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 [Fee Required] For the fiscal year ended October 3, 1998


[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required] 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                      I.R.S. Employer
 incorporation or organization)                     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.
                                                        [ ]

As of December 15, 1998 there were 7,611,129 shares of Common Stock outstanding.
The  aggregate  market value of the Common Stock held by  non-affiliates  of the
registrant,  based on the last sale price reported on the Nasdaq National Market
as of December 15, 1998, was approximately $144,703,175.



                       DOCUMENT INCORPORATED BY REFERENCE:

Document                                                    Form 10-K Reference

Proxy Statement, dated January 4, 1999                    Part III, Items 10-13


                      TROPICAL SPORTSWEAR INT'L CORPORATION

                             FORM 10-K ANNUAL REPORT
                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

PART I                                                                                  Page No.
<S>        <C>                                                                              <C>
Item 1     Business                                                                          3
Item 2     Properties                                                                       15
Item 3     Legal Proceedings                                                                15
Item 4     Submission of Matters to a Vote of Security Holders                              16

PART II

Item 5     Market for Registrant's Common Equity and Related Stockholder Matters            17
Item 6     Selected Financial Data                                                          17
Item 7     Management's Discussion and Analysis of Financial Condition and Results          18
           of Operations
Item 7A    Quantitative and Qualitative Disclosures About Market Risk                       29
Item 8     Financial Statements and Supplementary Data                                      29
Item 9     Changes in and Disagreements with Accountants on Accounting and Financial        29
           Disclosure

PART III

Item 10    Directors and Executive Officers of the Registrant                               30
Item 11    Executive Compensation                                                           30
Item 12    Security Ownership of Certain Beneficial Owners and Management                   30
Item 13    Certain Relationships and Related Transactions                                   30

PART IV

Item 14    Exhibits, Financial Statement Schedules and Reports on Form 8-K                  31
</TABLE>

Certain  statements  contained  in this  report on Form 10-K that are not purely
historical may be forward looking statements, including statements regarding the
Company's expectations,  hopes, beliefs, intentions, or strategies regarding the
future.  Forward looking statements include  statements  regarding,  among other
things: (i) the Company's backlog and sales; (ii) potential  acquisitions by the
Company;  (iii)  the  Company's  financing  plans;  (iv)  trends  affecting  the
Company's financial condition or results of operations; (v) the Company's growth
strategy,  operating strategy, and financing strategy;  (vi) the declaration and
payment of dividends; (vii) regulatory matters affecting the Company; and (viii)
the outcome of certain litigation involving the Company.  Prospective  investors
are cautioned  that any such  forward-looking  statements  are not guarantees of
future performance and involve risks and uncertainties,  and that actual results
may differ materially from those projected in the forward looking  statements as
a result of various  factors.  All forward looking  statements  included in this
document are based on  information  available to the Company on the date hereof,
and the  Company  assumes  no  obligation  to update  any such  forward  looking
statement.  Among  the  factors  that  could  cause  actual  results  to  differ
materially  are the  factors  detailed in Items 1 through 3 and 7 of this report
and the risks discussed under "Management's Discussion and Analysis of Financial
Condition  and Results of  Operations - Risk  Factors  Affecting  the  Company's
Business and Prospects" in Item 7. Prospective investors should also consult the
risk factors listed from time to time in the Company's  other reports filed with
the Securities and Exchange Commission.


<PAGE>


                                     PART I

Item 1.  Business

General

         The Company  produces  high quality  casual and dress men's and women's
apparel and provides major apparel retailers with comprehensive brand management
programs. The Company's programs currently feature pants, shorts, shirts, coats,
and denim  jeans for men and on a limited  basis,  pants and  skirts  for women.
These  products are marketed under Company  brands,  private brands and licensed
brand names. The Company  distinguishes  itself by providing  apparel  retailers
with  customer,   product  and  market  analysis,  apparel  design,  production,
merchandising,  and  inventory  forecasting.  The  Company  markets  its apparel
through  all  major  retail  distribution  channels,  including  department  and
specialty  stores,  national  chains,  catalog  retailers,   discount  and  mass
merchants  and  wholesale  clubs.  The  Company's  mission is to  provide  total
customer  satisfaction  through a combination of quality,  value and technology.
Management  believes that the Company  provides its customers  with high quality
apparel and services supported by a commitment to advanced  information,  design
and production technologies, and unique merchandising and operating strategies.

         On June 10,  1998,  the Company  completed  the  acquisition  of Savane
International  Corp.  (formerly known as Farah,  Inc.). Savane is a marketer and
manufacturer  of men's and  women's  apparel  bearing  national  brands  such as
Savane(R),  Farah(R), and John Henry(R). Savane had similar operations including
the use of  independent  garment  assembly  contractors  and its own cutting and
distribution  facilities.  Savane also has sales and distribution  operations in
the United Kingdom,  Australia,  and New Zealand.  The Company believes that the
combination  of its leading  private brand  operations  with those of a national
brand operation such as Savane's has provided it with a significant  competitive
advantage.

         The Company's apparel line focuses on basic,  recurring styles that the
Company believes are less susceptible to fashion  obsolescence and less seasonal
in nature than fashion styles.  Most of the Company's  products are derived from
six  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. The six basic chassis are
modified  to produce  separate  styles  through  variations  in cut,  fabric and
finish.   This  process  enables  the  Company  to  achieve  both  manufacturing
simplicity and  efficiencies  while producing a wide variety of products through
distinctions in color and style.

         Under  private  brand  programs,   products  receive  customer-specific
labeling and packaging upon receipt of  confirmation  of a customer  order. As a
result,  a common SKU (i.e.  style,  color,  and size),  differentiated  only by
labeling and packaging,  can be sold by both a high-end  department  store and a
mass merchant at different  retail price  points.  This  merchandising  strategy
offers  quick-response  execution of customer orders without the associated risk
of  carrying  customer-specific  inventories.  Under  national  brand  programs,
products  bearing  labels such as Savane(R),  Farah(R),  John  Henry(R),  Bay to
Bay(R),  Van  Heusen(R),  and Bill Blass(R)  generally  have the label  packages
applied   during  the  assembly   process  and  are  shipped  to  the  Company's
distribution   centers   ready  for  shipment  to  customers   upon  receipt  of
confirmation of a customer  order.  Products  bearing  national brand labels are
sold to many  different  customers  and  therefore  reduce the risk of  carrying
customer specific inventories.

         The Company manages the manufacture and  distribution of  substantially
all of its products  utilizing a  state-of-the-art  110,000  square foot cutting
facility in Tampa,  Florida,  a 201,000 square foot cutting facility in El Paso,
Texas, and independent  garment assembly  contractors  located  primarily in the
Dominican  Republic and Mexico,  a product  labeling and  distribution  facility
located in Tampa,  and a  distribution  facility  located in Santa  Teresa,  New
Mexico.  The Company also sources  certain  finished  garments from  independent
manufacturers  located in Mexico,  the  Pacific  Rim and the  Middle  East.  The
Company  believes that its commitment to the use of  independent  contractors in
the Dominican  Republic  anticipated the trend in the industry toward the use of
the Caribbean and Mexico for production.  The Company believes the establishment
of its name  and  reputation  in these  areas  gives it a  distinct  competitive
advantage.

         The  Company  utilizes  advanced  technology  in  all  aspects  of  its
business, including apparel design, materials sourcing,  production planning and
logistics,  customer  order entry and sales demand  forecasting.  The  Company's
dedication to technology produces greater efficiencies throughout the production
process and results in high-quality  products,  low-cost production and enhanced
customer order execution.  The Company  typically  designs its apparel lines and
customer  programs by tracking its customers'  store-level  point-of-sale  (POS)
system data and  responding  to retail  demand and trends on a per Stock Keeping
Unit (SKU) basis.  Apparel products are developed using a  computer-aided-design
("CAD") system  integrated  with fabric cutting to maximize  product quality and
materials  yield.  Management  believes that the  Company's  92% average  fabric
utilization  rate is among the  highest in the  apparel  industry.  The  Company
employs stringent quality control procedures throughout its operations, from raw
materials  production at supplier  mills through  finished  goods  shipping.  In
Fiscal  1998,  the return  rate for quality  defects was less than one  percent,
evidencing the impact of the Company's quality control procedures.

         Accurate and timely order execution is achieved through electronic data
interchange  ("EDI") order entry and quick replenishment of core SKUs. In Fiscal
1998, substantially all orders were placed via EDI. Orders generally are shipped
to the retailer  within three working days of receipt of shipping  instructions.
The  Company's  systems  enable it to further  assist the  retailer  by tracking
point-of-sale  activity  by SKU and  forecasting  consumer  demand and  seasonal
inventory requirements on a daily basis.

         The Company was founded in 1927. Pursuant to a tax-free  reorganization
consummated  prior to the Company's  initial  public  offering,  the Company was
merged into a newly-formed  corporation organized under the laws of the State of
Florida on January 27, 1997. The Company's executive offices are located at 4902
West Waters  Avenue,  Tampa,  Florida  33634-1302,  and its telephone  number is
813-249-4900.


Industry

         According to a retail industry research firm, the U.S. apparel industry
totaled  approximately $169.2 billion in retail sales in 1997. The industry grew
approximately 4.8% and 5.8% in 1997 and 1996,  respectively.  In 1997, the men's
bottoms (i.e., pants and shorts) business represented  approximately 8.0% of the
total apparel market. TSI believes that the apparel industry is characterized by
the following trends:

         Trend  Toward  Retail  Merchandise  Management  Programs.  The  Company
         believes that major  apparel  retailers  are  increasingly  outsourcing
         apparel merchandise management programs to minimize inventory risks and
         increase  profitability.  In addition,  the Company believes that major
         apparel  retailers  are  consolidating   their  suppliers  to  increase
         profitability by improving customer service and enhancing  economies of
         scale.  The Company  believes that its ability to offer leading brands,
         including those acquired in the Savane  acquisition,  combined with the
         Company's  private  brand  programs,  position it well to capitalize on
         these trends.

         Retail Consolidation of Branded Merchandise.  The Company believes that
         major apparel retailers are reducing the number of brands they offer in
         favor of a few of the most well-recognized consumer brands. Department,
         chain and discount store  retailers have  allocated  increasing  retail
         space  to  "in-store"   apparel  shops  featuring   individual   brands
         merchandised with customer fixturing supplied by the branded producers.
         The  Company  believes  the  Savane(R),  Farah(R),  and  licensed  John
         Henry(R)  brands are  favored  by their  respective  customers  and are
         well-positioned  to gain market  share by  investing  in  enhanced  POS
         merchandising.

         Trend Toward High Quality Private Brand Apparel.  The Company  believes
that there is an increased trend toward high quality, private brand apparel. The
Company  believes that this shift is due primarily to the education of consumers
and  retailers  as to the  benefits of private  brand  products.  Private  brand
apparel bears the retailer's  own name or a proprietary  brand name exclusive to
the  retailer.  Producers  are able to sell these  garments  at lower  wholesale
prices due to certain  economies,  including  lower  advertising and promotional
costs,  lack of brand  name  license  fees and  royalties,  and the  absence  of
"markdown"  and other  risks and  expenses  inherent in the  brand-name  apparel
industry.  As a result of the lower  wholesale  prices,  private  brand  apparel
generally  provides  higher margins for the retailer than brand name or designer
products.  The Company  believes  consumers  increasingly  regard  private brand
products  as less  expensive  than brand name  products,  but of equal or better
quality.  This increase in consumer demand for private brand  garments,  coupled
with retailers' demands for higher margins, has resulted in retailers allocating
more space to private brand products.

         Trend Toward Casual Dress. The Company believes that there is a growing
trend  in  the  United  States   toward  casual  dress,   as  reflected  in  the
implementation  of policies such as "casual  Fridays." In addition,  the Company
believes that the number of people who work at home is increasing  substantially
and that outside of the workplace,  people's social activities are focusing on a
more casual lifestyle.

         Expansion of Caribbean and Mexican Production.  Until recently, apparel
was produced predominantly  domestically or in the Pacific Rim countries.  Since
the  passage of Section  807 of the  Harmonized  Tariff  Schedule  of the United
States (now found under tariff subheading 9802.00.80,  but herein referred to as
"Section 807"), American apparel companies have increasingly utilized production
facilities located in the Caribbean Basin, including the Dominican Republic. The
Company  believes  that  the  Dominican  Republic  offers  certain   competitive
advantages,  including  favorable  pricing  and  better  quality  production,  a
long-standing  and  relatively  stable  production  network,  and  much  shorter
transportation  periods as compared to goods assembled in the Pacific Rim. Under
Section 807, customs duties on apparel products assembled in the Caribbean Basin
may be offset by the costs  incurred  in the  production  of  components  in the
United States (plus freight and  insurance).  More recently,  the North American
Free  Trade  Agreement   ("NAFTA"),   effective  1994,  has  permitted   Mexican
manufacturers to ship finished apparel products into the United States duty-free
or at reduced  duties.  According to Sandler & Travis Trade  Advisory  Services,
Inc.,  1996  marked the first year in which  apparel  products  exported  to the
United States from Mexico  exceeded  products  exported from any other  country,
including China.


Business and Growth Strategy

         The Company  believes  that its  business  and growth  strategies  will
position  it to  take  advantage  of  key  industry  trends  including:  (i)  an
increasing  emphasis  by  major  apparel  retailers  on  outsourced  merchandise
management  programs for core apparel lines; (ii) a reduction by major retailers
in the number of brands  offered  in favor of a few of the most  well-recognized
consumer  brands;  (iii)  an  increase  in  retailer  and  consumer  demand  for
high-quality  private brand apparel;  (iv) a shift in consumer preference toward
casual dress;  and (v) a shift in trade policy which favors the  manufacture  of
products in Mexico,  the  Caribbean and Latin  America.  The key elements of the
Company's business and growth strategies include:

         Advanced  Planning  and  Control  Systems and  Procedures.  The Company
         employs advanced  technology and  comprehensive  operating  systems and
         procedures  which  integrate  and  monitor  each  operation  to  reduce
         inefficiencies, increase productivity and enhance customer service.

         High-Quality  Products. The Company applies stringent quality standards
         throughout its operations,  from the design of its products through the
         shipment of customer  orders.  In fiscal 1998, the application of these
         standards  resulted in a rate of  customer  returns for defects of less
         than 1%.

         Low-Cost and Flexible Operations.  The Company is organized to effect a
         short  production  cycle from the receipt of raw materials  through the
         shipment  of a customer  order.  The  Company  believes  its  "chassis"
         production concept allows it to execute more cost-effective  production
         runs  than  those of its  competitors.  The  Company  outsources  labor
         intensive  garment  assembly and finishing  operations  to  independent
         manufacturers on a fixed cost per unit basis. This strategy reduces the
         personnel and capital resources  invested in the production process and
         enables the Company to vary production  levels with changes in customer
         demand.

         Minimized  Inventory  Risk. The Company  believes that it minimizes its
         inventory risk by (i) producing focused lines of core apparel products,
         (ii)  minimizing  the  production   cycle  and  maximizing   production
         flexibility  and (iii) tracking  customer demand trends by SKU on a per
         store basis.

         Customer Service.  The Company provides customer  satisfaction  through
         high-quality products and customized  merchandise  management programs.
         These  programs  serve to  increase  retailer  margins  by  outsourcing
         traditional  retailer  merchandising  functions and reducing  inventory
         risk and excessive markdowns.

         Expand Private Brand Programs for Major Retailers. The Company believes
         its  high-quality  and low-cost  products,  strong customer service and
         merchandise  management  capabilities  position it to increase  private
         brand market share as retailers consolidate and outsource private brand
         programs.

         New Product  Introductions.  The Company  intends to develop and market
         products that complement existing core product lines.  Targeted product
         categories include lines of men's casual shirts and women's sportswear.
         All new product  lines will employ the Company's  "chassis"  production
         concept.

         Acquisitions.  The Company will consider the  acquisition of additional
         established   brands  as  well  as  the  acquisition  of  producers  of
         complementary  new  product  lines.  The  Company  regularly  evaluates
         acquisition   opportunities,   but   currently   has   no   agreements,
         arrangements or understandings with respect to any acquisitions.


Integration Plan

         TSI and Savane  produce  similar  products  and use similar  production
operations.  Because Savane principally  marketed branded products,  the Company
has started to realize  higher  average  unit  selling  prices and higher  gross
margins on sales of Savane  products  than sales of products  generated by TSI's
private label programs.  The Company expects this trend to continue.  Because of
the similarity of product lines,  the Company  believes that operations and unit
production costs will generally be comparable.

         Subsequent  to the  acquisition,  the  Company  started to  implement a
comprehensive  plan to  integrate  Savane's  products  and  operations  into its
existing systems. As part of this integration  strategy,  the Company intends to
take the following actions:

         Rationalize Savane Product Offerings. The Company intends to reduce the
         number of styles and SKUs of Savane branded  products to concentrate on
         only those products  which the Company  believes  generate  appropriate
         levels of sales  and  profitability.  The  Company  believes  that this
         reduction  of Savane's  product line will reduce  inventory  levels and
         costly markdown and close-out sales and improve customer  service.  The
         Company also intends to integrate  Savane's private label programs with
         those of the Company.  In addition,  the Company intends to develop new
         products to merchandise under the Savane brands,  which will conform to
         the "chassis" production concept.

         Develop Independent Brand Strategies. The Company intends to manage the
         private  brands and each of the Savane(R)  and Farah(R)  brands and the
         licensed John Henry(R) brand as separate businesses with distinct brand
         management  programs.  The Savane(R) brand will continue to be marketed
         to the department store channel with key targeted  customers  including
         Federated  Department  Stores,  May Co.,  Dillard's and  Proffitt's,  a
         division of Saks.  The John Henry(R) brand will continue to be marketed
         exclusively  through Sears, and Farah(R) brand pants,  shorts and jeans
         will  continue to be marketed  through the mass merchant  channel.  The
         Company intends to invest in cooperative  advertising and merchandising
         programs  with certain key  customers to enhance  demand for the Savane
         brands.  The Company plans to apply its proven  merchandise  management
         and customer service capabilities to improve Savane's partnerships with
         its key accounts.

         Focus on Market Analysis and Sales Forecasting. Savane has historically
         forecasted  sales  based  on  customer-specific  and  market  data on a
         monthly basis. TSI generally forecasts sales once per week. TSI intends
         to initiate  weekly sales  forecasting  for the Savane  businesses  and
         integrate the  resulting  sales  forecasts  with TSI's  purchasing  and
         production planning and control systems.  The Company believes that the
         application  of TSI's  sales  forecasting  systems  and  procedures  to
         Savane's  businesses will reduce the amount of excess,  slow moving and
         obsolete Savane inventory.

         Joint  Sales and  Marketing.  The  Company  intends to market  Savane's
         branded products to TSI's customers and TSI's private brand programs to
         Savane's  customers.  TSI's sales mix is  concentrated in the wholesale
         clubs and mass  merchant  channels  with  modest  penetration  of chain
         stores and  department  stores.  Savane's  sales mix is strongest  with
         department  stores through its Savane(R) line of products.  The Company
         believes  that it can  increase  net sales  through  focused  sales and
         marketing programs targeting the entire TSI and Savane customer base.

         Rationalize   Production.   The   Company   intends   to  apply   TSI's
         sophisticated  production  planning and control systems and procedures,
         integrated  with its  sales  forecasting  system,  to  manage  Savane's
         production.  The  Company  also  intends to convert  Savane's  assembly
         operations to modular work teams to reduce work in process  inventories
         and  increase  productivity  and apply TSI's  production  planning  and
         control  systems to reduce  shipping  costs and improve  customer order
         execution.

         Consolidate  Purchasing.  The  Company  intends  to  combine  TSI's and
         Savane's  raw  materials  purchasing  to  realize  economies  of scale,
         improve raw materials quality and reduce raw materials inventories. The
         Company expects to consolidate raw materials  suppliers,  institute its
         just-in-time  inventory  management programs with its leading suppliers
         and inspect raw materials at supplier mills before receipt.

