SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549
                                
                            FORM 10-K
(Mark One)

X   ANNUAL  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF   THE
    SECURITIES EXCHANGE ACT OF 1934 .
           
           For the fiscal year ended February 1, 1997
                               OR
__  TRANSITION  REPORT  PURSUANT TO SECTION 13  OR  15(d)  OF  THE
    SECURITIES EXCHANGE ACT OF 1934.
                                
                   
                   Commission File No. 1-11980
                         
                         
                         ANNTAYLOR, INC.
     ------------------------------------------------------
     (Exact name of registrant as specified in its charter)
      
      
          DELAWARE                            51-0297083
------------------------------   -------------------------------------
(State or other jurisdiction of  (I.R.S. Employer Identification Number)
incorporation or organization)


    142 West 57th Street, New York, NY                 10019
  ----------------------------------------          ------------
  (Address of principal executive offices)           (Zip Code)
                         
                         
                         
                           (212) 541-3300
         ---------------------------------------------------
         (Registrant's telephone number, including area code)
                                
                                
   Securities registered pursuant to Section 12(b) of the Act:


  Title of Each Class             Name of each exchange on which registered
-------------------------         -----------------------------------------
8-3/4% Subordinated Notes               The New York Stock Exchange
    due 20000                                
   
   
   Securities registered pursuant to Section 12(g) of the Act: None.
     
     
     Indicate by check mark whether 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      .
                                        ----       ----- 

     As of March 14, 1997, 1 share of Common Stock was outstanding.

           Documents Incorporated by Reference:  None
                                
     
     The  registrant meets the conditions set forth in General
Instruction I(1)(a) and (b) of Form 10-K and is therefore filing
this form with the reduced disclosure format.


========================================================================   
<PAGE> 1                                
                                
                             
                             PART I
                                



ITEM 1.   Business
          --------

General
-------
     
     AnnTaylor, Inc. (the "Company" or "Ann Taylor") is a leading
national  specialty retailer of better quality  women's  apparel,
shoes  and accessories sold primarily under the Ann Taylor  brand
name.   The  Company  believes that  "Ann  Taylor"  is  a  highly
recognized  national brand that defines a distinct fashion  point
of  view.   Ann  Taylor  merchandise represents  classic  styles,
updated to reflect current fashion trends.  The Company's  stores
offer  a full range of career and casual separates, weekend wear,
dresses,  tops, accessories and shoes, coordinated as part  of  a
total  wardrobing  strategy.  This total wardrobing  strategy  is
reinforced by an emphasis on customer service.  Ann Taylor  sales
associates   are  trained  to  assist  customers  in  merchandise
selection  and  wardrobe coordination, helping them  achieve  the
"Ann  Taylor  look"  while  reflecting  the  customers'  personal
styles.
     
     The Company has sought to capitalize on the Ann Taylor brand
through  the introduction of new product lines in its Ann  Taylor
stores.  The Company believes that product extensions support the
Company's total wardrobing strategy, and provide existing and new
customers  with additional reasons to shop at Ann Taylor  stores.
Product  extensions expanded or developed over the  last  several
years include Ann Taylor shoes, ATdenim, Ann Taylor Petites,  and
fragrance and personal care products.
     
     As  of February 1, 1997, the Company operated 309 stores  in
41  states  and  the District of Columbia, under  the  names  Ann
Taylor, Ann Taylor Factory Store, Ann Taylor Loft and Ann  Taylor
Studio.   Of  the 259 stores operated under the Ann Taylor  name,
approximately  three-quarters are located in regional  malls  and
upscale  specialty  retail centers, with the balance  located  in
downtown  and  village  locations.  These  stores  represent  the
Company's core merchandise line.  The Company believes  that  the
customer  base  for its Ann Taylor Stores consists  primarily  of
relatively affluent, fashion-conscious women from the ages of  25
to  55, and that the majority of its customers are working  women
with limited time to shop, who are attracted to Ann Taylor by its
focused    merchandising   and   total   wardrobing   strategies,
personalized  customer  service,  efficient  store  layouts   and
continual flow of new merchandise.
     
     In  1995,  the  Company began testing  Ann  Taylor  Loft,  a
separate   moderate-price  store  concept   for   customers   who
appreciate  Ann  Taylor  style, but  are  more  value  conscious.
Merchandise  is designed uniquely for these stores  and  is  sold
under  the Ann Taylor Loft and Shoe Loft labels.  As of  February
1,  1997,  the  Company operated 15 Ann Taylor Loft  stores,  all
located in factory outlet centers.  The Company also operates  16
stores  in  factory  outlet centers under  the  name  Ann  Taylor
Factory Store or Ann Taylor Loft, that offer both original priced
Ann  Taylor  Loft  merchandise, as well as clearance  merchandise
from Ann Taylor and Ann Taylor Loft stores.  The Company believes
that  the  Ann Taylor Loft concept represents an opportunity for
the  Company to compete in the moderately-priced women's apparel
market,  and  management  is  developing  a  strategic plan  to
determine how best to maximize its potential in this market.
     
     The  Company also operates 10 Ann Taylor Factory Stores that
serve principally as a clearance vehicle for both Ann Taylor  and
Ann Taylor Loft merchandise.  All of these stores are located  in
factory outlet centers.
     
===================================================================
<PAGE> 2

     
     In  Fall  1994, the Company began testing Ann Taylor  Studio
stores, a free-standing shoe and accessory store concept offering
the  broadest assortment of Ann Taylor shoes, as well as  certain
accessories  also  sold in Ann Taylor stores,  such  as  hosiery,
belts,  handbags, and fragrance and personal care  products.   By
Fall  1995,  the Company had nine Ann Taylor Studio stores.   The
Company  did  not open any new Studio stores during Fiscal  1996.
The Company has determined that the Studio stores, which have not
been  profitable,  are not consistent with  the  Company's  total
wardrobing  strategy, and in January 1997 the  Company  announced
its plans to close all nine Studio stores during Fiscal 1997.
     
     The Company was incorporated under the laws of the State  of
Delaware  in 1986.  All of the outstanding capital stock  of  the
Company,  consisting of one share of common stock,  is  owned  by
AnnTaylor  Stores Corporation ("ATSC").  Ann Taylor was  acquired
by  ATSC in a leveraged buyout transaction (the "Acquisition") in
1989.
     


Sourcing Acquisition
--------------------
     
     The  Company  believes  that procuring merchandise  directly
from manufacturers improves the Company's competitive position by
providing  it with greater control over pre-production processes,
resulting  in  greater  consistency in  merchandise  quality  and
sizing, and by reducing merchandise costs.  To this end,  in  May
1992, the Company commenced a joint venture, known as "CAT", with
one  of its private label vendors, Cygne Designs, Inc. ("Cygne").
CAT  was  formed  for the purpose of acting as a  sourcing  agent
exclusively  for Ann Taylor, placing merchandise orders  directly
with manufacturers.  In 1995, the Company purchased approximately
38%  of its merchandise through CAT and approximately 16% of  its
merchandise from Cygne.  Until September 1996, the Company  owned
a  minority  interest in CAT.   In September  1996,  the  Company
acquired  Cygne's entire interest in CAT, which became a  wholly-
owned subsidiary of the Company, as well as certain of the assets
of  the  Ann Taylor Woven Division of Cygne (the "Woven  Division
Assets")  that Cygne used in sourcing merchandise for Ann  Taylor
(the   "Sourcing  Acquisition").   These  operations  have   been
combined  and  are  now  known as "Ann  Taylor  Global  Sourcing"
("ATGS").
     
     In  consideration for Cygne's interest in CAT and the  Woven
Division  Assets, ATSC and the Company paid (i) 2,348,145  shares
of  common  stock of ATSC having an aggregate value,  as  of  the
Effective  Date,  of  $36,000,000, (ii)  $3,200,000  in  cash  as
payment  for  inventory and fixed assets and (iii)  approximately
$6,500,000 in cash in settlement of open accounts payable by  Ann
Taylor  to Cygne for merchandise delivered by Cygne prior to  the
closing.  The Company also assumed certain liabilities related to
the  operations  of  the Woven Division.  The purchase  price  is
subject   to   post-closing   adjustments   based   upon    final
determination of the value of certain of the assets purchased and
liabilities  assumed.   As of February  1,  1997,  certain  post-
closing adjustments are expected to reduce the net cash paid  for
inventory and fixed assets to approximately $227,000.  The total
purchase price to the  Company of the Sourcing Acquisition has 
been allocated to the tangible and intangible assets and 
liabilities of CAT and the Woven Division that were acquired,
based on preliminary estimates of their respective fair values.
Accordingly, the allocation of the purchase price reflected in 
the accompanying Consolidated Balance Sheets may be adjusted 
upon final determination of the purchase price  adjustments.  
Management does not believe the subsequent changes, if any, 
will be significant.  The excess of the purchase price over the
fair value of the net assets acquired was recorded as  goodwill 
and is being amortized on a straight-line basis over 25 years.
     
     Pursuant  to  the terms of a Stockholders Agreement  entered
into at the time of the Sourcing Acquisition, ATSC registered the
sale  of the shares of ATSC common stock issued to Cygne as  part
of  the  consideration for the acquisition.   Cygne  subsequently
sold,  pursuant to this registration statement, all of the shares
of ATSC common stock issued to it by ATSC.
     
     In  connection  with  the Sourcing Acquisition,  Ann  Taylor
entered into two three-year consulting agreements with Cygne  for
the  services of Mr. Bernard Manuel, Chairman and Chief Executive
Officer  of  Cygne, and Mr. Irving Benson, the then-President  of
Cygne.  In November 1996, Mr. Benson resigned from his employment
with  Cygne  and, in accordance with the terms of the  consulting
agreement  relating to Mr. Benson's services, Cygne's obligations
and  rights  under  the consulting agreement  were  automatically
assigned to Mr. Benson.

==================================================================
<PAGE> 3

     



ITEM 2.   Properties
          ----------
     
     As of February 1, 1997, the Company operated 309 stores, all
of  which  were leased.  The store leases typically  provide  for
initial terms of ten years, although some leases have shorter  or
longer initial periods, and grant the Company the right to extend
the  term for one or two additional five-year periods.   Most  of
the  store  leases require Ann Taylor to pay a specified  minimum
rent, plus a contingent rent based on a percentage of the store's
net sales in excess of a certain threshold.  In addition, most of
the  leases  also  require Ann Taylor to pay real  estate  taxes,
insurance and certain common area and maintenance costs.
     
