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 July 3, 1999

                                       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 PRECEEDING 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


No stock is held by any non-affiliates of the registrant as of July 3, 1999


<PAGE>

                     Cluett American Corp. and Subsidiaries
                         TABLE OF CONTENTS


                  PART I - FINANCIAL INFORMATION

                                                                            Page
Item 1.  Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets as of July 3, 1999 and
December 31, 1998                                                            F-1

Condensed Consolidated Statements of Operations for the thirteen
and twenty-six week periods ended July 3, 1999 and June 27, 1998             F-2

Condensed Consolidated Statements of Cash Flows for the twenty-six
weeks ended July 3, 1999 and June 27, 1998                                   F-3

Notes to Condensed Consolidated Financial Statements - July 3, 1999          F-4


Item 2.  Management's Discussion and Analysis of Financial Condition
and Results of Operations.                                                     1


Item 3.  Quantitative and Qualitative Disclosures About Market Risk.           6




                  PART II - OTHER INFORMATION



Item 1.   Legal Proceedings                                                    7

Item 4.   Submission of Matters to a Vote of Security Holders                  7

Item 6.   Exhibits and Reports on Form 8-K                                     7


SIGNATURES                                                                    10

<PAGE>
<TABLE>


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


                                                                                  July 3,     December 31,
                                                                                   1999           1998
                                                                               -----------------------------
                                                                               (Unaudited)    (Note 1)
<S>                                                                           <C>            <C>
                                   Assets
Current assets:
   Cash and cash equivalents..........................................        $     1,361     $  2,868
   Accounts receivable, net...........................................             39,792       46,786
   Inventories .......................................................             90,060       74,599
   Prepaid expenses and other current assets..........................              3,119        3,972
                                                                              ----------------------------
Total current assets..................................................            134,332      128,225
Property, plant and equipment, net....................................             47,659       48,124
Pension assets........................................................             32,383       31,383
Deferred financing fees...............................................             10,902       11,198
Other noncurrent assets...............................................              1,877        1,845
                                                                              ============================
Total assets..........................................................           $227,153     $220,775
                                                                              ============================

                  Liabilities and stockholder's deficit Current liabilities:
   Accounts payable and accrued expenses..............................           $ 38,034    $  40,107
   Accrued interest payable...........................................              3,149        2,332
   Short-term debt and current portion of long-term debt..............            134,499       10,248
   Income taxes payable...............................................              1,682        1,475
                                                                              ----------------------------
Total current liabilities.............................................            177,364       54,162

Due to parent.........................................................             28,662       27,974
Long-term debt and capital lease obligations..........................            125,236      235,681
Dividends payable.....................................................                601          605
Other non-current liabilities.........................................                136          111
Senior exchangeable preferred stock, cumulative, $.01 par value:
   authorized 4,950,000, issued and outstanding 563,901 shares
   (liquidation preference of $56,390)................................            54,724        51,288
Stockholder's deficit:
   Common stock, $1 par value: authorized, issued and outstanding 1,000
      shares..........................................................                  1            1
   Additional paid-in capital.........................................            113,485      116,919
   Accumulated deficit................................................           (271,622)    (264,933)
   Other comprehensive loss...........................................             (1,434)      (1,033)
                                                                              ----------------------------
Total stockholder's deficit...........................................           (159,570)    (149,046)
                                                                              ============================
Total liabilities and stockholder's deficit...........................          $ 227,153    $ 220,775
                                                                              ============================


                             See accompanying notes.

</TABLE>
                                       F-1
<PAGE>
<TABLE>
                    Cluett American Corp. and Subsidiaries
           Condensed Consolidated Statements of Operations (Unaudited)
                             (Dollars In Thousands)


                                                             Thirteen weeks ended               Twenty-six weeks ended
                                                            July 3,        June 27,             July 3,        June 27,
                                                             1999            1998                1999            1998
                                                        ---------------- --------------      -------------- ---------------
<S>                                                        <C>              <C>               <C>              <C>
Net sales..........................................             $79,219        $76,279            $160,318        $168,634
Cost of goods sold.................................              56,710         52,532             114,097         116,438
                                                        ---------------- --------------      -------------- ---------------
Gross profit.......................................              22,509         23,747              46,221          52,196

Selling, general and administrative expenses.......              19,570         19,272              38,866          38,812
Facility closing and reengineering costs...........                 775             82                 775           1,022
                                                        ---------------- --------------      -------------- ---------------
Operating income...................................               2,164          4,393               6,580          12,362
Interest expense, net..............................               6,395          3,310              12,682           7,121
Other expense, net.................................                  13            142                  29             142
                                                        ---------------- --------------      -------------- ---------------
Income (loss) before reorganization costs and
   income taxes....................................             (4,244)            941             (6,131)           5,099
Bankruptcy reorganization costs....................               -             11,644                 -            13,179
                                                        ---------------- --------------      -------------- ---------------
Income (loss) before provision for income taxes....             (4,244)       (10,703)             (6,131)         (8,080)
Provision for income taxes.........................                 280            322                 558             604
                                                        ---------------- --------------      -------------- ---------------
Net loss ..........................................            $(4,524)      $(11,025)            $(6,689)        $(8,684)
                                                        ================ ==============      ============== ===============






                             See accompanying notes.


</TABLE>
                                       F-2
<PAGE>
<TABLE>
                      Cluett American Corp. and Subsidiaries
           Condensed Consolidated Statements of Cash Flows (Unaudited)
                             (Dollars in Thousands)


                                                                               Twenty-six weeks ended
                                                                               July 3,        June 27,
                                                                                 1999           1998
                                                                            ------------------------------
<S>                                                                          <C>           <C>
Operating activities
Net loss...........................................................             $(6,689)      $(8,684)
Adjustment to reconcile net loss  to net cash and cash equivalents
   used in operating activities:
   Depreciation....................................................               4,882         4,185
   Amortization....................................................                 791            10
   Loss (Gain)  on disposal........................................                (129)        1,905
   Changes of liabilities subject to compromise-reorganization.....                   -       (22,442)

Changes in operating assets and liabilities:
   Accounts receivable.............................................               7,266        12,070
   Inventories.....................................................             (14,788)      (14,553)
   Prepaid expenses and other current assets.......................                 894       (11,878)
   Pension and other noncurrent assets.............................              (1,480)         (997)
   Accounts payable and accrued expenses...........................              (1,204)         (657)
   Income taxes payable............................................                 207          (555)
   Other liabilities...............................................                (270)        8,560
   Effect of changes in foreign currency...........................                (336)            -
                                                                            ----------------------------
Net cash and cash equivalents used in operating activities.........             (10,856)      (33,036)

Investing activities
Purchase of fixed assets...........................................              (5,268)       (5,740)
Proceeds on disposal of fixed assets...............................               1,103           178
                                                                            ----------------------------
Net cash and cash equivalents used in investing activities.........              (4,165)       (5,562)

Financing activities
Issuance of preferred stock........................................                   -        48,125
Distribution to parent.............................................                   -       (87,524)
Principal payments on pre-petition credit facility.................                   -      (146,490)
Proceeds from long term debt.......................................                   -       226,000
Principal payments on long term debt ..............................              (1,300)       (4,000)
Net borrowings under line-of-credit agreement .....................              14,818         1,937
Principal payments on capital leases...............................                  (5)         (445)
                                                                            ----------------------------
Net cash and cash equivalents provided by financing activities.....              13,513        37,603

Effect of foreign currency translation.............................                   1            (9)
                                                                            ----------------------------
Net change in cash and cash equivalents............................              (1,507)       (1,004)
Cash and cash equivalents at beginning of period...................               2,868        10,019
                                                                            ============================
Cash and cash equivalents at end of period.........................         $       1,361      $9,015
                                                                            ============================


                             See accompanying notes.

