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

                                    FORM 10-Q

(Mark One)

(X)  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
For the quarterly period ended January 31, 1999
                               ----------------
                                       or
( )  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from ___________________to___________________

                         Commission File Number: 1-9474

                            FORSTMANN & COMPANY, INC.
              -----------------------------------------------------
             (Exact name of registrant as specified in its charter)

                 GEORGIA                                58-1651326
       ------------------------------                 --------------------
      (State or other jurisdiction of                 (I.R.S. Employer
       incorporation or organization)                  Identification No.)

  498 Seventh Avenue, New York, New York                     10018
----------------------------------------                   ----------
(Address of principal executive offices)                   (Zip Code)

(Registrant's telephone number, including area code)     (212) 642-6900
                                                         --------------
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.       (X) Yes   ( )No

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be  filed by  Section  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.    (X)Yes    (  )No

As of March 15, 1999, there was 4,391,458 shares of Common Stock outstanding.

Total number of pages: 22 pages.
<PAGE>
PART I -- FINANCIAL INFORMATION

Item 1.  Financial Statements
<TABLE>
                            FORSTMANN & COMPANY, INC.
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
           THIRTEEN WEEKS ENDED JANUARY 31, 1999 AND FEBRUARY 1, 1998
                                   (unaudited)


                                                                                            January 31,                 February 1,
                                                                                               1999                        1998
                                                                                               ----                        ----

<S>                                                                                        <C>                         <C>         
Net sales                                                                                  $ 18,498,000                $ 29,017,000

Cost of goods sold                                                                           19,052,000                  25,705,000
                                                                                           ------------                ------------

Gross profit (loss)                                                                            (554,000)                  3,312,000

Selling, general and administrative expenses                                                  3,395,000                   3,590,000

Provision for uncollectible accounts                                                            121,000                     224,000

Restructuring items                                                                           1,185,000                        --
                                                                                           ------------                ------------

Operating loss                                                                               (5,255,000)                   (502,000)

Interest expense                                                                              1,407,000                   1,540,000
                                                                                           ------------                ------------

Loss before reorganization items and
  income taxes                                                                               (6,662,000)                 (2,042,000)

Reorganization items                                                                             14,000                      20,000
                                                                                           ------------                ------------

Loss before income taxes                                                                     (6,676,000)                 (2,062,000)

Income tax benefit                                                                                 --                      (804,000)
                                                                                           ------------                ------------

Net loss                                                                                   $ (6,676,000)               $ (1,258,000)
                                                                                           ============                ============

Per share and share information:
  Loss per common share - basic and diluted                                                $      (1.52)               $       (.29)
                                                                                           ============                ============

Weighted average common shares outstanding                                                    4,387,819                   4,384,436
                                                                                           ============                ============

See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
                            FORSTMANN & COMPANY, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      JANUARY 31, 1999 AND NOVEMBER 1,1998
                                   (unaudited)

                                                                                                January 31,             November 1,
                                                                                                   1999                    1998
                                                                                                   ----                    ----
<S>                                                                                          <C>                      <C>
ASSETS
Current Assets:
  Cash                                                                                         $     40,000            $    143,000
  Cash restricted for settlement of unpaid claims                                                   328,000                 327,000
  Accounts receivable, net of allowance of
    $1,430,000 and $1,309,000                                                                    20,709,000              31,434,000
  Inventories                                                                                    39,647,000              38,818,000
  Current deferred tax assets                                                                          --                      --
  Other current assets                                                                              254,000                 281,000
  Property, plant and equipment
    held for sale                                                                                 6,530,000                    --
                                                                                               ------------            ------------
    Total current assets                                                                         67,508,000              71,003,000

Property, plant and equipment, net                                                               15,375,000              22,235,000
Other assets                                                                                      2,016,000               2,005,000
                                                                                               ------------            ------------
    Total                                                                                      $ 84,899,000            $ 95,243,000
                                                                                               ============            ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current maturities of long-term debt                                                         $ 47,131,000            $  7,619,000
  Accounts payable                                                                                3,920,000               3,151,000
  Accrued liabilities                                                                             7,973,000               9,238,000
                                                                                               ------------            ------------
    Total current liabilities                                                                    59,024,000              20,008,000

Long-term debt                                                                                      865,000              43,565,000
Deferred tax liabilities                                                                               --                      --
                                                                                               ------------            ------------
    Total liabilities                                                                            59,889,000              63,573,000

Commitments and contingencies

Shareholders' Equity:
  Preferred stock, $0.01 per value, 1,000,000
    shares authorized, nil outstanding                                                                 --                      --
  Common stock, $.01 par value, 35,000,000
    shares authorized, 4,391,458 and 4,387,819 shares issued
    and outstanding                                                                                  43,915                  43,878
  Additional paid-in capital                                                                     50,339,085              50,323,122
  Retained deficit since July 23, 1997                                                          (25,373,000)            (18,697,000)
                                                                                               ------------            ------------
    Total shareholders' equity                                                                   25,010,000              31,670,000
                                                                                               ------------            ------------
    Total                                                                                      $ 84,899,000            $ 95,243,000
                                                                                               ============            ============
See notes to condensed consolidated financial statements 
</TABLE>
<PAGE>
<TABLE>
                            FORSTMANN & COMPANY, INC.
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
           THIRTEEN WEEKS ENDED JANUARY 31, 1999 AND FEBRUARY 1, 1998
                                   (unaudited)

                                                                                             January 31,                 February 1,
                                                                                                1999                        1998
                                                                                                ----                        ----

<S>                                                                                         <C>                        <C>          
Net loss                                                                                    $ (6,676,000)              $ (1,258,000)
                                                                                            ------------               ------------
Adjustments to reconcile net loss to net
  cash provided (used) by operating activities:
    Depreciation and amortization                                                              1,162,000                  1,335,000
    Income tax not payable in cash                                                                  --                     (804,000)
    Income tax payments                                                                          (32,000)                      --
    Provision for uncollectible accounts                                                         121,000                    224,000
    Increase (decrease) in market reserves                                                      (626,000)                    34,000
    Gain from disposal of machinery and equipment                                                   --                       (1,000)
     Other                                                                                        74,000                       --
    Changes in current assets and current
      liabilities:
        Accounts receivable                                                                   10,604,000                  7,018,000
        Inventories                                                                             (261,000)               (13,707,000)
        Other current assets                                                                      59,000                    351,000
        Accounts payable                                                                         769,000                   (207,000)
        Accrued liabilities                                                                   (1,648,000)                (2,543,000)
        Accrued interest payable                                                                 383,000                     31,000
                                                                                            ------------               ------------

