CONE MILLS CORPORATION
3101 NORTH ELM STREET
P.O. BOX 26540
GREENSBORO, NC 27415-6540
CONE
June 23, 1999
McGladrey & Pullen, LLP
P.O. Box 2470
Greensboro, North Carolina 27402
We refer to our letter to you on May 20, 1999 relating to the financial
statements of the The 401(k) Program of Cone Mills Corporation and The 401(k)
Program (Hourly) of Cone Mills Corporation for the period ended December 31,
1998. For the purposes of Forms 11-K to be filed by Cone Mills Corporation, we
extend to this date and reaffirm all statements made as of the aforementioned
letter of May 20, 1999.
/s/ Gary L. Smith
Gary L. Smith
Executive Vice President and Controller
/s/ Delos R. DeCelle, Jr.
Delos R. DeCelle, Jr.
Manager, HRIS and Benefits Accounting
/ns
<PAGE>
CONE MILLS CORPORATION
3101 North Elm Street
Greensboro, NC 27408
June 23, 1999
VIA EDGAR
Securities and Exchange Commission
450 5th ST NW
Washington, D.C. 20001
RE: Cone Mills Corporation (the "Registrant") - Form 11K
Cone Mills Corporation Employee Equity Plan - Hourly/
The 401(k) Program (Hourly) of Cone Mills Corporation
Gentlemen:
On behalf of the Registrant and pursuant to Rule 15d of the Securities Exchange
Act of 1934. I hereby file the annual report on Form 11-K of Cone Mills
Corporation Employee Equity Plan - Hourly/The 401(k) Program
(Hourly) of Cone Mills Corporation.
These reports are being transmitted by EDGAR pursuant to General Instruction E
of Form 11-K and Rule 101(b)(3) of Regulation S-T.
If there are any questions or comments regarding the contents of the materials
in this transmission, please contact the undersigned, telephone 336-379-6568.
Sincerely,
CONE MILLS CORPORATION
/s/ Neil W. Koonce
Title: Vice President, General Counsel
and Secretary
Enclosures
c: Schell Bray Aycock Abel & Livingston, LLP (w/enclosures)
McGladrey & Pullen, LLP (w/enclosures)
New York Stock Exchange (w/enclosures)
<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996]
For the fiscal year ended December 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 1-3634
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
Cone Mills Corporation Employee Equity Plan - Hourly/
The 401(k) Program (Hourly) of Cone Mills Corporation
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office.
CONE MILLS CORPORATION
3101 North Elm Street
Greensboro, NC 27408
<PAGE>
THE 401(k) PROGRAM (HOURLY)
OF CONE MILLS CORPORATION
FINANCIAL REPORT
DECEMBER 31, 1998
<PAGE>
Contents
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Statement of net assets available for benefits with fund
information 2
Statement of changes in net assets available for benefits with
fund information 3
Notes to financial statements 4 - 6
<PAGE>
Independent Auditor's Report
To the Advisory Committee
The 401(k) Program (Hourly)
of Cone Mills Corporation
Greensboro, North Carolina
We have audited the accompanying statement of net assets available for benefits
of The 401(k) Program (Hourly) of Cone Mills Corporation (Plan #017) as of
December 31, 1998, and the related statement of changes in net assets available
for benefits for the period June 1, 1998 through December 31, 1998. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of The 401(k)
Program (Hourly) of Cone Mills Corporation as of December 31, 1998 and the
changes in net assets available for benefits for the period June 1, 1998 through
December 31, 1998 in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The Fund Information in the statements of net
assets available for benefits and changes in net assets available for benefits
is presented for purposes of additional analysis rather than to present the net
assets available and changes in net assets available of each fund. The Fund
Information has been subject to the auditing procedures applied in the audit of
the basic financial statements and in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
As discussed in Note 8 to the financial statements, the net assets of the Cone
Mills Corporation Employee Equity Plan Hourly ("EEP - Hourly") were merged into
the Plan on June 1, 1998. Immediately thereafter, the EEP - Hourly was
terminated with the Plan being the survivor.
/s/ McGLADREY & PULLEN, LLP
Greensboro, North Carolina
May 20, 1999
<PAGE>
THE 401(k) PROGRAM (HOURLY)
OF CONE MILLS CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies
Accounting principles and practices: The Plan's investments are held by The
Vanguard Group, Inc. ("Vanguard") in a trust fund. The accounting records with
respect to financial transactions are maintained by Vanguard. Vanguard invests
the participant's accounts, as elected by the participant, among nine investment
alternatives (See Note 2). Participants may change their investment options on a
daily basis. The financial statements of the Plan are presented under the
accrual method of accounting.
Note 2. Description of the Plan
The Plan is a defined contribution plan which became effective on January 1,
1994 under the name Supplemental Retirement Plan Hourly of Cone Mills
Corporation. On January 1, 1994, all hourly employees in the "Supplemental
Retirement Plan of Cone Mills Corporation" transferred their account balances to
this Plan. On June 1, 1998, the Plan assumed its current name in conjunction
with the change to Vanguard as Plan trustee and administrator.
Assets: Assets of the Plan are included with assets of "The
401(k) Program of Cone Mills Corporation" in a master trust.
Eligibility: Hourly employees who have attained age 21 and have
completed one year of service are eligible for the Plan.
Member contributions: Members may contribute from 2% to 15% of compensation on a
before-tax (Section 401(k)) basis.
Company contributions: Matching contributions are presently required each year
in an amount equal to 40% of each member's contributions not in excess of 6% of
his compensation. Additional matching contributions may be made at the
discretion of Cone Mills Corporation.
Benefits: The accumulated value of a member's individual account is paid after
retirement or other separation from service. Benefits are ordinarily paid in a
lump sum distribution in the year following the year of retirement or other
termination of employment; however, installment distributions may be made at the
election of the participant.
Member accounts: Individual accounts are maintained for each participant which
record the accumulated value of company contributions allocated to such
participant, the participant's contributions and investment earnings thereon.
Participants receive statements showing the value of their accounts quarterly.
Valuation of assets: The Plan's investments are stated at fair value. Shares of
registered investment companies are valued at quoted market prices which
represent the net asset value of shares held by the Plan at year-end. Units of
the Retirement Savings Trust are valued at net asset value at year-end. The
Company stock fund is valued at its year-end unit closing price (comprised of
year-end market price plus uninvested cash portion.) Participant loans are
valued at cost which approximates fair value.
Vesting: All members' accounts are 100% vested.
<PAGE>
Note 2. Description of the Plan (continued)
Investment alternatives: Each member has the following nine investment
alternatives:
Vanguard 500 Index Fund - Primarily invested in all of the 500 stocks that
make up the unmanaged Standard & Poor's 500 Composite Stock Price Index.
Vanguard International Growth Fund - Primarily invested in stocks of
high-quality, seasoned companies based outside the United States.
Vanguard LifeStrategy Moderate Growth Fund - Primarily invested in a domestic
stock fund, an international stock fund, a bond fund, and an asset allocation
fund.
