Page 1 of 87
                             Index to Exhibits-Pages 23-30

            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  September 28, 1997 

                            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)

                        (910) 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 October 31,
1997:   26,112,133 shares.





                          Page 1
<PAGE>
FORM 10-Q

                  CONE MILLS CORPORATION

                           INDEX

                                                        Page
                                                        Number

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

       Consolidated Condensed Statements of Operations
         Thirteen and thirty-nine weeks ended 
         September 28, 1997 and September 29, 1996
         (Unaudited). . . . . . . . . . . . . . . . . . .3

       Consolidated Condensed Balance Sheets
         September 28, 1997 and September 29, 1996
         (Unaudited) and December 29, 1996. . . . . . . .4 & 5

       Consolidated Condensed Statements of
       Stockholders' Equity
         Thirty-nine weeks ended September 28, 1997
         and September 29, 1996 (Unaudited) . . . . . . .6

       Consolidated Condensed Statements of
       Cash Flows
         Thirty-nine weeks ended September 28, 1997
         and September 29, 1996 (Unaudited) . . . . . . .7

       Notes to Consolidated Condensed Financial
       Statements (Unaudited) . . . . . . . . . . . . . .8

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


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings. . . . . . . . . . . . . . . .21
Item 6.  Exhibits and Reports on Form 8-K . . . . . . . .22

                          Page 2
<PAGE>
FORM 10-Q
                                    PART I
Item 1.
<TABLE>
<S>                                                     <C>             <C>             <C>             <C>

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


                                                            Thirteen        Thirteen       Thirty-Nine     Thirty-Nine
                                                           Weeks Ended     Weeks Ended     Weeks Ended     Weeks Ended
                                                         Sept. 28, 1997  Sept. 29, 1996  Sept. 28, 1997  Sept. 29, 1996
                                                          (Unaudited)      (Unaudited)     (Unaudited)     (Unaudited)

Net Sales                                                $    185,501     $   180,849     $   546,007     $    588,250

Operating Costs and Expenses:
  Cost of sales                                               160,151         152,163         464,496          482,209
  Selling and administrative                                   19,563          20,694          58,645           64,201
  Depreciation                                                  6,658           6,994          19,962           21,139
  Restructuring                                                 1,314             198           3,123           (4,486)

                                                              187,686         180,049         546,226          563,063

Income (Loss) from Operations                                  (2,185)            800            (219)          25,187

Other Income (Expense):
  Interest income                                                 834             207           1,653              380
  Interest expense                                             (3,365)         (3,682)        (10,772)         (11,634)

                                                               (2,531)         (3,475)         (9,119)         (11,254)

Income (Loss) before Income Taxes (Benefit) and Equity 
  in Earnings (Losses) of Unconsolidated Affiliate             (4,716)         (2,675)         (9,338)          13,933

Income Taxes (Benefit)                                         (1,797)           (979)         (3,469)           4,540

Income (Loss) before Equity in Earnings (Losses)
  of Unconsolidated Affiliate                                  (2,919)         (1,696)         (5,869)           9,393

Equity in Earnings (Losses) of Unconsolidated Affiliate         1,553            (547)          1,437             (749)

Net Income (Loss)                                          $   (1,366)     $   (2,243)     $   (4,432)     $     8,644


Income (Loss) Available to Common Shareholders:
  Net Income (Loss)                                        $   (2,121)     $   (2,963)     $   (6,662)     $     6,484

Earnings (Loss) Per Share - Fully Diluted:
  Net Income (Loss)                                           $ (.08)         $ (.11)         $ (.25)           $ .24 

Weighted Average Common Shares and
  Common Share Equivalents Outstanding -
  Fully Diluted                                                26,109          27,416          26,150           27,454
</TABLE>

See Notes to Consolidated Condensed Financial Statements.
                                                Page 3
<PAGE>
FORM 10-Q

Item 1.(continued)
                       CONE MILLS CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED CONDENSED BALANCE SHEETS
                (amounts in thousands, except share and par value data)
<TABLE>
<S>                                                          <C>              <C>               <C>

                                                              September 28,    September 29,     December 29,
       ASSETS                                                     1997             1996             1996
                                                               (Unaudited)      (Unaudited)        (Note)
   Current Assets:
     Cash                                                      $     2,280      $     2,742      $     1,018

     Accounts receivable - trade, less provision for
       doubtful accounts $1,500; $3,000; $3,000                     20,910           63,413           49,073

     Subordinated note receivable                                   35,909                -                -

     Inventories:
       Greige and finished goods                                    85,121           92,742           94,635
       Work in process                                              10,941           11,451           10,793
       Raw materials                                                12,639            9,434            7,231
       Supplies and other                                           12,921           31,851           26,874

                                                                   121,622          145,478          139,533

     Other current assets                                           11,733           13,823           14,794

              Total Current Assets                                 192,454          225,456          204,418

   Investments in Unconsolidated Affiliates                         35,581           35,853           34,144

   Other Assets                                                     39,110           41,178           40,746



   Property, Plant and Equipment:
     Land                                                           11,799           18,208           17,880
     Buildings                                                      82,679           82,399           83,048
     Machinery and equipment                                       318,442          313,409          319,271
     Other                                                          34,409           31,553           34,143

                                                                   447,329          445,569          454,342

       Less accumulated depreciation                               207,296          200,817          203,664

              Property, Plant and Equipment-Net                    240,033          244,752          250,678



                                                               $   507,178      $   547,239      $   529,986
</TABLE>
   Note:  The balance sheet at December 29, 1996 has been 
          derived from the audited financial statements at that date.