  Total adjustments                                                                           10,605,000                 (8,269,000)
                                                                                            ------------               ------------

    Net cash provided (used) by operations                                                     3,929,000                 (9,527,000)
                                                                                            ------------               ------------


</TABLE>
                            (continued on next page)
<PAGE>
<TABLE>
                            FORSTMANN & COMPANY, INC.
       CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) FOR THE
           THIRTEEN WEEKS ENDED JANUARY 31, 1999 AND FEBRUARY 1, 1998
                                   (unaudited)

                                                                                              January 31,               February 1,
                                                                                                 1999                      1998
                                                                                                 ----                      ----
<S>                                                                                         <C>                       <C>
Cash flows used by investing activities:
  Capital expenditures                                                                       $   (618,000)             $   (340,000)
  Investment in other assets                                                                     (208,000)                 (189,000)
  Net proceeds from disposal of machinery
    and equipment                                                                                  21,000                     1,000
                                                                                             ------------              ------------

    Net cash used by investing activities                                                        (805,000)                 (528,000)
                                                                                             ------------              ------------

Cash flows from financing activities:
  Net borrowings (repayments) under the
    Revolving Loan Facility                                                                    (1,732,000)               12,587,000
  Repayment of Term Loan Facility                                                              (1,123,000)               (1,123,000)
  Repayment of Deferred Interest Rate Notes                                                          --                  (1,570,000)
  Repayment of other financing arrangements                                                      (333,000)                 (259,000)
  Deferred financing costs                                                                        (38,000)                  (23,000)
                                                                                             ------------              ------------

    Net cash provided (used) by financing activities                                           (3,226,000)                9,612,000
                                                                                             ------------              ------------

Net decrease in cash                                                                             (102,000)                 (443,000)

Cash and restricted cash at beginning of period                                                   470,000                 1,051,000
                                                                                             ------------              ------------

Cash and restricted cash at end of period                                                    $    368,000              $    608,000
                                                                                             ============              ============


See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
                            FORSTMANN & COMPANY, INC.
                   CONDENSED CONSOLIDATED STATEMENT OF CHANGES
                             IN SHAREHOLDERS' EQUITY
                  FOR THE THIRTEEN WEEKS ENDED JANUARY 31, 1999
                                   (unaudited)

                                                                       Additional                                      Total
                                                     Common             Paid-In                Retained             Shareholders'
                                                     Stock              Capital                 Deficit               Equity
                                                     -----              -------                 -------               ------
<S>                                                <C>              <C>                    <C>                    <C>         
Balance, November 1, 1998                           $43,878          $ 50,323,122           $(18,697,000)          $ 31,670,000

Director shares awarded                                  37                15,963                  --                    16,000
 
Net loss                                                --                    --              (6,676,000)            (6,676,000)
                                                    -------          ------------           ------------           ------------

Balance, January 31, 1999                           $43,915          $ 50,339,085           $(25,373,000)          $ 25,010,000
                                                    =======          ============           ============           ============


See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
                            FORSTMANN & COMPANY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 1999
                                   (unaudited)


1.       Forstmann  &  Company,  Inc.  ("the  Company")  is a leading  designer,
         marketer and manufacturer of innovative,  high quality woolen,  worsted
         and  other  fabrics  which  are used  primarily  in the  production  of
         brand-name  and private  label  apparel  for men and women,  as well as
         specialty  fabrics for use in billiard and gaming  tables,  sports caps
         and school uniforms.  The apparel  industry  represents the majority of
         the Company's customers. Through its wholly-owned subsidiary, Forstmann
         Apparel,  Inc.  ("FAI"),  the Company designs and markets women's suits
         primarily   under  the  "Oleg   Cassini"   label.   FAI  contracts  the
         manufacturing  of  women's  suits  through  manufacturers  based in the
         Caribbean and sources complete apparel packages internationally.

2.       As  described  in  Note  1 to  the  Consolidated  Financial  Statements
         contained in the  Company's  Annual  Report on Form 10-K for the fiscal
         year ended  November  1, 1998 (the "1998 Form  10-K"),  the Company has
         incurred net losses of $19.0 million, $7.0 million and $17.8 million in
         fiscal years 1998, 1997 and 1996, respectively. Net sales declined from
         $199.0  million in fiscal  year 1997 to $149.6  million in fiscal  year
         1998.  Management  has responded to these losses,  the decline in sales
         and  the  resulting  adverse  impact  on  the  Company's  liquidity  by
         implementing   a  business   plan   designed  to  align  the  Company's
         manufacturing  capacity and overhead with expected  market  demand.  In
         October 1998, the Company's Board of Directors  approved the closing of
         its Louisville,  Georgia plant,  realignment of the Company's remaining
         manufacturing  facilities  located in Georgia and further reductions of
         its selling, styling and administrative costs (the "1999 Realignment").
         Implementation of the 1999 Realignment was substantially complete as of
         January  31,  1999.  As a result of the 1999  Realignment,  the Company
         incurred  approximately  $1.2  million in severance  expense  which was
         recognized  as a  restructuring  item during the  thirteen  week period
         ended January 31, 1999 (the "1999 First Quarter"). Further, the Company
         incurred  costs of  approximately  $0.1  million  during the 1999 First
         Quarter  related to the relocation of certain  machinery and equipment.
         Such  costs were  charged  to cost of goods sold  during the 1999 First
         Quarter.

