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 31, 2001
                               --------------

                                       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 May 1, 2001 was 6,800,000.


55745.0003
<PAGE>
                      KASPER A.S.L., LTD. AND SUBSIDIARIES


                                      INDEX

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

Item 1.    Financial Statements:

                     Condensed Consolidated Balance Sheets at March 31, 2001 and December 30, 2000 . . . . . . . . . 3

                     Condensed Consolidated Statements of Operations for the Thirteen weeks ended
                               March 31, 2001 and Thirteen weeks ended April 1, 2000  . . . . . . . . . . . . . . . .4

                     Condensed Consolidated Statements of Cash Flows for the Thirteen weeks ended
                               March 31, 2001 and Thirteen weeks ended April 1, 2000. . . . . . . . . . . . . . . . .5

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

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . 8


PART II - OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

EXHIBIT INDEX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

</TABLE>











                                       2
<PAGE>
                      KASPER A.S.L., LTD. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                 (In thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                                ------------------ ---- ------------------
                                    ASSETS                                           MARCH 31,              DECEMBER 30,
                                                                                      2001                     2000
                                                                                ------------------ ---- ------------------
                                                                                   (Unaudited)
<S>                                                                             <C>                     <C>
Current Assets:
      Cash and cash equivalents..............................................             $ 2,642                 $ 3,847
      Accounts receivable, net...............................................              65,436                  25,475
      Inventories, net.......................................................              88,805                 110,572
      Prepaid expenses and other current assets..............................               3,594                   4,014
      Income taxes receivable................................................                 788                     788
      Deferred taxes.........................................................               5,004                   5,004
                                                                                ------------------      ------------------
      Total Current Assets...................................................             166,269                 149,700
                                                                                ------------------      ------------------
Property, plant and equipment, at cost less accumulated
      depreciation and amortization of $14,591 and $13,422,                                20,642                  21,282
      respectively...........................................................
Reorganization value in excess of identifiable assets, net of
      accumulated amortization of $12,493 and $11,678, respectively..........              52,688                  53,503
Trademarks, net of accumulated amortization of $8,750 and $7,933,
      respectively...........................................................             105,613                 106,430
Other Assets, at cost less accumulated amortization of $2,497 and $2,086,
      respectively...........................................................               5,785                   6,202
                                                                                ------------------      ------------------
 Total Assets................................................................            $350,997                $337,117
                                                                                ==================      ==================

