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 of Cone Mills Corporation
Cone Mills Corporation Employee Equity Plan
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 Cone Mills
Corporation The 401(k) Program of Cone Mills Corporation/Cone Mills Corporation
Employee Equity Plan.
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 above:
The 401(k) Program of Cone Mills Corporation
Cone Mills Corporation Employee Equity Plan
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
OF CONE MILLS CORPORATION
FINANCIAL REPORT
DECEMBER 31, 1999
Contents
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Statements of net assets available for benefits 2-3
Statements of changes in net assets available for benefits 4-5
Notes to financial statements 6-12
McGLADREY & PULLEN, LLP
CERTIFIED PUBLIC ACCOUNTS
INDEPENDENT AUDITOR'S REPORT
To the Advisory Committee
The 401(k) Program
of Cone Mills Corporation
Greensboro, North Carolina
We have audited the accompanying statements of net assets available for benefits
of The 401(k) Program of Cone Mills Corporation (Plan #003) 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 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 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 funds (Note 6) $ 1,522,991 $ 224,416 $ 113,336 $ 216,861 $ 444,857
-------------------------------------------------------------------
Receivables:
Employer contributions 1,432 211 107 204 418
Employee contributions 4,766 703 355 678 1,392
-------------------------------------------------------------------
-------------------------------------------------------------------
6,198 914 462 882 1,810
-------------------------------------------------------------------
Total assets $ 1,529,189 $ 225,330 $ 113,798 $ 217,743 $ 446,667
=============--====================================================
Net assets available for benefits:
Amounts allocated to persons
who have withdrawn from
participation in the
earnings and operations
of the Plan $ 416,598 $ 61,386 $ 31,002 $ 59,320 $ 121,686
Other 1,112,591 163,944 82,796 158,423 324,981
-------------------------------------------------------------------
$ 1,529,189 $ 225,330 $ 113,798 $ 217,743 $ 446,667
===================================================================
---------------------------------------------------------------------------------
Vanguard
Vanguard Vanguard Retirement
US Growth Wellington Savings Cone Mills Participant
Fund Fund Trust Stock Fund Loans Total
- -----------------------------------------------------------------------------------------------------------------------
Assets:
Investments, at fair value,
trust funds (Note 6) $ 24,913,016 $ 9,198,095 $ 9,468,413 $ 9,464,296 $ 679,840 $ 56,246,121
---------------------------------------------------------------------------------
Receivables:
Employer contributions 23,424 8,648 8,902 8,899 -- 52,245
Employee contributions 77,959 28,783 29,629 29,616 -- 173,881
---------------------------------------------------------------------------------
101,383 37,431 38,531 38,515 -- 226,126
---------------------------------------------------------------------------------
Total assets $ 25,014,399 $ 9,235,526 $ 9,506,944 $ 9,502,811 $ 679,840 $ 56,472,247
=================================================================================
Net assets available for benefits:
Amounts allocated to persons
who have withdrawn from
participation in the
earnings and operations
of the Plan $ 6,814,691 $ 2,516,041 $ 2,589,984 $ 2,588,858 $ -- $ 15,199,566
Other 18,199,708 6,719,485 6,916,960 6,913,953 679,840 41,272,681
---------------------------------------------------------------------------------
$ 25,014,399 $ 9,235,526 $ 9,506,944 $ 9,502,811 $ 679,840 $ 56,472,247
=================================================================================
See Notes to Financial Statements.
