<PAGE>

                                    FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

[X]      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 For the Quarterly Period Ended February 24, 2002.

                                       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: 333-67975

                                  ALBECCA INC.
             (Exact name of registrant as specified in its charter)

            GEORGIA                                             39-1389732
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)

             3900 Steve Reynolds Boulevard, Norcross, Georgia 30093
               (Address of principal executive offices) (Zip Code)

                                 (770) 279-5210
              (Registrant's telephone number, including area code)

         Indicate by checkmark 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


                                       1
<PAGE>

                                  ALBECCA INC.

                               INDEX TO FORM 10-Q

<TABLE>
<CAPTION>
                                                                                                                Page No.
<S>                                                                                                             <C>
Part I - Financial Information

     Item 1.  Financial Statements

               Consolidated Balance Sheets as of August 26, 2001 (audited) and
                  February 24, 2002 (unaudited) .................................................................   3

               Consolidated Statements of Operations for the three and six months ended
                  February 25, 2001 (unaudited) and February 24, 2002 (unaudited) ...............................   4

               Consolidated Statements of Shareholder's (Deficit) Equity for the year ended
               August 26, 2001 (audited) and the six months ended February 24, 2002 (unaudited) .................   5

               Consolidated Statements of Cash Flows for the six months ended
                  February 25, 2001 (unaudited) and February 24, 2002 (unaudited) ................................  6

               Notes to the Consolidated Financial Statements ...................................................   7

     Item 2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations .....................................................................  18

     Item 3.  Quantitative and Qualitative Disclosures About Market Risk ........................................  23

Part II - Other Information

     Item 6.  Exhibits and Reports on Form 8-K ..................................................................  24

Signatures ....................................................................................................... 25
</TABLE>


                                       2
<PAGE>

PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

                                  ALBECCA INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                                 August 26,          February 24,
                                                                                                    2001                 2002
                                                                                                 ----------          ------------
                                                                                                                      (unaudited)
<S>                                                                                              <C>                 <C>
                                     ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                                                                      $   19,146           $   18,844
  Accounts receivable, less allowances for doubtful accounts of
    $4,602 and $4,475 at August 26, 2001 and February 24, 2002                                       32,967               34,348
  Inventories                                                                                        50,423               46,175
  Other current assets                                                                                6,203                9,121
                                                                                                 ----------           ----------
Total current assets                                                                                108,739              108,488
PROPERTY, PLANT AND EQUIPMENT, net                                                                   35,097               39,736
DEFERRED INCOME TAXES                                                                                 1,580               86,440
OTHER LONG-TERM ASSETS                                                                               37,717               34,900
                                                                                                 ----------           ----------
                                                                                                 $  183,133           $  269,564
                                                                                                 ==========           ==========

                 LIABILITIES AND SHAREHOLDER'S (DEFICIT) EQUITY

CURRENT LIABILITIES:
  Current maturities of long-term debt                                                           $    5,917           $    5,946
  Accounts payable                                                                                   17,680               15,272
  Accrued liabilities                                                                                18,547               19,968
                                                                                                 ----------           ----------
    Total current liabilities                                                                        42,144               41,186
                                                                                                 ----------           ----------
LONG-TERM DEBT, less current maturities                                                             145,240              144,832
                                                                                                 ----------           ----------
OTHER LONG-TERM LIABILITIES                                                                           8,976                6,511
                                                                                                 ----------           ----------

SHAREHOLDER'S (DEFICIT) EQUITY:
  Preferred stock                                                                                        --                   --
  Class A common stock                                                                                    4                  170
  Class B common stock                                                                                  166                   --
  Additional paid-in capital                                                                          7,326               92,402
  Accumulated (deficit) earnings                                                                     (6,098)                 470
  Accumulated other comprehensive loss                                                              (14,625)             (16,007)
                                                                                                 ----------           ----------
    Total shareholder's (deficit) equity                                                            (13,227)              77,035
                                                                                                 ----------           ----------
                                                                                                 $  183,133           $  269,564
                                                                                                 ==========           ==========
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       3
<PAGE>


                                  ALBECCA INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                     Three months ended                 Six months ended
                                                               -----------------------------     ------------------------------
                                                               February 25,     February 24,     February 25,      February 24,
                                                                   2001             2002             2001              2002
                                                               ------------     ------------     ------------      ------------
<S>                                                            <C>              <C>              <C>               <C>
Net sales                                                       $  81,345        $  77,245        $  166,386        $  157,727
Cost of sales                                                      43,990           41,862            91,894            86,677
                                                                ---------        ---------        ----------        ----------
  Gross profit                                                     37,355           35,383            74,492            71,050
Operating expenses                                                 23,847           27,701            47,530            50,846
                                                                ---------        ---------        ----------        ----------
  Operating income                                                 13,508            7,682            26,962            20,204
Interest  income                                                   (1,905)          (1,802)           (3,481)           (3,721)
Interest expense                                                    5,778            5,737            11,668            11,448
Other (income) loss                                                  (430)            (211)              (69)              162
                                                                ---------        ---------        ----------        ----------
  Income before provision for income taxes,
    minority interest and extraordinary gain                       10,065            3,958            18,844            12,315
Income tax expense (benefit)                                          388           (2,007)            1,267            (1,467)
Minority interest                                                      23               11                54                48
                                                                ---------        ---------        ----------        ----------
  Income before extraordinary gain                                  9,654            5,954            17,523            13,734
Extraordinary gain on repurchase of debt, net of tax                  251               --               498                --
                                                                ---------        ---------        ----------        ----------
Net income                                                      $   9,905        $   5,954        $   18,021        $   13,734
                                                                =========        =========        ==========        ==========
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       4
<PAGE>

                                  ALBECCA INC.

            CONSOLIDATED STATEMENTS OF SHAREHOLDER'S (DEFICIT) EQUITY
                        (In thousands, except share data)

<TABLE>
<CAPTION>

                                                                                                            ACCUMULATED
                                                 CLASS A                CLASS B      ADDITIONAL ACCUMULATED    OTHER
                                               COMMON STOCK          COMMON STOCK      PAID-IN   (DEFICIT)  COMPREHENSIVE
                                             SHARES    AMOUNT     SHARES     AMOUNT    CAPITAL   EARNINGS       LOSS         TOTAL
                                           ----------  ------  -----------   ------  ---------- ----------- -------------  --------
<S>                                        <C>         <C>     <C>           <C>     <C>        <C>         <C>            <C>
BALANCE, August 27, 2000                      374,000   $  4    16,626,000    $ 166    $ 7,326   $(23,578)    $(13,795)    $(29,877)
  Net income                                       --     --            --       --         --     31,580           --
    Foreign currency translation
      adjustment                                   --     --            --       --         --         --         (830)
    Total comprehensive income                                                                                               30,750
  Distribution to shareholders                     --     --            --       --         --    (14,100)          --      (14,100)
                                           ----------   ----   -----------    -----    -------   --------     --------     --------
BALANCE, August 26, 2001                      374,000      4    16,626,000      166      7,326     (6,098)     (14,625)     (13,227)
                                           ----------   ----   -----------    -----    -------   --------     --------     --------
  Net income (unaudited)                           --     --            --       --         --     13,734           --
    Foreign currency translation
     adjustment (unaudited)                        --     --            --       --         --         --       (1,382)
    Total comprehensive income (unaudited)                                                                                   12,352
  Distribution to shareholder (unaudited)          --     --            --       --         --     (7,166)          --       (7,166)
  Recognition of deferred taxes upon
    change in ownership (Note 5)
    (unaudited)                                    --     --            --       --     85,076         --           --       85,076
  Conversion of Class B Common Stock
    to Class A Common Stock (unaudited)    16,626,000    166   (16,626,000)    (166)        --         --           --           --
                                           ----------   ----   -----------    -----    -------   --------     --------     --------
BALANCE, February 24, 2002 (unaudited)     17,000,000   $170            --    $  --    $92,402   $    470     $(16,007)    $ 77,035
                                           ==========   ====   ===========    =====    =======   ========     ========     ========
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       5
<PAGE>

                                  ALBECCA INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                                        Six months ended
                                                                                                ------------         ------------
                                                                                                February 25,         February 24,
                                                                                                    2001                2002
                                                                                                ------------         ------------
<S>                                                                                             <C>                  <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES:
  Net income                                                                                     $   18,021           $  13,734
  Adjustments to reconcile net income to net cash
   provided by operating activities:
   Minority interest                                                                                     54                  48
   Depreciation and amortization                                                                      2,727               2,559
   Loss (gain) on disposal of property, plant and equipment                                             114                 (20)
   Extraordinary gain on repurchase of debt                                                            (498)                 --
   Changes in operating assets and liabilities:
    Accounts receivable                                                                                (279)             (2,018)
    Inventories                                                                                      (1,551)              3,544
    Deferred taxes                                                                                       --              (2,452)
    Other current assets                                                                               (523)               (598)
    Accounts payable                                                                                  1,579              (2,936)
    Accrued liabilities                                                                              (4,282)              2,547
    Other                                                                                               854              (2,330)
                                                                                                 ----------           ---------
     Net cash provided by operating activities                                                       16,216              12,078
                                                                                                 ----------           ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment                                                         (1,447)             (6,830)
  Proceeds from sales of property, plant and equipment                                                  668                  73
  Changes in other long-term assets                                                                     (57)              1,366
                                                                                                 ----------           ---------
     Net cash used in investing activities                                                             (836)             (5,391)
                                                                                                 ----------           ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facilities                                                            11,009               6,836
Repayments of revolving credit facilities                                                           (10,941)             (6,591)
Proceeds from long-term debt                                                                            703                 249
Repayments of long-term debt                                                                        (10,323)               (560)
Distributions to shareholders                                                                        (4,800)             (7,166)
                                                                                                 ----------           ---------
Net cash used in financing activities                                                               (14,352)             (7,232)
                                                                                                 ----------           ---------
EFFECT OF EXCHANGE RATE ON CASH                                                                         206                 243
                                                                                                 ----------           ---------

