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                                                                   Page 1 of 37
                                              Index to Exhibits - Pages 23 - 36
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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 March 31, 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 April 30, 2002: 25,692,993.


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                                       1
<PAGE>


                             CONE MILLS CORPORATION

                                      INDEX

PART I.       FINANCIAL INFORMATION
                                                                          Page
                                                                         Number

Item 1.       Financial Statements

              Consolidated Condensed Statements of Operations
              Thirteen weeks ended March 31, 2002 and
              April 1, 2001 (Unaudited).......................................3

              Consolidated Condensed Balance Sheets
              March 31, 2002 and April 1, 2001 (Unaudited)
              and December 30, 2001...........................................4

              Consolidated  Condensed  Statements of Cash Flows
              Thirteen  weeks ended March 31, 2002 and April 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..................14

Item 3.       Quantitative and Qualitative Disclosures about Market
              Risk  .........................................................21


PART II.      OTHER INFORMATION

Item 1.       Legal Proceedings..............................................22
Item 6.       Exhibits and Reports on Form 8-K...............................23


                                       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
                                                                                     WEEKS ENDED       Weeks Ended
                                                                                   MARCH 31, 2002     April 1, 2001
----------------------------------------------------------------------------------------------------------------------
                                                                                    (UNAUDITED)        (Unaudited)
<S>                                                                                <C>                <C>
Net Sales                                                                          $      105,820     $     132,661

Cost of Goods Sold                                                                         91,515           120,113
                                                                                   -----------------------------------

Gross Profit                                                                               14,305            12,548

Selling and Administrative                                                                  7,629             9,398
                                                                                   -----------------------------------

Income from Operations                                                                      6,676             3,150
                                                                                   -----------------------------------

Other Income (Expense)
   Interest income                                                                             18               124
   Interest expense                                                                       ( 4,308 )         ( 4,638 )
   Other expense                                                                            ( 465 )           ( 560 )
                                                                                   -----------------------------------
                                                                                          ( 4,755 )         ( 5,074 )
                                                                                   -----------------------------------
Income (Loss) from Continuing Operations before Income Tax Expense
   (Benefit) and Equity in Earnings (Losses) of Unconsolidated Affiliates                   1,921           ( 1,924 )
Income Tax Expense (Benefit)                                                                  434             ( 673 )
                                                                                   -----------------------------------

Income (Loss) from Continuing Operations before Equity in Earnings
   (Losses) of Unconsolidated Affiliates                                                    1,487           ( 1,251 )
Equity in Earnings (Losses) of Unconsolidated Affiliates                                     ( 47 )             349
                                                                                   -----------------------------------
Income (Loss) from Continuing Operations                                                    1,440             ( 902 )
                                                                                   -----------------------------------

Discontinued Operations
   Loss from discontinued operations                                                            -           ( 3,079 )
   Income tax benefit                                                                           -             1,078
                                                                                   -----------------------------------
                                                                                                -           ( 2,001 )
                                                                                   -----------------------------------
Net Income (Loss)                                                                  $        1,440     $     ( 2,903 )
                                                                                   -----------------------------------

Income (Loss) Available to Common Stockholders                                     $          408     $     ( 3,903 )
                                                                                   -----------------------------------

Earnings (Loss) Per Share - Basic and Diluted
   Income (Loss) from Continuing Operations                                        $         0.02     $      ( 0.07 )
   Loss from Discontinued Operations                                                            -            ( 0.08 )
                                                                                   -----------------------------------
Earnings (Loss) Per Share - Basic and Diluted                                      $         0.02     $      ( 0.15 )
                                                                                   -----------------------------------

Weighted-Average Common Stock Outstanding

   Basic                                                                                   25,667            25,518
                                                                                   -----------------------------------
   Diluted                                                                                 26,010            25,518
                                                                                   -----------------------------------
</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>
                                                                    MARCH 31,        April 1,         December 30,
                                                                      2002            2001                2001
------------------------------------------------------------------------------------------------------------------------
                                                                   (UNAUDITED)     (Unaudited)           (Note)
<S>                                                                <C>             <C>                <C>
ASSETS
   Current Assets
    Cash                                                           $      294      $    2,574         $       529
    Accounts receivable, less allowances: 2002, $5,700;
        2001, $4,705 and $5,700                                        41,166          46,968              28,373
    Inventories                                                        60,334         103,717              62,057
    Other current assets                                                3,591           6,733               3,371
                                                                   -----------------------------------------------------
      Total Current Assets                                            105,385         159,992              94,330
   Investments in and Advances to Unconsolidated Affiliates            51,358          57,411              51,664
   Other Assets                                                        24,215          17,775              23,917
   Property, Plant and Equipment                                      159,664         186,409             164,468
                                                                   -----------------------------------------------------
                                                                   $  340,622      $  421,587         $   334,379
                                                                   -----------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
   Current Liabilities
    Current maturities of long-term debt                           $   81,720      $   83,495         $     3,075
    Accounts payable                                                   28,551          37,176              21,535
    Sundry accounts payable and accrued liabilities                    19,889          26,052              27,928
    Deferred income taxes                                                   -          11,067                   -
                                                                   -----------------------------------------------------
      Total Current Liabilities                                       130,160         157,790              52,538

