UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

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

For the quarterly period ended September 28, 2002

                                       OR

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

For the transition period from              to

                        Commission File Number: 333-58059

                              Cluett American Corp.
             (Exact Name of Registrant as Specified in Its Charter)

Delaware                                                     22-2397044
(State or Other Jurisdiction of                              (IRS Employer
Incorporation or Organization)                               Identification No.)

                     48 West 38th Street New York, NY 10018
               (Address of Principal Executive Offices) (Zip code)

        Registrant's Telephone Number, Including Area Code 212-984-8900

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 registrant was
required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days.
Yes |X|    No |_|

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes |X|    No |_|

The aggregate market value of the voting stock held by any non-affiliates of the
registrant is zero as of September 28, 2002. All common stock of the registrant
is owned by Cluett American Group, Inc., which is a wholly-owned subsidiary of
Cluett American Investment Corp.


<PAGE>

                     Cluett American Corp. and Subsidiaries

                                TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

                                                                            Page
Item 1.  Financial Statements (Unaudited)

Report of Independent Accountants                                              3

Consolidated Balance Sheets as of September 28, 2002 and December 31, 2001   F-1

Consolidated Statements of Operations for the thirteen and thirty-nine
weeks ended September 28, 2002 and September 29, 2001                        F-2

Consolidated Statements of Cash Flows for the thirty-nine weeks ended
September 28, 2002 and September 29, 2001                                    F-3

Notes to Consolidated Financial Statements                                   F-4

Item 2.  Management's Discussion and Analysis of Financial Condition and
Results of Operations.                                                         4

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.          13

Item 4.  Controls and Procedures                                              13

PART II - OTHER INFORMATION

Item 1.   Legal Proceedings                                                   14

Item 4.   Submission of Matters to a Vote of Security Holders                 14

Item 6.   Exhibits and Reports on Form 8-K                                    14

SIGNATURES                                                                    19

302 CERTIFICATIONS                                                            20


<PAGE>

                     Cluett American Corp. and Subsidiaries

                        REPORT OF INDEPENDENT ACCOUNTANTS


Board of Directors
Cluett American Corp. and Subsidiaries
New York, New York

We have reviewed the accompanying consolidated balance sheet of Cluett American
Corp. and subsidiaries (the "Company"), a wholly owned subsidiary of Cluett
American Investment Corp., as of September 28, 2002, and the related
consolidated statements of operations and cash flows for the thirteen and
thirty-nine week periods ended September 28, 2002 and September 29, 2001. These
financial statements are the responsibility of the Company's management.

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

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

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet of the
Company as of December 31, 2001, and the related consolidated statements of
operations, stockholders' deficit and cash flows for the year then ended (not
presented herein); and in our report dated April 12, 2002, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying consolidated balance sheet as of
December 31, 2001, is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.

The accompanying financial statements for the period ended September 28, 2002
have been prepared assuming that the Company will continue as a going concern.
As discussed in Note 1 to the financial statements, certain conditions raise
substantial doubt about its ability to continue as a going concern. Management's
plans concerning these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.


                                            /s/ Deloitte & Touche LLP


Raleigh, North Carolina
November 19, 2002


                                       3
<PAGE>

                     Cluett American Corp. and Subsidiaries
                           Consolidated Balance Sheets
                    (Dollars In Thousands, except share data)

<TABLE>
<CAPTION>
                                                                              September 28,   December 31,
                                                                                  2002            2001
                                                                               (Unaudited)      (Note 1)
                                                                               -------------------------
<S>                                                                            <C>             <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                   $   1,103       $   1,299
   Accounts receivable, net                                                       24,002          29,084
   Inventories, net                                                               48,268          34,248
   Prepaid expenses and other current assets                                       1,616           1,723
   Net assets of discontinued operations                                           7,064           7,556
                                                                               -------------------------
Total current assets                                                              82,053          73,910

Property, plant and equipment, net                                                21,217          22,898
Pension assets                                                                    27,453          27,203
Investment in affiliates                                                           4,909             100
Deferred financing fees                                                            7,711           8,307
Other non-current assets                                                             844             844
                                                                               -------------------------
Total assets                                                                   $ 144,187       $ 133,262
                                                                               =========================

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
   Accounts payable and accrued expenses                                       $  20,681       $  14,011
   Accrued interest payable                                                       10,689           6,031
   Restructuring and obligations related to discontinued operations                2,410           3,914
   Short-term debt and long-term debt classified as current                      235,451           8,036
   Income taxes payable                                                            1,827           1,582
                                                                               -------------------------
Total current liabilities                                                        271,058          33,574

Long-term debt                                                                        --         225,994
Redeemable preferred stock dividends payable                                       3,435             809
Other non-current liabilities                                                         43              59
Senior Exchangeable Preferred Stock Due 2010, cumulative, $.01 par value:
   authorized 4,950,000, issued and outstanding 811,293 shares
   (liquidation preference of $81,129)                                            79,950          75,096
Stockholders' deficit:
   Common stock, $1 par value: authorized, issued and outstanding 1,000
      shares                                                                           1               1
   Additional paid-in capital                                                    110,682         118,162
   Accumulated deficit                                                          (320,953)       (320,433)
   Accumulated other comprehensive loss                                              (29)             --
                                                                               -------------------------
Total stockholders' deficit                                                     (210,299)       (202,270)
                                                                               -------------------------
Total liabilities and stockholders' deficit                                    $ 144,187       $ 133,262
                                                                               =========================
</TABLE>

                             See accompanying notes.


                                      F-1
<PAGE>

                     Cluett American Corp. and Subsidiaries
                Consolidated Statements of Operations (Unaudited)
                             (Dollars In Thousands)

<TABLE>
<CAPTION>
                                                           Thirteen weeks ended               Thirty-nine weeks ended
                                                      September 28,    September 29,     September 28,     September 29,
                                                          2002             2001              2002              2001
                                                      ------------------------------------------------------------------
<S>                                                     <C>              <C>              <C>               <C>
Net sales                                               $ 45,757         $ 47,096         $ 131,290         $ 135,941

Cost of goods sold                                        31,842           31,770            87,772            87,943
                                                        -------------------------------------------------------------
Gross profit                                              13,915           15,326            43,518            47,998

Selling, general and administrative expenses               9,973            8,506            30,260            26,497

Restructuring expense                                         18               --                28                --
                                                        -------------------------------------------------------------
Operating income from continuing operations                3,924            6,820            13,230            21,501

Interest expense, net                                      5,147            5,906            15,329            17,732

Equity earnings in investments in joint ventures              36               --               466                --
                                                        -------------------------------------------------------------
Income (loss) from continuing operations
 before provision for income taxes and
 extraordinary gain                                       (1,187)             914            (1,633)            3,769

Provision for income taxes                                   129              375               629             1,109
                                                        -------------------------------------------------------------

Income (loss) from continuing operations
 before extraordinary gain                                (1,316)             539            (2,262)            2,660

Extraordinary gain, net of taxes                             (98)              --             1,742                --
                                                        -------------------------------------------------------------
Income (loss) from continuing operations                  (1,414)             539              (520)            2,660

Discontinued operations:
 Loss from discontinued segment                               --             (262)               --           (10,463)
                                                        -------------------------------------------------------------
Net income (loss)                                       $ (1,414)        $    277         $    (520)        $  (7,803)
                                                        =============================================================
</TABLE>

                             See accompanying notes.


                                      F-2
<PAGE>

                     Cluett American Corp. and Subsidiaries
                Consolidated Statements of Cash Flows (Unaudited)
                             (Dollars In Thousands)

<TABLE>
<CAPTION>
                                                                            Thirty-nine weeks ended
                                                                          September 28,   September 29,
                                                                              2002            2001
                                                                           -------------------------
<S>                                                                        <C>              <C>
Operating activities
Net loss                                                                   $   (520)        $ (7,803)
Adjustments to reconcile net loss to net cash and cash equivalents
   used in operating activities:
   Earnings of equity investees                                                (466)              --
   Extraordinary gain of equity investee                                     (1,742)              --
   Depreciation                                                               4,650            4,740
   Deferred finance amortization                                              1,400            1,346
   (Gain) loss on sale of property, plant and equipment                        (713)               4
   Write-down related to discontinued operations                                 --            8,232

Changes in operating assets and liabilities:
   Accounts receivable                                                        5,082              606
   Inventories                                                              (14,020)         (15,577)
   Prepaid expenses and other current assets                                    107             (928)
   Pension and other non-current assets                                        (250)          (2,405)
   Accounts payable and accrued expenses                                      6,670            1,115
   Interest payable                                                           4,658            3,514
   Restructuring and obligations related to discontinued operations          (1,504)          (3,620)
   Income taxes payable                                                         245              280
   Other liabilities                                                            (16)             162
   Effect of changes in foreign currency                                        (29)            (228)
                                                                           -------------------------
Net cash and cash equivalents provided by (used in) operating
   activities                                                                 3,552          (10,562)

Investing activities
Purchase of property, plant and equipment                                    (2,978)          (3,081)
Proceeds on disposal of fixed assets                                              2               38
Investment in joint venture                                                  (2,600)              --
                                                                           -------------------------
Net cash and cash equivalents used in investing activities                   (5,576)          (3,043)

Financing activities
Net borrowings under line-of-credit agreement                                 4,900           15,900
Principal payments on long-term debt                                         (3,480)          (3,918)
Deferred financing activity                                                    (804)            (137)
                                                                           -------------------------
Net cash and cash equivalents provided by financing activities                  616           11,845

Cash provided by discontinued operations                                      1,212            5,587
                                                                           -------------------------
Net change in cash and cash equivalents                                        (196)           3,827
Cash and cash equivalents at beginning of period                              1,299            1,268
                                                                           -------------------------
Cash and cash equivalents at end of period                                 $  1,103         $  5,095
                                                                           =========================
</TABLE>

                             See accompanying notes.


                                      F-3
<PAGE>

                     Cluett American Corp. and Subsidiaries

             Notes to Consolidated Financial Statements (Unaudited)

1. Basis of Presentation

      The accompanying unaudited consolidated financial statements of Cluett
American Corp. and its subsidiaries, (the "Company") have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the thirteen and thirty-nine week periods ended September 28, 2002,
are not necessarily indicative of the operating results that may be expected for
the year ending December 31, 2002.

      The Consolidated Balance Sheet at December 31, 2001, has been derived from
the audited financial statements at that date but does not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements.

      For further information, refer to the annual consolidated financial
statements and footnotes of the Company, included in the Annual Report on Form
10-K, for the year ended December 31, 2001, filed with the Securities and
Exchange Commission on April 16, 2002.

      The consolidated financial statements include all subsidiary companies of
the Company. Significant intercompany transactions have been eliminated in
consolidation.

      The Company uses a 5-4-4 week fiscal quarter whereby the fiscal quarter
ends on the Saturday nearest the end of the calendar quarter, which accordingly
was September 28, 2002 and September 29, 2001, respectively.

      Certain amounts in the prior year financial statements and footnotes have
been reclassified to conform to the current year presentation.

