SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q
                Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

<TABLE>

<S>                                                             <C>
For the Quarterly Period ended September 29, 2001               Commission File No. 1-9196

</TABLE>

                          THE LESLIE FAY COMPANY, INC.

              Delaware                                                13-3197085
 (State of other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)


          1412 Broadway
       New York, New York                                           10018
(Address of principal executive offices)                           (Zip Code)


       Registrant's telephone number, including area code: (212) 221-4000


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

Yes   X    No
    ----     ----


Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

Yes   X    No
    ----     ----


There were 5,939,452 shares of Common Stock outstanding at September 29, 2001.
================================================================================

<PAGE>

                  THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES


                                      INDEX

                                                                        Page No.
                                                                        --------

PART I  - FINANCIAL INFORMATION

Item 1. Financial Statements:

               Consolidated Balance Sheets as of September 29, 2001
                (Unaudited) and December 30, 2000, respectively................3

               Consolidated Statements of Operations (Unaudited) for the
                Thirty-nine Weeks Ended September 29, 2001 and
                September 30, 2000, respectively...............................4

               Consolidated Statements of Operations (Unaudited) for the
                Thirteen Weeks Ended September 29, 2001 and
                September 30, 2000, respectively...............................5

               Consolidated Statements of Cash Flows (Unaudited) for the
                Thirty-nine Weeks Ended September 29, 2001 and
                September 30, 2000, respectively...............................6

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

Item 2.     Management's Discussion and Analysis of Financial
               Condition and Results of Operations............................11

Item 3.     Quantitative and Qualitative Disclosures
               About Market Risk..............................................17

PART II  -  OTHER INFORMATION

Item 1.     Legal Proceedings.................................................17
Item 2.     Changes in Securities.............................................17
Item 3.     Defaults Upon Senior Securities...................................17
Item 4.     Submission of Matters to a Vote of Security Holders...............17
Item 5.     Other Information.................................................17
Item 6.     Exhibits and Reports on Form 8-K..................................17

SIGNATURES....................................................................18


                                      -2-
<PAGE>

                  THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                   (In thousands, except par value share data)

<TABLE>
<CAPTION>
                                                                                        UNAUDITED                  AUDITED
                                                                                       September 29,             December 30,
                                             ASSETS                                        2001                     2000
                                                                                 ---------------------      ---------------------
<S>                                                                              <C>                        <C>
Current Assets:
     Cash and cash equivalents.................................................. $       6,039              $       5,492
     Restricted cash and cash equivalents.......................................         3,375                      3,450
     Accounts receivable- net of allowances for possible losses
       of $7,680 and $7,585, respectively.......................................        25,784                     27,877
     Inventories................................................................        26,775                     35,818
     Prepaid expenses and other current assets..................................         3,350                      1,775
                                                                                 -------------              -------------
       Total Current Assets.....................................................        65,323                     74,412
     Property, plant and equipment, at cost, net of accumulated
       depreciation of $4,447 and $3,126, respectively..........................         2,637                      3,625
     Excess of purchase price over net assets acquired-net of
       accumulated amortization of $1,379 and $980, respectively................         5,184                      5,680
     Deferred charges and other assets..........................................         5,278                      3,985
                                                                                 -------------              -------------
     Total Assets............................................................... $      78,422              $      87,702
                                                                                 =============              =============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
     Short term debt............................................................ $       1,000              $       1,000
     Accounts payable...........................................................        10,821                     15,648
     Accrued expenses and other current liabilities.............................         6,490                     10,024
     Accrued expenses and other current confirmation liabilities................         3,375                      3,450
     Current portion of capitalized leases......................................            98                         91
                                                                                 -------------              -------------
        Total Current Liabilities...............................................        21,784                     30,213

     Long term note payable.....................................................         2,250                      3,000
     Long term debt-capitalized leases..........................................            52                        126
     Deferred liabilities.......................................................         1,328                      1,135
                                                                                 -------------              -------------
     Total Liabilities..........................................................        25,414                     34,474
                                                                                 -------------              -------------
Commitments and Contingencies

Stockholders' Equity:
Preferred stock, $.01 par value; 500 shares authorized, no
     shares issued and outstanding..............................................            --                         --
Common stock, $.01 par value; 20,000 shares authorized,
     7,757 and 7,498 shares issued, respectively................................            78                         75
Capital in excess of par value..................................................        39,312                     38,451
Notes receivable from stock sale................................................        (1,853)                    (1,853)
Retained earnings...............................................................        27,094                     28,178
                                                                                 -------------              -------------
     Subtotal...................................................................        64,631                     64,851
 Treasury stock, at cost: 1,817 shares..........................................       (11,623)                   (11,623)
                                                                                 -------------              -------------
     Total Stockholders' Equity.................................................        53,008                     53,228
                                                                                 -------------              -------------
 Total Liabilities and Stockholders' Equity..................................... $      78,422              $      87,702
                                                                                 =============              =============

</TABLE>

   The accompanying Notes to Consolidated Financial Statements are an integral
                   part of these consolidated balance sheets.


