<PAGE>
                          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  AND EXCHANGE ACT OF 1934
                         For the Quarter Ended February 2, 1997

                                       OR

                  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                       OF THE SECURITIES EXCHANGE ACT OF 1934

                            Commission File No. 1-5400

                               FARAH INCORPORATED
               (Exact name of registrant as specified in its charter)

                          Texas                            74-1061146
        (State or other jurisdiction of                 (I.R.S. Employer
        incorporation or organization)                 Identification No.)

          8889 Gateway West, El Paso, Texas                   79925
       (Address of principal executive offices)            (Zip Code)

         Registrant's telephone number, including area code   (915) 593-4444

         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 and 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 March 7, 1997 there  were  outstanding  10,258,371  shares of the
registrant's  common stock,  no par value,  which is the only class of common or
voting stock of the registrant.
<PAGE>
PART 1.  FINANCIAL INFORMATION

Item 1.  Financial Statements
<TABLE>
<CAPTION>
                       FARAH INCORPORATED AND SUBSIDIARIES
      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
                QUARTERS ENDED FEBRUARY 2, 1997 AND FEBRUARY 4, 1996
                                   (Unaudited)

                                                                       (Thousands of dollars except share
                                                                                   and per share data)
                                                                         February 2,           February 4,
                                                                            1997                   1996
                                                                   ---------------------    -------------------
<S>                                                                <C>                                 <C>     
Net sales                                                          $             61,938                 51,510
Cost of sales                                                                    44,502                 37,713
                                                                   ---------------------    -------------------

    Gross profit                                                                 17,436                 13,797

Selling, general and administrative expenses                                     16,001                 13,789
Non-recurring charge                                                              2,462                      -
                                                                   ---------------------    -------------------

     Operating income (loss)                                                    (1,027)                      8

Other income (expense):
     Interest expense                                                             (707)                (1,365)
     Interest income                                                                191                    236
     Foreign currency transaction gains                                             111                     67
     Other, net                                                                      42                    210
                                                                   ---------------------    -------------------
                                                                                  (363)                  (852)

     Loss before provision for income taxes                                     (1,390)                  (844)

Provision for income taxes                                                          565                    145
                                                                   ---------------------    -------------------

     Net loss                                                                   (1,955)                  (989)

Retained earnings:
     Beginning                                                                    8,316                  1,560
                                                                   ---------------------    -------------------
     Ending                                                        $              6,361                    571
                                                                   =====================    ===================

Net loss per share                                                 $             (0.19)                 (0.10)
                                                                   =====================    ===================

Weighted average shares of common stock
   outstanding                                                               10,191,103             10,149,070
                                                                   =====================    ===================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
                       FARAH INCORPORATED AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      FEBRUARY 2, 1997 AND NOVEMBER 3, 1996
                                  (Unaudited)

                                                                            (Thousands of dollars except share data)
                                                                             February 2,               November 3,
                                                                                 1997                     1996
                                                                            ---------------          ----------------
<S>                                                                         <C>                              <C>     
ASSETS
Current assets:
   Cash                                                                     $        4,162                     3,777
   Trade receivables, net                                                           33,577                    41,671
   Inventories:
        Raw materials                                                               13,068                    11,404
        Work in process                                                             16,947                    15,251
        Finished goods                                                              36,290                    35,378
                                                                            ---------------          ----------------
                Total inventories                                                   66,305                    62,033
   Other current assets                                                             10,099                    10,857
                                                                            ---------------          ----------------
                Total current assets                                               114,143                   118,338

Note receivable                                                                      5,200                     5,260
Property, plant and equipment, net                                                  25,371                    25,370
Other non-current assets                                                             4,910                     4,895
                                                                            ---------------          ----------------
                                                                            $      149,624                   153,863
                                                                            ===============          ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Short-term debt                                                          $       23,331                    20,744
   Current installments of long-term debt                                            1,518                     1,288
   Trade payables                                                                   20,541                    24,038
   Other current liabilities                                                        13,917                    13,737
                                                                            ---------------          ----------------
                 Total current liabilities                                          59,307                    59,807

