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 September 28, 1997

                                       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)

                               (704) 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 September 28, 1997, the number of common shares outstanding was 1,867,403.


<PAGE>


PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

                     ALBA-WALDENSIAN, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets

<TABLE>
<S>     <C>    <C>   

                                                          September 28,                       December 31,
                                                                   1997                               1996
(Unaudited)

ASSETS
CURRENT ASSETS:
Cash                                                           $585,805                           $294,447
Accounts receivable, net of allowance
  for doubtful accounts of $255,636
  and $275,000, respectively                                 10,450,000                          9,712,667
Refundable income taxes                                          23,041                                 --
Inventories:
  Materials and supplies                                      2,773,037                          2,877,822
  Work-in-process                                             5,425,909                          4,168,965
  Finished goods                                              3,369,529                          5,295,871
                                                              ---------                          ---------
Total inventories                                            11,568,475                         12,342,658
                                                             ----------                         ----------

Deferred income taxes                                           452,091                            452,091
Prepaid expenses and other                                      278,855                            303,142
                                                                -------                            -------
Total Current Assets                                         23,358,267                         23,105,005
                                                             ----------                         ----------

PROPERTY AND EQUIPMENT                                       31,151,807                         31,359,652
LESS: ACCUMULATED DEPRECIATION                             (17,609,249)                       (17,821,356)
                                                            ----------                         ----------
Net Property and Equipment                                   13,542,558                         13,538,296
                                                             ----------                         ----------

OTHER ASSETS:
Notes receivable                                                 39,364                             47,920
Trademarks and patents                                          412,090                            445,510
Excess of cost over net assets acquired                       7,621,256                          8,062,580
                                                              ---------                          ---------
                                                              8,072,710                          8,556,010
                                                              ---------                          ---------

TOTAL ASSETS                                                $44,973,535                        $45,199,311
                                                             ==========                         ==========
</TABLE>

See notes to consolidated financial statements.


<PAGE>


                     ALBA-WALDENSIAN, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets
<TABLE>
<S>     <C>    <C>    

                                                          September 28,                       December 31,
                                                                   1997                               1996
                                                                   ----                               ----
                                                            (Unaudited)

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short term borrowings and lines
 of credit(Note 2)                                     $            -                      $             -
Current maturities of long-term debt                          2,350,000                          2,350,000
Accounts payable                                             2,432,662                           1,900,024
Accrued expenses:
  Payroll and profit-sharing                                  1,312,013                            605,372
  Property and payroll taxes                                    293,207                            169,554
  Group health claims                                           515,396                            241,872
  Other                                                         317,663                            356,080
Income taxes payable                                                 -                             169,324
                                                           ------------                            -------
Total Current Liabilities                                     7,220,941                          5,792,226

LONG-TERM DEBT (Note 2)                                       8,737,500                          9,912,500
DEFERRED COMPENSATION                                            31,993                            232,160
DEFERRED INCOME TAX LIABILITY                                 1,474,014                          1,474,014
                                                              ---------                          ---------
Total Liabilities                                            17,464,448                         17,410,900
                                                             ----------                         ----------

STOCKHOLDERS' EQUITY:
Common stock - authorized 3,000,000 shares,
   $2.50 par value; issued:  1,886,580
   shares in 1997 and 1996; outstanding:
   1,867,403 in 1997 and 1996                                 4,716,450                          4,716,450
Additional paid-in capital                                    9,182,158                          9,182,158
Retained earnings                                            13,747,115                         14,026,439
                                                             ----------                         ----------
                                                             27,645,723                         27,925,047
Less treasury stock - at cost
   (19,177 shares)                                            (136,636)                          (136,636)
                                                               -------                            --------
Total Stockholders' Equity                                   27,509,087                         27,788,411
                                                             ----------                         ----------
TOTAL LIABILITIES AND
 STOCKHOLDERS' EQUITY                                       $44,973,535                        $45,199,311
                                                             ==========                         ==========
</TABLE>

See notes to consolidated financial statements.


