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 ¨

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

The number of shares outstanding of the registrant’s common stock is ~~6,500,076~~8,382,198 (as of ~~June 12,~~September 8, 2003).

	April 30, 2003		January 31, 2003			July 31, 2003		January 31, 2003
ASSETS
Current Assets:
Cash and cash equivalents	$	1,518,310	$	4,683,177		$	5,324,290	$	4,683,177
Accounts receivable, net		97,132,008		79,489,739			82,192,001		79,489,739
Inventories, net		45,588,454		51,306,474			92,779,915		51,306,474
Deferred income taxes		2,769,086		2,957,765			17,859,581		2,957,765
Prepaid income taxes		—		3,361,650			2,341,760		3,361,650
Other current assets		5,755,882		4,104,767			8,884,358		4,104,767

Total current assets		152,763,740		145,903,572			209,381,905		145,903,572
Property and equipment, net		31,079,085		31,048,876			35,511,845		31,048,876
Intangible assets, net		142,186,062		142,186,062			150,326,989		142,186,062
Deferred income taxes							29,575,359		—
Other		12,163,614		12,098,835			11,286,354		12,098,835

TOTAL	$	338,192,501	$	331,237,345		$	436,082,452	$	331,237,345

LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	9,057,672	$	12,820,168		$	26,374,026	$	12,820,168
Accrued expenses		5,286,676		5,058,748			16,575,736		5,058,748
Accrued interest payable		1,163,015		4,674,929			4,525,588		4,674,929
Unearned revenues		1,592,348		1,994,554			1,189,048		1,994,554
Other current liabilities		974,689		1,457,422			2,940,468		1,457,422

Total current liabilities		18,074,400		26,005,821			51,604,866		26,005,821
Senior subordinated notes payable, net		99,332,637		99,180,580			99,282,693		99,180,580
Senior secured notes payable, net		61,282,101		60,729,796			59,927,130		60,729,796
Senior credit facility		30,841,228		22,922,287			43,286,273		22,922,287
Real estate mortgage		11,600,000		11,600,000			11,600,000		11,600,000
Deferred pension obligation							18,483,041		—
Deferred income tax		10,432,897		10,694,595			11,810,532		10,694,595

Total long-term liabilities		213,488,863		205,127,258			244,389,669		205,127,258

Total liabilities		231,563,263		231,133,079			295,994,535		231,133,079

Commitments and Contingencies
Minority Interest		748,957		702,480			728,588		702,480

Stockholders' Equity:
Stockholders’ Equity:
Preferred stock $.01 par value; 1,000,000 shares authorized; no shares issued or outstanding		—		—			—		—
Common stock $.01 par value; 30,000,000 shares authorized; 6,500,076 shares issued and outstanding as of April 30, 2003 and 6,425,641 shares issued and outstanding as of January 31, 2003		65,001		64,257
Common stock $.01 par value; 30,000,000 shares authorized; 8,382,198 shares issued and outstanding as of July 31, 2003 and 6,425,641 shares issued and outstanding as of January 31, 2003							83,822		64,257
Additional paid-in-capital		27,887,923		27,198,094			63,888,586		27,198,094
Retained earnings		77,810,550		72,182,529			75,176,080		72,182,529
Accumulated other comprehensive income		116,807		(43,094	)		210,841		(43,094	)

Total stockholders' equity		105,880,281		99,401,786
Total stockholders’ equity							139,359,329		99,401,786

TOTAL	$	338,192,501	$	331,237,345		$	436,082,452	$	331,237,345

	Three Months Ended April 30,				Three Months Ended July 31,						Six Months Ended July 31,
	2003		2002		2003			2002			2003		2002
Revenues
Net sales	$	101,866,844	$	78,619,092	$	87,065,654		$	56,394,030		$	188,932,498	$	135,013,122
Royalty income		6,411,177		6,076,793		5,699,508			7,600,633			12,110,685		13,677,426

Total revenues		108,278,021		84,695,885		92,765,162			63,994,663			201,043,183		148,690,548
Cost of sales		71,545,115		57,932,099		64,851,770			42,535,834			136,396,885		100,467,933

Gross profit		36,732,906		26,763,786		27,913,392			21,458,829			64,646,298		48,222,615
Operating expenses
Selling, general and administrative expenses		21,609,413		14,510,386		27,296,885			13,483,861			48,906,298		27,994,247
Depreciation and amortization		1,112,011		659,738		1,413,295			743,090			2,525,306		1,402,828

Total operating expenses		22,721,424		15,170,124		28,710,180			14,226,951			51,431,604		29,397,075

Operating income		14,011,482		11,593,662
Operating income (loss)						(796,788	)		7,231,878			13,214,694		18,825,540
Interest expense		4,963,311		3,866,731		3,391,141			3,786,193			8,354,452		7,652,924

Income before minority interest and income taxes		9,048,171		7,726,931
Income (loss) before minority interest and income taxes (benefit)						(4,187,929	)		3,445,685			4,860,242		11,172,616
Minority interest		46,477		32,020		(20,369	)		(22,176	)		26,108		9,844
Income taxes		3,373,673		2,928,711
Income taxes (benefit)						(1,533,090	)		1,286,608			1,840,583		4,215,319

Net income	$	5,628,021	$	4,766,200
Net income (loss)					$	(2,634,470	)	$	2,181,253		$	2,993,551	$	6,947,453

Net income per share
Net income (loss) per share
Basic	$	0.87	$	0.75	$	(0.36	)	$	0.34		$	0.43	$	1.09

Diluted	$	0.80	$	0.75	$	(0.36	)	$	0.34		$	0.40	$	1.08

Weighted average number of shares outstanding
Basic		6,451,193		6,325,674		7,372,519			6,384,932			6,919,491		6,386,341
Diluted		7,029,014		6,391,139		7,372,519			6,449,468			7,511,877		6,451,341

	Three Months Ended April 30,						Six Months Ended July 31,
	2003			2002			2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	5,628,021		$	4,766,200		$	2,993,551		$	6,947,453
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		850,737			502,162			2,004,735			1,073,142
Amortization of debt issue cost		279,085			189,169			557,128			393,698
Amortization of bond discount		91,385			74,589			182,770			165,973
Deferred income taxes								1,377,762			1,837,737
Minority interest		46,477			32,020			26,108			9,844
Other		111,888			12,628			180,986			20,710
Changes in operating assets and liabilities (net of effects of acquisition transaction):
Accounts receivable, net		(17,642,269	)		(17,947,365	)		11,057,738			(3,020,536	)
Inventories		5,718,020			10,815,158			5,240,559			14,407,999
Other current assets and prepaid income taxes		1,637,516			186,734			(1,839,701	)		(2,742,217	)
Other assets		263,121			(1,673,546	)		(633,962	)		(2,212,635	)
Accounts payable and accrued expenses		(3,534,568	)		213,988			(8,138,113	)		4,883,846
Income taxes payable		—			515,525			—			(1,381,551	)
Accrued interest payable		(3,511,914	)		(2,555,087	)		(149,341	)		1,052,963
Other current liabilities and unearned revenues		(884,939	)		320,866			677,540			721,593

Net cash used in operating activities		(10,947,440	)		(4,546,959	)
Net cash provided by operating activities								13,537,760			22,158,019

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(874,954	)		(831,473	)		(3,267,639	)		(17,025,684	)
Payment on purchase of intangible assets		—			(12,218	)		—			(18,737	)
Payment for acquired businesses		—			(25,050,474	)		(31,221,289	)		(25,050,474	)

Net cash used in investing activities:		(874,954	)		(25,894,165	)
Net cash used in investing activities								(34,488,928	)		(42,094,895	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) from senior credit facility		7,918,941			(21,756,094	)		20,363,986			(21,756,094	)
Net proceeds from senior secured notes		—			55,589,250			—			55,589,250
Net proceeds from real estate mortgage								—			11,600,000
Proceeds from exercise of stock options		690,573			316,184			1,155,346			1,237,005

Net cash provided by financing activities:		8,609,514			34,149,340
Net cash provided by financing activities								21,519,332			46,670,161

Effect of exchange rate changes on cash and cash equivalents		48,013			9,044			72,949			—

NET (DECREASE)/INCREASE IN CASH		(3,164,867	)		3,717,260
NET INCREASE IN CASH								641,113			26,733,285
CASH AT BEGINNING OF YEAR		4,683,177			1,303,978			4,683,177			1,303,978

CASH AT END OF PERIOD	$	1,518,310		$	5,021,238		$	5,324,290		$	28,037,263

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	7,329,008		$	6,634,281		$	7,721,248		$	6,759,806

Income taxes	$	4,625		$	2,422,500		$	205,293		$	4,929,500

NON-CASH FINANCING AND INVESTING ACTIVITIES:
Change in fair value of mark-to-market interest rate swap/option	$	51,914		$	1,188,684		$	883,823		$	4,990,177

Issuance of stock as merger consideration							$	35,554,711		$	—

The accompanying unaudited consolidated financial statements of Perry Ellis International, Inc. and subsidiaries (“Perry Ellis” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the requirements of Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and changes in cash flows required by GAAP. These consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form ~~10-K~~10-K/A for the year ended January 31, 2003. Certain amounts in the prior period have been reclassified to conform to the current period’s presentation.

In our opinion, the information presented reflects all adjustments, all of which are of a normal and recurring nature, necessary for a fair presentation of the interim periods. Results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the entire fiscal year.

Inventories are stated at the lower of cost (moving average cost) or market. Cost principally consists of the purchase price, customs, duties, freight, insurance and commissions to buying agents.

Borrowings and availability under letter of credit facilities consist of the following as of:

	April 30, 2003			January 31, 2003			July 31, 2003			January 31, 2003
Total letter of credit facilities	$	62,599,834		$	54,453,386		$	62,675,896		$	54,453,386
Outstanding letters of credit		(17,938,043	)		(31,966,591	)		(52,263,067	)		(31,966,591	)

Total credit available	$	44,661,791		$	22,486,795		$	10,412,829		$	22,486,795

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Amortization of leasehold improvements is computed using the straight-line method over the shorter of the lease term or estimated useful lives of the improvements. The useful lives range from three to thirty-nine years:

Asset Class		Avg. Useful Lives in Years
Furniture, fixtures and equipment		3-7
Vehicles		7
Leasehold improvements		11
Buildings		39

Intangible assets primarily represent costs capitalized in connection with the acquisitions of brand names and license rights. Under Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” identifiable intangible assets with an indefinite useful life are not amortized but are tested for impairment annually on ~~Feb 1~~^stFebruary 1st of each year.

Management reviews long-lived assets for possible impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If there is an indication of impairment, management prepares an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to reduce the asset to its estimated fair value. Preparation of estimated expected future cash flows is inherently subjective and is based on management’s best estimate of assumptions concerning future conditions. There has not been any material impairment to long-lived assets.

The Company’s accounting policy relating to advertising and related costs is to expense these costs in the period incurred. Advertising and related costs were ~~$2.7~~approximately $3.6 million and ~~$1.4~~$1.1 million for the three months ended ~~April 30,~~July 31, 2003 and ~~April 30,~~July 31, 2002, respectively, and $6.3 million and $2.6 million for the six months ended July 31, 2003 and July 31, 2002, respectively, and are included in selling, general and administrative expenses.

The Company has chosen to account for stock-based compensation to employees and non-employee members of the Board using the intrinsic value method prescribed by Accounting Principles Board Opinion ~~( “APB”~~(“APB”) No. 25,“Accounting for Stock Issued to Employees, and related interpretations. As required by SFAS No. 123, “Accounting for Stock-Based Compensation,” the Company presents certain pro forma and other disclosures related to stock-based compensation

plans as if compensation cost for options granted had been determined in accordance with the fair value provisions of SFAS No. 123.

