Page 1 of 50
                              Index to Exhibits-Pages 25-35

             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 29, 1996

                             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 November 1,
1996: 26,459,133 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 Income
            Thirteen and thirty-nine weeks ended
            September 29, 1996 and October 1, 1995
            (Unaudited). . . . . . . . . . . . . . . . . . 3

         Consolidated Condensed Balance Sheets
            September 29, 1996 and October 1, 1995
            (Unaudited) and December 31, 1995. . . . . . . 4 & 5

         Consolidated Condensed Statements of
         Stockholders' Equity
            Thirty-nine weeks ended September 29, 1996
            and October 1, 1995 (Unaudited). . . . . . . . 6

         Consolidated Condensed Statements of
         Cash Flows
            Thirty-nine weeks ended September 29, 1996
            and October 1, 1995 (Unaudited). . . . . . . . 7

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

Item 2.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations . . 15


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings . . . . . . . . . . . . . . . . 23
Item 6.  Exhibits and Reports on Form 8-K. . . . . . . . . 24

                           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 INCOME

                         (amounts in thousands, except per share data)

                                                         Thirteen         Thirteen      Thirty-Nine      Thirty-Nine
                                                        Weeks Ended      Weeks Ended    Weeks Ended      Weeks Ended
                                                       Sept. 29, 1996   Oct. 1, 1995   Sept. 29, 1996   Oct. 1, 1995
                                                         (Unaudited)     (Unaudited)    (Unaudited)      (Unaudited)

Net Sales                                              $      180,849   $     231,699   $     588,250   $     690,856

Operating Costs and Expenses:
  Cost of sales                                               152,163         190,635         482,209         567,888
  Selling and administrative                                   20,694          22,075          64,201          64,852
  Depreciation                                                  6,994           7,201          21,139          21,603
  Loss (Gain) on sale of division                                 198               -          (4,486)              -

                                                              180,049         219,911         563,063         654,343

Income from Operations                                            800          11,788          25,187          36,513

Other Income (Expense):
  Interest income                                                 207             114             380             499
  Interest expense                                             (3,682)         (3,928)        (11,634)        (11,038)

                                                               (3,475)         (3,814)        (11,254)        (10,539)

Income (Loss) before Income Taxes (Benefit) and Equity in 
  Earnings (Losses) of Unconsolidated Affiliates               (2,675)          7,974          13,933          25,974

Income Taxes (Benefit)                                           (979)          2,791           4,540           9,091

Income (Loss) before Equity in Earnings (Losses) of
  Unconsolidated Affiliates                                    (1,696)          5,183           9,393          16,883

Equity in Earnings (Losses) of Unconsolidated Affiliates         (547)            683            (749)         (8,255)

Net Income (Loss)                                        $     (2,243)   $      5,866    $      8,644    $      8,628


Income (Loss) Available to Common Shareholders:
  Net Income (Loss)                                      $     (2,963)   $      5,146    $      6,484    $      6,516

Earnings (Loss) Per Share - Fully Diluted:
  Net Income (Loss)                                      $       (.11)   $        .19    $        .24    $        .24 

Weighted Average Common Shares and
  Common Share Equivalents Outstanding -
  Fully Diluted                                                27,416          27,530          27,454          27,506
</TABLE>

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

Item 1.(continued)
<TABLE>
<S>                                                       <C>               <C>             <C>
                              CONE MILLS CORPORATION AND SUBSIDIARIES
                               CONSOLIDATED CONDENSED BALANCE SHEETS

                       (amounts in thousands, except share and par value data)


                                                           September 29,      October 1,     December 31,
       ASSETS                                                  1996             1995            1995
                                                           (Unaudited)       (Unaudited)       (Note)
   Current Assets:
     Cash                                                  $      2,742      $       752     $        336

     Accounts receivable - trade, less provision for
       doubtful accounts $3,000; $3,000; $3,200                  63,413           81,868           60,955

     Inventories:
       Greige and finished goods                                 92,742           83,632           84,822
       Work in process                                           11,451           14,296           14,786
       Raw materials                                              9,434           18,874           29,274
       Supplies and other                                        31,851           31,266           33,492

                                                                145,478          148,068          162,374

     Other current assets                                        13,823            8,900           10,227

              Total Current Assets                              225,456          239,588          233,892

   Investments in Unconsolidated Affiliates                      35,853           37,429           37,680

   Other Assets                                                  41,178           38,957           45,540



   Property, Plant and Equipment:
     Land                                                        18,208           19,618           19,615
     Buildings                                                   82,399           83,094           89,128
     Machinery and equipment                                    313,409          313,999          322,361
     Other                                                       31,553           32,123           34,292

                                                                445,569          448,834          465,396

       Less accumulated depreciation                            200,817          193,045          198,188

              Property, Plant and Equipment-Net                 244,752          255,789          267,208



                                                           $    547,239      $   571,763     $    584,320

Note:  The balance sheet at December 31, 1995 has been derived from the audited financial statements
       at that date.
</TABLE>           
See Notes to Consolidated Condensed Financial Statements.

