SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                           _________________________

                                    FORM 10-K
                           _________________________

[X]   ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF
      THE  SECURITIES  EXCHANGE  ACT OF  1934  For  the
      fiscal year ended December 31, 1999

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
      OF THE  SECURITIES  EXCHANGE  ACT OF 1934 For the
      transition period from _______ to _______

Commission file number 1-11438

                                 WORLDTEX, INC.
              (Exact name of registrant as specified in charter)

              DELAWARE                               56-1789271
      (State of Incorporation)          (I.R.S. Employer Identification No.)

       915 Tate Boulevard, S.E., Suite 106, Hickory, North Carolina 28602
                    (Address of principal executive offices)

                                  828-322-2242
                               (Telephone Number)

           Securities registered pursuant to Section 12(b) of the Act:

   Title of each class                 Name of each exchange on which registered
__________________________________     _________________________________________

Common stock, par value $.01 per       New York Stock Exchange, Inc.
share Preferred stock purchase         New York Stock Exchange, Inc.
rights

           Securities registered pursuant to Section 12(g) of the Act:

                                      None

                      (Cover sheet continued on next page)


<PAGE>


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [X]   No [  ]

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

As of March 1, 2000: 14,271,171 shares of Common Stock were outstanding; and the
aggregate market value of shares held by  non-affiliates  was $29,995,013.  (For
these purposes, a reported closing market price of $2.1875 per share on March 1,
2000 has been used and "affiliates"  have been arbitrarily  determined to be all
directors and executive officers, although the Company does not acknowledge that
any such  person is actually  an  "affiliate"  within the meaning of the federal
securities laws.)

Documents incorporated by reference:  definitive proxy statement for 2000 Annual
Meeting of Stockholders (Part III).

<PAGE>

                                     PART I

ITEM 1.     BUSINESS

            Worldtex,  Inc.  ("Worldtex" or the "Company") is a holding  company
engaged through its subsidiaries in the supply of elastomeric  components to the
textile and apparel  industries  and through one of its  subsidiaries  dates its
operations to 1934. Worldtex is a Delaware corporation organized in July 1992 to
acquire the covered yarn  manufacturing  operations of Willcox & Gibbs,  Inc., a
New York corporation that later changed its name to Rexel, Inc.  ("W&G").  Prior
to November 12, 1992,  Worldtex  was a wholly owned  subsidiary  of W&G. On that
date,  W&G  declared a dividend of one share of Worldtex  Common  Stock for each
share of W&G Common Stock outstanding on November 23, 1992; such Worldtex shares
were  distributed and started trading publicly on that date. The Company has one
business  segment  involving  elastomeric  components which has two main product
lines, covered elastic yarns and narrow elastic fabrics within that segment.

COVERED ELASTIC YARNS

             Worldtex's principal  subsidiaries engaged in the supply of covered
elastic yarns are (i) Regal  Manufacturing  Company,  Inc.  ("Regal"),  based in
Hickory, North Carolina, (ii) Rubyco (1987), Inc. ("Rubyco"), based in Montreal,
Canada, (iii) Filix, s.a. ("Filix"),  based in Troyes, France, and (iv) Fibrexa,
Ltda.  ("Fibrexa"),  based in  Bogota,  Colombia.  W&G  acquired  Regal in 1983,
acquired  Rubyco in 1986 and acquired  Filix in 1990,  and  transferred  them to
Worldtex  in August  1992.  Worldtex  acquired  Fibrexa as of April 1, 1995.  In
November  1999,  the Company  entered  into a 51% owned joint  venture in India,
Worldtex Valliappa Private Limited.

            The Company  believes that it is one of the two largest  independent
suppliers  of  covered  elastic  yarn in the  world  (based on 1999 net sales of
$167.6  million for this product  line).  Covered  elastic yarns are used by the
Company's customers to produce stretch fabrics for apparel that provide enhanced
styling   capabilities,   better  shape  retention,   and  improved  aesthetics,
durability and comfort. The principal products that utilize covered elastic yarn
produced  by the  Company  are sheer and opaque  pantyhose,  men's,  women's and
children's  socks,  sweaters,  swimwear,  active  and  athletic  wear and men's,
women's and children's stretch apparel. During 1999, Worldtex yarns were used in
the products of some of the world's best known brands and  designers,  including
Giorgio Armani, Hugo Boss, Pierre Cardin, Liz Claiborne, Danskin, Dim, Christian
Dior, Fogal,  Fruit of the Loom,  Givenchy,  Jockey,  Calvin Klein, Evan Picone,
Polo, Round the Clock, Nina Ricci, and others. The Company, which was one of the
first  independent  producers of covered  elastic  yarn,  currently  operates 11
manufacturing,  distribution,  and warehousing  facilities located in the United
States,  Canada,  France and South America.  Included in the 11 facilities are a
manufacturing  facility  and a warehouse  that Regal plans to close in the first
half of 2000.  The  Company  also has 38% and 51%  interests  in joint  ventures
located in Estonia and India,  respectively,  and  continues  to evaluate  joint
venture opportunities in Asia.


<PAGE>

      Products

            The covered  elastic  yarn  manufactured  by Worldtex is produced by
wrapping material,  principally nylon, polyester, cotton or other fibers, around
spandex  or latex  rubber.  The  core of  spandex  or  rubber  provides  stretch
capability  and  durability,  while the wrapped fiber  provides  dyeability  and
results in more comfort to the touch. Advanced  manufacturing  equipment permits
production of ultrafine covered elastic yarns that result in fabrics  comparable
in appearance to natural fibers, but with superior flexibility,  shape retention
and durability.

            Historically,  covered  elastic yarns were  principally  used in the
manufacture of women's pantyhose and other hosiery products.  However,  advances
in production  techniques and trends in consumer apparel preferences have led to
a substantial expansion of the end uses for covered elastic yarn. Today, covered
elastic yarn is used in a broad range of apparel, including sweaters,  swimwear,
running clothes,  athletic uniforms,  slacks,  skirts and dresses, as well as in
pantyhose and socks.

      Sales and Distribution

            The   Company's   manufacturing   and   distribution   centers   are
strategically  located to serve the Company's  principal markets.  The Company's
operations  in the United  States and Canada serve  customers  throughout  North
America,  its operations in France and joint venture in Estonia serve Europe and
its  operations  in  Bogota,  Colombia  serve  South  America  and also  provide
lower-cost products for the Company's other markets.

            As of December 31, 1999,  the Company  maintained a marketing  staff
located in Hickory,  North  Carolina,  Troyes,  France,  Montreal,  Canada,  and
Bogota,  Colombia.  Each sales employee has a designated territory. In addition,
certain sales personnel are specialists in designated  applications  for covered
yarn, such as circular knitting or woven fabrics. The sales staff is compensated
by salary and a sales  incentive  bonus plan.  The Company also has a network of
independent sales agents compensated on a commission basis.

            The  Company's  sales force is trained to work with the  customer to
develop new uses for  covered  elastic  yarns that may  improve  the  customer's
products. The Company's significant experience in the production and utilization
of covered  elastic yarns has provided the Company with  expertise not generally
available  to more  broadly-based  fabric and  apparel  producers.  The  Company
utilizes this expertise to develop solutions utilizing covered elastic yarns for
the customer's fabric needs.

      Customers

            In 1999, the Company  provided  covered  elastic yarns to over 1,400
customers,  and no single covered elastic yarn customer  accounted for more than
10% of 1999 sales.  The Company's ten largest  covered elastic yarn customers in
1999  accounted  for  approximately  30% of 1999 sales of covered  elastic yarns
which totaled $167.6 million.


<PAGE>

            The  Company's  customers are  principally  producers of hosiery and
fabric  sold for use in  apparel  products.  In 1999,  the  Company's  principal
customers included Jockey  International,  High-Tex  (division of Tefron),  U.S.
Textiles,  Sara Lee  Hosiery,  Hafner,  Doris  Hosiery,  Nalpac,  Iris  Hosiery,
Soieries  Peyraverney,  and Iril, s.a. During 1999,  Worldtex yarns were used in
the products of some of the world's best known brands and  designers,  including
Giorgio Armani, Hugo Boss, Pierre Cardin, Liz Claiborne, Danskin, Dim, Christian
Dior, Fogal,  Fruit of the Loom,  Givenchy,  Jockey,  Calvin Klein, Evan Picone,
Polo, Round the Clock, Nina Ricci, and others.

      Manufacturing

            Covered   elastic   yarns  are  produced  by  wrapping   strands  of
conventional  fabric materials around elastic materials such as spandex or latex
rubber.  In the  manufacturing  process,  a  "cover  component"  such as  nylon,
polyester, cotton, or other fiber is fed through high-speed spindles where it is
wrapped or twisted around a "core component" of spandex or latex rubber. Strands
of elastic may be single or double  covered,  depending  on the desired  end-use
application.  After  wrapping,  the yarn,  which is white in color and otherwise
unfinished,  is then  wound on a "take-up  package"  which is  adaptable  to the
customer's machinery and equipment for further processing.

            Worldtex's  research and development  activities are directed toward
improvements  in  existing  products  and  manufacturing  processes  and  toward
development of new uses for its products.  During 1999, Worldtex's  expenditures
for these purposes totaled less than 1% of its sales.

      Raw Materials

            In 1999,  approximately  69% of the Company's  production  costs for
covered  elastic yarns were  attributable  to raw  materials.  The principal raw
materials  utilized  by the Company are  spandex,  nylon and rubber.  Spandex is
principally supplied by DuPont, Globe and Bayer. Its rubber supply originates in
Malaysia and is obtained via various  domestic  importers.  The Company's  major
suppliers  of nylon in 1999 were DuPont,  BASF,  Nilit,  and  Nylstar.  In 1999,
Worldtex purchased a substantial  portion of its nylon and spandex from a single
source,  DuPont. In recent years, DuPont and its competitors have expanded their
spandex  production  capacity,  and Worldtex has been able to obtain  sufficient
supplies to meet its customers' requirements.

      Competition

            While Worldtex  believes that it is one of the largest  suppliers of
covered  elastic  yarn in the world,  several  companies  actively  compete with
Worldtex,  at least one of which,  Unifi, Inc., has greater assets and financial
resources  than  Worldtex.  Most  of  Worldtex's  major  customers  do  not  buy
exclusively  from Worldtex.  Competition is based primarily on product  quality,
customer service and price.


<PAGE>

      Employees

            As of December 31, 1999, Worldtex had a total of approximately 1,200
employees   engaged  in  its  covered   elastic  yarn   operations.   Of  these,
approximately 440 were employed in the United States by Regal,  approximately 80
were employed in Canada by Rubyco,  approximately 300 were employed in France by
Filix and approximately 380 were employed in Colombia by Fibrexa.  A substantial
amount of the covered elastic yarn sold by Filix is produced by  subcontractors,
whose employees are not included in the foregoing totals. Employees of Regal and
Fibrexa  are not  covered  by  collective  bargaining  agreements,  and  certain
employees  of Filix and Rubyco  are  covered by such  agreements.  Worldtex  has
experienced  no significant  labor  problems  during recent years in its covered
elastic yarn operations and considers its employee relations to be good.

NARROW ELASTIC FABRICS

            Worldtex's  subsidiary  engaged in the manufacture of narrow elastic
fabrics is Elastic  Corporation of America,  Inc. ("ECA").  The Company acquired
ECA, based in Columbiana,  Alabama,  in December 1997. The Company's  subsidiary
Elastex,  Inc.  ("Elastex")  acquired certain narrow elastic fabrics operations,
based in Asheboro, North Carolina, from Texfi Industries,  Inc. in October 1997.
Elastex was merged into ECA effective  December 31, 1998,  and references to ECA
herein shall mean the combined  operations of ECA and Elastex unless the context
indicates  otherwise.  In  addition,  on December  30,  1998,  ECA  acquired the
Lexington, South Carolina, narrow elastic manufacturing facility of Fruit of the
Loom.  ECA has  entered  into a long-term  agreement  to supply  narrow  elastic
fabrics to Fruit of the Loom.

            The Company  believes that it is the largest  manufacturer  of woven
and  knitted  narrow  elastic  fabrics in the world  (based on 1999 net sales of
$118.2 million for this product line). During 1999, ECA's narrow elastic fabrics
were used in apparel produced by Bassett Walker, Fruit of the Loom,  Maidenform,
Playtex,  Tommy  Hilfiger,  Jockey,  Donna Karan,  Calvin  Klein,  Ralph Lauren,
Russell  Corporation,  Sara Lee (Hanes products),  Vanity Fair, Warnaco (Warner,
Olga and Speedo  brands) and others.  ECA operates a total of six  manufacturing
facilities,  which are located in Alabama,  North  Carolina,  South Carolina and
Virginia.

      Products

            Narrow elastic fabrics are elasticized fabric bands, typically under
six inches in width,  that are used as components  in the  production of a broad
range of apparel products,  such as waistbands for men's, women's and children's
underwear,  athletic apparel and other garments,  straps, facings and edgings in
women's intimate apparel and elastic bands in women's hosiery. In addition,  ECA
manufactures  gauze and  elastic  wrap  products  for the medical  industry  and
specialized elastic fabric used by the automotive industry.

            ECA  manufactures a full range of narrow  elastic  fabric  products,
from  specialty  designs to commodity  items.  These varied  product  offerings,
together with sophisticated weaving and dyeing capabilities,  enable the Company
to provide bundled and customized products to its customers.


<PAGE>

            In  addition  to a  traditional  line of woven  elastic  inserts and
commodity narrow elastic fabrics, ECA has enhanced its product line with several
narrow  elastic  fabric  product  advancements.  For example,  ECA developed and
patented Quikcord(R) which embeds a drawstring within an elastic waistband. This
product  offers cost  savings to apparel  manufacturers  by avoiding  the costly
operation  of threading  the  drawstring  cord  through the elastic.  ECA's most
advanced narrow fabrics  products are waistbands with brand name logos and other
designs woven into the elastics,  principally  used in designer label underwear.
ECA  believes  that it  currently  has the  largest  number of logo looms in the
United States.

      Sales and Distribution

            ECA sells its products to manufacturers throughout the United States
and to foreign  manufacturers.  Sales  offices  are based in  Greensboro,  North
Carolina,  Miami,  Florida, San Francisco and Los Angeles,  California,  and New
York, New York.  There is no product  specialization  among the salesforce.  The
salesforce is compensated by salary and bonus incentive awards.

            ECA's key  marketing  strategy is to sell a  customized  product and
service program that meets specific  customer needs and to create  relationships
with  designers at premier  apparel  manufacturers  such as Calvin Klein,  Ralph
Lauren,  Tommy  Hilfiger,  Donna  Karan and  Jockey.  A  customer's  order often
comprises more than one type of narrow elastic fabric product,  and ECA believes
that it is critical to offer a coordinated  comprehensive supply program for its
customers.

      Customers

            In 1999, ECA served over 700 narrow elastic fabric customers.  Fruit
of the Loom  accounted  for  16.8% of the  Company's  1999  sales,  and no other
customer  accounted  for more than 10% of 1999 sales.  The Company's ten largest
narrow elastic fabric customers in 1999 accounted for  approximately 77% of 1999
sales of narrow elastic fabrics, which totaled $118.2 million.

            ECA's top customers in 1999 included apparel  manufacturers  such as
Bassett Walker, Fruit of the Loom, Tommy Hilfiger, Maidenform,  Playtex, Jockey,
Donna Karan, Calvin Klein, Ralph Lauren,  Russell  Corporation,  Sara Lee (Hanes
products), Vanity Fair, Warnaco (Warner, Olga and Speedo brands) and others. The
principal  customer in 1999 for ECA's medical products was Johnson & Johnson and
for its automotive products was Crotty Corporation, a supplier to General Motors
Corporation.

            In  connection  with the  acquisition  of Fruit of the Loom's narrow
elastic  manufacturing  facility  on  December  30,  1998,  ECA  entered  into a
long-term  supply  agreement  with Fruit of the Loom.  The Company  expects that
Fruit of the Loom will be ECA's largest  customer in 2000, based on Fruit of the
Loom's  past  requirements.  In  December  1999,  Fruit  of the Loom  filed  for
protection from its creditors under Chapter 11 of the U.S.  Bankruptcy Code. The
Company cannot predict the course of Fruit of the Loom's bankruptcy proceedings,
and no  assurances  can be  given  that  Fruit of the Loom  will  continue  as a

<PAGE>

customer.  For  further  discussion  regarding  Fruit of the  Loom's  bankruptcy
filing,  please  refer  to Item  7,  Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations - Liquidity; Capital Resources.

      Manufacturing

            Knit elastic  fabrics are primarily used in underwear and sportswear
applications.  Most commodity knit elastic  products are not "finished," and the
elastic yarn in the fabric is often bare. In contrast,  the elastic yarn used in
woven elastic  fabrics is covered by natural or synthetic yarns and the products
are finished or dyed. ECA operates dye houses for such purposes.

            Nylon,  polyester,  spandex  and rubber are the basic raw  materials
used in the manufacture of narrow elastic fabrics. For the manufacturing of knit
elastics,  the natural or synthetic  yarns (such as nylon,  polyester or cotton)
and the elastic  threads  (spandex  or rubber) are knitted  together to form the
knitted narrow elastic fabric products on the knitting machines. In woven narrow
elastic  fabrics,  the  elastic  threads  must be covered.  High-speed  covering
machines wrap the elastic core with natural or synthetic  yarns under tension to
cover the elastic. The covered elastic is collected on take-up packages and then
is typically put onto beams.  ECA's proprietary  covering  technology allows the
covered  elastic to be fed directly  onto the loom,  thereby  eliminating a step
wherein the covered  elastic is wound onto beams and then sent to the looms.  On
ECA's weaving looms,  the covered elastic is woven with the natural or synthetic
yarns (such as nylon, polyester or cotton) to create the narrow elastic fabrics.
If logos are required,  special looms are used and  programmed to weave into the
narrow elastic fabric the name of the designer or brand, such as Calvin Klein or
Jockey.

            All woven narrow fabrics are "finished."  The rough-edged  materials
that result from the weaving process are put through a finishing  process during
which the narrow elastic  fabrics are wetted and  resin-treated  and then dried.
Certain  knitted  narrow  elastics are  finished as well,  depending on customer
requirements.  Due to ECA's  focus on high-end  knitted  products  for  intimate
apparel, many of its fine quality knitted elastics are finished and dyed.

            Narrow fabrics may be dyed according to color formulations developed
in-house to meet specific  customer color  requirements.  ECA's dyeing processes
include  continuous  acid,  pressure beam or batch dyeing methods.  ECA believes
that it has the largest and most  diversified  dye lab,  computer color matching
equipment  and dyeing  equipment in the industry.  ECA uses lab equipment  which
simulates  the dye process,  resulting in high accuracy of dye quality and color
uniformity in actual production.

            ECA also produces silicon-backed fabrics. Such fabrics are typically
found in hosiery products, particularly in thigh-high stockings. To produce this
product,  silicon is applied to knit,  lace and simulated  lace uniformly on one
side of the fabric and then dried to create a non-slip  band. The band grips the
thigh allowing the stocking to stay in place without garters.  Utilizing special
robotic equipment,  the  silicon-backed  fabrics are banded to the specific size
requirements of the customers before inspection and final packaging.


