<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 July 3, 1999

                                       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 INTERNATIONAL CORPORATION
-------------------------------------------------------------------------------
             (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:
                                  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 Common Stock, its only
outstanding class of voting stock, held by non-affiliates of the Registrant as
of September 15, 1999, was $37,624,328.

The number of shares outstanding of the Registrant's Common Stock, its only
outstanding class of common equity, as of September 15, 1999, was 7,334,177.

                       DOCUMENTS INCORPORATED BY REFERENCE

<TABLE>
<CAPTION>
Incorporated Document                                                     Parts into which Incorporated
---------------------                                                     -----------------------------
<S>                                                                       <C>
1999 Annual Report to Shareholders for the fiscal year ended
July 3, 1999                                                              Part II
Proxy Statement for Annual Meeting of Shareholders to be
held November 9, 1999                                                     Part III
</TABLE>


                                       1
<PAGE>   2


PART I

ITEM 1. BUSINESS

GENERAL

    Conso International Corporation, 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
International Corporation, including its British Trimmings ("BT") 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 US business, which can be traced back to 1867, was acquired from
Springs Industries, Inc. in 1986 when Conso International 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. Effective November 10, 1998,
Conso Products Company changed its name to Conso International Corporation.
However, the Company still does business as Conso Products Company.

    Unless the context otherwise requires, all references in this report to
"Conso" or "Conso US" are to Conso International Corporation, its Delaware
predecessor, and its majority-owned Mexican and Indian subsidiaries; all
references to "BT" 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, BT, and Simplicity.

    The fiscal years ended July 3, 1999, June 27, 1998 and June 28, 1997 are
referred to herein as the "1999 fiscal year" or "fiscal 1999", the "1998 fiscal
year" or "fiscal 1998", and the "1997 fiscal year" or "fiscal 1997",
respectively. The 1999 fiscal year consists of 53 weeks, while fiscal 1998 and
1997 each consist of 52 weeks.

    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 $31,702,000 (consisting of the
$33,000,000 cash purchase price, less cash acquired of $2,066,000 and including
$768,000 of transaction expenses) plus the assumption of certain of Simplicity's
liabilities, for a total purchase price of $53,456,000. 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.

    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 BT 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;


                                       2

<PAGE>   3

    -   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 BT 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 of products.

    Demand for Conso US' and BT's products varies as fashion trends in home
furnishings and the relative cost of various products 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.

    Simplicity competes in the home sewing and crafts industry, and distributes
its products primarily through retailers. The home sewing and crafts industry
includes a variety of products such as 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 of the
four major 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 accessories products. The Company's strategy is to use
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.

PRODUCTS

    Decorative trimmings produced and sold by both Conso US and BT 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 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.

    BT also produces and sells apparel trimmings including sequin and glitter
trimmings, gimp trims and froggings. Some of the braids and other stock products
that are produced by both Conso US and BT are also used in apparel.

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

                                       3

<PAGE>   4

The Company currently sources the production of most of its decorative
accessories to both foreign and domestic vendors. With the purchase of VNI in
April 1999, the Company purchased its main supplier of resin hardware products
to allow for quicker product development and better quality control. This
purchase was the first step in internalizing more decorative accessories
production.

    With the acquisition of Simplicity, the Company has expanded its products to
include home sewing 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 sale 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 known for superior, easy-to-follow instructions
that simplify the entire sewing process.

    The following table sets forth, for the periods indicated, certain
information relating to sales of Conso's and BT's product lines for the current
and prior two fiscal years. Simplicity sales are included in the current year:

<TABLE>
<CAPTION>
                                                FISCAL YEARS ENDED
-------------------------------------------------------------------------------------------------------
                                       JULY 3, 1999             JUNE 27, 1998            JUNE 28, 1997
-------------------------------------------------------------------------------------------------------
                                               (DOLLARS IN THOUSANDS)
<S>                               <C>           <C>         <C>          <C>         <C>          <C>
Catalog Stock Products
  Conso US -  Trimmings           $ 28,660       24.0%      $31,880       44.3%      $32,988       44.9%
  British Trimmings                 13,842       11.6        11,469       16.0        10,548       14.4
  Wendy Cushing Trimmings            1,275        1.1           982        1.4           912        1.2
  Decorative Accessories             1,944        1.6         1,740        2.4         1,376        1.9
  Workroom supplies                  4,629        3.9         4,459        6.2         4,557        6.2
Manufacturers' Specials:
    Conso US                      $ 14,619       12.2%       12,464       17.3        12,572       17.1
    British Trimmings                4,235        3.5         5,659        7.9         5,804        7.9
    Wendy Cushing Trimmings            648        0.5           619        0.9           677        0.9
Other miscellaneous products         1,611        1.3         2,589        3.6         4,013        5.5
                                  --------      -----       -------      -----       -------      -----
Subtotal Conso/BT                 $ 71,463       59.7       $71,861      100.0%      $73,447      100.0%
Simplicity Pattern Products       $ 48,197       40.3            --         --            --         --
-------------------------------------------------------------------------------------------------------
Total                             $119,660      100.0%      $71,861      100.0%      $73,447      100.0%
=======================================================================================================
</TABLE>

    Details of operations and assets for the separate Conso US, Simplicity and
BT companies are presented in the Company's Notes to Consolidated Financial
Statements (Note 12) for the fiscal years Ended July 3, 1999, June 27, 1998 and
June 28, 1997.

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 20,000 stock keeping units
("SKUs"), and BT currently stocks products comprising over 3,500 SKUs. Both
Conso US and BT 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, the Company 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
select 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.


                                       4

<PAGE>   5

    BT 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 that would be found in a 15th
century English mansion, emphasizes Britain's heritage in marketing British
trimmings in home furnishings worldwide. In 1996, BT introduced its "Bloomsbury
Range", aimed at the upper end market. In 1997, BT introduced "Cambridge" and
"Oxford" ranges to aggressively pursue the upholstery market.

