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 JULY 3, 1999
                               ------------

                                       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 [ ]

                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 [X]   No [ ]


                      APPLICABLE ONLY TO CORPORATE ISSUERS

         The number of shares of the registrant's Common Stock, $.01 par value,
outstanding as of August 16, 1999 was 6,800,000.


#792931 v1
<PAGE>
                      KASPER A.S.L., LTD. AND SUBSIDIARIES




                                      INDEX


<TABLE>
<CAPTION>
                                                                                                                       Page No.
                                                                                                                       --------
PART I - FINANCIAL INFORMATION


Item 1.    Financial Statements:
<S>                                                                                                                   <C>
                     Condensed Consolidated Balance Sheets at July 3, 1999 and January 2, 1999 . . . . . . . . . . . . . . 3

                     Condensed Consolidated Statements of Operations for the Thirteen weeks ended
                               July 3, 1999 and Thirteen weeks ended July 4, 1998 . . . . . . . . . . . . . . . . . . . .  4

                     Condensed Consolidated Statements of Operations for the Twenty-six weeks ended
                               July 3, 1999 and Twenty-six weeks ended July 4, 1998 . . . . . . . . . . . . . . . . . . . .5

                     Condensed Consolidated Statements of Cash Flows for the Twenty-six weeks ended
                               July 3, 1999 and Twenty-six weeks ended July 4, 1998 . . . . . . . . . . . . . . . . . . . .6

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

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


PART II - OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21


</TABLE>

<PAGE>
ITEM 1.  FINANCIAL STATEMENTS

                      KASPER A.S.L., LTD. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                ------------------ ---- ----------------
                                    ASSETS                                            JULY 3,              JANUARY 2,
                                                                                      1999                   1999
                                                                                ------------------ ---- ----------------
                                                                                   (Unaudited)
<S>                                                                             <C>                      <C>
Current Assets:

      Cash and cash equivalents..............................................            $ 10,886               $ 2,437

      Accounts receivable-net of allowances for possible losses of
           $15,621 and $16,754, respectively.................................              31,651                32,721

      Inventories............................................................              84,467               100,435

      Prepaid expenses and other current assets..............................               6,453                 6,068
                                                                                ------------------      ----------------

      Total Current Assets...................................................             133,457               141,661
                                                                                ------------------      ----------------

Property, Plant and Equipment, at cost less accumulated
      depreciation and amortization of $7,105 and $5,500,
      respectively...........................................................              16,281                16,881

Reorganization value in excess of identifiable assets, net of
      accumulated amortization of $6,790 and $5,160, respectively............              58,391                60,021

Trademarks, net of accumulated amortization of $3,036 and $2,307, respectively             47,964                48,693

Other Assets, at cost less accumulated amortization of $1,868 and $1,449,
      respectively...........................................................               5,824                 2,102
                                                                                ------------------      ----------------
      Total Assets...........................................................            $261,917              $269,358
                                                                                ==================      ================

                     LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

      Accounts payable.......................................................             $13,189               $14,539

      Accrued expenses and other current liabilities.........................               6,180                 6,668

      Interest Payable.......................................................               3,557                 3,797

      Income taxes payable...................................................               1,239                   646
                                                                                ------------------      ----------------

      Total Current Liabilities..............................................              24,165                25,650

Long-Term Liabilities:

      Deferred Taxes.........................................................               1,630                 1,630

      Long-Term Debt.........................................................             110,000               110,000

      Bank Revolver..........................................................                  --                 7,569

      Minority Interest......................................................                 426                   459
                                                                                ------------------      ----------------
      Total Liabilities......................................................             136,221               145,308

Commitments and Contingencies

Shareholders' Equity:

      Common Stock, $0.01 par value; 20,000,000 shares
           authorized; 6,800,000 shares issued and outstanding...............                  68                    68

      Preferred Stock, $0.01 par value; 1,000,000 shares
           authorized; none issued and outstanding...........................                  --                    --

      Capital in excess of par value.........................................             119,932               119,932

      Retained Earnings......................................................               5,881                 4,142

      Cumulative Other Comprehensive Income..................................               (185)                  (92)
                                                                                ------------------      ----------------

      Total Shareholders' Equity.............................................             125,696               124,050
                                                                                ------------------      ----------------

      Total Liabilities and Shareholders' Equity.............................            $261,917              $269,358
                                                                                ==================      ================
</TABLE>


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


                                       3
<PAGE>
                      KASPER A.S.L., LTD. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                    THIRTEEN WEEKS             THIRTEEN WEEKS
                                                                        ENDED                      ENDED
                                                                        JULY 3,                    JULY 4,
                                                                         1999                       1998
                                                                 ----------------------     ----------------------
                                                                      (Unaudited)                (Unaudited)
<S>                                                              <S>                        <C>
Net Sales..............................................                        $55,760                    $62,371

Cost of Sales..........................................                         39,371                     44,507
                                                                 ----------------------     ----------------------
Gross Profit...........................................                         16,389                     17,864

Operating Expenses:

Selling, general and administrative expenses...........                         16,087
                                                                                                           15,628
Depreciation and Amortization..........................                          2,235                      2,059
                                                                 ----------------------     ----------------------
Total operating expenses...............................                         18,322                     17,687
                                                                 ----------------------     ----------------------
Operating (loss) income................................                        (1,933)                        177

