Page 1 of 33
                                                 Index to Exhibits - Pages 20-31


                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

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

For the quarterly period ended July 2, 2000

                                    OR

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

For the Transition period from             to

Commission file number    1-3634

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

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

3101 North Elm Street, Greensboro, North Carolina            27408
(Address of principal executive offices)                     (Zip Code)

                           336.379.6220

         (Registrant's telephone number, including area code)

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

Number of shares of common stock outstanding as of July 28, 2000:
25,496,859 shares.

<PAGE>


                             CONE MILLS CORPORATION

                                      INDEX

                                                                         Page
                                                                         Number

PART I.       FINANCIAL INFORMATION

Item 1.       Financial Statements

              Consolidated Condensed Statements of Operations
              Thirteen and twenty-six weeks ended July 2, 2000 and
              July 4, 1999 (Unaudited)........................................3

              Consolidated Condensed Balance Sheets
              July 2, 2000 and July 4, 1999 (Unaudited)
              and January 2, 2000.............................................4

              Consolidated  Condensed  Statements of Cash Flows
              Twenty-six weeks ended July 2, 2000 and July 4, 1999
              (Unaudited).....................................................5

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

Item 2.       Management's Discussion and Analysis of
              Financial Condition and Results of Operations..................12

Item 3.       Quantitative and Qualitative Disclosures about Market
              Risk  .........................................................19


PART II.      OTHER INFORMATION

Item 1.       Legal Proceedings..............................................19
Item 6.       Exhibits and Reports on Form 8-K...............................19

<PAGE>

                                     CONE MILLS CORPORATION AND SUBSIDIARIES
                                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                      (in thousands, except per share data)

<TABLE>
<S>                                                       <C>           <C>           <C>            <C>
                                                             Thirteen      Thirteen     Twenty-Six     Twenty-Six
                                                           Weeks Ended   Weeks Ended   Weeks Ended    Weeks Ended
                                                           July 2, 2000  July 4, 1999  July 2, 2000   July 4, 1999
------------------------------------------------------------------------------------------------------------------
                                                           (Unaudited)   (Unaudited)   (Unaudited)    (Unaudited)

Net Sales                                                   $ 161,549     $ 174,492     $ 303,226      $ 331,749

Cost of Goods Sold                                            141,957       160,249       266,533        302,163
                                                           -------------------------------------------------------
Gross Profit                                                   19,592        14,243        36,693         29,586

Selling and Administrative                                     12,753        11,725        26,179         25,030
Restructuring and Impairment of Assets                             -             -           (332)        12,917
                                                           -------------------------------------------------------
Income (Loss) from Operations                                   6,839         2,518        10,846         (8,361)
                                                           -------------------------------------------------------
Other Income (Expense)
   Interest income                                                272           446           642            876
   Interest expense                                            (4,826        (3,517)       (9,497)        (7,157)
   Other expense                                               (1,148)           -         (1,955)            -
                                                           -------------------------------------------------------
                                                               (5,702)       (3,071)      (10,810)        (6,281)
                                                           -------------------------------------------------------

Income (Loss) before Income Taxes (Benefit), Equity in
   Earnings of Unconsolidated Affiliate and Cumulative
   Effect of Accounting Change                                  1,137          (553)           36        (14,642)
Income Taxes (Benefit)                                            386          (177)           12         (4,967)
                                                           -------------------------------------------------------
Income (Loss) before Equity in Earnings of Unconsolidated
   Affiliate and Cumulative Effect of Accounting Change           751          (376)           24         (9,675)
Equity in Earnings of Unconsolidated Affiliate                    775         1,090         1,225          1,957
                                                           -------------------------------------------------------
Income (Loss) before Cumulative Effect of Accounting Change     1,526           714         1,249         (7,718)

Cumulative Effect of Accounting Change                             -             -             -          (1,038)
                                                           -------------------------------------------------------
Net Income (Loss)                                           $   1,526     $     714     $   1,249      $  (8,756)
                                                           -------------------------------------------------------
Income (Loss) Available to Common Shareholders
   Income (Loss) before Cumulative Effect of Accounting
     Change                                                 $     431     $     (76)    $    (553)     $  (9,228)
   Cumulative Effect of Accounting Change                          -             -             -          (1,038)
                                                           -------------------------------------------------------
   Net Income (Loss)                                        $     431     $     (76)    $    (553)     $ (10,266)
                                                           -------------------------------------------------------
Earnings (Loss) Per Share - Basic and Diluted
   Income (Loss) before Cumulative Effect of Accounting
     Change                                                 $    0.02     $      -      $   (0.02)     $   (0.36)
   Cumulative Effect of Accounting Change                          -             -             -           (0.04)
                                                           -------------------------------------------------------
   Net Income (Loss)                                        $    0.02     $      -      $   (0.02)     $   (0.40)
                                                           -------------------------------------------------------
Weighted-Average Common Shares Outstanding
   Basic                                                       25,487        25,442        25,483         25,437
                                                           -------------------------------------------------------
   Diluted                                                     25,648        25,442        25,483         25,437
                                                           -------------------------------------------------------
</TABLE>

See Notes to Consolidated Condensed Financial Statements.


