##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549




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FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 3, 2003

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from  _________________________ to _________________________

Commission file number 0-19526

Goodys Family Clothing, Inc.

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(Exact name of registrant as specified in its charter)


|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Tennessee                                                      |  | 62-0793974                             
|                                                               |  |                                        
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification Number)
|                                                               |  |                                        
|400 Goodys Lane, Knoxville, Tennessee                         |  | 37922                                  
|                                                               |  |                                        
|(Address of principal executive offices)                       |  | (Zip Code)                             

(865) 966-2000

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(Registrants telephone number, including area code)




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(Former name, former address and former fiscal year, if changed since last report.)


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes [X] No [  ]

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the latest practicable date. Common Stock, no par
value, 32,561,533 shares outstanding as of May 16, 2003.





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TABLE OF CONTENTS



|                                            |                                                                                                   |                                                      |  |  |  |  |  | 
|------------------------------------------- | ------------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|PART 1  FINANCIAL INFORMATION             
|                                            | Item 1    Condensed Consolidated Financial Statements                                           
|                                            |                                                                                                   | Consolidated Statements of Operations (Unaudited)   
|                                            |                                                                                                   | Consolidated Balance Sheets                         
|                                            |                                                                                                   | Consolidated Statements of Cash Flows (Unaudited)   
|                                            |                                                                                                   | Notes to Condensed Consolidated Financial Statements
|                                            | Item 2.    Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                            | Item 3  Quantitative and Qualitative Disclosures about Market Risk                              
|                                            | Item 4  Controls and Procedures                                                                 
|PART II  OTHER INFORMATION                
|                                            | Item 1    Legal Proceedings                                                                     
|                                            | Item 2.    Changes in Securities and Use of Proceeds                                            
|                                            | Item 3.    Defaults Upon Senior Securities                                                      
|                                            | Item 4.    Submission of Matters to a Vote of Security Holders                                  
|                                            | Item 5.    Other Information                                                                    
|                                            | Item 6.    Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                 
|EX-10.98 EMPLOYMENT AGREEMENT/ JOHN G. WISE
|EX-15 ACCOUNTANTS AWARENESS LETTER         
|EX-99.1 906 CERTIFICATION OF THE CEO       
|EX-99.2 CERTIFICATION OF THE CFO           
|EX-99.3 CERTIFICATION OF CAO               



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##### Table of Contents



Goodys Family Clothing, Inc.
Index to Form 10-Q
May 3, 2003

|                                |                                                                                                |  |                                                      |         |  |       | 
|------------------------------- | ---------------------------------------------------------------------------------------------- |  | ---------------------------------------------------- | ------- |  | ----- | 
|Part I  Financial Information: |                                                                                                |  |                                                      |        
|                                | Item 1  Condensed Consolidated Financial Statements (Unaudited)                               |  |                                                      |         | 
|                                |                                                                                                |  | Consolidated Statements of Operations                |         |  | 3     | 
|                                |                                                                                                |  | Consolidated Balance Sheets                          |         |  | 4     | 
|                                |                                                                                                |  | Consolidated Statements of Cash Flows                |         |  | 5     | 
|                                |                                                                                                |  | Notes to Condensed Consolidated Financial Statements |         |  | 6 - 9 | 
|                                |                                                                                                |  | Independent Accountants Review Report               |         |  | 10    | 
|                                | Item 2 - Managements Discussion and Analysis of Financial Condition and
Results of Operations |  |                                                      | 11 - 14 | 
|                                | Item 3  Quantitative and Qualitative Disclosures about Market Risk                            |  |                                                      | 14      | 
|                                | Item 4  Controls and Procedures                                                               |  |                                                      | 14      | 
|Part II  Other Information     |                                                                                                |  | 14 - 15                                              |        
|                                | Item 1. Legal Proceedings                                                                      |  |                                                      |         | 
|                                | Item 2. Changes in Securities and Use of Proceeds                                              |  |                                                      |         | 
|                                | Item 3.
Defaults upon Senior Securities                                                        |  |                                                      |         | 
|                                | Item 4. Submission of Matters to a Vote of Security Holders                                    |  |                                                      |         | 
|                                | Item 5. Other Information                                                                      |  |                                                      |         | 
|                                | Item 6. (a) Exhibits                                                                           |  |                                                      |         | 
|                                | Item 6. (b) Reports on Form 8-K                                                                |  |                                                      |         | 
|Signatures                      |                                                                                                |  | 16                                                   |        

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PART 1  FINANCIAL INFORMATIONItem 1    Condensed Consolidated Financial StatementsGoodys Family Clothing, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)

|                                             |                              |   |                      |        |             |   |         |        | 
|-------------------------------------------- | ---------------------------- | - | -------------------- | ------ | ----------- | - | ------- | ------ | 
|                                             |                              |   | Thirteen Weeks Ended
|                                             |                              |   |                     
|                                             |                              |   | May 3, 2003          |        | May 4, 2002
|                                             |                              |   |                      |        |            
|Sales                                        |                              | $ | 283,012              |        |             | $ | 283,504 |       
|Cost of sales and occupancy expenses         |                              |   | 197,196              |        |             |   | 199,046 |       
|                                             |                              |   |                      |        |             |   |         |       
|                                             | Gross profit                 |   |                      | 85,816 |             |   |         | 84,458 | 
|Selling, general and administrative expenses |                              |   | 83,034               |        |             |   | 75,646  |       
|                                             |                              |   |                      |        |             |   |         |       
|                                             | Earnings from operations     |   |                      | 2,782  |             |   |         | 8,812  | 
|Investment income                            |                              |   | 177                  |        |             |   | 104     |       
|Interest expense                             |                              |   | 1                    |        |             |   | 1       |       
|                                             |                              |   |                      |        |             |   |         |       
|                                             | Earnings before income taxes |   |                      | 2,958  |             |   |         | 8,915  | 
|Provision for income taxes                   |                              |   | 1,095                |        |             |   | 3,343   |       
|                                             |                              |   |                      |        |             |   |         |       
|Net earnings                                 |                              | $ | 1,863                |        |             | $ | 5,572   |       
|                                             |                              |   |                      |        |             |   |         |       
|Earnings per common share:                   |                              |   |                      |        |             |   |         |       
|                                             | Basic                        |   | $                    | 0.06   |             |   | $       | 0.17   | 
|                                             |                              |   |                      |        |             |   |         |       
|                                             | Diluted                      |   | $                    | 0.06   |             |   | $       | 0.17   | 
|                                             |                              |   |                      |        |             |   |         |       
|Weighted average common shares outstanding:  |                              |   |                      |        |             |   |         |       
|                                             | Basic                        |   |                      | 32,556 |             |   |         | 32,462 | 
|                                             |                              |   |                      |        |             |   |         |       
|                                             | Diluted                      |   |                      | 32,624 |             |   |         | 33,113 | 
|                                             |                              |   |                      |        |             |   |         |       

See accompanying Notes to Condensed Consolidated Financial Statements and
Independent Accountants Review Report.

