Page 1 of 32
Index to Exhibits-Pages 21-27
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 April 4, 1999
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)
(336) 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 April 30, 1999:
25,431,233 shares.
1
<PAGE>
CONE MILLS CORPORATION
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Operations
Thirteen weeks ended
April 4, 1999 and March 29, 1998
(Unaudited)...............................................3
Consolidated Condensed Balance Sheets
April 4, 1999 and March 29, 1998
(Unaudited) and January 3, 1999...........................4
Consolidated Condensed Statements of Cash Flows
Thirteen weeks ended April 4, 1999
and March 29, 1998 (Unaudited)............................5
Notes to Consolidated Condensed Financial Statements
(Unaudited)...............................................6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...............11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...............................................18
Item 6. Exhibits and Reports on Form 8-K................................20
2
<PAGE>
Item 1. Part I
CONE MILLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<S> <C> <C>
Thirteen Thirteen
Weeks Ended Weeks Ended
April 4, 1999 March 29, 1998
------------- --------------
(Unaudited) (Unaudited)
Net Sales $ 157,257 $ 190,171
Cost of Goods Sold 141,914 173,044
---------------- ----------------
Gross Profit 15,343 17,127
Selling and Administrative 13,305 13,755
Restructuring and Impairment of Assets 12,917 -
---------------- ----------------
Income (Loss) from Operations (10,879) 3,372
---------------- ----------------
Other Income (Expense)
Interest income 430 611
Interest expense (3,640) (3,547)
---------------- ----------------
(3,210) (2,936)
---------------- ----------------
Income (Loss) before Income Taxes (Benefit), Equity in
Earnings of Unconsolidated Affiliate and Cumulative Effect
of Accounting Change (14,089) 436
Income Taxes (Benefit) (4,790) 144
---------------- ----------------
Income (Loss) before Equity in Earnings of Unconsolidated
Affiliate and Cumulative Effect of Accounting Change (9,299) 292
Equity in Earnings of Unconsolidated Affiliate 867 1,252
---------------- ----------------
Income (Loss) before Cumulative Effect of Accounting Change (8,432) 1,544
Cumulative Effect of Accounting Change (1,038) -
---------------- ----------------
Net Income (Loss) $ (9,470) $ 1,544
================ ================
Income (Loss) Available to Common Shareholders
Income (Loss) before Cumulative Effect of Accounting Change $ (9,152) $ 791
Cumulative Effect of Accounting Change (1,038) -
================ ================
Net Income (Loss) $ (10,190) $ 791
================ ================
Earnings (Loss) Per Share - Basic and Diluted
Income (Loss) before Cumulative Effect of Accounting Change $ (0.36) $ 0.03
Cumulative Effect of Accounting Change (0.04) -
================ ================
Net Income (Loss) $ (0.40) $ 0.03
================ ================
Weighted-Average Common Shares Outstanding
Basic 25,431 26,183
================ ================
================ ================
Diluted 25,431 26,210
================ ================
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
3
<PAGE>
CONE MILLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except share and par value data)
<TABLE>
<S> <C> <C> <C>
April 4, March 29, January 3,
1999 1998 1999
---------- --------- ----------
(Unaudited) (Unaudited) (Note)
ASSETS
Current Assets
Cash $ 1,883 $ 525 $ 639
Accounts receivable, less allowances of $3,300; 1998, $1,500 21,765 25,063 26,010
Subordinated note receivable 30,025 39,886 10,414
Inventories 132,912 122,287 120,430
Other current assets 14,625 18,913 10,253
-------------- -------------- --------------
Total Current Assets 201,210 206,674 167,746
Investments in Unconsolidated Affiliates 45,318 38,033 45,489
Other Assets 36,127 37,844 36,616
Property, Plant and Equipment 230,211 250,017 238,666
-------------- -------------- --------------
$ 512,866 $ 532,568 $ 488,517
============== ============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable $ 4,000 $ 7,500 $ 1,000
Current maturities of long-term debt 10,714 10,714 10,714
Accounts payable 41,154 39,962 27,255
Sundry accounts payable and accrued liabilities 43,042 45,465 42,071
Deferred income taxes 18,115 20,436 22,670
-------------- -------------- --------------
Total Current Liabilities 117,025 124,077 103,710
Long-Term Debt 181,497 161,767 161,385
Deferred Income Taxes 30,241 40,913 30,050
Other Liabilities 11,651 10,936 11,448
Stockholders' Equity
Class A preferred stock - $100 par value; authorized
1,500,000 shares; issued and outstanding 411,916 shares;
1998, 383,948 shares 41,192 38,395 38,395
Class B preferred stock - no par value; authorized
5,000,000psharesPlant and Equipment-Net - - -
Common stock - $.10 par value; authorized 42,700,000
shares; issued and outstanding 25,431,233 shares;
1998, 26,166,933 shares and 25,432,233 shares 2,543 2,617 2,543
Capital in excess of par 57,256 62,057 57,264
Retained earnings 80,494 101,039 92,799
Deferred compensation - restricted stock (533) (702) (579)
Accumulated other comprehensive loss, currency translation adjustment (8,500) (8,531) (8,498)
-------------- -------------- --------------
Total Stockholders' Equity 172,452 194,875 181,924
-------------- -------------- --------------
$ 512,866 $ 532,568 $ 488,517
============== ============== ==============
</TABLE>
Note: The balance sheet at January 3, 1999, has been derived from
the financial statements at that date.