Long-term debt, excluding current installments                                       4,919                     4,706
Other non-current liabilities                                                        3,234                     3,992

Deferred gain on sale of building                                                    2,710                     3,218

Shareholders' equity:
   Common stock, no par value, $.01 stated value, 20,000,000 shares
     authorized; issued 10,294,646 in 1997 and 10,209,246 in 1996                   46,025                    46,024
   Additional paid-in capital                                                       30,396                    29,894
   Cumulative foreign currency translation adjustment                              (1,976)                     (742)
   Minimum pension liability adjustment                                            (1,243)                   (1,243)
   Retained earnings                                                                 6,361                     8,316
                                                                            ---------------          ----------------
                                                                                    79,563                    82,249
   Less: Treasury stock, 36,275 shares in 1997 and 1996, at cost                       109                       109
                                                                            ---------------          ----------------
                 Total shareholders' equity                                         79,454                    82,140
                                                                            ---------------          ----------------
                                                                            $      149,624                   153,863
                                                                            ===============          ================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
                       FARAH INCORPORATED AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
               QUARTERS ENDED FEBRUARY 2, 1997 AND FEBRUARY 4, 1996
                                   (Unaudited)
                                                                                        (Thousands of dollars)
                                                                                February 2, 1997      February 4, 1996
                                                                                -----------------     ------------------
<S>                                                                             <C>                             <C> 
Cash flows from (used in) operating activities:
     Net loss                                                                   $        (1,955)                  (989)
     Adjustments  to reconcile net loss to net cash from (used in)
          operating activities:
               Depreciation and amortization                                               1,256                  1,325
               Amortization of deferred gain on building sale                              (508)                  (508)
               Amortization of deferred gain on subsidiary sale                            (784)                      -
               Non-recurring charge                                                        2,462                      -
               Deferred income taxes                                                         421                      -

     Decrease (increase) in:
               Trade receivables                                                           9,164                  9,767
               Inventories                                                               (5,147)                  5,132
               Other current assets                                                          337                  (144)
     Increase (decrease) in:
               Trade payables                                                            (3,497)                (2,733)
               Other current liabilities                                                 (1,863)                (3,093)
                                                                                -----------------     ------------------

                       Net cash from (used in) operating activities                        (114)                  8,757
                                                                                -----------------     ------------------
Cash flows used in investing activities:
     Purchases of property, plant and equipment                                          (1,837)                  (667)
                                                                                -----------------     ------------------

                         Net cash used in investing activities                           (1,837)                  (667)
                                                                                -----------------     ------------------
Cash flows from (used in) financing activities:
     Net increase (decrease) in short-term debt                                            2,587                (6,527)
     Repayment of long-term debt                                                           (366)                  (603)
     Proceeds from sale of common stock                                                      491                      -
     Other                                                                                   100                    127
                                                                                -----------------     ------------------

             Net cash from (used in) financing activities                                  2,812                (7,003)
                                                                                -----------------     ------------------

Foreign currency translation adjustment                                                    (476)                  (523)
                                                                                -----------------     ------------------

Net increase in cash                                                                         385                    564

Cash, beginning of quarter                                                                 3,777                  3,657
                                                                                -----------------     ------------------

Cash, end of quarter                                                             $         4,162                  4,221

                                                                                =================     ==================
Supplemental cash flow disclosures:
     Interest paid                                                              $            611                  1,419
     Income taxes paid                                                                       161                    299
     Assets acquired through direct financing
        loans or capital leases                                                              809                    508
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>


                       FARAH INCORPORATED AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.       The attached  condensed  consolidated  financial  statements  have been
         prepared  pursuant to the rules and  regulations  of the Securities and
         Exchange  Commission.  As a result,  certain  information  and footnote
         disclosures  normally  included  in  financial  statements  prepared in
         accordance  with generally  accepted  accounting  principles  have been
         condensed or omitted.  The Company  believes that the disclosures  made
         are adequate to make the information  presented not  misleading.  These
         condensed   consolidated   financial   statements  should  be  read  in
         conjunction  with the  consolidated  financial  statements  and related
         notes included in the Company's 1996 Annual Report on Form 10-K.

