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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    ---------

                                    FORM 10-K

                  FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
           SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(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 December 31, 1997

          |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
                             For the period from to
                         Commission File Number: 1-11812

                               STARTER CORPORATION
             (Exact name of registrant as specified in its charter)

                Delaware                                06-0872266
     (State or other jurisdiction           (I.R.S. Employer Identification No.)
   of incorporation or organization)

    370 James Street,  New Haven, CT                       06513
(Address of principal executive offices)                 (Zip Code)

       Registrant's telephone number, including area code: (203) 781-4000
           Securities registered pursuant to Section 12(b) of the Act:

  Title of each class                  Name of each exchange on which registered
  -------------------                  -----------------------------------------
  Common Stock, $.01 par value                    New York Stock Exchange

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

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [_] Yes [ ] 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 March 20, 1998, the aggregate market value of Common Stock held by
nonaffiliates of the registrant was $26,959,590.

As of March 20, 1998, 27,886,049 shares of Common Stock were outstanding.

Documents Incorporated by Reference. Parts of Registrant's Proxy Statement for
the Annual Meeting of stockholders to be held on May 19, 1998 are incorporated
by reference into Part III of this Form 10-K.

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<PAGE>

                               STARTER CORPORATION
                                  ANNUAL REPORT
                                  ON FORM 10-K

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

         PART I..............................................................1

ITEM 1.  Business........................................................... 1

ITEM 2.  Properties..........................................................9

ITEM 3.  Legal Proceedings...................................................9

ITEM 4.  Submission of Matters to a Vote of Security Holders.................10

         PART II.............................................................10

ITEM 5.  Market for Registrant's Common Stock and Related Stockholder 
         Matters.............................................................10

ITEM 6.  Selected Financial Data.............................................10

ITEM 7.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations...........................................12

ITEM 8.  Consolidated Financial Statements and Supplementary Data............19

ITEM 9.  Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure............................................39

         PART III........................................................... 40

ITEM 10. Directors and Executive Officers of the Registrant..................40

ITEM 11. Executive Compensation..............................................40

ITEM 12. Security Ownership of Certain Beneficial Owners and Management......40

ITEM 13. Certain Relationships and Related Transactions......................40

         PART IV............................................................ 41

ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.....41
<PAGE>

                                     PART I

ITEM 1.  Business

General

Starter Corporation was incorporated in 1971 under the laws of the State of
Connecticut. In 1989 the Company reorganized and became a Delaware corporation.
As used herein, the terms "Starter" and the "Company" refer to Starter
Corporation and its predecessors, subsidiaries and affiliates, unless the
context indicates otherwise.

Starter is a leading designer and marketer of quality apparel associated with
sports, leisure and entertainment. Starter is a premier licensee of apparel
bearing the names, logos and insignia of sports teams and leagues under licenses
granted by the major North American professional sports leagues: Major League
Baseball ("MLB"), the National Basketball Association ("NBA"), the National
Football League ("NFL") and the National Hockey League ("NHL"). The Company
believes that the Starter brand name and the "S-and-Star" logo have achieved
wide recognition through their association with prominent professional coaches,
managers, athletes and entertainers. Starter also is an apparel licensee for
approximately 150 colleges and universities in North America.

The Company sells its products to approximately 4,000 retail accounts throughout
the United States, to retailers in Europe through its subsidiary Starter Europe,
B.V., and to independent distributors in Europe and the Pacific Rim. In addition
to the Company's wholesale business, the Company's subsidiary, Starter Outlet
Stores, Inc., ("Outlet Stores") operates 30 outlet stores throughout the United
States to provide for an organized distribution of excess and noncarryover
merchandise. Approximately 90% of the Company's products, the majority of which
are produced in the Far East, are manufactured by independent contractors. The
Company has not experienced any major interruptions in product deliveries during
the last four years and believes that these foreign manufacturers have not
experienced difficulties in obtaining sufficient supplies of raw material in the
past. The Company, through its subsidiary Starter Galt, Inc., maintains a
250,000 square foot facility for distribution, screen printing and embroidery of
t-shirts and fleece in Cedar Rapids, Iowa. The Company believes it has good
relations with a number of suppliers of raw materials for its domestic
manufacturing operations; however, there can be no assurance that the adequacy
of the supply of material will continue.

The Company has benefited from the interest of consumers in buying and wearing
authentic and official sportswear. Thus, the Company's business is vulnerable to
a number of factors beyond its control which include, but are not limited to:
(1) player strikes, (2) owner lockouts, (3) work stoppages, (4) the granting of
additional licenses by the leagues, some of which licensees have greater
financial resources and manufacturing capabilities than the Company, and (5)
changes in consumer tastes and enthusiasm for spectator sports which could
affect the consumers' desire to buy team licensed products. The Company's
business may also be affected by other matters which impact the retail
marketplace, including increased credit and inventory exposure, consolidation
and resulting decline in the number of retailers, and other cyclical economic
factors. The Company seeks to minimize inventory exposure by encouraging
retailers to place orders five to six months in advance of the date products are
scheduled to be delivered. The Company believes certain of its competitors offer
similar arrangements.


                                       1
<PAGE>

Historically, outerwear and activewear have accounted for a significant
percentage of the Company's annual net sales. As such, the Company's business is
seasonal with higher sales generally reported in the second half of the year due
to the higher price points of a significant portion of the Company's outerwear,
which is principally sold during the fall and holiday seasons. The seasonality
of the Company's business also affects borrowings under the Company's revolving
credit agreement. Such borrowings fluctuate as a result of seasonal demands for
the Company's products. Traditional quarterly fluctuations in the Company's
business may vary in the future depending upon, among other things, changes in
order cycles and product mix.

Products

The Company participates in the following areas of the apparel market:
outerwear, activewear, headwear, accessories, and printables. In each of these
areas, the Company offers authentic and official licensed products, and Starter
brand products. The Company introduces new selections, as well as traditional
products which are relatively unchanged year to year, during the spring, fall
and holiday selling seasons.

A significant portion of raw materials used to manufacture the majority of the
Company's outerwear and activewear as well as headwear and accessories
originates outside of the United States. To date, the Company's subcontractors
have not experienced difficulties in obtaining sufficient material to meet
customer demands; however, there can be no assurance that they will be able to
purchase sufficient quantities in the future.

The following table describes the product offerings and features in each of the
Company's four product categories:

<TABLE>
<CAPTION>
Category                       Product Offerings                        Product Features
--------                       -----------------                        ----------------
<S>                            <C>                                      <C>    

Outerwear                      insulated and uninsulated jackets,       appliqued or embroidered logos
                               windwear                                 and designs

Activewear                     fleece pants and tops; polo shirts;      appliqued or embroidered logos
                               shorts; warm-up suits, uniforms          and designs

Headwear and Accessories       coaches caps; travel bags                embroidered logos and designs

Printables                     T-shirts; shorts; fleece, pants and
                               tops                                     silk-screened logos and designs
</TABLE>

Licensed Product

Authentic. Within its licensed products business, Starter markets both authentic
and official garments for professional sports teams, as well as for colleges and
universities. Starter is an original participant in each league's authentic
licensing program. These programs are: MLB's Diamond Collection, NBA Authentics,
NFL's Pro Line, and the NHL Center Ice Program.


                                       2
<PAGE>

These programs enable the Company to sell certain authentic garments which are
virtually identical to those actually worn by players, coaches and managers
during competition and distinguishes the Company from many other manufacturers
who sell only official products.

The following chart describes the year in which the Company commenced its
relationship with each league, each league's authentic licensing program and the
authentic products offered by the Company:


Professional     Year Started       Authentic          Authentic
League           with League        Program            Products
------           -----------        -------            --------


                                                     Outerwear on the field and
   MLB               1979      Diamond Collection    in the bullpen; team bags


                                                     Outerwear; polo shirts;
   NBA               1981        NBA Authentics      team bags; activewear


                                                     Outerwear; activewear;
                                                     headwear; accessories;
   NFL               1983        Pro Line            printables


                                                     Exclusive outerwear;
                                                     headwear; polo shirts; team
   NHL               1980        Center Ice          bags

Official. The Company also sells official products which bear the names or logos
of teams, but are not worn during competition by professional teams, players,
coaches and managers. These products have been approved by each licensor to bear
the league or team name and logo. Official products for a particular league may
be similar to an authentic product for another league. Official products can
also be designed by Starter's creative department to meet the particular need of
the retailer and consumer.

Starter Brand Product

The remainder of the Company's products are branded apparel bearing only the
Starter name, "S-and-Star" logo or other design. The Company believes that
consumers will purchase Starter products as much for the quality and
authenticity associated with the Starter brand name and logo as for the team
names and logos appearing on the Company's traditional products. There can be no
assurances that the branded products will be successful at the retail level.

Creative and Merchandising

Starter's Creative and Merchandising Departments include approximately 70
full-time employees and emphasize creativity and responsiveness to consumer
preferences in the development of new products. The Creative and Merchandising
Departments evaluate the


                                       3
<PAGE>

designs in the marketplace and apply these in product development. The Company's
design and marketing personnel frequently visit domestic and foreign markets and
conduct market research to identify developing consumer trends and new product
ideas. The Creative and Merchandising Departments seek input from many sources
in the creative design process, including Starter's key customers and the
Company's Sales and Marketing Departments as well as the leagues, colleges and
universities.

The majority of Starter's products feature the colors and logos of professional
and collegiate teams. Some products remain essentially unchanged from year to
year. In developing a new licensed product, a prototype is manufactured for
league review and approval. From time to time, the Company will also participate
with certain teams and leagues in the design, creation and selection of logos
and colors.

As part of product development, Starter encourages key customers to participate
in the creation of product designed for their stores. These products may then be
sold by that customer on an exclusive basis. Management believes the development
of distinct product styles for select retailers allows for greater product
differentiation among different stores in a given retail location.

License Agreements

Starter has agreements with the licensing agencies of all four of the major
North American professional sports leagues: MLB, the NBA, the NFL and the NHL.
The Company's licenses generally entitle it to use league and member team
colors, symbols and logos. The Company negotiates separate licenses with the
leagues for distribution of products internationally. In addition, the Company
has negotiated agreements covering apparel for approximately 150 colleges and
universities in North America. The large majority of Starter's licensed products
are sold under non-exclusive licenses. Competition, in most cases, is limited by
the number and kinds of licenses granted. The leagues classify licenses by
product category and closely monitor the quality of each licensees' products.

A substantial majority of the Company's licenses require a royalty to be paid
based on a percentage of net sales. Royalties vary by product, though the
Company believes all licensees in a product category pay the same royalty for
that product to a particular league. Each licensee negotiates minimum royalty
payments, the length of the contracts, and the terms of renewal options with
each league. Starter's current agreements include royalty rates ranging from 6%
to 15% for United States and foreign sales. These rates may be increased from
time to time upon prior notice. Minimum payments are applied against royalty
fees either over the term of a contract or annually, depending on the contract.
In addition, the licensing arrangements generally require payments by the
Company to certain promotional programs sponsored by the leagues.

The Company holds either a master license or several licenses with the exclusive
agents of the leagues, covering the breadth of Starter products for both the
United States market and abroad. Starter's existing licensing agreements with
the leagues, have terms ranging from two to five years and expire at various
times through July 31, 2001. The terms of renewal options are negotiated
separately, and historically the Company's material licenses have been renewed.


                                       4
<PAGE>

However, there can be no assurances that the Company will be able to renew its
licenses or enter into comparable licensing agreements in the future or that
additional large, well-financed companies will not enter or increase their
participation in the league licensed apparel business.

As the Company seeks to increase market penetration, its success will depend, in
part, on its ability to maintain its market share as new competitors emerge as
well as to gain market share from established competitors. The Company believes
that new product introductions play an important role in its continuing ability
to compete. However, there can be no assurance that the Company will continue to
be successful in introducing new products.
Certain of the Company's material licensing arrangements are described below.


Major League Baseball. The Company entered into a contract for outerwear,
activewear and printables that extends through 1999. The Company also has a
contract for headwear through 1998 pending renewal approval. In addition, the
Company is a member of the MLB Authentic Diamond Collection. The Company's
licensing agreement with MLB began in 1979. The Company is the exclusive
provider of on-the-field outerwear to MLB through 1999.

National Basketball Association. In January 1997 the Company entered two license
agreements with the NBA; the first of which commenced on August 1, 1997 and
provides for the distribution of outerwear, activewear, printables and headwear
as well as the NBA Authentic line, the second agreement grants the Company
exclusive rights to the NBA championship t-shirt and hat. These agreements
expire on July 31, 2001.