Vanguard Small-Cap Index Fund - Primarily invested in a sample of small stocks
in the Russell 2000 Index, an unmanaged index of smaller companies.
Vanguard Total Bond Market Index Fund - Primarily invested in a
sample of bonds in the unmanaged Lehman Brothers Aggregate Bond
Index.
Vanguard U.S. Growth Fund - Primarily invested in common stocks of various
public companies.
Vanguard Wellington Fund - Primarily invested in common and preferred stocks
and corporate and government bonds.
Vanguard Retirement Savings Trust - Primarily invested in fixed income
securities such as investment contracts issued by insurance companies and
commercial banks, interest-bearing accounts, certificates of deposit and money
market investments.
Cone Mills Stock Fund - Primarily invested in the common stock of Cone Mills
Corporation.
Estimates: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and the
accompanying notes. Actual results could differ from those estimates.
Note 3. Plan Termination
If the Plan is terminated, each member would be entitled to the total amount in
his account, payable under the terms of the Plan.
Note 4. Withdrawals and Loans From the Plan
Under the provisions of the Plan relating to financial hardship, a participant
may receive an in-service withdrawal of funds from his plan account. Loans from
the Plan are also permitted for up to 50% (maximum of $25,000) of the member's
account balance.
Note 5. Income Tax Status
The Plan is intended to meet the qualification requirements of Section 401(k)
and related provisions of the Internal Revenue Code. As long as the Plan meets
these requirements, the Plan will not be subject to income taxes and members
will not recognize taxable income for federal income tax purposes upon receipt
to their individual accounts of contributions, dividends, interest or investment
gains. Taxation of the amounts credited to a member's individual account is
deferred until the member receives a distribution. The Plan has received a
determination letter from the Internal Revenue Service affirming that the Plan
is a qualified trust exempt from income taxes.
<PAGE>
Note 6. Investments
The following table presents the cost and fair values of the Plan's investments
at December 31, 1998:
<TABLE>
<S> <C> <C>
Cost Fair Value
* Vanguard 500 Index Fund $ 126,007 $ 141,818
* Vanguard International Growth Fund 2,700 2,909
* Vanguard LifeStrategy Moderate Growth Fund 53,404 56,415
* Vanguard Small-Cap Index Fund 10,263 9,977
* Vanguard Total Bond Market Index Fund 12,505 12,429
* Vanguard U.S. Growth Fund 5,768,640 6,459,897
* Vanguard Wellington Fund 2,012,545 1,887,631
* Vanguard Retirement Savings Trust 5,363,358 5,363,358
* Cone Mills Stock Fund 3,793,750 2,270,943
* Participant Loans 1,161,718 1,161,718
$18,304,890 $17,367,095
</TABLE>
* Designates party-in-interest
Note 7. Reconciliation of Differences Between These Financial Statements
and the Financial Information Required on Form 5500
<TABLE>
<S> <C>
Net assets available for benefits as presented in these
financial statements $17,653,958
Adjustment of benefits payable (787,721)
Net assets available for benefits as presented in Form 5500 $16,866,237
</TABLE>
Note 8. Plan Merger
The Cone Mills Corporation Employee Equity Plan - Hourly ("EEP - Hourly") was
merged into the Plan on June 1, 1998. All of the EEP - Hourly's net assets were
transferred into the Plan at that date. Immediately thereafter, the EEP - Hourly
was terminated with the Plan being the survivor.
<PAGE>
CONE MILLS CORPORATION
EMPLOYEE EQUITY PLAN - HOURLY
FINANCIAL REPORT
JUNE 1, 1998
<PAGE>
Contents
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Statement of financial condition 2
Statement of income and changes in plan equity 3
Notes to financial statements 4 -6
<PAGE>
Independent Auditor's Report
To the Advisory Committee
Cone Mills Corporation
Employee Equity Plan -Hourly
Greensboro, North Carolina
We have audited the accompanying statements of financial condition of the Cone
Mills Corporation Employee Equity Plan Hourly as of June 1, 1998 and December
31, 1997, and the related statements of income and changes in plan equity for
the period January 1, 1998 through June 1, 1998 and each of the two years in the
period ended December 31, 1997. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial condition of the Cone Mills Corporation
Employee Equity Plan Hourly as of June 1, 1998 and December 31, 1997, and the
changes in plan equity for the period January 1, 1998 through June 1, 1998 and
each of the two years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles.
As discussed in Note 6 to the financial statements, the Plan's net assets were
merged into the Cone Mills Corporation Supplemental Retirement Plan -Hourly
("SRP -Hourly") on June 1, 1998. Immediately thereafter, the Plan was terminated
with
the SRP -Hourly being the survivor.
/s/ McGLADREY & PULLEN, LLP
Greensboro, North Carolina
October 23, 1998
<PAGE>
CONE MILLS CORPORATION
EMPLOYEE EQUITY PLANT-HOURLY
STATEMENTS OF FINANCIAL CONDITION
JUNE 1, 1998 AND DECEMBER 31, 1997
<TABLE>
<S> <C> <C>
1998 1997
Assets:
Money market account, Crestar Bank $ - $ 54,525
Investment in Cone Mills Corporation common stock at
market value (shares 365,675)(cost $2,341,418) - 2,833,985
Accounts receivable, Cone Mills Corporation 21,115 70,565
Accounts receivable, participants 46,456 54,575
Accrued income receivable 143 225
Total assets 67,714 3,013,875
Liabilities:
Amounts due to Cone Mills Supplemental Retirement
Plan -Hourly 67,714 -
Total liabilities 67,714 -
Equity:
Amounts allocated to persons who have withdrawn from
participation in the earnings and operations of the
Plan - 230,056
Other - 2,783,819
Net assets available for benefits $ - $3,013,875
</TABLE>
See Notes to Financial Statements.
<PAGE>
CONE MILLS CORPORATION
EMPLOYEE EQUITY PLAN - HOURLY
STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY
PERIOD JANUARY 1, 1998 THROUGH JUNE 1, 1998 AND
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
Additions:
Interest income $ 1,647 $ 5,577 $ 10,513
Cone Mills Corporation contributions 116,929 315,579 390,753
Participants contributions 255,779 689,177 853,399
Gains realized on distributions of Cone
Mills Corporation common stock to plan
participants (market value 1997 $12,012;
1996 $10,913) (cost 1997 $9,615;
1996 $6,009) - 2,397 4,904
Gains realized on sales of Cone Mills
Corporation common stock (proceeds
1998 $49,458; 1997 $26,877;
1996 $177,092) (cost 1998 $37,561;
1997 $21,182; 1996 $98,140) 11,897 5,695 78,952
Transfers from Cone Mills Corporation
Employee Equity Plan 46,534 - 123,933
Unrealized appreciation of investments 690,854 - -
Total additions 1,123,640 1,018,425 1,462,454
Reductions:
Benefit payments 103,132 418,929 690,891
Transfers to Cone Mills Corporation
Supplemental Retirement Plan - Hourly 139,487 305,041 203,384
Transfers to Cone Mills Corporation
Employee Equity Plan - 29,420 -
Unrealized depreciation of investments - 74,859 1,201,406
Transfer to merge net assets into Cone
Mills Corporation Supplemental Retirement
Plan - Hourly (Note 6) 3,894,896 - -
Total reductions 4,137,515 828,249 2,095,681
Increase (decrease) in plan equity (3,013,875) 190,176 (633,227)
Plan equity:
Beginning 3,013,875 2,823,699 3,456,926
Ending $ - $3,013,875 $2,823,699
</TABLE>
See Notes to Financial Statements.
