================================================================================

                        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 JULY 1, 2000           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 5,073,138 shares of Common Stock outstanding at July 1, 2000.

================================================================================
<PAGE>


                  THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES


                                      INDEX
<TABLE>
<CAPTION>

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

Item 1.  Financial Statements:

                  Consolidated Balance Sheets as of July 1, 2000 (Unaudited)
                     and January 1, 2000, respectively...............................................3

                  Consolidated Statements of Operations (Unaudited) for the
                     Twenty-six Weeks Ended July 1, 2000 and
                     July 3, 1999, respectively......................................................4

                  Consolidated Statements of Operations (Unaudited) for the
                    Thirteen Weeks Ended July 1, 2000 and
                    July 3, 1999, respectively.......................................................5

                  Consolidated Statements of Cash Flows (Unaudited) for the
                    Twenty-Six Weeks Ended July 1, 2000 and
                    July 3, 1999, 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.................................................................15

PART II  -  OTHER INFORMATION

Item 1.  Legal Proceedings..........................................................................16
Item 2.  Changes in Securities......................................................................16
Item 3.  Defaults Upon Senior Securities............................................................16
Item 4.  Submission of Matters to a Vote of Security Holders........................................16
Item 5.  Other Information..........................................................................16
Item 6.  Exhibits and Reports on Form 8-K...........................................................16

SIGNATURES..........................................................................................17

INDEX TO EXHIBITS..................................................................................E-1
</TABLE>


                                      -1-
<PAGE>

                  THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                   (IN THOUSANDS, EXCEPT PAR VALUE SHARE DATA)
<TABLE>
<CAPTION>
                                                                                UNAUDITED             AUDITED

                                                                                JULY 1,               JANUARY 1,
                                ASSETS                                            2000                   2000
                                                                            -----------------      -----------------
Current Assets:
<S>                                                                                  <C>                    <C>
    Cash and cash equivalents.......................................                 $   894                $ 2,034
    Restricted cash and cash equivalents............................                   3,464                  3,432
    Accounts receivable- net of allowances for possible losses of
       $7,279 and $5,468, respectively..............................                  23,667                 16,952
    Inventories.....................................................                  33,152                 34,226
    Prepaid expenses and other current assets.......................                   1,853                  2,702
       Total Current Assets.........................................                  63,030                 59,346
    Property, plant and equipment, at cost, net of accumulated
       depreciation of $2,293 and $1,535, respectively..............                   4,102                  3,695
    Excess of purchase price over net assets acquired-net of
       accumulated amortization of $653 and $357, respectively......                   7,026                  4,330
    Deferred charges and other assets...............................                   3,752                  1,629

    Total Assets....................................................                $ 77,910               $ 69,000
                                                                            =================      =================

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
    Short term debt.................................................                $  3,165                $ 1,000
    Accounts payable................................................                  13,903                  9,454
    Accrued expenses and other current liabilities..................                   7,417                  8,121
    Accrued expenses and other current confirmation liabilities.....                   3,464                  3,432
    Income taxes payable............................................                     222                     --
    Current portion of capitalized leases...........................                      86                     40
       Total Current Liabilities....................................                  28,257                 22,047

    Long term note payable..........................................                   3,500                  4,000
    Excess of  revalued  net assets  acquired  over  equity  under fresh - start
         reporting, net of accumulated amortization of $13,708
       and $11,811, respectively....................................                     --                   1,897
    Other long term liabilities.....................................                   1,194                    915
    Total Liabilities...............................................                  32,951                 28,859

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;
      6,890 and 6,870 shares issued, respectively....................                     69                     69
 Capital in excess of par value.....................................                  32,669                 31,212
 Retained earnings..................................................                  23,844                 20,483
    Subtotal........................................................                  56,582                 51,764
 Treasury stock, at cost ; 1,817 shares.............................                  11,623                 11,623
    Total Stockholders' Equity......................................                  44,959                 40,141
 Total Liabilities and Stockholders' Equity.........................                $ 77,910               $ 69,000
                                                                            =================      =================
</TABLE>

