UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996]

For the fiscal year ended December 31, 1997

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

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 of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

801 Fieldcrest Road 27288
Eden, North Carolina (Zip Code)
(Address of principal executive offices)

Registrant's telephone number, including area code: (336) 635-4000

Securities registered pursuant to Section 12 (b) ofthe Act:

Title of Each Class Name of Each Exchange
on Which Registered
Common Stock, No par value New York Stock Exchange

Securities registered pursuant to Section 12 (g) of the Act:
None

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

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

The aggregate market value of Common Stock, no par value, held by
non-affiliates of the registrant, as of March 25, 1998, was approximately
$34,592,808.

As of March 31, 1998, there were 8,109,152 shares of Common Stock, no
par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Annual Shareholders Report for the year ended December
31, 1997 are incorporated by reference into Part II of this report.

Portions of the Proxy Statement for the Annual Meeting of Shareholders
to be held on June 2, 1998 are incorporated by reference into Parts I and III of
this report.

PART I

ITEM 1. Business

GENERAL

Pluma (the "Company") is a vertically integrated manufacturer and distributor of
high quality fleece and jersey activewear. The Company is focused on increasing
sales and profitability by offering high value products to a diverse customer
base across multiple markets and distribution channels. Currently Pluma's
material customers include branded customers such as adidas and Starter,
retailers such as Miller's Outpost and Sam's Club and entertainment customers
such as Busch Gardens, Hard Rock Cafe and Walt Disney. The Company sells
products under its own "PLUMA[R]", "SANTEE[R]" and "SNOWBANK[R]" brand names to
retail and wholesale customers. In addition, Pluma sells to screenprinters and
embroiderers who sell the Company's products to a wide variety of retailers,
ranging from small souvenir and resort stores to large nationwide department
stores. Pluma seeks to grow both by increasing sales to existing customers and
by adding new customers. This diverse customer base provides product exposure to
many consumer markets and enables Pluma to balance its production more evenly
throughout the year, thereby improving sales and profitability.

Since its inception, the Company has been an innovator of new products and
styles and has focused on delivering higher quality products. The Company was
one of the first to introduce heavyweight, fuller cut fleece products at
attractive price points and fleecewear with higher cotton content. These
products were well received by consumers, and the Company rapidly increased
sales and profitability as it expanded its business across broad market
segments. In 1990, the Company began to produce heavyweight cotton jersey
products suitable for outerwear in order to diversify its product mix, more
efficiently utilize its manufacturing base and increase sales and profitability.
Today the Company continues to be an innovator of new products and has recently
introduced a thermal-lined hooded jacket with a synthetic shell which it will
sell for the first time in 1998.

In addition, the Company believes its ability to collaborate with customers in
developing new styles provides a distinct competitive advantage. As a result of
Pluma's flexible manufacturing capabilities, customers often select the Company
as their "manufacturer of choice" for its ability to develop specialized
products that meet customers' cost, quality and delivery criteria.

Consistent with its strategy of distributing its products to a diverse customer
base, in December of 1997, Pluma initiated the creation of a national
distribution network by acquiring for cash, substantially all the assets and
properties of two nationally-recognized wholesale distributorships, Stardust
Corporation ("Stardust") and Frank L. Robinson Company ("FLR"), major customers
of the Company. Stardust is located in Verona, Wisconsin, has operated since
1988 and serves approximately 6,000 customers. It will distribute the Company's
products throughout the Midwestern United States. FLR is located in Los Angeles,
California, has operated since 1936 and serves approximately 3,000 customers. It
will distribute the Company's products in the Western United States. These
distributors have the experience and capability to distribute the Company's
products to smaller customers which the Company, as a manufacturer, finds
difficult to service efficiently. The management of Stardust and FLR have joined
the Pluma management team. The Company believes that this network will benefit
the company by bringing Pluma closer to the ultimate consumer and allow the
company to sell directly to retail customers, largely inaccessible in the past
except through wholesale distributors. Pluma will continue to service other
wholesale distributors not owned by the company.

To take advantage of lower production costs and remain responsive to customers'
demands for specialized products, in 1997 Pluma became a partner with a Mexican
corporation in a joint venture located in Aguascalientes, Mexico, which began
sewing a small portion of Pluma's products. Pluma also contracted with four
independent contractors in Mexico to sew some of its goods in 1997.
Approximately 3% of the Company's goods were sewn in Mexico in 1997. The Company
is currently negotiating with another Mexican company, and expects to complete
in early 1998, the formation of a joint venture with the company which will sew
a portion of the Company's goods in the State of Chihuahua, Mexico. These two
joint ventures, as well as independent contractors, will continue to assemble
component parts of the Company's products in 1998. The Company anticipates that
it may have up to 30% of its products sewn in Mexico in 1998.

