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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                            ------------------------

                                   FORM 10-K

(MARK ONE)

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   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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                  FOR THE FISCAL YEAR ENDED DECEMBER 29, 2001
                                       OR

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   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15( ) OF THE
           SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED].
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                         COMMISSION FILE NUMBER 0-20382

                            ------------------------

                                 DANSKIN, INC.

             (Exact name of registrant as specified in its charter)

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               DELAWARE                                     62-1284179
    (State or other jurisdiction of            (I.R.S. Employer Identification No.)
    incorporation or organization)
530 SEVENTH AVENUE, NEW YORK, NEW YORK                        10018
    (Address of principal executive                         (Zip Code)
               offices)
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      Registrant's telephone number, including area code:  (212) 764-4630

       Securities registered pursuant to Section 12(b) of the Act:  NONE

          Securities registered pursuant to Section 12(g) of the Act:
         COMMON STOCK, PAR VALUE $.01 PER SHARE, AND ASSOCIATED RIGHTS

                            ------------------------

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

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in the definitive proxy statement incorporated
by reference in Part III of this annual report on Form 10-K or any amendment to
this Form 10-K. __

    As of March 1, 2002, the aggregate market value of the Common Stock held by
non-affiliates of the registrant was $1,509,290. Such aggregate market value was
computed by reference to the closing price of the Common Stock as quoted by the
National Quotation Bureau on such date. As of March 1, 2002, there were
68,945,454 shares of the registrant's Common Stock outstanding, excluding 1,083
shares held by a subsidiary.

    Unless the context indicates otherwise, the term "Company" refers to
Danskin, Inc. and, where appropriate, one or more of its subsidiaries.

                      DOCUMENTS INCORPORATED BY REFERENCE

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                         DANSKIN, INC. AND SUBSIDIARIES
                               TABLE OF CONTENTS

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PART I
Item 1.   Business....................................................      2
Item 2.   Properties..................................................     14
Item 3.   Legal Proceedings...........................................     14
Item 4.   Submission of Matters to a Vote of Security Holders.........     14

PART II
Item 5.   Market for the Registrant's Common Stock and Related
            Stockholder Matters.......................................     15
Item 6.   Selected Consolidated Financial Data........................     15
Item 7.   Management's Discussion and Analysis of Financial Condition
            and Results of Operations.................................     19
Item 7A.  Quantitative and Qualitative Disclosure About Market Risk...     32
Item 8.   Financial Statements and Supplementary Data.................     32
Item 9.   Changes in and Disagreements with Accountants on Accounting
            and Financial Disclosure..................................     32

PART III
Item 10.  Directors and Executive Officers of the Registrant..........     33
Item 11.  Executive Compensation......................................     36
Item 12.  Security Ownership of Certain Beneficial Owners and
            Management................................................     40
Item 13.  Certain Relationships and Related Transactions..............     42

PART IV
Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form
            8-K.......................................................     43

SIGNATURES............................................................     45

CONSOLIDATED FINANCIAL STATEMENTS.....................................    F-1

FINANCIAL STATEMENT SCHEDULES.........................................    S-1
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                                       1
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                                     PART I

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

ITEM 1. BUSINESS

    Danskin, Inc. and Subsidiaries (the "Company") has made significant progress
under current management in its "right-sizing" reorganization plan implemented
over the last three fiscal years. Despite being negatively impacted by capital
constraints during this timeframe, the Company has benefited from substantial
operational improvements and successes in reaching new customers and channels of
distribution as well as expansion of its licensing efforts. The Company's
financial results for fiscal year 2001 were negatively impacted by capital
constraints coupled with the general downturn in the economy and apparel
industry. The Company's management remains confident that progress will continue
in its reorganization efforts.

    Specifically, in fiscal 1999, capital constraints impacted all aspects of
the Company's business including: the ability to purchase piece goods; its
ability to fulfill customers' orders resulting in both a decline in potential
revenues, as a substantial percentage of orders were either shipped late and/or
only partially fulfilled, and declines in orders as a result of inadequate
and/or mismatched inventory, poor reporting systems, limited marketing
investment and the absence of an integrated and focused retail strategy.

    Commencing in June 1999, the Company took a number of positive steps to
address these issues. In June 1999, Carol Hochman was brought in as the
Company's President and Chief Executive Officer. During the second half of
fiscal 1999, Mrs. Hochman and a number of new senior executives addressed the
foregoing operating issues by implementing a "right-sizing" reorganization of
the Company's personnel and manufacturing infrastructures, eliminated
substantial operating costs and changed its approach to merchandising and
selling, eliminating unprofitable SKUs, emphasizing high quality businesses,
adding new customers and licenses, improving factory efficiency with an
effective and growing outsourcing capability as well as significant process
modifications, instituting a replenishment and forecasting capability to improve
fulfillment and maximize revenue, and developing an integrated and focused
retail strategy.

    Although significant progress has been made in addressing the operating
issues which current management began addressing in fiscal 1999, the Company's
results of operations continue to be hampered by the negative impact of the
capital constraints experienced by the Company for the last three fiscal years
including limited marketing investment, poor reporting systems and restrictions
on piece goods and raw materials purchases. In addition, results of operations
in fiscal 2001 were negatively impacted by weakness in the overall economy and
the apparel industry.

    At December 29, 2001, availability under the Company's Revolving Credit
Facility was an overadvance of ($5,206). Pursuant to certain amendments to the
Loan and Security Agreement executed in March 2002, the Lender has provided the
Company with additional borrowing capacity of varying amounts through
December 31, 2002 based on the Company's forecasted monthly business plans
through fiscal year 2002, plus an additional $3,000 in excess availability to a
maximum overadvance of $10,987 (the "Overadvance"). Based on the aforementioned
Overadvance from its lender, the Company believes it will have sufficient
liquidity in fiscal year 2002 to operate the business in the normal course,
contingent upon achievement of its forecasted monthly business plans, taking
into account the $3,000 in additional availability above the requirements of its
business plan, as described above. (See Managements' Discussion and Analysis of
Financial Condition and Results of Operations, Liquidity and Capital Resources.)

    The Company is currently seeking to raise additional capital through the
sale of debt or equity securities. The Company presently anticipates that the
proceeds from any such sale, if successful, will

                                       2
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be used for general working capital purposes. (See Managements' Discussion and
Analysis of Financial Condition and Results of Operations, Liquidity and Capital
Resources.)

    The Company designs, manufactures, markets and/or licenses several leading
brands of women's activewear, dancewear and legwear.
Danskin(-Registered Trademark-), Zen Sport-TM- from
Danskin(-Registered Trademark-), Round-the-Clock(-Registered Trademark-),
Freestyle(-Registered Trademark-) and Danskin Girl-TM- are the Company's
principal proprietary brands. The Company also manufactures women's legwear
under the Ellen Tracy(-Registered Trademark-), Givenchy(-Registered Trademark-)
and Evan Picone(-Registered Trademark-) brands and women's bodywear under New
York City Ballet(-Registered Trademark-) and Denise
Austin(-Registered Trademark-) brands pursuant to license agreements. In
addition to its branded merchandise, the Company manufactures and markets
private label merchandise, principally legwear, for many major retailers,
including most full line department stores. The Company currently operates as
two divisions: Danskin Division for activewear and Pennaco for legwear.

    Danskin(-Registered Trademark-) is a leading brand of women's activewear,
legwear, and dancewear in the United States, enjoying a total brand awareness
factor of over 80% among target women. According to the Women's Wear Daily 100
Study, Danskin ranks 6th in consumer perception for the Activewear Category. The
Company manufactures and sells activewear, dancewear and legwear to girls and
women under the Danskin(-Registered Trademark-) label and New York City
Ballet(-Registered Trademark-) and to large-size women under the Danskin
Plus(-Registered Trademark-) label. Although known for its design of seasonal
fashion offerings and its wide range of colors, currently approximately 75% of
the Danskin Division's net revenues are attributable to basic styles, with black
being the most popular color. The Company currently licenses the
Danskin(-Registered Trademark-) brand to manufacturers of women's underwear,
women's and girl's socks and women's fitness equipment and accessories. In
addition, the Company licenses the Freestyle(-Registered Trademark-) diffusion
line to manufacturers of women's and girl's activewear, women's and girl's socks
and girl's intimate apparel. The Danskin Division currently produces
approximately 36% of its activewear products at its plant in York, Pennsylvania
and is one of the only major suppliers of branded women's activewear with
substantial domestic manufacturing capacity. The Company believes that its
domestic manufacturing allows it to respond to customer orders quickly and also
allows its designers to respond quickly to market trends.

    The Company's Danskin Division operates two full-priced stores and 32 outlet
stores in 18 different states. The Company's outlet stores, in addition to
offering in-line merchandise, provide a distribution channel for irregulars and
excess inventory.

    Pennaco hosiery is widely recognized for its quality, fit and innovation.
Pennaco is one of the oldest manufacturers of hosiery in the United States and
the second largest supplier of sheer hosiery to domestic, full line department
stores and apparel specialty stores, as well as being a leading supplier of
private label hosiery to these stores. The Company markets
Round-the-Clock(-Registered Trademark-), a proprietary brand, which has been in
the market since 1919, as well as the Ellen Tracy(-Registered Trademark-),
Givenchy(-Registered Trademark-) and Evan Picone(-Registered Trademark-)
licensed brands of hosiery.

STRATEGY

    The Company's market includes products intended for a woman's active
lifestyle, including activewear, dancewear and legwear. The Company has
developed a diversified portfolio of quality branded and private label products
that can be offered to consumers at varying price points through its various
channels of distribution. The Company's objectives are: (i) expand its portfolio
of products in order to become a complete apparel and accessories resource for
the active woman by capitalizing on the strong name recognition of its
proprietary and licensed brands, (ii) expand its distribution channels both
domestically and internationally, and (iii) reduce SKU's to eliminate
unprofitable products and focus the activewear line for a more compelling
presentation to retailers and consumers.

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    Key elements of the Company's strategy include the following:

EXPANSION OF DANSKIN(-REGISTERED TRADEMARK-) PRODUCT LINES

    The Company believes that innovative product is the key to the success and
longevity of Brand Danskin(-Registered Trademark-). The first company to bring
Supplex(-Registered Trademark-)Lycra(-Registered Trademark-) performance fabric
to the market, Danskin has expanded its Supplex(-Registered Trademark-)
Lycra(-Registered Trademark-) fabric line by continually offering new fabric
innovations. Supplex(-Registered Trademark-) Rib and Heathered
Supplex(-Registered Trademark-) are textured fabrics that combine style with
technology, while Woven Supplex(-Registered Trademark-) offers the benefit of
Supplex(-Registered Trademark-) fabric in off the body silhouettes that take
advantage of the lifestyle trend toward loose, cover-up activewear.

    Because Danskin believes that innovation based on consumer need drives
consumer interest, the Company has introduced the O2 Performance-TM- category.
O2 Performance-TM- successfully combines the soft comfortable hand of cotton
that women prefer with the advanced moisture management technology of
Coolmax(-Registered Trademark-) Polyester. The core fabric for this category is
proprietary, carrying both the Cotton Council and DuPont(-Registered Trademark-)
Coolmax(-Registered Trademark-) trademarks. The Company also continues to
capitalize on the success of Dry Zone-TM- by product innovation in performance
t-shirts and shells. Dry Zone-TM-fabrics are designed to regulate body
temperature in multi-climate conditions. The fabric category combines
technological innovation with comfort and style, the hallmark of
Danskin(-Registered Trademark-) active product.

    To continue to move Brand Danskin(-Registered Trademark-) beyond its
traditional stretch bodywear platform, the Company expanded its offering of Yoga
garments for Holiday 2001 to address this fast-growing fitness trend, leveraging
the success of Zen Sport-TM- from Danskin(-Registered Trademark-) launched in
1999. Both Danskin Yoga and Zen Sport-TM- from Danskin(-Registered Trademark-)
respond to a woman's need for stretch apparel that is suited to low impact
activities such as yoga, meditation and stretch exercises, satisfying the need
for comfort while reinventing the way we define fitness wear. Danskin Yoga is
designed and marketed to meet the specific needs of the sporting goods and
moderate department store channels of distribution. Danskin was awarded
"Innovative Product of the Year" by The Sports Authority during its annual
Vendor Leadership Conference in early year 2002 for its Yoga products.

    Innovation meets heritage and tradition with the introduction of New York
City Ballet(-Registered Trademark-) dance apparel, scheduled to debut in stores
in Fall 2002. New York City Ballet and Danskin, both world renowned for
uncompromising quality, will introduce contemporary dance apparel dedicated to
"beauty, innovation and quality." Danskin's New York City Ballet product
introduces cotton lycra seamless leotard's superior stretch, comfort and
advanced technology. The four-way stretch of seamless product, with its
unlimited range of motion, redefines stretch dance apparel. The unique
fabrication and product assortment of New York City
Ballet(-Registered Trademark-) tiers Brand Danskin(-Registered Trademark-) dance
apparel, allowing the Company to expand its position on innovation.

    Danskin legwear under the New York City Ballet(-Registered Trademark-) label
will also allow the Company to tier product and offer innovation in legwear.
First to the marketplace with Coolmax(-Registered Trademark-) tights, this
product is sleek, durable and technologically focused to provide maximum
moisture management and comfort carrying the DuPont(-Registered Trademark-)
Coolmax(-Registered Trademark-) trademark.

    Danskin also reached agreement with Denise Austin to endorse Danskin
products and has created an innovative new line of active apparel, Denise
Austin(-Registered Trademark-)by Danskin(-Registered Trademark-). Ms. Austin, a
fitness inspiration for millions of American women, will wear
Danskin(-Registered Trademark-) products on Lifetime Television, where she
appears daily on two shows, as well as when taping her videos. Denise also sells
Denise Austin(-Registered Trademark-) by Danskin(-Registered Trademark-) apparel
on QVC Network for the Company.

INTERNATIONAL SALES EXPANSION

    The Company believes that Brand Danskin(-Registered Trademark-) enjoys
strong recognition in many foreign markets, and that the Company has not taken
full advantage of this opportunity. The Company has targeted

                                       4
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international markets as a potential source of growth in fiscal 2002 and beyond.
The Company has brought on a Vice President, International to focus on driving
international growth, primarily through distribution channel expansion
throughout Western Europe. Penetration of sales per female capita, even at half
the level of the United States could yield significant upside revenue potential
for the Company. Activewear sales of other manufacturers/suppliers have been
significant in international markets. However, the Company's sales in the market
have been primarily related to its dance products. A recent fact-finding study,
commissioned by the Company, found strong retailer interest in carrying
Danskin's Activewear line. Export net sales over the past three full fiscal
years were $4,800 for fiscal 1999, $4,400 for fiscal 2000, and $3,700 for fiscal
2001. The Company remains optimistic of the opportunities available to it
through International distribution expansion.

LICENSING OF THE DANSKIN(-REGISTERED TRADEMARK-) NAME AND DIFFUSION MARKS

    The Company currently licenses the Danskin(-Registered Trademark-) brand to
manufacturers of women's and girl's underwear, women's and girl's socks, and
women's fitness equipment and accessories. The Company believes that there is a
significant opportunity to license the Danskin(-Registered Trademark-) name for
additional product categories, including such categories as swimwear, body care
products, eyewear, dance shoes, accessories (bags, watches, headwear), toddler
playwear, footwear and nutritional supplements. The Company believes that
selective licensing enhances the value of the brand, by expanding the
opportunities for retail purchases of its brands, affording cross-marketing and
merchandising opportunities and providing additional product categories for sale
in Company-owned stores. The Company is presently in discussions with a number
of additional potential licensees for various product categories.

    In fiscal 2001, the Company signed a multi-year license agreement with
Jacques Moret, Inc., for the manufacture of the
Freestyle(-Registered Trademark-) line of women's and girl's activewear and
bodywear for distribution to all 991 Target Stores retail locations throughout
the United States commencing June 2001. Danskin retains design approval over all
product manufactured and distributed by Jacques Moret. In addition, the Company
also signed a multi-year license agreement with Renfro Corporation for women's
and girl's socks as well as with Delta Galil Industries for girl's underwear and
is in discussion with other potential licensees for other product categories.
The Freestyle(-Registered Trademark-) lines are represented by product that is
distinctly different from both the current Brand
Danskin(-Registered Trademark-)offering and the current Target offering. The
women's and girl's lines offer Target's clientele fashion and function at a
value that will exceed consumer expectation levels.

    The Company believes that the Target opportunity coupled with the new
licenses for Brand Danskin(-Registered Trademark-), are a significant step in
the development of the Company's branding strategy and its transformation from
strictly a manufacturer to a brand manager and marketer. The Company believes
that the credibility and power of Brand Danskin(-Registered Trademark-) will
allow it to seek enhanced distribution of Brand Danskin(-Registered Trademark-)
products, as well as its diffusion lines, through its in-house efforts and
additional strategic licensing opportunities.

COMPANY-OWNED STORE STRATEGY

    Recognizing that the Company's retail stores provide a platform for
capitalizing on the strong brand awareness enjoyed by Brand
Danskin(-Registered Trademark-), provide a channel of distribution where the
Company can showcase its products, and act as a laboratory for product
innovation, the Company has revitalized its retail operations, including the
hiring of a dedicated management team, closing under-performing locations,
downsizing certain locations, remerchandising the stores, installing a point of
sale system in all locations to provide critical inventory and sales information
and implementing visual merchandising programs in all locations to achieve a
consistent and identifiable retail impression and presence.

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    OUTLET STORES.  During fiscal 2001, capital constraints continued to
severely impact the retail operations of the Company. Management has taken steps
to evaluate the performance of its retail outlet locations. The Company's
efforts are designed to transform its outlet stores to smaller, efficient
specialty outlet stores, which represent the overall
Danskin(-Registered Trademark-) product line. In order to achieve this, the
Company has downsized certain locations, changed the stores' merchandise mix and
fulfillment practices to provide for the automatic replenishment of basic
product as determined by model stock levels, allowed for the purchase of in-line
seasonal merchandise, and has implemented focused store merchandising and
imaging programs that improve the stores' overall product presentation with a
focus on improved presentation of key items.

    FULL PRICE RETAIL STORES.  The Company presently operates two full-price
retail stores under the Danskin(-Registered Trademark-) name: Columbus Avenue in
New York City and Prudential Center in Boston, Massachusetts. The Company
anticipates opening a third full price location in Westport, Connecticut in the
second quarter of 2002.

    The Company continues to believe that the recognition of Brand
Danskin(-Registered Trademark-), along with the brand's reputation for fit,
comfort and durability, provide the Company with an opportunity to successfully
open additional full price Danskin(-Registered Trademark-) stores in
freestanding metropolitan and upscale downtown locations. Such stores would
offer the Danskin(-Registered Trademark-) consumer a wider assortment of
Danskin(-Registered Trademark-) merchandise by carrying an inventory
representative of the entire Danskin(-Registered Trademark-) apparel line
consisting of approximately 1,500 SKU's, contrasted with only approximately 150
SKU's maintained at any one time by even the largest retailer of
Danskin(-Registered Trademark-) apparel products, as well as the other lifestyle
products which are available under the Danskin(-Registered Trademark-) brand. In
addition to expanding a channel of distribution for the Company's products, the
Company believes that these stores would be an effective form of consumer
advertising and help "showcase" the full assortment of its product offerings.
While management believes that there are ample opportunities for selective
national expansion of its full price retail strategy, it is presently focusing
on, and has made substantial progress under, its "right-sizing" initiatives,
improving the operations and performance of its current retail store base,
refining its formula which it can then successfully apply to additional store
locations.

    E-COMMERCE.  The Company continues to pursue a number of strategies for the
marketing and distribution of its products over the Internet. The Company's
".com" strategy is discussed below. In addition to its planned Internet
activities, the Company has joined forces with a number of e-commerce partners
for the distribution of its Brand Danskin(-Registered Trademark-) products, and
anticipates that such ventures will have a positive effect on the Company's
revenues while providing critical exposure for its proprietary and licensed
brands. The Company believes that the Internet will also provide it with a
distribution channel that will allow it to offer the full complement of its
Brand Danskin(-Registered Trademark-) product lines, while reaching a broader
audience than is presently available to it in any existing channel of
distribution.

ESTABLISHMENT OF PENNACO AS A COMPLETE LEGWEAR RESOURCE

    Despite continued capital constraints, as well as reduction in the size of
hosiery departments, Pennaco continues to be the number two hosiery resource
(behind Sara Lee Corporation) in most domestic, full line department stores, and
enjoys a reputation for the fit, innovation and sheer quality of its products,
private label offerings, reliable shipping performance and brand diversity. The
Company is also a major supplier of private label sheer hosiery sold by these
department stores as well as national chain stores and specialty stores. With
the focus on innovation and developing market right products and programs, the
Company has developed initiatives for each of its legwear brands to take
advantage of the opportunities for niche products and in growing specialty and
dot.com channels of distribution. With the addition of the Ellen
Tracy(-Registered Trademark-) and Evan Picone(-Registered Trademark-) labels
during fiscal 2000, the repositioning of the Ellen Tracy(-Registered Trademark-)
and Givenchy(-Registered Trademark-) brands as well as an expanded casual and
private label presence, the Company has completed the process of recreating
itself as a complete legwear resource.

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PRODUCTS

    ACTIVEWEAR

    The Company designs, manufactures and markets several leading brands of
women's and girl's activewear (including bodywear, cover-ups and outerwear),
performance legwear and dancewear under the Danskin(-Registered Trademark-),
Danskin Girl-TM-, Zen Sport-TM- from Danskin(-Registered Trademark-),
Everywear-TM-, New York City Ballet(-Registered Trademark-) and Denise
Austin(-Registered Trademark-) by Danskin(-Registered Trademark-).

    Danskin realizes approximately 75% of its activewear revenues from basic
styles, with black being the single most popular color. Activewear products are
generally designed in four seasonal fashion groupings, with a monthly
introduction of new styles or colors. Under management's "right-sizing"
initiatives, and in an effort to improve margins and minimize operating
complexity, the Company has made significant progress in eliminating low-volume
and unprofitable SKU's from its product offerings. The total number of SKU's for
activewear, per season, is approximately 5,600. Danskin(-Registered Trademark-)
activewear products sell at retail prices ranging from $8.50 to $84.00.

    LEGWEAR

    Pennaco is one of the oldest manufacturers of hosiery in the United States
and is the second largest supplier of women's sheer hosiery and legwear to
domestic, full line department stores and apparel specialty stores. The Company
is also a leading supplier of private label hosiery to department stores as well
as national chains and specialty stores. Approximately 33% of the Company's
annual legwear revenues consist of sales of its private label merchandise.
Pennaco hosiery is widely recognized for its quality, fit and innovation.
Through its proprietary brand, Round-the-Clock(-Registered Trademark-), the
Company was the first manufacturer to introduce multiple sizes and colors in
pantyhose, and was a pioneer in the application of spandex
(Lycra(-Registered Trademark-)) yarns to hosiery.

    The Company also manufactures and sells licensed brands of hosiery under the
Ellen Tracy(-Registered Trademark-), Givenchy(-Registered Trademark-) and Evan
Picone(-Registered Trademark-) labels, which, together represented approximately
52% of legwear revenues for the fiscal year ended December 29, 2001.

    Givenchy(-Registered Trademark-) has been a leading brand since its
introduction by Pennaco in 1979. The Givenchy(-Registered Trademark-) license
agreement covers the United States, Canada and Mexico and expires on
December 31, 2004. Givenchy(-Registered Trademark-) sheer hosiery retails in a
price range of $4.50 to $25.00.

    The Company's agreement with Ellen Tracy(-Registered Trademark-) extends
through December 31, 2003, and grants the Company worldwide distribution rights
for hosiery, tights, socks and trouser socks under the Ellen
Tracy(-Registered Trademark-), Linda Allard(-Registered Trademark-) and Linda
Allard for Ellen Tracy(-Registered Trademark-) labels. Ellen
Tracy(-Registered Trademark-)products retail in a price range of $5.00 to
$16.00.

    The Company's agreement with JONES APPAREL GROUP for the Evan
Picone(-Registered Trademark-) label grants the Company distribution rights in
North America for hosiery through December 31, 2003. Evan
Picone(-Registered Trademark-) products retail in a price range of $2.95 to
$10.00

    Although the Company is required to maintain a high number of legwear SKU's
because of the complex packaging requirements of its private label customers, it
knits only 73 styles. Product is held in an undyed state and is dyed, finished
and packaged in accordance with forecasted demand. Over the past year, the
Company has aggressively reduced both the number of legwear styles and SKU's it
produces.

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MARKET SEGMENTATION

    ACTIVEWEAR

    The Company sells its activewear products to approximately 3,170 accounts,
representing over 5,000 stores. These products are targeted towards different
segments of the wholesale market. Danskin(-Registered Trademark-) and Danskin
Plus(-Registered Trademark-) (activewear for the large sized woman) products are
marketed to major sporting goods stores, such as The Sports Authority, Academy,
Garts and Oshman's Sporting Goods, full line department stores, including
Kohl's, Saks, Dillard's, Nordstrom, Federated Department Stores (including
Bloomingdale's and Bloomingdale's by Mail), Belk Stores, Marshall Field's,
Carson's, Parisian's and many smaller sporting goods and specialty stores. The
Company continues to re-evaluate its product offerings to gain additional
penetration in the activewear market in all classes of trade.

    LEGWEAR

    The Company sells its legwear products to approximately 600 accounts,
representing over 1,800 stores. The customer base for its legwear consists
primarily of full line department stores and apparel specialty stores, including
Federated Department Stores (including Macy's and Bloomingdale's), May Co.
stores (including Kaufmans, Filenes, Hecht, Famous Barr, Robinson May, Foleys,
Meier and Frank and Lord & Taylor), Dillards, Dayton Hudson, Marshall Field's,
Nordstrom, Saks Fifth Avenue, Sears and Talbot's (including its catalog).

    The Company provides a diversity of legwear products to its customer base at
each price/quality level, and seeks market niches for product expansion. Within
the legwear market, the market is divided principally by retail price points,
with designer brands such as Ellen Tracy(-Registered Trademark-) and
Givenchy(-Registered Trademark-) occupying the upper price point positions with
generally higher gross margins, additional brands, such as
Round-the-Clock(-Registered Trademark-) and Evan Picone(-Registered Trademark-),
occupying the middle price point positions and private label products at varied
price points, depending upon the retailer's brand image.

STORE OPERATIONS

    FULL PRICE RETAIL

    The Company has operated a full price retail store under the
Danskin(-Registered Trademark-) name on Columbus Avenue in New York City since
November 1994. The store covers approximately 3,000 square feet and is designed
exclusively for women, offering a wide assortment of
Danskin(-Registered Trademark-) products. During fiscal 2000, the Company
undertook a refurbishment of its Columbus Avenue location, which has resulted in
increased revenues in this location. The Company also operates a full price
store in Prudential Center in Boston, Massachusetts and anticipates opening a
third full price store in Westport, Connecticut in the second quarter of 2002.
While the Company believes that the full price store concept will be applicable
in other major metropolitan areas and downtown locations in the United States,
it continues to focus on improving the operations and performance of its current
retail store base.

