Exhibit 13



FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA

(Dollar and share amounts in thousands, except per share data)



|                                                                               |  | Fiscal Year Ended
|------------------------------------------------------------------------------ |  | -----------------
|                                                                               |  | February 1, 2003 
|Income Statement Data:                                                         |  |                  
|Net sales                                                                      |  | $                
|Gross profit                                                                   |  |                  
|Selling, general and administrative expenses                                   |  |                  
|Interest                                                                       |  |                  
|Depreciation and amortization                                                  |  |                  
|Net income                                                                     |  |                  
|Earnings Per Share Data:                                                       |  |                  
|Basic earnings per share                                                       |  | $                
|Diluted earnings per share                                                     |  |                  
|Weighted average shares outstandingbasic                                      |  |                  
|Weighted average shares outstandingincluding dilutive potential common
shares |  |                  
|Balance Sheet Data:                                                            |  |                  
|Working capital                                                                |  | $                
|Inventories                                                                    |  |                  
|Net property and equipment                                                     |  |                  
|Total assets                                                                   |  |                  
|Long-term debt (including current maturities)                                  |  |                  
|Shareholders equity                                                           |  |                  
|Book value per share                                                           |  |                  
|Current ratio                                                                  |  |                  
|Number of stores at year-end                                                   |  |                  



1



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MANAGEMENTS
DISCUSSION AND FINANCIAL REVIEW



RESULTS OF OPERATIONS



The following table sets forth certain items in the
Statements of Income as a percentage of net sales for fiscal years 2003, 2002 and 2001.



|                                    |  | Percentage of Net Sales
|----------------------------------- |  | -----------------------
|                                    |  | Fiscal Year Ended      
|                                    |  | 2/1/03                 
|Net sales                           |  | 100.0                  
|Cost of sales                       |  | 52.0                   
|                                    |  |                        
|Gross profit                        |  | 48.0                   
|Other costs and expenses:           |  |                        
|Selling, general and administrative |  | 43.2                   
|Interest                            |  | 0.3                    
|Depreciation and amortization       |  | 2.0                    
|Other income, net                   |  | (0.2                   
|                                    |  |                        
|Income before income taxes          |  | 2.7                    
|Provision for income taxes          |  | 1.0                    
|                                    |  |                        
|Net income                          |  | 1.7                    
|                                    |  |                        



Year Ended February
1, 2003 Compared to Year Ended February 2, 2002



Net sales
increased by 1%, or $1.3 million, from fiscal 2002 to fiscal 2003 with comparable store sales up 1%. During fiscal 2003 the Company opened nine new stores and closed ten under-performing stores (four of which were relocations).



Cost of sales in fiscal 2003 was 52.0% of net sales compared to 51.6% of net
sales in fiscal 2002. The 0.4% of net sales increase was primarily due to taking a higher level of promotional markdowns to increase store traffic and, to a lesser degree, higher freight and buying and occupancy costs as a component of cost of sales
compared to the prior year.



Selling, general and administrative
expenses in fiscal 2003 were 43.2% of net sales compared to 43.1% of net sales in fiscal 2002. This 0.1% of net sales increase was due primarily to a combination of higher incentive bonus payments and significantly higher rates for casualty
insurance, offset in part by lower advertising expense and lower net alteration costs.



Interest expense in fiscal 2003 was 0.3% of net sales compared to 0.2% of net sales in fiscal 2002. Fiscal 2003 includes incremental interest expense of approximately $253,000 related to a new Credit Facility (see Note 4 to
the Financial Statements) and was partially offset primarily by lower interest rates compared to last year.



Other income, net includes income from unrelated insurance claims of $132,000 ($82,000 after tax, or $.03 per diluted share) in fiscal 2003 and $525,000 ($325,000 after tax, or $.08 per diluted share)
in fiscal 2002.



2



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Year Ended February 2, 2002
Compared to Year Ended February 3, 2001



Net sales decreased
by 4%, or $7.1 million, from fiscal 2001 (a 53-week year) to fiscal 2002 (a 52-week year). Comparable store sales were down 4% on a fiscal year basis; however, on a comparable 52-week basis, same store sales decreased 3%. These decreases in
comparable 52-week periods year over year were attributable to weak retail sales experienced in the second half of fiscal 2002. Additionally, during fiscal 2002 the Company opened ten new stores and closed eleven (four of which were relocations).



Cost of sales in fiscal 2002 was 51.6% of net sales compared to
50.5% of net sales in fiscal 2001. The 1.1% of net sales increase was primarily due to higher markdowns, primarily to clear older season merchandise and, to a lesser extent, the expensing of previously capitalized buying and occupancy costs due to a
$7.2 million reduction in ending inventory.



Selling, general and
administrative expenses in fiscal 2002 were 43.1% of net sales compared to 42.7% of net sales in fiscal 2001. This 0.4% of net sales increase was the net result of experiencing lower than expected sales while incurring plan levels of store payroll
and supervision costs as well as higher group health insurance claims, offset in part by lower advertising costs and incentive bonus payments.



Interest expense in fiscal 2002 was 0.2% of net sales compared to 0.5% of net sales in fiscal 2001 and is primarily the result of a decrease in the
average annual interest rates from 6.8% in fiscal 2001 to 3.7% in fiscal 2002 and, to a lesser degree, lower average borrowing levels.



Other income, net in fiscal 2002 included $525,000 ($325,000 after tax, or $.08 per diluted share) related to income from an insurance claim.



