Page 1 of 50
Index to Exhibits-Pages 25-35
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Transition period from to
Commission file number 1-3634
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.)
3101 North Elm Street, Greensboro, North Carolina 27408
(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 November 1,
1996: 26,459,133 shares.
Page 1
<PAGE>
FORM 10-Q
CONE MILLS CORPORATION
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Income
Thirteen and thirty-nine weeks ended
September 29, 1996 and October 1, 1995
(Unaudited). . . . . . . . . . . . . . . . . . 3
Consolidated Condensed Balance Sheets
September 29, 1996 and October 1, 1995
(Unaudited) and December 31, 1995. . . . . . . 4 & 5
Consolidated Condensed Statements of
Stockholders' Equity
Thirty-nine weeks ended September 29, 1996
and October 1, 1995 (Unaudited). . . . . . . . 6
Consolidated Condensed Statements of
Cash Flows
Thirty-nine weeks ended September 29, 1996
and October 1, 1995 (Unaudited). . . . . . . . 7
Notes to Consolidated Condensed Financial
Statements (Unaudited). . . . . . . . . . . . . . 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . 23
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . 24
Page 2
<PAGE>
FORM 10-Q
PART I
Item 1.
<TABLE>
<S> <C> <C> <C> <C>
CONE MILLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(amounts in thousands, except per share data)
Thirteen Thirteen Thirty-Nine Thirty-Nine
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
Sept. 29, 1996 Oct. 1, 1995 Sept. 29, 1996 Oct. 1, 1995
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net Sales $ 180,849 $ 231,699 $ 588,250 $ 690,856
Operating Costs and Expenses:
Cost of sales 152,163 190,635 482,209 567,888
Selling and administrative 20,694 22,075 64,201 64,852
Depreciation 6,994 7,201 21,139 21,603
Loss (Gain) on sale of division 198 - (4,486) -
180,049 219,911 563,063 654,343
Income from Operations 800 11,788 25,187 36,513
Other Income (Expense):
Interest income 207 114 380 499
Interest expense (3,682) (3,928) (11,634) (11,038)
(3,475) (3,814) (11,254) (10,539)
Income (Loss) before Income Taxes (Benefit) and Equity in
Earnings (Losses) of Unconsolidated Affiliates (2,675) 7,974 13,933 25,974
Income Taxes (Benefit) (979) 2,791 4,540 9,091
Income (Loss) before Equity in Earnings (Losses) of
Unconsolidated Affiliates (1,696) 5,183 9,393 16,883
Equity in Earnings (Losses) of Unconsolidated Affiliates (547) 683 (749) (8,255)
Net Income (Loss) $ (2,243) $ 5,866 $ 8,644 $ 8,628
Income (Loss) Available to Common Shareholders:
Net Income (Loss) $ (2,963) $ 5,146 $ 6,484 $ 6,516
Earnings (Loss) Per Share - Fully Diluted:
Net Income (Loss) $ (.11) $ .19 $ .24 $ .24
Weighted Average Common Shares and
Common Share Equivalents Outstanding -
Fully Diluted 27,416 27,530 27,454 27,506
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
Page 3
<PAGE>
FORM 10-Q
Item 1.(continued)
<TABLE>
<S> <C> <C> <C>
CONE MILLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(amounts in thousands, except share and par value data)
September 29, October 1, December 31,
ASSETS 1996 1995 1995
(Unaudited) (Unaudited) (Note)
Current Assets:
Cash $ 2,742 $ 752 $ 336
Accounts receivable - trade, less provision for
doubtful accounts $3,000; $3,000; $3,200 63,413 81,868 60,955
Inventories:
Greige and finished goods 92,742 83,632 84,822
Work in process 11,451 14,296 14,786
Raw materials 9,434 18,874 29,274
Supplies and other 31,851 31,266 33,492
145,478 148,068 162,374
Other current assets 13,823 8,900 10,227
Total Current Assets 225,456 239,588 233,892
Investments in Unconsolidated Affiliates 35,853 37,429 37,680
Other Assets 41,178 38,957 45,540
Property, Plant and Equipment:
Land 18,208 19,618 19,615
Buildings 82,399 83,094 89,128
Machinery and equipment 313,409 313,999 322,361
Other 31,553 32,123 34,292
445,569 448,834 465,396
Less accumulated depreciation 200,817 193,045 198,188
Property, Plant and Equipment-Net 244,752 255,789 267,208
$ 547,239 $ 571,763 $ 584,320
Note: The balance sheet at December 31, 1995 has been derived from the audited financial statements
at that date.
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
Page 4
<PAGE>
FORM 10-Q
Item 1. (continued)
<TABLE>
<S> <C> <C> <C>
CONE MILLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(amounts in thousands, except share and par value data)
September 29, October 1, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995 1995
(Unaudited) (Unaudited) (Note)
Current Liabilities:
Notes payable $ 8,703 $ 10,031 $ 8,875
Current maturities of long-term debt 11,114 11,250 11,236
Accounts payable - trade 26,981 36,402 40,023
Sundry accounts payable and accrued expenses 41,786 41,123 64,800
Income taxes payable 2,227 1,289 -
Deferred income taxes 25,510 28,190 25,938
Total Current Liabilities 116,321 128,285 150,872
Long-Term Debt 150,742 161,822 161,782
Deferred Items:
Deferred income taxes 41,043 40,742 40,836
Other deferred items 10,187 6,605 8,705
51,230 47,347 49,541
Stockholders' Equity:
Class A Preferred Stock - $100 par value; authorized
1,500,000 shares; issued and outstanding 383,948
shares - Employee Stock Ownership Plan 38,395 38,395 38,395
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 27,336,333 shares;
1995, 27,380,409 shares 2,734 2,738 2,738
Capital in excess of par 70,687 71,090 71,090
Retained earnings 125,592 131,726 119,825
Currency translation adjustment (8,462) (9,640) (9,923)
Total Stockholders' Equity 228,946 234,309 222,125
$ 547,239 $ 571,763 $ 584,320
Note: The balance sheet at December 31, 1995 has been derived from the audited financial statements
at that date.
</TABLE>
See Notes to Consolidated Condensed 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
THIRTY-NINE WEEKS ENDED SEPTEMBER 29, 1996 AND OCTOBER 1, 1995
(amounts in thousands, except share data)
(Unaudited)
Class A Preferred
Stock Common Stock
Shares Amount Shares Amount
Balance, December 31, 1995 383,948 $ 38,395 27,380,409 $ 2,738
Net income - - - -
Currency translation adjustment -
Sale of stock of affiliate - - - -
Class A Preferred Stock -
Employee Stock Ownership Plan:
Cash dividends paid - - - -
Common Stock:
Options exercised - - 61,800 6
Purchase of common shares - - (105,876) (10)
Balance, September 29, 1996 383,948 $ 38,395 27,336,333 $ 2,734
Class A Preferred
Stock Common Stock
Shares Amount Shares Amount
Balance, January 1, 1995 383,948 $ 38,395 27,403,621 $ 2,740
Net income - - - -
Currency translation loss (net
of income tax benefit of $3,630) - - - -
Class A Preferred Stock -
Employee Stock Ownership Plan:
Cash dividends paid - - - -
Common Stock:
Options exercised - - 4,000 1
Purchase of common shares - - (27,212) (3)
Balance, October 1, 1995 383,948 $ 38,395 27,380,409 $ 2,738
</TABLE>
See Notes to Consolidated Financial Statements.