         The  operating  results  for fiscal  year 1998,  the effect of the 1998
         Restructuring,  and the  1999  Realignment  and the  formation  of FAI,
         including the purchase of  substantially  all of the assets of Arenzano
         (see  Note 4 to the 1998  Form  10-K),  have  negatively  impacted  the
         Company's  borrowing  availability  under its  Revolving  Loan Facility
         (hereinafter  defined).  The Company's availability under its Revolving
         Loan  Facility  was  approximately  $1.6 million at January 31, 1999 as
         compared to $21.7  million at February 1, 1998. As of February 28, 1999
         borrowing  availability  under the  Revolving  Loan  Facility  was $2.0
         million.  The Company's  ability to maintain  adequate  availability to
         meet its operating needs and to fund the 1999  Realignment is dependent
         on achieving future sales consistent with management's expectations for
         fiscal year 1999 and successful  implementation of its cost reductions.
         The majority of the  Company's  customers  are in the domestic  apparel
         industry which has continued to suffer an economic  decline as a result
         of higher  levels of imports  and  changing  fashion  trends.  If these
         trends  continue,  the  Company's  results of opertaion  and  financial
         condition  will continue to  deteriorate,  likely at a faster rate than
         previously experienced. Expected cash flow from operations is dependent
         upon achieving sales  expectations  during fiscal year 1999,  which are
         influenced by market conditions,
<PAGE>
         including  apparel sales at retail,  that are beyond the control of the
         Company.   Further,   the  collectibility  of  accounts  receivable  is
         dependent  upon the  state  of the  economy  and,  in  particular,  the
         financial   condition  of  the  apparel  industry.   Also,   continuing
         refinement  of  the  Company's   strategies  in  response  to  evolving
         circumstances could materially change the Company's working capital and
         capital expenditures  requirements.  There can be no assurance that the
         Company will be able to achieve an adequate  level of sales  consistent
         with  management's  expectations  for  fiscal  year 1999 to enable  the
         Company to generate  sufficient funds to meet its operating needs or to
         fund its 1999 Realignment.  Further, there can be no assurance that the
         1999 Realignment will be successfully implemented.  These factors raise
         substantial  doubt about the  Company's  ability to continue as a going
         concern.  The financial  statements do not include any adjustments that
         might result from the outcome of these uncertainties.

3.       One of the Company's  customers  accounted for approximately 18% of the
         Company's revenues for the 1999 First Quarter and 17% of gross accounts
         receivable at January 31, 1999. This customer has indicated that due to
         general,  adverse trends in the apparel industry,  it desires to reduce
         the  amount  of its  orders to the  Company  significantly  during  the
         remainder of fiscal year 1999. Two other individual customers accounted
         for  approximately  13% and 11% of the Company's  revenues for the 1999
         First Quarter.  No other customer  represented more than 8% of revenues
         for the 1999  First  Quarter  or 8% of  gross  accounts  receivable  at
         January 31, 1999.

4.       Inventories are stated at the lower of cost, determined  principally by
         the LIFO method, or market and consist of (in thousands):

                                              January 31,    November 1,
                                                 1999           1998
                                                 ----           ----
            Raw materials and supplies        $  8,665       $ 10,218
            Work in process                     22,423         19,390
            Finished products                   11,054         12,331
            Less market reserves                (2,495)        (3,121)
                                              --------       --------
            Total                               39,647         38,818
            Difference between LIFO
              carrying value and current
              replacement cost                    --             --
                                              --------       --------
            Current replacement cost          $ 39,647       $ 38,818
                                              ========       ========

5.     The  Company  had  property,  plant and  equipment  held for sale of $6.5
       million as of January 31, 1999 which related to assets  previously  idled
       in connection with the 1998  Restructuring and 1999 Realignment (see Note
       1 to the 1998 Form 10-K and Note 2 to these Financial  Statements).  Such
       assets are stated at fair value,  based on appraised values, and will not
       be depreciated in future periods.
<PAGE>
6.     Other assets consist of (in thousands):

                                              January 31,    November 1,
                                                 1999           1998
                                                 ----           ----
            Computer information systems,
              net of accumulated amortization
              of $166 and $93                  $ 1,032        $   909
            Deferred financing costs, net of
              accumulated amortization of
              $901 and  $744                       967          1,086
            Other, net                              17             10
                                               -------        -------
            Total                              $ 2,016        $ 2,005
                                               =======        =======

7. Accrued liabilities consist of (in thousands):
                                              January 31,    November 1,
                                                 1999           1998
                                                 ----           ----
        Salaries, wages and related
          payroll taxes                         $  642         $  606
        Incentive compensation                     139            290
        Vacation and holiday                     1,238          1,243
        Interest on long-term debt                 526            143
        Medical insurance premiums               1,410          1,416
        Professional fees                           65            105
        Environmental remediation                  278            292
        Loss on open wool purchase 
          commitments                              469          1,537
        Restructuring items                      2,413          1,796
        Other                                      793          1,810
                                                ------         ------
        Total                                   $7,973         $9,238
                                                ======         ======

8. Long-term debt consists of (in thousands):
                                              January 31,    November 1,
                                                 1999           1998
                                                 ----           ----
       Revolving Loan Facility                $ 26,176       $ 27,908
       Term Loan Facility                       19,220         20,343
       Other note                                  325            374
       Capital lease obligations                 1,681          1,890
       Licensing agreement                         594            669
                                              --------       --------
       Total debt                               47,996         51,184
       Current portion of long-term debt       (47,131)        (7,619)
                                              --------       --------
       Total long-term debt                   $    865       $ 43,565
                                              ========       ========

       Reference  is  made to Note 9 to the  Consolidated  Financial  Statements
       contained in the 1998 Form 10-K.  On July 23, 1997,  the Company  entered
       into  the Loan and  Security  Agreement  with a  syndicate  of  financial
       institutions   led  by  BABC.  The  Loan  and  Security   Agreement,   as
       subsequently amended,  provides for a revolving line of credit (including
       a $15.0 million letter of credit  facility),  subject to a borrowing base
       formula,  of up to $70 million (the  "Revolving  Loan Facility") and term
       loans of approximately $31.5 million (the "Term Loan Facility").
<PAGE>
       As of February 8, 1999, the Company and its lenders  amended the Loan and
       Security  Agreement,  waived certain financial  covenant defaults arising
       from the  Company's  financial  results for fiscal  year 1998 and,  among
       other things, set new financial  covenants for fiscal year 1999. However,
       there can be no  assurance  that the Company  will be able to achieve the
       amended  financial  covenants during fiscal year 1999. In connection with
       the amendment, the Company agreed to prepay $5.6 million of the Term Loan
       Facility   through   borrowings   under  the  Revolving   Loan  Facility.
       Additionally,  the  Company  agreed to  increase  its  monthly  Term Loan
       Facility  principal payment from $374,000 to $450,000  beginning March 1,
       1999. Further,  based on the Company's declining working capital needs in
       light of declining revenues, the Company and its lenders agreed to reduce
       the Revolving Loan Facility  commitment  from $85 million to $70 million.
       This  reduction  is expected to reduce the  Company's  unused line fee by
       approximately  $75,000 per annum.  The Company  further agreed to repay a
       portion of its Term Loan Facility in the future if subsequently  obtained
       appraised orderly  liquidation values for the Company's  property,  plant
       and  equipment  securing  the Term  Loan  Facility  fall  below  83.1% in
       relation to the outstanding amount owed under the Term Loan Facility.  In
       connection  with  entering  into the  amendment  to the Loan and Security
       Agreement the Company  agreed to pay BABC for the benefit of the lenders,
       $200,000 which is payable in four equal monthly  installments  commencing
       March  31,  1999.  Additionally,  BABC as  Agent,  retains  the  right to
       withhold up to approximately  $1,694,000 in aggregate  availability which
       arose  from the  expiration  of  certain  letters  of  credit  previously
       outstanding  as a  security  deposit  for the  Company's  former New York
       headquarters lease.

