SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
    Mark One
                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    -------
      X          THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
    -------
                    For the Fiscal Year Ended November 3, 1996
                                        OR
                  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
               OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                             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                79925-6584
       (Address of principal executive offices)           (Zip Code)

     Registrant's telephone number, including area code:   (915) 593-4444
          Securities registered pursuant to Section 12(b) of the Act:

                                                  Name of each exchange
               Title of each class                 on which registered
             Common Stock, No par value          New York Stock Exchange

           Securities registered pursuant to Section 12(g) of the Act:
                     8.5% Convertible Subordinated Debenture
                               due February 1, 2004

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

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes X No ___

     As of January  13,  1997 there were  outstanding  10,235,371  shares of the
registrant's  common stock,  no par value,  which is the only class of common or
voting stock of the registrant.  As of that date, the aggregate  market value of
the shares of common stock held by  non-affiliates  of the registrant  (based on
the closing price for the common stock on the New York Stock Exchange on January
13, 1997) was $80,121,652.

                       DOCUMENTS INCORPORATED BY REFERENCE
     Portions of the following  documents are incorporated by reference into the
indicated part or parts of this report: 

      Annual Report to Shareholders for fiscal year ended November 3, 1996
                - Parts I and II (attached as Exhibit 13 hereto).
               Proxy Statement Dated January 31, 1997 - Part III.
                  THE EXHIBIT INDEX IS ON PAGE 18 OF FORM 10-K

                                     PART I

Item 1.  BUSINESS

General

         The Company, founded in 1920, is a leading manufacturer and marketer of
apparel for men and boys.  Beginning in fiscal 1996, a limited amount of women's
products were added to the Company's product lines. The Company was incorporated
in Texas in 1947 as Farah  Manufacturing  Company,  Inc. The name of the Company
was changed to Farah Incorporated in 1987.

         The Company is organized as three distinct operating  divisions:  Farah
U.S.A.,  Farah International and Value Slacks. Farah U.S.A. (74% of consolidated
revenue for fiscal  1996)  manufactures  and sells a variety of casual and dress
apparel to retailers  throughout the United States.  Farah International (19% of
consolidated  revenue for fiscal 1996) manufactures and sells apparel in several
countries in Europe,  Australia and Asia. Farah International's  primary markets
are  the  United  Kingdom,  Australia  and  New  Zealand.  Value  Slacks  (7% of
consolidated  revenue for fiscal 1996) operates retail stores which sell apparel
manufactured by the Company for these stores,  close-outs and seconds from Farah
U.S.A., and a limited amount of merchandise  purchased from third parties. As of
November 3, 1996,  Value Slacks had 39 retail stores,  all located in the United
States.

Products

         The Company manufactures high quality,  medium priced,  fashion apparel
for men, boys and women.  The Company's  products  include casual slacks,  dress
slacks,  suit separates  (matching  pants and  sportcoats  that may be mixed and
matched to accommodate retail customer size preferences), sportcoats, shorts and
shirts. The Company's  products are sold under three primary labels:  Savane(R),
Farah(R) and John  Henry(R).  In addition,  the Company  manufactures  and sells
private label products for certain customers.

         The  Company's  apparel  products  are  manufactured  with an  array of
fabrics  that emphasize  comfort,  fit and performance.  It is known for its use
of  "performance  fabrics"  that maintain a fresh,  neat  appearance, and  who's
product  lines  primarily  use  100% cotton fiber  and blended  fabrics  (rayon/
polyester  or  wool/polyester).   Most  of  the  Company's  Savane products  are
offered with PROCESS  2000(R).  PROCESS 2000 is the Company's  trademark,  first
introduced in late fiscal 1989, used to describe the wrinkle resistant  features
of the Savane  garments.  PROCESS  2000  fabrics  are soft,  wrinkle  and shrink
resistant  and behave like  "permanent  press." The Company also sells  products
under the Farah and John Henry labels and private label  products  using wrinkle
resistant technologies.

         In 1995, the Company  co-developed a dying process for dying color-fast
bottom  weight  fabrics for use in its  garments.  The garments are then treated
with a soft-hand,  stain  repellent  finish.  These  products  provide  no-fade,
no-stain  features on no-wrinkle  cotton  slacks.  These  products were launched
under the  Deep Dye Savane  label in 1996 and are now the Company's best selling
cotton slacks.

         Additional information with respect to the Company's significant labels
is as follows:

         Savane - Both dress and casual products are sold under this label.  The
Company has positioned the Savane product as a high quality garment using better
fabrics and finer workmanship, and is sold  primarily to department stores.  The
major product lines included under this label are as follows:

                  Savane  Casual's  for Men and  Boys - Savane  Casuals  include
         slacks and shorts  for men and boys.  Slacks are made from 100%  cotton
         fabrics and are treated with PROCESS 2000.  The Company  offers several
         distinctly different products in this category.  Savane Classic Casuals
         offer no  wrinkle  softness  together  with  soil and  stain  resistant
         treatments.  Savane  Softwash  Casuals  are  manufactured  with  unique
         softening  agents  for a soft  finish.  Savane  Deep Dye  Casuals  were
         introduced  in  1996  and  are  treated  with the Deep Dye process that
         provides fade resistant features.    Included  in  the  Savane Deep Dye
         Casuals are the newly  introduced  Deep Dye Fancies which are patterned
         goods made mostly from 100% cotton.  Fancies are upscale  casual slacks
         having a semi-dress  look,  that is  moderately  priced and have the no
         wrinkle, easy care features.

                  Savane  Casual's  for Women - Savane  casuals  for women  were
         introduced  by the  Company in the third  quarter of fiscal  1996.  The
         women's line  includes  casual  cotton  twill slacks in selected  basic
         colors and offers the same no wrinkle,  easy care performance  features
         as the men's  products.  These  products were  introduced  with limited
         distribution,  however,  the Company  intends to pursue this program by
         offering  it to more  customers  and by  expanding  the line to women's
         shirts, and possibly skirts, in 1997.

                  Savane Shirts - The Company began  shipping  Savane shirts for
         men late in the 1996  fourth  quarter.  Savane  shirts are made of 100%
         cotton and treated with  PROCESS  2000.  Savane  shirts are designed to
         compliment  the  Company's  line of bottoms.  The Company also plans to
         expand its shirt  business in 1997 by offering a broader line of cotton
         fabrics while also adding knits.

                  Savane Dress Wear - Savane dress wear  includes  men's slacks,
         coats  and  suit   separates.   Dress   products  are  made  mainly  of
         polyester/wool  and  polyester/rayon  blend  fabrics.  A Deep Dye Dress
         product is also offered,  providing the same fade resistant features as
         the casual wear. In the first  quarter of 1997,  the Company will begin
         shipments of a new upscale dress line, Savane  Elements(TM).  This line
         uses high  performance  Savane fabric finishes on polyester,  rayon and
         worsted wool.  Savane Elements  include dress slacks with  coordinating
         coats, offering a sportswear career apparel.