   Long-Term Debt                                                      98,686         106,176             170,655
   Deferred Income Taxes                                               10,849          17,461              10,513
   Other Liabilities                                                   14,077          16,347              14,063

   Stockholders' Equity
    Class A preferred stock - $100 par value; authorized
      1,500,000 shares; issued and outstanding: 2002, 363,590
      shares; 2001, 367,339 shares and 334,309 shares                  36,359          36,734              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, 25,687,993 shares;
      2001, 25,542,211 shares and 25,660,663 shares                     2,569           2,554               2,566
    Capital in excess of par                                           57,927          57,695              57,872
    Retained earnings (deficit)                                         ( 542 )        35,669               2,029
    Deferred compensation - restricted stock                             ( 10 )          ( 33 )              ( 12 )
    Accumulated other comprehensive loss                              ( 9,453 )       ( 8,806 )           ( 9,276 )
                                                                   -----------------------------------------------------
      Total Stockholders' Equity                                       86,850         123,813              86,610
                                                                   -----------------------------------------------------
                                                                   $  340,622      $  421,587         $   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>

                                                                                       THIRTEEN          Thirteen
                                                                                     WEEKS ENDED       Weeks Ended
                                                                                   MARCH 31, 2002     April 1, 2001
---------------------------------------------------------------------------------------------------------------------
                                                                                    (UNAUDITED)        (Unaudited)
<S>                                                                                <C>                <C>
CASH USED IN OPERATIONS                                                            $      ( 2,986 )   $     ( 7,480 )
                                                                                  --------------------------------------
INVESTING
   Investments in and advances to unconsolidated affiliates                                     -             ( 797 )
   Proceeds from sale of property, plant and equipment                                        874             2,199
   Capital expenditures                                                                     ( 687 )         ( 1,337 )
                                                                                  --------------------------------------
    Cash provided by investing                                                                187                65
                                                                                  --------------------------------------

FINANCING
   Decrease in checks issued in excess of deposits                                        ( 2,975 )         ( 2,214 )
   Principal borrowings on long-term debt                                                   6,564            10,000
   Proceeds from issuance of common stock                                                      58                67
   Dividends paid - Class A Preferred                                                        ( 91 )            ( 59 )
   Redemption of Class A Preferred stock                                                    ( 992 )           ( 681 )
                                                                                  --------------------------------------
    Cash provided by financing                                                              2,564             7,113
                                                                                  --------------------------------------
    Net change in cash                                                                      ( 235 )           ( 302 )

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

Cash at End of Period                                                              $          294     $       2,574
                                                                                  --------------------------------------

Supplemental Disclosures of Additional Cash Flow Information:
Cash payments for:
   Interest                                                                        $        6,550     $       6,618
                                                                                  --------------------------------------
   Income taxes, net of refunds                                                    $            -     $         169
                                                                                  --------------------------------------
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  March  31,  2002 and April 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 March 31,
2002,  April  l,  2001 and  December  30,  2001,  and the  related  consolidated
condensed  statements of operations  and cash flows for the thirteen weeks ended
March 31,  2002 and April 1, 2001.  All  adjustments  are of a normal  recurring
nature with the exception of those  reclassifications  made in  connection  with
discontinued  operations.  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 March  31,  2002  and  April 1,  2001 and  related  consolidated
condensed  statements of operations  for the thirteen weeks then ended are based
on certain estimates relating to quantities and cost as of the end of the fiscal
year.

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.  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.

