UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                                 Washington, D. C. 20549

                                        FORM 10-Q

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

          For the quarterly period ended     September 30, 1996       

                                           OR
                TRANSITION  REPORT  PURSUANT TO  SECTION 13  OR  15(d)  OF THE
                SECURITIES EXCHANGE ACT OF 1934 

          For the transition period from           to                  


                               Commission File No. 1-5137


                                  FIELDCREST CANNON, INC.                 

                 (Exact name of registrant as specified in its charter)

                     DELAWARE                               56-0586036   
          (State or other jurisdiction of              (I.R.S. Employer
           incorporation or organization)              Identification No.)


                 One Lake Drive
                 Kannapolis, NC                                28081     
             (Address of principal                        (Zip Code)
              executive offices)

          Registrant's telephone number, including area code 704-939-2000   



          Former name, former address and former fiscal year, if changed since
          last report

          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 and
          (2) has been  subject to such  filing requirements  for the past  90
          days.  Yes  x  .  No    .

                     Number of shares outstanding  October 31, 1996

                           Common Stock  9,087,192



                                                        Total pages 22

                                                        Exhibit Index Page 11<PAGE>
     <TABLE>                PART 1. FINANCIAL INFORMATION

     FIELDCREST CANNON, INC.
     Consolidated statement of financial position                               
     <CAPTION>                                                              
                                                  September 30   December 31,
     Dollars in thousands                             1996          1995     
     <S>                                            <C>          <C>
     Assets                                                                  
     Cash                                           $ 11,800      $  9,124
     Accounts receivable                             163,956       168,112
     Inventories (note 3)                            264,386       228,167
     Other prepaid expenses and current assets         1,077         3,446     
     Total current assets                            441,219       408,849  
     Plant and equipment, net                        332,532       342,285
     Deferred charges and other assets                59,241        61,812
                                                                            
     Total assets                                   $832,992      $812,946
                                                                            

     Liabilities and shareowners' equity                                    
                                                                            
     Accounts and drafts payable                    $ 59,053      $ 54,274
     Deferred income taxes                            16,977        17,593
     Accrued liabilities                              70,156        67,725
     Current portion of long-term debt                 6,930           780 
     Total current liabilities                       153,116       140,372
     Senior long-term debt                           169,998       155,262
     Subordinated long-term debt                     203,750       210,000
     Total long-term debt                            373,748       365,262
     Deferred income taxes                            37,743        40,475
     Other non-current liabilities                    54,696        51,406
                                                                            
     Total liabilities                               619,303       597,515
                                                                            
     Shareowners' equity:
     Preferred Stock, $.01 par value,
     10,000,000 authorized, 1,500,000 issued
     and outstanding September 30, 1996 and
     December 31, 1995 (aggregate liquidation
     preference of $75,000)                               15            15

     Common Stock, $1 par value,
     25,000,000 authorized, 12,693,592 issued
     September 30, 1996 and 12,560,826
     December 31, 1995                                12,694        12,561 

     Additional paid in capital                      223,799       221,025
     Retained earnings                                94,406        99,055
     Excess purchase price for Common Stock
       acquired and held in treasury - 
       3,606,400 shares                             (117,225)     (117,225)
                                                                            
     Total shareowners' equity                       213,689       215,431
                                                                            
     Total liabilities and shareowners' equity      $832,992      $812,946
                                                                            
     </TABLE>
                                See accompanying notes
                                         (2)<PAGE>


   <TABLE>
   FIELDCREST CANNON, INC.
   Consolidated statement of income and retained earnings
   <CAPTION>                                                                       
                                         For the three months  For the nine months
   Dollars in thousands,                ended September 30    ended September 30
   except per share data                  1996       1995        1996      1995
   <S>                                   <C>        <C>        <C>       <C>     
   Net sales                            $285,221   $280,524    $812,995  $810,581
                                                                                 
   Cost of sales                         249,568    240,388     706,482   693,075
   Selling, general and administrative    28,253     26,342      78,406    78,688
   Restructuring charges                   4,500      7,082       8,130    15,536
                                                                                 
   Total operating costs and expenses    282,321    273,812     793,018   787,299
                                                                                 
   Operating income                        2,900      6,712      19,977    23,282
                                                                                 
   Other deductions (income):
     Interest expense                      7,160      6,807      21,496    20,290
     Other, net                               97         29         519      (115)
                                                                                 
   Total other deductions                  7,257      6,836      22,015    20,175
                                                                                 
   Income (loss) before income taxes      (4,357)      (124)     (2,038)    3,107
   Federal and state income
     taxes (benefit)                      (1,634)      (109)       (764)    1,103
                                                                                 
   Net income (loss)                      (2,723)       (15)     (1,274)    2,004
   Preferred dividends                    (1,125)    (1,125)     (3,375)   (3,375)
                                                                                 
   Earnings (loss) on common              (3,848)    (1,140)     (4,649)   (1,371)
                                                                                 
   Amount added to (subtracted from)
     retained earnings                    (3,848)    (1,140)     (4,649)   (1,371)
   Retained earnings,
    beginning of period                   98,254    100,195      99,055   100,426
                                                                                 
   Retained earnings, end of period     $ 94,406   $ 99,055    $ 94,406  $ 99,055  
                                                                                 
   Net income (loss) per common share   $   (.43)  $   (.13)   $   (.52) $   (.15)
   Fully diluted income (loss)
    per common share                    $   (.43)  $   (.13)   $   (.52) $   (.15)
                                                                                 
