<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 29, 2001

                                       OR

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

                 FOR THE TRANSITION PERIOD FROM ______ TO ______

                          COMMISSION FILE NUMBER 1-8941

                             FRUIT OF THE LOOM, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

             DELAWARE                                       36-3361804
  (STATE OR OTHER JURISDICTION OF                        (I.R.S. EMPLOYER
  INCORPORATION OR ORGANIZATION)                        IDENTIFICATION NO.)

                           200 W. MADISON, SUITE 2700
                             CHICAGO, ILLINOIS 60606
          (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)

                                 (312) 899-1320
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

         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 |X|   No |_|

         Capital stock outstanding at November 9, 2001: 66,905,348 Class A
Common Stock, $.01 par value and 5,229,421 shares of the Registrant's Preferred
Stock, $.01 par value (the Common and Preferred Stock is privately owned and not
traded on a public market).

<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                             PAGE NO.
                                                                                                             --------
<S>                                                                                                          <C>
PART I.  FINANCIAL INFORMATION
         Item 1.   Financial Statements
                   Condensed Consolidated Balance Sheet--September 29, 2001 (Unaudited)
                        and December 30, 2000.............................................................       2
                   Condensed Consolidated Statement of Operations (Unaudited)
                        for the Three and Nine Months Ended September 29, 2001 and September 30, 2000.....       3
                   Condensed Consolidated Statement of Cash Flows (Unaudited)
                        for the Nine Months Ended September 29, 2001 and September 30, 2000...............       4
                   Notes to Condensed Consolidated Financial Statements (Unaudited).......................       5
         Item 2.   Management's Discussion and Analysis of Financial Condition and
                        Results of Operations.............................................................      30
         Item 3.   Quantitative and Qualitative Disclosures about Market Risk.............................      38
PART II. OTHER INFORMATION
         Item 1.   Legal Proceedings......................................................................      39
         Item 6.   Exhibits and Reports on Form 8-K.......................................................      39
</TABLE>



                                       1
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
                      CONDENSED CONSOLIDATED BALANCE SHEET
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                                        SEPTEMBER 29,       DECEMBER 30,
                                                                                            2001                2000
                                                                                            ----                ----
                                                                                         (UNAUDITED)
<S>                                                                                  <C>                 <C>
ASSETS
Current Assets
   Cash and cash equivalents (including restricted cash)...........................  $        125,800    $       131,200
   Notes and accounts receivable (less allowance for possible
     losses of $31,500 and $44,800, respectively)..................................           186,200            142,400
   Inventories
     Finished goods................................................................           379,500            454,800
     Work in process...............................................................            40,900             78,900
     Materials and supplies........................................................            14,400             30,300
                                                                                     ----------------    ---------------
         Total inventories.........................................................           434,800            564,000
   Other ..........................................................................            24,600             25,900
                                                                                     ----------------    ---------------
         Total current assets......................................................           771,400            863,500
                                                                                     ----------------    ---------------
Property, Plant and Equipment......................................................           875,000          1,022,400
   Less accumulated depreciation...................................................           687,900            783,100
                                                                                     ----------------    ---------------
         Net property, plant and equipment.........................................           187,100            239,300
                                                                                     ----------------    ---------------
Other Assets
   Goodwill (less accumulated amortization of $395,200 and
     $376,700, respectively).......................................................           588,100            606,600
   Other ..........................................................................            53,700             76,300
                                                                                     ----------------    ---------------
         Total other assets........................................................           641,800            682,900
                                                                                     ----------------    ---------------
                                                                                     $      1,600,300    $     1,785,700
                                                                                     ================    ===============

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
   Current maturities of long-term debt............................................  $        647,400    $       746,400
   Trade accounts payable..........................................................            27,600             31,500
   Net liabilities of discontinued operations......................................             6,400              5,100
   Other accounts payable and accrued expenses.....................................           221,600            232,800
                                                                                     ----------------    ---------------
         Total current liabilities.................................................           903,000          1,015,800
                                                                                     ----------------    ---------------
Noncurrent Liabilities
   Long-term debt..................................................................           411,100            410,300
   Net liabilities of discontinued operations......................................            11,500             11,900
   Notes and accounts payable - affiliates.........................................           227,100            128,700
   Other ..........................................................................            26,200             11,500
                                                                                     ----------------    ---------------
         Total noncurrent liabilities..............................................           675,900            562,400
                                                                                     ----------------    ---------------
Liabilities Subject to Compromise
   Unrelated parties...............................................................           527,100            540,700
   Affiliates......................................................................           386,300            386,300
                                                                                     ----------------    ---------------
         Total liabilities subject to compromise...................................           913,400            927,000
                                                                                     ----------------    ---------------
Preferred Stock....................................................................            71,700             71,700
                                                                                     ----------------    ---------------
Common Stockholders' Deficit.......................................................          (963,700)          (791,200)
                                                                                     ----------------    ---------------
                                                                                     $      1,600,300    $     1,785,700
                                                                                     ================    ===============
</TABLE>

                             See accompanying notes.


                                       2
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
           CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                      THREE MONTHS ENDED                NINE MONTHS ENDED
                                                                      ------------------                -----------------
                                                                SEPTEMBER 29,    SEPTEMBER 30,    SEPTEMBER 29,    SEPTEMBER 30,
                                                                    2001             2000             2001             2000
                                                                    ----             ----             ----             ----
<S>                                                             <C>              <C>              <C>              <C>
Net sales
    Unrelated parties ......................................     $   361,400      $   397,400      $ 1,023,300      $ 1,220,400
    Affiliates .............................................         118,700          203,000          396,100          660,700
                                                                 -----------      -----------      -----------      -----------
                                                                     480,100          600,400        1,419,400        1,881,100
                                                                 -----------      -----------      -----------      -----------

Cost of sales
    Unrelated parties ......................................         271,900          308,700          807,700        1,073,300
    Affiliates .............................................         160,700          231,900          489,900          743,600
                                                                 -----------      -----------      -----------      -----------
                                                                     432,600          540,600        1,297,600        1,816,900
                                                                 -----------      -----------      -----------      -----------
       Gross earnings ......................................          47,500           59,800          121,800           64,200
Selling, general and administrative expenses:
    Operating ..............................................          36,300           38,500          114,900          144,000
    Consolidation costs ....................................           3,600               --           40,400               --
                                                                 -----------      -----------      -----------      -----------
                                                                      39,900           38,500          155,300          144,000
Goodwill amortization ......................................           6,200            6,200           18,500           18,500
                                                                 -----------      -----------      -----------      -----------
       Operating earnings (loss) ...........................           1,400           15,100          (52,000)         (98,300)
Interest expense ...........................................         (22,600)         (32,200)         (77,600)         (92,800)
Other (expense) income-net .................................          (2,900)          (2,700)          (2,000)           2,400
                                                                 -----------      -----------      -----------      -----------
       Loss from continuing operations before
         reorganization items and income tax provision .....         (24,100)         (19,800)        (131,600)        (188,700)
Reorganization items .......................................          (8,200)          (9,300)         (24,400)         (28,300)
                                                                 -----------      -----------      -----------      -----------
       Loss from continuing operations before
         income tax provision ..............................         (32,300)         (29,100)        (156,000)        (217,000)
Income tax provision .......................................             500              800            1,500            2,200
                                                                 -----------      -----------      -----------      -----------
       Loss from continuing operations .....................         (32,800)         (29,900)        (157,500)        (219,200)
Discontinued operations - Sports & Licensing:
    Loss from operations ...................................              --               --               --           (2,600)
                                                                 -----------      -----------      -----------      -----------
       Net loss ............................................     $   (32,800)     $   (29,900)     $  (157,500)     $  (221,800)
                                                                 ===========      ===========      ===========      ===========
</TABLE>


                             See accompanying notes.


                                       3
<PAGE>
                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
           CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                                          NINE MONTHS ENDED
                                                                                          -----------------
                                                                                  SEPTEMBER 29,       SEPTEMBER  30,
                                                                                      2001                2000
                                                                                      ----                ----
<S>                                                                               <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Loss from continuing operations........................................        $   (157,500)       $    (219,200)
   Adjustments to reconcile to net operating cash flows:
      Depreciation and amortization.......................................              58,300               81,800
      Decrease in working capital.........................................              83,900              129,700
      Cash flows of discontinued operations...............................                 500               23,400
      Gains on marketable equity securities...............................              (4,500)             (16,700)
      Consolidation of operations - writedowns and reserves ..............              36,800                   --
      Other--net..........................................................               1,700              (14,500)
                                                                                  ------------        -------------
         Net operating cash flows before
           reorganization items...........................................              19,200              (15,500)
      Net cash used for reorganization items..............................             (18,600)             (18,000)
                                                                                  ------------        -------------
           Net operating cash flows.......................................                 600              (33,500)
                                                                                  ------------        -------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures...................................................             (21,300)              (8,200)
   Proceeds for the sale of property, plant and equipment.................               7,900                3,300
   Proceeds from sale of Gitano...........................................                  --               16,500
   Proceeds from sale of marketable equity securities.....................               7,300               16,600
   Other--net.............................................................              (1,000)                (800)
                                                                                  ------------        -------------
           Net investing cash flows.......................................              (7,100)              27,400
                                                                                  ------------        -------------
CASH FLOWS FROM FINANCING ACTIVITIES
   DIP financing proceeds.................................................             755,300            1,040,300
   DIP financing payments.................................................            (855,300)          (1,061,000)
   Principal payments on long-term debt and capital leases................                (500)              (1,600)
   Affiliate notes and accounts payable...................................             101,600               91,100
                                                                                  ------------        -------------
           Net financing cash flows.......................................               1,100               68,800
                                                                                  ------------        -------------
Net increase (decrease) in Cash and cash
   equivalents (including restricted cash)................................              (5,400)              62,700
Cash and cash equivalents (including restricted
   cash) at beginning of period...........................................             131,200               38,300
                                                                                  ------------        -------------
Cash and cash equivalents (including restricted
   cash) at end of period.................................................        $    125,800        $     101,000
                                                                                  ============        =============
</TABLE>


                             See accompanying notes.


                                       4
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

         1. JOINT PLAN OF REORGANIZATION. Fruit of the Loom, Inc. ("FTL Inc.",
"Fruit of the Loom" or "the Company"), its parent and 32 direct and indirect
subsidiaries, debtors and debtors in possession (collectively, the "Debtors")
commenced reorganization cases (the "Reorganization Cases") by filing petitions
for relief under chapter 11 ("Chapter 11"), title 11 of the United States Code,
11 U.S.C. ss.ss. 101-1330 (as amended, the "BankruptCy Code") on December 29,
1999 (the "Petition Date") in the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court"). The Reorganization Cases are
being jointly administered, for procedural purposes only, before the Bankruptcy
Court under Case No. 99-4497(PJW). Pursuant to Sections 1107 and 1108 of the
Bankruptcy Code, FTL Inc., as debtor and debtor in possession, has continued to
manage and operate their assets and businesses subject to the supervision and
orders of the Bankruptcy Court. On March 15, 2001, FTL Inc. and the other
Debtors filed their joint plan of reorganization (the "Reorganization Plan") and
the disclosure statement (the "Disclosure Statement"), with the Bankruptcy Court
pursuant to Section 1125 of the Bankruptcy Code. The Disclosure Statement and
Reorganization Plan were filed on Form 8-K dated as of March 22, 2001 and are
hereby incorporated by reference. Because FTL Inc. is operating as debtor in
possession under the Bankruptcy Code, the existing directors and officers of FTL
Inc. continue to govern and manage the operations of the Company subject to the
supervision and orders of the Bankruptcy Court.

         On March 18, 2001, the unsecured creditors' committee (the "Committee")
filed a motion to stay all proceedings with respect to the Reorganization Plan
and the Disclosure Statement until a determination is made as to whether various
claims are secured or unsecured pursuant to a pending action commenced by the
Committee against certain prepetition secured lenders of Fruit of the Loom.
Fruit of the Loom opposed the motion. A hearing was held on the motion on May 9,
2001, at which (i) the committee withdrew the motion without prejudice, and (ii)
the Bankruptcy Court ordered the appointment of a mediator with respect to the
dispute between the committee and certain prepetition secured creditors of the
Debtors as to whether and to what extent those claims are both valid and
secured. Due to the committee's motion and the court ordered mediation, there
has not yet been a hearing to consider the adequacy of the Disclosure Statement.

         The Debtors, the Committee and representatives of the prepetition
secured creditors thereafter reached an agreement to resolve, among other
things, the Committee's pending adversary proceeding. By agreement, this
settlement will be set forth in an amended reorganization plan to be filed by
the Debtors and will provide for an increased distribution under the
Reorganization Plan to holders of allowed Class 4A Unsecured Claims (as such
term is defined in the Reorganization Plan), which reduces the distribution that
would otherwise go to the holders of the allowed Class 2 Prepetition Secured
Claims (as such term is defined in the Reorganization Plan). The Class 2
Prepetition Secured Creditors are the secured creditors whose liens were
challenged in the Committee's pending adversary proceeding. Under the
settlement, the holders of allowed Class 4A Unsecured Claims will receive the
economic equivalent of 7.5% of the equity interests in Reorganized Fruit of the
Loom (as such term is defined in the Reorganization Plan), which would have been
distributed under the Reorganization Plan as originally filed on March 15, 2001,
and 7.5% of the non-core assets of Fruit of the Loom. A more detailed
description of the distribution to the unsecured creditors is set forth in the
Motion to Approve the Bidding Procedures, a copy of which was filed by the
Company as part of its Form 8-K, dated November 9, 2001.

         Certain subsidiaries were not included in the Reorganization Cases.
Condensed combined financial statements of the entities in reorganization are
presented herein.


                                       5
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

         As part of the Reorganization Cases, the Company routinely files
pleadings, documents and reports with the Bankruptcy Court which may contain
updated, additional or more detailed information about the Company, its assets,
liabilities or financial performance than is contained in this report. Copies of
filings in the Company's Reorganization Cases are available during regular
business hours at the office of the Clerk of the Bankruptcy Court, United States
Bankruptcy Court for the District of Delaware, 5th Floor, 824 Market Street,
Wilmington, Delaware 19801. Certain filings may also be reviewed on the
Bankruptcy Court's electronic docket for the Company's Reorganization Cases,
which is posted on the internet at "www.deb.uscourts.gov".

         REORGANIZATION PLAN PROCEDURES. The Debtors expect to reorganize their
affairs under the protection of Chapter 11. The consummation of a plan of
reorganization is the principal objective of the Reorganization Cases. Although
the Reorganization Plan and Disclosure Statement were filed on March 15, 2001,
there has not yet been a hearing to consider the adequacy of the Disclosure
Statement. Pursuant to the settlement reached among the Debtors, the Committee,
and the representatives of the secured creditors, the Debtors will be filing an
amended reorganization plan ("Amended Reorganization Plan") to give effect to
the terms of the settlement and to incorporate a proposed sale of the Company's
basic apparel business, which is described below. It is anticipated that the
Amended Reorganization Plan will contemplate emergence in 2002, but there can be
no assurance at this time that the Amended Reorganization Plan proposed by the
Debtors will be approved or confirmed by the Bankruptcy Court, or that the
Amended Reorganization Plan will be consummated. The Amended Reorganization Plan
will not provide any recovery to the equity security holders of Fruit of the
Loom, Ltd. ("FTL Ltd."), the Company's parent. Accordingly, management believes
that current equity security holders (both common and preferred stock) will not
receive any distribution under any reorganization plan as a result of the
issuance of new equity to existing creditors. The Amended Reorganization Plan
will set forth the means for satisfying claims and interests in the Company and
its debtor subsidiaries, including the liabilities subject to compromise. The
consummation of the Amended Reorganization Plan will require the requisite vote
of impaired creditors entitled to vote under the Bankruptcy Code and
confirmation of the plan by the Bankruptcy Court.