NET INCREASE (DECREASE) IN CASH                                                                       1,234                (302)
CASH and cash equivalents, beginning of period                                                       23,321              19,146
                                                                                                 ----------           ---------
CASH and cash equivalents, end of period                                                         $   24,555           $  18,844
                                                                                                 ==========           =========

SUPPLEMENTAL INFORMATION:
  Interest paid                                                                                  $   11,782           $  11,312
                                                                                                 ==========           =========
  Income taxes paid                                                                              $    2,258           $   1,252
                                                                                                 ==========           =========
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       6
<PAGE>

                                  ALBECCA INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

Note 1.           CHANGE IN OWNERSHIP

         On February 8, 2002, Albecca Inc. and its subsidiaries ("the Company",
"Albecca") were acquired by Berkshire Hathaway Inc. ("Berkshire"), a Delaware
holding company owning subsidiaries engaged in a number of diverse business
activities. Under the terms of the Purchase and Sale Agreement, all of the
outstanding shares of common stock of Albecca were acquired from its sole
shareholder for cash consideration of $223,425,000. In connection with the
transaction, all Class B common shares were converted to Class A common shares.

         In connection with the acquisition, the Company incurred and expensed
transaction related expenditures of approximately $5,500,000 consisting of
$467,000 for legal fees and other professional fees, $1,939,000 for the
accelerated vesting of stock options due to change of control provisions, a
one-time discretionary $1,000,000 contribution to the Company's 401(K)
plan for the benefit of all plan participants, and $2,094,000 for other
compensation arrangements. Additionally, the Company will accrue and expense
additional compensation amounts over related vesting periods of 12 and 24 month
periods from the transaction date totaling $6,930,000. The Company expensed
approximately $144,000 of such amounts during the quarter ended February 24,
2002. Based on the above, a total of $5,644,000 in expenses are reflected in
operating expenses within the accompanying statement of operations.

Note 2.           BASIS OF INTERIM FINANCIAL STATEMENT PRESENTATION

         As permitted under Staff Accounting Bulletin (SAB) No. 54, "Push Down
Basis of Accounting Required in Certain Limited Circumstances", the Company
elected not to apply push down accounting in its consolidated financial
statements as it is a public registrant as a result of public debt that was
outstanding prior to the acquisition. As such, the accompanying consolidated
financial statements are reported on the Company's historical cost basis. If
push down accounting had been elected, the Company would have been required to
establish a new basis for its assets and liabilities based on the amount of
consideration paid and the fair value of the acquired assets and liabilities as
of the date of acquisition.

         The unaudited consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial information. Accordingly, the unaudited interim
consolidated financial statements do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States for complete financial statements. In the opinion of management, all
adjustments (consisting of only normal recurring adjustments) considered
necessary for a fair presentation have been included. On a quarterly basis, the
Company's results may vary. The results of operations for any interim period are
not necessarily indicative of the results of operations to be expected for a
full year. For further information, refer to the consolidated financial
statements and accompanying footnotes included in the Company's Form 10-K for
the fiscal year ended August 26, 2001, as filed with the Securities and Exchange
Commission.

Note 3.           USE OF ESTIMATES

         The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Note 4.           PRINCIPLES OF CONSOLIDATION

         The consolidated financial statements include the accounts of Albecca
and its subsidiaries. All significant intercompany transactions have been
eliminated. Minority interest represents minority shareholders' interest in
majority-owned subsidiaries.

Note 5.           INCOME TAXES

         Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and tax credit carryforwards. Deferred tax assets and liabilities are
measured using statutory tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled.

         Prior to the acquisition, the Company was treated as an S corporation
for federal income tax purposes and several of its subsidiaries were classified
as either partnerships or single member entities. As such, these entities were
not subject to federal, and certain state, income taxes. Instead, the related
taxable income was included in the tax returns of the shareholders and members
of the respective entities. The Company made distributions to its shareholders
to pay income tax obligations as a result of the Company's


                                       7
<PAGE>

                                  ALBECCA INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                   (unaudited)

status as an S corporation.

         Albecca's S corporation status automatically terminated upon the
closing of the acquisition and the Company became subject to entity level taxes
at C corporation tax rates for federal income tax purposes. The single member
entities and partnerships will retain their tax entity status and continue to
have their results combined with Albecca's, which consolidated federal income
will be included in Berkshire's consolidated federal income tax filing. The
foreign subsidiaries not included in the Company's federal income tax filings
were not impacted by this conversion.

         In the Purchase and Sale Agreement, Berkshire and the former sole
shareholder have agreed to jointly elect to treat the sale of the Company for
federal and certain state income tax purposes as an asset acquisition under
section 338(h)(10) ("the 338 election") of the Internal Revenue Code of 1986, as
amended. A preliminary allocation of the purchase price to the tax basis of
assets and liabilities based on their respective estimated fair values at
February 8, 2002 has been made for income tax purposes. As a result of the 338
election, the automatic termination of S corporation status for federal income
tax purposes and the Company's election not to push down the accounting
associated with the acquisition, the Company recorded a deferred tax asset of
approximately $85,076,000. This net deferred tax asset, which primarily consists
of tax deductible goodwill, results from the excess of the adjusted tax basis
over the historical cost basis of the Company's assets and liabilities for
financial reporting purposes. A corresponding credit was made to additional
paid-in capital in accordance with Emerging Issues Task Force (EITF) 94-10,
"Accounting by a Company for the Income Tax Effects of Transactions Among or
with its Shareholders Under FASB Statement 109". As the allocation of the
purchase price to the acquired assets is subject to change in upcoming periods
as appraisals and other allocation methods are finalized, additional changes to
additional paid-in capital may occur.

Note 6.           RESTRUCTURING PLANS

THE NETHERLANDS - LEVER

         As of February 24, 2002, with respect to the Company's closure of its
Lever manufacturing and distribution facility located in Bergambacht, The
Netherlands, none of the original 28 team members remained at the facility.
During the second quarter of fiscal 2002, cash payments of $50,000 were made
with respect to severance costs, resulting in a remaining balance of $34,000 in
accrued liabilities at February 24, 2002. The Company anticipates that The
Netherlands - Lever restructuring plan will be completed prior to the end of
fiscal 2002.

CANADA - EDMONTON

         As of February 24, 2002, with respect to the Company's closure of one
of its Canadian distribution facilities, located in Edmonton, none of the
original 5 team members remained at the facility. During the second quarter of
fiscal 2002, cash payments relating to lease termination and other exit costs
were made totaling $49,000, resulting in a remaining balance of $44,000 in
accrued liabilities. The Company anticipates that the Canada - Edmonton
restructuring will be completed prior to the end of fiscal 2002.

UNITED KINGDOM - NORTHAMPTON

         As of February 24, 2002, with respect to the Company's closure of its
United Kingdom - Northampton operation, none of the original 37 team members
remained at the facility and the restructuring plan was substantially complete.
The remaining accrual relates to the Company's continuing obligation under
existing lease commitments for the closed facility and a severance payment that
will be paid during fiscal 2002. Cash payments relating to lease termination
costs of $51,000 were made during the second quarter of fiscal 2002.

NEW ZEALAND

         As of February 24, 2002, with respect to the closure of the Company's
distribution operations in New Zealand, none of the 9 original team members
remained at the facility and the restructuring plan was complete. Cash payments
relating to other exit costs of approximately $10,000 were made during the first
quarter of fiscal 2002.


                                       8
<PAGE>

                                  ALBECCA INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                   (unaudited)

GREECE

         As of February 24, 2002, with respect to the closure of the Company's
distribution operations in Greece, none of the original 14 team members remained
at the facility. Cash payments relating to other exit costs of approximately
$7,000 were made during the second quarter of fiscal 2002. The Company, through
its local counsel, is finalizing the legal liquidation of its Greek entities.
The Company anticipates that the restructuring plan will be completed prior to
the end of the third quarter of fiscal 2002.

         For more descriptive information on the above mentioned restructuring
plans, please see the Company's Form 10-K for the fiscal year ended August 26,
2001, as filed with the Securities and Exchange Commission.

SUMMARY OF RESTRUCTURING PLANS

         As of February 24, 2002, as it relates to the Company's reported
restructuring plans, $248,000 of restructuring charges remained in accrued
liabilities representing $39,000 of severance and other termination costs and
$209,000 of lease termination and other exit costs.