Interest and Financing Costs...........................                          3,943                      4,017
                                                                 ----------------------     ----------------------
Loss before provision for income taxes.................                        (5,876)                    (3,840)

Provision for Income Taxes.............................                        (2,468)                    (1,615)
                                                                 ----------------------     ----------------------
Net Loss...............................................                       $(3,408)                  $ (2,225)
                                                                 ======================     ======================
Basic loss per common share............................                          (.50)                      (.33)
                                                                 ======================     ======================
Diluted loss per common share..........................                          (.50)                      (.33)
                                                                 ======================     ======================
Weighted average number of shares used in computing Basic
   earnings per common share...........................                      6,800,000                  6,800,000

Weighted average number of shares used in computing Diluted
   earnings 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.


                                       4
<PAGE>
                      KASPER A.S.L., LTD. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                   TWENTY-SIX WEEKS           TWENTY-SIX WEEKS
                                                                         ENDED                      ENDED
                                                                        JULY 3,                    JULY 4,
                                                                         1999                       1998
                                                                 ----------------------     ----------------------
                                                                      (Unaudited)                (Unaudited)
<S>                                                              <C>                        <C>
Net Sales..............................................                       $154,046                   $158,503

Cost of Sales..........................................                        105,660                    112,467
                                                                 ----------------------     ----------------------
Gross Profit...........................................                         48,386                     46,036

Operating Expenses:

Selling, general and administrative expenses...........                         32,713
                                                                                                           30,717
Depreciation and Amortization..........................                          4,431                      4,118
                                                                 ----------------------     ----------------------

Total operating expenses...............................                         37,144                     34,835
                                                                 ----------------------     ----------------------
Operating income.......................................                         11,242                     11,201

Interest and Financing Costs...........................                          8,245                      8,128
                                                                 ----------------------     ----------------------
Income before provision for income taxes...............                          2,997                      3,073

Provision for Income Taxes.............................                          1,258                      1,290
                                                                 ----------------------     ----------------------
Net Income.............................................                         $1,739                    $ 1,783

                                                                 ======================     ======================
Basic earnings per common share........................                            .26                        .26
                                                                 ======================     ======================
Diluted earnings per common share......................                            .26                        .26
                                                                 ======================     ======================
Weighted average number of shares used in computing Basic
   earnings per common share...........................                      6,800,000                  6,800,000

Weighted average number of shares used in computing Diluted
   earnings 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.

                                       5
<PAGE>
                      KASPER A.S.L., LTD. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                   TWENTY-SIX WEEKS          TWENTY-SIX WEEKS
                                                                                         ENDED                     ENDED
                                                                                 ----------------------    ----------------------
                                                                                       JULY 3, 1999              JULY 4, 1998
                                                                                 ----------------------    ----------------------
                                                                                      (Unaudited)               (Unaudited)
<S>                                                                              <C>                       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income...................................................................                   $1,739                   $ 1,783
Adjustments to reconcile net income to net cash provided by (used in) operating
   activities:
   Depreciation and amortization.............................................                    2,753                     2,564
   Amortization of reorganization value in excess of identifiable
        assets...............................................................                    1,630                     1,629
   (Loss) income applicable to minority interest.............................                     (33)                       469
   Change in allowance for possible losses on accounts receivable............                  (1,133)                     (161)
(Increase) decrease in:
   Accounts receivable.......................................................                    2,203                   (5,070)
   Inventories...............................................................                   15,968                  (12,332)
   Prepaid expenses and other current assets.................................                    (385)                   (1,544)
   Other assets..............................................................                  (4,141)                        --
(Decrease) increase in:
   Accounts payable, accrued expenses and other current liabilities..........                  (1,838)
                                                                                                                         (1,416)
   Interest payable..........................................................                    (240)                        19
   Income taxes payable......................................................                      593                     (682)
                                                                                 ----------------------    ----------------------
Total adjustments............................................................                   15,377                  (16,524)
                                                                                 ----------------------    ----------------------
Net cash provided by (used in) operating activities..........................                   17,116                  (14,741)
                                                                                 ----------------------    ----------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures, net ................................................                  (1,005)                   (3,334)
                                                                                 ----------------------    ----------------------
Net cash used in investing activities........................................                  (1,005)                   (3,334)
                                                                                 ----------------------    ----------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Bank Revolver.............................................................                  (7,569)                     4,381
                                                                                 ----------------------    ----------------------
Net cash (used in) provided by financing activities..........................                  (7,569)                     4,381

Effect of exchange rate changes on cash and cash equivalents.................                     (93)                      (59)
                                                                                 ----------------------    ----------------------
Net increase (decrease) in cash and cash equivalents.........................                    8,449                  (13,753)

Cash and cash equivalents, at beginning of period............................                    2,437                    16,677
                                                                                 ----------------------    ----------------------
Cash and cash equivalents, at end of period..................................                  $10,886                    $2,924
                                                                                 ======================    ======================
</TABLE>

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


                                       6
<PAGE>
                      KASPER A.S.L., LTD. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.  GENERAL

           The Condensed Consolidated Financial Statements included herein have
been prepared by Kasper A.S.L., Ltd. and subsidiaries (Kasper A.S.L., Ltd. being
sometimes referred to, and together with its subsidiaries collectively referred
to, as the "Company" or "Kasper" as the context may require) without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission
(the "Commission"). Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principals have been condensed or omitted from this report; as is
permitted by such rules and regulations; however the Company believes that the
disclosures are adequate to make the information presented not misleading. These
Condensed Consolidated Financial Statements included herein should be read in
conjunction with the Consolidated/Combined Financial Statements and the notes
thereto included in the Company's Annual Report on Form 10-K for the Fiscal Year
ended January 2, 1999.