      Average primary shares outstanding            9,044,250    8,912,817     9,002,815   8,860,070
   Average fully diluted shares outstanding      9,044,250    8,912,817     9,003,562   8,860,293  
   </TABLE>



                                See accompanying notes

                                         (3)<PAGE>



     <TABLE>
     FIELDCREST CANNON, INC.
     Consolidated statement of cash flows
     <CAPTION>

                                                            Nine Months
                                                         ended September 30   
     Dollars in thousands                               1996            1995  
     <S>                                              <C>            <C>        
     Increase (decrease) in cash
     Cash flows from operating activities:
     Net income                                      $ (1,274)      $  2,004
     Adjustments to reconcile net income to
       net cash provided by operating activities: 
     Depreciation and amortization                     26,979         23,595
     Deferred income taxes                             (2,732)         1,012
     Other                                              8,625         (2,043)
     Change in current assets and liabilities,
       excluding effects of acquisition of Sure Fit:
       Accounts receivable                              4,156            118
       Inventories                                    (36,219)       (26,701)
       Other prepaid expenses and current assets        2,369            858
       Accounts payable and accrued liabilities         7,210         15,038
       Federal and state income taxes                       -         (2,268)
       Deferred income taxes                             (616)           (52)
                                                                              
       Net cash provided by operating activities        8,498         11,561
                                                                              
     Cash flows from investing activities:
     Additions to plant and equipment                 (21,035)       (49,761)
     Proceeds from disposal of plant and equipment      3,911          1,206
     Proceeds from net assets held for sale                 -         20,885
     Purchase of Sure Fit, net of cash acquired             -        (27,300)
                                                                              
       Net cash (used in) investing activities        (17,124)       (54,970)
                                                                             
     Cash flows from financing activities:
     Increase in revolving debt                        11,826         48,179
     Proceeds from issuance of long-term debt           3,610              -
     Payments on long-term debt                          (800)        (1,466)
     Proceeds from sale of common stock                    41             57
     Dividends paid on preferred stock                 (3,375)        (3,375)   
         
                                                                              
       Net cash provided by financing activities       11,302         43,395
                                                                               
     Increase (decrease) in cash                        2,676            (14)
                                                                              
     Cash at beginning of year                          9,124          5,885
                                                                              
     Cash at end of period                           $ 11,800       $  5,871
     </TABLE>




       
       See accompanying notes

                                         (4)<PAGE>



                               FIELDCREST CANNON, INC.

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  September 30, 1996  



          1. Basis of Presentation
             The consolidated financial  statements are unaudited.   In the
             opinion  of management  all  adjustments, consisting  only  of
             normal recurring items, have been made which are necessary  to
             show a  fair presentation  of the  financial  position of  the
             Company  at September  30,  1996 and  the  related results  of
             operations for the three  and nine months ended September  30,
             1996  and   1995.     The  unaudited   consolidated  financial
             statements should  be read in  conjunction with  the Company's
             Form 10-K for the year ended December 31, 1995.

          2. Income Per Common Share
             Reference  is made  to Exhibit  11  to this  Form  10-Q for  a
             computation  of  primary  and  fully-diluted  net  income  per
             Common share.

          3. Inventories
             Inventories are classified as follows:
             <TABLE>
             <CAPTION>
                                           September 30,    December 31, 
             (In thousands)                    1996             1995    
             <S>                             <C>              <C>
             Finished goods                  $128,389         $117,776
             Work in process                   83,016           72,315
             Raw materials and supplies        52,981           38,076  

                                             $264,386         $228,167   
             </TABLE>
             At September  30, 1996  approximately 72%  of the  inventories
             were valued on the last-in, first-out method (LIFO).


















                                         (5)<PAGE>


                       MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                    FINANCIAL CONDITION AND RESULTS OF OPERATIONS



          Changes in Financial Condition

          The Company's  debt (including  the current portion  of long-term
          debt) increased  $14.6 million  during the first  nine months  of
          1996.   Debt  increased primarily  because inventories  increased
          $36.2 million due to normal seasonal inventory build-up.  Capital
          expenditures totaled $21.0 million for  the first nine months  of
          1996 compared to $49.8 million for the first nine months of 1995.
          Included  in the  1996  and 1995  capital  expenditures are  $7.0
          million  and $27.9  million,  respectively, for  the new  weaving
          plant at the Company's Columbus, GA/Phenix City, Ala. towel mill.
          Capital expenditures  for 1996  are expected to  be approximately
          $35  million.  At September 30, 1996, approximately $28.0 million
          of  the  Company's $195  million  revolving  credit facility  was
          available and unused.  It is anticipated that financing of future
          capital  expenditures  will  be   provided  by  cash  flows  from
          operations,  borrowings  under  the  Company's  revolving  credit
          facility,  and, possibly,  the sale  of long-term debt  or equity
          securities.

          During  the third quarter the Company reached an agreement and on
          October 3,  1996 signed  a definitive agreement  to sell  certain
          Blanket   Division   inventories  and   equipment   to  Pillowtex
          Corporation  for $30 million in cash.  The transaction includes a
          long-term   trademark  license  royalty   agreement  under  which
          Pillowtex will sell blankets and throws, bed pillows and mattress
          pads  with  Fieldcrest  Cannon's brands  and  other  marks.   The
          Company is liquidating the remaining assets.   The purchase price
          is subject to  changes in  inventory levels from  June 30,  1996.
          The  transaction  will result  in  closing  the Blanket  Division
          facilities  in   Eden,  N.C.,   and  a  workforce   reduction  of
          approximately 750 employees.  The transaction is expected to take
          place by the end of  1996.  Proceeds from the sale of the Blanket
          Division  assets will be used to reduce debt and for reinvestment
          in the  Company's core businesses which  have historically earned
          higher margins than the blanket business.