    OUTLETS

    The Company currently operates 32 outlet stores located in 18 different
states, situated in areas where the Company believes they generally do not
compete with the Company's principal channels of distribution. They range in
size from approximately 1,800 to 7,500 square feet, with the average being
approximately 3,100 square feet. Although these stores have traditionally
provided the Company with a channel of distribution for closeout merchandise,
the Company has moved to providing more in-line merchandise in its outlet store,
resulting in improved inventory turns and margins. The Company has also improved
the operations of its retail stores through improved personnel and staffing,
store downsizings and the closing of unprofitable stores, among other factors,
which have resulted in lower store operating expenses.

                                       8
<Page>
OPERATIONS

    ACTIVEWEAR

    The Company manufactures approximately 36% of its activewear products in its
275,000 square foot facility in York, Pennsylvania, and is one of the only major
suppliers of branded women's activewear with substantial domestic manufacturing
capacity. The manufacturing capabilities of this facility include knitting,
cutting, sewing, dyeing, and finishing. The Company believes that manufacturing
domestically allows it to maintain an overall shorter lead-time. This allows the
Company to respond to customer orders in a reasonable amount of time and also
allows its designers to respond quickly to market trends. This enables Danskin
to defer authorization of fabric purchasing and cutting until buyers have seen
product samples. In addition, the Company redirected its York facility to
operate principally as a bottoms manufacturer, with state of the art cutting and
sewing, which has enabled the Company to achieve longer, more efficient runs.
The York facility is also the Company's focal point for product development.

    In order to complement the York facility, the Company operates a sewing
facility in Mexicali, Mexico, operating under NAFTA. This facility produces
activewear at significantly enhanced margins. The Mexico facility, along with
contractors in the Mexicali, Mexico region, provide the Company with
manufacturing expansion opportunities, while retaining the quick response and
flexibility afforded by being a domestic manufacturer. Approximately 28% of the
Company's activewear product is produced in Mexico.

    The Company continues to pursue its strategy of diversifying the
manufacturing of its activewear product offerings by using offshore
manufacturing to purchase packaged finished goods. As a result, it expects to
source an increasing proportion of its total production through offshore
contractors. Currently, approximately 36% of the activewear manufacturing is
package-sourced offshore.

    With all three sources of manufacturing, the Company is continually striving
to reduce total lead times, raw material inventories, and work in process
inventory levels. Continually evaluating and changing current processes, plant
layout changes, and organizational changes are helping to attain these
objectives.

    The York facility has dyeing capabilities which enable the Company to hold
basic garments in greige (undyed state), and then garment dye based on the
release of customer orders. This allows the Company to minimize inventory risk,
minimize finished goods inventory, and reduce the time required to react to
customer spikes in demand. Distribution of Activewear is made from Danskin's
120,000 square foot facility in York, Pennsylvania.

    LEGWEAR

    The Company manufactures the majority of its sheer and casual legwear at its
Grenada, Mississippi facility. The Company's additional manufacturing capacity
needs are met through long-term relationships with manufacturers in Mexico and
Italy. Experienced senior managers have joined Pennaco in the past year and are
pursuing a number of initiatives to raise efficiencies and profitability.
Specifically, Pennaco is in the process of compressing its manufacturing square
footage to gain increased efficiencies, reduce inventories and achieve dramatic
improvements in cycle times. Significant headcount reductions and renegotiated
terms with suppliers have led the way to improving the cost structure of the
facility. A key ingredient to the plant initiatives has been an extremely stable
and willing workforce. The Company's legwear distribution facilities are also
located in Grenada, Mississippi.

    The Company continues to process a substantial and increasing portion of its
customer orders through EDI programs, which permit the electronic receipt of
purchase orders and, in some cases, the electronic transmission of invoices. In
addition, the Company has an established a "Quick Response

                                       9
<Page>
Program" for certain high volume styles, which has enhanced its EDI
replenishment capabilities and has enabled it to ship products within three to
five days of receiving an order.

SALES

    The Company's domestic sales force consists of approximately 17 sales
people; 6 of whom are responsible for marketing the Company's activewear product
lines and 11 of whom are responsible for marketing the Company's legwear product
lines to department stores, apparel specialty stores, sporting goods retailers
and smaller specialty stores. The Company has an inside Sales and Customer
Service Department that supplements area coverage and provides assistance to
accounts. The Company periodically reviews the structure of its sales force and
makes adjustments based on the Company's needs.

    The activewear sales force is headed up by the Vice President, General
Manager of Brand Danskin(-Registered Trademark-). Reporting to the Vice
President, General Manager are four sales Vice Presidents. Each Vice President
is responsible for a distinct customer class of trade. The Company's major
classes of trade distinctions are Sporting Goods, Department Stores, Dance and
Active Specialty Stores and better Specialty Stores. The Company employs a
direct sales force responsible for the Sporting Goods and Department Store
classes of trade. The Specialty Store class of trade is handled by an
independent sales force. Currently, Danskin has contracts with eighteen
independent representatives, who are currently managing twenty-four field
representatives. In addition, Danskin employs a sales person solely responsible
for the private label and closeout businesses. Sales account executives are
compensated on a straight salary basis, and independent sales representatives
are compensated on a commission basis.

    The Pennaco sales force is comprised of Company employees whose
responsibilities are structured around the Division's major accounts. To drive
the Division's revenue, the Company has, among other steps, recently adjusted
the compensation structure for the Pennaco sales force to be comprised of a
combination of base salary and commission.

    The Company emphasizes its commitment to customer service through a staff of
approximately 40 area merchandisers, located throughout the country, whose
principal responsibility is field merchandising of legwear products in
department stores. These representatives are present in the stores during peak
consumer traffic periods; they merchandise the selling fixtures, instruct store
personnel about effective selling, conduct seminars, interact directly with
consumers and are available to support in-store events and promotions, all with
the goal of maximizing sales of the Company's products. To a lesser extent, they
also merchandise the Company's activewear products in department stores and
certain sporting goods stores.

    Export sales are generally made to international distributors, with the
exception of Canada, where the Company utilizes independent sales
representatives to market Danskin(-Registered Trademark-) activewear directly.
In addition, the Company recently signed an agreement with an independent
distributor for the distribution of the Zen Sport-TM- Brand in Canada. The
Canadian sales force is managed by an employee of Danskin Canada, the Company's
wholly owned subsidiary.

MARKETING

    BRAND DANSKIN(-REGISTERED TRADEMARK-)

    The Company uniquely supports women's and girls' active lifestyles through
its product lines. The overall marketing strategy is to provide
Danskin(-Registered Trademark-)branded products that dramatically exceed
consumers' expectations for fashion, fit and femininity, and support her active
lifestyle while maximizing the presence and support of Brand
Danskin(-Registered Trademark-) at retail. The Company has redesigned and
updated the hangtag system and packaging on licensed product to improve feature
and benefit communication for

                                       10
<Page>
the consumer at point-of-sale. New hangtags on Danskin(-Registered Trademark-)
branded apparel are shipping on garments beginning Spring 2002.

    Dance is the company's heritage, and a complete program of marketing
activities supports these products, including national print advertising, dance
spokeswomen (Deanna McBrearty and Saskia Beskow of New York City Ballet),
retailer programs for in-store merchandising, sponsorships of major dance
companies and projects, and studio sweepstakes promotions. The Company has
returned to it's advertising slogan of "What Dancers Wear-TM-" to support it's
strong, broad product offering and long history of serving female dancers from
their introductory dance classes that begin at age three. Danskin was also the
2001 preferred dancewear and legwear supplier to the world famous Rockettes, as
they celebrated their 75th anniversary and is in negotiations to continue that
relationship. Additionally, the launch of New York City
Ballet(-Registered Trademark-) by Danskin(-Registered Trademark-) will be
supported with national print advertising, in-store signage, a consumer gift
with purchase and in-store events featuring Saskia Beskow, the line's
spokeswoman.

    The Company's Activewear lines are primarily supported by the Company's
ownership and title sponsorship of the Danskin Women's Triathlon Series, now
beginning its 13th year. Over 80,000 women have competed in a "Danskin" as the
event is called by participants. Covering seven cities throughout the United
States, the Company uses the Series as a promotional event for both retailers
and consumers, offering seminars at partner retailer locations for participants
prior to the race event in each city. The Company further evidences its support
of women's programs by donating a percentage of the series entry fee to the
Susan G. Komen Breast Cancer Foundation. Marketing programs to improve in-store
merchandising and provide product information to consumers are continuing.

    Danskin(-Registered Trademark-) Yoga is a new classification of lifestyle
products inspired by the increasing popularity of yoga and other meditative
activities, yet versatile enough for wear out of the gym as part of a casual
lifestyle. This line began shipping to sporting goods and department stores in
Spring 2002. Zen Sport-TM- from Danskin(-Registered Trademark-), the Company's
higher-end Yoga line, is currently in all doors of Saks Fifth Avenue, a
significant number of Nordstrom doors and many better specialty stores
throughout the country, with significant sell-throughs driving a dramatic growth
rate for the business. Zen Sport-TM- from Danskin(-Registered Trademark-) and
Danskin(-Registered Trademark-) Yoga are supported by in-store collateral and
hangtag programs.

    The Company requires its licensees to spend a percentage of net sales on
marketing and advertising to address the consumer and channel targeted by the
particular product. The Company maintains control over all advertising,
marketing and other consumer communication to ensure a consistent image and
presence.

    LEGWEAR

    The Company offers a full range of hosiery products through the portfolio of
four brands, Ellen Tracy(-Registered Trademark-),
Givenchy(-Registered Trademark-), Evan Picone(-Registered Trademark-) and Round
the Clock(-Registered Trademark-), as well as retaining the role of a major
private label hosiery supplier to the department stores.

    Each of the brands offered by the Company offers consumers innovative
products that respond to fashion trends and packaging that calls out features
and benefits to the time-starved shopper. Givenchy(-Registered Trademark-) has
enjoyed sales increases due to an innovative packaging strategy that has
significantly improved the image of the brand at retail. The Company executed a
packaging change at retail for Ellen Tracy(-Registered Trademark-) in fiscal
2001. Each of the products offered by the Company is supported by in-store
signage and in-store merchandisers who insure replenishment of inventory within
Danskin's fixturing.

                                       11
<Page>
SEASONALITY

    The Company's business achieves seasonally higher financial performance in
its September fiscal quarter, principally as a result of "back-to-school"
purchases. See "Management's Discussion and Analysis of Financial Conditions and
Results of Operations Seasonality."

SUPPLIERS

    The Company's raw materials consist principally of piece goods and yarn that
are purchased by the Company from a number of domestic and foreign textile mills
and converters. The Company obtains Lycra(-Registered Trademark-) from DuPont.
Although from time to time there have been shortages of
Lycra(-Registered Trademark-), such shortages have not adversely affected the
Company. The Company does not have long-term formal arrangements with any of its
suppliers. Due to capital constraints which continued to be encountered during
fiscal 2001, the Company was unable to adequately satisfy its raw material
requirements. Management is in the process of negotiating with suppliers to
re-instate favorable credit terms which the Company has historically enjoyed.
Based on the progress made to date on improving its operations, the Company
anticipates that it will adequately be able to satisfy its ongoing raw material
requirements.

TRADEMARKS

    The Company owns and utilizes a variety of trademarks, the principal ones
being Danskin(-Registered Trademark-), Zen Sport-TM- from
Danskin(-Registered Trademark-), Danskin Girl-TM-,
Round-the-Clock(-Registered Trademark-) and Freestyle(-Registered Trademark-).
The Danskin(-Registered Trademark-) trademark is owned by the Company worldwide,
except in Japan, and is registered with the United States Patent and Trademark
Office and in most other major jurisdictions of the world. In Japan, the
trademark is owned by the Company's former licensee, Goldwin, Inc.

    Certain of the Company's other trademarks are registered with the United
States Patent and Trademark Office and in some foreign jurisdictions as well.
The Company regards its trademarks and other proprietary rights as valuable
assets and believes that they have significant value in the marketing of its
products. The Company actively protects its trademarks against infringement.

REGULATION

    The Company is subject to various federal, state and local environmental
laws and regulations limiting the discharge, storage, handling and disposal of a
variety of substances, particularly the federal Water Pollution Control Act, the
Clean Air Act of 1970 (as amended in 1990), the Resource Conservation and
Recovery Act (including amendments relating to underground tanks) and the
federal "Superfund" program. The Company cannot, with certainty, assess at this
time the impact upon its operations or capital expenditure requirements of
future emission standards and enforcement practices under the 1990 amendments to
the Clean Air Act.

    In connection with the refinancing of its bank loan agreement, in the fourth
quarter of fiscal year ended December 27, 1997, the Company engaged an
independent environmental consulting firm to conduct assessments of
environmental conditions at the Company's manufacturing and distribution
facilities in York, Pennsylvania and Grenada, Mississippi. No material
environmental problems were discovered in these assessments.

    The Company also is subject to federal, state and local laws and regulations
relating to workplace safety and worker health, including those promulgated
under the Occupational Safety and Health Act ("OSHA"). As part of its OSHA
compliance efforts, the Company requires all personnel working in high noise
areas and those working in certain areas with high concentrations of dust to
wear protective equipment.

    The Company believes that it currently is in compliance in all-material
respects with existing OSHA standards and environmental laws and regulations.
The Company does not believe that there is

                                       12
<Page>
a substantial likelihood that further OSHA or environmental compliance will
require substantial expenditures or materially affect its operations or
competitive position.

EMPLOYEES

    As of March 1, 2002, the Company employed approximately 825 persons, of whom
483 were employed at Danskin, 293 were employed at Pennaco and the remainder was
employed at the Company's executive offices. At such date, 565 of the Company's
employees were paid on an hourly basis, and the remainder were salaried
employees. Although there have been attempts to organize certain of its
employees in the past, none are currently represented by a union, and employee
relations are generally considered to be good.

COMPETITION

    The apparel industry is highly competitive. Many of the Company's
competitors are larger and have greater financial, distribution, marketing and
other resources, and better-established brand names, than the Company. The
Danskin(-Registered Trademark-) brand competes with products sold by an array of
smaller and larger companies, including Nike, Reebok, Adidas, Champion, and
Everlast for activewear, along with Marika, Capezio, Bodywrappers and Mirella
for dancewear. Legwear products compete with products sold by a number of other
established manufacturers and marketers, the largest of which is the Hanes
division of Sara Lee Corporation, while other significant competitors include
Kayser-Roth/Golden Lady. The Company does not market its legwear in food or drug
stores.

    STATEMENTS CONTAINED HEREIN AND IN THE FUTURE FILINGS BY THE COMPANY WITH
THE SECURITIES AND EXCHANGE COMMISSION, IN THE COMPANY'S PRESS RELEASES, AND IN
ORAL STATEMENTS MADE BY OR WITH THE APPROVAL OF AUTHORIZED PERSONNEL THAT RELATE
TO THE COMPANY'S FUTURE PERFORMANCE, INCLUDING, WITHOUT LIMITATION, STATEMENTS
WITH RESPECT TO THE COMPANY'S ANTICIPATED RESULTS OF OPERATIONS OR LEVEL OF
BUSINESS FOR 2002 OR ANY OTHER FUTURE PERIOD, SHALL BE DEEMED FORWARD-LOOKING
STATEMENTS WITHIN THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995, AS A NUMBER OF FACTORS AFFECTING THE COMPANY'S
BUSINESS AND OPERATIONS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE CONTEMPLATED BY THE FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE BASED
ON CURRENT EXPECTATIONS AND INVOLVE KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES
AND CERTAIN ASSUMPTIONS, REFERRED TO BELOW, ARE INDICATED BY WORDS OR PHRASES
SUCH AS "ANTICIPATES," "ESTIMATES," "PROJECTS," "MANAGEMENT EXPECTS," "THE
COMPANY BELIEVES," "IS OR REMAINS OPTIMISTIC," OR "CURRENTLY ENVISIONS" AND
SIMILAR WORDS OR PHRASES. THESE FACTORS INCLUDE, AMONG OTHERS, CHANGES IN
REGIONAL AND GLOBAL ECONOMIC CONDITIONS; RISKS ASSOCIATED WITH CHANGES IN THE
COMPETITIVE MARKETPLACE, INCLUDING THE LEVEL OF CONSUMER CONFIDENCE AND
SPENDING, AND THE FINANCIAL CONDITION OF THE APPAREL INDUSTRY AND THE RETAIL
INDUSTRY, AS WELL AS ADVERSE CHANGES IN RETAILER OR CONSUMER ACCEPTANCE OF THE
COMPANY'S PRODUCTS AS A RESULT OF FASHION TRENDS OR OTHERWISE, AND THE
INTRODUCTION OF NEW PRODUCTS OR PRICING CHANGES BY THE COMPANY'S COMPETITORS;
RISKS ASSOCIATED WITH THE COMPANY'S DEPENDENCE ON SALES TO A LIMITED NUMBER OF
LARGE DEPARTMENT STORE AND SPORTING GOODS STORE CUSTOMERS, INCLUDING RISKS
RELATED TO CUSTOMER REQUIREMENTS FOR VENDOR MARGIN SUPPORT, AND THOSE RELATED TO
EXTENDING CREDIT TO CUSTOMERS; RISKS ASSOCIATED WITH CONSOLIDATIONS,
RESTRUCTURINGS AND OTHER OWNERSHIP CHANGES IN THE RETAIL INDUSTRY; UNCERTAINTIES
RELATING TO THE COMPANY'S ABILITY TO IMPLEMENT ITS GROWTH STRATEGIES; AND RISKS
ASSOCIATED WITH CHANGES IN SOCIAL, POLITICAL, ECONOMIC AND OTHER CONDITIONS
AFFECTING FOREIGN SOURCING.

                                       13
<Page>
ITEM 2. PROPERTIES

    The Company leases its principal executive offices and showroom located at
530 Seventh Avenue in New York City. Such lease provides for an average annual
base rent of $736 and expires in December 2008.

    The Danskin plant is located in York, Pennsylvania and contains office
space, inventory storage space and a shop area where a significant portion of
the Company's activewear products are developed and manufactured. This facility
is owned by the Company. Danskin also leases a distribution facility in York,
Pennsylvania. Such lease provides for annual rent of $511 and expires in
September 2002. The Company is currently renegotiating the lease for the
distribution facility.

    The Pennaco mill is located in Grenada, Mississippi and contains office
space and inventory storage space where substantially all of the hosiery
products manufactured by the Company are produced. The Company leases this
facility from the City of Grenada for a nominal rent through the year 2065. The
distribution center is also leased from the City of Grenada for annual rent of
$333, under a lease that expires in December 2008.

    The Company also has committed to lease space for 34 retail stores at annual
rents ranging from $13 to $340 under leases expiring during the fiscal year
ending 2002 through fiscal year 2007. Thirteen outlet store leases expire in
2002 and the Company is reviewing whether to continue in such locations if
available. The Company continually reviews the operations and profitability of
its retail locations and will make lease renewal determinations based upon such
review. The Company may, based upon such review, attempt to negotiate additional
lease terminations.

    The Company believes that its facilities provide adequate levels of capacity
for current levels of production as well as for reasonable levels of growth.
None of the Company's properties is leased from an affiliated entity.

    Substantially all of the Company's properties and other assets are pledged
to Century Business Credit Corporation ("CBCC") to secure the Company's
obligations under the Loan and Security Agreement with CBCC. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations
Liquidity and Capital Resources" and Note 11 in the Notes to Consolidated
Financial Statements.

ITEM 3. LEGAL PROCEEDINGS

    On November 25, 1996, the Company commenced suit against Herman Gruenwald,
former President, Director and Principal shareholder of Siebruck Hosiery, Ltd.
("Siebruck") for damages in the amount of $1,450 in the Superior Court,
Montreal. The claim relates to unreported sales in excess of $1,500 arising
under a license agreement entered into by and between the Company and Siebruck,
which expired on December 31, 1995. Siebruck was placed under the provision of
the Canadian Bankruptcy and Insolvency Act. Mr. Gruenwald's statement of defense
included a cross-demand against the Company wherein he is claiming damages to
his reputation in the amount of Cdn. $3,000. The matter is presently pending
before the Superior Court and a reasonable evaluation of the claim against the
Company, or the timing of its resolution, cannot be made at this time. However,
the Company does not presently anticipate that the ultimate resolution of such
claim will be material to its financial condition, results of operations,
liquidity, or business of the Company.

    The Company is a party to a number of other legal proceedings arising in the
ordinary course of business. Management believes that the ultimate resolution of
these proceedings will not, individually or in the aggregate, have a material
adverse affect on the financial condition, results of operations, liquidity or
business of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    None.

                                       14
<Page>
                                    PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

    Bid quotations for the Company's Common Stock may be obtained from the
National Quotation Bureau, and the Common Stock is traded in the
over-the-counter market. The following table presents the quarterly high and low
bid quotations during the last two fiscal years. The Common Stock trades solely
in the over-the-counter market. The quotations set forth below, therefore,
reflect the inter-dealer prices, without retail mark-up, mark-down or
commission, and may not necessarily represent actual transactions.

<Table>
<Caption>
                                                                HIGH       LOW
                                                              --------   --------
<S>                                                           <C>        <C>
FISCAL YEAR ENDED DECEMBER 29, 2001
Three-month period ended March..............................   $0.190     $0.145
Three-month period ended June...............................    0.210      0.165
Three-month period ended September..........................    0.190      0.075
Three-month period ended December...........................    0.100      0.040

FISCAL YEAR ENDED DECEMBER 30, 2000
Three-month period ended March..............................   $ 0.95     $ 0.55
Three-month period ended June...............................     0.59       0.39
Three-month period ended September..........................     0.43       0.27
Three-month period ended December...........................     0.28       0.16
</Table>

    As of December 29, 2001, the number of stockholders of record of the
Company's Common Stock was approximately 210.

    The Company has not declared any cash dividends with respect to the Common
Stock subsequent to the effective date of its initial public offering,
August 19, 1992. The Company's Loan and Security Agreement with CBCC prohibits
the payment of dividends without the lender's consent.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

    The following selected consolidated operating data for the five fiscal
twelve months ended December 27, 1997, December 26, 1998, December 25, 1999,
December 30, 2000, and December 29, 2001 and the financial position for each of
the periods ending, have been derived from the consolidated financial statements
of the Company. The data presented below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the

                                       15
<Page>
Consolidated Financial Statements, including the Notes thereto, of the Company,
appearing elsewhere in this Annual Report on Form 10-K.

<Table>
<Caption>
                                                        FISCAL YEARS ENDED DECEMBER
                                            ----------------------------------------------------
                                              1997       1998       1999       2000       2001
                                            --------   --------   --------   --------   --------
                                                  (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                         <C>        <C>        <C>        <C>        <C>
INCOME STATEMENT DATA:
Net revenues
    Danskin...............................  $ 81,831   $ 74,100   $ 61,119   $ 57,282   $ 54,989
    Pennaco...............................    40,901     35,324     27,373     28,011     26,769
                                            --------   --------   --------   --------   --------
      Total...............................   122,732    109,424     88,492     85,293     81,758
                                            --------   --------   --------   --------   --------
Cost of goods sold
    Danskin...............................    52,888     45,369     44,374     38,582     35,289
    Pennaco...............................    29,744     23,802     21,553     22,046     21,600
                                            --------   --------   --------   --------   --------
      Total...............................    82,632     69,171     65,927     60,628     56,889
                                            --------   --------   --------   --------   --------
Gross profit
    Danskin...............................    28,943     28,731     16,745     18,700     19,700
    Pennaco...............................    11,157     11,522      5,820      5,965      5,169
                                            --------   --------   --------   --------   --------
      Total...............................    40,100     40,253     22,565     24,665     24,869
                                            --------   --------   --------   --------   --------
Selling, general and administrative
  expenses................................    40,110     42,052     36,196     29,771     29,096
Non-recurring charges (income) (1)........       300      2,419        795       (510)     1,700
Interest expense..........................     4,278      2,513      5,462      3,289      4,051
                                            --------   --------   --------   --------   --------
Loss before provision for income taxes and
  extraordinary item......................    (4,588)    (6,731)   (19,888)    (7,885)    (9,978)
Provision for income taxes................       245        190         20         20         40
                                            --------   --------   --------   --------   --------
Loss before extraordinary item............    (4,833)    (6,921)   (19,908)    (7,905)   (10,018)
Extraordinary item (2)....................     5,245         --         --         --         --
                                            --------   --------   --------   --------   --------
Net income (loss).........................       412     (6,921)   (19,908)    (7,905)   (10,018)
                                            --------   --------   --------   --------   --------
Preferred Stock dividend..................       425      1,114      1,078      1,369      1,795
                                            --------   --------   --------   --------   --------
Loss applicable to Common Stock...........  $    (13)  $ (8,035)  $(20,986)  $ (9,274)  $(11,813)
                                            ========   ========   ========   ========   ========
BASIC AND DILUTED NET INCOME (LOSS) PER
  SHARE
Net loss per share before extraordinary
  item (3)................................  $  (0.66)  $  (0.50)  $  (0.89)  $  (0.13)  $  (0.17)
Net income per share for extraordinary
  item (2)................................      0.66         --         --         --         --
Net loss per share after extraordinary
  item....................................  $  (0.00)  $  (0.50)  $  (0.89)  $  (0.13)  $  (0.17)
                                            --------   --------   --------   --------   --------
Weighted average number of common shares
  outstanding.............................     7,942     16,168     23,493     73,688     68,947
                                            ========   ========   ========   ========   ========
Working Capital (deficit).................  $ 19,070   $  6,545   $  8,235   $    286   $ (6,940)
Total assets..............................    55,022     57,706     47,888     48,852     41,000
Long-term debt (excludes current
  obligations)............................     9,667      6,674     11,500     10,558     11,000
Total debt (4)............................    21,539     24,703     21,541     33,679     38,247
Total stockholders' equity (deficit)......     1,681     (3,900)     5,874     (3,124)   (16,739)
</Table>

------------------------

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE NUMBERS)

(1) Non-recurring charges for fiscal 2001 were $1,700 related to the write-off
    of costs incurred for the purchase of computer hardware and software and
    system programming costs by external consultants. The Company placed this
    project on hold until adequate capital could be raised. However, with the
    Company's continuing cash constraints, management is unable to determine

                                       16
<Page>
    when, or if, this project will be resumed. As a result, the Company has
    written off the previously capitalized cost of $1,700 in fiscal 2001.
    Non-recurring income was $510 for fiscal 2000. The income consisted of a net
    recovery of $426 for an outstanding amount owed the Company for the sale of
    a trademark, $220 resulting from securing a subtenant for the Company's
    former corporate offices in New York City, in respect of which the Company
    previously recognized a loss in fiscal year 1999. The aforementioned income
    was partially offset by $136 for severance pay to a former executive.
    Non-recurring charges for fiscal year 1999 were $795. These charges
    consisted of an additional provision for remaining lease obligations for the
    former corporate offices in New York City, and establishment of a reserve
    against an outstanding amount owed the Company for the sale of a trademark.
    Non-recurring charges of $2,419 for the fiscal year ended December 26, 1998
    consisted of costs related to certain executive employee severance costs,
    provision established for the remaining net lease obligation for the former
    corporate offices in New York City and write-offs of non-operating assets,
    offset by the recognition of a receivable and the gain on the sale of the
    Reading, PA outlet store. Non-recurring charges of $300 for the fiscal year
    ended December 27, 1997 consisted of certain executive employee severance
    costs.

