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                      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 2, 2002
                                      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:

                                     NONE.


          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 1, 2002, 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.


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================================================================================
<PAGE>1

                                        PART I



ITEM 1. BUSINESS
-------

GENERAL

      AnnTaylor,  Inc.  (the  "Company"  or "Ann  Taylor"),  through its wholly
owned  subsidiaries,  is  a  leading  national  specialty  retailer  of  better
quality women's  apparel,  shoes and accessories  sold primarily under the "Ann
Taylor"  and "Ann Taylor  Loft" brand  names.  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,   dresses,   tops,   weekend  wear,  shoes  and
accessories,  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.

      As of February  2, 2002,  the Company  operated  538 retail  stores in 42
states,  the  District of Columbia  and Puerto Rico under the names Ann Taylor,
Ann Taylor Loft and Ann Taylor  Factory  Store.  The  Company's  342 Ann Taylor
stores  compete in the  "better"-priced  market.  These  stores  represent  the
Company's  core  merchandise  line.   Approximately   three-quarters  of  these
stores are located in  regional  malls and upscale  specialty  retail  centers,
with the  balance  located in  downtown  and  village  locations.  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  professional  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.

      As of  February  2,  2002,  the  Company  operated  186 Ann  Taylor  Loft
stores.   Ann  Taylor  Loft  stores  compete  in  the   "upper-moderate"-priced
market.  Ann Taylor Loft is designed  for women with a more  relaxed  lifestyle
and work  environment,  who  appreciate the Ann Taylor style but are more price
sensitive.  Merchandise  is  created  uniquely  for  these  stores  and is sold
under the Ann Taylor  Loft label.  The first Ann Taylor  Loft stores  opened by
the  Company  were  located in factory  outlet  centers.  In 1998,  the Company
began opening Ann Taylor Loft stores  outside the factory  outlet  environment,
in  regional  malls,  strip  shopping  centers  and  urban and  village  street
locations.  At  February 2, 2002,  168 Ann Taylor  Loft stores were  located in
these  venues.   Management   believes  that  Ann  Taylor  Loft   represents  a
significant    opportunity    for   the    Company    to    compete    in   the
upper-moderate-priced  women's  apparel  market.  See "Stores  and  Expansion",
"Competition"   and   "Management's   Discussion   and  Analysis  of  Financial
Condition  and Results of  Operations  - Statement  Regarding  Forward  Looking
Disclosures" below.

      As of February 2, 2002,  the Company also operated 10 Ann Taylor  Factory
stores in factory  outlet  centers.  The  Company  plans to convert  all 18 Ann
Taylor Loft outlet  stores to Ann Taylor  Factory  stores  during  Fiscal 2002.
The Ann Taylor  Factory  outlet  stores will then serve as a  brand-appropriate
clearance  vehicle  for  merchandise  from both Ann Taylor and Ann Taylor  Loft
stores and will also handle an increasing  assortment of current  season styles
created  uniquely for these stores and sold under the Ann Taylor  Factory store
label.

      From time to time, the Company  introduces new product  categories to its
merchandise  assortment.  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 the Company's  stores.  Product
extensions  introduced  over the last several years include petite sizes in the
Company's  apparel  offerings  and fragrance and personal care products in both
Ann  Taylor  and  Ann  Taylor  Loft  stores.   In  Fiscal  2001,   the  Company
discontinued  its line of color  cosmetics.  See  "Management's  Discussion and
Analysis  of  Financial  Condition  and  Results of  Operations  - Fiscal  2001
Compared to Fiscal 2000".

================================================================================
<PAGE>2

making Ann Taylor  merchandise  available  for direct  retail sale to customers
over the  Internet.  The  Online  Store was  designed  as an  extension  of the
in-store  experience  and offers a wide  selection of each  season's Ann Taylor
stores'  collection.  Although the  Company's  Online Store did not achieve the
expected  sales  volume  during  Fiscal  2001,  the Company  believes  that the
Online Store  further  builds the Ann Taylor  brand and enhances the  Company's
relationships  with customers,  as well as creates the opportunity for sales to
new and  existing  customers.  See  "Management's  Discussion  and  Analysis of
Financial  Condition  and  Results of  Operations  - Fiscal  2001  Compared  to
Fiscal 2000" for  information  regarding the asset  write-off  associated  with
the Company's Online Store.

      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").
The Company was acquired by ATSC in a leveraged buyout transaction in 1989.


STATEMENT REGARDING FORWARD-LOOKING DISCLOSURES

      Sections   of  this   annual   report  on  Form  10-K   contain   various
forward-looking  statements,  made  pursuant to the safe harbor  provisions  of
the  Private  Securities  Litigation  Reform Act of 1995,  with  respect to the
financial  condition,  results  of  operations  and  business  of the  Company.
These forward-looking  statements involve certain risks and uncertainties,  and
no assurance  can be given that any of such  matters  will be realized.  Actual
results may differ materially from those  contemplated by such  forward-looking
statements,  and the  Company  does not  assume  any  obligation  to  update or
revise  any  forward-looking  statements  at  any  time  for  any  reason.  See
"Management's  Discussion  and Analysis of Financial  Condition  and Results of
Operations - Statement Regarding Forward-Looking Disclosures".


ITEM 2. PROPERTIES
-------

      As of February 2, 2002,  the Company  operated  538 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  specified  threshold.  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 and 1372
Broadway  in New  York  City.  The  Company  also  leases  office  space in New
Haven, Connecticut.

      Ann Taylor'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
-------

      ATSC settled the  purported  class action  lawsuit  pending in the United
States  District  Court  for the  Southern  District  of New York  against  the
Company,  ATSC,  and certain  former  officers and directors of the Company and
ATSC.  Finalization  of the  settlement  is  subject  to  Court  approval.  The
complaint  alleged that the  defendants  made false and  misleading  statements
about the Company  and ATSC from  February  3, 1994  through  May 4, 1995.  The
net  cost  to  ATSC,  after   application  of  insurance   proceeds,   will  be
approximately  $3.3  million.  The  decision  to settle  this action was not an
admission of any wrongdoing,  but reflected the significant  legal fees,  other
expenses  and  management  time that would have to be  devoted to  continue  to
vigorously defend it in the courts.

      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
consolidated  financial  position,   consolidated  results  of  operations,  or
liquidity of the Company.

                                      -2-
================================================================================
<PAGE>3
                                       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.


      The  payment  of  dividends  by Ann  Taylor to ATSC is subject to certain
restrictions   under  the  Company's  Credit  Facility  described  below  under
"Management's  Discussion  and Analysis of Financial  Condition  and Results of
Operations--Liquidity  and Capital  Resources".  From time to time, the Company
pays  dividends  to  ATSC  in  amounts  sufficient  to  fund  ATSC's  operating
expenses.


ITEM 7. MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION  AND
-------
RESULTS OF OPERATIONS



SALES

      The  following  table  sets  forth  certain  sales and store data for the
periods indicated:

<TABLE>
<CAPTION>
                                                             FISCAL YEAR
                                              -------------------------------------------
                                                  2001            2000            1999
                                              -----------     -----------     -----------
                                               (52 weeks)      (53 weeks)      (52 weeks)

<S>                                           <C>             <C>             <C>
Net sales ($000) ..........................   $ 1,299,573     $ 1,232,776     $ 1,084,519
Total net sales increase
    percentage (52-week basis) ............           6.8%           12.2%           18.9%
Comparable store sales increase
  (decrease) percentage (52-week basis) ...          (6.1)%          (0.5)%           8.4%
Net sales per average gross square foot ...   $       452     $       496     $       502
Total store square footage at end of period     3,057,000       2,695,000       2,280,000
Number of:
  New stores ..............................            67              81              47
  Expanded stores .........................             6               4               8
  Closed stores ...........................             7               8               7
Total stores open at end of period ........           538             478             405
</TABLE>

     The  Company's  net  sales  do not  show  significant  seasonal  variation,
although net sales in the fourth quarter have  historically  been higher than in
the other quarters.  As a result,  the Company has not had significant  overhead
and other costs generally associated with large seasonal variations.


RESULTS OF OPERATIONS

      The  following  table  sets  forth  consolidated  income  statement  data
expressed as a percentage of net sales for the periods indicated:

                                                            FISCAL YEAR
                                                      ------------------------
                                                       2001     2000     1999
                                                      -----    -----    -----
Net sales .......................................     100.0%   100.0%   100.0%
Cost of sales ...................................      50.2     50.5     49.4
                                                      -----    -----    -----
    Gross profit ................................      49.8     49.5     50.6
Selling, general and administrative expenses ....      44.4     40.7     38.2
Amortization of goodwill ........................       0.8      0.9      1.0
                                                      -----    -----    -----
    Operating income ............................       4.6      7.9     11.4
Interest income .................................       0.1      0.2      0.4
Interest expense ................................       0.5      0.6      1.1
                                                      -----    -----    -----
Income before income taxes and extraordinary loss       4.2      7.5     10.7
Income tax provision ............................       2.0      3.3      4.6
                                                      -----    -----    -----
Income before extraordinary loss ................       2.2      4.2      6.1
Extraordinary loss ..............................        --       --      0.1
                                                      -----    -----    -----
Net income ......................................       2.2%     4.2%     6.0%
                                                      =====    =====    =====
                                      -3-
================================================================================
<PAGE>4

FISCAL 2001 COMPARED TO FISCAL 2000

      The Company's net sales increased to $1,299,573,000  over  $1,232,776,000
in Fiscal 2000, an increase of  $66,797,000,  or 5.4%.  Comparable  store sales
for Fiscal  2001  decreased  6.1%,  compared  to a  decrease  of 0.5% in Fiscal
2000.  Total  sales for Fiscal  2001 were up 6.8% from  $1,216,808,000  for the
52-week  period  ended  January 27,  2001.  The sales  increase  was  primarily
attributable  to the  opening  of new  stores  and the  expansion  of  existing
stores,  partially  offset by the decrease in comparable  store sales in Fiscal
2001.  Management  believes  that the decrease in  comparable  store sales was,
in part, the result of customer  dissatisfaction  with certain of the Company's
product  offerings and  merchandise  assortment  available in Ann Taylor stores
in the Spring 2001  season.  Sales were also  impacted by an overall  reduction
in client spending caused by the current economic  environment,  as well as the
impact of the events of September 11, 2001.

      Gross  margin  as  a   percentage   of  net  sales,   excluding   certain
nonrecurring  expenses described below,  increased to 50.2% in Fiscal 2001 from
49.5% in Fiscal  2000.  The increase in gross margin  reflects  higher  margins
achieved on full price and non-full price sales at both divisions,  offset,  in
part,  by higher  promotional  sales  activity in Fiscal  2001  compared to the
prior  year.  In  addition,  during the  fourth  quarter  of Fiscal  2001,  the
Company incurred a pre-tax  nonrecurring  charge of approximately  $17,000,000.
Approximately  $4,100,000 of this charge affected gross margin,  and related to
the inventory  write-off  associated with the discontinuation of the Ann Taylor
cosmetics  line, and inventory  costs  associated  with canceling  certain Fall
2001 and  Spring  2002  merchandise  orders.  The  remaining  $12,900,000  were
additional  selling,  general and  administrative  costs, as further  discussed
below.  After taking these  nonrecurring  charges into  account,  gross margin,
as a percentage of sales, was 49.8%.

