Page 1 of 87
Index to Exhibits-Pages 23-30
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 1997
OR
[ ] 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 1-3634
CONE MILLS CORPORATION
(Exact name of registrant as specified in its charter)
North Carolina 56-0367025
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3101 North Elm Street, Greensboro, North Carolina 27408
(Address of principal executive offices) (Zip Code)
(910) 379-6220
(Registrant's telephone number, including area code)
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
Number of shares of common stock outstanding as of October 31,
1997: 26,112,133 shares.
Page 1
FORM 10-Q
CONE MILLS CORPORATION
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Operations
Thirteen and thirty-nine weeks ended
September 28, 1997 and September 29, 1996
(Unaudited). . . . . . . . . . . . . . . . . . .3
Consolidated Condensed Balance Sheets
September 28, 1997 and September 29, 1996
(Unaudited) and December 29, 1996. . . . . . . .4 & 5
Consolidated Condensed Statements of
Stockholders' Equity
Thirty-nine weeks ended September 28, 1997
and September 29, 1996 (Unaudited) . . . . . . .6
Consolidated Condensed Statements of
Cash Flows
Thirty-nine weeks ended September 28, 1997
and September 29, 1996 (Unaudited) . . . . . . .7
Notes to Consolidated Condensed Financial
Statements (Unaudited) . . . . . . . . . . . . . .8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. .13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . .21
Item 6. Exhibits and Reports on Form 8-K . . . . . . . .22
Page 2
FORM 10-Q
PART I
Item 1.
CONE MILLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
Thirteen Thirteen Thirty-Nine Thirty-Nine
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
Sept. 28, 1997 Sept. 29, 1996 Sept. 28, 1997 Sept. 29, 1996
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net Sales $ 185,501 $ 180,849 $ 546,007 $ 588,250
Operating Costs and Expenses:
Cost of sales 160,151 152,163 464,496 482,209
Selling and administrative 19,563 20,694 58,645 64,201
Depreciation 6,658 6,994 19,962 21,139
Restructuring 1,314 198 3,123 (4,486)
187,686 180,049 546,226 563,063
Income (Loss) from Operations (2,185) 800 (219) 25,187
Other Income (Expense):
Interest income 834 207 1,653 380
Interest expense (3,365) (3,682) (10,772) (11,634)
(2,531) (3,475) (9,119) (11,254)
Income (Loss) before Income Taxes (Benefit) and Equity
in Earnings (Losses) of Unconsolidated Affiliate (4,716) (2,675) (9,338) 13,933
Income Taxes (Benefit) (1,797) (979) (3,469) 4,540
Income (Loss) before Equity in Earnings (Losses)
of Unconsolidated Affiliate (2,919) (1,696) (5,869) 9,393
Equity in Earnings (Losses) of Unconsolidated Affiliate 1,553 (547) 1,437 (749)
Net Income (Loss) $ (1,366) $ (2,243) $ (4,432) $ 8,644
Income (Loss) Available to Common Shareholders:
Net Income (Loss) $ (2,121) $ (2,963) $ (6,662) $ 6,484
Earnings (Loss) Per Share - Fully Diluted:
Net Income (Loss) $ (.08) $ (.11) $ (.25) $ .24
Weighted Average Common Shares and
Common Share Equivalents Outstanding -
Fully Diluted 26,109 27,416 26,150 27,454
See Notes to Consolidated Condensed Financial Statements.
Page 3
FORM 10-Q
Item 1.(continued)
CONE MILLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(amounts in thousands, except share and par value data)
September 28, September 29, December 29,
ASSETS 1997 1996 1996
(Unaudited) (Unaudited) (Note)
Current Assets:
Cash $ 2,280 $ 2,742 $ 1,018
Accounts receivable - trade, less provision for
doubtful accounts $1,500; $3,000; $3,000 20,910 63,413 49,073
Subordinated note receivable 35,909 - -
Inventories:
Greige and finished goods 85,121 92,742 94,635
Work in process 10,941 11,451 10,793
Raw materials 12,639 9,434 7,231
Supplies and other 12,921 31,851 26,874
121,622 145,478 139,533
Other current assets 11,733 13,823 14,794
Total Current Assets 192,454 225,456 204,418
Investments in Unconsolidated Affiliates 35,581 35,853 34,144
Other Assets 39,110 41,178 40,746
Property, Plant and Equipment:
Land 11,799 18,208 17,880
Buildings 82,679 82,399 83,048
Machinery and equipment 318,442 313,409 319,271
Other 34,409 31,553 34,143
447,329 445,569 454,342
Less accumulated depreciation 207,296 200,817 203,664
Property, Plant and Equipment-Net 240,033 244,752 250,678
$ 507,178 $ 547,239 $ 529,986
Note: The balance sheet at December 29, 1996 has been
derived from the audited financial statements at that date.
See Notes to Consolidated Condensed Financial Statements.
Page 4
FORM 10-Q
Item 1. (continued)
CONE MILLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(amounts in thousands, except share and par value data)
September 28, September 29, December 29,
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996 1996
(Unaudited) (Unaudited) (Note)
Current Liabilities:
Notes payable $ - $ 8,703 $ 5,267
Current maturities of long-term debt 10,714 11,114 10,754
Accounts payable - trade 37,318 26,981 27,113
Sundry accounts payable and accrued expenses 44,439 44,013 52,770
Deferred income taxes 24,695 25,510 23,667
Total Current Liabilities 117,166 116,321 119,571
Long-Term Debt 139,545 150,742 149,968
Deferred Items:
Deferred income taxes 38,211 41,043 40,066
Other deferred items 10,780 10,187 10,130
48,991 51,230 50,196
Stockholders' Equity:
Class A Preferred Stock - $100 par value; authorized
1,500,000 shares; issued and outstanding 383,948
shares - Employee Stock Ownership Plan 38,395 38,395 38,395
Class B Preferred Stock - no par value; authorized
5,000,000 shares - - -
Common Stock - $.10 par value; authorized 42,700,000
shares; issued and outstanding 26,112,133 shares;
1996, 27,336,333 shares and 26,301,233 shares 2,611 2,734 2,630
Capital in excess of par 61,548 70,687 62,995
Retained earnings 107,423 125,592 114,706
Currency translation adjustment (8,501) (8,462) (8,475)
Total Stockholders' Equity 201,476 228,946 210,251
$ 507,178 $ 547,239 $ 529,986
Note: The balance sheet at December 29, 1996 has been derived
from the audited financial statements at that date.