<PAGE>
CONE MILLS CORPORATION
EMPLOYEE EQUITY PLAN - HOURLY
NOTES TO FINANCIAL STATEMENTS
Note 1. Accounting Principles and Practices
The assets of the Plan were valued at market. Market for Cone Mills Corporation
common stock was based upon closing quotations on the New York Stock Exchange
Composite Tape. The accrual method of accounting was used. Cost for dispositions
of stock was determined by the average cost method.
Note 2. Description of the Plan
The Plan was a defined contribution plan which became effective on January 1,
1994. On January 1, 1994, all hourly employees in the "Employee Equity Plan"
transferred their account balances to this Plan. A general description of the
provisions of the Plan follows:
Assets: Assets of the Plan were included with assets of the "Employee Equity
Plan" in a master trust ("Plans"). Assets were invested primarily in Cone Mills
Corporation common stock. A portion of the assets were held in an Other
Investments Fund which holds short-term cash or money market investments. The
portion held in the Other Investments Fund was used for cash distributions to
participants and to enable the Plans to purchase additional Cone Mills
Corporation common stock. Members with account balances less than $5,000 were
allowed to make a one-time transfer of their account balances to the Cone Mills
Corporation Supplemental Retirement Plans. Also, members who had attained 60
years of age as of the last day of the prior plan year, were allowed to transfer
in two annual installments their account balances in these Plans to the Cone
Mills Corporation Supplemental Retirement Plans. Other members were allowed to
transfer their account balances to the Cone Mills Corporation Supplemental
Retirement Plans over a four-year period. Otherwise, members of the Plans were
not entitled to select the manner in which their individual accounts were
invested.
Market risk: The Plan invested primarily in Cone Mills Corporation common stock
("Cone stock"). Cone stock is traded on the New York Stock Exchange, and
therefore its value is subject to the effects of fluctuations in overall market
performance. The Plan was potentially subject to heightened levels of market
risk attributable to its investment concentration.
Eligibility: Hourly employees who had attained age 21 were
eligible after completing one year of service.
Member contributions: Members were allowed to contribute from 2% to 15% of
compensation on a before-tax (Section 401(k)) basis.
Company contributions: Matching contributions were required each period in an
amount equal to 50% of each member's contribution not in excess of 6% of his
compensation. Additional matching contributions could have been made at the
<PAGE>
discretion of Cone Mills Corporation.
Benefits: The accumulated value of a member's individual account was paid after
retirement or other separation from service. Distributions from the Plan must
have been paid in cash, except that the receiving member was allowed to receive
his distribution in the form of qualifying employer securities unless such a
distribution was restricted according to the Company's bylaws and articles of
incorporation. The valuation of Cone Mills Corporation common stock used for
cash distributions was the closing price of such stock as reported on the
sixtieth day following the applicable valuation date.
Member accounts: Individual accounts were maintained for each plan participant
which recorded the accumulated value of Company contributions allocated to such
participant, the participant's contributions and investment earnings thereon.
Vesting: All members' accounts were 100% vested.
Estimates: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Note 3. Unrealized Appreciation of Investments
The unrealized appreciation of investments as of June 1, 1998,
(immediately prior to transfer) December 31, 1997, and 1996 is
as follows:
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
$ 1,209,982 $ 492,567 $522,799
</TABLE>
Note 4. Federal Income Taxes
The Plan was intended to meet the qualification requirements of Sections 401(a)
and 401(k) and related provisions of the Internal Revenue Code. As long as the
Plan met these requirements, the Plan was not subject to income taxes and
members would not recognize taxable income for federal income tax purposes upon
receipt to their individual accounts of contributions, dividends, interest or
investment gains. Taxation of the amounts credited to a member's individual
account was deferred until the member received a distribution. A favorable
determination letter had been obtained as of June 1, 1998.
<PAGE>
Note 5. Reconciliation of Differences Between These Financial Statements
and the Financial Information Required on Form 5500
<TABLE>
<S> <C> <C>
June 1, December 31,
1998 1997
Plan equity as presented in these financial
statements $ - $ 3,013,875
Adjustment of benefits payable - (230,056)
Plan equity as presented in Form 5500 $ - $ 2,783,819
Net increase (decrease) in plan equity as presented
in these financial statements $(3,013,875) $ 190,176
Adjustment of benefits paid 230,056 (45,043)
Net increase (decrease) in plan equity as presented
in Form 5500 $(2,783,819) $ 145,133
</TABLE>
Note 6. Plan Merger and Termination
The Plan was merged into the Cone Mills Corporation Supplemental Retirement Plan
- -Hourly ("SRP - Hourly") on June 1, 1998. All of the Plan's net assets were
transferred into the SRP -Hourly at that date. Immediately thereafter, the Plan
was terminated with the SRP - Hourly being the survivor.
<PAGE>
The 401(k) Program (Hourly) of Cone Mills Corporation
Statement of Net Assets Available for Benefits
With Fund Information
December 31, 1998
<TABLE>
<S> <C> <C> <C> <C> <C>
Vanguard Vanguard Vanguard
Vanguard International LifeStrategy Small-Cap Total Bond
500 Index Growth Moderate Index Market Index
Fund Fund Growth Fund Fund Fund
========================================================================
Assets:
Investments, at fair value,
trust funds (Note 6) $ 141,818 $ 2,909 $ 56,415 $ 9,977 $ 12,429
-----------------------------------------------------------------------
Receivables:
Employer contributions 1,654 190 381 125 262
Employee contributions 4,683 537 1,079 356 742
-----------------------------------------------------------------------
6,337 727 1,460 481 1,004
-----------------------------------------------------------------------
Total assets $ 148,155 $ 3,636 $ 57,875 $ 10,458 $ 13,433
=======================================================================
Net Assets Available for Benefits:
Amounts allocated to persons
who have withdrawn from
participation in the earnings
and operations of the Plan $ 25,614 $ -- $ -- $ 166 $ --
Other 122,541 3,636 57,875 10,292 13,433
-----------------------------------------------------------------------
$ 148,155 $ 3,636 $ 57,875 $ 10,458 $ 13,433
=======================================================================
Vanguard
Vanguard Vanguard Retirement
US Growth Wellington Savings Cone Mills Participant
Fund Fund Trust Stock Fund Loans Total
===================================================================================
Assets:
Investments, at fair value,
trust funds (Note 6) $ 6,459,897 $ 1,887,631 $ 5,363,358 $ 2,270,943 $ 1,161,718 $ 17,367,095
----------------------------------------------------------------------------------
Receivables:
Employer contributions 24,612 8,652 24,786 14,193 -- 74,855
Employee contributions 69,707 24,506 70,199 40,199 -- 212,008
----------------------------------------------------------------------------------
94,319 33,158 94,985 54,392 -- 286,863
----------------------------------------------------------------------------------
Total assets $ 6,554,216 $ 1,920,789 $ 5,458,343 $ 2,325,335 $ 1,161,718 $ 17,653,958
==================================================================================
Net Assets Available for Benefits:
Amounts allocated to persons
who have withdrawn from
participation in the earnings
and operations of the Plan $ 239,340 $ 114,608 $ 242,836 $ 159,554 $ 5,603 $ 787,721
Other 6,314,876 1,806,181 5,215,507 2,165,781 1,156,115 16,866,237
----------------------------------------------------------------------------------
$ 6,554,216 $ 1,920,789 $ 5,458,343 $ 2,325,335 $ 1,161,718 $ 17,653,958
==================================================================================
</TABLE>
See Notes to Financial Statements.
