Page 1 of 32
                                                  Index to Exhibits-Pages 24-30


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

                                  FORM 10-Q

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

For the quarterly period ended  July 4, 1999

                                      OR

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

For the Transition period from             to

Commission file number    1-3634


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

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

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

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

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

Number of shares of common stock outstanding as of July 29, 1999:
25,485,517 shares.

                                        1

<PAGE>

                              CONE MILLS CORPORATION

                                       INDEX

                                                                        Page
                                                                        Number

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated Condensed Statements of Operations
               Thirteen and twenty-six weeks ended July 4, 1999
               and June 28, 1998 (Unaudited).................................3

         Consolidated Condensed Balance Sheets
               July 4, 1999 and June 28, 1998 (Unaudited)
               and January 3, 1999...........................................4

         Consolidated Condensed Statements of Cash Flows
               Twenty-six weeks ended July 4, 1999
               and June 28, 1998 (Unaudited).................................5

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

Item 2.  Management's Discussion and Analysis of
               Financial Condition and Results of Operations................13

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.........20


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings..................................................21
Item 4.  Submission of Matters to a Vote of Security Holders................22
Item 5.  Other Information..................................................22
Item 6.  Exhibits and Reports on Form 8-K...................................23

                                        2
<PAGE>

Item 1.                                               Part I

                                CONE MILLS CORPORATION AND SUBSIDIARIES
                            CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                 (in thousands, except per share data)
<TABLE>
<S>                                                  <C>             <C>            <C>            <C>

                                                        Thirteen        Thirteen      Twenty-Six     Twenty-Six
                                                       Weeks Ended     Weeks Ended    Weeks Ended    Weeks Ended
                                                      July 4, 1999    June 28, 1998  July 4, 1999   June 28, 1998
                                                      -------------   -------------  -------------  -------------
                                                       (Unaudited)     (Unaudited)    (Unaudited)    (Unaudited)

Net Sales                                                $ 174,492      $ 197,304       $ 331,749      $ 387,475

Cost of Goods Sold                                         160,249        177,148         302,163        350,192
                                                      -------------   ------------   -------------  -------------

Gross Profit                                                14,243         20,156          29,586         37,283

Selling and Administrative                                  11,725         14,066          25,030         27,821
Restructuring and Impairment of Assets                           -              -          12,917              -
                                                      -------------   ------------   -------------  -------------

Income (Loss) from Operations                                2,518          6,090          (8,361)         9,462
                                                      -------------   ------------   -------------  -------------
Other Income (Expense)
   Interest income                                             446            751             876          1,362
   Interest expense                                         (3,517)        (4,174)         (7,157)        (7,721)
                                                      -------------   ------------   -------------  -------------
                                                            (3,071)        (3,423)         (6,281)        (6,359)
                                                      -------------   ------------   -------------  -------------
Income (Loss) before Income Taxes (Benefit), Equity
   in Earnings of Unconsolidated Affiliate and
   Cumulative Effect of Accounting Change                     (553)         2,667         (14,642)         3,103

Income Taxes (Benefit)                                        (177)           880          (4,967)         1,024
                                                      -------------   ------------   -------------  -------------
Income (Loss) before Equity in Earnings of
   Unconsolidated Affiliate and Cumulative Effect
   of Accounting Change                                       (376)         1,787          (9,675)         2,079

Equity in Earnings of Unconsolidated Affiliate               1,090          1,264           1,957          2,516
                                                      -------------   ------------   -------------  -------------
Income (Loss) before Cumulative Effect of Accounting
   Change                                                      714          3,051          (7,718)         4,595

Cumulative Effect of Accounting Change                           -              -          (1,038)             -
                                                      -------------   ------------   -------------  -------------
Net Income (Loss)                                        $     714      $   3,051       $  (8,756)       $ 4,595
                                                      =============   ============   =============  =============
Income (Loss) Available to Common Shareholders
   Income (Loss) before Cumulative Effect of
     Accounting Change                                   $     (76)     $   2,331       $  (9,228)       $ 3,122
   Cumulative Effect of Accounting Change                        -              -          (1,038)             -
                                                      =============   ============   =============  =============
   Net Income (Loss)                                     $     (76)     $   2,331       $ (10,266)       $ 3,122
                                                      =============   ============   =============  =============
Earnings (Loss) Per Share - Basic and Diluted
   Income (Loss) before Cumulative Effect of
     Accounting Change                                   $       -      $    0.09       $   (0.36)        $ 0.12
   Cumulative Effect of Accounting Change                        -              -           (0.04)             -
                                                      =============   ============   =============  =============
   Net Income (Loss)                                     $       -      $    0.09       $   (0.40)        $ 0.12
                                                      =============   ============   =============  =============
Weighted-Average Common Shares Outstanding
   Basic                                                    25,442         26,166          25,437         26,175
                                                      =============   ============   =============  =============
   Diluted                                                  25,442         26,280          25,437         26,246
                                                      =============   ============   =============  =============
</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>
<S>                                                                <C>             <C>             <C>
                                                                       July 4,         June 28,       January 3,
                                                                        1999            1998            1999
                                                                    -------------   --------------  --------------
                                                                    (Unaudited)      (Unaudited)       (Note)
ASSETS
    Current Assets
      Cash                                                             $   3,992        $   1,609       $     639
      Accounts receivable, less allowances of $3,300; 1998, $1,500        35,184           24,652          26,010
      Subordinated note receivable                                        22,115           44,970          10,414
      Inventories                                                        113,718          123,618         120,430
      Other current assets                                                14,774           23,947          10,253
                                                                    -------------   --------------  --------------
         Total Current Assets                                            189,783          218,796         167,746

    Investments in Unconsolidated Affiliates                              46,408           39,297          45,489
    Other Assets                                                          36,556           36,354          36,616
    Property, Plant and Equipment                                        225,194          251,821         238,666
                                                                    -------------   --------------  --------------

                                                                       $ 497,941        $ 546,268       $ 488,517
                                                                    =============   ==============  ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
    Current Liabilities
      Notes payable                                                    $       -        $   1,500       $   1,000
      Current maturities of long-term debt                                10,714           10,714          10,714
      Accounts payable                                                    38,944           37,480          27,255
      Sundry accounts payable and accrued liabilities                     45,703           47,757          42,071
      Deferred income taxes                                               16,979           20,938          22,670
                                                                    -------------   --------------  --------------

         Total Current Liabilities                                       112,340          118,389         103,710

    Long-Term Debt                                                       171,608          176,878         161,385
    Deferred Income Taxes                                                 31,377           41,964          30,050
    Other Liabilities                                                     10,784           11,080          11,448