                                                 Page 4
<PAGE>
FORM 10-Q

Item 1.    (continued)
<TABLE>
<S>                                                        <C>               <C>              <C>
                            CONE MILLS CORPORATION AND SUBSIDIARIES
                             CONSOLIDATED CONDENSED BALANCE SHEETS

                     (amounts in thousands, except share and par value data)


                                                            September 29,       October 1,     December 31,
      LIABILITIES AND STOCKHOLDERS' EQUITY                      1996              1995            1995
                                                             (Unaudited)       (Unaudited)       (Note)

Current Liabilities:
   Notes payable                                            $      8,703      $    10,031      $     8,875
   Current maturities of long-term debt                           11,114           11,250           11,236
   Accounts payable - trade                                       26,981           36,402           40,023
   Sundry accounts payable and accrued expenses                   41,786           41,123           64,800
   Income taxes payable                                            2,227            1,289                -
   Deferred income taxes                                          25,510           28,190           25,938

      Total Current Liabilities                                  116,321          128,285          150,872

Long-Term Debt                                                   150,742          161,822          161,782

Deferred Items:
   Deferred income taxes                                          41,043           40,742           40,836
   Other deferred items                                           10,187            6,605            8,705

                                                                  51,230           47,347           49,541



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 27,336,333 shares;
      1995, 27,380,409 shares                                      2,734            2,738            2,738
   Capital in excess of par                                       70,687           71,090           71,090
   Retained earnings                                             125,592          131,726          119,825
   Currency translation adjustment                                (8,462)          (9,640)          (9,923)

                Total Stockholders' Equity                       228,946          234,309          222,125




                                                            $    547,239      $   571,763      $   584,320

Note:  The balance sheet at December 31, 1995 has been derived from the audited financial statements
       at that date.
</TABLE>
See Notes to Consolidated Condensed Financial Statements.

                                              Page 5
<PAGE>
FORM 10-Q

Item 1.  (continued)
<TABLE>
<S>                                           <C>        <C>           <C>           <C>
                         CONE MILLS CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              THIRTY-NINE WEEKS ENDED SEPTEMBER 29, 1996 AND OCTOBER 1, 1995
                        (amounts in thousands, except share data)
                                       (Unaudited)

                                                 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



                                                 Class A Preferred
                                                       Stock                    Common Stock
                                                Shares        Amount       Shares         Amount

Balance, January 1, 1995                       383,948    $   38,395    27,403,621    $     2,740
Net income                                           -             -             -              -
Currency translation loss (net
  of income tax benefit of $3,630)                   -             -             -              -
Class A Preferred Stock -
  Employee Stock Ownership Plan:
  Cash dividends paid                                -             -             -              -
Common Stock: 
  Options exercised                                  -             -         4,000              1
  Purchase of common shares                          -             -       (27,212)            (3)

Balance, October 1, 1995                       383,948    $   38,395    27,380,409    $     2,738

</TABLE>

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

Item 1.  (continued)
<TABLE>
<S>                                        <C>            <C>         <C>
                      CONE MILLS CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
           THIRTY-NINE WEEKS ENDED SEPTEMBER 29, 1996 AND OCTOBER 1, 1995
                     (amounts in thousands, except share data)
                                  (Unaudited)

                                            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)



                                            Capital in                  Currency
                                              Excess        Retained   Translation
                                              of Par        Earnings    Adjustment

Balance, January 1, 1995                    $   71,354     $ 125,771   $    (1,380)
Net income                                           -         8,628             -
Currency translation loss (net
  of income tax benefit of $3,630)                   -             -        (8,260)
Class A Preferred Stock -
  Employee Stock Ownership Plan:
  Cash dividends paid                                -        (2,673)            -
Common Stock: 
  Options exercised                                 25             -             -
  Purchase of common shares                       (289)            -             -

Balance, October 1, 1995                    $   71,090     $ 131,726   $    (9,640)

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

Item 1. (continued)
<TABLE>
<S>                                                                 <C>              <C>
                               CONE MILLS CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

                                             (amounts in thousands)
                                                                      Thirty-Nine     Thirty-Nine
                                                                      Weeks Ended     Weeks Ended
                                                                     Sept. 29, 1996   Oct. 1, 1995
                                                                      (Unaudited)     (Unaudited)

Cash Flows Provided by Operating Activities                           $    14,921      $   15,114

Cash Flows from Investing Activities:
   Investments in unconsolidated affiliates                                     -         (19,650)
   Proceeds from sale of division (a)                                      42,228               -
   Capital expenditures                                                   (21,367)        (41,092)
   Other                                                                    3,405           3,431

     Net cash provided by (used in) investing activities                   24,266         (57,311)

Cash Flows from Financing Activities:
   Decrease in checks issued in excess of deposits                        (21,829)         (1,712)
   Principal payments - long-term debt                                    (11,496)        (97,245)
   Proceeds from long-term debt borrowings                                      -          48,000
   Proceeds from debentures issued                                              -          99,831
   Other                                                                   (3,456)         (7,083)

     Net cash (used in) provided by financing activities                  (36,781)         41,791