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Goodys Family Clothing, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)

|                                              |                                                                                                                                                 |                                              |                                            |                           |         |             |         |                  |         |             |         |             |         |         |         | 
|--------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------------------------ | ------------------------- | ------- | ----------- | ------- | ---------------- | ------- | ----------- | ------- | ----------- | ------- | ------- | ------- | 
|                                              |                                                                                                                                                 |                                              |                                            |                           |         | May 3, 2003 |         | February 1, 2003 |         | May 4, 2002
|                                              |                                                                                                                                                 |                                              |                                            |                           |         |             |         |                  |         |            
|                                              |                                                                                                                                                 |                                              |                                            |                           |         | (Unaudited) |         |                  |         |             |         | (Unaudited)
|ASSETS                                        |                                                                                                                                                 |                                              |                                            |                           |         |             |         |                  |         |             |         |            
|Current
Assets                                |                                                                                                                                                 |                                              |                                            |                           |         |             |         |                  |         |             |         |            
|                                              |                                                                                                                                                 | Cash
    and cash equivalents                |                                            | $                         | 91,395  |             |         | $                | 100,030 |             |         | $           | 45,917  |        
|                                              |                                                                                                                                                 | Inventories                                  |                                            |                           | 207,199 |             |         |                  | 180,023 |             |         |             | 201,572 |        
|                                              |                                                                                                                                                 | Accounts receivable and other current assets |                                            |                           | 20,263  |             |         |                  | 17,567  |             |         |             | 25,136  |        
|                                              |                                                                                                                                                 |                                              |                                            |                           |         |             |         |                  |         |             |         |            
|                                              |                                                                                                                                                 |                                              |                                            | Total current assets      |         |             | 318,857 |                  |         |             | 297,620 |             |         |         | 272,625 | 
|Property and equipment, net                   |                                                                                                                                                 |                                              | 106,676                                    |                           |         |             | 108,688 |                  |         |             | 122,555 |            
|Other assets                                  |                                                                                                                                                 |                                              | 9,594                                      |                           |         |             | 9,539   |                  |         |             | 9,585   |            
|                                              |                                                                                                                                                 |                                              |                                            |                           |         |             |         |                  |         |             |         |            
|                                              |                                                                                                                                                 |                                              |                                            | Total assets              |         | $           | 435,127 |                  |         | $           | 415,847 |             |         | $       | 404,765 | 
|                                              |                                                                                                                                                 |                                              |                                            |                           |         |             |         |                  |         |             |         |            
|LIABILITIES AND SHAREHOLDERS EQUITY          |                                                                                                                                                 |                                              |                                            |                           |         |             |         |                  |         |             |         |            
|Current
Liabilities                           |                                                                                                                                                 |                                              |                                            |                           |         |             |         |                  |         |             |         |            
|                                              |                                                                                                                                                 | Accounts
payable  trade                     |                                            | $                         | 115,636 |             |         | $                | 105,898 |             |         | $           | 119,345 |        
|                                              |                                                                                                                                                 | Accounts payable  other                     |                                            |                           | 13,601  |             |         |                  | 24,321  |             |         |             | 14,969  |        
|                                              |                                                                                                                                                 | Accrued expenses                             |                                            |                           | 73,136  |             |         |                  | 54,769  |             |         |             | 38,947  |        
|                                              |                                                                                                                                                 | Income taxes payable                         |                                            |                           |        |             |         |                  |        |             |         |             | 2,649   |        
|                                              |                                                                                                                                                 |                                              |                                            |                           |         |             |         |                  |         |             |         |            
|                                              |                                                                                                                                                 |                                              |                                            | Total current liabilities |         |             | 202,373 |                  |         |             | 184,988 |             |         |         | 175,910 | 
|Other long-term liabilities                   |                                                                                                                                                 |                                              | 6,879                                      |                           |         |             | 7,187   |                  |         |             | 6,308   |            
|Deferred income taxes                         |                                                                                                                                                 |                                              | 12,879                                     |                           |         |             | 12,539  |                  |         |             | 14,076  |            
|                                              |                                                                                                                                                 |                                              |                                            |                           |         |             |         |                  |         |             |         |            
|                                              |                                                                                                                                                 |                                              |                                            | Total liabilities         |         |             | 222,131 |                  |         |             | 204,714 |             |         |         | 196,294 | 
|                                              |                                                                                                                                                 |                                              |                                            |                           |         |             |         |                  |         |             |         |            
|Commitments and Contingencies (Notes 4 and 6) |                                                                                                                                                 |                                              |                                            |                           |         |             |         |                  |         |             |         |            
|Shareholders Equity                          |                                                                                                                                                 |                                              |                                            |                           |         |             |         |                  |         |             |         |            
|                                              | Preferred stock, par value $1.00 per share;
Authorized - 2,000,000 shares; issued and outstanding  none                                        |                                              |                                            |                           |         |             |         |                  |         |             |         |             |        
|                                              | Class B Common stock, no par value;
Authorized - 50,000,000 shares; issued and outstanding  none                                               |                                              |                                            |                           |         |             |         |                  |         |             |         |             |        
|                                              | Common stock, no par value; Authorized - 50,000,000 shares;
Issued and outstanding  32,555,533, 32,555,533
and 32,482,530 shares, respectively |                                              |                                            | 22,245                    |         |             |         | 22,245           |         |             |         | 21,867      |        
|                                              | Paid-in capital                                                                                                                                 |                                              |                                            | 10,510                    |         |             |         | 10,510           |         |             |         | 10,231      |        
|                                              | Retained earnings                                                                                                                               |                                              |                                            | 180,241                   |         |             |         | 178,378          |         |             |         | 176,373     |        
|                                              |                                                                                                                                                 |                                              |                                            |                           |         |             |         |                  |         |             |         |            
|                                              |                                                                                                                                                 |                                              | Total shareholders equity                 |                           |         | 212,996     |         |                  |         | 211,133     |         |             |         | 208,471 |        
|                                              |                                                                                                                                                 |                                              |                                            |                           |         |             |         |                  |         |             |         |            
|                                              |                                                                                                                                                 |                                              | Total liabilities and shareholders equity |                           | $       | 435,127     |         |                  | $       | 415,847     |         |             | $       | 404,765 |        
|                                              |                                                                                                                                                 |                                              |                                            |                           |         |             |         |                  |         |             |         |            

See accompanying Notes to Condensed Consolidated Financial Statements and
Independent Accountants Review Report.