    Stockholders' Equity
      Class A preferred  stock - $100 par value;  authorized
         1,500,000  shares; issued and outstanding 395,558 shares;
         1998, 383,948 shares                                             39,556           38,395          38,395
      Class B preferred stock - no par value; authorized
         5,000,000 shares                                                      -                -               -
      Common stock - $.10 par value; authorized 42,700,000
         shares; issued and outstanding 25,485,517 shares;
         1998, 26,165,933 shares and 25,432,233 shares                     2,549            2,617           2,543
      Capital in excess of par                                            57,522           62,049          57,264
      Retained earnings                                                   81,208          104,089          92,799
      Deferred compensation - restricted stock                              (486)            (655)           (579)
      Accumulated other comprehensive loss, currency translation
         adjustment                                                       (8,517)          (8,538)         (8,498)
                                                                    -------------   --------------  --------------
         Total Stockholders' Equity                                      171,832          197,957         181,924
                                                                    -------------   --------------  --------------

                                                                       $ 497,941        $ 546,268       $ 488,517
                                                                    =============   ==============  ==============
</TABLE>
Note:  The balance sheet at January 3, 1999,  has been derived from
         the 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>
<S>                                                                   <C>                  <C>
                                                                          Twenty-Six           Twenty-Six
                                                                          Weeks Ended          Weeks Ended
                                                                         July 4, 1999         June 28, 1998
                                                                       -----------------    ------------------
                                                                          (Unaudited)           (Unaudited)

CASH USED IN OPERATIONS                                                     $ (5,699)             $ (9,869)
                                                                       -----------------    ------------------
INVESTING
     Proceeds from sale of property, plant and equipment                       2,660                 5,017
     Capital expenditures                                                     (3,970)              (16,706)
                                                                       -----------------    ------------------
        Cash used in investing                                                (1,310)              (11,689)
                                                                       ----------------     ------------------
FINANCING
     Net payments under line of credit agreements                             (1,000)               (3,000)
     Increase (decrease) in checks issued in excess of deposits                2,755                (8,488)
     Proceeds from long-term debt borrowings                                  10,000                37,000
     Proceeds from sale of common stock                                          326                     -
     Purchase of outstanding common stock                                        (45)                 (246)
     Dividends paid - Class A Preferred                                          (38)               (2,955)
     Redemption of Class A Preferred stock                                    (1,636)                    -
                                                                       -----------------    ------------------
        Cash provided by financing                                            10,362                22,311
                                                                       -----------------    ------------------
        Net change in cash                                                     3,353                   753

Cash at Beginning of Period                                                      639                   856
                                                                       -----------------    ------------------
Cash at End of Period                                                       $  3,992              $  1,609
                                                                       =================    ==================
Supplemental Disclosures of Additional Cash Flow Information:
Cash payments for:
     Interest                                                               $  7,281              $  7,393
                                                                       =================    ==================
     Income taxes, net of refunds                                           $    482              $    522
                                                                       =================    ==================

Supplemental Schedule of Noncash Investing and Financing Activities:
     Stock dividend - Class A Preferred Stock                               $  2,797              $      -
                                                                       =================    ==================
</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  (the "Company")  consolidated  condensed  financial
statements for July 4, 1999 and June 28, 1998 are unaudited,  but in the opinion
of  management   reflect  all  adjustments   necessary  to  present  fairly  the
consolidated condensed balance sheets of Cone Mills Corporation and Subsidiaries
at  July 4,  1999,  June  28,  1998,  and  January  3,  1999,  and  the  related
consolidated  condensed statements of operations for the respective thirteen and
twenty-six  weeks  ended  July 4, 1999 and June 28,  1998 and cash flows for the
twenty-six weeks then ended.  All adjustments are of a normal recurring  nature.
The results are not necessarily indicative of the results to be expected for the
full year.

These  statements  should  be read in  conjunction  with the  audited  financial
statements  and related notes  included in the  Company's  annual report on Form
10-K for fiscal year 1998.

Inventories  are stated at the lower of cost or market.  The last-in,  first-out
(LIFO) method is used to determine cost of most domestically produced goods. The
first-in, first-out (FIFO) or average cost methods are used to determine cost of
all other inventories. Because amounts for inventories under the LIFO method are
based  on an  annual  determination  of  quantities  as  of  the  year-end,  the
inventories at July 4, 1999 and June 28, 1998 and related consolidated condensed
statements of operations  for the thirteen and  twenty-six  weeks then ended are
based on certain estimates  relating to quantities and cost as of the end of the
fiscal year.

Note 2.  Inventories
<TABLE>
<S>                                <C>               <C>              <C>

(in thousands)                         7/4/99           6/28/98           1/3/99

Greige and finished goods           $  81,031         $  79,589        $  87,087
Work in process                         6,993            10,602            9,810
Raw materials                          14,331            20,664           11,508
Supplies and other                     11,363            12,763           12,025
                                      -------           -------          -------
                                    $ 113,718         $ 123,618        $ 120,430
                                      =======           =======          =======
Note 3.  Long-Term Debt

(in thousands)                         7/4/99           6/28/98           1/3/99

Senior Note                         $  42,858         $  53,572        $  42,858
Revolving Credit Agreement             42,000            37,000           32,000
8 1/8% Debentures                      97,464            97,020           97,241
                                      -------           -------          -------
                                      182,322           187,592          172,099
Less current maturities                10,714            10,714           10,714
                                      -------           -------          -------
                                    $ 171,608         $ 176,878        $ 161,385
                                      =======           =======          =======
</TABLE>
                                        6
<PAGE>

Note 4.  Class A Preferred Stock

On  February  11,  1999,  the  Company  declared  a 7.5% stock  dividend  on the
Company's Class A Preferred Stock which was paid on March 31, 1999. The dividend
was charged to retained  earnings in the amount of  approximately  $2.8 million.
The 2000  dividend rate for Class A Preferred  Stock is 8.0%,  payable March 31,
2000.