<PAGE>



                     ALBA-WALDENSIAN, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations
                                   (Unaudited)
<TABLE>
<S>     <C>    <C>    <C>    <C>  

                                                    Three Months Ended           Nine Months Ended
                                        September 28,     September 29,    September 28,     September 29,
                                                 1997              1996             1997              1996
                                                 ----              ----             ----              ----

Net sales                                 $15,389,916       $16,279,071      $45,202,763       $49,954,254
Cost of sales                              12,205,100        12,584,736       35,513,875        38,344,370
                                           ----------        ----------       ----------        ----------
Gross profit                                3,184,816         3,694,335        9,688,888        11,609,884

Selling, general and
 administrative expenses                    2,685,572         3,309,221        9,226,864        10,426,362
                                            ---------         ---------        ---------        ----------
Operating income                              499,244           385,114          462,024         1,183,522

Interest expense                            (269,819)         (381,732)        (778,809)         (995,480)
Interest income                                17,735             6,777           45,076            13,370
Other                                          14,143            26,944        (179,597)             6,626
                                               ------            ------         -------          ---------
Total other income (expense)                (237,941)         (348,011)        (913,270)         (975,484)
                                                                                                         -

Income (loss) before income taxes             261,303            37,103        (451,246)           208,038
Provision for (benefit from)
 income taxes                                  98,842            13,660        (171,922)            78,652
                                               ------            ------         -------             ------

Net income (loss)                           $ 162,461          $ 23,443     $  (279,324)          $129,386
                                              =======            ======         =======            =======

Net income (loss) per
 common share                            $        .09     $         .01   $       (.15)        $       .07
                                                  ===               ===           ====                 ===

Weighted average number of
shares
  of common stock outstanding               1,867,403         1,867,403        1,867,403        1,867,403
                                            =========         =========        =========        =========
</TABLE>


See notes to consolidated financial statements.


<PAGE>


                     ALBA-WALDENSIAN, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<S>     <C>    <C>  
                                                                       Nine Month Periods Ended
                                                          September 28,                      September 29,
                                                                   1997                               1996
                                                                   ----                               ----
OPERATING ACTIVITIES:
 Net income (loss)                                        $   (279,324)                          $ 129,386
  Adjustments to reconcile net income
   to net cash provided by operating activities:
    Depreciation and amortization                             1,293,535                          1,310,495
    Goodwill amortization                                       441,324                            499,090
    Provision for bad debts                                      92,548                             30,587
    Loss on disposal of property                                137,815
    Provision for inventory obsolescence                        625,081                            448,747
  Changes in operating assets and
    liabilities providing (using) cash:
     Accounts receivable                                      (828,509)                        (1,081,550)
     Refundable income taxes                                   (23,041)                            437,453
     Inventories                                                149,102                          (115,784)
     Prepaid expenses and other                                  24,287                            431,263
    Accounts payable                                            532,638                        (1,191,547)
    Accrued expenses and other liabilities                    1,065,400                            545,708
    Income taxes payable                                      (169,324)                            178,202
    Deferred compensation                                     (200,167)                           (77,708)
                                                               -------                             ------
Net cash provided by operating activities                     2,861,365                          1,544,342
                                                              ---------                          ---------

INVESTING
ACTIVITIES:
 Capital expenditures                                       (1,614,293)                        (1,230,877)
 Proceeds from sale of property                                 212,102                                 --
Proceeds from notes receivable                                    7,184                              6,558
                                                                  -----                              -----
Net cash used in investing activities                       (1,395,007)                        (1,224,319)
                                                             ---------                          ---------

FINANCING ACTIVITIES:
 Net borrowings under line
  of credit agreement                                                --                          1,457,758
 Principal payments on long-term debt                       (1,175,000)                        (1,820,569)
                                                             ---------                          ---------
Net cash provided by financing activities                   (1,175,000)                          (362,811)
                                                            -----------                          ---------

NET INCREASE IN CASH                                            291,358                           (42,788)
CASH AT BEGINNING OF PERIOD                                     294,447                             56,009
                                                                -------                             ------
CASH AT END OF PERIOD                                         $ 585,805                           $ 13,221
                                                                =======                             ======
</TABLE>


<PAGE>



                     ALBA-WALDENSIAN, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<S>     <C>    <C>   

                                                                       Nine Month Periods Ended
                                                          September 28,                      September 29,
                                                                   1997                               1996
                                                                   ----                               ----

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

  Cash paid during the period for:
    Interest                                                $   670,244                          $ 992,934
    Income taxes                                           $     20,617                          $       0

</TABLE>



See notes to consolidated financial statements.


