<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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


                                    FORM 10-Q

For the Quarter Ended June 30, 2001                Commission File Number 1-5315

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

                            SPRINGS INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)


               SOUTH CAROLINA                             57-0252730
     (State or other jurisdiction of                    (I.R.S. Employer
      incorporation or organization)                   Identification No.)


205 North White Street
Fort Mill, South Carolina                                     29715
(Address of principal executive offices)                    (Zip Code)

               Registrant's telephone number, including area code:
                                 (803) 547-1500

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


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 at least the past 90 days.

                                 Yes [X] No [ ]

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

As of August 8, 2001, there were 10,816,710 shares of Class A Common Stock and
7,151,563 shares of Class B Common Stock of Springs Industries, Inc.
outstanding.

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

There are 23 pages in the sequentially numbered, manually signed original of
this report.


                                      -1-
<PAGE>   2



                         TABLE OF CONTENTS TO FORM 10-Q



PART I - FINANCIAL INFORMATION


<TABLE>
<CAPTION>
ITEM                                                                     PAGE
----                                                                     ----
<S>               <C>                                                    <C>

1.                FINANCIAL STATEMENTS                                     3

2.                MANAGEMENT'S DISCUSSION AND ANALYSIS OF                 14
                    FINANCIAL CONDITION AND RESULTS OF OPERATIONS

3.                QUANTITATIVE AND QUALITATIVE DISCLOSURES
                    ABOUT MARKET RISK                                     21
</TABLE>



PART II - OTHER INFORMATION


<TABLE>
<CAPTION>
ITEM                                                                     PAGE
----                                                                     ----
<S>               <C>                                                    <C>

6.                EXHIBITS AND REPORTS ON FORM 8-K                        22


SIGNATURES                                                                23
</TABLE>


                                      -2-
<PAGE>   3




                         PART I - FINANCIAL INFORMATION
                          ITEM 1.- FINANCIAL STATEMENTS


SPRINGS INDUSTRIES, INC.
Condensed Consolidated Statements of Operations
     and Retained Earnings
(In thousands except per share amounts)
(Unaudited)

<TABLE>
<CAPTION>
                                                        THIRTEEN WEEKS ENDED                     TWENTY-SIX WEEKS ENDED
                                                   -----------------------------           ---------------------------------
                                                   JUNE 30,             JULY 1,             JUNE 30,              JULY 1,
                                                      2001                2000                2001                  2000
                                                   ---------           ---------           -----------           -----------
<S>                                                <C>                 <C>                 <C>                   <C>
Operations
   Net sales                                       $ 546,942           $ 573,128           $ 1,117,322           $ 1,166,352

   Cost and expenses:
      Cost of goods sold                             446,133             456,994               916,150               935,161
      Selling, general and
         administrative expenses                      65,430              72,946               133,243               147,264
      Provision for uncollectible
         receivables                                   1,223               1,282                 3,507                 2,297
      Restructuring and realignment
         (income) expenses                              (500)              2,890                  (500)                2,890
      Expenses related to
         recapitalization proposal                     1,231                  --                 3,481                    --
      Interest expense                                 6,338               8,018                13,923                15,894
      Other expense (income), net                        192                 139                  (200)                   57
                                                   ---------           ---------           -----------           -----------
         Total                                       520,047             542,269             1,069,604             1,103,563
                                                   ---------           ---------           -----------           -----------

Income before income taxes                            26,895              30,859                47,718                62,789

Income tax provision                                   9,945              11,415                17,645                23,238
                                                   ---------           ---------           -----------           -----------

      Net income                                   $  16,950           $  19,444           $    30,073           $    39,551
                                                   =========           =========           ===========           ===========

Basic earnings per common share                    $    0.94           $    1.08           $      1.68           $      2.21
                                                   =========           =========           ===========           ===========

Diluted earnings per common share                  $    0.93           $    1.06           $      1.65           $      2.16
                                                   =========           =========           ===========           ===========

Cash dividends declared per common share:
      Class A common shares                        $    0.33           $    0.33           $      0.66           $      0.66
                                                   =========           =========           ===========           ===========
      Class B common shares                        $    0.30           $    0.30           $      0.60           $      0.60
                                                   =========           =========           ===========           ===========

Basic weighted-average
     common shares outstanding                        17,959              17,923                17,947                17,917
Dilutive effect of stock-
     based compensation awards                           360                 408                   320                   352
                                                   ---------           ---------           -----------           -----------
Diluted weighted-average
     common shares outstanding                        18,319              18,331                18,267                18,269
                                                   =========           =========           ===========           ===========

RETAINED EARNINGS
     Retained earnings at
      beginning of period                          $ 729,931           $ 692,580           $   722,515           $   678,170
     Net income                                       16,950              19,444                30,073                39,551
     Cash dividends declared                          (5,714)             (5,699)              (11,421)              (11,396)
                                                   ---------           ---------           -----------           -----------
     Retained earnings at
      end of period                                $ 741,167           $ 706,325           $   741,167           $   706,325
                                                   =========           =========           ===========           ===========
</TABLE>


See Notes to Condensed Consolidated Financial Statements.


                                      -3-
<PAGE>   4

SPRINGS INDUSTRIES, INC.
Condensed Consolidated Balance Sheets
(In thousands except share data)
(Unaudited)

<TABLE>
<CAPTION>
                                                          JUNE 30,             DECEMBER 30,
                                                            2001                  2000
                                                         -----------           ------------
<S>                                                      <C>                   <C>
ASSETS
Current assets:
   Cash and cash equivalents                             $    11,372           $     2,862
   Accounts receivable, net                                  293,889               291,050
   Inventories, net                                          511,944               508,067
   Other                                                      45,171                34,386
                                                         -----------           -----------
       Total current assets                                  862,376               836,365
                                                         -----------           -----------

Property                                                   1,511,981             1,477,941
   Accumulated depreciation                                 (901,061)             (860,019)
                                                         -----------           -----------
       Property, net                                         610,920               617,922
                                                         -----------           -----------
Goodwill and other assets, net                               125,701               129,859
                                                         -----------           -----------
       Total assets                                      $ 1,598,997           $ 1,584,146
                                                         ===========           ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Short-term borrowings                                 $    40,525           $    24,700
   Current maturities of long-term debt                       34,102                25,216
   Accounts payable                                          114,218               106,728
   Accrued wages and salaries                                 16,429                 9,431
   Accrued incentive pay and benefit plans                    16,918                28,735
   Income taxes payable                                       13,611                 7,879
   Other accrued liabilities                                  68,398                68,318
                                                         -----------           -----------
       Total current liabilities                             304,201               271,007
                                                         -----------           -----------

Noncurrent liabilities:
   Long-term debt                                            261,122               283,280
   Accrued benefits and deferred compensation                165,110               176,113
   Other                                                      36,893                33,959
                                                         -----------           -----------
       Total noncurrent liabilities                          463,125               493,352
                                                         -----------           -----------

Shareholders' equity:
   Class A common stock - $.25 par value
     (10,903,185 and 10,867,988 shares issued
     in fiscal 2001 and 2000, respectively)                    2,726                 2,717
   Class B common stock - $.25 par value
     (7,151,563 and 7,154,763 shares issued
     and outstanding in fiscal 2001 and 2000,
     respectively)                                             1,788                 1,789
   Additional paid-in capital                                105,527               104,181
   Retained earnings                                         741,167               722,515
   Cost of Class A common stock in treasury
     (88,544 and 91,216 shares in fiscal 2001
     and 2000, respectively)                                  (2,032)               (2,085)
   Accumulated other comprehensive loss                      (17,505)               (9,330)
                                                         -----------           -----------
     Total shareholders' equity                              831,671               819,787
                                                         -----------           -----------
     Total liabilities and shareholders' equity          $ 1,598,997           $ 1,584,146
                                                         ===========           ===========
</TABLE>


See Notes to Condensed Consolidated Financial Statements.