	Three Months Ended April 30,				Three Months Ended July 31,					Six Months Ended July 31,
	2003		2002		2003			2002		2003		2002
Net income as reported	$	5,628,021	$	4,766,200
Net income (loss) as reported					($	2,634,470	)	$	2,181,253	$	2,993,551	$	6,947,453
Add : Total stock based employee compensation expense included in reported net income, net		—		—		—			—		—		—
Deduct : Total stock based employee compensation expense not included in reported net income, net		100,833		70,196		87,329			58,511		188,432		128,707

Pro forma net income	$	5,527,188	$	4,696,004
Pro forma net income (loss)					($	2,721,799	)	$	2,122,742	$	2,805,119	$	6,818,746

Pro forma net income per share:
Pro forma net income (loss) per share:
Basic	$	0.86	$	0.74	$	(0.37	)	$	0.33	$	0.41	$	1.07

Diluted	$	0.79	$	0.73	$	(0.37	)	$	0.33	$	0.37	$	1.06

Basic net income per share is computed by dividing net income by the weighted average shares of outstanding common stock. The calculation of diluted net income per share is similar to basic earnings per share except that the denominator includes potential dilutive common stock. The potential dilutive common stock included in the Company’s computation of diluted net income per share includes the effects of the stock options and warrants as determined using the treasury stock method.

The following table sets forth the computation of basic and diluted income per ~~share~~share:

Comprehensive income (loss) is comprised of net income (loss) and the effect of foreign currency translation. Comprehensive income (loss) was ~~$5,787,922~~($2,540,436) and ~~$4,778,828~~$2,189,335 for the three months ended ~~April 30,~~July 31, 2003 and 2002, respectively and was $3,247,486 and $6,968,163 for the six months ended July 31, 2003 and 2002, respectively.

In accordance with SFAS No. 131, “Disclosure About Segments of an Enterprise and RelatedInformation,”our principal business segments are grouped into the generation of revenues from sale of products and royalties from licensing activity. These segments are identified and managed by the Company based on the products and services offered by each. The product segment derives its revenues from the design, importation and distribution of apparel to various retail channels, which include ~~regional,~~department stores, national and ~~international~~regional chain stores, mass merchants, ~~chain stores, department stores~~ and other specialty retail stores, principally throughout the United States, Puerto Rico and Canada. The licensing segment derives its revenues from royalties associated with the licensing of its trademarks to third parties, principally Perry Ellis^®, John Henry^®, Manhattan^® and Munsingwear^®. Trademark costs have been allocated among the segments where the brands are shared. Shared selling, general and administrative expenses are allocated amongst the segments based upon department utilization rates.

	Three Months Ended April 30,				Three Months Ended July 31,					Six Months Ended July 31,
	2003		2002		2003			2002		2003		2002
Revenues:
Product	$	101,866,844	$	78,619,092	$	87,065,654		$	56,394,030	$	188,932,498	$	135,013,122
Licensing		6,411,177		6,076,793		5,699,508			7,600,633		12,110,685		13,677,426

Total Revenues	$	108,278,021	$	84,695,885	$	92,765,162		$	63,994,663	$	201,043,183	$	148,690,548

Operating Income:
Operating Income (Loss):
Product	$	9,663,594	$	6,126,099	$	(4,347,047	)	$	707,501	$	5,316,546	$	6,833,602
Licensing		4,347,889		5,467,563		3,550,259			6,524,377		7,898,148		11,991,938

Total Operating Income	$	14,011,483	$	11,593,662
Total Operating Income (Loss)					$	(796,788	)	$	7,231,878	$	13,214,694	$	18,825,540

On ~~March 22, 2002,~~June 19, 2003, the Company acquired Salant Corporation. The aggregate merger consideration paid by the ~~Jantzen swimwear business from subsidiaries~~Company was approximately $91.0 million, comprised of ~~VF Corporation for~~ approximately ~~$24.0~~$35.8 million ~~excluding liabilities assumed~~worth of newly issued Perry Ellis common stock, $51.9 million in cash, and ~~expenses incurred related to the transaction.~~approximately $3.3 million in merger costs. The ~~acquisition was financed with a~~cash portion of the ~~proceeds~~consideration was funded from ~~a $57.0~~Salant’s available cash reserves and through borrowings under the Company’s senior credit facility.

Salant licensed the Perry Ellis brand from the Company for men’s sportswear, dress shirts, dress bottoms and accessories, and derived approximately $164.3 million or 65% of its 2002 revenues from the sale of Perry Ellis products. Salant was the Company’s largest licensee of Perry Ellis branded apparel. The remaining $87.7 million of Salant’s 2002 revenue was made up of sales of product under Salant’s owned brands such as Axis^® and Tricots St. Raphael^®, sales under license agreements for use of the JNCO^® and Ocean Pacific^® brands, as well as several private ~~offering of 9½% senior secured notes, which closed simultaneously with the acquisition.~~label programs.

The ~~Jantzen assets acquired consist primarily~~following table summarizes the estimated fair values of the ~~Jantzen trademarks and tradenames, license agreements, certain equipment and inventory relating to the 2003 season, which commenced in July 2002.~~

~~In connection with the Jantzen acquisition, the Company entered into a lease agreement with VF Corporation to occupy Jantzen’s Portland, Oregon administrative facility for an initial six-month~~

period, thereafter on a month-to-month basis. In addition, the Company entered into a lease agreement to occupy a portion of Jantzen’s Seneca, South Carolina distribution center facility for a one-year period. The Company was also granted a right of first refusal to purchase the Seneca distribution center facility. The option was exercised on May 20, 2002 at a price of $2.5 million. The Company closed on this purchase during September 2002.

~~The Jantzen~~ assets acquired and liabilities assumed ~~have been recorded~~ at ~~their fair values.~~the date of acquisition. The ~~following~~Company is ~~a summary~~in the process of obtaining third party valuations of certain intangible assets; thus the allocation of the purchase price ~~and purchase price allocation.~~may be subject to change.

The pro forma financial information presented below, gives effect to the Salant acquisition, as if it occurred as of the beginning of the fiscal year for the three and six months ended July 31, 2003 and 2002. The information presented below is for illustrative purposes only and is not indicative of results, which would have been achieved, or results, which may be achieved in the future.

In April 2002, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB No. 13, and Technical Corrections,” which all but eliminates the presentation in income statements of debt extinguishments as extraordinary items. SFAS No. 145 will be effective for fiscal years beginning after May 15, 2002. The Company adopted SFAS No. 145 as of February 1, 2003. SFAS No. 145 did not have a material impact on the financial position or results of operations of the Company.

In July 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit of Disposal Activities,” which requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to exit or disposal plan. SFAS No. 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. SFAS No. 146 ~~did~~is not expected have a ~~material~~significant impact on the financial position or results of operations of the Company.

In November 2002, the FASB issued FASB Interpretation No. 45 “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others—an Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34” (“FIN No. 45”). FIN No. 45 elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial

recognition and initial measurement provisions of FIN No. 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor’s fiscal year-end. However, the disclosure requirements in FIN No. 45 are effective for financial statements of interim or annual periods ~~ending~~ after December 15, 2002. Perry Ellis is not a party to any agreement in which it is a guarantor of indebtedness of others. ~~FIN 45~~Accordingly, adoption of this pronouncement did not have ~~a material~~an impact effect on Perry Ellis’ consolidated financial ~~position or results of operations.~~statements.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation—Transition and ~~Disclosure”~~Disclosure.”. SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends disclosure requirements of SFAS No. 123, “Accounting for Stock-Based Compensation,”to require disclosure in both interim and annual financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. SFAS No. 148 is effective for fiscal years ended after December 15, 2002 and for the interim financial statements beginning after December 15, 2002. The ~~Company adopted~~adoption of the disclosure ~~provision~~provisions of SFAS No. 148 ~~effective for fiscal year ended January 31, 2003.~~is not expected to have a significant effect on the financial position or results of operations of the Company.

In January 2003, the FASB issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities—an Interpretation of ARB No. 51” (“FIN No. 46”). FIN No. 46 addresses consolidation by business enterprises of variable interest entities (formerly special purpose entities or SPEs). In general, a variable interest entity is a corporation, partnership, trust, or any other legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. The objective of FIN No. 46 is not to restrict the use of variable interest entities but to improve financial reporting by companies involved with variable interest entities. FIN No. 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns or both. The Company ~~is required to adopt~~adopted the provisions of FIN No. 46 ~~immediately~~

for variable interests in variable interest entities created after January 31, 2003, and in the quarter ending ~~October 31,~~April 30, 2003 for variable interests in variable interest entities created before February 1, 2003. ~~However, certain of the disclosure requirements apply to financial statements issued after January 31, 2003, regardless of when the variable interest entity was established.~~ The Company does not have any variable interest entities as defined in FIN No. 46. Accordingly, the Company has determined that it is not reasonably possible that it will be required to consolidate or disclose information about a variable interest entity upon the adoption of FIN No. 46.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging ~~Activities~~Activities.”. SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. The new guidance amends SFAS No. 133 for decisions made (a) as part of the Derivatives Implementation Group process that effectively required amendments to SFAS No. 133, (b) in connection with other Board projects dealing with financial instruments, and (c) regarding implementation issues raised in relation to the application of the definition of a derivative, particularly regarding the meaning of an “underlying” and the characteristics of a derivative that contains financing components. The amendments set forth in SFAS No. 149 improve financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. SFAS No. 149 is generally effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The guidance is to be applied prospectively. SFAS No. 149 is not expected to have a material impact on the financial position or results of operations of the Company.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.”. SFAS No. 150 improves the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity. The new Statement requires that those instruments be classified as liabilities in statements of financial position. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003 and otherwise shall be effective at the beginning of the first interim period beginning after June 15, 2003. For financial instruments created before May 2003 and still existing at the beginning of the interim period of adoption, transition will be accomplished by reporting the cumulative effect of a change in an accounting principle. SFAS No. 150 is not expected to have a material impact on the financial position or results of operations of the Company.

The Company has entered into derivative financial instruments in order to manage the overall borrowing costs associated with its senior subordinated notes and senior secured notes.

At ~~April 30,~~July 31, 2003, the Company ~~has~~had an interest rate swap agreement (the “August Swap Agreement”) with a notional amount of $40.0 million maturing on April 1, 2006. The swap is a fair value hedge as it has been designated against the senior subordinated notes carrying a fixed rate of interest and converts such notes to variable rate debt. The interest rate swap contracts are reflected at fair value in the Company’s consolidated balance sheet.

At ~~April 30,~~July 31, 2003, the Company also ~~has~~had an interest rate cap (the “October Swap Agreement”) maturing on April 1, 2006 with a notional amount of $40.0 million. The Company also had a basis swap with a notional amount of $40.0 million that matured in April 2003. The interest rate cap effectively ~~hedges~~hedge against increases in the variable rate of interest paid on the interest rate swap and

the basis swap decreased the spread on the interest rate swap for 18 months ~~thru~~through April 2003. Neither of these derivatives qualified for hedge accounting and accordingly, are reflected at fair value in the Company’s consolidated balance sheet with the offset being recognized in the consolidated statements of income for the periods presented. Interest expense for the three months ended ~~April 30,~~July 31, 2003 and ~~April 30,~~July 31, 2002 ~~increased~~decreased by approximately ~~$0.2~~$0.05 million and ~~$0.3~~$0.1 million, respectively, as a result of the recognition of these derivatives. Interest expense for each of the six months ended July 31, 2003 and 2002 increased by approximately $0.2 million as a result of the recognition of these derivatives. In August 2003, the Company terminated the October Swap Agreement and the August Swap Agreement.

