================================================================================
                                                                    Page 1 of 41
                                               Index to Exhibits - Pages 27 - 40
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                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 June 30, 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 July 25, 2002:  25,706,393.


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

                                       1
<PAGE>

                             CONE MILLS CORPORATION

                                      INDEX



PART I.   FINANCIAL INFORMATION
                                                                           Page
                                                                          Number

Item 1.   Financial Statements

          Consolidated Condensed Statements of Operations
          Thirteen and Twenty-Six weeks ended June 30, 2002 and
          July 1, 2001 (Unaudited).............................................3

          Consolidated Condensed Balance Sheets
          June 30, 2002 and July 1, 2001 (Unaudited)
          and December 30, 2001................................................4

          Consolidated Condensed Statements of Cash Flows
          Twenty-Six weeks ended June 30, 2002 and
          July 1, 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  ..............................................................24


PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings...................................................25
Item 4.   Submission of Matters to a Vote of Security Holders ................25
Item 5.   Other Information ..................................................25
Item 6.   Exhibits and Reports on Form 8-K....................................26


                                       2
<PAGE>


                                                     PART I
Item 1.

                                      CONE MILLS CORPORATION AND SUBSIDIARIES
                                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                       (in thousands, except per share data)
<TABLE>
<CAPTION>
                                                            Thirteen         Thirteen        Twenty-Six       Twenty-Six
                                                          Weeks Ended       Weeks Ended      Weeks Ended     Weeks Ended
                                                         June 30, 2002     July 1, 2001     June 30, 2002    July 1, 2001
-----------------------------------------------------------------------------------------------------------------------------
                                                          (Unaudited)       (Unaudited)      (Unaudited)     (Unaudited)
<S>                                                        <C>               <C>              <C>             <C>
Net Sales                                                  $  125,837        $  121,728       $  231,657      $  254,389
Cost of Goods Sold                                            108,570           116,322          200,085         236,435
                                                         --------------------------------------------------------------------
Gross Profit                                                   17,267             5,406           31,572          17,954
Selling and Administrative                                      9,466             9,749           17,095          19,147
Restructuring and Impairment of Assets                              -            19,739                -          19,739
                                                         --------------------------------------------------------------------
Income (Loss) from Operations                                   7,801          ( 24,082 )         14,477        ( 20,932 )
                                                         --------------------------------------------------------------------

Other Income (Expense)
   Interest income                                                111                89              129             213
   Interest expense                                           ( 3,994 )         ( 4,836 )        ( 8,302 )       ( 9,474 )
   Other expense                                                ( 541 )           ( 763 )        ( 1,006 )       ( 1,323 )
                                                         --------------------------------------------------------------------
                                                              ( 4,424 )         ( 5,510 )        ( 9,179 )      ( 10,584 )
                                                         --------------------------------------------------------------------

Income (Loss) from Continuing Operations before
   Income Tax Expense (Benefit) and Equity in
   Earnings of Unconsolidated Affiliates                        3,377          ( 29,592 )          5,298        ( 31,516 )
Income Tax Expense (Benefit)                                    1,013           ( 8,401 )          1,447         ( 9,074 )
                                                         --------------------------------------------------------------------

Income (Loss) from Continuing Operations before
   Equity in Earnings of Unconsolidated Affiliates              2,364          ( 21,191 )          3,851        ( 22,442 )
Equity in Earnings of Unconsolidated Affiliates                   729               223              682             572
                                                         --------------------------------------------------------------------
Income (Loss) from Continuing Operations                        3,093          ( 20,968 )          4,533        ( 21,870 )
                                                         --------------------------------------------------------------------

Discontinued Operations
   Loss from discontinued operations                                -           ( 8,457 )              -        ( 11,536 )
   Income tax benefit                                               -           ( 2,960 )              -         ( 4,038 )
                                                         --------------------------------------------------------------------
                                                                    -           ( 5,497 )              -         ( 7,498 )
                                                         --------------------------------------------------------------------
Net Income (Loss)                                         $     3,093        $ ( 26,465 )     $    4,533      $ ( 29,368 )
                                                         --------------------------------------------------------------------

Income (Loss) Available to Common Stockholders            $     2,015        $ ( 27,532 )     $    2,423      $ ( 31,414 )
                                                         --------------------------------------------------------------------

Earnings (Loss) per Share - Basic and Diluted
   Income (loss) from continuing operations               $      0.08        $   ( 0.86 )     $     0.09      $   ( 0.94 )
   Loss from discontinued operations                                -            ( 0.22 )              -          ( 0.29 )
                                                         --------------------------------------------------------------------
Earnings (Loss) per Share - Basic and Diluted             $      0.08        $   ( 1.08 )     $     0.09      $   ( 1.23 )
                                                         --------------------------------------------------------------------

Weighted-Average Common Shares Outstanding
   Basic                                                       25,692            25,557           25,679          25,537
                                                         --------------------------------------------------------------------
   Diluted                                                     26,109            25,557           26,065          25,537
                                                         --------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Condensed Financial Statements.