         Farah - Products  sold under this label  include men's casual and dress
slacks. Dress products are made from blended fabrics,  while casual products are
mainly 100% cotton.  Some casual slacks with these labels are  fabricated  using
wrinkle  resistant  technologies.  These products are primarily sold through the
mass merchant distribution channel.

         John Henry -- This label is  primarily  used for higher  fashion  dress
slacks and suit separates produced from blended fabrics. Certain of the products
in this  line  use  wrinkle  resistant  technologies.  The  John  Henry  line is
currently  being  sold to  Sears.  Product  distribution  of this  label  should
continue to grow in 1997 as the Company delivers more product to Sears and gains
additional customers in this market segment.

         Private Label - The Company primarily produces casual and dress product
for various  retailers using their own labels.  Products produced include casual
wear,  dress,  womenswear  and boys.  Such  product is  produced  to  customers'
specifications.

Business Strategy

         The  Company's  business  strategy  is (1)  to  maximize  sales  of its
products by positioning  them in clear channels of  distribution  and adding new
merchandise  within  each  product  category,  (2)  reduce the  overall  cost of
sourcing  products  by  relying on third  party  contractors,  which  allows the
Company to better control  inventory  levels and match  production with customer
demands, and (3) maintain a low cost administrative structure.

         Farah  U.S.A. has recently  experienced   significant   growth  in  its
wrinkle-free  products  as causal wear  gained  more  acceptance  in the market.
During fiscal 1994,  Savane  product sales increase by more than 89% over fiscal
1993.   However,  as the sales of Savane  products  increased sales of the Farah
and  John Henry   labeled  products   began  to decline.    One reason  for this
decrease was the competition from the Savane products, which were  being sold in
the same channels of distribution. Accordingly, management decided to reposition
its products  into separate  and distinct  channels of  distribution to maximize
sales  in each of the product groups.  In June 1996, the Company began  shipping
John  Henry  product to Sears.    Product  sales  of this  label  include  men's
dress slacks, sport  coats and suit separates.   In the 1996 fourth quarter, the
Company began selling its Farah brand  products to a  limited  number of  stores
of  a major  retailer  in the  mass  merchandising  distribution  channel.   The
Company  continues  to sell  Savane  products to the department store channel of
distribution.

         Following the  repositioning of it products, the Company began focusing
on  increasing  sales in all three  of the product  categories.   During  fiscal
1996, the  Company  introduced  Deep  Dye  casuals  and  dress, womenswear,  and
shirts, all under the Savane label.   In fiscal 1997,  the Company  will offer a
new  line of upscale  dress wear,  called Savane  Elements,  together with a new
line of golf wear  focused  on  comfort  and  performance.   To further  broaden
the  Savane label,  the  Company  also  intends  to pursue  licensing agreements
with selected apparel and apparel related vendors.

         Initial  sales of the John Henry  product  to Sears  included a limited
line of dress  slacks  which  sold  extremely  well,  indicating  wide  consumer
acceptance.  The line has since  been  increased  to  include  additional  dress
slacks,  sports  coats  and  suit  separates.  Plans  for  fiscal  1997  include
increasing  distribution to additional Sears stores,  as well as adding products
to the current line.

         The Company  intends to broaden  distribution  of the Farah label,  not
only to additional stores within its present mass merchant customer, but also to
other retailers in this same  distribution  channel.  Furthermore,  in the first
quarter of 1997,  the Company  entered into an  agreement  with its present mass
merchant  customer  to license  the Farah label on a  non-exclusive  basis.  The
license applies to all categories of men's, women's,  boys', and girls' apparel,
accessories  and  shoes.  The  Company  believes  this  license  will  assist in
expanding sales of the Company's existing Farah labeled products currently being
sold to this retailer and will also result in licensing  fees for sales of other
labeled products sold by this retailer.

         In addition to the product realignment,  the Company launched a program
to  re-examine  its  costs at all  levels.  The U.S.  production  workforce  was
dramatically  reduced and all U.S.  sewing and finishing  processes were shifted
offshore to take advantage of lower costs. In October 1995, the Company sold its
coat  manufacturing  facility  in San Jose,  Costa Rica,  and in June 1996,  the
Company sold its largest production facility located in Piedras Negras,  Mexico.
Management  has shifted its strategy to place less  dependence  on Company owned
facilities allowing for greater flexibility in production sourcing. Although the
Company still owns production facilities in Mexico and Costa Rica, approximately
two-thirds  of current  production  is  supplied by outside  contractors.  Farah
U.S.A.  is currently  negotiating to form joint  ventures with existing  apparel
manufacturers in Mexico. These joint ventures will allow the Company to maintain
control  of  its  unique  finishing   processes,   while   minimizing   required
investments.

         Management also made  significant  changes in its selling and marketing
strategies during fiscal 1996. The mix of the sales force was changed,  reducing
the number of salesmen and replacing them with coordinators, whose purpose is to
ensure that the merchandise and promotional materials are properly displayed and
assist  store  personnel.  A change was also made in the  Company's  advertising
strategy,  targeting  specific  consumer  markets by placing heavier emphasis on
print media.  In addition,  more  marketing  dollars were  allocated to point of
sales  efforts that  included  store  display  tables and  fixturing,  enhancing
product attractiveness to the consumer.

Farah U.S.A.

         General.  Farah U.S.A. produces and sells a variety of casual and dress
clothing lines to retailers  throughout the United States.  Substantially all of
Farah U.S.A.'s apparel is produced by third party contractors, located primarily
in Mexico and Central America, and Farah U.S.A.  factories located in Costa Rica
and Mexico. Farah U.S.A.'s products are directed to the men's, boys' and women's
segments of the apparel  industry,  with  approximately  93% of branded sales in
fiscal 1996 in the men's  segment.  In fiscal 1992,  Farah U.S.A.  established a
private  label  division to  manufacture  and sell  private  label  products for
certain customers.  Sales in the private label division have grown and represent
21% of Farah U.S.A. sales in fiscal 1996.

         Sales and  Product  Distribution.  In 1996,  Farah  U.S.A.  completed a
realignment of its product  positioning in the marketplace.  Savane continues to
have a strong  position  in  department  stores,  while the John Henry brand was
introduced to Sears.  Early in the fourth  quarter,  shipments of  Farah-labeled
product began to the mass merchant  channel.  By positioning the brands in three
distinct  distribution  channels,  management  believes the Company is in a more
favorable position to maximize sales potential.

         Farah U.S.A.  has six regional  corporate  account  executives  who are
directly  responsible for certain major retail accounts.  Farah U.S.A. employs a
field sales force who report to one of the corporate account  executives and are
responsible for the primary relationship with smaller retailers.