<PAGE>

                                     CONE MILLS CORPORATION AND SUBSIDIARIES
                                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands, except share and par value data)

<TABLE>
<S>                                                                      <C>           <C>            <C>
                                                                           July 2,       July 4,      January 2,
                                                                            2000          1999          2000
------------------------------------------------------------------------------------------------------------------
                                                                         (Unaudited)   (Unaudited)      (Note)
ASSETS
   Current Assets
     Cash                                                                 $   2,681     $   3,992      $   1,267
     Accounts receivable, less allowance of $5,050; 1999, $3,300
       and $5,050                                                            55,193        35,184         47,531
     Subordinated note receivable                                                -         22,115             -
     Inventories                                                            115,783       113,718        110,613
     Other current assets                                                     9,996        14,774          6,149
                                                                         -----------------------------------------
       Total Current Assets                                                 183,653       189,783        165,560

   Investments in Unconsolidated Affiliates                                  50,277        46,408         46,815
   Other Assets                                                              37,816        36,556         38,964
   Property, Plant and Equipment                                            210,483       225,194        221,458
                                                                         -----------------------------------------
                                                                          $ 482,229     $ 497,941      $ 472,797
                                                                         -----------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
   Current Liabilities
     Current maturities of long-term debt                                 $   2,932     $  10,714      $  79,714
     Accounts payable                                                        53,114        38,944         26,849
     Sundry accounts payable and accrued liabilities                         27,602        45,703         33,866
     Deferred income taxes                                                   12,406        16,979          9,894
                                                                         -----------------------------------------

       Total Current Liabilities                                             96,054       112,340        150,323

   Long-Term Debt                                                           185,120       171,608        119,115
   Deferred Income Taxes                                                     33,042        31,377         33,916
   Other Liabilities                                                         11,772        10,784         11,958

   Stockholders' Equity
     Class A preferred stock - $100 par value; authorized
       1,500,000  shares; issued and outstanding 357,700 shares;
       1999, 395,558 shares and 355,635 shares                               35,770        39,556         35,564
     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 25,490,660 shares;
       1999, 25,485,517 shares and 25,479,717 shares                          2,549         2,549          2,548
     Capital in excess of par                                                57,492        57,522         57,435
     Retained earnings                                                       69,118        81,208         70,776
     Deferred compensation - restricted stock                                  (171)         (486)          (321)
     Accumulated other comprehensive loss, currency translation adjustment   (8,517)       (8,517)        (8,517)
                                                                         -----------------------------------------
       Total Stockholders' Equity                                           156,241       171,832        157,485
                                                                         -----------------------------------------
                                                                          $ 482,229     $ 497,941      $ 472,797
                                                                         -----------------------------------------
</TABLE>

Note:  The balance sheet at January 2, 2000, has been derived from
       the financial statements at that date.

See Notes to Consolidated Condensed Financial Statements.

<PAGE>

                                     CONE MILLS CORPORATION AND SUBSIDIARIES
                                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                                 (in thousands)

<TABLE>
<S>                                                                                   <C>             <C>
                                                                                        Twenty-Six      Twenty-Six
                                                                                       Weeks Ended     Weeks Ended
                                                                                       July 2, 2000    July 4, 1999

------------------------------------------------------------------------------------------------------------------
                                                                                       (Unaudited)     (Unaudited)

CASH PROVIDED BY (USED IN) OPERATIONS                                                   $  21,487       $  (5,699)
                                                                                       ---------------------------
INVESTING
   Investments in unconsolidated affiliates                                                (2,237)             -
   Proceeds from sale of property, plant and equipment                                      2,306           2,660
   Capital expenditures                                                                    (2,128)         (3,970)
                                                                                       ---------------------------
     Cash used in investing                                                                (2,059)         (1,310)
                                                                                       ---------------------------
FINANCING
   Net payments under line of credit agreements                                                -           (1,000)
   Increase (decrease) in checks issued in excess of deposits                              (4,391)          2,755
   Proceeds from (payments on) long-term debt borrowings                                  (11,000)         10,000
   Proceeds from issuance of common stock                                                      78             326
   Purchase of outstanding common stock                                                        -              (45)
   Dividends paid - Class A Preferred                                                         (62)            (38)
   Redemption of Class A Preferred stock                                                   (2,639)         (1,636)
                                                                                       ---------------------------
     Cash provided by (used in) financing                                                 (18,014)         10,362
                                                                                       ---------------------------
     Net change in cash                                                                     1,414           3,353

Cash at Beginning of Period                                                                 1,267             639
                                                                                       ---------------------------
Cash at End of Period                                                                   $   2,681      $    3,992
                                                                                       ---------------------------
Supplemental Disclosures of Additional Cash Flow Information:
Cash payments for:
   Interest                                                                             $   9,514      $    7,281
                                                                                       ---------------------------
   Income taxes, net of refunds                                                         $    (220)     $      482
                                                                                       ---------------------------
Supplemental Schedule of Noncash Financing Activities:
   Stock dividend - Class A Preferred Stock                                             $   2,845      $    2,797
                                                                                       ---------------------------
</TABLE>

See Notes to Consolidated Condensed Financial Statements.


<PAGE>

                     CONE MILLS CORPORATION AND SUBSIDIARIES

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Note 1.  Basis of Financial Statement Preparation

The Cone Mills  Corporation  (the "Company")  consolidated  condensed  financial
statements for July 2, 2000 and July 4, 1999 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 July 2, 2000, July 4, 1999, and January 2, 2000, and the related consolidated
condensed  statements of operations for the  respective  thirteen and twenty-six
weeks  ended  July 2,  2000 and July 4, 1999 and cash  flows for the  twenty-six
weeks then ended. All adjustments are of a normal recurring nature.  The results
are not necessarily indicative of the results to be expected for the full year.

These  statements  should  be read in  conjunction  with the  audited  financial
statements  and related notes  included in the  Company's  annual report on Form
10-K for fiscal year 1999.