       At January 31, 1999,  the Company's loan  availability  as defined in the
       Loan and  Security  Agreement,  in excess  of  outstanding  advances  and
       letters of credit, was approximately  $1.6 million.  At January 31, 1999,
       the Company was in compliance  with such  applicable  covenants under the
       Loan and Security  Agreement.  However, as a result of the uncertainties,
       as more thoroughly  discussed in Note 2 to these  condensed  consolidated
       financial  statements,  concerning the Company's ability to continue as a
       going concern, the long-term amount due under the Revolving Loan Facility
       and Term Loan Facility  ($40.1  million) has been included in the current
       portion of long-term debt at January 31, 1999.

       As described  more  thoroughly  in Note 9 to the  Consolidated  Financial
       Statements  contained in the 1998 Form 10-K,  the Company had  previously
       issued  subordinated  floating  rate notes (the  "Deferred  Interest Rate
       Notes") in respect of certain accrued but unpaid interest  (approximately
       $1.6  million).  On December  22, 1997,  the Company  repaid the Deferred
       Interest Rate Notes and accrued  interest due thereon through  borrowings
       under the Revolving Loan Facility.

9.     Statements  of Financial  Accounting  Standards  No. 128,  "Earnings  Per
       Share,"  became  effective  during  fiscal  year  1998 and  requires  two
       presentations  of  earnings  per  share  -"basic"  and  "diluted".  Basic
       earnings  per share is computed by dividing  income  available  to common
       stockholders  (the  numerator) by the weighted  average  number of common
       shares (the  denominator)  for the  period.  The  computation  of diluted
       earnings per share is similar to basic  earnings  per share,  except that
       the  denominator is increased to include the number of additional  common
       shares  that  would have been  outstanding  if the  potentially  dilutive
       common shares had been issued.
<PAGE>
       The numerator in  calculating  both basic and diluted  earnings per share
       for each  period  is the  reported  net  loss.  The  denominator  used in
       calculating  both basic and diluted is the weighted average common shares
       outstanding  as there  were no  potentially  dilutive  shares  for either
       period.

10.    As  discussed  in  Note  13  to  the  Consolidated  Financial  Statements
       contained  in the  1998  Form  10-K,  the  Company  has  accrued  certain
       estimated costs for environmental matters.

       Dublin,   Georgia.  On  December  29,  1995,  the  Georgia  Environmental
       Protection  Division ("EPD") issued separate  administrative  orders (the
       "Administrative  Orders") to the Company and to J.P.  Stevens & Co., Inc.
       ("Stevens")  which  relate to three sites on the Georgia  Hazardous  Site
       Inventory - the "TCE site",  the "1,1-DCA site" and another site known as
       the  "Burn  Area"  - at  the  Company's  Dublin,  Georgia  facility.  The
       Administrative  Orders  required  the  Company  and  Stevens  to submit a
       compliance  status  report  ("CSR") for these  sites that would  include,
       among other things,  a description  of the release,  including its nature
       and extent,  and suspected or known  source,  the quantity of the release
       and the  date of the  release.  The CSR  would  also  have to  include  a
       determination of cleanup  standards  (called "risk reduction  standards")
       for the sites and a certification  that the sites were in compliance with
       those  standards;  alternatively,  the  party  submitting  the CSR  could
       acknowledge  that  the  site is not in  compliance  with  risk  reduction
       standards.  Pursuant to the  Administrative  Orders,  if a site is not in
       compliance with the risk reduction  standards,  then a Corrective  Action
       Plan (a "Corrective  Action Plan") for remediating the release would have
       to be submitted to EPD.

       Since both the Company and Stevens had been  required to perform the same
       work at all three of these  sites,  the  Company  and  Stevens  agreed to
       allocate  responsibilities  between  themselves  pursuant to an Agreement
       Concerning  Performance of Work ("Agreement") dated January 24, 1997. The
       Agreement  required  the Company to prepare and submit to EPD the CSR for
       the TCE and 1,1-DCA sites,  while requiring Stevens to prepare and submit
       to EPD a CSR for the Burn Area site. The Agreement does not commit either
       party to perform  corrective  action at these sites.  Stevens submitted a
       CSR for the Burn Area site.  During  fiscal  year 1998,  EPD and  Stevens
       corresponded regarding the Stevens CSR. It is the Company's understanding
       that  Stevens  is  waiting  for a  response  from EPD  regarding  the CSR
       submitted from Stevens.

