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

                                    FORM 10-K
(Mark One)
[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

For the fiscal year ended January 3, 1999
                                          OR
[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

For the transition period from              to

Commission File Number  1-3634

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

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

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

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

Securities registered pursuant to Section 12(b) of the Act:
                                                   Name of each exchange
    Title of each class                             on which registered
Common Stock, $ .10 par value                      New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Aggregate market value of voting stock held by nonaffiliates of the
registrant as of February 22, 1999: $127,161,165

Number of shares of common stock outstanding as of February 22, 1999:
25,432,233 shares.

Documents incorporated by reference: Portions of 1998 Annual Report to
Shareholders, Part II, Items 5, 6, 7, 7a and 8; Proxy Statement for Annual
Meeting to be held May 11, 1999, Part III, Items 10, 11, 12 and 13 of this
report.

Index to Exhibits - Pages 24-34


<PAGE>


                                        2

                                     PART I
ITEM 1.  BUSINESS

                                   THE COMPANY

OVERVIEW

Founded in 1891 Cone Mills Corporation (the "Company" or "Cone"), incorporated
and headquartered in North Carolina, is the world's largest producer of denim
fabrics and the largest commission printer of home furnishings in North America.
The Company competes domestically and internationally on the basis of styling
and product development, management experience, versatility and size of
manufacturing facilities and the Cone name and reputation. The Company has a 50%
interest in Parras Cone de Mexico, S.A. , ("Parras Cone"), a denim manufacturing
facility in Mexico, and an alliance with the Ashima Group of India.

The Company operates in four principal business segments: (1) Denim and Khaki,
(2) Yarn-Dyed Products, (3) Commission Finishing and (4) Decorative Fabrics. The
Company seeks growth of its products through expansion into new geographic areas
and markets, product development and investment in value-added technology such
as CAD/CAM. Capital expenditures for the last five years have totaled
approximately $205 million and the Company expects to spend approximately $15
million in 1999 for capital projects.

The Company is engaged in denim production in Mexico through a joint venture
facility with Compania Industrial de Parras, S.A., ("CIPSA"). This facility,
Parras Cone, has been producing basic denims and yarn since late 1995. As
approved by the Parras Cone Board of Directors, Cone markets and distributes the
denim production of Parras Cone.

In August 1998, the Company formed an alliance with the Ashima Group of India.
This alliance consists of an equity investment in Ashima Syntex Ltd.,
technical service agreements and a marketing agreement whereby Cone markets
Ashima denim and sportswear products outside the Indian sub-continent. See "Item
7. Management's Discussion and Analysis of Results of Operations and Financial
Condition, Long-Term Strategic Initiatives."

During early 1999, the Company announced a major reorganization and downsizing
initiative. Upon completion of its announced restructuring plan Cone will employ
approximately 5,000 employees and operate seven manufacturing plants in North
and South Carolina. The plan includes the reconfiguration and closing of
manufacturing


<PAGE>


                                        3

facilities and downsizing and reorganization of sales, manufacturing and
administrative staffs. See "Item 7. Management's Discussion and Analysis of
Results of Operations and Financial Condition, Long-Term Strategic Initiatives"
and "Item 8. Financial Statements and Supplementary Data," Note 21 of the Notes
to Consolidated Financial Statements.

BUSINESS SEGMENTS

Information concerning operating segments for the Company's 1998, 1997 and 1996
fiscal years are incorporated by reference. See "Item 7. Management's Discussion
and Analysis of Results of Operations and Financial Condition, Long-Term
Strategic Initiatives" and "Item 8. Financial Statement and Supplementary Data,"
Notes 18 and 21 of the Notes to Consolidated Financial Statements.

APPAREL PRODUCTS

Cone's apparel products group consists of two reporting segments:
the Denim and Khaki segment and the Yarn-Dyed Products segment.

Retail sales of denim and khaki apparel products have been growing in recent
years with khakis reporting double-digit increases for 1998 in the U.S. Flannel
shirting fabrics, which comprise the major portion of the Company's yarn-dyed
products, have seen a decrease in popularity in recent years as alternative
fabrics have gained fashion appeal. The Company believes that the rate of growth
in casual apparel fabrics, denim and khakis in particular, is the result of
several factors, including (i) the adoption of casual lifestyles by the
"baby-boom" generation, born between 1946 and 1964, and their children, (ii) the
enhanced value of casual garments to consumers resulting from lower acquisition
costs and lower life cycle costs, (iii) enhanced styling and comfort of casual
garments along with greater acceptance of casual wear in the workplace and (iv)
strong brands such as Levi, Dockers, Wrangler, The Gap, Old Navy and Arizona
which continue to create fashion interest for consumers.

The Company's domestic apparel fabrics markets have been affected by changing
demographics associated with the maturation of the baby-boom generation. As the
baby-boom generation has matured, product trends have evolved to higher quality
products with more diverse styling. As a result, many denim apparel customers
desire better fabric quality, durability and styling to meet consumer demand, as
well as faster service to reduce the risk of changing fashion trends. The size
of the 15-to-24 year old age category, which accounts for the largest jeans
consumption segment of the U.S.


<PAGE>


                                        4

population, began to expand in the mid-1990s when the children of baby-boomers
began to reach these ages. Demand for denim and khaki apparel is expected to
increase as this segment of the U.S. population expands.

At the retail level, mass market and specialty retailers have gained market
share from department stores. This change in distribution has created the need
to differentiate marketing and manufacturing to provide the right product to
each distribution channel. The Company uses its Parras Cone facility to target
the mass market channel of distribution while its U.S. facilities are more
focused on specialty retailers and department store channels of distribution.

Internationally, consumption of denims has plateaued in industrialized
countries, with Europe showing a slight decline in the past year as khakis and
other alternative fabrics have gained market share. In less industrialized
countries, the potential market for denim jeans has continued to grow as youth
populations expand. However, the growth in denim demand has been tempered by
economic weakness in Asia and South America. In addition the Company's sales
growth has been countered by increased global supply primarily in countries with
lower labor costs.

