CONE MILLS CORP, 10-Q, 1995-08-11

CONE MILLS CORP
10-Q, 1995-08-11
BROADWOVEN FABRIC MILLS, COTTON

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Page 1 of 64
Index to Exhibits-Pages 31-36

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

For the quarterly period ended July 2, 1995

[ ] 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 1-3634

CONE MILLS CORPORATION
(Exact name of registrant as specified in its charter)

North Carolina 56-0367025
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

1201 Maple Street, Greensboro, North Carolina 27405
(Address of principal executive offices) (Zip Code)

(910) 379-6220
(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

Number of shares of common stock outstanding as of August 1,
1995: 27,380,409 shares.

Page 1
<PAGE>
FORM 10-Q

CONE MILLS CORPORATION

INDEX
Page
Number

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Statements of Income
Thirteen and twenty-six weeks ended
July 2, 1995 and July 3, 1994 (Unaudited) . .3

Consolidated Balance Sheets
July 2, 1995 and July 3, 1994
(Unaudited) and January 1, 1995 . . . . .4 & 5

Consolidated Statements of Stockholders' Equity
Twenty-six weeks ended July 2, 1995
and July 3, 1994 (Unaudited) . . . . . . . .6

Consolidated Statements of Cash Flows
Twenty-six weeks ended July 2, 1995
and July 3, 1994 (Unaudited) . . . . . . . .7

Notes to Consolidated Financial Statements
(Unaudited) . . . . . . . . . . . . . . . . .8

Item 2. Managements's Discussion and Analysis of
Financial Condition and Results of Operations . 18

PART II. OTHER INFORMATION

Item 1. Legal Proceedings . . . . . . . . . . . . . . 29

Item 4. Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . 30

Item 6. Exhibits and Reports on Form 8-K . . . . . . . 30

Page 2
<PAGE>
FORM 10-Q
PART I
Item 1.
<TABLE>
<S> <C> <C> <C>
CONE MILLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

(amounts in thousands, except per share data)

Thirteen Thirteen Twenty-Six Twenty-Six
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
July 2, 1995 July 3, 1994 July 2, 1995 July 3, 1994
(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Net Sales $ 232,952 $ 201,662 $ 459,157 $ 397,581

Operating Costs and Expenses:
Cost of sales 191,305 159,629 377,253 313,210
Selling and administrative 21,950 19,327 42,777 38,280
Depreciation 7,201 5,801 14,402 11,603

220,456 184,757 434,432 363,093

Income from Operations 12,496 16,905 24,725 34,488

Other Income (Expense):
Interest income 160 49 385 137
Interest expense (4,109) (1,884) (7,110) (4,089)

(3,949) (1,835) (6,725) (3,952)

Income from Continuing Operations before Income Taxes
and Equity in Earnings (Loss) of Unconsolidated Affiliates 8,547 15,070 18,000 30,536

Income Taxes 2,996 5,445 6,300 10,985

Income from Continuing Operations before Equity
in Earnings (Loss) of Unconsolidated Affiliates 5,551 9,625 11,700 19,551

Equity in Earnings (Loss) of Unconsolidated Affiliates (6,423) 222 (8,938) 321

Income (Loss) from Continuing Operations (872) 9,847 2,762 19,872

Gain on Disposal - Discontinued Operations - (Net of
income tax of $276) - - - 439

Income (Loss) before Cumulative Effect of Accounting Change (872) 9,847 2,762 20,311

Cumulative Effect of Accounting Change for
Postemployment Benefits - (Net of income
tax benefit of $772) - - - (1,228)

Net Income (Loss) $ (872) $ 9,847 $ 2,762 $ 19,083

Income (Loss) Available to Common Shareholders:
Income (Loss) from Continuing Operations $ (1,592) $ 9,175 $ 1,370 $ 18,528
Income (Loss) before Cumulative Effect of
Accounting Change $ (1,592) $ 9,175 $ 1,370 $ 18,967
Cumulative Effect of Accounting Change - - - (1,228)
Net Income (Loss) $ (1,592) $ 9,175 $ 1,370 $ 17,739

Earnings (Loss) Per Share - Fully Diluted:
Income (Loss) from Continuing Operations $ (.06) $ .33 $ .05 $ .67
Income (Loss) before Cumulative Effect of
Accounting Change $ (.06) $ .33 $ .05 $ .68
Cumulative Effect of Accounting Change - - - (.04)
Net Income (Loss) $ (.06) $ .33 $ .05 $ .64

Weighted Average Common Shares and
Common Share Equivalents Outstanding -
Fully Diluted 27,380 27,858 27,489 27,861

</TABLE>
See Notes to Consolidated Financial Statements.
Page 3
<PAGE>
FORM 10-Q

Item 1. (continued)
<TABLE>
<S> <C> <C> <C>
CONE MILLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share and par value data)

July 2, July 3, January 1,
ASSETS 1995 1994 1995
(Unaudited) (Unaudited) (Note)
Current Assets:
Cash $ 2,284 $ 3,384 $ 1,158

Accounts receivable - trade, less
provision for doubtful accounts $3,000 89,708 57,141 56,654

Inventories:
Greige and finished goods 80,937 84,294 83,377
Work in process 16,122 15,814 15,796
Raw materials 23,383 17,259 19,973
Supplies and other 33,212 30,124 30,274

153,654 147,491 149,420

Other current assets 7,778 6,117 6,007

Total Current Assets 253,424 214,133 213,239

Investments in Unconsolidated Affiliates 32,392 28,437 34,294

Other Assets 39,150 4,953 38,803

Property, Plant and Equipment:
Land 19,766 20,559 20,662
Buildings 79,452 72,431 79,418
Machinery and equipment 302,580 254,037 284,401
Other 32,073 26,782 30,581

433,871 373,809 415,062

Less accumulated depreciation 189,471 169,335 177,321

Property, Plant and Equipment-Net 244,400 204,474 237,741

$ 569,366 $ 451,997 $ 524,077

Note: The balance sheet at January 1, 1995 has been derived from the audited financial
statements at that date.

See Notes to Consolidated Financial Statements.
</TABLE>
Page 4
<PAGE>
FORM 10-Q

Item 1. (continued)
<TABLE>
<S> <C> <C> <C>
CONE MILLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share and par value data)

July 2, July 3, January 1,
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994 1995
(Unaudited) (Unaudited) (Note)

Current Liabilities:
Notes payable $ 10,541 $ 14,603 $ 10,700
Current maturities of long-term debt 389 256 414
Accounts payable - trade 39,770 28,842 38,430
Sundry accounts payable and accrued expenses 44,398 36,104 39,881
Income taxes payable - 954 -
Deferred income taxes 28,254 28,299 28,148

Total Current Liabilities 123,352 109,058 117,573

Long-Term Debt 172,632 75,800 126,108

Deferred Items:
Deferred income taxes 39,343 36,187 36,789
Other deferred items 6,438 5,800 6,727

45,781 41,987 43,516

Stockholders' Equity:
Class A Preferred Stock - $100 par value; authorized
1,500,000 shares; issued and outstanding 383,948
shares; 1994, 470,752 shares and 383,948 shares
- Employee Stock Ownership Plan 38,395 47,075 38,395
Class A Preferred Stock held in escrow (1994, 86,804 shares) - (8,680) -
Class B Preferred Stock - no par value; authorized
5,000,000 shares - - -
Common Stock - $.10 par value; authorized 42,700,000
shares; issued and outstanding 27,380,409 shares;
1994, 27,747,221 shares and 27,403,621 shares 2,738 2,775 2,740
Capital in excess of par 71,090 75,351 71,354
Retained earnings 125,872 109,917 125,771
Currency translation adjustment (10,494) (1,286) (1,380)

Total Stockholders' Equity 227,601 225,152 236,880

$ 569,366 $ 451,997 $ 524,077

Note: The balance sheet at January 1, 1995 has been derived from the audited financial statements
at that date.
</TABLE>
See Notes to Consolidated Financial Statements.

Page 5
<PAGE>
FORM 10-Q

Item 1. (continued)
<TABLE>
<S> <C> <C> <C> <C>
CONE MILLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
TWENTY-SIX WEEKS ENDED JULY 2, 1995 AND JULY 3, 1994
(amounts in thousands, except share data)
(Unaudited)

Class A Preferred Class A Preferred
Stock Stock - Escrow
Shares Amount Shares Amount

Balance, January 1, 1995 383,948 $ 38,395 - $ -
Net income - - - -
Currency translation loss (net
of income tax benefit of $3,630) - - - -
Class A Preferred Stock -
Employee Stock Ownership Plan:
Cash dividends paid - - - -
Shares Redeemed - - - -
Common Stock:
Options exercised - - - -
Purchase of common shares - - - -

Balance, July 2, 1995 383,948 $ 38,395 - $ -

Class A Preferred Class A Preferred
Stock Stock - Escrow
Shares Amount Shares Amount

Balance, January 2, 1994 465,077 $ 46,508 (81,125) $ (8,113)
Net income - - - -
Currency translation loss (net
of income tax benefit of $858)
Class A Preferred Stock - - - - -
Employee Stock Ownership Plan:
Cash dividends paid - - - -
Shares issued (7.0% dividend on shares
held in Cone Mills escrow account) 5,679 567 (5,679) (567)
Shares redeemed (4) - - -
Common Stock:
Options exercised - - - -
Purchase of common shares - - - -

Balance, July 3, 1994 470,752 $ 47,075 (86,804) $ (8,680)

</TABLE>
See Notes to Consolidated Financial Statements.
Page 6
<PAGE>
FORM 10-Q

Item 1. (continued)
<TABLE>
<S> <C> <C> <C> <C> <C>
CONE MILLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
TWENTY-SIX WEEKS ENDED JULY 2, 1995 AND JULY 3, 1994
(amounts in thousands, except share data)
(Unaudited)

Capital in Currency
Common Stock Excess Retained Translation
Shares Amount of Par Earnings Adjustment

Balance, January 1, 1995 27,403,621 $ 2,740 $ 71,354 $ 125,771 $ (1,380)
Net income - - - 2,762 -
Currency translation loss (net
of income tax benefit of $3,630) - - - - (9,114)
Class A Preferred Stock -
Employee Stock Ownership Plan:
Cash dividends paid - - - (2,661) -
Shares Redeemed - - - - -
Common Stock:
Options exercised 4,000 1 25 - -
Purchase of common shares (27,212) (3) (289) - -

Balance, July 2, 1995 27,380,409 $ 2,738 $ 71,090 $ 125,872 $ (10,494)

Capital in Currency
Common Stock Excess Retained Translation
Shares Amount of Par Earnings Adjustment

Balance, January 2, 1994 27,744,783 $ 2,774 $ 75,397 $ 93,468 $ -
Net income - - - 19,083 -
Currency translation loss (net
of income tax benefit of $858) - - - - (1,286)
Class A Preferred Stock -
Employee Stock Ownership Plan:
Cash dividends paid - - - (2,634) -
Shares issued (7.0% dividend on shares
held in Cone Mills escrow account) - - - - -
Shares redeemed
Common Stock:
Options exercised 11,000 1 62 - -
Purchase of common shares (8,562) - (108) - -

Balance, July 3, 1994 27,747,221 $ 2,775 $ 75,351 $ 109,917 $ (1,286)

</TABLE>
See Notes to Consolidated Financial Statements.
Page 6a
<PAGE>
FORM 10-Q

Item 1. (continued)
<TABLE>
<S> <C> <C>
CONE MILLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

Twenty-Six Twenty-Six
Weeks Ended Weeks Ended
July 2, 1995 July 3, 1994
(Unaudited) (Unaudited)

Cash Flows (Used In) Provided By Operating Activities $ (3,910) $ 16,473

Cash Flows from Investing Activities:
Investments in unconsolidated affiliates (16,150) (3,523)
Capital expenditures (21,943) (15,954)
Other 760 943

Net cash used in investing activities (37,333) (18,534)

Cash Flows from Financing Activities:
Principal payments - long-term debt (97,189) (47,461)
Proceeds from long-term debt borrowings 48,000 45,578
Proceeds from debentures issued 99,831 -
Other (8,273) 6,825

Net cash provided by financing activities 42,369 4,942

Net increase in cash 1,126 2,881

Cash at Beginning of Period 1,158 503

Cash at End of Period $ 2,284 $ 3,384

Supplemental Disclosures of Additional Cash Flow Information:

Cash payments for:
Interest, net of interest capitalized $ 7,417 $ 4,171
Income taxes, net of refunds $ 4,032 $ 8,490

Supplemental Schedule of Noncash Investing and Financing Activities:
Stock dividend paid to ESOP trustee for Cone escrow account $ - $ 567
Class A Preferred Stock issued $ - $ 567

</TABLE>
See Notes to Consolidated Financial Statements.