<PAGE>


                     ALBA-WALDENSIAN, INC. AND SUBSIDIARIES
                    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 September 28, 1997,  and the results of operations for
the three and nine month  periods ended  September  28, 1997,  and September 29,
1996. These unaudited  financial  statements  should be read in conjunction with
the Company's most recent audited financial statements.

         The results of  operations  for the three and nine months  period ended
September 28, 1997, are not necessarily indicative of the results to be expected
for the full year.

         The  three-month  period  for 1997  began  June  30,  1997,  and  ended
September  28, 1997.  The  three-month  period for 1996 began July 1, 1996,  and
ended September 29, 1996. The nine-month  period for 1997 began January 1, 1997,
and ended  September 28, 1997. The  nine-month  period for 1996 began January 1,
1996, and ended September 29, 1996.


2.   BANK DEBT
         The  Company  has both a  seasonal  line of credit and  long-term  debt
agreements  with a major bank. On March 28, 1997, the Company  renegotiated  the
terms of these  agreements  wherein the seasonal line of credit was reduced from
$5,000,000  to  $3,000,000.  For  both  the  seasonal  line  and  the  long-term
agreements,  the interest rate was increased to LIBOR plus 2.75% (formerly LIBOR
plus  1.75% for the  seasonal  line and LIBOR plus 2% for the  long-term  debt).
Additionally,  the terms of certain  financial  covenants  were  revised to more
closely reflect the current level of the Company's operations.

Seasonal Line of Credit
         The Company has an  agreement  with a bank,  which  provides a seasonal
line of credit of up to $3,000,000.  In addition, this line of credit provides a
sub-limit of $1,000,000 to support import letters of credit. Interest is accrued
at the  LIBOR  rate  plus  2.75% at  September  28,  1997.  The  line of  credit
commitment will be automatically reduced by $1,000,000 on both May 31, 1998, and
March  31,  1999.   Indebtedness  under  this  agreement  is  collateralized  by
inventory, equipment and accounts receivable.






Long-Term Debt
<TABLE>
<S>     <C>    <C>  
           Long-term debt is comprised of:
                                                        September 28,                December 31,
                                                                1997                      1996
                  Note Payable-Equipment Loan(a)    $        250,000                $    500,000
                  Note Payable-Balfour Purchase (b)       10,837,500                  11,762,500
                                                         ------------                -----------
                           Total                          11,087,500                  12,262,500
                           Less: Current Maturities        2,350,000                   2,350,000
                                                         -------------               -----------
                  Total Long-Term Debt                   $ 8,737,500                 $ 9,912,500
</TABLE>

         (a)  Pursuant to a fixed rate term loan  agreement  dated  February 12,
1993, this $2,000,000 note was used to purchase new equipment.  Interest accrues
at 6.3% fixed rate and  principal  payments  are made  quarterly  with the final
payment due December 31, 1997.

         (b) Pursuant to variable loan rate term loan  agreement  dated March 6,
1995, this $15,000,000 note was used to purchase the Balfour Healthcare Division
from Kayser-Roth  Corporation.  Interest accrues at the rate of LIBOR plus 2.75%
at September  28, 1997.  Principal  payments are being made  quarterly and began
June 30, 1995,  with the final  payment due June 30, 2000.  This loan  agreement
contains various loan covenants, as defined, which include maintaining a minimum
tangible  net  worth,  a  minimum  cash flow and  leverage  ratio and a limit on
capital spending. The agreement also maintains that any cash dividends paid will
not cause default of any loan covenant as a result of paying those dividends.

               The Company has outstanding  interest rate swap agreements  under
which the Company  receives a variable rate based on LIBOR and pays a fixed rate
of  7.95%  to  8.03%  on  notional   amounts  of  $3,342,806   and   $3,868,561,
respectively,  as determined in one month intervals  through  November 31, 1998.
The  transaction  effectively  changes a portion of the Company's  interest rate
exposure  from a  variable  rate to a fixed  rate.  The  Company is exposed to a
credit loss in the event of  nonperformance  by the other party to the  interest
rate swap agreement.  However, the Company does not anticipate nonperformance by
the counterparty.

