<PAGE>   1
                      SECURITIES AND EXCHANGE COMMISSION
                           Washington, D. C. 20549

                          -------------------------

                                  Form 10-K

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

           For the Fiscal Year ended January 3, 1998
                                      or
     / /   TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934

           For the transition period from _____________ to ______________

           Commission file number 1-13421

                                 DAN RIVER INC.
              (Exact name of registrant as specified in its charter)

           GEORGIA                             58-1854637
           (State or other jurisdiction of     (I.R.S. Employer
           incorporation or organization)      Identification No.)

           2291 Memorial Drive                 24541
           Danville, Virginia                  (Zip Code)
           (Address of principal executive offices)

           Registrant's telephone number, including area code: (804) 799-7000
           Securities registered pursuant to Section 12(b) of the Act:
                             Class A Common Stock par value $0.01 per share
           Securities registered pursuant to Section 12(g) of the Act:  None

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.  / /

Aggregate market value of voting stock held by non-affiliates of the
registrant as of March 2, 1998:  $159,946,580

Number of shares of common stock outstanding as of March 2, 1998:
                                                   Class A: 16,777,075 shares
                                                   Class B: 2,062,070 shares
Documents Incorporated by Reference:  Part II incorporates information by
reference from the Annual Report to Shareholders for the year ended January
3, 1998.  Part III incorporates information by reference from the Proxy
Statement of the Annual Meeting of Shareholders to be held April 22, 1998.

Exhibit Index:  Page 16

<PAGE>   2
                                     PART I

Item 1.  Business

General

Founded in 1882, Dan River Inc. (the "Company" or "Dan River") is a leading
manufacturer and marketer of textile products for the home fashions and
apparel fabrics markets. The Company designs, manufactures and markets a
coordinated line of value-added home fashions products consisting of packaged
bedroom furnishings such as comforters, sheets, pillowcases, shams, bed
skirts, decorative pillows and draperies.  Dan River also manufactures and
markets a broad range of high quality woven cotton and cotton-blend apparel
fabrics and believes that it is the leading supplier of men's dress shirting
fabrics in North America (based on net sales).

On February 3, 1997, the Company acquired substantially all of the assets and
assumed certain liabilities of The New Cherokee Corporation ("Cherokee"),
which was a supplier of yarn-dyed fabrics to men's and women's shirting
manufacturers and of sportswear fabrics to the converting trade.  The assets
purchased consisted primarily of two woven fabrics manufacturing facilities
located in Spindale, North Carolina and Sevierville, Tennessee, and a
finishing facility located in Harris, North Carolina, together with
associated real property, machinery and equipment, inventories and
receivables.

The following table sets forth for the periods indicated the dollar amount
and percentage of total net sales of the Company attributable to home
fashions products and apparel fabrics:

<TABLE>
<CAPTION>
                                                                                Fiscal Year
                                                           -------------------------------------------------------
                                                            1997                    1996                   1995     
                                                            ----                    ----                   ----     
                                                                               (in millions)                   
<S>                                                         <C>                     <C>                    <C>      
Dollar amount:                                                                                                      
  Home fashions                                                                                                     
    products..................                              $255.8                  $243.2                 $231.8   
  Apparel fabrics.............                               220.6                   136.4                  153.0   
                                                            ------                  ------                 ------   
    Total.....................                              $476.4                  $379.6                 $384.8   
                                                            ======                  ======                 ======   
Percentage:                                                                                                         
  Home fashions                                                                                                     
    products..................                                53.7%                   64.1%                  60.2%  
  Apparel fabrics.............                                46.3                    35.9                   39.8   
                                                            ------                  ------                 ------   
    Total.....................                               100.0%                  100.0%                 100.0%  
                                                            =======                 =======                =======  
</TABLE>


<PAGE>   3

Home Fashions Products

         Products

The Company's home fashions products include packaged bedroom furnishings
such as comforters, sheets, pillowcases, shams, bed skirts, decorative
pillows and draperies which are marketed under the "Dan River" brand name, as
well as under various other trademarks and licenses from, among others,
"Colours by Alexander Julian," "D. Porthault," "John Wilman," "Liberty" and
"Nautica."  Home fashions products are offered in a wide variety of styles
and patterns, including fashion designs and, to a lesser extent, solid
colors.  Products range from a 120-thread count muslin sheet of blended
polyester and cotton to a top-of-the-line 250-thread count percale 100%
cotton sheet.

Dan River has established itself as an innovator in merchandising home
fashions products.  The Company was a leader in introducing the complete bed
ensemble, which it markets under the name "Bed-in-a-Bag."  The "Bed-in-a-Bag"
complete bed ensemble consists of a comforter with matching sheets,
pillowcases, shams and a dust ruffle.  Management believes that the Company's
ability to manufacture wide-width, yarn-dyed fabrics in short runs in a wide
variety of innovative styles, such as woven plaids, for use in home fashions
products differentiates the Company from its competitors.

