**FORM 10-QUNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C.    20549**

****

| ý | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934** |
|--------|--------------------------------------------------------------------------------------------|

**For the quarterly period ended March 30, 2002**

**OR**

|  ̈ | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934** |
|--------|---------------------------------------------------------------------------------------------|

**For the transition period from _____ to  _____**

**Commission File No. 0-8544**

**SPEIZMAN INDUSTRIES, INC.***(Exact name of registrant as specified in its charter)*

| Delaware                                                                  | 56-0901212                               |
|---------------------------------------------------------------------------|------------------------------------------|
|                                                                           |                                          |
| **(State or other jurisdiction of   incorporation or organization)** | **(I.R.S. Employer Identification No.)** |
|                                                                      |                                          |
| 701 Griffith Road Charlotte, North Carolina                               | 28217                                    |
|                                                                           |                                          |
| **(Address of principal executive offices)**                              | **(Zip Code)**                           |

**(704) 559-5777(Registrant's telephone number, including area code)**

**Not Applicable(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 befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject tosuch filing requirements for the past 90 days.

** YES ****þ**                  **NO **** ̈**

Indicate the number of shares outstanding of each of the issuer's classes of common stockas of the latest practicable date.

| **Class of Common Stock** | **Outstanding atMay 10, 2002** |
|---------------------------|--------------------------------|
| Par value $.10 per share  | 3,255,428                      |

----

**AND SUBSIDIARIES**

**INDEX**

| PART I.  FINANCIAL INFORMATION:                                                                                                                                                          | **Page No.** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|
|                                                                                                                                                                                          |              |
|       Item 1.  Financial Statements:                                                                                                                            |              |
|                                                                                                                                                                                          |              |
|            Condensed ConsolidatedBalance Sheets                                                                                   | 3-4          |
|                                                                                                                                                                                          |              |
|            Condensed ConsolidatedStatements of Operations                                                                         | 5            |
|                                                                                                                                                                                          |              |
|            Condensed ConsolidatedStatements of Cash Flows                                                                              | 6            |
|                                                                                                                                                                                          |              |
|            Condensed ConsolidatedStatements of Stockholders’ Equity                                                              | 7            |
|                                                                                                                                                                                          |              |
|            Notes to CondensedConsolidated Financial Statements                                                                         | 8-11         |
|                                                                                                                                                                                          |              |
|       Item 2.  Management's Discussion and Analysis of FinancialCondition            and Results ofOperations | 11-21        |
|                                                                                                                                                                                          |              |
| PART II. OTHER INFORMATION:                                                                                                                                                                   |              |
|                                                                                                                                                                                          |              |
|       Item 6. Exhibits  and reports on Form 8-K                                                                                                                 | 22           |

Page2          

----

**SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED  BALANCE SHEETS**

|                                                                                                     |   | March 30,                    |   | June 30,                           |
|----------------------------------------------------------------------------------------------------------|--------|------------------------------|--------|------------------------------------|
|                                                                                                     |   | 2002                         |   | 2001                               |
|                                                                                                     |   |                              |   |                                    |
|                                                                                                          |   | (unaudited)                  |   |                               |
| **ASSETS**                                                                                               |        |                              |   |                                    |
| CURRENT:                                                                                                 |        |                              |        |                                    |
|    Cash                                                                                        | $      | 122,996       | $      | -              |
|    Accounts receivable, less allowances of      $895,334 and $747,092 |        | 11,127,894    |        | 19,440,188     |
|    Inventories                                                                                 |        | 14,645,524    |        | 16,721,714     |
|    Income tax receivable                                                                       |        | 2,798,503     |        | 577,717        |
|    Prepaid expenses and other current assets                                                   |        | 2,355,222     |        | 2,564,728      |
|                                                                                                     |   |                              |   |                                    |
|          TOTAL CURRENT ASSETS                                    |        | 31,050,139    |        | 39,304,347     |
|                                                                                                     |   |                              |   |                                    |
|                                                                                                     |        |                              |        |                                    |
|                                                                                                     |        |                              |        |                                    |
|                                                                                                     |        |                              |        |                                    |
| PROPERTY AND EQUIPMENT:                                                                                  |        |                              |        |                                    |
|    Building and leasehold improvements                                                         |        | 7,336,153     |        | 7,336,153      |
|    Machinery and equipment                                                                     |        | 938,687       |        | 1,083,517      |
|    Furniture, fixtures and transportation equipment                                            |        | 1,608,992     |        | 1,657,855      |
|                                                                                                     |   |                              |   |                                    |
|         Total                                                         |        | 9,883,832     |        | 10,077,525     |
|    Less accumulated depreciation and amortization                                              |        | (3,415,476)        |        | (2,865,649)         |
|                                                                                                     |   |                              |   |                                    |
|                                                                                                     |        |                              |        |                                    |
|          NET PROPERTY AND EQUIPMENT                              |        | 6,468,356     |        | 7,211,876      |
|                                                                                                     |   |                              |   |                                    |
|                                                                                                     |        |                              |        |                                    |
| DEFERRED TAX ASSET, LONG TERM                                                                            |        | 2,321,829     |        | 3,297,707      |
| OTHER LONG-TERM ASSETS                                                                                   |        | 223,370       |        | 268,750        |
| GOODWILL, NET OF ACCUMULATED AMORTIZATION                                                                |        | 3,790,407     |        | 4,790,407      |
|                                                                                                     |   |                              |   |                                    |
|                                                                                                          |        |                              |        |                                    |
|                                                                                                          | $      | 43,854,101    | $      | 54,873,087     |
|                                                                                           |        |                              |        |                                    |

 

 

See accompanying notes to condensed consolidated financialstatements.

Page3          

----

**Part I.    FINANCIAL INFORMATION**

**Item 1.    Financial Statements**

**SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED  BALANCE SHEETS**

|                                                                                                                                                                                                                                    |        | March 30,                    |        | June 30,                           |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|--------|------------------------------------|
|                                                                                                                                                                                                                                    |        | 2002                         |        | 2001                               |
|                                                                                                                                                                                                                               |   |                              |   |                                    |
|                                                                                                                                                                                                                               |        | (unaudited)                  |        |                                    |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                                                                                     |        |                              |        |                                    |
|                                                                                                                                                                                                                               |        |                              |        |                                    |
| CURRENT LIABILITIES:                                                                                                                                                                                                               |        |                              |        |                                    |
|    Bank overdraft                                                                                                                                                                                                        | $      | -             | $      | 1,438,466      |
|    Accounts payable                                                                                                                                                                                                      |        | 7,935,243     |        | 14,005,690     |
|    Customers’ deposits                                                                                                                                                                                             |        | 2,542,454     |        | 4,183,369      |
|    Accrued expenses                                                                                                                                                                                                      |        | 1,189,381     |        | 1,475,347      |
|    Current maturities of long-term debt                                                                                                                                                                                  |        | 10,317,327    |        | 901,216        |
|                                                                                                                                                                                                                               |   |                              |   |                                    |
|                                                                                                                                                                                                                               |        |                              |        |                                    |
|          TOTAL CURRENT LIABILITIES                                                                                                                                                         |        | 21,984,405    |        | 22,004,088     |
|                                                                                                                                                                                                                               |   |                              |   |                                    |
|                                                                                                                                                                                                                               |        |                              |        |                               |
| Long-term portion of revolving credit facility                                                                                                                                                                                     |        | -             |        | 10,978,000     |
| Other long-term obligations                                                                                                                                                                                                        |        | 4,702,761     |        | -              |
| Obligation under capital lease                                                                                                                                                                                                     |        | 4,420,653     |        | 4,524,682      |
|                                                                                                                                                                                                                               |   |                              |   |                                    |
|           TOTAL LIABILITIES                                                                                                                                                                |        | 31,107,819    |        | 37,506,770     |
|                                                                                                                                                                                                                               |   |                              |   |                                    |
|                                                                                                                                                                                                                               |        |                              |        |                                    |
|                                                                                                                                                                                                                               |        |                              |        |                                    |
| STOCKHOLDERS’ EQUITY:                                                                                                                                                                                                        |        |                              |        |                                    |
|    Common stock – par value $.10; authorized 12,000,000      shares at March 30, 2002 and 20,000,000 shares at      June 30, 2001, issued 3,396,228, outstanding 3,255,428 |        | 339,623       |        | 339,623        |
|    Additional paid-in capital                                                                                                                                                                                            |        | 13,047,150    |        | 13,047,150     |
|    Accumulated other comprehensive loss                                                                                                                                                                                  |        | (202,284)          |        | (263,585)           |
|    Retained earnings                                                                                                                                                                                                     |        | 148,616       |        | 4,829,952      |
|                                                                                                                                                                                                                               |   |                              |   |                                    |
|         Total                                                                                                                                                                                   |        | 13,333,105    |        | 17,953,140     |
|    Treasury stock, at cost, 140,800 shares                                                                                                                                                                               |        | (586,823)          |        | (586,823)           |
|                                                                                                                                                                                                                               |   |                              |   |                                    |
|          TOTAL STOCKHOLDERS’EQUITY                                                                                                                                                   |        | 12,746,282    |        | 17,366,317     |
|                                                                                                                                                                                                                               |   |                              |   |                                    |
|                                                                                                                                                                                                                                    |        |                              |        |                                    |
|                                                                                                                                                                                                                                    | $      | 43,854,101    | $      | 54,873,087     |
|                                                                                                                                                                                                                                    |        |                              |        |                                    |

See accompanying notes to condensed consolidated financialstatements.

