SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)
   X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
------ EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED APRIL 1, 2000


                                       OR

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

               Commission file numbers 333-42411 and 333-42411-01

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

Delaware                                                      13-3862561
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                          Identification Number)

                            GLENOIT ASSET CORPORATION
             (Exact name of registrant as specified in its charter)

Delaware                                                      51-0343206
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                          Identification Number)
                              111 West 40th Street
                            New York, New York 10018
                            Telephone: (212) 391-3915
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)

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___ No__X_



None of the voting securities of Glenoit Corporation or Glenoit Asset
Corporation is held by non-affiliates.

As of April 1, 2000, there were 1,000 shares of Glenoit Corporation common stock
outstanding.


                    DOCUMENTS INCORPORATED BY REFERENCE: NONE

<PAGE>

PART 1 - FINANCIAL INFORMATION

Item 1.     Financial Statements

                     GLENOIT CORPORATION AND SUBSIDIARIES
             (a wholly-owned subsidiary of Glenoit Universal, Ltd.)
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                                       January 1,        April 1,
                                                                                          2000             2000
                                                                                     ---------------  ----------------
                                    ASSETS                                                              (Unaudited)
<S>                                                                                <C>              <C>

Current assets:
     Cash and cash equivalents                                                     $      2,015,080 $         748,885
     Receivables:
          Trade accounts receivable, net of allowance of $5,470,000 and
               $5,326,000 as of January 1, 2000 and April 1, 2000,
               respectively                                                              27,639,925        35,940,508
          Other receivables                                                               2,396,339         3,482,673
     Inventories                                                                         50,974,925        57,208,611
     Current deferred tax assets                                                          3,406,960         4,406,960
     Prepaid expenses and other current assets                                            1,012,441         1,510,982
                                                                                     ---------------  ----------------

                    Total current assets                                                 87,445,670       103,298,619

Property, plant and equipment, net                                                       67,701,677        66,222,976

Other assets:
     Notes receivable from related party                                                    246,810           241,808
     Intangible assets, net of accumulated amortization of $3,185,000
          and $3,764,000 as of January 1, 2000 and April 1, 2000,
          respectively                                                                   50,933,860        50,354,695
     Deferred loan costs and other, net of accumulated amortization of
          $2,836,000 and $3,336,000 as of January 1, 2000 and April 1,
          2000, respectively                                                              9,293,032         8,792,639
     Other assets                                                                         1,324,424         1,220,410
                                                                                     ---------------  ----------------

                    Total assets                                                   $    216,945,473 $     230,131,147
                                                                                     ===============  ================
</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.


                                       2
<PAGE>

                      GLENOIT CORPORATION AND SUBSIDIARIES
             (a wholly-owned subsidiary of Glenoit Universal, Ltd.)
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>

                                                                              January 1,             April 1,
                                                                                 2000                  2000
                                                                            ---------------       ---------------
          LIABILITIES AND STOCKHOLDER'S DEFICIT                                                    (Unaudited)

<S>                                                                    <C>                    <C>
Current liabilities:
     Accounts payable                                                  $        10,061,519    $       12,585,015
     Accrued expenses                                                           13,907,287            20,736,167
     Current maturities of long-term debt                                      237,681,953           244,022,158
     Due to Holdings                                                             2,462,933             2,890,515
                                                                            ---------------       ---------------

                    Total current liabilities                                  264,113,692           280,233,855

Long-term debt less current maturities                                                   0                     0
Deferred income taxes                                                            5,840,012             5,839,917
Other long-term liabilities                                                      6,125,933             6,220,117
                                                                            ---------------       ---------------

                    Total liabilities                                          276,079,637           292,293,889
                                                                            ---------------       ---------------

Commitments and contingencies

Stockholder's deficit:
     Common stock, $.01 par value, 1,000 shares authorized, issued
         and outstanding as of January 1, 2000 and April 1, 2000                        10                    10
     Additional paid-in capital                                                  1,461,713             1,461,713
     Accumulated deficit                                                  (     60,255,036  )   (     63,249,924 )
     Accumulated other comprehensive loss                                 (        340,851  )   (        374,541 )
                                                                            ---------------       ---------------

                    Total stockholder's deficit                           (     59,134,164  )   (     62,162,742 )
                                                                            ---------------       ---------------

                    Total liabilities and stockholder's deficit        $       216,945,473    $      230,131,147
                                                                            ===============       ===============
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.

                                       3
<PAGE>

                      GLENOIT CORPORATION AND SUBSIDIARIES
             (a wholly-owned subsidiary of Glenoit Universal, Ltd.)
                  Consolidated Statements of Operations (Unaudited)

<TABLE>
<CAPTION>
                                                                    Three Months Ended
                                                           -------------------------------------
                                                              April 3,              April 1,
                                                                1999                  2000
                                                           ---------------       ---------------

<S>                                                 <C>                   <C>
Net sales                                           $          54,882,318 $          77,869,520

Cost of sales                                                  40,457,537            58,527,202
                                                           ---------------       ---------------

          Gross profit                                         14,424,781            19,342,318
                                                           ---------------       ---------------

Operating expenses:
     Selling                                                    4,885,364             5,644,719
     Administrative                                             8,731,456             9,435,280
     Research and development                                     640,315             1,135,760
     Restructuring charge                                      13,100,000                     0
                                                           ---------------       ---------------
          Total operating expenses                             27,357,135            16,215,759
                                                           ---------------       ---------------

Income (loss) from operations                         (        12,932,354 )           3,126,559
                                                           ---------------       ---------------

Other income (expense):
     Interest expense                                 (         5,122,613 )    (      6,704,082 )
     Amortization of deferred financing costs         (           291,819 )    (        500,393 )
     Other                                                         46,641               129,364
                                                           ---------------       ---------------
          Total other expense                         (         5,367,791 )    (      7,075,111 )
                                                           ---------------       ---------------

Loss before income taxes                              (        18,300,145 )    (      3,948,552 )

Income tax benefit                                    (         6,778,698 )    (        953,664 )
                                                           ---------------       ---------------

Net loss                                              (  $     11,521,447 ) $  (      2,994,888 )
                                                      ====================     =================
</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.


                                       4
<PAGE>

                      GLENOIT CORPORATION AND SUBSIDIARIES
             (a wholly-owned subsidiary of Glenoit Universal, Ltd.)
           Consolidated Statement of Stockholder's Deficit (Unaudited)
                    for the three months ended April 1, 2000

<TABLE>
<CAPTION>
                                                                                      Accumulated
                      Shares of               Additional                              Other
                      Common      Common      Paid-in         Accumulated             Comprehensive
                      Stock       Stock       Capital         Deficit                 Loss                  Total
                      ----------  ----------  ------------    ------------------      ----------------      ----------------
<S>                   <C>         <C>         <C>             <C>                     <C>                   <C>
Balance as of
   January 1, 2000        1,000 $        10 $   1,461,713 $ (        60,255,036 ) $ (         340,851 ) $ (      59,134,164 )

Net loss                                                    (         2,994,888 )                         (       2,994,888 )

Accumulated Other
   Comprehensive
   Income                                                                           (          33,690 )   (          33,690 )
                      ----------  ----------  ------------    ------------------      ----------------      ----------------

Balance as of
   April 1, 2000          1,000 $        10 $   1,461,713 $ (        63,249,924 ) $ (         374,541 ) $ (      62,162,742 )
                      ==========  ==========  ============    ==================      ================      ================
</TABLE>


          CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (UNAUDITED)


<TABLE>
<CAPTION>
                                                                         Three Months Ended
                                                              ----------------------------------------
                                                                  April 3,               April 1,
                                                                    1999                   2000
                                                              ------------------      ----------------
<S>                                                           <C>                     <C>
Net loss                                                  $ (        11,521,447 ) $ (       2,994,888 )

Other comprehensive income (loss), net of tax:
   Currency translation adjustment                                      116,974     (          22,909 )
                                                              ------------------      ----------------

Comprehensive loss                                        $ (        11,404,473 ) $ (       3,017,797 )
                                                              ==================      ================
</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.