   See Notes to Consolidated Condensed Financial Statements.

                                     Page 4
<PAGE>
FORM 10-Q

Item 1.  (continued)
                         CONE MILLS CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED CONDENSED BALANCE SHEETS
                  (amounts in thousands, except share and par value data)
<TABLE>
<S>                                                            <C>              <C>              <C>   


                                                                September 28,    September 29,    December 29,
      LIABILITIES AND STOCKHOLDERS' EQUITY                          1997             1996            1996
                                                                 (Unaudited)      (Unaudited)       (Note)

Current Liabilities:
   Notes payable                                                $         -      $     8,703      $     5,267
   Current maturities of long-term debt                              10,714           11,114           10,754
   Accounts payable - trade                                          37,318           26,981           27,113
   Sundry accounts payable and accrued expenses                      44,439           44,013           52,770
   Deferred income taxes                                             24,695           25,510           23,667

      Total Current Liabilities                                     117,166          116,321          119,571

Long-Term Debt                                                      139,545          150,742          149,968

Deferred Items:
   Deferred income taxes                                             38,211           41,043           40,066
   Other deferred items                                              10,780           10,187           10,130

                                                                     48,991           51,230           50,196



Stockholders' Equity:
   Class A Preferred Stock - $100 par value; authorized
      1,500,000 shares; issued and outstanding 383,948
      shares - Employee Stock Ownership Plan                         38,395           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 26,112,133 shares;
      1996, 27,336,333 shares and 26,301,233 shares                   2,611            2,734            2,630
   Capital in excess of par                                          61,548           70,687           62,995
   Retained earnings                                                107,423          125,592          114,706
   Currency translation adjustment                                   (8,501)          (8,462)          (8,475)

                Total Stockholders' Equity                          201,476          228,946          210,251






                                                            $       507,178  $       547,239  $       529,986
</TABLE>
Note:  The balance sheet at December 29, 1996 has been derived
       from the audited financial statements at that date.


See Notes to Consolidated Condensed Financial Statements.

                                               Page 5
<PAGE>
FORM 10-Q

Item 1.  (continued)
                      CONE MILLS CORPORATION AND SUBSIDIARIES
              CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
          THIRTY-NINE WEEKS ENDED SEPTEMBER 28, 1997 AND SEPTEMBER 29, 1996
                     (amounts in thousands, except share data)
                                   (Unaudited)
<TABLE>
<S>                                           <C>         <C>          <C>            <C>
                                                Class A Preferred
                                                       Stock                   Common Stock
                                               Shares        Amount       Shares         Amount

Balance, December 29, 1996                     383,948     $  38,395    26,301,233     $    2,630
Net loss                                             -             -             -              -
Currency translation adjustment                      -             -             -              -
Class A Preferred Stock -
  Employee Stock Ownership Plan:
    Cash dividends paid                              -             -             -              -
Common Stock: 
  Options exercised                                  -             -        12,600              1
  Purchase of common shares                          -             -      (201,700)           (20)

Balance, September 28, 1997                    383,948     $  38,395    26,112,133     $    2,611



                                                 Class A Preferred
                                                      Stock                    Common Stock
                                               Shares        Amount       Shares         Amount

Balance, December 31, 1995                     383,948     $  38,395    27,380,409     $    2,738
Net income                                           -             -             -              -
Currency translation adjustment -
  Sale of stock of affiliate                         -             -             -              -
Class A Preferred Stock -
  Employee Stock Ownership Plan:
    Cash dividends paid                              -             -             -              -
Common Stock: 
  Options exercised                                  -             -        61,800              6
  Purchase of common shares                          -             -      (105,876)           (10)

Balance, September 29, 1996                    383,948     $  38,395    27,336,333     $    2,734
</TABLE>


See Notes to Consolidated Condensed Financial Statements.
                                               Page 6
<PAGE>
FORM 10-Q

Item 1.  (continued)
                     CONE MILLS CORPORATION AND SUBSIDIARIES
            CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
        THIRTY-NINE WEEKS ENDED SEPTEMBER 28, 1997 AND SEPTEMBER 29, 1996
                    (amounts in thousands, except share data)
                                  (Unaudited)
<TABLE>
<S>                                         <C>           <C>          <C>
                                             Capital in                   Currency
                                               Excess       Retained    Translation
                                               of Par       Earnings     Adjustment

Balance, December 29, 1996                   $  62,995     $ 114,706      $ (8,475)
Net loss                                             -        (4,432)            -
Currency translation adjustment                      -             -           (26)
Class A Preferred Stock -
  Employee Stock Ownership Plan:
    Cash dividends paid                              -        (2,851)            -
Common Stock: 
  Options exercised                                 65             -             -
  Purchase of common shares                     (1,512)            -             -

Balance, September 28, 1997                  $  61,548     $ 107,423      $ (8,501)



                                             Capital in                   Currency
                                               Excess       Retained    Translation
                                               of Par       Earnings     Adjustment