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


                                      -2-
<PAGE>

                  THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                                            TWENTY-SIX           TWENTY-SIX
                                                                           WEEKS ENDED           WEEKS ENDED
                                                                             JULY 1,               JULY 3,
                                                                              2000                   1999
                                                                            ---------             ---------
<S>                                                                          <C>                   <C>
Net Sales.......................................................             $112,234              $ 99,594
 Cost of Sales..................................................               87,013                73,067
                                                                            ---------             ---------
   Gross profit.................................................               25,221                26,527
                                                                            ---------             ---------
Operating Expenses:
      Selling, warehouse, general and
          administrative expenses...............................               20,493                19,384

   Non-cash stock based compensation............................                  467                   630
   Depreciation and amortization expense........................                  974                   595
                                                                            ---------             ---------
       Total operating expenses.................................               21,934                20,609

   Other income.................................................                (693)                  (672)

   Amortization of excess revalued net assets acquired
         over equity............................................              (1,897)                (2,286)
                                                                            ---------             ---------
   Total operating expenses, net................................               19,344                17,651
                                                                            ---------             ---------
   Operating income.............................................                5,877                 8,876

Interest and Financing Costs....................................                1,543                 1,004
Other Expenses..................................................                   --                   534
                                                                            ---------             ---------
   Income before taxes..........................................                4,334                 7,338


Provision for Taxes.............................................                  973                 2,089
                                                                            ---------             ---------
   Net Income ..................................................              $ 3,361                $5,249
                                                                            =========             =========

   Net Income per Share - Basic.................................               $ 0.66                $ 0.87
                                                                            =========             =========
                        - Diluted...............................               $ 0.63                $ 0.84
                                                                            =========             =========

Weighted Average Shares Outstanding - Basic.....................            5,069,512             6,041,138
                                                                            =========             =========
                                    -Diluted....................            5,343,487             6,220,849
                                                                            =========             =========
</TABLE>
           The accompanying Notes to Consolidated Financial Statements
        are an integral part of these consolidated financial statements.

                                      -3-
<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
                                                                          JULY 1,                 JULY 3,
                                                                            2000                    1999

<S>                                                                           <C>                  <C>
Net Sales.......................................................              $45,297              $ 38,450
 Cost of Sales..................................................               35,716                  28,607
                                                                            ---------             ---------
   Gross profit.................................................                9,581                 9,843
                                                                            ---------             ---------

Operating Expenses:
      Selling, warehouse, general and
          administrative expenses...............................                9,889                 9,011
   Non-cash stock based compensation............................                  217                   329
   Depreciation and amortization expense........................                  534                   315
                                                                            ---------             ---------
       Total operating expenses.................................               10,640                 9,655
   Other income.................................................                (346)                  (323)

   Amortization of excess revalued net assets acquired
         over equity............................................                (755)                 (1,143)
                                                                            ---------             ---------
   Total operating expenses, net................................                9,539                 8,189
                                                                            ---------             ---------
                                                                                   42                 1,654
   Operating income.............................................
Interest and Financing Costs....................................                  681                   335
Other Expenses..................................................                   --                   534
                                                                            ---------             ---------
   Income (loss) before taxes...................................                (639)                   785


Benefit for Taxes...............................................                (698)                 (183)
                                                                            ---------             ---------
   Net Income ..................................................                $59                    $968
                                                                            =========             =========

   Net Income per Share - Basic.................................             $ 0.01                  $ 0.16
                                                                            =========             =========
                                 - Diluted......................             $ 0.01                  $ 0.15
                                                                            =========             =========

Weighted Average Shares Outstanding - Basic.....................            5,073,138             6,041,138
                                                                            =========             =========
                                     -Diluted..                             5,189,964             6,290,628
                                                                            =========             =========
</TABLE>

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

                                      -4-
<PAGE>

                 THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                    UNAUDITED
<TABLE>
<CAPTION>
                                                                            TWENTY-SIX              TWENTY-SIX
                                                                            WEEKS ENDED             WEEKS ENDED
                                                                              JULY 1,                 JULY 3,
                                                                                2000                    1999
                                                                            -----------             -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                              <C>                   <C>
   Net income .......................................................            $ 3,361               $5,249
   Adjustments  to  reconcile  net  income  to net cash  provided  by
     operating activities:
     Depreciation and amortization...................................              1,054                  656
     Amortization of excess net assets acquired over equity..........             (1,897)              (2,286)
     Provision for possible losses on accounts receivable............                 (4)                  (5)
     Provision for stock based compensation and stock option grants..                467                  630
     Changes in assets and liabilities, net of impact of acquisitions:
       Accounts receivable...........................................             (6,223)              (1,089)
       Inventories...................................................              3,598                3,522
       Prepaid expenses and other current assets.....................                856                 (458)
       Deferred charges and other assets.............................             (2,092)              (1,505)
       Accounts payable, accrued expenses and other current
           liabilities...............................................              2,646               (1,722)
       Income taxes payable..........................................                222                1,535
       Deferred liabilities..........................................                158                  211
     Changes due to reorganization activities:
       Use of pre-consummation deferred taxes........................                927                  383
                                                                                 -------              -------
         Total adjustments...........................................               (288)                (128)
                                                                                 -------              -------
         Net cash provided by operating activities...................              3,073                5,121
                                                                                 -------              -------