         A summary of the restructuring plans and activity consist of the
following estimated accrued future cash/non-cash requirements:

<TABLE>
<CAPTION>
                                                          Write-down of     Severance and
                                                          property and    other termination        Lease termination
CLOSURE OF UNITED KINGDOM - NORTHAMPTON:                    equipment          benefits          and other exit costs      Total
                                                          -------------   ------------------     --------------------   ----------
<S>                                                       <C>             <C>                    <C>                    <C>
2000 Provision                                              $ 499,000         $ 298,000               $  618,000        $1,415,000
      Non-cash                                                499,000                --                       --           499,000
                                                            ---------         ---------               ----------        ----------
      Cash                                                         --           298,000                  618,000           916,000
Fiscal 2000 cash activity                                          --          (116,000)                 (84,000)         (200,000)
                                                            ---------         ---------               ----------        ----------
Balance as of August 27, 2000                                      --           182,000                  534,000           716,000
Fiscal 2001 cash activity                                          --          (150,000)                (374,000)         (524,000)
                                                            ---------         ---------               ----------        ----------
Balance as of August 26, 2001                                      --            32,000                  160,000           192,000
First quarter 2002 cash activity (unaudited)                       --                --                  (58,000)          (58,000)
                                                            ---------         ---------               ----------        ----------
Balance as of November 25, 2001 (unaudited)                        --            32,000                  102,000           134,000
Second quarter 2002 cash activity (unaudited)                      --                --                  (51,000)          (51,000)
                                                            ---------         ---------               ----------        ----------
Balance as of February 24, 2002 (unaudited)                 $      --         $  32,000               $   51,000        $   83,000
                                                            =========         =========               ==========        ==========
</TABLE>

<TABLE>
<CAPTION>
                                                          Write-down of     Severance and
                                                          property and    other termination
CLOSURE OF OPERATIONS IN NEW ZEALAND:                       equipment          benefits            Other exit costs       Total
                                                          -------------   ------------------     --------------------   ----------
<S>                                                       <C>             <C>                    <C>                    <C>
1999 Provision                                              $  75,000         $  48,000               $  102,000        $  225,000
      Non-cash                                                 75,000                --                       --            75,000
                                                            ---------         ---------               ----------        ----------
      Cash                                                         --            48,000                  102,000           150,000
Fiscal 1999 cash activity                                          --           (30,000)                 (75,000)         (105,000)
                                                            ---------         ---------               ----------        ----------
Balance as of August 29, 1999                                      --            18,000                   27,000            45,000
Fiscal 2000 cash activity                                          --            (3,000)                  (3,000)           (6,000)
                                                            ---------         ---------               ----------        ----------
Balance as of August 27, 2000                                      --            15,000                   24,000            39,000
2001 reversal of excess provision                                  --           (15,000)                 (14,000)          (29,000)
                                                            ---------         ---------               ----------        ----------
Balance as of August 26, 2001                                      --                --                   10,000            10,000
First quarter 2002 cash activity (unaudited)                       --                --                  (10,000)          (10,000)
                                                            ---------         ---------               ----------        ----------
Balance as of November 25, 2001 (unaudited)                 $      --         $      --               $       --        $       --
                                                            =========         =========               ==========        ==========
</TABLE>


                                       9
<PAGE>

                                  ALBECCA INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                          Write-down of     Severance and
                                                          property and    other termination
CLOSURE OF OPERATIONS IN GREECE:                            equipment          benefits            Other exit costs       Total
                                                          -------------   ------------------     --------------------   ----------
<S>                                                       <C>             <C>                    <C>                    <C>
1998 Provision                                              $ 333,000         $  79,000               $  104,000        $  516,000
      Non-cash                                                333,000                --                       --           333,000
                                                            ---------         ---------               ----------        ----------
      Cash                                                         --            79,000                  104,000           183,000
Fiscal 1998 cash activity                                          --                --                       --                --
                                                            ---------         ---------               ----------        ----------
Balance as of August 30, 1998                                      --            79,000                  104,000           183,000
1999 provision                                                     --                --                  129,000           129,000
Fiscal 1999 cash activity                                          --           (70,000)                (129,000)         (199,000)
                                                            ---------         ---------               ----------        ----------
Balance as of August 29, 1999                                      --             9,000                  104,000           113,000
Fiscal 2000 cash activity                                          --                --                   (4,000)           (4,000)
                                                            ---------         ---------               ----------        ----------
Balance as of August 27, 2000                                      --             9,000                  100,000           109,000
Fiscal 2001 cash activity                                          --            (9,000)                  (6,000)          (15,000)
                                                            ---------         ---------               ----------        ----------
Balance as of August 26, 2001                                      --                --                   94,000            94,000
First quarter 2002 cash activity (unaudited)                       --                --                       --                --
                                                            ---------         ---------               ----------        ----------
Balance as of November 25, 2001 (unaudited)                        --                --                   94,000            94,000
Second quarter 2002 cash activity (unaudited)                      --                --                   (7,000)           (7,000)
                                                            ---------         ---------               ----------        ----------
Balance as of February 24, 2002 (unaudited)                 $      --         $      --               $   87,000        $   87,000
                                                            =========         =========               ==========        ==========
</TABLE>

Note 7.           OTHER (INCOME) LOSS

         During the three months ended February 24, 2002, the Company received a
dividend from Prudential Financial as a result of the insurance company's
conversion from a mutual company to a stock company. Albecca received shares of
Prudential Financial stock with a value at the time of issuance of $232,000,
which was reflected in other income for the period ended February 24, 2002. The
Company anticipates selling such shares prior to the end of the fiscal year. As
of the end of the second quarter of fiscal 2002, the value of the shares
approximates the amount recognized as income. The remaining other (income) loss
primarily represents net realized and unrealized foreign currency exchange gains
and losses on intercompany account balances and certain other
foreign-denominated assets, as well as gains and losses on derivative
instruments as discussed in Note 11.

Note 8.           EXTRAORDINARY GAIN

         During the six months ended February 25, 2001, the Company repurchased
a portion of its senior subordinated notes with a face value of $8,000,000. The
debt repurchase resulted in an extraordinary gain of $498,000, net of state
income taxes of $12,000. The Company did not repurchase any of its senior
subordinated notes during the six months ended February 24, 2002.

Note 9.           INVENTORIES

         Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                        August 26,        February 24,
                                                           2001               2002
                                                        ----------        ------------
         <S>                                            <C>               <C>
         Raw materials                                  $   6,218          $   6,772
         Work in process                                    1,812              1,936
         Finished goods                                    42,393             37,467
                                                        ---------          ---------
                                                        $  50,423          $  46,175
                                                        =========          =========
</TABLE>


                                       10
<PAGE>

                                  ALBECCA INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                   (unaudited)

Note 10.          COMPREHENSIVE INCOME

         Comprehensive income for the Company is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                     Three months ended                 Six months ended
                                                                  -------          ------          --------           --------
                                                               February 25,     February 24,     February 25,       February 24,
                                                                   2001            2002             2001               2002
                                                               ------------     ------------     ------------       ------------
         <S>                                                   <C>              <C>              <C>                <C>
         Net income, as reported                                  $ 9,905          $5,954          $ 18,021           $ 13,734
         Foreign currency translation adjustments                   2,459             252              (449)            (1,382)
                                                                  -------          ------          --------           --------
         Total comprehensive income                               $12,364          $6,206          $ 17,572           $ 12,352
                                                                  =======          ======          ========           ========
         </TABLE>

         Accumulated other comprehensive loss represents foreign currency
translation adjustments of $14,625 and $16,007 at August 26, 2001 and February
24, 2002, respectively.

Note 11.          DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

         Effective August 28, 2000, the Company adopted Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"), as amended by SFAS No. 137, which establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities.
This statement became effective for all fiscal years beginning after June 15,
2000.

         The Statement requires the Company to recognize all derivatives on the
balance sheet at fair value. If the derivative is a hedge, changes in the fair
value of derivatives are either offset against the change in fair value of
assets, liabilities, or firm commitments through earnings or recognized in
comprehensive income (equity) until the hedged item is recognized in earnings.
The ineffective portion of a derivative's change in fair value is recognized in
earnings. In transition, the Statement required all hedging relationships to be
evaluated and designated anew, resulting in cumulative transition adjustments to
earnings and other comprehensive income (equity). The Company adopted SFAS 133
on August 28, 2000. The adoption was not material to the consolidated financial
statements.

         The Company has historically entered into forward exchange contracts to
reduce the foreign currency exchange risks associated with its committed and
anticipated foreign currency denominated purchases. Its U.S. operations purchase
primarily Euro forward exchange contracts and its United Kingdom subsidiary
primarily enters into U.S. dollar and Euro forward exchange contracts.

         The carrying amount of derivatives at fair value as of February 24,
2002 was a net liability of $35,000. During the six months ended February 24,
2002 a loss of $31,000 was recorded in the accompanying statement of operations,
net of tax, representing the change in fair value of the derivatives. As of
February 24, 2002 the maximum period of time the Company was hedging its
exposure to the variability in future cash flows for forecasted transactions was
approximately seven months.

Note 12.          COMMITMENTS AND CONTINGENCIES

LITIGATION

         The Company is involved in certain litigation arising in the ordinary
course of business. In the opinion of management, the ultimate resolution of
these matters will not have a material adverse effect on the Company's financial
position or results of operations.

Note 13.          RELATED PARTY TRANSACTIONS

         Pursuant to the Purchase and Sale Agreement between the Company and
Berkshire, the Company acquired the during the second quarter of fiscal 2002,
the corporate headquarters office building in Norcross, Georgia for $5,575,000
from an entity controlled by the selling shareholder of the Company. The
purchase price was based on a recent third-party appraisal. In addition, under
the terms of the agreement, the selling shareholder is required to reimburse the
Company for certain state income taxes resulting from the 338 election. In
connection with this obligation, the Company has recorded on a preliminary basis
a receivable due from the former shareholder of approximately $1,050,000.