     Ann  Taylor leases corporate offices at 142 West 57th Street
in New York City, as well as office space at 1372 Broadway in New
York  City.   The Company also leases office space in New  Haven,
Connecticut.
     
     The    Company's    wholly-owned    subsidiary,    AnnTaylor
Distribution  Services,  Inc.  owns  its  256,000   square   foot
distribution center located in Louisville, Kentucky.  Nearly  all
Ann  Taylor  merchandise is distributed to the  Company's  stores
through  this  facility.   The parcel  on  which  the  Louisville
distribution center is located comprises approximately  20  acres
and could accommodate possible future expansion of the facility.



ITEM 3.   Legal Proceedings
          -----------------
     
     On  April  26,  1996, certain alleged stockholders  of  ATSC
filed  a  purported  class action lawsuit in  the  United  States
District  Court Southern District of New York, against ATSC,  the
Company,  certain officers and directors of ATSC and the Company,
Merrill  Lynch  & Co, Inc. ("ML&Co.") and certain  affiliates  of
ML&Co.  (Novak  v.  Kasaks, et. al., No. 96  CIV  3073  (S.D.N.Y.
1996)).   The  complaint alleges causes of action  under  Section
10(b)  and Section 20(a) of the Securities Exchange Act of  1934,
as  amended,  by  alleging  that ATSC and  the  other  defendants
engaged  in  a  fraudulent  scheme and course  of  business  that
operated  a fraud or deceit on purchasers of ATSC's common  stock
during the period commencing February 3, 1994 through May 4, 1995
due to alleged false and misleading statements about ATSC and the
Company.   The complaint seeks, among other things, certification
as  a  class  action on behalf of all purchasers of common  stock
during  the  period commencing February 3, 1994  through  May  4,
1995, the awarding of compensatory damages to the plaintiffs  and
purported  members of the class, the awarding of costs, including
pre-judgment  and  post-judgment interest, reasonable  attorneys'
fees  and  expert  witness fees to the plaintiffs  and  purported
members of the class and equitable and/or injunctive relief.  The
Company  believes that the complaint is without merit and intends
to   defend  the  action  vigorously.   The  Company  and   other
defendants  have  filed motions to dismiss  the  actions.   These
motions  are  pending,  and  discovery  in  this  case  has  been
suspended pending judicial disposition of these motions.  As  the
case  is in preliminary stages, any liability that may arise from
this action cannot be predicted at this time.
     
     The  Company is also a party to routine litigation  incident
to  its  business.    Although the amount of any  liability  that
could  arise  with respect to these actions cannot be  accurately
predicted, in the opinion of the Company, any such liability will
not  have  a  material adverse effect on the financial  position,
results of operations and liquidity of the Company.


==================================================================
<PAGE> 4
                                
                                
                             PART II
                                
                                
                                
                                
                                
ITEM   5.   Market  for  Registrant's
            -------------------------

Common Equity and Related Stockholder Matters
---------------------------------------------
     
     There  is  no  public  market for the common  stock  of  the
Company.  All of the outstanding stock of the Company, consisting
of one share of common stock, is owned by ATSC.

     From  time  to time, the Company pays dividends to  ATSC  in
amounts  sufficient to fund ATSC's operating expenses.   Further,
in   connection   with  the  8-1/2%  Company-Obligated Mandatorily
Redeemable   Convertible  Preferred  Securities  (the  "preferred
securities")  issued  by  ATSC's  financing  vehicle,   AnnTaylor
Finance  Trust (the "Trust"), the Company makes regular  dividend
payments  to  ATSC  in amounts sufficient to allow  ATSC  to  pay
interest and principal on certain debentures issued to the Trust.
The  payment  of dividends by the Company to ATSC is  subject  to
certain restrictions under the Company's bank credit agreement,
the indenture relating to the Company's 8-3/4% Subordinated Notes
due  2000 and the Company's Receivables Facility.  See Note 2  to
the Consolidated Financial Statements of the Company.


ITEM  7.    Management's Discussion and Analysis of Financial Condition
            -----------------------------------------------------------
            and Results of Operations
            -------------------------
     
Fiscal 1996 Compared to Fiscal 1995
-----------------------------------
     
     The  Company's net sales increased to $798,117,000 in Fiscal
1996  (53 weeks) from $731,142,000 in Fiscal 1995 (52 weeks),  an
increase  of $66,975,000, or 9.2%.  Total sales for the fifty-two
week period ended February 1, 1997 were up 10.6% compared to  the
fifty-two  week period ended January 27, 1996.  This increase  in
net  sales  was attributable to the inclusion of a full  year  of
operating results for the 48 stores opened and 30 stores expanded
during 1995, the opening of 11 new stores and the expansion of  7
stores  in 1996, and to a comparable sales increase of  1.8%  for
the  fifty-two  week period ended February 1, 1997.   This  sales
increase was partially offset by the closing of 8 stores in 1996.
The  Company  believes that the 1.8% increase in  its  comparable
store  sales  in  1996  was attributable  primarily  to  positive
customer   reaction  to  the  Company's  Fall  1996   merchandise
offerings.
     
     Gross profit as a percentage of net sales increased to 44.4%
in  1996  from  41.8%  in  1995.   This  increase  was  primarily
attributable   to  lower  markdowns  associated  with   decreased
promotional activities.
     
     Selling, general and administrative expenses as a percentage
of  net sales decreased to 36.5% in 1996 from 37.0% in 1995.  The
decrease  in  selling, general and administrative expenses  as  a
percentage  of  net sales was primarily the result  of  increased
leverage  on  fixed  expenses due to  improved  comparable  store
sales.
     
     Operating  income increased to $46,461,000, or 5.8%  of  net
sales,  in 1996 from $25,275,000, or 3.5% of net sales, in  1995.
Operating income in  1996 was reduced by $3,500,000, or  0.4%  of
net  sales,  representing the estimated costs  of  the  Company's
obligations  under  the former Chairperson's employment  contract
following  her  resignation in August 1996,  and  by  a  one-time
charge  of  $3,600,000,  or 0.4% of net sales,  relating  to  the
planned  closing  of  the  nine Ann  Taylor  Studio  shoe  stores
announced   in  January  1997.   Amortization  of  goodwill   was
$10,086,000  in  1996 compared to $9,506,000 in 1995.   Operating
income   without   giving   effect  to  such   amortization   was
$56,547,000,  or  7.1% of net sales, in 1996 and $34,781,000,  or
4.8% of net sales, in 1995.
     
     Interest  expense  was  $24,416,000  in  1996  compared   to
$20,956,000  in  1995.   The increase  in  interest  expense  was
attributable  to  higher  interest  rates  associated  with   the
issuance  of  the  preferred securities by the  Trust,  partially
offset  by   a   decrease in the Company's long-term  debt.   The
weighted  average  interest  rate on  the  Company's  outstanding
indebtedness at February 1, 1997 was 8.80% compared to  8.26%  at
February 3, 1996.
     
==================================================================
<PAGE> 5
     

     

Fiscal 1996 Compared to Fiscal 1995 (Continued)
-----------------------------------------------
     
     The income tax provision was $12,975,000, or 60.0% of income
before  income taxes, in the 1996 period compared to  $5,157,000,
or  120.5% of income before income taxes, in 1995.  The effective
tax  rates for both periods were higher than the statutory rates,
primarily as a result of non-deductible goodwill expense.
     
     As  a  result of the foregoing factors, the Company had  net
income of $8,667,000, or 1.1% of net sales, for 1996 compared  to
a net loss of $876,000, or 0.1% of net sales, for 1995.


ITEM  8.   Financial  Statements and Supplementary Data
           --------------------------------------------
     
     The  following  consolidated  financial  statements  of  the
Company  for the years ended February 1, 1997, February  3,  1996
and  January 28, 1995 are included as a part of this Report  (See
Item 14):
     
     Consolidated  Statements of Operations for the fiscal  years
        ended February 1, 1997, February 3, 1996 and January  28,
        1995.
     
     Consolidated  Balance  Sheets as of  February  1,  1997  and
        February 3, 1996.
     
     Consolidated  Statements of Cash Flows for the fiscal  years
        ended February 1, 1997, February 3, 1996 and January  28,
        1995.
     
     Notes to Consolidated Financial Statements.
     
     

ITEM  9.   Changes in and Disagreements with Accountants on Accounting 
           -----------------------------------------------------------
           and Financial Disclosures
           -------------------------
     
            None.
                                
=======================================================================       
<PAGE> 6
                                
                             PART IV
     
     
ITEM  14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K
            ----------------------------------------------------------------
  
  (a)    List of documents filed as part of this Annual Report:
       
         The  following  consolidated financial statements  of  the
         Company   and  the  independent  auditors'   report   are
         included on pages 11 through 27 and are filed as part  of
         this Annual Report:
       
         Consolidated  Statements  of  Operations  for  the  fiscal
         years  ended  February  1, 1997,  February  3,  1996  and
         January  28,  1995;  Consolidated Balance  Sheets  as  of
         February  1,  1997,  and February 3,  1996;  Consolidated
         Statements  of  Cash  Flows for the  fiscal  years  ended
         February 1, 1997, February 3, 1996 and January 28,  1995;
         Notes  to  Consolidated Financial Statements; Independent
         Auditors' Report.
        
  
  (b)    Reports on Form 8-K
         None
          
  
  (c)    Exhibits
         
         The  exhibits listed below are filed as a part  of  this
         Annual Report.
          
    
    Exhibit Number
    --------------
        
  3.1      Certificate   of  Incorporation  of  the   Company,   as
            amended.  Incorporated by reference to Exhibit  3.3  to
            the Registration Statement of ATSC and Ann Taylor filed
            on May 3, 1989 (Registration No. 33-28522).
  
  3.2      By-Laws  of  the Company.  Incorporated by reference  to
            Exhibit  3.4 to the Registration Statement of ATSC  and
            Ann  Taylor filed on May 3, 1989 (Registration No.  33-
            28522).
  
  4.1      Indenture,  dated  as  of  June 15,  1993,  between  Ann
            Taylor and Fleet Bank, N.A., as Trustee, including  the
            form  of  Subordinated Note due 2000.  Incorporated  by
            reference to Exhibit 4.1 to the Current Report on  Form
            8-K of Ann Taylor filed on July 7, 1993.
  
  4.1.1    Instrument  of Resignation, Appointment and  Acceptance,
            dated  as of December 1, 1995, among Ann Taylor,  Fleet
            Bank,  N.A.,  as  Resigning Trustee, and  Norwest  Bank
            Minnesota,  N.A., the Successor Trustee.   Incorporated
            by  reference to Exhibit 4.1.1 to the Annual Report  on
            Form 10-K of the Company filed on April 8, 1996.
  