Note 5.  Depreciation and Amortization

The following  table  presents  depreciation  and  amortization  included in the
statements of operations.
<TABLE>
<S>           <C>             <C>             <C>            <C>
                Thirteen        Thirteen       Twenty-Six     Twenty-Six
               Weeks Ended     Weeks Ended     Weeks Ended    Weeks Ended
                 7/4/99          6/28/98          7/4/99        6/28/98

Depreciation     $ 5,902         $ 7,049        $ 13,092       $ 14,223
Amortization         674             674           1,350          1,349
                   -----           -----          ------         ------
                 $ 6,576         $ 7,723        $ 14,442       $ 15,572
                   =====           =====          ======         ======
</TABLE>
                                      7
<PAGE>

Note 6.  Earnings (Loss) Per Share

The following table sets forth the computation of basic and diluted earnings
(loss) per share ("EPS").
<TABLE>
<S>                                             <C>              <C>
(in thousands, except                             Thirteen         Thirteen
  per share data)                                Weeks Ended      Weeks Ended
                                                   7/4/99           6/28/98

Net income                                         $    714         $ 3,051

Preferred stock dividends                              (790)           (720)
                                                      -----           -----

Basic EPS - income (loss) available
  to common shareholders                               ( 76)          2,331
Effect of dilutive securities                             -               -
                                                     ------           -----

Diluted EPS - income (loss) available to
  common shareholders after assumed
  conversions                                      $   ( 76)       $  2,331
                                                     ======           =====

Determination of shares:

Basic EPS - weighted-average shares                  25,442          26,166

Effect of dilutive securities                             -             114
                                                     ------          ------

Diluted EPS - adjusted weighted-average
  shares after assumed conversions                   25,442          26,280
                                                     ======          ======

Earnings (loss) per share - basic and diluted      $      -        $   0.09
                                                     ======          ======
                                    8

<PAGE>



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

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

(in thousands, except                            Twenty-Six       Twenty-Six
  per share data)                                Weeks Ended      Weeks Ended
                                                    7/4/99          6/28/98

Income (loss) before cumulative                    $ (7,718)       $ 4,595
  effect of accounting change

Preferred stock dividends                            (1,510)        (1,473)
                                                    -------         ------
Income (loss) available to common
  shareholders before cumulative
  effect of accounting change                        (9,228)         3,122

Cumulative effect of accounting change               (1,038)             -
                                                     ------          -----

Basic EPS - income (loss) available
  to common shareholders                            (10,266)         3,122

Effect of dilutive securities                             -              -
                                                     ------          -----

Diluted EPS - income (loss) available to
  common shareholders after assumed
  conversions                                      $(10,266)       $ 3,122
                                                     ======          =====

Determination of shares:

Basic EPS - weighted-average shares                  25,437         26,175

Effect of dilutive securities                             -             71
                                                     ------         ------

Diluted EPS - adjusted weighted-average
  shares after assumed conversions                   25,437         26,246
                                                     ======         ======

Earnings (loss) per share - basic and diluted
  Income (loss) before cumulative effect
    of accounting change                           $ ( 0.36)       $  0.12
  Cumulative effect of accounting change             ( 0.04)             -
                                                     ------         ------

  Net income (loss)                                $ ( 0.40)       $  0.12
                                                     ======         ======
</TABLE>
Common stock options outstanding at July 4, 1999 were not included in the
computation of diluted earnings per share because to do so would have been
antidilutive.

                                      9

<PAGE>

Note 7.  Segment Information

The Company has four principal business segments which are based upon
organizational structure: 1) denim and khaki; 2) yarn-dyed products; 3)
commission finishing; and 4) 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 of unconsolidated  affiliate is
included in the denim and khaki segment.  Restructuring  and impairment of asset
expenses,  unallocated expenses, interest, income taxes and cumulative effect of
accounting change are not included in segment operating income (loss).

Net sales and income (loss) from operations for the Company's operating segments
are as follows:
<TABLE>
<S>                                              <C>              <C>
(in thousands)                                     Thirteen         Thirteen
                                                  Weeks Ended      Weeks Ended
                                                    7/4/99           6/28/98
Net Sales
     Denim and Khaki                               $ 127,238        $ 146,359
     Yarn-Dyed Products                                6,565           12,353
     Commission Finishing                             26,403           28,082
     Decorative Fabrics                               17,763           13,671
     Other                                               428            1,753
                                                     -------          -------
                                                     178,397          202,218
     Less Intersegment Sales                           3,905            4,914
                                                     -------          -------
                                                   $ 174,492        $ 197,304
                                                     =======          =======
Income (Loss) from Operations
     Denim and Khaki                               $   7,251        $  14,880
     Yarn-Dyed Products                                 (528)          (1,891)
     Commission Finishing                             (1,716)          (3,625)
     Decorative Fabrics                                  369             (193)
     Other                                               (29)             (26)
     Unallocated Expenses                             (1,739)          (1,791)
                                                     -------          -------
                                                       3,608            7,354
     Restructuring and Impairment of Assets                -                -
                                                     -------          -------
                                                       3,608            7,354
   Less Equity in Earnings of Unconsolidated
       Affiliate                                       1,090            1,264
                                                     -------          -------
                                                       2,518            6,090
     Interest Expense - Net                          ( 3,071)         ( 3,423)
                                                     -------          -------
     Income (Loss) before Income Taxes (Benefit),
       Equity in Earnings of Unconsolidated
       Affiliate and Cumulative Effect of
       Accounting Change                           $    (553)       $   2,667
                                                     =======          =======
</TABLE>
                                         10

<PAGE>


Note 7.  Segment Information (continued)
<TABLE>
<S>                                              <C>           <C>
(in thousands)                                    Twenty-Six    Twenty-Six
                                                  Weeks Ended   Weeks Ended
                                                    7/4/99       6/28/98
Net Sales
     Denim and Khaki                               $ 239,873     $ 288,113
     Yarn-Dyed Products                               14,071        24,033
     Commission Finishing                             52,241        55,209
     Decorative Fabrics                               34,348        25,659
     Other                                               900         3,449
                                                     -------       -------
                                                     341,433       396,463
     Less Intersegment Sales                           9,684         8,988
                                                     -------       -------
                                                   $ 331,749     $ 387,475
                                                     =======       =======
Income (Loss) from Operations
     Denim and Khaki                               $  16,567     $  28,732
     Yarn-Dyed Products                               (3,805)       (3,332)
     Commission Finishing                             (3,672)       (8,607)
     Decorative Fabrics                                  873          (721)
     Other                                              (258)         (488)
     Unallocated Expenses                             (3,192)       (3,606)
                                                     -------       -------
                                                       6,513        11,978
     Restructuring and Impairment of Assets          (12,917)            -
                                                     -------       -------
                                                      (6,404)       11,978
     Less Equity in Earnings of Unconsolidated
       Affiliate                                       1,957         2,516
                                                     -------       -------
                                                      (8,361)        9,462

     Interest Expense - Net                           (6,281)       (6,359)
                                                     -------       -------

     Income (Loss) before Income Taxes (Benefit),
       Equity in Earnings of Unconsolidated
       Affiliate and Cumulative Effect of
       Accounting Change                            $ (14,642)    $   3,103
                                                      =======       =======
</TABLE>

