SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q

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

                     For the Quarter Ended February 5, 2000
                           Commission File No. 1-11722


                              DURANGO APPAREL INC.
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


       Delaware                                           13-3494627
-------------------------------------------------------------------------------
(State of Incorporation)                               (I.R.S. Employer
                                                      Identification No.)

1372 Broadway, New York, New York                            10018
--------------------------------------------------------------------------------
(Address of principal executive offices)                   (Zip Code)


       (212) 302-6400
-------------------------------
Registrant's telephone number,
including area code

                               Chic By H.I.S, Inc.
-------------------------------------------------------------------------------

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.


                                                              Yes   X        No
                                                                  ----

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




                                                                  Shares
    Date                          Class                        Outstanding
-------------          ----------------------------            -----------
May 26, 2000           Common Stock, $.01 Par Value             9,870,793


<PAGE>


                              DURANGO APPAREL INC.

                                      INDEX
                              --------------------


                                                                        Page


Part I.  Financial Information

         Item 1:  Financial Statements (unaudited, except as noted):

                  Consolidated Balance Sheets at
                     February 5, 2000 and November 6, 1999 (audited)     3

                  Consolidated Statements of Operations
                     for the thirteen weeks ended February 5,
                     2000 and February 6, 1999                           4

                  Consolidated Statements of Cash Flows
                     for the thirteen weeks ended February 5,
                     2000 and February 6, 1999                           5

                  Consolidated Statements of Stockholders'
                     Equity for the thirteen weeks ended
                     February 5, 2000 and February 6, 1999               6

                  Notes to Consolidated Financial Statements            7-8

         Item 2:  Management's Discussion and Analysis of
                  Financial Condition and Results of Operations         9-12

         Item 3:  Quantitative and Qualitative Disclosures About
                  Market Risk                                            13

Part II. Other Information

         Item 5:  Special Note Regarding Forward-Looking Statements    14-15

         Item 6:  Exhibits and Reports on Form 8-K                      16

                  Signature Page                                        17


<PAGE>


                      DURANGO APPAREL INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<S>                                                                         <C>                <C>
                                                                           Feb. 5, 2000       Nov. 6, 1999
(In Thousands))                                                             (Unaudited)         (Audited)
----------------------------------------------------------------------------------------------------------
Assets
    Current:
          Cash and cash equivalents                                          $  1,177            $ 2,079
          Accounts receivable - net of reserve for possible losses             26,619             35,115
          Inventories                                                          43,181             58,488
          Deferred income taxes                                                 3,665              3,592
          Prepaid expenses and other current assets                             6,905              3,199
---------------------------------------------------------------------------------------------------------
                Total Current Assets                                           81,547             102,473
---------------------------------------------------------------------------------------------------------
     Property, Plant and Equipment, at cost less accumulated
          depreciation and amortization                                        61,584             62,694
     Deferred income taxes                                                      4,557              4,557
     Other Assets                                                               2,160              2,543
---------------------------------------------------------------------------------------------------------
                                                                             $149,848           $172,267
---------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity
     Current:
           Revolving bank loan                                               $ 21,853           $ 31,982
           Foreign bank debt                                                    9,600              5,337
           Current maturities of long-term debt                                22,015             22,488
           Obligations under capital leases                                       647                664
           Accounts payable                                                    15,328             18,066
           Accrued liabilities:
                Payroll, payroll taxes and commissions                          5,497              4,418
                Income taxes                                                      847                668
                Other                                                           3,600              2,947
---------------------------------------------------------------------------------------------------------
                      Total current liabilities                                79,387             86,570
---------------------------------------------------------------------------------------------------------
      Non-current:
           Long-term debt                                                      20,640             21,310
           Pension liability                                                   13,298             13,298
           Obligations under capital leases                                       948              1,046
---------------------------------------------------------------------------------------------------------
                     Total non-current liabilities                             34,886             35,654
---------------------------------------------------------------------------------------------------------
Minority interest                                                               6,378              6,536
---------------------------------------------------------------------------------------------------------
Stockholders' Equity
     Preferred stock,  $.01 par value - shares authorized 10,000,000; none
          issued                                                                    -                   -
     Common stock, $.01 value - 25,000,000 shares authorized;
          9,870,793 and 9,870,793 issued and outstanding                           98                 98
     Paid-in capital                                                          106,304            106,304
     Accumulated deficit                                                      (60,568)           (47,292)
     Cumulative foreign currency translation adjustment                        (3,339)            (2,305)
     Excess of additional pension liability over intangible pension asset     (13,298)           (13,298)
---------------------------------------------------------------------------------------------------------
                     Stockholders' Equity                                      29,197             43,507
---------------------------------------------------------------------------------------------------------
                                                                             $149,848           $172,267
---------------------------------------------------------------------------------------------------------

