SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

Dyersburg Corporation
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(3) Filing Party:

(4) Date Filed:
2
DYERSBURG CORPORATION

1315 PHILLIPS STREET
DYERSBURG, TENNESSEE 38024

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 27, 1999

As a shareholder of Dyersburg Corporation (the "Company"), you are
hereby given notice of and invited to attend in person or by proxy the Annual
Meeting of Shareholders of the Company to be held at the Ballantyne Country
Club, 11120 Ballantyne Crossing, Charlotte, North Carolina 28277 on Wednesday,
January 27, 1999, at 9:00 a.m. E.S.T. for the following purposes:

1. To elect four directors in Class I to serve for a term of
three years and until their successors are duly elected and
qualified;

2. To ratify the appointment of Ernst & Young LLP as the
independent auditors of the Company; and

3. To transact such other business as may properly come before
the meeting or any adjournment thereof.

Only shareholders of record of Common Stock of the Company at the close
of business on December 11, 1998 are entitled to notice of and to vote at the
meeting.

Whether or not you expect to attend the meeting, management desires to
have the maximum representation at the meeting and respectfully requests that
you date, execute, and mail promptly the enclosed proxy in the enclosed stamped
envelope, which requires no postage if mailed in the United States. A proxy may
be revoked by a shareholder any time prior to its use as specified in the
enclosed proxy statement.

BY ORDER OF THE BOARD OF DIRECTORS,

/s/ WILLIAM S. SHROPSHIRE, JR.
SECRETARY

Dyersburg, Tennessee
December 29, 1998

DYERSBURG CORPORATION

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 27, 1999

To Our Shareholders:

This Proxy Statement is furnished to shareholders of Dyersburg
Corporation (the "Company") in connection with the solicitation of proxies by
the board of directors of the Company (the "Board of Directors") to be voted at
the Annual Meeting of Shareholders (the "Annual Meeting") to be held at the
date, time, and place and for the purposes set forth in the accompanying Notice
of Annual Meeting of Shareholders, or at any adjournment or adjournments
thereof. The approximate date on which this Proxy Statement and the enclosed
proxy are first being sent to shareholders is December 29, 1998. The principal
executive offices of the Company are located at 1315 Phillips Street,
Dyersburg, Tennessee 38024.

The record of shareholders entitled to vote at the Annual Meeting was
taken at the close of business on December 11, 1998 (the "Record Date"). On such
date, 13,341,066 shares of the Company's common stock, par value $0.01 per share
(the "Common Stock"), having one vote each were outstanding.

Shares represented by valid proxies will be voted in accordance with
instructions contained therein, or, in the absence of such instructions, in
accordance with the Board of Directors' recommendations. Any shareholder of the
Company has the unconditional right to revoke his or her proxy at any time prior
to the voting thereof by any action inconsistent with the proxy, including
notifying the Secretary of the Company in writing, executing a subsequent proxy,
or personally appearing at the Annual Meeting and casting a contrary vote. No
such revocation will be effective, however, unless and until notice of such
revocation has been received by the Company at or prior to the Annual Meeting.

The cost of soliciting proxies in the accompanying form will be borne
by the Company. In addition to the use of mail, officers of the Company may
solicit proxies by telephone or telecopy. Upon request, the Company will
reimburse brokers, dealers, banks, and trustees, or their nominees, for
reasonable expenses incurred by them in forwarding proxy material to beneficial
owners of the Common Stock.

PROPOSAL ONE - ELECTION OF DIRECTORS

The Board of Directors of the Company is divided into three classes
(Class I, Class II, and Class III). At each annual meeting of shareholders,
directors constituting one class are elected for a three-year term. The Amended
and Restated Charter of the Company provides that each class shall consist, as
nearly as may be possible, of one-third of the total number of directors
constituting the entire Board of Directors. The current Board of Directors is
comprised of ten members. Four members will be elected at the Annual Meeting.
The Board of Directors of the Company has nominated and recommends to the
shareholders, P. Manohar, Mickey Ganot, Julius Lasnick and Donna Randall, each
of whom is an incumbent Class I director, for election as Class I directors to
serve until the annual meeting of shareholders in 2002 and until such time as
their respective successors are duly elected and qualified. The election of
directors requires the vote of a plurality of the Common Stock.