                     LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
      Accounts payable.......................................................             $26,237                 $34,609
      Accrued expenses and other current liabilities.........................              10,339                  11,183
      Interest payable.......................................................              15,980                  11,563
      Deferred income........................................................                 310                     414
      Taxes payable..........................................................               1,734                   1,653
      Reclassified long-term debt............................................             110,000                 110,000
      Bank revolver..........................................................              89,670                  70,258
                                                                                ------------------      ------------------
Total Current Liabilities....................................................             254,270                 239,680
Long-Term Liabilities:
      Deferred taxes.........................................................               3,352                   3,352
      Minority interest......................................................                 678                     484
                                                                                ------------------      ------------------
Total Liabilities............................................................             258,300                 243,516
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
      Accumulated deficit....................................................            (26,537)                (25,820)
      Cumulative other comprehensive loss....................................               (766)                   (579)
                                                                                ------------------      ------------------
Total Shareholders' Equity...................................................              92,697                  93,601
                                                                                ------------------      ------------------
Total Liabilities and Shareholders' Equity...................................            $350,997                $337,117
                                                                                ==================      ==================
</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 share and per share data)
<TABLE>
<CAPTION>
                                                                    THIRTEEN WEEKS             THIRTEEN WEEKS
                                                                         ENDED                      ENDED
                                                                       MARCH 31,                  APRIL 1,
                                                                         2001                       2000
                                                                 ----------------------     ----------------------
                                                                      (Unaudited)                (Unaudited)
<S>                                                              <C>                        <C>
Net sales..............................................                      $ 122,681                   $107,589
Royalty income.........................................                          3,434                      3,579
Cost of sales..........................................                         89,303                     73,640
                                                                 ----------------------     ----------------------
Gross profit...........................................                         36,812                     37,528
Operating Expenses:
Selling, general and administrative expenses...........                         25,881                     26,163
Depreciation and amortization..........................                          2,883                      2,682
Restructuring charges..................................                          1,361                        ---
                                                                 ----------------------     ----------------------
Total operating expenses...............................                         30,125                     28,845
                                                                 ----------------------     ----------------------
Operating income.......................................                          6,687                      8,683
Interest and financing costs...........................                          7,054                      5,838
                                                                 ----------------------     ----------------------
(Loss) income before provision for income taxes........                          (367)                      2,845
Provision for income taxes.............................                            350                      1,195
                                                                 ----------------------     ----------------------
Net (loss) income......................................                        $ (717)                     $1,650
                                                                 ======================     ======================
Basic (loss) earnings per common share.................                         $(.11)                     $  .24
                                                                 ======================     ======================
Diluted (loss) earnings per common share...............                         $(.11)                     $  .24
                                                                 ======================     ======================
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 CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                   THIRTEEN WEEKS            THIRTEEN WEEKS
                                                                                        ENDED                     ENDED
                                                                                ----------------------    ----------------------
                                                                                   MARCH 31, 2001             APRIL 1, 2000
                                                                                ----------------------    ----------------------
                                                                                     (Unaudited)               (Unaudited)
<S>                                                                             <C>                       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income............................................................                  $(717)                    $1,650
Adjustments to reconcile net income to net cash used in operating activities:
   Depreciation and amortization.............................................                   2,397                     2,101
   Amortization of reorganization value in excess of identifiable
        assets...............................................................                     815                       816
   Income applicable to minority interest....................................                     194                       119
(Increase) decrease in:
   Accounts receivable, net..................................................                (39,961)                  (36,446)
   Inventories...............................................................                  21,767                     8,779
   Prepaid expenses and other assets.........................................                     426                         3
(Decrease) increase in:
   Accounts payable, accrued expenses and other current liabilities..........                 (9,216)                     (389)
   Interest payable..........................................................                   4,417                   (3,592)
   Deferred income...........................................................                   (104)                     (343)
   Income taxes payable......................................................                      81                     1,536
                                                                                ----------------------    ----------------------
Total adjustments............................................................                (19,184)                  (27,416)
                                                                                ----------------------    ----------------------
Net cash used in operating activities........................................                (19,901)                  (25,766)
                                                                                ----------------------    ----------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures net of proceeds from the sale of fixed assets........                   (529)                   (2,529)
                                                                                ----------------------    ----------------------
Net cash used in investing activities........................................                   (529)                   (2,529)
                                                                                ----------------------    ----------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Bank Revolver.............................................................                  19,412                    26,342
                                                                                ----------------------    ----------------------
Net cash provided by financing activities....................................                  19,412                    26,342

Effect of exchange rate changes on cash and cash equivalents.................                   (187)                     (118)
                                                                                ----------------------    ----------------------
Net decrease in cash and cash equivalents....................................                 (1,205)                   (2,071)

Cash and cash equivalents, at beginning of period............................                   3,847                     5,086
                                                                                ----------------------    ----------------------
Cash and cash equivalents, at end of period..................................                  $2,642                    $3,015
                                                                                ======================    ======================
</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
              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 principles have been condensed or omitted from this report, as is
permitted by such rules and regulations; however, the Company believes that the
disclosures are adequate to make the information presented not misleading. These
Condensed Consolidated Financial Statements included herein should be read in
conjunction with the Consolidated Financial Statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the Fiscal Year ended
December 30, 2000.

           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 (first-in, first-out, "FIFO")
or market.

           Inventories consist of the following:

                                         MARCH 31, 2001    DECEMBER 30, 2000
                                         --------------    -----------------
                                                   (in thousands)
   Raw materials                             $42,691             $ 39,318
   Finished goods                             46,114               71,254
                                           ----------          -----------
              Total inventories              $88,805             $110,572
                                           ==========          ===========

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.

NOTE 4.   DEBT

           At March 31, 2001, there were direct borrowings of $89,670,000
outstanding under the Credit Facility led by the Chase Manhattan Bank (the
"Facility") and approximately $20,095,000 outstanding in letters of credit under
the Facility. The Company had approximately $22,183,000 available for future
borrowings as of March 31, 2001.