                See notes to consolidated financial statements.
                                                                                                       3

</TABLE>


<PAGE>

                      DURANGO APPAREL INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<S>                                                                         <C>                <C>
                                                                       Thirteen Weeks     Thirteen Weeks
                                                                     Ended February 5,  Ended February 6,
(In Thousands, Except Share and Per Share Amounts)                          2000               1999
---------------------------------------------------------------------------------------------------------
Net sales                                                                $ 44,983           $ 51,228
Cost of goods sold                                                         42,717             36,857
---------------------------------------------------------------------------------------------------------
     Gross profit                                                           2,266             14,371
Licensing revenues                                                            185                637
---------------------------------------------------------------------------------------------------------
                                                                            2,451             15,008
Selling, general and administrative expenses                               12,478             13,541
---------------------------------------------------------------------------------------------------------
     Operating income (loss)                                              (10,027)             1,467
Interest and finance costs                                                 (1,860)            (1,517)
---------------------------------------------------------------------------------------------------------
Loss before provision for income taxes and minority interest              (11,887)               (50)
Provision for income taxes                                                    937              1,200
---------------------------------------------------------------------------------------------------------
Loss before minority interest                                             (12,824)            (1,250)
Minority interest                                                             452                637
---------------------------------------------------------------------------------------------------------
Net loss                                                                 $(13,276)         $  (1,887)
---------------------------------------------------------------------------------------------------------

Net loss per common share:
     Basic                                                                 ($1.34)            ($ .19)
     Diluted                                                               ($1.34)            ($ .19)

Weighted average number of common shares and share equivalents
outstanding
     Basic                                                              9,870,793         9,870,793
     Diluted                                                            9,870,793         9,870,793
--------------------------------------------------------------------------------------------------------

                                         See notes to consolidated financial statements.

                                                                                                  4

</TABLE>


<PAGE>


<TABLE>

                      DURANGO APPAREL INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)



<S>                                                                         <C>    <C>

                                                                           Thirteen Weeks Emded
------------------------------------------------------------------------------------------------
                                                                         February 5, February 6,
(In Thousands)                                                               2000        1999
------------------------------------------------------------------------------------------------
Cash Flows from operating activities:
Net loss                                                                  ($13,276)    ($ 1,887)
------------------------------------------------------------------------------------------------
Adjustments  to reconcile  net loss to net cash  provided by (used in)
operating activities:
     Minority interest                                                         452          637
     Gain on sale of fixed assets                                               22            -
     Depreciation and amortization                                           1,148        1,036
     Deferred income taxes                                                     (73)        (958)
Decrease (increase) in:
     Accounts receivable                                                     8,496       (1,770)
     Inventories                                                            15,307      (11,662)
     Prepaid expenses and other current assets                              (3,706)      (2,096)
     Other assets                                                              383          369
Increase (decrease) in:
     Accounts payable                                                       (2,738)       3,081
     Accrued liabilities                                                     1,911          718
------------------------------------------------------------------------------------------------
          Total adjustments                                                 21,202      (10,645)
------------------------------------------------------------------------------------------------
          Net cash  provided by (used in) operating activities               7,926      (12,532)
------------------------------------------------------------------------------------------------
Cash Flows from investing activities:
 Purchase of property, plant and equipment                                    (242)      (1,550)
 Proceeds from sale of fixed assets                                             25          -
------------------------------------------------------------------------------------------------
          Net cash used in investing activities                               (217)      (1,550)
------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase (decrease) in loans under revolving line of credit            (10,129)     10,276
Net increase in foreign bank debt                                            4,263       7,133
Increase in short-term notes payable                                            -        3,336
Repayment of long-term debt                                                 (1,080)     (1,190)
Dividend payment - minority interest                                          (172)        -
Short-swing profits                                                             -           29
Principal payments under capitalized lease obligations                        (115)       (184)
------------------------------------------------------------------------------------------------
          Net cash provided by (used in) financing activities               (7,233)     19,400
------------------------------------------------------------------------------------------------
          Increase in cash and cash equivalents                                476       5,318
------------------------------------------------------------------------------------------------
Effect of exchange rates on cash                                            (1,378)     (1,046)
Cash and Cash Equivalents, beginning of period                               2,079       3,623
Cash and Cash Equivalents, end of period                                    $1,177      $7,895
------------------------------------------------------------------------------------------------
</TABLE>

                See notes to consolidated financial statements.