PRODUCTS

Pluma's high quality fleece and jersey activewear meet consumer preferences for
heavier weights and higher cotton content. The Company's fleece products include
a variety of styles and colors of tops and bottoms in seven and one-half, nine,
ten, and eleven ounce weights in cotton/polyester blends ranging from 50%
cotton/50% polyester to 100% cotton. Pluma also manufacturers five and one-half
and seven ounce 100% jersey tops and bottoms designed for outerwear.

The Company believes that certain design and construction features enhance the
quality and appeal of its products relative to most competitors.

(bullet) Pluma's fleece and jersey tops are fuller cut and heavier weight.
(bullet) Pluma produces higher stitch count fabrics to reduce
shrinkage, provide a better printing surface and increase
softness.
(bullet) Pluma uses air jet spun yarn for its 50% cotton/50% polyester
fleece fabric to prevent pilling.
(bullet) All of Pluma's ribbed fabrics contain Spandex(TM) to retain shape.
(bullet) Pluma uses greater detail in its sewing processes to enhance
durability and appearance.
(bullet) Pluma utilizes advanced finishing techniques, including the
application of softeners and napping (brushing), to give its
fleece fabrics more bulk and softer texture.

The sales mix of fleece and jersey products for the three years ended December
31, 1997, in sales, gross dozens sold, excluding close-outs and irregulars, and
the average sales price per dozen is as follows:

Year Ended December 31

1997 1996 1995
In thousands ------------------ --------------- ------------------
Except average Gross Avg. Gross Avg. Gross Avg.
Sales price per dozen Dozens Sales Price/ Dozens Sales Price/ Dozens Sales Price/
Sales Sold Dozen Sales Sold Dozen Sales Sold Dozen
-------- ----- ------- -------- ----- -------- ----------- ----- --------

Fleece $80,751 879 $91.88 $ 80,423 871 $ 92.41 $ 70,634 826 $ 85.50
Jersey 51,836 841 61.67 46,803 765 61.16 29,989 480 62.43
-------- ----- -------- ----- -------- -----
Total/Average $132,587 1,720 $77.10 $127,226 1,636 $ 77.79 $100,623 1,306 $ 77.01
======== ===== ======== ===== ======== =====

Historically, the Company's sales have been derived predominantly from fleece
products. However, since introducing jersey products in 1990, the Company has
increased jersey sales in order to diversify its product mix, more efficiently
utilize its manufacturing base and reduce the impact of seasonality that is
inherent in the fleece industry. Generally, jersey products sell at lower price
points and generate lower profit margins than fleece.

As of December 31, 1997 and 1996, the Company had backlog orders of
approximately 645,475 dozens, or approximately $36,939,287 million, and 320,899
dozens or approximately $22,668,135 million, respectively. Backlogs are computed
from orders on hand at the last day of each fiscal period. The Company believes
that as a result of the seasonality and the just-in-time nature of its business,
order backlogs are not a reliable indicator of future sales volume.

CUSTOMERS

Pluma targets a diverse customer base which is comprised of five primary
markets: Branded, retailers, screenprinters and embroiderers, wholesale
distributors and entertainment. As a result of Pluma's ability to customize
products according to its customer's needs, it is focusing on increasing sales
to its branded and retail customers, which produce higher gross margins.

For the years ended December 31, 1997, 1996, and 1995, Pluma's top ten customers
accounted for 80.2%, 75.5% and 75.6%, respectively, of the Company's net sales
and 47.18%, 65.4% and 78.2%, respectively, of its accounts receivable. For the
year ended December 31, 1997, the Company's top three customers, Sam's Club,
adidas and FLR, accounted for 31.1%, 12.0% and 8.7%, respectively, of the
Company's net sales. For the year ended December 31, 1996, the Company's top
three customers, Sam's Club, adidas and FLR, accounted for 24.1%, 14.7% and
7.2%, respectively, of the Company's net sales. For the year ended December 31,
1995, the Company's top three customers, Sam's Club, FLR and Starter
accounted for 16.1%, 12.8% and 11.4%, respectively, of the Company's net sales.
Pluma provides products to its customers pursuant to purchase orders on an
as-needed basis.

BRANDED

Branded accounts consist of customers such as adidas and Starter. These accounts
require the manufacturer to meet exact specifications, such as styling, color,
screenprinting and embroidery. Products are labeled, packaged and shipped ready
for sale to consumers. The Company's ability to accommodate the specialized
nature of products manufactured for these customers often results in higher
margins. Branded accounts constituted approximately 23.0% of the Company's net
sales for the year ended December 31, 1997, 20.6% of the Company's net sales for
1996 and 20.6% for 1995.