           On September 29, 2000 and March 30, 2001, the Company announced that
it would not make its respective semi-annual interest payments of approximately
$7.2 million each, due on September 30, 2000 and March 31, 2001, to holders of
its 13% Senior Notes (the "Senior Notes"). Accordingly, the Company is currently
in default under the terms of the Senior Notes. In addition, the Company is not


                                       6
<PAGE>
in compliance with certain financial covenants and ratios under the Facility.
The Company is currently engaged in discussions with an ad hoc committee of its
noteholders to formulate a financial restructuring that will address current
liquidity issues and enhance the Company's ability to operate under its short-
and long-term plans. The Company is also negotiating with its lenders under the
Facility to waive defaults and amend certain covenants. Although the Company
expects to reach agreement on the terms of a financial restructuring with the
holders of a substantial majority of the Senior Notes and on the terms for
waivers and amendments of the Facility, there is no assurance that the Company
will be successful in doing so. If the Company is unable to reach such
agreements, it may be compelled to seek relief under the United States
Bankruptcy Code. In the interim, the Company is examining all available options.

           The Company has been advised by its independent public accountants
that should the situation described above remain unresolved at year-end, the
auditors' report on those financial statements will be modified for that
contingency.

           As a result of the defaults under the Senior Notes and the Facility,
the indebtedness under the Senior Notes and the Facility have been reclassified
on the Company's balance sheet as short-term obligations.

NOTE 5.  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
66 Kasper retail outlet stores and 30 Anne Klein retail outlet stores throughout
the United States 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 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.

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

<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED MARCH 31, 2001
                                                 WHOLESALE            RETAIL           LICENSING           CONSOLIDATED
                                             ------------------  -----------------  -----------------    -----------------
                                                                            (in thousands)
<S>                                          <C>                 <C>                <C>                  <C>
Revenues                                              $106,407             $16,274            $3,434             $126,115
EBITDAR                                                  8,456               (524)             2,999               10,931
Depreciation and amortization                                                                                       2,883
Restructuring charges                                                                                               1,361
                                                                                                         -----------------
Operating income                                                                                                  $ 6,687


THIRTEEN WEEKS ENDED APRIL 1, 2000
                                                 WHOLESALE            RETAIL           LICENSING           CONSOLIDATED
                                             ------------------  -----------------  -----------------    -----------------
                                                                            (in thousands)

Revenues                                              $ 92,110            $ 15,479            $3,579            $ 111,168
EBITDAR                                                  8,080                  86             3,199               11,365
Depreciation and amortization                                                                                       2,682
                                                                                                         -----------------
Operating income                                                                                                  $ 8,683

</TABLE>

                                       7
<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 30,2000. 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

      The accompanying consolidated financial statements have been presented on
a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.

      As of March 31, 2001, the Company was in default under the terms of its
$110 million Senior Notes (the "Senior Notes"), as amended, as the result of
non-payment of its March 31, 2001 and September 30, 2000 semi-annual interest
payments of $7.2 million each. The entire amount due under the Senior Notes has
been reclassified as current in the accompanying consolidated balance sheet. The
Company is currently engaged in discussions with an ad hoc committee of its
noteholders (the "Ad Hoc Committee") to formulate a financial restructuring that
will address current liquidity issues and enhance the Company's ability to
operate under its short- and long-term plans.

      As of March 31, 2001, the Company was in default under its Amended and
Restated Credit Facility led by the Chase Manhattan Bank (the "Chase Facility"),
because the Company failed to meet its interest coverage ratio and minimum net
worth requirements. The Company is currently negotiating with its lenders under
the Chase Facility to waive these defaults and amend certain financial
covenants. In connection with an amendment under the Chase Facility, the Company
was required to retain a consulting firm to assist the Company in the
implementation of a restructuring plan and have named the consultant under that
agreement as Chief Restructuring Officer.

      Although the Company expects to reach agreement on the terms of a
financial restructuring with the holders of a substantial majority of the Senior
Notes and on the terms for waivers and amendments of the Chase Facility, there
is no assurance that the Company will be successful in doing so. If the Company
is unable to reach such agreements, it may be compelled to seek relief under the
United States Bankruptcy Code. In the interim, the Company is examining all
available options.

           The Company has been advised by its independent public accountants
that should the situation described above remain unresolved at year-end, the
auditors' report on those financial statements will be modified for that
contingency.

      The consolidated financial statements contained herein do 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. There can be no assurances that the Company's
operations can be returned to profitability.