                                                                             5

<PAGE>


<TABLE>

                      DURANGO APPAREL INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                   (Unaudited)



<S>                                   <C>         <C>          <C>         <C>           <C>           <C>
                                                                                                   Excess of
                                                                                                   Additional
                                                                                                    Pension
                                                                                                   Liability
                                                                                       Foreign        over
                                                                                      Currency     Intangible
                                                Common      Paid-In    Accumulated   Translation    Pension
(In Thousands)                       Total       Stock      Capital      Deficit     Adjustment      Asset
---------------------------------------------------------------------------------------------------------------
Balance, November 7, 1998             $59,471        $98     $106,275     ($34,249)      ($ 671)     ($11,982)
------------------------------------------------------------------------------------------------- -------------
Comprehensive loss:
     Net loss                          (1,887)          -            -      (1,887)          -             -
     Foreign currency translation
         adjustment                      (795)          -            -             -        (795)          -
---------------------------------------------------------------------------------------------------------------
Total comprehensive loss               (2,682)         -            -       (1,887)         (795)          -
---------------------------------------------------------------------------------------------------------------
Short-swing Section 16(b) profits          29          -           29             -            -           -
---------------------------------------------------------------------------------------------------------------
Balance, February 6, 1999             $56,818       $98      $106,304     ($36,136)      ($1,466)     ($11,982)
---------------------------------------------------------------------------------------------------------------


Balance, November 6, 1999             $43,507       $98     $106,304      ($47,292)      ($2,305)     ($13,298)
---------------------------------------------------------------------------------------------------------------
Comprehensive loss:
     Net loss                        (13,276)          -            -      (13,276)            -           -
     Foreign currency translation
       adjustment                     (1,034)          -            -                     (1,034)          -
---------------------------------------------------------------------------------------------------------------
Total comprehensive loss             (14,310)          -            -      (13,276)       (1,034)          -
---------------------------------------------------------------------------------------------------------------
Balance February 5,  2000            $29,197        $98     $106,304      ($60,568)      ($3,339)     ($13,298)
---------------------------------------------------------------------------------------------------------------
</TABLE>

                See notes to consolidated financial statements.

                                                                             6

<PAGE>






                      DURANGO APPAREL INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 ----------------------------------------------


1. Basis of Presentation

       The accompanying  unaudited  consolidated  financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included.

       The  consolidated  financial  statements  have been  prepared  on a going
concern basis,  which contemplates the realization of assets and satisfaction of
liabilities  in the normal course of business.  As discussed in the  independent
certified  public  accountants  report  on the  November  6,  1999  consolidated
financial  statements,  recurring  losses from  operations  and  operating  cash
constraints  raise  doubt  about the  Company's  ability to  continue as a going
concern.  The Company also  continues  to be in default of the  domestic  credit
agreement for which waivers have not been obtained.

       The consolidated financial statements do not include adjustments relating
to the  recoverability  and  classification  of recorded asset  amounts,  or the
amounts and  classification  of liabilities  that might be necessary  should the
Company be unable to  continue  as a going  concern.  The  Company's  ability to
continue as a going concern is dependent upon its ability to generate sufficient
cash flow to meet its  obligations  on a timely basis and  ultimately  to attain
profitable  operations.  As  discussed  in Note 4, the Company  entered  into an
agreement with VF Corporation,  the final phases of which should be completed by
the end of July 2000.  The proceeds,  use of proceeds and the Company's  ongoing
operations are also discussed in Note 4. The Company continues to negotiate with
its creditors to restructure its existing debt.  There can be no assurances that
the Company will be successful in these efforts.