  10.1     Amended  and  Restated  Credit Agreement,  dated  as  of
            September  29, 1995, among Ann Taylor, Bank of  America
            National  Trust  and  Savings  Association  ("Bank   of
            America"), and Fleet Bank, National Association, as Co-
            Agents,  the financial institutions from time  to  time
            party  thereto, BA Securities, Inc., as  Arranger,  and
            Bank  of  America, as Agent.  Incorporated by reference
            to  Exhibit 10.1 to the Current Report on Form  8-K  of
            Ann Taylor filed on October 17, 1995.
  
  10.1.1   First   Amendment   to  Amended  and   Restated   Credit
            Agreement,  dated  as of January  4,  1996,  among  Ann
            Taylor,   Bank   of  America,  Fleet   Bank,   National
            Association,  as Co-Agents, the financial  institutions
            from  time to time party thereto, BA Securities,  Inc.,
            as   Arranger,   and   Bank  of  America,   as   Agent.
            Incorporated  by  reference to Exhibit  10.2.1  to  the
            Annual  Report on Form 10-K of ATSC filed on  April  8,
            1996.
  10.1.2   Second  Amendment  to  the Amended and  Restated  Credit
            Agreement, dated as of April 9, 1996 among Ann  Taylor,
            Bank  of  America and Fleet Bank, National Association,
            as  Co-Agents, the financial institutions from time  to
            time party thereto, BA Securities Inc. as Arranger, and
            Bank of America as Agent.  Incorporated by reference to
            Exhibit 10.1 on Form 10-Q of ATSC for the Quarter ended
            August 3, 1996 filed on September 16, 1996.

======================================================================
<PAGE> 7
    
    Exhibit Number
    --------------
                                      
  10.2     Amended  and  Restated Guaranty, dated as  of  September
            29, 1995, made by ATSC in favor of Bank of America,  as
            Agent.   Incorporated by reference to Exhibit  10.4  to
            the  Current Report on Form 8-K of Ann Taylor filed  on
            October 17, 1995.
  
  10.3     Amended  and  Restated  Security and  Pledge  Agreement,
            dated  as of September 29, 1995, made by Ann Taylor  in
            favor  of  Bank of America, as Agent.  Incorporated  by
            reference to Exhibit 10.2 to the Current Report on Form
            8-K of Ann Taylor filed on October 17, 1995.
  
  10.4     Amended  and  Restated  Security and  Pledge  Agreement,
            dated  as of September 29, 1995, made by ATSC in  favor
            of   Bank  of  America,  as  Agent.   Incorporated   by
            reference to Exhibit 10.5 to the Current Report on Form
            8-K of Ann Taylor filed on October 17, 1995.
  
  10.5     Trademark Security Agreement, dated as of September  29,
            1995,  made by Ann Taylor in favor of Bank of  America,
            as Agent.  Incorporated by reference to Exhibit 10.3 to
            the  Current Report on Form 8-K of Ann Taylor filed  on
            October 17, 1995.
  
  
  10.6     1989  Stock  Option Plan.  Incorporated by reference  to
            Exhibit 10.18 to the Registration Statement of ATSC and
            Ann  Taylor filed on May 3, 1989 (Registration No.  33-
            28522).
  
  10.6.1   Amendment  to  1989 Stock Option Plan.  Incorporated  by
            reference  to Exhibit 10.15.1 to the Annual  Report  on
            Form 10-K of ATSC filed on April 30, 1993.
  
  10.7     Lease,  dated  as  of  March 17,  1989,  between  Carven
            Associates  and  Ann Taylor concerning  the  West  57th
            Street  headquarters.   Incorporated  by  reference  to
            Exhibit 10.21 to the Registration Statement of ATSC and
            Ann  Taylor filed on May 3, 1989 (Registration No.  33-
            28522).
  
  10.7.1   First  Amendment  to  Lease, dated as  of  November  14,
            1990,   between  Carven  Associates  and  Ann   Taylor.
            Incorporated  by reference to Exhibit  10.17.1  to  the
            Registration Statement of ATSC filed on April 11,  1991
            (Registration No. 33-39905).
  
  10.7.2   Second  Amendment  to Lease, dated as  of  February  28,
            1993,   between   Carven  Associates  and  Ann  Taylor.
            Incorporated  by reference to Exhibit  10.17.2  to  the
            Annual  Report on Form 10-K of ATSC filed on April  29,
            1993.
  
  10.7.3   Extension and Amendment to Lease dated as of October  1,
            1993,   between  Carven  Associates  and  Ann   Taylor.
            Incorporated by reference to Exhibit 10.11 to the  Form
            10-Q  of  Ann Taylor for the Quarter ended October  30,
            1993 filed on November 26, 1993.
  
  10.7.4   Modification of Amendment and Extension to Lease,  dated
            as  of April 14, 1994 between Carven Associates and Ann
            Taylor.   Incorporated by reference to Exhibit  10.15.4
            to  the  Annual  Report on Form 10-K of ATSC  filed  on
            April 28, 1995.
  
  10.7.5   Fifth  Amendment to Lease, dated as of March  14,  1995,
            between Carven Associates and Ann Taylor.  Incorporated
            by reference to Exhibit 10.15.5 to the Annual Report on
            Form 10-K of ATSC filed on April 28, 1995.
  
  10.8     Tax  Sharing  Agreement, dated  as  of  July  13,  1989,
            between ATSC and Ann Taylor.  Incorporated by reference
            to Exhibit 10.24 to Amendment No. 2 to the Registration
            Statement of ATSC and Ann Taylor filed on July 13, 1989
            (Registration No. 33-28522).
  
  10.9     Employment  Agreement  dated  as  of  February  1,  1994
            between  ATSC and Sally Frame Kasaks.  Incorporated  by
            reference to Exhibit 10.8 to the Form 10-Q of ATSC  for
            the Quarter ended October 29, 1994 filed on December 9,
            1994.
  
  10.10    Employment  Agreement dated February  16,  1996  between
            ATSC   and  J.  Patrick  Spainhour.   Incorporated   by
            reference to Exhibit 10.4 to the Annual Report on  Form
            10-K of ATSC filed on April 8, 1996.
  
  10.10.1  Amendment to the Employment Agreement, dated August  23,
            1996,   between   ATSC   and  J.   Patrick   Spainhour.
            Incorporated  by reference to Exhibit  10.11.1  to  the
            Annual Report on Form 10-K of ATSC filed on May 1, 1997.
  
 
  10.11    Employment  Agreement dated November  25,  1996  between
            ATSC and Patricia DeRosa.  Incorporated by reference to
            Exhibit 10.3 to Form 10-Q of Ann Taylor for the Quarter
            ended November 2, 1996 filed on December 17, 1996.

=====================================================================
<PAGE> 8    
    
    
Exhibit Number
--------------

  10.12    Employment  Agreement dated September 20,  1996  between
            Ann  Taylor  and  Dwight  F.  Meyer.   Incorporated  by
            reference  to  Exhibit 10.4 to the  Form  10-Q  of  Ann
            Taylor for the Quarter ended November 2, 1996 filed  on
            December 17, 1996.
  
  10.13    Separation Agreement dated January 24, 1997 between  Ann
            Taylor  and Paul E. Francis.  Incorporated by reference
            to  Exhibit 10.14 to the Annual Report on Form 10-K  of
            ATSC filed on May 1, 1997.
  
  10.14    The  AnnTaylor Stores Corporation 1992 Stock Option  and
            Restricted  Stock  and  Unit Award  Plan,  Amended  and
            Restated  as  of  February 23, 1994 (the  "1992  Option
            Plan").  Incorporated by reference to Exhibit 10.15  to
            the Annual Report on Form 10-K of ATSC filed on May 1, 
            1997.
  
  10.15    Amended     and    Restated    Management    Performance
            Compensation Plan as approved by stockholders  of  ATSC
            on  June 1, 1994.  Incorporated by reference to Exhibit
            10.22.1 to the Annual Report on Form 10-K of ATSC filed
            on April 28, 1995.
  
  10.15.1  Amendment    to   the   AnnTaylor   Stores   Corporation
            Management  Performance Compensation Plan dated  as  of
            February  24,  1995,   Incorporated  by  reference   to
            Exhibit  10.22.2 to the Annual Report on Form  10-K  of
            ATSC filed on April 28, 1995.
  
  10.16    Associate   Stock   Purchase  Plan.    Incorporated   by
            reference to Exhibit 10.31 to the Form 10-Q of ATSC for
            the  Quarter  Ended October 31, 1992 filed on  December
            15, 1992.
  
  10.17    Interest Rate Swap Agreement dated as of July 22,  1993,
            between  Ann  Taylor and Fleet Bank  of  Massachusetts,
            N.A.  Incorporated by reference to Exhibit 10.6 to  the
            Form 10-Q of Ann Taylor for the Quarter ended July  31,
            1993 filed on September 2, 1993.
  
  10.18    Stock  Purchase  Agreement, dated as of July  13,  1993,
            between  Ann  Taylor  and  Cleveland  Investment,  Ltd.
            Incorporated by reference to Exhibit 10.7 to  the  Form
            10-Q  of Ann Taylor for the Quarter ended July 31, 1993
            filed on September 2, 1993.
  
  10.19    Amended  and  Restated  Receivables Financing  Agreement
            dated  October 31, 1995, among AnnTaylor Funding, Inc.,
            Ann  Taylor, Market Street Capital Corp. and PNC  Bank,
            National  Association.  Incorporated  by  reference  to
            Exhibit  10.31.4  to  the Form 10-Q  of  ATSC  for  the
            Quarter  ended  October 28, 1995 filed on  December  8,
            1995.
  
  10.19.1  First  Amendment to the Amended and Restated Receivables
            Financing  Agreement,  dated as of  October  31,  1995,
            among  AnnTaylor  Funding,  Inc.,  Ann  Taylor,  Market
            Street   Capital   Corp.   and   PNC   Bank,   National
            Association.  Incorporated by reference to Exhibit 10.5
            to the Form 10-Q of ATSC for the Quarter ended November
            2, 1996 filed on December 17, 1996.
  
  10.20    Purchase  and  Sale Agreement dated as  of  January  27,
            1994  between  Ann Taylor and AnnTaylor  Funding,  Inc.
            Incorporated  by  reference to  Exhibit  10.29  to  the
            Annual  Report on Form 10-K of ATSC filed on March  31,
            1994.
  