In December 1999,  the staff of the Securities and  Exchange  Commission issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
(SAB No. 101). SAB No. 101 summarizes some of the staff's interpretations of the
application of generally accepted accounting  principles to revenue recognition.
The Company will adopt SAB No. 101 when  required in the fourth quarter of 2000.
Management  believes  the adoption of  SAB No. 101 will  not have a significant
effect on its financial statements.

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 July 2, 2000 and July 4, 1999 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.

Note 2.  Inventories

(in thousands)                             7/2/00         7/4/99          1/2/00

Greige and finished goods               $  77,120      $  81,031       $  78,973
Work in process                             4,371          6,993           4,821
Raw materials                              22,199         14,331          15,523
Supplies and other                         12,093         11,363          11,296
                                        $ 115,783      $ 113,718       $ 110,613

<PAGE>

Note 3.  Long-Term Debt

(in thousands)                             7/2/00         7/4/99          1/2/00

Senior Note                             $  32,144      $  42,858       $  32,144
Revolving Credit Agreement                 58,000         42,000          69,000
8-1/8% Debentures                          97,908         97,464          97,685
                                          188,052        182,322         198,829
Less current maturities                     2,932         10,714          79,714
                                        $ 185,120      $ 171,608       $ 119,115

On July 14, 2000, the Company amended its Revolving  Credit  Agreement to extend
the maturity date to August 7, 2001. At the same time,  the Company  amended its
Senior  Note debt  payment  schedule  to reduce the  August 7,  2000,  principal
payment of $10.7  million to $2.9 million with the resulting  principal  payment
reduction of $7.8 million being rolled forward into the August 7, 2001, payment.
In addition,  the interest  rate on the Senior Note was  increased to 11.7% from
11.0%.

Note 4.  Class A Preferred Stock

On  February  11,  2000,  the  Company  declared an 8.0% stock  dividend  on the
Company's  Class A  Preferred  Stock,  which  was paid on March  31,  2000.  The
dividend was charged to retained  earnings in the amount of  approximately  $2.8
million.  The 2001 dividend rate for Class A Preferred Stock is 11.75%,  payable
March 31, 2001.

Note 5.  Depreciation and Amortization

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

(in thousands)       Thirteen        Thirteen        Twenty-Six       Twenty-Six
                    Weeks Ended     Weeks Ended     Weeks Ended      Weeks Ended
                      7/2/00          7/4/99          7/2/00           7/4/99

Depreciation          $ 5,721         $ 5,902        $ 11,687         $ 13,092
Amortization              451             450             905              902
                      $ 6,172         $ 6,352        $ 12,592         $ 13,994

<PAGE>

Note 6. Earnings (Loss) Per Share

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

(in thousands, except                          Thirteen                Thirteen
  per share data)                            Weeks Ended             Weeks Ended
                                                7/2/00                  7/4/99
Income before cumulative effect of
  accounting change                           $  1,526                $    714
Preferred stock dividends                       (1,095)                (   790)

Basic EPS - income (loss) available to
  common shareholders                              431                 (    76)
Effect of dilutive securities                       -                       -

Diluted EPS - income (loss) available
  to common shareholders after assumed
  conversions                                 $    431                $(    76)

Determination of shares:

Basic EPS - weighted-average shares             25,487                  25,442
Effect of dilutive securities                      161                      -

Diluted EPS - adjusted weighted-average
  shares after assumed conversions              25,648                  25,442

Earnings per share - basic and diluted        $    .02                $     -

<PAGE>

Note 6. Earnings (Loss) Per Share  (continued)

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

(in thousands, except                        Twenty-Six              Twenty-Six
  per share data)                            Weeks Ended             Weeks Ended
                                               7/2/00                  7/4/99
Income (loss) before cumulative effect
  of accounting change                        $  1,249                $( 7,718)
Preferred stock dividends                       (1,802)                ( 1,510)

Loss before cumulative effect of accounting
  change available to common shareholders       (  553)                ( 9,228)
Cumulative effect of accounting change              -                  ( 1,038)

Basic EPS - loss available to common
  shareholders                                  (  553)                (10,266)
Effect of dilutive securities                       -                       -

Diluted EPS - loss available to common
  shareholders after assumed conversions      $ (  553)               $(10,266)

Determination of shares:

Basic EPS - weighted-average shares             25,483                  25,437
Effect of dilutive securities                       -                       -

Diluted EPS - adjusted weighted-average
  shares after assumed conversions              25,483                  25,437

Loss per share - basic and diluted
  Loss before cumulative effect of
    accounting change                         $ (  .02)               $(   .36)
  Cumulative effect of accounting change            -                  (   .04)

  Net loss                                    $ (  .02)               $(   .40)

Common  stock  options  outstanding  at July 2, 2000,  were not  included in the
computation of diluted loss per share for the twenty-six weeks period because to
do so would have been  antidilutive.  Common stock options at July 4, 1999, were
not included in the computation of diluted loss per share because to do so would
have been antidilutive.

Note 7.  Segment Information

The  Company  has  three  principal  business  segments  which  are  based  upon
organizational  structure:  1) denim and khaki; 2) commission finishing;  and 3)
decorative fabrics. The Company ceased manufacturing yarn-dyed products in 1999.

<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  affiliate is
included in the denim and khaki segment. Restructuring and impairment of assets,
unallocated expenses, interest, income taxes and cumulative effect of accounting
change are not included in segment operating income (loss).