Each of Messrs. Manohar, Shankar and Ganot were appointed to the Board
of Directors pursuant to an Agreement, dated as of April 8, 1997 (the "Texmaco
Agreement"), among Polysindo Hong Kong Limited ("Texmaco"), PT. Texmaco Jaya, an
Indonesian corporation and affiliate of Texmaco, and the Company, entered into
in connection with the acquisition by Texmaco of 3,000,000 shares of the
Company's Common Stock from certain shareholders of the Company. Pursuant to the
Texmaco Agreement, the Company agreed to fill three vacancies on the Board of
Directors with designees of Texmaco reasonably acceptable to the Board of
Directors. The members of the Board of Directors not affiliated with Texmaco
(the "Disinterested Directors") are obligated pursuant to the Texmaco Agreement
to recommend each of the Texmaco designees for election at each annual meeting
of the Company's shareholders at which each such designee shall stand for
election. At such time as Texmaco and its affiliates own less than 20% but at
least 15% of the Company's outstanding Common Stock, Texmaco is only entitled to
two designees. Between 15% and 10%, Texmaco is only entitled to one designee and
at less than 10%, Texmaco is not entitled to any designees. Pursuant to the
Texmaco Agreement, Texmaco has agreed to vote its shares of Common Stock in
accordance with the recommendation of the Disinterested Directors with respect
to the election of directors.

If any of the nominees should become unable to accept election, the
persons named in the proxy may vote for such other person or persons as may be
designated by the Board of Directors. Management has no reason to believe that
any of the nominees named above will be unable to serve. Certain information
with respect to directors who are nominees for election at the Annual Meeting
and with respect to directors who are not nominees for election at the Annual
Meeting is set forth on the following pages.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" ALL OF THE
DIRECTOR NOMINEES IN PROPOSAL ONE.

Name Age Principal Occupation/Directorships Director Since
- - ---- --- ---------------------------------- --------------

DIRECTOR NOMINEES
Class I Directors
(Terms Expire 2002)

P. Manohar 45 Mr. Manohar has been Group Executive Vice President/Finance of Texmaco 1997
Group since 1989. Prior to that time, he held Finance Executive positions in
various companies of the Texmaco Group and with SRF Ltd., an Indian
textile company. Mr. Manohar was appointed to the Board of Directors as
a designee of Texmaco.

Mickey Ganot 47 Mr. Ganot has been the Director of Global Marketing of Texmaco since 1997
1993. Prior to joining Texmaco, he served as Corporate Vice President
Manufacturing and Operations of Liz Claiborne. Mr. Ganot was appointed
to the Board of Directors as a designee of Texmaco.

Julius Lasnick 69 Mr. Lasnick, now retired, was the President - Manufacturing of Springs 1992
Industries, Inc., a textile company, from 1991 until April 1993. From 1986
until April 1993 he also served as Executive Vice President and a director of
Springs Industries, Inc. Mr. Lasnick is also a director of National Spinning
Co., Inc.

Donna M. Randall 45 Dr. Randall has been Dean and Professor of Management, Fogelman College of 1998
Business and Economics, The University of Memphis since 1995. Prior to that
time she served the Department of Management and Systems, Washington State
University as Professor from 1994 to 1995, as Chair from 1992 to 1995 and as
Associate Professor from 1990 to 1994. Dr. Randall serves on the Advisory
Board of Enterprise National Bank.