                                      -3-
<PAGE>

                  THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except share and per share data)
                                    UNAUDITED

<TABLE>
<CAPTION>

                                                                                  Thirty-nine                     Thirty-nine
                                                                                  Weeks Ended                     Weeks Ended
                                                                                 September 29,                   September 30,
                                                                                     2001                            2000
<S>                                                                              <C>                            <C>
     Net Sales.................................................................. $    144,172                  $     173,281
     Cost of Sales..............................................................      114,588                        133,718
                                                                                  -----------                    -----------
     Gross profit...............................................................       29,584                         39,563
                                                                                  -----------                    -----------
     Operating Expenses:
        Selling, warehouse, general and
          administrative expenses...............................................       28,244                         32,243
     Non-cash stock based compensation..........................................           64                            643
     Depreciation and amortization expense......................................        1,612                          1,566
                                                                                  -----------                    -----------
     Total operating expenses...................................................       29,920                         34,452
     Other income...............................................................         (518)                        (1,045)
     Amortization of excess revalued net assets acquired
        over equity.............................................................           --                         (1,898)
                                                                                  -----------                    -----------
     Total operating expenses, net..............................................       29,402                         31,509
                                                                                  -----------                    -----------
     Operating income...........................................................          182                          8,054
     Interest and Financing Costs...............................................        1,151                          2,410
     Other Expenses.............................................................          900                             --
                                                                                  -----------                    -----------
     (Loss) Income before taxes.................................................       (1,869)                         5,644
     (Benefit) Provision for Taxes..............................................         (785)                         1,523
                                                                                  -----------                    -----------
     Net (Loss) Income ......................................................... $     (1,084)                  $      4,121
                                                                                 ============                   ============
     Net (Loss) Income per Share - Basic........................................ $      (0.19)                  $       0.81
                                                                                 ============                   ============
                       - Diluted................................................ $      (0.19)                  $       0.78
                                                                                 ============                   ============
     Weighted Average Shares Outstanding - Basic................................    5,848,740                      5,070,984
                                                                                 ============                   ============
                       - Diluted................................................    5,848,740                      5,277,463
                                                                                 ============                   ============
</TABLE>

   The accompanying Notes to Consolidated Financial Statements are an integral
                   part of these consolidated balance sheets.


                                       -4-
<PAGE>

                  THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except share and per share data)
                                    UNAUDITED

<TABLE>
<CAPTION>

                                                                                      Thirteen                         Thirteen
                                                                                     Weeks Ended                      Weeks Ended
                                                                                      September                      September 30,
                                                                                          29
                                                                                         2001                             2000
                                                                                 ----------------               --------------
<S>                                                                              <C>                            <C>
   Net Sales.................................................................... $         48,503               $       61,047
    Cost of Sales...............................................................           40,597                       46,705
                                                                                 ----------------               --------------
   Gross profit.................................................................            7,906                       14,342
                                                                                 ----------------               --------------
   Operating Expenses:
         Selling, warehouse, general and
           administrative expenses..............................................            9,064                       11,750
   Non-cash stock based compensation............................................               21                          176

   Depreciation and amortization expense........................................              492                          592
                                                                                 ----------------               --------------
   Total operating expenses.....................................................            9,577                       12,518
   Other income.................................................................            (190)                         (353)
                                                                                 ----------------               --------------
   Total operating expenses, net................................................            9,387                       12,165
                                                                                 ----------------               --------------
   Operating (loss) income......................................................           (1,481)                       2,177
   Interest and Financing Costs.................................................              297                          867
   Other Expenses...............................................................               75                           --
                                                                                 ----------------               --------------
   (Loss) Income before taxes...................................................          (1,853)                        1,310
   (Benefit) Provision for Taxes................................................            (779)                          550
                                                                                 ----------------               --------------
   Net (Loss) Income ........................................................... $        (1,074)               $          760
                                                                                 ===============                ==============
   Net (Loss) Income per Share - Basic.......................................... $         (0.18)               $         0.15
                                                                                 ===============                ==============
                       - Diluted................................................ $         (0.18)               $         0.15

   Weighted Average Shares Outstanding - Basic..................................       5,939,452                     5,073,929
                                                                                 ===============                ==============
                       - Diluted................................................       5,939,452                     5,145,417
                                                                                 ===============                ==============

</TABLE>

   The accompanying Notes to Consolidated Financial Statements are an integral
                   part of these consolidated balance sheets.


                                      -5-
<PAGE>

                  THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                                                 Thirty-nine                     Thirty-nine
                                                                                 Weeks Ended                     Weeks Ended
                                                                                September 29,                   September 30,
                                                                                     2001                            2000
<S>                                                                              <C>                            <C>
Cash Flows from Operating Activities:
   Net (loss) income ............................................................$         (1,084)              $       4,121
   Adjustments to reconcile net income to net cash provided by
    operating activities:
      Depreciation and amortization..............................................           1,753                       1,691
      Amortization of excess net assets acquired over equity.....................               -                      (1,898)
      Provision for possible losses on accounts receivable.......................             (61)                         (3)
      Provision for stock based compensation and stock option grants.............              64                         643
      Loss on sale of fixed assets...............................................              78                           -
      Changes in assets and liabilities, net of impact of acquisitions:
         Accounts receivable.....................................................          (8,846)                    (27,222)
         Inventories.............................................................           9,043                      10,899
         Prepaid expenses and other current assets...............................          (1,575)                        899
         Deferred charges and other assets.......................................          (1,293)                     (2,261)
         Accounts payable, accrued expenses and other current
           liabilities...........................................................          (7,894)                      2,721
         Income taxes payable....................................................               -                         662
         Deferred liabilities....................................................             193                         215
      Changes due to reorganization activities:
         Use of pre-consummation deferred taxes..................................               -                         598
           Total adjustments.....................................................          (8,538)                    (13,056)
                                                                                 ----------------               -------------
           Net cash (used in) operating activities...............................          (9,622)                     (8,935)
                                                                                 ----------------               -------------
Cash Flows from Investing Activities:
   Capital expenditures..........................................................            (444)                     (1,789)
   Net cash paid for acquisition.................................................               -                      (5,001)
   Net cash received for trademark...............................................          11,000                           -
   Merger costs..................................................................            (373)                          -
                                                                                 ----------------               -------------
           Net cash provided by (used in) investing activities...................          10,183                      (6,790)
                                                                                 ----------------               -------------
Cash Flows from Financing Activities:
   Proceeds from borrowings......................................................          32,962                      87,934
   Repayment of borrowings.......................................................         (32,962)                    (72,742)
   Repayment of notes payable....................................................            (750)                       (750)
   Repayment of capital leases ..................................................             (67)                        (58)
   Proceeds from new stock issuance and options exercised .......................             803                          62
                                                                                 ----------------               -------------
        Net cash (used in) provided by financing activities......................             (14)                     14,446
                                                                                 ----------------               -------------
   Net increase (decrease) in cash and cash equivalents..........................             547                      (1,279)

