================================================================================
                        SECURITIES AND EXCHANGE COMMISION
                              WASHINGTON, DC 20549
                              --------------------

                                    FORM 10-Q
                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001        COMMISSION FILE NO. 1-9196

                          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 5,680,694 shares of Common Stock outstanding at March 31, 2001.

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<PAGE>

                  THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
                                      INDEX

                                                                                          Page No.
                                                                                          --------
<S>                                                                                             <C>
PART I  - FINANCIAL INFORMATION

Item 1.  Financial Statements:

                  Consolidated Balance Sheets as of March 31, 2001 (Unaudited)
                     and December 30, 2000, respectively.........................................3

                  Consolidated Statements of Operations (Unaudited) for the
                     Thirteen Weeks Ended March 31, 2001 and

                     April 1, 2000, respectively.................................................4

                  Consolidated Statements of Cash Flows (Unaudited) for the
                    Thirteen Weeks Ended March 31, 2001 and

                    April 1, 2000, respectively..................................................5

Notes to Consolidated Financial Statements.......................................................6

Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations...........................................10

Item 3.  Quantitative and Qualitative Disclosures
                  About Market Risk.............................................................13

PART II  -  OTHER INFORMATION

Item 1.  Legal Proceedings......................................................................13
Item 2.  Changes in Securities..................................................................13
Item 3.  Defaults Upon Senior Securities........................................................13
Item 4.  Submission of Matters to a Vote of Security Holders....................................13
Item 5.  Other Information......................................................................13
Item 6.  Exhibits and Reports on Form 8-K.......................................................13

SIGNATURES......................................................................................14
</TABLE>


                                      -2-
<PAGE>
<TABLE>
<CAPTION>
                                     THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES

                                              CONSOLIDATED BALANCE SHEETS
                                      (IN THOUSANDS, EXCEPT PAR VALUE SHARE DATA)

                                                                               UNAUDITED                AUDITED
                                                                                MARCH 31,             DECEMBER 30,
                                ASSETS                                            2001                    2000
                                                                            ------------------      ------------------
<S>                                                                                     <C>                   <C>
Current Assets:
    Cash and cash equivalents.......................................                    $ 692                 $ 5,492
    Restricted cash and cash equivalents............................                    3,480                   3,450
    Accounts receivable- net of allowances for possible losses of
       $5,736 and $7,585, respectively..............................                   38,825                  27,877
    Inventories.....................................................                   28,454                  35,818
    Prepaid expenses and other current assets.......................                    1,685                   1,775
                                                                            ------------------      ------------------
       Total Current Assets.........................................                   73,136                  74,412
    Property, plant and equipment, at cost, net of accumulated
       depreciation of $3,581 and $3,126, respectively..............                    3,293                   3,625
    Excess of purchase price over net assets acquired-net of accumulated
       amortization of $1,115 and $980, respectively................                    5,544                   5,680
    Deferred charges and other assets...............................                    3,973                   3,985
                                                                            ------------------      ------------------
    Total Assets....................................................                 $ 85,946                $ 87,702
                                                                            ==================      ==================

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
    Short term debt.................................................                  $ 6,042                 $ 1,000
    Accounts payable................................................                   10,710                  15,648
    Accrued expenses and other current liabilities..................                    6,850                  10,024
    Accrued expenses and other current confirmation liabilities.....                    3,480                   3,450
    Current portion of capitalized leases...........................                       93                      91
                                                                            ------------------      ------------------
       Total Current Liabilities....................................                   27,175                  30,213

    Long term note payable..........................................                    2,750                   3,000
    Long term debt-capitalized leases...............................                      102                     126
    Deferred liabilities............................................                    1,184                   1,135
                                                                            ------------------      ------------------
    Total Liabilities...............................................                   31,211                  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,
     7,498 and 7,498 shares issued, respectively....................                       75                      75
 Capital in excess of par value.....................................                   38,781                  38,451
 Notes receivable from stock sale...................................                    (1,853)                 (1,853)
 Retained earnings..................................................                   29,355                  28,178
                                                                            ------------------      ------------------
    Subtotal........................................................                   66,358                  64,851
 Treasury stock, at cost ; 1,817 shares.............................                   (11,623)                (11,623)
                                                                            ------------------      ------------------
    Total Stockholders' Equity......................................                   54,735                  53,228
                                                                            ------------------      ------------------
 Total Liabilities and Stockholders' Equity.........................                 $ 85,946                $ 87,702
                                                                            ==================      ==================