RETAILERS

Retail customers include specialty, high-end and value-oriented retailers. The
Company's largest retail customer in 1997 was Sam's Club, which markets and
sells PLUMA[R] labeled products. Pluma's other retail customers include Miller's
Outpost, which sells its own private label products manufactured by Pluma or
products with Pluma's "SANTEE(R)" label. The Company believes that this market
segment holds significant opportunity for growth as other value-oriented retail
formats continue to grow in popularity. Retail customers constituted
approximately

40.88% of the Company's net sales for the year ended December 31, 1997 and 33.7%
and 27.% for the same periods in 1996 and 1995, respectively. As a result of the
growth of the Company's business with Sam's Club, coupled with increased
consumer recognition of the "PLUMA"(R) brand name, the Company has granted a
license to Kayser Roth Corporation ("Kayser Roth") that allows it to manufacture
and distribute socks to Sam's Club under the "PLUMA"(R) brand name.

SCREENPRINTERS AND EMBROIDERERS

Screenprinters and embroiderers include Endless Design and Embroidery Services
among others. These customers typically purchase basic products to which they
add design and logos; they then resell these products to a wide variety of
retailers, ranging from small souvenir and resort stores to large, nationwide
department stores. Certain screenprinters and embroiderers resell under Pluma's
"SANTEE(R)" label. Screenprinters and embroiderers constituted approximately
11.3% of the Company's net sales for the year ended December 31, 1997 and 19.7%
and 26.7% for the same periods in 1996 and 1995, respectively.

WHOLESALE DISTRIBUTORS

Wholesale distributors have included FLR, Alpha and Stardust. These customers
generally purchase goods in large volume for further distribution to small
customers, which are typically more difficult for the Company to service. All
products sold to these customers contain Pluma's "SANTEE(R)" label, which is
becoming more recognizable by consumers. Wholesale distributors constituted
approximately 16.7% of the Company's net sales for the year ended December 31,
1997 and 17.5% and 22.8% for the same periods in 1996 and 1995, respectively.
The Company purchased Stardust and FLR in December 1997 and will continue to
operate these distributorships.

ENTERTAINMENT

Entertainment accounts consist of customers such as Busch Gardens, Hard Rock
Cafe and Walt Disney. This market segment demands a basic product on which
designs are printed or embroidered for souvenir sales. Demand for goods sold to
this market segment is relatively consistent throughout the year. Entertainment
accounts constituted approximately 8.1% of the Company's net sales for the year
ending December 31, 1997 and 8.4% and 12.9% for the same periods in 1996 and
1995 respectively.

MANUFACTURING

Pluma is a vertically integrated manufacturer. The Company's manufacturing
process consists of knitting, dyeing, finishing, cutting and sewing. Using
proprietary equipment and advanced manufacturing processes, Pluma has the
flexibility to shift its knitting, dyeing and sewing operations between various
fabric weights, blends and styles, as well as between fleece and jersey with
minimal downtime. These capabilities allow Pluma to service effectively and
efficiently its diverse customer base.

Pluma currently manufactures most of its products domestically at sites within
close proximity to each other and uses technologically advanced equipment and
sophisticated production scheduling systems. The Company recently chose to move
some of its production to Mexico to meet customer demands for value. The Company
believes that adding production from Mexico will improve the Company's ability
to service more of its customers' needs while maintaining their just-in-time
delivery requirements and minimizing transportation costs.

Pluma's vertically integrated manufacturing process includes the following:

KNITTING

The Company operates modern, high-speed circular knitting machines that produce
various types of fabric in its manufacturing facilities in Eden, North Carolina.
The circular knitting process eliminates the need for side- seaming, reduces
waste and consequently, lowers production costs. The Company also continues to
purchase new

knitting equipment and components that should increase efficiency in its
knitting operations. Proprietary knitting processes enable the Company to change
its production with minimal downtime for setup. The Company can shift its
knitting processes between various fabric blends, weights and styles, as well as
between fleece and jersey fabrics, without significant loss of utilization.
Pluma uses Spandex(TM) in all of its ribbed fabrics to retain shape and produces
high stitch count fabrics, which results in lower shrinkage, a better printing
surface and a softer feel.

DYEING

The Company believes that its computer-controlled, pressurized dyeing operations
in Eden, North Carolina, are state-of-the-art. Computerized controls reduce
processing time and improve control of dyeing cycles, temperatures, water
pressure and chemical usage, thereby producing greater consistency and
minimizing waste. In addition, the Company's pressurized dyeing process
increases bulking, which reduces shrinkage and color bleeding of its fabrics.

FINISHING

The finishing process consists of extracting, drying, napping (brushing) and
compacting the fabric. The extraction process involves the addition of fabric
softeners to ensure that the fabric retains its softness during the drying
process. Fleece fabrics are then napped to produce a soft and heavy feel. Also,
fabrics are compacted to minimize shrinkage and increase stability. The Company
is currently adding new finishing processes to accommodate newly developed
fabrics.

CUTTING

Pluma's cutting operation in Eden, North Carolina, uses Bierrebi automatic
continuous-cutting machines with computer-controlled hydraulic die-cutting
heads. The Company also uses a Gerber cutting system which interfaces with its
computerized pattern design process. The Company utilizes these machines to
improve consistency and efficiency and generate less waste. Manual cutting is
used to provide flexibility to process low-volume orders.