      Selling,   general  and   administrative   expenses,   excluding  certain
nonrecurring  expenses  described  below,  were  $563,658,000,  or 43.4% of net
sales,  in Fiscal 2001,  compared to  $490,760,000,  or 39.8% of net sales,  in
Fiscal 2000. The increase in selling,  general and  administrative  expenses as
a percentage of net sales was primarily  attributable to decreased  leverage on
fixed expenses  resulting from negative  comparable  store sales, and increases
in  tenancy  and  Loft  store  operations  expenses  due to  expansion.  Of the
$17,000,000  pre-tax   nonrecurring   charge  discussed  above,   approximately
$12,900,000  represented  increased selling,  general and administrative costs.
Approximately  $7,200,000 of the nonrecurring  charge related to the write-down
of certain  anntaylor.com  assets,  based upon projected cash flows, which were
not deemed  adequate to support  the  carrying  value of the assets  associated
with this  ongoing  business.  An  additional  $3,300,000  related to the cost,
net of insurance  proceeds,  of settling a class  action  lawsuit (see Item 3 -
"Legal  Proceedings").  The remaining  $2,400,000  represented the write-off of
certain  fixed  assets  related  to  the  discontinuation  of  the  Ann  Taylor
cosmetics  line, and severance  costs  associated  with  reductions made in the
Company's  store and home office  workforce.  After taking  these  nonrecurring
charges  into  account,  selling,  general and  administrative  expenses,  as a
percentage  of net  sales,  were  44.4%.  During  the first  quarter  of Fiscal
2000,  the  Company  incurred a pre-tax  nonrecurring  charge of  approximately
$8,500,000  in  connection  with  an  extensive   review   conducted  with  the
Company's  financial  and legal  advisors of various  strategic  approaches  to
enhance   shareholder  value.  In  the  fourth  quarter  of  Fiscal  2000,  the
Company  recorded a nonrecurring  pre-tax charge of $2,200,000  relating to the
costs  of the  Company's  obligations  under a  former  executive's  employment
contract with the Company,  in connection with the  executive's  resignation in
January 2001. After taking these  nonrecurring  charges into account,  selling,
general  and  administrative  expenses  for Fiscal  2000,  as a  percentage  of
sales, were 40.7%.

      Operating  income  decreased  to  $60,141,000,  or 4.6% of net sales,  in
Fiscal  2001,  from  $98,240,000,  or  7.9%  of  net  sales,  in  Fiscal  2000.
Amortization  of  goodwill  was  $11,040,000,  or 0.8% of net sales,  in Fiscal
2001,  compared  to  $11,040,000,  or  0.9%  of  net  sales,  in  Fiscal  2000.
Operating  income without giving effect to such  amortization  was $71,181,000,
or 5.4% of net sales,  in Fiscal 2001 and  $109,280,000,  or 8.8% of net sales,
in Fiscal 2000.

      Interest income was $1,390,000 in Fiscal 2001,  compared to $2,473,000 in
Fiscal  2000.  The decrease was  primarily  attributable  to lower cash on hand
and lower interest rates during Fiscal 2001 compared to Fiscal 2000.

                                      -4-
================================================================================
<PAGE>5

      Interest  expense was  $6,869,000 in Fiscal 2001,  compared to $7,315,000
in  Fiscal  2000.  The  weighted   average   interest  rate  on  the  Company's
outstanding indebtedness at February 2, 2002 was 3.75%.

      The income  tax  provision  was  $25,557,000,  or 46.8% of income  before
income  taxes in  Fiscal  2001,  compared  to  $41,035,000,  or 43.9% of income
before  income taxes in Fiscal 2000.  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
$29,105,000,  or 2.2% of net sales, for Fiscal 2001,  compared to net income of
$52,363,000, or 4.2% of net sales, for Fiscal 2000.


FISCAL 2000 COMPARED TO FISCAL 1999

      The Company's net sales increased to $1,232,776,000  over  $1,084,519,000
in Fiscal  1999,  an  increase  of  $148,257,000,  or 13.7%.  Comparable  store
sales for Fiscal  2000  decreased  0.5%,  compared  to an  increase  of 8.4% in
Fiscal 1999.  Total sales for the 52-week  period  ended  January 27, 2001 were
up 12.2% to  $1,216,808,000,  compared to the same period in Fiscal  1999.  The
sales  increase  was  primarily  attributable  to the opening of new stores and
the  expansion  of  existing  stores,  partially  offset by a net  decrease  in
comparable  store sales in Fiscal 2000.  Management  believes that the decrease
in  comparable  store  sales was the result of  customer  dissatisfaction  with
certain of the Company's  product  offerings and merchandise  assortment in the
Fall 2000 season.

      Gross  profit as a percentage  of net sales  decreased to 49.5% in Fiscal
2000 from  50.6% in Fiscal  1999.  This  decrease  in gross  margin  reflects a
higher  markdown  rate on goods sold below full price and the sale of a greater
amount of goods below full price as a percentage of sales,  most  significantly
in the  fourth  quarter  of Fiscal  2000,  compared  to the prior  year.  These
decreases  were  offset,   in  part,  by  higher  gross  margins   achieved  on
merchandise   that  was  sold  at  full   price,   attained   through   ongoing
efficiencies   achieved  through   continued   improvements  in  the  Company's
sourcing, merchandising, and inventory processes.

      Selling,   general  and   administrative   expenses,   excluding  certain
nonrecurring  expenses  described  below,  were  $490,760,000,  or 39.8% of net
sales,  in Fiscal 2000,  compared to  $414,315,000,  or 38.2% of net sales,  in
Fiscal  1999.  Selling,  general and  administrative  expenses  for Fiscal 2000
included  approximately  $10,300,000 of expenses  related to the development of
the  Company's  Online Store,  which  commenced  during  Fiscal 2000.  Selling,
general  and  administrative  expenses  as  a  percentage  of  net  sales  also
reflected  increases  in tenancy  expenses  and  increases  in Ann Taylor  Loft
store  operations  expenses,   offset  by  a  decrease  in  the  provision  for
management  performance  bonus  expense.  During  the first  quarter  of Fiscal
2000,  the  Company  incurred a pre-tax  nonrecurring  charge of  approximately
$8,500,000  in  connection  with  an  extensive   review   conducted  with  the
Company's  financial  and legal  advisors of various  strategic  approaches  to
enhance   shareholder  value.  In  the  fourth  quarter  of  Fiscal  2000,  the
Company  recorded a nonrecurring  pre-tax charge of $2,200,000  relating to the
estimated  costs  of the  Company's  obligations  under  a  former  executive's
employment  contract  with the  Company,  in  connection  with the  executive's
resignation  in January  2001.  After  taking these  nonrecurring  charges into
account,  selling,  general and  administrative  expenses,  as a percentage  of
sales, were 40.7%.

      Operating  income  decreased  to  $98,240,000,  or 7.9% of net sales,  in
Fiscal  2000,  from  $123,150,000,  or  11.4% of net  sales,  in  Fiscal  1999.
Amortization  of  goodwill  was  $11,040,000,  or 0.9% of net sales,  in Fiscal
2000,  compared  to  $11,040,000,  or  1.0%  of  net  sales,  in  Fiscal  1999.
Operating income without giving effect to such  amortization was  $109,280,000,
or 8.8% of net sales, in Fiscal 2000 and  $134,190,000,  or 12.4% of net sales,
in Fiscal 1999.

      Interest income was $2,473,000 in Fiscal 2000,  compared to $4,378,000 in
Fiscal 1999.  The  decrease was  primarily  attributable  to decreased  cash on
hand in Fiscal  2000 as a result of a dividend to ATSC,  described  below under
"Liquidity  and Capital  Resources",  to facilitate  the  repurchase by ATSC of
shares of its common stock during the second half of Fiscal 1999.
                                      -5-
================================================================================
<PAGE>6

     Interest  expense was $7,315,000 in 2000,  compared to $11,814,000 in 1999.
The decrease in interest  expense was  attributable  to the net reduction in the
Company's outstanding long-term debt and other obligations and a decrease in the
interest  rate borne by the  Company's  remaining  outstanding  long- term debt.
During the second quarter of 1999, a note (the  "intercompany  note") payable by
the  Company  to ATSC in August  1998 was  forgiven,  and the  Company's  8-3/4%
Subordinated  Notes due 2000 ("8-3/4%  Notes")  referred to below were redeemed.
These transactions were completed using, in part, the proceeds from the issuance
in June 1999 of a promissory note to ATSC ("Note Payable to ATSC"),  which bears
interest at a rate of 3.75% per annum. The weighted average interest rate on the
Company's outstanding indebtedness at February 3, 2001 was 3.79%.

      The income  tax  provision  was  $41,035,000,  or 43.9% of income  before
income  taxes in  Fiscal  2000,  compared  to  $50,221,000,  or 43.4% of income
before income taxes and  extraordinary  loss in Fiscal 1999.  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
$52,363,000,  or 4.2% of net sales, for Fiscal 2000,  compared to net income of
$64,531,000, or 6.0% of net sales, for Fiscal 1999.


CHANGES IN FINANCIAL POSITION

      Accounts  receivable  increased to  $65,296,000 at the end of Fiscal 2001
from  $57,989,000  at the end of Fiscal  2000,  an increase of  $7,307,000,  or
12.6%.  This increase was primarily  attributable  to an increase of $6,083,000
in trade accounts receivable.

      Merchandise  inventories  increased to  $180,117,000  at February 2, 2002
from  $170,631,000  at February 3, 2001,  an increase of  $9,486,000,  or 5.6%.
Merchandise  inventories  at  February 2, 2002 and  February  3, 2001  included
approximately   $37,558,000  and   $33,469,000,   respectively,   of  inventory
associated  with  the  Company's  sourcing   division,   which  is  principally
finished  goods  in  transit  from  factories.   The  increase  in  merchandise
inventories  is primarily  due to inventory  purchased to support 67 new stores
opened since the beginning of the year.  Total store square  footage  increased
to approximately  3,057,000 square feet at February 2, 2002 from  approximately
2,695,000  square  feet  at  February  3,  2001.  Merchandise  inventory  on  a
per-square-foot  basis,  excluding  inventory  associated  with  the  Company's
sourcing  division,  was approximately $47 at the end of Fiscal 2001,  compared
to $51 at the end of Fiscal  2000.  Inventory  turned 4.7 times in Fiscal 2001,
compared to 4.9 times in Fiscal 2000,  excluding inventory  associated with the
Company's  sourcing  division.  Inventory  turnover is  determined  by dividing
cost of sales by the  average of the cost of  inventory  at the  beginning  and
end of the period (excluding inventory associated with the sourcing division).

      Accounts payable  decreased to $59,482,000 at the end of Fiscal 2001 from
$65,903,000  at the end of Fiscal  2000,  a decrease  of  $6,421,000,  or 9.7%.
The  decrease in accounts  payable is  primarily  due to the timing of payments
at the end of Fiscal 2001.


LIQUIDITY AND CAPITAL RESOURCES

      The  Company's  primary  source  of  working  capital  is cash  flow from
operations.  The following table sets forth material  measures of the Company's
liquidity:

                                                 FISCAL YEAR
                                          -----------------------------
                                            2001      2000       1999
                                          ------    -------    --------
                                              (DOLLARS IN THOUSANDS)

Cash provided by operating activities    $ 77,598   $ 76,625   $ 98,299
Working capital ......................   $189,239   $172,767   $151,368
Current ratio ........................     2.39:1     2.22:1     2.26:1
Debt to equity ratio .................      .20:1      .20:1      .22:1

                                      -6-
================================================================================
<PAGE>7

      Cash  provided by operating  activities  in Fiscal 2001,  as presented on
the consolidated  statements of cash flows,  primarily  resulted from earnings,
noncash  charges,  and a decrease in prepaid expenses and other current assets,
partially  offset  by  increases  in  accounts  receivable  and  inventory  and
decreases in accounts payable and accrued liabilities.