Page 7
<PAGE>

FORM 10-Q

Item 1. (continued)

CONE MILLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 2, 1995

Note 1. Basis of Financial Statement Preparation

The Cone Mills Corporation (the "Company") condensed
consolidated financial statements for July 2, 1995
and July 3, 1994 are unaudited, but in the opinion of
management reflect all adjustments necessary to
present fairly the consolidated balance sheets of
Cone Mills Corporation and Subsidiaries at July 2,
1995, January 1, 1995 and July 3, 1994 and the
related consolidated statements of income for the
respective thirteen and twenty-six weeks ended July
2, 1995 and July 3, 1994, and stockholders' equity
and cash flows for the twenty-six weeks then ended.
All adjustments are of a normal recurring nature.
The results are not necessarily indicative of the
results to be expected for the full year.

These statements should be read in conjunction with
the audited financial statements and related notes
included in the Company's annual report on Form 10-K
for fiscal 1994.

Substantially all components of textile inventories
are valued at the lower of cost or market using the
last-in, first-out (LIFO) method. Nontextile
inventories are valued at the lower of average cost
or market. Because amounts for inventories under the
LIFO method are based on an annual determination of
quantities as of the year-end, the inventories at
July 2, 1995 and July 3, 1994 and related
consolidated statements of income for the thirteen
and twenty-six weeks then ended are based on certain
estimates relating to quantities and cost as of the
end of the fiscal year.

Page 8
<PAGE>
FORM 10-Q

Item 1. (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2. Sale of Accounts Receivable

The Company has an agreement with the subsidiary of
a major financial institution which allows the sale
without recourse of up to $50 million of an undivided
interest in eligible trade receivables. This
agreement, dated August 11, 1992, and amended June
30, 1994, is extendable to August 1997. Accounts
receivable is shown net of $31 million sold at July
2, 1995, net of $50 million sold at July 3, 1994, and
net of $50 million sold at January 1, 1995. As a
result of the sale of the interest in these
receivables, cash flows provided by operating
activities include a decrease of $19 million and an
increase of $15 million for the twenty-six weeks
ended July 2, 1995 and July 3, 1994, respectively.

Note 3. Investments in Unconsolidated Affiliates

Investments in unconsolidated affiliated companies
are accounted for by the equity method. The
Company's equity in earnings (including foreign
currency transaction losses) and currency translation
adjustments are recorded on a one quarter delay
basis.

In December 1994, the Mexican government devalued the
peso and allowed it to freely trade against the U.S.
dollar resulting in a substantial decline in value of
the peso versus the U.S. dollar. On January 1, 1995,
the peso was trading at 4.94 pesos per U.S. dollar
versus an exchange rate of approximately 3.45 prior
to the devaluation. During the first quarter of 1995
the peso continued to devalue versus the U.S. dollar
and was trading at an exchange rate of 6.78 pesos per
U.S. dollar on April 2, 1995. The devaluation of the
peso created foreign currency transaction losses for
the Company's Mexican affiliates, primarily related
to debt denominated in U.S. dollars for Compania
Industrial de Parras S.A., ("CIPSA"). Due to the
continued devaluation of the peso in the first
quarter of 1995, the Company recognized a $6.4
million loss as its pro rata share in its second
quarter income statement.

Page 9
<PAGE>
FORM 10-Q

Item 1. (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the second quarter of 1995 the peso recovered
to an exchange rate of 6.24 pesos per U.S. dollar on
July 2, 1995. The specific dollar effect on income
that these U.S. dollar denominated debt transactions
will have on the Company's third quarter earnings
will not be known until CIPSA releases second quarter
U.S. GAAP operating results.

Note 4. Long-Term Debt

On March 15, 1995 the Company completed the sale of
$100 million 8-1/8% Debentures through an
underwritten public offering. The unsecured
debentures are due March 15, 2005, and are not
redeemable prior to maturity. Interest is payable
semiannually each March 15 and September 15.
Proceeds were used to repay all outstanding
borrowings under the Revolving Credit Facility and
for general corporate purposes. In early 1995,
considering the uncertainty in the bond market, the
Company entered into an interest rate hedge contract
to fix the interest rate on the debentures. The
contract was terminated in conjunction with the
pricing of the debentures at a cost of $4.3 million.
Amortization of the loss on the interest rate hedge
and original issue discount, both over a 10-year
life, will result in an 8.57% effective rate for the
issue.

Page 10
<PAGE>
FORM 10-Q

Item 1. (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The total Revolving Credit Facility of $80 million
remains available for future working capital
requirements. At July 2, 1995 and July 3, 1994,
long-term debt consisted of the following:

July 2, 1995
Current
Total Maturity Long-Term
(amounts in thousands)

8% Senior Note $ 75,000 $ - $ 75,000
8-1/8% Debentures 95,688 - 95,688
Capital Lease Obligation 1,533 155 1,378
Industrial Revenue Bonds 645 199 446
Other 155 35 120

Total $173,021 $ 389 $172,632

July 3, 1994
Current
Total Maturity Long-Term
(amounts in thousands)

8% Senior Note $ 75,000 $ - $ 75,000
Industrial Revenue Bonds 869 223 646
Other 187 33 154

Total $ 76,056 $ 256 $ 75,800

Note 5. Class A Preferred Stock

The dividend rate for Class A Preferred Stock is 7.50%,
which is payable March 31, 1996.

Page 11
<PAGE>
FORM 10-Q

Item 1.(continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Note 6. Stock Option Plans

1984 Stock Option Plan:

Option price per share $5.25 $6.50
Outstanding at 1/2/94 95,200 103,800
Exercised (7,000) (4,000)
Outstanding at 7/3/94 88,200 99,800
Exercised (10,000) -
Outstanding at 1/1/95 78,200 99,800
Exercised - (4,000)
Outstanding at 7/2/95 78,200 95,800

1992 Stock Option Plan:

Option price per share $15.625 $12.00
Outstanding 1/2/94 500,000
Canceled (4,000)
Outstanding 7/3/94 496,000
Canceled (4,000)
Granted 11/9/94 - 410,000
Outstanding at 1/1/95 492,000 410,000
Canceled (37,000)
Outstanding at 7/2/95 455,000 410,000

1994 Stock Option Plan:

Option price per share $12.875 $11.625
Granted 5/17/94 6,000
Granted 5/16/95 - 7,000
Outstanding at 7/2/95 6,000 7,000

Options exercisable
at 7/2/95 78,200 68,850 182,000 82,000 6,000 7,000

</TABLE>
Page 12
<PAGE>
FORM 10-Q

Item 1. (continued)
<TABLE>
<S> <C> <C> <C> <C>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7. Earnings (Loss) Per Share

Thirteen Thirteen
Weeks Ended Weeks Ended
July 2, 1995 July 3, 1994
Fully Fully
Primary Diluted Primary Diluted
(amounts in thousands, except per share data)

Income (loss) from
continuing operations $ (872) $ (872) $ 9,847 $ 9,847
Less: Class A Preferred
dividends (720) (720) ( 672) ( 672)

Adjusted net income (loss) $(1,592) $(1,592) $ 9,175 $ 9,175

Weighted average common
shares outstanding 27,380 27,380 27,751 27,751
Common share equivalents
from assumed exercise
of outstanding options,
less shares assumed
repurchased - - 104 107

Weighted average common
shares and common share
equivalents outstanding 27,380 27,380 27,855 27,858

Earnings (loss) per common
share and common share
equivalent $ (.06) $ (.06) $ .33 $ .33

</TABLE>

Page 13
<PAGE>
FORM 10-Q
Item 1. (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7. Earnings (Loss) Per Share (continued)
<TABLE>
<S> <C> <C> <C> <C>
Twenty-six Twenty-six
Weeks Ended Weeks Ended
July 2, 1995 July 3, 1994
Fully Fully
Primary Diluted Primary Diluted
(amounts in thousands, except per share data)
Income from continuing
operations $ 2,762 $ 2,762 $19,872 $19,872
Less: Class A Preferred
dividends (1,392) (1,392) (1,344) (1,344)
Adjusted income from
continuing operations 1,370 1,370 18,528 18,528
Gain on disposal-
discontinued operations - - 439 439
Adjusted income before
cumulative effect of
accounting change 1,370 1,370 18,967 18,967
Cumulative effect of
accounting change - - (1,228) (1,228)

Adjusted net income $ 1,370 $ 1,370 $17,739 $17,739

Weighted average common
shares outstanding 27,380 27,380 27,748 27,748

Common share equivalents from:
Assumed exercise of outstanding
options, less shares assumed
repurchased 84 109 113 113

Weighted average common shares
and common share equivalents
outstanding 27,464 27,489 27,861 27,861

Earnings per common share and
common share equivalent:
Income from continuing
operations $ .05 $ .05 $ .67 $ .67
Income before cumulative effect
of accounting change $ .05 $ .05 $ .68 $ .68
Cumulative effect of
accounting change $ - - (.04) (.04)
Net income $ .05 $ .05 $ .64 $ .64

</TABLE>
Primary and fully diluted earnings (loss) per share have been
computed by dividing the net earnings (loss) available to
common stockholders by the sum of the weighted average common
shares and common share equivalents outstanding.
Page 14
<PAGE>
FORM 10-Q

Item 1. (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8. Litigation and Contingencies

In November 1988, William J. Elmore and Wayne Comer (the
"Plaintiffs"), former employees of the Company,
instituted a class action suit against the Company and
Wachovia Bank & Trust Company, N.A. ("Wachovia") and
certain current and former employees of the Company and
Wachovia. The suit was brought on behalf of salaried
employees of the Company who were participants in certain
Company retirement plans. The Plaintiffs asserted a
variety of claims related to actions taken and statements
made concerning certain employee benefit plans maintained
by the Company.

On March 20, 1992, the United States District Court in
Greenville, South Carolina, entered a judgment finding
that the Company had promised to contribute certain
surplus funds (or their equivalent in Company stock)
relating to the overfunding of the Company's pension
plans to the 1983 ESOP by December 23, 1985, that such
surplus amounted to $69 million, that the Company's
actual contribution totaled approximately $55 million,
and that the Company and certain of its executive
officers therefore had breached their fiduciary duties
under the Employee Retirement Income Security Act of 1974
("ERISA") to certain participants in the 1983 ESOP. The
District Court ordered the Company to pay to the 1983
ESOP for the benefit of plan participants, both salaried
and hourly, the sum of $14.2 million in cash or the
equivalent in Company stock. In addition, the District
Court awarded $3.5 million in attorneys' fees to the
Plaintiffs, $2.2 million of which was to be paid from the
sum awarded to the 1983 ESOP. Judgment was entered in
favor of the defendants on all remaining claims except
for claims relating to the ESOP contribution.

On March 20, 1992, the Company and the individual
defendants appealed the District Court's judgment against
them to the United States Court of Appeals for the Fourth
Circuit. On April 2, 1992, the Plaintiffs appealed the
District Court's judgment to the Court of Appeals insofar
as it dismissed certain of their claims. To secure the
judgment on appeal the Company had deposited in escrow
with the trustee of the 1983 ESOP an $8 million letter of

Page 15
<PAGE>
FORM 10-Q

Item 1. (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

credit and 75,330 shares of Class A Preferred Stock
valued at $7.5 million which subsequently earned
dividends of an additional 11,474 shares valued at $1.2
million. To record these escrow transactions, the
Company increased outstanding Class A Preferred Stock by
$8.7 million. The increase in outstanding Class A
Preferred Stock was offset by a contra stockholders'
equity account labeled "Class A Preferred Stock held in
escrow." These escrow account transactions did not have
an effect upon net income or stockholders' equity of the
Company.

On May 6, 1994, the Court of Appeals, sitting en banc,
affirmed the prior conclusion of a panel of three of its
judges, and unanimously reversed the $15.5 million
judgment and unanimously affirmed all of the District
Court's rulings in favor of the Company. However, the
Court of Appeals affirmed, by an equally divided court,
the District Court's holding that Plaintiffs should be
allowed to proceed on an alternative theory whether,
subject to proof of any detrimental reliance, Plaintiffs
could establish that a letter to salaried employees on
December 15, 1983 could allow recovery on a theory of
equitable estoppel. Accordingly, the case was remanded
to the District Court for a determination of whether the
Plaintiffs could establish detrimental reliance creating
estoppel of the Company.

