UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 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.......333-18755.....................................
           ............................................Pluma, Inc..........
             (Exact name of registrant as specified in its charter)

             North Carolina                                    56-1541893
(State or other jurisdiction of incorporation                (I.R.S. Employer
           or organization)                                Identification No.)

       ..................................................................
                    (Address of principal executive offices)
                                   (Zip Code)


 ............801 Fieldcrest Road, Eden, North Carolina  27289................
            (Registrant's telephone number, including area code)
 ..............................(336) 635-4000................................
(Former name, former address and former fiscal year, if changed since last
 report)

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  ......        No........

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date 8,109,152 shares of common
stock, no par value, as of November 14, 1998.


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<CAPTION>

PLUMA, INC.

INDEX TO FORM 10-Q
-------------------------------------------------------------------------------

PART I - FINANCIAL INFORMATION                                                                              PAGE
<S>                                 <C> <C>               <C> <C>                                              <C>
Item 1.  Financial Statements
         Balance Sheets - September 30, 1998 and December 31, 1997                                             3
         Statements of Operations - Three Months and Nine Months Ended September 30, 1998
         and 1997                                                                                              4
         Statements of Cash Flows - Nine Months Ended September 30, 1998 and 1997                              5
         Notes to Financial Statements                                                                       6-9

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations                                                                              9-10

PART II - OTHER INFORMATION

Item 2.  Changes in Security                                                                                   8

Item 6.  Exhibits and Reports on Form 8-K                                                                     10

</TABLE>


                                       2

<PAGE>
<TABLE>
<CAPTION>





PART I - FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

PLUMA, INC.
BALANCE SHEETS
--------------------------------------------------------------------------------------------------------------------------
                                                                                         (UNAUDITED)
                                                                                       SEPTEMBER 30,        DECEMBER 31,
                                                                                          1998                 1997
<S>                                                                                     <C>                 <C>
ASSETS
Current assets:
  Cash                                                                                  $  2,563,866        $  1,875,992
  Accounts receivable (less allowance - 1998, $1,734,356;

    1997, $2,353,577)                                                                     39,047,472          32,001,332

  Refundable income taxes                                                                  4,676,055           1,952,796

  Other receivables                                                                             --             1,906,178

  Deferred income taxes                                                                    1,251,001           1,539,385

  Inventories                                                                             69,555,782          51,177,900

  Other current assets                                                                       818,357           1,168,663
                                                                                        ------------        ------------

      Total current assets                                                               117,912,533          91,622,246
                                                                                        ------------        ------------

Property, plant and equipment:

  Land                                                                                       929,689             929,689

  Land improvements                                                                          719,699             719,699

  Buildings and improvements                                                              17,042,915          16,663,608

  Machinery and equipment                                                                 42,848,548          36,420,561

  Construction in process                                                                  9,343,301           4,762,235
                                                                                        ------------        ------------

      Total property, plant and equipment                                                 70,884,152          59,495,792

  Less accumulated depreciation                                                           24,667,198          21,496,857
                                                                                        ------------        ------------

      Property, plant and equipment, net                                                  46,216,954          37,998,935
                                                                                        ------------        ------------
Other assets:
  Goodwill (less accumulated amortization -

    1998, $1,333,840; 1997, $26,655                                                       33,524,461          34,831,646

  Other                                                                                    2,570,554           1,533,840
                                                                                        ------------        ------------

      Total other assets                                                                  36,095,015          36,365,486
                                                                                        ------------        ------------
Total                                                                                   $200,224,502        $165,986,667
                                                                                        ============        ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:

  Current maturities of long-term debt                                                   109,393,000          44,117,982

  Accounts payable                                                                        22,120,728          12,057,069

  Accrued expenses                                                                         5,923,435           2,472,458
                                                                                        ------------        ------------

      Total current liabilities                                                          137,437,163          58,647,509
                                                                                        ------------        ------------

Long-term debt                                                                                  --            40,000,000
                                                                                        ------------        ------------