                                       6
<PAGE>


As of March 31, 2002 and April 1, 2001, the total amount of advances of proceeds
from the sale of  receivables  under the A/R  Securitization  Facility was $31.7
million and $50.2 million,  respectively.  In addition, as of March 31, 2002 and
April 1, 2001,  included in accounts  receivable  were deferred  purchase  price
receivables  under the A/R  Securitization  Facility of $16.6  million and $39.2
million,  respectively.  The table below summarizes certain cash flows under the
securitization  for the fiscal  quarters ended March 31, 2002 and April 1, 2001:
(in thousands)

                                                         3/31/02       4/1/01
                                                        -----------------------
Proceeds from securitizations                           $ 30,911    $   8,610
Reductions due to change in level of receivables
  sold                                                  ( 36,140 )   ( 14,153 )
Daily yield paid                                           ( 451 )      ( 935 )
Servicing fees paid                                        ( 141 )      ( 209 )
Servicing fees received                                      141          220



Note 3.  Inventories
(in thousands)                              3/31/02       4/1/01     12/30/01
                                           ------------------------------------
Greige and finished goods                  $ 37,384     $ 67,642    $  35,811
Work in process                               3,816        6,755        5,084
Raw materials                                 9,334       18,574       10,779
Supplies and other                            9,800       10,746       10,383
                                           ------------------------------------
                                           $ 60,334     $103,717    $  62,057
                                           ------------------------------------


Note 4.  Long-Term Debt
(in thousands)                              3/31/02       4/1/01     12/30/01
                                           ------------------------------------
Senior Note                                $ 26,720     $ 28,946    $  27,155
Revolving Credit Agreement                   55,000       65,000       48,000
8-1/8% Debentures                            98,686       95,725       98,575
                                           ------------------------------------
                                            180,406      189,671      173,730
Less current maturities                      81,720       83,495        3,075
                                           ------------------------------------
                                           $ 98,686     $106,176    $ 170,655
                                           ------------------------------------

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.

                                       7
<PAGE>



Note 5.  Class A Preferred Stock

On February 13, 2002,  Cone  declared a 12.00% 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.

Note 6.  Depreciation and Amortization

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

                                              Thirteen            Thirteen
                                            Weeks Ended         Weeks Ended
(in thousands)                                3/31/02              4/1/01
                                            --------------------------------

Depreciation                                $    5,049          $    5,509
Amortization                                        23                  30
                                            --------------------------------
                                            $    5,072          $    5,539
                                            --------------------------------


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:

                                              Thirteen            Thirteen
                                            Weeks Ended         Weeks Ended
(in thousands)                                3/31/02              4/1/01
                                            --------------------------------

Depreciation                                $        -          $       47
Amortization                                         -                   1
                                            --------------------------------
                                            $        -          $       48
                                            --------------------------------

                                       8
<PAGE>


Note 7.  Income (Loss) Per Share

The  following  table sets forth the  computation  of basic and  diluted  income
(loss) per common share ("EPS").
<TABLE>
<CAPTION>
                                                                         Thirteen               Thirteen
                                                                        Weeks Ended            Weeks Ended
(in thousands, except per share data)                                     3/31/02                4/1/01
                                                                       --------------------------------------
<S>                                                                     <C>                    <C>

Income (loss) from continuing operations                                $     1,440            $     ( 902 )
Preferred stock dividends                                                   ( 1,032 )              ( 1,000 )
                                                                       --------------------------------------
Income (loss) from continuing operations available
    to common stockholders                                                      408                ( 1,902 )
Net loss from discontinued operations                                             -                ( 2,001 )
                                                                       --------------------------------------
Basic EPS - income (loss) available to common
    stockholders                                                                408                ( 3,903 )
Effect of dilutive securities                                                     -                      -
                                                                       --------------------------------------
Diluted EPS - income (loss) available to common
    stockholders after assumed conversions                              $       408            $   ( 3,903 )
                                                                       --------------------------------------

Determination of shares:
Weighted-average shares                                                      25,675                 25,533
Contingently issuable (unvested restricted shares)                              ( 8 )                 ( 15 )
                                                                       --------------------------------------
Basic EPS - weighted-average shares                                          25,667                 25,518
Effect of dilutive securities                                                   343                      -
                                                                       --------------------------------------
Diluted EPS - adjusted weighted-average shares after
    assumed conversions                                                      26,010                 25,518
                                                                       --------------------------------------

Earnings (loss) per share - basic and diluted:
    Income (loss) from continuing operations                            $      0.02            $    ( 0.07 )
    Loss from discontinued operations                                             -                 ( 0.08 )
                                                                       --------------------------------------
    Earnings (loss) per share - basic and diluted                       $      0.02            $    ( 0.15 )
                                                                       --------------------------------------
</TABLE>
There were no potentially  dilutive common stock options outstanding at April 1,
2001.

Note 8.  Segment Information

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

Operating  income  (loss)  for each  segment  is total  revenue  less  operating
expenses  applicable  to  the  segment.  Intersegment  revenue  relates  to  the
commission  finishing  segment.  Equity in earnings  (losses) of  unconsolidated
affiliates is included in the denim segment.  Unallocated expenses, interest and
income tax  expense  (benefits)  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.

