UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20459

                                    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 June 28, 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 1-6150

                              ALBA-WALDENSIAN, INC.
             (Exact name of registrant as specified in its Charter)
     Delaware                                         56-0359780
(State or other jurisdiction                (I.R.S.Employer Identification No.)
of incorporation or organization)

                        P.O. Box 100, Valdese, N.C. 28690
               (Address of principal executive offices)(Zip code)

                                 (828) 879-6500
               Registrant's telephone number, including area code

                                      NONE
                 Former name,  former address and former fiscal year, if changed
since last report.

     Indicate  by check  mark  whether  registrant  (1) has  filed  all  reports
required to be filed by section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant  was required to file such  reports) and (2) has been subject to such
filing requirements for the past 90 days. YES X NO

As of June 28, 1998, the number of common shares outstanding was 1,572,403.


<PAGE>


PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

                                                    ALBA-WALDENSIAN, INC.
                                            Consolidated Balance Sheets
                                                     ($000's)
<TABLE>
<CAPTION>


                                                                        June 28,              December 31,
                                                                            1998                      1997
(Unaudited)
<S>                                                                      <C>                      <C>    

ASSETS
CURRENT ASSETS:
Cash                                                                          $6                    $2,416
Accounts receivable, net of allowance for
 doubtful accounts of $344 and $260, respectively                          8,734                     7,823
Inventories:
  Materials and supplies                                                   3,187                     2,554
  Work-in-process                                                          6,152                     5,045
  Finished goods                                                           1,392                     3,710
                                                                           -----                     -----
Total Inventories                                                         10,731                    11,309
                                                                          ------                    ------

Deferred income taxes                                                        707                       707
Prepaid expenses and other                                                   356                       127
                                                                             ---                       ---
Total Current Assets                                                      20,534                    22,382
                                                                          ------                    ------

PROPERTY AND EQUIPMENT                                                    33,043                    31,111
Less: accumulated depreciation                                          (18,730)                  (17,857)
                                                                         -------                   ------
Net Property and Equipment                                                14,313                    13,254
                                                                          ------                    ------

OTHER ASSETS:
Notes receivable                                                              15                        17
Trademarks and patents                                                       460                       492
Excess of cost over net assets acquired                                    7,180                     7,474
                                                                           -----                     -----
                                                                           7,655                     7,983
                                                                           -----                     -----

TOTAL ASSETS                                                             $42,502                   $43,619
                                                                          ======                    ======
</TABLE>

See notes to consolidated financial statements.


<PAGE>


                                               ALBA-WALDENSIAN, INC.
                                            Consolidated Balance Sheets
                                           ($000's except share amounts)

<TABLE>
<CAPTION>
                                                                        June 28,              December 31,
                                                                            1998                      1997
                                                                            ----                      ----
                                                                     (Unaudited)
<S>                                                                    <C>                      <C> 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt                                     $   538                  $  2,350
Accounts payable                                                          3,116                      3,118
Accrued expenses                                                           1,850                     1,542
                                                                           -----                     -----
Total Current Liabilities                                                  5,504                     7,010

LONG-TERM DEBT (Note 2)                                                    8,704                     7,452
CAPITAL LEASE OBLIGATION                                                      71                         -
DEFERRED INCOME TAX LIABILITY                                              1,746                     1,746
                                                                           -----                     -----
Total Liabilities                                                         16,025                    16,208
                                                                          ------                    ------

STOCKHOLDERS' EQUITY:
Common stock  - authorized 3,000,000 shares,
 $2.50 par value; issued: 1,886,580 shares in 1998
 and 1997; outstanding: 1,572,403 and 1,867,403
 in 1998 and 1997, respectively                                            4,716                     4,716
Additional paid-in capital                                                 9,182                     9,182
Retained earnings                                                         15,044                    13,650
                                                                          ------                    ------
                                                                          28,942                    27,548
Less treasury stock - at cost
  (314,177 and 19,177 shares in 1998 and 1997,
  respectively)                                                          (2,465)                     (137)
                                                                          -----                       ----
Total Stockholders' Equity                                                26,477                    27,411
                                                                          ------                    ------
TOTAL LIABILITIES AND
 STOCKHOLDERS' EQUITY                                                    $42,502                   $43,619
                                                                          ======                    ======
</TABLE>

See notes to consolidated financial statements.


