<PAGE>   1


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-Q


          [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

               For the quarterly period ended September 30, 1997

                                       OR

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

                  For the transition period from           to
                                                -----------   ------------

                         Commission File Number 1-8941

                            FRUIT OF THE LOOM, INC.
             (Exact name of registrant as specified in its charter)



         DELAWARE                                      36-3361804          
(State or other jurisdiction of                     (I.R.S. Employer    
incorporation or organization)                     Identification No.) 


                               5000 SEARS TOWER,
                            233 SOUTH WACKER DRIVE,
                            CHICAGO, ILLINOIS 60606
          (Address of principal executive offices, including Zip Code)

                                 (312) 876-1724
              (Registrant's telephone number, including area code)

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

Common shares outstanding at October 31, 1997: 67,526,520 shares of Class A
Common Stock, $.01 par value, and 5,684,276 shares of Class B Common Stock,
$.01 par value.


<PAGE>   2
                  FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                                    INDEX



    PART I.  FINANCIAL INFORMATION                                    PAGE NO.


             Item 1.   Financial Statements

                       Condensed Consolidated Balance Sheet;
                            September 30, 1997 (Unaudited) and
                            December 31, 1996                                 2


                       Condensed Consolidated Statement of Operations 
                            (Unaudited); Three and Nine Months Ended
                            September 30, 1997 and 1996                       3

                       Condensed Consolidated Statement of Cash
                            Flows (Unaudited); Nine Months Ended
                            September 30, 1997 and 1996                       4

                       Notes to Condensed Consolidated Financial Statements 
                            (Unaudited)                                       5


             Item 2.   Management's Discussion and Analysis of Financial 
                            Condition and Results of Operations               11



    PART II. OTHER INFORMATION

             Item 1.   Legal Proceedings                                      18
                                                                                
             Item 6.   Exhibits and Reports on Form 8-K                       18





<PAGE>   3

                  FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEET
                           (In thousands of dollars)


<TABLE>
<CAPTION>
                                                                  SEPTEMBER 30,   DECEMBER 31,
                                                                       1997           1996
                                                                  -------------   ------------
ASSETS                                                             (UNAUDITED)
------
<S>                                                                  <C>            <C>
Current Assets
   Cash and cash equivalents (including restricted cash)........      $   18,200    $   18,700
   Notes and accounts receivable (less allowance for possible  
      losses of $19,500 and $20,600, respectively)..............         262,600       167,300
   Inventories                                                 
      Finished goods............................................         492,800       396,800
      Work in process...........................................         197,300       176,700
      Materials and supplies....................................          60,900        44,500
                                                                   -------------  ------------
         Total inventories......................................         751,000       618,000
   Other........................................................          43,900        38,100
                                                                   -------------  ------------
         Total current assets...................................       1,075,700       842,100
                                                                   -------------  ------------

Property, Plant and Equipment...................................       1,546,200     1,541,000
    Less accumulated depreciation...............................         719,000       641,100
                                                                   -------------  ------------
         Net property, plant and equipment......................         827,200       899,900
                                                                   -------------  ------------
Other Assets
   Goodwill (less accumulated amortization of
      $304,600 and $284,500, respectively)......................         724,200       744,300
   Other........................................................          83,700        60,700
                                                                   -------------  ------------
         Total other assets.....................................         807,900       805,000
                                                                   -------------  ------------
                                                                      $2,710,800    $2,547,000
                                                                   =============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
   Current maturities of  long-term debt........................      $   33,200    $   18,200
   Trade accounts payable.......................................         135,400       111,900
   Other accounts payable and accrued expenses..................         294,500       196,600
                                                                   -------------  ------------
         Total current liabilities..............................         463,100       326,700
                                                                   -------------  ------------
Noncurrent Liabilities
   Long-term debt...............................................       1,118,400       867,400
   Deferred income taxes........................................          18,900        16,900
   Other........................................................         285,800       271,200
                                                                   -------------  ------------
         Total noncurrent liabilities...........................       1,423,100     1,155,500
                                                                   -------------  ------------
Common Stockholders' Equity.....................................         824,600     1,064,800
                                                                   -------------  ------------
                                                                      $2,710,800    $2,547,000
                                                                   =============  ============
</TABLE>

                           See accompanying notes.


                                      2
<PAGE>   4
                  FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

          CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
                    (In thousands, except per share data)



<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED                 NINE MONTHS ENDED
                                                         SEPTEMBER 30,                     SEPTEMBER 30,
                                                    --------------------------         ----------------------------
                                                      1997         1996                   1997             1996
                                                    -----------   ------------         -----------      ------------
<S>                                                 <C>           <C>                  <C>               <C>
Net sales................................           $  569,700    $  628,000           $1,711,400        $1,866,400
Cost of sales............................              427,600       427,400            1,257,500         1,320,000
                                                    -----------   ------------         -----------      ------------
  Gross earnings.........................              142,100       200,600              453,900           546,400
Selling, general and
  administrative expenses................              116,800        99,700              307,700           280,400
Goodwill amortization....................                6,700         6,700               20,100            20,100
                                                    -----------   ------------         -----------      ------------
  Operating earnings.....................               18,600        94,200              126,100           245,900
Interest expense.........................              (22,500)      (25,400)             (62,500)          (79,800)
Other expense - net......................              (36,400)         (400)             (42,400)           (3,300)
                                                    -----------   ------------         -----------      ------------
   Earnings (loss) before income tax 
     expense (benefit)...................              (40,300)       68,400               21,200           162,800
Income tax expense (benefit).............               (2,200)       20,600               14,900            54,700
                                                    -----------   ------------         -----------      ------------
   Earnings (loss) from continuing
      operations.........................              (38,100)       47,800                6,300           108,100
   Discontinued operations:       
      Loss on LMP litigation.............             (101,200)            -             (101,200)                -
                                                    -----------   ------------         -----------      ------------
   Net earnings (loss)...................           $ (139,300)   $   47,800           $  (94,900)       $  108,100
                                                    ===========   ============         ===========      ============
Earnings (loss) per common share:
   Continuing operations.................           $    (0.52)   $     0.63           $     0.08        $     1.42
   Discontinued operations...............                (1.38)            -                (1.35)             -
                                                    -----------   ------------         -----------      ------------
   Net earnings (loss) per common share..           $    (1.90)   $     0.63           $    (1.27)       $     1.42
                                                    ===========   ============         ===========      ============
Average common shares outstanding........               73,200        76,400               74,900            76,200
                                                    ===========   ============         ===========      ============

