CONE MILLS CORPORATION
3101 NORTH ELM STREET
GREENSBORO, NC 27408
June 16, 2000
VIA EDGAR
Securities and Exchange Commission
450 5th ST NW
Washington, D.C. 20001
RE: Cone Mills Corporation (the "Registrant") - Form 11K
The 401(k) Program (Hourly) of Cone Mills Corporation/
Cone Mills Corporation Employee Equity Plan - Hourly
Gentlemen:
On behalf of the Registrant and pursuant to Rule 15d of the Securities Exchange
Act of 1934. I hereby file the annual report on Form 11-K of The 401(k) Program
(Hourly) of Cone Mills Corporation/Cone Mills Corporation Employee Equity Plan -
Hourly.
These reports are being transmitted by EDGAR pursuant to General Instruction E
of Form 11-K and Rule 101(b)(3) of Regulation S-T.
If there are any questions or comments regarding the contents of the materials
in this transmission, please contact the undersigned, telephone 336.379.6568.
Sincerely,
CONE MILLS CORPORATION
/s/ Neil W. Koonce
Title: Vice President, General Counsel
and Secretary
Enclosures
c: Schell Bray Aycock Abel & Livingston, LLP (w/enclosures)
McGladrey & Pullen, LLP (w/enclosures)
New York Stock Exchange (w/enclosures)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996]
For the fiscal year ended December 31, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 1-3634
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
The 401(k) Program (Hourly) of Cone Mills Corporation/
Cone Mills Corporation Employee Equity Plan - Hourly
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office.
CONE MILLS CORPORATION
3101 North Elm Street
Greensboro, NC 27408
THE 401(k) PROGRAM (HOURLY)
OF CONE MILLS CORPORATION
FINANCIAL REPORT
DECEMBER 31, 1999
Contents
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Statements of net assets available for benefits
with fund information 2-3
Statements of changes in net assets available for benefits
with fund information 4-5
Notes to financial statements 6-12
McGLADREY AND PULLEN, LLP
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITOR'S REPORT
To the Advisory Committee
The 401(k) Program (Hourly)
of Cone Mills Corporation
Greensboro, North Carolina
We have audited the accompanying statements of net assets available for benefits
of The 401(k) Program (Hourly) of Cone Mills Corporation (Plan #017) as of
December 31, 1999, and 1998, and the related statements of changes in net assets
available for benefits for the year ended December 31, 1999 and for the period
June 1, 1998 through December 31, 1998. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of The 401(k)
Program (Hourly) of Cone Mills Corporation as of December 31, 1999 and 1998, and
the changes in net assets available for benefits for the year ended December 31,
1999 and the period June 1, 1998 through December 31, 1998 in conformity with
generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The Fund Information in the statements of net
assets available for benefits and changes in net assets available for benefits
is presented for purposes of additional analysis rather than to present the net
assets available and changes in net assets available of each fund. The Fund
Information has been subject to the auditing procedures applied in the audit of
the basic financial statements and in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ McGladrey & Pullen, LLP
McGLADREY & PULLEN, LLP
Greensboro, North Carolina
April 27, 2000
The 401(k) Program (Hourly) of Cone Mills Corporation
Statement of Net Assets Available
for Benefits
With Fund Information
December 31, 1999
-----------------------------------------------------------
Vanguard Vanguard Vanguard Vanguard
Vanguard International LifeStrategy Small-Cap Total Bond
500 Index Growth Moderate Index Market Index
Fund Fund Growth Fund Fund Fund
- ------------------------------------------------------------------------------------------
Assets:
Investments, at fair
value, trust fund
Note 6) $334,091 $ 16,374 $ 114,967 $ 11,113 $ 45,486
---------------------------------------------------------------
Receivables:
Employer 1,257 62 433 42 171
contributions
---------------------------------------------------------------
Employee 3,549 174 1,221 118 483
contributions
---------------------------------------------------------------
4,806 236 1,654 160 654
Total assets $338,897 $ 16,610 $ 116,621 $ 11,273 $ 46,140
===============================================================
Net assets available for
benefits:
Amounts allocated to
persons who have
withdrawn from
participation in
the earnings and
operations of the Plan $ 41,420 $ 2,030 $ 14,253 $ 1,378 $ 5,639
Other 297,477 14,580 102,368 9,895 40,501
---------------------------------------------------------------
$338,897 $ 16,610 $ 116,621 $ 11,273 $ 46,140
===============================================================
-------------------------------------------------------------------------
Vanguard Vanguard
US Vanguard Retirement
Growth Wellington Savings Cone Mills Participant
Fund Fund Trust Stock Fund Loans Total
- ----------------------------------------------------------------------------------------------------
Assets:
Investments, at fair
value, trust fund (Note 6) $7,237,480 $1,851,108 $5,457,188 $1,767,006 $1,206,776 $18,041,589
-------------------------------------------------------------------------
Receivables:
Employer contributions 27,230 6,964 20,532 6,648 - 63,339
-------------------------------------------------------------------------
Employee contributions 76,880 19,663 57,969 18,770 - 178,827
-------------------------------------------------------------------------
104,110 26,627 78,501 25,418 - 242,166
Total assets $7,341,590 $1,877,735 $5,535,689 $1,792,424 $1,206,776 $18,283,755
=========================================================================
Net assets available for
benefits:
Amounts allocated to
persons who have
withdrawn from
participation in
the earnings and
operations of the Plan $ 897,293 $ 229,498 $ 676,575 $ 219,071 $ - $ 2,087,157
Other 6,444,297 1,648,237 4,859,114 1,573,353 1,206,776 16,196,598
--------------------------------------------------------------------------
$7,341,590 $1,877,735 $5,535,68 $1,792,424 $1,206,776 $18,283,755
==========================================================================
See Notes to Financial
Statements.