                                       3
<PAGE>


                                    CONE MILLS CORPORATION AND SUBSIDIARIES
                                     CONSOLIDATED CONDENSED BALANCE SHEETS
                                (in thousands, except share and par value data)
<TABLE>
<CAPTION>
                                                               June 30,           July 1,         December 30,
                                                                 2002              2001               2001
--------------------------------------------------------------------------------------------------------------------
                                                             (Unaudited)        (Unaudited)          (Note)
<S>                                                           <C>                <C>               <C>
ASSETS
   Current Assets
     Cash                                                     $     408          $    2,183        $       529
     Accounts receivable, less allowances: 2002, $5,700;
        2001, $5,000 and $5,700                                  40,028              49,921             28,373
     Inventories                                                 49,518              82,085             62,057
     Other current assets                                         5,330               9,406              3,371
                                                            --------------------------------------------------------
        Total Current Assets                                     95,284             143,595             94,330

   Investments in and Advances to Unconsolidated Affiliates      52,087              52,989             51,664
   Other Assets                                                  27,176              16,614             23,917
   Property, Plant and Equipment                                155,640             172,600            164,468
                                                            --------------------------------------------------------
                                                              $ 330,187          $  385,798        $   334,379
                                                            --------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
   Current Liabilities
     Current maturities of long-term debt                     $  62,160          $   83,495        $     3,075
     Accounts payable                                            31,053              33,646             21,535
     Sundry accounts payable and accrued liabilities             22,409              31,955             27,928
                                                            --------------------------------------------------------
        Total Current Liabilities                               115,622             149,096             52,538

   Long-Term Debt                                                98,797             106,357            170,655
   Deferred Income Taxes                                         12,278              17,413             10,513
   Other Liabilities                                             14,043              16,291             14,063

   Stockholders' Equity
     Class A preferred stock - $100 par value; authorized
        1,500,000 shares; issued and outstanding:
        2002, 349,913 shares; 2001, 353,941 shares and
        334,309 shares                                           34,991              35,394             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, 25,706,193 shares; 2001, 25,586,133
        shares and 25,660,663 shares                              2,571               2,559              2,566
     Capital in excess of par                                    57,950              57,765             57,872
     Retained earnings                                            2,550               9,205              2,029
     Deferred compensation - restricted stock                       ( 5 )              ( 26 )             ( 12 )
     Accumulated other comprehensive loss                       ( 8,610 )           ( 8,256 )          ( 9,276 )
                                                            --------------------------------------------------------
        Total Stockholders' Equity                               89,447              96,641             86,610
                                                            --------------------------------------------------------
                                                              $ 330,187          $  385,798        $   334,379
                                                            --------------------------------------------------------
</TABLE>

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

See Notes to Consolidated Condensed Financial Statements.


                                       4
<PAGE>

                                   CONE MILLS CORPORATION AND SUBSIDIARIES
                                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                              (in thousands)
<TABLE>
<CAPTION>
                                                                                    Twenty-Six        Twenty-Six
                                                                                    Weeks Ended       Weeks Ended
                                                                                   June 30, 2002     July 1, 2001
--------------------------------------------------------------------------------------------------------------------
                                                                                    (Unaudited)       (Unaudited)
<S>                                                                                 <C>               <C>
CASH PROVIDED BY (USED IN) OPERATIONS                                               $   19,668        $  ( 5,144 )
                                                                                  -----------------------------------

INVESTING
 Investments in and advances to unconsolidated affiliates                                    -           ( 1,740 )
 Proceeds from sale of property, plant and equipment                                       997             3,034
 Capital expenditures                                                                  ( 1,906 )         ( 2,980 )
                                                                                  -----------------------------------
  Cash used in investing                                                                 ( 909 )         ( 1,686 )
                                                                                  -----------------------------------

FINANCING
 Decrease in checks issued in excess of deposits                                       ( 3,515 )         ( 1,839 )
 Principal borrowings (payments) on long-term debt                                    ( 12,996 )           9,913
 Proceeds from issuance of common stock                                                     83               142
 Dividends paid - Class A Preferred                                                       ( 92 )            ( 58 )
 Redemption of Class A Preferred stock                                                 ( 2,360 )         ( 2,021 )
                                                                                  -----------------------------------
  Cash provided by (used in) financing                                                ( 18,880 )           6,137
                                                                                  -----------------------------------

  Net change in cash                                                                     ( 121 )            (693 )

Cash at Beginning of Period                                                                529             2,876
                                                                                  ----------------------------------
Cash at End of Period                                                               $      408        $    2,183
                                                                                  -----------------------------------

Supplemental Disclosures of Additional Cash Flow Information:
Cash payments for:
 Interest                                                                           $    8,411        $    9,132
                                                                                  -----------------------------------
 Income taxes, net of refunds                                                       $        -        $      227
                                                                                  -----------------------------------

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  June 30,  2002  and July 1,  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 June 30,
2002, July l, 2001 and December 30, 2001, and the related consolidated condensed
statements of operations for the respective  thirteen and twenty-six weeks ended
June 30,  2002 and July 1, 2001 and cash  flows for the  twenty-six  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  the  year-end,  the
inventories at June 30, 2002 and July 1, 2001 and related consolidated condensed
statements of operations  for the thirteen and  twenty-six  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  twenty-six  weeks ended
July 1, 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 June 30, 2002 and July 1, 2001,
the total amount of advances of proceeds from the sale of receivables  under the
A/R Securitization  Facility was $37.7 million and $51.6 million,  respectively.
As of June 30,  2002 and July 1, 2001,  included  in  accounts  receivable  were
deferred  purchase price receivables  under the A/R  Securitization  Facility of
$17.7  million  and $42.3  million,  respectively.  The table  below  summarizes
certain cash flows under the securitization:

<TABLE>
<CAPTION>
                                       Thirteen           Thirteen          Twenty-Six          Twenty-Six
                                     Weeks Ended        Weeks Ended         Weeks Ended        Weeks Ended
(in thousands)                          6/30/02            7/1/01             6/30/02             7/1/01
                                   -----------------------------------------------------------------------------
<S>                                   <C>                <C>                 <C>                <C>
Proceeds from securitizations         $  36,536          $  22,118           $  67,447          $  30,728
Reductions due to change
  in level of receivables sold         ( 30,562 )         ( 23,549 )          ( 66,702 )         ( 37,702 )
Daily yield paid                          ( 539 )            ( 886 )             ( 990 )          ( 1,821 )
Servicing fees paid                       ( 170 )            ( 194 )             ( 311 )            ( 403 )
Servicing fees received                     170                124                 311                344

</TABLE>

Note 3.  Inventories

(in thousands)                          6/30/02         7/1/01       12/30/01
                                    ------------------------------------------

Greige and finished goods              $ 27,220       $ 50,602       $ 35,811
Work in process                           4,326          6,618          5,084
Raw materials                             8,442         14,648         10,779
Supplies and other                        9,530         10,217         10,383
                                    ------------------------------------------
                                       $ 49,518       $ 82,085       $ 62,057
                                    ------------------------------------------


Note 4.  Long-Term Debt

(in thousands)                          6/30/02         7/1/01       12/30/01
                                    ------------------------------------------

Senior Note                            $ 25,160       $ 28,859       $ 27,155
Revolving Credit Agreement               37,000         65,000         48,000
8-1/8% Debentures                        98,797         95,993         98,575
                                    ------------------------------------------
                                        160,957        189,852        173,730
Less current maturities                  62,160         83,495          3,075
                                    ------------------------------------------
                                       $ 98,797       $106,357       $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.

On July 1, 2002,  the  interest  rate on the Senior  Note and the margin on Base
Rate Loans on the  Revolving  Credit  Facility  increased to 14.2% and 4.5% from
13.7% and 4.0%, respectively.


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 was charged to
retained earnings in the amount of approximately $3.9 million. 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            Twenty-Six          Twenty-Six
                                         Weeks Ended          Weeks Ended         Weeks Ended         Weeks Ended
(in thousands)                              6/30/02              7/1/01             6/30/02              7/1/01
                                      -----------------------------------------------------------------------------
<S>                                      <C>                  <C>                 <C>                 <C>
Depreciation                             $    5,048           $    5,374          $   10,098          $   10,882
Amortization                                     23                   27                  46                  57
                                      -----------------------------------------------------------------------------
                                         $    5,071           $    5,401          $   10,144          $   10,939
                                      -----------------------------------------------------------------------------
</TABLE>

Depreciation  and  amortization  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            Twenty-Six          Twenty-Six
                                         Weeks Ended          Weeks Ended         Weeks Ended         Weeks Ended
(in thousands)                              6/30/02              7/1/01             6/30/02              7/1/01
                                      -----------------------------------------------------------------------------
<S>                                      <C>                  <C>                 <C>                 <C>
Depreciation                             $        -           $       63          $        -          $      111
Amortization                                      -                    3                   -                   4
                                      -----------------------------------------------------------------------------
                                         $        -           $       66          $        -          $      115
                                      -----------------------------------------------------------------------------
</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)                                6/30/02             7/1/01
                                                                ----------------------------------------
<S>                                                                <C>                <C>
Income (loss) from continuing operations                           $    3,093         $ ( 20,968 )
Preferred dividends                                                   ( 1,078 )          ( 1,067 )
                                                                ----------------------------------------
Income (loss) from continuing operations available
  to common stockholders                                                2,015           ( 22,035 )
Loss from discontinued operations                                           -            ( 5,497 )
                                                                ----------------------------------------
Basic EPS - income (loss) available to common
  stockholders                                                          2,015           ( 27,532 )
Effect of dilutive securities                                               -                  -
                                                                ----------------------------------------
Diluted EPS - income (loss) available to common
  stockholders after assumed conversions                           $    2,015         $ ( 27,532 )
                                                                ----------------------------------------

Determination of shares:
Weighted-average shares                                                25,700             25,572
Contingently issuable (unvested restricted shares)                        ( 8 )             ( 15 )
                                                                ----------------------------------------
Basic EPS - weighted-average shares                                    25,692             25,557
Effect of dilutive securities                                             417                  -
                                                                ----------------------------------------
Diluted EPS - adjusted weighted-average shares after
  assumed conversions                                                  26,109             25,557
                                                                ----------------------------------------

Earnings (loss) per share - basic and diluted:
  Income (loss) from continuing operations                         $     0.08         $   ( 0.86 )
  Loss from discontinued operations                                         -             ( 0.22 )
                                                                ----------------------------------------
  Earnings (loss) per share - basic and diluted                    $     0.08         $   ( 1.08 )
                                                                ----------------------------------------
</TABLE>

The number of potentially  dilutive common stock options  outstanding  using the
treasury  stock  method  for  the  thirteen  weeks  ended  July  1,  2001,  were
approximately  23,000 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>
                                                                   Twenty-Six          Twenty-Six
                                                                   Weeks Ended        Weeks Ended
(in thousands, except per share data)                                6/30/02             7/1/01
                                                                ----------------------------------------
<S>                                                                <C>                <C>
Income (loss) from continuing operations                           $    4,533         $ ( 21,870 )
Preferred dividends                                                   ( 2,110 )          ( 2,046 )
                                                                ----------------------------------------
Income (loss) from continuing operations available
  to common stockholders                                                2,423           ( 23,916 )
Loss from discontinued operations                                           -            ( 7,498 )
                                                                ----------------------------------------
Basic EPS - income (loss) available to common
  stockholders                                                          2,423           ( 31,414 )
Effect of dilutive securities                                               -                  -
                                                                ----------------------------------------
Diluted EPS - income (loss) available to common
  stockholders after assumed conversions                           $    2,423         $ ( 31,414 )
                                                                ----------------------------------------