At ~~April 30,~~July 31, 2003, the Company ~~has~~had an interest rate swap and option (the “March Swap Agreement”) for an aggregate notional amount of $57.0 million in order to minimize the debt servicing costs associated with the senior secured notes. The March Swap Agreement is a fair value hedge as it has been designated against the senior secured notes carrying a fixed rate of interest and converts such notes to variable rate debt. The interest rate swap contracts are reflected at fair value in the ~~company’s~~Company’s consolidated balance sheet. The fair value of the March Swap Agreement recorded on the Company’s ~~Consolidated Balance Sheet~~consolidated balance sheet was ~~$5.5~~$4.1 million as of ~~April 30,~~July 31, 2003.

In December 2002, the Company entered into an interest rate floor agreement (the “December Floor Agreement”) for an aggregate notional amount of $57.0 million associated with the senior secured notes. The December Floor Agreement is scheduled to terminate on March 15, 2005. Under the December Floor Agreement, the Company must pay the difference between the three-month LIBOR rate and 1.50% for all rate resets in which the LIBOR is below 1.50%. When the LIBOR is equal to or greater than 1.50%, the Company makes no payments under the Floor.

The December Floor Agreement did not qualify for hedge accounting treatment, resulting in $0.1 million ~~increase~~decrease of recorded interest expense on the ~~Consolidated Statement~~consolidated statement of ~~Income~~income for

the ~~quarter~~three and sixth months ended ~~April 30, 2003.~~July 31, 2003, respectively. The fair value of the December Floor Agreement recorded on the Company’s ~~Consolidated Balance Sheet~~consolidated balance sheet was ($~~0.3)~~0.2) million as of ~~April 30,~~July 31, 2003.

In April 2003, the Company entered into an interest rate cap agreement (the “April Cap Agreement”) for an aggregate notional amount of $57.0 million associated with the senior secured notes. The April Cap Agreement is scheduled to terminate on March 15, 2009. The April Cap Agreement caps the interest rate on the $57.0 million senior secured notes at 10%.

The April Cap Agreement did not qualify for hedge accounting treatment, resulting in ~~$0.3~~$0.7 million ~~increase~~and a $0.4 million decrease of recorded interest expense on the ~~Consolidated Statement~~consolidated statement of ~~Income~~income for the ~~quarter~~three and six months ended ~~April 30, 2003.~~July 31, 2003, respectively. The fair value of the April Cap Agreement recorded on the Company’s ~~Consolidated Balance Sheet~~consolidated balance sheet was ~~($0.3)~~$0.4 million as of ~~April 30,~~July 31, 2003.

The Company does not currently have a significant exposure to foreign exchange risk and accordingly, has not entered into any transactions to hedge against those risks.

On February 3, 2003, the Company entered into a merger agreement with Salant Corporation, the Company’s largest licensee, which provides for the merger of a wholly owned Company subsidiary with Salant. If the merger is completed, Salant will become a wholly owned subsidiary of the Company.

The aggregate merger consideration to be paid by the Company is $91.0 million, comprised of approximately $52.0 million in cash and approximately $39.0 million worth of newly issued Perry Ellis common stock. Salant shareholders will receive approximately $9.37 per share in value comprised of at least $5.35 per share in cash and not more than $4.02 per share of Perry Ellis common stock. The precise fraction of a share of Perry Ellis common stock that the Company will issue in the merger for each Salant share will be determined based on the average closing price of the Perry Ellis common stock for the 20-day period ending three trading days before the anticipated merger closing date. The maximum number of shares of Perry Ellis common stock that may be issued in the Salant acquisition is limited to 3,250,000. The Company expects the transactions costs to be approximately $10.0 million.

Salant licenses the Perry Ellis brand from the Company for men��s sportswear, dress shirts, dress bottoms and accessories and derived approximately $164.3 million or 65% of its fiscal 2002 revenues from the sale of Perry Ellis products. Salant is the Company’s largest licensee of Perry Ellis branded apparel. The remaining $87.7 million of Salant’s fiscal 2002 revenue is made up of Salant’s owned brands such as Axis and Tricots St. Raphael, sales under license agreements for use of the JNCO and Ocean Pacific brands, as well as, several private label programs. The Salant acquisition is expected to close on or about June 19^th~~, 2003.~~

Perry Ellis International, Inc. and several of its subsidiaries have fully and unconditionally guaranteed the senior secured notes and senior subordinated notes on a joint and several basis. As such, the following consolidating condensed financial statements, which present, in separate columns: Perry Ellis, the guarantors on a combined and the non-guarantors on a consolidated basis are required to be presented. Additional columns present eliminating adjustments and consolidated totals as of ~~April 30,~~July 31, 2003 and January 31, 2003, and for the three months and six months ended ~~April 30,~~July 31, 2003 and 2002. The Company has not presented separate financial statements and other disclosures concerning the combined guarantors because management has determined that such information is not material to investors.

PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AS OF APRIL 30, 2003

   Non-
   Parent Only
Guarantors
Guarantors
   Eliminations
Consolidated
ASSETS

Current Assets:

Cash and cash equivalents
   $ (1,040,265 ) $ 422,090 $ 2,136,485    $ —   $ 1,518,310
Accounts receivable, net
   31,378 116,830,345 1,812,071    (21,541,786 ) 97,132,008
Intercompany receivable—Guarantors
   —   43,496,438 —      (43,496,438 ) —
Intercompany receivable—Non Guarantors
   —   758,772 —      (758,772 ) —
Inventories, net
   —   45,358,944 229,510    —   45,588,454
Deferred income taxes
   —   2,769,086 —      —   2,769,086
Other current assets
   561,889 5,172,049 21,944    —   5,755,882




Total current assets
   (446,998 ) 214,807,724 4,200,010    (65,796,996 ) 152,763,740
Property and equipment, net
   —   31,054,058 25,027    —   31,079,085
Intangible assets, net
   —   120,473,276 21,712,786    —   142,186,062
Investment in subsidiaries
   80,943,780 —   —      (80,943,780 ) —
Other
   873,500 11,290,114 —      —   12,163,614




TOTAL
   $ 81,370,282 $ 377,625,172 $ 25,937,823    $ (146,740,776 ) $ 338,192,501




LIABILITIES & STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable
   $ 134,886 $ 8,729,143 $ 193,643    $ —   $ 9,057,672
Accrued expenses
   197,436 5,089,240 —      —   5,286,676
Intercompany payable—Parent
   (21,963,764 ) 64,177,188 1,924,979    (44,138,403 ) —
Income taxes payable
   (679,065 ) 349,630 329,435    —   —
Accrued interest payable
   —   1,163,015 —      —   1,163,015
Unearned revenues
   —   1,434,016 158,332    —   1,592,348
Other current liabilities
   —   895,868 78,821    —   974,689




Total current liabilities
   (22,310,507 ) 81,838,100 2,685,210    (44,138,403 ) 18,074,400
Senior subordinated notes payable, net
   (2,199,492 ) 101,532,129 21,541,786    (21,541,786 ) 99,332,637
Deferred income tax
   —   10,432,897 —      —   10,432,897
Senior credit facility
   —   30,841,228 —      —   30,841,228
Real estate mortgage
   —   11,600,000 —      —   11,600,000
Senior secured notes payable, net
   —   61,282,101 —      —   61,282,101




Total long-term liabilities
   (2,199,492 ) 215,688,355 21,541,786    (21,541,786 ) 213,488,863




Total liabilities
   (24,509,999 ) 297,526,455 24,226,996    (65,680,189 ) 231,563,263




Commitments and Contingencies

Long Term Debt
   —   —   613,525    (613,525 ) —




Minority Interest
   —   —   748,926    31 748,957




Stockholders' Equity:

Preferred stock $.01 par value; 1,000,000 shares authorized; no shares issued or outstanding
      —
Common stock $.01 par value; 30,000,000 shares authorized; 6,500,076 shares issued and outstanding as of April 30, 2003
   65,001 100 63    (163 ) 65,001
Additional paid-in-capital
   27,887,923 —   —      —   27,887,923
Contributing Capital
   —   3,997,338 —      (3,997,338 ) —
Retained earnings
   77,810,550 76,132,115 257,273    (76,389,388 ) 77,810,550
Accumulated other comprehensive income
   116,807 (30,836 ) 91,040    (60,204 ) 116,807




Total stockholders' equity
   105,880,281 80,098,717 348,376    (80,447,093 ) 105,880,281




TOTAL
   $ 81,370,282 $ 377,625,172 $ 25,937,823    $ (146,740,776 ) $ 338,192,501

							Non-
	Parent Only			Guarantors			Guarantors			Eliminations			Consolidated				Parent Only			Guarantors			Non-Guarantors			Eliminations			Consolidated
ASSETS
Current Assets:
Cash and cash equivalents	$	(44,791	)	$	3,533,055		$	1,194,913		$	—		$	4,683,177			$	(148,681	)	$	3,533,055		$	1,298,803		$	—		$	4,683,177
Accounts receivable, net		1,072,969			78,161,200			255,570			—			79,489,739				21,784			78,161,200			1,306,755			—			79,489,739
Intercompany receivable—Guarantors		—			53,636,456			—			(53,636,456	)		—				—			53,636,456			—			(53,636,456	)		—
Intercompany receivable—Non Guarantors		—			582,410			—			(582,410	)		—				—			582,410			—			(582,410	)		—
Inventories		—			50,908,167			398,307			—			51,306,474
Inventories, net																		—			50,908,167			398,307			—			51,306,474
Deferred income taxes		—			2,957,765			—			—			2,957,765				—			2,957,765			—			—			2,957,765
Prepaid income taxes		—			3,361,650			—			—			3,361,650				—			3,361,650			—			—			3,361,650
Other current assets		285,385			3,819,382			—			—			4,104,767				285,385			3,819,382			—			—			4,104,767

Total current assets		1,313,563			196,960,085			1,848,790			(54,218,866	)		145,903,572				158,488			196,960,085			3,003,865			(54,218,866	)		145,903,572
Property and equipment, net		—			31,019,320			29,556			—			31,048,876				—			31,019,320			29,556			—			31,048,876
Intangible assets, net		15,490,786			126,695,276			—			—			142,186,062				—			126,695,276			15,490,786			—			142,186,062
Investment in subsidiaries		74,553,931			—			—			(74,553,931	)		—				74,705,213			—			—			(74,705,213	)		—
Other		837,500			11,261,335			—			—			12,098,835				837,500			11,261,335			—			—			12,098,835

TOTAL	$	92,195,780		$	365,936,016		$	1,878,346		$	(128,772,797	)	$	331,237,345			$	75,701,201		$	365,936,016		$	18,524,207		$	(128,924,079	)	$	331,237,345

LIABILITIES & STOCKHOLDERS' EQUITY
LIABILITIES & STOCKHOLDERS’ EQUITY																LIABILITIES & STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	124,806		$	12,501,910		$	193,452		$	—		$	12,820,168			$	123,969		$	12,501,910		$	194,289		$	—		$	12,820,168
Accrued expenses		242,248			4,812,742			3,758			—			5,058,748				242,248			4,812,742			3,758			—			5,058,748
Intercompany payable—Parent		(5,351,406	)		59,034,006			579,360			(54,261,960	)		—				(21,635,693	)		59,034,006			16,863,647			(54,261,960	)		—
Income taxes payable		(151,616	)		123,305			28,311			—			—				(231,617	)		123,305			108,312			—			—
Accrued interest payable		—			4,674,929			—			—			4,674,929				—			4,674,929			—			—			4,674,929
Unearned revenues		129,454			1,865,100			—			—			1,994,554				—			1,865,100			129,454			—			1,994,554
Other current liabilities		—			1,449,615			7,807			—			1,457,422				—			1,449,615			7,807			—			1,457,422