See Notes to Consolidated Condensed Financial Statements.
Page 5
FORM 10-Q
Item 1. (continued)
CONE MILLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
THIRTY-NINE WEEKS ENDED SEPTEMBER 28, 1997 AND SEPTEMBER 29, 1996
(amounts in thousands, except share data)
(Unaudited)
Class A Preferred
Stock Common Stock
Shares Amount Shares Amount
Balance, December 29, 1996 383,948 $ 38,395 26,301,233 $ 2,630
Net loss - - - -
Currency translation adjustment - - - -
Class A Preferred Stock -
Employee Stock Ownership Plan:
Cash dividends paid - - - -
Common Stock:
Options exercised - - 12,600 1
Purchase of common shares - - (201,700) (20)
Balance, September 28, 1997 383,948 $ 38,395 26,112,133 $ 2,611
Class A Preferred
Stock Common Stock
Shares Amount Shares Amount
Balance, December 31, 1995 383,948 $ 38,395 27,380,409 $ 2,738
Net income - - - -
Currency translation adjustment -
Sale of stock of affiliate - - - -
Class A Preferred Stock -
Employee Stock Ownership Plan:
Cash dividends paid - - - -
Common Stock:
Options exercised - - 61,800 6
Purchase of common shares - - (105,876) (10)
Balance, September 29, 1996 383,948 $ 38,395 27,336,333 $ 2,734
See Notes to Consolidated Condensed Financial Statements.
Page 6
FORM 10-Q
Item 1. (continued)
CONE MILLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
THIRTY-NINE WEEKS ENDED SEPTEMBER 28, 1997 AND SEPTEMBER 29, 1996
(amounts in thousands, except share data)
(Unaudited)
Capital in Currency
Excess Retained Translation
of Par Earnings Adjustment
Balance, December 29, 1996 $ 62,995 $ 114,706 $ (8,475)
Net loss - (4,432) -
Currency translation adjustment - - (26)
Class A Preferred Stock -
Employee Stock Ownership Plan:
Cash dividends paid - (2,851) -
Common Stock:
Options exercised 65 - -
Purchase of common shares (1,512) - -
Balance, September 28, 1997 $ 61,548 $ 107,423 $ (8,501)
Capital in Currency
Excess Retained Translation
of Par Earnings Adjustment
Balance, December 31, 1995 $ 71,090 $ 119,825 $ (9,923)
Net income - 8,644 -
Currency translation adjustment -
Sale of stock of affiliate - - 1,461
Class A Preferred Stock -
Employee Stock Ownership Plan:
Cash dividends paid - (2,877) -
Common Stock:
Options exercised 515 - -
Purchase of common shares (918) - -
Balance, September 29, 1996 $ 70,687 $ 125,592 $ (8,462)
See Notes to Consolidated Condensed Financial Statements.
Page 6a
FORM 10-Q
Item 1. (continued)
CONE MILLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(amounts in thousands)
Thirty-Nine Thirty-Nine
Weeks Ended Weeks Ended
Sept. 28, 1997 Sept. 29, 1996
(Unaudited) (Unaudited)
Cash Flows Provided By Operating Activities $ 19,033 $ 14,921
Cash Flows from Investing Activities:
Proceeds from divestitures (a) 19,529 42,228
Proceeds from sale of property, plant and equipment 4,154 2,600
Capital expenditures (17,651) (21,367)
Other (1,500) 805
Net cash provided by investing activities 4,532 24,266
Cash Flows from Financing Activities:
Net payments - short-term loans (5,267) (172)
Decrease in checks issued in excess of deposits (1,923) (21,829)
Principal payments - long-term debt (10,796) (11,496)
Other (4,317) (3,284)
Net cash used in financing activities (22,303) (36,781)
Net increase in cash 1,262 2,406
Cash at Beginning of Period 1,018 336
Cash at End of Period $ 2,280 $ 2,742
(a)Divestitures:
Inventories $ 12,034 $ 14,926
Property, plant and equipment 6,262 21,516
Other 1,199 1,300
Gain on sale 34 4,486
Proceeds from sale $ 19,529 $ 42,228
Supplemental Disclosures of Additional Cash Flow Information:
Cash payments for:
Interest, net of interest capitalized $ 14,317 $ 15,369
Income taxes, net of refunds $ (3,017) $ 4,929
Supplemental Schedule of Noncash Investing and Financing Activities:
Receivable recorded from divestitures $ 811 $ 2,000
Purchase of outstanding capital stock - common,
through incurrence of accounts payable $ - $ 303
See Notes to Consolidated Condensed Financial Statements.
Page 7
FORM 10-Q
Item 1. (continued)
CONE MILLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 28, 1997
Note 1. Basis of Financial Statement Preparation
The Cone Mills Corporation (the "Company") consolidated
condensed financial statements for September 28, 1997 and
September 29, 1996 are unaudited, but in the opinion of
management reflect all adjustments necessary to present
fairly the consolidated condensed balance sheets of Cone
Mills Corporation and Subsidiaries at September 28, 1997,
September 29, 1996, and December 29, 1996, and the
related consolidated condensed statements of operations
for the respective thirteen and thirty-nine weeks ended
September 28, 1997 and September 29, 1996, and
stockholders' equity and cash flows for the thirty-nine
weeks then ended. All adjustments are of a normal
recurring nature. The results are not necessarily
indicative of the results to be expected for the full
year.
These statements should be read in conjunction with the
audited financial statements and related notes included
in the Company's annual report on Form 10-K for fiscal
1996.
Inventories are stated at the lower of cost or market.
The last-in, first-out (LIFO) method is used to value
inventories of most domestically produced goods. The
first-in, first-out (FIFO) or average cost methods are
used to value all other inventories. Because amounts for
inventories under the LIFO method are based on an annual
determination of quantities as of the year-end, the
inventories at September 28, 1997 and September 29, 1996
and related consolidated condensed statements of
operations for the thirteen and thirty-nine weeks then
ended are based on certain estimates relating to
quantities and cost as of the end of the fiscal year.