See Notes to Consolidated Condensed Financial Statements.
4
<PAGE>
CONE MILLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<S> <C> <C>
Thirteen Thirteen
Weeks Ended Weeks Ended
April 4, 1999 March 29, 1998
------------- --------------
(Unaudited) (Unaudited)
CASH USED IN OPERATIONS $ (19,542) $ (14,461)
----------------- -----------------
INVESTING
Proceeds from sale of property, plant and equipment 450 2,566
Capital expenditures (1,420) (6,790)
----------------- -----------------
Cash used in investing (970) (4,224)
----------------- -----------------
FINANCING
Net borrowings under line of credit agreements 3,000 3,000
Decrease in checks issued in excess of deposits 1,206) (3,446)
Proceeds from long-term debt borrowings 0,000 22,000
Purchase of outstanding common stock - (246)
Dividends paid - Class A Preferred (38) (2,954)
----------------- -----------------
Cash provided by financing 21,756 18,354
----------------- -----------------
Net change in cash 1,244 (331)
Cash at Beginning of Period 639 856
----------------- -----------------
Cash at End of Period $ 1,883 $ 525
================= =================
Supplemental Disclosures of Additional Cash Flow Information:
Cash payments for:
Interest $ 6,271 $ 6,520
================= =================
================= =================
Income taxes, net of refunds $ 30 $ (17)
================= =================
Supplemental Schedule of Noncash Investing and Financing Activities:
Stock dividend paid - Class A Preferred Stock $ 2,797 $ -
================= =================
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
5
<PAGE>
CONE MILLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 1. Basis of Financial Statement Preparation
The Cone Mills Corporation (the "Company") consolidated condensed
financial statements for April 4, 1999 and March 29, 1998 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 April 4, 1999,
March 29, 1998, and January 3, 1999, and the related consolidated
condensed statements of operations and cash flows for the thirteen
weeks ended April 4, 1999 and March 29, 1998. 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 year 1998.
Inventories are stated at the lower of cost or market. The last-in,
first-out (LIFO) method is used to determine cost of most
domestically produced goods. The first-in, first-out (FIFO) or
average cost methods are used to determine cost of all other
inventories. Because amounts for inventories under the LIFO method
are based on an annual determination of quantities as of the year-
end, the inventories at April 4, 1999 and March 29, 1998 and related
consolidated condensed statements of operations for the thirteen
weeks then ended are based on certain estimates relating to
quantities and cost as of the end of the fiscal year.
Note 2. Inventories
<TABLE>
<S> <C> <C> <C>
(in thousands) 4/4/99 3/29/98 1/3/99
Greige and finished goods $ 100,206 $ 83,391 $ 87,087
Work in process 9,162 10,578 9,810
Raw materials 13,184 16,057 11,508
Supplies and other 10,360 12,261 12,025
$ 132,912 $ 122,287 $ 120,430
</TABLE>
6
<PAGE>
Note 3. Long-Term Debt
<TABLE>
<S> <C> <C> <C>
(in thousands) 4/4/99 3/29/98 1/3/99
Senior Note $ 42,858 $ 53,572 $ 42,858
Revolving Credit Agreement 52,000 22,000 32,000
8 1/8% Debentures 97,353 96,909 97,241
192,211 172,481 172,099
Less current maturities 10,714 10,714 10,714
$ 181,497 $ 161,767 $ 161,385
</TABLE>
Note 4. Class A Preferred Stock
On February 11, 1999, the Company declared a 7.5% stock dividend on
the Company's Class A Preferred Stock which was paid on March 31,
1999. The dividend was charged to retained earnings in the amount
of approximately $2.8 million.
Note 5. Depreciation and Amortization
The following table presents depreciation and amortization included
in the statements of operations.
<TABLE>
<S> <C> <C>
(in thousands) Thirteen Thirteen
Weeks Ended Weeks Ended
4/4/99 3/29/98
Depreciation $ 7,190 $ 7,174
Amortization 676 675
$ 7,866 $ 7,849
</TABLE>
7
<PAGE>
Note 6. Earnings (Loss) Per Share
The following table sets forth the computation of basic and diluted
earnings (loss) per share ("EPS").