         Customers

The Company distributes home fashions products through key retailers in all
retail trade classes including department stores, specialty home fashions
stores, direct marketers, national chains, mass merchants and regional
discounters.  The Company markets its home fashions products to approximately
360 customers, none of which accounted for more than 10% of the Company's
total net sales in fiscal 1997.  The Company has pursued and established
strong relationships with large, high volume retailers including Wal-Mart
Stores, Inc., Kmart Corporation, Federated Department Stores, Inc., J.C.
Penney Company, Inc. and The May Department Stores Company.  As a supplement
to its primary distribution channels, a Dan River subsidiary operates factory
outlet stores which sell home fashions products directly to consumers.

         Sales and Marketing

The home fashions products sales and marketing staff consists of
approximately 60 persons and is headquartered in New York City, with
satellite offices in Atlanta, Boston, Chicago, Dallas, Los Angeles,
Philadelphia and San Francisco.  These marketing professionals, stylists and
product development personnel work as early as one year in advance of a
retail selling season to develop new fabrics, styles, colors, constructions
and finishes.  Together with the marketing group, stylists often work
directly with the Company's customers to create fabrics that respond to
rapidly changing fashion trends and customer needs.  New styles are also
developed internally for the April and October bed and bath home textile
trade shows, where they are shown to buyers and are placed in production
based on customer acceptance. Orders for home fashions products are filled
from inventory or, if inventory is not available, products are manufactured
and generally shipped within six to 12 weeks of order placement.

<PAGE>   4

Apparel Fabrics

         Products

The Company manufactures and markets a broad range of high quality woven
cotton and cotton-blend fabrics, which are marketed primarily to
manufacturers of men's, women's and children's clothing.  The Company's yarn-
dyed and piece-dyed woven apparel fabrics include oxford cloth, pinpoint
oxford cloth, fancy broad cloth, seer-suckers, mid and light weight denim,
twills and chambrays.  The Company also manufactures and distributes apparel
fabrics to uniform manufacturers and for use in decorating and crafts, 100%
cotton fabrics to the furniture market and greige (unfinished) fabrics to
converters.

Management believes that the Company enjoys a reputation as a leader in
creating new fabric styles and designs within the apparel fabrics market.
The Company's product development professionals work independently as well as
directly with customers to develop new fabric styles and constructions.  In
addition, the Company's product development personnel increasingly work
directly with retailers to develop fabrics.  These retailers often specify
that the Company's fabrics be used by their suppliers in the manufacture of
garments to be sold by them.  The Company believes that it is a leader in
wrinkle resistant technology for shirting fabrics and markets Dri-Don(R)
blended easy care fabrics and 100% cotton Wrinkl-Shed(R) fabrics.  As a result
of the Cherokee acquisition, the Company now manufactures and markets fabrics
utilizing Tencel lyocell, an innovative new fiber.  These versatile,
innovative fabrics are used primarily in manufacturing women's sportswear.

         Customers

The Company distributes its apparel fabrics primarily to domestic
manufacturers of men's, women's and children's clothing which, in turn,
operate sewing plants throughout the United States and the Caribbean.  The
Company's customers market clothing manufactured from its apparel fabrics
under such brand names as Arrow, Brooks Brothers, Hathaway, Liz Claiborne,
L.L. Bean, Land's End, Osh Kosh B'Gosh and Van Heusen, as well as under
private labels through retailers such as J.C. Penney Company, Inc. and Sears,
Roebuck & Co.  The Company markets uniform fabrics to customers such as
Cintas Corporation and Red Kap, and distributes apparel fabrics to home
sewing retailers such as Wal-Mart Stores, Inc., Fabric-Centers of America,
and through various wholesale distributors, for use in decorating and crafts,
as well as garment sewing.  The Company's upholstery fabrics are sold to
furniture manufacturers.

         Sales and Marketing

The Company's apparel fabrics sales and marketing staff consists of approxi-
mately 55 persons and is headquartered in New York City, with satellite
offices in Chicago, Dallas, Danville, High Point (North Carolina), Los
Angeles and San Francisco.  Apparel fabrics are generally "made to order"
products. Fabrics are manufactured and generally shipped within nine to 12
weeks of order placement.  Orders for apparel fabrics are based on customer
selections from offerings of color, content, construction, design and finish,
and fabrics are made to customer specifications, which may be developed
jointly with the customer.

<PAGE>   5


Manufacturing Process

Dan River is a vertically integrated manufacturer involved in all aspects of
the woven textile manufacturing process, from spinning and weaving to dyeing,
finishing, and sewing.  Substantially all of the Company's facilities for the
manufacture of home fashions products are located in Danville, Virginia.  As
a result of the acquisition of Cherokee, with spinning and weaving facilities
located in Spindale, North Carolina and Sevierville, Tennessee and finishing
facilities located in Harris, North Carolina, the Company added almost a
million square feet of manufacturing and warehousing floor space dedicated to
the manufacture of apparel fabrics in addition to its existing apparel
fabrics manufacturing facilities in Danville.