                                       5
<PAGE>

                      GLENOIT CORPORATION AND SUBSIDIARIES
             (a wholly-owned subsidiary of Glenoit Universal, Ltd.)
                Consolidated Statements of Cash Flows (Unaudited)

<TABLE>
<CAPTION>

                                                                                            Three Months Ended
                                                                                   --------------------------------------
                                                                                      April 3,               April 1,
                                                                                        1999                   2000
                                                                                   ---------------        ---------------
<S>                                                                                <C>                    <C>
Cash flows from operating activities:
     Net loss                                                               $  (       11,521,447 )   (        2,994,888 )
     Adjustments to reconcile net loss to net cash
        used in operating activities:
          Depreciation and amortization                                                 2,816,585              3,257,950
          Restructuring charge                                                         13,100,000                      -
          Gain on sale of property and equipment                                                -     (          168,727 )
          Effect of foreign currency exchange rate                                        188,668     (           33,690 )
          Changes in operating assets and liabilities:
             Trade and other receivables                                       (          639,586 )   (        9,538,917 )
             Inventories                                                       (        8,750,576 )   (        6,233,686 )
             Prepaid expenses and other assets                                 (          280,197 )   (        1,389,526 )
             Due to Holdings                                                   (        5,690,725 )              427,582
             Accounts payable                                                           1,588,390              2,523,496
             Accrued expenses and other liabilities                                     3,513,311              6,959,302
                                                                                   --------------         --------------
               Net cash used in operating activities                           (        5,675,577 )   (        7,191,104 )
                                                                                   ---------------        ---------------

Cash flows from investing activities:
   Purchases of acquired businesses, net of cash acquired                      (       50,279,944 )                    -
   Purchases of and additions to property, plant and equipment                 (        2,608,987 )   (          767,522 )
   Proceeds from sale of property and equipment and refunds of
          deposits                                                                              -                352,227
                                                                                   ---------------        ---------------
               Net cash used in investing activities                           (       52,888,931 )   (          415,295 )
                                                                                   ---------------        ---------------

Cash flows from financing activities:
   Proceeds from line of credit and issuance of debt, net                              63,875,669              8,000,000
   Repayments of long-term debt                                                                 -     (        1,659,796 )
   Payments for financing costs                                                (        4,192,854 )                    -
                                                                                   ---------------        ---------------
               Net cash provided by financing activities                               59,682,815              6,340,204
                                                                                   ---------------        ---------------

               Net increase (decrease) in cash and cash equivalents                     1,118,307     (        1,266,195 )

Cash and cash equivalents at beginning of period                                          339,700              2,015,080
                                                                                   ---------------        ---------------

Cash and cash equivalents at end of period                                  $           1,458,007 $              748,885
                                                                                   ===============        ===============

</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.

                                       6

<PAGE>



                      GLENOIT CORPORATION AND SUBSIDIARIES
             (a wholly-owned subsidiary of Glenoit Universal, Ltd.)
             Notes to Consolidated Financial Statements (Unaudited)

1.          SIGNIFICANT ACCOUNTING POLICIES

            BASIS OF PRESENTATION

            The accompanying unaudited condensed consolidated financial
            statements of Glenoit Corporation and subsidiaries (collectively the
            "Company") have been prepared in accordance with generally accepted
            accounting principles for interim financial information.
            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 only normal recurring adjustments)
            considered necessary for a fair presentation have been included.
            Operating results for the three-month period ended April 1, 2000 are
            not necessarily indicative of the results that may be expected for
            the fiscal year ending December 30, 2000. The unaudited financial
            statements should be read in conjunction with the audited financial
            statements and footnotes thereto for the fiscal year ended January
            1, 2000. Subsequent to January 1, 2000, the Company was in violation
            of certain covenants of its senior credit facility and senior
            subordinated notes (See Note 4). This matter raises substantial
            doubt about the Company's ability to continue as a going concern.
            The Company is currently in negotiations with its senior lenders and
            is reviewing alternative financing and strategic options to address
            the defaults outstanding as well as reduce the Company's overall
            leverage. The consolidated financial statements do not include any
            adjustments that might result from the outcome of this uncertainty.

            CONSOLIDATION

            Prior to September 1997, the accompanying financial statements
            included the accounts of Glenoit Corporation and its wholly-owned
            subsidiaries Glenoit Mills, Inc. ("Mills"), Tarboro Properties, Inc.
            ("Tarboro"), and Glenoit Asset Corporation, Inc. ("Glenoit Asset
            Corporation"). In September 1997, Glenoit Corporation merged with
            Mills and Tarboro. In addition, Glenoit Corporation's newly formed
            wholly-owned subsidiary, Glenoit Corporation of Canada ("Glenoit
            Canada") acquired the assets of Collins & Aikman Canada Inc. On
            October 2, 1998, the Company acquired all the capital stock of
            American Pacific Enterprises, Inc. On February 12, 1999, the Company
            acquired all the outstanding shares of capital stock of Ex-Cell Home
            Fashions, Inc. (See Note 7). Accordingly, at April 1, 2000, the
            accompanying financial statements include the accounts of Glenoit
            Corporation and it's wholly-owned subsidiaries Glenoit Canada,
            American Pacific Enterprises, Inc., Glenoit Asset Corporation and
            Ex-Cell Home Fashions, Inc. The Company is a wholly-owned subsidiary
            of Glenoit Universal, Ltd. ("Holdings").


                                       7

<PAGE>


                      GLENOIT CORPORATION AND SUBSIDIARIES
             (a wholly-owned subsidiary of Glenoit Universal, Ltd.)
             Notes to Consolidated Financial Statements (Unaudited)

1.          SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT

            In June 1998, the Financial Accounting Standards Board ("FASB")
            issued Statement of Financial Accounting Standards No. 133,
            Accounting for Derivative Instruments and Hedging Activities ("SFAS
            No. 133"). SFAS No. 133 establishes standards related to the
            recording and reporting of derivative instruments. The FASB recently
            delayed the required implementation of SFAS No. 133 until fiscal
            year 2001. During 1999, the Company entered into an interest rate
            hedge agreement but has yet to determine any future impact of SFAS
            No. 133.

2.          RELATED PARTY TRANSACTIONS

            In January 1999, the Company loaned an officer $150,000 and created
            an unsecured note receivable which was repaid in February, 1999.

3.          INVENTORIES

            Inventories are summarized as follows:

<TABLE>
<CAPTION>
                                                             January 1,                   April 1,
                                                                2000                        2000
                                                       -----------------------     ------------------------
                                                                                               (Unaudited)
<S>                                                    <C>                         <C>

           Raw materials                                           $9,269,434                   $9,961,083
           Work-in-process                                          4,985,545                   10,675,322
           Finished goods                                          36,719,946                   36,572,206
                                                       -----------------------     ------------------------

                     Total inventories                            $50,974,925                  $57,208,611
                                                       =======================     ========================
</TABLE>


4.          LONG-TERM DEBT

            As of January 1, 2000 and April 1, 2000, long-term debt consisted of
the following:

<TABLE>
<CAPTION>
                                                                                               January 1,          April 1,
                                                                                                  2000               2000
                                                                                                  -----              ----
                                                                                                                  (Unaudited)
              <S>                                                                               <C>               <C>
              Senior credit facility................................................            $142,681,953      $149,022,158
              11% Senior subordinated notes ........................................              95,000,000        95,000,000
                                                                                                 -----------       -----------
                     Total long-term debt...........................................             237,681,953        244,022,158
              Less current portion .................................................             237,681,953        244,022,158
                                                                                                 ------------      ------------
                                                                                                          $0                 $0
                                                                                                          ==                 ==
</TABLE>

                                        8
<PAGE>


                      GLENOIT CORPORATION AND SUBSIDIARIES
             (a wholly-owned subsidiary of Glenoit Universal, Ltd.)
             Notes to Consolidated Financial Statements (Unaudited)

4.             LONG TERM DEBT (CONTINUED)

            On April 1, 1997, the Company issued $100,000,000 of senior
            subordinated notes (the "Senior Subordinated Notes") in a private
            placement bond offering. The Senior Subordinated Notes bear interest
            at a fixed rate of 11% and mature on April 15, 2007. The Company at
            its option, can prepay these notes at a price of 105.5% of the
            original principal amount, beginning on April 15, 2002. The premium
            declines by 1.833% thereafter each year beginning on April 15
            until reduced to the original principal amount. Upon a Change
            of Control of the Company, as defined in the Indenture
            governing the Senior Subordinated Notes, the holder of a
            Senior Subordinated Note may require the Company to redeem the
            note at a price of 101% of the principal amount. Interest is
            payable semi-annually, and began on October 15, 1997.

            During September 1998, the Company acquired $5 million of the Senior
            Subordinated Notes in the open market. These notes were subsequently
            retired. In connection with this transaction, the Company recorded
            an extraordinary loss of approximately $117,000, net of a tax
            benefit, which consisted of the write off of a pro rata share of
            deferred financing costs associated with the issuance of the Senior
            Subordinated Notes.

            On April 1, 1997, the Company also entered into a $70 million senior
            credit facility (the "Facility") with a financial institution. Of
            the total commitment of $70 million under the Facility, $25 million
            was designated as an Acquisition Commitment and $45 million as a
            Working Capital Commitment, which is a revolving credit facility
            limited to the Borrowing Base as defined in the Facility. On October
            2, 1998, the Facility was amended to increase the Acquisition
            Commitment to $76 million. On October 2, 1998, in connection with
            the acquisition of American Pacific Enterprises, Inc., discussed in
            Note 7, the Company borrowed approximately $55.7 million under the
            Acquisition Commitment.