The 401(k) Program 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) $ 617,077 $ 42,743 $ 46,581 $ 31,344 $ 855,041
-------------------------------------------------------------------
Receivables:
Employer contributions 3,438 484 346 375 754
Employee contributions 11,464 1,615 1,155 1,249 2,515
-------------------------------------------------------------------
14,902 2,099 1,501 1,624 3,269
-------------------------------------------------------------------
Total assets $ 631,979 $ 44,842 $ 48,082 $ 32,968 $ 858,310
===================================================================
Net asssets available for benefits:
Amounts allocated to persons
who have withdrawn from
participation in the
earnings and
operations of the Plan $ 23,929 $ 827 $ -- $ 1,100 $ --
Other 608,050 44,015 48,082 31,868 858,310
-------------------------------------------------------------------
$ 631,979 $ 44,842 $ 48,082 $ 32,968 $ 858,310
===================================================================
---------------------------------------------------------------------------------
Vanguard
Vanguard Vanguard Retirement
US Growth Wellington Savings Cone Mills Participant
Fund Fund Trust Stock Fund Loans Total
- -----------------------------------------------------------------------------------------------------------------------
Assets:
Investments, at fair value,
trust fund (Note 6) $ 24,178,515 $ 11,312,650 $ 8,105,570 $ 12,300,898 $ 395,413 $ 57,885,832
---------------------------------------------------------------------------------
Receivables:
Employer contributions 33,700 13,664 8,347 18,472 -- 79,580
Employee contributions 112,375 45,563 27,832 61,598 -- 265,366
---------------------------------------------------------------------------------
146,075 59,227 36,179 80,070 -- 344,946
---------------------------------------------------------------------------------
Total assets $ 24,324,590 $ 11,371,877 $ 8,141,749 $ 12,380,968 $ 395,413 $ 58,230,778
=================================================================================
Net asssets available for benefits:
Amounts allocated to persons
who have withdrawn from
participation in the
earnings and
operations of the Plan $ 2,376,093 $ 1,745,903 $ 2,018,898 $ 1,432,535 $ -- $ 7,599,285
Other 21,948,497 9,625,974 6,122,851 10,948,433 395,413 50,631,493
---------------------------------------------------------------------------------
$ 24,324,590 $ 11,371,877 $ 8,141,749 $ 12,380,968 $ 395,413 $ 58,230,778
=================================================================================
See Notes to Financial Statements.
The 401(k) Program 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 $ 27,051 $ 545 $ 3,361 $ 2,291 $ (37,466)
Unrealized appreciation (depreciation)
in fair value of investments 153,453 27,260 5,606 15,711 (16,740)
Dividends 22,152 11,114 4,988 18,759 44,002
Interest -- -- -- -- --
-------------------------------------------------------------------
202,656 38,919 13,955 36,761 (10,204)
-------------------------------------------------------------------
Contributions:
Employer 50,605 7,199 6,539 4,922 5,500
Employee 216,539 26,878 35,345 18,845 33,578
Participant loan repayments 5,944 207 2,655 344 721
-------------------------------------------------------------------
273,088 34,284 44,539 24,111 39,799
-------------------------------------------------------------------
Transfers with other funds 601,977 120,418 34,082 160,012 (384,172)
-------------------------------------------------------------------
Total additions (reductions) 1,077,721 193,621 92,576 220,884 (354,577)
-------------------------------------------------------------------
Benefits paid directly to participants 177,756 12,311 16,474 33,766 56,199
Participant loan withdrawals 1,724 707 10,207 1,202 679
Other deductions 1,031 115 179 1,141 188
-------------------------------------------------------------------
Total deductions 180,511 13,133 26,860 36,109 57,066
-------------------------------------------------------------------
Net increase (decrease) 897,210 180,488 65,716 184,775 (411,643)
Net assets available for benefits:
December 31, 1998 631,979 44,842 48,082 32,968 858,310
-------------------------------------------------------------------
December 31, 1999 $ 1,529,189 $ 225,330 $ 113,798 $ 217,743 $ 446,667
===================================================================
---------------------------------------------------------------------------------
Vanguard
Vanguard Vanguard Retirement
US Growth Wellington Savings Cone Mills Participant
Fund Fund Trust Stock Fund Loans Total
---------------------------------------------------------------------------------
Investments income (loss):
Gain(loss) on sale of investments $ 433,428 $ 8,136 $ -- $ (81,672) $ -- $ 355,674
Unrealized appreciation (depreciation)
in fair value of investments 3,228,340 (444,976) -- (2,306,526) -- 662,128
Dividends 1,256,834 865,671 -- 8,889 -- 2,232,409
Interest -- -- 509,447 -- 48,308 557,755
---------------------------------------------------------------------------------
4,918,602 428,831 509,447 (2,379,309) 48,308 3,807,966
---------------------------------------------------------------------------------
Contributions:
Employer 316,050 135,705 80,667 215,732 -- 822,919
Employee 1,109,166 470,445 265,500 644,845 -- 2,821,141
Participant loan repayments 82,665 39,404 15,368 31,225 (178,533) --
---------------------------------------------------------------------------------
1,507,881 645,554 361,535 891,802 (178,533) 3,644,060
---------------------------------------------------------------------------------
Transfers with other funds (1,942,277) (1,543,173) 3,653,884 (700,751) -- --
---------------------------------------------------------------------------------
Total additions (reductions) 4,484,206 (468,788) 4,524,866 (2,188,258) (130,225) 7,452,026
---------------------------------------------------------------------------------
Benefits paid directly to participants 3,549,804 1,572,470 3,125,095 586,122 43,410 9,173,407
Participant loan withdrawals 230,078 88,463 28,684 96,318 (458,062) --
Other deductions 14,515 6,630 5,892 7,459 -- 37,150
---------------------------------------------------------------------------------
Total deductions 3,794,397 1,667,563 3,159,671 689,899 (414,652) 9,210,557
---------------------------------------------------------------------------------
Net increase (decrease) 689,809 (2,136,351) 1,365,195 (2,878,157) 284,427 (1,758,531)
Net assets available for benefits:
December 31, 1998 24,324,590 11,371,877 8,141,749 12,380,968 395,413 58,230,778
---------------------------------------------------------------------------------
December 31, 1999 $ 25,014,399 $ 9,235,526 $ 9,506,944 $ 9,502,811 $ 679,840 $ 56,472,247
=================================================================================
See Notes to Financial Statements.