<TABLE>
<S> <C> <C>
(in thousands, except Thirteen Thirteen
per share data) Weeks Ended Weeks Ended
4/4/99 3/29/98
Income (loss) before cumulative $ (8,432) $ 1,544
effect of accounting change
Preferred stock dividends (720) (753)
Income (loss) before cumulative
effect of accounting change available
to common shareholders (9,152) 791
Cumulative effect of accounting change (1,038) -
Basic EPS - income (loss) available
to common shareholders (10,190) 791
Effect of dilutive securities - -
Diluted EPS - income (loss) available to
common shareholders after assumed
conversions $(10,190) $ 791
Determination of shares:
Basic EPS - weighted-average shares 25,431 26,183
Effect of dilutive securities - 27
Diluted EPS - adjusted weighted-average
shares after assumed conversions 25,431 26,210
Earnings (loss) per share - basic and diluted
Income (loss) before cumulative effect
of accounting change $ (0.36) $ 0.03
Cumulative effect of accounting change (0.04) -
Net income (loss) $ (0.40) $ 0.03
</TABLE>
Common stock options outstanding at April 4, 1999 were not included
in the computation of diluted earnings per share because to do so
would have been antidilutive.
8
<PAGE>
Note 7. Segment Information
The Company has four principal business segments which are based
upon organizational structure: 1) denim and khaki; 2) yarn-dyed
products; 3) commission finishing and 4) decorative fabrics.
Operating income (loss) for each segment is total revenue less
operating expenses applicable to the segment. Intersegment revenue
relates to the commission finishing segment. Equity in earnings of
unconsolidated affiliate is included in the denim and khaki segment.
Restructuring and impairment of asset expenses, unallocated
expenses, interest, income taxes and cumulative effect of accounting
change are not included in segment operating income (loss).
Net sales and income (loss) from operations for the Company's
operating segments are as follows:
<TABLE>
<S> <C> <C>
(amounts in thousands) Thirteen Thirteen
Weeks Ended Weeks Ended
4/4/99 3/29/98
Net Sales
Denim and Khaki $ 112,635 $ 141,754
Yarn-Dyed Products 7,506 11,680
Commission Finishing 25,838 27,127
Decorative Fabrics 16,585 11,988
Other 472 1,696
163,036 194,245
Less Intersegment Sales 5,779 4,074
$ 157,257 $ 190,171
Income (Loss) from Operations
Denim and Khaki $ 9,316 $ 13,852
Yarn-Dyed Products (3,277) (1,441)
Commission Finishing (1,956) (4,982)
Decorative Fabrics 504 (528)
Other (229) (462)
Unallocated Expenses (1,453) (1,815)
2,905 4,624
Restructuring and Impairment of Assets (12,917) -
(10,012) 4,624
Less Equity in Earnings of Unconsolidated
Affiliate 867 1,252
(10,879) 3,372
Interest Expense - Net ( 3,210) ( 2,936)
Income (Loss) before Income Taxes (Benefit),
Equity in Earnings of Unconsolidated
Affiliate and Cumulative Effect of
Accounting Change $ (14,089) $ 436
</TABLE>
9
<PAGE>
Note 8. Comprehensive Income (Loss)
Comprehensive income (loss) is the total of net income (loss) and
other changes in equity, except those resulting from investments by
owners and distribution to owners not reflected in net income
(loss). Total comprehensive income (loss) for the periods was as
follows:
<TABLE>
<S> <C> <C>
(in thousands) Thirteen Thirteen
Weeks Ended Weeks Ended
4/4/99 3/29/98
Net income (loss) $ (9,470) $ 1,544
Other comprehensive loss,
currency translation adjustment ( 2) (27)
$ (9,472) $ 1,517
</TABLE>
Note 9. Reclassification of Selling and Administrative
In the first quarter of 1999 the Company changed the criteria for
items to be included in selling and administrative expenses to
conform to prevailing industry practices. The Company has restated
its prior year Statement of Operations to reflect the new
classification criteria. This resulted in the reclassification of
$7.0 million from selling and administrative expenses to cost of
goods sold for the first quarter of 1998.
Note 10. Cumulative Effect of Accounting Change
Beginning in fiscal year 1999, the Company adopted Statement of
Position ("SOP") 98-5, "Reporting on the Costs of Start-Up
Activities," which requires future start-up costs to be expensed as
incurred and previously capitalized start-up costs to be expensed
when SOP 98-5 is adopted. The Company recognized a charge of $1.0
million, the Company's 50% portion of Parras Cone's unamortized
start-up costs, as a cumulative effect of an accounting change in
the first quarter of 1999. Had SOP 98-5 not been adopted during the
first quarter of 1999, net loss would have been reduced by $0.9
million, or $0.04 per share.
10
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
In response to 1998 business conditions for apparel products and
commission finishing, the Company announced, in early 1999 and began
to implement during the first quarter, a comprehensive downsizing
and reorganization program which included:
1) The streamlining of product offering of the sportswear
division including the closing of the Salisbury plant which
produces yarn-dyed shirting fabrics.
