<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                                WASHINGTON, D.C.
                                      20549

                                    FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended January 1, 2000                    Commission File No. 0-1915


                              THOMASTON MILLS, INC.

          GEORGIA                                 58-0460470
-----------------------------------       --------------------------------------
 (State or other jurisdiction of          (I.R.S. Employer Identification No.)
incorporation or organization)


115 East Main Street, P.O. Box 311, Thomaston, Georgia            30286-0004
--------------------------------------------------------------------------------
    (Address of principal executive offices)                      (Zip Code)


Registrant's telephone number, including area code (706) 647-7131.
                                                   ---------------

Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the close of the period covered by this report.

    Class A        Common Stock $1 Par Value  -  5,620,518 Shares including
                   710,838 Treasury Shares

    Class B        Common Stock $1 Par Value  -  1,873,506 Shares including
                   243,140 Treasury Shares

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 for
the past 90 days.


Yes [X]                 No [ ]



<PAGE>   2




                                      INDEX
                      THOMASTON MILLS, INC. AND SUBSIDIARY


PART 1.      FINANCIAL INFORMATION

Item 1.      Financial Statements (Unaudited)

             Condensed consolidated balance sheets - January 1, 2000 and July 3,
             1999

             Condensed consolidated statements of operations -- thirteen
             weeks ended January 1, 2000 and thirteen weeks ended January
             2, 1999 and twenty-six weeks ended January 1, 2000 and
             twenty-seven weeks ended January 2, 1999

             Condensed consolidated statements of cash flows - twenty-six
             weeks ended January 1, 2000 and twenty-seven weeks ended
             January 2, 1999

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

Item 3.      Quantitative and Qualitative Disclosures about Market Risk


PART II.     OTHER INFORMATION

Item 1.      Legal Proceedings

Item 2.      Change in Securities

Item 3.      Defaults upon Senior Securities

Item 4.      Submission of Matters to a vote of Security Holders

Item 5.      Other information

Item 6.      Exhibits and Reports on Form 8-K


SIGNATURES



<PAGE>   3





PART 1 - FINANCIAL INFORMATION

                      THOMASTON MILLS, INC. AND SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (Dollars in Thousands)



<TABLE>
<CAPTION>
                                                     JANUARY 1, 2000       July 3, 1999
                                                     ---------------       ------------
<S>                                                  <C>                   <C>
ASSETS
CURRENT ASSETS
 Cash & cash equivalents                                    $    293          $    353
 Accounts receivable, less allowance of
  $724 at January 1, 2000 and $950 at July 3, 1999            25,350            35,237
   Inventories--Note B                                        37,324            40,371
   Other current assets                                        1,096             1,038
                                                            --------          --------
          TOTAL CURRENT ASSETS                                64,063            76,999

  PROPERTY, PLANT AND EQUIPMENT                              167,273           166,339
   Less allowance for depreciation                           119,268           114,679
                                                            --------          --------
                                                              48,005            51,660

  Assets held for sale                                         9,680            10,709
  Deferred income taxes                                        3,116             3,116
  Other assets                                                 7,732             5,937
                                                            --------          --------
                                                            $132,596          $148,421
                                                            ========          ========
  LIABILITIES AND SHAREHOLDERS' EQUITY
  CURRENT LIABILITIES
   Accounts payable                                         $ 12,490          $ 17,950
   Accrued liabilities                                         9,092             7,339
   Current portion of long-term debt
    and capital lease obligations                              4,398             4,398
   Reserve for discontinued operations                             0             5,533
                                                            --------          --------
      TOTAL CURRENT LIABILITIES                               25,980            35,220

  OBLIGATIONS UNDER CAPITAL LEASE -
   less current portion                                          767               963

  LONG-TERM DEBT, less current portion                        62,116            66,696

  OTHER LIABILITIES                                            1,445             1,342

  SHAREHOLDERS' EQUITY
   Class A Common Stock--5,620,518 shares
     outstanding including 710,838 treasury shares             5,621             5,621
   Class B Common Stock--1,873,506 shares
     outstanding including 243,140 treasury shares             1,873             1,873
   Additional paid-in capital                                 10,766             8,904
   Retained earnings                                          29,448            33,222
                                                            --------          --------
                                                              47,708            49,620

   Less treasury stock - at cost                               5,420             5,420
                                                            --------          --------
                                                              42,288            44,200
                                                            --------          --------
                                                            $132,596          $148,421
                                                            ========          ========
</TABLE>



NOTE: The Balance Sheet at July 3, 1999 has been derived from the Audited
Financial Statements at that date. See Notes to Condensed Financial Statements.