      The Company was not in compliance with certain financial covenants of its
Senior Credit Facility as of September 28, 2002. On November 13, 2002, the
Company obtained waivers of certain financial covenants under the facility for
the periods ended September 28, 2002 and December 31, 2002, and the facility was
amended to adjust certain financial ratios and tests, interest periods,
limitations on asset sales and increase the applicable interest rates on the
facility. The amendment also limits outstanding Senior Funded Indebtedness to
$48.0 million on March 31, 2003. Senior Funded Indebtedness means, as of any
date, all Funded Indebtedness (net of cash and cash equivalents) of the Company
on a consolidated basis on such date, excluding (i) Subordinated Indebtedness
and (ii) the Tranche C Obligations. Outstanding Senior Funded Indebtedness was
$93.1 million as of September 28, 2002. These conditions raise substantial doubt
as to the Company's ability to continue as a going concern.

      In order to remain in compliance with the financial covenants included in
the Company's Senior Credit Facility after December 31, 2002 and have adequate
liquidity over the next twelve months, the Company intends to seek to reduce its
indebtedness under its Senior Credit Facility by March 31, 2003. This includes
exploring alternative financing and the sale of certain idle and non-core assets
of the Company. There can be no assurances as to the success or timing of such
sales or the proceeds that the Company could realize therefrom.


                                      F-4
<PAGE>

                     Cluett American Corp. and Subsidiaries

       Notes to Consolidated Financial Statements (Unaudited) (continued)

1. Basis of Presentation (continued)

      The Senior Credit Facility includes a cross-default provision which makes
it a default under the Senior Credit Facility if, with respect to other
indebtedness in excess of $2.0 million of Cluett American Investment Corp.
("Holdings") and the Company, any such party defaults in any payment with
respect to such indebtedness or defaults in a manner that permits such
indebtedness to be accelerated or such indebtedness is in fact accelerated.

      The consequences of a default under the Senior Credit Facility are that
the lender may terminate the commitments, accelerate the Company's obligations
under the Senior Credit Facility, declaring them immediately due and payable,
require the credit parties to establish a cash collateral account as security
for outstanding letters of credit and enforce any and all other rights and
interests existing under the credit documents.

      If the Company is unable to reduce its outstanding Senior Funded
Indebtedness by March 31, 2003 to $48.0 million, then the Company would be in
default of its Senior Credit Facility. As a result, outstanding amounts under
its Senior Credit Facility and Senior Subordinated Notes have been classified as
current liabilities in the Company's consolidated balance sheet as of September
28, 2002.

      Although the Company expects to be able to meet its working capital
requirements with cash flow generated from operations and its ongoing efforts to
optimize the Company's asset base, short-term borrowings for seasonal working
capital, and permitted borrowings under the senior credit facility, there can be
no assurance that the Company will have sufficient source of funds to meet its
debt service obligations on March 31, 2003. The accompanying unaudited
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

2. Joint Venture

      On January 7, 2002, the Company entered into a joint venture agreement
with Administradora Gaco, S.A. de C.V. and Inversiones Gaco, S.A. de C.V.
investing $2.6 million for a 50% share of outstanding capital stock of
Inversiones Gaco, S. A. de C. V. The Company's investment in the joint venture
is accounted for under the equity method. The joint venture owns a leading
manufacturer and distributor of men's, women's and children's socks in Mexico
with the largest Mexican brand, CANNON. By moving labor-intensive finishing
operations to a lower cost environment, management believes it will recognize
significant annual cost savings.

      In conjunction with the investment, and under the recently adopted
Financial Accounting Standards Board ("FASB") Statement No. 141, "Business
Combinations", the Company recorded a $1.7 million extraordinary gain related to
negative goodwill. The negative goodwill reflects the equity investee's purchase
price allocation of the acquisition of a business and was determined based on
the fair value of the acquired property, plant and equipment as of the
acquisition date.

      Summary financial information of the joint venture, for which the Company
has recorded its 50% share of operating results, is as follows:

                                     (Dollars In Thousands)
                  Total assets               $12,210
                  Total liabilities         $  3,083
                  Total net income          $  4,469

      Total net income includes a $3.5 million extraordinary gain related to
negative goodwill.


                                      F-5
<PAGE>

                     Cluett American Corp. and Subsidiaries

       Notes to Consolidated Financial Statements (Unaudited) (continued)

3. Recently Issued Accounting Standards Adopted or To Be Adopted

      In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets" ("SFAS No. 142") which addresses financial accounting and reporting for
acquired goodwill and other intangible assets. SFAS No. 142 eliminates
amortization of goodwill and other intangible assets that are determined to have
an indefinite useful life and instead requires an impairment only approach. At
adoption, any goodwill impairment loss will be recognized as the cumulative
effect of a change in accounting principle. Subsequently, any impairment losses
will be recognized as a component of income from operations. The Company adopted
SFAS No. 142 on January 1, 2002. The adoption of SFAS No. 142 did not have a
material impact on the Company's results of operations and financial condition.

      In August 2001, the FASB issued SFAS No. 143, "Accounting For Asset
Retirement Obligation" ("SFAS No. 143") which requires recording the fair value
of a liability for an asset retirement obligation in the period in which it is
incurred, and a corresponding increase in the carrying value of the related
long-lived asset. Over time, the liability is accreted to its present value each
period, and the capitalized cost is depreciated over the useful life of the
related asset. Upon settlement of the liability, it is either settled for its
recorded amount or a gain or loss upon settlement is recorded. SFAS No. 143 is
effective for the Company's fiscal year ended December 31, 2003. The Company is
currently assessing, but has not yet determined the impact of SFAS No. 143 on
its financial position and results of operations.

      In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment for Disposal of Long-Lived Assets" ("SFAS No. 144") which addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets. This Statement supersedes FASB Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of",
and the accounting and reporting provisions of APB Opinion No. 30, "Reporting
the Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions", for the disposal of a segment of a business (as previously
defined in that Opinion). The Company adopted SFAS No. 144 on January 1, 2002.
The adoption of SFAS No. 144 did not have a material impact on the Company's
results of operations and financial condition.

      In November 2001, the Emerging Issues Task Force reached consensus on
issue No. 01-9, "Accounting for Consideration Given by a Vendor to a Customer or
a Reseller of the Vendor's Products ("EITF 01-9"). The consensus requires
certain payments to customers that may have previously been classified as a
selling, general and administrative expense to be a reduction of sales. The
adoption of EITF 01-9 on January 1, 2002, did not have a material impact on the
Company's results of operations.

      In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities ("SFAS No. 146"). This statement
requires companies to recognize costs with exit or disposal activities when they
are incurred rather than at the date of a commitment to an exit or disposal
plan. SFAS No. 146 is to be applied prospectively to exit or disposal activities
initiated after December 31, 2002. The Company is currently assessing, but has
not yet determined the impact of SFAS No. 146 on its financial position and
results of operations.


                                      F-6
<PAGE>

                     Cluett American Corp. and Subsidiaries

       Notes to Consolidated Financial Statements (Unaudited) (continued)

4. Discontinued Operations

      On June 13, 2000, Phillips-Van Heusen Corporation ("PVH"), and the Company
announced an agreement (the "Agreement") for PVH to license the ARROW brand for
men's and boys' dress shirts, sports shirts (including knit, woven and all forms
of fleece), pants, shorts and sweaters ("Licensed Product") in the United
States. In addition, PVH and the Company agreed in principle for PVH to acquire
the stock of Cluett Designer Group, Inc. ("CDG"), the licensee for Kenneth Cole
dress shirts. In conjunction with the Agreement, the Company approved a plan to
discontinue the Company's shirt group segment's manufacturing and distribution
operations.

      On July 24, 2000, the transactions contemplated by the Agreement,
including the Purchase and Sale Agreement among Cluett, Peabody & Co., Inc.
("CP"), Cluett, Peabody Canada, Inc. ("CP Canada"), Arrow Factory Stores Inc.
("AFS"), CDG, Consumer Direct Corporation ("CDC"), Cluett, Peabody Holding Corp.
("Holding"), and PVH, (the "Purchase and Sale Agreement") and the Share Purchase
Agreement among CP, CDG, Bidermann Tailored Clothing Inc. ("BTC"), and PVH (the
"Share Purchase Agreement") were closed. Each of the parties to the Purchase and
Sale Agreement and the Share Purchase Agreement other than PVH and CDG is, and
prior to the closing CDG was, a wholly owned subsidiary of the Company.

      Pursuant to the Purchase and Sale Agreement, (i) all of the outstanding
shares of capital stock of C.A.T. Industrial S.A. de C.V., ("C.A.T") a
corporation organized under the laws of Honduras, were sold to PVH by CP, AFS,
CDG, CDC and Holding, (ii) PVH purchased all of CP's and AFS's right, title and
interest in and to certain of the other assets (principally inventory) of CP and
AFS used primarily by CP and AFS in their ARROW label and private label men's
and boys' dress and sport shirt businesses and their Arrow factory outlet
operations in the United States and (iii) PVH purchased all of CP Canada's
right, title and interest in and to ARROW label dress and sport shirt inventory
used in CP Canada's United States "Career Apparel" business. Pursuant to the
Share Purchase Agreement, all of the outstanding shares of capital stock of CDG
were sold by CP and BTC to PVH.

      The aggregate purchase price paid by PVH pursuant to the Purchase and Sale
Agreement and the Share Purchase Agreement for the stock and assets referred to
above was approximately $51.2 million in cash plus the assumption of $2.1
million of debt related to C.A.T., calculated as set forth in, and subject to
adjustment pursuant to, Article 3 of each of the Purchase and Sale Agreement and
the Share Purchase Agreement.

      Pursuant to the Purchase and Sale Agreement, the Trademark License
Agreement ("PVH Trademark License Agreement"), dated July 24, 2000, by and
between Cluett Peabody Resources Corporation ("CPR"), a Delaware corporation and
a wholly-owned subsidiary of the Company, CP and PVH was executed and delivered.
Pursuant to the PVH Trademark License Agreement, CP granted to PVH an exclusive
license to use trademarks related to CP's ARROW clothing line in the United
States and its territories and possessions in connection with its manufacture,
advertising, marketing, promotion, distribution, offer to sell and the sale of
men's and boys' Licensed Product in certain specified channels of trade,
including the Internet. CP also granted to PVH the right to operate most of the
websites that use URLs that incorporate the ARROW trademarks. The PVH Trademark
License Agreement provides for a $5.0 million minimum guaranteed annual royalty
fee to be paid to CP, subject to cost of living adjustments. The initial term of
the license expires on June 30, 2007; however, PVH has the option to renew the
PVH Trademark License Agreement for two additional five-year terms, provided it
meets certain conditions.


                                      F-7
<PAGE>

                     Cluett American Corp. and Subsidiaries

       Notes to Consolidated Financial Statements (Unaudited) (continued)

4. Discontinued Operations (continued)

      The Company used $39.3 million of the net proceeds from the Purchase and
Sale Agreement, the Share Purchase Agreement and the PVH Trademark License
Agreement (collectively referred to as the "Transactions") to repay outstanding
borrowings under its Senior Credit Facility and CP Canada's Credit Facility.

