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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K

(Mark One)

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

For the fiscal year ended September 27, 2003

or

[   ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the transition period from ______________________________ to ______________________________

Commission File Number 0-23161

Tropical Sportswear Intl Corporation




(Exact name of registrant as specified in its charter)


|                                                               |  |                                   
|-------------------------------------------------------------- |  | ----------------------------------
|Florida                                                        |  | 59-3424305                        
|                                                               |  |                                   
|(State or other jurisdiction of
incorporation or organization) |  | I.R.S. Employer
Identification No.
|                                                              
|4902 W. Waters Avenue Tampa, FL                                |  | 33634-1302                        
|                                                               |  |                                   
|(Address of principal executive offices)                       |  | (Zip Code)                        

Registrants telephone number, including area code (813) 249-4900

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

Securities registered pursuant to Section 12 (g) of the Act:
                    Common
Stock, par value $.01 per share

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

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

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

As of January 8, 2004 there were 11,055,042 shares of Common Stock outstanding.
The aggregate market value of the Common Stock held by non-affiliates of the
registrant (assuming for purposes of this calculation, without conceding, that
all executive officers and directors are affiliates), based on the last sale
price reported on the NASDAQ National Market as of January 8, 2004, was
$21,273,211.

1



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TABLE OF CONTENTS



|                                                  |                                                                                               |  |  |  |  |  |  | 
|------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                           
|                                                  | Item 1. Business                                                                             
|                                                  | Item 2. Properties                                                                           
|                                                  | Item 3. Legal Proceedings                                                                    
|                                                  | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                                                  | Item 4A. Executive Officers of the Registrant                                                
|PART II                                          
|                                                  | Item 5. Market for Registrants Common Equity and Related Shareholder Matters                
|                                                  | Item 6. Selected Financial Data                                                              
|                                                  | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                  | Item 7A. Quantitative and Qualitative Disclosures About Market Risk                          
|                                                  | Item 8. Financial Statements and Supplementary Data                                          
|                                                  | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|PART III                                         
|                                                  | Item 10. Directors and Executive Officers of the Registrant                                  
|                                                  | Item 11. Executive Compensation                                                              
|                                                  | Item 12. Security Ownership of Certain Beneficial Owners and Management                      
|                                                  | Item 13. Certain Relationships and Related Transactions                                      
|                                                  | Item 14. Controls and Procedures                                                             
|                                                  | Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.                   
|SIGNATURES                                       
|Ex-3.2 Amended and Restated By-Laws              
|Ex-10.8 Michael Kagan Employment Agreement       
|Ex-10.9 Richard J. Domino Employment Agreement   
|Ex-10.10 Robin J. Cohan Employment Agreement     
|Ex-10.11 Frank A. Maccarrone Employment Agreement
|Ex-10.38 Fleet Amended Loan Agreement            
|Ex-10.39 Fleet Amended Loan Agreement            
|Ex-10.40 Amended Fleet Loan Agreement            
|Ex-10.41 Fleet Loan Agreement                    
|Ex-10.42 Nelson L. Mcpherson Settlement Agreement
|Ex-10.43 Christopher B. Munday Settlement Agmnt  
|Ex-10.44 Gregory L. Williams Employment Agreement
|Ex-14.(A) Code of Business Conduct               
|Ex-14.(B) Code of Conduct                        
|Ex-21.1 Subsidiaries                             
|Ex-23.1 Ernst & Young Consent                    
|Ex-31.1 Section 302 CEO Certification            
|Ex-31.2 Section 302 CFO Certification            
|Ex-32.1 Section 906 CEO Certification            
|Ex-32.2 Section 906 CFO Certification            



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DOCUMENTS INCORPORATED BY REFERENCE:

Certain portions of the Proxy Statement for the Annual Meeting of Shareholders
of Tropical Sportswear Intl Corporation, to be held on January 28, 2004 are
incorporated by reference in Part III of this Annual Report on Form 10-K.

TROPICAL SPORTSWEAR INTL CORPORATION

ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

|               |  |                                                                                       |  |         
|-------------- |  | ------------------------------------------------------------------------------------- |  | --------
|               |  |                                                                                       |  | Page No.
|               |  |                                                                                       |  |         
|PART I         |  |                                                                                       |  |         
|Item 1         |  | Business                                                                              |  | 5       
|Item 2         |  | Properties                                                                            |  | 14      
|Item 3         |  | Legal Proceedings                                                                     |  | 14      
|Item 4         |  | Submission of Matters to a Vote of Security Holders                                   |  | 14      
|Item 4A        |  | Executive Officers of the Registrant                                                  |  | 15      
|PART II        |  |                                                                                       |  |         
|Item 5         |  | Market for Registrants Common Equity and Related Shareholder Matters                 |  | 16      
|Item 6         |  | Selected Financial Data                                                               |  | 17      
|Item 7         |  | Managements Discussion and Analysis of Financial Condition and Results
of Operations |  | 18      
|Item 7A        |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 32      
|Item 8         |  | Financial Statements and Supplementary Data                                           |  | 32      
|Item 9         |  | Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure  |  | 32      
|PART III       |  |                                                                                       |  |         
|Item 10        |  | Directors and Executive Officers of the Registrant                                    |  | 33      
|Item 11        |  | Executive Compensation                                                                |  | 35      
|Item 12        |  | Security Ownership of Certain Beneficial Owners and Management                        |  | 35      
|Item 13        |  | Certain Relationships and Related Transactions                                        |  | 35      
|Item 14        |  | Controls and Procedures                                                               |  | 35      
|Item 15        |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                       |  | 35      
|Corporate Data |  | 72                                                                                   

2



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Forward Looking Statements

Certain statements contained in this Annual Report on Form 10-K that are not
purely historical may be forward- looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including statements regarding our
expectations, hopes, beliefs, intentions, or strategies regarding the future.
Forward-looking statements are subject to the safe harbor created by the
Private Securities Litigation Reform Act of 1995. These statements involve
known and unknown risks, uncertainties and other factors which may cause our
actual results, performance or achievements to be materially different from any
future results, performances or achievements expressed or implied by the
forward-looking statements. Forward-looking statements include, but are not
limited to, statements about:



| |  | Our projected sales and earnings;                                                             
|- |  | ----------------------------------------------------------------------------------------------
| 
| |  | Cost savings from our consolidation efforts;                                                  
| 
| |  | The success of new products;                                                                  
| 
| |  | Our product mix;                                                                              
| 
| |  | Potential acquisitions by us;                                                                 
| 
| |  | Our future financing plans;                                                                   
| 
| |  | Increases in sales of our Savane® brand;                                                      
| 
| |  | The benefits of expanding our distribution of Savane® through new core replenishment programs;
| 
| |  | Trends affecting our results of operations and financial condition; and                       
| 
| |  | Our business growth, operating and financing strategies.                                     

In some cases, you can identify forward-looking statements by terms such as
may, will, should, could, would, expects, plans, intends,
anticipates, believes, estimates, projects, predicts, potential,
and similar expressions intended to identify forward-looking statements. These
statements, which reflect our current views with respect to future events, are
based on assumptions and subject to risks and uncertainties. Given these
uncertainties, you should not place undue reliance on these forward-looking
statements. Among the factors that could cause actual results to differ from
the forward-looking statements are:



| |  | General economic conditions, including but not necessarily limited to recession or other cyclical effects impacting
customers in the United States and abroad;          
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Failure to achieve planned cost savings associated with consolidation and reorganization;                                                                               
| 
| |  | Disruption in the business associated with changes in management;                                                                                                       
| 
| |  | Loss of programs or customers as a result of product delivery problems;                                                                                                 
| 
| |  | Negative effects from the continued sell off of excess inventory at discounted prices;                                                                                  
| 
| |  | Restrictions and limitations placed on us by our debt instruments;                                                                                                      
| 
| |  | Potential negative effects of loan agreement covenant violations, should any occur;                                                                                     
| 
| |  | Risks associated with sourcing a greater percentage of our products as full package imports;                                                                            
| 
| |  | The financial strength of our customers;                                                                                                                                
| 
| |  | Potential negative effects from the termination of the Victorinox® license agreement and the transition of this business to
Swiss Army Brands, Inc.;                    
| 
| |  | Potential negative effects on existing customer relationships of selling the Duck Head® trademarks;                                                                     
| 
| |  | Potential negative effects resulting from the discontinuation of our Duck Head® retail outlet business;                                                                 
| 
| |  | Potential negative effects of possible class action lawsuits;                                                                                                           
| 
| |  | Potential negative effects of possible shareholder derivative demand;                                                                                                   
| 
| |  | Regulatory matters affecting us, including quotas and tariffs;                                                                                                          
| 
| |  | Removal of trade quotas applicable to countries other than Mexico or the Caribbean Basin beginning in 2005;                                                             
| 
| |  | International risks including exchange rate fluctuations, trade disruptions, and political instability of foreign markets
that we produce in or purchase materials from;
| 
| |  | Reduction in the level of consumer spending;                                                                                                                            
| 
| |  | Customer or consumer rejection or non acceptance of major product initiatives such as our Savane® MOTION MOVES WITH YOU
pants;                                         

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| |  | The availability and price of raw materials and global manufacturing costs and restrictions;                                            
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Continued pricing pressures on our product line;                                                                                        
| 
| |  | The inability to successfully identify, acquire and profitably operate brands, companies and businesses;                                
| 
| |  | Increases in costs;                                                                                                                     
| 
| |  | The availability and quality of independent manufacturers;                                                                              
| 
| |  | Changes in fashion trends and consumer preferences;                                                                                     
| 
| |  | The continued acceptance of our existing and new products by our major customers;                                                       
| 
| |  | The success of advertising and marketing programs to support and promote our Savane® brand;                                             
| 
| |  | The continued viability of our major suppliers;                                                                                         
| 
| |  | Our ability to continue to use existing and obtain additional licensed trademarks and tradenames, including Bill Blass® and
Van Heusen®;
| 
| |  | Seasonality in our business;                                                                                                            
| 
| |  | Business disruptions and costs arising from acts of terrorism or military activities around the globe; and                              
| 
| |  | Those risks and uncertainties discussed under the heading Risk Factors.                                                               

All forward-looking statements included in this document are based on
information available to us on the date hereof, and we assume no obligation to
update any such forward-looking statements. Other factors that could cause
actual results to differ from the forward-looking statements are the factors
discussed in Items 1 through 3 and 7 of this report.

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PART I




Item 1. Business

General

We are an innovator, designer, marketer and producer of high-quality
branded and retailer private branded apparel products that we sell to major
retailers in all levels and channels of distribution.

Our primary product lines feature casual and dress-casual pants, shorts,
denim jeans and woven and knit shirts for men, boys and women. Our products
are marketed under widely recognized international and national brands,
including:

Our owned brands:



| |  | Savane®                 
|- |  | ------------------------
| 
| |  | Farah®                  
| 
| |  | Flyers                 
| 
| |  | The Original Khaki Co.® 
| 
| |  | Bay to Bay®             
| 
| |  | Two Pepper®             
| 
| |  | Royal Palm®             
| 
| |  | Banana Joe®             
| 
| |  | Authentic Chino
Casuals®

Our licensed brands:



| |  | Bill Blass®
|- |  | -----------
| 
| |  | Van Heusen®

Retailer national private brands:

     Puritan®

     Members Mark®

     George

     Sonoma®

     Croft & Barrow®

     St. Johns Bay®

     Roundtree & Yorke®

     Geoffrey Beene®

     Izod®

     Faded Glory®

     White Stag®

Our brand strategy provides for the distribution of our products across
all major apparel retail channels including department stores, discounters and
mass merchants, wholesale clubs, national chains, specialty stores and catalog
retailers. Our major customers include:



| |  | Wal-Mart                          
|- |  | ----------------------------------
| 
| |  | Sams Club                        
| 
| |  | Kohls                            
| 
| |  | Dillards                         
| 
| |  | J.C.
Penney                       
| 
| |  | Phillips-Van Heusen Retail Outlets
| 
| |  | Federated                         
| 
| |  | Belk                              
| 
| |  | May Company                       
| 
| |  | Saks                              
| 
| |  | BJs                              
| 
| |  | Mervyns                          

We were founded in 1927. Our primary executive offices are located at
4902 West Waters Avenue, Tampa, Florida 33634-1302, and our telephone number
is 813-249-4900.

Industry

The apparel industry is large and highly fragmented. According to NPD, a
retail industry research firm, the U.S. apparel industry totaled approximately
$174 billion in retail sales in 2002. We believe that the apparel industry is
currently characterized by the following trends:



| |  |  | Increasing consumer demand for brands and retailers private
brands featuring greater innovation, higher quality, new technology,
better fit, increased comfort and value pricing;                                    
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Increasing consumer demand for convenient, easy to shop and
competitively priced apparel retailers;                                                                                                                   
|
| |  |  | Consolidation of major apparel retailers;                                                                                                                                                                             
|
| |  |  | Heightened dependence by major apparel retailers on key
vendors that can maximize the retailers return on investment,
improve customer service and provide vendor managed inventory and
category management programs;

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| |  |  | Focus by major apparel retailers on national brands that meet evolving consumer needs; and           
| | - |  | -----------------------------------------------------------------------------------------------------
|
| |  |  | Consolidation by major apparel retailers of their suppliers into core retailer-supplier partnerships.

Our Business

Our business contains several key areas, which include the following:

Highly Diversified Portfolio of Brands and Distribution Channels.Our
product lines currently feature over 60 brands including our owned and licensed
brands as well as retailer private brands. We believe that the breadth of this
portfolio of brands allows us to penetrate all levels of distribution and
mitigates the risk that potential negative trends in any one market segment
will significantly impact our company. In addition, the positioning of our
brand portfolio and retailer private brands across a broad range of price
points enables us to maximize penetration of our customer base by providing
them with differentiated brand programs to target consumers across all
demographics.

Continuous Innovation.Innovation is a key element of our business. We
continuously work internally and collaborate with our suppliers to improve our
products. We devote significant resources to researching consumer trends and
preferences, developing new fabrics and product finishes and designing products
to meet consumer needs.

Product Quality.Our product quality is critical given increasing
consumer demand for quality apparel products at compelling values. We apply
stringent quality standards throughout our operations, from product design
through the sourcing of our raw materials from the mill and the shipment of
customer orders. Our quality control personnel are on-site at our suppliers
mills and inspect raw materials prior to shipment to our cutting facility.
Similarly, our quality control personnel are on-site at the facilities of our
independent assembly contractors to supervise quality throughout the assembly
process.

Accelerated Production Process.We have developed and continue to refine
an operating blueprint that minimizes the production cycle and reduces
inventory risk. In fiscal 2002, we achieved a 27 day average production cycle
for our core replenishment products. During fiscal 2003, we encountered
difficulties in the consolidation of our El Paso operations, particularly
related to our cutting operations, which increased our production cycle to 35
days. This caused delays in delivering products to our customers, and
negatively impacted our results during fiscal 2003. These difficulties were
resolved during the second half of fiscal 2003, which reduced our production
cycle back to 28 days at the end of fiscal 2003.

Efficient Operations.We achieve efficient operations through utilization
of advanced technology, the integration of our systems and those of our
suppliers, consolidation of operational and production processes and the
employment of an experienced, well-trained work force. Our systems include
integrated apparel design, materials sourcing, production planning and
logistics, customer order entry, sales demand forecasting and order
fulfillment, all of which are integrated with our financial reporting and human
resources systems. Our systems are integrated with our suppliers production
planning processes, enabling us to adjust the amount and composition of our raw
materials.

Customer Service and Support.We maximize customer satisfaction through
our customized brand and merchandise management programs. Our programs help
retailers increase their profit margins by outsourcing traditional retailer
merchandising functions and reducing their inventory risk and markdowns.
Through these programs, our customers are able to leverage our expertise in
tracking and evaluating consumer trends and preferences and are able to consult
with us on all aspects of merchandising including product design, labeling,
sales strategy, point-of-sale advertising and pricing. Additionally, as
retailers have increasingly focused on maximizing their return on investment
and inventory turns and partnering with vendors that can assist them to achieve
those objectives, we have been able to provide many of our customers with our
sophisticated vendor managed inventory program in which we manage customer
inventory levels by stock-keeping unit, or SKU, and replenish inventories
automatically based on store level retail sell-through. As an element of our
programs, we

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monitor product sell-through and assist the customer in managing its floor
space and inventory portfolio by suggesting merchandise mix adjustments based
on the point of sale SKU data we collect. We also provide financial support
for several of our brands, including the Savane® brand, which include in-store
fixtures, co-op and other advertising support. We believe that these services
build brand recognition and customer loyalty as well as support for the brand
by the retailer.

Growth Strategies

Our goal is to strengthen our position as an innovator, designer, marketer
and producer of high-quality branded and private branded apparel products, and
to grow our margins and improve our return on invested capital. The key
elements of our growth strategy include the following:

Further Penetrate Existing and New Customers in Current and New Markets.
We intend to continue leveraging our diversified portfolio of brands and
merchandising programs to expand our existing customer relationships by
introducing new products and programs, growing existing brands, products and
programs and capitalizing on international growth opportunities with existing
customers. Our key customers include many of the top retailers in the world,
some of whose apparel businesses are rapidly expanding in North America and
globally. With our established operations in the United Kingdom, Mexico,
Canada and the South Pacific, we believe that we are positioned to capitalize
on international sales opportunities. Examples of these activities include the
important new programs we added under our Savane® brand with J.C. Penney,
Kohls and Mervyns, and our expanding global relationship with Wal-Mart under
the Farah® brand. We are actively pursuing additional new customer
relationships, including selected mass merchants, deep discount retailers,
vertically integrated private brand retailers, and leading direct marketers.

Continue to Expand Product Categories.We will continue to develop and
bring to market innovative products that complement our existing core product
lines. In fiscal 2003, we introduced our Savane® MOTION MOVES WITH YOU pants.
These pants provide comfort from the waist down and contain an expandable
waistband, flexible fabric that moves with the body throughout the garment, and
100% shape retention throughout the garment. In fiscal 2003, we introduced a
line of shirts and plan to expand distribution through many of our retail
distribution channels. Additionally, we are focusing on the further
development of our denim line and related programs in order to capitalize on
increased consumer demand for denim. We believe that our ability to continue
to offer an expanding array of products will be an important driver of future
growth.

Develop New and Innovative Products.Our focus on innovative design and
fabrication features is driven by consumer demand for freshness and innovation
in styling, performance and value. This focus on innovation is an important
reason we continue to be a key vendor to our customers and positions us well to
realize continued growth with our customers and attract new customers. While
maintaining our focus on basic recurring styles, we base our designs on a
careful and thorough assessment of prevailing consumer fashion and lifestyle
trends to incorporate features into our products that enhance styling and
performance, such as innovative new cuts, fabrics and finishes. We also work
with our customers to offer innovative packaging and displays as a complement
to their point-of-sale advertising.

Products

Product Overview.We produce core lines of high quality casual and
dress-casual pants, shorts, denim jeans and woven and knit shirts for men, boys
and women. The following table sets forth our product sales mix expressed as a
percentage of our net sales for fiscal 2003:

|                          |  |  |     |  
|------------------------- |  |  | --- | -
|Casual Pants              |  |  | 45  | %
|Dress-Casual Pants        |  |  | 21  |  
|Shorts                    |  |  | 13  |  
|Denim                     |  |  | 13  |  
|Shirts                    |  |  | 6   |  
|Womens, Boys, and Other |  |  | 2   |  
|                          |  |  |     |  
|                          |  |  | 100 | %
|                          |  |  |     |  

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Our product line focuses on basic, recurring apparel styles with
innovative design and fabrication features that address consumer preferences
for styling, performance and value. We base our designs on a careful
assessment of prevailing consumer fashion and lifestyle trends to incorporate
features into our products that enhance styling and performance, such as
innovative new cuts, fabrics and finishes. We believe that our focus on core
apparel products makes our business less susceptible to fashion obsolescence
and less seasonal in nature than other companies that are dependent on fashion
styles. The majority of our mens pant products are derived from production
platforms, or chassis, each of which incorporates basic features requiring
distinct manufacturing processes, such as inclusion of an elastic waistband, a
jeansband or button-flap pockets. We modify our basic chassis to produce
separate and distinct styles through variations in cut, fabric and finish.
This process enables us to achieve production consistency and efficiencies,
while also producing a wide variety of products through distinctions in color
and style. In order to continue to bring newness to the market, we also
introduce fashion-oriented products on a limited basis. The key fabrics that
we use include 100% cotton and blends utilizing silk, Tencel®, rayon, wool,
Lycra® and other micro-denier type fabrics as well as various blends of these
and other fabrics. In addition, we have a core line of woven and knit shirts
that are sourced entirely as full packaged imports from the Far East and the
Pacific Rim.

Design and Development.Our marketing team analyzes domestic and
international trends in the apparel industry as well as industries outside of
apparel, including the technology, automobile, grocery and home furnishings
industries, to determine trends in styling, color, consumer preferences and
lifestyle. Virtually all of our products are designed by our in-house staff
utilizing a computer-aided-design, or CAD system, which enables us to produce
computer simulated samples that display how a particular style will look in a
given color and fabric. The use of CAD technology reduces the time and costs
associated with producing actual sewn samples prior to customer approval and
allows us to create custom designed products meeting the specific needs of a
customer. Our product content and construction specifications require the use
of matched finish thread throughout the garment, surge seaming of all pockets,
rigorous attention to seam construction, color matching of all components and
the generous use of fabric and a graduated rise in our pants which produce a
fuller, more comfortable fit and reduce costly customer returns.

Brands

Our product lines currently feature over 60 brands. Our products are
marketed under our owned brands, including Savane®, Farah®, Flyers, The
Original Khaki Co.®, Bay to Bay®, Two Pepper®, Royal Palm®, Banana Joe® and
Authentic Chino Casuals®, and our licensed national brands, including Bill
Blass® and Van Heusen®, and numerous private brands owned by our key customers.

The following table sets forth net sales by brand category for fiscal
2003:

|                        |  |  |     |  
|----------------------- |  |  | --- | -
|Retailer Private Brands |  |  | 40  | %
|Savane®                 |  |  | 25  |  
|Farah®                  |  |  | 18  |  
|Other Owned Brands      |  |  | 11  |  
|Licensed Brands         |  |  | 3   |  
|Duck Head®              |  |  | 3   |  
|                        |  |  |     |  
|                        |  |  | 100 | %
|                        |  |  |     |  

In June 2003, we sold our Duck Head® trademarks to Goodys Family
Clothing, Inc. Additionally, in May 2003, we transitioned our Victorinox®
apparel division to Swiss Army Brands, Inc.

8



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The following chart illustrates the distribution channels through which we
sell our primary brands:

|               |  |                                                                           |  |                                                                                                                     
|-------------- |  | ------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------
|Brand          |  | Product Categories                                                        |  | Distribution Channels                                                                                               
|               |  |                                                                           |  |                                                                                                                     
|Savane®        |  | Mens casual and
dress-casual pants,
shorts, jeans and shirts             |  | Finer to moderate
department stores and
specialty stores                                                            
|               |  |                                                                           |  |                                                                                                                     
|Farah®         |  | Mens, womens, and boys
casual and dress-casual
pants, jeans and shorts |  | Exclusively available to
Wal-Mart in the U.S. with
minimal distribution in
other international
distribution channels
|               |  |                                                                           |  |                                                                                                                     
|Private Brands |  | Mens, womens and boys
casual and dress-casual
pants, jeans and shorts  |  | Finer department stores,
mass merchants,
discounters and specialty
stores                                           

The following are brief descriptions of certain of our primary brands:

Savane®.We acquired the Savane® brand as part of our acquisition of
Farah Incorporated in June 1998. Savane® historically has been positioned as a
leading brand at better department stores, including Federated and May Company.
In April 2002, we announced important new national programs under the Savane®
brand with J.C. Penney, Kohls and Mervyns. Our Savane® branded clothing is
targeted to consumers between 30 and 50 years old who value innovation and
quality.

Farah®.We also acquired the Farah® brand as part of our acquisition of
Farah Incorporated in June 1998. This internationally recognized brand is
exclusively distributed to Wal-Mart in the United States. We currently produce
casual and dress-casual pants and shorts under this brand and anticipate
expanding into shirts. This line of clothing is designed to appeal to the
value shopper who is between 30 and 50 years old.

Retail Private Brands.In addition to the owned and licensed brands in
our product line, we produce products marketed under retailer private brands to
customers including Wal-Mart, Sams Club, Kohls, Dillards, J.C. Penney,
Phillips-Van Heusen, Federated, May Company, Saks, BJs, Goodys, Fred Meyer
and Galyans. Some of the better known retailer private brands for which we
produce apparel are Puritan®, Members Mark®, George, Sonoma®, Croft &
Barrow®, St. Johns Bay®, Roundtree & Yorke®, Geoffrey Beene®, Izod®, Faded
Glory® and White Stag®. Our products sold under retailer private brands
generally produce lower gross margins than branded products, but also require
lower selling, general and administrative expenses.

Other Licensed Brands.An important component of the branded position of
our product line feature brands that we license from third parties. Our other
principal licensed brands include Bill Blass® and Van Heusen®. Licensed brands
are an important part of the breadth of our portfolio of brands and our
penetration of all retail distribution channels

Customers and Value-Added Services

General.We market our products across all major apparel retail channels
including department stores, discounters and mass merchants, wholesale clubs,
national chains, specialty stores and catalog retailers. Sales to our five
largest customers represented approximately 58.2%, 55.3% and 64.3% of net sales
during fiscal 2001, 2002 and 2003, respectively. Sales to Wal-Mart accounted
for approximately 15.3%, 14.7% and 20.8% during fiscal 2001, 2002 and 2003,
respectively. Sales to Sams Club accounted for approximately 17.6%, 13.4% and
15.8% during fiscal 2001, 2002 and 2003, respectively. We also sell our
products to other major retailers

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including Kohls, Dillards, J.C. Penney, Phillips-Van Heusen Retail Outlets,
Federated, Belk, May Company, Saks, BJs, Mervyns and Costco.

The following table sets forth net sales trends by distribution channel:

|                               |  |             |     |             |  |             |     |   |  |  |     |  
|------------------------------ |  | ----------- | --- | ----------- |  | ----------- | --- | - |  |  | --- | -
|                               |  | Fiscal 2001 |     | Fiscal 2002 |  | Fiscal 2003
|                               |  |             |     |             |  |            
|Department Stores              |  |             | 33  | %           |  |             | 27  | % |  |  | 23  | %
|Discounters and Mass Merchants |  |             | 23  |             |  |             | 23  |   |  |  | 30  |  
|Wholesale Clubs                |  |             | 21  |             |  |             | 17  |   |  |  | 17  |  
|National Chains                |  |             | 9   |             |  |             | 14  |   |  |  | 15  |  
|Outlet & Other                 |  |             | 8   |             |  |             | 9   |   |  |  | 9   |  
|Specialty Stores               |  |             | 6   |             |  |             | 10  |   |  |  | 6   |  
|                               |  |             |     |             |  |             |     |   |  |  |     |  
|                               |  |             | 100 | %           |  |             | 100 | % |  |  | 100 | %
|                               |  |             |     |             |  |             |     |   |  |  |     |  

Customer Service and Support.We offer our customers comprehensive brand
management programs, which provide:



| |  |  | Product design, merchandise planning and support;                                                                                                                                                         
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Value-added services, such as sales and pricing strategy,
point-of-sale advertising, custom labeling and packaging design,
just-in-time electronic order execution, and retail profitability
analysis; and
|
| |  |  | Access to advanced sales forecasting and inventory management
systems and Internet order fulfillment.                                                                                                     

We believe that close collaboration with our customers provides our
employees the opportunity to better understand the fashion, fabric and pricing
strategies of the customer and leads to the generation of products that are
more consistent with customer expectations. At the same time, we provide the
customer the opportunity to benefit from our knowledge of designing, packaging
and labeling high quality products, our consumer purchasing data and
experience, our merchandise, brand and category management capabilities and
knowledge in tracking and evaluating consumer trends and preferences. In
addition, we offer each of our existing and prospective customers a marketing
plan tailored to the customers market niche. Using our marketing data and
industry experience, we are able to create for each customer and each product,
a plan that outlines optimum volume and pricing strategies, as well as
sell-through, expected markdowns and profit margins.

Stock Replenishment Program.Accurate and timely order execution is
achieved through an electronic data interchange order entry or EDI, and quick
replenishment of core SKUs. Substantially all orders are placed via EDI and
orders are executed utilizing fully integrated inventory management and order
fulfillment technology. Our systems also enable us to track point-of-sale
activity by SKU and forecast consumer demand and seasonal inventory
requirements on a real-time continuous basis.

Product Labeling and Packaging.We differentiate our products through
customized labeling, point-of-sale packaging and other brand identification
techniques. For some of our customers, we manage the design and production of
labeling and packaging materials. Management regularly analyzes consumer
product labeling and packaging and consumer targeting trends evident in other
retailing formats, including the automobile, grocery and home furnishings
industries. We primarily ship products directly to our customers retail
stores in floor-ready form and offer innovative packaging and displays.

Under our national brand programs, including Savane® and, Farah®, products
are labeled at garment assembly factories. Under our private brand programs,
some products are delivered to our distribution centers without
customer-specific labeling and packaging, which is then added to the product
only after we receive a customers confirmed purchase order. Under certain
programs, we will apply a customer-specific label to the product during the
production process.

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Sales Force.Our products are principally sold by our experienced
in-house sales and marketing associates located across the United States and
internationally. We also maintain customer focused sales and marketing support
teams dedicated to analyzing sales and marketing data.

Products and Sourcing

General.Approximately 75% of our products are cut at our Tampa Florida
facility and by various offshore contractors before offshore assembly and
finishing in the Caribbean Basin and Mexico. We believe that the use of
independent assembly contractors enables us to provide customers with high
quality goods at significantly lower prices than if we operated our own
assembly facilities. We also source approximately 25% of our products through
the use of full-package imports from independent manufacturers located in the
Pacific Rim, the Middle East and Mexico. We anticipate sourcing a greater
portion of our products as full package imports.

Purchasing.We purchase raw materials, including fabrics, thread, trim
and labeling and packaging materials, from domestic and international sources
based on quality, pricing and availability. Although we have no long-term
agreements with any of our suppliers, we believe that generally we have the
flexibility, if needed, to replace a supplier with minimal disruption to our
business. We generally undertake a quality audit at our major suppliers prior
to shipment to assure that quality standards are met and to avoid unnecessary
delays. An additional quality audit is performed upon receipt of all raw
materials. We project raw material requirements through a series of planning
sessions, taking into account orders received and future projections by style
and color. This data is then used to purchase the raw material components
needed by production time frame in order to meet customers requirements.

Cutting.We utilize advanced computerized equipment for spreading,
marking and cutting fabric. Our CAD system positions all component parts of a
single garment in close proximity on the same bolt of fabric to ensure color
consistency. Quality audits in our cutting facility and at our contractors are
performed during various stages.

Assembly.Component parts are shipped by common carrier to independent
assembly contractors, principally in the Caribbean Basin for assembly and
finishing. There are no formal arrangements regarding the production of
garments between us and any of our independent assembly contractors, but we
believe that our relationships with our contractors are generally good. Using
independent assembly contractors allows us to shift our sources of supply
depending upon production and delivery requirements and cost, while at the same
time reducing the need for significant capital expenditures, work-in-process
inventory and a large production work force. We arrange for the assembly or
production of our products primarily based on orders received. We inspect
prototypes of each product before production runs are commenced. Random
in-line quality control checks are performed during and after assembly before
the garments leave the contractor. We currently have a team of full-time
production and quality control personnel on-site in the Caribbean Basin and
Mexico. During the fourth quarter of fiscal 2003, we transitioned the majority
of our Mexico production to the Dominican Republic.

Finished Goods Sourcing.We utilize over 40 factories in various
countries and conduct human rights audits in each of the factories we use. All
garments are produced according to our specifications and product quality is
monitored at the factories. During fiscal 2003, we expanded our sourcing of
complete garment packages for selected product styles.

