UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

(Mark One)
   [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934

           For the quarterly period ended MARCH 29, 2003
                                          --------------

                                             OR

   [ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934.


For the transition period from                       to
                              ----------------------   ------------------------


                         Commission file number: 0-24179
                                                 -------

                               KASPER A.S.L., LTD.
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)


            DELAWARE                                    22-3497645
    ------------------------                --------------------------------
    (State of Incorporation)                (IRS Employer Identification No)



                    77 METRO WAY, SECAUCUS, NEW JERSEY 07094
     -----------------------------------------------------------------------
              (Address and zip code of principal executive office)


                                 (201) 864-0328
     -----------------------------------------------------------------------
              (Registrant's telephone number, including area code)


      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]   No [ ]

      Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act Yes [ ]   No [X]


                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS.

      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 [ ]   No [ ]


                      APPLICABLE ONLY TO CORPORATE ISSUERS

      The number of shares of the registrant's Common Stock, $.01 par value,
outstanding as of May 9, 2003 was 6,800,000.

<PAGE>
                      KASPER A.S.L., LTD. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)



                                      INDEX



PART I - FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                                                       Page No.
                                                                                                                       --------
<S>                                                                                                                  <C>
Item 1.     Financial Statements:

                     Condensed Consolidated Balance Sheets at March 29, 2003, December 28, 2002
                     and March 30, 2002.................................................................................   1

                     Condensed Consolidated Statements of Operations for the Thirteen weeks ended
                     March 29, 2003 and March 30, 2002..................................................................   2

                     Condensed Consolidated Statements of Cash Flows for the Thirteen weeks ended
                     March 29, 2003 and March 30, 2002 .................................................................   3

                     Notes to Condensed Consolidated Financial Statements ..............................................   4

Item 2.     Management's Discussion and Analysis of Financial Condition and Results of Operations.......................  13

Item 4.     Controls and Procedures.....................................................................................  19

PART II - OTHER INFORMATION

Item 6.     Exhibits and Reports on Form 8-K............................................................................  20


SIGNATURES..............................................................................................................  21

CERTIFICATIONS..........................................................................................................  22

EXHIBIT INDEX...........................................................................................................  24


</TABLE>



<PAGE>
ITEM 1. FINANCIAL STATEMENTS


                      KASPER A.S.L., LTD. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)
<TABLE>
<CAPTION>
                                                                             ----------------   -----------------  ----------------
                                  ASSETS                                      MARCH 29, 2003    DECEMBER 28, 2002   MARCH 30, 2002
                                                                             ----------------   -----------------  ----------------
                                                                                (UNAUDITED)         (AUDITED)         (UNAUDITED)
                                                                                                                      (RESTATED)
<S>                                                                          <C>                 <C>               <C>
Current Assets:
      Cash and cash equivalents............................................          $ 6,279           $ 24,941           $ 46,265
      Restricted cash......................................................            4,000                 --                 --
      Accounts receivable, net of reserves of  $36,045, $34,679 and
         $42,617, respectively.............................................           44,358             14,479             43,137
      Inventories, net.....................................................           40,898             48,302             37,822
      Prepaid expenses and other current assets............................            5,615              5,441              6,951
                                                                             ----------------    ---------------   ----------------
Total Current Assets.......................................................          101,150             93,163            134,175
                                                                             ----------------    ---------------   ----------------

Property, plant and equipment, at cost less accumulated
      depreciation and amortization of $22,827, $21,538 and
      $17,457, respectively................................................           19,265             19,673             15,805
Reorganization value in excess of identifiable assets, net of
      accumulated amortization.............................................           19,844             19,844             19,844
Trademarks, net of accumulated amortization................................          103,162            103,162            103,162
Other assets, at cost less accumulated amortization........................            2,415                997                990
                                                                             ----------------    ---------------   ----------------
 Total Assets..............................................................         $245,836           $236,839           $273,976
                                                                             ================    ===============   ================


                   LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities Not Subject to Compromise:
      Accounts payable.....................................................          $24,922            $28,592            $15,418
      Accrued expenses and other current liabilities.......................           14,579             13,095             17,854
      Interest payable.....................................................              111                182                768
      Deferred income taxes................................................           13,814              9,118              4,482
      Deferred royalty income..............................................            5,000              5,098              4,139
                                                                             ----------------    ---------------   ----------------
Total Current Liabilities..................................................           58,426             56,085             42,661
Long-Term Liabilities Not Subject to Compromise:
      DIP facility.........................................................               --                 --             77,039
      Deferred royalty income..............................................            9,086             10,000             15,000
      Other long-term liabilities..........................................              692                738                 --
                                                                             ----------------    ---------------   ----------------
Total Liabilities Not Subject to Compromise................................           68,204             66,823            134,700
Liabilities Subject to Compromise..........................................          144,476            145,074            145,931
                                                                             ----------------    ---------------   ----------------
Total Liabilities..........................................................          212,680            211,897            280,631
Commitments and Contingencies
Shareholders' Equity (Deficit):
      Common Stock, 6,800,000 shares issued and outstanding................               68                 68                 68
      Preferred Stock, none issued and outstanding.........................               --                 --                 --
      Capital in excess of par value.......................................          120,668            120,561            120,244
      Accumulated deficit..................................................         (87,036)           (95,046)          (126,232)
      Cumulative other comprehensive loss..................................            (544)              (641)              (735)
                                                                             ----------------    ---------------   ----------------
Total Shareholders' Equity (Deficit).......................................           33,156             24,942            (6,655)
                                                                             ----------------    ---------------   ----------------
Total Liabilities and Shareholders' Equity.................................         $245,836           $236,839           $273,976
                                                                             ================    ===============   ================

</TABLE>

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


                                       1
<PAGE>
                      KASPER A.S.L., LTD. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except share and per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                       THIRTEEN WEEKS ENDED
                                                                           ----------------------------------------------
                                                                              MARCH 29, 2003            MARCH 30, 2002
                                                                           ---------------------     ---------------------
                                                                                                           (RESTATED)
<S>                                                                        <C>                       <C>
Net sales..............................................                               $ 100,497                 $ 113,616
Royalty income.........................................                                   4,364                     3,686
                                                                           ---------------------     ---------------------
Total revenue..........................................                                 104,861                   117,302
Cost of sales..........................................                                  62,525                    76,839
                                                                           ---------------------     ---------------------
Gross profit...........................................                                  42,336                    40,463

Operating expenses:
Selling, general and administrative expenses...........                                  24,928                    23,955
Depreciation and amortization..........................                                   1,468                     1,029
Restructuring and other charges........................                                      --                       542
                                                                           ---------------------     ---------------------
Total operating expenses...............................                                  26,396                    25,526
                                                                           ---------------------     ---------------------
Operating income.......................................                                  15,940                    14,937
Interest and financing costs (excludes $4,893 and
   $2,668 of stayed interest in 2003 and 2002,
   respectively).......................................                                     982                     3,554
                                                                           ---------------------     ---------------------
Income before reorganization costs, income taxes and
   cumulative effect of change in accounting principle.                                  14,958                    11,383
Reorganization costs...................................                                   1,147                     1,627
                                                                           ---------------------     ---------------------
Income before income taxes and cumulative effect of
   change in accounting principle......................                                  13,811                     9,756
Income taxes...........................................                                   5,801                     4,098
                                                                           ---------------------     ---------------------
Income before cumulative effect of change in accounting
   principle...........................................                                   8,010                     5,658
Cumulative effect of change in accounting principle....                                      --                    30,400
                                                                           ---------------------     ---------------------
Net income (loss)......................................                                 $ 8,010                $ (24,742)
                                                                           =====================     =====================
Basic and diluted earnings (loss) per common share.....                                  $ 1.18                  $ (3.64)
                                                                           =====================     =====================
Basic and diluted earnings per common share before
   cumulative change in accounting principle...........                                  $ 1.18                    $ 0.83
                                                                           =====================     =====================
Weighted average number of shares used in computing
    basic and diluted earnings (loss) per common share.                               6,800,000                 6,800,000
                                                                           =====================     =====================