Note 2. Securitization of Accounts Receivable
On March 25, 1997, the Company entered into a one year
agreement with the subsidiary of a major financial
institution ("the purchaser") and Cone Receivables, LLC,
Page 8
FORM 10-Q
Item 1. (continued)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
a wholly owned subsidiary of Cone Mills Corporation,
which allows the sale of up to $40 million undivided
interest in eligible accounts receivable by Cone
Receivables, LLC. Cone Receivables, LLC, a qualifying
special-purpose entity, meets the requirements for
accounts receivable securitization in accordance with
SFAS 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities", and
therefore is not a consolidated entity of Cone Mills.
Cone Mills accounts for the sale of receivables to Cone
Receivables, LLC, as a true sale in accordance with SFAS
125.
At September 28, 1997, the Company had sold accounts
receivable of $78 million, less a $2 million provision
for doubtful accounts receivable, to Cone Receivables,
LLC. The Company currently has a subordinated note
receivable from Cone Receivables, LLC of $36 million.
Note 3. Long-Term Debt
Long-term debt consists of the following:
September 28, 1997
Current
Total Maturity Long-Term
(amounts in thousands)
8% Senior Note $ 53,573 $10,714 $ 42,859
8-1/8% Debentures 96,686 - 96,686
Total $150,259 $10,714 $139,545
September 29, 1996
Current
Total Maturity Long-Term
(amounts in thousands)
8% Senior Note $ 64,285 $10,714 $ 53,571
8-1/8% Debentures 96,243 - 96,243
Capital Lease Obligation 1,206 362 844
Other 122 38 84
Total $161,856 $11,114 $150,742
In August of 1997, the Company signed a new three year
$80 million revolving credit agreement with terms and
conditions not materially different from the previous
revolving credit agreement.
Page 9
FORM 10-Q
Item 1. (continued)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 4. Class A Preferred Stock
The 1998 dividend rate for Class A Preferred Stock is
7.85%, payable March 31, 1998.
Note 5. Earnings (Loss) Per Share
Thirteen Thirteen
Weeks Ended Weeks Ended
September 28, 1997 September 29, 1996
Fully Fully
Primary Diluted Primary Diluted
(amounts in thousands,
except per share data)
Net income (loss) $(1,366) $(1,366) $(2,243) $(2,243)
Less: Class A Preferred
dividends ( 755) ( 755) ( 720) ( 720)
Adjusted net income (loss) $(2,121) $(2,121) $(2,963) $(2,963)
Weighted average common
shares outstanding 26,109 26,109 27,416 27,416
Common share equivalents
from assumed exercise
of outstanding options,
less shares assumed
repurchased - - - -
Weighted average common
shares and common share
equivalents outstanding 26,109 26,109 27,416 27,416
Earnings (loss) per common
share and common share
equivalent $( .08) $( .08) $( .11) $( .11)
Page 10
FORM 10-Q
Item 1. (continued)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 5. Earnings (Loss) Per Share (continued)
Thirty-Nine Thirty-Nine
Weeks Ended Weeks Ended
September 28, 1997 September 29, 1996
Fully Fully
Primary Diluted Primary Diluted
(amounts in thousands,
except per share data)
Net income (loss) $(4,432) $(4,432) $ 8,644 $ 8,644
Less: Class A Preferred
dividends (2,230) (2,230) (2,160) (2,160)
Adjusted net income (loss)$(6,662) $(6,662) $ 6,484 $ 6,484
Weighted average common
shares outstanding 26,150 26,150 27,401 27,401
Common share equivalents
from assumed exercise
of outstanding options,
less shares assumed
repurchased - - 53 53
Weighted average common
shares and common share
equivalents outstanding 26,150 26,150 27,454 27,454
Earnings (loss) per common
share and common share
equivalent $( .25) $( .25) $ .24 $ .24
Primary and fully diluted earnings (loss) per share have been
computed by dividing the net earnings (loss) available to
common stockholders by the sum of the weighted average common
shares and common share equivalents outstanding. Common share
equivalents have been excluded when they would be
antidilutive.
Page 11
FORM 10-Q
Item 1. (continued)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 6. Divestitures
In January 1996, the Company completed the sale of its
polyurethane products division. The Company sold all
inventory and substantially all of the property, plant,
and equipment of this division. Proceeds of $42.2 million
had been received at September 29, 1996. Gain of $4.7
million from disposal of this division was recognized in
the first quarter 1996 financial statements as a
restructuring item.
In May 1997, the Company completed the sale of
substantially all the assets of its real estate
operations, including those of its subsidiary Cornwallis
Development Co. Proceeds of $19.5 million were received
in the second quarter of 1997. A reserve was established
in the Company's fourth quarter 1996 financial statements
to adjust the carrying value of these assets to estimated
net realizable value. The gain recognized upon the
disposition of these assets in the second quarter of 1997
was insignificant.
Note 7. Restructuring Activities
Restructuring costs of $3.1 million were incurred in the
first nine months of 1997 related to the consolidation of
operations from Cone's Granite Finishing Plant to its
Carlisle facility. Additional restructuring costs will
be incurred during the fourth quarter of 1997 as
consolidation of the facilities is substantially
completed.
Page 12
FORM 10-Q
Item 2.
MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OPERATING RESULTS
Third Quarter Ended September 28, 1997 Compared with Third
Quarter Ended September 29, 1996.
Sales for the third quarter of 1997 were $185.5 million, up
2.6%, as compared with sales of $180.8 million for the third
quarter of 1996. After eliminating the sales of business units
included in the Company's restructuring plan, sales increased
approximately 5%. Improved sales of denim, specialty
sportswear and jacquard fabrics accounted for the increase.
International sales, primarily denims, were $48.2 million, or
26% of total sales, as compared with $44.1 million, or 24% of
sales, for the third quarter of 1996.
Cone Mills had a net loss for the third quarter of 1997 of
$1.4 million, or $.08 per share after preferred dividends,
which included a pre-tax charge of $1.3 million associated
with the consolidation of Granite Finishing into Carlisle
Finishing operations. For comparison, third quarter 1996 had
a net loss of $2.2 million, or $.11 per share.
Gross profit for the third quarter of 1997 (net sales less
cost of sales and depreciation) was 10.1% of sales, as
compared with 12.0% for the previous year. The decrease was
primarily the result of mix changes to more basic denim
products with lower margins, pricing pressures, operating
disruption due to consolidation of finishing operations and
the increase in sales of product produced by Parras Cone where
a portion of the operating income is reported as equity in
earnings of unconsolidated affiliate.