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Goodys Family Clothing, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)

|                                                                                |                                   |                                             |                              |                                           |       |                      |        |        |       |         |        |  
|------------------------------------------------------------------------------- | --------------------------------- | ------------------------------------------- | ---------------------------- | ----------------------------------------- | ----- | -------------------- | ------ | ------ | ----- | ------- | ------ | -
|                                                                                |                                   |                                             |                              |                                           |       | Thirteen Weeks Ended
|                                                                                |                                   |                                             |                              |                                           |       |                     
|                                                                                |                                   |                                             |                              |                                           |       | May 3,               |        | May 4,
|                                                                                |                                   |                                             |                              |                                           |       | 2003                 |        | 2002  
|                                                                                |                                   |                                             |                              |                                           |       |                      |        |       
|Cash Flows from Operating Activities                                            |                                   |                                             |                              |                                           |       |                      |        |       
|Net earnings                                                                    |                                   | $                                           | 1,863                        |                                           |       | $                    | 5,572  |       
|Adjustments to reconcile net earnings to net cash
used in operating activities: |                                   |                                             |                              |                                           |       |                      |        |       
|                                                                                |                                   | Depreciation and amortization               |                              |                                           | 5,403 |                      |        |        | 5,825 |        
|                                                                                |                                   | Net loss on asset disposals and write-downs |                              |                                           | 326   |                      |        |        | 779   |        
|                                                                                |                                   | Changes in assets and liabilities:          |                              |                                           |       |                      |        |        |       |        
|                                                                                |                                   |                                             | Inventories                  |                                           |       | (27,176              | )      |        |       | (21,601 | )     
|                                                                                |                                   |                                             | Accounts payable  trade     |                                           |       | 9,738                |        |        |       | 4,282   |       
|                                                                                |                                   |                                             | Accounts payable  other     |                                           |       | (10,720              | )      |        |       | (4,079  | )     
|                                                                                |                                   |                                             | Income taxes                 |                                           |       | 1,551                |        |        |       | 3,538   |       
|                                                                                |                                   |                                             | Other assets and liabilities |                                           |       | 14,043               |        |        |       | (1,302  | )     
|                                                                                |                                   |                                             |                              |                                           |       |                      |        |       
|                                                                                |                                   |                                             |                              | Net cash used in operating activities     |       |                      | (4,972 | )      |       |         | (6,986 | )
|                                                                                |                                   |                                             |                              |                                           |       |                      |        |       
|Cash Flows from Investing Activities                                            |                                   |                                             |                              |                                           |       |                      |        |       
|Acquisitions of property and equipment                                          |                                   |                                             | (3,690                       | )                                         |       |                      | (1,055 | )     
|Proceeds from sale of property and equipment                                    |                                   |                                             | 27                           |                                           |       |                      | 4      |       
|                                                                                |                                   |                                             |                              |                                           |       |                      |        |       
|                                                                                |                                   |                                             |                              | Net cash used in investing activities     |       |                      | (3,663 | )      |       |         | (1,051 | )
|                                                                                |                                   |                                             |                              |                                           |       |                      |        |       
|Cash
Flows from Financing Activities                                            |                                   |                                             |                              |                                           |       |                      |        |       
|Proceeds from exercise of stock options                                         |                                   |                                             |                             |                                           |       |                      | 148    |       
|                                                                                |                                   |                                             |                              |                                           |       |                      |        |       
|                                                                                |                                   |                                             |                              | Net cash provided by financing activities |       |                      |       |        |       |         | 148    |  
|                                                                                |                                   |                                             |                              |                                           |       |                      |        |       
|Net decrease in cash and cash equivalents                                       |                                   |                                             | (8,635                       | )                                         |       |                      | (7,889 | )     
|Cash and cash equivalents, beginning of period                                  |                                   |                                             | 100,030                      |                                           |       |                      | 53,806 |       
|                                                                                |                                   |                                             |                              |                                           |       |                      |        |       
|Cash and cash equivalents, end of period                                        |                                   | $                                           | 91,395                       |                                           |       | $                    | 45,917 |       
|                                                                                |                                   |                                             |                              |                                           |       |                      |        |       
|Supplemental Disclosures:                                                       |                                   |                                             |                              |                                           |       |                      |        |       
|                                                                                | Net income tax (refunds) payments |                                             | $                            | (38                                       | )     |                      | $      | 83     |      
|                                                                                | Interest payments                 |                                             |                              |                                          |       |                      |        | 1      |      

See accompanying Notes to Condensed Consolidated Financial Statements and
Independent Accountants Review Report.

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Goodys Family Clothing, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

(1)  Basis of presentation

The accompanying condensed consolidated financial statements of Goodys Family
Clothing, Inc. and subsidiaries (the Company) are unaudited and have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission for interim financial statements. In the opinion of the Companys
management, the accompanying unaudited condensed consolidated financial
statements include all adjustments, consisting primarily of normal and
recurring adjustments, necessary for a fair presentation of the Companys
financial position, results of operations and cash flows for the interim
periods presented. Due to the seasonal nature of the Companys business, the
results of operations for the interim periods are not necessarily indicative of
the results that may be achieved for the entire year. The condensed
consolidated financial statements should be read in conjunction with the
audited consolidated financial statements and the notes thereto contained in
the Companys Annual Report on Form 10-K for its fiscal year ended February 1,
2003.

(2)  Stock-Based Compensation

The Company has options outstanding under four stock option plans: the Goodys
Family Clothing, Inc. Amended and Restated 1991 Stock Incentive Plan (the 1991
Plan), the Goodys Family Clothing, Inc. Amended and Restated 1993 Stock
Option Plan (the 1993 Plan), the Goodys Family Clothing, Inc. Amended and
Restated 1997 Stock Option Plan (the 1997 Plan) and the Amended and Restated
Discounted Stock Option Plan for Directors (the Directors Plan).

The Company accounts for these stock option plans under the recognition and
measurement principles of APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related Interpretations. No stock-based employee compensation
cost is reflected in net earnings, as all options granted under those plans had
an exercise price equal to the market value of the underlying common stock on
the date of grant. However, expense is recorded in connection with stock
options issued under the Directors Plan to non-employee directors and this
expense has been immaterial. The following table illustrates the effect on net
earnings and earnings per common share if the Company had applied the fair
value recognition provisions of Statement of Financial Accounting Standards No.
148 (SFAS 148), Accounting for Stock-Based Compensation  Transaction and
Disclosure  an Amendment of FASB Statement No. 123, to stock-based employee
compensation (in thousands, except per share amounts):