     Net increase (decrease) in cash                                        2,406            (406)

Cash at Beginning of Period                                                   336           1,158

Cash at End of Period                                                 $     2,742      $      752


(a)Divestiture:
   Inventories                                                        $    14,926
   Property, plant and equipment                                           21,516
   Other                                                                    1,300
   Gain on sale                                                             4,486

     Proceeds from sale                                               $    42,228


Supplemental Disclosures of Additional Cash Flow Information:

Cash payments for:
   Interest, net of interest capitalized                              $    15,369      $   12,455

   Income taxes, net of refunds                                       $     4,929      $    4,245

Supplemental Schedule of Noncash Investing and Financing Activities:

   Receivable recorded from sale of division                          $     2,000      $        -

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



</TABLE>
See Notes to Consolidated Condensed Financial Statements.

                                              Page 7
<PAGE>

FORM 10-Q

Item 1.  (continued)



           CONE MILLS CORPORATION AND SUBSIDIARIES
    NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                     SEPTEMBER 29, 1996




Note 1.   Basis of Financial Statement Preparation

     The Cone Mills Corporation (the "Company") consolidated
     condensed financial statements for September 29, 1996 and
     October 1, 1995 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 29, 1996,
     October 1, 1995, and December 31, 1995 and the related
     consolidated condensed statements of income for the
     respective thirteen and thirty-nine weeks ended September
     29, 1996 and October 1, 1995, 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
     1995.
 
     Substantially all components of textile inventories are
     valued at the lower of cost or market using the last-in,
     first-out (LIFO) method.  Nontextile inventories are
     valued at the lower of average cost or market.  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 29, 1996 and October 1,
     1995 and related consolidated condensed statements of
     income 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.


                           Page 8
<PAGE>
FORM 10-Q

Item 1.   (continued)

    NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


Note 2.   Sale of Accounts Receivable

     The Company has an agreement with the subsidiary of a
     major financial institution which allows the sale without
     recourse of up to $50 million of an undivided interest in
     eligible trade receivables.  This agreement has been
     extended to June 1997.  Accounts receivable is shown net
     of $42 million sold at September 29, 1996, net of $32
     million sold at October 1, 1995, and net of $40 million
     sold at December 31, 1995. As a result of the sale of the
     interest in these receivables, cash flows provided by
     operating activities include an increase of $2 million
     and a decrease of $18 million for the thirty-nine weeks
     ended September 29, 1996 and October 1, 1995,
     respectively.

Note 3.   Investments in Unconsolidated Affiliates

     Investments in unconsolidated affiliated companies are
     accounted for by the equity or cost method depending upon
     ownership and the Company's ability to exert influence. 
     In 1995, the Company accounted for the results of CIPSA
     by the equity method.  Based upon a reduction in
     ownership to 18% and certain other factors, the Company
     will account for its investment in CIPSA by the cost
     method in 1996 and future periods.

     In December 1994, the Mexican government devalued the
     peso and allowed it to freely trade against the U.S.
     dollar resulting in a substantial decline in value of the
     peso versus the U.S. dollar.  On January 1, 1995, the
     peso was trading at 4.94 pesos per U.S. dollar versus an
     exchange rate of approximately 3.45 prior to the
     devaluation.  The peso continued to devalue versus the
     U.S. dollar in the first quarter of 1995 and was trading
     at an exchange rate of 6.78 pesos per U.S. dollar on
     April 2, 1995.  The devaluation of the peso created
     foreign currency transaction losses for the Company's
     Mexican affiliates, primarily related to debt denominated
     in U.S. dollars for Compania Industrial de Parras S.A.,
     ("CIPSA").  Primarily due to the devaluation of the peso,
     the Company recognized an $8.3 million loss as its pro
     rata share of these losses in its thirty-nine weeks 1995
     income statement.

                           Page 9
<PAGE>
FORM 10-Q

Item 1.  (continued)

    NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                              

Note 4.   Long-Term Debt
<TABLE>
<S>                              <C>        <C>        <C>     
                                        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

                                         October 1, 1995        
                                              Current           
                                    Total    Maturity   Long-Term
                                       (amounts in thousands)   

8% Senior Note                    $ 75,000   $ 10,714   $ 64,286
8-1/8% Debentures                   95,795          -     95,795
Capital Lease Obligation             1,533        327      1,206
Industrial Revenue Bonds               589        174        415
Other                                  155         35        120

Total                             $173,072   $ 11,250   $161,822

</TABLE>

Note 5.   Class A Preferred Stock

     The dividend rate for Class A Preferred Stock is 7.50%,
     which is payable March 31, 1997.