<PAGE>

      Raw Materials

            Raw  materials  comprised  approximately  50% of ECA's 1999 costs of
production.  Key raw materials for ECA include synthetic  fibers,  such as nylon
and polyester,  spandex,  rubber, cotton, chemical dyes and silicon. The Company
buys its synthetic  materials and spandex  primarily from DuPont and Bayer.  Its
rubber  supply  originates  in  Malaysia  and is obtained  via various  domestic
importers.  Chemical dyes and auxiliary dye  ingredients are supplied by various
prominent  chemical  companies,  such as Crompton & Knowles and Ciba-Geigy,  and
silicon is primarily supplied by Dow Corning.

      Competition

            ECA believes that it is the leader in many of the market  categories
in which it  operates.  There are  approximately  ten domestic  competitors  who
manufacture narrow elastic fabrics for the apparel industry.  Principal domestic
competitors in narrow elastic fabrics  include  Clinton Mills,  George C. Moore,
and Narrow Fabrics, Inc.

      Employees

            As of December 31, 1999, Worldtex had a total of approximately 1,100
employees  engaged  in its  narrow  elastic  fabrics  operations.  None of these
employees  are  covered  by  collective  bargaining  agreements.   Worldtex  has
experienced  no  significant  labor  problems  in  its  narrow  elastic  fabrics
operations and considers its employee relations to be good.


ITEM 2.     PROPERTIES

            Worldtex maintains its headquarters in Hickory,  North Carolina,  in
leased office space.

      COVERED ELASTIC YARN

            The  Company  operates  a  total  of  eleven  covered  elastic  yarn
manufacturing  plants,  distribution and warehouse facilities of which seven are
owned and four are  leased.  The  Company  intends  to close two  facilities  in
Hickory,   North  Carolina  and  consolidate  their  operations  with  remaining
facilities  during the first half of 2000.  In  addition,  the Company has a 38%
interest in a joint  venture in Estonia that owns and  operates a 52,000  square
foot covered elastic yarn manufacturing and distribution  facility.  In general,
the  Company's  facilities  are adequate and suitable for the purposes for which
they are utilized by the Company. The plants and distribution centers are listed
below:


<PAGE>

                    SQUARE    OWNED/
  LOCATION           FEET     LEASED                  USE
_______________     ______    ______      ____________________________________

UNITED STATES:
  Hickory, NC       82,000    Owned       Manufacturing Plant and Headquarters
                                          of Regal<F1>
  Hickory, NC      144,000    Owned       Manufacturing Plant - Regal
  Hickory, NC       69,000    Owned       Manufacturing Plant - Regal
  Hickory, NC       18,000    Leased      Warehouse - Regal<F1>
  Hickory, NC       80,000    Leased      Distribution Center - Regal

----------
<F1>
Regal  intends  to  close  these  facilities  in the  first  half  of  2000  and
consolidate within existing facilities.

CANADA:
  Montreal,         85,000    Leased      Manufacturing Plant and Headquarters
  Quebec                                  of Rubyco

FRANCE:
  Troyes            69,000    Owned       Distribution Center and Headquarters
                                          of Filix
  Athis            139,000    Owned       Manufacturing Plant - Filix
  Conde            202,000    Owned       Manufacturing Plant - Filix
  Le Grand Serre   111,000    Owned       Manufacturing Plant - Filix

COLOMBIA:
  Bogota           239,000    Leased      Manufacturing Plant and Headquarters
                 _________                of Fibrexa

SUBTOTAL         1,238,000
                 _________

      NARROW ELASTIC FABRICS

            ECA operates a total of six manufacturing  plants,  all of which are
owned.  In addition,  a rented sales office is maintained in New York City.  The
manufacturing plants are listed below.


                    SQUARE    OWNED/
  LOCATION           FEET     LEASED                  USE
_______________     ______    ______      ____________________________________

UNITED STATES:
  Columbiana, AL    245,000   Owned       Manufacturing Plant and Headquarters
                                          of ECA
  Columbiana, AL    115,000   Owned       Manufacturing Plant
  Asheboro, NC      143,000   Owned       Manufacturing Plant
  Hemingway, SC      65,000   Owned       Manufacturing Plant
  Lexington, SC     114,000   Owned       Manufacturing Plant
  Woolwine, VA       77,000   Owned       Manufacturing Plant
                  _________
SUBTOTAL            759,000
                  _________
GRAND TOTAL       1,997,000
                  _________
                  _________
<PAGE>

ITEM 3.     LEGAL PROCEEDINGS

            There are no material  pending legal  proceedings  as of the date of
this  Report to which the  Company or any of its  subsidiaries  is a party or to
which any of their property is subject.

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

            During the last  quarter  of the  Company's  1999  fiscal  year,  no
matters were submitted to a vote of the Company's security holders.


<PAGE>

                                     PART II

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

            The Company's Common Stock is listed on the New York Stock Exchange.
The  following  table sets forth the high and low per share sales prices for the
Common Stock on the New York Stock  Exchange for each quarter since December 31,
1997.

                                      High         Low
                                     ______       _____
          1998:
             1st Quarter             $ 8.06        6.94
             2nd Quarter               8.13        5.44
             3rd Quarter               6.25        4.25
             4th Quarter               4.81        3.50

          1999:
             1st Quarter               4.00        1.56
             2nd Quarter               3.00        1.69
             3rd Quarter               2.63        2.00
             4th Quarter               2.06        1.13

          2000:
             1st Quarter               2.69        1.38
             (through March 1)

            At March 1, 2000 there were  approximately  941 holders of record of
Common Stock.

            The Company currently does not pay any dividends.  Future payment of
cash  dividends  by the Company  will be  dependent  on such factors as business
conditions,  earnings and the financial condition of the Company.  The Company's
credit  facilities  restrict the payment of dividends by the Company.  Under the
most  restrictive  of these debt  agreements,  no amounts were available for the
payment of dividends and other  distributions  as of December 31, 1999. See Item
7, "Management's  Discussion and Analysis of Financial  Condition and Results of
Operations - Liquidity; Capital Resources."

ACQUISITION BY INVESTMENT MANAGERS OF 34% OF THE COMMON STOCK

            On  February  28,  2000,  a  Schedule  13D report was filed with the
Securities and Exchange Commission stating that certain investment managers were
the beneficial owners of approximately 34% of the outstanding shares of Worldtex
common stock.  According to the Schedule 13D filing,  William  Ehrman,  Frederic
Greenberg, Jonas Gerstl, William Lautman and Julia Oliver (collectively the "EGS
Persons"), the principals of the firm EGS Partners,  L.L.C., were the beneficial
owners of such shares, which were held by certain investment  partnerships or in
discretionary  accounts over which they have  investment  authority.  The filing
states that the Worldtex shares were acquired for investment.


<PAGE>

            As a  consequence  of the filing of such report,  the "poison  pill"
shareholder  rights  attached  to the  outstanding  Worldtex  common  stock were
required to trade  separately  from such stock and become  exercisable  after 10
days,  unless  otherwise  provided by the Worldtex  Board of  Directors.  If the
rights  had  become  exercisable,   each  right  holder  (other  than  such  34%
shareholders) would have been entitled to pay $30 per right and receive Worldtex
common  stock (or a common  stock  equivalent)  with a value of $60  (determined
pursuant to the  agreement  governing  the rights).  In  addition,  the Board of
Directors of Worldtex  had the option to exchange  each right (other than rights
held by such 34% shareholders) for one share of Worldtex common stock. The Board
of  Directors  subsequently  extended  the  initial  10-day  period  on  several
occasions in order to permit discussions with the EGS Persons.

            On March 27, 2000, Worldtex entered into a Standstill Agreement (the
"Standstill  Agreement")  with the EGS  Persons  and  certain  related  entities
(collectively,  the  "EGS  Parties").  Pursuant  to  the  Standstill  Agreement,
Worldtex amended its "poison pill" shareholder rights plan to prevent the rights
from trading  separately  or becoming  exercisable  as a result of the announced
beneficial  ownership  by the EGS  Parties,  unless  the Board of  Directors  of
Worldtex  determines  that  there  has  been a  breach  by an EGS  Party  of the
Standstill Agreement.

            Under the Standstill Agreement,  the EGS Parties agreed, among other
things,  not to (i) acquire  additional  shares of Worldtex  common stock,  (ii)
encourage  other  persons to acquire  Worldtex  common  stock,  (iii)  submit or
encourage a proposal for the acquisition of Worldtex, (iv) make any solicitation
of proxies for Worldtex common stock, (v) sell any Worldtex common stock, except
sales of not more than 5% of the outstanding shares in any 90 day period so long
as the buyer is not and will not thereby  become the  beneficial  owner of 5% or
more of the Worldtex  common stock or (vi) submit any shareholder  proposal.  In
addition,  each EGS Party agreed to vote the Worldtex common stock  beneficially
owned by it, at its option,  (i) in the manner recommended by the Worldtex Board
of Directors  or (ii) in the same  proportion  as the votes of other  holders of
Worldtex common stock.  The EGS Parties also agreed to make payments to Worldtex
aggregating $8 million,  in reimbursement of certain  expenses.  The term of the
Standstill Agreement is ten years.

            Also as a result of such acquisition of Worldtex common stock by the
EGS  Persons,  all  outstanding  stock  options  granted  under  the 1992  Stock
Incentive  Plan of Worldtex,  representing  the right to purchase  approximately
1,760,000 shares of Worldtex common stock at exercise prices from $2.81 to $6.75
per share, became vested. In addition,  Barry D. Setzer,  Chairman of the Board,
President and Chief Executive Officer of Worldtex, and Marty R. Kittrell, Senior
Vice President and Chief Financial Officer of Worldtex,  each has asserted that,
under the terms of his employment  agreement  with  Worldtex,  he is entitled to
terminate his employment and receive payment of 2.99 times his "base salary" (as
defined).  If both officers were entitled to exercise such right, Worldtex would
be obligated to make  severance  payments of  approximately  $2.1  million.  The
Worldtex  Board of Directors  has taken the position  that such officers are not
entitled to exercise  such right.  However,  the Board of Directors  has entered
into negotiations with such officers seeking to settle the matter amicably.  The
departure from Worldtex of these senior  managers could have a material  adverse
effect on Worldtex.


<PAGE>

ITEM 6.     SELECTED FINANCIAL DATA

            WORLDTEX, INC. AND SUBSIDIARIES

            The following  table sets forth certain  financial  data of Worldtex
for the five fiscal years ended  December 31, 1999,  which has been derived from
Worldtex's audited financial statements for such years. This data should be read
in conjunction  with the Consolidated  Financial  Statements of Worldtex and the
Notes thereto appearing  elsewhere herein.  Results are not directly  comparable
due to the  acquisition  of the  Fruit of the  Loom  manufacturing  facility  on
December 30, 1998, ECA as of December 1, 1997 and Elastex as of October 3, 1997.
See Item 7,  Management's  Discussion  and Analysis of Financial  Condition  and
Results of Operations. Historical financial information may not be indicative of
Worldtex's future  performance.  Diluted earnings per share are calculated based
upon the  weighted  average  number of common  shares  outstanding  and dilutive
common equivalent shares during such year.

<TABLE>
<CAPTION>
                                                  YEARS ENDED DECEMBER 31,
                                  __________________________________________________
                                     1999      1998       1997      1996      1995
                                  _________  _________  ________  ________  ________
                                   (Dollars in thousands, except per share amounts)
<S>                                <C>        <C>        <C>       <C>       <C>
Net Sales                          $285,787   258,537    203,256   207,829   187,981

Income (loss) before income
  taxes                              (9,975)   (6,392)    11,869    17,361    10,231

Provision (benefit) for income
  taxes                                 170      (494)     5,377     6,415     4,979

Net income (loss)                   (10,145)   (5,898)     5,148    10,946     5,252

Diluted income (loss) per share        (.71)     (.41)       .35       .75       .36

EBITDA<F1>                           34,732    30,862     26,059    28,777    23,602

Depreciation                         14,931    11,934      5,877     5,342     5,234

Amortization                          2,951     4,638        968       942       899

Cash flows from operating
  activities                          5,502     9,053     (1,497)   15,032    12,046

Capital expenditures                 17,716    19,871      7,706    13,785     8,356

Total assets                        314,436   324,120    312,439   206,032   196,065

Long-term debt (including
  current installments of
  long-term debt)                   207,631   198,771    186,400    69,388    70,187

Stockholders' equity                 52,492    73,482     77,502    85,178    78,939

Cash dividends per Common Share        -         -          -         -         -
----------
<FN>
<F1>
EBITDA  represents  operating  profit plus  depreciation  and  amortization  and
one-time items. While EBITDA should not be considered as an alternative  measure
of net income or cash  provided by  operating  activities,  it is  presented  to
provide additional  information relating to the Company's debt service capacity.
EBITDA  should not be  considered  in  isolation  or as a  substitute  for other
measures of financial performance or liquidity.
</FN>
</TABLE>


<PAGE>

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

            The  Company  believes  that it is one of the largest  suppliers  of
elastomeric  components to the textile  industry in the world (based on 1999 net
sales). The Company has two main product lines, covered elastic yarns and narrow
elastic  fabrics.   Covered  elastic  yarns  manufactured  by  the  Company  are
principally used in the production of sheer and opaque pantyhose, men's, women's
and children's socks,  sweaters,  swimwear,  active and athletic wear and men's,
women's and children's  stretch apparel.  Narrow elastic fabrics are elasticized
fabric bands,  typically under six inches in width,  that are used as components
in the production of a broad range of apparel  products,  such as waistbands for
men's,  women's and children's  underwear,  athletic apparel and other garments,
straps,  facings and edgings in women's  intimate  apparel and elastic  bands in
women's hosiery.

            The  Company's  covered  elastic yarn business  operates  around the
world through its subsidiaries Regal, based in Hickory, North Carolina,  Rubyco,
based in Montreal, Canada, Filix, based in Troyes, France, and Fibrexa, based in
Bogota,  Colombia.  The Company also has 38% and 51% interests in joint ventures
in Estonia and India, respectively.

            The Company's narrow elastic fabrics  business is conducted  through
ECA, acquired on December 1, 1997 based in Columbiana, Alabama. In addition, the
Company acquired through Elastex certain narrow elastic fabrics operations based
in  Asheboro,  North  Carolina,  in October  1997.  Elastex  was merged into ECA
effective December 31, 1998. In addition, on December 30, 1998, ECA acquired the
Lexington, South Carolina, narrow elastic manufacturing facility of Fruit of the
Loom.

RISK FACTORS TO BE CONSIDERED

            Worldtex is a holding company, the principal assets of which are the
stock of its  subsidiaries.  Significantly all of the operations of Worldtex are
conducted   through   its  direct  and   indirect   wholly-owned   subsidiaries.
Accordingly,  Worldtex's  ability to service its indebtedness and meet its other
obligations is dependent upon earnings and cash flow of its subsidiaries and the
payment  of  funds by  those  subsidiaries  to  Worldtex  in the form of  loans,
dividends or otherwise.  In addition, the ability of Worldtex's  subsidiaries to
pay dividends, repay intercompany liabilities or make other advances to Worldtex
is subject to  restrictions  imposed by corporate law and certain United States,
state and foreign tax considerations.


<PAGE>

            As  a  result  of  the   acquisition  of  beneficial   ownership  of
approximately 34% of the outstanding Worldtex common stock by certain investment
managers  (as  described  in  Note 17 of the  Notes  to  Consolidated  Financial
Statements),  Barry D.  Setzer,  Chairman  of the  Board,  President  and  Chief
Executive Officer of Worldtex, and Marty R. Kittrell,  Senior Vice President and
Chief Financial Officer of Worldtex,  each has asserted that, under the terms of
his  employment  agreement  with  Worldtex,  he is  entitled  to  terminate  his
employment and receive payment of 2.99 times his "base salary" (as defined).  If
both officers were entitled to exercise such right,  Worldtex would be obligated
to make severance payments of approximately $2.1 million.  The Worldtex Board of
Directors has taken the position that such officers are not entitled to exercise
such right.  However,  the Board of Directors has entered into negotiations with
such officers seeking to settle the matter amicably. The departure from Worldtex
of these senior managers could have a material adverse effect on Worldtex.

            The  Company  is  highly  leveraged.   See  "-  Liquidity;   Capital
Resources" below.

            A substantial  portion of the Company's sales and operating  profits
have historically been derived from  international  operations and export sales,
which are subject in varying degrees to risks inherent in doing business abroad.
Such risks include the  possibility  of unfavorable  circumstances  arising from
host country laws or regulations.  In addition, foreign operations include risks
of partial or total  expropriation;  currency  exchange  rate  fluctuations  and
restrictions on currency repatriation; significant changes in taxation policies;
the disruption of operations from labor and political disturbances, insurrection
or war; and the requirements of partial local ownership of operations in certain
countries.  Moreover,  changes  in the value of the  currencies  of the  foreign
countries  in which the  Company  does  business  could have a material  adverse
impact on the Company's business, financial condition and results of operations.

            The textile and retail apparel  industries  are highly  cyclical and
are  characterized  by rapid shifts in fashion and consumer  demand,  as well as
competitive  pressures  and price and  demand  volatility.  The  demand  for the
Company's  products is  principally  dependent  upon the level of United  States
demand for retail apparel. The demand for retail apparel is in turn dependent on
United States consumer spending,  which may be adversely affected by an economic
downturn,  changing  retailer  and  consumer  demands,  a  decline  in  consumer
confidence or spending,  and other  factors  beyond the  Company's  control.  In
recent  years,  sales in the United  States of sheer  pantyhose  have  declined.
Although pantyhose  manufacturers have historically  accounted for a significant
portion of the Company's sales of covered  elastic yarn, the Company's  business
strategy  includes the continued  development  of new end-use  applications  for
covered  elastic  yarn and the  diversification  of its  product  lines with the
recent narrow elastics acquisitions.

            Spandex  and  nylon  are the  principal  raw  materials  used in the
Company's  manufacturing  process.  In 1999  Worldtex  purchased  a  significant
portion of its nylon and spandex from a single source,  DuPont. In recent years,
DuPont and its competitors have expanded their spandex production capacity,  and
Worldtex  has been able to obtain  sufficient  supplies  to meet its  customers'
requirements.


<PAGE>

            The textile  and  apparel  industries  are highly  competitive.  The
apparel markets are served by a variety of producers,  many of which are located
in rapidly  growing,  low-wage  countries  and use  textiles  produced  in those
regions.  Many of these textile producers have  substantially  greater financial
and other  resources and lower cost of funds than the Company.  Unifi,  Inc. and
Worldtex are the two largest  suppliers of covered  elastic  yarns in the United
States and worldwide.  Unifi, Inc. has substantially greater financial resources
than the Company and is less leveraged.  The Company  believes it is the largest
supplier of narrow elastic fabrics in the world.