         Effective November 1, 2001, the Company executed a definitive agreement
with an unrelated party for the sale of substantially all of the Company's basic
apparel business operations at a purchase price of $835,000,000 in cash, subject
to, and contingent upon, confirmation of the Amended Reorganization Plan. The
purchase price is subject to significant reduction for certain liabilities as
well as adjustment upward or downward depending on working capital levels. The
purchaser will assume the ordinary course post-petition liabilities and certain
specified prepetition liabilities of the business. As contemplated by the
definitive asset purchase agreement, the Company will seek approval of the
Bankruptcy Court to conduct an auction whereby higher and better offers to
purchase the business may be considered. The closing of the definitive asset
purchase agreement will be effectuated pursuant to the Amended Reorganization
Plan and is subject to completion of the auction and other conditions set forth
in the definitive asset purchase agreement. A copy of the definitive asset
agreement was filed by the Company as a part of its Form 8-K, dated November 9,
2001. For more details regarding the terms and conditions of the agreement,
please refer to the Form 8-K.



                                       6
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

         FINANCIAL STATEMENT PRESENTATION. The consolidated financial statements
have been presented in accordance with the American Institute of Certified
Public Accountants Statement of Position 90-7, "Financial Reporting by Entities
in Reorganization under the Bankruptcy Code" ("SOP 90-7"), and have been
prepared in accordance with accounting principles generally accepted in the
United States applicable to a going concern, which principles, except as
otherwise disclosed, assume that assets will be realized and liabilities will be
discharged in the ordinary course of business. As a result of the Reorganization
Cases and circumstances relating to this event, including FTL Inc.'s debt
structure, default on all prepetition debt, negative cash flows, its recurring
losses, and current economic conditions, such realization of assets and
liquidation of liabilities are subject to significant uncertainty. While under
the protection of Chapter 11, the Company may sell or otherwise dispose of
assets, and liquidate or settle liabilities, for amounts other than those
reflected in the financial statements. Additionally, the amounts reported on the
consolidated balance sheet could materially change because of changes in
business strategies and the effects of any proposed plan of reorganization.

         The appropriateness of using the going concern basis is dependent upon,
among other things, confirmation of a plan of reorganization, future profitable
operations, the ability to comply with the terms of the debtor-in-possession
financing facility and the ability to generate sufficient cash from operations
and financing arrangements to meet obligations.

         LIABILITIES SUBJECT TO COMPROMISE. In the Reorganization Cases,
substantially all unsecured liabilities as of the Petition Date are subject to
compromise or other treatment under a plan of reorganization which must be
confirmed by the Bankruptcy Court after submission to any required vote by
affected parties. For financial reporting purposes, those liabilities and
obligations whose treatment and satisfaction are dependent on the outcome of the
Reorganization Cases, have been segregated and classified as liabilities subject
to compromise under reorganization proceedings in the consolidated balance
sheets. Generally, all actions to enforce or otherwise effect repayment of
prepetition liabilities as well as all pending litigation against the Debtors
are stayed while the Debtors continue their business operations as debtors in
possession. Unaudited schedules have been filed by the Debtors with the
Bankruptcy Court setting forth the assets and liabilities of the Debtors as of
the Petition Date as reflected in the Debtors' accounting records. The ultimate
amount of and settlement terms for such liabilities are subject to an approved
plan of reorganization and accordingly are not presently determinable.

         Under the Bankruptcy Code, the Debtors may elect to assume or reject
real estate leases, employment contracts, personal property leases, service
contracts and other prepetition executory contracts, subject to Bankruptcy Court
approval. Claims for damages resulting from the rejection of real estate leases
and other executory contracts will be subject to separate bar dates. The Debtors
have reviewed substantially all leases and executory contracts and have assumed
or rejected most of such leases and contracts. The remaining leases and
executory contracts are anticipated to be either assumed or rejected pursuant to
a plan of reorganization upon emergence from Chapter 11.



                                       7
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

         The principal categories of obligations classified as liabilities
subject to compromise to unrelated parties under reorganization cases are
identified below. The amounts below in total may vary significantly from the
stated amount of proofs of claim that will be filed with the Bankruptcy Court
and may be subject to future adjustment depending on Bankruptcy Court action,
further developments with respect to potential disputed claims, determination as
to the value of any collateral securing claims, or other events.

<TABLE>
<CAPTION>
                                                               SEPT. 29,    DECEMBER 30,
                                                                 2001           2000
                                                                 ----           ----
                                                              (IN THOUSANDS OF DOLLARS)
<S>                                                           <C>           <C>
         8.875% Unsecured Senior Notes....................    $  248,500     $  248,500
         Trade accounts payable...........................        96,800         97,200
         Environmental and product liability..............        31,800         33,800
         Accrued severance................................        27,900         27,900
         Deferred compensation accrual....................        10,100         14,300
         Other............................................       112,000        119,000
                                                              ----------     ----------
                                                              $  527,100     $  540,700
                                                              ==========     ==========
</TABLE>

         As a result of the Reorganization Cases, no principal or interest
payments will be made on unsecured prepetition debt without Bankruptcy Court
approval or until a plan of reorganization providing for the repayment terms has
been confirmed by the Bankruptcy Court and becomes effective. Therefore,
interest on prepetition unsecured obligations has not been accrued after the
Petition Date.

         REORGANIZATION ITEMS AND OTHER EXPENSES. Pursuant to SOP 90-7, revenues
and expenses, realized gains and losses, and provisions for losses resulting
from the reorganization of the business are reported in the Condensed
Consolidated Statement of Operations separately as reorganization items.
Professional fees are expensed as incurred. Interest expense is reported only to
the extent that it will be paid during the cases or that it is probable that it
will be an allowed claim.



                                       8
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

         The Company's 7% Debentures due March 15, 2011 were delisted as of June
14, 2000 upon notice from the NASDAQ-AMEX Market Group (the "Exchange") that the
Company had fallen below certain of the Exchange's continued listing guidelines.

         2. On March 4, 1999, FTL Ltd., a Cayman Islands company, became the
parent holding company of FTL Inc. pursuant to a reorganization (the "Cayman
Reorganization") approved by the stockholders of FTL Inc. on November 12, 1998.
At the beginning of the third quarter of 1999, FTL Inc. transferred ownership of
its Central American subsidiaries that perform essentially all of the Company's
sewing and finishing operations for the U.S. market to FTL Caribe Ltd., a Cayman
Islands company directly wholly owned by FTL Ltd.

         As originally planned, when fully implemented, the Cayman
Reorganization would have transferred ownership from FTL Inc. to FTL Ltd., or a
non-United States subsidiary of FTL Ltd., of essentially all businesses and
subsidiaries of FTL Inc. located outside of the United States (other than
certain operations in Canada and Mexico) and would have transferred beneficial
ownership of certain trademarks from FTL Inc. to FTL Ltd. The Cayman
Reorganization was not fully implemented before the Petition Date; neither the
trademarks nor FTL Inc.'s indirect European subsidiaries were transferred to FTL
Ltd.

         3. The condensed consolidated financial statements contained herein
should be read in conjunction with the consolidated financial statements and
related notes contained in the Company's Annual Report on Form 10-K for the year
ended December 30, 2000. The information furnished herein reflects all
adjustments (consisting of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of the results of
operations of the interim periods. Operating results for the nine months ended
September 29, 2001 are not necessarily indicative of results that may be
expected for the full year. Certain prior year amounts have been reclassified to
conform with the current year presentation.

         4. No dividends were declared on the Company's common stock for the
nine-month periods ended September 29, 2001 and September 30, 2000. The Board of
Directors of the Company believes that no dividends will be declared on the
Company's common stock while the Company's Reorganization Cases are pending.

         5. The Company's income tax provision for the third quarter and first
nine months of 2001 and 2000 consists of a provision for European income taxes.
The Company recorded no U.S. tax benefit at the U.S. statutory rate of 35% on
the pretax loss in the third quarter and first nine months of 2000 or first nine
months of 2001 or the pretax earnings in the third quarter of 2001 primarily
because the Company is unable to realize any current benefit from the operating
loss through carrybacks to prior years and due to the Company's present
inability under the Reorganization Cases to implement certain income tax
planning strategies. In addition, the Company expects a loss before income taxes
for 2001.


                                       9
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

         6. On February 23, 2000, the Bankruptcy Court approved the Company's
plan to discontinue the operations of the Company's Pro Player Sports and
Licensing Division ("Pro Player"). In accordance with accounting principles
generally accepted in the United States, Pro Player has been treated as a
discontinued operation in the accompanying condensed consolidated financial
statements. A portion of the Company's interest expense (in the amount of
interest expense in each period presented below) has been allocated to
discontinued operations based on the debt balance attributable to those
operations. Income taxes have been provided on a separate company basis. In
connection with the Company's decision to discontinue the operations of Pro
Player, $47,500,000 was accrued in 1999 for the loss on disposal of the assets
of Pro Player and for expected operating losses during the phase-out period from
February 24, 2000 through disposal. An additional $20,200,000 provision for loss
on disposal was recorded in the fourth quarter of 2000. Accordingly, the portion
of Pro Player's net loss attributable to periods after February 23, 2000 has
been charged to the Company's reserve for loss on disposal.

         Operating results for Pro Player are classified as Discontinued
Operations in the accompanying condensed statement of operations as follows (in
thousands of dollars):

<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED         NINE MONTHS ENDED
                                                                        ------------------         -----------------
                                                                      SEPT. 29,     SEPT. 30,    SEPT. 29,    SEPT. 30,
                                                                        2001          2000         2001         2000
                                                                        ----          ----         ----         ----
<S>                                                                 <C>            <C>          <C>          <C>
         Net sales................................................  $        --    $     (500)  $    3,000   $   29,100
         Cost of sales............................................           --           900        2,100       30,000
                                                                    -----------    ----------   ----------   ----------
              Gross earnings (loss)...............................           --        (1,400)         900         (900)
         Selling, general & administrative expenses...............           --           500        1,200       13,500
         Goodwill amortization....................................           --            --           --        1,000
                                                                    -----------    ----------   ----------   ----------
              Operating loss......................................           --        (1,900)        (300)     (15,400)
         Interest expense.........................................           --            --           --       (1,500)
         Other expense--net.......................................           --        (1,100)          --       (1,400)
                                                                    -----------    ----------   ----------   ----------
              Net loss............................................           --        (3,000)        (300)     (18,300)
         Portion of net loss charged to reserve
                          for loss on disposal....................           --         3,000          300       15,700
                                                                    -----------    ----------   ----------   ----------
              Loss from discontinued operations...................  $        --    $       --   $       --   $   (2,600)
                                                                    ===========    ==========   ==========   ==========
</TABLE>

         Assets and liabilities of the discontinued Pro Player segment consisted
of the following (in thousands of dollars):

<TABLE>
<CAPTION>
                                                                                            SEPT. 29,      DECEMBER 30,
                                                                                              2001             2000
                                                                                              ----             ----
<S>                                                                                        <C>             <C>
Inventories.............................................................................   $        --     $        500
Other accounts payable and accrued expenses.............................................        (6,400)          (5,600)
                                                                                           -----------     ------------
    Net current liabilities.............................................................        (6,400)          (5,100)
                                                                                           -----------     -------------
Property, plant and equipment...........................................................         2,000            2,000
Liabilities subject to compromise.......................................................       (13,500)         (13,900)
                                                                                           -----------     ------------
    Net noncurrent liabilities..........................................................       (11,500)         (11,900)
                                                                                           -----------     ------------
    Net liabilities of discontinued operations..........................................   $   (17,900)    $    (17,000)
                                                                                           ===========     ============
</TABLE>

         Assets are shown at their expected net realizable values.



                                       10
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

         7. In the first quarter of 2001, an $8,800,000 charge was recorded
principally related to the closure of one of the Company's yarn mills. In the
second quarter of 2001, the Company reached a decision and announced the closure
of one of its textile facilities and one additional sewing facility. The total
cost related to the closure of these facilities aggregated $30,400,000 and was
recorded in the second quarter of 2001. In the third quarter of 2001, the
Company reached a decision to close one of its textile facilities as well as
certain administrative offices in Europe. The total cost related to the closure
of these facilities aggregated $3,900,000 and was recorded in the third quarter
of 2001. Included in the cost of the 2001 shutdowns were cash charges of
$6,600,000.

         Following is a summary of 2001 consolidation costs and related reserve
balances at September 29, 2001 (in thousands of dollars):

<TABLE>
<CAPTION>
                                                                                                               RESERVE
                                                           2001                                              BALANCE AT
                                                      CONSOLIDATION    CASH       INCOME        OTHER          SEPT. 29,
                                                          COSTS       PAYMENTS   (EXPENSE)     ACTIVITY          2001
                                                          -----       --------   ---------     --------          ----
<S>                                                   <C>             <C>        <C>          <C>            <C>
Closing of facilities:
         Severance...................................  $     5,400    $  2,100   $     300    $        --    $     3,000
         Property, plant and equipment...............       36,500          --          --         16,700         19,800
         Other costs.................................        1,200         700          --             --            500
                                                       -----------    --------   ---------    -----------    -----------
                                                       $    43,100    $  2,800   $     300    $    16,700    $    23,300
                                                       ===========    ========   =========    ===========    ===========
</TABLE>

         Other activity in the first nine months of 2001 consists primarily of
disposal of property, plant and equipment.

         In the fourth quarter of 2000, the Company incurred costs in connection
with the closure of several manufacturing facilities in the United States,
resulting in special charges aggregating $73,300,000 for write downs of
inventory, property, plant and equipment, other assets and contractual
obligations.

         A rollforward of the 2000 special charges from December 30, 2000
through September 29, 2001 is presented below (in thousands of dollars):

<TABLE>
<CAPTION>
                                                         RESERVE                                              RESERVE
                                                        BALANCE AT                                           BALANCE AT
                                                       DECEMBER 30,     CASH       INCOME        OTHER        SEPT. 29,
                                                           2000       PAYMENTS    (EXPENSE)     ACTIVITY        2001
                                                           ----       --------    ---------     --------        ----
<S>                                                    <C>            <C>        <C>          <C>            <C>
Closing and disposal of U.S.
   manufacturing facilities..........................  $    60,600    $  1,700   $   (2,000)  $    56,600    $     4,300
                                                       ===========    ========   ===========  ===========    ===========
</TABLE>

         Other activity in the first nine months of 2001 consists primarily of
disposal of property, plant and equipment. The Company sold five facilities in
the second quarter of 2001 at an aggregate price of $4,100,000 which resulted in
a loss of $2,300,000 in addition to the charges recorded in 2000. The loss was
recorded in other expense in the accompanying condensed consolidated statement
of operations. In addition, the Company sold equipment in the first nine months
of 2001 for an aggregate price of $2,200,000 and recorded no gain or loss on the
sales compared to the written down balance. Also, the Company finalized certain
of the 2000 consolidation costs in the second quarter of 2001, resulting in a
reduction in 2001 consolidation costs of $300,000.



                                       11
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

         In the third and fourth quarters of 1999, the Company recorded charges
for provisions and losses on the sale of close-out and irregular inventory,
costs related to impairment of certain European manufacturing facilities,
severance, a debt guarantee and other asset write-downs and reserves. These
charges totaled $345,800,000 ($126,600,000 in the third quarter and $219,200,000
in the fourth quarter).