|                                                        |                                                                                     |   |                      |     |             |   |       |     | 
|------------------------------------------------------- | ----------------------------------------------------------------------------------- | - | -------------------- | --- | ----------- | - | ----- | --- | 
|                                                        |                                                                                     |   | Thirteen Weeks Ended
|                                                        |                                                                                     |   |                     
|                                                        |                                                                                     |   | May 3, 2003          |     | May 4, 2002
|                                                        |                                                                                     |   |                      |     |            
|Net earnings, as reported                               |                                                                                     | $ | 1,863                |     |             | $ | 5,572 |    
|Deduct: Total stock-based employee compensation expense |                                                                                     |   |                      |     |             |   |       |    
|                                                        | Determined under fair value based-method for all awards,
net of related tax effects |   |                      | 218 |             |   |       | 318 | 
|                                                        |                                                                                     |   |                      |     |             |   |       |    
|Pro forma net earnings                                  |                                                                                     | $ | 1,645                |     |             | $ | 5,254 |    
|                                                        |                                                                                     |   |                      |     |             |   |       |    
|Earnings per common share                               |                                                                                     |   |                      |     |             |   |       |    
|Basic  as reported                                     |                                                                                     | $ | 0.06                 |     |             | $ | 0.17  |    
|Basic  pro forma                                       |                                                                                     |   | 0.05                 |     |             |   | 0.16  |    
|Diluted  as reported                                   |                                                                                     |   | 0.06                 |     |             |   | 0.17  |    
|Diluted  pro forma                                     |                                                                                     |   | 0.05                 |     |             |   | 0.16  |    

The weighted-average fair value of each stock option included in the preceding
pro forma amounts was estimated using the Black-Scholes option-pricing model
and is amortized over the vesting period of the underlying options.

(3)  Credit arrangements

In May 2001, the Company entered into a five-year $130,000,000 syndicated
revolving loan and security agreement that provides for cash borrowings for
general corporate purposes, including a $95,000,000 sub-facility for the
issuance of letters of credit. Borrowings under this credit facility are
limited by collateral formulas, based principally upon the Companys eligible
inventories. The credit facility is secured primarily by the Companys
inventories, receivables and

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cash and cash equivalents. If availability (as calculated pursuant to the
credit facility) falls below $25,000,000, the Company would be required, for a
period of time, to comply with a financial covenant requiring it to maintain
minimum levels of tangible net worth based on formulas. The credit facility
also contains certain discretionary provisions that enable the lender to reduce
availability. The credit facility bears interest at LIBOR plus an applicable
margin or the prime rate. At May 3, 2003, the Company had no borrowings and
$28,157,000 in letters of credit (not yet reflected in accounts payable)
outstanding under the facility. These letters of credit generally have terms of
less than one year and are primarily used to facilitate the purchase of import
merchandise.

(4)  Recent accounting pronouncements

In December 2002, the Financial Accounting Standards Board (the FASB) issued
Statement of Financial Accounting Standards No. 148 (SFAS 148), Accounting
for Stock-Based Compensation  Transition and Disclosure  an Amendment of FASB
Statement No. 123. SFAS 148 amends SFAS 123, Accounting for Stock-Based
Compensation, to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS
123 to require prominent disclosures in both annual and interim financial
statements about the method of accounting for stock-based employee compensation
and the effect of the method used on reported results. The disclosure
provisions of this statement were effective for financial statements for fiscal
years ending after December 15, 2002. The disclosures required by this
statement are included in Note 2 above. The Company is currently assessing the
alternative methods of transition for a voluntary change to the fair value
based method of accounting for stock-based employee compensation included in
this statement.

FASB Interpretation (FIN) No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others, was issued in November 2002. This interpretation requires guarantors
to account at fair value for and disclose certain types of guarantees. The
interpretations disclosure requirements were effective for the Companys year
ended February 1, 2003; the interpretations measurement requirements were
effective for guarantees issued or modified after December 31, 2002.
Historically, the Company has not incurred significant costs related to
performance under these types of guarantees. No material liabilities have been
recorded for these obligations on the Companys consolidated balance sheet as
of May 3, 2003.

FIN No. 46, Consolidation of Variable Interest Entities, was issued in
January 2003. This interpretation requires consolidation of variable interest
entities (VIE) (also formerly referred to as special purpose entities) if
certain conditions are met. The interpretation applies immediately to VIEs
created after January 31, 2003, and to interests obtained in VIEs after
January 31, 2003. Beginning after June 15, 2003, the interpretation applies
also to VIEs created or interests obtained in VIEs before January 31, 2003.
The Company believes this interpretation will have no effect on its financial
position, results of operations or cash flows.

FASBs EITF Issue 02-16, Accounting By A Customer (Including A Reseller) For
Cash Consideration Received From A Vendor addressed the accounting treatment
for vendor allowances. The Company adopted EITF Issue 02-16 on February 2,
2003; the adoption of this statement did not have a significant impact on the
Companys consolidated financial statements.

(5)  Restructuring Charge

The Company recorded a restructuring charge during the fourth quarter of fiscal
2001 of approximately $1,335,000 for an announced reduction in the Companys
work force that was completed during 2002. The reduction resulted in the
elimination of jobs located at its corporate office and distribution center in
Knoxville, Tennessee, and its distribution center in Russellville, Arkansas.
The charge included the costs associated with severance, health benefits,
outplacement services and professional fees related to developing and
implementing the restructuring plan. There was no activity related to
restructuring charges during the first quarter of fiscal 2003. During the first
quarter of fiscal 2002, the Company made payments related to the restructuring
of $690,000 and net credits to income of $20,000. During the remainder of
fiscal 2002, payments related to the restructuring charge totaled $48,000 and
net credits to income were $54,000, leaving no accrued restructuring charge on
the balance sheet as of February 1, 2003.

(6)  Contingencies

Class Action Proceeding

In February 1999, a lawsuit was filed in the United States District Court for
the Middle District of Georgia and was served on the Company and Robert M.
Goodfriend, its Chairman of the Board and Chief Executive Officer, by 20

7



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named plaintiffs, generally alleging that the Company discriminated against a
class of African-American employees at its retail stores through the use of
discriminatory selection and compensation procedures and by maintaining unequal
terms and conditions of employment. The plaintiffs further alleged that the
Company maintained a racially hostile working environment.

On February 28, 2003, a proposed Consent Decree was filed with the Court for
its preliminary approval. The proposed Consent Decree sets forth the proposed
settlement of the class action race discrimination lawsuit. Ultimately, class
action certification was sought in the lawsuit only with respect to alleged
discrimination in promotion to management positions and the proposed Consent
Decree is limited to such claims. Generally, the proposed settlement provides
for a payment by the Company in the aggregate amount of $3.2 million to the
class members (including the named plaintiffs) and their counsel, as well as
the Companys implementation of certain policies, practices and procedures
regarding, among other things, training of employees. The Company expects that
$3.1 million of such payment will be covered by its insurance. The proposed
Consent Decree explicitly provides that it is not an admission of liability by
the Company and the Company continues to deny all of the allegations. On April
30, 2003, the Court granted preliminary approval of the proposed Consent
Decree, and has scheduled a hearing on June 30, 2003 regarding the adequacy and
fairness of the proposed settlement. At such hearing, any objections to the
proposed settlement would be heard and the Court would consider whether to
grant final approval. There can be no assurance that such final approval to the
Consent Decree will be granted or that the settlement will not be overturned on
appeal.