      On April 30,  2001,  the Company  entered  into an Amended  and  Restated
$175,000,000  senior secured revolving Credit Facility (the "Credit  Facility")
with Bank of America  N.A.  and a syndicate  of lenders.  This Credit  Facility
was further  amended on December 20, 2001 to adjust  certain ratio  provisions,
and amend certain  definitions  used in the  calculation of ratios  required in
the Credit Facility.  The Credit Facility matures on April 29, 2004.

      Maximum  availability  for loans and  letters of credit  under the Credit
Facility  is  governed  by  a  monthly   borrowing  base,   determined  by  the
application  of  specified  advance  rates  against  certain  eligible  assets.
Based on this  calculation,  the maximum amount available for loans and letters
of credit  under the Credit  Facility  at  February  2, 2002 was  $175,000,000.
Commercial  and  standby  letters  of  credit   outstanding  under  the  Credit
Facility  as  of  February  2,  2002  were  approximately  $77,934,000.   Loans
outstanding   under  the   Credit   Facility   at  any  time  may  not   exceed
$75,000,000.   There  were  no  loans   outstanding  at  fiscal  year  end.  In
addition,  the Credit Facility  requires that the  outstanding  loan balance be
reduced  to zero for a 30-day  period  each  calendar  year.  This  "cleandown"
period was achieved in January 2002.

      Amounts  outstanding  under the Credit  Facility  bear interest at a rate
equal to, at the Company's  option,  the Bank of America Base Rate,  defined as
the  higher  of (a) the  Federal  Funds  Rate plus  one-half  of 1% and (b) the
Prime Rate for such day, or  Eurodollar  Rate;  plus,  in either case, a margin
ranging  from 0.25% to 2.00%.  The Company is also  required to pay the lenders
a quarterly  commitment fee on the unused  revolving loan commitment  amount at
a  rate  ranging  from  0.30%  to  0.50%  per  annum.   Fees  for   outstanding
commercial  and standby  letters of credit  range from 0.50% to 0.875% and from
1.25% to  2.00%,  respectively.  Premiums  ranging  from  0.125%  to 0.50%  may
apply  to all  interest  and  commitment  fees,  depending  on  the  calculated
Leverage ratio.

      The Credit Facility  contains  financial and other  covenants,  including
limitations on indebtedness,  liens and investments,  restrictions on dividends
or other  distributions  to stockholders  and maintenance of certain  financial
ratios including specified levels of tangible net worth.

      The lenders  have been  granted a pledge of the common  stock of ATSC and
certain of its  subsidiaries,  and a security  interest  in  substantially  all
other  tangible  and  intangible   assets,   including   accounts   receivable,
trademarks,  inventory,  store  furniture and fixtures,  of the Company and its
subsidiaries,  as  collateral  for the Company's  obligations  under the Credit
Facility.

      The Company had outstanding an intercompany  note payable of $100,625,000
to  ATSC.   During   Fiscal  1999,   the  Company  made  a  prepayment  on  the
intercompany  note in the amount of  $100,000,  and the balance was forgiven by
ATSC.  This  forgiveness of debt  constitutes a contribution of capital by ATSC
to the Company.

      During Fiscal 1999, the Company issued a promissory note, as amended,  to
ATSC, of an aggregate of $199,072,000  principal  amount at maturity (the "Note
Payable to ATSC").  The Note  Payable to ATSC was issued,  as  amended,  by the
Company for value  received and has interest  and payment  terms  substantially
similar  to the  terms of the  Convertible  Debentures  Due 2019  ("Convertible
Debentures")  that  were  issued  in 1999 by ATSC.  ATSC has  pledged  the Note
Payable to ATSC to the lenders  under the  Company's  bank  Credit  Facility as
collateral   for  ATSC's   guarantee  of  the  Company's   performance  of  its
obligations under the Credit Facility.

     On July 22, 1999, the Company redeemed all of its outstanding 8-3/4% Notes,
at a redemption  price of 101.375% of  principal  amount,  plus  accrued  unpaid
interest to the redemption  date. The redemption of the 8-3/4% Notes resulted in
an  extraordinary  charge to  earnings  in the second  quarter of Fiscal 1999 of
$962,000, net of income tax benefit.

                                      -7-
================================================================================
<PAGE>8

      The  Company  and its wholly  owned  subsidiary,  AnnTaylor  Distribution
Services,  Inc., are parties to a $7,000,000  seven-year mortgage loan maturing
in Fiscal  2002.  The loan is  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  $130,000.
The mortgage loan balance at February 2, 2002 was $1,250,000.

      The Company's capital expenditures  totaled $83,693,000,  $83,310,000 and
$53,409,000   in   Fiscal   2001,   2000  and   1999,   respectively.   Capital
expenditures  were primarily  attributable  to the Company's  store  expansion,
renovation and  refurbishment  programs,  as well as the investment the Company
made in  certain  information  systems  and the  Company's  corporate  offices.
These  expenditures  also  include,  in Fiscal  2001 and Fiscal  2000,  capital
expenditures  related  to the  Company's  Internet  e-commerce  Web  site,  and
related   enhancements  to  the  material  handling  system  at  the  Company's
distribution  center.  See  "Management's  Discussion and Analysis of Financial
Condition  and Results of  Operations  - Fiscal 2001  Compared to Fiscal  2000"
for  information  regarding the asset  write-off  associated with the Company's
Online Store.  The Company expects its total capital  expenditure  requirements
in Fiscal 2002 will be  approximately  $47,000,000,  including  capital for new
store  construction  for a planned  square  footage  increase of  approximately
246,000  square  feet,  or  8%,  as  well  as  capital  to  support   continued
investments  in  information  systems.  The  actual  amount  of  the  Company's
capital  expenditures  will  depend in part on the  number  of  stores  opened,
expanded  and  refurbished  and on the amount of  construction  allowances  the
Company receives from the landlords of its new or expanded stores.

      On January 26, 2000, the Company declared a cash dividend,  authorized by
its Board of  Directors,  to ATSC in the amount of  $89,944,612  to  facilitate
the  repurchase,  by ATSC,  of up to  $90,000,000  of its common  stock  and/or
Convertible  Debentures through open market purchases and privately  negotiated
transactions.  As of  January  29,  2000,  3,012,500  shares of  ATSC's  common
stock had been  repurchased  for an  aggregate  purchase  price of  $89,900,900
(exclusive of brokerage  commissions),  completing ATSC's  repurchase  program.
All of the  repurchased  shares became  treasury shares of ATSC and may be used
for general  corporate  and other  purposes.  No  Convertible  Debentures  were
purchased.

      In order to finance its operations and capital requirements,  the Company
expects  to  use  internally   generated  funds  and  trade  credit  and  funds
available  to it under the Credit  Facility.  The  Company  believes  that cash
flow  from  operations  and  funds  available  under the  Credit  Facility  are
sufficient  to enable it to meet its ongoing  cash needs for its  business,  as
presently conducted, for the foreseeable future.

      On February 4, 2002, the Company sold the assets  associated with its Ann
Taylor  credit card  accounts to World  Financial  Network  National  Bank (the
"Bank").  In connection  with the sale,  the Company  contracted  with Alliance
Data Systems Corporation ("ADS"),  the Bank's affiliated  servicer,  to provide
private  label  credit card  services  to  proprietary  Ann Taylor  credit card
customers.  Under the terms of the transaction,  ADS will manage the Ann Taylor
credit  card  program,  and pay  the  Company  a  percentage  of all  collected
finance  charges.  The Company  believes that having ADS provide these services
rather  than   continuing   to  handle  this  program   in-house  will  further
strengthen the Company's  relationship with its clients,  and aid in the growth
of the Ann Taylor credit card.

      In 1998, the Financial  Accounting  Standards Board (the "FASB"),  issued
Statement of Financial  Accounting  Standards ("SFAS") No. 133, "Accounting for
Derivative  Instruments  and Hedging  Activities,"  as amended by SFAS No. 137,
"Accounting  for  Derivative  Instruments  and Hedging  Activities-Deferral  of
Effective Date of FASB  Statement No. 133",  which  establishes  accounting and
reporting standards for derivatives,  derivative  instruments embedded in other
contracts and for hedging  activities.  In 2000,  the FASB issued SFAS No. 138,
"Accounting for Certain Derivative  Instruments and Hedging Activities",  which
establishes   accounting  and  reporting  standards  for  certain  derivatives,
derivative  instruments  embedded in other  contracts  and for certain  hedging
activities.  These  statements  were  effective for the  Company's  Fiscal 2001
financial  statements.  The  adoption of these  standards  had no impact on the
Company's consolidated financial statements.

                                      -8-
================================================================================
<PAGE>9

      In July 2001,  the FASB  issued SFAS No.  141,  "Business  Combinations",
SFAS No.  142,  "Goodwill  and  Other  Intangible  Assets",  and SFAS No.  143,
"Accounting for Asset Retirement  Obligations".  SFAS No. 141 requires that the
purchase method of accounting be used for all business  combinations  completed
after June 30, 2001 and  clarifies the criteria for  recognition  of intangible
assets  separately  from goodwill.  Management has determined that the adoption
of SFAS No.  141 will have no impact on the  Company's  consolidated  financial
statements.

      SFAS No. 142 requires that ratable  amortization  of goodwill be replaced
with periodic tests of the goodwill's  impairment and that  intangible  assets,
other than  goodwill,  which have  determinable  useful lives be amortized over
that  period.  SFAS No. 142 is  effective  for  fiscal  years  beginning  after
December  15,  2001.  Management  intends to adopt SFAS No. 142 in Fiscal 2002,
and has  determined  that the fair value of the Company  exceeds  the  carrying
value of its  recorded  net  assets,  including  goodwill,  as of  February  2,
2002.  Management  further  estimates  that  adoption  of SFAS No. 142 will add
approximately $11,000,000 to Fiscal 2002 net income.

      SFAS No. 143 provides accounting  requirements for retirement obligations
associated  with  tangible  long-lived  assets.  SFAS No. 143 is effective  for
fiscal years  beginning  after June 15, 2002.  Management does not believe that
the adoption of SFAS No. 143 will have a  significant  impact on the  Company's
consolidated financial statements.

      In  August  2001,  the FASB  issued  SFAS No.  144,  "Accounting  for the
Impairment  or  Disposal  of  Long-Lived  Assets".   This  statement  addresses
accounting and reporting for the  impairment or disposal of long-lived  assets,
other  than  goodwill,  including  discontinued  operations.  SFAS  No.  144 is
effective for fiscal years  beginning  after December 15, 2001.  Management has
determined  that the  adoption  of SFAS  No.  144 will  have no  impact  on the
Company's consolidated financial statements.