National Football League. In April 1996, the Company entered into new licensing
agreements with the NFL for distribution of outerwear, activewear, printables
and headwear in the United States for a term expiring in 1999, including the
right to continue to participate in the NFL Pro Line Collection.

National Hockey League. In March 1993, Starter entered into license agreements
with the NHL for distribution of outerwear, activewear, printables and headwear
in the United States for terms expiring at various times through June 30, 1999,
including the right to continue to participate in the NHL Center Ice program.

Colleges and Universities. The majority of the colleges and universities are
licensed through the Licensing Resource Group, Inc. and the Collegiate Licensing
Company. The Company has a number of licenses presently outstanding representing
approximately 150 colleges and universities in North America. The terms of these
licenses vary.

Marketing

Starter's marketing strategy is to promote its products by associating the
Starter logo and designs with sports, leisure and entertainment lifestyles.
Management believes a key ingredient in the success of Starter's marketing
strategy is the Company's close promotional relationships with players, coaches,
managers and league officials in all of the leagues. Generally, the term of
these promotional relationships ranges from one to two years and the promotional
fees paid by the Company vary depending upon the length of the relationship and
the individual involved.


                                       5
<PAGE>

Players, coaches and managers wearing Starter products provide visibility and
reinforce the product's authentic quality. In the case of MLB, only Starter
jackets, with the Company's logo featured prominently on the left sleeve, may be
worn by players, coaches and managers on the field and in the bullpen. Examples
of prominent athletes wearing Starter products are: Emmitt Smith (National
Football League MVP, All-Pro and Super Bowl MVP), Jerome Bettis (National
Football League All-Pro), Cal Ripken, Jr. (Major League Baseball MVP and
All-Star, holder of MLB record for most consecutive games played), and Mark
Messier (National Hockey League MVP and All-Star).

In 1997, Starter launched an integrated marketing campaign featuring one of the
nation's hottest hip-hop DJ, Funkmaster Flex, to reach the influential urban
consumer. Starter has also partnered with the Steve Rifkind Company (SRC) and
its "Street Team" to reinforce its name and clothing in the urban marketplace.

The Company advertises its licensed and branded products in national media,
including television, trade publications, newspapers and magazines, such as
Sports Illustrated, Sports Illustrated for Kids and VIBE. The Company's
advertising is seasonal in both print and television media, with minimal
advertising in the summer. Starter also promotes its products through donations
to sports teams, as well as through the use of point-of-sale promotional
materials. In addition, Starter is actively involved in community and
educational programs, such as the JC Penney/Starter NFL Take A Player to
School/Program, the Play Football Craze, and various local football clinics and
school partnership programs.

Starter also benefits from the many celebrities on television and in film
wearing Starter products. From hats to jackets, Starter apparel has appeared in
top-rated television programs, such as ER, Seinfeld, Friends, The Drew Carey
Show, Mad About You, Suddenly Susan, The Nanny, Dharma and Greg, NYPD Blue, and
in various major motion pictures.

Sales and Distribution

United States Distribution. Approximately 80%, 90% and 90% of Starter's net
sales for the fiscal years ended 1997, 1996 and 1995, respectively, were made to
approximately 400 accounts, including sporting and licensed goods stores and
selected department stores. The Company also distributes its products through
military PX stores and college bookstores.

Net sales to JC Penney totaled 15%, 14% and 11% of net sales for the years ended
1997, 1996 and 1995, respectively. In addition, the Kinney Group, which is owned
by F.W. Woolworth, and includes Foot Locker, Kids Foot Locker, Lady Foot Locker,
Foot Locker Europe, Going to the Game, Champs Sports and Athletic X-Press,
accounts for a significant portion of Starter's net sales (4%, 5% and 10% for
the years ended 1997, 1996 and 1995, respectively). The Company does not view
the Kinney Group as a single account since each group of sport specialty stores
makes independent buying decisions, nevertheless, Kinney Group is the single
payer for sales to these stores. No other single customer accounted for more
than 10% of net sales in the years ended 1997, 1996 and 1995. The Company's ten
largest accounts represented approximately 36%, 33% and 33% of total net sales
for the years ended 1997, 1996 and 1995, respectively.


                                       6
<PAGE>

Starter sells its products in the United States primarily through 10 independent
sales representative organizations with approximately 70 domestic retail sales
representatives, with some direct sales for major accounts. The Company has
sales management to monitor these sales representatives. Regional and national
sales meetings are held during the course of the year.

International Distribution. Net sales to international customers during 1997,
1996 and 1995 were as follows:


                                            1997            1996            1995
                                            ----            ----            ----

Western Europe                       $25,400,000     $23,000,000     $21,200,000

Other (Primarily Pacific
  Rim and Australasia)               $ 3,600,000     $ 2,000,000     $ 3,800,000
                                     -----------     -----------     -----------

                                     $29,000,000     $25,000,000     $25,000,000
                                     ===========     ===========     ===========

All international sales are denominated in U.S. dollars. The Company believes
that international markets may be a source of future growth due to the appeal of
popular American sports apparel and the increasing awareness of American
professional sports abroad. However, there can be no assurance that such growth
will be achieved.

The Company currently has exclusive distribution arrangements with one
distributor in Canada and thirteen distributors or licensees in Europe, the
Pacific Rim and Australasia, all of whom buy products directly from Starter or
from contractors approved by Starter. Starter requires its distributors or
licensees to purchase products only from Starter (or approved manufacturers) to
ensure that the Company's quality standards are maintained.

Foreign Operations

A substantial portion of the Company's products are manufactured by over 100
independent contractors located in foreign countries. The Company has an office
in Hong Kong to help ensure quality control and to assist in the sourcing and
purchasing of the products. The Company's contracts require delivery of products
to the Company's international freight forwarder, who arranges for shipment to
the Company. The Company's import operations are subject to constraints imposed
by bilateral textile agreements. Bilateral textile agreements, which are trade
agreements between the United States and various foreign nations, impose quotas
on imported apparel products from such nations. Although the Company does not
regard these agreements as normally limiting the size of the Company's
operations, the Company may be adversely affected to varying degrees in a
specified period by the exhaustion, cut-back or reallocation of any supplier
country's quota relating to a category of goods. In addition, the Company's
operations may be adversely affected by political and financial instability
resulting in the disruption of trade from foreign countries in which the
Company's contractors and suppliers are located, the imposition of additional
regulations relating to imports, or duties, taxes or other charges on imports.
The Company is unable to predict whether any additional regulations, duties,
taxes, quotas or other charges may be imposed on the importation of its
products. The imposition of any of these items could result in increases in the
cost of such imports and affect the sales or profitability of the Company. In
addition, the inability of a manufacturer to ship some or all of the Company's
orders in a timely manner could adversely affect the Company's


                                       7
<PAGE>

ability to deliver products to its customers on time. Delays in delivery could
result in missing certain retailing seasons with respect to some or all of the
Company's products or could otherwise adversely affect the Company. All of the
Company's products manufactured abroad are paid for in U.S. dollars.
Accordingly, the Company does not currently engage in any currency hedging
transactions.

Quality Control

Starter maintains a quality control and assurance program and utilizes internal
and independent sourcing agents as part thereof. These agents engage their own
quality control program staffs who monitor compliance with Starter product
specifications. Starter monitors quality through site visits by its own
personnel to the manufacturers from whom it sources products.

The independent sourcing agents retain responsibility for all products that do
not meet Starter's specifications. Prior to shipment, inspection certificates
are issued by the agents which indicate that the products have been inspected
and found to be in conformity with the order. Products which are manufactured in
foreign countries are tested to meet United States customs import requirements
by the foreign manufacturers prior to shipment, and the results of such tests,
along with samples of each product style, are sent to the Company. Upon arrival
in Starter's distribution centers, a sampling of the products is inspected by
Starter personnel prior to distribution and the cost of defective goods, if any,
may be charged back to the vendor.

Trademarks and Patents

Starter believes that an integral part of its strength is its ability to
capitalize on the "Starter" and "S-and-Star" trademarks, which are registered in
the United States and many foreign countries. Recognized in the United States,
these registered trademarks are important to the success of the Company's
products.

Environmental

Given the nature of the Company's operations (the manufacture and distribution
of finished clothing products), the Company's facilities are not subject to
extensive environmental regulation in comparison to other industries. The
Company's facilities have permits for the discharge of wastewater as required by
the Clean Water Act. Other laws that could apply to the Company include federal
air, solid and hazardous waste reporting laws and regulations, including the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., and the
Emergency Planning and Community Right-to-Know Act as well as related state
statutes. However, the Company's operations to date do not require the Company
to obtain permits under these or other environmental statutes.


                                       8
<PAGE>

Competition

The licensed apparel industry is competitive in the United States and on a
worldwide basis. The industry had significant growth during the past ten years,
and such growth has been accompanied by an increase in competition.

The Company experiences substantial competition in most of its product
categories from a number of well established companies, some of which have
greater financial resources and manufacturing capabilities than the Company. The
Company's primary competitors vary among product lines and include Adidas,
Champion Products, Fruit of the Loom, The Game, Tultex, Nike Inc., Reebok
International, Ltd., Russell Corporation, Sports Specialties and VF Corporation.
In addition, certain competitors have increased marketing efforts in an attempt
to increase brand recognition. Starter differentiates products on the basis of
price, quality, style and distribution channels. The quality of the Company's
products and consumer recognition of the brand and logo ("S-and-Star") is
important for the Company to remain a leading licensee of the major professional
sports leagues as well as many colleges and universities. Increased competition
by existing and future competitors could result in reductions in sales and
prices of Company products and could materially adversely affect the Company's
profitability.

Employees

The Company had approximately 1000 employees at December 31, 1997. Management
considers its relationship with its employees to be good. None of the Company's
employees are represented by a union. The Company has never experienced a work
stoppage.

ITEM 2.  Properties

Following is a summary of the principal properties owned or leased by the
Company. The Company's leases expire at various times through 2008.

                             Corporate Headquarters
                             ----------------------

                New Haven, Connecticut (2 locations) - one owned
                  (220,000 square feet) and one leased (30,000
                                  square feet).

                    Manufacturing and Distribution Facilities
                    -----------------------------------------

                Memphis, Tennessee - leased, 450,000 square feet
                Cedar Rapids, Iowa - leased, 250,000 square feet

ITEM 3.  Legal Proceedings

The Company is a party to various lawsuits incidental to its business which
management believes will not have a material adverse effect on the Company's
financial position, results of operations or cash flows.


                                       9
<PAGE>

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

No matter was submitted during the fourth quarter of the 1997 fiscal year to a
vote of security holders, through the solicitation of proxies or otherwise.

PART II

ITEM 5.  Market for Registrant's Common Stock and Related Stockholder Matters

The Company's common stock is listed on the New York Stock Exchange and trades
under the symbol STA. At March 20, 1998, there were 1,469 holders of record of
the Company's common stock.

The high and low sales price for each quarter during the last two years follows:

                                          1997                      1996
                                    High         Low         High          Low
                                    ------------------------------------------

First Quarter                      $7          $4 5/8       $8 3/8       $5 3/8
Second Quarter                      5 1/2       4 1/2        9 3/4        8
Third Quarter                       5 1/8       4            8 7/8        5 5/8
Fourth Quarter                      4 3/8       2 3/4        6 1/2        5 1/4


The Company has not paid dividends to stockholders since it completed its
initial public offering in April 1993 ("the IPO") and does not have any plans to
pay dividends in the foreseeable future.