Deferred income taxes                                                                      4,428,823           3,671,301
                                                                                        ------------        ------------

Commitments and contingencies

Shareholders' equity:
  Preferred stock, no par value, 1,000,000 shares authorized Common stock, no
  par value, 15,000,000 shares authorized,

    shares issued and outstanding - 1998, 8,109,152; 1997, 8,109,152                      36,849,127          36,849,127

  Retained earnings                                                                       21,509,389          26,818,730
                                                                                        ------------        ------------

      Total shareholders' equity                                                          58,358,516          63,667,857
                                                                                        ------------        ------------
Total                                                                                   $200,224,502        $165,986,667
                                                                                       ============        ============
</TABLE>


The accompanying notes are an integral part of these statements.



                                       3
<PAGE>
<TABLE>
<CAPTION>




PLUMA, INC.

STATEMENTS OF OPERATIONS
----------------------------------------------------------------------------------------------------------------------------------

                                                              (UNAUDITED)                             (UNAUDITED)
                                                              THREE MONTHS                           NINE MONTHS
                                                                ENDED                                   ENDED
                                                               SEPTEMBER 30,                           SEPTEMBER 30,
                                                               1998               1997                1998                1997

<S>                                                          <C>                <C>                <C>                <C>
Net sales                                                    $  54,608,997      $  38,965,527      $ 144,865,133      $  99,477,525

Cost of goods sold                                              51,639,967         34,068,210        133,250,402         84,714,875
                                                             -------------      -------------      -------------      -------------

Gross profit                                                     2,969,030          4,897,317         11,614,731         14,762,650

Selling, general and administrative expenses                     4,750,727          1,738,339         13,768,792          7,043,811
                                                             -------------      -------------      -------------      -------------

Income (loss) from operations                                   (1,781,697)         3,158,978         (2,154,061)         7,718,839
                                                             -------------      -------------      -------------      -------------

Other income (expenses):
  Interest expense                                              (2,151,012)          (519,051)        (5,481,849)        (1,697,223)
  Amortization of goodwill                                        (435,728)              --           (1,307,185)              --
  Other income                                                     108,431            158,139            595,073            407,878
                                                             -------------      -------------      -------------      -------------

Total other expenses, net                                       (2,478,309)          (360,912)        (6,193,961)        (1,289,345)
                                                             -------------      -------------      -------------      -------------

Income (loss) before income taxes                               (4,260,006)         2,798,066         (8,348,022)         6,429,494
                                                             -------------      -------------      -------------      -------------

Income taxes (benefit)                                          (1,550,642)         1,029,688         (3,038,681)         2,366,054
                                                             -------------      -------------      -------------      -------------

Net income (loss)                                            $  (2,709,364)     $   1,768,378      $  (5,309,341)     $   4,063,440
                                                             =============      =============      =============      =============

Earnings per common share -
  basic and diluted                                          $        (.33)     $         .22      $        (.65)     $         .55
                                                             =============      =============      =============      =============

Weighted average number of shares outstanding                    8,109,152          8,109,152          8,109,152          7,366,625
                                                             =============      =============      =============      =============
</TABLE>



The accompanying notes are an integral part of this statement.



                                       4






<PAGE>

<TABLE>
<CAPTION>


PLUMA, INC.

STATEMENTS OF CASH FLOWS
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                (UNAUDITED)
                                                                                              NINE MONTHS ENDED
                                                                                                 SEPTEMBER 30,
                                                                                           1998                 1997
<S>                                                                                  <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                                                  $ (5,309,341)       $  4,063,440
  Adjustments to reconcile net income to net cash
    used in operating activities:

    Provision for depreciation                                                          3,328,491           3,018,571

    Provision for amortization                                                          1,382,188

    Other,  net                                                                           (45,278)             (1,162)

    Increase in accounts receivable                                                    (5,139,962)        (18,615,617)

    Increase in deferred income taxes                                                   1,045,906             305,680

    Increase in inventories                                                           (18,377,882)           (984,971)