</TABLE>

                           See accompanying notes.
                                                                 
                                       3
<PAGE>   5

                   FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
          CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
                          (In thousands of dollars)


<TABLE>
<CAPTION>

                                                                                NINE MONTHS ENDED       
                                                                                   SEPTEMBER 30,        
                                                                           ---------------------------- 
                                                                               1997           1996      
                                                                           -------------  ------------- 
<S>                                                                         <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net earnings (loss).................................................     $    (94,900) $  108,100
   Adjustments to reconcile net earnings (loss) to net cash 
      provided by (used for) operating activities:          
      Depreciation and amortization....................................          116,500     113,900
      Deferred income tax expense......................................            1,900      27,000
      Increase in working capital......................................         (193,400)   (121,400)
      Loss on LMP litigation - net of $28,600 paid.....................           72,600           -
      Other-net........................................................           (6,200)     (3,500)
                                                                           -------------  ------------- 
         Net cash provided by (used for) operating activities..........         (103,500)    124,100
                                                                           -------------  ------------- 

CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures................................................          (41,800)    (27,100)
   Other-net...........................................................             (800)     (2,200)
                                                                           -------------  ------------- 
         Net cash used for investing activities........................          (42,600)    (29,300)
                                                                           -------------  ------------- 

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from issuance of long-term debt............................           98,300      63,000
   Proceeds under line-of-credit agreements............................          975,000     308,500
   Payments under line-of-credit agreements............................         (785,800)   (483,100)
   Principal payments on long-term debt and capital leases.............          (11,800)    (19,000)
   Common stock issued.................................................           11,100      11,300
   Common stock repurchased............................................         (141,200)          -
                                                                           -------------  ------------- 
         Net cash provided by (used for) financing activities..........          145,600    (119,300)
                                                                           -------------  ------------- 

Net decrease in Cash and cash equivalents (including
    restricted cash)...................................................             (500)    (24,500)
Cash and cash equivalents (including restricted cash)
    at beginning of period.............................................           18,700      26,500
                                                                           -------------  ------------- 
Cash and cash equivalents (including restricted cash)
    at end of period...................................................     $     18,200  $    2,000
                                                                           =============  =============


</TABLE>

                            See accompanying notes.

                                      4
<PAGE>   6
                   FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

1.   The condensed consolidated financial statements contained herein should
     be read in conjunction with the consolidated financial statements and
     related notes contained in the Annual Report on Form 10-K of Fruit of the
     Loom, Inc. (the "Company") for the year ended December 31, 1996.  The
     information furnished herein reflects all adjustments (consisting of
     normal recurring adjustments) which are, in the opinion of management,
     necessary for a fair presentation of the results of operations of the
     interim periods.  Operating results for the three and nine months ended
     September 30, 1997 are not necessarily indicative of results that may be
     expected for the year ended December 31, 1997.

     The Company uses the last-in, first-out ("LIFO") method of accounting
     for the majority of inventories for financial reporting purposes.  Interim
     determinations of LIFO inventories are necessarily based on management's
     estimates of year-end inventory levels and costs.  Subsequent changes in
     these estimates, including the final year-end LIFO determination, and the
     effect of such changes on earnings are recorded in the interim periods in
     which they occur.

2.   No dividends were declared on the Company's common stock for the
     nine-month periods ended September 30, 1997 and 1996.

3.   The Company's effective income tax rate for the first nine months of 1997
     was significantly impacted by the $32,000,000 charge related to the Acme
     Boot Company guarantee for which no tax benefit was recorded (see Note 5).
     Excluding this charge, the Company's effective income tax rate of 28% for
     the nine-month period differed from the Federal statutory rate of 35%
     primarily due to the impact of foreign earnings, certain of which are
     taxed at lower rates than in the United States, partially offset by
     goodwill amortization, a portion of which is not deductible for Federal
     income taxes, and state income taxes.  For the first nine months of 1996,
     the Company's effective income tax rate differed from the Federal
     statutory rate primarily due to foreign earnings, substantially offset by
     goodwill amortization, state income taxes and interest on prior years'
     income taxes.

     The most significant difference in both years (excluding the $32,000,000 
     charge) relates to the impact of undistributed earnings of the foreign 
     subsidiaries, which is estimated to reduce the effective income tax rate 
     by 21.7% and 10.8% for the first nine months of 1997 and 1996, 
     respectively.

4.   In 1995, management announced plans to close certain manufacturing
     operations and to take other actions to reduce costs and improve
     operations.  As a result, the Company recorded charges of approximately
     $372,900,000 ($287,400,000 after tax) related to impairment writedowns of
     goodwill, costs associated with the closing or realignment of certain
     domestic manufacturing facilities and attendant personnel reductions and
     charges related to inventory writedowns and valuations, foreign operations
     and other corporate issues.  These charges were taken in an effort to
     reduce the Company's cost structure, streamline operations and further
     improve customer service.