Page4          

----

**SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED  STATEMENTS OF OPERATIONS**

|                                                                                                                                 | (Unaudited)                | (Unaudited)               |
|---------------------------------------------------------------------------------------------------------------------------------|----------------------------|---------------------------|
|                                                                                                                            | For the Three Months Ended | For the Nine Months Ended |
|                                                                                              |                            |                           |
|                                                                                                                            | 03-30-02                   | 03-31-01                  | 03-30-02 | 03-31-01 |
|                                                                                                                            | (13 Weeks)                 | (13 Weeks)                | (39 Weeks) | (39 Weeks) |
|                                                                                                                  |                            |                           |  |  |
|                                                                                                                            |                       |                      |   |   |
| REVENUES                                                                                                                        | $                          | 12,932,115      | $ | 21,164,396   | $ | 40,216,372   | $ | 59,870,962   |
|                                                                                                                            |                            |                      |  |   |  |   |  |   |
| COST OF SALES                                                                                                                   |                            | 11,216,537      |  | 17,661,204   |  | 34,916,791   |  | 52,414,925   |
|                                                                                                                  |                            |                           |  |  |
|                                                                                                                            |                            |                      |  |   |  |   |  |   |
| GROSS PROFIT                                                                                                                    |                            | 1,715,578       |  | 3,503,192   |  | 5,299,581   |  | 7,456,037   |
|                                                                                                                       |                            |                      |  |   |  |   |  |   |
| SELLING EXPENSES                                                                                                                |                            | 1,391,584       |  | 1,935,117   |  | 4,316,017   |  | 5,758,337   |
|                                                                                                                            |                            |                      |  |   |  |   |  |   |
| GENERAL AND ADMINISTRATIVE      EXPENSES                                                                    |                            | 1,627,321       |  | 1,542,566   |  | 4,646,595   |  | 5,532,749   |
|                                                                                                                            |                            |                      |  |   |  |   |  |   |
| LOSS ON GOODWILL IMPAIRMENT                                                                                                     |                            | 1,000,000       |  | -   |  | 1,000,000   |  | -   |
|                                                                                                                  |                            |                           |  |  |
|                                                                                                                            |                            |                      |  |   |  |   |  |   |
| OPERATING (LOSS) INCOME                                                                                                         |                            | (2,303,327)          |  | 25,509   |  | (4,663,031)  |  | (3,835,049)  |
|                                                                                                                            |                            |                      |  |   |  |   |  |   |
|      Net Interest Expense                                                                                   |                            | 398,502         |  | 626,076   |  | 1,536,305   |  | 1,784,200   |
|      Loss on settlement of uncommitted       foreign currency derivative contracts |                            | -               |  |  |  | -   |  | 3,925,947   |
|                                                                                                                  |                            |                           |  |  |
|                                                                                                                            |                            |                      |  |   |  |   |  |   |
| LOSS BEFORE BENEFIT FOR     INCOME TAX                                                                      |                            | (2,701,829)          |  | (600,057)  |  | (6,199,336)  |  | (9,545,196)  |
|                                                                                                                            |                            |                      |  |   |  |   |  |   |
| BENEFIT FOR INCOME TAX                                                                                                          |                            | (488,000)            |  | (230,000)  |  | (1,518,000)  |  | (3,640,100)  |
|                                                                                                                  |                            |                           |  |  |
|                                                                                                                            |                            |                      |  |   |  |   |  |   |
| NET LOSS                                                                                                                        | $                          | (2,213,829)          | $ | (370,567)  | $ | (4,681,336)  | $ | (5,905,096)  |
|                                                                                                                  |                            |                           |  |  |
|                                                                                                                            |                            |                      |  |   |  |   |  |   |
| Basic loss per share                                                                                                            |                            | $  (0.68)       |  | $  (0.11)  |  | $  (1.44)  |  | $  (1.82)  |
| Diluted loss per share                                                                                                          |                            | (0.68)               |  | (0.11)  |  | (1.44)  |  | (1.82)  |
|                                                                                                                            |                            |                      |  |   |  |   |  |   |
| Weighted average shares     Outstanding:                                                                    |                            |                      |  |   |  |   |  |   |
|      Basic                                                                                                  |                            | 3,255,428       |  | 3,252,428   |  | 3,255,428   |  | 3,252,428   |
|      Diluted                                                                                                |                            | 3,255,428       |  | 3,252,428   |  | 3,255,428   |  | 3,252,428   |

See accompanying notes to condensed consolidated financialstatements.

Page5          

----

**  SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF  CASH FLOWS**

|                                                                                                                                                                                                                                                                              | (Unaudited)               |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------|
|                                                                                                                                                                                                                                                                              | For the Nine Months Ended |
|                                                                                                                                                                                                                                                                         |                           |
|                                                                                                                                                                                                                                                                              | 03-30-02                  | 03-31-01 |
|                                                                                                                                                                                                                                                                              | (39 Weeks)                | (39 Weeks) |
|                                                                                                                                                                                                                                                     |                           |  |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                                                                                                                                                                        |                           |  |  |  |
|       Net loss                                                                                                                                                                                                                                      | $                         | (4,681,336) | $ | (5,905,096)  |
| Adjustments to reconcile net loss to cash provided by (used in)      operating activities:                                                                                                                                                          |                           |  |  |  |
|           Depreciation                                                                                                                                                                                                          |                           | 645,625  |  | 685,998   |
|           Amortization                                                                                                                                                                                                          |                           | 184,248  |  | 399,730   |
|           Provision for inventoryobsolescence                                                                                                                                                                                   |                           | 238,000  |  | 788,917   |
|           Provision for losses on accountsreceivable                                                                                                                                                                            |                           | 240,000  |  | 413,207   |
|           Deferred income taxes                                                                                                                                                                                                 |                           | (1,448,642) |  | (3,633,516)  |
|           Loss on impairment ofgoodwill                                                                                                                                                                                         |                           | 1,000,000  |  | -   |
|           Gain (loss) on disposal ofassets                                                                                                                                                                                      |                           | (13,080) |  | (2,710)  |
|           Decrease (increase) in:                                                                                                                                                                                               |                           |  |  |  |
|               Accountsreceivable                                                                                                                                                                            |                           | 8,072,294  |  | 11,697,909   |
|              Inventories                                                                                                                                                                                    |                           | 1,838,190  |  | (2,137,088)  |
|               Prepaidexpenses and other current assets                                                                                                                                                      |                           | 204,472  |  | 2,320,915   |
|               Otherassets                                                                                                                                                                                   |                           | 45,380  |  | 528,824   |
|           (Decrease) increase in:                                                                                                                                                                                               |                           |  |  |  |
|               Accountspayable and accrued liability on foreign currency                  derivatives and bankoverdraft |                           | (2,589,133) |  | (8,098,763)  |
|               Accruedexpenses, deferred revenue and customers’ deposits                                                                                                                               |                           | (1,841,060) |  | 1,292,059   |
|                                                                                                                                                                                                                                                     |                           |  |
|           Net cash provided by (used in)operating activities                                                                                                                                                                    |                           | 1,894,958  |  | (1,649,614)  |
|                                                                                                                                                                                                                                                     |                           |  |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                                                                                                                                                                        |                           |  |  |  |
|       Capital expenditures                                                                                                                                                                                                                          |                           | (12,643) |  | (275,716)  |
|       Proceeds on sale of assets                                                                                                                                                                                                                    |                           | 123,618  |  | 174,890   |
|                                                                                                                                                                                                                                                     |                           |  |
|           Net cash provided by (used in)investing activities                                                                                                                                                                    |                           | 110,975  |  | (100,826)  |
|                                                                                                                                                                                                                                                     |                           |  |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                                                                                                                                                                        |                           |  |  |  |
|       Net (payments) borrowings on line of creditagreement                                                                                                                                                                                          |                           | (1,478,000) |  | 1,440,000   |
|       Principal payments on long-term debt                                                                                                                                                                                                          |                           | (404,937) |  | (403,314)  |
|                                                                                                                                                                                                                                                     |                           |  |
|           Net cash (used in) provided byfinancing activities                                                                                                                                                                    |                           | (1,882,937) |  | 1,036,686   |
|                                                                                                                                                                                                                                                     |                           |  |
|                                                                                                                                                                                                                                                                              |                           |  |  |  |
| NET INCREASE (DECREASE) IN CASH                                                                                                                                                                                                                                              |                           | 122,996  |  | (713,754)  |
| CASH AND CASH EQUIVALENTS at beginning of period                                                                                                                                                                                                                             |                           | -  |  | 713,754   |
| CASH AND CASH EQUIVALENTS at end of period                                                                                                                                                                                                                                   | $                         | 122,996  | $ | -   |
|                                                                                                                                                                                                                                                     |                           |  |
|                                                                                                                                                                                                                                                                         |                      |   |   |   |
| Supplemental Disclosures:                                                                                                                                                                                                                                                    |                           |  |  |  |
|       Cash paid during period for:                                                                                                                                                                                                                  |                           |  |  |  |
|           Interest                                                                                                                                                                                                              | $                         | 1,542,606  | $ | 1,690,652   |
|           Income taxes                                                                                                                                                                                                          |                           | 64,670  |  | 40,200   |

See accompanying notes to condensed consolidated financialstatements.