Determination of shares:
Weighted-average shares                                                25,687             25,552
Contingently issuable (unvested restricted shares)                        ( 8 )             ( 15 )
                                                                ----------------------------------------
Basic EPS - weighted-average shares                                    25,679             25,537
Effect of dilutive securities                                             386                  -
                                                                ----------------------------------------
Diluted EPS - adjusted weighted-average shares after
  assumed conversions                                                  26,065             25,537
                                                                ----------------------------------------

Earnings (loss) per share - basic and diluted:
  Income (loss) from continuing operations                         $     0.09         $   ( 0.94 )
  Loss from discontinued operations                                         -             ( 0.29 )
                                                                ----------------------------------------
  Earnings (loss) per share - basic and diluted                    $     0.09         $   ( 1.23 )
                                                                ----------------------------------------
</TABLE>

The number of potentially  dilutive common stock options  outstanding  using the
treasury  stock  method  for the  twenty-six  weeks  ended  July 1,  2001,  were
approximately  16,000 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 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:

                                              Thirteen            Thirteen
                                             Weeks Ended         Weeks Ended
(in thousands)                                 6/30/02              7/1/01
                                         ---------------------------------------
Net Sales
  Denim                                      $  101,725          $   97,475
  Commission Finishing                           15,365              17,968
  Decorative Fabrics                              9,491               9,927
  Other                                              81                  89
                                         ---------------------------------------
                                                126,662             125,459
Less Intersegment Sales                             825               3,731
                                         ---------------------------------------
                                             $  125,837          $  121,728
                                         ---------------------------------------
Income (Loss) from Continuing Operations
  Denim                                      $    8,692          $    3,402
  Commission Finishing                            1,073                 885
  Decorative Fabrics                              ( 145 )             ( 144 )
  Other                                           ( 626 )                13
  Unallocated Expenses                            ( 464 )           ( 1,137 )
                                         ---------------------------------------
                                                  8,530               3,019
  Reinvention Plan - Inventory Charges and
    Facility Consolidation Charges                    -             ( 7,139 )
  Restructuring and Impairment of Assets              -            ( 19,739 )
                                         ---------------------------------------
                                                  8,530            ( 23,859 )
  Less Equity in Earnings of
    Unconsolidated Affiliates                       729                 223
                                         ---------------------------------------
                                                  7,801            ( 24,082 )
Other Expense, Net                              ( 4,424 )           ( 5,510 )
                                         ---------------------------------------
Income (Loss) from Continuing Operations
  before Income Tax Expense (Benefit) and
  Equity in Earnings of Unconsolidated
  Affiliates                                 $    3,377          $ ( 29,592 )
                                         ---------------------------------------


                                       11
<PAGE>


Note 8.  Segment Information (continued)

<TABLE>
<CAPTION>
                                                                           Twenty-Six          Twenty-Six
                                                                          Weeks Ended         Weeks Ended
(in thousands)                                                              6/30/02              7/1/01
                                                                        ---------------------------------------
<S>                                                                       <C>                 <C>
Net Sales
  Denim                                                                   $  183,840          $  203,625
  Commission Finishing                                                        30,524              37,317
  Decorative Fabrics                                                          19,810              21,065
  Other                                                                          143                 208
                                                                        ---------------------------------------
                                                                             234,317             262,215
Less Intersegment Sales                                                        2,660               7,826
                                                                        ---------------------------------------
                                                                          $  231,657          $  254,389
                                                                        ---------------------------------------
Income (Loss) from Continuing Operations
  Denim                                                                   $   14,473          $    8,450
  Commission Finishing                                                         2,129                 272
  Decorative Fabrics                                                             371               ( 267 )
  Other                                                                        ( 994 )              ( 67 )
  Unallocated Expenses                                                         ( 820 )           ( 1,870 )
                                                                        ---------------------------------------
                                                                              15,159               6,518
  Reinvention Plan - Inventory Charges and
    Facility Consolidation Charges                                                 -             ( 7,139 )
  Restructuring and Impairment of Assets                                           -            ( 19,739 )
                                                                        ---------------------------------------
                                                                              15,159            ( 20,360 )
  Less Equity in Earnings of Unconsolidated Affiliates                           682                 572
                                                                        ---------------------------------------
                                                                              14,477            ( 20,932 )
Other Expense, Net                                                           ( 9,179 )          ( 10,584 )
                                                                        ---------------------------------------
Income (Loss) from Continuing Operations before
    Income Tax Expense (Benefit) and Equity in Earnings
    of Unconsolidated Affiliates                                          $    5,298          $ ( 31,516 )
                                                                        ---------------------------------------
</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           Twenty-Six       Twenty-Six
                                         Weeks Ended      Weeks Ended         Weeks Ended       Weeks Ended
(in thousands)                             6/30/02           7/1/01             6/30/02            7/1/01
                                      ---------------------------------------------------------------------------
<S>                                      <C>              <C>                 <C>               <C>
Net income (loss)                        $    3,093       $ ( 26,465 )        $    4,533        $ ( 29,368 )
Other comprehensive income,
  cotton derivatives gains                      843              550                 666             1,513
                                      ---------------------------------------------------------------------------
                                         $    3,936       $ ( 25,915 )        $    5,199        $ ( 27,855 )
                                      ---------------------------------------------------------------------------
</TABLE>