The 401(k) Program (Hourly) of Cone Mills
Corporation
Statement of Net Assets Available
for Benefits
With Fund Information
December 31, 1998
-------------------------------------------------------------
Vanguard Vanguard Vanguard Vanguard
Vanguard International LifeStrategy Small-Cap Total Bond
500 Index Growth Moderate Index Market Index
Fund Fund Growth Fund Fund Fund
- -----------------------------------------------------------------------------------------
Assets:
Investments, at fair
value, trust fund (Note 6) $141,818 $ 2,909 $ 56,415 $ 9,977 $ 12,429
-------------------------------------------------------------
Receivables:
Employer contributions 1,654 190 381 125 262
Employee contributions 4,683 537 1,079 356 742
-------------------------------------------------------------
6,337 727 1,460 481 1,004
-------------------------------------------------------------
Total assets $148,155 $ 3,636 $ 57,875 $10,458 $ 13,433
=============================================================
Net assets available for
benefits:
Amounts allocated to
persons who have
withdrawn from
participation in
the earnings and
operations of the Plan $ 25,614 $ - $ - $ 166 $ -
Other 122,541 3,636 57,875 10,292 13,433
--------------------------------------------------------------
$148,155 $ 3,636 $ 57,875 $10,458 $ 13,433
==============================================================
------------------------------------------------------------------------
Vanguard Vanguard
US Vanguard Retirement
Growth Wellington Savings Cone Mills Participant
Fund Fund Trust Stock Fund Loans Total
- ---------------------------------------------------------------------------------------------------
Assets:
Investments, at fair
value, trust fund (Note 6) $6,459,897 $1,887,631 $5,363,358 $2,270,943 $1,161,718 $17,367,095
------------------------------------------------------------------------
Receivables:
Employer contributions 24,612 8,652 24,786 14,193 - 74,855
Employee contributions 69,707 24,506 70,199 40,199 - 212,008
------------------------------------------------------------------------
94,319 33,158 94,985 54,392 - 286,863
------------------------------------------------------------------------
Total assets $6,554,216 $1,920,789 $5,458,34 $2,325,335 $1,161,718 $17,653,958
========================================================================
Net assets available for
benefits:
Amounts allocated to
persons who have
withdrawn from
participation in
the earnings and
operations of the Plan $ 239,340 $ 114,608 $ 242,836 $ 159,554 $ 5,603 $ 787,721
Other 6,314,876 1,806,181 5,215,507 2,165,781 1,156,115 16,866,237
------------------------------------------------------------------------
$6,554,216 $1,920,789 $5,458,343 $2,325,335 $1,161,718 $17,653,958
========================================================================
See Notes to Financial
Statements.