           In the opinion of management, the accompanying interim Condensed
Consolidated Financial Statements contain all material adjustments necessary to
present fairly the Condensed Consolidated financial condition, results of
operations, and changes in financial position of Kasper and its subsidiaries for
the interim periods presented.

NOTE 2.  INVENTORIES

           Inventories are valued at lower of cost or (first-in, first-out,
"FIFO") market.

           Inventories consist of the following:

                                               JULY 3, 1999     JANUARY 2, 1999
                                               ------------     ---------------
                                                       (in thousands)

           Raw materials                         $37,307             $38,470
           Finished goods                         47,160              61,965
                                               ---------           ---------
                      Total inventories         $84,467            $ 100,435
                                               =========           =========

NOTE 3.   INCOME (LOSS) PER SHARE

           The computation of income (loss) per common share is based upon the
weighted average number of common shares outstanding during the period.


                                       7
<PAGE>
NOTE 4.   DEBT

           At July 3, 1999, there were no direct borrowings outstanding under
the BankBoston Credit Agreement and approximately $13,080,000 outstanding in
letters of credit under the facility. The Company has approximately $41,113,000
available for future borrowings as of July 3, 1999.


           On July 9, 1999, the facility was amended by the Amended and Restated
Revolving Credit Facility, (the "Revolving Credit Facility"), led by The Chase
Manhattan Bank in order to fund Kasper's working capital requirements and to
finance the purchase of the Anne Klein Company LLC ("Anne Klein") trademarks
(see Note 5). The Revolving Credit Facility provides Kasper with two revolving
credit lines aggregating up to $125 million and will increase to $160 million
upon the satisfaction of certain conditions.

           On June 16, 1999 the Company received consents from a majority of the
aggregate principal amount of its 12.75% Senior Notes due 2004 (the "Senior
Notes") outstanding as of May 21, 1999, to certain proposed amendments to the
Indenture, dated as of June 1, 1997 and effective June 4, 1997 (as amended by
the Supplemental Indenture, dated as of June 30, 1997, the "Indenture"), between
the Company and IBJ Whitehall Bank & Trust Company (f/k/a IBJ Schroder Bank
&Trust Company), as Trustee, governing the Senior Notes, and had executed a
Second Supplemental Indenture (the "Second Supplemental Indenture") with respect
thereto. The primary purpose of the amendments is to enable the Company to
consummate the purchase of certain trademarks and related license agreements and
certain other assets of Anne Klein (the "Trademark Purchase"). On July 9, 1999
as a result of the closing of the Revolving Credit Facility, the Second
Supplemental Indenture, dated as of June 16, 1999, became effective. As a
result, the Company was required to pay to each registered holder of Senior
Notes as of May 21, 1999, $0.02 in cash for each $1.00 in principal amount of
Senior Notes held by such registered holder as of that date. In addition, the
interest rate on the Senior Notes will increase to 13.00%, beginning January 1,
2000.

NOTE 5.   ANNE KLEIN TRADEMARK PURCHASE

           On March 16, 1999 the Company issued a joint press release with Anne
Klein announcing, among other things, that the Company and Anne Klein signed a
definitive agreement for the Company to purchase Anne Klein's trademarks and
selected related assets. On July 9, 1999, the Company completed the Trademark
Purchase, including ANNE KLEIN(R), ANNE KLEIN II(R) and A LINE ANNE KLEIN(TM)
and the "Lion Head Design" from Anne Klein. The aggregate purchase price for
these assets was $60,000,000. The trademark purchase was funded by the Revolving
Credit Facility and included $3,000,000 previously paid under the expired
license agreement between the Company and Anne Klein. The Company has begun
selling ANNE KLEIN(R) and A LINE ANNE KLEIN(R) Resort Collections.

NOTE 6.  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, the Company operates 58
retail outlet stores throughout the United States as another distribution
channel for its products. For the purposes of decision-making and assessing
performance, Management includes the operations of Asia Expert Limited in its
wholesale segment. International operations are immaterial for segment reporting
and have been included in the wholesale segment.