Page6          

----

**SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF  STOCKHOLDERS’ EQUITY**

|                                                                                                                     | **Common Shares** |   | **Common Stock** |   | **Additional Paid-In Capital** |   | **Retained Earnings** |   | **Accumulated Other Comprehensive Loss** |   | **Treasury Stock** |   | **Comprehensive Loss** |
|---------------------------------------------------------------------------------------------------------------------|-------------------|---|------------------|---|--------------------------------|---|-----------------------|---|------------------------------------------|---|--------------------|---|------------------------|
|                                                                                                                     |                   |   |                  |   |                                |   |                       |   |                                          |   |                    |   |                        |
|                                                                                                                     |                   |   |                  |   |                                |   |                       |   |                                          |   |                    |   |                        |
| BALANCE, JULY 1, 2000                                                                                               | 3,393,228         | $ | 339,323          | $ | 13,045,200                     | $ | 10,692,607       | $ | -                              | $ | (586,823)          | $ |                        |
| Net loss                                                                                                            | -                 |   | -                |   | -                              |   | (5,862,655)           |   | -                              |   | -             |   | (5,862,655)            |
| Accumulated Comprehensive     loss - Interest rate swap, net       of tax   | -                 |   | -                |   | -                              |   | -                |   | (263,585)                           |   | -             |   | (263,585)              |
|                                                                                                                     |                   |   |                  |   |                                |   |                       |   |                                          |   |                    |   |                        |
|     Comprehensive Loss                                                                          | -                 |   | -                |   | -                              |   | -                |   | -                              |   | -             | $ | (6,126,240)            |
|                                                                                                                     |                   |   |                  |   |                                |   |                       |   |                                          |   |                    |   |                        |
| Exercise of stock options                                                                                           | 3,000             |   | 300              |   | 1,950                          |   | -                |   | -                              |   | -             |   |                        |
|                                                                                                                |                   |   |                  |   |                                |   |                       |   |                                          |   |                    |   |                        |
| BALANCE, JUNE 30, 2001                                                                                              | 3,396,228         |   | 339,623          |   | 13,047,150                     |   | 4,829,952        |   | (263,585)                           |   | (586,823)          |   |                        |
| Net loss                                                                                                            | -                 |   | -                |   | -                              |   | (4,681,336)           |   | -                              |   |  -            | $ | (4,681,336)            |
| Accumulated Comprehensive     Income - Interest rate swap,       net of tax | -                 |   | -                |   | -                              |   | -                |   | 61,301                         |   | -             |   | 61,301            |
|                                                                                                                     |                   |   |                  |   |                                |   |                       |   |                                          |   |                    |   |                        |
|     Comprehensive Loss                                                                               | -                 |   | -                |   | -                              |   | -                |   | -                              |   | -             | $ | (4,620,035)            |
|                                                                                                                |                   |   |                  |   |                                |   |                       |   |                                          |   |                    |   |                        |
| BALANCE, MARCH 30, 2002     (unaudited)                                                              | 3,396,228         | $ | 339,623          | $ | 13,047,150                     | $ | 148,616          | $ | (202,284)                           | $ | (586,823)          |   |                        |
|                                                                                                                     |                   |   |                  |   |                                |   |                       |   |                                          |   |                    |   |                        |

See accompanying summary of accounting policies and notes to condensedconsolidated financial statements.

Page7          

----

**SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIESNOTES  TO CONDENSED CONSOLIDATED FINANCIALSTATEMENTS**

****

Note 1.         Interim FinancialStatements

Inthe opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary topresent the Registrant's financial position, the results of operations and changes in cash flow for the periods indicated. Any interim adjustments are of a normal recurring nature unless otherwise indicated in the Notes to the FinancialStatements.

The accounting policies followed by the Registrant are set forth in the Registrant's Form10-K for the fiscal year ended June 30, 2001, which is incorporated by reference.

Note 2.        Deferred Revenue

TheCompany, in some instances with its laundry equipment and services business, is engaged in installation projects for customers on acontract basis.  Generally, retainage on such contracts is withheld and recorded as deferred revenue until the project iscomplete.  In addition, some contracts call for progress billings.  In such cases, the Company uses the percentage ofcompletion method to recognize revenue whereby sales are recorded based upon the ratio of costs incurred to total estimated costsat completion.  Deferred revenue was immaterial at March 30, 2002 and June 30, 2001.

Note 3.        Inventories

Inventories consisted of the following:

> 
March 30,

June 30,

2002

2001
 
(unaudited)

Machines

$

9,611,408

$

10,910,198

Parts and supplies

5,034,116

5,811,516
 
        Total

$

14,645,524

$

16,721,714

Note 4.        Taxes on Income

Taxeson income are allocated to interim periods on the basis of an estimated annual effective tax rate.  Other comprehensive income(losses), if any, are net of an estimated deferred tax expense (benefit).  Deferred income taxes at June 30, 2001 consistedprimarily of net operating loss carryforwards.   During March 2002, the Job Creation and Workers Association Act of 2002(“Stimulus Bill”) was passed by Congress and signed into law by President Bush.  The Stimulus Bill extends the netoperating loss carryback period from two to five years.  Accordingly, at March 30, 2002, the Company recognized a currentincome tax receivable of approximately $2.8 million for income taxes paid in fiscal years 1997 and 1998. 

Note 5.        Net Income (Loss) Per Share

Basic net income per share includes no dilution and is calculated by dividing net incomeby the weighted average number of common shares outstanding for the period.  Diluted net loss per share reflects the potentialdilution of securities that could share in the net income of the Company

Page8          

----

which consists of stock options using the treasury stockmethod.  In a period with a net loss, the weighted average shares outstanding will be the same for basic and diluted net lossper share.

Note 6.         Intangibles

In June 2001, the Financial Accounting Standards Board finalized Statement of FinancialAccounting Standards (SFAS) Statements No. 141, *Business Combinations* (SFAS 141), and No. 142, *Goodwill and OtherIntangible Assets* (SFAS 142).  SFAS 141 requires the use of the purchase method of accounting and prohibits the use of thepooling-of-interest methods of accounting for business combinations initiated after June 30, 2001.  SFAS 141 also requiresthat the Company recognize acquired intangible assets apart from goodwill if the acquired intangible assets meet certaincriteria.  SFAS 141 applies to all business combinations initiated after June 30, 2001 and for purchase business combinationscompleted on or after July 1, 2001.  It also requires, upon adoption of SFAS 142, that the Company reclassify, if applicable,the carrying amounts of intangible assets and goodwill based on the criteria in SFAS 141. 

SFAS 142 requires, among other things, that companies no longer amortize goodwill, butinstead test goodwill for impairment at least annually.  In addition, SFAS 142 requires that the Company identify reportingunits for the purposes of assessing potential future impairments of goodwill, reassess the useful lives of other existingrecognized intangible assets, and cease amortization of intangible assets with an indefinite useful life.  An intangible assetwith an indefinite useful life should be tested for impairment in accordance with the guidance in SFAS 142.  SFAS 142 isrequired to be applied in fiscal years beginning after December 15, 2001 to all goodwill and other intangible assets recognized atthat date, regardless of when those assets were initially recognized.  SFAS 142 requires the Company to complete atransitional goodwill impairment test six months from the date of adoption.

The Company elected early adoption of SFAS 142 for the fiscal year beginning July 1,2001.  In March 2002, the Company recognized an impairment loss of $1,000,000 for goodwill related to its Finishing Divisionas a result of lower forecasted revenue principally from the anticipated elimination of license fee revenue associated with the restructuringof certain trade debt (see Note 9).  The Finishing Division is a reporting unit of the Company’s Textile EquipmentSegment for purposes of assessing potential future impairment of goodwill associated with the Company’s acquisition of ToddMotion Controls, Inc. (“TMC”). 

Pursuant to SFAS 142, no amortization expense relating to the Company’s goodwill wasrecognized for the nine months ended March 30, 2002.  For the nine months ended March 31, 2001, amortization of goodwill was$330,000.