Total current liabilities		(5,006,514	)		84,461,607			812,688			(54,261,960	)		26,005,821				(21,501,093	)		84,461,607			17,307,267			(54,261,960	)		26,005,821
Senior subordinated notes payable, net		(2,199,492	)		101,380,072			—			—			99,180,580				(2,199,492	)		101,380,072			—			—			99,180,580
Senior secured notes payable, net		—			60,729,796			—			—			60,729,796				—			60,729,796			—			—			60,729,796
Senior credit facilities		—			22,922,287			—			—			22,922,287				—			22,922,287			—			—			22,922,287
Real Estate Mortgage		—			11,600,000			556,922			(556,922	)		11,600,000
Real estate mortgage																		—			11,600,000			556,922			(556,922	)		11,600,000
Deferred income tax		—			10,694,595			—			—			10,694,595				—			10,694,595			—			—			10,694,595

Total long-term liabilities		(2,199,492	)		207,326,750			556,922			(556,922	)		205,127,258				(2,199,492	)		207,326,750			556,922			(556,922	)		205,127,258

Total liabilities		(7,206,006	)		291,788,357			1,369,610			(54,818,882	)		231,133,079				(23,700,585	)		291,788,357			17,864,189			(54,818,882	)		231,133,079

Commitment and Contingencies
Minority Interest		—			—			702,449			31			702,480
Minority interest																		—			—			702,449			31			702,480

Stockholders' Equity:
Stockholders’ Equity:
Preferred stock $.01 par value; 1,000,000 shares authorized; no shares issued or outstanding		—			—			—			—			—				—			—			—			—			—
Common stock $.01 par value; 30,000,000 shares authorized; 6,425,641 shares issued and outstanding as of January 31, 2003		64,257			100			63			(163	)		64,257				64,257			100			63			(163	)		64,257
Additional paid-in-capital		27,198,094			—			—						27,198,094				27,198,094			—			—			—			27,198,094
Contributing Capital		—			3,997,338			—			(3,997,338	)		—
Contributing capital																		—			3,997,338			—			(3,997,338	)		—
Retained earnings		72,182,529			70,252,092			(252,553	)		(69,999,539	)		72,182,529				72,182,529			70,252,092			(101,271	)		(70,150,821	)		72,182,529
Accumulated other comprehensive income		(43,094	)		(101,871	)		58,777			43,094			(43,094	)			(43,094	)		(101,871	)		58,777			43,094			(43,094	)

Total stockholders' equity		99,401,786			74,147,659			(193,713	)		(73,953,946	)		99,401,786				99,401,786			74,147,659			(42,431	)		(74,105,228	)		99,401,786

TOTAL	$	92,195,780		$	365,936,016		$	1,878,346		$	(128,772,797	)	$	331,237,345			$	75,701,201		$	365,936,016		$	18,524,207		$	(128,924,079	)	$	331,237,345

~~FOR THE THREE MONTHS ENDED APRIL 30,~~For the Three Months Ended July 31, 2003

						Non-
	Parent Only			Guarantors		Guarantors		Eliminations			Consolidated		Parent Only			Guarantors			Non-Guarantors			Eliminations			Consolidated
Revenues
Net sales	$	—		$	100,736,349	$	1,130,495	$	—		$	101,866,844	$	—		$	86,593,183		$	472,471		$	—		$	87,065,654
Royalty income		—			5,193,857		1,217,320		—			6,411,177		—			4,110,304			1,589,204			—			5,699,508

Total revenues		—			105,930,206		2,347,815		—			108,278,021		—			90,703,487			2,061,675			—			92,765,162
Cost of sales		—			70,868,613		676,502		—			71,545,115		—			64,531,685			320,085			—			64,851,770

Gross profit		—			35,061,593		1,671,313		—			36,732,906		—			26,171,802			1,741,590			—			27,913,392
Operating expenses
Selling, general and administrative expenses		1,209,250			19,852,411		547,752		—			21,609,413		1,277,488			25,530,077			489,320			—			27,296,885
Depreciation and amortization		—			1,107,986		4,025		—			1,112,011		77			1,410,609			2,609			—			1,413,295

Total operating expenses		1,209,250			20,960,397		551,777		—			22,721,424		1,277,565			26,940,686			491,929			—			28,710,180

Operating income		(1,209,250	)		14,101,196		1,119,536		—			14,011,482		(1,277,565	)		(768,884	)		1,249,661			—			(796,788	)
Interest expense		—			4,742,587		220,724		—			4,963,311		6			3,256,475			134,660			—			3,391,141

Income before minority interest and income taxes		(1,209,250	)		9,358,609		898,812		—			9,048,171		(1,277,571	)		(4,025,359	)		1,115,001			—			(4,187,929	)
Minority interest		—			—		46,477		—			46,477		—			—			(20,369	)		—			(20,369	)
Equity in earnings of subsidiaries, net		(6,389,849	)		—		—		6,389,849			—		1,829,600			—			—			(1,829,600	)		—
Income taxes		(447,422	)		3,478,587		342,508		—			3,373,673		(472,701	)		(1,431,546	)		371,157			—			(1,533,090	)

Net income	$	5,628,021		$	5,880,022	$	509,827	$	(6,389,849	)	$	5,628,021
Net income (loss)													$	(2,634,470	)	$	(2,593,813	)	$	764,213		$	1,829,600		$	(2,634,470	)

~~FOR THE THREE MONTHS ENDED APRIL 30,~~For the Three Months Ended July 31, 2002

	Parent Only			Guarantors		Non-Guarantors			Eliminations			Consolidated		Parent Only			Guarantors		Non-Guarantors			Eliminations			Consolidated
Revenues
Net sales	$	—		$	77,971,412	$	647,680		$	—		$	78,619,092	$	—		$	56,340,355	$	53,675		$	—		$	56,394,030
Royalty income		884,070			5,192,723		—			—			6,076,793		1,330,073			6,270,560		—			—			7,600,633

Total revenues		884,070			83,164,135		647,680			—			84,695,885		1,330,073			62,610,915		53,675			—			63,994,663
Cost of sales		—			57,366,328		565,771			—			57,932,099		—			42,483,904		51,930			—			42,535,834

Gross profit		884,070			25,797,807		81,909			—			26,763,786		1,330,073			20,127,011		1,745			—			21,458,829
Operating expenses
Selling, general and administrative expenses		769,050			13,277,246		464,090			—			14,510,386		714,645			13,088,937		(319,721	)		—			13,483,861
Depreciation and amortization		—			657,872		1,866			—			659,738		—			743,811		(721	)		—			743,090

Total operating expenses		769,050			13,935,118		465,956			—			15,170,124		714,645			13,832,748		(320,442	)		—			14,226,951

Operating income		115,020			11,862,689		(384,047	)		—			11,593,662		615,428			6,294,263		322,187			—			7,231,878
Interest expense		(15,467	)		3,881,356		842			—			3,866,731		(15,145	)		3,801,061		277			—			3,786,193

Income before minority interest and income taxes		130,487			7,981,333		(384,889	)		—			7,726,931		630,573			2,493,202		321,910			—			3,445,685
Minority Interest		—			—		32,020						32,020
Minority interest															—			—		(22,716	)		—			(22,716	)
Equity in earnings of subsidiaries, net		(4,684,907	)		—					4,684,907			—		(1,785,884	)		—					1,785,884			—
Income taxes		49,194			3,021,127		(141,610	)		—			2,928,711		235,204			927,636		123,768			—			1,286,608

Net income	$	4,766,200		$	4,960,206	$	(275,299	)	$	(4,684,907	)	$	4,766,200
Net income (loss)														$	2,181,253		$	1,565,566	$	220,318		$	(1,785,884	)	$	2,181,253

	Parent Only			Guarantors			Non-Guarantors			Eliminations			Consolidated			Parent Only			Guarantors			Non-Guarantors			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	4,766,200		$	4,960,206		$	(275,299	)	$	(4,684,907	)	$	4,766,200		$	6,947,453		$	6,159,241		$	(54,981	)	$	(6,104,260	)	$	6,947,453
Adjustments to reconcile net income to net cash used in operating activities:
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		—			500,296			1,866			—			502,162			—			1,071,997			1,145			—			1,073,142
Amortization of debt issue cost		—			189,169			—			—			189,169			—			393,698			—			—			393,698
Amortization of bond discount		—			74,589			—			—			74,589			—			165,973			—			—			165,973
Minority Interest		—			—			32,020			—			32,020
Deferred income taxes																	—			1,837,737			—						1,837,737
Minority interest																	—			—			9,844			—			9,844
Equity in earnings of subsidiaries, net		(4,684,907	)		—			—			4,684,907			—			(6,104,260	)		—			—			6,104,260			—
Other					4,749			7,879			—			12,628			20,710			—			—			—			20,710
Changes in operating assets and liabilities (net of effects of acquisitions):
Accounts receivable, net		(624,911	)		(17,600,349	)		151,704			126,191			(17,947,365	)		(1,464,420	)		(2,111,958	)		391,421			164,421			(3,020,536	)
Inventories		—			10,823,083			(7,925	)		—			10,815,158			—			14,597,168			(189,169	)		—			14,407,999
Other current assets and prepaid income taxes		19,911			174,252			(7,429	)		—			186,734			(134,502	)		(2,552,284	)		(55,431	)		—			(2,742,217	)
Other assets		(213,427	)		(1,460,119	)					—			(1,673,546	)		(543,892	)		(1,668,743	)					—			(2,212,635	)
Accounts payable and accrued expenses		384,334			(176,567	)		132,412			(126,191	)		213,988			(124,017	)		5,159,730			12,554			(164,421	)		4,883,846
Income taxes payable		—			645,018			(129,493	)		—			515,525			—			(1,221,446	)		(160,105	)		—			(1,381,551	)
Accrued interest payable		—			(2,555,087	)		—			—			(2,555,087	)		—			1,052,963			—			—			1,052,963
Other current liabilities and unearned revenues		36,616			254,458			29,792			—			320,866			18,812			778,546			(75,765	)		—			721,593

Net cash used in operating activities		(316,184	)		(4,166,302	)		(64,473	)		—			(4,546,959	)
Net cash provided by (used in) operating activities																	(1,384,116	)		23,662,622			(120,487	)		—			22,158,019

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		—			(831,473	)		—			—			(831,473	)		—			(17,025,684	)		—			—			(17,025,684	)
Payment on purchase of intangible assets, net		—			(12,218	)		—			—			(12,218	)		—			(18,737	)		—			—			(18,737	)
Payment for acquired businesses, net of cash acquired		—			(25,050,474	)		—						(25,050,474	)		—			(25,050,474	)		—						(25,050,474	)

Net cash used in investing activities:		—			(25,894,165	)		—			—			(25,894,165	)
Net cash (used in) investing activities:																	—			(42,094,895	)		—			—			(42,094,895	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net (payments) proceeds from senior credit facility		—			(21,819,334	)		63,240			—			(21,756,094	)		—			(21,819,334	)		—			—			(21,819,334	)
Purchase of treasury stock		—			55,589,250			—			—			55,589,250
Net proceeds from senior secured notes																	—			55,589,250			63,240			—			55,652,490
Net proceeds from real estate mortgage																	—			11,600,000			—			—			11,600,000
Proceeds from exercise of stock options		316,184			—			—			—			316,184			1,237,005			—			—			—			1,237,005

Net cash used in financing activities:		316,184			33,769,916			63,240			—			34,149,340
Net cash provided by financing activities:																	1,237,005			45,369,916			63,240			—			46,670,161

Effect of exchange rate changes on cash and cash equivalents		—			—			9,044			—			9,044
NET INCREASE IN CASH		—			3,709,449			7,811						3,717,260
NET (DECREASE) INCREASE IN CASH																	(147,111	)		26,937,643			(57,247	)					26,733,285
CASH AT BEGINNING OF YEAR		—			124,998			1,178,980			—			1,303,978			—			124,998			1,178,980			—			1,303,978

CASH AT END OF YEAR	$	—		$	3,834,447		$	1,186,791		$	—		$	5,021,238		$	(147,111	)	$	27,062,641		$	1,121,733		$	—		$	28,037,263

Item 2:~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless the context otherwise requires, all references to “Perry Ellis,” the “Company,” “we,” “us” or “our” include Perry Ellis International, Inc. and ~~its~~our subsidiaries. References in this report to the Jantzen acquisition refer to our acquisition of the Jantzen swimwear business from subsidiaries of VF Corporation in March 2002. References in this report to the Salant acquisition refer to our ~~pending~~ acquisition ~~by merger~~ of Salant Corporation ~~pursuant to a definitive merger agreement entered into in February 2003 and anticipated to be~~that was completed in June 2003. This management’s discussion and analysis should be read in conjunction with our Annual Report on Form ~~10-K~~10-K/A for the year ended January 31, 2003.