       The  Company  submitted  a CSR  for  the TCE  and  1,1-DCA  sites,  which
       certified  compliance with risk reduction  standards for both sites.  EPD
       indicated that it did not agree to the certification  with respect to the
       TCE site. After extensive  discussions with EPD concerning the issue, the
       Company submitted a revised Corrective Action Plan ("CAP") on October 31,
       1997 which has been  approved by EPD. The revised CAP calls for continued
       operation of the Company's existing  groundwater recovery system, as well
       as one additional  groundwater recovery well and a groundwater collection
       trench near the former dry cleaning  basement.  The Company has completed
       installation of the recovery well and the groundwater  collection trench.
       In addition to the  installation  of these two systems,  the CAP requires
       the submission of an Annual  Corrective  Action Status Report to EPD. The
       Company  submitted an interim report to EPD on March 2, 1999 and plans to
       submit the required  Annual  Corrective  Action Status Report by July 31,
       1999.
<PAGE>
       Tifton, Georgia. In January 1997, the Company was notified by a potential
       buyer of the Company's Tifton facility that soil and groundwater  samples
       had been obtained from that  facility and that certain  contaminants  had
       been identified.  Subsequently, through sampling and testing performed by
       the  Company's  environmental  consultants,  the  Company  confirmed  the
       presence of  contaminants  in  groundwater  samples taken at the site. On
       February 28, 1997,  the Company  notified EPD of such  findings,  and the
       site was placed on the Georgia Hazardous Site Inventory.

       The Company subsequently  consummated its sale of the Tifton facility. As
       part of that  transaction,  the  Company,  the  Tift  County  Development
       Authority  as  purchaser  ("TCDA")  and Burlen  Corporation  as  operator
       ("Burlen")  entered  into an  Environmental  Cost  Sharing and  Indemnity
       Agreement ("Cost Sharing  Agreement").  Under the Cost Sharing Agreement,
       the   Company   retained    responsibility   for   remediating    certain
       contamination,  to the extent required by law, that  originated  prior to
       Burlen's  occupancy of the premises.  Likewise,  the Company  assumed the
       obligation to indemnify  TCDA and Burlen in regard to such  contamination
       to the  extent  that a claim is made by an  unaffiliated  third  party or
       governmental agency. In exchange, Burlen agreed to pay to the Company the
       lesser of (1)  $150,000  minus any  payments  already made to the Company
       (certain   expenses   had  already   been   shared)  to  respond  to  the
       contamination  or (2)  one-half  of the costs  incurred by the Company in
       response to such contamination.

       By letter dated  December 21, 1998, EPD requested that the Company submit
       a CSR for the  site by June  21,  1999.  EPD  indicated  that it had sent
       Burlen a similar  request.  The Company intends to submit the CSR for the
       site by the requested deadline.

       At January 31, 1999, the Company had $0.3 million accrued for costs to be
       incurred  in  connection  with  the  TCE,  1,1-DCA  and  Tifton  facility
       environmental  matters.  The Company,  subject to EPD's  response to J.P.
       Stevens  revised  CSR  and  compliance  status  certification  and  EPD's
       response to the Tifton site, believes the accrual for environmental costs
       at January 31, 1999 is adequate.

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

Reference is made to Item 7 - "Management's Discussion and Analysis of Financial
Condition  and  Results  of  Operations"  contained  in the 1998 Form 10-K for a
discussion  of  the  Company's  financial  condition  as of  November  1,  1998,
including  a  discussion  of the  Company's  anticipated  liquidity  and working
capital requirements during its 1999 fiscal year.

Forward Looking Statements

Certain  matters  discussed  in this  Quarterly  Report under Item 2 are forward
looking  statements  which reflect the  Company's  current views with respect to
future events and financial  performance.  These forward-looking  statements are
subject to certain risks and  uncertainties  which could cause actual results to
differ  materially from  historical  results or those  anticipated.  Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of their dates.  The Company  undertakes no obligation to publicly
update or revise  any  forward-looking  statements,  whether  as a result of new
information,  future  events or  otherwise.  The  following  factors could cause
actual  results  to  differ   materially  from   historical   results  or  those
anticipated:  demand for the  Company's  products,  competition,  the  Company's
production needs, wool market  conditions,  foreign currency exchange rates, the
adequacy  of  the  Company's  current   financing,   any  unexpected   financing
requirements, and changes in the general economic climate.
<PAGE>
Recent Events

1999 Realignment

As described in Note 1 to the Consolidated Financial Statements contained in the
1998 Form 10-K,  the  Company has  incurred  net losses of $19.0  million,  $7.0
million and $17.8 million in fiscal years 1998, 1997 and 1996, respectively. Net
sales  declined  from $199.0  million in fiscal  year 1997 to $149.6  million in
fiscal year 1998. Management has responded to these losses, the decline in sales
and the resulting  adverse impact on the Company's  liquidity by  implementing a
business  plan  designed  to align  the  Company's  manufacturing  capacity  and
overhead with expected market demand.

In October 1998,  the Company's  Board of Directors  approved the closing of its
Louisville,  Georgia plant, realignment of the Company's remaining manufacturing
facilities located in Georgia and further reductions of its selling, styling and
administrative  costs  (the  "1999  Realignment").  Implementation  of the  1999
Realignment  was  substantially  complete as of January 31, 1999. As a result of
the 1999  Realignment,  the  Company  incurred  approximately  $1.2  million  in
severance  expense  which was  recognized  as a  restructuring  item  during the
thirteen week period ended January 31, 1999 (the "1999 First Quarter"). Further,
the Company incurred costs of  approximately  $0.1 million during the 1999 First
Quarter related to the relocation of certain machinery and equipment. Such costs
were charged to cost of goods sold during the 1999 First Quarter.

Financial Condition and Liquidity

The Company's business is seasonal,  with the vast majority of orders for woolen
fabrics placed from December through April for apparel  manufacturers to produce
apparel  for retail sale during the fall and winter  months.  This  results in a
seasonal sales order and billing  pattern which  historically  generates  higher
sales  during the  Company's  second and third fiscal  quarters  compared to the
Company's first and fourth fiscal  quarters.  This sales pattern places seasonal
constraints on the Company's manufacturing operations which results in increased
working capital  requirements in the Company's first fiscal quarter  relating to
the  manufacture  of  certain  components  of  inventory  which  are sold in the
Company's  second and third fiscal quarter.  Further,  the industry  practice of
providing  coating fabric customers with favorable billing terms (referred to as
"dating")  which permit payment 60 (sixty) days from July 1 for invoices  billed
in January through June encourages such coating fabric customers to place orders
in advance of their actual need.  This  enables the Company to  manufacture  and
bill certain coating fabric customers during the Company's first fiscal quarter.

