<PAGE>   1
                       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 JUNE 30, 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 August 13, 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>   2


                    FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                              Page No.
                                                                                                              --------

PART I. FINANCIAL INFORMATION
<S>                                                                                                           <C>
         Item 1.    Financial Statements
                    Condensed Consolidated Balance Sheet - June 30, 2001 (Unaudited)
                      and December 30, 2000...................................................................       2
                    Condensed Consolidated Statement of Operations (Unaudited)
                      for the Three and Six Months Ended June 30, 2001 and July 1, 2000.......................       3
                    Condensed Consolidated Statement of Cash Flows (Unaudited)
                      for the Six Months Ended June 30, 2001 and July 1, 2000.................................       4
                    Notes to Condensed Consolidated Financial Statements (Unaudited)..........................       5
         Item 2.    Management's Discussion and Analysis of Financial Condition and
                      Results of Operations...................................................................      28
         Item 3.    Quantitative and Qualitative Disclosures about Market Risk............................          35
PART II. OTHER INFORMATION................................................................................
         Item 1.    Legal Proceedings.....................................................................          36
         Item 6.    Exhibits and Reports on Form 8-K..........................................................      36
</TABLE>



                                       1
<PAGE>   3


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

<TABLE>
<CAPTION>
                                                                                          JUNE 30,          DECEMBER 30,
                                                                                            2001                2000
                                                                                            ----                ----
                                                                                         (UNAUDITED)
ASSETS
<S>                                                                                  <C>                 <C>
Current Assets
   Cash and cash equivalents (including restricted cash)...........................  $        122,100    $       131,200
   Notes and accounts receivable (less allowance for possible
     losses of $40,400 and $44,800, respectively)..................................           196,600            142,400
   Inventories
     Finished goods................................................................           442,500            454,800
     Work in process...............................................................            53,100             78,900
     Materials and supplies........................................................            13,600             30,300
                                                                                     ----------------    ---------------
         Total inventories.........................................................           509,200            564,000
   Other ..........................................................................            34,800             25,900
                                                                                     ----------------    ---------------
         Total current assets......................................................           862,700            863,500
                                                                                     ----------------    ---------------
Property, Plant and Equipment......................................................           869,800          1,022,400
   Less accumulated depreciation...................................................           687,900            783,100
                                                                                     ----------------    ---------------
         Net property, plant and equipment.........................................           181,900            239,300
                                                                                     ----------------    ---------------
Other Assets
   Goodwill (less accumulated amortization of $389,000 and
     $376,700, respectively).......................................................           594,300            606,600
   Other ..........................................................................            60,900             76,300
                                                                                     ----------------    ---------------
         Total other assets........................................................           655,200            682,900
                                                                                     ----------------    ---------------
                                                                                     $      1,699,800    $     1,785,700
                                                                                     ================    ===============

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
   Current maturities of long-term debt............................................  $        741,700    $       746,400
   Trade accounts payable..........................................................            33,100             31,500
   Net liabilities of discontinued operations......................................             5,600              5,100
   Other accounts payable and accrued expenses.....................................           222,400            232,800
                                                                                     ----------------    ---------------
         Total current liabilities.................................................         1,002,800          1,015,800
                                                                                     ----------------    ---------------
Noncurrent Liabilities
   Long-term debt..................................................................           408,900            410,300
   Net liabilities of discontinued operations......................................            11,700             11,900
   Notes and accounts payable - affiliates.........................................           196,500            128,700
   Other ..........................................................................            20,300             11,500
                                                                                     ----------------    ---------------
         Total noncurrent liabilities..............................................           637,400            562,400
                                                                                     ----------------    ---------------
Liabilities Subject to Compromise
   Unrelated parties...............................................................           536,100            540,700
   Affiliates......................................................................           386,300            386,300
                                                                                     ----------------    ---------------
         Total liabilities subject to compromise...................................           922,400            927,000
                                                                                     ----------------    ---------------
Preferred Stock....................................................................            71,700             71,700
                                                                                     ----------------    ---------------
Common Stockholders' Deficit.......................................................          (934,500)          (791,200)
                                                                                     ----------------    ---------------
                                                                                     $      1,699,800    $     1,785,700
                                                                                     ================    ===============
</TABLE>
                             See accompanying notes.



                                       2
<PAGE>   4


                    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      SIX MONTHS ENDED
                                                                                   ------------------      ----------------
                                                                                  JUNE 30,     JULY 1,   JUNE 30,     JULY 1,
                                                                                    2001        2000       2001        2000
                                                                                    ----        ----       ----        ----

<S>                                                                             <C>         <C>         <C>         <C>
         Net sales
             Unrelated parties..............................................    $  347,700  $   447,400 $   661,900 $  823,000
             Affiliates.....................................................       130,800      231,600     277,400    457,700
                                                                                ----------  ----------- ----------- ----------
                                                                                   478,500      679,000     939,300  1,280,700
                                                                                ----------  ----------- ----------- ----------

         Cost of sales
             Unrelated parties..............................................       269,400      402,000     535,800    764,600
             Affiliates.....................................................       156,200      257,800     329,200    511,700
                                                                                ----------  ----------- ----------- ----------
                                                                                   425,600      659,800     865,000  1,276,300
                                                                                ----------  ----------- ----------- ----------
                Gross earnings .............................................        52,900       19,200      74,300      4,400
         Selling, general and administrative expenses:
             Operating......................................................        37,200       50,700      78,600    105,500
             Consolidation costs............................................        30,100           --      36,800         --
                                                                                ----------  ----------- ----------- ----------
                  Total.....................................................        67,300       50,700     115,400    105,500
         Goodwill amortization..............................................         6,100        6,100      12,300     12,300
                                                                                ----------  ----------- ----------- ----------
                Operating loss..............................................       (20,500)     (37,600)    (53,400)  (113,400)
         Interest expense...................................................       (26,200)     (31,300)    (55,000)   (60,600)
         Other (expense) income-net.........................................        (1,800)      (3,000)        900      5,100
                                                                                ----------  ----------- ----------- ----------
                Loss from continuing operations before
                  reorganization items and income tax provision.............       (48,500)     (71,900)   (107,500)  (168,900)
         Reorganization items...............................................        (5,600)      (9,500)    (16,200)   (19,000)
                                                                                ----------  ----------- ----------- ----------
                Loss from continuing operations before
                  income tax provision......................................       (54,100)     (81,400)   (123,700)  (187,900)
         Income tax provision...............................................           500          700       1,000      1,400
                                                                                ----------  ----------- ----------- ----------
                Loss from continuing operations.............................       (54,600)     (82,100)   (124,700)  (189,300)
         Discontinued operations - Sports & Licensing:
             Loss from operations...........................................            --           --          --     (2,600)
                                                                                ----------  ----------- ----------- ----------
                Net loss....................................................    $  (54,600) $   (82,100)$  (124,700)$ (191,900)
                                                                                ==========  =========== =========== ==========
</TABLE>










                             See accompanying notes.