         A rollforward of the 1999 special charges from December 30, 2000
through September 29, 2001 is presented below (in thousands of dollars):

<TABLE>
<CAPTION>
                                                         RESERVE                                               RESERVE
                                                        BALANCE AT                                            BALANCE AT
                                                       DECEMBER 30,     CASH       INCOME       OTHER         SEPT. 29,
                                                           2000       PAYMENTS    (EXPENSE)    ACTIVITY          2001
                                                           ----       --------    ---------    --------          ----
<S>                                                    <C>            <C>        <C>          <C>            <C>
Provisions and losses on the sale of
   close-out and irregular merchandise...............  $     4,900    $     --   $        --  $     4,900    $        --
Severance (subject to compromise)....................       27,900          --            --           --         27,900
Debt guarantee.......................................       29,300          --            --           --         29,300
Other asset write downs and reserves ($8,000,000
       subject to compromise)........................       22,500          --            --       14,500          8,000
                                                       -----------    --------   -----------  -----------    -----------
                                                       $    84,600    $     --            --  $    19,400    $    65,200
                                                       ===========    ========   ===========  ===========    ===========
</TABLE>

         Other activity in the first nine months of 2001 consists of inventory
reserves which were relieved as the inventory was sold. Other activity does not
include amounts provided in the first nine months of 2001 for additional ongoing
normal lower of cost or market reserves.

         In the fourth quarter of 1997, the Company recorded charges for costs
related to the closing and disposal of a number of domestic manufacturing and
distribution facilities, impairment of manufacturing equipment and other assets
and certain European manufacturing and distribution facilities, and other costs
associated with the Company's world-wide restructuring of manufacturing and
distribution facilities. These and other special charges totaled $441,700,000
($372,200,000 after tax).



                                       12
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

         A rollforward of the 1997 special charges from December 30, 2000
through September 29, 2001 is presented below (in thousands of dollars):

<TABLE>
<CAPTION>
                                                           RESERVE                                              RESERVE
                                                          BALANCE AT                                           BALANCE AT
                                                         DECEMBER 30,    CASH         INCOME       OTHER       SEPT. 29,
                                                             2000      PAYMENTS      (EXPENSE)    ACTIVITY        2001
                                                             ----      --------      ---------    --------        ----
<S>                                                      <C>           <C>           <C>         <C>           <C>
CLOSING AND DISPOSAL OF U.S. MANUFACTURING
   AND DISTRIBUTION FACILITIES
Loss on sale of facilities, improvements and equipment:
     Sewing, finishing and distribution facilities...     $   23,200   $      --     $     --    $  17,400     $     5,800
     Impairment of mills to be sold..................         13,400          --           --        4,500           8,900
     Lease residual guarantees.......................         54,200          --           --           --          54,200
     Other equipment.................................          6,100          --           --        1,900           4,200
                                                          ----------   ---------     --------    ---------     -----------
                                                              96,900          --           --       23,800          73,100
Severance costs......................................            200          --          200           --              --
Other accruals.......................................          1,900          --        1,900           --              --
                                                          ----------   ---------     --------    ---------     -----------
                                                              99,000          --        2,100       23,800          73,100
                                                          ----------   ---------     --------    ---------     -----------
OTHER ASSET WRITE-DOWNS AND RESERVES
Other accruals.......................................          2,100          --           --          200           1,900
                                                          ----------   ---------     --------    ---------     -----------
                                                               2,100          --           --          200           1,900
                                                          ----------   ---------     --------    ---------     -----------
CHANGES IN ESTIMATES OF CERTAIN RETAINED
   LIABILITIES OF FORMER SUBSIDIARIES................          8,800          --           --          200           8,600
                                                          ----------   ---------     --------    ---------     -----------
                                                          $  109,900   $      --     $  2,100    $  24,200     $    83,600
                                                          ==========   =========     ========    =========     ===========
</TABLE>

         Other activity in the first nine months of 2001 consists primarily of
disposal of property, plant and equipment. In the first quarter of 2001, the
Company finalized certain estimates related to the 1997 special charges,
resulting in reductions in 2001 consolidation costs of $2,100,000.

         8. The Company and its subsidiaries are involved in certain legal
proceedings and have retained liabilities, including certain environmental
liabilities such as those under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), as amended, its regulations
and similar state statutes ("Superfund Legislation"), in connection with the
sale of certain operations. The Company's subsidiary, NWI Land Management, Inc.,
is responsible for several sites that require varying levels of inspection,
maintenance, environmental monitoring and remedial or corrective action.
Reserves for estimated losses from environmental remediation obligations
generally are recognized no earlier than the completion of the remedial
feasibility study. The Company has established procedures to evaluate its
potential remedial liabilities and routinely reviews and evaluates sites
requiring remediation, giving consideration to the nature, extent and number of
years of the Company's alleged connection with the site. The Company's retained
liability reserves as of September 29, 2001 consist primarily of certain
environmental and product liability reserves of $29,800,000 and $2,000,000,
respectively. The Company has certain amounts of environmental and other
insurance which may cover expenditures in connection with environmental sites
and product liabilities. Management believes that adequate reserves have been
established to cover potential claims based on facts currently available and
current Superfund Legislation and CERCLA legislation.


                                       13
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)


         Owners and operators of hazardous waste sites, generators and
transporters of hazardous wastes are subject to claims brought by State and
Federal regulatory agencies under Superfund Legislation and by private citizens
under Superfund Legislation and common law theories. Since 1982, the United
States Environmental Protection Agency (the "EPA") has actively sought
compensation for response costs and remedial action at disposal locations from
liable parties under the Superfund Legislation, which authorizes such action by
the EPA regardless of fault, legality of original disposal or ownership of a
disposal site. The EPA's activities under the Superfund Legislation can be
expected to continue during the remainder of 2001 and future years.

         Certain of the Company's facilities, particularly in Central America,
have been, and will continue to be, exposed to a risk of inclement weather and
other conditions which could have a material adverse impact upon its operations.
The Company's operations also involve the use of ocean-going transport to ship
fabric to off-shore plants and to return finished goods to both Europe and the
United States; such maritime transport is inherently subject to risk from
weather and other conditions. While the Company maintains property and casualty
insurance related to such risks, the Company's insurance may be inadequate to
cover catastrophic events.

         On February 24, 1999, the Board of Directors, excluding Mr. Farley,
authorized the Company to guarantee a bank loan of up to $65,000,000 (the
lenders in respect of such are hereinafter referred to as the "Farley lenders")
to Mr. Farley in connection with Mr. Farley's refinancing and retirement of his
$26,000,000 and $12,000,000 loans previously guaranteed by the Company and other
indebtedness of Mr. Farley. The Company's obligations under the guarantee are
collateralized by 2,507,512 shares of FTL Inc. Preferred Stock and all of Mr.
Farley's assets, including Mr. Farley's personal guarantee. In consideration of
the guarantee, which expired in September 2000 (but as to which the Debtors
remain liable for all claims for payment thereunder made or deemed made prior to
that date), Mr. Farley is obligated to pay an annual guarantee fee equal to 2%
of the outstanding principal balance of the loan. The Board of Directors
received an opinion from an independent financial advisor that the terms of the
transaction are commercially reasonable. The total amount guaranteed is
$59,300,000 as of November 1, 2001. Based on management's assessment of existing
facts and circumstances of Mr. Farley's financial condition, the Company
recorded a $10,000,000 charge in the third quarter of 1999 and a $20,000,000
charge in the fourth quarter of 1999 related to the Company's exposure under the
guarantee. The Company continues to evaluate its exposure under the guarantee.
Mr. Farley has not paid the Company the guarantee fee due in 2000 and 2001 and
is in default under the loans and the reimbursement agreement with the Company.
The Company began paying interest on the loan in the first quarter of 2000
including interest that was outstanding from the fourth quarter of 1999. On May
16, 2000, Fruit of the Loom sent a demand letter to Mr. Farley on account of his
reimbursement obligation. Through November 1, 2001, total payments made by the
Company on behalf of Mr. Farley's loan aggregated $9,200,000. In addition,
unpaid guarantee fees owed the Company by Mr. Farley through November 1, 2001
aggregated $2,700,000.





                                       14
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

         On March 27, 1995, Mr. Farley and Fruit of the Loom entered into an
employment agreement, effective as of December 18, 1994, which was subsequently
amended and restated as of January 6, 1999 (the "Employment Agreement"). Mr.
Farley relinquished the duties of chief executive officer and chief operating
officer in August of 1999 at the direction of the Board. The Company recorded a
provision of $27,400,000 in the third quarter of 1999 for estimated future
severance and retirement obligations under Mr. Farley's Employment Agreement.
Fruit of the Loom terminated the Employment Agreement prior to the Petition Date
and, as a protective measure, rejected it by order of the Bankruptcy Court on
December 30, 1999. Pursuant to the terms of the Employment Agreement, Mr. Farley
had the right to defer all or a portion of his compensation in a particular year
in exchange for the right to receive benefits payable (if any) under a Deferred
Compensation Plan and a Rabbi Trust ("Rabbi Trust"). The Rabbi Trust provided
that, in the event Fruit of the Loom becomes a "debtor" under the Bankruptcy
Code, the assets of the Rabbi Trust would be held for the benefit of Fruit of
the Loom's general creditors. Nonetheless, Mr. Farley has taken the position
that the Rabbi Trust and its assets should not be considered property of Fruit
of the Loom's estate.

         On March 3, 2000, Fruit of the Loom moved for the entry of an order,
pursuant to Sections 105 and 543 of the Bankruptcy Code (the "Turnover Motion"),
directing the turnover of the cash and securities held in the Rabbi Trust (the
"Rabbi Trust Assets") from Wachovia Corporation ("Wachovia"). On or about June
30, 2000, the Bankruptcy Court entered an order granting, in part, the Turnover
Motion and directing that (i) Wachovia turn over the Rabbi Trust Assets to Fruit
of the Loom, (ii) Fruit of the Loom deposit the Rabbi Trust Assets in an escrow
account (the "Escrow Account") and (iii) Fruit of the Loom commence an adversary
proceeding seeking a declaratory judgment regarding the ownership of the Rabbi
Trust Assets and Fruit of the Loom's ability to use such assets in the
Reorganization Cases. As described more fully below, in furtherance of the
Bankruptcy Court's order, Fruit of the Loom commenced an adversary proceeding
against Mr. Farley, which is pending, and deposited the Rabbi Trust Assets into
the Escrow Account.

         On May 30, 2000, Mr. Farley commenced an adversary proceeding against
Fruit of the Loom in the Bankruptcy Court, Farley v. Fruit of the Loom, Inc.,
Case No. 99-04497, Adv. Proc. No. 00-646 (D. Del.) (the "Remedies Proceeding").
The Remedies Proceeding seeks a declaratory judgment that Mr. Farley is a
third-party beneficiary of certain documents with respect to Fruit of the Loom's
guarantee of the Farley loan, and that those documents cannot be altered without
his consent. Mr. Farley seeks a judgment that Fruit of the Loom is foreclosed
from seeking reimbursement and repayment for payments made by Fruit of the Loom
to the Farley lenders pursuant to the Farley guarantee until the Farley lenders
are paid in full. Fruit of the Loom has filed an answer and counterclaim
seeking, among other things, a determination that Mr. Farley is in breach of his
reimbursement obligations to Fruit of the Loom and a judgment requiring him to
specifically perform his obligations under the reimbursement agreement.

         On June 30, 2000, Fruit of the Loom filed a motion for summary judgment
in the Remedies Proceeding. On July 21, 2000, Mr. Farley opposed Fruit of the
Loom's summary judgment motion and filed a motion, pursuant to Rule 56(f) of the
Federal Rules of Civil Procedure, seeking entry of an order postponing and
continuing the Bankruptcy Court's consideration of Fruit of the Loom's summary
judgment motion. The District Court has reserved judgment on both motions.

         On July 17, 2000, Fruit of the Loom commenced an action against Mr.
Farley in the Bankruptcy Court, Fruit of the Loom, Inc. v. Farley, Case No.
99-04497, Adv. Proc. No. 00-724 (D. Del.) (the "Rabbi Trust Proceeding"). The
Rabbi Trust Proceeding seeks a declaratory judgment that certain assets
maintained and held in the Rabbi Trust are the property of Fruit of the Loom's
estate and may be used immediately by Fruit of the Loom for the benefit of its
estate and creditors. On August 21, 2000, Mr. Farley filed an answer and
counterclaims against Fruit of the Loom.



                                       15
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

         On August 4, 2000, Fruit of the Loom commenced an action against Mr.
Farley in the Bankruptcy Court, Fruit of the Loom, Inc. v. Farley, Case No.
99-04497, Adv. Proc. No. 00-276 (D. Del.) (the "Artwork Proceeding"). The
Artwork Proceeding seeks the return of certain pieces of art owned by Fruit of
the Loom that Fruit of the Loom contends are in the possession of Mr. Farley. On
September 2, 2000, Mr. Farley filed an answer and counterclaims against Fruit of
the Loom.

         On September 7, 2000, the reference for all three adversary proceedings
involving Fruit of the Loom and Mr. Farley was withdrawn to the United States
District Court for the District of Delaware and the adversary proceedings were
assigned to the Honorable Sue L. Robinson, effective September 27, 2000.
Discovery has commenced with respect to all of the adversary proceedings.

         On or about October 27, 2000, the Farley lenders commenced an action in
the Supreme Court for the State of New York, County of New York, Bank of
America, N.A. v. William F. Farley, Index No. 001604685, against Mr. Farley to
enforce his obligations to the Farley lenders. On December 8, 2000, this action
was removed to the United States District Court for the Southern District of New
York. The Farley lenders assert that Mr. Farley is in default under the Farley
loan agreements and seek repayment of the Farley loan pursuant to the loan
agreements in an amount equal to approximately $60,000,000. The case is
currently pending.

         The Company has negotiated grants from the governments of the Republic
of Ireland, Northern Ireland and Germany. The grants are being used for employee
training, the acquisition of property and equipment and other governmental
business incentives such as general employment. At September 29, 2001, the
Company had a contingent liability to repay, in whole or in part, grants
received of approximately $10,300,000 in the event that the Company does not
meet defined average employment levels or terminates operations in the Republic
of Ireland and Germany.

         On September 30, 1998, the New England Health Care Employees Pension
Fund filed a purported class action on behalf of all those who purchased FTL
Inc. Class A Common Stock and publicly traded options between July 24, 1996 and
September 5, 1997 against Fruit of the Loom and William F. Farley, Bernhard
Hansen, Richard C. Lappin, G. William Newton, Burgess D. Ridge, Larry K. Switzer
and John D. Wigodsky, each of whom is a current or former officer of Fruit of
the Loom, in the United States District Court for the Western District of
Kentucky (the "New England Action"). The plaintiff claims that the defendants
engaged in conduct violating Section 10(b) of the Securities Exchange Act of
1934, as amended (the "Act"), and that Fruit of the Loom and Mr. Farley are also
liable under Section 20(a) of the Act. A motion to dismiss the complaint filed
by the defendants was denied.

         Fruit of the Loom and counsel for the plaintiff reached agreement, so
ordered by the Bankruptcy Court on November 20, 2000 (the "105 Stipulation"), to
stay the New England Action and certain other proceedings at least until January
15, 2001, (which has been extended on consent) subject, among other things, to
certain limited document discovery against non-parties (other than any current
or former officers and directors) being permitted to proceed, and to the right
of the plaintiff to amend the complaint to add additional parties. Pursuant to
the 105 Stipulation, as extended on consent, the New England Action was stayed
indefinitely as to all parties. However, the stay will not be extended beyond
November 16, 2001.

         In March, April and May 2000, nine putative class actions were filed on
behalf of all those who purchased Fruit of the Loom, Inc. Class A common stock
between September 28, 1998 and November 4, 1999 against William F. Farley and G.
William Newton, each of whom is a current or former officer of Fruit of the
Loom, in the United States District Court for the Western District of Kentucky.
The actions allege that the defendants violated section 10(b) of the Act, and
that Mr. Farley is also liable under Section 20(a) of the Act. The nine putative
class action lawsuits have been consolidated under Bernard Fidel v. William
Farley, et al., Civil Action No. 1:00 CV-48M (W.D. Ky.), filed on March 22,
2000. A motion to dismiss the complaint filed by the defendants was denied.