         Distribution.  Savane recently opened a new  distribution  facility and
         experienced   difficulties  in  processing  orders  which  has  led  to
         substantial customer order cancellations.  The Company intends to apply
         its   comprehensive   operating  systems  and  procedures  to  Savane's
         distribution system.

         Reduce General and Administrative  Expenses. TSI intends to consolidate
         Savane into TSI's general and administrative infrastructure,  which TSI
         believes  will  result  in cost  savings  by  eliminating  redundancies
         associated  with Savane's public company  reporting and  administrative
         costs,  insurance  coverage and professional  fees.  Savane's financial
         reporting and internal control procedures will be integrated with TSI's
         systems.  TSI's  chief  financial  officer and  controller  will assume
         supervisory responsibility for Savane's accounting, financial reporting
         and internal controls.

         Integrate MIS Functions.  TSI intends to operate  Savane's  information
         systems in parallel  with TSI's,  evaluate  the best  practices of both
         systems  and  integrate   systems   functions  as   appropriate  on  an
         application-by-application  basis.  The  separate  information  systems
         staffs will be supervised by TSI's chief information officer.

         Potential  Divestiture  Opportunities.  The Company intends to evaluate
         Savane's  assets in light of TSI's  strategic and financial  objectives
         and,  to the extent  such  assets do not fit within  those  objectives,
         dispose of or discontinue operating such assets.


Integration Activity Update

         Since  the  acquisition  of  Savane  on  June  10,  1998,  many  of the
activities within the Company's integration plan have started to take place. The
brand management programs
remain in place and the Company  recently  launched a national cable  television
and outdoor media advertising  program.  The sales forecasting process at Savane
is now performed on a weekly basis.  The sales forces have been  integrated  and
cross  merchandising has been implemented with all customers.  The conversion of
Savane  assembly  operations to modular work teams is currently  being tested at
two  factories  and will  continue to be applied to remaining  factories  during
fiscal  1999.  The Company  has  started to receive the benefit of the  combined
purchasing  power  and has  consolidated  certain  suppliers.  The  systems  and
procedures  at the  Savane  distribution  center  have  been  modified  and  the
distribution  center is now achieving  on-time  deliveries of over 90%.  Certain
general and  administrative  functions have been  consolidated and all financial
reporting and internal  control  procedures  are  integrated.  The MIS functions
continue to run parallel and will be integrated as appropriate.  The Company has
disposed of Savane's  retail outlet stores and is in the process of disposing of
certain  manufacturing  facilities in Costa Rica and continues to evaluate other
assets for potential divestiture.


Products

         The Company produces a core line of high quality men's casual and dress
pants,  shirts,  coats,  shorts  and denim  jeans as well as a core line of high
quality  women's  casual pants and skirts.  Most of the  Company's  apparel line
focuses  on  basic,   recurring  styles  that  the  Company  believes  are  less
susceptible  to fashion  obsolescence  and less  seasonal in nature than fashion
styles.  Key fabrics include 100% cotton and synthetic  blends  utilizing rayon,
wool and polyester.  Key fabric constructions include twill, denim, corduroy and
wrinkle-free  fabrication.  The table below sets forth sales mix, expressed as a
percentage of net sales, and retail price points per product category:
<TABLE>
<CAPTION>
                                 Fiscal          Fiscal           Fiscal          Current Retail
                                  1998            1997             1996             Price Range
                               ------------    ------------    -------------    --------------------

<S>                                  <C>             <C>              <C>          <C>       <C>   
Casual Pants                         60.5%           53.9%            56.8%        $17.99 -  $39.99
Dress Pants                          10.1             8.6              1.7          24.99 -   39.99
Denim Jeans                           3.9             5.4              7.1          16.99 -   24.99
Shorts (including denim)             22.1            32.1             34.4          11.99 -   24.99
Other (including shirts,
   coats and women's)                 3.4              --               --                   Varies
                               ------------    ------------    -------------
                                      100.0%          100.0%           100.0%
</TABLE>

         The Company's design staff examines domestic and  international  trends
in the apparel industry as well as industries  completely  outside the sphere of
clothing  manufacture,  including the automobile,  grocery and home  furnishings
industries,  to determine  trends in styling,  color,  consumer  preferences and
lifestyle.  Virtually all of the Company's products are designed by its in-house
staff  utilizing CAD technology,  which enables the Company to produce  computer
simulated samples that display how a particular style will look in a given color
and fabric.  The Company can quickly  generate  samples and alter the  simulated
samples in response to customer input.  The use of CAD technology  minimizes the
time and costs  associated with producing  actual sewn samples prior to customer
approval and allows the Company to create custom designed  products  meeting the
specific needs of a customer.  The Company's  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 to produce a fuller,
more comfortable fit and minimize costly customer returns.


Customers and Customer Service

         The  Company  markets  its  products  across all major  apparel  retail
channels to  approximately  90 finer  department and specialty  stores,  catalog
retailers,  discount  merchants and wholesale clubs. The Company's  products are
sold at over 6,000 outlets  throughout  the United  States,  Canada,  Mexico and
Central  America.  Sales to the  Company's  five largest  customers  represented
approximately  50.9% and 71.6% of net sales during  Fiscal 1998 and Fiscal 1997,
respectively.  Sales to Wal-Mart  (including  Sam's Club,  the nation's  largest
chain of wholesale  clubs),  Price/Costco and Phillips-Van  Heusen accounted for
approximately  23.8%,  10.6%, and 6.1% respectively,  of net sales during Fiscal
1998 and 28.7, 18.8% and 11.0%,  respectively,  of net sales during Fiscal 1997.
The  Company  also  sells  its  products  to other  major  retailers,  including
Dillard's,  Belks,  Proffitt's, a division  of Saks,  Dayton  Hudson,  Federated
Department Stores, JC Penney, May Co., and Nordstrom.


         Set  forth  below  are  comparative  sales  mix  data,  expressed  as a
percentage of net sales, by marketing channel:
<TABLE>
<CAPTION>
                                       Fiscal               Fiscal               Fiscal
                                        1998                 1997                 1996
                                  -----------------    -----------------    -----------------

<S>                                        <C>                  <C>                  <C>  
Wholesale Club                             31.5%                46.1%                42.3%
Department store                           21.9                 10.9                 14.4
Discount and mass merchant                 20.1                 21.1                 21.4
National chain                             10.6                 12.3                 14.5
Specialty store                             8.3                  5.4                  4.7
Catalog                                     0.2                  0.2                  1.1
Other                                       7.4                  4.0                  1.6
                                  -----------------    -----------------    -----------------
                                          100.0%               100.0%               100.0%
</TABLE>

         The  Company  offers  its  customers   comprehensive  brand  management
programs, which provide: (i) merchandise planning and support; (ii) consistently
high quality products;  (iii) value-added services,  such as custom labeling and
packaging   design,   just-in-time   electronic  order  execution,   and  retail
profitability  analysis;  and (iv) access to state-of-the-art  sales forecasting
and  inventory  management  systems.  In addition,  the Company will continue to
promote  these  capabilities  to increase  sales of Company  brands and licensed
brand name apparel offered to multiple  retail  accounts.  The Company  believes
that close collaboration with its customers provides the Company's 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 each customer's  expectations.  At the same time, the customer is given the
opportunity,  at  minimal  expense  and  risk,  to  benefit  from the  Company's
substantial  expertise  in  designing,   packaging  and  labeling  high  quality
products.


Product Labeling and Packaging

         The Company  differentiates its products through  customized  labeling,
point-of-sale packaging and other brand identification  techniques.  For most of
its  customers,  the Company  manages 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.  The Company
can ship products  directly to its customers'  retail stores in floor-ready form
and offers innovative packaging and display techniques,  such as the "Big Pack."
A "Big Pack" is a  specially  designed  cardboard  carton used to ship pants and
shorts directly to Sam's Club stores. Upon delivery, it opens into a floor-ready
display.


Marketing and Sales

         The Company's products are sold by sales representatives located across
the United  States,  each of whom has many years of  experience  in the  apparel
industry.  The Company also  maintains a sales and  marketing  support  staff in
Tampa and El Paso dedicated to analyzing sales and marketing data.

         The Company  offers each of its  existing and  prospective  customers a
marketing plan tailored to the customer's market niche. Using its marketing data
and industry  experience,  the Company is able to create,  for each existing and
prospective  customer and each particular  product,  a market plan that outlines
optimum volume, timing and pricing strategies,  markdown and sell-through trends
and profit margins.

         The Company operates an EDI system,  whereby the Company can accept EDI
orders 24 hours a day and  typically  ship orders  within three working days. In
Fiscal 1998, substantially all orders were placed via EDI.

         The Company employs approximately 40 associates whose responsibility it
is to visit each major  retail  customer  store and assist the local  store with
product arrangement on the floor of the store as well as coordination of product
shipment and  restocking of racks and display  tables.  This service is provided
free of charge to the customer.


Operations

         The  Company  principally  cuts its  fabric  at its  Tampa  and El Paso
facilities  for  offshore  finishing  and  assembly.  The Company  also  imports
finished  goods,  principally  denim  jeans and  shorts,  shirts  and coats from
Mexico,  the Pacific Rim and the Middle East. The Company  believes that the use
of numerous  independent  international  suppliers to assemble components cut at
the Company's facilities enables it to provide customers with high quality goods
at significantly lower prices than if it operated its own assembly facilities.

         Overview.  The Company inventories,  spreads,  marks and cuts virtually
all of the fabric used in the  manufacture of its products at its own facilities
in Tampa and El Paso.  The  components  are then  assembled  outside  the United
States,  principally  in the Dominican  Republic and Mexico.  Most private brand
products are then shipped back to the Company's  Tampa  facilities for labeling,
packaging and  distribution.  The Savane(R),  Farah(R) and John Henry(R) labeled
products are shipped back to the Company's Santa Teresa, New Mexico facility for
distribution. In Fiscal 1998, the production cycle from receipt of raw materials
through  the  availability  for  shipping of  finished  goods  averaged 36 days,
including raw materials inventory, transit and assembly. The Company customarily
prepares,  packs and ships customer  orders within three working days of receipt
of shipping instructions.

         Raw Materials Sourcing. The Company purchases raw materials,  including
fabrics,  thread,  trim and  labeling and  packaging  materials,  from  domestic
sources  based on quality,  pricing and  availability.  Prior to  shipment,  the
Company undertakes a quality audit at its major suppliers to assure that quality
standards are met. An additional  quality audit is performed upon receipt of all
raw materials. The Company maintains a laboratory at its Tampa, Florida facility
in order to test the quality of raw  materials.  The  Company  has no  long-term
agreements  with  any  of its  suppliers.  The  Company  projects  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 translated
to the raw material  components needed by production time frame in order to meet
customers' requirements.

         Cutting.  The  Company  believes  that its  domestic  cutting  facility
provides it with  substantial  advantages  over many of its  competitors.  Since
1989, the Company has invested in  state-of-the-art  computerized  equipment for
spreading,  marking and cutting fabric.  The Company's CAD system  positions all
component  parts of a single  garment  in close  proximity  on the same  bolt of
fabric to ensure  color  consistency.  This  process also enables the Company to
utilize  approximately  92% of the  fabric.  The  Company  also has  invested in
air-table  fabric  handling  equipment  that eases the movement of fabric on the
cutting  table by the use of forced air through a grid of air ducts on the table
surface.  The use of such air-table  fabric handling  equipment  reduces by more
than  one-half the number of workers  required to handle a bolt of fabric in the
cutting process. In addition,  the Company uses three Gerber-brand  computerized
cutting systems in its Tampa facility and four Gerber-brand computerized cutting
systems  in  its  El  Paso   facility.   The  Tampa  cutting   systems   include
state-of-the-art  submerged  electrical and vacuum  components.  The use of such
cutting systems  significantly  enhances the Company's fabric cutting  capacity.
Quality audits in the cutting facility are performed during various stages, from
spreading  of  fabric   through   preparation   for   shipment  to   independent
manufacturers for assembly.

         Assembly.  After the  component  parts  are  marked  and cut,  they are
shipped by common carrier to independent foreign  manufacturers,  principally in
the  Dominican  Republic and Mexico,  for assembly  and  finishing.  The Company
currently uses  approximately 17 manufacturers in the Dominican  Republic and 22
manufacturers  in Mexico that  specialize in assembling  products on one or more
chassis and adhere to the Company's specific operating  procedures.  The Company
has used these manufacturers for an average of more than three years and enjoys,
in effect,  exclusive  relations with 19 of these manufacturers in the Dominican
Republic and Mexico. Several of the Company's independent  manufacturers utilize
various  equipment,  including  wrinkle-free  processing  ovens,  owned  by  the
Company.  The Company  believes that the Dominican  Republic  offers the Company
certain competitive  advantages,  including favorable pricing and better quality
production,  a long-standing and relatively stable production network,  and much
shorter  transportation  periods  than goods  assembled  in the Pacific  Rim. In
addition, U.S. customs duties programs, such as Section 807, facilitate assembly
in the Caribbean Basin by completely  eliminating or substantially  reducing the
customs duties on the import of assembled U.S. components.

         There are no material formal  arrangements  between the Company and any
of its  contractors,  but the  Company  believes  that  its  relations  with its
contractors  are  generally  good.  The  Company is able to shift its 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.  The  Company
arranges  for the assembly or  production  of its  products  primarily  based on
orders received. The Company has traditionally received a significant portion of
its customers'  orders prior to placement of its initial  manufacturing  orders.
Many of these  customer  orders  may  change  with  respect  to  colors,  sizes,
allotments or assortments  prior to the delivery date. The Company utilizes such
orders and its experience to estimate production requirements in order to secure
necessary assembly or manufacturing capacity. The Company inspects prototypes of
each product before  production  runs are  commenced.  The Company also performs
random  in-line  quality  control  checks during and after  assembly  before the
garments  leave the  contractor.  The Company  currently has 18 and 30 full-time
quality  control  personnel  on-site  in  the  Dominican  Republic  and  Mexico,
respectively.

         At the time of the acquisition of Savane in June 1998, Savane owned and
operated two production  facilities (one sewing and one finishing) in Costa Rica
and two  production  facilities  (one  sewing  and  one  finishing)  in  Mexico.
Currently,  only the sewing plant in Mexico  remains in  operation.  This plant,
which  occupies a 73,800  square foot  building in  Chihuahua,  Mexico,  employs
approximately 1,120 associates and produces casual pants and shorts.

         Labeling,  Packaging  and Shipping.  Under the Company's  private brand
programs,  upon  confirmation  of  a  customer  order,  the  Company  picks  the
appropriate  items from its common inventory.  Thereafter,  the appropriate tags
and labels,  such as pocket flashers,  jokers,  woven labels,  hang tags and leg
tape, are sewn on or applied. The Savane(R),  Farah(R) and John Henry(R) branded
products have the appropriate tags and labels sewn on or applied at the assembly
factories.  The  product  is then  packaged  (e.g.,  placed on hangers or put in
plastic  packaging) and prepared for shipment in accordance  with the customer's
specifications. The Company generally ships orders within three days of receipt.
Orders are shipped  F.O.B.  Tampa or Santa Teresa by customer or common  carrier
directly to the customer's individual stores or to its centralized  distribution
center. The customer pays the applicable freight charges.


Imports and Import Regulations

         The Company presently  imports garments under three separate  scenarios
having distinct  customs and trade  consequences:  (i) imports of finished goods
(mostly  from the  Pacific  Rim and the  Middle  East);  (ii)  imports  from the
Caribbean Basin and Central America; and (iii) imports from Mexico.

         For direct  importation  (mostly  from the  Pacific  Rim and the Middle
East),  imported  garments are normally  taxed at most  favored  nation  ("MFN")
tariffs and are subject to a series of bilateral quotas that regulate the number
of garments that may be imported  annually into the United  States.  The tariffs
for most of the countries from which the Company currently imports or intends to
import have been set by  international  negotiations  under the  auspices of the
World Trade Organization ("WTO").  These tariffs generally range between 17% and
35%,  depending  upon  the  nature  of the  garment  (e.g.,  shirt,  pant),  its
construction and its chief weight by fiber. The principal sourcing  alternatives
that do not enjoy MFN rates in the Far East are  Vietnam  and Laos.  The Company
does not source from these countries.

         In addition to these tariff rates,  merchandise  from virtually all the
countries  from which the Company  imports is also  subject to  bilateral  quota
restraints,  pursuant to U.S.  domestic  law or the  multi-lateral  Agreement on
Textile and  Clothing,  which is under the auspices of the WTO.  Most  bilateral
quotas are  negotiated on a calendar  year basis.  After the United States and a
particular  country agree to a particular level of exports in a particular quota
category (for instance,  cotton men's bottoms  (category 347)), the country that
receives the quota has the right to determine  the method by which such quota is
assigned to its  manufacturers.  Some  jurisdictions,  such as Hong Kong, have a
free market under which  quotas are bought and sold.  Most  countries,  however,
assign it to the factories that actually  produce the garments.  Shipments which
are  exported to the United  States  must,  in addition to the usual  commercial
documentation,  have  appropriate  and  official  textile  visas,  in  either an
electronic or paper format, which confirm their quota status. This documentation
must be filed prior to the admission and clearance of the  merchandise  into the
United States.  Accordingly,  the Company usually demands that this paperwork be
submitted prior to payment.

         The Company also imports garments from countries in the Caribbean Basin
and  Central  America,  most  notably  the  Dominican  Republic.  Although  much
merchandise imported from these jurisdictions is subject to the identical tariff
and quota consequences  described above for Far Eastern  importation,  there are
special  circumstances  which provide a unique tariff and quota  preference  for
some  merchandise  sourced  from the  Caribbean  Basin or Central  America.  The
principal tariff  advantage is the so-called "807" program.  Under this program,
merchandise produced under tariff subheading  9802.00.80,  HTS, is admitted into
the United States with a substantial tariff reduction. Specifically, this tariff
provision  provides  a  reduction  in duty based on the value of  exported  U.S.
components   assembled  into  a  product  in  a  foreign  jurisdiction  that  is
subsequently  reimported into the United States. In essence,  the duty reduction
is equal to the value of U.S. components incorporated into these assembled goods
plus southbound  international freight and insurance. For apparel products, such
U.S.  components  normally consist of cut-to-shape U.S. fabric parts,  finishing
and trim (buttons,  thread,  etc.).  In addition,  if the fabric which is cut to
create the cut component  parts is also  knitted,  woven or formed in the United
States,  there is a special quota provision which provides for more  liberalized
access to the U.S. marketplace.  This special quota provision is applicable only
to certain  Caribbean  Basin,  Central  American  and  northern  Latin  American
countries that have signed special agreements with the United States.  Under the
terms of these agreements, such products, known in the trade as "807A" or "Super
807" or "Guaranteed  Access Level" products,  are controlled through a much more
liberal quota  system.  Accordingly,  a country such as the  Dominican  Republic
would have a regular quota for men's cotton  bottoms  produced  through a normal
cut, make and trim operation or through the traditional 807 process; at the same
time,  it would  have a much  bigger  and,  therefore,  more  liberal  quota for
merchandise  produced from U.S. cloth under this Super 807 or 807A program.  The
Company  produces  significant  garments  under one or both of these  particular
programs.  In those  circumstances  where garments qualify for both preferences,
"807" and "807A," the  merchandise is accorded both  substantial and significant
quota and tariff  advantages over Pacific Rim, Middle Eastern or  non-qualifying
Western hemisphere goods.

         The Company  also  imports  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,  depending upon the type
of merchandise  selected.  The key requirement for NAFTA  qualification for such
garments is that the yarn,  cloth,  cut, sew and finish of the garments all take
place within North America.  This is commonly known as the "yarn-forward  rule."
Merchandise  produced  pursuant  to these  rules  enters the United  States at a
preferential or at a zero rate and is not subject to any quota.