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

(in thousands)                                Thirteen                Thirteen
                                             Weeks Ended             Weeks Ended
                                                7/2/00                  7/4/99
Net Sales

Denim and Khaki                               $121,995                $127,238
Commission Finishing                            23,646                  26,403
Decorative Fabrics                              19,973                  17,763
Yarn-Dyed Products                                  -                    6,565
Other                                              361                     428
                                               165,975                 178,397
Less Intersegment Sales                          4,426                   3,905
                                              $161,549                $174,492
Income (Loss) from Operations

Denim and Khaki                               $  8,681                $  7,251
Commission Finishing                                57                 ( 1,716)
Decorative Fabrics                             (   292)                    369
Yarn-Dyed Products                                   -                 (   528)
Other                                          (    20)                (    29)
Unallocated Expenses                           (   812)                ( 1,739)
                                                 7,614                   3,608
Restructuring and Impairment of Assets              -                       -
                                                 7,614                   3,608
Less Equity in Earnings of
  Unconsolidated Affiliate                         775                   1,090
                                                 6,839                   2,518
Other Expense, Net                             ( 5,702)                ( 3,071)

Income (Loss) before Income Taxes
  (Benefit), Equity in Earnings of
  Unconsolidated Affiliate and
  Cumulative Effect of Accounting Change      $  1,137                $(   553)

<PAGE>

Note 7.  Segment Information (continued)

(in thousands)                               Twenty-Six              Twenty-Six
                                             Weeks Ended             Weeks Ended
                                               7/2/00                  7/4/99
Net Sales

Denim and Khaki                               $226,257                $239,873
Commission Finishing                            44,449                  52,241
Decorative Fabrics                              39,522                  34,348
Yarn-Dyed Products                                  10                  14,071
Other                                              644                     900
                                               310,882                 341,433
Less Intersegment Sales                          7,656                   9,684
                                              $303,226                $331,749
Income (Loss) from Operations

Denim and Khaki                               $ 14,017                $ 16,567
Commission Finishing                           (   782)                ( 3,672)
Decorative Fabrics                             (   508)                    873
Yarn-Dyed Products                             (    60)                ( 3,805)
Other                                              672                 (   258)
Unallocated Expenses                           ( 1,600)                ( 3,192)
                                                11,739                   6,513
Restructuring and Impairment of Assets             332                 (12,917)
                                                12,071                 ( 6,404)
Less Equity in Earnings of
  Unconsolidated Affiliate                       1,225                   1,957
                                                10,846                 ( 8,361)
Other Expense, Net                             (10,810)                ( 6,281)

Income (Loss) before Income Taxes
  (Benefit), Equity in Earnings of
  Unconsolidated Affiliate and
  Cumulative Effect of Accounting Change      $     36                $(14,642)

Note 8.  Comprehensive Income (Loss)

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

(in thousands)                                Thirteen                Thirteen
                                             Weeks Ended             Weeks Ended
                                               7/2/00                  7/4/99

Net income (loss)                             $  1,526                $    714
Other comprehensive loss,
  currency translation adjustment                   -                   (   17)
                                              $  1,526                $    697

<PAGE>

Note 8.  Comprehensive Income (Loss) (continued)


(in thousands)                               Twenty-Six              Twenty-Six
                                             Weeks Ended             Weeks Ended
                                               7/2/00                  7/4/99

Net income (loss)                             $  1,249                $ (8,756)
Other comprehensive loss,
  currency translation adjustment                   -                   (   19)
                                              $  1,249                $ (8,775)

Note 9.  Securitization of Accounts Receivable

On April 24, 2000, the Company amended the securitization  agreements to include
certain  additional  trade  receivables  related  to the  ongoing  purchase  and
subsequent  resale by Cone  Receivables II LLC.  Effective with this  amendment,
purchases by Redwood  Receivables  Corporation may provide proceeds of up to $60
million at any point in time. As of July 2, 2000,  the total amount  outstanding
under the Accounts Receivable Facility was $60 million.

Note 10.  Exchange Offer and Consent Solicitation for the 8-1/8%
          Debentures

On August 4, 2000,  the Company filed with the SEC an offering to holders of its
8-1/8% Debentures due March 15, 2005, to exchange its common stock for up to $15
million of the  Debentures and its new secured  subordinated  debentures and its
common stock for up to $85 million of the Debentures.

Item 2.
                             MANAGEMENT'S DISCUSSION

                       AND ANALYSIS OF FINANCIAL CONDITION

                            AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Second Quarter Ended July 2, 2000 Compared with Second Quarter Ended July 4,
1999

For the second quarter of 2000, Cone Mills had sales of $161.5 million,  down 7%
from sales of $174.5 million for the second quarter of 1999.  Excluding sales of
businesses  exited in 1999,  sales for the second quarter of 2000 were down less
than 2% from 1999  amounts.  Lower  denim  prices  and weak  sales at the Raytex
finishing plant,  partially offset by improved  jacquard sales,  account for the
sales decrease.

Gross  profit for the second  quarter of 2000  increased  to 12.1% of sales,  as
compared  with 8.2% for the previous  year.  The  improvement  was primarily the
result of better  operating  results  in the  denim  and  khaki  segment  and in
commission  finishing and the realization of savings from the 1999 comprehensive
restructuring  program.  These savings include the  reconfiguration  of overhead

<PAGE>

structures,  restructuring  at Carlisle,  yarn outsourcing and the exit from the
yarn-dyed shirtings product line.

Segment  Information.  The  Company  has three  principal  business  segments:
1) denim and khaki;  2)  commission  finishing;  and 3) decorative  fabrics.
The Company ceased  manufacturing  yarn-dyed  products in 1999.  (See Note 7 to
Notes to  Consolidated  Condensed Financial Statements included in Part I, Item
1.)