            As further discussed in Note 7, the Company acquired all outstanding
            shares of capital stock of Ex-Cell Home Fashions, Inc. on February
            12, 1999. In connection with that acquisition, the Company amended
            and restated the Facility to increase the borrowing availability to
            $200 million. The additional availability was reduced to $175
            million in connection with the June, 1999 amendment discussed below
            and is currently comprised of (i) $65.0 million as the Working
            Capital Commitment, subject to the Borrowing Base as defined, (ii)
            $40.0 million Term A loan and (iii) $70.0 million Term B loan. The
            borrowings under both the Working Capital Commitment and Term A
            loan, as amended, bear interest at the Base Rate plus 2.25% or the
            Eurodollar Rate plus 3.50%. Advances under the Term B loan bear
            interest at the Base Rate plus 3.00% or the Eurodollar Rate plus
            4.25%. Beginning in July 1999, the interest rate charged on the Term
            A and Working Capital Commitment borrowings could decrease by 1.0%
            if certain financial ratios are


                                       9

<PAGE>


                      GLENOIT CORPORATION AND SUBSIDIARIES
             (a wholly-owned subsidiary of Glenoit Universal, Ltd.)
             Notes to Consolidated Financial Statements (Unaudited)

4.             LONG TERM DEBT (CONTINUED)

            met. Principal payments on the Term A and Term B loans began on
            September 30, 1999 at a total of $1.7 million per quarter and
            increase over the lives of the loans. Borrowings under the Term A
            loan and Working Capital Commitment are required to be fully repaid
            by December 31, 2003 and borrowings under the Term B loan are
            required to be fully repaid by June 30, 2004. On the date of the
            Ex-Cell acquisition, the Term A and Term B loans were fully drawn.
            The bank also extended up to a total of $5 million in letters of
            credit to the Company; however, the amount is limited to the amount
            of the unused Working Capital Commitment.

            The Facility and Senior Subordinated Notes have various covenants,
            as well as cross-acceleration provisions, that require the Company
            to: maintain key financial ratios, restrict corporate borrowings,
            limit the Company's ability to pay dividends, limit the type and
            amount of certain investments which may be undertaken by the
            Company, limit the Company's disposition of assets, limit the
            Company's ability to enter into operating and capital leases, and
            restrict the Company's ability to issue shares of its stock.

            As of January 1, 2000, the Company was in compliance with its
            covenants related to both the Facility and the Senior Subordinated
            Notes. On February 23, 2000, the Company failed to repay
            approximately $2 million of borrowings outstanding under the Working
            Capital Commitment that was required as a result of an insufficient
            borrowing base which resulted in a default under the Facility. The
            insufficient borrowing base was the result of missed shipments
            during the last week of January 2000 as a result of a blizzard in
            Eastern North Carolina that closed operating facilities and
            restricted shipments. On March 16, 2000, the Company's lenders
            waived this default until April 10, 2000 and limited the Company's
            availability under the Working Capital Commitment to approximately
            $48.3 million, including $3.3 million specifically for letters of
            credit, with a view towards negotiating mutually acceptable
            modifications to the facility prior to April 10, 2000. The Company
            and its lenders have been unable to negotiate such modifications to
            date and, as of April 11, 2000, the Company was in default under the
            Facility as a result of the termination of the above waiver. In
            accordance with terms of the Facility, the Company's lenders
            notified the Company on April 13, 2000 that such lenders were
            exercising their election to prohibit the Company from making the
            interest payments of approximately $5.3 million due under the Notes
            on April 15, 2000. Accordingly, as of April 15, 2000, the Company
            was in default and remains in default under the terms of the Notes
            due to its failure to make the interest payment. On April 26, 2000,
            the Company's Facility was amended and the previous defaults
            outstanding as of April 10, 2000 were waived until June 15, 2000 and
            the Company's lenders will continue lending within terms of the
            Facility at their discretion. As a result of the above defaults and
            short term waivers, all of the Company's borrowings under the Senior
            Subordinated Notes and Facility are classified as current
            liabilities.

                                       10

<PAGE>


                      GLENOIT CORPORATION AND SUBSIDIARIES
             (a wholly-owned subsidiary of Glenoit Universal, Ltd.)
             Notes to Consolidated Financial Statements (Unaudited)

4.             LONG TERM DEBT (CONTINUED)

            For the quarter ended April 1, 2000, the Company was in default of
            certain financial covenants under the Facility which had not
            previously been adjusted under the waivers and amendments received
            prior to January 1, 2000. This default was waived in the amendment
            on April 26, 2000 discussed above. The Company is currently in
            negotiations with its senior lenders to conform its financial
            covenants and borrowing needs to its current business plan. Even
            though discussions are ongoing, there can be no assurance that the
            Company will obtain the necessary amendments and waivers or as to
            the terms thereof. The Company is currently reviewing alternative
            financing and strategic options to attempt to address the default
            outstanding under the Senior Subordinated Notes and additional
            amendments required for the Facility as well as reduce the Company's
            overall leverage. The Notes also contain a cross-acceleration clause
            under which they become due and payable in the event that the
            Company's senior lenders demand payment of the Facility.

            Barring an intervening acceleration of the indebtedness under the
            Facility or an insolvency proceeding, the Company believes it has
            sufficient liquidity to meet its current cash needs. However, any
            decrease in cash provided from operations or increase in cash used
            in operations could cause the Company to be unable to meet its cash
            needs. The Company's future operating performance and ability to
            service or refinance the Notes and to extend or refinance its other
            indebtedness will be subject to future economic conditions and to
            financial, business and other factors beyond the Company's control.

            During June 1999, the Company entered into an interest rate cap
            agreement which caps the maximum Eurodollar rate to be paid by the
            Company at 6.5% on an $82.5 million notional amount. The Company
            paid approximately $820,000 to enter into this agreement.

            Substantially all of the Company's assets and operations are pledged
            as collateral for the Facility. Holdings and Glenoit Asset
            Corporation have guaranteed the Company's obligations under the
            Facility. Holdings and Glenoit Asset Corporation have no substantive
            assets or operations and rely on the Company to fund their
            obligations.

                                       11

<PAGE>


                      GLENOIT CORPORATION AND SUBSIDIARIES
             (a wholly-owned subsidiary of Glenoit Universal, Ltd.)
             Notes To Consolidated Financial Statements (Unaudited)

4.             LONG TERM DEBT (CONTINUED)

            The Senior Subordinated Notes are fully and unconditionally
            guaranteed, on a joint and several basis, by Glenoit Asset
            Corporation, American Pacific Enterprises, Inc. ("APE") and, as of
            February 12, 1999, Ex-Cell Home Fashions, Inc. ("Ex-Cell") (together
            the "Subsidiary Guarantors"). Glenoit Asset Corporation's operations
            consist solely of leasing certain trademarks and other intangibles
            to Glenoit Corporation. Accordingly, Glenoit Asset Corporation's
            assets and operations consist primarily of intercompany assets and
            operations with Glenoit Corporation. Glenoit Canada and the foreign
            subsidiaries of APE and Ex-Cell (together the "Subsidiary
            Non-Guarantors") do not guarantee the Senior Subordinated Notes. The
            financial information of the Subsidiary Guarantors for these periods
            has been excluded because management believes that this information
            is not material to investors.

            The following tables present summarized balance sheet information of
            Glenoit Corporation, the Subsidiary Guarantors, and Subsidiary
            Non-Guarantors as of April 1, 2000 and the related summarized
            operating statement and cash flow statement information for the
            period then ended. The Company believes that separate financial
            statements and other disclosures regarding the Subsidiary
            Guarantors, are not material to investors.

            Summarized balance sheet information, in thousands, as of April 1,
            2000 is as follows (unaudited):

<TABLE>
<CAPTION>
                                          Glenoit   Subsidiary                                Subsidiary
                                       Corporation  Guarantors  Eliminations   Sub-total   Non-Guarantors Eliminations  Consolidated
                                       -----------  ----------  ------------   ---------   -------------- ------------  ------------

<S>                                    <C>          <C>         <C>            <C>         <C>            <C>           <C>
Cash and cash equivalents.........            $90       $(148)                   $  (58)          $ 807                        $749
Accounts and other receivables, net...     12,662      23,608                    36,270           3,153                      39,423
Inventories............................    10,151      42,537                    52,688           4,521                      57,209
Other current assets...................     7,621      (1,932)                    5,689             229                       5,918
                                          -------    --------                  --------         -------                     -------
     Total current assets..............    30,524      64,065             0      94,589           8,710             0       103,299
Property, plant and equipment, net...      33,001      23,195                    56,196          10,027                      66,223
Other assets...........................   183,940      97,400     $(198,305)     83,035           1,423      $(23,849)       60,609
                                         --------    --------     ---------    --------         -------      --------       -------
     Total assets......................   247,465     184,660      (198,305)    233,820          20,160       (23,849)      230,131
                                         ========    ========     =========    ========         =======      ========       =======