                                       12
<PAGE>

Cotton  derivatives  gains  as of  June  30,  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  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  $0.2  million and $0.4 million in
expense related to amortization of this adjustment to the carrying value of debt
for the thirteen and twenty-six  weeks ended July 1, 2001, which is reflected in
the  "Other  expense"  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  twenty-six  weeks  ended  July 1,  2001,  Cone
recognized a gain on the change in the fair value of this derivative  instrument
of $0.3 million and $0.8 million, respectively, which is reflected in the "Other
expense" caption on the consolidated  condensed statements of operations.  As of
July 1, 2001,  the interest rate swap had an estimated fair market value of $1.9
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 June 30,  2002,  Cone  recorded  in
accumulated  other  comprehensive  income (loss) cotton derivative gains, net of
deferred taxes,  of $1.0 million.  At July 1, 2001, Cone recorded in accumulated
other comprehensive income (loss) cotton derivative gains, net of


                                       13
<PAGE>


deferred  taxes,  of $1.5  million.  Gains of $0.2 million and $0.6 million were
credited to cost of goods sold during the  thirteen and  twenty-six  weeks ended
June 30,  2002,  respectively.  Gains of less than $0.1 million and $0.4 million
were  credited to cost of goods sold during the  thirteen and  twenty-six  weeks
ended July 1, 2001,  respectively.  The ineffective  portion of derivative gains
and  losses  is   reported   in  results  of   operations   immediately.   Hedge
ineffectiveness  for the thirteen and  twenty-six  weeks ended June 30, 2002 and
July 1, 2001, was immaterial.


Note 11.  Restructuring and Impairment of Assets

A roll-forward of the activity related to Cone's  restructuring  charges for the
twenty-six weeks ended June 30, 2002 and July 1, 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, June 30, 2002                          $     -                  $    -                $     -
                                             --------------------------------------------------------------

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

Additions:
Terminal leave and related benefits               3,335                       -                  3,335
Consulting and legal fees                           600                       -                    600
Pension curtailment*                                888                       -                    888
                                             --------------------------------------------------------------
                                                  4,823                       -                  4,823
                                             --------------------------------------------------------------
Deductions:
Terminal leave and related benefits               ( 216 )                 ( 735 )                ( 951 )
Consulting and legal fees                         ( 233 )                     -                  ( 233 )
Pension curtailment*                              ( 888 )                     -                  ( 888 )
                                             --------------------------------------------------------------
                                                ( 1,337 )                 ( 735 )              ( 2,072 )
                                             --------------------------------------------------------------

Balance, July 1, 2001                           $ 3,486                  $  229                $ 3,715
                                             --------------------------------------------------------------
</TABLE>

*Items expensed as incurred.


Note 12.  Discontinued Operations

In accordance with the provisions of Statement of Financial Accounting Standards
("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
business and the John Wolf converted fabrics


                                       14
<PAGE>


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           Twenty-Six
                                                               Weeks Ended         Weeks Ended
(in thousands)                                                   7/1/01              7/1/01
                                                            ----------------------------------------
<S>                                                            <C>                 <C>
Net Sales
  John Wolf                                                    $    5,922          $   11,620
  Khaki                                                             7,564              16,740
                                                            ----------------------------------------
                                                               $   13,486          $   28,360
                                                            ----------------------------------------

Pretax Loss from Discontinued Operations
  John Wolf                                                    $  ( 3,015 )        $  ( 4,255 )
  Khaki                                                           ( 5,442 )           ( 7,281 )
                                                            ----------------------------------------
                                                                  ( 8,457 )          ( 11,536 )
Income Tax Benefit                                                ( 2,960 )           ( 4,038 )
                                                            ----------------------------------------
Net Loss from Discontinued Operations                          $  ( 5,497 )        $  ( 7,498 )
                                                            ----------------------------------------
</TABLE>


Note 13.  Income Taxes

The  effective  tax rate for the  thirteen and  twenty-six  weeks ended June 30,
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
twenty-six  weeks ended July 1, 2001,  differs from 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

The U.S.  economy  continued its recovery in the second quarter of 2002 from the
2001 economic  slowdown.  However,  growth slowed from the 6.1% increase in U.S.
GDP in the first quarter to an estimated  2.5% increase in the second quarter of
2002. The outlook for the U.S. economy for the balance of 2002 has been tempered
as a result of the  volatility  in the equity  markets.  The Federal  Reserve is
forecasting  that U.S. GDP growth will be 3% in the second half of 2002 and that
the  consumer  will  continue to drive the general  economy as overall  economic
fundamentals continue to improve. On a trade-weighted basis, the U.S. dollar has
declined versus foreign  currencies by  approximately 9% in 2002 through the end
of July. In general,  the decline in the U.S. dollar should aid recovery of U.S.
manufacturing.  However, the environment for U.S. textiles is expected to remain
challenging,  as many of the largest  apparel  exporting  countries  have linked
their  currency  to the  U.S.  dollar.  Many  of  these  countries  do not  have
free-market  economies  and any  adjustment  of trade  flows  will be based upon
global trade policy.