Page 6
<PAGE>
FORM 10-Q
Item 1. (continued)
<TABLE>
<S> <C> <C> <C>
CONE MILLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
THIRTY-NINE WEEKS ENDED SEPTEMBER 29, 1996 AND OCTOBER 1, 1995
(amounts in thousands, except share data)
(Unaudited)
Capital in Currency
Excess Retained Translation
of Par Earnings Adjustment
Balance, December 31, 1995 $ 71,090 $ 119,825 $ (9,923)
Net income - 8,644 -
Currency translation adjustment -
Sale of stock of affiliate - - 1,461
Class A Preferred Stock -
Employee Stock Ownership Plan:
Cash dividends paid - (2,877) -
Common Stock:
Options exercised 515 - -
Purchase of common shares (918) - -
Balance, September 29, 1996 $ 70,687 $ 125,592 $ (8,462)
Capital in Currency
Excess Retained Translation
of Par Earnings Adjustment
Balance, January 1, 1995 $ 71,354 $ 125,771 $ (1,380)
Net income - 8,628 -
Currency translation loss (net
of income tax benefit of $3,630) - - (8,260)
Class A Preferred Stock -
Employee Stock Ownership Plan:
Cash dividends paid - (2,673) -
Common Stock:
Options exercised 25 - -
Purchase of common shares (289) - -
Balance, October 1, 1995 $ 71,090 $ 131,726 $ (9,640)
</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 CONDENSED STATEMENTS OF CASH FLOWS
(amounts in thousands)
Thirty-Nine Thirty-Nine
Weeks Ended Weeks Ended
Sept. 29, 1996 Oct. 1, 1995
(Unaudited) (Unaudited)
Cash Flows Provided by Operating Activities $ 14,921 $ 15,114
Cash Flows from Investing Activities:
Investments in unconsolidated affiliates - (19,650)
Proceeds from sale of division (a) 42,228 -
Capital expenditures (21,367) (41,092)
Other 3,405 3,431
Net cash provided by (used in) investing activities 24,266 (57,311)
Cash Flows from Financing Activities:
Decrease in checks issued in excess of deposits (21,829) (1,712)
Principal payments - long-term debt (11,496) (97,245)
Proceeds from long-term debt borrowings - 48,000
Proceeds from debentures issued - 99,831
Other (3,456) (7,083)
Net cash (used in) provided by financing activities (36,781) 41,791
Net increase (decrease) in cash 2,406 (406)
Cash at Beginning of Period 336 1,158
Cash at End of Period $ 2,742 $ 752
(a)Divestiture:
Inventories $ 14,926
Property, plant and equipment 21,516
Other 1,300
Gain on sale 4,486
Proceeds from sale $ 42,228
Supplemental Disclosures of Additional Cash Flow Information:
Cash payments for:
Interest, net of interest capitalized $ 15,369 $ 12,455
Income taxes, net of refunds $ 4,929 $ 4,245
Supplemental Schedule of Noncash Investing and Financing Activities:
Receivable recorded from sale of division $ 2,000 $ -
Purchase of outstanding capital stock - common,
through incurrence of accounts payable $ 303 $ -
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
Page 7
<PAGE>
FORM 10-Q
Item 1. (continued)
CONE MILLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 29, 1996
Note 1. Basis of Financial Statement Preparation
The Cone Mills Corporation (the "Company") consolidated
condensed financial statements for September 29, 1996 and
October 1, 1995 are unaudited, but in the opinion of
management reflect all adjustments necessary to present
fairly the consolidated condensed balance sheets of Cone
Mills Corporation and Subsidiaries at September 29, 1996,
October 1, 1995, and December 31, 1995 and the related
consolidated condensed statements of income for the
respective thirteen and thirty-nine weeks ended September
29, 1996 and October 1, 1995, and stockholders' equity
and cash flows for the thirty-nine 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
1995.
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 September 29, 1996 and October 1,
1995 and related consolidated condensed statements of
income for the thirteen and thirty-nine 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 CONDENSED 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 has been
extended to June 1997. Accounts receivable is shown net
of $42 million sold at September 29, 1996, net of $32
million sold at October 1, 1995, and net of $40 million
sold at December 31, 1995. As a result of the sale of the
interest in these receivables, cash flows provided by
operating activities include an increase of $2 million
and a decrease of $18 million for the thirty-nine weeks
ended September 29, 1996 and October 1, 1995,
respectively.
Note 3. Investments in Unconsolidated Affiliates
Investments in unconsolidated affiliated companies are
accounted for by the equity or cost method depending upon
ownership and the Company's ability to exert influence.
In 1995, the Company accounted for the results of CIPSA
by the equity method. Based upon a reduction in
ownership to 18% and certain other factors, the Company
will account for its investment in CIPSA by the cost
method in 1996 and future periods.
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. The peso continued to devalue versus the
U.S. dollar in the first quarter of 1995 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"). Primarily due to the devaluation of the peso,
the Company recognized an $8.3 million loss as its pro
rata share of these losses in its thirty-nine weeks 1995
income statement.
Page 9
<PAGE>
FORM 10-Q
Item 1. (continued)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 4. Long-Term Debt
<TABLE>
<S> <C> <C> <C>
September 29, 1996
Current
Total Maturity Long-Term
(amounts in thousands)
8% Senior Note $ 64,285 $ 10,714 $ 53,571
8-1/8% Debentures 96,243 - 96,243
Capital Lease Obligation 1,206 362 844
Other 122 38 84
Total $161,856 $ 11,114 $150,742
October 1, 1995
Current
Total Maturity Long-Term
(amounts in thousands)
8% Senior Note $ 75,000 $ 10,714 $ 64,286
8-1/8% Debentures 95,795 - 95,795
Capital Lease Obligation 1,533 327 1,206
Industrial Revenue Bonds 589 174 415
Other 155 35 120
Total $173,072 $ 11,250 $161,822
</TABLE>
Note 5. Class A Preferred Stock
The dividend rate for Class A Preferred Stock is 7.50%,
which is payable March 31, 1997.