Import Regulations

Products imported from our source countries are subject to U.S. Customs
duties at applicable Normal Trade Relations or Column 1 duty rates. These
tariffs generally range between 10% and 30%, depending upon the nature of the
garment (e.g., shirt, pant), its construction and its chief weight by fiber. A
typical duty rate applicable to our imported mens cotton pants is
approximately 17%. In accordance with the Agreement on Textiles and Clothing
of the World Trade Organization, the U.S. has entered into bilateral trade
agreements with certain apparel producing countries to limit the quantity of
garments that may be imported annually from each such country. These limits,
or quotas, apply to a broad range of garments and are often competitive,
particularly as

11



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applied to Asian countries, thus affecting annual sourcing patterns and prices
for garments internationally. Effective January 1, 2005, the U.S., with few
exceptions, is obligated to remove quotas applicable to garments from all World
Trade Organization member countries, including China and certain other Asian
countries. See Risk Factors - The integration on January 1, 2005, of all
textile and apparel quotas under the World Trade Organization Agreement on
Textiles and Clothing could reduce the competitiveness of apparel assembled in
Mexico and the Caribbean Basin under our current business model.

The Caribbean Basin Trade Partnership Act (CBTPA) became effective on
October 2, 2000. CBTPA generally grants duty and quota-free access for
garments cut in the United States or in the Caribbean Basin and assembled in
the Caribbean Basin from United States fabric and U.S. yarn. The CBTPA
legislation is effective through September 30, 2008. Prior to this
legislation, most of the merchandise we sourced from these Caribbean Basin
countries was admitted in the U.S. with a substantial tariff reduction under
the so-called 807 program. In essence, reduction in dutiable value was equal
to the value of U.S. components incorporated into these assembled goods plus
southbound international freight and insurance. As a result of this
legislation, American apparel companies have increasingly utilized production
facilities located in the Caribbean Basin, including the Dominican Republic.
We believe that the Dominican Republic offers certain competitive advantages
including favorable pricing and quality production, a long-standing and
relatively stable production network, and shorter transportation periods.

We also import finished goods from Mexico under the North American Free
Trade Agreement, commonly known as NAFTA. Under NAFTA, merchandise that
qualifies is accorded reduced or duty-free access and is not subject to any
quota.

Human Rights Policy

We have a comprehensive human rights policy. The policy is consistent
with the Worldwide Responsible Apparel Production Principles, which are
endorsed by the American Apparel and Footwear Association and other Caribbean
Basin apparel manufacturing associations. Our policy focuses on working
conditions at the independent assembly contractors utilized by us and, among
other things, prohibits under age labor and poor working conditions.
Compliance with the policy is mandatory and is closely monitored in the
following ways: (1) our associates or our agents routinely visit each
independent contractor plant, (2) our management periodically visits
independent contractor plants and (3) independent third party agencies utilized
by many companies in the apparel industry performs audits periodically and
certify their results to us. We will promptly discontinue production with any
independent contractor that does not comply with the policy.

Management Information Systems

We believe that advanced information processing is critical to our
business. Our philosophy is to utilize modern technology where it will enhance
our competitive position. Consequently, we continue to upgrade our management
information systems in order to maintain better control of our inventory and to
provide management with information that is current and accurate. Our
management information systems provide, among other things, comprehensive order
processing, production, accounting and management information for our
marketing, manufacturing, importing and distribution functions. To support our
flexible inventory replenishment program, we have an EDI system through which
customer inventories can be tracked and orders automatically placed with us by
the retailer. In addition, our systems were designed to continually add new
brand programs and customer information quickly and reliably without disruption
to our existing operations.

Competition

The apparel industry is highly competitive and we compete with numerous
apparel manufacturers, including brand name and private label producers, as
well as retailers that have established, or may establish, internal product
development and sourcing capabilities. The principal markets in which we
compete are the United States, Europe, Canada, Mexico, Australia and New
Zealand. Many of our competitors and potential

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competitors have greater financial, manufacturing and distribution resources
than we do. We believe that we compete favorably on the basis of the quality
and value of our programs and products and the long-term customer relationships
we have developed. Nevertheless, any increased competition from manufacturers
or retailers could result in reductions in unit sales or prices, or both, which
could have a material adverse effect on our business and results of operations.

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Personnel

At December 31, 2003, we had 1,174 associates, including 1,033 in the
United States, 17 in Mexico, 97 in the United Kingdom, 19 in Australia, and
eight in New Zealand. Approximately 5% of our employees are members of the
Union of Needletrades Industrial and Textile Employees. The collective
bargaining agreement with these employees expires in February 2006. We
consider our relations with our employees to be generally good.

We are committed to developing and maintaining a well-trained workforce.
We provide or pay for continuing education annually for our employees on
subjects ranging from computers to foreign languages. We are equally committed
to the well-being of our employees. We offer our full-time employees and their
families a comprehensive benefits package that includes a 401(k) plan and a
choice of group health insurance plans. We also enjoy long-standing
relationships with certain of our independent assembly contractors in the
Dominican Republic and Mexico, and have contributed financial resources to
improving conditions for their employees.

Trademarks and Licenses

We hold or have applied for over 600 United States and worldwide trademark
registrations covering our various brand names including Savane®, Farah®,
Flyers, The Original Khaki Co.®, Authentic Chino Casuals®, Two Pepper®, and
Bay to Bay®. The word marks Savane®, Farah®, The Original Khaki Co. ®, and Bay
to Bay® are registered with the United States Patent and Trademark Office. In
addition, the word marks Savane®, Farah®, The Original Khaki Co.® and Bay to
Bay® are registered in various countries worldwide. Pursuant to separate
license agreements, we have the exclusive rights to use, (i) the Bill Blass®
trademark with respect to mens casual pants, shorts and jeans in the United
States and Canada, and (ii) the Van Heusen® trademark with respect to mens
pants, jeans and shorts in the United States, Canada, and Mexico. The license
agreement with respect to the Bill Blass® trademark expires in 2005 and is
subject to a renewal option that would extend the expiration date through 2010.
The license agreement with respect to the Van Heusen® trademark expires in
2004 and is subject to renewal options to be negotiated between the parties.
In June 2003, we sold our Duck Head® trademarks to Goodys Family Clothing,
Inc. In May 2003, we transitioned our Victorinox® apparel division to Swiss
Army Brands, Inc.

Seasonality

Historically, our business has been seasonal, with higher sales and income
in the second and third fiscal quarters. In addition, certain of our products,
such as shorts and corduroy pants, tend to be seasonal in nature. In the event
such products represent a greater percentage of our sales in the future, the
seasonality of our sales may be increased.

Backlog

In advance of the month in which units are to ship, we receive hold for
confirmation orders from customers which are used to plan production. These
orders are not commitments to purchase and are subject to change until they are
confirmed. Therefore, orders that we currently have may not be indicative of
future sales. This increases the difficulty in forecasting the demands of our
customers.

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Item 2. Properties

Our corporate headquarters are located in Tampa, Florida and are owned by
us. We consider both our domestic and international facilities to be suitable
and adequate to meet our current needs and to have sufficient production
capacity for current operations. (See Managements Discussion and Analysis of
Financial Condition and Results of Operations  Risk Factors Affecting our
Business and Prospects.). The following table reflects the general location,
use and approximate size of our significant real properties:

|                         |  |                                       |  |                |         |            |  |          
|------------------------ |  | ------------------------------------- |  | -------------- | ------- | ---------- |  | ---------
|                         |  |                                       |  | Approximate    |         | Owned/    
|Location                 |  | Use                                   |  | Square Footage |         | Leased (1)
|                         |  |                                       |  |                |         |           
|Tampa, Florida           |  | Corporate offices/Distribution center |  |                | 305,000 |            |  | Owned    
|Tampa, Florida           |  | Fabric cutting facility               |  |                | 110,000 |            |  | Owned    
|Tampa, Florida           |  | Corporate office                      |  |                | 118,000 |            |  | Owned(2) 
|El Paso, Texas           |  | Fabric cutting facility               |  |                | 205,000 |            |  | Leased(3)
|Santa Teresa, New Mexico |  | Distribution center                   |  |                | 250,000 |            |  | Leased   
|New York, New York       |  | Office/Showroom                       |  |                | 4,000   |            |  | Leased   
|Auckland, New Zealand    |  | Office/Warehouse                      |  |                | 9,000   |            |  | Owned    
|Sydney, Australia        |  | Office/Warehouse                      |  |                | 20,000  |            |  | Leased   
|Witham, United Kingdom   |  | Office/Distribution center            |  |                | 57,000  |            |  | Leased   



---

|(1) |  | See Note 6 of Notes to Consolidated Financial Statements for a discussion
of lease terms.
|--- |  | -----------------------------------------------------------------------------------------
|   
|(2) |  | Currently unoccupied and available for sale.                                             
|   
|(3) |  | Currently unoccupied and available for sublease.                                         




Item 3. Legal Proceedings

Two lawsuits seeking class action status were filed on September 16, 2003
and October 2, 2003, in the U.S. District Court for the Middle District of
Florida, Tampa Division, on behalf of all persons who purchased or otherwise
acquired the securities of our company during the period from April 17, 2002
through January 20, 2003 (the Class Period). The lawsuits name our company
and certain current and former officers and directors of our company as
defendants. The lawsuits make a number of allegations against the defendants,
including allegations that during the Class Period, the defendants materially
misled the investing public by publicly issuing false and misleading statements
and omitting to disclose material facts concerning our companys operations and
performance and the retail market for its goods. We have not yet responded to
either complaint, and intend to vigorously defend these lawsuits. Because
these cases are in the early stages of litigation, we are unable to form a
reasonable estimate of potential loss, if any, and have not established any
reserves related to these cases.

On October 30, 2003, a purported shareholder sent us a shareholder
derivative demand pursuant to Florida Statute Section 607.07401 demanding,
among other things, that we institute litigation against current and former
officers and directors Michael Kagan, Eloy Vallina-Laguera and William Compton.
The demand contends that we should attempt to recover from these officers and
directors their proceeds of certain stock sales in July 2002. We have not yet
responded to the demand, and no litigation has commenced yet.

Other than the items noted above, we are not a party to any other legal
proceedings other than various claims and lawsuits arising in the normal course
of business. Our management does not believe that any such claims or lawsuits
will have a material adverse effect on our financial condition.




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

Not applicable.

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Item 4A. Executive Officers of the Registrant

The following table provides the names and ages of our executive officers,
and the positions and offices currently held by each of them:

|                    |  |     |    |             |  |                                                                
|------------------- |  | --- | -- | ----------- |  | ---------------------------------------------------------------
|Name                |  | Age |    | Position(s)
|                    |  |     |    |            
|Michael Kagan       |  |     | 64 |             |  | Chief Executive Officer and Director                           
|Richard J. Domino   |  |     | 55 |             |  | President                                                      
|Robin J. Cohan      |  |     | 46 |             |  | Executive Vice President, Chief Financial Officer and Treasurer
|Frank A. Maccarrone |  |     | 57 |             |  | Executive Vice President, Chief Operating Officer              

Michael Kaganbecame a Director of our company in 1989, serving as Vice
Chairman of the Board through July 2002. In August 2003, Mr. Kagan was
appointed Chief Executive Officer replacing Mr. Christopher B. Munday and
continues to serve as a member of our Board. He served as Chairman of the
Board and as a consultant to our company from November 2002 to August 2003. He
previously served as Executive Vice President, Chief Financial Officer and
Secretary from November 1989 through July 2002 and as Treasurer from November
1989 to December 1997. Mr. Kagan has more than 30 years experience in the
apparel industry. Prior to joining our company, Mr. Kagan served as Senior
Vice President of Finance for Munsingwear, Inc. and as Executive Vice
President, Chief Financial Officer and Chief Operating Officer of Flexnit
Company Inc., a manufacturer of womens intimate apparel.

Richard J. Dominojoined our company in 1988 and was appointed President
in August 2003. Prior to becoming President, Mr. Domino served as our
Executive Vice President and President of our Branded Division since November
1994. Mr. Domino served as Senior Vice President of Sales and Marketing from
January 1994 to October 1994 and Vice President of Sales from December 1989 to
December 1993. He has over 25 years experience in apparel-related sales and
marketing.

Robin J. Cohanjoined our company in March 2000 as Senior Vice President
of Finance and was appointed Executive Vice President, Chief Financial Officer
and Treasurer in August 2003. Ms. Cohan is a C.P.A. and has over 10 years of
experience as a financial executive for publicly held companies. Ms. Cohan
also spent five years in public accounting with PricewaterhouseCoopers.

Frank
A. Maccarronejoined Savane International Corp. in February 1969 and
served in various positions including Distribution Center Manager, Director of
Customer Service, and Vice President of Advertising and Marketing. Mr.
Maccarrone was appointed Executive Vice President and Chief Operating Officer
of our company in June 2002. From November 1991 through April 2002, he served
as a Senior Vice President in production related capacities including retail
planning, production planning, purchasing and other operations related areas of
Savane. Mr. Maccarrone joined Savane in February 1969 and served in various
positions including Distribution Center Manager, Director of Customer Service,
and Vice President of Advertising and Marketing.

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PART II




Item 5. Market for Registrants Common Equity and Related Shareholder Matters

Our common stock began trading on the NASDAQ National Market under the
symbol TSIC on October 28, 1997. The initial public offering price of our
common stock was $12.00 per share. At January 8, 2004, there were
approximately 82 record holders of our common stock, and we estimate that there
were approximately 2,300 beneficial holders on the same date. The following
table sets forth the quarterly high and low sale prices per share of our common
stock as reported by the NASDAQ National Market for the last two fiscal years.

|                   |  |      |       |     |  |   |       | 
|------------------ |  | ---- | ----- | --- |  | - | ----- | 
|Fiscal Year Ended  |  |      |       |     |  |   |       | 
|September 28, 2002 |  | High |       | Low
|                   |  |      |       |    
|First Quarter      |  | $    | 19.66 |     |  | $ | 15.50 | 
|Second Quarter     |  | $    | 24.47 |     |  | $ | 18.55 | 
|Third Quarter      |  | $    | 29.55 |     |  | $ | 21.00 | 
|Fourth Quarter     |  | $    | 24.25 |     |  | $ | 14.25 | 

|                   |  |      |       |     |  |   |      | 
|------------------ |  | ---- | ----- | --- |  | - | ---- | 
|Fiscal Year Ended  |  |      |       |     |  |   |      | 
|September 27, 2003 |  | High |       | Low
|                   |  |      |       |    
|First Quarter      |  | $    | 12.98 |     |  | $ | 6.91 | 
|Second Quarter     |  | $    | 8.97  |     |  | $ | 4.44 | 
|Third Quarter      |  | $    | 7.83  |     |  | $ | 4.55 | 
|Fourth Quarter     |  | $    | 8.26  |     |  | $ | 4.00 | 

The transfer agent and registrar for our Common Stock is Computershare
Investor Services, LLC, Chicago, Illinois.

We have not declared or paid any cash dividends on our common stock since
1989. We currently anticipate that all of our earnings will be retained for
the continued development and expansion of our business and do not anticipate
declaring or paying any cash dividends in the foreseeable future. Moreover,
our various existing debt facilities contain covenants expressly prohibiting
the payment of any cash dividends.

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Item 6. Selected Financial Data

The following selected financial data (in thousands, except share and per
share data) are derived from our audited consolidated financial statements for
each of the five fiscal years in the period ended September 27, 2003. You
should read the following consolidated financial information together with our
consolidated financial statements and the related notes in Item 15 of this
report, and the information under Managements Discussion and Analysis of
Financial Condition and Results of Operations in Item 7 of this report.

|                                                                        |  |                   |            |               |  |               |           |               |  |            |           |  |  |   |           |  |  |   |           | 
|----------------------------------------------------------------------- |  | ----------------- | ---------- | ------------- |  | ------------- | --------- | ------------- |  | ---------- | --------- |  |  | - | --------- |  |  | - | --------- | 
|                                                                        |  | Fiscal Year Ended
|                                                                        |  |                  
|                                                                        |  | September 27,     |            | September 28, |  | September 29, |           | September 30, |  | October 2,
|Statements of Income Data:                                              |  | 2003              |            | 2002          |  | 2001          |           | 2000          |  | 1999      
|                                                                        |  |                   |            |               |  |               |           |               |  |           
|Net sales                                                               |  | $                 | 386,723    |               |  | $             | 463,877   |               |  | $          | 436,436   |  |  | $ | 472,985   |  |  | $ | 420,691   | 
|Gross profit                                                            |  |                   | 40,998     |               |  |               | 128,407   |               |  |            | 124,556   |  |  |   | 137,522   |  |  |   | 117,922   | 
|Selling, general and administrative
expenses                            |  |                   | 85,369     |               |  |               | 97,157    |               |  |            | 88,509    |  |  |   | 88,719    |  |  |   | 80,511    | 
|Other charges                                                           |  |                   | 65,289     |               |  |               | 16,130    |               |  |            | 2,774     |  |  |   | 1,006     |  |  |   | 3,999     | 
|Operating income (loss)                                                 |  |                   | (109,660   | )             |  |               | 15,120    |               |  |            | 33,273    |  |  |   | 47,797    |  |  |   | 33,412    | 
|Interest expense, net                                                   |  |                   | 12,219     |               |  |               | 12,955    |               |  |            | 15,261    |  |  |   | 17,351    |  |  |   | 18,586    | 
|Other, net                                                              |  |                   | (395       | )             |  |               | (1,002    | )             |  |            | 989       |  |  |   | 1,251     |  |  |   | 973       | 
|Income (loss) before income taxes                                       |  |                   | (121,484   | )             |  |               | 3,167     |               |  |            | 17,023    |  |  |   | 29,195    |  |  |   | 13,853    | 
|Income (loss) before extraordinary item                                 |  |                   | (131,452   | )             |  |               | 1,909     |               |  |            | 10,430    |  |  |   | 17,503    |  |  |   | 8,251     | 
|Extraordinary item                                                      |  |                   |           |               |  |               | 412       |               |  |            | 800       |  |  |   |          |  |  |   |          | 
|Net income (loss)                                                       |  |                   | (131,452   | )             |  |               | 2,321     |               |  |            | 11,230    |  |  |   | 17,503    |  |  |   | 8,251     | 
|Income (loss) per common share before
extraordinary item-diluted        |  | $                 | (11.90     | )             |  | $             | 0.22      |               |  | $          | 1.34      |  |  | $ | 2.27      |  |  | $ | 1.05      | 
|Extraordinary item                                                      |  |                   |           |               |  |               | 0.04      |               |  |            | 0.11      |  |  |   |          |  |  |   |          | 
|Net income (loss) per common
share-diluted                              |  | $                 | (11.90     | )             |  | $             | 0.26      |               |  | $          | 1.45      |  |  | $ | 2.27      |  |  | $ | 1.05      | 
|Weighted average number of shares
used in the calculation  diluted (1) |  |                   | 11,046,000 |               |  |               | 8,857,000 |               |  |            | 7,771,000 |  |  |   | 7,725,000 |  |  |   | 7,838,000 | 

|                                                    |  |                         |         |               |  |               |         |               |  |            |         |  |  |   |         |  |  |   |         | 
|--------------------------------------------------- |  | ----------------------- | ------- | ------------- |  | ------------- | ------- | ------------- |  | ---------- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                                    |  | As of Fiscal Year Ended
|                                                    |  |                        
|                                                    |  | September 27,           |         | September 28, |  | September 29, |         | September 30, |  | October 2,
|Balance Sheet Data:                                 |  | 2003                    |         | 2002          |  | 2001          |         | 2000          |  | 1999      
|                                                    |  |                         |         |               |  |               |         |               |  |           
|Working capital                                     |  | $                       | 83,560  |               |  | $             | 166,214 |               |  | $          | 130,905 |  |  | $ | 111,627 |  |  | $ | 120,041 | 
|Total assets                                        |  |                         | 214,279 |               |  |               | 336,208 |               |  |            | 309,230 |  |  |   | 294,528 |  |  |   | 289,322 | 
|Long-term debt and obligations
under capital leases |  |                         | 135,421 |               |  |               | 110,173 |               |  |            | 151,314 |  |  |   | 145,541 |  |  |   | 170,894 | 
|Shareholders equity                                |  |                         | 22,751  |               |  |               | 156,372 |               |  |            | 86,267  |  |  |   | 75,834  |  |  |   | 59,823  | 



---

|(1) |  | Computed on the basis described in Notes to Consolidated Financial
Statements. Rounded to the nearest thousand.
|--- |  | ---------------------------------------------------------------------------------------------------------------

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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations

Overview

We manage the production of a majority of our products utilizing our
facility in Tampa, Florida and through independent assembly contractors located
primarily in the Caribbean Basin and Mexico. Approximately 75% of our products
are cut at our Tampa Florida facility and by various offshore contractors
before offshore assembly and finishing in the Caribbean Basin and Mexico. We
believe that the use of independent assembly contractors enables us to provide
customers with high quality goods at significantly lower prices than if we
operated our own assembly facilities. We also source approximately 25% of our
products through the use of full-package imports from independent manufacturers
located in the Pacific Rim, the Middle East and Mexico. We anticipate sourcing
a greater percentage of our products as full package imports. We have no
material contractual arrangements with our independent contractors and pay them
based on a specified unit price for actual first-quality units produced.
Accordingly, a substantial portion of our production labor and overhead is
variable. Finished goods are received into our Tampa, Florida and Santa
Teresa, New Mexico distribution centers. Upon receipt of a customer order
confirmation, we ship the product directly to customers or, in the case of
private brand products, attach designated labels and point-of-sale packaging
and then ship the product to our customers.

Our results of operations for fiscal 2002 and 2003 were adversely impacted
by negative economic trends including increasing unemployment, declines in the
U.S. equity markets and decreased consumer confidence. During these periods,
apparel retailers sought to increase consumer demand and reduce inventories
with aggressive price discounting, particularly in the department store
channel. In addition, certain producers made brands available to mass
merchants and discounters that normally were distributed through department and
specialty stores. Additionally, sales of our Savane® brand have declined
significantly since the beginning of fiscal 2000 due to declines in the
department store channel where the Savane® product is generally sold. We
expanded our distribution of the Savane® brand through new core replenishment
programs with J.C. Penney, Kohls and Mervyns. Results for fiscal 2003 were
also negatively impacted by the consolidation of our Savane® division and
various other charges, discussed below.

On April 18, 2002, we announced a plan to consolidate the administrative,
cutting and related functions of our Savane division in El Paso, Texas into our
Tampa, Florida facility. This initiative was internally referred to as Project
Synergy. We completed the physical consolidation in the second fiscal quarter
ended March 29, 2003. As part of the consolidation, we vacated our El Paso,
Texas administration building and cutting facility. We experienced delays and
difficulties in consolidating our El Paso, Texas cutting functions into our
Tampa, Florida facilities that resulted in delays in delivering products to our
customers and lost sales during fiscal 2003. During the second half of
fiscal 2003, our inventories grew, requiring us to sell higher than normal
levels of excess inventories at closeout prices, which reduced our average
selling price and our gross margins. Higher than normal levels of sales
returns and allowances also contributed to reduced gross margins. We still
have excess inventory which we expect to sell at discounted prices during the
first half of fiscal 2004.

In May 2003, we transitioned our Victorinox® apparel division to Swiss
Army Brands, Inc. In connection with the transition of our Victorinox® apparel
division to Swiss Army Brands, Inc. (Swiss Army), Swiss Army is currently
disputing certain aspects of the transition agreement and have not paid us
approximately $4.8 million, which we believe is due to us under the transition
agreement. On June 3, 2003, we filed a declaratory judgment action against
Swiss Army, seeking judicial interpretation of the agreement. We and Swiss
Army agreed to mediation in an attempt to resolve the issue, which resulted in
an impasse. There can be no assurance that all or any part of the $4.8 million
will be collected in its entirety.

In June 2003, we sold our Duck Head® trademarks to Goodys Family
Clothing, Inc. (Goodys) for $4.0 million in cash. Under the purchase
agreement, we continued to sell Duck Head® branded products through the end of
fiscal 2003. Goodys also assumed all licenses associated with the Duck Head®
trademarks. In connection with the sale, we recorded a net gain of $3.7
million, which is net of expenses related to the sale and a reduction of
certain of the remaining assets, including inventory. In connection with the
sale of our Duck Head® trademarks, all of our Duck Head® retail outlet stores
were closed in September 2003. The cash costs associated with the

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closure of the retail outlet stores was approximately $0.7 million. The Duck
Head® and Victorinox businesses represented less than 5% of our total fiscal
2003 net sales. We believe that exiting these businesses will free up valuable
resources that can be devoted to our core business.

We have continued the realignment of our business by disposing of the
unprofitable businesses noted above and aggressively reducing operating
expenses. We have completed the transition of the majority of our Mexico
production to the Dominican Republic during the fourth quarter of fiscal 2003.
We also reorganized our South Pacific division, including discontinuing
production in factories in Fiji that were partially owned by us. Production
for our South Pacific division is now sourced globally through what we believe
are lower cost, full packaged imports. During fiscal 2003, we reduced selling,
general and administrative expenses by approximately $12 million, which was
primarily due to successful cost cutting measures resulting from the
consolidation of our El Paso, Texas operations to Tampa, Florida, and to other
discretionary spending reductions. Significant areas of cost reduction
included salaries, co-op advertising and tradeshow costs.

The following discussion and analysis of our results of operations is
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of our consolidated financial statements in conformity with
generally accepted accounting principles requires that we make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosure of contingent assets and liabilities.
These estimates and assumptions are based on historical and other factors
believed to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of asset and
liabilities that are not readily apparent from other sources. Actual results
may differ materially from these estimates under different assumptions or
conditions. We have chosen accounting policies that we believe are appropriate
to accurately and fairly report our operating results and financial position,
and we apply those accounting policies in a consistent manner.

Critical Accounting Policies

Inventories Inventories are stated at the lower of cost or market. Cost
is determined using the first-in, first-out method. We evaluate our inventory
by style, color and size to determine excess or slow moving product based on
projected sales. We record provisions for markdowns and losses on excess and
slow-moving inventory to the extent the cost of inventory exceeds estimated net
realizable value. If actual market conditions or competitive pressures change,
the level of inventory reserves would change.

Reserve for Allowances and Doubtful Accounts Accounts receivable
consists of amounts due from our customers from our normal business activities.
We maintain a reserve for allowances and doubtful accounts, which is based on
historical collection and deduction write-off experience, and an estimate of
potential sales returns. Estimates for sales returns include provision for
order shortages, purchase order variances and other customer discrepancies.
For fiscal 2002, we did not provide a reserve for credit losses as
substantially all of our receivables were assigned under factoring agreements,
without recourse, except for credit losses on the first 0.10% of amounts
factored. During fiscal 2003, we discontinued factoring of our receivables,
but maintained credit insurance for those accounts which we deemed necessary.
Effective in the first quarter of fiscal 2004, we now maintain credit insurance
for all customer accounts. This credit insurance includes a deductible of
$100,000 per year. We will continue to assess the adequacy of our reserves
based on qualitative and quantitative measures.

Long-Lived Assets We estimate the depreciable lives of our property,
plant and equipment and review them for impairment when events or circumstances
indicate that their carrying amounts may be impaired. Most of our property,
plant and equipment are used in our cutting and distribution processes. We
periodically evaluate the carrying value of assets, which are held for sale, to
determine if, based on market conditions, the values of these assets should be
adjusted. Although we believe we have appropriately recorded our assets held
for sale at their estimated realizable value, net of estimated disposal costs,
the actual sale of these assets could result in gains or losses which could
differ from our estimated amounts. To assess the recoverability of goodwill
and other intangible assets, we make assumptions regarding estimated future
cash flows and other factors to determine whether the carrying values are
recoverable from operations. If these assumptions or estimates change, we may
be required to record impairment charges to reduce the value of these assets.

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Valuation Allowances for Deferred Tax Assets- Valuation allowances are
recorded to reduce deferred tax assets if, based on the weight of the evidence,
it is more likely than not that some or all of the deferred tax assets will not
be realized. The evidence considered in making that determination includes,
offsetting deferred tax liabilities, future taxable income, as well as prudent
tax planning strategies. We have recorded deferred income tax assets related
to state net operating loss carryforwards, foreign net operating loss
carryforwards, foreign tax credit carryforwards and certain other accruals. We
have recorded valuation allowances to reduce the deferred tax assets relating
to these operating loss carryforwards and accruals based on an evaluation of
the benefits expected to be realized. If we determine that we would be able to
realize more of our net deferred tax assets than we currently expect, we would
reduce the valuation allowance, which would have the effect of increasing
income in the period that we make the determination. Conversely, if we
determine that we will not be able to realize all or part of our net deferred
tax assets in the future, we will increase the valuation allowance, which would
have the effect of reducing income in the period that we make the
determination.

Contingencies We accrue for contingent obligations when the obligations
are probable and the amount is reasonably estimable. As facts concerning
contingencies become known, we reassess our estimates and make appropriate
adjustments to the financial statements. Estimates that are particularly
sensitive to future changes include tax, legal and other regulatory matters
such as import and export tariffs, which are subject to change as events evolve
and as additional information becomes available during the administrative and
litigation process.

The following discussion of our results of operations and financial
condition should be read in conjunction with our consolidated financial
statements and notes thereto contained in Item 14 of this report.

Results of Operations

The following table sets forth, for the periods indicated, selected items
in our consolidated statements of operations expressed as a percentage of net
sales:

|                                             |  |                   |       |               |  |               |       |   |  |  |       |  
|-------------------------------------------- |  | ----------------- | ----- | ------------- |  | ------------- | ----- | - |  |  | ----- | -
|                                             |  | Fiscal Year Ended
|                                             |  |                  
|                                             |  | September 27,     |       | September 28, |  | September 29,
|                                             |  | 2003              |       | 2002          |  | 2001         
|                                             |  |                   |       |               |  |              
|Net sales                                    |  |                   | 100.0 | %             |  |               | 100.0 | % |  |  | 100.0 | %
|Cost of goods sold                           |  |                   | 89.4  |               |  |               | 72.3  |   |  |  | 71.5  |  
|                                             |  |                   |       |               |  |               |       |   |  |  |       |  
|Gross profit                                 |  |                   | 10.6  |               |  |               | 27.7  |   |  |  | 28.5  |  
|Selling, general and
administrative expenses |  |                   | 22.1  |               |  |               | 20.9  |   |  |  | 20.3  |  
|Other charges                                |  |                   | 16.9  |               |  |               | 3.5   |   |  |  | 0.6   |  
|                                             |  |                   |       |               |  |               |       |   |  |  |       |  
|Operating income (loss)                      |  |                   | (28.4 | )             |  |               | 3.3   |   |  |  | 7.6   |  
|Interest expense, net                        |  |                   | 3.2   |               |  |               | 2.8   |   |  |  | 3.5   |  
|Other expense, net                           |  |                   | (0.2  | )             |  |               | (0.2  | ) |  |  | 0.2   |  
|                                             |  |                   |       |               |  |               |       |   |  |  |       |  
|Income (loss) before income taxes            |  |                   | (31.4 | )             |  |               | 0.7   |   |  |  | 3.9   |  
|Provision for income taxes                   |  |                   | 2.6   |               |  |               | 0.3   |   |  |  | 1.5   |  
|Income (loss) before extraordinary item      |  |                   | (34.0 | )             |  |               | 0.4   |   |  |  | 2.4   |  
|                                             |  |                   |       |               |  |               |       |   |  |  |       |  
|Extraordinary item                           |  |                   |      |               |  |               | 0.1   |   |  |  | 0.2   |  
|                                             |  |                   |       |               |  |               |       |   |  |  |       |  
|Net income (loss)                            |  |                   | (34.0 | )%            |  |               | 0.5   | % |  |  | 2.6   | %
|                                             |  |                   |       |               |  |               |       |   |  |  |       |  

Fiscal 2003 Compared to Fiscal 2002

Net Sales.Net sales for fiscal 2003 decreased to $386.7 million from
$463.9 million for fiscal 2002. This decrease was primarily due to a 14%
decrease in the average selling prices, a 2% decrease in units shipped, and
higher than normal levels of sales returns and allowances due to production
delay issues related to the

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consolidation of our El Paso, Texas operations with our Tampa, Florida
operations. During fiscal 2003, we shipped fewer full priced units and a
higher level of units at discounted prices. Additionally, the average selling
price was impacted by a change in the product mix as the higher average selling
priced Savane® products experienced declines in unit volume as the department
store channel in which Savane® was positioned suffered declines in sales. Due
to higher levels of inventory during fiscal 2003, our sales to discount
retailers were higher than historical levels. We expect fiscal 2004 sales of
Savane® and private label products to be slightly below fiscal 2003 levels due
to a continuing difficult retail environment.