LIQUIDITY AND CAPITAL RESOURCES



In fiscal 2003, the Company funded its operating activities, including
capital expenditures for the opening of new stores, from internally generated funds and from bank borrowings. During fiscal 2003, the Company opened nine new stores and closed ten under-performing stores (four of which were relocations) which had
not met the Companys sales and profitability expectations. During fiscal 2004 the Company believes it will open approximately 15 new stores and close or relocate approximately five other under-performing locations. The Company does not expect
this activity to significantly impact liquidity or capital resources, including its debt covenants, during fiscal 2004.



Operating activities provided net cash of $8.7 million, $15.4 million and $7.5 million in fiscal 2003, 2002 and 2001, respectively. The change between
fiscal 2003 and 2002 related primarily to the year over year fluctuations in inventory which increased by $1.5 million in fiscal 2003 and decreased by $6.8 million in fiscal 2002. The change between fiscal 2002 and 2001 related primarily to the $7.3
million reduction in inventory growth year over year and, to a lesser extent, the year over year growth in payables, both offset in part by the reduction in net income.



Net cash used for investing activities in fiscal 2003, 2002 and 2001 approximated $2.2 million, $2.9 million and $2.8
million, respectively, and was primarily for the purpose of store expansion, technology related purchases, and, to a lesser degree, in fiscal 2001, the development of the Companys internet store and remodelings.



Financing activities used net cash of $7.7 million, $8.6 million and $4.9
million in fiscal 2003, 2002 and 2001, respectively. During fiscal 2003, the Company completed a tender offer under which it purchased approximately 1.6 million shares at $11.00 per share for approximately $17.1 million. This tender offer and the
payoff of a previously outstanding Industrial Development Bond was financed under a new $46.0 million Credit Facility with two banks (see Note 4 to the Financial Statements). During fiscal 2003, the Company re-paid approximately $9.2 million under
this Credit Facility. Financing activities in fiscal 2002 and 2001 primarily related to fluctuations in the borrowing levels under the Companys previous revolving credit agreements, (which had an aggregate borrowing capacity of $40.0 million)
and included the repurchase of the Companys common stock of $0.3 million and $4.1 million, respectively. At the end of fiscal 2003, the Company had the entire $26.0 million available for use under the revolving loan portion of the Credit
Facility and was in compliance with all covenants.



3



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Contractual Obligations



The Companys contractual obligations to make future
payments under its existing Credit Facility and lease obligations are summarized below:

Payments Due by Period ($  millions)



|Contractual obligations       |  | Total |      | Less than 1 Year |   | 1-3 Years |  | 4-5 Years |      | After 5 Years
|----------------------------- |  | ----- | ---- | ---------------- | - | --------- |  | --------- | ---- | -------------
|Long-term debt                |  | $     | 11.3 |                  | $ | 1.9       |  | $         | 4.6  |              
|Operating leases              |  |       | 39.9 |                  |   | 13.5      |  |           | 15.8 |              
|                              |  |       |      |                  |   |           |  |           |      |              
|Total contractual obligations |  | $     | 51.2 |                  | $ | 15.4      |  | $         | 20.4 |              
|                              |  |       |      |                  |   |           |  |           |      |              



OTHER MATTERS



Critical Accounting Policies



In conformity with generally accepted accounting principles, the preparation
of our financial statements requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Although the estimates are based on our knowledge of current events and actions we
may undertake in the future, actual results could differ from those estimates. Significant accounting policies used in the preparation of the Companys financial statements are summarized in Note 1 of the Companys Financial Statements.



In 2002, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards (SFAS) No. 145 Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections and SFAS No. 146 Accounting for Costs Associated with Exit or
Disposal Activities. Adoption of these statements did not have a material impact on the Companys financial statements.



In fiscal 2003, the Company adopted SFAS No. 148 Accounting for Stock-Based Compensation-Transition and Disclosure. Adoption of this new
standard did not have a material impact on the Companys financial statements.



Historically, inflation has not significantly affected the Companys gross margins. When necessary, the Company has generally been able to pass through price increases as the cost of merchandise has increased.



Off Balance Sheet Arrangements



The Company does not have transactions, arrangements or relationships with
special purpose entities. Except for Letters of Credit approximating $1.1 million, which expire August 2003, the Company does not have any off balance sheet arrangements.



Interest Rate Risk



The Companys bank credit facilities bear interest at variable rates, which expose the Company to risk from interest rate fluctuations. If interest
rates were to increase or decrease by 10%, the effect on net income and cash flows would not be material.



Forward-Looking Statements



This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the
Companys actual results in future periods to differ materially from forecasted or expected results. Those risks include, among other things, the competitive environment in the value-priced mens apparel industry in general and in the
Companys specific market area, inflation, changes in costs of goods and services, economic conditions in general and in the Companys specific market area. Those and other risks are more fully described in the Companys filings with
the Securities and Exchange Commission, including the Companys Annual Report on Form 10-K for the fiscal year ended February 1, 2003.