Page 10
<PAGE>
FORM 10-Q
Item 1. (continued)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 6. Stock Option Plans
<TABLE>
<S> <C> <C> <C> <C>
1995 Exercise 1996 Exercise
Number Price Number Price
Of Weighted Of Weighted
Options Average Options Average
Outstanding -
beginning
of year 1,086,000 $ 12.66 1,047,000 $ 12.55
Granted 7,000 11.63 6,000 12.00
Exercised (4,000) 6.50 (61,800) 6.46
Forfeited (42,000) 15.63 (69,000) 13.94
Outstanding -
end of period 1,047,000 $ 12.56 922,200 $ 12.85
Exercisable at
end of period 512,050 612,200
</TABLE>
The following table summarizes information about stock options
outstanding at September 29, 1996:
<TABLE>
<S> <C> <C> <C>
Number Number
Exercise Outstanding Exercisable Expiration
Price at 9/29/96 at 9/29/96 Date
$ 5.250 76,200 76,200 June, 1999
$ 6.500 36,000 36,000 February, 2002
$11.625 6,000 6,000 May, 2002
$12.000 379,000 151,600 November, 2004
$12.000 6,000 6,000 May, 2003
$12.875 6,000 6,000 May, 2001
$15.625 413,000 330,400 February, 2003
922,200 612,200
</TABLE>
Page 11
<PAGE>
FORM 10-Q
Item 1. (continued)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 7. Earnings (Loss) Per Share
<TABLE>
<S> <C> <C> <C> <C>
Thirteen Thirteen
Weeks Ended Weeks Ended
September 29, 1996 October 1, 1995
Fully Fully
Primary Diluted Primary Diluted
(amounts in thousands,
except per share data)
Income (loss) from
continuing operations $ (2,243) $(2,243) $ 5,866 $ 5,866
Less: Class A Preferred
dividends ( 720) ( 720) ( 720) ( 720)
Adjusted net income (loss) $ (2,963) $(2,963) $ 5,146 $ 5,146
Weighted average common
shares outstanding 27,416 27,416 27,380 27,380
Common share equivalents
from assumed exercise
of outstanding options,
less shares assumed
repurchased - - 150 150
Weighted average common
shares and common share
equivalents outstanding 27,416 27,416 27,530 27,530
Earnings (loss) per common
share and common share
equivalent $ ( .11) $ ( .11) $ .19 $ .19
Page 12
<PAGE>
FORM 10-Q
Item 1. (continued)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 7. Earnings (Loss) Per Share (continued)
Thirty-nine Thirty-nine
Weeks Ended Weeks Ended
September 29,1996 October 1, 1995
Fully Fully
Primary Diluted Primary Diluted
(amounts in thousands,
except per share data)
Income from
continuing operations $ 8,644 $ 8,644 $ 8,628 $ 8,628
Less: Class A Preferred
dividends (2,160) (2,160) (2,112) (2,112)
Adjusted net income $ 6,484 $ 6,484 $ 6,516 $ 6,516
Weighted average common
shares outstanding 27,401 27,401 27,380 27,380
Common share equivalents
from assumed exercise
of outstanding options,
less shares assumed
repurchased 53 53 101 126
Weighted average common
shares and common share
equivalents outstanding 27,454 27,454 27,481 27,506
Earnings per common
share and common share
equivalent $ .24 $ .24 $ .24 $ .24
</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 13
<PAGE>
FORM 10-Q
Item 1. (continued)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 8. Sale of Division
On January 22, 1996, the Company completed the sale of
its Olympic Products Division to British Vita PLC. The
Company sold all inventory and substantially all of the
property, plant and equipment of this division. Proceeds
of $42,228,000 had been realized at September 29, 1996.
Page 14
<PAGE>
FORM 10-Q
Item 2.
MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OPERATING RESULTS
Third Quarter Ended September 29, 1996 Compared with Third
Quarter Ended October 1, 1995.
U.S. consumer spending in apparel and home furnishings grew
modestly in the third quarter of 1996; however, manufacturers
were adversely affected by selective reductions in softgoods
inventories, which were disruptive to textile industry
operating schedules and prices. In addition, weak consumer
preference for printed home furnishings fabrics adversely
affected the decorative print business. In the third quarter
of 1996, the Company began to experience weaker demand in
selective value-added denim product lines.
Cone Mills had third quarter 1996 sales of $180.8 million,
down 21.9%, as compared with sales of $231.7 million for the
third quarter of 1995. After eliminating the sales of the
Olympic Products Division, which was sold in January 1996,
third quarter 1995 sales were $208.2 million. Third quarter
1996 sales were down 13.2% from the 1995 period excluding
Olympic. Decreased denim sales account for the lower 1996
amounts. Export sales were $44.1 million, or 24% of total
sales, as compared with $50.3 million, or 22% of sales, for
the third quarter of 1995.
The Company had a net loss of $2.2 million, or $.11 per share
after preferred dividends, for the third quarter of 1996,
including an after-tax charge of $.5 million from equity in
losses of unconsolidated Mexican affiliate. For comparison,
third quarter 1995 had net income of $5.9 million or $.19 per
share, including a $.7 million after-tax gain from
unconsolidated Mexican affiliates.
Gross profit for third quarter of 1996 (net sales less cost of
sales and depreciation) was 12.0% of sales, as compared with
14.6% for the previous year. This decrease was primarily the
result of lower volume and margins in denims.
Page 15
<PAGE>
FORM 10-Q
Item 2. (continued)
Business Segments. 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 (loss) information.
<TABLE>
<S> <C> <C> <C> <C>
Third Quarter
1996 1995
(Dollar amounts in millions)
NET SALES (1)
Apparel $ 154.2 85.3% $ 180.3 77.8%
Home Furnishings 26.6 14.7 51.4 22.2
Total $ 180.8 100.0% $ 231.7 100.0%
OPERATING INCOME (LOSS)(2)
Apparel $ 6.0 3.9% $ 12.4 6.9%
Home Furnishings(3) (4.0) (14.9) (1.2) (2.3)
(1) Net sales include Olympic's net sales of $23.5 million in
1995.
(2) Operating income (loss) excludes general corporate
expenses. Percentages reflect operating income (loss) as
a percentage of segment net sales.
(3) Operating income (loss) includes Olympic's operating loss
of $.2 million in 1995.
</TABLE>
Apparel Fabrics. Apparel fabric segment sales for the third
quarter of 1996 were $154.2 million, down 14.5% from 1995
amounts. Lower denim sales due to lower volume accounted
for the decrease. Third quarter 1996 operating margins for
the apparel segment were 3.9% of sales, as compared with
6.9% in 1995. Margin decreases were in all product lines
with declines in denim accounting for approximately two-
thirds of the change in margins as a percent of sales. The
cost per pound paid by the Company for cotton decreased
slightly as compared with 1995 amounts. Fabric prices on
average were up 4.7% as compared to 1995 primarily the
result of a mix shift in denims. Export sales, primarily
denims, were down 11.8%, as compared with the previous
year's amounts. The Company's denim manufacturing
operations were affected by the North American supply and
demand imbalance in basic denims and selective inventory
imbalances in value-added denims. Specialty Sportswear
operations continued to be affected by inventory imbalances
in shirting fabrics resulting in operating production
facilities at less than capacity.
