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 FEBRUARY 1, 1998
                               ----------------
                                       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.)

       1155 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK         10036
       -----------------------------------------------       ---------
          (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 17, 1998, there was 4,385,770 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 STATEMENTS OF OPERATIONS FOR THE
           THIRTEEN WEEKS ENDED FEBRUARY 1, 1998 AND FEBRUARY 2, 1997
                                   (unaudited)

                                                 Reorganized       Predecessor
                                                   Company           Company
                                                  February 1,      February 2,
                                                     1998              1997
                                                     ----              ----
<S>                                              <C>               <C>         
Net sales ..................................     $ 29,017,000      $ 31,218,000

Cost of goods sold .........................       25,705,000        28,375,000
                                                 ------------      ------------

Gross profit ...............................        3,312,000         2,843,000

Selling, general and administrative expenses        3,590,000         4,254,000

Provision for uncollectible accounts .......          224,000           171,000
                                                 ------------      ------------

Operating loss .............................         (502,000)       (1,582,000)

Interest expense (contractual interest of
  $3,737,000 for 1997) .....................        1,540,000         1,585,000
                                                 ------------      ------------

Loss before reorganization items and
  income taxes .............................       (2,042,000)       (3,167,000)

Reorganization items .......................           20,000         4,151,000
                                                 ------------      ------------

Loss before income taxes ...................       (2,062,000)       (7,318,000)

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

Net loss ...................................     $ (1,258,000)     $ (7,318,000)
                                                 ============      ============

Per share and share information:
  Loss per common share - basic and diluted      $       (.29)     $      (1.30)
                                                 ============      ============

  Weighted average common shares outstanding        4,384,436         5,618,799
                                                 ============      ============

See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
                            FORSTMANN & COMPANY, INC.
                            CONDENSED BALANCE SHEETS
                      FEBRUARY 1, 1998 AND NOVEMBER 2, 1997
                                   (unaudited)

                                                            February 1,     November 2,
                                                               1998            1997
                                                               ----            ----
ASSETS
Current Assets:
<S>                                                   <C>                <C>         
  Cash ..........................................     $      48,000      $    493,000
  Cash restricted for settlement of unpaid claims           560,000           558,000
  Accounts receivable, net of allowance of
    $682,000 and $458,000 .......................        34,763,000        42,005,000
  Inventories ...................................        56,883,000        43,210,000
  Current deferred tax assets ...................           804,000              --
  Other current assets ..........................           575,000           926,000
                                                      -------------      ------------

    Total current assets ........................        93,633,000        87,192,000

Property, plant and equipment, net ..............        23,960,000        24,779,000
Other assets ....................................         1,706,000         1,670,000
                                                      -------------      ------------
    Total .......................................     $ 119,299,000      $113,641,000
                                                      =============      ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current maturities of long-term debt ..........     $   5,709,000      $  5,756,000
  Accounts payable ..............................         3,099,000         3,335,000
  Accrued liabilities ...........................         8,859,000        11,371,000
                                                      -------------      ------------
    Total current liabilities ...................        17,667,000        20,462,000

Long-term debt ..................................        52,259,000        42,548,000
Deferred tax liabilities ........................              --                --
                                                      -------------      ------------

    Total liabilities ...........................        69,926,000        63,010,000

Commitments and contingencies

Shareholders' Equity:
  New common stock, $.01 par value, 10,000,000
    shares authorized, 4,384,436 shares issued
    and outstanding .............................            43,844            43,844
Additional paid-in capital ......................        50,297,156        50,297,156
Retained earnings (deficit) since July 23, 1997 .          (968,000)          290,000
                                                      -------------      ------------
Total shareholders' equity ......................        49,373,000        50,631,000
                                                      -------------      ------------
      Total .....................................     $ 119,299,000      $113,641,000
                                                      =============      ============

See notes to financial statements ...............
</TABLE>
<PAGE>
<TABLE>
                            FORSTMANN & COMPANY, INC.
                   CONDENSED STATEMENTS OF CASH FLOWS FOR THE
           THIRTEEN WEEKS ENDED FEBRUARY 1, 1998 AND FEBRUARY 2, 1997
                                   (unaudited)

