Page 1 of 47
                                              Index to Exhibits - Pages 27 - 41
================================================================================

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-Q

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

                For the quarterly period ended September 29, 2002

                                       OR

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

           For the Transition period from ___________ to ____________

                          Commission File Number 1-3634

                             CONE MILLS CORPORATION
             (Exact name of registrant as specified in its charter)

       North Carolina                                   56-0367025
       --------------                                   ----------
(State or other jurisdiction)               (I.R.S. Employer Identification No.)

804 Green Valley Road, Suite 300, Greensboro, N.C.        27408
--------------------------------------------------        -----
(Address of principal executive offices)                (Zip Code)

        Registrant's telephone number, including area code: 336-379-6220

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No

Number of shares of common stock outstanding as of October 28, 2002: 25,757,344.


================================================================================



                                       1
<PAGE>


                             CONE MILLS CORPORATION

                                      INDEX



PART I.   FINANCIAL INFORMATION
                                                                          Page
                                                                         Number

Item 1.   Financial Statements

          Consolidated Condensed Statements of Operations
          Thirteen and Thirty-Nine weeks ended September 29, 2002 and
          September 30, 2001 (Unaudited)......................................3

          Consolidated Condensed Balance Sheets
          September 29, 2002 and September 30, 2001 (Unaudited)
          and December 30, 2001...............................................4

          Consolidated Condensed Statements of Cash Flows
          Thirty-Nine weeks ended September 29, 2002 and
          September 30, 2001 (Unaudited)......................................5

          Notes to Consolidated Condensed Financial Statements
          (Unaudited).........................................................6

Item 2.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations......................16

Item 3.   Quantitative and Qualitative Disclosures about Market
          Risk  .............................................................25

Item 4    Controls and Procedures ...........................................25

PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings..................................................26
Item 5.   Other Information .................................................26
Item 6.   Exhibits and Reports on Form 8-K...................................26

Annex A   Section 302 Certifications........................................A-1
Annex B   Section 906 Certification.........................................B-1



                                       2
<PAGE>


                                     PART I
Item 1.
                     CONE MILLS CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                          Thirteen          Thirteen        Thirty-Nine      Thirty-Nine
                                                         Weeks Ended      Weeks Ended       Weeks Ended      Weeks Ended
                                                        September 29,    September 30,     September 29,    September 30,
(in thousands, except per share data)                       2002             2001              2002             2001
----------------------------------------------------------------------------------------------------------------------------
                                                         (Unaudited)      (Unaudited)       (Unaudited)      (Unaudited)
<S>                                                     <C>              <C>               <C>              <C>
Net Sales                                               $   111,688      $   106,957       $   343,345      $   361,346
Cost of Goods Sold                                           94,625           95,562           294,710          331,997
                                                       ---------------------------------------------------------------------
Gross Profit                                                 17,063           11,395            48,635           29,349
Selling and Administrative                                    8,620            7,904            25,715           27,051
Restructuring and Impairment of Assets                            -              200                 -           19,939
                                                       ---------------------------------------------------------------------
Income (Loss) from Operations                                 8,443            3,291            22,920         ( 17,641 )
                                                       ---------------------------------------------------------------------

Other Income (Expense)
   Interest income                                               77              137               206              350
   Interest expense                                         ( 3,712 )        ( 3,982 )        ( 12,014 )       ( 13,456 )
   Other                                                      ( 433 )            893           ( 1,439 )          ( 430 )
                                                       ---------------------------------------------------------------------
                                                            ( 4,068 )        ( 2,952 )        ( 13,247 )       ( 13,536 )
                                                       ---------------------------------------------------------------------
Income (Loss) from Continuing Operations before
   Income Tax Expense (Benefit) and Equity in
   Earnings (Losses) of Unconsolidated Affiliates             4,375              339             9,673         ( 31,177 )
Income Tax Expense (Benefit)                                  1,455              120             2,902          ( 8,954 )
                                                       ---------------------------------------------------------------------

Income (Loss) from Continuing Operations before
   Equity in Earnings (Losses) of Unconsolidated
   Affiliates                                                 2,920              219             6,771         ( 22,223 )
Equity in Earnings (Losses) of Unconsolidated
   Affiliates                                                   923             ( 88 )           1,605              484
                                                       ---------------------------------------------------------------------
Income (Loss) from Continuing Operations                      3,843              131             8,376         ( 21,739 )
                                                       ---------------------------------------------------------------------

Discontinued Operations
   Loss from discontinued operations                              -            ( 890 )               -         ( 12,426 )
   Loss on sale of discontinued operation                         -          ( 6,397 )               -          ( 6,397 )
   Income tax benefit                                             -          ( 2,552 )               -          ( 6,590 )
                                                       ---------------------------------------------------------------------
                                                                  -          ( 4,735 )               -         ( 12,233 )
                                                       ---------------------------------------------------------------------
Net Income (Loss)                                       $     3,843      $   ( 4,604 )     $     8,376      $  ( 33,972 )
                                                       ---------------------------------------------------------------------

Income (Loss) Available to Common Stockholders          $     2,806      $   ( 5,677 )     $     5,229      $  ( 37,091 )
                                                       ---------------------------------------------------------------------

Earnings (Loss) per Share -
   Income (loss) from continuing operations             $      0.11      $    ( 0.04 )     $      0.20      $    ( 0.97 )
   Loss from discontinued operations                              -           ( 0.18 )               -           ( 0.48 )
                                                       ---------------------------------------------------------------------
Earnings (Loss) per Share - Basic and Diluted           $      0.11      $    ( 0.22 )     $      0.20      $    ( 1.45 )
                                                       ---------------------------------------------------------------------

Weighted-Average Common Shares Outstanding
   Basic                                                     25,739           25,595            25,704           25,557
                                                       ---------------------------------------------------------------------
   Diluted                                                   26,153           25,595            26,104           25,557
                                                       ---------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Condensed Financial Statements.



                                       3
<PAGE>


<TABLE>
<CAPTION>

                                     CONE MILLS CORPORATION AND SUBSIDIARIES
                                      CONSOLIDATED CONDENSED BALANCE SHEETS


                                                                         September 29,    September 30,     December 30,
(in thousands, except share and par value data)                              2002             2001             2001
---------------------------------------------------------------------------------------------------------------------------
                                                                          (Unaudited)      (Unaudited)         (Note)
<S>                                                                      <C>               <C>              <C>
ASSETS
   Current Assets
     Cash                                                                $    1,573        $     858        $     529
     Accounts receivable, less allowances: 2002, $5,700;
        2001, $5,350 and $5,700                                              43,327           44,251           28,373
     Inventories                                                             45,578           64,499           62,057
     Other current assets                                                     2,656            6,414            3,371
                                                                  ---------------------------------------------------------
        Total Current Assets                                                 93,134          116,022           94,330

   Investments in and Advances to Unconsolidated Affiliates                  53,010           51,915           51,664
   Other Assets                                                              27,496           18,646           23,917
   Property, Plant and Equipment                                            152,198          167,968          164,468
                                                                  ---------------------------------------------------------
                                                                         $  325,838        $ 354,551        $ 334,379
                                                                  ---------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
   Current Liabilities
     Current maturities of long-term debt                                $   56,262        $   3,208        $   3,075
     Accounts payable                                                        28,730           29,511           21,535
     Sundry accounts payable and accrued liabilities                         22,869           23,948           27,928
                                                                  ---------------------------------------------------------
        Total Current Liabilities                                           107,861           56,667           52,538

   Long-Term Debt                                                            98,908          177,548          170,655
   Deferred Income Taxes                                                     13,486           14,922           10,513
   Other Liabilities                                                         13,781           14,567           14,063

   Stockholders' Equity
     Class A  preferred  stock - $100 par value; authorized
        1,500,000 shares; issued and outstanding: 2002, 337,497
        shares; 2001, 342,780 shares and 334,309 shares                      33,750           34,278           33,431
     Class B preferred stock - no par value; authorized
        5,000,000 shares                                                          -                -                -
     Common stock - $.10 par value; authorized
        42,700,000 shares; issued and outstanding: 2002, 25,757,344
        shares; 2001, 25,622,816 shares and 25,660,663 shares                 2,576            2,562            2,566
     Capital in excess of par                                                58,098           57,815           57,872
     Retained earnings                                                        6,349            4,564            2,029
     Deferred compensation - restricted stock                                   ( 2 )           ( 17 )           ( 12 )
     Accumulated other comprehensive loss                                   ( 8,969 )        ( 8,355 )        ( 9,276 )
                                                                  ---------------------------------------------------------
        Total Stockholders' Equity                                           91,802           90,847           86,610
                                                                  ---------------------------------------------------------
                                                                         $  325,838        $ 354,551        $ 334,379
                                                                  ---------------------------------------------------------

Note:  The balance sheet at December 30, 2001, has been derived from
        the audited financial statements at that date.
</TABLE>

See Notes to Consolidated Condensed Financial Statements.



                                       4
<PAGE>


<TABLE>
<CAPTION>

                                      CONE MILLS CORPORATION AND SUBSIDIARIES
                                  CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS


                                                                          Thirty-Nine       Thirty-Nine
                                                                          Weeks Ended       Weeks Ended
                                                                         September 29,     September 30,
(in thousands)                                                               2002              2001
------------------------------------------------------------------------------------------------------------
                                                                          (Unaudited)       (Unaudited)
<S>                                                                      <C>               <C>
CASH PROVIDED BY OPERATIONS                                              $   30,080        $    2,779
                                                                         -----------------------------------
INVESTING
   Investments in and advances to unconsolidated affiliates                       -             ( 754 )
   Proceeds from sale of property, plant and equipment                        1,273             3,929
   Proceeds from sale of discontinued operations                                  -             5,375
   Capital expenditures of continuing operations                            ( 3,932 )         ( 4,648 )
   Capital expenditures of discontinued operations                                -              ( 91 )
                                                                         -----------------------------------
    Cash provided by (used in) investing                                    ( 2,659 )           3,811
                                                                         -----------------------------------

FINANCING
   Decrease in checks issued in excess of deposits                          ( 3,982 )         ( 6,119 )
   Principal borrowings (payments) on long-term debt                       ( 18,894 )             548
   Proceeds from issuance of common stock                                       236               195
   Dividends paid - Class A Preferred                                         ( 136 )            ( 95 )
   Redemption of Class A Preferred stock                                    ( 3,601 )         ( 3,137 )
                                                                         -----------------------------------
    Cash used in financing                                                 ( 26,377 )         ( 8,608 )
                                                                         -----------------------------------

    Net change in cash                                                        1,044            (2,018 )

Cash at Beginning of Period                                                     529             2,876
                                                                         -----------------------------------

Cash at End of Period                                                    $    1,573        $      858
                                                                         -----------------------------------

Supplemental Disclosures of Additional Cash Flow Information:
Cash payments for:
   Interest                                                              $   14,019        $   15,997
                                                                         -----------------------------------
   Income taxes, net of refunds                                          $       17        $      239
                                                                         -----------------------------------

Supplemental Schedule of Noncash Financing Activities:
   Stock dividend - Class A Preferred Stock                              $    3,920        $    3,881
                                                                         -----------------------------------
</TABLE>

See Notes to Consolidated Condensed Financial Statements.



                                       5
<PAGE>




                     CONE MILLS CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS



Note 1.  Basis of Financial Statement Preparation

The Cone Mills Corporation ("Cone") consolidated  condensed financial statements
for September 29, 2002 and September 30, 2001 are unaudited,  but in the opinion
of  management   reflect  all  adjustments   necessary  to  present  fairly  the
consolidated condensed balance sheets of Cone Mills Corporation and Subsidiaries
at September 29, 2002, September 30, 2001 and December 30, 2001, and the related
consolidated  condensed statements of operations for the respective thirteen and
thirty-nine weeks ended September 29, 2002 and September 30, 2001 and cash flows
for the thirty-nine  weeks then ended. All adjustments are of a normal recurring
nature with the exception of those  reclassifications  made in  connection  with
discontinued  operations  and entries  related to Cone's  Reinvention  Plan. The
results are not  necessarily  indicative  of the results to be expected  for the
full year.

These  statements  should  be read in  conjunction  with the  audited  financial
statements  and related notes  included in Cone's annual report on Form 10-K for
fiscal year 2001.

Inventories  are stated at the lower of cost or market.  The last-in,  first-out
(LIFO) method is used to determine cost of most domestically produced goods. The
first-in, first-out (FIFO) or average cost methods are used to determine cost of
all other inventories. Because amounts for inventories under the LIFO method are
based on an annual  determination of quantities as of year-end,  the inventories
at September 29, 2002 and September 30, 2001 and related consolidated  condensed
statements of operations for the thirteen and  thirty-nine  weeks then ended are
based on certain estimates  relating to quantities and cost as of the end of the
fiscal year.

Reclassifications:  Loss per share for the thirteen and thirty-nine  weeks ended
September 30, 2001, has been reclassified to reflect discontinued operations.


Note 2.  Securitization of Accounts Receivable

Accounting   Policies:   Cone  records   accounts   receivable  at  cost,  which
approximates  fair value at the respective  balance sheet dates.  Cone estimates
its allowance for doubtful  accounts  based on a combination  of historical  and
current information regarding the balance of accounts receivable, as well as the
current composition of the pool of accounts receivable. Cone determines past due
status on accounts  receivable  based on the  contractual  terms of the original
sale.   Accounts   receivable   that   management   believes  to  be  ultimately
uncollectible are written off upon such determination.