Page 16
<PAGE>
FORM 10-Q
Item 2. (continued)
Home Furnishings. For the third quarter of 1996, home
furnishings segment sales were $26.6 million, down 4.8%
from 1995 excluding Olympic. Both the Cone Finishing and
Cone Decorative Fabrics Divisions had lower sales volume in
1996 resulting from weak furniture markets and customer
preference for fabrics other than prints. The home
furnishings segment, excluding Olympic, had an operating
loss of $4.0 million compared with a loss of $1.0 million
for the 1995 period. The loss was primarily the result of
lower sales volume, resulting in operating levels
substantially less than capacity, and actions taken to
reposition the Cone Decorative Fabrics print lines. Cone
Jacquards incurred expected marginal start-up operating
losses.
Total Company selling and administrative expenses were $20.7
million, as compared with $22.1 million for the third quarter
of 1995. Selling and administrative expense increased to 11.4%
of 1996 sales as compared with 9.5% for the previous year
because of a decline in sales arising primarily from the sale
of Olympic and lower than expected sales in remaining
operations. Even though progress is being made on reducing
administrative costs, the current infrastructure is matched to
higher levels of business activity and strategic growth
initiatives. Interest expense was $3.7 million in the period,
down slightly from $3.9 million in the 1995 period.
Income taxes (benefit) as a percent of the taxable income
(loss) was 36.6% for the third quarter of 1996 compared with
35.0% for the 1995 period. Both periods reflect tax benefits
resulting from operation of the Company's foreign sales
corporation.
For the remainder of 1996, management expects further
deterioration in operating results as operating schedules are
curtailed to bring denim and specialty sportswear inventories
into balance, and because of continued weak decorative print
markets.
Nine Months Ended September 29, 1996 Compared with Nine Months
Ended October 1, 1995.
The Company experienced good demand for value-added denim
apparel fabrics and weak markets for specialty sportswear and
home furnishings fabrics in the first half of 1996. However,
Page 17
<PAGE>
FORM 10-Q
Item 2. (continued)
in the third quarter of 1996, the Company began to experience
weaker demand in selective value-added denim product lines
resulting from inventory adjustments in the softgoods
pipeline.
For the 1996 period, net sales were $588.3 million as compared
with $690.9 million for the first nine months of 1995.
Excluding the sales of Olympic, sales were $583.5 million and
$620.1 million respectively. Export sales, primarily denims,
accounted for 25% of sales in 1996 compared with 19% for 1995.
Net income for nine months 1996 was $8.6 million, or $.24 per
share after preferred dividends, including an after-tax gain
on the sale of Olympic of $2.8 million or $.10 per share. Net
income for the first nine months of 1995 was $8.6 million, or
$.24 per share including an after-tax charge of $8.3 million,
from equity in losses of unconsolidated Mexican affiliates
related primarily to peso devaluations.
Gross profit for first nine months of 1996 (net sales less
cost of sales and depreciation) was 14.4% of sales, as
compared with 14.7% for the previous year.
Business Segments. 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 (loss) information.
<TABLE>
<S> <C> <C> <C> <C>
First Nine Months
1996 1995
(Dollar amounts in millions)
NET SALES (1)
Apparel $500.8 85.1% $528.7 76.5%
Home Furnishings 87.5 14.9 162.2 23.5
Total $588.3 100.0% $690.9 100.0%
OPERATING INCOME (LOSS)(2)
Apparel $ 32.1 6.4% $ 32.8 6.2%
Home Furnishings(3) (3.6) (4.1) 4.2 2.6
</TABLE>
(1) Net sales include Olympic's net sales of $4.8 million and
$70.8 million in 1996 and 1995, respectively.
(2) Operating income (loss) excludes general corporate
expenses. Percentages reflect operating income (loss) as
a percentage of segment net sales.
Page 18
<PAGE>
FORM 10-Q
Item 2. (continued)
(3) Operating income (loss) includes the gain on the disposal
of Olympic of $4.5 million in 1996 and Olympic operating
income of $.1 million in 1995.
Apparel Fabrics. Apparel fabric segment sales for the first
nine months of 1996 were $500.8 million, down 5.3% compared
with sales of $528.7 million for nine months 1995. Denim
sales for the nine month periods were essentially flat, a
result of price increases and improved mix which were
offset by lower volume. In addition, the Company
experienced significantly lower specialty sportswear sales.
Nine months 1996 operating margins for the apparel segment
were 6.4% of sales as compared with 6.2% in 1995. Cotton
costs increased marginally from 1995 amounts but were
offset by price increases. Improved denim margins were
partially offset by lower operating results in specialty
sportswear fabrics product lines. Export sales, primarily
denims, were up 15.5% compared with the previous year
amounts.
Home Furnishings. Excluding Olympic, for the first nine
months of 1996 home furnishings segment sales were $82.7
million, down 9.4% from 1995. Both the Cone Finishing and
Cone Decorative Fabrics Divisions had lower sales in 1996
resulting from weak furniture markets and customer
preference for fabrics other than prints. The home
furnishings segment, excluding Olympic, had an operating
loss of $8.1 million compared with income of $4.1 million
for the 1995 period. The loss was primarily the result of
the lower sales volume and operating at levels
substantially less than capacity.
Total Company selling and administrative expenses were down
slightly to $64.2 million as compared with $64.9 million, but
increased from 9.4% of sales to 10.9% of sales for the most
recent period as discussed above.
Interest expense for the first nine months of 1996 was up $.6
million as compared with the 1995 period.
Income taxes as a percent of taxable income were 32.6% for the
first nine months of 1996 compared with 35.0% for the first
nine months of 1995. Both periods reflect tax benefits
resulting from operation of the Company's foreign sales
corporation.
Page 19
<PAGE>
FORM 10-Q
Item 2. (continued)
Liquidity and Capital Resources
The Company's principal long-term capital components consist
of $64.3 million outstanding under a Note Agreement with The
Prudential Insurance Company of America (the "Term Loan"), its
8 1/8% Debentures issued on March 15, 1995 and due March 15,
2005 (the "Debentures"), 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 September 29, 1996, the
Company had funds available of $88.0 million under its
Revolving Credit Facility and Receivables Purchase Agreement.
For the first nine months of 1996, the Company generated $32.6
million from earnings before depreciation, amortization and
unconsolidated Mexican affiliate results, as compared with
$40.8 million for the first nine months of 1995. For the 1996
period, the Company increased its investments in working
capital which resulted in net cash provided by operations of
$14.9 million. Additional uses of cash during the first nine
months of 1996 included capital spending of $21.4 million and
the preferred stock dividend of $2.9 million. During the first
quarter of 1996, the Company sold Olympic which provided in
excess of $50 million of cash proceeds including the
collection of accounts receivable.