                                       8
<PAGE>
      The Company measures segment profit as earnings before interest, taxes,
depreciation and amortization ("EBITDA"). All intercompany revenues and expenses
are eliminated in computing net sales and EBITDA. Information on segments and a
reconciliation to the consolidated financial statements are as follows:

<TABLE>
<CAPTION>
                                                   THIRTEEN WEEKS ENDED                           THIRTEEN WEEKS ENDED
                                                       JULY 3, 1999                                   JULY 4, 1998
                                       ---------------------------------------------  ----------------------------------------------
                                         WHOLESALE        RETAIL          TOTAL         WHOLESALE        RETAIL          TOTAL
                                       --------------  -------------- --------------- --------------  -------------- ---------------
<S>                                    <C>             <C>            <C>             <C>             <C>            <C>
Net Sales                                   $ 43,079         $12,681         $55,760       $ 50,424        $ 11,947        $ 62,371
EBITDA                                         (884)           1,186             302            980           1,256           2,236
Depreciation and amortization                                                  2,235                                          2,059
                                                                      ---------------                                ---------------
Operating (loss) income                                                      (1,933)                                            177
Interest and financing costs                                                   3,943                                          4,017
                                                                      ---------------                                ---------------
Loss before provision for income
   taxes                                                                     (5,876)                                        (3,840)
Income taxes                                                                 (2,468)                                        (1,615)
                                                                      ===============                                ===============
Net loss                                                                   $ (3,408)                                      $ (2,225)
                                                                      ===============                                ===============



                                                  TWENTY-SIX WEEKS ENDED                         TWENTY-SIX WEEKS ENDED
                                                       JULY 3, 1999                                   JULY 4, 1998
                                       ---------------------------------------------  ----------------------------------------------
                                         WHOLESALE        RETAIL          TOTAL         WHOLESALE        RETAIL          TOTAL
                                       --------------  -------------- --------------- --------------  -------------- ---------------

Net Sales                                  $ 130,257         $23,789        $154,046      $ 137,653        $ 20,850       $ 158,503
EBITDA                                        13,881           1,792          15,673         13,946           1,373          15,319
Depreciation and amortization                                                  4,431                                          4,118
                                                                      ---------------                                ---------------
Operating income                                                              11,242                                         11,201
Interest and financing costs                                                   8,245                                          8,128
                                                                      ---------------                                ---------------
Income before provision for income
   taxes                                                                       2,997                                          3,073
Income taxes                                                                   1,258                                          1,290
                                                                      ===============                                ===============
Net income                                                                   $ 1,739                                       $  1,783
                                                                      ===============                                ===============
</TABLE>



                                       9
<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 consolidated financial statements and notes thereto. 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.


RESULTS OF OPERATIONS

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

                               SECOND QUARTER                                              FIRST HALF
            ------------------------------------------------------   -------------------------------------------------------
                               %                           %                             %                           %
                1999       OF TOTAL          1998       OF TOTAL          1999       OF TOTAL         1998       OF TOTAL
            --------------              ---------------              ---------------              --------------
<S>         <C>             <C>         <C>             <C>          <C>             <C>          <C>             <C>
Wholesale        $ 43,079       77.3%         $ 50,424      80.8%         $ 130,257       84.6%       $ 137,653       86.8%
Retail             12,681       22.7%           11,947      19.2%            23,789       15.4%          20,850       13.2%
                   ------       -----           ------      -----            ------       -----          ------       -----
            --------------              ---------------              ---------------              --------------
Total sales      $ 55,760      100.0%         $ 62,371     100.0%         $ 154,046      100.0%     $ 158,503        100.0%



                                                          EBITDA BY SEGMENT
                                                     (000'S EXCEPT PERCENTAGES)


                          SECOND QUARTER                                           FIRST HALF
            -------------------------------------------           ----------------------------------------------
                1999                         1998                         1999                        1998
            --------------              ---------------              ---------------              --------------

Wholesale         $ (884)                       $  980                     $ 13,881                    $ 13,946
Retail              1,186                        1,256                        1,792                       1,373
                    -----                        -----                        -----                       -----
            --------------              ---------------              ---------------              --------------
Total              $  302                      $ 2,236                     $ 15,673                    $ 15,319

</TABLE>


THIRTEEN WEEKS ENDED JULY 3, 1999 AS COMPARED TO THIRTEEN WEEKS ENDED JULY 4,
1998

          NET SALES

         Net Sales for the thirteen weeks ended July 3, 1999 (the "second
quarter 1999") were $55.8 million as compared to $62.4 million for the thirteen
weeks ended July 4, 1998 (the "second quarter 1998").

         Wholesale sales decreased to $43.1 million in the second quarter 1999
from $50.4 million in the second quarter 1998. The Company's suit lines were
negatively impacted by higher markdowns to move current seasonal merchandise,
specifically short-sleeve suits, accounting for the drop in sales for the
historically weak second quarter. Sales of sportswear declined slightly in the
second quarter 1999 as the result of management's decision to scale back
production that resulted in excess product and larger markdowns in the second
quarter 1998.


                                       10
<PAGE>
           Retail sales increased to $12.7 million in the second quarter 1999
from $11.9 million in the second quarter 1998, an increase of $.8 million or
6.7% due primarily to the net addition of 5 retail outlet stores over the last
12 months. Comparable store sales decreased with second quarter 1999 sales of
$10.4 million compared to $10.7 million for the second quarter 1998, a decrease
of 2.4%. The decline is a result of reduced traffic experienced in outlet
centers in general, as well as the Company owned stores. Retail sales were also
impacted by the poor sell-through of short-sleeve suits during the period.
Despite these facts, conversion rates, representing the percentage of customers
who make a purchase, increased approximately 24% for the second quarter 1999.

           GROSS PROFIT

           Gross Profit as a percentage of net sales increased to 29.4% for the
second quarter 1999, compared to 28.6% for the second quarter 1998.