Cone's second quarter results improved from first quarter  primarily  because of
excellent  manufacturing  performance as measured against historical benchmarks,
cost savings from initiatives  undertaken as part of the 2001 Reinvention  Plan,
improved denim demand, and lower cotton costs.  Assuming that the housing effect
partially  offsets the loss of wealth as a result of the  declines in the equity
markets  and that the  consumer  continues  to  spend,  Cone  expects  continued
improvement in operating results in the third quarter. Traditionally, the second
and third quarters are Cone's strongest quarters.  Cone should also benefit from
lower cotton costs in the third quarter, which will be partially offset by lower
denim sales prices.  Improvement in Cone's  Carlisle and jacquard  businesses is
also dependent upon the general  strength of the economy and overall  confidence
levels, which have been shaken with the declines in the equity markets.

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.  Previously,  our estimates for the cost of
this denim facility, depending upon ultimate size and configuration, had been an
investment  of  between  $60 and $90  million.  Based  upon a review of the used
textile machinery market and other project cost reduction opportunities,  we now
believe  that  the  initial  denim  facility  can  be  completed  for a  capital
investment of less than $60 million.  The funds  required for the denim facility
will require debt or equity  financing and certain  modifications to our current
debt structure and lending 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 Mexican denim project.  Cone has
not arranged  financing or modified its debt structure or lending  agreements to
date, and there can be no assurance that such financing


                                       16
<PAGE>


will be available on acceptable terms and conditions or that its present lenders
will agree to the required 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. The expansion has been
delayed until financing can be secured;  however, there can be no assurance that
such  financing  will be available on acceptable  terms and  conditions.  In the
interim,  until  financing can be arranged for the larger  expansion,  a smaller
scale  expansion  of  approximately  9% of capacity at an  estimated  cost of $1
million is in process and is expected to be completed by August 2002.  Cone will
continue to market and distribute 100% of the fabric production of Parras Cone.


RESULTS OF OPERATIONS

Second  Quarter Ended June 30, 2002  Compared with Second  Quarter Ended July 1,
2001.

For the second quarter of 2002, Cone had sales of $125.8 million, an increase of
3.4% over sales of $121.7  million for the second  quarter of 2001. The increase
in sales was primarily driven by denim unit increases.

Gross profit margin  increased to 13.7% of sales for the second quarter of 2002,
as compared with 4.4% for the second quarter of 2001. The primary drivers of the
improvement  in gross profit  margin were the savings from the 2001  Reinvention
Plan,  lower  cotton  costs that were  partially  offset by lower denim  selling
prices  and  favorable   manufacturing   variances  reflecting  additional  cost
reductions, improved operating schedules and improved efficiencies and 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 $101.7 million for the second quarter
         of 2002, as compared with sales of $97.5 million for the second quarter
         of 2001,  or an  increase  of 4.4%.  Denim units  increased  11.8%,  as
         compared with the prior year's second 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 down in the mid-single  digits and on
         a consolidated basis sales mix was less favorable as denims produced by
         Parras Cone were a higher  percentage  of total denim sales.  Operating
         income for the denim  segment was $8.7 million or 8.5% of sales for the
         second quarter of 2002, as compared with $3.4 million, or 3.5% of sales
         for the second quarter of 2001. The improvement in operating income was
         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. Cone expects
         to realize



                                       17
<PAGE>

         greater benefits from lower cotton prices in the third quarter of 2002.
         However,  the decline in cotton  prices that  occurred in late 2001 has
         partially  reversed as cotton futures  prices have recently  increased.
         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 $0.8 million
         for the second  quarter of 2002,  as compared with $0.2 million for the
         second quarter 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.  Outside sales (total segment
         sales less  intercompany  sales) of the  commission  finishing  segment
         increased by 2.1%,  as compared with second  quarter 2001 results.  The
         increase  in outside  sales was the result of the sale of the John Wolf
         unit in August 2001, thereby changing the classification of these sales
         to outside  sales from  intercompany  sales.  Sales to the  apparel and
         specialty  markets  were lower in 2002,  as compared  with 2001.  Total
         sales,  including intercompany sales, decreased by 14.5% primarily as a
         result of Cone's decision to exit the khaki segment at the end of 2001.
         For the second quarter of 2002,  the segment  reported a profit of $1.1
         million,  as compared with $0.9 million for the second quarter of 2001.
         The  improvement  in  the  segment's   operating  income  is  primarily
         attributable to improved  operating  efficiencies,  quality and savings
         from the 2001 Reinvention Plan.

         Decorative  Fabrics.  The decorative fabrics segment consists of Cone's
         jacquard  operation.  Sales  revenue in the second  quarter of 2002 was
         $9.5 million,  as compared  with $9.9 million for second  quarter 2001.
         Sales volume decreased by approximately 20% and was partially offset by
         improved  product  mix and higher  average  unit  selling  prices.  The
         reduction in sales volume is the result of fewer product  placements in
         the market,  a decision to move certain looms to the denim operation in
         second  half of 2001 and  management's  decision  to phase out  certain
         unprofitable  lines.  Segment  operating  results  were a loss  of $0.1
         million for both periods.

Selling and administrative  expenses for the second quarter of 2002 were 7.5% of
sales,  as  compared  to 8.0%  for the  second  quarter  of  2001.  Selling  and
administrative  expenses were a lower  percentage of sales in the second quarter
of 2002 as a result of savings from the 2001  Reinvention  Plan partially offset
by  lower  unit  selling  prices  and  certain  accruals  for  performance-based
compensation.   Expenses  related  to  Cone's  balance  sheet   recapitalization
initiative were also included in second quarter of 2002 administrative expenses.