         Denim and Khaki.  Denim and khaki segment sales revenues for the second
         quarter of 2000 were $122.0 million, down 4.1% from second-quarter 1999
         sales  of  $127.2  million.  While  sales  volume  returned  to  levels
         equivalent to second-quarter  1999, revenues were adversely affected by
         lower denim prices,  the result of the industry  downturn in the second
         half  of  1999.  Operating  income  for the  denim  and  khaki  segment
         increased  to $8.7  million,  or  7.1% of  sales  for the  most  recent
         quarter, as compared with $7.3 million, or 5.7% of sales for the second
         quarter of 1999.  The increased  earnings  resulted  primarily from the
         reduction  of  losses  in  khaki  operations  and  improved   operating
         performance in denim  manufacturing  in 2000.  Operating income for the
         segment  includes  the equity in  earnings  from the Parras  Cone joint
         venture plant.

         Commission Finishing. Outside sales of the commission finishing segment
         were  $19.2  million  for the second  quarter of 2000,  down 14.6% from
         sales of $22.5 million for the second quarter of 1999. Operating losses
         and lower  sales were  experienced  at Raytex,  resulting  from  weaker
         demand for top-of-bed prints and manufacturing  difficulties associated
         with new  equipment.  Despite the sales  shortfall,  the segment had an
         operating  profit of $.1  million  for the second  quarter of 2000,  as
         compared  with a loss of $1.7  million for the second  quarter of 1999.
         The entire profit was  attributable  to the Carlisle  finishing  plant,
         which had much improved  operating results for the most recent quarter,
         the result of cost reduction and improved  efficiency and quality.  The
         Carlisle profit was partially offset by losses at Raytex.

         Decorative  Fabrics.  For the  second  quarter  of  2000,  sales of the
         decorative  fabrics  segment were $20.0 million,  up 12.4%, as compared
         with second-quarter  1999 sales of $17.8 million.  The increase was the
         result of continued growth in jacquards. The decorative fabrics segment
         had an operating loss of $.3 million for the second quarter of 2000, as
         compared  with a $.4 million  operating  profit for the previous  year.
         John Wolf sales were down as strong products in 1999 have moved late in
         their  product  life  cycles  and  restyling  efforts  have  not had an
         opportunity to be introduced into the marketplace. Jacquards had a less
         profitable sales mix and  difficulties  associated with outside weaving
         and finishing.

         Yarn-Dyed  Products.  As part of the 1999  comprehensive  restructuring
         program, the Company ceased manufacturing yarn-dyed products and exited
         the  business  in  1999.  For the  second  quarter  of  1999,  sales of

<PAGE>

         yarn-dyed  products  were $6.6 million and the  operating  loss for the
         segment was $.5 million.

Selling and  administrative  expenses for the second  quarter of 2000 were $12.8
million,  or 7.9% of sales, as compared with $11.7 million, or 6.7% of sales, in
second quarter 1999. Expenses associated with the Company's financial agreements
and lower denim prices on  essentially  the same sales yards resulted in selling
and administrative expenses increasing as a percent of sales.

For the second quarter of 2000, EBITDA, defined as income (loss) from operations
before depreciation and amortization,  was $13.0 million. For comparison, EBITDA
for  the  second   quarter  of  1999  was  $8.9  million.   However,   excluding
restructuring  charges,  related  expenses,  inventory  writedowns and operating
losses associated with businesses  exited, the Company had a pro forma EBITDA in
the second quarter of 1999 of $11.6 million.

Interest  expense for the second  quarter of 2000 was $4.8 million,  up 37% from
$3.5 million for the second  quarter of 1999.  The increase in interest  expense
was primarily the result of increases in rates under new lending  agreements and
market rates. Other expenses of $1.1 million recognized in the second quarter of
2000 were the ongoing  expenses of the new  accounts  receivable  securitization
program, which began September 1999.

In the second quarter of 2000,  income taxes as a percent of taxable income were
34%. In the second  quarter of 1999,  the income tax benefit as a percent of the
taxable loss was 34%.

Equity in earnings of Parras Cone, the Company's  joint venture plant in Mexico,
was $.8 million for the second  quarter of 2000,  as compared  with $1.1 million
for the second quarter of 1999.

For the  second  quarter of 2000,  the  Company  had net income of $1.5  million
before  preferred  dividends  as compared to net income of $.7 million in second
quarter 1999. After preferred  dividends,  the Company reported earnings of $.02
per share in the 2000 period as compared  with  breakeven  per share  results in
1999.

The dividend  rate on the  preferred  stock is 11.75% for 2000 as compared  with
8.00% for 1999. This increase  reflects  changes in the Company's  credit rating
and increases in market interest rates.

Six Months Ended July 2, 2000 Compared with Six Months Ended July 4, 1999

For the first six months of 2000, Cone Mills had sales of $303.2  million,  down
9% from  sales of $331.7  million  for the first six  months of 1999.  Excluding
sales of businesses  exited in 1999, sales for the first six months of 2000 were
down 2.0% from 1999  amounts.  Lower  denim  prices and weak sales at our Raytex
finishing plant,  partially offset by improved  jacquard sales,  account for the
sales decrease.

<PAGE>

Gross profit for the first six months of 2000  increased  to 12.1% of sales,  as
compared with 8.9% for the previous year. The  improvement  was primarily due to
better operating results in commission  finishing and the realization of savings
from the 1999  comprehensive  restructuring  program.  These savings include the
reconfiguration  of  overhead  structures,   restructuring  at  Carlisle,   yarn
outsourcing and the exit of the yarn-dyed shirtings product line.