RESULTS OF OPERATIONS

            The following table sets forth the relationship of percentages which
certain income and expense items have to net sales:

                                                    YEARS ENDED DECEMBER 31,
                                                   --------------------------
                                                    1999      1998      1997
                                                   ------    -------  -------

Net sales...................................       100.0%     100.0%    100.0%
                                                   =====      =====     =====
Gross profit................................        15.0%      16.4%     17.7%
Selling and administrative expense..........        10.0        9.9       7.7
Goodwill amortization.......................         1.0        1.8        .5
                                                   -----      -----     -----
Operating profit............................         4.0        4.7       9.5
Interest expense............................         7.0        7.3       3.5
Other income (expense)--net.................         (.5)        .1       (.2)
                                                   -----      -----     -----
Income (loss) before income taxes...........        (3.5)%     (2.5)%     5.8%
                                                   =====      =====     =====
EBITDA<F1>..................................        12.2%      11.9%     12.8%
                                                   =====      =====     =====
Depreciation................................         5.2%       4.6%      2.9%
                                                   =====      =====     =====
----------
<F1>
EBITDA  represents  operating  profit plus  depreciation  and  amortization  and
one-time items. While EBITDA should not be considered as an alternative  measure
of net income or cash  provided by  operating  activities,  it is  presented  to
provide additional  information relating to the Company's debt service capacity.
EBITDA  should not be  considered  in  isolation  or as a  substitute  for other
measures of financial performance or liquidity.

      1999 VS. 1998

            Sales for the year ended  December 31, 1999 were $285.8  million and
net loss was $10.1 million, compared with sales of $258.5 million and a net loss
of $5.9 million for 1998.  Diluted net loss per share was $.71 for 1999 compared
with $.41 in 1998. Results for 1999 reflect the acquisition of a narrow elastics
manufacturing facility from Fruit of the Loom in December 1998.


<PAGE>

            Worldtex's  covered  elastic  yarn  sales in 1999 of $167.6  million
decreased $11.1 million, or 6.2%, when compared with 1998,  primarily because of
continuing  softness in the European  general  textile  market,  higher  apparel
imports and overall weak demand by ladies' hosiery  customers.  Of the decrease,
the stronger U.S.  dollar versus foreign  currency  denominated  sales decreased
covered  elastic yarn sales by  approximately  $2.7 million  (assuming  currency
translation of 1999 sales at the rate applicable to 1998 results).

            During  the  fourth  quarter  of  1999,  the  Company   initiated  a
consolidation plan to reduce conventional  covered yarn production in the United
States. One of three manufacturing facilities located in Hickory, North Carolina
will be closed during the first half of 2000, with its operations moved into the
remaining facilities. The Company recorded a one-time charge of $2.8 million for
this  consolidation.  This charge,  recorded in cost of sales, covers provisions
for real estate and  manufacturing  equipment that will be taken out of service,
as well as certain inventory provisions.

            The Company's  narrow  elastic  fabric sales were $118.2  million in
1999, an increase of $38.4  million when  compared  with 1998.  The increase was
principally due to the Fruit of the Loom manufacturing  facility  acquisition in
December  1998,  as well as organic  growth of  approximately  7%. The Company's
narrow  elastic  fabric  sales  originate in the U.S.  with no foreign  currency
translation exposure.  Although narrow elastic fabric revenues increased,  these
revenues did not meet expectations during 1999 primarily due to a less favorable
product  mix.  Customers  deferred  purchases  of narrow  elastics  for intimate
apparel and other higher  margin  products in order to adjust  inventories.  The
Company also experienced  start-up costs and inefficiencies of over $1.0 million
as a result of efforts to address  the shift in product  mix, to  introduce  new
products  and to complete a program to add new weaving  capacity.  Additionally,
Fruit of the Loom, the Company's  largest narrow elastic fabric customer,  filed
for reorganization  under Chapter 11 of the U.S. Bankruptcy Code on December 29,
1999.  As a result,  the  Company  experienced  lower  revenues  due to  reduced
shipments to Fruit of the Loom in the fourth quarter of 1999 in  anticipation of
their  bankruptcy  filing.  Purchases  by Fruit of the Loom since the filing are
currently being paid in advance of shipment.

            Worldtex's  gross margin in 1999 decreased to 15.0% of net sales, as
compared to 16.4% for 1998.  Gross profit  margins  decreased  primarily  due to
higher  depreciation,  start-up  costs and changes in product  mix.  Selling and
administrative expenses increased slightly as a percentage of net sales to 10.0%
in 1999 from 9.9% in 1998,  primarily due to better sales leverage  arising from
the Fruit of the Loom  acquisition in December 1998 offset by the one-time items
recorded in 1999. Selling and administrative  one-time charges for 1999 included
reserves of $4.0 million for accounts receivable owed by Fruit of the Loom as of
December 31, 1999, charges of $.4 million for Canadian severance relating to the
1998  restructuring and certain  retirement costs of $.5 million.  In 1998, $1.7
million  of  one-time  charges  relating  to the  North  American  covered  yarn
restructuring  and the retirement of the Company's former chairman were included
in administrative  expenses.  Goodwill amortization decreased as a percentage of

<PAGE>

net  sales to 1.0% in 1999 from  1.8% in 1998 due to the $2.3  million  goodwill
writedown relating to the North American covered yarn restructuring  recorded in
1998.

            The  increase  in  interest  expense  of  $1.2  million  was  caused
primarily  by the  additional  debt  associated  with  the  Fruit  of  the  Loom
acquisition in December 1998,  additional  working capital  requirements  due to
fourth  quarter  operating  results and higher  borrowing  costs of the domestic
credit facility  related to rising interest rates.  Additionally,  the Company's
financial  performance  resulted  in higher  pricing  for  borrowings  under the
domestic credit facility.

      1998 VS. 1997

            Sales for the twelve  months  ended  December  31,  1998 were $258.5
million and net loss was $5.9 million, compared with sales of $203.3 million and
income before  extraordinary  item of $6.5 million for the comparable  period in
1997.  Diluted net loss per share was $.41 for 1998 compared with diluted income
per share before extraordinary item of $.44 in 1997. Results in 1998 reflect the
Company's acquisitions of ECA and Elastex in the last quarter of 1997.

            Worldtex's  covered  elastic  yarn  sales in 1998 of $178.7  million
decreased $15.7 million, or 8.1%, when compared with 1997,  primarily because of
continuing  softness in the European  general  textile  market,  higher  apparel
imports and overall weak demand by ladies' hosiery  customers.  Of the decrease,
the stronger U.S.  dollar versus foreign  currency  denominated  sales decreased
covered  elastic yarn sales by  approximately  $5.7 million  (assuming  currency
translation of 1998 sales at the rate  applicable to 1997  results).  During the
fourth quarter,  the Company  recorded  charges of $7.8 million which included a
$4.4  million   restructuring   provision   for   discontinuing   the  Company's
conventional  covered yarn production in Montreal,  Quebec, $1.9 million related
primarily to asset provisions for  underutilized  equipment in the United States
and $1.5 million related to the retirement of the Company's  former chairman and
chief financial  officer.  The Company's  narrow elastic fabric sales in 1998 of
$79.8  million  increased  $70.9  million when  compared  with 1997,  due to the
inclusion of narrow  elastic  fabric sales for the full year  compared with 1997
sales from the dates of the ECA and Elastex  acquisitions in the fourth quarter.
Narrow  elastic  fabric  sales  originate in the U.S.  with no foreign  currency
translation exposure.  Results from the narrow elastic fabric operations did not
meet expectations during 1998 due to customer inventory adjustments and softness
relating to Asian economic issues.

            Worldtex's  gross margin in 1998  decreased to 16.4% of net sales as
compared to 17.7% for 1997.  Gross profit  margins  decreased  primarily  due to
one-time  charges of $3.8  million  related to the North  American  covered yarn
restructuring  that lowered  gross margin from 17.8% of sales to 16.4% of sales.
Selling and  administrative  expenses  increased as a percentage of net sales to
9.9% in 1998 from 7.7% in 1997  primarily  because the fixed  component of these
expenses increased as a result of the recent acquisitions. In 1998, $1.7 million
of  the  one-time   charges   relating  to  the  North  American   covered  yarn
restructuring  and the retirement of the Company's former chairman were included
in administrative  expenses.  Goodwill amortization decreased as a percentage of
net sales to 1.8% in 1998 from 0.5% in 1997 due to the $2.3  million of one-time

<PAGE>

charges  relating to the North American covered yarn  restructuring  recorded in
the current year.  The increase in interest  expense of $11.7 million was caused
primarily  by the  $175.0  million  Senior  Notes  issued  December  1,  1997 in
connection with the  acquisitions of Elastex and ECA and refinancing of existing
indebtedness.

INCOME TAXES

            During  1999,  France  decreased  the tax rate  from  41.67% to 40%,
resulting  in a $.4  million  reduction  to the 1999  income  tax  provision  to
decrease  the  deferred  tax  liability  as of January 1, 1999.  A $4.1  million
valuation  allowance  was  established  in 1999 for  deferred  tax assets due to
uncertainty  as to the future  benefit of domestic  federal net  operating  loss
carryforwards.  There was also a valuation allowance as of December 31, 1999 for
certain state net operating loss carryforwards of $1.6 million.  At December 31,
1999, the Company had U.S.  Federal and state net operating  loss  carryforwards
aggregating  $33.6  million and $33.1  million,  respectively,  which  expire at
various dates through  2019.  In 1997,  France  increased the corporate tax rate
from 36.67% to 41.67%,  which  resulted in a charge to increase  the reserve for
deferred income taxes of approximately  $1.2 million and an additional charge of
$.5 million in the fourth quarter to reflect the  retroactive  effect of the tax
increase for all of 1997.

LIQUIDITY; CAPITAL RESOURCES

            The principal  indicators of the Company's  liquidity are cash flows
from  operating  activities  and cash flows  from  financing  activities,  which
consisted primarily of borrowings under the Company's credit facilities.

            Worldtex  generated  $5.5 million from its  operating  activities in
1999,  compared  with $9.1  million  generated  in 1998 and $1.5 million used in
1997.  The  decrease in net cash  provided by operating  activities  in 1999 was
caused  primarily  by the  increase  in  net  loss  and  increases  in  accounts
receivable.  Additionally,  Fruit of the  Loom,  the  Company's  largest  narrow
elastic fabrics customer,  filed for reorganization under Chapter 11 of the U.S.
Bankruptcy Code on December 29, 1999. While the Company has resumed shipments to
Fruit of the Loom, the Company's  pre-filing accounts receivable of $4.4 million
were  reduced  to their  estimated  recovery  value.  Accordingly,  the  Company
recorded  in  selling,  general  and  administrative  expenses  reserves of $4.0
million for  accounts  receivable  owed by Fruit of the Loom as of December  31,
1999.  Purchases by Fruit of the Loom since the filing are currently  being paid
in advance of shipment.

            EBITDA  represents   operating  profit  (loss)  plus   depreciation,
amortization  and in the case of 1999 and 1998,  certain one-time charges and is
provided as  additional  information  relating  to the  Company's  debt  service
capacity. While EBITDA should not be considered as an alternative measure of net
income or cash  provided by  operating  activities,  it is  presented to provide
additional information relating to the Company's debt service capability. EBITDA
should not be considered in isolation or as a substitute  for other  measures of
financial  performance  or liquidity.  EBITDA may not be comparable to similarly
titled  measures of financial  performance.  EBITDA for the years ended December
31, 1999,  1998 and 1997 was $34.7  million,  $30.9  million and $26.1  million,
respectively.  Depreciation  and  amortization  for the years ended December 31,

<PAGE>

1999,  1998  and  1997 was  $17.9  million,  $16.6  million  and  $6.8  million,
respectively. Results for 1999 include one-time charges for depreciation of $2.3
million and results  for 1998  include  one-time  charges for  depreciation  and
amortization of $5.6 million.

            During 1999, capital expenditures amounted to $17.7 million compared
to $19.9 million in 1998.  Capital  expenditures  were $7.7 million in 1997. The
majority of such capital  expenditures  during the years  1997-1999 were used to
purchase additional  manufacturing  equipment in order to increase the Company's
production   capacity   and  to  obtain   productivity   improvements.   Capital
expenditures  in 1999 also  included  $5.2  million for  management  information
systems.  The Company currently expects that capital  expenditures for 2000 will
aggregate  approximately  $10.0  million,  primarily  for machinery and property
improvements.

            The Company's  business  strategy  includes the pursuit of strategic
acquisitions of other  businesses.  Any acquisition would be funded through cash
on hand, the issuance of additional securities,  the sale of other assets or the
incurrence of additional indebtedness.  The Company's ability to sell assets and
incur indebtedness is restricted under the various terms of the Company's debt.

            On December  1, 1997,  the  Company  issued and sold $175.0  million
principal  amount of its 9 5/8%  Senior  Notes due 2007 (the  "Notes")  under an
Indenture,  dated as of December  1, 1997 (the  "Indenture").  The net  proceeds
(before deduction of transaction expenses) of approximately $170.0 million, were
used  to  pay  the  purchase  price  in  the  ECA  acquisition,   repay  certain
indebtedness and to pay transaction fees and expenses relating  thereto.  During
1998,  the Company  cancelled an interest rate swap  agreement  relating to debt
refinanced  by the notes and received a  cancellation  fee of $.3  million.  The
Company  used the  balance  of the net  proceeds  from the sale of the Notes for
general corporate purposes.

            The  Company  has  interest  rate swap  agreements  and swap  option
agreements  with a commercial bank that  effectively  converted a portion of its
fixed  rate debt to a floating  rate for a period of up to three  years with the
floating  rate reset  every six  months.  Under  these  agreements,  the Company
receives a weighted  average  fixed rate of 5.2% at December 31, 1999 and pays a
floating  rate  based on LIBOR or based on a rate  indexed to  selected  foreign
currency denominated  indices,  resulting in a weighted average floating rate of
4.6% at December 31, 1999.  Notional  principal amounts of $30.0 million in swap
agreements  and $20.0  million in swap option  agreements  were  outstanding  at
December 31, 1999.  Net amounts due under these  agreements  decreased  interest
expense for 1999 by approximately $.1 million. The estimated amounts the Company
would have to pay to terminate these agreements was approximately $.3 million at
December 31, 1999.

            The Company has a domestic  revolving  credit facility that provides
for revolving credit borrowings in an aggregate  principal amount of up to $25.0
million.  The revolving  credit  facility  terminates  and all amounts  borrowed
thereunder  will be due  December  1, 2002.  Loans  under the  revolving  credit
facility  bear  interest at rates based upon a base rate (the higher of the Bank
of America, N.A. prime rate or the Federal Funds rate),  certificates of deposit
rates or Eurodollar rates, in each case plus an applicable  margin.  Loans under

<PAGE>

the revolving  credit  facility are guaranteed by all U.S.  subsidiaries  of the
Company and are required to be secured by liens on the accounts  receivable  and
inventory  of the Company  and its U.S.  subsidiaries,  100% of the  outstanding
capital  stock of the Company's  U.S.  subsidiaries  and 65% of the  outstanding
capital stock of each of the non-U.S. subsidiaries.

            At December 31, 1999, the Company had total  indebtedness  of $214.1
million and $.1 million was available for future  borrowings  under the domestic
credit facility.  In addition,  at such date the Company's foreign  subsidiaries
had $20.3 million of U.S. dollar equivalent credit availability under bank lines
of credit.  Amounts  outstanding as of December 31, 1999 were $6.4 million.  The
most  restrictive  covenant  of  the  domestic  revolving  credit  facility  and
Indenture limits short-term  borrowings by the Company's foreign subsidiaries to
a total of $15.0 million, excluding certain existing indebtedness.

            At December 31, 1999,  Worldtex was not in compliance with financial
covenants  relating to the leverage  ratio,  interest  coverage  ratio,  current
ratio, minimum tangible net worth and limitations on capital expenditures of its
domestic credit  facility.  The Company obtained a waiver of these covenants and
an amendment to the domestic credit facility  through June 30, 2000. The Company
is currently  negotiating to refinance its domestic  credit facility and expects
to complete this process during the first half of 2000.  Accordingly,  the $24.9
million  outstanding balance on the domestic credit facility has been classified
as current installments of long-term debt as of December 31, 1999.

            The  deteriorating  financial  position  of Fruit of the  Loom,  the
Company's largest customer, during the fourth quarter of 1999 and the Chapter 11
bankruptcy  reorganization  filing by Fruit of the Loom on  December  29,  1999,
adversely  affected the Company's  short-term  liquidity position as of December
31, 1999. However,  the Company's financial position has subsequently  improved,
and at February 29, 2000 the Company had total indebtedness of $20.0 million and
$5.0 million was  available  for future  borrowings  under the  domestic  credit
facility.  The Company  had $3.0  million  cash on deposit in the United  States
earning daily money market  investment  yields at February 29, 2000. The Company
believes that its lines of credit,  as expected to be refinanced,  together with
internally  generated funds, will provide sufficient liquidity for the Company's
expected short-term and long-term cash requirements.

            The Company's  domestic  revolving credit facility and the Indenture
restrict the payment of dividends by the Company.  Under these  provisions,  the
Company  would be required to have net income  after  December  31, 1999 of more
than $16.5 million before any dividends could be paid.

            The  Company  is highly  leveraged.  The  Company's  ability to make
scheduled  payments of principal of, or to pay the interest on, or to refinance,
its indebtedness  (including the Notes), or to fund planned capital expenditures
will depend on its future performance, which, to a certain extent, is subject to
general  economic,  financial,  competitive,  legislative,  regulatory and other
factors that are beyond its control.  Based upon the current level of operations
and  anticipated  revenue  growth,  management  believes  that  cash  flow  from
operations  and available  cash,  together with available  borrowings  under the
Company's  credit  facilities,  will be  adequate to meet the  Company's  future


<PAGE>

liquidity needs for at least the next several years.  The Company may,  however,
need to refinance  all or a portion of the principal of the Notes on or prior to
maturity.  There can be no assurance  that the Company's  business will generate
sufficient  cash flow from  operations,  that  anticipated  revenue  growth  and
operating  improvements  will be  realized  or that  future  borrowings  will be
available  under the  Company's  credit  facilities  in an amount  sufficient to
enable the Company to service its indebtedness,  including the Notes, or to fund
its other  liquidity  needs.  In addition,  there can be no  assurance  that the
Company will be able to effect any such  refinancing on commercially  reasonable
terms or at all.

            The  Company's   high  degree  of  leverage   could  have  important
consequences to the Company,  including,  but not limited to: (i) making it more
difficult  for the  Company to satisfy  its  obligations,  (ii)  increasing  the
Company's  vulnerability  to general adverse  economic and industry  conditions,
(iii)  limiting the  Company's  ability to obtain  additional  financing to fund
future  working  capital,  capital  expenditures,  and other  general  corporate
requirements,  (iv)  requiring the  dedication  of a substantial  portion of the
Company's cash flow from operations to the payment of principal of, and interest
on, its  indebtedness,  thereby  reducing the  availability of such cash flow to
fund working capital,  capital  expenditures,  research and development or other
general corporate purposes,  (v) limiting the Company's  flexibility in planning
for, or reacting to, changes in its business and the industry,  and (vi) placing
the  Company  at  a  competitive   disadvantage   compared  to  less   leveraged
competitors.  In addition,  the Indenture and the  Company's  credit  facilities
contain financial and other restrictive  covenants that limit the ability of the
Company to, among other things,  borrow additional funds. Failure by the Company
to comply with such covenants  could result in an event of default which, if not
cured or waived, could have a material adverse effect on the Company.