</TABLE>
                                       F-3
<PAGE>

                  Cluett American Corp. and Subsidiaries
        Notes to Condensed Consolidated Financial Statements (Unaudited)


1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Cluett
American  Corp.  and  Subsidiaries,   (the  "Company")  have  been  prepared  in
accordance with generally accepted  accounting  principles 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 generally  accepted  accounting  principles  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-week and twenty-six week periods
ended July 3, 1999 are not necessarily  indicative of the operating results that
may be expected for the year ending December 31, 1999.

The  Balance  Sheet at  December  31,  1998 has been  derived  from the  audited
financial  statements  at that date but does not include all of the  information
and footnotes required by generally accepted accounting  principles 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,  1998,  filed  with the  Securities  and  Exchange
Commission on March 29, 1999.

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 July
3, 1999 and June 27, 1998, respectively.

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

2. Inventories

         Inventories consist of the following at the specified date:

 <TABLE>
                                                                   July 3,           December 31,
                                                                    1999                 1998
                                                             ------------------ -----------------
                                                                   (Dollars In Thousands)

<S>                                                              <C>               <C>
Finished goods                                                     $70,804            $60,134
Work in process                                                      6,785              4,189
Raw materials and supplies                                          12,471             10,276
                                                             ================== =================
                                                                   $90,060            $74,599
                                                             ================== =================


</TABLE>
                                       F-4
<PAGE>

                  Cluett American Corp. and Subsidiaries
    Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)


3. Comprehensive Income

Statement  of  Financial  Accounting  Standards  No. 130 (SFAS 130),  "Reporting
Comprehensive  Income" establishes new rules for reporting  comprehensive income
and its  components.  SFAS 130 is  effective  for fiscal years  beginning  after
December 15, 1997,  and was adopted by the Company for the fiscal year beginning
January 1, 1998. There was no impact on net income or shareholders'  equity from
the adoption of the statement.

For the  periods  ending  July 3,  1999  and June 27,  1998,  accumulated  other
comprehensive loss as shown in the consolidated  balance sheets was comprised of
foreign  currency  translation  adjustments,  which  prior to the  adoption  was
reported  separately in  shareholders'  equity.  The components of comprehensive
loss, for these periods were as follows:

<TABLE>

                                                             Thirteen weeks ended               Twenty-six weeks ended
                                                            July 3,        June 27,             July 3,        June 27,
                                                             1999            1998                1999            1998
                                                        ---------------- --------------      -------------- ---------------
                                                            (Dollars In Thousands)
<S>                                                       <C>              <C>
Net loss...........................................            $(4,524)      $(11,025)            $(6,689)       $ (8,684)
Foreign currency translation adjustment............               (765)          1,267               (401)           1,985
                                                        ================ ==============      ============== ===============
Comprehensive loss.................................            $(5,289)       $(9,758)            $(7,090)       $ (6,699)
                                                        ================ ==============      ============== ===============





</TABLE>
                                       F-5

<PAGE>

             Cluett American Corp. and Subsidiaries
    Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)


4. Segment Data

The Company  identifies its reportable  segments based on the segment's  product
offerings.  For the  quarter  ended  July 3, 1999,  the  Company  conducted  its
business  through two  principal  segments:  the Sock Group and the Shirt Group.
During the fiscal year ended December 31, 1998,  management  decided to exit the
Burberrys  and the Yves Saint  Laurent  ("YSL")  businesses.  Consequently,  the
Company   terminated  the  Burberrys  and  YSL  license  agreements  and  ceased
distributing  products  under these brands as of June 30,  1999.  Because of the
termination of these license  agreements,  the financial results of these brands
have been  restated  and reported  under the All Other  segment.  For  financial
reporting  purposes,  the dress shirt business under the Kenneth Cole trademark,
which was launched in Fall 1998  (previously  reported under the Designer Group)
was  consolidated  into the Shirt Group financial  results and the sock business
under the Kenneth Cole trademark was consolidated  into the Sock Group financial
results. During the second quarter, the Company restated both the Sock Group and
Shirt Group prior year's financial  results for the addition of the Kenneth Cole
brand.
<TABLE>
                                                                Thirteen weeks ended              Twenty-six weeks ended
                                                            July 3,            June 27,         July 3,         June 27,
                                                              1999               1998            1999             1998
                                                        ----------------- --- ------------    ------------ -- -------------

                                                                                (Dollars in Thousands)
<S>                                  <C>                       <C>              <C>              <C>              <C>
Net Sales
                                      Sock                       $38,771           $35,353        $72,909          $71,546
                                      Shirt                       40,176            36,213         85,193           85,748
                                      All Other                    1,904             5,847          5,606           14,507
                                      Intersegment               (1,632)           (1,134)        (3,390)          (3,167)
                                                                 -------           -------        -------          -------
                                                                 $79,219           $76,279       $160,318         $168,634
                                                                 =======           =======       ========         ========
Operating Income excluding facility
closing and reengineering costs
                                      Sock                         6,919             4,467         11,441            9,373
                                      Shirt                      (2,838)               950        (2,553)            5,444
                                      All Other                  (1,142)             (942)        (1,533)          (1,433)
                                                                 -------             -----        -------          -------
                                                                   2,939             4,475          7,355           13,384
                                                                   =====             =====          =====           ======

Depreciation
                                      Sock                         1,510             1,335          3,020            2,670
                                      Shirt                          940               755          1,862            1,515
                                      All Other                      ---               ---          ---                ---
                                                                     ---               ---          -----              ---
                                                                   2,450             2,090          4,882            4,185
                                                                   =====             =====          =====            =====
Amortization
                                      Sock                           ---               ---            ---              ---
                                      Shirt                            4                 5             10               10
                                      All Other                      392               ---          781              ---
                                                                     ---               ---          -----            ---
                                                                     396                 5            791               10
                                                                     ===                 =            ===               ==
Identifiable Assets
                                      Sock                        86,271            84,702         86,271           84,702
                                      Shirt                       90,933            90,026         90,933           90,026
                                      All Other                      495            13,043            495           13,043
                                                                     ---            ------            ---           ------
                                                                $177,699          $187,771       $177,699         $187,771
                                                                ========          ========       ========         ========

</TABLE>
                                       F-6
<PAGE>
          Cluett American Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)


4. Segment Data (Continued)

Reconciliation of Reportable Segments Net Sales, Operating Income and
Identifiable Assets
<TABLE>
                                                               Thirteen weeks ended            Twenty-six weeks ended
                                                          July 3, 1999       June 27, 1998   July 3, 1999     June 27, 1998
                                                          -------------- --- -----------    ------------- --- -------------

                                                                           (Dollars In Thousands)
<S>                                                           <C>               <C>          <C>                <C>
Net Sales
    Total net sales for reportable  segments                 $78,947           $71,566      $158,102           $157,294
    Other net sales                                            1,904             5,847         5,606             14,507
    Elimination of intersegment net sales                    (1,632)           (1,134)       (3,390)            (3,167)
                                                             -------           -------       -------            -------

          Total consolidated net sales                        79,219            76,279       160,318            168,634
                                                              ======            ======       =======            =======


  Operating Profit (Loss)
     Total operating profit or loss
        for reportable segments                                4,081             5,417         8,888             14,817
     Other operating profit or loss                                               (894)                          (1,425)
     Unallocated amounts:
        Corporate expense                                     (1,142)              (48)       (1,533)                (8)
        Facility closing and reengineering costs                (775)              (82)        (775)             (1,022)
                                                               -----              ----        ------            -------

