<SUBMISSION>
<ACCESSION-NUMBER>0000950128-01-000494
<TYPE>10-K
<PUBLIC-DOCUMENT-COUNT>4
<PERIOD>20001231
<FILING-DATE>20010316
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>BLAIR CORP
<CIK>0000071525
<ASSIGNED-SIC>5961
<IRS-NUMBER>250691670
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-K
<ACT>34
<FILE-NUMBER>001-00878
<FILM-NUMBER>1570598
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>220 HICKORY ST
<CITY>WARREN
<STATE>PA
<ZIP>16366
<PHONE>8147233600
</BUSINESS-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>NEW PROCESS CO
<DATE-CHANGED>19890507
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>j8679401e10-k.txt
<DESCRIPTION>BLAIR CORPORATION       FORM 10-K
<TEXT>

<PAGE>   1

================================================================================

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


                                    FORM 10-K


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

For the fiscal year ended December 31, 2000         Commission file number 1-878


                                BLAIR CORPORATION

   Incorporated in Delaware               I.R.S. Employer Identification Number:

     220 Hickory Street                                 25-0691670
  Warren, Pennsylvania 16366
      (814) 723-3600

Securities registered pursuant to Section 12(b) of the Act:

                                                       NAME OF EACH EXCHANGE
          TITLE OF EACH CLASS                           ON WHICH REGISTERED

Common Stock, without nominal or par value             American Stock Exchange

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


         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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ___

         The aggregate market value of the voting stock held by nonaffiliates of
the registrant as of February 23, 2001 was $136,734,712. There were 7,968,844
shares of common stock outstanding as of February 23, 2001, which amount
represents the figure reported outstanding by the Company's transfer agent as of
the record date.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Annual Report to Stockholders for the fiscal year ended
December 31, 2000 (the "Annual Report") are incorporated by reference into Part
II and Part IV of this Form 10-K. Portions of the Proxy Statement for the 2001
Annual Meeting of Stockholders (the "Proxy Statement") are incorporated by
reference into Part III of this Form 10-K.

================================================================================




<PAGE>   2



                                     PART I

ITEM 1. BUSINESS

         (a) GENERAL.

         Blair Corporation (the "Company") was founded in 1910 by John L. Blair,
Sr., and was incorporated in 1924 under the laws of the State of Delaware. The
Company's business consists of the sale of fashion apparel for men and women,
plus a wide range of home products, primarily through direct mail merchandising.
The Company operates three retail stores, two in Pennsylvania and one in
Delaware, and two outlet stores in Pennsylvania. The Company employs
approximately 2,500 people. None of the Company's employees are subject to
collective bargaining agreements.

         (b) INFORMATION REGARDING INDUSTRY SEGMENTS.

         The Company's business consists of only one industry segment, which is
the direct mail and retail merchandising of men's and women's fashion apparel
and home products.

         (c) DESCRIPTION OF BUSINESS.

         The Company markets a wide range of merchandise, manufactured by a
number of independent suppliers, both domestic and foreign. Most of these
suppliers have been associated with the Company for many years and manufacture
products based upon the Company's specifications. Suppliers are selected in
accordance with their ability to produce high quality products in a
cost-effective manner.

         The Company markets its products mainly by direct mail. Catalogs and
letters containing color folders, depict the current styles of womenswear (such
as coordinates, dresses, tops, pants, skirts, lingerie, sportswear, suits,
jackets, outerwear and shoes), menswear (such as suits, shirts, outerwear,
active wear, slacks, shoes, and accessories), and home products (such as
bedspread ensembles, draperies, furniture covers, area rugs, bath accessories,
kitchenware, gifts, collectibles and personal care items) and are mailed
directly to existing and prospective customers. Sales of the menswear and
womenswear products, including the new Crossing Pointe product line, accounted
for approximately 86% of the Company's total sales in 2000, and sales of home
products accounted for the remaining 14% (approximately). Media and co-op
prospect advertising programs continue to be used as components of the Company's
customer acquisition strategy. The Company had minimal presence on the Internet
in 2000, approximately $2 million in sales, but will be expanding its Internet
presence in 2001. The Company launched its own e-commerce website
(www.blair.com) in the fall of 2000 and redesigned the site at the beginning of
2001.

         Catalog mailings are mailed from commercial printers engaged by the
Company and letter mailings originate from the Company's Mailing Center in
nearby Irvine, Pennsylvania. Orders for merchandise are processed at the
Company's corporate offices in Warren, Pennsylvania (telephone orders via the
call centers) and orders are filled and mailed from the Company's Distribution
Center in Irvine, Pennsylvania. The Company serves customers throughout the
fifty states.

         The Company's outlet stores enable it to more efficiently promote and
liquidate discontinued, overstocked and returned merchandise. The Delaware
retail store is the only Company retail facility located outside of its home
state of Pennsylvania.

         The Company considers its merchandise to be low/medium-priced and
competes for sales with other direct marketers, retail department stores,
specialty shops, discount store chains and e-commerce and multi-channel
marketers. The Company competes based on its sales expertise - it's unique
combination of product, quality, price, credit, guarantee and service.

         During 2000, the Company continued to broaden its customer information
database systems. The marketing and credit departments are continually updated
in order to enhance the Company's ability to market to both customers and
prospects.

         (d) FOREIGN OPERATIONS AND EXPORT SALES.

         The Company does not derive any revenue from sales of merchandise
outside of the United States.




                                      -2-
<PAGE>   3

ITEM 2. PROPERTIES

         The Company owns the following properties:

         1. Blair Headquarters (220 Hickory Street, Warren, Pennsylvania).
         2. Blair Distribution Center (Route 62, Irvine, Pennsylvania).
         3. Blair Mailing Center (Route 62, Irvine, Pennsylvania).
         4. Blair Warehouse Outlet (Route 62, Starbrick, Pennsylvania).
         5. Blair Warehouse Outlet (Millcreek Mall, Erie, Pennsylvania).
         6. Bell Warehouse Building (Liberty Street, Warren, Pennsylvania).
         7. Starbrick Warehouse Building (Route 62, Starbrick, Pennsylvania).

         The Company leases the following properties:

         1. Blair Retail Store (Wilmington, Delaware).
         2. Warehouse Building (Route 62, Starbrick, Pennsylvania).
         3. Telephone Call Center (Erie, Pennsylvania).
         4. Telephone Call Center (Franklin, Pennsylvania).
         5. Blair Retail Store (Grove City, Pennsylvania).

         In addition, two of the Company's wholly-owned subsidiaries lease
office space in Newark, Delaware, which they use as their principal offices.

         Management believes that these properties are capable of meeting the
Company's anticipated needs for the near future once the previously announced
$23 million modernization and expansion of the Company's merchandise fulfillment
capabilities is completed. The Company's marketing strategy and potential sales
growth may require expansion of the Company's customer service and call center
capabilities.

ITEM 3. LEGAL PROCEEDINGS

         The Company is not involved in any pending legal proceedings other than
legal proceedings occurring in the ordinary course of business. Management
believes that none of these legal proceedings, individually or in the aggregate,
will have a material adverse impact on the results of operations or financial
condition of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year covered by this report.


                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS

         The information required by this item is incorporated by reference to
page 12 of the Company's 2000 Annual Report to Stockholders.

ITEM 6. SELECTED FINANCIAL DATA

         The information required by this item is incorporated by reference to
page 12 of the Company's 2000 Annual Report to Stockholders.



                                      -3-
<PAGE>   4

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

         The information required by this item is incorporated by reference to
pages 13 through 16 of the Company's 2000 Annual Report to Stockholders.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The information required by this item is incorporated by reference to
pages 6 through 12 of the Company's 2000 Annual Report to Stockholders.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

         None.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

         Information regarding directors and executive officers of the Company
appearing under the caption "Election of Directors" in the Company's Proxy
Statement for the 2001 Annual Meeting of Stockholders filed with the Securities
and Exchange Commission on March 16, 2001 (the "2001 Proxy Statement") is hereby
incorporated by reference.

ITEM 11. EXECUTIVE COMPENSATION

         Information appearing under the caption "Executive Compensation" in the
2001 Proxy Statement is hereby incorporated by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information setting forth the security ownership of certain beneficial
owners and management appearing under the captions "Security Ownership of
Certain Beneficial Owners" and "Security Ownership of Management" in the 2001
Proxy Statement is hereby incorporated by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Not applicable.