                                       11
<PAGE>

                                  ALBECCA INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                   (unaudited)

Note 14.          SUBSEQUENT EVENTS

         On March 11, 2002, the Company, pursuant to Sections 3.09 and 4.13 of
the Indenture dated August 11, 1998 between the Company and State Street Bank
and Trust, as trustee, issued a Notice of Change of Control and Offer to
Purchase for cash any and all of the Company's senior subordinated notes at an
offer price of 101% of the principal amount. The offer expired on April 5, 2002
and no notes were tendered for repurchase.

Note 15.          RECLASSIFICATIONS

         Certain prior period amounts have been reclassified to conform to the
current period presentation, including amounts related to the Company's
implementation of EITF 00-10, "Accounting for Shipping and Handling Fees and
Costs", as more fully explained in the Recent Accounting Pronouncements section
of Management's Discussion and Analysis of Financial Condition and Results of
Operations.

Note 16.          GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

         These condensed consolidating financial statements reflect Albecca Inc.
and Subsidiary Guarantors, which consist of all of the Company's wholly-owned
restricted subsidiaries other than the foreign subsidiaries, as defined under
the Indenture dated August 11, 1998. These nonguarantor foreign subsidiaries are
herein referred to as "Subsidiary Nonguarantors." The subsidiary guarantee of
each Subsidiary Guarantor will be subordinated to the prior payment in full of
all senior debt of such Subsidiary Guarantor. Separate financial statements of
the Subsidiary Guarantors are not presented because the subsidiary guarantees
are joint and several and full and unconditional and the Company believes the
condensed consolidating financial statements presented are more meaningful in
understanding the financial position of the Subsidiary Guarantors and the
separate financial statements are deemed not material to investors.


                                       12
<PAGE>

                                  ALBECCA INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                   (unaudited)

                     CONDENSED CONSOLIDATING BALANCE SHEETS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                            February 24, 2002 (unaudited)
                                                        -------------------------------------------------------------------------
                                                                                                     Consolidated
                                                                      Subsidiary     Subsidiary       Elimination      Consolidated
                                                      Albecca Inc.    Guarantors    Nonguarantors       Entries           Total
                                                      ------------    ----------    -------------    ------------      ------------
<S>                                                   <C>             <C>           <C>              <C>               <C>
                   ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                             $ 11,490       $    781       $   6,573        $      --        $  18,844
  Accounts receivable, net                                    --         19,966          14,382               --           34,348
  Intercompany accounts receivable                            --        124,565           1,008         (125,573)              --
  Inventories                                                 --         24,419          21,756               --           46,175
  Other current assets                                     3,811          1,827           3,483               --            9,121
                                                        --------       --------       ---------        ---------        ---------
    Total current assets                                  15,301        171,558          47,202         (125,573)         108,488
PROPERTY, PLANT AND  EQUIPMENT, net                           --         16,076          23,660               --           39,736
DEFERRED INCOME TAXES                                     84,860             --           1,580               --           86,440
OTHER LONG-TERM ASSETS                                     3,966         12,503          18,431               --           34,900
INVESTMENT IN SUBSIDIARIES                               170,769             --           7,885         (178,654)              --
INTERCOMPANY LOANS RECEIVABLE                             89,580             --             350          (89,930)              --
                                                        --------       --------       ---------        ---------        ---------
                                                        $364,476       $200,137       $  99,108        $(394,157)       $ 269,564
                                                        ========       ========       =========        =========        =========

      LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT)
CURRENT LIABILITIES:
  Current maturities of long-term debt                  $     --       $  1,109       $   4,837        $      --        $   5,946
  Accounts payable                                            --          9,385           5,887               --           15,272
  Intercompany accounts payable                          120,062            678           4,833         (125,573)              --
  Accrued liabilities                                      1,843          8,520           9,605               --           19,968
                                                        --------       --------       ---------        ---------        ---------
    Total current liabilities                            121,905         19,692          25,162         (125,573)          41,186
                                                        --------       --------       ---------        ---------        ---------
LONG-TERM DEBT, less current maturities                  134,930          5,932           3,970               --          144,832
                                                        --------       --------       ---------        ---------        ---------
INTERCOMPANY LOANS PAYABLE                                    --            350          89,580          (89,930)              --
                                                        --------       --------       ---------        ---------        ---------
OTHER LONG-TERM LIABILITIES                                   79          3,654           2,778               --            6,511
                                                        --------       --------       ---------        ---------        ---------
SHAREHOLDER'S  EQUITY (DEFICIT):
  Preferred stock                                             --             --              --               --               --
  Class A common stock                                       170             --              --               --              170
  Additional paid-in capital                              92,402         41,825           7,927          (49,752)          92,402
  Accumulated earnings (deficit)                          14,990        128,337         (13,955)        (128,902)             470
  Accumulated other comprehensive gain (loss)                 --            347         (16,354)              --          (16,007)
                                                        --------       --------       ---------        ---------        ---------
    Total shareholder's equity (deficit)                 107,562        170,509         (22,382)        (178,654)          77,035
                                                        --------       --------       ---------        ---------        ---------
                                                         $364,476       $200,137       $  99,108        $(394,157)       $ 269,564
                                                         ========       ========       =========        =========        =========
</TABLE>


                                       13
<PAGE>

                                  ALBECCA INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                   (unaudited)

                     CONDENSED CONSOLIDATING BALANCE SHEETS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                     August 26, 2001
                                                            ---------------------------------------------------------------------
                                                                                                      Consolidated
                                                                          Subsidiary    Subsidiary     Elimination   Consolidated
                                                            Albecca Inc.  Guarantors  Nonguarantors     Entries         Total
                                                            ------------  ----------  -------------   ------------   ------------
<S>                                                         <C>           <C>         <C>             <C>            <C>
                                       ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                                   $ 11,929     $  1,169     $   6,048      $      --      $  19,146
  Accounts receivable, net                                          --       19,364        13,603             --         32,967
  Intercompany accounts receivable                                  --      109,363         1,025       (110,388)            --
  Inventories                                                       --       26,679        23,744             --         50,423
  Other current assets                                             215        1,478         4,510             --          6,203
                                                              --------     --------     ---------      ---------      ---------
   Total current assets                                         12,144      158,053        48,930       (110,388)       108,739
PROPERTY, PLANT AND EQUIPMENT, net                                  --       10,752        24,345             --         35,097
DEFERRED INCOME TAXES                                               --           --         1,580             --          1,580
OTHER LONG-TERM ASSETS                                           4,174       13,684        19,859             --         37,717
INVESTMENT IN SUBSIDIARIES                                     151,703           --         7,884       (159,587)            --
INTERCOMPANY LOANS RECEIVABLE                                   89,819           --           360        (90,179)            --
                                                              --------     --------     ---------      ---------      ---------
                                                              $257,840     $182,489     $ 102,958      $(360,154)     $ 183,133
                                                              ========     ========     =========      =========      =========
                  LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT)
CURRENT LIABILITIES:
  Current maturities of long-term debt                        $     --     $    888     $   5,029      $      --      $   5,917
  Accounts payable                                                  --        8,998         8,682             --         17,680
  Intercompany accounts payable                                104,238          486         5,664       (110,388)            --
  Accrued liabilities                                              723        8,538         9,286             --         18,547
                                                              --------     --------     ---------      ---------      ---------
    Total current liabilities                                  104,961       18,910        28,661       (110,388)        42,144
                                                              --------     --------     ---------      ---------      ---------
LONG-TERM DEBT, less current maturities                        134,930        6,001         4,309             --        145,240
                                                              --------     --------     ---------      ---------      ---------
INTERCOMPANY LOANS PAYABLE                                          --          360        89,819        (90,179)            --
                                                              --------     --------     ---------      ---------      ---------
OTHER LONG-TERM LIABILITIES                                      2,031        4,470         2,475             --          8,976
                                                              --------     --------     ---------      ---------      ---------
SHAREHOLDER'S EQUITY (DEFICIT):
  Preferred stock                                                   --           --            --             --             --
  Class A common stock                                               4           --            --             --              4
  Class B common stock                                             166           --            --             --            166
  Additional paid-in capital                                     7,326       41,825         7,926        (49,751)         7,326
  Accumulated earnings (deficit)                                 8,422      110,550       (15,234)      (109,836)        (6,098)
  Accumulated other comprehensive gain (loss)                       --          373       (14,998)            --        (14,625)
                                                              --------     --------     ---------      ---------      ---------
    Total shareholder's equity (deficit)                        15,918      152,748       (22,306)      (159,587)       (13,227)
                                                              --------     --------     ---------      ---------      ---------
                                                              $257,840     $182,489     $ 102,958      $(360,154)     $ 183,133
                                                              ========     ========     =========      =========      =========
</TABLE>


                                       14
<PAGE>

                                  ALBECCA INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                   (unaudited)

                 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                     Three months ended
                                                                               February 24, 2002 (unaudited)
                                                            ---------------------------------------------------------------------
                                                                                                      Consolidated
                                                                          Subsidiary    Subsidiary     Elimination   Consolidated
                                                            Albecca Inc.  Guarantors  Nonguarantors     Entries         Total
                                                            ------------  ----------  -------------   ------------   ------------
<S>                                                         <C>           <C>         <C>             <C>            <C>