CONTINUING DIRECTORS

Class II Directors
(Terms Expire 2000)

L.R. Jalenak, Jr. 68 Mr. Jalenak retired in December 1993 from the position of Chairman of the 1992
Board of Cleo Inc., a Gibson Greetings Company manufacturing giftwrap,
greeting cards, and related products, a position he had held since June 1990.
For over ten years prior to June 1990, Mr. Jalenak was President and Chief
Executive Officer of Cleo Inc. Mr. Jalenak is also a director of Perrigo
Company and Lufkin Industries, and is an independent trustee and vice-
chairman of First Funds, a family of mutual funds managed by First
Tennessee Bank, Memphis, Tennessee.

T. Eugene McBride 55 Mr. McBride is Chairman of the Board and Chief Executive Officer of the 1989
Company. He joined the Company in September 1988 as Executive Vice
President. Mr. McBride was named Chief Operating Officer of the Company
in January 1989, Chief Executive Officer in September 1990, and Chairman
of the Board in July 1995. In addition, Mr. McBride served as President of
the Company from January 1989 until July 1997.

John D. Howard 46 Mr. Howard has been a Senior Managing Director of Bear Stearns & Co., a 1998
merchant banking firm, since March 1997 and the Chief Executive Officer
of Gryphon Capital Partners Corporation, a merchant banking firm, from July
1996 through 1997. Previously, Mr. Howard was the Co-Chief Executive Officer
of Vestar Capital Partners, Inc., a merchant banking firm, from 1990 to 1996.
Mr. Howard had been a director of the Company from 1986 through July 1997 and
since January 1998. Mr. Howard also serves as a director of Celestial
Seasonings, Inc. and Safety First Inc.

Class III Directors
(Terms Expire 2001)

Marvin B. Crow 66 Mr. Crow has been President of KBO Enterprises, the predominant business 1990
of which is operating "TCBY" frozen yogurt stores, since April 1988. Prior
to that he was President of J.P. Stevens & Co., Inc., a textile company. Mr.
Crow is also a director of National Spinning Co., Inc., Ameritex Yarn
Corporation, and Ithaca Industries.

Jerome M. Wiggins 58 Mr. Wiggins was elected President and Chief Operating Officer of the Company in 1992
July 1997 and previously served as President - Operations from December 1995 to
July 1997. Mr. Wiggins joined the Company in August 1989 as Vice President,
Chief Financial Officer, Treasurer, and Secretary and served in those capacities
until he was named President - Operations in December 1995.

Ravi Shankar 35 Mr. Shankar has been a Vice President of Operations in Texmaco's Textile 1997
division and Director of Texmaco Perkasa Engineering since 1987. Mr.
Shankar was appointed to the Board of Directors as a designee of Texmaco.

The Board of Directors holds regular quarterly meetings and meets on
other occasions when required by special circumstances. Certain directors also
devote their time and attention to the Board's principal standing committees.
The committees, their primary functions, and memberships are as follows:

Executive Committee -- This committee is authorized generally to act on
behalf of the Board of Directors between scheduled meetings of the
Board, subject to certain limitations established by the Board and
applicable corporate law. The Executive Committee is also given
specific authorization by the Board, from time to time, with respect to
certain matters. Members of the Executive Committee are T. Eugene
McBride, Marvin B. Crow, Mickey Ganot, and Julius Lasnick.

Audit Committee -- This committee makes recommendations to the Board of
Directors with respect to the Company's financial statements and the
appointment of independent auditors, reviews significant audit and
accounting policies and practices, meets with the Company's independent
auditors concerning, among other things, the scope of audits and
reports, and reviews the performance of the overall accounting and
financial controls of the Company. Members of the Audit Committee are
Marvin B. Crow and L.R. Jalenak, Jr.