        Total operating profit                                 2,164             4,393         6,580             12,362
                                                               =====             =====         =====             ======


  Assets
     Total assets for reportable segments                     177,204           174,728       177,204            174,728
        All other assets                                          495            13,043           495             13,043
        Unallocated amounts:
          Deferred finance costs                               10,902            11,560        10,902             11,560
          Pension assets                                       32,383            31,224        32,383             31,224
          Other unallocated amounts                             6,169             2,770         6,169              2,770
                                                                -----             -----         -----              -----

        Consolidated total                                   $227,153          $233,325      $227,153           $233,325
                                                             ========          ========      ========           ========

</TABLE>



                                       F-7
<PAGE>

               Cluett American Corp. and Subsidiaries
    Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)


5. 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  principal  domestic  subsidiaries:  Cluett
Peabody & Co., Inc., Great American Knitting Mills,  Inc., Cluett Designer Group
Inc.,  Consumer Direct  Corporation and Arrow Factory Stores Inc.  (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 Senior Credit Facility and the Notes are not guaranteed by
the foreign  operating  subsidiaries  Cluett,  Peabody  Canada Inc. and Arrow de
Mexico  S.A.  de  C.V.  (collectively  the  "Non-Guarantor  Subsidiaries").  The
obligation  of each  Guarantor  Subsidiary  under its  Guarantee of the Notes is
subordinated to such  subsidiary's  obligation under its guarantee of the Senior
Credit Facility.

Presented  below  is  condensed  consolidating  financial  information  for  the
Company, the Guarantor Subsidiaries and the Non-Guarantor  Subsidiaries.  In the
Company's  opinion,   separate   financial   statements  and  other  disclosures
concerning  each of the  Guarantor  Subsidiaries  would not  provide  additional
information that is material to investors. Therefore, the Guarantor Subsidiaries
are  consolidated in the  presentation  below.  Investments in subsidiaries  are
accounted  for by the Company using the equity  method of  accounting.  Earnings
(losses) of  subsidiaries  are,  therefore,  reflected  in the Parent  Company's
investments in and advances to/from  subsidiaries account and earnings (losses).
The  elimination  entries  eliminate  investments in  subsidiaries,  the related
stockholder's deficit and other intercompany balances and transactions.



                                       F-8
<PAGE>

             Cluett American Corp. and Subsidiaries
    Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)


5. Guarantor Subsidiaries (Continued)

              SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
                               JULY 3, 1999
<TABLE>
                                                                             (DOLLARS IN THOUSANDS)
                                                               PARENT    GUARANTOR   NON-GUARANTOR
                                                              COMPANY   SUBSIDIARIES  SUBSIDIARIES ELIMINATIONS CONSOLIDATED
<S>                                                         <C>           <C>         <C>          <C>           <C>
Assets
Current assets:
   Cash and cash equivalents .............................   $    --      $   1,206    $     155   $    --     $   1,361
   Accounts receivable, net ..............................        --         33,717        6,075        --        39,792
   Inventories (Note 2) ..................................        --         77,242       12,818        --        90,060
   Prepaid expenses and other
      current assets .....................................        --          2,467          652        --         3,119
                                                             ---------    ---------    ---------   ---------   ---------
Total current assets .....................................        --        114,632       19,700        --       134,332
Investment in subsidiaries ...............................     (93,019)        --           --        93,019        --
Intercompany receivable (payable) ........................      15,000      (15,000)        --          --          --
Property, plant and equipment, net .......................        --         45,675        1,984        --        47,659
Pension assets ...........................................        --         32,383         --          --        32,383
Deferred financing fees ..................................        --         10,902         --          --        10,902
Other noncurrent assets ..................................        --          1,053          824        --         1,877
                                                             ---------    ---------    ---------   ---------   ---------
Total assets .............................................   $ (78,019)   $ 189,645    $  22,508   $  93,019   $ 227,153
                                                             =========    =========    =========   =========   =========

Liabilities and stockholder's deficit Current liabilities:
   Accounts payable and accrued
      expenses ...........................................   $    --      $  34,805    $   3,229   $    --     $  38,034
   Accrued interest payable ..............................        --          3,149         --          --         3,149
   Short-term debt and current
      portion of long-term debt ..........................        --        126,750        7,749        --       134,499
   Income taxes payable ..................................        --          1,475          207        --         1,682
                                                             ---------    ---------    ---------   ---------   ---------
Total current liabilities ................................        --        166,179       11,185        --       177,364

Due to parent ............................................        --         28,662         --          --        28,662
Long-term debt and capital lease
   obligations ...........................................        --        125,000          236        --       125,236
Dividends payable ........................................         601         --           --          --           601
Other non-current liabilities ............................        --            136         --          --           136
Senior exchangeable preferred
   stock, cumulative, $.01 par
   value: authorized 4,950,000,
   issued and outstanding 563,901
   shares (liquidation preference ........................      54,724         --           --          --        54,724
   of $56,390)
Stockholder's deficit ....................................    (133,344)    (130,332)      11,087      93,019    (159,570)
                                                             ---------    ---------    ---------   ---------   ---------
Total liabilities and ....................................
   stockholder's deficit .................................   $ (78,019)   $ 189,645    $  22,508   $  93,019   $ 227,153
                                                             =========    =========    =========   =========   =========



</TABLE>







                                       F-9
<PAGE>

            Cluett American Corp. and Subsidiaries
    Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)



5. Guarantor Subsidiaries (Continued)

           SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
                            DECEMBER 31, 1998
<TABLE>
                                                                            (DOLLARS IN THOUSANDS)
                                                              PARENT      GUARANTOR   NON-GUARANTOR
                                                              COMPANY    SUBSIDIARIES  SUBSIDIARIES ELIMINATIONS CONSOLIDATED
<S>                                                         <C>         <C>           <C>           <C>          <C>
Assets
Current assets:
   Cash and cash equivalents .............................   $    --      $   2,396    $     472     $  --      $  2,868
   Accounts receivable, net ..............................        --         42,599        4,187        --        46,786
   Inventories (Note 2) ..................................        --         63,158       11,441        --        74,599
   Prepaid expenses and other
      current assets .....................................        --          3,168          804        --         3,972
                                                             ---------    ---------    ---------   ---------   ---------
Total current assets .....................................        --        111,321       16,904        --       128,225
Investment in subsidiaries ...............................     (86,330)        --           --        86,330        --
Intercompany receivable (payable) ........................      15,000      (15,000)        --          --          --
Property, plant and equipment, net .......................        --         46,112        2,012        --        48,124
Pension assets ...........................................        --         31,383         --          --        31,383
Deferred financing fees ..................................        --         11,198         --          --        11,198
Other noncurrent assets ..................................        --          1,012          833        --         1,845
                                                             ---------    ---------    ---------   ---------   ---------
Total assets .............................................   $ (71,330)   $ 186,026    $  19,749   $  86,330   $ 220,775
                                                             =========    =========    =========   =========   =========

Liabilities and stockholder's deficit Current liabilities:
   Accounts payable and accrued
      expenses ...........................................   $    --      $  35,449    $   4,658   $    --     $  40,107
   Accrued interest  payable .............................        --          2,332         --          --         2,332
   Short-term debt and current
      portion of long-term debt ..........................        --          6,600        3,648        --        10,248
   Income taxes payable ..................................        --          1,268          207        --         1,475
                                                             ---------    ---------    ---------   ---------   ---------
Total current liabilities ................................        --         45,649        8,513        --        54,162