2. Inventories

Inventories consist of the following:

(In Thousands)                February 5, 2000           November 6, 1999
-------------------------------------------------------------------------------

Raw Materials                      $ 5,939                     $ 6,535
Work-in-process                      9,668                      17,922
Finished Goods                      27,574                      34,031
-------------------------------------------------------------------------------

                                   $43,181                    $ 58,488



3. Recent Accounting Standards

        In June 1998, the Financial  Accounting  Standards Board issued SFAS No.
133,  "Accounting for Derivative  Instruments and Hedging  Activities." SFAS No.
133  requires  companies  to recognize  all  derivative  contracts at their fair
values,  as either  assets or  liabilities  on the  balance  sheet.  If  certain

                                                                               7
<PAGE>

                     DURANGO APPAREL INC. AND SUBSIDIARIES


conditions are met, a derivative may be specifically  designated as a hedge, the
objective  of which is to match the  timing of gain or loss  recognition  on the
hedging  derivative with the recognition of (1) the changes in the fair value of
the hedged asset or liability that are  attributable  to the hedged risk, or (2)
the earnings effect of the hedged forecasted  transaction.  For a derivative not
designated as a hedging instrument,  the gain or loss is recognized in income in
the  period of change.  SFAS No. 133 is  effective  for all fiscal  quarters  of
fiscal years beginning after June 15, 2000.

        Historically,  the  Company has not entered  into  derivative  contracts
either to hedge existing risks or for  speculative  purposes.  Accordingly,  the
Company  does not expect  adoption of the new  standard to affect its  financial
statements.

4. Subsequent Events

        On April 4, 2000 the  Company  sold the global  trademark  rights of the
Company's  CHIC  brand name and the  rights of the H.I.S  brand name  outside of
Europe to VF Corporation ("VF") and in connection therewith, the Company changed
its name from Chic By H.I.S,  Inc. to Durango  Apparel  Inc. The net proceeds of
approximately  $9.8 million were used to reduce both the term and revolving bank
loans.  Concurrently,  VF executed an Interim Licensing  Agreement  granting the
Company  the right to produce  and sell  certain  branded  "CORE"  products,  as
defined  through  April 30, 2000 and certain  branded  "NON-CORE"  products,  as
defined through June 30, 2000.

        In addition,  the Company  signed a letter of intent with VF to sell its
majority  share in H.I.S  Sportswear  AG. The sale is  subject  to  satisfactory
completion  of due  diligence by VF,  regulatory  approvals  and the  successful
completion  of a proposed  tender offer that would result in VF owning more than
75% of the shares of H.I.S Sportswear AG.

        The Company  also  entered  into a contract  with VF  providing  for the
Company to manufacture  one million units of product by December 31, 2000 and an
additional  two million units of product upon the  successful  completion of the
sale of the Company's majority share in H.I.S Sportswear AG.

        In May 2000, VF agreed to purchase  approximately three hundred thousand
units of branded "CORE" products valued at $2.4 million.

        The Company  expects to continue as a contractor,  manufacturing  out of
Mexico for VF, Levis, J.C. Penney's and others.

                                                                               8

<PAGE>






                      DURANGO APPAREL INC. AND SUBSIDIARIES

Item 2:   Management's discussion and
          analysis of financial condition
          and results of operations

GENERAL
-------

As a designer,  manufacturer and marketer of moderately priced, basic style male
and female denim jeans,  casual pants and shorts,  the Company believes that its
products  constitute  basic  apparel and, as such,  generally do not depend upon
impulse  buying or high fashion  trends.  The Company  distributes  its products
primarily through mass merchandisers, which constitute the Company's traditional
channel of distribution.

       The following table sets forth selected operating data as a percentage of
net sales for the periods indicated.

-------------------------------------------------------------------------------


                                                         Thirteen Weeks Ended
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

                                                       February 5,   February 6,
                                                          2000          1999
--------------------------------------------------------------------------------
Net sales
     United States                                        56.9          51.1
     Europe                                               43.1          48.9
--------------------------------------------------------------------------------
     Consolidated                                        100.0         100.0
--------------------------------------------------------------------------------
Gross margin
     United States                                       (25.2)         12.1
     Europe                                               44.9          44.7
--------------------------------------------------------------------------------
     Consolidated                                          5.0          28.5
--------------------------------------------------------------------------------
Licensing revenues                                          .4           1.2
--------------------------------------------------------------------------------
Selling, general and administrative expenses              27.7          26.4
--------------------------------------------------------------------------------
Operating income (loss)                                  (22.3)          2.9
--------------------------------------------------------------------------------
Interest and finance costs                                (4.1)         (3.0)
--------------------------------------------------------------------------------
Loss before provision for income taxes and
   minority interest                                     (26.4)         (0.1)
--------------------------------------------------------------------------------
Provision for income taxes                                (2.1)         (2.3)
--------------------------------------------------------------------------------
Minority interest                                         (1.0)         (1.2)
--------------------------------------------------------------------------------
Net loss                                                 (29.5)         (3.6)
--------------------------------------------------------------------------------

                                                                               9
<PAGE>


                      DURANGO APPAREL INC. AND SUBSIDIARIES

The following  discussion  provides  information  and analysis of the results of
operations  of the Company  for the  thirteen  weeks ended  February 5, 2000 and
February 6, 1999 and its liquidity and capital resources.