         Farah  U.S.A.  uses a computer  system which was first  implemented  in
fiscal 1990 as part of a company-wide  program to increase  quality and customer
service.  The system runs on laptop computers that the Farah U.S.A.  sales force
carries  with them as they  contact  retailers.  This system  maintains  timely,
accurate data on style numbers, prices and size charts (size charts describe the
distribution of sizes that a retailer typically sells). The system also provides
up-to-date,   easily  accessible  data  on  inventories,   customer  orders  and
production  backlogs.  With the system,  the sales force can execute orders more
efficiently  and assist the  retailer in  attaining  higher  margins by reducing
inventory imbalances.

         Orders  from  retailers  are filled  from  inventory  at the  Company's
facility  in El Paso.  Most  shipments  to  retailers  are sent  directly to the
retailers' stores or to independent distribution centers. Certain retailers pick
up their goods at the El Paso facility.

         Manufacturing  and Sourcing.  The men's apparel  industry in the United
States has two primary selling  seasons.  The Spring selling season extends from
December to April,  and the Fall  selling  season  extends from May to November.
Farah U.S.A.'s operations follow this seasonal pattern. The various steps in the
manufacturing  cycle  are  timed so that  Farah  U.S.A.  begins  to  manufacture
products  for a given  season  two to three  months  before  the  retail  season
officially begins.

         Farah  U.S.A.  purchases  its  fabric  and trim  requirements,  such as
pocketing,  linings,  belts, buttons,  zippers and thread, from several domestic
and foreign  sources.  No single  supplier of raw materials is critical to Farah
U.S.A.'s  long-term  production  needs.   Although  the  Company  believes  that
alternative  sources of supply  exist,  in the event Farah U.S.A.  needs to seek
additional or replacement  suppliers,  short-term  disruptions  could occur. The
order lead time for fabrics is  approximately  two to six months.  Payment terms
are generally 60 days. All fabrics are delivered to the Company's  cloth cutting
facility in El Paso, Texas.  Quality control procedures are in place to test for
flaws, coloring, stretch, shrinkage and other characteristics.

         After  fabrics  are cut,  they are  inspected,  batched  and packed for
shipment  to one of Farah  U.S.A.'s  offshore  manufacturing  plants or to third
party contractors. Farah U.S.A. uses company-owned factories in Mexico and Costa
Rica or third party  contractors  to sew all of its  products.  All products are
then  finished at the  Company's  laundry and pressing  facilities  in Mexico or
Costa Rica or at third party contractors.  In fiscal 1996,  approximately 57% of
Farah U.S.A.'s total production was sewed in its own factories, with the balance
sewed by  independent  contractors.  In June 1996,  the Company sold its Piedras
Negras,  Mexico  manufacturing  facility.  In conjunction  with the sale of this
facility,  the Company  entered  into a long term supply  agreement  whereby the
buyer of the facility will continue to sew and finish  garments for the Company.
Since the sale of the facility,  the percentage of Farah U.S.A.  production from
outside  contractors increased from 33% at the end of fiscal 1995, to 62% at the
end of fiscal 1996.   Farah  U.S.A. performs  sewing  and finishing  offshore in
order to keep  production  costs low.  The  offshore  plants  pack the  finished
garments  and ship  them  back to El Paso  for  distribution  to Farah  U.S.A.'s
customers.

         Marketing.  Retailers are requiring  increased  quality of service from
their  suppliers  and  greater  flexibility  in managing  their  inventories  as
consumer demands change.   Many of Farah U.S.A.'s  major  customers  participate
in an inventory replenishment program  referred to as "Quick  Response."  "Quick
Response"  has  evolved  in the  apparel  industry  to   assist   retailers   in
minimizing their inventories by requiring the apparel  manufacturers to maintain
enough finished goods inventory on hand to meet the  retailer's  demand on short
notice.   Most "Quick  Response" orders are  shipped  within 72 hours of receipt
of the order from the  retailer.  The Company has implemented an electronic data
interchange ("EDI") system with selected large  retailers in order to respond to
their  demands  to provide better service  and  facilitate  the "Quick Response"
program.   EDI systems allow retailers to  electronically  transmit  orders  for
certain  items  on a  frequent  basis,  typically  weekly.   Some retailers also
transmit  detailed sales data from their store locations.   The Company uses the
sales data to anticipate  demand from the retailers,  update sales forecasts and
plan and monitor production and inventory levels.

         In addition, in an effort to enhance retail presentation,  Farah U.S.A.
employs merchandise  coordinators who visit retail store accounts that carry the
Company's branded product.  Merchandise  coordinators provide services,  such as
training and education of in-store sales personnel about the Company's products;
straightening slacks and ensuring that displays are neat and orderly; responding
to customer  questions and comments;  and ensuring that the stores are satisfied
with their level of service.

         Advertising.   Farah  U.S.A.'s  advertising  program  is  comprised  of
national media advertising and participation in cooperative advertising programs
with retailers.  In fiscal 1996,  management shifted its advertising strategy to
more  heavily  focus on print media and  point-of-sale  merchandise  and less on
national  television  campaigns.  Advertising through several national magazines
and other printed  material in 1996 resulted in significant cost reductions that
have allowed  increases in customer  store  display  tables and  fixturing.  The
Company also participates in cooperative  advertising programs where the Company
and  individual  retailers  combine  their  efforts  to share the costs of local
television, radio and newspaper advertisements.

         Competition.  The  apparel  industry is highly  competitive  due to its
fashion orientation,  its mix of large and small producers, the flow of imported
merchandise and a wide variety of retailing  methods.  The principal elements of
competition in the apparel  industry  include style,  quality,  price,  comfort,
brand loyalty, customer service and advertising. The men's slacks segment of the
men's apparel industry is  characterized by a large number of participants.  The
Company believes its largest competitors in the United States are Levi Strauss &
Co. and Haggar Corp. Levi and certain other  competitors  have larger  financial
and marketing  resources and  therefore,  offer  significant  competition to the
Savane label.

Farah International

         Farah  International  sells  apparel  in several  countries  in Europe,
Australia and Asia. The primary markets for Farah  International  are the United
Kingdom,  Australia and New Zealand.  Farah  International  produces most of its
products in two locations,  and third party  contractors  produce the remainder.
Owned  and  leased  plants  in  Ireland   together  with   independent   outside
contractors,  supply  the  United  Kingdom  market,  and two  factories  in Fiji
operated by a 50% joint venture supply the markets in Australia and New Zealand.
The  Company  continually  examines  the cost  effectiveness  of its  suppliers,
including Company-owned  facilities,  and from time to time shifts production to
lower cost suppliers.  Approximately 61% of 1996 production was sourced from the
Company-owned   manufacturing   facilities.   The  Company   products  are  sold
internationally  primarily under the Farah and Savane labels, as well as private
labels.