          The  Company's  revolving credit  facility requires,  among other
          things, that the Company maintain certain financial ratios.   The
          Company  met all of its  financial covenants as  of September 30,
          1996.  The  Company currently expects  that operating results  in
          the  fourth quarter  of  1996 will  exceed  the financial  ratios
          required by the  covenants for the fourth quarter.   If this does
          not occur,  the Company would be  in violation at the  end of the
          fourth  quarter of certain of the above covenants but believes it
          can modify the covenants for  future periods through an amendment
          of the facility.<PAGE>


                                         (6)


          Changes in Results of Operations

          Quarter   Ended   September   30,    1996   vs.   Quarter   Ended
          September 30, 1995

          Net  sales  for the  third quarter  of  1996 were  $285.2 million
          compared  to  $280.5 million  in the  third  quarter of  1995, an
          increase of 2%.   The increase in  revenues was due  primarily to
          volume increases.

          Gross profit margins decreased from 14.3% in the third quarter of
          1995 to  12.5% in the  third quarter  of 1996.   The decrease  in
          margins  reflects lower  mill activity,  higher cotton  costs and
          $1.7
          million  of  equipment  relocation and  employee  training  costs
          related
          to the consolidation and closing of two towel facilities.  

          Selling,  general  and  administrative  expenses increased  as  a
          percentage of  sales from 9.4%  to 9.9%  in the third  quarter of
          1996 compared  to the same quarter of 1995.  The increase was due
          primarily  to  higher costs  related  to the  outsourcing  of the
          Company's information  technology services and  functions to  the
          Lockheed  Martin Corporation in August 1996.  The higher level of
          information technology expenses is expected to continue.

          In the third quarter of 1996 operating income was reduced by pre-
          tax  restructuring   charges   of  $4.5   million  for   employee
          termination benefits  and facility disposal costs  related to the
          sale of certain Blanket Division assets to Pillowtex Corporation.
          In the third quarter of 1995 operating income was reduced by pre-
          tax restructuring charges of $7.1 million related to  a voluntary
          early retirement program and  the reorganization of the Company's
          New York operations.

          Operating  income as a percentage  of sales decreased  to 1.0% in
          the third quarter of 1996 from 2.4% in the third quarter of 1995.
          The  decrease was due to lower gross profit margins and increased
          selling, general and administrative expenses.

          Interest expense  increased $.4 million  in the third  quarter of
          1996 as  compared to the third  quarter of 1995 due  primarily to
          higher rates under the  revolver and an increase in  average debt
          outstanding.

          The effective income tax rate was 37.5% for the third quarters of
          1996 and 1995.

          A net loss,  after the  effect of the  restructuring charges,  of
          $2.7 million, or  $.43 per  share after preferred  dividends, was
          incurred in  the third quarter of 1996, compared to a net loss of
          $15 thousand, or $.13 per share after preferred dividends, in the
          third quarter of 1995. 

          Nine  Months Ended  September  30,  1996  vs. Nine  Months  Ended
          September 30, 1995

          Net  sales for the first nine months  of 1996 were $813.0 million<PAGE>


          compared to $810.6 million in the first nine months of 1995.  The
          increase in revenues was due primarily to volume increases.


                                         (7)

          Gross  profit  margins decreased  from  14.5% in  the  first nine
          months of  1995 to 13.1% in the  first nine months of  1996.  The
          decrease was  due primarily  to lower mill  activity, higher  raw
          material  prices and  $3.3  million of  equipment relocation  and
          employee training costs related  to the consolidation and closing
          of two towel facilities.

          Selling, general  and  administrative  expenses  decreased  as  a
          percentage of sales from 9.7% to 9.6% in the first nine months of
          1996 compared to the first nine months of 1995.  The decrease was

          due primarily to lower payroll costs associated with the New York
          office   reorganization  and   the   early   retirement   program
          implemented  during 1995  which were  partially offset  by higher
          information technology expenses in the third quarter of 1996.

          Pre-tax restructuring charges of  $8.1 million in the first  nine
          months of 1996 include  $3.6 million for closing a  towel weaving
          plant  and a yarn manufacturing plant  as a part of the Company's
          ongoing consolidation  effort to utilize  assets more effectively
          and $4.5  million for employee termination  benefits and disposal
          costs  related to sale of  certain Blanket Division  assets.  The
          restructuring charges of  $15.5 million in the  first nine months
          of  1995 relate to the  reorganization of the  Company's New York
          operations and a voluntary early retirement program.
            
          Operating  income as a percentage  of sales decreased  to 2.5% in
          the first nine months of 1996 from 2.9%.  The decrease was due to
          lower  gross margins which were partially offset by a decrease in
          selling, general and administrative expenses and a lower level of
          restructuring charges.

          Interest expense increased $1.2 million the first  nine months of
          1996 as compared  to the first nine months of  1995 due primarily
          to an increase in average debt outstanding.

          The effective income tax rate was 37.5% for the first nine months
          of 1996 and 1995.