                                      5

<PAGE>   7


                   FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                  (UNAUDITED)

     During the first quarter of 1997, the Company finalized certain of the
     estimates recorded in connection with the above noted charges.  As a
     result of finalizing these estimates, earnings before income tax expense
     for the first quarter of 1997 increased by $7,500,000.  These amounts were
     substantially offset by additional expenses recorded related to a
     performance share compensation plan for certain executive officers earned
     in the first quarter of 1997.

5.   The Company and its subsidiaries are involved in certain legal
     proceedings and have retained liabilities, including certain environmental
     liabilities, such as those under the Comprehensive Environmental Response,
     Compensation and Liability Act of 1980, as amended, its regulations and
     similar state statutes ("Superfund Legislation"), in connection with the
     sale of certain discontinued operations, some of which were significant
     generators of hazardous waste.  The Company and its subsidiaries have also
     retained certain liabilities related to the sale of products in connection
     with the sale of certain discontinued operations.  The Company's retained
     liability reserves at September 30, 1997 related to discontinued
     operations consist primarily of certain environmental and product
     liability reserves of approximately $70,600,000.  The Company has recorded
     receivables related to these environmental liabilities of approximately
     $23,600,000 which management believes will be recovered from insurance and
     other sources.  Management believes that adequate reserves have been
     established to cover potential claims based on facts currently available
     and current Superfund Legislation.

     Generators of hazardous wastes which were disposed of at offsite locations
     which are now superfund sites are subject to claims brought by state and
     Federal regulatory agencies under Superfund Legislation and by private
     citizens under Superfund Legislation and common law theories.  Since 1982,
     the United States Environmental Protection Agency (the "EPA") has actively
     sought compensation for response costs and remedial action at offsite
     disposal locations from waste generators under the Superfund Legislation,
     which authorizes such action by the EPA regardless of fault, legality of
     original disposal or ownership of a disposal site.  The EPA's activities
     under the Superfund Legislation can be expected to continue during the
     remainder of 1997 and future years.

     In February 1986, the Company completed the sale of stock of its then
     wholly owned subsidiary, Universal Manufacturing Corporation ("Universal")
     to MagneTek, Inc. ("MagneTek").  At the time of the sale there was a suit
     pending against Universal and the Company's predecessor, Northwest
     Industries, Inc. ("Northwest"), by LMP Corporation ("LMP"). The suit (the
     "LMP Litigation") alleged that Universal and Northwest fraudulently
     induced LMP to sell its business to Universal and then suppressed the
     development of certain electronic lighting ballasts in breach of the
     agreement of sale, which required Universal to pay to LMP a percentage of
     the net profits from such business from 1982 through 1986.  Two additional
     plaintiffs, Stevens Luminoptics Partnership and Calmont Technologies,
     Inc., joined the litigation in 1986.  In December 1989 and January 1990, a
     jury returned certain verdicts against Universal and also returned
     verdicts in favor of Northwest and on certain issues in favor of
     Universal.  A judgment totaling $25,800,000, of which $7,500,000
     represented punitive damages, reflecting these verdicts was entered by the
     Alameda County, California Superior Court in January 1990 against
     Universal.

                                      6

<PAGE>   8




                   FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                  (UNAUDITED)

     In April 1992, the California Court of Appeals reversed the $25,800,000
     judgment against Universal and affirmed those verdicts favorable to
     Universal and Northwest.  In July 1992, the California Supreme Court
     denied the plaintiffs' petition for review.  The case was then remanded to
     the trial court.

     Pursuant to the stock purchase agreement (the "Stock Purchase Agreement")
     under which Universal was sold, the Company agreed to indemnify MagneTek
     for a two-year period following the sale of Universal for certain
     contingent liabilities.  MagneTek brought suit against the Company for
     declaratory and other relief in connection with the indemnification under
     the Stock Purchase Agreement.  In April 1992, the Los Angeles County,
     California Superior Court found that the Company was obligated by the
     Stock Purchase Agreement to indemnify MagneTek for any liability that may
     be assessed against MagneTek or Universal in the LMP Litigation and to
     reimburse MagneTek for, among other things, its costs and expenses in
     defending that case.  The court entered a judgment requiring the Company
     to reimburse and indemnify MagneTek in two stages:  currently, to
     reimburse MagneTek for costs of defense and related expenses in the LMP
     Litigation, plus costs of litigating the indemnity case with the Company;
     and at a later date, if and when any liability in the LMP Litigation is
     finally determined or a settlement is reached in that case, to reimburse
     and/or indemnify MagneTek for that amount as well.

     In October 1994, following a retrial of the LMP Litigation, a jury
     returned a verdict of approximately $96,000,000 against Universal.  The
     jury verdict included breach of contract and fraud damages and
     approximately $6,000,000 in punitive damages.  The Company is obligated to
     indemnify Universal for damages incurred in this case.

     In August 1997, the Court of Appeal of the State of California upheld the
     1994 judgment of $96,000,000 against Universal and MagneTek.  In
     accordance with an agreement between the Company and the plaintiffs, the
     Company paid $28,600,000 to the plaintiffs on August 18, 1997. Under the
     agreement, the Company will be required, should further appeals fail, to
     pay an additional $71,400,000 plus interest dating from August 1, 1997.
     As a result of the most recent judgement, the Company has taken a charge
     of $101,200,000 in the third quarter of 1997 which is classified as
     Discontinued operations in the Company's Condensed Consolidated Statement
     of Operations. Although the payment is probable, the Company continues to
     disagree with the decision by the Court of Appeal and has filed a petition
     for review with the California Supreme Court.