              A  substantial  portion of the Company's  inventory,  property and
equipment,  and accounts  receivable are pledged as collateral for the long-term
debt.

         The annual principal  maturities of the long term debt at September 28,
1997, were as follows:

                           1997                            1,175,000
                           1998                            2,350,000
                           1999                            2,350,000
                           2000                            5,212,500
                                                           ---------
                           Total                         $11,087,500
                                                         ===========



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. NEW ACCOUNTING PRONOUNCEMENTS

     The Company will adopt Statement of Financial Accounting Standards No. 128,
"Earnings  Per Share" ("SFAS No. 128") on December 31, 1997.  This  statement is
not expected to have a material  impact on the  Company's  reporting of Earnings
Per Share.

         In June 1997, the Financial Accounting Standards Board issued Statement
of Financial  Accounting  Standards  No.130,  "Reporting  Comprehensive  Income"
("SFAS No.  130").  SFAS No.130  establishes  standards  for the  reporting  and
displaying of comprehensive income and its components (revenues, expenses, gains
and losses) in a full set of general-purpose  financial statements.  SFAS No.130
requires the disclosure of an amount that represents total comprehensive  income
and the  components  of  comprehensive  income  in a  financial  statement.  The
pronouncement  is effective for fiscal years  beginning after December 15, 1997,
and is not  expected  to  have a  material  impact  on the  Company's  financial
statements.

         In June 1997, the Financial Accounting Standards Board issued Statement
of Financial  Accounting  Standards  No.131,  "Disclosures  about Segments of an
Enterprise and Related  Information"  ("SFAS No. 131"). SFAS No.131  establishes
standards for determining an entity's  operating segments and the type and level
of financial  information  to be disclosed in both annual and interim  financial
statements. SFAS No.131 also establishes standards for related disclosures about
products and services,  geographic areas and major customers.  The pronouncement
is effective for periods  beginning  after  December 15, 1997,  and its adoption
could result in the Company having to segment its operating activities.

<PAGE>



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

                         Liquidity and Capital Resources

         Although the  Company's  working  capital has  decreased by  $1,175,453
since December 31, 1996, the available  working capital continues to be adequate
to support the  Company's  operations  and  reflects an improved  ratio over the
comparable  period of the prior year. The working  capital  decline is primarily
reflected in higher accounts payable and higher accrued  expenses.  On September
28, 1997, the Company had a current working capital of $16,137,326  with a ratio
of 3.23 to1.  This is  comparable  to  $17,312,779  or 3.99 to 1 at December 31,
1996,  and  $17,534,010  or 3.06 to 1 at September 29, 1996. The decrease in the
amount of working  capital  reflects the Company's  concerted  efforts to reduce
inventory levels, which have declined to $11,568,475 at September 28, 1997, from
$12,342,658 at December 31, 1996, and $14,825,007 at September 29, 1996.

         Liquidity  needs are  primarily  affected  by and  related  to  capital
expenditures  and  changes in the  Company's  business  volume.  These needs are
adequately being met through available working capital,  and are supplemented by
a  short-term  line of  credit of  $3,000,000,  to cover  fluctuations.  Capital
expenditures  through  the first nine  months of 1997 have  totaled  $1,614,293,
reflecting  renovations  to  existing  plants  and the  purchase  of  new,  more
efficient knitting  equipment.  This level of capital  expenditures  compares to
$1,230,877  for the same nine  months of 1996 and  $1,524,893  for the full 1996
year. The Company  anticipates that capital  expenditures for the entire year of
1997 will total approximately $2,000,000.

         The  Company  has both a  seasonal  line of credit and  long-term  debt
agreements  with a major bank. On March 28, 1997, the Company  renegotiated  the
terms of these  agreements  wherein the seasonal line of credit was reduced from
$5,000,000  to  $3,000,000.  For  both  the  seasonal  line  and  the  long-term
agreements,  the interest rate was increased to LIBOR plus 2.75% (formerly LIBOR
plus  1.75% for the  seasonal  line and LIBOR plus 2% for the  long-term  debt).
Additionally,  the terms of certain  financial  covenants  were  revised to more
closely reflect the current level of the Company's operations.