Thirteen Weeks ended February 5, 2000 (the "2000 First  Quarter")  compared to
Thirteen Weeks ended February 6, 1999 (the "1999 First Quarter")

               Net Sales.  Net sales for the 2000 First Quarter  decreased  $6.3
million,  or 12.2%,  from  $51.2  million  for the 1999  First  Quarter to $45.0
million.  United  States sales  decreased $.6 million from $26.2 million for the
1999 First quarter to $25.6  million.  As of February 5, 2000, the Company had a
total backlog of confirmed domestic purchase orders of $43.1 million, a decrease
of 40.6%  compared to $72.5  million as of  February 6, 1999.  In the 2000 First
Quarter,  European sales  decreased by 4.7 million  deutsche marks, or 11.2%, to
37.4 million  deutsche  marks.  When  converted  using the  prevailing  currency
exchange rate, the European sales translated into a decrease of $5.7 million, or
22.6%,  to $19.4 million for the 2000 First Quarter due to weak German  consumer
demand.  As of February 5, 2000,  the Company had a total  backlog of  confirmed
European  purchase  orders of 52.2 million  deutsche  marks,  a decrease of 3.0%
compared to 53.8 million  deutsche  marks as of February 6, 1999.  The confirmed
European backlog, when converted into U.S. currency at the then prevailing rate,
was $26.2 million,  a decrease of 15.8% compared to $31.1 million on February 6,
1999.

               Gross Profit.  Gross profit for the 2000 First Quarter  decreased
$12.1  million,  or 84.2%,  from $14.4 million in the 1999 First Quarter to $2.3
million. United States 2000 First Quarter gross profit decreased $9.6 million to
a gross loss of $6.5 million compared to 1999 First Quarter gross profit of $3.1
million.  The  decrease  in gross  profit in the  United  States  resulted  from
decreased sales, production at less than full capacity and sales of inventory at
selling prices below cost. In addition,  the Company  provided for future losses
on inventory  sales.  European gross profit  decreased $2.5 million due to lower
sales volume,  but the gross margin  percentage  increased to 44.9%  compared to
1999 First Quarter gross margin of 44.7% due to a change in product mix.

               Licensing Revenues.  Licensing revenues for 2000 First Quarter of
$.2 million  decreased  $.4 million from $.6 million for the 1999 First  Quarter
due to the termination or elimination of licensing contracts.

               SG&A  Expenses.  Selling,  general  and  administrative  expenses
decreased  $1.1 million,  or 7.8%, to $12.5 million for the 2000 First  Quarter.
The decrease was primarily due to Company's  decreased  sales and cost reduction
efforts.

               Operating  Income.  Operating  income for the 2000 First  Quarter
decreased  $11.5  million  from $1.5  million  in the 1999  First  Quarter  to a
operating  loss of $10.0  million,  primarily  due to the  decrease in sales and
gross  profit,  offset by a  reduction  in selling,  general and  administrative
expenses.

               Interest and Finance Costs.  Interest and finance costs increased
$.3  million or 22.6%,  from $1.5  million  for the 1999  First  Quarter to $1.8
million for the 2000 First  Quarter.  The  increase in interest  cost was due to
higher average interest rates for the period.

               Income  Taxes.  The provision for income taxes for the 2000 First
Quarter was $.9 million as compared to $1.2  million for the 1999 First  Quarter
primarily as a result of the decrease in income.

                                                                              10
<PAGE>


                     DURANGE APPAREL INC. AND SUBSIDIARIES

Liquidity and Capital Resources

               The Company's  principal  capital  requirements have been to fund
working  capital needs and capital  expenditures.  The Company has  historically
relied primarily on internally  generated funds,  trade credit,  bank borrowings
and other debt offerings to finance these needs.

                The  consolidated  financial  statements have been prepared on a
going  concern  basis,   which   contemplates  the  realization  of  assets  and
satisfaction  of liabilities  in the normal course of business.  As discussed in
the  independent  certified  public  accountants  report on the November 6, 1999
consolidated   financial  statements,   recurring  losses  from  operations  and
operating cash constraints  raise doubt about the Company's  ability to continue
as a going concern.