                                       9
<PAGE>


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

<TABLE>
<CAPTION>
                                                                   Thirteen              Thirteen
                                                                 Weeks Ended           Weeks Ended
(in thousands)                                                     3/31/02                4/1/01
                                                               --------------------------------------
<S>                                                              <C>                   <C>
NET SALES
  Denim                                                          $   82,115            $  106,152
  Commission Finishing                                               15,159                19,349
  Decorative Fabrics                                                 10,319                11,136
  Other                                                                  62                   119
                                                               --------------------------------------
                                                                    107,655               136,756
Less Intersegment Sales                                               1,835                 4,095
                                                               --------------------------------------
                                                                 $  105,820            $  132,661
                                                               --------------------------------------
INCOME (LOSS) FROM OPERATIONS
  Denim                                                          $    5,781            $    5,058
  Commission Finishing                                                1,056                 ( 613 )
  Decorative Fabrics                                                    516                 ( 133 )
  Other                                                               ( 368 )                ( 80 )
  Unallocated Expenses                                                ( 356 )               ( 733 )
                                                               --------------------------------------
                                                                      6,629                 3,499
  Less Equity in Earnings (Losses) of
    Unconsolidated Affiliates                                          ( 47 )                 349
                                                               --------------------------------------
                                                                      6,676                 3,150
Other Expense, Net                                                  ( 4,755 )             ( 5,074 )
                                                               --------------------------------------
Income (Loss) from Continuing Operations
    before Income Tax Expense (Benefit)
    and Equity in Earnings (Losses) of
    Unconsolidated Affiliates                                    $    1,921            $  ( 1,924 )
                                                               --------------------------------------
</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: (in thousands)

<TABLE>
<CAPTION>
                                                                   Thirteen              Thirteen
                                                                 Weeks Ended           Weeks Ended
                                                                   3/31/02               4/1/01
                                                               --------------------------------------
<S>                                                              <C>                    <C>

Net income (loss)                                                $    1,440            $  ( 2,903 )
Other comprehensive income (loss),
    cotton derivatives gains (losses)                                 ( 177 )                 963
                                                               --------------------------------------
                                                                 $    1,263            $  ( 1,940 )
                                                               --------------------------------------
</TABLE>

                                       10
<PAGE>


Cotton derivatives gains (losses) as of March 31, 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 in expense related to
amortization  of this  adjustment  to the carrying  value of debt for the fiscal
quarter ended April 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 fiscal  quarter ended
April 1, 2001,  Cone  recognized  a gain on the change in the fair value of this
derivative instrument of $0.5 million, which is reflected in the "Other expense"
caption on the consolidated  condensed statements of operations.  As of April 1,
2001,  the interest rate swap had an estimated fair market value of $2.2 million
and was recorded in other long-term  liabilities on the  consolidated  condensed
balance sheet.  Effective  October 4, 2001, the interest rate swap agreement was
terminated for a total cost of $50,000.

Cash Flow Hedging Strategy

Cotton is the primary raw material for Cone's fabric  manufacturing  operations.
Cone has an established cotton purchasing  program,  administered in conformance
with  policies  approved by the Board of Directors,  to ensure an  uninterrupted
supply of appropriate  quality and quantities of cotton,  to cover committed and
anticipated  fabric  sales and to manage  margin  risks  associated  with  price
fluctuations  on  anticipated  cotton  purchases.  Cone  primarily  uses forward
purchase contracts and, to a lesser extent,  futures and option contracts.  Cone
considers its cotton derivatives to be primarily cash flow hedges of anticipated
future  transactions  under SFAS No. 133. The  effective  portion of  derivative
gains and losses for these hedges is initially  reported as a component of other
comprehensive  income  (loss)  outside  results of operations  and  subsequently
reclassified into results of operations when the forecasted  transactions  being
hedged  affect  results of  operations.  At March 31,  2002,  Cone  recorded  in
accumulated  other  comprehensive  income (loss) cotton derivative gains, net of
deferred tax  benefits,  of $0.1  million.  At April 1, 2001,  Cone  recorded in
accumulated  other  comprehensive  income (loss) cotton derivative gains, net of
deferred taxes, of $1.0 million. Gains of $0.4 million were credited to cost of

                                       11
<PAGE>


goods sold during both  thirteen  week periods ended March 31, 2002 and April 1,
2001.  The  ineffective  portion of  derivative  gains and losses is reported in
results of operations immediately. Hedge ineffectiveness for the fiscal quarters
ended March 31, 2002 and April 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
quarters ended March 31, 2002 and April 1, 2001 follows: (in thousands)