(2) The recognized gain of $5,245 represents the difference between (a) the
    recorded value of the Company's obligations under the term loan portion of
    its previous secured credit facility with First Union National Bank of North
    Carolina ("First Union") and (b) the fair value of the securities issued in
    connection with the refinancing of such facility and concurrent
    recapitalization, less the write-off of deferred finance charges relating to
    the First Union Loan Agreement and the costs incurred in connection with
    such recapitalization and refinancing. This gain was applied against the
    Company's net operating loss carry forward, available after offset may be
    subject to limitation under the change of control provisions of the Internal
    Revenue Code.

(3) In February 1997, the Financial Accounting Standards Board (FASB) issued
    Statement of Financial Accounting Standard (SFAS) No. 128 "Earnings Per
    Share", which requires presentation of basic earnings per share (EPS) and
    diluted earnings per share and requires the restatement of EPS for all prior
    periods reported. The Company adopted this statement as of December 27,
    1997.

    In September 1997, (i) the Board of Directors declared a stock dividend on
    the Common Stock equal to one share of Common Stock for each 11.99 shares of
    Common Stock held of record as of the close of business on September 22,
    1997 (these shares were retroactively applied in the accompanying financial
    statements for the earnings per share calculation) and (ii) the Board of
    Directors redeemed the rights issued pursuant to the Rights Agreement, dated
    as of June 5, 1996, between the Company and First Union, as rights agent,
    for $.01 per right in cash to holders of Common Stock held of record as of
    the close of business on September 22, 1997. Also in September 1997,
    1,630,000 Stock Options were granted to certain key personnel, 1,050,000 of
    which were exercisable immediately.

(4) Pursuant to an amendment executed in March 2002 (the "March Amendment"),
    CBCC has agreed to provide the Company with additional borrowing capacity of
    varying amounts through December 31, 2002, to meet borrowing levels required
    by the Company's forecasted monthly business plans plus an additional $3,000
    in excess availability through December 2002, to a maximum overadvance in
    fiscal 2002 of $10,987 (the "Overadvance"). The revolving credit obligations
    totaled $26,447 as of December 29, 2001.

    In connection with the March Amendment, the Company agreed (i) to pay CBCC
    5% of net royalties earned by the Company on licensing agreements entered
    into after February 28, 2002, with payments not to exceed $500 in any fiscal
    year. Payments will continue until the earlier of (i) December 31, 2005, and
    (ii) such time as the Company has $3,000 in undrawn availability.

                                       17
<Page>
    The Loan and Security Agreement was previously amended in August 2001 (the
    "August Amendment") to reduce the required amortization by $142 per month
    from December 2001 through December 2002. In accordance with the August
    Amendment, the Term Loan Facility is payable, with respect to principal, in
    equal consecutive monthly installments of (i) $50 on the first day of
    September 2001 and on the first day of each month thereafter through
    December 2002, and (ii) $192 commencing on the first day of January 2003 and
    on the first day of each month thereafter. In accordance with the
    amortization requirement prior to the August Amendment, the Company paid an
    aggregate of $550 to CBCC through August 1, 2001, reducing the outstanding
    principal amount of the Term Loan to $10,950. Pursuant to the August
    Amendment, CBCC agreed to re-lend the $550 to the Company, thereby making
    the full $11,500 amount of the Term Loan Facility available to the Company.

    In connection with certain previous amendments, the Company agreed: (i) to
    pay CBCC a fee equal to $25 on May 1, 2001, and an additional fee of $25,
    plus the amount of the previous month's fee, on the first of each month
    thereafter, and (ii) to issue 250,000 warrants to CBCC with a share price
    equal to the closing price of the Company's Common Stock on the date of
    issuance, on the first of each month, commencing May 1, 2001. Under the
    terms of the agreement with CBCC, the accrual of said additional payment
    will terminate at such time as the Company raises $4,790 of additional
    capital. This obligation is evidenced by a promissory note payable
    January 1, 2004. Therefore, in accordance with this understanding, through
    December 29, 2001, the Company has incurred $525 in additional fees to CBCC
    and has issued 2,250,000 warrants to CBCC with share prices ranging from
    $0.06 to $0.185 per share.

    In December 1999, in connection with the Company's issuance of Series E
    Convertible Preferred Stock, the Loan and Security Agreement with CBCC was
    amended (the "December Amendment") to, among other things, (i) extend the
    maturity date of the facility from October 8, 2002 to December 8, 2004, and
    (ii) increase the amount available under the Term Loan Facility to $11,500.

    Effective October 8, 1997, the Company entered into the Loan and Security
    Agreement with CBCC, which presently provides for loans to the Company
    maturing on December 31, 2005, thereby refinancing all amounts owing to
    First Union. Proceeds of the Loan and Security Agreement were used to pay
    all of the Company's indebtedness to First Union and to establish working
    capital lines of credit. In connection with the closing of the Loan and
    Security Agreement, the Company paid CBCC a facility fee equal to $300. At
    the closing, two term loans were advanced to the Company in the aggregate
    principal amount of $10,000.

                                       18
<Page>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

INTRODUCTION

    The following discussion provides an assessment of Danskin, Inc. (the
"Company") results of operations, capital resources and liquidity which should
be read in conjunction with the Consolidated Financial Statements and notes
thereto included elsewhere in this report. The operating results of the periods
presented were not significantly affected by inflation. The consolidated
financial statements include the accounts of the Company and its two divisions,
Danskin and Pennaco.

RECENT EVENTS

    The Company has made significant progress under current management in its
"right-sizing" reorganization plan implemented over the last three fiscal years.
Despite being negatively impacted by capital constraints during this timeframe,
the Company has benefited from substantial operational improvements and
successes in reaching new customers and channels of distribution as well as
expansion of its licensing efforts. The Company's financial results for fiscal
year 2001 were negatively impacted by capital constraints coupled with the
general downturn in the economy and apparel industry. The Company's management
remains confident that progress will continue in its reorganization efforts.

    Specifically, in fiscal 1999, capital constraints impacted all aspects of
the Company's business including: the ability to purchase piece goods; its
ability to fulfill customers' orders resulting in both a decline in potential
revenues, as a substantial percentage of orders were either shipped late and/or
only partially fulfilled, and declines in orders as a result of inadequate
and/or mismatched inventory, poor reporting systems, limited marketing
investment, and the absence of an integrated and focused retail strategy.

    Commencing in June 1999, the Company took a number of positive steps to
address these issues. In June 1999, Carol Hochman was brought in as the
Company's President and Chief Executive Officer. During the second half of
fiscal 1999, Mrs. Hochman and a number of new senior executives addressed the
foregoing operating issues by implementing a "right-sizing" reorganization of
the Company's personnel and manufacturing infrastructures, eliminated
substantial operating costs and changed its approach to merchandising and
selling, eliminating unprofitable SKUs, emphasizing high quality businesses,
adding new customers and licenses, improving factory efficiency with an
effective and growing outsourcing capability as well as significant process
modifications, instituting a replenishment and forecasting capability to improve
fulfillment and maximize revenue and developing an integrated and focused retail
strategy.

    Although significant progress has been made in addressing the operating
issues which current management began addressing in fiscal 1999, the Company's
results of operations continue to be hampered by the negative impact of the
capital constraints experienced by the Company for the last three fiscal years
including limited marketing investment, poor reporting systems and restrictions
on piece goods and raw materials purchases. In addition, results of operations
in fiscal 2001 were negatively impacted by weakness in the overall economy and
the apparel industry.

    At December 29, 2001, availability under the Company's Revolving Credit
Facility was an overadvance of ($5,206). Pursuant to certain amendments to the
Loan and Security Agreement executed in March 2002, the Lender has provided the
Company with additional borrowing capacity of varying amounts through
December 31, 2002, based on the Company's forecasted monthly business plans
through fiscal year 2002, plus an additional $3,000 in excess availability to a
maximum overadvance of $10,987 (the "Overadvance"). Based on the aforementioned
Overadvance from its lender, the Company believes it will have sufficient
liquidity in fiscal year 2002 to operate the business

                                       19
<Page>
in the normal course, contingent upon achievement of its forecasted monthly
business plans, taking into account the $3,000 in additional availability above
the requirements of its business plan, as described above. (See Liquidity and
Capital Resources.)

FISCAL YEAR END

    The Company's fiscal year ends on the last Saturday in December.

RESULTS OF OPERATIONS

(COMPARISON OF THE 52-WEEK FISCAL YEAR ENDED DECEMBER 29, 2001 WITH THE 53-WEEK
FISCAL YEAR ENDED DECEMBER 30, 2000)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

NET REVENUES

    Net revenues for the fiscal year ended 2001 amounted to $81,758 a decrease
of $3,535, or 4.1% from $85,293 for the fiscal year ended 2000. Danskin
activewear net revenues, which include the Company's retail operations,
decreased $2,293, to $54,989 or 4.0%, in fiscal 2001 from $57,282 in fiscal
2000. The decreased revenues are primarily due to lower sales in the retail and
outlet stores as a result of fewer stores and decreased traffic in existing
stores, lower private label and closeout sales and the effect of the extra week
in the fiscal year ended 2000. Weakness in the overall economy and drop in
consumer confidence and spending in the aftermath of the September 11 terrorist
attack had a negative effect on the Company's results during the fourth quarter
of fiscal 2001. These decreases were partially offset by higher sales for the
Danskin-Registered Trademark- brand and the Zen Sport line for the fiscal year
ended 2001.

    The Company's marketing of activewear wholesale products continues to
address the trend toward casual wear and emphasizes fashion and dancewear
product offerings complementing the Company's basic replenishment products. In
addition, the Company continues to work with its major retail partners to
increase the percentage of orders of basic product placed via electronic
re-order/fulfillment programs (Electronic Data Interchange or "EDI") in an
effort to drive its basic replenishment business, to increase open-to-buy-levels
and to seek out new customers and new channels of distribution.

    Sales in the Danskin Division's retail stores were $12,543 for fiscal 2001,
a decrease of $1,307 or 9.4% from $13,850 for fiscal 2000, which included an
extra week of sales. Comparable retail store sales declined 5.0% for 2001. The
retail and outlet stores have been impacted by softness in the marketplace for
its existing stores resulting in lower customer traffic and sales. As of
December 29, 2001, the Company has two full price stores, 29 permanent outlet
stores and three temporary stores in 18 states. There is a net four fewer stores
during fiscal 2001 versus fiscal 2000 resulting in lower total retail sales for
the current year. In addition, the extra week of sales for fiscal 2000
contributed to the shortfall in sales. To address these declines, and to enhance
the performance of its retail stores, the Company continues to improve store
product offerings, to renegotiate existing leases to achieve optimum store size,
to streamline store operations to reduce operating costs and to set up an
automatic stock replenishment system to maximize inventory turns. In addition,
the Company is continuing to take steps necessary to evaluate certain
unprofitable or under-performing locations. In this regard, during the fiscal
year ended December 29, 2001, the Company has closed two permanent outlet
stores. In addition, during fiscal 2001, the Company opened four temporary
stores, with month-to-month leases, to generate additional volume during the
Back-to-School sales period. Sales for these temporary stores for fiscal 2001
were $452. Of the four temporary stores opened during the fiscal year, one store
was closed in December 2001 and another store was closed in January of 2002.

    Pennaco legwear revenues amounted to $26,769 for fiscal 2001, a decrease of
$1,242, or 4.4%, from the prior fiscal year sales of $28,011. The decrease in
legwear revenues versus the prior fiscal year is primarily attributable to the
lower sales for the Givenchy(-Registered Trademark-) and Round the
Clock(-Registered Trademark-) brands due to continued weakness in the sheer
hosiery market. In addition, sales for Custom Collection or private

                                       20
<Page>
label customers were significantly lower for fiscal 2001 compared to fiscal
2000. These decreases were partially offset by incremental sales generated from
the Ellen Tracy(-Registered Trademark-) and Evan Picone(-Registered Trademark-)
brands, licensed to the Company in May 2000 (discussed below). In addition,
fiscal 2000 included an extra week of sales compared to fiscal 2001. Net
revenues for the Ellen Tracy(-Registered Trademark-) and Evan
Picone(-Registered Trademark-) products for fiscal 2001 were $4,002 and $5,838,
respectively compared to $3,214 and $3,811 respectively for fiscal 2000. The
Ellen Tracy(-Registered Trademark-) and Evan Picone(-Registered Trademark-)
brands did not commence shipping until the latter half of the second quarter of
fiscal 2000.

    Management believes that the Company is positioned to take advantage of
consolidation opportunities in the hosiery industry. In this regard, effective
May 5, 2000, the Company reached an agreement with Ellen Tracy, Inc. pursuant to
which Pennaco was granted a license for the manufacture and sale of legwear
including sheer hosiery, sheer knee highs, tights, socks and trouser socks under
the Ellen Tracy(-Registered Trademark-) label among others. The agreement
provides that Pennaco has the exclusive right and license to use the Ellen
Tracy(-Registered Trademark-) trademark in connection with the manufacture,
assemblage, sale, marketing and distribution, advertising and promotion of
legwear in the United States and Canada. The license was previously held by
Ridgeview, Inc.

    In a separate transaction, Pennaco obtained an exclusive license for the
manufacture and sale of sheer hosiery and knee highs under the Evan
Picone(-Registered Trademark-) label. This agreement provides that Pennaco has
the exclusive right and license to use the Evan Picone(-Registered Trademark-)
trademark in connection with the manufacture, assemblage, sale, marketing and
distribution, advertising and promotion of sheer hosiery and knee highs in the
United States and Canada. The license was previously held by Ridgeview, Inc.

    The Company presently anticipates that, together, the sales of product under
the Evan Picone(-Registered Trademark-) and Ellen Tracy(-Registered Trademark-)
labels will generate revenue of approximately $10,000 on an annualized basis.
Sales of product under these licenses began during the second fiscal quarter
2000. Total sales for the Evan Picone(-Registered Trademark-) and Ellen
Tracy(-Registered Trademark-) labels for fiscal year 2001 were $9,840.

    Management believes that opportunities exist for margin and revenue
improvement for market right products and programs in niche and
occasion-oriented sheer hosiery and through expanded distribution. Accordingly,
the Company has initiated a program of product development focused on these
product segments and is focusing on expanding distribution into new wholesale
accounts both domestic and international. In addition, opportunities exist for
niche products and in the growing specialty and dot.com channel segments, as
well as in a more focused strategy by management.

GROSS PROFIT

    Gross profit increased by $204 or 0.8% to $24,869 for fiscal 2001 compared
to $24,665 for fiscal 2000 despite overall lower level of sales for the Company.
Gross profit, as a percentage of net revenues, increased to 30.4% for fiscal
2001 compared to 28.9% for fiscal 2000.

    Danskin activewear gross profit, as a percentage of net revenues, increased
to 35.8% for fiscal 2001 versus 32.6% of net revenues for fiscal 2000. The
fiscal year 2001 improvement in margins was primarily due to a higher mix
percentage of Danskin brand product versus lower margin private label products
and closeout sales, increased royalty income, decreased design and product
development expenses and reduced overall product cost due to cost reductions and
improved efficiencies in the Company's manufacturing facility and more efficient
offshore sourcing of production.

    The Danskin Division's retail stores' gross profit, as a percent of net
revenues, for fiscal 2001 was 55.4% compared to 54.2% for fiscal 2000. The
fiscal 2001 improvement is principally attributable to better inventory
controls, an improved assortment of higher margin products and lower levels of
aged inventory.

    Pennaco legwear gross profit was $5,169 or 19.3% of net revenues for fiscal
2001, a decrease of $796 or 13.3% from the fiscal 2000 gross profit of $5,965 or
21.3% of net revenues. The gross profit decrease for fiscal 2001 is primarily
attributable to unfavorable manufacturing variances generated at

                                       21
<Page>
the Grenada, MS facility related to reduced production volumes for the
Round-the-Clock(-Registered Trademark-) and Givenchy(-Registered Trademark-)
brands and custom collection customers as well as incremental costs incurred
from integrating the Evan Picone(-Registered Trademark-) and the Ellen
Tracy(-Registered Trademark-) licenses described above.

SELLING, GENERAL AND ADMINISTRATION EXPENSES

    The Company continues to review its selling, general and administrative
expenses to reduce expenses and its infrastructure to right-size the
organization. This encompasses implementation of a cost-savings strategy to
control all expenses and streamline processes to increase efficiencies. The
result is accountability and improved business processes, as well as significant
head count reductions at all divisions. As indicated previously, the Company has
also streamlined retail operations to reduce operating costs.

    Selling, general and administrative expenses, which include retail store
operating costs including rents, decreased $675 or 2.3%, to $29,096, or 35.6% of
net revenues in fiscal 2001 compared to $29,771 or 34.9% of net revenues for
fiscal 2000. The net decrease for fiscal 2001 was the result of lower retail/
outlet store expenses related to having four fewer stores compared to fiscal
2000, partially offset by higher selling, marketing, sales promotions and
distribution expenses for the wholesale business. The increased selling and
marketing expenses are primarily attributable to hiring additional sales
management and independent sales representatives to increase geographic
coverage, grow the brands and increase channels of distribution. Selling,
general and administration expenses, excluding retail store operating costs,
increased $141, or 0.7%, to $19,518, or 28.2% of net revenues, for fiscal 2001,
from $19,377, or 27.1% of net revenues, for fiscal 2000.

NON-RECURRING CHARGES (INCOME)

    Non-recurring charges for fiscal 2001 were $1,700 primarily related to the
write-off of costs incurred for the purchase of computer hardware and software
and system programming costs by external consultants. The Company placed this
project on hold until adequate capital could be raised, however with the
Company's continuing cash constraints, management is unable to determine when or
if this project will be resumed. As a result, the Company has written off the
previously capitalized cost of $1,700 in fiscal 2001.

    Non-recurring income for fiscal 2000 was $510, primarily a result of a net
recovery of $426 for an outstanding amount owed the Company for the sale of a
trademark and $220 resulting from securing a subtenant for the Company's former
corporate offices in New York City, which the Company previously recognized a
loss in fiscal 1999. The aforementioned income was partially offset by $136 for
severance pay to a former executive.

INTEREST EXPENSE

    Interest expense amounted to $4,051 for fiscal 2001 and $3,289 for fiscal
2000. The higher interest expense for fiscal 2001 is due primarily to an average
higher level of debt and higher financing expenses related to the Overadvance,
partially offset by lower interest rates. Fiscal 2001 interest expense includes
non cash charges for warrants issued in accordance with modifications of the
Company's debt agreements of $140, as compared to $0 in 2000, as well as bank
fees of $525 in 2001 compared to $0 in 2000. The Company's effective interest
rate was 10.6% for fiscal 2001 versus 11.2% for fiscal 2000.

INCOME TAX PROVISION

    The Company's income tax provision rates differed from the Federal statutory
rates due to the incurrence of net operating losses for which the benefit was
offset by valuation allowances and the effect of state taxes for the fiscal
years 2001 and 2000. The Company's net deferred tax balance was $0 at both
fiscal 2001 and 2000.

                                       22
<Page>
    The Company has undergone a change of ownership within the meaning of
Internal Revenue Code Section 382. As a result of this change in ownership, the
future utilization of the Company's net operating loss (NOL) carryforward will
be limited. Under these rules, the amount of the Company's NOL carryforward that
can be used in each subsequent year is limited to an annual amount. This annual
limitation is determined by multiplying the value of the Company on the date of
the ownership change by the Federal long-term interest rate of approximately
5.5%.

NET LOSS

    As a result of the foregoing, the net loss was $10,018 for fiscal 2001
compared to the net loss of $7,905 for fiscal 2000.

(COMPARISON OF THE 53-WEEK FISCAL YEAR ENDED DECEMBER 30, 2000 WITH THE 52-WEEK
FISCAL YEAR ENDED DECEMBER 25, 1999)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

NET REVENUES

    Fiscal 2000 was a "transition" year for the Company. In this regard,
management has undertaken steps to eliminate unprofitable business and products
and cut infrastructure to maximize financial results and minimize risk. In
addition, the Company has taken steps to expand distribution with the addition
of new customers and licenses, and increase volume in the specialty store class
of trade, increase retail store profitability and is positioned to take
advantage of consolidation opportunities in the hosiery industry.

    Net revenues for the fiscal year ended 2000 amounted to $85,293, a decrease
of $3,199, or 3.6% from $88,492 for the fiscal year ended 1999. Danskin
activewear net revenues, which include the Company's retail operations,
decreased $3,837, to $57,282 or 6.3%, in fiscal 2000 from $61,119 in fiscal
1999. The decreased revenues are primarily the result of lower sales volumes in
private label businesses, international accounts, the discontinued packables
line and fewer company retail and outlet stores. This decrease was partially
offset by the extra week in fiscal 2000 compared to fiscal 1999.

    The Company's marketing of activewear wholesale products continues to
address the trend toward casual wear and emphasizes fashion and dancewear
product offerings complementing the Company's basic replenishment products. In
addition, the Company continues to work with its major retail partners to
increase the percentage of orders of basic product placed via electronic
re-order/fulfillment programs (Electronic Data Interchange or "EDI") in an
effort to drive its basic replenishment business, to increase open-to-buy-levels
and to seek out new customers and new channels of distribution.

    Sales in the Company's retail stores were $13,850 for fiscal 2000, a
decrease of $3,050 or 18.0% from 1999 sales of $16,900. Comparable retail store
sales declined 4.7% for 2000. The decline in retail store sales is attributable
to the capital constraints encountered during fiscal 1999, resulting in
inventory imbalances and promotional requirements, all of which have been
addressed by management, offset by the extra week in fiscal 2000. To address
these declines, and to enhance the performance of its retail stores, the Company
continues to improve store product offerings, to renegotiate existing leases to
achieve optimum store size, to streamline store operations to reduce operating
costs and to set up an automatic stock replenishment system. In addition, the
Company is continuing to take steps necessary to evaluate certain unprofitable
or under-performing locations. In this regard, as of the end of December 30,
2000, the Company has five fewer stores than as of December 25, 1999, as the
Company has closed six stores and opened one new store over the past year.

    Pennaco legwear revenues amounted to $28,011 for fiscal 2000, an increase of
$638, or 2.3%, from the prior fiscal year sales of $27,373. The increase in
legwear revenues versus the prior fiscal year is primarily attributable to the
incremental sales generated from the Ellen Tracy(-Registered Trademark-) and
Evan Picone(-Registered Trademark-) brands, as discussed below, since May 2000.
These increases were partially offset by lower sales in the

                                       23
<Page>
Round-the-Clock(-Registered Trademark-) and Givenchy(-Registered Trademark-)
brands as well as lower levels of closeouts and irregulars compared to fiscal
1999, offset by the extra week in fiscal 2000. Revenues for fiscal 2000 for the
Ellen Tracy(-Registered Trademark-) and Evan Picone(-Registered Trademark-)
products were $3,214 and $3,811, respectively.

    Management believes that the Company is positioned to take advantage of
consolidation opportunities in the hosiery industry. In this regard, effective
May 5, 2000, the Company reached an agreement with Ellen Tracy, Inc. pursuant to
which Pennaco was granted a license for the manufacture and sale of legwear
including sheer hosiery, sheer knee highs, tights, socks and trouser socks under
the Ellen Tracy(-Registered Trademark-) label among others. The agreement
provides that Pennaco shall have the exclusive right and license to use the
Ellen Tracy(-Registered Trademark-) trademark in connection with the
manufacture, assemblage, sale, marketing and distribution, advertising and
promotion of legwear in the United States and Canada. The license was previously
held by Ridgeview, Inc.

    In a separate transaction, Pennaco obtained an exclusive license for the
manufacture and sale of sheer hosiery and knee highs under the Evan
Picone(-Registered Trademark-) label. This agreement provides that Pennaco shall
have the exclusive right and license to use the Evan
Picone(-Registered Trademark-) trademark in connection with the manufacture,
assemblage, sale, marketing and distribution, advertising and promotion of sheer
hosiery and knee highs in the United States and Canada. The license was
previously held by Ridgeview, Inc.

    The Company presently anticipates that, together, the sales of product under
the Evan Picone(-Registered Trademark-) and Ellen
Tracy(-Registered Trademark-)labels will generate revenue of approximately
$10,000 on an annualized basis. Sales of product under these licenses began
during the second fiscal quarter 2000. Total sales for the Evan
Picone(-Registered Trademark-) and Ellen Tracy(-Registered Trademark-) labels
for fiscal year 2000 were $7,025.

    Management believes that opportunities exist for margin and revenue
improvement for market right products and programs in niche and
occasion-oriented sheer hosiery and through expanded distribution. Accordingly,
the Company has initiated a program of product development focused on these
product segments and is focusing on expanding distribution into new wholesale
accounts. In addition, opportunities exist for niche products and in the growing
specialty and dot.com channel segments, as well as in a more focused strategy by
new management. Among new niche products being offered is Passion
Privee(-Registered Trademark-)which has been well received.

GROSS PROFIT

    Gross profit was $24,665 or 28.9% of net revenues for fiscal 2000, an
increase of $2,100 from the fiscal 1999 gross profit of $22,565 or 25.5% of net
revenues. Despite improvements made in margins, the margins for the fiscal year
ended December 30, 2000 were adversely affected by the capital constraints
experienced during fiscal 1999, which resulted in an increased cost of inventory
and an aggressive program to dispose of excess and aged inventory.

    Danskin activewear gross profit, as a percentage of net revenues, increased
to 32.6% for fiscal 2000 versus 27.4% of net revenues for fiscal 1999. The
fiscal year 2000 improvement in margins was primarily due to an improved mix of
high margin Danskin(-Registered Trademark-) brand sales and retail store sales
versus the discontinued packables line and lower margin private label programs,
decreased design and product development expenses and reduced customer dilution
through better control of customer markdown allowances and reduced obsolescence
expense when compared to fiscal year 1999.

    Pennaco legwear gross profit was $5,965 or 21.3% of net revenues for fiscal
2000, an increase of $145 or 2.5% from the fiscal 1999 gross profit of $5,820 or
21.3% of net revenues. The gross profit increase for fiscal 2000 is primarily
attributable to the incremental sales from the licensing of the Ellen
Tracy(-Registered Trademark-) and Evan Picone(-Registered Trademark-) labels,
offset by the lower volume sales from the
Round-the-Clock(-Registered Trademark-) and Givenchy(-Registered Trademark-)
brands. Despite capital constraints experienced during 2000, Pennaco legwear was
able to maintain the same gross profit percentage of sales as achieved in fiscal
1999 through the initiation of a program to phase-out unprofitable styles within
its existing lines, implementation of an aggressive cost improvement program at
the manufacturing facility and price increases on Round-the
Clock(-Registered Trademark-) products.

                                       24
<Page>
SELLING, GENERAL AND ADMINISTRATION EXPENSES

    Under new management, the Company has undergone a thorough review of its
selling, general and administrative expenses and has reduced expenses and the
infrastructure to right-size the organization. This encompassed implementation
of a cost-savings strategy to control all expenses and streamline processes to
increase efficiencies. The result is accountability and improved business
processes, as well as significant head count reductions at all divisions. As
indicated previously, the Company is also in the process of streamlining retail
operations to reduce operating costs.