Compensation Committee -- This committee has the responsibility for
reviewing and approving the salaries, bonuses, and other compensation
and benefits of executive officers, reviewing and advising management
regarding benefits and other terms and conditions of compensation of
management, and administering the Company's 1992 Stock Incentive Plan
(the "1992 Stock Plan") and the Nonqualified Stock Option Plan for
Employees of Acquired Companies (the "Stock Option Plan"). Members of
the Compensation Committee are L.R. Jalenak, Jr., Julius Lasnick and
Marvin B. Crow. See "Compensation Committee Report on Executive
Compensation."

Nominating Committee -- This committee is responsible for reviewing the
size and composition of the Board of Directors and the qualifications
of possible candidates for the Board of Directors and making
recommendations respecting nominees to be proposed to shareholders for
election at each Annual Meeting. In accordance with the Company's
Bylaws, nominations for election to the Board of Directors may be made
by the Board of Directors, a nominating committee appointed by the
Board of Directors, or by any shareholder entitled to vote for the
election of directors. Nominations made by shareholders must be made by
written notice (setting forth the information required by the Company's
Bylaws) received by the Secretary of the Company at least 120 days in
advance of an annual meeting or within 10 days of the date on which
notice of a special meeting for the election of directors is first
given to shareholders. Members of the Nominating Committee are L.R.
Jalenak, Jr. and Julius Lasnick.

Mergers and Acquisitions Committee -- This committee is responsible for
exploring opportunities for growth through acquisitions. Members of the
Mergers and Acquisitions Committee are John D. Howard, T. Eugene
McBride, P. Manohar, L.R. Jalenak, Jr., and Julius Lasnick.

The Board of Directors held 5 meetings during the fiscal year ended
October 3, 1998 ("fiscal 1998"). Due to the increased number of meetings held by
the full Board of Directors, the Executive Committee held no meetings during
fiscal 1998, the Audit Committee held 3 meetings during fiscal 1998, the
Compensation Committee held 3 meetings during fiscal 1998, the Nominating
Committee held no meetings during fiscal 1998, the Mergers and Acquisitions
Committee held no meetings during fiscal 1998, and the Disinterested Directors
held 2 meetings during fiscal 1998. Each of the directors, other than P.
Manohar and Ravi Shankar, attended at least 75% of the meetings of the Board of
Directors and the committees on which such director served.

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

As of December 11, 1998, there were 13,341,066 shares of Common Stock
outstanding and entitled to vote at the Annual Meeting. Each share of Common
Stock is entitled to one vote on each of the matters to be voted on at the
Annual Meeting. The following table sets forth, as of November 30, 1998, the
beneficial ownership of each current director (including the four nominees for
director), each of the executive officers named in the Summary Compensation
Table beginning on page 6 hereof (the "Named Executive Officers"), the executive
officers and directors as a group, and each shareholder known to management of
the Company to own beneficially more than 5% of the outstanding Common Stock.
Unless otherwise indicated, the Company believes that the beneficial owner set
forth in the table has sole voting and investment power.

Name of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership(1)(2) Class
---------------- -------------------------- -----

T. Eugene McBride 206,415 1.5%
Janice L. Whitlock -- *
Jerome M. Wiggins 187,330 1.4
William S. Shropshire, Jr. 25,700 *
Stephen J. Dauer 100,026(3) *
Julius Lasnick 9,342 *
L.R. Jalenak, Jr. 19,842 *
Marvin B. Crow 9,342 *
John D. Howard -- *
Donna M. Randall -- *
P. Manohar --(4) *
Ravi Shankar --(4) *
Mickey Ganot --(4) *
Marimutu Sinivisan --(5) *
Texmaco 3,000,000(6) 22.5
Strong Capital Management, Inc. 1,113,000(7) 8.3
Dimensional Fund Advisors, Inc. 772,100(8) 5.8
Directors and executive officers as a group 749,480 5.6
(20 persons)

- - -------------------
* Less than one percent.

(1) Pursuant to the rules of the Securities and Exchange Commission (the
"SEC"), shares of Common Stock subject to options held by directors and
executive officers of the Company that are exercisable within 60 days of
the date hereof are deemed outstanding for the purpose of computing such
director's or executive officer's beneficial ownership and the beneficial
ownership of all executive officers and directors as a group.