<TABLE>
<CAPTION>
                                               Corporate
                                               & Textile
                                                Products
                                                 Group                    Raytex                 Total
                                             ----------------------------------------------------------------
<S>                                            <C>                       <C>                    <C>

Balance, December 30, 2001                     $    639                  $     -                $  639

Deductions:
Terminal leave and related benefits               ( 426 )                     -                  ( 426 )
                                             ----------------------------------------------------------------

Balance, March 31, 2002                        $    213                  $     -                $  213
                                             ----------------------------------------------------------------


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

Deductions:
Terminal leave and related benefits                   -                    ( 248 )               ( 248 )
                                             ----------------------------------------------------------------

Balance, April 1, 2001                         $      -                  $   716                $  716
                                             ----------------------------------------------------------------
</TABLE>

Note 12  Discontinued Operations

In  accordance  with  the  provisions  of  SFAS  No.  144,  "Accounting  for the
Impairment or Disposal of Long-Lived  Assets," Cone recorded in fiscal year 2001
the operating  results of its khaki business and the John Wolf converted fabrics
business  as  discontinued  operations.  Cone  will  not  have  any  significant
continuing involvement in the operations of these businesses.

                                       12
<PAGE>


Amounts of net sales and losses from  discontinued  operations  for the thirteen
weeks ended April 1, 2001, were as follows: (in thousands)


Net Sales
  John Wolf                                    $     5,699
  Khaki                                              9,175
                                               -------------
                                               $    14,874
                                               -------------

Pretax Loss from Discontinued Operations
  John Wolf                                    $   ( 1,203 )
  Khaki                                            ( 1,876 )
                                               -------------
                                                   ( 3,079 )

Income Tax Benefit                                   1,078
                                               -------------
Net Loss from Discontinued Operations          $   ( 2,001 )
                                               -------------


Note 13.  Income Tax Benefits

The  effective  tax rate of 23% for the thirteen  weeks ended March 31, 2002, is
lower  than  the   statutory   rate  of  35%   because  of  the  effect  of  the
extraterritorial  income  exclusion  related to export sales.  The effective tax
rate for the thirteen weeks ended April 1, 2001, was 35%.


                                       13
<PAGE>


Item 2.

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

OVERVIEW

During the first quarter of 2002, the economic environment that Cone operated in
improved  substantially  from fourth  quarter  2001 with U.S.  GDP growing at an
estimated  annual  rate of 5.8%.  Cone  began  seeing a  recovery  in its  denim
business in January 2002 resulting in improved manufacturing operating schedules
for the balance of the first quarter of 2002. The overall  environment  for U.S.
textiles  remains  challenging as a result of the relative  strength of the U.S.
dollar,  retail consolidation and continued price pressures on apparel products.
In April 2002, Levi Strauss & Co. ("Levi"),  Cone's largest customer,  announced
the closing of its owned and operated U.S.  apparel  operations with the planned
transition  to sourcing  garments from Mexico and Central  America  contractors.
This announcement by Levi follows similar moves by other apparel companies, such
as VF Corporation,  which announced similar plans in the fourth quarter of 2001.
Cone  currently  does  business with most of the major  apparel  contractors  in
Mexico and Central America and does not expect Levi's announcement to change its
fabric sourcing practices.

First  quarter  results were the result of improved  manufacturing  performance,
cost savings from  initiatives  undertaken as part of the 2001  Reinvention Plan
and improved denim demand.  Assuming improved economic  conditions  continue and
denim demand remains at current levels,  Cone expects improved operating results
for the second and third  quarters.  In  addition,  Cone expects to benefit from
traditionally  stronger  demand in these quarters and lower cotton costs,  which
will be partially offset by lower denim sales prices. The improvement in results
of Cone's Carlisle and jacquard businesses are also dependent upon the continued
strength of the economy as furniture  related markets typically rebound later in
an economic cycle than apparel.