<PAGE>
The 401(k) Program (Hourly) of Cone Mills Corporation
Statement of Changes in Net Assets Available for Benefits
With Fund Information
Period June 1, 1998 through December 31, 1998
<TABLE>
<S> <C> <C> <C> <C> <C>
Vanguard Vanguard Vanguard
Vanguard International LifeStrategy Small-Cap Total Bond
500 Index Growth Moderate Index Market Index
Fund Fund Growth Fund Fund Fund
=======================================================================
Investment income (loss):
Gain (loss) on sale of investments $ 1,242 $ 2 $ 570 $ -- $ 8
Unrealized appreciation (depreciation)
in fair value of investments 15,811 209 3,011 (286) (76)
Interest and dividends 1,302 58 1,829 731 167
----------------------------------------------------------------------
18,355 269 5,410 445 99
----------------------------------------------------------------------
Contributions:
Employer 7,283 551 1,476 319 829
Employee 19,304 2,281 4,382 1,094 2,498
Participant loan repayments 120 -- 140 -- 7
----------------------------------------------------------------------
26,707 2,832 5,998 1,413 3,334
----------------------------------------------------------------------
Transfers:
To merge net assets from Cone Mills
Corporation Employee Equity
Plan-Hourly (Note 8) -- -- -- -- --
With other funds 116,600 558 51,827 8,655 13,153
----------------------------------------------------------------------
-- -- -- --
116,600 558 51,827 8,655 13,153
----------------------------------------------------------------------
Total additions 161,662 3,659 63,235 10,513 16,586
----------------------------------------------------------------------
Benefits paid directly to participants 215 -- 27 -- 193
Participant loan withdrawals 12,934 -- 5,246 -- 2,932
Other deductions 358 23 87 55 28
----------------------------------------------------------------------
Total deductions 13,507 23 5,360 55 3,153
----------------------------------------------------------------------
Net increase (decrease) 148,155 3,636 57,875 10,458 13,433
Net assets available for benefits:
June 1, 1998 -- -- -- -- --
======================================================================
December 31, 1998 $ 148,155 $ 3,636 $ 57,875 $ 10,458 $ 13,433
======================================================================
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Vanguard
Vanguard Vanguard Retirement
US Growth Wellington Savings Cone Mills Participant
Fund Fund Trust Stock Fund Loans Total
==================================================================================
Investment income (loss):
Gain (loss) on sale of investments $ 5,799 $ (15,401) $ -- $ (416,368) $ -- $ (424,148)
Unrealized appreciation (depreciation)
in fair value of investments 691,257 (124,914) -- (1,134,431) -- (549,419)
Interest and dividends 426,075 211,953 189,122 -- 2,255 833,492
----------------------------------------------------------------------------------
1,123,131 71,638 189,122 (1,550,799) 2,255 (140,075)
----------------------------------------------------------------------------------
Contributions:
Employer 192,922 68,876 222,767 112,484 -- 607,507
Employee 630,080 215,057 652,803 309,091 -- 1,836,590
Participant loan repayments 5,984 2,369 7,270 2,413 (18,303) --
---------------------------------------------------------------------------------
828,986 286,302 882,840 423,988 (18,303) 2,444,097
---------------------------------------------------------------------------------
Transfers:
To merge net assets from Cone Mills
Corporation Employee Equity
Plan-Hourly (Note 8) -- -- -- 3,894,896 -- 3,894,896
With other funds (264,105) 90,232 40,762 (57,682) -- --
----------------------------------------------------------------------------------
-- -- -- -- --
(264,105) 90,232 40,762 3,837,214 -- 3,894,896
----------------------------------------------------------------------------------
Total additions 1,688,012 448,172 1,112,724 2,710,403 (16,048) 6,198,918
----------------------------------------------------------------------------------
Benefits paid directly to participants 453,402 170,398 609,339 255,257 5,986 1,494,817
Participant loan withdrawals 396,534 151,807 493,798 120,501 (1,183,752) --
Other deductions 11,707 4,922 20,322 9,310 -- 46,812
----------------------------------------------------------------------------------
Total deductions 861,643 327,127 1,123,459 385,068 (1,177,766) 1,541,629
----------------------------------------------------------------------------------
Net increase (decrease) 826,369 121,045 (10,735) 2,325,335 1,161,718 4,657,289
Net assets available for benefits:
June 1, 1998 5,727,847 1,799,744 5,469,078 -- -- 12,996,669
==================================================================================
December 31, 1998 $ 6,554,216 $ 1,920,789 $ 5,458,343 $ 2,325,335 $ 1,161,718 $17,653,958
==================================================================================
</TABLE>
See Notes to Financial Statements.
<PAGE>
Exhibit 23
McGLADREY & PULLEN, LLP
CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
CONSENT OF McGLADREY & PULLEN, LLP, INDEPENDENT AUDITOR
We hereby consent to the incorporation by reference in Cone Mills Corporation's
Registration Statements on Form S-8 (Nos. 33-31979; 33-51951; and 33-51953) of
our reports dated October 23, 1998 with respect to the Cone Mills Corporation
Employee Equity Plan - Hourly for the period ended June 1, 1998 and May 20, 1999
with respect to The 401(k) Program (Hourly) of Cone Mills Corporation for the
period ended December 31, 1998, such reports included in a Form 11-K.
/s/ McGLADREY & PULLEN, LLP
Greensboro, North Carolina
June 23, 1999
<PAGE>
CONE MILLS CORPORAITON
3101 NORTH ELM STREET
P.O. BOX 26540
GREENSBORO, NC 27415-6540
CONE
June 23, 1999
McGladrey & Pullen, LLP
P.O. Box 2470
Greensboro, North Carolina 27402
We refer to our letters to you on October 23, 1998 relating to the financial
statements of the Cone Mills Corporation Employee Equity Plan and the Cone Mills
Corporation Employee Equity Plan - Hourly for the periods ended June 1, 1998.