</TABLE>

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


                                       2
<PAGE>
                      KASPER A.S.L., LTD. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                  THIRTEEN WEEKS
                                                                                                       ENDED
                                                                                  ------------------------------------------------
                                                                                     MARCH 29, 2003            MARCH 30, 2002
                                                                                  ----------------------    ----------------------
                                                                                                                 (RESTATED)
<S>                                                                               <C>                       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................................................                   $ 8,010                $ (24,742)
Adjustments to reconcile net income (loss) to net cash (used in) provided by
   operating activities:
   Cumulative effect of change in accounting principle.......................                        --                    30,400
   Depreciation and amortization.............................................                     1,468                     1,029
   Interest rate swap........................................................                        --                       259
   Deferred income taxes.....................................................                     4,696                     3,945
   Deferred royalty income...................................................                   (1,012)                     (861)
   Deferred other............................................................                      (46)                        --
   Non-cash restructuring and other costs....................................                       131                       309
(Increase) decrease in:
   Accounts receivable, net..................................................                  (29,879)                  (38,804)
   Inventories, net..........................................................                     7,404                    35,877
   Prepaid expenses and other assets.........................................                   (1,592)                   (2,731)
(Decrease) increase in:
   Accounts payable, accrued expenses and other current liabilities..........                     (785)                   (1,144)
   Interest payable..........................................................                      (71)                  (27,974)
   Deferred royalty income...................................................                        --                    20,000
                                                                                  ----------------------    ----------------------
Total adjustments............................................................                  (19,686)                    20,305
                                                                                  ----------------------    ----------------------
Net cash used in operating activities before reorganization items............                  (11,676)                   (4,437)
                                                                                  ----------------------    ----------------------
OPERATING CASH FLOWS FROM REORGANIZATION ITEMS:
   Payment of liabilities subject to compromise..............................                     (598)                        --
   Payment of reorganization items...........................................                   (1,401)                   (1,286)
   Interest expense not paid.................................................                        --                    29,052
                                                                                  ----------------------    ----------------------
Net cash (used in) provided by operating activities..........................                  (13,675)                    23,329
                                                                                  ----------------------    ----------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures net of proceeds from sales of fixed assets...........                   (1,025)                   (1,401)
                                                                                  ----------------------    ----------------------
Net cash used in investing activities........................................                   (1,025)                   (1,401)
                                                                                  ----------------------    ----------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net borrowings under bank revolver........................................                        --                    17,991
                                                                                  ----------------------    ----------------------
Net cash provided by financing activities....................................                        --                    17,991
                                                                                  ----------------------    ----------------------

Effect of exchange rate changes on restricted and unrestricted cash and cash
   equivalents...............................................................                        38                      (59)
                                                                                  ----------------------    ----------------------
Net (decrease) increase in restricted and unrestricted cash and cash
   equivalents...............................................................                  (14,662)                    39,860
Cash and cash equivalents, at beginning of period............................                    24,941                     6,405
                                                                                  ----------------------    ----------------------
Restricted and unrestricted cash and cash equivalents, at end of period......                  $ 10,279                  $ 46,265
                                                                                  ======================    ======================

</TABLE>

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


                                       3
<PAGE>
                      KASPER A.S.L., LTD. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.  GENERAL

The accompanying unaudited condensed consolidated financial statements of Kasper
A.S.L., Ltd. and its wholly-owned subsidiaries (the "Company") have been
prepared in accordance with instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes necessary for a fair presentation of financial position, results of
operations and cash flows in conformity with generally accepted accounting
principles. In the opinion of management, all normal and recurring adjustments
and accruals considered necessary for a fair presentation of the Company's
financial position at March 29, 2003 and the results of operations for the
thirteen weeks ended March 29, 2003 (the "first quarter 2003") and March 30,
2002 (the "first quarter 2002") and cash flows for the first quarter 2003 and
first quarter 2002 have been included. These statements should be read in
conjunction with the audited consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission. Operating results for the first quarter 2003
are not necessarily indicative of the results that may be expected for the
fiscal year ending December 27, 2003. Certain amounts reflected in 2002 have
been reclassified to conform to the presentation of similar items in 2003.

The consolidated financial statements include the accounts of Kasper A.S.L.,
Ltd. and its wholly-owned subsidiaries. All material intercompany balances and
transactions have been eliminated in consolidation.

NOTE 2.  REORGANIZATION CASE

On February 5, 2002 (the "Filing Date"), the Company and substantially all of
its domestic subsidiaries (collectively, the "Debtors"), filed voluntary
petitions for reorganization under Chapter 11 of the United States Bankruptcy
Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court") (Case Nos. 02-B10497,
02-B10500, and 02-B10502 through 10505 (ALG)) (the "Chapter 11 Cases"). Pursuant
to an order of the Bankruptcy Court, the Chapter 11 Cases were consolidated for
procedural purposes only and are being jointly administered by the Bankruptcy
Court. The Company's international subsidiaries were not included in the
filings. The Company expects to continue to operate in the ordinary course of
business as debtor-in-possession under the jurisdiction of the Bankruptcy Court.

The accompanying condensed consolidated financial statements are presented in
accordance with American Institute of Certified Public Accountants Statement of
Position 90-7, "Financial Reporting by Entities in Reorganization under the
Bankruptcy Code" (SOP 90-7), and have been prepared in accordance with
accounting principles generally accepted in the United States applicable to a
going concern, which principles, except as otherwise disclosed, assume that
assets will be realized and liabilities will be discharged in the ordinary
course of business. The Company is currently operating under the jurisdiction of
Chapter 11 of the Bankruptcy Code and the Bankruptcy Court, and continuation of
the Company as a going concern is contingent upon, among other things, its
ability to formulate a plan of reorganization which will gain approval of the
requisite parties under the Bankruptcy Code and confirmation by the Bankruptcy
Court, its ability to comply with the Citicorp DIP Credit Agreement (as defined
below), its ability to generate sufficient cash flows from operations, securing
post-emergence financing and the success of future operations. These conditions
create substantial doubt regarding the ability of the Company to continue as a
going concern. The accompanying condensed consolidated financial statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts and classification of liabilities that
might result from the outcome of these uncertainties.