Marketing and Sales. The Company's marketing focus is to serve brand name
apparel customers through the development of products that are recognized in the
marketplace for their distinctive quality, durability and styling. Styles of the
Company's denim and other fabrics vary in color, finish, weight and
construction, depending upon fashion trends and the needs of the specific
customer. The Company's product development specialists monitor fashion trends
throughout the United States, Europe, Far East and South America, attend fashion
and trade shows, meet with garment manufacturers and retailers and conduct
market research. In addition, the Company maintains an international focus with
a long history of distributing its products internationally. In 1998 the Company
exported approximately 35% of its denim sales.

The apparel products group is organized and managed by its major product lines
of denim, khaki and other piece-dyed products, yarn-dyed products and products
produced by Ashima. The marketing group is headquartered in Greensboro, North
Carolina with sales offices in New York, San Francisco, Los Angeles, Dallas,
Brussels and Singapore to provide a more direct working relationship with the
customer. In addition, the Company has sales agents in Europe, Japan, Hong Kong,
Africa, and throughout Central and South America, and it maintains support
services in trade financing, traffic and transportation in order to support its
international presence. The


<PAGE>


                                        5

Company's strategy is to service its international customers with the same
degree of commitment to quality, service and fabric development as its domestic
customers. Cone's apparel products sales group and international agents
represent all product lines.

The Company's denim and khaki exports were approximately $177 million, $176
million and $188 million in 1998, 1997 and 1996, respectively.

Raw Materials. Cotton is the primary raw material for the Company's fabric
manufacturing operations, its purchased yarn and greige goods (fabrics that have
not been dyed or finished). United States agricultural programs affect the cost
and supply of cotton in the U.S., and the policies of foreign governments have
an effect on worldwide prices and supplies as well. The U.S. Department of
Agriculture provides several programs to keep the effective price to cotton
purchasers competitive with world levels while protecting the grower. Step 2 of
the Federal Agriculture Improvement and Reform Act provided a formula for
payments to users of domestically produced cotton when domestic cotton prices
exceeded world prices for a period of time. Funds for these payments were
depleted in December 1998. Step 3 of this program allows for the import of
cotton, which has become available to U.S. purchasers in March 1999, and has
resulted in the New York futures market price moving closer to the world price.
Although management believes that U.S. companies will continue to be able to
acquire adequate cotton supplies at prices competitive with offshore
manufacturers, there can be no assurance that these results will always occur.
To the extent that effective U.S. cotton prices exceed world prices, the
Company's competitiveness may be materially adversely affected, as the Company
cannot always fully pass increased cotton costs on to its customers. See "Item
7. Management's Discussion and Analysis of Results of Operations and Financial
Condition."

Since cotton is an agricultural product, its supply and quality are subject to
the forces of nature. Although the Company has always been able to acquire
sufficient supplies of cotton for its operations in the past, any shortage in
the cotton supply by reason of weather, disease or other factors could
materially adversely affect the Company's operations. See "Item 7. Management's
Discussion and Analysis of Results of Operations and Financial Condition."

The Company has an established cotton purchasing program, administered in
conformance with policies approved by the Board of Directors, to ensure an
uninterrupted supply of appropriate quality and quantities of cotton, to hedge
committed and anticipated fabric


<PAGE>


                                        6

sales and to manage margin risks associated with price fluctuations on
anticipated cotton purchases. The Company primarily uses forward purchase
contracts and, to a lesser extent, futures and options contracts. Management
believes that its cotton purchasing program has resulted in lower overall cotton
prices than if cotton were purchased solely on a spot market basis or by solely
matching cotton purchases with product sales. Since prices for forward purchase
contracts are sometimes fixed in advance of shipment, the Company may benefit
from its fixed price purchases in cotton if prices thereafter rise, or fail to
benefit if prices subsequently fall. There can be no assurance the forward
purchase contracts and hedging transactions will not result in higher cotton
costs to the Company or will protect the Company from price fluctuations.

Cone also purchases yarn, greige goods and dyes and chemicals. Based on the
Company's strategy to limit its investment in yarn manufacturing in the future,
it has formed alliances with yarn manufacturers to insure adequate supplies at
competitive prices. Pursuant to its decision to outsource an increased portion
of its yarn manufacturing, the Company has entered into a supply agreement with
Parkdale America, LLC, effective in 1999. Additional yarn and other materials
used by the Company have normally been available in adequate supplies through a
number of suppliers.

Trade. The North American Free Trade Agreement ("NAFTA"), which became effective
on January 1, 1994, has created a free-trade zone among Canada, Mexico and the
U.S. NAFTA contains safeguards which were sought by the U.S. textile industry,
including a rule of origin requirement that products be processed in one of the
three countries in order to benefit from the agreement. NAFTA will phase out all
trade restrictions and tariffs on textiles and apparel among the three
countries. In addition, legislation has been proposed that would grant benefits
to other countries in the Caribbean that are roughly equivalent to those
applicable to Mexico under NAFTA. The Company's Mexican joint venture, Parras
Cone, benefits from its access to U.S. markets. There can be no assurance that
NAFTA, or the possible adoption of any proposed legislation, will not adversely
affect the Company.

The Company has focused its operations on the manufacture of fabrics for use in
garments that are less vulnerable to import penetration. Management believes the
location of the Company's U.S. manufacturing facilities, its 50% interest in the
Parras Cone plant in Mexico, its alliance with the Ashima Group in India and its
emphasis on shortening production and delivery times allow Cone to respond more
quickly than foreign producers to changing fashion trends and to its


<PAGE>


                                        7

domestic customers' demands for precise production schedules and rapid delivery.
The Company has invested in technological and process improvements to meet
demand for quality and styling. Its emphasis on customer service is supported by
its just-in-time and quick response programs and by electronic data interchange
(EDI) with customers. These efforts have improved communication, planning and
processing time in manufacturing.

In instances where the Company finds itself uncompetitive with imports, the
Company is pursuing initiatives to either manufacture or source products
internationally.

DENIM AND KHAKI

The Company's denim products, accounting for the majority of this segment's
sales, are primarily designed for use in garments targeted for the upper-end
market, where styling and quality generally command premium fabric prices.
Fabric styling is supported by the Company's product development specialists.
Due to the nature of the manufacturing process, denim fabric contains variations
in color that give it a distinctive appearance. After weaving, denim fabrics and
garments are processed further in finishing operations that produce different
textures and other altered physical properties. In the dyeing and finishing of
khaki fabrics many different colors and finishes are produced including the
Company's fade resistant Deepdown(TM) fabric. During these processes, the
Company's product development specialists generally work in collaboration with
customers to assure that fabrics meet customer requirements and can be
manufactured efficiently. This creates a strong working relationship that allows
Cone to react quickly to its customers' rapidly changing needs.