Gross Profit. Gross profit decreased to $41.0 million, or 10.6% of net
sales, for fiscal 2003, from $128.4 million, or 27.7% of net sales, for fiscal
2002. The reduction in the gross margin percentage was due to a combination of
factors including a decrease in average selling prices of approximately 14%,
sales returns and allowances increasing by over 90%, and approximately $20
million of excess inventory sold at discounted prices. Sales of branded
products, which generate higher margins, were a lower portion of this years
sales. Additionally, the market for excess inventory has become much more
competitive as many other suppliers are actively disposing of excess inventory.
The lower market prices caused us to record higher reserves for remaining
excess inventory. As excess inventory is sold, we expect to partially reduce
these inventory reserves in fiscal 2004. To the extent that existing excess
inventory is sold in fiscal 2004, reduced gross margins could impact fiscal
2004 results. We estimate that approximately $10 million of excess inventory
existed at the end of fiscal 2003 that will be disposed of at reduced margins.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased to $85.4 million, or 22.1% of net sales, for
fiscal 2003, from $97.2 million, or 20.9% of net sales, for fiscal 2002. The
decrease in operating expenses was primarily due to cost cutting measures
resulting from the consolidation of our El Paso, Texas operations to Tampa,
Florida, and to other discretionary spending reductions. Significant areas of
cost reduction included salaries, co-op advertising and tradeshow costs. As
discussed in Liquidity and Capital Resources, the Company anticipates incurring
additional advertising to support the Savane® brand in fiscal 2004.

Other Charges. Other charges of $65.3 million in fiscal 2003 were primarily comprised of:



| |  |  | $34.2 million for a goodwill impairment loss;                                                                                                                      
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | $14.3 million reduction in market value of a recently constructed
administration building in Tampa, Florida that is now held for sale;                             
|
| |  |  | $11.7 million for severance related to various management positions;                                                                                               
|
| |  |  | $4.7 million of lease termination charges in conjunction with the disposal of our corporate aircraft;                                                              
|
| |  |  | $2.6 million related to reserves for certain contract
disputes/litigations and investment banking advisory fees;                                                   
|
| |  |  | $1.5 million for the termination costs of the lease on our El Paso,
Texas administration building and a loss on the sale of a parcel of
land in El Paso, Texas; and
|
| |  |  | $1.5 million related to termination costs of our Duck Head retail
outlet stores.                                                                                   

These charges were offset in part by a $3.7 million gain on the sale of
the Duck Head® trademarks, and the following activity related to Project
Synergy.

On April 18, 2002, we announced a plan to consolidate the administrative,
cutting and related functions of the Savane division in El Paso, Texas into the
Tampa, Florida facility. We completed the physical consolidation in the second
fiscal quarter ending March 29, 2003. As part of the consolidation, we vacated
our El Paso, Texas administration building and terminated the associated lease
obligation, and vacated our El Paso, Texas cutting facility.

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As a result of these initiatives (internally referred to as Project
Synergy), we recorded a pre-tax charge totaling approximately $16.1 million in
fiscal 2002 for severance ($3.1 million), relocation (recognized as incurred)
($2.5 million), lease terminations ($2.8 million), asset write-downs ($5.7
million) and other related costs ($2.0 million) included in other charges in
the accompanying statements of operations. As of September 27, 2003, we have
approximately $2.7 million accrued, related to exit costs, which consists of
lease terminations. The activity in the exit accruals related to Project
Synergy during fiscal 2003 and 2002 were as follows:

|                    |  |                    |        |                    |  |   |        |  
|------------------- |  | ------------------ | ------ | ------------------ |  | - | ------ | -
|                    |  | Year ended         |        | Year ended        
|                    |  | September 27, 2003 |        | September 28, 2002
|                    |  |                    |        |                   
|Beginning balance   |  | $                  | 4,295  |                    |  | $ |       |  
|Non cash additions  |  |                    | 1,986  |                    |  |   | 6,016  |  
|Non cash reductions |  |                    | (2,490 | )                  |  |   |       |  
|Cash payments       |  |                    | (1,052 | )                  |  |   | (1,721 | )
|                    |  |                    |        |                    |  |   |        |  
|Ending balance      |  | $                  | 2,739  |                    |  | $ | 4,295  |  
|                    |  |                    |        |                    |  |   |        |  

Other charges of $16.1 million in fiscal 2002 related to Project Synergy
and consisted of reserves for severance, lease termination costs, asset
writedowns and other related costs.

Interest Expense, net.Interest expense, net decreased to $12.2 million
for fiscal 2003 from $13.0 million for fiscal 2002. The decrease was primarily
due to lower average outstanding borrowings, and the capitalization of interest
costs of $1.0 million related to the recently constructed administration
building.

Other, net.Other, net decreased to $0.4 million in fiscal 2003 compared
with $1.0 million for fiscal 2002. The change was due to a decrease in royalty
income, offset by a decrease in factor expense.

Income Taxes.We currently have $43.0 million of net deferred tax assets
primarily comprised of temporary timing differences of future deductible
expenses and net operating losses available to offset future taxable income in
the United States. We have provided a valuation allowance of $44.1 million
against these assets, which results in an overall net deferred tax liability of
$1.2 million. An increase in the valuation allowance is reflected in our
income tax provision as a non-cash increase to tax expense of $40.4 million.
The use of these deferred tax assets to offset taxable profits in future years
would result in a reduction in our effective tax rate in these years.

Net Income (Loss).As a result of the above factors, we incurred a net
loss of $131.5 million for fiscal 2003, compared with net income of $2.3
million for fiscal 2002.

Fiscal 2002 Compared to Fiscal 2001

Net Sales.Net sales for fiscal 2002 increased to $463.9 million from
$436.4 million for fiscal 2001. This increase was primarily due to an 18%
increase in units sold, a small portion of which related to sales of Duck Head®
branded product, which was acquired in August 2001. This increase was offset
by a 10% decrease in average selling prices. The decrease in average selling
prices was due to our experiencing pricing pressure due to the weak retail
conditions. Additionally, the average selling price was impacted by a change
in mix of product sales as the higher average selling priced Savane® products
experienced declines in unit volume as the department store channel that Savane
was positioned in suffered declines in sales. We have expanded our
distribution of the Savane® brand through major new core replenishment programs
with retailers.

Gross Profit. Gross profit increased to $128.4 million, or 27.7% of net
sales, for fiscal 2002, from $124.6 million, or 28.5% of net sales, for fiscal
2001. The decrease in gross margin percentage was primarily due to continued
competitive pricing pressure and a higher mix of lower margin styles.

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Selling, General and Administrative Expenses.Selling, general and
administrative expenses increased to $97.2 million, or 20.9% of net sales, for
fiscal 2002, from $88.5 million, or 20.3% of net sales, for fiscal 2001. The
increase in operating expense as a percentage of net sales was primarily due to
the higher relative operating expenses associated with the Duck Head® and
Victorinox® branded components of the business.

Other Charges.Other charges of $16.1 million in fiscal 2002 relate to
Project Synergy and include reserves for severance, lease terminations, asset
write-downs and other related costs. Other charges of $2.8 million in fiscal
2001 relate to severance, in-process research and development acquired in
connection with the Victorinox® license, costs related to closure of a sewing
plant in Chihuahua, Mexico, and costs related to the unsuccessful pursuit of an
acquisition.

Interest Expense, net.Interest expense decreased to $13.0 million for
fiscal 2002 from $15.3 million for fiscal 2001. The decrease was primarily due
to lower average interest rates and to a reduction of outstanding borrowings
under our revolving credit line during our fourth quarter.

Other, net.During fiscal 2002, we recorded other income of $1.0 million
as compared with other expense of $1.0 million for fiscal 2001. The change
consisted primarily of lower amortization expense and higher royalty income
offset in part by higher factor fees. In accordance with Statement No. 142, we
discontinued the amortization of our intangible assets effective September 30,
2001.

Income Taxes.Our effective income tax rate for fiscal 2002 was 39.7%
compared with 38.7% for fiscal 2001. The overall increase was due to changes
in permanent items related to deferred tax asset valuation allowances and to
other transactions related to certain of our foreign entities. This increase
was offset in part by the elimination of non-deductible goodwill amortization.

Extraordinary Item.We recorded an extraordinary gain in fiscal 2002 of
$412,000 related to the final purchase accounting adjustments associated with
our acquisition of Duck Head in August 2001.

Net Income.As a result of the above factors, including the charges
related to Project Synergy, we had net income of $2.3 million for fiscal 2002,
or 0.5% of net sales, compared with $11.2 million, or 2.6% of net sales for
fiscal 2001.

Liquidity and Capital Resources

Our primary capital requirements are funding our operations and capital
expenditures. We have historically financed our growth in sales and the
resulting increase in inventory and receivables through a combination of
operating cash flow and borrowings under our revolving credit line. Consistent
with industry practice, we are often required to post letters of credit when
placing an order with certain international manufacturers.

On June 6, 2003, we renewed our revolving credit line (the Facility).
The Facility provides for borrowings of up to $95.0 million, subject to certain
borrowing base limitations. Borrowings under the Facility bear variable rates
of interest based on LIBOR plus an applicable margin (4.3% at September 27,
2003), and are secured by substantially all of our domestic assets. The
Facility matures in June 2006. The Facility contains significant financial and
operating covenants if availability under the Facility falls below $20 million.
These covenants include a consolidated fixed charge ratio of at least .90x and
a ratio of consolidated funded debt to consolidated EBITDA of not more than
5.25x. The Facility also includes prohibitions on our ability to incur certain
additional indebtedness or to pay dividends, and restrictions on our ability to
make capital expenditures. As of September 27, 2003, $34.3 million was
available for borrowings under the Facility, therefore, we were not subject to
these covenants as of fiscal 2003 year end.

The Facility contains both a subjective acceleration clause and a
requirement to maintain a lock-box arrangement, whereby remittances from
customers reduce borrowings outstanding under the Facility. In

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accordance with Emerging Issues Task Force 95-22, Balance Sheet Classification
of Borrowings Outstanding under Revolving Credit Agreements That Include Both a
Subjective Acceleration Clause and a Lock-Box Arrangement, outstanding
borrowings under the Facility of $25.7 million have been classified as
short-term as of September 27, 2003.

On December 15, 2003, we paid the semi-annual interest payment of $5.5
million to the holders of our senior subordinated notes. On December 16, 2003,
availability under our Facility fell below $20 million, triggering financial
covenants which we violated. This caused us to be in technical default under
the Facility. On January 12, 2004, we amended the Facility (the Amended
Facility) with Fleet Capital, which among other things reduces aggregate
borrowings to $70 million. The default under the Facility was waived on
January 12, 2004 by the terms of the Amended Facility. Although our Amended
Facility provided for borrowings of up to $70 million, the amount that can be
borrowed at any given time is based upon a formula that takes into account,
among other things, our eligible accounts receivable and inventory, which can
result in borrowing availability of less than the full amount.
Additionally, the Amended
Facility contains a $10 million availability reserve base and higher rates of
interest than the Facility. The Amended Facility also contains monthly
financial covenants of minimum EBITDA levels which begin February 2004, and a
consolidated fixed charge coverage ratio and consolidated EBIT to consolidated
interest expense ratio which begin March 2005. The fiscal 2004
minimum EBITDA levels are cumulative month amounts beginning in the
second quarter of fiscal 2004. The minimum EBITDA threshold for
fiscal 2004 ranges from $1.8 million for the two months ending
February 29, 2004 to $11.8 million for the nine months
ending September 30, 2004.
While we believe our operating
plans, if met, will be sufficient to assure compliance with the terms of the
Amended Facility, there can be no assurances that we will be in compliance
through fiscal 2004.

On May 28, 1999, we entered into a real estate loan (Real Estate Loan)
agreement secured by our distribution center, cutting facility, and
administrative offices in Tampa, Florida. The Real Estate Loan was used to
refinance $9.5 million outstanding on our previous real estate loan and to
finance up to $6.0 million of the costs related to an expansion of our Tampa,
Florida distribution facility. In March 2000, the Real Estate Loan was
converted to a secured term loan. Principal and interest payments were paid
monthly on the refinanced amount through June 2002. On June 26, 2002, the
terms of the Real Estate Loan were amended and the loan required the payment of
monthly interest only, with the remaining outstanding principal balance of $7.0
million due on or before May 15, 2008. Under the terms of an interest-rate
swap agreement associated with the Real Estate Loan, effectively $7.0 million
of borrowings under the Real Estate Loan were associated with the swap
agreement.

On June 28, 2003, we violated certain of the financial covenants
associated with our Real Estate Loan, which was held by Bank of America, and we
were in technical default under certain terms of the Real Estate Loan and in
technical default under the terms of the Facility, due to the cross default
provision. On September 9, 2003, Bank of America assigned the Real Estate Loan
to Fleet Capital (the Amended Real Estate Loan). Borrowings under the
Amended Real Estate Loan bear variable rates of interest based on LIBOR plus an
applicable margin (5.3% at September 27, 2003). The Amended Real Estate Loan
requires quarterly principal payments of $200,000, which commenced October 1,
2003, and monthly interest payments. The Amended Real Estate Loan contains no
financial covenants, however in an event of default under the Amended Facility
the Amended Real Estate Loan would also be in default. The Amended Real Estate
Loan matures in June 2006.

The cross default provision on the Facility, which was triggered by the
default on the Real Estate Loan, was waived. In addition, the interest-rate
swap agreement was terminated concurrent with Fleet Capital assuming the
Amended Real Estate Loan. The terminated interest rate swap agreement has been
accounted for within other comprehensive income because the interest payments
on the Amended Real Estate Loan will continue through fiscal 2006. As of
September 27, 2003, the Amended Real Estate Loan had a balance of $8.0 million.
On January 12, 2004, the Amended Real Estate Loan was further amended to
increase the loan by $2.0 million, to increase the interest rate, and to
require additional quarterly principal payments of $50,000, which commence
April 1, 2004. The $2.0 million of additional borrowings was used to pay down
borrowings under the Facility.

We have $100 million of senior subordinated notes (the Notes)
outstanding that were issued through a private placement. Under the terms of
the indenture governing the Notes, we are paying semi-annual interest at the
rate of 11% through June 2008, at which time the entire principal amount is
due. The net proceeds from the

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Notes were used to repay a portion of the borrowings outstanding under a bridge
loan that was used to finance the purchase of Savane in June 1998.

In addition to the financial covenants discussed above, our Amended
Facility and our Amended Real Estate Loan also contain customary events of
default, including nonpayment of principal or interest, violation of covenants,
inaccuracy of representations and warranties, cross-defaults to other
indebtedness, bankruptcy and other insolvency events, material judgments,
certain ERISA events, a material adverse change, and certain changes of control
at our company. The occurrence of an event of default or a material adverse
effect on our company could result in our inability to obtain further
borrowings under our Amended Facility and could also result in the acceleration
of our obligations under any or all of our credit agreements, each of which
could materially and adversely affect our business.

Our estimate of capital needs is subject to a number of risks and
uncertainties that could result in additional capital needs that have not been
anticipated. An important source of capital is our ability to begin to
generate positive cash flow from operations. This is dependent upon our
ability to increase revenues, to generate adequate gross profit from those
sales, to reduce excess inventories and to control costs and expenses. Another
important source of capital is our ability to borrow under the Amended
Facility. We have historically violated certain covenants in our borrowing
agreements, and to this point, we have been able to obtain waivers from our
lenders allowing us continued access to this source of capital. However, there
can be no assurances that we will be able to obtain waivers from our lenders
should a violation occur in the future. If our actual revenues are less than
we expect or operating or capital costs are more than we expect, our financial
condition and liquidity may be materially adversely affected. We may need to
raise additional capital either through the issuance of equity or debt
securities or additional credit facilities, and there can be no assurance that
we would be able to access the credit or capital markets for additional
capital.

During fiscal 2003, we completed construction of an administration
building in Tampa, Florida. We have decided not to occupy this building and it
is being marketed for sale. Proceeds from the sale of this building, when
sold, will be used to pay down borrowings under the Amended Real Estate Loan
and the Amended Facility.

In June 2002, we completed a secondary public offering of 3.0 million
shares of common stock. We received net proceeds of approximately $63.2
million, of which approximately $32.0 million was used to repay all outstanding
borrowings under our previous revolving credit facility, to pay down a portion
of the Real Estate Loan, and to repay certain capital lease obligations. The
remaining $31.2 million was used for the payment of the cash portion of the
Project Synergy charges, the construction of an administration facility in
Tampa, Florida and for working capital and general corporate purposes. (See
Part 1, Item 3, Legal Proceedings).

During fiscal 2002, pursuant to two separate factoring agreements, we
factored substantially all our accounts receivable. The factoring agreements
provided that the factor pay us an amount equal to the gross amount of our
accounts receivable from customers, reduced by certain offsets, including,
among other things, discounts, returns and a commission payable by us to the
factor. During fiscal 2003, we discontinued factoring of our receivables, and
maintained credit insurance for those accounts that we deemed necessary.
Effective the first quarter of fiscal 2004, we now maintain credit insurance
for all of our customer accounts. This credit insurance includes a deductible
of $100,000 per year.

As a result of our decision to terminate the leases on our corporate
aircraft, we paid approximately $4.1 million of cash during the first quarter
of fiscal 2004. In connection with the severance of certain executive
management we paid approximately $5.1 of cash during the first quarter of
fiscal 2004. In connection with the termination of the lease on our El Paso,
Texas administration building, we paid approximately $2.2 million of cash
during the first quarter of fiscal 2004. We received approximately $1.1
million in the first quarter of fiscal 2004 from the sale of a parcel of land
in El Paso, Texas.

We anticipate using cash in fiscal 2004 for advertising programs to
support our Savane® brand. Although the amounts have not yet been quantified,
these programs may include local or national advertising

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campaigns, point of sale items, new labeling and packaging designs, and the use
of in store merchandise coordinators. We believe the use of these funds are
necessary to support and promote sales of our Savane® brand.

Capital expenditures were $16.4 million for fiscal 2003 and primarily
related to the construction of an administration building in Tampa, Florida,
and the upgrade or replacement of various other equipment and computer systems
including hardware and software. During fiscal 2004, we anticipate capital
expenditures will be approximately $3.5 million, which will primarily be used
for the upgrade or replacement of computer systems including hardware and
software.

During fiscal 2003, we used $42.4 million of cash in our operations. This
was primarily the result of a net loss of $131.5 million, (which included
non-cash expenses of $78.3 million), and a decrease in accounts payable due to
reduced production, offset in part by decreases in accounts receivable due to
reduced sales. Our finished goods inventory increased in fiscal 2003 due to
production delay issues related to the consolidation of our El Paso, Texas
operations into our Tampa, Florida operations.

On September 27, 2003 and September 28, 2002, we had working capital of
$83.6 million and $166.2 million, respectively. The decrease in working
capital was due to a classification of the outstanding balance on our Facility
of $25.7 million to short term (see Note 5 to the consolidated financial
statements). The decrease was also due to a reduction of accounts receivable
of $26.6 million, offset by an increase in assets held for sale of $6.6 million
and an decrease in accounts payable. We expect that our working capital needs
will continue to fluctuate based on seasonal changes in sales, accounts
receivable and trade accounts payable.

Impact of Recent Accounting Pronouncements

In November 2002, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation No. 45, Guarantors Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN
45). FIN 45 elaborates on the existing disclosure requirements for most
guarantees, including loan guarantees such as standby letters of credit. It
also clarifies that at the time a company issues a guarantee, the company must
recognize an initial liability for the fair value, or market value, of the
obligations it assumes under that guarantee and must disclose that information
in its interim and annual financial statements. FIN 45 is effective on a
prospective basis to guarantees issued or modified after December 31, 2002. The
requirements of FIN 45 are effective for financial statements of interim or
annual periods ending after December 15, 2002. We have adopted the accounting
and disclosure requirements of FIN 45, which resulted in no impact on our
financial statements.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities, an interpretation of Accounting Research Bulletin
No. 51 (the Interpretation). The Interpretation requires the consolidation
of entities in which an enterprise absorbs a majority of the entitys expected
losses, receives a majority of the entitys expected residual returns, or both,
as a result of ownership, contractual or other financial interests in the
entity. Currently, entities are generally consolidated by an enterprise when
it has a controlling financial interest through ownership of a majority voting
interest in the entity. The Interpretation is effective for the Company in
the period ending after March 15, 2004. The Company does not expect the
Interpretation to have any impact on its consolidated financial statements.

Inflation

The impact of inflation on our operating results has been moderate in
recent years, reflecting generally lower rates of inflation in the economy and
relative stability in our cost of sales. While inflation has not had, and we
do not expect that it will have, a material impact upon operating results,
there is no assurance that our business will not be materially adversely
affected by inflation in the future.

Risk Factors Affecting Our Business and Prospects

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Our financial success is linked to the success of our customers.

Our financial success is directly related to the success of our customers
and the willingness of our customers, in particular our major customers, to
continue buying our products. Sales to our five largest customers represented
approximately 58.2%, 55.3% and 64.3% of net sales during fiscal 2001, 2002 and
2003, respectively. Sales to Wal-Mart accounted for approximately 15.3%, 14.7%
and 20.8% of net sales during fiscal 2001, 2002, and 2003, respectively. Sales
to Sams Club accounted for approximately 17.6%, 13.4% and 15.8% of net sales
during fiscal 2001, 2002 and 2003, respectively.

We do not have long-term contracts with any of our customers. Sales to
our customers are generally on an order-by-order basis and are subject to
rights of cancellation and rescheduling by the customer or by us. Accordingly,
the number of unfilled orders at any given time is not indicative of the number
that will eventually be shipped. If we cannot timely fill our customers
orders, our relationships with our customers may suffer, and this could have a
material adverse effect on us, especially if the relationship is with a major
customer. Furthermore, if any of our major customers experiences a significant
downturn in business, or fails to remain committed to our programs or brands,
then these customers may reduce or discontinue purchases from us, which would
have a material adverse effect on our business, results of operations and
financial condition. Many of our customers are affiliates of other customers
and therefore any impact to our relationship with one customer may impact our
relationship with other customers.

The apparel industry is heavily influenced by general economic cycles.

Apparel is a cyclical industry that is heavily dependent upon the overall
level of consumer spending. Purchases of apparel and related goods tend to be
highly correlated with cycles in the disposable income of consumers. As a
result, any substantial deterioration in general economic conditions, increase
in interest rates or any other events or uncertainties that discourage
consumers from spending could have a significant effect on our sales and
profitability. Overall market sales declined in 2001, 2002 and this trend
continued in 2003. This decline has been due in part to declining prices. The
calendar year 2001 witnessed a significant reduction in consumer spending in
the retail sector due in part to the recession in the United States and the
terrorist attacks on September 11, 2001. In calendar year 2002 and 2003,
significant declines in the U.S. equity markets and decreased consumer
confidence caused reduced spending by consumers. Such conditions may continue
or may reoccur. In addition, moderate department stores have experienced
declining sales recently, as consumers buying habits have changed. This has
negatively affected, and may continue to negatively affect, our sales,
particularly our Savane® branded programs.

Our business could suffer as a result of consolidations, restructuring and
other ownership changes in the retail industry.

Various apparel retailers, including department stores, some of which are
or have been our customers, have in recent years experienced financial
problems. Many have been subject to bankruptcy, restructuring, or liquidation,
while others have consolidated ownership and centralized buying decisions.
This increases our risk of extending credit to these retailers, and may lead us
to reduce or discontinue business with such customers, or to assume more credit
risk relating to their accounts receivable. Any one of these actions could
have a material adverse effect on our business, results of operations and
financial condition.

We compete with manufacturers and retailers in the highly competitive apparel
industry.

We compete with many domestic and international apparel manufacturers,
including brand name and private brand producers and retailers (including our
own customers and vertically integrated specialty stores) who have, or may
have, the internal capability to develop their products and source their
products from independent manufacturers. Our products are also in competition
with many designer and non-designer product lines. Our products compete
primarily on the basis of price, quality, brand recognition and our ability to
satisfy customer orders in a timely manner. Our failure to satisfy any one of
these factors could cause our customers to purchase

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products from our competitors. Intense competition in the apparel industry,
has over the past several years, resulted in and may in the future result in
significant discounting and lower gross margins. The price deflation is
attributable to increased competition, increased product sourcing to lower cost
countries, growth of the mass merchant channel of distribution and increased
value-consciousness on the part of consumers. This downward pressure on prices
may limit our ability to maintain or improve gross margins. Because of our
high debt level, we may also be less able to respond effectively to these
developments than our competitors who have less financial leverage. Many of
our competitors and potential competitors have greater financial, manufacturing
and distribution resources than we do. If manufacturers or retailers increase
their competition with us, or if our current competitors become more successful
in competing with us, we could experience material adverse effects on our
business, results of operations and financial condition.

The potential integration, on January 1, 2005, of all textile and apparel quota
under the World Trade Organization Agreement on Textiles and Clothing could
reduce the competitiveness of apparel assembled in Mexico and the Caribbean
Basin under our current business model.

In accordance with the Agreement on Textiles and Clothing of the World
Trade Organization, or WTO, the United States has entered into bilateral trade
agreements with a number of other countries, including China. These agreements
limit the amount and type of goods that may be imported annually from these
countries. As a result of trade preference programs with Mexico and the
Caribbean Basin, where we produce and source a majority of our goods, we
currently enjoy a competitive advantage over those companies who import goods
from countries that are subject to these quotas. Effective January 1, 2005,
the United States, with few exceptions, is obligated to remove quotas
applicable to goods from all WTO member countries, including China. The
removal of these quotas will most likely result in an increase in the amount of
goods imported annually from these countries, including China, thereby
increasing our competition and potentially having a material adverse effect on
our business, results of operations and financial condition.

Fluctuations in the price, availability and quality of the fabrics or other raw
materials we use could increase our cost of sales and reduce our ability to
meet our customers demands.

The principal fabrics used in our apparel consist of cotton, wool,
synthetic and blended fabrics. The price we pay for these fabrics is mostly
dependent on the market prices for the raw materials used to produce them,
namely cotton, wool, rayon and polyester. Depending on a number of factors,
including crop yields and weather patterns, the market price of these raw
materials may fluctuate significantly. Some of our suppliers are experiencing
financial difficulties. This increases the risk that we will be unable to
obtain raw materials at the price or quality or with the ease that we have
historically obtained them. Moreover, only a limited number of suppliers are
available to supply the fabrics at the level of quality we require. If we have
to procure fabrics from sources other than our current suppliers, the quality
of the fabric may be significantly different from that obtained from our
current suppliers which could result in lost sales. Fluctuations in the price,
availability and quality of the fabrics or raw materials could increase our
cost of sales and reduce our ability to meet our customers demands. We have
not entered into transactions to mitigate or hedge risk relating to fluctuation
in price. We cannot assure you that we will be able to pass along to our
customers all, or any portion of, any increases in the prices paid for the
fabrics used in the manufacture of our products.

We may not successfully defend ourselves in the two potential class action
lawsuits or the shareholder derivative demand.

The two lawsuits seeking class action status and the shareholder
derivative demand described in Part I, Item 3, Legal Proceedings, are in their
early stages of litigation, consequently, we are unable to form a reasonable
estimate of potential loss, if any, and have not established any reserves
related to these cases. If we are not successful in defending ourselves, these
lawsuits could have a negative impact on our financial condition.

We depend upon independent manufacturers in the production of our apparel.

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We use independent manufacturers to assemble or produce our products,
including the sourcing of full-package imports. We depend on these
manufacturers ability to finance the assembly or production of goods ordered
and to maintain manufacturing capacity. We do not exert direct control over
these independent manufacturers, therefore, we may be unable to obtain timely
delivery of acceptable products. In addition, we do not have long-term
contracts with any of these independent manufacturers and any of these
manufacturers may unilaterally terminate their relationship with us at any time
or seek to increase the prices they charge us. As a result, we cannot be
assured of an uninterrupted supply of acceptable quality products from our
independent manufacturers. If there is an interruption, we may not be able to
substitute suitable alternative manufacturers because such substitutes may not
be available, or they may not be able to provide us with products or services
of a comparable quality, at an acceptable price or on a timely basis.

We require our independent manufacturers to meet our standards for working
conditions, environmental protection and other matters before we are willing to
place business with them. As such, we may not be able to obtain the lowest
cost production. In addition, any failure by our independent manufacturers to
adhere to labor or other laws, or any divergence of any independent
manufacturers labor practices from those generally considered ethical in the
United States and the potential negative publicity relating to any of these
events could materially harm our business and reputation.

Our ability to successfully conduct assembly and production operations in
facilities in foreign countries depends on many factors beyond our control.

Approximately 75% of our products are assembled or produced by independent
manufacturers in the Caribbean Basin and Mexico. The remainder of our products
are produced or assembled in other foreign countries. It is possible that we
will experience difficulties with these independent manufacturers, including
reduced production capacity, failure to meet production deadlines or increases
in manufacturing costs. Also, using foreign manufacturers requires us to order
products further in advance to account for transportation time. If we
overestimate customer demand, we may have to hold goods in inventory, and we
may be unable to sell these goods at the same margins as we have in the past.
If we underestimate customer demand, we may not be able to fill orders in time.

Other problems we may encounter by using foreign manufacturers include,
but are not limited to work stoppages; transportation delays and interruptions;
delays and interruptions from natural disasters; political instability;
involvement in wars or other similar conflicts such as terrorist attacks;
economic disruptions; expropriation; nationalization; imposition of tariffs;
imposition of import and export controls; and changes in government policies.

We are also exposed to foreign currency risk. In the past, most of our
contracts to have goods assembled or produced in foreign countries were
negotiated in U.S. dollars. If the value of the U.S. dollar decreases, then
the price that we pay for our products could increase, and it is possible that
we would not be able to pass this increase on to our customers.

Our success depends upon our ability to recruit qualified personnel and to
retain senior management.

Our continued success is dependent on retaining our senior management as
well as attracting and retaining qualified management, administrative and
operating personnel. If we lose any members of our senior management, or if we
do not recruit and retain other qualified personnel, then our business, results
of operations and financial condition could be materially adversely affected.
In November 2002, William W. Compton, one of our founders and our Chief
Executive Officer and Chairman of the Board resigned. There can be no
assurance that current management can continue to manage our business
successfully without Mr. Compton or that Mr. Comptons departure will not cause
disruptions in or otherwise negatively affect our business, customer or
supplier relationships or results of operations. Additionally, in August 2003,
we terminated Christopher B. Munday, the successor Chief Executive Officer to
Mr. Compton, N. Larry McPherson, Executive Vice President, Chief Financial
Officer and Treasurer, and Gregory L. Williams, Executive Vice President and
General Counsel. Additionally, in August 2003, Michael R. Mitchell, Executive
Vice President and President of our Branded

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Division resigned. There can be
no assurance that current management can continue to manage our business
successfully, or that the changes in management will not cause disruptions in
or otherwise negatively affect our business, customer or supplier relationships
or results of operations.

We have a substantial amount of debt and interest payment requirements that
will require successful future operating performance and financial results and
that impose important limitations on us.

We have substantial outstanding indebtedness and are highly leveraged.
The degree to which we are leveraged will have important consequences,
including the following:



| |  |  | a substantial portion of our cash flow from operations will
be dedicated to the payment of principal and interest on our debt;                    
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | our ability to obtain additional financing in the future for
working capital, capital expenditures, acquisitions or other
purposes may be limited;
|
| |  |  | our leverage may increase our vulnerability to economic
downturns and limit our ability to withstand competitive pressures;                       
|
| |  |  | our ability to capitalize on significant business opportunities may be limited; and                                                               
|
| |  |  | our leverage may place us at a competitive disadvantage in relation to less leveraged competitors.                                                

Our ability to meet our debt service obligations will depend on our future
operating performance and financial results, which will be subject in part to
factors beyond our control. Although we believe that our cash flow will be
adequate to meet our interest payments, there can be no assurance that we will
generate cash flow in the future sufficient to cover our fixed charges and
principal payments. If we are unable to generate cash flow in the future
sufficient to cover our fixed charges and principal payments and are unable to
borrow funds from existing credit facilities or from other sources, we may be
required to refinance all or a portion of our existing debt or to sell all or a
portion of our assets, either of which may be at terms that are unfavorable to
us. There can be no assurance that a refinancing would be possible, nor can
there be any assurance as to the timing of any asset sales or the proceeds that
we could realize therefrom. In addition, the terms of our debt restrict our
ability to sell assets and the use of the proceeds therefrom.

If for any reason, including a shortfall in anticipated operating cash
flow or proceeds from asset sales, we were unable to meet our debt service
obligations, we would be in default under the terms of our existing debt. In
the event of such a default, some of our lenders could elect to declare certain
debt to be immediately due and payable, including accrued and unpaid interest.
In addition, such lenders could proceed against the collateral securing the
debt, which consists of substantially all of our current and future personal
property. Default on our Facility, the restructured Facility our Amended Real
Estate Loan, or our senior subordinated notes could result in bankruptcy.