Interest  expense for the second  quarter of 2002 was $4.0 million,  as compared
with $4.8 million for the second 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 $0.5 million in the
second quarter of 2002 include the ongoing  expenses of the accounts  receivable
securitization  program,  as  compared to other  expense of $0.8  million in the
second  quarter of 2001,  which  included  the ongoing  expenses of the accounts
receivable  securitization  program as well as  amortization  of the  transition
amount  and the  valuation  adjustment  of the  interest  rate  swap  derivative
instrument. The interest rate swap was terminated in the fourth quarter of 2001.


                                       18
<PAGE>


The effective tax rate from continuing operations for the second quarter of 2002
was 30% versus a tax benefit of 28% for the second quarter of 2001. Tax benefits
of export sales reduced the  effective tax rate for the second  quarter of 2002.
The effective tax rate used for the thirteen weeks ended July 1, 2001,  differed
from 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 second  quarter of 2002,  Cone had a net profit $3.1 million or $.08 per
share after preferred dividends.  For the second quarter of 2001, Cone had a net
loss of $26.5 million, or $1.08 per share after preferred dividends. Included in
the net  loss  were  after-tax  charges  of  $23.8  million  of  impairment  and
restructuring  charges and  inventory  write-downs  and  facility  consolidation
charges related to the Reinvention Plan, or $0.93 per share.


Six Months Ended June 30, 2002 Compared with Six Months Ended July 2, 2001
--------------------------------------------------------------------------

For the first six months of 2002, Cone had sales of $231.7  million,  a decrease
of 8.9%,  as compared  with sales of $254.4  million for the first six months of
2001. The decrease in sales was across all segments.

Gross profit  margin  increased to 13.6% of sales for the first half of 2002, as
compared with 7.1% for the first half of 2001.  The  improvement in gross profit
margin was  attributable to the savings from the 2001  Reinvention  Plan,  lower
cotton  costs  that were  partially  offset by lower  denim  selling  prices and
favorable  manufacturing  variances  reflecting  additional  cost reductions and
improved efficiencies and 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 $183.8 million for the first half of
         2002,  as compared  with sales of $203.6  million for the first half of
         2001, or a decrease of 9.7%. Sales yards were down in the first half of
         2002,  as compared  with the first half of 2001 as fourth  quarter 2001
         market  weaknesses  continued into the first part of 2002 and more than
         offset the weakening of the market that began in the second  quarter of
         2001. 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 was $14.5 million or
         7.9% of sales for the first half of 2002, as compared with $8.5 million
         or 4.1% of  sales  for the  first  half of  2001.  The  improvement  in
         operating income was attributable to the 2001 Reinvention Plan savings,
         lower cotton costs and favorable manufacturing  variances.  Cotton cost
         savings were partially offset by the decline in


                                       19
<PAGE>


         average selling prices.  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 $0.9 million for the first half of 2002, as compared with $0.6
         million for the first half 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  increased by 1.3%, as compared with first half 2001
         results after  eliminating the results of the Raytex  operation for the
         period. The increase in outside sales was the result of the sale of the
         John Wolf unit in August 2001,  thereby changing the  classification of
         these  sales to outside  sales from  intercompany  sales.  Total  sales
         excluding Raytex but, including  intercompany sales, decreased by 13.3%
         primarily as a result of Cone's  decision to exit the khaki  segment at
         the end of 2001.  For the first half of 2002,  the  segment  reported a
         profit of $2.1  million,  as compared  with $0.3  million for the first
         half of 2001.  The  improvement  in the segment's  operating  income is
         primarily attributable to improved operating efficiencies,  quality and
         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 in the first half of 2002 was $19.8
         million,  as compared with $21.1 million for first half of 2001.  Sales
         volume  decreased by 18.5% and was partially offset by improved product
         mix and higher  average unit  selling  prices.  The  reduction in sales
         volume is the  result of fewer  product  placements  in the  market,  a
         decision to move certain looms to the denim operation in second half of
         2001 and management's decision to phase out certain unprofitable lines.
         Segment  operating  income was $0.4 million for the first half of 2002,
         as  compared  with a segment  operating  loss of $0.3  million  for the
         comparable prior year period.

Selling  and  administrative  expenses  for the first  half of 2002  were  $17.1
million,  as compared to $19.1  million for the first half of 2001.  Selling and
administrative expenses were lower on both an absolute and a percentage of sales
base in the first half of 2002 as a result of savings from the 2001  Reinvention
Plan  partially  offset by lower unit  selling  prices and certain  accruals for
performance-based compensation.

Interest  expense for the first half of 2002 was $8.3 million,  as compared with
$9.5 million for the first half 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 $1.0 million in the
first half of 2002  include the  ongoing  expenses  of the  accounts  receivable
securitization  program,  as  compared to other  expense of $1.3  million in the
first  half of  2001,  which  included  the  ongoing  expenses  of the  accounts
receivable  securitization  program as well as  amortization  of the  transition
amount  and the  valuation  adjustment  of the  interest  rate  swap  derivative
instrument.



                                       20
<PAGE>


The effective tax rate on continuing  operations  for the first half of 2002 was
27%  versus a tax  benefit of 29% for the first half of 2001.  Tax  benefits  of
export  sales  reduced the  effective  tax rate for the first half of 2002.  The
effective tax rate used for the six months ended July 1, 2001,  differs from 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 first half of 2002, Cone had a net profit $4.5 million or $.09 per share
after preferred dividends. For the first six months of 2001, Cone had a net loss
of $29.4 million, or $1.23 per share after preferred dividends.  Included in the
net loss were after-tax charges of $23.8 million of impairment and restructuring
charges and inventory write-downs and facility  consolidation charges related to
the Reinvention Plan, or $0.93 per share.