Hilfiger Matter, Sun Matter and Related Insurance Matters

In July 2000, Tommy Hilfiger Licensing, Inc. (Hilfiger) commenced an action
against the Company in the United States District Court for the Northern
District of Georgia, alleging, among other things, counterfeiting and trademark
infringement (the Hilfiger Matter). The counterfeiting claims arose out of
Goodys sale of t-shirts bearing certain Hilfiger trademarks that Goodys
purchased from certain vendors, which Goodys believed at the time to be
genuine. According to Hilfigers complaint, these items bore counterfeit
Hilfiger logos. The trademark infringement claims arose out of Goodys sale of
three lines of private label denim products. Hilfiger sought compensatory
damages and damages allowed by statute (including treble damages). Goodys had
begun the process of changing the packing design on its three private label
denim lines prior to the commencement of the lawsuit, and completed that
process in approximately the spring of 2001. A bench trial for the Hilfiger
Matter concluded on March 13, 2003. On May 9, 2003, the Court rendered its
decision, awarding damages to Hilfiger in the amount of approximately $11
million, plus reasonable attorneys fees and costs. The award consists of $2.1
million in damages for the sale of counterfeit t-shirts which includes treble
damages. The award also consists of nearly $9 million in damages for trademark
infringement involving the denim products and reasonable attorneys fees and
costs in an amount to be determined by the Court. Goodys strongly disagrees
with the Courts findings and believes it has meritorious grounds for appeal.
Goodys is currently reviewing its options for appeal.

Following the commencement of the Hilfiger Matter, Goodys filed suit in
November 2000 against its suppliers of the counterfeit Hilfiger t-shirts
alleging, among other things, breach of contract and fraudulent
misrepresentation. The suppliers asserted certain counterclaims. In October
2002, the Court entered judgment in favor of Goodys on its claims and denied
defendants counterclaim. The Court reserved ruling on damages pending the
outcome of the Hilfiger Matter. However, no assurance can be given that Goodys
will be able to collect from the defendants any amount awarded to it as
damages.

In June 2002, Hilfiger brought an action against Sun Apparel, Inc. (Sun), a
Goodys denim supplier, alleging trademark infringement arising out of Suns
manufacture of the allegedly infringing labels that gave rise to Hilfigers
trademark infringement claims against Goodys (the Sun Matter). Goodys has
certain indemnification obligations to Sun and is paying for the defense of the
Sun Matter. The Sun Matter is in its preliminary stages, and only limited
discovery has been allowed. At Suns request, the Court has informally stayed
the Sun Matter pending the outcome of the Hilfiger Matter. Goodys believes
that Sun has meritorious defenses to this action and is prepared to defend
vigorously the claims against Sun. In addition, Goodys believes that there may
be insurance coverage available for all or a portion of the liability, if any,
resulting from the Sun Matter. However, the insurers have not yet agreed to
provide indemnity to Goodys for the Sun Matter.

The Company has liability insurance with limits greater than the amount of
damages awarded to Hilfiger, which the Company believes provides coverage for
the liability and legal fees resulting from the Hilfiger Matter. At the time
the Hilfiger Matter commenced, the primary insurer indicated that it would
reimburse Goodys for its legal fees and expenses. In February 2003, after
several unsuccessful attempts to obtain such reimbursement, Goodys filed an
insurance coverage action against the insurers. Following the commencement of
such action, the primary insurer agreed to reimburse Goodys for a substantial
portion of its past and future legal expenses. However, the insurance carriers
have

8



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reserved their rights regarding their obligations to indemnify Goodys against
damages resulting from the Hilfiger claims and the Sun Matter and the carriers
have asserted certain defenses against their indemnity obligations. On May 13,
2003, Firemans Fund Insurance Company (Firemans Fund), the excess layer
(umbrella insurance) carrier, commenced an action against Goodys in the
Chancery Court for Knox County, Tennessee seeking a declaratory judgment
against Goodys declaring that it has no duty to indemnify Goodys in the
Hilfiger Matter (the Goodys suit against the insurers and the Firemans Fund
suit against the Company are collectively referred to herein as the Insurance
Matters). Firemans Fund alleges, among other things, that coverage is not
available because the damages awarded in the Hilfiger Matter do not constitute
an advertising injury as required under the policy and because the damages
arise from conduct which was willful, intentional and/or deliberate. The
Company believes that it has meritorious claims in the Insurance Matters for
full insurance coverage. If the Company does not prevail in the Insurance
Matters and/or the claim for coverage in the Sun Matter, however, the Company
could be required to pay all or a significant portion of the damage award in
the Hilfiger Matter and/or any potential damage award in the Sun Matter.

After considering all available information, the Company has recorded a
provision during the thirteen weeks ended May 3, 2003, of $8.0 million for
legal claims and related legal fees in connection with the Hilfiger Matter, the
Sun Matter and the Insurance Matters.

The results of the three matters described in this section cannot be predicted
with any certainty. An unfavorable resolution of the Hilfiger Matter and/or the
Sun Matter, in conjunction with an adverse outcome of the Insurance Matter
and/or the claim for insurance coverage in the Sun Matter, could have a
material adverse effect on the Companys financial position, results of
operations or cash flows.

Other Matters

In addition, the Company is a party to various other legal proceedings arising
in the ordinary course of its business. The Company has various insurance
policies in place in the event of unfavorable outcomes from such proceedings.
The insurance companies level of, and willingness to, support their coverage
could vary depending upon the circumstances of each particular case. As such,
there can be no assurance as to the level of support available from insurance
policies, particularly as it relates to the Insurance Matters. The Company does
not currently believe that the ultimate outcome of all such pending legal
proceedings (other than the matters noted in the foregoing paragraphs),
individually and in the aggregate, would have a material adverse effect on the
Companys financial position, results of operations or cash flows.

(7)  Reclassifications

Certain reclassifications have been made to the consolidated financial
statements of prior periods to conform to the current period presentation.

9



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INDEPENDENT ACCOUNTANTS REVIEW REPORT

Board of Directors and Shareholders
Goodys Family Clothing, Inc.
Knoxville, Tennessee

We have reviewed the accompanying condensed consolidated balance sheets of
Goodys Family Clothing, Inc. and subsidiaries as of May 3, 2003 and May 4,
2002, and the related condensed consolidated statements of operations and cash
flows for the thirteen-weeks then ended. These financial statements are the
responsibility of the Companys management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and of making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with auditing standards generally accepted in the
United States of America, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that
should be made to such condensed consolidated financial statements for them to
be in conformity with accounting principles generally accepted in the United
States of America.