                                       8
<PAGE>
      RESULTS OF OPERATIONS

                               REVENUES BY SEGMENT
                           (000'S EXCEPT PERCENTAGES)

<TABLE>
<CAPTION>
                                              FIRST QUARTER           %              FIRST QUARTER                %
                                                  2001             OF TOTAL              2000                  OF TOTAL
                                           --------------------                   --------------------
<S>                                        <C>                    <C>                  <C>                     <C>
Wholesale                                             $106,407       84.4%                   $ 92,110            82.9%
Retail                                                  16,274       12.9%                     15,479            13.9%
                                           --------------------   --------        --------------------        --------
Net Sales                                              122,681       97.3%                    107,589            96.8%
Licensing                                                3,434        2.7%                      3,579             3.2%
                                           --------------------   --------        --------------------        --------
Total revenue                                         $126,115      100.0%                  $ 111,168           100.0%


                               EBITDAR BY SEGMENT
                           (000'S EXCEPT PERCENTAGES)

                                              FIRST QUARTER           %             FIRST QUARTER                %
                                                  2001             OF TOTAL             2000                  OF TOTAL
                                           --------------------                   --------------------

Wholesale                                               $8,456       77.4%                    $8,080            71.1%
Retail                                                   (524)      (4.8)%                        86             0.8%
Licensing                                                2,999       27.4%                     3,199            28.1%
                                           --------------------   --------        --------------------       --------
Total                                                  $10,931      100.0%                  $ 11,365           100.0%

</TABLE>

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


           TOTAL REVENUE

      Net Sales for the thirteen weeks ended March 31, 2001 (the "first quarter
2001") were $122.7 million as compared to $107.6 for the thirteen weeks ended
April 1, 2000 (the "first quarter 2000"). Wholesale sales increased primarily as
a result of significant sales improvements in most of the Company's labels.
These improvements are the result of the correction of production problems in
the first quarter 2000, which delayed shipments of product from the Company's
contractors and ultimately to the Company's customers.

      Retail sales increased to $16.3 million in the first quarter 2001 from
$15.5 million in the first quarter 2000, an increase of $800,000 primarily due
to the net addition of 8 retail outlet stores over the last 12 months.
Comparable store sales decreased 6.4% and 0.8% for Kasper retail stores and Anne
Klein outlet stores, respectively, in the first quarter 2001 compared to the
first quarter 2000.

      Royalty income decreased slightly to $3.4 million in the first quarter
2001 from $3.6 million in the first quarter 2000.

           GROSS PROFIT

      Gross Profit as a percentage of total revenue decreased to 29.2% for the
first quarter 2001, compared to 33.8% for the first quarter 2000. Wholesale
gross profit as a percentage of sales decreased to 25.9% in the first quarter
2001 from 30.0% in the first quarter 2000 in part as a result of a higher
allowance accrual due to the ongoing promotional environment of department
stores. Wholesale margins, however, were consistent with Company expectations.

      Retail gross profit as a percentage of sales decreased to 36.0% in the


                                       9
<PAGE>
first quarter 2001 from 40.6% in the first quarter 2000 due primarily to an
increase in markdowns at the Anne Klein outlet stores.


           SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

      Selling, general and administrative expenses decreased to $25.9 million in
the first quarter 2001 as compared to $26.2 million in the first quarter 2000.
Wholesale operations cut expenses by approximately $900,000 primarily as a
result of the Company's restructuring efforts. Retail store expansion, including
the net addition of 8 retail outlet stores, contributed the offsetting increase
of $600,000 in increased selling, administrative and occupancy costs.

           EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AMORTIZATION AND
           RESTRUCTURING

      Earnings before interest, taxes, depreciation, amortization and
restructuring, ("EBITDAR") decreased to $10.9 million in the first quarter 2001
from $11.4 million in the first quarter 2000. Wholesale EBITDAR increased
approximately $400,000 over the first quarter 2000 primarily as a result of the
increase in sales and decrease in expenses. Retail experienced a slight decrease
in EBITDAR of $600,000. The remaining decrease is attributable to licensing
operations.

           RESTRUCTURING CHARGES

      The Company recorded a $1.4 million restructuring charge to cover the
estimated costs of streamlining operating and administrative functions. This
charge includes those related to professional fees and other expenses associated
with the implementation of the Company's restructuring program.

           AMORTIZATION OF REORGANIZATION ASSET

      As a result of the Company's 1997 spinoff under Leslie Fay's
reorganization plan, 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", (the "Reorganization
Asset"). This asset is being amortized over a 20-year period beginning June 4,
1997. Accordingly, the Company incurred amortization charges for both the first
quarter 2001 and 2000 totaling approximately $815,000.