         Subsequent  to year end,  on January 5, 1997,  a fire  occurred  at the
Company's  leased  garment  manufacturing  plant  in  Galway,  Ireland.  Certain
inventory and manufacturing  equipment were destroyed or damaged;  however,  the
Company  believes  that it is fully insured for such losses.  It is  anticipated
that it will take a minimum of six  months to fully  restore  operations  at the
Galway  facility.  Losses  may be  incurred  related to the  prolonged  business
interruption  of this  facility and its related  impact on the  Company's  other
manufacturing  facility  in  Ireland.   Accordingly,   management  is  currently
evaluating  whether it is  economically  feasible to continue its  operations in
Ireland.

         Farah International products primarily include dress and casual slacks,
and shirts and sweaters  manufactured  by third parties.  Farah  International's
products are designed for the specific styles and tastes of the markets in which
they are sold and differ  from Farah  U.S.A.  apparel.  During  fiscal  1996 the
majority of Farah  International's  products were made from polyester fabrics or
blended  fabrics with a high  polyester  content,  as opposed to natural  fibers
which are more popular in the United States.

         The United  Kingdom is Farah  International's  principal  market and in
fiscal 1996 accounted for approximately 63% of its sales.  Distribution channels
in the  United  Kingdom  are  significantly  different  from those in the United
States in that retailers carry more private label brands than branded  products.
Farah  International's  primary distribution  channels in the United Kingdom are
large retail outlets and independent menswear stores.

         Farah Australia and Farah New Zealand  accounted for  approximately 36%
of Farah  International's  sales in fiscal 1996. Farah New Zealand was opened in
fiscal 1990 under the same management as Farah Australia.

         For information  regarding the sales,  operating  profits and assets of
the Company in each of the  geographic  segments in which the Company  operates,
see Note 10 of Notes to Consolidated Financial Statements.

Value Slacks

         Value Slacks stores offer Farah U.S.A.'s seconds, irregulars and excess
merchandise,  combined with some merchandise manufactured specifically for Value
Slacks. Value Slacks began with one outlet store in downtown El Paso in 1968 and
has added locations as the Company's production has grown. Value Slacks operated
39 retail outlet stores as of November 3, 1996, all of which were located in the
United  States.  The stores are  generally  2,000 to 5,000  square  feet and are
generally located in suburban outlet malls or strip centers.

         In prior  years,  the majority of Value  Slacks'  stores were in Puerto
Rico.  As the factory  outlet  store  concept  gained  acceptance  in the United
States,  Value Slacks began reducing  operations in Puerto Rico and expanding in
the United  States.  By the end of the fourth  quarter of 1995, all Puerto Rican
stores were closed.

Customers

         The Company's  primary customers are department  stores.  The Company's
ten  largest  customers   accounted  for  approximately  55%  of  the  Company's
consolidated  revenues during fiscal 1996. In fiscal 1996,  Federated Department
Stores,  Inc.  accounted for $36,260,000  (14.6%) of the Company's  consolidated
sales, and Dillard Department Stores,  Inc. accounted for $26,571,000 (10.7%) of
consolidated sales.

 Trademarks

         The  Company  owns  many  U.S.  and  foreign  trademark  registrations,
including  Savane,  Savane  Elements,  PROCESS  2000,  Farah and Farah  Clothing
Company,  and has several  other  trademark  applications  pending in the United
States and foreign  countries.  The John Henry trademark is licensed from Zodiac
International Trading Corporation, an affiliate of Salant Corporation.  The John
Henry license is renewable by the Company through 2038.

Backlog

         Many of Farah  U.S.A.'s  major  customers  participate  in an inventory
replenishment  concept referred to as "Quick Response" as previously  discussed.
As a result,  customers tend to place orders close to delivery dates. Because of
the trend toward Quick  Response,  orders which are received are not necessarily
firm commitments. Therefore, the Company does not consider customer orders to be
"backlog" or necessarily an indication of future sales.

Factors Affecting the Company's Business and Prospects

         Statements  in this Report that relate to future  results or events are
based on the Company's current expectations.  There are many factors that affect
the  Company's  business  and the results of its  operations  that may cause the
actual results of operations in future periods to differ  materially  from those
currently  expected or desired.  These  factors  include  general  economic  and
business  conditions  in the U.S.  and  abroad;  the level of demand for apparel
products;  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 sourcing; the ability of the
Company to access the credit market to finance capital expenditures; the ability
of the  Company to manage its  inventory  levels to minimize  excess  inventory;
currency fluctuations; and the success of planned advertising.

Seasonality

         The Company's  products are primarily  marketed for the Spring and Fall
retail selling seasons each year, with interim lines introduced  periodically to
complement the two primary selling  seasons.  Sales volume for the first quarter
is  generally  the lowest of the year while the fourth  quarter is the  highest.
Farah U.S.A. closes some of its factories in the first quarter for approximately
two weeks at Christmas time.  However,  with the Company's  introduction of more
year-round basic products, the seasonality has been diminished somewhat.

Regulation

         Substantially  all of the Company's  total  production is  manufactured
abroad, either in its foreign factories or through arrangements with independent
foreign  contractors.  As a result,  the Company's  operations  may be adversely
affected by  political  instability  resulting in the  disruption  of trade from
foreign countries in which the Company's  facilities or contractors are located,
the imposition of additional  regulations  relating to imports or duties,  taxes
and other charges on imports,  any  significant  fluctuation of the value of the
dollar against foreign  currencies and restrictions on the transfer of funds. In
addition,  the Company's import operations are subject to constraints imposed by
bilateral  textile  agreements  between the United  States and  certain  foreign
countries.  These agreements impose quotas on the amount and type of goods which
can be  imported  into the United  States  from these  countries.  However,  the
Company closely monitors import quotas and can, in most cases,  shift production
to contractors  located in other countries with available  quotas or to domestic
factories.  The Company's  apparel products that are imported from its factories
in Mexico and Costa  Rica are  eligible  for  certain  duty-advantaged  programs
historically known as "807 Programs." With the advent of the North American Free
Trade Agreement  (NAFTA),  import quota regulations are not as significant as in
prior years.

Employees

         As of November 3, 1996, the Company had approximately  3,600 employees.
As of that  date,  Farah  U.S.A.,  Farah  International  and  Value  Slacks  had
approximately  3,000, 400 and 200 employees,  respectively.  Of these employees,
approximately 400 were either salaried or paid based on sales commissions earned
and the  remainder  were paid on an hourly basis or on the basis of  production.
Approximately  250 of Farah U.S.A.'s United States  employees are members of the
Amalgamated  Clothing and Textile Union and  approximately  650 of its employees
are members of a union in Mexico. The collective  bargaining  agreement with the
Company's  United  States  employees  expires in February  1997 and is currently
under  negotiation.  The  collective  bargaining  agreement  for  the  Company's
employees  in Mexico  expires  in  December  1997.  The  Company  considers  its
relations with its employees to be good.