Due to parent ............................................        --         27,974         --          --        27,974
Long-term debt and capital lease
   obligations ...........................................        --        235,450          231        --       235,681
Dividends payable ........................................         605         --           --          --           605
Other non-current liabilities ............................        --            111         --          --           111
Senior exchangeable preferred
   stock, cumulative, $.01 par
   value: authorized 4,950,000,
   issued and outstanding 530,730
   shares (liquidation preference ........................      51,288         --           --          --        51,288
   of $53,073)
Stockholder's deficit ....................................    (123,223)    (123,158)      11,005      86,330    (149,046)
                                                             ---------    ---------    ---------   ---------   ---------
Total liabilities and ....................................
   stockholder's deficit .................................   $ (71,330)   $ 186,026    $  19,749   $  86,330   $ 220,775
                                                             =========    =========    =========   =========   =========

</TABLE>
                                      F-10
<PAGE>

             Cluett American Corp. and Subsidiaries
    Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)


5. Guarantor Subsidiaries (Continued)

      SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                THIRTEEN WEEKS ENDED JULY 3, 1999
<TABLE>
                                                   (DOLLARS IN THOUSANDS)
                                                  PARENT    GUARANTOR   NON-GUARANTOR
                                                  COMPANY  SUBSIDIARIES SUBSIDIARIES  ELIMINATION CONSOLIDATED
<S> ...........................................  <C>         <C>         <C>         <C>        <C>
Net sales .....................................   $   --      $ 70,749    $  8,470    $   --     $ 79,219
Cost of goods sold ............................       --        50,076       6,634        --       56,710
                                                  --------    --------    --------    --------   --------
Gross profit ..................................       --        20,673       1,836        --       22,509

Selling, general and administrative
   expenses ...................................       --        17,565       2,005        --       19,570

Facility closing and re-engineering ...........       --           222         553        --          775
                                                  --------    --------    --------    --------   --------
Operating income(loss) ........................       --         2,886        (722)       --        2,164
Loss on investments in subsidiaries ...........     (4,524)       --          --         4,524       --
Interest expense, net .........................       --         6,235         160        --        6,395
Other expense, net ............................       --            13        --          --           13
                                                  --------    --------    --------    --------   --------
Loss before reorganization costs and
   income taxes ...............................     (4,524)     (3,362)       (882)      4,524     (4,244)
Bankruptcy reorganization costs ...............       --          --          --          --         --
                                                  --------    --------    --------    --------   --------
Income (loss) before provision for
   income taxes ...............................     (4,524)     (3,362)       (882)      4,524     (4,244)
Provision for income taxes ....................       --           286          (6)       --          280
                                                  --------    --------    --------    --------   --------
Net loss ......................................   $ (4,524)   $ (3,648)   $   (876)   $  4,524   $ (4,524)
                                                  ========    ========    ========    ========   ========
</TABLE>
                                      F-11
<PAGE>

               Cluett American Corp. and Subsidiaries
    Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)


5. Guarantor Subsidiaries (Continued)

   SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                THIRTEEN WEEKS ENDED JUNE 27, 1998
<TABLE>
                                                          (DOLLARS IN THOUSANDS)
                                          PARENT    GUARANTOR  NON-GUARANTOR
                                          COMPANY SUBSIDIARIES SUBSIDIARIES  ELIMINATIONS CONSOLIDATED
<S>                                     <C>         <C>         <C>         <C>         <C>
Net sales ............................   $   --      $ 67,761    $  8,518    $   --      $ 76,279
Cost of goods sold ...................       --        46,263       6,269        --        52,532
                                         --------    --------    --------    --------    --------
Gross profit .........................       --        21,498       2,249        --        23,747

Selling, general and administrative
   expenses ..........................       --        16,900       2,372        --        19,272
Facility closing and reengineering
   costs .............................       --            82        --          --            82
                                         --------    --------    --------    --------    --------
Operating income (loss) ..............       --         4,516        (123)       --         4,393
Income on investment in subsidiaries .
                                              432        --          --          (432)       --
Interest (income) expense, net .......       --         3,856        (546)       --         3,310
Other (income) expense, net ..........       --           151          (9)       --           142
                                         --------    --------    --------    --------    --------
Income before reorganization costs
   and income taxes ..................        432         509         432        (432)        941
Bankruptcy reorganization costs ......       --        11,644        --          --        11,644
                                         --------    --------    --------    --------    --------
Income (loss) before provision for
   income taxes ......................        432     (11,135)        432        (432)    (10,703)
Provision for income taxes ...........       --           322        --          --           322
                                         --------    --------    --------    --------    --------
Net income (loss) ....................   $    432    $(11,457)   $    432    $   (432)   $(11,025)
                                         ========    ========    ========    ========    ========



</TABLE>
                                      F-12
<PAGE>

                Cluett American Corp. and Subsidiaries
    Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)


5. Guarantor Subsidiaries (Continued)

     SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
               TWENTY-SIX WEEKS ENDED JULY 3, 1999
<TABLE>
                                                   (DOLLARS IN THOUSANDS)
                                          PARENT    GUARANTOR    NON-GUARANTOR
                                          COMPANY  SUBSIDIARIES  SUBSIDIARIES  ELIMINATIONS CONSOLIDATED
<S>                                     <C>          <C>          <C>          <C>          <C>
Net sales ............................   $    --      $ 144,044    $  16,274    $    --      $ 160,318
Cost of goods sold ...................        --        101,566       12,531         --        114,097
                                         ---------    ---------    ---------    ---------    ---------
Gross profit .........................        --         42,478        3,743         --         46,221

Selling, general and administrative
   expenses ..........................        --         34,832        4,034         --         38,866
Facility closing and reengineering
   costs .............................        --            222          553         --            775
                                         ---------    ---------    ---------    ---------    ---------
Operating income (loss) ..............        --          7,424         (844)        --          6,580
Income on investment in subsidiaries .
                                            (6,689)        --           --          6,689         --
Interest expense, net ................        --         12,404          278         --         12,682
Other expense, net ...................        --             29         --           --             29
                                         ---------    ---------    ---------    ---------    ---------
Loss before reorganization costs and
   income taxes ......................      (6,689)      (5,009)      (1,122)       6,689       (6,131)
Bankruptcy reorganization costs ......        --           --           --           --           --
                                         ---------    ---------    ---------    ---------    ---------
Income (loss) before provision for
   income taxes ......................      (6,689)      (5,009)      (1,122)       6,689       (6,131)
Provision for income taxes ...........        --            512           46         --            558
                                         ---------    ---------    ---------    ---------    ---------
Net income (loss) ....................   $  (6,689)   $  (5,521)   $  (1,168)   $   6,689    $  (6,689)
                                         =========    =========    =========    =========    =========

</TABLE>
                                      F-13
<PAGE>

            Cluett American Corp. and Subsidiaries
    Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)


5. Guarantor Subsidiaries (Continued)

    SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                 TWENTY-SIX WEEKS ENDED JUNE 27, 1998
<TABLE>
                                                              (DOLLARS IN THOUSANDS)
                                          PARENT     GUARANTOR   NON-GUARANTOR
                                          COMPANY  SUBSIDIARIES  SUBSIDIARIES  ELIMINATIONS CONSOLIDATED
<S>                                     <C>          <C>          <C>          <C>          <C>
Net sales ............................   $    --      $ 150,611    $  18,023    $    --      $ 168,634
Cost of goods sold ...................        --        103,586       12,852         --        116,438
                                         ---------    ---------    ---------    ---------    ---------
Gross profit .........................        --         47,025        5,171         --         52,196