The 401(k) Program (Hourly) of Cone Mills
Corporation
Statement of Changes in Net Assets Available for Benefits
With Fund Information
Year Ended December 31, 1999
---------------------------------------------------------------
Vanguard Vanguard Vanguard Vanguard
Vanguard International LifeStrategy Small-Cap Total Bond
500 Index Growth Moderate Index Market Index
Fund Fund Growth Fund Fund Fund
---------------------------------------------------------------
Investments income (loss):
Gain(loss) on sale of
investments $ 2,144 $ 26 $ 182 $ (415) $ (120)
Unrealized appreciation
(depreciation)in fair
value of investments 42,143 2,163 7,583 608 (1,895)
Dividends 5,044 815 4,093 985 1,861
Interest - - - - -
---------------------------------------------------------------
49,331 3,004 11,858 1,178 (154)
---------------------------------------------------------------
Contributions:
Employer 20,681 1,896 5,476 873 3,535
Employee 57,125 7,386 17,306 3,353 10,853
Participant loan repayments 5,929 360 3,027 - 487
---------------------------------------------------------------
83,735 9,642 25,809 4,226 14,875
---------------------------------------------------------------
Transfers with other funds 98,754 1,432 33,438 (3,986) 20,941
---------------------------------------------------------------
Total additions 231,820 14,078 71,105 1,418 35,662
---------------------------------------------------------------
Benefits paid directly to
participants 32,041 808 11,891 477 2,510
Participant loan withdrawals 7,257 104 40 - 142
Other deductions 1,780 192 428 126 303
---------------------------------------------------------------
Total deductions 41,078 1,104 12,359 603 2,955
---------------------------------------------------------------
Net increase (decrease) 190,742 12,974 58,746 815 32,707
---------------------------------------------------------------
Net assets available for benefits:
December 31, 1998 148,155 3,636 57,875 10,458 13,433
---------------------------------------------------------------
December 31, 1999 $ 338,897 $ 16,610 $ 116,621 $ 11,273 $ 46,140
===============================================================
-----------------------------------------------------------------------
Vanguard Vanguard
US Vanguard Retirement
Growth Wellington Savings Cone Mills Participant
Fund Fund Trust Stock Fund Loans Total
--------------------------------------------------------------------------
Investments income (loss):
Gain(loss) on sale of
investments $ 98,988 $ 12,428 $ - $ (30,366) $ - $ 82,867
Unrealized appreciation
(depreciation)in fair
value of investments 920,883 (93,537) - (392,147) - 485,801
Dividends 383,038 170,216 - 2,698 - 568,750
Interest - - 320,198 - 103,779 423,977
--------------------------------------------------------------------------
1,402,909 89,107 320,198 (419,815) 103,779 1,561,395
--------------------------------------------------------------------------
Contributions:
Employer 229,381 85,010 255,086 128,425 - 730,363
Employee 689,110 250,565 677,542 345,917 - 2,059,157
Participant loan repayments 158,243 55,305 183,150 65,269 (471,770) -
--------------------------------------------------------------------------
1,076,734 390,880 1,115,778 539,611 (471,770) 2,789,520
--------------------------------------------------------------------------
Transfers with other funds (48,378) (52,280) 67,662 (117,583) - -
--------------------------------------------------------------------------
Total additions 2,431,265 427,707 1,503,638 2,213 (367,991) 4,350,915
--------------------------------------------------------------------------
Benefits paid directly to
participants 1,299,209 394,863 1,156,833 441,070 285,639 3,625,341
Participant loan withdrawals 321,286 65,484 225,379 78,996 (698,688) -
Other deductions 23,396 10,414 44,080 15,058 - 95,777
--------------------------------------------------------------------------
Total deductions 1,643,891 470,761 1,426,292 535,124 (413,049) 3,721,118
--------------------------------------------------------------------------
Net increase (decrease) 787,374 (43,054) 77,346 (532,911) 45,058 629,797
--------------------------------------------------------------------------
Net assets available for benefits:
December 31, 1998 6,554,216 1,920,789 5,458,343 2,325,335 1,161,718 17,653,958
--------------------------------------------------------------------------
December 31, 1999 $ 7,341,590 $1,877,735 $5,535,689 $1,792,424 $1,206,776 $18,283,755
==========================================================================
See Notes to Financial
Statements.