               The consolidated  financial statements do not include adjustments
relating to the recoverability and classification of recorded asset amounts,  or
the amounts and classification of liabilities that might be necessary should the
Company be unable to  continue  as a going  concern.  The  Company's  ability to
continue as a going concern is dependent upon its ability to generate sufficient
cash flow to meet its  obligations  on a timely basis and  ultimately  to attain
profitable operations.

               In the 2000 First Quarter,  net cash of $7.9 million was provided
by operations, as compared to $12.5 million used in operations in the 1999 First
Quarter.  The net cash provided by operations  was  primarily  attributable  the
decrease in accounts  receivables and  inventories,  which was offset by the net
loss  for  the  period.  The  decrease  in  accounts  receivable  resulted  from
collections and overall lower sales.  The decrease in inventories  resulted from
the company's cash flow problems hindering adequate new purchases.

               Net cash used in investing activities was $.2 million in the 2000
First Quarter,  as compared to $1.6 million used in investing  activities in the
1999 First Quarter. Cash used in investing activities was primarily attributable
to the purchase of equipment for the Mexico manufacturing Plants.

               Net cash used in  financing  activities  was $7.2  million in the
2000  First  Quarter,  as  compared  to  $19.4  million  provided  by  financing
activities in the 1999 First Quarter.  The cash used in financing  activities in
the 2000 First Quarter was primarily attributable to a decrease in the Company's
borrowings  against its  domestic  credit  facilities,  offset by an increase in
foreign bank debt.

               As of  February 5, 2000,  the Company had a $60 million  domestic
credit  agreement  providing  a $40  million  revolving  line of credit  and $20
million term loan, of which $41.0 million was  outstanding.  The Company was not
in compliance with certain  covenants of its domestic credit agreement for which
waivers have not been  obtained.  Accordingly,  the Company has  classified  the
outstanding balance under the domestic credit agreement as current  liabilities.
The Company is pursuing  negotiations  to amend the existing  credit facility or
obtain alternative financing. There can be no assurance that the Company will be
successful in its efforts to modify or replace its domestic credit facility.  In
addition, the Company had $23.6 million of IRBs outstanding at February 5, 2000.

               The Company also has foreign financing  agreements with two banks
providing term loans aggregating 2.3 million deutsche marks  (approximately $1.2
million, based on the February 5, 2000

                                                                              11
<PAGE>

                     DURANGO APPAREL INC. AND SUBSIDIARIES

foreign  currency  exchange  rate) and lines of credit  aggregating  58  million
deutsche  marks  (approximately  $29.1  million,  based on the  February 5, 2000
foreign  currency  exchange  rate).  Approximately  $8.5 million was outstanding
against the foreign lines of credit as of February 5, 2000.

               On April 4, 2000 the Company sold the global  trademark rights of
the Company's  CHIC brand name and the rights of the H.I.S brand name outside of
Europe to VF Corporation ("VF") and in connection  therewith the Company changed
its name from Chic By H.I.S,  Inc. to Durango  Apparel  Inc. The net proceeds of
approximately  $9.8 million were used to reduce both the term and revolving bank
loans.  Concurrently,  VF executed an Interim Licensing  Agreement  granting the
Company  the right to produce  and sell  certain  branded  "CORE"  products,  as
defined  through  April 30, 2000 and certain  branded  "NON-CORE"  products,  as
defined through June 30, 2000.

               In  addition,  the  Company  signed a letter of intent with VF to
sell  its  majority  share in  H.I.S  Sportswear  AG.  The  sale is  subject  to
satisfactory  completion  of due diligence by VF,  regulatory  approvals and the
successful  completion of a proposed tender offer that would result in VF owning
more than 75% of the shares of H.I.S Sportswear AG.

               The Company also entered  into a contract  with VF providing  for
the Company to manufacture one million units of product by December 31, 2000 and
an additional two million units of product upon the successful completion of the
sale of the Company's majority share in H.I.S Sportswear AG.

               In May 2000,  VF agreed to purchase  approximately  three hundred
thousand units of branded "CORE" products valued at $2.4 million.

               The Company  expects to continue as a  contractor,  manufacturing
out of Mexico for VF, Levis, J.C. Penney's and others.