  10.21    AnnTaylor   Stores  Corporation  Deferred   Compensation
            Plan.   Incorporated by reference to Exhibit  10.33  to
            the  Annual Report on Form 10-K of ATSC filed on  April
            28, 1995.
  
  10.21.1  Amendment  to the AnnTaylor Stores Corporation  Deferred
            Compensation Plan as approved by the Board of Directors
            on  August  11,  1995.  Incorporated  by  reference  to
            Exhibit  10.33.1  to  the Form 10-Q  of  ATSC  for  the
            Quarter  Ended  July 29, 1995 filed  on  September  11,
            1995.
  
  10.22    Mortgage,  Assignment  of  Rents  and  Leases,  Security
            Agreement   and   Fixture  Financing  Statement   dated
            November   20,  1995,  between  AnnTaylor  Distribution
            Services,  Inc.,  as  Mortgagor, and  General  Electric
            Capital  Assurance Company, as Mortgagee.  Incorporated
            by  reference to Exhibit 10.34 to the Form 10-Q of  Ann
            Taylor for the Quarter ended October 28, 1995 filed  on
            December 8, 1995.

======================================================================
<PAGE> 9



Exhibit Number
--------------
                                      
  10.23    Promissory Note dated November 20, 1995 from Ann  Taylor
            and AnnTaylor Distribution Services, Inc., collectively
            as  Borrower,  to  General Electric  Capital  Assurance
            Company,  as  Lender.   Incorporated  by  reference  to
            Exhibit  10.35 to the Form 10-Q of Ann Taylor  for  the
            Quarter  ended  October 28, 1995 filed on  December  8,
            1995.
  
  10.24    Amended  and  Restated  Credit Agreement,  dated  as  of
            September  20, 1996, between AnnTaylor Global Sourcing,
            Inc.  and the Hongkong and Shanghai Banking Corporation
            Limited.  Incorporated by reference to Exhibit 10.6  to
            the  Form  10-Q  of  Ann Taylor for the  Quarter  ended
            November 2, 1996 filed on December 17, 1996.
  
  10.24.1  Promissory  Note dated September 20, 1996 from AnnTaylor
            Global  Sourcing,  Inc.  to the Hongkong  and  Shanghai
            Banking   Corporation   Limited,   New   York   Branch.
            Incorporated by reference to Exhibit 10.7 to Form  10-Q
            of  Ann  Taylor for the Quarter ended November 2,  1996
            filed on December 17, 1996.
  
  10.24.2  Amended  and  Restated Security Agreement, dated  as  of
            September  20, 1996, between AnnTaylor Global Sourcing,
            Inc.  and the Hongkong and Shanghai Banking Corporation
            Limited.  Incorporated by reference to Exhibit 10.8  to
            the  Form  10-Q  of  Ann Taylor for the  Quarter  ended
            November 2, 1996 filed on December 17, 1996.
  
  10.24.3  Letter  of  Negative Pledge, dated as of  September  20,
            1996  from  AnnTaylor  Global  Sourcing,  Inc.  to  the
            Hongkong  and  Shanghai  Banking  Corporation  Limited.
            Incorporated by reference to Exhibit 10.9 to  the  Form
            10-Q  of  Ann Taylor for the Quarter ended November  2,
            1996 filed on December 17, 1996.
  
  10.25    Stock and Asset Purchase Agreement, dated as of June  7,
            1996,  by  and among ATSC, Ann Taylor, Cygne and  Cygne
            Group  (F.E.)  Limited.  Incorporated by  reference  to
            Exhibit 2 to the Registrants' Current Report on Form 8-K 
            filed on June 10, 1996.
  
  10.25.1  Amendment  to Stock and Asset Purchase Agreement,  dated
            as  of  August 27, 1996, by and among ATSC, Ann Taylor,
            Cygne and Cygne Group (F.E.) Limited.  Incorporated  by
            reference  to  Exhibit  3 to the  Registrants'  Current
            Report on Form 8-K filed on August 30, 1996.
  
  10.25.2  Stockholders Agreement, dated as of September 20,  1996,
            among  ATSC,  Cygne and Cygne Group (F.E.)  Limited,  a
            Hong  Kong  corporation and wholly owned subsidiary  of
            Cygne.  Incorporated by reference to Exhibit 10.26.2 to
            the Annual Report on Form 10-K of ATSC filed on May 1, 1997.
  
  10.25.3  Consulting  Agreement, dated as of September  20,  1996,
            by  and  between ATSC, Cygne and Mr. Bernard M. Manuel.
            Incorporated  by reference to Exhibit  10.26.3  to  the
            Annual Report on Form 10-K of ATSC filed on May 1, 1997.
  
  10.25.4  Consulting  Agreement, dated as of September  20,  1996,
            by  and  between  ATSC, Cygne and  Mr.  Irving  Benson.
            Incorporated  by reference to Exhibit  10.26.4  to  the
            Annual Report on Form 10-K of ATSC filed on May 1, 1997.
  
  27       Financial Data Schedule.

======================================================================
                           
<PAGE> 10                           

                           
                           SIGNATURES
                           ----------
          
          
          
     Pursuant to the requirements of Section 13 or 15(d)  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.
          
                                      ANNTAYLOR, INC.

                                      By:   /s/ J. Patrick Spainhour
                                            ------------------------
                                            J. Patrick Spainhour
                                            Chairman and Chief Executive 
                                                    Officer
                                      
Date:  May 1, 1997
                                      
   Pursuant to the requirements of the Securities Exchange Act  of
1934,  this report has been signed below by the following  persons
on behalf of the Registrant and in the capacities and on the dates
indicated.


/s/J. PATRICK SPAINHOUR   Chairman and Chief Executive     May 1, 1997
------------------------     Officer and Director        --------------
   J. Patrick Spainhour  




/s/ PATRICIA DEROSA       President and Chief Operating    May 1, 1997
------------------------     Officer and Director        --------------
    Patricia DeRosa         



/s/ WALTER J. PARKS       Senior Vice President -          May 1, 1997
------------------------     Chief Financial Officer     --------------
    Walter J. Parks          



/s/ JAMES M. SMITH        Vice President and Controller    May 1, 1997
------------------------     Principal Accounting Officer -------------
    James  M.  Smith         


/s/ GERALD S.ARMSTRONG    Director                         May 1, 1997
-----------------------                                   -------------
    Gerald S. Armstrong


/s/ JAMES J. BURKE, JR.    Director                        May 1, 1997
------------------------                                  -------------
    James J. Burke, Jr.


/s/ ROBERT C. GRAYSON      Director                        May 1, 1997
-------------------------                                 -------------
    Robert C. Grayson


/s/ ROCHELLE B. LAZARUS    Director                        May 1, 1997
--------------------------                                --------------
    Rochelle B. Lazarus


/s/ HANNE M. MERRIMAN       Director                       May 1, 1997
---------------------------                               ---------------
    Hanne M. Merriman
          
          
==========================================================================
<PAGE> 11                         
                         
                         
                         ANNTAYLOR, INC.
           INDEX TO CONSOLIDATED FINANCIAL STATEMENTS




                                                        Page No.
                                                        --------

Independent Auditors' Report.............................. 12

Consolidated Financial Statements:
    
    Consolidated Statements of Operations for the 
       fiscal years ended February 1, 1997, 
       February 3, 1996 and January 28, 1995.............. 13
    
    Consolidated Balance Sheets as of February 1, 1997 
        and February 3, 1996.............................. 14
    
    Consolidated Statements of Cash Flows for the fiscal 
        years ended February 1, 1997, February 3, 1996 
        and January 28, 1995.............................. 15
    
    Notes to Consolidated Financial Statements............ 16

=======================================================================
<PAGE> 12


                  INDEPENDENT AUDITORS' REPORT
                  ----------------------------




To the Stockholder of
  ANNTAYLOR, INC.:

     
     We  have  audited  the  accompanying consolidated  financial
statements of AnnTaylor, Inc. and its subsidiaries, listed in the
accompanying   index.   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  in  accordance  with  generally
accepted  auditing standards.  Those standards  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.   An  audit  also includes assessing  the  accounting
principles used and significant estimates made by management,  as
well  as evaluating the overall financial statement presentation.
We  believe  that our audits provide a reasonable basis  for  our
opinion.
     
     In  our  opinion,  such  consolidated  financial  statements
present  fairly, in all material respects, the financial position
of  the  Company  and its subsidiaries at February  1,  1997  and
February  3, 1996, and the results of their operations and  their
cash flows for each of the three fiscal years in the period ended
February 1, 1997 in conformity with generally accepted accounting
principles.




DELOITTE & TOUCHE LLP


New York, New York
March 6, 1997


=====================================================================
<page 13>
                         
                         
                         ANNTAYLOR, INC.
              CONSOLIDATED STATEMENTS OF OPERATIONS
For the Fiscal Years Ended February 1, 1997, February 3, 1996 and
                        January 28, 1995






                                       Fiscal Years Ended
                                 -----------------------------
                                 
                                 Feb. 1,    Feb. 3,   Jan. 28,
                                   1997       1996      1995
                                 -------    -------   ---------
                                        
                                        (in thousands)

Net sales.......................  $798,117  $731,142   $658,804
Cost of sales...................   443,443   425,225    357,783
                                   -------   -------    -------
Gross profit....................   354,674   305,917    301,021
Selling, general and  
  administrative expenses.......   291,027   271,136    214,224
Studio shoe stores 
  closing expense...............     3,600       ---        ---
Employment contract separation 
  expense.......................     3,500       ---        ---
Amortization of goodwill........    10,086     9,506      9,506
                                   -------   -------    -------
Operating income................     46,461   25,275     77,291
Interest expense................     24,416   20,956     14,229
Other expense, net..............        403       38        168
                                    -------  -------    -------
Income before income taxes 
  and extraordinary  loss.......     21,642    4,281     62,894
Income tax provision............     12,975    5,157     30,274
                                    -------  -------    -------
Income  (loss)  before  
  extraordinary  loss...........      8,667     (876)    32,620
Extraordinary loss (net of 
  income tax benefit of
  $654,000).....................        ---      ---        868
                                    -------  -------    -------
   Net income (loss)............   $  8,667 $   (876)  $ 31,752
                                    =======  =======    ======= 



                                
    See accompanying notes to consolidated financial statements.