<PAGE>


                              Results of Operations

Items as a percentage of sales are reflected in the following table:
<TABLE>
<S>     <C>    <C>    <C>    <C>   
                                                Three Month Periods Ended          Nine Month Periods Ended
                                               September 28,       September 29,  September 28,  September 29,
                                                    1997               1996           1997            1996

Net sales                                          100.0%                100.0%       100.0%          100.0%
Cost of sales                                       79.3%                 77.3%        78.6%           76.8%
                                              -----------              --------      -------         -------
Gross profit                                        20.7%                 22.7%        21.4%           23.2%
Selling, general and
 administrative expenses                            17.5%                 20.3%        20.4%           20.9%
                                               ----------               --------      ------         -------
Operating income                                     3.2%                  2.4%         1.0%            2.3%
Other income (expense), net                         (1.5%)                (2.2%)       (2.0%)         (1.94%)
                                              -----------             ----------     -------         -------
Income before income taxes                           1.7%                  0.2%        (1.0%)           0.4%
Provision for income taxes                          (0.6%)                (0.1%)        0.4%           (0.1%)
                                                 --------              ---------     -------         -------
Net Income                                           1.1%                  0.1%        (0.6%)           0.3%
                                                 =======                 =======      ======          ======
</TABLE>

Three Month Periods Ended September 28, 1997, and September 29, 1996
     Net sales by division for the third quarter of 1997 compared to the third
quarter of 1996 are set forth in the following table.

<TABLE>
<S>     <C>    <C>    <C>    <C> 
                                        Three Month Period Ended
                                       September 28,   September 29,        Increase/       %Increase/
                                              1997           1996           (Decrease)      (Decrease)
                                            -------         ------          -----------     ----------
Health Products                         $ 7,659,542      $8,098,032      $   (438,490)         (5.4%)
Consumer Products                         5,673,645       6,267,956          (594,311)         (9.5%)
Alba Direct                                 449,682         477,806           (28,124)         (5.9%)
Byford                                    1,607,047       1,435,277           171,770          12.0%
                                       ------------     -----------      -------------
         Total                          $15,389,916     $16,279,071     $    (889,155)         (5.5%)
</TABLE>

         Net Sales as shown in the table  above  decreased  by $889,155 or 5.5%.
Health  Products  sales  are down  primarily  due to the  loss of a  substantial
portion of its dressing business (down 63.9%) to foreign  competition,  softness
in  stockinette  sales (down 15.4%) and  problems  with the  Company's  recently
redesigned  PulStar stocking system (down 51.8%).  These declines were partially
offset by an  increase in tread sales (up  12.6%).  Consumer  Products  intimate
apparel  sales  volume  decreased  24.6%,  primarily  as a  result  of a loss of
circular knit panty business to lower priced imports and the Company's  decision
to eliminate the Full Fashion panty line by mid-year.  The Full Fashion loss was
offset  in part by  converting  customers  to the  seamless  panty  line,  which
continues to show  strengthening  throughout the year. The decline in intimates'
volume was partially  offset by a 34.5%  increase in sales of hosiery during the
quarter. Due to marginal profitability,  the Company has decided to no longer be
a distributor for the Byford product line. During the third quarter of 1997, the
Company  sold  a  substantial   portion  of  its  Byford  sock  inventories  for
approximately $573,000, representing an amount slightly in excess of the cost of
such  inventories.  The Company  anticipates  that  substantially  all remaining
Byford  inventories  will  be  disposed  of by the  end of  1997  with a loss of
approximately  $200,000,  which has been fully provided for in the  accompanying
financial statements.  Byford sales totaled $3,616,747 for the first nine months
of 1997 and  $5,291,000  for the full year of 1996.  The effect of dropping  the
Byford  line  will  not  have  a  material  impact  on the  Company's  continued
profitability.

         Gross  profits  were  $509,519  lower in the third  quarter of 1997 due
primarily  to the  disposition  of a  significant  portion  of the  Byford  sock
inventories at a price only slightly in excess of the Company's cost.  Excluding
Byford,  gross profits for the third quarter of 1997 decreased  only 0.1%,  from
21.9% to 21.8%.