Accounts payable.......................     6,232       3,607                     9,839           2,746                      12,585
Other current liabilities..............   242,851      31,026             -     273,877          (6,228)                    267,649
                                         --------    --------                  --------         -------                     -------
     Total current liabilities.........   249,083      34,633             0     283,716          (3,482)            0       280,234
Long-term debt.........................    58,419                   (58,419)          0           3,277        (3,277)            0
Other long-term liabilities............     1,785      10,141                    11,926             134                      12,060
Stockholders equity (deficit)..........   (61,822)    139,886      (139,886)    (61,822)         20,231       (20,572)      (62,163)
                                         --------    --------     ---------    --------         -------      --------      -------
     Total liabilities and equity......  $247,465    $184,660     $(198,305)   $233,820         $20,160      $(23,849)     $230,131
                                         ========    ========     =========    ========         =======      ========      ========


</TABLE>


                                       12

<PAGE>


                      GLENOIT CORPORATION AND SUBSIDIARIES
             (a wholly-owned subsidiary of Glenoit Universal, Ltd.)
             Notes to Consolidated Financial Statements (Unaudited)

4.          LONG-TERM DEBT (CONTINUED)

            Summarized operating statements information, in thousands, for the
            three months ended April 1, 2000 is as follows:

<TABLE>
<CAPTION>

                                          Glenoit    Subsidiary                             Subsidiary
                                        Corporation  Guarantors   Eliminations  Sub-total  Non-Guarantors  Eliminations Consolidated
                                        -----------  ----------   ------------  ---------  --------------  ------------ ------------
<S>                                     <C>          <C>          <C>           <C>        <C>             <C>          <C>
Net sales..............................   $24,041      $48,028                   $72,069       $9,800          (4000)      $77,869
Cost of sales..........................    20,177       34,440                    54,617        7,910          (4000)       58,527
                                          -------      -------                    ------       ------          -----       -------
Gross profit...........................     3,864       13,588            0       17,452        1,890              0        19,342
Operating expenses.....................     5,144       10,616                    15,760          456                       16,216
Royalty income (expense)...............    (1,640)       1,640                         0            -                            -
                                          -------      -------                    ------       ------                      -------
Income (loss) from operations..........    (2,920)       4,612            0        1,692        1,434              0         3,126
Interest expense (income)..............     7,216         (561)                    6,655           49                        6,704
Other expense (income).................    (3,551)        (945)       3,946         (550)          19            902           371
Income taxes...........................    (3,590)       2,172            -       (1,418)         464              -          (954)
                                          -------      -------       ------       ------       ------            ---       -------
     Net income (loss).................   $(2,995)      $3,946      $(3,946)     $(2,995)       $ 902          $(902)      $(2,995)
                                          =======      =======      =======      =======       ======            ===       =======
</TABLE>

            Summarized cash flow statement information, in thousands, for the
            three months ended April 1, 2000 is as follows:

<TABLE>
<CAPTION>

                                         Glenoit    Subsidiary                             Subsidiary
                                       Corporation  Guarantors Eliminations  Sub-total   Non-Guarantors  Eliminations  Consolidated
                                       -----------  ---------- ------------  ---------   --------------  ------------  ------------
<S>                                    <C>          <C>        <C>           <C>         <C>             <C>           <C>
Cashflows from operating activities..   $(4,906)     $(1,954)                $(6,860)           $(331)                    $(7,191)
Cashflows used in investing
     activities......................       (49)        (223)                   (272)            (143)                       (415)
Cashflows from financing activities..     4,976        1,205                   6,181              159                       6,340
                                          -----        -----                 -------            -----                     -------
Net increase(decrease) in cash.......        21         (972)        0          (951)            (315)             0       (1,266)
Cash at beginning of period..........        69        1,744                   1,813              202                       2,015
                                         ------        -----                 -------            -----                     -------
Cash at end of period................       $90         $772         0          $862            $(113)             0         $749
                                         ======        =====         =       =======            =====              =      =======
</TABLE>



                                       13

<PAGE>


                      GLENOIT CORPORATION AND SUBSIDIARIES
             (a wholly-owned subsidiary of Glenoit Universal, Ltd.)
             Notes to Consolidated Financial Statements (Unaudited)

4.          LONG-TERM DEBT (CONTINUED)

            Summarized operating statements information, in thousands, for the
            three months ended April 3, 1999 is as follows :


<TABLE>
<CAPTION>
                                      Glenoit    Subsidiary                              Subsidiary
                                    Corporation  Guarantors   Eliminations   Sub-Total  Non-Guarantors  Eliminations  Consolidated
                                    -----------  ----------   ------------   ---------  --------------  ------------  ------------
<S>                                 <C>          <C>          <C>            <C>        <C>             <C>           <C>
Net sales.........................     24,765        27,448                     52,213        4,669          (2000)       54,882
Cost of sales.....................     19,883        18,593            0        38,476        3,982          (2000)       40,458
                                       ------        ------        -----       -------        -----           ----        ------
Gross profit......................      4,882         8,855            0        13,737          687              0        14,424
Operating expenses................     18,732         8,316                     27,048          309                       27,357
Royalty income (expense)..........     (1,705)        1,705            0             0            0              0             0
                                      -------        ------        -----       -------        -----             --        ------
Income (loss) from operations.....    (15,555)        2,244                    (13,311)         378              0       (12,933)
Interest expense (income).........      5,641          (557)                     5,084           39                        5,123
Other expense (income)............     (1,719)         (200)        1954            35          (42)           251           244
Income taxes......................     (7,956)        1,047            0        (6,909)         130              0        (6,779)
                                      -------        ------        -----       -------        -----             --        ------
     Net income (loss)............    (11,521)        1,954       (1,954)      (11,521)         251           (251)      (11,521)
                                      =======        ======        =====       =======        =====             ==        ======
</TABLE>

            Summarized cash flow statement information, in thousands, for the
            three months ended April 3, 1999 is as follows:

<TABLE>
<CAPTION>

                                          Glenoit     Subsidiary                            Subsidiary
                                        Corporation   Guarantors  Eliminations  Sub-Total  Non-Guarantors  Eliminations Consolidated
                                        -----------   ----------  ------------  ---------  --------------  ------------ ------------
<S>                                     <C>           <C>         <C>           <C>        <C>             <C>          <C>
Cashflows from operating activities..     (7,323)        1,395                   (5,928)         252                      (5,676)
Cashflows used in investing
     activities......................    (52,203)         (501)                 (52,704)        (185)                     (52,889)
Cashflows from financing activities..     59,775           (58)           0      59,717          (34)              0       59,683
                                         -------         -----           --     -------        -----              --      -------
Net increase (decrease) in cash......        249           836                    1,085           33                        1,118
Cash at beginning of period..........         39           179            0         218          122               0          340
                                         --------        -----           --     -------        -----              --      -------
Cash at end of period................        288         1,015            0       1,303          155               0        1,458
                                         =======         =====           ==     =======        =====              ==      -------
</TABLE>

                                       14

<PAGE>


                      GLENOIT CORPORATION AND SUBSIDIARIES
             (a wholly-owned subsidiary of Glenoit Universal, Ltd.)
             Notes to Consolidated Financial Statements (Unaudited)

5.          COMMITMENTS AND CONTINGENCIES

            Holdings is a holding company and as a result does not have any
            substantive assets or operations that generate revenues or cash
            flows. Accordingly, Holdings relies on the Company's distribution of
            dividends in order to fund its operations and meet its obligations,
            including its interest and principal payments.

            Holdings has obligations with a face amount of approximately $32.6
            million, bearing interest at stated rates between 5% to 12.5%, to
            shareholders ("Shareholder Notes") with principal due in 2004 and
            2005. These obligations are not reflected in the Company's
            accompanying balance sheets or income statements. Subject to
            existing debt restrictions, Shareholder Notes with a face amount of
            approximately $9.8 million contain certain acceleration clauses. At
            the option of Holdings, subject to the Company's existing debt
            restrictions, the interest may be paid by the issuance of additional
            notes or in cash.

            However, Holdings must pay interest in cash on certain of the
            Shareholder Notes if defined levels of consolidated cash flows of
            Holdings are attained. Annual interest payments during the next five
            years are approximately $2.6 million per year, excluding interest on
            notes that may be issued to pay interest. Assuming Holdings makes
            all interest payments related to the Shareholder Notes with
            additional notes, the Company's ultimate distribution of dividends
            in order for Holdings to meet its existing debt obligations is
            expected to be approximately $63 million beginning December 2004
            through December 2005. However, the Company may be required to
            declare dividends in order for Holdings to fund certain of its
            obligations in cash as discussed above. Such amounts could
            approximate $3 million in the aggregate and are due through December
            2004, if the defined levels of consolidated cash flow of Holdings
            are met.

            APE is a party to a copyright infringement and unfair business
            practices litigation with a competitor. The competitor has filed
            suit claiming damages in excess of $8 million. The suit is in the
            early stages of discovery and the potential liability, if any, to
            the Company cannot be determined. Management believes that the
            competitor's case is without merit and intends to vigorously contest
            this lawsuit. Accordingly, no provision has been made in the
            Company's financial statements.