Balance, December 31, 1995                   $  71,090     $ 119,825      $ (9,923)
Net income                                           -         8,644             -
Currency translation adjustment -
  Sale of stock of affiliate                         -             -         1,461
Class A Preferred Stock -
  Employee Stock Ownership Plan:
    Cash dividends paid                              -        (2,877)            -
Common Stock: 
  Options exercised                                515             -             -
  Purchase of common shares                       (918)            -             -

Balance, September 29, 1996                  $  70,687     $ 125,592      $ (8,462)

</TABLE>

See Notes to Consolidated Condensed Financial Statements.
                                        Page 6a
<PAGE>
FORM 10-Q

Item 1. (continued)

                        CONE MILLS CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                              (amounts in thousands)
<TABLE>
<S>                                                                 <C>              <C>   
                                                                      Thirty-Nine      Thirty-Nine
                                                                      Weeks Ended      Weeks Ended
                                                                     Sept. 28, 1997   Sept. 29, 1996
                                                                      (Unaudited)      (Unaudited)

Cash Flows Provided By Operating Activities                             $   19,033       $   14,921

Cash Flows from Investing Activities:
   Proceeds from divestitures (a)                                           19,529           42,228
   Proceeds from sale of property, plant and equipment                       4,154            2,600
   Capital expenditures                                                    (17,651)         (21,367)
   Other                                                                    (1,500)             805

     Net cash provided by investing activities                               4,532           24,266

Cash Flows from Financing Activities:
   Net payments - short-term loans                                          (5,267)            (172)
   Decrease in checks issued in excess of deposits                          (1,923)         (21,829)
   Principal payments - long-term debt                                     (10,796)         (11,496)
   Other                                                                    (4,317)          (3,284)

     Net cash used in financing activities                                 (22,303)         (36,781)

     Net increase in cash                                                    1,262            2,406

Cash at Beginning of Period                                                  1,018              336

Cash at End of Period                                                   $    2,280       $    2,742



(a)Divestitures:
   Inventories                                                          $   12,034       $   14,926
   Property, plant and equipment                                             6,262           21,516
   Other                                                                     1,199            1,300
   Gain on sale                                                                 34            4,486

     Proceeds from sale                                                 $   19,529       $   42,228


Supplemental Disclosures of Additional Cash Flow Information:

Cash payments for:
   Interest, net of interest capitalized                                $   14,317       $   15,369

   Income taxes, net of refunds                                         $   (3,017)      $    4,929

Supplemental Schedule of Noncash Investing and Financing Activities:

   Receivable recorded from divestitures                                $      811       $    2,000

   Purchase of outstanding capital stock - common,
     through incurrence of accounts payable                             $        -       $      303

See Notes to Consolidated Condensed Financial Statements.
</TABLE>
                                            Page 7
<PAGE>
FORM 10-Q

Item 1.  (continued)


          CONE MILLS CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                    SEPTEMBER 28, 1997



Note 1.  Basis of Financial Statement Preparation

     The Cone Mills Corporation (the "Company") consolidated
     condensed financial statements for September 28, 1997 and
     September 29, 1996 are unaudited, but in the opinion of
     management reflect all adjustments necessary to present
     fairly the consolidated condensed balance sheets of Cone
     Mills Corporation and Subsidiaries at September 28, 1997,
     September 29, 1996, and December 29, 1996, and the
     related consolidated condensed statements of operations
     for the respective thirteen and thirty-nine weeks ended
     September 28, 1997 and September 29, 1996, and
     stockholders' equity and cash flows for the thirty-nine
     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
     1996.
 
     Inventories are stated at the lower of cost or market. 
     The last-in, first-out (LIFO) method is used to value
     inventories of most domestically produced goods.  The
     first-in, first-out (FIFO) or average cost methods are
     used to value 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 September 28, 1997 and September 29, 1996
     and related consolidated condensed statements of
     operations for the thirteen and thirty-nine weeks then
     ended are based on certain estimates relating to
     quantities and cost as of the end of the fiscal year.

Note 2.  Securitization of Accounts Receivable

     On March 25, 1997, the Company entered into a one year
     agreement with the subsidiary of a major financial
     institution ("the purchaser") and Cone Receivables, LLC,

                          Page 8
<PAGE>
FORM 10-Q

Item 1.   (continued)

   NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

     a wholly owned subsidiary of Cone Mills Corporation,
     which allows the sale of up to $40 million undivided
     interest in eligible accounts receivable by Cone
     Receivables, LLC.  Cone Receivables, LLC, a qualifying
     special-purpose entity, meets the requirements for
     accounts receivable securitization in accordance with
     SFAS 125, "Accounting for Transfers and Servicing of
     Financial Assets and Extinguishments of Liabilities", and
     therefore is not a consolidated entity of Cone Mills. 
     Cone Mills accounts for the sale of receivables to Cone
     Receivables, LLC, as a true sale in accordance with SFAS
     125.

     At September 28, 1997, the Company had sold accounts
     receivable of $78 million, less a $2 million provision
     for doubtful accounts receivable, to Cone Receivables,
     LLC.  The Company currently has a subordinated note
     receivable from Cone Receivables, LLC of $36 million.