2) The downsizing and reorganization of the Corporate
Administrative staff to more efficiently match Cone's present
sales base.
3) The merger of the denim and sportswear fabrics businesses into
one unit which will more efficiently serve the growing
casualwear market.
4) The reduction of the manufacturing staff in order to simplify
the management structure and become more responsive to
customer cycle times.
5) The closing of the Florence and Cliffside yarn manufacturing
facilities, coupled with the outsourcing of yarn, to reduce
operating costs and conserve capital which would have been
required for equipment modernization.
6) The downsizing of screen printing operations at the Carlisle
plant to reduce costs and improve efficiency.
Substantially all of the expense related to these initiatives was
reflected in the last quarter of 1998 ($19.3 million) and the first
quarter of 1999 ($14.5 million). The Company expects to achieve
significant cost savings as a result of these initiatives beginning
in the second quarter of 1999.
RESULTS OF OPERATIONS
First Quarter Ended April 4, 1999 Compared with First Quarter Ended
March 29, 1998.
Cone Mills had sales for the first quarter of 1999 of $157.3
million, as compared with the first quarter of 1998 sales of $190.2
million. For the 1999 period, sales of denim and khaki, yarn-dyed
products, and commission finishing decreased partially offset by
increased decorative fabric sales. In the fourth quarter of 1998,
11
<PAGE>
which carried through into the first quarter of 1999, denim sales
slowed significantly. International sales represented 25% of total
sales in the first quarter of 1999 compared to 27% of sales for the
1998 period.
Gross profit for the first quarter of 1999 increased to 9.8% of
sales, as compared with 9.0% for the previous year. The improvement
was primarily the result of better operating results in commission
finishing and decorative fabrics.
Segment Information. Cone operates in four principal business
segments: denim and khaki, yarn-dyed products, commission finishing
and decorative fabrics. The following table sets forth for the first
quarters of 1999 and 1998 certain net sales and segment income
(loss) information regarding these segments.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
First Quarter
1999 1998
NET SALES
Denim and Khaki $ 112.6 71.6% $ 141.8 74.5%
Yarn-Dyed Products 7.5 4.8 11.7 6.1
Commission Finishing(1) 25.9 16.4 27.1 14.3
Decorative Fabrics 16.6 10.6 12.0 6.3
Other 0.5 0.3 1.6 0.9
Subtotal $ 163.1 103.7 $ 194.2 102.2
Less Intersegment Sales(1) 5.8 3.7 4.0 2.2
$ 157.3 100.0% $ 190.2 100.0%
SEGMENT INCOME (LOSS)(2)(3)
Denim and Khaki $ 9.3 8.3% $ 13.9 9.8%
Yarn-Dyed Products (3.3) (43.7) (1.4) (12.3)
Commission Finishing (2.0) (7.6) (5.0) (18.4)
Decorative Fabrics 0.5 3.0 (0.5) (4.4)
Other (0.2) (48.5) (0.5) (27.2)
Restructuring & Impairment
of Assets (12.9) - - -
</TABLE>
(1) Intersegment sales represent commission finishing intercompany
sales to the denim and khaki and decorative fabrics segments.
(2) Segment income (loss) excludes unallocated expenses.
Percentages reflect segment income (loss) as a percentage of
segment net sales including intersegment sales.
(3) Denim and khaki segment income includes equity in earnings of
an unconsolidated affiliate.
Denim and Khaki. For the first quarter of 1999, denim and khaki
segment sales were $112.6 million, down 20.5% from first quarter
12
<PAGE>
1998 sales of $141.8 million. Lower sales resulted primarily from
the negative impact of unseasonably warm weather in the second
half of 1998 on retail sales of basic heavyweight jeans, a
stronger consumer interest in fashion denims and khakis, and
adjustments to retail and manufacturing inventories associated
with these trends.
Operating income of the denim and khaki segment for the first
quarter of 1999 was $9.3 million, or 8.3% of sales, compared with
$13.9 million, or 9.8% for the first quarter of 1998. The reduced
margin and income resulted primarily from lower sales volume,
reduced plant operating schedules, and slightly lower prices.
Operating income for the segment includes the equity in earnings
from the Parras Cone joint venture plant.
Yarn-Dyed Products. As part of the restructuring program, the
Company will cease manufacturing yarn-dyed products in May 1999.
For the first quarter of 1999, both sales and operating results
for yarn-dyed products were lower than in the 1998 period. Sales
of $7.5 million were down 35.7% and the operating loss of $3.3
million increased $1.8 million, as compared to the first quarter
of 1998.