                                       6
<PAGE>



Cone has not sold any of its accounts  receivable  other than those  pursuant to
the Accounts Receivable  Securitization Facility ("A/R Securitization Facility")
with  General  Electric  Capital  Corporation.  As of  September  29,  2002  and
September  30, 2001,  the total amount of advances of proceeds  from the sale of
receivables  under the A/R  Securitization  Facility was $28.5 million and $45.3
million, respectively. As of September 29, 2002 and September 30, 2001, included
in accounts  receivable were deferred  purchase price  receivables under the A/R
Securitization  Facility of $35.2 million and $36.7 million,  respectively.  The
table below summarizes certain cash flows under the securitization:

<TABLE>
<CAPTION>
                                       Thirteen           Thirteen          Thirty-Nine        Thirty-Nine
                                     Weeks Ended        Weeks Ended         Weeks Ended        Weeks Ended
(in thousands)                         9/29/02            9/30/01             9/29/02            9/30/01
                                   -----------------------------------------------------------------------------
<S>                                  <C>                <C>                 <C>                <C>
Proceeds from securitizations        $  21,991          $  24,284           $  89,438          $  55,012
Reductions due to change
  in level of receivables sold        ( 31,119 )         ( 27,764 )          ( 97,821 )         ( 65,466 )
Daily yield paid                         ( 437 )            ( 693 )           ( 1,427 )          ( 2,514 )
Servicing fees paid                      ( 140 )            ( 186 )             ( 451 )            ( 589 )
Servicing fees received                    140                186                 451                530

</TABLE>

Note 3.  Inventories

(in thousands)                        9/29/02        9/30/01       12/30/01
                                   ------------------------------------------

Greige and finished goods            $ 23,183       $ 34,939       $ 35,811
Work in process                         4,118          6,611          5,084
Raw materials                           9,026         12,336         10,779
Supplies and other                      9,251         10,613         10,383
                                   ------------------------------------------
                                     $ 45,578       $ 64,499       $ 62,057
                                   ------------------------------------------


Note 4.  Long-Term Debt

(in thousands)                        9/29/02        9/30/01       12/30/01
                                   ------------------------------------------

Senior Note                          $ 23,262       $ 27,494       $ 27,155
Revolving Credit Agreement             33,000         57,000         48,000
8-1/8% Debentures                      98,908         96,262         98,575
                                   ------------------------------------------
                                      155,170        180,756        173,730
Less current maturities                56,262          3,208          3,075
                                   ------------------------------------------
                                     $ 98,908       $177,548       $170,655
                                   ------------------------------------------



                                       7
<PAGE>



On  November  9, 2001,  Cone  entered  into  agreements  to  refinance  both its
Revolving  Credit  Facility with its existing banks and its Senior Note. The new
agreements  provide for scheduled  amortization or commitment  reductions of $10
million during 2002 with a final maturity date of January 15, 2003. In addition,
the agreements  provide for additional  amortization  and commitment  reductions
related to proceeds received by Cone for permitted asset sales and 75% of excess
cash flow (as defined in the  agreements).  Cone is  considering  its  financing
alternatives  and has not  decided on a specific  course of action at this time.
There can be no assurance that  financing will be available on acceptable  terms
and conditions.


Note 5.  Class A Preferred Stock

On February 13,  2002,  Cone  declared a 12.0% stock  dividend on Cone's Class A
Preferred Stock,  which was paid on March 31, 2002. The dividend of $3.9 million
was charged to retained  earnings.  The 2003 dividend rate for Class A Preferred
Stock is 12.0%, payable March 31, 2003.


Note 6.  Depreciation and Amortization

The  following  table  presents   depreciation  and  amortization   included  in
continuing operations in the consolidated condensed statements of operations.

<TABLE>
<CAPTION>
                             Thirteen            Thirteen           Thirty-Nine         Thirty-Nine
                           Weeks Ended          Weeks Ended         Weeks Ended         Weeks Ended
(in thousands)               9/29/02              9/30/01             9/29/02             9/30/01
                        -----------------------------------------------------------------------------
<S>                        <C>                  <C>                 <C>                 <C>
Depreciation               $    4,666           $    4,862          $   14,764          $   15,744
Amortization                       22                   26                  68                  83
                        -----------------------------------------------------------------------------
                           $    4,688           $    4,888          $   14,832          $   15,827
                        -----------------------------------------------------------------------------
</TABLE>

Depreciation  expense included in the pre-tax loss from discontinued  operations
(See Note 12, "Discontinued  Operations," to the Notes to Consolidated Condensed
Financial Statements) is as follows:

<TABLE>
<CAPTION>
                             Thirteen            Thirteen           Thirty-Nine         Thirty-Nine
                           Weeks Ended          Weeks Ended         Weeks Ended         Weeks Ended
(in thousands)               9/29/02              9/30/01             9/29/02             9/30/01
                        -----------------------------------------------------------------------------
<S>                        <C>                  <C>                 <C>                 <C>
Depreciation               $        -           $       23          $        -          $      134
Amortization                        -                    -                   -                   4
                        -----------------------------------------------------------------------------
                           $        -           $       23          $        -          $      138
                        -----------------------------------------------------------------------------
</TABLE>



                                       8
<PAGE>



Note 7.  Earnings (Loss) Per Share

The following  table sets forth the  computation  of basic and diluted  earnings
(loss) per common share ("EPS").

<TABLE>
<CAPTION>
                                                              Thirteen            Thirteen
                                                             Weeks Ended        Weeks Ended
(in thousands, except per share data)                          9/29/02            9/30/01
                                                          ----------------------------------------
<S>                                                          <C>                <C>
Income from continuing operations                            $   3,843          $     131
Preferred dividends                                            ( 1,037 )          ( 1,073 )
                                                          ----------------------------------------
Income (loss) from continuing operations available
    to common stockholders                                       2,806              ( 942 )
Loss from discontinued operations                                    -            ( 4,735 )
                                                          ----------------------------------------
Basic EPS - income (loss) available to common
    stockholders                                                 2,806            ( 5,677 )
Effect of dilutive securities                                        -                  -
                                                          ----------------------------------------
Diluted EPS - income (loss) available to common
    stockholders after assumed conversions                   $   2,806          $ ( 5,677 )
                                                          ----------------------------------------

Determination of shares:
Weighted-average shares                                         25,747             25,610
Contingently issuable (unvested restricted shares)                 ( 8 )             ( 15 )
                                                          ----------------------------------------
Basic EPS - weighted-average shares                             25,739             25,595
Effect of dilutive securities                                      414                  -
                                                          ----------------------------------------
Diluted EPS - adjusted weighted-average shares after
    assumed conversions                                         26,153             25,595
                                                          ----------------------------------------

Earnings (loss) per share - basic and diluted:
    Income (loss) from continuing operations                 $    0.11          $  ( 0.04 )
    Loss from discontinued operations                                -             ( 0.18 )
                                                          ----------------------------------------
    Earnings (loss) per share - basic and diluted            $    0.11          $  ( 0.22 )
                                                          ----------------------------------------
</TABLE>

The number of potentially  dilutive common stock options  outstanding  using the
treasury  stock method for the thirteen  weeks ended  September  30, 2001,  were
approximately  84,000 but were not included in the  computation  of diluted loss
per share because to do so would have been antidilutive.



                                       9
<PAGE>



Note 7.  Earnings (Loss) Per Share (continued)

The  following  table sets forth the  computation  of basic and  diluted  income
(loss) per common share ("EPS").

<TABLE>
<CAPTION>
                                                             Thirty-Nine        Thirty-Nine
                                                             Weeks Ended        Weeks Ended
(in thousands, except per share data)                          9/29/02            9/30/01
                                                         --------------------------------------
<S>                                                          <C>                <C>
Income (loss) from continuing operations                     $   8,376          $( 21,739 )
Preferred dividends                                            ( 3,147 )          ( 3,119 )
                                                         --------------------------------------
Income (loss) from continuing operations available
    to common stockholders                                       5,229           ( 24,858 )
Loss from discontinued operations                                    -           ( 12,233 )
                                                         --------------------------------------
Basic EPS - income (loss) available to common
    stockholders                                                 5,229           ( 37,091 )
Effect of dilutive securities                                        -                  -
                                                         --------------------------------------
Diluted EPS - income (loss) available to common
    stockholders after assumed conversions                   $   5,229          $( 37,091 )
                                                         --------------------------------------

Determination of shares:
Weighted-average shares                                         25,712             25,572
Contingently issuable (unvested restricted shares)                 ( 8 )             ( 15 )
                                                         --------------------------------------
Basic EPS - weighted-average shares                             25,704             25,557
Effect of dilutive securities                                      400                  -
                                                         --------------------------------------
Diluted EPS - adjusted weighted-average shares after
    assumed conversions                                         26,104             25,557
                                                         --------------------------------------

Earnings (loss) per share - basic and diluted:
    Income (loss) from continuing operations                 $    0.20          $  ( 0.97 )
    Loss from discontinued operations                                -             ( 0.48 )
                                                         --------------------------------------
    Earnings (loss) per share - basic and diluted            $    0.20          $  ( 1.45 )
                                                         --------------------------------------
</TABLE>

The number of potentially  dilutive common stock options  outstanding  using the
treasury stock method for the  thirty-nine  weeks ended September 30, 2001, were
approximately  40,000 but were not included in the  computation  of diluted loss
per share because to do so would have been antidilutive.


Note 8.  Segment Information

Cone has three principal business segments based upon organizational  structure:
1) Denim; 2) Commission Finishing; and 3) Decorative Fabrics.



                                       10
<PAGE>



Operating  income  (loss)  for each  segment  is total  revenue  less  operating
expenses  applicable  to  the  segment.  Intersegment  revenue  relates  to  the
commission  finishing  segment.  Equity in earnings  (losses) of  unconsolidated
affiliates is included in the denim segment.  Unallocated expenses, interest and
income tax  expense  (benefit)  are not  included  in segment  operating  income
(loss).  Unallocated expenses include certain legal expenses, bank fees and fees
and discounts on the sale of accounts receivable.

Net sales and income  (loss) from  continuing  operations  for Cone's  operating
segments are as follows:

<TABLE>
<CAPTION>
                                                               Thirteen           Thirteen
                                                             Weeks Ended        Weeks Ended
(in thousands)                                                 9/29/02            9/30/01
                                                         ---------------------------------------
<S>                                                          <C>                <C>
Net Sales
  Denim                                                      $   95,448         $   82,747
  Commission Finishing                                           11,233             16,004
  Decorative Fabrics                                              5,690             10,789
  Other                                                              93                 52
                                                         ---------------------------------------
                                                                112,464            109,592
Less Intersegment Sales                                             776              2,635
                                                         ---------------------------------------
                                                             $  111,688         $  106,957
                                                         ---------------------------------------
Income (Loss) from Continuing Operations
  Denim                                                      $   11,697         $    2,460
  Commission Finishing                                                5              1,279
  Decorative Fabrics                                            ( 1,584 )              732
  Other                                                           ( 408 )            ( 182 )
  Unallocated Expenses                                            ( 344 )            ( 736 )
                                                         ---------------------------------------
                                                                  9,366              3,553
  Reinvention Plan - Inventory Charges and
    Facility Consolidation Charges                                    -              ( 150 )
  Restructuring and Impairment of Assets                              -              ( 200 )
                                                         ---------------------------------------
                                                                  9,366              3,203
  Less Equity in Earnings (Losses) of Unconsolidated
    Affiliates                                                      923               ( 88 )
                                                         ---------------------------------------
                                                                  8,443              3,291
Other Expense, Net                                              ( 4,068 )          ( 2,952 )
                                                         ---------------------------------------
Income before Income Tax Expense and Equity in
  Earnings (Losses) of Unconsolidated Affiliates             $    4,375         $      339
                                                         ---------------------------------------
</TABLE>



                                       11
<PAGE>



Note 8.  Segment Information (continued)

<TABLE>
<CAPTION>
                                                             Thirty-Nine         Thirty-Nine
                                                             Weeks Ended         Weeks Ended
(in thousands)                                                 9/29/02             9/30/01
                                                        ---------------------------------------
<S>                                                          <C>                <C>
Net Sales
  Denim                                                      $  279,288         $   286,372
  Commission Finishing                                           41,757              53,321
  Decorative Fabrics                                             25,500              31,854
  Other                                                             236                 260
                                                        ---------------------------------------
                                                                346,781             371,807
Less Intersegment Sales                                           3,436              10,461
                                                        ---------------------------------------
                                                             $  343,345         $   361,346
                                                        ---------------------------------------
Income (Loss) from Continuing Operations
  Denim                                                      $   26,170         $    10,910
  Commission Finishing                                            2,134               1,551
  Decorative Fabrics                                            ( 1,213 )               465
  Other                                                         ( 1,402 )             ( 249 )
  Unallocated Expenses                                          ( 1,164 )           ( 2,606 )
                                                        ---------------------------------------
                                                                 24,525              10,071
  Reinvention Plan - Inventory Charges and
    Facility Consolidation Charges                                    -             ( 7,289 )
  Restructuring and Impairment of Assets                              -            ( 19,939 )
                                                        ---------------------------------------
                                                                 24,525            ( 17,157 )
  Less Equity in Earnings of Unconsolidated Affiliates            1,605                 484
                                                        ---------------------------------------
                                                                 22,920            ( 17,641 )
Other Expense, Net                                             ( 13,247 )          ( 13,536 )
                                                        ---------------------------------------
Income (Loss) before Income Tax Expense (Benefit) and
  Equity in Earnings of Unconsolidated Affiliates            $    9,673         $  ( 31,177 )
                                                        ---------------------------------------
</TABLE>


Note 9.  Comprehensive Income (Loss)

Comprehensive  income (loss) is the total of net income (loss) and other changes
in equity,  except those resulting from investments by owners and  distributions
to owners not reflected in net income (loss).  Total comprehensive income (loss)
for the periods was as follows:

<TABLE>
<CAPTION>
                                        Thirteen             Thirteen          Thirty-Nine       Thirty-Nine
                                      Weeks Ended          Weeks Ended         Weeks Ended       Weeks Ended
(in thousands)                          9/29/02              9/30/01             9/29/02           9/30/01
                                    -------------------------------------------------------------------------------
<S>                                   <C>                  <C>                 <C>               <C>
Net income (loss)                     $    3,843           $  ( 4,604 )        $    8,376        $ ( 33,972 )
Other comprehensive
  income (loss), cotton
   derivatives gains (losses)               (359 )               ( 99 )               307             1,414
                                    -------------------------------------------------------------------------------
                                      $    3,484           $  ( 4,703 )        $    8,683        $ ( 32,558 )
                                    -------------------------------------------------------------------------------
</TABLE>



                                       12
<PAGE>



Cotton  derivatives  gains as of September  29, 2002,  reflected  above in other
comprehensive  income  (loss) will be  recognized in cost of goods sold over the
next twelve months.