Note 8.  Comprehensive Income (Loss)

Comprehensive  income (loss) is the total of net income (loss) and other changes
in equity,  except those resulting from investments by owners and  distributions
to owners not reflected in net income (loss).  Total comprehensive income (loss)
for the periods was as follows:
<TABLE>
<S>                                     <C>                <C>
(in thousands)                            Thirteen           Thirteen
                                         Weeks Ended        Weeks Ended
                                           7/4/99             6/28/98

Net income                                 $  714             $ 3,051
Other comprehensive loss,
  currency translation adjustment             (17)                ( 7)
                                            -----               -----
                                           $  697             $ 3,044
                                            =====               =====

                                     11

<PAGE>


Note 8.  Comprehensive Income (Loss) (continued)

(in thousands)                           Twenty-Six         Twenty-Six
                                         Weeks Ended        Weeks Ended
                                           7/4/99             6/28/98

Net income (loss)                        $ (8,756)            $ 4,595
Other comprehensive loss,
  currency translation adjustment             (19)                (34)
                                            -----               -----
                                         $ (8,775)            $ 4,561
                                            =====               =====
</TABLE>

Note 9.  Reclassification of Selling and Administrative

In the first  quarter of 1999 the Company  changed the  criteria for items to be
included  in selling  and  administrative  expenses  to  conform  to  prevailing
industry  practices.  The  Company  has  restated  its prior year  Statement  of
Operations  to reflect the new  classification  criteria.  This  resulted in the
reclassification   of  $7.6   million  and  $14.6   million   from  selling  and
administrative  expenses to cost of goods sold for the thirteen  and  twenty-six
weeks ended June 28, 1998, respectively.

Note 10.  Cumulative Effect of Accounting Change

Beginning in fiscal year 1999, the Company adopted Statement of Position ("SOP")
98-5,  "Reporting on the Costs of Start-Up  Activities,"  which requires  future
start-up  costs to be expensed as incurred and previously  capitalized  start-up
costs to be expensed when SOP 98-5 is adopted.  The Company  recognized a charge
of $1.0 million, the Company's 50% portion of Parras Cone's unamortized start-up
costs,  as a cumulative  effect of an accounting  change in the first quarter of
1999.  Had SOP 98-5 not been adopted  during the first quarter of 1999, net loss
would have been reduced by $0.8 million,  or $0.03 per share, for the twenty-six
weeks ended July 4, 1999.

                                       12

<PAGE>

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


OVERVIEW

In response to 1998  business  conditions  for apparel  products and  commission
finishing, the Company announced in early 1999 and began to implement during the
first  quarter a  comprehensive  downsizing  and  reorganization  program  which
included:

1)       The  streamlining  of  product  offering  of  the  sportswear  division
         including  the  closing in the second  quarter of the  Salisbury  plant
         which produced yarn-dyed shirting fabrics.
2)       The downsizing and reorganization of the corporate administrative staff
         to more efficiently match Cone's present sales base.
3)       The merger of the denim and sportswear fabrics businesses into one unit
         which will more efficiently serve the growing casual wear market.
4)       The  reduction  of the  manufacturing  staff in order to  simplify  the
         management  structure  and become more  responsive  to  customer  cycle
         times.
5)       The closing in the second  quarter of the Florence and  Cliffside  yarn
         manufacturing  facilities,  coupled with the  outsourcing  of yarn,  to
         reduce  operating  costs and  conserve  capital  which  would have been
         required for equipment modernization.
6)       The  restructuring,  downsizing  and  reorganization  of  the  Carlisle
         finishing plant to reduce costs and improve efficiency.

Most of the  expense  related to these  initiatives  was  reflected  in the last
quarter of 1998 ($19.3  million) and the first quarter of 1999 ($14.5  million).
Additional  expenses  will be  incurred  in the  third  quarter  related  to the
Carlisle restructuring. The Company began to achieve cost savings as a result of
these initiatives in the second quarter of 1999.

RESULTS OF OPERATIONS

Second Quarter Ended July 4, 1999 Compared with Second Quarter Ended June
28, 1998.

Cone Mills had sales for the  second  quarter  of 1999 of $174.5  million,  down
11.6%, as compared with the second quarter of 1998 sales of $197.3 million.  For
the 1999  period,  sales of denim and khaki and  yarn-dyed  products  decreased,
partially offset by increased  decorative fabric sales. In the fourth quarter of
1998,  and  continuing  through into the first half of 1999,  denim sales slowed
significantly,  the result of weaker consumer interest in denims.  International
sales  represented  19% of total sales in the second quarter of 1999 compared to
24% of sales for the 1998 period.  International  sales were negatively impacted
by the Asian economic crisis,

                                     13

<PAGE>



slowing European sales and the stronger U.S. dollar.

Gross  profit for the  second  quarter of 1999  decreased  to 8.2% of sales,  as
compared  with 10.2% for the previous  year.  Lower volume and pricing in denims
and the aggressive  elimination of unprofitable  lines and inventories more than
offset the improved  operating  results in commission  finishing and  decorative
fabrics.  Deteriorating conditions in the off-goods market resulted in inventory
reserves being inadequate.

Segment Information. Cone operates in four principal business segments:
denim and khaki, yarn-dyed products, commission finishing and decorative
fabrics. See Note 7 to Notes to Consolidated Condensed Financial
Statements (unaudited) included in Part 1, Item 1.

         Denim  and  Khaki.  For the  second  quarter  of 1999,  denim and khaki
         segment sales were $127.2 million,  down 13.1% from second quarter 1998
         sales of $146.4 million.  Substantially  all of the sales shortfall was
         the result of lower  sales  volume and prices in denim  which  resulted
         primarily  from the negative  impact of a weaker  consumer  interest in
         denims  and the  resulting  adjustments  to  retail  and  manufacturing
         inventories.

         Operating income for the denim and khaki segment for the second quarter
         of 1999  was  $7.3  million,  or 5.7% of  sales,  compared  with  $14.9
         million,  or 10.2%,  for the second quarter of 1998. The reduced margin
         and income  resulted  primarily from lower sales volume,  lower prices,
         reduced plant operating schedules and closeouts on khaki inventories as
         the Company  refocused  this  product  line.  Operating  income for the
         segment  includes  the equity in  earnings  from the Parras  Cone joint
         venture plant.

         Yarn-Dyed Products.  As part of the restructuring  program, the Company
         ceased  manufacturing  yarn-dyed  products in May 1999.  For the second
         quarter of 1999,  sales of yarn-dyed  products were $6.6 million,  down
         46.9% from  $12.4  million in the 1998  period.  Most of the  operating
         losses for this segment were  previously  reserved  under the Company's
         restructuring  plan.  However,  a loss of $0.5  million was included in
         segment data for the second quarter of 1999.  For the 1998 period,  the
         yarn-dyed products segment had an operating loss of $1.9 million.