                                      -4-
<PAGE>   5



                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

         (a) EXHIBITS AND FINANCIAL STATEMENTS AND SCHEDULES.

         (1) Financial Statements. The Company's consolidated financial
statements to be included in Part II, Item 8 are incorporated herein by
reference to the Company's 2000 Annual Report to Stockholders, a copy of which
accompanies this report on Form 10-K.

         (2) Financial Statement Schedules. SCHEDULE II -- VALUATION AND
QUALIFYING ACCOUNTS is being filed as part of this report on Form 10-K, and
should be read in conjunction with the consolidated financial statements of the
Company described in Item 14(a)(1) above.

         All other schedules set forth in the applicable accounting regulations
of the Securities and Exchange Commission either are not required under the
related instructions or are not applicable and, therefore, have been omitted.

         (3) List of Exhibits.

         The exhibits filed as a part of this Form 10-K are as follows (filed
herewith unless otherwise noted):

      3 (i)     Restated Certificate of Incorporation of the Company*

      3 (ii)    Bylaws of the Company**

      4         Form of Specimen Common Stock Certificate of Blair
                Corporation***

   10.1         Stock Accumulation and Deferred Compensation Plan for
                Directors****

   10.2         Blair Corporation 2000 Omnibus Stock Plan*****

     11         Computation of Earnings per Share (incorporated by reference to
                page 6 of the 2000 Annual Report to Stockholders)

     13         2000 Annual Report to Stockholders

     21         Subsidiaries of Registrant

     23         Consents of Experts and Counsel

---------------------
*     Incorporated herein by reference to Exhibit A to the Company's Quarterly
      Report on Form 10-Q filed with the SEC on August 10, 1995 (SEC File No.
      1-878).

**    Incorporated herein by reference to Exhibit 4.3 to the Company's
      Registration Statement on Form S-8 filed with the SEC on July 19, 2000
      (SEC File No. 333-41772).

***   Incorporated herein by reference to Exhibit 4.1 to the Company's
      Registration Statement on Form S-8 filed with the SEC on July 19, 2000
      (SEC File No. 333-41772).

****  Incorporated herein by reference to Exhibit A to the Company's Proxy
      Statement filed with the SEC on March 20, 1998 (SEC File No. 1-878).

***** Incorporated herein by reference to Exhibit A to the Company's Proxy
      Statement filed with the SEC on March 17, 2000 (SEC File No. 1-878).

         (b) REPORTS ON FORM 8-K.

         The registrant has filed no Forms 8-K during the quarter ended December
31, 2000.



                                      -5-
<PAGE>   6



                                   SIGNATURES

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


                                                BLAIR CORPORATION
                                                (Registrant)


Date: March 16, 2001                  By:          /s/ KENT R. SIVILLO
                                         -------------------------------------
                                                    Kent R. Sivillo
                                               Vice President and Treasurer

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the date indicated.

Date: March 16, 2001                  By:        /s/ MURRAY K. MCCOMAS
                                         -------------------------------------
                                                    Murray K. McComas
                                           Chairman of the Board of Directors

Date: March 16, 2001                  By:         /s/ JOHN E. ZAWACKI
                                         -------------------------------------
                                                     John E. Zawacki
                                           President, Chief Executive Officer
                                                     and Director
                                             (Principal Executive Officer)

Date: March 16, 2001                  By:       /s/ BLAIR T. SMOULDER
                                         -------------------------------------
                                                  Blair T. Smoulder
                                              Executive Vice President
                                                    and Director

Date: March 16, 2001                  By:        /s/ STEVEN M. BLAIR
                                         -------------------------------------
                                                   Steven M. Blair
                                              Vice President, Customer
                                               Services, and Director

Date: March 16, 2001                  By:        /s/ DAVID A. BLAIR
                                         -------------------------------------
                                                    David A. Blair
                                                Secretary and Director

Date: March 16, 2001                  By:        /s/ KENT R. SIVILLO
                                         -------------------------------------
                                                    Kent R. Sivillo
                                                    Vice President,
                                                Treasurer and Director
                                               (Principal Financial and
                                                  Accounting Officer)



                                      -6-
<PAGE>   7

Date: March 16, 2001                  By:      /s/ ROBERT D. CROWLEY
                                         -------------------------------------
                                                   Robert D. Crowley
                                               Vice President, Menswear,
                                                      and Director

Date: March 16, 2001                  By:     /s/ THOMAS P. MCKEEVER
                                         -------------------------------------
                                                  Thomas P. McKeever
                                            Vice President, Corporate Affairs
                                            and Human Resources, and Director






























                                      -7-
<PAGE>   8



                           Annual Report on Form 10-K
                         Item 14(a) (1) and (2), and (d)

         List of Financial Statements and Financial Statement Schedules

                       Blair Corporation and Subsidiaries
                              Warren, Pennsylvania

                          Year ended December 31, 2000

















































                                      -8-
<PAGE>   9


                       Blair Corporation and Subsidiaries

         List of Financial Statements and Financial Statement Schedules

                   Form 10-K -- Item 14(a)(1) and (2), and (d)

The following consolidated financial statements of Blair Corporation, included
in the annual report of the registrant to its stockholders for the year ended
December 31, 2000, are incorporated by reference in Item 8:

         --  Consolidated Balance Sheets -- December 31, 2000 and 1999

         --  Consolidated Statements of Income -- Years ended December 31, 2000,
             1999 and 1998

         --  Consolidated Statements of Stockholders' Equity -- Years ended
             December 31, 2000, 1999 and 1998

         --  Consolidated Statements of Cash Flows -- Years ended December 31,
             2000, 1999 and 1998

         --  Notes to Consolidated Financial Statements -- December 31, 2000

The following financial statement schedule of Blair Corporation is included in
Item 14(d):

         --  Schedule II -- Valuation and Qualifying Accounts

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



























                                      -9-
<PAGE>   10


                       Blair Corporation and Subsidiaries

                                   Schedule II

                        Valuation and Qualifying Accounts
                                December 31, 2000

<TABLE>
<CAPTION>

COLUMN A                                     COLUMN B           COLUMN C              COLUMN D            COLUMN E
---------------------------------------------------------------------------------------------------------------------
                                                               ADDITIONS-
                                            BALANCE AT         CHARGED TO                                  BALANCE
DESCRIPTION                                 BEGINNING          COSTS AND             DEDUCTIONS-           AT END
-----------                                 OF PERIOD           EXPENSES              DESCRIBE            OF PERIOD
                                            ---------           --------              --------            ---------
<S>                                         <C>               <C>                   <C>                   <C>
Year ended December 31, 2000:
    Allowance deducted from
    asset account (customer
    accounts receivable):

        For doubtful accounts               $31,489,153       $ 35,932,526(A)       $ 27,650,006(B)       $39,771,673

        For estimated loss on returns         6,431,673         84,955,671            84,394,344(C)         6,993,000
                                            -----------       ------------          ------------          -----------
Totals                                      $37,920,826       $120,888,197          $112,044,350          $46,764,673
                                            ===========       ============          ============          ===========

Year ended December 31, 1999:
    Allowance deducted from
    asset account (customer
    accounts receivable):

        For doubtful accounts               $29,224,323       $ 22,468,075(A)       $ 20,203,245(B)       $31,489,153

        For estimated loss on returns         6,250,000         83,262,638            83,080,965(C)         6,431,673
                                            -----------       ------------          ------------          -----------
Totals                                      $35,474,323       $105,730,713          $103,284,210          $37,920,826
                                            ===========       ============          ============          ===========

Year ended December 31, 1998:
    Allowance deducted from
    asset account (customer
    accounts receivable):

        For doubtful accounts               $31,984,888       $ 22,033,466(A)       $ 24,794,032(B)       $29,224,323

        For estimated loss on returns         6,495,000         88,927,593            89,172,593(C)         6,250,000
                                            -----------       ------------          ------------          -----------
Totals                                      $38,479,888       $110,961,059          $113,966,625          $35,474,323
                                            ===========       ============          ============          ===========
</TABLE>


----------

Note (A) -- Current year provision for doubtful accounts, charged against
            income.

Note (B) -- Accounts charged off, net of recoveries.

Note (C) -- Sales value of merchandise returned.