                                       16
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)


         The Fidel v. Farley, et al. action was also stayed by the 105
Stipulation. By letter dated January 19, 2001, counsel for the class action
plaintiffs agreed to continue the stay under the 105 Stipulation indefinitely
pending settlement discussions. However, the stay will not be extended beyond
November 16, 2001.

         Management believes that the above described actions are without merit,
and management and the Company intend to defend them vigorously. Management
believes, based on information currently available, that the ultimate resolution
of this litigation will not have a material adverse effect on the financial
condition or results of the operations of the Company.

         9. Comprehensive loss was as follows (in thousands of dollars):

<TABLE>
<CAPTION>
                                                                             THREE MONTHS ENDED            NINE MONTHS ENDED
                                                                             ------------------            -----------------
                                                                        SEPTEMBER 29,  SEPTEMBER 30,  SEPTEMBER 29,  SEPTEMBER 30,
                                                                            2001           2000           2001           2000
                                                                            ----           ----           ----           ----
<S>                                                                     <C>            <C>            <C>            <C>
               Net loss ..............................................   $ (32,800)     $ (29,900)     $(157,500)     $(221,800)
               Foreign currency translation adjustments--net .........       7,200         (8,700)        (5,700)       (17,300)
               Unrealized gain (loss) on marketable equity securities:
                     Holding gain (loss) .............................        (700)         4,400         (5,500)         6,400
                     Realized gains reclassified to net loss .........          --           (300)          (100)       (10,300)
               Accumulated loss on derivatives:
                     Holding loss ....................................      (2,400)            --         (3,500)            --
                                                                         ---------      ---------      ---------      ---------

                     Comprehensive loss ..............................   $ (28,700)     $ (34,500)     $(172,300)     $(243,000)
                                                                         =========      =========      =========      =========
</TABLE>

         The Company adopted Statement of Financial Accounting Standards No.
133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"),
effective December 31, 2000. The adoption resulted in no changes in the
Company's net income or other comprehensive income. At the adoption date the
Company's position with respect to derivative instruments and hedging activities
consisted of fixed price cotton purchase contracts that qualify for the "normal
purchases and sales" exclusion under SFAS 133.

         In the second and third quarters of 2001, to hedge a portion of its
forecasted cotton needs, the Company purchased cotton futures contracts and call
options maturing at various dates through March 2003. Through September 29,
2001, net losses of $3,500,000 from changes in the fair values of cotton futures
and options have been deferred and included in other comprehensive income. The
Company would expect to reclassify an insignificant portion of these deferred
losses to income in the next twelve months, if realized, based on forecasted
cotton purchases and average finished inventory turns. Gains or losses related
to hedge ineffectiveness, to derivative components excluded from the assessment
of hedge effectiveness or to discontinuance of hedge accounting have been
insignificant or have not occurred.

         10. DEBTOR FINANCIAL STATEMENTS. The following represents the
consolidation of the Company and its Debtor subsidiaries as of September 29,
2001 and December 30, 2000 and for the three and nine months ended September 29,
2001 and September 30, 2000. Investments in nondebtor subsidiaries are presented
using the equity method.



                                       17
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

                 FRUIT OF THE LOOM, INC. AND DEBTOR SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
                SUPPLEMENTAL CONDENSED CONSOLIDATED BALANCE SHEET
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                                                    SEPTEMBER 29,     DECEMBER 30,
                                                                                                        2001              2000
                                                                                                        ----              ----
                                                 ASSETS                                              (UNAUDITED)
<S>                                                                                                 <C>               <C>
Current Assets
   Cash and cash equivalents (including restricted cash) .......................................     $    66,500      $    93,100
   Notes and accounts receivable (less allowance for possible losses $17,800 and of $34,100) ...         135,700           94,000
   Inventories
      Finished goods ...........................................................................         311,000          392,700
      Work in process ..........................................................................          35,600           66,800
      Materials and supplies ...................................................................          10,600           23,700
                                                                                                     -----------      -----------
         Total inventories .....................................................................         357,200          483,200
   Other .......................................................................................          17,200           18,200
                                                                                                     -----------      -----------
         Total current assets ..................................................................         576,600          688,500
                                                                                                     -----------      -----------
Property, Plant and Equipment ..................................................................         734,500          870,000
   Less accumulated depreciation ...............................................................         606,300          699,200
                                                                                                     -----------      -----------
         Net property, plant and equipment .....................................................         128,200          170,800
                                                                                                     -----------      -----------
Other Assets
   Goodwill (less accumulated amortization of $395,200 and $376,700) ...........................         588,100          606,600
   Investment in nondebtor subsidiaries ........................................................         254,400          274,500
   Receivable from nondebtor subsidiaries ......................................................         114,200           85,800
   Other .......................................................................................          53,300           76,000
                                                                                                     -----------      -----------
         Total other assets ....................................................................       1,010,000        1,042,900
                                                                                                     -----------      -----------
                                                                                                     $ 1,714,800      $ 1,902,200
                                                                                                     ===========      ===========

                                LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
   Current maturities of long-term debt ........................................................     $   646,600      $   745,700
   Trade accounts payable ......................................................................          19,100           21,700
   Net liabilities of discontinued operations ..................................................           6,400            5,100
   Other accounts payable and accrued expenses .................................................         196,900          211,500
                                                                                                     -----------      -----------
         Total current liabilities .............................................................         869,000          984,000
                                                                                                     -----------      -----------
Noncurrent Liabilities
   Long-term debt ..............................................................................         387,600          385,800
   Net liabilities of discontinued operations ..................................................          11,500           11,900
   Payable to nondebtor subsidiaries ...........................................................         179,400           81,600
   Other .......................................................................................          26,000           11,500
                                                                                                     -----------      -----------
         Total noncurrent liabilities ..........................................................         604,500          490,800
                                                                                                     -----------      -----------
Liabilities Subject to Compromise
   Unrelated parties ...........................................................................         527,100          540,700
   Payable to nondebtor subsidiaries and affiliates ............................................         606,200          606,200
                                                                                                     -----------      -----------
         Total liabilities subject to compromise ...............................................       1,133,300        1,146,900
                                                                                                     -----------      -----------
Exchangeable Preferred Stock ...................................................................          71,700           71,700
                                                                                                     -----------      -----------
Common Stockholders' Deficit ...................................................................        (963,700)        (791,200)
                                                                                                     -----------      -----------

                                                                                                     $ 1,714,800      $ 1,902,200
                                                                                                     ===========      ===========
</TABLE>


                                       18
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

                 FRUIT OF THE LOOM, INC. AND DEBTOR SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
     SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                         THREE MONTHS ENDED                NINE MONTHS ENDED
                                                                         ------------------                -----------------
                                                                   SEPTEMBER 29,    SEPTEMBER 30,    SEPTEMBER 29,    SEPTEMBER 30,
                                                                       2001             2000             2001             2000
                                                                       ----             ----             ----             ----
<S>                                                                <C>              <C>              <C>              <C>
Net Sales
   Unrelated parties .............................................  $   308,400      $   334,800      $   844,500      $ 1,017,400
   Affiliates ....................................................      127,800          203,000          423,400          660,700
                                                                    -----------      -----------      -----------      -----------
                                                                        436,200          537,800        1,267,900        1,678,100
                                                                    -----------      -----------      -----------      -----------
Cost of Sales
   Unrelated parties .............................................      229,600          241,500          662,400          878,800
   Affiliates ....................................................      168,600          256,700          514,100          796,200
                                                                    -----------      -----------      -----------      -----------
                                                                        398,200          498,200        1,176,500        1,675,000
                                                                    -----------      -----------      -----------      -----------
   Gross earnings ................................................       38,000           39,600           91,400            3,100
Selling, general and administrative expenses .....................       23,300           28,500          113,700          102,700
Goodwill amortization ............................................        6,200            6,200           18,500           18,500
                                                                    -----------      -----------      -----------      -----------
   Operating earnings (loss) .....................................        8,500            4,900          (40,800)        (118,100)
Interest expense .................................................      (22,300)         (31,500)         (76,700)         (90,900)
Equity in earnings of nondebtor subsidiaries .....................       (9,200)           3,500          (14,500)           9,100
Other (expense) income--net ......................................       (1,400)           2,700             (500)          11,700
                                                                    -----------      -----------      -----------      -----------
   Loss from continuing operations before reorganization items
      and income tax provision ...................................      (24,400)         (20,400)        (132,500)        (188,200)
Reorganization items .............................................       (8,200)          (9,300)         (24,400)         (28,300)
                                                                    -----------      -----------      -----------      -----------
   Loss from continuing operations before income tax provision ...      (32,600)         (29,700)        (156,900)        (216,500)
Income tax provision .............................................          200              200              600            2,700
                                                                    -----------      -----------      -----------      -----------
   Loss from continuing operations ...............................      (32,800)         (29,900)        (157,500)        (219,200)
Discontinued operations:
   Loss--Sports & Licensing operations ...........................           --               --               --           (2,600)
                                                                    -----------      -----------      -----------      -----------
      Net loss ...................................................  $   (32,800)     $   (29,900)     $  (157,500)     $  (221,800)
                                                                    ===========      ===========      ===========      ===========
</TABLE>


                                       19
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

                 FRUIT OF THE LOOM, INC. AND DEBTOR SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
     SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                                                   NINE MONTHS ENDED
                                                                                                   -----------------
                                                                                              SEPTEMBER 29,  SEPTEMBER 30,
                                                                                                  2001           2000
                                                                                                  ----           -----
<S>                                                                                          <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Loss from continuing operations........................................................   $    (157,500)     (219,200)
   Adjustments to reconcile to net operating cash flows:
      Equity in (earnings) loss of nondebtor subsidiaries.................................          14,500        (9,100)
      Depreciation and amortization.......................................................          51,600        73,700
      Decrease in working capital.........................................................          80,300       189,800
      Cash flows of discontinued operations...............................................             500        23,400
      Gains on marketable equity securities...............................................          (4,500)      (16,700)
      Consolidation of operations - writedowns and reserves ..............................          35,300            --
      Other--net..........................................................................           7,600          (900)
                                                                                             -------------   -----------
        Net operating cash flows before reorganization items..............................          27,800        41,000
      Net cash used for reorganization items..............................................         (18,600)      (18,000)
                                                                                             -------------   -----------
          Net operating cash flows........................................................           9,200        23,000
                                                                                             -------------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures...................................................................         (20,900)       (7,300)
   Proceeds from sale of property, plant and equipment....................................           6,800         3,300
   Proceeds from sale of Gitano...........................................................              --        16,500
   Proceeds from sale of marketable equity securities.....................................           7,300        16,600
   Affiliate notes and accounts receivable................................................         (28,400)      (23,300)
   Other--net.............................................................................          (1,000)         (800)
                                                                                             -------------   -----------
          Net investing cash flows........................................................         (36,200)        5,000
                                                                                             -------------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES
   DIP financing proceeds.................................................................         755,300     1,040,300
   DIP financing payments.................................................................        (855,300)   (1,061,000)
   Affiliate notes and accounts payable...................................................         100,400        52,300
                                                                                             -------------   -----------
          Net financing cash flows........................................................             400        31,600
                                                                                             -------------   -----------
Net increase (decrease) in cash and cash equivalents (including restricted cash)..........         (26,600)       59,600
Cash and cash equivalents (including restricted cash) at beginning of period..............          93,100        18,200
                                                                                             -------------   -----------
Cash and cash equivalents (including restricted cash) at end of period....................   $      66,500   $    77,800
                                                                                             =============   ===========
</TABLE>


                                       20
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

         11. The Company's 87/8% senior notes due April 2006 ("87/8% Senior
Notes") are fully and unconditionally guaranteed on a senior unsecured basis,
jointly and severally, by each of the Company's principal, wholly-owned domestic
subsidiaries (the "Guarantor Subsidiaries"). Substantially all of the Company's
operating income and cash flow is generated by its subsidiaries. As a result,
funds necessary to meet the Company's debt service obligations are provided in
part by distributions or advances from its subsidiaries. Under certain
circumstances, contractual and legal restrictions, as well as the financial
condition and operating requirements of the Company's subsidiaries could limit
the Company's ability to obtain cash from its subsidiaries for the purpose of
meeting its debt service obligations. There are currently no significant
restrictions on the ability of the Guarantor Subsidiaries to make distributions
to the Company.

         The supplemental guarantor condensed consolidating financial statements
present:

                  (a) Supplemental condensed consolidating balance sheets as of
         September 29, 2001 and December 30, 2000, and supplemental condensed
         consolidating summaries of operations and cash flows for the nine
         months ended of September 29, 2001 and September 30, 2000;

                  (b)  The non-guarantor subsidiaries combined;

                  (c) The Guarantor Subsidiaries combined, with investments in
         non-guarantor subsidiaries accounted for using the equity method and
         with net assets of discontinued operations segregated;

                  (d) Fruit of the Loom, Inc. with investments in subsidiaries
         accounted for using the equity method; and

                  (e) Elimination entries necessary to consolidate the Company
         and all of its subsidiaries.

         Separate financial statements of individual Guarantor Subsidiaries are
not presented because the Guarantor Subsidiaries are jointly, severally and
unconditionally liable under the guarantees, are wholly-owned by the Company,
management has determined that they are not material to investors and the
Company believes the supplemental guarantor/non-guarantor condensed
consolidating financial statements as presented are more meaningful in
understanding the financial position of the Company and its Guarantor
Subsidiaries.