The terms of our existing debt place significant restrictions on our ability to
pursue financial and strategic opportunities.

Our existing debt facilities contain a number of significant covenants
that, among other things, restrict our ability to dispose of assets, incur
additional debt, repay other debt, pay dividends, make certain investments or
acquisitions, repurchase or redeem capital stock, make capital expenditures,
engage in mergers or consolidations, engage in certain transactions with
subsidiaries and affiliates, and engage in certain corporate activities.

There can be no assurance that these restrictions will not adversely
affect our ability to finance future operations or capital needs or engage in
other business activities that may be in our best interest, including
acquisitions. In addition, the terms of our existing debt require us to
maintain compliance with certain financial ratios. Our ability to comply with
such ratios may be affected by events beyond our control. A breach of any of
these terms or our inability to comply with the required financial ratios could
result in a default under the terms of our debt and the acceleration of all or
a portion of such debt, or result in bankruptcy.

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We are subject to changes in the apparel industry, including changing fashion
trends and consumer preferences.

The apparel industry has historically been subject to changing fashion
trends and consumer preferences. We believe that our success is largely
dependent on our ability to anticipate and respond promptly to changing
consumer demands and fashion trends in the design, styling and production of
our products. If we cannot gauge consumer needs and fashion trends and respond
appropriately, then consumers may not purchase our products and this could have
a material adverse effect on our business, results of operations and financial
condition.

Our use of our trademarks and trade dress may subject us to claims of
infringement by other parties; our trademarks and other intellectual property
may not be adequately protected.

We use many trademarks in our business, some of which have been registered
with the United States Patent and Trademark Office. We believe these
registered and common law trademarks and other proprietary rights are important
to our competitive position and to our success. The use and registration of
our trademarks and the use of our trade dress are challenged periodically.

Despite our efforts to the contrary, we may violate the proprietary rights
of others. If we were found to violate the proprietary rights of others, or
any of our trademarks or trade dress were subjected to some other challenge, we
cannot assure you that we would be permitted to continue using these trademarks
or trade dress. Furthermore, if we were sued for alleged infringement of
anothers proprietary rights, the party claiming infringement might have
greater resources than we do to pursue its claims, and we could be forced to
settle the claim on unfavorable terms or to incur substantial costs to defend the
litigation. Moreover, if the party claiming infringement prevails, we could be
forced to pay significant damages, or to enter into expensive royalty or
licensing arrangements with the prevailing party.

Pursuant to licensing agreements, we also have certain rights to use
trademarks owned by other companies in promoting, distributing and selling
their products. We cannot assure you that these licensing agreements will
remain in effect or that they will be renewed. In addition, any future
disputes concerning these licenses may cause us to incur significant litigation
costs or force us to suspend use of the trademarks.

We believe that our trademarks and other proprietary rights are important
to our success and our competitive position. We devote substantial resources
to the establishment and protection of our trademarks on a worldwide basis.
Nevertheless, we cannot assure you that the actions we have taken to establish
and protect our trademarks and other proprietary rights will be adequate to
prevent limitation of our products by others or to prevent others from seeking
to block sales of our products as a violation of the trademarks and proprietary
rights of others. In addition, the laws of certain foreign countries may not
protect proprietary rights to the same extent as do the laws of the United
States.

Our products that are imported into the United States are subject to certain
restrictions and tariffs.

Most of our import operations are subject to bilateral textile agreements
between the United States and a number of other countries. These agreements
establish quotas for the amount and type of goods that can be imported into the
United States from these countries. These agreements allow the United States,
in certain circumstances, to impose restraints at any time on the importation
of additional or new categories of merchandise. Future bilateral textile
agreements may also contain similar restraints. Excluding the countries
covered under the Caribbean Basin Trade Partnership Act, or CPTPA, and the
North America Free Trade Agreement, or NAFTA, our imported products are also
subject to United States customs duties. The United States and the countries
in which we manufacture our products may adjust quotas, duties, tariffs or
other restrictions that are currently in effect. There are no assurances that
any adjustments would benefit us. These same countries may also impose new
quotas, duties, tariffs or other restrictions. Furthermore, the United States
may bar imports of products that are found to be made by convicts, forced
indentured servants or child labor. The United States may also withdraw the
most favored nation status of certain countries, which could result in the
imposition of higher tariffs on products imported from those countries. All of
these changes could have a material adverse effect on our business, results of
operations and financial condition.

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Fluctuations in foreign exchange rates may affect our operating results and
financial position.

Fluctuations in foreign exchange rates between the U.S. dollar and the
currencies in each of the countries in which we operate may affect the results
of out international operations reported in U.S. dollars and the value of such
operations net assets reported in U.S. dollars. The results of operations and
financial condition of our businesses may be affected by the relative strength
of the currencies in countries where our products are currently sold. Our
results of operations and financial condition may be adversely affected by
fluctuations in foreign currencies and by translations of the financial
statements of our foreign subsidiaries from local currencies into U.S. dollars.

Our management information systems are an integral part of our operations and
must be updated regularly to respond to changing business needs.

We rely upon our management information systems to provide distribution
services and to track operating results. Further modification and refinement
will be required as we grow and our business needs change. If we experience a
significant system failure or if we are unable to modify our management
information systems to respond to changes in our business needs, then our
ability to properly and timely produce and distribute our products could be
adversely affected.

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Our sales and income levels are seasonal.

Our business has generally been seasonal, with higher sales and income in
the second and third fiscal quarters. Also, some of our products, such as
shorts and corduroy pants, tend to be seasonal in nature. If these types of
seasonal products represent a greater percentage of our sales in the future,
the seasonality of our sales may be increased. This could alter the
differences in sales and income levels in the second and third fiscal quarters
from the first and fourth fiscal quarters.




Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Our market risk is limited to fluctuations in interest rates as it
pertains to our borrowings under the Facility and the Amended Real Estate Loan.
As of September 27, 2003, interest rates on borrowings under our Facility and
our Amended Real Estate Loan were 4.3% and 5.3%, respectively. If the interest
rates on our borrowings average 100 basis points more in fiscal 2004 than they
did in fiscal 2003, our interest expense would increase and our loss before
income taxes would increase by $337,000. This amount is determined solely by
considering the impact of the hypothetical change in the interest rate on our
borrowing cost without consideration for other factors such as actions
management might take to mitigate its exposure to interest rate changes.




Item 8. Financial Statements and Supplementary Data

The information called for by this Item is contained in Item 15 of this
report and is incorporated herein by reference.




Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

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PART III




Item 10. Directors and Executive Officers of the Registrant

The information under the captions Election of Directors and Other
Matters  Section 16(a) Beneficial Reporting Compliance in our Proxy Statement
for its Annual Meeting of Shareholders to be held on January 28, 2004 (the
2003 Proxy Statement) is incorporated herein by reference. The information
called for by this Item with respect to Executive Officers is set forth in Item
4A of this report under the caption Executive Officers of the Registrant.

Board of Directors and Committees

Board of Directors. The property, affairs and business of the Company are
under the general management of its Board of Directors as provided by the laws
of the State of Florida and the Bylaws of the Company. The Board of Directors
conducts its business through meetings of the full Board and through committees
of the Board, and the Board of Directors has appointed standing Audit,
Corporate Governance and Nominating, Executive and Stock Option and
Compensation Committees of the Board of Directors.

The Board consists of seven members, one inside director, four independent
directors and two outside affiliated directors. The Board has adopted the
definition of independence as described under the Sarbanes-Oxley Act of 2002
(Sarbanes-Oxley) Section 301, Rule 10A-3 under the Securities Exchange Act of
1934 (the Exchange Act) and NASDAQ Rules 4200 and 4350. The Committee on
Governance and Nominations periodically reviews the size of the Board and
recommends any changes it determines to be appropriate given the needs of the
Corporation. Under the Corporations Bylaws, the number of members on the
Board may be increased or decreased by resolution of the Board.

During Fiscal 2003, the Board adopted a Corporate Governance Policy. The
Board shall review this policy at least annually to ensure the Companys
policies and practices meet the standards suggested by various groups or
authorities active in corporate governance and practices of other public
companies. Based upon this review, the Company expects to adopt any changes
that the Board believes are the best corporate governance policies and
practices for the Company. The Company will adopt changes, as appropriate, to
comply with Sarbanes-Oxley requirements and any rule changes made by the
Securities and Exchange Commission and NASDAQ. The Corporate Governance Policy
is shown as Exhibit A in the Companys 2003 Proxy Statement.

During fiscal 2003, the Board adopted a Code of Business Conduct and
Ethics for its directors and employees to ensure all business, state and
federal government regulations, accounting procedures and proper and ethical
business methods and practices are maintained at the Company. Also during
fiscal 2003, the Company adopted a Code of Ethics/Code of Conduct for its
principal executive officer and senior financial officers, which is specific to
financial and accounting procedures and reporting as required under Section 406
of Sarbanes-Oxley. The Code of Business Conduct and Ethics and Code of
Ethics/Code of Conduct are shown as Exhibits B and C, respectively, in the
Companys 2003 Proxy Statement.

Audit Committee. The Audit Committee consists of Messrs. Bucay and Pitts
and Ms. Gillock, each of whom meet the definitions as having financial
literacy and of being independent as defined under Sarbanes-Oxley. Mr.
Pitts serves as Chairman of the Audit Committee. The Audit Committee is
responsible to review and maintain the Audit Committee Charter to the standards
of Sarbanes-Oxley and NASDAQ. The Audit Committee has the sole authority to
engage and discharge, review the independence, qualifications, activities and
compensation of the Companys independent certified public accountants. The
Audit Committee recommends to the Board the ratification of the Audit
Committees appointment of the independent certified public accountants. The
Audit Committee must assure regular rotation of the lead and concurring audit
partners. The Audit Committee is responsible for the Companys financial
policies, control procedures, accounting staff, internal audit function and

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reviews and approves the Companys financial statements. The Audit Committee is
responsible for the review of transactions between the Company and any Company
officer, director or entity in which a Company officer or director has a
material interest. The Audit Committee must develop and maintain procedures for
the submission of
complaints and concerns about accounting and auditing matters. The Audit
Committee must assure CEO and CFO certifications meet their obligations by
performing a review and evaluation of the Companys disclosure controls and
procedures. The Audit Committee has the authority to engage the services of an
outside advisor when required. The Audit Committee must receive reports from
the outside auditor on critical accounting policies, significant accounting
judgments and estimates, off-balance sheet transactions and non-GAAP financial
measures. The Audit Committee Charter, as Amended November 18, 2003 is shown
as Exhibit D, in the Companys 2003 Proxy Statement.

The Audit Committee and the Board of Directors have determined that, at
present, no one member of the Board meets the qualification for audit
committee financial expert as defined under Sarbanes-Oxley Section 407. The
Board is actively seeking an additional member that would qualify under the
standards of audit committee financial expert to serve in such capacity.

Corporate Governance and Nominating Committee. In November 2003, the
Company changed its Nominating Committee to become the Corporate Governance and
Nominating Committee (Governance Committee) and adopted a Corporate
Governance Committee Charter. Prior to November 2003, the entire Board served
as the Nominating Committee. Messrs. Pitts and Smith and Ms. Gillock
constitute the Governance Committee, each of which are independent directors.
Mr. Smith serves as Chairman of the Governance Committee. The purpose of the
Governance Committee is to ensure the Companys policies and practices meet the
standards suggested by various groups or authorities active in corporate
governance and practices of other public companies and to select nominees for
election as directors of the Company. The Governance Committee will consider
those nominees submitted by holders of Common Stock if submitted to the Company
on or before November 2, 2004. The Corporate Governance and Nominating
Committee Charter is shown as Exhibit F in the Companys 2003 Proxy Statement.

Stock Option and Compensation Committee. The Stock Option and Compensation
Committee, which administers the Companys various incentive and stock option
plans, consists of Ms. Gillock and Messrs. Bucay and Smith, each of which are
independent. None of the Committee members have ever been an officer or
employee of the Company or any of its subsidiaries. During November 2003, the
Stock Option and Compensation Committee adopted a charter to outline its
compensation, benefits and management development philosophy and to communicate
to shareholders the Companys compensation policies and the reasoning behind
such policies as required by the Securities and Exchange Commission. The Stock
Option and Compensation Committee Charter is shown as Exhibit G in the
Companys 2003 Proxy Statement.

Executive Committee. The Executive Committee consisted of Messrs. Munday,
Kagan, Smith, Vallina-Laguera and Williams until January 2003. From January
2003 to August 2003, the Executive Committee members consisted of Messrs.
Munday, Kagan, Smith and Vallina-Laguera. From August 2003 to November 2003,
the Executive Committee members consisted of Messrs. Bucay, Kagan, Smith and
Vallina-Laguera. As of November 2003, the Executive Committee is consists of
Messrs. Bucay, Kagan, and Pitts and Ms. Gillock. Mr. Kagan serves as Chairman
of the Executive Committee. The Executive Committee met four times during
Fiscal 2003. During Fiscal 2003, the Executive Committee adopted a charter to
state its authorization, duties and limits of authority. The Executive
Committee is responsible for performing all tasks of the Board of Directors on
behalf of the Board between meetings of the Board to the extent permitted by
the Companys Bylaws and Florida law. The Executive Committee Charter is
shown as Exhibit H in the Companys 2003 Proxy Statement.

Legal Committee.The Legal Committee, which reviews company legal
compliance issues and litigation consists of Messrs. Bucay, Vallina-Laguera and
Pitts. Mr. Bucay serves as Chairman of the Legal Committee. The Legal
Committee does not have a charter.

Committee charters are posted on the Corporate Governance section of the
Companys website,
www.tropicalsportswear.com.

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Item 11. Executive Compensation

The information under the captions Election of Directors  Compensation
of Directors and Election of Directors  Executive Compensation in our 2003
Proxy Statement is incorporated herein by reference. In no event shall the
information contained in the 2003 Proxy Statement under the captions Election
of Directors  Executive Compensation  Compensation Committee Report on
Executive Compensation and Shareholder Return Comparison be incorporated
herein by reference.




Item 12. Security Ownership of Certain Beneficial Owners and Management

The information under the caption Election of Directors  Stock
Ownership in our 2003 Proxy Statement is incorporated herein by reference.




Item 13. Certain Relationships and Related Transactions

The information under the caption Election of Directors  Executive
Compensation  Compensation Committee Interlocks and Insider Participation and
Certain Transactions in our 2003 Proxy Statement is incorporated herein by
reference.




Item 14. Controls and Procedures



|(a) |  | Evaluation of Disclosure Controls and Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Our Chief Executive Officer and Chief Financial Officer have evaluated
the effectiveness of our disclosure controls and procedures (as such
term is defined in Rules 13a-14(c) and 15d-14(c) under the Securities
Exchange Act of 1934, as amended) as of a date within 90 days prior to
the filing date of this annual report (the Evaluation Date). Based on
such evaluation, our Chief Executive Officer and Chief Financial Officer
have concluded that as of the Evaluation Date, our disclosure controls
and procedures provide reasonable assurance that they are alerted on a
timely basis to material information relating to Tropical Sportswear
Intl Corporation (including its consolidated subsidiaries) required to
be included in our reports filed or submitted under the Securities
Exchange Act of 1934, as amended.
|   
|(b) |  | Changes in Internal Controls                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | Since the Evaluation Date, there have not been any changes in our
internal controls or other factors that could significantly affect such
controls.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      




Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.



|(a) 1. |  | Index to Financial Statements
|------ |  | -----------------------------

|                                                   |  |      |    | 
|-------------------------------------------------- |  | ---- | -- | 
|                                                   |  | Page
|                                                   |  |     
|Report of Independent Certified Public Accountants |  |      | 37 | 
|Consolidated Balance Sheets                        |  |      | 38 | 
|Consolidated Statements of Operations              |  |      | 39 | 
|Consolidated Statements of Shareholders Equity    |  |      | 40 | 
|Consolidated Statements of Cash Flows              |  |      | 41 | 
|Notes to Consolidated Financial Statements         |  |      | 42 | 

37



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|(a) 2. |  | Financial Statement Schedule
|------ |  | ----------------------------
|      

| | Schedule II - Valuation and Qualifying Accounts                    | 66
| | ------------------------------------------------------------------ | --
| | Other schedules are not submitted
because they are not applicable. |   
|

|(a) 3. |  | Exhibits                                                                                                                                                                                                                                                                     
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      
|       |  | The Index to Exhibits attached hereto lists the exhibits that are filed as
part of this report.                                                                                                                                                                              
|      
|(b)    |  | Reports on Form 8-K                                                                                                                                                                                                                                                          
|      
|       |  | On July 21, 2003, Tropical Sportswear Intl Corporation issued a press
release to announce the results of its third fiscal quarter ending June
28, 2003.                                                                                                                     
|      
|       |  | On August 13, 2003, Tropical Sportswear Intl Corporation issued a press
release to announce changes in senior management and the Board of
Directors.                                                                                                                        
|      
|       |  | On September 24, 2003, Tropical Sportswear Intl Corporation issued a
Form 8-K to announce that a lawsuit seeking class action status was
filed on September 16, 2003, naming the Company and certain current and
former officers and directors of the Company as defendants.

38



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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors
Tropical Sportswear Intl Corporation

We have audited the accompanying consolidated balance sheets of Tropical
Sportswear Intl Corporation as of September 27, 2003 and September 28, 2002,
and the related consolidated statements of operations, shareholders equity,
and cash flows for each of the three fiscal years in the period ended September
27, 2003. Our audits also included the financial statement schedule listed in
the index at Item 15 (a). These financial statements and schedule are the
responsibility of the Companys management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Tropical
Sportswear Intl Corporation at September 27, 2003 and September 28, 2002, and
the consolidated results of its operations and its cash flows for each of the
three fiscal years in the period ended September 27, 2003, in conformity with
accounting principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.

As noted in Note 1 to the accompanying financial statements, during fiscal
2001, the Company adopted certain provisions of Statement of Financial
Accounting Standards No. 133,Accounting for Derivative Instruments and Hedging
Activitiesand No. 141, Business Combinations. As noted in Note 1 to the
financial statements, during fiscal 2002, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets.



| | -s- Ernst & Young LLP
| | ---------------------

Tampa, Florida
November 21, 2003,
except for Note 16, as to which the date is
January 12, 2004

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TROPICAL SPORTSWEAR INTL CORPORATION

CONSOLIDATED BALANCE SHEETS
September 27, 2003 and September 28, 2002
(In thousands, except share data)

|                                                                         |                                                                                                                                                    |                            |         |         |         |      |         |        |         | 
|------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ------- | ------- | ---- | ------- | ------ | ------- | 
|                                                                         |                                                                                                                                                    |                            |         | 2003    |         | 2002
|                                                                         |                                                                                                                                                    |                            |         |         |         |     
|ASSETS                                                                   |                                                                                                                                                    |                            |         |         |         |      |         |       
|Current assets:                                                          |                                                                                                                                                    |                            |         |         |         |      |         |       
|                                                                         | Cash and cash equivalents                                                                                                                          |                            | $       | 4,485   |         |      | $       | 28,284 |        
|                                                                         | Marketable securities                                                                                                                              |                            |         |        |         |      |         | 11,100 |        
|                                                                         | Accounts receivable, net                                                                                                                           |                            |         | 64,355  |         |      |         | 91,009 |        
|                                                                         | Inventories, net                                                                                                                                   |                            |         | 73,293  |         |      |         | 74,797 |        
|                                                                         | Deferred income taxes                                                                                                                              |                            |         | 45      |         |      |         | 9,414  |        
|                                                                         | Prepaid expenses and other                                                                                                                         |                            |         | 10,956  |         |      |         | 13,460 |        
|                                                                         | Assets held for sale                                                                                                                               |                            |         | 6,597   |         |      |         |       |        
|                                                                         |                                                                                                                                                    |                            |         |         |         |      |         |       
|                                                                         |                                                                                                                                                    | Total current assets       |         |         | 159,731 |      |         |        | 228,064 | 
|Property and equipment                                                   |                                                                                                                                                    |                            | 70,681  |         |         |      | 83,380  |       
|Less accumulated depreciation and amortization                           |                                                                                                                                                    |                            | (35,779 | )       |         |      | (34,907 | )     
|                                                                         |                                                                                                                                                    |                            |         |         |         |      |         |       
|                                                                         |                                                                                                                                                    |                            | 34,902  |         |         |      | 48,473  |       
|Other assets                                                             |                                                                                                                                                    |                            | 6,710   |         |         |      | 12,345  |       
|Trademarks, net                                                          |                                                                                                                                                    |                            | 12,936  |         |         |      | 12,991  |       
|Excess of cost over fair value of net assets of acquired subsidiary, net |                                                                                                                                                    |                            |        |         |         |      | 34,335  |       
|                                                                         |                                                                                                                                                    |                            |         |         |         |      |         |       
|Total assets                                                             |                                                                                                                                                    | $                          | 214,279 |         |         | $    | 336,208 |       
|                                                                         |                                                                                                                                                    |                            |         |         |         |      |         |       
|LIABILITIES AND SHAREHOLDERS EQUITY                                     |                                                                                                                                                    |                            |         |         |         |      |         |       
|Current liabilities:                                                     |                                                                                                                                                    |                            |         |         |         |      |         |       
|                                                                         | Accounts payable                                                                                                                                   |                            | $       | 22,679  |         |      | $       | 40,342 |        
|                                                                         | Accrued expenses and other                                                                                                                         |                            |         | 25,843  |         |      |         | 20,257 |        
|                                                                         | Revolving credit line                                                                                                                              |                            |         | 25,685  |         |      |         |       |        
|                                                                         | Current portion of long-term debt                                                                                                                  |                            |         | 800     |         |      |         |       |        
|                                                                         | Current portion of obligations under capital leases                                                                                                |                            |         | 1,164   |         |      |         | 1,251  |        
|                                                                         |                                                                                                                                                    |                            |         |         |         |      |         |       
|                                                                         |                                                                                                                                                    | Total current liabilities  |         |         | 76,171  |      |         |        | 61,850  | 
|Long-term debt                                                           |                                                                                                                                                    |                            | 107,200 |         |         |      | 107,000 |       
|Obligations under capital leases                                         |                                                                                                                                                    |                            | 572     |         |         |      | 1,922   |       
|Deferred income taxes                                                    |                                                                                                                                                    |                            | 601     |         |         |      | 2,881   |       
|Other                                                                    |                                                                                                                                                    |                            | 6,984   |         |         |      | 6,183   |       
|                                                                         |                                                                                                                                                    |                            |         |         |         |      |         |       
|                                                                         |                                                                                                                                                    | Total liabilities          |         |         | 191,528 |      |         |        | 179,836 | 
|Commitments and contingencies                                            |                                                                                                                                                    |                            |         |         |         |      |         |       
|Shareholders equity:                                                    |                                                                                                                                                    |                            |         |         |         |      |         |       
|                                                                         | Preferred stock, $100 par value; 10,000,000 shares authorized;
no shares issued and outstanding                                                    |                            |         |        |         |      |         |       |        
|                                                                         | Common stock, $.01 par value; 50,000,000 shares authorized;
11,055,042 and 11,040,452 shares issued and outstanding in
2003 and 2002, respectively |                            |         | 111     |         |      |         | 110    |        
|                                                                         | Additional paid in capital                                                                                                                         |                            |         | 88,575  |         |      |         | 88,549 |        
|                                                                         | Retained earnings (deficit)                                                                                                                        |                            |         | (58,617 | )       |      |         | 72,835 |        
|                                                                         | Accumulated other comprehensive loss                                                                                                               |                            |         | (7,318  | )       |      |         | (5,122 | )      
|                                                                         |                                                                                                                                                    |                            |         |         |         |      |         |       
|                                                                         |                                                                                                                                                    | Total shareholders equity |         |         | 22,751  |      |         |        | 156,372 | 
|                                                                         |                                                                                                                                                    |                            |         |         |         |      |         |       
|Total liabilities and shareholders equity                               |                                                                                                                                                    | $                          | 214,279 |         |         | $    | 336,208 |       
|                                                                         |                                                                                                                                                    |                            |         |         |         |      |         |       

See accompanying notes to the consolidated financial statements.

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TROPICAL SPORTSWEAR INTL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

|                                                         |                                         |                  |          |                   |        |               |         |               |        |   |         |      |        |  
|-------------------------------------------------------- | --------------------------------------- | ---------------- | -------- | ----------------- | ------ | ------------- | ------- | ------------- | ------ | - | ------- | ---- | ------ | -
|                                                         |                                         |                  |          | Fiscal Year Ended
|                                                         |                                         |                  |          |                  
|                                                         |                                         |                  |          | September 27,     |        | September 28, |         | September 29,
|                                                         |                                         |                  |          | 2003              |        | 2002          |         | 2001         
|                                                         |                                         |                  |          |                   |        |               |         |              
|Net sales                                                |                                         | $                | 386,723  |                   |        | $             | 463,877 |               |        | $ | 436,436 |     
|Cost of goods sold                                       |                                         |                  | 345,725  |                   |        |               | 335,470 |               |        |   | 311,880 |     
|                                                         |                                         |                  |          |                   |        |               |         |               |        |   |         |     
|Gross profit                                             |                                         |                  | 40,998   |                   |        |               | 128,407 |               |        |   | 124,556 |     
|Selling, general and administrative expenses             |                                         |                  | 85,369   |                   |        |               | 97,157  |               |        |   | 88,509  |     
|Other charges                                            |                                         |                  | 65,289   |                   |        |               | 16,130  |               |        |   | 2,774   |     
|                                                         |                                         |                  |          |                   |        |               |         |               |        |   |         |     
|Operating income (loss)                                  |                                         |                  | (109,660 | )                 |        |               | 15,120  |               |        |   | 33,273  |     
|Other expenses:                                          |                                         |                  |          |                   |        |               |         |               |        |   |         |     
|                                                         |                                         | Interest expense |          |                   | 12,552 |               |         |               | 13,349 |   |         |      | 15,519 |  
|                                                         |                                         | Interest income  |          |                   | (333   | )             |         |               | (394   | ) |         |      | (258   | )
|                                                         |                                         | Other, net       |          |                   | (395   | )             |         |               | (1,002 | ) |         |      | 989    |  
|                                                         |                                         |                  |          |                   |        |               |         |               |        |   |         |     
|                                                         |                                         |                  | 11,824   |                   |        |               | 11,953  |               |        |   | 16,250  |     
|                                                         |                                         |                  |          |                   |        |               |         |               |        |   |         |     
|Income (loss) before income taxes and
extraordinary item |                                         |                  | (121,484 | )                 |        |               | 3,167   |               |        |   | 17,023  |     
|Provision for income taxes                               |                                         |                  | 9,968    |                   |        |               | 1,258   |               |        |   | 6,593   |     
|                                                         |                                         |                  |          |                   |        |               |         |               |        |   |         |     
|Income (loss) before extraordinary item                  |                                         |                  | (131,452 | )                 |        |               | 1,909   |               |        |   | 10,430  |     
|Extraordinary itemgain on negative goodwill             |                                         |                  |         |                   |        |               | 412     |               |        |   | 800     |     
|                                                         |                                         |                  |          |                   |        |               |         |               |        |   |         |     
|Net income (loss)                                        |                                         | $                | (131,452 | )                 |        | $             | 2,321   |               |        | $ | 11,230  |     
|                                                         |                                         |                  |          |                   |        |               |         |               |        |   |         |     
|Basic net income (loss) per share:                       |                                         |                  |          |                   |        |               |         |               |        |   |         |     
|                                                         | Income (loss) before extraordinary item |                  | $        | (11.90            | )      |               | $       | 0.22          |        |   | $       | 1.36 |       
|                                                         | Extraordinary item                      |                  |          |                  |        |               |         | 0.05          |        |   |         | 0.11 |       
|                                                         |                                         |                  |          |                   |        |               |         |               |        |   |         |     
|                                                         | Net income (loss) per share             |                  | $        | (11.90            | )      |               | $       | 0.27          |        |   | $       | 1.47 |       
|                                                         |                                         |                  |          |                   |        |               |         |               |        |   |         |     
|Diluted net income (loss) per share:                     |                                         |                  |          |                   |        |               |         |               |        |   |         |     
|                                                         | Income (loss) before extraordinary item |                  | $        | (11.90            | )      |               | $       | 0.22          |        |   | $       | 1.34 |       
|                                                         | Extraordinary item                      |                  |          |                  |        |               |         | 0.04          |        |   |         | 0.11 |       
|                                                         |                                         |                  |          |                   |        |               |         |               |        |   |         |     
|                                                         | Net income (loss) per share             |                  | $        | (11.90            | )      |               | $       | 0.26          |        |   | $       | 1.45 |       
|                                                         |                                         |                  |          |                   |        |               |         |               |        |   |         |     

See accompanying notes to the consolidated financial statements.

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TROPICAL SPORTSWEAR INTL CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(In thousands)

|                              |                                                                              |  |              |       |            |   |          |    |           |   |        |        |       |   |         |          |         |   |             |        |   |   |         |          |  
|----------------------------- | ---------------------------------------------------------------------------- |  | ------------ | ----- | ---------- | - | -------- | -- | --------- | - | ------ | ------ | ----- | - | ------- | -------- | ------- | - | ----------- | ------ | - | - | ------- | -------- | -
|                              |                                                                              |  |              |       |            |   |          |    |           |   |        |        |       |   |         |          |         |   | Accumulated |        |   |   |        
|                              |                                                                              |  |              |       |            |   |          |    |           |   |        |        |       |   |         |          |         |   | Other       |        |   |   |        
|                              |                                                                              |  |              |       |            |   |          |    |           |   |        |        |       |   |         |          | Compre- |   |             |        |  
|                              |                                                                              |  | Common Stock |       | Additional |   | Retained |    | hensive   |   |        |        |      
|                              |                                                                              |  |              |       | Paid In    |   | Earnings |    | Income    |   |        |        |      
|                              |                                                                              |  | Shares       |       | Amount     |   | Capital  |    | (Deficit) |   | (Loss) |        | Total
|                              |                                                                              |  |              |       |            |   |          |    |           |   |        |        |      
|Balance at September 30, 2000 |                                                                              |  | 7,638        |       |            | $ | 76       |    |           | $ | 17,830 |        |       | $ | 59,284  |          |         | $ | (1,356      | )      |   | $ | 75,834  |         
|                              | Net income                                                                   |  |              |      |            |   |          |   |           |   |        |       |       |   |         | 11,230   |         |   |             |       |   |   |         | 11,230   |  
|                              | Foreign currency translation
adjustment                                      |  |              |      |            |   |          |   |           |   |        |       |       |   |         |         |         |   |             | (1,819 | ) |   |         | (1,819   | )
|                              |                                                                              |  |              |       |            |   |          |    |           |   |        |        |       |   |         |          |         |   |             |        |   |   |         |         
|                              | Total comprehensive income                                                   |  |              |      |            |   |          |   |           |   |        |       |       |   |         |         |         |   |             |       |   |   |         | 9,411    |  
|                              | Stock option exercises                                                       |  |              | 59    |            |   |          | 1  |           |   |        | 1,021  |       |   |         |         |         |   |             |       |   |   |         | 1,022    |  
|                              |                                                                              |  |              |       |            |   |          |    |           |   |        |        |       |   |         |          |         |   |             |        |   |   |         |         
|Balance at September 29, 2001 |                                                                              |  | 7,697        |       |            |   | 77       |    |           |   | 18,851 |        |       |   | 70,514  |          |         |   | (3,175      | )      |   |   | 86,267  |         
|                              | Net income                                                                   |  |              |      |            |   |          |   |           |   |        |       |       |   |         | 2,321    |         |   |             |       |   |   |         | 2,321    |  
|                              | Foreign currency translation
adjustment, minimum pension
liability and other |  |              |      |            |   |          |   |           |   |        |       |       |   |         |         |         |   |             | (1,947 | ) |   |         | (1,947   | )
|                              |                                                                              |  |              |       |            |   |          |    |           |   |        |        |       |   |         |          |         |   |             |        |   |   |         |         
|                              | Total comprehensive income                                                   |  |              |      |            |   |          |   |           |   |        |       |       |   |         |         |         |   |             |       |   |   |         | 374      |  
|                              | Common stock issuance, net                                                   |  |              | 3,000 |            |   |          | 30 |           |   |        | 63,190 |       |   |         |         |         |   |             |       |   |   |         | 63,220   |  
|                              | Stock option exercises                                                       |  |              | 343   |            |   |          | 3  |           |   |        | 6,508  |       |   |         |         |         |   |             |       |   |   |         | 6,511    |  
|                              |                                                                              |  |              |       |            |   |          |    |           |   |        |        |       |   |         |          |         |   |             |        |   |   |         |         
|Balance at September 28, 2002 |                                                                              |  | 11,040       |       |            |   | 110      |    |           |   | 88,549 |        |       |   | 72,835  |          |         |   | (5,122      | )      |   |   | 156,372 |         
|                              | Net loss                                                                     |  |              |      |            |   |          |   |           |   |        |       |       |   |         | (131,452 | )       |   |             |       |   |   |         | (131,452 | )
|                              | Foreign currency translation
adjustment, minimum pension
liability and other |  |              |       |            |   |          |    |           |   |        |        |       |   |         |          |         |   |             | (2,196 | ) |   |         | (2,196   | )
|                              |                                                                              |  |              |       |            |   |          |    |           |   |        |        |       |   |         |          |         |   |             |        |   |   |         |         
|                              | Total comprehensive loss                                                     |  |              |      |            |   |          |   |           |   |        |       |       |   |         |         |         |   |             |       |   |   |         | (133,648 | )
|                              | Stock option exercises/awards                                                |  |              | 15    |            |   |          | 1  |           |   |        | 26     |       |   |         |         |         |   |             |       |   |   |         | 27       |  
|                              |                                                                              |  |              |       |            |   |          |    |           |   |        |        |       |   |         |          |         |   |             |        |   |   |         |         
|Balance at September 27, 2003 |                                                                              |  | 11,055       |       |            | $ | 111      |    |           | $ | 88,575 |        |       | $ | (58,617 | )        |         | $ | (7,318      | )      |   | $ | 22,751  |         
|                              |                                                                              |  |              |       |            |   |          |    |           |   |        |        |       |   |         |          |         |   |             |        |   |   |         |         

See accompanying notes to the consolidated financial statements.