CASH FLOWS FROM INVESTING ACTIVITIES:

   Capital expenditures..............................................               (960)              (1,514)
   Net cash paid for acquisition.....................................             (4,943)                  --
                                                                                 -------              -------
         Net cash used in investing activities.......................             (5,903)              (1,514)
                                                                                 -------              -------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from borrowings..........................................             56,201               28,908
   Repayment of borrowings...........................................            (54,036)             (29,236)
   Repayment of notes payable........................................               (500)                (417)
   Repayment of merger costs.........................................                 --                 (227)
   Repayment of capital leases ......................................               (38)                  (23)
   Proceeds from new stock issuance and options exercised ...........                 62                   --
   Proceeds from (payment of) obligations under Plan of Reorganization
                                                                                      33                 (639)
                                                                                 -------              -------
             Net cash provided by (used in) financing activities.....              1,722               (1,634)
                                                                                 -------              -------
   Net (decrease) increase in cash and cash equivalents..............             (1,108)               1,973

   Cash and cash equivalents, at beginning of period.................              5,466                4,213
                                                                                 -------              -------
   Cash and cash equivalents, at end of period.......................             $4,358              $ 6,186
                                                                                 =======              =======
</TABLE>

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

                                      -5-
<PAGE>

                 THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (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 January 1, 2000
(the "1999 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.       ACQUISITION:

         On February 15, 2000, the Company entered into a license agreement with
the licensing subsidiary of Liz Claiborne, Inc. ("Liz Claiborne") to manufacture
dresses and suits under the Liz Claiborne and Elisabeth trademarks.  The Company
also  purchased  the dress  finished  goods and raw  materials  inventory of Liz
Claiborne and agreed to honor related  manufacturing  commitments  that had been
made by Liz  Claiborne as of February 15, 2000.  Beginning  for the Holiday 2000
season that begins to ship in October 2000,  the Company will design and arrange
the  manufacture  of Liz  Claiborne  and  Elisabeth  dresses.  Liz Claiborne and
Elisabeth  dresses are sold in department  and specialty  stores  throughout the
United States and, to a much lesser extent, in Canada, Mexico and other parts of
the world.

         The  agreements  with Liz  Claiborne  provide that the Company will pay
royalties including  guaranteed minimum average annual royalty payments of up to
approximately  $2,000,000 throughout the five year initial term of the agreement
against 6% of the net sales of Liz Claiborne  and  Elisabeth  dresses and suits.
The Company also will reimburse Liz Claiborne for certain  operating  costs on a
transitional basis.


                                      -6-
<PAGE>

                 THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES

         This transaction  generated intangible assets of $1,919,000,  which the
Company is amortizing over the initial  five-year period of the agreement ending
February 2005. The Liz Claiborne agreement has been accounted for as a purchase,
and  accordingly,  the  operating  results of Liz  Claiborne  Dresses  have been
included in the Company's  consolidated  financial  statements since the date of
the acquisition.  The purchase price allocation is preliminary and is subject to
refinement  during  fiscal  2000.  Year to  date  net  sales  from  the  date of
acquisition through July 1, 2000 were $13,065,000.

         On May 9, 2000,  the  Company  consummated  its  agreement  to purchase
substantially  all the  assets of  Cynthia  Steffe,  Inc.  Cynthia  Steffe  also
licensed  her trade  names to the  Company  for an  indefinite  period.  Cynthia
Steffe, Inc. markets to both department and specialty stores in the contemporary
and designer sportswear categories. This transaction generated intangible assets
of $1,074,000,  which the Company is amortizing  over fifteen years ending April
2015. The 1999 Net Sales for Cynthia Steffe, Inc. were approximately $7,000,000.
Cynthia Steffe and Richard  Roberts,  principals of Cynthia  Steffe,  Inc., have
entered into employment agreements with the Company.