Although the markets and end uses for denim are very diverse, the Company
categorizes the market into heavyweight denims and specialty weight denims.
Heavyweight denim is used primarily in jeans and is by far the largest segment
of the denim market. Within the heavyweight market, the Company further
classifies its denims as "value-added" and "basic." Value-added denims are
distinguished by fabric construction, yarn variations, finishes and new product
introductions. Basic denims are less differentiated by styling with competition
being primarily on the basis of price, quality and service.

Cone's value-added denims are sold principally to brand name apparel companies,
specialty retailers and brand name garment producers. Cone's basic denims are
used primarily in garments sold through retail chains, department stores and
catalogs. Although most of the


<PAGE>


                                        8

Company's basic denims are designed for the upscale segment of these markets,
the Company also produces high-quality basic heavyweight blue denim, primarily
at Parras Cone, to service the mass market distribution channel. Sales of basic
denims constituted approximately one-fourth of the Company's total denim sales
in 1998.

The Company's largest denim customer is Levi Strauss, whose 501(R) family of
jeans are produced solely from the Company's proprietary fabrics. Other
customers include V.F. Corporation (Wrangler and Lee), The Gap, Old Navy, Calvin
Klein, Aalfs, Arizona, P.L. Industries and Hilfiger. The Company's international
customers include Levi International, Joker Jeans and Big Star in Europe, Edwin
in Japan and VF Corporation (Wrangler and Lee) in South America.

Specialty weight denims include a variety of woven constructions, colors and
weights and are used primarily in fashion garment silhouettes and women and
children's wear. These fabrics constitute a growing portion of the denim market
as recent growth in denim has occurred in fashion silhouettes such as baggy
jeans and carpenter pants at the expense of basic five pocket jeans. These
denims tend to establish market trends because of their use in higher fashion
garments.

Cone also serves niche markets for piece-dyed fabrics with its ProSpin(R) fabric
which provides superior wrinkle resistance properties based upon yarn formation
technologies. In addition, Cone styles and distributes a line of specialty print
fabrics for a wide range of branded apparel customers. These fabrics, printed at
the Company's Carlisle plant, are products primarily for fashion women's and
children's wear.

Manufacturing. The Company's denim facilities are modern, flexible, vertically
integrated, and encompass all manufacturing processes necessary to convert raw
fiber into finished fabrics. The Company's denim weaving facilities have all
been re-loomed in the nineties. The Company's U.S. dyeing and finishing
facilities include a wide range of technologies, with seven indigo long-chain
dyeing machines, beam dyeing, continuous overdye machinery and raw cotton
dyeing equipment. As previously discussed, in addition to its U.S. facilities
the Company has a 50% interest in Parras Cone, a low cost producer of
high-quality basic denims.

Cone is recognized internationally as a quality leader with its weaving plants
being certified under the ISO 9002 process.

Product and process development is supported by manufacturing development
groups, which have specialists located in each facility.


<PAGE>


                                        9

These groups work with the Company's product development specialists and its
customers' designers to produce new products for the marketplace. The Company
uses on-line computer-aided design systems to increase styling effectiveness.

Competition. The denim and khaki fabrics business is highly competitive. Primary
competitive factors include price, product styling and differentiation, customer
service, quality and flexibility, with the significance of each factor dependent
upon the particular needs of the customer and the product involved.

No single company dominates the industry and domestic and foreign competitors
range from large, integrated enterprises to small niche concerns. Competition is
in the form of both domestic and foreign piece goods and in the form of imported
apparel garments from Mexico, Asia and other countries. The migration of garment
manufacturing facilities to Mexico and Caribbean countries, additional worldwide
capacity, more aggressive pricing from domestic companies and the proliferation
of newly styled fabrics competing for fashion acceptance have been factors
affecting the Company's business environment. Principal competitive factors in
the domestic and international markets for denims are quality, price and
styling. Denim jeans have an image of being uniquely American products. The
Company's competitiveness with producers from other countries is influenced by
tariffs and transportation costs. Any failure of the Company to compete
effectively in this environment or to keep pace with changing markets could have
a material adverse effect on the Company's results of operations and financial
position.

In recent years due to the competitiveness of the apparel business and the
criticality of low wage costs for garment producers the Company has been
exploring a number of international initiatives. Its objectives for expansion
into Mexico included seeking access to the Mexican distribution system to sell
the Company's products and access to lower cost cut-and-sew facilities in order
to increase market share with private label customers and large branded
customers migrating to Mexico. The Company is also seeking to gain production
cost advantages while benefiting from its technological expertise. As the
garment industry has migrated to Mexico from the U.S. the Company has benefited
from Parras Cone's cost structure, location and Cone's U.S. infrastructure.

In 1998, the Company formed an alliance with the Ashima Group of India that
allows Cone to market Ashima denim and sportswear products worldwide outside the
Indian sub-continent. This alliance will allow Cone to provide products to its
customers on a worldwide basis that cannot be competitively produced in the U.S.

The Company is continuously assessing the feasibility of additional


<PAGE>


                                       10

manufacturing platforms and alliances within certain trade blocs in order to
compete more effectively in its markets.

Seasonality. Demand for the Company's denim and khaki products and the level of
the Company's sales fluctuate moderately during the year. There are three retail
selling seasons: spring, fall (back-to-school) and the holiday season. The
Company's sales for a particular selling season generally begin six months in
advance of that season.

YARN-DYED PRODUCTS

Yarn-dyed products, primarily flannel, are principally used in menswear and in
lighter weight apparel products for women's and children's wear. These products
are sold through catalogs, department stores and discounters. Customers for
these fabrics include M. Fine, L.L. Bean, J.C. Penney and Woolrich.

Manufacturing. The Company's Salisbury facility provided the dyeing and weaving
production for the yarn-dyed product line. Due to extensive losses in this
product line in recent years and the cost structure of the Salisbury plant, in
January 1999, the Company announced its plans to close the facility. The Company
plans to continue to be in the yarn-dyed business primarily through products
produced by Ashima and potentially other third party manufacturers or on a
limited basis in its denim facilities.