   Cash and cash equivalents, at beginning of period.............................           5,492                        2,034
                                                                                 ----------------               -------------

   Cash and cash equivalents, at end of period...................................$          6,039               $          755
                                                                                 ================               ==============

</TABLE>

   The accompanying Notes to Consolidated Financial Statements are an integral
                   part of these consolidated balance sheets.


                                      -6-
<PAGE>

                                   (UNAUDITED)

1.   Basis of Presentation:

         The  consolidated   financial  statements  included  herein  have  been
prepared by The Leslie Fay Company,  Inc. and subsidiaries ("Leslie Fay" and the
"Company"), pursuant to the rules and regulations of the Securities and Exchange
Commission (the "SEC").  Certain information and footnote  disclosures  normally
included  in  financial   statements  prepared  in  accordance  with  accounting
principles  generally  accepted  in the United  States  have been  condensed  or
omitted  from this  report,  as is  permitted  by such  rules  and  regulations;
however,  the Company  believes  that the  disclosures  are adequate to make the
information  presented not misleading.  These consolidated  financial statements
should be read in conjunction with the consolidated financial statements and the
notes thereto  included in the Company's Annual Report on Form 10-K, as amended,
for the Fiscal  Year ended  December  30, 2000 (the "2000 Form  10-K").  Interim
taxes were provided based on the Company's  estimated effective tax rate for the
year.

         In the opinion of management,  the information  furnished  reflects all
adjustments, all of which are of a normal recurring nature, necessary for a fair
presentation  of the  results  for the  reported  interim  periods.  Results  of
operations for interim periods are not necessarily indicative of results for the
full year, and the seasonality of the business may make projections of full year
results based on interim periods unreasonable.

2.   Proposal to Acquire Outstanding Shares:

         On March 27, 2001, as amended on April 27, 2001,  the Company  signed a
merger  agreement  under  the terms of which its  majority  stockholders,  Three
Cities Fund II, L.P. and Three Cities  Offshore II, C.V.  (collectively,  "Three
Cities Funds") which  collectively  own  approximately  50% of the shares of the
common  stock  of the  Company,  on a fully  diluted  basis,  will  acquire  the
remaining  stock of the  Company  not  owned by Three  Cities  Funds  and  their
affiliates  and certain  members of management of Leslie Fay for a cash price of
$5.00 per share.  On Friday,  January 12,  2001,  the trading day prior to Three
Cities' Funds original proposal, the closing price of the Company's common stock
was  $2.81.  The  transaction  is  subject  to  stockholder  approval  and other
customary  conditions.  If  consummated,  Leslie Fay  shares  would no longer be
publicly traded.

         On  May  1,  2001,  the  Company's  second  largest  stockholder,  John
Constable d/b/a Constable Asset Management, Ltd. and certain entities affiliated
with him, signed a Contribution  and  Subscription  Agreement  whereby they will
contribute  their  442,408  shares to affiliates of Three Cities Funds for which
they will  receive  the  equivalent  proportion  of  shares in the post-  merger
company. A proxy statement with respect to the transaction has been furnished to
stockholders,  and a meeting of stockholders is scheduled to be held on November
20, 2001. As a result of the  transaction,  and assuming no  dissenting  shares,
Three Cities Funds will acquire  approximately  1,589,522  additional  shares of
Leslie Fay common stock and will own in the aggregate approximately 81.4% of the
total shares of Leslie Fay.