                                       4
<PAGE>
While under the protection of Chapter 11, the Company may sell or otherwise
dispose of assets, and liquidate or settle liabilities, for amounts other than
those reflected in the financial statements. Additionally, the amounts reported
on the condensed consolidated balance sheet could materially change because of
changes in business strategies and the effects of a plan of reorganization. In
the Chapter 11 Cases, substantially all unsecured liabilities as of the Filing
Date are subject to compromise or other treatment under a plan of reorganization
which must be confirmed by the Bankruptcy Court after submission to any required
vote by affected parties. For financial reporting purposes, those liabilities
and obligations whose treatment and satisfaction is dependent on the outcome of
the Chapter 11 Cases, have been segregated and classified as liabilities subject
to compromise in the accompanying condensed consolidated balance sheets.
Generally, all actions to enforce or otherwise effect repayment of pre-Chapter
11 liabilities as well as all pending litigation against the Debtors are stayed
while the Debtors continue their business operations as debtors-in-possession.
The ultimate amount of and settlement terms for such liabilities are subject to
approval of a plan of reorganization and accordingly are not presently
determinable. The principal categories of obligations classified as liabilities
subject to compromise under the Chapter 11 Cases as of March 29, 2003 are
identified below:

                                                              MARCH 29, 2003
                                                             ----------------
                                                              (in thousands)

          13.0% Senior Notes due 2004                            $ 110,000
          Interest accrued on above Senior Notes                    29,096
          Accounts payable                                           3,651
          Other accrued expenses                                     1,729
                                                                 ---------
          Total liabilities subject to compromise                $ 144,476
                                                                 =========

For the first quarter 2003 and first quarter 2002, the Company recognized $1.1
million and $1.6 million in reorganization costs, respectively. These amounts
relate primarily to professional fees and, in 2002, bank fees. Interest expense,
including default interest, under the Senior Notes would have amounted to $4.9
million and $4.4 million for the first quarter 2003 and first quarter 2002,
respectively, had it not have been for the Chapter 11 Cases.

At the commencement of the Chapter 11 Cases, the Company filed a preliminary
plan of reorganization. The United States Trustee thereafter appointed the
Official Committee of Unsecured Creditors (the "Creditors' Committee"), and
based on negotiations with the Creditors' Committee, the Company filed a First
Amended and Restated Joint Plan of Reorganization (the "Plan") and First Amended
and Restated Disclosure Statement (the "Disclosure Statement") on November 6,
2002. In essence, the Plan provides for (i) payment in full of federal, state,
and local tax claims and other administrative and priority claims; (ii) payment
in full or refinancing of the DIP Credit Agreement; (iii) reinstatement or
payment in full of, or surrender of collateral securing, allowed miscellaneous
secured claims and capitalized lease obligations; (iv) distributions of shares
of stock in the reorganized Company to the holders of allowed general unsecured
claims and the holders of the Company's Senior Notes due 2004; (v) a
distribution of cash in the amount of 70% of allowed convenience claims; and
(vi) distributions of warrants to purchase shares of stock in the reorganized
Company to the holders of shares of stock in the Company on the record date
established in the Chapter 11 Cases.

A hearing to consider the Plan was scheduled for December 5, 2002 (the
"Scheduled Hearing"). On December 4, 2002, the Company received a proposal to
acquire the Company for $88 million in cash (the "Management Proposal") from a
management group led by John D. Idol, the Company's Chief Executive Officer (the



                                       5
<PAGE>
"Management Group"), and Parthenon Capital, LLC ("Parthenon"). The Scheduled
Hearing was postponed to allow the Company to consider the Management Proposal.
Under the Management Proposal, no payment would be made to the Company's
existing stockholders. The Management Proposal was modified on December 10, 2002
to increase the amount of the cash payment to $100 million.

On September 20, 2002, the Board of Directors of the Company formed a special
committee of independent directors (the "Special Committee") in connection with
the Company's exploration of strategic alternatives, including a possible sale
of the Company. The Special Committee was formed in anticipation of potential
offers to purchase the Company, and to avoid potential conflicts of interest in
the event such an offer was made by the Company's management. On December 23,
2002, the Special Committee, consisting of Salvatore Salibello and Denis Taura,
with the support of the Creditor's Committee, engaged Peter J. Solomon Company
("Solomon") to advise the Special Committee in connection with exploring
strategic alternatives. Solomon, on behalf of the Special Committee, is
soliciting proposals from potential purchasers of the Company, including the
Management Group and Parthenon. Such proposals will be considered by the Special
Committee and representatives of the Creditors' Committee. However, there is no
assurance that a transaction will be consummated or that, if consummated, any
revised plan of reorganization submitted to the bankruptcy court in connection
therewith would result in a distribution to equity holders.

A restructuring of the Company's debt, under the Plan, may result in the
cancellation of indebtedness ("COD"), which if it occurs in the course of a
proceeding pursuant to Chapter 11 of the United States Bankruptcy Code, would be
excluded from the Company's gross income in the year of the forgiveness.
However, the Company will be required to reduce its basis in its tax attributes,
which include net operating loss carry-forwards and general business and other
credits and tax basis in its assets by an amount equal to the COD. The reduction
of these tax attributes results in the Company not being able to shelter future
taxable income in the amount equal to the COD.

NOTE 3.  INVENTORIES, NET

Inventories, net of reserves, are valued at lower of cost (first-in, first-out)
or market and consist of the following:

<TABLE>
<CAPTION>
                                             MARCH 29, 2003       DECEMBER 28, 2002     MARCH 30, 2002
                                             --------------       -----------------     --------------
                                                                    (in thousands)
<S>                                          <C>                  <C>                   <C>
     Raw materials                               $ 6,034                $ 6,482             $ 10,090
     Finished goods                               34,864                 41,820               27,732
                                               ---------              ---------            ---------
                Total inventories               $ 40,898               $ 48,302             $ 37,822
                                               =========              =========            =========

</TABLE>

NOTE 4.  REORGANIZATION VALUE IN EXCESS OF IDENTIFIABLE ASSETS AND OTHER
         INTANGIBLE ASSETS

In June 2001, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" ("SFAS No. 142"). SFAS No. 142 prohibits the amortization of
goodwill and intangible assets with indefinite useful lives and requires that
these assets be reviewed for impairment upon adoption with completion of testing
within one year of adoption and at least annually thereafter. The Company, as
required, adopted SFAS No. 142 beginning December 30, 2001. SFAS No. 142
requires that the Company's Reorganization Value in Excess of Identifiable
Assets (the "Reorganization Asset") and other indefinitely lived intangible
assets (collectively, the "Intangibles") be tested for impairment using the
two-step process. The first step is to determine the fair value of the reporting


                                       6
<PAGE>
unit, which may be calculated using a discounted cash flow methodology, and
compare this value to its carrying value. If the fair value exceeds the carrying
value, no further work is required and no impairment loss would be recognized.
The second step is an allocation of the fair value of the reporting unit to all
of the reporting unit's assets and liabilities under a hypothetical purchase
price allocation. As of the date the Company adopted SFAS No. 142, the Company
was experiencing substantial operating losses; highly leveraged; unable to make
its semi-annual interest payments on its Senior Notes; undergoing a corporate
restructuring of which success was uncertain; had diminimus market
capitalization and; on the verge of filing bankruptcy. These circumstances led
to a significant diminution of the Company's fair vale and the failure of step
one of SFAS No. 142. The Company utilized the discounted cash flow methodology
to estimate fair value. The evaluation of reporting units on a fair value basis,
as required from the implementation of SFAS No. 142, indicated that the implied
Reorganization Asset of the Kasper Wholesale segment was $30.4 million less than
its carrying value. Based on the evaluation, along with continuing difficulties
being experienced in the industry, the Company recorded a non-cash charge of
$30.4 million to reduce the carrying value of the Reorganization Asset to the
estimated fair value as of December 28, 2002, in the first quarter 2002. This
non-cash charge is reported as a cumulative effect of an accounting change in
the accompanying statement of operations for the first quarter 2002. The first
quarter 2002 was restated, as required by SFAS No, 142, to reflect the
impairment charge that was determined prior to the issuance of the Company's
financial statements for the fiscal year ended December 28, 2002.