We caution ~~readers~~ that this report includes ~~“forward-looking statements” as that term is used in~~forward-looking statements. These statements may be identified by the ~~Private Securities Litigation Reform Act~~use of ~~1995. Forward-looking statements are based on current expectations rather than historical facts and they are indicated by words or phrases~~forward-looking terminology such as ~~“ anticipate,~~“anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” ~~“project,” “believe,”~~ “intend,” ~~“envision,~~“may,” ~~and similar words~~“might,” “plan,” “potential,” “predict,” “should,” or ~~phrases. These~~“will,” or the negative thereof or other variations thereon or comparable terminology.

We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors ~~that~~ may cause our actual results, performance or achievements to bediffer materially ~~different~~ from any future results, performance or achievements expressed or implied by ~~such~~these forward-looking statements. Some of the factors that ~~would affect our financial performance,~~could cause actual results to differ from our ~~estimates, or underlie such forward-looking statements, are set forth in various places in this report. These factors include:~~expectations are:

~~You~~Given these risks and uncertainties, you are cautioned not to place undue reliance on ~~these~~such forward-looking statements, which are valid only as of the date ~~they were made.~~hereof. We do not undertake noand specifically decline any obligation to update any such statements or, ~~revise~~to publicly announce the results of any ~~forward-looking~~revisions to any such statements to reflect ~~new information or the occurrence of unanticipated~~future events or ~~otherwise.~~developments.

Included in the footnotes to the consolidated financial statements in our Annual Report on Form ~~10-K~~10-K/A for the year ended January 31, 2003 is a summary of all significant accounting policies used in the preparation of our consolidated financial statements. We follow the accounting methods and practices as required by ~~Accounting Principles Generally Accepted~~accounting principles generally accepted in the United States of America (“GAAP”). ~~In particular,~~Several of our ~~critical~~ accounting policies involve significant judgments and ~~areas we use judgment in are~~uncertainties. The policies with the ~~areas~~greatest effect on our results of ~~revenue recognition,~~operation and financial position include the estimated collectability of accounts receivable, the recoverability of obsolete or overstocked inventory and the impairment on long-lived assets, ~~which are our~~including trademarks.

Revenue Recognition.Sales are recognized at the time legal title to the product passes to the customer, generally ~~FOB~~free on board (“FOB”) Perry Ellis’ distribution facilities, net of trade allowances and a provision for estimated returns and other allowances. Royalty income is recognized when earned on the basis of the terms specified in the underlying contractual agreements. We believe that our revenue recognition policies conform to Staff Accounting Bulletin No. 101,“Revenue Recognition in Financial Statements.”

Accounts Receivable.We maintain an allowance for doubtful accounts ~~receivables~~receivable for estimated trade discounts, co-op advertising, allowances provided to retail customers to flow goods through the retail channel, and losses resulting from the inability of our retail customers to make required payments considering historical and anticipated trends. Judgment is critical because some retail customers are currently operating in bankruptcy or have experienced financial difficulties. Additional allowances might be required if their financial condition were to worsen.

Inventories.Our inventories are valued at the lower of cost or market value. We evaluate all of our inventory style-size-color stock keeping units, or SKUs, to determine excess or slow-moving SKUs based on orders on hand and projections of future demand and market conditions. For those units in inventory that are so identified, we estimate their market value or net sales value based on current realization trends. If the projected net sales value is less than cost, on an individual SKU basis, we provide an allowance to reflect the lower value of that inventory. This methodology

recognizes projected inventory losses at the time such losses are evident rather than at the time goods are actually sold.

Intangible Assets. We have, at the present time, only one class of indefinite lived assets, trademarks. We review our intangible assets with indefinite useful lives for possible impairments on an annual basis in accordance with SFAS No. 142 and perform impairment testing as of February

1^st. 1st of each year. We evaluate the “fair value” of our identifiable intangible assets for purposes of recognition and measurement of impairment losses. Evaluating indefinite useful life assets for impairment involves certain judgments and estimates, including the interpretation of current economic indicators and market valuations, and our strategic plans with regard to our operations, historical and anticipated performance of our operations and other factors. If we incorrectly anticipate these trends or unexpected events occur, our results of operations could be materially affected.

The following is a discussion of the results of operations for the ~~first~~second quarter of the fiscal year ~~ending~~ended January 31, 2004 (“fiscal 2004”) compared with the ~~first~~second quarter of the fiscal year ended January 31, 2003 (“fiscal 2003”).

~~Results of Operations—First Quarter of Fiscal 2004~~Three Months and Six Months Ended July 31, 2003 compared ~~with First Quarter of Fiscal 2003.~~to Three Months and Six Months Ended July 31, 2002.

Total revenues. Total revenues consist of net sales and royalty income. Total revenues for the ~~first~~second quarter of fiscal 2004 were ~~$108.3~~$92.8 million, an increase of ~~27.8%~~45.0%, or ~~$23.6~~$28.8 million, from ~~$84.7~~$64.0 million for the ~~first~~second quarter of fiscal 2003. The increase was due mainly to an increase of ~~$27.3~~$30.7 million in net sales generated by the Salant business, which we acquired in the middle of the second quarter of fiscal 2004, and an increase of $7.2 million in net sales generated by our swimwear business, ~~and an~~which generated minimal sales in the second quarter of fiscal 2003. This increase was offset in ~~royalty income of $0.4 million offset~~part by a ~~$4.0~~$7.2 million reduction in net sales in our men’s sportswear ~~business.~~business, described below, and a decrease in royalty income of $1.9 million described below.

Total revenues for the six months ended July 31, 2003 increased 35.2%, or $52.4 million, to $201.0 million from $148.7 for the six months ended July 31, 2002. The increase was due mainly to the increases in net sales generated by the Salant business, and an increase of $34.5 million in net sales generated by our swimwear business, which increases were offset in part by an $11.2 million reduction in net sales in our men’s sportswear business described below and a $1.6 million reduction in royalty income described below.

Net sales. Net sales increased ~~$23.2~~$30.7 million, or ~~29.6%~~54.4%, to ~~$101.9~~$87.1 million for the ~~first~~second quarter of fiscal 2004 from ~~$78.6~~$56.4 million in the ~~first~~second quarter of fiscal 2003. The increase in net sales is primarily attributable to the ~~$27.3 million~~ increase in net sales generated by the Salant business and by our swimwear business. ~~The~~This increase in net sales ~~by our swimwear business~~ was offset in part by ~~lower~~a decrease in net sales in our men’s sportswear business as compared to the same period of fiscal 2003. The decrease in our men’s sportswear business was due to our planned reduction in low margin private label sales.

Net sales increased $53.9 million, or 39.9%, to $188.9 million for the six months ended July 31, 2003 from $135.0 million for the six months ended July 31, 2002. The increase was due mainly

to the increases in net sales generated by the Salant business and by our swimwear business. This increase in net sales was offset in part by the lower net sales in our men’s sportswear business described above.

Royalty income. Royalty income for the ~~first~~second quarter of fiscal 2004 was ~~$6.4~~$5.7 million, ~~an increase~~a decrease of ~~5.5%~~25.0% from ~~$6.0~~$7.6 million for the comparable ~~first~~second quarter of fiscal 2003. Royalty income is derived from agreements entered into by us with our licensees, which average three to five years in length. The vast majority of our license agreements require licensees to pay us a royalty, based on net sales and require licensees to pay a guaranteed minimum royalty. Approximately ~~77.1%~~75% and ~~73.9%~~70% of our royalty income was attributable to guaranteed minimum royalties with the balance attributable to royalty income in excess of the guaranteed minimums for the ~~first~~second quarter of fiscal 2004 and 2003, respectively.

Royalty income for the six months ended July 31, 2003 decreased 11.5%, to $12.1 million, from $13.7 million for the six months ended July 31, 2002. The ~~increase~~decrease in royalty income for both the second quarter of fiscal 2004 and the six months ended July 31, 2004 was due primarily to the ~~increase~~decrease in royalty income in excess of guaranteed minimums for certain of the licensees of the Perry Ellis brand and lower royalties ~~from new licenses for~~due to the ~~Jantzen brand.~~acquisition of Salant, which was our largest licensee.

Cost of sales. Cost of sales for ~~first~~the second quarter of fiscal 2004 increased ~~$13.6~~$22.3 million, or ~~23.5%~~52.5%, to ~~$71.5~~$64.8 million from ~~$57.9~~$42.5 million in the comparable ~~first~~second quarter of fiscal 2003 due mainly to the increase in net sales for the period as described above.

Cost of sales for the six months ended July 31, 2003, increased $35.9 million to $136.4 million, or 35.8%, compared to $100.5 million for the six months ended July 31, 2002. This increase was due mainly to the increase in net sales for the period as described above.

As a percentage of revenues, cost of sales ~~decreased~~increased from ~~68.4%~~66.5% in the ~~first~~second quarter of fiscal 2003 to ~~66.1%~~69.9% in the ~~first~~second quarter of fiscal 2004, and from 67.6% in the six months ended July 31, 2002 to 67.8% in the comparable period of 2004. The increase in cost of sales as a percentage of total revenues was due ~~primarily~~ to lower royalty income as a ~~change~~result of the Salant acquisition, partially offset by a shift in our sales mix ~~between private label and~~to more branded ~~label sales with higher sales volume of branded label sales which typically generate higher margins of~~ sales. Cost of sales includes only costs relating to sale of product and excludes costs relating to royalty income, which are immaterial.

Gross profit was ~~$36.7~~$27.9 million in ~~first~~the second quarter of fiscal 2004, or ~~33.9%~~30.1% of total revenues, as compared to ~~$26.7~~$21.5 million, or ~~31.6%~~33.5% of revenues, in the ~~first~~second quarter of fiscal year 2003. ~~Our~~For the six months of fiscal 2004, gross profit increased by 34.1% to $64.6 million from $48.2 million for the comparable fiscal 2003 period. The increase in gross profit for the three and six months ended July 31, 2003 as compared to the comparable fiscal 2003 periods is primarily attributed to (1) lower royalty income as described above, (2) our planned increased focus on branded label sales, which accounted for ~~86.2%~~more than 90% of our net sales in the first ~~quarter~~six months of fiscal 2004 as compared to ~~70.1%~~less than 75% in the first ~~quarter~~six months of fiscal 2003, contributed to greater gross

~~margins because~~ profit since branded label sales typically generate higher gross ~~margins.~~ margins, and (3) incremental gross profit contributed by Salant from acquisition date to the end of the second quarter of fiscal 2004.

Our gross profit percentage for branded label sales typically ~~are~~is 3% to 5% higher than our gross margin percentage for private label sales depending on customer and product mix. Our gross profit percentage may not be

comparable to others in ~~the~~our industry, because our gross profit includes royalty income ~~in gross profit~~ and others in the apparel industry may ~~not.~~not have such income.