      On  December  12,  2001,  the  United  States   Securities  and  Exchange
Commission  (the "SEC")  issued  Financial  Reporting  Release  ("FRR") No. 60,
"Cautionary Advice Regarding  Disclosure About Critical  Accounting  Policies",
which  encourages  the  identification  and  disclosure  of the  most  critical
accounting  policies  applied  in  the  preparation  of a  company's  financial
statements.  In  response to FRR No. 60,  Management  has  determined  that the
Company's  most critical  accounting  policies are those related to merchandise
inventory   valuation  and  recorded  goodwill.   These  policies  are  further
described  in  the  Notes  to the  Consolidated  Financial  Statements,  and in
relevant sections of this discussion and analysis.


STATEMENT REGARDING FORWARD-LOOKING DISCLOSURES

      Sections  of this Annual  Report on Form 10-K,  including  the  preceding
Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations,  contain various forward-looking  statements,  made pursuant to the
safe harbor  provisions  of the  Private  Securities  Litigation  Reform Act of
1995.   The   forward-looking   statements   may   use  the   words   "expect",
"anticipate",    "plan",   "intend",    "project",    "believe"   and   similar
expressions.  These  forward-looking  statements  reflect the Company's current
expectations   concerning   future  events,   and  actual  results  may  differ
materially  from  current   expectations  or  historical   results.   Any  such
forward-looking  statements  are  subject to various  risks and  uncertainties,
including  failure  by the  Company  to  predict  accurately  customer  fashion
preferences;  decline  in the demand for  merchandise  offered by the  Company;
competitive  influences;  changes  in  levels  of  store  traffic  or  consumer
spending  habits;  effectiveness of the Company's brand awareness and marketing
programs;  lack  of  sufficient  customer  acceptance  of the Ann  Taylor  Loft
concept in the  upper-moderate-priced  women's apparel market; general economic
conditions or a downturn in the retail  industry;  the inability of the Company
to locate new store sites or  negotiate  favorable  lease terms for  additional
stores or for the expansion of existing  stores;  lack of  sufficient  consumer
interest  in  the  Company's   Online  Store;  a  significant   change  in  the
regulatory  environment  applicable to the Company's  business;  an increase in
the rate of import  duties or  export  quotas  with  respect  to the  Company's
merchandise;  financial or  political  instability  in any of the  countries in
which the  Company's  goods are  manufactured;  acts of war or terrorism in the
United  States or  worldwide;  and  other  factors  set forth in the  Company's
filings  with the SEC.  The Company  does not assume any  obligation  to update
or revise any forward-looking statements at any time for any reason.

                                      -9-
================================================================================
<PAGE>10

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------

      The Company  maintains the majority of its cash and cash  equivalents  in
financial  instruments  with original  maturity  dates of three months or less.
These  financial  instruments  are  subject  to  interest  rate  risk  and will
decline in value if  interest  rates  increase.  Due to the short  duration  of
these  financial  instruments,  a change of 100 basis points in interest  rates
would not have a material effect on the Company's financial condition.

      The  Company's  outstanding  long-term  debt as of February 2, 2002 bears
interest at fixed  rates;  therefore,  the  Company's  consolidated  results of
operations  would only be affected by interest  rate changes to the extent that
fluctuating  rate  loans are  outstanding  under  the  Credit  Facility.  As of
February  2,  2002,  the  Company  has  no  such  amounts  outstanding.  Future
borrowings  would be affected by interest  rate changes;  however,  the Company
does not  believe  that a change of 100 basis  points in  interest  rates would
have a material effect on the Company's financial condition.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------

     The  following  consolidated  financial  statements of the Company for the
 years  ended  February  2, 2002,  February  3, 2001 and  January  29, 2000 are
 included as a part of this Report (See Item 14):

      Consolidated  Statements of Income for the fiscal years ended February 2,
         2002, February 3, 2001 and January 29, 2000.

      Consolidated Balance Sheets as of February 2, 2002 and February 3, 2001.

      Consolidated  Statements  of  Cash  Flows  for  the  fiscal  years  ended
         February 2, 2002, February 3, 2001 and January 29, 2000.

      Notes to Consolidated Financial Statements.


ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
--------
FINANCIAL DISCLOSURES



      None.



                                      -10-
================================================================================
<PAGE>11

                                       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 are
         included on pages 18 through 33 and are filed as part of this Annual
         Report:

         Independent Auditors' Report; Consolidated Statements of Income for
         the fiscal years ended February 2, 2002, February 3, 2001 and January
         29, 2000; Consolidated Balance Sheets as of February 2, 2002 and
         February 3, 2001; Consolidated Statements of Cash Flows for the
         fiscal years ended February 2, 2002, February 3, 2001 and January 29,
         2000; Notes to Consolidated Financial Statements.

   (b)   Reports on Form 8-K

         The Company filed a report, dated January 10, 2002 with the
         Commission on Form 8-K with respect to the amendment of AnnTaylor,
         Inc.'s existing senior secured revolving credit facility.

   (c)   Exhibits

         The exhibits listed below are filed as a part of this Annual Report.

         Schedules other than the above have been omitted because they are
         either not applicable or the required information has been disclosed
         in the consolidated financial statements or notes thereto.


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 18, 1999, between the Company, ATSC, and the
            Bank  of  New  York,  as  Trustee.  Incorporated  by  reference  to
            Exhibit  4.01  to the  Registration  Statement  of  ATSC  filed  on
            September 13, 1999.

10.1    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).

10.1.1  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).

10.1.2  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.

                                      -11-
================================================================================
<PAGE>12

EXHIBIT NUMBER
--------------

10.1.3    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 the Company for the
            Quarter ended October 30, 1993 filed on November 26, 1993.

10.1.4    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.

10.1.5    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.

10.1.6    Sixth  Amendment  to Lease,  dated as of  January  5,  1996,  between
            Pacific  Metropolitan  Corporation and Ann Taylor.  Incorporated by
            reference  to Exhibit  10.8.6 to the Annual  Report on Form 10-K of
            ATSC filed on April 30, 1998.

10.1.7    Seventh  Amendment  to  Lease,  dated  as of  June 5,  1996,  between
            Pacific  Metropolitan  Corporation and Ann Taylor.  Incorporated by
            reference  to Exhibit  10.8.7 to the Annual  Report on Form 10-K of
            ATSC filed on April 30, 1998.

10.1.8    Eighth  Amendment to Lease,  undated,  between  Pacific  Metropolitan
            Corporation  and Ann Taylor.  Incorporated  by reference to Exhibit
            10.8.8 to the  Annual  Report  on Form 10-K of ATSC  filed on April
            30, 1998.

10.1.9    Ninth Amendment to Lease,  dated as of May 13, 1997,  between Pacific
            Metropolitan   Corporation   and  Ann   Taylor.   Incorporated   by
            reference  to Exhibit  10.8.9 to the Annual  Report on Form 10-K of
            ATSC filed on April 30, 1998.

10.1.10   Tenth  Amendment  to  Lease,  dated  as of May  21,  1997,  between
            Pacific  Metropolitan  Corporation and Ann Taylor.  Incorporated by
            reference to Exhibit  10.8.10 to the Annual  Report on Form 10-K of
            ATSC filed on April 30, 1998.

10.1.11   Eleventh  Amendment  to Lease,  dated as of May 15,  1998,  between
            Pacific   Metropolitan   Corporation  and  ATSC.   Incorporated  by
            reference to Exhibit  10.3.11 to the Annual  Report on Form 10-K of
            ATSC filed on March 29, 1999.

10.1.12   Sublease Agreement,  dated as of February 23, 1999, between Societe
            Air France  (formerly known as Compagnie  Nationale Air France) and
            the Company.  Incorporated  by reference to Exhibit  10.2.12 to the
            Annual Report on Form 10-K of ATSC filed on April 18, 2000.

10.2      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).

10.3      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.

10.4     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 the Company filed on April 8, 1996.


                                      -12-
================================================================================
<PAGE>13

EXHIBIT NUMBER
--------------

 10.4.1   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.

 10.4.2   Amendment  #2 to the  Employment  Agreement,  dated  August 12, 1999,
           between ATSC and J.  Patrick  Spainhour.  Incorporated  by reference
           to  Exhibit  10.6.2 to the Form 10-Q of ATSC for the  Quarter  ended
           July 31, 1999 filed on September  14, 1999.  Confidential  treatment
           has been granted with respect to certain portions of this exhibit.

 10.4.3   Amendment  #3 to the  Employment  Agreement,  dated March 10, 2000,
            between ATSC and J. Patrick  Spainhour.  Incorporated  by reference
            to Exhibit  10.5.3 to the Annual  Report on Form 10-K of ATSC filed
            on April 18, 2000.

*10.5     Employment  Agreement,  dated as of January  29,  2002,  between  the
            Company and J. Patrick Spainhour.

 10.6     Employment  Agreement  dated  November  25,  1996  between  ATSC  and
            Patricia  DeRosa.  Incorporated  by  reference  to Exhibit  10.3 to
            Form 10Q of ATSC for the  Quarter  ended  November 2, 1996 filed on
            December 17, 1996.

 10.6.1   Amendment #1 to the  Employment  Agreement,  dated as of February 16,
            2000,  between ATSC and Patricia DeRosa.  Incorporated by reference
            to Exhibit  10.6.1 to the  Annual  Report on Form 10K of ATSC filed
            on April 18,  2000.  Confidential  treatment  has been granted with
            respect to certain portions of this exhibit.

 10.7     Separation  Agreement,  dated as of January 15, 2001 between ATSC and
            Patricia  DeRosa.  Incorporated  by reference to Exhibit  10.6.2 to
            the Annual Report on Form 10-K of ATSC filed on April 5, 2001.

 10.8     The AnnTaylor  Stores  Corporation  1992 Stock Option and  Restricted
            Stock and Unit Award Plan,  Amended and Restated as of February 23,
            1994.  Incorporated  by  reference  to Exhibit  10.15 to the Annual
            Report on Form 10-K of ATSC filed on May 1, 1997.

 10.8.1    Amendment to the AnnTaylor Stores Corporation  Amended and Restated
            1992 Stock  Option and  Restricted  Stock and Unit Award  Plan,  as
            approved  by  stockholders  on  June  18,  1997.   Incorporated  by
            reference  to  Exhibit  10.15.1  to the  Form  10-Q of ATSC for the
            Quarter ended August 2, 1997 filed on September 12, 1997.

 10.8.2    Amendment to the AnnTaylor Stores Corporation  Amended and Restated
            1992 Stock  Option and  Restricted  Stock and Unit Award Plan dated
            as of January 16,  1998.  Incorporated  by  reference to Exhibit 10
            of Form 8-K of ATSC filed on March 12, 1998.

 10.8.3    Amendment to the AnnTaylor Stores Corporation  Amended and Restated
            1992 Stock  Option and  Restricted  Stock and Unit Award Plan dated
            as of May 2, 1998.  Incorporated  by reference  to Exhibit  10.16.3
            to the Form 10-Q of ATSC for the Quarter  ended April 2, 1998 filed
            on June 16, 1998.

 10.8.4    Amendment to the AnnTaylor Stores Corporation  Amended and Restated
            1992 Stock  Option and  Restricted  Stock and Unit Award Plan dated
            as of March 10, 2000.  Incorporated  by reference to Exhibit 10.8.4
            to the Annual Report on Form 10-K of ATSC filed on April 18, 2000.

*10.9      AnnTaylor  Stores  Corporation 2002 Stock Option and Restricted Stock
            and Unit Award Plan.