         In addition to the regular NAFTA program,  certain  imports made by the
Company are also subject to a tariff  preference that was created and enacted as
part  of the  NAFTA-enabling  legislation.  This  tariff  provision,  subheading
9802.00.90,  HTS, provides for immediate duty-free and quota-free entry into the
United  States  from Mexico of garments  made from  components  which are cut to
shape in the  United  States  from  U.S.  knit,  woven  or  formed  cloth.  This
duty-free,  quota-free  entry would be available for pant products  sourced from
U.S. components cut from U.S. knitted/woven fabric. This merchandise, therefore,
has an even more favorable  treatment than  merchandise  being imported from the
Caribbean  Basin.  The  Company  currently  imports  a  limited  amount  of such
merchandise from Mexico.

         Finally,  non-NAFTA  qualifying goods may be imported from Mexico. Such
merchandise  could be imported at reduced duty rates under the 807  (9802.00.80)
program  (cut in the  U.S.),  or  special  tariff  rate  quotas  called  "TPLs."
Otherwise,  it is subject to full duty. Such  merchandise may also be subject to
Mexican quotas that are effective for some products until 2004.

         See also  Note 13 to Notes to  Consolidated  Financial  Statements  for
information   regarding   financial   information  about  foreign  and  domestic
operations and export sales.


Personnel

         At November 28, 1998, the Company had 2,622 associates, including 26 in
the  Dominican  Republic,  1,118 in  Mexico,  80 in the  United  Kingdom,  28 in
Australia, and 11 in New Zealand. Of the total, approximately 484 hold executive
and  administrative  positions,  approximately  27 are  engaged  in  design  and
merchandising,  approximately  1,514 are engaged in production  (e.g.,  marking,
cutting,  assembly  and  labeling),  approximately  110 are  engaged  in  sales,
approximately  439 are engaged in distribution and  approximately 48 are engaged
in quality control. Approximately 100 of Savane's domestic employees are members
of the Union of Needletrades  Industrial and Textile  Employees.  The collective
bargaining   agreement   with  these   employees   expires  in  February   2000.
Approximately  750 of Savane's  employees  in Mexico are members of Sindicato de
Trabajadores  de la  Industria  Costurera,  Similaries  y  Conexes,  C.T.M.  The
collective  bargaining  agreement with these employees expires in December 1998.
The Company considers its relations with its employees to be generally good.

         The Company is committed to developing  and  maintaining a well-trained
workforce.  The  Company  provides  or pays for in  excess  of  20,000  hours of
continuing  education  annually  for its  employees  on  subjects  ranging  from
computers  to  foreign  languages.  The  Company  is  equally  committed  to the
well-being of its  employees.  The Company  offers its  full-time  employees and
their families a comprehensive  benefits  package that includes a 401(k) plan, a
choice of group health insurance  plans,  term life insurance (with an option to
purchase additional coverage),  a choice of dental plans, and a vision plan. The
Company also offers tuition reimbursement for business-related  courses and pays
a retirement bonus to persons  employed by the Company for twenty-five  years or
more.  The Company  maintains a recreation  area and health club  facilities  in
Tampa for the use and enjoyment of its employees and their families. The Company
also enjoys long-standing relationships with certain of its independent assembly
contractors in the Dominican  Republic and Mexico and has contributed  financial
resources to improving conditions for their employees.


Management Information Systems

         The Company believes that advanced information  processing is important
to maintain its competitive  position.  Consequently,  the Company  continues to
upgrade its management  information  systems in order to maintain better control
of its inventory and to provide  management with  information  that is both more
current  and  more  accurate  than  was  available  previously.   The  Company's
management information systems provide, among other things,  comprehensive order
processing, production, accounting and management information for the marketing,
manufacturing,  importing and distribution  functions of the Company's business.
The Company has  purchased and  implemented a software  program that enables the
Company to track, among other things, orders, manufacturing schedules, inventory
and unit sales of its products.  In addition,  to support the Company's flexible
inventory  replenishment  program,  the Company has an EDI system  through which
customer  inventories  can be  tracked  and orders  automatically  placed by the
retailer with the Company. (See Item 7. Management's  Discussion and Analysis of
Financial   Condition  and  Results  of  Operations  --  Liquidity  and  Capital
Resources).   The  Company  is  in  the  process  of  implementing  SAP/AFS,  an
enterprise-wide  software  package  that will  serve the Tampa  facilities.  The
Company expects to complete the  implementation  during fiscal 1999. The Company
recently implemented a new enterprise-wide  software package that will serve the
El Paso and Santa Teresa facilities.


Competition

         The apparel  industry is highly  competitive  and the Company  competes
with  numerous  apparel  manufacturers,  including  brand name and private label
producers,  and retailers  that have  established,  or may  establish,  internal
product  development and sourcing  capabilities.  The Company's main competitors
are Levis Straus & Co.,  Haggar Corp.,  and other private label  producers.  The
principal  markets in which the Company  competes are the United States,  United
Kingdom,  and  Southeast  Asia.  The  Company's  products  also  compete  with a
substantial  number of designer  and  non-designer  product  lines.  Many of the
Company's   competitors  and  potential   competitors  have  greater  financial,
manufacturing and distribution  resources than the Company. The Company believes
that it competes favorably on the basis of quality and value of its programs and
products,  price,  the production  flexibility that it enjoys as a result of its
cutting and labeling  capabilities and its sourcing  network,  and the long-term
customer relationships it has developed. Nevertheless, any increased competition
from   manufacturers  or  retailers,   or  any  increased  success  by  existing
competition,  could result in reductions in unit sales or prices, or both, which
could have a material  adverse  effect on the Company's  business and results of
operations.


Trademarks and Licenses

         The Company holds or has applied for 119 U.S.  trademark  registrations
covering  its various  brand names.  The Company  believes  that its  Savane(R),
Farah(R),  Flyers?,  and Bay to Bay(R)  trademarks are material to its business.
The word marks  Savane(R),  Farah(R),  and Bay to Bay(R) are registered with the
United States Patent and Trademark Office.  These registrations  expire in 2007,
2005, and 2001, respectively,  and are subject to renewal.  Pursuant to separate
license  agreements,  the Company has the  exclusive  rights to use (i) the John
Henry(R)  trademark with respect to men's bottoms and coats  distributed or sold
in the United States,  its  territories  and  possessions,  U.S.  Military bases
worldwide  and Canada,  and (ii) the Bill  Blass(R)  trademark  with  respect to
casual pants and shorts, jeans and certain pre-hemmed dress pants distributed or
sold in the United States,  Mexico and Canada and (iii) the Generra(R) trademark
with respect to the design,  manufacture  and wholesale in the United States and
Canada of men's casual  pants,  shorts and dress slacks  (excluding  open bottom
construction) and men's  jean-constructed  bottoms made of denim or heavy weight
fabrics  (excluding  open bottom  construction).  These licenses expire in 2003,
2000  and  1999,  respectively.  The  license  agreement  with  respect  to  the
Generra(R) trademark is subject to two renewal options that expire September 30,
2002 and 2005,  respectively.  The license  agreement  with  respect to the John
Henry  trademark is subject to seven renewal options which extend the expiration
date through 2038. The Company  believes that it has the exclusive use of all of
its owned and licensed trademarks.


Credit Facilities

         The Company needs significant working capital to purchase inventory and
finance accounts  receivable and,  consistent with industry  practice,  is often
required  to  post  letters  of  credit  when  placing  an  order  with  certain
international  manufacturers.  Currently, a substantial portion of the Company's
working capital  requirements are met through a new $110 million credit facility
with a syndicate of banks (the "Facility"), which expires in June 2003.


Factoring of Accounts Receivable

           Historically,  the  Company has sold  substantially  all of its trade
accounts  receivable  to a factor that assumes  virtually all of the credit risk
with respect to  collection  of such  accounts.  The factor pays the Company the
receivable  amount upon the earlier of (i) receipt by the factor of payment from
the Company's customer or (ii) 120 days past the due date for such payment.  The
factor  approves the credit of the  Company's  customers  prior to sale.  If the
factor  disapproves  or limits a sale to a customer  and the Company  decides to
proceed  with the sale,  the  Company  bears some  credit  risk.  The  factoring
agreement  expires in September 2001, at which time the Company intends to renew
or replace it. At the time of the acquisition of Savane, the Company established
a factoring  arrangement for the sales of Savane under terms that are similar to
those of the Company.


Seasonality

         Historically,  the Company's business has been seasonal,  with slightly
higher sales and income in the second and fourth fiscal quarters,  just prior to
and during the two peak retail selling seasons for spring and fall  merchandise.
In  addition,  certain of the  Company's  products,  such as shorts and corduroy
pants,  tend to be seasonal in nature.  In the event such  products  represent a
greater  percentage of the Company's sales in the future, the seasonality of the
Company's sales may be increased.


Backlog

         At October 3, 1998,  including  the orders of Savane,  the  Company had
unfilled customer orders of approximately $292.8 million. All of such orders are
scheduled for shipment in Fiscal 1999.  At September  27, 1997,  the Company had
unfilled customer orders of approximately $135.8 million.  Fulfillment of orders
is affected by a number of factors,  including  revisions in the  scheduling  of
manufacture and shipment of the product which, in some instances, depends on the
demands of the retail  consumer.  Accordingly,  a comparison of unfilled  orders
from period to period is not necessarily  meaningful,  and the level of unfilled
orders at any given time may not be indicative of eventual actual shipments.


Executive Officers of the Registrant

         The  following  table  provides  the  names  and ages of the  Company's
executive  officers,  and the  positions and offices  currently  held by each of
them:
<TABLE>
<CAPTION>
      Name                          Age                            Position(s)

      <S>                           <C>      <C>
      William W. Compton            55       Chairman of the Board, Chief Executive Officer and Director
      Richard J. Domino             50       President
      Michael Kagan                 59       Executive Vice President, Chief Financial Officer,
                                               Secretary and Director
</TABLE>

         William W. Compton has served as Chairman of the Board, Chief Executive
Officer and a Director of the Company  since  November  1989.  He also served as
President of the Company from November 1989 to November  1994.  Mr.  Compton has
over 30 years of  experience  in the  apparel  industry.  Prior to  joining  the
Company,  he served as President  and Chief  Operating  Officer of  Munsingwear,
Inc., an apparel manufacturer and marketer,  President/Executive  Vice President
of  Corporate   Marketing  for  five  apparel   divisions  of   McGregor/Faberge
Corporation  and  President,  U.S.A.  and  a  director  of  Farah  Manufacturing
Corporation.

         Richard  J.  Domino  joined  the  Company  in 1988  and has  served  as
President of the Company 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.  Before joining the Company,
Mr.  Domino  was  employed  by  Thompson  Sportswear,   Inc.,  a  men's  apparel
manufacturer and marketer, as its Sales Manager for the Northwest Territory, and
by Haggar Corp., a men's apparel  manufacturer  and marketer,  as its New Jersey
Salesman.

         Michael Kagan has served as Executive Vice  President,  Chief Financial
Officer,  Secretary  and a Director of the Company since  November  1989. He was
also  Treasurer of the Company from November 1989 to January 1998. Mr. Kagan has
more than 32 years  experience  in the  apparel  industry.  Prior to joining the
Company,  Mr. Kagan served as Senior Vice President of Finance for  Munsingwear,
Inc. and as Executive  Vice  President  and Chief  Operating  Officer of Flexnit
Company, Inc., a manufacturer of women's intimate apparel.


Item 2.  Properties

         The Company's corporate  headquarters are located in Tampa, Florida and
is  owned  by  the  Company.   The  Company  considers  both  its  domestic  and
international  facilities  to be suitable and  adequate  and to have  sufficient
productive  capacity for current operations.  (See "Management's  Discussion and
Analysis  of  Financial  Condition  and  Results of  Operations  - Risk  Factors
Affecting the Company's Business and Prospects.")

         The following table reflects the general location,  use and approximate
size of the Company's significant real properties currently in use:

<TABLE>
<CAPTION>
                                                                                    Approximate          Owned/
          Location                                   Use                          Square Footage       Leased (1)
------------------------------    -------------------------------------------    ------------------    ------------

<S>                               <C>                                                      <C>         <C>
Tampa, Florida                    Corporate Offices/Distribution Warehouse                 190,000     Owned
Tampa, Florida                    Fabric cutting facility                                  110,000     Owned
Chihuahua, Mexico                 Garment  manufacturing  plant                             73,800     Owned
San Jose, Costa Rica              Garment  manufacturing  plant                            124,000     Owned (2)
Cartago, Costa Rica               Garment  manufacturing  plant                             77,000     Owned (2)
Auckland, New Zealand             Office/Warehouse                                           9,000     Owned
El Paso, Texas                    Administrative office                                     43,500     Leased
El Paso, Texas                    Fabric cutting facility                                  201,000     Leased
Sydney, Australia                 Office/Warehouse                                          29,000     Leased
Suva, Fiji                        Two garment  manufacturing  plants                        35,000     Leased (3)
Witham, United Kingdom            Office/Warehouse                                          57,000     Leased
Santa Teresa, New Mexico          Distribution Warehouse                                   250,000     Leased
Juarez, Mexico                    Garment  manufacturing  plant                             73,500     Leased (2)
Queretero, Mexico                 Warehouse                                                 32,700     Leased (2)

(1)      See Note 6 of Notes to Consolidated Financial Statements for a discussion of lease terms.
(2)      Currently unoccupied.
(3)      The facilities are leased by a 50% joint venture of which the Company is a party.
</TABLE>


Item 3.  Legal Proceedings

         On March 21, 1997,  Levi Straus & Co.  brought suit against the Company
in United States  District Court for the Northern  District of  California.  The
complaint  alleges,  among other  things,  that several  marks in the  Company's
family of Flyers(TM) trademarks and certain trade dress used in the labeling and
packaging of the Company's  Flyers(TM) and Bay to Bay(R) products  infringe upon
certain of plaintiff's proprietary trademark and trade dress rights in violation
of federal Lanham Act and California law. The complaint seeks injunctive relief,
as well as treble damages and attorneys' fees. Levi Strauss & Co. has also filed
opposition  proceedings in the United States Patent and Trademark Office against
the Company's  trademark  applications for two marks in the Flyers(TM) family of
marks.  These opposition  proceedings have been suspended pending  resolution of
the  litigation.  In addition,  plaintiff  had  indicated  that it believes that
certain  trade dress used in the labeling and  packaging of the  Company's  Bill
Blass(R)   brand  dress  slacks  also  infringes  upon  certain  of  plaintiff's
proprietary trade dress rights. In an attempt to limit the Company's  liability,
if any, with respect to such alleged infringement,  the Company has unilaterally
altered the  trademark  and trade dress which are currently the subjects of this
litigation. The Company previously reported that the parties appeared to be very
close  to  finalizing  a  settlement  agreement;  however,  a  final  settlement
agreement  was not  ultimately  agreed  upon and the parties  have  re-commenced
litigation  activities.  The parties are continuing settlement discussions while
the litigation  ensues.  The Company intends to vigorously  defend these claims,
but  remains  open  to  reasonable  settlement  terms.  Given  the  vagaries  of
litigation,  the Company  cannot  predict the outcome of this suit. If plaintiff
prevails,  the outcome  could have a material  adverse  effect on the  Company's
business, results of operations or financial condition.

         As previously reported,  on July 3, 1997,  Out-of-Mexico  Apparel, Ltd.
brought suit against the Company in California  Superior  Court for, among other
things,  breach  of  contract,  breach  of a non  circumvention  agreement,  and
violation of the California Unfair Business Practices Act. The complaint alleged
that the Company  entered into  contracts  for the  manufacture  of apparel with
certain  manufacturers  in  contravention  of  a  customer   non-disclosure  and
non-circumvention agreement between Out-of-Mexico Apparel, Ltd. and the Company.
The complaint sought compensatory damages and pre-judgement  interest,  punitive
damages and the costs of suit.  The Company  has reached a  settlement  with the
plaintiffs  in November  1998 for an amount that did not  materially  affect the
Company's operating results.

         On December 30, 1997, the Company  brought suit against Bremen Trousers
Inc.  ("Bremen")  in the  State  Circuit  Court  in  Tampa,  Florida  seeking  a
declaratory  judgement  that the Company has the right to  manufacture  and sell
casual pants with "busted  seams" using the Bill  Blass(R)  label  pursuant to a
license  agreement  (the  "Pincus  License  Agreement")  between the Company and
Pincus Bros., Inc.  ("Pincus").  Bremen is a licensee of Pincus under a separate
license agreement. In March 1998, the Company filed an amended complaint,  which
added  Pincus as a defendant,  alleging  breach of contract  against  Pincus and
tortuous  interference  with business  relations  against Bremen.  Also in March
1998,  Pincus  and  Bremen  filed a  separate  complaint  against  the  Company,
alleging,  among other things, that the Company violated the terms of the Pincus
License Agreement by manufacturing "busted seam" pants. Pincus and Bremen sought
unspecified  damages  and  other  non-monetary  relief.  The  Company  reached a
settlement agreement in October 1998 with regard to this litigation that did not
require that the Company pay any monetary amounts.


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

         Not applicable.


<PAGE>


                                     PART II


Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

         The  Company's  Common  Stock has been  traded on The  Nasdaq  National
Market under the symbol "TSIC" since its initial public  offering on October 28,
1997.  The  initial  public  offering  price of the Common  Stock was $12.00 per
share.  Prior to such time,  there was no established  public trading market for
the Company's  Common Stock. At December 15, 1998 there were  approximately  115
record  holders of the Company's  Common Stock,  and the Company  estimates that
there were  approximately  1,000  beneficial  holders  as of the same date.  The
following  sets forth the  quarterly  high and low last sale prices per share of
the Common Stock as reported by the Nasdaq  National  Market for the last fiscal
year.

      Fiscal Year Ended
       October 3, 1998                  High                 Low
-------------------------------    ----------------    -----------------

First Quarter                          13 1/4               10
Second Quarter                         10 1/8               14 1/8
Third Quarter                          23 3/8               13 5/8
Fourth Quarter                         24 3/4               16 3/4


         The  transfer  agent for the  Common  Stock is Firstar  Trust  Company,
Milwaukee, Wisconsin.

         The Company has not  declared or paid any cash  dividends on the Common
Stock since 1989.  The Company  currently  anticipates  that all of its earnings
will be retained for  development  and expansion of the  Company's  business and
does not anticipate  declaring or paying any cash  dividends in the  foreseeable
future.  Moreover,  each of the new senior credit facility, (the "Facility") and
the indenture (the "Indenture") underlying the 11% Senior Subordinated Notes due
2008 (the "Notes") contains a covenant expressly  prohibiting the payment of any
cash  dividends.   (See  "Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations Liquidity and Capital Resources," and Note 5
to the Consolidated Financial Statements.")


Item 6.  Selected Financial Data

         The following selected  financial data (in thousands,  except share and
per share data) are derived from the  consolidated  financial  statements of the
Company for each of the five years in the period  ended  October 3, 1998.  These
consolidated financial statements have been audited and reported upon by Ernst &
Young LLP, independent certified public accountants.