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TROPICAL SPORTSWEAR INTL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


|                                                                                                   |                                |                                     |                                                                         |   |                   |         |               |   |               |        |         |   |  |        |  
|-------------------------------------------------------------------------------------------------- | ------------------------------ | ----------------------------------- | ----------------------------------------------------------------------- | - | ----------------- | ------- | ------------- | - | ------------- | ------ | ------- | - |  | ------ | -
|                                                                                                   |                                |                                     |                                                                         |   | Fiscal Year Ended
|                                                                                                   |                                |                                     |                                                                         |   |                  
|                                                                                                   |                                |                                     |                                                                         |   | September 27,     |         | September 28, |   | September 29,
|                                                                                                   |                                |                                     |                                                                         |   | 2003              |         | 2002          |   | 2001         
|                                                                                                   |                                |                                     |                                                                         |   |                   |         |               |   |              
|Operating activities                                                                               |                                |                                     |                                                                         |   |                   |         |               |   |               |        |         |  
|Net income (loss)                                                                                  |                                | $                                   | (131,452                                                                | ) |                   | $       | 2,321         |   |               | $      | 11,230  |  
|Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities: |                                |                                     |                                                                         |   |                   |         |               |   |               |        |         |  
|                                                                                                   |                                |                                     | Impairment of assets held for sale                                      |   |                   | 15,513  |               |   |               |       |         |   |  |       |  
|                                                                                                   |                                |                                     | Gain on disposal of property and equipment                              |   |                   | (282    | )             |   |               | (504   | )       |   |  | (142   | )
|                                                                                                   |                                |                                     | Depreciation and amortization                                           |   |                   | 6,634   |               |   |               | 7,318  |         |   |  | 10,149 |  
|                                                                                                   |                                |                                     | Impairment of cost over fair value of net assets of
acquired subsidiary |   |                   | 34,241  |               |   |               |       |         |   |  |       |  
|                                                                                                   |                                |                                     | Provision for allowances and doubtful accounts                          |   |                   | 1,927   |               |   |               | 1,129  |         |   |  | 1,583  |  
|                                                                                                   |                                |                                     | Change in excess and slow moving inventory reserve                      |   |                   | 8,665   |               |   |               | (3,593 | )       |   |  | (371   | )
|                                                                                                   |                                |                                     | Deferred income taxes                                                   |   |                   | 11,640  |               |   |               | 3,079  |         |   |  | 2,417  |  
|                                                                                                   |                                |                                     | Income tax benefit from exercise of stock options                       |   |                   |        |               |   |               | 987    |         |   |  | 85     |  
|                                                                                                   |                                |                                     | Extraordinary item-gain on negative goodwill                            |   |                   |        |               |   |               | (412   | )       |   |  | (800   | )
|Changes in operating assets and liabilities:                                                       |                                |                                     |                                                                         |   |                   |         |               |   |               |        |         |  
|                                                                                                   | (Increase) decrease in assets: |                                     |                                                                         |   |                   |         |               |   |               |        |         |   | 
|                                                                                                   |                                |                                     | Accounts receivable                                                     |   |                   | 24,727  |               |   |               | (5,230 | )       |   |  | 9,767  |  
|                                                                                                   |                                |                                     | Inventories                                                             |   |                   | (7,161  | )             |   |               | 1,879  |         |   |  | 424    |  
|                                                                                                   |                                |                                     | Prepaid expenses and other assets                                       |   |                   | 5,124   |               |   |               | 6,468  |         |   |  | (1,450 | )
|                                                                                                   |                                | Increase (decrease) in liabilities: |                                                                         |   |                   |         |               |   |               |        |         |   |  |       
|                                                                                                   |                                |                                     | Accounts payable                                                        |   |                   | (17,663 | )             |   |               | 4,925  |         |   |  | (9,245 | )
|                                                                                                   |                                |                                     | Accrued expenses and other                                              |   |                   | 5,667   |               |   |               | (617   | )       |   |  | (4,092 | )
|                                                                                                   |                                |                                     |                                                                         |   |                   |         |               |   |               |        |         |  
|Net cash provided by (used in) operating activities                                                |                                |                                     | (42,420                                                                 | ) |                   |         | 17,750        |   |               |        | 19,555  |  
|Investing activities                                                                               |                                |                                     |                                                                         |   |                   |         |               |   |               |        |         |  
|Capital expenditures                                                                               |                                |                                     | (16,429                                                                 | ) |                   |         | (11,008       | ) |               |        | (7,882  | )
|Acquisition of subsidiary, net of cash acquired                                                    |                                |                                     |                                                                        |   |                   |         |              |   |               |        | (12,440 | )
|Proceeds from sale of property and equipment                                                       |                                |                                     | 884                                                                     |   |                   |         | 570           |   |               |        | 740     |  
|Sale (purchase) of marketable securities                                                           |                                |                                     | 11,100                                                                  |   |                   |         | (11,100       | ) |               |        |        |  
|                                                                                                   |                                |                                     |                                                                         |   |                   |         |               |   |               |        |         |  
|Net cash used in investing activities                                                              |                                |                                     | (4,445                                                                  | ) |                   |         | (21,538       | ) |               |        | (19,582 | )
|Financing activities                                                                               |                                |                                     |                                                                         |   |                   |         |               |   |               |        |         |  
|Proceeds from issuance of long-term debt                                                           |                                |                                     | 8,000                                                                   |   |                   |         | 88            |   |               |        | 236     |  
|Proceeds from exercise of stock options & awards                                                   |                                |                                     | 27                                                                      |   |                   |         | 5,524         |   |               |        | 937     |  
|Proceeds from sale of common stock                                                                 |                                |                                     |                                                                        |   |                   |         | 63,220        |   |               |        |        |  
|Principal payments of long-term debt                                                               |                                |                                     | (7,865                                                                  | ) |                   |         | (7,302        | ) |               |        | (5,470  | )
|Principal payments of capital leases                                                               |                                |                                     | (1,468                                                                  | ) |                   |         | (1,821        | ) |               |        | (1,352  | )

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|                                                                      |  |   |         |   |                   |   |               |   |               |   |       |   |  |  | 
|--------------------------------------------------------------------- |  | - | ------- | - | ----------------- | - | ------------- | - | ------------- | - | ----- | - |  |  | 
|                                                                      |  |   |         |   | Fiscal Year Ended
|                                                                      |  |   |         |   |                  
|                                                                      |  |   |         |   | September 27,     |   | September 28, |   | September 29,
|                                                                      |  |   |         |   | 2003              |   | 2002          |   | 2001         
|                                                                      |  |   |         |   |                   |   |               |   |              
|Net proceeds from (repayment of) revolving credit line borrowings     |  |   | 25,685  |   |                   |   | (32,130       | ) |               |   | 6,445 |  
|                                                                      |  |   |         |   |                   |   |               |   |               |   |       |  
|Net cash provided by financing activities                             |  |   | 24,379  |   |                   |   | 27,579        |   |               |   | 796   |  
|Effect of change in currency translation on cash and cash
equivalents |  |   | (1,313  | ) |                   |   | 2,779         |   |               |   | (822  | )
|                                                                      |  |   |         |   |                   |   |               |   |               |   |       |  
|Net increase (decrease) in cash and cash equivalents                  |  |   | (23,799 | ) |                   |   | 26,570        |   |               |   | (53   | )
|Cash and cash equivalents at beginning of year                        |  |   | 28,284  |   |                   |   | 1,714         |   |               |   | 1,767 |  
|                                                                      |  |   |         |   |                   |   |               |   |               |   |       |  
|Cash and cash equivalents at end of year                              |  | $ | 4,485   |   |                   | $ | 28,284        |   |               | $ | 1,714 |  
|                                                                      |  |   |         |   |                   |   |               |   |               |   |       |  

See accompanying notes to the consolidated financial statements.

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TROPICAL SPORTSWEAR INTL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 27, 2003, September 28, 2002, and September 29, 2001
(Tables in thousands, except share and per share amounts)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of Tropical
Sportswear Intl Corporation and its wholly-owned subsidiaries, Savane
International Corp. (Savane) and its subsidiaries, Tropical Sportswear
Company, Inc., Duck Head Apparel Company LLC and its subsidiaries, Delta
Merchandising, Inc. and Apparel Network Corporation (collectively, the
Company). All significant intercompany balances and transactions have been
eliminated in consolidation.

Nature of Operations

The Companys principal line of business is the marketing, design,
manufacture and distribution of sportswear, primarily mens and womens casual
pants and shorts. The principal markets for the Company include major
retailers within the United States, United Kingdom and other European
countries, Mexico, Canada, Australia, and New Zealand. The Company
subcontracts a substantial portion of the assembly of its products with
independent manufacturers in the Caribbean Basin and Mexico and, at any point
in time, a majority of the Companys work-in-process inventory is located in
those countries.

Accounting Period

The Company operates on a 52/53-week annual accounting period ending on
the Saturday nearest September 30th. The fiscal years ended September 27,
2003, September 28, 2002, and September 29, 2001 each contain 52 weeks.

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Net Income (Loss) Per Share

Basic and diluted net income (loss) per share are computed as follows:

|                                                             |                                                                  |         |                   |            |                   |          |               |           |               |       |           |           |      |        | 
|------------------------------------------------------------ | ---------------------------------------------------------------- | ------- | ----------------- | ---------- | ----------------- | -------- | ------------- | --------- | ------------- | ----- | --------- | --------- | ---- | ------ | 
|                                                             |                                                                  |         |                   |            | Fiscal Year Ended
|                                                             |                                                                  |         |                   |            |                  
|                                                             |                                                                  |         |                   |            | September 27,     |          | September 28, |           | September 29,
|                                                             |                                                                  |         |                   |            | 2003              |          | 2002          |           | 2001         
|                                                             |                                                                  |         |                   |            |                   |          |               |           |              
|Numerator for basic and diluted net
income (loss) per share: |                                                                  |         |                   |            |                   |          |               |           |               |       |           |          
|                                                             |                                                                  |         | Net income (loss) |            | $                 | (131,452 | )             |           | $             | 2,321 |           |           | $    | 11,230 | 
|Denominator for basic net income (loss) per
share:           |                                                                  |         |                   |            |                   |          |               |           |               |       |           |          
|                                                             | Weighted average shares of common
stock outstanding              |         |                   | 11,045,553 |                   |          |               | 8,665,155 |               |       |           | 7,656,642 |     
|                                                             | Effect of dilutive stock options using
the treasury stock method |         |                   |           |                   |          |               | 192,344   |               |       |           | 113,948   |     
|                                                             |                                                                  |         |                   |            |                   |          |               |           |               |       |           |           |      |        | 
|Denominator for diluted net income (loss) per
share          |                                                                  |         | 11,045,553        |            |                   |          | 8,857,499     |           |               |       | 7,770,590 |          
|                                                             |                                                                  |         |                   |            |                   |          |               |           |               |       |           |           |      |        | 
|Net income (loss) per share:                                 |                                                                  |         |                   |            |                   |          |               |           |               |       |           |          
|                                                             |                                                                  | Basic   |                   | $          | (11.90            | )        |               | $         | 0.27          |       |           | $         | 1.47 |       
|                                                             |                                                                  |         |                   |            |                   |          |               |           |               |       |           |           |      |        | 
|                                                             |                                                                  | Diluted |                   | $          | (11.90            | )        |               | $         | 0.26          |       |           | $         | 1.45 |       
|                                                             |                                                                  |         |                   |            |                   |          |               |           |               |       |           |           |      |        | 

At September 27, 2003, September 28, 2002 and September 29, 2001 there
were 1.5 million, 1.0 million and 1.4 million stock options, respectively,
excluded from the computation of diluted earnings per share because the effect
of their inclusion in the calculation would have been anti-dilutive.

Stock Based Compensation

The Company has elected to follow Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees (APB 25) and related
interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under FASB
Statement No. 123, Accounting for Stock Based Compensation, (Statement No.
123) requires the use of option valuation models that were not developed for
use in valuing employee stock options. Under APB 25, because the exercise
price of the Companys employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.

Pro forma information regarding net income and earnings per share is
required by Statement No. 123, which also requires that the information be
determined as if the Company has accounted for its employee stock options
granted subsequent to December 31, 1994 under the fair value method of that
Statement. The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for fiscal 2003, 2002 and 2001, respectively: risk-free interest
rate of 3.9%, 3.4%, and 4.4%; a dividend yield of 0%, 0% and 0%; volatility
factor of the expected market price of the Companys common stock of .83, .49
and .48; and a weighted-average expected life of the option of eight years,
seven years, and eight years.

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For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options vesting period. The
Companys pro forma information for fiscal 2003, 2002 and 2001 is (in thousands
except for net income (loss) per share information):

|                                                |  |            |          |           |  |           |        |   |  |   |        |  
|----------------------------------------------- |  | ---------- | -------- | --------- |  | --------- | ------ | - |  | - | ------ | -
|                                                |  | Year Ended
|                                                |  |           
|                                                |  | September  |          | September |  | September
|                                                |  | 27, 2003   |          | 28, 2002  |  | 29, 2001 
|                                                |  |            |          |           |  |          
|Net income (loss) as reported                   |  | $          | (131,452 | )         |  | $         | 2,321  |   |  | $ | 11,230 |  
|Estimated fair value of options                 |  |            | (3,168   | )         |  |           | (2,728 | ) |  |   | (1,646 | )
|                                                |  |            |          |           |  |           |        |   |  |   |        |  
|Net income (loss) pro forma                     |  | $          | (134,620 | )         |  | $         | (407   | ) |  | $ | 9,584  |  
|                                                |  |            |          |           |  |           |        |   |  |   |        |  
|Basic net income (loss) per share as reported   |  | $          | (11.90   | )         |  | $         | 0.27   |   |  | $ | 1.47   |  
|Basic net income (loss) per share pro forma     |  | $          | (12.19   | )         |  | $         | (0.05  | ) |  | $ | 1.25   |  
|Diluted net income (loss) per share as
reported |  | $          | (11.90   | )         |  | $         | 0.26   |   |  | $ | 1.45   |  
|Diluted net income (loss) per share pro forma   |  | $          | (12.19   | )         |  | $         | (0.05  | ) |  | $ | 1.23   |  

Accumulated Other Comprehensive Income (Loss)

Other comprehensive loss for fiscal 2003, composed primarily of foreign
currency translations of $0.4 million, the adjustment of fair value of a cash
flow hedge of $(0.1) million, and the change in the Companys minimum pension
liability of $1.9 million, totaled $2.2 million. Other comprehensive loss for
fiscal 2002, composed of foreign currency translations of $(0.8) million and
the change in the Companys minimum pension liability of $2.7 million, totaled
$1.9 million, (net of income tax benefit of $1.2 million). Other comprehensive
loss for fiscal 2001, composed of foreign currency translations of $1.1 million
and the fair value of a cash flow hedge of $0.7 million, totaled $1.8 million
(net of income tax benefit of $1.1 million). Total comprehensive income (loss)
amounted to $(131.7) million, $0.4 million and $9.4 million, for fiscal 2003,
2002 and 2001, respectively.

Revenue Recognition

Based on its terms of F.O.B. shipping point, the Company records sales
upon the shipment of finished products to the customer, net of provisions for
sales returns and allowances. The Company records sales in accordance with SEC
Staff Accounting Bulletin No. 101, Revenue Recognition in Financial
Statements. Under these guidelines, revenue is recognized when all of the
following exist: persuasive evidence of an arrangement exists, delivery of the
product has occurred, the price is fixed or determinable and payment is
reasonably assured.

Foreign Currencies

Foreign entities whose functional currency is the local currency translate
net assets at year-end rates and income and expense accounts at average
exchange rates. Adjustments resulting from these translations are reflected in
the Shareholders equity section as a component of other comprehensive income
(loss).

Advertising and Promotion Costs

Advertising and promotion costs are expensed when the advertising occurs.
Advertising and promotion expense was $4.8 million, $7.7 million, and $9.7
million, in fiscal 2003, 2002, and 2001, respectively.

Shipping and Handling Costs

The Company does not typically incur shipping costs to its customers.
Inventory handling costs incurred by the Company are included in selling,
general and administrative expenses in the accompanying consolidated statements
of income, and were less than 1% of net sales in each of the fiscal years
presented.

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Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and investments with
original maturities of three months or less.

Marketable Securities

Marketable securities are classified as trading securities and are carried
at fair value, with the unrealized holding gains and losses reflected as
interest income in the accompanying consolidated statement of income. For the
purposes of computing realized and unrealized gains and losses, cost is
determined on a specific identification basis.

Marketable securities classified as trading consisted of the following:

|                  |  |               |        | 
|----------------- |  | ------------- | ------ | 
|                  |  | September 28,
|                  |  | 2002         
|                  |  |              
|Bonds, cost       |  | $             | 11,100 | 
|Bonds, fair value |  | $             | 11,100 | 

These marketable securities were sold during fiscal 2003.

Accounts Receivables

Trade receivables are recorded at net realizable value or the amount that
the Company expects to collect on gross customer trade receivables. A reserve
has been established based on historical experience, in addition to a reserve
for specific receivables which may not be fully collectible. Items deemed
uncollectible are written off against the reserve for allowances and doubtful
accounts. The Company utilizes credit insurance to reduce it exposure to
uncollectible accounts.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out method. The Company records provisions for
markdowns and losses on excess and slow-moving inventory to the extent the cost
of inventory exceeds estimated net realizable value.

Property and Equipment

Property and equipment are stated at cost. The Company primarily uses
straight-line depreciation methods over periods that approximate the assets
estimated useful lives.

Trademarks

Trademarks represent the fair value of the Savane® and Farah®
trademarks that were acquired with the acquisition of Savane. The trademarks
effectively have an indefinite legal life and their value has been amortized
through September 29, 2001, on the straight-line basis over a period of 30
years. Effective September 30, 2001, the Company adopted Statement of
Financial Accounting Standard No. 142 Goodwill and Other Intangible Assets
(Statement No. 142), and no longer amortizes the remaining value of its
trademarks, but tests them for impairment on a periodic basis. In connection
with the Companys acquisition of Duck Head Apparel Company, Inc. (Duck Head)
in August 2001, the fair value of the Duck Head® trademarks was estimated at
approximately $13.3 million. The fair value assigned to the Duck Head
trademark in the allocation of the purchase price was reduced to zero as a
result of non long-lived assets exceeding the price the Company paid for Duck
Head®. Effective June 6, 2003, the Company sold the Duck Head® trademarks.

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Excess of Cost Over Fair Value of Net Assets of Acquired Subsidiary

The excess of cost over fair value of net assets of acquired subsidiary is
primarily related to the acquisition of Savane and has been amortized through
September 29, 2001, on the straight-line basis over a period of 30 years.
Effective September 30, 2001, the Company adopted Statement No. 142, and ceased
amortizing the remaining goodwill from the acquisition of Savane. In
connection with the Companys acquisition of Duck Head, the fair value of Duck
Heads non long-lived assets exceeded the price the Company paid, which in
accordance with SFAS No. 142, resulted in an extraordinary gain.

Impairment of Trademarks and the Excess of Cost over Fair Value of Net Assets
of Acquired Subsidiary

Impairment of intangibles not subject to amortization is tested annually,
or more frequently if events or changes in circumstances indicate that the
asset might be impaired. The impairment test consists of a comparison of the
fair value of an intangible asset, determined through a discounted cash flow
valuation method, with its carrying amount. If the carrying amount of an
intangible asset exceeds its fair value, an impairment loss is recognized in an
amount equal to that excess. During the fourth quarter of fiscal 2003, the
Company performed its annual test of impairment of its intangibles that
included an independent valuation. As a result of this test and the
independent valuation, the Company recorded a goodwill impairment charge of
$34.2 million, resulting in the complete write-off of all goodwill related to
the 1998 acquisition of Savane International Corp. This charge is included in
other charges in the consolidated statements of operations. The Companys
impairment test and independent valuation resulted in no impairment of the
value of the Companys trademarks.

Impairment of Long-Lived Assets

Impairment losses are recorded on long-lived assets used in operations
when impairment indicators are present and the undiscounted cash flows
estimated to be generated by those assets are less than the assets carrying
amount. When impairment is indicated, a loss is recognized for the excess of
the carrying values over the fair values. During the fourth quarter of fiscal
2003, the Company completed construction of a new administration building in
Tampa Florida. Subsequent to its completion, the Company determined that it
would not occupy its new administration building, therefore, the building is
being marketed for sale. The Company recorded a charge of $14.3 million to
reduce the carrying amount to its fair value less cost to sell. This charge is
included in other charges in the consolidated statements of operations.

Use of Estimates

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

Derivative Accounting

The Company adopted the provisions of Statement of Financial Accounting
Standard No. 133, Accounting for Derivative Instruments and Hedging
Activities (Statement No. 133), effective October 1, 2000. Under the terms
of Statement No. 133, all derivative instruments are required to be accounted
for at fair value and recorded on the consolidated balance sheet. The Company
had an interest-rate swap agreement (the Agreement) which modified the
interest characteristics of a portion of its outstanding debt. The Agreement
was designated to hedge the interest payments related to a portion of the
principal balance of the Companys variable rate real estate loan. The
Agreement involved the exchange of amounts based on a fixed interest rate for
amounts based on variable interest rates over the life of the Agreement without
an exchange of the notional amount upon which the payments are based. The
differential to be paid or received as interest rates changed was accrued and
recognized as

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an adjustment of interest expense related to the debt. The
notional amount of the Agreement was $7.0 million and the Agreement was
terminated on September 9, 2003, concurrent with the assignment of the real
estate loan to which it was related. The loss on termination of the Agreement
was $1.0 million and will be amortized over the remaining life of the Amended
Real Estate Loan, through June 2006. (See Managements Discussion and Analysis
of Financial Condition and Results of Operations  Liquidity and Capital
Resources).

Financial Instruments

The Companys financial instruments include cash, accounts receivable,
accounts payable and accrued expenses, long-term debt and obligations under
capital leases and an interest rate swap agreement. The following methods and
assumptions were used by the Company in estimating its fair value disclosures
for financial instruments:



| |  | Cash, accounts receivable, accounts payable and accrued expenses:
The carrying amounts reported in the consolidated balance sheets
approximate fair value.                                                                                                                                                                                                                                                                                
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Long-term debt and obligations under capital leases: The carrying
amount of the Companys borrowings under its variable rate
long-term debt agreements approximate their fair value. The fair
value of the Companys fixed rate long-term debt and obligations
under capital leases is estimated using discounted cash flow
analyses, based on the estimated current incremental borrowing
rate for similar types of borrowing agreements.
|
| |  | Interest-rate swap agreement: The carrying amount was determined
using fair value estimates from third parties. This agreement was
terminated in September 2003.                                                                                                                                                                                                                                                                          
|
| |  | The carrying amounts and fair value of the Companys long-term debt and
obligations under capital leases and interest-rate swap agreement are as
follows:                                                                                                                                                                                                                                                                                 

|                                                    |  |                    |         |                    |  |          |         |       |  |   |         |   |  |   |         |  
|--------------------------------------------------- |  | ------------------ | ------- | ------------------ |  | -------- | ------- | ----- |  | - | ------- | - |  | - | ------- | -
|                                                    |  | September 27, 2003 |         | September 28, 2002
|                                                    |  |                    |         |                   
|                                                    |  | Carrying           |         | Fair               |  | Carrying |         | Fair 
|                                                    |  | Value              |         | Value              |  | Value    |         | Value
|                                                    |  |                    |         |                    |  |          |         |      
|Long-term debt and obligations
under capital leases |  | $                  | 135,421 |                    |  | $        | 148,709 |       |  | $ | 110,173 |   |  | $ | 111,701 |  
|Interest-rate swap agreement
liability              |  |                    |        |                    |  |          |        |       |  | $ | (1,161  | ) |  | $ | (1,161  | )

Recent Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board, issued Statement
of Financial Accounting Standard No. 141, Business Combinations (Statement
No. 141). Statement No. 141 prohibits the use of the pooling-of-interests
method for business combinations completed after June 30, 2001, and requires
the recognition of intangible assets separately from goodwill. The acquisition
of Duck Head in August 2001 was accounted for in accordance with Statement No.
141.

In accordance with Statement of Financial Accounting Standard No. 142,
Goodwill and Other Intangible Assets, the Company discontinued the
amortization of goodwill and other indefinite lived intangible assets effective
September 30, 2001. Amortization expense is included in other expenses in the
accompanying statements of income. A reconciliation of previously reported net
income (loss) and earnings (loss) per share for fiscal 2003, 2002 and 2001, to
the amounts adjusted for the exclusion of amortization net of the related
income tax effect follows:

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|                                   |                                              |   |                   |        |           |   |           |      |  |   |        |      | 
|---------------------------------- | -------------------------------------------- | - | ----------------- | ------ | --------- | - | --------- | ---- |  | - | ------ | ---- | 
|                                   |                                              |   | Fiscal Year Ended
|                                   |                                              |   |                  
|                                   |                                              |   | September         |        | September |   | September
|                                   |                                              |   | 27, 2003          |        | 28, 2002  |   | 29, 2001 
|                                   |                                              |   |                   |        |           |   |          
|Reported net income (loss)         |                                              | $ | (131,452          | )      |           | $ | 2,321     |      |  | $ | 11,230 |     
|Add: Amortization, net of tax      |                                              |   |                  |        |           |   |          |      |  |   | 1,160  |     
|                                   |                                              |   |                   |        |           |   |           |      |  |   |        |     
|Adjusted net income (loss)         |                                              | $ | (131,452          | )      |           | $ | 2,321     |      |  | $ | 12,390 |     
|                                   |                                              |   |                   |        |           |   |           |      |  |   |        |     
|Basic earnings (loss) per share:   |                                              |   |                   |        |           |   |           |      |  |   |        |     
|                                   | Reported net income (loss)                   |   | $                 | (11.90 | )         |   | $         | 0.27 |  |   | $      | 1.47 | 
|                                   | Amortization, net of tax                     |   |                   |       |           |   |           |     |  |   |        | 0.15 | 
|                                   |                                              |   |                   |        |           |   |           |      |  |   |        |     
|                                   | Adjusted net income (loss) per share- basic  |   | $                 | (11.90 | )         |   | $         | 0.27 |  |   | $      | 1.62 | 
|                                   |                                              |   |                   |        |           |   |           |      |  |   |        |     
|Diluted earnings (loss) per share: |                                              |   |                   |        |           |   |           |      |  |   |        |     
|                                   | Reported net income (loss)                   |   | $                 | (11.90 | )         |   | $         | 0.26 |  |   | $      | 1.45 | 
|                                   | Amortization, net of tax                     |   |                   |       |           |   |           |     |  |   |        | 0.15 | 
|                                   |                                              |   |                   |        |           |   |           |      |  |   |        |     
|                                   | Adjusted net income (loss) per share-diluted |   | $                 | (11.90 | )         |   | $         | 0.26 |  |   | $      | 1.60 | 
|                                   |                                              |   |                   |        |           |   |           |      |  |   |        |     

In November 2002, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation No. 45, Guarantors Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN
45). FIN 45 elaborates on the existing disclosure requirements for most
guarantees, including loan guarantees such as standby letters of credit. It
also clarifies that at the time a company issues a guarantee, the company must
recognize an initial liability for the fair value, or market value, of the
obligations it assumes under that guarantee and must disclose that information
in its interim and annual financial statements. FIN 45 is effective on a
prospective basis to guarantees issued or modified after December 31, 2002. The
requirements of FIN 45 are effective for financial statements of interim or
annual periods ending after December 15, 2002. The Company has adopted the
accounting and disclosure requirements of FIN 45, which resulted in no impact
on the financial statements.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities, an interpretation of Accounting Research Bulletin
No. 51 (the Interpretation). The Interpretation requires the consolidation
of entities in which an enterprise absorbs a majority of the entitys expected
losses, receives a majority of the entitys expected residual returns, or both,
as a result of ownership, contractual or other financial interests in the
entity. Currently, entities are generally consolidated by an enterprise when
it has a controlling financial interest through ownership of a majority voting
interest in the entity. The Company does not expect the Interpretation to
have any impact on its consolidated financial statements. The Interpretation
is effective for the Company in the period ending after March 15, 2004.

Statement of Cash Flows

Supplemental cash flow information:

|               |  |                   |        |               |  |               |        |  |  |   |        | 
|-------------- |  | ----------------- | ------ | ------------- |  | ------------- | ------ |  |  | - | ------ | 
|               |  | Fiscal Year Ended
|               |  |                  
|               |  | September 27,     |        | September 28, |  | September 29,
|               |  | 2003              |        | 2002          |  | 2001         
|               |  |                   |        |               |  |              
|Cash paid for: |  |                   |        |               |  |               |        |  |  |   |        | 
|Interest       |  | $                 | 14,258 |               |  | $             | 13,320 |  |  | $ | 14,943 | 
|Income taxes   |  |                   | 1,233  |               |  |               | 2,766  |  |  |   | 4,635  | 

Capital lease obligations of $0, $750,000, and $1,151,000 were incurred
when the Company entered into leases for new equipment in the years ended
September 27, 2003, September 28, 2002, and September 29, 2001, respectively.

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2. ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:

|                                             |  |               |        |               |  |   |        |  
|-------------------------------------------- |  | ------------- | ------ | ------------- |  | - | ------ | -
|                                             |  | September 27, |        | September 28,
|                                             |  | 2003          |        | 2002         
|                                             |  |               |        |              
|Receivable from factor                       |  | $             |       |               |  | $ | 86,063 |  
|Receivable from trade accounts               |  |               | 71,531 |               |  |   | 10,196 |  
|Reserve for allowances and doubtful accounts |  |               | (7,176 | )             |  |   | (5,250 | )
|                                             |  |               |        |               |  |   |        |  
|                                             |  | $             | 64,355 |               |  | $ | 91,009 |  
|                                             |  |               |        |               |  |   |        |  

During fiscal 2002, pursuant to two separate factoring agreements, the
Company factored substantially all of its accounts receivable. The factoring
agreements provided that the factor pay the Company an amount equal to the
gross amount of its accounts receivable from customers, reduced by certain
offsets, including, among other things, discounts, returns and a commission
payable by the Company to the factor. During fiscal 2003, the Company
discontinued factoring of its receivables, and maintained credit insurance for
those accounts that it deemed necessary. Effective in the first quarter of
fiscal 2004, the Company now maintains credit insurance for all customer
accounts.

