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The New York Yankees` worst fears were realized when an extensive examination showed Pascual Perez would need shoulder surgery and probably will miss the rest of the season.

Perez underwent an arthroscopic exam on Wednesday afternoon, and Yankee team physician Dr. Stuart Hershon told the 33-year-old pitcher Wednesday night that he would have to undergo arthroscopic surgery on his right shoulder.

”I`ll miss the whole season,” said Perez, who signed a three-year, $5.7-million deal during the winter. ”I don`t know what I can do. I have no choice. If I continue to throw like that, there would be more damage.”

Asked if he was disappointed, Perez quietly said, ”Yep. Big time.”