Incorporation of the Company (2)

                                     3.5   Bylaws of the Company (2)

                                    10.2   Employment Agreement dated December 22, 1993 by and between
                                           British Trimmings and A.W. Laughton (4)

                                    10.3   Employment Agreement dated December 22, 1993 by and between
                                           British Trimmings and C.V. Balakrishnan (4)

                                   10.14   Letter Agreement dated August 20, 1992 by and between the
                                           Company and Louis Nicole, Inc. (2)

                                   10.16   Marketing Agreement dated November 3, 1988 by and between the
                                           Company and F. Schumacher & Co. (2)

                                   10.17   1993 Stock Option Plan (2)

                                   10.20   Agreement dated 10 September 1993 between Calver Properties
                                           Limited and British Trimmings (Leek) Limited (2)

                                   10.31   Advice of Borrowing Terms of March 31, 1995 (Revision)
                                           regarding National Westminster Bank facility letter of June
                                           22, 1990 (3)

                                   10.36   1994 Employee Stock Purchase Plan (5)

                                   10.37   Letter Agreement dated May 12, 1995 by and between the Company
                                           and S. Duane Southerland, Jr. (4)

                                   10.60   Letter dated March 25, 1997 by and between the Company and
                                           Wesley Mancini Ltd. (7)

                                   10.61   Stock Election Plan for Non-Employee Directors (6)

                                   10.62   Modified and Restated Loan Agreement dated June 19, 1998 among
                                           The Company, NationsBank, N.A. and Simplicity Pattern Co. Inc. (1)

                                   10.63   Promissory Note dated June 19, 1998 issued by the Company and
                                           Simplicity Pattern Co. Inc. in favor of NationsBank, N.A. in the original
                                           Principal amount of up to $30,000,000 (1)

                                   10.64   Promissory Note dated June 19, 1998 issued by British Trimmings in
                                           Favor of NationBank, N.A. in the original principal amount of up to
                                           pound sterling 7,000,000 (1)

                                   10.65   Employment Agreement dated February 15, 1991 between Simplicity
                                           Holdings, Inc. and Louis S. Oltman (filed herewith)

                                   10.66   Letter Agreement dated May 4, 1998 between Simplicity Pattern Co.
                                           Inc. and Louis S. Oltman (filed herewith)

                                   10.67   Executive Severance Policy for Simplicity Capital Corporation,
                                           Simplicity Holdings, Inc. and Simplicity Pattern Co. Inc. (filed
                                           herewith)

                                   13      Portions of the Company's 1998 Annual Report to Shareholders
                                           that are incorporated herein by reference (filed herewith)

                                   16      Letter of Grant Thornton regarding change in certifying accountant for
                                           British Trimmings Limited (8)

                                   21      Subsidiaries of the Company (filed herewith)
</TABLE>

                                       17

<PAGE>   18


<TABLE>
                                  <S>      <C>
                                  23.1     Consent of Deloitte & Touche LLP (filed herewith)

                                  23.2     Consent of Grant Thornton (filed herewith)

                                  27       Financial Data Schedule (filed in electronic format only)
</TABLE>

                      MANAGEMENT CONTRACTS AND COMPENSATORY
                             PLANS AND ARRANGEMENTS

    The foregoing exhibits include the following management contracts and
compensatory plans and arrangements:

<TABLE>
                                  <S>     <C>
                                  10.2    Employment Agreement dated December 22, 1993 by and between
                                          British Trimmings and A.W. Laughton (4)

                                  10.3    Employment Agreement dated December 22, 1993 by and between
                                          British Trimmings and C.V. Balakrishnan(4)

                                  10.17   1993 Stock Option Plan (2)

                                  10.36   1994 Employee Stock Purchase Plan (5)

                                  10.37   Letter Agreement dated May 12, 1995 by and between the Company
                                          and S. Duane Southerland, Jr. (4)

                                  10.61   Stock Election Plan for Non-Employee Directors (6)

                                  10.65   Employment Agreement dated February 15, 1991 between Simplicity
                                          Holdings, Inc. and Louis S. Oltman (filed herewith)

                                  10.66   Letter Agreement dated May 4, 1998 between Simplicity Pattern Co.
                                          Inc. and Louis S. Oltman (filed herewith)

                                  10.67   Executive Severance Policy for Simplicity Capital Corporation,
                                          Simplicity Holdings, Inc. and Simplicity Pattern Co. Inc. (filed
                                          herewith)
</TABLE>


     (1)          Incorporated herein by reference to the exhibit designated by
                  the same number in the Company's Current Report on Form 8-K
                  filed with the Commission on July 6, 1998

     (2)          Incorporated herein by reference to the exhibit designated by
                  the same number in the Company's Registration Statement on
                  Form SB-2 (Registration No. 33-71296)