SEWING

The Company's sewing facilities are located in Eden, North Carolina, and in
Martinsville, Rocky Mount, Chatham, Vesta and Altavista, Virginia. Pluma's
sewing operations begin with the preassembly of component parts utilizing
computerized sewing equipment. Preassembled parts are then sewn using the
Company's proprietary tandem sewing process or conventional sewing. Management
believes that its tandem sewing process is unique and gives the Company a
competitive advantage in sewing operations by enhancing product quality and
manufacturing flexibility.

Pluma's proprietary tandem sewing process utilizes the Company's patented tandem
sewing table. This proprietary equipment allows operations to move rapidly
between sewing steps to reduce further assembly time. The table is easily
adjustable to accommodate different operators' physical characteristics,
minimizing downtime between shifts and thereby facilitating multi-shift
operations.

The Company engages independent sewing contractors for low volume, special style
products that require specific equipment. These independent contractors also
assist the Company during peak manufacturing periods by providing additional
capacity. Approximately 15.0%, 16.0% and 14.9% of the Company's products were
sewn by independent contractors in 1997, 1996 and 1995, respectively. As stated
above, in 1997, approximately 3% of the Company's products were sewn in Mexico
by independent contractors and a joint venture of which the Company is a
partner. The Company anticipates that up to 30% of its products may be sewn in
Mexico in 1998 by the above-referenced joint venture, a new joint venture and
independent contractors.

The Company hires independent embroidery and screen printing subcontractors to
print or embroider special images on products ordered by certain of its
entertainment and branded accounts. The Company believes that it is more cost
effective to out-source these services.

PACKAGING AND DISTRIBUTION

Pluma operates a three-building complex in Martinsville, Virginia, which serves
as its central packaging and distribution facility. The complex contains
approximately 462,950 square feet of packing and storage space.

The packaging process includes folding, tagging, bagging, packing and bar
coding. The Company's packaging operation employs automated folding machines and
other technologically advanced equipment that package products efficiently.

Pluma uses computers, scanners, radios, conveyor systems and order pickers to
track, locate and move products within its facilities and to the loading docks
for shipment. One conveyor system links two facilities, thereby significantly
reducing handling time.

The Company leases a fleet of eleven tractors and eighty-seven trailers and owns
seven trailers. It leases two trucks to transport materials between plants, as
necessary. It relies upon common carriers for delivery to its customers.

SOURCES OF RAW MATERIALS

Pluma purchases yarn, dye stuffs and chemicals that are the principal raw
materials used in its products. Management believes that there is sufficient
availability of raw materials from a number of suppliers at competitive prices
to satisfy current and anticipated needs of the Company.

The Company does not spin its own yarn. Yarn spinning is a capital intensive
operation in which there is substantial domestic and foreign competition. The
Company has stable relationships with its principal yarn suppliers and often
makes advance purchases of yarn based on projected demand. The Company has
contracted to purchase substantially all of its projected yarn needs for 1998.
However, should any or all of these suppliers be unable for any reason to
fulfill their obligations under these yarn contracts, the Company believes that
such an occurrence would not have a material adverse effect on the Company's
business as yarn is available to the Company from other suppliers at comparable
prices.

Pluma maintains a five- to ten-day supply of raw material inventories,
minimizing the need for storage space. During 1997, Pluma's principal yarn
suppliers included Parkdale Mills, Inc. and Mayo Yarns, Inc. and its principal
supplies of dye and chemicals included Clariant, DyStar and Ciba Specialty
Chemicals. The Company anticipates that these suppliers, as well as others, will
continue to supply the Company with raw material as needed.

SEASONALITY

The activewear business is seasonal. Typically, demand for fleece products is
much lower during the first and second quarters each year and is partially
offset by increased demand for jersey products in these periods.

Notwithstanding the Company's efforts to diversify its products and customer
base to create a more consistent demand for its products throughout the year,
the Company produces and stores fleece finished goods inventory during the first
half of each year. This practice enables the Company to meet the heavy demand
for delivery during the second half of the year.

COMPETITION

The fleece and jersey activewear industry is highly competitive. Pluma's major
competitors are vertically integrated manufacturers such as Fruit of the Loom,
Inc., Russell Corporation, Tultex Corporation, Sara Lee Corporation and VF
Corporation. Certain of these competitors have greater financial resources and
larger manufacturing, distribution and marketing capabilities than the Company;
however, no single manufacturer dominates the industry. Among other factors, the
Company's future success will depend to a significant extent upon its ability to
remain competitive in the areas of price, quality, marketing, product
development, manufacturing capabilities, distribution and order processing,
which are the principal methods of competing within the fleece and jersey
apparel industry.