YEAR 2000 COMPLIANCE

            Worldtex  established  a Year 2000 project team in 1998 and retained
an  independent  consulting  group to provide  assistance in assessing Year 2000
risks and to provide recommendations for remediation. The project scope included
both information technology and computer based embedded technology.  The project
team has focused its  efforts on  information  systems  software  and  hardware,
manufacturing equipment and facilities, and third-party relationships.

            The  Company  is near  completion  of a  worldwide  business  system
replacement  project that uses programs  primarily from one vendor.  The initial
implementation of the new systems is generally  scheduled to be completed during
the second quarter of 2000. The  replacement  project has incurred costs of $7.1
million as of December 31, 1999 with $5.2 million  capitalized  and $1.9 million
charged to expense since project  inception.  Remediation for other  information
systems and  computer  based  embedded  technology  systems was  completed as of
December 31, 1999 so that all systems were Year 2000 compliant.  The Company has
experienced no discernable  problems with any  computer-based  applications as a
result of the Year 2000.


<PAGE>

NEW ACCOUNTING STANDARDS

            In June 1998,  SFAS No. 133,  Accounting for Derivative  Instruments
and Hedging  Activities  was issued.  SFAS No. 133  establishes  accounting  and
reporting  standards  for  derivative  financial  instruments  embedded in other
contracts  (collectively  referred to as embedded  derivatives)  and for hedging
activities.  The new standard requires an entity to recognize all derivatives as
either assets or liabilities in the statement of financial  position and measure
those  instruments  at fair  value.  SFAS No. 133 was  amended by SFAS No.  137,
Accounting for Derivative  Instruments and Hedging  Activities - Deferral of the
Effective Date for FASB Statement No. 133, which delays the Company's  effective
date until the first quarter of the year ending December 31, 2001. Management is
currently  evaluating  the  effects of SFAS No. 133 on the  Company's  financial
statements and current disclosures.

EUROPEAN MONETARY UNION - EURO

            The Company conducts business in multiple currencies,  including the
currencies  of  various  European  countries  in the  European  Union  which are
participating  in the single  European  currency by  adopting  the Euro as their
common currency on January 1, 1999, the date that the Euro commenced  trading on
currency  exchanges.  The legal currencies of the  participating  countries will
remain legal tender for a transition  period between January 1, 1999 and January
1, 2002.  During the transition  period,  wire transfers can be made in the Euro
with payment for goods and  services in either the Euro or the legacy  currency.
Between  January  1, 2002 and July 1, 2002,  the  participating  countries  will
introduce  Euro notes and coins and eventually  withdraw all legacy  currencies.
Currency rates during the transition  period will no longer be computed from one
legacy to another but instead will first be converted into the Euro. The Company
is  addressing  the issues  involved with the  introduction  of the Euro and the
impact on its business,  both strategically and operationally.  Based on current
information,  the Company does not expect the Euro conversion to have a material
adverse  effect on the  financial  position  or  results  of  operations  of the
Company.

FORWARD-LOOKING STATEMENTS

            Certain  statements in this Management's  Discussion and Analysis of
Financial  Condition and Results of Operations  which are other than  historical
facts are  intended  to be  "forward-looking  statements"  within the meaning of
federal  securities  laws. Words such as "expects",  "believes",  "anticipates",
"projects",  "estimates",  "plan",  variations  of such words and other  similar
expressions  are intended to identify  such  forward-looking  statements.  These
statements  are subject to various  risks and  uncertainties,  many of which are
outside the control of the Company. Risks and uncertainties include, but are not
limited to, the matters discussed under "- Risk Factors to be Considered" above,
the financial  strength of the apparel industry,  the level of consumer spending
for apparel, changing consumer preferences,  the competitive pricing environment
within  the  apparel  industry,  foreign  currency  translation,  success of new
product introductions,  and other risk factors.  Therefore,  actual outcomes and
results  may differ  materially  from what is  expressed  or  forecasted  in, or
implied by, such forward-looking statements, which reflect management's judgment

<PAGE>

only as of the date hereof.  The Company does not intend to update publicly this
information to reflect new information, future events or otherwise.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

            The Company in the normal  course of business is exposed to the risk
of loss from  non-performance  by its  customers  for  amounts  due the  Company
through the  extension  of credit.  The Company  controls  credit risk  exposure
through credit approvals,  credit limits, factoring certain selected receivables
and monitoring procedures.  The Company did not have any significant exposure to
any  individual  customer as of December  31, 1999 that had not been  adequately
provided for through an allowance for bad debts.

            The  Company's  sales  are  predominantly  denominated  in the local
currency of the subsidiary  originating  the sale. A significant  decline in the
value of currencies of the foreign  countries in which the Company does business
could  have a  material  adverse  impact on the  Company's  business,  financial
condition and results of operations.

            The  Company's   primary  source  of  funds  other  than  cash  from
operations  is  borrowings  under its domestic  revolving  and foreign  lines of
credit  facilities which incur interest at variable rates at terms not to exceed
six months,  at which time the borrowings are reset to current market rates. The
Company may utilize  interest  rate swap  agreements  to manage its  exposure to
interest rate risk.  The Company's net exposure to interest rate risk  primarily
consists of an inability to benefit from lower  interest  rates due to its fixed
rate Senior Notes.

            The following table summarizes the Company's market risks associated
with long-term debt and derivative  financial  instruments that are sensitive to
changes in interest rates. For debt  obligations,  the table presents  principal
cash out-flows and related  weighted average interest rates by year of maturity.
For interest rate derivative  instruments,  the table presents  notional amounts
and weighted average interest rates by year of maturity.  Fair values used below
were  determined  using quoted market rates or interest rates that are currently
available to the Company on debt with similar terms and remaining maturities.

<PAGE>

                            INTEREST RATE SENSITIVITY
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                    FAIR
                    `        2000     2001     2002    2003    2004   THEREAFTER    TOTAL     VALUE
                             ----     ----     ----    ----    ----   ----------    -----     -----
<S>                           <C>      <C>      <C>     <C>     <C>     <C>        <C>        <C>
LIABILITIES:

  Fixed rate                  $232     236      227     232     252     175,592    176,771    143,533

  Average interest rate      7.00%   7.00%     7.00%   7.00%   7.00%        9.6%

  Variable rate            24,860       -         -       -       -       6,000     30,860     30,551

  Average interest rate      8.66%      -         -       -       -        5.10%

INTEREST RATE SWAPS:

  Fixed to variable             -       -    30,000       -       -           -     30,000     (183)

  Average pay rate              -       -      4.57%      -       -           -

  Average receive rate          -       -      5.20%      -       -           -

SWAP OPTIONS:

  Fixed to variable        20,000       -         -       -       -           -     20,000      (99)

  Average pay rate       To be set      -         -       -       -           -

  Average receive rate       6.72%      -         -       -       -           -
</TABLE>

EFFECTS OF INFLATION

            The results of operations  and  financial  condition of Worldtex are
based upon  historical  cost.  While it is difficult to  accurately  measure the
impact of inflation due to the imprecise nature of estimates required,  Worldtex
believes the effects on the results of operations  and financial  condition have
been minor. Worldtex will continue to monitor the impact of inflation in setting
its pricing and other policies.

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

            The  following   financial   statements,   supplementary   financial
information and schedule are filed as part of this Report:

WORLDTEX, INC.

Independent Auditors' Reports

Financial Statements:

            Consolidated Statements of Operations,
                  Years Ended December 31, 1999, 1998 and 1997

            Consolidated Statements of Comprehensive Income (Loss),
                  Years Ended December 31, 1999, 1998 and 1997


<PAGE>

            Consolidated Balance Sheets,
                  December 31, 1999 and 1998

            Consolidated Statements of Stockholders' Equity,
                  Years Ended December 31, 1999, 1998 and 1997

            Consolidated Statements of Cash Flows,
                  Years Ended December 31, 1999, 1998 and 1997

            Notes to Consolidated Financial Statements

Supplementary Financial Information

Financial Statement Schedule:

            Schedule      II - Valuation  and  Qualifying  Accounts  Years Ended
                          December 31, 1999, 1998 and 1997

            All schedules  not  mentioned  above are omitted for the reason that
they are not required or are not  applicable,  or the information is included in
the Consolidated Financial Statements or the Notes thereto.

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders of
Worldtex, Inc.:

We have audited the accompanying  consolidated balance sheets of Worldtex,  Inc.
and  subsidiaries  (the  "Company")  as of December  31, 1999 and 1998,  and the
related  consolidated  statements of  operations,  comprehensive  income (loss),
stockholders'  equity,  and cash flows for the years then ended.  Our audit also
included the financial  statement schedule for the years ended December 31, 1999
and 1998 listed in the Index at Item 8. These financial statements and financial
statement  schedule are the  responsibility  of the  Company's  management.  Our
responsibility  is to  express  an opinion  on these  financial  statements  and
financial  statement schedule based on our audits. The financial  statements and
financial statement schedule of the Company for the year ended December 31, 1997
were audited by other auditors whose report,  dated February 27, 1998, expressed
an unqualified opinion on those statements.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  such 1999 and 1998 consolidated  financial  statements  present
fairly, in all material  respects,  the financial  position of the Company as of
December 31, 1999 and 1998, and the results of its operations and its cash flows
for the years then ended in  conformity  with  accounting  principles  generally
accepted in the United States of America.  Also, in our opinion,  such financial
statement  schedule  for the  years  ended  December  31,  1999 and  1998,  when
considered in relation to the basic consolidated financial statements taken as a
whole,  presents  fairly in all  material  respects  the  information  set forth
therein.

Deloitte & Touche LLP

Hickory, North Carolina
March 30, 2000

<PAGE>

                                 WORLDTEX, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
                     (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                     1999        1998        1997
                                                   ________    ________    ________
<S>                                                <C>          <C>         <C>
Net sales (Note 11)                                $285,787     258,537     203,256

Cost of goods sold (Notes 3 and 15)                 243,052     216,267     167,272
                                                   --------     -------     -------

   Gross profit                                      42,735      42,270      35,984

Selling and administrative expense
  (Notes 3 and 16)                                   28,331      25,599      15,802

Goodwill amortization (Notes 3 and 16)                2,951       4,638         968
                                                   --------     -------     -------

   Operating profit                                  11,453      12,033      19,214

Interest expense (Note 3)                            19,952      18,765       7,043

Other income (expense) - net                         (1,476)        340        (302)
                                                   --------     -------     -------

   Income (loss) before income taxes                 (9,975)     (6,392)     11,869

Provision (benefit) for income taxes (Note 11)          170        (494)      5,377
                                                   --------     -------     -------

   Income (loss) before extraordinary item         (10,145)      (5,898)      6,492

Extraordinary item, net (Note 6)                        -           -        (1,344)
                                                   -------      -------     -------

   Net income (loss)                              $(10,145)      (5,898)      5,148
                                                  =========     =======     =======

Basic net income (loss) per share (Note 3):
   Income (loss) before extraordinary item        $   (.71)        (.41)        .45
   Extraordinary item, net                              -           -          (.09)
                                                  --------      -------     -------

   Net income (loss)                              $   (.71)        (.41)        .36
                                                  ========      =======     =======
Diluted net income (loss) per share (Note 3):
   Income (loss) before extraordinary item        $   (.71)        (.41)        .44
   Extraordinary item, net                              -           -          (.09)
                                                  --------      -------     -------

   Net income (loss)                              $   (.71)        (.41)        .35
                                                  ========      =======     =======

Weighted average shares outstanding (Note 3):
   Basic                                            14,271       14,368      14,420
                                                  ========      =======     =======

   Diluted                                          14,271       14,368      14,821
                                                  ========      =======     =======
</TABLE>


          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

<PAGE>


                                 WORLDTEX, INC.
             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


--------------------------------------------------------------------------------
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                     1999        1998        1997
                                                   ________    ________    ________
<S>                                                <C>          <C>         <C>
Net income (loss)                                  $(10,145)     (5,898)      5,148

Other comprehensive income (loss):

   Foreign currency translation adjustments         (10,845)      2,704     (12,937)
     (Note 3)                                      --------     -------    --------

   Comprehensive loss                              $(20,990)     (3,194)     (7,789)
                                                   ========     =======    ========
</TABLE>


           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<PAGE>


                                 WORLDTEX, INC.
                           CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
                           DECEMBER 31, 1999 AND 1998
                                 (IN THOUSANDS)

                           ASSETS

                                                              1999        1998
                                                             ______      ______
Current assets:
    Cash and cash equivalents (Note 3)                       $5,686       6,715
    Accounts and notes receivable, less allowance for
      doubtful accounts of $6,568 in 1999 and $2,041 in      39,877      42,885
      1998 (Notes 4 and 6)
    Inventories (Notes 3 and 7)                              61,817      58,515
    Prepaid expenses and other current assets (Note 11)       5,791       3,982
                                                            _______     _______
      Total current assets                                  113,171     112,097

Property, plant and equipment - net (Notes 3 and 6)         110,025     113,652
Other assets (Notes 3 and 15)                                 8,625      12,850
Cost in excess of net assets of acquired businesses, net
    of accumulated amortization of $11,546 in 1999 and
    $9,146 in 1998 (Note 3)                                  82,615      85,521
                                                            _______     _______
                                                           $314,436     324,120

                   LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Short-term borrowings (Note 5)                            $6,423       7,308
   Current installments of long-term debt (Note 6)           25,092         525
   Accounts payable-trade and other liabilities
     (Notes 8 and 10)                                        33,780      27,995
   Income taxes payable (Note 11)                               481       1,700
                                                            _______     _______
      Total current liabilities                              65,776      37,528

Long-term debt (Note 6)                                     182,539     198,246
Other long-term liabilities                                   3,073       1,986
Deferred income taxes (Note 11)                              10,556      12,878
                                                            _______     _______
      Total liabilities                                     261,944     250,638
                                                            _______     _______
Commitments and contingencies (Notes 8 and 9)

Stockholders' equity (Note 7):
   Preferred stock                                                -           -
   Common stock (shares issued of 14,701 in 1999 and
     1998)                                                      147         147
   Paid-in capital                                           30,084      30,084
   Retained earnings                                         46,024      56,169
   Accumulated other comprehensive loss:
     Cumulative foreign translation adjustment              (21,414)    (10,569)
   Less - Treasury stock, at cost (430 shares in 1999
     and 1998)                                               (2,349)     (2,349)
      Total stockholders' equity                             52,492      73,482
                                                            _______     _______
                                                           $314,436     324,120
                                                            _______     _______
                                                            _______     _______


         SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


<PAGE>

                                 WORLDTEX, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                           CUMULATIVE
                                     COMMON                                  FOREIGN
                                     STOCK    COMMON  PAID-IN    RETAINED  TRANSLATION    TREASURY
                                     SHARES   STOCK   CAPITAL    EARNINGS   ADJUSTMENT     STOCK    TOTAL
                                     ______   ______  _______    ________  ___________    ________  _____

<S>                                  <C>     <C>       <C>        <C>           <C>        <C>      <C>
Balances at December 31, 1996        14,670  $   147   29,946     56,919        (336)      (1,498)  85,178

Net income                                -        -        -      5,148           -            -    5,148
Foreign currency translation
   adjustment                             -        -        -          -     (12,937)           -  (12,937)
Options exercised                        25        -      113          -           -            -      113
                                     ______  _______   ______     ______     _______       ______   ______

Balances at December 31, 1997        14,695      147   30,059     62,067     (13,273)      (1,498)  77,502

Net loss                                  -        -        -     (5,898)          -            -   (5,898)
Foreign currency translation
   adjustment                             -        -        -          -       2,704            -    2,704
Purchases of treasury stock               -        -        -          -           -         (851)    (851)
Options exercised                         6        -       25          -           -            -       25
                                     ______  _______   ______     ______     _______       ______   ______

Balances at December 31, 1998        14,701      147   30,084     56,169     (10,569)      (2,349)  73,482

Net loss                                  -        -        -    (10,145)          -            -  (10,145)
Foreign currency translation              -        -        -          -     (10,845)           -  (10,845)
   adjustment                        ______  _______   ______     ______     _______       ______   ______


Balances at December 31, 1999
   (Notes 6 and 7)                   14,701  $   147   30,084     46,024     (21,414)      (2,349)  52,492
                                     ______  _______   ______     ______     _______       ______   ______
                                     ______  _______   ______     ______     _______       ______   ______

</TABLE>


          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


<PAGE>

                                 WORLDTEX, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


------------------------------------------------------------------------------
             FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
                                 (IN THOUSANDS)

                                              1999      1998      1997
                                           _________  ________  _________
Cash flows from operating activities:
  Net income (loss)                        $(10,145)   (5,898)    5,148
  Adjustments to reconcile net income
  (loss) to net cash provided by
  (used in) operating activities:
    Depreciation                             14,931    11,934     5,877
    Amortization                              2,951     4,638       968
    Provision for losses on accounts          4,830       590       305
     receivable
    Deferred income taxes                    (2,451)   (5,089)      720
    Change in assets and liabilities
     net of effects of acquisitions:
      Accounts and notes receivable          (4,459)    2,729    (1,064)
      Inventories                            (6,406)   (2,228)   (7,396)
      Prepaid expenses and other current       (256)      135      (248)
       assets
      Accounts payable -
       trade and other current liabilities    7,488       392    (4,313)
      Income taxes payable                     (981)    1,850    (1,494)
                                             -------   ------    -------
    Net cash provided by (used in)            5,502     9,053    (1,497)
      operating activities                   -------   ------    -------


Cash flows from investing activities:
   Capital expenditures                     (17,716)  (19,871)   (7,706)
   Acquisitions, net of cash acquired             -   (12,810)  (85,382)
   Other investing activities                (1,928)   (2,830)   (8,190)
                                            --------  -------- ---------
    Net cash used in investing activities   (19,644)  (35,511) (101,278)
                                            --------  -------- ---------


Cash flows from financing activities:
   Borrowings under line of credit                -     9,482     3,548
    arrangements
   Payments under line of credit                (55)   (3,221)   (3,435)
    arrangements
   Borrowings under revolving credit        110,960    12,000   109,550
    facility
   Payments under revolving credit          (98,100)        -  (121,940)
    facility
   Borrowings under long-term loans               -         -   175,000
   Payments under long-term loans            (1,463)        -   (50,000)
   Stock issued or (reacquired), net              -      (825)      113
   Other financing activities                 2,027       276     1,068
                                             ------    ------   -------
    Net cash provided by financing           13,369    17,712   113,904
    activities                               ------    ------   -------
Effects of exchange rate changes on cash       (256)      589     1,626
                                             -------   ------    ------
    Net increase (decrease) in cash and      (1,029)   (8,157)   12,755
     cash equivalents
Cash and cash equivalents at beginning of     6,715    14,872     2,117
 year                                        ------    ------    ------
Cash and cash equivalents at end of year     $5,686     6,715    14,872
                                             ======    ======    ======

Supplemental disclosure of cash flow information:
   Cash paid during the year for:
    Interest                                $19,155    19,667     7,374
                                             ======    ======    ======
    Income taxes                             $3,602     1,920     7,594
                                             ======    ======    ======


         SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

<PAGE>

                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


NOTE 1 - ORGANIZATION AND BUSINESS

Worldtex,  Inc. ("Worldtex" or the "Company"),  a Delaware corporation organized
in July 1992,  is a holding  company  engaged  through its  subsidiaries  in the
manufacture  of  covered  elastic  yarn,  which is used to  manufacture  hosiery
products and other apparel items;  and narrow  elastic  fabrics that are used as
components in the  production  of apparel  products and elastic bands in women's
hosiery.  Worldtex's  principal markets are in North America,  South America and
Europe.