3. INVENTORIES

Inventories consist of the following:

|                                             |  |               |         |               |  |   |        |  
|-------------------------------------------- |  | ------------- | ------- | ------------- |  | - | ------ | -
|                                             |  | September 27, |         | September 28,
|                                             |  | 2003          |         | 2002         
|                                             |  |               |         |              
|Raw materials                                |  | $             | 6,939   |               |  | $ | 7,772  |  
|Work in process                              |  |               | 6,947   |               |  |   | 18,696 |  
|Finished goods                               |  |               | 71,479  |               |  |   | 51,736 |  
|Reserve for excess and
slow moving inventory |  |               | (12,072 | )             |  |   | (3,407 | )
|                                             |  |               |         |               |  |   |        |  
|                                             |  | $             | 73,293  |               |  | $ | 74,797 |  
|                                             |  |               |         |               |  |   |        |  

4. PROPERTY AND EQUIPMENT

Property and equipment, at cost, consist of the following:

|                           |  |               |        |               |  |         |        |  |  |  |      | 
|-------------------------- |  | ------------- | ------ | ------------- |  | ------- | ------ |  |  |  | ---- | 
|                           |  | September 27, |        | September 28, |  | Life   
|                           |  | 2003          |        | 2002          |  | (Years)
|                           |  |               |        |               |  |        
|Land                       |  | $             | 4,221  |               |  | $       | 7,484  |  |  |  |     | 
|Land improvements          |  |               | 2,035  |               |  |         | 2,035  |  |  |  | 15   | 
|Buildings and improvements |  |               | 16,065 |               |  |         | 15,748 |  |  |  | 350 | 
|Machinery and equipment    |  |               | 43,901 |               |  |         | 49,445 |  |  |  | 312 | 
|Leasehold improvement      |  |               | 3,959  |               |  |         | 2,496  |  |  |  | 525 | 
|Construction in progress   |  |               | 500    |               |  |         | 6,172  |  |  |  |     | 
|                           |  |               |        |               |  |         |        |  |  |  |      | 
|                           |  | $             | 70,681 |               |  | $       | 83,380 |  |  |  |      | 
|                           |  |               |        |               |  |         |        |  |  |  |      | 

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During fiscal 2003, 2002 and 2001, the Company capitalized interest cost
of $1,010,000, $0, and $107,000, respectively, for buildings and improvements,
and machinery and equipment in the process of construction. Total depreciation
expense was $6.7 million, $7.3 million, and $8.2 million, for the years ended
September 27, 2003, September 28, 2002, and September 29, 2001, respectively.

5. DEBT

Debt consists of the following:

|                          |  |               |         |               |  |   |         | 
|------------------------- |  | ------------- | ------- | ------------- |  | - | ------- | 
|                          |  | September 27, |         | September 28,
|                          |  | 2003          |         | 2002         
|                          |  |               |         |              
|Revolving credit line     |  | $             | 25,685  |               |  | $ |        | 
|Real estate loan          |  |               | 8,000   |               |  |   | 7,000   | 
|Senior subordinated notes |  |               | 100,000 |               |  |   | 100,000 | 
|                          |  |               |         |               |  |   |         | 
|                          |  |               | 133,685 |               |  |   | 107,000 | 
|Less current maturities   |  |               | (26,485 | )             |  |   |        | 
|                          |  |               |         |               |  |   |         | 
|Long-term debt            |  | $             | 107,200 |               |  | $ | 107,000 | 
|                          |  |               |         |               |  |   |         | 

On June 6, 2003, the Company renewed its revolving credit line (the
Facility). The Facility provides for borrowings of up to $95.0 million,
subject to certain borrowing base limitations. Borrowings under the Facility
bear variable rates of interest based on LIBOR plus an applicable margin (4.3%
at September 27, 2003), and are secured by substantially all of the Companys
domestic assets. The Facility matures in June 2006. The Facility contains
significant financial and operating covenants if availability under the
Facility falls below $20 million. These covenants include a consolidated fixed
charge ratio of at least .90x and a ratio of consolidated funded debt to
consolidated EBITDA of not more than 5.25x. The Facility also includes
prohibitions on the Companys ability to incur certain additional indebtedness
or to pay dividends, and restrictions on its ability to make capital
expenditures. As of September 27, 2003, $34.3 million was available for
borrowings under the Facility, therefore, the Company was not subject to these
covenants as of fiscal 2003 year end. See Note 16  Subsequent Events for
further discussion of covenants and an amendment to the Facility.

The Facility contains both a subjective acceleration clause and a
requirement to maintain a lock-box arrangement, whereby remittances from
customers reduce borrowings outstanding under the Facility. In accordance with
Emerging Issues Task Force 95-22, Balance Sheet Classification of Borrowings
Outstanding under Revolving Credit Agreements That Include Both a Subjective
Acceleration Clause and a Lock-Box Arrangement, outstanding borrowings under
the Facility of $25.7 million have been classified as short-term as of
September 27, 2003.

On May 28, 1999, the Company entered into a real estate loan (Real Estate
Loan) agreement secured by its distribution center, cutting facility, and
administrative offices in Tampa, Florida. The Real Estate Loan was used to
refinance $9.5 million outstanding on the Companys previous real estate loan
and to finance up to $6.0 million of the costs related to an expansion of the
Tampa, Florida distribution facility. In March 2000, the Real Estate Loan was
converted to a secured term loan. Principal and interest payments were paid
monthly on the refinanced amount through June 2002. On June 26, 2002, the
terms of the Real Estate Loan were amended and the loan required the payment of
monthly interest only, with the remaining outstanding principal balance of $7.0
million due on or before May 15, 2008. Under the terms of an interest-rate
swap agreement associated with the Real Estate Loan, effectively $7.0 million
of borrowings under the Real Estate Loan were associated with the swap
agreement.

On June 28, 2003, the Company violated certain of the financial covenants
associated with the Real Estate Loan, which was held by Bank of America, and
was in technical default under certain terms of the Real Estate Loan and in
technical default under the terms of the Facility, due to the cross default
provision. On September 9,

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2003, Bank of America assigned the Real Estate Loan
to Fleet Capital (the Amended Real Estate Loan). Borrowings under the
Amended Real Estate Loan bear variable rates of interest based on LIBOR plus an
applicable margin (5.3% at September 27, 2003). The Amended Real Estate Loan
requires quarterly principal payments of $200,000, which commenced October 1,
2003, and monthly interest payments. The Amended Real Estate Loan contains no
financial covenants, however, in an event of default under the Amended Facility
the Amended Real Estate Loan would also be in default. The Amended Real Estate
Loan matures in June 2006.

The cross default provision on the Facility, which was triggered by the
default on the Real Estate Loan, was waived. In addition, the interest-rate
swap agreement was terminated concurrent with Fleet Capital assuming the
Amended Real Estate Loan. The terminated interest rate swap agreement has been
accounted for within other comprehensive income because the interest payments
on the Amended Real Estate Loan will continue through fiscal 2006. As of
September 27, 2003, the Amended Real Estate Loan had a balance of $8.0 million.

The Company has $100 million of senior subordinated notes (the Notes)
outstanding that were issued through a private placement. Under the terms of
the indenture governing the Notes, the Company is paying semi-annual interest
at the rate of 11% through June 2008, at which time the entire principal amount
is due. The net proceeds from the Notes were used to repay a portion of the
borrowings outstanding under a bridge loan that was used to finance the
purchase of Savane in June 1998.

In addition to the financial covenants discussed above, the Amended
Facility and the Amended Real Estate Loan also contain customary events of
default, including nonpayment of principal or interest, violation of covenants,
inaccuracy of representations and warranties, cross-defaults to other
indebtedness, bankruptcy and other insolvency events, material judgments,
certain ERISA events, a material adverse change, and certain changes of control
at the Company. The occurrence of an event of default or a material adverse
effect on the Company could result in its inability to obtain further
borrowings under the restructured Facility and could also result in the
acceleration of its obligations under any or all of our credit agreements,
each of which could materially and adversely affect the business.

In June 2002, the Company completed a secondary public offering of 3.0
million shares of common stock. The Company received net proceeds of
approximately $63.2 million, of which approximately $32.0 million was used to
repay all outstanding borrowings under the Companys previous revolving credit
facility, to pay down a portion of the Real Estate Loan, and to repay certain
capital lease obligations. The remaining $31.2 million was used for the
payment of the cash portion of the Project Synergy charges, the construction of
an administration facility in Tampa, Florida and for working capital and
general corporate purposes. (See Part 1, Item 3, Legal Proceedings).

The scheduled maturities of long-term debt are as follows:

|            |  |        |         | 
|----------- |  | ------ | ------- | 
|Fiscal Year |  | Amount
|            |  |       
|2004        |  | $      | 800     | 
|2005        |  |        | 800     | 
|2006        |  |        | 32,085  | 
|2007        |  |        |        | 
|2008        |  |        | 100,000 | 
|Thereafter  |  |        |        | 

Total accrued interest related to debt as of September 27, 2003 and
September 28, 2002 was $3.4 million in each fiscal year.

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6. LEASES

The Company leases administrative facilities, production facilities, and
certain equipment under non-cancelable leases. Future minimum lease payments
under operating leases and the present value of future minimum capital lease
payments as of September 27, 2003 are as follows:

|                                                |  |           |        |         |  |   |        |  
|----------------------------------------------- |  | --------- | ------ | ------- |  | - | ------ | -
|                                                |  | Operating |        | Capital
|Fiscal Year                                     |  | Leases    |        | Leases 
|                                                |  |           |        |        
|2004                                            |  |           | 2,714  |         |  |   | 1,255  |  
|2005                                            |  |           | 1,832  |         |  |   | 408    |  
|2006                                            |  |           | 1,560  |         |  |   | 198    |  
|2007                                            |  |           | 1,446  |         |  |   | 18     |  
|2008                                            |  |           | 4,895  |         |  |   |       |  
|Thereafter                                      |  |           | 581    |         |  |   |       |  
|                                                |  |           |        |         |  |   |        |  
|Total minimum lease payments                    |  | $         | 13,028 |         |  |   | 1,879  |  
|                                                |  |           |        |         |  |   |        |  
|Less amount representing interest               |  |           |        |         |  |   | (143   | )
|                                                |  |           |        |         |  |   |        |  
|Present value of minimum capital lease payments |  |           |        |         |  |   | 1,736  |  
|Less current installments                       |  |           |        |         |  |   | (1,164 | )
|                                                |  |           |        |         |  |   |        |  
|                                                |  |           |        |         |  | $ | 572    |  
|                                                |  |           |        |         |  |   |        |  

The following summarizes the Companys assets under capital leases:

|                         |  |               |       |               |  |   |       | 
|------------------------ |  | ------------- | ----- | ------------- |  | - | ----- | 
|                         |  | September 27, |       | September 28,
|                         |  | 2003          |       | 2002         
|                         |  |               |       |              
|Machinery and equipment  |  | $             | 8,939 |               |  | $ | 9,332 | 
|Accumulated amortization |  |               | 5,232 |               |  |   | 4,012 | 

Amortization of assets under capital leases has been included in
depreciation. Total rental expense for operating leases for fiscal 2003, 2002,
and 2001, was $4.9 million, $6.2 million, and $4.4 million, respectively.

7. INCOME TAXES

Deferred income tax assets and liabilities are provided to reflect the
future tax consequences of differences between the tax bases of assets and
liabilities and their reported amounts in the financial statements.

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For financial reporting purposes, income (loss) before income taxes
includes the following components:

|               |  |               |          |               |  |               |        |   |  |   |        |  
|-------------- |  | ------------- | -------- | ------------- |  | ------------- | ------ | - |  | - | ------ | -
|               |  | Year Ended   
|               |  |              
|               |  | September 27, |          | September 28, |  | September 29,
|               |  | 2003          |          | 2002          |  | 2001         
|               |  |               |          |               |  |              
|Domestic       |  | $             | (120,315 | )             |  | $             | 2,664  |   |  | $ | 15,808 |  
|Costa Rica     |  |               | 210      |               |  |               | 198    |   |  |   | 7      |  
|Australia      |  |               | (560     | )             |  |               | (1,499 | ) |  |   | (321   | )
|United Kingdom |  |               | 2,838    |               |  |               | 2,258  |   |  |   | 1,397  |  
|Mexico         |  |               | (1,774   | )             |  |               | 173    |   |  |   | (60    | )
|Hong Kong      |  |               | (2,150   | )             |  |               | (716   | ) |  |   | 23     |  
|Other          |  |               | 267      |               |  |               | 89     |   |  |   | 169    |  
|               |  |               |          |               |  |               |        |   |  |   |        |  
|               |  | $             | (121,484 | )             |  | $             | 3,167  |   |  | $ | 17,023 |  
|               |  |               |          |               |  |               |        |   |  |   |        |  

The components of the income tax provision (benefit) are as follows:

|          |                |   |               |        |               |   |               |        |   |   |       |       |  
|--------- | -------------- | - | ------------- | ------ | ------------- | - | ------------- | ------ | - | - | ----- | ----- | -
|          |                |   | Year Ended   
|          |                |   |              
|          |                |   | September 27, |        | September 28, |   | September 29,
|          |                |   | 2003          |        | 2002          |   | 2001         
|          |                |   |               |        |               |   |              
|Current:  |                |   |               |        |               |   |               |        |   |   |       |      
|          | Federal        |   | $             | (1,968 | )             |   | $             | (2,283 | ) |   | $     | 3,627 |  
|          | State          |   |               | (133   | )             |   |               | (267   | ) |   |       | 409   |  
|          | Australia      |   |               |       |               |   |               | (449   | ) |   |       |      |  
|          | United Kingdom |   |               | 907    |               |   |               | 243    |   |   |       | 23    |  
|          | Other foreign  |   |               | 194    |               |   |               | 7      |   |   |       | 118   |  
|          |                |   |               |        |               |   |               |        |   |   |       |       |  
|          |                |   | (1,000        | )      |               |   | (2,749        | )      |   |   | 4,177 |      
|Deferred: |                |   |               |        |               |   |               |        |   |   |       |      
|          | Federal        |   |               | 10,934 |               |   |               | 3,974  |   |   |       | 2,798 |  
|          | State          |   |               | (62    | )             |   |               | 129    |   |   |       | (273  | )
|          | Australia      |   |               |       |               |   |               |       |   |   |       | (109  | )
|          | Other foreign  |   |               | 96     |               |   |               | (96    | ) |   |       |      |  
|          |                |   |               |        |               |   |               |        |   |   |       |       |  
|          |                |   | 10,968        |        |               |   | 4,007         |        |   |   | 2,416 |      
|          |                |   |               |        |               |   |               |        |   |   |       |       |  
|          |                | $ | 9,968         |        |               | $ | 1,258         |        |   | $ | 6,593 |      
|          |                |   |               |        |               |   |               |        |   |   |       |       |  

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The reconciliation of income tax expense (benefit) computed at the U.S.
Federal statutory tax rate to the Companys income tax provision is as follows:

|                                                                                    |  |               |         |               |  |               |       |   |  |   |       |  
|----------------------------------------------------------------------------------- |  | ------------- | ------- | ------------- |  | ------------- | ----- | - |  | - | ----- | -
|                                                                                    |  | Year Ended   
|                                                                                    |  |              
|                                                                                    |  | September 27, |         | September 28, |  | September 29,
|                                                                                    |  | 2003          |         | 2002          |  | 2001         
|                                                                                    |  |               |         |               |  |              
|Income tax expense (benefit) at
Federal statutory rate (35% in 2003,
2002 and 2001) |  | $             | (42,519 | )             |  | $             | 1,108 |   |  | $ | 5,957 |  
|State taxes, net of Federal tax benefit                                             |  |               | (2,663  | )             |  |               | (299  | ) |  |   | 160   |  
|Income (losses) of foreign subsidiaries                                             |  |               | 1,510   |               |  |               | 55    |   |  |   | 7     |  
|Amortization of goodwill                                                            |  |               | 10,422  |               |  |               |      |   |  |   | 399   |  
|Meals and entertainment                                                             |  |               | 58      |               |  |               | 121   |   |  |   | 105   |  
|Increase in valuation allowance                                                     |  |               | 40,427  |               |  |               |      |   |  |   |      |  
|Subpart F income                                                                    |  |               |        |               |  |               | 204   |   |  |   | 38    |  
|Other                                                                               |  |               | 2,733   |               |  |               | 69    |   |  |   | (73   | )
|                                                                                    |  |               |         |               |  |               |       |   |  |   |       |  
|                                                                                    |  | $             | 9,968   |               |  | $             | 1,258 |   |  | $ | 6,593 |  
|                                                                                    |  |               |         |               |  |               |       |   |  |   |       |  

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income taxes. Certain of the Companys
foreign subsidiaries have undistributed accumulated earnings of approximately
$19.4 million, as adjusted for U.S. tax purposes at September 27, 2003. No
U.S. tax has been provided on the undistributed earnings because the Company
intends to indefinitely reinvest such earnings in the foreign operations. The
amount of the unrecognized deferred tax liability associated with the
undistributed earnings that have not been previously taxed in the U.S. was
approximately $4.2 million at September 27, 2003. If earnings are repatriated,
foreign tax credits can offset a portion of the U.S. tax on such earnings. The
amount of $4.2 million has been calculated net of the foreign tax credits.

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The temporary differences that give rise to significant portions of the
deferred tax assets and liabilities as of September 27, 2003 and September 28,
2002 are presented below:

|                                                           |                                             |                                |         |               |        |               |        |        |         |  
|---------------------------------------------------------- | ------------------------------------------- | ------------------------------ | ------- | ------------- | ------ | ------------- | ------ | ------ | ------- | -
|                                                           |                                             |                                |         | Year Ended   
|                                                           |                                             |                                |         |              
|                                                           |                                             |                                |         | September 27, |        | September 28,
|                                                           |                                             |                                |         | 2003          |        | 2002         
|                                                           |                                             |                                |         |               |        |              
|Deferred tax assets:                                       |                                             |                                |         |               |        |               |        |       
|                                                           | Accounts receivable                         |                                | $       | 2,943         |        |               | $      | 1,021  |        
|                                                           | Inventory                                   |                                |         | 4,009         |        |               |        | 3,810  |        
|                                                           | U.S. Federal NOL carryforwards              |                                |         | 26,371        |        |               |        | 7,440  |        
|                                                           | U.S. State NOL carryforwards                |                                |         | 4,158         |        |               |        | 2,045  |        
|                                                           | Foreign NOL carryforwards                   |                                |         |              |        |               |        | 887    |        
|                                                           | Tax credits                                 |                                |         | 588           |        |               |        | 298    |        
|                                                           | Depreciation                                |                                |         | 145           |        |               |        |       |        
|                                                           | Accrued exit costs  U.S.                   |                                |         | 2,139         |        |               |        | 3,190  |        
|                                                           | Accrued exit costs  foreign                |                                |         | 553           |        |               |        | 648    |        
|                                                           | Other accrued expenses and reserves   U.S. |                                |         | 11,526        |        |               |        | 6,737  |        
|                                                           | Other accrued expenses and reserves-foreign |                                |         |              |        |               |        | 220    |        
|                                                           |                                             |                                |         |               |        |               |        |        |        
|                                                           |                                             | Total deferred tax assets      |         |               | 52,432 |               |        |        | 26,296  |  
|                                                           |                                             |                                |         |               |        |               |        |        |        
|Deferred tax liabilities:                                  |                                             |                                |         |               |        |               |        |       
|                                                           | Depreciation                                |                                |         |              |        |               |        | (5,172 | )      
|                                                           | Trademarks                                  |                                |         | (5,003        | )      |               |        | (5,003 | )      
|                                                           | Other items                                 |                                |         | (4,463        | )      |               |        | (3,065 | )      
|                                                           |                                             |                                |         |               |        |               |        |        |        
|                                                           |                                             | Total deferred tax liabilities |         |               | (9,466 | )             |        |        | (13,240 | )
|                                                           |                                             |                                |         |               |        |               |        |        |        
|Net deferred tax asset                                     |                                             |                                | 42,966  |               |        |               | 13,056 |       
|Valuation allowance                                        |                                             |                                | (44,157 | )             |        |               | (2,790 | )     
|                                                           |                                             |                                |         |               |        |               |        |        |        
|Deferred tax asset (liability), net of valuation
allowance |                                             | $                              | (1,191  | )             |        | $             | 10,266 |       
|                                                           |                                             |                                |         |               |        |               |        |        |        
|Classified as follows:                                     |                                             |                                |         |               |        |               |        |       
|                                                           | Current asset                               |                                | $       | 45            |        |               | $      | 9,414  |        
|                                                           | Non-current asset                           |                                |         | 140           |        |               |        | 3,733  |        
|                                                           | Current liability                           |                                |         | (775          | )      |               |        |       |        
|                                                           | Non-current liability                       |                                |         | (601          | )      |               |        | (2,881 | )      
|                                                           |                                             |                                |         |               |        |               |        |        |        
|                                                           |                                             | $                              | (1,191  | )             |        | $             | 10,266 |       
|                                                           |                                             |                                |         |               |        |               |        |        |        

A valuation allowance to reduce the deferred tax assets reported is
required if, based on the weight of the evidence, it is more likely than not
that some portion or all of the deferred tax assets will not be realized. For
fiscal 2003 and 2002, management determined that respective valuation
allowances of $44.1 million and $2.8 million, respectively, were necessary to
reduce the deferred tax assets relating to certain state net operating loss
carryforwards, foreign net operating loss carryforwards, foreign tax credit
carryforwards and other accruals not expected to result in a future realizable
benefit.

For domestic purposes, the Company has Federal net operating loss
carryforwards for tax purposes of approximately $74.3 million, which will
expire through 2023. The net operating loss carryforwards will be subject to
certain tax law provisions that limit the utilization of net operating losses
that were generated in pre-acquisition years and were acquired through changes
in ownership. These limitations were considered during managements

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evaluation of the need for a valuation allowance. The Company has
AMT credit carryforwards of $588,000, which carry forward indefinitely.

8. SALE OF DUCK HEAD® TRADEMARKS

On August 9, 2001, the Company completed the acquisition of 100% of the
outstanding stock of Duck Head Apparel Company, Inc. (Duck Head). The total
purchase price, including cash paid for common stock acquired, cash paid for
the fair value of outstanding stock options, and cash paid for fees and
expenses, amounted to $17.9 million. Cash acquired totaled $5.5 million. The
acquisition of Duck Head was made to expand the Companys portfolio of brands.

The acquisition was accounted for using the purchase method of accounting
and the results of operations for Duck Head have been included in the
consolidated statements of income since the acquisition date. The preliminary
fair value of identifiable tangible and intangible net assets acquired was
$28.2 million. This resulted in an initial excess of the fair value of the net
assets acquired over the purchase price of approximately $10.3 million. The
Company then reduced the fair value assigned to Duck Heads long-lived assets,
including trademarks and property and equipment from $9.5 million to zero. The
remaining $800,000 was recorded as an extraordinary gain in the consolidated
statement of income in fiscal 2001. Final adjustments to the purchase price of
Duck Head resulted in an additional extraordinary gain, which was recorded in
fiscal 2002.

On June 2, 2003, the Company sold its Duck Head® trademarks to Goodys
Family Clothing, Inc. (Goodys) for $4.0 million in cash. Under the purchase
agreement, the Company continued to sell Duck Head® branded products through
the end of fiscal 2003. Goodys also assumed all licenses associated with the
Duck Head® trademarks. In connection with the sale, the Company recorded a
net gain of $3.7 million, which is net of expenses related to the sale and a
reduction of certain of the remaining assets, including inventory. In
connection with the sale of the Duck Head® trademarks, all of the Duck
Head® retail outlet stores were closed in September 2003. The cash costs
associated with the closure of the retail stores was approximately $0.7
million.

9.     RESTRUCTURING OF SAVANE INTERNATIONAL CORP.

The Company has remaining accrued liabilities related to the 1998
acquisition of Savane International Corp. of approximately $437,000 related to
exit costs which consists of estimated lease termination costs and related
expenses. The activity in the exit accruals related to this acquisition during
fiscal 2003, 2002 and 2001 were as follows:

|                    |  |               |        |      |  |           |        |           |  |   |       |  
|------------------- |  | ------------- | ------ | ---- |  | --------- | ------ | --------- |  | - | ----- | -
|                    |  | Year Ended   
|                    |  |              
|                    |  |               |        |      |  | September |        | September
|                    |  | September 27, |        | 28,  |  | 29,      
|                    |  | 2003          |        | 2002 |  | 2001     
|                    |  |               |        |      |  |          
|Beginning balance   |  | $             | 2,216  |      |  | $         | 5,150  |           |  | $ | 5,592 |  
|Cash payments       |  |               | (1,779 | )    |  |           | (484   | )         |  |   | (132  | )
|Non-cash reductions |  |               |       |      |  |           | (2,450 | )         |  |   | (310  | )
|                    |  |               |        |      |  |           |        |           |  |   |       |  
|Ending balance      |  | $             | 437    |      |  | $         | 2,216  |           |  | $ | 5,150 |  
|                    |  |               |        |      |  |           |        |           |  |   |       |  

On April 18, 2002, the Company announced a plan to consolidate the
administrative, cutting and related functions of the Savane division in El
Paso, Texas into the Tampa, Florida facility. The Company completed the
physical consolidation in the second fiscal quarter ending March 29, 2003. As
part of the consolidation, the Company has vacated its El Paso, Texas
administration building and terminated the associated lease obligation, and
vacated its El Paso, Texas cutting facility.

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As a result of these initiatives (internally referred to as Project
Synergy), the Company recorded a pre-tax charge totaling approximately $16.1
million in fiscal 2002 for severance ($3.1 million), relocation (recognized as
incurred) ($2.5 million), lease terminations ($2.8 million), asset
write-downs ($5.7 million) and other related costs ($2.0 million) included in
other charges in the accompanying statements of operations. As of September
27, 2003, the Company has approximately $2.7 million accrued, related to exit
costs, which consists of lease terminations. The activity in the exit accruals
related to Project Synergy during fiscal 2003 and 2002 were as follows:

|                    |  |                    |        |                    |  |   |        |  
|------------------- |  | ------------------ | ------ | ------------------ |  | - | ------ | -
|                    |  | Year ended         |        | Year ended        
|                    |  | September 27, 2003 |        | September 28, 2002
|                    |  |                    |        |                   
|Beginning balance   |  | $                  | 4,295  |                    |  | $ |       |  
|Non-cash additions  |  |                    | 1,986  |                    |  |   | 6,016  |  
|Non-cash reductions |  |                    | (2,490 | )                  |  |   |       |  
|Cash payments       |  |                    | (1,052 | )                  |  |   | (1,721 | )
|                    |  |                    |        |                    |  |   |        |  
|Ending balance      |  | $                  | 2,739  |                    |  | $ | 4,295  |  
|                    |  |                    |        |                    |  |   |        |  

Fiscal 2003 non-cash additions related primarily to reserves for lease
terminations. Fiscal 2003 non-cash reductions primarily related to reserves
for severance and other related costs.

10. COMMITMENTS AND CONTINGENCIES

In May 2003, the Company transitioned the Victorinox® apparel division
to Swiss Army Brands, Inc. (Swiss Army). In connection with the
transition, Swiss Army is currently disputing certain aspects of the transition
agreement and have not paid the Company approximately $4.8 million, which the
Company believes is due under the transition agreement. On June 3, 2003, the
Company filed a declaratory judgment action against Swiss Army, seeking
judicial interpretation of the agreement. Swiss Army agreed to mediation in an
attempt to resolve the issue, which resulted in an impasse. There can be no
assurance that all or any part of the $4.8 million will be collected in its
entirety.

As of September 27, 2003, the Company had approximately $13.3 million of
outstanding trade letters of credit with various expiration dates through March
2004.

Two lawsuits seeking class action status were filed on September 16, 2003
and October 2, 2003, in the U.S. District Court for the Middle District of
Florida, Tampa Division, on behalf of all persons who purchased or otherwise
acquired the securities of the Company during the period from April 17, 2002
through January 20, 2003 (the Class Period). The lawsuits name the Company
and certain current and former officers and directors of the Company as
defendants. The lawsuits make a number of allegations against the defendants,
including allegations that during the Class Period, the defendants materially
misled the investing public by publicly issuing false and misleading statements
and omitting to disclose material facts concerning the Companys operations and
performance and the retail market for its goods. The Company has not yet
responded to either complaint and intends to vigorously defend these lawsuits.
Because these cases are in the early stages of litigation, the Company is
unable to form a reasonable estimate of potential loss, if any, and has not
established any reserves related to these cases.

On October 30, 2003, a purported shareholder sent to the Company a
shareholder derivative demand pursuant to Florida Statute Section 607.07401
demanding, among other things, that the Company institute litigation against
current and former officers and directors Michael Kagan, Eloy Valline-Laguera
and William Compton. The demand contends that the Company should attempt to
recover from these officers and directors their proceeds of certain stock sales
in July 2002. The Company has not yet responded to the demand, and no
litigation has been commenced yet.

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Other than the items noted above, the Company is subject to various claims
and lawsuits arising in the normal course of business, that the Company does
not believe could reasonably be expected to have a material adverse effect on
the Companys business, financial position or results of operations.

11. EMPLOYEE BENEFIT PLANS

Defined Contribution Plans

The Company has a 401(k) profit sharing plan under which all domestic
employees are eligible to participate. Employee contributions are voluntary
and subject to Internal Revenue Service limitations. The Company matches,
based on annually determined factors, employee contributions provided the
employee completes certain levels of service annually and is employed as of
December 31 of each plan year. For fiscal 2003, 2002, and 2001, the Company
recorded expenses of $509,000, $681,000, and $584,000, respectively, related
to the plan.

Certain non-U.S. employees participate in defined contribution plans with
varying vesting and contribution provisions. For fiscal 2003, 2002 and 2001,
the Company recorded expenses of $255,000, $229,000 and $263,000, respectively,
related to these plans.

Defined Benefit Plan

Under the defined benefit plan, which covers certain Savane distribution
center associates, the basic monthly pension payable to a participant upon
normal retirement equals the product of the participants monthly benefit rate
times the number of years of credited service. Assets of the defined benefit
plan are invested primarily in U.S. government obligations, corporate bonds,
and equity securities.