3.       INVENTORIES:

         Inventories consist of the following:

                                             (Unaudited)
                                               July 1,         January 1,
                                               2000               2000
                                              ---------         --------
  (In thousands)

  Raw materials                                 $15,357          $14,338
  Work in process                                 2,744            3,654
  Finished goods                                 15,051           16,234
                                              ---------         --------

     Total inventories                          $33,152          $34,226
                                              =========          =======

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% (9.25% at
July 1, 2000) and the CIT Credit Agreement  requires a fee, payable monthly,  on
average outstanding letters of credit at a rate of 2% annually.  The Company had
a net borrowing  availability  under the CIT Credit  Agreement of $28,292,000 on
July 1, 2000,  prior to the additional  available  borrowings as a result of the
modifications  discussed  below and peak borrowing  during the twenty-six  weeks
ended July 1, 2000 was  $19,424,000.  There was $2,165,000 in direct  borrowings
outstanding  under the CIT Credit  Agreement and  approximately  $11,543,000 was
committed under unexpired letters of credit as of July 1, 2000.

         Additionally,  the  Company  borrowed,  through  a five  year term note
payable,  $5,000,000

                                      -7-
<PAGE>

                 THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES

at an  interest  rate of prime  plus 200 basis  points  (11.00% at July 1, 2000)
which was used to repurchase the Company's  common stock. As of July 1, 2000 the
principal balance outstanding on the note payable was $4,500,000.

         The CIT Credit Agreement has been modified as of August 14, 2000. Key
modifications since January 1, 2000 include:

|X|      The  committed  credit  line has been  increased  to  $52,000,000  from
         $42,000,000. The sub-limit on letters of credit has also been increased
         from $25,000,000 to $30,000,000.

9        The requirement  that in order to pay dividends or to repurchase  stock
         there remain unused  credit  available of no less than  $5,000,000  has
         been eliminated.

|X|      The covenant related to the maximum capital  expenditures was raised to
         $4,000,000  for the year ended December 30, 2000 and $2,500,000 for the
         fiscal years thereafter.

|X|      The  Company is  permitted  to grant  stock  acquisition  loans to four
         designated senior officers in the amount of approximately $3,645,000 to
         fund the acquisition of shares of capital stock of the Company.

[ ]      The Company is authorized  to make a loan to the  principals of Cynthia
         Steffe,  Inc. not to exceed  $1,000,000 with principal and interest due
         May 10, 2010. The loan balance on July 1, 2000 was $746,000.

2        Letters of credit may be issued in support of product  which  bears the
         Liz Claiborne  licensed mark for up to 180 days to an aggregate maximum
         amount not to exceed $5,000,000.

         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.

5.       INCOME TAXES:

         The provision  (benefit)  for federal,  state and local income taxes is
$973,000 and $2,089,000 for the twenty-six  weeks ended July 1, 2000 and July 3,
1999,  respectively  and  ($698,000) and ($183,000) for the thirteen weeks ended
July 1, 2000 and July 3, 1999.  Cash 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  for  federal  income tax  purposes  is  limited to  approximately
$1,500,000 in 2000.

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 $467,000 and

                                      -8-
<PAGE>

                 THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES

$593,000 of non-cash stock based  compensation  expense for the twenty-six weeks
ended July 1, 2000 and July 3, 1999,  respectively and $217,000 and $314,000 for
the  thirteen  weeks  ended July 1, 2000 and July 3, 1999,  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 twenty-six weeks ended July 1, 2000 and July 3, 1999, the basic
weighted   average  common  shares   outstanding  was  5,069,512  and  6,041,138
respectively,  and the weighted average shares outstanding assuming dilution was
5,343,487  and  6,220,849  respectively.  The  difference of 273,975 and 179,711
respectively,  represents  the  incremental  dilution of shares upon exercise of
dilutive stock options.