Note 7.        Risk Management and Derivative FinancialInstruments

Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instrumentsand Hedging Activities (SFAS 133), as amended by SFAS No. 137 and SFAS No. 138, establishes accounting and reporting standards forderivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. SFAS 133, as amended, requires the Company to recognize all derivative instruments on the balance sheet at fair value.  If thederivative is a hedge, changes in the fair value of derivatives are either offset against the change in fair value of assets,liabilities, or firm commitments through earnings or recognized in other comprehensive income (equity) until the hedged item isrecognized in earnings.  The ineffective portion of a derivative’s change in fair value is recognized inearnings.

Page9          

----

The Company has historically entered into forward exchange contracts to reduce the foreigncurrency exchange risks associated with its committed and anticipated lira and Euro denominated purchases, and not forspeculation.  As of March 30, 2002, the Company had no foreign exchange contracts.

The Company had two interest rate swap derivatives designated as cash flow hedges at March30, 2002.  The change in the fair market value during the current year was a gain of $61,301 net of tax expense, and wasrecognized in Other Comprehensive Loss (equity) at March 30, 2002.  For interest rate swap agreements, increases or reductionsin interest expense are recognized in the periods in which they accrue.

Note 8.        Line of Credit

The Company has a revolving credit facility and a line of credit for issuance ofDocumentary Letters of Credit with SouthTrust Bank, N.A.  Effective February 19, 2002, the Company entered into a ThirdAmendment and Forbearance Agreement (“Third Amendment”) relating to its original Credit Facility Agreement withSouthTrust.  The Third Amendment provides a revolving credit facility up to $15.0 million and an additional line of credit forissuance of Documentary Letters of Credit up to $4.0 million.  The availability under the combined facility is limited to aborrowing base as defined in the Third Amendment and the original Credit Facility Agreement.  The credit facility agreementmatures on July 31, 2002.

Advances under the revolving credit facility and line of credit as amended are broken downinto two components for the calculation of interest expense: the London Interbank Offered Rate (LIBOR) component that accruesinterest at the LIBOR rate plus 11⁄2% to 21⁄2%, and a base rate component that accrues interest at prime plus 1%. The rates are scaled based upon the Company’s funded debt as defined in the original Credit Facility Agreement.  Priorto the Second Amendment and pursuant to the terms of the First Amendment dated November 13, 2000, the LIBOR component accruedinterest at the LIBOR rate plus 3%, and the base rate component accrued interest at prime plus 11⁄4 %.  The Company alsohas in effect interest rate swap derivatives that fix the interest rate for advances under the LIBOR component at 7.77% and 7.79%plus the applicable margin for borrowing levels of $3.0 million and $5.0 million, respectively, which expire on June 2, 2002 andJune 2, 2003, respectively.  As of March 30, 2002, amounts outstanding of $9.5 million were advanced under the LIBOR componentat a rate of 1.97% plus 2.4%.  The facility is secured by all the assets of the Company.

The Credit Facility as amended by the Third Amendment contains specific covenants thatrequire, among other things, the Company to maintain specified EBITDA targets for each month through July 31, 2002. TheCompany was in compliance at March 30, 2002 with its bank covenants.

Note 9.        Other Long-Term Obligations

Other long-term obligations primarily include trade debt with payment dates beyond one year.  Effective February2002, theCompany restructured its payment terms with Lonati S.p.A., its largest supplier, on current trade obligations amounting to $5.2million, less $1.0 million owed to the Company.  The net balance of $4.2 million is payable over a 24-month period commencingMarch 1, 2004.  The restructured terms also include an interest charge at 6% per annum, payable quarterly commencing September2002.  The agreement also provides the Company through February 2006 with exclusive distribution rights for Lonati’sproduct line and the ability to purchase in U.S. dollars.  In consideration, the Company entered into a non-binding agreementand is in the process of amending its License Agreement with Todd Motion Controls, Inc. (“TMC”) and SRA, an affiliateof Lonati, whereby license fees previously due under this 

Page10          

----

 agreement would be eliminated, commencing January 1, 2002. Previously, the agreement provided for quarterly license fees of $125,000 payable to the Company through December 2004.

The Company also restructured other current trade obligations in the amount of $1.2million to a two- year period, payable monthly commencing January 31, 2002.  The amount of this obligation bears nointerest.

Note 10.       Segment Information

The Company operates primarily in two segments of business, textile equipment(“textile”) and laundry equipment and services (“laundry”).  Prior to the acquisition of Wink Davis onAugust 1, 1997, the Company operated only in the Textile Segment.  Corporate operations include general corporate expenses,amortization of debt issuance costs, interest expense related to the Company’s credit facility and elimination ofintersegment balances.  The table below summarizes financial data by segment. 

| Segment Information                                                                                                                                                                                                       | Nine Months         | Total Textile    | Total Laundry          |                  |                  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------|------------------|------------------------|------------------|------------------|
| Ended March                                                                                                                                                                                                               | Segment             | Segment     | Corporate         |  Total      |
|                                                                                                                                                                                                                      |                     |                  |                        |                  |                  |
|                                                                                                                                                                                                                           |                     |                  |                        |                  |                  |
| Net Revenues                                                                                                                                                                                                         | 2002                | $                | 22,486,978        | $                | 17,729,394  | $ | -  | $ |  40,216,372  |
|                                                                                                                                                                                                                           | 2001                |                  |  31,831,747  |                  | 28,039,215  |  | -  |  | 59,870,962  |
|                                                                                                                                                                                                                           |                     |                  |                        |                  |                  |  |  |  |  |
| (Loss) Earnings before Interest       &Taxes                                                                                                                                            | 2002                |                  |   (3,174,886)     |                  | (542,559)        |  | (945,586) |  | (4,663,031) |
|                                                                                                                                                                                                                           | 2001                |                  | (8,307,892)            |                  | 1,428,661   |  | (881,765) |  | (7,760,996) |
|                                                                                                                                                                                                                           |                     |                  |                        |                  |                  |  |  |  |  |
| Capital Expenditures                                                                                                                                                                                                      | 2002                |                  | 11,243            |                  | 1,400       |  | -  |  |  12,643  |
|                                                                                                                                                                                                                           | 2001                |                  | 261,753           |                  | 13,963      |  | -  |  | 275,716  |
|                                                                                                                                                                                                                           |                     |                  |                        |                  |                  |  |  |  |  |
| Depreciation and Amortization                                                                                                                                                                                        | 2002                |                  | 582,391           |                  | 63,234      |  | 184,248  |  | 829,873  |
|                                                                                                                                                                                                                           | 2001                |                  | 728,151           |                  | 287,848     |  | 69,729  |  | 1,085,728  |
|                                                                                                                                                                                                                           |                     |                  |                        |                  |                  |  |  |  |  |
| Interest Expense                                                                                                                                                                                                     | 2002                |                  | 679,105           |                  | 6,306       |  | 850,894  |  | 1,536,305  |
|                                                                                                                                                                                                                           | 2001                |                  | 757,975           |                  | 8,231       |  | 1,017,994  |  | 1,784,200  |
|                                                                                                                                                                                                                      |                     |                  |                        |                  |                  |  |  |  |  |
|                                                                                                                                                                                                                      |                     |                  |                        |                  |                  |  |  |  |  |
| Segment Information                                                                                                                                                                                                       | Three Months        | Total Textile    | Total Laundry          |                  |                  |
| Ended March                                                                                                                                                                                                               | Segment   | Segment     | Corporate         | Total            |
|                                                                                                                                                                                                                      |                     |                  |                        |                  |                  |
| Net Revenues                                                                                                                                                                                                         | 2002                | $                | 5,743,001         | $                | 7,189,114   | $ | -  | $ |  12,932,115  |
|                                                                                                                                                                                                                           | 2001                |                  |  8,786,959   |                  | 12,377,437  |  | -  |  | 21,164,396  |
|                                                                                                                                                                                                                           |                     |                  |                        |                  |                  |  |  |  |  |
| (Loss) Earnings before Interest       &Taxes                                                                                                                                                 | 2002                |                  |   (2,235,526)     |                  | 177,859     |  | (245,660) |  | (2,303,327) |
|                                                                                                                                                                                                                           | 2001                |                  |    (930,087) |                  | 1,265,478   |  | (309,882) |  | 25,509  |
|                                                                                                                                                                                                                           |                     |                  |                        |                  |                  |  |  |  |  |
| Capital Expenditures                                                                                                                                                                                                      | 2002                |                  | -                 |                  | -           |  | -  |  |  -  |
|                                                                                                                                                                                                                           | 2001                |                  | 22,466            |                  | 3,000       |  | -  |  | 25,466  |
|                                                                                                                                                                                                                           |                     |                  |                        |                  |                  |  |  |  |  |
| Depreciation and Amortization                                                                                                                                                                                             | 2002                |                  | 193,764           |                  | 21,078      |  | 61,416  |  | 276,258  |
|                                                                                                                                                                                                                           | 2001                |                  | 238,656           |                  | 95,677      |  | 29,031  |  | 363,364  |
|                                                                                                                                                                                                                           |                     |                  |                        |                  |                  |  |  |  |  |
| Interest Expense                                                                                                                                                                                                     | 2002                |                  | 45,995            |                  | 2,287       |  | 350,220  |  | 398,502  |
|                                                                                                                                                                                                                           | 2001                |                  | 111,064           |                  | 2,944       |  | 512,068  |  | 626,076  |
|                                                                                                                                                                                                                           |                     |                  |                        |                  |                  |  |  |  |  |
| Total Assets                                                                                                                                                                                                              |                     |                  |                        |                  |                  |  |  |  |  |
|       March 30, 2002 (unaudited)                                                                                                                                                            | $                   | 32,964,954  | $                      | 15,209,165  | $                | (4,320,018) | $ |  43,854,101  |
|       June 30, 2001                                                                                                                                                                         |                     | 43,338,426  |                        | 14,570,252  | $                | (3,035,591) | $ | 54,873,087  |
|                                                                                                                                                                                                                           |                     |
| In 2001, the loss before interest and taxes for the textile segment includes a one-timeloss on settlement of uncommitted foreign currency derivatives $3,925,947 recognized during the second quarter ended December2000. |
| In 2002, the loss before interest and taxes for the textile segment includes a loss onimpairment of goodwill of $1,000,000.                                                                                               |