                           Page 10
<PAGE>

FORM 10-Q

Item 1.   (continued)

    NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Note 6.   Stock Option Plans
<TABLE>
<S>               <C>         <C>        <C>          <C>
                       1995     Exercise     1996      Exercise
                      Number     Price      Number      Price
                        Of      Weighted      Of       Weighted
                     Options    Average     Options    Average 
Outstanding -
  beginning
  of year          1,086,000   $ 12.66    1,047,000    $ 12.55
Granted                7,000     11.63        6,000      12.00  
Exercised             (4,000)     6.50      (61,800)      6.46
Forfeited            (42,000)    15.63      (69,000)     13.94

Outstanding -
  end of period    1,047,000   $ 12.56      922,200    $ 12.85

Exercisable at
  end of period      512,050                612,200 
</TABLE>
The following table summarizes information about stock options
outstanding at September 29, 1996:
<TABLE>
<S>               <C>            <C>             <C>
                      Number        Number        
 Exercise          Outstanding    Exercisable     Expiration
  Price             at 9/29/96     at 9/29/96        Date   

 $ 5.250                76,200         76,200     June, 1999
 $ 6.500                36,000         36,000     February, 2002
 $11.625                 6,000          6,000     May, 2002
 $12.000               379,000        151,600     November, 2004
 $12.000                 6,000          6,000     May, 2003
 $12.875                 6,000          6,000     May, 2001
 $15.625               413,000        330,400     February, 2003

                       922,200        612,200

</TABLE>
                           Page 11
<PAGE>
FORM 10-Q

Item 1.   (continued)

    NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


Note 7. Earnings (Loss) Per Share
<TABLE>
<S>                         <C>        <C>       <C>        <C>
                                   Thirteen           Thirteen
                                  Weeks Ended        Weeks Ended
                              September 29, 1996   October 1, 1995  
                                          Fully                Fully
                               Primary   Diluted   Primary    Diluted 
                                     (amounts in thousands,
                                     except per share data)
Income (loss) from
 continuing operations       $ (2,243)  $(2,243)  $ 5,866    $ 5,866 
 Less:  Class A Preferred
        dividends              (  720)   (  720)     ( 720)    ( 720)

Adjusted net income (loss)   $ (2,963)  $(2,963)  $  5,146   $ 5,146 

Weighted average common
 shares outstanding            27,416    27,416     27,380    27,380 
Common share equivalents            
 from assumed exercise
 of outstanding options,
 less shares assumed
 repurchased                        -         -        150       150 
 
Weighted average common
 shares and common share
 equivalents outstanding       27,416    27,416     27,530    27,530 

Earnings (loss) per common
 share and common share
 equivalent                  $  ( .11)  $ ( .11)  $    .19   $   .19

                           Page 12
<PAGE>
FORM 10-Q

Item 1.   (continued)

    NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


Note 7. Earnings (Loss) Per Share (continued)

                                 Thirty-nine         Thirty-nine
                                 Weeks Ended         Weeks Ended
                              September 29,1996    October 1, 1995  
                                          Fully                Fully
                               Primary   Diluted   Primary    Diluted 
                                     (amounts in thousands,
                                     except per share data)
Income from
 continuing operations       $  8,644   $ 8,644   $  8,628   $ 8,628 
 Less:  Class A Preferred
        dividends              (2,160)   (2,160)    (2,112)   (2,112)

Adjusted net income          $  6,484   $ 6,484   $  6,516   $ 6,516 

Weighted average common
 shares outstanding            27,401    27,401     27,380    27,380 
Common share equivalents            
 from assumed exercise
 of outstanding options,
 less shares assumed
 repurchased                       53        53        101       126 
 
Weighted average common
 shares and common share
 equivalents outstanding       27,454    27,454     27,481    27,506 

Earnings per common
 share and common share
 equivalent                  $    .24   $   .24   $    .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.

                           Page 13
<PAGE>
FORM 10-Q

Item 1.   (continued)


    NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


Note 8.   Sale of Division

     On January 22, 1996, the Company completed the sale of
     its Olympic Products Division to British Vita PLC.  The
     Company sold all inventory and substantially all of the
     property, plant and equipment of this division. Proceeds
     of $42,228,000 had been realized at September 29, 1996. 

                           Page 14
<PAGE>
FORM 10-Q

Item 2.

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


OPERATING RESULTS

Third Quarter Ended September 29, 1996 Compared with Third
Quarter Ended October 1, 1995.

U.S. consumer spending in apparel and home furnishings grew
modestly in the third quarter of 1996; however, manufacturers
were adversely affected by selective reductions in softgoods
inventories, which were disruptive to textile industry
operating schedules and prices. In addition, weak consumer
preference for printed home furnishings fabrics adversely
affected the decorative print business. In the third quarter
of 1996, the Company began to experience weaker demand in
selective value-added denim product lines. 

Cone Mills had third quarter 1996 sales of $180.8 million,
down 21.9%, as compared with sales of $231.7 million for the
third quarter of 1995. After eliminating the sales of the
Olympic Products Division, which was sold in January 1996,
third quarter 1995 sales were $208.2 million. Third quarter
1996 sales were down 13.2% from the 1995 period excluding
Olympic. Decreased denim sales account for the lower 1996
amounts. Export sales were $44.1 million, or 24% of total
sales, as compared with $50.3 million, or 22% of sales, for
the third quarter of 1995. 

The Company had a net loss of $2.2 million, or $.11 per share
after preferred dividends, for the third quarter of 1996,
including an after-tax charge of $.5 million from equity in
losses of unconsolidated Mexican affiliate. For comparison,
third quarter 1995 had net income of $5.9 million or $.19 per
share, including a $.7 million after-tax gain from
unconsolidated Mexican affiliates.