                                      -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

TWENTY-SIX WEEKS ENDED JULY 1, 2000 AS COMPARED TO
TWENTY-SIX WEEKS ENDED JULY 3, 1999

         The Company recorded net sales of $112,234,000 for the twenty-six weeks
ended July 1, 2000,  compared with  $99,594,000  for the twenty-six  weeks ended
July 3, 1999, a net increase of  $12,640,000  or 12.7%.  The Dress product lines
net  sales,  excluding  $13,065,000  generated  by  the  recently  licensed  Liz
Claiborne  dress  brands,  increased  $3,326,000  or 4.4% as a result  of a 5.4%
decrease in the Leslie Fay dress  brands  combined  with an increase of 31.4% in
the David Warren brands. Net sales for the Sportswear  product lines,  excluding
$82,000  generated by the recently  acquired  Cynthia Steffe  sportswear  brands
decreased by $3,833,000 or 16.3% mostly as a result of the  restructuring of the
Leslie Fay Sportswear brands. This restructuring is expected to reduce sales and
improve profitability.

         Gross  profit  was  $25,221,000  and 22.5% of net sales  compared  with
$26,527,000  and 26.6% for the  twenty-six  weeks ended July 1, 2000 and July 3,
1999,  respectively.  The gross  profit from the Dress line,  net of  $2,567,000
generated  by  the  recently  licensed  Liz  Claiborne  dress  brands,  declined
$3,722,000  and the percentage of net sales  decreased to 22.5% from 28.4%.  The
gross profit produced by the Sportswear lines, net of negative margin of $31,000
generated by the recently  acquired Cynthia Steffe  sportswear  brands,  for the
twenty-six weeks ended July 1, 2000, decreased by $120,000 and the percentage of
net sales increased to 24.5% from 21.0% for the comparable  period ended July 1,
2000.  The improved  gross profit as a percentage of net sales resulted from the
restructuring  of the Leslie Fay  Sportswear  brand that was  implemented in the
fourth quarter of 1999.

         SG&A expenses were $20,493,000 or 18.3% of net sales and $19,384,000 or
19.5% of net sales for the twenty-six weeks ended July 1, 2000 and July 3, 1999,
respectively.  The expense  increase of  $1,109,000  was caused  mainly by about
$2,000,000 of additional  operating  expenses related to the Liz Claiborne dress
brands and the Cynthia Steffe brands  partially offset by expense savings caused
by the restructuring of the Leslie Fay sportswear brands.

         Non-cash  stock  based  compensation  for  stock  options  and  outside
director  compensation  for the twenty-six  weeks ended July 1, 2000 and July 3,
1999 was $467,000 and $630,000, respectively.

         Other income,  consisting primarily of royalty income, was $692,000 and
$672,000  for  the  twenty-six  weeks  ended  July 1,  2000  and  July 3,  1999,
respectively.

         Depreciation  and  amortization  expense for the twenty-six weeks ended
July 1, 2000 and July 3, 1999,  respectively,  was  $974,000 and  $595,000.  The
increase was due to the  acquisition of fixed assets since the Company's June 4,
1997 emergence from  bankruptcy as well as the excess of purchase price over net
assets acquired from The Warren Apparel Group Ltd. and Cynthia  Steffe,  Inc. as
well as the  licensing of the Liz  Claiborne  dress  brands.  In  addition,  the
Company  recognized income of $1,897,000 and $2,286,000 for the twenty-six weeks
ended July

                                      -10-
<PAGE>

                 THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES


1, 2000 and July 3, 1999  respectively  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  $1,543,000  and  $1,004,000 for the
twenty-six  weeks  ended  July 1,  2000  and  July 3,  1999,  respectively.  The
additional  interest  was  generated  as a result of rising  interest  rates and
higher  borrowings  during the twenty-six  weeks ended July 1, 2000,  which were
utilized  for the Liz  Claiborne  and Cynthia  Steffe  transactions.  Also,  the
Company  incurred  additional  interest  expense during the period ended July 1,
2000 as a result of the  $5,000,000  term note  entered into on August 25, 1999.
The financing fees under the new CIT Credit  Agreement were partially  offset by
income earned on the cash invested for the  twenty-six  weeks ended July 1, 2000
and July 3, 1999.

         Other expenses of $534,000 were recorded  during the  twenty-six  weeks
ended  July 3,  1999 to  provide  for  non-operating  legal and  financing  fees
incurred as a result of the merger transaction with Three Cities Research, Inc.

         The  provision  for federal,  state and local income taxes was $973,000
and  $2,089,000  for the  twenty-six  weeks ended July 1, 2000 and July 3, 1999,
respectively.