Segment  Information.  The  Company  has three  principal  business  segments:
1) denim and khaki;  2)  commission  finishing;  and 3) decorative  fabrics.
The Company ceased  manufacturing  yarn-dyed  products in 1999.  (See Note 7 to
Notes to  Consolidated  Condensed Financial Statements included in Part I,
Item 1.)

         Denim and Khaki.  Denim and khaki segment sales  revenues for the first
         six months of 2000 were  $226.3  million,  down 5.7% from the first six
         months  of 1999  sales  of  $239.9  million.  While  sales  yards  were
         essentially flat  year-over-year,  revenues were adversely  affected by
         lower denim prices, the result of industry supply/demand imbalances and
         declining  cotton  costs which were passed on to  customers  because of
         market conditions. Operating income for the denim and khaki segment was
         $14.0 million,  or 6.2% of sales for the 2000 period,  as compared with
         $16.6  million,  or 6.9% of sales  for the  1999  period.  The  decline
         resulted  primarily  from lower denim prices,  partially  offset by the
         reduction  of  losses in khaki  operations.  Operating  income  for the
         segment  includes  the equity in  earnings  from the Parras  Cone joint
         venture plant.

         Commission Finishing. Outside sales of the commission finishing segment
         were $36.8  million  for the first six months of 2000,  down 13.5% from
         the  first six  months of 1999.  Lower  sales at the  Raytex  finishing
         plant, resulting from weaker demand in top-of-bed prints, accounted for
         the  decline.   Carlisle  sales  to  outside  customers   increased  by
         approximately  4% in the first six months of 2000, as compared with the
         1999 period. Operating results for the segment improved as the Carlisle
         plant  had a  profit,  as  compared  with a  significant  loss  for the
         previous year,  mitigating  the volume  shortfall and losses at Raytex.
         Losses for this  segment  were  reduced from $3.7 million for the first
         six months of 1999 to a loss of $.8 million for the most recent period.

         Decorative  Fabrics.  For the  first six  months of 2000,  sales of the
         decorative  fabrics segment rose by 15.1% to $39.5 million,  the result
         of continued  growth in jacquards.  John Wolf sales were down as strong
         products  in 1999 have  moved  late in their  product  life  cycles and
         restyling efforts have not had an opportunity to be introduced into the
         marketplace.  Due  to  the  sales  decline  at  John  Wolf  and a  less
         profitable mix at Jacquards  along with  difficulties  associated  with
         outside weaving and finishing the segment reported an operating loss of
         $.5 million in 2000 as compared with an operating profit of $.9 million
         in 1999.

<PAGE>

         Yarn-Dyed  Products.  As part of the 1999  comprehensive  restructuring
         program, the Company ceased manufacturing yarn-dyed products and exited
         the  business  in 1999.  For the  first six  months  of 1999,  sales of
         yarn-dyed  products were $14.1  million and the operating  loss for the
         segment was $3.8 million.

Selling and administrative  expenses for the first six months of 2000 were $26.2
million,  or 8.6% of sales, as compared with $25.0 million,  or 7.5% of sales in
the first six months of 1999.  Expenses  associated with the Company's financial
agreements,  certain  performance-based  compensation  accruals  and lower denim
prices  on   essentially   the  same  sales   yards   resulted  in  selling  and
administrative expenses increasing as a percent of sales.

For the first  six  months  of 2000,  EBITDA,  defined  as  income  (loss)  from
operations  before  depreciation  and  amortization,   was  $23.4  million.  For
comparison,  EBITDA for the first six months of 1999 was $5.6 million.  However,
excluding  restructuring  charges,  related expenses,  inventory  writedowns and
operating losses associated with businesses  exited, the Company had a pro forma
EBITDA in the first six months of 1999 of $ 25.9 million.

Interest expense for the first six months of 2000 was $9.5 million,  up 33% from
$7.2 million for the first six months of 1999. The increase in interest  expense
was primarily the result of increases in rates under new lending  agreements and
market rates.  Other expenses of $2.0 million recognized in the first six months
of 2000 were the ongoing expenses of the new accounts  receivable securitization
program, which began September 1999.

In the first six months of 2000,  income  taxes as a percent  of taxable  income
were 34%.  In the first six months of 1999,  the income tax benefit as a percent
of the taxable loss was 34%.

Equity in earnings of Parras Cone, the Company's  joint venture plant in Mexico,
was $1.2 million for the first six months of 2000, as compared with $2.0 million
for the first six months of 1999 before the  cumulative  effect of an accounting
change.

For the first six months of 2000, the Company had net income of $1.2 million, or
a loss of $.02 per share after  preferred  dividends.  For  comparison,  for the
first six months of 1999 the  Company  reported a net loss of $8.8  million,  or
$.40 per share after preferred  dividends.  Excluding  restructuring and related
expenses, and the cumulative effect of an accounting change, the Company had pro
forma earnings of $.10 per share for the first six months of 1999.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal long-term capital components consist of debt outstanding
under its Senior Note, its 8-1/8% Debentures and stockholders'  equity.  Primary
sources of liquidity are internally  generated  funds, an $80 million  Revolving

<PAGE>

Credit Facility ("Revolving Credit Facility") of which approximately $20 million
was  available  on July 2, 2000,  and a $60  million  Receivables  Purchase  and
Servicing  Agreement (the "Receivables  Agreement") entered into on September 1,
1999,  and amended on April 24,  2000,  with Cone  Receivables  II LLC,  Redwood
Receivables Corporation ("Redwood"), and General Electric Capital Corporation.