    The "Jaipur Collection" was added in 1999 at both Conso US and BT. The
collection draws on a blend of styling, fabrications, and colorways from around
the world to elegantly capture the trend of blending different styles within the
same room. The eclectic mix is also designed to make the Company more
competitive in the international market. Wendy Cushing is developing a new
floral collection. This collection, with an extensive stock range, will be
launched in Europe in September 1999 and in the US in 2000.

    With the acquisition of VNI, our major supplier of resin products, the
Company increased the development of coordinating decorative accessories such as
finials, curtain rods, brackets, tiebacks, rings, and sconces.

    Because 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 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.

    Simplicity introduced an upscale fashion line "Millennium by Simplicity" in
the spring 1999 season. "Retro Simplicity" was also introduced in 1999; the line
leverages Simplicity's archives to feature designs from earlier in the century.
Simplicity expanded its medieval pattern selection as Renaissance Fairs and
related activities have become more popular.


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 that is produced annually by its graphic design team,
and also produces brochures, sample cards and selling aids, and advertises its
products in major trade publications.

    Since the acquisition of BT, the Company has established a marketing
department at BT that works closely with and reports to the Conso US marketing
group. BT 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. BT's 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. BT maintains showrooms at its Stockport and London
manufacturing facilities and Wendy Cushing Trimmings has a showroom at Chelsea
Harbour in London. In calendar 1999, the Company will display the products of
both Conso US and BT at a total of two 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 US cities, sales personnel that travel
internationally, and through foreign independent sales representatives. BT has
sales personnel operating in various UK major cities, 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) and distributor 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


                                       5

<PAGE>   6

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.

    Both Simplicity (www.simplicity.com) and Conso US (www.conso.com) have web
sites. The sites are designed to provide information about the Company's
products and allow customers to purchase catalogs. Currently, the Company does
not directly distribute products using these sites.

    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. In 1999, Simplicity
purchased new computer design and digital fabric scanning equipment that will
allow the presentation of current fabrics in the pattern catalogs. This new
catalog concept will be introduced in spring 2000.

    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 a web site, 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 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

    Customer service representatives in offices in Union, South Carolina and
Stockport, England receive most of Conso US' and BT's orders directly from
customers. Conso receives approximately 60% of orders by fax and 40% by phone,
while BT receives approximately 80% of orders by fax and 20% by phone. The
customer service operations include representatives for domestic stock orders,
representatives who process international orders, and representatives who handle
manufacturing specials orders.

    Because most of Conso US' and BT's customer orders are for stock items and
because prompt response to customer orders is critical to customer satisfaction,
Conso US and BT emphasize customer service and prompt fulfillment of orders. To
that end, Conso US and BT 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 with 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 BT to better
maintain inventory levels for 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 BT 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. Simplicity sells direct to retail customers who
sell

                                       6

<PAGE>   7

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 9,700
retail locations worldwide are serviced directly by Simplicity.

    While Conso and BT have not had any one customer that would make up more
than 10% of their business, Simplicity's two largest retail customers represent
approximately 54% of this segment's sales. Simplicity has one customer, Wal-Mart
Stores, Inc. ("Wal-Mart"), that represented approximately 12% of the
consolidated net revenues of the Company for fiscal 1999. In September 1999, the
Company and Wal-Mart renegotiated the principal trade terms of their
relationship effective January 2000. Under the new arrangement, Simplicity will
retain ownership of the patterns inventory in Wal-Mart stores and Wal-Mart will
remit payment for the patterns at the time it sells them to its customers. Had
this new arrangement been in effect throughout fiscal 1999, the Company
estimates that on a pro forma basis its net revenues would have been reduced by
approximately $650,000 and its expenses would have increased by approximately
$350,000, resulting in a reduction in its after-tax net income of approximately
$620,000. The Company has taken action and has made plans for future actions at
Simplicity to offset the negative financial effects of this new arrangement when
it goes into effect in January 2000, including cost reductions, new programs to
increase unit sales volume and advertising income, and price increases. The new
arrangement and other trade terms will be subject to renegotiation or
termination by either party at any time under Wal-mart's normal vendor
agreement.

    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
--------------------------------------------------------------------------------------
                      JULY 3, 1999             JUNE 27,1998            JUNE 28, 1997
--------------------------------------------------------------------------------------
                             (DOLLARS IN THOUSANDS)
<S>              <C>            <C>       <C>           <C>        <C>           <C>
Manufacturers    $ 30,405        25.4%    $ 27,696       38.6%     $ 31,108       42.3%
Distributors       30,416        25.4       30,996       43.1        30,013       40.8
Retailers          58,839        49.2       13,169       18.3        12,326       16.9
--------------------------------------------------------------------------------------
Total            $119,660       100.0%    $ 71,861      100.0%     $ 73,447      100.0%
======================================================================================
</TABLE>

    At July 3, 1999, the Company had approximately 14,500 customer accounts with
open balances. Conso and BT had open customer orders at July 3, 1999 of $4.2
million as compared to $3.6 million at June 27, 1998. The Company expects that
substantially all of the open orders at July 3, 1999 will be recognized as
revenue within the first quarter. Simplicity's open orders are insignificant on
a consolidated basis, because most of its orders are handled through electronic
data interchange and are shipped within one week.

EXPORTS

    Consolidated net sales to the Company's two major market areas, the United
States and the United Kingdom, were $87.8 million and $17.1 million,
respectively. The remaining sales of $14.8 million were export sales
representing 12.4% of consolidated net revenue. 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:

<TABLE>
<CAPTION>
                                      FISCAL YEARS ENDED
--------------------------------------------------------------------------------------------
                               JULY 3, 1999            JUNE 27, 1998          JUNE 28, 1997
--------------------------------------------------------------------------------------------
                                    (DOLLARS IN THOUSANDS)
<S>                        <C>           <C>       <C>           <C>       <C>          <C>
Western Hemisphere         $ 6,617        5.5%     $ 4,138        5.8%     $ 3,985       5.4%
Europe and Middle East       3,840        3.2        2,841        4.0        2,683       3.7
Pacific Rim                  4,370        3.7        1,541        2.1        1,787       2.4
--------------------------------------------------------------------------------------------
Total                      $14,827       12.4%     $ 8,520       11.9%     $ 8,455      11.5%
============================================================================================
</TABLE>


MANUFACTURING AND RAW MATERIALS

    Conso US and BT 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 BT 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, cords and sewing
tapes. Much of the machinery is developed and often constructed in their own
engineering departments. Conso US and BT 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 BT 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 BT 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 the US, Conso completed construction of a new 33,000 square foot
dyehouse facility with a cost of $4.6 million, which enables us to do virtually
all dyeing in house.