            From time to time, the Company is involved in various other
            litigation which arises in the ordinary course of business. After
            consultation with its legal counsel, management believes the
            ultimate disposition of these matters will not have a material
            adverse effect on the Company's consolidated financial position or
            results of operations.

6.          INCOME TAXES

            The Company and Holdings, have entered into a Tax Sharing Agreement
            whereby the Company will pay Holdings its respective pro rata share
            of the total consolidated tax liability or receive its respective
            pro rata share of the total consolidated tax refund, as set forth in
            the tax sharing agreement. Under the Tax Sharing Agreement, the
            Company and Holdings are treated as separate tax groups.

            Consistent with the year ending January 1, 2000, the Company
            provided a valuation allowance for net operating losses generated in
            North Carolina and New York which are not currently anticipated to
            be utilized. During the first quarter of 2000, the allowance was
            increased $130,000. The Company estimates its annual effective
            income tax rate to be a benefit of approximately 24%.

                                       15
<PAGE>

                      GLENOIT CORPORATION AND SUBSIDIARIES
             (a wholly-owned subsidiary of Glenoit Universal, Ltd.)
             Notes to Consolidated Financial Statements (Unaudited)


7.          ACQUISITIONS

            On October 2, 1998, the Company acquired all the capital stock of
            American Pacific Enterprises, Inc. ("APE") for approximately $39.1
            million, including fees and expenses, subject to post-closing
            adjustments. In addition, approximately $16.6 million of
            indebtedness of APE was extinguished by the Company in connection
            therewith. The purchase agreement also includes additional payments
            to the former owners of APE if certain earning targets for APE's
            operations are met during 1998 and 1999. For fiscal 1998,
            approximately $12.3 million was paid to the former owners and
            current employees during April 1999. Of this amount, approximately
            $3.5 million was paid to current employees and expensed during 1998.
            The remaining $8.8 million was recorded as additional purchase
            price. Based on APE's projected operating results through the first
            quarter of 1999, the Company recorded approximately $1.0 million of
            compensation expense related to this agreement. However, based on
            the full year of APE's 1999 operating results, this charge was later
            reversed and no compensation expense was recorded for the twelve
            months ended January 1, 2000. APE is a leading designer, importer
            and marketer of decorative textile home furnishings, principally
            quilts and specialty decorative bedding items. The purchase price
            allocation attributed approximately $31.8 million to net working
            capital items, approximately $1.3 million to property, plant and
            equipment and approximately $31.4 million to goodwill. Goodwill is
            being amortized on a straight-line basis over 25 years.

            On February 12, 1999, the Company acquired all the outstanding
            shares of capital stock of Ex-Cell Home Fashions, Inc. ("Ex-Cell")
            in a single transaction for approximately $44.1 million, including
            fees and expenses, subject to post-closing adjustments. In addition,
            approximately $6.8 million of indebtedness of Ex-Cell was
            extinguished by the Company in connection therewith. Ex-Cell is
            engaged in the design, manufacture, importation and distribution of
            textile home furnishings consisting principally of shower curtains,
            table linens and decorative pillows. The acquisition has been
            accounted for as a purchase, and, accordingly, the operating results
            of the acquired business have been included in the results of
            operations since the acquisition date. The purchase price allocation
            attributed approximately $15.1 million to net working capital items,
            approximately $22.8 million to property, plant and equipment, $7.1
            million to long term liabilities including deferred income taxes and
            approximately $20.1 million to goodwill. Goodwill is being amortized
            on a straight line basis over 25 years.

            The following unaudited proforma summary of consolidated results of
            operations have been prepared as if the acquisition of Ex-Cell
            occurred at the beginning of the period presented. In connection
            with the allocation of purchase price, the Company wrote up
            Ex-Cell's inventory by approximately $2.2 million. This write-up
            negatively impacted gross margin during the Company's first nine
            months of 1999 as that inventory was sold. The impact of this
            write-up is not reflected in the proforma results presented below.
            Certain costs associated with the former shareholders of Ex-Cell are
            also excluded from the proforma results.


                                       16

<PAGE>


                     GLENOIT CORPORATION AND SUBSIDIARIES
             (a wholly-owned subsidiary of Glenoit Universal, Ltd.)
             Notes to Consolidated Financial Statements (Unaudited)


7.          ACQUISITIONS (CONTINUED)

<TABLE>
<CAPTION>
                                                                                            Three Months Ended
                                                                                                 April 3,
                                                                                                   1999
                                                                                            ------------------
<S>                                                                                         <C>
                                                                                               (Unaudited)
                     Net sales..................................................                $63,700,000
                                                                                                ===========
                     Net loss...................................................                (11,400,000)
                                                                                                ===========
</TABLE>


            These proforma results do not purport to be indicative of the
            results that would have actually been obtained if Ex-Cell had been
            acquired as of January 3, 1999 or results of future periods.

8.          RESTRUCTURING CHARGE

            On February 25, 1999, the Company's Board of Directors approved a
            plan to close one of the manufacturing operations of the Fabric
            Division. In connection with this activity, the Company discontinued
            operations at its leased Tennessee facility and terminated
            substantially all of the associates at that facility. The Company
            ceased substantially all operations in the facility on or about May
            28, 1999. During the first quarter of fiscal 1999, the Company
            recorded a restructuring charge totaling $13.1 million of which $3.2
            million related to the write-off of the goodwill, $1.8 million to
            cover the write-down of machinery and equipment to fair market value
            and the remainder for the costs of operating leases and severance
            and other personnel costs related to the termination of
            approximately 225 associates. Management reviewed its original
            write-down of fixed assets and compared the actual results of asset
            sales to original appraised values as well as reviewed any remaining
            asset values. In connection with this review as of January 1, 2000,
            management determined that the write down of machinery and equipment
            should be increased to $3.4 million. Management also reviewed the
            anticipated requirements for operating leases and determined this
            amount should decrease by $1.6 million as a result of certain leased
            equipment being transferred to its other manufacturing facilities
            and placed in service. The components of the reserves for this
            facility are as follows (in thousands):

<TABLE>
<CAPTION>

                                                                   Original Reserve    Usage        Adjustment   Remaining Reserve
                                                                   ----------------    -----        ----------   -----------------
<S>                                                                <C>                <C>           <C>          <C>
              Anticipated expenditures related to operating
              leases for plant and equipment                           $7,323         $(1,626)        $(1,586)       $4,111
              Anticipated severance benefits                              850         (   850)              0             0
                                                                       ------         -------         -------        ------

                                                                       $8,173         $(2,476)        $(1,586)       $4,111
                                                                       ======         ========        ========       ======

</TABLE>

                                       17

<PAGE>


                      GLENOIT CORPORATION AND SUBSIDIARIES
             (a wholly-owned subsidiary of Glenoit Universal, Ltd.)
             Notes to Consolidated Financial Statements (Unaudited)


9.          OPERATING SEGMENTS

            DESCRIPTION OF SEGMENTS

            The Company has two operating segments: (i) Decorative Home
            Furnishings which designs, manufacturers, imports and distributes
            decorative textile home furnishings and (ii) a domestic manufacturer
            and marketer of specialty fabrics, primarily for the apparel
            industry, known as "sliver knit" pile fabrics ("Fabric Division").

            MEASUREMENT OF SEGMENT PROFIT

            The Company evaluates performance and allocates resources based on
            operating income of each division. The accounting policies of the
            reportable segments are the same as described in Note 1 and exclude
            any costs associated with the Company's corporate administrative and
            finance functions.

            FACTORS MANAGEMENT USED TO IDENTIFY THE REPORTABLE SEGMENTS

            The Company's reportable segments are business units that offer
            different products and each are managed separately. The following
            tables present operating results and other financial information
            utilized by management in analyzing each operating division. All
            amounts are in thousands.