                                                         Reorganized      Predecessor
                                                           Company          Company
                                                         February 1,      February 2,
                                                            1998             1997
                                                            ----             ----
<S>                                                     <C>               <C>         
Net loss ..........................................     $ (1,258,000)     $(7,318,000)
                                                        ------------      -----------
Adjustments to reconcile net loss to net
  cash used by operating activities:
    Depreciation and amortization .................        1,335,000        3,112,000
    Income tax not payable in cash ................         (804,000)            --
    Income tax payments ...........................             --               --
    Provision for uncollectible accounts ..........          224,000          171,000
    Increase (decrease) in market reserves ........           34,000         (952,000)
    Loss from disposal, abandonment and
      impairment of machinery and equipment
      and other assets and (gain) from disposal ...           (1,000)       3,039,000
    Changes in current assets and current
      liabilities:
        Accounts receivable .......................        7,018,000        9,964,000
        Inventories ...............................      (13,707,000)      (9,076,000)
        Other current assets ......................          351,000           53,000
        Accounts payable ..........................         (207,000)         403,000
        Accrued liabilities .......................       (2,543,000)        (179,000)
        Accrued interest payable ..................           31,000          600,000
        Operating liabilities subject to compromise             --           (234,000)
                                                        ------------      -----------

  Total adjustments ...............................       (8,269,000)       6,901,000
                                                        ------------      -----------

    Net cash used by operations ...................       (9,527,000)        (417,000)
                                                        ------------      -----------
</TABLE>
                            (continued on next page)
<PAGE>
<TABLE>

                            FORSTMANN & COMPANY, INC.
                   CONDENSED STATEMENTS OF CASH FLOWS FOR THE
           THIRTEEN WEEKS ENDED FEBRUARY 1, 1998 AND FEBRUARY 2, 1997
                                   (unaudited)

                                                         Reorganized     Predecessor
                                                           Company         Company
                                                         February 1,     February 2,
                                                            1998            1997
                                                            ----            ----
Cash flows used by investing activities:
<S>                                                   <C>               <C>    
  Capital expenditures ...........................         (340,000)        (176,000)
  Investment in computer information systems .....         (189,000)        (105,000)
  Net proceeds from disposal of machinery
    and equipment ................................            1,000            1,000
                                                       ------------      -----------

    Net cash used by investing activities ........         (528,000)        (280,000)
                                                       ------------      -----------

Cash flows from financing activities:
  Net borrowings under the Revolving Loan Facility       12,587,000             --
  Net borrowings under the DIP Facility ..........             --          1,193,000
  Repayment of Term Loan Facility ................       (1,123,000)            --
  Repayment of Deferred Interest Rate Notes ......       (1,570,000)            --
  Repayment of other financing arrangements ......         (259,000)        (283,000)
  Deferred financing costs .......................          (23,000)        (213,000)
                                                       ------------      -----------

    Net cash provided by financing activities ....        9,612,000          697,000

Net decrease in cash .............................         (443,000)            --

Cash and restricted cash at beginning of period ..        1,051,000           48,000
                                                       ------------      -----------

Cash and restricted cash at end of period ........     $    608,000      $    48,000
                                                       ============      ===========



See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>

                            FORSTMANN & COMPANY, INC.
             CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                  FOR THE THIRTEEN WEEKS ENDED FEBRUARY 1, 1998
                                   (unaudited)

                                           Additional       Retained          Total
                               Common       Paid-In         Earnings       Shareholders'
                               STOCK        CAPITAL         (DEFICIT)         EQUITY

<S>                           <C>         <C>             <C>              <C>         
Balance, November 2, 1997     $43,844     $50,297,156     $   290,000      $ 50,631,000

Net loss ................        --              --        (1,258,000)       (1,258,000)
                              -------     -----------     -----------      ------------

Balance, February 1, 1998     $43,844     $50,297,156     $  (968,000)     $ 49,373,000
                              =======     ===========     ===========      ============

See notes to financial statements.
</TABLE>
<PAGE>
                            FORSTMANN & COMPANY, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                FEBRUARY 1, 1998
                                   (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  tables,  sports caps and school
        uniforms.  The apparel industry represents the majority of the Company's
        customers.

        As  described  in Note 1 to the  Financial  Statements  contained in the
        Company's  Annual Report on Form 10-K for the fiscal year ended November
        2, 1997,  on  September  22,  1995,  the  Company  filed a petition  for
        protection  under Chapter 11 of the United States  Bankruptcy  Code (the
        "Bankruptcy  Code")  with the U.S.  Bankruptcy  Court  for the  Southern
        District of New York (the "Bankruptcy Filing"). The Company emerged from
        Bankruptcy   pursuant  to  a  Plan  of  Reorganization   (the  "Plan  of
        Reorganization") on July 23, 1997 (the "Effective Date").