The Companys policy is to fund accrued pension cost when such costs are
deductible for tax purposes. Net periodic pension cost for the years ended
September 27, 2003 and September 28, 2002, included the following components:

|                                               |                           |   |               |     |               |   |      |     | 
|---------------------------------------------- | ------------------------- | - | ------------- | --- | ------------- | - | ---- | --- | 
|                                               |                           |   | September 27, |     | September 28,
|                                               |                           |   | 2003          |     | 2002         
|                                               |                           |   |               |     |              
|Service cost-benefits earned during the period |                           | $ | 38            |     |               | $ | 37   |    
|Interest cost on projected benefit obligation  |                           |   | 573           |     |               |   | 588  |    
|Estimated return on plan assets                |                           |   | (508          | )   |               |   | (690 | )  
|Net amortization and deferral                  |                           |   | 295           |     |               |   | 206  |    
|                                               |                           |   |               |     |               |   |      |    
|                                               | Net periodic pension cost |   | $             | 398 |               |   | $    | 141 | 
|                                               |                           |   |               |     |               |   |      |    

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The following table sets forth the funded status of the defined benefit
plan:

|                                                                  |                                         |   |           |        |           |   |       |        |  
|----------------------------------------------------------------- | --------------------------------------- | - | --------- | ------ | --------- | - | ----- | ------ | -
|                                                                  |                                         |   | September |        | September
|                                                                  |                                         |   | 27,       |        | 28,      
|                                                                  |                                         |   | 2003      |        | 2002     
|                                                                  |                                         |   |           |        |          
|ACTUARIAL PRESENT VALUE OF BENEFIT
OBLIGATION:                    |                                         |   |           |        |           |   |       |       
|Accumulated benefit obligation                                    |                                         | $ | 10,667    |        |           | $ | 8,868 |       
|Projected benefit obligation                                      |                                         |   | 10,667    |        |           |   | 8,868 |       
|Plan assets at market value                                       |                                         |   | 6,267     |        |           |   | 6,358 |       
|                                                                  |                                         |   |           |        |           |   |       |       
|                                                                  | Funded status                           |   |           | (4,400 | )         |   |       | (2,510 | )
|Amounts recognized in the consolidated
balance sheets consist of: |                                         |   |           |        |           |   |       |       
|                                                                  | Accrued benefit liability               |   | $         | (4,400 | )         |   | $     | (2,510 | )
|                                                                  | Intangible asset                        |   |           |        |           |   |       | 8      |  
|                                                                  | Accumulated other comprehensive expense |   |           | 5,885  |           |   |       | 4,385  |  
|                                                                  |                                         |   |           |        |           |   |       |       
|                                                                  | Net amount recognized                   |   | $         | 1,485  |           |   | $     | 1,883  |  
|                                                                  |                                         |   |           |        |           |   |       |       

The following table provides a reconciliation of beginning and ending
balances of the benefit obligation of the defined benefit plan:

|                                                |  |           |        |           |  |   |       |  
|----------------------------------------------- |  | --------- | ------ | --------- |  | - | ----- | -
|                                                |  | September |        | September
|                                                |  | 27,       |        | 28,      
|                                                |  | 2003      |        | 2002     
|                                                |  |           |        |          
|CHANGE IN BENEFIT OBLIGATION:                   |  |           |        |           |  |   |       |  
|Projected benefit obligation, beginning of year |  | $         | 8,868  |           |  | $ | 8,201 |  
|Service cost                                    |  |           | 38     |           |  |   | 37    |  
|Interest cost                                   |  |           | 573    |           |  |   | 588   |  
|Benefits paid                                   |  |           | (913   | )         |  |   | (763  | )
|Actuarial (gain) loss                           |  |           | 2,101  |           |  |   | 805   |  
|                                                |  |           |        |           |  |   |       |  
|Projected benefit obligation, end of year       |  | $         | 10,667 |           |  | $ | 8,868 |  
|                                                |  |           |        |           |  |   |       |  

The following table provides a reconciliation of the beginning and ending
balances of the fair value of plan assets of the defined benefit plan:

|                                             |  |           |       |           |  |   |       |  
|-------------------------------------------- |  | --------- | ----- | --------- |  | - | ----- | -
|                                             |  | September |       | September
|                                             |  | 27,       |       | 28,      
|                                             |  | 2003      |       | 2002     
|                                             |  |           |       |          
|CHANGE IN PLAN ASSETS:                       |  |           |       |           |  |   |       |  
|Plan assets at fair value, beginning of year |  | $         | 6,358 |           |  | $ | 7,580 |  
|Actual return on plan assets                 |  |           | 822   |           |  |   | (459  | )
|Benefits paid                                |  |           | (913  | )         |  |   | (763  | )
|                                             |  |           |       |           |  |   |       |  
|Plan assets at fair value, end of year       |  | $         | 6,267 |           |  | $ | 6,358 |  
|                                             |  |           |       |           |  |   |       |  

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In determining the benefit obligations and service cost of the Companys
defined benefit plan, a weighted average discount rate of 6.00% and 6.75% was
used for fiscal 2003 and fiscal 2002, respectively, and an expected long-term
rate of return on plan assets of 8.50% was used for fiscal 2003 and fiscal
2002.

12. STOCK OPTION PLANS

The Company has adopted various stock option plans, which combined reserve
3,560,000 shares of the Companys common stock for future issuance. The per
share exercise price of each stock option granted under these plans will be
equal to the quoted fair market value of the stock on the date of grant.

A summary of the Companys stock option activity, and related information
follows:

|                                                               |  |             |           |             |  |             |       |       |  |         |           |           |  |   |       |  |  |           |           |   |  |   |       | 
|-------------------------------------------------------------- |  | ----------- | --------- | ----------- |  | ----------- | ----- | ----- |  | ------- | --------- | --------- |  | - | ----- |  |  | --------- | --------- | - |  | - | ----- | 
|                                                               |  | Fiscal 2003 |           | Fiscal 2002 |  | Fiscal 2001
|                                                               |  |             |           |             |  |            
|                                                               |  |             |           |             |  | Weighted    |       |       |  |         |           | Weighted  |  |   |       |  |  | Weighted 
|                                                               |  |             |           |             |  | Average     |       |       |  |         |           | Average   |  |   |       |  |  | Average  
|                                                               |  |             |           |             |  | Exercise    |       |       |  |         |           | Exercise  |  |   |       |  |  | Exercise 
|                                                               |  |             |           |             |  | Price Per   |       |       |  |         |           | Price Per |  |   |       |  |  | Price Per
|                                                               |  | Options     |           | Share       |  | Options     |       | Share |  | Options |           | Share    
|                                                               |  |             |           |             |  |             |       |       |  |         |           |          
|Outstanding  beginning of
Year                                |  |             | 1,239,557 |             |  | $           | 17.98 |       |  |         | 1,471,996 |           |  | $ | 16.52 |  |  |           | 1,421,881 |   |  | $ | 16.58 | 
|Granted                                                        |  |             | 841,909   |             |  |             | 5.53  |       |  |         | 279,580   |           |  |   | 22.89 |  |  |           | 233,680   |   |  |   | 17.56 | 
|Exercised                                                      |  |             | (1,250    | )           |  |             | 5.05  |       |  |         | (343,120  | )         |  |   | 16.07 |  |  |           | (59,605   | ) |  |   | 15.85 | 
|Canceled/expired                                               |  |             | (524,622  | )           |  |             | 16.01 |       |  |         | (168,899  | )         |  |   | 17.23 |  |  |           | (123,960  | ) |  |   | 18.18 | 
|                                                               |  |             |           |             |  |             |       |       |  |         |           |           |  |   |       |  |  |           |           |   |  |   |       | 
|Outstanding-end of year                                        |  |             | 1,555,594 |             |  | $           | 11.92 |       |  |         | 1,239,557 |           |  | $ | 17.96 |  |  |           | 1,471,996 |   |  | $ | 16.64 | 
|                                                               |  |             |           |             |  |             |       |       |  |         |           |           |  |   |       |  |  |           |           |   |  |   |       | 
|Weighted-average fair
value of options granted
during the year |  |             |           |             |  | $           | 4.67  |       |  |         |           |           |  | $ | 17.98 |  |  |           |           |   |  | $ | 14.66 | 

The exercise price range of outstanding and exercisable options as of
September 27, 2003 follows:

|                |       |             |   |             |  |          |       |             |  |                     |           |                     |  |           |      |          |  |   |       |  |  |          |           |  |  |   |       | 
|--------------- | ----- | ----------- | - | ----------- |  | -------- | ----- | ----------- |  | ------------------- | --------- | ------------------- |  | --------- | ---- | -------- |  | - | ----- |  |  | -------- | --------- |  |  | - | ----- | 
|                |       |             |   |             |  |          |       |             |  | Options Outstanding |           | Options Exercisable
|                |       |             |   |             |  |          |       |             |  |                     |           |                    
|                |       |             |   |             |  |          |       |             |  |                     |           |                     |  | Weighted  |      |          |  |   |       |  |  |          |           |  |  |  
|                |       |             |   |             |  |          |       |             |  |                     |           |                     |  | Average   |      | Weighted |  |   |       |  |  | Weighted
|                |       |             |   |             |  |          |       |             |  |                     |           |                     |  | Remaining |      | Average  |  |   |       |  |  | Average 
|Range of        |       | Outstanding |   | Contractual |  | Exercise |       | Exercisable |  | Exercise           
|Exercise Prices |       | Options     |   | Life        |  | Price    |       | Options     |  | Price              
|                |       |             |   |             |  |          |       |             |  |                    
|$               | 4.96  |             |  |             |  | $        | 5.05  |             |  |                     | 546,115   |                     |  |           | 9.37 |          |  | $ | 5.02  |  |  |          | 364,221   |  |  | $ | 5.01  | 
|$               | 5.20  |             |  |             |  | $        | 13.88 |             |  |                     | 390,879   |                     |  |           | 7.91 |          |  | $ | 8.81  |  |  |          | 231,771   |  |  | $ | 11.09 | 
|$               | 14.00 |             |  |             |  | $        | 19.69 |             |  |                     | 391,258   |                     |  |           | 6.86 |          |  | $ | 18.21 |  |  |          | 337,529   |  |  | $ | 18.13 | 
|$               | 19.75 |             |  |             |  | $        | 27.75 |             |  |                     | 227,342   |                     |  |           | 7.41 |          |  | $ | 23.01 |  |  |          | 182,683   |  |  | $ | 22.85 | 
|                |       |             |   |             |  |          |       |             |  |                     |           |                     |  |           |      |          |  |   |       |  |  |          |           |  |  |   |       | 
|$               | 4.96  |             |  |             |  | $        | 27.75 |             |  |                     | 1,555,594 |                     |  |           | 8.09 |          |  | $ | 11.92 |  |  |          | 1,116,204 |  |  | $ | 13.16 | 
|                |       |             |   |             |  |          |       |             |  |                     |           |                     |  |           |      |          |  |   |       |  |  |          |           |  |  |   |       | 

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The weighted-average remaining contractual life of the outstanding options
is eight years. The initial term for options is generally ten years. The
vesting period is three years for 727,085 options, two years for 271,850
options, one year for 100,000 options and 456,659 options were immediately
vested.

13. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the unaudited quarterly results of
operations:

|                                  |                |  |       |         |        |  |               |         |        |  |               |         |         |  |     |         |        |  |        |       |     |  |   |       |  
|--------------------------------- | -------------- |  | ----- | ------- | ------ |  | ------------- | ------- | ------ |  | ------------- | ------- | ------- |  | --- | ------- | ------ |  | ------ | ----- | --- |  | - | ----- | -
|                                  |                |  |       |         |        |  |               |         |        |  |               |         |         |  |     |         |        |  | Net    |       | Net
|                                  |                |  |       |         |        |  |               |         |        |  | Net           |         |         |  |     |         | Income |  | Income
|                                  |                |  |       |         |        |  |               |         |        |  | Income (Loss) |         |         |  |     |         | (Loss) |  | (Loss)
|                                  |                |  |       |         |        |  |               |         |        |  | Before        |         | Net     |  | Per |         | Per   
|                                  |                |  | Net   |         | Gross  |  | Extraordinary |         | Income |  | Share        |         | Share 
|                                  |                |  | Sales |         | Profit |  | Item          |         | (Loss) |  | Basic         |         | Diluted
|                                  |                |  |       |         |        |  |               |         |        |  |               |         |        
|Year Ended
September 27, 2003
(a) |                |  |       |         |        |  |               |         |        |  |               |         |         |  |     |         |        |  |        |       |     |  |   |      
|                                  | First Quarter  |  | $     | 99,041  |        |  | $             | 20,794  |        |  | $             | (5,018  | )       |  | ($  | 5,018   | )      |  | $      | (0.45 | )   |  | $ | (0.45 | )
|                                  | Second Quarter |  |       | 112,725 |        |  |               | 23,029  |        |  |               | 638     |         |  |     | 638     |        |  |        | 0.06  |     |  |   | 0.06  |  
|                                  | Third Quarter  |  |       | 96,732  |        |  |               | 9,026   |        |  |               | (30,564 | )       |  |     | (30,564 | )      |  |        | (2.75 | )   |  |   | (2.75 | )
|                                  | Fourth Quarter |  |       | 78,225  |        |  |               | (11,851 | )      |  |               | (96,508 | )       |  |     | (96,508 | )      |  |        | (8.73 | )   |  |   | (8.73 | )
|Year Ended
September 28, 2002
(b) |                |  |       |         |        |  |               |         |        |  |               |         |         |  |     |         |        |  |        |       |     |  |   |      
|                                  | First Quarter  |  | $     | 110,011 |        |  | $             | 31,633  |        |  | $             | 2,958   |         |  | $   | 2,958   |        |  | $      | 0.38  |     |  | $ | 0.38  |  
|                                  | Second Quarter |  |       | 120,610 |        |  |               | 33,917  |        |  |               | 3,669   |         |  |     | 3,669   |        |  |        | 0.47  |     |  |   | 0.46  |  
|                                  | Third Quarter  |  |       | 116,262 |        |  |               | 31,407  |        |  |               | (5,631  | )       |  |     | (5,631  | )      |  |        | (0.69 | )   |  |   | (0.69 | )
|                                  | Fourth Quarter |  |       | 116,994 |        |  |               | 31,450  |        |  |               | 913     |         |  |     | 1,325   |        |  |        | 0.12  |     |  |   | 0.12  |  



| | (a) |  | Includes the effect of certain other pre-tax charges as
described in Item 7. Managements Discussion and Analysis of
Financial Condition and Results of Operations.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Includes the effect of the pre-tax Project Synergy charges of $12.3
million and $3.8 million, respectively, in the third and fourth quarters of fiscal 2002.       

14. SEGMENT AND GEOGRAPHIC INFORMATION

The Company has one reportable segment, the design, sourcing and marketing
of sportswear apparel. The information for this segment is the information
used by the Companys chief operating decision-maker to evaluate operating
performance. International sales represented approximately 12.4%, 10.5%, and
9.1% of net sales for fiscal 2003, 2002 and 2001, respectively. No individual
foreign country or geographic area accounted for more than 10% of net sales in
any of the periods presented. Long-term assets of international operations
represented approximately 4.1%,
2.3% and 2.3% of the Companys long-term assets at September 27, 2003,
September 28, 2002 and September 29, 2001, respectively.

In fiscal 2003, Wal-Mart, Sams, and Kohls accounted for approximately
20.8%, 15.8% and 10.5%, respectively, of consolidated net sales. In fiscal
2002, Wal-Mart, Sams and Kohls accounted for approximately 14.7%, 13.4% and
9.9%, respectively, of consolidated net sales. In fiscal 2001, Sams and
Wal-Mart accounted for approximately 17.6% and 15.4%, respectively, of
consolidated net sales.

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15. SUPPLEMENTAL COMBINED CONDENSED FINANCIAL INFORMATION

The Notes (see Note 5) are jointly and severally guaranteed by the
Companys domestic subsidiaries. The wholly-owned foreign subsidiaries are not
guarantors with respect to the Notes and do not have any credit arrangements
senior to the Notes except for their local overdraft facility and capital lease
obligations.

The following is the supplemental combined condensed statement of
operations and cash flows for the three years ended September 27, 2003, and the
supplemental combined condensed balance sheets as of September 27, 2003 and
September 28, 2002. The only intercompany eliminations are the normal
intercompany sales, borrowing and investments in wholly-owned subsidiaries.
Separate complete financial statements of the guarantor subsidiaries are not
presented because management believes that they are not material to investors.

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|                                      |  |                               |         |              |  |              |         |              |  |              |        |   |  |   |        |   |  |   |          |  
|------------------------------------- |  | ----------------------------- | ------- | ------------ |  | ------------ | ------- | ------------ |  | ------------ | ------ | - |  | - | ------ | - |  | - | -------- | -
|                                      |  | Year Ended September 27, 2003
|                                      |  |                              
|                                      |  |                               |         |              |  |              |         |              |  | Non-         |        |   |  |   |        |   |  |  
|                                      |  | Parent                        |         | Guarantor    |  | Guarantor    |         |              |  |              |        |   |  |  
|Statements of Operations              |  | Only                          |         | Subsidiaries |  | Subsidiaries |         | Eliminations |  | Consolidated
|                                      |  |                               |         |              |  |              |         |              |  |             
|Net sales                             |  | $                             | 192,433 |              |  | $            | 148,393 |              |  | $            | 48,064 |   |  | $ | (2,167 | ) |  | $ | 386,723  |  
|Gross profit                          |  |                               | 24,373  |              |  |              | 2,735   |              |  |              | 14,221 |   |  |   | (331   | ) |  |   | 40,998   |  
|Operating income (loss)               |  |                               | (44,154 | )            |  |              | (65,671 | )            |  |              | 165    |   |  |   |       |   |  |   | (109,660 | )
|Interest, income taxes and other, net |  |                               | 11,020  |              |  |              | 8,338   |              |  |              | 2,434  |   |  |   |       |   |  |   | 21,792   |  
|Net loss                              |  |                               | (55,174 | )            |  |              | (74,009 | )            |  |              | (2,269 | ) |  |   |       |   |  |   | (131,452 | )

|                                      |  |                               |         |              |  |              |         |              |  |              |        |   |  |   |      |   |  |   |         | 
|------------------------------------- |  | ----------------------------- | ------- | ------------ |  | ------------ | ------- | ------------ |  | ------------ | ------ | - |  | - | ---- | - |  | - | ------- | 
|                                      |  | Year Ended September 28, 2002
|                                      |  |                              
|                                      |  |                               |         |              |  |              |         |              |  | Non-         |        |   |  |   |      |   |  |  
|                                      |  | Parent                        |         | Guarantor    |  | Guarantor    |         |              |  |              |        |   |  |  
|Statements of Operations              |  | Only                          |         | Subsidiaries |  | Subsidiaries |         | Eliminations |  | Consolidated
|                                      |  |                               |         |              |  |              |         |              |  |             
|Net sales                             |  | $                             | 204,653 |              |  | $            | 211,519 |              |  | $            | 48,689 |   |  | $ | (984 | ) |  | $ | 463,877 | 
|Gross profit                          |  |                               | 50,525  |              |  |              | 61,414  |              |  |              | 16,468 |   |  |   |     |   |  |   | 128,407 | 
|Operating income (loss)               |  |                               | 18,899  |              |  |              | (3,989  | )            |  |              | 210    |   |  |   |     |   |  |   | 15,120  | 
|Interest, income taxes and other, net |  |                               | 8,065   |              |  |              | 4,889   |              |  |              | (276   | ) |  |   | 121  |   |  |   | 12,799  | 
|Net income (loss)                     |  |                               | 10,834  |              |  |              | (8,878  | )            |  |              | 486    |   |  |   | (121 | ) |  |   | 2,321   | 

|                                      |  |                               |         |              |  |              |         |              |  |              |        |  |  |   |        |   |  |   |         | 
|------------------------------------- |  | ----------------------------- | ------- | ------------ |  | ------------ | ------- | ------------ |  | ------------ | ------ |  |  | - | ------ | - |  | - | ------- | 
|                                      |  | Year Ended September 29, 2001
|                                      |  |                              
|                                      |  |                               |         |              |  |              |         |              |  | Non-         |        |  |  |   |        |   |  |  
|                                      |  | Parent                        |         | Guarantor    |  | Guarantor    |         |              |  |              |        |  |  |  
|Statements of Operations              |  | Only                          |         | Subsidiaries |  | Subsidiaries |         | Eliminations |  | Consolidated
|                                      |  |                               |         |              |  |              |         |              |  |             
|Net sales                             |  | $                             | 188,956 |              |  | $            | 208,359 |              |  | $            | 41,837 |  |  | $ | (2,716 | ) |  | $ | 436,436 | 
|Gross profit                          |  |                               | 44,977  |              |  |              | 65,418  |              |  |              | 14,161 |  |  |   |       |   |  |   | 124,556 | 
|Operating income                      |  |                               | 12,740  |              |  |              | 19,243  |              |  |              | 1,290  |  |  |   |       |   |  |   | 33,273  | 
|Interest, income taxes and other, net |  |                               | 6,185   |              |  |              | 14,510  |              |  |              | 404    |  |  |   | 944    |   |  |   | 22,043  | 
|Net income                            |  |                               | 6,555   |              |  |              | 4,733   |              |  |              | 886    |  |  |   | (944   | ) |  |   | 11,230  | 

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|                                                                                       |                                            |      |                    |              |           |              |           |              |  |              |         |        |  |   |          |          |   |   |         |         | 
|-------------------------------------------------------------------------------------- | ------------------------------------------ | ---- | ------------------ | ------------ | --------- | ------------ | --------- | ------------ |  | ------------ | ------- | ------ |  | - | -------- | -------- | - | - | ------- | ------- | 
|                                                                                       |                                            |      | September 27, 2003
|                                                                                       |                                            |      |                   
|                                                                                       |                                            |      |                    |              |           |              |           |              |  |              | Non-    |        |  |   |          |          |   |   |        
|                                                                                       |                                            |      | Parent             |              | Guarantor |              | Guarantor |              |  |              |         |        |  |   |         
|Balance Sheets                                                                         |                                            | Only |                    | Subsidiaries |           | Subsidiaries |           | Eliminations |  | Consolidated
|                                                                                       |                                            |      |                    |              |           |              |           |              |  |             
|ASSETS                                                                                 |                                            |      |                    |              |           |              |           |              |  |              |         |        |  |   |          |          |   |   |         |        
|Cash and cash equivalents                                                              |                                            | $    | 218                |              |           | $            | 440       |              |  | $            | 3,827   |        |  | $ |         |          |   | $ | 4,485   |        
|Marketable securities                                                                  |                                            |      |                   |              |           |              |          |              |  |              |        |        |  |   |         |          |   |   |        |        
|Accounts receivable                                                                    |                                            |      | 33,740             |              |           |              | 22,174    |              |  |              | 8,441   |        |  |   |         |          |   |   | 64,355  |        
|Inventories                                                                            |                                            |      | 31,945             |              |           |              | 30,818    |              |  |              | 10,530  |        |  |   |         |          |   |   | 73,293  |        
|Other current assets                                                                   |                                            |      | 9,703              |              |           |              | 4,903     |              |  |              | 2,992   |        |  |   |         |          |   |   | 17,598  |        
|                                                                                       |                                            |      |                    |              |           |              |           |              |  |              |         |        |  |   |          |          |   |   |         |        
|                                                                                       | Total current assets                       |      |                    | 75,606       |           |              |           | 58,335       |  |              |         | 25,790 |  |   |          |         |   |   |         | 159,731 | 
|Property and equipment, net                                                            |                                            |      | 27,627             |              |           |              | 5,318     |              |  |              | 1,957   |        |  |   |         |          |   |   | 34,902  |        
|Other assets                                                                           |                                            |      | 157,597            |              |           |              | 6,706     |              |  |              | (14,071 | )      |  |   | (130,586 | )        |   |   | 19,646  |        
|                                                                                       |                                            |      |                    |              |           |              |           |              |  |              |         |        |  |   |          |          |   |   |         |        
|                                                                                       | Total assets                               |      | $                  | 260,830      |           |              | $         | 70,359       |  |              | $       | 13,676 |  |   | $        | (130,586 | ) |   | $       | 214,279 | 
|                                                                                       |                                            |      |                    |              |           |              |           |              |  |              |         |        |  |   |          |          |   |   |         |        
|LIABILITIES AND SHAREHOLDERS EQUITY                                                   |                                            |      |                    |              |           |              |           |              |  |              |         |        |  |   |          |          |   |   |         |        
|Accounts payable and accrued liabilities                                               |                                            | $    | 38,036             |              |           | $            | 5,480     |              |  | $            | 5,006   |        |  |   |         |          |   | $ | 48,522  |        
|Current portion of revolving credit line,
long-term debt and capital lease obligations |                                            |      | 26,738             |              |           |              | 892       |              |  |              | 19      |        |  |   |         |          |   |   | 27,649  |        
|                                                                                       |                                            |      |                    |              |           |              |           |              |  |              |         |        |  |   |          |          |   |   |         |        
|                                                                                       | Total current liabilities                  |      |                    | 64,774       |           |              |           | 6,372        |  |              |         | 5,025  |  |   |          |         |   |   |         | 76,171  | 
|Long-term debt and noncurrent portion of capital
lease obligations                     |                                            |      | 107,590            |              |           |              | 87        |              |  |              | 95      |        |  |   |         |          |   |   | 107,772 |        
|Other noncurrent liabilities                                                           |                                            |      | 510                |              |           |              | 6,968     |              |  |              | 107     |        |  |   |         |          |   |   | 7,585   |        
|Shareholders equity                                                                   |                                            |      | 87,956             |              |           |              | 56,932    |              |  |              | 8,449   |        |  |   | (130,586 | )        |   |   | 22,751  |        
|                                                                                       |                                            |      |                    |              |           |              |           |              |  |              |         |        |  |   |          |          |   |   |         |        
|                                                                                       | Total liabilities and shareholders equity |      | $                  | 260,830      |           |              | $         | 70,359       |  |              | $       | 13,676 |  |   | $        | (130,586 | ) |   | $       | 214,279 | 
|                                                                                       |                                            |      |                    |              |           |              |           |              |  |              |         |        |  |   |          |          |   |   |         |        

|                                                                   |                                            |      |                    |              |           |              |           |              |  |              |        |        |  |   |          |          |   |   |         |         | 
|------------------------------------------------------------------ | ------------------------------------------ | ---- | ------------------ | ------------ | --------- | ------------ | --------- | ------------ |  | ------------ | ------ | ------ |  | - | -------- | -------- | - | - | ------- | ------- | 
|                                                                   |                                            |      | September 28  2002
|                                                                   |                                            |      |                   
|                                                                   |                                            |      |                    |              |           |              |           |              |  |              | Non-   |        |  |   |          |          |   |   |        
|                                                                   |                                            |      | Parent             |              | Guarantor |              | Guarantor |              |  |              |        |        |  |   |         
|Balance Sheets                                                     |                                            | Only |                    | Subsidiaries |           | Subsidiaries |           | Eliminations |  | Consolidated
|                                                                   |                                            |      |                    |              |           |              |           |              |  |             
|ASSETS                                                             |                                            |      |                    |              |           |              |           |              |  |              |        |        |  |   |          |          |   |   |         |        
|Cash and cash equivalents                                          |                                            | $    | 24,274             |              |           | $            | 167       |              |  | $            | 3,843  |        |  | $ |         |          |   | $ | 28,284  |        
|Marketable securities                                              |                                            |      | 11,100             |              |           |              |          |              |  |              |       |        |  |   |         |          |   |   | 11,100  |        
|Accounts receivable                                                |                                            |      | 44,317             |              |           |              | 36,045    |              |  |              | 10,647 |        |  |   |         |          |   |   | 91,009  |        
|Inventories                                                        |                                            |      | 34,867             |              |           |              | 31,050    |              |  |              | 8,880  |        |  |   |         |          |   |   | 74,797  |        
|Other current assets                                               |                                            |      | 10,494             |              |           |              | 9,234     |              |  |              | 3,146  |        |  |   |         |          |   |   | 22,287  |        
|                                                                   |                                            |      |                    |              |           |              |           |              |  |              |        |        |  |   |          |          |   |   |         |        
|                                                                   | Total current assets                       |      |                    | 125,052      |           |              |           | 76,496       |  |              |        | 26,516 |  |   |          |         |   |   |         | 228,064 | 
|Property and equipment, net                                        |                                            |      | 37,152             |              |           |              | 8,759     |              |  |              | 2,562  |        |  |   |         |          |   |   | 48,473  |        
|Other assets                                                       |                                            |      | 135,189            |              |           |              | 68,557    |              |  |              | (6,638 | )      |  |   | (137,437 | )        |   |   | 59,671  |        
|                                                                   |                                            |      |                    |              |           |              |           |              |  |              |        |        |  |   |          |          |   |   |         |        
|                                                                   | Total assets                               |      | $                  | 297,393      |           |              | $         | 153,812      |  |              | $      | 22,440 |  |   | $        | (137,437 | ) |   | $       | 336,208 | 
|                                                                   |                                            |      |                    |              |           |              |           |              |  |              |        |        |  |   |          |          |   |   |         |        
|LIABILITIES AND SHAREHOLDERS EQUITY                               |                                            |      |                    |              |           |              |           |              |  |              |        |        |  |   |          |          |   |   |         |        
|Accounts payable and accrued liabilities                           |                                            | $    | 43,265             |              |           | $            | 12,394    |              |  | $            | 5,161  |        |  | $ | (221     | )        |   | $ | 60,599  |        
|Current portion of long-term debt and capital
lease obligations    |                                            |      | 274                |              |           |              | 948       |              |  |              | 29     |        |  |   |         |          |   |   | 1,251   |        
|                                                                   |                                            |      |                    |              |           |              |           |              |  |              |        |        |  |   |          |          |   |   |         |        
|                                                                   | Total current liabilities                  |      |                    | 43,539       |           |              |           | 13,342       |  |              |        | 5,190  |  |   |          | (221     | ) |   |         | 61,850  | 
|Long-term debt and noncurrent portion of capital
lease obligations |                                            |      | 107,643            |              |           |              | 1,178     |              |  |              | 101    |        |  |   |         |          |   |   | 108,922 |        
|Other noncurrent liabilities                                       |                                            |      | 1,170              |              |           |              | 6,864     |              |  |              | 30     |        |  |   |         |          |   |   | 9,064   |        
|Shareholders equity                                               |                                            |      | 145,041            |              |           |              | 131,428   |              |  |              | 17,119 |        |  |   | (137,216 | )        |   |   | 156,372 |        
|                                                                   |                                            |      |                    |              |           |              |           |              |  |              |        |        |  |   |          |          |   |   |         |        
|                                                                   | Total liabilities and shareholders equity |      | $                  | 297,393      |           |              | $         | 153,812      |  |              | $      | 22,440 |  |   | $        | (137,216 | ) |   | $       | 336,208 | 
|                                                                   |                                            |      |                    |              |           |              |           |              |  |              |        |        |  |   |          |          |   |   |         |        

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|                                                    |  |                               |         |              |  |              |        |              |  |              |        |   |  |   |   |  |  |   |         |  
|--------------------------------------------------- |  | ----------------------------- | ------- | ------------ |  | ------------ | ------ | ------------ |  | ------------ | ------ | - |  | - | - |  |  | - | ------- | -
|                                                    |  | Year Ended September 27, 2003
|                                                    |  |                              
|                                                    |  |                               |         |              |  |              |        |              |  | Non-         |        |   |  |   |   |  |  |  
|                                                    |  | Parent                        |         | Guarantor    |  | Guarantor    |        |              |  |              |        |   |  |  
|Statements of Cash Flows                            |  | Only                          |         | Subsidiaries |  | Subsidiaries |        | Eliminations |  | Consolidated
|                                                    |  |                               |         |              |  |              |        |              |  |             
|Net cash provided by (used in) operating activities |  | $                             | (45,650 | )            |  | $            | 3,472  |              |  | $            | (242   | ) |  | $ |  |  |  | $ | (42,420 | )
|Net cash provided by (used in) investing activities |  |                               | (4,010  | )            |  |              | (497   | )            |  |              | 62     |   |  |   |  |  |  |   | (4,445  | )
|Net cash provided by (used in) financing activities |  |                               | 25,600  |              |  |              | 2,099  |              |  |              | (3,320 | ) |  |   |  |  |  |   | 24,379  |  
|Other                                               |  |                               | 4       |              |  |              | (4,801 | )            |  |              | 3,484  |   |  |   |  |  |  |   | (1,313  | )
|Net increase (decrease) in cash                     |  |                               | (24,056 | )            |  |              | 273    |              |  |              | (16    | ) |  |   |  |  |  |   | (23,799 | )
|Cash and cash equivalents, beginning of year        |  |                               | 24,274  |              |  |              | 167    |              |  |              | 3,843  |   |  |   |  |  |  |   | 28,284  |  
|Cash, end of year                                   |  |                               | 218     |              |  |              | 440    |              |  |              | 3,827  |   |  |   |  |  |  |   | 4,485   |  

|                                                    |  |                               |         |              |  |              |        |              |  |              |       |   |  |   |   |  |  |   |         |  
|--------------------------------------------------- |  | ----------------------------- | ------- | ------------ |  | ------------ | ------ | ------------ |  | ------------ | ----- | - |  | - | - |  |  | - | ------- | -
|                                                    |  | Year Ended September 28, 2002
|                                                    |  |                              
|                                                    |  |                               |         |              |  |              |        |              |  | Non-         |       |   |  |   |   |  |  |  
|                                                    |  | Parent                        |         | Guarantor    |  | Guarantor    |        |              |  |              |       |   |  |  
|Statements of Cash Flows                            |  | Only                          |         | Subsidiaries |  | Subsidiaries |        | Eliminations |  | Consolidated
|                                                    |  |                               |         |              |  |              |        |              |  |             
|Net cash provided by (used in)
operating activities |  | $                             | 15,424  |              |  | $            | 282    |              |  | $            | 2,044 |   |  | $ |  |  |  | $ | 17,750  |  
|Net cash provided by (used in)
investing activities |  |                               | (20,238 | )            |  |              | (1,088 | )            |  |              | (212  | ) |  |   |  |  |  |   | (21,538 | )
|Net cash provided by (used in)
financing activities |  |                               | 29,294  |              |  |              | (1,418 | )            |  |              | (297  | ) |  |   |  |  |  |   | 27,579  |  
|Other                                               |  |                               | (396    | )            |  |              | 2,142  |              |  |              | 1,033 |   |  |   |  |  |  |   | 2,779   |  
|Net increase (decrease) in cash                     |  |                               | 24,084  |              |  |              | (82    | )            |  |              | 2,568 |   |  |   |  |  |  |   | 26,570  |  
|Cash, beginning of year                             |  |                               | 190     |              |  |              | 249    |              |  |              | 1,275 |   |  |   |  |  |  |   | 1,714   |  
|Cash and cash equivalents, end of year              |  |                               | 24,274  |              |  |              | 167    |              |  |              | 3,843 |   |  |   |  |  |  |   | 28,284  |  

|                                                    |  |                               |         |              |  |              |        |              |  |              |       |   |  |   |   |  |  |   |         |  
|--------------------------------------------------- |  | ----------------------------- | ------- | ------------ |  | ------------ | ------ | ------------ |  | ------------ | ----- | - |  | - | - |  |  | - | ------- | -
|                                                    |  | Year Ended September 29, 2001
|                                                    |  |                              
|                                                    |  |                               |         |              |  |              |        |              |  | Non-         |       |   |  |   |   |  |  |  
|                                                    |  | Parent                        |         | Guarantor    |  | Guarantor    |        |              |  |              |       |   |  |  
|Statements of Cash Flows                            |  | Only                          |         | Subsidiaries |  | Subsidiaries |        | Eliminations |  | Consolidated
|                                                    |  |                               |         |              |  |              |        |              |  |             
|Net cash provided by (used in)
operating activities |  | $                             | 14,709  |              |  | $            | 4,131  |              |  | $            | 715   |   |  | $ |  |  |  | $ | 19,555  |  
|Net cash provided by (used in)
investing activities |  |                               | (16,192 | )            |  |              | (2,933 | )            |  |              | (457  | ) |  |   |  |  |  |   | (19,582 | )
|Net cash provided by (used in)
financing activities |  |                               | 1,502   |              |  |              | (149   | )            |  |              | (557  | ) |  |   |  |  |  |   | 796     |  
|Other                                               |  |                               |        |              |  |              | (822   | )            |  |              |      |   |  |   |  |  |  |   | (822    | )
|Net increase (decrease) in cash                     |  |                               | 19      |              |  |              | 227    |              |  |              | (299  | ) |  |   |  |  |  |   | (53     | )
|Cash, beginning of year                             |  |                               | 171     |              |  |              | 22     |              |  |              | 1,574 |   |  |   |  |  |  |   | 1,767   |  
|Cash, end of year                                   |  |                               | 190     |              |  |              | 249    |              |  |              | 1,275 |   |  |   |  |  |  |   | 1,714   |  

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16. SUBSEQUENT EVENTS

On December 15, 2003, the Company paid the semi-annual interest payment of
$5.5 million to the holders of its senior subordinated notes. On December 16,
2003, availability under the Facility fell below $20 million, triggering
financial covenants which were violated. This caused the Company to be in
technical default under the Facility. On January 12, 2004, the Company amended
the Facility (the Amended Facility) with Fleet Capital, which among other
things reduces aggregate borrowings to $70 million. The default under the
Facility was waived on January 12, 2004 by the terms of the Amended Facility.
Although the Amended Facility provides for borrowings of up to $70 million, the
amount that can be borrowed at any given time is based upon a formula that
takes into account, among other things, eligible accounts receivable and
inventory, which can result in borrowing availability of less than the full
amount. Additionally, the Amended Facility also contains a $10 million availability reserve
base and higher rates of interest than the Facility. The Amended Facility
contains monthly financial covenants of minimum EBITDA levels which begin
February 2004, and a consolidated fixed charge coverage ratio and consolidated
EBIT to consolidated interest expense ratio which begin March 2005.
The fiscal 2004 minimum EBITDA levels are cumulative month amounts
beginning in the second quarter of fiscal 2004. The minimum EBITDA
threshold for fiscal 2004 ranges from $1.8 million for the two
months ending February 29, 2004 to $11.8 million for the
nine months ending September 30, 2004. While the
Company believes its operating plans, if met, will be sufficient to assure
compliance with the terms of the Amended Facility, there can be no assurances
that the Company will be in compliance through fiscal 2004.