                                      -7-
<PAGE>

3.   Inventories:

            Inventories consist of the following:

                                        (Unaudited)
                                        September 29,       December 30,
                                            2001                2000
                                      ------------------------------------
  (In thousands)
  Raw materials                          $ 10,305           $ 15,032
  Work in process                           2,249              1,561
  Finished goods                           14,221             19,225
                                         --------           --------
     Total inventories                   $ 26,775           $ 35,818
                                         ========           ========

4.   Debt:

         On June 2, 1997, in  preparation  for the  consummation  of the Amended
Joint Plan of  Reorganization  ("the Plan"),  a  wholly-owned  subsidiary of the
Company entered into a two-year financing agreement (the "CIT Credit Agreement")
with The CIT  Group/Commercial  Services,  Inc.  ("CIT"),  which was  amended on
August 25, 1999 to extend the agreement  through June 2, 2004, to provide direct
borrowings  and to issue  letters  of credit  on the  Company's  behalf.  Direct
borrowings  bear interest at prime minus 0.25% (5.75% at September 29, 2001) and
the CIT Credit Agreement requires a fee, payable monthly, on average outstanding
letters  of credit at a rate of 2%  annually.  There  were no direct  borrowings
outstanding  under the CIT Credit  Agreement and  approximately  $5,891,000  was
committed  under  unexpired  letters  of credit as of  September  29,  2001.  On
September 29, 2001, the Company had a net borrowing  availability  under the CIT
Credit  Agreement  of  $36,558,000  in excess of direct  borrowings  and amounts
committed  under  the  unexpired  letters  of  credit.   The  peak  credit  line
utilization  during the  thirty-nine  weeks ended September 29, 2001 occurred on
March 20, 2001 and was  $19,642,000,  which  consisted of direct  borrowings  of
$9,294,000 and unexpired letters of credit of $10,348,000.

         Additionally,  the  Company  borrowed,  through  a five  year term note
payable, $5,000,000 at an interest rate of prime plus 200 basis points (8.00% at
September 29, 2001) which was used to repurchase the Company's  common stock. As
of September 29, 2001 the principal balance  outstanding on the note payable was
$3,250,000.

         On April 9, 2001, the Company's  Credit Agreement was amended to reduce
the advance rate on eligible  accounts  receivable  to 75% from 85%. This was to
reflect  the  higher  dilution  rate  on  accounts  receivable  the  Company  is
experiencing.  At the same time, the Company's  factoring agreement with CIT was
modified  to reduce  the  factoring  fee from  0.40% of sales to 0.15% of sales.
Under  the  revised  factoring  agreement,  the  Company  will  perform  its own
collection  and cash  processing  functions and bad debts


                                      -8-
<PAGE>

will be shared equally with CIT on aggregate  losses in excess of $50,000 in any
fiscal year.

         As collateral for borrowing under the CIT Credit Agreement, the Company
has granted to CIT a security  interest in substantially  all of its assets.  In
addition,  the CIT Credit  Agreement  contains  certain  restrictive  covenants,
including  limitations on the incurrence of additional  liens and  indebtedness.
The Company is currently in compliance  with or has obtained  written waivers as
of  September  29,  2001  for  all  requirements  contained  in the  CIT  Credit
Agreement. Current business plans indicate potential non-compliance with certain
covenants as of December 29, 2001. The Company  anticipates  obtaining,  written
waivers or amendments for those covenants as of December 29, 2001.

5.   Income Taxes:

         The (benefit)  provision  for federal,  state and local income taxes is
($785,000) and $1,523,000 for the thirty-nine weeks ended September 29, 2001 and
September 30, 2000,  respectively  and  ($779,000) and $550,000 for the thirteen
weeks ended  September 29, 2001 and September 30, 2000,  respectively.  In 2000,
federal and state income taxes payable are partially  offset by the  utilization
of  pre-consummation  net  operating  loss  carryforwards.  The  utilization  of
pre-consummation  net operating loss  carryforwards to offset taxable income for
federal income tax purposes is limited to approximately $1,500,000 annually.

6.   Accounting  for  Stock  Option   Compensation:

         Under the  provisions  of Statement of Financial  Accounting  Standards
("SFAS")  No.123,  "Accounting  for Stock Based  Compensation,"  the Company has
recorded $64,000 and $643,000 of non-cash stock based  compensation  expense for
the  thirty-nine  weeks  ended  September  29,  2001  and  September  30,  2000,
respectively and $21,000 and $176,000 for the thirteen weeks ended September 29,
2001 and  September  30,  2000,  respectively.  These  amounts  were  offset  as
adjustments  to  Capital  in  excess of par  value in the  Consolidated  Balance
Sheets.

7.   Net Income Per Share:

         For the  thirty-nine  weeks ended  September 29, 2001 and September 30,
2000, the basic weighted  average  common shares  outstanding  was 5,848,740 and
5,070,984  respectively,  and the weighted average shares  outstanding  assuming
dilution was  5,848,740 and 5,277,463  respectively.  The  difference of -0- and
206,479  respectively,  represents  the  incremental  dilution  of  shares  upon
exercise of dilutive stock options.  The net loss per share for the  thirty-nine
weeks ended  September 29, 2001 excludes the dilutive  effect of stock  options,
which would be anti-dilutive as a result of the net loss.

8.   Accounting for Derivatives:

         In June 1998, SFAS No. 133, "Accounting for Derivative  Instruments and
Hedging Activities" was issued,  establishing accounting and reporting standards
requiring  that  every  derivative   instrument  (including  certain  derivative
instruments  embedded in other  contracts)  be recorded in the balance  sheet as
either an asset or


                                      -9-
<PAGE>

liability measured at its fair value. The Statement requires that changes in the
derivative's  fair value be  recognized  currently in earnings  unless  specific
hedge  accounting  criteria are met.  Special  accounting for qualifying  hedges
allows a derivative's  gains and losses to offset related  results on the hedged
item  in the  income  statement,  and  requires  that a  company  must  formally
document,  designate and assess the  effectiveness of transactions  that receive
hedge accounting.  In June 2000, the Financial Accounting Standards Board (FASB)
issued SFAS No. 138, "Accounting for Certain Derivative  Instruments and Certain
Hedging Activities",  an amendment of SFAS No. 133. The Company adopted SFAS No.
133 and the  corresponding  amendments  under  SFAS  No.  138 for the  Company's
financial  statements  beginning in 2001.  There was no impact of adopting these
standards  to  the  Company's   reported  financial  position  or  results  from
operations, as the Company does not currently utilize derivative instruments.