        As described in Note 2 to the Financial Statements contained in the 1997
        Form 10-K, in accordance with the American Institute of Certified Public
        Accountants'   Statement  of  Position  90-7,  "Financial  Reporting  by
        Entities in Reorganization  Under the Bankruptcy Code" ("SOP 90-7"), the
        Company  established its reorganization  value and adopted "fresh start"
        accounting as of July 22, 1997.

        Under the principles of "fresh start"  accounting,  the Company's  total
        net assets were recorded at its established  reorganization value, which
        was then allocated to identifiable tangible and intangible assets on the
        basis of their  estimated fair value.  In accordance  with "fresh start"
        accounting,  the difference between the assumed reorganization value and
        the aggregate  fair value of the  identifiable  tangible and  intangible
        assets resulted in a reduction in the value assigned to property,  plant
        and  equipment.  In  addition,  the  Company's  accumulated  deficit was
        eliminated.

2.      On March 6, 1998, the Company  announced  that, as part of its long-term
        strategy,  it will discontinue the production of top dye worsted fabrics
        used to  manufacture  men's  suits and  government  uniforms  (the "1998
        Restructuring")  after completing  orders for its fall season. In fiscal
        year 1997, top dye worsteds  accounted for  approximately $18 million in
        men's suiting fabric and $10 million in government uniform fabric sales.
        This  decision  will  result  in  the  Company's  overall  workforce  of
        approximately 2,500 people being reduced by approximately 730 people.

        Implementation  of the 1998  Restructuring  will  result in the  Company
        incurring  certain  costs,   including,   among  other  costs,  salaried
        severance,  special  one-time  hourly "stay put"  bonuses and  equipment
        relocation costs. Additionally, certain of the Company's inventories may
        be impaired or rendered  obsolete and the  carrying  value of certain of
        the Company's property, plant and equipment may be impaired. The Company
        estimates that severance expense will be approximately  $0.5 million and
        will be recognized as a  restructuring  expense in the Company's  second
        quarter of fiscal  year 1998.  The Company  estimates  that the stay put
        bonuses will be approximately  $0.8 million and will be accrued over the
        employee's remaining service period as a restructuring expense.  Certain
<PAGE>
        other  adjustments  relating to certain other employee benefit costs may
        be  incurred  in  connection  with  the   implementation   of  the  1998
        Restructuring,  which will be recognized as a  restructuring  expense in
        the  period  such  costs  can be  reasonably  estimated.  Impairment  of
        inventories will be recognized as an operating expense in the periods in
        which the impairment can be reasonably estimated,  whereas impairment of
        property,  plant and equipment  will be  recognized  as a  restructuring
        expense  in the  periods  in  which  the  impairment  can be  reasonably
        estimated.  Costs incurred to relocate  certain  machinery and equipment
        will be charged against operations in the periods incurred.

3.      One of the Company's  customers  accounted for  approximately 31% of the
        Company's revenues for the thirteen weeks ended February 1, 1998 and 34%
        of gross  accounts  receivable  at February 1, 1998.  No other  customer
        represented more than 6% of revenues or 6% of gross accounts receivable.

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

                                                  February 1,     November 2,
                                                     1998            1997
                                                     ----            ----
     Raw materials and supplies ...........       $  9,070        $  8,303
     Work-in-process ......................         33,266          27,459
     Finished products ....................         15,744           8,169
     Less market reserves .................         (1,257)           (721)
                                                  --------        --------
     Total ................................         56,883          43,210
     Difference between LIFO
       carrying value and current
       replacement cost ...................            613            --
                                                  --------        --------
     Current replacement cost .............       $ 57,496        $ 43,210
                                                  ========        ========

5. Other assets consist of (in thousands):

                                                  February 1,     November 2,
                                                     1998            1997
                                                     ----            ----
     Computer information systems,
       net of accumulated amortization
       of $0 and $0 .......................       $    225        $     94
     Deferred financing costs, net of
       accumulated amortization of
       $304 and $164 ......................          1,372           1,520
     Other, net ...........................            109              56
                                                  --------        --------
      Total ...............................       $  1,706        $  1,670
                                                  ========        ========
<PAGE>
6. Accrued liabilities consist of (in thousands):