Commission Finishing. Outside sales of commission finishing for
the first quarter of 1999 were $20.1 million, down 13.0% from
$23.1 million for the first quarter of 1998 because of
disappointing sales volume in prints. However, the segment made
substantial improvement in operating results with the first
quarter 1999 loss of $2.0 million, an improvement of
approximately 60% from a loss of $5.0 million for the first
quarter of 1998. The Carlisle plant has improved operating
results primarily because of improved expense control, higher
quality levels, and delivery integrity
Decorative Fabrics. For the first quarter of 1999, sales of the
decorative fabrics segment were $16.6 million, up 38.3% from
sales of $12.0 million for the first quarter of 1998. Cone
Jacquards sales improved as capacity expanded, and John Wolf
sales were up as the unit improved its product offerings and
marketing effort. The decorative fabrics segment had earnings of
$0.5 million for the first quarter of 1999 compared with a loss
of $0.5 million for the first quarter of 1998.
Selling and administrative expenses for the first quarter of 1999
were $13.3 million, or 8.5% of sales, as compared with $13.8
million, or 7.2% of sales in the first quarter of 1998. Selling and
administrative expenses for 1998 have been restated to conform to
13
<PAGE>
industry practices. In the 1999 period, selling and administrative
expenses increased, as a percentage of sales, primarily as a result
of the lower sales level relative to the 1998 period. The Company
expects the level of selling and administrative expenses to decline
in 1999 as the cost savings from restructuring initiatives are
realized.
Interest expense for the first quarter of 1999 was $3.6 million, up
from $3.5 million for the first quarter of 1998, primarily the
result of additional borrowing to support increases in working
capital needs.
For the first quarter of 1999, the income tax benefit as a percent
of the taxable loss was 34.0%.
Equity in earnings of Parras Cone, the Company's joint venture plant
in Mexico, was $0.9 million for the first quarter of 1999, as
compared with $1.3 million for the 1998 period.
For the first quarter of 1999, Cone Mills had a net loss of $9.5
million, or $.40 per share after preferred dividends, including a
$1.0 million charge from the cumulative effect of an accounting
change related to capitalized start-up costs at the Parras Cone
joint venture plant. In the quarter, the Company also incurred
restructuring and exit expenses of $14.5 million associated with its
previously announced restructuring program. Excluding the
restructuring and exit expenses, and the accounting change, the
Company had earnings of $.02 per share after preferred dividends.
For comparison, in the first quarter of 1998, Cone Mills had sales
of $190.2 million with net income of $1.5 million, or $.03 per share
after preferred dividends.
Liquidity and Capital Resources
The Company's principal long-term capital components consist of debt
outstanding under its Senior Note, its 8 1/8% Debentures and
stockholders' equity. Primary sources of liquidity are internally
generated funds, an $80 million Revolving Credit Facility and a $50
million Receivables Purchase Agreement. The Receivables Purchase
Agreement expires in June 1999, and the Company believes it can
replace this facility on comparable terms. On April 4, 1999, the
Company had funds available of $28.0 million under its Revolving
Credit Facility.
During the first quarter of 1999, the Company used cash from
operations, before changes in working capital, of $3.3 million, as
compared with generated cash of $6.7 million for the first quarter
14
<PAGE>
of 1998. Working capital increased by $16.2 million, which included
inventory increases of $12.5 million in the first quarter of 1999.
Uses of cash included $1.4 million for capital expenditures.
The Company believes that internally generated operating funds and
funds available under its credit facilities will be sufficient to
meet its needs for the foreseeable future. International
investments, including the proposed denim facility discussed below,
will require additional long-term financing.
On April 30, 1999, Guilford Mills, Inc. (Guilford) and the Company
announced plans to develop an innovative new textile and apparel
industrial park in Mexico. The park is believed to be the first
large-scale industrial development in Mexico in which textile
plants, garment manufacturing, and laundering facilities are located
in close proximity to each other.
In support of this project, the Mexican government has agreed to
facilitate the infrastructure including roads and rights of way,
water resources, telecommunications, municipal services,
electricity, natural gas, wastewater treatment and work force
training.
The new park, to be built in several stages, will be located on over
500 acres of land in Altamira, near Tampico, a northeast coast port
city in the state of Tamaulipas. In April, Guilford and Cone
established a 50/50 joint venture to develop and operate the park.
It is expected that this investment for Cone will range from $6
million to $10 million.
The plant to be built by Cone in the initial phase of the project
will be a ring-spun, value-added denim plant with a capacity of 20
million yards expandable to 40 million yards. The Company expects
to invest $40 million to $75 million in the initial denim facility
depending upon whether it outsources yarn manufacturing, forms a
yarn alliance or produces its own yarn. The Company could invest an
additional $30 million to $45 million for the expansion to 40
million yards. A portion of the funds required for this facility
will require debt financing, which the Company has not arranged at
this date.