THIRTEEN WEEKS ENDED JULY 1, 2000 AS COMPARED TO
THIRTEEN WEEKS ENDED JULY 3, 1999

         The Company  recorded net sales of  $45,297,000  for the thirteen weeks
ended July 1, 2000,  compared with $38,450,000 for the thirteen weeks ended July
3, 1999, a net increase of  $6,847,000 or 17.8%.  The Dress  product  lines' net
sales,  excluding  $6,911,000  generated by the recently  licensed Liz Claiborne
dress  brands,  increased  $1,478,000  or 4.6%.  A 22.5%  increase in the Warren
brands was offset by a 2.9% decrease in the Leslie Fay dress brands.  The Warren
brands acquired in late 1998 had a net sales  improvement of 22.5% in the second
quarter of 2000 compared to the second quarter of 1999. The increased  volume of
the  Warren  Group  was  driven  by  price  concessions  on  Spring  and  Summer
merchandise.  The  lower  level of Leslie  Fay  dress  net  sales was  caused by
additional  price  concessions  to clear  product.  Net sales for the Sportswear
product lines,  excluding  $82,000  generated by the recently  acquired  Cynthia
Steffe  sportswear  brands decreased by $1,624,000 or 27.1%.  This resulted from
the  restructuring  of the  Leslie  Fay  Sportswear  brand  and the  Leslie  Fay
Haberdashery  brand that was  implemented  in the fourth  quarter of 1999.  This
restructuring was expected to reduce sales and improve gross profit.

         Gross  profit  was  $9,581,000  and  21.2% of net sales  compared  with
$9,843,000 and 25.6% for the thirteen weeks ended July 1, 2000 and July 3, 1999,
respectively.  The gross profit from the Dress lines, net of $991,000  generated
by the recently licensed Liz Claiborne dress brands,  decreased $959,000 and the
percent to net sales  decreased  to 23.3% from 27.3% for the  comparable  period
ended July 3, 1999.  The Leslie Fay dress line  experienced  an  improvement  in
gross profit contribution of $296,000 and 26.4% of net sales compared with 24.4%
of net sales for the second  quarter of 2000 and 1999  respectively.  The Warren
Group experienced a decline in Gross Profit of $1,256,000 and 17.2% of net sales
in the second  quarter of 2000 when compared to 34.2% of net sales in the second
quarter of 1999. The high level of off-price sales was the primary cause of this
gross profit  decline for the Warren  Group.  The gross  profit  produced by the
Sportswear  lines,  net of negative margin of $31,000  generated by the recently
acquired Cynthia Steffe sportswear  brands, for the thirteen weeks ended July 1,
2000 decreased

                                      -11-
<PAGE>

                 THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES


by $263,000  and the percent to net sales  increased to 16.7% from 16.6% for the
comparable period ended July 3, 1999.

         SG&A expenses were $9,889,000 and 21.8% of net sales and $9,011,000 and
23.4% of net sales for the  thirteen  weeks ended July 1, 2000 and July 3, 1999,
respectively.  The  expense  increase  of  $878,000  was caused  mainly by about
$1,500,000 of additional  operating  expenses related to the Liz Claiborne dress
brands and the Cynthia Steffe brands  partially offset by expense savings caused
by the restructuring of the Leslie Fay sportswear brands.

         Non-cash  stock  based  compensation  for  stock  options  and  outside
director compensation for the thirteen weeks ended July 1, 2000 and July 3, 1999
was $217,000 and $329,000, respectively.

         Other income,  consisting primarily of royalty income, was $346,000 and
$323,000  for  the  thirteen  weeks  ended  July  1,  2000  and  July  3,  1999,
respectively.

         Depreciation and amortization expense for the thirteen weeks ended July
1, 2000 and July 3, 1999, was $534,000 and $315,000  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
$755,000 and  $1,143,000  for the thirteen  weeks ended July 1, 2000 and July 3,
1999, respectively 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  $681,000  and  $335,000  for the
thirteen weeks ended July 1, 2000 and July 3, 1999, respectively. The additional
interest  was  generated  as a result of higher  borrowings  during the thirteen
weeks ended July 1, 2000,  which were utilized for the Liz Claiborne and Cynthia
Steffe  transactions.  Also, the Company  incurred  additional  interest expense
during the period  ended  July 1, 2000 as a result of the  $5,000,000  term note
entered into on August 25,  1999.  The  financing  fees under the new CIT Credit
Agreement  were  partially  offset by income earned on the cash invested for the
thirteen weeks ended July 1, 2000 and July 3, 1999.