Selling, ~~General~~general and ~~Administrative Expenses~~administrative expenses. Selling, general and administrative expenses increased ~~$7.1~~$13.8 million, or ~~48.9%~~102.4%, to ~~$21.6~~$27.3 million for the ~~first~~second quarter of fiscal 2004 from ~~$14.5~~$13.5 million for the ~~first~~second quarter of fiscal 2003. As a percentage of total revenues, selling, general and administrative expenses were ~~20.0%~~29.4% in the second quarter of fiscal 2004 ~~quarter~~ compared to ~~17.1%~~21.1% in the comparable fiscal 2003 quarter. The increase in selling, general and administrative costs is primarily attributable to the additional ~~$5.1~~$5.4 million in expenses incurred in connection with the Salant acquisition, $3.8 million in expenses incurred by our swimwear business, which expenses were immaterial in the comparable prior year period, ~~and~~ an additional ~~$2.0~~$4.6 million incurred by our men’s sportswear business as a result of our increased focus on branded label sales, which generally result in greater design, marketing and advertising ~~expenses.~~expenses, and increased employee costs in anticipation of the integration of the Salant acquisition.

Selling, general and administrative expenses increased $20.9 million, or 74.7%, to $48.9 million for the first six months of fiscal 2004 from $28.0 million for the comparable fiscal 2003 period. As a percentage of total revenues, selling, general and administrative expenses were 24.3% in the six months ended July 31, 2003 compared to 18.8% in the comparable 2003 fiscal period. The increase in selling, general and administrative costs for the six-months ended July 31, 2003 is primarily attributable to the additional $5.4 million in expenses incurred in connection with the Salant acquisition, $8.9 million in expenses incurred by our swimwear business, which were also immaterial in the comparable prior year period, an additional $6.6 million incurred by our men’s sportswear business, and increased employee costs in anticipation of the integration of the Salant acquisition.

Depreciation and amortization. Depreciation and amortization increased ~~$0.5~~$0.67 million for the ~~first~~second quarter of fiscal 2004 to ~~$1.1~~$1.4 million from ~~$0.6~~$0.7 million in the comparable quarter of fiscal 2003. Depreciation and amortization increased $1.1 million for the six months ended July 31, 2003 to $2.5 million from $1.4 million in the comparable fiscal 2003 period. The increase is due to the increase in property, plant and equipment purchases in fiscal 2003 and the purchase of the ~~main~~principal executive and administrative office, warehouse and distribution facility in Miami and the distribution center in Seneca, ~~distribution center.~~South Carolina. As of ~~April 30,~~July 31, 2003, ~~there was~~we owned approximately ~~$31.1~~$35.5 million of property, plant and equipment compared to ~~$11.7~~$27.4 million of property, plant and equipment as of ~~the same period in fiscal 2003.~~July 31, 2002.

Interest expense. Interest expense ~~increased $1.1~~decreased $0.39 million, or ~~28.3%~~10.4%, for the ~~first~~second quarter of fiscal 2004 to ~~$5.0~~$3.4 million from ~~$3.9~~$3.8 million in the comparable fiscal 2003 quarter. The ~~increase~~decrease is mainly due to lower interest rates and the ~~increase in long-term debt~~impact of certain derivative hedging transactions from the ~~first~~second quarter of fiscal 2004 as compared to the ~~first~~second quarter of fiscal 2003.

Interest expense increased $0.7 million, or 9.2%, for the six months ended July 31, 2003 to $8.4 million from $7.7 million in the comparable fiscal 2003 period. The increase is mainly due to an increase in long-term debt for the six months ended July 31, 2003 compared to the six months ended July 31, 2002. As of ~~April 30,~~July 31, 2003, we had ~~$203.1~~$214.1 million in long-term debt compared to ~~$155.9~~$171.4 million in ~~April 30, 2002.~~July 31, 2002 as a result of long-term debt incurred from the Salant acquisition. In addition, the $57.0 million senior secured notes due 2009 were outstanding for the entire first ~~quarter~~six months of fiscal 2004 compared to only ~~one-third of the first quarter~~four and one half months of fiscal ~~2003 resulting in additional interest for the current quarter.~~2003. The interest expense on higher outstanding debt was offset in part, however, by lower interest rates and the ~~positive~~

impact of certain derivative hedging transactions described in “Item 3: Quantitative and Qualitative Disclosures about Market Risks.”

Income taxes. For the ~~first~~second quarter of fiscal 2004, ~~the~~our effective tax rate was ~~37.3%~~36.6% as compared to ~~37.9%~~37.3% for the comparable fiscal 2003 period. For the six months ended July 31, 2003, our effective tax rate was 37.9% as compared to 37.7% for the comparable 2002 period.

Net income (loss). ~~Net income~~Our net loss for ~~first~~second quarter of fiscal 2004 ~~increased $0.8~~was ($2.6) million, ~~or 18.1%~~a decrease of $4.8 million compared to ~~$5.6 million from $4.8~~net income of $2.2 million for the comparable fiscal 2003 quarter. Net income for the six months ended July 31, 2003 decreased $3.9 million to $3.0 million from $6.9 million for the comparable fiscal 2003 period. The ~~increase was the result of the increase~~decrease in net ~~sales of $23.2 million, royalty~~ income ~~of $0.4 million and~~was due to the ~~related improvement in gross margin of $10.0 million.~~changes described above.

We rely primarily upon cash flow from operations and borrowings under our senior credit facility to finance our operations and expansion. Net cash ~~used in~~provided by operating activities was ~~$10.9~~$13.6 million in the ~~first quarter of fiscal 2004,~~six months ended July 31, 2003, compared to cash ~~used in~~provided by operating activities of ~~$4.5~~$22.2 million in the comparable fiscal 2003 ~~quarter.~~period. The ~~increase~~decrease of ~~$6.4~~$8.6 million in the level of cash ~~used in~~provided by operating

activities is ~~primarily~~ attributable to ~~an increase~~a decrease in accounts receivable, inventory, accounts payable and accrued expenses, ~~offset in part by higher net income~~ and a ~~decrease in inventory.~~lower net income.

Net cash used in investing activities was ~~$0.9~~$34.5 million for the ~~first quarter of fiscal 2004,~~six months ended July 31, 2003, which primarily reflects the acquisition of Salant, net of cash acquired, and purchases of property and equipment made during the ~~quarter.~~period. Net cash used in investing activities was ~~$25.9~~$42.1 million for the ~~first quarter of fiscal 2003,~~six months ended July 31, 2002, which reflects the $25.1 million purchase price of the Jantzen acquisition and purchases of computer equipment and related software enhancements cost of $0.8 million. In addition, during the six months ended July 31, 2002, we used $17.0 million for the purchase of property, plant and equipment, which included the $14.5 million contingent rental payment that was required by the termination of the synthetic lease.

Net cash provided by financing activities for the ~~first quarter of fiscal 2004~~six months ended July 31, 2003 totaled ~~$8.6~~$21.5 million, which ~~was~~ primarily reflects the ~~result of~~ proceeds from our senior credit facility of ~~$7.9~~$20.4 million and the proceeds from the exercise of employee stock options of ~~$0.7~~$1.2 million. Net cash provided by financing activities for the ~~first quarter of fiscal 2003~~six months ended July 31, 2002 totaled ~~$34.1~~$46.7 million, which ~~was primarily the result of~~reflects the net proceeds from our offering of the senior secured notes of $55.6 million, net of repayments of borrowings under our senior credit facility of $21.8 million, ~~and~~the proceeds from the exercise of employee stock options of ~~$0.3 million.~~$1.2 million and the mortgage of $11.6 million on our principal executive main administrative office, warehouse and distribution facility.

~~If the~~On June 19, 2003, we acquired Salant, ~~acquisition is completed, the~~which was our largest licensee. The aggregate merger consideration ~~to be~~ paid by ~~Perry Ellis is~~us was approximately $91.0 million, comprised of approximately ~~$52.0~~$51.9 million in cash, ~~and~~ approximately ~~$39.0~~$35.8 million worth of our newly issued ~~Perry Ellis common stock. If the average closing price of the Perry Ellis~~ common stock ~~for the 20-day period ending three trading days before the anticipated~~and approximately $3.3 million in merger ~~closing date is less than $12.00, the cash portion of the merger consideration will increase by the amount of any deficiency. We expect the transaction costs to be approximately $10.0 million.~~costs. The cash portion of the merger consideration ~~will be~~was funded from ~~our existing~~Salant’s available cash reserves and through borrowings under our ~~existing~~ senior credit ~~facility, which is expected to be increased to $110.0~~facility.

Salant licensed the Perry Ellis brand from us for men’s sportswear, dress shirts, dress bottoms and accessories and derived approximately $164.3 million, or 65% of its fiscal 2002

revenues, from the sale of Perry Ellis products. Salant was our largest licensee of Perry Ellis branded apparel. The remaining $87.7 million of Salant’s fiscal 2002 revenues was made up of Salant’s owned brands such as ~~described below.~~Axis^® and Tricots St. Raphael^®, sales under license agreements for use of the JNCO^® and Ocean Pacific^® brands, as well as several private label programs.

~~In October 2002, we entered into a new~~Our amended senior credit facility with Congress Financial Corporation (Florida), as agent for a ~~group~~syndicate of ~~financial institutions. The senior credit facility~~lenders, provides us with a revolving credit ~~line~~facility of up to an aggregate amount of ~~$60.0~~$110.0 million. ~~Seth forth below~~The senior credit facility expires in September 2005 and the indebtedness thereunder ranks ahead of the Notes.

The following is a description of the terms of the ~~new~~ senior credit facility, as amended and does not purport to be complete and is subject to, and qualified in its entirety by reference to, all of the provisions of the senior credit facility. In anticipation of the Salant acquisition, we received a commitment from a senior lender in its existing senior credit facility to increase the senior credit facility to $110.0 million with a sub limit of $30.0 million for letters of credit. We anticipate that on the closing date of the Salant acquisition, after financing the cash portion of the merger consideration and the related transaction expenses, we will have an aggregate outstanding balance of between $42.0 million and $52.0 million under the senior credit facility and availability under the senior credit facility of between $68.0 million and $58.0 million respectively. We do not expect that Salant will have any long-term debt outstanding as of the anticipated closing date. As of June 12, 2003, Perry Ellis has an aggregate outstanding balance of $7.6 million under the senior credit facility and availability of $52.4 million.

It is anticipated that the terms and conditions of this amended credit facility will mirror the terms outlined below but, in the case of certain covenants, the amounts will increase to reflect the increase in the facility.

Certain Covenants.The senior credit facility contains certain covenants, which, among other things, requires us to maintain a minimum EBITDA if availability falls below a certain minimum. It may restrict our ability and the ability of our subsidiaries to, among other things, incur

additional indebtedness in certain circumstances, redeem or repurchase capital stock, make certain investments, or sell assets. We are prohibited from paying cash dividends under these covenants. We believe we are currently in compliance with all of our covenants under the senior credit facility. We could be materially harmed if we violate any covenants as the lenders under the senior credit facility could declare all amounts outstanding thereunder, together with accrued interest, to be immediately due and payable. If we are unable to repay those amounts, the lenders could proceed against our assets. In addition, a violation could also constitute a cross-default under the indentures and mortgage, resulting in all of our debt obligations becoming immediately due and payable, which we may not be able to satisfy.

Borrowing Base. Borrowings under the senior credit facility are limited under its terms to a borrowing base calculation, which generally restricts the outstanding balances to the lesser of either (1) the sum of (a) 85.0% of eligible receivables plus (b) 85.0% of our eligible factored accounts receivables up to ~~$5.0~~$20.0 million plus (c) the lesser of (i) the inventory loan limit, or (ii) the lesser of (A) 65.0% of eligible finished goods inventory, or (B) 85.0% of the net recovery percentage (as defined in the senior credit facility) of eligible inventory, or (2) the loan limit; and in each case minus (x) 35.0% of the amount of outstanding letters of credit for eligible inventory, (y) the full amount of all other outstanding letters of credit issued pursuant to the senior credit facility which are not fully secured by cash collateral, and (z) licensing reserves for which we are the licensee of certain branded products.