Net sales                                                     $     --      $ 55,134     $  24,317      $  (2,206)     $  77,245
Cost of sales                                                       --        28,563        15,505         (2,206)        41,862
                                                              --------      --------     ---------      ---------      ---------
  Gross profit                                                      --        26,571         8,812             --         35,383
Operating expenses                                                 566        18,893         8,242             --         27,701
                                                              --------      --------     ---------      ---------      ---------
  Operating (loss) income                                         (566)        7,678           570             --          7,682
Interest income                                                 (1,780)           --           (22)            --         (1,802)
Interest expense                                                 5,364           117           256             --          5,737
Other (income) loss                                               (232)            4            17             --           (211)
                                                              --------      --------     ---------      ---------      ---------
  (Loss) income before provision for income taxes,
    minority interest, and extraordinary gain                   (3,918)        7,557           319             --          3,958
Income tax (benefit) expense                                    (2,395)          180           208             --         (2,007)
Minority interest                                                   --            --            11             --             11
                                                              --------      --------     ---------      ---------      ---------
  (Loss) income before extraordinary gain                       (1,523)        7,377           100             --          5,954
Equity in earnings of subsidiaries                               7,477            --            --         (7,477)            --
                                                              --------      --------     ---------      ---------      ---------
Net income                                                    $  5,954      $  7,377     $     100      $  (7,477)     $   5,954
                                                              ========      ========     =========      =========      =========
</TABLE>

<TABLE>
<CAPTION>
                                                                                  Three months ended
                                                                             February 25, 2001 (unaudited)
                                                            ---------------------------------------------------------------------
                                                                                                      Consolidated
                                                                          Subsidiary    Subsidiary     Elimination   Consolidated
                                                            Albecca Inc.  Guarantors  Nonguarantors     Entries         Total
                                                            ------------  ----------  -------------   ------------   ------------
<S>                                                         <C>           <C>         <C>             <C>            <C>

Net sales                                                     $     --      $ 27,745     $  28,687      $  (2,663)     $  81,345
Cost of sales                                                       --        17,951        18,893         (2,663)        43,990
                                                              --------      --------     ---------      ---------      ---------
  Gross profit                                                      --        27,561         9,794             --         37,355
Operating expenses                                                 172        15,198         8,477             --         23,847
                                                              --------      --------     ---------      ---------      ---------
  Operating (loss) income                                         (172)       12,363         1,317             --         13,508
Interest income                                                 (1,905)           --            --             --         (1,905)
Interest expense                                                 5,372           182           224             --          5,778
Other income                                                        --            --          (430)            --           (430)
                                                              --------      --------     ---------      ---------      ---------
  (Loss) income before provision for income taxes,
    minority interest, and extraordinary gain                   (3,639)       12,181         1,523             --         10,065
Income tax expense                                                  --           125           263             --            388
Minority interest                                                   --            --            23             --             23
                                                              --------      --------     ---------      ---------      ---------
  (Loss) income before extraordinary gain                       (3,639)       12,056         1,237             --          9,654
Extraordinary gain on repurchase of debt, net of tax               251            --            --             --            251
Equity in earnings of subsidiaries                              13,293            --            --        (13,293)            --
                                                              --------      --------     ---------      ---------      ---------
Net income                                                    $  9,905      $ 12,056     $   1,237      $ (13,293)     $   9,905
                                                              ========      ========     =========      =========      =========
</TABLE>


                                       15
<PAGE>

                                  ALBECCA INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                   (unaudited)

                 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                     Six months ended
                                                                               February 24, 2002 (unaudited)
                                                            -----------------------------------------------------------------------
                                                                                                      Consolidated
                                                                          Subsidiary    Subsidiary     Elimination   Consolidated
                                                            Albecca Inc.  Guarantors  Nonguarantors     Entries         Total
                                                            ------------  ----------  -------------   ------------   ------------
<S>                                                         <C>           <C>         <C>             <C>            <C>
Net sales                                                     $     --      $109,122      $  52,083      $  (3,478)     $ 157,727
Cost of sales                                                       --        56,725         33,430         (3,478)        86,677
                                                              --------      --------      ---------      ---------      ---------
  Gross profit                                                      --        52,397         18,653             --         71,050
Operating expenses                                                 734        33,863         16,249             --         50,846
                                                              --------      --------      ---------      ---------      ---------
  Operating (loss) income                                         (734)       18,534          2,404             --         20,204
Interest income                                                 (3,610)           --           (111)            --         (3,721)
Interest expense                                                10,835           266            347             --         11,448
Other (income) loss                                               (232)          165            229             --            162
                                                              --------      --------      ---------      ---------      ---------
  (Loss) income before provision for income taxes
    and minority interest                                       (7,727)       18,103          1,939             --         12,315
Income tax (benefit) expense                                    (2,395)          316            612             --         (1,467)
Minority interest                                                   --            --             48             --             48
                                                              --------      --------      ---------      ---------      ---------
  (Loss) income before equity in earnings                       (5,332)       17,787          1,279             --         13,734
Equity in earnings of subsidiaries                              19,066            --             --        (19,066)            --
                                                              --------      --------      ---------      ---------      ---------
        Net income                                            $ 13,734      $ 17,787      $   1,279      $ (19,066)     $  13,734
                                                              ========      ========      =========      =========      =========

                             CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NET CASH PROVIDED BY
OPERATING ACTIVITIES                                          $  6,727      $  4,399      $     952      $      --      $  12,078
                                                              --------      --------      ---------      ---------      ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment                        --        (5,928)          (902)            --         (6,830)
  Proceeds from sales of property, plant and equipment              --             7             66             --             73
  Changes in other long-term assets                                 --           972            394             --          1,366
                                                              --------      --------      ---------      ---------      ---------
  Net cash used in investing activities                             --        (4,949)          (442)            --         (5,391)
                                                              --------      --------      ---------      ---------      ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from revolving credit facilities                         --           216          6,620             --          6,836
  Repayments of revolving credit facilities                         --            --         (6,591)            --         (6,591)
  Proceeds from long-term debt                                      --            --            249             --            249
  Repayments of long-term debt                                      --           (54)          (506)            --           (560)
  Distributions to shareholder                                  (7,166)           --             --             --         (7,166)
                                                              --------      --------      ---------      ---------      ---------
  Net cash (used in) provided by financing activities           (7,166)          162           (228)            --         (7,232)
                                                              --------      --------      ---------      ---------      ---------
EFFECT OF EXCHANGE RATE ON CASH                                     --            --            243             --            243
                                                              --------      --------      ---------      ---------      ---------
NET (DECREASE) INCREASE IN CASH                                   (439)         (388)           525             --           (302)
Cash and cash equivalents, beginning of period                  11,929         1,169          6,048             --         19,146
                                                              --------      --------      ---------      ---------      ---------
Cash and cash equivalents, end of period                      $ 11,490      $    781      $   6,573      $      --      $  18,844
                                                              ========      ========      =========      =========      =========
</TABLE>


                                       16
<PAGE>

                                  ALBECCA INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                   (unaudited)

                 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                     Six months ended
                                                                               February 25, 2001 (unaudited)
                                                            -----------------------------------------------------------------------
                                                                                                      Consolidated
                                                                          Subsidiary    Subsidiary     Elimination   Consolidated
                                                            Albecca Inc.  Guarantors  Nonguarantors     Entries         Total
                                                            ------------  ----------  -------------   ------------   ------------
<S>                                                         <C>           <C>         <C>             <C>            <C>

Net sales                                                     $     --      $113,988      $  57,298      $  (4,900)     $ 166,386
Cost of sales                                                       --        59,716         37,078         (4,900)        91,894
                                                              --------      --------      ---------      ---------      ---------
  Gross profit                                                      --        54,272         20,220             --         74,492
Operating expenses                                                 190        30,612         16,728             --         47,530
                                                              --------      --------      ---------      ---------      ---------
  Operating (loss) income                                         (190)       23,660          3,492             --         26,962
Interest income                                                 (3,481)           --             --             --         (3,481)
Interest expense                                                10,831           416            421             --         11,668
Other income                                                        --            --            (69)            --            (69)
                                                              --------      --------      ---------      ---------      ---------
  (Loss) income before provision for income taxes,
    minority interest and extraordinary gain                    (7,540)       23,244          3,140             --         18,844
Income taxes expense                                                --           260          1,007             --          1,267
Minority interest                                                   --            --             54             --             54
                                                              --------      --------      ---------      ---------      ---------
  (Loss) income before extraordinary gain                       (7,540)       22,984          2,079             --         17,523
Extraordinary gain on repurchase of debt, net of tax               498            --             --             --            498
Equity in earnings of subsidiaries                              25,063            --             --        (25,063)            --
                                                              --------      --------      ---------      ---------      ---------
        Net income (loss)                                     $ 18,021      $ 22,984      $   2,079      $ (25,063)     $  18,021
                                                              ========      ========      =========      =========      =========