Environmental Regulations

         Current  environmental  regulations have not had and, in the opinion of
the Company, assuming the continuation of present conditions,  will not have any
material effect on the capital expenditures, earnings or competitive position of
the Company.

Derivative Financial Instruments

         In 1996, the Company did not utilize derivative financial instruments.

Item 2.  PROPERTIES

         The   Company's   principal   executive   offices  and  United   States
distribution  facility are located in El Paso, Texas. The Company considers both
its  domestic and  international  facilities  to be suitable,  adequate and with
sufficient  productive capacity for current  operations.  The Company's lease on
its corporate  headquarters in El Paso, Texas expires in May 1998.  Accordingly,
the Company plans to relocate its Corporate offices to another El Paso location.
The new offices will be leased under an operating lease  agreement  estimated to
begin in the second quarter of fiscal 1997. The Company has also  contracted for
the construction of a new distribution  warehouse  located in Santa Teresa,  New
Mexico.  Relocation  to the new  warehouse  is planned for the first  quarter of
fiscal 1998. <TABLE> <CAPTION>

         The following table reflects the general location,  use and approximate
size of the  Company's  significant  real  properties  currently in use or under
construction:
<S>                                  <C>                                        <C>
                                                                                  Approximate           Owned/
            Location                                  Use                       Square Footage        Leased (1)
            --------                                  ---                       --------------
                                                                                                     -------------

El Paso, Texas                       Garment manufacturing plant                         116,000     Owned (2)
Chihuahua, Mexico                    Garment manufacturing plant                          54,000     Owned
San Jose, Costa Rica                 Garment manufacturing plant                         124,000     Owned
Cartago, Costa Rica                  Garment manufacturing plant                          77,000     Owned
Kiltimagh, Ireland                   Garment manufacturing plant                          23,000     Owned
Auckland, New Zealand                Office/Warehouse                                      9,000     Owned
El Paso, Texas                       Office/Warehouse                                  1,033,000     Leased (3)
El Paso, Texas                       Garment manufacturing plant                         201,000     Leased
Sydney, Australia                    Office/Warehouse                                     29,000     Leased
Suva, Fiji                           Two garment manufacturing plants                     35,000     Leased (4)
Witham, United Kingdom               Office/Warehouse                                     57,000     Leased
Galway, Ireland                      Garment manufacturing plant                          36,000     Leased (5)
Retail locations in the United
    States                           38 Retail stores                                    100,000     Leased
El Paso, Texas                       Corporate offices                                    43,500     Leased (6)
Santa Teresa, New Mexico             Distribution Warehouse                              250,000     Leased (7)

</TABLE>

(1)      See  Note  8 of  Notes  to  Consolidated  Financial  Statements  for a
         discussion of lease terms.

(2)      Plant  currently used for storage.   Underlying  land is leased through
         February 2002.

(3)      Originally  owned by the  Company  and sold  and  leased  back in 1988.
         Initial lease term is ten years ending in 1998. As of the end of fiscal
         1996, approximately 65% of the Company's El Paso building was subleased
         to a third party.

(4)      By a 50% joint venture.

(5)      The Galway plant was sold and leased back on a month-to-month  lease in
         the second  quarter of fiscal 1996.  Subsequent to year end, on January
         5, 1997,  a fire  occurred at this  facility.  Management  is currently
         evaluating the extent of the losses, to determine if it is economically
         feasible to continue its operations in Ireland.

(6)      Operating  lease  for new  corporate  headquarters was  entered into in
         October 1996.  Construction  is currently  underway  to prepare  office
         space for intended  use.  Relocation  to this  facility is  planned for
         the second quarter of fiscal 1997.

(7)      On November 30, 1996,  the Company  entered into a lease for a facility
         to be constructed with an estimated  completion date of September 1997.
         The lease  agreement  provides an option to purchase the  warehouse for
         $6,700,000.  Such purchase would be subject to satisfactory  Industrial
         Revenue Bond financing.  Relocation to the new warehouse is planned for
         the first quarter of fiscal 1998.


Item 3.  LEGAL PROCEEDINGS

         The Company is a defendant in several legal actions.  In the opinion of
the  Company's  management,  based upon the advice of the  respective  attorneys
handling  such  cases,  the  aggregate  of  expected  fees,  expenses,  possible
settlements  and  liability  will  not have a  material  adverse  effect  on the
financial performance of the Company.


Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None
                                     PART II

Item 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS

         The information required under this item is set forth under the caption
"Common Stock" on page 32 of the Company's Annual Report to Shareholders for the
fiscal year ended November 3, 1996 and is incorporated herein by reference.

Item 6.  SELECTED FINANCIAL DATA

         The information required under this item is set forth under the caption
"Selected  Financial  Data"  on  page  33 of  the  Company's  Annual  Report  to
Shareholders  for the fiscal  year ended  November  3, 1996 and is  incorporated
herein by reference.

Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         The information required under this Item is set forth under the caption
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  on  pages  34  through  40  of  the  Company's   Annual  Report  to
Shareholders  for the fiscal  year ended  November  3, 1996 and is  incorporated
herein by reference.

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The following  consolidated  financial statements of Farah Incorporated
and  Subsidiaries  included in the Company's  Annual Report to Shareholders  for
fiscal year ended November 3, 1996 on page 14 through 32 are incorporated herein
by reference:

        Quarterly Data (Unaudited) - Supplementary Data for
                 fiscal years 1996 and 1995
        Consolidated  Statements of  Operations - Years ended  November 3, 1996,
                 November 3, 1995 and November 4, 1994
        Consolidated Balance Sheets - November 3, 1996 and November 3, 1995
        Consolidated Statements of Shareholders' Equity - Years ended
                 November  3,  1996,  November  3,  1995 and  November  4,  1994
        Consolidated Statements of Cash Flows - Years ended
                 November 3, 1996,  November 3, 1995 and  November 4, 1994
        Notes to Consolidated Financial Statements - November 3, 1996,
                 November 3, 1995 and November 4, 1994
        Reports of Independent Public Accountants


Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE

         The Board of Directors  previously requested the Audit Committee of the
Board to seek proposals from other  accounting firms with a view toward reducing
the Company's audit and accounting fees. On the basis of the proposals received,
the Board  appointed  the firm of Coopers & Lybrand  L.L.P.  On March 13,  1996,
Coopers & Lybrand L.L.P. was informed of the Board's decision. Also on March 13,
1996, Arthur Andersen L.L.P. was notified of their dismissal.