2.       The foregoing  financial  information  reflects all adjustments  (which
         consist only of normal recurring adjustments) which are, in the opinion
         of  management,  necessary to present a fair statement of the financial
         position and the results of  operations  and cash flows for the interim
         periods.

3.       The  Company  maintains  its fiscal  year on a 52/53 week  fiscal  year
         basis.  Effective in the first quarter of 1996, the Company revised its
         fiscal  month-end from Friday to the following  Sunday.  The change was
         implemented to conform the Company's accounting period to the month-end
         shipping  pattern  required by customers  and to minimize  overtime and
         transportation  costs.  The effect of the change was an increase in net
         sales of  approximately  $2.4  million  and was not  material  to gross
         profit for the first quarter of 1996.

4.       On January 5, 1997,  a fire  occurred at the Company's  leased  garment
         manufacturing plant in Galway, Ireland, in which certain inventory  and
         manufacturing equipment owned by the Company  were either  destroyed or
         damaged.  In addition,  the Company's other Irish facility  located  in
         Kiltimagh  has been adversely affected because of its dependency on the
         operations  of the Galway facility.   As a result of the  fire and  its
         related  impact, the Company recorded a non-recurring charge (after tax
         and net of insurance proceeds)  of $2.5 million in the first quarter of
         fiscal 1997.
 


<PAGE>
                       FARAH INCORPORATED AND SUBSIDIARIES


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations.
<TABLE>
<CAPTION>
Results of Operations

         The following  sets forth certain  financial data as percentages of net
sales:

                                                               First Quarter Ended
                                                        -------------- ---- -------------
                                                            1997                1996
                                                       --------------      -------------
                <S>                                            <C>                <C>    
                Net sales:
                      Farah U.S.A.                              76.7%              72.6%
                      Farah International                        16.8               19.4
                      Value Slacks                                6.5                8.0
                                                        --------------      -------------
                 Total net sales                                100.0              100.0
                 Cost of sales                                   71.8               73.2
                                                        --------------      -------------
                      Gross profit                               28.2               26.8
                 Selling, general and
                   administrative expenses                       25.9               26.8
                 Non-recurring charge                             4.0                0.0
                                                        --------------      -------------
                      Operating income (loss)                    -1.7                0.0
                 Other expense, net                                .6                1.6
                                                        --------------      -------------
                      Loss before income taxes                   -2.3               -1.6
                  Income tax expense (benefit)                    0.9                0.3
                                                        --------------      -------------
                       Net loss                                 -3.2%              -1.9%
                                                        ==============      =============
</TABLE>
                                                  
         Consolidated  sales for the first  quarter of fiscal 1997  increased by
$10.4  million  (20%)  compared  to the  first  quarter  of fiscal  1996.  Sales
increased at Farah U.S.A. and Farah  International  by 27% and 4%,  respectively
and decreased at Value Slacks by 3%.

         Farah  U.S.A.  sales for the first  quarter  of fiscal  1997 were $47.5
million  compared  to $37.4  million in the first  quarter  of 1996.  Unit sales
increased 27% while the average unit selling price remained  constant.  Sales of
Savane product increased 15% in the first quarter of 1997 compared to 1996. This
increase  resulted from increases in existing product sales and the introduction
of new lines.  Sales of dress Savane product and casual Savane product increased
24% and 18%, respectively,  in the first quarter of 1997 compared to 1996. Sales
of women's  casual wear and men's  shirts,  that were not  introduced  until the
second half of fiscal 1996, also  contributed to the growth in the Savane label.
Sales  of John  Henry  and  Farah  products  also  increased  by 248%  and  47%,
respectively.  The Company completed a product  repositioning in the second half
of 1996,  which  resulted in increased  sales in both labels.  Shipments of John
Henry  product  to Sears  began in the  third  quarter  of  fiscal  1996,  while
shipments  of  Farah  product  to a major  retailer  in the  mass  merchandising
distribution channel began early in the fourth quarter of 1996. Sales of private
label  increased 52% as a result of retailers  expanding  their lines to include
more private label products.