      On January 29, 2001, and pursuant to an Asset Purchase Agreement, CP
Canada sold certain assets (principally inventory, personal property, and
manufacturing equipment) used primarily by CP Canada's ARROW labeled apparel
bearing the name or logo of other Corporate entities or other organizations
("Career Apparel") businesses in Canada, apparel sold in specialty golf stores
and golf pro shops ("Golf Apparel") and FRIDAY'S BY CLUETT businesses in Canada,
the United States and Puerto Rico, to The John Forsyth Shirt Company, LTD.
("Forsyth").

      Pursuant to a Trademark License Agreement ("Forsyth Trademark License
Agreement"), dated as of January 29, 2001, CP and CP Canada granted to Forsyth
an exclusive license to use trademarks related to the ARROW business in Canada
and the FRIDAY'S BY CLUETT and golf apparel business in Canada, the United
States and Puerto Rico. The Forsyth Trademark License Agreement provides for a
1.0 million Canadian dollar minimum guaranteed annual royalty fee to be paid to
CP, subject to the Consumer Price Index. The license expires on December 31,
2005; however, Forsyth has the option to renew for two additional five-year
terms, provided it meets certain conditions.

      The aggregate purchase price paid by Forsyth pursuant to the Asset
Purchase Agreement was approximately $8.0 million, and subject to adjustment
pursuant to Section 4 of the Asset Purchase Agreement.

      The Company used $5.4 million of the net proceeds from the Asset Purchase
Agreement to repay outstanding borrowings under CP Canada's loan facility.

      The Company has completed the majority of the disposition of the Shirt
Group segment's manufacturing and distribution operations. Accordingly, the
Company's consolidated financial statements reflect the shirt segment as a
discontinued operation. Consequently, the Company's remaining businesses include
primarily the Sock and Licensing Groups.

      The Company has reflected the trade assets, trade liabilities and credit
facility paid off, and operations of the shirt segment as discontinued in the
accompanying consolidated financial statements. The net assets of the shirt
segment are classified as net assets of discontinued operations in the
accompanying balance sheet. As of September 28, 2002, the Company's disposition
of the shirt segment is complete, except for real estate held for sale and
sublease. These remaining net assets consist primarily of distribution
facilities located in Austell, Georgia, and Kitchener, Ontario, that are carried
at fair value (less costs to sell).


                                      F-8
<PAGE>

                     Cluett American Corp. and Subsidiaries

       Notes to Consolidated Financial Statements (Unaudited) (continued)

5. Comprehensive Loss

      Total comprehensive loss for the nine months ended September 28, 2002 was
$29,000 and is comprised solely of unrealized losses on the translation of
foreign currency.

6. Inventories, Net

      Inventories from continuing operations consist of the following:

<TABLE>
<CAPTION>
                                                                 September 28,     December 31,
                                                                     2002              2001
                                                                -------------------------------
                                                                   (Dollars In Thousands)
<S>                                                              <C>                <C>
Finished goods                                                   $  39,307          $  27,600
Work in process                                                      3,798              2,939
Raw materials and supplies                                           5,753              5,313
                                                                -----------------------------
                                                                    48,858             35,852
Less: Allowance for obsolete and slow moving inventory                (590)            (1,604)
                                                                -----------------------------
                                                                 $  48,268          $  34,248
                                                                =============================
</TABLE>

7. Long-Term Obligations and Financing Arrangements

      As of September 28, 2002, the Company had outstanding $235.4 million of
debt consisting of $125.0 million in Senior Subordinated Notes (including the
Parity Notes), a Senior Credit Facility consisting of a $18.2 million term loan
("Term A"), a $43.1 million term loan ("Term B"), a $17.5 million Tranche C
loan, and $31.6 million in revolving credit facility borrowings. During the
thirty-nine weeks ended September 28, 2002, the Company had an increase in
revolving credit facility borrowings of $4.9 million and repaid $3.5 million in
term loans and notes payable.

      As discussed in Note 1 - Basis of Presentation, of the unaudited
consolidated financial statements, the Company was not in compliance with
certain financial covenants of its Senior Credit Facility as of September 28,
2002. On November 13, 2002, the Company obtained waivers of certain financial
covenants under the facility for the periods ended September 28, 2002 and
December 31, 2002, and the facility was amended to adjust certain financial
ratios and tests, interest periods, limitations on asset sales and increase the
applicable interest rates on the facility. The amendment also limits outstanding
Senior Funded Indebtedness to $48.0 million on March 31, 2003. Senior Funded
Indebtedness means, as of any date, all Funded Indebtedness (net of cash and
cash equivalents) of the Company on a consolidated basis on such date, excluding
(i) Subordinated Indebtedness and (ii) the Tranche C Obligations. Outstanding
Senior Funded Indebtedness was $93.1 million as of September 28, 2002. These
conditions raise substantial doubt as to the Company's ability to continue as a
going concern.

      In order to remain in compliance with the financial covenants included in
the Company's Senior Credit Facility after December 31, 2002 and have adequate
liquidity over the next twelve months, the Company intends to seek to reduce its
indebtedness under its Senior Credit Facility by March 31, 2003. This includes
exploring alternative financing and the sale of certain idle and non-core assets
of the Company. There can be no assurances as to the success or timing of such
sales or the proceeds that the Company could realize therefrom.


                                      F-9
<PAGE>

                     Cluett American Corp. and Subsidiaries

       Notes to Consolidated Financial Statements (Unaudited) (continued)

7. Long-Term Obligations and Financing Arrangements (continued)

      If the Company is unable to reduce its outstanding Senior Funded
Indebtedness by March 31, 2003 to $48.0 million, then the Company would be in
default of its Senior Credit Facility. As a result, outstanding amounts under
its Senior Credit Facility and the Senior Subordinated Notes have been
classified as current liabilities in the Company's consolidated balance sheet as
of September 28, 2002.

8. Restructuring and Obligations Related to Discontinued Operations

      The following table is a summary of the components of the restructuring
reserve and obligations related to discontinued operations. The remaining
restructuring reserves and obligations related to discontinued operations are
related to severance, which is expected to be completed in 2003, and lease
obligations which will expire in various years ending in 2006.

<TABLE>
<CAPTION>
                                        Severance Costs  Facility Closure       Other           Total
                                        --------------------------------------------------------------
                                                             (Dollars In Thousands)
<S>                                     <C>                 <C>                <C>             <C>
Balance, January 1, 2002                $     990           $  2,163           $   761         $ 3,914
    Additions                                  --                 28                --              28
    Payments                                 (451)              (800)             (281)         (1,532)
                                        --------------------------------------------------------------
Balance, September 28, 2002             $     539           $  1,391           $   480         $ 2,410
                                        ==============================================================
</TABLE>


                                      F-10
<PAGE>

                     Cluett American Corp. and Subsidiaries

       Notes to Consolidated Financial Statements (Unaudited) (continued)

9. Segment Data

      The Company identifies its reportable segments based on the segments'
product offerings. As a result of the Company's June 13, 2000, decision to
discontinue the shirt group operations and license the ARROW tradename, the
composition of the Company's reportable segments changed. Subsequent to June 13,
2000, the Company conducted its business through two principal segments: the
Sock Group and the Licensing Group. The financial results associated with Latin
America, Apparel On-Line LLC, Cluett American Receivables LLC and the U.S.
Retail division are referred to collectively as "All Other". Segment data
disclosures for the thirteen and thirty-nine weeks ended September 28, 2002 and
September 29, 2001, are as follows.

<TABLE>
<CAPTION>
                                                           Thirteen weeks ended                Thirty-nine weeks ended
                                                     September 28,       September 29,     September 28,    September 29,
                                                          2002             2001               2002                2001
                                                    ---------------------------------------------------------------------
                                                                           (Dollars In Thousands)
<S>                            <C>                  <C>                 <C>                 <C>                 <C>
Net sales
                               Sock                 $  41,793           $  43,070           $ 119,407           $ 124,632
                               Licensing                3,304               3,600               9,833               9,890
                               All Other                  990                 692               2,791               1,782
                               Intersegment              (604)               (510)             (1,562)             (1,144)
                                                    ---------           ---------           ---------           ---------
                                                    $  45,483           $  46,852           $ 130,469           $ 135,160
                                                    =========           =========           =========           =========

Operating income (loss)
                               Sock                 $   1,193           $   3,963           $   6,415           $  13,822
                               Licensing                2,467               2,790               6,909               7,416
                               All Other                  (82)               (154)               (324)               (363)
                                                    ---------           ---------           ---------           ---------
                                                    $   3,578           $   6,599           $  13,000           $  20,875
                                                    =========           =========           =========           =========

Depreciation expense
                               Sock                 $   1,417           $   1,455           $   4,250           $   4,365
                               Licensing                   27                  33                  80                  80
                               All Other                   66                  99                 299                 288
                                                   ----------           ---------           ---------           ---------
                                                    $   1,510           $   1,587           $   4,629           $   4,733
                                                    =========           =========           =========           =========

Identifiable assets
                               Sock                 $  96,994           $ 100,540           $  96,994           $ 100,540
                               Licensing                1,962               2,985               1,962               2,985
                               All Other                1,466               1,639               1,466               1,639
                                                    ---------           ---------           ---------           ---------
                                                    $ 100,422           $ 105,164           $ 100,422           $ 105,164
                                                    =========           =========           =========           =========
</TABLE>


                                      F-11
<PAGE>

                     Cluett American Corp. and Subsidiaries

       Notes to Consolidated Financial Statements (Unaudited) (continued)

9. Segment Data (Continued)

Reconciliation of Reportable Segments Net sales, Operating income, Depreciation
and amortization, and Identifiable assets

<TABLE>
<CAPTION>
                                                               Thirteen weeks ended              Thirty-nine weeks ended
                                                       September 28,       September 29,      September 28,       September 29,
                                                           2002                2001                2002               2001
                                                       ------------------------------------------------------------------------
                                                                                   (Dollars In Thousands)
<S>                                                     <C>                 <C>                 <C>                 <C>
Net sales
    Total net sales for reportable segments             $  45,097           $  46,670           $ 129,240           $ 134,522
    Other net sales                                         1,264                 936               3,612               2,563
    Elimination of intersegment net sales                    (604)               (510)             (1,562)             (1,144)
                                                        ---------           ---------           ---------           ---------
    Total consolidated net sales                        $  45,757           $  47,096           $ 131,290           $ 135,941
                                                        =========           =========           =========           ========

Operating income (loss)
    Total operating income for reportable
      segments                                          $   3,660           $   6,753           $  13,324            $ 21,238
    Other operating loss                                      (82)               (154)               (324)               (363)
    Unallocated amounts:
         Corporate (expense)/income before pension
         income                                               364                (379)                  8              (1,174)
         Pension income                                        --                 600                 250               1,800
    Restructuring charges                                     (18)                 --                 (28)                 --
                                                        ---------           ---------           ---------           ---------
    Total operating income                              $   3,924           $   6,820           $  13,230           $  21,501
                                                        =========           =========           =========           =========

Depreciation and amortization
    Total depreciation for reportable segments          $   1,444           $   1,488           $   4,330           $   4,445
    Other                                                      73                 106                 320                 295
    Amortization                                              475                 450               1,400               1,346
                                                        ---------           ---------           ---------           ---------
    Total depreciation and amortization                 $   1,992           $   2,044           $   6,050           $   6,086
                                                        =========           =========           =========           =========