                                                  February 1,     November 2,
                                                     1998            1997
                                                     ----            ----
     Salaries, wages and related
       payroll taxes ......................       $    935        $    978
     Incentive compensation ...............            347           2,082
     Vacation and holiday .................          1,793           1,729
     Employee benefits plans ..............             52              20
     Interest on long-term debt ...........             93              62
     Medical insurance premiums ...........          1,322           1,327
     Professional Fees ....................            142             355
     Environmental remediation ............            343             361
     Deferred rental and other lease obligations     2,166           2,186
     Other ................................          1,642           2,271
                                                  --------        --------
     Total ................................       $  8,835        $ 11,371
                                                  ========        ========

7. Long-term debt consists of (in thousands):
                                                  February 1,     November 2,
                                                     1998            1997
                                                     ----            ----
     Revolving Loan Facility ..............       $ 25,976        $ 13,389
     Term Loan Facility ...................         29,204          30,327
     Deferred Interest Rate Notes .........           --             1,571
     Other note ...........................            519             603
     Capital lease obligations ............          2,269           2,414
                                                  --------        --------
     Total debt ...........................         57,968          48,304
     Current portion of long-term debt ....         (5,709)         (5,756)
                                                  --------        --------
     Total long-term debt .................       $ 52,259        $ 42,548
                                                  ========        ========

        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  provides  for a revolving  line of credit
        (including  a $10.0  million  letter of credit  facility),  subject to a
        borrowing  base  formula,  of up to $85  million  (the  "Revolving  Loan
        Facility") and term loans of approximately $31.5 million (the "Term Loan
        Facility").

        At February 1, 1998, the Company's loan  availability  as defined in the
        Loan and  Security  Agreement,  in excess of  outstanding  advances  and
        letters of credit, was approximately $21.7 million.

        The Company and its lenders have negotiated an amendment to the Loan and
        Security  Agreement to modify,  among other  things,  the  definition of
        earnings before interest, income taxes,  depreciation,  amortization and
        reorganization items ("EBITDAR") and Adjusted Tangible Net Worth, and to
        modify  certain  loan  covenants  so as to  increase  permitted  capital
        expenditures  and lower the minimum fixed charge  coverage  ratio.  Such
        modifications  are being  made in  anticipation  of the  effects  of the
        Company's 1998  Restructuring  as more fully  described in Note 2 to the
        Financial  Statements contained herein. At February 1, 1998, the Company
        was  in  compliance  with  such   covenants.   In  connection  with  the
        negotiations,  the Company has agreed to prepay $3.0 million of the Term
<PAGE>
        Loan Facility through borrowings under the Revolving Loan Facility.  The
        Company  expects  to  enter  into a  formal  amendment  to the  Loan and
        Security  Agreement which reflects the negotiated  modifications  to the
        Loan and Security Agreement promptly.

        As  described  more  thoroughly  in Note 8 to the  Financial  Statements
        contained in the 1997 Form 10-K,  on the  Effective  Date, in accordance
        with  the  Plan  of  Reorganization,  the  Company  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.

8.      In February  1997,  the  Financial  Accounting  Standards  Board  issued
        Financial  Accounting  Standards  ("SFAS")  No. 128,  Earnings Per Share
        which simplifies the standards for computing  earnings per share ("EPS")
        information and makes the computation  comparable to  international  EPS
        Standards.  SFAS 128 replaces the  presentation  of "primary"  (and when
        required  "fully  diluted")  EPS  with a  presentation  of  "basic"  and
        "diluted"  EPS.  Loss per common share - basic is computed  based on the
        net loss divided by the weighted average common shares outstanding. On a
        diluted basis,  the loss per share - diluted is compared by dividing the
        net loss by the weighted  average  common  shares during the period plus
        incremental  shares that would have been outstanding under option plans.
        The  Company  did not  have  any  dilutive  options  for  either  period
        presented.

9.      As discussed  in Note 14 to the  Financial  Statements  in the 1997 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
<PAGE>
        either  party to  perform  corrective  action  at these  sites.  Stevens
        submitted a CSR for the Burn Area site. On January 28, 1998 EPD provided
        comments and requested clarification to the Stevens CSR. On February 12,
        1998 Stevens environmental consultant provided a preliminary response to
        EPD's letter and requested a meeting to discuss  proposed changes to the
        CSR.  Stevens  indicated  its intention to submit a revised CSR based on
        this meeting.