<PAGE>



                                               ALBA-WALDENSIAN, INC.
                                       Consolidated Statements of Operations
                                                    (Unaudited)
                                           ($000's except share amounts)
<TABLE>
<CAPTION>

                                                     Three Months Ended                         Six Month Period Ended
                                             June 28,          June 29,         June 28,          June 29,
                                                 1998              1997             1998              1997
                                                 ----              ----             ----              ----
<S>                                           <C>               <C>              <C>               <C>  

Net sales                                     $17,714           $15,872          $36,010           $29,813
Cost of sales                                  13,196            12,372           27,022            23,309
                                               ------            ------           ------            ------
Gross margin                                    4,518             3,500            8,988             6,504
Selling, general and
 administrative expense                         3,222             3,000            6,264             6,541
                                                -----             -----            -----             -----
Operating income (loss)                         1,296               500            2,724              (37)

Interest expense                                (220)             (245)            (435)             (534)
Interest income                                    18                 8               50                27
Other                                            (41)               130             (92)             (169)
                                                  --            -------             ----             -----
Total other income (expense)                    (243)             (107)            (477)             (676)
                                                                      -

Income (loss) before income taxes               1,053               393            2,247             (713)
Provision for (benefit from)
 income taxes                                     400               149              854             (271)
                                                -----               ---              ---             -----

Net income (loss)                              $  653              $244           $1,393            $(442)
                                              =======               ===           ======            ======

Net income (loss) per
 common share -
         Basic                           $       .38               $.13             $.78            $(.24)
                                                 ===                ===             ====            ======

         Diluted                          $       .36              $.13             $.76            $(.24)
                                                  ===              ====             ====            ======
</TABLE>



See notes to consolidated financial statements.

<PAGE>


                              ALBA-WALDENSIAN, INC.
                 Consolidated Statements of Stockholders' Equity
                                   (Unaudited)
                          ($000's except share amounts)
<TABLE>
<CAPTION>

                                   Additional
                                     Common                   Paid-In      Retained           Treasury Stock
                                     Shares       Amount      Capital      Earnings     Shares         Amount          Total
                                     ------       ------      -------      --------     ------         ------          -----
<S>                               <C>             <C>          <C>          <C>        <C>             <C>            <C>

Balance at January 1, 1997        1,886,580       $4,716       $9,182       $14,027     (19,177)        $(137)         $27,788

Net Loss                                                                       (442)                                      (442)
                                                                                ---                                        ---

Balance at June 29, 1997          1,886,580       $4,716       $9,182       $13,585     (19,177)        $(137)         $27,346
                                  =========        =====        =====        ======      ======           ===           ======


Balance at January 1, 1998        1,886,580       $4,716       $9,182       $13,651     (19,177)        $(137)         $27,412

Purchase of Treasury Stock                                                             (295,000)       (2,328)          (2,328)

Net Income                                                                    1,393                                      1,393
                                                                              -----                                      -----

Balance at June 28, 1998          1,886,580       $4,716       $9,182       $15,044    (314,177)      $(2,465)         $26,477
                                  =========        =====        =====        ======     =======         =====           ======
</TABLE>

See notes to consolidated financial statements.


<PAGE>


                              ALBA-WALDENSIAN, INC.
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
                                    ($000's)
<TABLE>
<CAPTION>