                                       3
<PAGE>   5



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

<TABLE>
<CAPTION>
                                                                                          SIX MONTHS ENDED
                                                                                          ----------------
                                                                                     JUNE 30,             JULY 1,
                                                                                       2001                2000
                                                                                       ----                ----

<S>                                                                               <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Loss from continuing operations........................................        $   (124,700)       $    (189,300)
   Adjustments to reconcile to net operating cash flows:
      Depreciation and amortization.......................................              41,200               54,800
      (Increase) decrease in working capital..............................              (6,200)              67,300
      Cash flows of discontinued operations...............................                 300               20,300
      Gains on marketable equity securities...............................              (4,900)             (15,800)
      Consolidation of operations - writedowns and reserves ..............              36,100                   --
      Other--net..........................................................              (1,200)             (13,000)
                                                                                  ------------        -------------
         Net operating cash flows before
         reorganization items.............................................             (59,400)             (75,700)
      Net cash used for reorganization items..............................             (12,200)              (9,100)
                                                                                  ------------        -------------
           Net operating cash flows.......................................             (71,600)             (84,800)
                                                                                  ------------        -------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures...................................................             (11,600)              (4,700)
   Proceeds for the sale of property, plant and equipment.................               7,600                2,000
   Proceeds from sale of marketable equity securities.....................               7,100               14,100
   Other--net.............................................................              (1,000)              (1,000)
                                                                                  ------------        -------------
           Net investing cash flows.......................................               2,100               10,400
                                                                                  ------------        -------------
CASH FLOWS FROM FINANCING ACTIVITIES
   DIP financing proceeds.................................................             500,100              703,400
   DIP financing payments.................................................            (505,800)            (680,800)
   Principal payments on long-term debt and capital leases................                (300)                (300)
   Affiliate notes and accounts payable...................................              66,400               62,000
                                                                                  ------------        -------------
           Net financing cash flows.......................................              60,400               84,300
                                                                                  ------------        -------------
Net increase (decrease) in Cash and cash
   equivalents (including restricted cash)................................              (9,100)               9,900
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................................................        $    122,100        $      48,200
                                                                                  ============        =============
</TABLE>





                             See accompanying notes.



                                       4
<PAGE>   6

                    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 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 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. 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.

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

         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".




                                       5
<PAGE>   7

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

         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. Although the Reorganization Plan contemplates emergence in 2001,
there can be no assurance at this time that the Reorganization Plan proposed by
the Debtors will be approved or confirmed by the Bankruptcy Court, or that the
Reorganization Plan will be consummated. The Reorganization Plan does 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 Reorganization Plan sets 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
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.

         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. Such rejections could
result in additional liabilities subject to compromise.





                                       6
<PAGE>   8

                    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.

         As stated above, additional claims may arise from the rejection of
additional real estate leases and executory contracts by the Debtors.

                                               JUNE 30,    DECEMBER 30,
                                                 2001          2000
                                                 ----          ----
                                             (IN THOUSANDS OF DOLLARS)

    8.875% Unsecured Senior Notes......... $    248,500     $  248,500
    Trade accounts payable................       97,700         97,200
    Environmental and product liability...       32,100         33,800
    Accrued severance.....................       27,900         27,900
    Deferred compensation accrual.........       13,100         14,300
    Other.................................      116,800        119,000
                                           ------------     ----------
                                           $    536,100     $  540,700
                                            ===========     ==========

         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.

         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.





                                       7
<PAGE>   9

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


         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 six months ended
June 30, 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
six-month periods ended June 30, 2001 and July 1, 2000. Management 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 second quarter and first
six 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 second quarter and first six months of 2001 or 2000
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 an operating loss for
2001.

         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.




                                       8
<PAGE>   10


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


         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         SIX MONTHS ENDED
                                                                       ------------------         ----------------
                                                                      JUNE 30,      JULY 1,     JUNE 30,       JULY 1,
                                                                        2001         2000         2001          2000
                                                                        ----         ----         ----          ----

<S>                                                                <C>            <C>          <C>          <C>
        Net sales................................................  $       400    $    8,300   $    3,000   $   29,600
        Cost of sales............................................          100        12,200        2,100       29,100
                                                                   -----------    ----------   ----------   ----------
             Gross earnings (loss)...............................          300        (3,900)         900          500
        Selling, general & administrative expenses...............         (200)        3,400        1,200       13,000
        Goodwill amortization....................................           --           500           --        1,000
                                                                   -----------    ----------   ----------   ----------
             Operating income (loss).............................          500        (7,800)        (300)     (13,500)
        Interest expense.........................................           --          (500)          --       (1,500)
        Other expense--net.......................................           --          (200)          --         (300)
                                                                   -----------    ----------   ----------   ----------
             Net income (loss)...................................          500        (8,500)        (300)     (15,300)
        Portion of net income (loss) charged (credited) to reserve
                         for loss on disposal....................         (500)        8,500          300       12,700
                                                                   -----------    ----------   ----------   ----------
             Loss from discontinued operations...................  $        --    $       --   $       --   $   (2,600)
                                                                   ===========     =========   ==========   ==========
</TABLE>

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

                                                    JUNE 30,      DECEMBER 30,
                                                      2001            2000
                                                      ----            ----

Inventories.......................................        --     $        500
Other accounts payable and accrued expenses.......    (5,600)          (5,600)
                                                  ----------     ------------
    Net current liabilities.......................    (5,600)          (5,100)
                                                  ----------     ------------
Property, plant and equipment.....................     2,000            2,000
Liabilities subject to compromise.................   (13,700)         (13,900)
                                                  ----------     ------------
    Net noncurrent liabilities....................   (11,700)         (11,900)
                                                  ----------     ------------
    Net liabilities of discontinued operations....$  (17,300)    $    (17,000)
                                                  ==========     ============

         Assets are shown at their expected net realizable values.




                                       9
<PAGE>   11

                    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 May
2001, the Company reached a decision and announced the closure of two of its
textile facilities. The total cost related to the closure of these facilities
aggregated $30,400,000 and was recorded in the second quarter of 2001. Included
in the cost of the 2001 shutdowns were cash charges of $4,600,000.

         Following is a summary of 2001 consolidation costs and related reserve
balances at June 30, 2001 (in thousands of dollars):

<TABLE>
<CAPTION>
                                                                                                RESERVE
                                                            2001                     OTHER    BALANCE AT
                                                        CONSOLIDATION   CASH       ACTIVITY    JUNE 30,
                                                            COSTS     PAYMENTS      IN 2001      2001
                                                            -----     --------      -------      ----
<S>                                                    <C>            <C>        <C>          <C>
       Closing of manufacturing facilities:
         Severance...................................  $     4,000    $  1,200   $        --  $     2,800
         Property, plant and equipment...............       34,600          --           600       34,000
         Other costs.................................          600          --            --          600
                                                       -----------    --------   -----------  -----------
                                                       $    39,200    $  1,200   $       600  $    37,400
                                                       ===========    ========   ===========  ===========
</TABLE>

         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 June 30, 2001 is presented below (in thousands of dollars):

<TABLE>
<CAPTION>
                                                           RESERVE                                           RESERVE
                                                         BALANCE AT                                         BALANCE AT
                                                        DECEMBER 30,    CASH        INCOME      OTHER        JUNE 30,
                                                            2000      PAYMENTS     (EXPENSE)  ACTIVITY         2001
                                                            ----      --------     ---------  --------         ----
<S>                                                    <C>            <C>        <C>          <C>           <C>
Closing and disposal of U.S.
   manufacturing facilities..........................  $    60,600    $  1,200   $   (2,000)  $    21,200   $    40,200
                                                       ===========    ========   ===========  ===========   ===========
</TABLE>

         Other activity in the first six 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 six 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.

         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).



                                       10
<PAGE>   12

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

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

<TABLE>
<CAPTION>
                                                           RESERVE                                             RESERVE
                                                         BALANCE AT                                          BALANCE AT
                                                        DECEMBER 30,    CASH        INCOME      OTHER         JUNE 30,
                                                            2000      PAYMENTS     (EXPENSE)  ACTIVITY          2001
                                                            ----      --------     ---------  --------          ----
<S>                                                    <C>            <C>        <C>          <C>            <C>
Provisions and losses on the sales of
   close-out and irregular merchandise...............  $     4,900    $     --   $        --  $     4,800    $       100
Severance (subject to compromise)....................       27,900          --            --           --         27,900
Debt guarantee (subject to compromise)...............       29,300          --            --           --         29,300
Other asset write downs and reserves ($8,000,000
       subject to compromise)........................       22,500          --            --       14,100          8,400
                                                       -----------    --------   -----------  -----------    -----------
                                                       $    84,600    $     --            --  $    18,900    $    65,700
                                                       ===========    ========   ===========  ===========    ===========
</TABLE>

         Other activity in the first six 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 six 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 totalled $441,700,000
($372,200,000 after tax).