                             CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NET CASH PROVIDED BY (USED IN)
  OPERATING ACTIVITIES                                        $ 14,088      $ (1,000)     $   3,128      $      --      $  16,216
                                                              --------      --------      ---------      ---------      ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment                        --          (388)        (1,059)            --         (1,447)
  Proceeds from sales of property, plant
    and equipment                                                   --           432            236             --            668
  Changes in other long-term assets                                190          (372)           125             --            (57)
                                                              --------      --------      ---------      ---------      ---------
  Net cash provided by (used in) investing activities              190          (328)          (698)            --           (836)
                                                              --------      --------      ---------      ---------      ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from revolving credit facilities                         --           102         10,907             --         11,009
  Repayments of revolving credit facilities                         --            (2)       (10,939)            --        (10,941)
  Proceeds from long-term debt                                      --           600            103             --            703
  Repayments of long-term debt                                  (7,503)          (23)        (2,797)            --        (10,323)
  Distributions to shareholders                                 (4,800)           --             --             --         (4,800)
                                                              --------      --------      ---------      ---------      ---------
  Net cash (used in) provided by financing activities          (12,303)          677         (2,726)            --        (14,352)
                                                              --------      --------      ---------      ---------      ---------
EFFECT OF EXCHANGE RATE ON CASH                                     --           (11)           217             --            206
                                                              --------      --------      ---------      ---------      ---------
NET INCREASE (DECREASE) IN CASH                                  1,975          (662)           (79)            --          1,234
Cash and cash equivalents, beginning of period                  13,745         1,855          7,721             --         23,321
                                                              --------      --------      ---------      ---------      ---------
Cash and cash equivalents, end of period                      $ 15,720      $  1,193      $   7,642      $      --      $  24,555
                                                              ========      ========      =========      =========      =========
</TABLE>


                                       17
<PAGE>

ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS

CRITICAL ACCOUNTING POLICIES

         The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amount of assets and
liabilities at the date of the financial statements and revenues and expenses
during the period reported. The Company bases its estimates on historical
experience and trends, projections of future results, economic and seasonal
fluctuations and on various other assumptions. Although the Company believes
these estimates are reasonable under the circumstances, there can be no
assurances as application of these accounting policies involves the exercise of
judgment and use of assumptions as to future uncertainties. Actual results may
differ from these estimates under different assumptions or conditions.

         The Company believes the following critical accounting policies require
the most significant judgments and estimates used in the preparation of its
consolidated financial statements.

Allowances for Doubtful Accounts

         The Company maintains allowances for doubtful accounts for estimated
losses resulting from the inability of its customers to make required payments.
This allowance includes the specific identification of certain customers for
which all or a part of amounts owed are considered to be uncollectible, as well
as a general reserve for uncollectible accounts receivable. The general reserve
is an estimate based on the Company's collection experience, bad debt write-off
history, economic factors that may effect customer's ability to pay, and
accounts receivable aging trends. If the Company's estimate of economic
conditions or customers' ability to pay differs from actual results, further
increases in the receivable allowance could be required.

Inventory Valuation

         The Company writes down its inventory for estimated obsolescence or
unmarketable inventory equal to the difference between the cost of the inventory
and the estimated market value based upon assumptions about future demand and
market conditions. These write-downs are estimates that could vary
significantly, either favorably or unfavorably, from actual results if future
economic conditions, customer purchasing levels or competitive conditions differ
from the Company's expectations. If actual market conditions are less favorable
than those projected by management, additional inventory write-downs could be
required.

Impairment of Long-Lived Assets

         The Company evaluates the recoverability of its identifiable intangible
assets, goodwill and other long-lived assets in accordance with SFAS No. 121
which generally requires assessing these assets for recoverability when events
or circumstances indicate a potential impairment by estimating the undiscounted
cash flows to be generated from the use and ultimate disposition of these
assets. Upon implementation of SFAS No. 142 on September 2, 2002, the Company
will use "fair value" methodologies to assess its existing goodwill and will
reassess such fair value on an annual basis. SFAS No. 142 contemplates the use
of methods which will require the Company to make estimates of the operating
cashflows for each reporting unit where goodwill exists. To the extent that
actual results differ from these estimates, such fair value assessments could
result in impairment charges to reduce the carry values of these assets in
future periods.

RECENT DEVELOPMENTS

Change in Ownership and Basis of Accounting

         On February 8, 2002, Albecca Inc. and its subsidiaries ("the Company",
"Albecca") were acquired by Berkshire Hathaway Inc. ("Berkshire"), a Delaware
holding company owning subsidiaries engaged in a number of diverse business
activities. Under the terms of the Purchase and Sale Agreement, all of the
outstanding shares of common stock of Albecca were acquired from its sole
shareholder for cash consideration of $223.4 million. In connection with the
transaction, all Class B common shares were converted to Class A common shares.

         In connection with the acquisition, the Company incurred and expensed
transaction related expenditures of approximately $5.5 million, consisting of
$.5 million for legal fees and other professional fees, $1.9 million for the
accelerated vesting of stock options due to change of control provisions, a
one-time discretionary $1.0 million contribution to the Company's 401(K) plan
for the benefit of all plan participants, and $2.1 million for other
compensation arrangements. Additionally, the Company will accrue and expense
additional compensation amounts over 12 and 24 month periods from the
transaction date totaling $6.9 million. The Company expensed approximately $.1
million of such amounts during the quarter ended February 24, 2002. Based on the
above, a total of $5.6 million in expenses are reflected in operating expenses
within the accompanying statement of operations.


                                       18
<PAGE>
         As permitted under Staff Accounting Bulletin (SAB) No. 54, "Push Down
Basis of Accounting Required in Certain Limited Circumstances", the Company
elected not to apply push down accounting in its consolidated financial
statements as it is a public registrant as a result of public debt that was
outstanding prior to the acquisition. As such, the accompanying consolidated
financial statements are reported on the Company's historical cost basis. If
push down accounting had been elected, the Company would have been required to
establish a new basis for its assets and liabilities based on the amount of
consideration paid.

Change in Tax Status

         Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and tax credit carryforwards. Deferred tax assets and liabilities are
measured using statutory tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled.

         Prior to the acquisition, the Company was treated as an S corporation
for federal income tax purposes and several of its subsidiaries were classified
as either partnerships or single member entities. As such, these entities were
not subject to federal, and certain state, income taxes. Instead, the related
taxable income was included in the tax returns of the shareholders and members
of the respective entities. The Company made distributions to its shareholders
to pay income tax obligations as a result of the Company's status as an S
corporation.

         Albecca's S corporation status automatically terminated upon the
closing of the acquisition and the Company became subject to entity level taxes
at C corporation tax rates for federal income tax purposes. The single member
entities and partnerships will retain their tax entity status and continue to
have their results combined with Albecca's, which consolidated federal income
will be included in Berkshire's consolidated federal income tax filing. The
foreign subsidiaries not included in the Company's federal income tax filings
were not impacted by this conversion.

         In the Purchase and Sale Agreement, Berkshire and the former sole
shareholder have agreed to jointly elect to treat the sale of the Company for
federal and certain state income tax purposes as an asset acquisition under
section 338(h)(10) ("the 338 election") of the Internal Revenue Code of 1986, as
amended. A preliminary allocation of the purchase price to the tax basis of
assets and liabilities based on their respective estimated fair values at
February 8, 2002 has been made for income tax purposes. As a result of the 338
election, the change from an S corporation to a C corporation for federal income
tax purposes and the Company's election not to push down the accounting
associated with the acquisition, the Company recorded a deferred tax asset of
approximately $85.1 million. This net deferred tax asset, which primarily
consists of tax deductible goodwill, results from the excess of the adjusted tax
basis over the historical cost basis of the Company's assets and liabilities for
financial reporting purposes. A corresponding credit was made to additional
paid-in capital in accordance with Emerging Issues Task Force (EITF) 94-10,
"Accounting by a Company for the Income Tax Effects of Transactions Among or
with its Shareholders Under FASB Statement 109". As the allocation of the
purchase price to the acquired assets is subject to change in upcoming periods
as appraisals and other allocation methods are finalized, additional changes to
additional paid-in capital may occur.

OVERVIEW

         Albecca primarily does business under the Larson-Juhl name. Albecca
designs, manufactures and distributes a complete line of high quality, branded
custom framing products, including wood and metal moulding, matboard, foamboard,
glass, equipment and other framing supplies. Albecca's principal brands include
the "Craig Ponzio Custom Frame Collection" and the "Larson-Juhl Classic
Collection." For over 100 years, Albecca has been designing, manufacturing and
distributing custom framing products that enhance the aesthetic qualities of
prints, paintings, drawings and other art and memorabilia.

RESULTS OF OPERATIONS

         The following discussion and analysis should be read in conjunction
with Albecca's unaudited consolidated financial statements and the related notes
thereto. In this "Management's Discussion and Analysis of Financial Condition
and Results of Operations," all references to the Company's international
operations ("International") include all of Albecca's operations outside of the
U.S.

         In July and September 2000, the Emerging Issues Task Force (EITF)
reached a consensus on Issue 00-10 "Accounting for Shipping and Handling Fees
and Costs." EITF Issue 00-10 requires that all amounts billed to a customer in a
sale transaction for shipping and handling be classified as sales, and
recommends that shipping and handling expenses be classified as cost of sales.
As required, the Company implemented EITF 00-10 during the fourth quarter of
fiscal 2001. Prior to implementation, the Company classified most shipping and
handling revenues and costs, on a net basis, in selling and administrative
expense. Accordingly, these costs have been reclassified to sales and cost of
sales for the current period and all prior periods presented as well as for the
purposes of the Management's Discussion and Analysis of Financial Position and
Results of Operations that follows. Costs reclassified to cost


                                       19
<PAGE>

of sales for the purpose of EITF Issue 00-10 include all third party shipping
expenses as well as variable handling costs such as shipping supplies.