         Commission  Finishing.   Outside  sales  of  the  commission  finishing
         segment,  which consists of the Carlisle and Raytex plants,  were $22.5
         million for the second  quarter of 1999,  down 2.9% from $23.2  million
         for the second  quarter of 1998.  For the second  quarter of 1999,  the
         operating loss was $1.7 million, an improvement of 53% from the loss of
         $3.6 million for the second quarter of 1998. While operating results at
         the  Carlisle  Plant  continue to improve  year-over-year,  the rate of
         improvement  has been  slower  than  desired,  which has  resulted in a
         reorganization of division management and the initiation of a review of
         the operating structure during the

                                        14

<PAGE>

         second quarter of 1999. The Company will begin implementation of the
         resulting restructuring plans in the third quarter.

         Decorative  Fabrics.  For the  second  quarter  of  1999,  sales of the
         decorative  fabrics segment were $17.8 million,  up 29.9% from sales of
         $13.7  million for the second  quarter of 1998.  Cone  Jacquards  sales
         improved as capacity  expanded and John Wolf  decorative  fabrics sales
         were up as the  unit  improved  its  product  offerings  and  marketing
         efforts.  The decorative  fabrics  segment had earnings of $0.4 million
         for the second quarter of 1999 compared with a loss of $0.2 million for
         the second  quarter of 1998.  Second quarter 1999 results were impacted
         by higher than expected start-up costs related to capacity additions at
         the jacquard plant.

Selling and  administrative  expenses for the second  quarter of 1999 were $11.7
million,  or 6.7% of sales, as compared with $14.1 million,  or 7.1% of sales in
the second  quarter  of 1998.  The lower  selling  and  administrative  expenses
reflect the cost savings realized from  restructuring  initiatives.  Selling and
administrative expenses for 1998 were restated to conform to industry practices.

Interest expense for the second quarter of 1999 was $3.5 million, down from $4.2
million for the second quarter of 1998,  primarily the result of lower borrowing
levels.

For the  second  quarter of 1999,  the  income  tax  benefit as a percent of the
taxable loss was 32.0%.

Equity in earnings of Parras Cone, the Company's  joint venture plant in Mexico,
was $1.1 million for the second  quarter of 1999,  as compared with $1.3 million
for the 1998 period.

For the second quarter of 1999, Cone Mills had net income of $0.7 million. After
preferred  dividends,  the Company essentially  reported a break-even for common
shareholders.  For comparison, in the second quarter of 1998, Cone Mills had net
income of $3.1 million, or $.09 per share after preferred dividends.

Six Months Ended July 4, 1999 Compared with Six Months Ended June 28, 1998

For the first six months of 1999, Cone Mills had sales of $331.7  million,  down
14.4% from sales of $387.5  million for the first six months of 1998,  primarily
due to a sales shortfall in denim.  Lower denim sales resulted  primarily from a
weaker  consumer  interest in jeans and the resulting  adjustments to retail and
manufacturing inventories.

Gross  profit for the first six months of 1999  decreased  to 8.9% of sales,  as
compared with 9.6% for the previous year. Lower volume and pricing in denims and
the  aggressive  elimination of  unprofitable  lines and  inventories  more than
offset the improved  operating  results in commission  finishing and  decorative
fabrics.  Deteriorating conditions in the off-goods market resulted in inventory

                                      15
<PAGE>

reserves being inadequate.

Segment Information. Cone operates in four principal business segments:
denim and khaki, yarn-dyed products, commission finishing and decorative
fabrics. See Note 7 to Notes to Consolidated Condensed Financial
Statements (unaudited) included in Part 1, Item 1.

         Denim and  Khaki.  For the first  six  months of 1999,  denim and khaki
         segment  sales  were  $239.9  million,  down 16.7% from first half 1998
         sales of $288.1  million.  Almost all of the sales  shortfall was lower
         sales volume and prices for denims.

         Operating  income  of the denim  and  khaki  segment  for the first six
         months of 1999 was $16.6 million, or 6.9% of sales, compared with $28.7
         million,  or 10.0% for the first six months of 1998. The reduced margin
         and income  resulted  primarily from lower sales volume,  lower prices,
         reduced plant operating schedules and closeouts on khaki inventories as
         the company  refocused  this  product  line.  Operating  income for the
         segment  includes  the equity in  earnings  from the Parras  Cone joint
         venture plant.

         Yarn-Dyed Products. The Company ceased manufacturing yarn-dyed products
         in May  1999.  For the first six  months  of 1999,  sales of  yarn-dyed
         products were $14.1 million,  down 41.5% from $24.0 million in the 1998
         period.  For the  first  six  months of 1999,  the  yarn-dyed  products
         segment had an operating loss of $3.8 million,  as compared with a loss
         of $3.3 million for the first six months of 1998.

         Commission  Finishing.   Outside  sales  of  the  commission  finishing
         segment,  which consists of the Carlisle and Raytex plants,  were $42.6
         million for the first six months of 1999,  down 7.9% from $46.2 million
         for the first six months of 1998.  Anticipated recovery in print demand
         in 1999 has not materialized.  For the 1999 period,  the operating loss
         was $3.7 million,  an  improvement of 57% from the loss of $8.6 million
         for the 1998 period.  While  operating  results at the  Carlisle  Plant
         continue  to  improve,  the rate of  improvement  has been  slower than
         expected.

         Decorative  Fabrics.  For the  first six  months of 1999,  sales of the
         decorative  fabrics segment were $34.3 million,  up 33.9% from sales of
         $25.7 million for the 1998 period.  Cone  Jacquards  sales  improved as
         capacity expanded and John Wolf decorative fabrics sales improved.  The
         decorative  fabrics  segment had  earnings of $0.9 million for the 1999
         period compared with a loss of $0.7 million for the first six months of
         1998.  1999 results were  negatively  impacted by higher than  expected
         start-up costs related to capacity additions at the jacquard plant.

Selling and  administrative  expenses for the first six months of 1999 was $25.0
million,  or 7.5% of sales, as compared with $27.8 million,  or 7.2% of sales in
the 1998 period. The lower selling and administrative expenses

                                     16

<PAGE>

reflect the cost savings realized from  restructuring  initiatives.  Selling and
administrative expenses for 1998 were restated to conform to industry practices.

Interest  expense for the first six months of 1999 was $7.2  million,  down from
$7.7 million for the 1998 period.