           The improvement over the second quarter 1998 can be attributed to
improved wholesale operations, as well as continued cost benefits as a result of
macroeconomic conditions in Asia. Wholesale gross profit as a percentage of
sales increased to 25.6% in the second quarter 1999 from 25.3% in the second
quarter 1998 as a result of the strong performance of the dress line, improved
performance of the sportswear line due to reduced production and the
discontinuance of Nina Charles(TM), which contributed negative margins in the
second quarter 1998.

           Retail gross profit as a percentage of sales decreased to 42.4% in
the second quarter 1999 from 42.8% in the second quarter 1998 due to an increase
in markdowns.

           SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

           Selling, general and administrative expenses increased to $16.1
million in the second quarter 1999 as compared to $15.6 million in the second
quarter 1998, an increase of $500 thousand. Approximately $350 thousand of this
increase is attributed to increased selling, administrative and occupancy costs
related to the net addition of 5 retail outlet stores. The remaining increase of
$150 thousand is associated with wholesale operations. The increase is the
result of combined modest increases in administrative, shipping, design and
occupancy expenses of approximately $350 thousand, primarily due to increased
personnel costs and Year 2000 compliance testing. The increases were offset by
decreases in selling of approximately $130 thousand as a result of the
discontinuance of Nina Charles, and production and advertising expenses of
approximately $70 due to timing and other miscellaneous variations.

           EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION

           Earnings before Interest, Taxes, Depreciation and Amortization,
("EBITDA") decreased to $300 thousand in the second quarter 1999 from $2.2
million in the second quarter 1998. Wholesale EBITDA decreased during the period
primarily as a result of decreased sales and increased selling, general, and
administrative expenses discussed above, which were partially offset by higher
margins. Retail experienced a slight decrease in EBITDA reflecting increased
markdowns and selling, general and administrative expenses relating to the
additional 5 new stores during the second quarter 1999.


                                       11
<PAGE>
           AMORTIZATION OF REORGANIZATION ASSET

           As a result of the reorganization of Leslie Fay, the portion of the
Company's reorganization value not attributable to specific identifiable assets
has been reported as "reorganization value in excess of identifiable assets".
This asset is being amortized over a 20-year period beginning June 4, 1997.
Accordingly, the Company incurred amortization charges for both the second
quarter 1999 and 1998 totaling approximately $825 thousand in each quarter.

           DEPRECIATION AND AMORTIZATION

           Depreciation and amortization totaled $1.4 million in the second
quarter 1999 and $1.3 million in the second quarter 1998, and consist of the
amortization charges associated with the trademarks and bank fees associated
with the financing agreement, as well as fixed asset depreciation. The
trademarks are being amortized over 35 years beginning June 4, 1997 and resulted
in amortization charges in both the second quarter 1999 and 1998 of
approximately $400 thousand in each quarter. The bank fees are being amortized
over the life of the financing agreement, which is three years, and resulted in
approximately $200 thousand of amortization charges in each of the second
quarter 1999 and 1998.

           INTEREST AND FINANCING COSTS

           Interest and financing costs decreased slightly to $3.9 million in
the second quarter 1999 from $4.0 million in the second quarter 1998, a decrease
of approximately $100 thousand. Interest is primarily attributable to the
expense on the $110 million aggregate principal amount of the Company's Senior
Notes, which were issued on June 4, 1997. The Senior Notes currently bear
interest at 12.75% per annum, which will increase to 13.00% commencing on
January 1, 2000. The Senior Notes mature on March 31, 2004. Interest is payable
semi-annually on March 31 and September 30. Interest relating to the Senior
Notes for the second quarter 1999 totaled $3.5 million. There are no principal
payments due until maturity. To the extent that the Company elects to undertake
a secondary stock offering or elects to prepay certain amounts, a premium will
be required to be paid.

           INCOME TAXES

           Provision for income taxes was $(2.5) million for the second quarter
1999. This amount differs from the amount computed by applying the federal
income tax statutory rate of 34% to income before taxes because of state and
foreign taxes.

TWENTY-SIX WEEKS ENDED JULY 3, 1999 AS COMPARED TO TWENTY-SIX WEEKS ENDED JULY
4, 1998

           NET SALES

           Net Sales for the twenty-six weeks ended July 3, 1999 (the "first
half 1999") were $154.0 million as compared to $158.5 for the twenty-six weeks
ended July 4, 1998 (the "first half 1998").

           Wholesale sales decreased to $130.3 million for the first half 1999,
from $137.7 million in the first half 1998. The discontinuance of Nina
Charles(TM) accounted for $2.5 million of the $7.4 million decline in wholesale
sales. In order to avoid the overproduction of the sportswear line that occurred
in the first half 1998, management decreased the production of sportswear in
1999, and as a result, sales of sportswear decreased $3.5 million in the first
half of 1999, resulting in a 100 basis-point increase in margin for the line.
Sales of Kasper(TM) dresses increased $1.9 million over the first half 1998, as
strong sales for the first quarter 1999 were only slightly impacted by the
downturn that affected the Company's sales in the historically weak second


                                       12
<PAGE>
quarter 1999. Sales of the Kasper(R) suit line increased by approximately $900
thousand for the first half of 1999 with strong sales in the first quarter of
1999 compensating for the lackluster performance of the short-sleeve suit line
in the second quarter 1999. The poorer than expected performance of the
short-sleeve suit design also contributed to decreased sales in the Le Suit(TM)
and Nipon(R) labels of a combined $4.4 million for the first half 1999. The
remaining increase of approximately $200 can be attributed to international
sales in Canada and Europe.