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

<TABLE>
<CAPTION>
                                                           RESERVE                                               RESERVE
                                                         BALANCE AT                                            BALANCE AT
                                                        DECEMBER 30,      CASH         INCOME       OTHER       JUNE 30,
                                                            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   $      --     $     --    $   6,700     $    16,500
     Impairment of mills to be sold..................         13,400          --           --        2,700          10,700
     Lease residual guarantees.......................         54,200          --           --           --          54,200
     Other equipment.................................          6,100          --           --           --           6,100
                                                          ----------   ---------     --------    ---------     -----------
                                                              96,900          --           --        9,400          87,500
Severance costs......................................            200          --          200           --              --
Other accruals.......................................          1,900          --        1,900           --              --
                                                          ----------   ---------     --------    ---------     -----------
                                                              99,000          --        2,100        9,400          87,500
                                                          ----------   ---------     --------    ---------     -----------
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    $   9,800     $    98,000
                                                          ==========   =========     ========    =========     ===========
</TABLE>




                                       11
<PAGE>   13


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

         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.
("NWI"), 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 June 30, 2001 consist primarily of certain
environmental and product liability reserves of $30,100,000 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.

         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.

         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 August 3, 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 August 3, 2001, total payments made by the
Company on behalf of Mr. Farley's loan aggregated $8,300,000. In addition,
unpaid guarantee fees owed the Company by Mr. Farley through August 3, 2001
aggregated $2,300,000.








                                       12
<PAGE>   14

                    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.





                                       13
<PAGE>   15

                    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 June 30, 2001, the Company
had a contingent liability to repay, in whole or in part, grants received of
approximately $9,500,000 in the event that the Company does not meet defined
average employment levels or terminates operations in the Republic of Ireland
and Germany. During the quarter ended June 30, 2001, all remaining restrictions
lapsed on grants received in Northern Ireland. Accordingly, the Company no
longer has a contingent liability to repay grants received of approximately
$8,000,000.

         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.

         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 has been
stayed indefinitely as to all parties.

         Management believes that the suit is without merit, and management and
the Company intend to defend it 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.




                                       14
<PAGE>   16


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

         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.

         The Fidel v. Farley, et al. action is subject to a stay of discovery,
pursuant to 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.

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

<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED        SIX MONTHS ENDED
                                                                        ------------------        ----------------
                                                                      JUNE 30,      JULY 1,    JUNE 30,        JULY 1,
                                                                        2001         2000        2001           2000
                                                                        ----         ----        ----           ----
<S>                                                                   <C>         <C>        <C>             <C>
                  Net loss.........................................   $(54,600)   $ (82,100) $   (124,700)   $  (191,900)
                  Foreign currency translation adjustments--net....     (3,400)      (5,400)      (12,900)        (8,600)
                  Unrealized gain/loss on marketable equity securities:
                        Holding gain (loss)........................       (400)       2,000        (4,800)         2,000
                        Realized gains reclassified to net loss....       (100)          --          (100)       (10,000)
                  Accumulated gain (loss) on derivatives:
                        Holding loss...............................     (1,100)          --        (1,100)            --
                                                                      --------    ---------  ------------    -----------

                        Comprehensive loss.........................   $(59,600)   $ (85,500) $   (143,600)   $  (208,500)
                                                                      ========    =========  ============    ===========
</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 three months ended June 30, 2001, to hedge a portion of its
forecasted cotton needs, the Company purchased cotton futures contracts and call
options maturing at various dates through February 2003. Through June 30, 2001,
net losses of $1,100,000 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 June 30, 2001 and
December 30, 2000 and for the three and six months ended June 30, 2001 and July
1, 2000. Investments in nondebtor subsidiaries are presented using the equity
method.





                                       15
<PAGE>   17
                    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>
                                                                                               JUNE 30,        DECEMBER 30,
                                                                                                 2001              2000
                                                                                                 ----              ----
                                                                                             (UNAUDITED)
<S>                                                                                       <C>              <C>
                               ASSETS
Current Assets
   Cash and cash equivalents (including restricted cash)................................  $         72,100 $      93,100
   Notes and accounts receivable (less allowance for possible losses
   $30,000 and of $34,100)..............................................................           139,000        94,000
   Inventories
      Finished goods....................................................................           384,400       392,700
      Work in process...................................................................            41,700        66,800
      Materials and supplies............................................................             7,400        23,700
                                                                                          ---------------- -------------
         Total inventories..............................................................           433,500       483,200
   Other ...............................................................................            24,300        18,200
                                                                                          ---------------- -------------
         Total current assets...........................................................           668,900       688,500
                                                                                          ---------------- -------------
Property, Plant and Equipment...........................................................           729,900       870,000
   Less accumulated depreciation........................................................           605,600       699,200
                                                                                          ---------------- -------------
         Net property, plant and equipment..............................................           124,300       170,800
                                                                                          ---------------- -------------
Other Assets
   Goodwill (less accumulated amortization of $389,000 and $376,700)....................           594,300       606,600
   Investment in nondebtor subsidiaries.................................................           256,400       274,500
   Receivable from nondebtor subsidiaries...............................................           106,400        85,800
   Other ...............................................................................            60,800        76,000
                                                                                          ---------------- -------------
         Total other assets.............................................................         1,017,900     1,042,900
                                                                                          ---------------- -------------
                                                                                          $      1,811,100 $   1,902,200
                                                                                          ================ =============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
   Current maturities of long-term debt.................................................  $        741,000 $     745,700
   Trade accounts payable...............................................................            21,500        21,700
   Net liabilities of discontinued operations...........................................             5,600         5,100
   Other accounts payable and accrued expenses..........................................           199,500       211,500
                                                                                          ---------------- -------------
         Total current liabilities......................................................           967,600       984,000
                                                                                          ---------------- -------------
Noncurrent Liabilities
   Long-term debt.......................................................................           387,000       385,800
   Net liabilities of discontinued operations...........................................            11,700        11,900
   Payable to nondebtor subsidiaries....................................................           145,100        81,600
   Other ...............................................................................            20,200        11,500
                                                                                          ---------------- -------------
         Total noncurrent liabilities...................................................           564,000       490,800
                                                                                          ---------------- -------------
Liabilities Subject to Compromise
   Unrelated parties....................................................................           536,100       540,700
   Payable to nondebtor subsidiaries and affiliates.....................................           606,200       606,200
                                                                                          ---------------- -------------
         Total liabilities subject to compromise........................................         1,142,300     1,146,900
                                                                                          ---------------- -------------
Exchangeable Preferred Stock............................................................            71,700        71,700
                                                                                          ---------------- -------------
Common Stockholders' Deficit............................................................          (934,500)     (791,200)
                                                                                          ---------------- -------------
                                                                                          $      1,811,100 $   1,902,200
                                                                                          ================ =============
</TABLE>



                                       16
<PAGE>   18


                    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        SIX MONTHS ENDED
                                                                              ------------------        ----------------
                                                                             JUNE 30,    JULY 1,      JUNE 30,      JULY 1,
                                                                               2001         2000        2001         2000
                                                                               ----        -----        ----         ----