ITEM 6.  Selected Financial Data

The following information should be read in conjunction with the audited
consolidated financial statements and related notes included elsewhere herein
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Statement of Operations Data:
<TABLE>
<CAPTION>
                                            Year Ended December 31,
                           1997 (1)       1996        1995      1994 (2)       1993
                          ---------    ---------   ---------   ---------    ---------
                                    (in thousands, except per share data)
<S>                       <C>          <C>         <C>         <C>          <C>      
Net sales                 $ 350,229    $ 405,961   $ 363,412   $ 377,765    $ 359,854
(Loss) income
    from operations         (24,224)       8,333       7,243      (5,452)      43,651
(Loss) income before
    income taxes and
    extraordinary items     (31,393)       3,132       2,288      (9,731)      40,101
(Loss) income before
    extraordinary items     (36,937)       1,877       1,223      (4,819)      28,568
</TABLE>


                                       10
<PAGE>

<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                        1997 (1)       1996        1995      1994 (2)       1993
                       ---------    ---------   ---------   ---------    ---------
                                 (in thousands, except per share data)

<S>                      <C>            <C>         <C>        <C>          <C>   
Net (loss) income        (36,937)       1,877       1,223      (4,819)      25,255
Net (loss) income
    per share (3)       ($  1.33)   $     .07   $     .05    ($   .18)


<CAPTION>
                                             At December 31,
                          1997         1996        1995        1994         1993
                       ---------    ---------   ---------   ---------    ---------
<S>                    <C>          <C>         <C>         <C>          <C>      
Balance Sheet Data:
Working capital        $  33,957    $  73,183   $  71,826   $  71,716    $  82,248

Total assets             160,521      188,895     167,686     195,521      156,572

Long-term debt             4,642        5,852       7,828       9,582       11,463

Total liabilities         93,086       85,642      72,843     102,011       58,354

Stockholders' equity      67,435      103,253      94,843      93,510       98,218

Distribution (4)                                                            38,424
</TABLE>

------------------------------
(1)      The net loss for the year is primarily attributable to the rapid
         unexpected deterioration in the athletic apparel industry in 1997 and
         the resulting decreases in sales levels and margins. These decreases
         resulted in the inability of the Company to recover its fixed selling,
         general and administrative expenses which had increased significantly
         in 1997 due to investments made in anticipation of growth in sales.

(2)      The net loss for the year is primarily the result of third and fourth
         quarter write-downs related to inventory, as well as an accrual for
         royalties and commissions. These write-downs were primarily due to
         inventory purchases which did not result in sales, primarily due to the
         suspension of play by Major League Baseball, the delay in the beginning
         of the National Hockey League season and a warmer than normal winter.

(3)      Per share data is not presented for 1993 since such data is not
         meaningful due to the Company's change in income tax status and new
         capital structure during 1993, as a result of the termination of S
         Corporation election for federal income tax purposes and the IPO.

(4)      Distributions to stockholders are primarily the accumulated earnings
         during the S Corporation period. The Company has not paid dividends to
         stockholders since it completed the IPO and the Company does not have
         any plans to pay dividends in the foreseeable future.


                                       11
<PAGE>

ITEM 7
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The Company's business is seasonal with higher sales reported in the second half
of the year due to the higher price points of a significant portion of the
Company's products which are sold during the fall and holiday seasons. The
seasonality of the Company's business also affects borrowings under the
Company's revolving credit agreement. The amount outstanding under the revolving
credit agreement fluctuates as a result of seasonal demands for the Company's
products. Traditional quarterly fluctuations in the Company's business may vary
in the future depending upon, among other things, changes in order cycles and
product mix.

The Company's business is vulnerable to a number of factors beyond its control.
These include: (1) player strikes, (2) owner lockouts, (3) work stoppages, (4)
the granting of additional licenses to competitors, some of which licensees have
greater financial resources and manufacturing capabilities than the Company, and
(5) changes in consumer tastes and enthusiasm for spectator sports. The
Company's business can also be affected by other matters which impact the retail
marketplace, including increased credit and inventory exposure, consolidation
and resulting decline in the number of retailers and other cyclical economic
factors. The Company seeks to minimize inventory exposure by encouraging
retailers to place orders five to six months in advance of the date products are
scheduled to be delivered. This provides the Company with better information to
purchase product for its reorder business.

A substantial portion of the Company's products are manufactured through
arrangements with independent contractors located in foreign countries. In
addition, the Company's import operations are subject to constraints imposed by
bilateral textile agreements between the United States and a number of foreign
countries. The agreements impose quotas on the amount and type of goods which
can be imported into the United States from these countries. The Company's
operations may be adversely affected by political instability resulting in the
disruption of trade from foreign countries in which the Company's contractors
and suppliers are located, the imposition of additional regulations relating to
imports or duties, taxes, quotas and other charges on imports. The Company is
unable to predict whether any additional regulations, duties, taxes, quotas or
other charges may be imposed on the importation of its products. The assessment
of any of these items could result in increases in the cost of such imports and
affect the sales or profitability of the Company. In addition, the failure of
one or more manufacturers to ship some or all of the Company's orders could
impact the Company's ability to deliver products to its customers on time.
Delays in delivery could result in missing certain retailing seasons with
respect to some or all of the Company's products or could otherwise adversely
affect the Company.

This discussion contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Actual results could differ
materially from those set forth in such statements due to various factors. Such
factors include product demand and market acceptance risks, the effect of
changing economic conditions, the impact of competitive products and pricing
risks associated with product development and other risk factors detailed above.


                                       12
<PAGE>

RESULTS OF OPERATIONS

On August 9, 1996, Starter Galt, Inc., a wholly owned subsidiary of the Company,
purchased substantially all of the assets and assumed all recorded liabilities
of Galt Sand Company and its subsidiaries ("Galt"). Galt is engaged in the
wholesale apparel business and operates 18 factory outlet stores.

The discussion below relates to the results of operations of the Company on a
historical basis for the years ended December 31, 1997, 1996 and 1995 (including
the results of Galt's operations since August 9, 1996).

                                                   Year Ended December 31,
                                              1997          1996          1995
                                              --------------------------------

Net sales                                      100%          100%          100%

Cost of sales                                (70.0)        (68.6)        (68.3)
                                             -----         -----         -----

Gross profit                                  30.0          31.4          31.7

Royalty income                                 1.1            .9            .8

Selling, general and
  administrative expenses                    (38.0)        (30.0)        (30.5)

Restructuring charge                            --           (.2)           --
                                             -----         -----         -----

(Loss) income from
  operations                                  (6.9)          2.1           2.0

Other income (expense)                                        .1            .1

Interest expense                              (2.1)         (1.4)         (1.5)
                                             -----         -----         -----

(Loss) income before
  income taxes                                (9.0)           .8            .6

Income taxes                                  (1.6)          (.3)          (.3)
                                             -----         -----         -----

Net (loss) income                            (10.6)%          .5%           .3%
                                             =====         =====         =====


1997 Compared to 1996

The net loss for the year is primarily attributable to the rapid unexpected
deterioration in the athletic apparel industry in 1997 and the resulting
decreases in sales levels and margins. These decreases resulted in the inability
of the Company to recover its fixed selling, general and


                                       13
<PAGE>

administrative expenses which had increased significantly in 1997 due to
investments made in anticipation of growth in sales. In 1996 and 1997, the
Company made investments and built an infrastructure to support a business that
had experienced growth in the past and was expected to continue to grow. In
addition to anticipated general growth arising from the industry as a whole, the
Company believed that its acquisitions provided a vehicle to support further
increases in its market share. Sales for the first six months of 1997 were in
line with internal projections. The market place began to soften in the last
half of 1997 and, at that time, the Company began a plan to reduce selling,
general and administrative expenses. Several changes were made in the management
team, including the elimination of several positions. The cost containment
initiatives are expected to result in reduced costs during 1998 via reductions
in the Company's workforce, reductions in unprofitable outlet store operations,
more cost effective marketing initiatives and other spending reductions.
However, there can be no assurance such cost containment initiatives will result
in the Company's return to profitability.

Net sales for 1997 were $350.2 million as compared to $406.0 million in 1996, a
13.7% decrease. Licensed product sales declined 15.7% to $301.3 million in 1997
as compared to $357.5 million in 1996 while sales of Starter Branded and
non-licensed products were $48.9 million as compared to $48.5 million in 1996.
The decrease in licensed sales during 1997 was partially due to an
oversaturation of licensed apparel at retail as well as an overall decline in
the athletic apparel industry resulting from: (1) retail consolidation; (2)
reduced consumer demand due to a variety of reasons, including a shift in buying
patterns from licensed to branded apparel; and (3) excess capacity in the
apparel industry which resulted in significant promotional activity and
discounting. Also contributing to the licensed decline was the lack of Olympic
licensed product sales, which accounted for $17.0 million in sales in 1996. By
category, the decrease in sales during 1997 was primarily attributed to
decreased sales of outerwear and accessories. Outerwear sales in 1997 declined
$41.0 million to $149.5 million due to (1) a warmer than normal Fall selling
season and (2) changes in consumer buying patterns toward outerwear apparel and
(3) retail consolidation. Accessory sales in 1997 decreased $15.6 million to
$31.1 million due to reduced consumer demand and the lack of Olympic sales in
1997.

Gross profit in 1997 was $105.0 million or 30.0% of net sales as compared to
$127.3 million or 31.4% of net sales in 1996. The decline in gross margin
percentage during 1997 was primarily related to unabsorbed distribution and
manufacturing costs associated with the 1997 decline in sales volume as well as
decreased margins due to the significant excess of product at retail which
resulted in higher than normal promotional activities. During 1997 the Starter
outlet stores generated gross margin percentage of 27.6% on sales of $31.2
million as compared to a gross margin percentage of 39.2% on sales of $19.3
million during 1996. The decline in the outlet gross margin during 1997 is
attributable to the continuing retail pressures associated with increased
competition and the continued softness of the licensed apparel market.

Royalty income for 1997 increased 8.8% to $3.7 million as compared to $3.4
million in 1996, primarily as a result of the addition of new domestic
licensees.


                                       14
<PAGE>

Selling, general and administrative expenses in 1997 were $133.0 million or
38.0% of net sales as compared to $121.7 million or 30.0% of net sales in 1996.
The increased selling, general and administrative expenses are primarily
attributable to increased employee compensation and outlet store expenses.
Employee compensation increased to 6.9% of net sales in 1997 as compared to 5.0%
of net sales in 1996 as a result of the acquisition of Galt in 1996 and a
European distributor in 1997, as well as increased severance costs associated
with planned personnel reductions late in 1997. Outlet store expenses increased
to $11.6 million as compared to $7.0 million as a result of acquisition of Galt
which had 18 stores at the acquisition date. At December 31, 1997 and 1996, the
Company owned 33 outlet stores. Royalties and commissions increased to 11.9% of
net sales in 1997 as compared to 11.4% of net sales in 1996 primarily as a
result of overall increased royalty rates paid to licensors.

Interest expense during 1997 increased to $7.3 million from $5.6 million during
1996 as a result of higher borrowings needed to finance operations during 1997
as well as higher effective borrowing rates and increased loan fees associated
with the Company's loan amendments during 1997.

Income tax expense of $5.5 million primarily relates to the recognition of a
deferred tax asset valuation allowance in 1997 against deferred tax assets
previously recorded, as management believes it is more likely than not that such
deferred tax assets will not be utilized in the near term.

1996 compared to 1995

Net sales increased 11.7% to $406.0 million in 1996 as compared to $363.4
million in 1995. The increase is primarily related to Galt, which had sales of
$28.0 million since August 9, 1996. Exclusive of Galt, net sales increased $14.5
million, or 4.0%, during 1996, primarily driven by increased Starter Brand sales
of $7.7 million and increased licensed sales of $6.8 million. The increase in
net sales is due to increased volume, which is consistent throughout each
product category.

Gross profit for 1996 was $127.3 million, or 31.4% of net sales, as compared to
$115.1 million, or 31.7%, in 1995. The gross profit margin was reduced by 2.7%
and 2.9% in 1996 and 1995, respectively, by the disposition of excess inventory
at prices equal to or below costs. The gross margin in 1996 was also impacted by
increased distribution costs of .6% as a result of additional personnel needed
at the Company's Memphis distribution facility to handle the peak season
requirements of retail customers.

Royalty income for 1996 was $3.4 million as compared to $3.1 million in 1995.
The increase is primarily related to increased domestic licensees offset by
reduced royalties from international distributors.


                                       15
<PAGE>

Selling, general and administrative expenses for 1996 were $121.7 million, or
30% of net sales, as compared to $111.0 million, or 30.5% of net sales in 1995.
Galt's selling, general and administrative expenses since August 9, 1996 were
$4.9 million, or 1.2% of consolidated net sales.

Excluding the impact of Galt, selling, general and administrative expenses in
1996 were $116.8 million, or 30.9% of net sales. The increased selling, general
and administrative expenses are primarily related to higher royalties,
commissions and employee compensation. Royalties and commissions increased to
11.8% of net sales in 1996 as compared to 11% of net sales in 1995. The increase
as a percent of net sales is primarily related to the 1995 amounts having been
reduced by the utilization of reserves established for the sale of inventory
below cost. Salaries and wages increased to 4.3% of net sales in 1996 from 3.8%
of net sales in 1995 primarily as a result of the annualized effect related to
senior and middle management additions throughout 1995. The increased royalties,
commissions, salaries and wages were offset by decreased sales and marketing
costs.