                                       18

<PAGE>


                      GLENOIT CORPORATION AND SUBSIDIARIES
             (a wholly-owned subsidiary of Glenoit Universal, Ltd.)
             Notes to Consolidated Financial Statements (Unaudited)

9.          OPERATING SEGMENTS

<TABLE>
<CAPTION>

                                                                      Three Months
                                                            ------------------------------
                                                             April 3,             April 1,
                                                               1999                 2000
                                                               ----                 ----
<S>                                                          <C>                <C>
               Net Sales
                    Decorative Home Furnishings......        $40,365              $65,500
                    Fabric...........................         14,517               12,662
                    Intercompany.....................              -            (     292)
                                                            --------            ---------
                         Consolidated................        $54,882              $77,870
                                                             =======              =======


               Operating income (loss)
                    Decorative Home Furnishings......        $3,037               $5,382
                    Fabric...........................       (13,350)             (   398)
                    Corporate/Other..................        (2,619)              (1,857)
                                                            -------              -------
                         Consolidated................      $(12,932)             $ 3,127
                                                           ========              =======

               Depreciation and amortization
                    Decorative Home Furnishings.              $ 938               $1,661
                    Fabric...........................         1,167                  977
                    Corporate/Other..................           712                  620
                                                             ------               ------
                         Consolidated................        $2,817               $3,258
                                                             ======               ======


                                                                                  April 1,
                                                                                    2000
                                                                                  --------

               Inventory and accounts receivable
                    Decorative Home Furnishings......                            $83,022
                    Fabric...........................                             10,127
                                                                                  ------
                         Consolidated................                            $93,149
                                                                                 =======

</TABLE>



                                       19

<PAGE>



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

OVERVIEW

        On December 13,1995, Glenoit Universal, Ltd. ("Holdings") formed a
wholly owned subsidiary, Glenoit Corporation (the Company), formerly Glenoit
Intermediate, Inc. and exchanged all of the issued and outstanding stock of
Glenoit Mills, Inc. and subsidiary ("Mills") for all of the issued and
outstanding shares of common stock of Glenoit Corporation. During 1997, Mills
was merged into the Company. The Company has two operating segments: (i)
Decorative Home Furnishings which manufactures, imports and distributes
decorative textile home furnishings and (ii) a domestic manufacturer and
marketer of specialty fabrics, primarily for the apparel industry, known as
"sliver-knit" pile fabrics ("Fabric Division"). The Company's two most recent
acquisitions, American Pacific Enterprises and Ex-Cell Home Fashions, Inc., are
part of the Decorative Home Furnishings segment

RECENT DEVELOPMENTS

        On October 2, 1998, the Company acquired all the capital stock of
American Pacific Enterprises, Inc. ("APE") for approximately $39.1 million,
including fees and expenses, subject to post-closing adjustment. In addition,
approximately $16.6 million of indebtedness of APE was extinguished by the
Company in connection therewith. In addition, the Company paid the former
shareholders approximately $8.8 million and certain employees approximately $3.5
million during April 1999 in connection with the acquisition agreement. APE is a
leading designer, importer and marketer of decorative textile home furnishings,
principally quilts and decorative bedding items. On February 12, 1999, the
Company acquired all the outstanding shares of capital stock of Ex-Cell Home
Fashions, Inc. ("Ex-Cell") in a single transaction for approximately $44.1
million, subject to post-closing adjustments. In addition, approximately $6.8
million of debt of Ex-Cell was extinguished in connection therewith. Ex-Cell is
engaged in the design, manufacture, importation and distribution of textile home
furnishings, principally shower curtains, table linens, and decorative pillows.
The Company believes that these acquisitions will expand its current product
offerings to large retailers, further penetrate the specialty retailing segment
and diversify product sourcing capabilities beyond North America to include
Chinese suppliers. As a result of these acquisitions, the Company believes it
has transformed itself from a specialty textile manufacturer focused on
profitable niche segments to a diversified manufacturer and distributor of
consumer goods, with the majority of its revenues derived from the home textile
market. These acquisitions have been accounted for as "purchases" under APB
Opinion No. 16 and, accordingly, the financial statements reflect the results of
operations from the dates of purchase.

        On February 25, 1999, the Company's Board of Directors approved a plan
to close one of the manufacturing operations of the Fabric Division. In
connection with this activity, the Company discontinued all operations at its
leased Tennessee facility and terminated substantially all of the associates at
that facility. During the first quarter of fiscal 1999, the Company recorded a
restructuring charge totaling $13.1 million to cover the estimated costs
associated with the closing of that facility including the cost of operating
leases, the write-off of the related goodwill, the write-down of machinery and
equipment to fair market value and severance and other personnel costs.

                                       20

<PAGE>

RESULTS OF OPERATIONS

Net sales for the quarter ended April 1, 2000, increased to $77.9 million or
41.9% compared to $54.9 million during the comparable quarter in the prior year.
The increase in net sales is partially attributable to the acquisition of
Ex-Cell. Ex-Cell's net sales totaled $22.3 million for the first quarter of 2000
compared to $10.6 million for the first quarter of 1999 since its acquisition on
February 12, 1999. The Decorative Home Furnishings segment also benefited from
internal sales growth of APE. These increases in sales were slightly offset by a
decline in sales of the Fabric Division to $12.7 million from $14.5 million.
This decrease was mainly due to manufacturing inefficiencies which restricted
the shipment of finished goods.

Gross profit for the quarter ended April 1, 2000 was $19.3 million or 24.8% of
net sales compared to $14.4 million or 26.3% of net sales for the same period
last year. The increase of $4.9 million relates to the inclusion of Ex-Cell's
operating results for the full quarter of 2000 as well as sales growth at APE.
Ex-Cell's gross margin was negatively impacted in the first quarter of 1999 by $
0.6 million of additional cost of sales related to the sale of inventory that
had been written up at the time of acquisition in accordance with generally
accepted accounting principles. As a result of the significant decline in sales,
the Fabric Division's gross margin decreased to $1.5 million from $1.7 million.
The Fabric Division's results were negatively impacted by the decreased volume
which resulted in a low absorption of overhead costs. The Fabric Division
benefited from the shutdown of the Tennessee facility during 1999 which reduced
manufacturing overhead costs during the first quarter of 2000.

Operating expenses for the quarter ended April 1, 2000, were $16.2 million
compared to $27.4 million in the first quarter of the prior year. Operating
expenses for 1999 include a $13.1 million restructuring charge related to the
closure of a manufacturing facility in the Fabric Division as discussed in
"Recent Developments". In addition to the restructuring charge, dollar increases
in 2000 relate to the operating expenses of Ex-Cell for the full quarter of
2000. Based on APE's projected operating results, the Company recorded
approximately $1.0 million of compensation expense in the first quarter of 1999
related to the APE purchase agreement. However, based on the full year of APE's
1999 operating results, this charge was later reversed and no compensation
expense was recorded for the twelve months ended January 1, 2000. Operating
expenses for the Fabric Division were down slightly as a result of the decreased
sales.

The Company reported operating income of $3.1 million for the quarter ended
April 1, 2000 compared to an operating loss of $12.9 million in the prior year
as a result of factors described above.

Interest expense for the quarter ended April 1, 2000, was $6.7 million compared
to $5.1 million for the same period last year. Interest expense has increased
due to higher levels of debt related to the Ex-Cell acquisition, as well as
overall increases in interest rates.

Net loss for the quarter ended April 1, 2000, was $3.0 million compared to a net
loss of $11.5 million the prior year.

                                       21

<PAGE>


LIQUIDITY AND CAPITAL RESOURCES


The Company relies on internally generated cash flow from operations,
supplemented by borrowings under its senior credit facility and vendor financing
to meet its debt service requirements, capital expenditures and working capital
needs. The Company is highly leveraged.

On April 1, 1997, the Company issued $100 million of senior subordinated notes
(the "Notes"). Concurrently with the issuance of the Notes, the Company entered
into a $70 million senior credit facility ("the New Credit Facility") with a
syndicate of lenders led by Banque Nationale de Paris ("BNP"), pursuant to which
the Company obtained available credit (i) up to $45.0 million for working
capital and general corporate purposes (the "Working Capital Commitment"),
subject to a Borrowing Base, and (ii) up to $25.0 million for acquisitions (the
"Acquisition Commitment"). On October 2, 1998, the New Credit Facility was
amended to increase the Acquisition Commitment to $76 million. On October 2,
1998, the Company borrowed approximately $55.7 million under the Acquisition
Commitment in connection with the acquisition of APE. In connection with the
acquisition of Ex-Cell, the Company amended and restated the New Credit Facility
to increase its borrowing availability to $200 million. This additional
availability was reduced to $175 million in connection with the June, 1999
amendment discussed below and is currently comprised of (i) $65 million as the
Working Capital Commitment, subject to the Borrowing Base, as defined, (ii) $40
million Term A loan, and (iii) $70 million Term B loan. Principal payments under
the Term A and Term B loans began on September 30, 1999 at a total of $1.7
million per quarter and increase over the life of loans. Borrowings under the
Term A loan and Working Capital Commitment are required to be fully repaid by
December 31, 2003 and borrowings under the Term B loan are required to be fully
repaid by June 30, 2004. On the date of the Ex-Cell acquisition, both the Term A
and Term B loans were fully drawn. During November 1999, the Company prepaid a
total of approximately $1 million of loans outstanding under the Term A and Term
B facilities with excess cash proceeds from the sale of fixed assets. A more
detailed description of the senior subordinated notes and the senior credit
agreement may be found in the notes to consolidated financial statements.