For the first six months of 1999,  the  income  tax  benefit as a percent of the
taxable loss was 33.9%.  In the 1998  period,  income tax as a percent of income
was 33.0%.

Equity in earnings of Parras Cone, the Company's  joint venture plant in Mexico,
was $2.0 million for the first six months of 1999, as compared with $2.5 million
for  the  1998  period.  In the  1999  period,  the  plant  had  lower  capacity
utilization as compared to 1998.

For the first six months of 1999, the Company had a net loss of $8.8 million, or
$.40 per share after  preferred  dividends.  This included a $1.0 million charge
from the  cumulative  effect of an  accounting  change  related  to  capitalized
start-up  costs at the Parras  Cone  plant.  In the  period,  the  Company  also
incurred restructuring and related expenses of $14.5 million associated with its
restructuring  program.  Excluding the  restructuring,  related expenses and the
accounting  change,  the Company had earnings of $.01 per share after  preferred
dividends.  For comparison,  in the first six months of 1998, Cone Mills had net
income of $4.6 million, or $.12 per share after preferred dividends.

Liquidity and Capital Resources

The Company's principal long-term capital components consist of debt outstanding
under its Senior Note, its 8 1/8% Debentures and stockholders'  equity.  Primary
sources of liquidity are internally  generated  funds, an $80 million  Revolving
Credit  Facility  (under which $38 million was  available on July 4, 1999) and a
$50 million Receivables  Purchase Agreement.  The Receivables Purchase Agreement
expires in November 1999, and the Company believes it can replace this facility
on comparable terms.

During the first six months of 1999, the Company generated cash from operations,
before  changes in working  capital,  of $2.2  million,  as compared  with $16.3
million for the first six months of 1998.  In the 1999 period,  working  capital
increased by $7.9 million. Uses of cash in the 1999 period included $4.0 million
for capital expenditures and $1.6 million for the redemption of preferred stock.

The  Company  believes  that  internally  generated  operating  funds  and funds
available  under its credit  facilities will be sufficient to meet its needs for
the foreseeable future. International investments,  including the proposed denim
facility discussed below, will require additional long-term financing.

                                      17

<PAGE>


On April 30, 1999,  Guilford Mills,  Inc.  (Guilford) and the Company  announced
plans to develop an  innovative  new  textile  and  apparel  industrial  park in
Mexico. The park is believed to be the first large-scale  industrial development
in  Mexico  in which  textile  plants,  garment  manufacturing,  and  laundering
facilities are planned to be located in proximity to each other.

In support of this project,  the Mexican government has agreed to facilitate the
infrastructure   including   roads   and   rights  of  way,   water   resources,
telecommunications,  municipal  services,  electricity,  natural gas, wastewater
treatment and work force training.

The new park, to be built in several  stages,  will be located on over 500 acres
of land in Altamira,  near Tampico,  a northeast coast port city in the state of
Tamaulipas.  In April,  Guilford and Cone  established  a 50/50 joint venture to
develop and operate the park. It is expected that this  investment for Cone will
range from $6 million to $10 million.

The  plant to be built by Cone in the  initial  phase of the  project  will be a
ring-spun,  value-added  denim  plant  with  a  capacity  of  20  million  yards
expandable to 40 million yards. The Company expects to invest $40 million to $75
million in the initial denim facility  depending upon whether it outsources yarn
manufacturing, forms a yarn alliance or produces its own yarn. The Company could
invest an additional  $30 million to $45 million for the expansion to 40 million
yards.  A portion of the funds  required  for this  facility  will  require debt
financing, which the Company has not arranged at this date.

On July 4, 1999, the Company's  long-term capital structure  consisted of $171.6
million of  long-term  debt and  $171.8  million of  stockholders'  equity.  For
comparison,  on June 28, 1998,  the Company had $176.9 million of long-term debt
and $198.0 million of stockholders'  equity.  Long-term debt (including  current
maturities  of  long-term   debt)  as  a  percentage   of  long-term   debt  and
stockholders'  equity was 51% at July 4, 1999,  as compared with 49% at June 28,
1998.

Accounts and note  receivable on July 4, 1999,  were $57.3 million,  as compared
with $69.6 million at June 28, 1998. Receivables,  including those sold pursuant
to the Receivables Purchase Agreement,  represented 58 days of sales outstanding
at July 4,  1999 and 51 days at June 28,  1998.  The  increase  in days of sales
outstanding  primarily  reflects  a change  in  customer  sales  mix with  fewer
customers paying in advance of due date.

Inventories on July 4, 1999,  were $113.7  million,  down $9.9 million from June
28,  1998.  The  decrease  was  primarily  due to lower raw material and work in
process inventories.

For the first six months of 1999,  capital spending was $4.0 million compared to
$16.7  million for the first six months of 1998.  Domestic  capital  spending in
1999 is expected to be approximately  $15 million.  The reduced spending in 1999
is because the Company completed its relooming

                                    18

<PAGE>

program of domestic  denim  facilities in 1998. In addition to the 1999 domestic
capital  spending  budget,  the  Company  expects to spend up to $12 million for
investments in international initiatives.

Other Matters

The Company is implementing a comprehensive  plan to address possible  exposures
to Year 2000 issues.  Critical financial,  operational and manufacturing systems
have been  inventoried and assessed by filing date and system  modifications  or
replacement  have been completed or are in-process.  Implementation  of required
changes for all systems is targeted for completion during calendar year 1999.

Executive  management  continually reviews the status of the Company's Year 2000
compliance  efforts.  At present the Company  estimates it is approximately  90%
complete with  implementation  of new systems or remediation of existing systems
related to core  business  systems.  Although the Company has  received  written
vendor certification that all new core business systems are Year 2000 compliant,
the Company will test selected core business systems in third quarter 1999.

As previously  disclosed,  the Company's critical  manufacturing,  operating and
control  systems  are  approximately  90%  complete  with  respect  to Year 2000
compliance efforts. Testing and certification are now targeted for completion in
the third quarter of 1999.

The Company is  coordinating  Year 2000 readiness with other entities with which
it interacts, both domestically and globally, including suppliers, customers and
financial service organizations. Coordination efforts involve communication with
major suppliers and customers to undertake testing of electronic  interfaces and
obtaining  written   certifications   of  compliance  where   applicable.   Risk
assessments  and action plans have been  substantially  completed.  All required
changes, including testing and certification, are targeted for completion during
third quarter 1999.

The Company has made  significant  investments  to modernize  its core  business
systems  over  the  past  several  years.  With  each  system   modification  or
replacement,  Cone has  addressed  the Year 2000 issue.  Therefore,  remediation
costs to address the  Company's  Year 2000 issues are  presently  expected to be
approximately $1.0 million.