         Farah  International  sales in the first  quarter  of 1997  were  $10.4
million  compared  to $10.0  million in the first  quarter of 1996.  Unit volume
decreased 7% while the average  selling price increased 12%. Sales at Farah U.K.
represented 59% of international  sales and decreased 2% for the quarter.  Sales
in this location were negatively impacted by inventory losses resulting from the
fire in the  Company's  plant  in  Ireland,  discussed  below.  Sales  at  Farah
Australia and New Zealand,  represented 39% of total  international  sales,  and
increased 16% in the first quarter of 1997 compared to 1996.  Increases in these
countries were mainly attributable to continued market acceptance of the wrinkle
free and private label product.

         Value  Slacks  sales in the first  quarter  of 1997  were $4.0  million
compared to $4.1 million in the first  quarter of 1996,  a 3% decrease.  Overall
store sales  decreased due to the shortened  retail period between  Thanksgiving
and Christmas and severe  weather  conditions in the Midwest and Eastern  United
States.  In addition,  sales were adversely  affected  during the quarter as the
Company  transitioned  product in the stores from  closeouts  and  irregulars to
first quality goods.

         As a  percent of sales,  gross  profit was 28% in the first  quarter of
1997 and 27% in the first quarter of 1996.

         Farah  U.S.A.  gross  profit as a percent of sales was 26% in the first
quarter of 1997  compared to 22% in the same period of 1996.  Fewer  promotional
and  closeout  sales,  and cost  reduction  efforts  through  better  production
planning  and  sourcing  have been the  principal  factors  contributing  to the
improvement in gross profit  margins.  This,  combined with  increased  sales of
Savane  products,  which  generally  carry  higher  margins,  have  improved the
Company's overall gross profit percentage.

         Farah  International  gross profit as a percent of sales decreased from
34% in the first quarter of 1996 to 32% in the first quarter of 1997. Because of
the  damages  to  inventory  from  the  fire  in the  Company's  Irish  facility
discussed below, the Company was unable to deliver certain  orders. The Company,
however,   continued  to  incur  certain  levels  of fixed  operating  costs  in
connection  with its  production  facilities,  resulting  in lower gross  profit
margins.

         Value Slacks gross profit as a percent of sales  decreased  from 50% in
the  first  quarter  of 1996 to 46% in the  first  quarter  of  1997.  Inventory
shrinkage  combined  with a lower mix of  irregular  and  closeout  sales  which
typically carry higher profit margins, contributed to the decrease.

         Selling,  general and administrative  expenses ("SG&A") as a percent of
sales was 26% in the first  quarter of 1997,  down from 27% in the first quarter
of 1996. SG&A was down 1% at Farah U.S.A., offset partially by an increase of 2%
at both Farah  International and Value Slacks. At Farah U.S.A.,  the decrease in
SG&A was attributable to lower overall expenses resulting from company wide cost
reduction  efforts,  combined with the favorable effects of fixed costs that did
not increase in relation to the increased sales levels.  The increase in SG&A at
Farah International  resulted mainly from the effects of translation of expenses
from foreign  currencies to the U.S. Dollar. In local currencies,  SG&A expenses
were comparable. At Value Slacks, the increase in SG&A resulted from fixed costs
that did not decrease in relation to lower sales.

         On January 5, 1997, a fire  occurred at the  Company's  leased  garment
manufacturing  plant  in  Galway,   Ireland,  in  which  certain  inventory  and
manufacturing  equipment owned by the Company were either  destroyed or damaged.
In addition, the Company's other  Irish facility  located in Kiltimagh  has been
adversely affected because  of its dependency  on the  operations of the  Galway
facility.  As a result of the fire and its related impact, the Company  recorded
a non-recurring charge (after tax and net of insurance proceeds) of $2.5 million
in the  first quarter of fiscal 1997.  There was some  shortfall in sales in the
Company's  United  Kingdom  operations  because of the  fire  during  the  first
quarter.  Management believes that such effect will continue to some degree into
the  second quarter,  although it believes  there  will be no long term material
impact.