                                      -10-





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>2
<FILENAME>j8679401ex13.txt
<DESCRIPTION>2000 ANNUAL REPORT TO STOCKHOLDERS
<TEXT>

<PAGE>   1

                                                                      EXHIBIT 13


CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                                    2000               1999                1998
---------------------------------------------------------------------------------------------------------
<S>                                                 <C>                 <C>                 <C>
Net sales ...................................        $574,595,907        $522,197,334        $506,803,591
Other income-- Note 5 .......................          44,792,832          40,686,195          43,862,320
                                                     ------------        ------------        ------------
                                                      619,388,739         562,883,529         550,665,911
Costs and expenses:
   Cost of goods sold .......................         282,011,613         269,460,019         251,832,019
   Advertising ..............................         140,860,571         134,892,301         132,274,259
   General and administrative ...............         125,458,465         109,340,500         108,567,387
   Provision for doubtful accounts ..........          35,932,526          22,468,075          22,033,466
   Interest .................................           1,835,120           2,557,945           2,116,772
                                                     ------------        ------------        ------------
                                                      586,098,295         538,718,840         516,823,903
                                                     ------------        ------------        ------------
INCOME BEFORE INCOME TAXES ..................          33,290,444          24,164,689          33,842,008

Income taxes-- Note 6 .......................          12,186,000           8,852,000          11,553,000
                                                     ------------        ------------        ------------

NET INCOME ..................................        $ 21,104,444        $ 15,312,689        $ 22,289,008
                                                     ============        ============        ============

Basic and diluted earnings per share based on
   weighted average shares outstanding ......               $2.63               $1.84               $2.49
                                                            =====               =====               =====
</TABLE>

See accompanying notes.


REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS

Board of Directors and Stockholders
Blair Corporation and Subsidiaries

We have audited the accompanying consolidated balance sheets of Blair
Corporation and Subsidiaries as of December 31, 2000 and 1999 and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 2000. These financial
statements are the responsibility of Blair Corporation management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Blair Corporation
and Subsidiaries at December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000 in conformity with accounting principles generally accepted in
the United States.


                                                          /s/ Ernst & Young LLP

February 7, 2001

6

<PAGE>   2


CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
DECEMBER 31                                                               2000                1999
------------------------------------------------------------------------------------------------------
<S>                                                                 <C>                 <C>
ASSETS
CURRENT ASSETS
   Cash ......................................................        $  7,497,907        $  1,625,236
   Customer accounts receivable, less
      allowances for doubtful accounts and
      returns of $46,764,673 in 2000 and
      $37,920,826 in 1999 ....................................         172,393,572         165,829,079
   Inventories:
      Merchandise ............................................          94,912,349          68,408,229
      Advertising and shipping supplies ......................          14,660,290          11,639,598
                                                                      ------------        ------------
                                                                       109,572,639          80,047,827

Deferred income taxes-- Note 6 ...............................          11,728,000           9,234,000
   Prepaid and refundable federal and state taxes ............                 -0-           7,487,288
   Prepaid expenses ..........................................             958,849           1,068,936
                                                                      ------------        ------------
TOTAL CURRENT ASSETS .........................................         302,150,967         265,292,366

PROPERTY, PLANT AND EQUIPMENT
   Land ......................................................           1,142,144           1,142,144
   Buildings .................................................          64,235,385          63,583,170
   Equipment .................................................          54,664,689          42,550,368
                                                                      ------------        ------------
                                                                       120,042,218         107,275,682
   Less allowances for depreciation ..........................          66,391,927          60,390,643
                                                                      ------------        ------------
                                                                        53,650,291          46,885,039

TRADEMARKS ...................................................             704,894             777,137
                                                                      ------------        ------------
TOTAL ASSETS .................................................        $356,506,152        $312,954,542
                                                                      ============        ============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Notes payable-- Note 2 ....................................        $ 25,000,000        $ 11,800,000
   Trade accounts payable ....................................          76,038,528          53,245,921
   Advance payments from customers ...........................           2,077,053           2,058,651
   Accrued expenses-- Note 3 .................................          14,289,318          10,742,545
   Accrued federal and state taxes ...........................             929,101                 -0-
                                                                      ------------        ------------
TOTAL CURRENT LIABILITIES ....................................         118,334,000          77,847,117
DEFERRED INCOME TAXES-- Note 6 ...............................           1,146,000           1,130,000
LONG-TERM DEBT -- Note 2 .....................................                 -0-          10,000,000
STOCKHOLDERS' EQUITY -- Note 4 Common Stock without par value:
      Authorized 12,000,000 shares; issued
      10,075,440 shares (including shares held
      in treasury)--stated value .............................             419,810             419,810
   Additional paid-in capital ................................          14,612,333          14,625,722
   Retained earnings .........................................         267,444,414         251,163,905
                                                                      ------------        ------------
                                                                       282,476,557         266,209,437
   Less 2,106,596 shares in 2000 and 1,917,574
      shares in 1999 of Common Stock in
      treasury-- at cost .....................................          43,218,782          39,829,081
   Less receivable from stock plans ..........................           2,231,623           2,402,931
                                                                      ------------        ------------
                                                                       237,026,152         223,977,425
                                                                      ------------        ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...................        $356,506,152        $312,954,542
                                                                      ============        ============
</TABLE>

See accompanying notes.


                                                                              7

<PAGE>   3


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                                                          2000                 1999                1998
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>                 <C>                 <C>
COMMON STOCK ........................................................       $    419,810        $    419,810        $    419,810

ADDITIONAL PAID-IN CAPITAL:
   Balance at beginning of year .....................................         14,625,722          14,278,828          13,230,251
   Issuance (net of forfeitures)
      of Common Stock under
      Employee Stock Purchase and
       Omnibus Stock Plans-- Note 4 .................................            (13,830)            334,894           1,025,989
   Issuance of Common Stock to
      non-employee directors ........................................                441              12,000              22,588
                                                                            ------------        ------------        ------------
   Balance at end of year ...........................................         14,612,333          14,625,722          14,278,828

RETAINED EARNINGS:
   Balance at beginning of year .....................................        251,163,905         240,798,008         223,868,940
   Net income .......................................................         21,104,444          15,312,689          22,289,008
   Cash dividends declared per share--
      $0.60 in 2000, 1999 and 1998 ..................................         (4,823,935)         (4,946,792)         (5,359,940)
                                                                            ------------        ------------        ------------
   Balance at end of year ...........................................        267,444,414         251,163,905         240,798,008

TREASURY STOCK:
   Balance at beginning of year .....................................        (39,829,081)        (26,756,067)        (23,161,169)
   Purchase of 268,074 shares in 2000;
      808,127 shares in 1999; and 147,573 shares
       in 1998 of Common Stock for treasury .........................         (4,965,592)        (13,847,120)         (4,001,471)
    Issuance (net of forfeitures)
      of Common Stock under
      Employee Stock Purchase and
      Omnibus Stock Plans-- Note 4 ..................................          1,553,457             759,762             393,536
    Issuance of 1,500 shares in 2000, 1999 & 1998 of
      Common Stock to non-employee directors ........................             22,434              14,344              13,037
                                                                            ------------        ------------        ------------
    Balance at end of year ..........................................        (43,218,782)        (39,829,081)        (26,756,067)

RECEIVABLE FROM STOCK PLANS:
   Balance at beginning of year .....................................         (2,402,931)         (2,239,344)         (1,928,786)
   Issuance (net of forfeitures)
      of Common Stock under
      Employee Stock Purchase and
      Omnibus Stock Plans-- Note 4 ..................................           (499,263)           (371,551)           (494,285)
   Repayments .......................................................            670,571             207,964             183,727
                                                                            ------------        ------------        ------------
   Balance at end of year ...........................................         (2,231,623)         (2,402,931)         (2,239,344)
                                                                            ------------        ------------        ------------

TOTAL STOCKHOLDERS' EQUITY ..........................................       $237,026,152        $223,977,425        $226,501,235
                                                                            ============        ============        ============
</TABLE>

See accompanying notes


8

<PAGE>   4



CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                                                    2000                 1999                1998
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>                  <C>                  <C>
OPERATING ACTIVITIES
   Net income ...............................................        $ 21,104,444         $ 15,312,689         $ 22,289,008
   Adjustments to reconcile net income
      to net cash provided by (used in) operating activities:
      Depreciation and amortization .........................           6,241,784            5,073,618            4,979,582
      Provision for doubtful accounts .......................          35,932,526           22,468,075           22,033,466
      Provision for deferred income taxes ...................          (2,478,000)          (1,691,000)           1,814,000
      Compensation expense for stock awards .................           1,063,239              830,850            1,094,025
      Changes in operating assets and liabilities
         providing (using) cash:
            Customer accounts receivable ....................         (42,497,019)         (30,105,328)         (22,589,196)
            Inventories .....................................         (29,524,812)          35,087,723          (36,408,141)
            Prepaid expenses ................................             110,087             (724,454)              47,050
            Trade accounts payable ..........................          22,792,607            1,109,999            5,777,625
            Advance payments from customers .................              18,402              875,822             (210,985)
            Accrued expenses ................................           3,546,773           (1,332,191)           3,041,325
            Federal and state taxes .........................           8,416,389            4,967,928           (5,955,804)
                                                                     ------------         ------------         ------------
NET CASH PROVIDED BY (USED IN)
   OPERATING ACTIVITIES .....................................          24,726,420           51,873,731           (4,088,045)