                                      -4-
<PAGE>   5

SPRINGS INDUSTRIES, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

<TABLE>
<CAPTION>
                                                                        TWENTY-SIX WEEKS ENDED
                                                                     ---------------------------
                                                                     JUNE 30,           JULY 1,
                                                                       2001               2000
                                                                     --------           --------
<S>                                                                  <C>                <C>
OPERATING ACTIVITIES:
   Net income                                                        $ 30,073           $ 39,551
   Adjustments to reconcile net income to net
       cash provided by operating activities:
       Depreciation and amortization                                   56,417             52,812
       Restructuring and realignment (income) expenses                   (500)             2,890
       Provision for uncollectible receivables                          3,507              2,297
       Losses on sales of property, net                                   765                672
       Changes in operating assets and liabilities,
          net of effects of business acquisition:
          Accounts receivable                                          (6,346)           (16,436)
          Inventories                                                  (3,604)           (38,710)
          Accounts payable and
             other accrued liabilities                                  6,741            (16,244)
          Accrued restructuring costs                                  (1,068)                --
          Other, net                                                  (16,743)            (6,865)
                                                                     --------           --------
       Net cash provided by operating activities                       69,242             19,967
                                                                     --------           --------

INVESTING ACTIVITIES:
   Purchases of property                                              (35,181)           (53,302)
   Business acquisition                                               (12,389)                --
   Principal collected on notes receivable                                265                952
   Net proceeds from sales of property                                     26                753
                                                                     --------           --------
       Net cash used for investing activities                         (47,279)           (51,597)
                                                                     --------           --------

FINANCING ACTIVITIES:
   Proceeds from short-term borrowings, net                            15,825             20,950
   Proceeds from long-term debt                                        30,000             90,000
   Repayments of long-term debt                                       (43,272)           (63,721)
   Proceeds from exercise of stock options                              1,118                119
   Payment of cash dividends                                          (17,124)           (17,090)
                                                                     --------           --------
       Net cash (used for) provided by financing activities           (13,453)            30,258
                                                                     --------           --------

Net increase (decrease) in cash and cash equivalents                    8,510             (1,372)
Cash and cash equivalents at beginning of period                        2,862              4,210
                                                                     --------           --------
Cash and cash equivalents at end of period                           $ 11,372           $  2,838
                                                                     ========           ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Noncash activities:
   Change in fair value of
       cash flow hedging instruments                                 $(12,899)          $     --
                                                                     --------           --------
   Income tax effect related to change in
       fair value of cash flow hedging instruments                   $  4,902           $     --
                                                                     --------           --------
</TABLE>


See Notes to Condensed Consolidated Financial Statements.


                                      -5-
<PAGE>   6




              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.       Basis of Presentation and Significant Accounting Policies:

         The accompanying unaudited condensed consolidated financial statements
         have been prepared in accordance with accounting principles generally
         accepted in the United States of America ("generally accepted
         accounting principles") for interim financial information and with the
         instructions to Form 10-Q and Article 10 of Regulation S-X.
         Accordingly, they do not include all of the information and footnotes
         required by generally accepted accounting principles for complete
         financial statements. In the opinion of management, all adjustments
         (consisting of normal recurring accruals) necessary for a fair
         presentation have been included. Operating results for the thirteen and
         twenty-six week periods ended June 30, 2001, are not necessarily
         indicative of the results that may be expected for the year ending
         December 29, 2001. For further information, refer to the consolidated
         financial statements and footnotes thereto included in the Annual
         Reports on Forms 10-K and 10-K/A for the year ended December 30, 2000
         (the "2000 Annual Report") of Springs Industries, Inc. ("Springs" or
         the "Company").

         Use of Estimates: Preparation of the Company's condensed consolidated
         financial statements in accordance with generally accepted accounting
         principles requires management to make estimates and assumptions that
         affect the reported a mounts of assets and liabilities, disclosures
         relating to contingent assets and liabilities, and the reported amounts
         of revenues and expenses. Actual results could differ from those
         estimates and assumptions.

         Reclassifications: Certain prior-year amounts have been reclassified to
         conform to the fiscal 2001 presentation.

         Segment Reporting: The Company's operations have been aggregated into
         one reportable segment in accordance with Financial Accounting
         Standards Board ("FASB") Statement of Financial Accounting Standards
         ("SFAS") No. 131, "Disclosures about Segments of an Enterprise and
         Related Information." The Company evaluates its performance based on
         profit from operations, which is defined as net sales less cost of
         goods sold, selling, general, and administrative expenses, and the
         provision for uncollectible receivables. Profit from operations and the
         reconciliation to the Company's consolidated income before income taxes
         for the thirteen and twenty-six week periods ended June 30, 2001 and
         July 1, 2000 were as follows: (in thousands)

<TABLE>
<CAPTION>
                                             Thirteen Weeks Ended       Twenty-Six Weeks Ended
                                            ----------------------      ----------------------
                                            June 30,       July 1,      June 30,       July 1,
                                              2001          2000          2001           2000
                                            --------       -------      --------       -------

         <S>                                <C>            <C>          <C>            <C>
         Profit from operations             $ 34,156       $41,906      $ 64,422       $81,630
         Restructuring and realignment
            (income) expenses                   (500)        2,890          (500)        2,890
         Expenses related to
            recapitalization proposal          1,231            --         3,481            --
         Interest expense                      6,338         8,018        13,923        15,894
         Other expense (income), net             192           139          (200)           57
                                            --------       -------      --------       -------

         Income before income taxes         $ 26,895       $30,859      $ 47,718       $62,789
                                            ========       =======      ========       =======
</TABLE>

         Accounting Changes: Effective December 31, 2000 (fiscal 2001), the
         Company adopted SFAS No. 133, "Accounting for Derivative Instruments
         and Hedging Activities" ("SFAS 133"), as amended by SFAS No. 138,
         "Accounting for Certain Derivative Instruments and Certain Hedging
         Activities (an amendment of FASB


                                      -6-
<PAGE>   7

         Statement No. 133)." See Note 11, Derivative Financial Instruments, for
         further discussion.