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

                                                          -3-
</TABLE>

<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
                                                                         MARCH 31,              APRIL 1,
                                                                            2001                   2000
                                                                   ------------------     ------------------
<S>                                                                          <C>                  <C>
Net Sales.......................................................             $ 56,130             $   66,936

 Cost of Sales..................................................               41,695                 51,296
                                                                   ------------------     ------------------
   Gross profit.................................................               14,435                 15,640
                                                                   ------------------     ------------------

Operating Expenses:
      Selling, warehouse, general and
          administrative expenses...............................               10,764                 10,604

   Non-cash stock based compensation............................                   22                    250

   Depreciation and amortization expense........................                  575                    440
                                                                   ------------------     ------------------
       Total operating expenses.................................               11,361                 11,294

   Other income.................................................                 (57)                   (346)
   Amortization of excess revalued net assets acquired
         over equity............................................                   --                 (1,143)
                                                                   ------------------     ------------------
   Total operating expenses, net................................               11,304                  9,805
                                                                   ------------------     ------------------
   Operating income.............................................                3,131                  5,835

Interest and Financing Costs....................................                  560                    862

Other Expenses..................................................                  541                     --
                                                                   ------------------     ------------------
   Income before taxes..........................................                2,030                  4,973

Provision for Taxes.............................................                  853                  1,671
                                                                   ------------------     ------------------
   Net Income ..................................................              $ 1,177                 $3,302
                                                                   ==================     ==================

   Net Income per Share - Basic.................................               $ 0.21                 $ 0.65
                                                                   ==================     ==================
                        - Diluted...............................               $ 0.21                 $ 0.60
                                                                   ==================     ==================

Weighted Average Shares Outstanding - Basic.....................            5,680,694              5,065,885
                                                                   ==================     ==================
                                    -Diluted....................            5,680,694              5,497,009
                                                                   ==================     ==================

The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.

                                                          -4-
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                     THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES

                                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                     (IN THOUSANDS)
                                                       UNAUDITED

                                                                            THIRTEEN                   THIRTEEN
                                                                           WEEKS ENDED                WEEKS ENDED
                                                                           MARCH 31,                   APRIL 1,
                                                                              2001                       2000
                                                                      ------------------          ------------------
<S>                                                                              <C>                          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income .......................................................            $ 1,177                      $3,302
   Adjustments to reconcile net income to net cash used in operating
   activities:
     Depreciation and amortization...................................                621                         479
     Amortization of excess net assets acquired over equity..........                  -                     (1,143)
     Provision for possible losses on accounts receivable............                (2)                         (2)
     Provision for stock based compensation and stock option grants..                 22                         250
     Loss on sale of fixed assets....................................                 15                           -
     Changes in assets and liabilities, net of impact of acquisitions:
       Accounts receivable...........................................           (10,946)                      (27,403)
       Inventories...................................................              7,364                         8,035
       Prepaid expenses and other current assets.....................                 90                         1,262
       Deferred charges and other assets.............................                 12                         (436)
       Accounts payable, accrued expenses and other current
          liabilities................................................            (7,822)                       4,976
       Income taxes payable..........................................                  -                         181
       Deferred liabilities..........................................                 50                          85
     Changes due to reorganization activities:
       Use of pre-consummation deferred taxes........................                307                         795
                                                                      ------------------          ------------------
         Total adjustments...........................................           (10,289)                    (12,921)
                                                                      ------------------          ------------------
         Net cash used in operating activities.......................            (9,112)                     (9,619)
                                                                      ------------------          ------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures..............................................              (169)                       (238)
   Net cash paid for acquisition.....................................                  -                     (3,104)
   Merger costs......................................................              (289)                           -
                                                                      ------------------          ------------------
         Net cash used in investing activities.......................              (458)                     (3,342)
                                                                      ------------------          ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from borrowings..........................................             23,816                      31,464
   Repayment of borrowings...........................................           (18,774)                    (19,463)
   Repayment of notes payable........................................              (250)                       (250)
   Repayment of capital leases ......................................               (22)                        (19)
   Proceeds from new stock issuance and options exercised ...........                  -                          62
   Proceeds from obligations under the Plan of
   Reorganization, net...............................................                 30                          14
                                                                      ------------------          ------------------
             Net cash provided by financing activities...............              4,800                      11,808
                                                                      ------------------          ------------------
   Net (decrease) in cash and cash equivalents.......................            (4,770)                     (1,153)