    Selling, general and administrative expenses, which include retail store
operating costs including rents, decreased $6,425, or 17.8%, to $29,771, or
34.9% of net revenues in fiscal 2000 compared to $36,196 or 40.9% of net
revenues for fiscal 1999. Selling, general and administration expenses,
excluding retail store operating costs, decreased $3,124, or 13.9%, to $19,377,
or 27.1% of net revenues, for fiscal 2000, from $22,501, or 31.4% of net
revenues, for fiscal 1999. The decrease in expenses for 2000 was principally a
result of a reduction in sales promotions and advertising, selling and
administrative costs, as well as closing unprofitable outlet/retail stores.

INTEREST EXPENSE

    Interest expense amounted to $3,289 for fiscal 2000 and $5,462 for fiscal
1999. Interest expense for fiscal 1999 includes the amortization of warrants
issued in connection with the bridge financing amounting to $2,055. The
Company's effective interest rate, excluding the warrants, was 11.2% for fiscal
2000 versus 10.4% for fiscal 1999.

NON-RECURRING CHARGES (INCOME)

    Non-recurring income for fiscal 2000 was $510, primarily a result of a net
recovery of $426 for an outstanding amount owed the Company for the sale of a
trademark and $220 resulting from securing a subtenant for the Company's former
corporate offices in New York City, which the Company previously recognized a
loss in fiscal 1999. The aforementioned income was partially offset by $136 for
severance pay to a former executive.

    Non-recurring charges for fiscal 1999 were $795. These charges consisted of
an additional provision for remaining lease obligations for the former corporate
office at 111 West 40th Street in New York City, and establishment of a reserve
against an outstanding amount owed the Company for the sale of a trademark.

INCOME TAX PROVISION

    The Company's income tax provision rates differed from the Federal statutory
rates due to the net loss in 2000 and 1999 and reflect a provision for minimum
state taxes. No benefit has been recorded for generated net operating losses
during 2000 and 1999. The Company's net deferred tax balance was $0 at both
fiscal 2000 and 1999.

    The Company has undergone a change of ownership within the meaning of
Internal Revenue Code Section 382. As a result of this change in ownership, the
future utilization of the Company's net operating loss (NOL) carryforward will
be limited. Under these rules, the amount of the Company's NOL carryforward that
can be used in each subsequent year is limited to an annual amount. This annual
limitation is determined by multiplying the value of the Company on the date of
the ownership change by the Federal long-term interest rate of approximately
5.5%.

                                       25
<Page>
NET LOSS

    As a result of the foregoing, the net loss was $7,905 for fiscal 2000; an
improvement of $12,003 compared to the net loss of $19,908 for fiscal 1999.
Fiscal 1999 results were adversely impacted by non-cash charges pertaining to
warrants issued and employee stock grants amounting to $2,489.

SEASONALITY

    In the fiscal years ended December 29, 2001 and December 30, 2000, the
Spring and Fall season, shipped in the first and third quarter, respectively,
continued to generally represent the best volume period for activewear and
legwear.

    The following table summarizes the net revenues, operating loss before
non-recurring charges (income), interest and taxes and net loss of the Company
before preferred stock dividends, for each of the fiscal March, June, September
and December quarters in the last two fiscal years:

<Table>
<Caption>
                                                          MARCH       JUNE     SEPTEMBER   DECEMBER
                                                         --------   --------   ---------   --------
<S>                                                      <C>        <C>        <C>         <C>
                                                               FOR THE FISCAL QUARTERS ENDED
                                                         ------------------------------------------
                                                                        (DOLLARS IN THOUSANDS)
2001
Net Revenues...........................................  $22,093    $19,718     $21,718    $18,229
Loss before non-recurring (income), interest and
  taxes................................................   (1,118)    (1,274)         65     (1,900)
Net loss...............................................   (2,080)    (2,226)     (1,138)    (4,574)

2000
Net Revenues...........................................  $21,204    $20,652     $21,554    $21,883
Loss before non-recurring (income), interest and
  taxes................................................   (1,232)    (1,178)     (1,256)    (1,440)
Net loss...............................................   (1,935)    (1,268)     (2,164)    (2,538)
</Table>

INFLATION

    The Company does not believe that the relatively moderate levels of
inflation which have been experienced in the United States, Canada and Western
Europe in recent years, have had a significant effect on its net revenues.

LIQUIDITY AND CAPITAL RESOURCES

    The Company's primary liquidity and capital requirements relate to the
funding of working capital needs, primarily inventory, accounts receivable,
capital investments in operating facilities, machinery and equipment, and
principal and interest payments on indebtedness. The Company's primary sources
of liquidity have been from bank financing, issuance of convertible securities,
vendor credit terms and internally generated funds.

    Net cash flow used in operations decreased by $7,896 to $4,118 for fiscal
2001, from a use of cash in operations of $12,014 in fiscal 2000, principally
attributable to the operating loss in fiscal 2001, decreases in accounts payable
and accrued expenses, decreases in accounts receivable and inventories. The
maximum borrowings under the Company's revolving line of credit were $29,426
during the fiscal year ended December 29, 2001. Availability was an overadvance
of ($5,206) as of December 29, 2001.

    Working Capital was a deficit of ($6,940) at December 29, 2001 compared to
$286 at December 30, 2000. The change in working capital is primarily
attributable to an increase of $4,068 in the Company's revolving line of credit
to fund the net loss, capital expenditures, decreases in accounts payable and
accrued expenses offset by decreases in inventory and accounts receivable.

    As reflected in the Consolidated Financial Statements, the Company has
incurred losses for each of the periods presented. However, the Company (i) has
implemented a cost savings strategy

                                       26
<Page>
Company-wide which has resulted in, and the Company believes will continue to
produce, reductions in the Company's infrastructure expenses, (ii) has taken
actions to increase the revenue of each of its operating segments, including
selling to new customers and entering into new licensing arrangements, and
(iii) has amended its secured credit facility from time to time, to provide the
Company with the liquidity it needs to meet its business plans. In addition, the
Company is currently seeking to raise additional capital through the sale of
debt or equity securities. The Company presently anticipates that the proceeds
from any such sale, if successful, will be used for general working capital
purposes.

    Effective October 8, 1997, the Company entered into a loan and security
agreement (the "Loan and Security Agreement") with Century Business Credit
Corporation ("CBCC" or the "Lender") which matures on December 31, 2005. The
Company's obligations to CBCC under the Loan and Security Agreement are
generally secured by a first priority interest in all present and future assets
of the Company.

    Pursuant to and in accordance with its terms, the Loan and Security
Agreement provides the Company with a term loan facility in the aggregate
principal amount of $11,500 (the "Term Loan Facility") and a revolving credit
facility, including a provision for the issuance of letters of credit (the
"Revolving Credit Facility") generally in an amount not to exceed the lesser of
(a) $45,000 less the aggregate outstanding principal balance under the Term Loan
Facility, or (b) a formula amount based upon the Company's available inventory
and accounts receivable levels, minus certain discretionary reserves.

    The Loan and Security Agreement has been amended from time to time since
inception, each time providing the Company with the additional liquidity
necessary to meet its business plans. Pursuant to an amendment executed in
March 2002 (the "March Amendment"), CBCC has agreed to provide the Company with
additional borrowing capacity of varying amounts through December 31, 2002, to
meet borrowing levels required by the Company's forecasted monthly business
plans, plus an additional $3,000 in excess availability through December 2002,
to a maximum overadvance of $10,987 (the "Overadvance").

    In connection with the March Amendment, the Company agreed (i) to pay CBCC
5% of net royalties earned by the Company on licensing agreements entered into
after February 28, 2002, with payments not to exceed $500 in any fiscal year.
Payments will continue until the earlier of (i) December 31, 2005, and
(ii) such time as the Company has $3,000 in undrawn availability.

    The Loan and Security Agreement was previously amended in August 2001 (the
"August Amendment") to reduce the required amortization by $142 per month from
December 2001 through December 2002. In accordance with the August 2001
Amendment, the Term Loan Facility is payable, with respect to principal, in
equal consecutive monthly installments of (i) $50 on the first day of
September 2001 and on the first day of each month thereafter through
December 2002, and (ii) $192 commencing on the first day of January 2003 and on
the first day of each month thereafter. In accordance with the amortization
requirement prior to the August Amendment, the Company paid an aggregate of $550
to CBCC through August 1, 2001, reducing the outstanding principal amount of the
Term Loan to $10,950. Pursuant to the August Amendment, CBCC agreed to re-lend
the $550 to the Company, thereby making the full $11,500 amount of the Term Loan
Facility available to the Company.

    In addition to its other provisions, the August Amendment also provided that
any fees payable by the Company to CBCC on or after August 1, 2001 pursuant to
an amendment executed in March 2001, as set forth below, would be evidenced by a
promissory note subsequently amended to be payable January 1, 2004, thereby
relieving the Company of the requirement of cash payments to CBCC in respect of
this obligation through December 2003. In connection with the August Amendment,
CBCC requested a "good faith" participation by certain shareholders and
affiliates of the Company who agreed to immediately provide the Company with
$200 in additional credit support.

                                       27
<Page>
    In connection with the amendment in March 2001, the Company agreed: (i) to
pay CBCC a fee equal to $25 on May 1, 2001, and an additional fee of $25, plus
the amount of the previous month's fee, on the first of each month thereafter,
and (ii) to issue 250,000 warrants to CBCC with a share price equal to the
closing price of the Company's Common Stock on the date of issuance, on the
first of each month, commencing May 1, 2001. Under the terms of the agreement
with CBCC, the accrual of said additional payment will terminate at such time as
the Company raises $4,790 of additional capital. Therefore, in accordance with
this understanding, through December 29, 2001, the Company has incurred $525 in
additional fees to CBCC and has issued 2,250,000 warrants to CBCC with share
prices ranging from $0.06 to $0.185 per share.

    The Loan and Security Agreement contains certain affirmative and negative
covenants, including maintenance of tangible net worth and a limitation on
capital expenditures, respectively. The tangible net worth covenant is
calculated by subtracting from total assets all intangible assets and total
liabilities. The Company must maintain a tangible net worth of not less than a
net deficit of ($24,156) as of December 29, 2001 and as of the end of each month
thereafter and (ii) it shall be an Event of Default if the Company fails to
maintain average undrawn availability under the Loan and Security Agreement for
any month of less than $0 after giving effect to the Overadvance. At
December 29, 2001 the Company's tangible net worth was a deficit of $(17,231.)
The maximum borrowings under the Revolving Credit Facility were $29,426 during
the fiscal year ended December 29, 2001.

    Interest on the Company's obligations and under the Loan and Security
Agreement generally accrues at a rate per annum equal to the sum of the Prime
Rate plus one half of one ( 1/2%) percent and is payable monthly. The Company
previously had the option of electing a EuroLoan, pursuant to which interest on
the Company's obligations would accrue at a rate per annum equal to the sum of
the Eurodollar Rate, as defined in the Loan and Security Agreement, plus two and
three quarters percent (2 3/4%). However, as consideration to CBCC in connection
with certain previous amendments, the Company agreed to waive its right to elect
a Eurodollar Loan until such time as the Company maintains average undrawn
availability of at least $1,000 for three consecutive months.

    In December 1999, the Company issued $15,210 stated value of 9% Series E
Senior Step-Up Convertible Preferred Stock (the "Series E Stock"). The 3,042
shares of Series E Stock are convertible into Common Stock, at the option of the
holder, at an initial conversion rate of 16,129 shares of Common Stock for each
share of Series E Stock so converted, subject to adjustment in certain
circumstances. The Series E Stock also contains a "reset" provision which
provides that if, at the eighteen (18) month anniversary of the date of issuance
(June 8, 2001), the Market Price (generally defined to mean the average closing
price of the Common Stock for the twenty day period prior to such date (the
"Reset Period")) is less than the Conversion Price ($0.31 per share), the
Conversion Price shall be reset to the Market Price. At the Reset Period, the
Market Price of the Common Stock was $0.18 per share. Therefore, as a result of
the reset provision, the conversion rate for the Series E Stock was adjusted
from 16,129 shares of Common Stock to 27,778 shares of Common Stock, for each
share of Series E Stock so converted.

    The terms of the Series E Stock also provide that, at any time after the
fifth anniversary of the date of its issuance, the Series E Stock may, at the
election of the Company, be redeemed by the Company for an amount equal to the
sum of (x) $5,000 per share (as adjusted for any combinations, divisions or
similar recapitalizations affecting the shares of Series E Stock), plus (y) all
accrued and unpaid dividends on such shares of Series E Stock to the date of
redemption. Until the fifth anniversary of the date of its issuance, the
Series E Stock has a 9% annual dividend rate, provided that the Company may, at
its sole option, pay a portion of such dividend equal to up to 2% per annum in
shares of common stock of the Company; provided however, that the Company has an
obligation with respect to the holders of the Series E Stock to cause the common
stock of the Company to be listed on the Nasdaq Small Cap Market or the Nasdaq
National Market as promptly as feasible following the issuance of the Series E
Stock. If the Company does not achieve such listing within eighteen

                                       28
<Page>
(18) calendar months following the issuance date of the Series E Stock,
dividends shall accrue prospectively at a rate of 14% per annum, payable in cash
only, until such time such listing is effected.

    Notwithstanding the above, from and after the fifth anniversary of the date
of issuance, dividends accrue on the Series E Stock at a rate of 14% per annum,
payable only in cash. The Common Stock is not presently listed as required by
the terms of the Series E Stock. Therefore, effective June 8, 2001, dividends on
the Series E Stock are accruing at a rate of 14% per annum.

    Simultaneously with the Company's issuance of the Series E Stock, the
holders of the Company's Series D Redeemable Cumulative Convertible Preferred
Stock (the "Series D Stock") agreed to convert such Series D Stock into Common
Stock of the Company in accordance with the terms and conditions of the
Series D Stock. The holders of the 2,400 shares of Series D Stock issued by the
Company converted such preferred stock into Common Stock at the stated
conversion rate of 16,666.66 shares of Common Stock for each share of the
Series D Stock so converted. In addition, the Series D Stock had an 8% annual
dividend rate, payment of which was deferred through December 31, 1999. The
holders agreed that, for the period beginning on the date of issuance of the
Series D Stock and ending on December 31, 1999, all dividends accrued on the
Series D Stock could be paid, at the option of the Company, in cash or in
additional Common Stock of the Company. The Company elected to pay such accrued
but unpaid dividends in Common Stock. Therefore, as a result of the conversion
of the Series D Stock, the Company issued 46,924,000 shares of Common Stock in
respect of the Series D Stock and all accrued but unpaid dividends through the
effective date of the conversion.

    The Company expects to finance its short term growth, working capital
requirements, capital expenditures, and debt service requirements principally
from the additional capital and liquidity provided by the cash generated from
operations, existing credit lines, including the Overadvance as discussed
previously, vendor arrangements and by raising additional capital as previously
discussed.

    The Company expects to finance its long-term growth, working capital
requirements, capital expenditures, management information systems upgrades, and
debt service requirements through a combination of cash provided from operations
and bank credit lines. The Company will require additional capital and/or
financing, however, for the development of any new business or programs.

    The following tables summarize the Company's contractual and commercial
obligations as of December 29, 2001:

<Table>
<Caption>
                                                                PAYMENTS DUE BY PERIOD
                                          -------------------------------------------------------------------
                                          TOTAL      LESS THAN 1 YEAR   1-3 YEARS   4-5 YEARS   AFTER 5 YEARS
CONTRACTUAL OBLIGATIONS                   -----      ----------------   ---------   ---------   -------------
                                                                (DOLLARS IN THOUSANDS)
<S>                                       <C>        <C>                <C>         <C>         <C>
Long-term Debt..........................  $11,800         $  800         $11,000          0            0

Capital Leases..........................        0              0               0          0            0

Operating Leases........................  $12,643         $3,597         $ 5,789     $2,494         $763
</Table>

<Table>
<Caption>
                                                     AMOUNT OF COMMITMENT EXPIRATION PER PERIOD
                                      ------------------------------------------------------------------------
                                      TOTAL AMOUNTS
                                      COMMITTED       LESS THAN 1 YEAR   1-3 YEARS   4-5 YEARS   AFTER 5 YEARS
OTHER COMMERCIAL COMMITMENTS          -------------   ----------------   ---------   ---------   -------------
                                                               (DOLLARS IN THOUSANDS)
<S>                                   <C>             <C>                <C>         <C>         <C>
Working Capital Facility............     $26,447           $26,447           0           0              0

Merchandise Letters of Credit.......     $   553               553           0           0              0

Standby Letters of Credit...........     $   621                 0           0           0           $621
</Table>

                                       29
<Page>
STRATEGIC OUTLOOK

    Over the period that the current management team has been in place,
significant progress has been made in all aspects of the operation of the
business. The Company has undertaken steps to eliminate unprofitable business
and products and cut infrastructure to maximize financial results and minimize
risk. In addition, the Company has taken steps to expand distribution with the
addition of new customers and licenses, and increase volume in the specialty
store class of trade, increase retail store profitability and is positioned to
take advantage of consolidation opportunities in the hosiery industry.

    The Company's business strategy is to capitalize on and enhance the consumer
recognition of Brand Danskin-Registered Trademark- by continuing to develop new
and innovative activewear, dancewear and legwear products that reflect a woman's
active lifestyle, and to offer those products to the consumer in traditional and
nontraditional channels of distribution.

    The Company continues to pursue a "Primary Resource Strategy," moving Brand
Danskin-Registered Trademark- beyond its traditional stretch bodywear platform.
The Company intends to continue to offer new and innovative products that blend
technical innovation with comfort and style, broadening the position of Brand
Danskin-Registered Trademark- to the consumer beyond "activewear" to one of
"active lifestyle." New innovation initiatives launched in 2001 for selling
during the Spring and Fall 2002 seasons included O2
Performance-Registered Trademark-, Danskin Yoga and Denise
Austin-Registered Trademark- by Danskin-Registered Trademark-. Additionally, the
Company launched a new license with New York City Ballet-Registered Trademark-
to develop innovative contemporary dance apparel. The Company continues to
expand the visibility of Brand Danskin-Registered Trademark- beyond its
traditional channels of distribution to alternative channels such as the
internet (both direct to consumer selling and select retailer sites), direct
mail, and home shopping television channels.

    The Company's Pennaco hosiery division has developed a diversified portfolio
of products under proprietary, licensed and private label brands. These products
include sheer and super sheer products, value oriented multipacks, plus size
offerings, trouser socks and tights. Most recently, in fiscal year 2000 the
Company reached an agreement with Ellen Tracy, Inc. pursuant to which Pennaco
was granted a license for the manufacture and sale of legwear including sheer
hosiery, sheer knee highs, tights, socks and trouser socks under the Ellen
Tracy-Registered Trademark- label. In a separate transaction, Pennaco also
recently obtained an exclusive license for the manufacture and sale of legwear
under the EvanPicone-Registered Trademark- label.

    The Company's business strategy with respect to the Pennaco division is to
continue to develop market right products and programs, exploiting its
significant manufacturing expertise, and the diversity of its product offerings,
to achieve strategic alliances with its key retail partners to enable it to
maintain its industry position in a contracting sheer hosiery market.

    The Company developed, and is implementing, an integrated Internet strategy
in 2001 and beyond. The strategy is predicated upon the strong recognition of
Brand Danskin-Registered Trademark- and its lifestyle credibility among women in
the dance and physical activity arenas. The Company believes that Brand
Danskin-Registered Trademark-'s high recognition and credibility present a
unique opportunity to create and implement an Internet site focused on both
content and contextual commerce relevant to dance and physical activity.

    Phase I of Danskin.com was completed during the second quarter of fiscal
year 2001, dramatically expanding the consumer's ability to connect with the
Company, finding retail locations to purchase Danskin products, directly
purchasing plus-sized apparel which is particularly hard to find, and accessing
information on the Danskin Women's Triathlon Series, the most popular and
largest multisport series in the world exclusively for women, which is beginning
its 13th year in 2002.

    The Triathlon Series is a tremendous content opportunity in its own right
with 190 million reach through media exposure, community involvement and
participant's inspirational stories. Danskin sponsors "grass roots" programs in
each of seven race cities (Seattle, Sacramento, Denver, Austin, Boston, Chicago,
Orlando) that will be improved through interactive activities on Danskin.com.
The

                                       30
<Page>
"MentorMentee" program allows first time entrants to receive support and advice
from past participants and is only possible in a meaningful way through internet
communication. Team Survivor is Danskin's program to support breast cancer
survivors with free specialized coaching and training to prepare for the race.
For the first time in 2001, Danskin.com enabled participants to register online
for a Danskin race. Danskin.com also enhances the sponsorship opportunities
available to partners of the Danskin Women's Triathlon Series, including Dove,
Ryka, Shape, Timex and Dupont, linking our active women to their websites.

    Phase II of Danskin.com launched during March 2002 initiating a unique
business-to-business site for dance and specialty stores seeking Danskin
products. The Company recently introduced a new In-Stock program to address the
needs of its retail partners and the dance community. With this new program,
Danskin guarantees availability of key products on a yearly basis, with two-week
turnaround for shipment. The In-Stock program will enable Danskin to increase
its offerings to retailers and consumers who require products that can be
reordered for theatrical productions and team uniforms (a quick-growing market
for young women). The combination of the In-Stock program and a
business-to-business Internet site should significantly increase the Company's
business opportunities by providing a strong support to the independent
representative sales force serving this channel of distribution.

    In addition to the foregoing, with the addition of licenses for fitness
equipment and socks under the Danskin-Registered Trademark- Brand, along with
women's and girl's activewear, and socks and girls intimate apparel under the
Freestyle-Registered Trademark- brand, the Company is aggressively seeking to
increase its presence at retail by continuing to explore various licensing
opportunities for Brand Danskin-Registered Trademark- and
Freestyle-Registered Trademark-. The Company also continues to pursue a strategy
to increase its presence in international markets.

    There can be no assurances that the Company will be able to implement these
strategies, or that if implemented, that such strategies will be successful. In
addition, there can be no assurance that the Company would not be adversely
affected by adverse changes in general economic conditions, the financial
condition of the apparel industry or retail industry, or adverse changes in
retailer or consumer acceptance of the Company's products as a result of fashion
trends or otherwise. Moreover, the retail environment remains intensely
competitive and highly promotional and there can be no assurance that the
Company would not be adversely affected by pricing changes of the Company's
competitors.

    CERTAIN STATEMENTS CONTAINED IN THE DISCUSSION BELOW, INCLUDING, WITHOUT
LIMITATION, STATEMENTS WITH RESPECT TO THE COMPANY'S ANTICIPATED RESULTS OF
OPERATIONS OR LEVEL OF BUSINESS FOR FISCAL YEAR 2002, OR ANY OTHER FUTURE
PERIOD, SHALL BE DEEMED FORWARD-LOOKING STATEMENTS WITHIN THE SAFE HARBOR
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, AS A NUMBER
OF FACTORS AFFECTING THE COMPANY'S BUSINESS AND OPERATIONS COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY THE FORWARD-LOOKING
STATEMENTS. SUCH STATEMENTS ARE BASED ON CURRENT EXPECTATIONS AND INVOLVE KNOWN
AND UNKNOWN RISKS AND UNCERTAINTIES AND CERTAIN ASSUMPTIONS, REFERRED TO BELOW,
ARE INDICATED BY WORDS OR PHRASES SUCH AS "ANTICIPATES," "ESTIMATES,"
"PROJECTS," "MANAGEMENT EXPECTS," "THE COMPANY BELIEVES," "IS OR REMAINS
OPTIMISTIC," OR "CURRENTLY ENVISIONS" AND SIMILAR WORDS OR PHRASES. THESE
FACTORS INCLUDE, AMONG OTHERS, CHANGES IN THE REGIONAL AND GLOBAL ECONOMIC
CONDITIONS; RISKS ASSOCIATED WITH CHANGES IN THE COMPETITIVE MARKETPLACE,
INCLUDING THE LEVEL OF CONSUMER CONFIDENCE AND SPENDING, AND THE FINANCIAL
CONDITION OF THE APPAREL INDUSTRY AND THE RETAIL INDUSTRY, AS WELL AS ADVERSE
CHANGES IN RETAILER OR CONSUMER ACCEPTANCE OF THE COMPANY'S PRODUCTS AS A RESULT
OF FASHION TRENDS OR OTHERWISE AND THE INTRODUCTION OF NEW PRODUCTS OR PRICING
CHANGES BY THE COMPANY'S COMPETITORS; RISKS ASSOCIATED WITH THE COMPANY'S
DEPENDENCE ON SALES TO A LIMITED NUMBER OF LARGE DEPARTMENT STORE AND SPORTING
GOODS STORE CUSTOMERS, INCLUDING RISKS RELATED TO CUSTOMER REQUIREMENTS FOR
VENDOR MARGIN SUPPORT, AND THOSE RELATED TO EXTENDING CREDIT TO CUSTOMERS; RISKS
ASSOCIATED WITH CONSOLIDATIONS, RESTRUCTURINGS AND OTHER OWNERSHIP CHANGES IN
THE RETAIL INDUSTRY; UNCERTAINTIES RELATING TO THE COMPANY'S ABILITY TO
IMPLEMENT ITS GROWTH STRATEGIES; AND RISKS ASSOCIATED WITH CHANGES IN SOCIAL,
POLITICAL, ECONOMIC AND OTHER CONDITIONS AFFECTING FOREIGN SOURCING.

                                       31
<Page>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

    The Company does not trade in derivative financial instruments. The
Company's revolving line of credit bears interest at a variable rate (prime plus
1/2%) and, therefore, the Company is subject to market-risk in the form of
interest rate fluctuations.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    Financial statements and supplementary data required pursuant to Item 8
begin on page F-1 of this Form 10-K.

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

    None

                                       32
<Page>
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

EXECUTIVE OFFICERS AND DIRECTORS

    The following table sets forth certain information regarding the Company's
directors and executive officers:

<Table>
<Caption>
NAME                          AGE                           POSITION
----                        --------   ---------------------------------------------------
<S>                         <C>        <C>
Donald Schupak                 57      Chairman of the Board
  (1)(3)(4)...............
Carol J. Hochman (1)......     51      President, Chief Executive Officer and Director
John A. Sarto.............     50      Executive Vice President and Chief Financial
                                       Officer
Margaret B. Pritchard.....     39      Secretary, General Counsel and Senior Vice
                                       President, Business Development
Andrew J. Astrachan            42      Director
  (1)(4)..................
James P. Jalil (1)(2).....     53      Director
Nina McLemore (4).........     56      Director
Henry T. Mortimer, Jr.         59      Director
  (2).....................
Larry B. Shelton (2)......     67      Director
</Table>

------------------------

(1) Member of Executive Committee.

(2) Member of Audit Committee.

(3) Member of Compensation Committee.

(4) Member of the Nominating Committee.

    The business experience, principal occupations and employment, as well as
the periods of service, of each of the directors and executive officers of the
Company during at least the last five years, are set forth below.

DIRECTORS

    CLASS I

    Directors in Class I will continue to serve as directors until they are
proposed for reelection at the next annual meeting of stockholders.

    CAROL J. HOCHMAN, age 51, became the Chief Executive Officer of the Company
in June 1999. Prior to joining the Company, Ms. Hochman served as the Group
President for Accessories at Liz Claiborne, Inc. Prior to Liz Claiborne,
Ms. Hochman spent six years in the International Division of May Department
Stores.