        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  Corrective  Action Plan for the TCE site by letter
        dated May 15, 1997. By letter dated September 29, 1997, EPD responded to
        the  Corrective  Action  Plan with  notice of  deficiency.  The  Company
        submitted a revised  Corrective  Action Plan on October  31,  1997.  The
        revised  Corrective  Action Plan 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.  EPD has not yet responded to the
        Company's revised Corrective Action Plan.

        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. EPD has not yet requested any additional
        response to conditions at this site.

        At February 1, 1998,  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 concurring with the
        Company's  Corrective Action Plan relating to the TCE and 1,1-DCA sites,
        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 February 1, 1998 is adequate.
<PAGE>
10.     In accordance with SOP 90-7,  professional  fees, asset  impairments and
        restructuring  charges  directly  related to the  Bankruptcy  Filing and
        related  reorganization  proceedings  have been  segregated  from normal
        operations during the  thirteen-week  periods ended February 1, 1998 and
        February 2, 1997 and consist of (in thousands):

                                                Reorganized      Predecessor
                                                  Company          Company
                                                 Thirteen         Thirteen
                                                Weeks Ended      Weeks Ended
                                                February 1,      February 2,
                                                   1998             1997
                                                   ----             ----
     Professional fees ....................       $     16        $    977
     Impairment of assets .................           --             3,039
     Default interest expense and
        professional fees associated with the
        Senior Secured Notes ..............           --              (177)
     Other ................................              4             (42)
                                                  --------        --------
     Total ................................       $     20        $  4,151
                                                  ========        ========

        As of February 2, 1997,  $4.2  million was included in  construction  in
        progress relating to certain unerected  equipment.  Accordingly,  during
        the  thirteen  weeks  ended  February 2, 1997,  the  Company  accrued an
        expected loss of $3.0 million associated with the sale of such equipment
        to reorganization expense.
<PAGE>
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 1997 Form 10-K for a
discussion  of  the  Company's  financial  condition  as of  November  2,  1997,
including  a  discussion  of the  Company's  anticipated  liquidity  and working
capital requirements during its 1998 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,  the adequacy of the Company's current
financing,  any unexpected  financing  requirements,  and changes in the general
economic climate.

RECENT EVENTS

1998 RESTRUCTURING

On March 6, 1998, the Company announced that, as part of its long-term strategy,
it  will  discontinue  the  production  of  top  dye  worsted  fabrics  used  to
manufacture men's suits and government uniforms (the "1998 Restructuring") after
completing  orders for its fall  season.  In fiscal year 1997,  top dye worsteds
accounted for  approximately  $18 million in men's suiting  fabric sales and $10
million in government  uniform  fabric  sales.  This decision will result in the
Company's  overall  workforce of  approximately  2,500  people being  reduced by
approximately  730  people.  The top dye  worsted  fabrics  business  has been a
relatively small part of the Company's overall business. However, the complexity
of manufacturing top dyes makes it extremely labor intensive and unprofitable at
its  current  level.  By  discontinuing  top dye  worsted  fabrics,  the Company
believes it can focus all of its resources on its strengths in men's and women's
woolen and worsted sportswear, coating and niche specialty markets.

Implementation  of the 1998  Restructuring  will result in the Company incurring
certain  costs,  including,  among  other  costs,  salaried  severance , special
one-time hourly "stay put" bonuses and equipment relocation costs. Additionally,
certain of the Company's  inventories  may be impaired or rendered  obsolete and
the carrying value of certain of the Company's property, plant and equipment may
be impaired.  The Company estimates that severance expense will be approximately
$0.5 million and will be recognized as a restructuring  expense in the Company's
second quarter of fiscal year 1998. The Company  estimates that stay put bonuses
will be  approximately  $0.8  million  and will be accrued  over the  employee's
remaining service period as a restructuring  expense.  Certain other adjustments
relating to certain other  employee  benefit costs may be incurred in connection
with the implementation of the 1998 Restructuring, which will be recognized as a
restructuring  expense in the period  such  costs can be  reasonably  estimated.
Impairment of  inventories  will be  recognized  as an operating  expense in the
periods in which the impairment can be reasonably estimated,  whereas impairment
<PAGE>
of property,  plant and equipment will be recognized as a restructuring  expense
in the  periods  in which the  impairment  can be  reasonably  estimated.  Costs
incurred to relocate  certain  machinery and equipment  will be charged  against
operations  in the  periods  incurred.  During the first  quarter of fiscal year
1998, no amounts were recognized as restructuring  expense and operating results
were not affected as a result of the 1998 Reorganization.