<S>                                                                      <C>          <C>           <C>           <C>
Net Sales
   Unrelated parties...................................................  $   284,900  $   379,500   $   536,100   $   682,600
   Affiliates..........................................................      139,500      231,600       295,600       457,700
                                                                         -----------  -----------   -----------   -----------
                                                                             424,400      611,100       831,700     1,140,300
                                                                         -----------  -----------   -----------   -----------
Cost of Sales
   Unrelated parties...................................................      219,200      340,700       432,800       637,300
   Affiliates..........................................................      164,400      271,600       345,500       539,500
                                                                         -----------  -----------   -----------   -----------
                                                                             383,600      612,300       778,300     1,176,800
                                                                         -----------  -----------   -----------   -----------
      Gross earnings (loss)............................................       40,800       (1,200)       53,400       (36,500)
Selling, general and administrative expenses...........................       53,800       35,900        90,400        74,200
Goodwill amortization..................................................        6,100        6,100        12,300        12,300
                                                                         -----------  -----------   -----------   -----------
      Operating loss...................................................      (19,100)     (43,200)      (49,300)     (123,000)
Interest expense.......................................................      (26,000)     (30,800)      (54,400)      (59,400)
Equity in earnings (loss) of nondebtor subsidiaries....................       (3,100)       3,600        (5,300)        5,600
Other (expense) income--net............................................         (600)      (1,600)          900         9,000
                                                                         -----------  -----------   -----------   -----------
      Loss from continuing operations before reorganization items
        and income tax provision.......................................      (48,800)     (72,000)     (108,100)     (167,800)
Reorganization items...................................................       (5,600)      (9,500)      (16,200)      (19,000)
                                                                         -----------  -----------   -----------   -----------
      Loss from continuing operations before income tax provision......      (54,400)     (81,500)     (124,300)     (186,800)
Income tax provision...................................................          200          600           400         2,500
                                                                         -----------  -----------   -----------   -----------
      Loss from continuing operations..................................      (54,600)     (82,100)     (124,700)     (189,300)
Discontinued operations
   Loss--Sports & Licensing operations.................................           --           --            --        (2,600)
                                                                         -----------  -----------   -----------   -----------
   Net loss............................................................  $   (54,600) $   (82,100)  $  (124,700)  $  (191,900)
                                                                         ===========  ===========   ===========   ===========
</TABLE>



                                       17
<PAGE>   19


                    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>
                                                                                                     SIX MONTHS ENDED
                                                                                                     ----------------
                                                                                                 JUNE 30,        JULY 1,
                                                                                                   2001             2000
                                                                                                   ----            -----
<S>                                                                                          <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Loss from continuing operations........................................................   $    (124,700)     (189,300)
   Adjustments to reconcile to net operating cash flows:
      Equity in (earnings) loss of nondebtor subsidiaries.................................           5,300        (5,600)
      Depreciation and amortization.......................................................          36,500        49,700
      (Increase) decrease in working capital..............................................          (2,700)      115,200
      Cash flows of discontinued operations...............................................             300        20,300
      Gains on marketable equity securities...............................................          (4,900)      (15,800)
      Consolidation of operations - writedowns and reserves ..............................          34,600            --
      Other--net..........................................................................           7,300       (16,400)
                                                                                             -------------   -----------
        Net operating cash flows before reorganization items..............................         (48,300)      (41,900)
      Net cash used for reorganization items..............................................         (12,200)       (9,100)
                                                                                             -------------   -----------
          Net operating cash flows........................................................         (60,500)      (51,000)
                                                                                             -------------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures...................................................................         (11,500)       (4,500)
   Proceeds from sale of property, plant and equipment....................................           6,500         2,300
   Proceeds from sale of marketable equity securities.....................................           7,100        14,100
   Affiliate notes and accounts receivable................................................         (20,600)      (32,800)
   Other--net.............................................................................            (900)       (1,000)
                                                                                             -------------   -----------
          Net investing cash flows........................................................         (19,400)      (21,900)
                                                                                             -------------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES
   DIP financing proceeds.................................................................         500,100       703,400
   DIP financing payments.................................................................        (505,800)     (680,800)
   Affiliate notes and accounts payable...................................................          64,600        54,500
                                                                                             -------------   -----------
          Net financing cash flows........................................................          58,900        77,100
                                                                                             -------------   -----------
Net increase (decrease) in cash and cash equivalents (including restricted cash)..........         (21,000)        4,200
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....................   $      72,100   $    22,400
                                                                                             =============   ===========
</TABLE>





                                       18
<PAGE>   20

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

         11. The Company's 8 7/8% senior notes due April 2006 ("8 7/8% 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
         June 30, 2001 and December 30, 2000, and supplemental condensed
         consolidating summaries of operations and cash flows for the six months
         ended of June 30, 2001 and July 1, 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.




                                       19
<PAGE>   21

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

         SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET (UNAUDITED)
                                  JUNE 30, 2001
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                         COMBINED       COMBINED        FRUIT      ELIMINATIONS
                                                       NON-GUARANTOR   GUARANTOR       OF THE           AND
ASSETS                                                 SUBSIDIARIES   SUBSIDIARIES    LOOM, INC.  RECLASSIFICATIONS   CONSOLIDATED
                                                       ------------   ------------    ----------  -----------------   ------------
<S>                                                     <C>          <C>           <C>            <C>                 <C>
Current Assets
   Cash and cash equivalents
     (including restricted cash).....................   $  47,600    $     3,300    $     71,200    $                 $   122,100
   Notes and accounts receivable
   (less allowance for possible losses of $40,400)...      52,100        144,400             100                          196,600
   Inventories
     Finished goods..................................      52,100        390,400              --                          442,500
     Work in process.................................      10,100         43,000              --                           53,100
     Materials and supplies..........................       6,700          6,900              --                           13,600
                                                        ---------    -----------    ------------    ------------      -----------
         Total inventories...........................      68,900        440,300              --                          509,200
   Other ............................................       8,400         24,800           1,600                           34,800
                                                        ---------    -----------    ------------    ------------      -----------
         Total current assets........................     177,000        612,800          72,900                          862,700
                                                        ---------    -----------    ------------    ------------      -----------
Property, Plant and Equipment........................     130,000        736,700           3,100                          869,800
   Less accumulated depreciation.....................      78,800        608,500             600                          687,900
                                                        ---------    -----------    ------------    ------------      -----------
       Net property, plant and equipment.............      51,200        128,200           2,500                          181,900
                                                        ---------    -----------    ------------    ------------      -----------
Other Assets
   Goodwill (less accumulated amortization of
     $389,000).......................................          --         27,000         567,300                          594,300
   Affiliate notes and accounts receivable--net......          --             --       1,193,200      (1,193,200)              --
   Investment in subsidiaries........................          --        121,900              --        (121,900)              --
   Other ............................................       1,100         20,800          39,000              --           60,900
                                                        ---------    -----------    ------------    ------------      -----------
         Total other assets..........................       1,100        169,700       1,799,500      (1,315,100)         655,200
                                                        ---------    -----------    ------------    ------------      -----------
                                                        $ 229,300    $   910,700    $  1,874,900    $ (1,315,100)     $ 1,699,800
                                                        =========    ===========    ============    ============      ===========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
   Current maturities of long-term debt..............   $     700    $        --    $    741,000    $                 $   741,700
   Trade accounts payable............................       9,800         20,700           2,600                           33,100
   Net liabilities of discontinued operations........          --          5,600              --                            5,600
   Other accounts payable and accrued expenses.......      20,100        123,000          79,300                          222,400
                                                        ---------    -----------    ------------    ------------      -----------
         Total current liabilities...................      30,600        149,300         822,900                        1,002,800
                                                        ---------    -----------    ------------    ------------      -----------
Noncurrent Liabilities
   Long-term debt....................................      21,900          7,600         379,400                          408,900
   Losses in excess of investment in subsidiaries....          --             --       1,207,700      (1,207,700)              --
   Net liabilities of discontinued operations........          --         11,700              --                           11,700
   Notes and account payable - affiliates............      54,800      1,334,900              --      (1,193,200)         196,500
   Other ............................................         100         20,100             100                           20,300
                                                        ---------    -----------    ------------    ------------      -----------
         Total noncurrent liabilities................      76,800      1,374,300       1,587,200      (2,400,900)         637,400
                                                        ---------    -----------    ------------    ------------      -----------
Liabilities Subject to Compromise
   Unrelated parties.................................          --        208,500         327,600                          536,100
   Affiliates........................................          --        386,300              --                          386,300
                                                        ---------    -----------    ------------    ------------      -----------
         Total liabilities subject to compromise.....          --        594,800         327,600                          922,400
                                                        ---------    -----------    ------------    ------------      -----------
Preferred Stock......................................          --             --          71,700                           71,700
                                                        ---------    -----------    ------------    ------------      -----------
Common Stockholder's Equity (Deficit)................     121,900     (1,207,700)       (934,500)      1,085,800         (934,500)
                                                        ---------    -----------    ------------    ------------      -----------
                                                        $ 229,300    $   910,700    $  1,874,900    $ (1,315,100)     $ 1,699,800
                                                        =========    ===========    ============    ============      ===========
</TABLE>