Selling, general and administrative
   expenses ..........................        --         34,032        4,780         --         38,812
Facility closing and reengineering
   costs .............................        --          1,022         --           --          1,022
                                         ---------    ---------    ---------    ---------    ---------
Operating income .....................        --         11,971          391         --         12,362
Income on investment in subsidiaries .
                                                (9)        --           --              9         --
Interest expense, net ................        --          6,899          222         --          7,121
Other (income) expense, net ..........        --             (2)         144         --            142
                                         ---------    ---------    ---------    ---------    ---------
Income before reorganization costs
   and income taxes ..................          (9)       5,074           25            9        5,099
Bankruptcy reorganization costs ......        --         13,179         --           --         13,179
                                         ---------    ---------    ---------    ---------    ---------
Income (loss) before provision for
   income taxes ......................          (9)      (8,105)          25            9       (8,080)
Provision for income taxes ...........        --            570           34         --            604
                                         ---------    ---------    ---------    ---------    ---------
Net income (loss) ................       $      (9)   $  (8,675)   $      (9)   $       9    $  (8,684)
                                         =========    =========    =========    =========    =========

</TABLE>
                                      F-14
<PAGE>

               Cluett American Corp. and Subsidiaries
    Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)


5. Guarantor Subsidiaries (Continued)

    SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
               TWENTY-SIX WEEKS ENDED JULY 3, 1999
<TABLE>
                                                              (DOLLARS IN THOUSANDS)
                                            PARENT   GUARANTOR  NON-GUARANTOR
                                           COMPANY SUBSIDIARIES SUBSIDIARIES  ELIMINATIONS CONSOLIDATED
<S>                                         <C>       <C>         <C>         <C>          <C>
Operating activities
Net loss ...............................   $ (6,689)   $ (5,521)   $ (1,168)   $  6,689    $ (6,689)
Adjustment to reconcile net loss to net
cash and cash equivalents provided by
(used in) operating activities:
  Loss on investments in subsidiaries ..      6,689        --          --        (6,689)       --
  Depreciation .........................       --         4,727         155        --         4,882
  Amortization .........................       --           791        --          --           791
  Loss on disposal of assets ...........       --          (129)       --          --          (129)
  Changes in operating assets and ......       --        (6,597)     (3,114)       --        (9,711)
liabilities
                                               --         -----       -----        --         -----
Net cash and cash equivalents used in
operating activities ...................       --        (6,729)     (4,127)       --       (10,856)

Investing activities
Purchase of fixed assets ...............       --        (5,263)         (5)       --        (5,268)
Proceeds on disposal of fixed assets ...       --         1,102           1        --         1,103
                                               --         -----           -        --         -----
Net cash and cash equivalents used in
investing activities ...................       --        (4,161)         (4)       --        (4,165)

Financing activities
Proceeds on the credit facility ........       --        11,000       3,818        --        14,818
Principal payments on long term debt ...       --        (1,300)       --          --        (1,300)
Principal payments on capital leases ...       --          --            (5)       --            (5)
                                               --         -----       -----        --         -----
Net cash and cash equivalents provided
by financing activities ................       --         9,700       3,813        --        13,513
Effect of foreign currency translation .       --          --             1        --             1

Net change in cash and cash equivalents        --        (1,190)       (317)       --        (1,507)

Cash and cash equivalents at beginning .       --         2,396         472        --         2,868
of year                                        --         -----         ---        --         -----

Cash and cash equivalents at end of ....   $   --        $1,206    $    155    $   --      $  1,361
period .................................       ==         =====         ===        ==         =====





</TABLE>
                                      F-15
<PAGE>
               Cluett American Corp.and Subsidiaries
     Notes to Condensed Consolidated Financial Statements (Unaudited)(continued)

5. Guarantor Subsidiaries (Continued)

     SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                TWENTY-SIX WEEKS ENDED JUNE 27, 1998
<TABLE>
                                                                 (DOLLARS IN THOUSANDS)
                                          PARENT     GUARANTOR    NON-GUARANTOR
                                          COMPANY   SUBSIDIARIES  SUBSIDIARIES  ELIMINATIONS CONSOLIDATED
<S>                                     <C>          <C>             <C>       <C>          <C>
Operating activities
Net income (loss) ....................   $  (8,684)   $  (8,675)      $   (9)   $   8,684    $  (8,684)
(loss) to net cash and cash
equivalents provided by (used in)
operating activities:
  Loss on investment in subsidiaries .       8,684         --           --         (8,684)        --
  Depreciation and amortization ......        --          4,029          166         --          4,195
  Loss on disposal ...................        --            442        1,463         --          1,905
  Changes of liabilities subject to
     compromise ......................        --        (22,442)        --           --        (22,442)
  Changes in operating assets and ....        --         (2,851)      (5,159)        --         (8,010)
liabilities
                                              --         ------        -----         --         ------
Net cash and cash equivalents used in
operating activities .................        --        (29,497)      (3,539)        --        (33,036)

Investing activities
Purchase of fixed assets .............        --         (5,605)        (135)        --         (5,740)
Proceeds on disposal of fixed assets .        --           --            178         --            178
                                              --          -----          ---         --          -----
Net cash and cash equivalents used in
investing activities .................        --         (5,605)          43         --         (5,562)

Financing activities
Issuance of preferred stock ..........        --         48,125         --           --         48,125
Distribution to parent ...............        --        (87,524)        --           --        (87,524)
Net proceeds on long term debt .......        --        222,000         --           --        222,000
Net borrowings (payments) under
line-of-credit agreement .............        --         (1,756)       3,693         --          1,937
Principal payments on pre-petition
credit facility ......................        --       (146,490)        --           --       (146,490)
Principal payments on capital leases .        --           (433)         (12)        --           (445)
                                              --        -------        -----         --        -------
Net cash and cash equivalents
provided by financing activities .....        --         33,922        3,681         --         37,603
Effect of foreign currency translation        --           --             (9)        --             (9)
Net change in cash and cash ..........        --         (1,180)         176         --         (1,004)
equivalents

Cash and cash equivalents at
beginning of year ....................        --          9,551          468         --         10,019
                                              --          -----          ---         --         ------

Cash and cash equivalents at end of ..   $    --      $   8,371    $     644    $    --      $   9,015
period                                        ==          =====          ===         ==          =====


</TABLE>
                                      F-16
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Results of Operations: Thirteen weeks ended July 3, 1999 vs. June 27, 1998

The  following  table is derived from the Company's  Consolidated  Statements of
Operations and sets forth, for the period  indicated,  net sales,  gross profit,
operating income, interest expense, bankruptcy reorganization costs and net loss
of the Company:
<TABLE>
<S>                                                                            <C>               <C>
                                                                                    Thirteen weeks ended
                                                                                   July 3,       June 27,
                                                                                    1999           1998
                                                                               ------------------------------
                                                                                   (Dollars In Thousands)

Net sales.................................................................         $79,219        $76,279
Gross profit..............................................................          22,509         23,747
Operating income .........................................................           2,164          4,393
Interest expense .........................................................           6,395          3,310
Bankruptcy reorganization costs...........................................              --         11,644
Net loss..................................................................         $(4,524)      $(11,025)
</TABLE>

Net Sales:  For the  second  quarter  1999,  net sales for  reportable  segments
(excludes YSL, Burberrys and Canadian retail terminated  businesses) were up 10%
versus the prior year. The Shirt Group had an 11% net sales increase  versus the
second  quarter of 1998 and the Sock Group  recorded  a 10% second  quarter  net
sales  increase  versus the same period last year.  The second quarter net sales
growth from the Shirt Group  relates  primarily to strong growth in Kenneth Cole
and a more moderate  increase in Arrow. The second quarter net sales growth from
the Sock  Group  relates  to a strong  rebound in Gold Toe sales from a sluggish
first  quarter  combined  with  solid  growth in the  Nautica  and  Jockey  sock
offerings.