<TABLE>
<CAPTION>
                                                                  Fiscal Year Ended
                                     -----------------------------------------------------------------------
                                      October 3,   September 27,  September 28,  September 30,  October 1,
                                         1998          1997           1996           1995          1994
Statement of Income Data:

<S>                                     <C>            <C>            <C>            <C>          <C>     
Net sales                                $263,976       $151,692       $117,355       $110,064     $100,359
Gross profit                               68,889         36,055         26,223         22,206       24,682
Selling, general and administrative
    expenses                               43,204         19,443         15,189         15,060       14,291
Operating income                           25,685         16,612         11,034          7,146       10,391
Interest expense                            6,866          2,889          2,498          3,160        2,115
Income before income taxes                 17,283         13,176          7,916          2,985        8,591
Net income                                 10,802          8,269          5,171          2,160        4,978
Net  income  per  common   share  -          1.43           1.37           0.86           0.36         0.83
diluted
Weighted average number of shares
    used  in  the   calculation   -     7,550,000      6,015,000      6,015,000      6,015,000    6,015,000
    diluted (1)
</TABLE>

<TABLE>
<CAPTION>
                                                                       At
                                     -----------------------------------------------------------------------
                                      October 3,   September 27,  September 28,  September 30,  October 1,
                                         1998          1997           1996           1995          1994
Balance Sheet Data:

<S>                                      <C>             <C>            <C>            <C>          <C>    
Working capital                          $107,397        $30,234        $25,483        $31,655      $23,600
Total assets                              297,476         69,658         63,415         55,237       52,023
Long-term debt and obligations
    under capital leases                  171,494         24,055         24,162         27,175       20,973
Shareholders' equity                       50,964         26,651         18,382         13,211       11,051

(1)  Computed on the basis described in Notes to Consolidated Financial Statements
</TABLE>



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

General

         The Company manages the production of substantially all of its products
utilizing  Company-owned  facilities  in Tampa,  Florida and El Paso,  Texas and
independent assembly manufacturers located in the Dominican Republic and Mexico.
Savane currently  produces a limited amount of finished goods in a company-owned
manufacturing  facility in Mexico.  The Company also sources finished goods from
independent  suppliers.  For goods assembled by independent  manufacturers,  the
Company  purchases and  inventories all of its raw materials and cuts its fabric
in it's Tampa and El Paso cutting  facilities based on expected customer orders.
The  Company  ships cut fabric  parts and other  product  components  via common
carrier to the independent manufacturers,  who assemble components into finished
garments  (except  for  labeling  and  packaging  in the case of  private  brand
products)  and  perform  certain  finishing  processes.  The  Company  pays  its
independent   manufacturers   based  on  a  specified   unit  price  for  actual
first-quality  units  produced.   Accordingly,  a  substantial  portion  of  the
Company's production labor and overhead is variable. The Company has no material
contractual  arrangements  with its  manufacturers.  The Company ships assembled
goods from the Dominican  Republic and Mexico to its Tampa and Santa Teresa, New
Mexico distribution centers via common carrier. Upon receipt of a customer order
confirmation,  the Company  ships orders to customers or, in the case of private
brand products,  attaches designated labels and point-of-sale packaging and then
ships orders to customers.

         The following  discussion of the  Company's  results of operations  and
financial   condition   should  be  read  in  conjunction   with  the  Company's
consolidated financial statements and notes thereto.

Results of Operation

As a result of the  acquisition  of Savane on June 10,  1998,  the  fiscal  1998
results of operations may not be comparable to prior years.  The following table
sets  forth,  for  the  periods  indicated,  selected  items  in  the  Company's
consolidated statements of operations expressed as a percentage of net sales:
<TABLE>
<CAPTION>

                                                       Year Ended
                                   ----------------------------------------------------
                                      October 3,      September 27,    September 28,
                                         1998             1997              1996
                                         ----             ----              ----

<S>                                         <C>              <C>               <C>   
Net sales                                   100.0%           100.0%            100.0%
Cost of goods sold                           73.9             76.2              77.7
                                             ----             ----              ----
Gross profit                                 26.1             23.8              22.3
Selling, general and
    administrative expenses                  16.4             12.8              12.9
                                             ----             ----              ----
Operating income                              9.7             11.0               9.4
Interest expense                              2.6              1.9               2.1
Bridge loan funding fee                       0.2               --                --
Other expense, net                            0.4              0.4               0.6
                                              ---              ---               ---
Income before income taxes                    6.5              8.7               6.7
Provision for income taxes                    2.4              3.2               2.3
                                              ---              ---               ---
Net income                                    4.1%             5.5%              4.4%
                                              ====             ====              ====

</TABLE>

Fiscal 1998 Compared to Fiscal 1997

         Net Sales. Net sales for Fiscal 1998 were $264.0 million as compared to
$151.7  million for Fiscal  1997,  an increase of $112.3  million or 74.0%.  The
increase  was due to an  increase  in units  shipped  and an increase in average
selling  price per unit,  both of which were caused by the inclusion of Savane's
operations since the date of acquisition as well as increased market penetration
and brand acceptance.

         Gross  Profit.  Gross profit for Fiscal 1998 was $68.9 million or 26.1%
of net sales as  compared  with  $36.1  million or 23.8% of net sales for Fiscal
1997.  The  increase  in gross  margin  was  driven by a change in mix to higher
margin  products  caused  primarily by the  inclusion of Savane's  higher margin
branded product sales.

         Selling,  General and  Administrative  Expenses.  Selling,  general and
administrative  expenses  for Fiscal  1998 were $43.2  million,  or 16.4% of net
sales, as compared to $19.4 million,  or 12.8% of net sales for Fiscal 1997. The
increase in selling,  general and  administrative  expenses was primarily due to
higher  advertising and brand support related expenses as well as higher general
and administrative expenses associated with the Savane operations.

         Interest Expense.  Interest expense for Fiscal 1998 was $6.9 million as
compared  to $2.9 for Fiscal  1997.  The  increase  was due to the  increase  in
average  outstanding  borrowings caused by the acquisition of Savane,  including
Savane's  outstanding  borrowings  as of the  date  of the  acquisition  and the
Company's issuance of $100 million of the Notes, the proceeds of which were used
to finance the acquisition of Savane.

         Bridge Loan Funding Fee. The Company entered into a $100 million bridge
financing  facility to finance the Savane  acquisition  until the closing of the
offering of $100  million of the Notes.  The bridge loan funding fee of $500,000
was incurred to originate the bridge financing.

         Income  Taxes.  The  Company's effective  tax rate for Fiscal  1998 was
37.5% as  compared  with 37.2% in Fiscal 1997.

         Net Income.  As a  result  of the above factors,  net income for Fiscal
1998 was $10.8  million,  or 4.1% of net sales, as compared to $8.3  million, or
5.5% of net sales, for Fiscal 1997.

Fiscal 1997 Compared To Fiscal 1996

         Net Sales. Net sales for Fiscal 1997 were $151.7 million as compared to
$117.4  million for Fiscal 1996, an increase of $34.3  million,  or 29.3%.  This
increase was attributable to a 27% increase in the number of units shipped and a
2%  increase  in the  average  selling  price per  unit.  These  increases  were
primarily the result of increased market penetration and brand acceptance.

         Gross Profit.  Gross profit for Fiscal 1997 was $36.1 million, or 23.8%
of net sales, as compared with $26.2 million,  or 22.3% of net sales, for Fiscal
1996.  The  increase  in  gross  profit  percentage  resulted  primarily  from a
significant reduction in the level of markdowns.  During the first several weeks
of Fiscal 1996,  a  significant  number of orders were  canceled due to the soft
retail market  experienced by most major retailers.  In an effort to control the
cost of rising  inventories  and in  anticipation  of a  continued  weak  retail
market,  the Company sold products  below its normal  selling prices and in some
cases below its cost. Also, the Company recorded  additional markdown allowances
for any remaining excess  inventory.  During the latter part of Fiscal 1996, the
retail market strengthened and the level of markdowns  decreased  significantly.
This trend continued during Fiscal 1997 and the gross profit percentage returned
to historical levels.

         Selling,  General and  Administrative  Expenses.  Selling,  general and
administrative  expenses  for Fiscal  1997 were $19.4  million,  or 12.8% of net
sales, as compared to $15.2 million, or 12.9% of net sales, for Fiscal 1996. The
increase in selling,  general and administrative expenses was principally due to
the overall  increase in the level of operations  of the Company.  The principal
components  of the increase  included  $590,000 in  distribution  center  labor,
$370,000 in  depreciation  and  occupancy  costs  related to the  Company's  new
distribution  center,  $520,000 in commissions  and selling  costs,  $450,000 in
information  technology  costs,  $515,000 in  merchandising  costs,  $330,000 in
certain  legal  expenses,  and  $330,000  in bad  debts  related  to a  customer
bankruptcy.

         Interest Expense.  Interest expense for Fiscal 1997 was $2.9 million as
compared to $2.5 million for Fiscal 1996.  The increase in interest  expense was
the result of higher average outstanding  borrowings,  offset in part by a lower
average  interest  rate  due to a  re-negotiation  of the  Credit  Agreement  in
November 1996.

         Income Taxes.  The Company's  effective income tax rate for Fiscal 1997
was 37.2% as compared with 34.7% in the  comparable  period in Fiscal 1996.  The
increase in the effective  rate for Fiscal 1997 was primarily due to the Company
receiving  in Fiscal 1996 a benefit  for  previously  unrecognized  losses of an
international subsidiary, which was closed in Fiscal 1995.

         Net Income.  As a result of the above  factors,  net income  for Fiscal
1997 was  $8.3  million,  or 5.5% of  net sales, as compared to $5.2 million, or
4.4% of net sales, for Fiscal 1996.

Liquidity and Capital Resources

         Prior to the  acquisition  of Savane,  the  Company's  primary  capital
requirements  have been the  funding of the  growth in  operations  and  capital
expenditures.  The Company has historically financed its growth in sales and the
resulting  increase  in  inventory  and  receivables  through a  combination  of
operating cash flow and borrowings under its senior credit facility.

         On June 10, 1998,  the Company  closed on the Facility,  which provides
for  borrowings  of up to  $110  million,  subject  to  certain  borrowing  base
limitations.  The  Facility  was  obtained  in  conjunction  with the  Company's
acquisition of Savane and was used to refinance  indebtedness  then  outstanding
under the Company's previous senior credit facility,  to refinance  indebtedness
of Savane, to pay fees incurred in connection with the acquisition of Savane and
with the Facility,  and for general  corporate  purposes.  Borrowings  under the
Facility  bear  variable  rates of  interest  (8.4% at  October 3, 1998) and are
secured by  substantially  all of the Company's  domestic  assets.  The Facility
matures in June 2003. As of October 3, 1998,  excluding  outstanding  letters of
credit of approximately $12.8 million, an additional $30.1 million was available
for borrowings under the Facility.

         In addition, on June 10, 1998, the Company closed a $100 million bridge
financing facility (the "Bridge Facility"). Borrowings of $100 million under the
Bridge Facility and approximately $70.4 million under the Facility were incurred
to finance the purchase price for the  acquisition  of Savane,  the repayment of
indebtedness  outstanding  under the Company's and Savane's former senior credit
facilities  and the  redemption  of $1.7 million of Savane's  8.50%  convertible
subordinated  debentures  due 2004.  As discussed  below,  debt under the Bridge
Facility  was  repaid in full with the $95.6  million of net  proceeds  from the
offering and sale of the Notes,  together with borrowings of approximately  $4.4
million  under the  Facility.  A funding fee of $500,000  was paid to the lender
under the Bridge  Facility,  which was amortized to expense over the 14-day life
of the loan.

         On June 24,  1998,  the Company  closed the  issuance  and sale of $100
million  of the  Notes  through  a  private  placement.  Under  the terms of the
indenture  agreement  underlying  the Notes,  the Company  will pay  semi-annual
interest  at the rate of 11% for ten years 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 The Bridge Facility.

         Effective  February 1, 1998, the Company  negotiated a reduction in the
interest  rate  applicable  to its real estate  loan.  The loan now bears annual
interest at 7.38%,  a decrease of 1.5% from the previous rate of 8.88%.  The new
rate is fixed  through July 18, 2002, at which time the rate will be adjusted in
accordance with the provisions of the loan agreement.

         The  Company's  credit  agreements  contain  significant  financial and
operating  covenants,  including  requirements that the Company maintain minimum
net worth levels and certain  financial  ratios,  prohibitions on the ability of
the Company to incur certain  additional  indebtedness or to pay dividends,  and
restrictions  on its  ability  to make  capital  expenditures.  The  Company  is
currently in compliance with all covenants under its credit agreements.

         Pursuant  to  two  separate   factoring   agreements   (the  "Factoring
Agreements"),  the Company factors substantially all of its accounts receivable.
The Factoring  Agreements provide that the factor will pay the Company an amount
equal to the gross amount of the Company's  accounts  receivable from customers,
reduced by certain offsets, including among other things, discounts, returns and
a commission  payable by the Company to the factor.  The commission  ranges from
 .18% to .28% of the gross amount factored.  The factor subjects all sales to its
credit review process and assumes 99.9% of the credit risk for amounts  factored
pursuant  to  the  Factoring   Agreements.   Funds  are  transferred  to  reduce
outstanding  borrowings  under the Facility  once  payment is received  from the
factor.  The factor pays the Company the  receivable  amount upon the earlier of
(i)  receipt by the factor of payment  from the  Company's  customer or (ii) 120
days past the due date for such  payment.  The  Factoring  Agreements  expire in
2001.

         As a  result  of the  acquisition  of  Savane  in  June  1998,  certain
consolidation  and cost savings  activities have transpired that will impact the
Company's  capital  resources.  Specifically,  the  Company  has  chosen to exit
certain owned or leased facilities or dispose of certain operations. The sale of
owned facilities will generate cash while the payment of lease termination costs
or other exit costs  (including  severance) will utilize cash. In November 1998,
the Company  disposed of Savane's 32 retail outlet stores to an unrelated  third
party.  Under the terms of the sale,  the buyer paid the  Company  approximately
$1.3 million in cash, received approximately $4.6 million in assets, and assumed
approximately $5.3 million in outstanding lease obligations.

         During  Fiscal  1998,  the  Company  used $1.6  million  of cash in its
operations.  This was primarily the result of net income of $10.8 million (which
included  non-cash  charges of  approximately  $4.8  million) and an increase in
accounts payable of $2.6 million,  offset by an increase in accounts  receivable
and  prepaid  expenses  and other  assets  of $13.5  million  and $7.9  million,
respectively.

         The Company has historically  financed its capital expenditures through
a  combination  of  operating  cash  flow  and  long-term  borrowings.   Capital
expenditures were $6.9 million and $5.2 million for Fiscal 1998 and Fiscal 1997,
respectively. The expenditures primarily relate to the upgrade or replacement of
the Company's  existing  equipment and computer systems  including  hardware and
software and consulting fees related to the new system.

         During Fiscal 1999, the Company  anticipates  capital  expenditures  to
total  approximately $10 million include  completing the installation of its new
computer  system,  the  upgrading or  replacement  of other  ancillary  existing
computer systems and the upgrading or replacement of certain existing equipment.
Additionally,   due  to  increases  in  volume,   the  Company  intends  to  add
approximately 90,000 square feet to its distribution center in Tampa.

         At October 3, 1998 and at September  27, 1997,  the Company had working
capital of $107.4  million  and $30.2  million,  respectively.  The  increase in
working  capital was due  primarily  to the working  capital  acquired  with the
acquisition  of Savane.  Additionally,  working  capital was impacted by a $13.5
million increase in accounts receivable. The Company expects its working capital
needs will  continue  to  fluctuate  based on  seasonal  increases  in sales and
accounts receivable and seasonal decreases in trade accounts payable.

         The Company  received $17.3 million in proceeds from its initial public
offering in October 1997.  Of the proceeds,  $3.9 million was used to redeem the
Company's  preferred stock, $10.6 million was used to reduce amounts outstanding
under the Facility and the remainder was invested for use in operations.

         The Company  believes that the combination of existing working capital,
funds  anticipated to be generated  from operating  activities and the borrowing
availability  under  the  current  and  anticipated  credit  agreements  will be
sufficient  to fund both its  short-term  and  long-term  capital and  liquidity
needs.


Impact of Recent Accounting Pronouncements

In 1997, the Financial  Accounting  Standards  Board (FASB) issued  Statement of
Financial Accounting Standards 130, "Reporting  Comprehensive Income." Statement
130 establishes  standards for reporting and display of comprehensive income and
its components in financial statements. Comprehensive income, as defined, is the
change in equity of a business  enterprise during a period from transactions and
other  events and  circumstances  from  non-owner  sources.  The  provisions  of
Statement 130 are effective for periods  beginning  after  December 15, 1997 and
adoption  of  Statement  130 is not  expected  to have a material  impact on the
consolidated financial position or results of operations.

         In June  1997,  the  FASB  issued  Statement  of  Financial  Accounting
Standards  131,  "Disclosures  about  Segments  of an  Enterprises  and  Related
Information."  Statement 131  establishes  standards  for segment  reporting and
disclosure of additional information on products and services, geographic areas,
and major customers.  The Company is assessing  implementation of the disclosure
requirements  of this standard  which is effective for periods  beginning  after
December  15,  1997.  The  adoption of  Statement  131 may result in  additional
financial statement disclosure.


Impact of the Year 2000 Issue

         The "Year 2000  Issue" is the result of computer  programs  and systems
having been  designed  and  developed  to use two digits,  rather than four,  to
define the applicable year. As a result, these computer programs and systems may
recognize  a date using "00" as the year 1900  rather  than the year 2000.  This
could  result in a system  failure or  miscalculations  causing  disruptions  of
operations,  including,  among other  things,  a temporary  inability to process
transactions, send invoices or engage in similar normal business activities.

         In fiscal 1998, The Company  completed the evaluation and  modification
of all of its  information  techno9logy  systems  with  regard  to the Year 2000
issue.  The amount  expensed by the Company to  accomplish  this process was not
material to the operations or financial  condition of the Company,  and has been
included in its  entirety  in the results of  operations  for fiscal  1998.  The
Company  believes that all of its  information  technology  systems are now Year
2000 compliant.

         Based on assessments  made during fiscal 1996 and 1997,  Savane decided
to replace its entire  inventory  management,  warehouse  distribution and order
processing  systems so that those systems will be Year 2000  compliant.  The new
systems became  operational  in early December 1998 and therefore,  all existing
systems are now Year 2000 compliant.

         Should there be any portions of the Company's  information systems that
were overlooked in the remediation  process,  or become  susceptible to the Year
2000 subsequent to such  remediation as the result of interaction  with supplier
or customer  systems,  or  otherwise,  the impact could be felt  throughout  the
Company's main operating  system which includes  subsystems  related to customer
analysis,  order  processing,  planning,  procurement,   production  and  sales.
Information  technology  plays  a vital  role  in  almost  every  aspect  of the
Company's  operations.  See  "Business -  Management  Information  Systems."  In
addition,  the Year 2000 issue would strike at a time of the calendar  year that
is one of the Company's busiest in terms of production and  distribution.  While
the Company  believes  that it will be able to sustain  normal  operations  even
without any of its information  technology systems, this could only continue for
a short period of time.  The resources  necessary to address any Year 2000 issue
which may arise will not be available entirely from internal personnel,  and the
Company will be forced to contract with third-party  consultants.  At this time,
the Company does not have any such  third-party  consultants  under contract and
does not anticipate  that it will enter into any such contracts prior to the end
of  calendar  1999.  Further,  the  Company  does  not  anticipate  that it will
stockpile raw materials or inventory in advance of the end of calendar 1999.

         The  worst  case  scenario  for  the  Company  would  occur  if the new
management information system currently being implemented was not operational at
December  31,  1999.  To plan for this  possibility,  and as  noted  above,  the
Company"  current  systems have been  modified and are now Year 2000  compliant.
Based on the Company" current Year 2000 compliant status, the Company believes a
contingency plan is not necessary.

         The Company has communicated  with all significant  suppliers and large
customers to determine  the extent to which the Company is  vulnerable  to those
third parties'  failure to remediate their own Year 2000 Issues.  As of the date
of this report,  substantially all of the Company's suppliers and customers have
informed  the  Company  that their  systems  are or will be Year 2000  compliant
within the next six  months.  If certain  suppliers  were not able to  remediate
their own Year 2000 issues,  it could affect the Company's  ability to order and
receive raw materials  shipments on a timely basis, which will have a direct and
adverse impact on the Company's production  schedule.  This will then affect the
Company's ability to fill customer orders on a timely basis, the result of which
may be a loss of customer sales. In addition,  if the Company's customers do not
remediate their systems,  it could affect the Company's ability to receive order
information  through EDI and receive POS  inventory  information,  both of which
will also have a direct and adverse impact on the Company's sales.