                                       21
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

         SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET (UNAUDITED)
                               SEPTEMBER 29, 2001
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                               COMBINED      COMBINED       FRUIT       ELIMINATIONS
                                                            NON-GUARANTOR   GUARANTOR      OF THE          AND
                                                             SUBSIDIARIES  SUBSIDIARIES   LOOM, INC.  RECLASSIFICATIONS CONSOLIDATED
                                                             ------------  ------------   ----------  ----------------- ------------
<S>                                                         <C>            <C>            <C>         <C>               <C>
ASSETS
Current Assets
   Cash and cash equivalents
     (including restricted cash) ........................... $    56,300   $    11,600    $    57,900    $              $   125,800
   Notes and accounts receivable
   (less allowance for possible losses of $31,500) .........      45,300       140,500            400                       186,200
   Inventories
     Finished goods ........................................      54,800       324,700             --                       379,500
     Work in process .......................................       9,800        31,100             --                        40,900
     Materials and supplies ................................       6,300         8,100             --                        14,400
                                                             -----------   -----------    -----------    -----------    -----------
         Total inventories .................................      70,900       363,900             --                       434,800
   Other ...................................................       5,000        18,400          1,200                        24,600
                                                             -----------   -----------    -----------    -----------    -----------
         Total current assets ..............................     177,500       534,400         59,500                       771,400
                                                             -----------   -----------    -----------    -----------    -----------
Property, Plant and Equipment ..............................     130,500       744,000            500                       875,000
   Less accumulated depreciation ...........................      78,000       609,500            400                       687,900
                                                             -----------   -----------    -----------    -----------    -----------
       Net property, plant and equipment ...................      52,500       134,500            100                       187,100
                                                             -----------   -----------    -----------    -----------    -----------
Other Assets
   Goodwill (less accumulated amortization of $395,200) ....          --        26,700        561,400                       588,100
   Affiliate notes and accounts receivable--net ............          --            --      1,105,200     (1,105,200)            --
   Investment in subsidiaries ..............................          --        64,700             --        (64,700)            --
   Other ...................................................       1,400        20,700         31,600             --         53,700
                                                             -----------   -----------    -----------    -----------    -----------
         Total other assets ................................       1,400       112,100      1,698,200     (1,169,900)       641,800
                                                             -----------   -----------    -----------    -----------    -----------
                                                             $   231,400   $   781,000    $ 1,757,800    $(1,169,900)   $ 1,600,300
                                                             ===========   ===========    ===========    ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
   Current maturities of long-term debt .................... $       800   $        --    $   646,600    $              $   647,400
   Trade accounts payable ..................................       6,700        17,200          3,700                        27,600
   Net liabilities of discontinued operations ..............          --         6,400             --                         6,400
   Other accounts payable and accrued expenses .............      21,400       124,500         75,700                       221,600
                                                             -----------   -----------    -----------    -----------    -----------
         Total current liabilities .........................      28,900       148,100        726,000                       903,000
                                                             -----------   -----------    -----------    -----------    -----------
Noncurrent Liabilities
   Long-term debt ..........................................      23,500         7,600        380,000                       411,100
   Losses in excess of investment in subsidiaries ..........          --            --      1,214,800     (1,214,800)            --
   Net liabilities of discontinued operations ..............          --        11,500             --                        11,500
   Notes and account payable - affiliates ..................     114,200     1,218,100             --     (1,105,200)       227,100
   Other ...................................................         100        23,100          3,000                        26,200
                                                             -----------   -----------    -----------    -----------    -----------
         Total noncurrent liabilities ......................     137,800     1,260,300      1,597,800     (2,320,000)       675,900
                                                             -----------   -----------    -----------    -----------    -----------
Liabilities Subject to Compromise
   Unrelated parties .......................................          --       201,100        326,000                       527,100
   Affiliates ..............................................          --       386,300             --                       386,300
                                                             -----------   -----------    -----------    -----------    -----------
         Total liabilities subject to compromise ...........          --       587,400        326,000                       913,400
                                                             -----------   -----------    -----------    -----------    -----------
Preferred Stock ............................................          --            --         71,700                        71,700
                                                             -----------   -----------    -----------    -----------    -----------
Common Stockholder's Equity (Deficit) ......................      64,700    (1,214,800)      (963,700)     1,150,100       (963,700)
                                                             -----------   -----------    -----------    -----------    -----------
                                                             $   231,400   $   781,000    $ 1,757,800    $(1,169,900)   $ 1,600,300
                                                             ===========   ===========    ===========    ===========    ===========
</TABLE>


                                       22
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

     SUPPLEMENTAL CONDENSED CONSOLIDATING SUMMARY OF OPERATIONS (UNAUDITED)
                      THREE MONTHS ENDED SEPTEMBER 29, 2001
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                          COMBINED       COMBINED        FRUIT      ELIMINATIONS
                                                       NON-GUARANTOR    GUARANTOR       OF THE          AND
                                                        SUBSIDIARIES   SUBSIDIARIES    LOOM, INC. RECLASSIFICATIONS  CONSOLIDATED
                                                        ------------   ------------    ---------- -----------------  ------------
<S>                                                    <C>             <C>             <C>        <C>                <C>
Net sales
   Unrelated parties ................................... $  48,600      $ 312,800      $              $                $ 361,400
   Affiliates ..........................................        --        124,900                        (6,200)         118,700
                                                         ---------      ---------      ---------      ---------        ---------
                                                            48,600        437,700                        (6,200)         480,100
                                                         ---------      ---------      ---------      ---------        ---------
Cost of sales
   Unrelated parties ...................................    39,900        232,000                                        271,900
   Affiliates ..........................................        --        166,900                        (6,200)         160,700
                                                         ---------      ---------      ---------      ---------        ---------
                                                            39,900        398,900                        (6,200)         432,600
                                                         ---------      ---------      ---------      ---------        ---------
     Gross earnings ....................................     8,700         38,800                                         47,500
Selling, general and administrative expenses ...........    12,800         28,100         (1,000)                         39,900
Goodwill amortization ..................................        --            300          5,900                           6,200
                                                         ---------      ---------      ---------      ---------        ---------
     Operating earnings (loss) .........................    (4,100)        10,400         (4,900)                          1,400
Interest expense .......................................      (300)          (100)       (22,200)                        (22,600)
Affiliated interest income (expense) ...................      (800)       (20,900)        21,700                              --
Equity in losses of subsidiaries .......................        --         (9,800)       (11,100)        20,900               --
Other income (expense)--net ............................    (4,300)         9,600         (8,200)                         (2,900)
                                                         ---------      ---------      ---------      ---------        ---------
     Loss from continuing operations before
       reorganization items and income tax provision ...    (9,500)       (10,800)       (24,700)        20,900          (24,100)
Reorganization items ...................................        --           (100)        (8,100)                         (8,200)
                                                         ---------      ---------      ---------      ---------        ---------
     Loss from continuing operations before
         income tax provision ..........................    (9,500)       (10,900)       (32,800)        20,900          (32,300)
Income tax provision ...................................       300            200             --                             500
                                                         ---------      ---------      ---------      ---------        ---------
     Loss from continuing operations ...................    (9,800)       (11,100)       (32,800)        20,900          (32,800)
Discontinued operations - Sports & Licensing
   Loss from operations ................................        --             --             --             --               --
                                                         ---------      ---------      ---------      ---------        ---------
     Net loss .......................................... $  (9,800)     $ (11,100)     $ (32,800)     $  20,900        $ (32,800)
                                                         =========      =========      =========      =========        =========
</TABLE>




                                       23
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

     SUPPLEMENTAL CONDENSED CONSOLIDATING SUMMARY OF OPERATIONS (UNAUDITED)
                      NINE MONTHS ENDED SEPTEMBER 29, 2001
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                            COMBINED       COMBINED        FRUIT      ELIMINATIONS
                                                         NON-GUARANTOR    GUARANTOR       OF THE          AND
                                                          SUBSIDIARIES   SUBSIDIARIES    LOOM, INC. RECLASSIFICATIONS CONSOLIDATED
                                                          ------------   ------------    ---------- ----------------- ------------
<S>                                                      <C>             <C>            <C>         <C>               <C>
Net sales
   Unrelated parties .................................... $   169,200    $   854,100    $              $              $ 1,023,300
   Affiliates ...........................................          --        415,500                       (19,400)       396,100
                                                          -----------    -----------    -----------    -----------    -----------
                                                              169,200      1,269,600                       (19,400)     1,419,400
                                                          -----------    -----------    -----------    -----------    -----------
Cost of sales
   Unrelated parties ....................................     140,900        666,800                                      807,700
   Affiliates ...........................................          --        509,300                       (19,400)       489,900
                                                          -----------    -----------    -----------    -----------    -----------
                                                              140,900      1,176,100                       (19,400)     1,297,600
                                                          -----------    -----------    -----------    -----------    -----------
     Gross earnings .....................................      28,300         93,500                                      121,800
Selling, general and administrative expenses ............      36,000        117,200          2,100                       155,300
Goodwill amortization ...................................          --            800         17,700                        18,500
                                                          -----------    -----------    -----------    -----------    -----------
     Operating loss .....................................      (7,700)       (24,500)       (19,800)                      (52,000)
Interest expense ........................................        (900)          (300)       (76,400)                      (77,600)
Affiliated interest income (expense) ....................      (2,400)       (74,100)        76,500                            --
Equity in losses of subsidiaries ........................          --        (15,600)      (103,600)       119,200             --
Other income (expense)--net .............................      (3,700)        12,400        (10,700)                       (2,000)
                                                          -----------    -----------    -----------    -----------    -----------
     Loss from continuing operations before
       reorganization items and income tax provision ....     (14,700)      (102,100)      (134,000)       119,200       (131,600)
Reorganization items ....................................          --           (900)       (23,500)                      (24,400)
                                                          -----------    -----------    -----------    -----------    -----------
     Loss from continuing operations before
         income tax provision ...........................     (14,700)      (103,000)      (157,500)       119,200       (156,000)
Income tax provision ....................................         900            600             --                         1,500
                                                          -----------    -----------    -----------    -----------    -----------
     Loss from continuing operations ....................     (15,600)      (103,600)      (157,500)       119,200       (157,500)
Discontinued operations - Sports & Licensing
   Loss from operations .................................          --             --             --             --             --
                                                          -----------    -----------    -----------    -----------    -----------
     Net loss ........................................... $   (15,600)   $  (103,600)   $  (157,500)   $   119,200    $  (157,500)
                                                          ===========    ===========    ===========    ===========    ===========
</TABLE>



                                       24
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

     SUPPLEMENTAL CONDENSED CONSOLIDATING SUMMARY OF CASH FLOWS (UNAUDITED)
                      NINE MONTHS ENDED SEPTEMBER 29, 2001
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                   COMBINED     COMBINED     FRUIT      ELIMINATIONS
                                                                NON-GUARANTOR   GUARANTOR   OF THE          AND
                                                                 SUBSIDIARIES SUBSIDIARIES LOOM, INC. RECLASSIFICATIONS CONSOLIDATED
                                                                 ------------ ------------ ---------- ----------------- ------------
<S>                                                             <C>           <C>          <C>        <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Loss from continuing operations .............................  $ (15,600)   $(103,600)  $(157,500)     $ 119,200      $(157,500)
   Adjustments to reconcile to net operating cash flows:
     Equity in losses of subsidiaries ..........................         --       15,600     103,600       (119,200)            --
     Depreciation and amortization .............................      6,300       27,800      24,200                        58,300
     Decrease (increase) in working capital ....................     (3,400)      84,600       2,700                        83,900
     Cash flows of discontinued operations .....................         --          500          --                           500
     Gain on marketable equity securities ......................         --       (4,500)         --                        (4,500)
     Consolidation of operations - writedowns and  reserves ....      6,300       30,500          --                        36,800
     Other--net ................................................     (4,600)     (16,800)     23,100                         1,700
                                                                  ---------    ---------   ---------      ---------      ---------
       Net operating cash flows
         before reorganization items ...........................    (11,000)      34,100      (3,900)                       19,200
     Net cash used for reorganization items ....................         --           --     (18,600)                      (18,600)
                                                                  ---------    ---------   ---------      ---------      ---------
             Net operating cash flows ..........................    (11,000)      34,100     (22,500)            --            600
                                                                  ---------    ---------   ---------      ---------      ---------
CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures ........................................       (300)     (21,000)         --                       (21,300)
   Proceeds for the sale of property, plant and equipment ......      1,100        6,800          --                         7,900
   Proceeds from sale of marketable equity securities ..........         --        7,300          --                         7,300
   Affiliate notes and accounts receivable .....................     59,500           --     100,000       (159,500)            --
   Liquidation of investment in preferred stock of subsidiary ..         --       50,800          --        (50,800)            --
   Other--net ..................................................         --       (1,000)         --                        (1,000)
                                                                  ---------    ---------   ---------      ---------      ---------
             Net investing cash flows ..........................     60,300       42,900     100,000       (210,300)        (7,100)
                                                                  ---------    ---------   ---------      ---------      ---------
CASH FLOWS FROM FINANCING ACTIVITIES
   DIP financing proceeds ......................................         --           --     755,300                       755,300
   DIP financing payments ......................................         --           --    (855,300)                     (855,300)
   Principal payments on
     long-term debt and capital leases .........................       (500)          --          --                          (500)
   Affiliate notes and accounts payable ........................     25,300      (83,200)         --        159,500        101,600
   Redemption of preferred stock held by affiliate .............    (50,800)          --          --         50,800             --
                                                                  ---------    ---------   ---------      ---------      ---------
             Net financing cash flows ..........................    (26,000)     (83,200)   (100,000)       210,300          1,100
                                                                  ---------    ---------   ---------      ---------      ---------
Net increase (decrease) in Cash and cash equivalents
   (including restricted cash) .................................     23,300       (6,200)    (22,500)            --         (5,400)
Cash and cash equivalents (including restricted cash)
   at beginning of period ......................................     33,000       17,800      80,400                       131,200
                                                                  ---------    ---------   ---------      ---------      ---------
Cash and cash equivalents (including restricted cash)
   at end of period ............................................  $  56,300    $  11,600   $  57,900 $           --      $ 125,800
                                                                  =========    =========   =========      =========      =========
</TABLE>


                                       25
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTORS IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

               SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
                                DECEMBER 30, 2000
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                               COMBINED      COMBINED       FRUIT      ELIMINATIONS
                                                            NON-GUARANTOR   GUARANTOR       OF THE         AND
                                                             SUBSIDIARIES  SUBSIDIARIES    LOOM INC. RECLASSIFICATIONS CONSOLIDATED
                                                             ------------  ------------    --------- ----------------- ------------
<S>                                                         <C>            <C>            <C>        <C>               <C>
ASSETS
Current Assets
   Cash and cash equivalents (including restricted cash) ... $    33,000   $    17,800    $    80,400    $              $   131,200
   Notes and accounts receivable (less allowance
     for possible losses of $44,800) .......................      38,100       104,100            200                       142,400
   Inventories
     Finished goods ........................................      62,400       392,400             --                       454,800
     Work in process .......................................       7,300        71,600             --                        78,900
     Materials and supplies ................................       5,500        24,800             --                        30,300
                                                             -----------   -----------    -----------    -----------    -----------
       Total inventories ...................................      75,200       488,800             --                       564,000
   Other ...................................................       5,500        18,400          2,000                        25,900
                                                             -----------   -----------    -----------    -----------    -----------
       Total currents assets ...............................     151,800       629,100         82,600                       863,500
                                                             -----------   -----------    -----------    -----------    -----------
Property, Plant and Equipment ..............................     142,600       874,600          5,200                     1,022,400
   Less accumulated depreciation ...........................      80,800       699,700          2,600                       783,100
                                                             -----------   -----------    -----------    -----------    -----------
     Net property, plant and equipment .....................      61,800       174,900          2,600                       239,300
                                                             -----------   -----------    -----------    -----------    -----------
Other Assets
   Goodwill (less accumulated amortization of $376,700) ....          --        27,500        579,100                       606,600
   Affiliate notes and accounts receivable--net ............          --            --      1,202,800     (1,202,800)            --
   Investment in subsidiaries ..............................          --       135,100             --       (135,100)            --
   Other ...................................................       1,400        30,500         44,400                        76,300
                                                             -----------   -----------    -----------    -----------    -----------
       Total other assets ..................................       1,400       193,100      1,826,300    $(1,337,900)       682,900
                                                             -----------   -----------    -----------    -----------    -----------
                                                             $   215,000   $   997,100    $ 1,911,500    $(1,337,900)   $ 1,785,700
                                                             ===========   ===========    ===========    ===========    ===========

LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current Liabilities
   Current maturities of long-term debt .................... $       700   $        --    $   745,700    $              $   746,400
   Trade accounts payable ..................................       7,100        24,400             --                        31,500
   Net liabilities of discontinued operations ..............          --         5,100             --                         5,100
   Other accounts payable and accrued expenses .............      18,100       133,100         81,600                       232,800
                                                             -----------   -----------    -----------    -----------    -----------
       Total current liabilities ...........................      25,900       162,600        827,300                     1,015,800
                                                             -----------   -----------    -----------    -----------    -----------
Noncurrent Liabilities
   Long-term debt ..........................................      24,400         7,700        378,200                       410,300
   Losses in excess of investment in subsidiaries ..........          --            --      1,096,300     (1,096,300)            --
   Net liabilities of discontinued operations ..............          --        11,900             --                        11,900
   Affiliate notes and accounts payable ....................      29,500     1,302,000             --     (1,202,800)       128,700
   Other ...................................................         100        11,300            100                        11,500
                                                             -----------   -----------    -----------    -----------    -----------
       Total noncurrent liabilities ........................      54,000     1,332,900      1,474,600     (2,299,100)       562,400
                                                             -----------   -----------    -----------    -----------    -----------
Liabilities Subject to Compromise
   Unrelated parties .......................................          --       211,600        329,100                       540,700
   Affiliates ..............................................          --       386,300             --                       386,300
                                                             -----------   -----------    -----------    -----------    -----------
                                                                      --       597,900        329,100                       927,000
                                                             -----------   -----------    -----------    -----------    -----------
Preferred Stock ............................................          --            --         71,700                        71,700
                                                             -----------   -----------    -----------    -----------    -----------
Common Stockholder's Equity (Deficit) ......................     135,100    (1,096,300)      (791,200)       961,200       (791,200)
                                                             -----------   -----------    -----------    -----------    -----------
                                                             $   215,000   $   997,100    $ 1,911,500    $(1,337,900)   $ 1,785,700
                                                             ===========   ===========    ===========    ===========    ===========
</TABLE>