         Recently Issued Accounting Standards: In July 2001, the FASB issued
         SFAS No. 141, "Business Combinations" ("SFAS 141"). SFAS 141 requires
         the purchase method of accounting for business combinations initiated
         after June 30, 2001 and eliminates the pooling-of-interests method. The
         Company does not believe that the adoption of SFAS 141 will have a
         significant impact on its financial position, results of operations and
         cash flows.

         In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other
         Intangible Assets" ("SFAS 142"), which is effective December 30, 2001
         (fiscal 2002). SFAS 142 requires, among other things, the
         discontinuance of goodwill amortization. In addition, the standard
         includes provisions for the reclassification of certain existing
         recognized intangibles as goodwill, reassessment of the useful lives of
         existing recognized intangibles, reclassification of certain
         intangibles out of previously reported goodwill and the identification
         of reporting units for purposes of assessing potential future
         impairments of goodwill. SFAS 142 also requires the Company to complete
         a transitional goodwill impairment test six months from the date of
         adoption. The Company is currently assessing but has not yet determined
         the impact of SFAS 142 on its financial position, results of operations
         and cash flows. For the twenty-six weeks ended June 30, 2001, the
         Company recorded $1.4 million of amortization expense related to
         goodwill and $0.4 million of amortization expense related to other
         intangible assets.

2.       Accounts Receivable:

         The Company performs ongoing credit evaluations of its customers'
         financial conditions and, typically, requires no collateral from its
         customers. The Company's reserve for doubtful accounts was $9.7 million
         at June 30, 2001, compared to $9.4 million at December 30, 2000. The
         increase in the reserve for doubtful accounts at June 30, 2001 reflects
         a year-to-date provision for doubtful accounts of $3.5 million and net
         write-offs of approximately $3.2 million for previously reserved
         accounts. The reserve for doubtful accounts was $9.5 million at July 1,
         2000, compared to $9.7 million at January 1, 2000. The decrease in the
         reserve for doubtful accounts reflected a year-to-date provision for
         doubtful accounts of $2.3 million and net write-offs of approximately
         $2.5 million for previously reserved accounts.

3.       Inventories:

         Inventories are summarized as follows: (in thousands)

<TABLE>
<CAPTION>
                                                     June 30,         December 30,
                                                       2001               2000
                                                    ---------         ------------
         <S>                                        <C>               <C>
         Standard cost (which approximates
         current cost):
            Finished goods                          $ 334,926           $ 314,629
            In process                                205,057             213,855
            Raw materials and supplies                 63,607              64,241
                                                    ---------           ---------
                                                      603,590             592,725
         Less LIFO reserve                            (91,646)            (84,658)
                                                    ---------           ---------

            Total                                   $ 511,944           $ 508,067
                                                    =========           =========
</TABLE>


                                      -7-
<PAGE>   8

4.       Acquisitions:

         Effective January 2, 2001, the Company acquired certain assets of
         Maybank Textile Corp. ("Maybank"), a manufacturer of rug yarn. Prior to
         the acquisition, Maybank was a supplier to Springs, its largest
         customer. The acquisition included all of the assets used by Maybank to
         supply yarn to Springs. The purchase price was approximately $12.4
         million. The acquisition was accounted for as a purchase in accordance
         with APB 16, and the operating results for the acquired business have
         been included in the Company's consolidated financial statements since
         the January 2, 2001, acquisition date. The purchase price was allocated
         to the assets acquired based on their estimated fair value at the date
         of acquisition. The excess of the purchase price over the fair value of
         the assets acquired, which totaled $2.0 million, has been recorded as
         goodwill and is currently being amortized on a straight-line basis over
         20 years. Due to the supplier-customer relationship between Maybank and
         Springs prior to the acquisition, pro-forma operating results are not
         materially different than previously reported results.

         On August 7, 2000, the Company acquired certain assets and operations
         of a Mexican maquiladora (a business enterprise which provides
         preferential import and tax treatment for goods transferred between
         Mexico and the United States), which fabricates window blinds, and a
         related U.S. distribution operation. The purchase price was
         approximately $5.7 million. The acquisition was accounted for as a
         purchase in accordance with APB 16, and the operating results for the
         acquired business have been included in the Company's consolidated
         financial statements since the August 7, 2000, acquisition date. The
         purchase price was allocated to the assets acquired based on their
         estimated fair value at the date of acquisition. The excess of the
         purchase price over the fair value of the assets acquired, which
         totaled $3.9 million, has been recorded as goodwill and is currently
         being amortized on a straight-line basis over 20 years. The pro-forma
         impact on sales and operating profits for 2000 was not material.

         See Note 1, Basis of Presentation and Significant Accounting Policies,
         for a discussion of SFAS 141 and SFAS 142, and the impact on accounting
         for goodwill in future periods.

5.       Restructuring and Realignment Expenses:

         In December 2000, the Company announced a restructuring plan to
         eliminate certain production at its Katherine and Elliott bedding
         plants in South Carolina, beginning in February 2001. The plan
         eliminates some narrow loom weaving, which is not compatible with newer
         fabrication equipment, at the Katherine plant and outdated yarn
         spinning at the Katherine and Elliott plants.

         The Company recorded a charge of $2.4 million in fiscal 2000, which
         included a $1.1 million accrual for severance costs arising from the
         elimination of an estimated 326 manufacturing positions and a $1.3
         million impairment charge for disposal of machinery and equipment.
         Impairment was determined by comparing the net book value against
         estimated sales value less costs to sell. In the second quarter of
         2001, the severance accrual was reduced by $0.5 million due to the
         Company's ability to place a greater-than-expected number of associates
         affected by the restructuring plan elsewhere within the Company. The
         restructuring plan is expected to be completed during the fourth
         quarter of 2001.


                                      -8-
<PAGE>   9

         Changes in the restructuring accruals since the adoption of the plan
         are as follows: (in millions)

<TABLE>
<CAPTION>
                                        Severance       Asset
                                         Accrual      Impairment
                                        ---------     ----------
         <S>                            <C>           <C>
         Original accrual as of
          December 6, 2000               $  1.1         $  1.3
         Cash payments                     (0.4)            --
         Charged against assets              --           (1.3)
         Adjustment                        (0.5)            --
                                         ------         ------
         Accrual balance as of
          June 30, 2001                  $  0.2         $  0.0
                                         ======         ======
</TABLE>

         In the second quarter of 2000, the Company adopted a plan to phase out
         production and close plants in Griffin and Jackson, Georgia, which
         manufactured certain baby apparel products, and to phase out yarn
         production for terry towels at its No. 2 plant in Griffin, Georgia
         beginning in August 2000.

         The Company recorded a charge of $2.9 million, which included a $2.4
         million accrual for severance costs arising from the elimination of an
         estimated 426 manufacturing positions, a $0.3 million impairment charge
         for machinery and equipment to be sold, and a $0.2 million accrual for
         estimated idle plant costs. These charges relate primarily to the baby
         products facilities since costs related to the terry yarn facility were
         not significant. The restructuring plan was completed during the first
         quarter of 2001.