For the purposes of Forms 11-K to be filed by cone Mills Corporation, we extend
to this date and reaffirm all statements made as of the aforementioned letters
of October 23, 1998.
/s/ Anthony L. Furr
Anthony L. Furr
Executive Vice President
and Chief Financial Officer
/s/ Delos R. Decelle, Jr.
Delos R. Decelle, Jr.
Manager, HRIS and Benefits Accounting
/ns
<PAGE>
CONE MILLS CORPORATION
3101 North Elm Street
Greensboro, NC 27408
June 23, 1999
VIA EDGAR
Securities and Exchange Commission
450 5th ST NW
Washington, D.C. 20001
RE: Cone Mills Corporation (the "Registrant") - Form 11K
Cone Mills Corporation Employee Equity Plan/
The 401(k) Program of Cone Mills Corporation
Gentlemen:
On behalf of the Registrant and pursuant to Rule 15d of the Securities Exchange
Act of 1934. I hereby file the annual report on Form 11-K of Cone Mills
Corporation Employee Equity Plan/The 401(k) Program of Cone Mills
Corporation.
These reports are being transmitted by EDGAR pursuant to General Instruction E
of Form 11-K and Rule 101(b)(3) of Regulation S-T.
If there are any questions or comments regarding the contents of the materials
in this transmission, please contact the undersigned, telephone 336-379-6568.
Sincerely,
CONE MILLS CORPORATION
/s/ Neil W. Koonce
Title: Vice President, General Counsel
and Secretary
Enclosures
c: Schell Bray Aycock Abel & Livingston, LLP (w/enclosures)
McGladrey & Pullen, LLP (w/enclosures)
New York Stock Exchange (w/enclosures)
<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996]
For the fiscal year ended December 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 1-3634
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
Cone Mills Corporation Employee Equity Plan/
The 401(k) Program of Cone Mills Corporation
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office.
CONE MILLS CORPORATION
3101 North Elm Street
Greensboro, NC 27408
<PAGE>
THE 401(k) PROGRAM OF
CONE MILLS CORPORATION
EMPLOYEE EQUITY PLAN
FINANCIAL REPORT
DECEMBER 31, 1998
<PAGE>
Contents
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Statements of net assets available for benefits with fund
information 2
Statements of changes in net assets available for benefits
with fund information 3
Notes to financial statements 4 - 6
<PAGE>
Independent Auditor's Report
To the Advisory Committee
The 401(k) Program
of Cone Mills Corporation
Greensboro, North Carolina
We have audited the accompanying statement of net assets available for benefits
of The 401(k) Program of Cone Mills Corporation (Plan #003) as of December 31,
1998, and the related statement of changes in net assets available for benefits
for the period June 1, 1998 through December 31, 1998. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of The 401(k)
Program of Cone Mills Corporation as of December 31, 1998 and the changes in net
assets available for benefits for the period June 1, 1998 through December 31,
1998 in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The Fund Information in the statements of net
assets available for benefits and changes in net assets available for benefits
is presented for purposes of additional analysis rather than to present the net
assets available and changes in net assets available of each fund. The Fund
Information has been subject to the auditing procedures applied in the audit of
the basic financial statements and in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
As discussed in Note 8 to the financial statements, the net assets of the Cone
Mills Corporation Employee Equity Plan ("EEP") were merged into the Plan on June
1, 1998. Immediately thereafter, the EEP was terminated with the Plan being the
survivor.
/s/ McGLADREY & PULLEN, LLP
Greensboro, North Carolina
May 20, 1999
<PAGE>
THE 401(k) PROGRAM
OF CONE MILLS CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies
Accounting principles and practices: The Plan's investments are held by The
Vanguard Group, Inc. ("Vanguard") in a trust fund. The accounting records with
respect to financial transactions are maintained by Vanguard. Vanguard invests
the participant's accounts, as elected by the participant, among nine investment
alternatives (See Note 2). Participants may change their investment options on a
daily basis. The financial statements of the Plan are presented under the
accrual method of accounting.
Note 2. Description of the Plan
The Plan is a qualified, defined contribution plan which became effective
January 1, 1947 under the name of the Supplemental Retirement Plan of Cone Mills
Corporation ("SRP"). In 1992, the Plan was amended effective January 1, 1993, to
include hourly employees as members in the Plan and to cause other changes which
updated and improved the Plan. In 1993, the Plan was amended effective January
1, 1994, to allow members to contribute up to 15% of adjusted total compensation
on a before-tax (Section 401(k)) basis. The Supplemental Retirement Plan -Hourly
became effective as of January 1, 1994, at which time all hourly employees
transferred their account balances to this new plan. On June 1, 1998, the Plan
assumed its current name in conjunction with the change to Vanguard as Plan
trustee and administrator.
Assets: Assets of the Plan are included with assets of the "The
401(k) Program (Hourly) of Cone Mills Corporation" in a master
trust.
Eligibility: Salaried employees who have attained age 21 and
have completed one year of service are eligible for the Plan.
Member contributions: Members may contribute from 2% to 15% of compensation on a
before-tax (Section 401(k)) basis.
Company contributions: Matching contributions are presently required each year
in an amount equal to 40% of each member's contributions not in excess of 6% of
his compensation. Additional matching contributions may be made at the
discretion of Cone Mills Corporation.
Benefits: The accumulated value of a member's individual account is paid after
retirement or other separation from service. Benefits are ordinarily paid in a
lump-sum distribution in the year following the year of retirement or other
termination of employment; however, installment distributions may be made at the
election of the participant.
Member accounts: Individual accounts are maintained for each participant which
record the accumulated value of Company contributions allocated to such
participant, the participant's contributions and investment earnings thereon.
Participants receive statements showing the value of their accounts quarterly.
Valuation of assets: The Plan's investments are stated at fair value. Shares of
registered investment companies are valued at quoted market prices which
represent the net asset value of shares held by the Plan at year-end. Units of
the Retirement Savings Trust are valued at net asset value at year-end. The
Company stock fund is valued at its year-end unit closing price (comprised of
year-end market price plus uninvested cash portion.) Participant loans are
valued at cost which approximates fair value.
<PAGE>
Note 2. Description of the Plan (continued)
Vesting: All members' accounts are 100% vested.
Investment alternatives: Each member has the following nine investment
alternatives:
Vanguard 500 Index Fund -Primarily invested in all of the 500 stocks that make
up the unmanaged Standard & Poor's 500 Composite Stock Price Index.
Vanguard International Growth Fund -Primarily invested in stocks of
high-quality, seasoned companies based outside the United States.
Vanguard LifeStrategy Moderate Growth Fund -Primarily invested in a domestic
stock fund, an international stock fund, a bond fund, and an asset allocation
fund.
Vanguard Small-Cap Index Fund -Primarily invested in a sample of small stocks
in the Russell 2000 Index, an unmanaged index of smaller companies.
Vanguard Total Bond Market Index Fund -Primarily invested in a
sample of bonds in the unmanaged Lehman Brothers Aggregate Bond
Index.