Interest expense in 1996 increased to $5.6 million from $5.3 million in 1995,
primarily due to increased overall borrowings necessary to finance operations.

Liquidity and Capital Resources

The Company's working capital decreased to $34.0 million at December 31, 1997 as
compared to $73.2 million at December 31, 1996, primarily as a result of
decreases in accounts receivable and inventory, and additional borrowings.
Accounts receivable decreased $17.5 million primarily as a result of a $32.2
million decrease in net sales during the fourth quarter of 1997 as compared to
the fourth quarter of 1996. Inventory at December 31, 1997 decreased to $71.9
million from $77.0 million at December 31, 1996 primarily as a result of the
Company's ability to adjust purchasing levels throughout 1997 to support revised
decreased sales levels. The Company's notes payable at December 31, 1997
increased to $41.6 million from $34.7 million as additional borrowings were
needed to fund the Company's operations due to the significant 1997 loss.

On March 31, 1998 the Company's three year secured revolving credit facility
("the credit facility") was amended to provide for, among other items, an
increase in permitted overadvances, increased advance rates and the elimination
of certain financial covenants. The $130,000,000 credit facility provides for a
seasonal increase up to a maximum $160,000,000 from April 1 through January 15
of each year, however, obligations outstanding under the credit agreement can
not exceed $85,000,000 for a period of 30 days during the first quarter of each
year. Borrowings under the credit facility are subject to various limitations
based upon eligible receivables and inventory, as defined, of the Company and
its subsidiaries. Additionally, the credit facility provides for permitted
overadvances of $22,000,000 to fund seasonal working capital requirements from
January 1 to October 15 each year. From October 15, 1998 to December 31, 1998


                                       16
<PAGE>

the permitted overadvance decreases to $7,500,000. Under terms of the credit
facility, the Chairman and Chief Executive Officer of the Company, (the
"guarantor") who is also the majority stockholder of the Company, has guaranteed
up to $22,000,000 of the credit facility. The guarantee may be terminated upon
written notice to the banks by the guarantor. However, it is not the intent of
the guarantor to terminate the guarantee during 1998. Any reduction in the
guarantee will simultaneously reduce dollar for dollar the amount of any
permitted overadvance. The credit facility, which expires March 31, 2001,
contains a covenant requiring minimum net worth of $45 million plus 50% of the
Company's cumulative net income, if any, for each fiscal year ending on or after
December 31, 1998. The covenant is to be tested annually at the end of each
fiscal year of the Company. The credit facility further places restrictions on
distributions, mergers and asset acquisitions, as defined, and requires the
Company to enter into interest rate protection arrangements satisfactory to the
banks for a notional amount of $35,000,000. The credit facility also contains
other typical terms of default, as defined, including the termination of the
guarantee.

Amounts outstanding under the credit facility accrue interest at either the
bank's base rate plus 1% or at LIBOR plus 3%, at the Company's option. The
Company is required to pay a 2% fee on the face amount of each letter of credit
issued under the credit facility and an annual fee, which can range from .375%
to .5% percentage points, as defined, on the credit facility. In addition, the
Company was required to pay a transaction fee of 2% on the maximum available
credit facility to the banks in connection with the amended agreement. The
credit facility is secured by substantially all of the Company's assets.

Prior to entering into the March 31, 1998 amendment, the Company entered into a
forbearance agreement on February 13, 1998 as a result of the Company's
inability to meet its then existing covenants. The forbearance agreement, which
was to expire on March 31, 1998, provided for a permitted overadvance of
$15,000,000, a portion of which was also guaranteed by the Company's Chairman
and Chief Executive Officer.

Cash generated from operations, together with the Company's existing revolving
credit agreement, is expected, under current conditions, to be sufficient to
finance the Company's planned operations in 1998.


                                       17
<PAGE>

Year 2000 Conversion

The Company recognizes the need to ensure that its systems, applications and
hardware will recognize and process transactions for the year 2000 and beyond.
In continuing efforts to become more productive and competitive, the company has
begun to replace significant portions of its software and some of its hardware
so that its computer systems will function properly with respect to dates
related to the year 2000 and beyond. The Company also has initiated discussions
with its significant suppliers, customers and financial institutions to ensure
that those parties have appropriate plans to remediate Year 2000 issues when
their systems interface with the Company's systems or may otherwise impact
operations. The Company is assessing the extent to which its operations are
vulnerable should those organizations fail to properly remediate their computer
systems.

The Company's comprehensive system conversion initiative, which encompasses the
Year 2000 issues, is being managed by a team of experienced internal and
external professionals. The team's activities are designed to ensure that there
is no adverse effect on the Company's core business operations and that
transactions with customers, suppliers, and financial institutions are fully
supported. The initiative encompasses all business systems, including
administrative, manufacturing and distribution equipment that utilize
microprocessors. Project completion is expected by early 1999. While the company
believes its plans are adequate to address its Year 2000 concerns, many factors
could affect its ultimate success including, but not limited to the continued
availability of outside resources and sufficient financing. The project is not
expected to exceed $10 million in cost, some of which is potentially
capitalizable. Through December 31, 1997 the Company has incurred costs of
$3,000,000 related to the project. This cost range is based on management's best
estimates, which were derived utilizing assumptions about future events. The
results could differ materially from those anticipated subject to uncertainties
regarding the availability of resources and the impact of the issue on key
suppliers and customers among others.

Future Accounting Changes

In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income." This standard
requires that the company disclose total comprehensive income, which includes
net income and other transactions which bypass the income statement. In 1997,
the Financial Accounting Standards Board also issued Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information." This standard establishes new requirements for reporting
segments information. Under the provisions of these standards the company is not
required to, and will not adopt these new standards until 1998. These standards
will not impact the company's financial position, results of operations or cash
flows.


                                       18
<PAGE>

ITEM 8.  Consolidated Financial Statements and Supplementary Data


                                       19
<PAGE>

                         Report of Independent Auditors



Board of Directors and Stockholders
Starter Corporation

We have audited the accompanying consolidated balance sheets of Starter
Corporation as of December 31, 1997 and 1996, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 1997. 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 Starter
Corporation at December 31, 1997 and 1996, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, 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


Hartford, Connecticut
March 31, 1998.


                                       20
<PAGE>

                               Starter Corporation
                           Consolidated Balance Sheets
                        (in thousands, except share data)


                                                               December 31
                                                           1997          1996
                                                           ----          ----
Assets

Current assets:
Cash and cash equivalents                               $     149     $   2,995
Accounts receivable, trade, less allowance for
    doubtful accounts of $3,800                            38,424        55,910
Inventories                                                71,940        76,964
Prepaid expenses and other assets                          11,888         8,539
Deferred income taxes                                          --         8,565
                                                        ---------     ---------
Total current assets                                      122,401       152,973

Property, plant and equipment, net
Land and buildings                                         14,286        14,003
Machinery and equipment                                    17,063        18,412
Leasehold improvements                                      4,848         3,619
                                                        ---------     ---------
                                                           36,197        36,034

Less accumulated depreciation                              (9,691)       (8,095)
                                                        ---------     ---------
                                                           26,506        27,939

Other assets                                               11,614         7,983
                                                        ---------     ---------

Total assets                                            $ 160,521     $ 188,895
                                                        =========     =========


                                       21
<PAGE>

                               Starter Corporation
                     Consolidated Balance Sheets (continued)
                        (in thousands, except share data)

                                                                December 31
                                                            1997         1996
                                                         ---------    ---------

Liabilities and stockholders' equity

Current liabilities:
Notes payable to banks under revolving credit facility   $  41,624    $  34,666
Accounts payable                                            16,600       14,218
Accrued expenses                                            16,312       15,508
Accrued licensing fees                                       5,988        6,166
Accrued advertising                                          6,981        7,381
Current portion of long-term debt                              939        1,851
                                                         ---------    ---------
Total current liabilities                                   88,444       79,790

Long-term debt, less current portion                         4,642        5,852

Stockholders' equity
Convertible preferred stock ($.01 par value) 5,000,000
    shares authorized shares; none outstanding

Common stock ($.01 par value) 50,000,000 shares
    authorized; issued 27,872,232 at December 31, 1997
    and 27,708,146 at December 31, 1996                        279          277

Additional paid-in capital                                  82,774       81,657
Retained earnings (deficit)                                (15,618)      21,319
                                                         ---------    ---------

Total stockholders' equity                                  67,435      103,253
                                                         ---------    ---------

Total liabilities and stockholders' equity               $ 160,521    $ 188,895
                                                         =========    =========



See accompanying notes.


                                       22
<PAGE>

                               Starter Corporation
                      Consolidated Statements of Operations
                      (in thousands, except per share data)


<TABLE>
<CAPTION>
                                                       Year Ended December 31
                                                 1997         1996         1995
                                              ---------    ---------    ---------
<S>                                           <C>          <C>          <C>      
Net sales                                     $ 350,229    $ 405,961    $ 363,412
Cost of sales                                   245,232      278,651      248,290
                                              ---------    ---------    ---------
                                                104,997      127,310      115,122

Royalty income                                    3,729        3,449        3,122
Selling, general and
  administrative expenses                      (132,950)    (121,686)    (111,001)
Restructuring costs                                             (740)
                                              ---------    ---------    ---------

(Loss) income from operations                   (24,224)       8,333        7,243
Other income                                        103          446          304
Interest expense                                 (7,272)      (5,647)      (5,259)
                                              ---------    ---------    ---------

(Loss) income before income taxes               (31,393)       3,132        2,288
Income taxes                                      5,544        1,255        1,065
                                              ---------    ---------    ---------
Net (loss) income                             $ (36,937)   $   1,877    $   1,223
                                              =========    =========    =========

Basic and diluted (loss) earnings per share   $   (1.33)   $     .07    $     .05
                                              =========    =========    =========
</TABLE>




See accompanying notes


                                       23
<PAGE>

                               Starter Corporation
                 Consolidated Statements of Stockholders' Equity
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                Convertible                Convertible                Additional   Retained      Total
                                Preferred     Common       Preferred     Common       Paid-In      Earnings      Stockholders'
                                Shares        Shares       Stock         Stock        Capital      (Deficit)     Equity
                                ----------    ----------   ----------    ----------   ----------   ----------    ----------
<S>                             <C>           <C>          <C>           <C>          <C>          <C>           <C>
Balance, January 1, 1995           408,164    26,410,611   $        4    $      264   $   75,023   $   18,219    $   93,510
Issuance of Common Stock                          15,032                                     110                        110
Net income                              --            --           --            --           --        1,223         1,223
                                ----------    ----------   ----------    ----------   ----------   ----------    ----------


Balance, December 31, 1995         408,164    26,425,643            4           264       75,133       19,442        94,843
Issuance of Common Stock                         874,339                          9        6,524                      6,533
Conversion of preferred stock     (408,164)      408,164           (4)            4
Net income                              --            --           --            --           --        1,877         1,877
                                ----------    ----------   ----------    ----------   ----------   ----------    ----------

Balance, December 31, 1996              --    27,708,146           --           277       81,657       21,319       103,253
Issuance of Common Stock                         164,086                          2        1,117                      1,119
Net loss                                --            --           --            --           --      (36,937)      (36,937)
                                ----------    ----------   ----------    ----------   ----------   ----------    ----------
Balance, December 31, 1997              --    27,872,232   $       --    $      279   $   82,774   $  (15,618)   $   67,435
                                ==========    ==========   ==========    ==========   ==========   ==========    ==========
</TABLE>

See accompanying notes


                                       24
<PAGE>

                               Starter Corporation
                      Consolidated Statements of Cash Flows
                                 (in thousands)


<TABLE>
<CAPTION>
                                                                Year Ended December 31
                                                         1997           1996           1995
                                                       --------       --------       --------
<S>                                                    <C>            <C>            <C>     
Cash flows from operating activities
Net (loss) income                                      $(36,937)      $  1,877       $  1,223
Adjustments to reconcile net (loss) income to net
  cash (used) provided by operating activities:
  Depreciation and amortization                           5,353          3,479          2,770
  Provision for bad debts                                   647          2,200          1,037
  Deferred income taxes                                  10,133          2,529          6,857
Changes in operating assets and liabilities:
     Accounts receivable                                 19,220        (11,074)         6,957
     Inventories                                          5,573            408         15,743
     Prepaid expenses and other assets                   (3,276)         8,567         (3,665)
     Accounts payable and accrued expenses               (2,232)        (5,550)        (9,390)
                                                       --------       --------       --------
Net cash (used) provided by operating activities         (1,519)         2,436         21,532

Cash flows from investing activities
  Purchase of property, plant and equipment              (2,780)        (2,275)        (2,147)
  Other, net                                               (487)          (527)          (690)
                                                       --------       --------       --------
Net cash used by investing activities                    (3,267)        (2,802)        (2,837)

Cash flows from financing activities
  Repayment of longterm borrowings                       (3,859)        (1,874)        (1,849)
  Net borrowings (repayments) on credit
    arrangements                                          5,680            596        (17,929)
  Net proceeds from sale of common stock                    119            133            110
                                                       --------       --------       --------

Net cash provided (used) by financing activities          1,940         (1,145)       (19,668)
                                                       --------       --------       --------

  Net decrease in cash                                   (2,846)        (1,511)          (973)
  Cash and cash equivalents-beginning of year             2,995          4,506          5,479
                                                       --------       --------       --------
Cash and cash equivalents-end of year                  $    149       $  2,995       $  4,506
                                                       ========       ========       ========

Supplemental disclosures:
Income taxes paid                                      $    358       $  2,142       $    767

Interest paid                                          $  6,859       $  5,073       $  5,597

Noncash financing activities - capital leases          $  1,737
</TABLE>


See accompanying notes.