The Company uses on-line computer-aided design systems to increase styling
effectiveness and will electronically link with Ashima in the development of
products and patterns.

Competition. The yarn-dyed products business is highly competitive with the
primary form of competition being imported garments and to a lesser extent North
and Central American piece goods. As with denim and khaki, primary competitive
factors include price, product styling and differentiation, customer service,
quality and flexibility. As styling has become more complex with finer yarn
counts, labor intensity of the product has increased resulting in increased cost
advantages for Asian producers.

As discussed previously, the Company formed an alliance with the Ashima Group of
India that allows Cone to market Ashima products worldwide outside the Indian
sub-continent. Ashima produces an extensive line of yarn-dyed products and the
Company will provide Ashima with its technical assistance and styling to enhance
Ashima's product offerings in this area. This alliance should provide Cone with
cost-competitive products for its customers.

Seasonality.  Demand for the Company's yarn-dyed products has been


<PAGE>


                                       11

very seasonal due to the fact that the primary product is heavyweight flannels.
As the Company moves forward in its alliance with Ashima the Company should have
products for both the Spring and Fall selling seasons.

COMMISSION FINISHING AND DECORATIVE FABRICS

Commission Finishing. The commission finishing segment, consisting of the
Company's Carlisle and Raytex plants, is the largest commission printer of
decorative fabrics in the United States and provides custom printing and
plainshade dyeing services to leading home furnishings stylists and
distributors. As commission printers, Carlisle and Raytex print fabrics owned by
customers on a fee basis. Converters purchase unfinished fabrics from weaving
mills, use outside sources such as Carlisle to dye the fabrics and print their
designs, and then market the finished fabrics to apparel manufacturers.

The home furnishings fabrics processed at its Carlisle facility are generally
used for upholstery and drapery prints. The Company also provides fabric
printing and plainshade dyeing services to converters of fashion apparel
fabrics. Cone's khaki product line is primarily dyed and finished at the
Carlisle facility.

The Carlisle plant is a modern, one-million square foot facility specializing in
rotary screen printing. In recent years, the Company has invested heavily in
computerized color-mixing systems and automated process controls in order to
support its competitive strategy of focusing on quality and service. Customers
for Carlisle's home furnishings printing services include Waverly Division of F.
Schumacher & Co., Springs Industries, Bloomcraft and P. Kaufman.

The Raytex plant is a modern, 260,000 square foot facility specializing in wide
rotary screen printing. In 1996, a new preparation range was installed providing
additional product capabilities. Raytex is one of the largest wide-fabric
commission printers in the United States. Customers for Raytex include Springs
Industries, Tietex Ticking, Dan River Mills, Revman Industries and Croscill.

Cone's commission finishing marketing headquarters are located in New York City.
Marketing efforts of the New York sales staff are augmented by close working
relationships between Carlisle and Raytex's production and technical staffs
and customers' designers and stylists. The Company's commission finishing
operations also maintain a customer service center that utilizes electronic data


<PAGE>


                                       12

interchange (EDI) with major customers.

Consumer fashion preference is based upon coloration, texture and value. As with
all home furnishing fabrics, there is fashion risk which affects consumer
preference. In recent years, home furnishing prints have experienced lesser
popularity than during previous years.

Decorative Fabrics. The Company's decorative fabrics segment includes John Wolf
and Cone Jacquards. John Wolf is a "converter" of printed and solid woven
fabrics for upholstery, draperies and bedspreads. A converter designs and
distributes fabrics, which are manufactured and printed for the converter by
others. The decorative fabrics' lines are printed primarily at the Carlisle
plant under the names "John Wolf Decorative Fabrics" and "David and Dash." John
Wolf customers include Corinthian Furniture Inc., Arden Companies, Bauhaus USA
Inc. and Burlington House Fabrics.

Cone Jacquards, a modern 138,000 square foot facility with wide weaving
machines, produces broadloom jacquard fabrics for furniture manufacturers,
fabric distributors, retailers, converters and specialty products manufacturers.
Customers for Cone Jacquards include Gum Tree Fabrics, Inc., Valley Forge
Fabrics, Inc., Fieldcrest Cannon and Westpoint Stevens, Inc.

Decorative fabrics are marketed domestically and internationally through the
segment's sales staff and sales agents. The sales staff and sales agents handle
sales to large customers such as hotels, institutions and furniture
manufacturers, as well as jobbers, who resell to decorators, fabric retailers
and certain smaller quantity users. International sales and sales to other
smaller customers are made primarily through agents.

Competition. The finishing and decorative fabrics business is highly competitive
and the Company competes primarily on the basis of quality and service. The
commission finishing segment competes directly with several large commission
printers as well as a number of smaller competitors. The decorative fabrics
segment competes with a large number of domestic and foreign suppliers of
decorative fabrics and jacquard woven fabrics.

Seasonality.  Demand for the Company's finishing services and
decorative fabrics and the level of the Company's sales fluctuate
moderately during the year.

OTHER SEGMENT

The "Other" segment consists of synthetic fabrics, which were sold


<PAGE>


                                       13

in January 1997, real estate operations, which were sold in May 1997, and other
miscellaneous ancillary operations.

TRADEMARKS, COPYRIGHTS AND PATENTS

The Company owns several registered trademarks containing the "Cone" name and
various designs. In addition, the Company holds various other trademarks, trade
names, copyrights and patents used in connection with its business and products,
both domestically and internationally. The Company believes that the name
recognition of Cone and its reputation for quality, service and product
development have value in both domestic and international markets.

CUSTOMERS

The Company has one customer, Levi Strauss, which accounts for more than 10% of
net sales. Sales to this customer accounted for approximately 32%, 37% and 49%
of sales in 1998, 1997 and 1996, respectively. Levi has recently announced the
closing of eleven plants in the United States as it transitions from owned
facilities to a greater reliance upon contractors. The Company cannot predict
the impact on sales, if any, of this change in Levi's manufacturing strategy.
The loss of Levi as a customer, or a significant reduction in its purchases from
the Company, would have a material adverse effect on the Company's financial
position and results of operations.