Page11          

----

**MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS**

**GENERAL**

 Speizman Industries, Inc. is a major distributor of specialized industrial machinery,parts and equipment.  The Company operates primarily in two segments, textile equipment (“Textile Segment”) andlaundry equipment and services (“Laundry Segment”).  In the Textile Segment, the Company distributes sock-knittingmachines, other knitting equipment, automated boarding, finishing and packaging equipment used in the sock industry, and relatedparts.  In the Laundry Segment, the Company sells commercial and industrial laundry equipment, including the distribution ofmachines and parts as well as providing installation and after sales service. 

**RESULTS OF OPERATIONS**

Total revenues decreased 39% to $12.9 million for the third quarter ended March 30, 2002,compared to $21.2 million for the same period last year.  Revenues for the Textile Segment for the third quarter ended March2002 decreased 35% to $5.7 million, compared to $8.8 million for the same period last year.  Revenues for the Laundry Segmentdecreased 42% to $7.2 million, compared to $12.4 million in the same period of the prior fiscal year.  For the nine monthsended March 2002, total revenues decreased 33% to $40.2 million, compared with $59.9 million for the same period in the prioryear.  For the nine months ended March 2002, the Company’s revenues for its Textile and Laundry Segments decreased 37%to $17.7 million, and 29% to $22.5 million, respectively, compared to the same period in the prior year.  The decrease insales for both segments is primarily from reduced market demand due to the slowness in the textile and hospitality industries, aswell as the downturn in the U.S. economy that commenced during last fiscal year. 

Gross profit for the third quarter ended March 30, 2002 was $1.7 million, a reduction ofapproximately $1.8 million from the gross profit in the third quarter ended March 31, 2001 of $3.5 million.  Consolidatedgross profit as a percentage of revenues decreased to 13.2% in the third quarter of fiscal 2002.  This compared to a grossprofit percentage of 16.5% for the same period in the prior fiscal period.  The reduction in gross profit was primarily due toreduced volume for both the Textile and Laundry Segments amounting to $1.5 million, reduced license fee revenue for the TextileSegment of $125,000, and reduced margins amounting to $130,000 related to laundry equipment sales.

Gross profit for the nine months ended March 2002 was $5.3 million, a $2.2 millionreduction in the amount reported in the prior year’s nine-month period.  Gross profit, as a percentage of revenues,improved to 13.1% for the current nine-month period, compared to 12.4% reported for the prior nine-month period.  The decreasein gross profit dollars was attributable primarily from reduced volume in both segments resulting in a reduction in gross profitcontribution of $2.9 million, a reduction in textile sales commission revenue of $500,000, reduced contribution in service andmiscellaneous revenues of $400,000, and reduced contribution due to lower margin primarily related to laundry equipment sales of$700,000, offset by lower cost of sales in the current period of $2.3 million relating to the textile group.  The lower costsof sales in the current year of $2.3 million as compared to the prior year’s nine-month period primarily resulted from theutilization of foreign currency contracts during fiscal 2000 that were devalued because they were originally designated forpurchase orders that were subsequently cancelled or delayed.

Selling expenses for the third quarter ended March 2002 reduced to $1.4 million from $1.9million in the prior fiscal period.  The reduction was primarily due to lower costs in salaries, travel, and variable sellingcosts including commissions.  As a percentage of revenues, selling expensesincreased to 10.7% in the current fiscal period from 9.1% for the prior year’sthird quarter. The increase as a percentage of sales is due to an increase incertain selling costs in the Textile Segment that are primarily fixed in nature,such as 

Page12          

----

 general insurance and warehouse-related costs, coupledwith a reduction in sales volume during the current period when compared to same period last year.

Selling expenses year to date decreased $1.4 million compared with the same period lastyear.  The decrease was primarily due to reduced sales salaries in the Textile Segment and lower variable expenses such ascommissions, travel, and exhibitions.  As a percentage of revenue, selling expenses were 10.7% compared to 9.6% for the sameperiod last year.  The increase as a percentage of sales is due to certain fixed selling expenses, such as warehouse-relatedcosts and salaried personnel in the Textile Segment, coupled with a decrease in textile sales compared with the same period lastyear.

General and administrative expenses were $1.6 million in the third quarter.  Theamount for the same period last year was $1.5 million.  The slight increase in the current third fiscal quarter when comparedto the same period in the last fiscal year was primarily the result of an increase in provision for baddebts of $130,000.  Increases in other costs includinghealth insurance, were offset by reduced amortization expense and reductions in personnel.  Net amortizationexpenses were lower primarily due to the Company ceasing to amortize goodwill in accordance with recent accounting pronouncements,offset by an increase in the amortization of debt issuance cost associated with the Company’s bank facility that matures onJuly 31, 2002.

General and administrative expenses for the nine months ended March 2002 decreased$900,000 when compared with the same period last year to $4.6 million.   The decrease in general and administrativeexpenses is primarily due to reductions in personnel and a decrease in amortization and bad debt expense.

Loss on goodwill impairment of $1.0 million during the third quarter of the current fiscalyear reflected an adjustment to the goodwill associated with the 1998 acquisition of Todd Motion Controls, Inc. (TMC).  Theimpairment in the carrying value of TMC’s goodwill was primarily due to theanticipated elimination of license fee revenues, effectiveJanuary 1, 2002, in connection with an agreement to restructure certain trade debt with thelicensee that Speizman is currently negotiating.  Refer to further discussion in Liquidity and Capital Resources.  

Net interest expense for the current year’s third quarter decreased approximately$225,000 compared to the same period last year.  A decrease of $120,000 was due to reduced interest payments resulting fromlower average borrowings on the company’s bank facility in the current quarter as compared to the same period in the prioryear.  Additionally, the company amended its current lease for its principal place of operation with its lessor, Speizman LLC,to reflect an annual rent reduction of $280,000.  This lease is accounted for as a capital lease and, accordingly, during thecurrent quarter, a $70,000 reduction was reflected in interest expense when compared to the same period in the prior year. The balance of the interest expense reduction recognized during the current quarter when compared to the prior year was primarilydue to lower interest rates incurred on the Company’s line of credit facility.

 Net interest expense during the nine months ended March 30, 2002 improved to $1.5 millionwhen compared to interest expense of approximately $1.8 million for the same period in the prior fiscal period.  The reductionwas primarily due to reduced interest payments resulting from lower average borrowings on the company’s bank facility duringthe nine-month current period as compared to the same period in the prior year, and the reduction in the capital lease payment thatcommenced January 1, 2002.

Benefit for income tax in the current quarter was $488,000 or 18% of the current periodpre-tax loss.  This compared to $230,000 benefit for income tax in the prior year’s third quarter or 38% of the prioryear’s third quarter pre-tax loss.  The reduction in the current period’s effective tax rate was primarily due tono tax deduction recognized on the loss associated with goodwill impairment of $1.0 million that occurred duringthe currentquarter. The provision for the nine-month period includes a valuation reserve of $220,000 provided on the Company’s grossdeferred tax asset of $3.4 million as of March 2002.  The Company 

Page13          

----

 deemed it prudent to record a deferred tax valuationallowance during the second quarter in the current fiscal year in light of general economic conditions remaining soft, and morespecifically, the textile industry deteriorating further than initially anticipated at that time.

Net loss for the third quarter was $2.2 million or $0.68 per share both basic anddiluted.  This compared with a loss for the same period last year of $370,000 or $.11, basic and diluted.  The loss forthe current quarter includes a $1,000,000 loss on goodwill impairment.  Net loss for the nine months ended March 2002 was $4.7million or $1.44 per share, basic and diluted, and compared to a loss in the prior nine-month period of $5.9 million or $1.82 pershare, basic and diluted.  The loss in the prior year’s nine-month period included a one-time loss on settlement ofuncommitted foreign currency derivative contracts of $3.9 million before tax benefit.