9.   New Accounting Pronouncements:

         In April  2001,  the  FASB's  Emerging  Issues  Task  Force  reached  a
consensus on Issue No.  00-25,  "Vendor  Income  Statement  Characterization  of
Consideration Paid to a Reseller of the Vendor's Products". This issue addresses
the   recognition,   measurement   and  income   statement   classification   of
consideration  from a vendor to a customer  in  connection  with the  customer's
purchase  or  promotion  of the  vendor's  products.  While  the  impact of this
consensus on the  Company's  consolidated  financial  statements  is still being
evaluated, it is expected to only impact revenue and expense classifications and
not change reported net income.  In accordance  with the consensus,  the Company
will adopt the required issue effective December 30, 2001.

         In June  2001,  the FASB  issued  Statements  of  Financial  Accounting
Standards  No.  141,  "Business  Combinations"  ("SFAS No.  141"),  and No. 142,
"Goodwill and Other  Intangible  Assets" ("SFAS No. 142").  SFAS No. 141 changes
the   accounting  for  business   combinations,   requiring  that  all  business
combinations  be  accounted  for using the purchase  method and that  intangible
assets  be  recognized  as  assets  apart  from  goodwill  if  they  arise  from
contractual  or other legal rights,  or if they are separate or capable of being
separated from the acquired entity and sold,  transferred,  licensed,  rented or
exchanged.  SFAS No. 141 is effective  for all business  combinations  initiated
after June 30, 2001. SFAS No. 142 addresses  accounting and reporting  standards
for acquired goodwill and other intangible assets, and generally,  requires that
goodwill and  indefinite  life  intangible  assets no longer be amortized but be
tested for impairment  annually.  Finite life intangible assets will continue to
be amortized over their useful lives. SFAS No. 142 is effective for fiscal years
beginning after December 15, 2001. Goodwill and intangible assets acquired after
June 30, 2001 will be subject to the provisions of SFAS No. 142 immediately.

         The Company is currently  assessing the impact of the adoption of these
statements.  Amortization  of  goodwill  and  other  intangibles  was  $623,000,
$399,000 and $131,000 for the year ended  December 30, 2000 and the  thirty-nine
and thirteen weeks ended September 29, 2001,  respectively  excluding $1,898,000
of amortization of excess revalued net assets over equity  recognized during the
year ended December 30, 2000.


                                      -10-
<PAGE>

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

(A)  Results of Operations

Thirty-nine Weeks Ended September 29, 2001 as Compared to
Thirty-nine Weeks Ended September 30, 2000

         The Company  recorded  net sales of  $144,172,000  for the  thirty-nine
weeks ended September 29, 2001,  compared with  $173,281,000 for the thirty-nine
weeks  ended  September  30,  2000,  a net  decrease  of  $29,109,000  or 16.8%.
Excluding net sales during the  thirty-nine  weeks ended  September 29, 2001 and
September 30, 2000  generated by the  discontinued  Reggio brand of $107,000 and
$8,365,000,  respectively,  $18,731,000 and $18,719,000,  respectively generated
from the Liz Claiborne  Dress brand  license,  acquired  February 15, 2000,  and
$21,000 and $-0-  respectively,  generated  by the newly  created Trio -New York
brand,  the Dress product lines  comparable net sales  decreased  $17,978,000 or
16.9%.  The  decrease  in net  sales for the  comparable  Dress  product  lines'
resulted  from  increased  price   concessions  made  to  the  Company's  retail
customers,  reduced  production against the comparable year ago period, a change
in the  retail  calendar  followed  by many of the  Company's  department  store
customers  that added a  fifty-third  week to their 2000 retail  fiscal year and
increased  cancellation and  renegotiations of orders as a result of poor retail
performance. The additional week in the fiscal 2000 retail calendar extended the
normal start dates for orders from the  twenty-fifth  day of each month into the
following month,  thereby shifting sales forward. The Company expects this trend
to continue throughout the fiscal year ending December 29, 2001.  Comparable net
sales for the  Sportswear  product  lines,  excluding  $4,157,000 and $1,591,000
generated  by the newly  acquired  Cynthia  Steffe  sportswear  brand during the
thirty-nine weeks ended September 29, 2001 and September 30, 2000,  respectively
and excluding $32,000 and $3,410,000 of net sales of the discontinued Leslie Fay
Sportswear  brand  during the  thirty-nine  weeks ended  September  29, 2001 and
September 30, 2000, respectively, decreased $2,094,000 or 6.0% over the year ago
period. This decrease occurred as a result of lower shipments as a result of the
change in the  retail  sales  calendar  discussed  above,  offset  partially  by
increased net sales within the Haberdashery by Leslie Fay brand generated by the
restructuring of the product offering during fiscal 2000.