LIQUIDITY AND CAPITAL RESOURCES

Cone's  principal  capital  components  consist  of debt  outstanding  under its
Revolving Credit Facility,  Senior Note, and 8-1/8% Debentures and 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,  per the 75%
of excess  cash flow  provision  of its  lending  agreements,  Cone will make 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 June 30, 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% Debenture                       $    100.0          $   100.0            8.125%       Mar 15, 2005
Senior Note                                  25.2               25.2           13.700        Jan 15, 2003
Revolving Credit Facility                    65.7               37.0            8.750        Jan 15, 2003
A/R Securitization Facility                  60.0               37.7            5.230        Sept 1, 2004
</TABLE>

At June 30, 2002, Cone had availability under its financing  agreements of $26.9
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 well in excess of $20 million for
the second quarter of 2002.  During the first six months of 2002, Cone generated
$19.7  million  of  cash  from  operations.  Changes  in  operating  assets  and
liabilities  provided $6.0 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 six  months of 2002,  Cone  invested  in  capital
expenditures   of  $1.9  million  and  sold  $1.0  million  of  land  and  other
non-essential  equipment.  Cone expects to spend  approximately  $8.5 million in
2002 for domestic capital expenditures to maintain its manufacturing  facilities
in good condition and to provide the  flexibility  and  capability  necessary to
meet  market  demands.  Capital  expenditures  are  expected  to be  financed by
internally generated funds.

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 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.

Cone has made it a priority to  implement a  long-term  recapitalization  of its
balance  sheet in 2002 that will  provide  the  funding  for its  Mexican  denim
expansion.  In the second quarter of 2002, we retained Jefferies and Co., as our
investment banker to assist us in the process.  We have had discussions with our
existing lenders and potential new sources of debt or equity. At this time,


                                       22
<PAGE>


there is no  definitive  proposal or  agreement on the  recapitalization  of the
balance sheet.  Management remains committed to completing the  recapitalization
in 2002.

On June 30, 2002, Cone's capital  structure  consisted of $161.0 million of debt
(including  current  maturities) and $89.4 million of stockholders'  equity. For
comparison,  Cone had $189.9 million of debt (including current  maturities) and
$96.6 million of stockholders' equity at July 1, 2001.

Accounts  receivable on June 30, 2002 were $40.0 million, as compared with $49.9
million at July 1, 2001.  Receivables,  including those sold pursuant to the A/R
Securitization  Facility,  represented 57 days of sales  outstanding at June 30,
2002  and  69  days  at  July  1,  2001.  Advances  outstanding  under  the  A/R
Securitization Facility were $37.7 million at June 30, 2002 and $50.6 million at
July 1, 2001.

Inventories on June 30, 2002 were $49.5 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 to reflect  lower  cotton  prices and the
reduced cost of operations as the result of the 2001 Reinvention Plan.  Finished
goods  inventories  were reduced by $8.6 million from year-end 2001 levels.  For
comparison  purposes,  inventories  at July 1,  2001  were  $82.1  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 sale of
John  Wolf,  the exit from the khaki  segment  and  lower  cotton  and other raw
material prices.


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:

<TABLE>
<CAPTION>
                                                Thirteen          Thirteen         Twenty-Six        Twenty-Six
                                              Weeks Ended       Weeks Ended       Weeks Ended        Weeks Ended
(in thousands)                                  6/30/02            7/1/01           6/30/02            7/1/01
                                             ------------------------------------------------------------------------

<S>                                           <C>               <C>               <C>                <C>
Income (Loss) from Continuing Operations      $    7,801        $ ( 24,082 )      $   14,477         $ ( 20,932 )
Depreciation and Amortization                      5,071             5,401            10,144             10,939
Reinvention Plan - Inventory Charges
  and Facility Consolidation Charges                   -             7,139                 -              7,139
Restructuring and Impairment Charges                   -            19,739                 -             19,739
                                             ------------------------------------------------------------------------
EBITDA                                            12,872             8,197            24,621             16,885
50% Parras Cone EBITDA                             2,296             1,569             3,537              3,227
                                             ------------------------------------------------------------------------
Pro Forma EBITDA                              $   15,168        $    9,766        $   28,158        $    20,112
                                             ------------------------------------------------------------------------
</TABLE>


                                       24
<PAGE>


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 June 30, 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) Cone's  inability to continue the savings and profit  improvement
         associated with its Restructuring Plan, 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.

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.


                                       24
<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 June 30, 2002, no significant litigation existed.


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

Cone Mills  Corporation's  Annual Meeting of Shareholders  was held May 7, 2002.
The proposals voted upon and the results of the voting were as follows:

                                                                   Abstentions
                                                 Against/       (Includes Broker
                                  For           Withheld           Non-Votes)
                               ---------        ----------      ----------------

1.  Election of four class I directors for a three-year term:

    John L. Bakane            24,464,469          207,998                0
    Marvin W. Goldstein       24,484,340          188,127                0
    Haynes G. Griffin         24,488,753          183,714                0
    Charles M. Reid           24,483,543          188,924                0

2.  Approval of 2002 Executive Incentive Compensation Plan:

                              22,716,694        1,312,725          642,778

3.  Ratification of the appointment of McGladrey & Pullen, LLP, as
    independent auditors for the Corporation for the current year:

                              24,383,038          173,919          115,510


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


                                       25
<PAGE>


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.

*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.



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.


                                       40
<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:    August 14, 2002            /s/Gary L. Smtih
                                    Gary L. Smith
                                    Executive Vice President and
                                    Chief Financial Officer




                                       41