<PAGE>   4




                      THOMASTON MILLS, INC. AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
             (Dollars in Thousands except Share and Per Share Data)



<TABLE>
<CAPTION>
                                                            13 WEEKS            13 Weeks            26 WEEKS           27 Weeks
                                                              ENDED              Ended               ENDED               Ended
                                                        JANUARY 1, 2000     January 2, 1999     JANUARY 1, 2000     January 2, 1999
                                                        ---------------     ---------------     ---------------     ---------------
<S>                                                     <C>                 <C>                 <C>                 <C>
Net sales                                                   $    37,195         $    37,954         $    77,919         $    81,024
Cost of sales                                                    33,586              38,509              69,817              80,206
                                                            -----------         -----------         -----------         -----------
  Gross profit (loss)                                             3,609                (555)              8,102                 818

Selling, general and administrative expenses                      3,741               3,739               7,798               8,215
                                                            -----------         -----------         -----------         -----------
  Operating profit (loss)                                          (132)             (4,294)                304              (7,397)

Interest expense                                                  2,241               1,613               4,309               3,198
Amortization of credit agreement fees                               100                   0                 174                   0
Other income                                                        289                 315                 405                 459
                                                            -----------         -----------         -----------         -----------
  Loss from continuing operations before income tax              (2,184)             (5,592)             (3,774)            (10,136)
    benefit
Benefit for income taxes                                              0              (3,304)                  0              (5,751)
                                                            -----------         -----------         -----------         -----------
  Loss from continuing operations                                (2,184)             (2,288)             (3,774)             (4,385)
  Loss from discontinued operations                                   0              (3,102)                  0              (4,997)
                                                            -----------         -----------         -----------         -----------
  Net loss                                                  $    (2,184)        $    (5,390)        $    (3,774)        $    (9,382)
                                                            ===========         ===========         ===========         ===========


Weighted Average Number of Shares - Basic and Diluted         6,540,046           6,540,046           6,540,046           6,540,046
Basic and diluted loss per share:
  Continuing operations                                     $     (0.33)        $     (0.35)        $     (0.58)        $     (0.67)
  Discontinued operations                                          0.00               (0.47)               0.00               (0.76)
                                                            -----------         -----------         -----------         -----------
Net loss per share                                          $     (0.33)        $     (0.82)        $     (0.58)        $     (1.43)

Dividends paid per share                                    $    0.0000         $    0.0000         $    0.0000         $    0.0375
</TABLE>



<PAGE>   5




                      THOMASTON MILLS, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)



<TABLE>
<CAPTION>
                                                      26 WEEKS           27 Weeks
                                                        ENDED              Ended
                                                  JANUARY 1, 2000     January 2, 1999
                                                  ---------------     ---------------
<S>                                               <C>                 <C>
OPERATING ACTIVITIES
Net loss                                              $ (3,774)          $ (9,382)
Adjustments to reconcile net loss
 to net cash provided by operating
 activities:
      Depreciation and amortization                      5,047              7,538
      Gain on sale of property, plant
      and equipment                                       (266)               (35)
Changes in operating assets and liabilities:
      Accounts receivable                                9,887             16,069
      Inventories                                        3,047             (4,358)
      Other assets                                        (429)            (3,473)
      Assets held for sale                               1,029                  0
      Accounts payable, accrued
       liabilities and
       other liabilities                                (3,604)             2,549
      Reserve for discontinued operations               (5,533)                 0
                                                      --------           --------
      NET CASH PROVIDED BY
      OPERATING ACTIVITIES                               5,404              8,908