          A net loss, after the effect of the restructuring charges of $1.3
          million, or $.52 per share was incurred for the first nine months
          of 1996 compared to net  income of $2.0 million, a $.15  loss per
          share  after preferred  dividends, for the  first nine  months of
          1995.

          Forward-Looking Statements

          Certain  statements  in  management's  financial  discussion  and
          analysis above contain forward-looking information, including the
          statements under the discussion of changes in financial condition
          relating  to  continued compliance  with the  financial covenants
          under the  Company's revolving  credit facility.   Actual results
          and trends  could differ materially from those that are reflected
          in  such  statements  due  to a  variety  of  important  factors,
          including changes in the  Company's product sales mix  and market<PAGE>


          conditions for bed and bath products.





                                         (8)


          Item 6.   Exhibits and Reports on Form 8-K





             (a).   Exhibits


                    10.1   Sixth  Amendment to  Third Amended  and Restated
                           Revolving  Credit  Agreement  dated  October  9,
                           1996.

                    11     Computation  of Primary  and  Fully Diluted  Net
                           Income Per Share.


             (b).   Reports on Form 8-K

                    The  Registrant  did   not  file  any  reports  to   the
                    Commission on Form  8-K for the quarter ended  September
                    30, 1996.        <PAGE>









                                         (9)









                                 S I G N A T U R E S

          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.







                                               FIELDCREST CANNON, INC.    
                                                (Registrant)






                                         BY:  /s/ T. R. Staab              
                                             T. R. Staab      
                                             Vice President and
                                             Chief Financial Officer













          Date:  November 12, 1996<PAGE>






                                         (10)





                                  EXHIBIT INDEX TO 

                         QUARTERLY REPORT ON FORM 10-Q FOR 

                               FIELDCREST CANNON, INC.

                      FOR THE QUARTER ENDED SEPTEMBER 30, 1996 



   <TABLE>
   <CAPTION>

          Exhibit                                            Page
          Number              Description                    Number

          <S>          <C>                                   <C>

          (10.1)       Sixth Amendment to Third Amended
                       and Restated Revolving Credit
                       Agreement dated October 9, 1996       12 - 21

          (11)         Computation of Primary and Fully
                       Diluted Net Income Per Share            22

   /TABLE
<PAGE>








                                        (11)


                                         -1-


                                   SIXTH AMENDMENT
                                          to
                              THIRD AMENDED AND RESTATED
                              REVOLVING CREDIT AGREEMENT


               This SIXTH AMENDMENT (the "Amendment"), dated as of  October
          9,  1996, is  by and  among FIELDCREST  CANNON, INC.,  a Delaware
          corporation (the "Company"), the lenders listed on the  signature
          pages hereto (the "Lenders"), BANK OF AMERICA ILLINOIS  (formerly
          known as Continental Bank N.A.), CORESTATES BANK, N.A.  (formerly
          known  as Philadelphia  National Bank)  and FIRST  UNION NATIONAL
          BANK  OF  NORTH  CAROLINA,  as  lead  managers  for  the  Lenders
          (collectively, the "Lead Managers"), and THE FIRST NATIONAL  BANK
          OF BOSTON, as agent for the Lenders (the "Agent").

               WHEREAS, the Company, the Lenders, the Lead Managers and the
          Agent  are parties  to  that certain  Third Amended  and Restated
          Revolving  Credit  Agreement, dated  as  of  March  10, 1994,  as
          amended (as so amended, the "Credit Agreement"); and

               WHEREAS, the Company, the Lenders, the Lead Managers and the
          Agent  have agreed, subject to the terms and conditions set forth
          herein, to  amend certain provisions  of the Credit  Agreement as
          set forth herein;

               NOW, THEREFORE, the parties hereto hereby agree as follows:

               1.   CERTAIN DEFINED  TERMS.   Capitalized  terms which  are
          used  herein without  definition  and which  are  defined in  the
          Credit  Agreement shall have the  same meanings herein  as in the
          Credit Agreement.

               2.   AMENDMENT OF CREDIT AGREEMENT.  

               (a)  Section 1 of the Credit Agreement is hereby  amended by
          adding the following new definitions in the appropriate places in
          the alphabetical sequence thereof:

                    Blanket  Sale.  The  sale by  the Company  to Pillowtex
               Corporation of certain  inventory and  equipment related  to
               the Company's  manufacture  and  sale  of  blankets  by  its
               Blanket Division.

                    Blanket Sale Expense Amount.  For any fiscal quarter of
               the Company,  the  aggregate  amount  of  idle  plant  costs
               incurred by the Company as normal operating expenses  during
               such fiscal quarter  as a result of the Blanket Sale and the
               closing  of  all  or  a  portion  of the  Company's  blanket<PAGE>





               manufacturing facilities  in Eden,  North Carolina,  as such
               amount is identified by the Company to the Agent in a manner
               satisfactory to the Agent in all respects.

                                         -12-

                                         -2-


                    Blanket Sale Restructuring Charge.   An amount equal to
               the one-time  charge against Consolidated Net  Income of the
               Company and its  Subsidiaries for the fiscal  quarter of the
               Company ending September  30, 1996 incurred  as a result  of
               the Blanket Sale and the closing  of all or a portion of the
               Company's blanket manufacturing facilities located  in Eden,
               North  Carolina,   as  such  amount  is   reflected  in  the
               consolidated  financial statements  of the  Company and  its
               Subsidiaries  for such  fiscal period;  provided that  in no
               event shall the  Blanket Sale  Restructuring Charge  include
               the Blanket Sale Expense Amount.