    NINA MCLEMORE, age 56, has been a director of the Company since
September 1997. She is a Senior Managing Partner of Regent Capital Partners,
L.P., a private investment firm. She previously served as a member of the
Executive Committee of Liz Claiborne, Inc. from 1989 to 1993 and was responsible
for acquisitions, start-ups and new business opportunities in 1993. Prior to
that, Ms. McLemore was President of Liz Claiborne Accessories from 1980 to 1992.
She serves as a Director for Santa Monica Amusements, Inc. and Evercom, Inc.

                                       33
<Page>
    CLASS II

    Directors in Class II will continue to serve as directors until they are
proposed for reelection at the next annual meeting of stockholders.

    ANDREW J. ASTRACHAN, age 42, has been a director of the Company since
September 1997. He is the President and founder of Onyx Partners, Inc., an
investment bank. From 1985 to 1990, Mr. Astrachan was employed at Drexel,
Burnham & Lambert. Prior to that, he was a Vice President at Salomon
Brothers Inc. from 1981 to 1985.

    JAMES P. JALIL, age 53, has been a director of the Company since
September 1997. He has been a senior corporate partner with the law firm of
Shustak Jalil & Heller since 1992. Prior to that, Mr. Jalil was a corporate
partner at Lane & Mittendorf from 1982 to 1992.

    HENRY T. MORTIMER, JR., age 59, has been a director of the Company since
August 1992. He has been a Managing Director of Financial Security
Assurance, Inc., a financial guarantee insurance company since 1985. Previously,
he was a Senior Vice President of E.F. Hutton & Co., Inc. in its investment
banking department. In addition, he is currently a director of Tipiak, S.A., a
French food manufacturing company.

    CLASS III

    Directors in Class III will continue to serve as directors until they are
proposed for reelection at the next annual meeting of stockholders.

    DONALD SCHUPAK, age 57, has been a director of the Company since
October 1996 and became the Chairman of the Board of Directors in March 1997. He
is the Chief Executive Officer of the Schupak Group, an organization that
provides strategic planning, management consulting and corporate finance
services to a variety of clients. Mr. Schupak founded the Schupak Group in 1980.
From September 1988 through September 1990, he served as Chairman, Chief
Executive Officer and President of Horn & Hardart Company N/K/A Hanover Direct.
From 1971 through 1980, Mr. Schupak was actively engaged in the practice of law
with Schupak, Rosenfeld & Fischbein, a New York City law firm founded by
Mr. Schupak.

    LARRY B. SHELTON, age 67, has been a director of the Company since
October 1994. He is a retired as President and Chief Operating Officer of
Genesco, Inc., an apparel and footwear company, having served in that
organization for over 35 years in various management capacities. He has long
been active in the apparel industry, having served as Chairman of the Board of
The American Apparel Manufacturing Association and as a board member of The
Clothing Manufacturers Association.

    Effective February 26, 2002, David Chu resigned from the Board of Directors.

OFFICERS

    JOHN A. SARTO has been the Executive Vice President and Chief Financial
Officer of the Company since January 2000, having previously acted as an
internal financial consultant since July 1999. Prior to joining Danskin,
Mr. Sarto was Senior Engagement Manager for the Schupak Group, the merchant
banking and consulting firm headed by the Company's Chairman, Donald Schupak
from December 1998. From 1994 to 1997, Mr. Sarto was the Chief Financial Officer
at SLM International, Inc. where he was brought in to help restructure the
troubled Canadian sporting goods/ toy company. From 1988 to 1993, Mr. Sarto was
the Chief Financial Officer at Brooke Group Ltd., a multi-billion dollar,
diversified holding company. Prior to that, Mr. Sarto was Vice President,
Corporate Controller of Mastercard International from 1987 to 1988. Mr. Sarto is
a Certified Public Accountant.

    MARGARET B. PRITCHARD has been the Senior Vice President, Business
Development of the Company since June 1, 1997. Ms. Pritchard has also been the
General Counsel of the Company since October 1,

                                       34
<Page>
1997, having previously served as the Company's Assistant General Counsel since
June 1, 1997. She was appointed Secretary of the Company by the Board of
Directors on December 10, 1997. Prior to joining the Company, Ms. Pritchard was
associated with the law firm of Fried, Frank, Harris, Shriver & Jacobson in New
York.

    Under Section 16(a) of the Securities and Exchange Act of 1934, the
Company's directors, executive officers and holders of more than 10% of the
Common Stock are required to report their initial ownership of the Company's
equity securities and any subsequent changes in that ownership to the Securities
and Exchange Commission. Specific due dates for these reports have been
established, and the Company is required to disclose any failure to file by
these dates with respect to Fiscal 2001. Based on information available to it,
the Company does not believe that the Company's officers, directors or 10%
holders have changed their ownership positions.

BOARD OF DIRECTORS AND BOARD COMMITTEES

    The Board of Directors formally met two times in fiscal 2001. In addition,
individual members of the Board met informally numerous times throughout fiscal
2001 to monitor the Company's activities and operations, in light of the
continuing capital constraints experienced by the Company.

    The Board of Directors has an Executive Committee, an Audit Committee, a
Compensation Committee and a Nominating Committee.

    The Executive Committee is generally empowered to act on behalf of the Board
of Directors when the Board is not convened in meeting. The members of the
Executive Committee consist of Donald Schupak, Carol J. Hochman, James P. Jalil
and Andrew J. Astrachan. The Executive Committee held several informal meetings
during fiscal 2001, in light of the capital constraints experienced by the
Company.

    The Audit Committee is generally responsible for recommending the
appointment of the Company's independent auditors and overseeing the accounting
and internal audit functions of the Company, including reviewing, with the
Company's independent auditors, (i) the general scope of their audit services
and the annual results of their audit, (ii) the reports and recommendations made
to the Audit Committee by the independent auditors, and (iii) the Company's
internal control structure. The members of the Audit Committee consist of Larry
B. Shelton, Henry T. Mortimer and James P. Jalil. The Audit Committee held one
meeting during 2001.

    The Compensation Committee is generally responsible for reviewing and making
recommendations to the Board of Directors concerning remuneration of the
Company's key employees, including executive officers. The Compensation
Committee also grants stock options pursuant to the Stock Option Plan.
Presently, the sole member of the Compensation Committee is Donald Schupak. The
Compensation Committee did not take any action during 2001.

    The Nominating Committee is generally responsible for recommending
appropriate individuals to serve as members of the Board of Directors. The
members of the Nominating Committee consist of Donald Schupak, Andrew J.
Astrachan and Nina McLemore. The Nominating Committee did not meet during 2001.

                                       35
<Page>
ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

    The following table sets forth information concerning the compensation
earned during the last three fiscal years by the Company's Chief Executive
Officer and each other executive officer of the Company (each, a "named
executive officer"). The Company had three executive officers during the fiscal
year ended December 29, 2001 ("fiscal 2001").

<Table>
<Caption>
                                                                           OTHER ANNUAL     STOCK      ALL OTHER
                                           FISCAL     SALARY     BONUS     COMPENSATION    OPTIONS    COMPENSATION
NAME AND PRINCIPAL POSITION                 YEAR       ($)        ($)          ($)           (#)          ($)
---------------------------               --------   --------   --------   ------------   ---------   ------------
<S>                                       <C>        <C>        <C>        <C>            <C>         <C>
Carol J. Hochman........................    2001     425,000          0             0             0        2,625(1)
  President, Chief Executive Officer        2000     425,000          0             0             0        2,625(1)
                                            1999     237,020     86,500             0     5,040,000      232,452(1)

John A. Sarto...........................    2001     275,000          0             0             0        6,360(2)
  EVP, Chief Financial Officer              2000     275,000     53,000             0             0        5,323(2)
                                            1999     129,112     50,000             0     1,582,400        1,959(2)

Margaret B. Pritchard...................    2001     220,000          0             0             0        2,200(3)
  SVP, Secretary, General Counsel           2000     220,000          0             0             0        2,200(3)
                                            1999     203,077          0             0       550,000        2,036(3)
</Table>

------------------------

(1) Amounts shown as "All Other Compensation" for Ms. Hochman include
    (i) $230,000 attributable to a stock grant in fiscal 1999, and (ii) a $2,625
    contribution by the Company in each of 2000 and 2001, and a $2,452
    contribution by the Company in 1999, as the 25% matching contribution for
    the first 4% of earnings contributed by Mrs. Hochman to the Company's
    Savings Plan, a tax qualified plan covering full-time salaried employees
    over the age of 21 (the "Savings Plan"). The Savings Plan allows
    participants to elect to make contributions, on a pre-tax basis, from 1% to
    15% of their compensation, subject to applicable Internal Revenue Code
    limitations, and the Company is required to make a matching contribution
    equal to 25% of the participant's contributions up to 4% of such
    compensation. A participant becomes 33% vested in the matching contributions
    after three years of service, 66 2/3% after four years of service and 100%
    after five years of service.

(2) Amounts shown as "All Other Compensation" for Mr. Sarto include (i) a
    premium paid by the Company with respect to a long term disability policy
    for the benefit of Mr. Sarto in the amount of $900 in each of 2001 and 2000
    and $415 in 1999, (ii) a premium paid by the Company in respect of a life
    insurance policy for the benefit of Mr. Sarto in the amount of $2,835 in
    each of 2001 and 2000, and (iii) a $2,625, a 1,588 and a $1,544 matching
    contribution to the Savings Plan in 2001, 2000 and 1999, respectively.

(3) Amounts shown as other compensation for Ms. Pritchard include a $2,200,
    $2,200, and a $2,036 matching contribution to the Savings Plan in 2001, 2000
    and 1999, respectively.

STOCK OPTION GRANTS IN LAST FISCAL YEAR

    In fiscal 2001, none of the named executive officers received a stock option
grant.

                                       36
<Page>
AGGREGATED OPTIONS EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
  VALUES

    The following table shows information for fiscal 2001 respecting stock
options for each named executive officer.

<Table>
<Caption>
                                                               NUMBER OF SECURITIES
                                                                    UNDERLYING         VALUE OF UNEXERCISED IN-
                                  SHARES ACQUIRED    VALUE      UNEXERCISED OPTIONS      THE-MONEY OPTIONS AT
NAME                                ON EXERCISE     REALIZED   AT FISCAL YEAR END(1)    FISCAL YEAR END(2)($)
----                              ---------------   --------   ---------------------   ------------------------
<S>                               <C>               <C>        <C>                     <C>
Carol J. Hochman................         0             $0             5,040,000                   $0
John A. Sarto...................         0             $0             1,582,400                   $0
Margaret B. Pritchard...........         0             $0               775,000                   $0
</Table>

------------------------

(1) 951,850 options are presently exercisable.

(2) The value of an unexercised option at December 29, 2001 is determined by
    subtracting the exercise price of such option from the market value of a
    share of Common Stock on December 29, 2001, as published by the National
    Quotation Bureau.

EMPLOYMENT AGREEMENTS

    CAROL J. HOCHMAN.  Effective June 1999, the Company reached an agreement
with Carol J. Hochman concerning the terms and conditions of her employment by
the Company as President and Chief Executive Officer of the Company through
June 30, 2004, subject to earlier termination for death, resignation or removal.
Mrs. Hochman's annual base salary is $425,000. She is entitled to receive an
annual performance bonus of up to 100% of her base salary as determined by the
Board of Directors, in its sole discretion, based on such quantitative and
qualitative initiatives as identified by the Board upon consultation with
Mrs. Hochman and upon approval of the budget for the respective fiscal year.
Under Mrs. Hochman's agreement, if she resigns her employment for "good reason"
(as defined), if the Company terminates her employment without "cause" (as
defined), or she resigns by reason of a `change of control' (as defined), the
Company will be obligated to continue her base salary payments and benefits for
a period of one year, and she will be entitled to a performance bonus in an
amount equal to, depending upon the circumstance of her resignation or
termination, fifty percent (50%) to one-hundred percent (100%) of the previous
year's performance bonus.

    In accordance with the terms of her employment agreement, effective
December 8, 1999, Mrs. Hochman received a grant of one million shares of Common
Stock of the Company.

    In addition, as of December 8, 1999, and in accordance with the terms of her
employment arrangement, the Company issued Mrs. Hochman options to purchase
5,040,000 shares of common Stock of the Company for $0.27 per share. The options
vest in accordance with a performance based vesting schedule. Specifically, the
options are divided into six traunches, each of which will vest approximately
ten years from the date of issuance, subject to accelerated vesting if the
Company achieves certain EBIT levels. As of December 29, 2001, none of such
options vested.

    JOHN A. SARTO.  As of July 8, 1999, the Company entered into an employment
agreement with John A. Sarto, employing him as an internal financial consultant
through January 2000, and thereafter, as Executive Vice President, Chief
Financial Officer of the Company through July 1, 2002, subject to earlier
termination for death, resignation or removal. Mr. Sarto's annual base salary is
$275,000. He is entitled to receive an annual performance bonus of up to 75% of
his base salary as determined by the Board of Directors, in its sole discretion,
based on such quantitative and qualitative initiatives as identified by the
Board upon consultation with Mr. Sarto and upon approval of the budget for the
respective fiscal year. Under Mr. Sarto's agreement, if he resigns his
employment for "good reason" (as defined), if the Company terminates his
employment without "cause" (as defined), or he resigns by reason of a "change of
control" (as defined), the Company will be obligated to continue his base salary

                                       37
<Page>
payments and benefits for a period of two years, and he will be entitled to a
pro rata portion of his performance bonus.

    In accordance with the terms of his employment agreement, Mr. Sarto received
options to purchase 1,582,400 shares of Common Stock of the Company for $0.27.
Two hundred and fifty thousand of such options vested on the date of grant. Of
the balance of the options, 50% vest 25% a year, and 50% vest in accordance with
a performance based vesting schedule. As of December 29, 2001, 583,100 of such
options are vested.

    MARGARET B. PRITCHARD.  As of October 26, 1999, the Company entered into an
employment agreement with Margaret B. Pritchard, employing her as Senior Vice
President, General Counsel of the Company from October 26, 1999 through
October 31, 2002, subject to earlier termination for death, resignation or
removal. Ms. Pritchard's annual base salary is $220,000. She is entitled to
receive an annual performance bonus of up to 50% of her base salary as
determined by the Board of Directors, in its sole discretion, based on such
quantitative and qualitative initiatives as identified by the Board upon
consultation with Ms. Pritchard and upon approval of the budget for the
respective fiscal year. Under Ms. Pritchard's agreement, if she resigns her
employment for "good reason" (as defined), if the Company terminates her
employment without "cause" (as defined), or she resigns by reason of a "change
of control" (as defined), the Company will be obligated to continue her base
salary payments and benefits for a period eighteen months, and she will be
entitled to a pro rata portion of her performance bonus.

    Over the course of her employment, Ms. Pritchard has received options to
purchase an aggregate of 775,000 shares of Common Stock of the Company at strike
prices ranging from $0.27 to $1.62. As of December 29, 2001, 368,750 of such
options are vested.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    All of the members of the Compensation Committee are non-employee directors
of the Company and are not former officers of the Company or its subsidiaries.
No executive officer of the Company serves as a member of the Board of Directors
or on the compensation committee of a corporation for which any of the Company's
directors serving on the Compensation Committee or on the Board of Directors of
the Company is an executive officer.

COMPENSATION OF DIRECTORS

    Directors who are employees of the Company are not compensated for serving
as directors. Directors who are not employees of the Company receive an annual
retainer fee of $12,000, plus fees of $1,000 per day for attendance at meetings
of the Board of Directors and $500 per day for attendance at meetings of its
committees. Each of the directors appointed to the Board by Danskin Investors,
LLC in 1997 has agreed to waive receipt of such amount until such time as they,
as a group, direct the Company to the contrary. All non-employee directors of
the Company are reimbursed for out-of-pocket expenses. In addition, each
non-employee director receives, upon such person's initial election as a
director, a grant of an option to purchase 50,000 shares of the Common Stock
under the Stock Option Plan at fair market value, exercisable in three equal
installments on the first, second and third anniversaries of the grant date.
Although Mr. Schupak does not receive a salary from the Company, the Company
provides for a payment of $10,000 per month to an entity designated by
Mr. Schupak to defray his office overhead, and he is entitled to reimbursement
of reasonable travel and other expenses incidental to the performance of his
duties as Chairman of the Board of Directors.

CERTAIN TRANSACTIONS

    On September 22, 1997, Donald Schupak (the Chairman of the Board of the
Company) purchased from the Company, a Warrant (the "Schupak Warrant") for the
purchase of 5,372,315 shares of

                                       38
<Page>
Common Stock, subject to adjustment, at an exercise price of $.30 a share,
subject to adjustment. In consideration of the sale of the Schupak Warrant,
Mr. Schupak paid the Company the Warrant Price comprised of (x) $20,000 in cash
and (y) the Schupak Promissory Note in the amount of $80,000. The outstanding
principal balance of the Schupak Promissory Note bears interest at a rate of
6.55% per annum, to be paid annually on the anniversary of the Contribution
Closing Date. The Schupak Warrant may be exercised, in whole at any time or in
part from time to time, prior to 5:00 p.m., Eastern Standard Time, on
September 22, 2004. In addition, each of David Chu, a former director of the
Company, and Nina McLemore, a director of the Company, purchased from the
Company, for $14,815 and $29,607 respectively, a warrant for the purchase of
795,900 shares of Common Stock and 1,591,797 shares of Common Stock,
respectively, at an exercise price of $.30 per share. Ms. McLemore subsequently
assigned 803,400 of such warrants.

    In accordance with the terms of her employment agreement, effective
December 8, 1999, Ms. Hochman received a grant of one million shares of Common
Stock of the Company.

    In connection with an amendment to the Company's Loan and Security Agreement
in August 2001, the Company's lender, Century Business Credit Corporation,
requested a "good faith" participation in the credit by certain shareholders and
affiliates of the Company who agreed to immediately provide the Company with
$200 in additional credit support. The additional funds of $200 were received in
September 2001 and are accounted for as current portion of long term debt.

                                       39
<Page>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The following table sets forth certain information, as of March 1, 2002,
regarding the beneficial ownership of the Common Stock by (i) each person known
to the Company to beneficially own more than 5% of the Common Stock; (ii) each
director and each named executive officer; and (iii) all executive officers and
directors of the Company as a group. A person is a beneficial owner if he or she
has or shares voting power or investment power. On March 1, 2002, there were
outstanding 68,945,454 shares of Common Stock (excluding 1,083 shares held by a
subsidiary of the Company) and 3,042 shares of Series E Preferred Stock.

    BENEFICIAL OWNERSHIP OF SECURITIES AS OF MARCH 1, 2001

<Table>
<Caption>
                                                           BENEFICIAL OWNERSHIP
                               ----------------------------------------------------------------------------
      NAME AND ADDRESS                AMOUNT AND NATURE OF BENEFICIAL         PERCENT OF OUTSTANDING VOTING
     OF BENEFICIAL OWNER                         OWNERSHIP                             SECURITIES
-----------------------------  ---------------------------------------------  -----------------------------
<S>                            <C>                                            <C>
Marbre Services (1)..........  18,738,635 Common Stock                                    24.14%
  10100 Santa Monica Blvd      200 Series E Preferred Stock                                6.57%
  Los Angeles, CA 90067

Alpine Associates (2)........  17,053,388 Common Stock                                    22.25%
  100 Union Avenue             175 Series E Preferred Stock                                5.75%
  Cresskill, NJ

Regent Capital Holdings, Inc.  16,516,395 Common Stock                                    21.90%
  (3)........................  120 Series E Preferred Stock                                3.94%
  505 Park Avenue
  Suite 1700
  New York, New York 10022

S.G. Cowan (4)...............  16,666,800 Common Stock                                    19.47%
  32 Old Slip                  600 Series E Preferred Stock                               19.72%
  New York, NY 10004

Andrew J. Astrachan (5)......  10,883,231 Common Stock                                    14.37%
                               200 Series E Preferred Stock                                6.57%

Charles Dolan (6)............  11,111,200 Common Stock                                    13.88%
  c/o Cable Vision             400 Series E Preferred Stock                               13.15%
  1111 Stewart Avenue
  Bethpage, NY 11714

Donald Schupak (7)...........  5,898,315 Common Stock                                      7.88%
                               0 Series E Preferred Stock

David Chu (8)................  5,588,798 Common Stock                                      7.85%
  610 Park Avenue              40 Series E Preferred Stock                                 1.31%
  New York, New York

Carol J. Hochman (9).........  2,824,900 Common Stock                                      3.99%
                               50 Series E Preferred Stock                                 1.64%

Nina McLemore (10)...........  1,039,648 Common Stock                                      1.49%
                               0 Series E Preferred Stock

James P. Jalil (11)..........  83,333 Common Stock                                            *
                               0 Series E Preferred Stock

Henry T. Mortimer, Jr.         63,333 Common Stock                                            *
  (11).......................  0 Series E Preferred Stock

John A. Sarto (11)...........  583,100 Common Stock                                           *
                               0 Series E Preferred Stock
</Table>

                                       40
<Page>
<Table>
<S>                            <C>                                            <C>
Margaret B. Pritchard (11)...  368,750 Common Stock                                           *
                               0 Series E Preferred Stock

Larry B. Shelton (11)........  63,333 Common Stock                                            *
                               0 Series E Preferred Stock

All Directors and............  27,396,741 Common Stock                                    31.22%
  Executive Officers as a      240 Series E Preferred Stock                                9.53%
  Group
  (10 persons) (12)
</Table>

--------------------------

*   Percentage of shares of Common Stock beneficially owned does not exceed one
    percent of the class of Common Stock.

(1) The amount shown as Common Stock includes (a) 5,555,600 shares of Common
    Stock issuable upon conversion of the Series E Preferred Stock, and
    (b) 3,126,667 shares of Common Stock underlying presently exercisable
    Warrants. Each shares of Series E Preferred Stock entitles the holder
    thereof to one vote per share for each share of Common Stock that would be
    issued upon conversion of a share of Series E Preferred Stock (27,778 votes
    per share).

(2) The amount shown as Common Stock includes (a)4,861,150 shares of Common
    Stock issuable upon conversion of the Series E Preferred Stock, and
    (b) 2,835,930 shares of Common Stock underlying presently exercisable
    Warrants.

(3) The amount shown as Common Stock includes (a) 3,333,360 shares of Common
    Stock issuable upon conversion of the Series E Preferred Stock, and
    (b) 3,126,667 shares of Common Stock underlying presently exercisable
    Warrants.

(4) The amount shown as Common Stock includes 16,666,800 shares of Common Stock
    issuable upon conversion of the Series E Preferred Stock.

(5) The amount shown as Common Stock includes (a) 5,555,600 shares of Common
    Stock issuable upon conversion of the Series E Preferred Stock, 645,160 of
    which are held by Mr. Astrachan and 2,580,640 are held by Onyx Partners, of
    which Mr. Astrachan is a principal, (b) 1,172,398 shares of Common Stock
    underlying presently exercisable Warrants, and (c) 83,333 shares of Common
    Stock underlying presently exercisable stock options.

(6) The amount shown as Common Stock includes 11,111,200 shares of Common Stock
    issuable upon conversion of the Series E Preferred Stock.

(7) The amount shown as Common Stock includes (a) 5,808,315 shares of Common
    Stock underlying presently exercisable Warrants, and (b) 90,000 shares of
    Common Stock underlying presently exercisable stock options.

(8) The amount shown as Common Stock includes (a) 1,111,120 shares of Common
    Stock issuable upon conversion of the Series E Preferred Stock,
    (b) 1,042,222 shares of Common Stock underlying presently exercisable
    Warrants, and (c) 83,333 shares of Common Stock underlying presently
    exercisable stock options.

(9) Amounts shown include (a) 436,000 shares of Common Stock underlying a
    presently exercisable warrant held by Richard Hochman, Ms. Hochman's
    husband, and (b) 1,388,900 shares of Common Stock issuable upon conversion
    of the Series E Preferred Stock held by Mr. Hochman. The amounts for
    Ms. Hochman do not include holdings of Regent Capital Holdings of which
    Mr. Hochman is a principal.

(10) The amount shown as Common Stock includes (a) 818,708 shares of Common
    Stock underlying presently exercisable Warrants, and (b) 53,333 shares of
    Common Stock underlying presently exercisable stock options. The amounts
    shown as Common Stock do not include the holdings of Regent Capital Holdings
    (see Note 3 above) of which Ms. McLemore is a principal. If such holdings
    were included, Ms. McLemore would hold 21.56% of the outstanding voting
    securities of the Company.

(11) The amounts shown as Common Stock reflects presently exercisable stock
    options.

(12) The amounts shown as Common Stock includes (a) 8,055,620 shares of Common
    Stock issuable upon conversion of the Series E Preferred Stock,
    (b) 9,277,643 shares of Common Stock underlying presently exercisable
    Warrants, and (c) 1,471,848 shares of Common Stock underlying presently
    exercisable stock options.

                                       41
<Page>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    On September 22, 1997, Donald Schupak (the Chairman of the Board of the
Company) purchased from the Company, a Warrant (the "Schupak Warrant") for the
purchase of 5,372,315 shares of Common Stock, subject to adjustment, at an
exercise price of $.30 a share, subject to adjustment. In consideration of the
sale of the Schupak Warrant, Mr. Schupak paid the Company the Warrant Price
comprised of (x) $20,000 in cash and (y) the Schupak Promissory Note in the
amount of $80,000. The outstanding principal balance of the Schupak Promissory
Note bears interest at a rate of 6.55% per annum, to be paid annually on the
anniversary of the Contribution Closing Date. The Schupak Warrant may be
exercised, in whole at any time or in part from time to time, prior to
5:00 p.m., Eastern Standard Time, on September 22, 2004. In addition, each of
David Chu, a former director of the Company, and Nina McLemore, a director of
the Company, purchased from the Company, for $14,815 and $29,607 respectively, a
warrant for the purchase of 795,900 shares of Common Stock and 1,591,797 shares
of Common Stock, respectively, at an exercise price of $.30 per share.
Ms. McLemore subsequently assigned 803,400 of such warrants.

    In connection with an amendment to the Company's Loan and Security Agreement
in August 2001, the Company's lender, Century Business Credit Corporation,
requested a "good faith" participation in the credit by certain shareholders and
affiliates of the Company who agreed to immediately provide the Company with
$200 in additional credit support. The additional funds of $200 were received in
September 2001 and are accounted for as current portion of long term debt

                                       42
<Page>
                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(A) EXHIBITS

    1. FINANCIAL STATEMENTS

    2. FINANCIAL STATEMENT SCHEDULES

    The financial statements and financial statement schedules included in this
Annual Report on Form 10-K are listed in the accompanying Index to the Financial
Statements on Page F-1 of this Form 10-K.

    All other schedules have been omitted because the required information is
shown in the Consolidated Financial Statements or Notes thereto or they are not
applicable.

    3. EXHIBITS

    The Exhibits designated by an asterisk are management contracts and
compensatory plans and arrangements required to be filed as Exhibits to this
Form 10-K.

<Table>
<Caption>
       EXHIBIT
       NUMBER                                   DESCRIPTION
---------------------                           -----------
<S>                     <C>
 3.1.1                  Amended and Restated Certificate of Incorporation of the
                        Registrant. (Incorporated by reference to Exhibit to the
                        Registration Statement of the Registrant on Form S-1 (Reg.
                        No. 33-49274)(the "Registration Statement").)