The  Company   currently  has  contingency  plans  that  address  core  business
system-related  interruptions  and will further  develop  such plans  related to
manufacturing,  operating  and  control  systems to protect  the  business  from
potential Year 2000 interruptions. These plans will be completed during calendar
year 1999 and will include,  for example,  as a worst case scenario,  processing
certain  significant  business  transactions  manually.  The  Company  is taking
reasonable steps to prevent major interruptions  related to the Year 2000 issue;
however,  the potential impact on the Company's financial  position,  results of
operations, or cash flows if the Company, its suppliers or its customers are not
fully Year 2000 compliant

                                      19

<PAGE>

is not reasonably estimable.

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

The Company is a party to various legal claims and actions.  Management believes
that none of these claims or actions,  either  individually or in the aggregate,
will have a material adverse effect on the financial condition of the Company.

"Safe  Harbor"  Statement  under Section 27A of the  Securities  Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
         Except for the historical information presented,  the matters disclosed
         in the foregoing discussion and analysis and other parts of this report
         include  forward-looking  statements.  These  statements  represent the
         Company's  current  judgment on the future and are subject to risks and
         uncertainties  that could cause  actual  results to differ  materially.
         Such factors include,  without  limitation:  (i) the demand for textile
         products, including the Company's products, will vary with the U.S. and
         world  business   cycles,   imbalances   between  consumer  demand  and
         inventories  of  retailers  and  manufacturers  and  changes in fashion
         trends,  (ii) the highly competitive nature of the textile industry and
         the  possible  effects  of reduced  import  protection  and  free-trade
         initiatives, (iii) the unpredictability of the cost and availability of
         cotton,  the  Company's  principal  raw  material,  (iv) the  Company's
         relationships  with Levi  Strauss  as its major  customer,  and (v) the
         risks  associated with unforeseen  technological  difficulties  arising
         under the Company's Year 2000 compliance  efforts and the potential for
         increased  costs  associated  therewith.  For a further  description of
         these  risks  see the  Company's  1998  Form  10-K,  "Item 1.  Business
         -Competition,   -Raw  Materials  and  -Customers"   and   "Management's
         Discussion   and  Analysis  of  Results  of  Operations  and  Financial
         Condition  --  Overview"  of  the  Company's   1998  Annual  Report  to
         Shareholders  incorporated  by reference into Item 7. of the Form 10-K.
         Other risks and uncertainties may be described from time to time in the
         Company's  other reports and filings with the  Securities  and Exchange
         Commission.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

The Company is exposed to market risks relating to fluctuations in

                                     20

<PAGE>

interest rates,  currency exchange rates and commodity prices. There has been no
material change in the Company's  market risks that would  significantly  affect
the disclosures made in the Form 10-K for the year ended January 3, 1999.


                                    PART II

Item 1.  Legal Proceedings

In November 1988,  William J. Elmore and Wayne Comer (the  "Plaintiffs")  former
employees of the Company, instituted a class action suit against the Company and
certain other  defendants in which the  Plaintiffs  asserted a variety of claims
related to the Cone Mills  Corporation  1983 ESOP (the "1983  ESOP") and certain
other  employee  benefit  plans  maintained by the Company.  In March 1992,  the
United States District Court in Greenville, South Carolina entered a judgment in
the amount of $15.5  million  (including an  attorneys'  fee award)  against the
Company  with  respect  to  an  alleged  promise  to  make  additional   Company
contributions  to the 1983 ESOP and all claims  unrelated to the alleged promise
were dismissed.  The Company,  certain individual  defendants and the Plaintiffs
appealed.

On May 6, 1994,  the United  States  Court of  Appeals  for the Fourth  Circuit,
sitting en banc, affirmed the prior conclusion of a panel of three of its judges
and unanimously reversed the $15.5 million judgment and unanimously affirmed all
of the District Court's rulings in favor of the Company.  However,  the Court of
Appeals affirmed, by an equally divided court, the District Court's holding that
Plaintiffs  should be  allowed  to proceed  on an  alternative  theory  whether,
subject to proof of  detrimental  reliance,  Plaintiffs  could  establish that a
letter to  salaried  employees  on  December  15,  1983  created an  enforceable
obligation  that  could  allow  recovery  on a  theory  of  equitable  estoppel.
Accordingly,  the case was remanded to the District Court for a determination of
whether the Plaintiffs could establish detrimental reliance creating estoppel of
the Company.

On April 19,  1995,  the  District  Court  granted a motion by the  Company  for
summary judgment on the issues of equitable estoppel and third-party beneficiary
of contract  which had been  remanded  to it by the Court of Appeals.  The Court
ruled that the  Plaintiffs  could not forecast  necessary  proof of  detrimental
reliance.  The District Court,  however,  granted Plaintiffs motion to amend the
complaint insofar as they sought to pursue a "new" claim for unjust  enrichment,
but  denied  their  motion  to amend so far as they  sought  to add  claims  for
promissory  estoppel  and  unilateral  contract.  The Court  further  denied the
Company's motion to decertify the class.

The  District  Court held a hearing on July 24,  1995 to decide on the merits of
the  Plaintiffs'  lone  remaining  claim of unjust  enrichment,  and in an order
entered  September  25,  1995,  the  District  Court  dismissed  that claim with
prejudice. On October 20, 1995, the Plaintiffs appealed to the Court

                                     21

<PAGE>

of Appeals from the April 19, 1995 and September 25, 1995 orders of the District
Court.  Oral argument on Plaintiffs'  appeal was held in the Court of Appeals on
October 31, 1996. Due to the uncertainties  inherent in the litigation  process,
it is not possible to predict the ultimate outcome of this lawsuit. However, the
Company  has  defended  this  matter  vigorously,  and it is the  opinion of the
Company's  management  that the  probability  is remote that this lawsuit,  when
finally  concluded,  will  have a  material  adverse  effect  on  the  Company's
financial condition or results of operations.