As of January 1, 2000, the Company was in compliance with its covenants related
to both the New Credit Facility and the Notes. On February 23, 2000, the Company
failed to repay approximately $2 million of borrowings outstanding under the
Working Capital Commitment that was required as a result of an insufficient
borrowing base which resulted in a default under the New Credit Facility. The
insufficient borrowing base was the result of missed shipments during the last
week of January 2000 as a result of a blizzard in Eastern North Carolina that
closed operating facilities and restricted shipments. On March 16, 2000, the
Company's lenders waived this default until April 10, 2000 and limited the
Company's availability under the Working Capital Commitment to approximately
$48.3 million, including $3.3 million specifically for letters of credit, with a
view towards negotiating mutually acceptable modifications to the facility prior
to April 10, 2000. The Company and its lenders have been unable to negotiate
such modifications to date and, as of April 11, 2000, the Company was in default
under the New Credit Facility as a result of the termination of the above
waiver. In accordance with terms of the New Credit Facility, the Company's
lenders notified the Company on April 13, 2000 that such lenders were exercising
their election to prohibit the Company from making the interest payments of

                                       22

<PAGE>

approximately $5.3 million due under the Notes on April 15, 2000. Accordingly,
as of April 15, 2000, the Company was in default and remains in default under
the terms of the Notes due to its failure to make the interest payment. On April
26, 2000, the New Credit Facility was amended and the previous defaults
outstanding as of April 10, 2000 were waived until June 15, 2000 and the senior
lenders will continue lending within terms of the New Credit Facility at their
discretion. As a result of the above defaults and short term waivers, all of the
Company's borrowings under the Notes and New Credit Facility are classified as
current liabilities.

For the quarter ended April 1, 2000, the Company was in default of certain
financial covenants under the New Credit Facility which had not previously been
adjusted under the waivers and amendments received prior to January 1, 2000.
This default was waived in the amendment on April 26, 2000 discussed above. The
Company is currently in negotiations with its senior lenders to conform its
financial covenants and borrowing needs to its current business plan. Even
though discussions are ongoing, there can be no assurance that the Company will
obtain the necessary amendments and waivers or as to the terms thereof. The
Company is currently reviewing alternative financing and strategic options to
attempt to address the default outstanding under the Notes and additional
amendments required for the New Credit Facility as well as reduce the Company's
overall leverage. The Notes also contain a cross-acceleration clause under which
they become due and payable in the event that the Company's senior lenders
demand payment of the New Credit Facility.

Barring an intervening acceleration of the indebtedness under the New Credit
Facility or an insolvency proceeding, the Company believes it has sufficient
liquidity to meet its current cash needs. However, any decrease in cash provided
by operations or increase in cash used in operations could cause the Company to
be unable to meet its cash needs. The Company's future operating performance and
ability to service or refinance the Notes and to extend or refinance its other
indebtedness will be subject to future economic conditions and to financial,
business and other factors beyond the Company's control.

Ex-Cell has a factoring arrangement whereby substantially all of its accounts
receivable are assigned and sold without recourse. During November 1999, the
Company entered into a factoring agreement for its Fabric Division whereby all
pre-approved accounts are assigned without recourse. The Company does retain
credit risks on customer orders that were not approved by the factor. As of
April 1, 2000, the Company retained credit risk of approximately $1.9 million
related to accounts not factored under these two agreements.

Principal and interest payments in respect of the Notes and the New Credit
Facility represent significant liquidity requirements for the Company. In
addition, the Company will be permitted (but will not be obligated) to make
certain payments to Holdings, including payments (i) in respect of principal and
interest of the Seller Notes, (ii) to cover certain administrative and operating
expenses of Holdings and (iii) to cover certain tax liabilities allocable to the
Company, subject in each case to certain conditions as described in the Notes
and the New Credit Facility.

                                       23

<PAGE>

Holdings is a holding company and as a result does not have any substantive
assets or operations that generate revenues or cashflows. Accordingly, Holdings
relies on the Company's distribution of dividends to meet its obligations,
including interest and principal payments. As of April 1, 2000, Holdings has
obligations with a face amount of $32.6 million, bearing interest at stated
rates between 5% to 12.5%, to shareholders with principal due in 2004 and 2005.

During September 1998, the Company acquired $5 million of the Notes in the open
market. These Notes were subsequently retired. In connection with this
transaction, the Company recorded an extraordinary loss of approximately
$117,000, net of a tax benefit, which consisted of the write off of a pro rata
share of deferred financing costs associated with the Notes.

During June 1999, the Company entered into an interest rate cap agreement which
caps the maximum Eurodollar rate to be paid by the Company at 6.5% on an $82.5
million national amount. The Company paid approximately $820,000 to enter into
this agreement.

During the first quarter of 2000, net cash used in operations was $7.2 million.
Receivables increased by $9.5 million, inventories increased by $6.2 million,
accrued expenses increased $7.0 million, and accounts payable increased $2.5
million. These increases are primarily to support the sales growth in the
Decorative Home Furnishing Segment and to meet the company's seasonal
requirements.


CAPITAL IMPROVEMENTS

Capital expenditures for the three months ended April 1, 2000 were $0.8 million.
These additions were related to several projects in the two operating segments.


SEASONALITY

The Company's business is seasonal in nature. Generally, there is increased
retail demand for the Company's products during the fall (back-to-school) and
holiday selling seasons. Consequently, demand for the Company's products is
generally higher during the Company's second and third fiscal quarters when such
products are produced and distributed for these selling seasons.




INFLATION

The Company believes that inflation has not had a material impact on the results
of operations presented.

IMPACT OF YEAR 2000 COMPLIANCE

       The Company has currently not experienced any significant systems or
other Year 2000 related problems. The Company substantially completed all the
conversions that were in progress to improve operating efficiencies in which
Year 2000 corrections were ancillary. The Company

                                       24

<PAGE>

capitalized the costs associated with these conversions in accordance with
appropriate accounting policies.

FORWARD-LOOKING STATEMENTS

       This Form 10-Q contains certain forward-looking statements concerning the
Company's operations, economic performance and financial condition, including in
particular, the likelihood of the Company's success in developing and expanding
its business and of maintaining financing on reasonable terms. These statements
are based upon a number of assumptions and estimates which are inherently
subject to significant uncertainties and contingencies, many of which are beyond
the control of the Company, and reflect future business decisions which are
subject to change. Some of these assumptions inevitably will not materialize,
and unanticipated events will occur which will affect the Company's results. The
forward looking statements in this Form 10-Q are intended to be subject to the
safe harbor protection provided by Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Act of 1934 (the "Safe Harbor Acts").


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

       The Company's exposure to market risk relates to changes in interest
rates and foreign currency rates. During 1999, the Company entered into an
interest rate cap agreement which caps the maximum Eurodollar rate to be paid by
the Company at 6.5% on an $82.5 million notional amount. As of April 1, 2000,
the market value of this cap was approximately $1 million. The Company has not
utilized any other derivative financial instruments. The Company's borrowings
under its New Credit Facility bear interest rates based on either a floating
Base Rate or the Eurodollar Rate. As of April 1, 2000, the Company had $149.0
million outstanding under its New Credit Facility with an average interest rate
of 10.1%. The Company's other borrowings consist of $95.0 million of senior
subordinated debt due on April 2007 at a fixed rate of 11%. The definitive
extent of the Company's interest rate risk under the New Credit Facility is not
quantifiable or predictable because of the variability of future interest rates
and borrowing requirements.

       The Company is exposed to foreign currency risk by virtue of its Canadian
and Chinese operations. However, less than 10% of its annual revenues are
generated by these operations. Both China and Canada have traditionally had a
relatively stable currency and therefore the Company feels its exposure to
significant adjustments to be minimal. Additionally, the Company's consolidated
financial statements are denominated in U. S. dollars and, accordingly, changes
in the exchange rate between U. S. dollars and these currencies affect the
operating results as well as stockholder's deficit. These adjustments, to date,
have not been material to the Company's consolidated balance sheet.



PART II - OTHER INFORMATION

ITEM 2:     LEGAL PROCEEDINGS

       There have been no material developments in legal proceedings involving
       the Company or its subsidiaries since the Company's Annual Report on Form
       10-K for the year ended January 1, 2000.

ITEM 3:     DEFAULT ON SENIOR INDEBTEDNESS

       See "Liquidity and Capital Resources" for a discussion regarding the
       Company's defaults under the New Credit Facility and Senior Subordinated
       Notes.