    (Increase) decrease in other current assets                                           350,306             344,065

    Increase in accounts payable                                                       10,063,659           2,268,856

   (Increase) decrease in refundable income taxes                                      (2,723,259)           (691,437)

    Increase in accrued expenses                                                        3,450,977             806,308
                                                                                     ------------        ------------


Net cash used in operating activities                                                 (11,974,195)         (9,486,267)
                                                                                     ------------        ------------

CASH FLOWS FROM INVESTING ACTIVITIES:

  Purchases of property, plant and equipment                                          (11,556,132)         (8,814,148)

  Other, net                                                                           (1,056,817)           (218,320)
                                                                                     ------------        ------------


Net cash used in investing activities                                                 (12,612,949)         (9,032,468)
                                                                                     ------------        ------------

CASH FLOWS FROM FINANCING ACTIVITIES:

  Repayment of subordinated debt                                                         (849,640)           (849,640)

  Proceeds from issuance of long term debt                                             26,124,658                   0

  Net repayments of revolving loan                                                    (10,266,437)

  Net proceeds from sale of common stock                                               29,626,577

  Payment of dividends                                                                   (144,451)


Net cash provided by financing activities                                              25,275,018          18,366,049
                                                                                     ------------        ------------


Net increase (decrease) in cash                                                           687,874            (152,686)

Cash, beginning of period                                                               1,875,992             291,488
                                                                                     ------------        ------------

Cash, end of period                                                                  $  2,563,866        $    138,802
                                                                                     ============        ============

Supplemental disclosures of cash flow information: Cash paid during the period
  for:
    Interest (net of amounts capitalized)                                            $  4,708,255        $  1,889,717
    Income taxes                                                                     $     57,500        $  2,751,811
  Cash received during the period for:

    Income taxes                                                                     $  1,400,829                   -
</TABLE>


The accompanying notes are an integral part of this statement.



                                       5






<PAGE>









PLUMA, INC.

NOTES TO FINANCIAL STATEMENTS
(UNAUDITED) SEPTEMBER 30, 1998
-------------------------------------------------------------------------------


1.    ACCOUNTING POLICIES

      The accompanying unaudited financial statements of Pluma, Inc. (the
      "Company") have been prepared in accordance with generally accepted
      accounting principles for interim periods.

      In the opinion of management, these financial statements include all
      adjustments, including all normal recurring accruals, necessary for a fair
      presentation of the financial position at September 30, 1998 and December
      31, 1997, the results of operations for the three months and nine months
      ended September 30, 1998 and 1997 and cash flows for the nine months ended
      September 30, 1998 and 1997.

      The operating results for the three months and nine months ended September
      30, 1998 are not necessarily indicative of the results to be expected for
      the full year ending December 31, 1998.

      In December 1997, the Company purchased certain assets and assumed
      liabilities of Stardust Corporation ("Stardust") and Frank L. Robinson
      Company ("FLR)". The acquisitions have been accounted for as purchases.
      Accordingly, the assets, liabilities, revenues and expenses of the
      acquired businesses are included in the financial statements as of
      December 31, 1997, and for the three months and nine months ended
      September 30, 1998.

2.    INVENTORIES

      Inventories consist of the following:
                                               (UNAUDITED)
                                              SEPTEMBER 30,      DECEMBER 31,
                                                  1998               1997

      At FIFO cost:
          Raw materials                     $    1,653,181      $     1,429,371
          Work-in-progress                      11,167,268            6,077,538
          Finished goods                        61,682,367           45,885,484
          Production supplies                    1,114,864              953,147
                                            --------------      ---------------
                                                75,617,680           54,345,540
      Excess of FIFO over LIFO cost             (3,587,439)          (1,846,435)
                                            --------------      ---------------
                                                72,030,241           52,499,105
      Excess of cost over market                (2,474,459)          (1,321,205)
                                            --------------      ---------------
                                            $   69,555,782      $    51,177,900
                                            ==============      ===============

3.    CAPITAL STOCK

      On January 28, 1997, the Board of Directors declared a 0.736-for-one
      reverse common stock split for shareholders of record on February 3, 1997.
      All references in the accompanying financial statements to the number of
      common shares and per share amounts reflect the reverse stock split.
                                       6
<PAGE>


      In March 1997, the Company completed its initial public offering of
      2,500,000 shares of Common Stock at $12.00 per share. The $26,400,000 net
      proceeds were used to reduce debt.