         Due to lower  sales  volume and tighter  cost  controls,  the  selling,
general and  administrative  expenses decreased by $623,649 or from 20.3% of net
sales  in the  third  quarter  of 1996 to 17.5% in the  third  quarter  of 1997.
However,  the  Company  cannot  state  with  certainty  that  it will be able to
maintain such tight control over these costs for the remainder of 1997.

         Interest Expense  decreased in the third quarter of 1997 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 1997.

         As a result of the foregoing,  the Company recorded an after tax profit
of $162,461 for the third quarter of 1997 as compared to a net income of $23,443
for the third quarter of 1996.


Nine Month Periods Ended September 28, 1997 and September 29, 1996

         Net Sales by division  for the first nine months of 1997 as compared to
the first nine-month period of 1996 are set forth in the following table:
<TABLE>
<S>     <C>    <C>    <C>    <C> 
                                         Nine Months Ended
                                    September 28,  September 29,       Increase/        %Increase/
                                       1997              1996         (Decrease)        (Decrease)
Health Products                     $23,450,864     $24,818,215    $ (1,367,351)           (5.5%)
Consumer Products                    16,836,467      20,145,309      (3,308,842)          (16.4%)
Alba Direct                           1,298,685       1,416,499        (117,814)           (8.3%)
Byford                                3,616,747       3,559,459          57,288             1.6%
AWI Retail                                    0          14,772         (14,772)          100.0%
                              -----------------   -------------  ---------------
           Total                    $45,202,763     $49,954,254    $ (4,751,491)           (9.5%)
</TABLE>

         Net Sales as shown in the table above  decreased by $4,751,491 or 9.5%.
Health  Products  sales  are down  primarily  due to the  loss of a  substantial
portion of its dressing business (down 26.4%) to foreign  competition,  softness
in  stockinette  sales (down 12.5%) and  problems  with the  Company's  recently
redesigned Pul Star stocking system (down 53.9%).  These declines were partially
offset by an  increase  in cuff  sales (up  9.4%).  Consumer  Products  sales of
intimate apparel  decreased  22.0%,  primarily as a result of a loss of circular
knit panty  business  to lower  priced  imports  and the  Company's  decision to
eliminate  the Full Fashion  panty line by  mid-year.  The Full Fashion loss was
offset in part by converting customers to the seamless panty line. Hosiery sales
were down 4.6% for the 1997 year to date, but as noted above, hosiery sales were
up in the third quarter of 1997.  Alba Direct sales  declined due to lower sales
to Japan.  (See discussion  above regarding the Company's  decision to no longer
distribute the Byford product line.)

         Gross profits decreased from 23.2% to 21.4% due to the disposition of a
significant  portion of the  Byford  sock  inventories  (see  discussion  above)
combined with a lower volume of production causing  manufacturing  overhead cost
per unit to increase and the  resistance  of the  marketplace  to any attempt to
pass along manufacturing cost increases.

         Selling, general and administrative expenses (as a percentage of sales)
decreased  from 20.9% to 20.4% in the first nine  months of 1997 as  compared to
the first  nine  months of 1996.  Actual  selling,  general  and  administrative
expenses decreased  $1,199,498.  Due to lower volumes and tighter cost controls,
the Company was able to reduce distribution,  marketing and selling expenses for
the nine months of 1997 by $1,340,739.  However,  this was partially offset by a
one-time charge to record the severance  arrangement  with the Company's  former
President and CEO.

         Interest  Expense  decreased  in the nine months of 1997 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 1997.

         Other expense  increased  primarily as a result of one-time  charges to
write-off the full fashion  equipment  ($143,000) and to write down the carrying
value of the idle Alba plant that is being held for sale ($48,000). Other income
reflected 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 an after tax loss of
$279,324 for the nine months of 1997 as compared to a net income of $129,386 for
the comparable period of 1996.



<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. AND SUBSIDIARIES


Date: November 12, 1997                       /s/ Glenn J. Kennedy
                                              --------------------
                                             Vice President and Treasurer
                                             (Chief Financial Officer and
                                              Principal Accounting Officer)