   Cash and cash equivalents, at beginning of period.................              8,942                       5,466
                                                                      ------------------          ------------------
   Cash and cash equivalents, at end of period.......................             $4,172                     $ 4,313
                                                                      ==================          ==================

The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.

                                                          -5-
</TABLE>
<PAGE>
                  THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES

                                   (UNAUDITED)

1.       BASIS OF PRESENTATION:

         The consolidated financial statements included herein have been
prepared by The Leslie Fay Company, Inc. and subsidiaries (The Leslie Fay
Company, Inc. being sometimes individually referred to, and together with its
subsidiaries collectively referred to, as the "Company" as the context may
require), 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 generally accepted
accounting principles 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 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, 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 (together, "Constable"), signed a Contribution and Subscription
Agreement whereby they will contribute their 442,408 shares into the merger for
which they will receive the equivalent proportion of shares in the post- merger
company. At this time, a draft proxy statement with respect to the transaction
has been filed with the SEC for their review. Following clearance of the proxy
soliciting material by the SEC, a proxy statement will be furnished to
stockholders, and the Company expects a meeting of stockholders to be held in
July. As a result of the transaction, and assuming no dissenting shares, Three
Cities Funds will acquire about 1,589,522 additional shares of Leslie Fay common
stock and will own in the aggregate about 81.4% of the total shares of Leslie
Fay.

                                       -6-
<PAGE>

                  THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES

3.       INVENTORIES:

         Inventories consist of the following:

                                        (Unaudited)
                                         March 31,            December 30,
                                            2001                  2000
                                      -------------------------------------
  (In thousands)

  Raw materials                           $15,315               $15,032
  Work in process                           4,302                 1,561
  Finished goods                            8,837                19,225
                                            -----                ------
     Total inventories                    $28,454               $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 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% (7.75% at
March 31, 2001) and the CIT Credit Agreement requires a fee, payable monthly, on
average outstanding letters of credit at a rate of 2% annually. There was
$5,042,000 in direct borrowings outstanding under the CIT Credit Agreement and
approximately $10,039,000 was committed under unexpired letters of credit as of
March 31, 2001. On March 31, 2001, the Company had a net borrowing availability
under the CIT Credit Agreement of $32,304,000 in excess of direct borrowings and
amounts committed under the unexpired letters of credit. The peak credit line
utilization during the thirteen weeks ended March 31, 2001 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 (10.00%
at March 31, 2001) which was used to repurchase the Company's common stock. As
of March 31, 2001 the principal balance outstanding on the note payable was
$3,750,000.

         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 0.4% 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 will be shared 50/50 with CIT on any
losses in excess of $50,000 in any 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 for
all requirements contained in the CIT Credit Agreement.


                                      -7-
<PAGE>

                  THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES

5.       INCOME TAXES:

         The provision for federal, state and local income taxes is $853,000 and
$1,671,000 for the thirteen weeks ended March 31, 2001 and April 1, 2000.
Federal and state income taxes payable are partially offset by the utilization
of pre-consummation net operating loss carryforwards. The utilization in 2001 of
pre-consummation net operating loss carryforwards for federal income tax
purposes is limited to approximately $1,500,000.