      In April 1997, the Underwriters' over-allotment option for 293,300 shares
      of Common Stock at $12.00 per share was exercised. The $3,300,000 net
      proceeds were used to reduce debt.

4.    STOCK OPTIONS

      In May 1995, the Company adopted the 1995 Stock Option Plan in which
      515,200 shares of the Company's Common Stock may be issued. The exercise
      price of the options may not be less than the fair value of the Common
      Stock on the date of grant. The options granted become exercisable at such
      time or times as shall be determined by the Compensation Committee of the
      Board of Directors (the "Committee"). The Committee may at any time
      accelerate the exercisability of all or any portion of any stock option.
      These options expire, if not exercised, ten years from the date of grant.
      Participants in the Plan may be independent contractors or employees of
      independent contractors, full or part-time officers and other employees of
      the Company, or independent directors of the Company.

      In April 1996 and October 1995, the Company granted 32,384 and 379,776
      options, respectively, to purchase Common Stock at an exercise price of
      $13.077 per share of which 181,352 and 180,763 options are exercisable as
      of September 30, 1998 and December 31, 1997, respectively. Forfeited
      options were 40,627 as of September 30, 1998 and 31,795 as of December 31,
      1997. Expired options were 6,477 shares as of September 30, 1998 and 589
      shares as of December 31, 1997. The remaining 183,704 options become
      exercisable on the anniversary dates of the grants as follows:

                   YEAR                               SHARES

                  1998                                 54,759
                  1999                                 61,236
                  2000                                 61,234
                  2001                                  6,475
                                                   ----------
                                                      183,704
                                                   ==========

      The Company applies APB Opinion No. 25 and related interpretations in
      accounting for the 1995 Stock Option Plan. Accordingly, no compensation
      cost has been recognized since the exercise price approximates the fair
      value of the stock price at the grant dates. Had compensation cost been
      determined based on the fair value at the grant date consistent with the
      method of Statement of Financial Accounting Standards No. 123, "Accounting
      for Stock-Based Compensation", the Company's net income and earnings per
      share would have been effected for the three months and nine months ended
      September 30, 1998 and 1997 as indicated below:
<TABLE>
<CAPTION>


                                             Three Months                           Nine Months
                                            Ended June 30,                        Ended June 30,
                                       1998                1997            1998                1997
<S>                           <C>             <C>               <C>               <C>
      Net Income:
         As reported          $  (2,709,364)  $     1,768,378   $   (5,309,341)   $     4,063,440
         Pro forma            $  (2,737,554)  $     1,717,064   $   (5,396,291)   $     3,909,499
      Earnings per Share:
         As reported          $        (.33)  $           .22   $         (.65)   $           .55
         Pro forma            $        (.34)  $           .21   $         (.67)   $           .53
</TABLE>
                                       7
<PAGE>

5.    EARNINGS PER SHARE

      In February 1997, the Financial Accounting Standards Board issued
      Statement of Financial Accounting Standards No. 128, "Earnings per Share"
      ("SFAS 128") which changes the method of computing and presenting earnings
      per share. SFAS 128 requires the presentation of basic earnings per share
      and diluted earnings per share ("EPS") on the face of the income statement
      for all entities with complex capital structures and requires a
      reconciliation of the numerator and denominator of the basic EPS
      computation to the numerator and denominator of the diluted EPS
      computation. Basic earnings per share is computed by dividing the net
      income available to common shareholders by the weighted average shares of
      outstanding common stock. The calculation of diluted earnings per share is
      similar to basic earnings per share except that the denominator includes
      dilutive common stock equivalents such as stock options and warrants. SFAS
      128 is effective for financial statements for periods ending after
      December 15, 1997 and early adoption is not permitted.