INVESTING ACTIVITIES
   Purchases of property, plant and equipment ...............         (12,934,793)          (3,842,522)          (1,008,218)
                                                                     ------------         ------------         ------------
NET CASH USED IN INVESTING ACTIVITIES .......................         (12,934,793)          (3,842,522)          (1,008,218)



FINANCING ACTIVITIES
   Net proceeds from (repayments of) bank borrowings ........           3,200,000          (30,950,000)          14,150,000
   Dividends paid ...........................................          (4,823,935)          (4,946,792)          (5,359,940)
   Purchase of Common Stock for treasury ....................          (4,965,592)         (13,847,120)          (4,001,471)
   Decrease in notes receivable from
      stock plans ...........................................             670,571              126,563               50,567
                                                                     ------------         ------------         ------------
NET CASH (USED IN) PROVIDED BY
   FINANCING ACTIVITIES .....................................          (5,918,956)         (49,617,349)           4,839,156
                                                                     ------------         ------------         ------------



NET INCREASE (DECREASE) IN CASH .............................           5,872,671           (1,586,140)            (257,107)
   Cash at beginning of year ................................           1,625,236            3,211,376            3,468,483
                                                                     ------------         ------------         ------------

CASH AT END OF YEAR .........................................        $  7,497,907         $  1,625,236         $  3,211,376
                                                                     ============         ============         ============
</TABLE>

See accompanying notes.

                                                                              9


<PAGE>   5



Notes to Consolidated Financial Statements

1. SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

The consolidated financial statements include the accounts of Blair Corporation
and its wholly owned subsidiaries. All significant intercompany accounts are
eliminated upon consolidation.

REVENUE RECOGNITION

Sales (cash, Blair credit, or third party credit card) are recorded when the
merchandise is shipped to the customer. Blair credit sales are made under Easy
Payment Plan sales arrangements. Monthly, a provision for potentially doubtful
accounts is charged against income based on management's estimate of
realization. Any recoveries of bad debts previously written-off are credited
back against the allowance for doubtful accounts in the period received. As
reported in the balance sheet, the carrying amount, net of allowances for
doubtful accounts and returns, for customer accounts receivable on Blair credit
sales, approximates fair value.

The Company records internally incurred shipping and handling costs in cost of
sales.

Finance charges on time payment accounts are recognized on an accrual basis of
accounting.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.

RETURNS

A provision for anticipated returns is recorded monthly as a percentage of gross
sales based upon historical experience. This provision is charged directly
against gross sales to arrive at net sales as reported in the consolidated
statements of income. Actual returns are charged against the allowance for
returns, which is netted against accounts receivable in the balance sheet. The
provision for returns charged against income in 2000, 1999, and 1998 amounted to
$84,955,671, $83,262,638, and $88,927,593, respectively. Management believes
these provisions are adequate based upon the relevant information presently
available. However, it is reasonably possible that the Company's provisions may
change in the near term.

DOUBTFUL ACCOUNTS

A provision for doubtful accounts is recorded monthly as a percentage of gross
credit sales based upon experience of delinquencies and charge-offs and current
credit market conditions. Management believes these provisions are adequate
based upon the relevant information presently available. However, it is
reasonably possible that the Company's provisions may change in the near term.

INVENTORIES

Inventories are valued at the lower of cost or market. Cost of merchandise
inventories is determined principally on the last-in, first-out (LIFO) method.
Cost of advertising and shipping supplies is determined on the first-in,
first-out (FIFO) method. Advertising and shipping supplies include printed
advertising material and related mailing supplies for promotional mailings,
which are generally scheduled to occur within two months. These costs are
expensed when mailed. If the FIFO method had been used, inventories would have
increased by approximately $6,717,000 and $7,869,000 at December 31, 2000 and
1999, respectively.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated on the basis of cost. Depreciation has
been provided principally by the straight-line method using rates, which are
estimated to be sufficient to amortize the cost of the assets over their period
of usefulness.

TRADEMARKS

Trademarks are stated on the basis of cost. All trademarks are being amortized
by the straight-line method for a period of 15 years. Amortization expense
amounted to $72,243 in 2000, 1999 and 1998.

EMPLOYEE BENEFITS

The Company's employee benefits include a profit sharing and retirement feature
available to all eligible employees. Contributions are dependent on net income
of the Company and recognized on an accrual basis of accounting. The
contributions to the plan charged against income in 2000, 1999, and 1998
amounted to $2,288,916, $1,630,652, and $2,371,992, respectively.

As part of the same benefit plan, the Company has a contributory savings feature
whereby all eligible employees may contribute up to 10% of their annual base
salaries. The Company's matching contribution to the plan is based upon a
percentage formula as set forth in the plan agreement. The Company's matching
contributions to the plan charged against income in 2000, 1999, and 1998
amounted to $2,004,930, $1,940,441, and $1,871,906, respectively.

INCOME TAXES

The liability method is used in accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax basis of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse.

FINANCIAL INSTRUMENTS

The carrying amounts of cash, customer accounts receivable, accounts payable,
and accrued liabilities approximate fair value due to the short-term maturities
of these assets and liabilities. The interest rates on the Company's revolving
credit facility are adjusted regularly to reflect current market rates.
Accordingly, the carrying amounts of the Company's borrowings also approximate
fair value.

NEW ACCOUNTING PRONOUNCEMENTS

Revenue Recognition in the Financial Statements

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements." This SAB
formalizes the SEC's position on application of revenue recognition rules. SAB
No. 101 was adopted by the Company in the fourth quarter of 2000 and did not
have a substantial effect on the Company.

Accounting for Derivative Instruments and Hedging Activities

The Financial Accounting Standards Board issued Statement No. 133, "Accounting
for Derivative Instruments and Hedging Activities." The Company will adopt the
new statement effective January 1, 2001. The Company has historically not
invested in derivative instruments, and as a result, the adoption of this
statement will have no impact on the financial statements of the Company.

CONTINGENCIES

The Company is involved in certain items of litigation, arising in the normal
course of business. While it cannot be predicted with certainty, management
believes that the outcome will not have a material effect on the Company's
financial condition or results of operations.

2. FINANCING ARRANGEMENTS

On November 13, 1998, the Company entered into an amended and restated
$95,000,000 Revolving Credit Facility, which expires on November 13, 2001. This
credit facility was amended subsequent to year-end. The interest rate is, at the
Company's option, based on a base rate option, swing loan rate option or
Euro-rate option as defined in the agreement. The Revolving Credit Facility is
unsecured and requires the Company to meet certain covenants as outlined in the
agreement. These covenants specifically relate to tangible net worth,
maintaining a defined leverage ratio, interest coverage ratio, and fixed charge
coverage ratio, and complying with certain indebtedness restrictions. As of
December 31, 2000 and 1999, the Company was in compliance with all the
agreement's covenants. At December 31, 2000 and 1999, the Company had borrowed
$25,000,000, and $21,800,000, respectively, of which $-0- and $10,000,000 was
classified as long-term, respectively.


10


<PAGE>   6


2. FINANCING ARRANGEMENTS (Continued)

Interest paid during 2000, 1999, and 1998 amounted to $1,835,120, $2,558,409,
and $2,030,379, respectively. The weighted average interest rate on average debt
outstanding was 7.07%, 5.77%, and 5.97% for the years ended December 31, 2000,
1999 and 1998, respectively.

Additionally, the Company has available a $25 million line for letters of
credit. Outstanding letters of credit amounted to approximately $14,850,000 at
December 31, 2000 and related primarily to inventory purchases.