    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 BT. In July
1997, the Company


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<PAGE>   8

leased facilities in Coimbatore, India which house handwork operations.
Operations at this facility began in January 1998 with product shipments being
received beginning in July 1998. The addition of this facility will allow the
Company to be more competitive with certain low priced products. The Company has
budgeted approximately $3.7 million to acquire new production facilities in
Mexico and India in fiscal 2000.

    The various departments in each of Conso US' and BT's 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 BT are spun rayon and filament viscose rayon. The primary yarns
used in the India operations are filament rayon and cotton. These yarns are
commodities that generally are 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 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, recycled paper, ink
and corrugated cardboard and the Company believes that an ample supply of these
raw materials will continue to be available. However, changes in the price of
paper, 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.

    The Company does not have any vendor who represents more than 10% of raw
material purchases.

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. However, 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 historically has 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. 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.

    Conso US and BT experienced increased price competition on sales of certain
manufacturing special items and hand assembled products, to an extent, by low
priced goods being manufactured by smaller competitors and from low priced goods
being imported from India and 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 Company's Mexico plant continues to
produce many of the hand-assembled products sold in the US, although some of
this production is being shifted to India Trimmings. The North American Free


                                       8

<PAGE>   9

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, accessories 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 recently has acquired companies that focus on decorative
accessories items, and is marketing and distributing these items to its existing
customer base. The decorative accessories 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 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 accessories business,
and its 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 July 3, 1999, Conso US had 643 full-time employees, of whom 551 were
hourly employees and 92 were salaried employees. In addition, 282 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. India Trimmings employs
133 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 July 3, 1999, BT had 348 full-time employees, of whom 246 were hourly
employees and 102 were salaried employees. Approximately 34% of the employees of
BT are represented by the Union of Textile Workers (the "Union"). BT and the
Union verbally agreed in July 1999 to the annual salary review for the year
ending July 31, 2000, 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 BT for at least 30 years, during which time there has
never been a strike or work stoppage.

    As of July 3, 1999, Simplicity had approximately 406 employees, of whom 181
were represented by labor unions and 225 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

                                       9

<PAGE>   10

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), DUITALL FABRIC MASTER(R), and CLEARWARE DECORATING SYSTEMS(R) for
decorative hardware items. BT has registered the trademarks SPECTRUM(R) for
lace, braids and woven labels and POLYUROCOL(R) for certain yarns and threads in
the United Kingdom. Simplicity has registered its trademarks SIMPLICITY(R), NEW
LOOK(R), STYLE(R) and ITS SO EASY(R), ITS SIMPLICITY(R) 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.


                                       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, BT 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(1)      340,000
    Union, SC (Annex Plant)   Warehousing and yarn processing                             Owned         101,000
    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         Owned         185,000
                              one location)
    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
    Blantyre, Scotland        Distribution and offices                                    Leased(11)     41,000
    London, England           Offices                                                     Leased(12)      1,400
    Revesby, Australia        Distribution and offices                                    Leased(13)     25,000
    Auckland, New Zealand     Offices                                                     Leased(14)      1,922
    Niles, Michigan           Manufacturing and distribution facility                     Owned         740,000
</TABLE>

(1)   Legal title has been transferred to Union County, South Carolina in
      connection with a "fee-in-lieu of taxes" arrangement for the distribution
      center and dyehouse facilities. The Company has the option to purchase
      these facilities for nominal consideration.
(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 expires on November 16, 2007.
(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 September 30, 2001.
(11)  This facility is leased for a term expiring July 20, 2002.
(12)  This facility is being cancelled effective September 30, 1999.
(13)  This facility is leased for a term expiring September 30, 2004.
(14)  This facility is leased for a term expiring November 1, 1999.


    Certain of the Company's owned manufacturing facilities are subject to liens
securing its bank indebtedness. The principal manufacturing facilities are of
brick construction, 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 1999,
respectively; BT's 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 an 86,000 square foot distribution center in
July 1997, with a total cost of $4.5 million, and has completed construction of
a 33,000 square foot dyehouse facility with a total cost of $4.6 million. Both
of these facilities are located adjacent to the existing main plant in Union,
SC. These expansions freed up approximately 65,000 square feet for additional
production and office space. The Company has budgeted approximately $3.7 million
to acquire new production facilities in Mexico and India in fiscal 2000. The
Company will consider additional capital expenditures for building expansions or
business acquisitions as opportunities arise.


                                       11

<PAGE>   12

ITEM 3.  LEGAL PROCEEDINGS

         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 "Common 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 1999 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 Mrs. 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 "Common Stock" in the Notes to Consolidated
Financial Statements in the Company's 1999 Annual Report to Shareholders is
incorporated herein by reference.

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

Results of Operations

         Conso International Corporation's (the "Company") fiscal year is the 52
or 53 week period ending on the Saturday nearest June 30; interim reporting
periods are based on 13 week quarters. The fiscal year ended July 3, 1999
included 53 weeks. The fiscal years ended June 27, 1998 and June 28, 1997 each
included 52 weeks.

1999 Compared with 1998

         The fiscal year ended July 3, 1999 included the results of Simplicity
Capital Corporation ("Simplicity"), while the fiscal year ended June 27, 1998
excluded Simplicity's operations. Simplicity was acquired on June 19, 1998 and
Simplicity's results for the period June 19, 1998 through June 27, 1998 were not
material and therefore were excluded from the Company's results of operations
for fiscal year 1998.