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet of
Goodys Family Clothing, Inc. and subsidiaries as of February 1, 2003 and the
related consolidated statements of operations, shareholders equity, and cash
flows for the year then ended (not presented herein); and in our report dated
March 17, 2003, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of February 1, 2003 is
fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.

/s/ Deloitte & Touche LLP
Atlanta, Georgia
May 20, 2003

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Item 2.    Managements Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report contains certain forward-looking statements which are
based upon current expectations, business plans and estimates and involve
material risks and uncertainties including, but not limited to:



| |  |  | The effectiveness of the Companys planned merchandising,
advertising, pricing, and operational changes                            
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The ability to achieve business plan targets                                                                                       
|
| |  |  | The ability to avoid excess promotional pricing                                                                                    
|
| |  |  | Weather conditions                                                                                                                 
|
| |  |  | The timely availability of branded and private label
merchandise in sufficient quantities to satisfy customer demand               
|
| |  |  | Customer demand and trends in the apparel and retail
industry and to the acceptance of merchandise acquired for sale
by the Company
|
| |  |  | The effectiveness of advertising and promotional events                                                                            
|
| |  |  | The ability to enter into leases for new store locations                                                                           
|
| |  |  | The timing, magnitude and costs of opening new stores                                                                              
|
| |  |  | Individual store performance, including new stores                                                                                 
|
| |  |  | Employee relations                                                                                                                 
|
| |  |  | The general economic conditions within the Companys
markets and an improvement in the overall retail environment                  
|
| |  |  | Global political unrest and associated risks                                                                                       
|
| |  |  | The continued availability of adequate credit support from vendors and factors                                                     
|
| |  |  | The Companys compliance with loan covenants and the
availability of sufficient eligible collateral for borrowing                  
|
| |  |  | The inherent uncertainty of, and possible adverse outcomes in, pending litigation                                                  
|
| |  |  | The unanticipated needs for additional capital expenditures                                                                        
|
| |  |  | Trends affecting the Companys financial condition, results of operations or cash flows                                            
|
| |  |  | The Companys ability to resume historical levels of new store growth                                                              
|
| |  |  | Competition, including the impact of competitors pricing
and store expansion in markets in which the Company operates             
|
| |  |  | The Companys ability to reverse negative comparable
store sales trends                                                            

Any forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, which generally can be identified by the use of
forward-looking terminology such as may, will, expect, estimate,
anticipate, believe, target, plan, project, or continue or the
negatives thereof or other variations thereon or similar terminology, are made
on the basis of managements plans and current analysis of the Company, its
business and the industry as a whole. Readers are cautioned that any such
forward-looking statement is not a guarantee of future performance and
involves risks and uncertainties, and that actual results may differ
materially from those projected in the forward-looking statement as a result
of various factors. The Company does not undertake to publicly update or
revise its forward-looking statements even if experience or future changes
make it clear that any projected results expressed or implied therein will not
be realized. Additional information on risk factors that could potentially
affect the Companys financial results may be found in the Companys public
filings with the Securities and Exchange Commission. Certain of such filings
may be accessed through the Companys web site,
http://www.goodysonline.com/investor.asp, then select SEC Filings.

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Results of Operations

The following table sets forth unaudited results of operations as a percent of
sales for the periods indicated:

|                                             |  |                      |       |             |  |  |       |  
|-------------------------------------------- |  | -------------------- | ----- | ----------- |  |  | ----- | -
|                                             |  | Thirteen Weeks Ended
|                                             |  |                     
|                                             |  | May 3, 2003          |       | May 4, 2002
|                                             |  |                      |       |            
|Sales                                        |  |                      | 100.0 | %           |  |  | 100.0 | %
|Cost of sales and occupancy expenses         |  |                      | 69.7  |             |  |  | 70.2  |  
|                                             |  |                      |       |             |  |  |       |  
|Gross profit                                 |  |                      | 30.3  |             |  |  | 29.8  |  
|Selling, general and administrative expenses |  |                      | 29.3  |             |  |  | 26.7  |  
|                                             |  |                      |       |             |  |  |       |  
|Earnings from operations                     |  |                      | 1.0   |             |  |  | 3.1   |  
|Investment income                            |  |                      | 0.1   |             |  |  | 0.1   |  
|Interest expense                             |  |                      |      |             |  |  |      |  
|                                             |  |                      |       |             |  |  |       |  
|Earnings before income taxes                 |  |                      | 1.1   |             |  |  | 3.2   |  
|Provision for income taxes                   |  |                      | 0.4   |             |  |  | 1.2   |  
|                                             |  |                      |       |             |  |  |       |  
|Net earnings                                 |  |                      | 0.7   | %           |  |  | 2.0   | %
|                                             |  |                      |       |             |  |  |       |  

Overview.During the first quarter of fiscal 2003, the Company relocated or
remodeled five stores and closed one store; bringing the total number of
stores in operation at May 3, 2003 to 327 compared with 332 at the end of the
first quarter of fiscal 2002. In the corresponding period of the previous
fiscal year, one new store was opened, one store was remodeled and one store
was closed. Net earnings for the first quarter of fiscal 2003 were $1,863,000,
or 0.7% of sales, which includes an $8.0 million pretax charge associated with
the Hilfiger Matter and related matters as discussed in Note 6 to the Notes to
Condensed Consolidated Financial Statements, compared with net earnings of
$5,572,000, or 2.0% of sales, for the first quarter of fiscal 2002.

Sales.Sales for the first quarter of fiscal 2003 were $283,012,000, a 0.2%
decrease from the $283,504,000 for the first quarter of fiscal 2002. This
decrease of $492,000 consisted of a decrease of $3,041,000 in sales from new
and transition stores, offset by an increase of $2,549,000 in comparable store
sales. Comparable store sales for the first quarter of fiscal 2003 increased
0.9% compared with the corresponding period of the previous fiscal year.

Gross profit.Gross profit for the first quarter of fiscal 2003 was
$85,816,000, or 30.3% of sales, a $1,358,000 increase over the $84,458,000, or
29.8% of sales, in gross profit for the first quarter of fiscal 2002. The 0.5%
increase in gross profit, as a percent of sales, resulted from a 0.6% increase
in merchandise margins, offset by a 0.1% increase in occupancy costs primarily
related to common area maintenance costs.