The 401(k) Program (Hourly) of Cone Mills
Corporation
Statement of Changes in Net Assets Available for Benefits
With Fund Information
Period June 1, 1998 through December 31, 1998
---------------------------------------------------------------
Vanguard Vanguard Vanguard Vanguard
Vanguard International LifeStrategy Small-Cap Total Bond
500 Index Growth Moderate Index Market Index
Fund Fund Growth Fund Fund Fund
----------------------------------------------------------------
Investments income (loss):
Gain(loss) on sale of
investments $ 1,242 $ 2 $ 570 $ - $ 8
Unrealized appreciation
(depreciation)in fair
value of investments 15,811 209 3,011 (286) (76)
Dividends 1,302 58 1,829 731 167
Interest - -
----------------------------------------------------------------
18,355 269 5,410 445 99
----------------------------------------------------------------
Contributions:
Employer 7,283 551 1,476 319 829
Employee 19,304 2,281 4,382 1,094 2,498
Participant loan repayments 120 - 140 - 7
----------------------------------------------------------------
26,707 2,832 5,998 1,413 3,334
----------------------------------------------------------------
Transfers:
To merge net assets from
Cone Mills Corporation
Employee Equity
Plan-Hourly (Note 2) - - - - -
With other funds 116,600 558 51,827 8,655 13,153
----------------------------------------------------------------
116,600 558 51,827 8,655 13,153
----------------------------------------------------------------
Total additions 161,662 3,659 63,235 10,513 16,586
----------------------------------------------------------------
Benefits paid directly to
participants 215 - 27 - 193
Participant loan withdrawals 12,934 - 5,246 - 2,932
Other deductions 358 23 87 55 28
----------------------------------------------------------------
Total deductions 13,507 23 5,360 55 3,153
----------------------------------------------------------------
Net increase (decrease) 148,155 3,636 57,875 10,458 13,433
Net assets available for
benefits:
June 1, 1998 - - - - -
----------------------------------------------------------------
December 31, 1999 $ 148,155 $ 3,636 $ 57,875 $ 10,458 $ 13,433
================================================================
------------------------------------------------------------------------
Vanguard Vanguard
US Vanguard Retirement
Growth Wellington Savings Cone Mills Participant
Fund Fund Trust Stock Funds Loans Total
------------------------------------------------------------------------
Investments income (loss):
Gain(loss) on sale of
investments $ 5,799 $ (15,401) $ - $ (416,366) $ - $ (424,148)
Unrealized appreciation
(depreciation)in fair
value of investments 691,257 (124,914) - (1,134,431) - (549,419)
Dividends 426,075 211,953 - - - 642,115
Interest 189,122 - 2,255 191,377
-----------------------------------------------------------------------
1,123,131 71,638 189,122 (1,550,797) 2,255 (140,075)
------------------------------------------------------------------------
Contributions:
Employer 192,922 68,876 222,767 112,484 - 607,507
Employee 630,080 215,057 652,803 309,091 - 1,836,590
Participant loan repayments 5,984 2,369 7,270 2,413 (18,303) -
------------------------------------------------------------------------
828,986 286,302 882,840 423,988 (18,303) 2,444,097
------------------------------------------------------------------------
Transfers:
To merge net assets from
Cone Mills Corporation
Employee Equity
Plan-Hourly (Note 2) - - - 3,894,896 - 3,894,896
With other funds (264,105) 90,232 40,762 (57,682) - -
------------------------------------------------------------------------
(264,105) 90,232 40,762 3,837,214 - 3,894,896
------------------------------------------------------------------------
Total additions 1,688,012 448,172 1,112,724 2,710,405 (16,048) 6,198,918
------------------------------------------------------------------------
Benefits paid directly to
participants 453,402 170,398 609,339 255,257 5,986 1,494,817
Participant loan withdrawals 396,534 151,807 493,798 120,501 (1,183,752) -
Other deductions 11,707 4,922 20,322 9,310 - 46,812
------------------------------------------------------------------------
Total deductions 861,643 327,127 1,123,459 385,068 (1,177,766) 1,541,629
------------------------------------------------------------------------
Net increase (decrease) 826,369 121,045 (10,735) 2,325,337 1,161,718 4,657,289
Net assets available for benefits:
June 1, 1998 5,727,847 1,799,744 6,469,078 - - 12,996,669
------------------------------------------------------------------------
December 31, 1999 $6,554,216 $1,920,789 $5,458,343 $2,325,335 $1,161,718 $17,653,958
========================================================================
See Notes to Financial
Statements.
<PAGE<
THE 401(k) PROGRAM (HOURLY)
OF CONE MILLS CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies
Accounting principles and practices: The Plan's investments are held in a trust
fund administered by The Vanguard Group, Inc. ("Vanguard"). The accounting
records with respect to financial transactions are maintained by Vanguard.
Vanguard invests the participant's accounts, as elected by the participant,
among nine investment alternatives. Participants may change their investment
options on a daily basis. The financial statements of the Plan are presented
under the accrual method of accounting.
Note 2. Description of the Plan
The Plan is a defined contribution plan which became effective on January 1,
1994 under the name Supplemental Retirement Plan - Hourly of Cone Mills
Corporation. On January 1, 1994, all hourly employees in the "Supplemental
Retirement Plan of Cone Mills Corporation" transferred their account balances to
this Plan. On June 1, 1998, the Cone Mills Corporation Employee Equity Plan -
Hourly ("EEP - Hourly") was merged into the Plan with all of the EEP - Hourly's
net assets being transferred into the Plan at that date. Immediately thereafter,
the EEP - Hourly was terminated with the Plan being the survivor. On that same
date, the Plan assumed its current name in conjunction with the change to
Vanguard as Plan trustee and administrator.
Assets: Assets of the Plan are included with assets of "The 401(k) Program of
Cone Mills Corporation" in a master trust.
Eligibility: Hourly employees who have attained age 21 and have completed one
year of service are eligible for the Plan.
Member contributions: Members may contribute from 2% to 15% of compensation on a
before-tax (Section 401(k)) basis.