INVESTING ACTIVITIES
Purchases of property, plant and equipment                (926)            (2,009)
Proceeds from sales of property, plant
   and equipment                                           237                 35
                                                      --------           --------
      NET CASH USED IN INVESTING
      ACTIVITIES                                          (689)            (1,974)

FINANCING ACTIVITIES
Proceeds from revolving lines of credit
   and long-term debt                                    6,936              3,500
Principal payments on revolving lines of
   credit, long-term debt and capital
   lease obligations                                   (11,712)            (8,899)
Cash dividends paid                                          0               (245)
                                                      --------           --------
      NET CASH USED IN
      FINANCING ACTIVITIES                              (4,776)            (5,644)
                                                      --------           --------

      INCREASE (DECREASE) IN CASH
      AND CASH EQUIVALENTS                                 (61)             1,290

Cash and cash equivalents at beginning
   of period                                               353              1,122
                                                      --------           --------
Cash and cash equivalents at end
   of period                                          $    292           $  2,412
                                                      --------           --------
</TABLE>
<PAGE>   6




                      THOMASTON MILLS, INC. AND SUBSIDIARY


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 1, 2000

NOTE A -- BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the thirteen weeks ended January 1, 2000
are not necessarily indicative of the results that may be expected for the year
ending July 1, 2000. Certain fiscal 1999 balances have been reclassified to
conform with the fiscal 2000 classifications. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Company's annual report for the year ended July 3, 1999.

NOTE B -- INVENTORIES

The components of inventory consist of the following:



<TABLE>
<CAPTION>
                                                 (Dollars in Thousands)

                                         JANUARY 1, 2000        July 3, 1999
                                         ---------------        ------------
                   <S>                   <C>                    <C>
                   Raw materials             $ 4,844               $ 5,304
                   Work in process            20,309                24,245
                   Finished products          20,153                19,813
                   LIFO reserve               (7,982)               (8,991)
                                             -------               -------
                                             $37,324               $40,371
                                             =======               =======
</TABLE>


NOTE C - DISCONTINUED OPERATIONS

In June 1999, the Company made the decision to discontinue its denim and
industrial yarn operations, which have been unprofitable in recent years. These
operations have been treated as discontinued operations in the thirteen and
twenty-seven week consolidated financial statements.

The results of operations for the denim and industrial yarn businesses have been
classified as loss from discontinued operations in the prior periods as follows:


<TABLE>
<CAPTION>
                                                                  (Dollars in Thousands)

                                                                13 Weeks           27 Weeks
                                                                 Ended              Ended
                                                            January 2, 1999   January 2, 1999
                                                            ---------------   ---------------
                    <S>                                     <C>               <C>
                    Revenues                                   $  9,806           $ 27,724
                    Cost of sales                                12,136             31,060
                                                               --------           --------
                    Gross profit (loss)                          (2,330)            (3,336)
                    Other expenses, net                             772              1,661
                                                               --------           --------
                    Loss before income tax benefit               (3,102)            (4,997)
                    Income tax (benefit)                              0                  0
                                                               --------           --------
                    Loss from discontinued operations          $ (3,102)          $ (4,997)
                                                               ========           ========
</TABLE>



<PAGE>   7




NOTE D -- NET INCOME (LOSS) PER COMMON SHARE


The following table sets forth the computation of the numerator and denominator
used in the calculation of basic and diluted earnings (loss) per share from
continuing operations:

<TABLE>
<CAPTION>
                                                                    (Dollars in Thousands except Share and Per Share Data)

                                                                13 WEEKS           13 Weeks          26 WEEKS          27 Weeks
                                                                 ENDED              Ended              ENDED             Ended
                                                            JANUARY 1, 2000    January 2, 1999   JANUARY 1, 2000    January 2, 1999
                                                            ---------------    ---------------   ---------------    ---------------
<S>                                                         <C>                <C>               <C>                <C>

Numerator:
  Net income (loss) from continuing operations               $    (2,184)       $    (2,288)       $    (3,774)       $    (4,385)
                                                             -----------        -----------        -----------        -----------

Numerator for basic and diluted earnings (loss) per
  share                                                      $    (2,184)       $    (2,288)       $    (3,774)       $    (4,385)
                                                             -----------        -----------        -----------        -----------