 3.1.2                  Certificate of Correction, dated July 9, 1992, of the
                        Amended and Restated Certificate of Incorporation of the
                        Registrant. (Incorporated by reference to Exhibit 3.1.2 to
                        Amendment No. 1 to the Registration Statement ("Amendment
                        No. 1").)

 3.1.3                  Certificate of Amendment, dated the 27th day of January 1998
                        to the Amended and Restated Certificate of Incorporation of
                        the Registrant.

 3.2                    Amended and Restated Certificate of Incorporation of the
                        Registrant dated as of January 27, 1998.

 4.1                    Form of Certificate for Common Stock of the Registrant.
                        (Incorporated by reference to Exhibit 4.1 to Amendment No.
                        1.)

 4.2                    Securities Purchase Agreement, dated as of September 22,
                        1997, between the Registrant and Danskin Investors, LLC.
                        (Incorporated by reference to Registrant's Form 8-K dated
                        September 22, 1997.)

 4.2.1                  Form of Warrant Issued to Danskin Investors, LLC.
                        (Incorporated by reference to Registrant's Form 8-K dated
                        September 22, 1997.)

 4.2.2                  Certificate of Designations of Series C Cumulative
                        Convertible Preferred Stock. (Incorporated by reference to
                        the Registrant's Form 8-K dated September 22, 1997.)

 4.2.3                  Certificate of Designations of Series D Cumulative
                        Convertible Preferred Stock. (Incorporated by reference to
                        the Registrant's Form 8-K dated September 22, 1997.)

 4.2.3A                 Certificate of Amendment to Certificate of Designations,
                        Preferences and Rights of Series D Cumulative Preferred
                        Stock of Danskin, Inc. (Incorporated by reference to the
                        Registrant's Form 8-K dated December 21, 1999).

 4.2.4                  Promissory Notes of the Registrant's in favor of Danskin
                        Investors, LLC. (Incorporated by reference to the
                        Registrant's Form 8-K dated September 22, 1997.)
</Table>

                                       43
<Page>

<Table>
<Caption>
       EXHIBIT
       NUMBER                                   DESCRIPTION
---------------------                           -----------
<S>                     <C>
 4.3                    Certificate of Designations, Preferences and Rights of 9%
                        Series E Senior Step Up Convertible Preferred Stock of
                        Danskin, Inc. (Incorporated by reference to the Registrant's
                        Form 8-K dated December 21, 1999).

 10.5.1                 Lease Agreement, dated October 16, 1986, between the
                        Registrant and Robert H. Arnow, relating to leasehold
                        interest at 111 West 40th Street, New York, New York, as
                        amended, and related agreement. (Incorporated by reference
                        to Exhibit 10.5.1 to the Registration Statement.)

 10.5.4                 Lease Agreement, dated March 22, 1996, between the City of
                        Grenada, Mississippi and the Registrant. (Incorporated by
                        reference to Exhibit 10.5.4 to the Registrant's Form 10-Q
                        for the fiscal quarter ended September 28, 1996.)

 10.5.5                 Agreements in connection with Industrial Revenue Bond for
                        property located at 1261 South Commerce Street, Grenada,
                        Mississippi, between the City of Grenada, Mississippi and
                        the Registrant (as assignee of International Playtex, Inc.).
                        (Incorporated by reference to Exhibit 10.5.5 to Amendment
                        No. 1.)

 10.5.7                 Agreement between the Pennaco division and the City of
                        Grenada, Mississippi, relating to the issuance by the City
                        of Grenada of $1,500,000 principal amount of bonds to
                        finance the construction of a distribution center to be
                        owned by the City of Grenada and leased to the Pennaco
                        division. (Incorporated by reference to Exhibit 10.5.7 to
                        Amendment No. 2 to the Registration Statement ("Amendment
                        No. 2").)

 10.5.11                Lease Agreement between Paul Klinge A/S and the Registrant.
                        (Incorporated by reference to Exhibit 10.5.11 to Amendment
                        No. 2.)

 10.5.12                Addendum to Lease between Henrik Klinge and the Registrant
                        dated August 23, 1996. (Incorporated by reference to Exhibit
                        10.5.12 to the Registrant's Form 10-Q for the fiscal quarter
                        ended September 28, 1996.)

 10.8.1                 1992 Stock Option Plan of the Registrant, together with form
                        of Non-Qualified Stock Option Agreement. (Incorporated by
                        reference to Exhibit 10.8.1 to the Registration Statement.)

 10.8.1A                Amendment No. 1 to the 1992 Stock Option Plan of the
                        Company. (Incorporated by reference to Exhibit 10.8.1A to
                        the Registrant's Form 10-K for the fiscal year ended March
                        27, 1993.)

 10.8.2                 Savings Plan of the Registrant, as amended. (Incorporated by
                        reference to Exhibit 4.1 to the Registration Statement of
                        the Registrant on Form S-8 (Reg. No. 33-53852).)

 21.1                   Subsidiaries of the Registrant.

 23.1*                  Consent of Arthur Andersen LLP.

 99.1*                  Letter to Commissioner Pursuant to Temporary Note 3T to
                        Article 3 of Regulation S-X.
</Table>

------------------------

*   Filed herewith

    REPORTS ON FORM 8-K

    None.

                                       44
<Page>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date: March 28, 2002

<Table>
<S>                                                    <C>  <C>
                                                       DANSKIN, INC.

                                                       By:             /s/ CAROL J. HOCHMAN
                                                            -----------------------------------------
                                                                         Carol J. Hochman
                                                                     CHIEF EXECUTIVE OFFICER
</Table>

    Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Form 10-K has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.

<Table>
<Caption>
                      SIGNATURE                         CAPACITY IN WHICH SIGNED           DATE
                      ---------                         ------------------------           ----
<C>                                                    <S>                          <C>
                /s/ CAROL J. HOCHMAN
     -------------------------------------------       Chief Executive Officer        March 28, 2002
                  Carol J. Hochman

                 /s/ DONALD SCHUPAK
     -------------------------------------------       Chairman of the Board          March 28, 2002
                   Donald Schupak

                  /s/ JOHN A. SARTO
     -------------------------------------------       EVP, Chief Financial           March 28, 2002
                    John A. Sarto                        Officer

               /s/ ANDREW J. ASTRACHAN
     -------------------------------------------       Director                       March 28, 2002
                 Andrew J. Astrachan

                 /s/ JAMES P. JALIL
     -------------------------------------------       Director                       March 28, 2002
                   James P. Jalil

                  /s/ NINA MCLEMORE
     -------------------------------------------       Director                       March 28, 2002
                    Nina McLemore

                /s/ HENRY T. MORTIMER
     -------------------------------------------       Director                       March 28, 2002
                  Henry T. Mortimer

                  /s/ LARRY SHELTON
     -------------------------------------------       Director                       March 28, 2002
                    Larry Shelton
</Table>

                                       45
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<Table>
<Caption>
                                                                 PAGE
                                                              -----------
<S>                                                           <C>
Report of Independent Public Accountants....................      F-2

Consolidated Balance Sheets as of December 30, 2000 and
  December 29, 2001.........................................      F-3

Consolidated Statements of Operations for the fiscal years
  ended December 25, 1999, December 30, 2000 and December
  29, 2001..................................................      F-4

Consolidated Statements of Stockholders' Equity for the
  fiscal years ended December 25, 1999, December 30, 2000
  and December 29, 2001.....................................      F-5

Consolidated Statements of Cash Flows for the fiscal years
  ended December 25, 1999, December 30, 2000 and December
  29, 2001..................................................  F-6 to F-7

Notes to Consolidated Financial Statements..................  F-8 to F-29

Supplemental Financial Information:

  Unaudited Selected Quarterly Financial Information........      S-1

Financial Statement Schedule:

  Schedule II Schedule of Valuation and Qualifying
    Accounts................................................      S-2
</Table>

                                      F-1
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of Danskin, Inc.:

    We have audited the accompanying consolidated balance sheets of
Danskin, Inc. (a Delaware Corporation) and Subsidiaries (the "Company") as of
December 29, 2001 and December 30, 2000, and the related consolidated statements
of operations, stockholders' equity and cash flows for each of the three fiscal
years in the period ended December 29, 2001. These financial statements and the
schedule referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
schedule based on our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Danskin, Inc. and
Subsidiaries as of December 29, 2001 and December 30, 2000, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended December 29, 2001 in conformity with accounting principles
generally accepted in the United States.

    Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
consolidated financial statements is presented for purposes of complying with
the Securities and Exchange Commission's rules and is not a required part of the
basic financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.

                                          ARTHUR ANDERSEN LLP

New York, New York
March 1, 2002 (except with respect to the matters discussed in Notes 1 and 11,
as to which the date is March 28, 2002)

                                      F-2
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

       (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<Table>
<Caption>
                                                              DECEMBER 30,   DECEMBER 29,
                                                                  2000           2001
                                                              ------------   ------------
<S>                                                           <C>            <C>
                           ASSETS
Current assets:
  Cash and cash equivalents.................................     $   789        $   642
  Accounts receivable, less allowance for doubtful accounts
    of $1,039 at December 30, 2000 and $1,005 at December
    29, 2001................................................      11,598         11,050
  Inventories...............................................      24,353         20,307
  Prepaid expenses and other current assets.................       1,709          1,711
                                                                 -------        -------
    Total current assets....................................      38,449         33,710
  Property, plant and equipment- net of accumulated
    depreciation and amortization of $10,291 at
    December 30, 2000 and $10,583 at December 29, 2001......       9,280          6,179
  Other assets..............................................       1,123          1,111
                                                                 -------        -------
  Total assets..............................................     $48,852        $41,000
                                                                 =======        =======
            LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Revolving line of credit..................................     $22,379        $26,447
  Current portion of long-term debt.........................         742            800
  Accounts payable..........................................       6,691          6,385
  Accrued expenses..........................................       8,351          7,018
                                                                 -------        -------
  Total current liabilities.................................      38,163         40,650
                                                                 =======        =======
  Long-term debt, net of current maturities.................      10,558         11,000
  Accrued dividends.........................................       1,434          3,229
  Accrued retirement costs..................................       1,821          2,860
                                                                 -------        -------
  Total long-term liabilities...............................      13,813         17,089
                                                                 -------        -------
  Total liabilities.........................................      51,976         57,739
                                                                 -------        -------
  Commitments and contingencies
  Stockholders' Equity (Deficit)
  Series E Cumulative Convertible Preferred Stock, 3,042
  shares Liquidation Value of $15,210.......................      15,210         15,210
  Common Stock, $.01 par value, 250,000,000 shares
    authorized, 68,946,537 shares issued at December 30,
    2000 and 68,946,537 shares issued at December 29, 2001,
    less 1,083 shares held by subsidiary at December 30,
    2000 and December 29, 2001..............................         689            689
  Additional paid-in capital................................      38,542         38,702
  Accumulated deficit.......................................     (54,806)       (66,619)
  Accumulated other comprehensive loss......................      (2,759)        (4,721)
                                                                 -------        -------
    Total Stockholder's Equity (Deficit)....................      (3,124)       (16,739)
                                                                 -------        -------
  Total Liabilities and Stockholders' Equity................     $48,852        $41,000
                                                                 =======        =======
</Table>

          The accompanying Notes to Consolidated Financial Statements
         are an integral part of the Consolidated Financial Statements.

                                      F-3
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

       (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<Table>
<Caption>
                                                          FISCAL YEAR    FISCAL YEAR    FISCAL YEAR
                                                             ENDED          ENDED          ENDED
                                                          DECEMBER 25,   DECEMBER 30,   DECEMBER 30,
                                                              1999           2000           2001
                                                          ------------   ------------   ------------
<S>                                                       <C>            <C>            <C>
Net revenues............................................   $   88,492     $   85,293     $   81,758
Cost of goods sold......................................       65,927         60,628         56,889
                                                           ----------     ----------     ----------
Gross profit............................................       22,565         24,665         24,869
Selling, general and administrative expenses............       36,196         29,771         29,096
Non-recurring charges (income)..........................          795           (510)         1,700
Interest expense........................................        5,462          3,289          4,051
                                                           ----------     ----------     ----------
                                                               42,453         32,550         34,847
                                                           ----------     ----------     ----------
Loss before income tax provision........................      (19,888)        (7,885)        (9,978)
Provision for income taxes..............................           20             20             40
                                                           ----------     ----------     ----------
Net loss................................................      (19,908)        (7,905)       (10,018)
Preferred dividends.....................................        1,078          1,369          1,795
                                                           ----------     ----------     ----------
Net loss applicable to Common Stock.....................   $  (20,986)    $   (9,274)    $  (11,813)
                                                           ==========     ==========     ==========
Basic and diluted net loss per share:
Net loss per share......................................   $    (0.89)    $    (0.13)    $    (0.17)
                                                           ----------     ----------     ----------
Weighted average number of common shares outstanding....   23,493,000     73,688,000     68,947,000
                                                           ==========     ==========     ==========
</Table>

          The accompanying Notes to Consolidated Financial Statements
         are an integral part of the Consolidated Financial Statements.

                                      F-4
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
       (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<Table>
<Caption>
                                               PREFERRED
                                   PREFERRED     STOCK     COMMON STOCK       COMMON      ADDITIONAL PAID-IN   NOTE RECEIVABLE
                                    SHARES      AMOUNT        SHARES       STOCK AMOUNT        CAPITAL         FROM STOCK SALE
                                   ---------   ---------   -------------   ------------   ------------------   ---------------
<S>                                <C>         <C>         <C>             <C>            <C>                  <C>
Balance, December 26, 1998.......       --           --     20,915,610         $209             $23,483
  Comprehensive loss
    Net loss.....................
    Minimum pension liability
      adjustment.................
  Total comprehensive loss.......
  Preferred stock dividend.......
  Issuance of Series E Preferred
    Stock........................    3,042       15,210                                            (437)
  Conversion of Series D
    Preferred Stock..............                           40,000,000          400              11,006
  Common Stock issued for Series
    D dividends..................                            6,924,000           69               2,008
  Common Stock option
    exercises....................                                5,185                                4
        Employee Stock Grant.....                            1,100,000           11                 313
  Warrants Issued................                                                                 2,165
  Stock Sale.....................                            5,040,000           50               1,311             (1,361)
                                     -----      -------     ----------         ----             -------           --------
Balance, December 25, 1999.......    3,042      $15,210     73,984,795         $739             $39,853           ($ 1,361)
  Comprehensive loss
    Net loss.....................
    Minimum pension liability
      adjustment.................
  Total comprehensive loss.......
  Preferred stock dividend.......
  Employee Stock Grant...........                                  659
  Rescind Stock Sale.............                           (5,040,000)         (50)             (1,311)             1,361
                                     -----      -------     ----------         ----             -------           --------
Balance, December 30, 2000.......    3,042      $15,210     68,945,454         $689             $38,542           $     --
  Comprehensive loss
    Net loss.....................
    Minimum pension liability
      adjustment.................
    Total comprehensive loss.....
    Preferred stock dividend.....
Warrants Issued..................                                                                   160
                                     -----      -------     ----------         ----             -------           --------
Balance, December 29, 2001.......    3,042      $15,210     68,945,454         $689             $38,702           $     --
                                     =====      =======     ==========         ====             =======           ========

<Caption>
                                                         ACCUMULATED OTHER
                                                           COMPREHENSIVE
                                   ACCUMULATED DEFICIT     INCOME (LOSS)      TOTAL
                                   -------------------   -----------------   --------
<S>                                <C>                   <C>                 <C>
Balance, December 26, 1998.......        ($24,546)           ($ 3,046)       ($ 3,900)
  Comprehensive loss
    Net loss.....................         (19,908)                            (19,908)
    Minimum pension liability
      adjustment.................                                  11              11
                                                                             --------
  Total comprehensive loss.......                                             (19,897)
  Preferred stock dividend.......          (1,078)                             (1,078)
  Issuance of Series E Preferred
    Stock........................                                              14,773
  Conversion of Series D
    Preferred Stock..............                                              11,406
  Common Stock issued for Series
    D dividends..................                                               2,077
  Common Stock option
    exercises....................                                                   4
        Employee Stock Grant.....                                                 324
  Warrants Issued................                                               2,165
  Stock Sale.....................                                                  --
                                         --------            --------        --------
Balance, December 25, 1999.......        ($45,532)           ($ 3,035)       $  5,874
  Comprehensive loss
    Net loss.....................          (7,905)                             (7,905)
    Minimum pension liability
      adjustment.................                                 276             276
                                                                             --------
  Total comprehensive loss.......                                              (7,629)
  Preferred stock dividend.......          (1,369)                             (1,369)
  Employee Stock Grant...........
  Rescind Stock Sale.............                                                  --
                                         --------            --------        --------
Balance, December 30, 2000.......        ($54,806)           ($ 2,759)       ($ 3,124)
  Comprehensive loss
    Net loss.....................         (10,018)                            (10,018)
    Minimum pension liability
      adjustment.................                              (1,962)         (1,962)
                                                                             --------
    Total comprehensive loss.....                                             (11,980)
    Preferred stock dividend.....          (1,795)                             (1,795)
Warrants Issued..................                                                 160
                                         --------            --------        --------
Balance, December 29, 2001.......        ($66,619)           ($ 4,721)       ($16,739)
                                         ========            ========        ========
</Table>

The accompanying Notes to Consolidated Financial Statements are an integral part
                   of the Consolidated Financial Statements.

                                      F-5
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
       (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<Table>
<Caption>
                                                         FISCAL YEAR ENDED   FISCAL YEAR ENDED   FISCAL YEAR ENDED
                                                         DECEMBER 25, 1999   DECEMBER 30, 2000   DECEMBER 29, 2001
                                                         -----------------   -----------------   -----------------
<S>                                                      <C>                 <C>                 <C>
Cash Flows From Operating Activities:
Net Loss...............................................       ($19,908)           ($ 7,905)           ($10,018)
Adjustments to reconcile net loss to net cash used in
  operating activities:
  Depreciation and amortization........................          2,002               2,000               1,800
  Stock grants issued..................................            324                  --                  --
  Provision for doubtful accounts receivable...........            250                  --                  --
  Warrants issued......................................          2,165                  --                 140
  Loss on sale of property, plant and equipment........             58                 175               1,785
  Net gain on sale of trademark........................             --                (365)                 --
  Financing fees converted to term loan................             --                  --                 300
  Changes in operating assets and liabilities:
    Decrease (increase) in accounts receivable.........          3,820              (2,150)                548
    Decrease (increase) in inventories.................          6,227                (194)              4,046
    Decrease (increase) in prepaid expenses and other
      assets...........................................            898                (527)             (1,102)
    (Decrease) in accounts payable.....................         (1,124)               (625)               (306)
    (Decrease) in accrued expenses.....................         (3,026)             (2,423)             (1,311)
                                                              --------            --------            --------
Net cash used in operating activities..................         (8,314)            (12,014)             (4,118)
                                                              --------            --------            --------
Cash Flows From Investing Activities:
  Capital expenditures.................................         (2,836)               (631)               (281)
  Proceeds from sale of trademark......................             --                 600                  --
  Proceeds from sale of property, plant and
    equipment..........................................             --                 108                  39
                                                              --------            --------            --------
Net cash (used in) provided by investing activities....         (2,836)                 77                (242)
                                                              --------            --------            --------
Cash Flows From Financing Activities:
    Net (repayments) borrowings under revolving line of
      credit...........................................         (5,988)             12,338               4,068
    Repayments of long-term debt.......................         (2,157)               (200)               (550)
    Proceeds from term loans...........................          4,983                  --                 750
    Common Stock option exercises......................              4                  --                  --
    Issuance of Series E Preferred Stock...............         15,210                  --                  --
    Expenses associated with issuance of Series E
      Preferred Stock..................................           (437)                 --                  --
    Financing costs incurred...........................           (348)                (75)                (55)
                                                              --------            --------            --------
Net cash provided by financing activities..............         11,267              12,063               4,213
                                                              --------            --------            --------
Net increase (decrease) in Cash and Cash Equivalents...            117                 126                (147)
Cash and Cash Equivalents, Beginning of Period.........            546                 663                 789
                                                              --------            --------            --------
Cash and Cash Equivalents, End of period...............       $    663            $    789            $    642
                                                              ========            ========            ========
Supplemental Disclosure of Cash Flow Information:
Interest Paid..........................................       $  3,350            $  3,104            $  3,723
Income Taxes Paid......................................            118                  20                  59
Cash refunds received for income taxes.................            (63)                (40)                 (9)
</Table>

          The accompanying Notes to Consolidated Financial Statements
         are an integral part of the Consolidated Financial Statements.

                                      F-6
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NON-CASH ACTIVITIES

    The Company issued a stock grant of 100,000 shares valued at $0.9375 per
share to the EVP-CFO in January 1999.

    The Company issued a stock grant of 1,000,000 shares valued at $0.23 per
share to the CEO in December 1999.

    The Company issued 12,103,200 warrants in connection with the bridge
financing in November 1999 (Note 15)

    The Company issued 550,000 warrants to CBCC in connection with the
refinancing of the Company's secured bank debt (Note 15).

    In December 1999, Carol Hochman executed a promissory note in the principal
amount of $1,361 in connection with her purchase of Common Stock of the Company.
In fiscal 2000, and to accommodate a request by Mrs. Hochman, the Company
rescinded the share purchase by Mrs. Hochman, cancelled the promissory note, and
issued an identical number of options to purchase Common Stock of the Company at
$0.27 per share (Note 18).

    In December 1999, the Company issued a warrant to Utendahl Capital Partners
in respect of their participation in the placement of the Company's Series E
Stock (Note 15).

    The Company issued an employee stock grant of 659 shares valued at $0.61 per
share in February 2000.

    During fiscal 2001, the Company issued warrants to purchase 2,250,000 shares
of the Company's Common Stock to CBCC at prices ranging from $0.06 to $0.185 per
share (Note 11).

    During fiscal 2001, CBCC converted $300 of financing fees to a term loan in
connection with an amendment to the Company's debt agreement.

                                      F-7
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

1. LIQUIDITY

    Danskin, Inc. has made significant progress under current management in its
"right-sizing" reorganization plan implemented over the last three fiscal years.
Despite being negatively impacted by capital constraints during this timeframe,
the Company has benefited from substantial operational improvements and
successes in reaching new customers and channels of distribution as well as
expansion of its licensing efforts. The Company's financial results for fiscal
year 2001 were negatively impacted by these capital constraints coupled with the
general downturn in the economy and apparel industry. The Company's management
remains confident that progress will continue in its reorganization efforts.

    Specifically, in fiscal 1999, capital constraints impacted all aspects of
the Company's business including: the ability to purchase piece goods; its
ability to fulfill customers' orders resulting in both a decline in potential
revenues, as a substantial percentage of orders were either shipped late and/or
only partially fulfilled, and declines in orders as a result of inadequate
and/or mismatched inventory, poor reporting systems, limited marketing
investment and the absence of an integrated and focused retail strategy.

    Commencing in June 1999, the Company took a number of positive steps to
address these issues. In June 1999, Carol Hochman was brought in as the
Company's President and Chief Executive Officer. During the second half of
fiscal 1999, Mrs. Hochman and a number of new senior executives addressed the
foregoing operating issues by implementing a "right-sizing" reorganization of
the Company's personnel and manufacturing infrastructures, eliminated
substantial operating costs and changed its approach to merchandising and
selling, eliminating unprofitable SKUs, emphasizing high quality businesses,
adding new customers and licenses, improving factory efficiency with an
effective and growing outsourcing capability as well as significant process
modifications, instituting a replenishment and forecasting capability to improve
fulfillment and maximize revenue, and developing an integrated and focused
retail strategy.

    Although significant progress has been made in addressing the operating
issues which current management began addressing in fiscal 1999, the Company's
results of operations continue to be hampered by the negative impact of the
capital constraints experienced by the Company for the last three fiscal years
including limited marketing investment, poor reporting systems and restrictions
on piece goods and raw materials purchases. In addition, results of operations
in fiscal 2001 were negatively impacted by weakness in the overall economy and
the apparel industry.

    At December 29, 2001 availability under the Company's Revolving Credit
Facility was an overadvance of ($5,206). Pursuant to certain amendments to the
Company's secured credit facility executed in March 2002, the Lender has
provided the Company with additional borrowing capacity of varying amounts
through December 31, 2002 based on the Company's forecasted monthly business
plans through fiscal year 2002, plus an additional $3,000 in excess availability
to a maximum overadvance of $10,987. The adequacy of the Company's bank
facilities is contingent upon the successful attainment of the Company's
business plan, taking into account the $3,000 in availability in excess of the
requirements of the business plan, discussed above. (Refer to Note 11).

                                      F-8
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    ORGANIZATION

    Danskin, Inc. (the "Company") was incorporated on February 21, 1986 to own
and operate the business and assets of two divisions of a corporation acquired
on July 22, 1986.

    The Company currently operates under two divisions: Danskin, which designs,
manufactures, markets and/or licenses dance wear, bodywear, tights, exercise
apparel, intimate apparel, socks, and fitness equipment and also operates 32
retail stores and two full price stores; and Pennaco, which designs,
manufactures and markets hosiery under the brand names
Round-the-Clock-Registered Trademark-, Givenchy-Registered Trademark-, Evan
Picone-Registered Trademark-, and Ellen Tracy-Registered Trademark- and under
private labels for major retailers.

    BASIS OF PRESENTATION

    The consolidated financial statements of the Company include the accounts of
the Company, including all of its operating divisions, and its wholly owned
subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation.

    Certain reclassifications were made to prior year information to conform to
the current year presentation.

    The Company's fiscal year ends on the last Saturday in December. Fiscal 1999
ended on December 25, 1999; fiscal 2000 ended on December 30, 2000; fiscal 2001
ended on December 29, 2001. In addition, fiscal years 1999 and 2001 contained 52
weeks and fiscal year 2000 contained 53 weeks.

    INVENTORIES

    Inventories are stated at the lower of cost or market on a first-in,
first-out basis. Inventories consist of:

<Table>
<Caption>
                                                      DECEMBER 30,   DECEMBER 29,
                                                          2000           2001
                                                      ------------   ------------
<S>                                                   <C>            <C>
Finished Goods......................................     $15,090        $14,344
Work-in-process.....................................       4,921          2,729
Raw materials.......................................       3,576          2,568
Packaging materials.................................         766            666
                                                         -------        -------
                                                         $24,353        $20,307
                                                         =======        =======
</Table>

    PROPERTY, PLANT AND EQUIPMENT

    Property, plant and equipment are stated at cost less accumulated
depreciation and amortization. Furniture and fixtures, machinery and equipment
and buildings are depreciated by the straight-line method over the estimated
useful lives of the assets, ranging from 5 to 20 years. Leasehold improvements
are amortized by the straight-line method over the related lease terms or the
estimated useful life of the asset, whichever is less.

                                      F-9
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    EXCESS OF PURCHASE PRICE OVER FAIR VALUE OF NET TANGIBLE ASSETS ACQUIRED

    The excess of purchase price over fair value of net tangible assets acquired
is amortized on a straight-line basis over 20 years.

    DEFERRED FINANCING CHARGES

    Deferred financing charges are amortized over the respective terms of debt
obtained under financing agreements.