         For the year ended July 3, 1999, total consolidated net sales increased
$47.8 million or 66.5% from $71.9 million to $119.7 million. The primary reason
for the increase was due to the acquisition of Simplicity, which had $48.2
million in net sales. With the acquisition of Simplicity, the Company has
significantly expanded its presence in the retail segment. Gains in sales to
retailers and continued growth in sales to manufacturers lessened the impact of
increasing competitive pressures within the distributor segment. The following
analysis of the sales results by the separate Conso US and British Trimmings
("BT") units are after eliminating the effect of intercompany sales.

         Total net sales of Conso US increased $1.3 million or 2.5% from $52.3
million to $53.6 million. The primary reason for the increase was the year
consisting of 53 weeks in fiscal 1999 as compared to 52 weeks in fiscal 1998.
Total net sales of BT decreased $1.6 million, or 8.2%, from $19.5 million to
$17.9 million primarily due to declining sales to the reupholster wholesalers
and manufacturers. Additionally, pricing pressures occurred due to a strong
British pound sterling that enabled suppliers in Spain and Belgium to make
inroads into BT's markets.

         Comparable net sales to manufacturers (Conso US and BT) increased $1.1
million, or 3.9%, led by a strong fourth quarter at Conso US which offset weak
second and third quarters, as well as softness at BT. Net sales to manufacturers
through Conso US increased $1.7 million, or 7.4%, primarily due to the bedding
portion of the home furnishings market. Net sales to manufacturers by BT
declined $0.6 million, or 10.5%, primarily due to competition from both domestic
UK and European producers, as well as the strength of the British pound sterling
against European currencies.

         Comparable net sales to distributors (Conso US and BT) decreased $1.2
million, or 3.8%. Conso US sales to distributors were flat at $18.7 million. BT
sales to distributors were down $1.0 million, or 8.3%, primarily due to the
strong British pound sterling and pricing pressure from European competitors,
particularly with respect to tasseled items. In an effort to be able to compete
more effectively, production of tasseled items is being shifted to India.

                                       13
<PAGE>   14

         Conso and BT overall comparable net sales to retailers decreased $0.3
million, or 2.2%. Conso US net sales to retailers for the current year decreased
$0.2 million, or 2.0%. The reduction in net sales occurred due to the shipment
of an initial stocking order of $1.4 million to a major retailer in the fourth
quarter of 1998. Excluding the effect of the initial stocking order, continuing
business is up over last year. Net sales to retailers through BT decreased
slightly.

         Net sales outside the US and UK (the Company's major sales regions)
increased $6.3 million, or 74.1% from the prior year to $14.8 million, and
represented 12.4% of total net sales due to the addition of Simplicity. On a
comparable basis (Conso US and BT), international sales were down $0.3 million,
or 3.5%. The Pacific Rim continued to be negatively impacted by the recent
changes in currency values and other economic problems of that region, causing
net sales on a comparable basis to decline 7.1%. However, overall sales to the
Pacific Rim region were up 184% due to the acquisition of Simplicity. Export
sales to the Western Hemisphere on a comparable basis increased 3.0% primarily
due to gains in the Canadian market. With Simplicity's presence in the Canadian
and Mexican markets, the sales to this area increased 59.9%. Europe and Middle
East regions increased 34.5% and 37.2%, respectively, primarily due to the
acquisition of Simplicity.

         The gross margin for the year increased to $47.3 million, or 39.5% of
net sales from the prior year's gross margin of $25.3 million, or 35.2% of net
sales, primarily due to the Simplicity acquisition and its historically higher
margins. The gross margin for Conso US for the current year was 38.8%, compared
to the prior year's 38.7%. At BT, the margin declined to 24.7% from 25.8%, due
to lower sales to cover overheads, in spite of reductions of labor and
materials. The Company is currently implementing a shift of manufacturing
operations from high cost to low cost areas in an effort to improve
profitability.

         Simplicity has one customer, Wal-Mart Stores, Inc. ("Wal-Mart"), that
represented approximately 12% of the consolidated net revenues of the Company
for fiscal 1999. In September 1999, the Company and Wal-Mart renegotiated the
principal trade terms of their relationship effective January 2000. Under the
new arrangement, Simplicity will retain ownership of the patterns inventory in
Wal-Mart stores and Wal-Mart will remit payment for the patterns at the time it
sells them to its customers. Had this new arrangement been in effect throughout
fiscal 1999, the Company estimates that on a pro forma basis its net revenues
would have been reduced by approximately $650,000 and its expenses would have
been increased by approximately $350,000, resulting in a reduction in its
after-tax net income of approximately $620,000. The Company has taken action
and has made plans for future actions at Simplicity to offset the negative
financial effects of this new arrangement when it goes into effect in January
2000, including cost reductions, new programs to increase unit sales volume and
advertising income, and price increases. The new arrangement and other trade
terms will be subject to renegotiation or termination by either party at any
time under Wal-Mart's normal vendor agreement.

         Distribution expenses increased $6.1 million compared to the prior
year, from 4.6% to 7.9% of net sales. This increase is primarily attributable to
the acquisition of Simplicity. Simplicity accounted for $6.0 million of the
increase in distribution expenses. BT's distribution expenses decreased, but
increased as a percentage of sales from 5.8% to 6.1% due to lower net sales.
Conso US' expenses increased as a percentage of sales from 4.1% to 4.2%, due
primarily to depreciation on the warehouse facility and related equipment.

         Selling expenses for the current year increased $3.1 million but
decreased as a percentage of sales from 11.5% to 9.5% due to the acquisition of
Simplicity. Simplicity accounted for a $3.4 million increase in selling
expenses. Selling expenses at BT decreased $280,000, while Conso increased
$27,000.

         General and administrative costs increased $7.8 million and increased
as a percentage of sales from 6.6% to 10.5%, primarily due to the Simplicity
acquisition. General administration costs at BT decreased $362,000, while Conso
US increased $403,000. The increase in general and administrative costs at Conso
US was related primarily to higher travel expenses, personnel costs, higher
bonus levels, and professional fees related to managing a larger organization
and pursuing acquisitions.

         Currency losses of $84,000 were realized in fiscal 1999, while in the
prior year a loss of $27,000 was recorded.