Seasonality

         Historically,  the Company's business has been seasonal,  with slightly
higher sales and income in the second and fourth fiscal quarters,  just prior to
and during the two peak retail selling seasons for spring and fall  merchandise.
In  addition,  certain of the  Company's  products,  such as shorts and corduroy
pants,  tend to be seasonal in nature.  In the event such  products  represent a
greater  percentage of the Company's sales in the future, the seasonality of the
Company's sales may be increased.


Euro Conversion Issue

         On January 1, 1999, 11 of the 15 member countries of the European Union
are  scheduled  to  establish  fixed  conversion  rats  between  their  existing
currencies  and the Euro and to adopt the Euro as their  common  legal  currency
(the "Euro Conversation"). The Company has begun consideration of the effects of
the Euro  Conversation  on its  operations,  but it is  currently  unsure of the
potential  impact that the Euro Conversion will have on its business,  financial
condition  and  results of  operations,  particularly  as the Euro  Conversation
relates to the Company's European operations.


Risk Factors Affecting the Company's Business and Prospects
               
We must successfully  integrate Savane into our  existing  operations  to remain
profitable.

     The acquisition of Savane  resulted in a significant  increase in the scope
of our business. Specifically, as a result of the acquisition of Savane, we have
significantly  increased the total scale of our operations,  including:  (i) the
number of our branded and private  brand apparel  offerings,  (ii) the number of
our  manufacturing  and  other  operating  locations,  (iii)  the  number of our
employees,  and (iv) our geographical scope.  Management must devote substantial
attention and financial resources to address the coordination of our purchasing,
distribution,  manufacturing  and  warehousing for the combined  companies;  the
coordination of our sales and marketing  operations;  and the  implementation of
appropriate  financial and  management  systems.  Our inability to  successfully
integrate  Savane in a timely and efficient manner could have a material adverse
affect on our business, results of operations and financial condition.

     We expect to realize  certain  cost  savings and  business  synergies  as a
result of our acquisition of Savane.  However,  realization of these savings and
synergies  could be affected by a number of factors beyond our control,  such as
general  economic  conditions,  increased  operating  costs, the response of our
competitors, customers or employees and regulatory developments. There can be no
assurance that we will achieve the expected cost savings and business synergies.

To acquire  Savane we  incurred a  substantial  amount of debt that will require
successful  future  operating  performance and  financial results and may impose
important limitations on us.

     As a result of the  acquisition  of Savane,  we 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 and will not be
       available for other purposes;
     - our  ability to obtain  additional  financing  in the future for  working
       capital, capital  expenditures,  acquisitions  or  other purposes  may be
       impaired; 
     - 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 and principal payments,  there can be no assurance
that we will  generate  earnings  in the  future  sufficient  to cover our fixed
charges. If we are unable to generate earnings in the future sufficient to cover
our fixed charges 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.  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 the debt  restrict  our  ability to sell
assets and the use of the proceeds therefrom.

     If for any reason,  including a shortfall in anticipated  operating results
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, and to
their  commitments to provide future  funding.  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
senior debt obligation  could result in a default under our other debt or result
in bankruptcy.

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

     The terms of our existing  debt 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,
          - engage in mergers or consolidations, 
            or 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. 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 our default under the terms of other
debt or result in bankruptcy.

We may not be able to  successfully  identify,  acquire and  profitably  operate
companies and businesses that are compatible with our operations.

         We continually  evaluate the potential  acquisition of other companies,
brands and producers of  complementary  product lines.  Our search may not yield
any  complementary  companies  or  brands,  and  even if we do  find a  suitable
acquisition  we may not be able  to  obtain  sufficient  financing  to fund  the
purchase.  We may not be able to  successfully  integrate the  operations of any
company that we acquire into our own  operations  and we cannot  assure you that
the acquired  operation will achieve the results we expected.  For example,  the
acquired  business may not achieve  revenues,  profits or  productiveness at the
same levels as our existing operations. The success of any acquisition will also
depend  upon our  ability  to retain  or hire,  and then  train  key  personnel.
Acquiring  another  company or business  may also have  negative  effects on our
business, results of operations and financial condition because our officers and
directors may focus their  attention on completing the  acquisition,  or because
other resources may be diverted to fulfilling the needs of the acquisition.

         We compete with other  companies who have greater  resources than we do
for the  opportunities  to buy other  companies and businesses and to expand our
operations.  As a result, even if we do identify a suitable acquisition,  we may
lose the  acquisition  to a  competitor  who offers a more  attractive  purchase
price.  At this time,  we do not have any  agreement or  arrangement  to buy any
other company or business, or to expand our operations.

Our financial success is linked to that of our customers,  and to our customers'
commitment to our products.

         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.  The following chart shows who our
major  customers are, and the percentage of our net sales that their purchase of
our products comprises:

                                 Percentage of Our Net Sales
                                      for the Year Ended
      Major Customer                   October 3, 1998
----------------------------    -------------------------------

Wal-Mart                                    23.8%
Price/Costco                                10.6%
Phillips-Van Heusen                          6.1%


         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
its 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. See "Business-Customers and Customer Service."

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

         The  apparel  industry  has  historically   been  subject  to  cyclical
variations.  A  recession  in the  general  economy,  or  any  other  events  or
uncertainties that discourage consumers from spending,  could have a significant
effect on our sales and  profitability.  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 would have
a material adverse effect on our business,  results of operations, and financial
condition.

         Various  apparel  retailers,  some 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 receivables.  Either
one of these  actions  could have a  material  adverse  effect on our  business,
results of operations and financial condition. See "Business - Industry."

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

         We compete with many apparel  manufacturers,  including  brand name and
private label  producers and retailers who have, or may have,  the capability to
develop their  product and source their  products  internally.  Our products are
also in  competition  with many designer and  non-designer  product  lines.  Our
products compete  primarily on the basis of price,  quality,  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   products  from  our
competitors.  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.
See "Business - Competition."

Our  use of  our  trademarks  and  trade  dress  may  subject  us to  claims  of
infringement by other parties.

         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.  Levi
Strauss  & Co.  recently  sued us,  claiming,  among  other  things,  that a TSI
trademark  and the trade dress used in the labeling and  packaging of certain of
our products infringe on certain proprietary trademark and trade dress rights of
Levi Strauss & Co. The outcome of the  litigation  cannot be  determined at this
time.  Nevertheless  in an  attempt  to limit  our  liability,  if any,  we have
unilaterally  altered the trademark and trade dress which are the subject of the
suit.  We  cannot  assure  you,  however,  that  the  modifications  made to the
trademark and trade dress do not infringe on Levi Strauss & Co.'s rights.  It is
possible  that Levi Strauss & Co. will  continue to seek to recover  damages and
attorney's  fees from us regarding the use of the trademark and trade dress,  or
regarding the use of the trademark and trade dress as modified.  See "Business -
Legal Proceedings."

         Despite our efforts to the contrary,  our  trademarks  and  proprietary
rights may violate the proprietary rights of others. If any of our trademarks or
other proprietary rights were found to violate the proprietary rights of others,
or were subjected to some other challenge, we cannot assure you that we would be
permitted  to  continue  using these  trademarks  or other  proprietary  rights.
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 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 exclusive rights to use
trademarks owned by other companies in promoting, distributing and selling their
products.  We have  periodically  been  involved in litigation  regarding  these
licensing agreements.  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.  See  "Business  Trademarks  and
Licenses."

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
sales 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. See
"Management."

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.  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. 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 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. See "Business Production."

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

         We use independent  manufacturers  to assemble or produce a substantial
portion of our products.  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,
however,  and so we may be  unable  to  obtain  timely  delivery  of  acceptable
products.  We  generally  do not  have  long-term  contracts  with  any of these
independent manufacturers. As a result, we cannot be assured of an uninterrupted
supply  of our  product  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. See "Business - Production."

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

         During  Fiscal  1998,  almost all of our  products  were  assembled  or
produced by independent  manufacturers in the Dominican  Republic and Mexico. 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 as more fully  discussed  above.
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.  On the  other  hand,  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:

o        work stoppages;
o        transportation delays and interruptions;
o        delays and interruptions from natural disasters;
o        political instability;
o        economic disruptions;
o        expropriation;
o        nationalization;
o        imposition of tariffs;
o        imposition of import and export controls;
o        changes in government policies.

         We also own a number of manufacturing  facilities which operate outside
the United  States,  and this subjects us to additional  risks  associated  with
owning and operating  manufacturing  facilities  abroad. For example, a facility
operated in a foreign  country may become subject to that  country's  labor laws
and government regulations. If the laws are unfavorable to our operations in any
foreign  country,  we could  experience a loss in revenues,  customer orders and
customer goodwill.

         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 United States  dollars.  If the value of the United States 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.
See "Business--Production."

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.  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  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,  or forced or
indentured  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. See "Business - Imports and Import Regulations."

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

         We rely upon our management  information system to provide distribution
services  and to track  operating  results.  We  implemented  a new,  integrated
management  information  system  in  1998  and  are  still  in  the  process  of
integrating  additional  functions.   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.  See "Business - Management Information Systems."

Principal  shareholders  of our company have a great deal of influence  over the
constitution of our board of directors,  and over matters submitted to a vote of
shareholders.

         The  following  table sets  forth our  principal  shareholders  and the
percentage of our common stock that they each own or control:
<TABLE>
<CAPTION>

              Name of Shareholder and Title                      Percentage of Shares of
                     (if applicable)                               Common Stock Owned
-----------------------------------------------------------   ------------------------------

<S>                                                                       <C>  
William W. Compton                                                        12.7%
Chairman of the Board and Chief Executive Officer

Michael Kagan                                                              7.5%
Executive Vice President and Chief Financial Officer

Accel, S.A. de C.V.                                                       21.1%
( a Mexican corporation) ("Accel")
</TABLE>


Pursuant to our Amended and Restated Articles of Incorporation,  Accel currently
has the right to nominate  two persons to stand for  election to our nine member
Board of Directors,  and separate family limited partnerships  controlled by Mr.
Compton and by Mr.  Kagan,  respectively,  each have the right to  nominate  one
person to stand for election to our Board of  Directors.  Each of the  following
has entered into a shareholders' agreement:

o        Accel;
o        Mr. Compton;
o        Mr. Kagan;
o        The Compton Family Limited Partnership;
o        The Kagan Family Limited Partnership.

The  shareholders'  agreement  provides  that each of the parties  will vote the
shares of common  stock each owns or controls to elect the nominees of the other
parties to our Board of Directors.  Given their collective ownership of 41.4% of
our common stock, and the terms of the  shareholders'  agreement,  these parties
will have the ability to  significantly  influence the election of our directors
and the outcome of all other issues submitted to a vote of our shareholders. See
"Management" and "Principal Shareholders."

Our sales and income levels are seasonal.

         Our business has generally been seasonal,  with higher sales and income
in the second and fourth  fiscal  quarters,  just before and during the two peak
retail  selling  seasons  for spring  and fall  merchandise.  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 fourth fiscal  quarters
from the first and third fiscal quarters.

If we,  our  customers  and  suppliers  are  not  Year  2000  compliant,  we may
experience significant problems in several areas of our business.

         In fiscal 1998, the Company  completed the evaluation and  modification
of all of its information technology systems with regard to the Year 2000 Issue,
and the Company believes that all of its information  technology systems are now
Year 2000 compliant.  Should there be any portions of the Company's  information
systems that were overlooked in the remediation  process,  or become susceptible
to The  Year  2000  Issue  subsequent  to  such  remediation  as the  result  of
interaction with supplier or customer systems or otherwise,  the impact could be
felt  throughout the Company's main operating  system which includes  subsystems
related  to  customer  analysis,   order  processing,   planning,   procurement,
production, distribution and sales. Information technology plays a vital role in
almost  every aspect of the  Company's  operations.  See  "Business - Management
Information Systems."

         Any  problems  with  the  Company's   information   technology  systems
resulting  from a Year 2000 Issue would  strike at a time of the  calendar  year
that is one of the Company's  busiest in terms of production  and  distribution.
While the Company  believes  that it will be able to sustain  normal  operations
even without any of its information technology systems, this could only continue
for a short  period of time.  The  resources  necessary to address any Year 2000
Issue which may arise will not be available  entirely from  internal  personnel,
and the Company will be forced to contract with third-party consultants. At this
time, the Company does not have any such third-party  consultants under contract
and does not anticipate  that it will enter into any such contracts prior to the
end of calendar  1999.  Further,  the Company does not  anticipate  that it will
stockpile raw materials or inventory in advance of the end of calendar  1999. As
a result, if the Company does experience Year 2000  Issue-related  problems with
its information technology systems, it may not be able to:

         - Design new products;
         - Control, adjust or operate the computerized cutting systems;
         - Receive customer ordering information; 
         - Monitor customer inventory and POS  information;  
         - Efficiently  execute  distribution  functions;  
         - Monitor and evaluate overall management information such as
           inventory, order flow and distribution;

         The Company has communicated  with all significant  suppliers and large
customers to determine  the extent to which the Company is  vulnerable  to those
third parties'  failure to remediate their own Year 2000 Issues.  As of the date
of this report,  substantially  all of the  Company's  significant suppliers and
customers  have informed the Company that their systems are or will be Year 2000
compliant within the next six to nine months. If certain suppliers were not able
to remediate their own Year 2000 issues,  it could affect the Company's  ability
to order and receive raw materials  shipments on a timely basis, which will have
a direct and adverse impact on the Company's production schedule. This will then
affect the  Company's  ability to fill customer  orders on a timely  basis,  the
result of which may be a loss of customer sales.  In addition,  if the Company's
customers do not remediate their systems,  it could affect the Company's ability
to receive order information through EDI and receive POS inventory  information,
both of which will also have a direct and adverse impact on the Company's sales.


Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

         The Company is exposed to market risk from  changes in interest  rates,
foreign  exchange  rates,  and commodity  prices.  This does not use any hedging
transactions  in order to modify  the risk from  these  interest  rate,  foreign
currency exchange rate, and commodity price fluctuations.  The Company also does
not use  financial  instruments  for trading  purposes and is not a party to any
leveraged derivatives.


Item 8.  Financial Statements and Supplementary Data

         The  information  called  for by this  Item is  contained  in  pages 31
through 51 of this report.


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

         None.



<PAGE>


PART III


Item 10.  Directors and Executive Officers of the Registrant.

         The  information  under the captions  "Election of Directors - Nominees
for  Director,"  "Election of Directors - Directors  Continuing  in Office," and
"Other Matters - Section 16(a) Beneficial Reporting Compliance" in the Company's
Proxy Statement for its Annual Meeting of Stockholders to be held on February 4,
1999 (the "1998 Proxy  Statement")  is  incorporated  herein by  reference.  The
information called for by this Item, with respect to Executive Officers,  is set
forth in Item 1 of this  report  under the  caption  "Executive  Officers of the
Registrant."


Item 11.  Executive Compensation.

         The   information   under  the   captions   "Election  of  Directors  -
Compensation of Directors" and "Election of Directors - Executive  Compensation"
in the Company's 1998 Proxy Statement is incorporated by reference.  In no event
shall the  information  contained in the 1998 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 the  Company's  1998 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 the Company's 1998 Proxy  Statement is  incorporated
herein by reference.



<PAGE>


PART IV


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


(a) 1.   Index to Financial Statements

         Report of Independent Certified Public Accountants
         Consolidated Balance Sheets
         Consolidated Statements of Income
         Consolidated Statements of Shareholders' Equity
         Consolidated Statements of Cash Flows
         Notes to Consolidated Financial Statements

(a) 2.   Financial Statement Schedule

         Schedule II - Valuation and Qualifying Accounts

(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

         No reports on Form 8-K were filed  during the fourth  quarter of fiscal
1998.



<PAGE>


               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 October 3, 1998 and September 27,
1997, and the related consolidated  statements of income,  shareholders' equity,
and cash flows for each of the three years in the period ended  October 3, 1998.
Our audits also included the financial statement schedule listed in the Index at
Item 14(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 generally  accepted auditing
standards.  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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Tropical Sportswear Int'l Corporation at October 3, 1998 and September 27, 1997,
and the  consolidated  results of its  operations and its cash flows for each of
the three  years in the  period  ended  October  3,  1998,  in  conformity  with
generally  accepted  accounting  principles.  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.


ERNST & YOUNG LLP

/s/ Ernst & Young LLP

Tampa, Florida
November 16, 1998


<PAGE>

<TABLE>
<CAPTION>

                                       TROPICAL SPORTSWEAR INT'L CORPORATION

                                            CONSOLIDATED BALANCE SHEETS
                                      October 3, 1998 and September 27, 1997
                                         (In thousands, except share data)

                                                                           1998                  1997
                                                                    -------------------    ------------------
ASSETS

Current assets:
    <S>                                                                       <C>                    <C>  
    Cash                                                                      $  2,097               $   116
    Accounts receivable                                                         72,355                24,981
    Inventories                                                                 84,099                21,351
    Deferred income taxes                                                        9,372                 1,495
    Prepaid expenses and other                                                   5,674                   812
                                                                    -------------------    ------------------
       Total current assets                                                    173,597                48,755
Property and equipment                                                          60,920                25,245
Less accumulated depreciation and amortization                                   8,923                 4,962
                                                                    -------------------    ------------------
                                                                                51,997                20,283
Other assets                                                                    20,176                   227
Trademarks                                                                      15,000                    --

Excess  of  cost  over  fair  value  of  net  assets  of  acquired              36,706                   393
subsidiary, net
                                                                    -------------------    ------------------

Total assets                                                                  $297,476               $69,658
                                                                    ===================    ==================
</TABLE>


<TABLE>

<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    <S>                                                                       <C>                    <C>    
    Accounts payable                                                          $ 37,451               $12,828
    Accrued expenses and other                                                  23,737                 2,424
    Accrued incentive compensation                                               1,920                 1,934
    Current installments of long-term debt                                         831                   801
    Current installments of obligations under capital leases                     2,261                   534
                                                                    -------------------    ------------------
       Total current liabilities                                                66,200                18,521
Long-term debt                                                                 166,339                23,442
Obligations under capital leases                                                 5,155                   613
Deferred income taxes                                                            5,117                   431
Other                                                                            3,701                    --
Commitments and contingencies
Shareholders' equity:
    Preferred stock, $100 par value; 10,000,000 shares
       authorized; none and 38,630 shares issued and
       outstanding in 1998 and 1997, respectively                                   --                 3,863
    Common stock, $.01 par value; 50,000,000 shares authorized;
       7,600,000 and 6,000,000 shares issued and outstanding in
       1998 and 1997, respectively                                                  76                    60
    Additional paid in capital                                                  17,270                    --
    Foreign currency translation adjustment                                         88                    --
    Retained earnings                                                           33,530                22,728
                                                                    -------------------    ------------------
       Total shareholders' equity                                               50,964                26,651
                                                                    ===================    ==================
Total liabilities and shareholders' equity                                    $297,476               $69,658
                                                                    ===================    ==================

                                              See accompanying notes.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                       TROPICAL SPORTSWEAR INT'L CORPORATION

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


                                                                           Year Ended
                                                   -----------------------------------------------------------
                                                      October 3,         September 27,        September 28,
                                                         1998                 1997                 1996
                                                   -----------------    -----------------    -----------------

<S>                                                        <C>                  <C>                  <C>     
Net sales                                                  $263,976             $151,692             $117,355
Cost of goods sold                                          195,087              115,637               91,132
                                                   -----------------    -----------------    -----------------
Gross profit                                                 68,889               36,055               26,223
Selling, general and administrative expenses                 43,204               19,443               15,189
                                                   -----------------    -----------------    -----------------
Operating income                                             25,685               16,612               11,034
Other expenses:
    Interest                                                  6,866                2,899                2,498
    Bridge funding fee                                          500                   --                   --
    Other, net                                                1,036                  537                  620
                                                   -----------------    -----------------    -----------------
                                                              8,402                3,436                3,118
                                                   -----------------    -----------------    -----------------
Income before income taxes                                   17,283               13,176                7,916
Provision for income taxes                                    6,481                4,907                2,745
                                                                        -----------------
                                                   =================                         =================
Net income                                                 $ 10,802              $ 8,269              $ 5,171
                                                   =================    =================    =================

Net income per common share
     Basic                                                    $1.45                $1.38                $0.86
                                                   =================    =================    =================

     Diluted                                                  $1.43                $1.37                $0.86
                                                   =================    =================    =================



                                              See accompanying notes.