           Retail sales increased to $23.8 million in the first half 1999 from
$20.9 million in the first half 1998, an increase of approximately 13.9% due
primarily to the net addition of 5 retail outlet stores over the last 12 months.
Comparable store sales for the first half 1999 were $19.4 million as compared to
$19.0 million for the first half 1998, an increase of approximately 2.4%.

           GROSS PROFIT

           Gross Profit as a percentage of net sales increased to 31.4% for the
first half 1999, compared to 29.0% for the first half 1998.

           The improvement over the first half 1998 can be attributed to
improved wholesale operations, as well as continued cost benefits as a result of
macroeconomic conditions in Asia. Wholesale gross profit as a percentage of
sales increased to 29.7% in the first half 1999 from 27.2% in the first half
1998. The discontinuance of Nina Charles(TM), which contributed negative margins
in the first half 1998, along with the improved performance of the sportswear
line, as previously discussed, helped improve margins for the first half 1999.
All remaining lines had increased margins, with the exception of Le Suit(TM)
which held flat.

           Retail gross profit as a percentage of sales decreased to 41.0% in
the first half 1999 from 41.5% in the first half 1998 as a result of increased
markdowns.

           SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

           Selling, general and administrative expenses increased to $32.7
million in the first half 1999 as compared to $30.7 million in the first half
1998, an increase of $2.0 million. Approximately $600 thousand of this increase
is attributed to increased selling, administrative and occupancy costs related
to the net addition of 5 retail outlet stores. The remaining increase is
associated with Wholesale operations. Administrative expenses increased by
approximately $800 thousand as a result of Year 2000 compliance testing and
remediation which was substantially completed during the period, along with
other information system projects and increased personnel costs. Increases in
production, design and shipping relating primarily to increased personnel costs
were offset by a decrease in selling expense as a result of the discontinuance
of Nina Charles(TM), and resulted in the remaining increase in selling, general
and administrative expenses of $600 thousand.

           EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION

           EBITDA increased to $15.7 million in the first half 1999 from $15.3
million in the first half 1998. Despite the lower sales, wholesale EBITDA for
the first half 1999 remained comparable to the first half 1998 at $13.9 million,
directly as a result of strong margins. Retail EBITDA increased to $1.8 million
from $1.4 million as a result of increased sales relating to the additional 5
new stores and modest increases in comparable store sales, which were offset
slightly by lower margins and increased expenses associated with the store
openings.


                                       13
<PAGE>
           AMORTIZATION OF REORGANIZATION ASSET

           As a result of the Reorganization, the portion of the Company's
reorganization value not attributable to specific identifiable assets has been
reported as "reorganization value in excess of identifiable assets". This asset
is being amortized over a 20-year period beginning June 4, 1997. Accordingly,
the Company incurred amortization charges for both the first half 1999 and 1998
totaling approximately $1.6 million in each half year.

           DEPRECIATION AND AMORTIZATION

           Depreciation and amortization increased to approximately $2.8 million
in the first half 1999 from approximately $2.5 million in the first half 1998
and consist of the amortization charges associated with the trademarks and bank
fees associated with the financing agreement, as well as fixed asset
depreciation. The trademarks are being amortized over 35 years beginning June 4,
1997 and resulted in amortization charges in both the first half 1999 and 1998
of approximately $800 thousand in each half year. The bank fees are being
amortized over the life of the financing agreement, which is three years,
beginning June 4, 1997 and resulted in approximately $400 thousand of
amortization charges in each of the first half 1999 and 1998.

           INTEREST AND FINANCING COSTS

           Interest and financing costs increased to $8.2 million in the first
half 1999 from $8.1 million in the first half 1998, an increase of approximately
$100 thousand. Interest relating to the Senior Notes totaled $7.0 million for
both the first half 1999 and 1998.

           INCOME TAXES

           Provision for income taxes was $ 1.3 million for the first half 1999
and 1998. This amount differs from the amount computed by applying the federal
income tax statutory rate of 34% to income before taxes because of state and
foreign taxes.

LIQUIDITY AND CAPITAL RESOURCES

           Net cash provided by operating activities increased to $17.1 million
during the first half 1999 as compared to cash usage of $14.7 million for the
first half 1998, primarily as a result of the decrease in inventory from the
beginning of the year.

           The Company's main sources of liquidity have been cash flows from
operations and credit facilities. Effective June 5, 1997, the Company entered
into a $100 million working capital facility with BankBoston as the agent bank
for a consortium of lending institutions. The facility, as amended, provides for
a sub-limit for letters of credit of $50 million. The working capital facility
is secured by substantially all the assets of the Company. The working capital
facility expires in fiscal 2000 and provides for various borrowing rate options,
including rates based upon a fixed spread over LIBOR. The facility provides for
the maintenance of certain financial ratios and covenants and sets limits on the


                                       14
<PAGE>
amount of capital expenditures and dividends to shareholders. Availability under
the facility is limited to a borrowing base calculated upon eligible accounts
receivable, inventory and letters of credit. The facility has been amended to
update certain financial ratios, covenants and limits on capital expenditures.
As of July 3, 1999, there were no direct borrowings outstanding, $13.1 million
in letters of credit outstanding and $41.1 million available for future
borrowings.