Note 3.  Long-Term Debt

     Long-term debt consists of the following:
<TABLE>
<S>                            <C>       <C>        <C>
                                       September 28, 1997        
                                           Current
                                  Total   Maturity   Long-Term
                                    (amounts in thousands)   
8% Senior Note                  $ 53,573   $10,714   $ 42,859
8-1/8% Debentures                 96,686         -     96,686

Total                           $150,259   $10,714   $139,545

                                       September 29, 1996       
                                           Current           
                                  Total   Maturity   Long-Term
                                    (amounts in thousands)   
8% Senior Note                  $ 64,285   $10,714   $ 53,571
8-1/8% Debentures                 96,243         -     96,243
Capital Lease Obligation           1,206       362        844
Other                                122        38         84

Total                           $161,856   $11,114   $150,742
</TABLE>
     In August of 1997, the Company signed a new three year
     $80 million revolving credit agreement with terms and
     conditions not materially different from the previous
     revolving credit agreement.
                          Page 9
<PAGE>
FORM 10-Q

Item 1.   (continued)

   NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


Note 4.  Class A Preferred Stock

     The 1998 dividend rate for Class A Preferred Stock is
     7.85%, payable March 31, 1998.


Note 5.  Earnings (Loss) Per Share
<TABLE>
<S>                        <C>       <C>       <C>       <C>
                                 Thirteen           Thirteen
                                Weeks Ended        Weeks Ended
                             September 28, 1997  September 29, 1996
                                        Fully               Fully
                             Primary   Diluted   Primary   Diluted 
                                  (amounts in thousands,
                                   except per share data)

Net income (loss)           $(1,366)  $(1,366)  $(2,243)  $(2,243)
Less:  Class A Preferred
        dividends            (  755)   (  755)   (  720)   (  720)

Adjusted net income (loss)  $(2,121)  $(2,121)  $(2,963)  $(2,963)

Weighted average common
  shares outstanding         26,109    26,109    27,416    27,416 
Common share equivalents           
  from assumed exercise
  of outstanding options,
  less shares assumed
  repurchased                     -         -         -         - 
  
Weighted average common
  shares and common share
  equivalents outstanding    26,109    26,109    27,416    27,416 

Earnings (loss) per common
  share and common share
  equivalent                 $( .08)   $( .08)   $( .11)   $( .11)
</TABLE>
                          Page 10
<PAGE>

FORM 10-Q

Item 1.   (continued)

   NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


Note 5. Earnings (Loss) Per Share (continued)
<TABLE>
<S>                      <C>       <C>         <C>       <C>
                             Thirty-Nine           Thirty-Nine
                             Weeks Ended           Weeks Ended
                          September 28, 1997    September 29, 1996
                                      Fully                Fully
                           Primary   Diluted     Primary  Diluted
                                  (amounts in thousands,
                                  except per share data)

Net income (loss)         $(4,432)  $(4,432)    $ 8,644   $ 8,644 
Less:  Class A Preferred
        dividends          (2,230)   (2,230)     (2,160)   (2,160)

Adjusted net income (loss)$(6,662)  $(6,662)    $ 6,484   $ 6,484 

Weighted average common
  shares outstanding       26,150    26,150      27,401    27,401 
Common share equivalents           
  from assumed exercise
  of outstanding options,
  less shares assumed
  repurchased                   -         -          53        53 
  
Weighted average common
  shares and common share
  equivalents outstanding  26,150    26,150      27,454    27,454 

Earnings (loss) per common
  share and common share
  equivalent               $( .25)   $( .25)     $  .24    $  .24
</TABLE>

Primary and fully diluted earnings (loss) per share have been
computed by dividing the net earnings (loss) available to
common stockholders by the sum of the weighted average common
shares and common share equivalents outstanding.  Common share
equivalents have been excluded when they would be
antidilutive.

                             Page 11
<PAGE>
FORM 10-Q

Item 1.   (continued)


   NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


Note 6.  Divestitures

     In January 1996, the Company completed the sale of its
     polyurethane products division. The Company sold all
     inventory and substantially all of the property, plant,
     and equipment of this division. Proceeds of $42.2 million
     had been received at September 29, 1996. Gain of $4.7
     million from disposal of this division was recognized in
     the first quarter 1996 financial statements as a
     restructuring item.

     In May 1997, the Company completed the sale of
     substantially all the assets of its real estate
     operations, including those of its subsidiary Cornwallis
     Development Co.  Proceeds of $19.5 million were received
     in the second quarter of 1997.  A reserve was established
     in the Company's fourth quarter 1996 financial statements
     to adjust the carrying value of these assets to estimated
     net realizable value.  The gain recognized upon the
     disposition of these assets in the second quarter of 1997
     was insignificant.

Note 7.  Restructuring Activities

     Restructuring costs of $3.1 million were incurred in the
     first nine months of 1997 related to the consolidation of
     operations from Cone's Granite Finishing Plant to its
     Carlisle facility.  Additional restructuring costs will
     be incurred during the fourth quarter of 1997 as
     consolidation of the facilities is substantially
     completed.

                          Page 12
<PAGE>
FORM 10-Q

Item 2.

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

OPERATING RESULTS

Third Quarter Ended September 28, 1997 Compared with Third
Quarter Ended September 29, 1996.

Sales for the third quarter of 1997 were $185.5 million, up
2.6%, as compared with sales of $180.8 million for the third
quarter of 1996. After eliminating the sales of business units
included in the Company's restructuring plan, sales increased
approximately 5%. Improved sales of denim, specialty
sportswear and jacquard fabrics accounted for the increase.
International sales, primarily denims, were $48.2 million, or
26% of total sales, as compared with $44.1 million, or 24% of
sales, for the third quarter of 1996. 