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

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

Cone Mills Corporation's Annual Meeting of Shareholders was held May 11, 1999.
The proposals voted upon and the results of the voting were as follows:
<TABLE>
<S>                     <C>             <C>            <C>
                                                          Abstentions
                                          Against /     (Includes Broker
                            For           Withheld         Non-Votes)

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

     John L. Bakane      18,945,181      2,426,178               0
     Charles M. Reid     18,943,472      2,427,887               0
     Nicholas Shreiber   18,957,573      2,413,786               0

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

                         20,688,975      646,045            36,339

3.   Consideration of shareholder proposal for adoption of nonbinding resolution
     urging the directors to take the necessary steps to declassify the board of
     directors:

                          7,739,214    8,270,101         5,362,044
</TABLE>
Item 5.  Other Information

Notice of a matter to be presented by a  shareholder  for  consideration  at the
2000 annual meeting other than pursuant to Rule 14a-8 of the Securities Exchange
Act of 1934 must be received by the Company prior to February 16, 2000.  Failure
to give timely notice will result in the proxy statement relating to the meeting
not  including  information  on the matter or the  manner in which  management's
proxies will vote on the matter and the proxies received by management will have
discretionary authority to

                                     22

<PAGE>

vote on such matter.

Item 6.  Exhibits and Reports on Form 8-K

         (a)     The  exhibits to this Form 10-Q are listed in the  accompanying
                 Index to Exhibits.
         (b)     Reports on Form 8-K.
                 None

                                      23

<PAGE>

Exhibit                                                             Sequential
  No.            Description                                          Page No.

*2.1(a)          Purchase  Agreement between Registrant and
                 Cone Receivables LLC dated  as of  March 25,
                 1997,  filed  as  Exhibit  2.1(l)  to
                 Registrant's report on Form 10-Q for the
                 quarter ended March 30, 1997.

*2.1(b)          Receivables Purchase Agreement dated
                 as of March 25, 1997, among Cone
                 Receivables LLC, as Seller, the
                 Registrant, as Servicer, and
                 Delaware Funding Corporation, as
                 buyer, filed as Exhibit 2.1(m) to
                 Registrant's report on Form 10-Q
                 for the quarter ended March 30, 1997.

*2.1(c)          Amendment to Receivables Purchase
                 Agreement dated March 24, 1998,
                 between the Registrant and Delaware
                 Funding Corporation, filed as Exhibit
                 2.1(c) to Registrant's report on
                 Form 10-Q for the quarter ending
                 March 29, 1998.

*2.1(d)          Second Amendment to Receivables
                 Purchase Agreement dated as of
                 July 16, 1998, between the Registrant
                 and Delaware Funding Corporation, filed
                 as Exhibit 2.1(d) to Registrant's report
                 Form 10-Q for the quarter ending
                 September 27, 1998.

*2.1(e)          Third Amendment to Receivables
                 Purchase Agreement dated as of
                 December 23, 1998, between the
                 Registrant and Delaware Funding
                 Corporation.

*2.1(f)          Fourth Amendment to Receivables
                 Purchase Agreement dated as of
                 March 23, 1999, between the
                 Registrant and Delaware Funding
                 Corporation.

*2.2(a)          Investment Agreement dated as of
                 June 18, 1993, among Compania Industrial
                 de Parras, S.A. de C.V., Sr. Rodolfo
                 Garcia Muriel, and Cone Mills
                 Corporation, filed as Exhibit 2.2(a)

                                      24

<PAGE>

Exhibit                                                             Sequential
  No.            Description                                          Page No.

                 to Registrant's report on Form 10-Q for
                 the quarter ended July 4, 1993, with
                 exhibits herein numbered 2.2(b),(c), (d),
                 (f), (g), and (j) attached.

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

*2.2(c)          Guaranty  Agreement  dated as of June 25,
                 1993, between Cone Mills Corporation 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.

*2.2(d)          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.

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

*2.2(f)          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.

                                      25

<PAGE>

Exhibit                                                             Sequential
  No.            Description                                         Page No.


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

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

*2.2(i)          Guaranty Agreement dated as of June 15,
                 1995, between Cone Mills Corporation and
                 Morgan Guaranty Trust Company of New York
                 filed as Exhibit 2.2(i) to the Registrant's
                 report on Form 10-Q for the quarter ended
                 July 2, 1995.

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

*2.2(k)          Call Option dated September 25, 1995, between
                 Registrant and SMM Trust, 1995-M, a Delaware
                 business trust, filed  as Exhibit 2.2(k) to
                 the Registrant's  report on Form 10-Q for the
                 quarter ended October 1, 1995.

*2.2(l)          Put Option dated September 25, 1995, between
                 Registrant and SMM Trust, 1995-M, a Delaware
                 business trust,  filed as Exhibit 2.2(l) to
                 the Registrant's  report on Form 10-Q for the
                 quarter ended October 1, 1995.

*2.2(m)          Letter Agreement dated January 11, 1996
                 among Registrant, Rodolfo Garcia Muriel,
                 and Compania Industrial de Parras,
                 S.A. de C.V., filed as Exhibit 2.2(m) to

                                       26

<PAGE>

Exhibit                                                             Sequential
  No.            Description                                          Page No.

                 the Registrant's report on Form 10-K
                 for the year ended December 31, 1995.

*4.1             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.

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

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

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

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

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

*4.3(d)          Letter Agreement dated November 14, 1994,
                 amending the Note Agreement dated
                 August 13, 1992, between the Registrant

                                       27

<PAGE>

Exhibit                                                             Sequential
  No.            Description                                          Page No.

                 and The Prudential Insurance Company of
                 America  filed  as Exhibit 4.5 to the
                 Registrant's  report on Form 8-K dated March
                 1, 1995.

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

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

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

*4.3(h)          Letter Agreement dated as of January
                 31, 1997, between the Registrant and
                 The Prudential Insurance Company of
                 America filed as Exhibit 4.3(h) to
                 the Registrant's report on Form 10-K
                 Company of America, filed as Exhibit 4.3(j)
                 to Registrant's report on Form 10-Q
                 for the quarter ending March 29, 1998.

*4.4             Credit Agreement dated August 7, 1997,
                 among the Registrant, various banks and Morgan
                 Guaranty Trust Company of New York as agent,
                 filed as Exhibit 4.4 to the Registrant's
                 report on Form 10-Q for the quarter ended
                 September 28, 1997.

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

                                      28

<PAGE>

Exhibit                                                             Sequential
  No.            Description                                          Page No.

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

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

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

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

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

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

*4.8             Indenture dated as of February 14,
                 1995, between Cone Mills Corporation
                 and Wachovia Bank of North Carolina,
                 N.A. as Trustee (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).

                                     29

<PAGE>

Exhibit                                                             Sequential
  No.            Description                                          Page No.

27               Financial Data Schedule                                 32


* Incorporated by reference to the statement or report indicated.


                                    30

<PAGE>


                                SIGNATURES


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



                                            CONE MILLS CORPORATION
                                            (Registrant)





Date      August 18, 1999                    /s/ Anthony L. Furr
         ----------------                   --------------------
                                            Anthony L. Furr
                                            Executive Vice President and
                                            Chief Financial Officer


                                      31