                                       20
<PAGE>   22

                    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 JUNE 30, 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.................................   $  60,500     $   287,200    $               $                $   347,700
   Affiliates........................................          --         136,900                          (6,100)        130,800
                                                        ---------     -----------    ------------    ------------     -----------
                                                           60,500         424,100                          (6,100)        478,500
                                                        ---------    -----------     ------------    ------------     -----------
Cost of sales
   Unrelated parties.................................      49,600         219,800                                         269,400
   Affiliates........................................          --         162,300                          (6,100)        156,200
                                                        ---------     -----------    ------------    ------------     -----------
                                                           49,600         382,100                          (6,100)        425,600
                                                        ---------     -----------    ------------    ------------     -----------
     Gross earnings..................................      10,900          42,000                                          52,900
Selling, general and administrative expenses.........      12,800          50,300           4,200                          67,300
Goodwill amortization................................          --             200           5,900                           6,100
                                                        ---------     -----------    ------------    ------------     -----------
     Operating loss..................................      (1,900)         (8,500)        (10,100)                        (20,500)
Interest expense.....................................        (200)           (100)        (25,900)                        (26,200)
Affiliated interest income (expense).................        (800)        (23,600)         24,400                              --
Equity in losses of subsidiaries.....................          --          (3,600)        (38,400)         42,000              --
Other income (expense)--net..........................        (400)         (1,800)            400                          (1,800)
                                                        ---------     -----------    ------------    ------------     -----------
     Loss from continuing operations before
       reorganization items and income tax
       provision.....................................      (3,300)        (37,600)        (49,600)         42,000         (48,500)
Reorganization items.................................          --            (600)         (5,000)                         (5,600)
                                                        ---------     -----------    ------------    ------------     -----------
     Loss from continuing operations before
         income tax provision........................      (3,300)        (38,200)        (54,600)         42,000         (54,100)
Income tax provision.................................         300             200              --                             500
                                                        ---------     -----------    ------------    ------------     -----------
     Loss from continuing operations.................      (3,600)        (38,400)        (54,600)         42,000         (54,600)
Discontinued operations - Sports & Licensing
   Loss from operations..............................          --              --              --              --              --
                                                        ---------     -----------    ------------    ------------     -----------
     Net loss........................................   $  (3,600)    $   (38,400)   $    (54,600)   $     42,000    $    (54,600)
                                                        =========     ===========    ============    ============     ===========
</TABLE>














                                       21
<PAGE>   23

                    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)
                         SIX MONTHS ENDED JUNE 30, 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.................................   $ 120,600    $   541,300  $             $               $   661,900
   Affiliates........................................          --        290,600                     (13,200)       277,400
                                                        ---------    -----------  ------------  ------------    -----------
                                                          120,600        831,900                     (13,200)       939,300
                                                        ---------    -----------  ------------  ------------    -----------
Cost of sales
   Unrelated parties.................................     101,000        434,800                                    535,800
   Affiliates........................................          --        342,400                     (13,200)       329,200
                                                        ---------    -----------  ------------  ------------    -----------
                                                          101,000        777,200                     (13,200)       865,000
                                                        ---------    -----------  ------------  ------------    -----------
     Gross earnings..................................      19,600         54,700                                     74,300
Selling, general and administrative expenses.........      23,200         89,100         3,100                      115,400
Goodwill amortization................................          --            500        11,800                       12,300
                                                        ---------    -----------  ------------  ------------    -----------
     Operating loss..................................      (3,600)       (34,900)      (14,900)                     (53,400)
Interest expense.....................................        (600)          (200)      (54,200)                     (55,000)
Affiliated interest income (expense).................      (1,600)       (53,200)       54,800                           --
Equity in losses of subsidiaries.....................          --         (5,800)      (92,500)       98,300             --
Other income (expense)--net..........................         600          2,800        (2,500)                         900
                                                        ---------    -----------  ------------  ------------    -----------
     Loss from continuing operations before
       reorganization items and income tax provision.      (5,200)       (91,300)     (109,300)       98,300       (107,500)
Reorganization items.................................          --           (800)      (15,400)                     (16,200)
                                                        ---------    -----------  ------------  ------------    -----------
     Loss from continuing operations before
         income tax provision........................      (5,200)       (92,100)     (124,700)       98,300       (123,700)
Income tax provision.................................         600            400            --                        1,000
                                                        ---------    -----------  ------------  ------------    -----------
     Loss from continuing operations.................      (5,800)       (92,500)     (124,700)       98,300       (124,700)
Discontinued operations - Sports & Licensing
   Loss from operations..............................          --             --            --            --             --
                                                        ---------    -----------  ------------  ------------    -----------
     Net loss........................................   $  (5,800)   $   (92,500) $   (124,700) $     98,300    $  (124,700)
                                                        =========    ===========  ============  ============    ===========
</TABLE>