         Changes in the restructuring accruals since the adoption of the plan
         are as follows: (in millions)

<TABLE>
<CAPTION>
                                                                        Idle
                                        Severance       Asset          Plant
                                         Accrual      Impairment       Costs
                                        ---------     ----------       ------
         <S>                            <C>           <C>              <C>
         Original accrual as of
          June 2, 2000                   $  2.4         $  0.3         $  0.2
         Cash payments                     (2.4)            --           (0.2)
         Charged against assets              --           (0.3)            --
                                         ------         ------         ------
         Accrual balance as of
          March 31, 2001                 $  0.0         $  0.0         $  0.0
                                         ======         ======         ======
</TABLE>

6.       Goodwill:

         The Company had net goodwill of $61.9 million and $61.0 million at June
         30, 2001, and December 30, 2000, respectively. These amounts are net of
         accumulated amortization of $18.1 million at June 30, 2001, and $16.7
         million at December 30, 2000. See Note 1, Basis of Presentation and
         Significant Accounting Policies, for a discussion of SFAS 141 and SFAS
         142 and the impact on accounting for goodwill in future periods and
         Note 4, Acquisitions, for a description of the goodwill from the fiscal
         2001 and 2000 acquisitions.


                                      -9-
<PAGE>   10

7.       Accrued Benefits and Deferred Compensation:

         The long-term portion of accrued benefits and deferred compensation was
         comprised of the following: (in thousands)

<TABLE>
<CAPTION>
                                                            June 30,        December 30,
                                                              2001              2000
                                                            --------        ------------
         <S>                                                <C>             <C>
         Postretirement medical benefit obligation          $ 52,008          $ 56,287
         Deferred compensation                                58,230            65,681
         Other employee benefit obligations                   54,872            54,145
                                                            --------          --------

             Total                                          $165,110          $176,113
                                                            ========          ========
</TABLE>



         The liabilities are long term in nature and will be paid over time in
         accordance with the terms of the plans.

8.       Financing Arrangements:

         During the first quarter of 2001, the Company borrowed an additional
         $65.0 million through its existing long-term revolving credit facility,
         $35.0 million of which was classified as short-term borrowings. In the
         second quarter of 2001, the Company repaid the $35.0 million classified
         as short-term borrowings and an additional $35.0 million that was
         classified as long-term debt under this facility. The remaining $55.0
         million balance outstanding under this facility has been classified as
         long-term debt. This activity reflects the Company's seasonal use of
         cash in the first quarter and positive cash flows in the second
         quarter. The LIBOR-based weighted-average interest rate on this
         agreement was 4.1 percent as of June 30, 2001.

         The majority of the Company's existing financing arrangements will be
         refinanced if the proposed recapitalization transaction (refer to Note
         13, Proposed Recapitalization Transaction) is completed.

9.       Comprehensive Income: (in thousands, net of taxes)

<TABLE>
<CAPTION>
                                                    Thirteen Weeks Ended                Twenty-Six Weeks Ended
                                                ---------------------------           ---------------------------
                                                June 30,            July 1,           June 30,            July 1,
                                                  2001               2000               2001               2000
                                                --------           --------           --------           --------

         <S>                                    <C>                <C>                <C>                <C>
         Net income                             $ 16,950           $ 19,444           $ 30,073           $ 39,551
         Foreign currency
             translation adjustment                  343               (868)              (179)              (716)
         SFAS 133 change in accounting
             transition adjustment                    --                 --                339                 --
         Change in fair value of cash
             flow hedging instruments             (1,630)                --             (8,336)                --
                                                --------           --------           --------           --------

         Comprehensive income                   $ 15,663           $ 18,576           $ 21,897           $ 38,835
                                                ========           ========           ========           ========
</TABLE>

         In the first quarter of 2001, the Company recorded the cumulative
         effect of a change in accounting adjustment to other comprehensive
         income of $0.5 million ($0.3 million net of taxes) related to the
         adoption of SFAS 133. See Note 11, Derivative Financial Instruments,
         for additional discussion of the adoption of SFAS 133.


                                      -10-
<PAGE>   11

10.      Income Taxes:

         The Company's provision for income taxes for fiscal 2001 is based on an
         estimated 37 percent effective tax rate. This estimated effective tax
         rate does not take into consideration the proposed recapitalization
         transaction (refer to Note 13, Proposed Recapitalization Transaction).
         If the proposed recapitalization transaction is completed, the
         effective tax rate for the year will be higher than currently estimated
         due to the treatment of certain merger-related expenses. The effective
         tax rate for 2000 was also 37 percent.

11.      Derivative Financial Instruments:

         Effective December 31, 2000 (fiscal 2001), the Company adopted SFAS
         133, as amended by Statement No. 138, "Accounting for Certain
         Derivative Instruments and Certain Hedging Activities (an amendment of
         SFAS 133)." This statement, as amended, requires the Company to
         recognize all derivatives on the Consolidated Balance Sheets at fair
         value, with changes in fair value recognized in earnings unless
         specific criteria are met for derivatives in qualifying hedging
         transactions. Changes in fair value of derivatives in qualifying cash
         flow hedging transactions are reflected in accumulated other
         comprehensive loss and reclassified into earnings at the time the
         corresponding hedged transaction is recognized in earnings. The Company
         uses derivative instruments to reduce exposure to interest rate and
         commodity price risks.

         Interest Rate Risk - Springs is exposed to interest rate volatility
         with regard to existing issuances of variable rate debt. The Company
         uses interest rate swaps to achieve a desired proportion of variable
         versus fixed-rate debt, based on current and projected market
         conditions, and to hedge the changes in future cash flows based on
         interest rate fluctuations.

         Commodity Price Risk - The Company is exposed to price fluctuations
         related to anticipated purchases of certain raw materials, primarily
         cotton fiber. Springs uses a combination of forward delivery contracts
         and exchange-traded futures contracts, the volume of which the Company
         believes is consistent with the size of its business and the expected
         volume of its purchases, to reduce the Company's exposure to changes in
         future cash flows due to cotton price volatility.

         The Company is also exposed to price fluctuations related to
         anticipated purchases of natural gas. Springs utilizes commodity swap
         contracts to fix the price it pays for natural gas for a significant
         portion of its expected utilization and thereby reduces the Company's
         exposure to changes in future cash flows due to natural gas price
         volatility.

         The Company's derivatives consisted of cotton futures contracts, a
         natural gas commodity swap contract and interest rate swap contracts
         which were designated in cash flow hedging relationships as of the SFAS
         133 adoption date. As a result of this adoption, in the first quarter
         of 2001 the Company recorded the cumulative effect of a change in
         accounting adjustment to other comprehensive income of $0.5 million
         ($0.3 million net of taxes).