**LIQUIDITY AND CAPITAL RESOURCES**

The Company has a revolving credit facility with SouthTrust Bank, N.A.  The agreementwith SouthTrust as recently amended, expires on July 31, 2002 and provides a line of credit up to $15.0 million and an additionalline of credit for issuance of Documentary Letters of Credit up to $4.0 million.  The availability under the combined lines ofcredit is limited by the percentage of eligible accounts receivable and inventory determined from time to time by SouthTrust. As of April 26, 2002, the Company had borrowings of $9.5 million and had an unused availability of  $1.0 million under itscredit facility based upon its borrowing base at that time.

As a way to improve the Company’s liquidity,in May 2002 the Company entered into an agreement with Lonati S.p.A that amendstheir agreement under which the Company distributes Lonati machines in theUnited States and Canada and provides for Lonati's forbearance and paymentrestructuring with respect to trade debt owed Lonati by the Company.  Thisamendment is effective February 2002.  The amendment  includes atwo-year suspension on trade debt of $5.2 million owed to Lonati S.p.A., less $1.0 million owed by Lonati to theCompany.   The net principal balance of $4.2 million is payable over a 24-month period commencing March 1, 2004. This amount bears interest at 6% per annum, which is payable quarterly, commencing September 2002. Commencing March 2002, future tradepayments to Lonati for equipment and parts are payable with a 10% deposit, with a Documentary Letter ofCredit due for the balance payable 90 days after shipment.  Previously, the Company’s payment terms for equipment were10% deposit, 50% with Documentary Letter of Credit due 90 days after shipment, and 40% payable 120 days after shipment date, up toan open line of approximately $4.0 million.  The Company, through February2006,  also received an extension of its distribution rights and is able topurchase with Lonati S.p.A. in U.S. dollars.  Lonati may terminate thedistribution agreement, as amended, and accelerate payment of all amounts owedupon certain events of default.  See  “– Other Risk Factors–Relatedto Lonati Agreement”for a discussion of these events of default.  Lonati S.p.A. and itsaffiliates have a secured interest, subordinated to SouthTrust Bank, N.A. in allassets of the Company.

Related to the amendment of theLonati agreement, the Company is also negotiating an amendment of its licenseagreement with Todd Motion Controls, Inc. (TMC) and SRA, S.r.l., an affiliate ofLonati, whereby license fees previously due to the Company, will be eliminatedeffective January 1, 2002.   Previously, the agreement provided forquarterly license fees of $125,000 payable to the Company through December 2004.

During March 2002, the Job Creation and Workers Association Act of 2002 (commonly referredto as the “Stimulus Bill”) was passed by U.S. Congress and signed into law by the President.  The Stimulus Billextends the net operating loss carryback period from two to five years, effective for losses generated during fiscal years2001.  Accordingly, at March 30, 2002, the Company recognized a current income tax receivable of approximately $2.8 millionfor income taxes paid in fiscal years 1997 and 1998.  The Company anticipates $2.2 million will be received by June 2002, withthe balance due after the filing of its 

Page14          

----

 current fiscal year 2002 tax return. The Company anticipates using the tax proceedsto further reduce its debt with SouthTrust.  

Amounts outstanding under the line of credit with SouthTrust for direct borrowings bearinterest based upon two components:  London Interbank Offered Rate (LIBOR) rate plus 1.5% to 2.5% for a short term fixedperiod and prime plus 0% to 1% for the non-fixed period.  The rates vary based upon the Company’s funded debt as definedin the loan agreement.  The Company has two interest rate swaps that fix the LIBOR interest rate (exclusive of margin of 250basis points) at 7.77% and 7.79% for borrowings of $3.0 million and $5.0 million, respectively, which expire on June 2, 2002 andJune 3, 2003, respectively.

Working capital at March 30, 2002 was $9.1 million as compared to $17.3 million at June30, 2001.  The working capital ratio was 1.41 at March 30, 2001 and 1.79 at June 30, 2001.  The decrease in workingcapital was primarily due to the classification of the Company’s debt with SouthTrust Bank of $9.5 million as current sincethe debt facility matures on July 31, 2002.  Excluding the classification of the SouthTrust debt as current, theCompany’s working capital ratio would improve to 2.49. 

Net cash provided from operating activities for the nine months ended March 30, 2001 was$1.9 million.  Net cash provided by operating activities was primarily due to a reduction in accounts receivable of $8.1million, a reduction in inventories of $1.8 million, a non-cash loss for impairment of goodwill of $1.0 million, and non-cashexpenses of $1.3 million.  These were partially offset by a net loss of $4.7 million, a reduction in accounts payable andoverdraft of $2.6 million, a reduction in customer deposits of $1.8 million, and a non-cash tax benefit of $1.5 million.

Accounts receivable decreased at March 30, 2002 compared to June 30, 2001 primarily fromreduced billing resulting from reduced demand for equipment in the marketplace and from the offset of $1.0 million owed by theCompany’s largest supplier against the amounts owed by the Company that were restructured into a long-termobligation.

Inventories decreased at March 30, 2002 compared to June 30, 2001 primarily from reducedpurchases of stock inventory and reductions in existing stock through sales.

The increase in current income tax receivable at March 30, 2002 compared with June 30,2001 resulted from the Stimulus Bill passed in March 2002 which extended the net operating loss carryback provisions from two tofive years.  The long term deferred tax asset decreased by $2.8 million as a result of the legislation, which was offset by anon-cash benefit recognized during the nine months ended March 30, 2002 of $1.7 million, net of a valuation allowance of$220,000.  The Company believes the net deferred tax benefit as of March 30, 2002 will be recoverable through its normalcourse of business in the future.

Accounts payable decreased at March 30, 2002 compared to June 30, 2001 primarily fromreduced purchasing actively resulting from reduced demand for equipment and from the restructuring of $5.2 million of tradeobligations with the Company’s largest supplier, Lonati, S.p.A., into a long term trade note payable.

Customer deposits decreased at March 30, 2002 compared to June 30, 2001 primarily fromlower orders of equipment and from the restructuring of a $1.2 million refundable deposit currently owed to a customer into atwo-year note.

Net cash provided by investing activities was approximately $111,000 for the nine monthsended March 2002 principally from the sale of certain equipment.  Net cash used by financing activities was $1.9 million forthe nine months ended March 30, 2002, which included payments of $1.5 million on the Company’s bank credit facility andprincipal payments on long-term debt of $405,000.

Page15          

----

The Company has satisfied its cash requirements in the past principally from cashgenerated from operations and borrowings under its line of credit facility with commercial banks. The Company’s currentline of credit facility with SouthTrust Bank, N.A. is scheduled to mature on July 31, 2002. The Company does not have thefinancial resources to repay this debt and will therefore need to refinance this debt prior to the maturity date.  There is noassurance that the Company will be able to refinance this obligation with another lender on a timely basis, on commerciallyreasonable terms, or at all.  Additionally, the textile industry has continued to experience tightened lending practices fromtraditional financial institutions which may further hinder the Company’s ability to refinance this debt, especially in lightof the Company’s recent financial losses.  In the event the Company is unable to obtain refinancing or additional neededcapital, the Company would be required to significantly reduce its operations, dispose of assets and/or sell additional securitieson terms that could be dilutive to current stockholders.

 **OUTLOOK**** **

Fiscal 2002 Equipment Bookings – The Company during the first six months in itscurrent fiscal period experienced a decline in its equipment bookings.  The Company has seen a modest improvement, primarilyin its Textile Segment since February 2002.  In furtherance with the Company’s cost saving initiatives that began infiscal year 2001, the Company reduced its expenses to help mitigate the adverse effects from the overall decline in equipmentbookings during its fiscal period ending March 2002.

Hosiery Equipment – Shipments of the new generation closed toe sock knitting machineproduced by Lonati, S.p.A. of Brescia, Italy, the world’s largest manufacturer of hosiery knitting machines, began inmid-March 2001.  The new generation closed toe machines have been commercially accepted and the Company anticipates they couldgradually replace most of the conventional athletic sock machines in the United States and Canada over the next four to sixyears.

Knitted Fabric Equipment –  The market demand for seamless actionwear machinesdecreased significantly since its peak two years ago.  The Company does not feel that this is the end of the demand forseamless type garments.  However, it now appears that only the large, well-capitalized underwear and lingerie firms who havesignificant resources with brand names and direct relationships with major retail outlets will have the ability to purchasesignificant quantities of additional seamless garment machines.

Wink Davis – The Company, through Wink Davis, maintains a strong presence in theUnited States industrial laundry segment through its sale of new equipment, parts and services.  Over the past nine months,the demand for on premise laundry equipment has declined significantly.  The Company does not feel this is the end of demandand expects this market segment to improve somewhat towards the end of fiscal year 2002. Proposals for larger installation projects continue to remain active; however, if successful, margins will be slightly lower due tolower selling prices as a result of increased competition in a relatively tight market.

Other Areas of Development – The Company continually explores opportunities foradditional growth including new relationships with manufacturers that have competitive product offerings in its existing marketchannels. 