               (b)  The definition of "Applicable Margin" set forth in 1 of
          the  Credit   Agreement  is  hereby  amended   by  deleting  such
          definition  in  its  entirety,   and  substituting  therefor  the
          following:

                    Applicable Margin.   For  each period commencing  on an
               Adjustment  Date through the  date immediately preceding the
               next Adjustment Date (each  a "Rate Adjustment Period"), the
               Applicable  Margin shall  be  the applicable  percentage set
               forth below with respect  to the Company's Interest Coverage
               Ratio (calculated as described  below), as determined at the
               end of the fiscal period of the Company and its Subsidiaries
               ending immediately prior to  the applicable Rate  Adjustment
               Period:
          <TABLE>
                  Interest
                  Coverage           Commitment     EuroRate     C/D Rate     Letter of
                    Ratio               Fee         Amounts      Amounts      Credit Fees
            <CAPTION>
            <S>                      <C>            <C>          <C>          <C>
            Less than or equal         0.500%        2.250%       2.375%        2.250%
            to 0.50 to 1.00
            Greater than 0.50 to       0.500%        2.000%       2.125%        2.000%
            1.00 and less than or
            equal to 1.00 to 1.00
            Greater than 1.00 to       0.500%        1.750%       1.875%        1.750%
            1.00 and less than or
            equal to 1.50 to 1.00
            Greater than 1.50          0.375%        1.500%       1.625%        1.500%
            to 1.00
            </TABLE>
                    Notwithstanding  the  foregoing,  (a)  for  the  period
               commencing on January 15,  1996 through the date immediately<PAGE>


               preceding the first Adjustment  Date to occur after December
               29,  1995, the Applicable Margin  shall be deemed  to be the
               highest  Applicable Margin set  forth above  and (b)  if the
               Company fails to deliver any Compliance Certificate pursuant
               to 7.5(d) hereof then, for the period commencing on the next
               Adjustment Date to occur  subsequent to such failure through
               the date  immediately preceding  the  Adjustment Date  which
               occurs  immediately  following   the  date  on  which   such
               Compliance  Certificate is delivered,  the Applicable Margin
               shall  be deemed  to be  the highest  Applicable  Margin set
               forth  above.   For  purposes  of  calculating the  Interest
               Coverage Ratio in order  to determine the Applicable Margin,
               the Blanket Sale 
                                         -13-

                                         -3-

               Expense Amount shall not be added to Consolidated Net Income
               as provided in  clause (h) of the definition of Consolidated
               Net Income.

               (c)  The definition of  "Consolidated Net Income" set  forth
          in 1 of  the Credit Agreement is hereby amended  by deleting such
          definition  in  its  entirety,  and  substituting   therefor  the
          following: 

                    Consolidated Net  Income.  The consolidated  net income
               (or net deficit) of the Company and its Subsidiaries for any
               period, after  deduction of  all expenses, taxes,  and other
               proper  charges,   all  as  determined  in  accordance  with
               Generally  Accepted Accounting  Principles.    In  addition,
               there  shall be  added to  Consolidated Net Income  for each
               fiscal  period  an  amount  equal to  the  Cotton  Writedown
               Charge,  if any, for such fiscal period, as determined on an
               after-tax  basis,  and   there  shall  be   subtracted  from
               Consolidated Net Income  for such period an amount  equal to
               the  aggregate  amount  of  reversals  of  Cotton  Writedown
               Charges  from  prior fiscal  periods,  as  determined on  an
               after-tax basis, made in  accordance with Generally Accepted
               Accounting  Principles reflecting  the  consumption  of  the
               cotton to  which the Cotton Writedown Charges from the prior
               fiscal periods relate, all  as determined in accordance with
               Generally  Accepted Accounting Principles; provided that for
               purposes of determining Consolidated  Net Income in order to
               determine Consolidated EBIT and Consolidated EBITDA:

                    (a)  the   foregoing  calculations  in   this  sentence
               pertaining  to Cotton  Writedown  Charges  and reversals  of
               Cotton Writedown  Charges from  prior periods shall  be made
               using  Cotton  Writedown  Charges  and reversals  of  Cotton
               Writedown Charges from prior periods determined on a pre-tax
               basis;

                    (b) there  shall be  added to Consolidated  Net Income,
               for  the  fiscal period  in  which the  Company  adopted the
               accounting  standards  set  forth  in  Financial  Accounting
               Standard Board's  Statement Nos.  106 and 109,  an aggregate<PAGE>


               amount  equal  to the  one-time non-cash  accounting charges
               against Consolidated  Net Income  taken as  a result  of the
               adoption  by the  Company  of the  accounting standards  set
               forth therein;

                    (c) there shall be added to Consolidated Net Income for
               the fiscal quarters ending March 31, 1995, June 30, 1995 and
               September  30, 1995  an  amount equal  to the  Restructuring
               Charge,  as determined on a pre-tax basis, provided, that in
               no event  shall the  aggregate amount added  to Consolidated
               Net Income pursuant to this clause (c) exceed $15,536,000;

                    (d) there shall be added to Consolidated Net Income for
               the fiscal  quarter ending December 31, 1995 an amount equal
               to  the Yarn  Spinning Charge,  as determined  on a  pre-tax
               basis, 