Company contributions: Matching contributions are required in an amount equal to
40% of each member's contributions not in excess of 6% of his compensation.
Additional matching contributions may be made at the discretion of Cone Mills
Corporation.
Benefits: The accumulated value of a member's individual account is paid after
retirement or other separation from service. Benefits are ordinarily paid in a
lump sum distribution in the year following the year of retirement or other
termination of employment; however, installment distributions may be made at the
election of the participant.
Member accounts: Individual accounts are maintained for each participant which
record the accumulated value of Company contributions allocated to such
participant, the participant's contributions and investment earnings thereon.
Note 2. Description of the Plan (continued)
Participants receive statements showing the value of their accounts quarterly.
Valuation of assets: The Plan's investments are stated at fair value. Shares of
registered investment companies are valued at quoted market prices which
represent the net asset value of shares held by the Plan at year-end. Units of
the Retirement Savings Trust are valued at net asset value at year-end. The
Company stock fund is valued at its year-end unit closing price (comprised of
year-end market price plus uninvested cash portion.) Participant loans are
valued at cost which approximates fair value.
Vesting: All members' accounts are 100% vested.
Investment alternatives: Participants must direct their salary deferral
contributions to selected investments as made available and determined by the
Plan Administrator. Participants may change their investment options any time
throughout the year via direct phone or internet access to Vanguard. Each member
has the following nine investment alternatives:
Vanguard 500 Index Fund - Primarily invested in all of the 500 stocks that
make up the unmanaged Standard & Poor's 500 Composite Stock Price Index.
Vanguard International Growth Fund - Primarily invested in stocks of
high-quality, seasoned companies based outside the United States.
Vanguard LifeStrategy Moderate Growth Fund - Primarily invested in a domestic
stock fund, an international stock fund, a bond fund, and an asset allocation
fund.
Vanguard Small-Cap Index Fund - Primarily invested in a sample of small stocks
in the Russell 2000 Index, an unmanaged index of smaller companies.
Vanguard Total Bond Market Index Fund - Primarily invested in a sample of
bonds in the unmanaged Lehman Brothers Aggregate Bond Index.
Vanguard U.S. Growth Fund - Primarily invested in common stocks of various
public companies. Vanguard Wellington Fund - Primarily invested in common and
preferred stocks and corporate and government bonds. Vanguard Retirement
Savings Trust - Primarily invested in fixed income securities such as
investment contracts issued by insurance
companies and commercial banks, interest-bearing accounts, certificates of
deposit and money market investments. Cone Mills Stock Fund - Primarily
invested in the common stock of Cone Mills Corporation.
Estimates: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and the
accompanying notes. Actual results could differ from those estimates.
Note 3. Plan Termination
If the Plan is terminated, each member would be entitled to the total amount in
his account, payable under the terms of the Plan.
Note 4. Withdrawals and Loans From the Plan
Under the provisions of the Plan relating to financial hardship, a participant
may receive an in-service withdrawal of funds from his plan account. Loans from
the Plan are also permitted for up to 50% (maximum of $25,000) of the member's
account balance.
Note 5. Income Tax Status
The Plan is intended to meet the qualification requirements of Section 401(k)
and related provisions of the Internal Revenue Code. As long as the Plan meets
these requirements, the Plan will not be subject to income taxes and members
will not recognize taxable income for federal income tax purposes upon receipt
to their individual accounts of contributions, dividends, interest or investment
gains. Taxation of the amounts credited to a member's individual account is
deferred until the member receives a distribution. The Plan has received a
determination letter from the Internal Revenue Service affirming that the Plan
is a qualified trust exempt from income taxes.