Gross profit for third quarter of 1996 (net sales less cost of
sales and depreciation) was 12.0% of sales, as compared with
14.6% for the previous year. This decrease was primarily the
result of lower volume and margins in denims. 


                           Page 15
<PAGE>
FORM 10-Q

Item 2.   (continued)


Business Segments. Cone Mills 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. 
<TABLE>
<S>                   <C>       <C>        <C>      <C>
                                   Third Quarter          
                             1996                 1995     
                          (Dollar amounts in millions)
NET SALES (1)
   Apparel             $ 154.2    85.3%     $ 180.3   77.8%
   Home Furnishings       26.6    14.7         51.4   22.2
     Total             $ 180.8   100.0%     $ 231.7  100.0%

OPERATING INCOME (LOSS)(2)
   Apparel             $   6.0     3.9%     $  12.4    6.9%
   Home Furnishings(3)    (4.0)  (14.9)        (1.2)  (2.3)

(1)  Net sales include Olympic's net sales of $23.5 million in
     1995. 
(2)  Operating income (loss) excludes general corporate
     expenses. Percentages reflect operating income (loss) as
     a percentage of segment net sales.
(3)  Operating income (loss) includes Olympic's operating loss
     of $.2 million in 1995. 
</TABLE>
   Apparel Fabrics. Apparel fabric segment sales for the third
   quarter of 1996 were $154.2 million, down 14.5% from 1995
   amounts. Lower denim sales due to lower volume accounted
   for the decrease. Third quarter 1996 operating margins for
   the apparel segment were 3.9% of sales, as compared with
   6.9% in 1995. Margin decreases were in all product lines
   with declines in denim accounting for approximately two-
   thirds of the change in margins as a percent of sales. The
   cost per pound paid by the Company for cotton decreased
   slightly as compared with 1995 amounts. Fabric prices on
   average were up 4.7% as compared to 1995 primarily the
   result of a mix shift in denims. Export sales, primarily
   denims, were down 11.8%, as compared with the previous
   year's amounts. The Company's denim manufacturing
   operations were affected by the North American supply and
   demand imbalance in basic denims and selective inventory
   imbalances in value-added denims. Specialty Sportswear
   operations continued to be affected by inventory imbalances
   in shirting fabrics resulting in operating production
   facilities at less than capacity. 


                           Page 16
<PAGE>
FORM 10-Q

Item 2.   (continued)


   Home Furnishings. For the third quarter of 1996, home
   furnishings segment sales were $26.6 million, down 4.8%
   from 1995 excluding Olympic. Both the Cone Finishing and
   Cone Decorative Fabrics Divisions had lower sales volume in
   1996 resulting from weak furniture markets and customer
   preference for fabrics other than prints. The home
   furnishings segment, excluding Olympic, had an operating
   loss of $4.0 million compared with a loss of $1.0 million
   for the 1995 period. The loss was primarily the result of
   lower sales volume, resulting in operating levels
   substantially less than capacity, and actions taken to
   reposition the Cone Decorative Fabrics print lines. Cone
   Jacquards incurred expected marginal start-up operating
   losses. 

Total Company selling and administrative expenses were $20.7 
million, as compared with $22.1 million for the third quarter
of 1995. Selling and administrative expense increased to 11.4%
of 1996 sales as compared with 9.5% for the previous year
because of a decline in sales arising primarily from the sale
of Olympic and lower than expected sales in remaining
operations. Even though progress is being made on reducing
administrative costs, the current infrastructure is matched to
higher levels of business activity and strategic growth
initiatives. Interest expense was $3.7 million in the period,
down slightly from $3.9 million in the 1995 period. 

Income taxes (benefit) as a percent of the taxable income
(loss) was 36.6% for the third quarter of 1996 compared with
35.0% for the 1995 period. Both periods reflect tax benefits
resulting from operation of the Company's foreign sales
corporation. 

For the remainder of 1996, management expects further
deterioration in operating results as operating schedules are
curtailed to bring denim and specialty sportswear inventories
into balance, and because of continued weak decorative print
markets. 


Nine Months Ended September 29, 1996 Compared with Nine Months
Ended October 1, 1995.

The Company experienced good demand for value-added denim
apparel fabrics and weak markets for specialty sportswear and
home furnishings fabrics in the first half of 1996. However, 

                           Page 17
<PAGE>
FORM 10-Q

Item 2.   (continued)


in the third quarter of 1996, the Company began to experience
weaker demand in selective value-added denim product lines
resulting from inventory adjustments in the softgoods
pipeline.

For the 1996 period, net sales were $588.3 million as compared
with $690.9 million for the first nine months of 1995.
Excluding the sales of Olympic, sales were $583.5 million and
$620.1 million respectively. Export sales, primarily denims,
accounted for 25% of sales in 1996 compared with 19% for 1995.