NOTE 5.   DEBT

CREDIT FACILITY -

On July 9, 1999, the Company entered into a credit facility with a bank group
led by Chase (the "Chase Facility") in order to, among other things, fund the
Company's working capital requirements and to finance the Company's purchase of
the Anne Klein trademarks (the "Trademark Purchase"). On the Filing Date, the
Company obtained a $35 million DIP Revolving Credit Agreement from its existing
bank group (the "Chase DIP"). The Chase DIP also provided for a term loan for
the purpose of refinancing the pre-petition obligations outstanding under the
Chase Facility. On July 12, 2002, the Chase DIP was amended to convert the term
loan to a revolving credit agreement.

The Chase DIP provided, among other things, for the maintenance of certain
financial ratios and covenants, and set limits on capital expenditures and
dividends to shareholders. The Chase DIP was scheduled to expire on February 5,
2003. Availability under the Chase DIP was limited to a borrowing base
calculated upon eligible accounts receivable, inventory, trademarks and letters
of credit. Interest on outstanding borrowings was determined based on stated
margins above the prime rate at Chase.

In connection with the Chase DIP, the Company paid $875,000 in facility,
advisory and structuring fees, along with an annual administrative agency fee of
$100,000 and an annual collateral monitoring fee of $100,000. These fees were
expensed as incurred and included as part of reorganization costs. In connection
with the July 12, 2002 amendment, the Company paid $100,000 in bank fees, which
were capitalized and amortized over the remaining life of the Chase DIP,
totaling $85,000 in 2002.

On January 30, 2003, the Company obtained a $100 million debtor-in-possession
financing facility (the "Citicorp DIP Credit Agreement") from its new bank group
led by Citicorp USA, Inc. ("Citicorp"). The Citicorp DIP Credit Agreement
replaced the Chase DIP and permits up to $60.0 million available for issuance of
letters of credit, of which $15.0 million will be available for stand-by letters
of credit and up to $10.0 million for discretionary swing loans.


                                       7
<PAGE>
The Citicorp DIP Credit Agreement provides, among other things, for the
maintenance of certain financial ratios and covenants, and set limits on capital
expenditures and dividends to shareholders. The Citicorp DIP Credit Agreement,
has a term ending on the earliest to occur of (i) the six month anniversary of
the closing date, (ii) the effective date of the Plan, or (iii) the occurrence
of an Event of Default. Availability under the Citicorp DIP Credit Agreement is
limited to a borrowing base calculated upon eligible accounts receivable,
eligible inventory, eligible documentary letters of credit and trademarks, in
each case, less appropriate reserves. Interest on outstanding borrowings is
determined based on stated margins above the Base Rate Loans and Eurodollar Rate
Loans maintained by Citicorp on the terms and subject to the conditions of the
agreement.



The Company paid approximately $1.6 million in commitment and related fees in
connection with the Citicorp DIP Credit Agreement in January 2003. On March 14,
2003 the Company obtained an amendment to the Citicorp DIP Credit Agreement,
which allowed the DIP portion of the credit agreement to be extended to December
31, 2003, as well as amended certain financial covenants. There were no
incremental bank fees associated with this amendment. As of March 29, 2003,
there were no direct borrowings and $35.9 million outstanding in letters of
credit under the Citicorp DIP Credit Agreement. In addition to $6.3 million of
unrestricted cash and cash equivalents on hand, the Company had approximately
$31.7 million available for future borrowings as of March 29, 2003.

NOTE 6.   INCOME (LOSS) PER SHARE

The computation of basic and diluted income (loss) per common share is based
upon the weighted average number of common shares outstanding during the period.
The gains and losses resulting from changes in exchange rates from year to year
have been reported in other comprehensive income.

NOTE 7.  SEGMENT INFORMATION

The Company's primary segment is the design, distribution and wholesale sale of
women's career suits, dresses and sportswear principally to major department
stores and specialty shops. In addition, as of March 29, 2003, the Company
operated 62 Kasper retail stores, 10 Anne Klein retail stores and one Anne Klein
New York full price store, as another distribution channel for its products. The
Company's licensing operations are also considered a segment for reporting
purposes. For the purposes of decision-making and assessing performance,
management includes its international operations in its wholesale segment, as
they are deemed immaterial for segment reporting.

The Company measures segment profit as earnings before interest, taxes,
depreciation, amortization and reorganization ("EBITDAR"). All intercompany
revenues and expenses are eliminated in computing revenues and EBITDAR.
Information on segments and a reconciliation to the condensed consolidated
financial statements is as follows:


<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED MARCH 29, 2003:
                                                 WHOLESALE            RETAIL           LICENSING           CONSOLIDATED
                                             ------------------  -----------------  -----------------    -----------------
                                                                            (in thousands)
<S>                                          <C>                 <C>                <C>                  <C>
Revenues                                              $ 87,845            $ 12,652           $ 4,364            $ 104,861
                                             ------------------  ------------------ -----------------    -----------------

EBITDAR                                                 12,944                 818             3,646               17,408
Depreciation and amortization                                                                                       1,468
                                                                                                         -----------------
Operating income                                                                                                  $15,940
                                                                                                         =================



                                       8
<PAGE>
THIRTEEN WEEKS ENDED MARCH 30, 2002:
                                                 WHOLESALE            RETAIL           LICENSING           CONSOLIDATED
                                             ------------------  -----------------  -----------------    -----------------
                                                                            (in thousands)

Revenues                                              $ 98,804            $ 14,812           $ 3,686            $ 117,302
                                             ------------------  ------------------ -----------------    -----------------

EBITDAR                                                 12,986                 593             2,929               16,508
Depreciation and amortization                                                                                       1,029
Restructuring and other charges                                                                                       542
                                                                                                         -----------------
Operating income                                                                                                 $ 14,937
                                                                                                         =================

</TABLE>





























                                       9
<PAGE>
NOTE 8. RESTRUCTURING AND OTHER CHARGES

In the fourth quarter of 2000, the Company began preparations for its bankruptcy
filing, and in doing so, incurred various consulting, legal and other fees
related to such filing. These fees, along with other charges taken to exit
certain retail store leases and certain office space prior to the Filing Date,
have been classified as restructuring and other charges on the accompanying
Consolidated Statements of Operations. During the first quarter 2002, the
Company recorded a charge of $542,000 primarily relating to professional fees.

<TABLE>
<CAPTION>
                                                                                Estimated occupancy
                                                                               costs, severance and
                                                         Professional Fees       asset write-downs               Total
                                                         ------------------- -------------------------- ----------------------
                                                                                  (in thousands)
<S>                                                      <C>                 <C>                        <C>
Balance at December 30, 2000                                   $    ---               $    ---                 $    ---
     2001 restructuring and other charges                         4,297                  4,904                    9,201
     2001 payments/write-downs                                   (4,196)                (1,802)                  (5,998)
                                                            ------------           ------------             ------------
Balance at December 29, 2001                                   $    101               $  3,102                 $  3,203
                                                            ------------           ------------             ------------
     2002 restructuring and other charges (credits)                 603                 (3,098)                  (2,495)
     2002 (payments) reversals                                     (704)                   956                      252
                                                            ------------           ------------             ------------
Balance at December 28, 2002                                   $    ---               $    960                 $    960
                                                            ============           ============             ============
     2003 restructuring charges                                     ---                    ---                      ---
     2003 payments                                                  ---                   (360)                    (360)
                                                            ------------           ------------             ------------
Balance at March 29, 2003                                      $    ---               $    600                 $    600
                                                            ============           ============             ============

</TABLE>


NOTE 9.  NEW ACCOUNTING PRONOUCEMENTS

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities," which changes the accounting for costs such
as lease termination costs and certain employee severance costs that are
associated with a restructuring, discontinued operation, plant closing, or other
exit or disposal activity initiated after December 31, 2002. The standard
requires companies to recognize the fair value of costs associated with exit or
disposal activities when they are incurred rather than at the date of a
commitment to an exit or disposal plan. The Company does not expect the adoption
of this standard to have a material effect on the results of operations. In
December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - An Amendment of FASB Statement No.
123." SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based
Compensation," to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the disclosure requirements of
SFAS No. 123 to require prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. The Company
adopted the disclosure provisions of SFAS No. 148 effective December 28, 2002.