On January 12, 2004, the Amended Real Estate Loan was further amended to
increase the loan by $2.0 million, to increase the interest rate, and to
require additional quarterly principal payments of $50,000, which commence
April 1, 2004. The $2.0 million of additional borrowings was used to pay down
borrowings under the Facility.

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TROPICAL SPORTSWEAR INTL CORPORATION

SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)

Reserve for sales returns and allowances:

|                   |  |            |       |            |  |            |       |            |  |           |     |         |  |   |    |  |  |   |       | 
|------------------ |  | ---------- | ----- | ---------- |  | ---------- | ----- | ---------- |  | --------- | --- | ------- |  | - | -- |  |  | - | ----- | 
|                   |  |            |       |            |  | Additions  |       |            |  |           |     |         |  |  
|                   |  |            |       |            |  |            |       |            |  |           |     |         |  |  
|                   |  | Balance at |       | Charged to |  | Charged to |       |            |  |           |     | Balance
|                   |  | Beginning  |       | Costs and  |  | Other      |       |            |  |           |     | at End 
|                   |  | of Period  |       | Expenses   |  | Accounts   |       | Deductions |  | of Period
|                   |  |            |       |            |  |            |       |            |  |          
|Year Ended:        |  |            |       |            |  |            |       |            |  |           |     |         |  |   |    |  |  |   |       | 
|September 29, 2001 |  | $          | 1,998 |            |  | $          | 1,596 |            |  | $         | 540 | (1)     |  | $ | 13 |  |  | $ | 4,121 | 
|                   |  |            |       |            |  |            |       |            |  |           |     |         |  |   |    |  |  |   |       | 
|September 28, 2002 |  | $          | 4,121 |            |  | $          | 1,493 |            |  | ($        | 364 | )(2)    |  | $ |   |  |  | $ | 5,250 | 
|                   |  |            |       |            |  |            |       |            |  |           |     |         |  |   |    |  |  |   |       | 
|September 27, 2003 |  | $          | 5,250 |            |  | $          | 1,941 |            |  | $         |    |         |  | $ | 15 |  |  | $ | 7,176 | 
|                   |  |            |       |            |  |            |       |            |  |           |     |         |  |   |    |  |  |   |       | 

Reserve for excess and slow-moving inventory:

|                   |  |            |       |            |  |            |        |            |  |           |       |         |  |   |       |  |  |   |        | 
|------------------ |  | ---------- | ----- | ---------- |  | ---------- | ------ | ---------- |  | --------- | ----- | ------- |  | - | ----- |  |  | - | ------ | 
|                   |  |            |       |            |  | Additions  |        |            |  |           |       |         |  |  
|                   |  |            |       |            |  |            |        |            |  |           |       |         |  |  
|                   |  | Balance at |       | Charged to |  | Charged to |        |            |  |           |       | Balance
|                   |  | Beginning  |       | Costs and  |  | Other      |        |            |  |           |       | at End 
|                   |  | of Period  |       | Expenses   |  | Accounts   |        | Deductions |  | of Period
|                   |  |            |       |            |  |            |        |            |  |          
|Year Ended:        |  |            |       |            |  |            |        |            |  |           |       |         |  |   |       |  |  |   |        | 
|September 29, 2001 |  | $          | 4,467 |            |  | $          | 1,250  |            |  | $         | 2,904 | (1)     |  | $ | 1,621 |  |  | $ | 7,000  | 
|                   |  |            |       |            |  |            |        |            |  |           |       |         |  |   |       |  |  |   |        | 
|September 28, 2002 |  | $          | 7,000 |            |  | $          | 1,234  |            |  | ($        | 2,330 | )(2)    |  | $ | 2,497 |  |  | $ | 3,407  | 
|                   |  |            |       |            |  |            |        |            |  |           |       |         |  |   |       |  |  |   |        | 
|September 27, 2003 |  | $          | 3,407 |            |  | $          | 12,337 |            |  | $         |      |         |  | $ | 3,672 |  |  | $ | 12,072 | 
|                   |  |            |       |            |  |            |        |            |  |           |       |         |  |   |       |  |  |   |        | 

Deferred tax asset valuation allowance:

|                   |  |            |       |            |  |            |        |            |  |           |       |         |  |   |       |  |  |   |        | 
|------------------ |  | ---------- | ----- | ---------- |  | ---------- | ------ | ---------- |  | --------- | ----- | ------- |  | - | ----- |  |  | - | ------ | 
|                   |  |            |       |            |  | Additions  |        |            |  |           |       |         |  |  
|                   |  |            |       |            |  |            |        |            |  |           |       |         |  |  
|                   |  | Balance at |       | Charged to |  | Charged to |        |            |  |           |       | Balance
|                   |  | Beginning  |       | Costs and  |  | Other      |        |            |  |           |       | at End 
|                   |  | of Period  |       | Expenses   |  | Accounts   |        | Deductions |  | of Period
|                   |  |            |       |            |  |            |        |            |  |          
|Year Ended:        |  |            |       |            |  |            |        |            |  |           |       |         |  |   |       |  |  |   |        | 
|September 29, 2001 |  | $          | 2,200 |            |  | $          |       |            |  | $         | 1,763 | (1)     |  | $ | 123   |  |  | $ | 3,840  | 
|                   |  |            |       |            |  |            |        |            |  |           |       |         |  |   |       |  |  |   |        | 
|September 28, 2002 |  | $          | 3,840 |            |  | $          | 509    |            |  | $         |      |         |  | $ | 1,559 |  |  | $ | 2,790  | 
|                   |  |            |       |            |  |            |        |            |  |           |       |         |  |   |       |  |  |   |        | 
|September 27, 2003 |  | $          | 2,790 |            |  | $          | 40,427 |            |  | $         | 940   | (3)     |  | $ |      |  |  | $ | 44,157 | 
|                   |  |            |       |            |  |            |        |            |  |           |       |         |  |   |       |  |  |   |        | 



|(1) |  | Represents balance acquired as a result of the acquisition of Duck Head
Apparel Company, Inc. in August 2001.         
|--- |  | ----------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Represents reduction of reserves related to the acquisition of Duck Head
Apparel Company, Inc.                        
|   
|(3) |  | Represents reserve for pension liability and fair value of a cash flow
hedge established through comprehensive income.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Tampa, and State of Florida, on this 12th day of January 2004.

| |  |                                       |  |                  
| |  | ------------------------------------- |  | -----------------
| |  | TROPICAL SPORTSWEAR INTL CORPORATION
| |  |                                       |  |                  
| |  | By:                                   |  | /s/ Michael Kagan
| |  |                                      
| |  |                                       |  | Michael Kagan    
| |  | Chief Executive Officer and Director 

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated. Each person whose
signature appears below constitutes and appoints Michael Kagan and Robin J.
Cohan and each of them individually, his true and lawful attorney-in-fact and
agent, with full power of substitution and revocation, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments to
this report and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them full power
and authority to do and perform each and every act and this requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or either of them, may lawfully do or
cause to be done by virtue hereof.

|          |                             |                                       |                                |      |                 
|--------- | --------------------------- | ------------------------------------- | ------------------------------ | ---- | ----------------
|Signature |                             | Title                                 |                                | Date
|          |                             |                                       |                                |     
|          | /s/ Eloy S. Vallina-Laguera |                                       | Chairman of the Board          |      | January 12, 2004
|          |                             |                                       |                                |     
|          | Eloy S. Vallina-Laguera     |                                       |                                |      |                 
|          |                             |                                       |                                |      |                 
|          | /s/ Michael Kagan           |                                       | Chief Executive Officer        |      | January 12, 2004
|          |                             | and Director                          |                                |     
|          | Michael Kagan               |                                       |                                |      |                 
|          |                             |                                       |                                |     
|          | /s/ Robin J. Cohan          |                                       | Executive Vice President,      |      | January 12, 2004
|          |                             | Chief Financial Officer and Treasurer |                                |     
|          | Robin J. Cohan              |                                       | (Principal Accounting Officer) |      |                 
|          |                             |                                       |                                |      |                 
|          | /s/ Charles J. Smith        |                                       | Director                       |      | January 12, 2004
|          |                             |                                       |                                |     
|          | Charles J. Smith            |                                       |                                |      |                 
|          |                             |                                       |                                |      |                 
|          | /s/ Leslie J. Gillock       |                                       | Director                       |      | January 12, 2004
|          |                             |                                       |                                |     
|          | Leslie J. Gillock           |                                       |                                |      |                 
|         
|          | /s/ Benito F. Bucay         |                                       | Director                       |      | January 12, 2004
|          |                             |                                       |                                |     
|          | Benito F. Bucay             |                                       |                                |      |                 
|          |                             |                                       |                                |      |                 
|          | /s/ Martin W. Pitts         |                                       | Director                       |      | January 12, 2004
|          |                             |                                       |                                |     
|          | Martin W. Pitts             |                                       |                                |      |                 
|          |                             |                                       |                                |      |                 
|          | /s/ Eloy Vallina Garza      |                                       | Director                       |      | January 12, 2004
|          |                             |                                       |                                |     
|          | Eloy Vallina Garza          |                                       |                                |      |                 

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PART IV

Item 15. Index to Exhibits

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|*3.1    |  | Amended and Restated Articles of Incorporation of Tropical
Sportswear Intl Corporation (filed as Exhibit 3.1 to Tropical
Sportswear Intl Corporations Form 10-Q filed May 14, 2002).                                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|3.2     |  | Amended and Restated By-Laws of Tropical Sportswear Intl
Corporation (filed herewith).                                                                                                                                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|*4.1    |  | Specimen Certificate for the Common Stock of Tropical Sportswear
Intl Corporation (filed as Exhibit 4.1 to Amendment No. 1 to Tropical
Sportswear Intl Corporations Registration Statement on Form S-1 filed
October 2, 1997).                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|*4.2    |  | Shareholders Agreement dated as of September 29, 1997 among
Tropical Sportswear Intl Corporation, William W. Compton, the Compton
Family Limited Partnership, Michael Kagan, the Kagan Family Limited
Partnership, Shakale International, S.A. and Accel, S.A. de C.V. (filed
as Exhibit 4.2 to Amendment No. 1 to Tropical Sportswear Intl
Corporations Registration Statement on Form S-1 filed October 2,
1997).                     
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|*4.3    |  | Indenture dated as of June 24, 1998 among Tropical Sportswear Intl
Corporation, the Subsidiary Guarantors named therein, and SunTrust
Bank, Atlanta, as trustee (filed as Exhibit 4.4 to Tropical Sportswear
Intl Corporations Form S-4 filed August 20, 1998).                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|*4.4    |  | Shareholder Protection Rights Agreement, dated as of November 13,
1998, between Tropical Sportswear Intl Corporation and Firstar Bank
Milwaukee, N.A. (which includes as Exhibit B thereto the Form of Right
Certificate) (filed as Exhibit 99.1 to Tropical Sportswear Intl
Corporations Form 8-K dated November 13, 1998).                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|*4.5    |  | Amendment No. 1 to Shareholder Protection Rights Agreement, dated
as of September 3, 2002 between Tropical Sportswear Intl Corporation
and Computershare Investor Services, LLC (filed herewith)                                                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|*4.6    |  | Supplemental Indenture No. 1 dated as of August 23, 2000 among
Tropical Sportswear Intl Corporation, each of the New Subsidiary
Guarantors named therein, and SunTrust Bank, Atlanta, as trustee (filed
as Exhibit 4.5 to Tropical Sportswear Intl Corporations Annual Report
on Form 10-K filed December 19, 2000).                                                                                                                     
|*10.1   |  | Loan Agreement dated as of May 28, 1999 between Tropical Sportswear
Intl Corporation and NationsBank N.A. (filed as Exhibit 10.1 to
Tropical Sportswear Intl Corporations Quarterly Report on Form
10-Q filed August 12, 1999).                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|*10.2   |  | Loan and Security Agreement dated June 10, 1998 (the Loan and
Security Agreement) among Tropical Sportswear Intl Corporation,
Tropical Sportswear Company, Inc., Savane International Corp. and
Apparel Network Corporation, as borrowers, the Lenders named therein
and Fleet Capital Corporation, as agent (filed as Exhibit 10.4 to
Tropical Sportswear Intl Corporations Registration Statement on
Form S-4 filed August 20, 1998).
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|*10.3   |  | First Amendment to the Loan and Security Agreement dated July 9,
1998 (filed as Exhibit 10.5 to Tropical Sportswear Intl Corporations
Registration Statement on Form S-4 filed August 20, 1998).                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|*10.4   |  | Employment Agreement dated June 9, 1998 between Michael R. Mitchell
and Farah Incorporated (filed as Exhibit 10.14 to Tropical Sportswear
Intl Corporations Form S-4 filed August 20, 1998).                                                                                                                                                                                                                                              

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|        |  |                                                                                                                                                                                                                                                       
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                       
|Number  |  | Description                                                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                       
|*10.5   |  | Employment Agreement dated April 15, 2002 between Gregory L. Williams
and Tropical Sportswear Intl Corporation (filed as
Exhibit 4.10 to Tropical Sportswear Intl Corporations Form 10-Q filed May 14, 2002).                                      
|        |  |                                                                                                                                                                                                                                                       
|*10.6   |  | Employment Agreement dated April 15, 2002 between Christopher B.
Munday and Tropical Sportswear Intl Corporation (filed as Exhibit 4.8 to
Tropical Sportswear Intl Corporations Form 10-Q filed May 14, 2002).                                     
|        |  |                                                                                                                                                                                                                                                       
|*10.7   |  | Employment Agreement dated April 15, 2002 between N. Larry McPherson
and Tropical Sportswear Intl Corporation (filed as Exhibit 4.9 to
Tropical Sportswear Intl Corporations Form 10-Q filed May 14, 2002)                                         
|        |  |                                                                                                                                                                                                                                                       
|10.8    |  | Employment Agreement effective August 11, 2003 between Michael Kagan
and Tropical Sportswear Intl Corporation (filed herewith).                                                                                                                      
|        |  |                                                                                                                                                                                                                                                       
|10.9    |  | Employment Agreement effective July 18, 2003 between Richard J.
Domino and Tropical Sportswear Intl Corporation (filed herewith).                                                                                                                    
|        |  |                                                                                                                                                                                                                                                       
|10.10   |  | Employment Agreement effective August 11, 2003 between Robin J.
Cohan and Tropical Sportswear Intl Corporation (filed herewith).                                                                                                                     
|        |  |                                                                                                                                                                                                                                                       
|10.11   |  | Employment Agreement effective April 13, 2002 between Frank A.
Maccarrone and Tropical Sportswear Intl Corporation (filed herewith).                                                                                                                 
|        |  |                                                                                                                                                                                                                                                       
|*10.12  |  | Separation Agreement by and among Tropical Sportswear Intl
Corporation, Savane International Corp. and William W. Compton dated
November 18, 2002 (filed as Exhibit 99.1 to Tropical Sportswear Intl
Corporations Form 8-K filed November 18, 2002)
|        |  |                                                                                                                                                                                                                                                       
|*10.13  |  | Employee Stock Option Plan of Tropical Sportswear Intl Corporation as
amended (filed as Exhibit 99.1 to Tropical Sportswear Intl Corporations
Registration Statement on Form S-8 filed October 28, 1999).                                          
|        |  |                                                                                                                                                                                                                                                       
|*10.14  |  | Non-Employee Director Stock Option Plan of Tropical Sportswear Intl
Corporation (filed as Exhibit 10.8 to Tropical Sportswear Intl
Corporations Registration Statement on Form S-1 filed August 15, 1997).                                         
|        |  |                                                                                                                                                                                                                                                       
|*10.15  |  | Amended and Restated Farah U.S.A. Bargaining Unit Pension Plan dated
December 31, 1994, effective as of January 1, 1990 (filed as Exhibit
10.21 to Tropical Sportswear Intl Corporations Form S-4 filed August
20, 1998).                           
|        |  |                                                                                                                                                                                                                                                       
|*10.16  |  | Amendment to the Amended and Restated Farah U.S.A. Bargaining Unit
Pension Plan dated December 13, 1995 (filed as Exhibit 10.22 to Tropical
Sportswear Intl Corporations Form S-4 filed August 20, 1998).                                           
|        |  |                                                                                                                                                                                                                                                       
|*10.17  |  | Apparel International Group, Inc. 1996 Stock Option Plan (filed as
Exhibit 10.9 to Tropical Sportswear Intl Corporations Registration
Statement on Form S-1 filed August 15, 1997).                                                                 
|        |  |                                                                                                                                                                                                                                                       
|*10.18  |  | Second Amendment dated August 27, 1998 to Loan and Security Agreement
(filed as Exhibit 10.23 to Tropical Sportswear Intl Corporations
Quarterly Report on Form 10-Q filed February 16, 1999).                                                      
|        |  |                                                                                                                                                                                                                                                       
|*10.19  |  | Third Amendment dated December 31, 1998 to Loan and Security Agreement
(filed as Exhibit 10.24 to Tropical Sportswear Intl Corporations
Quarterly Report on Form 10-Q filed February 16, 1999).                                                     
|        |  |                                                                                                                                                                                                                                                       
|*10.20  |  | Fourth Amendment dated May 21, 1999 to Loan and Security Agreement
(filed as Exhibit 10.25 to Tropical Sportswear Intl Corporations Form
10-K filed December 30, 1999).                                                                             
|        |  |                                                                                                                                                                                                                                                       
|*10.21  |  | Fifth Amendment dated July 16, 1999 to Loan and Security Agreement
(filed as Exhibit 10.2 to Tropical Sportswear Intl Corporations
Quarterly Report on Form 10-Q filed August 12, 1999).                                                            
|        |  |                                                                                                                                                                                                                                                       
|*10.22  |  | First Amendment dated July 19, 1999 to Loan Agreement with NationsBank
N.A. (filed as Exhibit 10.3 to Tropical Sportswear Intl Corporations
Quarterly Report on Form 10-Q filed August 12, 1999).                                                   
|        |  |                                                                                                                                                                                                                                                       
|*10.23  |  | Sixth Amendment dated October 28, 1999 to Loan and Security Agreement
with Fleet Capital Corporation (filed as Exhibit 10.28 to Tropical
Sportswear Intl Corporations Form 10-K filed December 30, 1999).                                           

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|        |  |                                                                                                                                                                                                                                                                        
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                        
|Number  |  | Description                                                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                        
|*10.24  |  | Seventh Amendment dated November 12, 1999 to Loan and Security
Agreement with Fleet Capital Corporation (filed as Exhibit 10.29 to
Tropical Sportswear Intl Corporations Form 10-K filed December 30,
1999).                                                         
|        |  |                                                                                                                                                                                                                                                                        
|*10.25  |  | Second Amendment dated November 12, 1999 to Loan Agreement with
NationsBank N.A. (filed as Exhibit 10.30 to Tropical Sportswear Intl
Corporations Form 10-K filed December 30, 1999).                                                                                
|        |  |                                                                                                                                                                                                                                                                        
|*10.26  |  | Third Amendment dated August 24, 1998 to Retail-Domestic Collection
Factoring Agreement between Heller Financial, Inc. and Tropical
Sportswear Intl Corporation (filed as Exhibit 10.31 to Tropical
Sportswear Intl Corporations Form 10-K filed December 30, 1999).
|        |  |                                                                                                                                                                                                                                                                        
|*10.27  |  | Third Amendment dated January 18, 2000 to Loan Agreement with
NationsBank N.A. (filed as Exhibit 10.1 to Tropical Sportswear Intl
Corporations Form 10-Q filed May 10, 2000).                                                                                        
|        |  |                                                                                                                                                                                                                                                                        
|*10.28  |  | Eighth Amendment dated January 19, 2000 to Loan and Security Agreement
with Fleet Capital Corporation (filed as Exhibit 10.2 to Tropical
Sportswear Intl Corporations Form 10-Q filed May 10, 2000).                                                                 
|        |  |                                                                                                                                                                                                                                                                        
|*10.29  |  | Tropical Sportswear Intl Corporation 2000 Long-Term Incentive Plan
(filed as Exhibit 99.1 to Tropical Sportswear Intl Corporations
Registration Statement on Form S-8, dated July 28, 2000).                                                                        
|        |  |                                                                                                                                                                                                                                                                        
|*10.30  |  | Joinder Agreement dated August 23, 2000 and Supplement to Loan and
Security Agreement with Fleet Capital Corporation (filed as Exhibit 10.35
to Tropical Sportswear Intl Corporations Annual Report on Form 10-K
filed December 19, 2000).                           
|        |  |                                                                                                                                                                                                                                                                        
|*10.31  |  | Joinder Agreement dated August 9, 2001 and Supplement to Loan and
Security Agreement with Fleet Capital Corporation (filed as Exhibit 10.36
to Tropical Sportswear Intl Corporations Annual Report on Form 10-K
filed December 27, 2001).                            
|        |  |                                                                                                                                                                                                                                                                        
|*10.32  |  | Consent Agreement dated June 25, 2001 with Fleet Capital Corporation,
as Agent (filed as Exhibit 10.37 to Tropical Sportswear Intl
Corporations Annual Report on Form 10-K filed December 27, 2001).                                                                 
|        |  |                                                                                                                                                                                                                                                                        
|*10.33  |  | Eleventh Amendment to Loan and Security Agreement with Fleet Capital
Corporation dated May 22, 2002 (filed as Exhibit 10.1 to Tropical
Sportswear Intl Corporations Form 10-Q filed August 12, 2002).                                                                
|        |  |                                                                                                                                                                                                                                                                        
|*10.34  |  | Note Amendment Agreement to Renewal and Replacement Promissory Note
with Bank of America, N.A. dated June 26, 2002 (filed as Exhibit 10.2 of
Tropical Sportswear Intl Corporations Form 10-Q filed August 12, 2002).                                                 
|        |  |                                                                                                                                                                                                                                                                        
|*10.35  |  | Amendment to Loan Agreement with Bank of America, N.A. dated March 31,
2002 (filed as Exhibit 10.3 to Tropical Sportswear Intl Corporations
Form 10-Q filed August 12, 2002).                                                                                        
|        |  |                                                                                                                                                                                                                                                                        
|*10.36  |  | Amended and Restated Loan and Security Agreement with Fleet Capital
Corporation dated June 6, 2003 (filed as Exhibit 10.1 of Tropical
Sportswear Intl Corporations Form 10-Q filed August 8, 2003).                                                                  
|        |  |                                                                                                                                                                                                                                                                        
|*10.37  |  | Asset Purchase Agreement by and among Goodys Family Clothing, Inc.,
TSI Brands, Inc., and Tropical Sportswear Intl Corporation dated May
30,2003 (filed as Exhibit 10.2 of Tropical Sportswear Intl Corporations
Form 10-Q filed August 8, 2003).                  
|        |  |                                                                                                                                                                                                                                                                        
|10.38   |  | Amendment No. 1 to Amended and Restated Loan and Security Agreement
and Waiver with Fleet Capital Corporation dated September 9, 2003 (filed
herewith).                                                                                                                
|        |  |                                                                                                                                                                                                                                                                        
|10.39   |  | Amended and Restated Loan and Security Agreement with Fleet Capital
Corporation dated September 9, 2003 (filed herewith).                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                        
|10.40   |  | Second Amended and Restated Loan and Security Agreement with Fleet
Capital Corporation dated January 12, 2004 (filed herewith).                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                        
|10.41   |  | First Amendment to Amended and Restated Loan and Security Agreement
with Fleet Capital Corporation dated January 12, 2004 (filed herewith.                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                        
|10.42   |  | Settlement Agreement by and between Tropical Sportswear Intl
Corporation and Nelson L. McPherson dated October 31, 2003 (filed
herewith).                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                        
|10.43   |  | Settlement Agreement by and between Tropical Sportswear Intl
Corporation and Christopher B. Munday dated October 31, 2003 (filed
herewith).                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                        
|10.44   |  | Settlement Agreement by and between Tropical Sportswear Intl
Corporation and Gregory L. Williams dated October 31, 2003 (filed
herewith).                                                                                                                             

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##### Table of Contents



|        |  |                                                                                                                                                                           
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                           
|Number  |  | Description                                                                                                                                                               
|        |  |                                                                                                                                                                           
|14.A    |  | Tropical Sportswear Intl Corporation Code of Business Conduct and Ethics (filed herewith).                                                                               
|        |  |                                                                                                                                                                           
|14.B    |  | Tropical Sportswear Intl Corporation Code of Conduct/Code of Ethics (filed herewith).                                                                                    
|        |  |                                                                                                                                                                           
|21.1    |  | Subsidiaries of the Registrant (filed herewith).                                                                                                                          
|        |  |                                                                                                                                                                           
|23.1    |  | Consent of Ernst & Young LLP (filed herewith).                                                                                                                            
|        |  |                                                                                                                                                                           
|31.1    |  | Certification of Chief Executive Officer pursuant to Securities
Exchange Act Rules 13a-14 and 15d-14 as adopted pursuant to section 302
of the Sarbanes-Oxley act of 2002.
|        |  |                                                                                                                                                                           
|31.2    |  | Certification of Chief Financial Officer pursuant to Securities
Exchange Act Rules 13a-14 and 15d-14 as adopted pursuant to section 302
of the Sarbanes-Oxley act of 2002.
|        |  |                                                                                                                                                                           
|32.1    |  | Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley
act of 2002.                        
|        |  |                                                                                                                                                                           
|32.2    |  | Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley
act of 2002.                        



| |  | * Indicates document incorporated herein by reference.
| |  | ------------------------------------------------------

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##### Table of Contents



Corporate Officers

Michael Kagan
Chief Executive Officer
Class I Director, classified as insider
Chairman of the Executive Committee

Richard J. Domino
President

Robin J. Cohan
Executive Vice President, Chief Financial Officer

Frank A. Maccarrone
Executive Vice President, Chief Operating Officer

Karen S. Castillo
Vice President Corporate Administration & Secretary

Directors
Eloy S. Vallina-Laguera
Chairman of the Board
Class II Director, classified as affiliate
Chairman of the Board of Accel S.A. de C.V.
evallinalaguera@yahoo.com

Benito F. Bucay
Class III Director, classified as independent
Chairman of the Legal Committee, Member of the Audit,
Executive, and Stock Option & Compensation Committees
Managing Director of Grupo Industrial Bre
bfbucay@yahoo.com

Leslie J. Gillock
Class II Director, classified as independent
Chairman of the Stock Option & Compensation Committee
and Member of the Audit and Corporate Governance &
Nominating Committees
Vice President, Brand Management, Springs Industries, Inc.
gillockl@yahoo.com

Martin W. Pitts
Class I Director, classified independent
Retired Partner, KPMG
Chairman of the Audit Committee, Member of the
Executive, Legal and Corporate Governance & Nominating Committees
mwpitts1@yahoo.com

Charles J. Smith
Class III Director, classified independent
Chairman of the Corporate Governance & Nominating
Committee, Member of the Executive and Stock Option &
Compensation Committees
Retired, Crystal Brands
smith_cj2001@yahoo.com

Eloy S. Vallina-Garza
Class I Director, classified affiliate
Vice President of Kleentex Corp.
evallinagarza@yahoo.com

Corporate Information

Corporate Offices
Tropical Sportswear Intl Corporation
4902 W. Waters Avenue
Tampa, FL 33634
Telephone: (813) 249-4900
Fax: (813) 371-4703

Annual Meeting
The annual meeting of shareholders of the Company will be
held at the corporate offices of the Company on February 19,
2004, at 10:00 a.m. local time.

Stock Exchange Listings
The Companys stock is traded on the NASDAQ exchange under
the symbol TSIC.

Independent Certified Public Accountants
Ernst & Young LLP
Tampa, FL

10-K Report, Proxy and Other Public Information
A copy of the Companys annual report on Form 10-K, Proxy
Statement and other public information as filed with the
Securities and Exchange Commission, will be furnished to any
shareholder free of charge on request to the secretary of the
Corporation.

These materials may also be obtained through the Companys
website, www.tropicalsportswear.com.

Stock Transfer Agent
ComputerShare Investor Services LLC
2 N. LaSalle Street
Chicago, IL 60602

Corporate Governance

The Board of Directors of the Company adheres to a Corporate
Governance Policy to ensure the Companys policies and
practices meet the standards suggested by various groups or
authorities active in corporate governance and practices of
other public companies and to select nominees for election as
directors of the Company.Board Committees          Audit
Committee          Corporate
Governance & Nominating Committee          Executive
Committee          Legal
Committee          Stock
Option & Compensation Committee

The Companys Corporate Governance Policy, as well as the
charters for each of the committees of the Board of Directors
is shown in their entirety in the Companys Proxy Statement
for its 2004 annual meeting of shareholders.

Direct Shareholder Communication to Board Members
Confidential, direct communication to non-management
directors can be made by using the internet addresses as
shown on this page or by the links on the Companys website,
www.tropicalsportswear.com.

76