           DEPRECIATION AND AMORTIZATION

      Depreciation and amortization, excluding the amortization of the
Reorganization Asset, totaled $2.1 million in the first quarter 2001 and $1.9
million in the first quarter 2000, and consists of the amortization charges
associated with the trademarks, as well as fixed asset depreciation. Trademarks
are being amortized over 35 years. The increase relates to depreciation and
amortization associated with capital expenditures.

           INTEREST AND FINANCING COSTS

      Interest and financing costs increased to $7.0 million in the first
quarter 2001 from $5.8 million in the first quarter 2000. Interest expense is
comprised of the interest expense on the Senior Notes and the amortization of
the related bondholder consent fee paid on July 9, 1999, along with interest on
the Chase Facility, and the amortization of the related bank fees and factoring
fees.

      Interest relating to the Senior Notes increased to $3.8 million for the
first quarter 2001 compared to $3.6 million for the first quarter 2000. Interest
on the Senior Notes is 13% per annum, and is payable semi-annually on March 31


                                       10
<PAGE>
and September 30. Included in interest expense for the first quarter 2001 was
approximately $260,000 in unpaid default interest on the Senior Notes. Default
interest began to accrue at a rate equal to 14.75% per annum on the unpaid
interest on the Senior Notes on September 30, 2000 because the Company did not
make the semi-annual interest payment of approximately $7.2 million, which
became due on such date. The amount of unpaid interest now totals $14.8 million,
as the Company did not make its March 31, 2001 $7.2 million semi-annual interest
payment. There are no principal payments due until maturity, which is March 31,
2004. 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. Amortization of the bondholder consent fee, which is being amortized over
the remaining life of the Senior Notes beginning July 9, 1999, totaled
approximately $115,000 in both the first quarter 2001 and first quarter 2000.

      Interest under the Chase Facility totaled approximately $2.6 million in
the first quarter 2001, an increase of $800,000 over the first quarter 2000 due
primarily to the increased level of borrowings needed to finance the Anne Klein
product development costs. The related bank fees are being amortized over the
remaining life of the Chase Facility, and resulted in approximately $200,000 and
$130,000 of amortization charges in the first quarter 2001 and first quarter
2000, respectively.

      The remaining increase in interest expense is related to factoring fees,
which increased from $250,000 in the first quarter 2000 to $400,000 in the first
quarter 2001, due to an increase in the fee structure of the Company's factoring
agreement that was implemented in November 2000.

           INCOME TAXES

      Provision for income taxes was $300,000 for the first quarter 2001,
relating primarily to foreign taxes, compared to $1.2 million for the first
quarter 2000. These amounts differ 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

      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, retail
expansion and renovation of department store boutiques and other corporate
activities.

      Net cash used in operating activities was $19.9 million during the first
quarter 2001 and $25.8 million during the first quarter 2000. The improvement in
cash flows from operating activities is partly the result of the correction of
overseas production problems from the first quarter 2000, which in the first
quarter 2001 enabled the Company to bring in and ultimately ship inventory on a
more timely basis. Operating cash flows improved also as a result of the
non-payment of Senior Notes interest, and was offset partially by the net loss
for the first quarter 2001 and a decrease in accounts payable. The decrease in
cash flows from investing activities resulted from greater capital expenditures
in the first quarter 2000 relating to the warehouse expansion for the increased
space needed for the Anne Klein product lines and for Anne Klein showroom
improvements. The increase in cash flows from financing activities is the result
of the increased financing needed for the Company's Anne Klein operations.

      On July 9, 1999, the Company entered into 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"). The Chase Facility provides the Company with a revolving credit line


                                       11
<PAGE>
of up to $160 million. The Chase Facility provides, among other things, for the
maintenance of certain financial ratios and covenants, and sets limits on the
amount of capital expenditures and dividends to shareholders. The Chase Facility
is scheduled to expire on December 31, 2003. Availability under the Chase
Facility is limited to a borrowing base calculated upon eligible accounts
receivable, inventory, trademarks and letters of credit. Interest on outstanding
borrowings is determined based on stated margins above the prime rate at the
Chase Manhattan Bank ("Chase"), which on March 31, 2001 was 1.0% above the prime
rate. The Chase Facility was amended on December 22, 1999, June 29, 2000 and
November 13, 2000 to modify certain financial ratios and covenants. The Company
paid approximately $2.4 million in commitment and related fees in connection
with the Chase Facility in July 1999 and $875,000 in connection with the
November 13, 2000 amendment. These fees will be amortized as interest and
financing costs over the remaining life of the financing agreement at the time
of the applicable amendment. As of March 31, 2001, there were direct borrowings
of $89.7 million outstanding, $20.1 million in letters of credit outstanding and
$22.2 million available for future borrowings.