                                       10
<PAGE>
NOTE 10. SUPPLEMENTAL CONDENSED FINANCIAL INFORMATION

The following presents the condensed financial statements of the Company and its
subsidiaries, as of March 29, 2003 and December 28, 2002 and for the thirteen
weeks ending March 29, 2003 and March 30, 2002, that filed voluntary petitions
under Chapter 11:

<TABLE>
<CAPTION>
CONDENSED BALANCE SHEETS                                                       March 29, 2003        December 28, 2002
---------------------------------------------------------------------        -------------------    -------------------
<S>                                                                          <C>                    <C>
                                ASSETS                                                     (in thousands)
Current Assets:
  Restricted and unrestricted cash                                                        $9,878                $22,896
  Accounts receivable, net                                                                39,580                 12,709
  Inventories, net                                                                        39,333                 46,726
  Prepaid expenses and other current assets                                                4,884                  4,701
                                                                             -------------------    -------------------
Total Current Assets                                                                      93,675                 87,032
                                                                             -------------------    -------------------
Property, plant and equipment, net                                                        17,643                 18,064
Intangibles and other assets, net                                                        124,438                123,020
Investment in subsidiaries                                                                47,796                 47,796
                                                                             -------------------    -------------------
Total Assets                                                                           $ 283,552              $ 275,912
                                                                             ===================    ===================

                        LIABILITIES AND EQUITY
Current Liabilities:
  Accounts payable, accrued expenses and other current liabilities                      $ 60,313                $58,228
Payable to wholly-owned entities not in bankruptcy                                        68,941                 67,861
Long-term liabilities not subject to compromise                                            9,087                 10,000
Liabilities subject to compromise                                                        144,476                145,074
                                                                             -------------------    -------------------
Total Liabilities                                                                        282,817                281,163
Shareholders' Equity                                                                         735                (5,251)
                                                                             -------------------    -------------------
Total Liabilities and Equity                                                           $ 283,552              $ 275,912
                                                                             ===================    ===================


CONDENSED STATEMENTS OF OPERATIONS                                           First Quarter 2003      First Quarter 2002
---------------------------------------------------------------------        -------------------    -------------------
                                                                                           (in thousands)

Total revenue                                                                          $ 102,074              $ 114,705
Cost of sales                                                                             64,365                 76,615
                                                                             -------------------    -------------------
Gross profit                                                                              37,709                 38,090

Selling, general and administrative expenses                                              23,139                 22,752
Depreciation and amortization                                                              1,299                    886
Restructuring and other charges                                                              ---                    542
                                                                             -------------------    -------------------
Total operating expenses                                                                  24,438                 24,180
                                                                             -------------------    -------------------
Operating income                                                                          13,271                 13,910

Interest and financing costs                                                                 950                  3,551
Reorganization costs                                                                       1,147                  1,627
Income taxes                                                                               5,291                  3,903
Cumulative effect of accounting change                                                       ---                 30,400
                                                                             -------------------    -------------------
Net income                                                                               $ 5,883             $ (25,571)
                                                                             ===================    ===================
</TABLE>

                                       11
<PAGE>
CONDENSED STATEMENT OF CASH FLOWS                         First Quarter 2003
-----------------------------------------------------     -------------------
                                                             (in thousands)

Cash Flows used in Operating Activities                            $ (12,140)
Cash Flows used in Investing Activities                                 (878)
Cash Flows used in Financing Activities                                  ---
                                                          -------------------
Net decrease in cash and cash equivalents                            (13,018)
Cash and cash equivalents, beginning of period                        22,896
                                                          -------------------
Cash and cash equivalents, end of period                           $   9,878
                                                          ===================





















                                       12
<PAGE>
ITEM 2.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the
foregoing condensed consolidated financial statements and notes thereto and
management's discussion and analysis of financial condition and results of
operations in the Company's Annual Report on Form 10-K for the year ended
December 28, 2002. This discussion contains forward-looking statements based on
current expectations that involve risks and uncertainties. Actual results and
the timing of certain events may differ significantly from those projected in
such forward-looking statements due to a number of factors, including those set
forth at the end of this Item.

OVERVIEW

On February 5, 2002, the Company and certain of its domestic subsidiaries filed
voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code.
The Company continues to operate in the ordinary course of business as
debtor-in-possession under the jurisdiction of the Bankruptcy.

The Company's ability to continue as a going concern is dependent upon the
acceptance of a plan of reorganization by the Bankruptcy Court and the Company's
creditors, securing exit financing upon emergence from bankruptcy, compliance
with all debt covenants under the Citicorp DIP Credit Agreement, the ability to
generate sufficient cash flows from operations and the success of future
operations. There can be no assurance that the Company will be successful in
resolving these uncertainties. As a result, the independent auditors have
qualified their opinion relative to the uncertainty of the Company to continue
as a going concern. The financial information contained herein does not include
any adjustments relating to the recoverability and classification of recorded
asset amounts or the amount and classification of liabilities or any other
adjustments that might become necessary should the Company be unable to continue
as a going concern in its present form.

In the first quarter of 2003, the Company's revenue decreased 11.6% and its
gross margin increased to 40.4% from 34.5% compared to the first quarter of
2002. The trends evident in the first quarter of 2003 are not necessarily
indicative of the results that may be expected for the fiscal year ending
December 27, 2003.

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                             REVENUES BY SEGMENT
                                          (000'S EXCEPT PERCENTAGES)

                                  FIRST QUARTER               %               FIRST QUARTER               %
                                      2003                 OF TOTAL               2002                 OF TOTAL
                               --------------------                        --------------------
<S>                            <C>                     <C>                 <C>                    <C>
Wholesale                                  $87,845            83.8%                    $98,804            84.2%
Retail                                      12,652            12.0%                     14,812            12.7%
                               --------------------        --------        --------------------        --------
Net sales                                  100,497            95.8%                    113,616            96.9%
Licensing                                    4,364             4.2%                      3,686             3.1%
                               --------------------        --------        --------------------        --------
Total revenue                            $ 104,861           100.0%                   $117,302           100.0%
                               ====================        ========        ====================        ========

</TABLE>


THIRTEEN WEEKS ENDED MARCH 29, 2003 AS COMPARED TO THIRTEEN WEEKS ENDED
MARCH 30, 2002

TOTAL REVENUE

Net sales for the thirteen weeks ended March 29, 2003 (the "first quarter 2003")
were $100.5 million as compared to $113.6 for the thirteen weeks ended March 30,
2002 (the "first quarter 2002"). The reduction in sales from the Company's
wholesale operations ("Wholesale") was primarily the result of a decrease in


                                       13
<PAGE>
average unit prices resulting from a revised merchandise and pricing strategy in
a business line, late delivery of goods and an overall difficult retail
environment experienced during the first quarter of 2003.

Sales at the Company's retail stores ("Retail") decreased to $12.7 million in
the first quarter 2003 from $14.8 million in the first quarter 2002, due to the
closing of 24 under performing stores, which contributed $1.8 million in sales
during the first quarter of 2002. In addition, comparable store sales decreased
6.9% in the first quarter 2003 compared to the first quarter 2002 as a result of
continued weakness in the retail environment.