                                      -13-
================================================================================
<PAGE>14

EXHIBIT NUMBER
--------------

 10.10     AnnTaylor  Stores   Corporation   Amended  and  Restated   Management
            Performance  Compensation Plan, as approved by stockholders on June
            18, 1997.  Incorporated  by reference to Exhibit  10.16 to the Form
            10-Q  of ATSC  for the  Quarter  ended  August  2,  1997  filed  on
            September 12, 1997.

 10.10.1   Amendment  to the  AnnTaylor  Stores  Corporation  Amended  and
            Restated  Management  Performance  Compensation  Plan  dated  as of
            March 12, 1998.  Incorporated  by  reference to Exhibit  10.17.1 to
            the Annual Report on Form 10-K of ATSC filed on April 30, 1998.

 10.10.2   Amendment  to the  AnnTaylor  Stores  Corporation  Amended  and
            Restated  Management  Performance  Compensation  Plan,  dated as of
            March 10, 2000.  Incorporated  by  reference  to Exhibit  10.9.2 to
            the Annual Report on Form 10-K of ATSC filed on April 18, 2000.

 10.11     AnnTaylor Stores  Corporation  Deferred  Compensation Plan ("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.

 10.11.1   Amendment to the 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.

*10.11.2   Amendment  to  the  Deferred  Compensation  Plan,  effective  as of
            January 1, 2002.

 10.12     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.

 10.13     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.

 10.14     Credit Agreement,  dated as of June 30, 1998 among the Company,  Bank
            of  America,  Citicorp  USA  and  First  Union  National  Bank,  as
            Co-Agents,  the  financial  institutions  from  time to time  party
            thereto,  BancAmerica Robertson Stephens, as Arranger,  and Bank of
            America,  as  Administrative  Agent.  Incorporated  by reference to
            Exhibit  10.28  to the  Form  10-Q of ATSC  for the  Quarter  ended
            August 1, 1998 filed on September 14, 1998.

 10.14.1   Trademark Security  Agreement,  dated as of June 30, 1998, made
            by Ann  Taylor  in  favor  of Bank of  America,  as  Administrative
            Agent.  Incorporated  by reference  to Exhibit  10.28.1 to the Form
            10-Q  of ATSC  for the  Quarter  ended  August  1,  1998  filed  on
            September 14, 1998.

 10.14.2   Guaranty,  dated as of June 30,  1998,  made by the  Company in
            favor of Bank of America,  as  Administrative  Agent.  Incorporated
            by  reference  to Exhibit  10.28.2 to the Form 10-Q of ATSC for the
            Quarter ended August 1, 1998 filed on September 14, 1998.

 10.14.3   Security and Pledge  Agreement,  dated as of June 30, 1998,  made by
            ATSC  in  favor  of  Bank  of  America,  as  Administrative   Agent.
            Incorporated  by  reference  to Exhibit  10.28.3 to the Form 10-Q of
            ATSC for the Quarter  ended  August 1, 1998 filed on  September  14,
            1998.

                                      -14-
================================================================================
<PAGE>15

EXHIBIT NUMBER
--------------

 10.14.4   Security  and  Pledge  Agreement,  dated as of June 30,
            1998 made by Ann  Taylor  in favor of Bank of  America,
            as Administrative  Agent.  Incorporated by reference to
            Exhibit  10.28.4  to the  Form  10-Q  of  ATSC  for the
            Quarter  ended  August 1, 1998 filed on  September  14,
            1998.

 10.14.5   Subsidiary Guaranty,  dated as of June 30, 1998 made by
            AnnTaylor  Distribution  Services  in  favor of Bank of
            America,  as  Administrative  Agent.   Incorporated  by
            reference  to Exhibit  10.28.5 to the Form 10-Q of ATSC
            for  the  Quarter   ended   August  1,  1998  filed  on
            September 14, 1998.

 10.14.6   First  Amendment  to the Credit  Agreement,  dated as of
            September 7, 1999, among the Company,  Bank of America,
            N.A.,  Citibank,  N.A.,  First Union  National Bank and
            each  of  the  other   lenders   party  to  the  Credit
            Agreement,  NationsBanc  Montgomery  Securities LLC, as
            Arranger  and  Bank  of  America,   as   Administrative
            Agent.  Incorporated  by reference  to Exhibit  10.19.6
            to the Form  10-Q of ATSC for the  Quarter  ended  July
            31, 1999 filed on September 14, 1999.

 10.14.7   Second   Amendment  to  the  Credit   Agreement,   dated
            December  1999,  among the  Company,  Bank of  America,
            N.A.,  Citibank,  N.A.,  First Union National Bank, and
            each  of  the  other   lenders   party  to  the  Credit
            Agreement,  NationsBanc  Montgomery  Securities LLC, as
            Arranger  and  Bank  of  America,   as   Administrative
            Agent.  Incorporated  by reference  to Exhibit  10.15.7
            to the Annual Report on Form 10-K of ATSC filed on April
            18, 2000.

  10.151   Amended and Restated Credit Agreement,  dated as of April
            30, 2001, among AnnTaylor,  Inc., as Borrower,  Bank of
            America,   N.A.,  as  Administrative   Agent,  The  CIT
            Group/Business  Credit,  Inc.,  Firstar Bank, N.A., and
            Transamerica    Business   Capital   Corporation,    as
            Co-Agents,  The Chase  Manhattan  Bank and First  Union
            National  Bank, as Syndication  Agents,  Fleet National
            Bank,  as  Documentation  Agent,  and Bank of  America,
            N.A.,  The  Chase   Manhattan  Bank,  and  First  Union
            National  Bank,  as Issuing  Banks and the Lenders from
            time to time party thereto.  Incorporated  by reference
            to Exhibit  10.18 to the Form 10-Q of the  Company  for
            the Quarter ended May 5, 2001 filed on June 18, 2001.

   10.15.1 Amendment  No.  1  to  Credit  Agreement,   dated  as  of
            December 20, 2001, by and among  AnnTaylor,  Inc.,  the
            Guarantors    and   Bank   of   America,    N.A.,    as
            Administrative  Agent for each of the Lenders  pursuant
            to the Credit  Agreement.  Incorporated by reference to
            Exhibit  10.1  on  Form  8-K of the  Company  filed  on
            January 10, 2002.

   10.16   AnnTaylor  Stores  Corporation  Long-Term  Cash Incentive
            Compensation  Plan, as approved by stockholders on June
            17,  1998.  Incorporated  by  reference to Exhibit A to
            the Proxy  Statement of ATSC dated May 1, 1998 filed on
            May 6, 1998.

   10.16.1 Amendment   to   the   AnnTaylor   Stores   Corporation
            Long-Term Cash Incentive  Compensation  Plan,  dated as
            of  March  10,  2000.   Incorporated  by  reference  to
            Exhibit  10.16.1 to the  Annual  Report on Form 10-K of
            ATSC filed on April 18, 2000.

   10.17   AnnTaylor  Stores  Corporation  Special  Severance  Plan,
            dated as of March 10, 2000.  Incorporated  by reference
            to Exhibit  10.18 to the Annual  Report on Form 10-K of
            ATSC filed on April 18, 2000.

   10.18   The AnnTaylor  Stores  Corporation  2000 Stock Option and
            Restricted    Stock   Award   Plan    ("2000    Plan").
            Incorporated   by   reference   to   the   Registration
            Statement on Form S-8 of ATSC filed on May 31, 2000.


                                      -15-
================================================================================
<PAGE>16

EXHIBIT NUMBER
--------------

 *10.18.1  First  Amendment to the 2000 Plan,  adopted January 29,
            2002.

  10.19    Employment Agreement,  dated as of March 7, 2001, between
            ATSC   and    Barry    Erdos    ("Erdos    Agreement").
            Incorporated  by  reference  to  Exhibit  10.17  to the
            Annual  Report on Form  10-K of ATSC  filed on April 5,
            2001.

  10.19.1  Amendment,  dated as of June 1,  2001,  to the Erdos
            Agreement.   Incorporated   by   reference  to  Exhibit
            10.17.1  to the  Form  10-Q  of  the  Company  for  the
            Quarter ended May 5, 2001 filed on June 18, 2001.

 *10.19.2  Amendment  No. 2, dated as of November 25, 2001, to the
            Erdos Agreement.

  10.20    Employment  Agreement,   dated  as  of  April  24,  2001,
            between the Company and Kim Roy ("Roy    Agreement").
            Incorporated  by reference to Exhibit 10.19 to the Form
            10-Q of the Company  for the Quarter  ended May 5, 2001
            filed on June 18, 2001.

 *10.20.1  Amendment  No. 1, dated as of November 25, 2001, to the
            Roy Agreement.

  10.21    Employment  Agreement,  dated as of May 3, 2001,  between
            the  Company  and   Katherine   Lawther  Krill  ("Krill
            Agreement").   Incorporated  by  reference  to  Exhibit
            10.20 to the Form 10-Q of the  Company  for the Quarter
            ended May 5, 2001 filed on June 18, 2001.

 *10.21.1  Amendment  No. 1, dated as of November 25, 2001, to the
            Krill Agreement.

 *21       Subsidiaries of AnnTaylor, Inc.

 *23       Consent of Deloitte & Touche LLP.


* Filed electronically herewith.

                                      -16-
================================================================================
<PAGE>17

                                   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: April 4, 2002


    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, Chief Executive       April 4, 2002
------------------------       Officer                  ---------------------
    J. Patrick Spainhour                                        Date


/s/ Barry Erdos             Senior Executive Vice           April 4, 2002
------------------------       President, Chief         ---------------------
    Barry Erdos                Operating Officer                Date
                               and Director


/s/ James M. Smith          Senior Vice President,           April 4, 2002
------------------------       Chief Financial          ---------------------
    James M. Smith             Officer, Treasurer and           Date
                               Director

/s/ Barbara K. Eisenberg    Director                        April 4, 2002
------------------------                                ---------------------
    Barbara K. Eisenberg                                        Date

                                      -17-
================================================================================
<PAGE>18


                          ANNTAYLOR, INC.
                          ---------------
            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
            ------------------------------------------




                                                                    PAGE NO.
                                                                    --------

Independent Auditors' Report........................................    19

Consolidated Financial Statements:

     Consolidated Statements of Income for the fiscal years ended
       February 2, 2002, February 3, 2001 and January 29, 2000......    20

     Consolidated Balance Sheets as of February 2, 2002 and
       February 3, 2001.............................................    21

     Consolidated Statements of Cash Flows for the fiscal years
       ended
       February 2, 2002, February 3, 2001 and January 29, 2000......    22

     Notes to Consolidated Financial Statements.....................    23

                                      -18-
================================================================================
<PAGE>19

                   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  auditing
standards  generally  accepted  in the  United  States of  America.
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  2,  2002  and
February  3, 2001 and the  results  of their  operations  and their
cash flows for each of the three  fiscal  years in the period ended
February  2,  2002  in  conformity   with   accounting   principles
generally accepted in the United States of America.