4



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STATEMENTS OF INCOME(in thousands, except per share data)



|                                                                                      |  | Fiscal Year Ended |        
|------------------------------------------------------------------------------------- |  | ----------------- | -------
|                                                                                      |  | February 1, 2003  |        
|Net sales                                                                             |  | $                 | 162,184
|Cost of sales                                                                         |  |                   | 84,382 
|                                                                                      |  |                   |        
|Gross profit                                                                          |  |                   | 77,802 
|Other costs and expenses:                                                             |  |                   |        
|Selling, general and administrative                                                   |  |                   | 70,087 
|Interest                                                                              |  |                   | 439    
|Depreciation and amortization                                                         |  |                   | 3,177  
|Other income, net                                                                     |  |                   | (291   
|                                                                                      |  |                   |        
|Income before income taxes                                                            |  |                   | 4,390  
|Provision for income taxes                                                            |  |                   | 1,669  
|                                                                                      |  |                   |        
|Net income                                                                            |  | $                 | 2,721  
|                                                                                      |  |                   |        
|Earnings per common share:                                                            |  |                   |        
|Basic                                                                                 |  | $                 | 0.95   
|                                                                                      |  |                   |        
|Diluted                                                                               |  | $                 | 0.94   
|                                                                                      |  |                   |        
|Weighted average common shares outstandingbasic                                      |  |                   | 2,866  
|Dilutive effect of stock options                                                      |  |                   | 25     
|                                                                                      |  |                   |        
|Weighted average common shares outstandingincluding dilutive potential common
shares |  |                   | 2,891  
|                                                                                      |  |                   |        





5



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STATEMENTS OF CHANGES IN
SHAREHOLDERS EQUITY(in thousands)



|                                                             |  | Common Stock |   |  | Capital in Excess of Par Value |       |   | Notes Receivable Stock Purchase Loan Plan |   |        | Retained Earnings |  |   | Total  |  
|------------------------------------------------------------ |  | ------------ | - |  | ------------------------------ | ----- | - | ----------------------------------------- | - | ------ | ----------------- |  | - | ------ | -
|                                                             |  | Shares       |   |  | Amount                         |       |   |                                           |   |       
|BalanceJanuary 29, 2000                                     |  | 4,656        |   |  | $                              | 2,328 |   |                                           | $ | 3,950  |                   |  | $ | (2,457 | )
|Net income                                                   |  |              |   |  |                                |       |   |                                           |   |        |                   |  |   |        |  
|Repurchase of common stock                                   |  | (565         | ) |  |                                | (282  | ) |                                           |   | (3,802 | )                 |  |   |        |  
|Issuances of common stock                                    |  | 8            |   |  |                                | 4     |   |                                           |   | 56     |                   |  |   |        |  
|Issuances of common stock under the Stock Purchase Loan Plan |  | 10           |   |  |                                | 4     |   |                                           |   | 62     |                   |  |   |        |  
|Notes receivablestock purchase                              |  |              |   |  |                                |       |   |                                           |   |        |                   |  |   | (67    | )
|Reduction of notes receivable                                |  |              |   |  |                                |       |   |                                           |   |        |                   |  |   | 57     |  
|                                                             |  |              |   |  |                                |       |   |                                           |   |        |                   |  |   |        |  
|BalanceFebruary 3, 2001                                     |  | 4,109        |   |  |                                | 2,054 |   |                                           |   | 266    |                   |  |   | (2,467 | )
|Net income                                                   |  |              |   |  |                                |       |   |                                           |   |        |                   |  |   |        |  
|Repurchase of common stock                                   |  | (84          | ) |  |                                | (42   | ) |                                           |   | (357   | )                 |  |   |        |  
|Issuances of common stock                                    |  | 19           |   |  |                                | 10    |   |                                           |   | 103    |                   |  |   |        |  
|Reduction of notes receivable                                |  |              |   |  |                                |       |   |                                           |   |        |                   |  |   | 454    |  
|                                                             |  |              |   |  |                                |       |   |                                           |   |        |                   |  |   |        |  
|BalanceFebruary 2, 2002                                     |  | 4,044        |   |  |                                | 2,022 |   |                                           |   | 12     |                   |  |   | (2,013 | )
|Net income                                                   |  |              |   |  |                                |       |   |                                           |   |        |                   |  |   |        |  
|Repurchase of common stock                                   |  | (1,564       | ) |  |                                | (782  | ) |                                           |   | (154   | )                 |  |   |        |  
|Tender Offer costs                                           |  |              |   |  |                                |       |   |                                           |   |        |                   |  |   |        |  
|Surrender of shares under Stock Purchase Loan Plan           |  | (44          | ) |  |                                | (22   | ) |                                           |   | (182   | )                 |  |   |        |  
|Issuances of common stock, including tax benefits            |  | 68           |   |  |                                | 34    |   |                                           |   | 324    |                   |  |   |        |  
|Reduction of notes receivable                                |  |              |   |  |                                |       |   |                                           |   |        |                   |  |   | 1,017  |  
|                                                             |  |              |   |  |                                |       |   |                                           |   |        |                   |  |   |        |  
|BalanceFebruary 1, 2003                                     |  | 2,504        |   |  | $                              | 1,252 |   |                                           | $ | 0      |                   |  | $ | (996   | )
|                                                             |  |              |   |  |                                |       |   |                                           |   |        |                   |  |   |        |  



See
Notes to Financial Statements.