Royalty revenue from the Company's licensing activities ("Licensing") increased
to $4.4 million in first quarter 2003 compared to $3.7 million in the first
quarter 2002 as a result of newly renegotiated higher royalty percentage rates
and higher licensee sales volume.

GROSS PROFIT

Gross Profit as a percentage of total revenue increased to 40.3% for the first
quarter 2003, compared to 34.5% for the first quarter 2002. Wholesale gross
profit as a percentage of sales increased to 35.0% in the first quarter 2003
from 30.1% in the first quarter 2002, the result of improved margins on
off-price sales and cost savings from sourcing and internal production process
improvements which favorably impacted cost of goods sold.

Retail gross profit as a percentage of sales increased to 56.5% in first quarter
2003 from 47.2% in first quarter 2002 due to the closing of under performing
stores and the cost savings passed on from wholesale as discussed above.

Licensing contributed to the Company's overall increased gross margin due to the
greater contribution of royalty revenue as a percentage of total revenue.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses ("SG&A") increased to approximately
$24.9 million in the first quarter 2003 as compared to $24.0 million in the
first quarter 2002. The variance is attributable to increases in design,
production and shipping costs.

RESTRUCTURING AND OTHER CHARGES

The Company recorded $542,000 in other charges in the first quarter of 2002.
These charges related primarily to professional fees associated with the
Company's pending bankruptcy filing.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization totaled $1.5 million in the first quarter 2003 and
$1.0 million in the first quarter 2002. The increase in depreciation relates to
the implementation of the Company's new management information systems and
capital expenditures relating to department store boutiques and the Company's
new full price retail store.

INTEREST AND FINANCING COSTS

Interest and financing costs decreased to $1.0 million in the first quarter 2003
from $3.6 million in the first quarter 2002. Interest expense is comprised of
the interest expense on the Senior Notes prior to February 5, 2002, along with
interest on the Citicorp DIP Credit Agreement, Chase Facility and Chase DIP (all
defined elsewhere within), factoring fees and changes in fair value of the
Company's interest rate swap.

As a result of the Chapter 11 Cases, interest on the Senior Notes stopped
accruing as of February 5, 2002. Accordingly, the Company did not incur interest
on the Senior Notes in the first quarter 2003 compared to $1.7 million for the


                                       14
<PAGE>
first quarter 2002. Included in Senior Notes interest expense for the first
quarter 2002 was approximately $300,000 in unpaid default interest on the Senior
Notes.

Interest under the Chase Facility, Chase DIP and Citicorp DIP Credit Agreement,
as applicable, totaled approximately $535,000 in the first quarter 2003, and
$1.5 million in the first quarter 2002, the result of decreased borrowings. In
the first quarter 2003, the Company paid approximately $1.6 million in bank fees
related to the Citicorp DIP Credit Agreement and resulted in approximately
$100,000 of amortization charges in the first quarter 2003.

The remaining interest expense relates to factoring fees of approximately
$350,000 in the first quarter 2003 and $410,000 in the first quarter 2002. As of
June 29, 2002 the interest rate swap expired and the Company incurred no
interest expense in the first quarter 2003 compared to income of $260,000 in the
first quarter 2002.

REORGANIZATION COSTS

The Company recorded $1.1 million in reorganization costs in the first quarter
of 2003 compared to $1.6 million in the first quarter 2002. These costs related
primarily to professional fees and, in 2002, bank fees associated with the
Company's reorganization as a result of the Chapter 11 Cases.

INCOME TAXES

Provision for income taxes was $5.8 million for the first quarter 2003 compared
to $4.1 million for the first quarter 2002. These amounts differ from the amount
computed by applying the federal income tax statutory rate of 34% to income
before taxes primarily because of state and foreign taxes.

NET INCOME (LOSS)

Net income was $8.0 million in the first quarter 2003 compared to a loss of
$24.7 million in the first quarter 2002, an increase of approximately $32.7
million. The increase is the result of the increased margins, reduced interest
and financing costs along with the cumulative effect of change in accounting
principle recorded in the first quarter 2002. See Notes to Condensed
Consolidated Financial Statements for more information on the cumulative effect
of change in accounting principle.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

The Company's main sources of liquidity historically have been cash flows from
operations, vendor credit terms and credit facilities. The Company's capital
requirements primarily result from working capital needs, department store
boutiques, retail stores including full price shops and other corporate
activities.

Net cash used in operating activities was $13.7 million during the first quarter
2003 as compared to cash provided by operating activities of $23.3 million
during the first quarter 2002. The decrease in cash flows from the prior year is
partly the result of the $20.0 million royalty prepayment received during the
first quarter of 2002. In addition, as a result of the Chapter 11 Cases, in 2002
the Company benefited from the non-payment of pre-petition liabilities, which
are generally not settled until a plan of reorganization has been approved.
Inventory levels at the beginning of 2003 were leaner than at the beginning of
2002, resulting in a smaller decrease for the quarter. The decrease in cash used
in investing activities resulted from less capital expenditures in the first
quarter 2003 compared to the first quarter 2002. Cash flows from financing
activities decreased as a result of the decreased borrowings during the first
quarter 2003.

On July 9, 1999, the Company entered into a credit facility (the "Chase
Facility") with a bank group led by JPMorgan Chase ("Chase") in order to, among
other things, fund the Company's working capital requirements and to finance the
Company's purchase of the Anne Klein trademarks (the "Trademark Purchase"). On
the Filing Date, the Company obtained a $35 million DIP Revolving Credit


                                       15
<PAGE>
Agreement from its existing bank group (the "Chase DIP"). The Chase DIP also
provided for a term loan for the purpose of refinancing the pre-petition
obligations outstanding under the Chase Facility. On July 12, 2002, the Chase
DIP was amended to convert the term loan to a revolving credit agreement.

The Chase DIP provided, among other things, for the maintenance of certain
financial ratios and covenants, and set limits on capital expenditures and
dividends to shareholders. The Chase DIP was scheduled to expire on February 5,
2003. Availability under the Chase DIP was limited to a borrowing base
calculated upon eligible accounts receivable, inventory, trademarks and letters
of credit. Interest on outstanding borrowings was determined based on stated
margins above the prime rate at Chase.

In connection with the Chase DIP, the Company paid $875,000 in facility,
advisory and structuring fees, along with an annual administrative agency fee of
$100,000 and an annual collateral monitoring fee of $100,000. These fees were
expensed as incurred and included as part of reorganization costs. In connection
with the July 12, 2002 amendment, the Company paid $100,000 in bank fees, which
were capitalized and amortized over the remaining life of the Chase DIP.

On January 30, 2003, the Company obtained a $100 million debtor-in-possession
financing facility (the "Citicorp DIP Credit Agreement") from its new bank group
led by Citicorp USA, Inc. ("Citicorp"). The Citicorp DIP Credit Agreement
replaced the Chase DIP and permits up to $60.0 million available for issuance of
letters of credit, of which $15.0 million will be available for stand-by letters
of credit and up to $10.0 million for discretionary swing loans.

The Citicorp DIP Credit Agreement provides, among other things, for the
maintenance of certain financial ratios and covenants, and set limits on capital
expenditures and dividends to shareholders. The Citicorp DIP Credit Agreement,
has a term ending on the earliest to occur of (i) the six month anniversary of
the closing date, (ii) the effective date of the Plan, or (iii) the occurrence
of an Event of Default. Availability under the Citicorp DIP Credit Agreement is
limited to a borrowing base calculated upon eligible accounts receivable,
eligible inventory, eligible documentary letters of credit and trademarks, in
each case, less appropriate reserves. Interest on outstanding borrowings is
determined based on stated margins above the Base Rate Loans and Eurodollar Rate
Loans maintained by Citicorp on the terms and subject to the conditions of the
agreement.