Page16          

----

**EMPLOYEES**

As of March 30, 2002, the Company had 123 full-time domestic employees. TheCompany’s employees are not represented by a labor union, and the Company has never suffered an interruption of business as aresult of a labor dispute.  The Company considers its relations with its employees to be good.

**BACKLOG**

As of April 26, 2002, the Company’s backlog of unfilled equipment orders wasapproximately $16.4 million, which includes an order for $4.0 million that is contingent upon the customer obtaining financing tosatisfy payment.  The period of time required to fill orders varies depending on the model ordered, manufacturers’production capabilities, and availability of overseas shippers.  The Company typically fills its backlog within 12 months;however, orders constituting the current backlog are subject to customer cancellation, changes in delivery and machine performance.  As a result, the Company’s backlog may not necessarily be indicative of future revenue and will not necessarily leadto revenues in any future period.  Any cancellation, delay or change in orders which constitute our current or future backlogmay result in lower than expected revenues.

**SEASONALITY AND OTHER FACTORS**

There are certain seasonal factors that may affect the Company’s business. Traditionally, manufacturing businesses in Italy close for the month of August, and the Company’s hosiery customers close forone week in July.  Consequently, no shipments or deliveries, as the case may be, of machines distributed by the Company thatare manufactured in Italy are made during these periods which fall in the Company’s first quarter.  In addition,manufacturing businesses in Italy generally close for two weeks in December, during the Company’s second quarter. Fluctuations of customer orders or other factors may result in quarterly variations in net revenues from year to year.

**EFFECTS OF INFLATION AND CHANGING PRICES**

Management believes that inflation has not had a material effect on the Company’soperations.

**QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK**

The Company is exposed to market risks, which include changes in U.S. and internationalinterest rates as well as changes in foreign currency exchange rates as measured against the U.S. dollar and each other.  TheCompany attempts to reduce these risks by utilizing financial instruments, pursuant to Company policies.

The value of the U.S. dollar affects the Company’s financial results.  Changesin exchange rates may positively or negatively affect the Company’s revenues (as expressed in U.S. dollars), cost of sales,gross margins, operating expenses, and retained earnings.  Where the Company deems it prudent, it engages in hedging thosetransactions aimed at limiting in part the impact of currency fluctuations.  The Company has historically entered into forwardexchange contracts to protect against currency exchange risks associated with the Company’s anticipated and firm commitmentsof lira-denominated purchases for resale.

These hedging activities provide only limited protection against currency exchangerisks.  Factors that could impact the effectiveness of the Company’s programs include volatility of the currencymarkets, and availability of hedging instruments.  All currency contracts that are entered into by the Company are componentsof hedging programs and are entered into for the sole purpose of hedging an existing or anticipated currency exposure, not forspeculation.  Although the Company maintains these programs to reduce the impact of changes in currency exchange rates, whenthe U.S. dollar sustains a strengthening

Page 17          

----

position against the Euro in which the Company has anticipated purchase commitments, theCompany’s earnings could be adversely affected if future sale prices cannot be increased because of market pressures. The Company had no foreign exchange contracts outstanding as of March 30, 2002.

The Company is also subject to interest rate exposure on $9.5 million of debt outstandingat March 30, 2002 that was priced at interest rates that float with the market.  The Company has interest rate swaps to hedgeadverse interest rate changes on a portion of this debt; specifically for borrowing levels of $3.0 million and $5.0 million,interest is fixed at 7.77% and 7.79%, respectively, exclusive of a margin for the bank at 250 basis points.  These swapsexpire on June 2, 2002 and June 2, 2003, respectively.  A one hundred basis point change in interest rates on the averagevariable portion on the Company’s borrowings for the nine months ended March 30, 2002 would have impacted net interestexpense by $27,000.  Reference is made to Note 8 for additional information.

**NOTE REGARDING PRIVATE SECURITIES LITIGATION REFORM ACT**

This report contains forward-looking statements that have been made pursuant to theprovisions of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements are based on currentexpectations, estimates, and projections about Speizman's industry, management beliefs, and certain assumptions made by Speizman'smanagement.  Words such as "anticipates," "expects," "intends," "plans," "believes,” "seeks," "estimates," variations ofsuch words, and similar expressions are intended to identify such forward-looking statements.  These statements are notguarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict;therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Such risks and uncertainties include those set forth herein under the caption "Other Risk Factors.”  Unless required bylaw, the Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of newinformation, future events, or otherwise.  However, readers should carefully review the risk factors set forth in otherreports and documents that the Company files from time to time with the Securities and Exchange Commission.

**OTHER RISK FACTORS **

***Risks Related to Speizman’s Bank Debt***

As of April 26, 2002, Speizman had $9.5 million in borrowings under its line of creditfacility with a commercial bank.  The scheduled maturity date for this facility is July 31, 2002.  The Company currentlydoes not have the financial resources to repay this debt when it becomes due and will therefore need to refinance this debt priorto the maturity date.  There is no assurance that the Company will be able to refinance this debt with another lender on atimely basis, on commercially reasonable terms, or at all.  Additionally, the textile industry has continued to experiencetightened lending practices from traditional financial institutions which may further hinder Speizman’s ability to refinancethis debt, especially in light of Speizman’s recent financial losses.  If Speizman is unable to refinance this debt orobtain needed additional capital, it would be required to significantly reduce its operations, dispose of assets and/or selladditional securities on terms that could be dilutive to current stockholders.

***Risks Related to Lonati Agreement***

In May 2002, the Company and LonatiS.p.A. entered into an agreement effective February 2002, providing for theamendment of their agreement under which Speizman distributes Lonatisock-knitting machines in the United States and Lonati's forbearance and paymentrestructuring with respect to $4.2 million of trade debt owed by Speizman toLonati.  This amendment and forbearance agreement provides that thefollowing events, among others, will constitute an event of default underSpeizman's distribution agreement with Lonati, as amended.

Page 18          

----

- failure to pay any amounts owed    Lonati when due, which failure continues for 10 days after written notice;
- an event of default occurring under    Speizman's existing credit facility with SouthTrust; or
- failure to refinance its existing    credit facility at maturity for a new term extending beyond July 31, 2003.

Upon the occurrence of an event ofdefault, Lonati can terminate its distribution agreement with Speizman and candeclare all amounts then due Lonati payable in full.

***Speizman’s Ability to Return toProfitability***

Due principally to decline in sales, Speizman incurred a net loss of $1.4 million in the first quarter of fiscal 2002, $1.0million in the second quarter of fiscal 2002, and $2.2 million in the third quarter of fiscal 2002. In addition, Speizmanincurred net losses of $5.9 million in fiscal 2001 principally as a result of losses associated with foreign currencyderivatives.  For the nine months ended March 30, 2002, Speizman’s generated cash from operating activities of $1.9million.  Although Speizman intends to further reduce its expenses, the Company will need to generate increases in itsrevenues to return to profitability and in order to generate cash from future operating activities.

***Speizman’s Large Amount of Debt Could Negatively Impact its Business and itsStockholders***

Principally as a result of losses funded over the past nine months ended March 30, 2002and fiscal year 2001, the Company is burdened with a large amount of debt. Speizman’s large amount of debt couldnegatively impact its stockholders in many ways, including:

> -  reducing funds available to support its business operations and for other corporatepurposes because portions of cash flow from operations must be dedicated to the payment of its existing debt; 
-  impairing its ability to obtain additional financing for working capital, capitalexpenditures, acquisitions or general corporate purposes; 
-  increasing vulnerability to increases in interest rates; 
-  hindering its ability to adjust rapidly to changing market conditions; and 
-  making it more vulnerable to a further downturn in general economic conditions or in itsbusiness. 

***Relationship with Foreign Suppliers***

The majority of Speizman Industries’ suppliers for parts and equipment are based inforeign countries primarily concentrated in Italy.  There can be no assurance that Speizman will not encounter significantdifficulties in any attempt to enforce any provisions of the agreements with foreign manufacturers, or any agreement that may arisein connection with the placement and confirmation of orders for the machines manufactured by foreign manufacturers or obtain anadequate remedy for a breach of any such provision, due principally that they are foreign companies.

Page 19          

----

***Dependence on Lonati***

The Company's operations are substantially dependent on the net revenues generated fromthe sale of sock knitting and other machines manufactured by both Lonati S.p.A. and Santoni, S.p.A., Brescia, Italy, one ofLonati's subsidiaries, and the Company expects this dependence to continue. Sales of sock knitting and other machines manufacturedby Lonati and Santoni generated an aggregate of approximately 30.4% and 53.5% of the Company's net revenues in fiscal 2001 andfiscal 2000, respectively.  The Company amended its agreement with Lonati for the sale of its machines effective February 2002to be the exclusive agent through February 2006.  The Company has acted as the United States sales agent and distributor forcertain machines manufactured by Lonati continuously since 1982.  The cost to the Company of Lonati machines, as well as thedelivery schedule of these machines, are at the discretion of Lonati.  Management believes that the Company’srelationship with Lonati will continue to be strong as long as the Company generates substantial sales of Lonati machines; however,there can be no assurance that the Company will be able to do so or that the Company's relationship with Lonati will continue orwill continue on its present terms.  Any decision by Lonati to sell machines through another distributor or directly topurchasers would have a material adverse effect on the Company.