On April 19, 1995, the District Court granted a motion by
the Company for summary judgment on the issues of
equitable estoppel and third-party beneficiary of
contract which had been remanded to it by the Court of
Appeals. The court ruled that the Plaintiffs could not
forecast necessary proof of detrimental reliance. The
District Court, however, granted Plaintiffs motion to
amend the complaint insofar as they seek to pursue a
"new" claim for unjust enrichment, but denied their
motion to amend so far as they sought to add claims for
promissory estoppel and unilateral contract. The court
further denied the Company's motion to decertify the
class.

Page 16
<PAGE>
FORM 10-Q

Item 1. (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On July 24, 1995, the District Court held a "final
hearing" on this matter and the parties are awaiting the
decision. Because of the uncertainties inherent in the
litigation process, it is not possible to predict the
ultimate outcome of this lawsuit. However, the Company
has defended this matter vigorously, and it is the
opinion of the Company's management that this lawsuit,
when finally concluded, will not have a material adverse
effect on the Company's financial condition.

Because the original judgment of the District Court was
reversed, the escrowed stock and letter of credit were
ordered released by order of the District Court entered
July 22, 1994. Subject to the court's order, the stock
was redeemed, the offsetting contra account eliminated
and letter of credit terminated. None of these escrow
transactions had an effect on net income or stockholders'
equity.

Page 17
<PAGE>
FORM 10-Q

Item 2.

MANAGEMENTS' DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

OPERATING RESULTS

Second Quarter Ended July 2, 1995 Compared with Second Quarter
Ended July 3, 1994.

Net sales for the second quarter of 1995 were a record $233.0
million, up 15.5% as compared with second quarter 1994 net
sales of $201.7 million. Excluding the results of the recently
acquired Raytex and Greeff operations, net sales were up
11.6%. This sales increase, excluding the impact of
acquisitions, resulted from higher sales of denim fabrics
partially offset by lower sales of specialty sportswear and
home furnishings fabrics. Export sales for the second quarter
of 1995 accounted for 18.0% of total sales compared with 17.4%
for the second quarter of 1994. General economic conditions
during the second quarter of 1995 were mixed as retail sales
of consumer durables and apparel weakened except for jeanswear
which experienced strong retail sales. The denim industry
operated at full capacity during second quarter 1995. For
comparison, during the later half of 1993 and first half of
1994 the denim industry operated at less than capacity as
excess inventories in the softgoods pipeline were reduced.

During the second quarter, Cone recognized a noncash charge of
$6.4 million related primarily to the impact of the peso
devaluation on the U.S. dollar denominated debt of its
unconsolidated Mexican affiliates. After these charges, Cone
reported a net loss of $.06 per share, as compared with net
income of $.33 per share, reported for second quarter 1994.
Excluding the results of its unconsolidated Mexican
affiliates, income from continuing operations was $5.6
million, or $.18 per share as compared with $9.6 million or
$.32 per share, for the previous year.

Gross profit (net sales less cost of sales and depreciation)
declined to 14.8% of sales as compared with 18.0% of sales for
the second quarter of 1994. This decline resulted from the
inability to pass on higher cotton costs through increased
pricing, lower margins in home furnishings and sportswear
fabrics operations arising from weaker business conditions
and, to a lesser extent, higher depreciation and amortization
costs associated with the Company's growth initiatives.

Page 18
<PAGE>
FORM 10-Q

Item 2. (continued)

Business Segment. Cone Mills operates in two principal
business segments, apparel fabrics and home furnishings
products. The following table sets forth certain net sales and
operating income information regarding these segments for the
second quarters of 1995 and 1994.

Second Quarter
1995 1994
(Dollar amounts in millions)
NET SALES
Apparel $ 178.1 76.5% $ 149.9 74.3%
Home Furnishings 54.9 23.5 51.8 25.7
Total $ 233.0 100.0% $ 201.7 100.0%

OPERATING INCOME (1)
Apparel $ 11.4 6.4% $ 13.3 8.9%
Home Furnishings 1.7 3.0 4.5 8.7

(1) Operating income excludes general corporate expenses.
Percentages reflect operating income as a percentage of
segment net sales.

Apparel Fabrics. Sales of apparel fabrics were $178.1
million, up 18.8% as compared with year-ago levels. The
increase came from stronger sales of denims, partially
offset by weaker sales of specialty sportswear fabrics.
Sales increases resulted primarily from higher unit volume.
Average prices, adjusted for mix changes, increased
marginally. Apparel segment profit margins declined to 6.4%
of sales as compared with 8.9% of sales for the second
quarter of 1994. The decrease was caused primarily by the
large unrecovered increase in cotton costs, partially
offset by increased volume and improved capacity
utilization as denim plants operated at full capacity.

Export sales for the apparel segment, primarily denims,
were $40.7 million, up 21.4% as compared with second
quarter 1994.

Home Furnishings. Sales of the home furnishings segment
increased by 6.0% to $54.9 million as the effect of the
Raytex, Greeff and David and Dash acquisitions were
partially offset by lower sales for the Company's Carlisle
and John Wolf units.

Page 19

<PAGE>
FORM 10-Q

Item 2. (continued)

Home furnishings operating income declined to $1.7 million
as compared with $4.5 million for the second quarter of
1994. This earnings decline resulted from a combination of
lower sales volume at John Wolf and Carlisle, lower levels
of capacity utilization and less favorable product mix at
Cone Finishing, and start-up costs associated with growth
initiatives and higher raw material costs at the Olympic
Products division.

Total Company selling and administrative expenses decreased as
a percent of sales from 9.6% for the second quarter of 1994 to
9.4% for the most recent quarter as the Company benefited from
the leverage of sales growth. Selling and administration
expenses for the second quarter of 1995 were $22.0 million, up
13.6% from the second quarter of 1994.

Interest expense for the second quarter of 1995 increased $2.2
million compared with the second quarter of 1994, primarily
the result of higher borrowing levels associated with
acquisitions.

Income taxes as a percent of taxable income were 35.1% in the
second quarter of 1995 compared with 36.1% for the 1994
period. Both periods reflect tax benefits resulting from
operation of the Company's foreign sales corporation.

Six Months Ended July 2, 1995 Compared with Six Months Ended
July 3, 1994.

For the first six months of 1995, the Company experienced
strong demand for denim apparel fabrics and weakening markets
for speciality sportswear and home furnishings fabrics. Net
sales for the first half of 1995 were $459.2 million up 15.5%
as compared with first half 1994 net sales of $397.6 million.
Excluding the results of the recently acquired Raytex and
Greeff operations, net sales were up 11.3%. Export sales for
both periods accounted for approximately 17% of total sales.

Net income for the first half of 1995 was $2.8 million
compared with $19.1 million for the first half of 1994.
However, 1995 earnings were negatively affected by a $8.9
million noncash charge from unconsolidated Mexican affiliates
related primarily to the peso devaluation. Income for the
first half of 1994 was increased by a gain of $.4 million,

Page 20
<PAGE>
FORM 10-Q

Item 2. (continued)

arising from the final disposal of assets of the Company's
discontinued operations, and reduced by $1.2 million from the
cumulative effect of adoption of SFAS NO. 112. Net income for
the first six months of 1995 after preferred dividends was
$.05 per share, or $.37 per share excluding Mexican affiliates
losses, as compared with net income of $.64 per share last
year or $.68 per share before SFAS No. 112. In addition to
Mexican affiliate charges, earnings were adversely affected by
lower operating margins and higher interest expense.

Gross profit (net sales less cost of sales and depreciation)
declined to 14.7% of sales as compared with 18.3% of sales for
the first half of 1994. This decline resulted from the
inability to pass on higher cotton costs through increased
pricing, lower margins in home furnishings operations and, to
a lesser extent, higher depreciation and amortization costs
associated with the Company's growth initiatives.

First Six Months
1995 1994
(Dollar amounts in millions)
NET SALES
Apparel $ 348.4 75.9% $ 295.9 74.4%
Home Furnishings 110.8 24.1 101.7 25.6
Total $ 459.2 100.0% $ 397.6 100.0%

OPERATING INCOME (1)
Apparel $ 20.3 5.8% $ 26.1 8.8%
Home Furnishings 5.4 4.9 10.0 9.8

(1) Operating income excludes general corporate expenses.
Percentages reflect operating income as a percentage of
segment net sales.

Page 21
<PAGE>
FORM 10-Q

Item 2. (continued)

Apparel Fabrics. Sales of apparel fabrics were $348.4
million, up 17.7% as compared with year-ago levels. The
increase came primarily from stronger sales of denims.
Sales increases resulted from higher unit volume as average
prices adjusted for mix changes increased only slightly.
Apparel segment profit margins declined to 5.8% of sales as
compared with 8.8% of sales for the first half of 1994. The
decrease was caused primarily by the large unrecovered
increase in cotton costs, partially offset by increased
volume and improved capacity utilization as denim plants
operated at full capacity.

Export sales for the apparel segment, primarily denims,
were $78.0 million, up 19.1% as compared with the 1994
period.

Home Furnishings. Sales of the home furnishings segment
increased by 8.9% to $110.8 million as the effect of the
Raytex, Greeff and David and Dash acquisitions were
partially offset by fashion weaknesses in demand for the
Company's home furnishings fabrics.

Home furnishings operating income declined to $5.4 million
as compared with $10.0 million for the first half of 1994.
This decline resulted from a combination of lower sales
volume at John Wolf and Carlisle, lower levels of capacity
utilization and less favorable mix at Cone Finishing, and
start-up costs associated with growth initiatives and
higher raw material costs at the Olympic Products division.

Total Company selling and administrative expenses decreased as
a percent of sales from 9.6% for the first half of 1994 to
9.3% for the most recent six months as the Company benefited
from the leverage of sales growth.

Interest expense for the first six months of 1995 increased
$3.0 million compared with the first half of 1994, primarily
the result of higher borrowing levels associated with
acquisitions.

Income taxes as a percent of taxable income were 35.0% in the
first half of 1995 compared with 36.0% for the 1994 period.

Page 22
<PAGE>

FORM 10-Q

Item 2. (continued)

Liquidity and Capital Resources

The Company's principal long-term capital sources are a $75
million Note Agreement with The Prudential Insurance Company
of America (the "Term Loan"), its 8 1/8% Debentures due March
15, 2005 (the "Debentures"), issued on March 15, 1995 as
described below, and stockholders' equity. Primary sources of
liquidity are internally generated funds, an $80 million
Credit Agreement with a group of banks with Morgan Guaranty
Trust Company of New York ("Morgan Guaranty") as Agent Bank
(the "Revolving Credit Facility"), and a $50 million
Receivables Purchase Agreement (the "Receivables Purchase
Agreement") with Delaware Funding Corporation, an affiliate of
Morgan Guaranty.

On March 15, 1995, the Company completed the sale of
$100,000,000 of Debentures through an underwritten public
offering. A portion of the proceeds were used to repay all
outstanding borrowings under the Revolving Credit Facility.
Amounts repaid under the Revolving Credit Facility will remain
available for future borrowings. On July 2, 1995, the Company
had funds available of $99.0 million under its Revolving
Credit Facility and Receivables Purchase Agreement.

During the first half of 1995, the Company used $3.9 million
of funds in its operating activities as $27.6 million of cash
provided by net income before depreciation and amortization
expenses and noncash charges from unconsolidated Mexican
affiliates, was more than offset by increases in working
capital requirements, primarily accounts receivable as
discussed below. During the period amounts sold under the
Receivables Purchase Agreement were reduced by $19.0 million.
Additional uses of cash include capital spending of $21.9
million, investment of $16.2 million in the joint venture in
Mexico, and the preferred stock dividend of $2.7 million.
Funding came primarily from the $100,000,000 of debentures
sold in March of 1995.

During the first half of 1994, the Company generated $16.5
million in funds from operating activities which included
$30.7 million of cash provided by net income before
depreciation and amortization expenses and noncash results
from unconsolidated Mexican affiliates, partially offset by
increased working capital requirements, primarily increases in
accounts receivables and reductions of accounts payable and
accrued expenses. Major uses of cash during this period
included $16.0 million for capital expenditures, $2.6 million

Page 23
<PAGE>
FORM 10-Q

Item 2. (continued)

for preferred stock dividends and $3.5 million for investment
in the Mexican joint venture. Funding came primarily from
operating cash flow and short term borrowings and the
additional sale of accounts receivables to support working
capital needs.

On July 2, 1995, the Company's long-term capital structure
consisted of $172.6 million of long-term debt, including the
Term Loan and Debentures, and $227.6 million of stockholders'
equity. For comparison, on July 3, 1994 the Company had $75.8
million of long-term debt and $225.2 million of stockholders'
equity. Long-term debt as a percent of long-term debt and
stockholders' equity was 43% on July 2, 1995, compared with
25% on July 3, 1994.