     In March 1988, a class action suit entitled Endo, et al v. Albertine, et
     al. was filed in the United States District Court for the Northern
     District of Illinois (the "District Court") against the Company, its then
     directors, certain of its then executive officers, its then underwriters
     and the Company's current independent auditors in connection with the
     Company's initial public offering of Class A Common Stock and certain debt
     securities in March 1987.  The suit alleged, among other things,
     violations of Federal and state securities laws against all of the
     defendants, as well as breaches of fiduciary duties by the director and
     officer defendants, and sought unspecified damages.


                                      7

<PAGE>   9


                         FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                  (UNAUDITED)

     In October 1997, the Company and the other remaining defendants reached a
     tentative settlement with the plaintiff class.  The settlement is subject
     to preliminary approval by the District Court at a court hearing.  If that
     preliminary approval is given, the settlement is also subject to final
     approval by the District Court, at another court hearing that will occur
     after notice of the settlement and the right to object to the settlement
     is provided to members of the plaintiff class.  Assuming preliminary
     approval of the settlement, it is not expected that final approval by the
     District Court will occur before January 1998.  As a result of the
     foregoing, the trial that was scheduled to begin on November 3, 1997, has
     been continued generally while this settlement process proceeds.  The
     additional cost recorded in the third quarter of 1997 of $1,500,000, net
     of insurance proceeds, is included in Other expense-net in the Company's
     Condensed Consolidated Statement of Operations, to reflect the settlement.

     In November 1996, in connection with the sale of a substantial portion of
     its hosiery operations and related assets, the Company guaranteed the
     purchaser's $10,000,000 subordinated note payable to a bank.  The note
     bears interest at a rate of 7.66% per annum and is due November 2006.

     In June 1994, pursuant to authorization from the Company's Board of
     Directors, the Company guaranteed a loan from a bank in an amount up to
     $12,000,000 to Mr. William Farley, the Company's Chairman and Chief
     Executive Officer.  In exchange for the guarantee the Company receives an
     annual fee from Mr. Farley equal to 1% of the value of the loan covered by
     the guarantee. The guarantee is secured  by a second lien on certain
     shares of the Company held by the bank for other loans made to Mr. Farley.

     The Company has negotiated grants from the governments of the Republic of
     Ireland, Northern Ireland and Germany.  The grants are being used for
     employee training, the acquisition of property and equipment and other
     governmental business incentives such as general employment.  At September
     30, 1997, the Company has a contingent liability to repay, in whole or in
     part, grants received of approximately $49,800,000 in the event that the
     Company does not meet defined average employment levels or terminates
     operations in the Republic of Ireland, Northern Ireland and Germany.

     The Company has guaranteed, on an unsecured basis, the repayment of
     certain debt incurred or created by Acme Boot Company, Inc. ("Acme Boot"),
     formerly a wholly-owned subsidiary of the Company, under Acme Boot's bank
     credit facilities (the "Acme Boot Credit Facilities").  Acme Boot is a
     majority owned subsidiary of Farley Inc. ("FI"). Mr. Farley holds 100% of
     the common stock of FI.  At September 30, 1997, the Acme Boot Credit
     Facilities provide for up to approximately $67,000,000 of loans and
     letters of credit. The Acme Boot Credit Facilities are secured by liens on
     substantially all of the assets of Acme Boot and its subsidiaries.  At
     September 30, 1997 approximately $64,000,000 in loans and letters of
     credit were outstanding under the Acme Boot credit facilities.  In
     addition, the Company loaned Acme Boot $8,000,000 in August 1997 to
     provide Acme Boot with supplemental working capital during Acme Boot's
     peak selling season.  The loan was made in the form of a demand note
     payable and is senior to all indebtedness of Acme Boot.


                                      8
<PAGE>   10

                   FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                  (UNAUDITED)

Summarized unaudited financial information for Acme Boot follows (in 
thousands of dollars):


CONDENSED BALANCE SHEET


<TABLE>
<CAPTION>
                                     SEPTEMBER 30,      DECEMBER 31,     
                                         1997               1996
                                    --------------     -------------
<S>                                  <C>                <C>
Current assets                       $  33,400          $  30,400
Noncurrent assets                        3,800              1,600
                                    --------------     -------------
                                       $37,200            $32,000
                                    ==============     =============
Current liabilities                  $  83,100          $  11,400
Noncurrent liabilities                   8,900             68,400
Preferred stock                          4,100              3,400
Common stockholders' deficit           (58,900)           (51,200)
                                    --------------     -------------
                                     $  37,200          $  32,000
</TABLE>                            ==============     =============

CONDENSED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                THREE MONTHS ENDED              NINE MONTHS ENDED
                    SEPTEMBER 30,                  SEPTEMBER 30,
               ----------------------       --------------------------
                   1997        1996            1997            1996    
               -----------  ---------       -----------    -----------
<S>             <C>         <C>               <C>             <C>      
Net sales       $  12,100   $  20,400         $ 35,500        $ 62,300 
               ===========  =========       ===========    ===========
Gross earnings  $   1,600   $   4,200         $  5,700        $ 16,400 
               ===========  =========       ===========    ===========
Operating loss ($   2,500)  ($  3,700)       ($  5,700)      ($  7,800)
               ===========  =========       ===========    ===========
Net loss       ($   3,600)  ($  4,800)       ($  9,400)      ($ 10,200)
               ===========  =========       ===========    ===========
</TABLE>

     As a result of the operating performance of Acme Boot and management's
     assessment of existing facts and circumstances of Acme Boot's financial
     condition, the Company increased its reserve by $32,000,000 from
     $35,000,000 to $67,000,000 during the third quarter to fully reserve the
     Company's exposure under the Acme Boot guarantees.