On January 28, 2000, the Company entered into a new $80 million Revolving Credit
Facility  with its  existing  banks with Bank of America,  N.A.,  as agent.  The
Revolving  Credit  Facility  was secured by Company  assets and was to mature on
August 7, 2000. This date was subsequently  extended to August 7, 2001. Interest
rates were increased to market levels and new covenants were set.

At the same time the Company entered into the new Revolving Credit Facility, its
Senior Notes and 8-1/8% Debentures were ratably secured with the bank facility.

On April 24, 2000, the Company amended the Receivables  Agreement increasing the
facility  from $50  million  to $60  million.  In  addition  to  increasing  the
commitment,  the Company  modified other provisions of the Agreement to allow it
to utilize more fully the entire facility.

On July 14, 2000, the Company  amended its Revolving  Credit  Facility to extend
the maturity date to August 7, 2001. At the same time,  the Company  amended its
Senior  Note debt  repayment  schedule  to reduce the August 7, 2000,  principal
payment of $10.7  million to $2.9 million with the resulting  principal  payment
reduction of $7.8 million being rolled forward into the August 7, 2001, payment.
In addition,  the  commitment  on the Revolving  Credit  Facility was reduced to
$73.5  million  on August 7, 2000.  The  interest  rate on the  Senior  Note was
increased to 11.7% from 11.0%.

Financing  agreements of the Company  prohibit the Company from paying dividends
on its Common Stock.

During the first six months of 2000, the Company generated cash from operations,
before  changes in working  capital,  of $13.5  million,  as compared  with $1.3
million during the first six months of 1999. In the 2000 period, working capital
decreased by $8.0 million. Uses of cash in the 2000 period included $4.4 million
for domestic capital  expenditures and investment to develop the Company's joint
venture  industrial  park in Mexico,  and $2.6  million  for the  redemption  of
preferred stock.

The Company  believes that  internally  generated  operating cash flow and funds
available  under its credit  facilities will be sufficient to meet its needs for
working  capital,  capital  spending  permitted under the terms of the Revolving
Credit  Facility and debt  repayments.  Liquidity is  predicated  on the Company
meeting its operating targets in 2000 and further reductions in inventories.

On August 4, 2000,  the Company filed with the SEC an offering to holders of its
8-1/8% Debentures due March 15, 2005, to exchange its common stock for up to $15

<PAGE>

million of the debentures and its new secured subordinated debentures and common
stock  for up to $85  million  of the  debentures.  In  addition,  the  exchange
includes a consent to make certain changes in the indenture governing the 8-1/8%
Debentures  and  a  modification  of  the  collateral   currently  securing  the
debentures. The principal purpose of the transaction is to enable the Company to
revise its debt structure in a manner that should provide more  flexibility  and
should  permit  the  Company  to obtain  financing  necessary  for its  proposed
expansion into Mexico.  While management believes that it will be able to obtain
the appropriate financing for its Mexican initiative, there is no assurance that
the Company will obtain  financing  on terms and  conditions  acceptable  to the
Company.

On July 2, 2000, the Company's  long-term capital structure  consisted of $188.1
million of long-term debt (including  current  maturities) and $156.2 million of
stockholders'  equity.  For comparison,  on July 4, 1999, the Company had $182.3
million of long-term debt (including  current  maturities) and $171.8 million of
stockholders'  equity.  Long-term  debt  (including  current  maturities)  as  a
percentage of long-term debt and  stockholders'  equity was 55% at July 2, 2000,
as compared with 51% at July 4, 1999.

Accounts and note  receivable on July 2, 2000,  were $55.2 million,  as compared
with $57.3 million at July 4, 1999.  Receivables,  including those sold pursuant
to the Receivables Purchase Agreement,  represented 67 days of sales outstanding
at July 2,  2000  and 58 days at July 4,  1999.  The  increase  in days of sales
outstanding  primarily  reflects  a change  in  customer  sales  mix with  fewer
customers paying in advance of due date.

Inventories on July 2, 2000,  were $115.8  million,  up $2.1 million from $113.7
million at July 4, 1999.

For the first six months of 2000,  domestic  capital  spending  was $2.1 million
compared to $4.0 million for the 1999 period.  Domestic capital spending in 2000
is expected to be  approximately  $12 million.  In addition to the 2000 domestic
capital spending budget,  the Company expects to spend  approximately $8 million
for investments in international  initiatives of which $2.3 million was invested
in the first six months of 2000.

OTHER MATTERS

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

The Company is a party to various legal claims and actions.  Management believes
that none of these claims or actions,  either  individually or in the aggregate,

<PAGE>

will have a material adverse effect on the financial condition of the Company.