Cone  remains  focused on its  strategy to grow its denim  business by expanding
capacity in Mexico.  The  announcement by Levi to source product from Mexico and
Central America  validates the need to execute such a strategy long term. During
the first quarter of 2002,  Guilford  Mills,  Inc.,  Cone's partner in the joint
venture industrial park in Altamira,  Tamaulipas,  Mexico,  filed for protection
under Chapter 11 of the Federal  Bankruptcy Code.  Capital  requirements for the
industrial park infrastructure  were completed in early 2001.  Subsequent to its
bankruptcy  filing,  Guilford  announced  its decision to close its plant on its
property within the industrial park.  Guilford's  decision to exit manufacturing
at the Altamira site does not change Cone's commitment to build a denim plant on
its  property  with an initial  capacity of 20 million  yards when  financing is
available.  Depending upon the ultimate size and configuration,  Cone expects to
invest  between  $60 and $90 million in the initial  denim  facility.  The funds
required  for the denim  facility  will  require  debt or equity  financing  and

                                       14
<PAGE>


certain modifications to its current debt structure and lending agreements. Cone
has not arranged  financing or modified its debt structure or lending agreements
to date,  and there can be no assurance that such financing 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

First Quarter Ended March 31, 2002 Compared with First Quarter Ended April 1,
2001

For the first  quarter of 2002,  Cone had sales of $105.8  million,  as compared
with sales of $132.7 million for the first quarter of 2001 or a 20.2%  decrease.
The decrease in sales was  attributable to lower denim and home decorative sales
revenues and the closing of the Raytex operation in the first quarter of 2001.

Gross  profit for the first  quarter  of 2002  increased  to 13.5% of sales,  as
compared to 9.5% of sales for the previous  year.  The  improvement in the gross
profit margin was attributable to cost savings and profit  improvements  derived
from the 2001 Reinvention  Plan  initiatives as well as favorable  manufacturing
variances reflecting increased 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 of $82.1 million declined by 22.6% in the
          first quarter  2002,  as compared to the first quarter of 2001.  Sales
          yards were down 15.9%,  as  compared  with first  quarter of 2001,  as
          fourth quarter 2001 market  weakness  continued into the first part of
          the quarter.  Sales prices,  on a percentage  basis,  were down in the
          mid-single  digits, as compared with the prior year, and sales mix was
          also slightly less  favorable.  Operating  income was $5.8 million for
          the first  quarter,  as compared  with $5.1 million for the prior year
          quarter.  The  improvement  in  operating  income  on less  volume  is
          attributable to Reinvention  Plan savings and favorable  manufacturing
          variances.  Cotton cost  savings were offset by the decline in average
          selling  prices.  Cotton  futures prices fell  substantially  from the
          first quarter of 2001 to the end of the first quarter of 2002, from an

                                       15
<PAGE>


          estimated  $.60 per pound to  approximately  $.40 per pound.  However,
          Cone buys its cotton  forward  and as a result of lower than  expected
          2001 sales volume it was still consuming cotton originally  contracted
          to be purchased in 2001 during the first quarter of 2002. Cone expects
          to  realize  greater  benefits  of lower  cotton  prices in the second
          quarter of 2002.  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,
          Cone's joint venture  plant in Mexico,  was $0.1 million for the first
          quarter of 2002,  as compared  with $0.3 million for the first quarter
          of 2001.  Parras Cone results were negatively  impacted by lower sales
          prices  that were not fully  offset by reduced  cotton  costs.  In the
          first quarter of 2002,  Cone also recorded  equity in losses of ASISA,
          its joint venture industrial park in Altamira,  Tamaulipas, Mexico, of
          $0.1 million.

         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 for the first quarter of 2002 were  essentially flat
         with the prior  year  after  eliminating  the 2001  results  of Raytex.
         Carlisle  sales volume  continues to benefit from market  consolidation
         offset by  economically  sensitive home  decorative  markets and import
         penetration in apparel and specialty products. For the first quarter of
         2002 the segment  reported a profit of $1.1  million,  as compared with
         breakeven  results  in the first  quarter of 2001  after  removing  the
         Raytex  results,  which included  run-out and plant closure costs.  The
         improvement in the segment's operating income is primarily attributable
         to  improved  operating  efficiencies  and  quality,  Reinvention  Plan
         savings and reduction in energy costs.

         DECORATIVE FABRICS. For the first quarter of 2002, sales revenue of the
         decorative  fabrics  segment was $10.3 million,  down 7.3%, as compared
         with the first quarter of 2001 sales revenue. An improved sales mix and
         higher  average  selling  prices  were  more  than  offset  by a  16.7%
         reduction in sales  volume.  The reduction in sales volume is partially
         attributable  to the  decision to relocate  certain  looms to the denim
         operation in the second half of 2001.  Cone  Jacquards  operated a full
         normal  operating  schedule  in the  first  quarter  of  2002.  Segment
         operating  income  improved to $0.5  million,  as compared with a small
         loss in 2001, primarily as a result of continuous cost control efforts.