The Company paid approximately $1.6 million in commitment and related fees in
connection with the Citicorp DIP Credit Agreement in January 2003. On March 14,
2003 the Company obtained an amendment to the Citicorp DIP Credit Agreement,
which allowed the DIP portion of the credit agreement to be extended to December
31, 2003 as well as amended certain financial covenants. There were no
incremental bank fees associated with this amendment. As of March 29, 2003,
there were no direct borrowings and $35.9 million outstanding in letters of
credit under the Citicorp DIP Credit Agreement. In addition to $6.3 million of
unrestricted cash and cash equivalents on hand, the Company had approximately
$31.7 million available for future borrowings as of March 29, 2003. At March 29,
2003, the Company had $4.0 million in restricted cash with Chase,
collateralizing certain cash management activities conducted using the Company's
bank accounts maintained with Chase. During the month of March, the Company
began transferring in the cash management services provided by Citicorp
replacing those provided by Chase. When the transfer is completed and there are
no cash management services provided by Chase, the Company is then no longer
obligated to cash collateralize these activities.

Pursuant to the Leslie Fay reorganization plan, the Company issued $110 million
in Senior Notes due 2004 (the "Senior Notes"). The Senior Notes initially bore
interest at 12.75% per annum and mature on March 31, 2004. Beginning January 1,
2000, the interest rate increased to 13.0%. The Company stopped accruing
interest on the Senior Notes on the Filing Date. Interest was payable
semi-annually on March 31 and September 30. Interest relating the Senior Notes
totaled $1.7 million for the first quarter 2002, including $300,000 in default


                                       16
<PAGE>
interest. At March 29, 2003, the Senior Notes have been classified as
liabilities subject to compromise.

On October 4, 1999, the Company entered into a factoring agreement with the CIT
Group/Commercial Services, Inc. ("CIT"). CIT collects the Company's receivables
and in turn remits the funds to the Company. Any amounts unpaid after 90 days on
approved sales are guaranteed to be paid to the Company by CIT. The agreement
has no expiration date but may be terminated upon 90 days written notice by the
Company and upon 60 days written notice by CIT. On November 10, 2000, the
factoring agreement was amended to change the fee structure from a flat rate
monthly fee to a floating rate monthly fee based on a percentage of the amount
of each account factored. For its services, CIT charges the Company 0.30% of the
gross face amount of each account factored and an additional 0.25% of the gross
face amount of each account whose terms exceed 60 days. In addition, for each
six-month period beginning December 1, 2000, there is a minimum factoring fee of
$675,000. On February 5, 2002, the Company entered into an amended agreement
with CIT. The terms of the amended agreement remained substantially the same
with the exception of the reduction of the six-month minimum factoring fee to
$500,000 and the requirement of a 90-day termination notice by CIT, except upon
the occurrence of default by the Company, including a default under the Chase
DIP or failure to pay any obligation under the CIT agreement, for which no
notice is needed. On January 30, 2003, the Company, in connection with the
replacement of the Chase DIP by Citicorp DIP Credit Agreement, entered into an
amendment with CIT. The terms of this amendment were to incorporate the Citicorp
DIP Credit Agreement as part of the factoring agreement, change the fees charged
by CIT for its services to 0.25% of the gross face amount of each account
factored and reduce each six-month period minimum factoring fee to $375,000
beginning February 1, 2003.

Capital expenditures were $1.0 million and $1.4 million for the first quarter
2003 and the first quarter 2002, respectively. Capital expenditures represent
spending associated with information systems, new retail stores including the
Anne Klein New York full price store in the first quarter 2002, department store
boutiques, warehouse and showroom improvements, overseas facilities development
and general improvements.

On March 12, 2002, the Company received a prepayment of royalties of $20.0
million from one of its licensees. The royalty prepayment is non refundable and
is to be applied to guaranteed minimum royalty payments and excess royalties due
through December 31, 2006.

The Company currently anticipates that it will be in a position to satisfy its
ongoing cash requirements, in the near term, through cash from operations,
borrowings under the Citicorp DIP Credit Agreement and, from time to time,
amounts received in connection with strategic transactions, including, among
other things, licensing arrangements. Events that may impact the Company's
ability to meet its ongoing cash requirements in the near term include, but are
not limited to, failure to have the Plan approved by the Bankruptcy Court,
future events that may have the effect of reducing available cash balances (such
as unexpected operating losses, or increased capital or other expenditures), and
future circumstances that might reduce or eliminate the availability of external
financing. In addition, the ongoing promotional environment of department stores
has impacted the industry. If the current trend persists, the Company's
financial results could continue to be negatively impacted.


DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION

The statements contained in this Quarterly Report on Form 10-Q that are not
historical facts are "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Act of 1934, as amended. Those statements appear in a number of places in this
report, including in "Management's Discussion and Analysis of Financial
Conditions and Results of Operations," and include all discussions of trends
affecting the Company's financial conditions and results of operations and the


                                       17
<PAGE>
Company's business and growth strategies as well as statements that contain such
forward-looking statements as "believes," "anticipates," "could," "estimates,"
"expects," "intends," "may," "plans," "predicts," "projects," "will," and
similar terms and phrases, including the negative thereof. In addition, from
time to time, the Company or its representatives have made or may make
forward-looking statements, orally or in writing. Furthermore, forward-looking
statements may be included in our other filings with the Securities and Exchange
Commission as well as in press releases or oral statements made by or with the
approval of the Company's authorized executive officers.

We caution you to bear in mind that forward-looking statements, by their very
nature, involve assumptions and expectations and are subject to risks and
uncertainties. Although we believe that the assumptions and expectations
reflected in the forward-looking statements contained in this report are
reasonable, no assurance can be given that those assumptions or expectations
will prove to have been correct. Important factors that could cause actual
results to differ materially from our expectations include but are not limited
to, the following cautionary statements ("Cautionary Statements"):


o    the success of the Company's overall business strategy, including
     successful implementation of the Company's restructuring plan and
     successful implementation of the Company's plan of reorganization;

o    the impact that the continuation of the Company's Chapter 11 proceedings
     may have on the Company's relationships with its principal customers and
     suppliers;

o    the risk that the bankruptcy court overseeing the Company's Chapter 11
     proceedings may not confirm any reorganization plan proposed by the
     Company;

o    actions that may be taken by creditors and other parties-in-interest that
     may have the effect of preventing or delaying confirmation of a plan of
     reorganization in connection with the Company's Chapter 11 proceedings;

o    the risk that the cash generated by the Company from operations and the
     cash received by the Company under its Citicorp DIP Credit Facility
     (defined elsewhere herein) will not be sufficient to fund the operations of
     the Company until such time as the Company's plan of reorganization is
     approved by the bankruptcy court;

o    the ability of the Company to achieve its covenants under the Citicorp DIP
     Credit Agreement;

o    the ability of the Company to adapt to changing consumer preferences and
     tastes;

o    the risk of global political unrest including terrorism and war and its
     impact on consumer confidence and spending and disruption in the receipt
     and delivery of merchandise;

o    the risk of work stoppages by any Company suppliers or service providers;

o    the risk of significant disruption in the Company's relationships with its
     suppliers, manufacturers and employees;

o    potential fluctuations in the Company's operating costs and results;

o    the risk that the Internal Revenue Service will prevail in its proposed
     adjustment resulting in additional income taxes and interest in prior years
     thereby necessitating a reduction in net operating loss carryforwards, the
     write-down of certain tax assets, and the payment of interest;

o    potential exchange rate fluctuations;

o    the Company's concentration of revenues in department stores located in the
     United States;

o    the Company's dependence on a limited number of suppliers; and

o    unforeseen difficulties or significant delays resulting from the Company's
     implementation or operation of existing or new management information
     systems, including the integration of management and other personnel or the
     training of personnel.