         The benefit for federal,  state and local  income taxes was  ($698,000)
and  ($183,000)  for the  thirteen  weeks  ended  July 1, 2000 and July 3, 1999,
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 July 1, 2000 the Company was  utilizing  approximately
$11,543,000 under the CIT Credit Agreement for letters of credit,  and there was
$2,165,000  in  outstanding  cash  borrowings.  The Company had a net  borrowing
availability  under the CIT Credit  Agreement  of  $28,292,000  on July 1, 2000,
prior to the additional  available  borrowings as a result of the  modifications
discussed  herein and peak borrowing  during the twenty-six  weeks ended July 1,
2000 was $19,424,000.

         At July 1, 2000,  the Company's cash and cash  equivalents  amounted to
$4,358,000,  of which  $3,464,000  is  restricted  for payment of the  remaining
administrative  claims,  which are  expected  to be made prior to the end of the
fiscal  year.  Working  capital  decreased  $2,526,000  to

                                      -12-
<PAGE>

                 THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES


$34,773,000  for the  twenty-six  weeks  ended July 1, 2000.  The changes in the
components of working  capital were: a decrease in cash and cash  equivalents of
$1,108,000;  an increase in net accounts receivable of $6,715,000; a decrease in
inventories  of  $1,074,000;  a decrease in prepaid  expenses and other  current
assets of $849,000 and an increase of $6,210,000  in total current  liabilities.
Accounts  receivable  increased due to the  additional  volume  generated by the
recently  licensed  Liz  Claiborne  Dress  brands.   Total  current  liabilities
increased  as a result  of  additional  short  term  borrowings  of  $2,165,000,
increased operating accounts payable and other accrued liabilities of $4,045,000
resulting mostly from the timing of liabilities due.

         Although the Company's  results of  operations  indicated net income of
$3,361,000  for the twenty-six  weeks ended July 1, 2000,  these results are not
indicative of results for an entire year.

         Capital  expenditures  were  $1,165,000 for the twenty-six  weeks ended
July 1, 2000 which  included  $205,000 of  equipment  purchased  under a capital
lease.  Capital expenditures are expected to be $3,050,000 for fiscal year 2000.
The anticipated capital expenditures for the remainder of the year are primarily
related to improvements in management  information  systems, the Company's first
phase of a planned web site,  improvements in the distribution facility, as well
as the Liz Claiborne Dress showrooms and office space. 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 2000.

         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 July 1, 2000 the  Company  may
borrow up to  $5,661,000  for stock  repurchase  or dividend  distribution.  The
Company has no plans to pay cash dividends in the foreseeable future.

         The Company did not  experience any  significant  year 2000 problems or
disruptions  in the  business  process  caused  by its own  systems  or those of
unrelated  third parties.  The financial  condition or results of operations for
the  fiscal  year  ended  January  1,  2000 were not  affected  by any year 2000
problems. There was no material difference in the actual cost and that which was
previously  disclosed.  Additionally,  there are no remaining  contingencies  or
reserves relative to year 2000.

         There were no significant  changes in the Company's  inventory level or
cash flow caused by attempts to mitigate the risk of year 2000 related  business
interruptions.  The revenue  patterns of the  Company  were not  affected by any
unusual  customer buying levels,  either  positively or negatively at the end of
fiscal 1999.

         There were no  significant  information  technology  projects that were
deferred in fiscal 1999 that will require "catch-up" in the year 2000.

         The Company also passed  through the critical date of February 29, 2000
with no  significant  issues.  The Company  will  continue to monitor  year 2000
issues and will update disclosures appropriately.


                                      -13-
<PAGE>

                 THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES


         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.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES
          ABOUT MARKET RISK.

         None.

                                      -14-

<PAGE>

                 THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES


PART II  -  OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS.
-------    ------------------

         No legal  proceedings were terminated during the second quarter of 2000
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
                   Exhibits are set forth on the "Index to Exhibits" on page E-1
hereof.


                                      -15-
<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:  August 15, 2000            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

                                      -16-
<PAGE>

                 THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES



                                INDEX TO EXHIBITS
                                -----------------

Exhibit No.       Description
-----------       -----------

   27             Financial Data Schedule.

                                      E-1