</TABLE>

<PAGE>


<TABLE>
<CAPTION>

                                                  TROPICAL SPORTSWEAR INT'L CORPORATION

                                              CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                                             (In thousands)

                                                                                        Cumulative
                                                                                          Foreign
                                                                           Additional    Currency
                                 Preferred Stock         Common Stock        Paid In    Translation   Retained
                               Shares      Amount     Shares     Amount      Capital    Adjustment    Earnings     Total

<S>                                  <C>     <C>         <C>          <C>        <C>         <C>        <C>       <C>      
Balance  at  September 30,           39      $3,863      6,000        $60        $  --        $ --      $9,288    $13,211
1995

    Net income                       --          --         --         --           --          --       5,171      5,171
                              ---------- ----------- ---------- ---------- ------------ ----------- ----------- ----------

Balance  at  September 28,           39       3,863      6,000         60           --          --      14,459     18,382
1996

    Net income                       --          --         --         --           --          --       8,269      8,269
                              ---------- ----------- ---------- ---------- ------------ ----------- ----------- ----------

Balance  at  September 27,           39       3,863      6,000         60           --          --      22,728     26,651
1997

    Foreign currency 
      translation adjustment         --          --         --         --           --          88          --         88

    Sale of common stock             --          --      1,600         16       17,270          --          --     17,286

    Redemption  of preferred
    stock                          (39)     (3,863)         --          -           --          --          --    (3,863)

    Net income                       --          --         --         --           --          --      10,802     10,802
                              ---------- ----------- ---------- ---------- ------------ ----------- ----------- ----------

Balance at October 3, 1998           --          --      7,600        $76      $17,270         $88     $33,530    $50,964
                              ========== =========== ========== ========== ============ =========== =========== ==========


                             See accompanying notes.
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                       TROPICAL SPORTSWEAR INT'L CORPORATION

                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (In thousands)



                                                                           Year Ended
                                                     --------------------------------------------------------
                                                            October 3,      September 27,      September 28,
                                                              1998              1997               1996
                                                              ----              ----               ----


<S>                                                           <C>                 <C>                <C>    
Operating activities
Net income                                                    $ 10,802            $ 8,269            $ 5,171
Adjustments to reconcile net income to net
   cash provided (used) by operating activities:
    (Gain)  loss  on   disposal  of  property   and                150                (6)                152
    equipment
    Depreciation and amortization                                4,758              2,121              1,431
    Provision for doubtful accounts                              (347)                331                 --
    Deferred income taxes                                        1,970                386              (204)
    Changes in operating assets and liabilities:
     (Increase) decrease in assets:
       Accounts receivable                                    (13,490)            (5,115)                704
       Inventories                                               (327)              1,931              (848)
       Prepaid expenses and other assets                       (7,881)              (257)                779
     Increase (decrease) in liabilities:
       Accounts payable                                          2,556            (1,121)              3,863
       Accrued expenses and other                                  221                843               (73)
       Accrued incentive compensation                             (14)              (431)              1,576
                                                                  ----              -----              -----
Net cash (used) provided by operating activities               (1,602)              6,951             12,551

Investing activities
Capital expenditures                                           (6,881)            (5,162)           (10,119)
Acquisition of Farah, Inc.                                    (89,821)                 --                 --
Proceeds from sale of property and equipment                       592                 78                234
                                                                   ---                 --                ---
Net cash used by investing activities                         (96,110)            (5,084)            (9,885)

Financing activities
Proceeds of long-term debt                                     200,000              4,676              7,330
Proceeds from sale of common stock                              17,286                 --                 --
Redemption of preferred stock                                  (3,863)                 --                 --
Principal payments of long-term debt                         (156,335)            (3,253)            (1,628)
Principal payments of capital leases                           (1,257)              (424)              (500)
Net proceeds from (repayment of) long-term
   revolving credit line borrowings                             43,862            (3,011)            (7,675)
                                                                ------            -------            -------
Net cash provided (used) by financing activities                99,693            (2,012)            (2,473)
                                                                ------            -------

Net increase (decrease) in cash                                  1,981              (145)                193
Cash at beginning of year                                          116                261                 68
                                                                   ---                ---                 --
Cash at end of year                                            $ 2,097             $  116              $ 261
                                                               =======             ======              =====


                                              See accompanying notes.
</TABLE>


<PAGE>


                      TROPICAL SPORTSWEAR INT'L CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               October 3, 1998, September 27, 1997, and September
               28, 1996 (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  (the Company) and its wholly-owned  subsidiaries,
Savane  International Corp.  (Savane) and its subsidiaries,  Tropical Sportswear
Company,  Inc, and Apparel Network  Corporation.  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  Australia.   The  Company
subcontracts  a  substantial  portion  of  the  assembly  of its  products  with
independent manufacturers in the Dominican Republic 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 years ended October 3, 1998,  September
27, 1997, and September 28, 1996 contain 53, 52, and 52 weeks, respectively.


Net Income Per Share

         Net income per common  share is computed by dividing  net income by the
weighted average number of common and common equivalent shares  outstanding.  In
accordance with Securities and Exchange Commission Staff Accounting Bulletin No.
83,  common  equivalent  shares issued by the Company at prices below the public
offering price during the period  beginning one year prior to the filing date of
the initial  public  offering have been included in the  calculation  as if they
were outstanding for all periods prior to the offering.

         In February  1997,  the  Financial  Accounting  Standards  Board issued
Statement  of  Financial  Accounting  Standards  No.  128,  Earnings  Per  Share
(Statement 128). The Company adopted the provisions of Statement 128 during 1998
and has applied this method of accounting to all periods presented.

         The  following  table sets forth the  computation  of basic and diluted
earnings per share:
<TABLE>
<CAPTION>

                                                                 Year Ended
                                            ------------------------------------------------------
                                              October 3,       September 27,       September 28,
                                                 1998               1997                1996
                                            ---------------   -----------------    ---------------

<S>                                             <C>                 <C>                 <C>   
Numerator for basic and diluted earnings
per share:

      Net income                                $   10,802           $   8,269          $   5,171

Denominator for basic earnings per share:
    Weighted average shares of common
        stock outstanding                        7,470,620           6,000,000          6,000,000

Effect of dilutive stock options using the
    treasury stock method                           79,593              15,000             15,000
                                            ---------------   -----------------    ---------------

Denominator for diluted earnings per share       7,550,213           6,015,000          6,015,000
                                            ===============   =================    ===============

Net income per common share:
     Basic                                           $1.45               $1.38              $0.86
                                            ===============   =================    ---------------
     Diluted                                         $1.43               $1.37              $0.86
                                            ===============   =================    ===============

</TABLE>

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.


Foreign Currencies

          Foreign  entities   whose  functional  currency  is  the  U.S.  dollar
translate  monetary  assets  and  liabilities  at  year-end  exchange  rates and
non-monetary  items  at  historical  rates.    Income  and expense  accounts are
translated  at  the  average  rates  in  effect  during  the  year,  except  for
depreciation  which is translated at historical rates.  Gains  and  losses  from
changes in exchange  rates  are recognized in consolidated income in the year of
occurrence.

          Foreign activities 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 titled,  "Cumulative  Foreign
Currency  Translation Adjustment."


Advertising and Promotion Costs

         Advertising  and  promotion  costs  are  expensed in the year incurred.
Advertising expense was $3.0 million in 1998, and none in 1997 or 1996.


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(R)  and  Farah(R)
trademarks  that were acquired with the  acquisition of Savane (see Note 8). The
trademarks  effectively  have an indefinite  legal life and their value is being
amortized  on the  straight-line  basis  over a period of 30 years.  Accumulated
amortization at October 3, 1998 totaled $124,000.


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 (see Note 8) and is amortized
on the straight-line basis over a period of 30 years.
Accumulated amortization at October 3, 1998 totaled $303,000.


Use of Estimates

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect  the  reported  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.


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.


Financial Instruments

         The Company's financial  instruments include cash, accounts receivable,
accounts  payable,  long-term debt and  obligations  under capital  leases.  The
carrying  amount of these  financial  instruments  approximate  their fair value
based on current interest rates.


Reclassifications

         Certain  amounts in the fiscal 1997 and 1996 financial statements  have
been  reclassified  to conform to the fiscal 1998 presentation.


Recent Accounting Pronouncements

         In  1997,   the  Financial  Accounting  Standards  Board  (FASB) issued
Statement of  Financial  Accounting  Standards  130,  "Reporting   Comprehensive
Income."   Statement 130  establishes  standards for  reporting  and  display of
comprehensive income and its components in financial  statements.  Comprehensive
income,  as defined,  is the change in equity of a business  enterprise during a
period from  transactions  and  other events  and  circumstances  from non-owner
sources.  The  provisions  of Statement 130 are effective for periods  beginning
after December 15, 1997 and adoption of Statement 130 is not  expected to have a
material impact on the consolidated financial position or results of operations.

         In June  1997,  the  FASB  issued  Statement  of  Financial  Accounting
Standards  131,  "Disclosures  about  Segments  of an  Enterprises  and  Related
Information."  Statement 131  establishes  standards  for segment  reporting and
disclosure of additional information on products and services, geographic areas,
and major customers.  The Company is assessing  implementation of the disclosure
requirements  of this standard  which is effective for periods  beginning  after
December  15,  1997.  The  adoption of  Statement  131 may result in  additional
financial statement disclosure.


Statement of Cash Flows

         Supplemental cash flow information:
                                              Year Ended
                          ----------------------------------------------------
                             October 3,      September 27,    September 28,
                                1998             1997              1996
                                ----             ----              ----
Cash paid for:
Interest                         $3,262            $2,937            $2,439
Income taxes                      6,068             4,150             2,051


         Supplemental disclosure of non-cash investing and financing activities:

         Capital  lease  obligations  of $630,000 were incurred when the Company
         entered into leases for new  equipment in the year ended  September 27,
         1997.


2.  ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>

         Accounts receivable consist of the following:

                                                         October 3,         September 27,
                                                            1998                1997
                                                       ----------------    ----------------

<S>                                                            <C>                 <C>    
Receivable from factor                                         $62,330             $24,631
Receivable from trade accounts                                  11,311                 997
Reserve for returns and allowances and bad debts               (1,286)               (647)
                                                       ================    ================
                                                               $72,355             $24,981
                                                       ================    ================
</TABLE>


         The  Company  has  two  separate   factoring   agreements.   Under  the
agreements, substantially all of the Company's trade receivables are assigned on
an ongoing basis,  without recourse,  except for credit losses on the first .10%
of amounts  factored.  The factoring  agreements  are with  national  companies,
which, in management's  opinion, are highly creditworthy.  The purchase price of
each  receivable  is the net face amount,  less a factoring  discount of .18% to
 .28%.


3.  INVENTORIES

         Inventories consist of the following:

                           October 3,         September 27,
                              1998                1997
                        -----------------    ----------------

Raw materials                    $11,340              $2,255
Work in process                   21,886               5,617
Finished goods                    50,873              13,479
                        =================    ================
                                 $84,099             $21,351
                        =================    ================


         The Company has established  valuation  reserves of approximately  $9.1
million,  $2.2 million,  and $2.2 million at October 3, 1998, September 27, 1997
and  September  28,  1996,  respectively,  to reflect a write down of excess and
slow-moving inventory to net realizable value.


4.  PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>

         Property and equipment consist of the following:

                                     October 3,         September 27,         Life
                                        1998                1997             (Years)
                                   ----------------    ----------------    ------------

<S>                                         <C>                 <C>             <C>
Land                                        $3,976              $3,976              --
Land improvements                            1,594               1,581              15
Building and improvements                   10,723               9,317          3 - 50
Machinery and equipment                     35,521              10,313          3 - 12
Leasehold improvement                        5,146                  58          5 - 25
Construction in progress                     3,960                  --              --
                                   ================    ================
                                           $60,920             $25,245
                                   ================    ================

</TABLE>

         During 1998 and 1997,  the Company  capitalized  $96,000 and $72,000 of
interest  cost,  respectively,  for  property and  equipment  in  the process of
construction.

5.  DEBT

         Long-term debt consists of the following:

                                    October 3,         September 27,
                                       1998                1997
                                 -----------------    ----------------

Revolving credit line                     $55,997            $ 12,135
Equipment loan facility                        --               2,354
Real estate loan                            9,520               9,754
Other notes payable                         1,653                  --
Senior subordinated notes                 100,000                  --
                                 -----------------    ----------------
                                          167,170              24,243
Less current maturities                       831                 801
                                 =================    ================
                                         $166,339             $23,442
                                 =================    ================


         On June 10, 1998,  the Company  closed on a new senior credit  facility
(the Facility)  which provides for borrowings of up to $110 million,  subject to
certain  borrowing  base  limitations.  The Facility was obtained in conjunction
with the Company's  acquisition of Savane (See Note 8) and was used to refinance
indebtedness then outstanding under the Company's previous revolving credit line
and equipment loan facility,  to refinance  indebtedness of Savane,  to pay fees
incurred in connection with the acquisition of Savane and with the Facility, and
for general  corporate  purposes.  Borrowings  under the Facility  bear variable
rates of interest  based on LIBOR plus an applicable  margin (8.4% at October 3,
1998) and are secured by substantially all of the Company's domestic assets. The
Facility matures in June 2003. Debt issue costs of $1.5 million were incurred in
connection  with the Facility and are included in other assets.  These costs are
being  amortized to interest  expense  over the life of the  Facility  using the
effective interest method. As of October 3, 1998, excluding  outstanding letters
of credit of  approximately  $12.8  million,  an  additional  $30.1  million was
available for borrowings under the Facility.

         On  June  10,  1998,  the  Company  closed  on a $100  million  interim
financing  facility  (the Bridge  Facility).  The net  proceeds  from the Bridge
Facility  were used to acquire  Savane and pay related  fees and  expenses.  The
Bridge Facility was repaid on June 24, 1998 as described below. A funding fee of
$500,000 was incurred and amortized to expense over the 14-day life of the loan.

         On June 24,  1998,  the Company  closed on the sale of $100  million of
Senior  Subordinated  Notes (the Notes) through a private  placement.  Under the
terms of the  indenture  agreement  underlying  the Notes,  the Company will pay
semi-annual  interest at the rate of 11% for ten years, 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 The Bridge  Facility.  Debt issue
costs of $4.1 million were  incurred  and are  included in other  assets.  These
costs are being  amortized to interest  expense over the life of the Notes using
the effective interest method.

         On May 7, 1996, the Company  entered into a construction  and term loan
agreement.  The loan was utilized to purchase the  Company's  previously  leased
operating  facility and to finance the  construction  of a new adjacent  cutting
facility.  On July 18,  1997,  the  construction  loan was  converted  to a $9.8
million  real  estate  loan which  will  mature on May 7,  2006.  Principal  and
interest at 7.4% are due monthly based on a 19-year amortization.

         Other notes payable consists primarily of loans for equipment purchases
with  maturities  through 2007.  Interest  rates on the loans range from 8.9% to
10.9%.

         The Company's  debt  agreements  contain  certain  covenants,  the most
restrictive of which are as follows:  (i) maintenance of consolidated  net worth
at specified  levels,  (ii) achievement of specified  adjusted net earnings from
operations,  (iii)  maintenance  of debt  service  coverage  ratio at  specified
levels,  (iv)  limitations on annual capital  expenditures,  (v)  limitations on
liens,  and (vi)  prohibition  of the  payment of  dividends.  The Company is in
compliance with all such covenants.

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

   Fiscal Year             Amount
-------------------    ----------------

1999                            $  831
2000                               526
2001                               421
2002                               445
2003                            56,479
Thereafter                     108,468


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 October 3, 1998 are:
<TABLE>
<CAPTION>

                                                             Operating            Capital
                     Fiscal Year                               Leases              Leases
------------------------------------------------------    -----------------   -----------------

<S>                                                                <C>                  <C>   
1999                                                               $ 5,197              $2,766
2000                                                                 4,485               1,819
2001                                                                 3,768               1,185
2002                                                                 3,259               1,043
2003                                                                 3,120                 934
Thereafter                                                          19,889               1,074
                                                          ----------------    -----------------
                                                          
Total minimum lease payments                                       $39,718               8,821
                                                          =================
Less amount representing interest                                                        1,405
                                                                              -----------------
Present value of minimum capital lease payments                                          7,416
Less current installments                                                                2,261
                                                                              =================
                                                                                        $5,155
                                                                              =================

</TABLE>

         Operating lease  commitments of  approximately  $5.2 million related to
the  Company's  32 retail  outlets  have been  excluded  from the above  amounts
because these leases were assumed by the buyer in a November 1998 transaction in
which all of the retail outlets were sold to an unrelated third party.

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

                                    October 3,         September 27,
                                       1998                1997
                                 -----------------    ----------------

Machinery and equipment                    $6,805              $2,893
Accumulated amortization                    4,834               1,588


         Amortization  of assets  under  capital  leases  has been  included  in
depreciation.

         Total  rental  expense for operating  leases for 1998,  1997,  and 1996
was $2.4  million,  $465,000  and $859,000, respectively.


7.  INCOME TAXES

         The Company  accounts  for income taxes under FASB  Statement  No. 109,
"Accounting  for  Income  Taxes  (FASB  109)."  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.

         For financial reporting  purposes,  income before income taxes includes
the following components:
<TABLE>
<CAPTION>

                                                      Year Ended
                               ----------------------------------------------------------
                                     1998                1997                 1996
                               -----------------    ----------------    -----------------
<S>                                     <C>                 <C>                   <C>   
Domestic                                $18,939             $13,176               $7,916
Costa Rica                               (1,791)                 --                   --
Other foreign                               135                  --                   --
                               =================    ================    =================
                                        $17,283             $13,176               $7,916
                               =================    ================    =================


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

                                                      Year Ended
                               ----------------------------------------------------------
                                     1998                1997                 1996
                               -----------------    ----------------    -----------------
Current:
   Federal                               $4,132              $4,143               $2,713
   Costa Rica                                --                  --                   --
   Other foreign                             39                  --                   --
   State                                    340                 378                  236
                               -----------------    ----------------    -----------------
                                          4,511               4,521                2,949
Deferred:
   Federal                                1,962                 365                (188)
   Foreign                                   --                  --                   --
   State                                      8                  21                 (16)
                               -----------------    ----------------    -----------------
                                          1,970                 386                (204)
                               =================    ================    =================
                                         $6,481              $4,907               $2,745
                               =================    ================    =================
</TABLE>


         The  reconciliation  of  income  taxes  computed  at the  U.S.  Federal
statutory tax rate to the Company's income tax provision is as follows:
<TABLE>
<CAPTION>

                                                             Year Ended
                                      ---------------------------------------------------------
                                           1998                 1997                1996
                                      ----------------    -----------------   -----------------

<S>                                            <C>                  <C>                 <C>   
Income tax expense at Federal
   statutory rate (35% in 1998,
   34% in 1997 and 1996)                       $6,049               $4,480              $2,691
State taxes, net of Federal
   tax benefit                                    221                  348                 144
Losses of foreign subsidiaries                    628                   --               (162)
Amortization of goodwill                          154                    4                  48
Unrepatriated foreign earnings                  (488)                   --                  --
Other                                            (83)                   75                  24
                                      ----------------    -----------------   -----------------
                                               $6,481               $4,907              $2,745
                                      ================    =================   =================
</TABLE>

         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.  As a result of the
Company's  acquisition  of  Savane,  as  described  in Note 8, the  Company  has
recorded a U.S. Federal and State deferred tax liability of  approximately  $4.3
million as of October 3, 1998, in connection with the undistributed  earnings of
the Company's  foreign  subsidiaries.  Accordingly,  upon  distribution of these
earnings in the form of dividends or otherwise,  the Company would be subject to
both U.S.  income taxes  (subject to an adjustment  for foreign tax credits) and
withholding taxes payable to the various foreign countries.