Worldtex's  principal  subsidiaries  are  Regal  Manufacturing  Company,  Inc.
("Regal"),  based in Hickory, North Carolina,  Rubyco (1987), Inc. ("Rubyco"),
based in Montreal,  Canada,  Filix, s.a. ("Filix"),  based in Troyes,  France,
Fibrexa,   Ltda.   ("Fibrexa"),   based  in  Bogota,   Colombia,  and  Elastic
Corporation of America,  Inc. ("ECA"),  based in Columbiana,  Alabama.  During
1999,  the  Company  became  a 51%  partner  in an  Indian  joint  venture.  A
reference to Worldtex  includes its subsidiaries  unless the context indicates
otherwise.

NOTE 2 - BASIS OF PRESENTATION

The  consolidated  financial  statements of Worldtex as of December 31, 1999 and
1998 and for the years  ended  December  31,  1999,  1998 and 1997  include  the
accounts of Regal, Rubyco, Filix, Fibrexa, Elastex effective October 3, 1997 and
ECA  effective  December 1, 1997.  The Company also has 38% and 51% interests in
joint ventures in Estonia and India, respectively, which are accounted for under
the equity method.  All significant  intercompany  balances and transactions for
all periods are eliminated in the consolidated financial statements.


<PAGE>

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)  Cash and Cash Equivalents

At December 31, 1998, cash included a demand deposit of $2,596 with a commercial
bank  earning  daily money  market  investment  yields.  At December  31,  1998,
restricted cash on deposit of $2,247 is included in other assets as security for
loans to Fibrexa in Colombia, South America.

(b)  Inventories

Inventories are stated at the lower of cost (determined on a first-in, first-out
basis) or market.

As of December 31, 1999 and 1998, the major classes of inventory are:

                   1999       1998
                   ----       ----

Raw Materials    $17,836      16,032
Work in Process   14,035      14,749
Finished Goods    29,946      27,734
                  ------     -------
                 $61,817      58,515
                 =======     =======

(c)  Property, Plant and Equipment

Property,  plant and  equipment are recorded at cost and  depreciated  primarily
using the straight-line  method over the following estimated useful lives of the
related  assets:  machinery and equipment (6 to 14 years),  structures (20 to 40
years),  other equipment (5 to 10 years).  Leasehold  improvements are amortized
over their  respective  lease terms or their estimated useful lives, if shorter.
Repair and  maintenance  costs are charged to expense as incurred.  Renewals and
betterments  which  substantially  extend  the  useful  life  of  an  asset  are
capitalized and depreciated.


<PAGE>

                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------------------------------------------
               (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


As of December 31, 1999 and 1998, property, plant and equipment consists of:

                             1999     1998
                             ----     ----

Land                      $  2,889    3,255
Buildings and leasehold
   improvements             42,752   39,246

Machinery and
   equipment               113,180  111,417
                          -------- --------
                          $158,821  153,918
Less accumulated
   depreciation and
   amortization             48,796   40,266
                          -------- --------
                          $110,025  113,652
                          ========  =======

(d)  Cost in Excess of Net Assets of Acquired Businesses

The cost in excess of net assets of acquired  businesses is amortized  using the
straight-line  method over the expected  periods to be  benefited,  generally 40
years. The Company  assesses the  recoverability  of these intangible  assets by
determining  whether  the  amortization  of the cost in excess of net  assets of
acquired  businesses  over their  remaining  lives can be recovered  through the
undiscounted  future  operating  cash  flows  of  the  acquired  business.   The
assessment  of the  recoverability  of goodwill  will be  impacted if  estimated
future cash flows are not achieved.

(e)  Forward Exchange Contracts

The Company enters into forward  exchange  contracts as a hedge against accounts
payable  denominated in foreign  currency.  These contracts are used to minimize
exposure and reduce risk from exchange rate  fluctuations  in the regular course
of its foreign business.  Gains and losses on forward  contracts,  which are not
material,  are deferred and included in the  measurement of the related  foreign
currency  transactions.  The  impact  of  forward  contracts  on cash  flows  is
reflected in the change in accounts  payable-trade and other liabilities.  As of
December 31, 1998, $400 in contracts was outstanding.


<PAGE>

(f)  Income Taxes

Deferred  tax  assets  and   liabilities  are  recognized  for  the  future  tax
consequences  attributable to temporary differences between the carrying amounts
of assets and liabilities for tax purposes and financial  statement purposes and
operating loss and tax credit carryforwards. Deferred tax assets and liabilities
are measured using tax rates expected to apply to taxable income (deductions) in
the years in which those  temporary  differences are expected to be recovered or
settled.  The effect on deferred tax assets and  liabilities  of a change in tax
rates is recognized in income in the period that includes the change.

No  provision  is made for income  taxes  which may be payable if  undistributed
earnings of foreign  subsidiaries were to be paid as dividends to Worldtex.  The
foreign currency translation adjustment shown on the consolidated  statements of
comprehensive  income (loss) is not shown net of tax. Worldtex intends that such
earnings will continue to be invested in those countries.  At December 31, 1999,
the cumulative  amount of foreign  undistributed  earnings  amounted to $56,984.
Foreign tax credits may be  available  as a reduction  of United  States  income
taxes in the event of such distributions.

(g)  Foreign Currency

Assets and  liabilities  denominated in foreign  currencies have been translated
into U. S.  dollars at the  period-end  exchange  rate.  Revenues  and  expenses
denominated in foreign  currencies have been translated into U.S. dollars at the
weighted average exchange rate.  Translation  gains and losses are accounted for
in a separate  component of stockholders'  equity. The exchange gains and losses
arising on transactions are charged to income as incurred.  Net foreign currency
losses charged to income for the years 1999, 1998 and 1997 were $1,860, $380 and
$526, respectively.

(h)  Net Income per Share

Basic earnings per share are calculated  based upon the weighted  average number
of common shares  outstanding  during the year.  Diluted  earnings per share are
based upon the weighted  average  number of common  shares and  dilutive  common

<PAGE>

                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
               (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


equivalent  shares  outstanding  during the year. The  reconciliation  of income
available to common  stockholders  and weighted  average number of common shares
for basic and diluted per share amounts are as follows:

                              1999      1998      1997
                              ----      ----      ----
Diluted net  income
  (loss)                   $(10,145)   (5,898)    5,148
                           ========    ======     =====
Basic weighted
  average common
  shares outstanding         14,271     14,368   14,420
Effect of dilutive
  options outstanding            -          -      401
                           --------    -------   ------
Diluted weighted
  average common
  and common
  equivalent shares
  outstanding                14,271     14,368   14,821
                           ========    =======   ======
Potentially dilutive
 shares not included
  because their
  effect was
  antidilutive                1,760      1,814       80
                           ========    =======   ======

(i)  Revenue Recognition

Revenue  from sales is  recognized  when goods are shipped to the  customer,  at
which point the risk of loss has passed to the  customer.  The Company  provides
allowances  for bad debts based upon  periodic  evaluations  of the aging of the
accounts receivable and related claims experience.

(j)  Interest Rate Swap Agreements

The Company terminated an interest rate swap agreement in 1998. During 1999, the
Company entered into new interest rate swap and swap option agreements. Interest
swap and swap option agreements are accounted for like a hedge of the underlying
debt  obligation  and interest  expense is recorded  using the revised  interest
rate, with fees and other payments amortized as yield adjustments.


<PAGE>

(k)  Stock Options

The Company  accounts for its stock option plan using the intrinsic  value based
method.

(l)  Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenues and expenses during the period.  Actual results
could differ from those estimates.

(p)   Reclassifications

Certain prior year amounts have been reclassified to conform to the current year
presentation.  The  reclassifications  did not impact  net income as  previously
reported.

(n)   New Accounting Standards

In June 1998,  SFAS No. 133,  Accounting for Derivative  Instruments and Hedging
Activities  was  issued.  SFAS No.  133  establishes  accounting  and  reporting
standards  for  derivative  financial  instruments  embedded in other  contracts
(collectively  referred to as embedded  derivatives) and for hedging activities.
The new  standard  requires an entity to  recognize  all  derivatives  as either
assets or liabilities  in the statement of financial  position and measure those
instruments at fair value. SFAS No. 133 was amended by SFAS No. 137,  Accounting
for Derivative  Instruments  and Hedging  Activities - Deferral of the Effective
Date for FASB Statement No. 133, which delays the Company's effective date until
the first quarter of the year ending December 31, 2001.  Management is currently
evaluating the effects of SFAS No. 133 on the Company's financial statements and
current disclosures.

(o)   Capitalization of Interest

The Company capitalizes interest expense associated with construction of certain
assets.  In  1999  and  1998,  interest  of $722  and  $379,  respectively,  was
capitalized.


<PAGE>

                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
               (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


(p)   Advertising and Sales Promotion Costs

Advertising and sales promotion costs are expensed as incurred and totaled $276,
$417 and $115 in 1999, 1998 and 1997, respectively.

NOTE 4 - NOTES RECEIVABLE

Foreign  subsidiaries  have the U.S.  dollar  equivalent  of $942 and  $2,845 of
non-interest  bearing  notes  receivable  as of  December  31,  1999  and  1998,
respectively, with maturities within four months of those dates.

NOTE 5 - SHORT-TERM BORROWINGS

Short-term debt consists of notes payable to banks, advances under bank lines of
credit  and  overdraft  facilities.  The  Company's  foreign  subsidiaries  have
available  the U.S.  dollar  equivalent  of $20,286  under various bank lines of
credit and overdraft facilities providing for unsecured borrowings and letter of
credit financing generally due in 90 to 180 days. At December 31, 1999 and 1998,
$6,423 and $7,308, respectively, were outstanding under these foreign agreements
at average interest rates of 8.7% and 5.25% respectively.

NOTE 6 - LONG-TERM DEBT

As of December 31, 1999 and 1998, long-term debt consists of:

                                     1999         1998
                                   --------     --------
9.625% Senior Notes
  due December 15, 2007            $175,000      175,000

Industrial revenue bonds
  due June 1, 2014 with
  interest at variable rates
  (5.1% average rate as of
  December 31, 1999)                  6,000        6,000
Revolving credit facilities
  due December 1, 2002
  with interest at variable
  rates (8.66% weighted
  average rate as of
  December 31, 1999)                 24,860       12,000
Other indebtedness,
  primarily fixed rate
  debt, due at various
  dates through 2007                  1,771        5,771
                                    -------      -------
                                    207,631      198,771
Less current installments            25,092          525
                                    -------      -------
                                   $182,539      198,246
                                   ========      =======

The aggregate annual  maturities of long-term debt during each of the five years
subsequent to December 31, 1999 are as follows:

                 YEAR ENDING
                 DECEMBER 31,      AMOUNT
                 ------------    ----------
                     2000          $25,092
                     2001             236
                     2002             227
                     2003             232
                     2004             252
                  Thereafter       181,592
                                  --------
                                  $207,631
                                  ========

The Company  entered into an  indenture  dated  December 1, 1997,  under which a
total of  $175,000  of Senior  Notes due  December  15,  2007 were  issued  with
interest at the annual rate of 9.625%. The notes are unconditionally  guaranteed
by each of the U.S.  subsidiaries  of the  Company.  The  Company may redeem the
notes on or after December 15, 2002, at redemption  prices ranging from 104.813%
in 2002 to 100% in 2005.  Up to 35% of the aggregate  principal  amount of notes

<PAGE>

                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


originally  issued may be redeemed at a price of 109.625%  with the net proceeds
of a public offering of common stock at any time on or before December 15, 2000.
The indenture restricts the ability of the Company and its subsidiaries to incur
additional indebtedness and issue preferred stock, enter into sale and leaseback
transactions,  incur  liens,  pay  dividends or make  certain  other  restricted
payments,  apply net  proceeds  from  certain  asset  sales,  enter into certain
transactions with affiliates,  and assign, transfer,  lease, convey or otherwise
dispose of substantially all of the assets of the Company. At December 31, 1999,
Worldtex was in compliance with the various covenants.  Upon the issuance of the
notes, the Company repaid certain existing indebtedness. An extraordinary charge
of  $1,344,  net of a tax  benefit  of $693,  was  recorded  for the early  debt
extinguishment. In addition, during 1998, the Company cancelled an interest rate
swap agreement relating to indebtedness  repaid by the issuance of the notes and
received a settlement of $286.

The Company has interest rate swap agreements and swap option  agreements with a
commercial bank that effectively converted a portion of its fixed rate debt to a
floating  rate for a period of up to three  years with the  floating  rate reset
every six  months.  Under  these  agreements,  the  Company  receives a weighted
average  fixed rate of 5.2% at December 31, 1999 and pays a floating  rate based
on LIBOR or based on a rate  indexed to selected  foreign  currency  denominated
indices,  resulting in a weighted  average floating rate of 4.6% at December 31,
1999.  Notional  principal  amounts of $30,000 in swap agreements and $20,000 in
swap option  agreements  were  outstanding  at December  31,  1999.  Net amounts
received under these agreements  decreased interest expense for 1999 by $70. The
estimated amount the Company would have to pay to terminate these agreements was
approximately $282 at December 31, 1999.

Certain property and equipment collateralize the industrial revenue bonds, which
are also secured by an annually renewable letter of credit.

The Company has a domestic  credit  facility that provides for revolving  credit
borrowings  in an  aggregate  principal  amount of up to $25,000.  The  domestic
credit  facility  terminates  and all amounts  borrowed  thereunder  will be due
December 1, 2002.  Loans under the domestic  credit  facility  bear  interest at
variable  rates  based  upon a base  rate (the  higher of the prime  rate or the
Federal Funds rate),  certificate of deposit rates or Eurodollar  rates, in each
case plus an applicable margin. Loans are guaranteed by all U.S. subsidiaries of
the Company and are required to be secured by liens on the  accounts  receivable
and inventory of the Company and its U.S. subsidiaries,  100% of the outstanding

<PAGE>

capital  stock of the Company's  U.S.  subsidiaries  and 65% of the  outstanding
capital stock of each of the foreign subsidiaries.  The domestic credit facility
carries  a  commitment  fee of  .50% of the  unused  available  borrowings.  The
domestic credit facility  contains  customary  covenants and restrictions on the
Company's  ability to engage in certain  activities.  In addition,  the domestic
credit facility provides that the Company must meet certain financial covenants,
including a minimum  consolidated  current ratio, a maximum leverage ratio and a
minimum  interest  coverage  ratio.  In addition,  the domestic  credit facility
restricts  the payment of dividends.  At December 31, 1999,  Worldtex was not in
compliance with financial  covenants  relating to the leverage  ratio,  interest
coverage  ratio,  current ratio,  minimum  tangible net worth and limitations on
capital  expenditures of the domestic credit  facility.  The Company  obtained a
waiver of these  covenants  and an  amendment to the  domestic  credit  facility
through June 30, 2000.  The Company is currently  negotiating  to refinance  its
domestic  credit  facility and expects to complete this process during the first
half of 2000.  Accordingly,  the  $24,860  outstanding  balance on the  domestic
credit facility has been classified as current installments of long-term debt as
of December 31, 1999.


Under the most restrictive of these debt  agreements,  no amounts were available
for the payment of dividends and other distributions as of December 31, 1999.

NOTE 7 - STOCKHOLDERS' EQUITY

Worldtex is authorized to issue up to  40,000,000  shares of common stock,  $.01
par value,  and  10,000,000  shares of preferred  stock,  $.01 par value.  As of
December  31,  1999 and 1998,  there  were  issued  14,700,971  and  outstanding
14,271,171 shares of common stock and no shares of preferred stock. Worldtex has
a current authorization to repurchase up to 1,000,000 shares of its common stock
although no amount was  available  for such  repurchases  at December  31, 1999,
under  restrictive  covenants in Worldtex's debt  agreements.  Through  December
1999,  429,800  shares had been  purchased  and are  carried at cost as Treasury
Stock.


<PAGE>

                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


Preferred  stock  is  issuable  in one  or  more  series  with  dividend  rates,
liquidation  preferences and redemption,  conversion and voting rights as may be
determined by Worldtex's Board of Directors.

In connection with Worldtex's formation in 1992, each shareholder  received,  in
addition to one share of Worldtex  common stock,  one share  purchase  right for
each outstanding  share of the former parent's common stock. Each right entitles
the  registered  holder to purchase from Worldtex a unit ("Unit")  consisting of
one  one-hundredth of a share of preferred stock of Worldtex,  at a price of $30
per Unit. The share purchase rights are not  exercisable or  transferable  apart
from  Worldtex  common  stock  until  the  earlier  to occur of 1) the tenth day
following  a public  announcement  that a  person  or  group  of  affiliated  or
associated  persons has acquired,  or obtained the right to acquire,  beneficial
ownership of 20% or more of the outstanding Worldtex common stock (an "Acquiring
Person"),  or 2) the tenth business day following the  commencement  of a tender
offer or exchange offer if, upon consummation thereof, any person or group would
be an Acquiring  Person.  The share purchase  rights will expire at the close of
business on December 31, 2002, unless earlier redeemed or exchanged by Worldtex.

Certain  investment  managers  made  filings  with the  Securities  and Exchange
Commission  on February  28, 2000  stating  they were the  beneficial  owners of
approximately 34% of the outstanding  shares of Worldtex common stock. The share
purchase rights  attached to the outstanding  Worldtex common stock provide that
they would trade separately from such stock and become exercisable the tenth day
following public  announcement  that beneficial  ownership of 20% or more of the
outstanding  Worldtex  common  stock had been  acquired.  The Board of Directors
subsequently extended the shareholder rights 10-day period on several occasions.
On March 27,  2000,  Worldtex  entered  into a  Standstill  Agreement  with such
investment  managers and certain  related  persons.  Pursuant to the  Standstill
Agreement,  Worldtex amended the share purchase rights plan to prevent the share
purchase rights from trading  separately or becoming  exercisable as a result of
such announced beneficial  ownership,  unless the Board of Directors of Worldtex

<PAGE>


                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


determines  that there has been a breach of the  Standstill  Agreement by any of
such other parties.