During the past five fiscal years, the Company has made significant
investments in an extensive facility modernization program focused on
installing advanced manufacturing technologies in an effort to be the low
cost manufacturer in the industry.  Within its home fashions operations, the
Company has installed modern, high-speed air-jet looms; automatic sheet
cutting, hemming and folding equipment; lower cost open-end spinning
equipment; and computerized comforter equipment.  Within its apparel fabrics
operations, the Company has modernized its yarn preparation processes through
the installation of more efficient, lower cost, open-end spinning, carding,
drawing and combing equipment.  The Company's ongoing capital improvement
programs have modernized and streamlined substantially all significant
components of the manufacturing process for both home fashions products and
apparel fabrics, helping the Company reduce lead times, minimize inventory
levels and maximize flexibility to respond to changing market conditions,
while at the same time increasing the quality of its products.

During fiscal 1997, the Company completed construction of a new 258,000
square foot home fashions finished goods warehouse and distribution center
which is located adjacent to its new home fashions accessory sewing plant in
Danville, Virginia.  The Company believes the new warehouse will enable it to
better and more efficiently service its home fashions customers and
accommodate further growth of its home fashions business.  Additionally, the
Company closed its Riverside apparel fabrics weaving facility in Danville as
part of its plan to consolidate apparel manufacturing operations.

Dan River has engineered its manufacturing processes to meet the quick
response delivery requirements of its customers.  Quick response techniques
reduce turnaround time (the time required to process a particular order)
which improves customer service and production efficiency.  Furthermore, Dan
River has the capability to offer electronic data interchange programs to all
of its customers.  These programs minimize the lead time for customer orders
and permit a more efficient, targeted manufacturing schedule, as well as
improvements in efficiency, communications, planning and processing times at
each stage of production.  The Company has electronic data interchange
programs in place with most of its major home fashions products customers.

Raw Materials

Dan River uses substantial quantities of cotton in its manufacturing
operations.  By law, U.S. textile companies are generally prohibited from

<PAGE>   6


importing cotton, subject to certain exceptions which take effect primarily
when the U.S. price of cotton exceeds the world price.  Cotton is an
agricultural product subject to weather conditions and other factors
affecting agricultural markets.  Accordingly, the price of cotton is subject
to considerable fluctuation.

Dan River purchases cotton primarily in the domestic market directly from
merchants or through brokers. Generally, the Company seeks to purchase
sufficient amounts of cotton to cover existing order commitments; however,
the Company may purchase cotton in advance of orders on terms that it deems
advantageous, and while the Company does not speculate on the price of
cotton, it may hedge prices from time to time through forward contracts and
the futures and options markets.  The Company also uses significant
quantities of polyester, which is available from several sources.

Although the Company has always been able to obtain sufficient supplies of
both cotton and polyester, any shortage or interruption in the supply or
variations in the quality of either could have a material adverse effect on
the Company's business.  Additionally, fluctuations in cotton and polyester
prices can significantly affect the Company's profitability, particularly on
a short term basis, since Dan River and other textile manufacturers cannot
always mirror such fluctuations in the pricing of their products.

The Company also uses various other raw materials, such as dyes and
chemicals, in its manufacturing operations.  The Company believes these
materials are readily available from a number of sources.  Dan River also
supplements its internal manufacturing capabilities by purchasing yarn and
unfinished fabrics from outside sources and by contracting with third parties
for various manufacturing services, including certain printing and sewing
operations.  During fiscal 1997, less than 10% of the Company's manufacturing
requirements were purchased from outside sources.

Trademarks and Licenses

The Company holds licenses to produce and sell home fashions products under
"Colours by Alexander Julian," "D. Porthault," "John Wilman," "Liberty" and
"Nautica" and certain other names or marks, and to use certain designs on its
home fashions textile products.  Such licenses generally provide that the
Company has the exclusive right for a limited period, generally three years
subject to renewal for additional periods, to use the respective brand name
and/or design in the sale of certain types of products in certain geographic
regions.  Dan River also holds non-exclusive licenses with respect to the use
and advertising of certain processes or synthetic fibers or fabrics.
Management believes that the failure of the Company to continue to hold any
one of its licenses or trademarks (other than "Dan River") would not have a
material adverse effect on the Company's business.

Dan River has registered the "Bed-in-a-Bag" name as a trademark.  In February
1997, a competitor filed a Petition for Cancellation of the trademark in the
United States Patent and Trademark Office (the "U.S. Patent Office").  Dan
River filed its answer to the Petition for Cancellation and intends to

<PAGE>   7


vigorously defend the action.  The Petition challenges only the exclusivity
of the trademark and not the Company's right to continue to use the phrase in
connection with its products.  Therefore, while the Company cannot predict
the outcome of this matter, the Company believes that the loss of such
exclusivity would not have a material adverse effect on the Company's
business or prospects.

Competition

The Company's competitive position varies by product line.  Competitive
factors include price, product styling and differentiation, quality,
flexibility of production and finishing, delivery time and customer service.
The Company sells its products primarily to domestic customers and competes
with both large, integrated textile manufacturers and numerous smaller
companies specializing in limited segments of the market.  Some competitors
have significantly greater financial resources than Dan River.

The Company is one of several domestic manufacturers of home fashions
products.  Certain of the Company's competitors have a significantly greater
share of the domestic market than the Company, including WestPoint Stevens
Inc., Springs Industries, Inc. and Pillowtex Corp., which management believes
collectively account for over 50% of the home fashions bedding products
market.