6



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BALANCE SHEETS(in
thousands, except per share data)



|                                                                                           |  | February 1, 2003 |        |   | February 2, 2002 |  
|------------------------------------------------------------------------------------------ |  | ---------------- | ------ | - | ---------------- | -
|Assets                                                                                     |  |                  |        |   |                  |  
|Current assets:                                                                            |  |                  |        |   |                  |  
|Cash and cash equivalents                                                                  |  | $                | 3,002  |   |                  | $
|Accounts receivable                                                                        |  |                  | 314    |   |                  |  
|Merchandise inventories                                                                    |  |                  | 46,073 |   |                  |  
|Prepaid income taxes                                                                       |  |                  | 242    |   |                  |  
|Other current assets                                                                       |  |                  | 3,283  |   |                  |  
|                                                                                           |  |                  |        |   |                  |  
|Total current assets                                                                       |  |                  | 52,914 |   |                  |  
|Property and equipment, net                                                                |  |                  | 16,121 |   |                  |  
|Other assets                                                                               |  |                  | 7,174  |   |                  |  
|                                                                                           |  |                  |        |   |                  |  
|                                                                                           |  | $                | 76,209 |   |                  | $
|                                                                                           |  |                  |        |   |                  |  
|Liabilities and Shareholders Equity                                                       |  |                  |        |   |                  |  
|Current liabilities:                                                                       |  |                  |        |   |                  |  
|Current maturities of long-term debt                                                       |  | $                | 1,860  |   |                  | $
|Accounts payable                                                                           |  |                  | 12,037 |   |                  |  
|Accrued compensation and related items                                                     |  |                  | 2,379  |   |                  |  
|Current and deferred income taxes                                                          |  |                  | 94     |   |                  |  
|Other current liabilities                                                                  |  |                  | 2,034  |   |                  |  
|                                                                                           |  |                  |        |   |                  |  
|Total current liabilities                                                                  |  |                  | 18,404 |   |                  |  
|Long-term debt                                                                             |  |                  | 9,419  |   |                  |  
|Other long-term liabilities                                                                |  |                  | 1,690  |   |                  |  
|Deferred income taxes                                                                      |  |                  | 1,512  |   |                  |  
|Commitments                                                                                |  |                  |        |   |                  |  
|Shareholders equity:                                                                      |  |                  |        |   |                  |  
|Preferred stock, $1 par value; authorized shares, 500; issued and outstanding shares, none |  |                  |        |   |                  |  
|Common stock, $.50 par value; authorized shares,                                           |  |                  |        |   |                  |  
|10,000; issued and outstanding shares, 2,504                                               |  |                  |        |   |                  |  
|(2003)and 4,044 (2002)                                                                     |  |                  | 1,252  |   |                  |  
|Capital in excess of par value                                                             |  |                  |       |   |                  |  
|Notes receivableStock Purchase Loan Plan                                                  |  |                  | (996   | ) |                  |  
|Retained earnings                                                                          |  |                  | 44,928 |   |                  |  
|                                                                                           |  |                  |        |   |                  |  
|                                                                                           |  |                  | 45,184 |   |                  |  
|                                                                                           |  |                  |        |   |                  |  
|                                                                                           |  | $                | 76,209 |   |                  | $
|                                                                                           |  |                  |        |   |                  |  



See
Notes to Financial Statements.



7



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STATEMENTS OF CASH FLOWSIncrease (decrease) in cash (in thousands)



|                                                                                             |  | Fiscal Year Ended |        
|-------------------------------------------------------------------------------------------- |  | ----------------- | -------
|                                                                                             |  | February 1, 2003  |        
|Cash flows from operating activities:                                                        |  |                   |        
|Net income                                                                                   |  | $                 | 2,721  
|Adjustments to reconcile net income to net cash provided by (used for) operating
activities: |  |                   |        
|Depreciation and amortization                                                                |  |                   | 3,685  
|Proceeds received on insurance claim                                                         |  |                   | 415    
|Gain on insurance claim                                                                      |  |                   | (132   
|Loss on property dispositions, net                                                           |  |                   | 85     
|Other                                                                                        |  |                   | 106    
|Changes in assets and liabilities:                                                           |  |                   |        
|Accounts receivable                                                                          |  |                   | (44    
|Merchandise inventories                                                                      |  |                   | (1,519 
|Other current assets                                                                         |  |                   | (70    
|Other assets                                                                                 |  |                   | (138   
|Accounts payable and accrued expenses                                                        |  |                   | 3,594  
|Current and deferred income taxes                                                            |  |                   | (33    
|                                                                                             |  |                   |        
|Net cash provided by operating activities                                                    |  |                   | 8,670  
|                                                                                             |  |                   |        
|Cash flows from investing activities:                                                        |  |                   |        
|Capital expenditures                                                                         |  |                   | (2,216 
|Proceeds from property dispositions                                                          |  |                   | 14     
|                                                                                             |  |                   |        
|Net cash used for investing activities                                                       |  |                   | (2,202 
|                                                                                             |  |                   |        
|Cash flows from financing activities:                                                        |  |                   |        
|Net paydowns under revolving bank loans                                                      |  |                   |       
|Borrowings under line of credit debt                                                         |  |                   | 18,997 
|Repayment under line of credit and real estate debt                                          |  |                   | (9,158 
|Repurchase of common stock                                                                   |  |                   | (17,210
|Payment of tender offer cost                                                                 |  |                   | (375   
|Payment of debt issuance cost                                                                |  |                   | (212   
|Principal paid on notes receivable-Stock Purchase Loan Plan                                  |  |                   | 618    
|Premium payments on life insurance policies                                                  |  |                   | (383   
|                                                                                             |  |                   |        
|Net cash used for financing activities                                                       |  |                   | (7,723 
|                                                                                             |  |                   |        
|Net (decrease) increase in cash and cash equivalents                                         |  |                   | (1,255 
|Cash and cash equivalents at beginning of year                                               |  |                   | 4,257  
|                                                                                             |  |                   |        
|Cash and cash equivalents at end of year                                                     |  | $                 | 3,002  
|                                                                                             |  |                   |        
|Supplemental disclosure of cash flow information:                                            |  |                   |        
|Cash paid during the year for interest                                                       |  | $                 | 414    
|Cash paid during the year for income taxes, net                                              |  |                   | 1,701  
|Non-cash financing activity                                                                 |  |                   |        
|Reduction of notes receivableStock Purchase Loan Plan                                       |  |                   | 379    
|Principal forgiveness on Stock Purchase Loan Plan                                            |  |                   | 41     
|Issuances of common stock                                                                    |  |                   | 132    
|Reduction of common stock due to surrender of shares                                         |  |                   | (489   
|Reduction in income taxes payable from benefit of stock options                              |  |                   | 230    



See Notes
to Financial Statements.