         Intangible amortization of $715,000 relates to the Simplicity
acquisition. Operating income of $13.1 million was $4.2 million greater than
fiscal 1998. This increase was attributable to Simplicity, while operating
income at BT and Conso US was basically flat.

         Interest expense increased $2.4 million primarily due to the borrowings
associated with the Simplicity acquisition.

         The effective tax rate increased due to Simplicity's higher effective
tax rate from non-deductible intangible amortization and losses in its foreign
operations.

         Net income increased $0.8 million, from $5.0 million to $5.8 million.
Earnings per share increased from $.68 to $.78, a $.10 per share increase. Of
the $.10 per share increase, $.08 was attributable to Simplicity and $.02 was
attributable to Conso, while BT's loss remained flat compared to prior year.

                                       14
<PAGE>   15

1998 Compared with 1997

         For the year ended June 27, 1998, net sales decreased 2.2% from $73.4
million to $71.9 million, before adjusting for prior year's sales through
MacCulloch & Wallis, the London subsidiary sold in August 1997. MacCulloch &
Wallis (London) Ltd., a retail subsidiary operation in London, servicing
primarily the apparel industry with haberdashery items, had made little money
and was facing potential losses due to increasing rent and other overhead costs.
Accordingly, the business was sold. The business operated until its sale
(through July 1997). There were net sales of $275,000 related to this unit,
which were recorded in fiscal year 1998, while the unit reported approximately
$1.4 million of net sales in the same period of the prior year. When excluding
sales through the MacCulloch & Wallis (London) Ltd. subsidiary, net sales were
not as negatively impacted, decreasing only 0.7%. With the acquisition of
Simplicity, the Company has the opportunity to expand its presence further in
the retail markets. Gains in sales to retailers and continued growth in sales to
distributors lessened the impact of increasing competitive pressures within the
manufacturing customer segment. The following analysis of the sales results by
the separate Conso US and BT units are after eliminating the effect of
intercompany sales.

         Total net sales through Conso US decreased 1.4% from $53.1 million to
$52.3 million,as a result of the decline in sales to manufacturers, while total
net sales through BT decreased 4.2% from $20.4 million to $19.5 million,
primarily as a result of the sale of MacCulloch & Wallis (London) Ltd. Excluding
the sales of MacCulloch & Wallis (London) Ltd., net sales through BT actually
increased 1.1%.

         Net sales to manufacturers declined 11.0%, more than offsetting gains
in net sales to distributor and retail customers. Net sales to manufacturers
through Conso US declined 11.6%. Much of the decline in revenue dollars in the
manufacturing group serviced by Conso US came from the reformulation of products
to meet lower price points and compete with domestic competitive offerings, from
reductions in prices (primarily on hand-assembled items) to meet the foreign
competition and retain market share and, in a few cases, due to changes in
orders as a result of changes in special programs offered by manufacturers to
their customers. Net sales to manufacturers serviced by BT declined 8.2%. Net
sales to manufacturers through BT were impacted primarily by competition both
from domestic and European producers, with the strength of the British pound
sterling giving an added advantage to other European competitors, and from
increased competition with foreign producers of tasseled items. The Company
began production in India in January 1998 to compete with lower cost imports and
improve margins and has established special teams to provide more focused
support to the manufacturing groups.

         Net sales to distributors increased 3.3%, improving 1.8% at Conso US
and 5.6% at BT, primarily as a result of the continued success of the Conso US
and BT catalogs, selling aids, and other marketing efforts and as a result of
increased product offerings.

         Overall, net sales to retailers, including sales through MacCulloch &
Wallis (London) Ltd., increased 6.8%. Net sales to retailers, excluding the
effect of the decline in sales as a result of the disposed MacCulloch & Wallis
(London) Ltd. operations, increased 17.5%. During the fourth quarter of fiscal
1998, Conso US established a trim program for a major retail store chain. As a
result of the new retail trim program and other sales gains, Conso US' net sales
to retailers for fiscal 1998 increased 19.9%, compared to the same

                                       15
<PAGE>   16

period of the prior year. Net sales to retailers through BT declined 34.1%,
primarily due to the sale of MacCulloch & Wallis (London) Ltd. Excluding the
MacCulloch & Wallis (London) Ltd. sales, sales to retailers for BT were up 3.6%
over the prior year.

         Net sales outside the US and UK (the Company's major sales regions)
increased $65,000, or 0.8% from the comparable period of the prior year, to $8.5
million, and represented 11.9% of total net sales. The Pacific Rim continued to
be negatively impacted by the recent changes in currency values and other
economic problems of that region, and net sales to that region declined by
13.7%. Export sales to the Western Hemisphere and the Europe and Middle East
regions increased 3.8% and 5.9%, respectively, despite increasing competition
from foreign producers and the strength of the British pound sterling.

         The gross margin for the year declined to $25.3 million or 35.2% of net
sales from the prior year's gross margin of $27.8 million or 37.9%. Increased
cost of inventory produced prior to the reductions of personnel and focus on
cost controls have been recorded as cost of goods sold. Pricing pressures from
competition, both domestic and foreign, have contributed to the margin's
decline, and reformulation of existing products to provide less expensive
alternatives have contributed to the decline in the margin dollars.

         In the US, the gross margin for fiscal 1998 was 38.7% compared to the
prior year's 40.8%, while at BT, the margin declined from 30.3% to 25.8%. The
Company has taken action to reduce the number of personnel considering the
current margin climate.

         In the fourth quarter of fiscal 1998, the consolidated gross margin of
36.2% was ahead,for the first time in fiscal 1998, of the gross margin for the
similar period of the prior year. The prior year's fourth quarter margin was
36.0% excluding the unanticipated year-end physical inventory adjustment and
34.0% including the adjustment. In addition, the fourth quarter margin was well
ahead of the third quarter's 33.8%. This improvement indicates that the
long-awaited effects of the reductions in personnel and increased cost controls,
begun earlier in the year, are beginning to impact the Company's cost of sales
as the higher cost inventory at Conso US turned over through the early and
mid-part of the year. Such turnover is still in process at BT.