         The Company recorded the following activity in accumulated other
         comprehensive loss during the thirteen and twenty-six week periods
         ended June 30, 2001: (in thousands, net of taxes)


                                      -11-
<PAGE>   12

<TABLE>
<CAPTION>
                                                                           Thirteen             Twenty-Six
                                                                         Weeks Ended           Weeks Ended
                                                                        June 30, 2001         June 30, 2001
                                                                        -------------         -------------
         <S>                                                            <C>                   <C>
         Accumulated other comprehensive loss related to
           cash flow hedging relationships at beginning
           of period                                                       $(6,367)               $    --
         SFAS 133 change in accounting transition adjustment                    --                    339
         Amounts reclassified from accumulated other
           comprehensive loss to earnings                                     (366)                (1,565)
         Change in fair value of interest rate swaps                         1,227                 (1,222)
         Change in fair value of natural gas
           commodity swaps                                                    (537)                  (512)
         Change in fair value of cotton futures                             (1,954)                (5,037)
                                                                           -------                -------
         Accumulated other comprehensive loss related
           to cash flow hedging relationships at
           end of period                                                   $(7,997)               $(7,997)
                                                                           =======                =======
</TABLE>

         The Company estimates that $5.9 million (net of tax) of the amount
         recorded in accumulated other comprehensive loss is expected to be
         reclassified to earnings during the next twelve months. Ineffectiveness
         from natural gas cash flow hedges was reflected in cost of goods sold
         in the Consolidated Statement of Operations during the second quarter
         and first six months of 2001, and was not material.

         At June 30, 2001, the Company's derivatives recognized in the
         Consolidated Balance Sheet consisted of an $8.1 million cotton futures
         liability recorded in other accrued liabilities, a $3.9 million
         interest rate swap liability recorded in other noncurrent liabilities
         and a $0.9 million natural gas commodity swap liability recorded in
         other accrued liabilities. All derivatives recognized as of June 30,
         2001, were designated in cash flow hedging relationships. The Company
         is hedging commodity price exposure on cotton through December 2002,
         and natural gas through December 2001.

12.      Contingencies:

         During the second quarter of 2000, the Company received a $3.0 million
         sales and use tax assessment from the state of Wisconsin. Management
         performed an initial analysis of the several tax issues raised in the
         assessment, evaluated the basis for the claimed underpayment of tax,
         estimated the potential for settlement, and accrued approximately $2.2
         million. During the third and fourth quarters of 2000, the Company
         engaged consultants to assist in the evaluation of the assessment and
         negotiation with the state of Wisconsin. Springs was able to challenge
         several of the positions taken by the state and provided additional
         documentation that significantly reduced the Company's tax exposure.
         During the first quarter of 2001, the Company reached a settlement with
         the state of Wisconsin for approximately $0.5 million. As a result of
         this settlement, the Company was able to reverse approximately $1.7
         million during the first quarter of 2001, which is reflected in
         selling, general and administrative expenses in the Consolidated
         Statement of Operations.

         As disclosed in its 2000 Annual Report, Springs is involved in certain
         administrative proceedings governed by environmental laws and
         regulations, including proceedings under the Comprehensive
         Environmental Response, Compensation, and Liability Act. The potential
         costs to the Company related to all of these environmental matters are
         uncertain due to such factors as: the unknown magnitude of possible
         pollution and cleanup costs; the complexity


                                      -12-
<PAGE>   13

         and evolving nature of governmental laws and regulations and their
         interpretations; the timing, varying costs and effectiveness of
         alternative cleanup technologies; the determination of the Company's
         liability in proportion to other potentially responsible parties; and
         the extent, if any, to which such costs are recoverable from insurers
         or other parties.

         In connection with these proceedings, the Company estimates the range
         of possible losses to be between $5.3 million and $14.0 million and has
         accrued an undiscounted liability of approximately $8.4 million as of
         June 30, 2001, which represents management's best estimate of Springs'
         probable liability concerning all known environmental matters.

         Management believes the $8.4 million will be paid out over the next 15
         years. This accrual has not been reduced by any potential insurance
         recovery to which the Company may be entitled regarding environmental
         matters. Environmental matters include a site listed on the United
         States Environmental Protection Agency's ("EPA") National Priority List
         where Springs is the sole responsible party. Springs, the EPA and the
         United States Department of Justice have executed a consent decree
         related to this site. Soil cleanup was completed in 1993, subject to
         final approval by the EPA, and the approved EPA groundwater remedy
         began in 1996. There are no other known sites that the Company
         presently believes may involve material expenditures.

         Springs is also involved in various legal proceedings and claims
         incidental to its business. Springs is protecting its interests in all
         such proceedings.

         In the opinion of management, based on the advice of counsel, the
         likelihood that the resolution of the above matters would have a
         material adverse impact on either the financial condition or the future
         results of operations of Springs is remote.

13.      Proposed Recapitalization Transaction:

         On April 24, 2001, Springs' Board of Directors approved a definitive
         recapitalization agreement with Heartland Springs Investment Company,
         an affiliate of Heartland Industrial Partners, L.P. ("Heartland"), a
         private equity firm. Upon completion of the recapitalization, which
         would be accomplished through a merger between Springs and the
         Heartland affiliate, each public shareholder of Springs would receive
         $46.00 per share in cash and Springs would become privately held by the
         Close family, whose ownership interest in Springs' common stock would
         increase from approximately 41 percent to approximately 56 percent, and
         Heartland, whose ownership interest in Springs' common stock would be
         approximately 44 percent.

         The recapitalization agreement will require the approval of two-thirds
         of the outstanding Class A and Class B shares of Springs, with each
         share casting one vote per share. In addition, the recapitalization
         agreement will require the approval of a majority of votes cast by
         shareholders whose shares are being converted into cash (with the Class
         A and Class B shares voting together as a single class with each having
         one vote per share). A shareholders' meeting to vote on the proposed
         transaction has been scheduled for September 5, 2001. The completion of
         the proposed recapitalization is subject to certain other conditions,
         including the availability of funding and other customary closing
         conditions.


                                      -13-
<PAGE>   14


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

GENERAL

Springs Industries, Inc. ("Springs" or "the Company") is engaged in
manufacturing, marketing, selling and distributing home furnishings products.
The Company's product line includes sheets, pillows, pillowcases, bedspreads,
comforters, mattress pads, baby bedding and infant apparel, towels, shower
curtains, bath and accent rugs, other bath fashion accessories, over-the-counter
home-sewing fabrics, drapery hardware, and hard and soft decorative window
fashions. The Company's emphasis on the home furnishings market has developed
into the following strategic initiatives: focus on key accounts; brand
investment and expansion; manufacturing and purchasing efficiencies; supply
chain management and global sourcing.

The Company continues to see the benefits of these strategic initiatives. The
focus on key accounts has resulted in increases in our top ten customer sales,
despite the slowdown in the retail economy and inventory adjustments by many
retailers. Springs' manufacturing and purchasing initiatives have helped to
mitigate the impact of higher raw material and energy costs and the effects of
production curtailments to adjust inventory levels.

On February 20, 2001, the Company was presented with a proposal from the Close
family, which owns approximately 41 percent of Springs' common stock, and
Heartland Industrial Partners, L.P. ("Heartland"), a private equity firm, to
take the Company private in a recapitalization transaction (the "proposed
recapitalization transaction"). The Company's Board of Directors formed a
special committee of independent directors on February 22, 2001, to evaluate the
proposed recapitalization transaction on behalf of the Company's shareholders.
The special committee recommended, and on April 24, 2001, the Board of Directors
approved, the proposed recapitalization transaction. See the PROPOSED
RECAPITALIZATION TRANSACTION section of Management's Discussion and Analysis of
Financial Condition and Results of Operations for additional discussion.