Selling and  administrative  expenses for the first  quarter of 2002 declined to
$7.6 million,  as compared  with $9.4 million for the prior year first  quarter.
Selling and  administrative  expenses were 7.2% of sales in the first quarter of
2002,  as  compared  to 7.1%  for  the  comparable  2001  quarter.  Selling  and
administrative  expenses  for  the  first  quarter  of  2002  were  higher  as a
percentage  of sales as a result of lower sales  prices,  lower sales volume and
compensation expenses related to improved operating performance.

                                       16
<PAGE>


Interest  expense for the first  quarter of 2002 was $4.3  million,  as compared
with $4.6  million for the first  quarter of 2001.  Benefits  from lower  market
interest  rates and lower  borrowings  outstanding  were  partially  reduced  by
increased rates under the lending agreements.  Other expenses of $0.5 million in
the  first  quarter  of  2002  include  the  ongoing  expenses  of the  accounts
receivable  securitization program, as compared to other expense of $0.6 million
in the first  quarter  of 2001,  which  included  the  ongoing  expenses  of the
accounts  receivable  securitization  program  as  well as  amortization  of the
transition  amount  related to recording an interest rate swap and the valuation
adjustment of the interest rate swap  derivative  instrument.  The interest rate
swap was terminated in the fourth quarter of 2001.

The  effective  tax  rate for the  first  quarter  of 2002 was 23%  versus a tax
benefit  of 35% for the first  quarter of 2001.  Tax  benefits  of export  sales
significantly reduced the effective tax rate for the first quarter of 2002.

For the first  quarter of 2002,  Cone had a net profit $1.4  million or $.02 per
share after preferred dividends. For comparison,  for the first quarter of 2001,
Cone  reported  a loss of  $2.9  million  or  $.15  per  share  after  preferred
dividends.  First quarter 2001 results from continuing  operations was a loss of
$1.0 million or $.07 per share after preferred dividends.

LIQUIDITY AND CAPITAL RESOURCES

Cone's principal  long-term 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.

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

                                       17
<PAGE>


The following is a summary of primary financing agreements as of March 31, 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                                  26.7               26.7            13.700            Jan 15, 2003
Revolving Credit Facility                    67.5               55.0             8.750            Jan 15, 2003
A/R Securitization Facility                  60.0               31.7             5.320            Sept 1, 2004
</TABLE>

At March 31, 2002, Cone had availability under its financing agreements of $15.3
million.   Availability   under  the  Revolving  Credit  Facility  and  the  A/R
Securitization  Facility is determined by overall facility commitment levels and
borrowing  base   calculations,   as  defined  in  the  respective   agreements.
Availability  under these  agreements  averaged in excess of $20 million for the
month of April 2002.  During the first quarter of 2002,  cash used in operations
was $3.0 million as cash generated was offset by an increase of $12.8 million in
accounts  receivable  primarily as a result of a recovery in business  activity.
During the first quarter of 2002, Cone invested in capital  expenditures of $0.7
million and sold $0.9 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.

On March 31,  2002,  Cone's  long-term  capital  structure  consisted  of $180.4
million of long-term debt  (including  current  maturities) and $86.9 million of
stockholders' equity. For comparison,  Cone had $189.7 million of long-term debt
(including  current  maturities) and $123.8 million of  stockholders'  equity at
April 1, 2001.

                                       18
<PAGE>


Accounts  receivable  on March 31, 2002,  were $41.2  million,  as compared with
$47.0 million at April 1, 2001.  Receivables,  including  those sold pursuant to
the A/R  Securitization  Facility,  represented 65 days of sales  outstanding at
March 31, 2002 and 62 days at April 1, 2001. Advances  outstanding under the A/R
Securitization  Facility  were $31.7 million at March 31, 2002 and $50.2 million
at April 1, 2001.

Inventories on March 31, 2002 were $60.3 million, as compared with $62.1 million
at December 30, 2001 as slight increases in finished goods inventories were more
than offset by reductions in raw materials and work-in-process  inventories. For
comparison purposes,  inventories at April 1, 2001 were $103.7 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

On May 13, 2002, Cone and Levi Strauss amended the exclusivity and  requirements
features of their Supply Agreement  relating to the denim used worldwide in Levi
Strauss' 501(R) jeans.  The amendment  provides that, after March 30, 2003, Cone
may sell these denims to customers in addition to Levi Strauss, and Levi Strauss
may purchase these denims from other  suppliers.  The amendment also allows Levi
Strauss to purchase these denims for its European business from non-U.S. sources
prior to March  30,  2003 if the  European  Union  implements  material  tariffs
against  U.S.  produced  denim  prior to this date.  While  denim was  initially
included in the European Union's list of products for a 30% percent  retaliatory
tariff in response to U.S. steel tariffs,  it has subsequently been removed from
the list.  The  amendment  does not  change any other  provisions  of the Supply
Agreement.