Denominator:
  Denominator for basic earnings (loss) per share -
  Weighted average shares
                                                               6,540,046          6,540,046          6,540,046          6,540,046

  Dilutive effect of potential common shares -
  Employee stock options                                             N/A                N/A                N/A                N/A
  Warrants                                                           N/A                N/A                N/A                N/A
                                                             -----------        -----------        -----------        -----------

  Denominator for diluted earnings (loss) per share -
  adjusted weighted-average shares and
  assumed conversions                                          6,540,046          6,540,046          6,540,046          6,540,046
                                                             -----------        -----------        -----------        -----------

Basic earnings (loss) per share                              $     (0.33)       $     (0.35)       $     (0.58)       $     (0.67)
                                                             -----------        -----------        -----------        -----------

Diluted earnings (loss) per share                                  (0.33)             (0.35)             (0.58)       $     (0.67)
                                                             -----------        -----------        -----------        -----------

Potentially dilutive common shares related to options
  and warrants outstanding:
  Not considered in calculation due to net loss                  736,956                  0            644,383                  0
                                                             -----------        -----------        -----------        -----------

  Not considered in calculation due to exercise
  price of options exceeding average price of
  exercise price of options                                      710,750            892,025            760,632            900,666
                                                             -----------        -----------        -----------        -----------
</TABLE>



<PAGE>   8




NOTE E -- SEGMENT INFORMATION

The Company has two reportable segments in its continuing operations: Consumer
Products and Apparel Fabrics. Each reportable segment is organized around
product similarities. The Consumer Products segment manufactures and sells a
complete line of muslin, percale and premium threadcount products for the
bedroom, including fashion-coordinated bedding sets and comforters marketed
under the Thomaston label, and offers home furnishing fabrics for sale to other
manufacturers of home furnishings. The Apparel Fabrics line is directed toward
dyeing and finishing heavier fabrics such as twill and other value-added
fabrics.

The profit performance measure for the Company's segments is defined as Internal
EBIT (earnings before interest and taxes). The aggregate of Internal EBIT for
the reportable segments differs from the Company's consolidated earnings before
interest and taxes by costs that are deemed to be non-operating in nature.

 Allocations of corporate general and administrative expenses are used in the
determination of segment profit performance.


<TABLE>
<CAPTION>
                                                       (Dollars in Thousands except Share and Per Share Data)

                                                          NET SALES                         PROFIT PERFORMANCE
                                                13 WEEKS            13 Weeks           13 WEEKS            13 Weeks
                                                 ENDED               Ended               ENDED              Ended
                                            JANUARY 1, 2000     January 2, 1999     JANUARY 1, 2000    January 2, 1999
                                            ---------------     ---------------     ---------------    ---------------
          <S>                               <C>                 <C>                 <C>                <C>
          Reportable segments:
              Consumer products                   21,927              20,996               (684)            (5,414)
              Apparel fabrics                     15,268              16,958                841              1,435
                                                --------            --------              -----              -----
          Segment total                           37,195              37,954                157             (3,979)
                                                ========            ========
          Interest expense                                                                2,241              1,613
          Other non-segment                                                                 100                  0
                                                                                          -----              -----

          Consolidated (loss) before
          taxes from continuing operations                                                (2,184)            (5,592)
                                                                                          ======             ======
</TABLE>




<TABLE>
<CAPTION>
                                                         NET SALES                           PROFIT PERFORMANCE
                                                26 WEEKS            27 Weeks           26 WEEKS            27 Weeks
                                                 ENDED               Ended               ENDED              Ended
                                            JANUARY 1, 2000     January 2, 1999     JANUARY 1, 2000    January 2, 1999
                                            ---------------     ---------------     ---------------    ---------------
          <S>                               <C>                 <C>                 <C>                <C>
          Reportable segments:
              Consumer products                   49,308              49,463               (440)            (7,376)
              Apparel fabrics                     28,611              31,561              1,149                438
                                                --------            --------             ------             ------
          Segment total                           77,919              81,024                709             (6,938)
                                                ========            ========
          Interest expense                                                                4,309              3,198
          Other non-segment                                                                 174                  0
                                                                                         ------             ------