Note 10.  Financial Instruments

Cone utilizes derivative  financial  instruments to manage risks associated with
changes in cotton prices, interest rates and foreign exchange rates.

Cone adopted Statement of Financial  Accounting  Standards  ("SFAS") No. 133 and
SFAS No. 138 as of January 1, 2001.  Cone determined that its interest rate swap
agreement  was an  ineffective  hedge  under the new  standards.  Because of the
transition provision of SFAS No. 133, Cone did not recognize a cumulative effect
of an accounting change affecting results of operations  related to its interest
rate swap  agreement at January 1, 2001. The adjustment to the carrying value of
debt in the amount of  approximately  $2.7 million on January 1, 2001,  recorded
under the transition  provisions of the new standards,  was amortized to results
of operations over the period to swap termination. Cone recognized approximately
$0.1  million  and $0.5  million in  expense  related  to  amortization  of this
adjustment to the carrying value of debt for the thirteen and thirty-nine  weeks
ended  September  30, 2001,  which is  reflected  in the "Other"  caption on the
consolidated  condensed  statements of operations.  Changes in the fair value of
the  interest  rate  swap  agreement  after  transition  were  recorded  in  the
statements  of  operations  in the  period  of  change.  For  the  thirteen  and
thirty-nine weeks ended September 30, 2001, Cone recognized a gain on the change
in the  fair  value  of this  derivative  instrument  of $1.7  million  and $2.5
million,  respectively,  which  is  reflected  in  the  "Other"  caption  on the
consolidated  condensed statements of operations.  As of September 30, 2001, the
interest  rate swap had an  estimated  fair market value of $0.2 million and was
recorded in other long-term  liabilities on the consolidated  condensed  balance
sheet.  Effective  October  4,  2001,  the  interest  rate  swap  agreement  was
terminated for a total cost of $50,000.


Cash Flow Hedging Strategy

Cotton is the primary raw material for Cone's fabric  manufacturing  operations.
Cone has an established cotton purchasing  program,  administered in conformance
with  policies  approved by the Board of Directors,  to ensure an  uninterrupted
supply of appropriate  quality and quantities of cotton,  to cover committed and
anticipated  fabric  sales and to manage  margin  risks  associated  with  price
fluctuations  on  anticipated  cotton  purchases.  Cone  primarily  uses forward
purchase contracts and, to a lesser extent,  futures and option contracts.  Cone
considers its cotton derivatives to be primarily cash flow hedges of anticipated
future  transactions  under SFAS No. 133. The  effective  portion of  derivative
gains and losses for these hedges is initially  reported as a component of other
comprehensive  income  (loss)  outside  results of operations  and  subsequently
reclassified into results of operations when the forecasted  transactions  being
hedged affect  results of  operations.  At September 29, 2002,  Cone recorded in
accumulated  other  comprehensive  income (loss) cotton derivative gains, net of
deferred  taxes,  of $0.6  million.  At  September  29, 2001,  Cone  recorded in
accumulated other comprehensive income (loss) cotton derivative gains,



                                       13
<PAGE>



net of deferred taxes,  of $1.4 million.  Gains of $0.2 million and $0.8 million
were  credited to cost of goods sold during the thirteen and  thirty-nine  weeks
ended September 29, 2002, respectively. Gains of less than $0.5 million and $0.9
million were credited to cost of goods sold during the thirteen and  thirty-nine
weeks  ended  September  30,  2001,  respectively.  The  ineffective  portion of
derivative  gains and losses is reported in results of  operations  immediately.
Hedge ineffectiveness for the thirteen and thirty-nine weeks ended September 29,
2002 and September 30, 2001, was immaterial.


Note 11.  Restructuring and Impairment of Assets

A roll-forward of the activity related to Cone's  restructuring  charges for the
thirty-nine weeks ended September 29, 2002 and September 30, 2001 follows:

<TABLE>
<CAPTION>
                                        Corporate
                                        & Textile
                                        Products
(in thousands)                            Group             Raytex            Total
                                      ----------------------------------------------------
<S>                                     <C>                 <C>              <C>
Balance, December 30, 2001              $    639            $    -           $   639

Deductions:
Terminal leave and related benefits        ( 639  )              -             ( 639  )
                                      ----------------------------------------------------

Balance, September 29, 2002             $      -            $    -           $     -
                                      ----------------------------------------------------

Balance, December 31, 2000              $      -            $  964           $   964

Additions:
Terminal leave and related benefits        3,535                 -             3,535
Consulting and legal fees                    600                 -               600
Pension curtailment*                         888                 -               888
                                      ----------------------------------------------------
                                           5,023                 -             5,023
                                      ----------------------------------------------------
Deductions:
Terminal leave and related benefits      ( 1,701  )          ( 925  )        ( 2,626  )
Consulting and legal fees                  ( 600  )              -             ( 600  )
Pension curtailment*                       ( 888  )              -             ( 888  )
                                      ----------------------------------------------------
                                         ( 3,189  )          ( 925  )        ( 4,114  )
                                      ----------------------------------------------------

Balance, September 30, 2001             $  1,834            $   39           $ 1,873
                                      ----------------------------------------------------
</TABLE>

*Items expensed as incurred.


Note 12.  Discontinued Operations

In  accordance  with  the  provisions  of  SFAS  No.  144,  "Accounting  for the
Impairment or Disposal of Long-Lived  Assets," Cone recorded in fiscal year 2001
the operating results of its khaki



                                       14
<PAGE>



business  and  the  John  Wolf  converted   fabrics   business  as  discontinued
operations.  Cone will not have any  significant  continuing  involvement in the
operations of these businesses.

Net sales and losses from discontinued operations were as follows:

<TABLE>
<CAPTION>
                                             Thirteen           Thirty-Nine
                                            Weeks Ended         Weeks Ended
(in thousands)                                9/30/01             9/30/01
                                        ----------------------------------------
<S>                                         <C>                 <C>
Net Sales
  John Wolf                                 $    2,794          $   14,414
  Khaki                                          6,075              22,815
                                        ----------------------------------------
                                            $    8,869          $   37,229
                                        ----------------------------------------

Pretax Loss from Discontinued Operations
  John Wolf                                 $    ( 428 )        $  ( 4,620 )
  Khaki                                          ( 462 )           ( 7,806 )
                                        ----------------------------------------
                                                 ( 890 )          ( 12,426 )
Loss on Sale of Discontinued Operations        ( 6,397 )           ( 6,397 )
Income Tax Benefit                             ( 2,552 )           ( 6,590 )
                                        ----------------------------------------
Net Loss from Discontinued Operations       $  ( 4,735 )        $ ( 12,233 )
                                        ----------------------------------------
</TABLE>


Note 13.  Income Taxes

The effective tax rate for the thirteen and  thirty-nine  weeks ended  September
29, 2002, is lower than expected  because of the effect of the  extraterritorial
income  exclusion  related to export sales.  The effective tax rate used for the
thirty-nine weeks ended September 30, 2001,  differs from the corporate U.S. tax
rate of 35% because  Cone  recorded a valuation  allowance  on the  deferred tax
assets that resulted from the non-cash  impairment charges totaling $5.6 million
related  to Cone's  investments  in certain  of its  unconsolidated  affiliates,
Ashima and CIPSA.  The  impairment  charges will result in future tax deductible
capital losses;  however,  Cone does not expect to have taxable capital gains in
the future to realize these tax deductible losses. As such, Cone has established
the valuation allowance on the resulting deferred tax assets.




                                       15
<PAGE>



Item 2.
                             MANAGEMENT'S DISCUSSION
                       AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


OVERVIEW

Cone's results of operations are influenced by a number of macroeconomic factors
such as U.S. GDP growth,  the relative  value of the U.S.  dollar  against other
currencies  and consumer  spending.  During the third quarter of 2002,  U.S. GDP
growth  continued below first quarter levels as the continued  volatility of the
U.S. equity markets and the threat of war dampened consumer confidence.  For the
quarter U.S. GDP growth was estimated to be 3.1% driven  primarily by auto sales
and  housing.  In  addition,  during  the  quarter  the U.S.  dollar  marginally
strengthened on a trade-weighted basis and the manufacturing sector contracted.

While economic  conditions  were less  favorable  than expected,  Cone's overall
third quarter results continued to improve on a sequential  quarter basis and as
compared with the prior year. The continued improvement in financial performance
was  attributable  to  multiple  factors   including   excellent   manufacturing
performance  as  measured  against  historical  benchmarks,  cost  savings  from
initiatives  undertaken as part of the 2001  Reinvention Plan and ongoing profit
improvement  initiatives,  capacity  utilization  levels in the company's  denim
facilities and lower cotton costs,  which were  partially  offset by lower denim
sales prices and lower sales volume for Cone's home furnishing operations.  Cone
expects fourth quarter results to be lower than the third quarter as a result of
slightly  higher cotton prices and the fact that many of Cone's denim  customers
typically  idle their garment  cut-and-sew  facilities  for two weeks around the
Christmas holidays.  The outlook for 2003 results will be dependent upon general
economic  conditions,  denim and home  furnishings  demand  at  retail  and 2002
holiday sales.

Cone  remains  focused on its  strategy to grow its denim  business by expanding
capacity  in Mexico.  The stated plan has been to build a denim  plant,  with an
initial  capacity  of 20 million  yards,  on our site in  Altamira,  Tamaulipas,
Mexico when  financing is available.  We believe that the initial denim facility
can be  completed  for a  capital  investment  of less than $60  million.  As an
alternative  to  building a denim  plant on its site in  Altamira,  Cone is also
exploring other opportunities to expand denim manufacturing in Mexico. The funds
required for the Mexico denim  expansion  will require debt or equity  financing
and certain  modifications  to current  debt  agreements.  Cone is  presently in
discussions with its lenders regarding a balance sheet  recapitalization  and is
holding  discussions with capital providers regarding funds for the Mexico denim
project.  Cone has not reached agreements on new financing or equity, nor has it
modified its debt  structure or lending  agreements to date, and there can be no
assurance  that  such new  monies  will be  available  on  acceptable  terms and
conditions   or  that  its  present   lenders   will  agree  to  the   necessary
modifications.

Also in Mexico,  Cone and its joint  venture  partner,  Compania  Industrial  de
Parras,  S.A. de C.V.  ("CIPSA"),  have  agreed to expand  Parras  Cone's  denim
production  capacity by up to 35%.  The  expansion is expected to be financed by
Parras Cone with internally generated cash flow and debt.



                                       16
<PAGE>



The majority of the capacity  expansion has been delayed until  financing can be
secured;  however, in the interim, a smaller scale expansion of approximately 9%
of capacity at a cost of  approximately $1 million was completed in August 2002.
There  can be no  assurance  that the  joint  venture  partners  will be able to
arrange financing on acceptable terms and conditions for the remaining expansion
of Parras Cone.  Cone will continue to market and distribute  100% of the fabric
production of Parras Cone.

During the third quarter of 2002,  Cone completed the process of forming a joint
venture in Turkey  with  Isko,  a large  Turkish  denim  company.  Cone and Isko
established a joint venture company,  IsKone,  (owned 51% by Cone) to sell denim
fabrics to Levi Strauss  Europe for Levi's(R)  501(R)  jeans.  The denim fabrics
will be marketed by Cone to Levi Strauss  Europe and produced by Isko. The joint
venture with Isko was formed to provide denim fabrics for Levi's(R) 501(R) jeans
in Europe on a tariff  friendly basis.  The joint venture  company,  IsKone,  is
expected  to  begin  shipping  product  to  Levi  Strauss  Europe  on a  regular
commercial basis in the first quarter of 2003.