On April 4, 1999, the Company's long-term capital structure
consisted of $181.5 million of long-term debt and $172.5 million of
stockholders' equity. For comparison, on March 29, 1998, the Company
had $161.8 million of long-term debt and $194.9 million of
stockholders' equity. Long-term debt (including current maturities
of long-term debt) as a percentage of long-term debt and
15
<PAGE>
stockholders' equity was 53% at April 4, 1999, as compared with 47%
at March 29, 1998.
Accounts and note receivable on April 4, 1999, were $51.8 million,
as compared with $64.9 million at March 29, 1998. Receivables,
including those sold pursuant to the Receivables Purchase Agreement,
represented 55 days of sales outstanding at April 4, 1999 and 51
days at March 29, 1998. The increase in days of sales outstanding
primarily reflects a change in customer sales mix with fewer
customers paying in advance of due date.
Inventories on April 4, 1999, were $132.9 million, up $10.6 million
from March 29, 1998. The increase was primarily due to higher denim
finished goods inventories.
Capital spending in the first quarter of 1999 was $1.4 million, as
compared with $6.8 million for the 1998 period. Domestic capital
spending in 1999 is expected to be approximately $15 million. The
reduced spending in 1999 is because the Company completed its
relooming program of domestic denim facilities in 1998. In addition
to the domestic capital spending budget, the Company expects to
spend up to $12 million for investments in international initiatives
in 1999.
Other Matters
The Company is implementing a comprehensive plan to address possible
exposures to Year 2000 issues. Critical financial, operational, and
manufacturing systems have been inventoried and assessed and system
modification or replacement have been completed or are in-process.
Implementation of required changes for all systems is targeted for
completion during fiscal year 1999.
Executive management periodically reviews the status of the
Company's Year 2000 compliance efforts. At present the Company
estimates it is approximately 80% complete with implementation of
new systems or remediation of existing systems related to core
business systems and approximately 90% complete with such efforts
related to manufacturing, operating and control systems. Testing and
certification is expected to be substantially completed by June
1999.
The Company is coordinating Year 2000 readiness with other entities
with which it interacts, both domestically and globally, including
suppliers, customers and financial service organizations.
Coordination efforts involve communication with major suppliers and
customers to undertake testing of electronic interfaces and
16
<PAGE>
obtaining written certifications of compliance where applicable.
Risk assessments and action plans have been substantially completed.
The majority of necessary system modifications, including testing
and certification, should be completed in the first half of 1999.
All required changes are targeted for completion by third quarter
1999.
The Company has made significant investments to modernize its core
business systems over the past several years. With each system
modification or replacement, Cone has addressed the Year 2000 issue.
Therefore, remediation costs to address the Company's Year 2000
issues are presently expected to be less than $1.0 million.
The Company currently has contingency plans which address system-
related interruptions and will further develop such plans to protect
the business from potential Year 2000 interruptions. These plans
will be completed during fiscal year 1999 and will include, for
example, as a worst case scenario, processing certain significant
business transactions manually. The Company is taking reasonable
steps to prevent major interruptions related to the Year 2000 issue;
however, the potential impact on the Company's financial position,
results of operations, or cash flows if the Company, its suppliers
or its customers are not fully Year 2000 compliant is not reasonably
estimable.
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.
"Safe Harbor" Statement under Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended.
Except for the historical information presented, the
matters disclosed in the foregoing discussion and
analysis and other parts of this report include forward-
looking statements. These statements represent the
17
<PAGE>
Company's current judgment on the future and are subject
to risks and uncertainties that could cause actual
results to differ materially. Such factors include,
without limitation: (i) the demand for textile products,
including the Company's products, will vary with the
U.S. and world business cycles, imbalances between
consumer demand and inventories of retailers and
manufacturers and changes in fashion trends, (ii) the
highly competitive nature of the textile industry and
the possible effects of reduced import protection and
free-trade initiatives, (iii) the unpredictability of
the cost and availability of cotton, the Company's
principal raw material, (iv) the Company's relationships
with Levi Strauss as its major customer, and (v) the
risks associated with unforeseen technological
difficulties arising under the Company's Year 2000
compliance efforts and the potential for increased costs
associated therewith. For a further description of these
risks see the Company's 1998 Form 10-K, "Item 1.
Business -Competition, -Raw Materials and -Customers"
and "Management's Discussion and Analysis of Results of
Operations and Financial Condition -- Overview" of the
Company's 1998 Annual Report to Shareholders
incorporated by reference into Item 7. of the Form 10-K.
Other risks and uncertainties may be described from time
to time in the Company's other reports and filings with
the Securities and Exchange Commission.
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
18
<PAGE>
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.
The District Court held a hearing on July 24, 1995 to decide on the
merits of the 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 effect on the Company's financial
condition or results of operations.
The Company and its subsidiaries are involved in legal proceedings
and claims arising in the ordinary course of business. Although
there can be no assurance as to the ultimate disposition of these
matters, management believes that the probable resolution of such
contingencies will not have a material adverse effect on the
financial condition of the Company.