      As of March 31, 2001, the Company was in default under the Chase Facility,
because it did not meet certain financial covenants there under including, the
interest coverage ratio and minimum net worth requirement. The Company is
currently negotiating with the lenders under the Chase Facility to waive such
defaults and amend certain financial covenants. Although the Company expects to
reach agreement on the terms of such waivers and amendments, no assurance can be
given that the Company will be successful in doing so. As of March 31, 2001, the
$89.7 million outstanding under the Chase Facility has been reclassified as a
short-term liability.

      Pursuant to the Leslie Fay reorganization plan, the Company issued $110
million in 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%. Interest is payable semi-annually on March 31 and September
30. Interest relating the Senior Notes totaled $3.8 million for the first
quarter 2001 and $3.6 million for the first quarter 2000. 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, a majority of the aggregate principal amount of its
Senior Notes as of May 21, 1999, consented to certain amendments to the Senior
Notes. 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, totaling
$2.2 million (the "Consent Fee"). The Consent Fee is being amortized over the
remaining life of the Senior Notes and is included in interest and financing
costs.

      On March 30, 2001 and September 29, 2000, the Company announced that it
would not make its semi-annual interest payments of approximately $7.2 million
each to holders of its Senior Notes. Accordingly, the Company is currently in
default under the terms of the Senior Notes. The Company is currently engaged in
discussions with the Ad Hoc Committee to formulate a financial restructuring
that will address current liquidity deficiencies and enhance the Company's
ability to operate under its short- and long-term plans. As a result of the
default, the $110 million Senior Notes have been reclassified as short-term
debt.

           Although the Company expects to reach agreement on the terms of a
financial restructuring with the holders of a substantial majority of the Senior
Notes, and on waivers and amendments to the Chase Facility, there is no
assurance that the Company will be successful in doing so. If the Company is
unable to reach such agreements, it may be compelled to seek relief under the
United States Bankruptcy Code. In the interim, the Company is examining all
available options. As previously discussed, the defaults on the Senior Notes and


                                       12
<PAGE>
the Chase Facility raise substantial doubt as to the ability of the Company to
continue as a going concern.

           The Company has been advised by its independent public accountants
that should the situation described above remain unresolved at year-end, the
auditors' report on those financial statements will be modified for that
contingency.

      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 are guaranteed to be paid to the Company by CIT. The agreement has
no expiry 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 the
six-month period beginning December 1, 2000, there is a minimum factoring fee of
$675,000.

      Capital expenditures were $500,000 and $2.5 million for the first quarter
2001 and first quarter 2000, respectively. Capital expenditures represent funds
spent for warehouse expansion, showroom improvements, new retail stores,
information systems, overseas facilities development and general improvements.

      If the Company and the lenders under the Chase Facility reach an agreement
to waive defaults and amend certain financial covenants under the Chase
Facility, the Company anticipates that it will be in a position to satisfy its
ongoing cash requirements, in the near term, through borrowings under the Chase
Facility 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 reach an agreement with a
substantial majority of noteholders of its Senior Notes, 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 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


                                       13
<PAGE>
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 as a stand-alone entity;

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

o    potential exchange rate fluctuations;

o    the Company's concentration of revenues;

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

o    the Company's dependence on its financing arrangement under the Chase
     Facility and its ability to reach agreement on waivers and amendments of
     the Chase Facility and to achieve ongoing amended covenant requirements in
     future periods; and

o    the ability of the Company to reach an agreement with holders of the Senior
     Notes on the terms of a financial restructuring of such Senior Notes


      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.









                                       14
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)        Exhibits:

           10.1   Consulting Agreement dated April 11, 2001, between the Company
                  and Alvarez and Marsal, Inc.

(b)        Reports on Form 8-K:

           None.















                                       15
<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 15, 2001
                                        /s/ Arthur S. Levine
                                        -------------------------------------
                                        Arthur S. Levine
                                        Chairman and Chief Executive Officer



                                        /s/ Gwen Gepfert
                                        -------------------------------------
                                        Gwen Gepfert
                                        Chief Financial Officer











                                       16
<PAGE>
                                  EXHIBIT INDEX


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

     10.1           Consulting Agreement dated April 11, 2001, between the
                    Company and Alvarez and Marsal, Inc


















                                       17