Levi has been a customer of the Company since 1915 and a close, cooperative
supplier/customer relationship has evolved through the development of the
Company's proprietary fabrics for use in Levi's 501(R) family of jeans. In
addition to supplying fabrics for Levi's 501(R) family of jeans, the Company
sells other denim fabrics to Levi. Because the Company is Levi's major denim
supplier, Levi initiated discussions with the Company in 1989 concerning ways to
assure the continuity of this relationship. As a result of these discussions,
Cone and Levi entered into an exclusive Supply Agreement as of March 30, 1992,
which confirms that Levi will continue to use only Cone's proprietary denim
fabrics in manufacturing Levi's 501(R) family of jeans and that Cone will
continue to supply such fabrics solely to Levi. The volume of purchases by Levi
and the prices charged by Cone will continue to be subject to customary
negotiations between the parties.

The Supply Agreement expires in March of 2004 and is automatically extended each
year, unless either party gives notice otherwise, so that the remaining term is
five years. Following a change in control, the Supply Agreement would terminate
at the end of the


<PAGE>


                                       14

three-year supply arrangement or of the lease term, as the case may be.
Additionally, Levi may terminate the Supply Agreement at any time upon 30 days'
written notice and either party may terminate the Supply Agreement in the event
of the other party's insolvency, bankruptcy or occurrence of a similar event.

BACKLOG

The Company's order backlog was approximately $155 million at January 3, 1999,
as compared to approximately $157 million at December 28, 1997. Physical
deliveries for accepted fabric orders in the apparel industry vary in that some
products are ordered for immediate delivery only, while others are ordered for
delivery several months in the future. In addition, the Company has an ongoing
proprietary program for which orders are issued only for nearby delivery.
Therefore, orders on hand are not necessarily indicative of total future
revenues. It is expected that substantially all of the orders outstanding at
January 3, 1999, will be filled within the first quarter of 1999.

RESEARCH AND DEVELOPMENT

The research and development activities of the Company are directed primarily
toward improving the quality, styling and performance of its apparel fabrics and
other products and services. The Company also is engaged in the development of
computer-aided design and manufacturing systems and other methods of improving
the interaction between the Company's stylists and its customers. These
activities are conducted at various facilities, and expenses related to these
activities are an immaterial portion of the Company's overall operating costs.

GOVERNMENTAL REGULATION

Federal, state and local regulations relating to the workplace and the discharge
of materials into the environment are continually changing; therefore, it is
difficult to gauge the total future impact of such regulations on the Company.
However, existing government regulations are not expected to have a material
effect on the Company's financial position, operating results or planned capital
expenditures. The Company currently has an active environmental protection
committee and an active workplace safety organization.

EMPLOYEES

At January 31, 1999, the Company employed approximately 6,100


<PAGE>


                                       15

persons, of whom approximately 1,100 were salaried and approximately 5,000 were
hourly employees. Of such hourly employees, approximately 1,650 are represented
by collective bargaining units and are employed under collective bargaining
agreements that provide for annual wage negotiations in the spring of each year.
Based upon its records relating to the withholding of union dues from employee
compensation, the Company believes that approximately 620 of its employees are
dues-paying union members. The Company has not suffered any major disruptions in
its operations from strikes or similar events for more than a decade and
considers its relationship with its employees to be satisfactory. The Company
expects to reduce the number of its employees to approximately 5,000 by mid-year
1999 pursuant to its restructuring program.

ITEM 2.  PROPERTY

Cone's U.S. manufacturing facilities consist of eight plants, six located in
North Carolina and two in South Carolina, with approximately 5.2 million square
feet of floor space. The denim and khaki segment operates four plants,
commission finishing operates two plants and yarn-dyed products and decorative
fabrics each operate one plant. The Company also maintains several distribution
centers and warehouses. Internationally, the Company has a 50% interest in a
575,000 square foot denim manufacturing facility in Parras, Mexico. The Company
announced in January 1999 the closing of its Salibury, North Carolina plant,
which contains approximately .5 million square feet of floor space, in the
second quarter of 1999. In early 1999, the Company also announced the closing of
the yarn manufacturing portions of two additional North Carolina facilities,
Florence and Cliffside, which constitute approximately .2 million square feet of
floor space.

All such facilities are maintained in good condition and are both adequate and
suitable for their respective purposes. The majority of the Company's
manufacturing facilities are substantially fully utilized.

All U.S. manufacturing facilities are held in fee and are substantially free of
any significant liens or other encumbrances. The Mexican denim facility serves
as collateral for a portion of the debt of the joint venture company.

The Company leases its executive and administrative offices, located in
Greensboro, North Carolina. Other offices, located in various U.S. cities,
Brussels, and Singapore, are leased from unrelated parties.



<PAGE>


                                       16

ITEM 3.  LEGAL PROCEEDINGS

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

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

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

The District Court held a hearing on July 24, 1995 to decide on the merits of
the Plaintiffs' lone remaining claim of unjust enrichment, and in an order
entered September 25, 1995, the District Court dismissed that claim with
prejudice. On October 20, 1995, the Plaintiffs appealed to the Court of Appeals
from the April 19, 1995 and September 25, 1995 orders of the District Court.
Oral argument on


<PAGE>


                                       17

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

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

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

Name                          Age     Position with the Company

John L. Bakane                 48     Director, President and
                                        Chief Executive Officer

G. Watts Carr III              56     Executive Vice President and
                                        President Apparel Products Group

Anthony L. Furr                55     Executive Vice President and
                                        Chief Financial Officer

Gary L. Smith                  40     Executive Vice President and
                                        Controller

Neil W. Koonce                 51     Vice President, General Counsel
                                        and Secretary

Terry L. Weatherford           56     Vice President

Marvin A. Woolen, Jr.          58     Vice President-Cotton Purchasing

David E. Bray                  60     Treasurer

All officers of the Registrant are elected or reelected each year at the Annual
Meeting of the Board of Directors or at other times


<PAGE>


                                       18

as necessary.  All officers serve at the pleasure of the Board of
Directors and until their successors are elected and qualified.

John L. Bakane joined the Company in 1975. He was named Chief Financial Officer
in 1988 and was elected to the Board of Directors in 1989. He was elected
Executive Vice President in 1995. In November 1996, he assumed responsibility
for management of the Denim Group of the Company and in April 1997 he was
appointed President of Cone Apparel Products Group. He was appointed Chief
Operating Officer in April 1998, and served in such capacity until elected
President and Chief Executive Officer in November 1998.