With the acquisition of Cherokee, the Company believes that it is a leading
producer of lightweight yarn-dyed woven cotton and cotton-blend apparel
fabrics in North America.  With respect to men's shirtings, management
believes the Company is the largest producer of oxford cloth and pima cotton
pinpoint oxford cloth and the leading producer of lightweight yarn-dyed dress
shirting fabrics in North America (based on net sales).  In the sportswear
and upholstery fabrics markets, the Company is one of a number of domestic
producers.

The Company is subject to foreign competition.  The Company believes that
over half of the apparel fabrics (much in the form of imported garments) and
approximately 15% of the home fashions products sold in the U.S. are
manufactured overseas. One of the Company's business strategies is to seek
niche apparel fabrics markets that are less susceptible to foreign
competition. The Company believes that its domestic manufacturing base and
emphasis on shortening production and delivery times allow the Company to
respond more quickly than foreign producers to changing fashion trends and to
its domestic customers' delivery schedules.

The extent of import protection afforded by the U.S. government to domestic
textile producers has been, and is likely to remain, subject to considerable
domestic political deliberation.  The Company benefits from protections
afforded to apparel manufacturers based in certain Caribbean and Central
American countries which ship finished garments into the U.S. under Item
9802.00.80 of the Harmonized Tariff Schedule of the U.S. as authorized by the
Caribbean Basin Recovery Act.  Item 9802.00.80 reduces certain tariffs which
would otherwise apply to apparel garments manufactured outside the U.S. and
shipped into the U.S., provided that the garments are manufactured from
fabric produced and cut domestically.  Item 9802.00.80 is beneficial for Dan
River and other domestic producers of apparel fabrics, because it creates an
attractive manufacturing base for apparel in close proximity to the U.S.


<PAGE>   8


In January 1995, a multilateral trade organization, the WTO, was established
to replace the GATT.  This new body has set forth the mechanisms by which
world trade in textiles and clothing will be progressively liberalized with
the elimination of quotas and the reduction of duties.  The implementation
began in January 1995 with the phasing-out of quotas and the reduction of
duties to take place over a 10-year period.  The selection of products at
each phase is made by each importing country and must be drawn from each of
the four main textile groups:  tops and yarns, fabrics, made-up textile
products and apparel.  The elimination of quotas and the reduction of tariffs
under the WTO may result in increased imports of certain textile products and
apparel into North America.  These factors could make the Company's products
less competitive against low cost imports from developing countries.

NAFTA, which was entered into by the United States, Canada and Mexico and
became effective on January 1, 1994, has created the world's largest free-
trade zone.  The agreement contains safeguards sought by the U.S. textile
industry, including a rule of origin requirement that products be processed
in one of the three countries in order to benefit from NAFTA.  NAFTA will
phase out all trade restrictions and tariffs on textiles and apparel among
the three countries.  In addition, NAFTA requires merchandise to be made from
yarns and fabrics originating in North America in order to avoid trade
restrictions.  Thus, not only must apparel be made from North American fabric
but the fabric must be woven from North American spun yarn.  Although
management believes that the Company may benefit from NAFTA, there can be no
assurance that the removal of these barriers to trade will not have a
material adverse effect on the Company's business.

Order Backlog

The Company's order backlog was approximately $104 million at January 3,
1998, as compared to approximately $72 million at December 28, 1996, which
was prior to the Cherokee acquisition.  Substantially all of the orders on
hand at January 3, 1998 are expected to be filled within four months of that
date.

Governmental Regulation

Dan River is subject to various federal, state and local environmental laws
and regulations limiting the discharge of pollutants and the storage,
handling and disposal of a variety of substances.  In particular, the
Company's dyeing and finishing operations result in the discharge of
substantial quantities of wastewater and in emissions to the atmosphere.

The Company is subject to the federal Clean Water and Clean Air Acts, and
related state and local laws and regulations.  The Company's operations also
are governed by laws and regulations relating to workplace safety and worker
health, principally the Occupational Safety and Health Act and regulations
thereunder, which, among other things, establish cotton dust, formaldehyde,
asbestos and noise standards, and regulate the use of hazardous chemicals in
the workplace.  The Company believes that it is currently in compliance in
all material respects with the environmental or health and safety laws and
regulations and does not believe that the cost of, or any operational
constraints or modifications required to assure, future compliance with such
laws or regulations will have a material adverse effect on its results of

<PAGE>   9


operations or financial condition.  However, there can be no assurance that
environmental requirements will not become more stringent in the future or
that the Company will not incur significant costs to comply with such
requirements.

At the property formerly owned by Cherokee at Spindale, North Carolina, there
is groundwater contamination consisting of diesel fuel, for which the owner
of an adjoining property has acknowledged responsibility.  The neighboring
landowner is engaged in cleanup operations under the direction of the North
Carolina Department of Health, Environment and Natural Resources.  Prior to
purchasing the Spindale property, the Company identified additional
contamination, consisting primarily of benzene in excess of applicable action
levels, that the Company believes, based on reports from its environmental
consultant, also originates on the adjoining property.  The Company also
believes cleanup of the benzene contamination may not be required under
current North Carolina policy, and that in the event the Company is required
to clean up the contamination, it may be eligible to apply for funding from
the North Carolina underground storage tank trust fund.  In addition,
liabilities arising from environmental contamination associated with pre-
closing operation of Cherokee's facilities were excluded in connection with
the Company's purchase of Cherokee's assets and therefore not assumed by the
Company.  In any event, the Company believes that if it were required to
clean up the currently known contamination because it is the owner of the
affected property, the cost of such cleanup would not have a material adverse
effect on its results of operations or financial condition.