     In August 1994, the Company acquired Pro Player, Inc. ("Pro Player") for
     approximately $55,700,000 including approximately $14,200,000 of Pro
     Player debt which was repaid by the Company.  The principals of Pro
     Player, who are also key employees of that business, may also be entitled
     to receive compensation of varying amounts in 1999 and 2000 up to a
     maximum of $47,100,000 combined, based in part on the attainment of
     certain levels of operating performance by the acquired entity.

                                      9


<PAGE>   11


                   FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                  (UNAUDITED)

6.   The Securities and Exchange Commission recently adopted new rules that
     require expanded disclosure of accounting policies for derivative
     financial instruments.  The following accounting policy disclosures
     supplement the disclosures included in the Summary of Significant
     Accounting Policies in the Notes to Consolidated Financial Statements
     contained in Item 8 of the Company's 1996 Annual Report on Form 10-K.

     Cotton futures contracts are the primary derivative commodity instruments
     utilized by the Company.  These instruments are designated and effective
     as hedges of a portion of the probable periodic cotton purchases that
     would otherwise expose the Company to the risk of increases in the price
     of cotton consumed in manufacturing the Company's products. The contract
     terms match the Company's purchasing cycle.  Options (caps and floors) are
     also used but are not currently material to the Company's financial
     condition or net income.  Futures contracts are closed by cash settlement.
     Open futures contracts are marked to market.  Realized and unrealized
     gains and losses are deferred and recognized in earnings as cotton costs
     are recovered through sales of the Company's products (the deferral
     accounting method).  Deferred gains and losses are included in other
     liabilities or assets and in cash flows from investing activities.
     Unrealized changes in fair value of contracts no longer effective as
     hedges would be recognized in income from the date the contracts become
     ineffective until they are sold.  Historically, the Company has not closed
     futures contracts prior to fixing prices on cotton contracted for
     delivery.

     Interest rate swap agreements are the primary derivative financial
     instruments utilized by the Company.  These instruments limit the
     Company's risk of exposure to increases in interest rates on selected
     portions of its variable rate debt.  These agreements involve the exchange
     of amounts based on a variable interest rate for amounts based on fixed
     interest rates over the life of the agreement without an exchange of the
     notional amount upon which the payments are based.  The differential to be
     paid or received as interest rates change is accrued and recognized as an
     adjustment of interest expense related to the debt (the accrual accounting
     method).  The related amount payable to or receivable from counterparties
     is included in interest payable.  The fair values of the swap agreements
     are not recognized in the financial statements.  Gains and losses on
     terminations of interest-rate swap agreements would be deferred as an
     adjustment to the carrying amount of the outstanding debt and amortized as
     an adjustment to interest expense related to the debt over the remaining
     term of the original contract life of the terminated swap agreement.  In
     the event of the early extinguishment of a designated debt obligation, any
     realized or unrealized gain or loss from the swap would be recognized in
     income coincident with the extinguishment.  Any swap agreements that are
     not designated with outstanding debt or notional amounts (or durations) of
     interest-rate swap agreements in excess of the principal amounts (or
     maturities) of the underlying debt obligations would be recorded as an
     asset or liability at fair value, with changes in fair value recorded in
     other income or expense (the fair value method).

                                      10


<PAGE>   12



                   FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                        PART I.  FINANCIAL INFORMATION

ITEM 2.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING INFORMATION

The Company desires to provide investors with meaningful and useful
information. Therefore, this Quarterly Report on Form 10-Q contains certain
statements which describe the Company's beliefs concerning future business
conditions and the outlook for the Company based on currently available
information.  Wherever possible, the Company has identified these "forward
looking" statements (as defined in Section 21E of the Securities Exchange Act
of 1934) by words such as "anticipates," "believes," "estimates," "expects" and
similar expressions.  These forward looking statements are subject to risks and
uncertainties which could cause the Company's actual results, performance and
achievements to differ materially from those expressed in, or implied by, these
statements.  These risks and uncertainties include but are not limited to the
following:  the financial strength of the retail industry (particularly the
mass merchant channel), the level of consumer spending for apparel, demand for
the Company's activewear screenprint products, the competitive pricing
environment within the basic apparel segment of the apparel industry, the
Company's ability to develop, market and sell new products, the Company's
effective income tax rate, the Company's ability to successfully move
labor-intensive segments of the manufacturing process offshore, the success of
planned advertising, marketing and promotional campaigns, international
activities and the outcome of legal proceedings and other contingent
liabilities.  The Company assumes no obligation to update publicly any forward
looking statements, whether as a result of new information, future events or
otherwise.

RESTRUCTURING AND SPECIAL CHARGES

In 1995, management announced plans to close certain manufacturing operations
and to take other actions to reduce costs and improve operations.  As a result,
the Company recorded charges of approximately $372,900,000 ($287,400,000 after
tax) related to impairment write-downs of goodwill, costs associated with the
closing or realignment of certain domestic manufacturing facilities and
attendant personnel reductions and charges related to inventory write-downs and
valuations, foreign operations and other corporate issues. These charges were
taken in an effort to reduce the Company's cost structure, streamline
operations and further improve customer service.

By early 1998, the Company expects to complete the migration of its sewing
operations to lower cost, offshore locations along with the realignment of
certain domestic manufacturing operations.  On August 7, 1997, the Company
announced plans to close one domestic plant and relocate sewing operations from
five additional domestic facilities, with the termination of approximately
4,800 production and administrative personnel at these facilities.  In
conjunction with these actions, the Company incurred charges of $16,800,000 in
the third quarter of 1997 for production inefficiencies, severance, fringe
benefits (principally health insurance representing the net cost of COBRA),
lease termination and other costs.  The majority of the charges incurred are
expected to result in cash payments.  In addition, the Company incurred charges
of $4,800,000 in the third quarter of 1997 related to reduced work weeks to
balance inventories.