Identifiable assets
    Total assets for reportable segments                $  98,956           $ 103,525           $  98,956           $ 103,525
    Other assets                                            1,466               1,639               1,466               1,639
    Net assets of discontinued operations                   7,064               9,659               7,064               9,659
    Unallocated amounts:
         Deferred finance costs                             7,711               8,757               7,711               8,757
         Pension assets                                    27,453              29,345              27,453              29,345
         Other unallocated amounts                          1,537               5,209               1,537               5,209
                                                        ---------           ---------           ---------           ---------
    Consolidated total                                  $ 144,187           $ 158,134           $ 144,187           $ 158,134
                                                        =========           =========           =========           =========
</TABLE>


                                      F-12
<PAGE>

                     Cluett American Corp. and Subsidiaries

       Notes to Consolidated Financial Statements (Unaudited) (continued)

10. Guarantor Subsidiaries

      The Company's payment obligations under the Senior Credit Facility and the
Senior Subordinated Notes (the "Notes") are fully and unconditionally guaranteed
on a joint and several basis by its current domestic subsidiaries, principally:
Cluett Peabody & Co., Inc., Gold Toe Brands, Inc., Apparel On-Line LLC, Great
American Knitting Mills, Inc., Consumer Direct Corporation and U.S. Retail
division (collectively the "Guarantor Subsidiaries"). Each of the Guarantor
Subsidiaries is a direct or indirect wholly-owned subsidiary of the Company. The
Company's payment obligations under the Notes are not guaranteed by the
remaining subsidiaries: Bidermann Womenswear Corp. (formerly Ralph Lauren
Womenswear Inc.), Cluett Peabody Canada, Inc., Arrow de Mexico S.A. de C.V.,
Arrow Inter-America & Co., Ltd. and Cluett American Receivables, LLC
(collectively the "Non-Guarantor Subsidiaries"). The obligations of each
Guarantor Subsidiary under its guarantee of the Notes are subordinated to such
subsidiary's obligations under its guarantee of the Senior Credit Facility.

      The Company has no independent assets or operations, the guarantees are
full and unconditional and joint and several, and any subsidiaries of the
Company other than the subsidiary guarantors are minor.


                                      F-13
<PAGE>

                     Cluett American Corp. and Subsidiaries

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

Overview

      The Company was organized in 1982 and primarily designs, manufactures and
markets socks in the United States, as well as licenses its proprietary
trademarks and trade names domestically and internationally. Based on net sales,
the Company believes it is one of the leading designers, manufacturers and
marketers of men's socks in the United States and has a significant market
presence in women's and children's socks. While the Company serves many channels
of distribution, its primary focus, historically, has been in department and
national chain store retailers. Today, the Company continues to build new
distribution, with particular focus on mass merchandisers that account for more
than half of all consumer sock purchases. The Company believes its core product
offering, GOLD TOE socks, provides classic and contemporary styles at price
points that represent exceptional value and appeal to a broad consumer base.
This broad appeal has successfully been captured in brand extensions, AURO, a
GOLD TOE brand; ALL PRO, a GOLD TOE brand; and GOLD TOE GEAR to reach an even
larger percentage of sock consumers. The Company owns numerous trademarks,
including GOLD TOE, SILVER TOE, ARROW and its related trade names such as DOVER,
TOURNAMENT, LADY ARROW, FAIRFIELD BY ARROW and FRIDAY'S BY CLUETT, which it
regards as valuable assets. Because of the high brand recognition, the Company
is able to license the various trademarks to apparel manufacturers and
distributors worldwide. The Company has 38 licensees in various countries, which
market, manufacture and sell apparel and non-apparel products bearing the ARROW
trademark in various channels of distribution.

Critical Accounting Policies

      Management's Discussion and Analysis of Financial Condition and Results of
Operations discusses the Company's consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the 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. Management bases its estimates and
judgments on historical experience and on various other factors that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Management evaluates its
estimates and judgments on an on-going basis. Actual results may differ from
these estimates under different assumptions or conditions.

      The Company's critical accounting policies have not changed from those
disclosed in Management's Discussion and Analysis of Financial Condition and
Results of Operations in the 2001 Annual Report on Form 10-K.

Discontinued Operations

      On June 13, 2000, Phillips-Van Heusen Corporation, ("PVH"), and the
Company announced an agreement (the "Agreement") for PVH to license the ARROW
brand for men's and boys' dress shirts, sports shirts (including knit, woven and
all forms of fleece), pants, shorts and sweaters ("Licensed Product") in the
United States. In addition, PVH and the Company agreed in principle for PVH to
acquire the stock of Cluett Designer Group, Inc. ("CDG"), the licensee for
Kenneth Cole dress shirts. In conjunction with the Agreement, the Company
approved a plan to discontinue the Company's shirt group segment's manufacturing
and distribution operations.

      On July 24, 2000, the transactions contemplated by the Agreement,
including the Purchase and Sale Agreement among Cluett, Peabody & Co., Inc.
("CP"), Cluett, Peabody Canada, Inc. ("CP Canada"), Arrow Factory Stores Inc.
("AFS"), CDG, Consumer Direct Corporation ("CDC"), Cluett, Peabody Holding Corp.
("Holding"), and PVH, (the "Purchase and Sale Agreement") and the Share Purchase
Agreement among CP, CDG, Bidermann Tailored Clothing Inc. ("BTC"), and PVH (the
"Share Purchase Agreement") were closed. Each of the parties to the Purchase and
Sale Agreement and the Share Purchase Agreement other than PVH and CDG is, and
prior to the closing CDG was, a wholly owned subsidiary of the Company.


                                        4
<PAGE>

                     Cluett American Corp. and Subsidiaries

      Pursuant to the Purchase and Sale Agreement, (i) all of the outstanding
shares of capital stock of C.A.T. Industrial S.A. de C.V., ("C.A.T") a
corporation organized under the laws of Honduras, were sold to PVH by CP, AFS,
CDG, CDC and Holding, (ii) PVH purchased all of CP's and AFS's right, title and
interest in and to certain of the other assets (principally inventory) of CP and
AFS used primarily by CP and AFS in their ARROW label and private label men's
and boys' dress and sport shirt businesses and their Arrow factory outlet
operations in the United States and (iii) PVH purchased all of CP Canada's
right, title and interest in and to ARROW label dress and sport shirt inventory
used in CP Canada's United States "Career Apparel" business. Pursuant to the
Share Purchase Agreement, all of the outstanding shares of capital stock of CDG
were sold by CP and BTC to PVH.

      The aggregate purchase price paid by PVH pursuant to the Purchase and Sale
Agreement and the Share Purchase Agreement for the stock and assets referred to
above was approximately $51.2 million in cash plus the assumption of $2.1
million of debt related to C.A.T., calculated as set forth in, and subject to
adjustment pursuant to, Article 3 of each of the Purchase and Sale Agreement and
the Share Purchase Agreement.

      Pursuant to the Purchase and Sale Agreement, the Trademark License
Agreement ("PVH Trademark License Agreement"), dated July 24, 2000, by and
between Cluett Peabody Resources Corporation ("CPR"), a Delaware corporation and
a wholly-owned subsidiary of the Company, CP and PVH was executed and delivered.
Pursuant to the PVH Trademark License Agreement, CP granted to PVH an exclusive
license to use trademarks related to CP's ARROW clothing line in the United
States and its territories and possessions in connection with its manufacture,
advertising, marketing, promotion, distribution, offer to sell and the sale of
men's and boys' Licensed Product in certain specified channels of trade,
including the Internet. CP also granted to PVH the right to operate most of the
websites that use URLs that incorporate the ARROW trademarks. The PVH Trademark
License Agreement provides for a $5.0 million minimum guaranteed annual royalty
fee to be paid to CP, subject to cost of living adjustments. The initial term of
the license expires on June 30, 2007; however, PVH has the option to renew the
PVH Trademark License Agreement for two additional five-year terms, provided it
meets certain conditions.

      The Company used $39.3 million of the net proceeds from the Purchase and
Sale Agreement, the Share Purchase Agreement and the PVH Trademark License
Agreement (collectively referred to as the "Transactions") to repay outstanding
borrowings under its Senior Credit Facility and CP Canada's Credit Facility.

      On January 29, 2001, and pursuant to an Asset Purchase Agreement, CP
Canada sold certain assets (principally inventory, personal property, and
manufacturing equipment) used primarily by CP Canada's ARROW labeled apparel
bearing the name or logo of other Corporate entities or other organizations
("Career Apparel") businesses in Canada, apparel sold in specialty golf stores
and golf pro shops ("Golf Apparel") and FRIDAY'S BY CLUETT businesses in Canada,
the United States and Puerto Rico, to The John Forsyth Shirt Company, LTD.
("Forsyth").

      Pursuant to a Trademark License Agreement ("Forsyth Trademark License
Agreement"), dated as of January 29, 2001, CP and CP Canada granted to Forsyth
an exclusive license to use trademarks related to the ARROW business in Canada
and the FRIDAY'S BY CLUETT and golf apparel business in Canada, the United
States and Puerto Rico. The Forsyth Trademark License Agreement provides for a
1.0 million Canadian dollar minimum guaranteed annual royalty fee to be paid to
CP, subject to the Consumer Price Index. The license expires on December 31,
2005; however, Forsyth has the option to renew for two additional five-year
terms, provided it meets certain conditions.

      The aggregate purchase price paid by Forsyth pursuant to the Asset
Purchase Agreement was approximately $8.0 million, and subject to adjustment
pursuant to Section 4 of the Asset Purchase Agreement.

      The Company used $5.4 million of the net proceeds from the Asset Purchase
Agreement to repay outstanding borrowings under CP Canada's loan facility.

      The Company has completed the majority of the disposition of the Shirt
Group segment's manufacturing and distribution operations. Accordingly, the
Company's consolidated financial statements reflect the shirt segment as a
discontinued operation. Consequently, the Company's remaining businesses include
primarily the Sock and Licensing Groups.


                                       5
<PAGE>

                     Cluett American Corp. and Subsidiaries

      The Company has reflected the trade assets, trade liabilities and credit
facility paid off, and operations of the shirt segment as discontinued in the
accompanying consolidated financial statements. The net assets of the shirt
segment are classified as net assets of discontinued operations in the
accompanying balance sheet. As of September 28, 2002, the Company's disposition
of the shirt segment is complete, except for real estate held for sale and
sublease. These remaining net assets consist primarily of distribution
facilities located in Austell, Georgia, and Kitchener, Ontario, that are carried
at fair value (less costs to sell).

Results of Operations: Thirteen weeks ended September 28, 2002 vs. September 29,
2001

      The following table sets forth, for the periods indicated, statement of
operations data for the Company's continuing operations including the Sock
Group, the Licensing Group and all other (Latin America, Apparel On-Line LLC,
Cluett American Receivables LLC, U.S. Retail division and corporate overhead
charges) and excludes the Company's discontinued Shirt Group operation.