Employees

At January 3, 1998, the Company had approximately 5,300 employees, of which
approximately 4,500 were hourly employees.  Of these hourly employees,
approximately 3,500 are located primarily in the Company's Danville, Virginia
operations and represented by a collective bargaining agreement which expires
on January 1, 2002.  The Company believes that its relations with its
employees are good.

Item 2. Properties

On February 3, 1997, the Company acquired substantially all of the assets of
Cherokee, including greige manufacturing facilities in Spindale, North
Carolina and Sevierville, Tennessee, and a finishing plant in Harris, North
Carolina.  The Company owns the North Carolina facilities, totaling
approximately 595,000 square feet of manufacturing space.  The Company leases
the Sevierville, Tennessee facility (consisting of approximately 419,000 feet
of manufacturing space) with an option to purchase the facility for nominal
consideration in 2018.

Substantially all of Dan River's other apparel fabrics facilities, and
substantially all of its home fashions and corporate facilities, are located

<PAGE>   10


in Danville, Virginia.  Most of the Danville facilities are owned by the
Company.  The owned facilities occupy a total of approximately 5,680,000
square feet, with approximately 2,600,000 square feet of space currently used
for manufacturing.  The Company's 116,000 square foot accessory sewing plant
and new 258,000 square foot distribution center are leased, with an option to
purchase for nominal consideration.  The Company leases approximately 873,000
square feet of additional warehouse and manufacturing space in Danville.

During fiscal 1997 the Company sold its yarn mill in Alabama.  The Company
leases each of its marketing and sales offices and, through its subsidiary,
Dan River Factory Stores, Inc., the Company leases seven factory outlet
stores in Georgia, Illinois, Maryland, Ohio, South Carolina and Tennessee,
each of which averages approximately 6,000 square feet of total space.  The
Company owns its factory outlet store in Danville, Virginia.

The Company's manufacturing facilities generally operate on a five, six or
seven day 24-hour per day schedule depending on the nature of the operations
and demand for specific products of the Company, as well as other factors.

The Company believes that its existing facilities are adequate to service
existing demand for the Company's products.  The Company considers its plants
and equipment to be in good condition.

Item 3.  Legal Proceedings

From time to time, the Company is a party to litigation arising in the
ordinary course of its business.  The Company is not currently a party to any
litigation that management believes, if determined adversely to the Company,
would have a material adverse effect on the Company.  A competitor has filed
a Petition for Cancellation with the U.S. Patent Office challenging the
Company's "Bed-in-a-Bag" trademark. See Business"--Trademarks and Licenses."

Item 4.  Submission of Matters to a Vote of Security Holders.

In October 1997, prior to the completion of the initial public offering of
the Company's Class A Common Stock, the shareholders of the Company
unanimously approved pursuant to written consent (i) the Amended and Restated
Articles of Incorporation of the Company; (ii) an exchange offer pursuant to
an Exchange Agreement whereby certain members of senior management and their
families would be permitted to exchange shares of the Company's Class A
Common Stock, par value $.01 per share, owned by them for supervoting Class B
Common Stock, par value $.01 per share; and (iii) the 1997 Stock Incentive
Plan and the 1997 Stock Plan for Outside Directors.

                      Executive Officers of the Registrant

Following is information concerning the executive officers of Dan River, who
are elected by the Board of Directors and hold office generally until the
next annual meeting of the Board or until their successors are elected and
qualified:


<PAGE>   11



<TABLE>
<CAPTION>

         Name                               Age     Position with Dan River
         ----                               ---     -----------------------
<S>      <C>                                <C>     <C>
         Joseph L. Lanier, Jr.........      66      Chairman, Chief Executive Officer
                                                      and Director
         Richard L. Williams..........      64      President, Chief Operating Officer
                                                      and Director
         Barry F. Shea................      49      Vice President-Chief Financial
                                                      Officer
         Scott D. Batson..............      41      Vice President-Finance
         Anthony J. Bender............      40      Vice President-Information Systems
         Gregory R. Boozer............      42      Vice President-Manufacturing
                                                      Services
         Edward E. Carroll............      58      Vice President-Industrial Relations
         Harry L. Goodrich............      47      Vice President, Secretary and
                                                      General Counsel
         George R. Herron.............      57      Vice President-Cotton Procurement
         Larry W. Van de Visser.......      61      Vice President-Administration
         Gary D. Waldman..............      41      Controller
</TABLE>

Joseph L. Lanier, Jr. has been Chairman of the Board of Directors and Chief
Executive Officer of Dan River or Braelan Corp. (the "Predecessor") since
1989.  Mr. Lanier is also a director of SunTrust Bank, Inc. (a bank holding
company), Flowers Industries, Inc. (a food company), Torchmark Corporation
(an insurance company) and Dimon Incorporated (a tobacco products company and
distributor of cut flowers).