In recent years, certain fleece and jersey apparel manufacturers have
overproduced inventory as a result of excess plant and equipment capacity.
This oversupply of inventory has on occasion led to inventory dumping,
resulting in price reductions for fleece and jersey apparel. Such lower prices
have had an adverse effect upon the Company's operating results. The Company
believes that continuation of this practice would have an adverse impact on
fleece and jersey apparel manufacturers, including the Company.

In general, wholesale distributors warehouse inventory longer than other
distribution channels. Consequently, manufacturers, including the Company,
have extended to wholesale customers longer payment terms. In addition,
certain manufacturers recently began a practice of consigning products to
wholesale distributors for competitive reasons. Should wholesale distributors
of fleece and jersey apparel demand and receive longer payment terms than
currently exist, or should consignment of inventory become common within the
industry, the Company could be adversely impacted by increased inventory
costs, delays in collecting receivables and return of inventory.

ENVIRONMENTAL MATTERS

The Company is subject to various federal, state and local environmental laws
and regulations governing, among other things, the discharge, storage, handling
and disposal of a variety of hazardous and nonhazardous substances and wastes
used in or resulting from its operations and potential remediation obligations
thereunder. At the Company's textile manufacturing facility in Eden, North
Carolina, the Company disposes of dye waste through the city's municipal
wastewater treatment system under a permit issued by state regulatory
authorities.

The Company's operations also are governed by laws and regulations relating to
employee safety and health, principally OSHA and regulations thereunder, which,
among other things, establish exposure limitations for cotton dust,
formaldehyde, asbestos and noise, and regulate chemical and ergonomic hazards in
the workplace.

LABOR

The Company had approximately 2,400 employees at December 31, 1997. Management
considers labor relations to be excellent. The Company is subject to one
collective bargaining agreement affecting approximately 24 of the company's
employees employed in Los Angeles, California. This agreement will be
renegotiated in September 1998. Some of the Company's competitors located in its
geographic area are unionized, and there can be no assurance that the Company
will not become a target for union organizing activity in the future. To the
extent that unionization increases the Company's cost of operations, the Company
would be impacted adversely from both an operating and financial standpoint.

TRADEMARKS AND LICENSES

Pursuant to an Assignment from Superba, Inc. recorded December 22, 1997, Pluma
became the owner of the registered trademark SANTEE(R), Registration No.
830,629. SNOWBANK(R) and PLUMA(R) are also registered trademarks owned by
Pluma, Registration No. 2,079,657 and Registration No. 2,139,902, respectively.
PLUMA(R), SANTEE(R) and SNOWBANK(R) are all utilized in connection with
marketing certain styles of the Company's activewear.

On October 24, 1995, the Company entered into a license agreement with Kayser
Roth granting to Kayser Roth a limited exclusive license to use the name
"PLUMA"(R) in connection with the manufacture and sale of socks in the United
States and Mexico to Sam's Club (the "Kayser Roth Agreement"). The Company
receives a royalty from Kayser Roth equal to 2.0% of net sales of socks bearing
the Pluma label up to $3,000,000 of such sales and 1.5% of all net sales of
socks thereafter (in each case, less customary trade discounts, shipping
charges, returns and allowances and sales taxes). The Kayser Roth Agreement
terminates on December 31, 1998, but is renewable by Kayser Roth for successive
one-year terms thereafter. The Company maintains appropriate quality control
standards in the Kayser Roth Agreement designed to ensure that only quality
products are distributed under the PLUMA(R) name.

On July 30, 1996, U.S. Patent No. 5,540,160 was issued by the USPTO for the
Company's tandem sewing table.

ITEM 2. Properties

All of the Company's facilities are located in North Carolina, Virginia,
Wisconsin and California. All buildings are well maintained and several of its
facilities have been expanded or are currently undergoing expansion since
operations commenced in 1987 to accommodate the Company's growth. The location,
approximate size, owned or

leased status, year in which operations commenced and use of the Company's
principal facilities are summarized in the following table:

Use
Location Square Footage Ownership Operations --------------------
- -------- -------------- --------- Commenced
----------

Eden, NC 170,900 Owned 1987 Executive offices,
dyeing, finishing
and cutting

Eden, NC 83,900 Owned 1993 Knitting and yarn
storage

Eden, NC 20,600 Leased 1996 Outlet store

Eden, NC 18,000 Leased 1987(1) Sewing

Martinsville, VA 198,000 Leased 1996 Distribution and
warehouse

Martinsville, VA 181,600 Leased 1988 Distribution,
packaging and
warehouse

Martinsville, VA 83,200 Leased 1994 Packaging,
warehouse and
management
information systems

Martinsville, VA 43,900 Owned 1988 Sewing

Martinsville, VA 15,600 Leased 1992 Storage

Martinsville, VA 11,500 Leased 1997 Product
Development and
Outlet store

Martinsville, VA 8,300 Owned 1997 Marketing and sales
office and some
executive offices

Rocky Mount, VA 82,000 Owned 1995 Sewing

Chatham, VA 52,000 Owned 1990 Sewing

Vesta, VA 24,000 Owned 1994 Sewing

Altavista, VA 12,000 Owned 1996(2) Sewing

Altavista, VA 2,200 Leased 1997 Outlet Store

Los Angeles, CA 139,500 Leased 1997 Distributor

Verona, WI 63,000 Owned 1997 Distributor

(1) The Company leased this facility from 1987 through 1993 and subsequently
executed a new lease for this facility in December 1996.