The 401(k) Program 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 $ (329) $ 38 $ (220) $ (2,550) $ 14
Unrealized appreciation
(depreciation)
in fair value of investments 83,508 2,273 3,251 131 6,609
Dividends 5,729 5,071 1,510 2,297 22,449
Interest -- -- -- -- --
-------------------------------------------------------------------
88,908 7,382 4,541 (122) 29,072
-------------------------------------------------------------------
Contributions:
Employer 13,811 1,842 1,488 1,466 2,781
Employee 45,892 7,047 5,076 5,328 9,276
Participant loan repayments 370 -- 71 -- 72
-------------------------------------------------------------------
60,073 8,889 6,635 6,794 12,129
-------------------------------------------------------------------
Transfers:
To merge net assets from Cone Mills
Corporation Employee Equity
Plan-Hourly (Note 2) -- -- -- -- --
With other funds 487,312 28,593 39,851 26,634 824,356
-------------------------------------------------------------------
487,312 28,593 39,851 26,634 824,356
-------------------------------------------------------------------
Total additions 636,293 44,864 51,027 33,306 865,557
-------------------------------------------------------------------
Benefits paid directly to participants -- -- -- 95 --
Participant loan withdrawals 4,109 -- 2,906 -- 7,199
Other deductions 205 22 39 243 48
-------------------------------------------------------------------
Total deductions 4,314 22 2,945 338 7,247
-------------------------------------------------------------------
Net increase (decrease) 631,979 44,842 48,082 32,968 858,310
-------------------------------------------------------------------
Net assets available for benefits:
June 1, 1998 -- -- -- -- --
-------------------------------------------------------------------
December 31, 1999 $ 631,979 $ 44,842 $ 48,082 $ 32,968 $ 858,310
===================================================================
---------------------------------------------------------------------------------
Vanguard
Vanguard Vanguard Retirement
US Growth Wellington Savings Cone Mills Participant
Fund Fund Trust Stock Fund Loans Total
---------------------------------------------------------------------------------
Investments income (loss):
Gain(loss) on sale of investments $ 82,045 $ (147,247) $ -- $ (242,057) $ -- $ (310,306)
Unrealized appreciation
(depreciation)
in fair value of investments 2,584,588 (786,718) -- (8,528,272) -- (6,634,630)
Dividends 1,516,106 1,226,690 -- -- -- 2,779,852
Interest -- -- 313,743 -- 1,842 315,585
---------------------------------------------------------------------------------
4,182,739 292,725 313,743 (8,770,329) 1,842 (3,849,499)
---------------------------------------------------------------------------------
Contributions:
Employer 229,408 95,363 59,052 146,181 -- 551,392
Employee 884,632 350,723 213,516 447,871 -- 1,969,361
Participant loan repayments 3,402 1,142 397 1,154 (6,608) --
---------------------------------------------------------------------------------
1,117,442 447,228 272,965 595,206 (6,608) 2,520,753
---------------------------------------------------------------------------------
Transfers:
To merge net assets from Cone Mills
Corporation Employee Equity
Plan-Hourly (Note 2) -- -- -- 21,632,540 -- 21,632,540
With other funds (578,654) (886,957) (17,433) 76,298 -- --
---------------------------------------------------------------------------------
(578,654) (886,957) (17,433) 21,708,838 -- 21,632,540
---------------------------------------------------------------------------------
Total additions 4,721,527 (147,004) 569,275 13,533,715 (4,766) 20,303,794
---------------------------------------------------------------------------------
Benefits paid directly to participants 2,172,484 1,731,140 1,832,887 1,105,913 -- 6,842,513
Participant loan withdrawals 205,068 90,454 47,845 42,598 (400,179) --
Other deductions 7,247 3,472 2,895 4,236 -- 18,407
---------------------------------------------------------------------------------
Total deductions 2,384,799 1,825,066 1,883,627 1,152,747 (400,179) 6,860,920
---------------------------------------------------------------------------------
Net increase (decrease) 2,336,728 (1,972,070) (1,314,352) 12,380,968 395,413 13,442,874
---------------------------------------------------------------------------------
Net assets available for benefits:
June 1, 1998 21,987,862 13,343,947 9,456,101 -- -- 44,787,910
---------------------------------------------------------------------------------
December 31, 1999 $ 24,324,590 $11,371,877 $ 8,141,749 $ 12,380,968 $ 395,413 $ 58,230,784
=================================================================================
See Notes to Financial Statements.