RESULTS OF OPERATIONS

Sales

Net sales for the second quarter of 2001 were $546.9 million, down 4.6 percent
from the second quarter of 2000. Sales to the Company's key mass merchant,
specialty store and home improvement accounts increased, with top ten customer
sales increasing approximately 6.7 percent over the second quarter of 2000. The
increase in sales to key customers was offset by a lower volume of sales to
department stores, smaller specialty stores and institutional customers, and
lower sales of window fashions products to distributors and fabricators,
resulting in the overall decrease in net sales. Net sales for the second quarter
of 2000 also included sales under the Disney license, which was not renewed for
fiscal 2001. Compared to the second quarter of 2000, sales of bedding products
were lower, while sales of bath products were higher, in 2001. Similar changes
in sales volume and mix were experienced in the first quarter of 2001, resulting
in the decrease in year-to-date net sales to $1.117 billion, 4.2 percent lower
than the prior year.

Earnings

Net income for the second quarter of 2001 was $17.0 million, or $0.93 per
diluted share, compared to $19.4 million, or $1.06 per diluted share in the
second quarter of 2000. Net income for the second quarter of 2001 included a
pretax charge of $1.2 million primarily for legal fees associated with the
proposed recapitalization transaction. Additionally, second-quarter net income
included $0.5 million of pre-tax income in 2001 and $2.9 million of pre-tax
expense in 2000 related to


                                      -14-
<PAGE>   15

previously announced plans to restructure manufacturing operations at certain
facilities. See the RESTRUCTURING AND REALIGNMENT EXPENSES section of
Management's Discussion and Analysis of Financial Condition and Results of
Operations for additional discussion.

Operating earnings for the second quarter of 2001 were lower than the second
quarter of 2000 due to the decrease in sales volume and a decrease in the
Company's gross margin for the second quarter, from 20.3 percent in 2000 to 18.4
percent in 2001. The gross margin percentage is calculated by dividing net sales
less costs of goods sold, by net sales. Several factors contributed to the lower
gross margin percentage in 2001. The margins in the second quarter of 2001 were
negatively impacted by the continuation of the trend experienced during the
three previous quarters of higher levels of off-quality and closeout product
sales, and by a higher mix of lower-margin bath products, compared to the prior
year. Raw material costs, due primarily to lower cotton rebates in the current
quarter, and energy costs, principally for natural gas, were higher in the
second quarter of 2001 than in the prior year. Lower manufacturing volumes, due
to efforts to reduce inventory levels, resulted in greater levels of
under-absorbed overhead when compared to the second quarter of 2000.

Selling, general and administrative expenses were lower in the second quarter of
2001 than in the second quarter of 2000, primarily reflecting: (i) adjustments
to incentive compensation expense due to this year's lower earnings; and (ii)
lower spending on advertising. In addition, the second-quarter 2000 selling,
general and administrative expenses included a $2.2 million accrual related to a
state sales and use tax assessment from the state of Wisconsin.

Net income for the first six months of 2001 was $30.1 million, or $1.65 per
diluted share, compared to last year's $39.6 million, or $2.16 per diluted
share. Net income for the first six months of 2001 included pretax charges of
$3.5 million that primarily consisted of financial advisory and legal fees
associated with the proposed recapitalization transaction. Additionally, net
income for the first six months included $0.5 million of pre-tax income in 2001
and $2.9 million of pre-tax expense in 2000 related to previously announced
plans to restructure manufacturing operations at certain facilities. See the
RESTRUCTURING AND REALIGNMENT EXPENSES section of Management's Discussion and
Analysis of Financial Condition and Results of Operations for additional
discussion.

Operating earnings for the first six months of 2001 were lower than prior year
due to the decrease in sales volume and a decrease in the Company's gross
margin, from 19.8 percent in 2000 to 18.0 percent in 2001. This decrease in the
gross margin percentage for the first six months of the year reflects the impact
of the previously discussed second-quarter factors, which had a similar effect
on first quarter results.

Selling, general and administrative expenses were lower in the first half of
2001, compared to the first half of 2000 due to several factors. During the
second quarter of 2001, the Company reversed its incentive compensation accruals
to reflect the current year's lower earnings. The Company's spending on
advertising in the first six months of 2000 was higher than current year levels,
due to the promotion of the Springmaid(R) brand rollout to the mass merchant
channel. Selling, general and administrative expenses in the first six months of
both years also reflect the impact of a state sales and use tax assessment.
During the second quarter of 2000, the Company received a $3.0 million sales and
use tax assessment from the state of Wisconsin. Management performed an initial
analysis of the several tax issues raised in the assessment, evaluated the basis
for the claimed underpayment of tax, estimated the potential for settlement, and
accrued approximately $2.2 million. During the third and fourth quarters of
2000, the Company engaged consultants to assist in the evaluation of the
assessment and negotiation with the state of Wisconsin. Springs was able to
challenge several of


                                      -15-
<PAGE>   16

the positions taken by the state and provided additional documentation that
significantly reduced the Company's tax exposure. During the first quarter of
2001, the Company reached a settlement with the state of Wisconsin for
approximately $0.5 million. As a result of this settlement, the Company was able
to reverse approximately $1.7 million during the first quarter of 2001. Fees for
consulting services performed through the settlement were approximately $0.5
million. The net effect on year-to-date 2001 earnings was an increase of
approximately $1.3 million. The higher year-to-date provision for uncollectible
receivables in 2001 reflects the adverse effects on certain retail customers
from the general slowdown in the retail economy.

Income Taxes

The Company's provision for income taxes for fiscal 2001 is based on an
estimated 37 percent effective tax rate. This estimated effective tax rate does
not take into consideration the proposed recapitalization transaction. Refer to
the PROPOSED RECAPITALIZATION TRANSACTION section of Management's Discussion and
Analysis of Financial Condition and Results of Operations for additional
discussion. If the proposed recapitalization transaction is completed, the
effective tax rate for the year will be higher than currently estimated due to
the treatment of certain merger-related expenses. The effective tax rate for
2000 was also 37 percent.

RESTRUCTURING AND REALIGNMENT EXPENSES

In December 2000, the Company announced a restructuring plan to eliminate
certain production at its Katherine and Elliott bedding plants in South
Carolina, beginning in February 2001. The plan eliminates some narrow loom
weaving, which is not compatible with newer fabrication equipment, at the
Katherine plant and outdated yarn spinning at the Katherine and Elliott plants.

The Company recorded a charge of $2.4 million in fiscal 2000, which included a
$1.1 million accrual for severance costs arising from the elimination of an
estimated 326 manufacturing positions and a $1.3 million impairment charge for
disposal of machinery and equipment. Impairment was determined by comparing the
net book value against estimated sales value less costs to sell. In the second
quarter of 2001, the severance accrual was reduced by $0.5 million due to the
Company's ability to place a greater-than-expected number of associates affected
by the restructuring plan elsewhere within the Company.