Richard L. Williams has been a director and President and Chief Operating
Officer of Dan River or the Predecessor since 1989.

Barry F. Shea was a director of the Predecessor from 1989 to 1991. He was
Vice President-Finance, Chief Financial Officer and Assistant Secretary of
Dan River or the Predecessor from 1989 until 1996 and has been Vice
President-Chief Financial Officer from 1996 to the present.

Scott D. Batson has been Vice President-Finance of Dan River since 1995 and
was Director of Finance from 1990 to 1995.  Mr. Batson was also Treasurer of
the Predecessor from 1990 to 1995.

Anthony J. Bender has been Vice President-Information Systems of Dan River
since 1995.  Mr. Bender was Director of Systems Development of Springs
Industries, Inc. (a manufacturer and distributor of textile products) from
1993 until 1995, and held a number of management consulting positions with
Price Waterhouse, LLP from 1985 to 1993.

Gregory R. Boozer has been Vice President-Manufacturing Services of Dan River
since 1989.

Edward E. Carroll has been Vice President-Industrial Relations of Dan River
since 1995.  He was Director of Employee Relations of Dan River from 1984
until 1995.


<PAGE>   12


Harry L. Goodrich has been Secretary and General Counsel of Dan River or the
Predecessor since 1989 and has been Vice President of Dan River since 1995.

George R. Herron has been Vice President-Cotton Procurement of Dan River
since 1987.

Larry W. Van de Visser was Controller of Dan River from 1990 until 1995 and
Vice President-Controller of Dan River from 1995 to 1996.  He has been Vice
President-Administration of Dan River since 1996.

Gary D. Waldman has been Controller of Dan River since 1996.  He was
Assistant Controller of Dan River from 1992 until 1996, and Director of Taxes
from 1990 until 1992.

Other significant employees of the Company are James E. Martin and Thomas L.
Muscalino.

Mr. Martin has headed Dan River's apparel fabrics operations since 1990. He
is 48 years old.

Mr. Muscalino has headed Dan River's home fashions operations since 1993.
From 1975 until 1992, he held a number of marketing positions with WestPoint
Stevens Inc. (a textile company), including President of its Consumer
Products Division in 1992.  He is 47 years old.

                                    PART II

Item 5.  Market for the Registrant's Common Stock and Related Stockholder
Matters.

The information contained in the section entitled "Market and Dividend Data"
is incorporated herein by reference from the 1997 Annual Report to
Shareholders.

The Company has sold no securities within the past three years which were not
registered under The Securities Act of 1933, except for the sale of 66,423
shares of Class A Common Stock which were issued to employees of the Company
upon exercise of stock options held by them, the proceeds of which were paid
to a stockholder of the Company who was contractually obligated to and did in
fact surrender the shares which were subject to the options.  See "Security
Ownership of Certain Beneficial Owners and Management", Note 5, in the Company's
Proxy Statement for the Annual Meeting of Shareholders to be held on April
22, 1998, which Note 5 is incorporated by reference herein.



<PAGE>   13
Item 6.  Selected Financial Data.

Information contained in the section entitled "Five Year Summary of Selected
Financial Data" is incorporated by reference from the 1997 Annual Report to
Shareholders.  

Item 7.  Management's Discussion and Analysis of Financial Condition and
Results of Operations.

Information contained in the section entitled "Management's Discussion and
Analysis" is incorporated herein by reference from the 1997 Annual Report to
Shareholders.

Item 7A.  Quantitative and Quantitative Disclosures Above Market Risk.

Not Applicable

Item 8.  Consolidated Financial Statements and Supplementary Data.

Information contained in the sections entitled "Consolidated Balance Sheets,"
"Consolidated Statements of Income," "Consolidated Statements of
Shareholders' Equity," "Consolidated Statements of Cash Flows," "Notes to
Consolidated Financial Statements," and "Report of Independent Auditors" are
incorporated herein by reference from the 1997 Annual Report to Shareholders.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.

None.

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant

Information regarding the directors under the caption, "Election of
Directors," is incorporated herein by reference from Registrant's "Proxy
Statement for the Annual Meeting of Shareholders" to be held on April 22,
1998.

For information regarding the executive officers of the Registrant, see Part
I, "Executive Officers of the Registrant."

Section 16(a) Beneficial Ownership Reporting Compliance. Subsequent to the
printing of its Proxy materials for the 1998 Annual Meeting, the Registrant
became aware that Annual Report of Changes in Beneficial Ownership on Form 5
was not timely filed on behalf of Mr. Joseph L. Lanier, Jr., in connection
with his purchase of 100 shares of Class A Common Stock on November 21, 1997.
The appropriate Form 5 has now been filed.

Item 11.  Executive Compensation

Incorporated herein by reference from sections of the Registrant's "Proxy
Statement for the Annual Meeting of Shareholders to be held on April 22,
1998" under the captions entitled, "Election of Directors--Director
Compensation" and "Executive Compensation."

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

Incorporated herein by reference from the section of the Registrant's "Proxy
Statement for Annual Meeting of Shareholders to be held on April 22, 1998"
entitled "Security Ownership of Certain Beneficial Owners and Management."