RESULTS OF OPERATIONS

Third  Quarter  Ended  September  29, 2002  Compared  with Third  Quarter  Ended
September 30, 2001.

For the third quarter of 2002, Cone had sales of $111.7 million,  an increase of
4.4% over sales of $107.0 million for the third quarter of 2001. The increase in
sales  was  primarily  driven  by denim  unit  increases,  partially  offset  by
weaknesses in the  commission  finishing and decorative  fabrics  segments where
sales declined by 33.2%.

Gross profit  margin  increased to 15.3% of sales for the third quarter of 2002,
as compared with 10.7% for the third quarter of 2001. The primary drivers of the
improvement  in gross profit margin were cost savings from the 2001  Reinvention
Plan and ongoing profit improvement initiatives,  capacity utilization levels in
the company's denim facilities and lower cotton costs that were partially offset
by lower denim sales prices.  Gross profit was negatively  impacted in the third
quarter,  as compared  with the prior year as a result of lower sales volume for
the commission  finishing and decorative fabrics operations  resulting in a $3.6
million  reduction  in  operating  income for these two  segments  for the third
quarter of 2002, as compared with the third quarter of 2001.

Segment Information.  Cone operates in three principal business segments: Denim,
Commission  Finishing  and  Decorative  Fabrics.  (See  Note 8 of the  Notes  to
Consolidated Condensed Financial Statements included in Part I, Item 1.)

         Denim. Denim sales revenues were $95.4 million for the third quarter of
         2002,  as compared with sales of $82.7 million for the third quarter of
         2001, or an increase of 15.3%.  Denim sales yards  increased  18.0%, as
         compared with the prior year's third quarter  results,  as improvements
         in the market for denim fabrics and Cone's product  styling allowed the
         denim  facilities  to  operate  at full  capacity  and  also to  reduce
         inventory  levels.  As compared  with the prior  year's  period,  sales
         prices on a percentage basis were



                                       17
<PAGE>



         down in the mid-single  digits,  and on a consolidated  basis sales mix
         was less  favorable  as denims  produced by Parras Cone were a slightly
         higher percentage of total denim sales.  Operating income for the denim
         segment  was $11.7  million or 12.3% of sales for the third  quarter of
         2002,  as compared  with $2.5  million,  or 3.0% of sales for the third
         quarter of 2001. The improvement in operating  income was  attributable
         to  cost  savings   programs,   lower  cotton   costs,   and  favorable
         manufacturing variances.  Operating income for the segment includes the
         equity in earnings  (losses)  of the Parras Cone joint  venture and the
         Altamira  industrial  park joint venture.  Equity in earnings of Parras
         Cone was $1.0 million for the third  quarter of 2002,  as compared with
         break-even  results for the third quarter of 2001.  The  improvement in
         Parras  Cone's  results is primarily  attributable  to the same factors
         that affected Cone's overall denim performance.

         Commission   Finishing.   Outside  sales  (total   segment  sales  less
         intercompany  sales) of the commission  finishing  segment decreased by
         21.8%,  as compared with third  quarter 2001  results.  The decrease in
         outside sales was the result of weakness in all of  Carlisle's  product
         lines,  especially apparel and specialty products, as compared with the
         prior year. Total sales,  including  intercompany  sales,  decreased by
         29.8%, a greater percentage decline than outside sales,  primarily as a
         result of Cone's decision to exit the khaki segment at the end of 2001.
         For the third quarter of 2002, the segment reported break-even results,
         as compared with operating income of $1.3 million for the third quarter
         of 2001. The decline in the segment's  operating income is attributable
         to lower sales volume partially offset by plant operating efficiencies,
         improved quality and savings from Cone's cost reduction plans.

         Decorative  Fabrics.  The decorative fabrics segment consists of Cone's
         jacquard operation. Sales revenue in the third quarter of 2002 was $5.7
         million,  as compared with $10.8 million for third quarter 2001.  Sales
         volume decreased by approximately 50%. The reduction in sales volume is
         the result of fewer product placements in the market because of product
         styling,  a general  weakness  in home  decorative  fabrics  demand and
         management's decision earlier in 2002 to phase out certain unprofitable
         lines.  For the third quarter of 2002 the segment had an operating loss
         of $1.6  million  versus an  operating  profit of $0.7  million for the
         third  quarter of 2001.  The decline in sales volume and  profitability
         has resulted in  operational  changes at the plant that are expected to
         reduce the loss for the fourth quarter of 2002.

Selling and  administrative  expenses for the third quarter of 2002 were 7.7% of
sales,  as  compared  to  7.4%  for the  third  quarter  of  2001.  Selling  and
administrative  expenses as a  percentage  of sales were higher  primarily  as a
result of accruals for performance-based compensation.

Interest  expense for the third  quarter of 2002 was $3.7  million,  as compared
with $4.0 million for the third quarter of 2001.  Benefits from lower  borrowing
levels and lower market interest rate levels were partially  offset by increases
in rates under Cone's financing agreements. Other expense of $0.4 million in the
third quarter of 2002 includes the ongoing  expenses of the accounts  receivable
securitization program, as compared to other income of $0.9 million in the



                                       18
<PAGE>



third quarter of 2001.  For the third quarter of 2001 other income  consisted of
an expense of $0.7 million for the ongoing  expense of the  accounts  receivable
securitization  program and income of $1.7 million for the  amortization  of the
transition  amount  related to recording an interest rate swap and the valuation
adjustment of the interest rate swap derivative  instrument.  The recognition of
income was a result of marking to market,  as required by SFAS No. 133, the fair
value of the interest rate swap.  The interest  rate swap was  terminated in the
fourth quarter of 2001.

The effective tax rate from continuing  operations for the third quarter of 2002
was 33% versus 35% for the third quarter of 2001.

For the third quarter of 2002, Cone had a net profit of $3.8 million or $.11 per
share after preferred  dividends.  For the third quarter of 2001, Cone had a net
loss of $4.6 million, or $.22 per share after preferred  dividends.  Included in
the net loss were after-tax charges of $4.7 million for discontinued operations,
or $.18 per share.


Nine Months Ended  September 29, 2002 Compared with Nine Months Ended  September
30, 2001

For the first nine months of 2002, Cone had sales of $343.3 million,  a decrease
of 5.0%, as compared  with sales of $361.3  million for the first nine months of
2001.  The decrease in sales  dollars was across all  segments;  however,  denim
sales units increased in 2002, as compared with 2001.

Gross  profit  margin  increased  to 14.2% of sales for the first nine months of
2002, as compared with 8.1% for the first nine months of 2001.  The  improvement
in gross profit margin was  attributable to many factors  including cost savings
from the 2001 Reinvention Plan and the ongoing profit  improvement  initiatives,
lower cotton costs that were partially  offset by lower denim selling prices and
favorable   manufacturing   variances  and  efficiencies,   increased   capacity
utilization in the denim plants and improved quality.

Segment Information.  Cone operates in three principal business segments: Denim,
Commission  Finishing  and  Decorative  Fabrics.  (See  Note 8 of the  Notes  to
Consolidated Condensed Financial Statements included in Part I, Item 1.)

         Denim.  Denim sales  revenues  were  $279.3  million for nine months of
         2002, as compared with sales of $286.4 million for the comparable  nine
         months of 2001, or a decrease of 2.5%.  Sales yards for 2002  increased
         from 2001 levels  primarily as a result of  increased  denim demand and
         market share gains.  Sales prices,  on a percentage basis, were down in
         the mid-single  digits,  as compared with the prior year, and sales mix
         was  also  less  favorable.  Operating  income  for the  denim  segment
         increased  to $26.2  million  or 9.4% of sales  for the nine  months of
         2002,  as  compared  with $10.9  million or 3.8% of sales for the first
         nine months of 2001. The improvement in operating  income was primarily
         attributable to the 2001 Reinvention  Plan savings,  lower cotton costs
         and  favorable  manufacturing  variances.   Cotton  cost  savings  were
         partially  offset by the decline in average selling  prices.  Operating
         income for the segment includes the equity in earnings



                                       19
<PAGE>



         (losses) of the Parras Cone joint  venture and the Altamira  industrial
         park joint venture.  Equity in earnings of Parras Cone was $1.9 million
         for nine months of 2002,  as compared with $0.6 million for nine months
         of 2001.

         Commission  Finishing.   In  2002,  the  commission  finishing  segment
         consists only of the Carlisle plant. In 2001, the segment  consisted of
         both the Carlisle and Raytex  operations.  During the first  quarter of
         2001, Cone was in the process of closing the Raytex operation.  Outside
         sales (total segment sales less  intercompany  sales) of the commission
         finishing  segment  decreased  by 6.2%,  as compared  with 2001 results
         after  eliminating  the sales  produced  by the Raytex  operation.  The
         decrease  in  outside  sales  was  the  result  of  weakness  in all of
         Carlisle's product lines in the third quarter of 2002, as compared with
         the third  quarter  of 2001,  as sales for the first  half of 2002 were
         basically flat with year ago levels.  Total sales excluding Raytex, but
         including  intercompany sales, decreased by 18.6% primarily as a result
         of Cone's  decision to exit the khaki  segment at the end of 2001.  For
         the nine months of 2002, the segment reported a profit of $2.1 million,
         as  compared  with a profit  $1.6  million for the first nine months of
         2001. The  improvement in the segment's  operating  income is primarily
         attributable to improved  quality and operating  efficiencies,  savings
         from the 2001 Reinvention Plan and the closing of the Raytex operation.

         Decorative  Fabrics.  The decorative fabrics segment consists of Cone's
         jacquard operation. Sales revenue for the nine months of 2002 was $25.5
         million,  as compared with $31.9 million for the  comparable  period of
         2001.  Sales volume  decreased by  approximately  30%. The reduction in
         sales volume is the result of fewer product placements in the market as
         a result of product styling,  weaker  decorative  fabrics market demand
         and management's  decision to phase out certain  unprofitable  lines in
         early 2002.  Segment operating loss was $1.2 million for nine months of
         2002, as compared with segment operating income of $0.5 million for the
         comparable prior year period.

Selling and administrative expenses for the first nine months of 2002 were $25.7
million, as compared to $27.1 million for the first nine months of 2001. Selling
and administrative expenses were 7.5% of sales for both years primarily a result
of  savings   from  the  2001   Reinvention   Plan   offset  by   accruals   for
performance-based compensation.

Interest expense for the nine months of 2002 was $12.0 million, as compared with
$13.5 million for the nine months of 2001.  Benefits from lower borrowing levels
and lower  market  interest  rate levels were  partially  offset by increases in
rates under Cone's financing  agreements.  Other expenses of $1.4 million in the
first nine months of 2002 include the ongoing expense of the accounts receivable
securitization  program,  as compared to other  expense of $0.4  million for the
nine months of 2001.  For the nine months of 2001 other expense  consisted of an
expense of $2.5  million  for the  ongoing  expense of the  accounts  receivable
securitization  program and income of $2.1 million for the  amortization  of the
transition  amount  related to recording an interest rate swap and the valuation
adjustment of the interest rate swap derivative  instrument.  The recognition of
income was as a result of marking to market,  as required  by SFAS No. 133,  the
fair value of the interest rate swap.  The interest rate swap was  terminated in
the fourth quarter of 2001.



                                       20
<PAGE>



The effective tax rate on  continuing  operations  for year to date 2002 was 30%
versus a tax benefit of 29% for the  comparable  period of 2001. Tax benefits of
export sales  reduced the  effective  tax rate for 2002.  The effective tax rate
used for the nine months ended  September  30, 2001,  differs from the corporate
U.S. tax rate of 35% because Cone recorded a valuation allowance on the deferred
tax assets that  resulted  from the non-cash  impairment  charges  totaling $5.6
million  related  to  Cone's   investments  in  certain  of  its  unconsolidated
affiliates,  Ashima and CIPSA. The impairment  charges will result in future tax
deductible capital losses; however, Cone does not expect to have taxable capital
gains in the future to realize these tax deductible losses.  Therefore, Cone has
established the valuation allowance on the resulting deferred tax assets.

For the nine  months of 2002,  Cone had a net profit $8.4  million,  or $.20 per
share after  preferred  dividends.  For the nine months of 2001,  Cone had a net
loss of $34.0 million, or $1.45 per share after preferred dividends. Included in
the net loss for 2001 were after-tax charges of $19.7 million for impairment and
restructuring  charges and  inventory  write-downs  and  facility  consolidation
charges related to the Reinvention Plan  attributable to continuing  operations,
or $.77 per share. In addition,  included in the net loss for the nine months of
2001 were after-tax  charges of $12.2 million for  discontinued  operations,  or
$.48 per share.


LIQUIDITY AND CAPITAL RESOURCES

Cone's  principal  capital  components  consist  of debt  outstanding  under its
Revolving  Credit  Facility,  its Senior  Note,  its 8-1/8%  Debentures  and its
stockholders'  equity.  Primary  sources of liquidity are  internally  generated
funds,  availability  under the  Revolving  Credit  Facility  and a $60  million
Receivables   Purchase  and  Servicing   Agreement   (the  "A/R   Securitization
Facility").