                                       25

<PAGE>

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

(a)         Exhibits

<TABLE>
<CAPTION>
<S>                <C>

       3.1         Certificate of Incorporation of Glenoit Corporation is hereby
                   incorporated by reference to Exhibit 3.1 to Glenoit
                   Corporation's Registration Statement on Form S-4
                   (Registration No. 333-42411) filed on December 16, 1997.
       3.2         By-Laws of Glenoit Corporation are hereby incorporated by reference to Exhibit 3.2 to Glenoit Corporation's
                   Registration Statement on
                   Form S-4 (Registration No. 333-42411) filed on December 16, 1997.
       3.3         Certificate of Incorporation of Glenoit Asset Corporation is hereby incorporated by reference to Exhibit 3.3 of
                   Amendment No. 1 to
                   Glenoit Asset Corporation's Registration Statement of Form S-4 (Registration No. 333-42411-01) filed
                   February 4, 1998.
       3.4         By-Laws of Glenoit Asset Corporation are hereby incorporated by reference to Exhibit 3.4 of Amendment No. 1 to
                   Glenoit Asset Corporation's Registration Statement of Form S-4 (Registration No. 333-42411-01) filed
                   February 4, 1998.
       4.1         Indenture dated as of April 1, 1997 between Glenoit
                   Corporation, the Subsidiary Guarantors (as defined therein)
                   and United States Trust Company of New York is hereby
                   incorporated by reference to Exhibit 4.1 to Glenoit
                   Corporation's Registration Statement on Form S-4
                   (Registration No. 333-42411) filed on December 16, 1997.
       4.2         Purchase Agreement dated as of March 26, 1997 among Glenoit Corporation, the Subsidiary Guarantors (as defined
                   therein), Salomon Brothers Inc. and CIBC Wood Gundy Securities Corp. is hereby incorporated by reference to
                   Exhibit 4.2 to Glenoit Corporation's
                   Registration Statement on Form S-4 (Registration No. 333-42411) filed on December 16, 1997.
       4.3         Registration Agreement dated as of March 26, 1997 among Glenoit Corporation, the Subsidiary Guarantors (as
                   defined therein), Salomon Brothers Inc. and CIBC Wood Gundy Securities Corp. is hereby incorporated by reference
                   to Exhibit 4.3 to Glenoit Corporation's Registration Statement on Form S-4 (Registration No. 333-42411) filed on
                   December 16, 1997.
       10.1        Second Amended and Restated Credit Agreement dated as of
                   April 1, 1997 among Glenoit Corporation, the banks, financial
                   institutions and other institutional lenders listed on the
                   signature pages thereto as the Restatement Lenders, the
                   Banque Nationale de Paris, as Administrative Agent for the
                   Lender Parties (as defined therein) is hereby incorporated by
                   reference to Exhibit 10.1 to Glenoit Corporation's
                   Registration Statement on Form S-4 (Registration No.
                   333-42411) filed on December 16, 1997.
       10.2        Supply Agreement dated February 1, 1997 by and between the Company and Sterling Fibers, Inc. is hereby
                   incorporated by reference to Exhibit 10.2 of Amendment No. 1 to Glenoit Corporation's Registration Statement on
                   Form S-4 (Registration No. 333-42411) filed on February 4, 1998.
       10.3        Employment Agreement dated October 28, 1997 by and among the Company, Glenoit Universal, Inc. and Thomas J.
                   O'Gorman is hereby incorporated to reference to Exhibit 10.3 of Amendment No. 1 to Glenoit Corporation's
                   Registration Statement on Form S-4 (Registration No. 333-42411) filed on February 4, 1998.
</TABLE>

                                       26

<PAGE>

<TABLE>
<CAPTION>
<S>                <C>
       10.4        Employment Agreement dated August 5, 1996 by and between the Company and Lester D. Sears is hereby incorporated
                   by reference to Exhibit 10.4 of Amendment No. 1 to Glenoit Corporation's Registration Statement on Form S-4
                   (Registration No. 333-42411) filed on February 4, 1998.
       10.5        Stockholders Agreement dated as of December 14, 1995 by and
                   among Glenoit Universal, Inc., Citicorp Venture Capital, John
                   Mowbray O'Mara, Banque Nationale de Paris, The Equitable Life
                   Assurance Society of the United States, the Seller, Soannes
                   Investment Corporation, Thomas J. O'Gorman and certain other
                   parties thereto to is hereby incorporated by reference to
                   Exhibit 10.5 of Amendment No. 1 to Glenoit Corporation's
                   Registration Statement on Form S-4 (Registration No.
                   333-42411) filed on February 4, 1998.
       10.6        Second Amendment and Waiver to the Credit Agreement, dated
                   October 2, 1998, among Glenoit Corporation, the banks,
                   financial institutions and other institutional lenders
                   parties to the Credit Agreement and Banque Nationale de Paris
                   as Agent is hereby incorporated by reference to Exhibit 4.1
                   of Glenoit Corporation's Form 8-K filed on October 16, 1998.
       10.7        Stock Purchase Agreement dated October 2, 1998 among Glenoit Corporation, American Pacific Enterprises, Inc.,
                   Steven J. Block, Jeffrey J. Block and Gregory D. Block is hereby incorporated by reference to Exhibit 2.1 of
                   Glenoit Corporation's Form 8-K filed on October 16, 1998
       10.8        Third Amendment and Waiver to the Credit Agreement, dated
                   October 30, 1998, among Glenoit Corporation, the banks,
                   financial institutions and other institutional lenders
                   parties to the Credit Agreement and Banque Nationale de Paris
                   as Agent is incorporated by reference to Exhibit 10.8 of
                   Glenoit Corporation's Form 10-K filed on April 1, 1999.
       10.9        Third Amended and Restated Credit Agreement, dated February
                   12, 1999, among Glenoit Corporation, the banks, financial
                   institutions and other institutional lenders parties to the
                   Credit Agreement and Banque Nationale de Paris as Agent is
                   hereby incorporated by reference to Exhibit 4.1 of Glenoit
                   Corporation's Form 8-K filed on February 26, 1999.
       10.10       Stock Purchase Agreement dated February 12, 1999, among
                   Glenoit Corporation, Ex-Cell Home Fashions, Inc., Arnold
                   Angerman, Irving Angerman, Samuel Samelson and two trusts is
                   hereby incorporated by reference to Exhibit 2.1 of Glenoit
                   Corporation's Form 8-K filed on February 26, 1999.
       10.11       Amendment No. 2 to the Third Amended and Restated Credit
                   Agreement, dated as of June 29, 1999, among Glenoit
                   Corporation, the banks, financial institutions and other
                   institutional lenders and Banque Nationale de Paris as Agent
                   is hereby incorporated by reference to Exhibit 10.11 of
                   Glenoit Corporation's Form 10-Q filed on August 24, 1999.
       10.12       Amendment No. 3 to the Third Amended and Restated Credit
                   Agreement, dated as of August 20, 1999, among Glenoit
                   Corporation, the banks, financial institutions and other
                   institutional lenders and Banque Nationale de Paris as Agent
                   is hereby incorporated by reference to Exhibit 10.12 of
                   Glenoit Corporation's Form 10-Q filed on August 24, 1999.
</TABLE>

                                       27

<PAGE>
<TABLE>
<CAPTION>
<S>                <C>

       10.13       Amendment No. 4 to the Third Amended and Restated Credit
                   Agreement, dated as of October 29, 1999, among Glenoit
                   Corporation, the banks, financial institutions and other
                   institutional lenders and Banque Nationale de Paris as Agent,
                   is hereby incorporated by reference to Exhibit 10.13 of
                   Glenoit Corporation's Form 10-Q filed on November 23, 1999.
       10.14       Amendment No. 5 to the Third Amended and Restated Credit
                   Agreement, dated as of November 19, 1999, among Glenoit
                   Corporation, the banks, financial institutions and other
                   institutional lenders and Banque Nationale de Paris as Agent,
                   is hereby incorporated by reference to Exhibit 10.14 of
                   Glenoit Corporation's Form 10-Q filed on November 23, 1999.
       10.15       Amendment No. 6 to the Third Amended and Restated Credit
                   Agreement, dated as of March 16, 2000, among Glenoit
                   Corporation, the banks, financial institutions, and other
                   institutional lenders and Banque Nationale de Paris as Agent,
                   is hereby incorporated by reference to Exhibit 10.15 of
                   Glenoit Corporation's Form 10-K filed on April 17, 2000.
       10.16       Amendment No. 7 to the Third Amended and Restated Credit Agreement dated as of April 26, 2000,
                   among Glenoit Corporation, the banks, financial institutions, and other institutional lenders
                   and Banque Nationale de Paris as Agent.
       21.1        Subsidiaries of Glenoit Corporation is hereby incorporated by reference to Exhibit 21.1 to Glenoit
                   Corporation's Registration Statement on Form S-4 (Registration No. 333-42411) filed on December 16, 1997.
       27.1        Financial Data Schedule.

(b)         Reports on Form 8-K
              None

</TABLE>




<PAGE>

                                   SIGNATURES

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


Dated: May 22, 2000
                               GLENOIT CORPORATION


                               By     /S/ LESTER D. SEARS
                                  --------------------------------
                                   Lester D. Sears
                                   Executive Vice President and
                                   Chief Financial Officer
                                   (On behalf of the Registrant and as Principal
                                   Financial and Accounting Officer)




                                   SIGNATURES

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


Dated: May 22, 2000
                               GLENOIT ASSET CORPORATION




                               By        /S/ LESTER D. SEARS
                                   -------------------------------
                                   Lester D. Sears
                                   Executive Vice President and
                                   Chief Financial Officer
                                   (On behalf of the Registrant and as Principal
                                   Financial and Accounting Officer)


                                       29