Net sales in the All Other  segment  were down $3.9  million from the prior year
reflecting an exit from the YSL, Burberrys and Canadian retail store businesses.
Net sales for the second quarter of 1999 represent the final  liquidation of the
inventory associated with the YSL and Burberrys businesses.

Gross  Profit:  For the second  quarter of 1999,  gross  profit  decreased  $1.2
million  (with  $1.4  million  of the  deterioration  relating  to All  Other or
terminated  businesses) from the second quarter of 1998. The Sock Group improved
its second quarter gross margin from 31.8% to 35.4% of net sales year over year.
This improvement  relates primarily to lower manufacturing and material costs of
production. The Shirt Group's gross margin decreased from 30.5% in 1998 to 21.9%
for the same period in 1999.  This drop was caused by a  combination  of factors
including  a sales mix  erosion,  significant  freight  expense  increases,  and
negative  manufacturing  variances  (particularly at domestic sewing and cutting
operations). The sales mix erosion is primarily in the staple dress shirt arena,
which is historically the Shirt Group's most profitable segment. The marketplace
is in a fancy dress shirt cycle  (which  offers  lower gross  margins and higher
markdown  risk) and overall  sales  conditions  for staple dress  shirts  remain
depressed.  The freight expense increase relates to the Shirt Group's failure to
hedge its  shipping  costs out of Asia,  which  have  skyrocketed  in the last 9
months.  The negative  manufacturing  variances  arose out of increased  make in
dress shirts plus domestic plant inefficiencies.

Operating Income:  The Company's  operating income declined to $2.2 million from
$4.4 million for the  thirteen  weeks ended July 3, 1999,  primarily  due to the
Shirt  Group's  reduced  gross  margin  discussed  above and the  Shirt  Group's
increased   selling,   distribution,    general   &   administrative   spending.
Additionally,  during the second quarter, the Company incurred net restructuring
costs of $775,000  as a result of the  consolidation  of certain  administrative
functions within the Shirt Group.

Interest expense: Interest expense increased $3.1 million for the thirteen weeks
ended  July 3,  1999 as a result  of  higher  debt  levels  existing  after  the
Recapitalization which was completed on May 18, 1998.

Bankruptcy  Reorganization Costs: The Company's bankruptcy proceedings concluded
in May 1998. As a result, there were no bankruptcy  reorganization costs for the
thirteen  weeks ended July 3, 1999.  For the thirteen weeks ended June 27, 1998,
bankruptcy  reorganization costs represented payment of post-petition  interest,
default  interest  and fees to  creditors  in  accordance  with the terms of the
bankruptcy reorganization plan.

Net loss:  Net loss for the  thirteen  weeks ended July 3, 1999  decreased  $6.5
million  to a loss of $4.5  million  from a loss of $11.0  million  for the same
period in 1998.  This  reduction  was  primarily  related to the  decline in the
bankruptcy  reorganization  costs  offset by the  decline  in the Shirt  Group's
operating profit and the Company's overall increased interest expense.
                                       1
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (Continued)


Results of Operations: Twenty-six weeks ended July 3, 1999 vs. June 27, 1998

The  following  table is derived from the Company's  Consolidated  Statements of
Operations and sets forth, for the period  indicated,  net sales,  gross profit,
operating income,  interest  expense,  bankruptcy  reorganization  costs and net
income (loss) of the Company:
<TABLE>
<S>                                                                               <C>           <C>
                                                                                   Twenty-six weeks ended
                                                                                   July 3,       June 27,
                                                                                    1999           1998
                                                                               ------------------------------
                                                                                   (Dollars In Thousands)

Net sales.................................................................        $160,318       $168,634
Gross profit..............................................................          46,221         52,196
Operating income .........................................................           6,580         12,362
Interest expense .........................................................          12,682          7,121
Bankruptcy reorganization costs...........................................              --         13,179
Net loss..................................................................         $(6,689)       $(8,684)
</TABLE>
Net Sales: For the twenty-six weeks ended July 3, 1999, net sales for reportable
segments   (excluding  the  YSL,   Burberrys  and  Canadian  retail   terminated
businesses) were up 1% versus the prior year. The Shirt Group had a 1% net sales
decrease  versus the first  half of 1998 and the Sock Group  recorded a 2% first
half net sales  increase  versus the same  period  last year.  Both groups had a
sluggish or  disappointing  first quarter of 1999 offset by an improved level of
sales activity in the second quarter of 1999 as compared to the prior year.

Net  sales  in the  All  Other  segment  (YSL,  Burberrys  and  Canadian  retail
businesses)  were down $8.9 million from the prior year  reflecting the decision
to exit the businesses in 1998. $5.6 million of All Other net sales in the first
six months of 1999  represent  the final  liquidation  of the YSL and  Burberrys
inventory.

Gross Profit: For the twenty-six weeks ended July 3 1999, gross profit decreased
$6.0 million  (with $4.0 million of the  deterioration  relating to All Other or
terminated  businesses) from the first half of 1998. The Sock Group improved its
first half  gross  margin  from 32.0% to 35.0% of net sales year over year.  The
Shirt  Group's gross margin  decreased  from 29.6% of net sales to 24.3% for the
same period in 1999.  The reasons for the  improvement,  in the case of the Sock
Group,  and the decline,  in the case of the Shirt Group,  are  consistent  with
those as outlined for the second quarter of 1999.

Operating Income:  The Company's  operating income declined to $6.6 million from
$12.4 million for the twenty-six weeks ended July 3, 1999,  primarily due to the
Shirt  Group's  gross  margin  deterioration  and the gross  margin  loss due to
terminated licenses discussed above.

Interest  expense:  Interest  expense  increased $5.6 million for the twenty-six
weeks ended July 3, 1999 as a result of higher debt  levels  existing  after the
Recapitalization which was completed on May 18, 1998.

Bankruptcy  Reorganization Costs: The Company's bankruptcy proceedings concluded
in May 1998. As a result, there were no bankruptcy  reorganization costs for the
twenty-six  weeks ended July 3, 1999.  For the  twenty-six  weeks ended June 27,
1998,  bankruptcy  reorganization  costs  represented  payment of  post-petition
interest,  default interest,  and fees to creditors in accordance with the terms
of the bankruptcy reorganization plan.

Net loss:  Net loss for the  twenty-six  weeks ended July 3, 1999 decreased $2.0
million  to a loss of $6.7  million  from a loss of $8.7  million  for the  same
period in 1998.  This  reduction  was  primarily  related to the  decline in the
bankruptcy  reorganization  costs  offset by the  decline  in the Shirt  Group's
operating profit and the Company's overall increased interest expense.

In a continuing effort to reduce operating costs and increase efficiencies,  the
Company incurred net restructuring costs of $775,000,  during the second quarter
1999, as a result of the  consolidation  of certain  functions  within the Shirt
Group.  This   consolidation  is  expected  to  yield  annual  cost  savings  of
approximately $600,000 beginning in 2000.