(2) Includes shares of Common Stock issuable upon the exercise of options
granted pursuant to the 1992 Stock Plan held by the individual in the
following amount: Mr. McBride, 25,414; Mr. Wiggins, 16,492; Mr. Shropshire,
25,000; Mr. Dauer, 2,111; Mr. Lasnick, 7,000; Mr. Jalenak, 9,000; Mr. Crow,
7,000; and directors and executive officers as a group, 114,160.

(3) Includes 300 shares of Common Stock owned by Mr. Dauer's spouse.

(4) Excludes shares held by Texmaco that may be deemed to be beneficially owned
because such person is a Texmaco designee to the Company's Board of
Directors pursuant to the Texmaco Agreement.

(5) Excludes shares held by Texmaco that may be deemed to be beneficially owned
because such person is a controlling person of Texmaco.

(6) Address: Sentra Mulia Suite 1008, 10th Floor, JI. H.R. Resuna Said Kav. X-6
No. 8, Jakarta - 12540 Indonesia.

(7) Source of data is most recent Form 13-F quarterly filing on September 30,
1998. Address: 100 Heritage Reserve, Menomonee Falls, Wisconsin 53051.
Only exercises voting power over 468,100 shares.

(8) Source of data is most recent Form 13F-E quarterly filing on September 30,
1998. Address: 1099 Ocean Avenue, 11th Floor, Santa Monica, California
90401.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

Unless the context otherwise requires, the term "Company" as used in
connection with executive compensation refers to the Company and its wholly
owned operating subsidiaries, Dyersburg Fabrics Limited Partnership, I
("Dyersburg Fabrics"), IQUE Limited Partnership, I ("IQUE"), United Knitting
Limited Partnership, I ("United Knitting"), and AIH Inc. ("Alamac"). The
following table provides information as to annual, long-term, and other
compensation paid by the Company and its subsidiaries to the Company's Chief
Executive Officer and to each of the other Named Executive Officers of the
Company for services rendered in all capacities to the Company and its
subsidiaries.

Long-Term
Compensation
Annual Compensation Awards
------------------------- ---------------------
Securities Underlying All Other
Name and Principal Positions Fiscal Year Salary Bonus Options (#) Compensation(1)
- - --------------------------- ----------- ----------- ---------- --------------------- ------------------

T. Eugene McBride, 1998 $311,929 $ -- 6,000 $44,031
Chairman and Chief 1997 282,802 211,875 -- 19,871
Executive Officer 1996 259,386 96,950 25,414(2) 15,446

Jerome M. Wiggins, 1998 $225,000 $ -- 5,000 $28,740
President and Chief 1997 203,791 132,000 -- 15,661
Operating Officer 1996 186,258 65,012 16,492(2) 12,731

Janice L. Whitlock, 1998 $208,334 $ -- 5,000 $28,953
President - Marketing 1997 193,232 135,000 -- 17,250
1996 181,678 61,287 34,981(3) 14,228

William S. Shropshire, Jr., 1998 $189,174 $ -- 5,000 $26,009
Executive Vice President, 1997 181,550 120,000 25,000 15,040
Chief Financial Officer, 1996(4) N/A N/A N/A N/A
Secretary and Treasurer

Stephen J. Dauer, 1998 $182,262 $ -- 4,000 $24,792
Sr. Vice President - Sales 1997 178,072 112,500 -- 18,234
1996 174,000 52,612 9,311(2) 13,784
- - ------------

(1) Includes contributions by the Company in fiscal 1998 to the Dyersburg
Fabrics Inc. Profit Sharing Plan (the "Profit Sharing Plan") and to the
Company's Deferred Compensation Plan and premiums paid by the Company for
term life insurance provided for the benefit of the Named Executive
Officer, all as reflected in the table below.