(2) The Company exercised its option to purchase this property in October 1997.

ITEM 3. Legal Proceedings

The Company is not a party to nor is any of its property the subject of
any legal proceedings, the result of which it believes could have a material
adverse impact on its business, properties, or financial condition.

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

None.

EXECUTIVE OFFICERS OF THE COMPANY

"Election of Directors' on pages 5 through 6 of the Proxy Statement for
the Annual Meeting of Share Owners to be held June 2, 1998, is incorporated
herein by reference.

Additional executive officers who are not directors are as follows:

Name Age Position
---- --- --------
Forrest H. Truitt, II 43 Executive Vice President, Treasurer
and Chief Financial Officer

Milton A. Barber, IV 37 Senior Vice President of Sales and
Marketing

David S. Green 48 Senior Vice President of Human
Resouces

Walter E. Helton 58 Senior Vice President of Operations

Douglas A. Shelton 41 Senior Vice President of Manufacturing

Raymond L. Rea 56 Vice President of Manufacturing

Nancy B. Barksdale 40 Vice President and Controller

Jeffrey N. Robinson 35 Vice President of Sales and President
of Frank L. Robinson, Inc.

James E. Beale 44 Vice President of Wholesale Distribution
and President of Stardust Corporation

John R. Beale 50 Executive Vice President of Stardust
Corporation

FORREST H. TRUITT, II became Vice President, Treasurer and Chief Financial
Officer in March 1996 and became an Executive Vice President in January 1997.
From February 1994 until he joined the Company, Mr. Truitt was a self-employed
financial consultant. Prior to that time, he served as the Chief Financial
Officer of Mayo Yarns from September 1993 to February 1994, and Vice President
of Finance and Secretary/Treasurer of Vintage Yarns, Inc. from 1982 until 1993.

Milton A. Barber IV became Senior Vice President of Sales and Marketing in
October 1997. Mr. Barber has been Vice President of Sales and Marketing since
January 1986. From July 1991 until December 1995, Mr. Barber served as an
Assistant Vice President of Sales & Marketing for Box & Company. Mr. Barber
was employed by Bassett-Walker, Inc. from 1987 until 1991.

DAVID S. GREEN became Senior Vice President of Human Resources in October 1997.
Mr. Green has served the company as Vice President of Human Resources since
1993. Prior to joining the Company, Mr. Green had been employed by Sara Lee for
17 years where his most recent title was Director of Employee Relations at the
Martinsville, Virginia knitwear division.

WALTER E. HELTON became Senior Vice President of Operations in October 1997. Mr.
Helton is Vice President of Operations responsible for management information
systems and distribution. Before joining the Company in January 1992, Mr. Helton
was employed by Sara Lee as Director of Information Systems.

DOUGLAS A. SHELTON is Senior Vice President of Manufacturing. Mr. Shelton joined
the company in May 1996 as Director of Cutting. He was employed previously by
Sara Lee as Plant Manager from August 1989 until May 1996.

RAYMOND L. REA is Vice President of Manufacturing responsible for all sewing
operations. Prior to his employment with the Company in 1987, Mr. Rea had been
employed by Basset-Walker, Inc. for 25 years.

Nancy B. Barksdale is Vice President and Controller. From 1979 to 1983, Ms.
Barksdale was a staff accountant of Deloitte & Touche LLP. She received her CPA
certification from the Commonwealth of Virginia in 1983. From 1983 until 1987,
Ms. Barksdale was employed by Bassett-Walker, Inc. as Assistant Controller.
Since 1987, Ms. Barksdale has served as Controller for Pluma, and served as
Treasurer from August 1993 until March 1996. She was promoted to Vice President
in January 1986.

JEFFREY N. ROBINSON is Vice President of Marketing & Sales and President of
Frank L. Robinson, Inc., a division of Pluma, Inc. Prior to joining the
Company in 1997, Mr. Robinson was employed as a partner in Frank L. Robinson
Company, a wholesale distributor, since 1985.

JAMES E. BEALE is Vice President of Wholesale Distribution and President of
Stardust Corporation, a division of Pluma, Inc. Mr. Beale served as General
Manager of Stardust Corporation, wholesale distributor since 1988. Mr. Beale is
the brother of John R. Beale, an executive officer of Stardust Corporation.