Reference is made to Note 9 to the Consolidated  Financial  Statements contained
in the 1998 Form 10-K. The Company funds its operating needs through  borrowings
under it's  Amended and  Restated  Loan and  Security  Agreement  (the "Loan and
Security  Agreement") which was entered into between the Company and a syndicate
of financial  institutions led by BankAmerica  Business Credit, Inc. ("BABC") on
July 23,  1997.  The Loan  and  Security  Agreement,  as  subsequently  amended,
provides for a revolving  line of credit  (including a $15.0  million  letter of
credit),  subject to a base  borrowing  formula of up to $70 million.  Under the
Loan and  Security  Agreement,  as of January 31,  1999,  the Company owed $19.2
million in term loans (the "Term Loan Facility").  Subsequently,  on February 8,
1999, the Loan and Security Agreement was amended and the Company agreed,  among
other  things,  to  prepay  $5.6  million  of the  Term  Loan  Facility  through
borrowings  under the Revolving Loan  Facility.  The $5.6 million had previously
been  reserved  from the revolving  line of credit  availability  under the base
borrowing formula. Further, the Company agreed to increase its monthly Term Loan
<PAGE>
Facility  principal  payment from $374,000 to $450,000  beginning March 1, 1999.
The Company agreed to repay a portion of the Term Loan Facility in the future if
subsequently  obtained  appraised orderly  liquidation  values for the Company's
property,  plant and equipment  securing the Term Loan Facility fall below 83.1%
in relation to the outstanding amount owed under the Term Loan Facility.

The Company's  availability  under its Revolving Loan Facility was approximately
$1.6  million at January 31,  1999 as  compared to $21.7  million at February 1,
1998. At February 28, 1999, the Company's  availability under its Revolving Loan
Facility was $2.0  million.  At January 31, 1999,  the Company was in compliance
with the applicable covenants under its Loan and Security Agreement. However, as
a result of the uncertainties  concerning the Company's ability to continue as a
going  concern,  the long-term  amount due under the Revolving Loan Facility and
Term-Loan Facility ($40.1 million) has been classified in the current portion of
long-term debt at January 31, 1999 for financial reporting purposes.

The Company's  ability to maintain  adequate  availability to meet its operating
needs and to fund the 1999  Realignment  is dependent on achieving  future sales
consistent  with  management  expectations  for fiscal year 1999 and  successful
implementation of its cost reductions.  The majority of the Company's  customers
are in the domestic  apparel  industry which has continued to suffer an economic
decline as a result of higher levels of imports and changing fashion trends.  If
these  trends  continue,  the  Company's  results of  operations  and  financial
condition will continue to deteriorate,  likely at a faster rate than previously
experienced.  Expected  cash flow from  operations is dependent  upon  achieving
sales  targets  during  fiscal  year  1999,   which  are  influenced  by  market
conditions,  including  apparel sales at retail,  that are beyond the control of
the Company.  Further,  the  collectibility of accounts  receivable is dependent
upon the state of the economy and, in particular, the financial condition of the
apparel industry.  Also,  continuing  refinement of the Company's  strategies in
response to evolving circumstances could materially change the Company's working
capital and capital  expenditures  requirements.  There can be no assurance that
the company will be able to achieve an adequate level of sales  consistent  with
management's expectations for fiscal year 1999 to enable the Company to generate
sufficient  funds to meet its operating  needs or to fund its 1999  Realignment.
Further,   there  can  be  no  assurance  that  the  1999  Realignment  will  be
successfully  implemented.  These  factors  raise  substantial  doubt  about the
Company's ability to continue as a going concern.

During  the  thirteen-week  period  ended  January  31,  1999 (the  "1999  First
Quarter"),  operations  provided $3.9 million of cash,  whereas $9.5 million was
used by operations during the  thirteen-week  period ended February 1, 1998 (the
"1998  First  Quarter").  This  $13.4  million  increase  in  cash  provided  by
operations  in the 1999  First  Quarter  was  primarily  due to a $13.4  million
decrease in cash used by inventory  during the 1999 First Quarter as compared to
the 1998 First Quarter.  The decrease in cash used by inventory  during the 1999
First  Quarter as compared to the 1998 First  Quarter  resulted from the Company
curtailing its manufacturing  operations during the 1999 First Quarter. This was
in response to  significantly  lower receipt of customer sales orders during the
1999 First  Quarter as  compared  to the 1998 First  Quarter  for  product to be
delivered  in the  Company's  second and third  fiscal  quarters  as well as the
Company's  decision to exit certain  product lines in  connection  with the 1998
Restructuring  (see  Note  1 to  the  1998  Form  10-K  )  and  reduced  worsted
manufacturing  capacity resulting from the 1999 Realignment (see Note 2 to these
Financial Statements).
<PAGE>
Investing  activities used $0.8 million in the 1999 First Quarter as compared to
$0.5 million in the 1998 First Quarter. The Company expects spending for capital
expenditures,  principally  plant  and  equipment,  in  fiscal  year  1999 to be
approximately  the same as fiscal year 1998 due to costs  incurred in connection
with the Company's  leasehold  improvements at the Company's new headquarters in
New York and renewal or betterments  of plant and equipment and compliance  with
environmental regulations.

As a result of the foregoing,  during the 1999 First  Quarter,  $3.2 million was
used by financing  activities whereas during the 1998 First Quarter $9.6 million
was provided by financing activities.

The sales order  backlog at February 28, 1999 was $33.9  million  whereas at the
comparable  time a year earlier the sales order backlog was $54.5  million.  The
composition  of the sales order  backlog at February 28, 1999  reflects a weaker
order  position  in all major  product  lines  except  specialty  fabrics  which
increased by $0.9 million when  compared to a year earlier due to an increase in
orders for fabrics  used in baseball  caps.  Of the  approximate  $20.6  million
decline in the sales  order  backlog at  February  28,  1999 as  compared to the
comparable time a year earlier,  approximately $10.9 million related to menswear
fabrics and  government  fabrics.  Approximately  $7.6  million of this  decline
related to the Company's decision to exit men's suits and government businesses.
Menswear  fabrics further  declined  primarily due to an over capacity in global
worsted wool  manufacturing  and fashion trends.  The order position for coating
fabrics at February 28, 1999 has  declined by $6.2  million over the  comparable
time a year  earlier.  The  decrease in coating  fabric  sales order  backlog is
primarily due to the unseasonably warm winter experienced throughout much of the
U.S. in 1997-1998.  As a result, initial coating fabric orders have been delayed
by  retailers,  which  has  delayed  orders  from  apparel  manufacturers.   The
womenswear  fabric  sales order  backlog at February  28, 1999  declined by $4.9
million over the comparable  time a year earlier.  The decline in the backlog of
sales orders for women's  fabrics is twofold.  First, an over capacity of woolen
flannel  manufacturing  coupled with  excessive  women's  wool  flannel  apparel
inventory  at retail has lead to a decline in demand for the  Company's  women's
wool flannel  fabrics.  Second,  the reduction in the Company's  worsted fabrics
manufacturing  capacity  has caused the  Company to limit  somewhat  its women's
worsted product offerings.