Interest. Interest on the principal balance under the senior credit facility accrues, at the our option, at either (a) 0.25% above our bank prime lending rate with adjustments depending upon our quarterly average excess availability plus excess cash or leverage ratio or ~~b) 2.00%~~(b) 2.25% above the rate quoted by our bank as the average Eurodollar Rate (“Eurodollar”) for ~~1, 2, 3~~1-, 2-, 3- and 6-month Eurodollar deposits with one-quarter percentage point adjustments depending upon the our quarterly average excess availability plus excess cash and leverage ratio at the time of borrowing.

Security. As security for the indebtedness under the senior credit facility, we granted the lenders a first priority security interest in substantially all of our existing and future assets other than

our trademark portfolio existing as of March 2002, including, without limitation, accounts receivable, inventory deposit accounts, general intangibles, equipment and ~~equipment.~~capital stock or membership interests, as the case may be, of certain subsidiaries. Lenders under the senior credit facility have a second priority security interest in our trademark portfolio as of March 2002 and a first priority lien on the rest of our trademarks.

As of April 30, 2003, we maintained three U.S. dollar letter of credit facilities totaling $60.0 million and one letter of credit facility totaling $2.6 million utilized by the our Canadian joint venture. Each letter of credit is secured primarily by the consignment of merchandise in transit under that letter of credit and certain subordinated liens or our assets. As of April 30, 2003 there was $44.7 million available under existing letter of credit facilities.

On March 22, 2002, we completed a private offering of $57.0 million 9½% senior secured notes due 2009. The proceeds of the private offering were used to finance the Jantzen acquisition, to reduce the amount of outstanding debt under the previous senior credit facility and as additional working capital. The proceeds to us were ~~$55,589,250~~$55.6 million yielding an effective interest rate of 9.74% after deduction of discounts. We entered into certain derivative hedging transaction described in

~~“Item~~ “Item 3: Quantitative and Qualitative Disclosures about Market Risks” in order to minimize debt service costs related to these senior secured notes.

The senior secured notes are secured by a first priority security interest granted in our existing portfolio of trademarks and licenses as of the closing date of the Jantzen acquisition, including the trademarks, licenses and all income, royalties and other payments acquired in the Jantzen acquisition. The senior secured notes are senior secured obligations of ours and rankpari passuin right of payment with all of our existing and future senior indebtedness. The senior secured notes are effectively senior to all of our unsecured indebtedness to the extent of the value of the assets securing the senior secured notes.

Certain Covenants. The indenture governing the senior secured notes contains certain covenants which restrict our ability and the ability of our subsidiaries to, among other things, incur additional indebtedness in certain circumstances, redeem or repurchase capital stock, make certain investments, or sell assets. We are prohibited from paying cash dividends under these covenants. We believe we are currently in compliance with all of the covenants in this indenture. We could be materially harmed if we violate any covenants because the indenture’s trustee could declare the outstanding notes, together with accrued interest, to be immediately due and payable, which we may not be able to satisfy. In addition, a violation could also constitute a cross-default under the senior credit facility, letter of credit facility, mortgage and ~~other~~the indenture relating to our senior subordinated notes resulting in all of our debt obligations becoming immediately due and payable, which we may not be able to satisfy.

As of July 31, 2003, we maintained three U.S. dollar letter of credit facilities totaling $60.0 million and one letter of credit facility totaling $2.7 million utilized by the our Canadian joint venture. Each letter of credit is secured primarily by the consignment of merchandise in transit under that letter of credit and certain subordinated liens on our assets, including but not limited to the capital stock or membership interests, as the case may be, of certain of our subsidiaries. As of July 31, 2003, there was $10.4 million available under existing letter of credit facilities.

We issued $100.0 million senior subordinated notes on April 6, 1999, the proceeds of which were used to acquire the Perry Ellis, John Henry and Manhattan brands and to pay down the

outstanding balance of the senior credit facility at that time. The notes mature on April 1, 2006 and bear interest at the rate of 12¼% payable on April 1 and October 1 in each year. The proceeds to us were $98,852,000 yielding an effective interest rate of 12.39% after deduction of discounts. We entered into certain derivative hedging transaction described in “Item 3: Quantitative and Qualitative Disclosures about Market Risks” in order to minimize debt service costs related to these senior subordinated notes. In November 2002, we repurchased, but did not retire, $2.2 million of the senior subordinated notes.

Certain Covenants. The indenture governing the senior subordinated notes contains certain covenants which restrict our ability and the ability of our subsidiaries to, among other things, incur additional indebtedness in certain circumstances, redeem or repurchase capital stock, make certain investments, or sell assets. We believe we are currently in compliance with all of the covenants in this indenture. We are prohibited from paying cash dividends under these covenants. We could be materially harmed if we violate any covenants because the indenture’s trustee could declare the outstanding notes, together with accrued interest, to be immediately due and payable, which we may not be able to satisfy. In addition, a violation could also constitute a cross-default under the senior credit facility, the letter of credit facilities, mortgage and ~~other~~the indenture relating to our senior secured notes resulting in all of our debt obligations becoming immediately due and payable, which we may not be able to satisfy.

We occupied our ~~main~~principal executive and administrative office, warehouse and distribution facility under a synthetic operating lease for a ~~240,000~~230,000 square foot facility in Miami, Florida. The lease, as amended, expired on June 30, 2002, and required a final payment at termination of $14.5 million.

On June 30, 2002, we made the required payment under the synthetic operating lease and partially refinanced the acquisition of the facility with an $11.6 million mortgage. The mortgage contains certain covenants. We believe we are currently in compliance with all of our covenants under the mortgage. We could be materially harmed if we violate any covenants because the lender under the mortgage could declare all amounts outstanding thereunder to be immediately due and payable which we may not be able to satisfy. In addition, a violation could constitute a cross-default under our senior credit facility, the letter of credit facilities and indentures relating to our senior secured notes and senior subordinated notes resulting in all our of debt obligations becoming immediately due and payable.

On September 13, 2002, we purchased a distribution center in Seneca, South Carolina for $2.5 million in cash. We had secured the option to purchase the facility as part of the Jantzen acquisition.

The following tables illustrate our contractual obligations and commercial commitments as of ~~April 30,~~July 31, 2003 and include the effects of the ~~transactions~~Salant acquisition and related amendments discussed above that occurred during the ~~first~~second quarter ended ~~April 30,~~July 31, 2003.

	Payments Due by Period										Payments Due by Period
Contractual Obligations	Total		Less than 1 year		1-3 years		4-5 years		After 5 years		Total		Less than 1 year		1-3 years		4-5 years		After 5 years
Senior subordinated notes	$	100,000,000	$	—	$	100,000,000	$	—	$	—	$	100,000,000	$	—	$	100,000,000	$	—	$	—

Senior secured notes	$	57,000,000	$	—	$	—	$	—	$	57,000,000	$	57,000,000	$	—	$	—	$	—	$	57,000,000

Real estate mortgage	$	11,600,000	$	—	$	243,615	$	332,378	$	11,024,007	$	11,600,000	$	—	$	243,615	$	332,378	$	11,024,007

Operating leases	$	11,328,470	$	2,028,697	$	4,023,036	$	3,700,383	$	1,576,354	$	54,442,172	$	7,953,953	$	15,016,424	$	11,864,067	$	19,607,728

Total contractual cash obligations	$	179,928,470	$	2,028,697	$	104,266,651	$	4,032,761	$	69,600,361	$	223,042,172	$	7,953,953	$	115,260,039	$	12,196,445	$	87,631,735


			Amount of Commitment Expiration Per Period								Amount of Commitment Expiration Per Period
Other Commercial Commitments	Total		Less than 1 year		1-3 years		4-5 years		After 5 years		Total		Less than 1 year		1-3 years		4-5 years		After 5 years
Letter of credit	$	17,938,043	$	17,938,043	$	—	$	—	$	—	$	36,456,189	$	36,456,189	$	—	$	—	$	—

Stand by letters of credit	$	2,750,000	$	—	$	—	$	2,750,000	$	—	$	34,929,878	$	34,929,878	$	—	$	—	$	—

Total commercial commitments	$	20,688,043	$	17,938,043	$	—	$	2,750,000	$	—	$	71,386,067	$	52,263,067	$	—	$	19,123,000	$	—

Management believes that the combination of the borrowing availability under the amended senior credit facility, the letter of credit facilities, and funds anticipated to be generated from operating activities, will be sufficient to meet our operating and capital needs in the foreseeable future.

~~The Company does~~We do not believe that inflation or foreign currency fluctuations significantly affected ~~its~~our results of operations for the three months ended ~~April 30,~~July 31, 2003.

The market risk inherent in our financial statements represents the potential changes in the fair value, earnings or cash flows arising from changes in interest rates or foreign currency exchange rates. We manage this exposure through regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. Our policy allows the use of derivative financial instruments for identifiable market risk exposure, including interest rate and foreign currency fluctuations. We do not enter into derivative financial contracts for trading or other speculative purposes except for as discussed below.

In August 2001, we entered into an interest rate swap, option and interest rate cap agreements (the “August Swap Agreement”), for an aggregate notional amount of $40.0 million in order to minimize our debt servicing costs associated with our $100.0 million of 12¼% senior subordinated notes due April 1, 2006. The August Swap Agreement was subsequently modified through a basis swap entered into in October 2001 (the “October Swap Agreement,” and collectively with the August Swap Agreement, the “Swap Agreement”). The Swap Agreement is scheduled to terminate on April 1, 2006. Under the Swap Agreement, we are entitled to receive semi-annual

interest payments on October 1 and April 1 at a fixed rate of 12¼% and isare obligated to make semi-annual interest payments on October 1 and April 1 at a floating rate based on the six-month LIBOR rate plus 715 basis points for the 18-month period from October 1, 2001 through March 31, 2003 (per October Swap Agreement); and three-month LIBOR rate plus 750 basis ~~point~~points for the period from April 1, 2003 through April 1, 2006 (per the August Swap Agreement). The Swap Agreement has optional call provisions with trigger dates of April 1, 2003, April 1, 2004 and April 1, 2005, which contain certain premium requirements in the event the call is exercised.

The fair value of the August 2001 swap and the option component of the Swap Agreement recorded on our ~~Consolidated Balance Sheet~~consolidated balance sheet was ($~~0.7)~~0.5) million and ~~$2.7~~$2.4 million as of ~~April 30,~~July 31, 2003, respectively. The interest rate cap and basis swap component of the Swap Agreement did not qualify for hedge accounting treatment, resulting in ~~$0.2~~$0.05 million and $0.1 million increase in interest expense for the ~~first~~second quarter of fiscal 2004 and fiscal 2003, respectively and an increase of ~~$0.3~~$0.2 million in interest expense on the ~~Statement~~statement of ~~Operations~~operations for each of the ~~first quarter of fiscal 2003.~~six months ended July 31, 2003 and 2002, respectively. In August 2003, we terminated the October Swap Agreement and the August Swap Agreement.

In conjunction with our March 2002 offering of $57.0 million of 9½9¹/2% senior secured notes due March 15, 2009, we entered into interest rate swap and option agreements (the “March Swap Agreement”) for an aggregate notional amount of $57.0 million in order to minimize the debt servicing costs associated with the senior secured notes. The March Swap Agreement is scheduled to terminate on March 15, 2009. Under the March Swap Agreement, we are entitled to receive semi-annual interest payments on September 15 and March 15 at a fixed rate of 9½9¹/2% and are obligated to make semi-annual interest payments on September 15 and March 15 at a floating rate based on the three-month LIBOR rate plus 369 basis points for the period from March 22, 2002 through March 15, 2009. The March Swap Agreement has optional call provisions with trigger dates of March 15, 2005, March 15, 2006 and March 15, 2007, which contain premium requirements in the event the call is exercised.