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,  during the first
fiscal quarter, the Company has traditionally  lessened by manufacturing certain
components of inventory in advance of actual sales orders. 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.

During the  thirteen-week  period  ended  February 1, 1998 (the "1998  Period"),
operations  used  $9.5  million  of  cash,  whereas  $0.4  million  was  used by
operations  during the  thirteen-week  period ended  February 2, 1997 (the "1997
Period").  This $9.1  million  increase in cash used by  operations  in the 1998
Period was  primarily  due to a $4.6 million  increase in cash used by inventory
during the 1998 Period as compared to the 1997 Period. Traditionally, because of
the seasonal  nature of the  Company's  business,  the Company  replenishes  its
year-end  inventory  levels during its first fiscal quarter in order to meet the
higher sales demand of the Company's second and third fiscal quarters.  Accounts
receivable  provided $7.0 million during the 1998 Period,  whereas $10.0 million
was provided by accounts receivable during the 1997 Period.  Accounts receivable
at February 1, 1998 included $2.2 million of accounts  receivable with dating, a
decrease of $2.0 million  compared to February 2, 1997.  Such  decrease in dated
accounts  receivable  during the 1998 Period is primarily  due to a $1.4 million
decrease in coating  fabric sales during the 1998 Period as compared to the 1997
Period.  Combined,  the increase in inventory which was offset by the decline in
accounts  receivable  during the 1998 Period resulted in $6.7 million being used
in the 1998  Period as  compared  to $1.0  million  being  provided  in the 1997
Period. Additionally accrued liabilities used $2.5 million in the 1998 Period as
compared to $0.2 million in the 1997 Period.  As a result of the  foregoing  and
the  refinancing,  reinstatement  or  restructuring  of  the  Company's  secured
indebtedness pursuant to the Plan of Reorganization, working capital at February
1, 1998 was $76.0 million as compared to $16.7 million at February 2, 1997.

Investing  activities  used $0.5  million in the 1998 Period as compared to $0.3
million  in  the  1997  Period.   The  Company  expects   spending  for  capital
expenditures, principally plant and equipment, in fiscal year 1998 to be greater
than fiscal year 1997 due to renewals or  betterments of plant and equipment and
compliance with environmental regulations.

As a result of the foregoing,  during the 1998 Period, $9.6 million was provided
by financing  activities whereas during the 1997 Period $0.7 million was used by
financing activities.
<PAGE>
The Company  believes that cash generated from  operations and borrowings  under
the its Revolving  Loan Facility will be sufficient to fund its fiscal year 1998
working capital and capital  expenditure  requirements.  However,  expected cash
flows from  operations are dependent upon achieving  sales  expectations  during
fiscal year 1998 which are influenced by market  conditions,  including  apparel
sales at retail, that are beyond the control of the Company. Due to the seasonal
nature  of the  Company's  core  woolen  and  worsted  business,  the  Company's
borrowings  under its Revolving  Loan Facility will tend to increase  during the
first three  quarters  of the  Company's  fiscal year until the fourth  quarter,
when, at year-end,  borrowings tend to be the lowest. However, borrowings at the
end of fiscal year 1998 may be higher than at the  beginning of fiscal year 1998
or higher during various times within fiscal year 1998 than  comparable  periods
within fiscal year 1997.

The  sales  order  backlog  at March 1, 1998 was $54.5  million  whereas  at the
comparable  time a year earlier the sales order backlog was $70.9  million.  The
composition  of the sales order backlog at March 1, 1998 reflects a weaker order
position in all product  lines  except  specialty  and coating  fabrics.  Of the
approximate $16.4 million decline in the sales order backlog at March 1, 1998 as
compared to the  comparable  time a year  earlier,  approximately  $14.9 million
related  to  worsted  spun  fabrics,  including  approximately  $5.3  million in
government top-dyed fabrics.  The overall decline in worsted fabrics is believed
to be due, in part, to an over capacity in global worsted wool manufacturing and
fashion trends.

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 1998  Period  and the  Company's  forward  purchase
commitments,  the company  expects  wool costs to increase  approximately  1% in
fiscal year 1998 as compared to fiscal year 1997.