Net income for nine months 1996 was $8.6 million, or $.24 per
share after preferred dividends, including an after-tax gain
on the sale of Olympic of $2.8 million or $.10 per share. Net
income for the first nine months of 1995 was $8.6 million, or
$.24 per share including an after-tax charge of $8.3 million, 
from equity in losses of unconsolidated Mexican affiliates
related primarily to peso devaluations. 

Gross profit for first nine months of 1996 (net sales less
cost of sales and depreciation) was 14.4% of sales, as
compared with 14.7% for the previous year. 

Business Segments. Cone Mills 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.
<TABLE>
<S>                    <C>     <C>         <C>      <C>
                                 First Nine Months        
                             1996                1995     
                           (Dollar amounts in millions)
NET SALES (1)
   Apparel              $500.8   85.1%      $528.7    76.5%
   Home Furnishings       87.5   14.9        162.2    23.5
     Total              $588.3  100.0%      $690.9   100.0%

OPERATING INCOME (LOSS)(2)
   Apparel              $ 32.1    6.4%      $ 32.8     6.2%
   Home Furnishings(3)    (3.6)  (4.1)         4.2     2.6
</TABLE>
(1)  Net sales include Olympic's net sales of $4.8 million and
     $70.8 million in 1996 and 1995, respectively. 
(2)  Operating income (loss) excludes general corporate
     expenses. Percentages reflect operating income (loss) as
     a percentage of segment net sales.


                           Page 18
<PAGE>
FORM 10-Q

Item 2.   (continued)


(3)  Operating income (loss) includes the gain on the disposal
     of Olympic of $4.5 million in 1996 and Olympic operating
     income of $.1 million in 1995. 

   Apparel Fabrics. Apparel fabric segment sales for the first
   nine months of 1996 were $500.8 million, down 5.3% compared
   with sales of $528.7 million for nine months 1995. Denim
   sales for the nine month periods were essentially flat, a
   result of price increases and improved mix which were
   offset by lower volume. In addition, the Company
   experienced significantly lower specialty sportswear sales.
   Nine months 1996 operating margins for the apparel segment
   were 6.4% of sales as compared with 6.2% in 1995. Cotton
   costs increased marginally from 1995 amounts but were
   offset by price increases. Improved denim margins were
   partially offset by lower operating results in specialty
   sportswear fabrics product lines. Export sales, primarily
   denims, were up 15.5% compared with the previous year
   amounts.

   Home Furnishings. Excluding Olympic, for the first nine
   months of 1996 home furnishings segment sales were $82.7
   million, down 9.4% from 1995. Both the Cone Finishing and
   Cone Decorative Fabrics Divisions had lower sales in 1996
   resulting from weak furniture markets and customer
   preference for fabrics other than prints. The home
   furnishings segment, excluding Olympic, had an operating
   loss of $8.1 million compared with income of $4.1 million
   for the 1995 period. The loss was primarily the result of
   the lower sales volume and operating at levels
   substantially less than capacity. 

Total Company selling and administrative expenses were down 
slightly to $64.2 million as compared with $64.9 million, but
increased from 9.4% of sales to 10.9% of sales for the most
recent period as discussed above.

Interest expense for the first nine months of 1996 was up $.6
million as compared with the 1995 period. 

Income taxes as a percent of taxable income were 32.6% for the 
first nine months of 1996 compared with 35.0% for the first
nine months of 1995. Both periods reflect tax benefits
resulting from operation of the Company's foreign sales
corporation. 


                           Page 19
<PAGE>
FORM 10-Q

Item 2.   (continued)


Liquidity and Capital Resources

The Company's principal long-term capital components consist
of $64.3 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 a $50
million Receivables Purchase Agreement (the "Receivables
Purchase Agreement") with Delaware Funding Corporation, an
affiliate of Morgan Guaranty. On September 29, 1996, the
Company had funds available of $88.0 million under its
Revolving Credit Facility and Receivables Purchase Agreement.

For the first nine months of 1996, the Company generated $32.6
million from earnings before depreciation, amortization and
unconsolidated Mexican affiliate results, as compared with
$40.8 million for the first nine months of 1995. For the 1996
period, the Company increased its investments in working
capital which resulted in net cash provided by operations of
$14.9 million. Additional uses of cash during the first nine
months of 1996 included capital spending of $21.4 million and
the preferred stock dividend of $2.9 million. During the first
quarter of 1996, the Company sold Olympic which provided in
excess of $50 million of cash proceeds including the
collection of accounts receivable. 

The Company believes that the proceeds from the sale of the
Olympic Products Division, together with Cone's internally
generated operating funds and funds available under its
existing credit facilities, will be sufficient to meet its
working capital, capital spending, potential stock
repurchases, and financing needs for the foreseeable future. 

On September 29, 1996, the Company's long-term capital
structure consisted of $150.7 million of long-term debt and
$228.9 million of stockholders' equity. For comparison, at
October 1, 1995, the Company had $161.8 million of long-term
debt and $234.3 million of stockholders' equity. Long-term
debt (including current maturities of long-term debt) as a 


                           Page 20
<PAGE>
FORM 10-Q

Item 2.   (continued)


percentage of long-term debt and stockholders' equity was 41%
at the end of third quarter 1996 and 42% at October 1, 1995.