The March Swap Agreement is a fair value hedge as it has been designated against the 9½9¹/2% senior secured notes carrying a fixed rate of interest and converts such notes to variable rate debt. The interest rate swap contracts are reflected at fair value in our consolidated balance sheet. The fair value of the March 2002 swap and the option component of the March Swap Agreement

recorded on the ~~Consolidated Balance Sheet~~consolidated balance sheet was ~~$6.3~~$4.6 million and ($~~0.8)~~0.6) million respectively, as of ~~April 30,~~July 31, 2003.

In December 2002, we entered into an interest rate floor agreement (the “December Floor Agreement”) for an aggregate notional amount of $57.0 million. The December Floor Agreement is scheduled to terminate on March 15, 2005. Under the December Floor Agreement, we must pay the difference between the three-month LIBOR rate and 1.50% for all rate resets in which the LIBOR is below 1.50%. When the LIBOR is equal to or greater than 1.50%, we make no payments under the Floor.

The December Floor Agreement did not qualify for hedge accounting treatment under the SFAS No. 133, resulting in $0.1 million ~~increase~~decrease of recorded interest expense in the ~~Consolidated Statement~~consolidated statement of ~~Income~~income for the ~~first quarter~~three and six months ended ~~April 30, 2003.~~July 31, 2003 respectively. The fair value of the December Floor Agreement recorded on our ~~Consolidated Balance Sheet~~consolidated balance sheet was ($~~0.3)~~0.2) million as of ~~April 30,~~July 31, 2003.

In April 2003, we entered into an interest rate cap agreement (the “April Cap Agreement”) for an aggregate notional amount of $57.0 million associated with the senior secured notes. The April Cap Agreement is scheduled to terminate on March 15, 2009. The April Cap Agreement caps the interest rate on the $57.0 million senior secured notes at 10%.

The April Cap Agreement did not qualify for hedge accounting treatment, resulting in ~~$0.3~~$0.7 million ~~increase~~and a $0.4 million decrease of recorded interest expense on the ~~Consolidated Statement~~consolidated statement of ~~Income~~income for the ~~quarter~~three and six months ended ~~April 30, 2003.~~July 31, 2003 respectively. The fair value of the April Cap Agreement recorded on our ~~Consolidated Balance Sheet~~consolidated balance sheet was ~~($0.3)~~$0.4 million as of ~~April 30,~~July 31, 2003.

Our current exposure to foreign exchange risk is not significant and accordingly, we have not entered into any transactions to hedge against those risks.

An evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures ~~within 90 days~~as of the end of the fiscal quarter covered by this report was carried out by the Company under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures have been designed and are being operated in a manner that provides reasonable assurance that the information required to be disclosed by the Company in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. A control system, no matter how well designed and operated, cannot provide absolute assurance that the objective of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Subsequent to the date of the most recent evaluation of the Company’s internal controls, there were no significant changes in the Company’s internal controls or in other factors that could

significantly affect the internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

~~Not applicable.~~(a) The annual meeting of shareholders was held on Tuesday, June 17, 2003.

(b) The following individuals were elected directors until the 2006 Annual Meeting of Shareholders and until their successors are duly elected and qualified.

The term of office of each of the following directors continued after the meeting:

(1) The shareholders approved the issuance by the Company of up to 3,250,000 shares of common stock to Salant’s shareholders pursuant to the terms and subject to the conditions of the Agreement and Plan of Merger dated February 3, 2003, among Perry Ellis, Salant Corporation and Connor Acquisition Corp., a wholly owned subsidiary of Perry Ellis.

(2) The shareholders approved the amendment to Perry Ellis’ articles of incorporation to increase the number of shares of common stock that Perry Ellis is authorized to issue from 30,000,000 to 100,000,000.

(3) The shareholders approved the amendment to Perry Ellis’ articles of incorporation to increase the number of shares of preferred stock that Perry Ellis is authorized to issue from 1,000,000 to 5,000,000.

(4) The shareholders approved the amendment to Perry Ellis’ articles of incorporation to eliminate the ability of Perry Ellis’ shareholders to take action by written consent in lieu of a shareholder meeting.

(5) The shareholders approved the amendment to Perry Ellis’ articles of incorporation to require shareholders seeking to nominate directors for election to Perry Ellis’ board of directors to first comply with certain advance notice and disclosure procedures.

(6) The shareholders did not approve the amendment to Perry Ellis’ articles of incorporation to require the affirmative vote of not less than 66-2/3% of Perry Ellis’ outstanding common stock to effect certain future amendments to Perry Ellis’ articles of incorporation.

(7) The shareholders approved the amendment and restatement of Perry Ellis’ 2002 Stock Option Plan to (a) allow shares of Perry Ellis’ common stock to be granted under the plan in the form of restricted stock, (b) increase from 1,000,000 to 1,500,000 the number of shares of Perry Ellis’ common stock reserved for issuance pursuant to stock options and restricted stock granted under the plan, (c) limit the maximum number of options that may be awarded to any participant in any fiscal year to 250,000, (d) limit the maximum number of shares of restricted stock that may be granted to any participant in any fiscal year to 250,000 and (e) make certain other technical changes to the plan.

(8) The shareholders ratified the appointment by the Audit Committee of Perry Ellis’ board of directors of Deloitte & Touche LLP to serve as Perry Ellis’ independent auditors for the fiscal year ending January 31, 2004.

~~Not~~We issued a press release today to announce our intention to sell, subject to market and other conditions $150 million aggregate principal amount of senior subordinated notes due 2013, in a private offering pursuant to an exemption from registration requirements under the Securities Act of 1933, as amended. The notes, if issued, will be guaranteed on an unsecured senior subordinated basis by all of our current and certain of our future material domestic subsidiaries. We plan to use the net proceeds from the proposed offering to redeem our existing 12 1/4% senior subordinated notes due 2006 and reduce amounts outstanding under our existing senior credit facility.

Because the notes will not be registered under the Securities Act or and state securities laws, they will not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.

~~1) On February 3, 2003, Perry Ellis filed a report on Form 8-K to report that it had entered in an agreement and plan of merger with Salant Corporation.~~

~~2) On March 11, 2003, Perry Ellis filed a report on Form 8-K to report its fourth quarter and fiscal year end January 31, 2003 results of operations.~~

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.

~~1) I have reviewed the Registrant’s Form 10-Q quarterly report for the period ended April 30, 2003 (the “Report”);~~

2) Based on my knowledge, the Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the Report;

3) Based on my knowledge, the financial statements, and other financial information included in the Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in the Report;

4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

~~b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and~~

~~c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;~~

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in the internal controls; and

~~b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and~~

6) The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

~~c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;~~

~~b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and~~

3000 N.W. 107 Avenue ~~Miami, Florida~~		~~33172~~
Miami, Florida		33172
(Address of Principal Executive Offices)		(Zip Code)

			PAGE
PART I: FINANCIAL INFORMATION

Item 1:

	Consolidated Balance Sheets (Unaudited) as of ~~April 30,~~July 31, 2003 ~~(Unaudited)~~ and January 31, 2003		1

	Consolidated Statements of Income (Unaudited) for the three and six months ended ~~April 30,~~July 31, 2003 and 2002		2

	Consolidated Statements of Cash Flows (Unaudited) for the ~~three~~six months ended ~~April 30,~~July 31, 2003 and 2002		3

	Notes to Unaudited Consolidated Financial Statements		4

Item 2:
Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
		22
Item 3:
Quantitative and Qualitative Disclosures About Market Risk	27
		31
Item 4:
Controls and Procedures	28
		33
PART II: OTHER INFORMATION	29
		33
~~Signature~~Item 1:
Legal Proceedings	30
		33
~~Certifications~~Item 2:
Changes in Securities	3133
Item 3:
Defaults Upon Senior Securities	34
Item 4:
Submission of Matters to a Vote of Security Holders	34
Item 5:
Other Information	36
Item 6:
Exhibits and Reports of Form 8-K	36

	(Dollars in Thousands)
Purchase price determination:
Net purchase price	$	23,978
Liabilities assumed and expenses incurred in connection with the acquisition		3,063

Gross purchase price	$	27,041

Purchase price allocation:
Inventories	$	2,191
Machinery and equipment		465
Trademarks		24,385

Gross purchase price	$	27,041
Less: liabilities assumed		(1,957	)

Cash paid for acquisition and acquisition cost	$	25,084

	(Dollars in Thousands)
Total purchase price
Market value of stock issued	$	35,805
Cash consideration paid		51,906

Total purchase price		87,711
Total direct merger costs		3,155

Total adjusted purchase price	$	90,866

Net assets of Salant based on amounts as of June 19, 2003	$	77,054
Increase(decrease) in net assets to reflect estimated fair value adjustments under the purchase method of accounting:
Deferred taxes, current and long-term, net		39,738
Property, plant and equipment		(8,319	)
Other assets
Retail stores fixtures		(3,070	)
Deferred rental income		(456	)
License agreements		(5,479	)
Intangible assets, net		(8,545	)
Deferred rental expense		1,492
Net pension liability		(1,549	)

Fair value of net assets acquired	$	90,866

	Three Months Ended July 31,					Six Months Ended July 31,
	2003			2002		2003		2002
	(in thousands, except per share data)
Total revenues	$	125,240		$	113,180	$	298,649	$	258,694

Net income (loss)¹	$	(611	)	$	3,329	$	6,697	$	9,070

Net income (loss) per share
Basic	$	(0.07	)	$	0.41	$	0.81	$	1.11

Diluted	$	(0.07	)	$	0.40	$	0.75	$	1.10

	FOR	AGAINST
Oscar Feldenkreis	5,870,946	483,157
Allan Zwerner	5,865,796	488,307
Joseph P. Lacher	6,044,488	309,615

George Feldenkreis		Gary Dix
Ronald L. Buch		Leonard Miller
Salomon Hanono		Marc Balmuth

Exhibit Number		Description

~~99.1~~10.57		Amendment No. 1 to Loan and Security Agreement dated June 19, 2003.

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).

32.1		Certification of Chief Executive Officer pursuant to Section ~~906 of the Sarbanes-Oxley Act~~1350.

~~99.2~~32.2		Certification of Chief Financial Officer pursuant to Section ~~906 of the Sarbanes-Oxley Act~~1350.

99.1		Press Release dated September 9, 2005.


~~By:~~Date: September 9, 2003		~~/s/ TIMOTHY~~By: /s/ Timothy B. P~~AGE~~Page
		Timothy B. Page, Chief Financial Officer

Exhibit Number		Description

10.57		~~/s/ GEORGE~~ F~~ELDENKREIS~~
~~Name:~~		~~George Feldenkreis~~
~~Title:~~		~~Chairman~~Amendment No. 1 to Loan and ~~Chief Executive Officer~~ ~~(Chief Executive Officer)~~Security Agreement dated June 19, 2003.

~~99.1~~
32.1		Certification of Chief Executive Officer pursuant to Section ~~906 of the Sarbanes-Oxley Act~~1350.

~~99.2~~ 32.2		Certification of Chief Financial Officer pursuant to Section ~~906 of the Sarbanes-Oxley Act~~1350.

99.1		Press Release dated September 9, 2003.

FOR		AGAINST		WITHHELD
5,122,273		11,225		4,325

FOR		AGAINST		ABSTAIN
3,910,569		1,222,729		4,525

FOR		AGAINST		ABSTAIN
3,911,295		1,222,138		4,390

FOR		AGAINST		ABSTAIN
3,900,955		1,230,028		6,840