On November 9, 2001,  Cone entered  into  agreements  both to  refinance  and to
extend its Revolving  Credit Facility with its existing bank group and to extend
the  maturity on its Senior  Note.  The new  agreements  provide  for  scheduled
amortization  and  commitment  reductions of $10 million  during 2002 with a new
maturity  date of January 15, 2003.  In  addition,  the  agreements  provide for
additional  amortization and commitment  reductions related to proceeds received
by Cone for permitted asset sales and 75% of excess cash flow (as defined in the
agreements).  Interest  rates  were  increased  and  new  covenant  levels  were
established.

Based upon its operating  results for the first six months of 2002,  pursuant to
the 75% of excess cash flow  provision of its lending  agreements,  Cone made an
additional  amortization  payment and  commitment  reduction  of $3.7 million in
August 2002.

Financing  agreements  of Cone  prohibit it from paying  dividends on its Common
Stock.




                                       21
<PAGE>



The following is a summary of primary  financing  agreements as of September 29,
2002.

<TABLE>
<CAPTION>
                                                                       Interest/
($ Amounts in Millions)         Facility             Amount            Discount
Financing Agreement            Commitment          Outstanding           Rate        Maturity Date
--------------------------------------------------------------------------------------------------
<S>                            <C>                 <C>                 <C>            <C>
8-1/8% Debentures              $    100.0          $   100.0             8.125%       Mar 15, 2005
Senior Note                          23.3               23.3             14.200       Jan 15, 2003
Revolving Credit Facility            59.5               33.0              9.250       Jan 15, 2003
A/R Securitization
  Facility                           60.0               28.5              5.250       Sept 1, 2004

</TABLE>

At September 29, 2002, Cone had availability  under its financing  agreements of
$24.8  million.  Availability  under the Revolving  Credit  Facility and the A/R
Securitization  Facility is determined by overall facility commitment levels and
borrowing  base   calculations,   as  defined  in  the  respective   agreements.
Availability  under these  agreements  averaged in excess of $20 million for the
third  quarter of 2002.  During the first nine  months of 2002,  Cone  generated
$30.1  million  of  cash  from  operations.  Changes  in  operating  assets  and
liabilities  provided $8.3 million of the cash from operations as liquidation of
inventories  and increase in payables  more than offset the increase in accounts
receivable.  During the first nine months of 2002, Cone invested $3.9 million in
capital  expenditures  and sold $1.3  million  of land and  other  non-essential
equipment. Cone expects to spend approximately $8.0 million in 2002 for domestic
capital expenditures to maintain its manufacturing facilities and to provide the
flexibility   and  capability   necessary  to  meet  market   demands.   Capital
expenditures are expected to be financed by internally generated funds.

On September 29, 2002, Cone's capital  structure  consisted of $155.2 million of
debt (including current  maturities) and $91.8 million of stockholders'  equity.
For comparison,  Cone had $180.8 million of debt (including current  maturities)
and $90.8 million of stockholders' equity at September 30, 2001.

Accounts  receivable on September 29, 2002 were $43.3 million,  as compared with
$44.3 million at September 30, 2001. Receivables,  including those sold pursuant
to the A/R Securitization Facility,  represented 62 days of sales outstanding at
September 29, 2002 and 73 days at September 30, 2001. Advances outstanding under
the A/R  Securitization  Facility  were $28.5  million at September 29, 2002 and
$45.3 million at September 30, 2001.

Inventories  on September  29, 2002 were $45.6  million,  as compared with $62.1
million at December  30,  2001  reflecting  reductions  in  inventory  levels of
finished  goods,  work-in-process,  raw  materials  and supplies  and other.  In
addition,  inventory  carrying values were lower  reflecting lower cotton prices
and the reduced cost of operations as the result of the 2001  Reinvention  Plan.
Finished  goods  inventories  were reduced by $12.6  million from  year-end 2001
levels.  For comparison  purposes,  inventories at September 30, 2001 were $64.5
million.  The  year-over-year  reduction  in  inventories  is the  result of the
liquidation of core inventories, write-downs taken as part of Cone's Reinvention
Plan,  the exit from the khaki  segment and lower  cotton and other raw material
prices.



                                       22
<PAGE>



Cone believes that  internally  generated  operating  funds and funds  available
under its Revolving  Credit Facility  currently in effect are sufficient to meet
its needs for working capital and domestic capital spending  permitted under the
terms of the Revolving  Credit  Facility.  However,  by January 2003,  Cone must
either  refinance or replace the Revolving  Credit Facility and the Senior Note.
If Cone is unable to  refinance  this debt or is in default,  in addition to the
amounts  owed,  Cone will be  required  to pay to the  lenders  within two years
thereafter,  upon notice from the lenders,  an amount equal to the greater of $1
million or 10% of the market  value of Cone's  outstanding  common  stock at the
time of the notice.  There is no assurance that Cone will be able to replace its
Revolving  Credit Facility and its Senior Note or otherwise  obtain financing on
terms and conditions  acceptable to Cone.  Cone has not yet been able to finance
its  proposed  plant in  Altamira,  Tamaulipas,  Mexico,  and its  current  debt
structure  will not permit that  financing.  Cone is in the process of exploring
its  alternatives  related to  financing  its  businesses  in both the U.S.  and
Mexico.

The long-term  recapitalization of Cone's balance sheet is expected to result in
the extension and  modifications of existing debt agreements and the issuance of
new debt or equity securities (potentially including securities convertible into
common stock) that will provide the funding for its Mexico denim expansion. Cone
has made it a priority to implement a long-term  recapitalization of its balance
sheet;  therefore,  in the second quarter of 2002,  Cone retained  Jefferies and
Co., as its investment banker to assist in the process.  We have had discussions
with our existing  lenders and potential new sources of debt or equity.  At this
time, there is no definitive  proposal or agreement on the  recapitalization  of
the balance sheet.  Cone's goal is to announce the details of a recapitalization
plan in 2002 with a completion  date in the first quarter of 2003. The company's
schedule will require an interim  amendment to the Revolving Credit Facility and
the Senior Note to extend the January 15, 2003 maturity.

With the  significant  declines in the equity markets in 2002, the fair value of
Cone's  pension  plan  assets  has  declined  so that  its  accumulated  benefit
obligations to plan  participants  exceed the fair value of pension plan assets.
If the fair value of pension plan assets does not exceed the accumulated benefit
obligations to plan  participants at year-end,  Cone will recognize an after-tax
reduction to stockholders'  equity for a minimum pension  liability.  Based upon
pension plan assets at the end of the third quarter,  the after-tax reduction to
stockholders equity would be approximately $19 million at year-end.  The noncash
charge will not impact  2002 net income or  liquidity;  however,  the decline in
fair value of pension plan assets may reduce future operating results. As a part
of the 2001  Reinvention  Plan,  the salary  defined  benefit  pension  plan was
frozen.


OTHER MATTERS

EBITDA from  continuing  operations and pro forma EBITDA,  which includes 50% of
Parras Cone's EBITDA,  are presented not as an alternative  measure of operating
results or cash flow from  continuing  operations  (as  determined in accordance
with accounting  principles  generally accepted in the United States of America)
but because  they are a widely  accepted  financial  indicator of the ability to
incur and service debt.  Cone calculates  EBITDA from continuing  operations and
pro forma EBITDA as follows:



                                       23
<PAGE>



<TABLE>
<CAPTION>
                                                Thirteen          Thirteen        Thirty-Nine      Thirty-Nine
                                              Weeks Ended       Weeks Ended       Weeks Ended      Weeks Ended
(in thousands)                                  9/29/02           9/30/01           9/29/02          9/30/01
                                             ---------------------------------------------------------------------
<S>                                           <C>               <C>               <C>              <C>
Income (Loss) from Continuing Operations      $   8,443         $   3,291         $  22,920        $( 17,641 )
Depreciation and Amortization                     4,688             4,888            14,832           15,827
Reinvention Plan - Inventory Charges
   and Facility Consolidation Charges                 -               150                 -            7,289
Restructuring and Impairment Charges                  -               200                 -           19,939
                                             ---------------------------------------------------------------------
EBITDA                                           13,131             8,529            37,752           25,414
50% Parras Cone EBITDA                            2,531             1,043             6,068            4,270
                                             ---------------------------------------------------------------------
Pro Forma EBITDA                              $  15,662         $   9,572         $  43,820        $  29,684
                                             ---------------------------------------------------------------------
</TABLE>

Federal, state and local regulations relating to the workplace and the discharge
of materials into the environment  continue to change and,  consequently,  it is
difficult to gauge the total future impact of such regulations on Cone. Existing
government  regulations  are not  expected to cause a material  change in Cone's
competitive position,  operating results or planned capital  expenditures.  Cone
has  an  active  environmental  committee,   which  fosters  protection  of  the
environment and compliance with laws.

From  time to  time,  Cone is a party  to  various  legal  claims  and  actions.
Management believes that none of these claims or actions, either individually or
in the aggregate, will have a material adverse effect on the financial condition
and  liquidity  of  Cone.  As a  result  of  Cone's  recent  operating  results,
management  believes that the effects of any litigation,  no matter how small or
insignificant,  could  be  considered  material  to  Cone's  future  results  of
operations. As of September 29, 2002, no significant litigation existed.

"Safe  Harbor"  Statement  under Section 27A of the  Securities  Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

         Except for the historical information presented,  the matters disclosed
         in the foregoing discussion and analysis and other parts of this report
         include forward-looking  statements.  These statements represent Cone's
         current   judgment   on  the  future  and  are  subject  to  risks  and
         uncertainties  that could cause  actual  results to differ  materially.
         Such factors include,  without  limitation:  (i) the demand for textile
         products,  including Cone's products, will vary with the U.S. and world
         business cycles,  imbalances between consumer demand and inventories of
         retailers and  manufacturers  and changes in fashion  trends,  (ii) the
         highly  competitive  nature of the textile  industry  and the  possible
         effects  of  reduced  import  protection,  free-trade  initiatives  and
         retaliatory  measures in trade disputes,  (iii) the unpredictability of
         the cost and availability of cotton, Cone's principal raw material, and
         other manufacturing  costs, (iv) Cone's relationships with Levi Strauss
         as its major  customer  including  its sourcing  practices,  (v) Cone's
         ability to attract and maintain adequate capital to fund operations and
         strategic  initiatives,  (vi) increases in prevailing  interest  rates,
         (vii) the effect of  financial  market  performance  on Cone's  defined
         benefit pension plan assets,  and (viii) the effect on Cone's sales and
         markets  of events  such as the events of  September  11,  2001.  For a
         further  description of these risks see Cone's 2001 Form 10-K, "Item 1.
         Business -- Competition,  --Raw Materials and --Customers" and "Item 7.
         Management's  Discussion  and  Analysis  of Results of  Operations  and
         Financial  Condition  --  Overview"  of the Form 10-K.  Other risks and
         uncertainties  may be  described  from  time to time  in  Cone's  other
         reports and filings with the Securities and Exchange Commission.



                                       24
<PAGE>



Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Cone is exposed to market risks relating to  fluctuations  in interest rates and
commodity prices.  There has been no material change in Cone's market risks that
would  significantly  affect the disclosures  made in the Form 10-K for the year
ended December 30, 2001.


Item 4.  Controls and Procedures

Based on their evaluation of Cone's  disclosure  controls and procedures,  which
was  completed  within 90 days  prior to the  filing of this  report,  the Chief
Executive  Officer and the Chief  Financial  Officer have  concluded that Cone's
disclosure  controls and  procedures  are  effective to ensure that  information
required to be disclosed  by Cone in the reports that it files or submits  under
the  Securities  Exchange  Act of 1934,  as  amended,  is  recorded,  processed,
summarized and reported within the time periods  specified in the Securities and
Exchange  Commission's  rules and forms. In reaching this conclusion,  the Chief
Executive Officer and Chief Financial Officer  determined that Cone's disclosure
controls and  procedures  are  effective in ensuring  that such  information  is
accumulated  and  communicated  to Cone's  management to allow timely  decisions
regarding required disclosure.

There  were no  significant  changes  in Cone's  internal  controls  or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation.



                                       25
<PAGE>



                                     PART II

Item 1.  Legal Proceedings

From  time to  time,  Cone is a party  to  various  legal  claims  and  actions.
Management believes that none of these claims or actions, either individually or
in the aggregate, will have a material adverse effect on the financial condition
and  liquidity  of  Cone.  As a  result  of  Cone's  recent  operating  results,
management  believes that the effects of any litigation,  no matter how small or
insignificant,  could  be  considered  material  to  Cone's  future  results  of
operations. As of September 29, 2002, no significant litigation existed.


Item 5.  Other Information

Notice of a matter to be presented by a  shareholder  for  consideration  at the
2003 annual meeting other than pursuant to Rule 14a-8 of the Securities Exchange
Act of 1934 must be received by the company prior to February 10, 2003.  Failure
to give timely notice will result in the proxy statement relating to the meeting
not  including  information  on the matter or the  manner in which  management's
proxies will vote on the matter and the proxies received by management will have
discretionary authority to vote on such matter.