RESULTS OF OPERATIONS

The 1998 Period Compared to the 1997 Period

           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 1998 Period were $29.0 million, a decrease of 7.1% from the 1997 Period.
Total  yards of fabric  sold  decreased  8.5%  from the 1997  Period to the 1998
Period.  However, the average per yard selling price increased to $7.43 per yard
from  $7.12 per yard due to shifts in product  mix.  The  decrease  in sales was
primarily  due to the effect of product  lines  discontinued  during fiscal year
1996   (converting,   career  uniform  and  Carpini)  which  realized  sales  of
approximately $1.9 million in the 1997 Period as compared to $0.1 million in the
1998 Period,  men's woolen  fabric sales which were  approximately  $1.6 million
lower in the 1998 Period as compared to the 1997 Period and coating fabric sales
which were  approximately  $1.4 million  lower in the 1998 Period as compared to
the 1997 Period.  These declines in sales were somewhat offset by women's woolen
and  worsted  sales which were  approximately  $2.4  million  higher in the 1998
Period as compared to the 1997 Period.  The decline in men's woolen fabric sales
is due, in part, to increased  competitive pressures (primarily imports) as well
as  delayed  placement  of orders by a  customer  as such  customer  shifts  its
ordering  methodology  from projecting  anticipated  demand to actual receipt of
apparel orders from its  customers.  Overall,  the Company  expects men's woolen
fabric sales to be slightly lower in fiscal year 1998 as compared to fiscal year
<PAGE>
1997. The decrease in coating  fabric sales is due, in part, to an  unseasonably
warm fall and winter  season which  resulted in lower than  anticipated  women's
coats selling at retail.  This has resulted in delayed fabric shipment and order
assortment by the Company's  coating  fabric  customers.  At March 1, 1998,  the
backlog of sales orders for coating  fabric is ahead of the  comparable  date in
the prior year.  Currently,  the Company  expects coating fabric sales in fiscal
year 1998 to be  approximately  equal to fiscal  year 1997.  Women's  woolen and
worsted  fabric  sales were  higher in the 1998  Period as  compared to the 1997
Period due, in part, to the timing of customers  orders which were strong during
the fourth quarter of fiscal year 1997. 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 lower in fiscal year 1998 as compared to fiscal year 1997.

           Based on these trends (increased  competitive pressures in the woolen
and worsted markets, the decline in backlog of orders, management's expectations
as to the level of government orders to be awarded to the Company and the effect
of discontinued  product lines and the decision to discontinue the production of
top  dyed  worsted  fabrics  used to  manufacture  men's  suits  and  government
uniforms)  the Company  expects  sales revenue in fiscal year 1998 to be between
15% to 20% lower than in fiscal year 1997.  Accordingly,  on March 6, 1998,  the
Company announced that, as part of its long-term  strategy,  it will discontinue
the production of top dye worsted used to manufacture men's suits and government
uniforms after completing  orders for its fall season.  In fiscal year 1997, top
dyed worsteds  accounted for  approximately  $18 million in men's suiting fabric
sales and $10 million in government uniform fabric sales.  Further,  in addition
to  exiting  the  production  of  top-dyed  worsted  fabrics,   the  Company  is
consolidating  certain  manufacturing  operations and  implementing  other plans
designed  to align its costs  during  fiscal year 1998 with the decline in sales
anticipated in fiscal year 1998. The top dye worsted fabrics business has been a
relatively small part of the Company's overall business. However, the complexity
of manufacturing top dyes makes it extremely labor intensive and unprofitable at
its  current  level.  By  discontinuing  top dye  worsted  fabrics,  the Company
believes it can focus all of its resources on its strengths in men's and women's
woolen and worsted  sportswear,  coating and niche specialty  markets.  However,
there  can be no  assurance  as to the  level of sales  that  will  actually  be
attained in fiscal year 1998,  as sales are dependent on market  conditions  and
other factors beyond the Company's control,  nor can there be assurance that the
Company's cost reduction will be implemented successfully.

           Cost of goods sold decreased $2.7 million to $25.7 million during the
1998 Period  primarily as a result of a $1.4 million decline in depreciation and
amortization  expense  primarily due to the effect of "fresh  start"  accounting
previously  discussed herein and the decline in sales and change in product mix.
Gross profit increased $0.5 million or 16.5% to $3.3 million in the 1998 Period,
and gross profit  margin for the 1998 Period was 11.4%  compared to 9.1% for the
1997 Period.  Manufacturing overhead excluding depreciation and amortization was
approximately  $0.3  million  higher in the 1998  Period as compared to the 1997
Period.  This increase was primarily due to higher group medical costs under the
Company's self-insured plan.