Cone Mills had a net loss for the third quarter of 1997 of
$1.4 million, or $.08 per share after preferred dividends,
which included a pre-tax charge of $1.3 million associated
with the consolidation of Granite Finishing into Carlisle
Finishing operations. For comparison, third quarter 1996 had
a net loss of $2.2 million, or $.11 per share. 

Gross profit for the third quarter of 1997 (net sales less
cost of sales and depreciation) was 10.1% of sales, as
compared with 12.0% for the previous year. The decrease was
primarily the result of mix changes to more basic denim
products with lower margins, pricing pressures, operating
disruption due to consolidation of finishing operations and
the increase in sales of product produced by Parras Cone where
a portion of the operating income is reported as equity in
earnings of unconsolidated affiliate. 

Business Segments. Cone operates in two principal business
segments, apparel fabrics and home furnishings products. The
following table sets forth certain net sales and operating
income (loss) information. 

                          Page 13

<PAGE>
FORM 10-Q

Item 2.   (continued)
<TABLE>
<S>                  <C>      <C>       <C>      <C>

                                 Third Quarter           
                            1997               1996     
                         (Dollar amounts in millions)
NET SALES 
   Apparel(1)         $ 157.7   85.0%    $ 154.2   85.3%
   Home Furnishings(2)   27.8   15.0        26.6   14.7
     Total            $ 185.5  100.0%    $ 180.8  100.0%

OPERATING INCOME (LOSS)(3)
   Apparel            $   4.4    2.8%    $   6.0    3.9%
   Home Furnishings      (4.4) (15.9)       (4.0) (14.9)
   Restructuring         (1.3)   -           (.2)   -
</TABLE>
(1)  Apparel includes synthetic fabrics net sales of $1.8
     million in 1996. 
(2)  Home furnishings includes Greeff and real estate net
     sales of $2.9 million in 1996. 
(3)  Operating income (loss) excludes general corporate
     expenses. Percentages reflect operating income (loss) as
     a percentage of segment net sales. 

   Apparel Fabrics. Apparel fabric segment sales for the third
   quarter of 1997 were $157.7 million, up 2.3% from the third
   quarter of 1996. Excluding sales of the synthetic fabrics
   business, which was sold in January of 1997, apparel fabric
   segment sales were up approximately 3%. Both denim and
   specialty sportswear sales increased. Denim sales increases
   from additional volume were partially offset by lower
   average prices, the result of a mix shift to more basic
   denims and price pressure. 

   For the third quarter of 1997, the apparel segment had
   operating income of $4.4 million, or 2.8% of sales, as
   compared with income of $6.0 million, or 3.9% of sales, in
   the third quarter of 1996. All domestic apparel fabric
   manufacturing facilities operated at less than capacity as
   the Company attempted to control inventory levels. The
   Company's Parras Cone joint venture denim plant in Mexico
   operated at capacity during the quarter. Cone's portion of
   Parras Cone's operating income is reported as equity in
   earnings of unconsolidated affiliate and therefore is
   excluded from apparel segment operating income. 

                          Page 14
<PAGE>
FORM 10-Q

Item 2.   (continued)

   Home Furnishings. For the third quarter of 1997, home
   furnishings segment sales were $27.8 million as compared
   with $26.6 million in the third quarter of 1996. Excluding
   sales of Greeff and real estate which were sold, sales of
   the home furnishings segment were up 17%, as compared to
   the third quarter of 1996. Higher sales of Cone Jacquards
   and Raytex finishing services accounted for the increase. 

   The home furnishings segment had an operating loss of $4.4
   million compared with a loss of $4.0 million for the third
   quarter of 1996. Home furnishings results were negatively
   impacted by the finishing division operating at less than
   capacity and the repositioning of the decorative fabrics
   product line in the marketplace. 

Total Company selling and administrative expenses declined
from $20.7 million for the third quarter of 1996 to $19.6
million in the third quarter of 1997, the result of the sale
of the real estate, Greeff and synthetic fabric operations as
well as a cost reduction program to reduce selling and
administrative expenses. Selling and administrative expenses
were 10.5% of sales in the third quarter of 1997 as compared
with 11.4% in the third quarter of 1996. 

Interest expense for the third quarter of 1997 was $3.4
million, down 9% from the third quarter of 1996, primarily the
result of lower borrowings. 

Equity in the income of Parras Cone, the joint venture plant
in Mexico, was $1.6 million, as compared with a loss of $0.5
million in the third quarter of 1996. The increase in income
was primarily the result of improved sales, operating levels
and efficiencies. 

Even though the Company has seen some improvement in denim
operations, including Parras Cone, the seasonal slowdown in
sales of home furnishings and specialty sportswear products as
well as the consolidation of finishing facilities will
continue to negatively impact earnings. However, Cone
continues to implement its five-point profitability
improvement program which includes focusing on core
businesses, aggressive marketing, cost reduction, the
reconfiguration of manufacturing operations and capital
conservation. These actions should position the Company for
improved results in 1998. 

                          Page 15
<PAGE>
FORM 10-Q

Item 2.   (continued)

The Company's major customer on November 3, 1997 announced the
closure of a number of denim jeans facilities in the United
States.  This decision is not expected to have a materially
adverse affect on the Company's ongoing operations.  Due to the 
uncertainties inherent in the textile business, it is not possible
to predict the ultimate effect of customer actions.