The Company believes that the proceeds from the sale of the
Olympic Products Division, together with Cone's internally
generated operating funds and funds available under its
existing credit facilities, will be sufficient to meet its
working capital, capital spending, potential stock
repurchases, and financing needs for the foreseeable future.
On September 29, 1996, the Company's long-term capital
structure consisted of $150.7 million of long-term debt and
$228.9 million of stockholders' equity. For comparison, at
October 1, 1995, the Company had $161.8 million of long-term
debt and $234.3 million of stockholders' equity. Long-term
debt (including current maturities of long-term debt) as a
Page 20
<PAGE>
FORM 10-Q
Item 2. (continued)
percentage of long-term debt and stockholders' equity was 41%
at the end of third quarter 1996 and 42% at October 1, 1995.
Accounts receivable on September 29, 1996, were $63.4 million,
down from $81.9 million at October 1, 1995. At the end of the
third quarter of 1996, the Company had sold $42 million of
accounts receivable, an increase of $10 million from the
amount sold at October 1, 1995. The decrease in accounts
receivable was primarily due to lower sales levels and the
additional amount sold under the receivables purchase
agreement.
Inventories on September 29, 1996, were $145.5 million, up
approximately $10.1 million from third quarter 1995 levels
when adjusted for the sale of Olympic inventories. The
Company's additional finished goods inventories were the
result of lower unit sales than planned.
Capital spending in 1996 was originally budgeted at $52
million with projects for new weaving machines, investments in
information systems and the expansion of the jacquard weaving
facility. For the first nine months of 1996 expenditures were
$21.4 million. The Board of Directors has approved a reduction
in the 1996 capital budget to $42 million. This reduction of
$10 million reflects the adoption of new weaving technology in
the Company's relooming program that will allow the Company to
achieve modernization results at lower levels of capital
investment.
Cone will redeploy capital from the reduction of the capital
spending budget and from the potential sale of non-core
businesses including its real estate operations, Cornwallis
Development Co., to support general corporate initiatives.
These initiatives include global expansion, reduction of debt
and potential common stock repurchases pursuant to its
existing stock repurchase program. As of November 1, 1996,
1,366,000 shares had been repurchased in open market
transactions pursuant to an authorized repurchase program of
2.5 million shares, with 877,200 repurchased since September
29, 1996.
The Company has agreements with Compania Industrial de Parras
S.A. ("CIPSA") to purchase up to an additional 33% of the
existing outstanding common stock of Parras Cone for an amount
of $20 million, the August 1995 book value, if CIPSA does not
meet certain financial obligations.
Page 21
<PAGE>
FORM 10-Q
Item 2. (continued)
Federal, state and local regulations relating to the workplace
and the discharge of materials into the environment continue
to change and, consequently, 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. The Company
has an active environmental committee which fosters protection
of the environment and compliance with laws.
The Company is a party to various legal claims and actions.
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 22
<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.
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
sought 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 23
<PAGE>
FORM 10-Q
Item 1. (continued)
The District Court held a hearing on July 24, 1995 to decide
on the merits Plaintiffs' lone remaining claim of unjust
enrichment, and in an order entered September 25, 1995, the
District Court dismissed that claim with prejudice. On
October 20, 1995, the Plaintiffs appealed to the Court of
Appeals from the April 19, 1995 and September 25, 1995 orders
of the District Court. Oral argument on Plaintiffs' appeal
was held in the Court of Appeals on October 31, 1996. Due to
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 the
probability is remote that this lawsuit, when finally
concluded, will have a material adverse affect on the
Company's financial condition or results of operations.
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 or results of operations.
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 24
<PAGE>
FORM 10-Q INDEX TO EXHIBITS
Exhibit Sequential
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 filed as Exhibit
2.1(e) to the Registrant's report on
Form 10-Q for the quarter ended
July 2, 1995.
Page 25
<PAGE>
FORM 10-Q INDEX TO EXHIBITS
Exhibit Sequential
No. Description Page No.
* 2.1(f) Amendment to Receivables Purchase
Agreement dated as of December 31,
1995, between the Registrant and
Delaware Funding Corporation,
filed as Exhibit 2.1(f) to the
Registrant's report on Form 10-K
for the year ended December 31, 1995.
* 2.1(g) Amendment to Receivables Purchase
Agreement and Letter Agreement
referred to therein dated as of
June 24, 1996, between the Registrant
and Delaware Funding Corporation filed
as Exhibit 2.1(g) to Registrant's report
on Form 10-K for the quarter ended
June 30, 1996.
2.1(h) Amendment to Receivables Purchase
Agreement dated as of June 30, 1996,
between the Registrant and Delaware
Funding Corporation. 37
2.1(i) Amendment to Receivables Purchase
Agreement dated as of August 26, 1996,
between the Registrant and Delaware
Funding Corporation. 40
2.1(j) Amendment to Receivables Purchase
Agreement dated as of September 29,
1996, between the Registrant and
Delaware Funding Corporation. 43
* 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, filed as Exhibit 2.2(a)
to Registrant's report on Form 10-Q for
the quarter ended July 4, 1993, with
exhibits herein numbered 2.2(b),(c),
(d), (f), (g), and (j) attached.
Page 26
<PAGE>
FORM 10-Q INDEX TO EXHIBITS
Exhibit Sequential
No. Description Page No.
* 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., filed as Exhibit 2.2(e)
to the Registrant's report on Form 10-Q
for the quarter ended July 2, 1995.
* 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.
* 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 the Registrant's report on Form
10-Q for the quarter ended July 4, 1993.
Page 27
<PAGE>
FORM 10-Q INDEX TO EXHIBITS
Exhibit Sequential
No. Description Page No.
* 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 filed as Exhibit 2.2(h) to
the Registrant's report on Form 10-Q
for the quarter ended July 2, 1995.
* 2.2(i) Guaranty Agreement dated as of June 15,
1995, between Cone Mills Corporation
and Morgan Guaranty Trust Company of
New York filed as Exhibit 2.2(I) to
the Registrant's report on Form 10-Q
for the quarter ended July 2, 1995.
* 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.
* 2.2(k) Call Option dated September 25, 1995,
between Registrant and SMM Trust, 1995
- M, a Delaware business trust, filed
as Exhibit 2.2(k) to the Registrant's
report on Form 10-Q for the quarter
ended October 1, 1995.
* 2.2(l) Put Option dated September 25, 1995,
between Registrant and SMM Trust, 1995
- M, a Delaware business trust, filed
as Exhibit 2.2(l) to the Registrant's
report on Form 10-Q for the quarter
ended October 1, 1995.