                                       22
<PAGE>   24

                    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)
                         SIX MONTHS ENDED JUNE 30, 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...................     $  (5,800)   $   (92,500) $   (124,700) $     98,300    $  (124,700)
   Adjustments to reconcile to net operating cash flows:
     Equity in losses of subsidiaries................            --          5,800        92,500       (98,300)            --
     Depreciation and amortization...................         4,300         19,600        17,300                       41,200
     Decrease (increase) in working capital..........        (6,000)        (1,000)          800                       (6,200)
     Cash flows of discontinued operations...........            --            300            --                          300
     Gain on marketable equity securities............            --         (4,900)           --                       (4,900)
     Consolidation of operations - writedowns and
       reserves......................................         1,600         34,500            --                       36,100
     Other--net......................................        (5,500)        (8,900)       13,200                       (1,200)
                                                          ---------    -----------  ------------  ------------    ------------
       Net operating cash flows
         before reorganization items.................       (11,400)       (47,100)         (900)                     (59,400)
     Net cash used for reorganization items..........            --             --       (12,200)                     (12,200)
                                                          ---------    -----------  ------------  ------------    -----------
             Net operating cash flows................       (11,400)       (47,100)      (13,100)           --        (71,600)
                                                          ---------    -----------  ------------  ------------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures..............................          (100)       (11,500)           --                      (11,600)
   Proceeds for the sale of property, plant and
     equipment.......................................         1,100          6,500            --                        7,600
   Proceeds from sale of marketable equity
     securities......................................            --          7,100            --                        7,100
   Affiliate notes and accounts receivable...........            --             --         9,600        (9,600)            --
   Other--net........................................            --         (1,000)           --                       (1,000)
                                                          ---------    -----------  ------------  ------------    -----------
             Net investing cash flows................         1,000          1,100         9,600        (9,600)         2,100
                                                          ---------    -----------  ------------  -------------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES
   DIP financing proceeds............................            --             --       500,100                      500,100
   DIP financing payments ...........................            --             --      (505,800)                    (505,800)
   Principal payments on
     long-term debt and capital leases...............          (300)            --            --                         (300)
   Affiliate notes and accounts payable..............        25,300         31,500            --         9,600         66,400
                                                          ---------    -----------  ------------  ------------    -----------
             Net financing cash flows................        25,000         31,500        (5,700)        9,600         60,400
                                                          ---------    -----------  ------------  ------------    -----------
Net increase (decrease) in Cash and cash equivalents
   (including restricted cash).......................        14,600        (14,500)       (9,200)           --         (9,100)
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..................................     $  47,600    $     3,300  $     71,200  $         --    $   122,100
                                                          =========    ===========  ============  ============    ===========
</TABLE>











                                       23
<PAGE>   25

                    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                   ELIMINATIONS
                                                        NON-GUARANTOR   GUARANTOR     FRUIT OF          AND
                                                        SUBSIDIARIES  SUBSIDIARIES  THE 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>



                                       24
<PAGE>   26


                    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 JULY 1, 2000
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                         COMBINED      COMBINED                    ELIMINATIONS
                                                       NON-GUARANTOR   GUARANTOR      FRUIT OF          AND
                                                       SUBSIDIARIES  SUBSIDIARIES  THE LOOM, INC. RECLASSIFICATIONS  CONSOLIDATED
                                                       ------------  ------------  -------------- -----------------  ------------
<S>                                                     <C>          <C>            <C>           <C>               <C>
Net sales
   Unrelated parties.................................   $  63,800    $   383,600    $             $                 $   447,400
   Affiliates........................................          --        238,200                         (6,600)        231,600
                                                        ---------    -----------    ------------  -------------     -----------
                                                           63,800        621,800                         (6,600)        679,000
                                                        ---------    -----------    ------------  -------------     -----------
Cost of sales
   Unrelated parties.................................      50,100        351,900                                        402,000
   Affiliates........................................          --        264,400                         (6,600)        257,800
                                                        ---------    -----------    ------------  -------------     -----------
                                                           50,100        616,300                         (6,600)        659,800
                                                        ---------    -----------    ------------  -------------     -----------
     Gross earnings..................................      13,700          5,500                                         19,200
Selling, general and administrative expenses.........      11,200         38,700             800                         50,700
Goodwill amortization................................          --            200           5,900                          6,100
                                                        ---------    -----------    ------------  -------------     -----------
     Operating earnings (loss).......................       2,500        (33,400)         (6,700)                       (37,600)
Interest expense.....................................        (500)          (200)        (29,600)        (1,000)        (31,300)
Affiliated interest income (expense).................        (700)       (33,300)         34,000                             --
Equity in losses of subsidiaries.....................          --            500         (67,200)        66,700              --
Other income (expense)--net..........................        (600)         2,300          (4,700)                        (3,000)
                                                        ---------    -----------    ------------- -------------     -----------
     Loss from continuing operations before
         reorganization items and
         income tax provision.......................          700        (64,100)        (74,200)        65,700         (71,900)
Reorganization items.................................          --         (1,600)         (7,900)                        (9,500)
                                                        ---------    ------------   ------------- -------------     -----------
     Loss from continuing operations before
         income tax provision........................         700        (65,700)        (82,100)        65,700         (81,400)
Income tax provision.................................         200            500              --                            700
                                                        ---------    -----------    ------------  -------------     -----------
     Loss from continuing operations.................         500        (66,200)        (82,100)        65,700         (82,100)
Discontinued operations - Sports & Licensing:
   Loss from operations..............................          --         (1,000)             --          1,000              --
                                                        ---------    -----------    ------------  -------------     -----------
     Net loss........................................   $     500    $   (67,200)   $    (82,100) $      66,700     $   (82,100)
                                                        =========    ===========    ============  =============     ===========
</TABLE>





                                       25
<PAGE>   27


                    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)
                          SIX MONTHS ENDED JULY 1, 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>

Net sales
   Unrelated parties.................................   $ 132,500    $   690,500  $             $               $   823,000
   Affiliates........................................          --        475,300                     (17,600)       457,700
                                                        ---------    -----------  ------------  ------------    -----------
                                                          132,500      1,165,800                     (17,600)     1,280,700
                                                        ---------    -----------  ------------  ------------    -----------
Cost of sales
   Unrelated parties.................................     104,200        660,400                                    764,600
   Affiliates........................................          --        529,300                     (17,600)       511,700
                                                        ---------    -----------  ------------  ------------    -----------
                                                          104,200      1,189,700                     (17,600)     1,276,300
                                                        ---------    -----------  ------------  ------------    -----------
     Gross earnings (loss)...........................      28,300        (23,900)                                     4,400
Selling, general and administrative expenses.........      23,700         76,300         5,500                      105,500
Goodwill amortization................................          --            500        11,800                       12,300
                                                        ---------    -----------  ------------  ------------    -----------
     Operating earnings (loss).......................       4,600       (100,700)      (17,300)                    (113,400)
Interest expense.....................................      (1,200)          (400)      (59,000)                     (60,600)
Affiliated interest income (expense).................      (1,300)       (74,400)       75,700                           --
Equity in losses of subsidiaries.....................          --         (1,200)     (166,800)      168,000             --
Other income (expense)--net..........................      (2,800)        15,000        (7,100)                       5,100
                                                        ---------    -----------  ------------  ------------    -----------
     Loss from continuing operations
         before reorganization items
         and income tax provision....................        (700)      (161,700)     (174,500)      168,000       (168,900)
Reorganization items.................................          --         (1,600)      (17,400)                     (19,000)
                                                        ---------    -----------  ------------  ------------    -----------
     Loss from continuing operations before
         income tax provision........................        (700)      (163,300)     (191,900)      168,000       (187,900)
Income tax provision.................................         500            900            --                        1,400
                                                        ---------    -----------  ------------  ------------    -----------
     Loss from continuing operations.................      (1,200)      (164,200)     (191,900)      168,000       (189,300)
Discontinued operations:
   Loss - Sports & Licensing operations..............          --         (2,600)           --            --         (2,600)
                                                        ---------    -----------  ------------  ------------    -----------
     Net earnings (loss).............................   $  (1,200)   $  (166,800) $   (191,900) $    168,000    $  (191,900)
                                                        =========    ===========  ============  ============    ===========
</TABLE>