     (3)          Incorporated herein by reference to the exhibit designated by
                  the same number in the Company's Quarterly Report on Form
                  10-QSB for the quarterly period ended April 1, 1995

     (4)          Incorporated herein by reference to the exhibit designated by
                  the same number in the Company's Annual Report on Form 10-KSB
                  for the fiscal year ended July 1, 1995

     (5)          Incorporated herein by reference to Exhibit 4 to the Company's
                  Registration Statement on Form S-8 (Registration No. 33-85518)

     (6)          Incorporated herein by reference to Exhibit 4.3 to the
                  Company's Registration Statement on Form S-8 (Registration No.
                  333-20671)

     (7)          Incorporated by reference to the exhibit designated by the
                  same number in the Company's Annual Report on Form 10-K for
                  the fiscal year ended June 28, 1997

     (8)          Incorporated by reference to the exhibit designated by the
                  same number in the Company's Current Report on Form 8-K filed
                  with the Commission on December 11, 1997

                                       18

<PAGE>   19


(b)      Reports on Form 8-K.

         None.

(c)      Exhibits.

         See response to Item 14(a)(3).

(d)      Financial Statement Schedules.

         See response to Item 14(a)(2).

                                       19

<PAGE>   20





                                   SIGNATURES

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


                             CONSO PRODUCTS COMPANY


                             By: /s/ J. CARY FINDLAY
                                ----------------------------------------------
                                 J. Cary Findlay
                                 Chairman, President & Chief Executive Officer


Dated: September 25, 1998

    In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
                             Signature                                Capacity                            Date

<S>                      <C>                          <C>                                           <C>
                         /s/ J. CARY FINDLAY          Director, Chairman, President and Chief       September 25, 1998
                         --------------------------   Executive Officer (Principal Executive
                         J. Cary Findlay              Officer)

                         /s/ GILBERT G. BARTELL       Chief Financial Officer and Treasurer         September 25, 1998
                         --------------------------   (Principal Financial Officer)
                         Gilbert G. Bartell

                         /s/ DAVID B. DECHANT         Chief Accounting Officer and Controller       September 25, 1998
                         --------------------------   (Principal Accounting Officer)
                         David B. Dechant

                         /s/ KONSTANCE J.K. Findlay    Director                                     September 25, 1998
                         --------------------------
                         Konstance J.K. Findlay


                         /s/ MARCUS T. HICKMAN         Director                                     September 25, 1998
                         --------------------------
                         Marcus T. Hickman


                         /s/ ANTONY W. LAUGHTON        Director                                     September 25, 1998
                         --------------------------
                         Antony W. Laughton


                         /s/JOHN H. MAXHEIM            Director                                     September 25, 1998
                         --------------------------
                         John H. Maxheim


                         /s/ JAMES H. SHAW             Director                                     September 25, 1998
                         --------------------------
                         James H. Shaw
</TABLE>

                                       20

<PAGE>   21



                       SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C.


                                    EXHIBITS
                                  ITEM 14(a)(3)

                                    FORM 10-K
                                  ANNUAL REPORT


<TABLE>
<CAPTION>

<S>                                                                                     <C>
For the Fiscal Year Ended June 27, 1998                                                 Commission File Number 0-22942
</TABLE>


                             CONSO PRODUCTS COMPANY

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
                                  Exhibit
                                  Number   Exhibit Description
                                  -------  -------------------
                                   <S>     <C>
                                       2   Stock Purchase Agreement dated June 10, 1998 among the Company,
                                           Simplicity Capital Corporation, and the Sellers, Sellers Representative
                                           and Escrow Agent named herein (1)

                                     3.4   Articles of Incorporation of the Company (2)

                                     3.5   Bylaws of the Company (2)

                                    10.2   Employment Agreement dated December 22, 1993 by and between
                                           British Trimmings and A.W. Laughton (4)

                                    10.3   Employment Agreement dated December 22, 1993 by and betweem
                                           British Trimmings and C.V. Balakrishnan (4)

                                   10.14   Letter Agreement dated August 20, 1992 by and between the
                                           Company and Louis Nicole, Inc. (2)

                                   10.16   Marketing Agreement dated November 3, 1988 by and between the
                                           Company and F. Schumacher & Co. (2)

                                   10.17   1993 Stock Option Plan (2)

                                   10.20   Agreement dated 10 September 1993 between Calver Properties
                                           Limited and British Trimmings (Leek) Limited (2)

                                   10.31   Advice of Borrowing Terms of March 31, 1995 (Revision)
                                           regarding National Westminster Bank facility letter of June
                                           22, 1990 (3)

                                   10.36   1994 Employee Stock Purchase Plan (5)