                                       26
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTOR IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

     SUPPLEMENTAL CONDENSED CONSOLIDATING SUMMARY OF OPERATIONS (UNAUDITED)
                      THREE MONTHS ENDED SEPTEMBER 30, 2000
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                            COMBINED     COMBINED       FRUIT      ELIMINATIONS
                                                         NON-GUARANTOR   GUARANTOR     OF THE          AND
                                                          SUBSIDIARIES SUBSIDIARIES   LOOM, INC. RECLASSIFICATION  CONSOLIDATED
                                                          ------------ ------------   ---------- ----------------  ------------
<S>                                                      <C>           <C>            <C>        <C>               <C>
Net sales
   Unrelated parties ....................................   $  56,800    $ 340,600    $              $              $ 397,400
   Affiliates ...........................................          --      210,500                      (7,500)       203,000
                                                            ---------    ---------    ---------      ---------      ---------
                                                               56,800      551,100                      (7,500)       600,400
                                                            ---------    ---------    ---------      ---------      ---------
Cost of sales
   Unrelated parties ....................................      44,200      264,500                                    308,700
   Affiliates ...........................................          --      239,400                      (7,500)       231,900
                                                            ---------    ---------    ---------      ---------      ---------
                                                               44,200      503,900                      (7,500)       540,600
                                                            ---------    ---------    ---------      ---------      ---------
     Gross earnings .....................................      12,600       47,200                                     59,800
Selling, general and administrative expenses ............      10,000       26,000        2,500                        38,500
Goodwill amortization ...................................          --          300        5,900                         6,200
                                                            ---------    ---------    ---------      ---------      ---------
     Operating earnings (loss) ..........................       2,600       20,900       (8,400)                       15,100
Interest expense ........................................        (700)        (200)     (31,300)                      (32,200)
Affiliated interest income (expense) ....................        (800)     (34,100)      34,900                            --
Equity in losses of subsidiaries ........................          --        1,000      (21,900)        20,900             --
Other income (expense)--net .............................         400       (8,900)       5,800                        (2,700)
                                                            ---------    ---------    ---------      ---------      ---------
     Earnings (loss) from continuing operations before
       reorganization items and income tax provision ....       1,500      (21,300)     (20,900)        20,900        (19,800)
Reorganization items ....................................          --         (300)      (9,000)                       (9,300)
                                                            ---------    ---------    ---------      ---------      ---------
     Earnings (loss) from continuing operations before
         income tax provision ...........................       1,500      (21,600)     (29,900)        20,900        (29,100)
Income tax provision ....................................         500          300           --                           800
                                                            ---------    ---------    ---------      ---------      ---------
     Loss from continuing operations ....................       1,000      (21,900)     (29,900)        20,900        (29,900)
Discontinued operations:
   Loss - Sports & Licensing operations .................          --           --           --             --             --
                                                            ---------    ---------    ---------      ---------      ---------
     Net earnings (loss) ................................   $   1,000    $ (21,900)   $ (29,900)     $  20,900      $ (29,900)
                                                            =========    =========    =========      =========      =========
</TABLE>



                                       27
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTOR IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

     SUPPLEMENTAL CONDENSED CONSOLIDATING SUMMARY OF OPERATIONS (UNAUDITED)
                      NINE MONTHS ENDED SEPTEMBER 30, 2000
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                           COMBINED        COMBINED        FRUIT      ELIMINATIONS
                                                         NON-GUARANTOR    GUARANTOR       OF THE          AND
                                                          SUBSIDIARIES   SUBSIDIARIES    LOOM, INC. RECLASSIFICATION  CONSOLIDATED
                                                          ------------   ------------    ---------- ----------------  ------------
<S>                                                      <C>             <C>            <C>         <C>               <C>
Net sales
   Unrelated parties .................................... $   189,300    $ 1,031,100    $              $              $ 1,220,400
   Affiliates ...........................................          --        685,800                       (25,100)       660,700
                                                          -----------    -----------    -----------    -----------    -----------
                                                              189,300      1,716,900                       (25,100)     1,881,100
                                                          -----------    -----------    -----------    -----------    -----------
Cost of sales
   Unrelated parties ....................................     148,400        924,900                                    1,073,300
   Affiliates ...........................................          --        768,700                       (25,100)       743,600
                                                          -----------    -----------    -----------    -----------    -----------
                                                              148,400      1,693,600                       (25,100)     1,816,900
                                                          -----------    -----------    -----------    -----------    -----------
     Gross earnings .....................................      40,900         23,300                                       64,200
Selling, general and administrative expenses ............      33,700        102,300          8,000                       144,000
Goodwill amortization ...................................          --            800         17,700                        18,500
                                                          -----------    -----------    -----------    -----------    -----------
     Operating earnings (loss) ..........................       7,200        (79,800)       (25,700)                      (98,300)
Interest expense ........................................      (1,900)          (600)       (90,300)                      (92,800)
Affiliated interest income (expense) ....................      (2,100)      (108,500)       110,600                            --
Equity in losses of subsidiaries ........................          --           (200)      (188,700)       188,900             --
Other income (expense)--net .............................      (2,400)         6,100         (1,300)                        2,400
                                                          -----------    -----------    -----------    -----------    -----------
     Earnings (loss) from continuing operations before
       reorganization items and income tax provision ....         800       (183,000)      (195,400)       188,900       (188,700)
Reorganization items ....................................          --         (1,900)       (26,400)                      (28,300)
                                                          -----------    -----------    -----------    -----------    -----------
     Earnings (loss) from continuing operations before
         income tax provision ...........................         800       (184,900)      (221,800)       188,900       (217,000)
Income tax provision ....................................       1,000          1,200             --                         2,200
                                                          -----------    -----------    -----------    -----------    -----------
     Loss from continuing operations ....................        (200)      (186,100)      (221,800)       188,900       (219,200)
Discontinued operations:
   Loss - Sports & Licensing operations .................          --         (2,600)            --             --         (2,600)
                                                          -----------    -----------    -----------    -----------    -----------
     Net loss ........................................... $      (200)   $  (188,700)   $  (221,800)   $   188,900    $  (221,800)
                                                          ===========    ===========    ===========    ===========    ===========
</TABLE>



                                       28
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
                             (DEBTOR IN POSSESSION)
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

     SUPPLEMENTAL CONDENSED CONSOLIDATING SUMMARY OF CASH FLOWS (UNAUDITED)
                      NINE MONTHS ENDED SEPTEMBER 30, 2000
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                               COMBINED      COMBINED       FRUIT      ELIMINATIONS
                                                             NON-GUARANTOR   GUARANTOR     OF THE          AND
                                                             SUBSIDIARIES  SUBSIDIARIES   LOOM, INC. RECLASSIFICATION  CONSOLIDATED
                                                             ------------  ------------   ---------- ----------------  ------------
<S>                                                          <C>           <C>           <C>         <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Loss from continuing operations ......................... $      (200)  $  (186,100)  $  (221,800)   $   188,900    $  (219,200)
   Adjustments to reconcile to net operating cash flows:
     Equity in losses of subsidiaries ......................          --           200       188,700       (188,900)            --
     Depreciation and amortization .........................       7,600        48,200        26,000                        81,800
     Decrease (increase) in working capital ................     (16,000)      105,100        40,600                       129,700
     Cash flows of discontinued operations .................          --        23,400            --                        23,400
     Gain on marketable equity securities ..................          --       (16,700)           --                       (16,700)
     Other--net ............................................     (10,400)      (16,300)       12,200                       (14,500)
                                                             -----------   -----------   -----------    -----------    -----------
       Net operating cash flows
         before reorganization items .......................     (19,000)      (42,200)       45,700                       (15,500)
     Net cash used for reorganization items ................          --        (1,900)      (16,100)                      (18,000)
                                                             -----------   -----------   -----------    -----------    -----------
             Net operating cash flows ......................     (19,000)      (44,100)       29,600             --        (33,500)
                                                             -----------   -----------   -----------    -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures ....................................        (400)       (7,800)           --                        (8,200)
   Proceeds from sale of marketable equity securities ......          --        16,600            --                        16,600
   Proceeds from sale of Gitano ............................                    16,500                                      16,500
   Proceeds from sale of property, plant and equipment .....         100         3,200            --                         3,300
   Affiliate notes and accounts receivable .................       4,300            --        55,800        (60,100)            --
   Other--net ..............................................          --        (1,000)          200                          (800)
                                                             -----------   -----------   -----------    -----------    -----------
             Net investing cash flows ......................       4,000        27,500        56,000        (60,100)        27,400
                                                             -----------   -----------   -----------    -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES
   DIP financing proceeds ..................................          --            --     1,040,300                     1,040,300
   DIP financing payments ..................................          --            --    (1,061,000)                   (1,061,000)
   Principal payments on
     long-term debt and capital leases .....................      (1,600)           --            --                        (1,600)
   Affiliate notes and accounts payable ....................      17,500        13,500            --         60,100         91,100
                                                             -----------   -----------   -----------    -----------    -----------
             Net financing cash flows ......................      15,900        13,500       (20,700)        60,100         68,800
                                                             -----------   -----------   -----------    -----------    -----------
Net increase in Cash and cash equivalents (including
   restricted cash) ........................................         900        (3,100)       64,900             --         62,700
Cash and cash equivalents (including restricted cash)
   at beginning of period ..................................      19,100        10,300         8,900                        38,300
                                                             -----------   -----------   -----------    -----------    -----------
Cash and cash equivalents (including restricted cash)
   at end of period ........................................ $    20,000   $     7,200   $    73,800    $        --    $   101,000
                                                             ===========   ===========   ===========    ===========    ===========
</TABLE>


                                       29
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                          PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

FORWARD LOOKING INFORMATION

         The Company desires to provide investors with meaningful and useful
information. Therefore, this Quarterly Report on Form 10-Q contains certain
statements that describe the Company's beliefs concerning future business
conditions and the outlook for the Company based on currently available
information. Wherever possible, the Company has identified these "forward
looking" statements (as defined in Section 21E of the Securities Exchange Act of
1934) by words such as "anticipates", "believes", "estimates", "expects", and
similar expressions. These forward looking statements are subject to risks,
uncertainties and other factors that could cause the Company's actual results,
performance or achievements to differ materially from those expressed in, or
implied by, these statements. These risks, uncertainties and other factors
include, but are not limited to, the following: the ability of the Company to
continue operating as a going concern and successfully emerge from Chapter 11
protection pursuant to a reorganization plan that provides for the Company to
remain substantially intact, the Company's ability to successfully execute its
corporate strategy in a competitive marketplace, the financial strength of the
retail industry, particularly the mass merchant channel, the level of consumer
spending for apparel, the amount of sales of the Company's activewear
screenprint products, the competitive pricing environment within the basic
apparel segment of the apparel industry, the Company's ability to develop,
market and sell new products, the Company's successful planning and execution of
production necessary to maintain inventories at levels sufficient to meet
customer demand, the Company's effective income tax rate, the success of planned
advertising, marketing and promotional campaigns, political and regulatory
uncertainty that could influence international activities, the resolution of
legal proceedings and other contingent liabilities, weather conditions in the
locations in which the Company manufactures and sells its products and the
ability to maintain adequate levels of property and casualty insurance related
to its facilities due to recent world events affecting the insurance industry.
Please refer to the Company's documents on file with the Securities and Exchange
Commission and the U.S. Bankruptcy Court in Delaware for other risks and
uncertainties and for additional information that the Company is required to
report to the U.S. Bankruptcy Court on a monthly basis. The Company assumes no
obligation to update publicly any forward looking statements, whether as a
result of new information, future events or otherwise.

CHAPTER 11 FILING

         The Company and the other Debtors commenced the Reorganization Cases by
filing petitions for relief under Chapter 11 on December 29, 1999, the Petition
Date, in the Bankruptcy Court. The Reorganization Cases are being jointly
administered, for procedural purposes only, before the Bankruptcy Court under
Case No. 99-4497(PJW). Pursuant to Sections 1107 and 1108 of the Bankruptcy
Code, FTL Inc., as debtor and debtor in possession, has continued to manage and
operate its assets and businesses subject to the supervision and orders of the
Bankruptcy Court. On March 15, 2001, FTL Inc. and the other Debtors filed the
Reorganization Plan and the Disclosure Statement with the Bankruptcy Court,
pursuant to Section 1125 of the Bankruptcy Code. Because FTL Inc. is operating
as debtor in possession under the Bankruptcy Code, the existing directors and
officers of FTL Inc. continue to govern and manage the operations of the Company
subject to the supervision and orders of the Bankruptcy Court.


                                       30
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                          PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - (CONTINUED)

         On March 15, 2001, the Company filed the Reorganization Plan together
with the Disclosure Statement. No hearing has been set, as yet, to consider the
adequacy of the Disclosure Statement, which is a prerequisite to approval of the
Reorganization Plan. The Company intends to file an amended plan of
reorganization ("Amended Reorganization Plan") to give effect to the settlement
with the Committee and the definitive agreement to purchase the basic apparel
business. There can be no assurance that the Amended Reorganization Plan or any
other plan of reorganization will be confirmed under the Bankruptcy Code. If the
Company is unable to obtain confirmation of a plan of reorganization, its
creditors or equity security holders may seek other alternatives for the
Company, which include soliciting bids for the Company or parts thereof through
an auction process or possible liquidation. There can be no assurance that upon
consummation of a plan of reorganization there will be improvement in the
Company's financial condition or results of operations.

         The Company's consolidated financial statements have been prepared on a
going concern basis which contemplates continuity of operations, realization of
assets and liquidation of liabilities and commitments in the normal course of
business. The Reorganization Cases, related circumstances, and the losses from
operations, raise substantial doubt about the Company's ability to continue as a
going concern. The appropriateness of reporting on the going concern basis is
dependent upon, among other things, confirmation of a plan of reorganization,
future profitable operations, and the ability to generate sufficient cash from
operations and financing sources to meet obligations (see "LIQUIDITY AND CAPITAL
RESOURCES" and Notes to Condensed Consolidated Financial Statements). As a
result of the Reorganization Cases and related circumstances, however, such
realization of assets and liquidation of liabilities are subject to significant
uncertainty. While under the protection of Chapter 11, the Debtors may sell or
otherwise dispose of assets and liquidate or settle liabilities for amounts
other than those reflected in the accompanying condensed consolidated financial
statements. Further, the Amended Reorganization Plan or any other plan of
reorganization could materially change the amounts reported in the accompanying
condensed consolidated financial statements. The condensed consolidated
financial statements do not include any adjustments relating to the
recoverability of the value of recorded asset amounts or the amounts and
classifications of liabilities that might be necessary as a consequence of a
plan of reorganization.