In order to reduce its current domestic to imported goods  manufacturing  ratio,
improve productivity and asset utilization,  the Company announced, on August 2,
1999,  plans to close its owned  manufacturing  facility  located in Enterprise,
Alabama. The closure, which is expected to occur by October 15, 1999, will yield
annual pre-tax cost savings of  approximately  $3.2 million.  The  restructuring
plan,  which  is  anticipated  to  cost  approximately  $1.8  million,  includes
severance  and  benefits to  terminate  approximately  280  employees  and costs
related to the  physical  closure of the  facility.  The Company will record the
restructuring costs during the third quarter in accordance with the requirements
of Emerging Issues Task Force Pronouncement 94-3.
                                       2
<PAGE>
Liquidity and Capital Resources

The  Company's  primary  cash  requirements  are to fund the  Company's  working
capital  needs,  primarily  inventory and accounts  receivable,  the purchase of
property and equipment and payment of debt service  requirements  related to the
Company's  financing  agreements.  The  Company  has a  Senior  Credit  Facility
comprised of three loans,  including a revolving credit facility under which the
Company may, at its option,  borrow and repay amounts within certain limits. The
total amount  available to the Company  under the revolving  credit  facility is
$50.0 million,  subject to certain customary drawing  conditions;  the revolving
credit  facility  matures in 2004.  Interest for borrowings  under the revolving
credit  facility is based on either,  at the  Company's  option,  LIBOR plus 250
basis points or the  Alternative  Base rate plus 150 basis  points.  The Company
believes  that its  borrowing  capacity  under  this  facility  plus  internally
generated  funds are adequate to fund its capital  expenditures  and its working
capital and debt service requirements.

The Senior Credit Facility (which was amended on December 18, 1998 and March 19,
1999) is  secured  by  virtually  all  domestic  assets of the  Company  and its
domestic  subsidiaries  and  contains a number of  covenants  that,  among other
things,  restrict  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,  each of which is tested as of the last day of each
fiscal  quarter of the  Company.  During the  quarter,  the  Company  was not in
compliance with certain financial ratios and its lenders granted it a waiver for
this  quarter.  As a result,  the Company  currently  has full use of its credit
facilities.  The  Company  is in the  process  of  renegotiating  its  financial
covenants  and  expects to have an  agreement  in place  prior to the end of the
third calendar  quarter.  Despite the waiver,  accounting rules require that the
Company classify any outstandings  under the Senior Credit Facility as a current
liability until such time as a longer term agreement becomes effective.

The Company  typically  makes  capital  expenditures  related  primarily  to the
maintenance   and   improvement  of   manufacturing   facilities  and  equipment
modernization.  Net capital  spending in both the first twenty-six weeks of 1999
was $4.2  million and 1998 was $5.6  million.  The Company  anticipates  overall
capital spending levels for 1999 to be approximately $9.3 million. The Company's
principal  sources  of cash to fund  these  capital  requirements  are net  cash
provided by operating  activities as well as  borrowings,  if needed,  under its
Senior Credit Facility.

Net cash used by  operations  for the  twenty-six  weeks  ended July 3, 1999 was
$(10.9) million, as compared to $(33.0) million for the same period in the prior
year. The  significant  improvement in cash used by operations was primarily due
to the settlement of certain prepetition liabilities, which were paid during the
second  quarter  of 1998.  For  1999,  the net cash used by  operations  results
primarily from an inventory  increase at the Shirt Group.  Inventory levels were
higher at the Shirt  Group  because of the growth in  Kenneth  Cole,  the timing
differences  of shipments  year over year,  and a build up in staple dress shirt
inventory arising out of sales softness during the period.

For the  twenty-six  weeks ended July 3, 1999,  net cash  provided by  financing
activities  was $13.5 million  compared  with $37.6  million for the  twenty-six
weeks ended June 27, 1998.
                                       3
<PAGE>
Year 2000 Risk

As is more fully described in the Company's Annual Report filed on Form 10-K for
the fiscal year ended  December 31,  1998,  the Company has  undertaken  various
initiatives  intended to ensure that its computer  equipment  and software  will
function  properly with respect to dates in the year 2000 and thereafter.  Based
upon its  identification  and assessment  efforts to date, the Company  believes
that certain of the  computer  equipment  and  software it  currently  uses will
require  replacement or  modification.  In addition,  in the ordinary  course of
replacing  computer  equipment  and  software,  the  Company  attempts to obtain
replacements  that it believes are Year 2000 compliant.  Utilizing both internal
and external resources to identify and assess needed Year 2000 remediation,  the
Company  currently  anticipates that its Year 2000  identification,  assessment,
remediation, and testing efforts, will be completed by August 30, 1999, and that
such efforts will be completed prior to any currently  anticipated impact on its
computer equipment and software.
<TABLE>

<S>                                                                          <C>                     <C>
                    YEAR 2000 INITIATIVE                                       TIME FRAME             PERCENT COMPLETE

Initial IT Systems Assessment                                                 December 1998                  100%
Remediation and Testing of Central/Distributed Systems                          August 1999                   85%
Remediation and Testing of Store/Distribution Systems                           August 1999                   85%
Upgrades to Telephone/PBX/Other Systems                                       December 1998                  100%
EDI Trading Partner Conversions                                                 August 1999                   90%
Identification, Assessment, Remediation, & Testing
of Desktop Systems                                                              August 1999                   90%
Identification, Assessment & Testing of Non-IT Systems                        December 1998                  100%
</TABLE>

The  Company  has  also  mailed  letters  to its  significant  vendors,  service
providers and customers to determine  the extent to which  interfaces  with such
entities  are  vulnerable  to Year 2000  issues and  whether  the  products  and
services purchased from or by such entities are Year 2000 compliant.  As of July
1999, the Company had received  responses from  approximately  90% of such third
parties,  and 100% of the companies that have  responded  have provided  written
assurances that they expect to address all their significant Year 2000 issues on
a timely basis.

The Company believes that the cost of its Year 2000 identification,  assessment,
remediation,  and testing efforts, as well as currently  anticipated costs to be
incurred by the Company with respect to Year 2000 issues of third parties,  will
not exceed  $600,000,  which  expenditures  will be funded from  operating  cash
flows.  Such amount  represents  less than 3% of the Company's  total actual and
anticipated IT expenditures  for fiscal 1997 through fiscal 1999. As of July 23,
1999, the Company had incurred costs of  approximately  $490,000  related to its
Year 2000 identification,  assessment,  remediation, and testing efforts. All of
the $490,000 relates to analysis,  repair, or replacement of existing  software,
upgrades to existing  software,  or  evaluation  of  information  received  from
significant  vendors,  service providers,  or customers.  Other non-Year 2000 IT
efforts have not been materially  delayed or impacted by Year 2000  initiatives.
The  Company  presently  believes  that  the  Year  2000  issue  will  not  pose
significant  operational  problems  for the Company.  However,  if all Year 2000
issues are not properly identified, or assessment,  remediation, and testing are
not effected  timely with  respect to Year 2000  problems  that are  identified,
there can be no assurance that the Year 2000 issue will not materially adversely
impact the Company's  results of  operations  or adversely  affect the Company's
relationships with customers, vendors, or others. Additionally,  there can be no
assurance  that the Year 2000 issues of other  entities will not have a material
adverse impact on the Company's systems or results of operations.

The Company has begun,  but not yet completed,  a comprehensive  analysis of the
operational  problems  and costs  (including  loss of  revenues)  that  would be
reasonably  likely to result from the  failure by the Company and certain  third
parties to complete efforts to achieve Year 2000 compliance on a timely basis. A
contingency  plan has not been  developed  for dealing with the most  reasonably
likely  worst  case  scenario,  and  such  scenario  has  not yet  been  clearly
identified.   The  Company   currently  plans  to  complete  such  analysis  and
contingency planning by December 31, 1999.