                                                         Thirteen weeks ended
                                                     September 28, September 29,
                                                         2002            2001
                                                     ---------------------------
                                                        (Dollars In Thousands)

      Net sales                                         $ 45,757       $ 47,096
      Gross profit                                        13,915         15,326
      Operating income from continuing operations          3,924          6,820
      Interest expense, net                                5,147          5,906
      Equity earnings in investments in joint ventures        36             --
      Income taxes                                           129            375
      Extraordinary gain, net of taxes                       (98)            --
      Income (loss) from continuing operations          $ (1,414)      $    539

Net sales: For the thirteen weeks ended September 28, 2002, net sales decreased
$1.3 million to $45.8 million compared to $47.1 million for the thirteen weeks
ended September 29, 2001. Net sales of the Sock Group declined $1.3 million
while the Licensing Group's decreased $300,000 and the U.S. Retail division's
increased $282,000.

Net sales for the Sock Group decreased $1.3 million to $41.8 million in 2002
from $43.1 million in 2001. The launches of AURO, a GOLD TOE brand; ALL PRO, a
GOLD TOE brand; and continued placement of GOLD TOE GEAR and IZOD were offset by
declines in Gold Toe sales and planned exits of certain businesses. General
retail softness in the department store, national chain and off-price channels
resulted in volume declines in the Gold Toe brand business. During the fourth
quarter 2001 and first quarter 2002, the Sock Group re-evaluated their private
label programs and decided to exit businesses that did not meet minimum criteria
or provide a strategic fit to their branded businesses.

The Licensing Group's net sales decreased $300,000 to $3.3 million in 2002 from
$3.6 million in 2001 primarily due to reduced revenue from the domestic
loungewear/underwear licensee. The U.S. Retail division's net sales increased
$282,000 due to the opening of five new stores, which began in March 2001.

Gross profit: For the thirteen weeks ended September 28, 2002, gross profit
decreased $1.4 million to $13.9 million compared to the 2001 quarter. The
decline was driven by the Sock Group's decrease of $1.3 million and the
Licensing Group's decrease of $300,000 offset by an increase in the U.S. Retail
division of $140,000.


                                       6
<PAGE>

                     Cluett American Corp. and Subsidiaries

As discussed in net sales above, the Sock Group launched new brands, AURO and
ALL PRO, which generated increased gross profit for the third quarter 2002;
however, this improvement is offset by the cost associated with the decision to
exit certain non-performing businesses. Additionally, in October 2001, the Sock
Group announced restructuring plans to optimize plant capacity and maximize
supply chain opportunities. The Company is phasing-out production at its Bally,
Pennsylvania facility and is relocating its knitting and finishing operations to
other company-owned or contract facilities. The Sock Group incurred plant
manufacturing inefficiencies in conjunction with this restructuring plan.

The decrease in the Licensing Group's revenue of $300,000 had no associated cost
of sales. The opening of new stores drove the increase in the U.S. Retail
division's gross profit.

Operating income from continuing operations: For the thirteen weeks ended
September 28, 2002, operating income from continuing operations declined $2.9
million to $3.9 million compared to $6.8 million for the thirteen weeks ended
September 29, 2001, due to the factors discussed above and an increase in
Selling, General and Administrative Expenses ("SG&A") of $1.5 million.

For the Sock Group, SG&A increased $1.5 million over the same period last year,
driven by advertising and sales promotion, expenses incurred with the increased
capacity at the leased distribution facility, and the write-off of the remaining
Kmart pre-petition receivable.

The Licensing Group's SG&A expenses remained flat quarter over quarter. The U.S.
Retail division's SG&A expenses increased $100,000 due to the opening of new
stores and corporate overhead expenses declined $100,000 due to $600,000 lower
income from the defined benefit pension plan offset by the $700,000 gain
realized on the sale of the discontinued Shirt manufacturing facility in Canada.

Interest expense, net: Interest expense decreased $800,000 for the third quarter
compared to the same quarter last year, due to lower prevailing interest rates.

Equity earnings in investments in joint ventures: For the thirteen weeks ended
September 28, 2002, equity earnings in investments in joint ventures increased
$36,000 driven by the joint venture agreement as discussed in Note 2 - Joint
Venture.

Extraordinary gain, net of taxes: Extraordinary gain, net of taxes decreased to
$98,000 due to the Sock Group's equity investment in the joint venture and
related to an adjustment to negative goodwill recorded in the first quarter of
2002 as discussed in Note 2 - Joint Venture.

Income (loss) from continuing operations: Income from continuing operations
decreased $1.9 million to a loss of $1.4 million for the thirteen weeks ended
September 28, 2002, compared to income of $539,000 in the thirteen weeks ended
September 29, 2001, due to the factors discussed above.


                                       7
<PAGE>

                     Cluett American Corp. and Subsidiaries

Results of Operations: Thirty-nine weeks ended September 28, 2002 vs. September
29, 2001

      The following table sets forth, for the periods indicated, statement of
operations data for the Company's continuing operations including the Sock
Group, the Licensing Group and all other (Latin America, Apparel On-Line LLC,
Cluett American Receivables LLC, U.S. Retail division and corporate overhead
charges) and excludes the Company's discontinued Shirt Group operation.

                                                         Thirty-nine weeks ended
                                                     September 28, September 29,
                                                         2002            2001
                                                     ---------------------------
                                                       (Dollars In Thousands)

      Net sales                                       $ 131,290      $135,941
      Gross profit                                       43,518        47,998
      Operating income from continuing operations        13,230        21,501
      Interest expense, net                              15,329        17,732
      Equity earnings in investments in joint ventures      466            --
      Income taxes                                          629         1,109
      Extraordinary gain, net of taxes                    1,742            --
      Income (loss) from continuing operations        $    (520)     $  2,660

Net sales: For the thirty-nine weeks ended September 28, 2002, net sales
decreased $4.6 million to $131.3 million compared to $135.9 million for the
thirty-nine weeks ended September 29, 2001. Net sales of the Sock Group declined
$5.2 million while the Licensing Group's decreased $100,000 and the U.S. Retail
division's increased $954,000.

Net sales in the Sock Group decreased $5.2 million to $119.4 million in 2002
from $124.6 million in 2001. An increase in Gold Toe Men's volume and the
launches of AURO, a GOLD TOE brand; ALL PRO, a GOLD TOE brand; and continued
placement of GOLD TOE GEAR and IZOD were offset by declines in Gold Toe Women's
and Children's business and planned exits of certain businesses. A weak economy
and retail price pressure arising from competitors "buy market share" strategy
led to year over year declines in the Gold Toe Women's wholesale business.
Nevertheless, retail performance was strong with Gold Toe Women's regaining
market share during the same period. Declines in Gold Toe Children's were due to
discontinuing tights and infants programs at certain retailers. During the
fourth quarter 2001 and first quarter 2002, the Sock Group re-evaluated their
private label programs and decided to exit businesses that did not meet minimum
criteria or provide a strategic fit to their branded businesses. For example,
following Kmart's bankruptcy filing and concerns over the need for significant
future investment in this relationship, the Sock Group decided to de-emphasize
and later discontinue this current business relationship.

The Licensing Group's net sales decreased $100,000 to $9.8 million in 2002 from
$9.9 million in 2001 primarily due to reduced revenue from the domestic
loungewear/underwear licensee. The U.S. Retail division's net sales increased
$954,000 due to the opening of five new stores, which began in March 2001.

Gross profit: For the thirty-nine weeks ended September 28, 2002, gross profit
decreased $4.5 million to $43.5 million compared to $48.0 million in 2001. The
decline was driven by the Sock Group's decrease of $4.9 million, the Licensing
Group's decrease of $100,000 and an increase in the U.S. Retail division of
$400,000.

The Sock Group's gross profit decrease of $4.9 million was driven by one-time
start-up costs associated with the launches of new businesses, the planned exit
of private label programs, higher allowances, and plant inefficiencies
associated with the manufacturing restructuring plan.

The launches of AURO, a GOLD TOE brand; ALL PRO, a GOLD TOE brand; and continued
placement of GOLD TOE GEAR and IZOD generated year over year gross profit;
however, not without incurring start-up cost.


                                       8
<PAGE>

                     Cluett American Corp. and Subsidiaries

As discussed in net sales above, the Sock Group decided to exit certain
non-performing businesses, and during 2002 implemented aggressive inventory
liquidation plans based on those decisions. Costs associated with the exit of
these businesses, including markdown allowances, repackaging and obsolescence
were $5.3 million.

Competition within the women's area of the department store channel continued to
intensify and competitors became increasingly aggressive on discount pricing and
retailer incentives in efforts to acquire market share. In response to increased
competition, Gold Toe Women's implemented new marketing programs and since the
fourth quarter 2001 has regained market share; however, not without incurring
additional costs. Retailer allowances in Gold Toe Women's exceeded those in the
prior year and were the primary driver of the Sock Group's increase in
allowances in the branded lines of business.

In October 2001, the Sock Group announced restructuring plans to optimize plant
capacity and maximize supply chain opportunities. The Company is phasing-out
production at its Bally, Pennsylvania facility and is relocating its knitting
and finishing operations to other company-owned or contract facilities. During
2002, the Sock Group incurred approximately $1.5 million of plant inefficiencies
associated with this manufacturing restructuring plan.

The decrease in the Licensing Group's revenue of $100,000 had no associated cost
of sales. The opening of new stores drove the increase in the U.S. Retail
division's gross profit.

Operating income from continuing operations: The Company's operating income from
continuing operations decreased $8.3 million to $13.2 million in 2002 from $21.5
million in 2001 due to the factors discussed above and an increase in Selling,
General and Administrative Expenses ("SG&A") of $3.8 million. SG&A increased
$2.5 million in the Sock Group, $450,000 in the Licensing Group, $400,000 in
corporate overhead and $480,000 in the U.S. Retail division.

For the Sock Group, increases in SG&A were driven by advertising and sales
promotion, higher royalties related to the launch of a new line of business and
a renewed licensing contract, expenses incurred with the increased capacity at
the leased distribution facility, bad debt expense related to Kmart,
professional fees associated with the acquisition of the joint venture and
consulting fees related to product line and SKU evaluation.

The Licensing Group's increase in SG&A was driven by market research and legal
fees associated with additional trademark applications.

The increase in corporate overhead was driven by $1.5 million lower income from
the defined benefit pension plan offset by the $700,000 gain realized on the
sale of the discontinued Shirt manufacturing facility in Canada. The U.S. Retail
division's increase in SG&A was due to the opening of new stores.

Interest expense, net: Interest expense decreased $2.4 million compared to the
same period last year, due to lower prevailing interest rates.

Equity earnings in investments in joint ventures: For the thirty-nine weeks
ended September 28, 2002, equity earnings in investments in joint ventures
increased $466,000 driven by the joint venture agreement as discussed in Note 2
- Joint Venture.

Extraordinary gain, net of taxes: Extraordinary gain, net of taxes increased to
$1.7 million due to the Sock Group's equity investment in the joint venture
related to negative goodwill in the first quarter of 2002 as discussed in Note 2
- Joint Venture.

Income (loss) from continuing operations: Income from continuing operations
decreased $3.2 million, due to the factors discussed above.


                                       9
<PAGE>

                     Cluett American Corp. and Subsidiaries

Liquidity and Capital Resources

      The Company broadly defines liquidity as its ability to generate
sufficient cash flow from operating activities to meet its obligations and
commitments. In addition, liquidity includes the ability to obtain appropriate
debt and equity financing and, to convert into cash those assets that are no
longer required to meet existing strategic and financial objectives. Therefore,
liquidity cannot be considered separately from capital resources that consist of
current or potentially available funds for use in achieving long range business
objectives and meeting debt service commitments.