    CASH EQUIVALENTS

    The Company considers all highly liquid financial instruments purchased with
an original maturity of three months or less to be cash equivalents.

    TRADEMARKS

    The Company amortizes capitalized costs to acquire trademarks over the
estimated useful life of the trademark, generally 15 years.

    LOSS PER COMMON SHARE

    Basic loss per share is calculated by dividing net loss applicable to Common
Stock by the weighted average Common Stock outstanding during the period.
Diluted net loss per share is calculated by dividing net loss applicable to
Common Stock by the weighted average Common Stock and Common Stock equivalents
outstanding. Common Stock equivalents, including Convertible Series E Preferred
Stock, management options and warrants, are reflected in diluted net loss per
share except to the extent they are antidilutive.

    At December 29, 2001 the Company had the following common shares and common
share equivalents outstanding:

<Table>
<S>                                                           <C>
Common Shares...............................................   68,946,537
Preferred Stock.............................................   84,500,676
Warrants....................................................   32,783,199
Options.....................................................   13,679,132
                                                              -----------
  Total Shares and Share Equivalents Outstanding............  199,909,544
                                                              ===========
</Table>

    Due to the net loss for all periods presented, the assumed exercise of
common stock equivalents would be antidilutive and thus have not been included
as common stock equivalents for purposes of the calculation of diluted earnings
per share.

    REVENUE RECOGNITION

    Revenue within the wholesale operations is recognized at the time
merchandise is shipped from the Company's distribution centers. Retail store
revenues are recognized at the time of sale. All revenue is net of returns.

                                      F-10
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    ADVERTISING AND PROMOTION

    All costs associated with advertising and promoting products are expensed
when the advertising or event takes place. Costs associated with the Company's
catalogs are expensed when the catalogs are distributed. Advertising and
promotion expenses were $4,575 in fiscal 1999, $2,410 in fiscal 2000, and $2,561
in fiscal 2001.

    INCOME TAXES

    The Company accounts for its income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting For Income Taxes,"
which requires the liability method. Under this method, deferred tax assets and
liabilities are determined based on differences between financial reporting and
tax bases of assets and liabilities, and are measured using the enacted tax
rates and laws that will be in effect when the differences are expected to
reverse.

    LONG-LIVED ASSETS

    The Company continually evaluates the carrying value and the economic useful
life of its long-lived assets based upon the Company's operating performance and
its expected future net cash flows and will adjust the carrying amount of assets
which may not be recoverable. The Company does not believe that any impairment
exists in the recoverability of its long-lived assets as of the fiscal year end.

    USE OF ESTIMATES

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

    STOCK-BASED COMPENSATION

    SFAS No. 123, "Accounting for Stock-Based Compensation," defines a fair
value method of accounting for stock options and other equity instruments used
for compensation purposes, and requires companies electing to report in
accordance with the standard to recognize or disclose such compensation in its
financial statements. Under the fair value method, compensation cost is measured
at the grant date based on the fair value of the award and is recognized over
the service period, which is usually the vesting period. The Company, as
permitted, continues to account for such transactions under Accounting
Principles Board Opinion No. 25 ("APB No. 25"), "Accounting for Stock Issued to
Employees," but discloses in a note to the consolidated financial statements pro
forma net income and earnings per share as if the Company had adopted the fair
value method of accounting. (Refer to Note 3)

    FINANCIAL INSTRUMENTS

    In assessing the fair value of financial instruments at December 30, 2000
and December 29, 2001, the Company has used a variety of methods and
assumptions, which were based on estimates of market

                                      F-11
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
conditions and risks existing at that time. For certain instruments, including
cash and cash equivalents; it was assumed that the carrying amount approximated
fair value for the majority of these instruments because of their short
maturity. Bank debt obligations are valued at carrying amount due to floating
interest rates on such debt. These values merely represent a general
approximation of possible value and may never actually be realized.

    The estimated fair values of the Company's financial instruments are
summarized as follows:

<Table>
<Caption>
                                           DECEMBER 30, 2000       DECEMBER 29, 2001
                                         ---------------------   ---------------------
                                         CARRYING   ESTIMATED    CARRYING   ESTIMATED
                                          AMOUNT    FAIR VALUE    AMOUNT    FAIR VALUE
                                         --------   ----------   --------   ----------
<S>                                      <C>        <C>          <C>        <C>
Cash and cash equivalents..............  $   789     $   789     $   642     $   642
Revolving line of credit...............  (22,379)    (22,379)    (26,447)    (26,447)
Long-term debt.........................  (11,300)    (11,300)    (11,800)    (11,800)
</Table>

    RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

    In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, "Business Combinations" ("SFAS
No. 141"), and No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142").
SFAS No. 141 changes the accounting for business combinations, requiring that
all business combinations be accounted for using the purchase method and that
intangible assets be recognized as assets apart from goodwill if they arise from
contractual or other legal rights, or if they are separate or capable of being
separated from the acquired entity and sold, transferred, licensed, rented or
exchanged. SFAS No. 141 is effective for all business combinations initiated
after June 30, 2001. SFAS No. 142 specifies the financial accounting and
reporting for acquired goodwill and other intangible assets. Goodwill and
intangible assets that have indefinite useful lives will not be amortized but
rather will be tested at least annually for impairment. SFAS No. 142 is
effective for fiscal years beginning after December 15, 2001.

    SFAS No. 142 requires that the useful lives of intangible assets acquired on
or before June 30, 2001 be reassessed and the remaining amortization periods
adjusted accordingly. Previously recognized intangible assets deemed to have
indefinite lives shall be tested for impairment. Goodwill recognized on or
before June 30, 2001, will be tested for impairment as of the beginning of the
fiscal year in which SFAS No. 142 is initially applied in its entirety. The
Company is currently assessing the impact of the adoption of these statements.
Amortization of goodwill and other intangibles was $21 for the year ended
December 31, 2000 and $10 for the year ended December 29, 2001.

    In September 2001, the FASB issued SFAS No. 144, "Accounting for Impairment
or Disposal of Long-lived Assets". This Statement addresses the financial
accounting and reporting for the impairment or disposal of long-lived assets.
SFAS No. 144 supercedes SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of", but retains SFAS
No. 121's fundamental provisions for (a) recognition/measurement of impairment
of long-lived assets to be held and used and (b) measurement of long-lived
assets to be disposed of by sale. SFAS No. 144 also supercedes the
accounting/reporting provisions of APB Opinion No. 30, "Reporting the Results of
Operations--Reporting the Effects of a Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions" for
segments of a business to be

                                      F-12
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
disposed of, but retains APB No. 30's requirement to report discontinued
operations separately from continuing operations and extends that reporting to a
component of an entity that either has been disposed of or is classified as held
for sale. The statement is effective for fiscal years beginning after
December 15, 2001, and interim periods within those fiscal years, with earlier
application encouraged. The Company plans to adopt SFAS No. 144 effective
December 30, 2001. The adoption is not expected to have a material impact on the
Company's financial statements.

    In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or a liability
measured at fair value. The Statement also requires that changes in derivative
fair value be recognized currently in earnings unless specific hedge accounting
criteria are met. SFAS No. 133 was effective for the Company's financial
statements in the year 2001. The Company has not entered into any derivatives or
hedging activities and, as such, adoption of this statement did not have an
impact on its financial statements.

3. STOCK OPTION PLAN

    On July 1, 1992, the Company's Board of Directors adopted the 1992 Stock
Option Plan (the "Plan"). Effective September 18, 1997, the Executive Committee
of the Board of Directors of the Company amended the Company's Stock Option Plan
to clarify that the Board of Directors retains the discretion to determine the
fair market value of the Common Stock with respect to periods when the Common
Stock is not actively traded on NASDAQ or any other national exchange or under
circumstances where significant transactions in the Common Stock have occurred
outside traditional trading venues. As of December 29, 2001, 7,191,933 shares of
common stock were reserved for issuance under the Plan.

    The following table summarizes the activity relating to the Plan as of and
for the fiscal year ended December 25, 1999, the fiscal year ended December 30,
2000, and for the fiscal year ended December 29, 2001:

<Table>
<Caption>
                                              FISCAL YEAR ENDED        FISCAL YEAR ENDED        FISCAL YEAR ENDED
                                              DECEMBER 25, 1999        DECEMBER 30, 2000        DECEMBER 29, 2001
                                            ----------------------   ----------------------   ----------------------
                                                          WEIGHTED                 WEIGHTED                 WEIGHTED
                              EXERCISE                    AVERAGE                  AVERAGE                  AVERAGE
                                PRICE                     EXERCISE                 EXERCISE                 EXERCISE
                                RANGE       # OF SHARES    PRICE     # OF SHARES    PRICE     # OF SHARES    PRICE
                            -------------   -----------   --------   -----------   --------   -----------   --------
<S>                         <C>             <C>           <C>        <C>           <C>        <C>           <C>
Outstanding beginning of
  year....................    $0.27-$7.00    2,462,776    $1.4100     5,770,283    $0.4550     6,903,578    $0.4190
Granted...................    $0.16-$0.93    4,665,000    $0.3020     1,870,000    $0.3900       700,000    $0.2390
Canceled..................    $0.16-$7.00   (1,352,308)   $1.5610      (736,705)   $0.8310      (786,846)   $0.3370
Exercised.................  $0.625-$0.625       (5,185)   $0.6250            --         --            --         --
Outstanding, end of
  year....................    $0.20-$3.00    5,770,283    $0.4550     6,903,578    $0.4190     6,816,732    $0.4100
</Table>

                                      F-13
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

3. STOCK OPTION PLAN (CONTINUED)
    Options exercisable and shares available for future grant amounted to:

<Table>
<Caption>
                                                      DECEMBER 30,   DECEMBER 29,
                                                          2000           2001
                                                      ------------   ------------
<S>                                                   <C>            <C>
Options exercisable.................................     749,769       2,583,704
Shares available for grant*.........................     288,355         375,201
</Table>

------------------------

*   "Shares available for grant" under the Plan is equal to (a) the total number
    of options available for grant under the Plan, less (b) the sum of
    (x) options presently exercisable, (y) non-exercisable options, and
    (z) previously exercised options.

    The weighted average fair value of total stock options granted during 2001
was $0.06 per share. The fair value of each stock option grant is estimated on
the date of grant using a pricing model, which approximates the Black-Scholes
pricing model, with the following weighted average assumptions used for grants
in 2001: risk-free interest rate of 5.37%; no expected dividend yield; expected
life of ten years; and expected volatility of 28.88%; and for grants in 2000:
risk-free interest rate of 6.3%; no expected dividend yield; expected life of
ten years; and expected volatility of 41.39%. Stock options generally expire
10 years from the grant date or at termination, if earlier. The stock options
outstanding at December 29, 2001 have a weighted average exercise price of $0.41
per share.

    The Company accounts for stock options in accordance with APB No. 25, under
which no compensation cost has been recognized for stock option awards. Had
compensation cost for the Plan been determined consistent with SFAS No. 123, the
Company's pro forma net loss would have been ($10,364) and net loss applicable
to Common Stock and net loss per share (basic and diluted) for the fiscal year
ended December 29, 2001 would have been ($12,159) and ($0.18) per share,
respectively; for the fiscal year ended December 30, 2000, the Company's pro
forma net loss would have been ($8,309) and net loss applicable to Common Stock
and net loss per share (basic and diluted) would have been ($9,678) and ($0.13)
per share, respectively; for the fiscal year ended December 25, 1999, the
Company's pro forma net loss would have been ($20,150) and net loss applicable
to Common Stock and net loss per share (basic and diluted) would have been
($21,288) and ($0.90) per share, respectively.

    In accordance with the terms of her employment agreement, Carol J. Hochman,
President and Chief Executive Officer, received options to purchase 5,040,000
shares of Common Stock of the Company for $0.27. The options vest approximately
ten years from date of issuance, subject to accelerated vesting based upon a
performance vesting schedule. The options expire on December 8, 2009. As of
December 29, 2001, none of such options are presently vested and exercisable
(Refer to Note 18).

    In accordance with the terms of his employment agreement, John A. Sarto,
Executive Vice President and Chief Financial Officer, received options to
purchase 1,582,400 shares of Common Stock of the Company for $0.27. Two hundred
and fifty thousand of such options vested on the date of grant. Of the balance
of the options, 50% vest 25% a year, and 50% vest approximately ten years from
date of issuance, subject to accelerated vesting based upon a performance
vesting schedule. The options expire on December 8, 2009. As of December 29,
2001, 583,100 of the tenure based options are vested and exercisable; none of
the performance based options have vested.

                                      F-14
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

4. STOCK MARKET LISTING

    Bid quotations for the Company's Common Stock may be obtained from the "pink
sheets" published by the National Quotation Bureau. The Common Stock is traded
in the over-the-counter market.

5. SAVINGS AND PROFIT SHARING PLAN

    During fiscal 2001, the Company maintained a savings and profit sharing plan
(the "Savings Plan") for the benefit of employees meeting certain eligibility
requirements. Company profit sharing contributions are made at the discretion of
the Board of Directors. Effective April 1, 1987, under a 401(k) vehicle,
eligible employees may elect to defer a portion of their base salary, up to the
maximum allowed, as a deduction for Federal income tax purposes. The Company
will match 25% of each participant's investment, up to 6% of the participant's
base salary. Total expense for this plan, for the fiscal years ended
December 25, 1999, December 30, 2000 and December 29, 2001, was approximately
$147, $122 and $134, respectively. The Company also maintained an hourly savings
and profit sharing plan (the "Hourly Savings Plan"), for which the Company will
match 10% of each participant's investment up to 6% of base salary, with nominal
plan expense. Effective January 1, 2001, the Company merged the Savings Plan and
the Hourly Savings Plan into one plan, The Danskin Savings Plan. The Danskin
Savings Plan's features mirror the features of the Savings Plan, including the
level of the Company match.

6. PROPERTY, PLANT AND EQUIPMENT

    Property, plant and equipment consist of:

<Table>
<Caption>
                                                      DECEMBER 30,   DECEMBER 29,
                                                          2000           2001
                                                      ------------   ------------
<S>                                                   <C>            <C>
Land................................................    $     45       $     45
Buildings and improvements..........................       1,801          1,879
Machinery and equipment.............................       8,671          8,547
Furniture and fixtures..............................       3,967          3,058
Leasehold improvements..............................       3,234          3,183
Construction in progress............................       1,853             50
                                                        --------       --------
                                                          19,571         16,762
Accumulated depreciation and amortization...........     (10,291)       (10,583)
                                                        --------       --------
                                                        $  9,280       $  6,179
                                                        ========       ========
</Table>

    Included within Construction in progress in the fiscal year ended
December 30, 2000 is $1,700 relating to external costs incurred in conjunction
with a system implementation. The Company has written-off these costs in the
fiscal year ended December 29, 2001 (see Note 10).

                                      F-15
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

7. OTHER ASSETS

    Other assets consist of:

<Table>
<Caption>
                                                      DECEMBER 30,   DECEMBER 29,
                                                          2000           2001
                                                      ------------   ------------
<S>                                                   <C>            <C>
Deferred financing charges (net of accumulated
  amortization of $464 at December 2000 and $641 at
  December 2001)....................................     $  630         $  530
Unrecognized net pension obligation.................        394            492
Notes receivable....................................         89             89
Trademarks (net of accumulated amortization of $517
  at December 2000 and $527 at December 2001).......         10              0
                                                         ------         ------
                                                         $1,123         $1,111
                                                         ======         ======
</Table>

8. ACCRUED EXPENSES

    Accrued expenses consist of:

<Table>
<Caption>
                                                      DECEMBER 30,   DECEMBER 29,
                                                          2000           2001
                                                      ------------   ------------
<S>                                                   <C>            <C>
Salaries, wages and other compensation..............     $1,047         $  782
Employee benefits...................................        815            701
Accrued cooperative advertising and promotion
  costs.............................................      2,917          2,722
Accrued rent........................................        959            682
Other accrued expenses..............................      2,613          2,131
                                                         ------         ------
                                                         $8,351         $7,018
                                                         ======         ======
</Table>

9. NET REVENUES

    Net revenues consist of:

<Table>
<Caption>
                                          FISCAL YEAR    FISCAL YEAR    FISCAL YEAR
                                             ENDED          ENDED          ENDED
                                          DECEMBER 25,   DECEMBER 30,   DECEMBER 29,
                                              1999           2000           2001
                                          ------------   ------------   ------------
<S>                                       <C>            <C>            <C>
Net Sales...............................    $ 87,408       $84,038        $80,198
Royalties, licensing fees and freight
  income................................       1,084         1,255          1,560
                                            --------       -------        -------
                                            $ 88,492       $85,293        $81,758
                                            ========       =======        =======
</Table>

10. NON-RECURRING CHARGES (INCOME)

    Non-recurring charges were $795 for the fiscal year ended December 25, 1999.
These charges consisted of an additional provision for remaining lease
obligations for the former corporate office at 111 West 40th Street in New York
City due to the loss of a subtenant, and establishment of a reserve against an
outstanding amount owed the Company for the sale of a trademark.

                                      F-16
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

10. NON-RECURRING CHARGES (INCOME) (CONTINUED)
    Non-recurring income was $510 for the fiscal year ended December 30, 2000.
The income consisted of a net recovery of $426 for an outstanding amount owed
the Company for the sale of a trademark and $220 resulting from securing a
subtenant for the Company's former corporate offices in New York City, in
respect of which the Company previously recognized a loss in 1999. The
aforementioned income was partially offset by $136 for severance pay to a former
executive.

    Non-recurring charges was $1,700 for the fiscal year ended December 29,
2001. In prior years, the Company incurred $1,700 relative to the purchase of
computer hardware and software, including system programming costs by external
consultants. The Company placed this project on hold until adequate capital can
be raised. As a result of the Company's continuing capital constraints,
management is unable to determine when or if this project will be resumed.
Accordingly, the Company has written off the previously capitalized costs.

11. BANK FINANCING

<Table>
<Caption>
                                                      DECEMBER 30,   DECEMBER 29,
                                                          2000           2001
                                                      ------------   ------------
<S>                                                   <C>            <C>
Revolving Line of Credit............................     $22,379        $26,447
                                                         -------        -------
Long-term debt:
Term notes..........................................     $11,300        $11,800
                                                         -------        -------
Less current maturities of long-term debt...........         742            800
                                                         -------        -------
Long-term debt......................................     $10,558        $11,000
                                                         =======        =======
</Table>

    Maturities of term notes are as follows for the year ended:

<Table>
<S>                                                           <C>
December 2002...............................................  $   800
December 2003...............................................    2,599
December 2004...............................................    8,401
                                                              -------
Total.......................................................  $11,800
                                                              =======
</Table>

    Effective October 8, 1997, the Company entered into a loan and security
agreement (the "Loan and Security Agreement") with Century Business Credit
Corporation ("CBCC" or the "Lender") which matures on December 31, 2005. The
Company's obligations to CBCC under the Loan and Security Agreement are
generally secured by a first priority interest in all present and future assets
of the Company.

    Pursuant to and in accordance with its terms, the Loan and Security
Agreement provides the Company with a term loan facility in the aggregate
principal amount of $11,500 (the "Term Loan Facility") and a revolving credit
facility, including a provision for the issuance of letters of credit (the
"Revolving Credit Facility") generally in an amount not to exceed the lesser of
(a) $45,000 less the aggregate outstanding principal balance under the Term Loan
Facility, or (b) a formula amount based upon the Company's available inventory
and accounts receivable levels, minus certain discretionary reserves.

                                      F-17
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

11. BANK FINANCING (CONTINUED)
    The Loan and Security Agreement has been amended from time to time since
inception, each time providing the Company with the additional liquidity
necessary to meet its business plans. Pursuant to an amendment executed in
March 2002 (the "March Amendment"), CBCC has agreed to provide the Company with
additional borrowing capacity of varying amounts through December 31, 2002, to
meet borrowing levels required by the Company's forecasted monthly business
plans plus an additional $3,000 in excess availability through December 2002, to
a maximum overadvance of $10,987 (the "Overadvance").

    In connection with the March Amendment, the Company agreed (i) to pay CBCC
5% of net royalties earned by the Company on licensing agreements entered into
after February 28, 2002, with payments not to exceed $500 in any fiscal year.
Payments will continue until the earlier of (i) December 31, 2005, and
(ii) such time as the Company has $3,000 in undrawn availability.

    The Loan and Security Agreement was previously amended in August 2001 (the
"August Amendment") to reduce the required amortization by $142 per month from
December 2001 through December 2002. In accordance with the August 2001
Amendment, the Term Loan Facility is payable, with respect to principal, in
equal consecutive monthly installments of (i) $50 on the first day of
September 2001 and on the first day of each month thereafter through
December 2002, and (ii) $192 commencing on the first day of January 2003 and on
the first day of each month thereafter. In accordance with the amortization
requirement prior to the August Amendment, the Company paid an aggregate of $550
to CBCC through August 1, 2001, reducing the outstanding principal amount of the
Term Loan to $10,950. Pursuant to the August Amendment, CBCC agreed to re-lend
the $550 to the Company, thereby making the full $11,500 amount of the Term Loan
Facility available to the Company.

    In addition to its other provisions, the August Amendment also provided that
any fees payable by the Company to CBCC on or after August 1, 2001 pursuant to
an amendment executed in March 2001, as set forth below, would be evidenced by a
promissory note subsequently amended to be payable January 1, 2004, thereby
relieving the Company of the requirement of cash payments to CBCC in respect of
this obligation through December 2003. In connection with the August Amendment,
CBCC requested a "good faith" participation by certain shareholders and
affiliates of the Company who agreed to immediately provide the Company with
$200 in additional credit support.

    In connection with the amendment in March 2001, the Company agreed: (i) to
pay CBCC a fee equal to $25 on May 1, 2001, and an additional fee of $25, plus
the amount of the previous month's fee, on the first of each month thereafter,
and (ii) to issue 250,000 warrants to CBCC with a share price equal to the
closing price of the Company's Common Stock on the date of issuance, on the
first of each month, commencing May 1, 2001. Under the terms of the agreement
with CBCC, the accrual of said additional payment will terminate at such time as
the Company raises $4,790 of additional capital. Therefore, in accordance with
this understanding, through December 29, 2001, the Company has incurred $525 in
additional fees to CBCC and has issued 2,250,000 warrants to CBCC with share
prices ranging from $0.06 to $0.185 per share.

    The Loan and Security Agreement contains certain affirmative and negative
covenants, including maintenance of tangible net worth and a limitation on
capital expenditures, respectively. The tangible net worth covenant is
calculated by subtracting from total assets all intangible assets and total
liabilities. In accordance with the March Amendment, the Company must maintain a
tangible net worth of not

                                      F-18
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

11. BANK FINANCING (CONTINUED)
less than a net deficit of ($24,156) as of December 29, 2001 and as of the end
of each month thereafter and (ii) it shall be an Event of Default if the Company
fails to maintain average undrawn availability under the Loan and Security
Agreement for any month of less than $0 after giving effect to the Overadvance.
At December 29, 2001 the Company's tangible net worth was a deficit of $17,231.
The maximum borrowings under the Revolving Credit Facility were $29,426 during
the fiscal year ended December 29, 2001.

    Interest on the Company's obligations and under the Loan and Security
Agreement generally accrues at a rate per annum equal to the sum of the Prime
Rate plus one half of one ( 1/2%) percent and is payable monthly. The Company
previously had the option of electing a EuroLoan, pursuant to which interest on
the Company's obligations would accrue at a rate per annum equal to the sum of
the Eurodollar Rate, as defined in the Loan and Security Agreement, plus two and
three quarters percent (2 3/4%). However, as consideration to CBCC in connection
with certain previous amendments, the Company agreed to waive its right to elect
a Eurodollar Loan until such time as the Company maintains average undrawn
availability of at least $1,000 for three consecutive months.

12. PREFERRED STOCK AND SUBORDINATED CONVERTIBLE DEBENTURES

    In December 1999, the Company issued $15,210 stated value of 9% Series E
Senior Step-Up Convertible Preferred Stock (the "Series E Stock"). The 3,042
shares of Series E Stock are convertible into Common Stock, at the option of the
holder, at an initial conversion rate of 16,129 shares of Common Stock for each
share of Series E Stock so converted, as adjusted for the reset provision
discussed below, subject to adjustment in certain circumstances. The Series E
Stock also contains a "reset" provision, which provides that if, at the eighteen
(18) month anniversary of the date of issuance (June 8, 2001), the Market Price
(generally defined to mean the average closing price of the Common Stock for the
twenty day period prior to such date (the "Reset Period")) is less than the
Conversion Price ($0.31 per share), the Conversion Price shall be reset to the
Market Price. At the Reset Period, the Market Price of the Common Stock was
$0.18 Per Share. Therefore, as a result of the reset provision, the conversion
rate for the Series E Stock was adjusted from 16,129 shares of Common Stock to
27,778 shares of Common Stock, for each share of Series E Stock so converted.

    The terms of the Series E Stock also provide that, at any time after the
fifth anniversary of the date of its issuance, the Series E Stock may, at the
election of the Company, be redeemed by the Company for an amount equal to the
sum of (x) $5,000 per share (as adjusted for any combinations, divisions or
similar recapitalizations affecting the shares of Series E Stock), plus (y) all
accrued and unpaid dividends on such shares of Series E Stock to the date of
redemption. Holders of the Series E Stock are entitled to vote, together with
the holders of the Common Stock and any other class or series of stock then
entitled to vote, as one class on all matters submitted to a vote of
stockholders of the Company, in the same manner and with the same effect as the
holders of the Common Stock. In any such vote, each share of issued and
outstanding Series E Stock shall entitle the holder thereof to one vote per
share for each share of Common Stock that would be obtained upon conversion of
all of the outstanding shares of Series E Stock held by such holder, rounded up
to the next one-tenth of a share. Therefore, the issuance of the Series E Stock
by the Company was highly dilutive to existing holders of Common Stock.

                                      F-19
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

12. PREFERRED STOCK AND SUBORDINATED CONVERTIBLE DEBENTURES (CONTINUED)
    Until the fifth anniversary of the date of its issuance, the Series E Stock
has a 9% annual dividend rate, provided that the Company may, at its sole
option, pay a portion of such dividend, equal to up to 2% per annum, in shares
of common stock of the Company; provided however, that the Company has an
obligation, with respect to the holders of the Series E Stock, to cause the
common stock of the Company to be listed on the Nasdaq Small Cap Market or the
Nasdaq National Market as promptly as feasible following the issuance of the
Series E Stock. If the Company does not achieve such listing within eighteen
(18) calendar months following the issuance date of the Series E Stock,
dividends shall accrue prospectively at a rate of 14% per annum, payable in cash
only, until such time such listing is effected. Notwithstanding the foregoing,
from and after the fifth anniversary of the date of issuance, dividends accrue
on the Series E Stock at a rate of 14% per annum, payable only in cash. The
Common Stock is not presently listed as required by the terms of the Series E
Stock. Therefore effective June 8, 2001, dividends on the Series E Stock are
accruing at a rate of 14% per annum.