Selling, general and administrative expenses.Selling, general and
administrative expenses for the first quarter of fiscal 2003 were $83,034,000,
or 29.3% of sales, an increase of $7,388,000 from $75,646 ,000, or 26.7% of
sales, for the first quarter of fiscal 2002. Selling, general and
administrative expenses increased by 2.6%, as a percent of sales, for the
first quarter of fiscal 2003 compared with the first quarter of fiscal 2002
primarily due to (i) a 2.7% increase in legal claims and related fees arising
primarily from the $8.0 million charge for the Hilfiger Matter and related
matters, (ii) a 0.7% increase in advertising and promotional expenses, (iii) a
0.2% increase in stores payroll expenses, offset by (iv) a net 1.0% decrease
in all other selling, general and administrative expenses.

Investment income.Investment income for the first quarter of fiscal 2003
increased by $73,000 compared with the first quarter of fiscal 2002 primarily
due to higher levels of invested funds.

Interest expense.Interest expense for the first quarter of fiscal 2003 was
the same as the first quarter of fiscal 2002.

Income taxes.The provision for income taxes for the first quarter of fiscal
2003 was $1,095,000 for an effective tax rate of 37.0% of earnings before
income taxes, compared with a provision for income taxes of $3,343,000, for an
effective tax rate of 37.5% of earnings before income taxes, for the first
quarter of fiscal 2002.

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Liquidity and Capital Resources

Financial position.The Companys primary sources of liquidity are cash flows
from operations, including credit terms from vendors and factors, and
borrowings under its credit facility as discussed below. At May 3, 2003, the
Companys working capital was $116,484,000 compared with $96,715,000 at May 4,
2002. At the end of the first quarter of fiscal 2003 compared with the first
quarter of fiscal 2002, (i) cash and cash equivalents increased by
$45,478,000, (ii) inventories increased by $5,627,000, (iii) net property and
equipment decreased by $15,879,000 primarily from depreciation, and (iv)
accounts payable  trade decreased by $3,709,000. Accounts payable  trade, as
a percent of inventories, were 55.8% at May 3, 2003 compared with 59.2% at May
4, 2002.

In May 2001, the Company entered into a five-year $130,000,000 syndicated
revolving loan and security agreement that provides for cash borrowings for
general corporate purposes, including a $95,000,000 sub-facility for the
issuance of letters of credit. Borrowings under this credit facility are
limited by collateral formulas, based principally upon the Companys eligible
inventories. The credit facility is secured primarily by the Companys
inventories, receivables and cash and cash equivalents. If availability (as
calculated pursuant to the credit facility) falls below $25,000,000, the
Company would be required, for a period of time, to comply with a financial
covenant requiring it to maintain minimum levels of tangible net worth based
on formulas. The credit facility also contains certain discretionary
provisions that enable the lender to reduce availability. The credit facility
bears interest at LIBOR plus an applicable margin or the prime rate.

At May 3, 2003 and May 4, 2002, the Company had (i) no cash borrowings under
its credit agreements and (ii) letters of credit outstanding not yet reflected
in accounts payables of $28,157,000 and $30,420,000, respectively. There were
no cash borrowings at any time during the first quarter of fiscal 2003 or
fiscal 2002. Letters of credit outstanding averaged $36,840,000 during the
first quarter of fiscal 2003 compared with $29,753,000 during the first
quarter of fiscal 2002, with the highest balance of $47,428,000 in February
2003 compared with $59,698,000 in April 2002.

Cash flows.Cash used in operating activities for the first quarter of fiscal
2003 was $4,972,000 compared with $6,986,000 in the first quarter of fiscal
2002. Cash used in operating activities during the first quarter of fiscal
2003 for seasonal inventory build-ups and new stores was $27,176,000 compared
with $21,601,000 for the first quarter of fiscal 2002. Accounts payable 
trade provided cash of $9,738,000 in the first quarter of fiscal 2003 compared
with $4,282,000 for the first quarter of fiscal 2002. Accounts payable  other
used cash of $10,720,000 in the first quarter of fiscal 2003 compared with
$4,079,000 for the first quarter of fiscal 2002. Other assets and liabilities
provided cash of $14,043,000 in the first quarter of fiscal 2003 compared with
a use of cash of $1,302,000 for the first quarter of fiscal 2002. Depreciation
and amortization amounted to $5,403,000 in the first quarter of fiscal 2003
compared with $5,825,000 for the first quarter of fiscal 2002.

Cash used in investing activities for the first quarter of fiscal 2003 was
$3,663,000 compared with $1,051,000 for the first quarter of fiscal 2002. Cash
was used primarily to fund capital expenditures for new and remodeled stores
and for other corporate purposes.

No cash was provided by financing activities for the first quarter of fiscal
2003. Cash provided by financing activities was $148,000 for the first quarter
of fiscal 2002 due to the exercise of stock options.

Other Cash Flow Matters.As noted in Note 6 to the Notes to Condensed
Consolidated Financial Statements contained herein, the Company received an
unfavorable decision from the Court in connection with the Hilfiger Matter.
The Court awarded damages of approximately $11 million plus reasonable
attorneys fees and related costs. Hilfiger also brought an action against Sun
relating to the allegedly infringing labels that gave rise to the trademark
infringement claims in the Hilfiger Matter. Goodys has certain
indemnification obligations to Sun and is paying for the defense of the Sun
Matter. The Company has liability insurance with limits greater than the
amount of damages awarded to Hilfiger, which the Company believes provides
coverage for the liability and legal fees resulting from the Hilfiger Matter.
Goodys also believes that there may be insurance coverage available for all
or a portion of the liability, if any, resulting from the Sun Matter. However,
the insurance carriers have reserved their rights regarding their obligations
to indemnify Goodys against damages resulting from the Hilfiger claims and
the Sun Matter and the carriers have asserted certain defenses against their
indemnity obligations. On May 13, 2003, Firemans Fund, the excess layer
(umbrella insurance) carrier, commenced an action against the Company seeking
a declaratory judgment against Goodys declaring that it has no duty to
indemnify Goodys in the Hilfiger Matter. The Company believes that it has
meritorious claims in the Insurance Matters for full insurance coverage. If
the Company does not prevail in the Insurance Matters and/or the claim for
coverage in the Sun Matter, however, the Company could be required to pay all
or a significant portion of the damage award in the Hilfiger Matter and/or any
potential damage award in the Sun Matter. The Company believes that it has
sufficient cash and credit availability to satisfy any potential liability in
the Hilfiger Matter and Sun

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Matter, even if the Company does not prevail in the Insurance Matters.

Outlook.The Company plans to open approximately 10 new stores, relocate or
remodel 8 or 9 stores and close approximately 4 stores during the remaining
three quarters of fiscal 2003. Capital expenditures for the remainder of
fiscal 2003 are estimated to be approximately $18,300,000, primarily related
to store improvements, management information systems and general corporate
purposes.