THE 401(k) PROGRAM
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 qualified, defined contribution plan which became effective on
January 1, 1947 under the name Supplemental Retirement Plan of Cone Mills
Corporation ("SRP"). In 1992, the Plan was amended effective January 1, 1993, to
include hourly employees as members in the Plan and to cause other changes which
updated and improved the Plan. In 1993, the Plan was amended effective January
1, 1994, to allow members to contribute up to 15% of adjusted total compensation
on a before-tax (Section 401(k)) basis. The Supplemental Retirement Plan-Hourly
became effective as of January 1, 1994, at which time all hourly employees
transferred their account balances to this new plan. On June 1, 1998, the Cone
Mills Corporation Employee Equity Plan ("EEP") was merged into the Plan with all
of the EEP's net assets being transferred into the Plan at that date.
Immediately thereafter, the EEP 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 -
Hourly of Cone Mills Corporation" in a master trust.
Eligibility: Salaried 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
Note 2. Description of the Plan (continued)
Benefits (continued
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.
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.
Note 2. Description of the Plan (continued)
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; 11,253.908 units) $ 1,323,986 $ 1,522,991
*International Growth ($22.49/unit;
9,978.467 units) 195,635 224,416
*LifeStrategy Moderate Growth ($18.18/unit;
6,234.105 units) 104,968 113,336
*Small-Cap Index ($23.60/unit; 9,189.040 units) 201,662 216,861
*Total Bond Market Index ($9.56/unit; 46,533.201
units) 460,791 444,857
*U.S. Growth ($43.53/unit; 572,318.317 units) 19,702,730 24,913,016
*Wellington ($27.96/unit); 328,973.360 units) 10,207,698 9,198,095
*Vanguard Retirement Savings Trust ($1.00/unit;
9,468,413 units) 9,468,413 9,468,413
*Cone Mills Stock Fund ($4.37/unit;2,165,742.679
units) 14,254,224 9,464,296
*Participant Loans 679,840 679,840
---------- ----------
$ 56,599,947 $ 56,246,121
========== ==========
* Designates party-in-interest
1998
Cost Fair Value
Vanguard Funds:
*500 Index ($113.95/unit; 5,415.333 units) $ 533,569 $ 617,077
*International Growth ($18.77/unit;
2,277.224 units) 40,470 42,743
*LifeStrategy Moderate Growth ($16.86/unit;
2,762.806 units) 43,330 46,581
*Small-Cap Index ($21.20/unit; 1,478.476 units) 31,213 31,344
*Total Bond Market Index ($10.27/unit; 83,256.157
units) 848,432 855,041
*U.S. Growth ($37.49/unit; 644,932.384 units) 21,593,927 24,178,515
*Wellington ($29.35/unit); 385,439.530 units) 12,099,368 11,312,650
*Vanguard Retirement Savings Trust ($1.00/unit;
8,105,570 units) 8,105,570 8,105,570
*Cone Mills Stock Fund ($5.50/unit; 2,236,526.926
units) 15,149,432 12,300,898
*Participant Loans 395,413 395,413
---------- ----------
$ 58,840,724 $ 57,885,832
========== ==========
*Designates party-in-interest
Note 6. Investments (continued)
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 $ 1,675,427 $ 1,648,376 $ 27,051
Vanguard International Growth Fund 60,979 60,434 545
Vanguard LifeStrategy Moderate
Growth Fund 265,877 262,516 3,361
Vanguard Small-Cap Index Fund 45,454 43,163 2,291
Vanguard Total Bond Market Index
Fund 881,994 919,460 (37,466)
Vanguard U.S. Growth Fund 10,042,985 9,609,557 433,428
Vanguard Wellington Fund 4,697,293 4,689,157 8,136
Vanguard Retirement Savings Trust 8,557,908 8,557,908 -
Cone Mills Stock Fund 3,694,116 3,775,788 (81,672)
---------- ---------- -------
$ 29,922,033 $ 29,566,359 $ 355,674
========== ========== =======
1998
Proceeds Cost Gain(Loss)
-------- ------ ----------