The  Company  purchases  a  significant  amount of its raw wool  inventory  from
Australia.  Since all of the Company's forward purchase commitments for raw wool
are  denominated  in U.S.  dollars,  there is no  actual  currency  exposure  on
outstanding  contracts.  However,  future changes in the relative exchange rates
between  the United  States and  Australian  dollars can  materially  affect the
Company's results of operations for financial reporting purposes.  Based on wool
costs incurred during the 1999 First Quarter and the Company's  forward purchase
commitments,  the Company  expects wool costs to decrease  approximately  20% in
fiscal year 1999 as compared to fiscal year 1998.

Year 2000 Matters

Many computer systems  experience  problems handling dates beyond the year 1999.
Therefore, some computer hardware and software will need to be modified prior to
the year 2000 in order to remain  functional.  The  Company is in the process of
updating or replacing its  computerized  systems to ensure its systems are "Year
2000" compliant and to improve the Company's overall manufacturing, planning and
inventory  related systems.  The Company is utilizing both internal and external
resources  to  upgrade or  replace  its  existing  computerized  systems.  Costs
associated with upgrading  existing systems to address the Year 2000 matter will
be  expensed  in  the  period  incurred,   whereas  costs  associated  with  the
<PAGE>
replacement  of existing  systems will be  capitalized  in the period  incurred.
During the 1999 First  Quarter,  the Company  capitalized  $0.2 million in costs
associated with the replacement of existing systems.

The Company  expects its Year 2000 upgrade  project and the  replacement  of its
manufacturing  planning and inventory related systems to be completed during the
second quarter of calendar year 1999. There can be no assurance,  however,  that
there  will  not  be  a  delay  in,  or  increased  costs  associated  with  the
implementation  of such  changes,  and any  inability to implement  such changes
could have a material adverse effect on the Company.

The Company has not completed its assessment of the Year 2000  compliance of its
vendors and customers,  nor of the possible  consequences  to the Company of the
failure  of one or more  of its  vendors  and  customers  to  become  Year  2000
compliant on a timely basis.  The Company  expects to complete  such  assessment
before the end of the third  quarter of calendar  year 1999. It is possible that
if a substantial number of the Company's customers failed to implement Year 2000
compliant billing or payment systems, for example, their payments to the Company
might be disrupted  which might  adversely  affect the Company's  cash flow. The
Company will discuss  these  matters with its key vendors and  customers  during
1999 to attempt to ascertain whether and to what extent such problems are likely
to occur. It is not clear, however, what, if any measures the Company could take
to deal with such  eventualities  while still  maintaining  customer  and vendor
relationships. The Company does not believe that it has other relationships with
vendors and suppliers  which,  if disrupted,  due to the failure of such vendors
and suppliers to deal  adequately  with their own Year 2000  compliance  issues,
would have a material adverse effect on the Company.

The Company has  completed an  assessment  of its  manufacturing  processes  and
identified which processes are dependent on third-party  provided  software that
may need to be modified in order to be Year 2000 compliant.  The Company intends
to notify such  third-party  providers  before the end of the second  quarter of
calendar year 1999 to determine  whether such  software  needs to be modified in
order to be Year 2000 compliant.  Where software modifications are required, the
Company will engage the appropriate  third-party software providers to make such
Year 2000  compliant  modifications.  Should the Company be unable to obtain the
appropriate  software  modifications,  the  Company  believes  it can  alter its
manufacturing processes to supplement any processes idled by non compliance with
the Year 2000.

Results of Operations

The 1999 First Quarter Compared to the 1998 First Quarter

         The  Company's  business is  seasonal,  accordingly,  results for these
interim  periods are not indicative of results for a full fiscal year. Net sales
for the 1999 First Quarter were $18.5 million, a decrease of 36.3% from the 1998
First Quarter.  Total yards of fabric sold  decreased  40.2% from the 1998 First
Quarter  to the 1999  First  Quarter  and the  average  per yard  selling  price
decreased to $7.26 per yard from $7.43 per yard due to shifts in product mix and
sales price  decline.  The  decrease in sales was  primarily  due to  womenswear
fabric  sales  which were  approximately  $8.9  million  lower in the 1999 First
Quarter as compared to the 1998 First  Quarter and  menswear  fabric sales which
were  approximately  $4.5 million lower in the 1999 First Quarter as compared to
the 1998 First Quarter.  These  decreases  were somewhat  offset by increases in
specialty fabric sales of $0.7 million, coating fabric sales of $0.5 million and
government  fabric  sales of $0.2  million  during  the 1999  First  Quarter  as
compared to the 1998 First  Quarter.  Additionally,  the Company  added sales of
$1.5  million  for FAI during  the 1999 First  Quarter.  Menswear  fabric  sales
<PAGE>
declined due, in part, to the Company's  decision made in March 1998 to exit the
men's top dyed suit business.  Overall,  the Company expects men's woolen fabric
sales to be  slightly  lower in fiscal year 1999 as compared to fiscal year 1998
due to fashion trends and increased competition from imports. Women's woolen and
worsted  fabric  sales were lower in the 1999 First  Quarter as  compared to the
1998 First Quarter.  Based on current backlog of sales orders for women's woolen
and worsted  sales,  market  trends and  increased  competitive  pressures,  the
Company   expects  overall  women's  woolen  and  worsted  fabric  sales  to  be
significantly  lower in  fiscal  year 1999 as  compared  to  fiscal  year  1998.
Currently,  the Company  expects  coating fabric sales in fiscal year 1999 to be
approximately equal to fiscal year 1998.