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

<PAGE> 14

                         ANNTAYLOR, INC.
                   CONSOLIDATED BALANCE SHEETS
              February 1, 1997 and February 3, 1996




                                            February 1,     February 3,
                                               1997            1996
                                            ----------      -----------
                                     (in thousands, except per share amounts)

                  ASSETS
Current assets
 Cash.......................................  $  7,025        $  1,283
 Accounts receivable, net...................    63,605          70,395
 Merchandise inventories....................   100,237         102,685
 Prepaid expenses and other current assets..    25,653          24,307
                                               -------         -------
     Total current assets...................   196,520         198,670

Property and equipment
 Land and building..........................     8,930           8,923
 Leasehold improvements.....................    76,576          73,677
 Furniture and fixtures.....................   120,268          99,548
 Construction in progress...................     3,307          14,190
                                               -------         -------
                                               209,081         196,338
 Less accumulated depreciation and 
   amortization..............................   65,648          42,443
                                               -------         -------
     Net property and equipment..............  143,433         153,895
Goodwill, net................................  341,779         313,525
Deferred financing costs, net................    2,743           3,933
Other assets.................................    3,664           8,686
                                               -------         -------
     Total assets............................ $688,139        $678,709
       
          
          LIABILITIES AND STOCKHOLDER'S EQUITY
          
Current liabilities
 Accounts payable............................ $ 34,341        $ 42,909
 Accrued tenancy.............................    6,827           5,675
 Gift certificates redeemable................    4,903           4,269
 Accrued expenses............................   31,312          19,074
 Current portion of long-term debt...........      287          40,266
                                               -------         -------
     Total current liabilities...............   77,670         112,193
Long-term debt...............................  130,905         232,192
Deferred income taxes........................    4,872           1,300
Other liabilities............................    7,952           7,336

Commitments and contingencies
Stockholder's equity
 Common stock, $1.00 par value; 1,000 
   shares authorized; 1 share issued 
   and outstanding...........................        1               1
 Additional paid-in capital..................  443,952         311,567
 Retained earnings...........................   22,787          14,120
                                               -------         -------
     Total stockholder's equity..............  466,740         325,688
                                               -------         -------
     Total liabilities and stockholder's  
       equity................................ $688,139        $678,709
                                               =======         =======
                                
                                
     See accompanying notes to consolidated financial statements.


========================================================================
<PAGE> 15                         
                         
                         
                         ANNTAYLOR, INC.
              CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Fiscal Years Ended February 1, 1997, February 3, 1996 and
                        January 28, 1995
                                
                                
                                
                                                     Fiscal Years Ended
                                             ---------------------------------
                                             Feb. 1,        Feb. 3,    Jan. 28,
                                               1997           1996       1995
                                             -------        -------    --------
                                                    
                                                       (in thousands)
Operating activities:
  Net income (loss)........................ $  8,667        $  (876)   $ 31,752
  Adjustments to reconcile net income 
    (loss) to net cash provided by
    operating activities:
      Extraordinary loss...................      ---            ---      1,522
      Equity earnings in CAT...............   (1,402)        (1,646)    (1,547)
      Provision  for loss on accounts 
        receivable.........................    1,803          1,280      1,727
      Depreciation and amortization........   26,208         18,788     11,787
      Amortization of goodwill.............   10,086          9,506      9,506
      Amortization of deferred compensation      191             68        298
      Non-cash interest....................    1,574          1,004        978
      Deferred income taxes................     (985)         3,150        ---
      Loss  on disposal of property and 
        equipment..........................    3,209          1,143      1,268
      Change in assets and liabilities net 
        of effects from purchase of
        AnnTaylor Global Sourcing:
             Decrease  (increase) in 
               receivables.................    4,987        (10,464)   (13,659)
             Decrease (increase) in 
               merchandise inventories.....    9,342         (8,980)   (32,815)
            Decrease (increase) in prepaid 
               expenses and other current 
               assets......................      247        (12,951)      (772)
            Decrease in other non-current 
              assets and liabilities, net        738            429        567
          Increase in accounts payable and  
              accrued liabilities..........    2,867          6,925      6,537
                                             -------        -------    -------
  Net cash provided by operating activities   67,532          7,376     17,149
                                             -------        -------    -------

Investing activities:
  Purchases  of  property  and  equipment... (16,107)       (78,378)   (61,341)
  Purchase of AnnTaylor Global Sourcing.....    (227)           ---        ---
                                             -------        -------    -------
  Net cash used by investing activities..... (16,334)       (78,378)   (61,341)
                                             -------        -------    -------

Financing activities:
  Borrowings (repayments) under revolving    
    credit facility......................... (101,000)       37,000     64,000
  Payments of long-term debt................      ---           ---    (56,000)
  Parent company contribution...............   96,194           384     34,791
  Proceeds from term loan...................      ---        24,500        ---
  Proceeds from (payments of) mortgage......     (266)        6,958        ---
  Borrowings (repayments) under receivables  
    facility................................  (40,000)        4,000      3,000
  Payment of financing costs................     (384)       (2,108)      (340)
                                              -------       -------    -------
  Net cash provided by (used by) financing 
    activities..............................  (45,456)       70,734     45,451
                                              -------       -------    -------

Net increase (decrease) in cash.............    5,742          (268)     1,259
Cash, beginning of year.....................    1,283         1,551        292
                                              -------       -------    -------
Cash, end of year........................... $  7,025      $  1,283   $  1,551
                                              =======       =======    =======

Supplemental Disclosures of Cash Flow 
  Information:
  Cash paid during the year for interest.... $ 22,689      $ 19,607   $ 13,211
                                              =======       =======    =======
  Cash  paid  during the year for income 
    taxes................................... $  8,990      $  6,886   $ 26,242
                                              =======       =======    =======
  
  
                                
             See accompanying notes to consolidated financial statements.

===============================================================================
                         
<PAGE> 16
                         
                         
                         
                         ANNTAYLOR, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                
                                
                                


1.   Summary of Significant Accounting Policies
     ------------------------------------------
     
     AnnTaylor, Inc. (the "Company" or "Ann Taylor") is a leading
national  specialty retailer of better quality  women's  apparel,
shoes and accessories sold principally under the Ann Taylor brand
name.
     
     All  of  the  outstanding  capital  stock  of  the  Company,
consisting  of one share of common stock, is owned  by  AnnTaylor
Stores Corporation ("ATSC").


Basis of Presentation
---------------------     

     The  consolidated financial statements include the  accounts
of  the  Company and its subsidiaries.  All intercompany accounts
have been eliminated in consolidation.
     
     Certain  Fiscal 1995 and 1994 amounts have been reclassified
to conform to the Fiscal 1996 presentation.



Fiscal Year
-----------
     
     The  Company follows the standard fiscal year of the  retail
industry, which is a 52 or 53 week period ending on the  Saturday
closest to January 31 of the following calendar year.  The fiscal
year  ended February 3, 1996 included 53 weeks.  The other fiscal
years presented included 52 weeks.
     
     

Finance Service Charge Income
-----------------------------
     
     Income  from  finance service charges relating  to  customer
receivables,  which  is  deducted  from  selling,   general   and
administrative expenses, amounted to $9,024,000 for Fiscal  1996,
$8,328,000 for Fiscal 1995 and $6,871,000 for Fiscal 1994.



Merchandise Inventories
-----------------------
     
     Merchandise  inventories are accounted  for  by  the  retail
inventory  method and are stated at the lower of cost  (first-in,
first-out  method)  or  market.  The majority  of  the  Company's
inventory represents finished goods available for sale.



Property and Equipment
----------------------
     
     Property  and equipment are recorded at cost.   The  Company
capitalized interest costs of approximately $1,300,000 in  Fiscal
1995.   Depreciation and amortization are computed on a straight-
line basis over the estimated useful lives of the assets (3 to 40
years) or, in the case of leasehold improvements, over the  lives
of the respective leases, if shorter.



Pre-Opening Expenses
--------------------
     
     Pre-opening  store expenses are charged to selling,  general
and administrative expenses in the period incurred.


======================================================================
<PAGE> 17


                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
     
     
     
1.   Summary of Significant Accounting Policies (Continued)
     ------------------------------------------------------
     

Deferred Financing Costs
------------------------
     
     Deferred  financing  costs  are being  amortized  using  the
interest  method over the term of the related debt.   Accumulated
amortization  at  February  1, 1997  and  February  3,  1996  was
$3,534,000 and $1,960,000, respectively.



Goodwill
--------
     
     Goodwill  relating to the 1989 acquisition of Ann Taylor  by
ATSC  is being amortized on a straight-line basis over 40  years.
Goodwill relating to the 1996 Sourcing Acquisition (see  Note  8)
is  being  amortized  on a straight-line  basis  over  25  years.
Accumulated amortization at February 1, 1997 and February 3, 1996
was  $76,811,000  and $66,725,000, respectively.   On  an  annual
basis, the Company compares the carrying value of its goodwill to
an   estimate  of  the  Company's  fair  value  to  evaluate  the
reasonableness  of the carrying value and remaining  amortization
period.  Fair value is computed using projections of future  cash
flows.
     
     

Income Taxes
-------------
     
     The  Company  accounts for income taxes in  accordance  with
Statement  of Financial Accounting Standards No. 109, "Accounting
for  Income Taxes", which requires an asset and liability  method
of  accounting  for deferred income taxes.  Under the  asset  and
liability  method,  deferred  tax  assets  and  liabilities   are
recognized, and income or expense is recorded, for the  estimated
future  tax consequences attributable to differences between  the
financial  statement  carrying amounts  of  existing  assets  and
liabilities and their respective tax bases.

     Pursuant  to  a Tax Sharing Agreement, ATSC and the  Company
have agreed to elect to file consolidated income tax returns  for
federal income tax purposes and may elect to file such returns in
states  and  other  relevant jurisdictions that  permit  such  an
election,  for  income  tax  purposes.   With  respect  to   such
consolidated  income  tax  returns,  the  Tax  Sharing  Agreement
generally  requires  the company to pay to ATSC  the  entire  tax
shown  to be due on such consolidated returns, provided that  the
amount  paid by the Company shall not exceed the amount of  taxes
that would have been owed by the Company on a stand-alone basis.



Use of Estimates
----------------
     
     The  preparation of financial statements in conformity  with
generally  accepted accounting principles requires management  to
make estimates and assumptions that affect the reported amount of
assets  and liabilities and disclosures of contingent assets  and
liabilities  at  the  date of the financial  statements  and  the
reported  amounts  of  revenue and expenses during  the  reported
period.  Actual results could differ from these estimates.
     