               In  recent  years,  certain  retail  customers  have  experienced
significant financial difficulties.  The Company attempts to minimize its credit
risk  associated  with  these  customers  by  closely  monitoring  its  accounts
receivable  balances and their ongoing financial  performance and credit status.
Historically,  the Company has not  experienced  material  adverse  effects from
transactions   with  these   customers.   However,   considering   the  customer
concentration  of the Company's  net sales,  any material  financial  difficulty
experienced  by a  significant  customer  could  have an  adverse  effect on the
Company's financial position or results of operations.

               The  Company  is a holding  company,  and is  dependent  upon the
receipt of dividends or other payments from its subsidiaries.

                                                                              12

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                     DURANGO APPAREL INC. AND SUBSIDIARIES

Item 3:        Quantitative and Qualitative Disclosures About Market Risk

               The  Company's  primary  market  risks  include  fluctuations  in
interest  rates,  and exchange rate  variability.  A significant  portion of the
Company's  debt relates to a revolver and term loan.  As of February 5, 2000 the
outstanding balance of the revolver was $22 million. Interest on the outstanding
balance is charged at either the prime rate,  plus .75% or the Eurodollar  rate,
plus 3.25% at the  Company's  option.  As of  February  5, 2000 the  outstanding
balance of the term loan was $19 million. Interest on the outstanding balance is
charged the Eurodollar  rate, plus 3.5%.  Thus, the Company is subject to market
risk in the form of fluctuations  in interest rates.  The Company does not trade
in derivative financial instruments.

               The  Company  also  conducts   operations   in  various   foreign
countries,  including  Mexico,  Canada,  Germany,  Austria,  Switzerland,  Czech
Republic,  Poland,  and  Slovakia.  For the  quarter  ended  February  5,  2000,
approximately 43% of the Company's  revenues were earned outside of the U.S. and
collected in local  currency.  In addition,  operating  expenses are paid in the
corresponding  local currency and is subject to increased risk for exchange rate
fluctuations  between such local currencies and the dollar. The Company does not
conduct any hedging activities.

                                                                              13


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                      DURANGO APPAREL INC. AND SUBSIDIARIES

Part II        OTHER INFORMATION

Item 5:        Special Note Regarding Forward-looking Statements

       The Private  Securities  Litigation  Reform Act of 1995  provides a "safe
harbor" for forward-looking  statements.  Except for the historical  information
contained or incorporated by reference in this filing,  the matters discussed or
incorporated  by  reference   herein  are   forward-looking   statements.   Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors that may cause the actual results, performance, or achievements of
the Company,  or industry  results,  to be materially  different from any future
results,   performance,   or   achievements   expressed   or   implied  by  such
forward-looking  statements. Such factors include, among others, those set forth
below  under  the  heading  "Additional  Cautionary  Statements"  as well as the
following: general economic and business conditions; industry capacity; fashion,
apparel and other industry trends; competition;  overseas expansion; the loss of
major  customers;  changes  in  demand  for the  Company's  products;  cost  and
availability  of raw  materials;  changes in business  strategy  or  development
plans; quality of management; and availability, terms and deployment of capital.

Additional Cautionary Statements

       Recent Apparel Industry  Trends.  Competition in the apparel industry has
been exacerbated by the recent consolidations and closings of major stores. Like
many of its  competitors,  the  Company  sells  to  certain  retailers  who have
recently  experienced  financial  difficulties  and some of whom  are  currently
operating  under the  protection of the federal  bankruptcy  laws.  Although the
Company  monitors the financial  condition of its customers,  the Company cannot
predict what effect, if any, the financial condition of such customers will have
on the Company.  The Company  believes  that  developments  to date within these
companies  have not had a material  adverse  effect on the  Company's  financial
position or results of operations.

       Nature of Industry  Dependence on Jeans.  The apparel  industry is highly
competitive and characterized  generally by ease of entry. Many of the Company's
competitors are substantially  larger and have greater financial,  marketing and
other resources than the Company. The Company's revenues are derived principally
from sales of jeans products.  Although the Company's  products for the domestic
market  have  historically  been less  sensitive  to fashion  trends than higher
fashion  lines,  the apparel  industry is subject to rapidly  changing  consumer
preferences,  which may have an adverse  effect on the results of the  Company's
operations if the Company materially misjudges such preferences.