Note 6. Investments
The following tables present the cost and fair values of the Plan's investments
at December 31, 1999 and 1998, respectively:
1999
Cost Fair Value
Vanguard Funds:
*500 Index ($135.33/unit; 2,468.713 units) $ 278,672 $ 334,091
*International Growth ($22.49/unit; 728.045 units) 14,015 16,374
*LifeStrategy Moderate Growth ($18.18/unit;
6,323.806 units) 104,832 114,967
*Small-Cap Index ($23.60/unit; 470.900 units) 10,530 11,113
*Total Bond Market Index ($9.56/unit; 4,757.926
units) 47,455 45,486
*U.S. Growth ($43.53/unit; 166,264.193 units) 5,798,474 7,237,480
*Wellington ($27.96/unit); 66,205.589 units) 2,039,166 1,851,108
*Vanguard Retirement Savings Trust ($1.00/unit;
5,457,188 units) 5,457,188 5,457,188
*Cone Mills Stock Fund ($4.37/unit; 404,349.099
units) 3,256,558 1,767,006
*Participant Loans 1,206,776 1,206,776
$ 18,213,666 $ 18,041,589
* Designates party-in-interest
1998
Cost Fair Value
Vanguard Funds:
*500 Index ($113.95/unit; 1,244.566 units) $ 126,007 $ 141,818
*International Growth ($18.77/unit; 155.008 units) 2,700 2,909
*LifeStrategy Moderate Growth ($16.86/unit;
3,346.086 units) 53,404 56,415
*Small-Cap Index ($21.20/unit; 470.593 units) 10,263 9,977
*Total Bond Market Index ($10.27/unit; 1,210.207
units) 12,505 12,429
*U.S. Growth ($37.49/unit; 172,309.873 units) 5,768,640 6,459,897
*Wellington ($29.35/unit); 64,314.510 units) 2,012,545 1,887,631
*Vanguard Retirement Savings Trust ($1.00/unit;
5,363,358 units) 5,363,358 5,363,358
*Cone Mills Stock Fund ($5.50/unit; 412,898.778
units) 3,793,750 2,270,943
*Participant Loans 1,161,718 1,161,718
$ 18,304,890 $ 17,367,095
*Designates party-in-interest
The following tables present the realized gains (losses) on investments for the
years ended December 31, 1999 and 1998, respectively, using the average cost
method for determining the cost of the investments sold:
1999
Proceeds Cost Gain(Loss)
Vanguard 500 Index Fund $ 48,597 $ 46,453 $ 2,144
Vanguard International Growth Fund 1,104 1,078 26
Vanguard LifeStrategy Moderate
Growth Fund 12,460 12,278 182
Vanguard Small-Cap Index Fund 7,215 7,630 (415)
Vanguard Total Bond Market Index
Fund 3,278 3,398 (120)
Vanguard U.S. Growth Fund 1,909,697 1,810,709 98,988
Vanguard Wellington Fund 590,204 577,776 12,428
Vanguard Retirement Savings Trust 1,589,511 1,589,511 -
Cone Mills Stock Fund 742,920 773,286 (30,366)
$ 4,904,986 $ 4,822,119 $ 82,867
1998
Proceeds Cost Gain(Loss)
Vanguard 500 Index Fund $ 23,656 $ 22,414 $ 1,242
Vanguard International Growth Fund 23 21 2
Vanguard LifeStrategy Moderate
Growth Fund 15,234 14,664 570
Vanguard Small-Cap Index Fund 56 56 -
Vanguard Total Bond Market Index
Fund 3,153 3,145 8
Vanguard U.S. Growth Fund 1,215,559 1,209,760 5,799
Vanguard Wellington Fund 395,197 410,598 (15,401)
Vanguard Retirement Savings Trust 1,250,754 1,250,754 -
Cone Mills Stock Fund 546,740 963,108 (416,368)
$ 3,450,372 $ 3,874,520 $ (424,148)
Note 6. Investments (continued)
The following tables present the unrealized appreciation (depreciation) on
investments as of June 1, 1998, December 31, 1998 and December 31, 1999, and the
increases (decreases) in unrealized appreciation (depreciation) for the periods
therein:
Unrealized Increase Unrealized
Appreciation (Decrease) in Appreciation
(Depreciation) Unrealized (Depreciation)
December 31, Appreciation December 31,
1998 (Depreciation) 1999
Vanguard 500 Index Fund $ 10,638 $ 42,143 $ 52,781
Vanguard International Growth Fund 545 2,163 2,708
Vanguard LifeStrategy Moderate Growth
Fund 764 7,583 8,347
Vanguard Small-Cap Index Fund 522 608 1,130
Vanguard Total Bond Market Index Fund (1,483) (1,895) (3,378)
Vanguard U.S. Growth Fund 83,353 920,883 1,004,236
Vanguard Wellington Fund 1,511 (93,537) (92,026)
Vanguard Retirement Savings Trust - - -
Cone Mills Stock Fund (64,767) (392,147) (456,914)
Participant Loans - - -
$ 31,083 $ 485,801 $ 516,884
Increase Unrealized
Unrealized (Decrease) in Appreciation
Appreciation Unrealized (Depreciation)
(Depreciation) Appreciation December 31,
June 1, 1998 (Depreciation) 1998
Vanguard 500 Index Fund $ (5,173) $ 15,811 $ 10,638
Vanguard International Growth Fund 336 209 545
Vanguard LifeStrategy Moderate Growth
Fund (2,247) 3,011 764
Vanguard Small-Cap Index Fund 808 (286) 522
Vanguard Total Bond Market Index Fund (1,407) (76) (1,483)
Vanguard U.S. Growth Fund (607,904) 691,257 83,353
Vanguard Wellington Fund 126,425 (124,914) 1,511
Vanguard Retirement Savings Trust - - -
Cone Mills Stock Fund 1,069,664 (1,134,431) (64,767)
Participant Loans - - -
$ 580,502 $ (549,419) $ 31,083
Note 6. Investments (continued)
The following table details the number of participants in each investment
program as of December 31, 1999 and 1998, respectively:
1999 1998
Vanguard 500 Index Fund 104 57
Vanguard International Growth Fund 23 6