Business Segments. Cone operates in two principal business
segments, apparel fabrics and home furnishings products. The
following table sets forth certain net sales and operating
income (loss) information.
Page 13
FORM 10-Q
Item 2. (continued)
Third Quarter
1997 1996
(Dollar amounts in millions)
NET SALES
Apparel(1) $ 157.7 85.0% $ 154.2 85.3%
Home Furnishings(2) 27.8 15.0 26.6 14.7
Total $ 185.5 100.0% $ 180.8 100.0%
OPERATING INCOME (LOSS)(3)
Apparel $ 4.4 2.8% $ 6.0 3.9%
Home Furnishings (4.4) (15.9) (4.0) (14.9)
Restructuring (1.3) - (.2) -
(1) Apparel includes synthetic fabrics net sales of $1.8
million in 1996.
(2) Home furnishings includes Greeff and real estate net
sales of $2.9 million in 1996.
(3) Operating income (loss) excludes general corporate
expenses. Percentages reflect operating income (loss) as
a percentage of segment net sales.
Apparel Fabrics. Apparel fabric segment sales for the third
quarter of 1997 were $157.7 million, up 2.3% from the third
quarter of 1996. Excluding sales of the synthetic fabrics
business, which was sold in January of 1997, apparel fabric
segment sales were up approximately 3%. Both denim and
specialty sportswear sales increased. Denim sales increases
from additional volume were partially offset by lower
average prices, the result of a mix shift to more basic
denims and price pressure.
For the third quarter of 1997, the apparel segment had
operating income of $4.4 million, or 2.8% of sales, as
compared with income of $6.0 million, or 3.9% of sales, in
the third quarter of 1996. All domestic apparel fabric
manufacturing facilities operated at less than capacity as
the Company attempted to control inventory levels. The
Company's Parras Cone joint venture denim plant in Mexico
operated at capacity during the quarter. Cone's portion of
Parras Cone's operating income is reported as equity in
earnings of unconsolidated affiliate and therefore is
excluded from apparel segment operating income.
Page 14
FORM 10-Q
Item 2. (continued)
Home Furnishings. For the third quarter of 1997, home
furnishings segment sales were $27.8 million as compared
with $26.6 million in the third quarter of 1996. Excluding
sales of Greeff and real estate which were sold, sales of
the home furnishings segment were up 17%, as compared to
the third quarter of 1996. Higher sales of Cone Jacquards
and Raytex finishing services accounted for the increase.
The home furnishings segment had an operating loss of $4.4
million compared with a loss of $4.0 million for the third
quarter of 1996. Home furnishings results were negatively
impacted by the finishing division operating at less than
capacity and the repositioning of the decorative fabrics
product line in the marketplace.
Total Company selling and administrative expenses declined
from $20.7 million for the third quarter of 1996 to $19.6
million in the third quarter of 1997, the result of the sale
of the real estate, Greeff and synthetic fabric operations as
well as a cost reduction program to reduce selling and
administrative expenses. Selling and administrative expenses
were 10.5% of sales in the third quarter of 1997 as compared
with 11.4% in the third quarter of 1996.
Interest expense for the third quarter of 1997 was $3.4
million, down 9% from the third quarter of 1996, primarily the
result of lower borrowings.
Equity in the income of Parras Cone, the joint venture plant
in Mexico, was $1.6 million, as compared with a loss of $0.5
million in the third quarter of 1996. The increase in income
was primarily the result of improved sales, operating levels
and efficiencies.
Even though the Company has seen some improvement in denim
operations, including Parras Cone, the seasonal slowdown in
sales of home furnishings and specialty sportswear products as
well as the consolidation of finishing facilities will
continue to negatively impact earnings. However, Cone
continues to implement its five-point profitability
improvement program which includes focusing on core
businesses, aggressive marketing, cost reduction, the
reconfiguration of manufacturing operations and capital
conservation. These actions should position the Company for
improved results in 1998.
Page 15
FORM 10-Q
Item 2. (continued)
The Company's major customer on November 3, 1997 announced the
closure of a number of denim jeans facilities in the United
States. This decision is not expected to have a materially
adverse affect on the Company's ongoing operations. Due to the
uncertainties inherent in the textile business, it is not possible
to predict the ultimate effect of customer actions.
Page 15a
FORM 10-Q
Item 2. (continued)
Nine Months Ended September 28, 1997 Compared with Nine Months
Ended September 29, 1996.
While U.S. consumer spending in apparel and home furnishings
has been strong for the first nine months of 1997, Cone Mills
continued to experience value-added denim inventory
adjustments by certain customers and weak fashion demand for
decorative prints. For the first nine months of 1996, the
Company experienced good demand for value-added denim apparel
fabrics and weak markets for both specialty sportswear and
home furnishings fabrics.
Sales for the first nine months of 1997 were $546.0 million,
down 7.2%, as compared with sales of $588.3 million for the
first nine months of 1996. After eliminating the sales of
business units included in the Company's restructuring plan,
sales were down approximately 4%. Lower sales in denim
products and decorative prints were partially offset by
increased specialty sportswear and jacquard sales.
International sales, primarily denims, were 25% of total sales
for both periods.
Cone Mills had a net loss for the first nine months of 1997 of
$4.4 million, or $.25 per share after preferred dividends,
which included a pre-tax charge of $3.1 million associated
with the consolidation of the Granite operations into
Carlisle. For comparison, for the first nine months of 1996
net income was $8.6 million, or $.24 per share, including a
pre-tax gain of $4.5 million related to the sale of the
Olympic Products Division.
Gross profit for the first nine months of 1997 (net sales less
cost of sales and depreciation) was 11.3% of sales, as
compared with 14.4% for the comparable 1996 period. The
decrease was primarily the result of lower average denim
prices including mix changes to more basic denim products with
lower prices, cost inefficiencies associated with operating
plants at less than capacity, operating disruption due to
consolidation of finishing operations and the increase in
sales of product produced by Parras Cone where a portion of
the operating income is reported as equity in earnings of
unconsolidated affiliate.
Business Segments. Cone operates in two principal business
segments, apparel fabrics and home furnishings products. The
following table sets forth certain net sales and operating
income (loss) information.