G. Watts Carr III was employed by the Company and named president of the
Company's largest division, Cone Denim North America, effective October 1996. In
February 1999, he was named Executive Vice President and President of the
Apparel Products Group. Prior to joining the Company, Mr. Carr was employed by
the North Carolina Department of Commerce as director of Business and Industry
Development from 1992 until he joined the Company and as president of the North
Carolina Partnership of Economic Development. Prior to 1992, he held a number of
management and executive positions in textiles with Macfield, Inc. and the
company with which it merged, Unifi, Inc.

Anthony L. Furr joined the Company in May 1997 as Vice President and Chief
Financial Officer and served in that capacity until February 1999 when he was
appointed Executive Vice President and Chief Financial Officer. From 1992 to
1995 he was Chairman, President and Chief Executive Officer of Wachovia Bank of
South Carolina, N.A. and Executive Vice President of the parent Wachovia
Corporation for whom he served as Executive Vice President and Chief Financial
Officer from 1990 to 1992.

Gary L. Smith was employed by the Company in 1981 and was serving as Manager of
Business Analysis when he was elected Assistant Controller in 1994. He was named
Controller in December 1996 and was appointed Executive Vice President in
February 1999.

Neil W. Koonce was employed by the Company in 1974. He has been
General Counsel since 1987, Vice President since 1989, and
Secretary since February 1999.

Terry L. Weatherford was employed by the Company and elected Assistant Secretary
in May 1993. He was elected Secretary in December 1993 and served in that
capacity until February 1999. In 1995 he also was elected Vice President.



<PAGE>


                                       19

Marvin A. Woolen, Jr. was employed by the Company in July 1995 as
director of cotton purchasing. He has been in the cotton sales,
merchandising, purchasing, classing and shipping business since
1971. He was elected Vice President in 1997. From 1988 to 1995 he
was president of Rollins Company, a cotton shipping firm.

David E. Bray has been employed by the Company since 1977 and has been Treasurer
since 1988.

                                     PART II

ITEM 5.     MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
            STOCKHOLDER MATTERS

The Company's Common Stock has traded on the New York Stock Exchange under the
ticker symbol "COE" since June 18, 1992, the date of its public offering. The
approximate number of holders of record of the Company's Common Stock as of
January 31, 1999, was 394.

Information required by this Item on the sales prices and dividends of the
Common Stock of the Company appearing under the heading "Quarterly Financial
Data (Unaudited)" on page 37 of the Registrant's 1998 Annual Report is
incorporated herein by reference.

ITEM 6.     SELECTED FINANCIAL DATA

The information appearing under the heading "Historical Financial Review" on
page 40 of the Registrant's 1998 Annual Report to Shareholders is incorporated
herein by reference.

ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
            OPERATIONS AND FINANCIAL CONDITION

The information appearing under the heading "Management's Discussion and
Analysis of Results of Operations and Financial Condition" on pages 12 through
18 of the Registrant's 1998 Annual Report to Shareholders is incorporated herein
by reference.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
            RISK

The information appearing under the heading "Market Risks" on pages 17 through 
18 of the Registrant's 1998 Annual Report to Shareholders is incorporated herein
by reference.

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



<PAGE>


                                       20

The consolidated financial statements and notes thereto, appearing on pages 20
through 37 of the Registrant's 1998 Annual Report to Shareholders, are
incorporated herein by reference.

ITEM 9.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
             ACCOUNTING AND FINANCIAL DISCLOSURE

None.

                                    PART III

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information relating to directors of the Company is presented under the heading
"Election of Directors" in the Company's definitive Proxy Statement prepared for
the Annual Meeting of Shareholders to be held on May 11, 1999, and is hereby
incorporated by reference. Information regarding executive officers is included
as Item 4A in Part I.

ITEM 11.     EXECUTIVE COMPENSATION

Information relating to executive compensation is presented under the heading
"Executive Compensation" in the Company's definitive Proxy Statement prepared
for the Annual Meeting of Shareholders to be held on May 11, 1999, and is hereby
incorporated by reference.

ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
             MANAGEMENT

Information with respect to beneficial ownership of the Company's voting
securities by each director and all officers and directors as a group, and by
any person known to beneficially own more than 5% of any class of voting
security of the Company, is presented under the heading "Security Ownership of
Directors, Nominees and Named Executive Officers" and "Security Ownership of
Certain Beneficial Owners" in the Company's definitive Proxy Statement prepared
for the Annual Meeting of Shareholders to be held on May 11, 1999, and is hereby
incorporated by reference.

ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information with respect to certain relationships and related transactions is
presented under the headings "Compensation of Directors" in the Company's
definitive Proxy Statement prepared for the Annual Meeting of Shareholders to be
held on May 11, 1999 and is hereby incorporated by reference.


<PAGE>


                                       21

                                     PART IV

ITEM 14.       EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
               FORM 8-K

(a)(1)         The following financial statements of the Registrant are
               incorporated by reference in Item 8 hereof:

                    Independent Auditor's Report

                    Consolidated Statements of Operations for the Years Ended
                    January 3, 1999, December 28, 1997 and December 29, 1996

                    Consolidated Balance Sheets as of January 3, 1999
                    and December 28, 1997

                    Consolidated Statements of Stockholders' Equity for the
                    Years Ended January 3, 1999, December 28, 1997 and December
                    29, 1996

                    Consolidated Statements of Cash Flows for the Years Ended
                    January 3, 1999, December 28, 1997 and December 29, 1996

                    Notes to Consolidated Financial Statements

(a)(2)         The following Financial Statement Schedules are
               presented on pages 22 through 23 hereto.

                    Report of Independent Auditor's relating to Schedule II

                    Schedule II - Valuation and Qualifying Accounts

                    All other schedules specified under Regulation S-X are
                    omitted because they are not applicable, not required or the
                    information required appears in the Consolidated Financial
                    Statements or Notes thereto.

(a)(3)         Exhibits.  Exhibits to this report are listed on the
               accompanying Index to Exhibits.

(b)            Reports on Form 8-K

                    No report on 8-K was filed during the fourth quarter of
                    1998.