***Machine Performance and Delayed Deliveries***

During fiscal 2000 and the early part of fiscal year 2001, the Company experienced issueswith machine performance and delays from Lonati in shipments of closed toe knitting machines and Santoni undergarment knittingmachines.  The Company experienced material cancellations or postponements of orders due to these delays and performanceissues.  There can be no assurance that delayed deliveries in the future or issues with machine performance on newertechnology will not result in the loss or cancellation of significant orders. The Company also cannot predict situations inItaly such as potential employee strikes or political developments which could further delay deliveries or have other adverseeffects on the business of Lonati and the other Italian manufacturers represented by the Company.

***Foreign Currency Risk***

Historically, Speizman Industries’ purchases of foreign manufactured machinery andspare parts for resale were denominated in Italian lira or Euro dollars.  For purchases of machines that were denominated inItalian lira or Euro dollars, Speizman generally purchased foreign currency hedging contracts to compensate for anticipated dollarfluctuations; however, during fiscal year 2001, the Company experienced adverse effects utilizing lira hedging contracts for ordersthat were postponed or delayed.  Prior to fiscal year 2001 and for approximately 30 years, the Company did not experience anyadverse effect from utilizing lira-hedging contracts.  During fiscal year 2001, and in light of newer technology that wasbeing delivered by Lonati represented by its newer version closed toe single cylinder sock knitting machine, and with previousexperiences of delays associated with the development of its previous generation closed toe machine, the Company arranged withLonati and its affiliates to purchase its products for resale in U.S. dollars.  Speizman’s arrangement to buy in U.S.dollars with Lonati contractually ends in February 2006.  The Company had no foreign exchange contracts outstanding as ofMarch 30, 2002.  In the future, for purchases of machines that are supplied by other manufacturers that are denominated inEuro dollars, Speizman Industries feels its current practices enable the Company to adjust sales prices, or to commit to Eurodollar hedging contracts that effectively compensate for anticipated dollar fluctuations.

Additionally, international currency fluctuations that result in substantial price levelchanges could impede or promote import/export sales and substantially impact profits.  Speizman is not able to assess thequantitative effect of such international price level changes could have upon Speizman Industries’ operations.  Therecan be no assurance of fluctuations and foreign exchange rates will not have an adverse effect on Speizman Industries’ futureoperations.  All of Speizman Industries’ export sales originating from the United States are made in U.S.dollars.

Page 20          

----

***Industry Conditions***

The Company's business is subject to all the risks inherent in acting as a distributorincluding competition from other distributors and other manufacturers of both textile and laundry equipment, as well as thetermination of profitable distributor-manufacturer relationships.

The Company's laundry equipment segment is subject to the risks associated with newconstruction in the hospitality industry. Currently, there is a slowdown in construction of new hotels due to a general slowdown inthe U.S. economy and excess room availability.

The Textile Segment is subject to the risks associated with certain categories in thetextile industry, specifically, for socks, underwear, and actionwear garments.  The textile industry risks relating to socks,underwear, and actionwear garments include the impact of style and consumer preference changes.  These factors may contributeto fluctuations in the demand for the Company's sock knitting and packaging equipment and knitted fabric equipment products. There is a slowdown in underwear and actionwear garments that commenced during the second half of the last fiscal year.  Therealso appeared to be a downturn in the sock industry during the first six months of the Company’s fiscal period, however,there has been a modest upturn in bookings during recent months than what has been experienced over the last nine to twelvemonths.

***Nasdaq Listing     ***

The Company’s common stock has been listed on the Nasdaq SmallCap Market since March20, 2001 and was listed on the Nasdaq National Market System from October 1993 to March 19, 2001. The Company’scontinual listing of its common stock on the Nasdaq SmallCap Market is subject to certain criteria whichincludes a minimum bid of$1.00 as well as maintaining a minimum market value of public float of $1.0 million.  The minimum value of public floatapproximates a bid price of $0.41 as it relates to the Company’s publicly traded common stock.  Since January 2002, theCompany’s stock has been trading below $1.00.  The Company received official notification by Nasdaq regardingnoncompliance with the minimum bid requirement and has 180 days to regain compliance for the minimum bid requirement, whichinvolves maintaining a closing bid price of at least $1.00 for a minimum period of 10 consecutive trading days.  The Companymay also request an appeal with Nasdaq if it fails to regain compliance within the 180 day period which expires on August 13,2002.  However, no assurance can be made about the outcome of such appeal.  If the Company loses its Nasdaq SmallCapMarket status, its common stock might trade in the OTC – Bulletin Board, which is viewed by most investors as a lessdesirable marketplace.  In such event, the market price of the common stock may be adversely impacted and a stockholder mayfind it difficult to dispose, or obtain accurate quotations as to the market value, of the Company’s commonstock. 

 

Page 21          

----

**PART II.     OTHER INFORMATION**

| I**tem 6.  Exhibits and reports on Form 8-K** |
|---------------------------------------------------------|
|                                                    |
|                                                         | (a) | Exhibits: |
|                                                    |  |  |
|                                                         |  | 10(a) | Agency Agreement by and between Lonati S.p.A. and Speizman Industries, Inc. regardingMexico dated December 3, 2001. |
|                                                    |  |  |  |
|                                                         |  | 10(b) | Second Amendment to Lease Agreement by and between The Speizman LLC and SpeizmanIndustries, Inc. effective as of January 1, 2002. |
|                                                    |  |  |  |
|                                                         |  | 10(c) | Third Amendment & Forbearance Agreement by and among Speizman Industries, Inc. and itssubsidiaries and SouthTrust Bank, dated as of February 19, 2002. |
|                                                    |  |  |  |
|                                                         |  | 10(d) | Dealer Agreement between Pellerin Milnor Corporation and Wink Davis Equipment Co., Inc.dated as of February 1, 2002. |
|                                                    |  |  |  |
|                                                         |  | 10(e) | Commercial Lease between Master Distributors, Inc. t/a Atlantic Beverage Co., Inc. andWink Davis Equipment Co., Inc. dated as of September 6, 2001. |
|                                                    |  |  |  |
|                                                         |  | 10(f) | Second  Amendment to Agency Agreement and Forbearance Agreement between Lonati, S.p.A.  and Speizman Industries, Inc., effective as of February 1, 2002. |
|                                                    |  |  |  |
|                                                         | (b) | Reports on Form 8-K: |
|                                               |  |  |
|                                                         |  | None. |

Page22          

----

**SIGNATURES**

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

|                               | SPEIZMAN INDUSTRIES, INC.                                                                                                                                                                                                                            |
|-------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                               |             (Registrant)                                                                                                                                                                      |
|                          |                                                                                                                                                                                                                                                      |
| Date:  May 14, 2002 | /s/    *Robert S.Speizman*                                  |
|                               | By:  Robert S. Speizman                                                                                                                                                                                                                    |
|                               | Title:  President                                                                                                                                                                                                                          |
|                          |                                                                                                                                                                                                                                                      |
|                          |                                                                                                                                                                                                                                                      |
| Date:  May 14, 2002 | /s/    *John C.Angelella*                                   |
|                               | By:  John C. Angelella                                                                                                                                                                                                                     |
|                               | Title:  CFO/Secretary-Treasurer                                                                                                                                                                                                            |

Page23          

----

**EXHIBIT INDEX**

 

| **ExhibitNumber**                  | **Description**                                                                                                                                            |
|------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **     ** |
| 10(a)                              | Agency Agreement by and between Lonati S.p.A. and Speizman Industries, Inc. regardingMexico dated December 3, 2001.                                        |
|                               |                                                                                                                                                            |
| 10(b)                              | Second Amendment to Lease Agreement by and between The Speizman LLC and SpeizmanIndustries, Inc. effective as of January 1, 2002.                          |
|                               |                                                                                                                                                            |
| 10(c)                              | Third Amendment & Forbearance Agreement by and among Speizman Industries, Inc. and itssubsidiaries and SouthTrust Bank, dated as of February 19, 2002. |
|                               |                                                                                                                                                            |
| 10(d)                              | Dealer Agreement between Pellerin Milnor Corporation and Wink Davis Equipment Co., Inc.dated as of February 1, 2002.                                       |
|                               |                                                                                                                                                            |
| 10(e)                              | Commercial Lease between Master Distributors, Inc. t/a Atlantic Beverage Co., Inc. andWink Davis Equipment Co., Inc. dated as of September 6, 2001.        |
|                               |                                                                                                                                                            |
| 10(f)                              | Second  Amendment to Agency Agreement and Forbearance Agreement between Lonati, S.p.A.  and Speizman Industries, Inc., effective as of February 1, 2002.   |
|                               |                                                                                                                                                            |