DELOITTE & TOUCHE LLP


New York, New York
March 1, 2002


                                      -19-
================================================================================
<PAGE>20

                           ANNTAYLOR, INC.
                           ---------------
                  CONSOLIDATED STATEMENTS OF INCOME
                  ---------------------------------
  FOR THE FISCAL YEARS ENDED FEBRUARY 2, 2002, FEBRUARY 3, 2001 AND
                           JANUARY 29, 2000



                                                   FISCAL YEARS ENDED
                                         --------------------------------------
                                         FEB.2, 2002  FEB.3, 2001  JAN.29, 2000
                                         -----------  -----------  ------------
                                        (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


Net sales .............................   $1,299,573   $1,232,776   $1,084,519
Cost of sales .........................      651,808      622,036      536,014
                                          ----------   ----------   ----------
Gross profit ..........................      647,765      610,740      548,505
Selling, general and administrative
    expenses...........................      576,584      501,460      414,315
Amortization of goodwill ..............       11,040       11,040       11,040
                                          ----------   ----------   ----------
Operating income ......................       60,141       98,240      123,150
Interest income .......................        1,390        2,473        4,378
Interest expense ......................        6,869        7,315       11,814
                                          ----------   ----------   ----------
Income before income taxes and
    extraordinary loss ................       54,662       93,398      115,714
Income tax provision ..................       25,557       41,035       50,221
                                          ----------   ----------   ----------
Income before extraordinary loss ......       29,105       52,363       65,493

Extraordinary loss (net of income
    tax benefit of $0, $0,
    and $641,000, respectively) .......         --           --            962
                                          ----------   ----------   ----------
    Net income ........................   $   29,105   $   52,363   $   64,531
                                          ==========   ==========   ==========




          See accompanying notes to consolidated financial statements.

                                      -20-
================================================================================
<PAGE>21

                          ANNTAYLOR, INC.
                          ---------------
                    CONSOLIDATED BALANCE SHEETSs
                    ---------------------------
               FEBRUARY 2, 2002 AND FEBRUARY 3, 2001





                                                       FEB. 2,   FEB. 3,
                                                        2002       2001
                                                      --------   --------
                       ASSETS                      (IN THOUSANDS, EXCEPT
                                                     PER SHARE AMOUNTS)
Current assets
  Cash and cash equivalents .......................   $ 30,037   $ 31,962
  Accounts receivable, net ........................     65,296     57,989
  Merchandise inventories .........................    180,117    170,631
  Prepaid expenses and other current assets........     50,403     53,227
                                                      --------   --------
      Total current assets ........................    325,853    313,809
Property and equipment, net .......................    250,735    220,032
Goodwill, net .....................................    286,579    297,619
Deferred financing costs, net .....................      5,044      4,281
Other assets ......................................     14,775     12,374
                                                      --------   --------
      Total assets ................................   $882,986   $848,115
                                                      ========   ========

       LIABILITIES  AND  STOCKHOLDER'S EQUITY
Current liabilities
  Accounts payable ................................     59,482   $ 65,903
  Accrued tenancy .................................     10,151      9,800
  Gift certificates and merchandise
      credits redeemable ..........................     21,806     20,375
  Accrued expenses ................................     43,925     43,564
  Current portion of long-term debt ...............      1,250      1,400
                                                      --------   --------
      Total current liabilities ...................    136,614    141,042
Long-term debt, net ...............................    118,280    116,210
Deferred lease costs and other liabilities ........     15,963     16,834

Stockholder's equity
  Common stock, $1.00 par value; 1,000
      shares authorized 1 share issued
      and outstanding .............................          1          1
  Additional paid-in capital ......................    392,683    383,199
  Retained earnings ...............................    219,445    190,829
                                                      --------   --------
      Total stockholder's equity ..................    612,129    574,029
                                                      --------   --------
      Total liabilities and stockholder's equity ..   $882,986   $848,115
                                                      ========   ========





      See accompanying notes to consolidated financial statements.

                                      -21-
================================================================================
<PAGE>22

                          ANNTAYLOR, INC.
                          ---------------
               CONSOLIDATED STATEMENTS OF CASH FLOWS
               -------------------------------------
 FOR THE FISCAL YEARS ENDED FEBRUARY 2, 2002, FEBRUARY 3, 2001 AND
                          JANUARY 29, 2000

<TABLE>
<CAPTION>
                                                                         FISCAL YEARS ENDED
                                                        ----------------------------------------------------
                                                        FEBRUARY 2,           FEBRUARY 3,        JANUARY 29,
                                                            2002                 2001                2000
                                                           -------              -------             -------
                                                                             (IN THOUSANDS)
<S>                                                      <C>                  <C>                 <C>
Operating activities:
   Net income ........................................   $  29,105            $  52,363           $  64,531
   Adjustments to reconcile net income to net cash
     provided by operating activities:
       Extraordinary loss ............................         ---                  ---               1,603
       Provision for loss on accounts receivable .....       1,443                1,154               1,032
       Depreciation and amortization .................      43,529               35,033              30,347
       Amortization of goodwill ......................      11,040               11,040              11,040
       Amortization of deferred compensation .........       1,841                1,133               1,877
       Non-cash interest .............................       4,140                4,247               3,026
       Deferred income taxes .........................      (5,115)              (3,864)             (3,843)
       Loss on disposal and write-down of property
           and equipment .............................       9,483                1,884               1,219
       Changes in assets and liabilities:
         Accounts receivable .........................      (8,750)                (457)             (1,154)
         Merchandise inventories .....................      (9,486)             (30,605)             (3,278)
         Prepaid expenses and other current assets ...       6,948              (12,106)             (1,601)
         Other non-current assets and liabilities, net      (2,303)              (3,918)              3,131
         Accounts payable and accrued liabilities ....      (4,277)              20,721              (9,631)
                                                           -------              -------             -------
   Net cash provided by operating activities .........      77,598               76,625              98,299
                                                           -------              -------             -------
Investing activities:
   Purchases of property and equipment ...............     (83,693)             (83,310)            (53,409)
                                                           -------              -------             -------
   Net cash used by investing activities .............     (83,693)             (83,310)            (53,409)
                                                           -------              -------             -------
Financing activities:
   Parent company activity ...........................       7,154                4,911             (80,109)
   Payment of financing costs ........................      (1,583)                 (45)             (4,150)
   Payments of mortgage ..............................      (1,401)              (1,300)             (1,206)
  Proceeds from issuance of Note Payable to ATSC .....         ---                  ---             110,000
   Redemption of 8-3/4% Notes ........................         ---                  ---            (101,375)
                                                           -------              -------             -------
   Net cash provided by (used by) financing activities       4,170                3,566             (76,840)
                                                           -------              -------             -------
Net decrease in cash .................................      (1,925)              (3,119)            (31,950)
Cash, beginning of year ..............................      31,962               35,081              67,031
                                                           -------              -------             -------
Cash, end of year ....................................   $  30,037            $  31,962           $  35,081
                                                           =======              =======             =======
Supplemental disclosures of cash flow information:
   Cash paid during the year for interest ............   $   2,504            $   2,418           $   9,405
                                                           =======              =======             =======
   Cash paid during the year for income taxes ........   $  19,170            $  43,393           $  51,222
                                                           =======              =======             =======
</TABLE>



    See accompanying notes to consolidated financial statements.

                                      -22-
================================================================================
<PAGE>23

                          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 and
Ann Taylor  Loft brand  names.  Its  principal  market  consists of
the  United  States.   The  Company  sells  its  products   through
traditional  retail  stores  and over  the  Internet,  through  its
Online Store.

      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  2000  amounts  have  been   reclassified  to
conform to the Fiscal 2001 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.  All fiscal
years  presented  include 52 weeks,  except  the fiscal  year ended
February 3, 2001, which included 53 weeks.


REVENUE RECOGNITION

      The  Company  records  revenue as  merchandise  is sold.  The
Company's  policy with  respect to gift  certificates  is to record
revenue as the  certificates  are redeemed for  merchandise.  Prior
to their redemption, the certificates are recorded as a liability.


CASH AND CASH EQUIVALENTS

      Cash and short-term  highly liquid  investments with original
maturity  dates of three  months  or less  are  considered  cash or
cash equivalents.


MERCHANDISE INVENTORIES

      Merchandise  inventories  are  stated at the lower of average
cost  or  market.   The   majority  of  the   Company's   inventory
represents  finished  goods  available  for sale.  A provision  for
potentially  slow-moving  inventory is made based upon Management's
analysis of inventory levels and future sales projections.


PROPERTY AND EQUIPMENT

      Property and  equipment  are  recorded at cost.  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.

                                      -23-
================================================================================
<PAGE>24

                             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  2,  2002  and  February  3,  2001  was
$3,569,000 and $2,750,000, respectively.


FINANCE SERVICE CHARGE INCOME

      Income  from  finance  service  charges  relating to customer
receivables,   which  is  deducted   from   selling,   general  and
administrative  expenses,  amounted to $9,354,000  for Fiscal 2001,
$8,614,000 for Fiscal 2000 and $8,650,000 for Fiscal 1999.


GOODWILL AND OTHER LONG-LIVED ASSETS

      Goodwill  relating to the 1989  acquisition  of Ann Taylor by
ATSC has been  amortized  on a  straight-line  basis over 40 years.
Goodwill  relating  to  the  1996  acquisition  of  the  operations
comprising  the Company's  sourcing  division has been amortized on
a straight-line  basis over 25 years.  Accumulated  amortization at
February  2,  2002  and  February  3,  2001  was  $132,011,000  and
$120,971,000, respectively.

      In July 2001, the Financial  Accounting  Standards Board (the
"FASB")  issued   Statement  of  Financial   Accounting   Standards
("SFAS")  No. 142,  "Goodwill  and Other  Intangible  Assets".  The
Company  will  adopt  SFAS No. 142 in Fiscal  2002.  In  connection
with its annual  evaluation  of long-lived  assets for  impairment,
Management  has  determined  that  the fair  value  of the  Company
exceeds the carrying  value of its  recorded net assets,  including
goodwill,  as  of  February  2,  2002.  Management  estimates  that
adoption  of SFAS No.  142 will add  approximately  $11,000,000  to
Fiscal 2002 net income.


ADVERTISING

      Costs associated with the production of advertising,  such as
printing  and  other  costs,   are  expensed  as  incurred.   Costs
associated with  communicating  advertising that has been produced,
such as magazine  ads,  are  expensed  when the  advertising  first
takes  place.  Costs of direct  mail  catalogs  and  postcards  are
expensed  when  the  advertising   arrives  in  customers'   homes.
Advertising  costs were  $31,600,000,  $30,900,000  and $25,700,000
in Fiscal 2001, 2000 and 1999, respectively.


INCOME TAXES

     The Company  accounts  for income  taxes in  accordance  with SFAS 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.  The  Company  and its  domestic
subsidiaries file a consolidated  Federal income tax return, while the Company's
foreign subsidiaries file in their respective local jurisdictions.

                                      -24-
================================================================================
<PAGE>25

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



1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     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.


SEGMENTS

     The Company has one reportable  segment given the economic  characteristics
of the store  formats,  the similar  nature of the  products  sold,  the type of
customer and method of distribution.


USE OF ESTIMATES

     The  preparation  of financial  statements  in conformity  with  accounting
principles   generally  accepted  in  the  United  States  of  America  requires
Management to make estimates and assumptions  that affect the reported 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 reporting  period.  Actual  results could differ from these
estimates.


RECENT ACCOUNTING PRONOUNCEMENTS

     In  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments and Hedging Activities," as amended by SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities-Deferral of Effective Date of FASB
Statement No. 133",  which  establishes  accounting and reporting  standards for
derivatives,  derivative instruments embedded in other contracts and for hedging
activities.  In 2000,  the FASB  issued SFAS No.  138,  "Accounting  for Certain
Derivative Instruments and Hedging Activities," which establishes accounting and
reporting standards for certain derivatives,  derivative instruments embedded in
other  contracts  and for certain  hedging  activities.  These  statements  were
effective for the Company's  Fiscal 2001 financial  statements.  The adoption of
these  standards  had  no  impact  on  the  Company's   consolidated   financial
statements.