The Company accounts for investments in unconsolidated
affiliated companies using the equity method on a one quarter
delay basis. In December 1994, the Mexican government devalued
the peso and allowed it to trade freely against the U.S.
dollar resulting in a substantial decline in the value of the
peso versus the U.S. dollar. On January 1, 1995, the peso was
trading at 4.94 pesos per U.S. dollar versus an exchange rate
of approximately 3.45 prior to the devaluation. During the
first quarter of 1995 the peso continued to devalue versus the
U.S. dollar and was trading at an exchange rate of 6.78 pesos
per U.S. dollar on April 2, 1995. Based on the change in
exchange rates for the first quarter 1995, the Company's
stockholder equity was reduced by $3.9 million as a currency
translation adjustment in the second quarter of 1995. During
the second quarter of 1995 the peso recovered to an exchange
rate of 6.24 pesos per U.S. dollar on July 2, 1995.

Accounts receivable on July 2, 1995, were $89.7 million, up
$32.6 million from $57.1 million at July 3, 1994. At the end
of the 1995 period, the Company had sold $31 million of
accounts receivable, compared with $50 million at July 3,
1994. In addition, the increase in receivables was a result of
the increased sales level in the 1995 period. Receivables,
including those sold pursuant to the Receivables Purchase
Agreement, represented 48 days of sales outstanding at July 2,
1995 and 50 days at July 3, 1994.

Inventories on July 2, 1995, were $153.7 million, up 4.2% from
the July 3, 1994 amount of $147.5 million. The increase
resulted from higher raw materials inventories and the
purchase of Raytex.

Page 24
<PAGE>
FORM 10-Q

Item 2. (continued)

Capital spending in 1995 is expected to be approximately $62
million, including $15 million for a new jacquard plant. Other
projects include new weaving machines that replace 1970's
vintage weaving machines, additional dyeing capacity to
increase production flexibility, an additional screen printing
machine and approximately $6 million for computers, software
and information systems. Capital spending for the first half
of 1995 was $21.9 million compared with $16.0 million for the
first half of 1994. In addition to capital expenditures, the
Company expects for 1995 to spend approximately $26 million on
the Mexican joint venture, of which $16.2 million was spent in
the first half of the year.

Financial Outlook and Strategy

Beginning in 1992 and through late 1993, Cone benefited from
favorable apparel fabric markets characterized by increasing
prices and volume in both domestic and international denim
markets and the rapid expansion of sportswear fabrics markets.
While first half 1994 sales did not grow due to short-term
denim inventory adjustments in the softgoods pipeline, second
half 1994 and first half 1995 denim operations experienced
accelerated growth. In addition to this improvement, Company
management believes that demographic trends and other market
developments continue to present favorable long-term
opportunities for sales growth.

Net income was lower in the first half of 1995 than in the
first half of 1994 as a result of the sharp increase in cotton
costs not recovered in pricing, the peso devaluation and weak
demand for home furnishings fabrics. For the remainder of
1995, results are expected to be adversely affected by high
cotton costs and weakening specialty sportswear and home
furnishings market, partially offset by improved prices and
increased denim volume.

In addition to the Company's plans to maintain modern
manufacturing facilities through capital reinvestment, the
Company has set priorities for the use of cash flow and debt
capacity. Cone's first priority is international denim
manufacturing and marketing opportunities. In 1993, the
Company purchased a 20% ownership of CIPSA, and signed
agreements with CIPSA providing for the formation of the joint
venture denim manufacturing facility. Cone's second priority
for cash flow and debt capacity is acquisitions in related
home furnishings product lines. The acquisition of Raytex and

Page 25
<PAGE>
FORM 10-Q

Item 2. (continued)

Greeff are results of this strategy. The Company also from
time to time reviews and will continue to review acquisitions
and other investment opportunities (some of which may be
material to the Company) that permit Cone to add value through
its manufacturing and marketing expertise. However, the
Company currently has no agreement, arrangement or
understanding to make any such acquisition or investment.

Other potential uses of cash include additional common stock
repurchases, the reduction of outstanding preferred stock, or
cash dividends, depending on the expected benefits to
shareholders. On February 17, 1994, the Board of Directors of
the Company authorized the repurchase, from time to time, of
up to 2.5 million shares of the Company's outstanding common
stock in market transactions. As of August 1, 1995, 385,400
shares had been repurchased in open market transactions and
future repurchase decisions will be based on the Company's
expected capital structure, alternative investment
opportunities, and the market price of the common stock. No
stock repurchases have been made since January 1995.

The Company believes its internally generated operating funds
and funds available under its existing credit facilities, will
be sufficient to meet its working capital, capital spending,
possible stock repurchases, and financing commitment needs for
the foreseeable future.

Regulatory Matters

Federal, state and local regulations relating to the workplace
and the discharge of materials into the environment are
continually changing; therefore, it is difficult to gauge the
total future impact of such regulations on the Company.
Existing government regulations are not expected to cause a
material change in the Company's competitive position,
operating results or planned capital expenditures. Cone Mills
has an active environmental committee which fosters protection
of the environment and compliance with laws.

Legal Proceedings

In November 1988 certain former employees of the Company
instituted a class action suit against the Company and certain
other defendants in which the plaintiffs ("Plaintiffs")
asserted a variety of claims related to the 1983 ESOP and
certain other employee benefit plans maintained by the

Page 26
<PAGE>
FORM 10-Q

Item 2. (continued)

Company. In March 1992 the United States District Court in
Greenville, South Carolina entered a judgment in the amount of
$15.5 million (including an attorneys' fees award) against the
Company with respect to an alleged promise to make additional
Company contributions to the 1983 ESOP and all claims
unrelated to the alleged promise were dismissed. The Company,
certain individual defendants and the Plaintiffs appealed.

On May 6, 1994, the United States Court of Appeals for the
Fourth Circuit, sitting en banc, affirmed the prior conclusion
of a panel of three of its judges and unanimously reversed the
$15.5 million judgment and unanimously affirmed all of the
District Court's rulings in favor of the Company. However, the
Court of Appeals affirmed, by an equally divided court, the
District Court's holding that Plaintiffs should be allowed to
proceed on an alternative theory whether, subject to proof of
detrimental reliance, Plaintiffs could establish that a letter
to salaried employees on December 15, 1983 created an
enforceable obligation that could allow recovery on a theory
of equitable estoppel. Accordingly, the case was remanded to
the District Court for a determination of whether the
Plaintiffs could establish detrimental reliance creating
estoppel of the Company.

On April 19, 1995, the District Court granted a motion by the
Company for summary judgement on the issues of equitable
estoppel and third-party beneficiary of contract which had
been remanded to it by the Court of Appeals. The court ruled
that the Plaintiffs could not forecast necessary proof of
detrimental reliance. The District Court, however, granted
Plaintiffs motion to amend the complaint insofar as they seek
to pursue a "new" claim for unjust enrichment, but denied
their motion to amend so far as they sought to add claims for
promissory estoppel and unilateral contract. The court further
denied the Company's motion to decertify the class.

On July 24, 1995, the District Court held a "final hearing" in
this matter and the parties are awaiting the decision. Because
of the uncertainties inherent in the litigation process, it is
not possible to predict the ultimate outcome of this lawsuit.
However, the Company has defended this matter vigorously, and
it is the opinion of the Company's management that this
lawsuit, when finally concluded, will not have a material
adverse effect on the Company's financial condition.

Page 27
<PAGE>
FORM 10-Q

Item 2. (continued)

The Company is a party to various other legal claims and
actions incidental to its business. Management believes that
none of these claims or actions, either individually or in the
aggregate, will have a material adverse effect on the
financial condition of the Company.

Page 28
<PAGE>
FORM 10-Q
PART II

Item 1. Legal Proceedings

In November 1988, William J. Elmore and Wayne Comer (the
"Plaintiffs") former employees of the Company, instituted
a class action suit against the Company and certain other
defendants in which the Plaintiffs asserted a variety of
claims related to the Cone Mills Corporation 1983 ESOP
(the "1983 ESOP") and certain other employee benefit
plans maintained by the Company. In March 1992, the
United States District Court in Greenville, South
Carolina entered a judgment in the amount of $15.5
million (including an attorneys' fee award) against the
Company with respect to an alleged promise to make
additional Company contributions to the 1983 ESOP and all
claims unrelated to the alleged promise were dismissed.
The Company, certain individual defendants and the
Plaintiffs appealed.

On May 6, 1994, the United States Court of Appeals for
the Fourth Circuit, sitting en banc, affirmed the prior
conclusion of a panel of three of its judges and
unanimously reversed the $15.5 million judgment and
unanimously affirmed all of the District Court's rulings
in favor of the Company. However, the Court of Appeals
affirmed, by an equally divided court, the District
Court's holding that Plaintiffs should be allowed to
proceed on an alternative theory whether, subject to
proof of detrimental reliance, Plaintiffs could establish
that a letter to salaried employees on December 15, 1983
created an enforceable obligation that could allow
recovery on a theory of equitable estoppel. Accordingly,
the case was remanded to the District Court for a
determination of whether the Plaintiffs could establish
detrimental reliance creating estoppel of the Company.

Page 29
<PAGE>
FORM 10-Q

Item 1. (continued)

On July 24, 195, the District Court held a "final
hearing" on this matter and the parties are awaiting the
decision. Because of the uncertainties inherent in the
litigation process, it is not possible to predict the
ultimate outcome of this lawsuit. However, the Company
has defended this matter vigorously, and it is the
opinion of the Company's management that this lawsuit,
when finally concluded, will not have a material adverse
effect on the Company's financial condition.

The Company is a party to various other legal claims and
actions incidental to its business. Management believes
that none of these claims or actions, either individually
or in the aggregate, will have a material adverse effect
on the financial condition of the Company.

Item 4. Submission of Matters To A Vote Of Security Holders

Cone Mills Corporation's Annual Meeting of Shareholders
was held May 9, 1995. The proposals voted upon and the
results of the voting were as follows:

1. Election of three Class III Directors for a three-year
term.
Broker
For Against Abstentions Withheld Non-Votes
Doris R. Bray 22,100,209 117,486 0 0 3,575,100
Dewey L. Trogdon 22,095,829 121,866 0 0 3,575,100
Bud W. Willis III 22,100,109 117,586 0 0 3,575,100

2. Ratification of the appointment of McGladrey & Pullen as
Independent auditors for the Corporation for the fiscal
year ending December 31, 1995.
Broker
For Against Abstentions Withheld Non-Votes
22,107,648 101,546 8,501 0 3,575,100

Item 6. Exhibits and Reports on Form 8-K

(a) The exhibits to this Form 10-Q are listed in the
accompanying Index to Exhibits.

(b) Reports on Form 8-K

None

Page 30
<PAGE>
FORM 10-Q INDEX TO EXHIBITS

Exhibit
No. Description Page No.

* 2.1 Receivables Purchase Agreement dated
as of August 11, 1992, between the
Registrant and Delaware Funding
Corporation filed as Exhibit 2.01 to
the Registrant's report on Form 8-K
dated August 13, 1992.

* 2.1(a) Amendment to Receivables Purchase
Agreement dated April 4, 1994, between
the Registrant and Delaware Funding
Corporation filed as Exhibit 2.1 to
the Registrant's report on Form 8-K
dated March 1, 1995.

* 2.1(b) Amendment to Receivables Purchase
Agreement dated June 7, 1994, between
the Registrant and Delaware Funding
Corporation filed as Exhibit 2.2 to
the Registrant's report on Form 8-K
dated March 1, 1995.

* 2.1(c) Amendment to Receivables Purchase
Agreement dated as of June 30, 1994,
between the Registrant and Delaware
Funding Corporation filed as Exhibit
2.1 to the Registrant's report on
Form 10-Q for the quarter ended
July 3, 1994.

* 2.1(d) Amendment to Receivables Purchase
Agreement dated as of November 15, 1994,
between the Registrant and Delaware
Funding Corporation filed as Exhibit
2.4 to the Registrant's report on
Form 8-K dated March 1, 1995.

2.1(e) Amendment to Receivables Purchase
Agreement dated as of June 30, 1995,
between the Registrant and Delaware
Funding Corporation. 38

Page 31

<PAGE>
FORM 10-Q INDEX TO EXHIBITS

Exhibit
No. Description Page No.