           Selling, general and administrative expenses, excluding the provision
for uncollectible  accounts,  decreased 15.6% to $3.6 million in the 1998 Period
compared to $4.3 million in the 1997 Period. The majority of the decrease in the
1997 Period is due to lower incentive  compensation expense and depreciation and
amortization  expense.  Incentive  compensation  expense in the 1998  Period was
lower than in the 1997  Period due to a  one-time  special  bonus plan in fiscal
year 1997 for  certain  key  employees,  which was  triggered  by the  Company's
emergence from Bankruptcy.  The decline in depreciation and amortization expense
<PAGE>
is primarily due to the effect of "fresh start" accounting  previously discussed
herein.  Somewhat offsetting these declines were increased professional expenses
and higher group medical costs under the Company's self-insured plan.

           The provision for uncollectible  accounts  increased  slightly in the
1998  Period  as  compared  to the  1997  Period.  See  Note 3 to the  Financial
Statements  contained  in the 1997 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 1998 Period was $1.5 million as compared to
$1.6 million in the 1997 Period. This decrease is attributable to lower interest
rates in effect under the Loan and Security  Agreement during the 1998 Period as
compared to interest rates in effect in the 1997 Period.

           As a result of the foregoing,  a loss before reorganization items and
income  taxes of $2.0  million was  realized in the 1998 Period as compared to a
loss before  reorganization  items and income  taxes of $3.2 million in the 1997
Period.  Income before  depreciation  and  amortization,  reorganization  items,
interest  expense and income  taxes  during the 1998 Period was $0.7  million as
compared to $1.3 million during the 1997 Period.

           Reorganization items were $4.2 million in the 1997 Period as compared
to $20,000 in the 1998  Period.  Included  in  reorganization  items in the 1997
Period was the  accrual of $3.0  million  for the  expected  loss on the sale of
certain unerected equipment located at the Tifton facility which was not related
to the sale of such facility. Additionally,  during the 1997 Period, the Company
incurred  approximately  $1.0  million  in  professional  fees  related  to  the
Company's Bankruptcy Filing which were recognized as reorganization items.

           During fiscal year 1995, the Company fully utilized its net operating
loss carrybacks as permitted by the Internal Revenue Code. Accordingly,  for the
1997 Period,  no income tax benefit was recognized  from the  realization of net
operating losses.  During the 1998 Period,  the Company recognized an income tax
benefit of $0.8 million at an effective income tax rate of 39%. Although the use
of the Company's net operating loss  carryforwards is believed to be limited due
to the  distribution  of the new common  stock of the  Company to the  Company's
unsecured creditors pursuant to the Plan of Reorganization  which is believed to
have  resulted in an ownership  change as defined in Section 382 of the Internal
Revenue Code, the Company  believes  future  interim  periods during fiscal year
1998 will  generate  taxable  income  which will  offset the income tax  benefit
recognized in the 1998 Period.

As a result of the  foregoing,  net loss for the 1998 Period was $1.3 million as
compared to a net loss of $7.3 million in the 1997 Period.
<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 February 25, 1998 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 16,1998
-------------
    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
           February 25, 1998, from Deloitte & Touche
           LLP to Forstmann & Company, Inc.                              22

<PAGE>
EXHIBIT 15.1
INDEPENDENT ACCOUNTANTS' REVIEW REPORT

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

We have  reviewed  the  accompanying  condensed  balance  sheet of  Forstmann  &
Company,  Inc. (the "Company") as of February 1, 1998 and the related  condensed
statements of operations and cash flows for the thirteen weeks ended February 1,
1998 (Reorganized  Company) and February 2, 1997  (Predecessor  Company) and the
condensed  statement of changes in  shareholders'  equity for the thirteen weeks
ended February 1, 1998. 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 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 financial statements for them to be in conformity with
generally accepted accounting principles.

We have  previously  audited,  in accordance  with generally  accepted  auditing
standards,  the  balance  sheet of the  Company as of  November  2, 1997 and the
related statements of operations,  shareholders'  equity, and cash flows for the
period from November 4, 1996 to July 22, 1997 of the Predecessor Company and the
period from July 23, 1997 to November 2, 1997 of the  Reorganized  Company  (not
presented  herein);  and in our report dated  December 19, 1997, we expressed an
unqualified  opinion  on  those  financial  statements.   In  our  opinion,  the
information set forth in the accompanying condensed balance sheet as of November
2, 1997 is fairly stated, in all material  respects,  in relation to the balance
sheet from which it has been derived.


Deloitte & Touche LLP
Atlanta, Georgia
February 25, 1998