Item 6.  Exhibits and Reports on Form 8-K

(a)  The  exhibits  to this Form 10-Q are  listed in the  accompanying  Index to
     Exhibits.

(b)  Reports on Form 8-K. None



                                       26
<PAGE>



Exhibit
  No.     Description

*2.1      Receivables  Purchase and Servicing Agreement dated as of September 1,
          1999,  by and  among  Cone  Receivables  II LLC,  as  Seller,  Redwood
          Receivables Corporation,  as Purchaser,  the Registrant,  as Servicer,
          and General  Electric  Capital  Corporation,  as  Operating  Agent and
          Collateral  Agent,  filed as Exhibit 2.1(h) to Registrant's  report on
          Form 10-Q for the quarter ended October 3, 1999.

*2.2      Receivables  Transfer  Agreement dated as of September 1, 1999, by and
          among the  Registrant,  any other  Originator  Party hereto,  and Cone
          Receivables II LLC, filed as Exhibit 2.1(i) to Registrant's  report on
          Form 10-Q for the quarter ended October 3, 1999.

*2.3.1    First Amendment and Waiver to  Securitization  Agreements  dated as of
          November  16,  1999,  by and  between  Cone  Receivables  II LLC,  the
          Registrant,  Redwood  Receivables  Corporation  and  General  Electric
          Capital  Corporation,  together  with all exhibits  thereto,  filed as
          Exhibit 2.1(c) to Registrant's report on Form 10-K for the fiscal year
          ending January 2, 2000.

*2.3.2    Second Amendment to Securitization  Agreements dated as of January 28,
          2000, by and between Cone Receivables II LLC, the Registrant,  Redwood
          Receivables  Corporation,  and General Electric  Capital  Corporation,
          together  with all  exhibits  thereto,  filed  as  Exhibit  2.1(d)  to
          Registrant's report on Form 10-K for the fiscal year ending January 2,
          2000.

*2.3.3    Third  Amendment to  Securitization  Agreements  dated as of March 31,
          2000, by and between Cone Receivables II LLC, the Registrant,  Redwood
          Receivables  Corporation,  and General Electric  Capital  Corporation,
          together  with all  Exhibits  thereto,  filed  as  Exhibit  2.1(e)  to
          Registrant's report on Form 10-Q for the quarter ended April 2, 2000.

*2.3.4    Fourth  Amendment to  Securitization  Agreements dated as of April 24,
          2000 by and between  Cone  Receivables  II LLC, the  Registrant,  Cone
          Foreign  Trading LLC,  Redwood  Receivables  Corporation,  and General
          Electric  Capital  Corporation,  together  with all exhibits  thereto,
          filed as Exhibit  2.1(f) to  Registrant's  report on Form 10-Q for the
          quarter ended April 2, 2000,  filed as Exhibit  2.3.4 to  Registrant's
          Registration Statement on Form S-4 (File No. 333-43014).



                                       27
<PAGE>



Exhibit
  No.     Description

*2.3.5    Fifth Amendment to Securitization Agreements dated as of June 30, 2000
          by and between Cone  Receivables II LLC, the Registrant,  Cone Foreign
          Trading LLC,  Redwood  Receivables  Corporation,  and General Electric
          Capital   Corporation,   filed  as  Exhibit   2.3.5  to   Registrant's
          Registration Statement on Form S-4 (File No. 333-43014).

*2.3.6    Sixth Amendment to Securitization  Agreements dated as of December 12,
          2000 by and between  Cone  Receivables  II LLC, the  Registrant,  Cone
          Foreign  Trading  LLC,  Redwood  Receivables  Corporation  and General
          Electric Capital  Corporation,  filed as Exhibit 2.3.6 to Registrant's
          Registration Statement on Form S-4 (File No. 333-43014).

*2.3.7    Seventh  Amendment to  Securitization  Agreement dated as of April 23,
          2001 by and between  Cone  Receivables  II LLC, the  Registrant,  Cone
          Foreign Trading LLC, and General Electric Capital  Corporation,  filed
          as Exhibit 2.3.7 to  Registrant's  report on Form 10-Q for the quarter
          ended July 1, 2001.

*2.3.8    Eighth Amendment to Securitization Agreement dated as of July 20, 2001
          by and between Cone  Receivables II LLC, the Registrant,  Cone Foreign
          Trading  LLC,  and  General  Electric  Capital  Corporation,  filed as
          Exhibit  2.3.8 to  Registrant's  report on Form  10-Q for the  quarter
          ended July 1, 2001.

*2.3.9    Ninth  Amendment to  Securitization  Agreement dated as of November 9,
          2001 by and between  Cone  Receivables  II LLC, the  Registrant,  Cone
          Foreign Trading LLC, and General Electric Capital  Corporation,  filed
          as Exhibit 2.3.9 to the Registrant's  report on Form 10-K for the year
          ended December 30, 2001.

*2.4      Investment  Agreement  dated  as of  June  18,  1993,  among  Compania
          Industrial de Parras, S.A. de C.V., Sr. Rodolfo Garcia Muriel, and the
          Registrant,  filed as Exhibit  2.2(a) to  Registrant's  report on Form
          10-Q for the quarter ended July 4, 1993.

*2.5      Commercial  Agreement  dated  as  of  July  1,  1999,  among  Compania
          Industrial de Parras, S.A. de C.V., the Registrant, and Parras Cone de
          Mexico,  S.A., filed as Exhibit 2.2(b) to Registrant's  report on Form
          10-K for the fiscal year ending January 2, 2000.



                                       28
<PAGE>



Exhibit
  No.     Description

*2.5.1    Amended and Restated  Commercial  Agreement,  dated as of December 12,
          2000,  among  Compania   Industrial  de  Parras,  S.A.  de  C.V.,  the
          Registrant and Parras Cone de Mexico,  S.A., filed as Exhibit 2.5.1 to
          Registrant's Registration Statement on Form S-4 (File No. 333-43014).

*2.6      Guaranty  Agreement dated as of June 25, 1993,  between the Registrant
          and  Compania  Industrial  de Parras,  S.A. de C.V.,  filed as Exhibit
          2.2(c) to Registrant's  report on Form 10-Q for the quarter ended July
          4, 1993.

*2.7      Joint Venture  Agreement dated as of June 25, 1993,  between  Compania
          Industrial de Parras,  S.A. de C.V., and Cone Mills (Mexico),  S.A. de
          C.V., filed as Exhibit 2.2(d) to Registrant's  report on Form 10-Q for
          the quarter ended July 4, 1993.

*2.7.1    First Amendment to Joint Venture  Agreement dated as of June 14, 1995,
          between  Compania  Industrial de Parras,  S.A. de C.V., and Cone Mills
          (Mexico), S.A. de C.V., filed as Exhibit 2.2(e) to Registrant's report
          on Form 10-Q for the quarter ended July 2, 1995.

*2.8      Joint Venture Registration Rights Agreement dated as of June 25, 1993,
          among Parras Cone de Mexico, S.A., Compania Industrial de Parras, S.A.
          de C.V. and Cone Mills (Mexico), S.A. de C.V., filed as Exhibit 2.2(e)
          to  Registrant's  report on Form 10-Q for the  quarter  ended  July 4,
          1993.

*2.9      Parras  Registration  Rights  Agreement  dated  as of June  25,  1993,
          between  Compania   Industrial  de  Parras,   S.A.  de  C.V.  and  the
          Registrant,  filed as Exhibit  2.2(f) to  Registrant's  report on Form
          10-Q for the quarter ended July 4, 1993.

*2.10     Support Agreement dated as of June 25, 1993, among the Registrant, Sr.
          Rodolfo L. Garcia, Sr. Rodolfo Garcia Muriel and certain other persons
          listed therein  ("private  stockholders"),  filed as Exhibit 2.2(g) to
          Registrant's report on Form 10-Q for the quarter ended July 4, 1993.

*3.1      Restated Articles of Incorporation of the Registrant  effective August
          25, 1993, filed as Exhibit 4.1 to Registrant's report on Form 10-Q for
          the quarter ended October 3, 1993.



                                       29
<PAGE>



Exhibit
  No.     Description

*3.1.1    Articles  of  Amendment  of  the  Articles  of  Incorporation  of  the
          Registrant  effective  October  22,  1999,  to  fix  the  designation,
          preferences, limitations, and relative rights of a series of its Class
          B Preferred Stock,  filed as Exhibit 4.1(a) to Registrant's  report on
          Form 10-Q for the quarter ended October 3, 1999.

*3.2      Amended and Restated  Bylaws of  Registrant,  effective June 18, 1992,
          filed as Exhibit 3.5 to  Registrant's  Registration  Statement on Form
          S-1 (File No. 33-46907).

*4.1      Rights Agreement dated as of October 14, 1999,  between the Registrant
          and First Union National Bank, as Rights Agent,  with Form of Articles
          of Amendment  with respect to the Class B Preferred  Stock (Series A),
          the Form of Rights Certificate,  and Summary of Rights attached, filed
          as  Exhibit 1 to  Registrant's  report on Form 8-A dated  October  29,
          1999.

*4.2      Note Agreement dated as of August 13, 1992, between the Registrant and
          The  Prudential  Insurance  Company  of  America,   with  form  of  8%
          promissory note attached, filed as Exhibit 4.01 to Registrant's report
          on Form 8-K dated August 13, 1992.

*4.2.1    Letter Agreement dated September 11, 1992, amending the Note Agreement
          dated  August 13,  1992,  between the  Registrant  and The  Prudential
          Insurance  Company of America,  filed as Exhibit  4.2 to  Registrant's
          report on Form 8-K dated March 1, 1995.

*4.2.2    Letter  Agreement  dated July 19, 1993,  amending  the Note  Agreement
          dated  August 13,  1992,  between the  Registrant  and The  Prudential
          Insurance  Company of America,  filed as Exhibit  4.3 to  Registrant's
          report on Form 8-K dated March 1, 1995.

*4.2.3    Letter  Agreement  dated June 30, 1994,  amending  the Note  Agreement
          dated  August 13,  1992,  between the  Registrant  and The  Prudential
          Insurance  Company of America,  filed as Exhibit  4.4 to  Registrant's
          report on Form 8-K dated March 1, 1995.

*4.2.4    Letter Agreement dated November 14, 1994,  amending the Note Agreement
          dated  August 13,  1992,  between the  Registrant  and The  Prudential
          Insurance  Company of America,  filed as Exhibit  4.5 to  Registrant's
          report on Form 8-K dated March 1, 1995.



                                       30
<PAGE>



Exhibit
  No.     Description

*4.2.5    Letter  Agreement  dated  as of  June  30,  1995,  amending  the  Note
          Agreement  dated  August 13,  1992,  between  the  Registrant  and The
          Prudential  Insurance  Company of America,  filed as Exhibit 4.3(e) to
          Registrant's report on Form 10-Q for the quarter ended July 2, 1995.

*4.2.6    Letter Agreement dated as of June 30, 1995, between the Registrant and
          The  Prudential   Insurance  Company  of  America  superseding  Letter
          Agreement, filed as Exhibit 4.3(e) to Registrant's report on Form 10-Q
          for the  quarter  ended  July 2,  1995,  filed as  Exhibit  4.3(f)  to
          Registrant's report on Form 10-K for year ended December 31, 1995.

*4.2.7    Letter  Agreement  dated as of March 30, 1996,  between the Registrant
          and The  Prudential  Insurance  Company of  America,  filed as Exhibit
          4.3(g) to Registrant's report on Form 10-Q for the quarter ended March
          31, 1996.

*4.2.8    Letter Agreement dated as of January 31, 1997,  between the Registrant
          and The  Prudential  Insurance  Company of  America,  filed as Exhibit
          4.3(h) to Registrant's report on Form 10-K for the year ended December
          29, 1996.

*4.2.9    Letter Agreement dated as of July 31, 1997, between the Registrant and
          The Prudential  Insurance Company of America,  filed as Exhibit 4.3(i)
          to  Registrant's  report on Form 10-Q for the quarter ended  September
          28, 1997.

*4.2.10   Modification to Note Agreement dated as of February 14, 1998,  between
          the Registrant and The Prudential Insurance Company of America,  filed
          as Exhibit 4.3(j) to Registrant's  report on Form 10-Q for the quarter
          ended March 29, 1998.

*4.2.11   Letter  Agreement  dated as of  September  1, 1999,  amending the Note
          Agreement  dated  August 13,  1992,  between  the  Registrant  and The
          Prudential  Insurance  Company of America,  filed as Exhibit 4.3(i) to
          Registrant's  report on Form 10-Q for the  quarter  ended  October  3,
          1999.

*4.2.12   Amendment of 1992 Note Agreement  dated as of January 28, 2000, by and
          among the Registrant and The Prudential  Insurance Company of America,
          together with all exhibits thereto, filed as Exhibit 9 to Registrant's
          report on Form 8-K dated February 11, 2000.



                                       31
<PAGE>



Exhibit
  No.     Description

*4.2.13   Waiver under Note Agreement dated as of July 3, 2000, by and among the
          Registrant and The Prudential  Insurance Company of America,  filed as
          Exhibit  4.2.13 to  Registrant's  Registration  Statement  on Form S-4
          (File No. 333-43014).