* 2.2(a) Investment Agreement dated as of
June 18, 1993, among Compania Industrial
de Parras, S.A. de C.V., Sr. Rodolfo
Garcia Muriel, and Cone Mills
Corporation, with following exhibits
thereto attached, filed as Exhibit 2.2(a)
to Registrant's report on Form 10-Q for
the quarter ended July 4, 1993:

* 2.2(b) Commercial Agreement dated as of June
25, 1993, among Compania Industrial de
Parras, S.A. de C.V., Cone Mills
Corporation and Parras Cone de Mexico,
S.A., filed as Exhibit 2.2(b) to
Registrant's report on Form 10-Q for the
quarter ended July 4, 1993.

* 2.2(c) Guaranty Agreement dated as of June 25,
1993, between Cone Mills Corporation and
Compania Industrial de Parras, S.A. de
C.V., filed as Exhibit 2.2(c) to
Registrant's report on Form 10-Q for the
quarter ended July 4, 1993.

* 2.2(d) Joint Venture Agreement dated as of
June 25, 1993, between Compania
Industrial de Parras, S.A. de C.V., and
Cone Mills (Mexico), S.A. de C.V. filed as
Exhibit 2.2(d) to Registrant's report on
Form 10-Q for the quarter ended
July 4, 1993.

2.2(e) First Amendment to Joint Venture
Agreement dated as of June 14, 1995,
between Compania Industrial de Parras,
S.A. de C.V., and Cone Mills (Mexico),
S.A. de C.V. 41

* 2.2(f) Joint Venture Registration Rights
Agreement dated as of June 25, 1993,
among Parras Cone de Mexico, S.A.,
Compania Industrial de Parras, S.A. de
C.V. and Cone Mills (Mexico),
S.A. de C.V. filed as Exhibit 2.2(e)
to Registrant's report on Form 10-Q
for the quarter ended July 4, 1993.

Page 32
<PAGE>
FORM 10-Q INDEX TO EXHIBITS

Exhibit
No. Description Page No.

* 2.2(g) Parras Registration Rights Agreement
dated as of June 25, 1993, between Compania
Industrial de Parras, S.A. de C.V. and
Cone Mills Corporation filed as Exhibit
2.2(f) to Registrant's report on Form 10-Q
for the quarter ended July 4, 1993.

2.2(h) Guaranty Agreement dated as of June 14,
1995, between Compania Industrial de
Parras, S.A. de C.V. and Cone Mills
Corporation. 48

2.2(i) Guaranty Agreement dated as of June 15,
1995, between Cone Mills Corporation
and Morgan Guaranty Trust Company of
New York. 56

* 2.2(j) Support Agreement dated as of June 25,
1993, among Cone Mills Corporation, Sr.
Rodolfo L. Garcia, Sr. Rodolfo Garcia
Muriel and certain other person listed
herein ("private stockholders") filed
as Exhibit 2.2(g) to Registrant's
report on Form 10-Q for the quarter
ended July 4, 1993.

* 2.3 Asset Purchase Agreement dated as
of December 2, 1994 between the
Registrant, Lancer Industries, Inc.
and M.P.M. Transportation, Inc.,
filed as Exhibit 2 to the Registrant's
Current Report on Form 8-K dated
December 2, 1994.

* 4.1 Restated Articles of Incorporation of
the Registrant effective August 25, 1993,
filed as Exhibit 4.1 to Registrant's
report on Form 10-Q for the quarter ended
October 3, 1993.

* 4.2 Amended and Restated Bylaws of Registrant,
Effective June 18, 1992, filed as Exhibit
3.5 to the Registrant's Registration
Statement on Form S-1 (File No. 33-46907).

Page 33
<PAGE>
FORM 10-Q INDEX TO EXHIBITS

Exhibit
No. Description Page No.

* 4.3 Note Agreement dated as of August 13, 1992,
between Cone Mills Corporation and The
Prudential Insurance Company of America,
with form of 8% promissory note attached,
filed as Exhibit 4.01 to the Registrant's
report on Form 8-K dated August 13, 1992.

* 4.3(a) Letter Agreement dated September 11, 1992,
amending the Note Agreement dated August 13,
1992, between the Registrant and The
Prudential Insurance Company of America
filed as Exhibit 4.2 to the Registrant's
report on Form 8-K dated March 1, 1995.

* 4.3(b) Letter Agreement dated July 19, 1993,
amending the Note Agreement dated
August 13, 1992, between the Registrant
and The Prudential Insurance Company of
America filed as Exhibit 4.3 to the
Registrant's report on Form 8-K dated
March 1, 1995.

* 4.3(c) Letter Agreement dated June 30, 1994,
amending the Note Agreement dated
August 13, 1992, between the Registrant
and The Prudential Insurance Company of
America filed as Exhibit 4.4 to the
Registrant's report on Form 8-K dated
March 1, 1995.

* 4.3(d) Letter Agreement dated November 14, 1994,
amending the Note Agreement dated
August 13, 1992, between the Registrant
and The Prudential Insurance Company of
America filed as Exhibit 4.5 to the
Registrant's report on Form 8-K dated
March 1, 1995.

4.3(e) Letter Agreement dated as of June 30,
1995, amending the Note Agreement dated
August 13, 1992, between the Registrant
and the Prudential Insurance Company
of America. 62

Page 34
<PAGE>
FORM 10-Q INDEX TO EXHIBITS

Exhibit
No. Description Page No.

* 4.4 Credit Agreement dated as of August 13,
1992, among Cone Mills Corporation,
the banks listed therein and Morgan
Guaranty Trust Company of New York,
as Agent, with form of note attached
filed as Exhibit 4.02 to the Registrant's
report on Form 8-K dated August 13, 1992.

* 4.4(a) Amended and Restated Credit Agreement
dated November 18, 1994, among the
Registrant, various banks and Morgan
Guaranty Trust Company of New York,
as Agent, filed as Exhibit 4.1
to the Registrant's report on Form 8-K
dated March 1, 1995.

4.4(b) Amendment to Credit Agreement dated as of
June 30, 1995, amending the Amended and
Restated Credit Agreement dated
November 18, 1994, among the Registrant,
various banks and Morgan Guaranty Trust
Company of New York, as Agent. 63

* 4.5 Specimen Class A Preferred Stock
Certificate, filed as Exhibit 4.5
to the Registrant's Registration
Statement on Form S-1(File No. 33-46907).

* 4.6 Specimen Common Stock Certificate,
effective June 18, 1992, filed as
Exhibit 4.7 to the Registrant's
Registration Statement on Form S-1
(File No. 33-46907).

* 4.7 Registration rights agreement dated
as of March 30, 1992, among the
Registrant and the shareholders listed
therein, filed as Exhibit 4.8 to the
Registrant's Registration Statement on
Form S-1 (File No. 33-46907).

* 4.8 The 401(k) Program of Cone Mills
Corporation, amended and restated
effective December 1, 1994,filed as
Exhibit 4.8 to the Registrant's
report on Form 10-K for year ended
January 1, 1995.
Page 35
<PAGE>
FORM 10-Q INDEX TO EXHIBITS

Exhibit
No. Description Page No.

* 4.9 Cone Mills Corporation 1983 ESOP as
amended and restated effective
December 1, 1994, filed as Exhibit 4.9
to the Registrant's report on Form 10-K
for year ended January 1, 1995.

* 4.10 Indenture dated as of February 14,
1995, between Cone Mills Corporation
and Wachovia Bank of North Carolina,
N.A. as Trustee, filed as Exhibit 4.1
to Registrant's Registration Statement
on Form S-3 (File No. 33-57713)

* 4.11 Form of 8 1/8% Debenture in aggregate
principal amount of $100,000,000 due
March 15, 2005, filed as Exhibit 4.11
to the Registrant's report on Form 10-K
for the year ended January 1, 1995.

27 Financial Data Schedule 65

* Incorporated by reference to the statement or report
indicated.

Page 36
<PAGE>

SIGNATURES

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.

CONE MILLS CORPORATION
(Registrant)

Date August 11, 1995 JOHN L. BAKANE
John L. Bakane
Executive Vice President and
Chief Financial Officer

Page 37

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Cone Mills
Corporation Consolidated Financial Statements dated July 2, 1995, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUL-02-1995
<CASH> 2,284
<SECURITIES> 0
<RECEIVABLES> 92,708
<ALLOWANCES> 3,000
<INVENTORY> 153,654
<CURRENT-ASSETS> 253,424
<PP&E> 433,871
<DEPRECIATION> 189,471
<TOTAL-ASSETS> 569,366
<CURRENT-LIABILITIES> 123,352
<BONDS> 172,632
<COMMON> 2,738
0
38,395
<OTHER-SE> 186,468
<TOTAL-LIABILITY-AND-EQUITY> 569,366
<SALES> 459,157
<TOTAL-REVENUES> 459,157
<CGS> 391,655
<TOTAL-COSTS> 434,432
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,725
<INCOME-PRETAX> 9,062
<INCOME-TAX> 6,300
<INCOME-CONTINUING> 2,762
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,762
<EPS-PRIMARY> .05
<EPS-DILUTED> .05

</TABLE>

FORM 10-Q

Exhibit 2.1(e)

AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT

AMENDMENT dated as of June 28, 1995 (this "Amendment") of
a Receivables Purchase Agreement dated as of August 11, 1992,
as amended (as amended, the "Receivables Purchase Agreement"),
between CONE MILLS CORPORATION (the "Seller") and DELAWARE
FUNDING CORPORATION (the "Buyer"). Terms defined in the
Receivables Purchase Agreement and not otherwise defined
herein have the same meaning when used herein.

WITNESSETH:

WHEREAS, the Seller and the Buyer are parties to the
Receivables Purchase Agreement; and

WHEREAS, the Seller and the Buyer desire to amend the
Receivables Purchase Agreement (i) to extend the Expiration
Date, (ii) to amend the definition of Letter Agreement, (iii)
to amend the definition of Purchase Availability Fee and (iv)
to amend certain covenants of the Seller.

NOW, THEREFORE, the parties hereto, in consideration of
their mutual covenants hereinafter set forth and intending to
be legally bound hereby, agree as follows:

ARTICLE I. Amendment to the Receivables Purchase Agreement.

Subject to the satisfaction of the conditions precedent
specified in Article IV hereof, the Receivables Purchase
Agreement and the exhibits thereto shall be amended as
follows:

(a) The definition "Expiration Date" in Section
1.01 of the Receivables Purchase Agreement is
amended by replacing clause (i) of the
definition with "(i) June 24, 1996,".

(b) The definition "Letter Agreement" in Section
1.01 of the Receivables Purchase Agreement is
amended by inserting ", as further amended by
the letter dated June 28, 1995,"after "June 7,
1994" in such definition.

Page 38

<PAGE>
FORM 10-Q

Exhibit 2.1(e) (continued)

(c) The definition of "Purchase Availability Fee"
in Section 1.01 of the Receivables Purchase
Agreement is amended by deleting the number
".375%" and replacing such number with the
number ".300%".

(d) Section 2.15 of the Receivables Purchase
Agreement is amended by deleting the date
"June 28, 1995" therein and replacing such
date with the date "June 24, 1996".

(e) Section 6.02(j)(ii) of the Receivables
Purchase Agreement is hereby amended by
deleting the first sentence (but not the
definition of Adjusted Cash Flow or Total
Consolidated Debt) and replacing such sentence
with the following sentence:

Debt Ratio. As of the last day of each fiscal quarter
ended after January 1, 1996, the percentage of Adjusted Cash
Flow for the period of four consecutive fiscal quarters then
ended to Total Consolidated Debt as of such day will not be
less than 26%.

ARTICLE V. Governing Law.

This Amendment shall be governed by and construed in
accordance with the laws of the State of New York.

ARTICLE VI. Counterparts.

This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this
Amendment by signing such counterpart.

IN WITNESS WHEREOF, each of the parties hereto have caused
a counterpart of this Amendment to be duly executed as of the
date first above written.

Page 39

<PAGE>
FORM 10-Q

Exhibit 2.1(e) (continued)

DELAWARE FUNDING CORPORATION

by: J.P. Morgan Delaware,
as attorney-in-fact
for Delaware Funding Corporation

by: /s/ Robert J. Henchey

Title: Vice President

CONE MILLS CORPORATION

by: /s/ David E. Bray

Title: Treasurer

Page 40
<PAGE>

FORM 10-Q

Exhibit 2.2(e)

FIRST AMENDMENT TO
JOINT VENTURE AGREEMENT

FIRST AMENDMENT, dated as of June 14 , 1995, to the Joint
Venture Agreement, dated as of June 25, 1993 (the
"Agreement"), between Compania Industrial de Parras, S.A. de
C.V. ("CIPSA"), a sociedad anonima de capital variable
organized under the laws of the United Mexican States, and
Cone Mills (Mexico), S.A. de C.V. ("Cone"), a sociedad anonima
de capital variable organized under the laws of the United
Mexican States. Capitalized terms used herein without
definition shall have the meanings given to them in the
Agreement.