          Consolidated (loss) before
          taxes from continuing operations                                               (3,774)           (10,136)
                                                                                         ======             ======
</TABLE>

<PAGE>   9



THOMASTON MILLS, INC. AND SUBSIDIARY

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

In the fourth quarter of fiscal 1999, the Company began a comprehensive
restructuring of its operations and businesses with a view towards enhancing and
focusing on the Company's operations which are believed to present the best
future profitability and growth potential. As a result of completing the
assessment of various strategic alternatives, the Company concluded that
discontinuing the Company's denim and industrial yarn operations, which were
unprofitable in recent years, was in the best interest of the Company. In
conjunction with the exit of these businesses, the Company's balance sheet at
January 1, 2000 includes assets held for sale in the amount of $8,526,000. Any
proceeds from the sale of these assets will be applied against outstanding term
loan obligations.

The Company has concluded that it will focus on the manufacturing and marketing
of home furnishing as well as dyeing and finishing fabrics for casual and career
apparel. The Company believes that these operations offer the most viable
opportunity for improving future profitability. Discussions below pertaining to
the operating results exclude the Company's discontinued operations.

RESULTS OF OPERATIONS

Sales from continuing operations for the second fiscal quarter ended January 1,
2000 were down slightly to $37,195,000 from second quarter sales last year of
$37,954,000. For the twenty-six weeks ended January 1, 2000, sales were down
3.8% to $77,919,000 when compared to sales of $81,024,000 for the twenty-seven
weeks ended January 2, 1999. Sales in the Consumer Products area of the Company
were relatively unchanged for the twenty-six weeks ended January 1, 2000
compared to the twenty-seven weeks ended January 2, 1999. In the Apparel Fabrics
area, a shift in customer demand from heavier, bottom-weight, cotton fabrics to
lighter-weight, blended fabrics resulted in a sales decrease from $31,561,000
for the twenty-seven weeks ended January 2, 1999 to $28,611,000 for the
twenty-six weeks ended January 1, 2000.

Cost of sales for the quarter just ended decreased to 90.3% of sales or
$33,586,000. For the second quarter fiscal year 1999, cost of sales were 101.5%
of sales or $38,509,000. For the twenty-six weeks ended January 1, 2000, cost of
sales decreased to 89.6% of sales or $69,817,000 compared to cost of sales of
99.0% of sales or $80,206,000 for the twenty-seven weeks ended January 2, 1999.
Improved manufacturing capacity utilization, improved plant productivity and
decreases in raw material costs have contributed to the decline in cost of
sales.

Gross profit for the second quarter and the twenty-six weeks ended January 1,
2000 was 9.7% and 10.4% of sales, respectively. For the second quarter and
twenty-seven weeks ended January 2, 1999, gross profit was (1.5)% and 1.0%,
respectively.

Although sales were down for the quarter and twenty-six weeks ended January 1,
2000 when compared to the comparable periods last year, selling, general and
administrative expenses have remained relatively constant at approximately 10.0%
of sales for all periods reported. The Company's realignment of its operations
has contributed to reductions in certain selling, general and administrative
expenses.

Other income for the quarter and twenty-six weeks ended January 1, 2000 was
$289,000 and $405,000, respectively, compared to $315,000 and $459,000 for the
comparable periods last year. Other income relates to miscellaneous equipment
sales, royalties earned on the Company's sale of the Rattlers Brand(R) and
interest earned on the Company's short-term investments of cash.

Interest expense and amortization of credit agreement fees increased $728,000
from $1,613,000 during second quarter fiscal year 1999 to $2,341,000 during
second quarter fiscal year 2000. For the twenty-six weeks ended January 1, 2000,
interest expense and amortization of credit agreement fees increased $1,285,000
compared to the twenty-seven weeks ended January 2, 1999. This increase was the
result of higher interest rates under the Company's various credit agreements.
Excluding capitalized leases, total debt at January 1, 2000 was $66,116,000,
down $3,584,000 from total debt at January 2, 1999 of $69,700,000.