<PAGE>   14
Item 13.  Certain Relationships and Related Transactions.

Incorporated herein by reference from the section in the Registrant's "Proxy
Statement for Annual Meeting of Shareholders to be held on April 22, 1998"
entitled "Executive Compensation", "Security Ownership of Certain Beneficial
Owners and Management" and "Certain Relationships and Related Transactions".

                                    PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a)  1.   Financial Statements
          
          The following Financial Statements are filed under Item 8 of this
          Report:
          
          Consolidated Balance Sheets as of January 3, 1998 and December 28, 
          1996.
          
          Consolidated Statements of Income for the fiscal years ended
          January 3, 1998, December 28, 1996 and December 30, 1995.
          
          Consolidated Statements of Shareholders' Equity for the fiscal years 
          ended January 3, 1998, December 28, 1996 and December 30, 1995.
          
          Consolidated Statements of Cash Flows for the fiscal years ended
          January 3, 1998, December 28, 1996 and December 30, 1995.
          
          Notes to Consolidated Financial Statements for the fiscal years
          ended January 3, 1998, December 28, 1996 and December 30, 1995.
          
          Report of Independent Auditors.
          
     2.   The following Financial Statement Schedules are filed as part of
          this Report:
          
          Schedule II - Valuation and Qualifying Accounts
          
          Other schedules are omitted because, under applicable rules, the
          omitted Schedules are not required, are inapplicable, or the
          information required is included in the Financial Statements or in
          the Notes thereto.

     3.   Exhibits.

          The Exhibits listed as applicable on the accompanying Index to
          Exhibits are filed as part of this Annual Report.

(b)  Reports on Form 8-K.

     None.

<PAGE>   15
                                   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.

DAN RIVER INC.



By:  /s/ JOSEPH L. LANIER, JR.
     -------------------------
     Joseph L. Lanier, Jr.
     Chairman and Chief Executive Officer

Date:  March 24, 1998


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 and on the dates indicated.

<TABLE>                            
<S>                                         <C>
By:  /s/ DONALD J. KELLER                   By:  /s/ JOHN F. MAYPOLE
     --------------------------                  --------------------------
      Donald J. Keller, Director                 John F. Maypole, Director
                                   
                                   
Date:  March 24, 1998                       Date:  March 24, 1998
                                   
                                   
                                   
                                   
By:  /s/ JOSEPH L. LANIER, JR.              By:  /s/ BARRY F. SHEA
     --------------------------                  --------------------------
     Joseph L. Lanier, Jr.,                      Barry F. Shea, Vice-President-
     Chairman and Chief Executive                Chief Financial Officer
     Officer and Director                        (Principal Financial and
     (Principal Executive Officer)               Accounting Officer)
                                   
Date:  March 24, 1998                       Date:  March 24, 1998
                                   
                                   
                                   
                                   
By:    /s/ EDWARD J. LILL                   By:     /s/ RICHARD L. WILLIAMS
       -------------------------                    --------------------------
       Edward J. Lill, Director                     Richard L. Williams, President
                                                    and Chief Operating Officer and
                                                    Director
                                   
Date:  March 24, 1998                       Date:  March 24, 1998
                                   
</TABLE>                           

<PAGE>   16


                               INDEX TO EXHIBITS
<TABLE>
<CAPTION>


Exhibit No.         Description of Exhibit                            
-----------         ----------------------                            
<S>                 <C>                                               
              
  2.1               Asset Purchase Agreement dated
                    January 10, 1997 by and between
                    Dan River Inc. and The New Cherokee
                    Corporation.<F1>
              
  2.2               First Amendment to Asset Purchase
                    Agreement between Dan River Inc.
                    and The New Cherokee Corporation
                    dated as of February 2, 1997.<F1>
              
  3.1               Amended and Restated Articles of
                    Incorporation of Dan River Inc.<F2>
              
  3.2               Bylaws of Dan River Inc.<F2>
              
  4.1               Form of Indenture between the
                    Dan River Inc. and Marine Midland Bank,
                    N.A., as Trustee (including Form
                    of Note).<F3>
              
  10.1              Loan and Security Agreement dated
                    February 3, 1997 among Dan River Inc.
                    and Fleet Capital Corporation.<F4>
              
  10.2              Amendment No. 1, dated December 22,
                    1997, to Loan and Security Agreement
                    among Dan River Inc. and Fleet
                    Capital Corporation
              
  10.4              Registration Rights Agreement, dated
                    as of September 3, 1991, among Dan
                    River Inc. and the parties named
                    therein.<F5>
              
  10.4.1            Amendment dated as of October 27,
                    1997 to the Registration Rights
                    Agreement.
              