Page 16
FORM 10-Q
Item 2. (continued)
Nine Months
1997 1996
(Dollar amounts in millions)
NET SALES
Apparel(1) $ 465.1 85.2% $ 500.8 85.1%
Home Furnishings(2) 80.9 14.8 87.5 14.9
Total $ 546.0 100.0% $ 588.3 100.0%
OPERATING INCOME (LOSS)(3)
Apparel $ 16.7 3.6% $ 32.1 6.4%
Home Furnishings (11.2) (13.8) (8.1) (9.2)
Restructuring (3.1) - 4.5 -
(1) Apparel includes synthetic fabrics net sales of $2.5
million and $10.7 million in 1997 and 1996, respectively.
(2) Home furnishings includes Greeff and real estate net
sales of $2.2 million in 1997, and Olympic, Greeff and
real estate net sales of $13.8 million in 1996.
(3) Operating income (loss) excludes general corporate
expenses. Percentages reflect operating income (loss) as
a percentage of segment net sales.
Apparel Fabrics. Apparel fabric segment sales for the first
nine months of 1997 were $465.1 million, down 7.1% from the
first nine months of 1996. Excluding sales of the synthetic
fabrics business, which was sold in January of 1997,
apparel fabric segment sales were down approximately 6%.
Lower denim sales because of lower volume and prices
partially offset by higher specialty sportswear sales
accounted for the decrease. Average denim prices were down
in the first nine months of 1997 as a result of a mix shift
to more basic denims and price pressure from industry
supply and demand imbalances.
For the first nine months of 1997, the apparel segment had
operating income of $16.7 million, or 3.6% of sales, as
compared with income of $32.1 million, or 6.4% of sales, in
the first nine months of 1996.
Home Furnishings. For the first nine months of 1997, home
furnishings segment sales were $78.7 million, excluding
Olympic, Greeff and real estate, as compared with $73.7
million in the first nine months of 1996, an increase of
7%. Increased sales of Cone Jacquards was partially offset
by lower sales in Cone Decorative Fabrics. The home
furnishings segment had an operating loss of $11.2 million
Page 17
FORM 10-Q
Item 2. (continued)
compared with a loss of $8.1 million for the first nine months
of 1996. Home furnishings results were negatively impacted by
weak decorative fabrics markets and the operating disruption
due to consolidation of finishing operations.
Total Company selling and administrative expenses declined
from $64.2 million for the first nine months of 1996 to $58.6
million in the first nine months of 1997, the result of the
sale of the Olympic, Greeff, real estate and synthetic fabric
operations as well as a cost reduction program to reduce
selling and administrative expenses. Selling and
administrative expenses were 10.7% of sales in the first nine
months of 1997 as compared with 10.9% in the first nine months
of 1996.
Interest expense for the first nine months of 1997 was $10.8
million, down 7% from the first nine months of 1996, primarily
the result of lower borrowing levels.
For the first nine months of 1997, the income tax benefit as
a percent of the taxable loss was 37.1% compared with income
taxes of 32.6% for the first nine months of 1996. Both periods
reflect tax benefits resulting from operation of the Company's
foreign sales corporation.
Liquidity and Capital Resources
The Company's principal long-term capital components consist
of $53.6 million outstanding under a Note Agreement with The
Prudential Insurance Company of America (the "Term Loan"), its
8 1/8% Debentures issued on March 15, 1995 and due March 15,
2005 (the "Debentures"), and stockholders' equity. Primary
sources of liquidity are internally generated funds, an $80
million Credit Agreement with a group of banks with Morgan
Guaranty Trust Company of New York ("Morgan Guaranty") as
Agent Bank (the "Revolving Credit Facility"), and the $40
million Receivables Purchase Agreement (the "Receivables
Purchase Agreement") with Delaware Funding Corporation, an
affiliate of Morgan Guaranty. The Receivables Purchase
Agreement is a one year agreement entered into on March 25,
1997 with Delaware Funding Corporation and Cone Receivables,
LLC, a wholly owned subsidiary of Cone Mills Corporation. The
Company's Revolving Credit Facility was entered into in August
1997 and is a successor facility with terms and conditions not
materially different from the previous facility. On September
28, 1997, the Company had funds available of $80 million under
its Revolving Credit Facility.
Page 18
FORM 10-Q
Item 2. (continued)
During the first nine months of 1997, the Company generated
cash from operating activities before changes in working
capital of $13.7 million as compared with $28.3 million in the
first nine months of 1996. Working capital reductions in the
first nine months of 1997 were $5.3 million. Other uses of
cash in the first nine months of 1997 included $17.7 million
for capital expenditures, $10.8 million for repayment of long-
term debt, $1.5 million for the repurchase of common stock and
$2.9 million for preferred stock dividends.
The Company believes that the proceeds from the divesture of
non-core businesses and the potential sale of its John Wolf
division (Cone Decorative Fabrics), together with Cone's
internally generated operating funds and funds available under
its credit facilities, will be sufficient to meet its working
capital, capital spending, potential stock repurchases, and
financing needs for the foreseeable future. The Company has
Board authorization to purchase up to an additional 0.8
million shares of common stock.
On September 28, 1997, the Company's long-term capital
structure consisted of $139.5 million of long-term debt and
$201.5 million of stockholders' equity. For comparison, on
September 29, 1996, the Company had $150.7 million of long-
term debt and $228.9 million of stockholders' equity. Long-
term debt (including current maturities of long-term debt) as
a percentage of long-term debt and stockholders' equity was
43% on September 28, 1997 and 41% on September 29, 1996.
Accounts and note receivable on September 28, 1997, were $56.8
million, down from $63.4 million at September 29, 1996. At
September 28, 1997, the Company had sold accounts receivable
of $78 million to Cone Receivables, LLC, an unconsolidated
subsidiary, which subsequently sold $40 million of these
accounts receivables to an unrelated party. In addition to
the $40 million received for the sale of these receivables,
the Company also has received a $36 million subordinated note
receivable from Cone Receivables, LLC. At September 29, 1996,
the Company had sold $42 million of accounts receivable to an
unrelated party. The decrease in accounts and note receivable
was primarily due to the collection of receivables from
business units sold and a lower number of days of sales
outstanding as certain customers paid in advance of due date.
The Company adopted SFAS 125 "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of
Liabilities" during the first quarter of 1997 (See Note 2 of
Page 19
FORM 10-Q
Item 2. (continued)
Notes to Consolidated Condensed Financial Statements).
Receivables, including those sold pursuant to the Receivables
Purchase Agreement, represented 48 days of sales outstanding
at September 28, 1997 and 55 days at September 29, 1996.