         Distribution expenses increased $141,000 in fiscal 1998, from 4.3% to
4.6% of net sales. BT's expenses decreased $88,000. BT implemented some
personnel reductions and a change in freight carrier as an additional cost
savings measure. Conso US' expenses increased $229,000, due primarily to
depreciation on the new warehouse facility and related equipment including radio
frequency optical scanning systems.

         Selling expenses for fiscal 1998 decreased $467,000. BT decreased
$311,000, while Conso US decreased $156,000, with the largest portion of the
decline coming from the disposal of MacCulloch & Wallis (London) Ltd.

         General and administrative costs increased $182,000. BT decreased
$14,000, while Conso US increased $196,000. The increase in general and
administrative costs has been primarily attributable to the move of the Vice
President-Manufacturing into the Co-Managing Director roll for BT and now as
Chief Operating Officer of Conso US.

         Currency losses of $27,000 were incurred in fiscal 1998 while in the
prior year a gain of $63,000 was recorded. As a result of the decline in margin
and the currency losses, operating income decreased approximately $2.6 million
or 22.4%, from 15.7% of net sales to 12.4%.

         Interest expense increased $70,000, in connection with increases in
borrowings on the Company's revolving loan facilities to help fund the dyehouse
and warehouse projects and to acquire Simplicity.

         The effective tax rate increased as management recorded reductions in
South Carolina Jobs Tax Credits due to reductions in personnel effected through
fiscal 1998.

         While net income for the fourth quarter increased $389,000 from $1.2
million to $1.6 million and from 17 cents per share to 22 cents per share, net
income for the year declined approximately $2 million from $7 million in the
prior year to $5 million in the current year, and from 94 cents per share to 68
cents per share due to the performance of the first three quarters. Conso US'
net income declined $1.3 million while BT's net income declined $711,000.

Liquidity and Capital Resources

         The Company has historically financed its operations and capital
requirements through both internally generated funds and bank borrowings. Other
than the acquisitions of Simplicity and BT, capital requirements in recent years
have arisen principally from expansion of product lines and production capacity
and increased working capital needs to support higher sales volume. In June
1998, the Company renegotiated its bank loan agreement with its US bank. Under
this agreement, the Company obtained a $20 million term loan and the Company's
revolving loan was increased from $15 million to $30 million including advances
of up to (pound)7,000,000 ($11.2 million at the July 3, 1999 exchange rate). A
total of $6.1 million was available for borrowings under the revolver agreement
at July 3, 1999. This revolving loan expires on December 1, 2000, unless renewed
by mutual agreement. Consequently, the revolving loan is reported as long-term
debt.

         In November 1998, the Company converted its fixed rate on its term loan
(at 7.4%) to a floating rate at 90-day LIBOR plus 1.45% (or 6.66% at July 3,
1999). Concurrently, the Company entered into a $19.5 million interest rate swap
for a 5-year term that effectively fixes the Company's interest rate on the term
loan at 6.75%. The interest rate swap accomplishes this rate reduction while
avoiding the costs of refinancing the term loan. The interest rate swap includes
a "mark-

                                       16

<PAGE>   17

to-market" provision should the Company elect to terminate the swap prior to
maturity. Under this provision, Conso could realize a gain or loss, depending on
the interest rate conditions at the time the swap is terminated. The Company
estimates that a gain of $424,000 would have been realized had the swap
terminated as of July 2, 1999.

         The impact of changes in the relationship of other currencies
(primarily the British pound sterling) to the US dollar have historically not
been significant, and such changes in the future are not expected to have a
material impact on the Company's results of operations or cash flows. The euro
has not had, nor does the Company anticipate, a material impact on the results
of operations or cash flows. BT has set up a euro denominated account to handle
the small number of transactions currently occurring.

         Due primarily to the shift in debt from short-term to long-term, and
current assets and liabilities acquired in the Simplicity acquisition, working
capital increased to $38.2 million at July 3, 1999 from $35.0 million at June
27, 1998.

         Operating cash flow increased from $7.2 million in fiscal 1998 to $7.3
million in fiscal 1999 primarily as a result of increased earnings and improved
inventory management. Cash used in investing activities decreased from $38.5
million in fiscal 1998 to $5.1 million in fiscal 1999, primarily due to the
acquisition in 1998 of Simplicity, but was partially offset by additional
spending on the dyehouse facility in Union, South Carolina during fiscal 1999.
Cash provided by financing activities changed from a source of $33.2 million in
fiscal 1998 to a use of $2.9 million in fiscal 1999, as the Company began
servicing the debt incurred for the Simplicity acquisition.

         On November 10, 1997, the Board of Directors authorized the repurchase
of up to 500,000 shares of common stock. To date 248,000 shares have been
repurchased at a cost of $1,902,000,of which 75,000 shares at a cost of $503,000
occurred in fiscal 1999. Repurchases may be made from time to time depending
upon market conditions. The Company's Executive Committee will direct the
specific repurchases and approve prices and other terms.

         Capital expenditures for fiscal 1999 were approximately $5.2 million.
These expenditures were primarily for manufacturing equipment at Conso US,
digital catalog design equipment at Simplicity, and some facilities improvements
at Conso US, BT, and Simplicity. The Company has budgeted approximately $5.7
million for capital expenditures for fiscal 2000. Of this, $3.2 million is for
the acquisition of new facilities in Juarez, Mexico and $0.5 million for
facilities in Coimbatore, India. During fiscal 1999, approximately $1.5 million
was spent on the new dyehouse bringing this project to completion. The Company
will consider additional capital expenditures for expansion or acquisition as
the opportunities arise.

Year 2000

         In 1997, Conso US and BT developed a five-phase program for addressing
the Y2K issues and to assure information and other systems compliance. The
Company has completed all phases of its Y2K program except for the
implementation phase of a financial system at its Sydney, Australia facility,
and is satisfied with the results. The implementation in Sydney is scheduled to
be completed by October 1999, and the remaining cost is immaterial to the
Company.