<PAGE>


                                       22

                             MCGLADREY & PULLEN, LLP

                     CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS



             INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENT SCHEDULE




To the Board of Directors
Cone Mills Corporation
Greensboro, North Carolina

         Our audits were made for the purpose of forming an opinion on the
basic consolidated financial statements taken as a whole. The consolidated
supplemental Schedule II is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not a part of the basic
consolidated financial statements. This schedule has been subjected to the
auditing procedures applied in our audits of the basic consolidated financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic consolidated financial statements taken as a whole.





                                      /s/ McGLADREY & PULLEN, LLP
                                          MCGLADREY & PULLEN, LLP





Greensboro, North Carolina
February 19, 1999



<PAGE>


                                       23
<TABLE>
<CAPTION>
                                                                                                                            
                     CONE MILLS CORPORATION AND SUBSIDIARIES
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
      Years Ended January 3, 1999, December 28, 1997 and December 29, 1996
                                 (in thousands)


                          Column A                             Column B          Column C              Column D          Column E
------------------------------------------------------------- ----------- -------------------------- -------------      ----------
                                                                                   Additions
                                                                          --------------------------
                                                               Balance        (1)           (2)
                                                                  at       Charged to    Charged to                      Balance
                                                              beginning    costs and       other                         at end
                        Description                           of period     expenses      accounts   Deductions         of period
------------------------------------------------------------- ----------- ------------- ------------ ------------       -----------
<S>                                                           <C>         <C>           <C>           <C>                 <C>
January 3, 1999
     Valuation accounts deducted
        from the assets to which
        they apply:
            Provision for doubtful accounts                     $   1,500     $   1,433   $    -      $   1,433 (a)       $  1,500
                                                                ---------     ----------  -------     ----------          ---------
            Reserve for inventory (b)                               5,075         2,935        -          1,442              6,568
                                                                ---------     ----------  -------     ----------          ---------
            Reserve for fixed asset writedowns (b)                  1,638        15,800        -            700             16,738
                                                                ---------     ----------  -------     ----------           ---------
     Reserve for restructuring charges (b)                             -          1,058        -              -              1,058
                                                                ---------     ----------  -------     ----------           ---------
     Reserve for future losses (b)                                  1,357            88        -          1,323                122
                                                                ---------     ----------  -------     ----------           ---------



December 28, 1997
     Valuation accounts deducted
        from the assets to which
        they apply:
             Provision for doubtful accounts                    $   3,000     $     624   $    -      $   2,124  (a)(c)   $  1,500
                                                                ---------     ----------  -------     ----------          ---------
             Reserve for inventory (b)                                 -          5,075        -              -              5,075
                                                                ---------     ----------  -------     ----------          ---------
             Reserve for fixed asset writedowns                     2,638             -        -          1,000              1,638
                                                                ---------     ----------  -------     ----------          ---------
     Reserve for loss on real estate disposal                       4,500             -        -          4,500                  -
                                                                ---------     ----------  -------     ----------          ---------
     Reserve for future losses (b)                                  1,725           950        -          1,318              1,357
                                                                ---------     ----------  -------     ----------          ---------



December 29, 1996
     Valuation accounts deducted
        from the assets to which
        they apply:
              Provision for doubtful accounts                   $  3,200      $     127   $    -       $     327 (a)      $  3,000
                                                                ---------     ----------  -------     ----------          ---------
              Reserve for fixed asset writedowns (b)                   -          2,638        -              -              2,638
                                                                ---------     ----------  -------     ----------          ---------
     Reserve for loss on real estate disposal (b)                      -          4,500        -              -              4,500
                                                                ---------     ----------  -------     ----------          ---------
     Reserve for future losses (b)                                 2,644          1,522        -          2,441              1,725
                                                                ---------     ----------  -------     ----------          ---------

</TABLE>

(a) Represents bad debts charged off.

(b) Represents reserves charged to costs and expenses.

(c) Includes reduction of $1,750 related to sale of receivables to Cone
    Receivables, LLC.




<PAGE>


                                       24

Exhibit                                                           Sequential
  No.         Description                                          Page No.

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

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

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

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

 2.1(e)       Third Amendment to Receivables
              Purchase Agreement dated as of
              December 23, 1998, between the
              Registrant and Delaware Funding
              Corporation.                                                37

*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


<PAGE>


                                       25

Exhibit                                                           Sequential
  No.         Description                                          Page No.

              exhibits herein numbered 2.2(b),(c),
              (d), (f), (g), and (j) attached.

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

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

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

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

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

*2.2(g)       Parras Registration Rights Agreement


<PAGE>


                                       26

Exhibit                                                           Sequential
  No.         Description                                          Page No.

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

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

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

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

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

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

*2.2(m)       Letter Agreement dated January 11, 1996
              among Registrant, Rodolfo Garcia Muriel,


<PAGE>


                                       27

Exhibit                                                           Sequential
  No.         Description                                          Page No.

              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.

*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


<PAGE>


                                       28

Exhibit                                                           Sequential
  No.         Description                                          Page No.

              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.

*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, filed as Exhibit 4.3(i) to


<PAGE>


                                       29

Exhibit                                                           Sequential
  No.         Description                                          Page No.

              the Registrant's report on Form 10-Q
              for the quarter ended September 28, 1997.

*4.3(j)       Modification to Note Agreement dated as
              of February 14, 1998, between the
              Registrant and The Prudential
              Insurance Company of America, filed
              as Exhibit 4.3(j) to Registrant's
              report on Form 10-Q for the quarter
              ending March 29, 1998.

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

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

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

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

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

*4.7(b)       Second Amendment to the Cone Mills
              Corporation 1983 ESOP dated
              December 5, 1995,  filed as
              Exhibit 4.9(b) to the Registrant's


<PAGE>


                                       30

Exhibit                                                           Sequential
  No.         Description                                          Page No.

              report on Form 10-K for year ended
              December 31, 1995.

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

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

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

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

*10.1         Employees' Retirement Plan of Cone
              Mills Corporation as amended and
              restated effective December 1, 1994,
              filed as Exhibit 10.1 to the
              Registrant's report on Form 10-K for
              the year ended January 1, 1995.

*10.1(a)      First Amendment to the Employees'
              Retirement Plan of Cone Mills
              Corporation dated May 9,1995, filed
              as Exhibit 10.1(a) to the
              Registrant's report on Form 10-K for
              the year ended December 31, 1995.