      Outstanding options to purchase shares of common stock were not included
      in the computation of diluted EPS because the options' exercise prices
      were greater than the average market prices of the common shares during
      the three months and nine months ended September 30, 1998 and 1997.
      Accordingly, there were no differences in the numerators and denominators
      used in the basic EPS and diluted EPS computations.

6.    LONG-TERM DEBT

      In April 1998, the Company replaced its existing debt with a $115.0
      million syndicated credit facility (the "Syndicated Credit Facility"). The
      Syndicated Credit Facility permits revolving loans of up to $70.0 million
      (the "Revolving Loan") and term loans of up to $45.0 million (the "Term
      Loans"). Any amounts outstanding under the Revolving Loans mature in
      April, 2003. Term Loan borrowings will be due in specified quarterly
      installments beginning in April, 1999 with a final maturity in January,
      2003.

      Among the various provisions, limitations and restrictions contained in
      the Syndicated Credit Facility, the Company must meet specified
      consolidated net worth, leverage ratio, fixed charge coverage ration,
      funded debt to total capitalization ratio and consolidated earnings before
      the effect of interest expense, income taxes depreciation and amortization
      requirements. Under the Syndicated Credit Facility, the Company is
      restricted in the amount of its capital expenditures, indebtedness to
      certain other parties, payment of dividends, or redemption of its stock
      that would create an event of default, unless a waiver is obtained, any
      unpaid principal and accrued interest may be declared immediately due and
      payable. The Syndicated Credit Facility may be terminated at any time upon
      the occurrence of an event of default. The Company retains the right to
      remedy certain events of default within 30 days after notice. The Company
      was not in compliance with certain covenants and had not obtained the
      respective waivers as of September 30, 1998. Accordingly, all debt as of
      September 30, 1998 has been classified as current.

7.    NEW ACCOUNTING STANDARDS

      In June 1997, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 130, "Comprehensive Income" ("SFAS
      130"), which established standards for the reporting and display of
      comprehensive income and its components in a full set of general-purpose
      financial statements. This statement divides comprehensive income into net
      income and other comprehensive income. For the three months and nine
      months ended September 30, 1998 and 1997, the Company had no items of
      other comprehensive income.
                                       8
<PAGE>


      In June 1997, SFAS No. 131 "Disclosures about Segments of an Enterprise
      and Related Information", was issued, establishing standards for the way
      public enterprises report information about operating segments in annual
      financial statements. This statement also requires that those enterprises
      report selected information about operating segments in interim financial
      reports issued to shareholders. The Company will be required to apply the
      provisions of this statement beginning with the annual report issued for
      the year ending December 31, 1998.

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


GENERAL

The following discussion and analysis should be read in conjunction with the
financial statements and related notes of this Quarterly Report on Form 10-Q 
and in conjunction with the Company's 1997 Annual Report.

RESULTS OF OPERATIONS

                           (UNDAUDITED)                    (UNDAUDITED)
                           THREE MONTHS                    NINE MONTHS
                          ENDED SEPTEMBER 30,           ENDED SEPTEMBER 30,

                           1998        1997              1998        1997

Net sales                  100.0%      100.0%            100.0%      100.0%
Cost of goods sold          94.6        87.4              92.0        85.2
                           ------      -----              ----        ----

Gross profit                 5.4        12.6               8.0        14.8
Selling, general and
  administrative expenses    8.7         4.5               9.5         7.0
                            ------     -----               ---         ---
 
Income (loss) from 
  operations                (3.3)        8.1              (1.5)        7.8
Other expenses, net          4.5         0.9               4.3         1.3
                             ---         ---               ---         ---


Income (loss) before 
  income taxes              (7.8)        7.2              (5.8)        6.5
Income taxes (benefit)      (2.8)        2.7              (2.1)        2.4
                            -----        ---             ------        ---