3. ACCRUED EXPENSES

Accrued expenses consist of:
                                              2000               1999
                                          -----------        -----------
Employee compensation                     $ 9,476,660        $ 7,145,761
Contribution to Profit Sharing and
   Retirement Plan                          2,288,916          1,630,652
Taxes, other than taxes on income             745,312            285,775
Other accrued items                         1,778,430          1,680,357
                                          -----------        -----------
                                          $14,289,318        $10,742,545
                                          ===========        ===========


4. STOCK PLANS

EMPLOYEE STOCK PURCHASE PLAN

The Company has an Employee Stock Purchase Plan (Plan) (amended in 1992), which
provides for 400,000 shares of the Company's treasury stock to be reserved for
sale and issuance to employees at a price to be established by the Stock
Purchase Plan Committee. At December 31, 2000 and 1999, 1,698 and 43,850 shares,
respectively, were available to be issued under the Plan. The Company follows
APB Opinion No. 25, "Accounting for Stock Issued to Employees" and related
Interpretations and Statement of Financial Accounting Standard No. 123,
"Accounting for Stock-Based Compensation" (SFAS No. 123) in accounting for its
Employee Stock Purchase Plan. Compensation expense equals the difference between
the exercise price and the market price of the shares at the date of grant.
Compensation expense related to these awards amounted to $635,009, $804,506, and
$1,058,400 for the years ended December 31, 2000, 1999 and 1998, respectively. A
summary of the activity under the Plan is as follows:

                                         2000           1999       1998
                                      ----------     ---------   --------
Shares granted and issued             31,852 and       60,150     50,400
                                          14,000

Grant and issue price per share        $6.50 and        $6.50     $10.50
                                           $7.00

Market value per share
   at date of issue                  $20.063 and      $19.875     $31.50
                                         $21.500

Shares cancelled and forfeited             3,700        3,000      4,700

Original price per share                $6.50 to     $7.50 to   $7.50 to
                                          $13.00       $16.00     $16.00

Weighted average price per share           $9.70       $11.75     $11.75


OMNIBUS STOCK PLAN

During 2000, the Company adopted, with stockholder approval, an Omnibus Stock
Plan (Omnibus Plan) that provides for 750,000 shares of the Company's treasury
stock to be reserved for sale and issuance to employees at a price to be
established by the Omnibus Stock Plan Committee. At December 31, 2000, 714,600
shares were available to be issued under the Plan. The Company follows APB
Opinion No. 25, "Accounting for Stock Issued to Employees" and related
Interpretations and Statement of Financial Accounting Standard No. 123,
"Accounting for Stock-Based Compensation" (SFAS No. 123) in accounting for its
Omnibus Stock Plan. Compensation expense equals the difference between the
exercise price and the market price of the shares at the date of grant.
Compensation expense related to this award amounted to $480,130 for the year
ended December 31, 2000. A summary of the activity under the Plan is as follows:

                                  2000
                               -------
Shares granted and issued       35,400
Grant and issue price
   per share                     $6.50
Market value per share
   at date of issue            $20.063


5. OTHER INCOME

Other income consists of:

                                2000               1999               1998
                            -----------         -----------       -----------
Finance charges on time
   payment accounts         $37,270,749         $33,906,734       $34,006,347
Insurance proceeds                  -0-                 -0-         2,800,000
Miscellaneous                 7,522,083           6,779,461         7,055,973
                            -----------         -----------       -----------
                            $44,792,832         $40,686,195       $43,862,320
                            ===========         ===========       ===========


6. INCOME TAXES

The components of income tax expense are as follows:

                               2000                1999               1998
                           -----------          -----------        -----------
Currently payable:
   Federal                 $14,271,000          $ 9,710,000        $ 8,949,000
   State                       393,000              833,000            790,000
                           -----------          -----------        -----------
                            14,664,000           10,543,000          9,739,000
Deferred                    (2,478,000)          (1,691,000)         1,814,000
                           -----------          -----------        -----------
                           $12,186,000          $ 8,852,000        $11,553,000
                           ===========          ===========        ===========

The differences between total tax expense and the amount computed by applying
the statutory federal income tax rate of 35% to income before income taxes are
as follows:

                                   2000              1999              1998
                                -----------       ----------       -----------
Statutory rate applied to
   pretax income                $11,654,978       $8,457,641       $11,844,703
State income taxes, net
   of federal benefit               432,900          375,700           643,500
Non-taxable insurance
   proceeds                             -0-              -0-          (980,000)
Other items                          98,122           18,659            44,797
                                -----------       ----------       -----------
                                $12,186,000       $8,852,000       $11,553,000
                                ===========       ==========       ===========

Components of the deferred tax asset and liability under the liability method as
of December 31, 2000 and 1999 are as follows:

                                          2000          1999
                                       -----------   -----------
Current net deferred tax asset:
   Doubtful accounts                   $13,048,000   $ 9,142,000
   Returns allowance                     1,498,000     1,582,000
   Inventory obsolescence                2,386,000     1,551,000
   Inventory costs                      (2,085,000)   (1,166,000)
   Vacation pay                          1,408,000     1,440,000
   Advertising costs                    (5,011,000)   (4,412,000)
   Other items                             484,000     1,097,000
                                       -----------   -----------
                                       $11,728,000   $ 9,234,000
                                       ===========   ===========

Long-term deferred tax liability:
Property, plant and equipment          $ 1,146,000   $ 1,130,000
                                       ===========   ===========

Income taxes paid during 2000, 1999 and 1998 amounted to $6,972,690, $6,161,685
and $14,985,120, respectively.


7. BUSINESS SEGMENT AND CONCENTRATION
   OF BUSINESS RISK

The Company operates as one segment in the business of selling men's and women's
fashion wearing apparel and accessories and home furnishing items. The Company's
customer base is comprised of individuals throughout the United States and is
diverse in both geographic and demographic terms. Advertising is done mainly by
means of catalogs and direct mail letters, which offer the Company's
merchandise.

Sales of the men's and women's fashion wearing apparel and accessories accounted
for 86%, 86%, and 88% of total 2000, 1999, and 1998 sales, respectively. Home
products accounted for the remaining sales volume.


                                                                             11


<PAGE>   7


QUARTERLY RESULTS OF OPERATIONS

The following is a summary of unaudited quarterly results of operations for the
years ended December 31, 2000 and 1999.

<TABLE>
<CAPTION>
                                                     2000                                          1999
                                                Quarter Ended                                  Quarter Ended
                               March        June     September    December     March        June      September    December
                                31          30          30           31          31          30          30           31
                             ---------------------------------------------    ---------------------------------------------
                                                       (Thousands of dollars, except per share data)
<S>                         <C>         <C>         <C>          <C>         <C>         <C>         <C>          <C>
Net sales ...............    $130,064    $157,064    $115,183     $172,285    $122,023    $133,431    $111,652     $155,091
Cost of goods sold ......      64,034      77,373      57,530       83,075      62,274      68,656      59,992       78,538
Net income ..............       6,938       8,286        (773)       6,653       2,321       4,998        (732)       8,725
Basic and diluted
  earnings per share.....         .85        1.04        (.09)         .83         .27         .60        (.08)        1.05
</TABLE>



COMMON STOCK MARKET PRICES AND
DIVIDENDS DECLARED PER SHARE

The Company's Common Stock is traded on the American Stock Exchange (symbol BL).
The number of record holders of the Company's Common Stock at December 31, 2000
was 2,453.

<TABLE>
<CAPTION>
                                            2000                                          1999
                                Sales Price          Dividends                Sales Price           Dividends
                            High          Low        Declared              High          Low        Declared
<S>                      <C>           <C>          <C>                 <C>           <C>          <C>
First Quarter             $18.125       $12.563        $.15              $22.250       $15.250        $.15
Second Quarter             20.625        14.500         .15               27.500        15.563         .15
Third Quarter              25.375        17.125         .15               27.000        17.000         .15
Fourth Quarter             23.625        17.250         .15               18.250        12.500         .15
</TABLE>

The payment of dividends is not subject to any restrictions. The payment of
dividends is dependent on future earnings, capital requirements and financial
condition. The Company intends to continue its policy of paying regular cash
dividends; however, the Company will evaluate its dividend policy on an ongoing
basis.

SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
Year Ended December 31             2000                1999               1998               1997                1996
<S>                           <C>                 <C>                <C>                 <C>                <C>
Net sales                      $574,595,907        $522,197,334       $506,803,591        $486,581,737       $544,129,005
Net income                       21,104,444          15,312,689         22,289,008          13,253,928         14,726,221
Total assets                    356,506,152         312,954,542        346,012,722         309,497,568        368,757,108
Long-term debt                          -0-          10,000,000         30,000,000                 -0-         80,000,000
Per share:
   Basic and diluted
       earnings                        2.63               1.84                2.49                1.45               1.58
   Cash dividends declared              .60                .60                 .60                 .60               1.10
</TABLE>


12

<PAGE>   8


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

RESULTS OF OPERATIONS
--------------------------------------------------------------------------------
COMPARISON OF 2000 AND 1999

Net income for 2000 increased 38% as compared to 1999. The year 2000 was
favorably impacted by increased response rates, lower return levels and reduced
liquidation costs as compared to the year 1999. The year 2000 was negatively
impacted by an increased provision for doubtful accounts and by the costs
associated with the Company's expanding e-commerce initiatives and the start-up
of Crossing Pointe, our new women's apparel product line.

Net sales for 2000 were a new annual record and increased 10% from the net sales
for 1999. Overall, response rates were higher in 2000 than in 1999, but fell
below expected levels in the second half of 2000. Also, total advertising volume
was higher in 2000 than in 1999. Gross sales revenue generated per advertising
dollar increased 4.4% in 2000 as compared to 1999. The total number of orders
shipped increased significantly, while the average order size decreased slightly
in 2000 as compared to 1999. An increased level of prospecting for new customers
in 2000 affected the number and size of orders shipped. The provision for
returned merchandise as a percentage of gross sales decreased 6.4% in 2000 as
compared to 1999 primarily due to the Company's efforts to improve both product
development and product quality.

Other income increased approximately 10% in 2000 as compared to 1999. Increased
finance charges, resulting from higher Blair Easy Payment Plan credit sales and
accounts receivable, were primarily responsible for the increase in other income
in 2000.

Cost of goods sold as a percentage of net sales decreased to 49.1% in 2000 from
51.6% in 1999. Cost of goods sold in 2000 was favorably impacted by lower return
levels and reduced liquidation costs as compared to 1999.

Advertising expense in 2000 increased 4.4% from 1999. Increases in catalog and
letter-style mailings, the start-up of the Crossing Pointe product line and the
expansion of e-commerce initiatives were primarily responsible for the increased
advertising expense in 2000. Larger production runs have brought down the
average print cost for catalog and letter-style mailings and more than offset
the higher cost of paper in 2000. Improved predictive modeling techniques
applied to the Company's marketing database information helped make it possible
to increase response rates in 2000.

The total number of catalog mailings released in 2000 was 7.9% more than in 1999
(145.1 million vs. 134.5 million). Crossing Pointe print advertising is all via
catalog and is included in the catalog mailings number for 2000.

The total number of letter-style mailings released in 2000 was 8.5% more than in
1999 (90.9 million vs. 83.8 million). Letter mailings are most productive when
targeting the Company's female customers, and since mid-year 2000, have been
used only to promote our women's apparel lines.

Total volume of the co-op and media advertising programs decreased 8.6% in 2000
as compared to 1999 (1.22 billion vs. 1.34 billion). The Company has reduced the
volume primarily due to increased cost and/or lower response.

The Company launched e-commerce sites for Crossing Pointe and the Blair Online
Outlet early in the third quarter of 2000. The Blair website, www.blair.com, was
launched late third quarter/early fourth quarter of 2000 and included the Online
Outlet. A redesigned www.blair.com was introduced in the first quarter of 2001
and features improved navigation and quicker access to our expanded product
offerings.

General and administrative expense increased 14.7% in 2000 as compared to 1999.
The higher general and administrative expense was primarily the result of the
expansion of e-commerce, the start-up of Crossing Pointe and a 12.7% increase in
wages and benefits. The higher wages and benefits resulted from normal pay
increases, from new hires to help support our marketing strategy and increased
sales level and from increases in benefits tied to corporate income.

The provision for doubtful accounts as a percentage of credit sales increased
35.8% in 2000 as compared to 1999. The estimated provision for doubtful accounts
is based on current expectations (consumer credit and economic trends, etc...),
sales mix (prospect/customer) and current and prior years' experience,
especially delinquencies (accounts over 30 days past due) and actual charge-offs
(accounts removed from accounts receivable for non-payment). Prior to 1994,
actual charge-offs were consistently below delinquencies. In 1994, this trend
reversed itself - actual charge-offs started exceeding delinquencies, resulting
in additional provisions in 1995, 1996 and 1997. Once stronger credit controls
were implemented, provisions for doubtful accounts and actual charge-offs, as a
percentage of delinquencies, declined in 1998 and 1999. The estimated bad debt
rate used for 2000 was approximately 30% higher than the bad debt rate used for
1999. The estimated bad debt rate increased primarily due to a larger
credit-marketing program to prospects (new customers), a larger continuity sales
program and a slight deterioration in delinquency rates. At December 31, 2000,
the delinquency rate of open accounts receivable was 2.3% higher than at
December 31, 1999. The delinquency rate for established credit customers (95.3%
of open receivables at December 31, 2000 vs. 96.0% at December 31, 1999)
increased .2% and the delinquency rate for prospects increased 1.4%. The
charge-off rate for 2000 was 22% more than the charge-off rate for 1999,
primarily due to the expanded credit-marketing program to prospects. Recoveries
of bad debts previously charged off have been credited back against the
allowance for doubtful accounts. Credit granting, collection and behavior models
continue to be updated and improved, and, along with expanding database
capabilities, provide valuable credit-marketing opportunities.

Interest expense decreased 28% in 2000 as compared to 1999. Interest expense
results primarily from the Company's borrowings necessary to finance customer
accounts receivable and inventories. The purchase of Blair Common Stock from the
Estate of John L. Blair in the first half of 1999 and improved inventory and
accounts receivable turns in 2000 were primarily responsible for the reduction
in interest expense.


                                                                             13


<PAGE>   9


Income taxes as a percentage of income before income taxes were 36.6% in 2000
and in 1999. The federal income tax rate was 35% in both years.

COMPARISON OF 1999 AND 1998

Net income for 1999 was 31% lower than the net income for 1998. The year 1999
was negatively impacted by the disposition of excess inventory (approximately
$5.5 million pre-tax inventory write-down and increased volume of sale-priced
offerings) and by increased postage costs (approximately $3.9 million pre-tax).
These increased costs were primarily reflected in cost of goods sold and
advertising expense in 1999. The year 1998 included non-taxable, non-recurring
insurance proceeds of $2.8 million ($.31 per share).

Net sales for 1999 were 3.0% higher than net sales for 1998. Overall, response
rates were higher in 1999 than in 1998 - up for catalogs and circular letters
and lower for co-op and media. Response rates were above expected levels
especially in the fourth quarter of 1999. Gross sales revenue generated per
advertising dollar was approximately the same in both 1999 and 1998. The total
number of orders shipped and the average order size both increased slightly in
1999 as compared to 1998. The provision for returned merchandise as a percentage
of gross sales decreased approximately 8% in 1999 as compared to 1998 primarily
due to the Company's efforts to improve product quality.

Other income decreased 7.2% in 1999 as compared to 1998. The decrease in other
income was primarily the result of the non-recurring insurance proceeds of $2.8
million included in 1998's other income. The insurance proceeds were from the
Company-owned term life policy on John L. Blair, former President and Chairman
of the Company. Mr. Blair died on August 29, 1998.

Cost of goods sold as a percentage of net sales increased to 51.6% in 1999 from
49.7% in 1998. Cost of goods sold has been negatively impacted by the
disposition of excess inventory (approximately $5.5 million pre-tax inventory
write-down) and by increased shipping (postage) costs. Excess inventory had
resulted from the Company's transition to a larger catalog operation and lower
than expected response in the fourth quarter of 1998 and the first quarter of
1999.

Advertising expense in 1999 increased 2.0% from 1998. Increased catalog mailings
and postal rates more than offset decreased letter mailings and co-op and media
volume.

The total number of catalog mailings released in 1999 was 5% higher than in 1998
(134.5 million vs. 128.2 million). Catalog mailings from all three product
lines, including combined product line offerings, are continually reviewed as to
mailing frequency, page density, product content, number of pages and trim size.

The total number of letter mailings released in 1999 was 5% less than in 1998
(83.8 million vs. 88.5 million). Letter mailing volume has continued to decrease
due to the expansion of catalog advertising.

Total volume of the co-op and media advertising programs decreased 5% in 1999 as
compared to 1998 (1.34 billion vs. 1.41 billion). The Company reduced the volume
due to increased costs and/or lower response to the programs.