                                       25
<PAGE>

                               Starter Corporation
                   Notes to Consolidated Financial Statements
                                December 31, 1997

1.  Summary of Significant Accounting Policies

Nature of Business

The Company manufactures, imports and sells apparel to retailers (and to a
lesser extent distributors) primarily throughout the United States and various
other countries. A substantial portion of this apparel bears the names, logos
and insignias of sports teams and leagues under licenses granted by professional
sports leagues, colleges and universities in North America. The Company's
business is seasonal with higher sales generally reported in the second half of
the year due to the higher price points of the Company's insulated outerwear,
which is principally sold during the fall and holiday seasons. The Company's
business is vulnerable to a number of factors beyond its control. These include
(1) player strikes, (2) owner lockouts, (3) the grant of licenses to
competitors, and (4) changes in consumer tastes and enthusiasm for spectator
sports. The Company's business can also be affected by other matters which
impact the retail marketplace, including increased credit and inventory
exposure, consolidation and resulting decline in the number of retailers and
other cyclical economic factors. The Company seeks to minimize inventory
exposure by encouraging retailers to place orders five to six months in advance
of the date products are scheduled to be delivered.

A substantial portion of the Company's products are manufactured through
arrangements with independent contractors located in foreign countries. In
addition, the Company's import operations are subject to constraints imposed by
bilateral textile agreements between the United States and a number of foreign
countries. These agreements impose quotas on the amount and type of goods which
can be imported into the United States from these countries. The Company's
operations may be adversely affected by political instability resulting in the
disruption of trade from foreign countries in which the Company's contractors
and suppliers are located, the imposition of additional regulations relating to
imports or duties, taxes, quotas and other charges on imports. The Company is
unable to predict whether any additional regulations, duties, taxes, quotas or
other charges may be imposed on the importation of its products. The assessment
of any of these items could result in increases in the cost of such imports and
affect sales and profitability. In addition, the failure of manufacturers to
ship some or all of the Company's orders on time could impact the Company's
ability to deliver products to its customers. Delays in delivery could result in
missing certain retailing seasons with respect to some or all of the Company's
products or could otherwise adversely affect the Company.

Basis of Presentation

The consolidated financial statements include the accounts of Starter
Corporation (the "Company") and its subsidiaries, all of which are wholly owned.
All intercompany accounts and transactions are eliminated in the consolidated
financial statements.


                                       26
<PAGE>

                               Starter Corporation
             Notes to Consolidated Financial Statements (continued)

Basis of Presentation (continued)

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
While management believes that the estimates and related assumptions used in the
preparation of these financial statements are appropriate, actual results could
differ from those estimates.

Cash and Cash Equivalents

Highly liquid investments with maturities of three months or less when purchased
are considered cash equivalents.

Inventories

Inventories are stated at the lower of cost using the first in, first out (FIFO)
method or net realizable value. In 1996, the Company changed to the FIFO method
of accounting for inventories from the last-in, first-out (LIFO) method
primarily because the carrying costs of inventories had declined below the LIFO
values and were not expected to increase above LIFO values in the foreseeable
future. The change did not have an impact on results of operations in 1996.
Inventory costs did not differ significantly under the LIFO method when compared
to the FIFO method in 1995.

Long-lived assets

Property, plant and equipment is stated on the basis of cost. Depreciation is
computed using a combination of straight-line and accelerated methods for both
financial and tax reporting based on estimated useful lives. Depreciation
expense was $3,000,000, $2,787,000 and $2,278,000 for the years ended December
31, 1997, 1996 and 1995, respectively.

Goodwill and other intangibles are amortized on a straight-line basis over
periods estimated to be benefited, generally 10 to 15 years. Accumulated
amortization balances netted against goodwill and other intangibles were
$1,186,000 and $701,000 at December 31, 1997 and 1996, respectively.

Capitalized software included in the other assets reflects costs related to
purchase and install software. Upon completion, these costs will be amortized on
a straight-line basis over periods not exceeding seven years.

The Company periodically assesses the recoverability of the carrying value of
its goodwill based on a review of projected undiscounted cash flows of the
related operating entities. Other long-lived assets used in operations are
reviewed for impairment losses when indicators of impairment


                                       27
<PAGE>

                               Starter Corporation
             Notes to Consolidated Financial Statements (continued)

Long-lived assets (continued)

are present and the undiscounted cash flows estimated to be generated by the
assets are less than the asset carrying amounts.

Income Taxes

Deferred income taxes are provided for differences between the income tax and
financial reporting bases of assets and liabilities at the statutory tax rates
that are anticipated to be in effect when the differences are expected to
reverse.

Stock Based Compensation

The Company generally grants stock options for a fixed number of shares to key
employees and directors with an exercise price equal to the fair value of the
shares on the date of grant. The Company accounts for stock option grants in
accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees,
and, accordingly, recognizes no compensation expense for the stock option
grants. The Financial Accounting Standards Board ("FASB") issued statement of
Financial Accounting Standards No. 123 Accounting for Stock-Based Compensation
("FAS 123"), effective for years beginning after December 15, 1995. Under the
provisions of this accounting standard, the Company was not required to change
its method of accounting for stock based compensation. Had the Company adopted
the expense provisions of FAS 123 net (loss) income and (loss) income per share
would not have been materially different than the amounts reported.

(Loss) Earnings Per Share

In February 1997, the FASB issued Statement No. 128, Earnings per Share ("FAS
128"). This statement specifies the computation presentation and disclosure
requirements for earnings per share. Under FAS 128, basic earnings per share
equals net (loss) income divided by weighted average common stock shares
outstanding during the year. Diluted earnings per share reflects the potential
dilution that could occur if common stock equivalents, such as stock options,
were exercised. The adoption of this standard in 1997 had no impact on
previously reported earnings per share.

Advertising and Promotion Expense

Production costs of future media advertising are deferred until the advertising
occurs. Total advertising and promotional expenses were $29,537,000,
$26,100,000, and $29,200,000 for 1997, 1996 and 1995, respectively.

Reclassifications

Certain prior years amounts have been reclassified to conform to the current
year presentation.


                                       28
<PAGE>

                               Starter Corporation
             Notes to Consolidated Financial Statements (continued)

2. Acquisitions

In January 1997, the Company acquired the assets of Starter Benelux, a European
distributor of apparel, for $785,000, consisting of $385,000 in cash and 56,140
shares of the Company's common stock. The acquisition was accounted for under
the purchase method of accounting, and accordingly, the 1997 consolidated
statement of operations includes the operating results from the acquisition
date. The fair value of the assets acquired and liabilities assumed was
$3,149,000 and $3,932,000, respectively. The acquisition did not have a material
pro forma impact on operations.

On August 9, 1996, Starter Galt, Inc., a wholly-owned subsidiary of the Company,
purchased substantially all of the assets and assumed all recorded liabilities
of Galt Sand Company and its wholly-owned subsidiaries, Galt Shop Company,
Danaggers Company and Galt Sand Canada, Inc. (collectively, "Galt"), for
approximately $7,000,000. Galt was engaged in the wholesale apparel business and
operated 18 factory outlet stores. The Company accounted for the acquisition as
a purchase and, accordingly, the purchase price has been allocated to the
acquired assets and liabilities based on their fair values. The fair values of
the acquired assets and assumed liabilities were $23,496,000 and $19,627,000,
respectively. The excess of cost over fair value of net assets acquired is being
amortized over 15 years. The purchase price, which was subject to certain
adjustments as defined in the asset purchase and sale agreement, was paid
through the issuance of 933,333.33 shares of the Company's common stock, of
which 80,000 were issued in 1997 and 853,333.33 in 1996, based upon the closing
price ($7.50) of the Company's stock on July 25, 1996.

The operating results of Galt from the date of acquisition have been included in
the consolidated statements of operations from the date of acquisition. The
following pro forma unaudited consolidated operating results of the Company and
Galt have been prepared as if the acquisition had been made at the beginning of
the periods presented and include pro forma adjustments to reflect the
elimination of certain outlet stores, closure of a duplicate facility,
amortization of goodwill and revised financing arrangements, as well as the
income tax effect of these items.

                     Year Ended December 31  
               (in thousands, except per share data)
                        1996              1995
                        ----              ----
Net sales             $417,953          $416,375
Net loss                (1,336)             (697)
Net loss per share       $(.05)            $(.03)

These results are not necessarily indicative of the results of operations of the
combined companies had the acquisition occurred at the beginning of the periods
presented, nor are they necessarily indicative of future operating results.


                                       29
<PAGE>

                               Starter Corporation
             Notes to Consolidated Financial Statements (continued)

3. Inventories

Inventories are as follows (in thousands):
                                                                December 31
                                                            1997           1996
                                                          -------        -------
Raw materials                                             $18,627        $16,580
Finished goods                                             53,313         60,384
                                                          -------        -------
                                                          $71,940        $76,964
                                                          =======        =======

4. Other Assets

Other assets are as follows (in thousands):
                                                                December 31
                                                            1997           1996
                                                          -------        -------
Goodwill                                                  $ 5,552        $ 2,730
Trademarks                                                  1,789          1,974
Capitalized Software                                        2,712             --
Deferred income taxes                                          --          1,568
Other                                                       1,561          1,711
                                                          -------        -------
                                                          $11,614        $ 7,983
                                                          =======        =======
5. Benefit Plan

The Company maintains a defined contribution plan which covers substantially all
employees who have completed six months of service with the Company.
Participants may contribute to the plan a percentage of compensation up to the
maximum allowed by the Internal Revenue Code. The plan provides for a matching
contribution by the Company. In addition, the Company may make contributions to
the plan at the discretion of the Board of Directors. Company contributions to
the plan were $630,000, $668,000 and $465,000 for the years ended December 31,
1997, 1996 and 1995, respectively.

6. Credit Arrangements

On March 31, 1998 the Company's three year secured revolving credit facility
("the credit facility") was amended to provide for, among other items, an
increase in permitted overadvances, increased advance rates and the elimination
of certain financial covenants. The $130,000,000 credit facility provides for a
seasonal increase up to a maximum $160,000,000 from April 1 through January 15
of each year, however, obligations outstanding under the credit agreement can
not exceed $85,000,000 for a period of 30 days during the first quarter of each
year. Borrowings under the credit facility are subject to various limitations
based upon eligible


                                       30
<PAGE>

                               Starter Corporation
             Notes to Consolidated Financial Statements (continued)

6. Credit Arrangements (continued)

receivables and inventory, as defined, of the Company and its subsidiaries.
Additionally, the credit facility provides for permitted overadvances of
$22,000,000 to fund seasonal working capital requirements from January 1 to
October 15 each year. From October 15, 1998 to December 31, 1998 the permitted
overadvance decreases to $7,500,000. Under terms of the credit facility, the
Chairman and Chief Executive Officer of the Company, (the "guarantor"), who is
also the majority stockholder of the Company, has guaranteed up to $22,000,000
of the credit facility. The guarantee may be terminated upon written notice to
the banks by the guarantor. However, it is not the intent of the guarantor to
terminate the guarantee during 1998. Any reduction in the guarantee will
simultaneously reduce dollar for dollar the amount of any permitted overadvance.
The credit facility, which expires March 31, 2001, contains a covenant requiring
minimum net worth of $45 million plus 50% of the Company's cumulative net
income, if any, for each fiscal year ending on or after December 31, 1998. The
covenant is to be tested annually at the end of each fiscal year of the Company.
The credit facility further places restrictions on distributions, mergers and
asset acquisitions, as defined, and requires the Company to enter into interest
rate protection arrangements satisfactory to the banks for a notional amount of
$35,000,000. The credit facility also contains other typical terms of default,
as defined, including the termination of the guarantee.