                                       26
<PAGE>   28


                    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)
                          SIX MONTHS ENDED JULY 1, 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>
CASH FLOWS FROM OPERATING ACTIVITIES
   Loss from continuing operations...................     $  (1,200)   $  (164,200) $   (191,900) $    168,000    $  (189,300)
   Adjustments to reconcile to net operating cash flows:
     Equity in losses of subsidiaries................            --          1,200       166,800      (168,000)            --
     Depreciation and amortization...................         5,100         32,500        17,200                       54,800
     Decrease (increase) in working capital..........       (24,000)        55,000        36,300                       67,300
     Cash flows of discontinued operations...........            --         20,300            --                       20,300
     Gain on marketable equity securities............            --        (15,800)           --                      (15,800)
     Other--net......................................        (5,100)       (14,000)        6,100                      (13,000)
                                                          ---------    -----------  ------------  ------------    -----------
       Net operating cash flows
         before reorganization items.................       (25,200)       (85,000)       34,500                      (75,700)
     Net cash used for reorganization items..........            --             --        (9,100)                      (9,100)
                                                          ---------    -----------  ------------  ------------    -----------
             Net operating cash flows................       (25,200)       (85,000)       25,400            --        (84,800)
                                                          ---------    -----------  ------------  ------------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures..............................          (200)        (4,500)           --                       (4,700)
   Proceeds from sale of property, plant and
     equipment.......................................           300          1,700            --                        2,000
   Proceeds from sale of marketable equity
     securities......................................            --         14,100            --                       14,100
   Affiliate notes and accounts receivable...........         4,300             --       (44,700)       40,400             --
   Other--net........................................            --         (1,100)          100                       (1,000)
                                                          ---------    -----------  ------------  ------------    -----------
             Net investing cash flows................         4,400         10,200       (44,600)       40,400         10,400
                                                          ---------    -----------  ------------  ------------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES
   DIP financing proceeds............................            --             --       703,400                      703,400
   DIP financing payments ...........................            --             --      (680,800)                    (680,800)
   Principal payments on
     long-term debt and capital leases...............          (300)            --            --                         (300)
   Affiliate notes and accounts payable..............        24,500         77,900            --       (40,400)        62,000
                                                          ---------    -----------  ------------  ------------    -----------
             Net financing cash flows................        24,200         77,900        22,600       (40,400)        84,300
                                                          ---------    -----------  ------------  ------------    -----------
Net increase in Cash and cash equivalents (including
   restricted cash)..................................         3,400          3,100         3,400            --          9,900
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..................................     $  22,500    $    13,400  $     12,300  $         --    $    48,200
                                                          =========    ===========  ============  ============    ===========
</TABLE>





                                       27
<PAGE>   29


                    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, and weather conditions in
the locations in which the Company manufactures and sells its products. 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.




                                       28
<PAGE>   30

                    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. There can be no assurance that the 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 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.

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 June 30, 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.

         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 six 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.



                                       29
<PAGE>   31


                    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)

         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 May
2001, the Company reached a decision and announced the closure of two of its
textile facilities. The total cost related to the closure of these facilities
aggregated $30,400,000 and was recorded in the second quarter of 2001. Included
in the cost of the 2001 shutdowns were cash charges of $4,600,000. 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 quarter of
2001, the Company finalized certain of the special charges recorded in 1997,
resulting in a decrease to 2001 consolidation costs of $2,100,000. 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. 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.

Second Quarter and First Six Months of 2001 versus 2000

         Total net sales decreased $200,500,000 in the second quarter and
$341,400,000 in the first six months of 2001 compared to 2000. Net sales to
unrelated parties decreased $99,700,000 or 22.3% in the second quarter and
$161,100,000 or 19.6% in the first six months of 2001 compared to 2000. The
decreases in sales to unrelated parties were principally due to lower activewear
sales, which were affected by weakness in the overall activewear market combined
with competitively lower pricing. The higher sales volume in the second quarter
and first six months of 2000 also included sales of discontinued non-core retail
and activewear product lines, and Gitano Fashions, Ltd., the Company's jeanswear
business. In the first quality product category, $87,600,000 of the second
quarter decrease and $137,400,000 of the six-month decrease resulted from a
reduction in volume and a change in product mix. Also, $9,200,000 of the second
quarter decrease and $17,500,000 of the six month decrease was attributable to
lower pricing in the face of increased competition. In addition, $3,600,000 of
the second quarter decrease and $7,800,000 of the six month decrease in sales
resulted from a weakening of European currencies in relation to the U. S.
dollar.

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

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED          SIX MONTHS ENDED
                                                              ------------------          ----------------
                                                             JUNE  30,    JULY 1,       JUNE 30,      JULY 1,
                                                               2001        2000           2001         2000
                                                               ----        ----           ----         ----

<S>                                                       <C>            <C>           <C>         <C>
                         Retail Products................. $    207.6     $ 243.3       $   382.0   $   438.8
                         Activewear......................       93.0       156.4           185.1       281.7
                         Europe..........................       47.0        47.6            94.6       101.9
                         Other...........................        0.1         0.1             0.2         0.6
                                                          ----------     -------       ---------   ---------
                            Subtotal unrelated parties...      347.7       447.4           661.9       823.0
                            Affiliates...................      130.8       231.6           277.4       457.7
                                                          ----------     -------       ---------   ---------
                            Total........................ $    478.5     $ 679.0       $   939.3   $ 1,280.7
                                                          ==========     =======       =========   =========
</TABLE>

         Retail product sales decreased $35,700,000 or 14.7% in the second
quarter and $56,800,000 or 12.9% in the first six months of 2001 compared to
2000 principally due to the discontinuation of non-core product lines. The
Company's Gitano business was sold in July 2000, accounting for $11,200,000 of
the second quarter decrease and $22,500,000 of the decrease in the first six
months. The decrease in sales of retail products included $4,500,000 and
$5,400,000 as a result of reduced prices in the second quarter and first six
months of 2001 compared to the corresponding periods of 2000. Excluding the
Gitano decreases, $23,200,000 and $38,700,000 of the decrease in retail product
sales in the second quarter and first six months of 2001 compared to 2000
related to the discontinuation of non-core product lines.




                                       30
<PAGE>   32

                    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)

         Activewear sales decreased $63,400,000 or 40.5% in the second quarter
and $96,600,000 or 34.3% in the first six months of 2001 compared to 2000 due to
lower volume of first quality merchandise and price reductions. The lower volume
resulted from declines in the overall market as well as the elimination of
non-core products and lower volume of core products. For the six month period
ended June 30, 2001, dozens in the overall activewear market declined 8% when
compared to the corresponding period of 2000. The decrease in sales also
resulted in reduced market share in the first six months of 2001 versus 2000,
which decline the Company attributes partially to the impact of the pending
bankruptcy cases. Lower prices reflect the Company's response to aggressive
pricing by competitors.

         European sales declined $600,000 or 1.3% in the second quarter and
$7,300,000 or 7.2% in the first six months of 2001 compared to 2000 due to
unfavorable currency effects (higher U. S. dollar), price reductions and lower
sales of close-outs (in the six month period), offset partially by higher volume
of activewear products. Price reductions in Europe totaled $400,000 and
$2,300,000 in the second quarter and first six months of 2001 compared to 2000
reflecting market conditions in activewear and the shift in retail emphasis to
concentrate on selling to discount chains.