                                                                                   Six Month Periods Ended
                                                                        June 28,                  June 29,
                                                                            1998                      1997
<S>                                                                      <C>                       <C>  
                                                                            ----                      ----
OPERATING ACTIVITIES:
 Net income (loss)                                                       $ 1,393                   $ (442)
  Adjustments to reconcile net income (loss)
   to net cash provided by operating activities:
    Depreciation and amortization                                          1,216                     1,146
    Provision for bad debts                                                   90                        75
    Loss on disposal of property                                               2                       157
    Provision for inventory obsolescence                                     441                       423
  Changes in operating assets and liabilities providing (using) cash:
     Accounts receivable                                                 (1,001)                     (864)
     Refundable income taxes                                                  --                     (121)
     Inventories                                                             137                        69
     Prepaid expenses and other                                            (229)                        42
    Accounts payable                                                        (90)                        74
    Accrued expenses and other liabilities                                   308                       636
    Income taxes payable                                                      88                     (169)
    Deferred compensation                                                      1                     (172)
                                                                               -                      ---
Net cash provided by operating activities                                  2,356                       854
                                                                           -----                       ---
INVESTING ACTIVITIES:
Capital expenditures                                                     (1,770)                   (1,456)
Proceeds from sale of property                                                 -                       193
Proceeds from notes receivable                                                 2                         6
                                                                               -                         -
Net cash used in investing activities                                    (1,768)                   (1,257)
                                                                          -----                     -----
FINANCING ACTIVITIES:
 Net borrowings under line of credit agreement                             5,490                     1,296
 Principal payments on notes and Capital Leases                          (9,824)                   (1,175)
 Proceeds from Issuance of Long Term Debt                                  3,664                         -
 Repurchase of Capital Stock                                             (2,328)                         -
                                                                         -------                         -
Net cash (used in) provided by financing activities                      (2,998)                       121
                                                                         -------                       ---

NET DECREASE IN CASH                                                     (2,410)                     (282)
CASH AT BEGINNING OF PERIOD                                                2,416                       294
                                                                           -----                       ---
CASH AT END OF PERIOD                                                        $ 6                     $ 12
                                                                               =                       ==
</TABLE>


<PAGE>



                              ALBA-WALDENSIAN, INC.
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
                                    ($000's)
<TABLE>
<CAPTION>

                                                                        Six Month Periods Ended
                                                                        June 28,                  June 29,
                                                                            1998                      1997
                                                                            ----                      ----

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
<S>                                                                      <C>                       <C>   

  Cash paid during the period for:
    Interest                                                             $   365                     $ 479
    Income taxes                                                         $   766                    $   20

</TABLE>



See notes to consolidated financial statements.


<PAGE>


                              ALBA-WALDENSIAN, INC.
                    Notes to Consolidated Financial Statement
                                   (Unaudited)


1. UNAUDITED FINANCIAL INFORMATION

         In the opinion of the Company, the accompanying  unaudited consolidated
financial  statements  contain all  adjustments  necessary to present fairly the
financial  position as of June 28, 1998,  and the results of operations  for the
three-month and six-month  periods ended June 28, 1998, and June 29, 1997. These
unaudited financial  statements should be read in conjunction with the Company's
most recent audited financial statements.

         The results of operations for the interim  periods are not  necessarily
indicative of the results to be expected for the full year.


2.   BANK DEBT

         On December 31, 1997 the Company had both a $3,000,000 seasonal line of
credit and long-term  debt  agreements  with a major bank. The interest rate was
LIBOR plus 2.75%.  The seasonal  line of credit was  scheduled to mature on June
30, 1998, and the long-term debt portion matured on January 5, 1999.  There were
no amounts  outstanding  under the seasonal line of credit at December 31, 1997.
Quarterly  principal payments of $587,500 were required under the long-term debt
agreement.

         On May 14,  1998,  the  Company  entered  into  three-year  $21,000,000
financing  facility  with a major bank and  retired  both the  seasonal  line of
credit and long-term debt discussed above. The new facility is composed of up to
a  $15,000,000  revolving  loan,  based upon levels of accounts  receivable  and
inventories,  a $3,000,000 term loan and a $3,000,000 credit line to fund future
capital expenditures.  The new facility bears interest at Prime plus 0.5% (or at
the option of the Company,  portions of the facility may be priced at LIBOR plus
2.5%) and is secured by substantially all of the assets of the Company.

         The loan agreement  contains requires that the Company maintain certain
levels  of  tangible  net  worth and  fixed  charge  coverage  ratios as well as
limiting  the  level  of  capital   expenditures  ($5.8  million  in  1998)  and
prohibiting  other  financing (in excess of $1.5 million per year).  At June 28,
1998 the Company was in  compliance  with the  convenants  contained in the loan
agreement.