         The following table sets forth certain consolidated statements of
operations data as a percentage of net sales for the periods indicated:

<TABLE>
<CAPTION>
                                                                     Three months ended                    Six months ended
                                                                -----------------------------      -------------------------------
                                                                February 25,     February 24,      February 25,       February 24,
                                                                    2001             2002              2001               2002
                                                                ------------     ------------      ------------       ------------
         <S>                                                    <C>              <C>               <C>                <C>
         Net sales                                                100.0 %           100.0 %           100.0 %            100.0 %
         Cost of sales                                             54.1              54.2              55.2               55.0
                                                                  -----             -----             -----              -----
           Gross profit                                            45.9              45.8              44.8               45.0
         Operating expenses                                        29.3              35.9              28.6               32.2
                                                                  -----             -----             -----              -----
           Operating income                                        16.6               9.9              16.2               12.8
         Interest  income                                          (2.3)             (2.3)             (2.1)              (2.4)
         Interest expense                                           7.1               7.4               7.0                7.3
         Other (income) loss                                       (0.5)             (0.3)             (0.1)               0.1
                                                                  -----             -----             -----              -----
           Income before provision for income taxes,
             minority interest and extraordinary gain              12.3               5.1              11.4                7.8
         Income tax expense (benefit)                               0.5              (2.6)              0.8                (.9)
         Minority interest                                          0.1               0.1               0.1                0.1
                                                                  -----             -----             -----              -----
           Income before extraordinary gain                        11.7               7.6              10.5                8.6
         Extraordinary gain on repurchase of debt, net of tax       0.3                --               0.3                 --
                                                                  -----             -----             -----              -----
                 Net income                                        12.0 %             7.6 %            10.8 %              8.6 %
                                                                  =====             =====             =====              =====
</TABLE>

NET SALES

         For the second quarter ended February 24, 2002, net sales were $77.2
million compared to $81.3 million for the second quarter ended February 25,
2001. For the six months ended February 24, 2002, net sales were $157.7 million
compared to $166.4 million for the six months ended February 25, 2001. The
decrease in net sales for the three and six months ended February 24, 2002 was
primarily the result of the continued weakness in the U.S., Canadian and
European markets and the impact of unfavorable changes in foreign exchange
rates. Currency fluctuations decreased net sales by $2.6 million and $1.9
million for the three and six months ended February 24, 2002, respectively,
primarily due to continued strengthening of the U.S. dollar against most of the
currencies in which the Company's subsidiaries trade, including the Euro,
British Pound, Japanese Yen and Australian Dollar. U.S. net sales decreased 1.8%
and 4.2%, respectively, for the three and six months ended February 24, 2002
from the comparable periods in fiscal 2001, primarily the result of continuing
weakness in the U.S. economy. The rate of sales decline continued to decelerate
versus the first quarter of fiscal 2002. International net sales decreased 8.6%
and 7.3% for the three and six months ended February 24, 2002 from the
comparable periods in fiscal 2001, primarily due to sales decreases in Canada,
the Netherlands and Italy, as well as the negative impact of the continued
strengthening of the U.S. dollar. Management believes that Canadian sales
decreases during the first and second quarters of fiscal 2002, compared to the
comparable quarters of fiscal 2001, follow the trend of decreased consumer
purchases in the U.S. during the same period as the two economies are closely
linked. These sales decreases were partially offset by sales increases in the
U.K. and Japan.

COST OF SALES

         Cost of sales was $41.9 million and $86.7 million for the three and six
months ended February 24, 2002 compared to $44.0 million and $91.9 million for
the three and six months ended February 25, 2001. In the U.S., gross profit
decreased to 48.4% and increased to 48.2% for the three and six months ended
February 24, 2002 compared to 49.3% and 48.0% for the comparable periods in
fiscal 2001. The decrease for the quarter was primarily the result of a slight
increase in product cost. For the three and six months ended February 24, 2002,
International gross profit margin decreased slightly to 38.5% and increased
slightly to 38.5% compared to 38.7% and 38.3% for the comparable periods in
fiscal 2001. The slight decrease in gross profit margin in the second quarter of
fiscal 2002 was partially driven by higher cost of product in certain markets
that make large U. S. dollar-based purchases.


                                       20
<PAGE>

OPERATING EXPENSES

         Operating expenses were $27.7 million and $50.8 million for the three
and six months ended February 24, 2002 compared to $23.8 million and $47.5
million for the three and six months ended February 25, 2001. In the U.S.,
operating expenses as a percentage of net sales increased to 35.6% and 31.9% for
the three and six months ended February 24, 2002 compared to 27.2% and 26.9% for
the comparable periods in fiscal 2001. The increase is primarily the result of
$5.6 million of transaction expenses related to the sale of the Company,
including $.5 million for legal fees and other professional fees, $1.9 million
for the accelerated vesting of stock options due to change of control
provisions, a one-time discretionary $1.0 million contribution to the Company's
401(K) plan for the benefit of all plan participants, and $2.2 million of other
compensation arrangements. Absent these transaction related expenses, operating
expenses as a percentage of net sales would have been 28.6% and 28.7% for the
three and six months ended February 24, 2002. For the three and six months ended
February 24, 2002, International operating expenses as a percentage of net sales
increased to 35.2% and 33.0% compared to 33.9% and 32.0% for the comparable
periods in fiscal 2001. The increase in operating expenses as a percentage of
net sales is primarily attributable to the decrease in International sales
without a corresponding reduction in operating expenses.

INTEREST INCOME

         Interest income was $1.8 million and $3.7 million for the three and six
months ended February 24, 2002 compared to $1.9 million and $3.5 million for the
three and six months ended February 25, 2001.

INTEREST EXPENSE

         Interest expense was down slightly at $5.7 million and $11.4 million
for the three and six months ended February 24, 2002 compared to $5.8 million
and $11.7 million for the three and six months ended February 25, 2001.

OTHER (INCOME) LOSS

         During the three months ended February 24, 2002, the Company received a
stock dividend from Prudential Financial as a result of the insurance company's
conversion from a mutual company to a stock company. Albecca received shares of
Prudential Financial stock with a value at the time of issuance of $.2 million
which was reflected in other income. The Company anticipates selling such shares
prior to the end of the fiscal year. As of the end of the second quarter of
fiscal 2002, the value approximates the amount recognized as income. The
remaining other (income) loss primarily represents net realized and unrealized
foreign currency exchange gains and losses on intercompany account balances and
certain other foreign-denominated assets, as well as gains and losses on
derivative instruments as discussed in Note 11.

EXTRAORDINARY GAIN

         During the six months ended February 25, 2001, the Company repurchased
a portion of its senior subordinated notes with a face value of $8.0 million.
The debt repurchase resulted in an extraordinary gain of $.5 million, net of
state income taxes of $.01 million. The Company did not repurchase any of its
senior subordinated notes during the six months ended February 24, 2002.

NET INCOME

         For the reasons set forth above, net income was $6.0 million and $13.7
million for the three and six months ended February 24, 2002 compared to $9.9
million and $18.0 million for the three and six months ended February 25, 2001.

LIQUIDITY AND CAPITAL RESOURCES

         The Company's principal sources of funds have been, and are expected to
continue to be, cash flow from operations and its on-hand cash and cash
equivalents. The Company's principal need for funds historically has been to
finance its working capital (principally inventory and accounts receivable),
capital expenditures, acquisitions and distributions to the Company's
shareholder to pay income taxes as a result of its status as an S corporation.
As described in Note 5 to the Consolidated Financial Statements, due to the
termination of S corporation status for federal income tax purposes, the
Company, at a minimum, will be making distributions to its new parent,
Berkshire, for payment of federal income taxes associated with being included in
Berkshire's consolidated federal income tax filings. As of February 24, 2002,
the Company had cash and cash equivalents of $18.8 million compared to $19.1
million as of August 26, 2001.

         Net cash provided by operating activities was $12.1 million for the six
months ended February 24, 2002 compared to $16.2 million for the six months
ended February 25, 2001. The decrease in net cash provided by operating
activities was primarily due to a decrease in net income for the period (for the
reasons enumerated above) and an increase in accounts receivable, partially
offset by a reduction


                                       21
<PAGE>
in inventory and changes in other components of other working capital. During
the first quarter of fiscal 2002, the Company, to facilitate the relocation of
an officer, loaned certain amounts to the officer under a secured note. The note
is anticipated to be repaid prior to the end of fiscal 2002. Net cash used in
investing activities was $5.4 million for the six months ended February 24, 2002
compared to $.8 million for the six months ended February 25, 2001. This
increase is largely due to the $5.6 million acquisition by the Company of its
corporate offices from its former shareholder, as more fully explained in Note
13 of the notes to the consolidated financial statements. Net cash used in
financing activities decreased to $7.2 million for the six months ended February
24, 2002 compared to $14.4 million for the six months ended February 25, 2001.
The decrease is primarily due to a reduction in the amount of its senior
subordinated debt repurchased by the Company during the first six months of
fiscal 2002 compared to the prior comparable period, partially offset by an
increase in shareholder distributions. The Company repurchased no senior
subordinated debt during the six months ended February 24, 2002 compared to a
repurchase of notes with a face value of $8.0 million for the six months ended
February 25, 2001.

         As of February 24, 2002, the Company had outstanding indebtedness of
approximately $150.8 million, consisting of $134.9 million in principal amount
of the August 1998 senior subordinated debt and $15.9 million of other
indebtedness. At August 26, 2001, the Company had outstanding indebtedness of
approximately $151.2 million, consisting of $134.9 million in principal amount
of the notes and $16.3 million of other indebtedness.

         On March 11, 2002, the Company, pursuant to Sections 3.09 and 4.13 of
the Indenture dated August 11, 1998 between Albecca Inc. and State Street Bank
and Trust, as trustee, issued a Notice of Change of Control and Offer to
Purchase for cash any and all of the Company's senior subordinated notes at an
offer price of 101% of the principal amount. The offer expired on April 5, 2002
and no notes were tendered for repurchase.