Accounts receivable on September 29, 1996, were $63.4 million,
down from $81.9 million at October 1, 1995. At the end of the
third quarter of 1996, the Company had sold $42 million of
accounts receivable, an increase of $10 million from the
amount sold at October 1, 1995. The decrease in accounts
receivable was primarily due to lower sales levels and the
additional amount sold under the receivables purchase
agreement. 

Inventories on September 29, 1996, were $145.5 million, up
approximately $10.1 million from third quarter 1995 levels
when adjusted for the sale of Olympic inventories. The
Company's additional finished goods inventories were the
result of lower unit sales than planned. 

Capital spending in 1996 was originally budgeted at $52
million with projects for new weaving machines, investments in
information systems and the expansion of the jacquard weaving
facility. For the first nine months of 1996 expenditures were
$21.4 million. The Board of Directors has approved a reduction
in the 1996 capital budget to $42 million.  This reduction of
$10 million reflects the adoption of new weaving technology in
the Company's relooming program that will allow the Company to
achieve modernization results at lower levels of capital
investment. 

Cone will redeploy capital from the reduction of the capital
spending budget and from the potential sale of non-core
businesses including its real estate operations, Cornwallis
Development Co., to support general corporate initiatives.
These initiatives include global expansion, reduction of debt
and potential common stock repurchases pursuant to its
existing stock repurchase program. As of November 1, 1996,
1,366,000 shares had been repurchased in open market
transactions  pursuant to an authorized repurchase program of
2.5 million shares, with 877,200 repurchased since September
29, 1996. 

The Company has agreements with Compania Industrial de Parras
S.A. ("CIPSA") to purchase up to an additional 33% of the
existing outstanding common stock of Parras Cone for an amount
of $20 million, the August 1995 book value, if CIPSA does not
meet certain financial obligations. 

                           Page 21
<PAGE>
FORM 10-Q

Item 2.   (continued)


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.


                           Page 22
<PAGE>
FORM 10-Q
                           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.

                           Page 23
<PAGE>
FORM 10-Q

Item 1.   (continued)


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 affect on the
Company's financial condition or results of operations.

The Company is a party to various other legal claims and
actions incidental to its business.  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 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 24
<PAGE>
FORM 10-Q              INDEX TO EXHIBITS

Exhibit                                               Sequential
  No.       Description                               Page No. 

* 2.1       Receivables Purchase Agreement dated
            as of August 11, 1992, between the
            Registrant and Delaware Funding
            Corporation filed as Exhibit 2.01 to 
            the Registrant's report on Form 8-K
            dated August 13, 1992.

* 2.1(a)    Amendment to Receivables Purchase
            Agreement dated April 4, 1994, between
            the Registrant and Delaware Funding 
            Corporation filed as Exhibit 2.1 to
            the Registrant's report on Form 8-K
            dated March 1, 1995.

* 2.1(b)    Amendment to Receivables Purchase 
            Agreement dated June 7, 1994, between
            the Registrant and Delaware Funding
            Corporation filed as Exhibit 2.2 to
            the Registrant's report on Form 8-K
            dated March 1, 1995.

* 2.1(c)    Amendment to Receivables Purchase
            Agreement dated as of June 30, 1994, 
            between the Registrant and Delaware
            Funding Corporation filed as Exhibit
            2.1 to the Registrant's report on
            Form 10-Q for the quarter ended
            July 3, 1994.

* 2.1(d)    Amendment to Receivables Purchase
            Agreement dated as of November 15, 1994,
            between the Registrant and Delaware
            Funding Corporation filed as Exhibit
            2.4 to the Registrant's report on
            Form 8-K dated March 1, 1995.

* 2.1(e)    Amendment to Receivables Purchase
            Agreement dated as of June 30, 1995,
            between the Registrant and Delaware
            Funding Corporation filed as Exhibit
            2.1(e) to the Registrant's report on
            Form 10-Q for the quarter ended
            July 2, 1995.

                               Page 25

<PAGE>
FORM 10-Q              INDEX TO EXHIBITS

Exhibit                                               Sequential
  No.       Description                               Page No. 

* 2.1(f)    Amendment to Receivables Purchase
            Agreement dated as of December 31,
            1995, between the Registrant and
            Delaware Funding Corporation, 
            filed as Exhibit 2.1(f) to the
            Registrant's report on Form 10-K
            for the year ended December 31, 1995.

* 2.1(g)    Amendment to Receivables Purchase
            Agreement and Letter Agreement
            referred to therein dated as of
            June 24, 1996, between the Registrant
            and Delaware Funding Corporation filed
            as Exhibit 2.1(g) to Registrant's report
            on Form 10-K for the quarter ended
            June 30, 1996.

  2.1(h)    Amendment to Receivables Purchase
            Agreement dated as of June 30, 1996,
            between the Registrant and Delaware
            Funding Corporation.                            37

  2.1(i)    Amendment to Receivables Purchase
            Agreement dated as of August 26, 1996,
            between the Registrant and Delaware
            Funding Corporation.                            40

  2.1(j)    Amendment to Receivables Purchase
            Agreement dated as of September 29,
            1996, between the Registrant and
            Delaware Funding Corporation.                   43
            
* 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.