3.  NON-RECURRING CHARGES

         During the first  quarter  of 1997,  severance  costs of  approximately
$401,000  were recorded in connection  with the Company's  former  President and
CEO.


4.    ACQUISITION OF COMMON STOCK

     On May 15, 1998, investors,  including the Company and Mr. Clyde Wm. Engle,
the Company's Chairman and beneficial holder (through Sunstates  Corporation) of
a majority of the Company's  common stock,  purchased  from a major bank 938,700
shares of the Company's  common stock  formerly  held by Sunstates  Corporation,
pursuant to a private sale of collateral  held under a defaulted  loan which the
Company's  affiliates  had with the bank. The Company  purchased  295,000 of the
shares at a cost of $2,212,500 plus other estimated  transaction  costs totaling
$150,000.  The Company  utilized its existing cash plus funds  obtained from the
new $21,000,000  financing  facility  discussed above to purchase the stock. The
Company  intends to hold the 295,000  shares as treasury stock and currently has
no plans for future utilization of those shares.

     As a result of these transactions, the Company is no longer a subsidiary of
Sunstates Corporation. Mr. Engle now controls approximately 35% of the Company's
outstanding common stock.

5.    SUBSEQUENT EVENT

     On August 4, 1998 the Company declared a semi-annual cash dividend of $.075
per  share  ($117,930)  on its  common  stock  payable  on  August  24,  1998 to
shareholders  of record on August 14, 1998.  Under the Company's  loan agreement
with a bank  (see  Note  2),  dividends  may  not  exceed  $787,500  during  the
three-year term of the loan.


6.    EARNINGS PER SHARE
<TABLE>
<CAPTION>

                       For the Quarter Ended June 28, 1998
                                                                 Income           Shares         Per-Share
                                                            (Numerator)    (Denominator)            Amount
<S>                                                           <C>             <C>                    <C>   

Basic EPS
  Net Income                                                   $652,849        1,724,766              $.38

Effect of Dilutive Securities
  Stock Options                                                      --           67,750

Diluted EPS
  Net Income                                                   $652,849        1,792,516              $.36
</TABLE>

<TABLE>
<CAPTION>

                     For the Six Months Ended June 28, 1998
                                                                 Income           Shares         Per-Share
                                                            (Numerator)    (Denominator)            Amount
<S>                                                          <C>               <C>                   <C> 

Basic EPS
  Net Income                                                 $1,393,476        1,794,889              $.78

Effect of Dilutive Securities
  Stock Options                                                      --           33,875

Diluted EPS
  Net Income                                                 $1,393,476        1,828,764              $.76

</TABLE>

             There were no dilutive securities outstanding during 1997.


<PAGE>



     Item 2.  Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations

                         Liquidity and Capital Resources

         The Company's working capital has remained substantially unchanged from
December  31,  1997,  and  continues  to be adequate  to support  the  Company's
operations.  On June 28, 1998,  the Company had working  capital of  $15,030,000
with a ratio of 3.73 to1.  This is  comparable  to  $15,372,000  or 3.19 to 1 at
December 31, 1997.  The decrease in the amount of working  capital  reflects the
Company's  concerted efforts to reduce inventory levels,  which have declined to
$10,731,000  at  June  28,  1998,   from   $11,309,000  at  December  31,  1997.
Furthermore,   the  Company's   annual  debt   amortization   requirements   are
significantly  reduced  (current  maturities  of  $538,000  at June 1998  versus
$2,350,000 at December 1997) as a result of the refinancing of its bank debt.

         Liquidity  needs are  primarily  affected  by and  related  to  capital
expenditures and changes in the Company's business volume.  Capital expenditures
through the first six months of 1998 have  totaled  $1,770,000,  reflecting  the
acquisition  of new  seamless  knitting  machines in  response to the  increased
demand for the Company's new seamless intimate apparel  products.  This level of
capital expenditures compares to $1,456,000 for the same six months of 1997.
The Company  anticipates  that capital  expenditures for the entire year of 1998
may exceed $5,000,000.