         The Board  anticipates  that this change in accountants will enable the
Company  to  effect a savings  in audit and  accounting  fees.  Arthur  Andersen
L.L.P.'s  reports on the Company's  financial  statements for the past two years
have not  contained an adverse  opinion or a disclaimer  of opinion and were not
qualified as to uncertainty,  audit scope, or accounting principles.  During the
Company's  two most  recent  fiscal  years  and the  period  from the end of the
Company's  last  fiscal  year to the date of the  Board's  dismissal  of  Arthur
Andersen L.L.P., there have been no disagreements with Arthur Andersen L.L.P. on
any  matter  of  accounting   principles  or  practices,   financial   statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the  satisfaction of Arthur Andersen  L.L.P.,  would have caused it to make a
reference to the subject  matter of the  disagreements  in  connection  with its
reports.


                                    PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information required under this item is set forth under the caption
"Directors  and  Executive  Officers"  on pages 5 through 7, and "Performance of
the  Common Stock"  and  "Stock  Option  and  Compensation  Committee  Report on
Executive  Compensation" on pages 14 through 16 of the Company's Proxy Statement
dated  January 31, 1997  prepared in connection with its 1997  Annual Meeting of
Shareholders and is incorporated herein by reference.

Item 11.  EXECUTIVE COMPENSATION

         The information required under this item is set forth under the caption
"Compensation  of  Executive  Officers"  on pages 8 through 12 of the  Company's
Proxy  Statement  prepared  in  connection  with  its  1997  Annual  Meeting  of
Shareholders and is incorporated herein by reference.

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required under this item is set forth under the caption
"Ownership  of  Common  Stock"  on  pages 2  through  4 of the  Company's  Proxy
Statement  prepared in connection  with its 1997 Annual Meeting of  Shareholders
and is incorporated herein by reference.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information  required  under this item is set forth  under the  caption
"Compensation  of Directors" on pages 12 and 13, and under the caption  "Certain
Transactions" on page 13 of the Company's Proxy Statement prepared in connection
with its 1997  Annual  Meeting of  Shareholders  and is  incorporated  herein by
reference.



                                     PART IV

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

         (a) The consolidated  financial  statements and notes together with the
Reports  of  Independent  Public  Accountants  and  Selected  Financial  Data as
included in the Company's  Annual Report to  Shareholders  for fiscal year ended
November  3, 1996 filed with this  Annual  Report on Form 10-K are  incorporated
herein by reference  (only the  financial  statements  listed  below,  which are
included in the Annual Report to Shareholders for the fiscal year ended November
3,  1996,  are  filed  herewith  and  the  remainder  of the  Annual  Report  to
Shareholders  for the fiscal  year ended  November 3, 1995 is  furnished  to the
Commission for its information):

         Consolidated  Statements of Operations - Years ended  November 3, 1996,
                  November 3, 1995 and November 4, 1994
         Consolidated Balance Sheets - November 3, 1996 and November 3, 1995
         Consolidated Statements of Shareholders' Equity - Years ended
                  November  3,  1996,  November  3,  1995 and  November  4, 1994
         Consolidated Statements of Cash Flows - Years ended
                  November 3, 1996, November 3, 1995 and November 4, 1994
         Notes to Consolidated Financial Statements
         Reports of Independent Public Accountants
         Quarterly Data (unaudited) - Supplementary Data for
                           fiscal years 1996 and 1995
         Selected Financial Data for fiscal years ended 1992 to 1996

         (b)      Reports on Form 8-K.

         No reports on Form 8-K were filed during the last quarter of the period
for which this report is filed.
<TABLE>
<CAPTION>
        (c)      Exhibits.
   <S>  <C>      <C>    

    3            Articles of Incorporation and Bylaws.

    *   3.1      Restated Articles of Incorporation dated March 17, 1988 (filed as Exhibit 3.1 to Form S-3 as of
                 March 25, 1994).

    *   3.2      Amendment to the Articles of Incorporation of Farah Incorporated dated March 26, 1993 (filed as
                 Exhibit 3.2 to Form S-3 on March 25, 1994).

    *   3.3      Bylaws of Farah Incorporated Amended and Restated as of September 1, 1993 (filed as Exhibit 3.2
                 to Form 10-K as of November 5, 1993).


   4             Instruments defining the Rights of Security Holders, including Indentures.

    *   4.1      Indenture, dated as of February 1, 1994 (filed as Exhibit 1 to Form 8-A as of February 1, 1994).

                 Pursuant to  subsection  (b)(4)(iii)  of Item 601 of Regulation
                 S-K, Registrant hereby agrees to furnish to the Commission upon
                 request copies of other instruments  defining rights of holders
                 of  long-term  debt,  none  of  which  instruments   authorizes
                 indebtedness

   10            Material Contracts.

    *   10.1     Amended and Restated  Employment  Agreement  dated  August 2, 1994 (filed as Exhibit  10.52 to
                 Form 10-Q dated August 5, 1994).

    *   10.2     Amended and  Restated  Employment  Agreement  dated  August 25, 1994 (filed as Exhibit 10.4 to
                 Form 10-K dated November 4, 1994).

    *   10.3     Net  Lease,  dated  as of May 16,  1988,  between  Farah  U.S.A.,  Inc.  and Far  Pass  Realty
                 Associates, Ltd. (filed as Exhibit 5 to Form 8-K dated May 25, 1988).

    *   10.4     Guarantee of Lease by Farah Incorporated (filed as Exhibit 6 to Form 8-K dated May 25, 1988).

    *   10.5     Pledge Agreement by Farah U.S.A.,  Inc. to Far Pass Realty Associates,  Ltd. (filed as Exhibit
                 7 to Form 8-K dated May 25, 1988).

    *   10.6     Amended and Restated  Farah  Manufacturing  Company,  Inc. 1986 Stock Option Plan, and Form of
                 Stock Option  Agreement  (filed as Exhibit 4 (a) to the  Company's  Registration  Statement on
                 Form S-8, Registration No. 2-75949).

    *   10.7     Farah Manufacturing  Company,  Inc. Executive Stock Option Plan, as amended, and form of Stock
                 Option Agreement (filed as Exhibit 10.29 to Form 10-K as of October 31, 1988).

    *   10.8     Farah Incorporated 1988  Non-Employee  Directors  Stock Option  Plan and form of Stock  Option
                 Agreement (filed as Exhibit 10.31 to Form 10-K as of October 31, 1988).

    *   10.9     Accounts Financing Agreement (Security Agreement),  dated August 2, 1990 between Farah U.S.A.,
                 Inc. ("Farah U.S.A.") and Congress Financial  Corporation  (Southwest)  ("Congress") (filed as
                 Exhibit 10.53 to Form 10-Q as of July 31, 1990).

    *   10.10    Covenant  Supplement to Accounts  Financing  Agreement  (Security  Agreement)  dated August 2,
                 1990,  between Farah U.S.A.  and Congress  (filed as Exhibit 10.54 to Form 10-Q as of July 31,
                 1990).