Under the terms of the Worldtex  1992 Stock  Incentive  Plan,  as amended by the
stockholders in May 1998,  options to purchase up to 2,100,000  shares of common
stock may be awarded to officers and employees.  Options  granted under the plan
may be for such terms and  exercised at such times as  determined at the time of
grant by the Compensation Committee of the Board of Directors.  In addition, the
Plan  provides that each outside  director will be granted a one-time  option to
purchase 10,000 shares of common stock of the Company.  As of December 31, 1999,
37,600 had been  exercised  and 302,000  shares were  reserved for future awards
under the plan. The 1992 Stock  Incentive Plan also includes  provisions for the
granting  of  stock  appreciation  rights,  restricted  stock,  deferred  stock,
employee loans and tax offset payments. At December 31, 1999, no such grants had
been issued, except for limited stock appreciation rights applicable if there is
a change of control (as defined) of the Company.

The following  table  summarizes  stock option  activity during each of the last
three years:

                                            WEIGHTED
                                             AVERAGE
                            NUMBER OF       EXERCISE
                             SHARES          PRICE
                           -----------     ----------
Balances at
   December 31, 1996        1,315,800        $5.44
   Options Granted             80,000        $8.26
   Options Exercised        (  25,400)       $4.43
   Options Cancelled        (   3,000)       $6.44
                            ---------
Balances at
   December 31, 1997        1,367,400        $5.53
   Options Granted            444,100        $3.38
   Options Exercised        (   6,000)       $4.19
   Options Cancelled        (   1,000)       $6.75
                            ---------
Balances at
   December 31, 1998        1,804,500        $5.07
   Options Granted            325,000        $3.20
   Options Cancelled        ( 369,100)       $6.15
                            ---------
Balances at
   December 31, 1999        1,760,400        $4.50
                            =========

<PAGE>

                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


Options Exercisable:
  December 31, 1997           891,680        $5.76
  December 31, 1998         1,040,940        $5.65
  December 31, 1999         1,760,400        $4.50
Weighted average fair
value of options
granted:
  December 31, 1997                          $3.79
  December 31, 1998                          $1.98
  December 31, 1999                          $1.94


Options outstanding and exercisable at December 31, 1999:

                                    WEIGHTED
                                    AVERAGE      WEIGHTED
  RANGE OF            NUMBER       REMAINING     AVERAGE
  EXERCISE              OF        CONTRACTUAL    EXERCISE
   PRICES            SHARES          LIFE        PRICE
  --------           ------       -----------    --------
$2.81 - $4.75      1,270,900        7.3 yrs      $ 3.76
$6.00 - $6.75        489,500        3.0 yrs      $ 6.43

The Company  accounts for stock options  using the intrinsic  value based method
and,  accordingly,  recognizes  compensation  expense  to the  extent the quoted
market price of the stock  exceeds the amount the employee is required to pay as
of the date of grant of the option.  The acquisition of beneficial  ownership of
approximately 34% of the Worldtex common stock by certain investment managers as
described above was deemed to be a "change in control event" under such options.
Consequently, all outstanding stock options became fully vested and exercisable.

Had compensation  cost for the Company's stock option plan been determined using
the fair value based  method,  the  Company's  net income  (loss) and net income
(loss) per share would be as follows:


<PAGE>


                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


                               1999      1998      1997
                            ---------  --------  --------
Net income (loss) as
 reported                   $(10,145)   (5,898)   5,148
Pro forma net income
 (loss)                      (10,782)   (6,019)   5,046
Diluted net income
  (loss) per share as
  reported                      (.71)     (.41)     .35
Pro forma net income
  (loss) per share              (.76)     (.42)     .35

The fair  value of each  option  grant is  established  on the date of the grant
using the Black-Scholes option-pricing model with the following weighted-average
assumptions  used for  grants  in 1999,  1998 and  1997:  dividend  yield of 0%;
expected  volatility of 39%, 36% and 33%;  risk-free  interest rates of 5.5% and
expected lives of eight years.

NOTE 8 - EMPLOYEE BENEFIT PLANS

The  Worldtex,  Inc.  Profit  Sharing and  Retirement  Savings Plan (the "Plan")
provides for  discretionary  profit sharing  contributions,  elective  deferrals
pursuant to Internal  Revenue Code Section 401(k),  and  discretionary  matching
contributions for employees of the Company and its  participating  subsidiaries.
All  Company  contributions  vest at the rate of 20% after two years,  40% after
three years, 60% after four years and 100% after five years.

Employees  participating  in the Plan have an  opportunity  to purchase  various
investment  funds,  including  Company stock,  through payroll  deductions.  The
Company  determines,  on a prospective basis, the extent to which these employee
contributions are matched by Worldtex.  In 1998,  Worldtex instituted a matching
program at the rate of one-third of the  employee  contribution  up to a maximum
employee contribution of 6% of salary.  Matching  contributions to the Plan were
$270, $187 and $0 in 1999, 1998 and 1997 respectively.

The Plan also  permits the Company to decide each year  whether to make a profit
sharing contribution and the amount of each such contribution.  No discretionary


<PAGE>

                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


profit sharing contributions were made in 1999 and 1998. The Company made profit
sharing contributions of $89 for the year ended December 31, 1997.

Employee 401(k) and Company matching  contributions  are invested as directed by
the  employee  from a menu of funds  available  under the Plan.  Profit  sharing
contributions  are  invested  as directed  by the Plan's  investment  committee.
Certain  contributions  made to the  Plan in  prior  years  are  required  to be
invested in Company stock.

Employees of Rubyco  participate  in a Registered  Retirement  Savings plan. The
plan  provides for employee  contributions  of 4% of salary to a maximum of $2.3
per employee  with  corresponding  contributions  by Rubyco of 5% of salary to a
maximum of $2.3 per  employee.  Contributions  for the years ended  December 31,
1999, 1998 and 1997 were $19, $20 and $23 respectively.

Filix is legally  obligated to  contribute  to an employee  profit-sharing  plan
whereby annual contributions are determined on the basis of a prescribed formula
using  capitalization,  salaries and certain  revenues.  Amounts are paid into a
bank trust fund the year following the contribution  calculation.  Contributions
for the years ended  December 31, 1999,  1998 and 1997 were $447,  $590 and $720
respectively.

Under the terms of an industry-wide labor agreement, Filix employees participate
in an unfunded plan which provides for a lump-sum  payment at normal  retirement
age of up to four months  salary  depending on their number of years of service.
Such  amounts  are  payable  only  if the  employee  remains  with  Filix  until
retirement.  The Company's accumulated benefit obligation for this plan was $195
and $212 at December 31, 1999 and 1998,  respectively,  with a projected benefit
obligation of $210 and $228.  The projected  obligation at December 31, 1999 and
1998 was  determined  using an  assumed  discount  rate of 7.25% and an  assumed
long-term  rate of increase in  compensation  of 3%. The  Company's net periodic
pension  cost  for  this  plan  was  $23,  $22 and $21 in  1999,  1998  and 1997
respectively.

Worldtex also has unfunded supplemental plans for certain senior executives. The
accrued  liability  at December  31,  1999 and 1998 was $2,979 and  $2,365.  The
Company  accrued $818, $878 and $200 for the years ended December 31, 1999, 1998
and 1997 respectively for benefits under this plan.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

Future minimum lease payments under non-cancelable  operating leases,  primarily
for real property, as of December 31, 1999 are:

             2000           $2,325
             2001            1,994
             2002            1,372
             2003            1,041
             2004              170
                            ------
             Total          $6,902
                            ======


<PAGE>

                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


Rental  expense for cancelable and  non-cancelable  operating  leases charged to
operations  for the years ended  December  31,  1999,  1998 and 1997 was $2,327,
$2,100 and $1,134 respectively.

In the normal course of business, Worldtex and its subsidiaries may sometimes be
named as a defendant in litigation. In the opinion of management, based upon the
advice of counsel,  any uninsured liability which may result from the resolution
of any present  litigation or asserted claim will not have a material  effect on
Worldtex's operations, financial position or liquidity.

NOTE 10 - ACCOUNTS PAYABLE -TRADE AND OTHER LIABILITIES

Accounts  payable - trade and other  liabilities  consist of the following as of
December 31, 1999 and 1998:


                                 1999     1998
                                 ----     ----
Accounts and other
   payables - trade            $25,062   17,621
Salaries, wages and other
   compensation                  2,689    4,306
Pensions, profit sharing
   and employee benefits         1,662    2,006


<PAGE>

                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
               (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


                                   1999        1998
                                   ----        ----
Taxes, other than income
   taxes                             650       1,162
Interest                           1,034       1,145
Other                              2,683       1,755
                                 -------     -------
Total                            $33,780      27,995
                                 =======     =======

NOTE 11 - INCOME TAXES

The provisions (benefit) for income taxes for the years ended December 31, 1999,
1998 and 1997 are as follows:

             U. S.               U.S. STATE
            FEDERAL    FOREIGN    & LOCAL   TOTAL
            -------    -------   ---------- -----
1999
----
Current     $     0     2,276        65     2,341
Deferred     (1,650)      (91)     (430)   (2,171)
            --------    ------     -----   -------
Total       $(1,650)    2,185      (365)      170
            ========    ======     =====   =======
1998
----
Current     $     0     3,892       (55)    3,837
Deferred     (3,954)     (266)     (111)   (4,331)
            --------    ------    ------   -------
Total       $(3,954)    3,626      (166)     (494)
            ========    ======    ======    ======
1997
----
Current       $(310)    4,335       (55)    3,970
Deferred       (275)    1,794      (112)    1,407
              ------    ------    ------    -----
Total         $(585)    6,129      (167)    5,377
              ======    ======    ======    =====


Income (loss) before  income taxes for the years ended  December 31, 1999,  1998
and 1997 is comprised as follows:

              1999         1998         1997
              ----         ----         ----

U.S         $(18,012)    (12,760)     (2,245)
Foreign        8,037       6,368      14,114
            ---------    --------     ------
            $ (9,975)     (6,392)     11,869
            ========     ========     ======

A  reconciliation  for the years ended December 31, 1999,  1998 and 1997 between
the amount  computed  using the U. S. Federal  income tax rate and the effective
rate of tax on book income is as follows:


<PAGE>

                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


                                  1999     1998     1997
                                  ----     ----     ----
Statutory U.S. Federal
   income tax rate              (34.0)%  (34.0)%   34.0%
Effect of increase
  (decrease) in French tax
  rate on deferred taxes         (4.2)     -        9.7
Effect of higher foreign
  tax rates on current
  taxes                           3.7     12.8      7.1
Effect of foreign inflation
  adjustments                    (6.1)    (5.2)    (7.8)
Amortization of goodwill          2.3     16.1      2.2
Valuation allowance              41.5      -        -
Other, net                       (1.5)     2.6       .1
                                -----     ----     ----
Effective rate of tax on
  book income/loss                1.7%    (7.7)%   45.3%
                                =====     =====    ====


There was a $4,135  valuation  allowance  established  in 1999 for  deferred tax
assets due to  uncertainty  as to the future  benefit of  domestic  federal  net
operating loss  carryforwards.  There was also a valuation allowance for certain
state net operating  loss  carryforwards  of $1,635 and $894 for the years ended
December 31, 1999 and 1998, respectively.  At December 31, 1999, the Company had
U.S. Federal and state net operating loss carryforwards  aggregating $33,578 and
$33,133, respectively, which expire at various dates through 2019.

In October 1997,  France increased the tax rate from 36.67% to 41.67%.  The rate
increase  resulted  in a $1,156  charge in 1997 to the income tax  provision  to
increase the deferred tax liability as of January 1, 1997 to the higher  enacted
income tax rate.  During 1999,  France decreased the tax rate from 41.67% to 40%
resulting in a $417  reduction to the 1999 income tax  provision to decrease the
deferred tax liability as of January 1, 1999.

The tax effects of temporary  differences that give rise to significant portions
of the deferred tax assets and  liabilities at December 31, 1999 and 1998 are as
follows:


<PAGE>

                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


                                         1999      1998
                                         ----      ----
Deferred tax assets:
  Inventories                           $1,125      936
  Employee benefits                      1,401    1,294
  Allowance for doubtful accounts        2,064      467
  Net operating loss carryforwards       7,103    7,153
                                        ------   ------
                                        11,693    9,850
                                        ------    -----


                                         1999      1998
                                         ----      ----
Deferred tax liabilities:
  Property, plant and equipment        (15,270   (17,932)
  Goodwill amortization                 (1,645)   (1,323)
  Imputed interest                        (744)     (775)
  Other                                   (455)     (280)
                                      --------  --------
                                       (18,114)  (20,310)
                                      --------  --------
Net deferred income taxes             $ (6,421)  (10,460)
                                      ========  ========


Deferred taxes are classified in the  accompanying  Consolidated  Balance Sheets
captions as follows:


                          ASSET (LIABILITY)
                        ---------------------
                            1999    1998
                            ----    ----
Prepaid expenses and
  current assets        $ 4,135       2,418
Deferred income taxes   (10,556)    (12,878)
                        -------    --------
                        $(6,421)    (10,460)
                        =======    ========

NOTE 12 - OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION

The  Company's   operations  are  conducted   within  two  product  lines,   the
manufacturing  and sale of covered elastic yarns and of woven and knitted narrow
elastic  fabrics.  The Company has aggregated  these product lines for reporting
purposes due to their similar economic  characteristics,  production  processes,
customers  and  distribution  methods.  External  sales by  product  line are as
follows:


                         1999        1998        1997
                         ----        ----        ----

Covered elastic yarn   $167,596     178,768     194,386
Narrow elastic fabric   118,191      79,769       8,870
                       --------     -------     -------
                       $285,787     258,537     203,256
                       ========     =======     =======

External sales and net long-lived assets by geographic area are as follows:


<PAGE>


                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


                  1999      1998      1997
                  ----      ----      ----
UNITED STATES
Net sales       $192,652   146,684    73,843
Net long-lived   134,603   138,791   122,803
  assets

CANADA
Net sales         17,052    20,968    24,295
Net long-lived     1,199     1,570     6,025
  assets

FRANCE
Net sales         64,626    79,472    92,417
Net long-lived    44,861    53,096    49,673
  assets

COLOMBIA
Net sales         11,457    11,413    12,701
Net long-lived    20,602    18,566    15,520
  assets

In 1999,  Fruit of the Loom accounted for 16.8% of  consolidated  net sales.  In
1999, no other customer, and in 1998 and 1997, no customer, represented over 10%
of consolidated net sales.

NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair values are determined as follows:

(a)  Cash, Accounts and Notes Receivable and Accounts and Notes Payable

The carrying  amount  approximates  fair value because of the short  maturity of
these instruments.

(b)  Long-Term Debt

The fair values of each of the Company's long-term debt instruments are based on
quoted  market  rates or the amount of future  cash flows  associated  with each
instrument  discounted  using the Company's  current  borrowing rate for similar
debt  instruments  of  comparable  maturity.  The  estimated  fair values of the
Company's long-term debt instruments are:


<PAGE>

                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


                                DECEMBER 31, 1999
                                -----------------
                               CARRYING       ESTIMATED
                                AMOUNT        FAIR VALUE
                                ------        ----------

9.625% Senior Notes            $175,000        141,750
Revolving credit facilities      24,860         24,860
Other indebtedness                7,771          7,474
                               --------        -------
Total                          $207,631        174,084
                               ========        =======


                               DECEMBER 31, 1998
                               -----------------
                               CARRYING      ESTIMATED
                                AMOUNT       FAIR VALUE
                                ------       ----------

9.625% Senior Notes            $175,000       155,750
Revolving credit facilities      12,000        12,000
Other indebtedness               11,771        11,825
                               --------       -------
Total                          $198,771       179,575
                               ========       =======


(c)  Forward Exchange Contracts

The forward exchange  contracts  described in Note 3 (e) are relatively  simple,
short-term  instruments in which future  exchange rates are locked in for a fee.
Due to the  short-term  nature of the  foreign  exchange  contracts,  management
believes that the fair value, if any, is not significant.

(d)  Interest Rate Swap Agreement

The  Company  has an  aggregate  of $50,000  interest  rate swap and swap option
agreements with a fair value of $(282) as of December 31, 1999.

(e)  Limitations of Estimates

Fair value  estimates  are made at a specific  point in time,  based on relevant
market  information  and  information  about  the  financial  instrument.  These
estimates  are  subjective  in nature and involve  uncertainties  and matters of
significant judgment and therefore cannot be determined with precision.  Changes
in assumptions could significantly affect the estimates.

NOTE 14 - ACQUISITIONS

On October 3, 1997,  the Company  purchased  substantially  all of the assets of
Elastex for  approximately  $8,400 in cash.  On  December  1, 1997,  the Company

<PAGE>


                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


purchased  substantially all of the assets of ECA for  approximately  $76,300 in
cash and the  assumption of $6,000 in long term debt.  The net proceeds from the
sale of the $175,000  senior notes were used to fund the  acquisition of ECA and
to reduce  outstanding  indebtedness  incurred  to finance  the  acquisition  of
Elastex.  The  excess  of cost  over  fair  value  of net  assets  acquired  was
approximately  $53,161 for ECA and approximately $3,949 for Elastex and is being
amortized  using  the   straight-line   method  over  40  years.   ECA  acquired
substantially all of a narrow elastic fabric manufacturing  facility of Fruit of
the Loom on December 30, 1998,  for  approximately  $12,500.  The excess of cost
over  fair  value of net  assets  acquired  of  approximately  $3,836  are being
amortized  using the  straight-line  method over  periods of 5 to 10 years.  The
acquisitions  were accounted for as purchases and,  accordingly,  the results of
operations have been included in the Company's consolidated financial statements
from the date of  acquisition.  Additionally,  during 1999, the Company  entered
into a 51% joint venture in India.

NOTE 15 - RELATED PARTY TRANSACTIONS

In 1999, 1998 and 1997,  other assets include a $600  non-interest  bearing note
receivable due in the year 2002 from a senior executive

NOTE 16 - SIGNIFICANT FOURTH QUARTER CHARGES

During the fourth quarter of 1999, the Company initiated a consolidation plan to
reduce  conventional  covered yarn production in the United States. One of three
manufacturing  facilities  located in  Hickory,  North  Carolina  will be closed
during  the first half of 2000,  with its  operations  moved into the  remaining
facilities.  The Company recorded a one-time charge of $2,813 as of December 31,
1999 for the  consolidation.  This  charge,  recorded  in cost of sales,  covers
provisions for real estate and manufacturing equipment that will be taken out of
service,  as well as certain  inventory  provisions.  In  addition,  the Company
recorded in selling,  general and administrative expenses reserves of $4,000 for
accounts  receivable owed by Fruit of the Loom as of December 31, 1999, one-time

<PAGE>

                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


charges for Canadian  severance  relating to the 1998 restructuring of $404, and
certain retirement benefit costs of $506.