                          Page 15a
<PAGE>
FORM 10-Q

Item 2.   (continued)


Nine Months Ended September 28, 1997 Compared with Nine Months
Ended September 29, 1996.

While U.S. consumer spending in apparel and home furnishings
has  been strong for the first nine months of 1997, Cone Mills
continued to experience value-added denim inventory
adjustments by certain customers and weak fashion demand for
decorative prints. For the first nine months of 1996, the
Company experienced good demand for value-added denim apparel
fabrics and weak markets for both specialty sportswear and
home furnishings fabrics. 

Sales for the first nine months of 1997 were $546.0 million,
down 7.2%, as compared with sales of $588.3 million for the
first nine months of 1996. After eliminating the sales of
business units included in the Company's restructuring plan,
sales were down  approximately 4%. Lower sales in denim
products and decorative prints were partially offset by
increased specialty sportswear and jacquard sales.
International sales, primarily denims, were 25% of total sales
for both periods. 

Cone Mills had a net loss for the first nine months of 1997 of
$4.4 million, or $.25 per share after preferred dividends,
which included a pre-tax charge of $3.1 million associated
with the consolidation of the Granite operations into
Carlisle. For comparison, for the first nine months of 1996
net income was $8.6 million, or $.24 per share, including a
pre-tax gain of $4.5 million related to the sale of the
Olympic Products Division. 

Gross profit for the first nine months of 1997 (net sales less
cost of sales and depreciation) was 11.3% of sales, as
compared with 14.4% for the comparable 1996 period. The
decrease was primarily the result of lower average denim
prices including mix changes to more basic denim products with
lower prices, cost inefficiencies associated with operating
plants at less than capacity, operating disruption due to
consolidation of finishing operations and the increase in
sales of product produced by Parras Cone where a portion of
the operating income is reported as equity in earnings of
unconsolidated affiliate. 

Business Segments. Cone operates in two principal business
segments, apparel fabrics and home furnishings products. The
following table sets forth certain net sales and operating
income (loss) information. 

                          Page 16
<PAGE>
FORM 10-Q

Item 2.   (continued)
<TABLE>
<S>                  <C>      <C>       <C>      <C>
                                   Nine Months           
                            1997               1996     
                          (Dollar amounts in millions)
NET SALES 
   Apparel(1)         $ 465.1   85.2%    $ 500.8   85.1%
   Home Furnishings(2)   80.9   14.8        87.5   14.9
     Total            $ 546.0  100.0%    $ 588.3  100.0%

OPERATING INCOME (LOSS)(3)
   Apparel            $  16.7    3.6%    $  32.1    6.4%
   Home Furnishings     (11.2) (13.8)       (8.1)  (9.2)
   Restructuring         (3.1)   -           4.5    -
</TABLE>
(1)  Apparel includes synthetic fabrics net sales of $2.5
     million and $10.7 million in 1997 and 1996, respectively.
(2)  Home furnishings includes Greeff and real estate net
     sales of $2.2 million in 1997, and Olympic, Greeff and
     real estate net sales of $13.8 million in 1996. 
(3)  Operating income (loss) excludes general corporate
     expenses. Percentages reflect operating income (loss) as
     a percentage of segment net sales. 

   Apparel Fabrics. Apparel fabric segment sales for the first
   nine months of 1997 were $465.1 million, down 7.1% from the
   first nine months of 1996. Excluding sales of the synthetic
   fabrics business, which was sold in January of 1997,
   apparel fabric segment sales were down approximately 6%.
   Lower denim sales because of lower volume and prices
   partially offset by higher specialty sportswear sales
   accounted for the decrease. Average denim prices were down
   in the first nine months of 1997 as a result of a mix shift
   to more basic denims and price pressure from industry
   supply and demand imbalances. 

   For the first nine months of 1997, the apparel segment had
   operating income of $16.7 million, or 3.6% of sales, as
   compared with income of $32.1 million, or 6.4% of sales, in
   the first nine months of 1996. 

   Home Furnishings. For the first nine months of 1997, home
   furnishings segment sales were $78.7 million, excluding
   Olympic, Greeff and real estate, as compared with $73.7
   million in the first nine months of 1996, an increase of
   7%. Increased sales of Cone Jacquards was partially offset
   by lower sales in Cone Decorative Fabrics. The home
   furnishings segment had an operating loss of $11.2 million 

                          Page 17
<PAGE>
FORM 10-Q

Item 2.  (continued)

compared with a loss of $8.1 million for the first nine months
of 1996. Home furnishings results were negatively impacted by
weak decorative fabrics markets and the operating disruption
due to consolidation of finishing operations. 

Total Company selling and administrative expenses declined
from $64.2 million for the first nine months of 1996 to $58.6
million in the first nine months of 1997, the result of the
sale of the Olympic, Greeff, real estate and synthetic fabric
operations as well as a cost reduction program to reduce
selling and administrative expenses. Selling and
administrative expenses were 10.7% of sales in the first nine
months of 1997 as compared with 10.9% in the first nine months
of 1996. 

Interest expense for the first nine months of 1997 was $10.8
million, down 7% from the first nine months of 1996, primarily
the result of lower borrowing levels. 

For the first nine months of 1997, the income tax benefit as
a percent of the taxable loss was 37.1% compared with income
taxes of 32.6% for the first nine months of 1996. Both periods
reflect tax benefits resulting from operation of the Company's
foreign sales corporation. 