         The Company's  liquidity needs,  including the stock  repurchase,  have
been more than  adequately  provided for with the  securing of a new  three-year
$21,000,000  financing  facility  with a major  bank  (see  Note 4 of  Notes  to
Consolidated  Financial  Statements).  The new  financing  facility  provides  a
revolving  loan  of  up  to  $15,000,000,  depending  upon  levels  of  accounts
receivable  and  inventories,  a term loan of  $3,000,000  and a future  capital
expenditure  line of  $3,000,000.  In  addition,  the Company  may secure  other
outside  financing  of  capital  expenditures  of  up  to  $4,500,000  over  the
three-year term of the facility.

         The purchase on May 15, 1998 of 295,000 shares of the Company's  common
stock  for  approximately  $2,362,500  (see  Note  4 of  Notes  to  Consolidated
Financial  Statements) reduced the company's net worth. However, the acquisition
price per share of $7.50 was  significantly  less than the Company's  book value
per share ($15.08 at March 29, 1998) and  accordingly  the net book value of the
remaining outstanding shares was increased. At June 28, 1998, the book value per
share of the Company's remaining outstanding common stock was $16.84 per share.

         On August 4, 1998 the Company  declared a semi-annual  cash dividend of
$.075 per share  ($117,930)  on its common  stock  payable on August 24, 1998 to
shareholders  of record on August 14, 1998.  Under the Company's  loan agreement
with a bank, dividends may not exceed $787,500 during the three-year term of the
loan.





<PAGE>


                              Results of Operations

Items as a percentage of sales are reflected in the following table:
<TABLE>
<CAPTION>

                                                     Three Months Ended               Six Months Ended
                                             June 28,          June 29,         June 28,          June 29,
                                                 1998              1997             1998              1997
                                                 ----              ----             ----              ----
(%)
<S>                                             <C>               <C>              <C>               <C> 
Net sales                                       100.0             100.0            100.0             100.0
Cost of sales                                    74.5              78.0             75.0              78.2
                                                 ----              ----             ----              ----
Gross margin                                     25.5              22.0             25.0              21.8
Selling, general and
 administrative expenses                         18.2              18.9             17.4              21.9
                                                 ----              ----             ----              ----
Operating income (loss)                          7.3                3.1              7.6             (0.1)
Other income (expense), net                     (1.4)             (0.6)            (1.3)             (2.3)
                                                 ---               ---              ---               ---
Income before income taxes                        5.9               2.5              6.2             (2.4)
Provision for income taxes                        2.2               0.9              2.3             (0.9)
                                                  ---               ---              ---              ---
Net income (loss)                                 3.7               1.6              3.9             (1.5)
</TABLE>


Three Months Ended June 28, 1998 and June 29, 1997

         Net sales by division  for the second  quarter of 1998  compared to the
second quarter of 1997 are set forth in the following table ($000's):
<TABLE>
<CAPTION>

                                          Three Month      Period Ended
                                             June 28,          June 29,        Increase/       % Increase/
                                                 1998              1997       (Decrease)        (Decrease)
                                                 ----              ----       ----------        ----------
<S>                                           <C>               <C>               <C>              <C>  

Health Products                                $7,950            $8,130           ($180)            (2.2%)
Consumer Products                               9,740             6,726            3,014             44.8%
Byford                                             24             1,016           ($992)           (97.6%)
                                                   --             -----           ------
         Total                                $17,714           $15,872           $1,842             11.6%
</TABLE>

         Sales of  Consumer  Products  increased  $3,014,000  during  the second
quarter,  or 44.8%,  over the comparable  quarter of 1997. This increase results
primarily from continuing acceptance of the Company's seamless intimate apparel,
led by a new seamless bodysuit  introduced in the first quarter.  However,  even
without the new seamless bodysuits,  sales in the second quarter of 1998 were up
10% over the second quarter of 1997. Sales in the Consumer  Products Division in
1997 were down due to the loss of circular  knit panty  business to lower priced
imports and the decision to eliminate the full fashion panty line.