         Cost of goods sold  decreased  $6.7 million to $19.1 million during the
1999 First  Quarter  primarily as a result of the decline in sales and change in
product mix.  Gross profit  decreased $3.9 million from a profit of $3.3 million
in the 1998 First  Quarter  compared to a loss of $0.6 million in the 1999 First
Quarter,  and gross profit margin for the 1999 First Quarter was (3.0%) compared
to 11.4% for the 1998 First Quarter.  This decline in the gross profit margin is
due to fixed  manufacturing  costs  which are not  absorbed  when  manufacturing
operations are running at volumes below full capacity.  As a result of operating
below full capacity,  $3.1 million in fixed  manufacturing costs were unabsorbed
during the 1999 First Quarter as compared to $0.5 million  during the 1998 First
Quarter.

         Selling, general and administrative  expenses,  excluding the provision
for  uncollectible  accounts,  decreased  5.4% to $3.4 million in the 1999 First
Quarter compared to $3.6 million in the 1998 First Quarter. However, included in
selling,  general and  administrative  expenses during the 1999 First Quarter is
$0.8 million  related to FAI.  The majority of the decrease in selling,  general
and  administrative  expenses exclusive of FAI during the 1999 First Quarter was
primarily due to a decrease in human  resource  related  expenses as the Company
reduced its overhead in response to lower sales.

         The provision for uncollectible  accounts  decreased to $0.1 million in
the 1999 First  Quarter as compared to $0.2  million in the 1998 First  Quarter.
See Note 3 to the Consolidated  Financial  Statements contained in the 1998 Form
10-K  for a  discussion  of the  Company's  accounting  policies  regarding  the
establishment of its allowance for uncollectible accounts.

         Interest  expense  for the  1999  First  Quarter  was $1.4  million  as
compared  to $1.5  million in the 1998 First  Quarter  due to  comparable  debt
levels for each period.

         As a  result  of  the  foregoing,  a  loss  before  reorganization  and
restructuring  items and income  taxes of $5.5  million was realized in the 1999
First Quarter as compared to a loss before reorganization items and income taxes
of $2.0  million  in the  1998  First  Quarter.  Loss  before  depreciation  and
amortization,  reorganization  and  restructuring  items,  interest  expense and
income  taxes  during the 1999 First  Quarter  was $3.0  million as  compared to
income before  depreciation and  amortization,  reorganization  items,  interest
expense and income taxes of $0.7 million during the 1998 First Quarter.

         Restructuring items were $1.2 million during the 1999 First Quarter due
to severance  expenses  incurred as a result of the 1999 Realignment (see Note 2
to these Financial Statements).
<PAGE>
         During fiscal year 1995,  the Company fully  utilized its net operating
loss  carrybacks as permitted by the Internal  Revenue Code.  For the 1999 First
Quarter,  no income tax benefit was  recognized  from the  realization  of a net
operating loss. During the 1998 First Quarter,  the Company recognized an income
tax  benefit of $0.8  million at an  effective  income tax rate of 39% which was
reversed in a subsequent interim period.

         As a result of the  foregoing,  net loss for the 1999 First Quarter was
$6.7  million  as  compared  to a net loss of $1.3  million  in the  1998  First
Quarter.
<PAGE>
         PART II -- OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K:


(a)  Exhibits

        11.1      Statement re  computation of per share earnings - not required
                  since  such  computation  can be clearly  determined  from the
                  material contained herein.

        15.1      Independent  Accountants' Review Report,  dated March 10, 1999
                  from Deloitte & Touche LLP to Forstmann & Company, Inc.

(b)     Current Reports on Form 8-K

               None
<PAGE>


                                   SIGNATURES


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




                                                 FORSTMANN & COMPANY, INC.
                                                 -------------------------
                                                 (Registrant)




                                                 /s/ Rodney Peckham
                                                 -------------------------
                                                 Rodney Peckham
                                                 Executive Vice President
                                                 Finance, Administration and
                                                 Strategic Planning

March 16, 1999
--------------
    Date
<PAGE>
                                  EXHIBIT INDEX



Exhibit                                                               Sequential
  No.          Description                                             Page No.
-------        ------------------------------------------------       ----------
11.1           Statement re computation of per share earnings -
               not required since such computation can be
               clearly determined from the material contained
               herein.

15.1           Independent Accountants' Review Report, dated
               March 10, 1999, from Deloitte & Touche
               LLP to Forstmann & Company, Inc.                           23

<PAGE>
                                                                    Exhibit 15.1
INDEPENDENT ACCOUNTANTS' REPORT

Board of Directors and Shareholders
Forstmann & Company, Inc.:

We have  reviewed  the  accompanying  condensed  consolidated  balance  sheet of
Forstmann & Company,  Inc. and subsidiary (the "Company") as of January 31, 1999
and the related condensed  consolidated  statements of operations and cash flows
for the  thirteen  weeks ended  January  31,  1999 and  February 1, 1998 and the
condensed  consolidated  statement  of changes in  shareholders'  equity for the
thirteen  weeks ended  January 31,  1999.  These  financial  statements  are the
responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to such condensed  consolidated  financial  statements for them to be in
conformity with generally accepted accounting principles.

The accompanying  condensed consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the 1998 Form 10-K (not presented  herein) and in Note 2 to these condensed
consolidated  financial  statements,  certain conditions raise substantial doubt
about its ability to continue as a going concern.  Management's  plans in regard
to these  matters are also  described  in Notes 1 to the 1998 Form 10-K and 2 to
these condensed consolidated financial statements.

We have  previously  audited,  in accordance  with generally  accepted  auditing
standards,  the consolidated balance sheet of the Company as of November 1, 1998
and the related consolidated statements of operations, shareholders' equity, and
cash  flows  for the  period  from  November  3, 1997 to  November  1, 1998 (not
presented  herein);  and in our report dated  February 8, 1999,  we expressed an
unqualified  opinion on those  financial  statements and included an explanatory
paragraph  concerning  matters that raise  substantial doubt about the Company's
ability to continue as a going  concern.  In our opinion,  the  information  set
forth in the accompanying condensed consolidated balance sheet as of November 1,
1998 is fairly  stated,  in all  material  respects,  in relation to the balance
sheet from which it has been derived.

Deloitte & Touche LLP
Atlanta, Georgia
March 10, 1999