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 $22,000 and $250,000 of non-cash stock based compensation expense for
the thirteen weeks ended March 31, 2001 and April 1, 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 thirteen weeks ended March 31, 2001 and April 1, 2000, the
basic weighted average common shares outstanding was 5,680,694 and 5,065,885
respectively, and the weighted average shares outstanding assuming dilution was
5,680,694 and 5,497,009 respectively. The difference of -0- and 431,124
respectively, represents the incremental dilution of shares upon exercise of
dilutive stock options.

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 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.


                                      -8-
<PAGE>

                  THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES

9.       NEW ACCOUNTING PRONOUNCEMENT:

         In April 2001, the FASB's Emerging Issues Task Force (EITF) 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 reached, the
Company will adopt the required issue effective December 30, 2001.

                                      -9-
<PAGE>

                  THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES


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

(A)  RESULTS OF  OPERATIONS

THIRTEEN WEEKS ENDED MARCH 31, 2001 AS COMPARED TO
THIRTEEN WEEKS ENDED APRIL 1, 2000

         The Company recorded net sales of $56,130,000 for the thirteen weeks
ended March 31, 2001, compared with $66,936,000 for the thirteen weeks ended
April 1, 2000, a net decrease of $10,806,000 or 16.1%. Excluding net sales
during the thirteen weeks ended March 31, 2001 and April 30, 2000 generated by
the discontinued Reggio brand of $70,000 and $3,261,000, respectively and
$6,466,000 and $6,153,000, respectively generated from the Liz Claiborne Dress
brand license, acquired February 15, 2000, the Dress product lines comparable
net sales decreased $5,329,000 or 12.6%. The decrease in net sales for the
comparable Dress product lines resulted from reduced production of the Spring
season against the comparable year ago period and a change in the retail
calendar followed by many of the Company's department store customers that added
a fifty-third week to the 2000 retail fiscal year. The planned decrease in
Spring season production reduced the level of inventory sold at close out
prices. 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 period ended December 29, 2001. Comparable net
sales for the Sportswear product lines, excluding $648,000 generated by the
newly acquired Cynthia Steffe sportswear brand during the thirteen weeks ended
March 31, 2001 and excluding $26,000 and $3,774,000 of net sales of the
discontinued Leslie Fay Sportswear brand during the thirteen weeks ended March
31, 2001 and April 1, 2000, respectively, increased $501,000 or 4.3% over the
year ago period. This increase occurred as a result of additional sales within
the Haberdashery by Leslie Fay brand, generated by the restructuring of the
product offering during fiscal 2000, offset by lower shipments under the Joan
Leslie brand directly as a result of the change in the retail sales calendar
discussed above.

         Gross profit was $14,435,000 and 25.7% of net sales compared with
$15,640,000 and 23.4% for the thirteen weeks ended March 31, 2001 and April 1,
2000, respectively. Excluding gross profit during the thirteen weeks ended March
31, 2001 and April 30, 2000 of $-0- and $348,000, respectively, generated by the
discontinued Reggio and $1,317,000 and $1,576,000, respectively, generated from
the Liz Claiborne Dress brand license the Dress product lines comparable gross
profit decreased $365,000 or 0.7% while the percent to net sales increased to
25.1% from 22.8% for the comparable period ended April 1, 2000. The lower gross
profit contributed by the Dress lines resulted from the lower sales volume
discussed previously. The 2.3% increase in percent to net sales resulted mostly
from improved markup in the Leslie Fay Dress brand. The gross profit produced by
the Sportswear lines, excluding $169,000 generated by the Cynthia Steffe
sportswear brand during the thirteen weeks ended March 31, 2001 and $426,000
generated by the discontinued Leslie Fay Sportswear brand during the thirteen
weeks ended April 1, 2000, increased by $24,000 while the percent to net sales
decreased to 30.6% from 31.7% for the comparable period ended April 1, 2000.


                                      -10-
<PAGE>

                  THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES


         Selling, warehouse, general and administrative expenses were
$10,764,000 and 19.2% of net sales and $10,604,000 and 15.8% of net sales for
the thirteen weeks ended March 31, 2001 and April 1, 2000, respectively. The
expense increase was generated mostly by the additional operating costs of the
Cynthia Steffe brand and Liz Claiborne Dress license acquired during the first
half of 2000 offset by the decrease in expenses as a result of 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 March 31, 2001 and April 1,
2000 was $22,000 and $250,000, respectively. The compensation expensed under
SFAS No.123, "Accounting for Stock Based Compensation" decreased during the
thirteen weeks ended March 31, 2001 due to the full vesting and recognition of
all of the senior management stock options outstanding during fiscal 2000.