Vanguard U.S. Growth Fund -Primarily invested in common stocks of various
public companies.
Vanguard Wellington Fund -Primarily invested in common and preferred stocks
and corporate and government bonds.
Vanguard Retirement Savings Trust -Primarily invested in fixed income
securities such as investment contracts issued by insurance companies and
commercial banks, interest-bearing accounts, certificates of deposit and money
market investments.
Cone Mills Stock Fund -Primarily invested in the common stock of Cone Mills
Corporation.
Estimates: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and the
accompanying notes. Actual results could differ from those estimates.
Note 3. Plan Termination
If the Plan is terminated, each member would be entitled to the total amount in
his account, payable under the terms of the Plan.
Note 4. Withdrawals and Loans From the Plan
Under the provisions of the Plan relating to financial hardship, a participant
may receive an in-service withdrawal of funds from his plan account. Loans from
the Plan are also permitted for up to 50% (maximum of $25,000) of the member's
account balance.
<PAGE>
Note 5. Income Tax Status
The Plan is intended to meet the qualification requirements of Section 401(k)
and related provisions of the Internal Revenue Code. As long as the Plan meets
these requirements, the Plan will not be subject to income taxes and members
will not recognize taxable income for federal income tax purposes upon receipt
to their individual accounts of contributions, dividends, interest or investment
gains. Taxation of the amounts credited to a member's individual account is
deferred until the member receives a distribution. The Plan has received a
determination letter from the Internal Revenue Service affirming that the Plan
is a qualified trust exempt from income taxes.
Note 6. Investments
The following table presents the cost and fair values of the Plan's investments
at December 31, 1998:
<TABLE>
<S> <C> <C>
Cost Fair Value
* Vanguard 500 Index Fund $ 533,569 $ 617,077
* Vanguard International Growth Fund 40,470 42,743
* Vanguard LifeStrategy Moderate Growth Fund 43,330 46,581
* Vanguard Small-Cap Index Fund 31,213 31,344
* Vanguard Total Bond Market Index Fund 848,432 855,041
* Vanguard U.S. Growth Fund 21,593,927 24,178,515
* Vanguard Wellington Fund 12,099,368 11,312,650
* Vanguard Retirement Savings Trust 8,105,570 8,105,570
* Cone Mills Stock Fund 15,149,432 12,300,898
* Participant Loans 395,413 395,413
$58,840,724 $57,885,832
</TABLE>
* Designates party-in-interest.
Note 7. Reconciliation of Differences Between These Financial Statements
and the Financial Information Required on Form 5500
<TABLE>
<S> <C>
Net assets available for benefits as presented in these
financial statements $58,230,778
Adjustment of benefits payable (7,599,285)
Net assets available for benefits as presented in Form 5500 $50,631,493
</TABLE>
<PAGE>
Note 8. Plan Merger
The Cone Mills Corporation Employee Equity Plan ("EEP") was merged into the Plan
on June 1, 1998. All of the EEP's net assets were transferred into the Plan at
that date. Immediately thereafter, the EEP was terminated with the Plan being
the survivor.
<PAGE>
CONE MILLS CORPORATION
EMPLOYEE EQUITY PLAN
FINANCIAL REPORT
JUNE 1, 1998
<PAGE>
Contents
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Statements of financial condition 2
Statements of income and changes in plan equity 3
Notes to financial statements 4 -6
<PAGE>
Independent Auditor's Report
To the Advisory Committee
Cone Mills Corporation
Employee Equity Plan
Greensboro, North Carolina
We have audited the accompanying statements of financial condition of the Cone
Mills Corporation Employee Equity Plan as of June 1, 1998 and December 31, 1997,
and the related statements of income and changes in plan equity for the period
January 1, 1998 through June 1, 1998 and each of the two years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial condition of the Cone Mills Corporation
Employee Equity Plan as of June 1, 1998 and December 31, 1997, and the changes
in plan equity for the period January 1, 1998 through June 1, 1998 and each of
the two years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles.
As discussed in Note 6 to the financial statements, the Plan's net assets were
merged into the Cone Mills Corporation Supplemental Retirement Plan ("SRP") on
June 1, 1998. Immediately thereafter, the Plan was terminated with the SRP being
the survivor.
/s/ McGLADREY, LLP
Greensboro, North Carolina
October 23, 1998
<PAGE>
CONE MILLS CORPORATION
EMPLOYEE EQUITY PLAN
STATEMENTS OF FINANCIAL CONDITION
JUNE 1, 1998 AND DECEMBER 31, 1997
<TABLE>
<S> <C> <C>
1998 1997
Assets:
Money market account, Crestar Bank $ - $ 331,335
Investment in Cone Mills Corporation common stock
at market value (shares 2,222,096)(cost $14,228,069) - 17,221,241
Accounts receivable, Cone Mills Corporation 34,873 114,105
Accounts receivable, participants 80,782 96,682
Accrued income receivable 832 1,367
Total assets 116,487 17,764,730
Liabilities:
Amounts due to Cone Mills Supplemental Retirement Plan 116,487 -
Total liabilities 116,487 -
Equity:
Amounts allocated to persons who have withdrawn from
participation in the earnings and operations of the
Plan - 2,277,300
Other - 15,487,430
Net assets available for benefits $ - $17,764,730
</TABLE>
See Notes to Financial Statements.
<PAGE>
CONE MILLS CORPORATION
EMPLOYEE EQUITY PLAN
STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY
PERIOD JANUARY 1, 1998 THROUGH JUNE 1, 1998
AND YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
Additions:
Interest income $ 3,084 $ 10,285 $ 16,081
Cone Mills Corporation contributions 190,289 528,492 626,338
Participants contributions 455,142 1,264,013 1,508,352
Gains realized on distributions of Cone
Mills Corporation common stock to plan
participants (market value 1998 $47,095
1997 $842,820; 1996 $2,479,771) (cost
1998 $35,684; 1997 $663,657;
1996 $1,389,056) 11,411 179,163 1,090,715
Gains realized on sales of Cone Mills
Corporation common stock (proceeds
1998 $300,544; 1997 $174,015;
1996 $1,422,921) (cost 1998 $228,250;
1997 $137,145; 1996 $788,548) 72,294 36,870 634,373
Transfers from Cone Mills Corporation
Employee Equity Plan - Hourly - 29,420 -
Unrealized appreciation of investments 4,046,432 - -
Total additions 4,778,652 2,048,243 3,875,859
Reductions:
Benefit payments 398,237 1,444,451 3,776,304
Transfers to Cone Mills Corporation
Supplemental Retirement Plan 466,071 598,148 1,511,159
Transfers to Cone Mills Corporation
Employee Equity Plan - Hourly 46,534 - 123,933
Unrealized depreciation of investments - 478,515 9,176,348
Transfer to merge net assets into Cone
Mills Corporation Supplemental Retirement
Plan (Note 6) 21,632,540 - -
Total reductions 22,543,382 2,521,114 14,587,744
Decrease in plan equity (17,764,730) (472,871)(10,711,885)
Plan equity:
Beginning 17,764,730 18,237,601 28,949,486
Ending $ - $17,764,730 $18,237,601
</TABLE>
See Notes to Financial Statements.