As a result of the plan, the Company expects that its annual operating costs
will be improved by approximately $3.5 million. Including one-time transition
costs and a partial-year benefit, operating costs in 2001 are expected to be
improved by approximately $3.2 million. The restructuring plan is expected to be
completed by the fourth quarter of 2001.

Changes in the restructuring accruals since the adoption of the plan are as
follows: (in millions)

<TABLE>
<CAPTION>
                                             Severance       Asset
                                              Accrual      Impairment
                                             ---------     ----------
         <S>                                 <C>           <C>
         Original accrual as of
          December 6, 2000                    $  1.1         $  1.3
         Cash payments                          (0.4)            --
         Charged against assets                   --           (1.3)
         Adjustment                             (0.5)            --
                                              ------         ------
         Accrual balance as of
          June 30, 2001                       $  0.2         $  0.0
                                              ======         ======
</TABLE>


In the second quarter of 2000, the Company adopted a plan to phase out
production and close plants in Griffin and Jackson, Georgia, which manufactured
certain baby


                                      -16-
<PAGE>   17

apparel products, and to phase out yarn production for terry towels at its No. 2
plant in Griffin, Georgia beginning in August 2000. The Company has replaced the
baby products production by outsourcing from low-cost providers. The terry yarn
production at the Griffin No. 2 plant has been transferred to the Company's
Griffin No. 5 and Hartwell, Georgia plants, where recent investment in new
manufacturing technology allows terry yarn to be produced more competitively.

In connection with this plan, the Company recorded a charge of $2.9 million,
which included a $2.4 million accrual for severance costs arising from the
elimination of an estimated 426 manufacturing positions, a $0.3 million
impairment charge for machinery and equipment to be sold, and a $0.2 million
accrual for estimated idle plant costs. These charges relate primarily to the
baby products facilities since costs related to the terry yarn facility were not
significant. The restructuring plan was completed during the first quarter of
2001.

The expected benefits of this plan include lower product costs and better
utilization of existing capacity in other facilities. As a result, the Company
realized savings from lower product costs of approximately $2.1 million during
the second half of 2000, and expects to realize approximately $3.8 million of
savings in fiscal 2001.

Changes in the restructuring accruals since the adoption of the plan are as
follows: (in millions)

<TABLE>
<CAPTION>
                                                                        Idle
                                        Severance        Asset          Plant
                                         Accrual      Impairment        Costs
                                        ---------     ----------       -------
         <S>                            <C>           <C>              <C>
         Original accrual as of
          June 2, 2000                   $  2.4         $  0.3         $  0.2
         Cash payments                     (2.4)            --           (0.2)
         Charged against assets              --           (0.3)            --
                                         ------         ------         ------
         Accrual balance as of
          March 31, 2001                 $  0.0         $  0.0         $  0.0
                                         ======         ======         ======
</TABLE>

CAPITAL RESOURCES AND LIQUIDITY

During the first quarter of 2001, the Company borrowed an additional $65.0
million through its existing long-term revolving credit facility, $35.0 million
of which was classified as short-term borrowings. In the second quarter of 2001,
the Company repaid the $35.0 million classified as short-term borrowings and an
additional $35.0 million that was classified as long-term debt under this
facility. The remaining $55.0 million balance outstanding under this facility
has been classified as long-term debt. This activity reflects the Company's
seasonal use of cash in the first quarter and positive cash flows in the second
quarter. The LIBOR-based weighted-average interest rate on this agreement was
4.1 percent as of June 30, 2001.

Springs expects that positive operating cash flows for the remaining quarters of
the year will be more than sufficient to provide for the approximately $110.0
million of expected capital expenditures for 2001 and allow the Company to make
its scheduled repayments of long-term debt, resulting in positive cash flows for
the year.

The majority of the Company's existing financing arrangements will be refinanced
if the proposed recapitalization transaction is completed. Refer to the PROPOSED
RECAPITALIZATION TRANSACTION section of Management's Discussion and Analysis of
Financial Condition and Results of Operations for additional discussion.


                                      -17-
<PAGE>   18

ACQUISITIONS

Effective January 2, 2001, the Company acquired certain assets of Maybank
Textile Corp. ("Maybank"), a manufacturer of rug yarn. Prior to the acquisition,
Maybank was a supplier to Springs, its largest customer. The acquisition
included all of the assets used by Maybank to supply yarn to Springs. The
purchase price was approximately $12.4 million. The acquisition was accounted
for as a purchase in accordance with Accounting Principles Board Opinion No. 16,
"Business Combinations" ("APB 16"), and the operating results for the acquired
business have been included in the Company's consolidated financial statements
since the January 2, 2001, acquisition date. The purchase price was allocated to
the assets acquired based on their estimated fair value at the date of
acquisition. The excess of the purchase price over the fair value of the assets
acquired, which totaled $2.0 million, has been recorded as goodwill and is
currently being amortized on a straight-line basis over 20 years. Due to the
supplier-customer relationship between Maybank and Springs prior to the
acquisition, pro-forma operating results are not materially different than
previously reported results.

On August 7, 2000, the Company acquired certain assets and operations of a
Mexican maquiladora (a business enterprise which provides preferential import
and tax treatment for goods transferred between Mexico and the United States),
which fabricates window blinds, and a related U.S. distribution operation. The
purchase price was approximately $5.7 million. The acquisition was accounted for
as a purchase in accordance with APB 16, and the operating results of the
acquired business have been included in the Company's consolidated financial
statements since the August 7, 2000, acquisition date. The purchase price was
allocated to the assets acquired based on their estimated fair value at the date
of acquisition.

The excess of the purchase price over the fair value of the assets acquired,
which totaled $3.9 million, has been recorded as goodwill and is currently being
amortized on a straight-line basis over 20 years. The pro-forma impact on sales
and operating profits for 2000 was not material.

See RECENTLY ISSUED ACCOUNTING STANDARDS for a discussion of Statement of
Financial Accounting Standards ("SFAS") No. 141, "Business Combinations" ("SFAS
141") and SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"), and
the impact on accounting for goodwill in future periods.

MARKET RISK SENSITIVE INSTRUMENTS AND POSITIONS

Refer to the ACCOUNTING CHANGES section of Management's Discussion and Analysis
of Financial Condition and Results of Operations for a discussion of the impact
of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"
("SFAS 133") on market risk sensitive instruments and positions.

Interest Rate Risk: Springs is exposed to interest rate volatility with regard
to existing issuances of variable rate debt. The Company uses interest rate
swaps to reduce interest rate volatility and funding costs associated with
certain debt issues, and to achieve a desired proportion of variable versus
fixed-rate debt, based on current and projected market conditions. The fair
value of the Company's interest rate swap contracts as of June 30, 2001, was a
loss of $3.9 million, which is recorded in other noncurrent liabilities with an
offsetting after-tax amount recognized in accumulated other comprehensive loss.
The fair value of these instruments increased during the second quarter, due to
increases in long-term interest rates.