  10.5              Voting Agreement among Joseph L.
                    Lanier, Jr., Richard L. Williams
                    and Barry F. Shea and certain
                    members of their families.<F6>
              
 *10.7              Employment Agreement, dated as of
                    October 29, 1997, between Dan
                    River Inc. and Joseph L. Lanier, Jr.<F6>
</TABLE>      
              
<PAGE>   17
              
<TABLE>       
<S>                 <C>                                               <C>
              
 *10.8              Employment Agreement, dated as of
                    October 29, 1997, between Dan River
                    Inc. and Richard L. Williams.<F6>
              
 *10.9              Employment Agreement, dated as of
                    October 29, 1997, between Dan
                    River Inc. and Barry F. Shea.<F6>
              
 *10.10             Form of Post-employment Letter Agreement
                    between the Dan River Inc. and certain
                    of its officers.<F5>
              
 *10.12             Post-employment Letter Agreement between
                    Dan River Inc. and Gregory R.
                    Boozer.<F7>
              
 *10.13             Post-employment Letter Agreement between
                    Dan River Inc. and Harry L. Goodrich.<F8>
              
 *10.14             Dan River Inc. Amended and Restated
                    Stock Option Plan and form of Option
                    Agreement in effect prior to Decem-
                    ber 30, 1994.<F5>
              
 *10.14.1           Dan River Inc. Amended and Restated
                    Stock Option Plan and form of Option
                    Agreement; as amended as of Decem-
                    ber 30, 1994.<F7>
              
 *10.15             Dan River Management Incentive Plan.
              
 *10.16             Form of Dan River Inc. 1997 Stock
                    Incentive Plan.<F9>
              
 *10.19             Form of Dan River Inc. 1997 Stock
                    Plan for Outside Directors.<F9>
              
  10.21             Equipment Lease Agreement No.
                    2891-0, dated as of December 29,
                    1989, as amended, between MDFC
                    Equipment Leasing Corporation
                    and Dan River Inc.<F5>
              
  11.1              Statement regarding Computation of
                    Earnings per share.  See Financial
                    Statements and Schedules and Notes
                    thereto included in this Annual
                    Report on Form 10-K.
              
  13                Portions of 1997 Annual Report to
                    Shareholders incorporated by reference
                    in this Annual Report on Form 10-K.
              
  21                List of Subsidiaries<F5>
              
  23                Consent of Ernst & Young, LLP
</TABLE>      
              
<PAGE>   18
              
  27.1              Financial Data Schedule for 1997 Fiscal Year

  27.2              Restated Financial Data Schedule for 1996 Fiscal Year

-------------------


[FN]
*Management contract, compensatory plan or arrangement.

<F1>

Exhibit Nos. 2.1 and 2.2 incorporated by reference to Exhibit Nos. 2.1 and
2.2 in Dan River's Current Report on Form 8-K (No. 33-70442) dated February
3, 1997.

<F2>
Exhibits Nos. 3.1 and 3.2 incorporated by reference to Exhibits 3.1 and 3.2
in Amendment No. 1 to Registration Statement on Form S-1 (No. 333-36479)
filed on November 4, 1997.

<F3>
Exhibit 4.1 incorporated by reference to exhibit number 4 in Dan River's
Report on Form 10-K (No. 33-70442) for the fiscal year ended January 1, 1994.

<F4>
Exhibit 10.1 incorporated by reference to corresponding exhibit number in Dan
River's Report on Form 10-K (No. 33-70442) for the fiscal year ended Decem-
ber 28, 1996.

<F5>
Incorporated by reference to corresponding exhibit number in Dan River's
Registration Statement on Form S-1 (No. 33-70442) filed on October 15, 1993.

<F6>
Incorporated by reference to corresponding Exhibit number in Amendment No. 2
dated November 17, 1997 to Dan River's Registration Statement on Form S-1
(No. 333-36479).

<F7>
Exhibit Nos. 10.12 and 10.14.1 incorporated by reference to corresponding
exhibit numbers in Dan River's Report on Form 10-K (No. 33-70442) for the
fiscal year ended December 31, 1994.

<F8>
Exhibit No. 10.13 incorporated by reference to exhibit number 10.12 in the
Registration Statement on Form S-1 (No. 33-70442) filed on October 15, 1993.

<F9>
Incorporated by reference to corresponding exhibit numbers in Dan River's
Registration Statement on Form S-1 (No. 333-36479) dated September 26, 1997.
</FN>



<PAGE>   19
                                                                    Schedule II


                                DAN RIVER INC.
                      VALUATION AND QUALIFYING ACCOUNTS
     Years ended January 3, 1998, December 28, 1996 and December 30, 1995


<TABLE>
<CAPTION>
                                                                Additions
                                                          ----------------------
                                          Balance at      Charged to                                        Balance at
                                          Beginning       Costs and                                            End
      Description                         of Year         Expenses         Other            Deductions (B)    of Year
      -----------                         -------         --------         -----            ----------      ---------
                                                                      (in thousands)
<S>                                       <C>             <C>             <C>               <C>             <C>
Allowance for uncollectible
 accounts, discounts and
 claims (deducted from
 accounts receivable):

Year ended January 3, 1998                $ 4,631         8,096           1,200 (A)          7,697           $ 6,230
                                          -------         -----           -----              -----           -------

Year ended December 28, 1996              $ 5,140         6,937              --              7,446           $ 4,631
                                          -------         -----           -----              -----           -------

Year ended December 30, 1995              $ 5,892         7,060              --              7,812           $ 5,140
                                          -------         -----           -----              -----           -------

</TABLE>





Notes:

(A)  Allowance related to receivables acquired through business combination.
(B)  Includes writeoff of receivables (net of recoveries) and claims allowed.