         Sales of Health Products  decreased $180,000 or 2.2% due to slower than
anticipated acceptance of the Company's redesigned PulStar system.

         The decline in Byford  sales  reflects  the  Company's  decision in the
third  quarter  of 1997 to no  longer  distribute  the line of men's  socks  and
sweaters due to poor profitability.

         Gross  margins  increased in 1998 to 25.5% of net sales (22.0% in 1997)
as the  result of  increased  volume,  higher  margins  on new  styles  and cost
controls.

         Selling,  general and administrative expenses declined (as a percentage
of net sales)  from  18.9% in 1997 to 18.2% in 1998,  primarily  reflecting  the
impact of increased volumes.

         Interest expense decreased as a result of lower long-term debt and less
borrowing under the line of credit  agreement during the period partially offset
by higher (1%) interest rate in 1998.

         Other  income in the second  quarter  of 1997  included  several  minor
non-recurring gains,  including a gain from the sale of certain of the Company's
yarn covering equipment,  reflective of a decision to purchase covered yarn from
outside vendors at a lower cost.

         As a result  of the  foregoing,  the  Company  recorded  net  income of
$653,000  or $0.38 per share in 1998 as  compared  to income of $244,000 or $.13
per share in 1997.

Six Months Ended June 28, 1998 and June 29, 1997

         Net sales by division  for the six months of 1998  compared to 1997 are
set forth in the following table ($000's):
<TABLE>
<CAPTION>

                                            Six Month      Period Ended
                                             June 28,          June 29,        Increase/       % Increase/
                                                 1998              1997       (Decrease)        (Decrease)
                                                 ----              ----       ----------        ----------
<S>                                           <C>               <C>             <C>                <C> 
Health Products                               $16,373           $15,791             $582              3.7%
Consumer Products                              19,541            12,012            7,529             62.7%
Byford                                             96             2,010         ($1,914)           (95.2%)
                                                   --              ----         --------
         Total                                $36,010           $29,813           $6,197             20.8%
</TABLE>

         Sales of Consumer Products increased  $7,529,000 during 1998, or 62.7%,
over 1997. This increase  results  primarily from  continuing  acceptance of the
Company's seamless intimate apparel,  led by a new seamless bodysuit  introduced
in the first quarter. However, even without the new seamless bodysuit, sales for
1998 were up 18% over 1997. Sales in the Consumer Products Division in 1997 were
down due to the loss of circular knit panty business to lower priced imports and
the decision to eliminate the full fashion panty line.

         Sales of Health Products increased $582,000 or 3.7% due to strong sales
of treads and cuffs  partially  offset by  shortfalls  in sales of  stockinette,
dressings and the PulStar system.

         The decline in Byford  sales  reflects  the  Company's  decision in the
third  quarter  of 1997 to no  longer  distribute  the line of men's  socks  and
sweaters due to poor profitability.

         Gross  margins  increased in 1998 to 25.0% of net sales (21.8% in 1997)
as the  result of  increased  volume,  higher  margins  on new  styles  and cost
controls.

         Selling,  general and administrative expenses declined (as a percentage
of net sales)  from  21.9% in 1997 to 17.4% in 1998,  primarily  reflecting  the
impact of  increased  volumes.  Also,  included in 1997  expenses was a one-time
charge of  approximately  $400,000 to record the severance  arrangement with the
Company's former President and CEO.

         Interest expense decreased as a result of lower long-term debt and less
borrowing under the line of credit  agreement during the period partially offset
by higher (1%) interest rate in 1998.

         Other expense in 1997 included  one-time  charges to write-off the full
fashion equipment ($143,000), the write-off of a deposit on a canceled machinery
order ($80,000) and to write down the carrying value of the idle Alba plant that
is being held for sale  ($48,000).  Other income in 1997 included  several minor
non-recurring gains,  including a gain from the sale of certain of the Company's
yarn covering equipment,  reflective of a decision to purchase covered yarn from
outside vendors at a lower cost.