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

Exhibit                                               Sequential
  No.       Description                               Page No. 


* 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.

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

Exhibit                                               Sequential
  No.       Description                               Page No. 

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

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

Exhibit                                               Sequential
  No.       Description                               Page No. 

* 2.3       Asset Purchase Agreement dated as
            of December 2, 1994 between the
            Registrant, Lancer Industries, Inc.
            and M.P.M. Transportation, Inc.,
            filed as Exhibit 2 to the Registrant's
            Current Report on Form 8-K dated
            December 2, 1994.

* 2.4       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.

            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

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

Exhibit                                               Sequential
  No.       Description                               Page No. 

            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       

* 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.

                               Page 30
<PAGE>
FORM 10-Q              INDEX TO EXHIBITS

Exhibit                                               Sequential
  No.       Description                               Page No. 

* 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.

* 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.       

                               Page 31
<PAGE>
FORM 10-Q              INDEX TO EXHIBITS

Exhibit                                               Sequential
  No.       Description                               Page No. 


* 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.

* 4.4       Credit Agreement dated as of August 13,
            1992, among Cone Mills Corporation,
            the banks listed therein and Morgan
            Guaranty Trust Company of New York,
            as Agent, with form of note attached
            filed as Exhibit 4.02 to the Registrant's
            report on Form 8-K dated August 13, 1992.

* 4.4(a)    Amended and Restated Credit Agreement
            dated November 18, 1994, among the 
            Registrant, various banks and Morgan
            Guaranty Trust Company of New York,
            as Agent, filed as Exhibit 4.1
            to the Registrant's report on Form 8-K
            dated March 1, 1995.

* 4.4(b)    Amendment to Credit Agreement dated as of
            June 30, 1995, amending the Amended and
            Restated Credit Agreement dated 
            November 18, 1994, among the Registrant,
            various banks and Morgan Guaranty Trust
            Company of New York, as Agent filed as
            Exhibit 4.4(b) to the Registrant's 
            report on Form 10-Q for the quarter 
            ended July 2, 1995.

* 4.4(c)    Amendment No. 2 to Credit Agreement
            dated as of December 31, 1995, amending
            the Amended and Restated Credit 
            Agreement dated November 18, 1994,
            among the Registrant, various banks
            and Morgan Guaranty Trust Company
            of New York, as Agent, filed as 
            Exhibit 4.4(c) to the Registrant's
            report on Form 10-K for year ended
            December 31, 1995.

                               Page 32
<PAGE>
FORM 10-Q              INDEX TO EXHIBITS

Exhibit                                               Sequential
  No.       Description                               Page No. 

  4.4(d)    Amendment No. 3 to Credit Agreement
            dated as of June 30, 1996 to the
            Amended and Restated Credit
            Agreement dated as of November 18,
            1994, among the Registrant, various
            banks and Morgan Guaranty Trust
            Company of New York, as Agent.                  46

4.4 (e)     Amendment No. 4 to Credit Agreement
            dated as of September 29, 1996 to
            the Amended and Restated Credit 
            Agreement dated as of November 18,
            1994, among the Registrant, various
            banks and Morgan Guaranty Trust
            Company of New York, as Agent.                  48

* 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).

* 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       Registration rights agreement dated
            as of March 30, 1992, among the 
            Registrant and the shareholders listed
            therein, filed as Exhibit 4.8 to the
            Registrant's Registration Statement on
            Form S-1 (File No. 33-46907).

* 4.8       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.                            

* 4.8(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.

                               Page 33
<PAGE>
FORM 10-Q              INDEX TO EXHIBITS

Exhibit                                               Sequential
  No.       Description                               Page No. 

* 4.8(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.

* 4.9       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.

* 4.9(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.

* 4.9(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.

* 4.10      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).

* 4.11      Form of 8 1/8% Debenture in aggregate
            principal amount of $100,000,000 due
            March 15, 2005, filed as Exhibit 4.11 
            to the Registrant's report on Form 10-K 
            for the year ended January 1, 1995.

Management contract or compensatory plan or arrangement 
(Exhibits 10.1 - 10.2)

*10.1       Amended and Restated 1992 Stock Plan
            filed as Exhibit 10.7(a) to
            Registrant's report on Form 10-Q
            for the quarter ended March 31, 1996.

                               Page 34
<PAGE>
FORM 10-Q              INDEX TO EXHIBITS

Exhibit                                               Sequential
  No.       Description                               Page No. 


*10.2       1997 Senior Management Incentive
            Compensation Plan filed as Exhibit 10.2
            to Registrant's report on Form 10-Q
            for the quarter ended March 31, 1996.


27          Financial Data Schedule                         50



                             
* Incorporated by reference to the statement or report
indicated.

                           Page 35
<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, 1996       /s/  JOHN L. BAKANE         
                              John L. Bakane
                              Executive Vice President and
                              Chief Financial Officer


                           Page 36