         The temporary differences that give rise to significant portions of the
deferred  tax assets and  liabilities  as of October 3, 1998 and  September  28,
1997, respectively, are presented below:
<TABLE>
<CAPTION>

                                                       October 3,         September 27,
                                                          1998                 1997
                                                     ----------------    -----------------
<S>                                                          <C>                    <C>
Deferred tax assets:
    Inventory                                                 $2,801                $ 962
    Accounts receivable                                          257                  233
    U.S. Federal NOL carryforwards                             6,924                   --
    Foreign NOL carryforwards                                  1,862                   --
    Tax credits                                                  857                   --
    Accrued exit costs - U.S.                                  3,697                   --
    Accrued exit costs - foreign                               2,174                   --
    Other accrued expenses and reserves                        3,115                  351
Deferred tax liabilities:
    Depreciation                                             (2,177)                (431)
    Unrepatriated foreign earnings                           (4,291)                   --
    Trademarks                                                (5,514                   --
    Other items                                              (2,859)                 (51)
                                                     ----------------    -----------------
Net deferred tax asset                                         6,846                1,064
Valuation allowance                                          (2,591)                   --
                                                     ================    =================
Deferred tax asset, net of valuation allowance                $4,255               $1,064
                                                     ================    =================

Classified as follows:
    Current asset                                             $9,372               $1,495
    Non-current liability                                    (5,117)                (431)
                                                     ================    =================
                                                              $4,255               $1,064
                                                     ================    =================
</TABLE>

         SFAS 109  requires a valuation  allowance  to reduce the  deferred  tax
assets reported 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 the  fiscal  year  ended  October  3,  1998,  management  determined  that a
valuation  allowance  of $2.6  million was  necessary to reduce the deferred tax
assets  relating to certain  foreign net operating loss  carryforwards,  capital
loss  carryforwards,  foreign tax credit  carryforwards  and other  accruals not
expected to result in a future realizable benefit.

         At October 3, 1998,  the  Company's  United  Kingdom  subsidiary  had a
foreign operating loss of $4.5 million which carries forward  indefinitely.  For
domestic purposes,  the Company has Federal net operating loss carryforwards for
tax purposes of approximately  $18.4 million which will expire as follows:  $6.8
million  in 2009,  $3.3  million  in 2011,  and $8.3  million  in 2017.  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  evaluation of the need for a
valuation allowance.  The Company has AMT credit carryforwards of $298,000 which
carry  forward  indefinitely.  In  addition,  the Company has foreign tax credit
carryforwards  of  approximately   $559,000  to  offset  future  U.S.  taxes  on
repatriated  foreign income.  These foreign tax credit  carryforwards  expire in
2001.


8.  ACQUISITION OF SAVANE INTERNATIONAL CORP.

         The Company completed the acquisition of Savane on June 10, 1998. Total
purchase price, including cash paid for common stock acquired, cash paid for the
fair value of outstanding stock options,  and fees and expenses incurred to date
amounted to $89.8 million.

         The  acquisition  has been  accounted for using the purchase  method of
accounting  and the  Savane  results of  operations  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 is $54.7
million.  Additional  exit  activity  and further  analysis is  currently  being
performed which could cause this amount to be adjusted. The preliminary purchase
price in excess of net assets  acquired of $35.1  million  will be  allocated to
goodwill.
The goodwill, is being amortized over a period of 30 years.

         Subsequent to the acquisition,  the Company began performing a thorough
analysis of Savane's  operations and developed a plan to exit certain activities
and terminate  certain  personnel.  The major activities to date include,  among
other things,  elimination of redundant personnel,  closure of two manufacturing
facilities in Costa Rica,  closure of a manufacturing  facility and an inventory
consolidation  warehouse in Mexico,  closure of a storage facility in Texas, and
the disposal of certain equipment and other non-operating  assets. As of October
3, 1998,  the Company has accrued  approximately  $3.3  million  related to exit
costs which primarily  consist of estimates lease  termination costs and related
expenses. Management continues to evaluate certain acquired facilities and other
long-lived  assets for  compatibility  with the  Company's  long range  business
plans. Any additional exit costs or changes in the carrying value of assets will
increase or decrease  goodwill until the Company's exit activities are finalized
by June 1999.

         The two manufacturing facilities in Costa Rica, including other movable
assets,  are included in other assets.  The Company has valued these assets held
for sale at estimated net realizable value based on local market  conditions and
expects to dispose of these assets in Fiscal 2000.

         The unaudited pro forma results  presented below include the effects of
the acquisition as if it had been consummated at the beginning of the year prior
to  acquisition.  The unaudited  pro forma  financial  information  below is not
necessarily  indicative of either  future  results of operations or results that
might have been achieved had the acquisition  been  consummated at the beginning
of the year prior to acquisition.

                                 October 3,         September 27,
                                    1998                 1997
                               ----------------    -----------------

Net sales                             $448,795             $425,411
Net income (loss)                      (3,184)                (898)
Earnings (loss) per share              $(0.42)              $(0.15)


9.  COMMITMENTS AND CONTINGENCIES

         As of October 3, 1998, the Company had  approximately  $12.8 million of
outstanding  trade  letters of credit  with  various  expiration  dates  through
February 1999.

         On March 21, 1997,  Levi Straus & Co.  brought suit against the Company
in United States  District Court for the Northern  District of  California.  The
complaint  alleges,  among other  things,  that several  marks in the  Company's
family of Flyers(TM) trademarks and certain trade dress used in the labeling and
packaging of the Company's  Flyers(TM) and Bay to Bay(R) products  infringe upon
certain of plaintiff's proprietary trademark and trade dress rights in violation
of federal Lanham Act and California law. The complaint seeks injunctive relief,
as well as treble damages and attorneys' fees. Levi Strauss & Co. has also filed
opposition  proceedings in the United States Patent and Trademark Office against
the Company's  trademark  applications for two marks in the Flyers(TM) family of
marks.  These opposition  proceedings have been suspended pending  resolution of
the  litigation.  In addition,  plaintiff  had  indicated  that it believes that
certain  trade dress used in the labeling and  packaging of the  Company's  Bill
Blass(R)   brand  dress  slacks  also  infringes  upon  certain  of  plaintiff's
proprietary trade dress rights. In an attempt to limit the Company's  liability,
if any, with respect to such alleged infringement,  the Company has unilaterally
altered the  trademark  and trade dress which are currently the subjects of this
litigation. The Company previously reported that the parties appeared to be very
close  to  finalizing  a  settlement  agreement;  however,  a  final  settlement
agreement  was not  ultimately  agreed  upon and the parties  have  re-commenced
litigation  activities.  The parties are continuing settlement discussions while
the litigation  ensues.  The Company intends to vigorously  defend these claims,
but  remains  open  to  reasonable  settlement  terms.  Given  the  vagaries  of
litigation,  the  Company  cannot  predict  the  outcome  of this  suit.  If the
plaintiff  prevails,  the outcome  could have a material  adverse  effect on the
Company's business, results of operations or financial condition.

         The Company is not  involved in any other legal  proceedings  which the
Company  believes could reasonably be expected to have a material adverse effect
on the Company's business, financial position or results of operations.


10.  EMPLOYEE BENEFIT PLANS

Defined Contribution Plans

         The Company has two separate  401(k)  profit  sharing plans 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 1998,  1997, and 1996, the Company,  recorded
expenses of $264,000,  $114,000,  and $112,000,  respectively,  related to these
plans.


Defined Benefit Plan

         Under the defined  benefit plan which covers certain Savane cutting and
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 year ended
October 3, 1998, included the following components:

                                                        1998
                                                   ----------------

Service cost-benefits earned during the period               $ 36
Interest cost on projected benefit obligation                 516
Actual return on plan assets                                (711)
Net amortization and deferral                                  61
                                                   ================
    Net periodic pension cost                                 $98
                                                   ================


         The following  table sets forth the funded status at October 3, 1998 of
the defined benefit plan:

<TABLE>
<CAPTION>
                                                                           1998
                                                                     -----------------
<S>                                                                            <C>
ACTUARIAL PRESENT VALUE OF BENEFIT OBLIGATION:
Accumulated benefit obligation                                                 $8,258

Projected benefit obligation                                                   $8,258
Plan assets at market value                                                     8,335
                                                                     -----------------
    Funded status                                                                  77
Unrecognized transition liability being recognized over
    average future service of plan participants                                   274
Unrecognized net loss from past experience different from
    that assumed and effects of changes in assumptions                          1,517
                                                                     -----------------

    Prepaid expense                                                            $1,868
                                                                     =================

</TABLE>

         In  determining  the  benefit  obligations  and  service  cost  of  the
Company's  defined benefit plan in 1998, a weighted average discount rate and an
expected long-term rate of return on plan assets of 7.0% and 9.5%, respectively,
were used.

         This plan is associated  with Savane and was assumed in the acquisition
of Savane on June 10, 1998.


11.  STOCK OPTION PLANS

         In December  1996 and January 1997,  the Board of Directors  granted to
key members of management,  non-qualified  options to purchase  60,750 shares of
common  stock of the  Company at an  exercise  price of $10.50  per  share,  its
estimated fair value at the date of grant.

         The Board of Directors has adopted two stock option plans, which became
effective on October 28,  1997.  The  Employee  Stock Option Plan (the  Employee
Plan) and the  Non-Employee  Director  Stock  Option  Plan (the  Director  Plan)
reserve 700,000 shares of common stock for future issuance under the plans.  The
per share  exercise  price of each stock option  granted under the plans will be
equal to the quoted fair market value of the stock on the date of grant.

         All  options  granted  have  10-year  terms and vest and  become  fully
exercisable at the end of three years of continued employment.

         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 (Statement  123),  "Accounting for Stock Based  Compensation,"
requires  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  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 1998 and 1997, respectively: risk-free interest rate of 4.1% and
5.7%; a dividend yield of 0% and 0%;  volatility  factor of the expected  market
price of the  Company's  common  stock of .92 and  .78;  and a  weighted-average
expected life of the option of 5 years and 5 years.

         The  Black-Scholes  option  valuation  model was  developed  for use in
estimating the fair value of traded  options which have no vesting  restrictions
and are fully  transferable.  In addition,  option  valuation models require the
input of highly  subjective  assumptions  including  the  expected  stock  price
volatility.  Because the Company's  employee stock options have  characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially  affect the fair value estimate,  in
management's  opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

         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 1998 and 1997 is (in thousands except for earnings per
share information):

                                      October 3,        September 27,
                                         1998                1997
                                   -----------------   -----------------

Pro forma net income                        $10,235              $8,230
Pro forma earnings per share                  $1.36               $1.37


         A  summary  of  the  Company's  stock  option  activity,   and  related
information follows:
<TABLE>
<CAPTION>
                                                      1998                                   1997
                                       ------------------------------------   ------------------------------------
                                                        Weighted Average                       Weighted Average
                                                         Exercise Price                         Exercise Price
                                        Options            Per Share           Options            Per Share
                                       -----------    ---------------------   -----------    ---------------------

<S>                                      <C>                        <C>           <C>                      <C>
Outstanding-beginning of year              61,000                   $10.50            --                      N/A
Granted                                   452,000                    13.84        61,000                   $10.50
Exercised                                      --                       --            --                      N/A
Canceled/expired                         (26,000)                    11.88            --                      N/A
                                       ===========    =====================   ===========    =====================
Outstanding-end of year                   487,000                   $13.53        61,000                   $10.50
                                       ===========    =====================   ===========    =====================

Weighted-average fair value of
    Options granted during the year                                  $5.17                                  $4.13

</TABLE>

  Outstanding         Exercisable        Exercise Price
    Options             Options         Range Per Share
-----------------    --------------    -------------------

          64,000            19,000        $10.25 - $10.50
         225,000                --        $12.00
         128,000                --        $13.20 - $14.00
          70,000            15,000        $19.63 - $23.38
=================    ==============
         487,000            34,000
=================    ==============


         The  weighted-average  remaining  contractual  life of the  outstanding
options is nine years.


12.  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

         The  following  is a summary  of the  unaudited  quarterly  results  of
operations for October 3, 1998 and September 27, 1997:
<TABLE>
<CAPTION>

                                                                                Net Income Per
                                 Net            Gross             Net           Common Share -
                                Sales           Profit          Income              Diluted
                             ------------    -------------    ------------    --------------------
<S>     <C>                      <C>               <C>             <C>                      <C>
October 3, 1998
    First Quarter                $35,094           $8,070          $1,305                   $0.18
    Second Quarter                47,373           11,701           3,253                    0.43
    Third Quarter                 69,823           17,949           3,090                    0.40
    Fourth Quarter               111,686           31,169           3,154                    0.41

September 27, 1997
    First Quarter                $30,727           $6,745           $ 919                   $0.15
    Second Quarter                40,632           10,024           2,573                    0.43
    Third Quarter                 44,249           10,512           2,675                    0.45
    Fourth Quarter                36,084            8,774           2,102                    0.35

</TABLE>



<PAGE>


13.  GEOGRAPHIC SEGMENT INFORMATION

         The  Company is engaged in one  business  segment.  This  includes  the
design,  manufacture,  distribution and sale of men's,  young men's,  boys', and
women's apparel in the United States and certain foreign countries,  principally
in Europe  and the South  Pacific.  The  following  table  presents  information
regarding  geographic  segments for 1998, 1997, and 1996.  Transfers between the
United States and foreign areas are recorded at normal selling prices. Operating
profit is total revenue less operating expenses.  In computing operating profit,
general  corporate  expenses,  interest  expense  and  income  taxes  have  been
excluded.
<TABLE>
<CAPTION>

                                                  1998                 1997                 1996
                                            -----------------    -----------------    -----------------

<S>                                                 <C>                  <C>                  <C>
NET SALES:
United States to unaffiliated customers             $251,250             $151,692             $117,355
Transfers between areas                                   --                   --                   --
                                            -----------------    -----------------    -----------------
     Total United States                             251,250              151,692              117,355
Europe                                                 8,612                   --                   --
South Pacific                                          4,114                   --                   --
Adjustments and eliminations                              --                   --                   --
                                            =================    =================    =================
     Total                                          $263,976             $151,692             $117,355
                                            =================    =================    =================

OPERATING PROFIT (LOSS):
United States                                        $25,455              $16,612              $11,034
Europe                                                  (15)                   --                   --
South Pacific                                            245                   --                   --
Adjustments and eliminations                              --                   --                   --
                                            -----------------    -----------------    -----------------
     Total                                            25,685               16,612               11,034

General corporate expenses                             1,536                  537                  620
Interest expense, net                                  6,866                2,899                2,498
                                            =================    =================    =================
     Income (loss) before income taxes               $17,283              $13,176               $7,916
                                            =================    =================    =================

IDENTIFIABLE ASSETS:
United States                                       $272,663              $69,658              $63,415
Europe                                                11,227                   --                   --
Far East and the South Pacific                        19,791                   --                   --
Adjustments and eliminations                         (6,205)                   --                   --
                                            =================    =================    =================
     Total                                          $297,476              $69,658              $63,415
                                            =================    =================    =================

</TABLE>

         Included in the Company's consolidated balance sheet at October 3, 1998
were net assets  located in Mexico and Costa Rica  totaling  approximately  $5.0
million and $5.6 million, respectively.

         In 1998, two customers accounted for approximately 24% and 11% of sales
in  the  United  States.   In  fiscal  1997,   three  customers   accounted  for
approximately  29%, 19% and 11% of sales in the United  States.  In fiscal 1996,
three customers  accounted for  approximately  26%, 17%, and 14% of sales in the
United States.


14.  SUPPLEMENTAL COMBINED CONDENSED FINANCIAL

         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 balance sheet as
of  October  3,  1998  and the  supplemental  combined  condensed  statement  of
operations  and  cash  flows  for the  year  ended  October  3,  1998.  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  has
determined that they are not material to investors.

<TABLE>
<CAPTION>

                                                                                  1998
                                              -----------------------------------------------------------------------------
                                                                               Non-
Statement of Operations                        Parent       Guarantor        Guarantor
                                                Only       Subsidiaries     Subsidiaries    Eliminations      Consolidated
                                              ---------    -------------    ------------    --------------    -------------

<S>                                           <C>               <C>             <C>              <C>              <C>     
Net sales                                     $174,839          $76,694         $15,690          ($3,247)         $263,976
Gross profit                                    41,595           24,572           2,722                --           68,889
Operating income (loss)                         18,133            9,319         (1,767)                --           25,685
Interest, income taxes and other, net            9,070            6,686            (77)             (796)           14,883
Net income (loss)                                9,063            2,633         (1,690)               796           10,802

</TABLE>
<TABLE>
<CAPTION>

                                                                                  1997
                                              -----------------------------------------------------------------------------
                                                                               Non-
Statement of Operations                        Parent       Guarantor        Guarantor
                                                Only       Subsidiaries     Subsidiaries     Eliminations     Consolidated
                                              ---------    -------------    ------------     -------------    --------------

<S>                                           <C>                  <C>             <C>            <C>              <C>     
Net sales                                     $151,555             $324            $ --           $ (187)          $151,692
Gross profit                                    36,124              118              --             (187)            36,055
Operating income (loss)                         16,582               30              --                --            16,612
Interest, income taxes and other, net            8,330               13              --                --             8,343
Net income (loss)                                8,252               17              --                --             8,269

</TABLE>
<TABLE>
<CAPTION>

                                                                                  1996
                                              -----------------------------------------------------------------------------
                                                                               Non-
Statement of Operations                        Parent       Guarantor        Guarantor
                                                Only       Subsidiaries     Subsidiaries     Eliminations     Consolidated
                                              ---------    -------------    ------------     -------------    --------------

<S>                                           <C>                  <C>             <C>            <C>              <C>     
Net sales                                     $117,273             $192            $ --           $ (110)          $117,355
Gross profit                                    26,309               24              --             (110)            26,223
Operating income (loss)                         11,112             (78)              --                --            11,034
Interest, income taxes and other, net            5,893             (30)              --                --             5,863
Net income (loss)                                5,219             (48)              --                --             5,171

</TABLE>
<TABLE>
<CAPTION>

                                                                         As of October 3, 1998
                                              ----------------------------------------------------------------------------
                                                                            Non-Guarantor
Balance Sheet                                  Parent       Guarantor       Subsidiaries
                                                Only       Subsidiaries                     Eliminations     Consolidated
                                              ---------    -------------    ------------    -------------    -------------

<S>                                            <C>               <C>            <C>              <C>              <C>    
ASSETS
Cash                                           $  120            $  631         $ 1,346          $    --          $ 2,097
Accounts receivable, net                       31,655            35,120           6,362            (782)           72,355
Inventories                                    26,354            46,717          11,028               --           84,099
Other current assets                            3,205            11,534             777            (470)           15,046
                                              ---------    -------------    ------------    -------------    -------------
         Total current assets                  61,334            94,002          19,513          (1,252)          173,597

Property, plant and equipment, net             22,584            22,288           7,125               --           51,997
Investment in subsidiaries and other assets   175,100           109,078         (2,909)        (209,387)           71,882
                                              ---------    -------------    ------------    -------------    -------------
         Total asset                          $259,018         $225,368         $23,729       $(210,639)         $297,476
                                              =========    =============    ============    =============    =============
</TABLE>
<TABLE>
<CAPTION>

LIABILITIES  AND STOCKHOLDERS' EQUITY
<S>                                            <C>              <C>              <C>             <C>              <C>   
Current installments of long-term debt and
    capital leases                             $  587           $ 2,505           $  --          $    --          $ 3,092
Accounts payable and accrued liabilities       24,422            33,410           6,529          (1,253)           63,108
                                              ---------    -------------    ------------    -------------    -------------
       Total current liabilities               25,009            35,915           6,529          (1,253)           66,200
Long-term debt and noncurrent installments
    of capital leases                         184,488            62,334           2,267         (77,595)          171,494
Other noncurrent liabilities                      384             8,154             280               --            8,818
Stockholders' equity                           49,137           118,965          14,653        (131,791)           50,964
                                              =========    =============    ============    =============    =============
       Total liabilities and stockholders'    $259,018         $225,368         $23,729       $(210,639)         $297,476
    equity
                                              =========    =============    ============    =============    =============
</TABLE>