     As a result of the foregoing, the Company recorded net income of $1,393,000
or $.78 per shares in 1998 as  compared  to a loss of $442,000 or $.24 per share
in 1997.


THIS  QUARTERLY  REPORT ON FORM 1O-Q,  INCLUDING ANY  INFORMATION  INCORPORTATED
THEREIN BY  REFERENCE,  MAY  CONTAIN,  IN  ADDITION TO  HISTORICAL  INFORMATION,
CERTAIN   FORWARD-LOOKING   STATEMENTS  THAT  INVOLVE   SIGNIFICANT   RISKS  AND
UNCERTAINTIES.  SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON MANAGEMENT'S BELIEF
AS  WELL AS  ASSUMPTIONS  MADE  BY,  AND  INFORMATION  CURRENTLY  AVAILABLE  TO,
MANAGEMENT  PURSUANT TO THE SAFE  HARBOR  PROVISIONS  OF THE PRIVATE  SECURITIES
LITIGATION  REFORM ACT OF 1995.  FORWARD-LOOKING  STATEMENTS  CAN  GENERALLY  BE
IDENTIFIED  AS SUCH  BECAUSE THE CONTEXT OF THE  STATEMENT  USUALLY WILL INCLUDE
WORDS SUCH AS "THE COMPANY BELIEVES";  OR "ANTICIPATES",  OR "EXPECTS"; OR WORDS
OF SIMILAR  IMPORT.  SIMILARLY,  STATEMENTS  THAT DESCRIBE THE COMPANY'S  FUTURE
PLANS, OBJECTIVES,  ESTIMATES OR GOALS ARE ALSO FORWARD-LOOKING STATEMENTS. SUCH
STATEMENTS ADDRESS FUTURE EVENTS AND CONDITIONS CONCERNING CAPITAL EXPENDITURES,
EARNINGS, SALES, LIQUIDITY AND CAPITAL RESOURCES, AND ACCOUNTING MATTERS.

THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE EXPRESSED IN, OR
IMPLIED BY, THE FORWARD-LOOKING  STATEMENTS CONTAINED HEREIN. FACTORS THAT COULD
CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES  INCLUDE,  BUT ARE NOT LIMITED TO, THOSE
DISCUSSED IN ITEM 1 -  DESCRIPTION  OF BUSINESS;  AND ELSEWHERE IN THE COMPANY'S
ANNUAL  REPORT  ON FORM  1O-K  FOR THE  YEAR  ENDED  DECEMBER  31,  1997,  OR IN
INFORMATION  INCORPORATED THERIN BY REFERENCE, AS WELL AS FACTORS SUCH AS FUTURE
ECONOMIC CONDITIONS,  ACCEPTANCE BY CUSTOMERS OF THE COMPANY'S PRODUCTS, CHANGES
IN CUSTOMER  DEMAND,  LEGISLATIVE,  REGULATORY AND  COMPETITIVE  DEVELOPMENTS IN
MARKETS  IN  WHICH  THE  COMPANY  OPERATES  AND  OTHER  CIRCUMSTANCES  AFFECTING
ANTICIPATED  REVENUES AND COSTS. THE COMPANY UNDERTAKES NO OBLIGATION TO RELEASE
PUBLICLY THE RESULT OF ANY REVISIONS TO THESE FORWARD  LOOKING  STATEMENTS  THAT
MAY BE MADE TO REFLECT  EVENTS OR  CIRCUMSTANCES  AFTER THE DATE OF THIS  ANNUAL
REPORT ON FORM 1O-K OR TO REFLECT THE OCCURRENCE OF OTHER ANTICIPATED EVENTS.



<PAGE>


PART II.  OTHER INFORMATION

Item 6.   Exhibits and Reports on FORM 8-K

 a.   Exhibits
         27.   Financial Data Schedule (filed in electronic format only)

 b.   Form 8-K
                 None


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 there unto duly authorized.

                                       ALBA-WALDENSIAN, INC.


Date: August 10, 1998                   /s/ Glenn J. Kennedy
                                        --------------------
                                        Vice President and Treasurer
                                        (Chief Financial Officer and
                                         Principal Accounting Officer)