8



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NOTES TO FINANCIAL
STATEMENTS



Note 1Summary of Significant Accounting
Policies:



Principal Business

S&K Famous Brands, Inc. (the Company) operates in one segment, the retail sale of menswear, including tailored clothing, furnishings, sportswear,
shoes and accessories. The Companys fiscal year is the 52- or 53-week period, which ends on the Saturday closest to January 31. Fiscal years ended February 1, 2003 (fiscal 2003) and February 2, 2002 (fiscal 2002) were 52-week periods; February
3, 2001 (fiscal 2001) was a 53-week period.



Certain prior year
balances have been reclassified to conform to the current years presentation.



Use of Estimates

The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements
and that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



Cash and Cash Equivalents

Cash and
cash equivalents consist of cash on hand and marketable securities with original maturities of 90 days or less.



Merchandise Inventories

Inventories are valued at the lower of average cost or
market. If the Company receives merchandise vendor allowances, they are generally taken as a reduction of cost of sales in the period to which they apply for merchandise sold.



Property and Equipment

Property and equipment are stated at cost. Depreciation for financial reporting purposes is computed using both straight-line and accelerated methods over the estimated service lives which are between 25 and 40 years for buildings
and between three and seven years for fixtures and equipment. Leasehold improvements are generally amortized over an eight-year period.



The Company annually evaluates long-lived assets for any impairment through the evaluation of the recoverability of its property and equipment based on
the utilization of assets and expected cash flows. This evaluation has not resulted in adjustments to the Companys results of operations or financial position. Repair and maintenance expenditures are charged to expense as incurred. Upon
retirement or sale of an asset, its cost and related accumulated depreciation are written off and any gain or loss is recognized.



Other Assets

Other assets consist
primarily of receivables from certain officers under split dollar life insurance policies and cash surrender value related to various other life insurance policies aggregating $6.7 million and $6.1 million in fiscal 2003 and 2002, respectively.



Revenue Recognition

Net sales include sales of merchandise, net of returns and exclusive of sales taxes and shipping and handling revenues related to merchandise sold.



Advertising Costs

Advertising costs are expensed in the period in which the advertisement initially runs. Advertising expense of $12.4 million, $12.9 million and $14.8
million, respectively, was included in selling, general and administrative expenses in each of the last three fiscal years. Deferred advertising costs related to future programs included in the balance sheets approximated $100,000 in each year.



Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined
based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.



Earnings Per Share

The computation of basic earnings per share is based on the weighted average number of common shares outstanding during each period. Diluted earnings per
share include the dilutive effect of stock options. Options which were anti-dilutive of 51,700, 118,000, and 592,400 shares were not included in computing diluted earnings per share for fiscal 2003, 2002 and 2001, respectively.





9



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Stock-Based Compensation



FAS No. 123 requires the Company to make certain proforma
disclosures as if the fair value based method of accounting had been applied to its stock option grants. There were no options granted in fiscal 2003 or 2002. The fair value of the options granted in prior years, was estimated at the date of grant
using the Black-Scholes option pricing model with the following weighted average assumptions for fiscal 2001: risk free interest rates of 5.7%; expected volatility of 36.9%; expected life of 5 years. This pricing model resulted in a fair value per
option of $3.08, for fiscal 2001.



Had compensation cost been
determined including the weighted average fair-value of options granted subsequent to fiscal year 1996 (which all ratably vest over five years), the Companys proforma net income and net income per share would have been:



|(in thousands, except per share amounts)            |  | 2003 |       | 2002 |   | 2001 
|--------------------------------------------------- |  | ---- | ----- | ---- | - | -----
|Compensation expense related to stock option plans: |  |      |       |      |   |      
|As reported                                         |  | $    |      |      | $ |     
|Proforma                                            |  |      | 121   |      |   | 121  
|                                                    |  |      |       |      |   |      
|Net income:                                         |  |      |       |      |   |      
|As reported                                         |  | $    | 2,721 |      | $ | 3,386
|Proforma                                            |  |      | 2,600 |      |   | 3,265
|                                                    |  |      |       |      |   |      
|Basic earnings per share:                           |  |      |       |      |   |      
|As reported                                         |  | $    | .95   |      | $ | .84  
|Proforma                                            |  |      | .91   |      |   | .81  
|                                                    |  |      |       |      |   |      
|Diluted earnings per share:                         |  |      |       |      |   |      
|As reported                                         |  | $    | .94   |      | $ | .83  
|Proforma                                            |  |      | .90   |      |   | .80  
|                                                    |  |      |       |      |   |      



Accounting
Pronouncements



In 2002, the Financial Accounting Standards
Board issued Statements of Financial Accounting Standards (SFAS) No. 145 Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections and SFAS No. 146 Accounting for Costs Associated
with Exit or Disposal Activities. Adoption of these statements did not have a material impact on the Companys financial statements.