         Gross  profit  was  $29,584,000  and 20.5% of net sales  compared  with
$39,563,000  and 22.9% for the  thirty-nine  weeks ended  September 29, 2001 and
September 30, 2000, respectively.  Excluding gross profit during the thirty-nine
weeks ended  September 29, 2001 and September 30, 2000 of ($1,000) and $993,000,
respectively,  generated by the  discontinued  Reggio brand and  $1,787,000  and
$3,263,000,  respectively,  generated from the Liz Claiborne Dress brand license
and ($155,000) and $-0-  respectively,  generated by the newly created Trio -New
York  brand,  the  Dress  product  lines'   comparable  gross  profit  decreased
$6,781,000 or 27.1% while the percent to net sales decreased to 20.6% from 23.5%
for the comparable period ended September 30, 2000. The gross profit produced by
the Sportswear lines,  excluding  $610,000 and $262,000 generated by the Cynthia
Steffe  sportswear  brand during the thirty-nine  weeks ended September 29, 2001


                                      -11-
<PAGE>

and September 30, 2000,  respectively and ($6,000) and $20,000  generated by the
discontinued  Leslie Fay  Sportswear  brand during the  thirty-nine  weeks ended
September 29, 2001 and September 30, 2000, respectively decreased by $895,000 or
8.9%  while the  percent  to net sales  decreased  to 28.1%  from  29.2% for the
comparable  period ended September 30, 2000. The lower gross profit  contributed
by both the Dress and Sportswear  lines resulted from the price  concessions and
lower sales  volume  discussed  previously  and  additional  inventory  reserves
recorded in anticipation of markdowns  needed to move existing  inventories as a
result of decreased demand and order softness being experienced.

         Selling,   warehouse,   general  and   administrative   expenses   were
$28,244,000  and 19.6% of net sales and  $32,243,000  and 18.6% of net sales for
the  thirty-nine  weeks  ended  September  29,  2001  and  September  30,  2000,
respectively.  The expense decrease resulted from expense reductions made by the
Company during the first half of fiscal 2001 and the closure of the Reggio brand
during the fourth  quarter of fiscal 2000,  offset by the  additional  operating
costs of the Cynthia  Steffe  brand and Liz  Claiborne  Dress  license  acquired
during the first half of 2000 and additional  cost  associated with the start-up
of operations for the newly created Trio-New York brand.

         Non-cash  stock  based  compensation  for  stock  options  and  outside
director  compensation  for the  thirty-nine  weeks ended September 29, 2001 and
September  30, 2000 was $64,000 and  $643,000,  respectively.  The  compensation
expensed under SFAS No. 123, "Accounting for Stock Based Compensation" decreased
during the  thirty-nine  weeks ended  September 29, 2001 due to the full vesting
and recognition of all of the senior management stock options outstanding during
fiscal 2000.

         Other income was  $518,000 and  $1,045,000  for the  thirty-nine  weeks
ended September 29, 2001 and September 30, 2000,  respectively.  The decrease of
$527,000 was  primarily due to the reduced  licensing  revenues of $900,000 that
resulted  from the sale of the "HUE"  trademark  during  the  fourth  quarter of
fiscal 2000 offset by additional revenues generated during the thirty-nine weeks
ended September 29, 2001.

         Depreciation and amortization  expense for the thirty-nine  weeks ended
September  29, 2001 and  September  30,  2000,  was  $1,612,000  and  $1,566,000
respectively.  The increase was due to the acquisition of fixed assets since the
Company's  June 4, 1997  emergence  from  bankruptcy.  In addition,  the Company
recognized  income of $1,898,000 for the  thirty-nine  weeks ended September 30,
2000, from amortization of excess revalued net assets acquired over equity under
fresh start reporting.  The excess of revalued net assets was fully amortized in
the second quarter of 2000.

         Interest and financing  costs were  $1,151,000  and  $2,410,000 for the
thirty-nine weeks ended September 29, 2001 and September 30, 2000, respectively.
Included  in the  interest  and  financing  costs  was  $265,000  and  $387,000,
respectively for the interest on the $5,000,000 term note entered into on August
25, 1999 for the  thirty-nine  weeks ended  September 29, 2001 and September 30,
2000.  The  additional  working  capital  generated  by the  sale  of the  "HUE"
trademark  resulted  in lower  borrowings  during the  thirty-nine


                                      -12-
<PAGE>

weeks  ended  September  29, 2001 as  compared  to the  thirty-nine  weeks ended
September 30, 2000 which resulted in lower interest expenses incurred.

         Other expenses of $900,000 were recorded during the  thirty-nine  weeks
ended September 29, 2001 to provide for  non-operating  legal fees incurred as a
result  of  the  Three  Cities  proposal  to  acquire  approximately  27% of the
outstanding shares of common stock of the Company.

         The (benefit)  provision for federal,  state and local income taxes was
($785,000) and $1,523,000 for the thirty-nine weeks ended September 29, 2001 and
September  30,  2000,  respectively.  The  change in the  effective  tax rate is
primarily  due to the excess of revalued net assets  acquired  over equity under
fresh-start  reporting that was fully  amortized in the second quarter of fiscal
year 2000.