     

Impairment of Long-Lived Assets
-------------------------------
     
     The   Company  adopted  Statement  of  Financial  Accounting
Standards  No. 121, "Accounting for the Impairment of  Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" ("SFAS 121"),
in  Fiscal 1996.  The implementation of SFAS 121 did not  have  a
material  adverse effect on the consolidated financial statements
of the Company.

=====================================================================
<PAGE> 18
     
                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
     
     
     

2.   Long-Term Debt
     --------------
     
     The  following  summarizes  long-term  debt  outstanding  at
February 1, 1997 and February 3, 1996:
     
                                  February 1, 1997       February 3, 1996
                                --------------------    -------------------
                                  Carrying  Estimated   Carrying  Estimated
                                   Amount   Fair Value   Amount   Fair Value
                                 ---------  ----------  --------  ----------
                                               (in thousands)
Senior Debt:
 Revolving credit facility....... $    ---   $    ---    $101,000   $101,000
 Term loan.......................   24,500     24,500      24,500     24,500
 Mortgage........................    6,692      6,692       6,958      6,958
8-3/4% Notes.....................  100,000     97,750     100,000     83,125
Interest rate swap agreement.....      ---        ---         ---        384
Receivables facility.............      ---        ---      40,000     40,000
                                   -------    -------     -------    -------
        Total debt...............  131,192    128,942     272,458    255,967
Less current portion.............      287        287      40,266     40,266
                                   -------    -------     -------    -------
        Total  long-term debt.... $130,905   $128,655    $232,192   $215,701
                                   =======    =======     =======    =======
     
     
     In   accordance  with  the  requirements  of  Statement   of
Financial  Accounting Standards No. 107, "Disclosures about  Fair
Value  of  Financial  Instruments", the  Company  determined  the
estimated  fair value of its financial instruments  using  quoted
market  information, as available.  As judgment is involved,  the
estimates  are  not  necessarily indicative of  the  amounts  the
Company could realize in a current market exchange.
     
     The  Company's Bank Credit Agreement provides,  among  other
things,  for a $25,000,000 term loan and a $125,000,000 revolving
credit  facility.   As  described below,  in  January  1996,  the
Company  prepaid  a  portion of the term  loan  and  reduced  the
revolving credit facility to $122,000,000.  The principal  amount
of  the  term  loan  is payable on September 29,  1998,  and  the
maturity date of the revolving credit facility is July 29,  1998;
however,  the Company is required to reduce the outstanding  loan
balance  under  the revolving credit facility to  $50,000,000  or
less  for thirty consecutive days during Fiscal 1996 and in  each
fiscal  year thereafter.  The maximum amount that may be borrowed
under  the revolving credit facility is reduced by the amount  of
commercial  and standby letters of credit outstanding  under  the
Bank  Credit Agreement.  At February 1, 1997 the amount available
under the revolving credit facility was $110,000,000.
     
     The  term  loan bears interest at a rate equal  to,  at  the
Company's option, the Bank of America National Trust and  Savings
Association ("Bank of America") (1) Base Rate plus 2.50%, or  (2)
Eurodollar  Rate  plus 3.50%, and amounts outstanding  under  the
revolving  credit facility bear interest at a rate equal  to,  at
the  Company's option, the Bank of America (1) Base Rate, or  (2)
Eurodollar Rate plus 1.00%.  In addition, Ann Taylor is  required
to pay the lenders a quarterly commitment fee of 0.375% per annum
of  the  unused revolving loan commitment.  At February 1,  1997,
the  interest rate on the $24,500,000 outstanding under the  term
loan was 8.938% per annum.
     
     Under  the  terms  of  the Bank Credit  Agreement,  Bank  of
America  obtained  a  pledge of the Company's outstanding  common
stock  held by ATSC and a security interest in certain assets  of
the  Company,  excluding inventory and accounts  receivable.   In
addition, the Bank Credit Agreement contains financial and  other
covenants,  including  limitations  on  indebtedness,  liens  and
investments, restrictions on dividends or other distributions  to
stockholders,  and  maintaining  certain  financial  ratios   and
specified  levels of net worth.  The Bank Credit  Agreement  also
provides for, among other things, an annual limitation on capital
expenditures  of  $25,000,000 in Fiscal 1996 and  $32,500,000  in
Fiscal 1997 and beyond, subject to increase if certain conditions
are satisfied.


=====================================================================
<PAGE> 19              
                         
                         
                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
     
     
     
2.   Long-Term Debt (Continued)
     --------------------------
     
     Since  the fourth quarter of Fiscal 1993, the Company  sells
its  proprietary  credit  card accounts receivable  to  AnnTaylor
Funding,  Inc.,  a wholly owned subsidiary of the  Company,  that
uses  the  receivables to secure borrowings of up to $40,000,000,
based  on  its eligible accounts receivable, under a  receivables
financing facility (the "Receivables Facility").  The Receivables
Facility matures in May 1998.  As of February 1, 1997, there were
no   borrowings  outstanding  under  the  Receivables   Facility.
AnnTaylor   Funding,  Inc.  had  total  assets  of  approximately
$55,189,000 at February 1, 1997, all of which are subject to  the
security interest of the lender under the Receivables Facility.
     
     On  June 28, 1993, the Company issued $110,000,000 principal
amount of its 8-3/4% Subordinated Notes due 2000 ("8-3/4% Notes").  The
outstanding  principal amount of these notes as  of  February  1,
1997 was $100,000,000.
     
     In  July  1993,  the  Company entered  into  a  $110,000,000
(notional  amount) interest rate swap agreement,  which  had  the
effect  of converting the Company's interest obligations  on  the
8-3/4%  Notes to a variable rate.  Under the agreement, the  Company
received a fixed rate of 4.75% and paid a floating rate based  on
LIBOR,  as determined in six month intervals.  The swap agreement
matured  in  July  1996.   Net receipts  or  payments  under  the
agreement were recognized as adjustments to interest expense.
     
     In   November  1995,  the  Company  and  its  wholly   owned
subsidiary  AnnTaylor Distribution Services,  Inc.  received  the
proceeds of a $7,000,000 seven-year mortgage loan secured by  the
Company's  distribution center land and building  in  Louisville,
Kentucky.   The  mortgage  loan bears interest  at  7.5%  and  is
payable  in monthly installments of approximately $65,000 through
December   1,   1997,  and  thereafter  in  monthly  installments
sufficient to amortize the then remaining principal balance  over
a  period  of five years.   Pursuant to the requirements  of  the
Bank  Credit Agreement, in January 1996, the Company applied one-
half  of  the  proceeds  of the mortgage  to  reduce  the  amount
available  under the revolving credit facility, thereby  reducing
the  revolving  credit  facility by  $3,000,000,  and  prepaid  a
portion of the term loan.
     
     The   aggregate   principal  payments   of   all   long-term
obligations are as follows:
   
      Fiscal Year                            (in thousands)
      -----------
        1997...................................  $   287
        1998...................................   25,748
        1999...................................    1,206
        2000...................................  101,300
        2001...................................    1,401
        2002 and thereafter....................    1,250
                                                 -------
           Total............................... $131,192
                                                 =======

     At  February  1, 1997 and February 3, 1996, the Company  had
outstanding  commercial and standby letters of credit  under  the
Bank Credit Agreement of $12,116,000 and $7,850,000, respectively.
     
     In  connection  with the Sourcing Acquisition  discussed  in
Note  8,  the  Hongkong and Shanghai Banking Corporation  entered
into  an  Amended  and Restated Credit Agreement  with  AnnTaylor
Global  Sourcing, Inc. ("ATGS", formerly known  as  CAT  US  Inc.
("CAT")  and  now  a  wholly  owned subsidiary  of  Ann  Taylor),
continuing the $40,000,000 credit facility of ATGS's predecessor.
The facility is available principally for the issuance of letters
of  credit; cash borrowings under the facility are limited  to  a
maximum of $8,000,000.  Such credit facility matures on July  29,
1997  and contains financial and other covenants.  As of February
1,  1997,  commercial and standby letters of  credit  outstanding
under  this  facility  totaled  $28,189,000  and  there  were  no
borrowings outstanding under this facility.
                                

======================================================================
<PAGE> 20



                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
     
     
     
     
     
3.   Preferred Securities
     --------------------
     
     In  April and May of Fiscal 1996, ATSC completed the sale of
an aggregate of $100,625,000 of 8-1/2% Company-Obligated Mandatorily
Redeemable   Convertible  Preferred  Securities  (the  "preferred
securities")  issued by its financing vehicle, AnnTaylor  Finance
Trust,  a  Delaware business trust (the "Trust").  The  preferred
securities  have  a liquidation preference of  $50  per  security
($100,625,000 in the aggregate) and are convertible at the option
of  the  holders thereof into ATSC's common stock at a conversion
rate  of 2.545 shares of common stock for each preferred security
(equivalent   to  $19.65  per  share  of  common   stock,   which
represented  a 20% premium to the $16.375 closing  price  of  the
common  stock on the New York Stock Exchange at the date  of  the
execution of the purchase agreement relating to the sale  of  the
preferred  securities).   The  sole  assets  of  the  Trust   are
$103,700,000 of 8-1/2% Convertible Subordinated Debentures  of  ATSC
maturing  on  April  15,  2016.  A total of  2,012,500  preferred
securities were issued, and are convertible into an aggregate  of
5,121,812 shares of common stock.  ATSC received net proceeds  of
$95,984,000  in  connection  with  the  sale  of  the   preferred
securities,   of   which  $94,000,000  was  applied   to   reduce
outstanding  borrowings  under  the  Company's  revolving  credit
facility,   without  a  permanent  reduction  of  the  commitment
thereunder.
     
     

4.   Allowance for Doubtful Accounts
     --------------------------------
     
     A summary of activity in the allowance for doubtful accounts
for the fiscal years ended February 1, 1997, February 3, 1996 and
January 28, 1995 is as follows:
     
                                       
                                       
                                       Fiscal Years Ended
                                    February  1,  February 3, January 28,
                                        1997         1996        1995
                                    ------------  ----------- -----------

                                               (in thousands)
     
     Balance at beginning of year..... $   736     $   931    $   787
     Provision for loss on accounts  
       receivable.....................   1,803       1,280      1,727
     Accounts written off.............  (1,728)     (1,475)    (1,583)
                                        ------      ------     ------
     Balance at end of year........... $   811     $   736    $   931
                                        ======      ======     ======


5.   Commitments and Contingencies
     -----------------------------

Rental Commitments
------------------
     
     Ann  Taylor  occupies its retail stores  and  administrative
facilities  under  operating  leases,  most  of  which  are  non-
cancelable.   Some  leases contain renewal  options  for  periods
ranging from one to ten years under substantially the same  terms
and  conditions as the original leases.  Most of the store leases
require  Ann  Taylor  to pay a specified  minimum  rent,  plus  a
contingent rent based on a percentage of the store's net sales in
excess  of a certain threshold.  In addition, most of the  leases
require  Ann  Taylor  to  pay real estate  taxes,  insurance  and
certain  common  area and maintenance costs in  addition  to  the
future minimum lease payments shown below.