In fiscal 2003, the Company adopted SFAS No. 148 Accounting for Stock-Based Compensation-Transition and Disclosure. Adoption of this new
standard did not have a material impact on the Companys financial statements.



Note 2Merchandise Inventories:



Inventories are costed using an average cost method, under which the Company tracks inventory costs for approximately 100 inventory categories which are used to classify its inventory. The Companys lower of cost or market
inventory allowance and shrinkage reserve approximated $235,000 and $275,000, respectively, in fiscal 2003 and $225,000 and $281,000, respectively, in fiscal 2002.



The Company capitalizes certain buying, holding and distribution costs to inventory, which at the end of the last two fiscal
years were approximately $2.7 million. Buying, holding and distribution costs charged to cost of sales in fiscal years 2003, 2002 and 2001 were approximately $4.4 million, $4.2 million and $3.9 million, respectively.





10



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Note 3Property and
Equipment:



Property and equipment consists of the following
(in thousands):



|                                               |  | February 1, 2003 |        | February 2, 2002
|---------------------------------------------- |  | ---------------- | ------ | ----------------
|Land                                           |  | $                | 1,232  |                 
|Buildings                                      |  |                  | 5,375  |                 
|Furniture, fixtures and equipment              |  |                  | 17,327 |                 
|Leasehold improvements                         |  |                  | 17,220 |                 
|                                               |  |                  |        |                 
|                                               |  |                  | 41,154 |                 
|Lessaccumulated depreciation and amortization |  |                  | 25,033 |                 
|                                               |  |                  |        |                 
|                                               |  | $                | 16,121 |                 
|                                               |  |                  |        |                 



Depreciation and
amortization expense of approximately $508,000, $475,000 and $414,000 was included in cost of sales for each of the last three fiscal years, respectively.



Note 4Long-Term Debt:



Long-term debt consists of (in thousands):



|                                                                                                                                                                         |  | February 1, 2003 |        | February 2, 2002
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------- | ------ | ----------------
|Credit Facility:                                                                                                                                                         |  |                  |        |                 
|Line of Credit; $486 of principal due quarterly beginning May 1, 2003 plus interest
based on LIBOR due monthly                                                           |  | $                | 5,507  |                 
|Term Loan; $34 of principal plus interest based on LIBOR due monthly collateralized by
land and corporate headquarters                                                   |  |                  | 5,772  |                 
|Industrial Development Revenue Bond; $45 of principal plus interest at 65% of prime, due
quarterly to January 1, 2010, collateralized by land and corporate headquarters |  |                  |       |                 
|                                                                                                                                                                         |  |                  |        |                 
|                                                                                                                                                                         |  |                  | 11,279 |                 
|Lesscurrent maturities                                                                                                                                                  |  |                  | 1,860  |                 
|                                                                                                                                                                         |  |                  |        |                 
|                                                                                                                                                                         |  | $                | 9,419  |                 
|                                                                                                                                                                         |  |                  |        |                 



On April 26, 2002, the
Company purchased 1,553,375 shares of its common stock at $11.00 per share under a tender offer and financed it through available cash and a new credit facility (the Credit Facility) from two banks including a line of credit and term
loan. The Credit Facility also provides for an operating revolving loan for working capital needs in the principal amount of $26.0 million; at February 1, 2003, no amounts were outstanding.



The Credit Facility, which matures in 2007, is collateralized by liens on the
Companys inventory and the Companys headquarters property and adjacent store. Monthly principal payments on the term loan began in July 2002 and quarterly principal reductions on the line of credit loan will begin in May 2003. Amounts
outstanding bear interest at a variable rate based on LIBOR (2.99% at February 1, 2003), payable monthly. The Credit Facility contains customary financial covenants, including restrictions on the Companys ability to pay dividends and to
repurchase its capital stock. The Company is presently in compliance with all covenants in the Credit Facility.



On May 15, 2002, the remaining balance of the Companys previously outstanding Industrial Development Bond was refinanced, as well as a portion of the line of credit, into a term loan under the
Credit Facility totaling $6.0 million. As of February 1, 2003, the Company had $5.5 million outstanding under the line of credit portion of the Credit Facility. Maturities of long-term debt for the next five years are estimated at $1.9 million, $2.3
million, $2.3 million, $0.6 million and $4.2 million, respectively



11



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Note 5Profit Sharing
and Other Benefit Programs:



The Company maintains a
noncontributory profit sharing plan for all employees who meet age and service requirements. Contributions to the plan are determined annually by the Board of Directors and were $50,000, $50,000 and $120,000 in each of the last three fiscal years,
respectively.



Additionally, the profit sharing plan includes a
qualified salary reduction plan under Section 401(k) of the Internal Revenue Code. Eligible participants in the Companys 401(k) Plan can elect to invest 1% to 100% of their pre-tax earnings. The Companys contribution to the 401(k) Plan
is at the discretion of the Board of Directors, who authorized contributions of the Companys common stock in the amount of $150,000, $100,000 and $80,000 in each of the last three fiscal years, respectively. These contributions are paid into
the plan within 60 days of fiscal year end.



Included in other
assets at the end of the last two fiscal years are receivables from certain officers (aggregating $3,499,000 and $3,307,000, respectively) which represent accumulated premiums paid on split dollar life insurance policies through July 2002, when the
Company ceased premium payments. Cash surrender values of the related policies ($3,872,000 and $3,253,000, respectively) are pledged as collateral for these receivables.