A variety of factors,  including  the  inclusion of denim in the initial list of
products  to  be  subject  to  retaliatory  tariffs,  caused  the  companies  to
re-examine the  exclusivity  relationship.  The amendment gives Levi Strauss the
ability  to  source  denim for its  501(R)  jeans  business  in Europe on a more
tariff-friendly basis. More broadly, the amendment is consistent with the desire
of both  companies to manage risks  associated  with single  supplier and single
customer  relationships on a key product,  and reflects changing worldwide trade
patterns.

Since  1999,  Cone has  disclosed  that its  strategic  plan is to build a denim
facility  in  Altamira,  Tamaulipas,  Mexico  to  supply  denim to  Europe  on a
duty-free basis and to grow its market share in North America.  The execution of
this plan has been delayed by the inability of Cone to  restructure  its balance
sheet  and fund the  construction  of the denim  facility.  In  addition  to its
strategic goal of supplying  denims to Europe from Mexico on a duty-free  basis,
Cone is in the process of forming a joint venture to sell denim  manufactured in
Turkey for Levi Strauss' 501(R) jeans in Europe on a tariff-friendly  basis. The
proposed joint venture could supply Levi Strauss'  European  business with denim
as early as the third quarter of 2002.

                                       19
<PAGE>


The amendment does not affect Cone's supply of other products to Levi Strauss or
its overall close working  relationship  with Levi Strauss in developing new and
innovative  products.  Cone  anticipates  that orders from Levi  Strauss for the
balance of 2003 and the timing for the end of contractual  exclusivity on fabric
supplies for 501(R) jeans will  provide  Cone with the time and  opportunity  to
continue  to supply a large  percentage  of the denim for Levi  Strauss'  501(R)
jeans in Europe after March 30, 2003. Given the long-term  relationship  between
the  parties  and Cone's  expectations  for Levi  Strauss  orders in 2003,  Cone
believes  that,  if it is  able  to  successfully  complete  a  recapitalization
including  obtaining  funding for  expansion in Mexico,  it will be able to meet
successfully  changes  in  sourcing  practices  for Levi  Strauss  and its other
customers in the U.S. and European markets.  However, there is no assurance that
Cone will be able to compete  effectively  through the  proposed  joint  venture
relationship  in Turkey or finance and  construct a denim  facility in Altamira,
Tamaulipas,  Mexico to supply these or other  denims,  and the  amendment to the
Supply  Agreement  may have a material  adverse  impact  upon  Cone's  financial
position and results of operations.

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 (in thousands):

                                                      Thirteen Weeks Ended
                                                   3/31/02            4/1/01
                                               ---------------------------------
Income from continuing operations                  $   6,676          $   3,150
Depreciation and amortization                          5,072              5,539
                                               ---------------------------------
EBITDA                                                11,748              8,689
50% of Parras Cone's EBITDA                            1,242              1,659
                                               ---------------------------------
Pro Forma EBITDA                                   $  12,990          $  10,348
                                               ---------------------------------

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 March 31, 2002, no significant litigation existed.

                                       20
<PAGE>


"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, and
         (vii)  Cone's  inability  to  continue  the  cost  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.

                                       21
<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.  Due to 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 March 31, 2002, no significant litigation existed.

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

                                       22
<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).

                                       23
<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.

                                       24
<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.

                                       25
<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.

                                       26
<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.

*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.

                                       27
<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.

                                       28
<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.

                                       29
<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.

                                       30
<PAGE>


Exhibit
  No.     Description

*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.

*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.

                                       31
<PAGE>


Exhibit
  No.     Description

*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).

*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.


                                       32
<PAGE>


Exhibit
  No.     Description

*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.

*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).

                                       33
<PAGE>


Exhibit
  No.     Description

*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.

*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.

                                       34
<PAGE>


Exhibit
  No.     Description

*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.

*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 LeviStrauss dated as of March 30, 1992.

*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.

                                       35
<PAGE>


Exhibit
  No.     Description

*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.

*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  and schedules  included in
          this Annual Report on Form 10-K.

**99.1    Financial Statements of Parras Cone de Mexico, S.A. de C.V.

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

*Incorporated by reference to the statement or report indicated.

**To be filed by amendment.

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.

                                       36
<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:  May 14, 2002                              /s/Gary L.Smith
                                                 Gary L. Smith
                                                 Executive Vice President and
                                                 Chief Financial Officer




                                       37
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