Management expects to be able to comply with the terms of the amended debt
agreement throughout 1998. In 1997 the Company began a plan to reduce selling,
general and administrative expenses which are expected to result in reduced
costs during 1998 via reductions in the Company's workforce, reduction in
unprofitable outlet operations, more cost effective marketing initiatives and
other spending reductions. Management expects that the cost containment
initiatives together with the amended credit facility will provide sufficient
liquidity for operations through 1998.

Amounts outstanding under the credit facility accrue interest at either the
bank's base rate plus 1% or at LIBOR plus 3%, at the Company's option. The
Company is required to pay a 2% fee on the face amount of each letter of credit
issued under the credit facility and an annual fee, which can range from .375%
to .5% percentage points, as defined, on the credit facility. In addition, the
Company was required to pay a transaction fee of 2% on the maximum available
credit facility to the banks in connection with the amended agreement. The
credit facility is secured by substantially all of the Company's assets.

Prior to entering into the March 31, 1998 amendment, the Company entered into a
forbearance agreement on February 13, 1998 as a result of the Company's
inability to meet its then existing covenants. The forbearance agreement, which
was to expire on March 31, 1998, provided for a permitted overadvance of
$15,000,000, a portion of which was also guaranteed by the Company's Chairman
and Chief Executive Officer.


                                       31
<PAGE>

                               Starter Corporation
             Notes to Consolidated Financial Statements (continued)

6. Credit Arrangements (continued)

At December 31, 1997, $41,600,000 is outstanding under this facility,
$29,008,000 has been committed under letters of credit for vendors' orders for
which the Company will become liable at the time these orders are shipped, and
$3,961,000 is available for additional borrowing.

The weighted average interest rate on short-term borrowings outstanding at
December 31, 1997 and 1996 was 8.34% and 7.73%, respectively.

A summary of long-term debt follows (in thousands):                December
                                                               1997        1996
                                                              ------      ------
Variable rate, 3.9% at December 31, 1997, industrial
  revenue bond, requiring varying annual payments
  through maturity in 2011, secured by irrevocable
  letter of credit                                            $3,700      $4,000

Other                                                          1,881       3,703
                                                              ------      ------
                                                               5,581       7,703
Less current portion                                             939       1,851
                                                              ------      ------
                                                              $4,642      $5,852
                                                              ======      ======

Maturities of long-term debt for the next five years are: 1998-$939,000;
1999-$1,016,000; 2000-$538,000; 2001-$308,800; 2002- $208,800. The fair value of
credit arrangements approximates their carrying value.

7. Income Taxes

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

                                     1997              1996              1995
                                   --------          --------          --------
United States                      $(31,893)         $ (2,281)         $ (3,793)
Foreign                                 500             5,413             6,081
                                   --------          --------          --------
                                   $(31,393)         $  3,132          $  2,288
                                   ========          ========          ========


                                       32
<PAGE>

                               Starter Corporation
             Notes to Consolidated Financial Statements (continued)

7. Income Taxes (continued)

The reconciliation of the statutory federal income tax rate to the effective tax
rate is as follows:

<TABLE>
<CAPTION>
                                                      1997            1996            1995
                                                    --------        --------        --------
<S>                                                  <C>              <C>             <C>   
U.S. federal statutory tax (benefit)                     (35)%            35%             35%
State income taxes, net of
    federal benefit                                        1               8              10
Deferred tax asset valuation allowance                    49
Foreign                                                    2              (3)
Other, net                                                 1                               2
                                                    --------        --------        --------
Income tax expense                                        18%             40%             47%
                                                    ========        ========        ========

Components of the income tax expense (benefit)
are as follows (in thousands):

<CAPTION>
                                                      1997            1996            1995
                                                    --------        --------        --------
<S>                                                  <C>              <C>             <C>   
Current:
  State                                             $    395        $    108        $    103
  Federal                                             (5,487)           (328)         (6,930)
  Foreign                                                503          (1,583)          1,035
                                                    --------        --------        --------
Total current                                         (4,589)         (1,803)         (5,792)

Deferred:
  State                                                2,459             417             528
  Federal                                              7,674           2,641           6,329
                                                    --------        --------        --------
Total deferred                                        10,133           3,058           6,857
                                                    --------        --------        --------
Total income tax expense                            $  5,544        $  1,255        $  1,065
                                                    ========        ========        ========

Components of the Company's deferred tax assets and liabilities at December 31
are as follows (in thousands):

<CAPTION>
                                                      1997            1996            1995
                                                    --------        --------        --------
<S>                                                  <C>              <C>             <C>   
Deferred tax assets:
    Allowance for doubtful accounts                  $   --           $2,373          $1,584
    Inventory                                          2,543           2,695           2,946
    Accrued expenses                                   2,019           3,475           3,966
    NOL carryforward:
       Federal                                         9,297             868
       State                                           1,441             880             946
</TABLE>


                                       33
<PAGE>

                               Starter Corporation
             Notes to Consolidated Financial Statements (continued)

7. Income Taxes (continued)

                                            1997           1996            1995
                                          --------       --------       --------
    Tax credit carryforwards                   984            179            660
    Other, net                                 407            352             50
                                          --------       --------       --------
Total deferred tax assets                   16,691         10,822         10,152
                                          --------       --------       --------

Deferred tax liabilities:
    Foreign source income                   (1,146)          (584)
    Other                                     (155)          (105)
                                          --------       --------
Total deferred tax liabilities              (1,301)          (689)
                                          --------       --------
                                            15,390         10,133         10,152

Valuation allowance                        (15,390)            --             --
                                          --------       --------       --------
Net deferred tax assets                   $     --       $ 10,133       $ 10,152
                                          ========       ========       ========

During 1997 the Company recorded a valuation allowance for deferred tax assets
of $15,390,000 as a result of the Company's currently projected inability to
utilize such assets in the near term.

At December 31, 1997, the Company had state and federal net operating loss
carryforwards for income tax purposes of approximately $37,000,000 and
$27,000,000, respectively. The various state net operating loss carryforwards
expire over the next five to fifteen years, depending upon the state. The
federal net operating loss carryforwards expire in 2012 and are subject to
certain limitations due to the acquisition of Galt Sand Company by Starter Galt,
Inc. The Company has federal tax credit carryforwards of $984,000 at December
31, 1997. These credits expire over the next five years.

8. Capital Stock

The Company sponsors an employee stock purchase plan under which eligible
employees may purchase shares of the Company's common stock through payroll
deductions at 90% of the fair market value on the day of purchase. The Company
has reserved a total of 600,000 shares (150,000 annually) through September 1998
for issuance under this plan. During 1997, 1996 and 1995, 27,947, 21,006, and
15,032 shares were purchased at prices ranging from $2.75 to $5.18, $5.18 to
$7.88, and $6.07 to $9.00, respectively.

The Company has a stock option plan to provide nonqualified and incentive stock
options of up to 2,000,000 shares of Common Stock to officers and key employees.
In addition, the Company has a nonqualified stock option plan for up to 250,000
shares of common stock to non-employee


                                       34
<PAGE>

                               Starter Corporation
             Notes to Consolidated Financial Statements (continued)

8. Capital Stock (continued)

directors. Options are generally for a ten year term and have an exercise price
equal to market price of the Common Stock on the date of grant.

The following schedule summarizes stock option activity for the three year
period ended December 31, 1997.

Stock Purchase and Stock Option Plans:

<TABLE>
<CAPTION>
                                   1997                        1996                         1995
                        --------------------------  --------------------------   --------------------------
                                         Weighted-                   Weighted-                    Weighted-
                                         Average                     Average                      Average
                                         Exercise                    Exercise                     Exercise
                          Options        Price        Options        Price         Options        Price
                        ----------       ------     ----------       ------      ----------       ------
<S>                      <C>             <C>           <C>           <C>            <C>           <C>   
Outstanding
    at beginning
    of year              1,068,500       $ 6.73        938,000       $13.18         523,000       $17.90
    Granted                525,000         5.02        791,000         6.40         457,500         8.22

Cancelled                 (311,000)        6.76       (660,500)       15.51         (42,500)       17.65
                        ----------       ------     ----------       ------      ----------       ------
Outstanding
    at End of Year       1,282,500         6.01      1,068,500         6.73         938,000        13.18
                        ==========       ======     ==========       ======      ==========       ======

Exercisable
    at End of Year         199,500       $ 6.87         59,500       $ 7.84         180,200       $18.67
                        ==========       ======     ==========       ======      ==========       ======
</TABLE>

The weighted-average fair value of options granted during 1997, 1996 and 1995
was $2.28, $2.75 and $3.51, respectively. The fair value of each stock option
grant was estimated on the date of grant using the Black-Scholes option pricing
model with the following weighted-average assumptions used: dividend yield 0%;
expected volatility of 40% in 1997, 36% in 1996 and 1995; risk free interest
rate of 7%; and expected life of 3-7 years.

The following is a summary of information regarding options outstanding and
options exercisable at December 31, 1997:


                                       35
<PAGE>

                               Starter Corporation
             Notes to Consolidated Financial Statements (continued)

8. Capital Stock (continued)

<TABLE>
<CAPTION>
                                     Options Outstanding             Options Exercisable
                                 --------------------------  --------------------------------------
                                               Weighted-
                                               Average       Weighted-                    Weighted-
                                               Remaining     Average                      Average
                                 Number        Contractual   Exercise   Number            Exercise
Range of exercise prices         Outstanding   Life (years)  Price      Exercisable       Price
------------------------         -----------   ------------  -----      -----------       -----
<S>                              <C>            <C>          <C>        <C>               <C>
$3.125 to $5.00                    377,500           10      $4.87           --              --
$5.50 to $6.25                     692,500            9      $6.12      115,500           $6.24
$7.375 to $11.875                  212,500            8      $7.67       84,000           $7.73
                                 ---------                              -------
                                 1,282,500                              199,500
                                 =========                              =======
</TABLE>

At December 31, 1997, there were 967,500 options available for future issuance.

In addition, warrants to purchase 282,682 shares of common stock at $16.78 per
share were outstanding at December 31, 1997 and expire on April 18, 2001. At
December 31, 1997, 2,645,182 shares were reserved for future issuance under the
above plans and for outstanding warrants.

Earnings per Share Computation:

The company adopted FAS 128 in 1997 (see Note 1). The following table reconciles
the weighted-average shares outstanding used to calculate basic and diluted
earnings per share.

<TABLE>
<CAPTION>
                                                          1997           1996          1995
                                                        --------       --------      --------
<S>                                                     <C>            <C>           <C>     
(In thousands, except per share data)

Net (loss) income available to common shareholders      $(36,937)      $  1,877      $  1,223
                                                        ========       ========      ========

Basic earnings per share -
  weighted-average shares                                 27,847         27,133        26,418

Convertible preferred stock                                                  67           408

Dilutive effect of employee stock options                     --             --            --
                                                        --------       --------      --------
Diluted earnings per share -
  weighted-average shares                                 27,847         27,200        26,826
                                                        ========       ========      ========
</TABLE>


                                       36
<PAGE>

                               Starter Corporation
             Notes to Consolidated Financial Statements (continued)


8. Capital Stock (continued)
                                        1997         1996            1995
                                        ----         ----            ----
(Loss) earnings per share:
  Basic                               ($1.33)        $.07          $.05
  Diluted                             ($1.33)        $.07          $.05

9. Leases

The Company has a number of operating lease agreements primarily involving
property, plant and administrative facilities, and machinery and office
equipment, expiring on various dates through 2008.

Future minimum lease payments for the next five years and thereafter are: 1998 -
$7,599,000; 1999 - $6,585,000; 2000 - $4,576,000; 2001 - $2,926,000, 2002 -
$2,665,000 - thereafter - $8,869,000. Lease expense for 1997, 1996, and 1995 was
$6,277,000, $5,773,000, and $4,475,000, respectively.