<PAGE>
CONE MILLS CORPORATION
EMPLOYEE EQUITY PLAN
NOTES TO FINANCIAL STATEMENTS
Note 1. Accounting Principles and Practices
The assets of the Plan were valued at market. Market for Cone Mills Corporation
common stock was based upon closing quotations on the New York Stock Exchange
Composite Tape. The accrual method of accounting was used. Cost for dispositions
of stock was determined by the average cost method.
Note 2. Description of the Plan
The Plan was a defined contribution plan which became effective on May 1, 1989,
and was amended and restated on November 16, 1989. In 1990, the Plan was amended
effective January 1, 1989, to redefine "compensation" and "salary" as permitted
under Section 414(s) of the Internal Revenue Code of 1986 and to conform such
definitions to company practices. In 1991, the Plan was amended and restated
effective January 1, 1991, to continue compliance under applicable provisions of
the Internal Revenue Code of 1986 and the Employee Retirement Income Security
Act of 1974. In 1992, the Plan was amended effective January 1, 1993, to include
hourly employees as members in the Plan and to cause other changes which updated
and improved the Plan. In 1993, the Plan was amended effective January 1, 1994,
to allow members to contribute up to 15% of compensation on a before-tax
(Section 401(k)) basis. A new plan, the "Employee Equity Plan Hourly" was
adopted and all hourly employees transferred their account balances to that plan
on January 1, 1994. A general description of the provisions of the Plan follows:
Assets: Assets of the Plan were included with assets of the "Employee Equity
Plan - Hourly" in a master trust ("Plans"). Assets were invested primarily in
Cone Mills Corporation common stock. A portion of the assets were held in an
Other Investments Fund which holds short-term cash or money market investments.
The portion held in the Other Investments Fund was used for cash distributions
to participants and to enable the Plans to purchase additional Cone Mills
Corporation common stock. Members with account balances less than $5,000 were
allowed to make a one-time transfer of their account balances to the Cone Mills
Corporation Supplemental Retirement Plans. Also, members who had attained 60
years of age as of the last day of the prior plan year, were allowed to transfer
in two annual installments their account balances in these Plans to the Cone
Mills Corporation Supplemental Retirement Plans. Other members were allowed to
transfer their account balances to the Cone Mills Corporation Supplemental
Retirement Plans over a four-year period. Otherwise, members of the Plans were
not entitled to select the manner in which their individual accounts were
invested.
Market risk: The Plan invested primarily in Cone Mills Corporation common stock
("Cone stock"). Cone stock is traded on the New York Stock Exchange, and
therefore its value is subject to the effects of fluctuations in overall market
performance. The Plan was potentially subject to heightened levels of market
risk attributable to its investment concentration.
Eligibility: Salaried employees who had attained age 21 were
eligible after completing one year of service.
Member contributions: Members were allowed to contribute from 2% to 15% of
compensation on a before-tax (Section 401(k)) basis.
Company contributions: Matching contributions were required each period in an
amount equal to 50% of each member's contribution not in excess of 6% of his
compensation. Additional matching contributions could have been made at the
discretion of Cone Mills Corporation.
<PAGE>
Note 2. Description of the Plan (continued)
Benefits: The accumulated value of a member's individual account was paid after
retirement or other separation from service. Distributions from the Plan must
have been paid in cash, except that the receiving member was allowed to receive
his distribution in the form of qualifying employer securities unless such a
distribution was restricted according to the Company's bylaws and articles of
incorporation. The valuation of Cone Mills Corporation common stock used for
cash distributions was the closing price of such stock as reported on the
sixtieth day following the applicable valuation date.
Member accounts: Individual accounts were maintained for each plan participant
which recorded the accumulated value of Company contributions allocated to such
participant, the participant's contributions and investment earnings thereon.
Vesting: All members' accounts were 100% vested.
Estimates: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of additions and reductions during the
reporting period. Actual results could differ from those estimates.
Note 3. Unrealized Appreciation of Investments
The unrealized appreciation of investments as of June 1, 1998,
(immediately prior to transfer) December 31, 1997, and 1996 is
as follows:
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
$ 7,013,042 $ 2,993,172 $ 3,516,313
</TABLE>
Note 4. Federal Income Taxes
The Plan was intended to meet the qualification requirements of Sections 401(a)
and 401(k) and related provisions of the Internal Revenue Code. As long as the
Plan met these requirements, the Plan was not subject to income taxes and
members would not recognize taxable income for federal income tax purposes upon
receipt to their individual accounts of contributions, dividends, interest or
investment gains. Taxation of the amounts credited to a member's individual
account was deferred until the member received a distribution. A favorable
determination letter had been obtained as of June 1, 1998.
<PAGE>
Note 5. Reconciliation of Differences Between These Financial Statements
and the Financial Information Required on Form 5500
<TABLE>
<S> <C> <C>
June 1, December 31,
1998 1997
Plan equity as presented in these financial
statements $ - $17,764,730
Adjustment of benefits payable - (2,277,300)
Plan equity as presented in Form 5500 $ - $15,487,430
Net decrease in plan equity as presented in these
financial statements $(17,764,730) $ (472,871)
Adjustment of benefits paid 2,277,300 (678,962)
Net decrease in plan equity as presented in
Form 5500 $(15,487,430) $(1,151,833)
</TABLE>
Note 6. Plan Merger and Termination
The Plan was merged into the Cone Mills Corporation Supplemental Retirement Plan
("SRP") on June 1, 1998. All of the Plan's net assets were transferred into the
SRP at that date. Immediately thereafter, the Plan was terminated with the SRP
being the survivor.