                                         -14-

                                         -4-

               provided that  in no event shall the  aggregate amount added
               to  Consolidated  Net Income  pursuant  to  this clause  (d)
               exceed $5,000,000;

                    (e) there shall be added to Consolidated Net Income for
               the fiscal quarter ending March 31, 1996, an amount equal to
               the Mill  Closing Restructuring  Charge, as determined  on a
               pre-tax basis, provided that in no event shall the aggregate
               amount  added to  Consolidated Net  Income pursuant  to this
               clause (e) exceed $5,000,000;

                    (f) there shall be added to Consolidated Net Income for
               the fiscal  quarters ending  March 31, 1996,  June 30, 1996,
               September 30, 1996 and December 31,  1996 an amount equal to
               the Mill Closing Expenses Amount for such fiscal quarter, as
               determined on  a pre-tax  basis, provided  that in no  event
               shall the aggregate amount  added to Consolidated Net Income
               for the combined four quarter fiscal period pursuant to this
               clause (f) exceed $3,200,000;

                    (g) there shall be added to Consolidated Net Income for
               the fiscal quarter ended September 30, 1996, an amount equal
               to the Blanket Sale Restructuring Charge, as determined on a
               pre-tax basis, provided that in no event shall the aggregate
               amount  added to  Consolidated Net  Income pursuant  to this
               clause (g) exceed $4,500,000; and 

                    (h) there shall be added to Consolidated Net Income for
               each  of the fiscal quarters of the Company ended during the
               period commencing on January 1,  1997 and ending on December
               31,  1998 an amount equal to the Blanket Sale Expense Amount
               for  such fiscal quarter, as determined  on a pre-tax basis,
               provided that in  no event shall the aggregate  amount added
               to  Consolidated Net  Income for  the combined  four quarter
               fiscal period ended December  31, 1997 exceed $1,000,000 and
               in no event shall the aggregate amount added to Consolidated<PAGE>


               Net Income for the combined four quarter fiscal period ended
               December 31,  1998 exceed  $1,000,000; all as  determined in
               accordance with Generally Accepted Accounting Principles.  

               3.   WAIVER.    (a)  Section  8.6 of  the  Credit  Agreement
          provides  that the  Company  will not  sell,  lease or  otherwise
          dispose of  its assets except for  (i) sales of inventory  in the
          ordinary course of business, and (ii) sales of assets (other than
          Collateral) in  arm's-length transactions  for cash and  for fair
          and reasonable value.  The Company has requested that the Lenders
          waive  the  above-described  provision   of  8.6  of  the  Credit
          Agreement  solely to the  extent necessary to  permit the Blanket
          Sale to the extent  that the assets sold in such  sale constitute
          Collateral.   In response to  the Company's request,  the Lenders
          hereby waive the above-described provisions  of 8.6 of the Credit
          Agreement solely to  the extent necessary  to permit the  Blanket
          Sale, provided that the foregoing waiver shall be  effective only
          if (i) the Blanket Sale is 

                                         -15-

                                         -5-

          consummated in accordance with the terms and conditions set forth
          in a purchase and sale agreement which has been delivered to the 
          Agent and which is satisfactory to the Agent in all respects (the

          "Purchase Agreement"),  (ii) only the inventory  and equipment of
          the  Company which are used by its Blanket Division in connection
          with  the manufacture and sale of blankets in the ordinary course
          of  its business (the "Purchased Assets") are sold by the Company
          pursuant to  the Purchase Agreement, (iii)  the Company receives,
          upon  the consummation of the Blanket Sale in accordance with the
          terms  of the Purchase Agreement (the "Closing Date"), cash in an
          amount not less than $30,000,000 plus or  minus any change in the
          value  of inventory  of the  Blanket Division,  as valued  on the
          basis of standard  cost, from June 30, 1996  to the Closing Date,
          and  (iv) no  Default or Event  of Default exists  on the Closing
          Date  or  shall exist  after giving  effect  to the  sale  of the
          Purchased  Assets and the waiver  set forth herein.   The Company
          shall deliver to the Agent  on the Closing Date a certificate  as
          to the matters set forth in clauses (i) through (iv) above.

               (b)  Except  as expressly set forth herein, all of the terms
          and conditions of the  Credit Agreement remain in full  force and
          effect.    The waiver  contained in  clause (a)  of this  3 shall
          operate solely with  respect to the matters  described herein and
          shall  not  impair any  right or  power  accruing to  any Lender,
          including, without limitation, upon the occurrence or continuance
          of any Default or Event of Default under the Credit Agreement.

               4.   RELEASE  OF COLLATERAL.    Each of  the Lenders  hereby
          authorizes and directs the Agent to take all such actions  as are
          necessary  to release as of record its security interest, for the
          benefit of the Lenders, in the Purchased Assets which are sold by
          the  Company pursuant  to  and in  accordance  with the  Purchase
          Agreement, provided that the Agent may only  release its security<PAGE>


          interest  in the Purchased Assets  after or concurrently with the
          sale  of  such assets  by  the Company  on the  Closing  Date and
          provided  further that the Agent shall have received prior to any
          release of its security interest as provided herein a certificate
          of the Company in accordance with 3(a) hereof.