     In July 2001, the FASB issued SFAS No. 141, "Business  Combinations",  SFAS
No. 142, "Goodwill and Other Intangible Assets",  and SFAS No. 143,  "Accounting
for Asset  Retirement  Obligations".  SFAS No. 141  requires  that the  purchase
method of accounting be used for all business combinations  completed after June
30, 2001 and  clarifies  the  criteria  for  recognition  of  intangible  assets
separately  from goodwill.  Management has determined  that the adoption of SFAS
No. 141 will have no impact on the Company's consolidated financial statements.

     As discussed  above,  SFAS No. 142 requires  that ratable  amortization  of
goodwill be replaced with periodic tests of the  goodwill's  impairment and that
intangible assets, other than goodwill,  which have determinable useful lives be
amortized over that period. SFAS No. 142 is effective for fiscal years beginning
after December 15, 2001.  Management will adopt SFAS No. 142 in Fiscal 2002, and
has determined  that the fair value of the Company exceeds the carrying value of
its recorded net assets,  including goodwill, as of February 2, 2002. Management
further  estimates  that  adoption  of  SFAS  No.  142  will  add  approximately
$11,000,000 to Fiscal 2002 net income.

                                      -25-
================================================================================
<PAGE>26

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



1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

     SFAS No. 143 provides  accounting  requirements for retirement  obligations
associated with tangible long-lived assets. SFAS No. 143 is effective for fiscal
years  beginning  after June 15,  2002.  Management  does not  believe  that the
adoption  of SFAS No.  143  will  have a  significant  impact  on the  Company's
consolidated financial statements.

     In  August  2001,  the  FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment  or  Disposal  of  Long-Lived   Assets".   This  statement  addresses
accounting  and reporting for the  impairment or disposal of long-lived  assets,
other  than  goodwill,  including  discontinued  operations.  SFAS  No.  144  is
effective for fiscal years  beginning  after  December 15, 2001.  Management has
determined  that  the  adoption  of SFAS  No.  144 will  have no  impact  on the
Company's consolidated financial statements.


2.  LONG-TERM DEBT

     The following table  summarizes  long-term debt  outstanding at February 2,
2002 and February 3, 2001:

                                 FEBRUARY 2, 2002     FEBRUARY 3, 2001
                              --------------------  --------------------
                              CARRYING  ESTIMATED   CARRING   ESTIMATED
                               AMOUNT   FAIR VALUE  AMOUNT    FAIR VALUE
                              --------   --------   --------   --------
                                           (IN THOUSANDS)

Mortgage ..................   $  1,250   $  1,250   $  2,650   $  2,650
Note Payable to ATSC, net .    118,280    118,280    114,960    114,960
                              --------   --------   --------   --------
       Total debt .........    119,530    119,530    117,610    117,610
Less current portion ......      1,250      1,250      1,400      1,400
                              --------   --------   --------   --------
       Total long-term debt   $118,280   $118,280   $116,210   $116,210
                              ========   ========   ========   ========


     In accordance  with the  requirements of SFAS 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.

     On April 30,  2001,  the  Company  entered  into an  Amended  and  Restated
$175,000,000  senior secured  revolving Credit Facility (the "Credit  Facility")
with Bank of America N.A. and a syndicate of lenders.  This Credit  Facility was
further  amended on December 20, 2001 to adjust  certain ratio  provisions,  and
amend certain  definitions  used in the  calculation  of ratios  required in the
Credit Facility. The Credit Facility matures on April 29, 2004.

     Maximum  availability  for loans and  letters  of credit  under the  Credit
Facility is governed by a monthly borrowing base,  determined by the application
of specified  advance  rates  against  certain  eligible  assets.  Based on this
calculation,  the maximum amount available for loans and letters of credit under
the Credit Facility at February 2, 2002 was $175,000,000. Commercial and standby
letters of credit  outstanding  under the Credit Facility as of February 2, 2002
were approximately  $77,934,000.  Loans outstanding under the Credit Facility at
any time may not exceed  $75,000,000.  There were no loans outstanding at fiscal
year end. In addition,  the Credit Facility  requires that the outstanding  loan
balance  be  reduced  to zero for a  30-day  period  each  calendar  year.  This
"cleandown" period was achieved in January 2002.

                                      -26-
================================================================================
<PAGE>27

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



2.    LONG-TERM DEBT (CONTINUED)

     Amounts outstanding under the Credit Facility bear interest at a rate equal
to, at the  Company's  option,  the Bank of America  Base  Rate,  defined as the
higher of (a) the Federal  Funds Rate plus one-half of 1% and (b) the Prime Rate
for such day, or Eurodollar  Rate;  plus, in either case, a margin  ranging from
0.25% to 2.00%.  The  Company is also  required  to pay the  lenders a quarterly
commitment fee on the unused revolving loan commitment  amount at a rate ranging
from 0.30% to 0.50% per  annum.  Fees for  outstanding  commercial  and  standby
letters  of  credit  range  from  0.50%  to  0.875%  and from  1.25%  to  2.00%,
respectively.  Premiums  ranging  from 0.125% to 0.50% may apply to all interest
and commitment fees, depending on the calculated Leverage Ratio.

     The Credit  Facility  contains  financial  and other  covenants,  including
limitations on indebtedness, liens and investments, restrictions on dividends or
other  distributions to stockholders and maintenance of certain financial ratios
including specified levels of tangible net worth.

     The  lenders  have been  granted a pledge of the  common  stock of ATSC and
certain of its subsidiaries,  and a security interest in substantially all other
tangible and  intangible  assets,  including  accounts  receivable,  trademarks,
inventory, store furniture and fixtures, of the Company and its subsidiaries, as
collateral for the Company's obligations under the Credit Facility.

     During Fiscal 1999,  the Company issued a promissory  note, as amended,  to
ATSC, of an aggregate of  $199,072,000  principal  amount at maturity (the "Note
Payable to ATSC").  The Note  Payable to ATSC was  issued,  as  amended,  by the
Company for value  received  and has interest  and payment  terms  substantially
similar  to the  terms of the  Convertible  Debentures  Due  2019  ("Convertible
Debentures") that were issued in 1999 by ATSC. ATSC has pledged the Note Payable
to ATSC to the lenders  under the Company's  bank Credit  Facility as collateral
for ATSC's guarantee of the Company's  performance of its obligations  under the
Credit Facility.

     On July 22,  1999,  the  Company  redeemed  all of its  outstanding  8-3/4%
Subordinated  Notes due 2000 (the  "8-3/4%  Notes"),  at a  redemption  price of
101.375% of principal  amount,  plus accrued  unpaid  interest to the redemption
date. The redemption of the 8-3/4% Notes resulted in an extraordinary  charge to
earnings  in the second  quarter of Fiscal 1999 of  $962,000,  net of income tax
benefit.

     The Company had  outstanding a note (the  "intercompany  note")  payable of
$100,625,000 to ATSC. The intercompany  note was issued by the Company on August
28, 1998 and had interest and payment terms  substantially  similar to the terms
of the 8-1/2% Convertible  Subordinated  Debentures Due 2016 that were issued in
1996 by ATSC to AnnTaylor  Finance Trust. ATSC had pledged the intercompany note
to the lenders as collateral for ATSC's  guarantee of the Company's  performance
of its  obligations  under the Credit  Facility.  During  the second  quarter of
Fiscal  1999,  the Company  made a prepayment  on the  intercompany  note in the
amount of $100,000 and the balance was forgiven by ATSC. The forgiveness of debt
constituted a contribution of capital by ATSC to the Company.

     The  Company  and  its  wholly  owned  subsidiary  AnnTaylor   Distribution
Services,  Inc. are parties to a $7,000,000 seven-year mortgage loan maturing in
Fiscal 2002. The loan is 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  $130,000. The mortgage loan
balance at February 2, 2002 was $1,250,000.

                                      -27-
================================================================================
<PAGE>28

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



2.    LONG-TERM DEBT (CONTINUED)


     The aggregate  principal  payments for the next five years of all long-term
obligations at February 2, 2002 are as follows:

        Fiscal Year                            (in thousands)
        -----------
          2002.....................................$ 1,250
          2003.....................................    ---
          2004.....................................    ---
          2005.....................................    ---
          2006.....................................    ---
                                                    ------
          Total....................................$ 1,250
                                                    ======


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").  On
June 29, 1999, the Trust redeemed all of the outstanding  preferred  securities.
All but  $100,000 of the  liquidation  amount of the  preferred  securities  was
tendered for  conversion  into an  aggregate of 5,116,717  shares of ATSC common
stock prior to the redemption date, at a conversion price of $19.65 per share of
ATSC common  stock,  or 2.545  shares of ATSC common  stock per $50  liquidation
amount of the security.  Holders of preferred  securities that were not tendered
for  conversion  received  105.95% of the  liquidation  amount of the  preferred
securities redeemed, plus accrued distributions.


4.  ALLOWANCE FOR DOUBTFUL ACCOUNTS

     A summary of activity in the allowance for doubtful accounts for the fiscal
years  ended  February  2, 2002,  February  3, 2001 and  January  29, 2000 is as
follows:

                                                  FISCAL YEARS ENDED
                                             ------------------------------
                                             FEB. 2,    FEB. 3,    JAN. 29,
                                              2002       2001       2000
                                             ------     ------     ------
                                                   (IN THOUSANDS)

Balance at beginning of year ............   $   621    $   666    $   820
Provision for loss on accounts receivable     1,443      1,154      1,032
Accounts written off ....................    (1,501)    (1,199)    (1,186)
                                             ------     ------     ------
Balance at end of year ..................   $   563    $   621    $   666
                                             ======     ======     ======


5.  COMMITMENTS AND CONTINGENCIES

RENTAL COMMITMENTS

     The Company 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
payment  of a  specified  minimum  rent,  plus  a  contingent  rent  based  on a
percentage of the store's


                                      -28-
================================================================================
<PAGE>29

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




5.  COMMITMENTS AND CONTINGENCIES (CONTINUED)

net sales in excess of a specified  threshold.  In addition,  most of the leases
require  payment of real estate  taxes,  insurance  and certain  common area and
maintenance costs in addition to the future minimum lease payments shown below.

     Future minimum lease payments under  non-cancelable  operating leases as of
February 2, 2002 are as follows:

      FISCAL YEAR                           (IN THOUSANDS)
      -----------
       2002.................................. $  133,305
       2003..................................    131,232
       2004..................................    126,691
       2005..................................    117,674
       2006..................................     97,100
       2007 and thereafter...................    401,470
                                               ---------
       Total................................. $1,007,472
                                               =========


     Rent expense for the fiscal years ended February 2, 2002,  February 3, 2001
and January 29, 2000 was as follows:

                              FISCAL YEARS ENDED
                         -----------------------------
                         FEB. 2,    FEB. 3,    JAN. 29,
                           2002      2001       2000
                         --------   --------   --------
                                  (IN THOUSANDS)
Minimum rent .........   $107,858   $ 91,482   $ 73,363
Percentage rent.......      2,006      3,534      3,131
                         --------   --------   --------
     Total ...........   $109,864   $ 95,016   $ 76,494
                         ========   ========   ========


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  consolidated   financial  position,   consolidated  results  of
operations, or liquidity of the Company.