                                   10.37   Letter Agreement dated May 12, 1995 by and between the Company
                                           and S. Duane Southerland, Jr. (4)

                                   10.60   Letter dated March 25, 1997 by and between the Company and
                                           Wesley Mancini Ltd. (7)

                                   10.61   Stock Election Plan for Non-Employee Directors (6)

                                   10.62   Modified and Restated Loan Agreement dated June 19, 1998 among
                                           The Company, NationsBank, N.A. and Simplicity Pattern Co. Inc. (1)

                                   10.63   Promissory Note dated June 19, 1998 issued by the Company and
                                           Simplicity Pattern Co. Inc. in favor of NationsBank, N.A. in the original
                                           Principal amount of up to $30,000,000 (1)
</TABLE>

                                       21

<PAGE>   22


<TABLE>
                                   <S>     <C>
                                   10.64   Promissory Note dated June 19, 1998 issued by British Trimmings
                                           in Favor of NationBank, N.A. in the original principal amount of up to
                                           pound sterling 7,000,000 (1)

                                   10.65   Employment Agreement dated February 15, 1991 between Simplicity
                                           Holdings, Inc. and Louis S. Oltman (filed herewith)

                                   10.66   Letter Agreement dated May 4, 1998 between Simplicity Pattern Co.
                                           Inc. and Louis S. Oltman (filed herewith)

                                   10.67   Executive Severance Policy for Simplicity Capital Corporation,
                                           Simplicity Holdings, Inc. and Simplicity Pattern Co. Inc. (filed
                                           herewith)

                                   13      Portions of the Company's 1998 Annual Report to Shareholders
                                           that are incorporated herein by reference (filed herewith)

                                   16      Letter of Grant Thornton regarding change in certifying accountant for
                                           British Trimmings Limited (8)

                                   21      Subsidiaries of the Company (filed herewith)

                                   23.1    Consent of Deloitte & Touche LLP (filed herewith)

                                   23.2    Consent of Grant Thornton (filed herewith)

                                   27      Financial Data Schedule (filed in electronic format only)
</TABLE>

                      MANAGEMENT CONTRACTS AND COMPENSATORY
                             PLANS AND ARRANGEMENTS

        The foregoing exhibits include the following management contracts and
compensatory plans and arrangements:

<TABLE>
                                 <S>       <C>
                                   10.2    Employment Agreement dated December 22, 1993 by and between
                                           British Trimmings and A.W. Laughton (4)

                                   10.3    Employment Agreement dated December 22, 1993 by and between
                                           British Trimmings and C.V. Balakrishnan(4)

                                   10.17   1993 Stock Option Plan (2)

                                   10.36   1994 Employee Stock Purchase Plan (5)

                                   10.37   Letter Agreement dated May 12, 1995 by and between the Company
                                           and S. Duane Southerland, Jr. (4)

                                   10.61   Stock Election Plan for Non-Employee Directors (6)

                                   10.65   Employment Agreement dated February 15, 1991 between Simplicity
                                           Holdings, Inc. and Louis S. Oltman (filed herewith)

                                   10.66   Letter Agreement dated May 4, 1998 between Simplicity Pattern Co.
                                           Inc. and Louis S. Oltman (filed herewith)

                                   10.67   Executive Severance Policy for Simplicity Capital Corporation,
                                           Simplicity Holdings, Inc. and Simplicity Pattern Co. Inc. (filed
                                           herewith)
</TABLE>




     (1)          Incorporated herein by reference to the exhibit designated by
                  the same number in the Company's Current Report on Form 8-K
                  filed with the Commission on July 6, 1998

     (2)          Incorporated herein by reference to the exhibit designated by
                  the same number in the Company's Registration Statement on
                  Form SB-2 (Registration No. 33-71296)

                                       22

<PAGE>   23


     (3)          Incorporated herein by reference to the exhibit designated by
                  the same number in the Company's Quarterly Report on Form
                  10-QSB for the quarterly period ended April 1, 1995

     (4)          Incorporated herein by reference to the exhibit designated by
                  the same number in the Company's Annual Report on Form 10-KSB
                  for the fiscal year ended July 1, 1995

     (5)          Incorporated herein by reference to Exhibit 4 to the Company's
                  Registration Statement on Form S-8 (Registration No. 33-85518)

     (6)          Incorporated herein by reference to Exhibit 4.3 to the
                  Company's Registration Statement on Form S-8 (Registration No.
                  333-20671)

     (7)          Incorporated by reference to the exhibit designated by the
                  same number in the Company's Annual Report on Form 10-K for
                  the fiscal year ended June 28, 1997

     (8)          Incorporated by reference to the exhibit designated by the
                  same number in the Company's Current Report on Form 8-K filed
                  with the Commission on December 11, 1997

                                       23