JOHN R. BEALE is Executive Vice President of Stardust Corporation, a division of
Pluma, Inc. Mr. Beale was President and founder of Stardust Corporation in 1988.
He is the brother of James A. Beale, an executive Officer of the Company.

PART II

ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters

"Dividend and Market Information" on page 32 of the Annual Shareholders Report
for the year ended December 31, 1997 are incorporated herein by reference.

The approximate number of holders of the Company's common stock at
March 26, 1998 was 1,929, which includes record and beneficial holders.

ITEM 6. Selected Financial Data

"Selected Financial and Operating Data" on pages 10 and 11 of the Annual
Shareholders Report for the year ended December 31, 1997 is incorporated herein
by reference.

ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation

"Management's Discussion and Analysis of Financial Condition and Results of
Operation" on page 12 of the Annual Shareholders Report for the year ended
December 31, 1997 is incorporated herein by reference.

ITEM 8. Financial Statements and Supplementary Data

The following consolidated financial statements of the registrant and its
subsidiaries, included in the Annual Shareholders Report for the year ended
December 31, 1997 are incorporated herein by reference:

Balance Sheets - December 31, 1997 and December 31, 1996

Statements of Operations - years ended December 31, 1997,
December 31, 1996 and December 31, 1995

Statements of Cash Flows - years ended December 31, 1997,
December 31, 1996 and December 31, 1995

Statements of Shareholders' Equity - years ended December 31,
1997, December 31, 1996 and December 31, 1995

Notes to Financial Statements - years ended December 31, 1997,
December 31, 1996 and December 31, 1995

Report of Independent Auditors

ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.

PART III

ITEM 10. Directors and Executive Officers of the Registrant

The sections entitled "Nominees for Election Term Expiring 2001," "Incumbent
Directors Term Expiring 2000," and "Incumbent Directors Term Expiring 1999" on
pages 2 and 3 of the Proxy Statement for the Annual Meeting of Share Owners to
be held June 2, 1998, are incorporated herein by reference.

"Executive Officers of the Company" on page 10 of this report is incorporated
herein by reference.

ITEM 11. Executive Compensation

"Compensation Committee Report on Executive Compensation," "Performance Graph,"
"Executive Compensation," "Stock Options and Stock Appreciation Rights" and
"Aggregated Opinion/SAR Exercises in the Last Fiscal Year and Year End Option
Values" on pages 7 through 12 of the Proxy Statement for the Annual Meeting of
Share Owners to be held June 2, 1998, are incorporated herein by reference.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management

(a) Information concerning security ownership of management set forth
in the Proxy Statement for the Annual Meeting of Share Owners to be held June 2,
1998, under the caption "Ownership of Equity Securities in the Company" on page
5 is incorporated herein by reference.

(b) "Principal Share Owners" on page 7 of the Proxy Statement for the
Annual Meeting of Share Owners to be held June 2, 1998 is incorporated herein by
reference.

(c) There are no arrangements known to the registrant the
implementation on consummation of which may result in a change in control of the
registrant.

ITEM 13. Certain Relationships and Related Transactions

"Compensation Committee Interlocks and Insider Participation" and "Certain
Relationships and Related Transactions Involving Directors not on the
Compensation Committee" on pages 4 and 5 of the Proxy Statement for the Annual
Meeting of Share Owners to be held June 2, 1998 are incorporated herein by
reference.

PART IV

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

(a) List of Documents filed as part of this report:

(1) Financial Statements
All financial statements of the registrant as set forth under
Item 8 of this report on Form 10-K.
(2) Financial Statement Schedules
(3) Exhibits (numbered in accordance with Item 601 of Regulation S-K)

Exhibit Page Number or
Number Description Incorporation by
- ------ ----------- Reference to
-----------------

3.1 Amended and Restated Articles of Exhibit 3.1 to Registration
Incorporation Statement No. 333-18755, filed
December 24, 1996
3.2 By-Laws Exhibit 3.2 to Registration
Statement No. 333-18755, filed
December 24, 1996
4.1 Specimen Common Stock Certificate Exhibit 4.1 to Registration
Statement No. 333-18755, filed
December 24, 1996
10.1 Lease Agreement dated June 10, 1989, Exhibit 10.1 to Registration
by and between North Bowles Statement No. 333-18755, filed
Partnership and Pluma, Inc. and December 24, 1996
amendment thereto date December 1,
1990
10.2.1 Lease Agreement dated February 1, Exhibit 10.2.1 to Registration
1996, by and between North Bowles Statement No. 333-18755, filed
Partnership and Pluma, Inc. December 24, 1996
10.2.2 Lease Agreement dated December 1, Exhibit 10.2.2 to Registration
1995, by and between North Bowles Statement No. 333-18755, filed
Partnership and Pluma, Inc. December 24, 1996
10.3 License Agreement dated December 4, Exhibit 10.3 to Registration
1990, by and between Superba, Inc. Statement No. 333-18755, filed
and Pluma, Inc. December 24, 1996
10.4 Loan and Security Agreement dated Exhibit 10.4 to Registration
May 25, 1995, between First Union Statement No. 333-18755, filed
National Bank of North Carolina and December 24, 1996
Pluma, Inc.