*10.1(b)      Second Amendment to the Employees'
              Retirement Plan of Cone Mills


<PAGE>


                                       31

Exhibit                                                           Sequential
  No.         Description                                          Page No.

              Corporation dated December 5, 1995,
              filed as Exhibit 10.1(b) to the
              Registrant's report on Form 10-K for
              the year ended December 31, 1995.

*10.1(c)      Third Amendment to the Employees'
              Retirement Plan of Cone Mills
              Corporation dated August 16, 1996,
              filed as Exhibit 10.1(c) to the
              Registrant's report on Form 10-K for
              the year ended December 29, 1996.

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

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

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

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

*10.4         1984 Stock Option Plan of Registrant
              filed as Exhibit 10.7 to the Registrant's
              Registration Statement on Form S-1
              (File No. 33-28040).


<PAGE>


                                       32

Exhibit                                                           Sequential
  No.         Description                                          Page No.

*10.5         Form of Nonqualified Stock Option
              Agreement under 1984 Stock Option Plan
              of Registrant filed as Exhibit 10.8 to
              the Registrant's Registration Statement
              on Form S-1 (File No. 33-28040).

*10.6         Form of Incentive Stock Option Agreement
              under 1984 Stock Option Plan of
              Registrant filed as Exhibit 10.9 to the
              Registrant's Registration Statement on
              Form S-1 (File No. 33-28040).

*10.7         1992 Stock Option Plan of Registrant
              filed as Exhibit 10.9 to the
              Registrant's Report on Form 10-K for
              the year ended December 29, 1991.

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

*10.8         Form of Incentive Stock Option Agreement
              under 1992 Stock Option Plan filed as
              Exhibit 10.10 to the Registrant's
              report on Form 10-K for the year
              ended January 3, 1993.

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

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

*10.8(c)      Form of Restricted Stock Award
              Agreement under 1992 Amended and


<PAGE>


                                       33

Exhibit                                                           Sequential
  No.         Description                                          Page No.

              Restated Stock Plan, filed as Exhibit
              10.8(c) to the Registrant's report on
              Form 10-K for the year ended December
              28, 1997.

*10.9         1994 Stock Option Plan for Non-
              Employee Directors of Registrant
              filed as Exhibit 10.9 to Registrant's
              report on Form 10-K for the year
              ended January 2, 1994.

*10.10        Form of Non-Qualified Stock Option
              Agreement under 1994 Stock Option
              Plan for Non-Employee Directors of
              Registrant filed as Exhibit 10.10 to
              Registrant's report on Form 10-K for
              the year ended January 2, 1994.

*10.11        Management Incentive Plan of the
              Registrant filed as Exhibit 10.11(b)
              to Registrant's report on Form 10-K
              for the year ended January 3, 1993.

*10.12        1997 Senior Management Incentive
              Compensation Plan filed as Exhibit
              10.2 to Registrant's report on Form
              10-Q for the quarter ended March 31,
              1996.

*10.13        1997 Senior Management Discretionary
              Bonus Plan, filed as Exhibit 10.13 to
              the Registrant's report on Form 10-K
              for the year ended December 29, 1996.

*10.14        Form of Agreement between the Registrant
              and Levi Strauss dated as of March 30,
              1992, filed as Exhibit 10.14 to the
              Registrant's Registration Statement on
              Form S-1 (File No. 33-46907).

*10.15        First Amendment to Supply Agreement
              dated as of April 15, 1992, between
              the Registrant and Levi Strauss dated
              as of March 30, 1992, filed as
              Exhibit 10.15 to Registrant's
              Registration Statement


<PAGE>


                                       34

Exhibit                                                           Sequential
  No.         Description                                          Page No.

              on Form S-1 (No. 33-46907).

10.16         Agreement dated December 21, 1998
              between the Registrant and J. Patrick
              Danahy.                                                     40

10.17         Agreement dated January 1, 1999 between
              the Registrant and Parkdale Mills, Inc.                     50

13            1998 Annual Report                                          57

21            Subsidiaries of the Registrant.                            122

23.l          Consent of McGladrey & Pullen, LLP,
              independent auditor, with respect to
              the incorporation by reference in the
              Registrant's Registration Statements
              on Form S-8 (Nos. 33-31977; 33-31979;
              33-51951; 33-51953; 33-53705 and
              33-67800) of their reports on the
              consolidated financial statements
              and schedules included in this
              Annual Report on Form 10-K.                                123

 27           Financial Data Schedule                                    124


* Incorporated by reference to the statement or report indicated.
























<PAGE>


                                       35


                                   SIGNATURES

  Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant had duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                                      CONE MILLS CORPORATION

Date:   April 1, 1999                                  By: /s/ John L. Bakane
      -----------------                                    ------------------
                                                           John L. Bakane
                                                           President and Chief
                                                           Executive Officer


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

      Signature                         Title                            Date

/s/ Dewey L. Trogdon          Chairman of the Board               April 1, 1999
---------------------
(Dewey L. Trogdon)


/s/ John L. Bakane            Director, President                 April 1, 1999
------------------            and Chief Executive
(John L. Bakane)              Officer (Principal
                              Executive Officer)



/s/ Anthony L. Furr           Executive Vice President            April 1, 1999
---------------------         and Chief Financial
(Anthony L. Furr)             Officer



/s/ Gary L. Smith             Executive Vice President            April 1, 1999
---------------------         and Controller(Principal
(Gary L. Smith)               Accounting Officer)


/s/ Doris R. Bray             Director                            April 1, 1999
---------------------
(Doris R. Bray)


/s/ Jeanette C. Kimmel        Director                            April 1, 1999
----------------------
(Jeanette C. Kimmel)


<PAGE>


                                       36

      Signature                     Title                            Date


/s/ Charles M. Reid           Director                            April 1, 1999
----------------------
(Charles M. Reid)


/s/ John W. Rosenblum         Director                            April 1, 1999
---------------------
(John W. Rosenblum)


/s/ Cyrus C. Wilson           Director                            April 1, 1999
--------------------
(Cyrus C. Wilson)


/s/ Nicholas Shreiber         Director                            April 1, 1999
---------------------
(Nicholas Shreiber)