     In addition, ATSC settled the purported class action lawsuit pending in the
United States  District Court for the Southern  District of New York against the
Company,  ATSC,  and certain  former  officers and  directors of the Company and
ATSC. Finalization of the settlement is subject to Court approval. The complaint
alleged  that the  defendants  made false and  misleading  statements  about the
Company  and ATSC from  February 3, 1994  through  May 4, 1995.  The net cost to
ATSC,  after  application  of insurance  proceeds,  will be  approximately  $3.3
million.  The  decision  to  settle  this  action  was not an  admission  of any
wrongdoing,  but  reflected  the  significant  legal fees,  other  expenses  and
management  time that would have to be devoted to continue to vigorously  defend
it in the courts.


                                      -29-
================================================================================
<PAGE>30

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




6.  PROPERTY AND EQUIPMENT

      Property and equipment consists of the following:

                                                  FISCAL YEARS ENDED
                                                  ------------------
                                                  FEB. 2,    FEB. 3,
                                                    2002      2001
                                                  -------    -------
                                                    (IN THOUSANDS)
Land and building ............................   $  9,415   $  8,774
Leasehold improvements .......................    161,210    132,537
Furniture and fixtures .......................    247,145    213,195
Construction in progress .....................     20,181     25,279
                                                  -------    -------
                                                  437,951    379,785
Less accumulated depreciation and amortization    187,216    159,753
                                                  -------    -------
    Net property and equipment ...............   $250,735   $220,032
                                                 ========   ========


7.  EXTRAORDINARY ITEM

     On July 22,  1999,  the Company  applied  the  proceeds  received  from the
issuance of its Note  Payable to ATSC to redeem the  outstanding  8-3/4%  Notes.
This resulted in an extraordinary charge to earnings in Fiscal 1999 of $962,000,
net of income tax benefit of $641,000.



8.    INCOME TAXES

     The provision for income taxes for the fiscal years ended February 2, 2002,
February 3, 2001, and January 29, 2000 consists of the following:


                                         FISCAL YEARS ENDED
                                      ---------------------------
                                      FEB. 2,   FEB. 3,   JAN. 29,
                                       2002       2001      2000
                                      ------    ------     ------
                                            (IN THOUSANDS)
    Federal:
     Current........................$ 27,492   $38,082   $ 41,682
     Deferred.......................  (4,359)   (3,047)    (3,033)
                                      ------    ------     ------
       Total federal................  23,133    35,035     38,649
                                      ------    ------     ------
    State and local:
     Current........................   2,589     6,476     11,856
     Deferred.......................    (756)     (817)      (809)
                                      ------    ------     ------
       Total state and local........   1,833     5,659     11,047
                                      ------    ------     ------
    Foreign:
     Current........................     591       471        525
     Deferred.......................     ---      (130)       ---
                                      ------    ------     ------
       Total foreign................     591       341        525
                                      ------    ------     ------
     Total..........................$ 25,557   $41,035   $ 50,221
                                      ======    ======    =======


                                      -30-
================================================================================
<PAGE>31

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



8.    INCOME TAXES (CONTINUED)

     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 2, 2002, February 3, 2001 and January 29, 2000 is as follows:

                                                   FISCAL YEARS ENDED
                                          -------------------------------------
                                          FEBRUARY 2,   FEBRUARY 3,  JANUARY 29,
                                              2002         2001         2000
                                            ---------    ---------    ---------
                                             (IN THOUSANDS, EXCEPT PERCENTAGES)
Income before income taxes and
   extraordinary loss ...................   $  54,662    $  93,398    $ 115,714
                                            =========    =========    =========
Federal statutory rate ..................          35%          35%          35%
                                            =========    =========    =========
Provision for income taxes at
   federal statutory rate................   $  19,132    $  32,689    $  40,500
State and local income taxes, net of
   federal income tax benefit ...........       2,916        4,751        6,278
Non-deductible amortization of goodwill .       3,500        3,500        3,500
Earnings of foreign subsidiaries ........          29           78           79
Other ...................................         (20)          17         (136)
                                            ---------    ---------    ---------
Provision for income taxes ..............   $  25,557    $  41,035    $  50,221
                                            =========    =========    =========


     The tax effects of significant items comprising the Company's  deferred tax
assets as of February 2, 2002 and February 3, 2001 are as follows:

                                            FEB. 2,   FEB. 3,
                                              2002     2001
                                            -------   -------
                                              (IN THOUSANDS)
    Current:
     Inventory............................  $ 5,929   $ 4,375
     Accrued expenses.....................    6,666     3,364
     Real estate..........................   (2,819)   (2,087)
                                             ------    ------
    Total current.........................  $ 9,776   $ 5,652
                                            =======   =======
    Noncurrent:
     Accrued expenses.....................  $   ---   $   983
     Depreciation and amortization........   (1,970)   (2,616)
     Rent expense.........................    6,057     5,510
     Other................................      765       (16)
                                             ------    ------
    Total noncurrent......................  $ 4,852   $ 3,861
                                            =======   =======

     Income taxes provided  reflect the current and deferred tax consequences of
events  that  have  been  recognized  in the  Company's  consolidated  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 2, 2002  amounted to  approximately  $6,803,000.  However,  if these
earnings  were not  considered  permanently  reinvested,  under current law, the
incremental  tax  on  such   undistributed   earnings  would  be   approximately
$2,148,000.


 9. RETIREMENT PLANS

     SAVINGS PLAN. The Company maintains a defined  contribution  401(k) savings
plan  for  substantially  all  full-time   employees  of  the  Company  and  its
subsidiaries.  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 2001,  Fiscal 2000 and
Fiscal 1999 were $950,000, $792,000 and $697,000, respectively.

                                      -31-
================================================================================
<PAGE>32

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



 9. RETIREMENT PLANS (CONTINUED)

     PENSION PLAN.  Substantially all full-time employees of the Company and its
subsidiaries are covered under a  noncontributory  defined benefit pension plan.
The pension plan  calculates  benefits  based on a career average  formula.  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.

     The following  table provides  information for the pension plan at February
2, 2002, February 3, 2001 and January 29, 2000:

                                                     FISCAL YEARS ENDED
                                                -----------------------------
                                                FEB. 2,    FEB. 3,    JAN. 29,
                                                  2002      2001       2000
                                                -------    -------    -------
                                                         (IN THOUSANDS)
Change in benefit obligation:
Benefit obligation, beginning of year .......   $ 6,782    $ 4,954    $ 4,642
Service cost ................................     1,524      1,206      1,129
Interest ....................................       523        442        340
Actuarial loss ..............................     1,135        912         19
Benefits paid ...............................      (941)      (732)    (1,176)
                                                -------    -------    -------
Benefit obligation, end of year .............     9,023      6,782      4,954
                                                -------    -------    -------
Change in plan assets:
Fair value of plan assets, beginning of year      9,644      9,489      7,486
Actual return on plan assets ................    (1,414)       887        763
Employer contribution .......................     1,838        ---      2,416
Benefits paid ...............................      (941)      (732)    (1,176)
                                                -------    -------    -------
Fair value of plan assets, end of year ......     9,127      9,644      9,489
                                                -------    -------    -------
Funded status (fair value of plan assets less
   benefit obligation) ......................       104      2,862      4,535
Unrecognized net actuarial (gain)/loss ......     2,710       (763)    (1,621)
Unrecognized prior service cost .............        51         57         63
                                                -------    -------    -------
Prepaid benefit cost ........................   $ 2,865    $ 2,156    $ 2,977
                                                =======    =======    =======



Net pension cost includes the following components:


                                          FISCAL YEARS ENDED
                                     -----------------------------
                                     FEB. 2,    FEB. 3,    JAN. 29,
                                       2002      2001       2000
                                     -------    -------    -------
                                               (IN THOUSANDS)

Service cost .....................   $ 1,524    $ 1,206    $ 1,129
Interest cost ....................       523        442        340
Expected return on assets ........      (924)      (831)      (776)
Amortization of prior gains ......        --         (1)       (22)
Amortization of prior service cost         6          6          6
                                     -------    -------    -------
Net periodic pension cost ........   $ 1,129    $   822    $   677
                                     =======    =======    =======



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================================================================================
<PAGE>33

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


 9. RETIREMENT PLANS (CONTINUED)

     For the fiscal years ended  February 2, 2002,  February 3, 2001 and January
29, 2000, the following actuarial assumptions were used:

                                                     FISCAL YEARS ENDED
                                               -------------------------------
                                               FEB. 2,     FEB. 3,    JAN. 29,
                                                2002        2001       2000
                                               -------     -------    --------

Discount rate.................................  7.50%       7.75%      8.25%
Long-term rate of return on assets............  9.00%       9.00%      9.00%
Rate of increase in future compensation.......  4.00%       4.00%      4.00%


10. STOCKHOLDER'S EQUITY

     The following  summarizes the changes in stockholder's equity during Fiscal
2001, Fiscal 2000 and Fiscal 1999:


                                                ADDITIONAL             TOTAL
                                        COMMON  PAID-IN   RETAINED STOCKHOLDER'S
                                         STOCK  CAPITAL   EARNINGS    EQUITY
                                          ---   --------   --------   --------
                                                     (IN THOUSANDS)

Balance at January 30, 1999 .............  $ 1   $354,762   $ 73,935   $428,698
   Net income ...........................   --         --     64,531     64,531
   Parent company contributions .........   --     11,713       --       11,713
   Forgiveness of intercompany note .....   --    100,625       --      100,625
   Dividend to ATSC .....................   --    (89,945)      --      (89,945)
                                           ---   --------   --------   --------
Balance at January 29, 2000 .............    1    377,155    138,466    515,622
   Net income ...........................   --       --       52,363     52,363
   Parent company contributions .........   --      6,044       --        6,044
                                           ---   --------   --------   --------
Balance at February 3, 2001 .............    1    383,199    190,829    574,029
   Net income ...........................   --       --       29,105     29,105
   Parent company contributions (charges)   --      9,484       (489)     8,995
                                           ---   --------   --------   --------
Balance at February 2, 2002 .............  $ 1   $392,683   $219,445   $612,129
                                           ===   ========   ========   ========


     During  Fiscal 1999,  ATSC's Board of Directors  authorized a program under
which ATSC was  authorized to purchase up to  $90,000,000 of ATSC's common stock
and/or  Convertible  Debentures.  As of January 29,  2000,  3,012,500  shares of
ATSC's  common  stock had been  repurchased,  using the  funding  provided  by a
dividend  from the  Company  to ATSC.  The  securities  repurchase  program  was
completed in Fiscal 1999.


11. SUBSEQUENT EVENT

     On February 4, 2002,  the Company sold the assets  associated  with its Ann
Taylor  credit  card  accounts to World  Financial  Network  National  Bank (the
"Bank").  In connection with the sale, the Company contracted with Alliance Data
Systems Corporation ("ADS"), the Bank's affiliated servicer,  to provide private
label credit card  services to  proprietary  Ann Taylor  credit card  customers.
Under the terms of the  transaction,  ADS will manage the Ann Taylor credit card
program,  and pay the Company a percentage of all collected finance charges. The
Company  believes that having ADS provide these services  rather than continuing
to  handle  this  program   in-house  will  further   strengthen  the  Company's
relationship  with its clients,  and aid in the growth of the Ann Taylor  credit
card.


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