Inventories on September 28, 1997, were $121.6 million, down
$23.9 million from September 29, 1996 levels. The decrease was
primarily due to the sale of operating units partially offset
by increases in raw material levels.
Capital spending in 1997 is forecast to be approximately $40
million. Projects include new weaving machines that replace
1970s vintage weaving machines, link ring spinning, and
additional looms for the jacquard facility. Capital spending
in the first nine months of 1997 was $17.7 million.
The Company has an agreement with CIPSA to purchase up to an
additional 33% of the existing outstanding common stock of
Parras Cone for an amount of $20 million if CIPSA does not
meet certain financial obligations.
Federal, state and local regulations relating to the workplace
and the discharge of materials into the environment continue
to change and, consequently, it is difficult to gauge the
total future impact of such regulations on the Company.
Existing government regulations are not expected to cause a
material change in the Company's competitive position,
operating results or planned capital expenditures. The Company
has an active environmental committee which fosters protection
of the environment and compliance with laws.
The Company is a party to various legal claims and actions.
Management believes that none of these claims or actions,
either individually or in the aggregate, will have a material
adverse effect on the financial condition of the Company.
"Safe Harbor" Statement under Section 27A of the Securities
Act of 1993, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended.
Except for the historical information presented, the
matters disclosed in the foregoing discussion and
analysis and other parts of this report include forward-
looking statements. These statements represent the
Company's current judgment on the future and are subject
to risks and uncertainties that could cause actual
Page 20
FORM 10-Q
Item 2. (continued)
results to differ materially. Such factors include, without
limitation: (i) the demand for textile products, including
the Company's products, will vary with the U.S. and world
business cycles, imbalances between consumer demand and
inventories of retailers and manufacturers and changes in
fashion trends, (ii) the highly competitive nature of the
textile industry and the possible effects of reduced import
protection and free-trade initiatives, (iii) the
unpredictability of the cost and availability of cotton,
the Company's principal raw material, and (iv) the
Company's relationships with Levi Strauss as its major
customer. For a further description of these risks see the
Company's 1996 Form 10-K, "Item 1. Business -Competition, -
Raw Materials and -Customers" and "Management's Discussion
and Analysis of Results of Operations and Financial
Condition -- Overview" of the Company's 1996 Annual Report
to Shareholders incorporated by reference into Item 7. of
the Form 10-K. Other risks and uncertainties may be
described from time to time in the Company's other reports
and filings with the Securities and Exchange Commission.
PART II
Item 1. Legal Proceedings
In November 1988, William J. Elmore and Wayne Comer (the
"Plaintiffs") former employees of the Company, instituted a
class action suit against the Company and certain other
defendants in which the Plaintiffs asserted a variety of
claims related to the Cone Mills Corporation 1983 ESOP (the
"1983 ESOP") and certain other employee benefit plans
maintained by the Company. In March 1992, the United States
District Court in Greenville, South Carolina entered a
judgment in the amount of $15.5 million (including an
attorneys' fee award) against the Company with respect to an
alleged promise to make additional Company contributions to
the 1983 ESOP and all claims unrelated to the alleged promise
were dismissed. The Company, certain individual defendants
and the Plaintiffs appealed.
On May 6, 1994, the United States Court of Appeals for the
Fourth Circuit, sitting en banc, affirmed the prior conclusion
of a panel of three of its judges and unanimously reversed the
$15.5 million judgment and unanimously affirmed all of the
District Court's rulings in favor of the Company. However,
the Court of Appeals affirmed, by an equally divided court,
Page 21
FORM 10-Q
Item 1. (continued)
the District Court's holding that Plaintiffs should be allowed
to proceed on an alternative theory whether, subject to proof
of detrimental reliance, Plaintiffs could establish that a
letter to salaried employees on December 15, 1983 created an
enforceable obligation that could allow recovery on a theory
of equitable estoppel. Accordingly, the case was remanded to
the District Court for a determination of whether the
Plaintiffs could establish detrimental reliance creating
estoppel of the Company.
On April 19, 1995, the District Court granted a motion by the
Company for summary judgment on the issues of equitable
estoppel and third-party beneficiary of contract which had
been remanded to it by the Court of Appeals. The Court ruled
that the Plaintiffs could not forecast necessary proof of
detrimental reliance. The District Court, however, granted
Plaintiffs motion to amend the complaint insofar as they
sought to pursue a "new" claim for unjust enrichment, but
denied their motion to amend so far as they sought to add
claims for promissory estoppel and unilateral contract. The
court further denied the Company's motion to decertify the
class.
The District Court held a hearing on July 24, 1995 to decide
on the merits Plaintiffs' lone remaining claim of unjust
enrichment, and in an order entered September 25, 1995, the
District Court dismissed that claim with prejudice. On
October 20, 1995, the Plaintiffs appealed to the Court of
Appeals from the April 19, 1995 and September 25, 1995 orders
of the District Court. Oral argument on Plaintiffs' appeal
was held in the Court of Appeals on October 31, 1996. Due to
the uncertainties inherent in the litigation process, it is
not possible to predict the ultimate outcome of this lawsuit.
However, the Company has defended this matter vigorously, and
it is the opinion of the Company's management that the
probability is remote that this lawsuit, when finally
concluded, will have a material adverse effect on the
Company's financial condition or results of operations.
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits to this Form 10-Q are listed in the
accompanying Index to Exhibits.
(b) Reports on Form 8-K.
None
Page 22
FORM 10-Q INDEX TO EXHIBITS
Exhibit Sequential
No. Description Page No.
* 2.1(a) Purchase Agreement between Registrant
and Cone Receivables LLC dated as of
March 25, 1997, filed as Exhibit 2.1(l)
to Registrant's report on Form 10-Q
for the quarter ended March 30, 1997.
* 2.1(b) Receivables Purchase Agreement dated
as of March 25, 1997, among Cone
Receivables LLC, as Seller, the
Registrant, as Servicer, and
Delaware Funding Corporation, as
buyer, filed as Exhibit 2.1(m) to
Registrant's report on Form 10-Q
for the quarter ended March 30, 1997.
* 2.2(a) Investment Agreement dated as of
June 18, 1993, among Compania Industrial
de Parras, S.A. de C.V., Sr. Rodolfo
Garcia Muriel, and Cone Mills
Corporation, filed as Exhibit 2.2(a)
to Registrant's report on Form 10-Q for
the quarter ended July 4, 1993, with
exhibits herein numbered 2.2(b),(c),
(d), (f), (g), and (j) attached.