Vanguard Life Strategy Moderate Growth Fund 29 16
Vanguard Small-Cap Index Fund 12 3
Vanguard Total Bond Market Index Fund 26 14
Vanguard U.S. Growth Fund 930 1,096
Vanguard Wellington Fund 623 768
Vanguard Retirement Savings Trust 1,445 1,705
Cone Mills Stock Fund 851 1,127
Note 7. Reconciliation of Differences Between These Financial Statements
and the Financial Information Required on Form 5500
December 31,
1999 1998
Net assets available for benefits as presented
in these financial statements $ 18,283,755 $ 17,653,958
Adjustment of benefits payable (2,087,157) (787,721)
Net assets available for benefits as presented
in Form 5500 $ 16,196,598 $ 16,866,237
Net increase in net assets available for benefits
as presented in these financial statements $ 629,797
Adjustment of benefits paid (1,299,436)
Net decrease in net assets available for benefits
as presented in Form 5500 $ (669,639)
CONE MILLS CORPORATION
EMPLOYEE EQUITY PLAN - HOURLY
FINANCIAL REPORT
JUNE 1, 1998
Contents
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Statement of financial condition 2
Statement of income and changes in plan equity 3
Notes to financial statements 4-6
McGLADREY & PULLEN, LLP
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITOR'S REPORT
To the Advisory Committee
Cone Mills Corporation
Employee Equity Plan-Hourly
Greensboro, North Carolina
We have audited the accompanying statement of financial condition of the Cone
Mills Corporation Employee Equity Plan - Hourly as of June 1, 1998, and the
related statements of income and changes in plan equity for the period January
1, 1998 through June 1, 1998 and the year ended December 31, 1997. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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, the financial statements referred to above present fairly, in
all material respects, the financial condition of the Cone Mills Corporation
Employee Equity Plan - Hourly as of June 1, 1998, and the changes in plan equity
for the period January 1, 1998 through June 1, 1998 and the year ended December
31, 1997, in conformity with generally accepted accounting principles.
As discussed in Note 6 to the financial statements, the Plan's net assets were
merged into the Cone Mills Corporation Supplemental Retirement Plan -Hourly
("SRP-Hourly") on June 1, 1998. Immediately thereafter, the Plan was terminated
with the SRP-Hourly being the survivor.
/s/ McGladrey & Pullen, LLP
McGLADREY & PULLEN, LLP
Greensboro, North Carolina
October 23, 1998
STATEMENTS OF FINANCIAL CONDITION
JUNE 1, 1998
1998
Assets:
Money market account, Crestar Bank $ -
Investment in Cone Mills Corporation common stock at
market value (shares 365,675)(cost $2,341,418) -
Accounts receivable, Cone Mills Corporation 21,115
Accounts receivable, participants 46,456
Accrued income receivable 143
Total assets 67,714
Liabilities:
Amounts due to Cone Mills Supplemental Retirement
Plan -Hourly 67,714
Total liabilities 67,714
Equity:
Amounts allocated to persons who have withdrawn from
participation in the earnings and operations of the
Plan -
Other -
Net assets available for benefits $ -
See Notes to Financial Statements.
STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY
PERIOD JANUARY 1, 1998 THROUGH JUNE 1, 1998 AND YEAR ENDED DECEMBER 31, 1997
1998 1997
Additions:
Interest income $ 1,647 $ 5,577
Cone Mills Corporation contributions 116,929 315,579
Participants contributions 255,779 689,177
Gains realized on distributions of Cone
Mills Corporation common stock to plan
participants (market value $12,012;
(cost $9,615) - 2,397
Gains realized on sales of Cone Mills
Corporation common stock (proceeds
1998 $49,458; 1997 $26,877)(cost
1998 $37,561; 1997 $21,182) 11,897 5,695
Transfers from Cone Mills Corporation
Employee Equity Plan 46,534 -
Unrealized appreciation of investments 690,854 -
Total additions 1,123,640 1,018,425
Reductions:
Benefit payments 103,132 418,929
Transfers to Cone Mills Corporation
Supplemental Retirement Plan-Hourly 139,487 305,041
Transfers to Cone Mills Corporation
Employee Equity Plan - 29,420
Unrealized depreciation of investments - 74,859
Transfer to merge net assets into Cone
Mills Corporation Supplemental Retirement
Plan - Hourly (Note 6) 3,894,896 -
Total reductions 4,137,515 828,249
Increase (decrease) in plan equity (3,013,875) 190,176
Plan equity:
Beginning 3,013,875 2,823,699
Ending $ - $3,013,875
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
Note 1. Accounting Principles and Practices
The assets of the Plan were valued at market. Market for Cone Mills Corporation
common stock was based upon closing quotations on the New York Stock Exchange
Composite Tape. The accrual method of accounting was used. Cost for dispositions
of stock was determined by the average cost method.