General and administrative expense increased .7% in 1999 as compared to 1998.
The higher general and administrative expense was primarily the result of an
increase in wages and benefits. The higher wages and benefits resulted from
normal pay increases and from new hires to help support our marketing strategy.

The provision for doubtful accounts as a percentage of credit sales was 8.2%
lower in 1999 as compared to 1998. The estimated provision for doubtful accounts
is based on current expectations (consumer credit and economic trends, etc...),
sales mix (prospect/customer) and current and prior years' experience,
especially delinquencies (accounts over 30 days past due) and actual charge-offs
(accounts removed from accounts receivable for non-payment). Prior to 1994,
actual charge-offs were consistently below delinquencies. In 1994, this trend
reversed itself - actual charge-offs started exceeding delinquencies, resulting
in additional provisions in 1995, 1996 and 1997. Now that stronger credit
controls have been implemented, provisions for doubtful accounts and
delinquencies as a percentage of actual charge-offs have been declining (1998
and 1999). The estimated bad debt rate used for 1999 was approximately 8% less
than the estimated bad debt rate used for 1998. At December 31, 1999, the
delinquency rate of open accounts receivable was 3% higher than at December 31,
1998. A larger credit-marketing program to prospects in 1999 caused the
delinquency rate to increase overall. The delinquency rate for established
credit customers was approximately 5% lower (96% of open receivables in 1999,
98% in 1998) while the delinquency rate for prospects increased 27%. The
charge-off rate for 1999 was 18% less than the charge-off rate for 1998.
Recoveries of bad debts previously charged off have been credited back against
the allowance for doubtful accounts. Credit granting, collection and behavior
models continue to improve and, along with expanding database capabilities,
provide valuable credit marketing opportunities.

Interest expense increased 21% in 1999 as compared to 1998. Interest expense
results primarily from the Company's borrowings necessary to finance customer
accounts receivable and inventories. Higher inventory levels and the repurchase
of Blair Common Stock from the Estate of John L. Blair during the first half of
1999 were responsible for the increased level of interest expense.

Income taxes as a percentage of income before income taxes were 36.6% in 1999
and 34.1% in 1998. The federal income tax rate was 35% in both years. The total
tax rate in 1998 was lower due to the non-taxable insurance proceeds
($2,800,000).

LIQUIDITY AND SOURCES OF CAPITAl

All working capital and cash requirements for the year 2000 were met. In
November 1998, the Company entered into an amended and restated $95,000,000
Revolving Credit Facility, which expires on November 13, 2001. The credit
facility was amended subsequent to year- end. This unsecured Revolving Credit
Facility requires the Company to meet certain covenants and as of December 31,
2000 the Company was in compliance with all the covenants. Borrowings
outstanding at December 31, 2000 were $25,000,000, all classified as current.
Borrowings outstanding at December 31, 1999 were $21,800,000 of which
$10,000,000 was classified as long-term.

The ratio of current assets to current liabilities was 2.55 at December 31,
2000, 3.41 at December 31, 1999 and 3.37 at December 31, 1998. Working capital
decreased $3,628,282 in 2000 primarily due to the reduction of long-term debt.
The 2000 decrease was primarily reflected in increased notes payable and trade
accounts payable more than offsetting increased inventories. Working capital
decreased


14




<PAGE>   10


$21,530,714 in 1999 primarily due to the reduction of long- term debt and the
purchase of Common Stock for treasury from the Estate of John L. Blair. The 1999
decrease was primarily reflected in decreased inventories more than offsetting
decreased notes payable.

Merchandise inventory turnover was 2.8 in 2000, 2.5 in 1999 and 2.4 in 1998.
Merchandise inventory as of December 31, 2000 increased 39% from December 31,
1999 and decreased 7% from December 31, 1998. Inventory turnover has improved
due to the Company's movement of excess inventory in 1999 and better than
expected response rates in the fourth quarter of 1999 and the first six months
of 2000. Inventory levels increased in the last six months of 2000 as compared
to December 31, 1999 due to lower than expected response rates in the second
half of 2000 and the start up of new catalogs in 2000 and early 2001.

An operating segment is identified as a component of an enterprise for which
separate financial information is available for evaluation by the chief decision
maker, or decision-making group, in deciding on how to allocate resources and
assess performance. The Company operates as one business segment consisting of
four product lines. The fourth product line, Crossing Pointe, was added in the
third quarter of 2000 and is expected to become a significant revenue source
over the next few years. Home Products net sales as a percentage of total net
sales were 14.5% ($83.3 million) in 2000, 14.9% ($77.8 million) in 1999 and
13.9% ($70.3 million) in 1998. Menswear net sales as a percentage of total net
sales were 20.5% ($117.6 million) in 2000, 23.3% ($121.8 million) in 1999 and
24.0% ($121.6 million) in 1998. Womenswear net sales as a percentage of total
net sales were 64.3% ($369.7 million) in 2000, 61.8% ($322.6 million) in 1999
and 62.1% ($314.9 million) in 1998. Crossing Pointe net sales as a percentage of
total net sales were .7% ($4.0 million), all in the second half of 2000. Home
Products merchandise inventory totaled $17.1 million at December 31, 2000, $11.3
million at December 31, 1999 and $18.2 million at December 31, 1998. Menswear
inventory was $20.7 million at December 31, 2000, $16.9 million at December 31,
1999 and $26.6 million at December 31, 1998. Womenswear inventory was $54.3
million at December 31, 2000, $40.2 million at December 31, 1999 and $57.4
million at December 31, 1998. Crossing Pointe merchandise inventory totaled $2.8
million at December 31, 2000.

The Company looks upon its credit granting (Blair Credit) as a marketing
advantage. In the early 1990's, the Company started extending revolving credit
to first-time (prospect) buyers. Blair Credit was offered only to established
customers prior to that time. Prospects responded. This led to a broad offering
of pre-approved lines of credit to prospects in 1995 and 1996. Sales, accounts
receivable and bad debts expectedly increased. However, as the receivables aged,
bad debts greatly exceeded expected levels. The Company recognized that it
didn't have all the necessary credit controls in place and put a hold (second
quarter of 1996) on pre-approved credit offers and reviewed and strengthened
(mid-1996 and on) credit controls. Blair Credit customers, on average, buy more,
buy more often and are more loyal than cash and credit card customers. The
benefit from the increased sales volume achieved by offering Blair Credit is
significant and more than outweighs the cost of the credit program. The cost
and/or contribution of the credit program itself can be quickly assessed by
comparing finance charges (included in other income) to the provision for
doubtful accounts. For 2000, finance charges were $37,270,749 and the provision
for doubtful accounts was $35,932,526 (net of $1,338,223). For 1999, finance
charges were $33,906,734 and the provision for doubtful accounts was $22,468,075
(net of $11,438,659). For 1998, finance charges were $34,006,347 and the
provision for doubtful accounts was $22,033,466 (net of $11,972,881). The quick
assessment for 2000 was negatively impacted by a 60% increase in prospect credit
sales, which carry a higher bad debt rate, as compared to 1999. The assessments
do not take into consideration the administrative cost of the credit program
(included in general and administrative expense), the cost of money and the
impact on sales. The Company's gross credit sales increased 17.7% in 2000 as
compared to 1999, increased 10.4% in 1999 as compared to 1998 and decreased 1.8%
in 1998 as compared to 1997.

The Company has added new facilities, modernized its existing facilities and
acquired new cost-saving equipment during the last several years. Capital
expenditures for property, plant and equipment totaled $12,934,793, $3,842,522
and $1,008,218 during 2000, 1999 and 1998. Capital expenditures are projected to
be $15 million plus for each of the years 2001 and 2002 and nearly $10 million
for 2003. The increased capital expenditures in 2000 resulted primarily from
developing our own e-commerce sites, developing a new product line and
installing new financial and operational software systems. Capital expenditures
in 2001, 2002 and 2003 will result primarily from updating and redesigning our
e-commerce sites, maintaining higher inventory levels, expanding database
capabilities, developing new product lines, expanding customer service
capabilities and expanding fulfillment capabilities. The Company recently
announced that it will invest nearly $23 million over the next 18 months to
modernize and enhance its fulfillment capabilities and capacity.

The Company recently declared a quarterly dividend of $.15 per share payable on
March 15, 2001. It is the Company's intent to continue paying dividends;
however, the Company will evaluate its dividend practice on an ongoing basis.
See "Future Considerations."