           On July 9, 1999, the facility was amended by the Amended and Restated
Revolving Credit Facility, (the "Revolving Credit Facility") led by The Chase
Manhattan Bank in order to fund Kasper's working capital requirements and to
finance the purchase of certain trademarks and related license agreements and
certain other assets (the "Anne Klein Trademark Purchase") of Anne Klein Company
LLC ("Anne Klein"), which was completed on July 9, 1999. The Revolving Credit
Facility provides Kasper with two revolving credit lines aggregating up to $125
million and will increase to $160 million upon the satisfaction of certain
conditions. The Revolving Credit Facility also updates certain financial ratios,
covenants and limits on capital expenditures, and expires on December 31, 2003.

           Pursuant to the Leslie Fay reorganization plan, the Company issued
$110 million aggregate principal amount of its Senior Notes. The Senior Notes
bear interest at 12.75% per annum and mature on March 31, 2004. Interest is
payable semi-annually on March 31 and September 30. Interest relating to the
Senior Notes for the first half 1999 totaled $7.0 million. There are no
principal payments due until maturity. To the extent that the Company elects to
undertake a secondary stock offering or elects to prepay certain amounts, a
premium will be required to be paid.

           On June 16, 1999 the Company received consents from a majority of the
aggregate principal amount of its Senior Notes as of May 21, 1999, to certain
proposed amendments to the Indenture, dated as of June 1, 1997 and effective
June 4, 1997 (as amended by the Supplemental Indenture, dated as of June 30,
1997, the "Indenture"), between the Company and IBJ Whitehall Bank & Trust
Company (f/k/a IBJ Schroder Bank &Trust Company), as Trustee, governing the
Senior Notes, and had executed a Second Supplemental Indenture (the "Second
Supplemental Indenture") with respect thereto. The primary purpose of the
amendments was to enable the Company to consummate the Anne Klein Trademark
Purchase. On July 9, 1999 as a result of the closing of the Revolving Credit
Facility, the Second Supplemental Indenture, became effective. As a result, the
Company paid to each registered holder of Senior Notes as of May 21, 1999, $0.02
in cash for each $1.00 in principal amount of Senior Notes held by such
registered holder as of that date. In addition, the interest rate on the Senior
Notes will increase to 13.00%, beginning January 1, 2000.

           The Company has a factoring/financing agreement with Heller
Financial, Inc. ("Heller"). It provides for Heller to act as the credit and
collection arm of the Company. The Company receives funds from Heller as the
receivables are collected. Any amounts unpaid after 120 days are guaranteed and
paid to the Company by the factor. The agreement had a two-year term expiring in
February 1998. The cost was .4% for the first $240 million in sales and .35% for
sales above that amount. The agreement was amended in January 1998 to add an
additional 18 months to the term of the arrangement and lower the rate to .35%
for the first $250 million in sales and .3% on the excess over that amount.

           Capital expenditures were $1.0 million and $3.3 million for the first
half 1999 and first half 1998, respectively. Capital expenditures for the first
quarter 1999 represent funds spent for new retail stores, information systems
and general improvements.

           On March 16, 1999 the Company issued a joint press release with Anne
Klein announcing, among other things, that the Company and Anne Klein signed a
definitive agreement for the Company to purchase Anne Klein's trademarks and


                                       15
<PAGE>
related license agreements and other selected related assets. On July 9, 1999,
the Company completed the Anne Klein Trademark Purchase. The aggregate purchase
price for these assets was $60,000,000. The Anne Klein Trademark Purchase was
funded by the Revolving Credit Facility and included $3,000,000 previously paid
under the expired license agreement between the Company and Anne Klein. The
Company has begun selling ANNE KLEIN(R) and A LINE ANNE KLEIN(R) Resort
Collections.


YEAR 2000 COMPLIANCE

STATE OF READINESS

           The Company has conducted a comprehensive review of its computer
systems to identify the systems that could be affected by the "Year 2000" issue.
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a major system
failure or miscalculations. The Company uses software developed and supported by
third parties for all mission critical applications including order entry,
distribution, shipping, electronic data interchange ("EDI"), and for its retail
operations. Each of these software vendors has assured the Company in writing
that the current version of their software has been tested and is Year 2000
compliant. The Company performed a testing project to verify such assurances.
This testing was completed during the second quarter 1999.

           These mission-critical systems were tested and required minimal
remediation. Each of these systems was tested individually as well as in-concert
with each other in comprehensive real-world scenarios. These tests revealed
several minor problems, which were quickly addressed and resolved to be Year
2000 compliant. It is important to note that it is unfeasible to test every
feature of every system. The Company, however, believes that the aspects of the
systems tested are comprehensive and representative of total system performance.

           The Company is still in the process of remediating a number of
smaller non-mission-critical systems, which include stand-alone PC applications,
computer hardware, time clocks, and alarm systems. In addition, foreign offices
have been contacted, systems inventories completed and vulnerable applications
identified. These non-mission-critical systems are expected to be Year 2000
compliant by year-end.