                                      11
<PAGE>   13


                   FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                  PART I.  FINANCIAL INFORMATION - (CONTINUED)


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)


RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the accompanying
condensed consolidated financial statements and related notes for the period
ended September 30, 1997 and the Company's consolidated financial statements
and related notes contained in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.

The table below sets forth selected operating data (in millions of dollars and
as percentages of net sales) of the Company.

<TABLE>
<CAPTION>

                   THREE MONTHS ENDED      NINE MONTHS ENDED
                        SEPTEMBER 30,        SEPTEMBER 30,
                  ---------------------  ---------------------
                      1997       1996      1997       1996
                  ---------    --------  --------  -----------
<S>                 <C>        <C>       <C>        <C>
Net sales           $ 569.7    $628.0    $1,711.4   $1,866.4

Gross earnings      $ 142.1    $200.6    $  453.9   $  546.4
Gross margin           24.9%     31.9%       26.5%      29.3%

Operating earnings  $  18.6    $ 94.2    $  126.1   $  245.9
Operating margin        3.3%     15.0%        7.4%      13.2%
</TABLE>

NET SALES

Net sales decreased $58,300,000 or 9.3% in the third quarter and $155,000,000
or 8.3% in the first nine months of 1997 compared with the same periods of
1996, due mainly to significantly lower activewear sales in 1997 and inclusion
of hosiery sales in 1996.  Third quarter underwear shipments were also off from
a year ago as retailers reduced inventory levels.  The Company sold its hosiery
division in November 1996. Excessive T-shirt inventories at wholesale
activewear accounts and widespread promotional activity in the highly competive
wholesale activewear market were major negative factors.  In addition, both
activewear and casualwear fleece shipments were hampered by product shortages.
Retail product sales, before considering hosiery sales ($28,600,000 in the
third quarter and $78,400,000 in the first nine months of 1996), declined
modestly in the third quarter of 1997 due to lower underwear sales but were
essentially equal to 1996 for the nine-month period.  Sharply higher Gitano
sales and improved sales of Wilson* branded products were favorable factors in
both 1997 periods.  Sports & Licensing sales improved in both 1997 periods
while European sales were essentially flat with volume improvement offset by
unfavorable currency translation.


*WILSON(R) is a registered trademark of Wilson Sporting Goods Company and is
used by the Company under license for the sale of sweatshirts and sweatpants,
T-shirts, shorts and other athletic activewear.



                                      12

<PAGE>   14

                   FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                  PART I.  FINANCIAL INFORMATION - (CONTINUED)


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)


GROSS EARNINGS

Gross earnings decreased $58,500,000 or 29.2% in the third quarter and
$92,500,000 or 16.9% in the first nine months of 1997 compared with the same
periods of 1996.  Gross margin declined 7.0 percentage points to 24.9% in the
third quarter of 1997 and 2.8 percentage points to 26.5% for the first nine
months of 1997 compared to the same periods of 1996.  The principal unfavorable
factor in the quarter was the absorption of $21,600,000 of costs due to reduced
work weeks to balance inventories or shutdowns at a number of manufacturing
facilities.  Retail promotional activities and the inclusion of hosiery
earnings last year also had significant negative effects on the year to year
comparison.  Activewear earnings were flat and gross margin improved compared
to the third quarter of 1996 primarily reflecting offshore cost benefits.
Sports & Licensing gross earnings improved and gross margin was essentially
flat.  For the first nine months of 1997, unfavorable factors were as noted for
the quarter along with the impact of unfavorable activewear volume and retail
and activewear pricing and related promotional activities in the first half of
1997 compared with the first half of 1996.

OPERATING EARNINGS

Operating earnings declined $75,600,000 or 80.3% in the third quarter and
$119,800,000 or 48.7% in the first nine months of 1997 compared with the same
periods of 1996.  Operating margin dropped 11.7 percentage points to 3.3% in
the third quarter and 5.8 percentage points to 7.4% for the first nine months
of 1997 compared with 1996.  Gross earnings and margin were lower as noted
above, and the Company has continued to maintain increased levels of
advertising and promotion and to implement management information systems to
meet customer demand for more sophisticated distribution and inventory control.
Consequently, selling, general and administrative expense increased $17,100,000
or 17.2% in the third quarter and $27,300,000 or 9.7% in the first nine months
of 1997 over the respective 1996 periods.  The nine-month period ended
September 30, 1997 included the finalization of certain of the estimates
recorded in connection with the special charges taken in 1995 which reduced
selling, general and administrative expenses by $7,500,000 in the first quarter
of 1997.  Additional expenses of a substantially similar amount, however, were
also recorded in the first quarter of 1997 related to a performance share
compensation plan for certain executive officers. Selling, general and
administrative expense was 20.5% and 18.0% of sales in the third quarter and
first nine months of 1997 compared with 15.9% and 15.0% in the same periods of
1996, respectively.

INTEREST EXPENSE

Interest expense decreased $2,900,000 or 11.4% and $17,300,000 or 21.7% for the
third quarter and first nine months of 1997 compared with the same periods of
1996. The decrease was principally attributable to the effect of lower average
debt levels in 1997.  The lower debt levels were due to repayment of debt out
of the Company's positive cash flow from operating activities in the fourth
quarter of 1996 (including the sale of accounts receivable) and proceeds from
the sale of the Company's hosiery division in November 1996.