      The Company's liquidity needs arise primarily from debt service and the
funding of working capital and capital expenditures. As of September 28, 2002,
the Company had outstanding $235.4 million of debt consisting of $125.0 million
in Senior Subordinated Notes (including the Parity Notes), a Senior Credit
Facility consisting of a $18.2 million term loan ("Term A"), a $43.1 million
term loan ("Term B"), a $17.5 million Tranche C loan, and $31.6 million in
revolving credit facility borrowings. During the thirty-nine weeks ended
September 28, 2002, the Company had an increase in revolving credit facility
borrowings of $4.9 million and repaid $3.5 million in term loans and notes
payable.

      Net availability under the revolver at September 28, 2002, was $17.2
million in addition to cash and cash equivalents of $1.1 million. Refer to Note
1 - Basis of Presentation and Financing Sources and Cash Flows for further
information regarding the Company's Liquidity and Capital Resources.

Debt Service

      Principal and interest payments under the Company's debt agreements
represent significant liquidity requirements for the Company. Aggregate
principal payments on the Company's indebtedness have been classified as current
liabilities.

      The Company's senior subordinated notes mature in 2008 and require
semi-annual interest payments at an annual rate of 10 1/8%. The Term A and B
loans mature in 2004 and 2005, respectively, and require quarterly principal
payments and quarterly interest payments at floating rates based upon the
interest rate option elected by the Company. The revolving credit facility
expires at May 2004, and requires quarterly or monthly interest payments, based
on maturity date, at floating rates based upon the interest rate option elected
by the Company. Borrowings under Tranche C loan mature on May 18, 2004, and are
guaranteed by Vestar Capital Partners III, L.P. ("Vestar"). Cash paid for
interest for the quarter ending September 28, 2002, was $809,000. Interest
expense for 2002 is expected to be $19.5 million, including $1.9 million of
non-cash amortization of deferred debt issuance costs.

Covenant Restrictions

      The Senior Credit Facility contains a number of covenants that, among
other things, restricts the ability of the Company and its subsidiaries, other
than pursuant to specified exceptions, to dispose of assets, incur additional
indebtedness, incur guarantee obligations, repay other indebtedness, pay
dividends, create liens on assets, enter into leases, make investments, loans or
advances, make acquisitions, engage in mergers or consolidations, make capital
expenditures, enter into sale and leaseback transactions, change the nature of
their business or engage in certain transactions with subsidiaries and
affiliates and otherwise restrict corporate activities. In addition, under the
Senior Credit Facility the Company is required to comply with specified
financial ratios and tests, including minimum fixed charge coverage and interest
coverage ratios and maximum leverage ratios, including a senior leverage ratio
and a total leverage ratio and a minimum EBITDA test, each of which is tested as
of the last day of each fiscal quarter of the Company and its subsidiaries. The
amendments in May 1998, December 1998, March 1999, September 1999, March 2000,
June 2000, March 2001, April 2002 and November 2002 revised the original
covenants.


                                       10
<PAGE>

                     Cluett American Corp. and Subsidiaries

      As discussed in Note 1 - Basis of Presentation, of the unaudited
consolidated financial statements, the Company was not in compliance with
certain financial covenants of its Senior Credit Facility as of September 28,
2002. On November 13, 2002, the Company obtained waivers of certain financial
covenants under the facility for the periods ended September 28, 2002 and
December 31, 2002, and the facility was amended to adjust certain financial
ratios and tests, interest periods, limitations on asset sales and increase the
applicable interest rates on the facility. The amendment also limits outstanding
Senior Funded Indebtedness to $48.0 million on March 31, 2003. Senior Funded
Indebtedness means, as of any date, all Funded Indebtedness (net of cash and
cash equivalents) of the Company on a consolidated basis on such date, excluding
(i) Subordinated Indebtedness and (ii) the Tranche C Obligations. Outstanding
Senior Funded Indebtedness was $93.1 million as of September 28, 2002. These
conditions have required the Company to include a "going concern" qualification
in the consolidated financial statements and footnotes of the Company, for the
thirty-nine week period ended September 28, 2002.

      In order to remain in compliance with the financial covenants included in
the Company's Senior Credit Facility after December 31, 2002 and have adequate
liquidity over the next twelve months, the Company intends to seek to reduce its
indebtedness under its Senior Credit Facility by March 31, 2003. This includes
exploring alternative financing and the sale of certain idle and non-core assets
of the Company. There can be no assurances as to the success or timing of such
sales or the proceeds that the Company could realize therefrom.

Cash Flows

      Cash and cash equivalents decreased $200,000 to $1.1 million at September
28, 2002, from $1.3 million at December 31, 2001, primarily as a result of $3.6
million, $1.2 million and $616,000 provided by operating activities,
discontinued operations and financing activities, respectively, offset by $5.6
million use in investing activities. Net cash provided by operating activities
resulted from the Company's $520,000 loss offset by $3.8 million in non-cash
depreciation, amortization, equity earnings and extraordinary gain of equity
investee plus a $713,000 gain on the sale of property and an increase in
operating assets and liabilities of $943,000. The $1.2 million provided by
discontinued operations was the result of selling the discontinued Shirt
manufacturing facility in Canada. Net cash provided by financing activities
resulted from net borrowings under the Company's line of credit agreement of
$4.9 million offset by payments on long-term debt of $3.5 million and deferred
financing fees for the nine month period of $804,000. Net cash used in investing
activites is a result of $3.0 million capital expenditures and $2.6 million
investment in the joint venture discussed in Note 2 - Joint Venture.

      The Company had EBITDA As Defined from continuing operations of $18.4
million, of which $1.4 million was non-cash pension income, earnings of equity
investees and gain on disposal of assets; $9.3 million was paid for cash
interest expense (net of interest income from overnight investments); $2.6
million was used to fund the joint venture; $3.0 million was invested in capital
expenditures; $2.2 million was used by working capital, including accounts
receivable, prepaid expenses, inventory and accounts payable; $200,000 was used
to pay discontinued operations and restructuring expenditures; $500,000 was paid
for taxes and net financing activities provided $600,000.

      EBITDA, as defined ("EBITDA As Defined") is defined as operating income
before depreciation and amortization, interest expense, taxes and restructuring
and impairment charges plus equity earnings in investments in joint ventures.
EBITDA As Defined should not be considered in isolation or as a substitute for
net income, certain cash flows from operating activities and other income or
cash flow statement data prepared in accordance with accounting principles
generally accepted in the United States of America or as a measure of
profitability or liquidity. EBITDA As Defined is not necessarily comparable to
other similarly titled captions of other companies due to differences in methods
of calculation.

Capital Expenditures

      Capital spending for the thirty-nine week period ended September 28, 2002,
was $3.0 million and related primarily to general improvements to the Sock
Group's leased distribution center and upgrades to the Sock Group's AS400
operating systems in order to provide additional data processing capacity. Total
capital spending for 2002 is expected to be in the $4.0 million range and
relates primarily to the items described above.


                                       11
<PAGE>

                     Cluett American Corp. and Subsidiaries

Financing Sources and Cash Flows

      At September 28, 2002, the Company had $1.1 million in cash and additional
availability of $17.2 million under the revolving credit facilities included in
the Senior Credit facility, after consideration of $1.0 million of stand-by
letters of credit and $164,000 of trade letters of credit.

      Historically, the Company's cash on hand, together with cash flow
generated from operations and its ongoing efforts to optimize the Company's
asset base, short-term borrowings for seasonal working capital, and permitted
borrowings under the senior credit facility have been sufficient to enable the
Company to satisfy cash requirements for operating, investing and financing
activities, including debt service.

      As discussed in Note 1 - Basis of Presentation, of the unaudited
consolidated financial statements, the Company was not in compliance with
certain financial covenants of its Senior Credit Facility as of September 28,
2002. On November 13, 2002, the Company obtained waivers of certain financial
covenants under the facility for the periods ended September 28, 2002 and
December 31, 2002, and the facility was amended to adjust certain financial
ratios and tests, interest periods, limitations on asset sales and increase the
applicable interest rates on the facility. The amendment also limits outstanding
Senior Funded Indebtedness to $48.0 million on March 31, 2003. Senior Funded
Indebtedness means, as of any date, all Funded Indebtedness (net of cash and
cash equivalents) of the Company on a consolidated basis on such date, excluding
(i) Subordinated Indebtedness and (ii) the Tranche C Obligations. Outstanding
Senior Funded Indebtedness was $93.1 million as of September 28, 2002. These
conditions have required the Company to include a "going concern" qualification
in the consolidated financial statements and footnotes of the Company, for the
thirty-nine week period ended September 28, 2002.

      In order to remain in compliance with the financial covenants included in
the Company's Senior Credit Facility after December 31, 2002 and have adequate
liquidity over the next twelve months, the Company intends to seek to reduce its
indebtedness under its Senior Credit Facility by March 31, 2003. This includes
exploring alternative financing and the sale of certain idle and non-core assets
of the Company. There can be no assurances as to the success or timing of such
sales or the proceeds that the Company could realize therefrom.

      On January 7, 2002, the Company entered into a joint venture agreement
with Administradora Gaco, S.A. de C.V. and Inversiones Gaco, S.A. de C.V.
investing $2.6 million for a 50% share of outstanding capital stock of
Inversiones Gaco, S. A. de C. V. The joint venture owns a leading manufacturer
and distributor of men's, women's and children's socks in Mexico with the
largest Mexican brand, CANNON. By moving labor-intensive finishing operations to
a lower cost environment, management believes it will recognize significant
annual cost savings.

Seasonality

      The industries in which the Company operates are cyclical. Purchases of
apparel tend to decline during recessionary periods and also may decline at
other times. A recession in the general economy or uncertainties regarding
future economic prospects could affect consumer-spending habits and could have
an adverse effect on the Company's results of operations. Weak sales and
resulting markdown requests from customers could also have a material adverse
effect on the Company's business, results of operations and financial condition.

      The Company's business is seasonal, with higher sales and income during
its third and fourth quarters. The third and fourth quarters coincide with the
Company's two peak retail selling seasons: (i) the first season runs from the
start of the back-to-school and fall selling seasons, beginning in August and
continuing through September; and (ii) the second season runs from the start of
the Christmas selling season beginning with the weekend following Thanksgiving
and continuing through the week after Christmas.


                                       12
<PAGE>
                     Cluett American Corp. and Subsidiaries

Cautionary Statement Regarding Forward-Looking Statements

      The Quarterly Report on Form 10-Q contains certain statements which
describe the Company's beliefs concerning future business conditions and the
outlook for the Company based on currently available information. The preceding
Management's Discussion and Analysis contains forward-looking statements
regarding the Company's performance, liquidity and the adequacy of its capital
resources. These forward-looking statements are subject to risks, uncertainties
and other factors, which could cause the Company's actual results, performance
or achievement to differ materially from those expressed in, or implied by these
statements. These risks, uncertainties and other factors include, but are not
limited to, the following: (i) the financial strength of the retail industry and
the level of consumer spending for apparel, (ii) the Company's ability to
develop, market and sell its products, (iii) increased competition from other
manufacturers of socks, (iv) general economic conditions, (v) hiring and
retaining effective team members, and (vi) sourcing merchandise from domestic
and international vendors. Therefore, while management believes that there is a
reasonable basis for the forward-looking statements, undue reliance should not
be placed on those statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

      The Company has market risk exposure from changes in interest rates and
foreign currency exchange rates. The Company operates under a senior credit
facility at variable interest rates, primarily LIBOR and base rates. Interest
expense is primarily affected by the general level of U.S. interest rates, LIBOR
and base rates. Currently, the Company does not engage in any derivative type
instruments in order to hedge against interest rates and foreign currency
exchange rate fluctuations. However, the Company feels it is limited in its
exposure of foreign currency exchange rate changes as inventory purchase
contracts are denominated in U.S. Dollars.