         The Company  recorded  tax expense on a  consolidated  loss in both the
first quarter of 1997 and 1996. The Company's effective tax rate varies with the
mix of income or loss in countries in which the Company  conducts its  business.
Most  significant  was that the Company did not provide tax benefits on the loss
in connection with the fire in its Irish facility.

Financial Condition

         The Company's  primary Credit  Agreement  provides up to $50 million of
credit through July 1, 1998, for the Company's  United States and United Kingdom
operations for either  borrowings or letters of credit.  Availability  under the
Credit  Agreement is limited by formulas  derived from accounts  receivable  and
inventory.  As of February 2, 1997, usage under the agreement was  approximately
$24.9 million and the excess  credit line  available  was $23.3  million.  As of
February 2, 1997 the  Company was in  compliance  with all  covenants  under the
Credit Agreement.  The current Credit Agreement allows for consolidated  capital
expenditures for fiscal 1997 of $6,500,000.  Capital spending plans for 1997 are
such that management is currently negotiating an increase in this limit.

         Net cash used in  operations in the first quarter of 1997 was $114,000,
primarily  as a result of an  increase  in  inventories  and a decrease in trade
payables.  Production levels were increased in the first quarter to raise levels
to meet expected  demand.  The decrease in trade payables  resulted  mainly from
lower piece goods purchases at the end of the first quarter. Offsetting the cash
used for  increased  inventories  and lower  trade  payables  was a decrease  in
accounts receivable.  This decrease is consistent with the normal seasonality of
the Company's business.

         Capital   expenditures  through  February  2,  1997  approximated  $2.6
million.  Expenditures were mainly for manufacturing equipment, the construction
of new corporate headquarters,  and information systems. As of February 2, 1997,
the Company had commitments for future capital  expenditures of approximately $1
million.


Factors Affecting the Company's Business and Prospects

         The Company  cautions  readers  that  various  factors  could cause the
actual  results of the  Company to differ  materially  from those  indicated  by
forward-looking  statements  made from time to time in news  releases,  reports,
proxy  statements,  registration  statements  and other  written  communications
(including the preceding sections of this Management's Discussion and Analysis),
as well as oral  statements  made  from time to time by  representatives  of the
Company. Except for historical  information,  matters discussed in such oral and
written  communications  are  forward-looking  statements that involve risks and
uncertainties,  including,  but not limited to, economic and business conditions
in the U.S. and abroad; the level of demand for apparel products and the success
of planned  marketing  programs;  the intensity of  competition  and the pricing
pressures that may result;  changes in labor and import and export  regulations;
the ability of the Company to timely and effectively  manage  production  levels
and sourcing;  the ability of the Company to access the credit market to finance
capital expenditures; and currency fluctuations.




<PAGE>

                           PART II. OTHER INFORMATION

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

             Exhibit 11                     Statement regarding computation of
                                            net loss per share.

             Exhibit 27                     Financial Data Schedule

      (b)  Reports on Form 8-K.

             No reports on Form 8-K have been filed during the quarter for which
the report is filed.



                                   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.

                               FARAH INCORPORATED




Date:        March 18, 1997



                                 /s/ Russell G. Gibson                        
                                 Russell G. Gibson
                                 Executive Vice President
                                 Principal Financial Officer




                                 /s/ Polly H. Vaughn          
                                 Polly H. Vaughn
                                 Principal Accounting Officer



<PAGE>


                       FARAH INCORPORATED AND SUBSIDIARIES

                           FORM 10-Q INDEX TO EXHIBITS

                                FEBRUARY 2, 1997


                                                                        Page
                               Description                             Number

Exhibit 11               Statement regarding computation of              11
                         net loss per share.
                             

Exhibit 27               Financial Data Schedule                         12
<PAGE>