* 2.2(m) Letter Agreement dated January 11, 1996
among Registrant, Rodolfo Garcia Muriel,
and Compania Industrial de Parras,
S.A. de C.V., filed as Exhibit 2.2(m) to
the Registrant's report on Form 10-K
for the year ended December 31, 1995.
Page 28
<PAGE>
FORM 10-Q INDEX TO EXHIBITS
Exhibit Sequential
No. Description Page No.
* 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.
* 2.4 Olympic Division Acquisition Agreement
by and among Vitafoam Incorporated,
British Vita PLC, and Registrant
dated January 19, 1996 with related
Lease Agreement, Lease Agreement and
Option to Purchase, Sublease Agreement,
Services Agreement, License Agreement
And Hold Back Escrow Agreement, each
dated January 22, 1996. The Acquisition
Agreement and related agreements were
filed as Exhibit 2.4 to the
Registrant's report on Form 10-K for
the year ended December 31, 1995. The
following exhibits and schedules to
the Acquisition Agreement have been
omitted. The Registrant hereby
undertakes to furnish supplementally
a copy of such omitted exhibit or
schedule to the Commission upon
request.
Exhibits
Exhibit A1 Form of Buyer Lease
Exhibit A2 Form of Buyer Lease
Exhibit B Form of Holdback Escrow
Agreement
Exhibit C1 Facility 1
Exhibit C2 Facility 2
Exhibit C3 Facility 3
Exhibit C4 Facility 4
Exhibit C5 Facility 5
Exhibit C6 Facility 6
Exhibit D Form of Sublease Agreement
Exhibit E Form of Opinion of Buyer's
Counsel
Exhibit F Form of Opinion of Seller's
Counsel
Page 29
<PAGE>
FORM 10-Q INDEX TO EXHIBITS
Exhibit Sequential
No. Description Page No.
Exhibit G Form of Assumption Agreement
Exhibit H Form of Services Agreement
Exhibit I Inventory Valuation Principles
Exhibit J Form of License Agreement
Schedules
Schedule 1.1(a) Excluded Assets
Schedule 1.1(b) Tangible Fixed Assets
Schedule 2.8 Assigned Contracts
Schedule 2.10 Allocation of Purchase
Price
Schedule 4.3 Consents and
Authorizations
Schedule 4.7 Contracts by Category
Schedule 4.9 Litigation
Schedule 4.11 Tax Matters
Schedule 4.12 Licenses and Permits
Schedule 4.14 Tangible Personal
Property
Schedule 4.15 Employees and Wage Rates
Schedule 4.16 Insurance Policies
Schedule 4.17 Intellectual Property
Schedule 4.18 Licenses to Intellectual
Property; Third-party
Patents
Schedule 4.19 Purchases from One Party
Schedule 4.22 Real Property
Schedule 4.23 Business Names
Schedule 4.24 Environmental Matters
Schedule 9.4 Facility 5 Remediation Plan
* 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).
* 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.
Page 30
<PAGE>
FORM 10-Q INDEX TO EXHIBITS
Exhibit Sequential
No. Description Page No.
* 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 filed as Exhibit 4.3(e) to
the Registrant's report on Form 10-Q
for the quarter ended July 2, 1995.
* 4.3(f) Letter Agreement dated as of June 30,
1995, between the Registrant and
The Prudential Insurance Company
of America superseding Letter Agreement
filed as Exhibit 4.3(e) to the
Registrant's report on Form 10-Q
for the quarter ended July 2, 1995.
Page 31
<PAGE>
FORM 10-Q INDEX TO EXHIBITS
Exhibit Sequential
No. Description Page No.
* 4.3(g) Letter Agreement dated as of March 30,
1996, between the Registrant and The
Prudential Insurance Company of
America filed as Exhibit 4.3(g) to the
Registrant's report on Form 10-Q for
the quarter ended March 31, 1996.
* 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 filed as
Exhibit 4.4(b) to the Registrant's
report on Form 10-Q for the quarter
ended July 2, 1995.
* 4.4(c) Amendment No. 2 to Credit Agreement
dated as of December 31, 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, filed as
Exhibit 4.4(c) to the Registrant's
report on Form 10-K for year ended
December 31, 1995.
Page 32
<PAGE>
FORM 10-Q INDEX TO EXHIBITS
Exhibit Sequential
No. Description Page No.
4.4(d) Amendment No. 3 to Credit Agreement
dated as of June 30, 1996 to the
Amended and Restated Credit
Agreement dated as of November 18,
1994, among the Registrant, various
banks and Morgan Guaranty Trust
Company of New York, as Agent. 46
4.4 (e) Amendment No. 4 to Credit Agreement
dated as of September 29, 1996 to
the Amended and Restated Credit
Agreement dated as of November 18,
1994, among the Registrant, various
banks and Morgan Guaranty Trust
Company of New York, as Agent. 48
* 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.
* 4.8(a) First Amendment to the 401(k)
Program of Cone Mills Corporation
dated May 9, 1995, filed as
Exhibit 4.8(a) to the Registrant's
report on Form 10-K for year ended
December 31, 1995.
Page 33
<PAGE>
FORM 10-Q INDEX TO EXHIBITS
Exhibit Sequential
No. Description Page No.
* 4.8(b) Second Amendment to the 401(k)
Program of Cone Mills Corporation
dated December 5, 1995, filed as
Exhibit 4.8(b) to the Registrant's
report on Form 10-K for year ended
December 31, 1995.
* 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.
* 4.9(a) First Amendment to the Cone Mills
Corporation 1983 ESOP dated
May 9, 1995, filed as Exhibit 4.9(a)
to the Registrant's report on Form 10-K
for year ended December 31, 1995.
* 4.9(b) Second Amendment to the Cone Mills
Corporation 1983 ESOP dated
December 5, 1995, filed as
Exhibit 4.9(b) to the Registrant's
report on Form 10-K for year ended
December 31, 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.
Management contract or compensatory plan or arrangement
(Exhibits 10.1 - 10.2)
*10.1 Amended and Restated 1992 Stock Plan
filed as Exhibit 10.7(a) to
Registrant's report on Form 10-Q
for the quarter ended March 31, 1996.
Page 34
<PAGE>
FORM 10-Q INDEX TO EXHIBITS
Exhibit Sequential
No. Description Page No.
*10.2 1997 Senior Management Incentive
Compensation Plan filed as Exhibit 10.2
to Registrant's report on Form 10-Q
for the quarter ended March 31, 1996.
27 Financial Data Schedule 50
* Incorporated by reference to the statement or report
indicated.