10.5 Promissory Note in the principal Exhibit 10.5 to Registration
amount of $55,000,000 dated May 25, Statement No. 333-18755, filed
1995 by Pluma, Inc. in favor of First December 24, 1996
Union National Bank of North Carolina
10.6 Promissory Note in the principal Exhibit 10.6 to Registration
amount of $10,000,000 dated April 16, Statement No. 333-18755, filed
1996 in favor of First Union National December 24, 1996
Bank of North Carolina
10.7 Trademark License Agreement dated Exhibit 10.7 to Registration
July 2, 1996, by and between Pluma, Statement No. 333-18755, filed
Inc. and Kayser Roth Corporation December 24, 1996
10.8 Lease Agreement dated April 1, 1995, Exhibit 10.10 to Registration
by and between Tultex Corporation and Statement No. 333-18755, filed
Box & Company, Inc. December 24, 1996
10.9 Adoption Agreement #005 Exhibit 10.11 to Registration
Nonstandardized Codess.401(k) Profit Statement No. 333-18755, filed
Sharing Plan by Pluma, Inc. to First December 24, 1996
Union National Bank of North Carolina
dated November 30, 1993 and
Amendments thereto
10.10 1995 Stock Option Plan of Pluma, Inc. Exhibit 10.12 to Registration
Statement No. 333-18755, filed
December 24, 1996
10.11 Form of Incentive Stock Option Exhibit 10.13 to Registration
Agreement by and among Pluma, Inc. Statement No. 333-18755, filed
and the Named Officers December 24, 1996
10.12 Form of Nonstatutory Stock Option Exhibit 10.14 to Registration
Agreement by and among Pluma, Inc. Statement No. 333-18755, filed
and its Directors December 24, 1996
10.13 Pluma, Inc. Non-Qualified Deferred Exhibit 10.15 to Registration
Compensation Plan Statement No. 333-18755, filed
December 24, 1996
10.14 Pluma, Inc. Senior Executive Bonus Exhibit 10.16 to Registration
Plan Statement No. 333-18755, filed
December 24, 1996
10.15 Pluma, Inc. Sales Incentive Plan Exhibit 10.17 to Registration
Statement No. 333-18755, filed
December 24, 1996
10.16.1 License Agreement dated October 9, Exhibit 10.18.1 to Registration
1996 between SAP America, Inc. and Statement No. 333-18755, filed
Pluma, Inc. for license to utilize SAP December 24, 1996
R/3 Software

10.16.2 Professional Services Agreement dated Exhibit 10.18.2 to Registration
October 9, 1996, between SAP Statement No. 333-18755, filed
America, Inc. and Pluma, Inc. for December 24, 1996
installation of R/3 Software
10.17.1 Consulting Agreement dated January Exhibit 10.19 to Registration
17, 1996, between Philpott Ball & Statement No. 333-18755, filed
Company and Pluma, Inc. December 24, 1996
10.17.2 Consulting Agreement dated
December 6, 1996, between Philpott Ball &
Company and Pluma, Inc.

10.18 Form of Sale and Purchase Agreement Exhibit 10.20 to Registration
dated May 10, 1995, by and between Statement No. 333-18755, filed
Sara Lee Corporation and Pluma, Inc. December 24, 1996
for approximately 42 acres of improved
real estate located in Rocky Mount,
Virginia
10.19 Form of Employment Agreement by Exhibit 10.21 to Registration
and among Pluma, Inc. and R. Duke Statement No. 333-18755, filed
Ferrell, G. Walker Box, George G. December 24, 1996
Wade, C. Monroe Light, David S.
Green, Walter Helton, Raymond Rea,
Nancy Barksdale, Forrest H. Truitt, II;
Milton A. Barber and Jeffrey D. Cox
10.20 Form of Asset Purchase Agreement Exhibit 1 to Form 8-K filed
among Pluma, Inc., Stardust December 22, 1997
Corporation and John Beale and Linda
Beale dated December 22, 1997
10.21 Form of Asset Purchase Agreement Exhibit 1 to Form 8-K filed
among Pluma, Inc., Frank L. Robinson January 12, 1998
Company and the Partners of Frank L.
Robinson Company dated December
30, 1997
10.22 Form of Credit Agreement dated
December 22, 1997, by and between
Pluma, Inc., and NationsBank, N.A.
11 Statement re: Computation of Per Set forth in Company's Annual
Share Earnings Report attached hereto as
Exhibit 13
13 1997 Annual Report to Shareholders
24 Power of Attorney (included as the
signature page hereto)

(b) Reports on Form 8-K.