19
<PAGE>
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
20
<PAGE>
Exhibit Sequential
No. Description Page No.
*2.1(a) Purchase Agreement between Registrant
and Cone Receivables LLC dated as of
March 25, 1997, filed as Exhibit 2.1(l)
to Registrant's report on Form 10-Q
for the quarter ended March 30, 1997.
*2.1(b) Receivables Purchase Agreement dated
as of March 25, 1997, among Cone
Receivables LLC, as Seller, the
Registrant, as Servicer, and
Delaware Funding Corporation, as
buyer, filed as Exhibit 2.1(m) to
Registrant's report on Form 10-Q
for the quarter ended March 30, 1997.
*2.1(c) Amendment to Receivables Purchase
Agreement dated March 24, 1998,
between the Registrant and Delaware
Funding Corporation, filed as Exhibit
2.1(c) to Registrant's report on
Form 10-Q for the quarter ending
March 29, 1998.
*2.1(d) Second Amendment to Receivables
Purchase Agreement dated as of
July 16, 1998, between the Registrant
and Delaware Funding Corporation, filed
as Exhibit 2.1(d) to Registrant's report
Form 10-Q for the quarter ending
September 27, 1998.
*2.1(e) Third Amendment to Receivables
Purchase Agreement dated as of
December 23, 1998, between the
Registrant and Delaware Funding
Corporation.
2.1(f) Fourth Amendment to Receivables
Purchase Agreement dated as of
March 23, 1999, between the
Registrant and Delaware Funding
Corporation. 29
21
<PAGE>
Exhibit Sequential
No. Description Page No.
*2.2(a) Investment Agreement dated as of
June 18, 1993, among Compania Industrial
de Parras, S.A. de C.V., Sr. Rodolfo
Garcia Muriel, and Cone Mills
Corporation, 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.
*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.,
22
<PAGE>
Exhibit Sequential
No. Description Page No.
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.
*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
23
<PAGE>
Exhibit Sequential
No. Description Page No.
- 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.
*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.
*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.
24
<PAGE>
Exhibit Sequential
No. Description Page No.
*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.
*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.
*4.3(h) Letter Agreement dated as of January
31, 1997, between the Registrant and
The Prudential Insurance Company of
America filed as Exhibit 4.3(h) to
the Registrant's report on Form 10-K
25
<PAGE>
Exhibit Sequential
No. Description Page No.
for the year ended December 29, 1996.
*4.3(i) Letter Agreement dated as of
July 31, 1997, between the Registrant
and the Prudential Insurance Company
of America, filed as Exhibit 4.3(i) to
the Registrant's report on Form 10-Q
for the quarter ended September 28, 1997.
*4.3(j) Modification to Note Agreement dated
as of February 14, 1998, between the
Registrant and The Prudential Insurance
Company of America, filed as Exhibit 4.3(j)
to Registrant's report on Form 10-Q
for the quarter ending March 29, 1998.
*4.4 Credit Agreement dated August 7, 1997,
among the Registrant, various banks
and Morgan Guaranty Trust Company of
New York as agent, filed as Exhibit 4.4
to the Registrant's report on Form 10-Q
for the quarter ended September 28, 1997.
*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 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.
*4.7(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
26
<PAGE>
Exhibit Sequential
No. Description Page No.
for year ended December 31, 1995.
*4.7(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.
*4.7(c) Third Amendment to the Cone Mills
Corporation 1983 ESOP dated
August 7, 1997, filed as Exhibit
4.8(c) to the Registrant's report
on Form 10-Q for the quarter ended
September 28, 1997.
*4.7(d) Fourth Amendment to the Cone Mills
Corporation 1983 ESOP dated
December 4, 1997, filed as Exhibit
4.8(d) to the Registrant's report
on Form 10-K for the year ended
December 28, 1997.
*4.8 Indenture dated as of February 14,
1995, between Cone Mills Corporation
and Wachovia Bank of North Carolina,
N.A. as Trustee (Bank of New York is
successor Trustee), filed as Exhibit 4.1
to Registrant's Registration Statement
on Form S-3 (File No. 33-57713).
27 Financial Data Schedule 32
* Incorporated by reference to the statement or report indicated.
27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
CONE MILLS CORPORATION
(Registrant)
Date May 17, 1999 /s/ Anthony L. Furr
Anthony L. Furr
Executive Vice President and
Chief Financial Officer
28
<PAGE>
Exhibit 2.1(f)
FOURTH AMENDMENT
TO
RECEIVABLES PURCHASE AGREEMENT
THIS FOURTH AMENDMENT dated as of March 23, 1999 (this "Amendment") to
the Receivables Purchase Agreement, dated as of March 25, 1997, and amended as
of March 24, 1998, as of July 16, 1998, as of January 28, 1999 and as of
December 23, 1998 (the "Receivables Purchase Agreement"), by and among CONE
RECEIVABLES LLC, a Delaware limited liability company, as seller (the "Seller"),
CONE MILLS CORPORATION, a Delaware corporation, as buyer (the "Buyer"), is by
and among the parties listed above. Capitalized terms used in this Amendment and
not otherwise defined shall have the meanings assigned to such terms in the
Receivables Purchase Agreement.