The  Company  has  engaged  an  independent  expert  to  evaluate  its Year 2000
identification, assessment, remediation, and testing efforts.
                                       4
<PAGE>
The costs of the Company's Year 2000  identification,  assessment,  remediation,
and testing efforts and the dates on which the Company believes it will complete
such  efforts are based upon  management's  best  estimates,  which were derived
using numerous  assumptions  regarding  future  events,  including the continued
availability of certain  resources,  third-party  remediation  plans,  and other
factors.  There  can be no  assurance  that  these  estimates  will  prove to be
accurate  and actual  results  could  differ  materially  from  those  currently
anticipated.  Specific  factors  that  could  cause  such  material  differences
include,  but are not limited to, the availability and cost of personnel trained
in Year 2000 issues, the ability to identify,  assess,  remediate,  and test all
relevant computer codes and imbedded technology,  and similar uncertainties.  In
addition,  variability of  definitions  of  "compliance  with Year 2000" and the
myriad of different products and services, and combinations thereof, sold by the
Company  may  lead to  claims  whose  impact  on the  Company  is not  currently
estimable.  No assurance can be given that the  aggregate  cost of defending and
resolving  such  claims,  if any,  will  not  materially  adversely  affect  the
Company's results of operations.  Although some of the Company's agreements with
manufacturers  and others from whom it  purchases  products  for resale  contain
provisions   requiring   such  parties  to  indemnify  the  Company  under  some
circumstances,  there can be no assurance that such indemnification arrangements
will cover all of the Company's liabilities and costs related to claims by third
parties related to the Year 2000 issue.
                                       5
<PAGE>
Backlog and Seasonality

The amount of the Company's backlog orders at any particular time is affected by
a number of factors,  including  seasonality and scheduling of the manufacturing
and shipment of products.  In general, the Company's electronic data interchange
("EDI") system and vendor managed  inventory  systems have resulted in shortened
lead times between  submission  of purchase  orders and delivery and has lowered
the level of backlog orders. Consequently,  the Company believes that the amount
of its backlog is not an appropriate indicator of future production levels.

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.

Also  contributing  to the  strength of the third  quarter is the high volume of
fall shipments to wholesale  customers  which are generally more profitable than
spring  shipments.  The slower spring selling season at wholesale  combines with
retail seasonality to make the first half of the year particularly weak.


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,  financial condition,  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,  condition or achievement to differ materially from those expressed
in, or implied by these statements.  As a result,  the Company cautions that the
forward-looking statements are qualified by the financial strength of the retail
industry,  the risks of increased  competition from other manufacturers of men's
dress shirts and socks,  shifting  consumer  demand,  changing  consumer  credit
markets and general  economic  conditions,  hiring and retaining  effective team
members, sourcing merchandise from domestic and international vendors, preparing
for the impact of year 2000,  the Company's  ability to reach an agreement  with
its lenders  and other  risks and  uncertainties.  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 exposure to fluctuations in interest rates and foreign  currency
exchange rates.  The Company operates under a senior credit facility at variable
interest rates.  Interest expense is primarily  affected by the general level of
U.S.  interest rates,  LIBOR and European base rates.  The Company is subject to
risk from sales and loans to its foreign subsidiary as well as sales,  purchases
from third party  customers,  suppliers and  creditors,  denominated  in foreign
currencies.  Currently,  the Company does not engage in any material  derivative
type  instruments in order to hedge against  interest rate and Canadian  foreign
currency exchange rate fluctuations. However, the Company feels it is limited in
its  exposure  of foreign  currency  exchange  rate  changes  as most  inventory
purchase contracts are denominated in US Dollars.

The Company  evaluated its market risks (floating  interest rate, fixed interest
rate and currency  risks) at the fiscal year ended  December 31, 1998,  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, 1998.



                                       6
<PAGE>
                           Part II - OTHER INFORMATION


Item 1.     Legal Proceedings

The Company and its subsidiaries are involved in various legal proceedings, both
as  plaintiff  and as  defendant,  which are normal to its  business.  It is the
opinion of management that the aforementioned  actions and claims, if determined
adversely  to the  Company,  will  not have a  material  adverse  effect  on the
financial condition or operations of the Company taken as a whole.

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 July 3, 1999.

Item 6.  Exhibits and Reports on Form 8-K

(a)          (1)      Financial Statements

                      Included in Part I, Item 1

             (2)      Financial Statement Schedules

                      Schedule II - Valuation and Qualifying
                      Accounts

                     All  other  schedules  for which  provision  is made in the
                     applicable  accounting  regulation  of the  Securities  and
                     Exchange  Commission  are not  required  under the  related
                     instructions  or are  inapplicable  and therefore have been
                     omitted.

             (3)      List of Exhibits

(b)      The Company did not file any reports on Form 8-K during the thirteen
         weeks ended July 3, 1999

(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).

     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).
                                       7
 <PAGE>
     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  12  1/2%  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 an 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 an 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).

     10.2.2 Third Amendment to the Credit  Agreement and Assignment  dated as of
          March 19, 1999 by an 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).

     *10.2.3 Waiver to the Credit  Agreement and Assignment  dated July 28, 1999
          by an 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).

     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).
                                       8
<PAGE>
    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).

     +10.15  Severance  Agreement  dated as of January  16,  1996 by and between
          Bidermann  Industries  Corp.  and Steven J. Kaufman  (incorporated  by
          reference to Exhibit 10.15 to the Company's  Registration Statement on
          Form S-4/A (Reg. No. 333-58059) filed on October 15, 1998).

     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).

    *27   Financial Data Schedule (filed herewith as Exhibit 27)

     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

      *  Filed herewith

                                       9
<PAGE>

                                   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)


August 12, 1999                  /s/ Bryan P. Marsal
                                 -------------------------------------------
                                 Bryan P. Marsal
                                 Director, President and Chief Executive Officer


August 12, 1999                  /s/ W. Todd Walter
                                 -------------------------------------------
                                 W. Todd Walter
                                 Vice President and  Chief Financial
                                 and Accounting Officer












                                     10
<PAGE>




EXHIBIT INDEX

10.2.3 Waiver to the Credit  Agreement and Assignment  dated as of July
       28, 1999
27     Financial Data Schedule





















                                       11
<PAGE>


Item 6 (d). Financial Statement Schedules


                                   SCHEDULE II

                              CLUETT AMERICAN CORP.

                        VALUATION AND QUALIFYING ACCOUNTS

                             (DOLLARS IN THOUSANDS)

<TABLE>
<S>                                   <C>              <C>       <C>     <C>                 <C>            <C>
COLUMN A                               COLUMN B                  COLUMN C                   COLUMN D        COLUMN E
                                                                 ADDITIONS


                                      BALANCE AT       CHARGED TO        CHARGED TO                          BALANCE
                                      BEGINNING         COSTS AND           OTHER                            AT END
DESCRIPTION                           OF PERIOD         EXPENSES          ACCOUNTS         DEDUCTIONS       OF PERIOD

Period Ended July 3, 1999:
    Deductions from
     asset accounts:
     Allowance for
     Doubtful Accounts                      $1,568          $ 400 (a)        $  -- (b)        $    43(c)     $ 1,925
     Customer Allowances                     6,894          4,444               --              4,529(c)       6,809
     Inventory reserves                      5,149            822 (d)           --              3,437          2,534
                                             -----          -------        --------        ----------          -----
           Total                           $13,611         $5,666            $  --            $ 8,009        $11,268
                                           =======       ============      ========        ==========         ======




<FN>
(a)       Provision for doubtful accounts.
(b)       Recoveries of doubtful accounts previously written off.
(c)       Primarily uncollectible accounts charged against the allowance
          provided therefor.
(d)       Primarily related to the liquidation of excess inventory
</FN>
</TABLE>











                                       12