The Company has, from the fourth quarter of 1996 through the year 2000,
repurchased a total of 1,620,940 shares of its Common Stock - 864,720 shares
purchased on the open market and 756,220 shares from the Estate of John L.
Blair. In 1999, the Company purchased the 756,220 shares from the Estate of John
L. Blair (500,000 in January, 100,000 in April and 156,220 in May) and 51,907
shares on the open market (November and December). In 2000, the Company
purchased 268,704 shares on the open market. The reduction in shares
outstanding, due to the repurchase of shares for treasury, caused earnings per
share to increase by approximately $.08 in 2000.

Future cash needs will be financed by cash flow from operations, the current
borrowing arrangement and, if needed, other financing arrangements that may be
available to the Company. The Company intends to renew its current borrowing
arrangement, which expires in November 2001, in the same or similar form. The
Company's current projection of future cash requirements, however, may be
affected in the future by numerous factors, including changes in customer
payments on accounts receivable, consumer credit industry trends, sales volume,
operating cost fluctuations, revised capital spending plans and unplanned
capital spending.

IMPACT OF INFLATION AND CHANGING PRICES

Although inflation has moderated in our economy, the Company is continually
seeking ways to cope with its impact.

                                                                             15


<PAGE>   11



To the extent permitted by competition, increased costs are passed on to
customers by selectively increasing selling prices over a period of time. Profit
margins have been pressured by paper cost and postal rate increases. Paper
prices were higher in 1998 than in 1997, lower in 1999 than in 1998, again
higher in 2000 than in 1999 and fairly stable at this time. Postal rates
increased on January 10, 1999 and the Company estimates that its 1999 postage
bill increased by 4.7% (approximately $3.9 million pre-tax). Postal rates
increased again on January 7, 2001 and could increase again as early as the fall
of 2002.

The Company principally uses the LIFO method of accounting for its merchandise
inventories. Under this method, the cost of products sold reported in the
financial statements approximates current costs and thus reduces distortion in
reported income due to increasing costs. The charges to operations for
depreciation represent the allocation of historical costs incurred over past
years and are significantly less than if they were based on the current cost of
productive capacity being used.

Property, plant and equipment are continuously being expanded and updated. Major
projects are discussed under Liquidity and Sources of Capital. Assets acquired
in prior years will, of course, be replaced at higher costs but this will take
place over many years. New assets, when acquired, will result in higher
depreciation charges, but in many cases, due to technological improvements,
savings in operating costs should result.

ACCOUNTING PRONOUNCEMENTS

In June 1998, Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities," was issued. Statement No.
133 provides new guidelines for accounting for derivative instruments and
requires companies to recognize all derivatives on the balance sheet at fair
value. Gains or losses resulting from changes in the values of the derivatives
would be accounted for depending on the use of the derivative and whether it
qualifies for hedge accounting. The Company will adopt Statement No. 133
effective January 1, 2001. The Company believes that adoption of Statement No.
133 will not have an impact on the financial statements of the Company, as the
Company has historically not invested in derivative instruments.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements." Bulletin
No. 101 formalizes the SEC's position on application of revenue recognition
rules. The Company adopted Bulletin No. 101 in the fourth quarter of 2000 and
the adoption did not have a substantial effect on the Company's financial
statements.

FUTURE CONSIDERATIONS

The Company is faced with the ever-present challenge of maintaining and
expanding the customer file. This involves the acquisition of new customers
(prospects), the conversion of new customers to established customers (active
repeat buyers) and the retention and/or reactivation of established customers.
These actions are vital in growing the business but are being impacted by
increased operating costs, a declining labor pool, increased competition in the
retail sector, high levels of consumer debt and varying consumer response rates.

The Company's marketing strategy includes targeting customers in the "40 to 60,
low-to-moderate income" market and in the "60+, low-to-moderate income" market.
The "40 to 60" market is the fastest growing segment of the population. Success
of the Company's marketing strategy requires investment in database management,
financial and operating systems, prospecting programs, catalog marketing, new
product lines, telephone call centers, e-commerce and fulfillment capabilities
and capacity. Management believes that these investments should improve Blair
Corporation's position in new and existing markets and provide opportunities for
future earnings growth.

IMPACT OF YEAR 2000

The Company has not experienced any disruptions of its business operations due
to the Year 2000 Issue. Minor computer system problems were corrected over the
New Year's holiday weekend. No problems have occurred in our dealings with our
suppliers. The absence of Year 2000 problems to date doesn't guarantee that a
problem or problems couldn't arise in the future. The total Year 2000 project
cost the Company $825,000, all of which was expensed as incurred.

SAFE HARBOR STATEMENT UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

Forward-looking statements in this Annual Report, including without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to the
Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
Words such as "believes," "anticipates," "plans," "expects," and similar
expressions are intended to identify forward-looking statements. Any statements
contained in this report that are not statements of historical fact may be
deemed to be forward-looking statements. Such forward-looking statements are
included in, but not limited to, the following sections of the report:

     o    The Message to Shareholders.

     o    The paragraph on the provision for doubtful accounts in the Results of
          Operations, Comparison of 2000 and 1999.

     o    The Paragraph on the provision for doubtful accounts in the Results of
          Operations, Comparison of 1999 and 1998.

     o    The last sentence (Inventory levels have increased...) of the
          paragraph on merchandise inventory in Liquidity and Sources of
          Capital.

     o    The third sentence (The fourth product line, Crossing Pointe...) of
          the paragraph on operating segment in Liquidity and Sources of
          Capital.

     o    The paragraph on credit granting as a marketing advantage in Liquidity
          and Sources of Capital.

     o    The paragraph on capital expenditures in Liquidity and Sources of
          Capital.

     o    The second sentence (the Company's intent to...)of the paragraph on
          recently declared dividend in Liquidity and Sources of Capital.

     o    The paragraph on future cash needs in Liquidity and Sources of
          Capital.

     o    The Impact of Inflation and Changing Prices.

     o    Future Considerations.

Investors are cautioned that such forward-looking statements involve risks and
uncertainties including without limitation the following: (i) the Company's
plans, strategies, objectives, expectations and intentions are subject to change
at any time at the discretion of the Company; (ii) the Company's plans and
results of operations will be affected by the Company's ability to manage its
growth, accounts receivable and inventory; and (iii) other risks and
uncertainties indicated from time to time in the Company's filings with the
Securities and Exchange Commission.



16

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>3
<FILENAME>j8679401ex21.txt
<DESCRIPTION>SUBSIDIARIES OF BLAIR CORPORATION
<TEXT>

<PAGE>   1
                                                                      EXHIBIT 21




                       SUBSIDIARIES OF BLAIR CORPORATION

Blair Holdings Incorporated (a Delaware corporation)
Allegheny Woodlands Factoring Company (a Delaware corporation)
Blair Payroll LLC (a Delaware corporation)
Allegheny Woodlands Credit Services Corp. (a Delaware corporation)
Blair International Holding, Inc. (a Delaware corporation)
Blair International Limited (a Hong Kong corporation)
Blair International Singapore Pte. Ltd. (a Singapore corporation)


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>4
<FILENAME>j8679401ex23.txt
<DESCRIPTION>CONSENT OF INDEPENDENT AUDITORS
<TEXT>

<PAGE>   1
                                                                      EXHIBIT 23


                         CONSENT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
Blair Corporation

We consent to the incorporation by reference in this Form 10-K of Blair
Corporation and Subsidiaries of our report dated February 7, 2001, included in
the 2000 Annual Report to Stockholders of Blair Corporation.

Our audits also included the financial statement schedule of Blair Corporation
and Subsidiaries listed in Item 14(a). This schedule is the responsibility of
Blair Corporation's management. Our responsibility is to express an opinion
based on our audits. In our opinion, the financial statement schedule referred
to above, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.

We also consent to the incorporation by reference in the Registration Statement
on Form S-8 dated July 19, 2000, pertaining to the Blair Corporation Employee
Stock Purchase Plan and in the Registration Statement on Form S-8 dated July 19,
2000, pertaining to the Blair Corporation 2000 Omnibus Stock Plan, of our report
dated February 7, 2001, with respect to the consolidated financial statements
incorporated herein by reference, and our report included in the preceding
paragraph with respect to the financial statement schedule included in this Form
10-K of Blair Corporation.

                                                           /s/ ERNST & YOUNG LLP

Buffalo, New York
March 15, 2001
</TEXT>
</DOCUMENT>
</SUBMISSION>