                                      13
<PAGE>   15

                   FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                 PART I.  FINANCIAL INFORMATION - (CONTINUED)


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)


OTHER EXPENSE - NET

During the third quarter of 1997 the Company increased its reserve relating to  
the Company's guarantees of debt incurred or created by Acme Boot under Acme
Boot's credit facilities by $32,000,000 from $35,000,000 to $67,000,000 to
fully reserve the Company's exposure under the guarantees.  This charge is
reflected on the Other expense - net line of the Company's Condensed
Consolidated Statement of Operations. Other expense for the third quarter and
first nine months of 1997 included losses totaling $2,500,000 and $8,000,000
from sales of accounts receivable pursuant to its receivables purchase
agreement.  Accounts receivable were not sold during the third quarter and
first nine months of 1996.

INCOME TAXES

The Company's effective income tax rate for the first nine months of 1997 was
significantly impacted by the $32,000,000 charge related to the Acme Boot
guarantee for which no tax benefit was recorded.  Excluding this charge, the
Company's effective income tax rate of 28% for the nine-month period differed
from the Federal statutory rate of 35% primarily due to the impact of foreign
earnings, certain of which are taxed at lower rates than in the United States,
partially offset by goodwill amortization, a portion of which is not deductible
for Federal income taxes, and state income taxes.  For the first nine months of
1996, the Company's effective income tax rate differed from the Federal
statutory rate primarily due to foreign earnings, substantially offset by
goodwill amortization, state income taxes and interest on prior years' income
taxes.

The most significant difference in both years (excluding the $32,000,000
charge) relates to the impact of undistributed earnings of the Company's
foreign subsidiaries, which is estimated to reduce the effective income tax
rate by 21.7% and 10.8% for the first nine months of 1997 and 1996,
respectively.

DISCONTINUED OPERATIONS

In August 1997, the Court of Appeal of the State of California upheld a 1994
judgment of $96,000,000 against Universal and MagneTek.  In accordance with an
agreement between the Company and the plaintiffs, the Company paid $28,600,000
to the plaintiffs on August 18, 1997.  Under the agreement, the Company will be
required, should further appeals fail, to pay an additional $71,400,000 plus
interest dating from August 1, 1997.  As a result of the most recent judgement,
the Company has taken a charge of $101,200,000 in the third quarter of 1997
which is classified as discontinued operations in the Company's Condensed
Consolidated Statement of Operations.  Although the payment is probable, the
Company continues to disagree with the decision by the Court of Appeal and has
filed a petition for review with the California Supreme Court.


                                      14
<PAGE>   16

                   FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                  PART I.  FINANCIAL INFORMATION - (CONTINUED)


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)


EARNINGS (LOSS) PER COMMON SHARE

In 1997, earnings (loss) per common share from continuing operations was a loss
of $.52 and earnings of $.08 for the third quarter and first nine months
compared to earnings of $.63 and $1.42 for the respective 1996 periods.  The
loss per common share in 1997 from discontinued operations was $1.38 in the
third quarter and $1.35 in the first nine months.

LIQUIDITY AND CAPITAL RESOURCES

Funds generated from the Company's operations are the major source of liquidity
and are supplemented by funds obtained from capital markets including bank
facilities.  The Company has available for the funding of its operations
approximately $945,000,000 from bank credit lines.  As of October 31, 1997,
approximately $465,900,000 was available and unused under these facilities.

In September 1997, the Company entered into a five-year $900,000,000 credit
agreement with its banks. The agreement provides a $600,000,000 revolving
credit facility, a $200,000,000, 364-day facility, renewable annually, and a
$100,000,000 term loan facility.

Net cash used for operating activities was $103,500,000 in the nine months
ended September 30, 1997 compared with net cash provided by operating
activities of $124,100,000 in the same period of 1996.  The unfavorable
comparison to 1996 resulted primarily from increased working capital, lower
revenues and the $28,600,000 paid August 18, 1997 under agreement with the
plaintiff to limit the Company's liability under the LMP litigation.  The
comparison in working capital changes reflected a greater increase in
inventories partially offset by a lesser increase in receivables.  The largest
single factor in the inventory growth comparison was the abnormally high level
of inventories at the beginning of the 1996 period.  Lesser factors were
softness in 1997 shipments and, to a limited extent, issues related to the
offshore movement of the Company's sewing and support, and packaging
operations.  The favorable comparison in receivable growth reflected lower
revenues and the conclusion of promotional dating programs.

Net cash used for investing activities in the nine months ended September 30,
1997 and 1996 was $42,600,000 and $29,300,000, respectively.  Capital
expenditures were $41,800,000 and $27,100,000 in the first nine months of 1997
and 1996, respectively.  Capital spending, primarily to enhance finished cloth
manufacturing capabilities and to establish and support offshore assembly
operations, is anticipated to approximate $65,000,000 in 1997.

Net cash provided by financing activities in the nine months ended September
30, 1997 was $145,600,000. Net cash used for financing activities was
$119,300,000 in the comparable 1996 period.  In 1997 the Company borrowed a net
of $189,200,000 under its revolving credit facilities, compared with a net
repayment of $174,600,000 in 1996.  The Company also borrowed $100,000,000
under its bank term loan facility in 1997 and repurchased a total of
$141,200,000 of its common stock.  Total long-term debt


                                      15
<PAGE>   17


                   FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                  PART I.  FINANCIAL INFORMATION - (CONTINUED)

ITEM 2.            MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                   CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES - (CONTINUED)

(including current portion) was $1,151,600,000 at September 30, 1997, down
$157,100,000 from September 30, 1996.

In November 1996, the Company's Board of Directors authorized the purchase of
up to $200,000,000 of the Company's common stock in open market and privately
negotiated transactions.  Total purchases under the program through September
30, 1997 were 4,459,300 shares at an aggregate cost of $158,000,000.