Net income (loss)           (5.0)%       4.5%             (3.7)%       4.1%
                             ---         ---               ---         ---

Three Months and Nine Months Ended September 30, 1998 ("1998"), Compared to
Three Months and Nine Months Ended September 30, 1997 ("1997")

NET SALES
Net sales for the nine months ended September 30, 1998 were $144.9 million, an
increase of $45.4 million, or 45.6%, over net sales of $99.5 million for the
first nine months of 1997. This increase in net sales was attributable to the
inclusion of sales from FLR and Stardust which were acquired by the Company in
December of 1997. This increase in sales, however, was lower than anticipated
due to a short supply of specific inventory styles. This shortage of inventory
was due, in part, to problems associated with system design and procedural 
aspects of the SAP management information system which is currently being
implemented by the Company. Additionally, sales from FLR and Stardust were lower
than anticipated due to a temporary supply disruption of inventory that occurred
during the second quarter of 1998.

GROSS MARGINS
Gross margins declined to 5.4% and 8.0% for the third quarter and first nine
months of 1998, respectively, from 12.6% and 14.8% in the comparable periods of
1997. The decline was the result of lower fabric yield, a shift in product mix,
and an increase in supplies expense. Fabric yield was adversely impacted due to
problems associated with system design and procedural aspects of the SAP
management information system which is currently being implemented by the
Company. Steps have been or are being taken to correct this problem. Orders for
product shifted to a higher percentage of larger sized goods during the first
nine months of 1998 relative to the same period in 1997. Due to a competitive
market environment, the Company is not always able to offset 



<PAGE>


the higher production costs associated with larger sized product with higher
selling prices. Supplies expense increased as the Company provided manufacturing
and shipping supplies to a greater number of outside contractors during the
first nine months of 1998 than had been utilized in the same period of 1997.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A")
For the first nine months, SG&A expenses increased 95.5% to $13.8 million in
1998 from $7.0 million in 1997. SG&A as a percent of sales for 1998 was 9.5%
compared to 7.0% in 1997. This increase in SG&A expense is primarily
attributable to the inclusion of expenses from FLR and Stardust in the first
nine months of 1998.

OTHER EXPENSES, NET
Other expenses, net, increased 586.7% to $2.5 million in the third quarter of
1998 and 380.4% to $6.2 million in the first nine months of 1998. This increase
was due to an increase in interest expense and amortization expense associated
with the acquisitions made in December of 1997.

INCOME TAXES
The effective tax rate was 36.4% in 1998 and 36.8% 1997.

LIQUIDITY AND CAPITAL RESOURCES

PRINCIPAL SOURCES OF LIQUIDITY
Principal sources of liquidity have been net proceeds from the Company's initial
public offering and bank financing. In March 1997, the Company completed its
initial public offering of 2,500,000 shares of common stock at $12.00 per share.
Upon the exercise of an overallotment option in April 1997, the Company issued
an additional 293,300 shares at $12.00 per share. The $29.6 million in net
proceeds from the issuance of Common Stock was used to reduce debt.

The company entered into a $115.0 million syndicated credit facility (the
"Syndicated Credit Facility") in April, 1998. The Syndicated Credit Facility
permits revolving loans of up to $70.0 million (the "Revolving Loans") and term
loans of up to $45.0 million (the "Term Loans"). Any amounts outstanding under
the Revolving Loans mature in April, 2003. Term Loan borrowings will be due in
specified quarterly installments beginning in April, 1999 with a final maturity
in January, 2003. The Syndicated Credit Facility has been amended by the First
Amendment to Credit Agreement and Waiver entered into as of August 27, 1998, the
Second Amendment to Credit Agreement entered into as of September 30, 1998, and
the Third Amendment to Credit Agreement entered into as of November 16, 1998
(the "Credit Agreement Amendments"). The provisions of the Credit Agreement
Amendments include, among other things, the addition of up to $4.0 million to
the Company's calculated borrowing base under the Revolving Loans. The $4.0
million addition to the Company's calculated borrowing base provided in the
Third Amendment to Credit Agreement expires on November 30, 1998.