RECITALS

A. CIPSA and Cone have formed Parras Cone de Mexico, S.A. de
C.V. ("JV"), a sociedad anonima de capital variable
organized under the laws of the United Mexican States for
the purpose of carrying out the Project, as contemplated
by the Agreement.

B. CIPSA and Cone desire that JV borrow from Morgan Guaranty
Trust Company of New York the principal amount of
US$7,000,000 pursuant to a promissory note dated the date
hereof (as amended from time to time, the "Initial
Note"), the Initial Note to be guaranteed by Cone.

C. In order to obtain financing that will enable it to make
additional capital contributions to JV, CIPSA desires to
sell certain shares of JV Stock owned by CIPSA (the
"CIPSA Stock") to a special purpose financing vehicle
(the "SMM") established by JP Morgan & Co. Incorporated
or a subsidiary thereof. Cone desires for CIPSA to sell
the CIPSA Stock to the SMM.

D. In order to meet the foregoing objectives, CIPSA and Cone
desire to amend certain terms and provisions of the Joint
Venture Agreement, as provided herein.

NOW, THEREFORE, CIPSA and Cone hereby agree to each of
the following amendments to the Agreement:

Page 41
<PAGE>

FORM 10-Q

Exhibit 2.2(e) (continued)

1. Amendment of Section 1.2. Clause (iii) of Section
1.2(a) is hereby amended by inserting after the
word "foregoing" in the fifth line thereof the
following:

", other than any capital increase or issuance of
securities in connection with an Additional
Contribution pursuant to Section 5.2"

2. Amendment of Section 1.3. Section 1.3 is hereby
amended and restated in its entirety as follows:

1.3. Deadlock. If (a) so long as there are only
two Stockholders and each Stockholder holds 50% of
the outstanding shares of JV Stock, the
Stockholders are unable to reach agreement on any
proposed Ordinary Action or (b) at any time, the
Stockholders are unable to reach agreement on any
proposed Extraordinary Action (including, without
limitation, as a result of the failure by any
Stockholder to attend any Stockholders' meeting),
then in either case such matter shall be deemed to
be a Disputed Action for purposes of this Agreement
and shall be referred for resolution pursuant to
Article IV.

3. Amendment of Section 2.3. Section 2.3 is hereby
amended by appending the following to the end
thereof:

If at any time any Stockholder shall have a greater
number of designees on the Board of Directors than
the number of Directors to which such Stockholder
is entitled under this Section 2.3, then such
Stockholder shall forthwith cause to resign or
otherwise remove one or more of its designees so as
to comply with this Section 2.3.

4. Amendment of Section 3.1. Section 3.1(a) is hereby
amended by deleting from the fifth through seventh
lines thereof the following: ", including without
limitation any decision to draw upon the Letters of
Credit in accordance with Article V".

Page 42
<PAGE>

FORM 10-Q

Exhibit 2.2(e) (continued)

5. New Section 3.5. Article III is hereby amended and
supplemented by adding to Article III the following
new Section 3.5:

3.5. Secretary of the Board of Directors. Cone
and CIPSA shall consult and agree upon a nominee
for Secretary of the Board of Directors, which
Secretary shall be an independent Mexican attorney.
Each Stockholder shall cause its designees on the
Board of Directors, if any, to take such actions as
are necessary so as to appoint and continue in
office the person so designated as the Secretary of
the Board of Directors. Cone and CIPSA shall
jointly have the right to replace such
designee at any time by notice to the Board of
Directors and the other Stockholders and, in such
event, Cone and CIPSA shall cause their respective
designees on the Board of Directors, if any, to
take such actions as are necessary in order to
elect such replacement as promptly as practicable,
including without limitation by convening and
holding a meeting of the Board of Directors.

6. New Section 3.6. Article III is hereby amended and
supplemented by adding to Article III the following
new Section 3.6:

3.6. Signatures. Any agreement or transaction or
group of related agreements or transactions
involving an expenditure or incurrence of
indebtedness or other liability by JV in an amount
exceeding US$1,000,000 shall require the signatures
of both the Chief Executive Officer and the Chief
Financial Officer.

7. Amendment of Section 5.2. Section 5.2 of the
Agreement is hereby amended by (i) inserting after
"Contribution Notice"), in the third line thereof
the following: "which Contribution Notice may be
issued by the Chief Financial Officer,"; and (ii)
deleting the amount of "US$20,000,000" from the
last line thereof and replacing it with the amount
of "US$32,000,000". Section 5.2 is hereby further
amended by appending the following to the end
thereof:

Page 43
<PAGE>

FORM 10-Q

Exhibit 2.2(e) (continued)

If either Stockholder shall not, within 10 days
following receipt of the Contribution Notice or by
such later date specified therein, contribute such
Additional Contribution or agree to pay such amount
in the future in a form satisfactory to the other
Stockholder, the shareholders as of May 1, 1995 of
such Stockholder shall have the right, within two
days following such date, to contribute such
Additional Contribution. In the event that the
shareholders of such Stockholder shall not
contribute such Additional Contribution within such
two days, the other Stockholder shall have the
right to contribute such Additional Contribution
and purchase the shares of JV Stock issuable in
connection with such Additional Contribution.

8. Amendment of Section 6.1. Clause (ii) of Section
6.1(a) is hereby amended to read as follows:

"(ii) to a Permitted Transferee of such Stockholder
upon compliance with Section 6.1(b) and subject to
Section 6.1(d),".

Section 6.1 is hereby further amended and
supplemented by adding thereto the following new
Section 6.1(d):

(d) Notwithstanding anything to the contrary in
this Section 6.1 or in any other provision of
this Agreement, in the event that any
Stockholder transfers any shares of JV Stock
to a Permitted Transferee pursuant to Section
6.1(a)(ii), such Stockholder shall cause such
Permitted Transferee to continue to qualify as
a Permitted Transferee as defined herein for
so long as such Permitted Transferee holds any
shares of JV Stock

9. Amendment of Article VII. Article VII is hereby
amended and supplemented by adding to Article VII
the following new Section 7.6:

7.6. Call Right upon Parras Change of Control or
CIPSA Bankruptcy Event. Upon the occurrence of a
Parras Change of Control or a CIPSA Bankruptcy
Event (as such term is defined below), Cone shall

Page 44
<PAGE>

FORM 10-Q

Exhibit 2.2(e) (continued)

have the right to elect, by notice to CIPSA, to
purchase from CIPSA all of the shares of JV Stock
held by CIPSA at a price per share equal to the
book value per share of JV Stock, as such book
value is set forth in the balance sheet prepared in
accordance with U.S. GAAP delivered pursuant to
Section 7.1 (the "Book Value Price") provided,
however, that each party to the Support Agreement,
dated as of June 25, 1993, who was a stockholder of
CIPSA as of May 1, 1995 (collectively, the "Offeree
Stockholders") shall have the right to purchase
from CIPSA, within ten days of delivery of such
notice to CIPSA, at the Book Value Price, a
percentage of the shares of JV Stock held by CIPSA
equal to the percentage of shares of CIPSA common
stock held by such Offeree Stockholder as of May 1,
1995. CIPSA shall, within one day after receipt of
such notice from Cone, deliver to each such Offeree
Stockholder a notice setting forth (i) the number
of JV Shares that such Offeree Stockholder is
entitled to purchase, (ii) the applicable Book
Value Price and (iii) the date by which such right
must be exercised. Within five days of the
expiration of such period, CIPSA shall sell to Cone
all such JV Shares that have not been purchased by
such Offeree Stockholders by delivery of all
documents necessary to transfer such shares of JV
Stock, free and clear of all Liens, against payment
of cash in the amount of the Book Value Price for
each such share.

10. Definition of "Agreement". Section 8.1(b) of the
Agreement is hereby amended and supplemented by
adding the following definition:

"Agreement" means the Agreement, as amended by the
First Amendment and as may otherwise be amended
from time to time.

11. Definition of "CIPSA Bankruptcy Event". Section
8.1(b) of the Agreement is hereby amended and
supplemented by adding the following definition:

"CIPSA Bankruptcy Event" means the occurrence of
any of the following: (i) a decree or order for
relief in respect of CIPSA or any of its material

Page 45

<PAGE>
FORM 10-Q

Exhibit 2.2(e) (continued)

subsidiaries shall have been entered under any
bankruptcy, reorganization, insolvency or similar
law (herein called a "Bankruptcy Law"); (ii) CIPSA
shall have petitioned to any tribunal for, or
consented to, the appointment of, or taking
possession by, a trustee, receiver or other similar
official in respect of CIPSA or of any substantial
part of its assets or shall otherwise have
commenced a voluntary case or other similar
proceeding under any Bankruptcy Law or any such
petition shall have been filed, or any such
proceedings shall have been commenced, against
CIPSA or any of its material subsidiaries; or (iii)
CIPSA or any of its material subsidiaries shall
have become insolvent or generally unable to
satisfy its obligations to creditors as they become
due.

12. Amendment of Definition of "Parras Change of
Control". The definition of "Parras Change of
Control" contained in Section 8.1(b) of the
Agreement is hereby amended by deleting the amount
"50%" and replacing it with the amount "30%".

13. Amendment of Definition of "Permitted Transferee".
The definition of "Permitted Transferee" contained
in Section 8.1(b) of the Agreement is hereby
amended and restated in its entity as follows:

"Permitted Transferee" means (i) with respect to
any Stockholder, any direct or indirect wholly-
owned subsidiary of such Stockholder, any Person of
which such Stockholder is the direct or indirect
wholly-owned subsidiary, and any Person which is a
direct or indirect wholly-owned subsidiary of a
Person of which such Stockholder is the direct or
indirect wholly-owned subsidiary, and (ii) with
respect to CIPSA, the SMM and any transferee or
purchaser of the CIPSA Stock or of beneficial
interests in the SMM, to the extent and as
contemplated by the agreements or instruments
relating to the creation of the SMM. For purposes
of determining whether a subsidiary is wholly-
owned, directors' or other statutory qualifying
shares shall not be taken into account.

Page 46

<PAGE>
FORM 10-Q

Exhibit 2.2(e) (continued)

14. Amendment of Definition of "Senior Officers". The
definition of "Senior Officers" contained in
Section 8.1(b) of the Agreement is hereby amended
and restated in its entirety as follows:

"Senior Officers means the Chief Executive Officer,
the Chief Financial Officer, the director of
marketing, the director of manufacturing, the
Secretary of the Board of Directors and such other
officers as may be specified from time to time by
the Board of Directors.

15. Miscellaneous. Except as amended by this First
Amendment, the terms, covenants and conditions of
the Agreement (as amended by this First Amendment)
are in all respects ratified and confirmed and,
except as amended hereby, shall continue in full
force and effect. This First Amendment may be
executed in any number of counterparts, each of
which shall be an original, but all of which
together shall constitute one and the same
instrument.

IN WITNESS WHEREOF, the parties hereto have caused this
First Amendment to be duly executed as of the date first above
written.

COMPANIA INDUSTRIAL DE PARRAS,
S.A. DE C.V.

By s/s RODOLFO GARCIA MURIEL
Name: Rodolfo Garcia Muriel
Title: Director General

CONE MILLS (MEXICO), S.A. DE C.V

By s/s JOHN L. BAKANE
Name: John L. Bakane
Title: Presidente

Page 47
<PAGE>

FORM 10-Q

Exhibit 2.2(h)

GUARANTY AGREEMENT

GUARANTY AGREEMENT, dated as of the 14th day of June,
1995 (the "Agreement"), among COMPANIA INDUSTRIAL DE PARRAS,
S.A. DE C.V., a sociedad anonima de capital variable organized
under the laws of the United Mexican States (the "Guarantor"),
and CONE MILLS CORPORATION, a North Carolina corporation
("Cone").