      The Company evaluated its market risks (floating interest rate, fixed
interest rate and currency risks) at the fiscal year ended December 31, 2001,
which is disclosed in the Company's annual report filed on Form 10-K. There has
not been any material change (adverse or favorable) in the risk factors
identified since the evaluation performed by the Company at December 31, 2001.

Item 4. Controls and Procedures

      Based on their evaluation, as of a date within 90 days of the filing of
this Form 10-Q, the Company's Chief Executive Officer and Chief Financial
Officer have concluded the Company's disclosure controls and procedures (as
defined in the rules of the Securities Exchange Act of 1934) are effective.
There have been no significant changes in internal controls or in other factors
that could significantly affect these controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.


                                       13
<PAGE>

                     Cluett American Corp. and Subsidiaries

                           Part II - OTHER INFORMATION

Item 1. Legal Proceedings

      From time to time, the Company is involved in various legal proceedings
arising from the ordinary course of its business operations, such as personal
injury claims, employment matters and contractual disputes. The Company believes
that its potential liability with respect to proceedings currently pending is
not material in the aggregate to the Company's consolidated financial position
or results of operations.

Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders during the quarter
ended September 28, 2002.

Item 6. Exhibits and Reports on Form 8-K

(a)   (1) Financial Statements

          Included in Part I, Item 1

      (2) List of Exhibits

(b)   No report was filed on Form 8-K during the period ended September 28,
      2002.

(c)   Exhibits: See (a)(3) above for a listing of the exhibits included as part
      of this report.

(d)   Financial Statement Schedules: See (a)(1) and (a)(2) above for a listing
      of the financial statements and schedules submitted as part of this
      report.

EXHIBIT
   NO.                  DESCRIPTION OF EXHIBIT
-------                 ----------------------
   2.1        Third Amended plan of Reorganization of Cluett American Corp. and
              Cluett American Investment Corp. (incorporated by reference to
              Exhibit 2.1 to the Company's Registration Statement on Form S-4
              (Reg. No. 333-58059) filed on June 30, 1998).

   2.2        Subscription Agreement dated as of March 30, 1998 among Bidermann
              Industries U.S.A., Inc., Vestar Capital Partners III, L.P. and
              Alvarez & Marsal, Inc. (incorporated by reference to Exhibit 2.2
              to the Company's Registration Statement on Form S-4 (Reg. No.
              333-58059) filed on June 30, 1998).

   2.3        Stockholders' Agreement dated as of May 18, 1998 among Cluett
              American Investment Corp., Vestar Capital Partners III, L.P., A&M
              Investment Associates #7, LLC, the Co-Investors named therein, the
              Original Equity Holders named therein and the Management Investors
              named therein (incorporated by reference to Exhibit 2.3 to the
              Company's Registration Statement on Form S-4 (Reg. No. 333-58059)
              filed on June 30, 1998).

   2.4        Joinder Agreement dated as of June 30, 1998 among Cluett American
              Investment Corp., Vestar Capital Partners III, L.P. and each other
              signatory thereto (an "Additional Stockholder") (incorporated by
              reference to Exhibit 2.4 to the Company's Registration Statement
              on Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).

   3.1        Restated Certificate of Incorporation of Cluett American Corp.
              (incorporated by reference to Exhibit 3.1 to the Company's
              Registration Statement on Form S-4 (Reg. No. 333-58059) filed on
              June 30, 1998).


                                       14
<PAGE>

                     Cluett American Corp. and Subsidiaries

   3.2        Bylaws of Cluett American Corp. (incorporated by reference to
              Exhibit 3.2 to the Company's Registration Statement on Form S-4
              (Reg. No. 333-58059) filed on June 30, 1998).

   4.1        Indenture between Cluett American Corp. and The Bank of New York,
              as Trustee (incorporated by reference to Exhibit 4.1 to the
              Company's Registration Statement on Form S-4 (Reg. No. 333-58059)
              filed on June 30, 1998).

   4.2        Exchange Debenture Indenture between Cluett American Corp. and The
              Bank of New York, as Trustee (incorporated by reference to Exhibit
              4.2 to the Company's Registration Statement on Form S-4 (Reg. No.
              333-58059) filed on June 30, 1998).

   4.3        Certificate of Designations of the 121/2% Senior Exchangeable
              Preferred Stock Due 2010 (incorporated by reference to Exhibit 4.3
              to the Company's Registration Statement on Form S-4 (Reg. No.
              333-58059) filed on June 30, 1998).

   4.4        Form of 10 1/8% Senior Subordinated Notes Due 2008 (incorporated
              by reference to Exhibit 4.4 to the Company's Registration
              Statement on Form S-4 (Reg. No. 333-58059) filed on June 30,
              1998).

   4.5        Form of 10 1/8% Series B Senior Subordinated Notes Due 2008
              (incorporated by reference to Exhibit 4.5 to the Company's
              Registration Statement on Form S-4 (Reg. No. 333-58059) filed on
              June 30, 1998).

   4.6        Form of 12 1/2% Senior Exchangeable Preferred Stock Due 2010
              (incorporated by reference to Exhibit 4.6 to the Company's
              Registration Statement on Form S-4 (Reg. No. 333-58059) filed on
              June 30, 1998).

   4.7        Form of 12 1/2% Series B Senior Exchangeable Preferred Stock Due
              2010 (incorporated by reference to Exhibit 4.7 to the Company's
              Registration Statement on Form S-4 (Reg. No. 333-58059) filed on
              June 30, 1998).

   4.8        Note Registration Rights Agreement dated May 18, 1998 among Cluett
              American Corp., NationsBanc Montgomery Securities LLC and NatWest
              Capital Markets Limited (incorporated by reference to Exhibit 4.8
              to the Company's Registration Statement on Form S-4 (Reg. No.
              333-58059) filed on June 30, 1998).

   4.9        Preferred Stock Registration Rights Agreement dated May 18, 1998
              among Cluett American Corp., NationsBanc Montgomery Securities LLC
              and NatWest Capital Markets Limited (incorporated by reference to
              Exhibit 4.9 to the Company's Registration Statement on Form S-4
              (Reg. No. 333-58059) filed on June 30, 1998).

  10.1        $160,000,000 Credit Agreement dated as of May 18, 1998 among
              Cluett American Corp., as the Borrower, NationsBank, N.A., as
              Administrative Agent and Collateral Agent, NationsBanc Montgomery
              Securities LLC, as Arranger and Syndication Agent, and lenders
              (incorporated by reference to Exhibit 10.1 to the Company's
              Registration Statement on Form S-4 (Reg. No. 333-58059) filed on
              June 30, 1998).

  10.2        First Amendment to the Credit Agreement and Assignment dated May
              27, 1998 by and among Cluett American Corp., Cluett American
              Investment Corp., Cluett American Group, Inc. and certain
              subsidiaries, the Existing Lenders, New Lenders, and agents
              (incorporated by reference to Exhibit 10.2 to the Company's
              Registration Statement on Form S-4 (Reg. No. 333-58059) filed on
              June 30, 1998).

  10.2.1      Second Amendment to the Credit Agreement and Assignment dated as
              December 18, 1998 by and among Cluett American Corp., Cluett
              American Investment Corp., Cluett American Group, Inc. and certain
              subsidiaries, the Existing Lenders, New Lenders, and agents
              (incorporated by reference to Exhibit 10.2.1 to the Company's
              Annual Report on Form 10-K (Reg. No. 333-58059) filed on March 29,
              1999).


                                       15
<PAGE>

                     Cluett American Corp. and Subsidiaries

  10.2.2      Third Amendment to the Credit Agreement and Assignment dated as of
              March 19, 1999 by and among Cluett American Corp., Cluett American
              Investment Corp., Cluett American Group, Inc. and certain
              subsidiaries, the Existing Lenders, New Lenders, and agents
              (incorporated by reference to Exhibit 10.2.2 to the Company's
              Annual Report on Form 10-K (Reg. No. 333-58059) filed on March 29,
              1999).

  10.2.3      Waiver to the Credit Agreement and Assignment dated July 28, 1999
              by and among Cluett American Corp., Cluett American Investment
              Corp., Cluett American Group, Inc. and certain subsidiaries, the
              Existing Lenders, New Lenders, and agents (incorporated by
              reference to Exhibit 10.2.3 to the Company's Annual Report on Form
              10-K (Reg No. 333-58059) filed on March 29, 1999).

  10.2.4      Fourth Amendment to the Credit Agreement and Assignment dated
              September 30, 1999 by and among Cluett American Corp., Cluett
              American Investment Corp., Cluett American Group, Inc. and certain
              subsidiaries, the Existing Lender, New Lender, and agents
              (incorporated by reference to Exhibit 10.2.4 to the Company's
              Quarterly Report on Form 10-Q (Reg No. 333-58059) filed on
              November 16, 1999).

  10.2.5      Investment and Deposit Agreement between Vestar Capital Partners
              and Bank of America dated September 30, 1999 (incorporated by
              reference to Exhibit 10.2.5 to the Company's Quarterly Report on
              Form 10-Q (Reg No. 333-58059) filed on November 16, 1999).

  10.2.6      $3.0 million Credit Agreement dated as of November 9, 1999 among
              Cluett American Corp, as the borrower, Bank of America, N.A. and
              Vestar Capital Partners III, L.P., as guarantor (incorporated by
              reference to Exhibit 10.2.6 to the Company's Quarterly Report on
              Form 10-Q (Reg No. 333-58059) filed on November 16, 1999).

  10.2.7      $7.5 million Amended and Restated Credit Agreement dated as of
              February 17, 2000, among Cluett American Corp, as the borrower,
              Bank of America, N.A. and Vestar Capital Partners III, L.P., as
              guarantor (incorporated by reference to Exhibit 10.2.7 to the
              Company's Annual Report on Form 10-K (Reg No. 333-58059) filed on
              March 30, 2000).

  10.2.8      Fifth Amendment to Credit Agreement and Waiver dated March 29,
              2000 by and among Cluett American Corp., Cluett American
              Investment Corp., Cluett American Group, Inc. and certain
              subsidiaries, the Existing Lender, New Lender, and agents
              (incorporated by reference to Exhibit 10.2.8 to the Company's
              Annual Report on Form 10-K (Reg No. 333-58059) filed on March 30,
              2000).

  10.2.9      Amended and Restated Investment and Deposit Agreement between
              Vestar Capital Partners III, L.P. and Bank of America dated March
              29, 2000 (incorporated by reference to Exhibit 10.2.8 to the
              Company's Annual Report on Form 10-K (Reg No. 333-58059) filed on
              March 30, 2000).