===================================================================
<PAGE> 21
                                
                         
                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
     
     
     

5.   Commitments and Contingencies (Continued)
     -----------------------------------------
     
     Future minimum lease payments under non-cancelable operating
leases at February 1, 1997 are as follows:
     
     Fiscal Year                         (in thousands)
     -----------
      
      1997................................  $ 60,021
      1998................................    59,242
      1999................................    56,288
      2000................................    54,164
      2001................................    51,306
      2002 and thereafter.................   242,431
                                             -------
           Total..........................  $523,452
        
     
     Rent  expense for the fiscal years ended February  1,  1997,
February 3, 1996 and January 28, 1995 was as follows:

                                       
                                        Fiscal Years Ended
                              --------------------------------------
                              February  1,   February 3,  January 28,
                                  1997          1996         1995
                              ------------   -----------  ----------

                                         (in thousands)

     Minimum rent............... $55,571       $47,132       $35,382
     Percentage rent............   2,433         3,090         4,684
                                  ------        ------        ------
          Total................. $58,004       $50,222       $40,066
                                  ======        ======        ======
                                
                                

Litigation
----------
     
     The  Company has been named as a defendant in several  legal
actions  arising  from its normal business activities.   Although
the  amount  of  any liability that could arise with  respect  to
these  actions cannot be accurately predicted, in the opinion  of
the  Company, any such liability will not have a material adverse
effect  on  the  financial  position, results  of  operations  or
liquidity of the Company.
     
     In   addition,  ATSC,  Ann  Taylor,  certain  officers   and
directors  of ATSC and Ann Taylor, Merrill Lynch & Co. ("ML&Co.")
and certain affiliates of ML&Co. have been named as defendants in
a  purported  class  action  lawsuit  filed  by  certain  alleged
stockholders alleging that ATSC and the other defendants  engaged
in  a  fraudulent scheme and course of business that  operated  a
fraud  or  deceit  on  purchasers of ATSC's  common  stock.   The
Company  believes that the complaint is without merit and intends
to   defend  the  action  vigorously.   The  Company  and   other
defendants  have  filed  motions to dismiss  the  action.   These
motions  are  pending,  and  discovery  in  this  case  has  been
suspended pending judicial disposition of these motions.  As  the
case  is in preliminary stages, any liability that may arise from
this action cannot be predicted at this time.


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

<PAGE> 22
     
     
                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)



5.   Commitments and Contingencies (Continued)
     -----------------------------------------
     

Other
-----

     The Company is currently under tax examination by the
Internal Revenue Service ("IRS").  Such examination is not yet
complete and no assertions or claims have yet been made by the
IRS.  Management believes that the effect of any claims which may
arise as a result of the IRS audit will not have a materially
adverse effect on the consolidated financial condition, operating
results or liquidity of the Company.  However, there can be no
assurance that certain claims will not be made or that the effect
of such claims will not be significant
     
     

6. Extraordinary Item
   ------------------
     
     On  May  18,  1994,  ATSC completed  a  public  offering  of
1,000,000 shares of common stock (the "ATSC Offering") at a price
of  $32.00  per  share, resulting in aggregate  net  proceeds  of
$30,420,000   to  the  Company  (after  payment  of  underwriting
discounts and expenses of the ATSC Offering payable by ATSC).  As
required  by  the Company's then-existing bank credit  agreement,
$30,000,000 of the net proceeds of the ATSC Offering were used to
reduce  the  amount  of  a  term  loan  outstanding  under   that
agreement.   The write-off of deferred financing costs associated
with  the payment on the term loan with the proceeds of the  ATSC
Offering  and  refinancing  of  long-term  debt  resulted  in  an
extraordinary loss in Fiscal 1994 of $1,522,000 ($868,000 net  of
income tax benefit).
     
     The  ATSC  Offering  was consummated concurrently  with  the
public  offering  and sale of 4,075,000 shares of  ATSC's  common
stock   held  by  certain  affiliates  of  ML&Co.  (the  "Selling
Stockholders").  ATSC did not receive any of the proceeds of  the
shares sold by the Selling Stockholders.
     
     

7. Nonrecurring Charges
   ---------------------


Studio Shoe Stores Closing
--------------------------
     
     In connection with the planned closing of the Company's nine
Ann  Taylor  Studio shoe stores, announced in January  1997,  the
Company recorded a non-cash pre-tax charge of $3,600,000.  Of the
total  impairment loss, $2,500,000 represents impairment of long-
lived assets such as properties and store fixtures and $1,100,000
pertains  to  lease and other related costs for  these  locations
until the properties are sublet.
  


Resignation of Chairman and Chief Executive Officer
----------------------------------------------------
     
     Effective  August  23,  1996, the then  Chairman  and  Chief
Executive  Officer and Director of the ATSC and its wholly  owned
subsidiary,  Ann  Taylor,  resigned.   In  connection  with   the
resignation, a one-time pre-tax charge of $3,500,000 was recorded
relating  to  the  estimated costs of the  Company's  obligations
under the Chairman's employment contract with ATSC.


====================================================================
<PAGE> 23

                         
                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)




8. Certain Relationships and Related Transactions
   ----------------------------------------------
  

Transactions with Merrill Lynch and its Affiliates
--------------------------------------------------
     
     At  February  1,  1997, certain affiliates  of  ML&Co.  held
approximately 24.0% of ATSC's outstanding common stock.   Two  of
the  members  of the Board of Directors of the Company  and  ATSC
serve  as  representatives of ML&Co. and its  affiliates.   As  a
result, ML&Co. and such affiliates are in a position to influence
the management of the Company and ATSC.
     
     In Fiscal 1996, ATSC paid approximately $1,207,500 to ML&Co.
and Merrill Lynch, Pierce, Fenner & Smith, Incorporated ("Merrill
Lynch") in connection with their services as placement agents for
the  sale of the preferred securities of AnnTaylor Finance  Trust
(see  Note  3).   ATSC agreed to indemnify ML&  Co.  and  Merrill
Lynch,   as   placement  agents,  against  certain   liabilities,
including  certain liabilities under the federal securities  law,
in connection with the sale of the preferred securities.
     
     In  Fiscal  1994,  ATSC  paid  underwriting  commissions  of
approximately $1,027,000 to Merrill Lynch in connection with  the
ATSC  Offering  (see Note 6).  ATSC agreed to  indemnify  Merrill
Lynch,  as  underwriter,  against certain liabilities,  including
certain   liabilities  under  the  federal  securities  law,   in
connection with the ATSC Offering.
     


Sourcing Acquisition
--------------------
     
     In  Fiscal 1995, the Company purchased approximately 16%  of
its  merchandise directly from Cygne Designs, Inc. ("Cygne")  and
an additional 38% of its merchandise through the Company's direct
sourcing joint venture with Cygne known as CAT.  On September 20,
1996  (the  "Effective Date"), pursuant to the  Stock  and  Asset
Purchase  Agreement dated as of June 7, 1996, by and among  ATSC,
Ann  Taylor, Cygne and Cygne Group F.E. Limited (as amended,  the
"Purchase Agreement"), Ann Taylor acquired the entire interest of
Cygne in CAT and certain of the assets (the "Assets") of the  Ann
Taylor  Woven Division of Cygne (the "Division") that  were  used
for   sourcing   merchandise  for  Ann  Taylor   (the   "Sourcing
Acquisition").   As  a  result of the Sourcing  Acquisition,  CAT
became an indirect wholly owned subsidiary of the Company and now
performs   all  of  the  Company's  direct  sourcing   functions,
including  those previously provided by the Division,  under  the
name  AnnTaylor  Global Sourcing, Inc.  For  financial  reporting
purposes,  the  transaction has been  accounted  for  as  of  the
Effective  Date  under  the  purchase  method  of  accounting  in
accordance  with  Accounting Principles  Board  Opinion  No.  16,
"Accounting for Business Combinations".
     
     In consideration for Cygne's interest in CAT and the Assets,
ATSC and the Company paid (i) 2,348,145 shares of common stock of
ATSC  having  an  aggregate value, as of the Effective  Date,  of
$36,000,000, (ii) $3,200,000 in cash as payment for inventory and
fixed  assets  and  (iii) approximately  $6,500,000  in  cash  in
settlement  of open accounts payable by Ann Taylor to  Cygne  for
merchandise delivered by Cygne prior to the closing.  The Company
also assumed certain liabilities related to the operations of the
Division.    The  purchase  price  is  subject  to   post-closing
adjustments  based  upon  final determination  of  the  value  of
certain of the assets purchased and liabilities assumed.   As  of
February  1, 1997, certain post-closing adjustments are  expected
to reduce the net cash paid to approximately $227,000.  The total
purchase  price  to the Company of the Sourcing  Acquisition  has
been  allocated  to  the  tangible  and  intangible  assets   and
liabilities of CAT and the Division that were acquired, based  on
preliminary   estimates   of  their   respective   fair   values.
Accordingly,  the allocation of the purchase price  reflected  in
the accompanying consolidated balance sheets may be adjusted upon
final   determination   of   the  purchase   price   adjustments.
Management does not believe the subsequent changes, if any,  will
be  significant.  The excess of the purchase price over the  fair
value of the net assets acquired was recorded as goodwill and  is
being amortized on a straight-line basis over 25 years.


===================================================================
<PAGE> 24

                         
                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
     
     
     
8. Certain Relationships and Related Transactions (Continued)
   -----------------------------------------------------------
     
Sourcing Acquisition (Continued)
--------------------------------
     
     In  connection  with  the Sourcing Acquisition,  Ann  Taylor
entered into two three-year consulting agreements with Cygne  for
the  services of Mr. Bernard Manuel, Chairman and Chief Executive
Officer  of  Cygne, and Mr. Irving Benson, the then-President  of
Cygne.  In November 1996, Mr. Benson resigned from his employment
with  Cygne  and, in accordance with the terms of the  consulting
agreement  relating to Mr. Benson's services, Cygne's obligations
and  rights  under  the consulting agreement  were  automatically
assigned to Mr. Benson.
     