The Company has not recorded an income tax benefit for fiscal year 2000 as a
result of its operating loss carry forward position. The Company recorded an
income tax benefit of $3,102,000 for second quarter 1999 and $4,997,000 for the
twenty-seven weeks ended January 2, 1999. This future anticipated benefit was
recorded based on tax planning strategies as to the realization of the deferred
tax benefit.

<PAGE>   10

For the second quarter fiscal year 2000, the Company sustained a loss from
continuing operations of $2,184,000 or $ .33 per basic and diluted share as
compared to a second quarter fiscal year 1999 loss from continuing operations of
$2,288,000 or $ .35 per basic and diluted share. For the twenty-six weeks ended
January 1, 2000, the Company sustained a loss from continuing operations of
$3,774,000 or $ .58 per basic and diluted share as compared to a loss from
continuing operations of $4,385,000 or $ .67 per basic and diluted share for the
twenty-seven weeks ended January 2, 1999.

LIQUIDITY AND CAPITAL RESOURCES

At January 1, 2000, working capital was $38,083,000 as compared to $66,072,000
at January 2, 1999. The ratio of current assets to current liabilities was 2.5:1
at January 1, 2000 and 3.8:1 at January 2, 1999. Changes in working capital are
primarily the result of lower levels of inventory and accounts receivable.
Although inventories increased from first quarter to second quarter of fiscal
year 2000 in anticipation of third quarter shipments, improvements in
supply-chain inventory control systems and the selling off of inventories
associated with discontinued operations have resulted in decreased inventory
levels at January 1, 2000 as compared to inventory levels at January 2, 1999.
The collection of receivables associated with discontinued operations and
reduced sales during the twenty-six weeks ended January 1, 2000 have resulted in
a reduction in accounts receivable.

Operating activities provided cash of $5,404,000 during the twenty-six weeks
ended January 1, 2000. During the twenty-seven weeks ended January 2, 1999,
operating activities provided cash of $8,908,000. Net cash used in investing
activities amounted to $689,000 during the first half of fiscal 2000 compared to
$1,974,000 used in the first half of fiscal 1999. Capital expenditures have been
reduced as a result of the Company's realignment of its operations. Financing
activities used cash of $4,776,000 during the first half of fiscal year 2000 as
a result of net repayments of indebtedness. During the first half of fiscal year
1999, financing activities used funds of $5,644,000.

On July 27, 1999, the Company entered into a new Loan and Security Agreement
(the Loan Agreement) which provides for borrowing as follows:

-        Revolving advances equal to the lesser of $70,000,000 or a specified
         percentage of certain accounts receivable and inventory as defined in
         the Loan Agreement. At January 1, 2000, $29,081,000 was outstanding and
         $3,968,000 was available for borrowing under the revolving advances
         provisions. The revolving advances bear interest at the Reference Rate
         plus 1% or the Euro-dollar Rate plus 3.25%. The revolving advances are
         payable on July 27, 2004, and provide for an early termination penalty
         as specified in the Loan Agreement.

-        Tranche A Term Loan of $20,000,000 is payable in monthly installments
         of $333,333 beginning August 1, 1999, and bears interest at the
         Reference Rate plus 1.75% or the Euro-dollar Rate plus 3.75%.

-        Tranche B Term Loan of $5,000,000 is due July 23, 2004, and bears
         interest at 18.5% of which 15% is payable currently and 3.5% per annum
         is payable on the maturity date.

Borrowings under this Loan Agreement were used to reduce the existing Credit and
Security Agreement to $15,000,000 as discussed below and to repay previously
outstanding senior notes payable and industrial revenue bonds.

On July 27, 1999, the Company entered into an Amended and Restated Credit and
Security Agreement (the Credit Agreement) which reduced the existing borrowings
to $15,000,000. Interest is accrued at a rate of 15% increasing at the rate of
1% per month to a rate of 20% effective January 1, 2000. Interest is payable at
the Euro-dollar Rate plus 3.5% or the Base Rate plus 1.5%. The difference in the
interest accrued and the interest paid is added to the balance of the
borrowings. Borrowings under the Credit Agreement are due July 24, 2004, unless
repaid prior to that date.