Other long-term liabilities consist of unfunded deferred compensation agreements with certain officers which provide a fixed
level of retirement benefits to be paid based on age and years of service. Deferred compensation expense is being accrued over the vesting period using a discount rate of 8% and approximated $134,000, $127,000 and $120,000, respectively, in each of
the last three fiscal years.



Note 6Stock Incentive and
Stock Purchase Loan Plans:



The Companys stock
incentive plan provides for the granting of up to 400,000 common shares to key management employees. Options to purchase the Companys stock are granted with an exercise price not less than the market value at the date of grant, are exercisable
after one to five years and expire after eight years. The Company applies the intrinsic value based method of accounting prescribed by Accounting Principles Board Opinion No. 25, in accounting for its stock options. Accordingly, the Company has not
recognized any related compensation expense in its Statements of Income.



Changes in options under the plan for the three years ended February 1, 2003 were as follows:



|                             |  | Options  |   |  | Weighted Average Exercise Price |       | Exercisable |         | Weighted Average Exercise Price
|---------------------------- |  | -------- | - |  | ------------------------------- | ----- | ----------- | ------- | -------------------------------
|OutstandingJanuary 29, 2000 |  | 554,036  |   |  | $                               | 10.13 |             | 379,725 |                                
|Granted                      |  | 79,300   |   |  |                                 | 7.38  |             |         |                                
|Exercised                    |  | (4,000   | ) |  |                                 | 6.19  |             |         |                                
|Surrendered                  |  | (11,900  | ) |  |                                 | 10.56 |             |         |                                
|                             |  |          |   |  |                                 |       |             |         |                                
|OutstandingFebruary 3, 2001 |  | 617,436  |   |  |                                 | 9.79  |             | 421,496 |                                
|Exercised                    |  | (30,000  | ) |  |                                 | 6.28  |             |         |                                
|Surrendered                  |  | (73,100  | ) |  |                                 | 9.08  |             |         |                                
|Expired                      |  | (50,000  | ) |  |                                 | 21.75 |             |         |                                
|                             |  |          |   |  |                                 |       |             |         |                                
|OutstandingFebruary 2, 2002 |  | 464,336  |   |  |                                 | 8.84  |             | 336,976 |                                
|Exercised**                  |  | (212,432 | ) |  |                                 | 8.45  |             |         |                                
|Surrendered                  |  | (14,264  | ) |  |                                 | 8.98  |             |         |                                
|                             |  |          |   |  |                                 |       |             |         |                                
|OutstandingFebruary 1, 2003 |  | 237,640  |   |  |                                 | 9.17  |             | 165,036 |                                
|                             |  |          |   |  |                                 |       |             |         |                                



** Shareholders
surrendered 157,490 shares in the exercise of 212,432 stock options which resulted in the net issuance of 54,942       shares of common stock by the Compay.



12



---



Additional information
regarding stock options outstanding at February 1, 2003 follows:



|Range of Exercise Prices |  | Outstanding Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life |  | Exercisable Options |  | Weighted Average Exercise Price
|------------------------ |  | ------------------- |  | ------------------------------- |  | ------------------------------------------- |  | ------------------- |  | -------------------------------
|$7.38                    |  | 59,200              |  | $  7.38                         |  | 5.7 years                                   |  | 23,680              |  | $  7.38                        
|$8.31  $9.63            |  | 126,780             |  | 8.89                            |  | 3.4 years                                   |  | 100,028             |  | 9.02                           
|$11.94                   |  | 51,660              |  | 11.94                           |  | 3.6 years                                   |  | 41,328              |  | 11.94                          
|                         |  |                     |  |                                 |  |                                             |  |                     |  |                                
|$7.38  $11.94           |  | 237,640             |  |                                 |  |                                             |  | 165,036             |  |                                
|                         |  |                     |  |                                 |  |                                             |  |                     |  |                                



Under the Companys
Stock Purchase Loan Plan, the Company has full recourse loans with thirteen officers approximating $1.2 million, gross of amounts accrued for principal forgiveness. The Plan annually provides for reduction of a portion of interest payable on the
loans based on meeting certain operating targets, as well as the opportunity for the officer to receive a reduction of a portion of the principal balance of the loan if the officer remains an employee of the Company for seven years and maintains
ownership of the stock. Compensation expense related to this program was $41,000, $92,000 and $55,000 for the last three fiscal years, respectively. At the end of fiscal 2003 and 2002, the Company has accrued interest receivable from these officers
in the amount of $214,900 and $334,600, respectively.



Note
7Provision for Income Taxes:



Significant components
of the Companys deferred income tax liabilities (assets) are as follows (in thousands):



|                                                    |  | Fiscal Year Ended |      
|--------------------------------------------------- |  | ----------------- | -----
|                                                    |  | 2003              |      
|Deferred tax liabilities:                           |  |                   |      
|Depreciation                                        |  | $                 | 2,267
|Other items                                         |  |                   | 218  
|                                                    |  |                   |      
|Total deferred tax liabilities                      |  |                   | 2,485
|Deferred tax assets, primarily compensation related |  |                   | (879 
|                                                    |  |                   |      
|Net deferred tax liabilities                        |  | $                 | 1,606
|                                                    |  |                   |      