During the fourth quarter of 1998, the Company  recorded charges of $7,843 which
included  a $4,376  restructuring  provision  for  discontinuing  the  Company's
conventional  covered  yarn  production  in  Montreal,  Quebec,  $1,940  related
primarily to asset provisions for  underutilized  equipment in the United States
and $1,527 related to the retirement of the Company's  former chairman and chief
financial  officer.  The charges included $3,814 recorded in cost of goods sold,
$1,707 recorded as selling and administrative  expenses and $2,322 recorded as a
goodwill  writedown.  The Company  transferred  its  production of  conventional
covered  elastic yarn previously  manufactured  in Montreal,  Quebec to existing
operations in the United States and Colombia, South America.

NOTE 17 - SUBSEQUENT EVENT

On February 28, 2000,  a Schedule 13D report was filed with the  Securities  and
Exchange Commission stating that certain investment managers affiliated with EGS
Partners, L.L.C. (the "EGS Persons") were the beneficial owners of approximately
34% of the outstanding  shares of Worldtex common stock.  The filing states that
the Worldtex shares were acquired for investment.

As a consequence  of the filing of such report,  the "poison  pill"  shareholder
rights attached to the outstanding  Worldtex common stock were required to trade
separately  from  such  stock  and  become  exercisable  after 10  days,  unless
otherwise  provided by the Worldtex  Board of Directors.  The Board of Directors
subsequently extended the initial 10-day period on several occasions in order to
permit discussions with the EGS Persons.

On March 27, 2000, Worldtex entered into a Standstill Agreement (the "Standstill
Agreement") with the EGS Persons and certain related entities (collectively, the
"EGS  Parties").  Pursuant to the  Standstill  Agreement,  Worldtex  amended its
"poison  pill"  shareholder  rights  plan to  prevent  the rights  from  trading
separately  or  becoming  exercisable  as a result of the  announced  beneficial

<PAGE>

ownership  by the EGS  Parties,  unless  the  Board  of  Directors  of  Worldtex
determines  that  there  has been a  breach  by an EGS  Party of the  Standstill
Agreement.

Under the Standstill Agreement,  the EGS Parties agreed, among other things, not
to (i) acquire  additional shares of Worldtex common stock, (ii) encourage other
persons to acquire  Worldtex common stock,  (iii) submit or encourage a proposal
for the  acquisition  of  Worldtex,  (iv) make any  solicitation  of proxies for
Worldtex common stock,  (v) sell any Worldtex common stock,  except sales of not
more than 5% of the outstanding shares in any 90 day period so long as the buyer
is not and will not  thereby  become the  beneficial  owner of 5% or more of the
Worldtex common stock or (vi) submit any shareholder proposal. In addition, each
EGS Party agreed to vote the Worldtex common stock  beneficially owned by it, at
its option,  (i) in the manner recommended by the Worldtex Board of Directors or
(ii) in the same  proportion  as the votes of other  holders of Worldtex  common
stock.  The EGS  Parties  also agreed to make  payments to Worldtex  aggregating
$800, in reimbursement of certain expenses. The term of the Standstill Agreement
is ten years.

Also as a  result  of such  acquisition  of  Worldtex  common  stock  by the EGS
Persons,  all  outstanding  stock options granted under the 1992 Stock Incentive
Plan of Worldtex became vested.  In addition,  Barry D. Setzer,  Chairman of the
Board, President and Chief Executive Officer of Worldtex, and Marty R. Kittrell,
Senior Vice President and Chief Financial Officer of Worldtex, each has asserted
that, under the terms of his employment agreement with Worldtex,  he is entitled
to terminate his employment and receive  payment of 2.99 times his "base salary"
(as defined).  If both  officers were entitled to exercise such right,  Worldtex
would be obligated  to make  severance  payments of  approximately  $2,100.  The
Worldtex  Board of Directors  has taken the position  that such officers are not
entitled to exercise  such right.  However,  the Board of Directors  has entered
into negotiations with such officers seeking to settle the matter amicably.  The
departure from Worldtex of these senior  managers could have a material  adverse
effect on Worldtex.


<PAGE>

                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


NOTE 18 - SUPPLEMENTAL CONSOLIDATING FINANCIAL INFORMATION

The $175,000 Senior Notes are guaranteed by each of the U.S. subsidiaries of the
Company. The guarantor subsidiaries are wholly owned subsidiaries of the Company
and the guarantees are full,  unconditional and joint and several.  There are no
restrictions on the ability of the guarantor  subsidiaries to make distributions
to the Company,  except those generally  applicable  under relevant  corporation
laws. Separate financial  statements of each guarantor  subsidiary have not been
presented  because  management  has  determined  that they are not  material  to
investors.  The  following  pages  include  summarized  consolidating  financial
information for the Company,  segregating the parent, the guarantor subsidiaries
and the nonguarantor subsidiaries.

<PAGE>

                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

           NOTE 18 - SUPPLEMENTAL CONSOLIDATING FINANCIAL INFORMATION
--------------------------------------------------------------------------------
                             (DOLLARS IN THOUSANDS)


Consolidating Statements of
Operations Year Ended
December 31, 1999

<TABLE>
<CAPTION>
                                                     GUARANTOR   NON-GUARANTOR
                                                      DOMESTIC    FOREIGN
                                     WORLDTEX, INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
                                     -------------- ------------ ------------ ------------ ------------
<S>                                   <C>           <C>            <C>           <C>          <C>
Net sales                              $     -      197,512        109,662       (21,387)     285,787

Cost of goods sold                           -      175,409         88,595       (20,952)     243,052
                                        ------      -------         ------       --------     -------
  Gross profit                               -       22,103         21,067          (435)      42,735

Selling and administrative expense       4,080       18,559          8,599            44       31,282
                                        -------      ------         ------        ------       ------

  Operating profit (loss)               (4,080)       3,544         12,468          (479)      11,453

Interest expense                        18,475          432          1,045             -       19,952

Intercompany interest expense (income) (10,280)       9,454            826             -            -

Intercompany administrative charges     (2,862)       1,860          1,002             -            -

Other income (expense) - net              (289)         429         (1,616)            -       (1,476)
                                       --------     -------        -------       ------       -------

  Income (loss) before income taxes     (9,702)      (7,773)         7,979          (479)      (9,975)

Provision (benefit) for income taxes      (283)      (1,852)         2,305            -           170

Undistributed loss of subsidiaries        (247)       5,674              -        (5,427)           -
                                       --------      -------        ------        -------    --------

  Net income (loss)                    $(9,666)        (247)         5,674        (5,906)     (10,145)
                                       ========      =======        ======        =======    =========
</TABLE>


<PAGE>


                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

           NOTE 18 - SUPPLEMENTAL CONSOLIDATING FINANCIAL INFORMATION
--------------------------------------------------------------------------------
                             (DOLLARS IN THOUSANDS)


Consolidating Statements of
Operations  Year Ended
December 31, 1998

<TABLE>
<CAPTION>
                                                    GUARANTOR   NON-GUARANTOR
                                                     DOMESTIC    FOREIGN
                                    WORLDTEX, INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
                                    -------------- ------------ ------------ ------------ ------------
<S>                                    <C>            <C>          <C>           <C>          <C>
Net sales                               $    -        151,775      123,154       (16,392)     258,537

Cost of goods sold                           -        131,534      101,125       (16,392)     216,267
                                        -------       -------      -------       --------     -------

  Gross profit                               -         20,241       22,029             -       42,270

Selling and administrative               5,627         12,574       12,036             -       30,237
                                        ------         ------       ------        ------       ------
expense

  Operating profit (loss)               (5,627)         7,667        9,993             -       12,033

Interest expense                        17,120            586        1,059             -       18,765

Intercompany interest expense (income)  (9,467)         8,183        1,284             -            -

Intercompany administrative charges     (2,896)         1,894        1,002             -            -

Other income (expense) - net               557             63         (280)            -          340
                                        ------         ------        ------       ------       ------

  Income (loss) before income taxes     (9,827)        (2,933)       6,368             -       (6,392)

Provision (benefit) for income taxes    (3,307)          (813)       3,626             -         (494)

Undistributed earnings of subsidiaries     622          2,742            -        (3,364)           -
                                         ------        ------       ------        -------      ------

  Net income (loss)                    $(5,898)           622        2,742        (3,364)      (5,898)
                                       ========        ======       ======        =======      =======

</TABLE>

<PAGE>



                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

           NOTE 18 - SUPPLEMENTAL CONSOLIDATING FINANCIAL INFORMATION
--------------------------------------------------------------------------------
                             (DOLLARS IN THOUSANDS)


 Consolidating Statements of
 Operations Year Ended
 December 31, 1997

<TABLE>
<CAPTION>
                                                    GUARANTOR   NON-GUARANTOR
                                                     DOMESTIC    FOREIGN
                                    WORLDTEX, INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
                                    -------------- ------------ ------------ ------------ ------------
<S>                                    <C>            <C>          <C>           <C>          <C>
 Net sales                              $    -         77,893      138,892       (13,529)     203,256

 Cost of goods sold                          -         69,413      111,388       (13,529)     167,272
                                        ------         ------      -------       --------     -------

   Gross profit                              -          8,480       27,504             -       35,984

 Selling and administrative expense      2,572          4,270        9,928             -       16,770
                                        ------         ------       ------        ------       ------

   Operating profit (loss)              (2,572)         4,210       17,576             -       19,214

 Interest expense                        5,962            247          834             -        7,043

 Intercompany interest expense (income) (2,535)           844        1,691             -            -

 Intercompany administrative charges    (2,435)         1,948          487             -            -

 Other income (expense) - net               87             61         (450)            -         (302)
                                        ------         ------       ------        ------       ------

   Income (loss) before income taxes    (3,477)         1,232       14,114             -       11,869

 Provision (benefit) for income taxes   (1,083)           331        6,129             -        5,377

 Undistributed earnings of subsidiaries  8,886          7,985            -       (16,871)           -
                                        ------         ------       ------       -------       ------

   Net income before extraordinary Item  6,492          8,886        7,985       (16,871)       6,492

 Extraordinary item                      1,344              -            -             -        1,344
                                        ------         ------       ------        ------       ------

   Net income                           $5,148          8,886        7,985       (16,871)       5,148
                                        ======         ======       ======      ========       ======

</TABLE>

<PAGE>


                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

           NOTE 18 - SUPPLEMENTAL CONSOLIDATING FINANCIAL INFORMATION
--------------------------------------------------------------------------------
                             (DOLLARS IN THOUSANDS)


Consolidating Balance Sheets
December 31, 1999

<TABLE>
<CAPTION>
                                                    GUARANTOR   NON-GUARANTOR
                                                     DOMESTIC    FOREIGN
                                    WORLDTEX, INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
                                    -------------- ------------ ------------ ------------ ------------
<S>                                    <C>            <C>          <C>           <C>          <C>
Current assets
  Cash and cash equivalents             $1,769         (1,769)       5,686             -        5,686
  Accounts and notes receivable, net       315         18,173       21,389             -       39,877
  Inventories                                -         40,719       21,535          (437)      61,817
  Prepaid expenses and other current
    assets                               4,200            666          925             -        5,791
                                        ------         ------       ------        ------       ------

    Total current assets                 6,284         57,789       49,535          (437)     113,171

Property, plant and equipment, net       5,160         57,366       47,540           (41)     110,025
Other assets                             7,499            312          814             -        8,625
Cost in excess of net assets
  of acquired businesses, net                -         64,364       18,251             -       82,615
Intercompany investments               107,038         95,177            -      (202,215)           -
Intercompany advances                  154,811              -            -      (154,811)           -
                                       -------         ------       ------      ---------      ------
                                      $280,792        275,008      116,140      (357,504)     314,436
                                      ========        =======      =======      =========     =======
Liabilities and Stockholders'
 equity
Current liabilities
  Short-term borrowings                 $    -              -        6,423             -        6,423
  Current installments of long-term
    debt                                24,860              -          232             -       25,092
  Accounts payable-trade and             8,246         10,393       15,141             -       33,780
   other liabilities
  Income taxes payable                   1,230         (1,431)         682             -          481
                                        ------        -------       ------        ------       ------
    Total current liabilities           34,336          8,962       22,478             -       65,776

Long-term debt                         175,000          6,000        1,539             -      182,539
Other long-term liabilities              2,550              -          523             -        3,073
Deferred income taxes                   (5,479)         6,155        9,880             -       10,556
Intercompany payables                        -        146,854        7,957      (154,811)           -
                                        ------        -------       ------      ---------      ------
    Total liabilities                  206,407        167,971       42,377      (154,811)     261,944
                                       -------        -------       ------      ---------     -------

Stockholders' equity
  Common stock                             147              -       37,720       (37,720)         147
  Paid-in capital                       30,084         38,793            -       (38,793)      30,084
  Retained earnings                     46,503         68,244       57,457      (126,180)      46,024
  Accumulated other                          -              -      (21,414)            -      (21,414)
    comprehensive loss
  Less-Treasury stock, at cost          (2,349)             -            -             -       (2,349)
                                      --------         ------       ------      --------      -------
    Total stockholders' equity          74,385        107,037       73,763      (202,693)      52,492
                                      --------        -------      ------       ---------      ------
                                      $280,792        275,008      116,140      (357,504)     314,436
                                      ========        =======      =======      =========     =======

</TABLE>

<PAGE>

                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

           NOTE 18 - SUPPLEMENTAL CONSOLIDATING FINANCIAL INFORMATION
--------------------------------------------------------------------------------
                             (DOLLARS IN THOUSANDS)

Consolidating Balance Sheets
December 31, 1998

<TABLE>
<CAPTION>
                                                    GUARANTOR   NON-GUARANTOR
                                                     DOMESTIC    FOREIGN
                                    WORLDTEX, INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
                                    -------------- ------------ ------------ ------------ ------------
<S>                                    <C>            <C>          <C>           <C>          <C>
Assets
Current assets
  Cash and cash equivalents            $2,596              14      4,105          -     6,715
  Accounts and notes                        -          19,486     23,399          -    42,885
receivable, net
  Inventories                               -          33,815     24,700           -    58,515
  Prepaid expenses and other            2,594             183      1,205           -     3,982
                                       ------          ------     ------      ------    ------
current assets
    Total current assets                5,190          53,498     53,409           -   112,097

Property, plant and equipment,            337          58,710     54,605           -   113,652
net
Other assets                            9,239           2,457      1,154           -    12,850
Cost in excess of net assets
  of acquired businesses, net               -          68,048     17,473           -    85,521
Intercompany investments              101,344          83,560          -    (184,904)        -
Intercompany advances                 155,820               -          -    (155,820)        -
                                      -------         -------    -------    --------   -------
                                     $271,930         266,273    126,641    (340,724)  324,120
                                     ========         =======    =======    ========   =======
Liabilities and Stockholders'
equity
Current liabilities
  Short-term borrowings              $      -               -      7,308           -     7,308
  Current installments of
   long-term debt                           -               -        525           -       525
  Accounts payable-trade and
   other liabilities                    3,799           9,440     14,756           -    27,995
  Income taxes payable                  1,091          (1,641)     2,250           -     1,700
                                     --------          ------     ------     -------    ------
    Total current liabilities           4,890           7,799     24,839           -    37,528

Long-term debt                        187,000           6,000      5,246           -   198,246
Other long-term liabilities             1,417               -        569           -     1,986
Deferred income taxes                  (5,428)          6,870     11,436           -    12,878
Intercompany payables                       -         144,260     11,560    (155,820)        -
                                     --------         -------     ------    --------   -------
    Total liabilities                 187,879         164,929     53,650    (155,820)  250,638
                                     --------         -------     ------    --------   -------

Stockholders' equity
  Common stock                            147               -     31,778     (31,778)      147
  Paid-in capital                      30,084          32,852          -     (32,852)   30,084
  Retained earnings                    56,169          68,492     51,782    (120,274)   56,169
  Accumulated other
    comprehensive loss                                      -    (10,569)              (10,569)
  Less-treasury stock, at cost         (2,349)              -          -           -    (2,349)
                                     --------         -------     ------    --------   -------
    Total stockholders' equity         84,051         101,344     72,991    (184,904)   73,482
                                     --------         -------     ------    --------   -------
                                     $271,930         266,273    126,641    (340,724)  324,120
                                     ========         =======    =======    ========   =======
</TABLE>


<PAGE>

                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

           NOTE 18 - SUPPLEMENTAL CONSOLIDATING FINANCIAL INFORMATION
--------------------------------------------------------------------------------
                             (DOLLARS IN THOUSANDS)

Consolidating Balance Sheets
December 31, 1998

<TABLE>
<CAPTION>
                                                    GUARANTOR   NON-GUARANTOR
                                                     DOMESTIC    FOREIGN
                                    WORLDTEX, INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
                                    -------------- ------------ ------------ ------------ ------------
<S>                                    <C>            <C>          <C>           <C>          <C>
Cash flows from operating
activities:
 Net income (loss)                     $(9,666)          (247)         5,674      (5,906)    (10,145)
 Adjustments to reconcile net
  income (loss)to net cash
  provided (used in) by
  operating activities:
  Undistributed earnings of                247         (5,674)             -       5,427           -
  subsidiaries
  Depreciation and amortization            213         11,990          5,681          (2)     17,882
  Provision for losses on
   accounts receivable                       -          4,446            384           -       4,830
  Deferred income taxes                 (1,768)          (715)            32           -      (2,451)
  Change in assets and
   liabilities net of effects of
   acquisitions:
    Accounts and notes receivable         (315)        (3,132)        (1,012)          -      (4,459)
    Inventories                              -         (6,904)            61         437      (6,406)
    Prepaid expenses and other
      current assets                       110           (483)           117           -        (256)
    Accounts  payable-trade and
    other current liabilities            4,446            953          2,089           -       7,488
    Income taxes payable                   139            210         (1,330)          -        (981)
                                        ------        -------        -------     -------     -------
   Net cash provided by (used
   in) operating activities             (6,594)           444         11,696         (44)      5,502
                                        ------        -------        -------     -------     -------

Cash flows from investing activities:
  Capital expenditures                  (5,037)        (7,401)`       (5,322)         44     (17,716)
  Acquisitions, net of cash
  acquired                              (5,942)        (5,942)             -      11,884           -
  Other investing activities              (515)         1,982         (3,395)          -      (1,928)
                                        ------        -------        -------     -------     -------
  Net cash used in investing
  activities                           (11,494)       (11,361)        (8,717)     11,928     (19,644)
                                       -------        -------        -------     -------     -------