Thirteen Weeks Ended September 29, 2001 as Compared to
Thirteen Weeks Ended September 30, 2000

         The Company  recorded net sales of  $48,503,000  for the thirteen weeks
ended September 29, 2001, compared with $61,047,000 for the thirteen weeks ended
September 30, 2000, a net decrease of $12,544,000 or 20.5%.  Excluding net sales
during the  thirteen  weeks  ended  September  29, 2001 and  September  30, 2000
generated  by  the  discontinued   Reggio  brand  of  ($4,000)  and  $3,191,000,
respectively and $21,000 and $-0-, respectively,  generated by the newly created
Trio-New  York brand,  the Dress product lines  comparable  net sales  decreased
$6,215,000 or 16.4%.  The decrease in net sales for the comparable Dress product
lines' resulted from increased price  concessions  made to the Company's  retail
customers and a change in the retail calendar  followed by many of the Company's
department  store  customers that added a fifty-third  week to their 2000 retail
fiscal year and increased  cancellation and  renegotiations  of open orders as a
result of poor retail performance. The additional week in the fiscal 2000 retail
calendar extended the normal start dates for orders from the twenty-fifth day of
each month into the following month, thereby shifting sales forward. The Company
expects this trend to continue  throughout  the fiscal year ending  December 29,
2001.  Comparable  net  sales  for  the  Sportswear  product  lines,   excluding
$2,455,000  and  $1,509,000  generated  by the  newly  acquired  Cynthia  Steffe
sportswear  brand  during  the  thirteen  weeks  ended  September  29,  2001 and
September 30, 2000,  respectively  and excluding $-0- and ($86,000) of net sales
(returns) of the  discontinued  Leslie Fay Sportswear  brand during the thirteen
weeks ended September 29, 2001 and September 30, 2000,  respectively,  decreased
$4,187,000 or 22.7% over the year ago period. This decrease occurred as a result
of the change in the retail sales calendar discussed above.

         Gross  profit  was  $7,906,000  and  16.3% of net sales  compared  with
$14,342,000  and 23.7% for the  thirteen  weeks  ended  September  29,  2001 and
September  30, 2000,  respectively.  Excluding  gross profit during the thirteen
weeks ended  September 29, 2001 and September 30, 2000 of ($5,000) and $396,000,
respectively, generated by the discontinued Reggio brand and ($155,000) and $-0-
respectively,  generated by the newly  created  Trio -New York brand,  the Dress
product lines'  comparable gross profit decreased  $4,503,000 or 53.4% while the
percent to net sales  decreased  to 12.3% from


                                      -13-
<PAGE>

22.2% for the  comparable  period ended  September  30,  2000.  The gross profit
produced by the Sportswear lines,  excluding  $490,000 and $293,000 generated by
the Cynthia Steffe  sportswear  brand during the thirteen weeks ended  September
29,  2001 and  September  30,  2000,  respectively  and  ($16,000)  and  $24,000
generated by the  discontinued  Leslie Fay Sportswear  brand during the thirteen
weeks ended September 29, 2001 and September 30, 2000, respectively decreased by
$1,534,000 or 30.9% while the percent to net sales decreased to 25.8% from 28.8%
for the  comparable  period ended  September  30,  2000.  The lower gross profit
contributed  by both the  Dress and  Sportswear  lines  resulted  from the price
concessions and lower sales volume discussed previously and additional inventory
reserves   recorded  in  anticipation  of  markdowns  needed  to  move  existing
inventories   as  a  result  of  decreased   demand  and  order  softness  being
experienced.

          Selling,   warehouse,   general  and   administrative   expenses  were
$9,064,000  and 18.7% of net sales and  $11,750,000  and 19.25% of net sales for
the  thirteen   weeks  ended   September   29,  2001  and  September  30,  2000,
respectively.  The expense decrease resulted from expense reductions made by the
Company  during the thirteen  weeks ended  September 29, 2001 and the closure of
the Reggio brand during the fourth quarter of fiscal 2000.

          Non-cash  stock  based  compensation  for stock  options  and  outside
director  compensation  for the  thirteen  weeks  ended  September  29, 2001 and
September  30, 2000 was $21,000 and  $176,000,  respectively.  The  compensation
expensed under SFAS No. 123, "Accounting for Stock Based Compensation" decreased
during the thirteen  weeks ended  September 29, 2001 due to the full vesting and
recognition of all of the senior  management  stock options  outstanding  during
fiscal 2000.

          Other income was  $190,000  and $353,000 for the thirteen  weeks ended
September  29, 2001 and  September  30,  2000,  respectively.  The  decrease was
primarily due to the reduced  licensing  revenues of $300,000 that resulted from
the sale of the "HUE" trademark  during the fourth quarter of fiscal 2000 offset
by additional  revenues  generated during the thirteen weeks ended September 29,
2001.

          Depreciation  and  amortization  expense for the thirteen  weeks ended
September  29,  2001  and  September  30,  2000,   was  $492,000  and  $592,000,
respectively.  The decrease resulted mostly from the complete  depreciation of a
significant asset during the thirteen weeks ended September 29, 2001.

          Interest  and  financing  costs were  $297,000  and  $867,000  for the
thirteen  weeks ended  September 29, 2001 and September 30, 2000,  respectively.
Included in the  interest and  financing  costs was $74,000 and $127,000 for the
interest on the  $5,000,000  term note  entered  into on August 25, 1999 for the
thirteen  weeks ended  September 29, 2001 and September 30, 2000,  respectively.
The  additional  working  capital  generated by the sale of the "HUE"  trademark
resulted in lower borrowings  during the thirteen weeks ended September 29, 2001
as compared to the thirteen  weeks ended  September  30, 2000 which  resulted in
lower interest expenses incurred.