       Risks of Doing Business Overseas.  In general,  the Company believes that
the  demand  for jeans in  foreign  markets  is more  susceptible  to changes in
fashion preferences than in the domestic market. In addition, it is not possible
to  predict  accurately  the  effect  that the  continued  elimination  of trade
barriers  among  members  of the  European  Union  will  have  on the  Company's
operations in Europe.  The Company is also  expanding its  activities in Eastern
Europe, where economic, political and financial conditions are changing rapidly,
and  commenced  manufacturing  operations  in Mexico in fiscal 1997. In general,
there can be no assurance that the results of the Company's European  operations
or the  operations  in Mexico will not be adversely  affected by factors such as
restrictions  on  transfer of funds,  political  instability,  competition,  the
relative strength of the U.S. dollar, changes in fashion preferences and general
economic conditions.

                                                                              14
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                     DURANGO APPAREL INC. AND SUBSIDIARIES

       Absence of Dividends. The Company has not, in recent years, paid any cash
or other  dividends on its Common Stock,  and there can be no assurance that the
Company will pay cash dividends in the foreseeable future. As a holding company,
the ability of the Company to pay  dividends  is  dependent  upon the receipt of
dividends or other payments from its subsidiaries. The Company's domestic credit
agreements (the "Loan Agreements")  contain certain limitations on the Company's
ability to pay dividends.

       Leverage and Financial  Covenants.  Although debt and equity transactions
have improved the Company's  operating  and financial  flexibility,  the Company
continues  to have  indebtedness  that could  adversely  affect  its  ability to
respond to changing business and economic  conditions.  At February 5, 2000, the
Company  had  an  aggregate  of  approximately  $75.7  million  of  indebtedness
(including capital leases)  outstanding and the Company's  stockholders'  equity
was  approximately  $29.2  million.  The  Company's  credit  agreements  contain
covenants  that impose  certain  operating  and  financial  restrictions  on the
Company. Such restrictions affect, and in many respects limit or prohibit, among
other  things,  the  ability of the  Company to incur  additional  indebtedness,
create liens, sell assets,  engage in mergers or acquisitions and pay dividends.
The Company has amended the terms of its  domestic  credit  agreement to provide
seasonal  increases in its revolving credit facility and amend certain covenants
with which the Company was not in compliance as of February 5, 2000.

Subsequent Events

        On April 4, 2000 the  Company  sold the global  trademark  rights of the
Company's  CHIC  brand name and the  rights of the H.I.S  brand name  outside of
Europe to VF Corporation ("VF") and in connection therewith, the Company changed
its name from Chic By H.I.S., Inc. to Durango Apparel,  Inc. The net proceeds of
approximately  $9.8 million were used to reduce both the term and revolving bank
loans.  Concurrently,  VF executed an Interim Licensing  Agreement  granting the
Company  the right to produce  and sell  certain  branded  "CORE"  products,  as
defined  through  April 30, 2000 and certain  branded  "NON-CORE"  products,  as
defined through June 30, 2000.

        In addition,  the Company  signed a letter of intent with VF to sell its
majority  share in H.I.S  Sportswear  AG. The sale is  subject  to  satisfactory
completion  of due  diligence by VF,  regulatory  approvals  and the  successful
completion  of a proposed  tender offer that would result in VF owning more than
75% of the shares of H.I.S Sportswear AG.

        The Company  also  entered  into a contract  with VF  providing  for the
Company to manufacture  one million units of product by December 31, 2000 and an
additional  two million units of product upon the  successful  completion of the
sale of the Company's majority share in H.I.S Sportswear AG.

        In May 2000, VF agreed to purchase  approximately three hundred thousand
units of branded "CORE" products valued at $2.4 million.

                                                                              15
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                     DURANGO APPAREL INC. AND SUBSIDIARIES


Item 6.    EXHIBITS AND REPORTS ON FORM 8-K

           (a)   Exhibits

                 10.1    Asset Purchase Agreement dated as of April 4, 2000
                         Among Chic By H.I.S, Inc., Chic By H.I.S Licensing
                         Corporation, Henry I. Siegel Company, Inc.
                         and VF Corporation

                 10.2    Contract for outside Purchase of Garment or C.M.T.
                         Services dated April 4, 2000 between Chic By H.I.S,
                         Inc. and VF Jeanswear, Inc.

          (b)    Reports on Form 8-K

                 None

                                                                              16

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                     DURANGO APPAREL INC. AND SUBSIDIARIES


SIGNATURE




       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.








                                                DURANGO APPAREL INC.


Dated:   May 26, 2000                      By: /s/ Daniel Rubin
                                               -----------------
                                               Daniel Rubin
                                               Chief Executive Officer





Dated: May 26, 2000                        By: /s/ Joe Ciccarone
                                               ------------------
                                               Joe Ciccarone
                                               Secretary

                                                                              17