*4.2.14   Amendment of 1992 Note  Agreement  dated as of July 14,  2000,  by and
          among the Registrant and The Prudential  Insurance Company of America,
          filed as Exhibit 4.2.14 to Registrant's Registration Statement on Form
          S-4 (File No. 333-43014).

*4.2.15   Amendment of 1992 Note Agreement dated as of December 12, 2000, by and
          among the Registrant and The Prudential  Insurance Company of America,
          filed as Exhibit 4.2.15 to the Registrant's  Registration Statement on
          Form S-4 (File No. 333-43014).

*4.2.16   Amendment  of 1992 Note  Agreement  and  Waiver  dated as of April 23,
          2001, by and among the Registrant and The Prudential Insurance Company
          of America,  filed as Exhibit  4.2.16 to  Registrant's  report on Form
          10-Q for quarter ended July 1, 2001.

*4.2.17   Amendment of 1992 Note  Agreement  dated as of June 28,  2001,  by and
          among the Registrant and The Prudential  Insurance Company of America,
          filed as Exhibit  4.2.17 to  Registrant's  report on Form 10-Q for the
          quarter ended July 1, 2001.

*4.2.18   Waiver Under 1992 Note  Agreement  dated as of August 10, 2001, by and
          among the Registrant and The Prudential  Insurance Company of America,
          filed as Exhibit  4.2.18 to  Registrant's  report on Form 10-Q for the
          quarter ended September 30, 2001.

*4.2.19   Amendment of 1992 Note  Agreement  dated as of September  25, 2001, by
          and among the  Registrant  and The  Prudential  Insurance  Company  of
          America,  filed as Exhibit 4.2.19 to Registrant's  report on Form 10-Q
          for the quarter ended September 30, 2001.

*4.2.20   Amendment of 1992 Note Agreement  dated as of October 25, 2001, by and
          among the Registrant and The Prudential  Insurance Company of America,
          filed as Exhibit  4.2.20 to  Registrant's  report on Form 10-Q for the
          quarter ended September 30, 2001.



                                       32
<PAGE>



Exhibit
  No.     Description

*4.2.21   Amendment of 1992 Note Agreement  dated as of November 9, 2001, by and
          among the Registrant and The Prudential  Insurance Company of America,
          filed as Exhibit  4.2.21 to the  Registrant's  report on Form 10-K for
          the year ended December 30, 2001.

*4.2.22   Amendment of 1992 Note  Agreement  dated as of March 22, 2002,  by and
          among the Registrant and The Prudential  Insurance Company of America,
          filed as Exhibit  4.2.22 to the  Registrant's  report on Form 10-K for
          the year ended December 30, 2001.

*4.3      Credit  Agreement  dated as of  January  28,  2000,  by and  among the
          Registrant, as Borrower, Bank of America, N.A., as Agent and as Lender
          and the Lenders  party  thereto from time to time,  together  with all
          exhibits  thereto,  filed as Exhibit 1 to Registrant's  report on Form
          8-K dated February 11, 2000.

*4.3.1    Amendment No. 1 to Credit  Agreement dated as of July 14, 2000, by and
          among the Registrant,  as Borrower,  Cone Global Finance Corp.,  CIPCO
          S.C.  Inc.  and Cone  Foreign  Trading  LLC,  as  Guarantors,  Bank of
          America,  N.A., as Agent and as Lender,  and the Lenders party thereto
          from time to time, filed as Exhibit 4.3.1 to Registrant's Registration
          Statement on Form S-4 (File No. 333-43014).

*4.3.2    Amendment No. 2 to Credit  Agreement dated as of December 12, 2000, by
          and among the  Registrant,  as Borrower,  Cone Global  Finance  Corp.,
          CIPCO S.C. Inc. and Cone Foreign  Trading LLC, as Guarantors,  Bank of
          America,  N.A., as Agent and as Lender,  and the Lenders party thereto
          from time to time, filed as Exhibit 4.3.2 to Registrant's Registration
          Statement on Form S-4 (File No. 333-43014).

*4.3.3    Waiver and Amendment No. 3 to Credit  Agreement  dated as of April 23,
          2001, by and among the Registrant, as Borrower, Bank of America, N.A.,
          as Agent and as Lender,  and the Lenders Signatory  Thereto,  filed as
          Exhibit  4.3.3 to  Registrant's  report on Form  10-Q for the  quarter
          ended July 1, 2001.

*4.3.4    Amendment No. 4 to Credit  Agreement dated as of June 28, 2001, by and
          among the Registrant, as Borrower, Bank of America, N.A., as Agent and
          Lender, and the Lenders Signatory  Thereto,  filed as Exhibit 4.3.4 to
          Registrant's report on Form 10-Q for the quarter ended July 1, 2001.



                                       33
<PAGE>



Exhibit
  No.     Description

*4.3.5    Amendment  No. 5 to Credit  Agreement  dated as of August 10, 2001, by
          and among the Registrant, as Borrower, Bank of America, N.A., as Agent
          and Lender, and the Lenders Signatory Thereto,  filed as Exhibit 4.3.5
          to  Registrant's  report on Form 10-Q for the quarter ended  September
          30, 2001.

*4.3.6    Amendment No. 6 to Credit Agreement dated as of September 25, 2001, by
          and among the Registrant, as Borrower, Bank of America, N.A., as Agent
          and Lender, and the Lenders Signatory Thereto,  filed as Exhibit 4.3.6
          to  Registrant's  report on Form 10-Q for the quarter ended  September
          30, 2001.

*4.3.7    Amendment No. 7 to Credit  Agreement  dated as of October 25, 2001, by
          and among the Registrant, as Borrower, Bank of America, N.A., as Agent
          and Lender, and the Lenders Signatory Thereto,  filed as Exhibit 4.3.7
          to  Registrant's  report on Form 10-Q for the quarter ended  September
          30, 2001.

*4.3.8    Amendment No. 8 to Credit  Agreement  dated as of November 9, 2001, by
          and among the Registrant, as Borrower, Bank of America, N.A., as Agent
          and Lender, and the Lenders Signatory Thereto,  filed as Exhibit 4.3.8
          to the  Registrant's  report on Form 10-K for the year ended  December
          30, 2001.

*4.3.9    Amendment No. 9 to Credit  Agreement dated as of February 27, 2002, by
          and among the Registrant, as Borrower, Bank of America, N.A., as Agent
          and Lender, and the Lenders Signatory Thereto,  filed as Exhibit 4.3.9
          to the  Registrant's  report on Form 10-K for the year ended  December
          30, 2001.

*4.4      Guaranty  Agreement  dated as of January 28, 2000, made by Cone Global
          Finance Corporation,  CIPCO S.C., Inc. and Cone Foreign Trading LLC in
          favor of Bank of  America,  N.A.  as  Revolving  Credit  Agent for the
          Lenders, The Prudential  Insurance Company of America,  SunTrust Bank,
          Morgan Guaranty Trust Company of New York,  Wilmington  Trust Company,
          as General  Collateral  Agent,  Bank of  America,  N.A.,  as  Priority
          Collateral Agent, and Atlantic  Financial Group,  Ltd.,  together with
          all exhibits  thereto,  filed as Exhibit 2 to  Registrant's  report on
          Form 8-K dated February 11, 2000.

*4.5      Priority  Security  Agreement  dated as of January  28,  2000,  by the
          Registrant and certain of its subsidiaries,  as Grantors,  and Bank of
          America,  N.A.,  as  Priority  Collateral  Agent,  together  with  all
          exhibits  thereto,  filed as Exhibit 3 to Registrant's  report on Form
          8-K dated February 11, 2000.



                                       34
<PAGE>



Exhibit
  No.     Description

*4.6      General  Security  Agreement  dated as of  January  28,  2000,  by the
          Registrant  and  certain  of  its  subsidiaries,   as  Grantors,   and
          Wilmington Trust Company,  as General Collateral Agent,  together with
          all exhibits  thereto,  filed as Exhibit 4 to  Registrant's  report on
          Form 8-K dated February 11, 2000.

*4.7      Securities  Pledge  Agreement  dated as of January  28,  2000,  by the
          Registrant in favor of Wilmington Trust Company, as General Collateral
          Agent,  together  with all  exhibits  thereto,  filed as  Exhibit 5 to
          Registrant's report on Form 8-K dated February 11, 2000.

*4.8      CMM Pledge  Agreement  dated as of January 28, 2000, by the Registrant
          in favor of Wilmington  Trust Company,  as General  Collateral  Agent,
          together with all exhibits thereto, filed as Exhibit 6 to Registrant's
          Report on Form 8-K dated February 11, 2000.

*4.9      Deed of Trust,  Security  Agreement,  Fixture  Filing,  Assignment  of
          Leases and Rents and Financing Statement dated as of January 28, 2000,
          between the Registrant, as Grantor, TIM, Inc., as Trustee,  Wilmington
          Trust Company, as General Collateral Agent, and Bank of America, N.A.,
          as Designated Collateral Subagent, together with all exhibits thereto,
          filed as Exhibit 7 to  Registrant's  report on Form 8-K dated February
          11, 2000.

*4.10     Deed of Trust,  Security  Agreement,  Fixture  Filing,  Assignment  of
          Leases and Rents and Financing Statement dated as of January 28, 2000,
          between the Registrant, as Grantor, TIM, Inc., as Trustee, and Bank of
          America,  N.A.,  as  Priority  Collateral  Agent,  together  with  all
          exhibits  thereto,  filed as Exhibit 8 to Registrant's  report on Form
          8-K dated February 11, 2000.

*4.11     Termination  Agreement  dated as of  January  28,  2000,  between  the
          Registrant and Morgan Guaranty Trust Company of New York, as Agent for
          various banks terminating the Credit Agent dated August 7, 1997, filed
          as Exhibit 4.4(h) to  Registrant's  report on Form 10-K for the fiscal
          year ending January 2, 2000.

*4.12     Specimen Class A Preferred Stock Certificate,  filed as Exhibit 4.5 to
          Registrant's Registration Statement on Form S-1 (File No. 33-46907).

*4.13     Specimen Common Stock  Certificate,  effective June 18, 1992, filed as
          Exhibit 4.7 to Registrant's  Registration  Statement on Form S-1 (File
          No. 33-46907).



                                       35
<PAGE>



Exhibit
  No.     Description

*4.14     Cone Mills  Corporation  1983 ESOP as amended and  restated  effective
          December 1, 1994, filed as Exhibit 4.9 to Registrant's  report on Form
          10-K for year ended January 1, 1995.

*4.14.1   First Amendment to the Cone Mills  Corporation  1983 ESOP dated May 9,
          1995, filed as Exhibit 4.9(a) to Registrant's  report on Form 10-K for
          year ended December 31, 1995.

*4.14.2   Second  Amendment  to the  Cone  Mills  Corporation  1983  ESOP  dated
          December 5, 1995,  filed as Exhibit 4.9(b) to  Registrant's  report on
          Form 10-K for year ended December 31, 1995.

*4.14.3   Third Amendment to the Cone Mills  Corporation  1983 ESOP dated August
          7, 1997,  filed as Exhibit 4.8(c) to Registrant's  report on Form 10-Q
          for the quarter ended September 28, 1997.

*4.14.4   Fourth  Amendment  to the  Cone  Mills  Corporation  1983  ESOP  dated
          December 4, 1997,  filed as Exhibit 4.8(d) to  Registrant's  report on
          Form 10-K for the year ended December 28, 1997.

*4.15     Indenture  dated as of February 14, 1995,  between the  Registrant and
          Wachovia Bank of North Carolina, N.A. as Trustee (The Bank of New York
          is  successor   Trustee),   filed  as  Exhibit  4.1  to   Registrant's
          Registration Statement on Form S-3 (File No. 33-57713).

*10.1     Employees'  Retirement  Plan of Cone Mills  Corporation as amended and
          restated  effective  December  1,  1994,  filed  as  Exhibit  10.1  to
          Registrant's report on Form 10-K for the year ended January 1, 1995.

*10.1.1   First  Amendment  to the  Employees'  Retirement  Plan of  Cone  Mills
          Corporation   dated  May  9,  1995,   filed  as  Exhibit   10.1(a)  to
          Registrant's report on Form 10-K for the year ended December 31, 1995.

*10.1.2   Second  Amendment  to the  Employees'  Retirement  Plan of Cone  Mills
          Corporation  dated  December  5,  1995,  filed as  Exhibit  10.1(b) to
          Registrant's report on Form 10-K for the year ended December 31, 1995.

*10.1.3   Third  Amendment  to the  Employees'  Retirement  Plan of  Cone  Mills
          Corporation  dated  August  16,  1996,  filed as  Exhibit  10.1(c)  to
          Registrant's report on Form 10-K for the year ended December 29, 1996.



                                       36
<PAGE>



Exhibit
  No.     Description

*10.1.4   Fourth  Amendment  to the  Employees'  Retirement  Plan of Cone  Mills
          Corporation,  filed as Exhibit 10 to Registrant's  report on Form 10-Q
          for the quarter ended September 28, 1997.

*10.1.5   Fifth   Amendment  to  Employees'   Retirement   Plan  of  Cone  Mills
          Corporation  dated  December  4,  1997,  filed as  Exhibit  10.1(e) to
          Registrant's report on Form 10-K for the year ended December 28, 1997.