                                      -14-
<PAGE>

          Other  expenses of $75,000 were  recorded  during the  thirteen  weeks
ended September 29, 2001 to provide for  non-operating  legal fees incurred as a
result  of  the  Three  Cities  proposal  to  acquire  approximately  27% of the
outstanding shares of common stock of the Company.

          The (benefit) provision for federal,  state and local income taxes was
($779,000)  and  $550,000 for the thirteen  weeks ended  September  29, 2001 and
September 30, 2000, respectively.

(B)  Liquidity and Capital Resources

          The sixth  amendment  of the CIT Credit  Agreement  provides a working
capital facility commitment of $52,000,000,  including a $30,000,000 sublimit on
letters  of  credit.  As  of  September  29,  2001  the  Company  was  utilizing
approximately  $5,891,000  under the CIT Credit Agreement for letters of credit,
and there were no  outstanding  cash  borrowings.  On September  29,  2001,  the
Company  had a net  borrowing  availability  under the CIT Credit  Agreement  of
$36,558,000  in excess of direct  borrowings  and  amounts  committed  under the
unexpired  letters  of  credit.  The peak  credit  line  utilization  during the
thirty-nine  weeks  ended  September  29, 2001  occurred  March 30, 2001 and was
$19,642,000,  which  consisted of direct  borrowings of $9,294,000 and unexpired
letters of credit of $10,348,000.

          At  September  29,  2001,  the  Company's  unrestricted  cash and cash
equivalents  amounted to  $6,039,000.  Unrestricted  working  capital  decreased
$660,000 to $43,539,000  during the thirty-nine  weeks ended September 29, 2001.
The changes in the components of unrestricted  working capital were: an increase
in cash and cash equivalents of $547,000;  a decrease in net accounts receivable
of  $2,093,000  made up of a decrease in  operating  receivables  of  $8,907,000
offset by the receipt of $11,000,000 of  non-operating  cash related to the sale
of the "HUE" trademark; a decrease in inventories of $9,043,000;  an increase in
prepaid  expenses  and other  current  assets of  $1,575,000  and a decrease  of
$8,354,000 in total current  liabilities.  The changes in  unrestricted  working
capital are primarily  due to the  seasonality  of the  business.  Total current
liabilities decreased mostly from the timing of liabilities due.

          Although the Company's  results of operations  indicated a net loss of
$1,084,000 for the thirty-nine weeks ended September 29, 2001, these results are
not indicative of results for an entire year.

          Capital  expenditures  were $444,000 for the  thirty-nine  weeks ended
September  29,  2001.  Capital  expenditures  are  expected to be  approximately
$1,000,000 for fiscal year 2001. The anticipated  capital  expenditures  for the
remainder  of the year are  primarily  related  to  improvements  in  management
information systems and improvements in the distribution  facility.  The Company
believes that its financing  arrangements  and  anticipated  level of internally
generated  funds will be sufficient to finance its capital  spending  during the
remainder of 2001.


                                      -15-
<PAGE>

          The Company may pay cash  dividends or repurchase  its stock under the
CIT Credit Agreement as long as those  disbursements do not cause the Company to
be in violation of the restrictive covenants and the cumulative stock repurchase
or distribution  of dividends does not exceed the dividend and stock  repurchase
basket.  At the end of the fiscal  quarter ended  September 29, 2001 the Company
may borrow up to $7,339,000 for stock repurchase or dividend  distribution.  The
Company has no plans to pay cash dividends in the foreseeable future.

          Certain  statements  contained in this Form 10-Q,  including,  without
limitation,   statements   containing  the  words   "believes,"   "anticipates,"
"expects," and words of similar import, constitute  "forward-looking" statements
within the meaning of the Private Securities Litigation Reform Act of 1995. 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, the following:
the effects of future events on the Company's  financial  performance;  the risk
that the Company may not be able to finance its planned growth; risks related to
the industry in which the Company competes,  including  potential adverse impact
of external factors such as inflation,  consumer confidence,  unemployment rates
and  consumer  tastes and  preferences;  and the risk of  potential  increase in
market interest rates from current rates. Given these uncertainties, current and
prospective  investors  are  cautioned  not to  place  undue  reliance  on  such
forward-looking  statements.  The Company disclaims any obligation to update any
such factors or to publicly  announce the result of any  revisions to any of the
forward-looking   statements  contained  herein  to  reflect  future  events  or
developments.


                                      -16-
<PAGE>

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

        None.

PART II  - OTHER INFORMATION

Item 1.    Legal Proceedings.
-------    ------------------

     No other  significant legal proceedings were begun or terminated during the
first  quarter of 2001 or  thereafter,  other than ordinary  routine  litigation
incidental to the business of the Company.

Item 2.    Changes in Securities.
-------    ----------------------

               None.

Item 3.    Defaults Upon Senior Securities.
-------    --------------------------------

               None.

Item 4.  Submission of Matters to a Vote of Security Holders.
-------  ----------------------------------------------------

               None.

Item 5.    Other Information.
-------    ------------------

               None.

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

                a)   Exhibits
                     None

                b)   Reports on Form 8-K
                     None


                                      -17-
<PAGE>

                  THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES

                                   SIGNATURES

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

Date:  November 13, 2001                THE LESLIE FAY COMPANY, INC.
                                        (Company)


                                    By: /s/ Warren T. Wishart
                                       -----------------------------------------
                                        Warren T. Wishart
                                        Senior Vice President - Administration
                                        and Finance, Chief Financial Officer
                                        and Treasurer


                                      -18-