         Effective November 1, 2001, the Company executed a definitive agreement
with an unrelated party for the sale of substantially all of the Company's basic
apparel business operations at a purchase price of $835,000,000 in cash, subject
to, and contingent upon, confirmation of the Amended Reorganization Plan. The
purchase price is subject to significant reduction for certain liabilities as
well as adjustment upward or downward depending on working capital levels. The
purchaser will assume the ordinary course post-petition liabilities and certain
specified prepetition liabilities of the business.

RESULTS OF OPERATIONS

         The following discussion should be read in conjunction with the
accompanying condensed consolidated financial statements and related notes for
the period ended September 29, 2001 and the Company's consolidated financial
statements and related notes contained in the Company's Annual Report on Form
10-K for the year ended December 30, 2000.



                                       31
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                   PART I. FINANCIAL INFORMATION - (CONTINUED)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - (CONTINUED)

         SPECIAL CHARGES/CONSOLIDATION COSTS. During the five years in the
period ended January 1, 2000, the Company moved substantially all of its sewing
and finishing operations to locations in the Caribbean, Mexico and Central
America as part of its strategy to reduce its cost structure and remain a low
cost producer in the U.S. markets it serves. In the third and fourth quarters of
1999, the Company recorded charges for provisions and losses on the sale of
close-out and irregular inventory to reflect the reduced market prices for these
categories of inventory, costs related to impairment of certain European
manufacturing facilities, severance, a debt guarantee and other asset
write-downs and reserves. In the fourth quarter of 1997, the Company recorded
charges for costs related to the closing and disposal of a number of domestic
manufacturing and distribution facilities, impairment of manufacturing equipment
and other assets and certain European manufacturing and distribution facilities,
and other costs associated with the Company's world-wide restructuring of
manufacturing and distribution facilities. No amounts were charged to results of
operations during the first nine months of 2000 related to the above noted
special charges.

         In connection with the Company's efforts to eliminate non-core
businesses and unprofitable products, the Company incurred costs related to the
closure of yarn, textile and assembly plants in 2000. The Company incurred
charges of $73,300,000 (of which $12,000,000 were cash charges) for writedowns
of inventory, property, plant and equipment, other assets and contractual
obligations.

         In the first quarter of 2001, an additional $8,800,000 was recorded,
principally related to the closure of one of the Company's yarn mills. In the
second quarter of 2001, the Company reached a decision and announced the closure
of one of its textile facilities and one additional sewing facility. The total
cost related to the closure of these facilities aggregated $30,400,000 and was
recorded in the second quarter of 2001. In the third quarter of 2001, the
Company reached a decision to close of one of its textile facilities as well as
certain administrative offices in Europe. The total cost related to the closure
of these facilities aggregated $3,900,000 and was recorded in the third quarter
of 2001. Included in the cost of the 2001 shutdowns were cash charges of
$6,600,000. Additional gains or losses may be recorded on future divestitures
but the amount cannot be determined at this time. In addition, restructuring
costs may be incurred which the Company is unable to quantify at this time.
During the first nine months of 2001, the Company finalized certain of the
special charges, resulting in a decrease to 2001 consolidation costs of
$2,700,000. In addition, the Company sold five facilities in the second quarter
of 2001 which were originally included in the 2000 consolidation costs. The sale
of these facilities resulted in a loss of $2,300,000.

Third Quarter and First Nine Months of 2001 versus 2000

         Total net sales decreased $120,300,000 in the third quarter and
$461,700,000 in the first nine months of 2001 compared to 2000. Net sales to
unrelated parties decreased $36,000,000 or 9.1% in the third quarter and
$197,100,000 or 16.2% in the first nine months of 2001 compared to 2000. The
decreases in sales to unrelated parties were principally due to lower retail and
activewear sales. The decreases in sales of retail products in both the third
quarter and the nine months ended September 29, 2001 when compared to
corresponding periods of 2000 resulted from discontinued product lines. In
addition, the first nine months of 2000 included sales of Gitano Fashions, Ltd.,
the Company's jeanswear business. The decreases in sales of activewear products
in both the third quarter and the nine months ended September 29, 2001 when
compared to corresponding periods of 2000 primarily resulted from weakness in
the overall activewear market, competitively lower pricing and decreased market
share. In the first quality product category, $34,400,000 of the third quarter
decrease and $170,200,000 of the nine-month decrease resulted from a reduction
in volume and a change in product mix. Also, $10,100,000 of the third quarter
decrease and $31,400,000 of the nine-month decrease was attributable to lower
pricing in the face of increased competition. In addition, $600,000 of the third
quarter decrease and $8,300,000 of the nine-month decrease in sales resulted
from a weakening of European currencies in relation to the U. S. dollar.



                                       32
<PAGE>
                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                   PART I. FINANCIAL INFORMATION - (CONTINUED)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - (CONTINUED)

         Segment net sales were as follows (in millions of dollars).

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED        NINE MONTHS ENDED
                                                         ------------------        -----------------
                                                       SEPT. 29,    SEPT. 30,    SEPT. 29,    SEPT. 30,
                                                         2001         2000         2001         2000
                                                         ----         ----         ----         ----
<S>                                                    <C>          <C>          <C>          <C>
               Retail Products ...................     $  229.0     $  246.5     $  610.9     $  685.2
               Activewear ........................         96.0        109.6        281.2        391.4
               Europe ............................         36.4         41.2        131.1        143.1
               Other .............................           --          0.1          0.1          0.7
                                                       --------     --------     --------     --------
                  Subtotal unrelated parties .....        361.4        397.4      1,023.3      1,220.4
                  Affiliates .....................        118.7        203.0        396.1        660.7
                                                       --------     --------     --------     --------
                  Total ..........................     $  480.1     $  600.4     $1,419.4     $1,881.1
                                                       ========     ========     ========     ========
</TABLE>

         Retail product sales decreased $17,500,000 or 7.1% in the third quarter
and $74,300,000 or 10.8% in the first nine months of 2001 compared to the
corresponding periods of 2000 principally due to the discontinuation of non-core
product lines. The Company's Gitano business was sold in July 2000, accounting
for $22,500,000 of the decrease in the first nine months. The decrease in sales
of retail products included $600,000 and $8,100,000 as a result of reduced
prices in the third quarter and first nine months of 2001 compared to the
corresponding periods of 2000. The pricing decreases were offset by a favorable
impact on net sales aggregating $4,800,000 and $7,000,000 in the third quarter
and the first nine months of 2001 related to the finalization and elimination of
prior year promotional programs. Excluding the Gitano decreases, $25,600,000 and
$65,200,000 of the decrease in retail product sales in the third quarter and
first nine months of 2001 compared to 2000 related to the discontinuation of
non-core product lines. Specifically, the decrease in volume of retail products
also related to an elimination of a Casualwear Fleece program at a major
customer. As a result, Casualwear Fleece sales decreased $23,900,000 and
$30,400,000 in the third quarter and first nine months of 2001 when compared to
the corresponding periods of 2000.

         Activewear sales decreased $13,600,000 or 12.4% in the third quarter
and $110,200,000 or 28.2% in the first nine months of 2001 compared to 2000 due
to lower sales volume of first quality merchandise and price reductions. The
lower sales volume in both the third quarter and the nine-month period resulted
from a decrease in the volume of core products as well as the elimination of
non-core products. In addition, lower sales volume in the nine-month period
resulted from declines in the overall market. In the third quarter of 2001,
dozens sold in the overall activewear market increased 1.7% when compared to the
corresponding period of 2000, driven by strong demand for screen printed tees
with patriotic symbols. For the nine-month period ended September 29, 2001,
dozens in the overall activewear market declined 4.6% when compared to the
corresponding period of 2000. The decrease in sales also resulted in reduced
market share in the first nine months of 2001 versus 2000. Lower prices reflect
the Company's response to aggressive pricing by competitors.

         European sales declined $4,800,000 or 11.7% in the third quarter and
$12,000,000 or 8.4% in the first nine months of 2001 compared to the
corresponding periods of 2000 due to unfavorable currency effects (higher U.S.
dollar), price reductions and lower sales of close-outs (in the nine-month
period), offset partially by higher volume of activewear products (in the
nine-month period). Price reductions in Europe totaled $3,200,000 and $6,300,000
in the third quarter and first nine months of 2001 compared to the corresponding
periods of 2000, reflecting market conditions in activewear and the shift in
retail emphasis to concentrate on selling to mass merchandisers.




                                       33
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                   PART I. FINANCIAL INFORMATION - (CONTINUED)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - (CONTINUED)

         Total gross earnings decreased $12,300,000 in the third quarter of 2001
but increased $57,600,000 in the first nine months of 2001 compared to the
corresponding periods of 2000. Gross earnings on sales to unrelated parties
increased $700,000 in the third quarter of 2001 and $68,400,000 in the first
nine months of 2001 compared to the corresponding periods of 2000. Gross margin
on sales to unrelated parties increased 2.4 percentage points to 24.8% in the
third quarter of 2001 and 9.0 percentage points to 21.1% in the first nine
months of 2001 compared to the comparable periods of 2000. Lower production
costs totaled $14,000,000 and $131,000,000 in the third quarter and first nine
months of 2001 compared to the corresponding periods of 2000. Offsetting these
improvements were price declines aggregating $10,100,000 and $31,400,000 in the
third quarter and first nine months of 2001 compared to the corresponding
periods of 2000. The pricing decreases were partially offset by a favorable
impact on net sales aggregating $4,800,000 and $7,000,000 in the third quarter
and the first nine months of 2001 related to the finalization and elimination of
prior year promotional programs. In addition, reduced sales volume and
unfavorable mix resulted in decreases to gross earnings aggregating $12,800,000
and $50,300,000 in the third quarter and first nine months of 2001 compared to
the corresponding periods of 2000.

         Segment operating earnings (loss) were as follows (in millions of
dollars).

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED    NINE MONTHS ENDED
                                                      ------------------    -----------------
                                                     SEPT. 29,  SEPT. 30,  SEPT. 29,  SEPT. 30,
                                                       2001       2000       2001       2000
                                                       ----       ----       ----       ----
<S>                                                  <C>        <C>        <C>        <C>
               Retail Products ...................    $ 44.8     $ 35.2     $ 90.6     $ 11.9
               Activewear ........................      (0.3)       3.2      (14.0)     (33.1)
               Europe ............................       0.2        1.9       (0.4)       5.7
               Consolidation costs ...............      (3.6)        --      (40.4)        --
               Other .............................       5.5        5.9       15.4       14.6
               Goodwill ..........................      (6.2)      (6.2)     (18.5)     (18.5)
                                                      ------     ------     ------     ------
                    Subtotal unrelated parties ...      40.4       40.0       32.7      (19.4)
                    Affiliates ...................     (39.0)     (24.9)     (84.7)     (78.9)
                                                      ------     ------     ------     ------
                    Total ........................    $  1.4     $ 15.1     $(52.0)    $(98.3)
                                                      ======     ======     ======     ======
</TABLE>



                                       34
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                   PART I. FINANCIAL INFORMATION - (CONTINUED)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - (CONTINUED)

         The Company experienced operating earnings on sales to unrelated
parties in the third quarter of 2001 of $40,400,000 compared to operating
earnings on sales to unrelated parties of $40,000,000 in the third quarter of
2000. For the first nine months of 2001, the Company experienced operating
earnings on sales to unrelated parties of $32,700,000 compared to an operating
loss on sales to unrelated parties of $19,400,000 for the first nine months of
2000. Operating earnings in the third quarter and first nine months of 2001
include net consolidation costs of $3,600,000 and $40,400,000 principally
related to the 2001 shutdown of the Company's manufacturing facilities.
Excluding consolidation costs, operating earnings on sales to unrelated parties
were $44,000,000 and $73,100,000 in the third quarter and first nine months of
2001. The improvement in operating earnings in both periods resulted from the
increase in gross earnings and a decrease in operating selling, general and
administrative expenses. Excluding consolidation costs, operating selling,
general and administrative expenses on sales to unrelated parties decreased
$2,200,000 and $29,100,000 in the third quarter and first nine months of 2001
compared to the corresponding periods of 2000. Excluding consolidation costs,
selling, general and administrative expenses on sales to unrelated parties, as a
percentage of net sales, were 10.0% in the third quarter of 2001 and were 11.2%
of net sales in the first nine months of 2001. The decrease in operating
selling, general and administrative expenses in the third quarter and first nine
months of 2001 compared to the corresponding periods of 2000 primarily resulted
from reductions in headcount and related expenses.

         Interest expense decreased $9,600,000 or 29.8% in the third quarter and
$15,200,000 or 16.4% in the first nine months of 2001 compared to the
corresponding periods of 2000. The decrease in both periods reflected lower
average borrowing levels and a lower average interest rate.

         Other expense-net increased $200,000 from $2,700,000 in the third
quarter of 2000 to $2,900,000 in the third quarter of 2001. Principal components
of net other expense in the third quarter of 2001 included bank fees of
$800,000, adequate protection expense (interest payments) of $900,000 related to
the guarantee of personal indebtedness of the Company's former Chairman,
unfavorable translation of $1,000,000 related to the weakening of European
currencies in relation to the U.S. dollar and $400,000 in losses on the sale of
marketable equity securities, partially offset by interest income of $600,000.
Net other expense in the third quarter of 2000 included $900,000 in gains on the
sale of marketable equity securities and interest income of $700,000, which were
more than offset by adequate protection expense of $1,500,000, losses on the
sale of fixed assets of $1,300,000 and bank fees of $1,100,000.

         Other income (expense)-net was unfavorable $4,400,000 from income of
$2,400,000 in the first nine months of 2000 to expense of $2,000,000 in the
first nine months of 2001. Net other expense in the first nine months of 2001
included $4,500,000 in gains on the sale of marketable equity securities,
interest income of $2,400,000 and a $1,000,000 gain on the sale of the Company's
"Russell" hosiery trademark. These favorable impacts were more than offset by
adequate protection expense of $3,100,000, bank fees of $2,300,000, $1,700,000
in losses on the sale of fixed assets, unfavorable translation of $1,200,000 and
the DIP amendment fee of $1,100,000. Net other income in the first nine months
of 2000 included $16,700,000 in gains on the sale of marketable equity
securities and interest income of $2,100,000 partially offset by adequate
protection expense of $4,400,000, unfavorable foreign currency translation of
$2,700,000, bank fees of $2,700,000, losses on the sale of fixed assets of
$1,300,000 and a loss on the sale of the Company's Gitano jeanswear business of
$700,000.



                                       35
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                   PART I. FINANCIAL INFORMATION - (CONTINUED)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - (CONTINUED)

         Reorganization items represent costs incurred by the Company related to
the Reorganization Cases. Reorganization items in the third quarter of 2001 and
2000 aggregated $8,200,000 and $9,300,000, respectively. Reorganization items in
the first nine months of 2001 and 2000 aggregated $24,400,000 and $28,300,000,
respectively. Reorganization items in all periods consisted of professional
fees, including legal, accounting and other services provided to the Company
related to the Reorganization Cases.

         The Company's income tax provision for the third quarter and first nine
months of 2001 and 2000 consists of a provision for European income taxes. The
Company recorded no U.S. tax benefit at the U.S. statutory rate of 35% on the
pretax loss in the third quarter and first nine months of 2000 or first nine
months of 2001 or the pretax earnings in the third quarter of 2001 primarily
because the Company is unable to realize any current benefit from the operating
loss through carrybacks to prior years and due to the Company's present
inability under the Reorganization Cases to implement certain income tax
planning strategies. In addition, the Company expects a loss before income taxes
for 2001.

LIQUIDITY AND CAPITAL RESOURCES

         FTL Inc. and substantially all of its subsidiaries, as debtors in
possession, are parties to a postpetition credit agreement dated as of December
29, 1999 (the "DIP Facility") with Bank of America as agent. The DIP Facility
has been approved by the Bankruptcy Court and, as amended, includes a total
commitment of $450,000,000 which is comprised of revolving notes of $350,000,000
and a term note of $100,000,000. Letter of credit obligations under the revolver
portion of the DIP Facility are limited to $175,000,000. The DIP Facility is
intended to provide the Company with the cash and liquidity to conduct its
operations and pay for merchandise shipments at normal levels during the course
of the Reorganization Cases.