     The  following unaudited proforma consolidated data for  the
Company  for the fiscal years ended February 1, 1997 and February
3,  1996  have been presented to reflect the Sourcing Acquisition
as if it had occurred at the beginning of each such period:
                                      
                                      
                                      Fiscal Years Ended
                               --------------------------------------    
                               February 1, 1997      February 3, 1996
                               -----------------    -----------------
                                Actual  Proforma     Actual  Proforma
                                ------  --------    -------  --------
                          
                               (in thousands, except per share amounts)

   Net  sales................  798,117  $798,117    731,142   $731,142
   Net income (loss).........    8,667    11,595       (876)     2,871
   
     
     The  proforma  data set forth above does not purport  to  be
indicative  of the results that actually would have  occurred  if
the  Sourcing  Acquisition had occurred at the beginning  of  the
periods presented or of results which may occur in the future.
     
     A  summary  of  the noncash activity that  occurred  in  the
fiscal  year  ended  February 1, 1997  in  conjunction  with  the
Sourcing Acquisition is as follows:
                                                  
                                                  (in thousands)

   Fair value of assets acquired...................  $  4,727
   Excess  of  purchase price over the fair 
     value of  net  assets acquired................    38,340
   Ann Taylor's previous investment in CAT.........    (6,840)
   Issuance of ATSC's common stock.................   (36,000)
                                                      -------
   Cash paid                                         $    227
                                                      =======
     


9.   Stock Options Plans
     -------------------
     
     ATSC   accounts   for  stock  options  in  accordance   with
Accounting  Principles  Board Opinion  No.  25,  under  which  no
compensation costs have been recognized for stock option  awards.
Had  compensation costs of option awards been determined under  a
fair value alternative method as stated in Statement of Financial
Accounting   Standards  No.  123,  "Accounting  for   Stock-Based
Compensation",  ATSC would have been required to prepare  a  fair
value  model  for  such options and record  such  amount  in  the
financial  statements  as  compensation  expense.   Proforma  net
income  (loss) for Fiscal 1996 and Fiscal 1995 after taking  into
account  such  expense would have been $8.2  million  and  $(1.1)
million,  respectively.  ATSC arrived at the fair value  of  each
stock  grant  at  the date of grant by using  the  Black  Scholes
option   pricing  model  with  the  following  weighted   average
assumptions  used for grants for the fiscal years ended  February
1,  1997  and February 3, 1996:  risk-free interest rate of  5.8%
and 7.0%, respectively; expected life of 4.3 years and 5.0 years,
respectively;  and  expected  volatility  of  44.8%  and   55.2%,
respectively.

====================================================================
<PAGE> 25
                         
                         
                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)




10.  Income Taxes
     ------------
     
     The  provision for income taxes for the fiscal  years  ended
February  1, 1997, February 3, 1996 and January 28, 1995 consists
of the following:
     
                                         Fiscal Years Ended
                               -------------------------------------
                               February 1,  February 3,   January 28,
                                   1997         1996          1995
                               -----------  -----------   -----------
                                       
                                           (in thousands)
   Federal:
    Current....................  $ 9,898       $1,400       $22,534
    Deferred...................     (802)       2,249           ---
                                  ------        -----        ------
      Total federal............    9,096        3,649        22,534
                                  ------        -----        ------
   State and local:
    Current....................    3,844          607         7,740
    Deferred...................     (152)         901           ---
                                  ------        -----         -----
      Total state and local....    3,692        1,508         7,740
                                  ------        -----         -----
   Foreign:
    Current....................      187          ---           ---
    Deferred...................      ---          ---           ---
                                  ------        -----         -----
      Total foreign............      187          ---           ---
                                  ------        -----         -----
    Total......................  $12,975       $5,157       $30,274
                                  ======        =====        ======

     
     The  reconciliation between the provision for  income  taxes
and  the provision for income taxes at the federal statutory rate
for the fiscal years ended February 1, 1997, February 3, 1996 and
January 28, 1995 is as follows:
     
                                     
                                               Fiscal Years Ended
                                       ------------------------------------
                                       February 1,  February 3, January 28,
                                           1997         1996       1995
                                       -----------  ----------- ----------
                                                  
                                                   (in thousands)
Income before income taxes and 
   extraordinary loss..................... $21,642     $4,281    $62,894
                                            ======      =====     ======
Federal statutory rate                          35%        35%        35%
                                            ======      =====     ======
Provision  for income taxes at federal 
   statutory rate.........................  $7,575     $1,498    $22,013
State and local income taxes, net 
  of federal income tax benefit...........   2,273        980      5,031
Non-deductible amortization of goodwill...   3,429      3,327      3,327
Undistributed income of joint venture.....    (382)      (387)      (420)
Other                                           80       (261)       323
                                            ------      -----     ------
   Provision for income taxes............. $12,975     $5,157    $30,274
                                            ======      =====     ======


============================================================================
<PAGE> 26


   
                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)



10.  Income Taxes (Continued)
     ------------------------

     The   tax  effects  of  significant  items  comprising   the
Company's  net  deferred tax assets as of February  1,  1997  and
February 3, 1996 are as follows:
     
                                         February 1,  February 3,
                                             1997         1996
                                         -----------  -----------
                                              
                                              (in thousands)
   Current:
    Inventory............................. $ 2,070     $ 1,899
    Accrued expenses......................   7,492       2,188
    Real estate...........................  (1,433)     (1,139)
    Other.................................    (172)        452
                                             -----       -----
   Total current.......................... $ 7,957     $ 3,400
                                             =====       =====
   Noncurrent:
    Depreciation.......................... $(6,528)    $(3,024)
    Rent expense..........................   3,328       2,840
    Other.................................  (1,672)     (1,116)
                                            ------      ------
   Total noncurrent....................... $(4,872)    $(1,300)
                                             =====       =====
     
     Income  taxes provided reflect the current and deferred  tax
consequences of events that have been recognized in the Company's
financial  statements or tax returns.  U.S. federal income  taxes
are provided on unremitted foreign earnings except those that are
considered  permanently reinvested, which  at  February  1,  1997
amounted to approximately $6,000,000.  However, if these earnings
were  not  considered permanently reinvested, under current  law,
the  incremental  tax  on such undistributed  earnings  would  be
approximately $1,800,000.


11.  Retirement Plans
     ----------------
     
     Savings  Plan.  The Company maintains a defined contribution
401(k)  savings  plan for substantially all full-time  employees.
Participants may contribute to the plan an aggregate of up to 10%
of   their   annual  earnings.   The  Company  makes  a  matching
contribution  of  50%  with respect  to  the  first  3%  of  each
participant's  annual  earnings contributed  to  the  plan.   The
Company's contributions to the plan for Fiscal 1996, Fiscal  1995
and   Fiscal   1994   were  $390,000,  $337,000   and   $333,000,
respectively.
     
     Pension Plan.  Substantially all full-time employees of  the
Company  are  covered  under  a noncontributory  defined  benefit
pension plan.  The pension plan is a "cash balance pension plan".
Each  participant  accrues a benefit based  on  compensation  and
years  of service with the Company.  The Company's funding policy
for  the  plan is to contribute annually the amount necessary  to
provide  for benefits based on accrued service and projected  pay
increases.   Plan  assets consist primarily of cash,  equity  and
fixed income securities.


==================================================================
<PAGE> 27


                         ANNTAYLOR, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)




11.  Retirement Plans (Continued)
     ----------------------------
     
     The  following  table sets forth the funded  status  of  the
Pension  Plan at February 1, 1997, February 3, 1996  and  January
28,  1995,  in accordance with Statement of Financial  Accounting
Standards No. 87, "Employers' Accounting for Pensions":
     

                                   February 1,  February 3,  January 28,
                                       1997         1996        1995
                                   -----------  -----------  -----------
                                        
                                            (dollars in thousands)

Actuarial present value of 
  benefits obligation:
Accumulated benefit obligation, 
  including vested benefits of
  $2,147,000, $2,064,000 and 
  $1,500,000, respectively...........  $3,413       $2,893       $2,516
                                        =====        =====        =====
Projected benefit obligation for 
  service rendered to  date..........  $3,413       $2,893       $2,516
Plan assets at fair value............   4,745        2,537        2,522
                                        -----        -----        -----
Plan assets in excess of 
  projected benefit obligation
  (projected   benefit  obligation  
  in  excess  of   plan   assets)....   1,332         (356)           6
Unrecognized net gain................    (802)        (231)        (136)
                                        -----        -----        -----
Prepaid (accrued) pension cost.......  $  530       $ (587)      $ (130)
                                        =====        =====        =====
                                
Net periodic pension cost for 
  Fiscal 1996, Fiscal 1995 and 
  Fiscal 1994 included the 
  following components:
  Service cost/benefits earned 
    during the year..................  $  981       $  681       $  622
Interest cost on projected   
  benefit obligation.................     213          185          133
Actual loss (return) on plan assets..    (527)        (104)          72
Net amortization and deferral........     300         (132)        (285)
                                        -----        -----        -----
Net periodic pension cost............  $  967       $  630       $  542
                                        =====        =====        =====
Assumptions used to determine 
  the projected benefit
  obligation and plan assets were:
  Discount rate......................    8.00%        6.75%        8.50%
  Rate of increase in compensation 
    level............................    4.00%        4.00%        5.50%
  Expected long-term rate of return 
    on assets........................    9.00%        9.00%        8.00%



12.  Stockholder's Equity
     --------------------

     The following summarizes the changes in stockholder's equity
during Fiscal 1996, Fiscal 1995 and Fiscal 1994:
     
                                  
                                  
                                                        Retained
                                             Addi-      Earnings      Total
                                             tional      Accum-       Stock-
                                 Common      Paid-in     ulated       holder's
                                  Stock      Capital     Deficit)     Equity
                                  -----      -------     -------     --------
                                         
                                                (in thousands)

Balance  at  January 29, 1994....  $  1     $276,026    $(16,756)    $259,271
  Net income.....................   ---          ---      31,752       31,752
  Parent company contributions...   ---       35,089         ---       35,089
                                    ---      -------      ------      -------
Balance at January 28, 1995......     1      311,115      14,996      326,112
  Net loss.......................   ---          ---        (876)        (876)
  Parent company contributions...   ---          452         ---          452
                                    ---      -------      ------      -------
Balance at February 3, 1996......     1      311,567      14,120      325,688
  Net income.....................   ---          ---       8,667        8,667
  Parent company contributions...   ---      132,385         ---      132,385
                                    ---      -------      ------      -------
Balance at February 1, 1997......  $  1     $443,952    $ 22,787     $466,740
                                    ===      =======     =======      =======