10. Commitments and Contingencies

The Company is a licensee under agreements expiring at various times through
July 31, 2001, with numerous professional sports leagues and collegiate
organizations for the manufacture and sale of various items of sports apparel.
The license fees range from 6.5% to 15% of the net sales of licensed items. Each
of the material agreements with the National Football League (NFL), National
Basketball Association (NBA), National Hockey League (NHL), and Major League
Baseball (MLB) requires that the Company pay a minimum guaranteed royalty.

Licensing fees for 1997, 1996 and 1995 were $30,551,000, $33,836,000, and
$29,372,000, respectively.

The Company is a party to various lawsuits incidental to its business which
management believes will not have a material adverse effect on the Company's
financial position, results of operations or cash flows.

11. Concentrations

In the normal course of business, the Company extends credit, on open account,
to its retail customers, after a credit analysis based on financial and other
relevant criteria. Sales to a group of customers under common ownership totaled
4%, 5% and 10% of 1997, 1996 and 1995 sales, respectively. In addition, sales to
another customer totaled 15%, 14% and 11% of 1997, 1996 and


                                       37
<PAGE>

                               Starter Corporation
             Notes to Consolidated Financial Statements (continued)

11. Concentrations (continued)

1995 sales, respectively. There were no other individual customers who accounted
for more than 10% of sales. The Company does not believe that its retail
concentration of sales and credit risks represents a material risk of loss with
respect to its financial position at December 31, 1997.

12. Recent Accounting Pronouncements

In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income. This standard
requires that the company disclose total comprehensive income, which includes
net income and other transactions which bypass the income statement. In 1997,
the Financial Accounting Standards Board also issued Statement of Financial
Accounting Standards No. 131, Disclosures about Segments of an Enterprise and
Related Information. This standard establishes new requirements for reporting
segments information. Under the provisions of these standards the company is not
required to, and will not adopt these new standards until 1998. These standards
will not impact the company's financial position, results of operations or cash
flows.


                                       38
<PAGE>

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

None.


                                       39
<PAGE>

                                    PART III


The information required by Items 10, 11, 12 and 13 of this Form 10-K is
incorporated by reference from those portions of the Company's Proxy Statement
for its Annual Meeting of Stockholders to be held on May 19, 1998 which contain
such information.


                                       40
<PAGE>

                                     PART IV

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

(a)   The following consolidated financial statements and schedule of the
      Company are included in Item 8, as to the consolidated financial
      statements, and on page S-1, as to the schedule, of this Form 10-K.

      1. Financial Statements.

         Consolidated balance sheets - December 31, 1997 and 1996

         Consolidated statements of operations - Years ended December 31, 1997,
         1996 and 1995

         Consolidated statements of stockholders' equity - Years ended December
         31, 1997, 1996 and 1995

         Consolidated statements of cash flows - Years ended December 31, 1997,
         1996 and 1995

         Notes to consolidated financial statements - December 31, 1997

      2. Financial Statement Schedule.

         Schedule II - Valuation and qualifying accounts

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


(b)      Reports on Form 8-K

         None.


                                       41
<PAGE>

(C)  EXHIBITS


 Exhibit Number                          Description
 --------------                          -----------

      3.1       Form of Amended and Restated Certificate of Incorporation
                (incorporated by reference from Exhibit 3.2 to Amendment No. 1
                to the Registration Statement on Form S-1, filed March 10, 1993.
                File No. 33-58208)

      3.2       Form of Amended and Restated By laws (incorporated by reference
                from Exhibit 3.4 to Amendment No. 1 to the Registration
                Statement on Form S-1, filed March 10, 1993, File No. 33-58208)

      10.1      Form of Employment Agreement by and between Starter and David A.
                Beckerman (incorporated by reference from Exhibit 10.1 to
                Amendment No. 2 to the Registration Statement on Form S-1, filed
                March 24, 1993, File No. 33-58208)

      10.2*     License Agreement by and between Major League Baseball
                Properties, Inc. and Starter effective as of January 1, 1995.

      10.3*     License Agreement by and between Major League Baseball
                Properties, Inc. and Starter dated as of May 22, 1992
                (incorporated by reference to Exhibit 10.3 to Amendment No. 2 to
                the Registration Statement on Form S-1, filed March 24, 1993,
                File No. 33-58208)

      10.4*     License Agreement by and between National Football League
                Properties, Inc. and Starter dated as of August 5, 1991
                (incorporated by reference to Exhibit 10.4 to Amendment No. 2 to
                the Registration Statement on Form S-1, filed March 24, 1993,
                File No. 33-58208)

      10.5*     License Agreement by and between National Football League
                Properties, Inc. and Starter dated as of August 5, 1991
                (incorporated by reference to Exhibit 10.5 to Amendment No. 2 to
                the Registration Statement on Form S-1, filed March 24, 1993,
                File No. 33-58208)

      10.6*     License Agreement by and between National Football League
                Properties, Inc. and Starter dated as of July 1, 1991
                (incorporated by reference to Exhibit 10.6 to Amendment No. 2 to
                the Registration Statement on Form S-1, filed March 24, 1993,
                File No. 33-58208)


                                       42
<PAGE>

 Exhibit Number                          Description
 --------------                          -----------

      10.7*     License Agreement by and between NBA Properties, Inc. and
                Starter effective as of August 1, 1997

      10.8*     License Agreement by and between NHL Enterprises, Inc. and
                Starter dated as of February 10, 1993 (incorporated by reference
                to Exhibit 10.8 to Amendment No. 2 to the Registration Statement
                on Form S-1, filed March 24, 1993, File No. 33-58208)

      10.9*     License Agreement by and among Starter, Collegiate Concepts,
                Inc. and International Collegiate Enterprises, Inc. dated as of
                March 1, 1992 (incorporated by reference to Exhibit 10.9 to
                Amendment No. 2 to the Registration Statement on Form S-1, filed
                March 24, 1993, File No. 33-58208)

      10.10*    Starter Corporation 401(k) Profit Sharing Plan dated as of April
                1, 1989 (incorporated by reference to Exhibit 10.10 to Amendment
                No. 2 to the Registration Statement on Form S-1, filed March 24,
                1993, File No. 33-58208)

      10.11     Form of Starter Corporation 1993 Stock Option Plan (incorporated
                by reference to Exhibit 10.11 to Amendment No. 2 to the
                Registration Statement on Form S-1, filed March 24, 1993, File
                No. 33-58208)

      10.12     Intentionally omitted.

      10.13     Note Purchase Agreement dated March 9, 1993 among Starter and
                the purchasers named therein relating to the 12 3/4% Senior
                Subordinated Notes (incorporated by reference to Exhibit 10.13
                to Amendment No. 1 to the Registration Statement on Form S-1,
                filed March 10, 1993, File No. 33-58208)

      10.14     Note Purchase Agreement dated March 9, 1993 among Starter and
                the purchasers named therein related to the 10 7/8% Senior Notes
                (incorporated by reference to Exhibit 10.14 to Amendment No. 1
                to the Registration Statement on Form S-1, filed March 10, 1993,
                File No. 33-58208)


                                       43
<PAGE>

 Exhibit Number                          Description
 --------------                          -----------

      10.15     Form of Warrant issued to purchasers of the 12 3/4% Senior
                Subordinated Notes and 10 7/8% Senior Notes (incorporated by
                reference to Exhibit 10.15 to Amendment No. 1 to the
                Registration Statement on Form S-1, filed March 10, 1993, File
                No. 33-58208)

      10.16     Form of Warrant issued to purchasers of the 10 7/8% Senior Notes
                (incorporated by reference to Exhibit 10.16 to Amendment No. 1
                to the Registration Statement on Form S-1, filed March 10, 1993,
                File No. 33-58208)

      10.17*    License Agreement by and between NHL Enterprises, Inc. and
                Starter dated as of February 10, 1993 (incorporated by reference
                to Amendment No. 2 to the Registration Statement on Form S-1,
                filed March 24, 1993, File No. 33-58208)

      10.18*    License Agreement by and between NHL Enterprises, Inc. and
                Starter dated as of February 10, 1993 (incorporated by reference
                to Amendment No. 2 to the Registration Statement on Form S-1,
                filed March 24, 1993, File No. 33-58208)

      10.19*    License Agreement by and between NHL Enterprises, Inc. and
                Starter dated as of February 10, 1993 (incorporated by reference
                to Amendment No. 2 to the Registration Statement on Form S-1,
                filed March 24, 1993, File No. 33-58208)

      10.20     Form of Real Property Purchase Agreement by and between Starter
                and Acorn Realty, Inc. (incorporated by reference to Exhibit
                10.20 to Amendment No. 2 to the Registration Statement on Form
                S-1, filed March 24, 1993, File No. 33-58208)

      10.21     Form of Agreement Regarding Tax Distributions by and among
                Starter and the Current Stockholders (incorporated by reference
                to Exhibit 10.21 to Amendment No. 2 to the Registration
                Statement on Form S-1, filed March 24, 1993, File No. 33-58208)

      10.22     Intentionally omitted.

      10.23     Commercial Term Loan Agreement between Starter and Union Trust
                Company (incorporated by reference to Exhibit 10.23 to the
                Annual Report on Form 10-K for the fiscal year ended December
                31, 1993, filed March 28, 1994, File No. 1-11812)


                                       44
<PAGE>

 Exhibit Number                          Description
 --------------                          -----------

      10.24*    Retail Product License Agreement by and among Starter, NBA
                Properties, Inc. dated January 18, 1995 (incorporated by
                reference to Exhibit 10.24 to the Annual Report on Form 10-K for
                the fiscal year ended December 31, 1994, filed March 31, 1995,
                File No. 1-11812)

      10.25     Commercial Revolving Loan and Security Agreement among the
                Company and Bank of Boston Connecticut; The Chase Manhattan
                Bank, N.A., Fleet Bank, N.A., Natwest Bank N.A., People's Bank
                dated March 30, 1995 (incorporated by reference to Exhibit 10.25
                to Amendment No. 2 to the Annual Report on Form 10-K, filed May
                12, 1995, File No. 1-11812)

      10.26     First Amendment to Commercial Revolving Loan and Security
                Agreement dated June 14, 1995 (incorporated by reference to
                Exhibit 10.26 to the Quarterly Report on Form 10-Q, filed August
                14, 1995, File No. 1-11812)


                                       45
<PAGE>

 Exhibit Number                          Description
 --------------                          -----------

      10.27     Second Amendment to Commercial Revolving Loan and Security
                Agreement dated January 31, 1996 (incorporated by reference to
                Exhibit 10.27 to the Annual Report on Form 10-K, filed March 18,
                1996, File No. 1-11812)

      10.28     Starter Corporation Incentive Compensation Plan effective as of
                January 1, 1995 (incorporated by reference to Exhibit 10.28 to
                the Quarterly Report on Form 10-Q, filed May 13, 1996, File No.
                1-11812)
 
      10.29     Form of Employment Agreement by and between Starter Corporation
                and John M. Tucker dated as of January 1, 1996 (incorporated by
                reference to Exhibit 10.29 to the Quarterly Report on Form 10-Q,
                filed May 13, 1996)

      10.30     Third Amendment to Commercial Revolving Loan and Security
                Agreement dated May 17, 1996 (incorporated by reference to
                Exhibit 10.30 to the Quarterly Report on Form 10-Q, filed August
                14, 1996)

      10.31     Letter dated July 24, 1996 regarding Amendment of Starter
                Corporation's Commercial Revolving Loan and Security Agreement
                dated March 30, 1995, as amended by a First Amendment dated June
                14, 1995, a Second Amendment dated January 31, 1996, and a Third
                Amendment dated May 17, 1996 (incorporated by reference to
                Exhibit 10.30 to the Quarterly Report on Form 10-Q, filed August
                14, 1996)

      10.32     1996 Amended and Restated Commercial Revolving Loan and Security
                Agreement dated October 7, 1996 (incorporated by reference to
                Exhibit 10.32 to the Quarterly Report on Form 10-Q, filed
                November 13, 1996)

      10.33     Second Amended and Restated Credit Agreement dated May 13, 1997
                (incorporated by reference to Exhibit 10.32 to the Quarterly
                Report on Form 10-Q, filed August 14, 1997)


                                       46
<PAGE>

 Exhibit Number                          Description
 --------------                          -----------

      10.34     Second Amendment Agreement dated September 24, 1997
                (incorporated by reference to Exhibit 10.34 to the Quarterly
                Report on Form 10-Q, filed November 13, 1997)


      10.35     Third Amended and Restated Credit Agreement dated March 31,
                1998.
        
      22        Subsidiaries of the Registrant

      23        Consent of Ernst & Young LLP

      27        Financial Data Schedule


----------
*Confidential treatment requested as to certain portions


                                       47
<PAGE>

Schedule II

Valuation and Qualifying Accounts (in thousands)

<TABLE>
<CAPTION>
                                                 Starter Corporation

Column A                   Column B                    Column C               Column D      Column E
                           Balance at       (1) Charged       (2)Charged                    Balance at
                           Beginning        to Costs          to Other                      End of
Description                of Period        and Expenses      Accounts        Deductions    Period
-----------                ---------        ------------      --------        ----------    ------
<S>                           <C>             <C>                             <C>            <C>   
Year Ended:
    December 31, 1997
    Allowance for
    Doubtful Accounts         $3,800          $   647                         $  647(a)      $3,800

Year Ended:
    December 31, 1996
    Allowance for
    Doubtful Accounts         $3,800           $2,200                         $2,200(a)      $3,800

Year Ended:
    December 31, 1995
    Allowance for
    Doubtful Accounts         $3,800           $1,037                         $1,037(a)      $3,800
</TABLE>


----------
(a)  Uncollectible accounts written off net of recoveries.