    Simultaneously with the Company's issuance of the Series E Stock, the
holders of the Company's Series D Redeemable Cumulative Convertible Preferred
Stock (the "Series D Stock"), agreed to convert such Series D Stock into Common
Stock of the Company in accordance with the terms and conditions of the
Series D Stock. The holders of the 2,400 shares of Series D Stock issued by the
Company converted such preferred stock into Common Stock at the stated
conversion rate of 16,666.66 shares of Common Stock for each share of the
Series D Stock so converted. In addition, the Series D Stock had an 8% annual
dividend rate, payment of which was deferred through December 31, 1999. The
holders of the Series D Stock agreed that, for the period beginning on the date
of issuance of the Series D Stock and ending on December 31, 1999, all dividends
accrued on the Series D Stock could be paid, at the option of the Company, in
cash or in additional Common Stock of the Company. Therefore, as a result of the
conversion of the Series D Stock, the Company issued 46,924,000 shares of Common
Stock in respect of the Series D Stock and all accrued but unpaid dividends
through the effective date of the conversion.

                                      F-20
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

13. RELATED PARTY ACTIVITIES

    In connection with the Company's issuance to the Chairman of the Corporation
of a warrant to purchase 5,372,315 shares of Common Stock of the Company, in
September 1997, the Chairman executed a seven-year promissory note in favor of
the Company in the original principal amount of $80. The promissory note bears
interest at 6.55% per annum, payable annually.

    In connection with an amendment to the Company's Loan and Security
Agreement, the Company's lender, Century Business Credit Corporation, requested
a "good faith" participation in the credit by certain shareholders and
affiliates of the Company who agreed to immediately provide the Company with
$200 in additional credit support. The additional funds of $200 were received in
September 2001 and are accounted for as current portion of long term debt

14. PENSION PLAN

    The Company sponsors and administers two defined benefit pension plans, the
Danskin Division Hourly Employees' Pension Plan and the Pennaco Hosiery Division
Hourly Employees' Pension Plan. Substantially all of the hourly employees of the
Danskin division and the Pennaco Hosiery division participate in these plans.
Benefits under the plans are based on years of service. The Company's funding
policy is to contribute the minimum required contribution for each plan year.

    As of December 30, 2000 and December 29, 2001, the Company recorded a
minimum pension liability adjustment to equity of $2,759 and $4,721,
respectively.

    In each of October 1999 and 2000, the Company amended the Danskin Division
Hourly Employees' Pension Plan to increase the monthly benefit level for 1998
and 1999, respectively, credited service from $7.00 to $8.00 and amended the
Pennaco Hosiery Division Hourly Employees' Pension Plan to increase the monthly
benefit level for 1998 and 1999 from $0.00 to $8.00. In addition, the
October 2000 amendment for the Pennaco Hosiery Division Hourly Employees'
Pension Plan allows new entrants into the Plan through December 31, 1999.

    Effective April 15, 1997, the Pennaco Division Hourly Employees' Pension
Plan was frozen. No person who was not already a participant could become a
participant and no additional credited service

                                      F-21
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

14. PENSION PLAN (CONTINUED)
was granted to any participant. The following table sets forth the plans funded
status at December 30, 2000 and December 29, 2001:

<Table>
<Caption>
                                                               DECEMBER 30, 2000     DECEMBER 29, 2001
                                                              -------------------   -------------------
                                                              DANSKIN    PENNACO    DANSKIN    PENNACO
                                                              --------   --------   --------   --------
<S>                                                           <C>        <C>        <C>        <C>
CHANGE IN BENEFIT OBLIGATION
  Benefit Obligation at Beginning of Year...................  $ 6,282    $ 7,834    $ 6,338    $ 8,076
  Service Cost..............................................       92          0         89          0
  Interest Cost.............................................      458        581        444        606
  Amendments................................................       15        126         15        128
  Actuarial Loss............................................       80        133         83        457
  Benefits Paid.............................................     (589)      (598)      (603)      (657)
                                                              -------    -------    -------    -------
                                                              $ 6,338    $ 8,076    $ 6,366    $ 8,610

CHANGE IN PLAN ASSETS
  Fair Value of Plan Assets at Beginning of Year............  $ 5,376    $ 6,293    $ 5,899    $ 6,905
  Actual Return on Plan Assets..............................      584        808       (202)      (195)
  Employer Contribution.....................................      528        402        581        576
  Benefits Paid.............................................     (589)      (598)      (603)      (657)
                                                              -------    -------    -------    -------
  Fair Value of Plan assets at End of Year..................  $ 5,899    $ 6,905    $ 5,675    $ 6,629

  Funded Status.............................................  $  (439)   $(1,171)   $  (690)   $(1,982)
  Unrecognized Net Transition Asset.........................      (66)         0        (13)         0
  Unrecognized Prior Service Cost...........................       41        353         51        441
  Unrecognized Net Actuarial Loss...........................    1,621      1,203      2,340      2,394
                                                              -------    -------    -------    -------
  Net amount recognized.....................................  $ 1,157    $   385    $ 1,688    $   853
                                                              =======    =======    =======    =======
  Amounts recognized in the statement of financial position
    consist of:
    Prepaid benefit cost....................................  $ 1,157    $   385    $ 1,688    $   853
    Accrued benefit cost....................................   (1,597)    (1,556)    (2,378)    (2,835)
    Intangible Asset........................................       41        353         51        441
    Accumulated other comprehensive income..................    1,556      1,203      2,327      2,394
                                                              -------    -------    -------    -------
                                                              $ 1,157    $   385    $ 1,688    $   853
                                                              =======    =======    =======    =======

ASSUMPTIONS AS OF DECEMBER 31

Discount rate...............................................     7.50%      7.50%      7.25%      7.25%
Expected long-term rate of return on assets.................      8.5%       8.5%       8.5%       8.5%

COMPONENTS OF NET PERIODIC PENSION COST
  Service Cost..............................................  $    92    $     0    $    89    $     0
  Interest Cost.............................................      458        581        444        606
  Expected Return on Plan Assets............................     (447)      (529)      (494)      (577)
  Amortization of Net Transition (Asset) Obligation.........      (53)         0        (53)         0
  Amortization of Prior service Cost........................        3         21          5         38
  Recognized Actuarial Loss.................................       85         42         60         42
                                                              -------    -------    -------    -------
  Net Periodic Pension Cost.................................  $   138    $   115    $    51    $   109
                                                              =======    =======    =======    =======
</Table>

                                      F-22
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

15. WARRANTS

   In November 1999, the Company issued 12,103,200 warrants to Guarantors in
consideration for providing stand-by guarantees of the Company's obligations
under the Loan and Security Agreement. Each warrant represents the right to
purchase one share of Common Stock for $0.27 through May 2009. The number of
warrants issued to each Guarantor was based upon a formula which took into
account the dollar amount of the Guarantee and the number of days that the
Guarantee was in place. These warrants have been accounted for as an increase to
additional paid in capital and were amortized as interest expense over the life
of the guarantee. (Refer to Note 11 for a discussion of the Guarantees.)

    In December 1999, in connection with an amendment to the Loan and Security
Agreement, the Company issued to CBCC, its secured lender, a warrant to purchase
550,000 shares of the Company's Common Stock at a price of $0.27 per share. This
has been accounted for as additional financing fees totaling $110 and additional
paid-in-capital. In March 2001, in connection with an amendment to the Loan and
Security Agreement, the Company issued a warrant to purchase 250,000 shares of
the Company's Common Stock at a price of $0.185 per share. This warrant has been
accounted for as additional financing fees and additional paid in capital. The
unamortized portion of such fees will be amortized over the remaining life of
loan. The Company issued warrants to purchase 250,000 shares of the Company's
Common Stock on each of May 1, 2001, June 1, 2001, July 1, 2001, August 1, 2001,
September 1, 2001, October 1, 2001, November 1, 2001 and December 1, 2001 at
prices ranging from $0.06 to $0.18 per share. (Refer to Note 11). These warrants
have been accounted for as additional interest expense totaling $140 and as
additional paid in capital.

    In connection with the placement of the Series E Preferred Stock, the
Company issued to Utendahl Capital Partners for its services as placement agent
in connection with the sale of certain of the Series E Preferred Stock, a
warrant to purchase 119,987 shares of the Company's Common Stock at a price of
$0.31 per share. Such warrants were recorded as additions to paid-in capital.

16. INCOME TAXES

    The provision for income taxes was as follows:

<Table>
<Caption>
                               FISCAL YEAR ENDED   FISCAL YEAR ENDED   FISCAL YEAR ENDED
                               DECEMBER 25, 1999   DECEMBER 30, 2000   DECEMBER 29, 2001
                               -----------------   -----------------   -----------------
<S>                            <C>                 <C>                 <C>
Federal:
  Current Provision..........         $ 0                 $ 0                 $ 0
                                      ---                 ---                 ---
State:
  Current Provision..........          20                  20                  20
                                      ---                 ---                 ---
                                      $20                 $20                 $20
                                      ===                 ===                 ===
</Table>

                                      F-23
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

16. INCOME TAXES (CONTINUED)
The following represented the significant items comprising net deferred taxes as
of December 30, 2000 and as of December 29, 2001:

<Table>
<Caption>
                                               FISCAL YEAR ENDED   FISCAL YEAR ENDED
                                                 DECEMBER 30,        DECEMBER 29,
                                                     2000                2001
                                               -----------------   -----------------
<S>                                            <C>                 <C>
Accounts Receivable Allowance................       $    493            $    630
Inventory Allowance..........................          2,557                 670
Non-Deductible Accruals......................            904                 161
Pension and Retirement Accruals..............            591              (1,016)
Net Operating Loss Carry Forward.............         19,644              24,764
Other........................................          1,265               1,117
Prepaid Expenses.............................           (815)                764
Property, Plant & Equipment..................            525                 525
                                                    --------            --------
Total Deferred Taxes.........................         25,164              27,615
Valuation Allowance..........................        (25,164)            (27,615)
                                                    --------            --------
                                                    $      0            $      0
                                                    ========            ========
</Table>

    The difference between income tax expense and the tax computed by applying
the statutory income tax rate to income before taxes was as follows:

<Table>
<Caption>
                                FISCAL YEAR ENDED   FISCAL YEAR ENDED   FISCAL YEAR ENDED
                                  DECEMBER 25,        DECEMBER 30,        DECEMBER 29,
                                      1999                2000                2001
                                -----------------   -----------------   -----------------
<S>                             <C>                 <C>                 <C>
Statutory Federal Income Tax
  Rate........................         (34)%               (34)%               (34)%
State Income Taxes, net of
  Federal Benefit.............          --                  --                  --
Losses Not Utilized...........          34                  34                  34
                                       ---                 ---                 ---
Effective Income Tax Rate.....           0 %                 0 %                 0 %
                                       ===                 ===                 ===
</Table>

    The valuation allowance for the period ended December 25, 1999 increased
$2,526 to $17,327. The valuation allowance for the period ended December 30,
2000 increased $7,837 to $25,164. The valuation allowance for the period ended
December 29, 2001 increased $2,451 to $27,615. Valuation allowances have been
established since management deems it is more likely than not that certain tax
benefits will not be realized due to continued losses and limitation of
carryforward utilization due to the change in ownership discussed below.

    Deferred income taxes result primarily from net operating losses, certain
inventory adjustments not currently deductible for income tax purposes, the use
of accelerated depreciation methods for income tax purposes, accruals and
reserves not currently deductible, and differences in reporting pension expense
for financial statement and income tax purposes.

    Net operating loss carryforwards amounting to approximately $62,000 at
December 29, 2001 expire during the years 2010 to 2020; annual usage is subject
to the limitations discussed below. Approximately

                                      F-24
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

16. INCOME TAXES (CONTINUED)
$14,000 of the above net operating loss carryforward was generated during the
fiscal year ended December 29, 2001.

    The Company has undergone a change of ownership within the meaning of
Internal Revenue Code Section 382. As a result of this change in ownership, the
future utilization of the Company's net operating loss (NOL) carryforward will
be limited. Under these rules, the amount of the Company's NOL carryforward that
can be used in each subsequent year is limited to an annual amount. This annual
limitation is determined by multiplying the value of the Company on the date of
the ownership change by the Federal long-term interest rate of approximately
5.5%.

17. COMMITMENTS AND CONTINGENCIES

    LEGAL PROCEEDINGS

    On November 25, 1996, the Company commenced suit against Herman Gruenwald,
former President, Director and Principal shareholder of Siebruck Hosiery, Ltd.
("Siebruck") for damages in the amount of $1,450 in the Superior Court,
Montreal. The claim relates to unreported sales in excess of $1,500 arising
under a license agreement entered into by and between the Company and Siebruck,
which expired on December 31, 1995. Siebruck was placed under the provision of
the Canadian Bankruptcy and Insolvency Act. Mr. Gruenwald's statement of defense
included a cross-demand against the Company wherein he is claiming damages to
his reputation in the amount of Cdn. $3,000. The matter is presently pending
before the Superior Court and a reasonable evaluation of the claim against the
Company cannot be made at this time. However, the Company, or the timing of its
resolution, does not presently anticipate that the ultimate resolution of such
claim will be material to its financial condition, results of operations,
liquidity, or business of the Company.

    The Company is a party to a number of other legal proceedings arising in the
ordinary course of business. Management believes that the ultimate resolution of
these proceedings will not, in the aggregate, have a material adverse impact on
the financial condition, results of operations, liquidity or business of the
Company.

    TAX AUDITS

    The Company is not presently the subject of any existing or pending state or
federal audits.

                                      F-25
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

17. COMMITMENTS AND CONTINGENCIES (CONTINUED)
    OPERATING LEASES

    The minimum annual rental commitments under non-cancelable operating leases
at December 29, 2001 for office space, manufacturing space, equipment and retail
stores were approximately as follows:

<Table>
<Caption>
FISCAL YEARS ENDING:                                           AMOUNT
--------------------                                          --------
<S>                                                           <C>
December 2002...............................................  $ 3,597
December 2003...............................................    2,415
December 2004...............................................    1,868
December 2005...............................................    1,506
December 2006...............................................    1,301
Thereafter..................................................    1,956
                                                              -------
Total minimum rental payments...............................  $12,643
                                                              =======
</Table>

    The majority of operating leases are for three-year to five-year terms,
generally with options to renew for similar terms, except for the corporate
office, one full price retail store, and the Pennaco mill and warehouse space
which are for terms of 9 to 15 years. Certain leases require the payment of
contingent rent based upon sales and other factors.

    Rent expense was approximately as follows:

<Table>
<Caption>
                                          FISCAL YEAR    FISCAL YEAR    FISCAL YEAR
                                             ENDED          ENDED          ENDED
                                          DECEMBER 25,   DECEMBER 30,   DECEMBER 29,
                                              1999           2000           2001
                                          ------------   ------------   ------------
<S>                                       <C>            <C>            <C>
Minimum rent............................     $5,207         $4,455         $4,270
Contingent rent.........................        580            544            482
                                             ------         ------         ------
Rent expense............................     $5,787         $4,999         $4,752
                                             ======         ======         ======
</Table>

    EMPLOYMENT AGREEMENTS

    The Company has entered into employment agreements that provide for base and
incentive compensation, and that are terminable for "cause," as defined, or
resignation following a "change of control", as defined. The Company's total
minimum commitment pursuant to the term of these agreements for fiscal 2002 and
future years totals approximately $3,285 per year, generally through fiscal year
2005, unless employment is terminated in which case total pay will generally
continue for 6 to 24 months following such termination.

    CONCENTRATION OF CREDIT RISK

    Financial instruments which potentially subject the Company to concentration
of credit risk consist principally of accounts receivable from department
stores, sporting goods stores and other specialty retailers as well as
commercial letters of credit. Although the concentration of risk is limited due
to the large number of customers included within the Company's customer base,
several of the Company's retail customers have experienced financial
difficulties in recent years. These financial difficulties have

                                      F-26
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

17. COMMITMENTS AND CONTINGENCIES (CONTINUED)
increased the risk of extending credit to such customers. The Company subjects
all customers to credit evaluation prior to acceptance and maintains ongoing
reviews based on established policies.

    MINIMUM ROYALTY COMMITMENTS

    The Company generally enters into licensing arrangements, as a licensee,
that provide for minimum annual royalty payments and additional royalty payments
based on a percentage of net revenues. The Company also licenses its
Danskin-Registered Trademark-, Round-the-Clock-Registered Trademark- and
Freestyle-Registered Trademark- names to selected companies. As of December 29,
2001, the Company was committed to certain licensing arrangements as follows:

<Table>
<Caption>
FISCAL YEARS ENDING:                               ROYALTY EXPENSE   ROYALTY INCOME
--------------------                               ---------------   --------------
<S>                                                <C>               <C>
December 2002....................................      $1,082            $  768
December 2003....................................       1,221             1,123
December 2004....................................         442               545
December 2005....................................           0               367
                                                       ------            ------
Total............................................      $2,745            $2,803
                                                       ======            ======
</Table>

    NEW LICENSES

    During the first quarter of fiscal year 2001, the Company signed a
multi-year license agreement with Jacques Moret, Inc., for the manufacture of
the "Freestyle-Registered Trademark- line of women's and girl's Activewear for
distribution to all 991 Target Stores retail locations throughout the United
States commencing June 2001. The Company followed with licenses for women's
socks under the Freestyle-Registered Trademark- Brand with Renfro Corporation
for distribution to Target Stores in the third quarter 2001. In addition, a
license for girl's intimate apparel under the Freestyle-Registered Trademark-
Brand at Target, signed with Delta Galil, will put product in store in the third
quarter of 2002.

    Effective May 5, 2000, the Company reached an agreement with Ellen
Tracy, Inc. pursuant to which Pennaco was granted a license for the manufacture
and sale of legwear including sheer hosiery, sheer knee highs, tights, socks and
trouser socks under the Ellen Tracy-Registered Trademark- label. The agreement
provides that Pennaco shall have the exclusive right and license to use the
Ellen Tracy-Registered Trademark- trademark in connection with the manufacture,
assemblage, sale, marketing and distribution, advertising and promotion of
legwear in the United States and Canada. Ridgeview, Inc. previously held the
license. The Ellen Tracy-Registered Trademark-minimum royalties for 2002 and
2003 are $350 and $450, respectively.

    In a separate transaction, Pennaco obtained an exclusive license for the
manufacture and sale of sheer hosiery and knee-highs under the
Evan-Picone-Registered Trademark- label. The agreement provides that Pennaco
shall have the exclusive right and license to use the
Evan-Picone-Registered Trademark- trademark in connection with the manufacture,
assemblage, sale, marketing and distribution, advertising and promotion of sheer
hosiery in the United States and Canada. Ridgeview, Inc. previously held this
license as well. The Evan-Picone-Registered Trademark- minimum royalties for
2002 and 2003 are $300 and $350, respectively.

                                      F-27
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

18. STOCK ISSUANCES

    In furtherance of the terms of the Securities Purchase Agreement, on
April 28, 1998, the Company filed a Registration Statement on Form S-1 in
connection with the registration under the Securities Act of 1933, as amended,
of (i) an aggregate of 10,838,124 rights to purchase shares of Common Stock, and
(ii) 2,131,889 shares of Common Stock issuable upon exercise of such rights. The
Board of Directors established May 8, 1998 as the date of record for holders of
Common Stock to participate in such offering. Holders of Common Stock held of
record as of the close of business on the record date had the right to purchase,
pro rata, 2,131,889 shares of Common Stock at a per share price of $0.30 (the
"Rights Offering"). Approximately 8.4 million rights were subscribed for and
approximately 1.6 million shares were issued in respect of such rights. In
accordance with the terms of the Securities Purchase Agreement executed in 1997
Danskin Investors purchased the rights not subscribed for on primary
subscription, totaling 488,289 shares of Common Stock, at $0.30 per share. The
Company realized gross proceeds of approximately $640.

    In addition, on May 27, 1998, the Company, Danskin Investors, and a bond
fund purchased 7,864,336 shares of Common Stock, in exchange for approximately
$2,400 aggregate principal amount of Remaining Subordinated Notes (the "Stock
Sale"). As a result of the Rights Offering and the Stock Sale, the Company
issued 10,000,000 shares of Common Stock at $0.30 per share, as contemplated by
the Securities Purchase Agreement. In addition, the outstanding principal amount
of Remaining Subordinated Notes was satisfied in full.

    On December 8, 1999, Carol Hochman, the Chief Executive Officer, purchased
5,040,000 shares of Common Stock of the Company for $0.27 per share.
Ms. Hochman issued a promissory note, in favor of the Company, in the original
principal amount of $1,361 as payment for the shares. Such note receivable was
classified as stockholders' equity. In fiscal 2000, and to accommodate a request
by Ms. Hochman related to certain personal financial planning, the Company
rescinded the share purchase by Ms. Hochman, cancelled the promissory note, and
issued an identical number of options to purchase Common Stock of the Company at
$0.27 per share.

    On December 8, 1999, and in accordance with the terms of her employment
agreement, Mrs. Hochman received a grant of 1,000,000 shares at $0.23 per share.

19. SEGMENT INFORMATION

    The Company is organized based on the products that it offers. The Company
currently operates under two operating segments: Danskin, which designs,
manufactures, markets and sells activewear, dance wear, bodywear, tights and
exercise apparel through wholesale channels to retailers and through the
Company's outlet and retail stores; and Pennaco, which designs, manufactures and
markets hosiery under the brand names Round-The-Clock-Registered Trademark- and
Givenchy-Registered Trademark-, Evan Picone-Registered Trademark-, Ellen
Tracy-Registered Trademark-, and under private labels for major retailers.

    The Company evaluates performance based on profit or loss from operations
before extraordinary items, interest expense and income taxes. The Company
allocates corporate administrative expenses to each segment. The Danskin
Division was allocated $3,102 in fiscal 2001, $3,434 in fiscal 2000, and $4,287
in fiscal 1999. Pennaco was allocated $1,535 in fiscal 2001, $1,778 in fiscal
2000, and $2,201 in fiscal 1999. Capital expenditures for corporate
administration are included with the Danskin Division. In addition, the Company
does not allocate interest expense to the divisions.

                                      F-28
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

19. SEGMENT INFORMATION (CONTINUED)
    Financial information by segment for the fiscal years ended December 29,
2001, December 30, 2000, and December 25, 1999 is summarized below:

<Table>
<Caption>
                                                              DANSKIN    PENNACO     TOTAL
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
2001
Net Revenues................................................  $ 54,989   $26,769    $ 81,758
Operating Loss..............................................    (2,868)   (3,059)     (5,927)
Identifiable assets at year-end.............................    26,741    14,259      41,000
Depreciation and amortization...............................     1,134       480       1,614
Capital Expenditures........................................       109       172         281

2000
Net Revenues................................................  $ 57,282   $28,011    $ 85,293
Operating Loss..............................................    (2,619)   (1,977)     (4,596)
Identifiable assets at year-end.............................    32,427    16,425      48,852
Depreciation and amortization...............................     1,281       534       1,815
Capital Expenditures........................................       327       304         631

1999
Net Revenues................................................  $ 61,119   $27,373    $ 88,492
Operating Loss..............................................   (10,887)   (3,539)    (14,426)
Identifiable assets at year-end.............................    35,151    12,737      47,888
Depreciation and amortization...............................     1,320       484       1,804
Capital Expenditures........................................     1,779     1,057       2,836
</Table>

    Reconciliation of depreciation and amortization to consolidated totals is as
follows:

<Table>
<Caption>
                                                                1999       2000       2001
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Total segment depreciation and amortization.................   $1,804     $1,815     $1,614
Amortization of deferred financing costs....................      198        185        186
                                                               ------     ------     ------
Consolidated depreciation and amortization..................   $2,002     $2,000     $1,800
                                                               ======     ======     ======
</Table>

                                      F-29
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

  SUPPLEMENTAL FINANCIAL INFORMATION SELECTED QUARTERLY FINANCIAL INFORMATION

       (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<Table>
<Caption>
                                                              FISCAL QUARTERS ENDED
                                                -------------------------------------------------
                                                  MARCH         JUNE      SEPTEMBER     DECEMBER
                                                ----------   ----------   ----------   ----------
                                                                   (UNAUDITED)
<S>                                             <C>          <C>          <C>          <C>
Fiscal year ended December 29, 2001:
  Net revenues................................  $   22,093   $   19,718   $   21,718   $   18,229
                                                ==========   ==========   ==========   ==========
  Gross profit................................  $    6,288   $    5,876   $    7,454   $    5,251
                                                ==========   ==========   ==========   ==========
  Net loss....................................  ($   2,080)  ($   2,226)  ($   1,138)  ($   4,574)
                                                ==========   ==========   ==========   ==========
  Net loss applicable to Common Stock.........  ($   2,422)  ($   2,615)  ($   1,670)  ($   5,106)
                                                ==========   ==========   ==========   ==========
  Basic and diluted net loss per share........  ($    0.04)  ($    0.04)  ($    0.02)  ($    0.07)
                                                ==========   ==========   ==========   ==========
  Weighted average common shares and share
    equivalents outstanding...................  68,947,000   68,947,000   68,947,000   68,947,000
                                                ==========   ==========   ==========   ==========
Fiscal year ended December 30, 2000:
  Net revenues................................  $   21,204   $   20,652   $   21,554   $   21,883
                                                ==========   ==========   ==========   ==========
  Gross profit................................  $    6,170   $    6,051   $    6,625   $    5,819
                                                ==========   ==========   ==========   ==========
  Net loss....................................  ($   1,935)  ($   1,268)  ($   2,164)  ($   2,538)
                                                ==========   ==========   ==========   ==========
  Net loss applicable to Common Stock.........  ($   2,277)  ($   1,610)  ($   2,506)  ($   2,881)
                                                ==========   ==========   ==========   ==========
  Basic and diluted net loss per share........  ($    0.03)  ($    0.02)  ($    0.03)  ($    0.04)
                                                ==========   ==========   ==========   ==========
  Weighted average common shares and share
    equivalents outstanding...................  73,986,000   73,987,000   73,987,000   72,768,000
                                                ==========   ==========   ==========   ==========
</Table>

                                      S-1
<Page>
                         DANSKIN, INC. AND SUBSIDIARIES

                 SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS

                         (DOLLAR AMOUNTS IN THOUSANDS)

                                  SCHEDULE II

<Table>
<Caption>
                                   COLUMN A      COLUMN B       COLUMN C         COLUMN D        COLUMN E
                                 ------------   ----------   --------------   --------------   -------------
                                  BALANCE AT    CHARGED TO     ADDITIONS
                                 BEGINNING OF   COSTS AND      CHARGED TO                       BALANCE AT
DESCRIPTION                         PERIOD       EXPENSES    OTHER ACCOUNTS   DEDUCTIONS (A)   END OF PERIOD
-----------                      ------------   ----------   --------------   --------------   -------------
<S>                              <C>            <C>          <C>              <C>              <C>
Fiscal year Ended December 29,
  2001
  Allowance for doubtful
    accounts receivable........     $1,039         $ --           $ --             $ 34           $1,005
                                    ======         ====           ====             ====           ======

Fiscal year Ended December 30,
  2000
  Allowance for doubtful
    accounts receivable........     $1,087         $ --           $ --             $ 48           $1,039
                                    ======         ====           ====             ====           ======

Fiscal year Ended December 25,
  1999
  Allowance for doubtful
    accounts receivable........     $1,021         $250           $ --             $184           $1,087
                                    ======         ====           ====             ====           ======
</Table>

------------------------

(A) Uncollectible accounts receivable written off, net of recoveries.

                                      S-2