Page 35
<PAGE>
FORM 10-Q
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 November 12, 1996 /s/ JOHN L. BAKANE
John L. Bakane
Executive Vice President and
Chief Financial Officer
Page 36
FORM 10-Q
Exhibit 2.1(h)
AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT
AMENDMENT dated as of June 30, 1996 (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 Interest Coverage Test contained in Section 6.02(j)(i) of
the Receivables Purchase Agreement;
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 condition
precedent specified in Article IV hereof, the Receivables
Purchase Agreement shall be amended as follows:
Section 6.02(j)(i) of the Receivables Purchase
Agreement is amended in its entirety to read as follows:
(j) (i) Interest Coverage Test. As of the last day
of (i) each fiscal quarter ended on June 30, 1996,
September 29, 1996 and December 29, 1996, the ratio of
EBIT to Consolidated Interest Expense for the period of
four consecutive fiscal quarters then ended will not be
less than 1.8:1 and (ii) each fiscal quarter ended either
prior to June 30, 1996 or after December 29, 1996, the
ratio of EBIT to Consolidated Interest Expense for the
period of four consecutive fiscal quarters then ended
will not be less than 2.3:1.
Page 37
<PAGE>
FORM 10-Q
Exhibit 2.1(h) (continued)
For the purpose of this Section 6.02(j)(i):
"EBIT" shall mean, for any period, the sum for the
Seller and its Consolidated Subsidiaries (determined on
a consolidated basis without duplication in accordance
with GAAP) of (a) Consolidated Net Income for such period
plus (b) the aggregate amount deducted in determining
Consolidated Net Income in respect of Consolidated
Interest Expense and income taxes for such period.
"Consolidated Interest Expense" shall mean, for any
period, for the Seller and its Consolidated Subsidiaries
(determined on a consolidated basis without duplication
in accordance with GAAP), the interest expense for such
period.
ARTICLE II. Representations.
The Seller hereby represents and warrants that,
after giving effect to this Amendment:
the representations and warranties set forth in
Section 5.01 of the Receivables Purchase Agreement are true on
the date hereof as if made on and as of the date hereof except
as such representations and warranties specifically relate to
an earlier date and as if each reference to the "Receivables
Purchase Agreement" in said Section 5.01 was deemed to be a
reference to the Receivables Purchase Agreement as amended by
this Amendment; and
(a) there shall exist no Termination Event or
Potential Termination Event under the Receivables Purchase
Agreement.
ARTICLE III. Status of the Receivables Purchase
Agreement.
Except as otherwise expressly provided herein, all
terms and conditions of the Receivables Purchase Agreement are
ratified and shall remain unchanged and continue in full force
and effect. Each reference in the Receivables Purchase
Agreement to such Agreement or any exhibit thereto shall mean
and be a reference to the Receivables Purchase Agreement and
the exhibits thereto as amended hereby.
Page 38
<PAGE>
FORM 10-Q
Exhibit 2.1(h) (continued)
ARTICLE IV. Conditions Precedent.
The amendments to the Receivables Purchase Agreement
set forth in Article I hereof shall become effective upon the
execution and delivery of this Amendment by each of the
parties hereto.
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.
DELAWARE FUNDING CORPORATION
by: Morgan Guaranty Trust Company
of New York,
as attorney-in-fact for
Delaware Funding Corporation
by: /s/ Richard A. Burke
Authorized Signatory
Associate
Title
CONE MILLS CORPORATION
by: /s/ David E. Bray
Authorized Signatory
Treasurer
Title
Page 39
FORM 10-Q
Exhibit 2.1(i)
AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT
AMENDMENT dated as of August 26, 1996 (this
"Amendment") of a Receivables Purchase Agreement dated as of
August 11, 1992, as amended from time to time (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 definition of "Concentration Factor" in the Receivables
Purchase Agreement with respect to Levi Strauss & Co;
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:
Clause (iii) of the definition of "Concentration
Factor" in Section 1.01 of the Receivables Purchase Agreement
is hereby amended in its entirety to read as follows:
(iii) (A) for Levi Strauss & Co. and its
subsidiaries, in the aggregate, 17% of an amount equal to
the Outstanding Balances of all Eligible Receivables and
(B) for VF Corporation and its subsidiaries, in the
aggregate, 7% of an amount equal to the Outstanding
Balances of all Eligible Receivables;
ARTICLE II. Representations.
The Seller hereby represents and warrants that,
after giving effect to this Amendment:
Page 40
<PAGE>
FORM 10-Q
Exhibit 2.1(i) (continued)
the representations and warranties set forth in
Section 5.01 of the Receivables Purchase Agreement are true on
the date hereof as if made on and as of the date hereof except
as such representations and warranties specifically relate to
an earlier date and as if each reference to the "Receivables
Purchase Agreement" in said Section 5.01 was deemed to be a
reference to the Receivables Purchase Agreement as amended by
this Amendment; and
(a) there shall exist no Termination Event or
Potential Termination Event under the Receivables Purchase
Agreement.
ARTICLE III. Status of the Receivables Purchase
Agreement.
Except as otherwise expressly provided herein, all
terms and conditions of the Receivables Purchase Agreement are
ratified and shall remain unchanged and continue in full force
and effect. Each reference in the Receivables Purchase
Agreement to such Agreement or any exhibit thereto shall mean
and be a reference to the Receivables Purchase Agreement and
the exhibits thereto as amended hereby.
ARTICLE IV. Condition Precedent.
The amendment to the Receivables Purchase Agreement
set forth in Article I hereof shall become effective upon the
execution and delivery of this Amendment by each of the
parties hereto.
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 41
<PAGE>
FORM 10-Q
Exhibit 2.1(i) (continued)
DELAWARE FUNDING CORPORATION
by: Morgan Guaranty Trust Company
of New York (as successor to
J.P. Morgan Delaware),
as attorney-in-fact
for Delaware Funding
Corporation
by: /s/ Robert S. Jones
Authorized Signatory
Vice President
Title
CONE MILLS CORPORATION
by: /s/ David E. Bray
Authorized Signatory
Treasurer
Title
Page 42
FORM 10-Q
Exhibit 2.1(j)
AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT
AMENDMENT dated as of September 29, 1996 (this
"Amendment") of a Receivables Purchase Agreement dated as of
August 11, 1992, as amended from time to time (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
certain provisions of the Receivables Purchase Agreement;
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 shall be amended as follows:
The definition of "Consolidated Net Income" in
Section 1.01 of the Receivables Purchase Agreement is hereby
amended in its entirety to read as follows:
"Consolidated Net Income" means, for any period, the
net income of the Seller and its Consolidated
Subsidiaries for such period, excluding non-cash equity
earnings or losses from unconsolidated foreign affiliates
and all other non-recurring items related to reserves or
losses for write-downs of inventory, accounts receivable,
fixed assets, and investment of assets outside of the
normal course of business.