RECITALS

Parras-Cone de Mexico, S.A. de C.V., a sociedad anonima
de capital variable organized under the laws of the United
Mexican States (the "Company") and Morgan Guaranty Trust
Company of New York, a New York State banking corporation (the
"Bank") are parties to a Promissory Note dated as of June 1995
(the "Note"). The Company's obligations under the Note are
guaranteed by Cone pursuant to the Guaranty, dated as of the
date hereof (the "Cone Guaranty"), between Cone and the Bank.
Capitalized terms used herein not otherwise defined have the
meanings assigned to them in the Cone Guaranty. As an
inducement to Cone to execute the Cone Guaranty and for other
good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Cone and the Guarantor agree
as follows:

1. Guaranty of Payment. The Guarantor, as primary obligor
and not as surety only, hereby unconditionally guarantees
to Cone the due, punctual and complete payment (whether
at stated maturity, upon acceleration or otherwise) of
(a) until all obligations of the Company under the Note
have been paid or discharged in full (either through
payment in full in cash or through offset against the
subscription price payable by Cone in respect of the
issuance to Cone of ordinary voting shares of the Company
(the "JV stock") and inscription of Cone as legal and
beneficial owner of said shares (the latter being
referred to as a "Subscription by Offset")), (i) any
amounts arising out of or in connection with the Note,
including without limitation fees, principal and interest
payments and other obligations of the Company under the
Note, and (ii) all expenses of collection, counsel fees
and other expenses incurred by the Bank in connection

Page 48

<PAGE>
FORM 10-Q

Exhibit 2.2(h) (continued)

with the enforcement of its rights underthe Note or under
the Cone Guaranty; and (b) at any time, all legal fees or
other expenses incurred by Cone in connection with the
enforcement of the Note or the Cone Guaranty
(collectively, the "Guaranteed Obligations"), provided
that the Guarantor shall have no obligation hereunder
unless and until such time as Cone becomes obligated to
the Bank under the Cone Guaranty. Upon any default of
the Company in the payment of any of the Guaranteed
Obligations, the Guarantor agrees that it will forthwith,
upon receipt of a written demand from Cone, pay to Cone,
at the place and in the manner specified in such demand,
the total amount of the Guaranteed Obligations payable as
of the date of such demand, plus interest on the total
amount owing under the Note on the date of such default
from the date of such default to the date of payment of
such amount at a rate per annum equal to three-month U.S.
Dollar LIBOR plus five percent. This guaranty (the
"Guaranty") is a guaranty of payment and not merely a
guaranty of collection.

2. Put Right. In the event that any obligations of the
Company under the Note shall have been discharged by Cone
through a Subscription by Offset, Cone shall have the
right, by notice to the Guarantor, to require the
Guarantor to purchase, up to one-half of the total number
of shares of JV Stock issued to Cone pursuant to such
Subscription by Offset, for a price per share equal to
the price per share paid for such shares by Cone. The
Guarantor hereby agrees that within five days of receipt
of such notice, the Guarantor shall pay to Cone such
price in immediately available funds against delivery by
Cone of all documents necessary to transfer to the
Guarantor such shares of JV Stock, free and clear of all
liens.

3. Guaranty Unconditional and Absolute. The obligations of
the Guarantor hereunder shall be unconditional and
absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise
affected by:

(i) any extension, renewal, settlement, compromise,
waiver or release in respect of any obligation of the
Company, Cone or any other guarantor of any of the Guar-
anteed Obligations;

Page 49

<PAGE>
FORM 10-Q

Exhibit 2.2(h) (continued)

(ii) any release, exchange, non-perfection or invalidity
of any direct or indirect security for any of the
Guaranteed Obligations;

(iii) any modification or amendment of or supplement to
the Note or the Cone Guaranty, it being understood that
CIPSA shall be notified of any such modification,
amendment or supplement to the Note or the Cone Guaranty;

(iv) any change in the corporate existence (including
its constitution, laws, rules, regulations or powers),
structure or ownership of the Company, Cone or the
Guarantor, or any insolvency, bankruptcy, reorganization
or other similar proceeding affecting the Company or Cone
or their assets, the Guarantor or any other guarantor of
any of the Guaranteed Obligations;

(v) the existence of any claim, set-off or other rights
which the Guarantor may have at any time against Cone,
the Company, the Bank or any other corporation or person,
whether in connection herewith or in connection with any
unrelated transaction; provided that nothing herein shall
prevent the assertion of any such claim by separate suit
or compulsory counterclaim;

(vi) any invalidity or unenforceability relating to or
against Cone or any other guarantor for any reason of the
Cone Guaranty or any other guaranty agreement, or any
provision of applicable law or regulation purporting to
prohibit payment by Cone of amounts to be paid by it
under the Cone Guaranty or any of the Guaranteed
Obligations or under any such guaranty agreement; or

(vii) any other act or omission to act or delay of any
kind by the Company, Cone, any other guarantor, the Bank
or any other corporation or person or any other
circumstance whatsoever which might, but for the provi-
sions of this paragraph, constitute a legal or equitable
discharge of the Guarantor's obligations hereunder.

4. Discharge Only Upon Payment in Full; Reinstatement in
Certain Circumstances. The Guarantor's obligations
hereunder constitute a guarantee of payment and not of
collection merely and shall remain in full force and
effect until the Guaranteed Obligations shall have been
paid in full in accordance with the terms hereof and of

Page 50
<PAGE>
FORM 10-Q

Exhibit 2.2(h) (continued)

the Cone Guaranty. If at any time any payment of any of
the Company's obligations under the Note is rescinded or
must be otherwise restored or returned upon the
insolvency, bankruptcy or reorganization of the Company
or otherwise, the Guarantor's obligations hereunder with
respect to such payment shall be reinstated at such time
as though such payment had not been made.

5. Waiver by the Guarantor. The Guarantor irrevocably
waives acceptance hereof, diligence, presentment, demand,
protest, notice of dishonor and any notice not provided
for herein, as well as any requirement that at any time
any person exhaust any right or take any action against
Cone, the Company or its assets or any other guarantor or
person.

6. Subrogation. Upon making any payment under the Guaranty,
the Guarantor shall be subrogated to the rights of Cone
against the Company with respect to such payment;
provided that the Guarantor shall not enforce any right
or receive any payment by way of subrogation until all
Guaranteed Obligations have been fully paid and
satisfied.

7. Subordination. The Guarantor hereby agrees that until
such time as all of the Guaranteed Obligations shall be
paid and performed in full, all obligations of the
Company to the Guarantor are and shall be expressly
subordinated in right of payment to the prior payment of
the Guaranteed Obligations.

8. Right of Set-Off. The Guarantor, Telas Parras, S.A. de
C.V. ("Telas") and each other Affiliate of the Guarantor
hereby agrees that Cone may set off any amounts owed from
time to time by Cone or any of its affiliates to the
Guarantor, Telas or any other Affiliate of the Guarantor
against any amounts owed by the Guarantor to Cone
hereunder. For purposes of this Guaranty, "Affiliate"
shall mean any person directly or indirectly controlling
or controlled by or under common control with the
Guarantor, including (without limitation) any person
beneficially owning or holding 5% or more of any class of
voting securities of the Guarantor or any other
corporation of which the Guarantor or any subsidiary of
the Guarantor owns or holds 5% or more of any class of
voting securities, provided that, for purposes of this

Page 51
<PAGE>
FORM 10-Q

Exhibit 2.2(h) (continued)

definition, "control" (including, with correlative mean-
ings, the terms "controlled by" and "under common control
with"), as used with respect to any person, shall mean
the possession, directly or indirectly, of the power to
direct or cause the direction of the management and
policies of such Person, whether through the ownership of
voting securities or by contract or otherwise.

9. Stay of Acceleration Ineffective with Respect to
Guarantor. In the event that acceleration of the time
for payment of any amount payable by the Company under
the Note is stayed upon the insolvency, bankruptcy or
reorganization of the Company, all such amounts otherwise
subject to acceleration or required to be paid upon an
early termination pursuant to the terms of the Note shall
nonetheless be payable by the Guarantor hereunder
forthwith on demand by Cone.

10. Representations. The Guarantor hereby represents and
warrants to Cone that (a) the Guarantor is a sociedad
anonima de capital variable duly organized and existing
under the laws of the United Mexican States and is duly
authorized to enter into and perform this Agreement which
constitutes a valid and enforceable obligation of the
Guarantor, (b) neither the execution or delivery of this
Agreement nor the performance by the Guarantor of its
obligations hereunder will violate the Guarantor's
estatutos or any provision of law or any agreement,
indenture, note or other instrument binding upon the
Guarantor or give cause for acceleration of any
indebtedness of the Guarantor, (c) no authority from or
approval by any governmental body, commission or agency
is required in connection with the execution or validity
of this Agreement, (d) there are no actions, suits or
proceedings pending against or, to the knowledge of the
Guarantor, threatened against or affecting, the Guarantor
or any of its subsidiaries, in any court or before or by
any governmental department, agency or instrumentality,
an adverse decision in which could materially and
adversely affect the financial condition, business,
operations or prospects of the Guarantor or the ability
of the Guarantor to perform its obligations under this
Agreement and (e) the Guarantor owns 50% of the issued
and outstanding shares of capital stock of the Company.

Page 52
<PAGE>
FORM 10-Q

Exhibit 2.2(h) (continued)

11. Assignment; Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the Guarantor
and its successors and assigns, Telas and its successors
and assigns and Cone and its successors and assigns.
Neither the Guarantor nor Telas may assign its rights and
obligations hereunder without the prior written consent
of Cone, and any such purported assignment without the
written consent of Cone will be void.

12. Amendments and Waivers. No provision of this Agreement
may be amended, supplemented or modified, nor any of the
terms and conditions hereof or thereof waived, except by
a written instrument executed by the Guarantor, Telas and
Cone.

13. Expenses and Taxes. Without limiting the generality of
the Guarantor's obligations hereunder, the Guarantor
agrees to pay to Cone upon its request all reasonable
costs and expenses, including fees and disbursements of
counsel and taxes, incurred by Cone in enforcing its
rights under this Agreement, and in connection with any
default under the Note and collection or other
enforcement proceedings against any person or assets
resulting therefrom, all of which shall be "Guaranteed
Obligations" the payment of which is guaranteed
hereunder. The Guarantor agrees that all amounts payable
under this Agreement shall be paid without set-off or
counterclaim and free and clear of, and without deduction
or withholding for or on account of any present or future
taxes, levies, imposts, duties, fees, assessments or
other charges of whatever nature, now or hereafter
imposed by any governmental or taxing authority to which
the Guarantor is subject.

14. Full Recourse Obligations. The obligations of the
Guarantor set forth herein constitute the full recourse
obligations of the Guarantor enforceable against it to
the full extent of all its assets and properties.

15. Notices. All notices under the terms and provisions
hereof shall be in writing and shall be deemed validly
given upon personal delivery or one day after being sent
by telecopy or overnight courier service:

Page 53
<PAGE>
FORM 10-Q

Exhibit 2.2(h) (continued)

(a) if to Cone, at:
Cone Mills Corporation
1201 Maple Street,
Greensboro, North Carolina 27405
Attention: General Counsel
Telecopy: (919) 379-6972

(b) if to the Guarantor, at:
Compania Industrial de Parras, S.A. de C.V.
Paseo de las Palmas 731, Piso 7
Colonia Lomas de Chapultepec
Mexico, D.F. 11000
Attention: Director General
Telecopy: 011-525-520-8631

or at such other address as Cone or the Guarantor may
designate in writing to the other.

16. Judgment Currency. The Guarantor's obligation in respect
of any sum due by it to Cone hereunder shall,
notwithstanding any judgment in a currency other than
U.S. Dollars (the "Specified Currency"), be discharged
only to the extent that on the business day following
receipt by Cone of any sum adjudged to be so due in such
other currency Cone may in accordance with normal banking
procedures purchase the Specified Currency with such
other currency; if the Specified Currency so purchased is
less than the sum originally due to Cone in the Specified
Currency, the Guarantor agrees, as a separate obligation
and notwithstanding any such judgment, to indemnify Cone
against such loss.

17. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OR JURY
TRIAL. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
EACH OF CONE, THE GUARANTOR AND TELAS HEREBY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS GUARANTY OR THE TRANSACTIONS
CONTEMPLATED HEREBY. EACH OF CONE, THE GUARANTOR AND
TELAS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT

Page 54
<PAGE>
FORM 10-Q

Exhibit 2.2(h) (continued)

IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. EACH OF THE GUARANTOR, TELAS AND
CONE HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEM-
PLATED HEREBY.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above
written.

COMPANIA INDUSTRIAL DE PARRAS,
S.A. DE C.V.

By: /s/ RODOLFO GARCIA MURIEL
Name: Rodolfo Garcia Muriel
Title: Chief Executive Officer

CONE MILLS CORPORATION

By: /s/ NEIL W. KOONCE
Name: Neil W. Koonce
Title: Vice President

Agreed to for purposes of
Sections 8, 11 and 17:

TELAS PARRAS, S.A. DE C.V.