    *   10.11    Inventory   and  Equipment   Security  Agreement  Supplement to Accounts  Financing  Agreement 
                 (Security Agreement) dated August 2, 1990, between Farah U.S.A. and Congress (filed as Exhibit
                 10.56 to Form 10-Q as of July 31, 1990).

    *   10.12    Trade Financing   Agreement   Supplement  to Accounts Financing Agreement (Security Agreement)
                 dated August 2, 1990, between Farah U.S.A. and Congress  (filed as Exhibit 10.57 to
                 Form 10-Q as of July 31, 1990).

    *   10.13    Form of Pledge and Security  Agreement,  dated August 2, 1990 (filed as Exhibit  10.58 to Form
                 10-K as of October 31, 1990).

    *   10.14    Collateral  Assignment of License,  dated August 2, 1990, by Farah U.S.A. in favor of Congress 
                 (filed as Exhibit 10.60 to Form 10-Q as of July 31, 1990).

    *   10.15    Estoppel and Consent  Agreement, dated August 2, 1990 by Farah Incorporated ("Farah") (filed as
                 Exhibit 10.61 to Form 10-Q as of July 31, 1990).

    *   10.16    Deed  of  Trust  and  Security  Agreement,  dated  July 30, 1990, by Farah U.S.A.  and Farah in
                 favor of Congress (filed as Exhibit 10.63 to Form 10-Q as of July 31, 1990).

    *   10.17    Form  of Guarantee and Waiver,  dated August 2, 1990 (filed as Exhibit 10.64 to Form 10-K as of
                 October 31, 1990).

    *   10.18    Collateral  Assignment  of  Agreements,  dated  August 2, 1990, by Farah  in favor  of Congress 
                 (filed as Exhibit 10.68 to Form 10-Q as of July 31, 1990).

    *   10.19    Collateral  Assignment of Agreements,  dated August 2, 1990, by Farah Manufacturing Company of
                 New  Mexico,  Inc. in favor of  Congress  (filed as Exhibit  10.69 to Form 10-Q as of July 31,
                 1990).

    *   10.20    Subordination  Agreement,  dated August 2, 1990,  by Farah U.S.A.  and Farah (filed as Exhibit
                 10.70 to Form 10-Q as of July 31, 1990).

    *   10.21    Form of Pledge and Security  Agreement,  dated August 2, 1990 (filed as Exhibit  10.71 to Form
                 10-K as of October 31, 1990).

    *   10.22    Trademark  Collateral  Assignment and Security  Agreement, dated  August 2, 1990,  by Farah in
                 favor of Congress  (filed as  Exhibit 10.75 to Form 10-Q as of July 31, 1990).

    *   10.23    10.23 Patent  Collateral  Assignment  and  Security  Agreement, dated August 2, 1990, by Farah
                 in favor of Congress  (filed as Exhibit 10.76 to Form 10-Q as of July 31, 1990).

    *   10.24    General  Security  Agreement,  dated August 2, 1990,  by Farah in favor of Congress  (filed as
                 Exhibit 10.77 to Form 10-Q as of July 31, 1990).

    *   10.25    Form of General Security Agreement,  dated August 2, 1990 (filed as Exhibit 10.78 to Form 10-K
                 as of October 31, 1990).

    *   10.26    Amendment No. 1, dated November 5, 1990, to Financing  Agreements  dated August 2, 1990 (filed
                 as Exhibit 10.98 to Form 10-K as of October 31, 1990).

    *   10.27    Amendment No. 2 dated February 11, 1991, to Financing  Agreements  dated August 2, 1990 (filed
                 as Exhibit 10.103 to Form 10-Q as of January 31, 1991).

    *   10.28    Sublease between Farah U.S.A.,  Inc. and The Tonka  Corporation,  dated January 6, 1992 (filed
                 as Exhibit 10.107 to Form 10-K as of October 31, 1991).

    *   10.29    Farah  Incorporated  1991 Stock Option and Restricted Stock Plan dated October 15, 1991 (filed
                 as Exhibit 10.108 to Form 10-K as of October 31, 1991).

    *   10.30    Amendment No. 3 dated January 29, 1992,  to Financing  Agreements  dated August 2, 1990 (filed
                 as Exhibit 10.112 to Form 10-Q as of February 7, 1992).

    *   10.31    Amendment  No. 4 dated  June  25,  1992,  to  Accounts  Financing  Agreement  dated  August  2,
                 1990  between  Congress  Financial  Corporation  (Southwest) and Farah U.S.A., Inc.  (filed  as
                 as Exhibit 10.118 to Form 10-Q as of August 7, 1992).

    *   10.32    Amendment No. 5 dated  August  31,  1992,  to  Accounts  Financing  Agreement  dated  August 2,
                 1990  between  Congress  Financial  Corporation  (Southwest)  and Farah U.S.A., Inc.  (filed as 
                 Exhibit 10.119 to Form 10-Q as of August 7, 1992).

    *   10.33    Amendment  No. 6  dated  September  4, 1992,  to Accounts Financing  Agreement dated August  2, 
                 1990  between   Congress  Financial   Corporation  (Southwest)  and  Farah U.S.A., Inc.  (filed
                 as Exhibit 10.120 to Form 10-Q as of August 7, 1992).

    *   10.34    Amendment  No. 7 dated  September  16, 1992, to Accounts  Financing  Agreement  dated August 2,
                 1990  between  Congress  Financial  Corporation  (Southwest) and Farah U.S.A., Inc.  (filed  as
                 Exhibit 10.121 to Form 10-Q as of August 7, 1992).

    *   10.35    Stock  Purchase  Agreement  dated  August 4, 1992,  between  Farah  Incorporated  and  Marciano
                 Investments, Inc. (filed as Exhibit 10.122 to Form 10-Q as of August 7, 1992).

    *   10.36    Letter  Agreement  dated  October  28,  1992,  amending  the Accounts Financing Agreement dated
                 August 2, 1990 between Farah U.S.A.,  Inc. and  Congress  Financial   Corporation  (Southwest),
                 (filed as Exhibit 10.125 to Form 10-K as of November 6, 1992).

    *   10.37    Amended and Restated Farah  Savings and  Retirement  Plan,  as of January 1,  1991,  (filed  as 
                 Exhibit 10.125 to Form 10-K as of November 6, 1992).

    *   10.38    Amended and Restated Stock Purchase Agreement dated  March 12, 1993 (amending and restating the 
                 stock  purchase agreement  dated  February 23, 1993)  between  Farah  Incorporated, the Georges   
                 Georges  Marciano Trust and the Paul Marciano Trust,  (filed as Exhibit 10.128 to  Form 10-Q as 
                 of May 7, 1993).

    *   10.39    Amendment  No.  8 to Financing  Agreements  as of May 7, 1993 between  Farah  U.S.A.,  Inc. and
                 Congress  Financial  Corporation  (Southwest),  (filed as Exhibit 10.129 to Form 10-Q as of May
                 7, 1993).