* 2.2(b) Commercial Agreement dated as of June
25, 1993, among Compania Industrial de
Parras, S.A. de C.V., Cone Mills
Corporation and Parras Cone de Mexico,
S.A., filed as Exhibit 2.2(b) to
Registrant's report on Form 10-Q for the
quarter ended July 4, 1993.
* 2.2(c) Guaranty Agreement dated as of June 25,
1993, between Cone Mills Corporation and
Compania Industrial de Parras, S.A. de
C.V., filed as Exhibit 2.2(c) to
Registrant's report on Form 10-Q for the
quarter ended July 4, 1993.
* 2.2(d) Joint Venture Agreement dated as of
June 25, 1993, between Compania
Industrial de Parras, S.A. de C.V., and
Cone Mills (Mexico), S.A. de C.V. filed as
Exhibit 2.2(d) to Registrant's report on
Form 10-Q for the quarter ended
July 4, 1993.
Page 23
FORM 10-Q INDEX TO EXHIBITS
Exhibit Sequential
No. Description Page No.
* 2.2(e) First Amendment to Joint Venture
Agreement dated as of June 14, 1995,
between Compania Industrial de Parras,
S.A. de C.V., and Cone Mills (Mexico),
S.A. de C.V., filed as Exhibit 2.2(e)
to the Registrant's report on Form 10-Q
for the quarter ended July 2, 1995.
* 2.2(f) Joint Venture Registration Rights
Agreement dated as of June 25, 1993,
among Parras Cone de Mexico, S.A.,
Compania Industrial de Parras, S.A. de
C.V. and Cone Mills (Mexico),
S.A. de C.V. filed as Exhibit 2.2(e)
to Registrant's report on Form 10-Q
for the quarter ended July 4, 1993.
* 2.2(g) Parras Registration Rights Agreement
dated as of June 25, 1993, between Compania
Industrial de Parras, S.A. de C.V. and
Cone Mills Corporation filed as Exhibit
2.2(f) to the Registrant's report on Form
10-Q for the quarter ended July 4, 1993.
* 2.2(h) Guaranty Agreement dated as of June 14,
1995, between Compania Industrial de
Parras, S.A. de C.V. and Cone Mills
Corporation filed as Exhibit 2.2(h) to
the Registrant's report on Form 10-Q
for the quarter ended July 2, 1995.
* 2.2(i) Guaranty Agreement dated as of June 15,
1995, between Cone Mills Corporation
and Morgan Guaranty Trust Company of
New York filed as Exhibit 2.2(i) to
the Registrant's report on Form 10-Q
for the quarter ended July 2, 1995.
* 2.2(j) Support Agreement dated as of June 25,
1993, among Cone Mills Corporation, Sr.
Rodolfo L. Garcia, Sr. Rodolfo Garcia
Muriel and certain other person listed
herein ("private stockholders") filed
as Exhibit 2.2(g) to Registrant's
report on Form 10-Q for the quarter
ended July 4, 1993.
Page 24
FORM 10-Q INDEX TO EXHIBITS
Exhibit Sequential
No. Description Page No.
* 2.2(k) Call Option dated September 25, 1995,
between Registrant and SMM Trust, 1995
- M, a Delaware business trust, filed
as Exhibit 2.2(k) to the Registrant's
report on Form 10-Q for the quarter
ended October 1, 1995.
* 2.2(l) Put Option dated September 25, 1995,
between Registrant and SMM Trust, 1995
- M, a Delaware business trust, filed
as Exhibit 2.2(l) to the Registrant's
report on Form 10-Q for the quarter
ended October 1, 1995.
* 2.2(m) Letter Agreement dated January 11, 1996
among Registrant, Rodolfo Garcia Muriel,
and Compania Industrial de Parras,
S.A. de C.V., filed as Exhibit 2.2(m) to
the Registrant's report on Form 10-K
for the year ended December 31, 1995.
* 2.3 Olympic Division Acquisition Agreement
by and among Vitafoam Incorporated,
British Vita PLC, and Registrant
dated January 19, 1996 with related
Lease Agreement, Lease Agreement and
Option to Purchase, Sublease Agreement,
Services Agreement, License Agreement
and Hold Back Escrow Agreement, each
dated January 22, 1996. The Acquisition
Agreement and related agreements were
filed as Exhibit 2.4 to the Registrant's
report on Form 10-K for the year ended
December 31, 1995. The following
exhibits and schedules to the Acquisition
Agreement have been omitted. The
Registrant hereby undertakes to furnish
supplementally a copy of such omitted
exhibit or schedule to the Commission upon
request.
Page 25
FORM 10-Q INDEX TO EXHIBITS
Exhibit Sequential
No. Description Page No.
Exhibits
Exhibit A1 Form of Buyer Lease
Exhibit A2 Form of Buyer Lease
Exhibit B Form of Holdback Escrow
Agreement
Exhibit C1 Facility 1
Exhibit C2 Facility 2
Exhibit C3 Facility 3
Exhibit C4 Facility 4
Exhibit C5 Facility 5
Exhibit C6 Facility 6
Exhibit D Form of Sublease Agreement
Exhibit E Form of Opinion of Buyer's
Counsel
Exhibit F Form of Opinion of Seller's
Counsel
Exhibit G Form of Assumption Agreement
Exhibit H Form of Services Agreement
Exhibit I Inventory Valuation Principles
Exhibit J Form of License Agreement
Schedules
Schedule 1.1(a) Excluded Assets
Schedule 1.1(b) Tangible Fixed Assets
Schedule 2.8 Assigned Contracts
Schedule 2.10 Allocation of Purchase
Price
Schedule 4.3 Consents and
Authorizations
Schedule 4.7 Contracts by Category
Schedule 4.9 Litigation
Schedule 4.11 Tax Matters
Schedule 4.12 Licenses and Permits
Schedule 4.14 Tangible Personal
Property
Schedule 4.15 Employees and Wage Rates
Schedule 4.16 Insurance Policies
Schedule 4.17 Intellectual Property
Schedule 4.18 Licenses to Intellectual
Property; Third-party
Patents
Schedule 4.19 Purchases from One Party
Schedule 4.22 Real Property
Schedule 4.23 Business Names
Schedule 4.24 Environmental Matters
Schedule 9.4 Facility 5 Remediation Plan
Page 26
FORM 10-Q INDEX TO EXHIBITS
Exhibit Sequential
No. Description Page No.