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

     Except for the historical information  presented,  the matters disclosed in
     the  foregoing  discussion  and  analysis  and other  parts of this  report
     include   forward-looking   statements.   These  statements  represent  the
     Company's  current  judgment  on the  future  and are  subject to risks and
     uncertainties  that could cause actual results to differ  materially.  Such
     factors include,  without limitation:  (i) the demand for textile products,
     including  the  Company's  products,  will  vary  with the U.S.  and  world
     business  cycles,  imbalances  between  consumer  demand and inventories of
     retailers and manufacturers and changes in fashion trends,  (ii) the highly
     competitive  nature of the textile  industry  and the  possible  effects of
     reduced   import   protection  and   free-trade   initiatives,   (iii)  the
     unpredictability  of the cost and  availability  of cotton,  the  Company's
     principal raw material,  (iv) the Company's relationships with Levi Strauss
     as its major  customer,  (v) the Company's  ability to attract and maintain
     adequate  capital  to  fund  operations  and  strategic  initiatives,  (vi)
     successful  completion of the Exchange Offer and Consent  Solicitation  for
     the 8-1/8%  Debentures,  (vii) increases in prevailing  interest rates, and
     (viii) the  inability  to continue  the cost  savings  associated  with the
     Company's  restructuring  initiatives.  For a further  description of these
     risks see the Company's  1999 Form 10-K,  "Item 1.  Business  -Competition,
     -Raw Materials and -Customers" and "Management's Discussion and Analysis of
     Results of Operations  and  Financial  Condition -- Overview" of Item 7. of
     the Form 10-K. Other risks and  uncertainties may be described from time to
     time in the  Company's  other reports and filings with the  Securities  and
     Exchange Commission.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

The  Company is exposed to market  risks  relating to  fluctuations  in interest
rates and commodity  prices.  There has been no material change in the Company's
market risks that would  significantly  affect the disclosures  made in the Form
10-K for the year ended January 2, 2000.

                                     PART II

Item 1.  Legal Proceedings

The Company and its  subsidiaries  are involved in legal  proceedings and claims
arising in the ordinary  course of business.  Although there can be no assurance
as to the ultimate  disposition of these matters,  management  believes that the
probable  resolution  of such  contingencies  will not have a  material  adverse
effect on the financial condition of the Company.

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

<PAGE>

Exhibit                                                               Sequential
  No.                 Description                                       Page No.

*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 will 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  Agreement
                     dated as of April 24, 2000, by and between Cone
                     Receivables II LLC, the Registrant, Redwood
                     Receivables Corporation, and General Electric

<PAGE>

  Exhibit                                                             Sequential
  No.                Description                                       Page No.

                     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.

*2.3.5               Fifth Amendment to Securitization Agreements
                     dated as of June 30, 2000, by and between Cone
                     Receivables II LLC, the Registrant, 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).

*2.4                 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.

*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 the 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.

<PAGE>

Exhibit                                                               Sequential
  No.                Description                                       Page No.

*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 the 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 person 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.

*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 the 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 the 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
<PAGE>

Exhibit                                                               Sequential
  No.                Description                                       Page No.

                     8% promissory note attached,  filed as Exhibit
                     4.01 to the 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 the
                     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 the
                     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 the
                     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 the
                     Registrant's report on Form 8-K dated
                     March 1, 1995.

*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
                     the 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
                     the Registrant's report on Form 10-Q

<PAGE>

Exhibit                                                               Sequential
  No.                Description                                       Page No.

                     for the quarter ended July 2, 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 the
                     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 the
                     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 the
                     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) 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 the Registrant's report on Form
                     8-K dated February 11, 2000.

*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

<PAGE>

Exhibit                                                               Sequential
  No.                Description                                       Page No.

                     Statement on Form S-4 (file 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
                     333-43014)

*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 the 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 333-43014)

*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 the
                     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 the Registrant's
                     report on Form 8-K dated February 11, 2000.


<PAGE>

Exhibit                                                               Sequential
  No.                Description                                       Page No.

*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 the 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 the 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 the 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
                     the 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 the 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

<PAGE>

Exhibit                                                               Sequential
  No.                Description                                       Page No.

                     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 the 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 the
                     Registrant's Registration Statement on Form S-1
                     (File No. (33-46907).

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

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

*4.15.1              Form of First Supplemental Indenture to the
                     Indenture dated as of February 14, 1995, between
                     the Registrant and Wachovia Bank of North
                     Carolina, N.A. as Trustee (The Bank of New

<PAGE>

Exhibit                                                               Sequential
  No.                Description                                       Page No.

                     York is successor Trustee), with respect to
                     the 8-1/8% Debentures Due March 15, 2005, filed
                     as Exhibit 4.15.1 to Registrant's Registration
                     Statement on Form S-4 (file 333-43014).

*4.16                Form of Indenture between the Registrant
                     and The Bank of New York, as Trustee, with
                     respect to the 11% Secured Subordinated
                     Debentures Due March 15, 2005 being registered,
                     filed as Exhibit 4.16 to Registrant's
                     Registration Statement on Form S-4 (file
                     333-43014).

Management contract or compensatory plan or arrangement
(Exhibits 10.1 - 10.13)

*10.1                Employees' Retirement Plan of Cone Mills
                     Corporation as amended and restated effective
                     December 1, 1994, filed as Exhibit 10.1 to the
                     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 the 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 the
                     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 the Registrant's
                     report on Form 10-K for the year ended December
                     29, 1996.

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

<PAGE>

Exhibit                                                               Sequential
  No.                Description                                       Page No.

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

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

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

*10.9                1984 Stock Option Plan of Registrant filed as
                     Exhibit 10.7 to the 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 the 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 the 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 the Registrant's report on Form
                     10-K for the year ended December 29, 1991.

*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 the  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 the Registrant's report on Form 10-K
                     for the year ended December 29,1996.

<PAGE>

Exhibit                                                               Sequential
  No.                Description                                       Page No.

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

*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 the 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).

<PAGE>

Exhibit                                                               Sequential
  No.                Description                                       Page No.

*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).

27                   Financial Data Schedule                                33


------------------------------------------

* 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,  3101
North Elm Street, Greensboro, NC 27408.


<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, 2000          /S/Gary L. Smith
                                    Gary L. Smith
                                    Executive Vice President and
                                    Chief Financial Officer