Liquidity and Capital Resources

The Company's principal long-term capital components consist
of $53.6 million outstanding under a Note Agreement with The
Prudential Insurance Company of America (the "Term Loan"), its
8 1/8% Debentures issued on March 15, 1995 and due March 15,
2005 (the "Debentures"), and stockholders' equity. Primary
sources of liquidity are internally generated funds, an $80
million Credit Agreement with a group of banks with Morgan
Guaranty Trust Company of New York ("Morgan Guaranty") as
Agent Bank (the "Revolving Credit Facility"), and the $40
million Receivables Purchase Agreement (the "Receivables
Purchase Agreement") with Delaware Funding Corporation, an
affiliate of Morgan Guaranty. The Receivables Purchase
Agreement is a one year agreement entered into on March 25,
1997 with Delaware Funding Corporation and Cone Receivables,
LLC, a wholly owned subsidiary of Cone Mills Corporation. The
Company's Revolving Credit Facility was entered into in August
1997 and is a successor facility with terms and conditions not
materially different from the previous facility. On September
28, 1997, the Company had funds available of $80 million under
its Revolving Credit Facility. 
                          Page 18
<PAGE>
FORM 10-Q

Item 2.   (continued)

During the first nine months of 1997, the Company generated
cash from operating activities before changes in working
capital of $13.7 million as compared with $28.3 million in the
first nine months of 1996. Working capital reductions in the
first nine months of 1997 were $5.3 million. Other uses of
cash in the first nine months of 1997 included $17.7 million
for capital expenditures, $10.8 million for repayment of long-
term debt, $1.5 million for the repurchase of common stock and
$2.9 million for preferred stock dividends. 

The Company believes that the proceeds from the divesture of
non-core businesses and the potential sale of its John Wolf
division (Cone Decorative Fabrics), together with Cone's
internally generated operating funds and funds available under
its credit facilities, will be sufficient to meet its working
capital, capital spending, potential stock repurchases, and
financing needs for the foreseeable future.  The Company has
Board authorization to purchase up to an additional 0.8
million shares of common stock. 

On September 28, 1997, the Company's long-term capital
structure consisted of $139.5 million of long-term debt and
$201.5 million of stockholders' equity. For comparison, on
September 29, 1996, the Company had $150.7 million of long-
term debt and $228.9 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
43% on September 28, 1997 and 41% on September 29, 1996. 

Accounts and note receivable on September 28, 1997, were $56.8
million, down from $63.4 million at September 29, 1996. At
September 28, 1997, the Company had sold accounts receivable
of $78 million to Cone Receivables, LLC, an unconsolidated
subsidiary, which subsequently sold $40 million of these
accounts receivables to an unrelated party.  In addition to
the $40 million received for the sale of these receivables,
the Company also has received a $36 million subordinated note
receivable from Cone Receivables, LLC. At September 29, 1996,
the Company had sold $42 million of accounts receivable to an
unrelated party. The decrease in accounts and note receivable
was primarily due to the collection of receivables from
business units sold and a lower number of days of sales
outstanding as certain customers paid in advance of due date.
The Company adopted SFAS 125 "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of
Liabilities" during the first quarter of 1997 (See Note 2 of 

                          Page 19
<PAGE>
FORM 10-Q

Item 2.   (continued)


Notes to Consolidated Condensed Financial Statements).
Receivables, including those sold pursuant to the Receivables
Purchase Agreement, represented 48 days of sales outstanding
at September 28, 1997 and 55 days at September 29, 1996.

Inventories on September 28, 1997, were $121.6 million, down
$23.9 million from September 29, 1996 levels. The decrease was
primarily due to the sale of operating units partially offset
by increases in raw material levels. 

Capital spending in 1997 is forecast to be approximately $40
million. Projects include new weaving machines that replace
1970s vintage weaving machines, link ring spinning, and
additional looms for the jacquard facility. Capital spending
in the first nine months of 1997 was $17.7 million. 

The Company has an agreement with CIPSA to purchase up to an
additional 33% of the existing outstanding common stock of
Parras Cone for an amount of $20 million if CIPSA does not
meet certain financial obligations. 

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

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

"Safe Harbor" Statement under Section 27A of the Securities
Act of 1993, 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 

                          Page 20
<PAGE>
FORM 10-Q

Item 2.   (continued)

   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, and (iv) the
   Company's relationships with Levi Strauss as its major
   customer. For a further description of these risks see the
   Company's 1996 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 1996 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. 


                          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, 

                          Page 21
<PAGE>
FORM 10-Q

Item 1.   (continued)

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 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 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.


Item 6.  Exhibits and Reports on Form 8-K

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

                          Page 22
<PAGE>
FORM 10-Q              INDEX TO EXHIBITS

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.
          
* 2.2(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)
          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.
                           Page 23
<PAGE>
FORM 10-Q              INDEX TO EXHIBITS

Exhibit                                           Sequential
  No.     Description                              Page No. 

* 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.

* 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.                      

                           Page 24
<PAGE>
FORM 10-Q              INDEX TO EXHIBITS

Exhibit                                            Sequential
  No.     Description                               Page No. 