Vanguard 500 Index Fund $ 12,024 $ 12,353 $ ( 329)
Vanguard International Growth Fund 1,321 1,283 38
Vanguard LifeStrategy Moderate
Growth Fund 3,945 4,165 (220)
Vanguard Small-Cap Index Fund 11,168 13,718 (2,550)
Vanguard Total Bond Market Index
Fund 19,600 19,586 14
Vanguard U.S. Growth Fund 4,721,591 4,639,546 82,045
Vanguard Wellington Fund 3,300,296 3,447,543 (147,247)
Vanguard Retirement Savings Trust 4,331,889 4,331,889 -
Cone Mills Stock Fund 1,656,605 1,898,662 (242,057)
---------- ---------- ---------
$ 14,058,439 $ 14,368,745 $(310,306)
========== ========== =========
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 $ 87,156 $ 153,453 $ 240,609
Vanguard International Growth Fund 9,860 27,260 37,120
Vanguard LifeStrategy Moderate Growth Fund 2,623 5,606 8,229
Vanguard Small-Cap Index Fund 6,343 15,711 22,054
Vanguard Total Bond Market Index Fund (16,299) (16,740) (33,039)
Vanguard U.S. Growth Fund 228,463 3,228,340 3,456,803
Vanguard Wellington Fund (12,297) (444,976) (457,273)
Vanguard Retirement Savings Trust - - -
Cone Mills Stock Fund (140,763) (2,306,526) (2,447,289)
Participant Loans - - -
-----------------------------------------------------------
$ 165,086 $ 662,128 $ 827,214
===========================================================
Increase Unrealized
Unrealized (Decrease) in Appreciation
Appreciation Unrealized (Depreciation)
(Depreciation) Appreciation December 31,
June 1, 1998 (Depreciation) 1998
-----------------------------------------------------------
Vanguard 500 Index Fund $ 3,648 $ 83,508 $ 87,156
Vanguard International Growth Fund 7,587 2,273 9,860
Vanguard LifeStrategy Moderate Growth Fund (628) 3,251 2,623
Vanguard Small-Cap Index Fund 6,212 131 6,343
Vanguard Total Bond Market Index Fund (22,908) 6,609 (16,299)
Vanguard U.S. Growth Fund (2,356,125) 2,584,588 228,463
Vanguard Wellington Fund 774,421 (786,718) (12,297)
Vanguard Retirement Savings Trust - - -
Cone Mills Stock Fund 8,387,509 (8,528,272) (140,763)
Participant Loans - - -
-----------------------------------------------------------
$ 6,799,716 $ (6,634,630) $ 165,086
===========================================================
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 108 60
Vanguard International Growth Fund 30 18
Vanguard Life Strategy Moderate Growth Fund 25 15
Vanguard Small-Cap Index Fund 30 17
Vanguard Total Bond Market Index Fund 29 24
Vanguard U.S. Growth Fund 658 734
Vanguard Wellington Fund 501 597
Vanguard Retirement Savings Trust 609 424
Cone Mills Stock Fund 369 707
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 $ 56,472,247 $ 58,230,778
Adjustment of benefits payable (15,199,566) (7,599,285)
---------------------------------------
Net assets available for benefits as presented
in Form 5500 $ 41,272,681 $ 50,631,493
=======================================
Net decrease in net assets available for benefits
as presented in these financial statements $ (1,758,531)
Adjustment of benefits paid (7,600,281)
-------------------
Net decrease in net assets available for benefits
as presented in Form 5500 $ (9,358,812)
===================
CONE MILLS CORPORATION
EMPLOYEE EQUITY PLAN
FINANCIAL REPORT
JUNE 1, 1998
Contents
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Statement of financial condition 2
Statements 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
Greensboro, North Carolina
We have audited the accompanying statement of financial condition of the Cone
Mills Corporation Employee Equity Plan 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 as of June 1, 1998, and the changes 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 ("SRP") on
June 1, 1998. Immediately thereafter, the Plan was terminated with the SRP being
the survivor.