               5.   AFFIRMATION BY THE COMPANY AND THE GUARANTORS.

               (a)  The  Company hereby  ratifies and  confirms all  of the
          Lender Obligations, including, without limitation, the Loans, and
          the Company hereby affirms its absolute and unconditional promise
          to pay to the Lenders  the Loans and all other amounts  due under
          the  Credit  Agreement as  amended  hereby.   The  Company hereby
          confirms  that  the Lender  Obligations  are  and remain  secured
          pursuant  to the  Security Documents  to which  the Company  is a
          party.

               (b)  Each  of   Crestfield   Cotton,  FCC   Canada,   Encee,
          Fieldcrest International, St. Mary's,  Fieldcrest Transportation,
          Fieldcrest  Financing, Fieldcrest  Licensing and  Fieldcrest Sure
          Fit  hereby acknowledges  the  provisions of  this Amendment  and
          hereby reaffirms 

                                         -16-

                                         -6-

          its absolute and unconditional  guaranty of the Company's payment
          and  performance of the Lender  Obligations to the  Banks as more
          fully described in the Guaranty to which such  Person is a party.
          Each  of   the  Secured  Guarantors  hereby   confirms  that  its
          obligations
          under the  Guaranty to which it is a party are and remain secured
          pursuant to the Security Documents to which it is a party.

               6.   REPRESENTATIONS AND  WARRANTIES.   The  Company  hereby
          represents and warrants to the Lenders as follows:

               (a)  Representations  and  Warranties.   The representations
          and warranties contained in  6 of the Credit Agreement  were true
          and   correct  in   all  material   respects  when  made.     The
          representations  and  warranties contained  in  6  of the  Credit
          Agreement,  as amended hereby, are  true and correct  on the date
          hereof.

               (b)  Enforceability.   The  execution  and  delivery by  the
          Company  and the  Secured Guarantors  of this  Amendment and  all
          other  instruments and  agreements  required to  be executed  and
          delivered  by the Company and the Secured Guarantors, as the case
          may be,  in connection with the  transactions contemplated hereby
          or referred  to herein (collectively, the "Amendment Documents"),
          and  the performance by the Company and the Secured Guarantors of
          the  Amendment Documents  and  the Credit  Agreement, as  amended
          hereby,  are within the corporate  powers of the  Company and the
          Secured  Guarantors, as  the  case may  be,  and have  been  duly
          authorized by all necessary  corporate action on the part  of the
          Company and  the Secured Guarantors, as the case may be.  Each of<PAGE>


          the  Amendment Documents  and  the Credit  Agreement, as  amended
          hereby, are valid and legally  binding obligations of the Company
          and  the Secured Guarantors, as  the case may  be, enforceable in
          accordance  with their  terms, except  as limited  by bankruptcy,
          insolvency, reorganization,  moratorium or similar  laws relating
          to or affecting the enforcement of creditors' rights in general.

               (c)  No  Default.    No  Default  or  Event  of Default  has
          occurred and is  continuing and  no Default or  Event of  Default
          will  exist after the execution and delivery of this Amendment or
          after the consummation of the transactions contemplated hereby.

               7.   EFFECTIVENESS.  This  Amendment shall become  effective
          upon satisfaction  of each of the  following conditions precedent
          on or prior to December 31, 1996:

               (a)  Delivery.  The Company, the Lenders, the Agent  and the
          guarantors referred  to in  5(b) hereof shall  have executed  and
          delivered this Amendment.

               (b)  Proceedings   and  Documents.     All   proceedings  in
          connection with the  transactions contemplated by this  Amendment
          and all documents incident  hereto shall be satisfactory in  form
          and substance to the Agent, and the Agent shall have received all



                                         -17-

                                         -7-

          information and such counterpart originals or certified or other 
          copies of such documents as the Agent may reasonably request.

               8.   MISCELLANEOUS  PROVISIONS.    (a) Except  as  otherwise
          expressly  provided   by  this  Amendment,  all   of  the  terms,
          conditions and  provisions of  the Credit Agreement  shall remain
          the same.  It 
          is declared and  agreed by  each of the  parties hereto that  the
          Credit Agreement, as amended hereby, shall continue in full force
          and  effect, and  that this  Amendment and such  Credit Agreement
          shall  be  read and  construed as  one  instrument.   The consent
          granted hereunder is limited to the  specific matters referred to
          herein and the Lenders shall not have any obligation to issue any
          further  consent  with respect  to  the  subject  matter of  this
          consent or any other matter.

               (b)  This  Amendment  is  intended  to  take  effect  as  an
          agreement under  seal and  shall  be construed  according to  and
          governed by the laws of the Commonwealth of Massachusetts.

               (c)  This  Amendment  may  be  executed  in  any  number  of
          counterparts, but all such counterparts shall together constitute
          but one instrument.   In making proof of this  Amendment it shall
          not  be necessary  to  produce  or  account  for  more  than  one
          counterpart  signed by  each party  hereto by  and against  which
          enforcement hereof is sought.<PAGE>


               (d)  The  Company  hereby agrees  to  pay to  the  Agent, on
          demand  by  the Agent,  all  reasonable  out-of-pocket costs  and
          expenses  incurred or sustained  by the Agent  in connection with
          the preparation  of this Amendment and the  documents referred to
          herein (including reasonable legal fees).






















                                         -18-<PAGE>


                                         -8-


               IN WITNESS WHEREOF, the parties have executed this Amendment
          as of the date first above written.

                                        FIELDCREST CANNON, INC.