13



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The provision for income taxes
consists of (in thousands):



|         |  | Fiscal Year Ended |      
|-------- |  | ----------------- | -----
|         |  | 2003              |      
|Current: |  |                   |      
|Federal  |  | $                 | 1,231
|State    |  |                   | 368  
|         |  |                   |      
|         |  |                   | 1,599
|Deferred |  |                   | 70   
|         |  |                   |      
|         |  | $                 | 1,669
|         |  |                   |      



The effective income tax
rates consist of (in thousands):



|                                             |  | Fiscal Year Ended |      
|-------------------------------------------- |  | ----------------- | -----
|                                             |  | 2003              |      
|Income taxes at federal statutory rate (34%) |  | $                 | 1,493
|State income taxes, net of federal benefit   |  |                   | 243  
|Othernet                                    |  |                   | (67  
|                                             |  |                   |      
|                                             |  | $                 | 1,669
|                                             |  |                   |      
|Effective income tax rate                    |  |                   | 38.0 
|                                             |  |                   |      



Note
8Commitments:



The Company leases all but one of its
stores under varying terms and arrangements, which generally provide renewal options and contingent rentals based on a percentage of gross sales. Total rent expense under the leases approximated $13.4 million, $13.0 million and $13.4 million in each
of the last three years, respectively.



The future minimum
payments under operating leases as of the end of fiscal 2003 aggregate $39.9 million and are payable as follows: fiscal 2004$13.5 million, fiscal 2005$9.2 million, fiscal 2006$6.6 million, fiscal 2007$4.0 million, fiscal
2008$2.7 million and $3.9 million, thereafter.



The Company
leases a property from an immediate family member of an officer of the Company, who is also a shareholder. Rent expense included approximately $150,000, $147,000 and $144,000 in fiscal 2003, 2002 and 2001, respectively, paid to this party. The
Company is also obligated under this lease agreement to pay minimum rentals approximating $153,000 in fiscal 2004. Additionally, prior to January 2001, the Company had leased a property from an officer of the Company, who is also a shareholder, and
incurred rent expense of approximately $49,000 in fiscal 2001.



At the end of fiscal 2003, the Company had outstanding Letters of Credit approximating $1.1 million.



Note 9Nonrecurring Items:



During fiscal 2003, other income, net, included $132,000 ($82,000 after tax or $.03 per diluted share) related to income from an insurance claim. Gross
proceeds from this insurance claim were approximately $511,000 and covered the $379,000 loss of inventory and other related costs. During fiscal 2002, other income, net, included $525,000 ($325,000 after tax or $.08 per diluted share) related to
income from an insurance claim. Gross proceeds from this insurance claim were approximately $868,000 and covered the $343,000 loss of inventory and other related costs.



14



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REPORT OF INDEPENDENT
ACCOUNTANTS



To the
Board of Directors and Shareholders

of S&K Famous Brands, Inc.



In our opinion, the accompanying balance sheets and related statements of
income, of changes in shareholders equity and of cash flows present fairly, in all material respects, the financial position of S&K Famous Brands, Inc. (the Company) at February 1, 2003 and February 2, 2002, and the
results of its operations and its cash flows for each of the three fiscal years in the period ended February 1, 2003 in conformity with accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of the Companys management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing
standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.



/s/    PricewaterhouseCoopers LLP



March 14, 2003

Richmond, Virginia



15



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SELECTED QUARTERLY DATA
(unaudited)



Summarized quarterly data for fiscal 2003 and
2002 are as follows (in thousands, except per share data):



|Fiscal 2003                          |  | May 4 |              | August 3 |   | November 2   |  |   | February 1  
|------------------------------------ |  | ----- | ------------ | -------- | - | ------------ |  | - | ------------
|                                    
|Net sales                            |  | $     | 41,791       |          | $ | 36,094       |  | $ | 36,108      
|                                    
|Gross profit                         |  |       | 20,587       |          |   | 16,898       |  |   | 17,487      
|                                    
|Net income                           |  |       | 1,474        |          |   | 55           |  |   | (202        
|                                    
|Earnings per sharebasic and diluted |  |       | .38          |          |   | .02          |  |   | (.08        
|                                    
|Common share prices: High/Low        |  |       | 13.10 / 7.95 |          |   | 14.85 / 9.50 |  |   | 12.00 / 7.75



|Fiscal 2002                          |  | May 5 |             | August 4 |   | November 3   |  | February 2
|------------------------------------ |  | ----- | ----------- | -------- | - | ------------ |  | ----------
|                                    
|Net sales                            |  | $     | 41,820      |          | $ | 35,499       |  | $         
|                                    
|Gross profit                         |  |       | 20,625      |          |   | 16,779       |  |           
|                                    
|Net income                           |  |       | 1,431       |          |   | 5            |  |           
|                                    
|Earnings per sharebasic and diluted |  |       | .35         |          |   | .00          |  |           
|                                    
|Common share prices: High/Low        |  |       | 8.25 / 6.81 |          |   | 10.50 / 7.90 |  |           



S&K Famous Brands,
Inc. common shares are traded on The Nasdaq Stock Market under the symbol SKFB. As of February 1, 2003, there were more than 1,000 holders of S&K common stock, including approximately 200 holders of record. The number of record holders does not
reflect the number of beneficial owners of the Companys common stock for whom shares are held by Cede & Co., certain brokerage firms and others. The Credit Facility prohibits the Company from paying dividends on its common stock without
the consent of the banks. The Company has not declared cash dividends and anticipates that for the foreseeable future it will continue to follow its present policy of retaining earnings in order to finance the expansion and development of its
business.



16