In December 1996, the Company entered into a three-year receivables purchase
agreement whereby it can currently sell up to a $250,000,000 undivided interest
in a defined pool of its trade accounts receivable.  The maximum amount
outstanding as defined under the agreement varies based upon the level of
eligible receivables.  Under the agreement, approximately $200,000,000 of trade
accounts receivable had been sold at September 30, 1997 and December 31, 1996.
The proceeds were used to reduce amounts outstanding under the Company's
revolving lines of credit.

In September 1994, the Company entered into a five-year operating lease
agreement, with two annual renewal options, primarily for certain machinery and
equipment.  The total cost of the assets to be covered by the lease is limited
to $175,000,000.  At September 30, 1997, approximately $30,400,000 was
available and unused under this facility.  The lease provides for a substantial
residual value guarantee by the Company at the termination of the lease and
includes purchase and renewal options at fair market values.

On July 11, 1997, the Company filed with the Securities and Exchange Commission 
a shelf registration statement on Form S-3 (the "Registration Statement") to
register under the Securities Act of 1933, as amended, the sale of up to
$850,000,000 of its debt securities, preferred stock and Class A Common Stock
(collectively, the "Securities").  The Registration Statement does not relate
to any particular offering of Securities; rather, the Registration Statement
was filed to provide the Company with the flexibility to engage in future
offerings without the delay which could result from the filing of new
registration statements at that time.  The types of Securities offered, and
their terms, will be determined prior to any particular offering.  The Company
anticipates that the net proceeds from any future sale of the Securities would
be used for general corporate purposes, including, but not limited to, working
capital, capital expenditures, expansion of existing properties, development of
new projects, prepayment of outstanding indebtedness, investments and
acquisitions.

Management believes the funding available to the Company is sufficient to meet
anticipated requirements for capital expenditures, working capital and other
needs.  The Company's debt instruments, principally its bank agreements,
contain covenants restricting the Company's ability to sell assets, incur debt,
pay dividends and make investments and require the Company to maintain certain
financial ratios.



                                      16
<PAGE>   18

                   FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                  PART I.  FINANCIAL INFORMATION - (CONTINUED)

ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)

NEW ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 ("Statement No. 128"), Earnings per
Share, which is required to be adopted on December 31, 1997.  At that time, the
Company will be required to change the method currently used to compute
earnings per share and to restate all prior periods.  Statement No. 128 is not
expected to have any impact on the Company's computation of primary earnings
per share.

The Company does expect to include a computation of diluted earnings per share
in future periods for the effect of common stock equivalents.  As a result of
the net loss in the third quarter of 1997, the Company does not expect any
impact in diluted earnings per common share for the third quarter and first
nine months of 1997.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 ("Statement No. 131"), Disclosures about
Segments of an Enterprise and Related Information, which is required to be
adopted for years beginning after December 15, 1997.  Statement No. 131
requires that companies disclose segment data based on how management makes
decisions about allocating resources to segments and measuring their
performance.  The Company is currently evaluating the requirements of Statement
No. 131.

Effective January 1, 1997, the Company adopted Statement of Financial
Accounting Standards No. 125 ("Statement No. 125"), Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities, which
requires an entity to recognize the financial and servicing assets it controls
and the liabilities it has incurred and to derecognize financial assets when
control has been surrendered in accordance with the criteria provided in
Statement No. 125.  Adoption of Statement No. 125 did not have a material
impact on the condensed consolidated financial statements.


                                      17
<PAGE>   19

                   FRUIT OF THE LOOM, INC. AND SUBSIDIARIES

                          PART II.  OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS

The response to this item is incorporated by reference to the accompanying
condensed consolidated financial statements and related notes for the period
ended September 30, 1997.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

A.  EXHIBITS

4(a)  $900,000,000 Credit Agreement dated as of September 19, 1997, among the 
      several banks and other financial institutions from time to time parties
      thereto (the "Lenders"), NationsBank, N.A., as administrative agent for 
      the Lenders thereunder, Chase Manhattan Bank, Bankers Trust Company, The
      Bank of New York and the Bank of Nova Scotia, as co-agents.             

4(b)* Rights Agreement, dated as of March 8, 1996 between Fruit of the Loom,   
      Inc. and Chase Mellon Shareholder Services, L.L.C., Rights Agent         
      (incorporated herein by reference to Exhibit 4(c) to the Company's Annual
      Report on Form 10-K for the year ended December 31, 1995).               

27    Financial Data Schedule.

99.1* Press Release of Registrant dated October 22, 1997 (incorporated herein
      by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K
      filed on October 27, 1997).

_______________________________

*  Document is available at the Public Reference Section of the Securities and
Exchange Commission, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D. C.
20549 (Commission file No. 1-8941).

The Registrant has not listed nor filed as an Exhibit to this Quarterly Report
certain instruments with respect to long-term debt representing indebtedness of
the Registrant and its subsidiaries which do not individually exceed 10% of the
total assets of the Registrant and its subsidiaries on a consolidated basis.
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the Registrant agrees to
furnish such instruments to the Securities and Exchange Commission upon
request.

B.  REPORTS ON FORM 8-K
No report on Form 8-K was filed by the Registrant during the quarter ended
September 30, 1997.

                                      18

<PAGE>   20
                                  SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                           FRUIT OF THE LOOM, INC.           
                                           -----------------------           
                                                (Registrant)                 
                                                                             
                                                                             
                                                                             
                                                                             
Date: November 5, 1997                     LARRY K. SWITZER                  
                                           -----------------------           
                                           Larry K. Switzer                  
                                           Senior Executive Vice President   
                                           and Chief Financial Officer       
                                           (Principal Financial Officer      
                                           and duly authorized to sign       
                                           on behalf of Registrant)          



                                      19