           The Company is also highly dependent on its customers' ability to
transmit and receive EDI documents such as purchase orders, invoices and advance
shipping notices. The Company has worked with all its trading partners to
upgrade all electronic transactions to the VICS 4010 standard, which is Year
2000 compliant. With the exception of several new trading partners, this process
is complete. All remaining testing is expected to be completed by the end of the
third quarter 1999.

           In addition, the Company may face some risk to the extent that
suppliers of products and others with whom the Company has a material business
relationship will not be Year 2000 compliant. Accordingly, the Company has
conducted formal communications with significant suppliers and third parties in
order to determine the extent to which the Company may be vulnerable to the
failure of these suppliers and third parties to remediate their own Year 2000
issues. The Company has worked with its major trucking consolidator and believes
that its system is compliant. Similar efforts are ongoing with the Company's
overseas shippers. The Company will continue to review and evaluate the
responses it receives and periodically monitor the progress of these suppliers
and third parties in addressing their own Year 2000 issues.


                                       16
<PAGE>
           With the Anne Klein Trademark Purchase, a new set of potential Year
2000 issues has been introduced. The Company is in the process of integrating
Anne Klein's operations into the Company's network and systems in order to
minimize the potential exposure that Anne Klein's systems may present. A
detailed testing plan has been developed to verify that mission-critical
applications are compliant. This test plan and associated remediation is
expected to cost $200,000 and is expected to be completed by early October 1999.

COSTS

           The total cost associated with the required testing and modifications
to become Year 2000 compliant is not expected to be material to the Company's
financial position as a whole. The estimated total cost of the Year 2000
project, excluding the additional testing of Anne Klein systems, is
approximately $750,000. This cost estimate may change as the Company completes
its Year 2000 project and obtains additional information and conducts further
testing.

RISKS

           Despite all efforts, however, there can be no assurance that these
systems will be Year 2000 compliant under all the circumstances and volume
stresses that may actually be required. The possible consequences of the Company
or its key vendors, suppliers and customers not being fully year 2000 compliant
by January 1, 2000 include, among other things, delays in the delivery of
products, delays in the receipt of goods, invoice and collection errors and
inventory obsolescence. Consequently, the business and results of operations of
the Company could be materially adversely affected by a temporary inability of
the Company to conduct its business in the ordinary course for a period of time
until after January 1, 2000.

CONTINGENCY PLANS

           As an additional precaution, the Company is developing contingency
plans to mitigate the possible disruption in business operations that may result
from the Company's key vendors, suppliers and customers not being Year 2000
compliant. These plans which are dependent in large part to the responses the
Company receives from third parties with whom the Company has a material
business relationship are expected to be completed during the third quarter of
1999. Once developed, contingency plans and related cost estimates will be
continually refined as additional information becomes available.

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 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


                                       17
<PAGE>
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        general economic conditions;

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

o        the Company's limited operating history;

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

o        the Company's concentration of revenues;

o        challenges facing the Company related to its rapid growth;

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

o        the ability of the Company and third parties, including customers or
         suppliers, to adequately address Year 2000 issues; and

o        the ability of the Company to successfully integrate the businesses
         acquired in the Anne Klein Trademark Purchase into the Company's
         existing businesses.

      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>
                           PART II - OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits:

                  10.1     Lease, dated as of June 4, 1996, among 11 West 42nd
                           Limited Partnership as Landlord, and, Anne Klein &
                           Company and Mark of the Lion Associates, as tenants.

                  10.2     Omnibus Agreement, dated as of March 15, 1999, among
                           Kasper A.S.L., Ltd. and Anne Klein Company LLC.

                  27       Financial Data Schedule


         (b)      Reports on Form 8-K:

                               During the quarter ended July 3, 1999, a Current
                     Report on Form 8-K, dated June 17, 1999, was filed with the
                     Commission by the Company announcing that the Company
                     received consents from a majority of the aggregate
                     principal amount of its Senior Notes outstanding as of May
                     21, 1999, to certain proposed amendments to the Indenture
                     governing the Senior Notes, and had executed a Second
                     Supplemental Indenture with respect thereto.

                               The Company also announced that it had entered
                     into a commitment letter for the Revolving Credit Facility.




                                       19
<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:   August 16, 1999
                                     /s/  Arthur S. Levine
                                     ----------------------------------------
                                     Arthur S. Levine
                                     Chairman and Chief Executive Officer
                                     (duly authorized officer)



                                     /s/  Mary Ann Domuracki
                                     ----------------------------------------
                                     Mary Ann Domuracki
                                     Executive Vice President -
                                     Finance and Administration
                                     (duly authorized officer and a
                                     principal financial and
                                     chief accounting officer)



                                       20
<PAGE>
                                  EXHIBIT INDEX


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


         10.1     Lease, dated as of June 4, 1996, among 11 West 42nd Limited
                  Partnership as Landlord, and, Anne Klein & Company and Mark of
                  the Lion Associates, as tenants.

         10.2     Omnibus Agreement, dated as of March 15, 1999, among Kasper
                  A.S.L., Ltd. and Anne Klein Company LLC.

         27       EDGAR Data Schedule









                                       21