The Companys primary needs for capital resources are for the purchase of
store inventories, capital expenditures and for normal operating purposes.
Management believes that its existing working capital, together with
anticipated cash flows from operations, including credit terms from vendors
and factors, and the borrowings available under the credit facility will be
sufficient to meet the Companys operating and capital expenditure
requirements. However, an adverse outcome of the risks and uncertainties
described in the Companys 2002 Annual Report on Form 10-K under the caption
Certain Factors That May Affect Future Results could have a material adverse
effect on working capital or results of operations.




Item 3  Quantitative and Qualitative Disclosures about Market Risk

The Company has no material investments or risks in market risk sensitive
instruments.




Item 4  Controls and Procedures

Within the 90 days prior to the date of this Form 10-Q, the Company carried
out an evaluation, under the supervision and with the participation of the
Companys management, including the Companys Chairman and Chief Executive
Officer along with the Companys Chief Financial Officer and Chief Accounting
Officer, of the effectiveness of the design and operation of the Companys
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based
upon that evaluation, the Companys Chairman and Chief Executive Officer along
with the Companys Chief Financial Officer and Chief Accounting Officer
concluded that the Companys disclosure controls and procedures are effective
in timely alerting them to material information relating to the Company
(including its consolidated subsidiaries) required to be included in the
Companys periodic SEC filings. There have been no significant changes in the
Companys internal controls or in other factors which could significantly
affect internal controls subsequent to the date the Company carried out its
evaluation.




PART II  OTHER INFORMATION




Item 1    Legal Proceedings See Note 6 to the Notes to Condensed
Consolidated Financial Statements contained herein for a discussion of the
Hilfiger Matter, the Sun Matter and the Insurance Matters.




Item 2.    Changes in Securities and Use of Proceeds- None




Item 3.    Defaults Upon Senior Securities- None




Item 4.    Submission of Matters to a Vote of Security Holders- None




Item 5.    Other Information- None




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

a) Exhibits -

|      |  |                                                                                                                        
|----- |  | -----------------------------------------------------------------------------------------------------------------------
|10.98 |  | Employment agreement between the Registrant and
John G. Wise dated April 28, 2003.                                     
|      |  |                                                                                                                        
|15    |  | Accountants Awareness Letter                                                                                          
|      |  |                                                                                                                        
|99.1  |  | Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|      |  |                                                                                                                        
|99.2  |  | Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

14



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|     |  |                                                                                                                        
|---- |  | -----------------------------------------------------------------------------------------------------------------------
|99.3 |  | Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.



|b) |  | Reports on Form 8-K -                                                                                                                                                                                                                                                                                                                                                                           
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | On February 28, 2003, the Company filed a Current Report on Form 8-K
reporting under item 5 of its issuance of a press release concerning a
proposed Consent Decree setting forth the proposed settlement of the
class action race discrimination lawsuit originally filed in February
1999 against the Company and Robert M. Goodfriend, its Chairman of the
Board and Chief Executive Officer.
|  
|   |  | On March 19, 2003, the Company filed a Current Report on Form 8-K
reporting under item 5 of its issuance of a press release reporting
fiscal 2002 fourth quarter and year-end results.                                                                                                                                                                                                          
|  
|   |  | On May 12, 2003, the Company filed a Current Report on Form 8-K
reporting under item 5 of its issuance of a press release announcing
that a decision had been reached by the U.S. District Court for the
Northern District of Georgia in the action brought against Goodys by
Hilfiger.                                                                                                        

15



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GOODYS FAMILY CLOTHING, INC.




SIGNATURES



| |                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

|      |  |              |  |                                                                                                                                   
|----- |  | ------------ |  | ----------------------------------------------------------------------------------------------------------------------------------
|      |  |              |  | GOODYS FAMILY CLOTHING, INC.
(Registrant)                                                                                        
|     
|      |  |              |  |                                                                                                                                   
|     
|Date: |  | May 22, 2003 |  | /s/ Robert M. GoodfriendRobert M. Goodfriend
Chairman of the Board and
Chief Executive Officer                                    
|     
|      |  |              |  |                                                                                                                                   
|     
|Date: |  | May 22, 2003 |  | /s/ Edward R. CarlinEdward R. Carlin
Executive Vice President,
Chief Financial Officer and Secretary
(Principal Financial Officer)
|     
|      |  |              |  |                                                                                                                                   
|     
|Date: |  | May 22, 2003 |  | /s/ David G. PeekDavid G. Peek
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer)                  

16



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##### Table of Contents



GOODYS FAMILY CLOTHING, INC.
CERTIFICATION PURSUANT TO
RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert M. Goodfriend, Chairman of the Board and Chief Executive Officer of
the Company, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Goodys Family
Clothing, Inc. (the registrant);                                                                                                                                                                                                                           
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;    
|  
|3. |  | Based on my knowledge, the condensed consolidated financial
statements, and other financial information included in this quarterly
report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for,
the periods presented in this quarterly report;
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                         



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|             |  |     |  |                                                                                              
|------------ |  | --- |  | ---------------------------------------------------------------------------------------------
|             |  | By: |  | /s/ ROBERT M. GOODFRIENDRobert M. GoodfriendChairman of the Board and Chief Executive Officer
|            
|             |  |     |  |                                                                                              
|            
|May 22, 2003 |  |     |  |                                                                                              

17



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##### Table of Contents



GOODYS FAMILY CLOTHING, INC.
CERTIFICATION PURSUANT TO
RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Edward R. Carlin, Executive Vice President, Chief Financial Officer and
Secretary of the Company, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Goodys Family
Clothing, Inc. (the registrant);                                                                                                                                                                                                                           
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;    
|  
|3. |  | Based on my knowledge, the condensed consolidated financial
statements, and other financial information included in this quarterly
report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for,
the periods presented in this quarterly report;
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                         



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|             |  |     |  |                                                                                                    
|------------ |  | --- |  | ---------------------------------------------------------------------------------------------------
|             |  | By: |  | /s/ EDWARD R. CARLINEdward R. CarlinExecutive Vice President, Chief Financial Officer
and Secretary
|            
|             |  |     |  |                                                                                                    
|            
|May 22, 2003 |  |     |  |                                                                                                    

18



---



##### Table of Contents



GOODYS FAMILY CLOTHING, INC.
CERTIFICATION PURSUANT TO
RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David G. Peek, Senior Vice President and Chief Accounting Officer of the
Company, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Goodys Family
Clothing, Inc. (the registrant);                                                                                                                                                                                                                           
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;    
|  
|3. |  | Based on my knowledge, the condensed consolidated financial
statements, and other financial information included in this quarterly
report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for,
the periods presented in this quarterly report;
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                         



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|             |  |     |  |                                                                                 
|------------ |  | --- |  | --------------------------------------------------------------------------------
|             |  | By: |  | /s/ DAVID G. PEEKDavid G. PeekSenior Vice President and
Chief Accounting Officer
|            
|             |  |     |  |                                                                                 
|            
|May 22, 2003 |  |     |  |                                                                                 

19