         Albecca's ability to make scheduled payments of the principal of, or to
pay the interest or liquidated damages, if any, on, or to refinance its
indebtedness, including the August 1998 senior subordinated debt, or to fund
planned capital or other expenditures, will depend on its future financial or
operating performance, which will be affected by prevailing economic conditions
and financial, business and other factors, many of which are beyond its control.
Based upon the current levels of operations, management believes that cash flow
from operations and available cash and cash equivalents will provide adequate
funds for the Company's foreseeable working capital needs, capital expenditures,
scheduled payments of principal and interest on its indebtedness, including the
senior subordinated debt, and acquisitions. However, there is no certainty that
Albecca's business will generate sufficient cash flow from operations or that
future borrowings will be available in an amount sufficient to enable Albecca to
service its indebtedness, including the senior subordinated debt, or to make
anticipated capital and other expenditures.

RELATED PARTY TRANSACTIONS

Pursuant to the Purchase and Sale Agreement between the Company and Berkshire,
the Company acquired during the second quarter of fiscal 2002, the corporate
headquarters office building in Norcross, Georgia for $5.6 million from an
entity controlled by the selling shareholder of the Company.  The purchase
price was based on a recent third-party appraisal.  In addition, under the
terms of the agreement, the selling shareholder is required to reimburse the
Company for certain state income taxes resulting from the 338 election. In
connection with this obligation, the Company has recorded on a preliminary
basis a receivable due from the former shareholder of approximately $1.1
million.

RECENT ACCOUNTING PRONOUNCEMENTS

         In July and September 2000, the Emerging Issues Task Force (EITF)
reached a consensus on Issue 00-10 "Accounting for Shipping and Handling Fees
and Costs." EITF Issue 00-10 requires that all amounts billed to a customer in a
sale transaction for shipping and handling be classified as sales and recommends
that shipping and handling expenses be classified as cost of sales. As required,
the Company implemented EITF Issue 00-10 during the fourth quarter of fiscal
2001. Prior to implementation, the Company classified most shipping and handling
revenues and costs, on a net basis, in selling and administrative expense.
Accordingly, these costs were reclassified to sales and cost of sales for the
current period and all prior periods presented. Costs reclassified to cost of
sales for the purpose of EITF Issue 00-10 included all third party shipping
expenses as well as variable handling costs such as shipping supplies.

         In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations", and No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141
requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001, eliminating the pooling-of-interests
method. SFAS No. 141 also establishes criteria to be used in identifying
intangible assets to be recognized separately from goodwill in an acquisition.
SFAS No. 142 outlines the methods to be used to account for goodwill and other
intangible assets after their acquisition. Specifically, goodwill and intangible
assets with indefinite useful lives will no longer be amortized, but instead be
tested for impairment annually. Intangible assets with definite useful lives
will be amortized over their estimated useful life, which will no longer be
limited to forty years. The Company intends to implement SFAS No. 142, as
required, on the first day of fiscal 2003. Management is currently evaluating
the effect of this Statement on the Company's financial position and results of
operations. During


                                       22
<PAGE>
the six months ended February 24, 2002, amortization of goodwill and other
intangibles totaled $.9 million. As of February 24, 2002, the Company had $28.1
million of recorded goodwill, which will no longer be subject to amortization
effective September 2, 2002. The Company had $5.8 million of other net
intangible assets as of February 24, 2002, which will continue to be amortized
over periods ranging from 6 to 10 years.

         In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This Statement addresses financial accounting and
reporting for asset retirement costs of long-lived assets resulting from legal
obligations associated with acquisition, construction or development
transactions. As required, the Company plans to adopt SFAS No. 143 on the first
day of fiscal 2003. The adoption of this Statement is not expected to have a
material impact on the Company's financial position or results of operations.

         In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This Statement supersedes SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets to be Disposed Of," and
clarifies accounting and reporting for assets held for sale, scheduled for
abandonment or other disposal, and recognition of impairment loss related to the
carrying value of long-lived assets. This Statement is effective for fiscal
years beginning after December 15, 2001. The adoption of this Statement is not
expected to have a material impact on the Company's financial position or
results of operations.

EUROPEAN UNION CURRENCY CONVERSION

         On January 1, 1999, eleven member nations of the European Economic and
Monetary Union began using a common currency, the Euro. For a three-year
transition period ending June 30, 2002, both the Euro and each of the currencies
for such member countries will remain in circulation. After June 30, 2002, the
Euro will be the sole legal tender for those countries. The adoption of the Euro
will affect many financial systems and business applications as the commerce of
those countries may be transacted both in the Euro and the existing national
currency during the transition period. Historically, a significant portion of
the Company's revenue has been generated in Europe. Of the countries currently
using the Euro, the Company has subsidiary operations in Austria, Finland,
France, Germany, Italy, and the Netherlands. The Company has assessed the
potential impact of the Euro conversion in a number of areas, particularly on
pricing and other marketing strategies. Although the Company does not currently
expect that the conversion, either during or after the transition period, will
have an adverse effect on its operations or financial condition, there can be no
assurance that it will not have some unexpected adverse impact.

FORWARD LOOKING STATEMENTS

         When used in this Form 10-Q and in future filings by the Company with
the Securities and Exchange Commission and in its press releases, and in other
written or oral statements made by the Company's representatives, the words and
phrases "will likely result," "are expected to," "will continue," "is
anticipated," "estimates," "projects," "believes," "plans," "anticipates,"
"intends," "may," or similar expressions, are intended to identify "forward
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward looking statements include, without limitation,
the Company's expectations regarding sales, earnings, or other future financial
performance and liquidity, and general statements about future operations and
operating results. Although the Company believes that its expectations are based
on reasonable assumptions within the bounds of its knowledge of its business and
operations, there can be no assurance that actual results will not differ
materially from its expectations. Factors that could cause actual results to
differ from expectations include, without limitation, (i) the timing and expense
associated with, and effects of, cost-reduction and integration initiatives
being implemented by the Company; (ii) general competitive factors and the
overall financial condition of the custom framing industry, the retail industry
and the general economy; (iii) change in retailer or consumer acceptance of the
Company's products; (iv) consolidations and restructurings in the retail
industry causing a decrease in the number of stores that sell the Company's
products; (v) social, political, and economic risks to the Company's foreign
operations and customers; (vi) changes in the laws, regulations, and policies,
including changes in accounting standards, that affect, or will affect, the
Company in the United States and internationally; (vii) shipment delays,
depletion of inventory, service problems; and (viii) changes in product mix to
ones which are less profitable. The Company assumes no responsibility to update
forward-looking statements made herein or elsewhere.

ITEM 3.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         There have been no material changes to the Company's disclosures
related to certain market risks as reported under Item 7A, "Quantitative and
Qualitative Disclosures About Market Risk," in the Company's Form 10-K for the
fiscal year ended August 26, 2001, as filed with the Securities and Exchange
Commission.


                                       23
<PAGE>

PART II - OTHER INFORMATION

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

         a.       Exhibits:

<TABLE>
<CAPTION>
NO.      DESCRIPTION
<S>      <C>
3.1      Amended and Restated Articles of Incorporation of Albecca (incorporated
         by reference to Exhibit 3.1 of Albecca's Registration Statement on Form
         S-4 (No. 333-67975) as filed with the SEC on November 25, 1998 and
         declared effective by the SEC on February 12, 1999).

3.2      Amended and Restated Bylaws of Albecca (incorporated by reference to
         Exhibit 3.2 of Albecca's Registration Statement on Form S-4 (No.
         333-67975) as filed with the SEC on November 25, 1998 and declared
         effective by the SEC on February 12, 1999).

4.1      Indenture dated August 11, 1998, among Albecca Inc. and State Street
         Bank & Trust, as trustee, relating to the Notes (the
         "Indenture")(incorporated by reference to Exhibit 4.1 of Albecca's
         Registration Statement on Form S-4 (No. 333-67975) as filed with the
         SEC on November 25, 1998 and declared effective by the SEC on February
         12, 1999).

4.2      Form of 10 3/4% Senior Note due 2008 of Albecca Inc. (the "New
         Notes")(included as Exhibit A of the Indenture filed as Exhibit 4.1).
</TABLE>

         b.       Reports on Form 8-K:

                  On December 21, 2001, the Company filed a Current Report on
                  Form 8-K to report an agreement dated December 15, 2001
                  providing for the sale of all Albecca's issued and outstanding
                  capital stock to Berkshire Hathaway Inc. by Albecca's sole
                  shareholder Craig A. Ponzio.

                  On February 8, 2002, the Company filed a Current Report
                  Form 8-K to report the closing of the purchase of the Company
                  by Berkshire Hathaway from Albecca's sole shareholder Craig A.
                  Ponzio, as well as a change in the composition of the
                  Company's board of directors.

                                       24
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                       ALBECCA INC.
                                       (registrant)



Date: April 10, 2002                   By: /s/ Stephen E. McKenzie
     ---------------                      -------------------------------------
                                          Stephen E. McKenzie
                                          President, Chief Executive Officer
                                          (Principal Executive Officer)



Date: April 10, 2002                   By: /s/ R. Bradley Goodson
     ---------------                      -------------------------------------
                                          R. Bradley Goodson,
                                          Senior Vice President Finance,
                                          Chief Financial Officer
                                          (Principal Financial Officer)


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