RECITALS
WHEREAS, the parties to the Receivables Purchase Agreement desire to
amend the Receivables Purchase Agreement to extend the expiration date of the
facility as provided below:
NOW THEREFORE, in consideration of the premises and the agreements
contained herein, the parties hereto agree as follows:
SECTION 1. Amendment to Section 1.01 of the Receivables
Purchase Agreement. The definition of "Expiration Date: in Section
1.01 of the Receivables purchase Agreement is hereby amended in its
entirety and now reads as follows:
"Expiration Date: shall mean the earliest if (I) June 23, 1999
(ii) the date of termination of the commitment of the LOC Bank under
the Letter of Credit Reimbursement Agreement, (iii) the date of
termination of the commitment of the Banks under the Credit Agreement
or (iv) the day on which the Buyer delivers a Notice of Termination
pursuant to Section 7.02 hereof or a Termination Event described in
Section 7.01(k) hereof occurs.
SECTION 2. Amendment to Section 2.15 of the Receivables Purchase
Agreement. The expiration date in Section 2.15 of the Receivables Purchase
Agreement is hereby extended by deleting "March 23, 1999" and inserting in its
place "June 23, 1999".
29
<PAGE>
SECTION 3. Receivables Purchase Agreement in Full Force and Effect as
Amended. Except as specifically stated herein, all of the terms and conditions
of the Receivables Purchase Agreement shall remain in full force and effect. All
references to the Receivables Purchase Agreement in any other document or
instrument shall be deemed to mean the Receivables Purchase Agreement, as
amended by this Amendment. This Amendment shall not constitute a novation of the
Receivables Purchase Agreement, but shall constitute an amendment thereto. The
parties hereto agree to be bound by the terms and obligations of the Receivables
Purchase Agreement, as amended by this Amendment, as though the terms and
obligations of the Receivables Purchase Agreement were set forth herein.
SECTION 4. Effectiveness. The amendments provided for by this Amendment
shall become effective as of the date hereof, upon receipt by the Buyer of (a)
executed counterparts of this Amendment and (b) a certificate of an officer of
each of the Seller and the Services to the effect that the representations and
warranties in Section 5.01 and 5.03, as applicable, of the Receivables Purchase
Agreement are true and correct as of the date hereof and that no Termination
Event or Potential Termination Event shall exist as of the date hereof.
SECTION 5. Counterparts. This Amendment may be executed in any number
of counterparts and by separate parties hereto on separate counterparts, each of
which when executed shall be deemed an original, but all such counterparts taken
together shall constitute one and the same instrument.
SECTION 6. Governing Law. THIS AMENDMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW
YORK.
30
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their duly authorized officers as of the date hereof.
CONE RECEIVABLES LLC,
By: Cone Mills Corporation, its sole member
By: /s/ David E. Bray
Name: David E. Bray
Title: Treasurer
CONE MILLS CORPORATION
BY: /s/ Anthony L. Furr
Name: Anthony L. Furr
Title: Executive Vice President
and CFO
DELAWARE FUNDING CORPORATION,
By: Morgan Guaranty Trust Company of New
York, as attorney-in-fact-for Delaware
Funding Corporation
By: /s/ Richard A. Burke
Name: Richard A Burke
Title: Vice President
31
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Cone
Mills Corporation Consolidated Financial Statements dated April 4, 1999,
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000023304
<NAME> CONE MILLS CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-02-2000
<PERIOD-END> APR-04-1999
<CASH> 1,883
<SECURITIES> 0
<RECEIVABLES> 55,090
<ALLOWANCES> 3,300
<INVENTORY> 132,912
<CURRENT-ASSETS> 201,210
<PP&E> 469,656
<DEPRECIATION> 239,445
<TOTAL-ASSETS> 512,866
<CURRENT-LIABILITIES> 117,025
<BONDS> 181,497
0
41,192
<COMMON> 2,543
<OTHER-SE> 128,717
<TOTAL-LIABILITY-AND-EQUITY> 512,866
<SALES> 157,257
<TOTAL-REVENUES> 157,257
<CGS> 141,914
<TOTAL-COSTS> 153,419
<OTHER-EXPENSES> 12,917
<LOSS-PROVISION> 1,800
<INTEREST-EXPENSE> 3,210
<INCOME-PRETAX> (14,089)
<INCOME-TAX> (4,790)
<INCOME-CONTINUING> (8,432)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (1,038)
<NET-INCOME> (9,470)
<EPS-PRIMARY> (0.40)
<EPS-DILUTED> (0.40)
</TABLE>