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

* 2.3     Olympic Division Acquisition Agreement
          by and among Vitafoam Incorporated,
          British Vita PLC, and Registrant
          dated January 19, 1996 with related
          Lease Agreement, Lease Agreement and
          Option to Purchase, Sublease Agreement,
          Services Agreement, License Agreement 
          and Hold Back Escrow Agreement, each
          dated January 22, 1996.  The Acquisition
          Agreement and related agreements were
          filed as Exhibit 2.4 to the Registrant's
          report on Form 10-K for the year ended
          December 31, 1995. The following
          exhibits and schedules to the Acquisition
          Agreement have been omitted. The 
          Registrant hereby undertakes to furnish
          supplementally a copy of such omitted
          exhibit or schedule to the Commission upon
          request.

                           Page 25
<PAGE>
FORM 10-Q              INDEX TO EXHIBITS

Exhibit                                            Sequential
  No.     Description                              Page No. 

          Exhibits
           Exhibit A1      Form of Buyer Lease
           Exhibit A2      Form of Buyer Lease
           Exhibit B       Form of Holdback Escrow
                            Agreement
           Exhibit C1      Facility 1
           Exhibit C2      Facility 2
           Exhibit C3      Facility 3
           Exhibit C4      Facility 4
           Exhibit C5      Facility 5
           Exhibit C6      Facility 6
           Exhibit D       Form of Sublease Agreement
           Exhibit E       Form of Opinion of Buyer's
                            Counsel
           Exhibit F       Form of Opinion of Seller's
                            Counsel
           Exhibit G       Form of Assumption Agreement
           Exhibit H       Form of Services Agreement
           Exhibit I       Inventory Valuation Principles
           Exhibit J       Form of License Agreement

           Schedules
           Schedule 1.1(a) Excluded Assets
           Schedule 1.1(b) Tangible Fixed Assets
           Schedule 2.8    Assigned Contracts
           Schedule 2.10   Allocation of Purchase
                            Price
           Schedule 4.3    Consents and
                            Authorizations
           Schedule 4.7    Contracts by Category
           Schedule 4.9    Litigation
           Schedule 4.11   Tax Matters
           Schedule 4.12   Licenses and Permits
           Schedule 4.14   Tangible Personal
                            Property
           Schedule 4.15   Employees and Wage Rates
           Schedule 4.16   Insurance Policies
           Schedule 4.17   Intellectual Property
           Schedule 4.18   Licenses to Intellectual
                            Property; Third-party
                            Patents
           Schedule 4.19   Purchases from One Party
           Schedule 4.22   Real Property
           Schedule 4.23   Business Names
           Schedule 4.24   Environmental Matters
           Schedule 9.4    Facility 5 Remediation Plan    

                           Page 26
<PAGE>
FORM 10-Q              INDEX TO EXHIBITS

Exhibit                                            Sequential
  No.      Description                              Page No. 

* 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
           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.
                           Page 27
<PAGE>
FORM 10-Q              INDEX TO EXHIBITS

Exhibit                                            Sequential
  No.      Description                              Page No. 


* 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
           for the year ended December 29, 1996.

  4.3(i)   Letter Agreement dated as of
           July 31, 1997, between the Registrant
           and the Prudential Insurance Company
           of America.                                  32

  4.4      Credit Agreement dated August 7, 1997,
           among the Registrant, various banks
           and Morgan Guaranty Trust Company of
           New York as agent.                           34

* 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).


                           Page 28
<PAGE>
FORM 10-Q              INDEX TO EXHIBITS

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      The 401(k) Program of Cone Mills
           Corporation, amended and restated 
           effective December 1, 1994, filed as
           Exhibit 4.8 to the Registrant's
           report on Form 10-K for year ended
           January 1, 1995.                          

* 4.7(a)   First Amendment to the 401(k)
           Program of Cone Mills Corporation
           dated May 9, 1995, filed as 
           Exhibit 4.8(a) to the Registrant's
           report on Form 10-K for year ended
           December 31, 1995.

* 4.7(b)   Second Amendment to the 401(k)
           Program of Cone Mills Corporation
           dated December 5, 1995, filed as 
           Exhibit 4.8(b) to the Registrant's
           report on Form 10-K for year ended
           December 31, 1995.

  4.7(c)   Third Amendment to the 401(k)
           Program of Cone Mills Corporation
           dated August 7, 1997.                        81

* 4.8      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.

* 4.8(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.

                         Page 29
<PAGE>
FORM 10-Q              INDEX TO EXHIBITS

Exhibit                                            Sequential
  No.      Description                              Page No. 


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

  4.8(c)   Third Amendment to the Cone Mills
           Corporation 1983 ESOP dated
           August 7, 1997.                              83

* 4.9      Indenture dated as of February 14,
           1995, between Cone Mills Corporation
           and Wachovia Bank of North Carolina,
           N.A. as Trustee, filed as Exhibit 4.1
           to Registrant's Registration Statement
           on Form S-3 (File No. 33-57713).

 10        Fourth Amendment to the Employees'
           Retirement Plan of Cone Mills
           Corporation dated August 7, 1997.            85

 27        Financial Data Schedule                      87



                             
* Incorporated by reference to the statement or report
indicated.

                           Page 30
<PAGE>
FORM 10-Q



                        SIGNATURES


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



                             CONE MILLS CORPORATION
                             (Registrant)





Date: November 12, 1997      /s/ Anthony L. Furr          
                             Anthony L. Furr
                             Vice President and
                             Chief Financial Officer

                          Page 31
<PAGE>