Borrowings under the Loan Agreement and Credit Agreement are secured by all
assets and properties of the Company. The Loan Agreement and the Credit
Agreement contain various restrictions relating to, among other things,
maintaining a certain level of tangible net worth, attainment of certain amounts
of earnings before interest, taxes, depreciation and amortization and
restrictions on capital expenditures. Capital expenditures for fiscal year 2000
are projected to approximate $4,000,000.


<PAGE>   11

Management believes that cash provided by operating activities and the Loan
Agreement will be sufficient to finance capital requirements and operating needs
of the Company for fiscal year 2000.

WARRANTS TO LENDERS

As previously disclosed, the Company has issued warrants to its lenders in
connection with the Credit Agreement. The warrants permit the lenders to
purchase Class A and Class B common shares of the Company for nominal
consideration. The warrants are currently exercisable and may be exercised
through December 31, 2004. Although the lenders have not indicated to the
Company that they intend to exercise the warrants, if they elect to exercise
all of their warrants, the lenders will receive an interest equal to 10% of the
outstanding equity of the Company in each class, on a fully diluted basis.

ASSETS HELD FOR SALE

The Company's management intends to utilize the proceeds from the sale of the
assets held for sale to reduce outstanding term loan obligations. Management
believes, based on current appraisals, that $9,680,000 could be realized from
the sale of these assets, including $8,526,000 from the assets related to
discontinued operations. However, actual results could differ significantly from
these estimates.

INVENTORIES

Inventories at January 1, 2000 and January 2, 1999 were $37,324,000 and
$50,943,000, respectively. Improvements in supply-chain inventory control
systems and the selling off of inventories associated with discontinued
operations have resulted in decreased inventory levels at January 1, 2000 as
compared to inventory levels at January 2, 1999. Total inventory turns on an
average annualized rate were 3.7 times for the first six months of fiscal 2000
and 3.1 times for the first six months of fiscal 1999.

RAW MATERIALS

The Company's primary raw material is cotton. As a commodity, cotton is traded
on established markets and periodically experiences price fluctuations. The
Company monitors the cotton market and buys its cotton from brokers. The Company
has not had and does not currently anticipate any difficulty in obtaining
cotton.

In order to assure a continuous supply of cotton, the Company enters into cotton
purchase contracts for several months in advance of delivery which either
provide for (1) fixed quantities to be purchased at a pre-determined price or
(2) fixed quantities to be purchased at a price to be determined (at a later
date). When the Company sells its product to its customers, the cost of cotton
under existing cotton purchase contracts is taken into account in calculating
the price for the Company's product. The Company generally attempts to match
product sales contracts with fixed price cotton purchase contracts and uses
market price cotton contracts to anticipate future needs and subsequent product
sales contracts. To the extent prices are sometimes fixed in advance of
shipment, the Company may benefit from its cotton purchase contracts to the
extent prices thereafter rise, or incur increased cost to the extent prices
thereafter fall.

GATT

In December 1993, 117 countries reached an agreement under the General Agreement
on Tariffs and Trade that would cover new areas of trade, further cut tariffs
and strengthen multilateral free-trade rules by creating a World Trade
Organization (WTO) as its successor. This agreement was ratified by the United
States Congress and went into effect on July 1, 1995. As part of this new
agreement, the Multifiber Arrangement (MFA) under which textile and apparel
trade had been controlled, will be phased out along with its import quotas over
a 10-year period. Tariffs on textiles will be cut by an average of 11.6% over 10
years. Under the agreement, quotas on the least sensitive import products will
be phased out over the first five years and quotas on the most sensitive import
products will not be affected until the latter part of the ten-year period.

The WTO agreement contains some provisions which may have a favorable impact on
the textile industry. An assembly rule of origin amendment makes it illegal for
a non-WTO member country to assemble garments from pieces cut in a member
country and then export the garments as originating in the country where they
were cut. Additionally, the agreement preserves the authority of the President
of the United States to control imports from non-WTO countries such as Taiwan or
China. In the event China is admitted to the WTO, the U.S. apparel industry
could be adversely affected.

Although the WTO agreement may reduce the cost of certain imported textiles, the
Company believes that upgraded technology resulting in increased productivity
and lower costs will enable it to compete in a global market.