         The maximum borrowings, excluding the term commitments, under the DIP
Facility are limited to 85% of eligible accounts receivable, 50% to 65% of
eligible inventory and the assets existing as of the Petition Date. Various
percentages of the proceeds from the sales of assets (as defined in the DIP
Facility) will permanently reduce the commitments under the DIP Facility.
Qualification of accounts receivable and inventory items as "eligible" is
subject to unilateral change at the discretion of the lenders. Availability
under the DIP Facility at November 3, 2001 was $231,300,000 and, in addition,
the Company had $36,200,000 of invested cash at November 3, 2001. The Company
paid off the term loan portion of the DIP Facility in the third quarter of 2001.
Currently, no funded borrowings are owed and outstanding under the DIP Facility.

         The lenders under the DIP Facility have a super-priority administrative
expense claim against the estates of the Debtors. The DIP Facility expires on
December 31, 2001. The Company is currently working with the DIP agent and the
lenders to extend the DIP facility. The DIP Facility is secured by substantially
all of the assets of FTL Ltd. and its subsidiaries and a perfected pledge of
stock of substantially all of FTL Ltd.'s subsidiaries, including those
subsidiaries that did not file Chapter 11. The DIP Facility contains restrictive
covenants including, among other things, the maintenance of minimum earnings
before interest, taxes, depreciation and amortization and restructuring expenses
as defined, limitations on the incurrence of additional indebtedness, liens,
contingent obligations, sale of assets, capital expenditures and a prohibition
on paying dividends. The DIP loan limits annual capital expenditures for 2001 to
a maximum of $75,000,000.

         Cash provided by operating activities totaled $600,000 in the first
nine months of 2001 and was a use of $33,500,000 in the first nine months of
2000 reflecting the Company's losses from continuing operations. Net cash
provided by operating activities before reorganization items were $19,200,000 in
the first nine months of 2001 compared to net cash used for operating activities
before reorganization items of $15,500,000 in the first nine months of 2000. In
the first nine months of 2001, the primary factors in reconciling from the loss
from continuing operations of $157,500,000 to cash provided by operating
activities of $600,000 were a decrease in working capital of $83,900,000,
additional writedowns and reserves of $36,800,000 associated with the 2001
closure of certain of the Company's manufacturing facilities and depreciation
and amortization of $58,300,000, partially offset by gains on the sale of
marketable equity securities of $4,500,000 and cash payments for reorganization
items of $18,600,000.


                                       36
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                   PART I. FINANCIAL INFORMATION - (CONTINUED)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

         In the first nine months of 2000, the primary factors in reconciling
from the loss from continuing operations of $219,200,000 to cash used for
operating activities of $33,500,000 were a decrease in working capital of
$129,700,000, depreciation and amortization of $81,800,000, partially offset by
a gain on the sale of marketable equity securities of $16,700,000 and cash
payments for reorganization items of $18,000,000. Cash flows provided by
discontinued operations aggregated $23,400,000 in the first nine months of 2000.

         Net cash used for investing activities in the first nine months of 2001
was $7,100,000 compared with cash provided by investing activities totaling
$27,400,000 in the first nine months of 2000. Capital expenditures were higher
($21,300,000 in the first nine months of 2001 compared with $8,200,000 in the
first nine months of 2000). In addition, proceeds from the sale of marketable
equity securities aggregated $7,300,000 in the first nine months of 2001
compared to $16,600,000 in the first nine months of 2000. Also, the Company sold
its Gitano jeanswear division in the third quarter of 2000, providing cash of
$16,500,000. Proceeds for the sales of fixed assets increased from $3,300,000 in
the first nine months of 2000 to $7,900,000 in the first nine months of 2001.
Capital spending, primarily in state-of-the-art yarn and textile equipment, is
anticipated to approximate $43,700,000 in 2001.

         Net cash provided by financing activities totaled $1,100,000 in the
first nine months of 2001 (consisting principally of an increase to affiliated
notes and accounts payable, substantially offset by net payments on DIP Facility
financing), while net cash used for financing activities totaled $68,800,000 in
the first nine months of 2000 (consisting principally of an increase to
affiliated notes and accounts payable, partially offset by net payments on DIP
Facility financing).

         The Company believes that cash on hand, amounts available under the DIP
Facility and funds from operations will enable the Company to meet its current
liquidity and capital expenditure requirements during the Reorganization Cases,
although no assurances can be given in this regard. Until a plan of
reorganization is approved, the Company's long-term liquidity and the adequacy
of its capital resources cannot be determined.

         A successful plan of reorganization requires a capital structure which
permits the Debtors to generate sufficient cash flow after reorganization to
meet restructured obligations and fund the current obligations of the Debtors.
Under the Bankruptcy Code, the rights and treatment of prepetition creditors and
stockholders may be substantially altered.



                                       37
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                   PART I. FINANCIAL INFORMATION - (CONTINUED)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

         The Reorganization Plan provides for a capital structure which the
Company believes will enable it to generate sufficient cash flow after
reorganization to meet its restructured obligations and fund the current
obligations of the Company. In addition, the Company's creditors and equity
security holders must have an opportunity to review the Reorganization Plan, and
the Bankruptcy Court must determine the Reorganization Plan to be fair and
equitable. There can be no assurance that the Reorganization Plan will be
determined fair and equitable by the Bankruptcy Court. At this time it is not
possible to predict the outcome of the Reorganization Cases, in general, or the
effects of the Reorganization Cases on the business of the Debtors or on the
interests of creditors. The Reorganization Plan does not provide any recovery to
FTL Ltd.'s equity security holders. The amendments contemplated to the
Reorganization Plan to give effect to the settlement with the Committee and the
definitive agreement for the sale of the basic apparel business do not change
this result and do not include any distribution to FTL Ltd.'s equity security
holders. ACCORDINGLY, MANAGEMENT BELIEVES THAT CURRENT EQUITY SECURITY HOLDERS
(BOTH COMMON AND PREFERRED STOCK) WILL NOT RECEIVE ANY DISTRIBUTION UNDER ANY
REORGANIZATION PLAN AS A RESULT OF THE ISSUANCE OF NEW EQUITY TO EXISTING
CREDITORS. The Company has, and will continue to incur professional fees and
other cash demands typically incurred in bankruptcy. In the first nine months of
2001, the Company incurred reorganization costs of $24,400,000 related to the
bankruptcy. Since the beginning of the bankruptcy proceedings, the Company has
incurred reorganization costs aggregating $75,600,000 related to the bankruptcy.

         The Company's debt instruments, principally its bank agreements,
contain covenants restricting its ability to sell assets, incur debt, pay
dividends and make investments and requiring the Company to maintain certain
financial ratios. See "LONG-TERM DEBT" in the Notes to Consolidated Financial
Statements in the Company's Annual Report on Form 10-K for the year ended
December 30, 2000.

ACCOUNTING STANDARDS

         In June 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141, Business Combinations, and
No. 142, Goodwill and Other Intangible Assets, effective for fiscal years
beginning after December 15, 2001. Under the new rules, goodwill will no longer
be amortized but will be subject to annual impairment tests in accordance with
the Statements. Other intangible assets will continue to be amortized over their
useful lives.

         The Company will apply the new rules on accounting for goodwill and
other intangible assets beginning in the first quarter of 2002. Application of
the non-amortization provisions of the Statement is expected to result in an
increase in net income of $24,600,000 per year. During 2002, the Company will
perform the required impairment tests of goodwill and indefinite lived
intangible assets as of December 30, 2001 and has not yet determined what the
effect of these tests will be on the earnings and financial position of the
Company.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         For information regarding the Company's exposure to certain market
risks, see Item 7A. Quantitative and Qualitative Disclosures about Market Risk,
in the annual report on Form 10-K for fiscal 2000. There have been no
significant changes in the Company's market risk exposures since year-end.



                                       38
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         Fruit of the Loom is party to various other legal claims and
proceedings arising in the normal course of business. Management does not expect
disposition of these matters to have a material adverse effect on its results of
operations or financial condition. See Part I. Item 1. Financial Statements Note
8 and Part I Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations - Chapter 11 Filing.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

a.  EXHIBITS

3(a)*    Amended and Restated Certification of Incorporation of the Company
         (incorporated by reference to Exhibit 3(a) to the Company's Annual
         Report on Form 10-K for the year ended January 1, 2000).

3(b)*    By-laws of the Company (incorporated herein by reference to Exhibit
         4(b) to the Company's Registration Statement on Form S-2, Reg. No.
         33-8303).

4(a)*    $900,000,000 Credit Agreement dated as of September 19, 1997 (the
         "Credit Agreement"), among the several banks and other financial
         institutions from time to time parties thereto (the "Lenders"),
         NationsBank, N.A., as administrative agent for the Lenders thereunder,
         Chase Manhattan Bank, Bankers Trust Company, The Bank of New York and
         the Bank of Nova Scotia, as co-agents (incorporated herein by reference
         to Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q for the
         quarter ended March 31, 1997).

4(b)*    Rights Agreement, dated as of March 8, 1996 between Fruit the Loom,
         Inc. and Chemical Mellon Shareholder Services, L.L.C., Rights Agent
         (incorporated herein by reference to Exhibit 4(c) to the Company's
         Annual Report on Form 10-K for the year ended December 31, 1995).

4(c)*    First Amendment to Credit Agreement dated March 26, 1998; Second
         Amendment to Credit Agreement dated July 2, 1998; Third Amendment to
         Credit Agreement dated December 31, 1998; Fourth Amendment to Credit
         Agreement dated March 10, 1999; Second Amended and Restated Pledge
         Agreement dated March 10, 1999 related to the Credit Agreement; and
         Bond Pledge Agreement dated March 10, 1999 related to the Credit
         Agreement (incorporated herein by reference to Exhibit 4(c) to Fruit of
         the Loom, Inc.'s Annual Report on Form 10-K for the year ended January
         2, 1999).

4(d)*    Indenture dated as of March 25, 1999, among Fruit of the Loom, Inc., as
         issuer, Fruit of the Loom, Ltd., as guarantor, certain subsidiaries of
         Fruit of the Loom, Inc., as guarantors, and The Bank of New York, as
         trustee of the 8 7/8% senior Notes due 2006 (incorporated herein by
         reference to Exhibit 4(c) to the Company's Quarterly Report on Form
         10-Q for the quarter ended April 3, 1999).

4(e)*    Fifth Amendment to Credit Agreement dated July 20, 1999 (incorporated
         herein by reference to exhibit 4(d) to the Company's Quarterly Report
         on Form 10-Q for the quarter ended July 3, 1999).

4(f)*    Security Agreement dated March 10, 1999 (incorporated herein by
         reference to Exhibit 4(e) to the Company's Quarterly Report on Form
         10-Q for the quarter ended October 2, 1999).

4(g)*    First Amendment to Security Agreement dated July 20, 1999 (incorporated
         herein by reference to Exhibit 4(f) to the Company's Quarterly Report
         on Form 10-Q for the quarter ended October 2, 1999).



                                       39
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                    PART II. OTHER INFORMATION - (CONTINUED)

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K (CONTINUED)

a.  EXHIBITS (CONTINUED)

4(h)*    Sixth Amendment to Credit Agreement and Limited Waiver dated October
         13, 1999 (incorporated herein by reference to Exhibit 4(g) to the
         Company's Quarterly Report on Form 10-Q for the quarter ended October
         2, 1999).

4(i)*    Loan and Security Agreement dated as of October 29, 1999, among the
         financial institutions from time to time parties thereto (the "Bank
         Lenders"), Bank of America, National Association as administrative
         "Agent" for the Bank Lenders, Bank of America Securities LLC, as
         "Syndication Agent", and FTL Receivables Company, as "Borrower"
         (incorporated herein by reference to Exhibit 4(h) to the Company's
         Quarterly Report on Form 10-Q for the quarter ended October 2, 1999).

4(j)*    $625,000,000 Debtor-in-Possession Credit Facility dated as of December
         29, 1999, with Bank of America, N.A. (incorporated by reference to the
         Company's Current Report on Form 8-K dated December 29, 1999).

4(k)*    Amendment No. 1 to post-petition loan and security agreement dated
         January 14, 2000 by and among Bank of America, N.A. ("Agent"), Fruit of
         the Loom, Inc. ("Borrower") and Fruit of the Loom, Ltd. and certain
         domestic Subsidiaries of Borrower ("Guarantors") (incorporated by
         reference to the Company's Annual Report on Form 10-K dated December
         30, 2000).

4(l)*    Amendment No. 2 to post-petition loan and security agreement dated
         February 4, 2000 by and among Bank of America, N.A. ("Agent"), Fruit of
         the Loom, Inc. ("Borrower") and Fruit of the Loom, Ltd. and certain
         domestic Subsidiaries of Borrower ("Guarantors") (incorporated by
         reference to the Company's Annual Report on Form 10-K dated December
         30, 2000).

4(m)*    Amendment No. 3 to post-petition loan and security agreement dated
         March 3, 2000 by and among Bank of America, N.A. ("Agent"), Fruit of
         the Loom, Inc. ("Borrower") and Fruit of the Loom, Ltd. and certain
         domestic Subsidiaries of Borrower ("Guarantors") (incorporated by
         reference to the Company's Annual Report on Form 10-K dated December
         30, 2000).

4(n)*    Amendment No. 4 to post-petition loan and security agreement dated
         February 9, 2001 by and among Bank of America, N.A. ("Agent"), Fruit of
         the Loom, Inc. ("Borrower") and Fruit of the Loom, Ltd. and certain
         domestic Subsidiaries of Borrower ("Guarantors") (incorporated by
         reference to the Company's Annual Report on Form 10-K dated December
         30, 2000).

4(o)     Amendment No. 5 to post-petition loan and security agreement dated
         April 20, 2001 by and among Bank of America, N.A. ("Agent"), Fruit of
         the Loom, Inc. ("Borrower") and Fruit of the Loom, Ltd. and certain
         domestic Subsidiaries of Borrower ("Guarantors").


                                       40
<PAGE>

                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                    PART II. OTHER INFORMATION - (CONTINUED)

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K (CONTINUED)

a.  EXHIBITS (CONTINUED)

10(a)*   Asset Purchase Agreement, dated as of November 1, 2001, by and among
         Fruit of the Loom, Ltd., Fruit of the Loom, Inc., Union Underwear
         Company, Inc., FTL Caribe, Ltd., New FOL Inc. and Berkshire Hathaway
         Inc., and all exhibits thereto (incorporated by reference to the
         Company's Current Report on Form 8-K dated November 9, 2001).




*        Previously filed.

         The Registrant has not listed nor filed as an Exhibit to this Quarterly
Report certain instruments with respect to long-term debt representing
indebtedness of the Registrant and its subsidiaries which do not individually
exceed 10% of the total assets of the Registrant and its subsidiaries on a
consolidated basis. Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the
Registrant agrees to furnish such instruments to the Securities and Exchange
Commission upon request.

b.  REPORTS ON FORM 8-K

         No reports on Form 8-K were filed by the Registrant during the quarter
ended September 29, 2001.




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<PAGE>

                                    SIGNATURE

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


                                            FRUIT OF THE LOOM, INC.
                                                 (REGISTRANT)


                                  /s/          G. WILLIAM NEWTON
                                  --------------------------------------------
                                               G. William Newton
                                            Vice President Finance
                                      and Acting Chief Financial Officer
                                         (Principal Financial Officer
                                          and duly authorized to sign
                                           on behalf of Registrant)

Date: November 13, 2001






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