         Other income, consisting primarily of royalty income, was $57,000 and
$346,000 for the thirteen weeks ended March 31, 2001 and April 1, 2000,
respectively. The decrease of $289,000 was 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.

         Depreciation and amortization expense for the thirteen weeks ended
March 31, 2001 and April 1, 2000, was $575,000 and $440,000, respectively. The
increase was due to the acquisition of fixed assets since the Company's June 4,
1997 emergence from bankruptcy. Depreciation and amortization expense for the
thirteen weeks ended March 31, 2001 for the newly acquired businesses included
$41,000 and $17,000 for the Liz Claiborne license agreement and the Cynthia
Steffe brands, respectively. In addition, the Company recognized income of
$1,143,000 for the thirteen weeks ended April 1, 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,
which will negatively impact future earnings per share compared to prior
periods.

         Interest and financing costs were $560,000 and $862,000 for the
thirteen weeks ended March 31, 2001 and April 1, 2000, respectively. Included in
the interest and financing cost was $105,000 and $130,000 for the interest on
the $5,000,000 term note entered into on August 25, 1999 for the period ended
March 31, 2001 and April 1, 2000, respectively. The additional working capital
generated by the sale of the "HUE" trademark resulted in lower borrowings during
the thirteen weeks ended March 31, 2001 as compared to the thirteen weeks ended
April 1, 2000 which resulted in lower interest expenses incurred.

         Other expenses of $541,000 were recorded during the thirteen weeks
ended March 31, 2001 to provide for non-operating legal fees incurred as a
result of the Three Cities proposal to acquire approximately 32% of the
outstanding shares of common stock of the Company.

          The provision for federal, state and local income taxes was $853,000
and $1,671,000 for the thirteen weeks ended March 31, 2001 and April 1, 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.


                                      -11-
<PAGE>

                  THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES


(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 March 31, 2001 the Company was utilizing approximately
$10,039,000 under the CIT Credit Agreement for letters of credit, and there was
$5,042,000 in outstanding cash borrowings. On March 31, 2001, the Company had a
net borrowing availability under the CIT Credit Agreement of $32,304,000 in
excess of direct borrowings and amounts committed under the unexpired letters of
credit. The peak credit line utilization during the thirteen weeks ended March
31, 2001 was $19,642,000, which consisted of direct borrowings of $9,294,000 and
unexpired letters of credit of $10,348,000.

         At March 31, 2001, the Company's cash and cash equivalents amounted to
$4,172,000 of which $3,480,000 is restricted to the payment of confirmation
liabilities relative to the Company's 1997 exit from bankruptcy. Working capital
increased $1,762,000 to $45,961,000 during the thirteen weeks ended March 31,
2001. The changes in the components of working capital were: a decrease in cash
and cash equivalents of $4,770,000; an increase in net accounts receivable of
$10,948,000; a decrease in inventories of $7,364,000; a decrease in prepaid
expenses and other current assets of $90,000 and a decrease of $3,038,000 in
total current liabilities. The changes in working capital are primarily due to
the seasonality of the business. Total current liabilities decreased as a result
of additional short term borrowings of $5,042,000 offset by decreased operating
accounts payable and other accrued liabilities of $8,080,000 resulting mostly
from the timing of liabilities due.

         Although the Company's results of operations indicated net income of
$1,177,000 for the thirteen weeks ended March 31, 2001, these results are not
indicative of results for an entire year.

         Capital expenditures were $169,000 for the thirteen weeks ended March
31,2001. Capital expenditures are expected to be approximately $2,000,000 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.

         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 March 31, 2001 the Company may
borrow up to $6,127,500 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,

                                      -12-
<PAGE>

                  THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES

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.

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



                                      -13-
<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:  May 15, 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


                                      -14-