                                       S-1
<PAGE>

                                   SIGNATURES

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



                               STARTER CORPORATION


Date: April 2, 1998



By:/s/David A. Beckerman
   ---------------------------
David A. Beckerman
  Chairman of the Board and
  Chief Executive 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:

Principal Executive Officer and Director:


Date: April 2, 1998


By: /s/David A. Beckerman
David A. Beckerman
Chairman of the Board and
Chief Executive Officer


Date: April 2, 1998


By: /s/Sean T. Smith
Sean T. Smith
Controller
<PAGE>

DIRECTORS:


Date: April 2, 1998


By: /s/Benjamin E. Cohen
    -----------------------------
Benjamin E. Cohen
Director


Date: April 2, 1998


By: /s/Carmen L. Cozza
    -----------------------------
Carmen L. Cozza
Director


Date: April 2, 1998



By: /s/Joseph P. Grant
    -----------------------------
Joseph P. Grant
Director


Date: April 2, 1998


By: /s/Richard H. Saletan
    -----------------------------
Richard H. Saletan
Director


Date: April 2, 1998


By: /s/Mark G. Sklarz
    -----------------------------
Mark G. Sklarz
Director
<PAGE>

                             EXHIBITS


    Exhibit
    Number                      Description                             Page No.
    ------                      -----------                             --------

      3.1       Form of Amended and Restated Certificate of
                Incorporation (incorporated by reference from
                Exhibit 3.2 to Amendment No. 1 to the
                Registration Statement on Form S-1, filed March
                10, 1993. File No. 33-58208)

      3.2       Form of Amended and Restated By laws
                (incorporated by reference from Exhibit 3.4 to
                Amendment No. 1 to the Registration Statement on
                Form S-1, filed March 10, 1993, File No.
                33-58208)

      10.1      Form of Employment Agreement by and between
                Starter and David A. Beckerman (incorporated by
                reference from Exhibit 10.1 to Amendment No. 2 to
                the Registration Statement on Form S-1, filed
                March 24, 1993, File No. 33-58208)

      10.2*     License Agreement by and between Major League
                Baseball Properties, Inc. and Starter effective
                as of January 1, 1995.

      10.3*     License Agreement by and between Major League
                Baseball Properties, Inc. and Starter dated as of
                May 22, 1992 (incorporated by reference to
                Exhibit 10.3 to Amendment No. 2 to the
                Registration Statement on Form S-1, filed March
                24, 1993, File No. 33-58208)

      10.4*     License Agreement by and between National
                Football League Properties, Inc. and Starter
                dated as of August 5, 1991 (incorporated by
                reference to Exhibit 10.4 to Amendment No. 2 to
                the Registration Statement on Form S-1, filed
                March 24, 1993, File No. 33-58208)

      10.5*     License Agreement by and between National
                Football League Properties, Inc. and Starter
                dated as of August 5, 1991 (incorporated by
                reference to Exhibit 10.5 to Amendment No. 2 to
                the Registration Statement on Form S-1, filed
                March 24, 1993, File No. 33-58208)

      10.6*     License Agreement by and between National
                Football League Properties, Inc. and Starter
                dated as of July 1, 1991 (incorporated by
                reference to Exhibit 10.6 to Amendment No. 2 to
                the Registration Statement on Form S-1, filed
                March 24, 1993, File No. 33-58208)

      10.7*     License Agreement by and between NBA Properties,
                Inc. and Starter effective as of August 1, 1997

      10.8*     License Agreement by and between NHL Enterprises,
                Inc. and Starter dated as of February 10, 1993
                (incorporated by reference to Exhibit 10.8 to
                Amendment No. 2 to the Registration Statement on
                Form S-1, filed March 24, 1993, File No.
                33-58208)
<PAGE>

    Exhibit
    Number                      Description                             Page No.
    ------                      -----------                             --------

      10.9*     License Agreement by and among Starter,
                Collegiate Concepts, Inc. and International
                Collegiate Enterprises, Inc. dated as of March 1,
                1992 (incorporated by reference to Exhibit 10.9
                to Amendment No. 2 to the Registration Statement
                on Form S-1, filed March 24, 1993, File
                No. 33-58208)

      10.10*    Starter Corporation 401(k) Profit Sharing Plan
                dated as of April 1, 1989 (incorporated by
                reference to Exhibit 10.10 to Amendment No. 2 to
                the Registration Statement on Form S-1, filed
                March 24, 1993, File No. 33-58208)

      10.11     Form of Starter Corporation 1993 Stock Option
                Plan (incorporated by reference to Exhibit 10.11
                to Amendment No. 2 to the Registration Statement
                on Form S-1, filed March 24, 1993, File No.
                33-58208)

      10.12     Intentionally omitted.

      10.13     Note Purchase Agreement dated March 9, 1993 among
                Starter and the purchasers named therein relating
                to the 12 3/4% Senior Subordinated Notes
                (incorporated by reference to Exhibit 10.13 to
                Amendment No. 1 to the Registration Statement on
                Form S-1, filed March 10, 1993, File No.
                33-58208)

      10.14     Note Purchase Agreement dated March 9, 1993 among
                Starter and the purchasers named therein related
                to the 10 7/8% Senior Notes (incorporated by
                reference to Exhibit 10.14 to Amendment No. 1 to
                the Registration Statement on Form S-1, filed
                March 10, 1993, File No. 33-58208)

      10.15     Form of Warrant issued to purchasers of the 12
                3/4% Senior Subordinated Notes and 10 7/8% Senior
                Notes (incorporated by reference to Exhibit 10.15
                to Amendment No. 1 to the Registration Statement
                on Form S-1, filed March 10, 1993, File No.
                33-58208)

      10.16     Form of Warrant issued to purchasers of the 10
                7/8% Senior Notes (incorporated by reference to
                Exhibit 10.16 to Amendment No. 1 to the
                Registration Statement on Form S-1, filed March
                10, 1993, File No. 33-58208)

      10.17*    License Agreement by and between NHL Enterprises,
                Inc. and Starter dated as of February 10, 1993
                (incorporated by reference to Amendment No. 2 to
                the Registration Statement on Form S-1, filed
                March 24, 1993, File No. 33-58208)

<PAGE>

    Exhibit
    Number                      Description                             Page No.
    ------                      -----------                             --------

      10.18*    License Agreement by and between NHL Enterprises,
                Inc. and Starter dated as of February 10, 1993
                (incorporated by reference to Amendment No. 2 to
                the Registration Statement on Form S-1, filed
                March 24, 1993, File No. 33-58208)

      10.19*    License Agreement by and between NHL Enterprises,
                Inc. and Starter dated as of February 10, 1993
                (incorporated by reference to Amendment No. 2 to
                the Registration Statement on Form S-1, filed
                March 24, 1993, File No. 33-58208)

      10.20     Form of Real Property Purchase Agreement by and
                between Starter and Acorn Realty, Inc.
                (incorporated by reference to Exhibit 10.20 to
                Amendment No. 2 to the Registration Statement on
                Form S-1, filed March 24, 1993, File No.
                33-58208)

      10.21     Form of Agreement Regarding Tax Distributions by
                and among Starter and the Current Stockholders
                (incorporated by reference to Exhibit 10.21 to
                Amendment No. 2 to the Registration Statement on
                Form S-1, filed March 24, 1993, File No.
                33-58208)

      10.22     Intentionally omitted.

      10.23     Commercial Term Loan Agreement between Starter
                and Union Trust Company (incorporated by
                reference to Exhibit 10.23 to the Annual Report
                on Form 10-K for the fiscal year ended December
                31, 1993, filed March 28, 1994, File No. 1-11812)

      10.24*    Retail Product License Agreement by and among
                Starter, NBA Properties, Inc. dated January 18,
                1995 (incorporated by reference to Exhibit 10.24
                to the Annual Report on Form 10-K for the fiscal
                year ended December 31, 1994, filed March 31,
                1995, File No. 1-11812)

      10.25     Commercial Revolving Loan and Security Agreement
                among the Company and Bank of Boston Connecticut;
                The Chase Manhattan Bank, N.A., Fleet Bank, N.A.,
                Natwest Bank N.A., People's Bank dated March 30,
                1995 (incorporated by reference to Exhibit 10.25
                to Amendment No. 2 to the Annual Report on Form
                10-K, filed May 12, 1995, File No. 1-11812)

      10.26     First Amendment to Commercial Revolving Loan and
                Security Agreement dated June 14, 1995
                (incorporated by reference to Exhibit 10.26 to
                the Quarterly Report on Form 10-Q, filed August
                14, 1995, File No. 1-11812)

<PAGE>

    Exhibit
    Number                      Description                             Page No.
    ------                      -----------                             --------

      10.27     Second Amendment to Commercial Revolving Loan and
                Security Agreement dated January 31, 1996
                (incorporated by reference to Exhibit 10.27 to
                the Annual Report on Form 10-K, filed March 18,
                1996, File No. 1-11812)

      10.28     Starter Corporation Incentive Compensation Plan
                effective as of January 1, 1995 (incorporated by
                reference to Exhibit 10.28 to the Quarterly
                Report on Form 10-Q, filed May 13, 1996, File No.
                1-11812)
 
      10.29     Form of Employment Agreement by and between
                Starter Corporation and John M. Tucker dated as
                of January 1, 1996 (incorporated by reference to
                Exhibit 10.29 to the Quarterly Report on Form
                10-Q, filed May 13, 1996)

      10.30     Third Amendment to Commercial Revolving Loan and
                Security Agreement dated May 17, 1996
                (incorporated by reference to Exhibit 10.30 to
                the Quarterly Report on Form 10-Q, filed August
                14, 1996)

      10.31     Letter dated July 24, 1996 regarding Amendment of
                Starter Corporation's Commercial Revolving Loan
                and Security Agreement dated March 30, 1995, as
                amended by a First Amendment dated June 14, 1995,
                a Second Amendment dated January 31, 1996, and a
                Third Amendment dated May 17, 1996 (incorporated
                by reference to Exhibit 10.30 to the Quarterly
                Report on Form 10-Q, filed August 14, 1996)

      10.32     1996 Amended and Restated Commercial Revolving
                Loan and Security Agreement dated October 7, 1996
                (incorporated by reference to Exhibit 10.32 to
                the Quarterly Report on Form 10-Q, filed November
                13, 1996)

      10.33     Second Amended and Restated Credit Agreement
                dated May 13, 1997 (incorporated by reference to
                Exhibit 10.32 to the Quarterly Report on Form
                10-Q, filed August 14, 1997)

      10.34     Second Amendment Agreement dated September 24,
                1997 (incorporated by reference to Exhibit 10.34
                to the Quarterly Report on Form 10-Q, filed
                November 13, 1997)


      10.35     Third Amended and Restated Credit Agreement dated
                March 31, 1998.
        
      22        Subsidiaries of the Registrant

<PAGE>

    Exhibit
    Number                      Description                             Page No.
    ------                      -----------                             --------

      23        Consent of Ernst & Young LLP

      27        Financial Data Schedule


----------
*Confidential treatment requested as to certain portions