<PAGE>
THE 401(k)PROGRAM OF CONE MILLS CORPORATION
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
WITH FUND INFORMATION
DECEMBER 31, 1998
<TABLE>
<S> <C> <C> <C> <C> <C>
Vanguard Vanguard Vanguard
Vanguard International LifeStrategy Small-Cap Total Bond
500 Index Growth Moderate Index Market Index
Fund Fund Growth Fund Fund Fund
=====================================================================
Assets:
Investments, at fair value,
trust funds (Note 6) $ 617,077 $ 42,743 $ 46,581 $ 31,344 $ 855,041
---------------------------------------------------------------------
Receivables:
Employer contributions 3,438 484 346 375 754
Employee contributions 11,464 1,615 1,155 1,249 2,515
---------------------------------------------------------------------
14,902 2,099 1,501 1,624 3,269
---------------------------------------------------------------------
Total assets $ 631,979 $ 44,842 $ 48,082 $ 32,968 $ 858,310
=====================================================================
Net Assets Available for Benefits:
Amounts allocated to persons
who have withdrawn from
participation in the earnings and
operations of the Plan $ 23,929 $ 827 $ -- $ 1,100 $ --
Other 608,050 44,015 48,082 31,868 858,310
---------------------------------------------------------------------
$ 631,979 $ 44,842 $ 48,082 $ 32,968 $ 858,310
=====================================================================
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Vanguard
Vanguard Vanguard Retirement
US Growth Wellington Savings Cone Mills Participant
Fund Fund Trust Stock Fund Loans Total
==============================================================================
Assets:
Investments, at fair value,
trust funds (Note 6) $ 24,178,515 $ 11,312,650 $ 8,105,570 $12,300,898 $ 395,413 $ 57,885,832
------------------------------------------------------------------------------
Receivables:
Employer contributions 33,700 13,664 8,347 18,472 -- 79,580
Employee contributions 112,375 45,563 27,832 61,598 -- 265,366
------------------------------------------------------------------------------
146,075 59,227 36,179 80,070 -- 344,946
------------------------------------------------------------------------------
Total assets $ 24,324,590 $ 11,371,877 $ 8,141,749 $12,380,968 $ 395,413 $ 58,230,778
==============================================================================
Amounts allocated to persons
who have withdrawn from
participation in the earnings and
operations of the Plan $ 2,376,093 $ 1,745,903 $ 2,018,898 $ 1,432,535 $ -- $ 7,599,285
Other 21,948,497 9,625,974 6,122,851 10,948,433 395,413 50,631,493
------------------------------------------------------------------------------
$ 24,324,590 $ 11,371,877 $ 8,141,749 $12,380,968 $ 395,413 $ 58,230,778
==============================================================================
</TABLE>
See Notes to Financial Statements.
<PAGE>
THE 401(k) PROGRAM OF CONE MILLS CORPORATION
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
WITH FUND INFORMATION
PERIOD JUNE 1, 1998 THROUGH DECEMBER 31, 1998
<TABLE>
<S> <C> <C> <C> <C> <C>
Vanguard Vanguard Vanguard Vanguard
Vanguard International LifeStrategy Small-Cap Total Bond
500 Index Growth Moderate Index Market Index
Fund Fund Growth Fund Fund Fund
======================================================================
Investment income (loss):
Gain (loss) on sale of investments $ (329) $ 38 $ (220) $ (2,550) $ 14
Unrealized appreciation (depreciation)
in fair value of investments 83,508 2,273 3,251 131 6,609
Interest and dividends 5,729 5,071 1,510 2,297 22,449
----------------------------------------------------------------------
88,908 7,382 4,541 (122) 29,072
----------------------------------------------------------------------
Contributions:
Employer 13,811 1,842 1,488 1,466 2,781
Employee 45,892 7,047 5,076 5,328 9,276
Participant loan repayments 370 -- 71 -- 72
----------------------------------------------------------------------
60,073 8,889 6,635 6,794 12,129
----------------------------------------------------------------------
Transfers:
To merge net assets from Cone Mills
Corporation Employee Equity Plan
(Note 8) -- -- -- -- --
With other funds 487,312 28,593 39,851 26,634 824,356
----------------------------------------------------------------------
487,312 28,593 39,851 26,634 824,356
----------------------------------------------------------------------
Total additions 636,293 44,864 51,027 33,306 865,557
----------------------------------------------------------------------
Benefits paid directly to participants -- -- -- 95 --
Participant loan withdrawals 4,109 -- 2,906 -- 7,199
Other deductions 205 22 39 243 48
----------------------------------------------------------------------
Total deductions 4,314 22 2,945 338 7,247
----------------------------------------------------------------------
Net increase (decrease) 631,979 44,842 48,082 32,968 858,310
Net assets available for benefits:
June 1, 1998 -- -- -- -- --
======================================================================
December 31, 1998 $ 631,979 $ 44,842 $ 48,082 $ 32,968 $ 858,310
======================================================================
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Vanguard
Vanguard Vanguard Retirement
US Growth Wellington Savings Cone Mills Participant
Fund Fund Trust Stock Fund Loans Total
=====================================================================================
Investment income (loss):
Gain (loss) on sale of investments $ 82,045 $ (147,247) $ -- $ (242,057) $ -- $ (310,306)
Unrealized appreciation (depreciation)
in fair value of investments 2,584,588 (786,718) -- (8,528,272) -- (6,634,630)
Interest and dividends 1,516,106 1,226,690 313,743 -- 1,842 3,095,437
-------------------------------------------------------------------------------------
4,182,739 292,725 313,743 (8,770,329) 1,842 (3,849,499)
-------------------------------------------------------------------------------------
Contributions:
Employer 229,408 95,363 59,052 146,181 -- 551,392
Employee 884,632 350,723 213,516 447,871 -- 1,969,361
Participant loan repayments 3,402 1,142 397 1,154 (6,608) --
-------------------------------------------------------------------------------------
1,117,442 447,228 272,965 595,206 (6,608) 2,520,753
-------------------------------------------------------------------------------------
Transfers:
To merge net assets from Cone Mills
Corporation Employee Equity Plan
(Note 8) -- -- -- 21,632,540 -- 21,632,540
With other funds (578,654) (886,957) (17,433) 76,298 -- --
-------------------------------------------------------------------------------------
(578,654) (886,957) (17,433) 21,708,838 -- 21,632,540
-------------------------------------------------------------------------------------
Total additions 4,721,527 (147,004) 569,275 13,533,715 (4,766) 20,303,794
-------------------------------------------------------------------------------------
Benefits paid directly to participants 2,172,484 1,731,140 1,832,887 1,105,913 -- 6,842,519
Participant loan withdrawals 205,068 90,454 47,845 42,598 (400,179) --
Other deductions 7,247 3,472 2,895 4,236 -- 18,407
-------------------------------------------------------------------------------------
Total deductions 2,384,799 1,825,066 1,883,627 1,152,747 (400,179) 6,860,926
-------------------------------------------------------------------------------------
Net increase (decrease) 2,336,728 (1,972,070) (1,314,352) 12,380,968 395,413 13,442,868
Net assets available for benefits:
June 1, 1998 21,987,862 13,343,947 9,456,101 -- -- 44,787,910
======================================================================================
December 31, 1998 $ 24,324,590 $ 11,371,877 $ 8,141,749 $ 12,380,968 $ 395,413 $ 58,230,778
======================================================================================
</TABLE>
See Notes to Financial Statements.
<PAGE>
Exhibit 23
McGLADREY & PULLEN, LLP
CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
CONSENT OF McGLADREY & PULLEN, LLP, INDEPENDENT AUDITOR
We hereby consent to the incorporation by reference in Cone Mills Corporation's
Registration Statements on Form S-8 (Nos. 33-31979; 33-51951; and 33-51953) of
our reports dated October 23, 1998 with respect to the Cone Mills Corporation
Employee Equity Plan for the period ended June 1, 1998 and May 29, 1999 with
respect to The 401(k) Program of Cone Mills Corporation for the period ended
December 31, 1998, such reports included in a Form 11-K.
/s/ McGLADREY & PULLEN, LLP
Greensboro, North Carolina
June 23, 1999