    *   10.40    Amendment No. 9 dated  July 16, 1993 to Accounts  Financing  Agreement   dated  August 2,  1990  
                 between  Congress  Financial  Corporation   (Southwest),  (filed as Exhibit 10.129 to Form 10-Q
                 as of May 7, 1993).

    *   10.41    Deferred  Compensation  Agreement dated December 20, 1993 (filed as Exhibit 10.45 to Form 10-K
                 as of November 4, 1994).

    *   10.42    Form of Deferred  Compensation  Agreements  dated December 16, 1994 (filed as Exhibit 10.46 to
                 Form 10-K as of November 4, 1994).

    *   10.43    Amendment  No. 10 dated  November  5, 1993 to  Accounts Financing  Agreement  dated  August  2,
                 1990  between  Congress  Financial  Corporation  (Southwest) and  Farah U.S.A., Inc. (filed  as 
                 Exhibit 10.49 to Form 10-K as of November 5, 1993).

    *   10.44    Amendment  No. 11 dated  January  21,  1994 to  Accounts  Financing  Agreement  dated August 2,
                 1990  between  Congress   Financial  Corporation  (Southwest)  and Farah U.S.A., Inc. (filed as
                 Exhibit 10.50 to Form 10-Q dated February 4, 1994).

    *   10.45    Amendment   No.  12  dated   July  14,  1994   to  Accounts  Financing   dated  August 2,  1990 
                 between  Congress  Financial  Corporation  (Southwest)  and  Farah  U.S.A.,  Inc.   (filed   as
                 Exhibit 10.53 to Form 10-Q dated August 5, 1994).

    *   10.46    Amendment  No.  13  dated  March  7,  1995  to  Accounts Financing  Agreement  dated  August 2,
                 1990  between  Congress Financial Corporation (Southwest) and Farah  U.S.A., Inc.  (filed as
                 Exhibit 10.51 to Form 10-Q as of May 5, 1995).

    *   10.47    Amendment  No.  14  dated  April  5,  1995  to  Accounts
                 Financing  Agreement  dated  August  2, 1990  between  Congress
                 Financial Corporation (Southwest) and Farah U.S.A., Inc. (filed
                 Exhibit 10.52 to Form 10-Q as of August 4, 1995).

    *   10.48    Amendment  No.  15  dated  August  1,  1995 to  Accounts  Financing  Agreement dated  August 2,
                 1990  between  Congress  Financial  Corporation  (Southwest) and Farah U.S.A., Inc.  (filed  as
                 Exhibit 10.53 to Form 10-Q as of August 4, 1995).

    *   10.49    Amended and Restated Employment  Agreement dated July 10, 1995 (filed as Exhibit 10.53 to Form
                 10-K as of November 3, 1995).

    *   10.50    Form of Deferred  Compensation  Agreements  dated December 21, 1995 (filed as Exhibit 10.54 to
                 Form 10-K as of November 3, 1995).

    *   10.51    Employment  Agreement  dated March 1, 1996  (filed as Exhibit  10.55 to Form 10-Q as of May 5,
                 1996).

    *   10.52    Amendment  dated December 6, 1995 to the Farah  Incorporated  1991 Stock Option and Restricted
                 Stock Plan dated October 15, 1991 (filed as Exhibit 10.56 to Form 10-Q as of May 5, 1996).

    *   10.53    Asset Purchase  Agreement Farah  Incorporated,  Farah U.S.A, Inc. Galey & Lord, Inc. and Galey
                 & Lord Industries  Inc.,  dated May 20, 1996 (filed as Exhibit 10.57 to Form 10-Q as of May 5,
                 1996.)

        10.54    Form of Deferred Compensation Agreements dated December 19, 1996.

        10.55    Letter Amendment dated March 2, 1996 to Employment Agreement dated August 25, 1994.

        10.56    Letter Amendment dated March 2, 1996 to Employment Agreement dated August 2, 1994.

        10.57    Lease Agreement dated October 4, 1996 between Farah U.S.A., Inc. and Orso Partners, Ltd.

        10.58    Lease  Agreement  dated November 30, 1996 between Farah U.S.A.,  Inc. and Santa Teresa Limited
                 Partnership.

      *Incorporated herein by reference.

      13       Annual Report to Shareholders for Fiscal Year 1996

      21       Subsidiaries of Farah Incorporated

      23.1     Consent of Independent Accountants (Coopers & Lybrand L.L.P.)

      23.2     Consent of Independent Public Accountants (Arthur Andersen LLP)

      27       Financial Data Schedule
</TABLE>

<PAGE>





                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) 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
                                              (Registrant)


                                              /s/ Russell G. Gibson
                                              Russell G. Gibson
                                              Principal Financial Officer


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

Dated:      January 24, 1997


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities indicated on January 24, 1997.



/s/ Richard C. Allender                           /s/ Sylvan Landau
Richard C. Allender                               Sylvan Landau
Principal Executive Officer, Director             Director



/s/ Clark L. Bullock                              /s/ Michael R Mitchell
Clark L. Bullock                                  Michael R. Mitchell
Director                                          Director



/s/ Christopher L. Carameros                      /s/ Timothy B. Page
Christopher L. Carameros                          Timothy B. Page
Director                                          Director


/s/ John D. Curtis                                /s/ Charles J. Smith
John D. Curtis                                    Charles J. Smith
Director                                          Director
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                 FARAH INCORPORATED AND SUBSIDIARIES

    FORM 10-K INDEX TO ATTACHED  EXHIBITS (All Exhibits listed
                  are on pages 19 through 98)

    <S>                <C>                                                                                     <C>

                                                                                                                Page
                                                                                                               Numbers

    Exhibit 10.54      Form of Deferred Compensation Agreements dated December 19, 1996.                         19

    Exhibit 10.55      Letter Amendment dated March 2, 1996 to Employment Agreement dated August 25,             23
                       1994.

    Exhibit 10.56      Letter Amendment dated March 2, 1996 to Employment Agreement dated August 2,              24
                       1994.

    Exhibit 10.57      Lease Agreement dated October 4, 1996 between Farah U.S.A., Inc. and Orso                 25
                       Partners, Ltd.

    Exhibit 10.58      Lease Agreement dated November 30, 1996 between Farah U.S.A., Inc. and Santa              45
                       Teresa Limited Partnership.

    Exhibit 13         Annual Report to Shareholders for Fiscal Year 1996.                                       63

    Exhibit 21         Subsidiaries of Farah Incorporated                                                        95

    Exhibit 23.1       Consent of Independent Accountants (Coopers & Lybrand L.L.P.)                             96

    Exhibit 23.2       Consent of Independent Public Accountants (Arthur Andersen LLP)                           97

    Exhibit 27         Financial Data Schedule                                                                   98
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