         The Company's main contingency plan is to use additional labor to
overcome any Y2K issue which was either unforeseen or for which modifications
did not adequately solve. The use of extra labor would negatively affect the
Company's earnings during the period(s) that it was needed.

         The Company has spent $509,000 on Y2K issues since the program
commenced. Of this amount, $319,000 has been capitalized (primarily for the
purchase of new hardware and software), while $190,000 has been expensed (the
cost of modifications to existing software). During fiscal 1999, $398,000 was
spent on Y2K issues, including approximately $160,000 of labor to modify
existing programs, which was expensed.

         The Company has surveyed its major vendors and customers for their Y2K
readiness. The Company believes that it will not suffer any material disruptions
to its business as a result of its vendors and customers not being Y2K compliant
based on their responses.

New Accounting Pronouncement

         In June 1998, the FASB issued Statement of Financial Accounting
Standards (SFAS) 133, "Accounting for Derivative Instruments and Hedging
Activities. "This statement requires companies to record derivatives on the
balance sheet as assets or liabilities, and measure the fair value. Gains or
losses resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. This standard will be effective for fiscal 2001 and the
Company has not determined the extent of the impact of the implementation of
this standard on the financial statements.

Jobs Tax Credits Carryforward

         The Company recorded South Carolina Jobs Tax Credits earned in fiscal
year 1997 of $225,000, resulting in net tax benefits of $149,000 (net of
applicable federal income tax effect). During fiscal 1998, management wrote-off
$405,000 of South Carolina Jobs Tax Credits due to significant reductions in its
workforce in South Carolina, resulting in a charge against income (net of
applicable federal income tax effect) of $267,000. During fiscal 1999, no
additional credits or write-offs were required.

         According to SFAS 109, "Accounting for Income Taxes, "such tax credits
are to be recorded as assets and reductions of tax expense to the extent it is
more likely




                                       17
<PAGE>   18

than not that the taxable income in future periods will be sufficient to utilize
the credits and employment levels will not decrease, causing a loss of credits
recorded in prior years. SFAS 109 also requires that, on an ongoing basis,
management assess any changes in conditions which may affect the likelihood of
realizing these tax credits and that a valuation allowance be established should
a degree of uncertainty about the likelihood of realizing these credits become
apparent. A valuation allowance would be established with a charge against
income. Based on management's review of the Company's historical and current
performance and its plans for future growth including acquisitions, the
introduction of new products, the expansion of existing products and expansion
into international markets, management believes it is more likely than not that
the Company will be able to fully utilize these tax credits and has concluded
that no valuation allowance is necessary at this time.

         The Company is uncertain as to the amount and net income effect of
credits, if any, which may be earned in future years, because future credits are
contingent upon regionally specific increases in employment, and the net income
effect is contingent upon additional future South Carolina taxable income
sufficient to fully utilize such credits as may become available in the future.

Effects of Inflation

         During the three years ended July 3, 1999, inflation has had little
effect on the Company's capital costs and results of operations.

Cautionary Statement as to Forward Looking Information

         Statements contained in this report as to the Company's outlook for
sales, operations, capital expenditures and other amounts, budgeted amounts and
other projections of future financial or economic performance of the Company,
and statements of the Company's plans and objectives for the future operations
are "forward looking" statements, and are being provided in reliance upon the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. Important factors that could cause actual results or events to differ
materially from those projected, estimated, assumed or anticipated in any such
forward looking statements include, without limitation: adverse changes in the
Company's relationships with significant customers; general economic conditions
in the Company's markets, including inflation, recession, interest rates and
other economic factors, especially in the United States and the United Kingdom
but also including other areas of the world where the Company markets or
manufactures its products; changes in consumer fashion preferences for home
sewing products and finished products in the home furnishings market, which may
affect the demand for the Company's products; any loss of the services of the
Company's key management personnel; increased competition in the United States
and abroad, both from existing competitors and from any new entrants in the
decorative trimmings or pattern businesses; the Company's ability to
successfully continue its international expansion and to successfully integrate
into its operations any existing businesses it may acquire; changes in the cost
and availability of raw materials; changes in governmental regulations
applicable to the Company's businesses; fluctuations in exchange rates relative
to the US dollar for currencies of the United Kingdom and other nations where
the Company does business; casualty to and/or disruption of the Company's
production facilities and equipment; delays and disruptions in the shipment of
the Company's products and raw materials; disruption of operations due to
strikes or other labor unrest; and other factors that generally affect the
business of manufacturing companies with international operations.


                                       18
<PAGE>   19

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

         The Company is exposed to the impact of interest rate changes and
foreign currency fluctuations due to its $30.0 million revolving credit facility
and its foreign operations, primarily through its UK based subsidiaries. The
Company does not enter into derivative financial instruments for trading
purposes. Such products are only used to manage well-defined interest rate risk,
such as the interest rate swap used to lower the Company's term loan interest
rate (See Note 3).

         Borrowings under the Company's $30.0 million revolving credit facility
bear interest at rates based upon an adjusted LIBOR rate plus a margin that
ranges from .75% to 1.75% (depending upon the Company's consolidated leverage
ratio). Up to (pound)7,000,000 in borrowings may be made by BT in the United
Kingdom in British pound sterling. [An increase of 1% in the interest rate under
the Company's revolving credit facility would decrease earnings by approximately
$140,000 (assuming the Company's borrowings under the revolving credit facility
averaged $22,000,000 during a fiscal year).]

         The Company conducts business through BT in British pounds sterling
and, to a substantially lesser extent, through other subsidiaries in other
foreign currencies. As a result, the Company is subject to foreign exchange rate
risk on cash flows related to sales, expenses and financing transactions
(including borrowings in British pounds sterling). Because of the relatively
stable exchange ratio related to the British pound sterling, the Company has not
historically made use of foreign currency exchange contracts or otherwise hedged
its foreign currency risk. Prior foreign currency gains and losses have not been
material and are expected to continue to be immaterial.

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 1999 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 year ended June 28, 1997 included herewith.