By: /s/ RODOLFO GARCIA MURIEL
Name: Rodolfo Garcia Muriel
Title: Chief Executive Officer

Page 55
<PAGE>

FORM 10-Q

Exhibit 2.2(i)

GUARANTY

GUARANTY dated as of the 15th day of June, 1995 between
CONE MILLS CORPORATION, a North Carolina corporation (the
"Guarantor") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a
New York State banking corporation (the "Bank").

RECITALS

Parras Cone de Mexico S.A. de C.V., a Mexican corporation
(the "Company") has executed its Promissory Note dated as of
June 15, 1995 in a principal amount equal to Seven (7) Million
Dollars (the "Note") payable to the Bank. Capitalized terms
used herein not otherwise defined have the meanings assigned
to them in the Note. Pursuant to the Note and as an
inducement to the Bank to extend the Loan evidenced by the
Note and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Bank and the Guarantor agree as follows:

1. Guaranty of Payment. The Guarantor, as primary
obligor and not as surety only, hereby unconditionally
guarantees the due and punctual Dayment (whether at
stated maturity, upon acceleration or otherwise) of
any amounts arising out of or in connection with the
Note, including without limitation the obligation of
the Company to pay all fees, principalL and interest
payments due thereunder and all expenses of
collection, counsel fees and other expenses incurred
by the Bank in connection with the enforcement of its
rights under the Note (collectively, the
"Guaranteed-Obligations"). Upon any failure by the
Company to pay any of the Guaranteed Obligations, the
Guarantor agrees that it will forthwith on demand pay,
at the place and in the manner specified in the Note,
such amounts which the Company has failed to pay.
This Guaranty is a guaranty of payment and not merely
a guaranty of collection.

2. Guaranty Unconditional and Absolute. The obligations
of the Guarantor hereunder shall be unconditional and
absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or
otherwise affected by:

Page 56
<PAGE>
FORM 10-Q

Exhibit 2.2(i) (continued)

(i) any extension, renewal, settlement, compromise,
waiver or release in respect of any obligation of the
Company or any other guarantor of any of the
Guaranteed obligations; provided that the Bank shall
obtain the Guarantor's consent prior to agreeing to
extend the maturity date of the Note;

(ii) any release, exchange, non-perfection or
invalidity of any direct or indirect security for any
of the Guaranteed Obligations;

(iii) any modification or amendment of or supplement
to the Note; provided that the Bank shall obtain the
Guarantor's consent prior to agreeing to any such
modification or amendment;

(iv) any change in the corporate existence (including
its constitution, laws, rules, regulations or powers),
structure or ownership of the Company or the
Guarantor, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting
the Company or its assets, the Guarantor or any other
guarantor of any of the Guaranteed Obligations;

(v) the existence of any claim, set-off or other
rights which the Guarantor may have at any time
against the Company, the Bank or any other corporation
or person, whether in connection herewith or in
connection with any unrelated transaction; provided
that nothing herein shall prevent the assertion of any
such claim by separate suit or compulsory
counterclaim;

(vi) any invalidity or unenforceability relating to or
against the Company or any other guarantor for any
reason of the Note or any other guaranty agreement, or
any provision of applicable law or regulation
purporting to prohibit payment by the Company of
amounts to be paid by it under the Note or any of the
Guaranteed Obligations or under any such guaranty
agreement; or

(vii) any other act or omission to act or delay of any
kind by the Company, any other guarantor, the Bank or
any other corporation or person or any other
circumstance whatsoever which might, but for the
provisions of this paragraph, constitute a legal or
equitable discharge of the Guarantor's obligations
hereunder.
Page 57
<PAGE>
FORM 10-Q

Exhibit 2.2(i) (continued)

3. Discharge only Upon Payment In Full;

Reinstatement in Certain Circumstances. The
Guarantor's obligations hereunder constitute a
guarantee of payment and not of collection merely and
shall remain in full force and effect until the
Guaranteed Obligations shall have been paid in full in
accordance with the terms hereof and of the Note. If
at any time any payment of any of the Guaranteed
Obligations is rescinded or must be otherwise restored
or returned upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, the
Guarantor's obligations hereunder with respect to such
payment shall be reinstated at such time as though
such payment had not been made.

4. Waiver by the Guarantor. The Guarantor irrevocably
waives acceptance hereof, diligence, presentment,
demand, protest, notice of dishonor and any notice not
provided for herein, as well as any requirement that
at any time any person exhaust any right or take any
action against the Company or its assets or any other
guarantor or person.

5. Subrogation. Upon making any payment hereunder, the
Guarantor shall be subrogated to the rights of the
Bank against the Company with respect to such payment;
provided that the Guarantor shall not enforce any
right or receive any payment by way of subrogation
until all Guaranteed Obligations have been fully paid
and satisfied.

6. Stay of Acceleration Ineffective with respect to
Guarantor. In the event that acceleration of the time
for payment of any amount payable by the Company under
the Note is stayed upon the insolvency, bankruptcy or
reorganization of the Company, all such amounts
otherwise subject to acceleration or required to be
paid upon an early termination pursuant to the terms
of the Note shall nonetheless be payable by the
Guarantor hereunder forthwith on demand by the Bank.

Page 58
<PAGE>
FORM 10-Q

Exhibit 2.2(i) (continued)

7. Representations. The Guarantor hereby represents and
warrants to the Bank that (a) the Guarantor is a duly
organized and existing North Carolina corporation and
is duly authorized to enter into and perform this
Guaranty which constitutes a valid and enforceable
obligation of the Guarantor, (b) neither the making of
this Guaranty nor the performance by the Guarantor of
its obligations hereunder will violate the Guarantor's
certificate of incorporation or by-laws or any
provision of law or any agreement, indenture, note or
other instrument binding upon the Guarantor or give
cause for acceleration of any indebtedness of the
Guarantor, (c) no authority from or approval by any
governmental body, commission or agency is required in
connection with the making or validity of this
Guaranty (d) there are no actions, suits or
proceedings pending against or, to the knowledge of
the Guarantor, threatened against or affecting, the
Guarantor or any of its subsidiaries, in any court or
before or by any governmental department, agency or
instrumentality, an adverse decision in which could
materially and adversely affect the financial
condition, business, operations or prospects of the
Guarantor or the ability of the Guarantor to perform
its obligations under this Guaranty.

8. Assignment; Successors and Assigns. This Guaranty
shall he binding upon and inure to the benefit of the
Guarantor and its successors and assigns and the Bank
and its successors and assigns. The Guarantor may not
assign its rights and obligations hereunder without
the prior written consent of the Bank, and any such
purported assignment without the written consent of
the Bank will be void.

9. Amendments and Waivers. No provision of this Guaranty
may be amended, supplemented or modified, nor any of
the terms and conditions hereof or thereof waived,
except by a written instrument executed by the
Guarantor and the Dank.

10. Expenses and Taxes. Without limiting the generality
of the Guarantor's obligations hereunder, the
Guarantor agrees to pay to the Bank upon its request
all reasonable costs and expenses, including fees and

Page 59
<PAGE>
FORM 10-Q

Exhibit 2.2(i) (continued)

disbursements of counsel and taxes, incurred by the
Dank in enforcing its rights under this Guaranty and
in connection with the occurrence of any Event of
Default or failure to pay under the Note and
collection or other enforcement proceedings against
any person or assets resulting therefrom, all of which
shall be "Guaranteed obligations" the payment of which
is guaranteed hereunder. The Guarantor agrees that
all amounts payable under this Guaranty shall be paid
without set-off or counterclaim and free and clear of,
and without deduction or withholding for or on account
of any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever
nature, now or hereafter imposed by any governmental
or taxing authority to which the Guarantor is subject.

11. Judgment Currency. The Guarantor's obligation in
respect of any sum due by it to the Bank hereunder
shall, notwithstanding any judgment in a currency
other than U.S. Dollars (the "Specified Currency"), be
discharged only to the extent that on the business day
following receipt by the Bank of any sum adjudged to
be so due in such other currency the Bank may in
accordance with normal banking procedures purchase the
Specified Currency with such other currency; if the
Specified Currency so purchased is less than the sum
originally due to the Bank in the Specified Currency,
the Guarantor agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the
Bank against such loss.

12. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. THE GUARANTOR HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK
CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS
CONTEMPLATED HEREBY. THE GUARANTOR IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. THE GUARANTOR AND THE BANK HEREBY
Page 60
<PAGE>
FORM 10-Q

Exhibit 2.2(i) (continued)

IRREVOCABLY WAIVE ANY AND ALL RTGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.

IN WITNESS WHEREOF, the parties hereto have caused
this Guaranty to be duly executed as of the date first above
written.

CONE MILLS CORPORATION

By: /s/ NEIL W. KOONCE
Name: Neil W. Koonce
Title: Vice President

MORGAN GUARANTY TRUST
COMPANY OF NEW YORK

BY: /s/ DAVID COMMON
Name: David Common
Title: Vice President

Page 61
<PAGE>

FORM 10-Q
Exhibit 4.3(e)
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
c/o The Prudential Capital Group
1230 Peachtree Street, Suite 2523
Atlanta, Georgia 30309

As of June 30, 1995
CONE MILLS CORPORATION
1201 Maple Street
Greensboro, NC 27405
ATTN: David Bray, Treasurer

Ladies and Gentlemen:

Reference is made to the Note Agreement, dated as of
August 13, 1992 (as heretofore amended and modified, the "Note
Agreement"), between Cone Mills Corporation (the "Company")
and The Prudential Insurance Company of America
("Prudential"). Capitalized terms use herein without
definition shall have the meanings specified in the Note
Agreement.

At the request of the Company, Prudential hereby agrees
to waive the provisions of paragraph 6A of the Note Agreement
from June 30, 1995 through and until December 31, 1995.

The Company hereby represents that, except as amended by
this letter agreement, the terms, conditions and obligations
of the Note Agreement and the Notes remain in full force and
effect and that no Default or Event of Default exist or is
continuing.

If the provisions of this letter agreement are
satisfactory to you, please sign each copy of this letter
agreement and return two to Prudential, whereupon receipt by
Prudential this letter agreement shall become a binding
agreement as of the date first above written.

Very truly yours,

THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA

By:/s/ Robert R. Derrick
Vice President
Agreed to and accepted
as of June 30, 1995

CONE MILLS CORPORATION

By:/s/ David R. Bray
Title: Treasurer
Page 62
<PAGE>

FORM 10-Q

Exhibit 4.4(b)

AMENDMENT TO CREDIT AGREEMENT

AMENDMENT dated as of June 30, 1995 to the Amended
and Restated Credit Agreement dated as of November 18, 1994
(the "Agreement") among Cone Mills Corporation, the banks
listed on the signature pages thereof (the "Banks") and Morgan
Guaranty Trust Company of New York, as Agent (the "Agent").

The parties hereto agree as follows with respect to the
Agreement:

SECTION 1. Definitions; References. Unless otherwise
specifically defined herein, each term used herein which is
defined in the Agreement shall have the meaning assigned to
such term in the Agreement. Each reference to "hereof",
"hereunder", "herein" and "hereby" and each other similar
reference and each reference to "this Agreement" and each
other similar reference contained in the Agreement shall from
and after the date hereof refer to the Agreement as amended
hereby.

SECTION 2. Amendment of Section 5.10 of the Agreement.
Section 5.10 of the Agreement is amended to read in full as
follows:

SECTION 5.10. Debt Ratio. As of the last day of each
fiscal quarter ended after January 1, 1996, the percentage of
Adjusted Cash Flow for the period of four consecutive fiscal
quarters then ended to Total Consolidated Debt as of such day
will not be less than 26%.

SECTION 3. Governing Law. This Amendment shall be
governed by and construed in accordance with the laws of the
State of New York.

SECTION 4. Counterparts; Effectiveness. This Amendment
may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
This Amendment shall become effective as of June 30, 1995 when
the Agent shall have received duly executed counterparts
hereof signed by the Borrower and the Required Banks.

Page 63
<PAGE>
FORM 10-Q

Exhibit 4.4(b) (continued)

IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed as of the date first above
written.

CONE MILLS CORPORATION

By /s/ David E. Bray
Title: Treasurer

MORGAN GUARANTY TRUST COMPANY
OF NEW YORK

By /s/ Timothy S. Broadbent
Title: Vice President

FIRST UNION NATIONAL BANK
OF NORTH CAROLINA

By /s/ Kent Phillips
Title: Vice President

NATIONSBANK OF NORTH
CAROLINA, N.A.

By /s/ Alison H. Mewborne
Title: Senior Vice President

WACHOVIA BANK OF NORTH
CAROLINA, N.A.

By /s/ W. Stanton Laight
Title: Vice President

Page 64