Page 43
<PAGE>
FORM 10-Q
Exhibit 2.1(j) (continued)
The Interest Coverage Ratio negative covenant
(but not the definitions of "EBIT" or "Consolidated Interest
Expense") set forth in section 6.02(j)(i) of the Receivables
Purchase Agreement is hereby amended in its entirety to read
as follows:
(j)(i) Interest Coverage Ratio. As of the last day
of (i) the respective fiscal quarters ended on June 30, 1996,
September 29, 1996 and December 29, 1996 the ratio of EBIT to
Consolidated Interest Expense for the period of four
consecutive fiscal quarters then ended will not be less than
1.8:1, 1.4:1 and 1.0:1, respectively, and (ii) each fiscal
quarter ended either prior to June 30, 1996 or after December
29, 1996, the ratio of EBIT to Consolidated Interest Expense
for the period of four consecutive fiscal quarters then ended
will not be less than 2.3:1.
ARTICLE II. Representations.
The Seller hereby represents and warrants that,
after giving effect to this Amendment:
the representations and warranties set forth in
Section 5.01 of the Receivables Purchase Agreement are true on
the date hereof as if made on and as of the date hereof except
as such representations and warranties specifically relate to
an earlier date and as if each reference to the "Receivables
Purchase Agreement" in said Section 5.01 was deemed to be a
reference to the Receivables Purchase Agreement as amended by
this Amendment; and
there shall exist no Termination Event or Potential
Termination Event under the Receivables Purchase Agreement.
ARTICLE III. Status of the Receivables Purchase
Agreement.
Except as otherwise expressly provided herein, all
terms and conditions of the Receivables Purchase Agreement are
ratified and shall remain unchanged and continue in full force
and effect. Each reference in the Receivables Purchase
Agreement to such Agreement or any exhibit thereto shall mean
and be a reference to the Receivables Purchase Agreement and
the exhibits thereto as amended hereby.
Page 44
<PAGE>
FORM 10-Q
Exhibit 2.1(j) (continued)
ARTICLE IV. Condition Precedent.
The amendment to the Receivables Purchase Agreement
set forth in Article I hereof shall become effective on
September 30, 1996 upon the execution and delivery of this
Amendment by each of the parties hereto.
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.
DELAWARE FUNDING CORPORATION
by: Morgan Guaranty Trust Company
of New York (as successor to
J.P. Morgan Delaware),
as attorney-in-fact
for Delaware Funding
Corporation
by: /s/ Richard A. Burke
Authorized Signatory
Associate
Title
CONE MILLS CORPORATION
by: /s/ David E. Bray
Authorized Signatory
Treasurer
Title
Page 45
FORM 10-Q
Exhibit 4.4(d)
AMENDMENT NO. 3 TO CREDIT AGREEMENT
AMENDMENT dated as of June 30, 1996 to the Amended
and Restated Credit Agreement dated as of November 18, 1994
(as heretofore amended, 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 5.11 of the
Agreement. Section 5.11 of the Agreement is amended to read
in full as follows:
SECTION 5.11. Interest Coverage Ratio. As of
the last day of (i) each fiscal quarter ended on June 30,
1996, September 29, 1996 and December 29, 1996, the ratio
of EBIT to Consolidated Interest Expense for the period
of four consecutive fiscal quarters then ended will not
be less than 1.8:1 and (ii) each fiscal quarter ended
either prior to June 30, 1996 or after December 29, 1996,
the ratio of EBIT to Consolidated Interest Expense for
the period of four consecutive fiscal quarters then ended
will not be less than 2.3:1.
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, 1996 when
the Agent shall have received duly executed counterparts
hereof signed by the Borrower and the Required Banks.
Page 46
<PAGE>
FORM 10-Q
Exhibit 4.4(d) (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/Jeffrey Hwang
Title: Vice President
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By /s/S. C. Patrick McCormick
Title: Senior Vice President
NATIONSBANK, N.A.
By /s/E. Phifer Helms
Title: Senior Vice President
WACHOVIA BANK OF NORTH
CAROLINA, N.A.
By /s/W. Stanton Laight
Title: Senior Vice President
Page 47
FORM 10-Q
Exhibit 4.4(e)
AMENDMENT NO. 4 TO CREDIT AGREEMENT
AMENDMENT dated as of September 29, 1996 to the
Amended and Restated Credit Agreement dated as of November 18,
1994 (as heretofore amended, 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 Definition of Consolidated
Net Income. The definition of Consolidated Net Income in
Section 1.01 of the Agreement is hereby amended to read in
full as follows:
"Consolidated Net Income" means, for any
period, the net income of the Borrower and its
Consolidated Subsidiaries for such period, excluding non-
cash equity earnings or losses from unconsolidated
foreign affiliates and all other non-recurring items
related to reserves or losses for write-downs of
inventory, accounts receivable, fixed assets, and
investments outside of the ordinary course of business.
SECTION 3. Amendment of Section 5.11 of the
Agreement. Section 5.11 of the Agreement is amended to read
in full as follows:
SECTION 5.11. Interest Coverage Ratio. As of
the last day of (i) the respective fiscal quarters ended
on June 30, 1996, September 29, 1996 and December 29,
1996, the ratio of EBIT to Consolidated Interest Expense
for the period of four consecutive fiscal quarters then
ended will not be less than 1.8:1, 1.4:1 and 1.0:1,
respectively, and (ii) each fiscal quarter ended either
Page 48
<PAGE>
FORM 10-Q
Exhibit 4.4(e) (continued)
prior to June 30, 1996 or after December 29, 1996, the
ratio of EBIT to Consolidated Interest Expense for the
period of four consecutive fiscal quarters then ended
will not be less than 2.3:1.
SECTION 4. Governing Law. This Amendment shall be
governed by and construed in accordance with the laws of the
State of New York.
SECTION 5. 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 September 30, 1996
when the Agent shall have received duly executed counterparts
hereof signed by the Borrower and the Required Banks.
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/ Charles H. King
Title: Vice President
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By /s/ D. J. Norton
Title: Vice President
NATIONSBANK, N.A.
By /s/ Phifer Helms
Title: Senior Vice President
WACHOVIA BANK OF NORTH
CAROLINA, N.A.
By /s/ W. Stanton Laight
Title: Senior Vice President
Page 49
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Cone Mills
Corporation Consolidated Condensed Financial Statements dated September 29,
1996, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-END> SEP-29-1996
<CASH> 2,742
<SECURITIES> 0
<RECEIVABLES> 66,413
<ALLOWANCES> 3,000
<INVENTORY> 145,478
<CURRENT-ASSETS> 225,456
<PP&E> 445,569
<DEPRECIATION> 200,817
<TOTAL-ASSETS> 547,239
<CURRENT-LIABILITIES> 116,321
<BONDS> 150,742
0
38,395
<COMMON> 2,734
<OTHER-SE> 187,817
<TOTAL-LIABILITY-AND-EQUITY> 547,239
<SALES> 588,250
<TOTAL-REVENUES> 588,250
<CGS> 503,348
<TOTAL-COSTS> 563,063
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,254
<INCOME-PRETAX> 13,184
<INCOME-TAX> 4,540
<INCOME-CONTINUING> 8,644
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,644
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