                                       19
<PAGE>   20


                                                     [Grant Thornton Letterhead]

INDEPENDENT AUDITORS' REPORT
REGARDING BRITISH TRIMMINGS LIMITED
TO THE DIRECTORS OF CONSO INTERNATIONAL CORPORATION (FORMERLY KNOW AS 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 year ended 28 June 1997
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 audit provides 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 International
Corporation (formerly know as Conso Products Company) for the year ended 28 June
1997 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 International Corporation (formerly know as Conso Products
Company) for the year ended 28 June 1997 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

                                       20


<PAGE>   21


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 ended 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 fiscal year 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 fiscal year ended June 28, 1997 (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.


                                       21


<PAGE>   22


                                    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," "Certain Transactions," "Compensation Committee Interlocks and
Insider Participation," "Compensation Committee Report," "Shareholders' Return
Performance Graph," "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, 1999, which was filed with
the Commission on September 22, 1999.

                                     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 July 3, 1999 and June 27, 1998

              Consolidated Statements of Operations for fiscal years ended
              July 3, 1999 June 27, 1998, and June 28, 1997

              Consolidated Statements of Shareholders' Equity for the fiscal
              years ended July 3, 1999, June 27, 1998, and June 28, 1997

              Consolidated Statements of Cash Flows for the fiscal years
              ended July 3, 1999, June 27, 1998, and June 28, 1997

              Notes to Consolidated Financial Statements


         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.


                                       22
<PAGE>   23

<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)

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

10.36    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 (9)

10.66    Letter Agreement dated May 4, 1998 between Simplicity Pattern Co. Inc.
         and Louis S. Oltman (9)

10.67    Executive Severance Policy for Simplicity Capital Corporation,
         Simplicity Holdings, Inc. and Simplicity Pattern Co. Inc. (9)

10.68    Letter Agreement dated September 28, 1998 by and between Simplicity
         Capital Corporation and Frank Rizzo (filed herewith)

10.69    Modified and Restated Promissory Note dated November 16, 1998 issued by
         the Company and Simplicity Pattern Co, Inc. in favor of NationsBank,
         N.A. in the original principal amount of $19,500,000 (filed herewith)

13       Portions of the Company's 1999 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 herewith)
</TABLE>

                                       23

<PAGE>   24

                      MANAGEMENT CONTRACTS AND COMPENSATORY
                             PLANS AND ARRANGEMENTS

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

                  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 (9)

                  10.66    Letter Agreement dated May 4, 1998 between Simplicity
                           Pattern Co. Inc. and Louis S. Oltman (9)

                  10.67    Executive Severance Policy for Simplicity Capital
                           Corporation, Simplicity Holdings, Inc. and Simplicity
                           Pattern Co. Inc. (9)

                  10.68    Letter Agreement dated September 28, 1999 by and
                           between Simplicity Capital Corporation and Frank
                           Rizzo (filed herewith)


  (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

  (9)    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 27, 1998.

(b) Reports on Form 8-K.

    None.

(c) Exhibits.


                                       24

<PAGE>   25

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

(d)   Financial Statement Schedules.

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

                                       25
<PAGE>   26




                                   SIGNATURES

    Pursuant to the requirements of 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 INTERNATIONAL CORPORATION


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


Dated: September 30, 1999

    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>
 /s/ J. Cary Findlay            Director, Chairman, President and   September 30, 1999
---------------------------     Chief Executive Officer (Principal
     J. Cary Findlay            Executive Officer)

 /s/ Richard A. Zonin           Chief Financial Officer             September 30, 1999
---------------------------     (Principal Financial Officer)
     Richard A. Zonin

 /s/ John M. Davis              Chief Accounting Officer            September 30, 1999
---------------------------     (Principal Accounting Officer)
     John M. Davis

 /s/ Konstance J.K. Findlay     Director                            September 30, 1999
---------------------------
    Konstance J.K. Findlay

 /s/ Sara H. Bissell            Director                            September 30, 1999
---------------------------
    Sara H. Bissell


 /s/ Antony W. Laughton         Director                            September 30, 1999
---------------------------
    Antony W. Laughton

 /s/ John H. Maxheim            Director                            September 30, 1999
---------------------------
    John H. Maxheim

                                Director                            September __, 1999
---------------------------
    James H. Shaw
</TABLE>


                                       26

<PAGE>   27


                       SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C.


                                    EXHIBITS
                                  ITEM 14(a)(3)

                                    FORM 10-K
                                  ANNUAL REPORT


For the Fiscal Year Ended July 3, 1999            Commission File Number 0-22942


                         CONSO INTERNATIONAL CORPORATION

                                  EXHIBIT INDEX

Exhibit
Number   Exhibit Description
-------  -------------------


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)

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

10.36    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 (9)

10.66    Letter Agreement dated May 4, 1998 between Simplicity Pattern Co. Inc.
         and Louis S. Oltman (9)


                                       27

<PAGE>   28

10.67    Executive Severance Policy for Simplicity Capital Corporation,
         Simplicity Holdings, Inc. and Simplicity Pattern Co. Inc. (9)

10.68    Letter Agreement dated September 28, 1999 by and between Simplicity
         Capital Corporation and Frank Rizzo (filed herewith)

10.69    Modified and Restated Promissory Note dated November 16, 1998 issued by
         the Company and Simplicity Pattern Co, Inc. in favor of NationsBank,
         N.A. in the original principal amount of $19,500,000 (filed herewith)

13       Portions of the Company's 1999 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 herewith)

                      MANAGEMENT CONTRACTS AND COMPENSATORY
                             PLANS AND ARRANGEMENTS

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

                  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 (9)

                  10.66    Letter Agreement dated May 4, 1998 between Simplicity
                           Pattern Co. Inc. and Louis S. Oltman (9)

                  10.67    Executive Severance Policy for Simplicity Capital
                           Corporation, Simplicity Holdings, Inc. and Simplicity
                           Pattern Co. Inc. (9)

                  10.68    Letter Agreement dated September 28, 1999 by and
                           between Simplicity Capital Corporation and Frank
                           Rizzo (filed herewith)


(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


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<PAGE>   29

(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 27, 1998

(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

(9)      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 27, 1998.


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