Commodity Price Risk: The Company is exposed to price fluctuations related to
anticipated purchases of certain raw materials, primarily cotton fiber. Springs
uses a combination of forward delivery contracts and exchange-traded futures
contracts, consistent with the size of its business, to reduce the Company's


                                      -18-
<PAGE>   19

exposure to price volatility. The fair value of cotton futures contracts held as
of June 30, 2001 was a loss of $8.1 million, which is recorded in other accrued
liabilities with an offsetting after-tax amount recognized in accumulated other
comprehensive loss. The loss recognized related to cotton futures contracts has
increased during the second quarter due to an increase in the number of cotton
futures contracts held and lower market prices for cotton.

The Company is also exposed to price fluctuations related to anticipated
purchases of natural gas. The Company utilizes commodity swap contracts to fix
the price it pays for natural gas for a significant portion of its expected
utilization and thereby reduce the Company's exposure to changes in future cash
flows due to natural gas price volatility. The fair value of the Company's
natural gas swap contracts at June 30, 2001 was a loss of $0.9 million, which is
recorded in other accrued liabilities with an offsetting after-tax amount
recognized in accumulated other comprehensive loss.

Foreign Exchange Risk: The Company is exposed to foreign exchange risks to the
extent of adverse fluctuations in certain exchange rates, primarily the Canadian
dollar and Mexican peso. The Company does not believe that reasonably possible
near-term changes in foreign currencies will result in a material impact on
future earnings or cash flows.

ACCOUNTING CHANGES

Effective December 31, 2000 (fiscal 2001), the Company adopted SFAS 133, as
amended by SFAS No. 138, "Accounting for Certain Derivative Instruments and
Certain Hedging Activities (an amendment of FASB Statement No. 133)." This
statement, as amended, requires the Company to recognize all derivatives on the
Consolidated Balance Sheets at fair value, with changes in fair value recognized
in earnings unless specific criteria are met for derivatives in qualifying
hedging transactions. Changes in fair value of derivatives in qualifying cash
flow hedging transactions are reflected in accumulated other comprehensive loss
and reclassified into earnings at the time the corresponding hedged transaction
is recognized in earnings.

The Company's derivatives consisted of cotton futures contracts, a natural gas
commodity swap contract and interest rate swap contracts which were designated
in cash flow hedging relationships as of the SFAS 133 adoption date. As a result
of this adoption, in the first quarter of 2001 the Company recorded a natural
gas commodity swap asset of $2.1 million, interest rate swap liabilities of $1.6
million, an immaterial cotton futures liability, and the cumulative effect of a
change in accounting adjustment to other comprehensive income of $0.5 million
($0.3 million net of taxes).

RECENTLY ISSUED ACCOUNTING STANDARDS

In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS 141,
which requires the purchase method of accounting for business combinations
initiated after June 30, 2001 and eliminates the pooling-of-interests method.
The Company does not believe that the adoption of SFAS 141 will have a
significant impact on its financial position, results of operations and cash
flows.

In July 2001, the FASB issued SFAS 142, which is effective December 30, 2001
(fiscal 2002). SFAS 142 requires, among other things, the discontinuance of
goodwill amortization. In addition, the standard includes provisions for the
reclassification of certain existing recognized intangibles as goodwill,
reassessment of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported goodwill and
the identification of reporting units for purposes of assessing potential future
impairments of goodwill. SFAS 142 also requires the Company to complete a
transitional goodwill impairment test six months from the date of adoption. The


                                      -19-
<PAGE>   20

Company is currently assessing but has not yet determined the impact of SFAS 142
on its financial position, results of operations and cash flows. For the
twenty-six weeks ended June 30, 2001, the Company recorded $1.4 million of
amortization expense related to goodwill and $0.4 million of amortization
expense related to other intangible assets.

PROPOSED RECAPITALIZATION TRANSACTION

On April 24, 2001, Springs' Board of Directors approved a definitive
recapitalization agreement with Heartland Springs Investment Company, an
affiliate of Heartland Industrial Partners, L.P., a private equity firm. Upon
completion of the recapitalization, which would be accomplished through a merger
between Springs and the Heartland affiliate, each public shareholder of Springs
would receive $46.00 per share in cash and Springs would become privately held
by the Close family, whose ownership interest in Springs' common stock would
increase from approximately 41 percent to approximately 56 percent, and
Heartland, whose ownership interest in Springs' common stock would be
approximately 44 percent.

The recapitalization agreement will require the approval of two-thirds of the
outstanding Class A and Class B shares of Springs, with each share casting one
vote per share. In addition, the recapitalization agreement will require the
approval of a majority of votes cast by shareholders whose shares are being
converted into cash (with the Class A and Class B shares voting together as a
single class with each having one vote per share). A shareholders' meeting to
vote on the proposed transaction has been scheduled for September 5, 2001. The
completion of the proposed recapitalization is subject to certain other
conditions, including the availability of funding and other customary closing
conditions.

FORWARD LOOKING INFORMATION

This Form 10-Q report contains forward-looking statements that are based on
management's expectations, estimates, projections, and assumptions. Words such
as "expects," "believes," "estimates," and variations of such words and similar
expressions are often used to identify such forward-looking statements which
include but are not limited to projections of sales, expenditures, savings,
completion dates, cash flows, and operating performance. Such forward-looking
statements are made pursuant to the safe-harbor provisions of the Private
Securities Litigation Reform Act of 1995. These statements are not guaranties of
future performance; instead, they relate to situations with respect to which
certain risks and uncertainties are difficult to predict. Actual future results
and trends, therefore, may differ materially from what is predicted in
forward-looking statements due to a variety of factors, including: the health of
the retail economy in general, competitive conditions and demand for the
Company's products; progress toward the Company's manufacturing and purchasing
efficiency initiatives; unanticipated natural disasters; legal proceedings;
labor matters; and the availability and price of raw materials which could be
affected by weather, disease, energy costs, or other factors. The Company
assumes no obligation to update publicly any forward-looking statements, whether
as a result of new information, future events or otherwise.


                                      -20-
<PAGE>   21


      ITEM 3. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information called for by this item is incorporated by reference from this
Form 10-Q under the caption "Market Risk Sensitive Instruments and Positions" of
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations."


                                      -21-
<PAGE>   22


                           PART II - OTHER INFORMATION

                    ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K


During the quarter ended June 30, 2001, the Company filed a Current Report on
Form 8-K dated April 24, 2001, announcing that the Company's board of directors
had followed the unanimous recommendation of a special committee of independent
directors and approved a proposed recapitalization transaction whereby members
of the Close family and Heartland Industrial Partners, L.P., would take Springs
private. No financial statements were filed with the report. See the PROPOSED
RECAPITALIZATION TRANSACTION section of Management's Discussion and Analysis of
Financial Condition and Results of Operations for additional discussion.


                                      -22-
<PAGE>   23



                                   SIGNATURES


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

                                          SPRINGS INDUSTRIES, INC.



                                          By:      /s/Charles M. Metzler
                                             --------------------------------
                                             Charles M. Metzler
                                             Vice President-Controller
                                             (Duly Authorized Officer and
                                             Principal Accounting Officer)





DATED:  August 14, 2001


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