Cash flows from financing activities:
  Borrowings under line of
  credit arrangements                        -              -              -           -           -
  Payments under line of credit
  arrangements                               -              -            (55)          -         (55)
  Borrowings under revolving
  credit facility                      110,960              -              -           -     110,960
  Payments under revolving
  credit facility                      (98,100)             -              -           -     (98,100)
  Borrowings under long-term
  loans                                      -              -              -           -           -
  Payments under long-term loans             -              -         (1,463)          -      (1,463)
  Stock issued or (reacquired), net          -              -              -           -           -
  Advances - affiliated companies        1,009          3,192         (2,967)     (1,234)          -
  Other financing activities            (3,392)         5,942          3,979     (11,286)      2,027
                                       -------         ------         ------     --------     ------
  Net cash provided by (used in)
   financing activities                 17,261          9,134           (506)    (12,520)     13,369
                                       -------         ------         ------     -------      ------
 Effects of exchange rate
   changes on cash                           -              -           (892)        636        (256)
                                       -------         ------         ------     -------      ------
   Net increase (decrease) in
    cash and cash equivalents             (827)        (1,783)         1,581           -      (1,029)
 Cash and cash equivalents at
   beginning of year                     2,596             14          4,105           -       6,715
                                       -------         ------         ------     -------      ------
 Cash and cash equivalents at
   end of year                         $ 1,769         (1,769)         5,686           -       5,686
                                       =======         ======         ======     =======      ======
</TABLE>


<PAGE>

                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

           NOTE 18 - SUPPLEMENTAL CONSOLIDATING FINANCIAL INFORMATION
--------------------------------------------------------------------------------
                             (DOLLARS IN THOUSANDS)

Consolidating Balance Sheets
December 31, 1998

<TABLE>
<CAPTION>
                                                    GUARANTOR   NON-GUARANTOR
                                                     DOMESTIC    FOREIGN
                                    WORLDTEX, INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
                                    -------------- ------------ ------------ ------------ ------------
<S>                                    <C>            <C>          <C>         <C>          <C>
Cash flows from operating activities:
 Net income (loss)                      $(5,898)           622        2,742      (3,364)      (5,898)
 Adjustments to reconcile net
  income (loss)to net cash
  provided (used in) by
  operating activities:
  Undistributed earnings of
  subsidiaries                             (622)        (2,742)           -       3,364            -
  Depreciation and amortization              30          7,414        9,128           -       16,572
  Provision for losses on
   accounts receivable                        -            311          279           -          590
  Deferred income taxes                  (4,871)            49         (267)          -       (5,089)
  Change in assets and
   liabilities net of effects of
   acquisitions:
    Accounts and notes receivable             -          1,072        1,657           -        2,729
    Inventories                               -         (5,564)       1,732       1,604       (2,228)
    Prepaid expenses and other
     current assets                        (135)           329          (59)          -          135
    Accounts  payable-trade and
    other current liabilities               198            911         (717)          -          392
    Income taxes payable                    799            145          906           -        1,850
                                       --------         ------       ------      ------       ------
   Net cash provided by (used
     in) operating activities           (10,499)         2,547       15,401       1,604        9,053
                                       --------         ------       ------      ------       ------
Cash flows from investing activities:
  Capital expenditures                     (138)       (17,314)      (8,859)      6,440      (19,871)
  Acquisitions, net of cash
   acquired                              (2,740)             -            -     (10,070)     (12,810)
  Other investing activities                400         (6,221)      (1,777)      4,768       (2,830)
                                       --------        -------      -------     -------      -------
  Net cash used in investing
   activities                            (2,478)       (23,535)     (10,636)      1,138      (35,511)
                                       --------        -------      -------     -------      -------

Cash flows from financing activities:
  Borrowings under line of
   credit arrangements                        -              -        9,482           -        9,482
  Payments under line of credit
   arrangements                               -              -       (3,221)          -       (3,221)
  Borrowings under revolving
   credit facility                       12,000              -            -           -       12,000
  Stock issued or (reacquired), net        (825)             -            -           -         (825)
  Advances - affiliated companies        (9,657)        20,683      (10,960)        (66)           -
  Other financing activities              1,293              -         (580)       (437)         276
                                       --------        -------      -------     -------      -------
 Net cash provided by (used in)
   financing activities                   2,811         20,683       (5,279)       (503)      17,712
                                       --------        -------      -------     -------      -------
 Effects of exchange rate
   changes on cash                        2,704             (2)         126      (2,239)         589
                                       --------        -------      -------     -------      -------
    Net decrease in cash and
    cash equivalents                     (7,462)          (307)        (388)          -       (8,157)
 Cash and cash equivalents at
  beginning of year                      10,058            321        4,493           -       14,872
 Cash and cash equivalents at
  end of year                          $  2,596             14        4,105           -        6,715
                                       ========        =======      =======     =======      =======
</TABLE>


<PAGE>


                                 WORLDTEX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

           NOTE 18 - SUPPLEMENTAL CONSOLIDATING FINANCIAL INFORMATION
--------------------------------------------------------------------------------
                             (DOLLARS IN THOUSANDS)

Consolidating Balance Sheets
December 31, 1998

<TABLE>
<CAPTION>
                                                    GUARANTOR   NON-GUARANTOR
                                                     DOMESTIC    FOREIGN
                                    WORLDTEX, INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
                                    -------------- ------------ ------------ ------------ ------------
<S>                                    <C>          <C>          <C>         <C>          <C>
Cash flows from operating activities:
 Net income (loss)                     $5,148      8,886         7,985      (16,871)   5,148
 Adjustments to reconcile net
  income (loss)to net cash
  provided (used in) by operating
  activities:
  Undistributed earnings of            (8,886)    (7,985)            -      16,871         -
  subsidiaries
  Depreciation and amortization            37      2,630         4,178           -     6,845
  Provision for losses on accounts          -         71           234           -       305
   receivable
  Deferred income taxes                (1,099)       341         1,792        (314)      720
  Change in assets and liabilities
   net of effects of acquisitions:
     Accounts and notes receivable       (200)    (3,060)        2,196           -    (1,064)
     Inventories                            -     (2,007)       (5,389)          -    (7,396)
     Prepaid expenses and other           (86)       (34)         (128)          -      (248)
   current assets
    Accounts  payable-trade and
    other current liabilities             406     (2,171)       (1,902)       (646)   (4,313)
     Income taxes payable                (459)      (597)         (984)        546    (1,494)
                                       ------     ------        ------      ------    ------
   Net cash provided by (used in)
   operating activities                (5,139)    (3,926)        7,982        (414)   (1,497)
                                       -------    -------       ------      -------   -------

Cash flows from investing activities:
  Capital expenditures                     (3)    (2,823)       (5,426)        546    (7,706)
  Acquisitions, net of cash
    acquired                           (7,502)         -             -     (77,880)  (85,382)
  Other investing activities           (7,017)       835        (1,875)       (133)   (8,190)
                                       ------     ------        ------     -------   -------
  Net cash used in investing
  activities                          (14,522)    (1,988)       (7,301)    (77,467) (101,278)
                                      -------     ------        ------     -------  --------

Cash flows from financing activities:
  Borrowings under line of credit           -          -         3,548           -     3,548
  arrangements
  Payments under line of credit             -          -        (3,435)          -    (3,435)
  arrangements
  Borrowings under revolving
    credit facility                   109,550          -             -           -   109,550
  Payments under revolving credit
    facility                         (121,940)         -             -           -  (121,940)
  Borrowings under long-term loans    175,000          -             -           -   175,000
  Payments under long-term loans      (50,000)         -             -           -   (50,000)
  Stock issued or (reacquired), net       113          -             -           -       113
  Advances - affiliated companies     (70,376)     6,068         1,036      63,272         -
  Other financing activities             (119)         -         1,546        (359)    1,068
                                       ------     ------        ------      ------    ------
  Net cash provided by financing
   activities                          42,228      6,068         2,695      62,913    113,904
                                       ------     ------        ------      ------    -------

 Effects of exchange rate changes
   on cash                            (12,937)       (7)          (398)     14,968     1,626
                                      -------    -------       -------      ------    ------
   Net increase in cash and cash
    equivalents                         9,630        147         2,978           -    12,755
 Cash and cash equivalents at             428        174         1,515           -     2,117
                                       ------     ------        ------      ------    ------
 beginning of year
 Cash and cash equivalents at end
 of year                               $10,058       321         4,493           -    14,872
                                       =======    ======        ======      ======    ======
</TABLE>


<PAGE>

                                 WORLDTEX, INC.
                       SUPPLEMENTARY FINANCIAL INFORMATION
________________________________________________________________________________
                     YEARS ENDED DECEMBER 31, 1999 AND 1998
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                     DILUTED NET
                                                          NET          INCOME
         UNAUDITED             NET         GROSS         INCOME      (LOSS) PER
 QUARTERLY FINANCIAL DATA     SALES        PROFIT        (LOSS)      SHARE (A)
 ------------------------     -----        ------        ------      ---------
<S>                            <C>           <C>         <C>           <C>
1999 Quarter:
      First                   $78,017       13,528          815         .06
      Second                   73,607       13,517        1,260         .09
      Third                    69,721       10,229         (712)       (.05)
      Fourth (B)               64,442        5,461      (11,508)       (.81)
                              -------      -------      --------
                              $285,787      42,735      (10,145)
                              ========     =======      ========

1998 Quarter:
      First                   $69,229       14,052        2,151         .15
      Second                   66,054       12,818          748         .05
      Third                    59,801        9,040       (1,061)       (.07)
      Fourth (B)               63,453        6,360       (7,736)       (.54)
                              -------      -------      --------
                              $258,537      42,270       (5,898)
                              ========     =======      ========
</TABLE>

NOTES:

(A)   Diluted net income (loss) per share amounts are calculated  based upon the
      weighted  average number of common shares  outstanding and common dilutive
      equivalent shares during the year.

(B)   See note 16 of the  consolidated  financials  statements  for  significant
      fourth quarter charges in 1999 and 1998.


<PAGE>
                                 WORLDTEX, INC.
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
________________________________________________________________________________
                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
                             (DOLLARS IN THOUSANDS)


                                        ------ADDITIONS------
                             BALANCE    CHARGED                          BALANCE
                               AT       TO COSTS             DEDUCTIONS   AT END
                            BEGINNING     AND                  FROM        OF
                            OF PERIOD   EXPENSES     OTHER   RESERVES    PERIOD
                            ---------   --------     -----   --------    ------
1999
Allowance for doubtful        $2,041    4,830 (A)       -      303 (B)    6,568
accounts

1998
Allowance for doubtful        $2,085      590           -      634 (B)    2,041
accounts

1997
Allowance for doubtful        $2,589      305       470 (C)  1,279 (B)    2,085
accounts


NOTES:

(A) See note 16 of the consolidated financials statements for significant fourth
    quarter charges in 1999.

(B) Accounts charged off, recoveries, and other adjustments, net.

(C) Increases to reserves reflecting subsidiary purchase price allocation.


<PAGE>

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

            Not applicable.


                                    PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

ITEM 11.    EXECUTIVE COMPENSATION

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

            Reference  is  made  to the  information  responsive  to  the  Items
comprising  this  Part III that is  contained  in  Worldtex's  definitive  proxy
statement for its 2000 Annual  Meeting of  Stockholders  to be filed pursuant to
Regulation 14A under the Securities  Exchange Act of 1934, which is incorporated
herein by reference.


                                     PART IV

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

FINANCIAL STATEMENTS AND SCHEDULES

            The financial  statements and financial statement schedules included
in this Report are listed in the introductory portion of Item 8.

EXHIBITS

            The  following  exhibits  are  filed  as part of  this  Report  (for
convenience of reference,  exhibits are listed  according to numbers assigned in
the exhibit tables of Item 601 of Regulation  S-K under the Securities  Exchange
Act of 1934 and management  contracts or compensatory  plans are indicated by an
asterisk):

 EXHIBIT
   NO.         DESCRIPTION
________       ___________

   2.1         Purchase  Agreement,  dated as of March 28, 1995,  among Fibrexa,
               S.A., the stockholders of Fibrexa, Worldtex Colombiana, Ltda. and
               Worldtex - filed as Exhibit 2 to the Company's report on Form 8-K
               dated June 5, 1995 and incorporated herein by reference.


<PAGE>

 EXHIBIT
   NO.         DESCRIPTION
________       ___________

   2.2         Asset  Purchase  Agreement,  dated as of October 29, 1997,  among
               Elastic Corporation of America,  Inc. (a wholly-owned  subsidiary
               of Worldtex,  Inc.),  Worldtex,  Inc.,  and NFA Corp. -- filed as
               Exhibit  2.1 to the  Worldtex,  Inc.  Current  Report on Form 8-K
               dated December 1, 1997 and incorporated herein by reference.

   3.1         Certificate of  Incorporation of Worldtex -- filed as Exhibit 3.1
               to Worldtex's Registration Statement on Form 10, dated October 1,
               1992, as amended, and incorporated herein by reference.

   3.2         By-Laws  of  Worldtex  --  filed  as  Exhibit  3.2 to  Worldtex's
               Registration  Statement  on Form 10,  dated  October 1, 1992,  as
               amended, and incorporated herein by reference.

   4.1         Share Purchase Rights  Agreement,  dated as of August 1, 1992, by
               and between Worldtex and Chemical Bank as Rights Agent - filed as
               Exhibit 4.1 to the Company's  Annual Report on Form 10-K for 1992
               and incorporated herein by reference.

   4.2         Indenture,  dated as of December 1, 1997, by and among  Worldtex,
               Inc.,   Willcox  &  Gibbs   Filix  of   Delaware,   Inc.,   Regal
               Manufacturing  Company,  Inc.,  Elastic  Corporation  of America,
               Inc., Elastex, Inc., Regal Yarns of Argentina, Inc., WTX Colombia
               I, Inc. and WTX Colombia II, Inc. (together, other than Worldtex,
               Inc., the  "Guarantors"),  and IBJ Schroder Bank & Trust Company,
               as Trustee,  with  respect to the 9 5/8% Senior Notes due 2007 --
               filed as Exhibit 4.1 to the Company's  Registration  Statement on
               Form S-4 (No. 333-45331) and incorporated herein by reference.

   4.3         Registration  Rights Agreement,  dated as of December 1, 1997, by
               and  among  Worldtex,   Inc.,  the  Guarantors  and  the  Initial
               Purchasers - filed as Exhibit 4.3 to the  Company's  Registration
               Statement on Form S-4 (No.  333-45331) and incorporated herein by
               reference.

   4.4         Form of 9 5/8% Note - included in Exhibit 4.2.

  10.1         Distribution Agreement dated as of November 12, 1992, between W&G
               and  Worldtex - filed as  Exhibit  10.1 to the  Company's  Annual
               Report  on  Form  10-K  for  1992  and  incorporated   herein  by
               reference.

  10.2         Tax Sharing Agreement dated as of November 12, 1992,  between W&G
               and  Worldtex - filed as  Exhibit  10.2 to the  Company's  Annual
               Report  on  Form  10-K  for  1992  and  incorporated   herein  by
               reference.

  10.3         Severance  Agreement,  dated February 10, 1999,  between Worldtex
               and  Richard J. Mackey - filed as Exhibit  10.3 to the  Company's
               Annual  Report on Form 10-K for 1998 and  incorporated  herein by
               reference.*


<PAGE>

 EXHIBIT
   NO.         DESCRIPTION
________       ___________

  10.4         Employment  Agreement,  dated November 15, 1993, between Worldtex
               and  Barry D.  Setzer - filed as  Exhibit  10.4 to the  Company's
               Annual  Report on Form 10-K for 1993 and  incorporated  herein by
               reference.*

  10.5         Employment  Agreement,  dated December 22, 1998, between Worldtex
               and Marty R.  Kittrell - filed as Exhibit  10.5 to the  Company's
               Annual  Report on Form 10-K for 1998 and  incorporated  herein by
               reference.*

  10.6         1992  Stock  Incentive  Plan of  Worldtex,  as amended - filed as
               Appendix A to Worldtex's  proxy  statement,  dated April 1, 1994,
               for the 1994 Annual  Meeting of  Stockholders,  and  incorporated
               herein by reference.*

  10.7         Credit  Agreement,  dated as of December 1, 1997, among Worldtex,
               the Guarantors, the Lenders named therein and NationsBank,  N.A.,
               as Agent - filed as Exhibit 10.6 to the  Company's  Annual Report
               on Form 10-K for 1998 and incorporated herein by reference.

  10.8         Standstill  Agreement,  dated as of March 27, 2000, among (i) EGS
               Associates,  L.P.,  a  Delaware  limited  partnership,  (ii)  EGS
               Partners, L.L.C., a Delaware limited liability company, (iii) Bev
               Partners,  L.P.,  a  Delaware  limited  partnership,  (iv)  Jonas
               Partners,   L.P.,  a  New  York  limited   partnership,   (v)  FK
               Investments,  L.P., a Delaware limited partnership,  (vi) William
               Ehrman, (vii) Frederic Greenberg, (viii) Jonas Gerstl, (ix) Julia
               Oliver, (x) EGS Management,  L.L.C., a Delaware limited liability
               company, and (xi) the Company -- filed herewith.

  10.9         Amendment  No.  5,  dated as of March  27,  2000,  to the  Rights
               Agreement, dated as of August 1, 1992 -- attached as Exhibit A to
               the Standstill Agreement filed as Exhibit 10.8 hereto.

  21.1         Subsidiaries of Worldtex - filed herewith.

  23.1         Consent of KPMG LLP - filed herewith.

  23.2         Consent of Deloitte & Touche LLP - filed herewith.

  24.1         Powers of Attorney  executed by certain directors and officers of
               Worldtex - filed as Exhibit 25.1 to the  Company's  Annual Report
               on Form 10-K for 1992 and incorporated herein by reference.

  24.2         Powers of  Attorney  executed  by  Mitchell  R. Setzer - filed as
               Exhibit 24.2 to the Company's Annual Report on Form 10-K for 1994
               and incorporated herein by reference.

  24.3         Powers of Attorney executed by Claude D. Egler - filed as Exhibit
               24.3 to the  Company's  Annual  Report  on Form 10-K for 1996 and
               incorporated herein by reference.


<PAGE>

 EXHIBIT
   NO.         DESCRIPTION
________       ___________

  24.4         Power  of  Attorney  executed  by Marty  R.  Kittrell  - filed as
               Exhibit 24.4 to the Company's Annual Report on Form 10-K for 1998
               and incorporated herein by reference.

  27.1         Financial Data Schedule (filed with EDGAR only).


8-K REPORTS

            During the last  quarter of the  Company's  1999  fiscal  year,  the
Company filed no reports on Form 8-K.

<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: March 30, 2000


                                        WORLDTEX, INC.



                                        By /s/ BARRY D. SETZER
                                          ____________________________________
                                           Barry D. Setzer
                                           Chairman of the Board,
                                           President and Chief
                                           Executive Officer


            Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on March 30, 2000 by the following  persons on
behalf of the registrant and in the capacities indicated.


/s/ BARRY D. SETZER
___________________________________________

Barry D.  Setzer,  Chairman  of the  Board,
President,   Chief  Executive  Officer  and
Director   and  Attorney  for  the  persons
indicated by asterisk



/s/ MARTY R. KITTRELL
___________________________________________
Marty  R.  Kittrell,  Chief  Financial  and
Accounting Officer


CLAUDE D. EGLER*
Claude D. Egler, Director

JOHN B. FRASER*
John B. Fraser, Director



___________________________________________
Salim M. Ibrahim, Director


WILLI ROELLI*
Willi Roelli, Director

MICHAEL B. WILSON*
Michael B. Wilson, Director

JOHN K. ZIEGLER*
John K. Ziegler, Director