                                        By:  \s\ T. R. Staab     
                                           Title:  Vice President and 
                                                   Chief Financial Officer

                                        THE FIRST NATIONAL BANK
                                          OF BOSTON, as Agent


                                        By:  \s\ Thomas R. Sommerfield 
                                           Title:  Division Executive


                                        THE FIRST NATIONAL BANK
                                          OF BOSTON 


                                        By:  \s\ Thomas R. Sommerfield
                                           Title:  Division Executive


                                        BANK OF AMERICA ILLINOIS, 
                                          individually and as Lead Manager


                                        By:  \s\ Deidre B. Doyle 
                                           Title:  Vice President


                                        CORESTATES BANK, N. A., 
                                          individually and as Lead Manager 


                                        By: \s\ James P. Richards     
                                         Title:  Vice President













                                         -19-<PAGE>


                                         -9-


                                        FIRST UNION NATIONAL BANK
                                         OF NORTH CAROLINA, individually 
                                             and as Lead Manager


                                        By: \s\ Kent Phillips         
                                         Title:  Vice President


                                        BANK OF MONTREAL


                                        By: \s\ Thomas H. Calder      
                                         Title:  Director


                                        MELLON BANK, N. A.


                                        By: \s\ Charles M. Staub      
                                         Title:  First Vice President


               Each of the undersigned joins in this Amendment for purposes
          of 5(b) hereof.

                                        CRESTFIELD COTTON COMPANY


                                        By: \s\ T. R. Staab           
                                          Title: Vice President and
                                                  Treasurer


                                        FCC CANADA, INC.


                                        By: \s\ T. R. Staab           
                                          Title: Vice President and
                                                  Treasurer


                                        ENCEE, INC.


                                        By: \s\ T. R. Staab           
                                          Title:  Vice President and
                                                  Treasurer




                                         -20-<PAGE>


                                         -10-


                                        FIELDCREST CANNON 
                                          INTERNATIONAL, INC.


                                        By: \s\  T. R. Staab          
                                          Title:  Vice President and
                                                  Treasurer


                                        ST. MARY'S, INC.


                                        By: \s\  T. R. Staab          
                                          Title:  Vice President and
                                                  Treasurer

                                        FIELDCREST CANNON 
                                          TRANSPORTATION, INC.


                                        By: \s\  T. R. Staab          
                                          Title:  President


                                        FIELDCREST CANNON LICENSING, INC.


                                        By: \s\  John E. Setliff, Jr. 
                                          Title:  Vice President


                                        FIELDCREST CANNON FINANCING, INC.


                                        By: \s\  John E. Setliff, Jr. 
                                          Title:  Vice President


                                        FIELDCREST CANNON SURE FIT, INC.


                                        By: \s\  T. R. Staab          
                                          Title:  Vice President and
                                                  Chief Financial Officer








                                         -21-<PAGE>


            <TABLE>
     <CAPTION>                                                         Exhibit 11
                     Computation of Primary and Fully Diluted Net Income Per Share
                                               For the three months        For the nine months
                                                 ended September           ended September 30 
                                               1996            1995         1996          1995
     <S>                                   <C>           <C>            <C>          <C>
     Average shares outstanding              9,038,795     8,884,750       8,995,373   8,842,362

     Add shares assuming exercise of
       options reduced by the number
       of shares which could have been
       purchased with the proceeds from 
       exercise of such options                   5,455       28,067           7,442      17,708

     Average shares and equivalents
       outstanding, primary                   9,044,250    8,912,817       9,002,815   8,860,070

     Average shares outstanding               9,038,795    8,884,750       8,995,373   8,842,362

     Add shares giving effect to the
       conversion of the convertible
       subordinated debentures                   (1)          (1)             (1)          (1)

     Add shares giving effect to the
       conversion of the convertible 
       preferred stock                           (1)          (1)             (1)          (1)  

     Add shares assuming exercise of
       options reduced by the number 
       of shares which could have been 
       purchased with the proceeds from 
       exercise of such options                  5,455        28,067          8,189       17,931

     Average shares and equivalents
       outstanding, assuming full
       dilution                              9,044,250     8,912,817      9,003,562    8,860,293

     Primary Earnings

       Net income (loss)                   $(2,723,000)  $   (15,000)   $(1,274,000) $ 2,004,000

       Preferred dividends                  (1,125,000)   (1,125,000)    (3,375,000)  (3,375,000)

       Earnings (loss) on Common           $(3,848,000)  $(1,140,000)   $(4,649,000) $(1,371,000)

     Primary earnings (loss)
       per common share                    $      (.43)  $      (.13)   $      (.52) $      (.15)

     Fully Diluted Earnings  

       Earnings (loss) on Common           $(3,848,000)  $(1,140,000)   $(4,649,000) $(1,371,000)

       Add convertible subordinated
       debenture interest, net of taxes         (1)           (1)             (1)         (1)

       Add convertible preferred dividends      (1)           (1)             (1)         (1)   <PAGE>


       Net income (loss)                   $(3,848,000)  $(1,140,000)   $(4,649,000) $(1,371,000)

     Fully diluted earnings (loss)
       per Common share                    $      (.43)  $      (.13)   $      (.52) $      (.15)

     (1)   The  assumed conversion  of the  Registrant's Convertible  Subordinated Debentures  and
           Convertible Preferred  Stock for the three  months and nine months  ended September 30,
           1996 and  1995 would have an anti-dilutive  effect for the computation  of earnings per
           share; therefore, conversion has not been assumed for these periods.
     </TABLE>                                    (22)<PAGE>