  10.2.9.1    Sixth Amendment to Credit Agreement and Waiver dated June 30, 2000
              by and among Cluett American Corp., Cluett American Investment
              Corp., Cluett American Group, Inc. and certain subsidiaries, the
              Existing Lender, New Lender, and agent (incorporated by reference
              to Exhibit 10.2.9.1 to the Company's Quarterly Report on Form 10-Q
              (Reg No. 333-58059) filed on August 14, 2000).

  10.2.9.2    Seventh Amendment to Credit Agreement and Waiver dated March 22,
              2001 by and among Cluett American Corp., Cluett American
              Investment Corp., Cluett American Group, Inc. and certain
              subsidiaries, the Existing Lender, Agents and Documentation Agents
              (incorporated by reference to Exhibit 10.2.9.2 to the Company's
              Annual Report on Form 10-K (Reg No. 333-58059) filed on March 29,
              2001).

  10.2.9.3    Eighth Amendment to Credit Agreement and Waiver dated April 12,
              2002 by and among Cluett American Corp., Cluett American
              Investment Corp., Cluett American Group, Inc. and certain
              subsidiaries, the Existing Lender, Agents and Documentation Agents
              (incorporated by reference to Exhibit 10.2.9.3 to the Company's
              Annual Report on Form 10-K (Reg No. 333-58059) filed on April 16,
              2002).


                                       16
<PAGE>

                     Cluett American Corp. and Subsidiaries

  10.2.9.4    Ninth Amendment to Credit Agreement and Waiver dated November 13,
              2002 by and among Cluett American Corp., Cluett American
              Investment Corp., Cluett American Group, Inc. and certain
              subsidiaries, the Existing Lender, Agents and Documentation Agents
              (incorporated by reference to Exhibit 10.2.9.4 to the Company's
              Quarterly Report on Form 10-Q (Reg No. 333-58059) filed on
              November 26, 2002).

  10.3        Security Agreement dated as of May 18, 1998 made by Cluett
              American Corp., Cluett American Investment Corp., Cluett American
              Group, Inc. and certain Subsidiaries of Cluett American Investment
              Corp. in favor of NationsBank, N.A. as agent (incorporated by
              reference to Exhibit 10.3 to the Company's Registration Statement
              on Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).

  10.4        Pledge Agreement dated as of May 18, 1998 made by Cluett American
              Corp., Cluett American Investment Corp., Cluett American Group,
              Inc. and certain Subsidiaries of Cluett American Investment Corp.
              in favor of NationsBank, N.A., as agent (incorporated by reference
              to Exhibit 10.4 to the Company's Registration Statement on Form
              S-4 (Reg. No. 333-58059) filed on June 30, 1998).

  10.5        Joinder Agreement dated as of May 18, 1998 by and between
              Bidermann Tailored Clothing, Inc., and NationsBank, N.A., in its
              capacity as Agent under that certain Credit Agreement dated as of
              May 18, 1998 (incorporated by reference to Exhibit 10.5 to the
              Company's Registration Statement on Form S-4/A (Reg. No.
              333-58059) filed on September 3, 1998).

  10.6        CDN $15,000,000 Loan Agreement dated as of August 8, 1997 between
              Cluett, Peabody Canada Inc., as the Borrower, and Congress
              Financial Corporation (Canada), as Lender (incorporated by
              reference to Exhibit 10.6 to the Company's Registration Statement
              on Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).

 +10.7        Employment Agreement dated March 7, 1997 by and between Great
              American Knitting Mills, Inc. and James A. Williams (incorporated
              by reference to Exhibit 10.7 to the Company's Registration
              Statement on Form S-4/A (Reg. No. 333-58059) filed on September 3,
              1998).

 +10.8        Severance Agreement dated as of August 8, 1997 by and between
              Cluett, Peabody & Co., Inc. and Phil Molinari (incorporated by
              reference to Exhibit 10.8 to the Company's Registration Statement
              on Form S-4/A (Reg. No. 333-58059) filed on September 3, 1998).

 +10.9        Severance Agreement dated as of May 5, 1997 by and between Great
              American Knitting Mills, Inc. and William Sheely (incorporated by
              reference to Exhibit 10.9 to the Company's Registration Statement
              on Form S-4/A (Reg. No. 333-58059) filed on September 3, 1998).

 +10.10       Severance Agreement dated as of May 5, 1997 by and between Great
              American Knitting Mills, Inc. and Kathy Wilson (incorporated by
              reference to Exhibit 10.10 to the Company's Registration Statement
              on Form S-4/A (Reg. No. 333-58059) filed on September 3, 1998).

 +10.11       Advisory Agreement dated May 18, 1998 among Cluett American
              Investment Corp., Cluett American Corp. and Vestar Capital
              Partners (incorporated by reference to Exhibit 10.11 to the
              Company's Registration Statement on Form S-4/A (Reg. No.
              333-58059) filed on September 3, 1998).

  10.12       Secured Promissory Note dated May 18, 1998 made by A&M Investment
              Associates #7, LLC in favor of Cluett American Investment Corp.
              (incorporated by reference to Exhibit 10.12 to the Company's
              Registration Statement on Form S-4/A (Reg. No. 333-58059) filed on
              September 3, 1998).

  10.13       Form of Secured Promissory Note made by the Management Investors
              in favor of Cluett American Investment Corp. (incorporated by
              reference to Exhibit 10.13 to the Company's Registration Statement
              on Form S-4/A (Reg. No. 333-58059) filed on September 3, 1998).

 +10.14       Severance Agreement dated as of August 8, 1997 by and between
              Cluett, Peabody & Co., Inc. and Robert Riesbeck (incorporated by
              reference to Exhibit 10.14 to the Company's Registration Statement
              on Form S-4/A (Reg. No. 333-58059) filed on October 15, 1998).


                                       17
<PAGE>

                     Cluett American Corp. and Subsidiaries

  10.16       Limited Liability Company Agreement of Cluett American
              Receivables, LLC, entered into by Great American Knitting Mills,
              Inc. as the sole equity member and Dwight Jenkins and Lori Rezza
              as the special members (incorporate by reference to Exhibit 10.16
              to the Company's Quarterly Report of Form 10-Q (Reg No. 333-58059)
              filed on May 16, 2000).

  10.16.1     Receivable Transfer Agreement dated May 12, 2000 between Great
              American Knitting Mills, Inc. and Cluett American Receivables, LLC
              (incorporate by reference to Exhibit 10.16.1 to the Company's
              Quarterly Report on Form 10-Q (Reg No. 333-58059) filed on May 16,
              2000).

  10.16.2     Receivable Purchase Agreement entered into between Cluett American
              Receivable, LLC and Banc of America Commercial Corp. dated May 12,
              2000 (incorporate by reference to Exhibit 10.16.2 to the Company's
              Quarterly Report on Form 10-Q (Reg No. 333-58059) filed on May 16,
              2000).

  10.16.3     Partial Release Agreement dated May 12, 2000, by and among Bank of
              America, N.A. f/k/a/ Nationsbank, N.A. as agent for the Lenders
              under the Credit Agreement, Great American Knitting Mills, Inc.
              and Cluett American Corp. (incorporate by reference to Exhibit
              10.16.3 to the Company's Quarterly Report on Form 10-Q (Reg No.
              333-58059) filed on May 16, 2000).

  10.16.4     Guarantee Agreement dated May 12, 2000 made by Cluett American
              Corp. (incorporate by reference to Exhibit 10.16.4 to the
              Company's Quarterly Report on Form 10-Q (Reg No. 333-58059) filed
              on May 16, 2000).

  10.16.5     Repurchase Agreement dated May 12, 2000 made by Vestar Capital
              Partners III, L.P. in favor of Banc of America Commercial
              Corporation (incorporate by reference to Exhibit 10.16.5 to the
              Company's Quarterly Report on Form 10-Q (Reg No. 333-58059) filed
              on May 16, 2000).

  16.1        Letter from Ernst & Young LLP, former Certifying Accountants
              (incorporated by reference to Exhibit 16.1 to the Company's
              Current Report filed on Form 8-K (Reg. No. 333-58059) filed on
              January 10, 2000).

  21          List of Subsidiaries (incorporated by reference to Exhibit 10.6 to
              the Company's Registration Statement on Form S-4 (Reg. No.
              333-58059) filed on June 30, 1998).

  24          Powers of Attorney (included on pages II-5--II-11) (incorporated
              by reference to Exhibit 24 to the Company's Registration Statement
              on Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).

  99.1        Form of Note Letter of Transmittal (incorporated by reference to
              Exhibit 99.1 to the Company's Registration Statement on Form S-4
              (Reg. No. 333-58059) filed on June 30, 1998).

  99.2        Form of Preferred Stock Letter of Transmittal (incorporated by
              reference to Exhibit 99.2 to the Company's Registration Statement
              on Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).

  99.3        Form of Note Notice of Guaranteed Delivery (incorporated by
              reference to Exhibit 99.3 to the Company's Registration Statement
              on Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).

  99.4        Form of Preferred Stock Notice of Guaranteed Delivery
              (incorporated by reference to Exhibit 99.4 to the Company's
              Registration Statement on Form S-4 (Reg. No. 333-58059) filed on
              June 30, 1998).

     +        This is a management contract or compensatory plan or arrangement


                                       18
<PAGE>

                     Cluett American Corp. and Subsidiaries

                                   SIGNATURES

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


                              CLUETT AMERICAN CORP.

                                  (Registrant)

                             By: /s/ Bryan P. Marsal
                             Date: November 26, 2002


                             --------------------------------------------
                             Name: Bryan P. Marsal
                             Director and Chief Executive Officer


                             By: /s/ Kathy D. Wilson
                             Date:  November 26, 2002


                             --------------------------------------------
                             Kathy D. Wilson
                             Vice President and Chief Financial
                             and Accounting Officer


                                  EXHIBIT INDEX

  10.2.9.4    Ninth Amendment to Credit Agreement and Waiver dated November 13,
              2002


                                       19
<PAGE>

                     Cluett American Corp. and Subsidiaries

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Bryan P. Marsal, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Cluett American
      Corp.;

2.    Based on my knowledge, this quarterly report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;

3.    Bases on my knowledge, the financial statements, and other financial
      information included in this quarterly report, fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods presented in this
      quarterly report;

4.    The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:

            a)    designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

            b)    evaluate the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

            c)    presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

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

            a)    all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

            b)    any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

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


/s/ Bryan Marsal
------------------------------------
Bryan P. Marsal
Director and Chief Executive Officer
November 26, 2002


                                       20
<PAGE>

                     Cluett American Corp. and Subsidiaries

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kathy D. Wilson, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Cluett American
      Corp.;

2.    Based on my knowledge, this quarterly report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;

3.    Bases on my knowledge, the financial statements, and other financial
      information included in this quarterly report, fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods presented in this
      quarterly report;

4.    The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:

            a)    designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

            b)    evaluate the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

            c)    presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

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

            a)    all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

            b)    any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

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


/s/Kathy D. Wilson
---------------------------------------------------------
Kathy D. Wilson
Vice President and Chief Financial and Accounting Officer
November 26, 2002


                                       21