Note 2. Description of the Plan
The Plan was a defined contribution plan which became effective on January 1,
1994. On January 1, 1994, all hourly employees in the "Employee Equity Plan"
transferred their account balances to this Plan. A general description of the
provisions of the Plan follows:
Assets: Assets of the Plan were included with assets of the "Employee Equity
Plan" in a master trust ("Plans"). Assets were invested primarily in Cone Mills
Corporation common stock. A portion of the assets were held in an Other
Investments Fund which holds short-term cash or money market investments. The
portion held in the Other Investments Fund was used for cash distributions to
participants and to enable the Plans to purchase additional Cone Mills
Corporation common stock. Members with account balances less than $5,000 were
allowed to make a one-time transfer of their account balances to the Cone Mills
Corporation Supplemental Retirement Plans. Also, members who had attained 60
years of age as of the last day of the prior plan year, were allowed to transfer
in two annual installments their account balances in these Plans to the Cone
Mills Corporation Supplemental Retirement Plans. Other members were allowed to
transfer their account balances to the Cone Mills Corporation Supplemental
Retirement Plans over a four-year period. Otherwise, members of the Plans were
not entitled to select the manner in which their individual accounts were
invested.
Market risk: The Plan invested primarily in Cone Mills Corporation common stock
("Cone stock"). Cone stock is traded on the New York Stock Exchange, and
therefore its value is subject to the effects of fluctuations in overall market
performance. The Plan was potentially subject to heightened levels of market
risk attributable to its investment concentration.
Eligibility: Hourly employees who had attained age 21 were eligible after
completing one year of service.
Member contributions: Members were allowed to contribute from 2% to 15% of
compensation on a before-tax (Section 401(k)) basis.
Company contributions: Matching contributions were required each period in an
amount equal to 50% of each member's contribution not in excess of 6% of
Note 2. Description of the Plan (continued)
his compensation. Additional matching contributions could have been made at
the discretion of Cone Mills Corporation.
Benefits: The accumulated value of a member's individual account was paid after
retirement or other separation from service. Distributions from the Plan must
have been paid in cash, except that the receiving member was allowed to receive
his distribution in the form of qualifying employer securities unless such a
distribution was restricted according to the Company's bylaws and articles of
incorporation. The valuation of Cone Mills Corporation common stock used for
cash distributions was the closing price of such stock as reported on the
sixtieth day following the applicable valuation date.
Member accounts: Individual accounts were maintained for each plan participant
which recorded the accumulated value of Company contributions allocated to such
participant, the participant's contributions and investment earnings thereon.
Vesting: All members' accounts were 100% vested.
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
reporting period. Actual results could differ from those estimates.
Note 3. Unrealized Appreciation of Investments
The unrealized appreciation of investments as of June 1, 1998, (immediately
prior to transfer) and December 31, 1997, is as follows:
1998 1997
$ 1,209,982 $ 492,567
Note 4. Federal Income Taxes
The Plan was intended to meet the qualification requirements of Sections 401(a)
and 401(k) and related provisions of the Internal Revenue Code. As long as the
Plan met these requirements, the Plan was not subject to income taxes and
members would not recognize taxable income for federal income tax purposes upon
receipt to their individual accounts of contributions, dividends, interest or
investment gains. Taxation of the amounts credited to a member's individual
account was deferred until the member received a distribution. A favorable
determination letter had been obtained as of June 1, 1998.
Note 5. Reconciliation of Differences Between These Financial Statements
and the Financial Information Required on Form 5500
June 1, December 31,
1998 1997
Plan equity as presented in these financial
statements $ - $ 3,013,875
Adjustment of benefits payable - (230,056)
Plan equity as presented in Form 5500 $ - $ 2,783,819
Net increase (decrease) in plan equity as
presented in these financial statements $(3,013,875) $ 190,176
Adjustment of benefits paid 230,056 (45,043)
Net increase (decrease) in plan equity as
presented in Form 5500 $(2,783,819) $ 145,133
Note 6. Plan Merger and Termination
The Plan was merged into the Cone Mills Corporation Supplemental Retirement
Plan-Hourly ("SRP-Hourly") on June 1, 1998. All of the Plan's net assets were
transferred into the SRP-Hourly at that date. Immediately thereafter, the Plan
was terminated with the SRP-Hourly being the survivor.