All subsequent written or oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by the Cautionary Statements.


                                       18
<PAGE>
ITEM 4.
                             CONTROLS AND PROCEDURES

(a) The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Company's filings
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the periods specified in the rules and forms of the Securities
and Exchange Commission. Such information is accumulated and communicated to the
Company's management, including its principal executive officer and principal
financial officer, as appropriate, to allow timely decisions regarding required
disclosure. The Company's management, including the principal executive officer
and the principal financial officer, recognizes that any set of controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives.

Within 90 days prior to the filing date of this quarterly report on Form 10-Q,
the Company has carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's principal
executive officer and the Company's principal financial officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. Based on such evaluation, the Company's principal executive
officer and principal financial officer concluded that the Company's disclosure
controls and procedures are effective.

(b) There have been no significant changes in the Company's internal controls or
in other factors that could significantly affect the internal controls
subsequent to the date of their evaluation in connection with the preparation of
this quarterly report on Form 10-Q.








                                       19
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)   Exhibits:

           See Index to Exhibits following the signatures and certifications
           hereto.


     (b)   Reports on Form 8-K:

           No Reports on Form 8-K were filed by the Company during the
           quarter ended March 29, 2003.













                                       20
<PAGE>
                                   SIGNATURES

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



                                         KASPER A.S.L., LTD.
                                         (Registrant)
Dated:  May 13, 2003

                                         /s/ John D. Idol
                                         ---------------------------------------
                                         John D. Idol
                                         Chairman and Chief Executive Officer



                                         /s/ Joseph B. Parsons
                                         ---------------------------------------
                                         Joseph B. Parsons
                                         Executive Vice President -
                                         Chief Financial Officer










                                       21
<PAGE>
                                 CERTIFICATIONS
                                 --------------

                     I, John D. Idol, certify that:

1.         I have reviewed this quarterly report on Form 10-Q of Kasper A.S.L.,
           Ltd.;

2.         Based on my knowledge, this quarterly report does not contain any
           untrue statement of a material fact or omit to state a material fact
           necessary to make the statements made, in light of the circumstances
           under which such statements were made, not misleading with respect to
           the period covered by this quarterly report;

3.         Based on my knowledge, the financial statements, and other financial
           information included in this quarterly report, fairly present in all
           material respects the financial condition, results of operations and
           cash flows of the registrant as of, and for, the periods presented in
           this quarterly report;

4.         The registrant's other certifying officer and I are responsible for
           establishing and maintaining disclosure controls and procedures (as
           defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
           and we have:

           a)        designed such disclosure controls and procedures to ensure
                     that material information relating to the registrant,
                     including its consolidated subsidiaries, is made known to
                     us by others within those entities, particularly during the
                     period in which this quarterly report is being prepared;

           b)        evaluated the effectiveness of the registrant's disclosure
                     controls and procedures as of a date within 90 days prior
                     to the filing date of this quarterly report (the
                     "Evaluation Date"); and

           c)        presented in this quarterly report our conclusions about
                     the effectiveness of the disclosure controls and procedures
                     based on our evaluation as of the Evaluation Date;

5.         The registrant's other certifying officer and I have disclosed, based
           on our most recent evaluation, to the registrant's auditors and the
           audit committee of registrant's board of directors (or persons
           performing the equivalent function):

           a)        all significant deficiencies in the design or operation of
                     internal controls which could adversely affect the
                     registrant's ability to record, process, summarize and
                     report financial data and have identified for the
                     registrant's auditors any material weaknesses in internal
                     controls; and

           b)        any fraud, whether or not material, that involves
                     management or other employees who have a significant role
                     in the registrant's internal controls; and

6.         The registrant's other certifying officer and I have indicated in
           this quarterly report whether or not there were significant changes
           in internal controls or in other factors that could significantly
           affect internal controls subsequent to the date of our most recent
           evaluation, including any corrective actions with regard to
           significant deficiencies and material weaknesses.



                     Date: May 13, 2003

                                                /s/ John D. Idol
                                                --------------------------------
                                                John D. Idol
                                                Chief Executive Officer


                                       22
<PAGE>
                     I, Joseph B. Parsons, certify that:

1.         I have reviewed this quarterly report on Form 10-Q of Kasper A.S.L.,
           Ltd.;

2.         Based on my knowledge, this quarterly report does not contain any
           untrue statement of a material fact or omit to state a material fact
           necessary to make the statements made, in light of the circumstances
           under which such statements were made, not misleading with respect to
           the period covered by this quarterly report;

3.         Based on my knowledge, the financial statements, and other financial
           information included in this quarterly report, fairly present in all
           material respects the financial condition, results of operations and
           cash flows of the registrant as of, and for, the periods presented in
           this quarterly report;

4.         The registrant's other certifying officer and I are responsible for
           establishing and maintaining disclosure controls and procedures (as
           defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
           and we have:

           a)        designed such disclosure controls and procedures to ensure
                     that material information relating to the registrant,
                     including its consolidated subsidiaries, is made known to
                     us by others within those entities, particularly during the
                     period in which this quarterly report is being prepared;

           b)        evaluated the effectiveness of the registrant's disclosure
                     controls and procedures as of a date within 90 days prior
                     to the filing date of this quarterly report (the
                     "Evaluation Date"); and

           c)        presented in this quarterly report our conclusions about
                     the effectiveness of the disclosure controls and procedures
                     based on our evaluation as of the Evaluation Date;

5.         The registrant's other certifying officer and I have disclosed, based
           on our most recent evaluation, to the registrant's auditors and the
           audit committee of registrant's board of directors (or persons
           performing the equivalent function):

           a)        all significant deficiencies in the design or operation of
                     internal controls which could adversely affect the
                     registrant's ability to record, process, summarize and
                     report financial data and have identified for the
                     registrant's auditors any material weaknesses in internal
                     controls; and

           b)        any fraud, whether or not material, that involves
                     management or other employees who have a significant role
                     in the registrant's internal controls; and

6.         The registrant's other certifying officer and I have indicated in
           this quarterly report whether or not there were significant changes
           in internal controls or in other factors that could significantly
           affect internal controls subsequent to the date of our most recent
           evaluation, including any corrective actions with regard to
           significant deficiencies and material weaknesses.


                     Date: May 13, 2003

                                             /s/ Joseph B. Parsons
                                             -----------------------------------
                                             Joseph B. Parsons
                                             Chief Financial Officer


                                       23
<PAGE>
                                  EXHIBIT INDEX


EXHIBIT NUMBER        DESCRIPTION
--------------        -----------

     10.1             Surrender Agreement and Amendment dated as of December 31,
                      1999 between 11 West 42 Limited Partnership, as Landlord,
                      and the Company as Tenant

     10.2             Second Amendment and Surrender Agreement dated as of May
                      1, 2003 between 11 West 42 Limited Partnership, as
                      Landlord, and the Company as Tenant

     99.1             Certification of the Chief Executive Officer of the
                      Company pursuant to 18 U.S.C.ss.1350, as adopted by
                      Section 906 of the Sarbanes-Oxley Act of 2002

     99.2             Certification of the Chief Financial Officer of the
                      Company pursuant to 18 U.S.C.ss.1350, as adopted by
                      Section 906 of the Sarbanes-Oxley Act of 2002















                                       24