         Total gross earnings increased $33,700,000 and $69,900,000 in the
second quarter and first six months of 2001 compared to 2000. Gross earnings on
sales to unrelated parties increased $32,900,000 in the second quarter of 2001
and $67,700,000 in the first six months of 2001 compared to the corresponding
periods of 2000. Gross margin on sales to unrelated parties increased 12.4
percentage points to 22.5% in the second quarter of 2001 and 12.0 percentage
points to 19.1% in the first six months of 2001. Lower production costs totaled
$58,900,000 and $117,000,000 in the second quarter and first six months of 2001
compared to corresponding periods of 2000. Offsetting these improvements were
price declines aggregating $9,200,000 and $17,500,000 in the second quarter and
first six months of 2001 compared to the corresponding periods of 2000. In
addition, reduced sales volume and unfavorable mix resulted in decreases to
gross earnings aggregating $24,500,000 and $40,000,000 in the second quarter and
first six 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        Six Months Ended
                                                                     ------------------        ----------------
                                                                     June 30,     July 1,    June 30,    July 1,
                                                                       2001        2000        2001       2000
                                                                       ----        ----        ----       ----

<S>                                                               <C>         <C>           <C>         <C>
                   Retail Products..............................  $    31.8   $     2.3     $   45.8    $  (23.3)
                   Activewear...................................        0.1       (13.4)       (13.7)      (36.3)
                   Europe.......................................        0.5         1.5         (0.6)        3.8
                   Consolidation costs..........................      (30.1)         --        (36.8)        --
                   Other........................................        5.6         4.3          9.9         8.7
                   Goodwill.....................................       (6.1)       (6.1)       (12.3)      (12.3)
                                                                  ---------   ---------     --------    --------
                        Subtotal unrelated parties..............        1.8       (11.4)        (7.7)      (59.4)
                        Affiliates..............................      (22.3)      (26.2)       (45.7)      (54.0)
                                                                  ---------   ---------     --------    --------
                        Total...................................  $   (20.5)  $   (37.6)     $ (53.4)   $ (113.4)
                                                                  =========   =========     ========    ========
</TABLE>





                                       31
<PAGE>   33


                    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 second quarter of 2001 of $1,800,000 compared to an operating
loss on sales to unrelated parties of $11,400,000 in the second quarter of 2000.
For the first six months of 2001, the Company experienced an operating loss on
sales to unrelated parties of $7,700,000 compared to an operating loss on sales
to unrelated parties of $59,400,000 for the first six months of 2000. The
operating loss in the second quarter and first six months of 2001 includes net
consolidation costs of $30,100,000 and $36,800,000 principally related to the
2001 shutdown of the Company's manufacturing facilities. Excluding consolidation
costs, operating earnings were $31,900,000 and $29,100,000 in the second quarter
and first six months of 2001. The decrease in operating loss 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 $13,500,000 and $26,900,000 in the second quarter and first
six 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 10.7% in the second
quarter of 2001 and were 11.9% of net sales in the first six months of 2001. The
decrease in operating selling, general and administrative expenses in the second
quarter and first six months of 2001 compared to the corresponding periods of
2000 primarily resulted from reductions in headcount and related expenses.

         Interest expense decreased $5,100,000 or 16.3% in the second quarter
and $5,600,000 or 9.2% in the first six months of 2001 compared to the
corresponding periods of 2000. The decreases in both periods reflected lower
average borrowing levels and a lower average interest rate.

         Other expense-net improved $1,200,000 from $3,000,000 in the second
quarter of 2000 to $1,800,000 in the second quarter of 2001. Principal
components of net other expense in the second quarter of 2001 included
$3,100,000 in gains on the sale of marketable equity securities and interest
income of $1,000,000. These favorable impacts were more than offset by
$2,000,000 in losses on the sale of fixed assets, bank fees of $600,000,
adequate protection expense (interest payments) of $1,100,000 related to the
guarantee of personal indebtedness of the Company's former Chairman and an
amendment fee of $1,100,000 related to the Company's debtor in possession
financing agreement. Net other expense in the second quarter of 2000 included
$3,000,000 in gains on the sale of marketable equity securities, which was more
than offset by adequate protection expense of $1,600,000, unfavorable foreign
currency translation of $700,000 and bank fees of $900,000.

         Other income-net decreased $4,200,000 from $5,100,000 in the first six
months of 2000 to $900,000 in the first six months of 2001. Net other income in
the first six months of 2001 included $4,900,000 in gains on the sale of
marketable equity securities, interest income of $1,800,000 and a $1,000,000
gain on the sale of the Company's "Russell" hosiery trademark. These favorable
impacts were substantially offset by adequate protection expense of $2,200,000,
bank fees of $1,500,000, $1,400,000 in losses on the sale of fixed assets and
the DIP amendment fee of $1,100,000. Net other income in the first six months of
2000 included $15,800,000 in gains on the sale of marketable equity securities
and interest income of $1,400,000 partially offset by adequate protection
expense of $2,900,000, unfavorable foreign currency translation of $2,800,000
and bank fees of $1,600,000.

         Reorganization items represent costs incurred by the Company related to
the Reorganization Cases. Reorganization items in the second quarter of 2001 and
2000 aggregated $5,600,000 and $9,500,000, respectively. Reorganization items in
the first six months of 2001 and 2000 aggregated $16,200,000 and $19,000,000,
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.




                                       32
<PAGE>   34


                    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's income tax provision for the second quarter and first six
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 second quarter and first six months of 2001 or 2000 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 an operating loss 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 August 10, 2001 was $270,200,000 and, in addition, the
Company had $49,300,000 in invested cash at August 10, 2001.

         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 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 used for operating activities totaling $71,600,000 in the first
six months of 2001 and $84,800,000 in the first six months of 2000 reflected the
Company's losses from continuing operations. In the first six months of 2001,
the primary factors in reconciling from the loss from continuing operations of
$124,700,000 to cash used for operating activities of $71,600,000 were,
additional writedowns and reserves of $36,100,000 associated with the 2001
closure of certain of the Company's manufacturing facilities and depreciation
and amortization of $41,200,000, partially offset by an increase in working
capital of $6,200,000, gains on the sale of marketable equity securities of
$4,900,000 and cash payments for reorganization items of $12,200,000.






                                       33
<PAGE>   35


                    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 six months of 2000, the primary factors in reconciling
from the loss from continuing operations of $189,300,000 to cash used for
operating activities of $84,800,000 were a decrease in working capital of
$67,300,000 and depreciation and amortization of $54,800,000, partially offset
by a gain on the sale of marketable equity securities of $15,800,000 and cash
payments for reorganization items of $9,100,000. Cash flows provided by
discontinued operations aggregated $20,300,000 in the first six months of 2000.

         Net cash provided by investing activities in the first six months of
2001 was $2,100,000 compared with cash provided by investing activities totaling
$10,400,000 in the first six months of 2000. Capital expenditures were higher
($11,600,000 in the first six months of 2001 compared with $4,700,000 in the
first six months of 2000). In addition, proceeds from the sale of marketable
equity securities aggregated $7,100,000 in the first six months of 2001 compared
to $14,100,000 in the first six months of 2000. Capital spending, primarily in
state-of-the-art yarn and textile equipment, is anticipated to approximate
$46,000,000 in 2001.

         Net cash provided by financing activities was $60,400,000 in the first
six months of 2001 (consisting principally of increase to affiliated notes and
accounts payable, partially offset by net payments on DIP Facility financing),
while net cash provided by financing activities was $84,300,000 in the first six
months of 2000 (consisting principally of increase to affiliated notes and
accounts payable and net borrowings 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.

         Inherent in a successful plan of reorganization is 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.

         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. A significant component of the proposed plan of
reorganization is obtaining "Exit Financing." 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 Exit Financing
will be obtained or that the Plan will be determined fair and equitable by the
Bankruptcy Court. Also, there can be no assurance that the proposed capital
structure will enable the Company to generate sufficient cash flow after
reorganization to meet its restructured obligations and fund its current
obligations. 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.
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 six months of
2001, the Company incurred reorganization costs of $16,200,000 related to the
bankruptcy. Since the beginning of the bankruptcy proceedings, the Company has
incurred reorganization costs aggregating $67,400,000 related to the bankruptcy.




                                       34
<PAGE>   36


                    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'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 nonamortization 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 first of the required impairment tests of goodwill and indefinite
lived intangible assets as of January 1, 2002 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.












                                       35
<PAGE>   37


                    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).

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).




                                       36
<PAGE>   38

                    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(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).


*         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 June 30, 2001.





                                       37
<PAGE>   39



                                    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: August 14, 2001






                                       38