YEAR 2000

In 1996, the Company established a task force to address and assess Year 2000
(Y2K) compliance for the Company's computer systems and software applications,
manufacturing facilities and suppliers providing both goods and services. The
Company did not experience any significant malfunctions or errors in its
operating or business systems when the date changed from 1999 to 2000. Based on
operations since January 1, 2000, the Company does not expect any significant
impact to its on-going business as a result of the


<PAGE>   12

Y2K issue. However, it is possible that the full impact of the date change,
which was of concern due to computer programs that use two digits instead of
four digits to define years, has not been fully recognized. For example, it is
possible that Y2K or similar issues such as leap year-related problems may occur
with billing, payroll, or financial closings at month, quarterly or year end.
The Company believes that any such problems are likely to be minor and
correctable. In addition, the Company could still be negatively impacted if its
customers or suppliers are adversely affected by the Y2K or similar issues. The
Company currently is not aware of any significant Y2K or similar problems that
have arisen for its customers and suppliers.

The Company estimates that it has incurred approximately $450,000 in cost
related to the Y2K project, all of which has been expensed and funded through
operating cash flows.

FORWARD-LOOKING STATEMENTS

Certain of the above statements contained herein under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements express or
implied by such forward-looking statements. Such factors include, among other
things, business conditions, volatility of commodities markets, ability to
control operating costs, developing successful new products and maintaining
effective pricing and promotion of its products. Additionally, there can be no
assurance that the Company (i) will have access to financial capital in the
future or that it can obtain such capital on terms that are favorable to the
Company or otherwise reasonably acceptable to it, or (ii) will be able to
generate profits from, or continue the growth of, the lines of businesses and
operations that the Company has retained subsequent to its restructuring
efforts. A failure by the Company to obtain capital in the future on terms that
are favorable to it or a failure by the Company to generate profits from, or
grow, its remaining business lines may have a material adverse effect on the
Company's business, financial condition or results of operations.


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of certain market risks related to the Company, see Part I Item
7 "Quantitative and Qualitative Disclosures about Market Risks" in the Company's
Annual Report on Form 10-K for the fiscal year ended July 3, 1999. There have
been no significant developments with respect to derivatives or exposure to
market risk.


<PAGE>   13



PART II - OTHER INFORMATION


ITEM 1.        LEGAL PROCEEDINGS

               (a)      As of January 1, 2000, there were no material pending
                        legal proceedings, other than routine litigation
                        incidental to its business, to which the Company was a
                        party or to which any property of the Company was
                        subject. Such routine legal proceedings are not believed
                        to be material to the Company.

               (b)      Not applicable

ITEM 2.        CHANGE IN SECURITIES

               (a)      (b)      Not applicable.


ITEM 3.        DEFAULTS UPON SENIOR SECURITIES

               (a)      (b)      Not applicable.

ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

               (a)      (b)       (c)       (d)      Not applicable.

ITEM 5.        OTHER INFORMATION

                        On October 22, 1998, the Company's Class B Common Stock
                        began trading on the Nasdaq Smallcap Market under the
                        ticker symbol TMSTB. The Class B Common Stock had
                        previously traded on the Nasdaq National Market, but no
                        longer met certain of the listing criteria, including
                        the minimum public float requirement. The Company's
                        Class A Common Stock continues to trade on the Nasdaq
                        National Market under the symbol TMSTA.

               (a)      Exhibits:

                        13.1     Quarterly Report to Shareholders dated January
                                 25, 2000.

                        27.0     Financial Data Schedule (for SEC purposes only)

               (b)      The Company did not file any reports on Form 8-K during
                        the three months ended January 1, 2000.






<PAGE>   14




                                   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.

                                                      Thomaston Mills, Inc.



                                                     /s/ Neil H. Hightower
                                                     --------------------------
                                                     Neil H. Hightower
                                                     President and Chief
 Date:     February 14, 2000                         Executive Officer
           -----------------



                                                     /s/ A. William Ott
                                                     --------------------------
                                                     A. William Ott
                                                     Treasurer and Chief
 Date:     February 14, 2000                         Financial Officer
           -----------------