*10.1.6   Employees  Retirement  Plan of Cone Mills  Corporation  as amended and
          restated as of June 30, 2001,  filed as Exhibit 10.1.6 to Registrant's
          report on Form 10-Q for the quarter ended July 1, 2001.

*10.7     Cone Mills  Corporation SERP as amended and restated as of December 5,
          1995,  filed as Exhibit 10.2 to  Registrant's  report on Form 10-K for
          the year ended December 31, 1995.

*10.7.1   Cone Mills Corporation SERP as amended and restated effective June 30,
          2001, filed as Exhibit 10.7.1 to Registrant's  report on Form 10-Q for
          the quarter ended July 1, 2001.

*10.8     Excess Benefit Plan of Cone Mills  Corporation as amended and restated
          as of December 5, 1995,  filed as Exhibit 10.3 to Registrant's  report
          on Form 10-K for the year ended December 31, 1995.

*10.8.1   Excess Benefit Plan of Cone Mills  Corporation as amended and restated
          effective  June 30,  2001,  filed as  Exhibit  10.8.1 to  Registrant's
          report on form 10-Q for the quarter ended July 1, 2001.

*10.9     1984  Stock  Option  Plan  of  Registrant  filed  as  Exhibit  10.7 to
          Registrant's Registration Statement on Form S-1 (File No. 33-28040).

*10.10    Form of  Nonqualified  Stock Option  Agreement under 1984 Stock Option
          Plan of Registrant, filed as Exhibit 10.8 to Registrant's Registration
          Statement on Form S-1 (File No. 33-28040).

*10.11    Form of Incentive Stock Option  Agreement under 1984 Stock Option Plan
          of  Registrant,  filed as Exhibit  10.9 to  Registrant's  Registration
          Statement on Form S-1 (File No. 33-28040).

*10.12    1992  Stock  Option  Plan of  Registrant,  filed  as  Exhibit  10.9 to
          Registrant's Report on Form 10-K for the year ended December 29, 1991.



                                       37
<PAGE>



Exhibit
  No.     Description

*10.12.1  Amended  and  Restated  1992  Stock  Plan,  filed as  Exhibit  10.1 to
          Registrant's report on Form 10-Q for the quarter ended March 31, 1996.

*10.13    Form of Incentive Stock Option Agreement under 1992 Stock Option Plan,
          filed as  Exhibit  10.10 to  Registrant's  report on Form 10-K for the
          year ended January 3, 1993.

*10.14    Form of  Nonqualified  Stock Option  Agreement under 1992 Stock Option
          Plan, filed as Exhibit 10.8(a) to Registrant's report on Form 10-K for
          the year ended December 29, 1996.

*10.14.1  Form of  Nonqualified  Stock Option  Agreement  under 1992 Amended and
          Restated Stock Plan,  filed as Exhibit 10.8(b) to Registrant's  report
          on Form 10-K for the year ended December 29, 1996.

*10.15    Form of  Restricted  Stock  Award  Agreement  under 1992  Amended  and
          Restated Stock Plan,  filed as Exhibit 10.8(c) to Registrant's  report
          on Form 10-K for the year ended December 28, 1997.

*10.15.1  Form of  Incentive  Stock  Option  Agreement  under 1992  Amended  and
          Restated Stock Plan,  filed as Exhibit 10.8(d) to Registrant's  report
          on Form 10-K for the year ended December 28, 1997.

*10.16    1994 Stock Option Plan for Non-Employee Directors of Registrant, filed
          as Exhibit 10.9 to Registrant's report on Form 10-K for the year ended
          January 2, 1994.

*10.17    Form of  Non-Qualified  Stock Option Agreement under 1994 Stock Option
          Plan for Non-Employee Directors of Registrant,  filed as Exhibit 10.10
          to  Registrant's  report on Form 10-K for the year  ended  January  2,
          1994.

*10.18    Management Incentive Plan of the Registrant, filed as Exhibit 10.11(b)
          to  Registrant's  report on Form 10-K for the year  ended  January  3,
          1993.

*10.19    1997 Senior Management  Incentive  Compensation Plan, filed as Exhibit
          10.2 to  Registrant's  report on Form 10-Q for the quarter ended March
          31, 1996.

*10.20    1997 Senior  Management  Discretionary  Bonus  Plan,  filed as Exhibit
          10.13 to Registrant's  report on Form 10-K for the year ended December
          29, 1996.



                                       38
<PAGE>



Exhibit
  No.     Description

*10.21    2000 Stock Compensation Plan for Non-Employee  Directors of Registrant
          dated as of May 9, 2000, filed as Exhibit 10.18 to Registrant's report
          on Form 10-Q for the quarter ended April 7, 2000.

*10.22    Form of Agreement  between the Registrant and Levi Strauss dated as of
          March 30, 1992,  filed as Exhibit 10.14 to  Registrant's  Registration
          Statement on Form S-1 (File No. 33-46907).

*10.23    First  Amendment  to  Supply  Agreement  dated as of April  15,  1992,
          between the  Registrant  and Levi Strauss  dated as of March 30, 1992,
          filed as Exhibit 10.15 to Registrant's  Registration Statement on Form
          S-1 (No. 33-46907).

*10.23.1  Second Amendment to Supply Agreement dated as of May 13, 2002, between
          the Registrant  and Levi Strauss dated as of March 30, 1992,  filed as
          Exhibit  10.23.1 to  Registrant's  report on Form 10-Q for the quarter
          ended March 31, 2002.

*10.24    Agreement  dated January 1, 1999,  between the Registrant and Parkdale
          Mills,  Inc.,  filed as Exhibit 10.17 to  Registrant's  report on Form
          10-K for the year ended January 2, 2000.

*10.25    Tenth Amendment to Master Lease dated as of January 28, 2000,  between
          Atlantic  Financial Group, Ltd. and the Registrant,  together with all
          exhibits thereto,  filed as Exhibit 10 to Registrant's  Report on Form
          8-K dated February 11, 2000.

*10.25.1  Eleventh  Amendment  to Master Lease dated as of July 14, 2000 between
          Atlantic  Financial Group,  Ltd. and the Registrant,  filed as Exhibit
          10.25.1 to Registrant's  Registration  Statement on Form S-4 (File No.
          333-43014).

*10.25.2  Assignment  and  Termination  Agreement  dated as of August 31,  2000,
          among  Atlantic  Financial  Group,   Ltd.,   Suntrust  Bank,  and  the
          Registrant,  filed as Exhibit 10.25.2 to  Registrant's  report on Form
          10-Q for the quarter ended October 1, 2000.

*10.26    2001 Stock  Incentive  Plan,  filed as Exhibit  10.26 to  Registrant's
          report on Form 10-Q for the quarter ended April 1, 2001.

*10.26.1  Form of Incentive  Stock Option  Agreement  under 2001 Stock Incentive
          Plan, filed as Exhibit 10.26.1 to Registrant's report on Form 10-Q for
          the quarter ended April 1, 2001.



                                       39
<PAGE>



Exhibit
  No.                 Description

*10.26.2  2002 Executive Incentive Compensation Plan filed as Exhibit 10.26.2 to
          Registrant's report on Form 10-K for the year ended December 30, 2001.

10.27.1   Joint  Venture  Agreement  between Isko Dokuma  Isletmeleri  Sanayi ve
          Ticaret A.S. and Cone Mills  Corporation  and Zekeriye  Konukoglu  and
          Fatih Konukoglu and Oguzhan Gurdogan dated as of June 17, 2002.

10.27.2   Commercial  Agreement among Isko Dokuma  Isletmeleri Sanayi ve Ticaret
          A.S., Cone Mills  Corporation and IsKone Denim Pazarlama A.S. dated as
          of October 3, 2002.

10.27.3   Transfer  Price  Agreement  among Isko  Dokuma  Isletmeleri  Sanayi ve
          Ticaret A.S.,  Cone Mills  Corporation and IsKone Denim Pazarlama A.S.
          dated as of October 3, 2002.

10.27.4   License  Agreement  among Isko  Dokuma  Isletmeleri  Sanayi ve Ticaret
          A.S., Cone Mills  Corporation and IsKone Denim Pazarlama A.S. dated as
          of October 3, 2002.

10.27.5   Administrative  Services  Agreement  between  Isko Dokuma  Isletmeleri
          Sanayi ve Ticaret  A.S. and IsKone Denim  Pazarlama  A.S.  dated as of
          October 3, 2002.

*21       Subsidiaries of the Registrant.

*23.1     Consent of McGladrey & Pullen, LLP, Independent auditor,  with respect
          to the  incorporation  by reference in the  Registrant's  Registration
          Statements on Form S-8 (Nos. 33-31977;  33-31979;  33-51951; 33-51953;
          33-53705; 33-67800;  333-37054; and 333-60954) of their reports on the
          consolidated   financial   statements   and   schedules   included  in
          Registrant's report on Form 10-K for the year ended December 30, 2001.

*23.2     Consent of  Auditors  of Parras  Cone de  Mexico,  S.A.  de C.V.  with
          respect  to  the   incorporation  by  reference  in  the  Registrant's
          Registration   Statements  on  Form  S-8  (Nos.  33-31977;   33-31979;
          33-51951;  33-51953;  33-53705;  33-67800; 333-37054 and 333-60954) of
          their reports on the financial  statements included on Form 10-K/A for
          the year ended December 31, 2001.

*99.1     Financial Statements of Parras Cone de Mexico, S.A. de C.V., as of and
          for the year ended December 31, 2001.

*99.2     Certification  Pursuant  to Section 906 of the  Sarbanes-Oxley  Act of
          2002.
--------------------------------------------------------------------------

*Incorporated by reference to the statement or report indicated.



                                       40
<PAGE>


The Registrant  will provide any Shareholder or participant in the Company Stock
Fund in the 401(k) Programs copies of any of the foregoing exhibits upon written
request  addressed to Corporate  Secretary,  Cone Mills  Corporation,  804 Green
Valley Road, Suite 300, Greensboro NC 27408.



                                       41
<PAGE>




                                   SIGNATURES




Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                       CONE MILLS CORPORATION
                                       ----------------------
                                       (Registrant)




Date:    November 12, 2002             /s/Gary L. Smith
         -----------------             ----------------------
                                       Gary L. Smith
                                       Executive Vice President and
                                       Chief Financial Officer



                                       42
<PAGE>



                                                                       Annex A

                       Annual and Quarterly Certifications
            Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John L. Bakane, president and chief executive officer, certify that:

1. I have reviewed this report on Form 10-Q of Cone Mills Corporation;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a) designed  such  disclosure  controls and  procedures  to ensure that
material  information  relating to the  registrant,  including its  consolidated
subsidiaries, is made known to us by others within those entities,  particularly
during the period in which this quarterly report is being prepared;

         b) evaluated the effectiveness of the registrant's  disclosure controls
and  procedures  as of a date  within 90 days prior to the  filing  date of this
quarterly report (the "Evaluation Date"); and

         c)  presented  in this  quarterly  report  our  conclusions  about  the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

         a) all significant  deficiencies in the design or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

         b) any fraud,  whether or not  material,  that  involves  management or
other  employees  who  have a  significant  role  in the  registrant's  internal
controls; and

                                      A-1
<PAGE>


6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.



Date: November 12, 2002                       /s/ John L. Bakane
                                              Title: Chief Executive Officer

                                      A-2
<PAGE>


                                                                       Annex A

                       Annual and Quarterly Certifications
            Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Gary L. Smith, chief financial officer, certify that:

1. I have reviewed this report on Form 10-Q of Cone Mills Corporation;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a) designed  such  disclosure  controls and  procedures  to ensure that
material  information  relating to the  registrant,  including its  consolidated
subsidiaries, is made known to us by others within those entities,  particularly
during the period in which this quarterly report is being prepared;

         b) evaluated the effectiveness of the registrant's  disclosure controls
and  procedures  as of a date  within 90 days prior to the  filing  date of this
quarterly report (the "Evaluation Date"); and

         c)  presented  in this  quarterly  report  our  conclusions  about  the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

         a) all significant  deficiencies in the design or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

         b) any fraud,  whether or not  material,  that  involves  management or
other  employees  who  have a  significant  role  in the  registrant's  internal
controls; and

                                      A-3
<PAGE>


6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.



Date: November 12, 2002                      /s/ Gary L. Smith
                                             Title: Chief Financial Officer

                                      A-4
<PAGE>



                                                                        Annex B

                       Annual and Quarterly Certifications
            Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



Pursuant to section 906 of the  Sarbanes-Oxley  Act of 2002 (subsections (a) and
(b) of Section 1350,  Chapter 63 of Title 18,  United States Code),  each of the
undersigned  officers of Cone Mills  Corporation  (the  "Company"),  does hereby
certify, to such officer's knowledge, that:

The Quarterly  Report on Form 10-Q for the quarter  ended  September 29, 2002 of
the Company fully  complies with the  requirements  of section 13(a) or 15(d) of
the Securities  Exchange Act of 1934 and information  contained in the Form 10-Q
fairly presents,  in all material respects,  the financial condition and results
of operations of the Company.


Dated: November 12, 2002                   /s/ John L. Bakane
                                           Name: John L. Bakane
                                           Title: Chief Executive Officer


Dated: November 12, 2002                   /s/ Gary L. Smith
                                           Name: Gary L. Smith
                                           Title: Chief Financial Officer


                                      B-1