* 4.1 Restated Articles of Incorporation of
the Registrant effective August 25, 1993,
filed as Exhibit 4.1 to Registrant's
report on Form 10-Q for the quarter ended
October 3, 1993.
* 4.2 Amended and Restated Bylaws of Registrant,
Effective June 18, 1992, filed as Exhibit
3.5 to the Registrant's Registration
Statement on Form S-1 (File No. 33-46907).
* 4.3 Note Agreement dated as of August 13, 1992,
between Cone Mills Corporation and The
Prudential Insurance Company of America,
with form of 8% promissory note attached,
filed as Exhibit 4.01 to the Registrant's
report on Form 8-K dated August 13, 1992.
* 4.3(a) Letter Agreement dated September 11, 1992,
amending the Note Agreement dated August 13,
1992, between the Registrant and The
Prudential Insurance Company of America
filed as Exhibit 4.2 to the Registrant's
report on Form 8-K dated March 1, 1995.
* 4.3(b) Letter Agreement dated July 19, 1993,
amending the Note Agreement dated
August 13, 1992, between the Registrant
and The Prudential Insurance Company of
America filed as Exhibit 4.3 to the
Registrant's report on Form 8-K dated
March 1, 1995.
* 4.3(c) Letter Agreement dated June 30, 1994,
amending the Note Agreement dated
August 13, 1992, between the Registrant
and The Prudential Insurance Company of
America filed as Exhibit 4.4 to the
Registrant's report on Form 8-K dated
March 1, 1995.
* 4.3(d) Letter Agreement dated November 14, 1994,
amending the Note Agreement dated
August 13, 1992, between the Registrant
and The Prudential Insurance Company of
America filed as Exhibit 4.5 to the
Registrant's report on Form 8-K dated
March 1, 1995.
Page 27
FORM 10-Q INDEX TO EXHIBITS
Exhibit Sequential
No. Description Page No.
* 4.3(e) Letter Agreement dated as of June 30,
1995, amending the Note Agreement dated
August 13, 1992, between the Registrant
and The Prudential Insurance Company
of America filed as Exhibit 4.3(e) to
the Registrant's report on Form 10-Q
for the quarter ended July 2, 1995.
* 4.3(f) Letter Agreement dated as of June 30,
1995, between the Registrant and
The Prudential Insurance Company
of America superseding Letter Agreement
filed as Exhibit 4.3(e) to the
Registrant's report on Form 10-Q
for the quarter ended July 2, 1995.
* 4.3(g) Letter Agreement dated as of March 30,
1996, between the Registrant and The
Prudential Insurance Company of
America filed as Exhibit 4.3(g) to the
Registrant's report on Form 10-Q for
the quarter ended March 31, 1996.
* 4.3(h) Letter Agreement dated as of January
31, 1997, between the Registrant and
The Prudential Insurance Company of
America filed as Exhibit 4.3(h) to
the Registrant's report on Form 10-K
for the year ended December 29, 1996.
4.3(i) Letter Agreement dated as of
July 31, 1997, between the Registrant
and the Prudential Insurance Company
of America. 32
4.4 Credit Agreement dated August 7, 1997,
among the Registrant, various banks
and Morgan Guaranty Trust Company of
New York as agent. 34
* 4.5 Specimen Class A Preferred Stock
Certificate, filed as Exhibit 4.5
to the Registrant's Registration
Statement on Form S-1(File No. 33-46907).
Page 28
FORM 10-Q INDEX TO EXHIBITS
Exhibit Sequential
No. Description Page No.
* 4.6 Specimen Common Stock Certificate,
effective June 18, 1992, filed as
Exhibit 4.7 to the Registrant's
Registration Statement on Form S-1
(File No. 33-46907).
* 4.7 The 401(k) Program of Cone Mills
Corporation, amended and restated
effective December 1, 1994, filed as
Exhibit 4.8 to the Registrant's
report on Form 10-K for year ended
January 1, 1995.
* 4.7(a) First Amendment to the 401(k)
Program of Cone Mills Corporation
dated May 9, 1995, filed as
Exhibit 4.8(a) to the Registrant's
report on Form 10-K for year ended
December 31, 1995.
* 4.7(b) Second Amendment to the 401(k)
Program of Cone Mills Corporation
dated December 5, 1995, filed as
Exhibit 4.8(b) to the Registrant's
report on Form 10-K for year ended
December 31, 1995.
4.7(c) Third Amendment to the 401(k)
Program of Cone Mills Corporation
dated August 7, 1997. 81
* 4.8 Cone Mills Corporation 1983 ESOP as
amended and restated effective
December 1, 1994, filed as Exhibit 4.9
to the Registrant's report on Form 10-K
for year ended January 1, 1995.
* 4.8(a) First Amendment to the Cone Mills
Corporation 1983 ESOP dated
May 9, 1995, filed as Exhibit 4.9(a)
to the Registrant's report on Form 10-K
for year ended December 31, 1995.
Page 29
FORM 10-Q INDEX TO EXHIBITS
Exhibit Sequential
No. Description Page No.
* 4.8(b) Second Amendment to the Cone Mills
Corporation 1983 ESOP dated
December 5, 1995, filed as
Exhibit 4.9(b) to the Registrant's
report on Form 10-K for year ended
December 31, 1995.
4.8(c) Third Amendment to the Cone Mills
Corporation 1983 ESOP dated
August 7, 1997. 83
* 4.9 Indenture dated as of February 14,
1995, between Cone Mills Corporation
and Wachovia Bank of North Carolina,
N.A. as Trustee, filed as Exhibit 4.1
to Registrant's Registration Statement
on Form S-3 (File No. 33-57713).
10 Fourth Amendment to the Employees'
Retirement Plan of Cone Mills
Corporation dated August 7, 1997. 85
27 Financial Data Schedule 87
* Incorporated by reference to the statement or report
indicated.
Page 30
FORM 10-Q
SIGNATURES
Pursuant to the requirements 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.
CONE MILLS CORPORATION
(Registrant)
Date: November 12, 1997 /s/ Anthony L. Furr
Anthony L. Furr
Vice President and
Chief Financial Officer
Page 31