Among the various provisions, limitations and restriction contained in the
Syndicated Credit Facility, the Company must meet specified consolidated net
worth, leverage ratio, fixed charge coverage ratio, funded debt to total
capitalization ratio and consolidated earnings before the effect of interest
expense, income taxes, depreciation and amortization requirements. Under the
Syndicated Credit Facility, the Company is restricted in the amount of its
capital expenditures, indebtedness to certain other parties, payment of
dividends, or redemption of its stock that would create an event of default. In
the event of default, unless a waiver is obtained, any unpaid principal and
accrued interest may be declared immediately due and payable. The Syndicated
Credit Facility may be terminated at any time upon the occurrence of an event of
default. The Company retains the right to remedy certain events of default with
30 days after notice.

The Company was not in compliance with certain covenants and had not obtained
waivers as of September 30, 1998. As of September 30, 1998, the Company was
required to have a consolidated net worth greater than or equal to $62.5
million, a fixed charge coverage ratio of no less than 1.50 to 1.0, and
consolidated earnings before the effect of interest expense, income taxes,
depreciation and amortization greater than or equal to $20 million. As of
September 30, 1998, the Company had a consolidated net worth of $58.4 million, a
fixed charge coverage ratio of (0.37) to 1, and consolidated earnings before the
effect of interest expense, income




<PAGE>


taxes, depreciation and amortization of $12.5 million. The lenders party to the 
Syndicated Facility have agreed to forbear exercising their rights and remedies 
arising from the Company's covenant violations until December 31, 1998 and to 
continue to make available to the Company the loans provided under the 
Syndicated Credit Facility.

CASH FLOWS FROM OPERATING ACTIVITIES
For the nine months ended September 30, 1998 and 1997, net cash used in
operating activities totaled $12.0 million and $9.5 million, respectively.
Accounts receivable, net increased $5.1 million from December 31, 1997 to
September 30, 1998 due to increased sales volume and the seasonality of
activewear shipments. Inventories increased $18.4 million from December 31, 1997
to September 30, 1998 in order to support shipments due in the next six months.
These uses of cash were offset primarily by an increase in accounts payable of
$10.1 million.

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures were $11.6 million for the nine months ended September 30,
1998. These capital expenditures were primarily to enhance manufacturing and
management information systems capabilities.

CASH FLOWS FROM FINANCING ACTIVITIES
For the nine months ended September 30, 1998, the Company had net borrowings of
$25.3 million to help meet working capital and capital expenditure financing
needs.

Forward Looking Statements

Information in this form 10-Q may contain certain forward looking statements.
These statements involve risks and uncertainties that could cause actual results
to differ materially, including without limitation, the actual costs of
operating the Company's business, actual operating performance, the ability to
maintain large client contracts or to enter into new contracts and the level of
demand for the Company's product. Additional factors that could cause actual
results to differ are discussed in the Company's recent filings with the
Securities and Exchange Commission.




<PAGE>

PART II - OTHER INFORMATION

ITEM 2.    CHANGES IN SECURITY

      On January 28, 1997, the Board of Directors declared a 0.736-for-one
      reverse Common Stock split for shareholders of record on February 3, 1997.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

a.       Exhibits

         Exhibit
         Number                                         Filed Herewith (*)

          6.1 First Amendment to Credit Ageement
          6.2 Second Amendment to Credit Agreement
          6.3 Third Amendment to Credit Agreement
          6.4 Forbearance Agreement
          6.5 Cash Collateral Security Agreement
         11.1 Computation of Earnings per Share                  *

b.       Reports on Form 8-K

         None



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.

      Pluma, Inc.

                                  -----------------------------------
                                  R. Duke Ferrell, Jr.
                                  President, Chief Executive Officer
                                  and Director



                                  -----------------------------------
                                  Forrest H. Truitt II
                                  Executive Vice President, Treasurer
                                  and Chief Financial Officer

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