<TABLE>
<CAPTION>


                                                                       As of September 27, 1997
                                              ----------------------------------------------------------------------------
                                                                            Non-Guarantor
Balance Sheet                                  Parent       Guarantor       Subsidiaries
                                                Only       Subsidiaries                     Eliminations     Consolidated
                                              ---------    -------------    ------------    -------------    -------------

<S>                                            <C>                 <C>             <C>              <C>             <C>  
ASSETS
Cash                                            $  65              $ 51            $ --             $ --            $ 116
Accounts receivable, net                       24,979                 2              --               --           24,981
Inventories                                    21,312                39              --               --           21,351
Other current assets                            2,273                34              --               --            2,307
                                              ---------    -------------    ------------    -------------    -------------
         Total current assets                  48,629               126              --               --           48,755

Property, plant and equipment, net             20,259                24              --               --           20,283
Investment in subsidiaries and other assets       620                --              --               --              620
                                              ---------    -------------    ------------    -------------    -------------
         Total asset                          $69,508             $ 150            $ --             $ --          $69,658
                                              =========    =============    ============    =============    =============
</TABLE>

<TABLE>
<CAPTION>

LIABILITIES  AND STOCKHOLDERS' EQUITY
<S>                                            <C>               <C>               <C>              <C>            <C> 
Current installments of long-term debt and
    capital leases                             $1,335             $  --            $ --             $ --           $1,335
Accounts payable and accrued liabilities       16,976               210              --               --           17,186
                                              ---------    -------------    ------------    -------------    -------------
       Total current liabilities               18,311               210              --               --           18,521
Long-term debt and noncurrent installments
    of capital leases                          24,055                --              --               --           24,055
Other noncurrent liabilities                      431                --              --               --              431
Stockholders' equity                           26,711              (60)              --               --           26,651
                                              =========    =============    ============    =============    =============
       Total liabilities and stockholders'    $69,508              $150            $ --             $ --          $69,658
    equity
                                              =========    =============    ============    =============    =============

</TABLE>
<TABLE>
<CAPTION>
                                                                                  1998
                                              -----------------------------------------------------------------------------
                                                                               Non-
Statement of Cash Flows                        Parent       Guarantor        Guarantor
                                                Only       Subsidiaries     Subsidiaries    Eliminations      Consolidated
                                              ---------    -------------    ------------    --------------    -------------

<S>                                            <C>             <C>             <C>                 <C>           <C>      
Net cash used by operating activities          $ 2,117         $(1,396)        $(3,119)            $  796        $ (1,602)
Net cash used by investing activities         (104,120)         (1,106)           (211)             9,327         (96,110)
Net cash provided (used) by financing          101,999          (2,761)           1,251             (796)           99,693
activities
Net increase (decrease) in cash                    (4)          (5,263)         (2,079)             9,327            1,981
Cash, beginning of year                            124            5,893           3,426           (9,327)              116
Cash, end of year                                  120              630           1,347                --            2,097

</TABLE>


<TABLE>
<CAPTION>

                                                                                  1997
                                              -----------------------------------------------------------------------------
                                                                               Non-
Statement of Cash Flows                        Parent       Guarantor        Guarantor
                                                Only       Subsidiaries     Subsidiaries    Eliminations      Consolidated
                                              ---------    -------------    ------------    --------------    -------------

<S>                                            <C>               <C>              <C>               <C>            <C>    
Net cash provided by operating activities      $ 6,995           $ (44)           $  --             $  --          $ 6,951
Net cash used by investing activities          (5,082)              (2)              --                --          (5,084)
Net cash used by financing activities          (2,012)               --              --                --          (2,012)
Net decrease in cash                              (99)             (46)              --                --            (145)
Cash, beginning of year                            209               52              --                --              261
Cash, end of year                                  110                6              --                --              116

</TABLE>
<TABLE>
<CAPTION>

                                                                                  1996
                                              -----------------------------------------------------------------------------
                                                                               Non-
Statement of Cash Flows                        Parent       Guarantor        Guarantor
                                                Only       Subsidiaries     Subsidiaries    Eliminations      Consolidated
                                              ---------    -------------    ------------    --------------    -------------

<S>                                            <C>                  <C>            <C>               <C>          <C>     
Net cash provided by operating activities      $ 12,510             $41            $ --              $ --         $ 12,551
Net cash used by investing activities           (9,885)              --              --                --          (9,885)
Net cash used by financing activities           (2,473)              --              --                --          (2,473)
Net decrease in cash                               152               41              --                --              193
Cash, beginning of year                             58               10              --                --               68
Cash, end of year                                  210               51              --                --              261


</TABLE>

<PAGE>

<TABLE>
<CAPTION>                         
                                      TROPICAL SPORTSWEAR INT'L CORPORATION

                                                    SCHEDULE II
                                         VALUATION AND QUALIFYING ACCOUNTS
                                                  (In Thousands)


Reserve for returns and allowances and bad debts:

                                                     Additions
                                           ------------------------------
                           Balance at      Charged to       Charged to                          Balance
                           Beginning        Costs and          Other                            at End
                           of Period        Expenses        Accounts(1)       Deductions       of Period
                          -------------    ------------    --------------    -------------    ------------

Year Ended:

<S>                               <C>           <C>                  <C>           <C>               <C>       
September 28, 1996                $482          $3,022               ---           $2,980            $524
                                  ====          ======               ===           ======            ====

September 27, 1997                $524          $2,457               ---           $2,334            $647
                                  ====          ======               ===           ======            ====

October 3, 1998                   $647          $4,697              $985           $5,043          $1,286
                                  ====          ======              ====           ======          ======

</TABLE>


<TABLE>
<CAPTION>


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(1)       Deductions       of Period
                          -------------    ------------    --------------    -------------    ------------

Year Ended:

<S>                             <C>               <C>               <C>              <C>           <C>            
September 28, 1996              $1,780            $798               ---             $378          $2,200
                                ======            ====               ===             ====          ======

September 27, 1997              $2,200            $756               ---             $756          $2,200
                                ======            ====               ===             ====          ======

October 3, 1998                 $2,200            $800           $11,336           $5,192          $9,144
                                ======            ====           =======           ======          ======


Deferred tax asset valuation allowance:

                                                     Additions
                                           ------------------------------
                           Balance at      Charged to       Charged to                          Balance
                           Beginning        Costs and          Other                            at End
                           of Period        Expenses        Accounts(1)       Deductions       of Period
                          -------------    ------------    --------------    -------------    ------------

Year Ended:

<S>                             <C>               <C>               <C>              <C>           <C>            
September 28, 1996               ---               ---               ---             ---            ---
                                ======            ====               ===             ====          ======

September 27, 1997               ---               ---               ---             ---            ---
                                ======            ====               ===             ====          ======

October 3, 1998                  ---               ---            $2,591             ---           $2,591
                                ======            ====           =======           ======          ======


(1)   Represents balance acquired as a result of the acquisition of Savane International Corp. on June 10, 1998.





</TABLE>


<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned,  thereunto duly authorized, in the City of Tampa,
and State of Florida, on this 23rd day of December, 1998.

                                          TROPICAL SPORTSWEAR INT'L CORPORATION
                                          (Registrant)


                                          By:    /s/ William W. Compton 
                                                 William W. Compton
                                                 Principal Executive Officer


                                          By:    /s/ Michael Kagan
                                                 Michael Kagan
                                                 Principal Financial Officer


                                          By:    /s/ N. Larry McPherson
                                                 N. Larry McPherson
                                                 Principal Accounting Officer

         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 William W. Compton and Michael
Kagan 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.
<TABLE>
<CAPTION>

              Signature                               Title                                   Date

         <S>                                    <C>                                   <C> 
         /s/  William W. Compton                Chairman of the Board                 December 23, 1998
         William W. Compton                     Chief Executive Officer
                                                and Director
  
         /s/  Richard J. Domino                 President                             December 23, 1998
         Richard J. Domino

         /s/  Michael Kagan                     Executive Vice President,             December 23, 1998
         Michael Kagan                          Chief Financial Officer,
                                                and Secretary and Director

         /s/  Jesus Alvarez-Morodo              Director                              December 23, 1998
         Jesus Alvarez-Morodo

         /s/ Eloy S. Vallina-Laguera            Director                              December 23, 1998
         Eloy S. Vallina-Laguera

         /s/  Leslie J. Gillock                 Director                              December 23, 1998
         Leslie J. Gillock

         /s/  Donald H. Livingstone             Director                              December 23, 1998
         Donald H. Livingstone

         /s/  Leon H. Reinhart                  Director                              December 23, 1998
         Leon H. Reinhart

         /s/  Richard C. Allender               Director                              December 23, 1998
         Richard C. Allender

         /s/  Charles J. Smith                  Director                              December 23, 1998
         Charles J. Smith

</TABLE>

<PAGE>


Index to Exhibits



Exhibit
Number                                   Description

   1.1            Purchase  Agreement  dated  June  18,  1998  between  Tropical
                  Sportswear   Int'l   Corporation  and  Prudential   Securities
                  Incorporated  (incorporated  by  reference  to Exhibit  1.1 to
                  Tropical Sportswear Int'l Corporation's Registration Statement
                  on Form S-4 filed August 20, 1998).
   2.1            Agreement and Plan of Merger dated May 1, 1998 among  Tropical
                  Sportswear Int'l  Corporation,  Foxfire  Acquisition Corp. and
                  Farah  Incorporated  (incorporated  by  reference  to  Exhibit
                  (c)(1) to Tropical  Sportswear  Int'l  Corporation's  Schedule
                  14D-1 filed May 8, 1998).
   2.2            Agreement  and Plan of Merger  dated  as  of  August 15,  1997
                  between  Tropical  Sportswear  Int'l  Corporation and  Apparel
                  International Group, Inc.(incorporated by reference to Exhibit
                  2.1 to Tropical Sportswear Int'l  Corporation's Annual  Report
                  on Form 10-K405 filed December 23, 1997).
   2.3            Agreement  and Plan of Merger  dated as of  October  23,  1997
                  among  Tropical   Sportswear   Int'l   Corporation,   Tropical
                  Acquisition Corporation and Tropical Sportswear  International
                  Corporation  (incorporated  by  reference  to  Exhibit  2.2 to
                  Tropical Sportswear Int'l Corporation's Annual
                  Report on Form 10-K405 filed December 23, 1997).
   2.4            Asset  Purchase  Agreement  dated  May 20,  1996  among  Farah
                  Incorporated,  Farah U.S.A, Inc., Galey & Lord, Inc. and Galey
                  & Lord Industries Inc.  (incorporated  by reference to Exhibit
                  10.57 to Farah  Incorporated's  Quarterly  Report on Form 10-Q
                  filed May 5, 1996).
   3.1            Amended  and  Restated  Articles  of Incorporation of Tropical
                  Sportswear Int'l  Corporation  (filed herewith).
   3.2            Amended  and  Restated  By-Laws  of Tropical  Sportswear Int'l
                  Corporation  (incorporated   by  reference  to  Exhibit 3.2 to
                  Tropical Sportswear Int'l Corporation's Registration Statement
                  on Form S-1 filed August 15, 1997).
   4.1            Specimen   Certificate   for  the  Common  Stock  of  Tropical
                  Sportswear Int'l Corporation  (incorporated  by  reference  to
                  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
                  Internacional, S.A. and Accel, S.A. de C.V.  (incorporated  by
                  reference  to  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            Exchange and  Registration  Rights  Agreement dated as of June
                  24, 1998 between  Tropical  Sportswear  Int'l  Corporation and
                  Prudential Securities Incorporated  (incorporated by reference
                  to Exhibit 4.3 to Tropical Sportswear Int'l Corporation's Form
                  S-4 filed August 20, 1998).
   4.4            Indenture dated as of June 24, 1998 among Tropical  Sportswear
                  Int'l  Corporation,  the Subsidiary  Guarantors named therein,
                  and  SunTrust  Bank,  Atlanta,  as  trustee  (incorporated  by
                  reference  to  Exhibit  4.4  to  Tropical   Sportswear   Int'l
                  Corporation's Form S-4 filed August 20, 1998).
   4.5            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)  (incorporated  by
                  reference  to  Exhibit  99.1  of  Tropical   Sportswear  Int'l
                  Corporation's Form 8-K dated November 13, 1998).
   10.1           Construction  and Term Loan Agreement  dated as of May 7, 1996
                  between Tropical  Sportswear Int'l  Corporation and SouthTrust
                  Bank of Alabama, National Association, as amended by Amendment
                  Nos. 1, 2, 3, 4, 5 and 6 (incorporated by reference to Exhibit
                  10.2 to Tropical Sportswear Int'l  Corporation's  Registration
                  Statement  on Form S-1 filed  August  15,  1997 and to Exhibit
                  10.2.1 to Tropical  Sportswear Int'l  Corporation's  Quarterly
                  Report on Form 10-Q filed February 11, 1998).
   10.2           Retail  -    Domestic  Collection  Factoring  Agreement  dated
                  October 1, 1995, between Heller  Financial,  Inc. and Tropical
                  Sportswear  Int'l  Corporation  (incorporated  by reference to
                  Exhibit  10.3  of  Tropical  Sportswear   Int'l  Corporation's
                  Registration  Statement on Form S-1 filed August 15, 1997).


<PAGE>


Index to Exhibits (continued)



Exhibit
Number                                          Description

   10.3           Factoring  Agreement   dated  as  of  June  9,  1998   between
                  NationsBanc  Commercial  Corporation  and  Farah  Incorporated
                  (incorporated  by  reference  to  Exhibit  10.3  to   Tropical
                  Sportswear  Int'l Corporation's Registration Statement on Form
                  S-4 filed August 20, 1998).
   10.4           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  (incorporated  by reference to Exhibit
                  10.4 to Tropical Sportswear Int'l  Corporation's  Registration
                  Statement on Form S-4 filed August 20, 1998).
   10.5           First  Amendment  to the  Loan  and  Security  Agreement dated
                  July 9,  1998  (incorporated  by  reference to Exhibit 10.5 to
                  Tropical Sportswear Int'l Corporation's Registration Statement
                  on Form S-4 filed August 20, 1998).
   10.6           Employment   Agreement  effective  November  3,  1997  between
                  William W. Compton and Tropical  Sportswear Int'l  Corporation
                  (incorporated   by  reference  to  Exhibit  10.4  to  Tropical
                  Sportswear Int'l  Corporation's  Annual Report on Form 10-K405
                  filed December 23, 1997).
   10.7           Employment   Agreement  effective  November  3,  1997  between
                  Michael  Kagan  and  Tropical   Sportswear  Int'l  Corporation
                  (incorporated   by  reference  to  Exhibit  10.5  to  Tropical
                  Sportswear Int'l  Corporation's  Annual Report on Form 10-K405
                  filed December 27, 1997).
   10.8           Employment   Agreement  effective  November  3,  1997  between
                  Richard J. Domino and Tropical  Sportswear  Int'l  Corporation
                  (incorporated   by  reference  to  Exhibit  10.6  to  Tropical
                  Sportswear Int'l  Corporation's  Annual Report on Form 10-K405
                  filed December 27, 1997).
   10.9           Employment  Agreement  dated May 1, 1998  between  Richard  C.
                  Allender   and   Tropical    Sportswear   Int'l    Corporation
                  (incorporated  by  reference  to  Exhibit  (c)(5) to  Tropical
                  Sportswear  Int'l  Corporation's  Schedule  14D-1 filed May 8,
                  1998).
   10.10          Employment Agreement  dated June 9, 1998  between  Russell  G.
                  Gibson  and Farah  Incorporated  (incorporated by reference to
                  Exhibit 10.11 to Tropical  Sportswear Int'l Corporation's Form
                  S-4 filed August 20, 1998).
   10.11          Employment  Agreement  dated  June  9, 1998  between  Gary  J.
                  Kernaghan  and  Farah  Incorporated (incorporated by reference
                  to Exhibit  10.12 to Tropical  Sportswear Int'l  Corporation's
                  Form S-4 filed August 20, 1998)
   10.12          Employment   Agreement   dated  June  9,  1998  between  Polly
                  Vaughn  and  Farah  Incorporated (incorporated by reference to
                  Exhibit 10.13 to Tropical Sportswear Int'l  Corporation's Form
                  S-4 filed August 20, 1998).
   10.13          Employment  Agreement  dated June 9, 1998  between  Michael R.
                  Mitchell  and  Farah  Incorporated (incorporated by  reference
                  to Exhibit  10.14 to Tropical  Sportswear Int'l  Corporation's
                  Form S-4 filed August 20, 1998).
   10.14          Employment  Agreement  dated   June 9,  1998  between  Gilbert
                  Martinez  and  Farah  Incorporated  (incorporated by reference
                  to  Exhibit 10.15 to Tropical  Sportswear Int'l  Corporation's
                  Form S-4 filed August 20, 1998).
   10.15          Employment  Agreement  dated  June 9, 1998  between  Jackie L.
                  Boatman  and Farah  Incorporated (incorporated by reference to
                  Exhibit 10.16 to Tropical Sportswear Int'l  Corporation's Form
                  S-4 filed August 20, 1998).
   10.16          Employee  Stock  Option  Plan  of  Tropical  Sportswear  Int'l
                  Corporation  (incorporated by reference  to  Exhibit  10.7  to
                  Tropical Sportswear Int'l Corporation's Registration Statement
                  on Form S-1 filed August 15, 1997).
   10.17          Non-Employee Director Stock Option Plan of Tropical Sportswear
                  Int'l Corporation  (incorporated  by reference to Exhibit 10.8
                  to  Tropical  Sportswear   Int'l  Corporation's   Registration
                  Statement on Form S-1 filed August 15, 1997).
   10.18          Amended and Restated Farah Savings and  Retirement  Plan as of
                  January 1, 1991 (incorporated  by reference to Exhibit  10.125
                  to  Farah  Incorporated's  Annual  Report  on  Form 10-K filed
                  November 6, 1992).


<PAGE>


Index to Exhibits (continued)



Exhibit
Number                                    Description

   10.19          Addendum to Amended and Restated Farah Savings and  Retirement
                  Plan  dated  August 22, 1997  (incorporated  by  reference  to
                  Exhibit 10.20 to Tropical  Sportswear Int'l Corporation's Form
                  S-4 filed August 20, 1998).
   10.20          Amended and  Restated Farah  U.S.A.  Bargaining  Unit  Pension
                  Plan dated  December  31,  1994, effective  as of  January  1,
                  1990 (incorporated  by reference to  Exhibit 10.21 to Tropical
                  Sportswear  Int'l  Corporation's  Form  S-4  filed  August 20,
                  1998).
   10.21          Amendment to the Amended and Restated  Farah U.S.A. Bargaining
                  Unit  Pension  Plan  dated  December 13, 1995 (incorporated by
                  reference   to  Exhibit  10.22  to  Tropical  Sportswear Int'l
                  Corporation's Form S-4 filed August 20, 1998).
   10.22          Apparel  International  Group,  Inc.  1996  Stock  Option Plan
                  (incorporated  by  reference  to  Exhibit  10.9  to   Tropical
                  Sportswear Int'l Corporation's Registration  Statement on Form
                  S-1 filed August 15, 1997).
   11.1           Statement Regarding Computation of Per  Share  Earnings (filed
                  herewith).
   21.1           Subsidiaries  of  the  Registrant (incorporated  by  reference
                  to  Exhibit  21.1  to  Tropical Sportswear Int'l Corporation's
                  Form S-4 filed August 20, 1998).
   23.1           Consent of Ernst & Young LLP (filed herewith).
   24.1           Power of Attorney (included in Part IV of the Form 10-K).
   27.1           Financial Data Schedule (filed herewith).