/s/ McGladrey & Pullen, LLP
McGLADREY & PULLEN, LLP
Greensboro, North Carolina
October 23, 1998
STATEMENT OF FINANCIAL CONDITION
JUNE 1, 1998
1998
Assets:
Money market account, Crestar Bank $ -
Investment in Cone Mills Corporation common stock at
market value (shares 2,222,096)(cost $14,228,069) -
Accounts receivable, Cone Mills Corporation 34,873
Accounts receivable, participants 80,782
Accrued income receivable 832
-------
Total assets 116,487
-------
Liabilities:
Amounts due to Cone Mills Supplemental Retirement Plan 116,487
-------
Total liabilities 116,487
-------
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 $ 3,084 $ 10,285
Cone Mills Corporation contributions 190,289 528,492
Participants contributions 455,142 1,264,013
Gains realized on distributions of Cone
Mills Corporation common stock to plan
participants (market value 1998 $47,095;
1997 $842,820)(cost 1998 $35,684; 1997
$663,657) 11,411 179,163
Gains realized on sales of Cone Mills
Corporation common stock (proceeds
1998 $300,544; 1997 $174,015)
(cost 1998 $228,250; 1997 $137,145) 72,294 36,870
Transfers from Cone Mills Corporation
Employee Equity Plan - Hourly - 29,420
Unrealized appreciation of investments 4,046,432 -
---------- ----------
Total additions 4,778,652 2,048,243
---------- ----------
Reductions:
Benefit payments 398,237 1,444,451
Transfers to Cone Mills Corporation
Supplemental Retirement Plan 466,071 598,148
Transfers to Cone Mills Corporation
Employee Equity Plan - Hourly 46,534 -
Unrealized depreciation of investments - 478,515
Transfer to merge net assets into Cone
Mills Corporation Supplemental
Retirement Plan (Note 6) 21,632,540 -
---------- ----------
Total reductions 22,543,382 2,521,114
---------- ----------
Decrease in plan equity (17,764,730) (472,871)
Plan equity:
Beginning 17,764,730 18,237,601
---------- ----------
Ending $ - $ 17,764,730
========== ==========
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 May 1, 1989,
and was amended and restated on November 16, 1989. In 1990, the Plan was amended
effective January 1, 1989, to redefine "compensation" and "salary" as permitted
under Section 414(s) of the Internal Revenue Code of 1986 and to conform such
definition to company practices. In 1991, the Plan was amended and restated
effective January 1, 1991, to continue compliance under applicable provisions of
the Internal Revenue Code of 1986 and the Employee Retirement Income Security
Act of 1974. In 1992, the Plan was amended effective January 1, 1993, to include
hourly employees as members in the Plan and to cause other changes which updated
and improved the Plan. In 1993, the Plan was amended effective January 1, 1994,
to allow members to contribute up to 15% of compensation on a before-tax
(Section 401(k)) basis. A new plan, the "Employee Equity Plan - Hourly" was
adopted and all hourly employees transferred their account balances to that plan
on January 1, 1994. A general description of the provisions of the Plan follows:
Assets: Assets of the Plan were included with assets of the "Employee Equity
Plan-Hourly" 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.
Note 2. Description of the Plan (continued)
Eligibility: Salaried 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 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 additions and reductions 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
----- ----
$ 7,013,042 $ 2,993,172
========= =========
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 $ - $ 17,764,730
Adjustment of benefits payable - (2,277,300)
----------- ----------
Plan equity as presented in Form 5500 $ - $ 15,487,430
=========== ==========
Net decrease in plan equity as presented in
these financial statements $(17,764,730) $ (472,871)
Adjustment of benefits paid 2,277,300 (678,962)
---------- -----------
Net decrease in plan equity as presented
in Form 5500 $(15,487,430) $ (1,151,833)
========== ==========
Note 6. Plan Merger and Termination
The Plan was merged into the Cone Mills Corporation Supplemental Retirement Plan
("SRP") on June 1, 1998. All of the Plan's net assets were transferred into the
SRP at that date. Immediately thereafter, the Plan was terminated with the SRP
being the survivor.