Group Term Life
Name Profit Sharing Plan Deferred Compensation Plan Insurance Premiums
- - --------------------------- ------------------ --------------------------- -------------------

T. Eugene McBride $12,415 $29,816 $1,800
Jerome M. Wiggins 12,415 16,145 180
Janice L. Whitlock 12,415 15,026 1,512
William S. Shropshire, Jr. 12,415 12,226 1,368
Stephen J. Dauer 12,415 11,045 1,332

6
9

(2) Reflects number of options repriced in fiscal 1996.
(3) Includes 16,981 options repriced in fiscal 1996.
(4) Mr. Shropshire assumed the offices of Executive Vice President, Chief
Financial Officer, Secretary, and Treasurer effective September 28, 1996.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

The following table sets forth certain information concerning options
granted in fiscal 1998:

Individual Grants
---------------------------------------------------------------
Percent of
Total
Number of Options/ Potential Realizable Value at
Securities SARs Assumed Annual Rates of
Underlying Granted to Stock Price Appreciation
Options/ Employees Exercise for Option Term
SARs in Fiscal or Base Expiration -------------------------
Name Granted Year Price Date 5% 10%
- - ---------------------- ------------ ------------- ----------- ------------- ------ -------

T. Eugene McBride 6,000 3.07% $11.25 11/4/07 $42,480 $107,580
Jerome M. Wiggins 5,000 2.56 11.25 11/4/07 35,400 89,650
Janice L. Whitlock 5,000 2.56 11.25 11/4/07 35,400 89,650
William S. Shropshire, Jr. 5,000 2.56 11.25 11/4/07 35,400 89,650
Stephen J. Dauer 4,000 2.05 11.25 11/4/07 28,320 71,720

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES

The following table provides information as to options exercised by the
Named Executive Officers during fiscal 1998. The numbers and value of the
unexercised options held by the Named Executive Officers are also set forth in
the following table. None of the Named Executive Officers has held or exercised
separate stock appreciation rights ("SARs").

Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at In-the-Money
Acquired on Value Fiscal Year-End Options at Fiscal Year-End
Exercise Realized ----------------------------- ----------------------------
Named Executive Officer (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- - ------------------------- ------------ -------------- ------------ --------------- ------------ -------------

T. Eugene McBride -- $ -- 25,414 6,000 $ -- $ --
Jerome M. Wiggins -- -- 16,492 5,000 -- --
Janice L. Whitlock 34,981 255,137 -- 5,000 -- --
William S. Shropshire, Jr. -- -- 25,000 5,000 -- --
Stephen J. Dauer -- -- 2,111 3,200 -- --

COMPENSATION OF DIRECTORS

Directors who are not employees of the Company or Texmaco designees are
entitled to receive an annual fee of $12,000 in cash and $4,000 worth of Common
Stock, plus $1,000 for each Board of Directors meeting attended and $500 for
each committee meeting attended. These outside directors also received a grant
of 372 shares of Common Stock during the past fiscal year. Directors who are
employed by the Company receive no directors' fees. All directors are reimbursed
for their expenses incurred in attending meetings.

7
10

As of the date hereof, the 1992 Stock Plan provides for automatic
grants of non-qualified stock options to directors who have not served as an
officer or employee of the Company or any Subsidiary or Affiliate, or any person
beneficially owning five percent or more of the Common Stock of the Company
("Outside Directors"). Options to purchase 5,000 shares of Common Stock are
automatically granted to Outside Directors upon their initial election to the
Board of Directors. In addition, options to purchase 2,000 shares of Common
Stock are automatically granted to each Outside Director upon his reelection to
the Board of Directors if such director has served as such for at least one year
prior to such reelection. The exercise price of such options is equal to the
fair market value of the Common Stock on the date of election. The term of such
options is ten years, and they are exercisable one year from the date of grant.

CERTAIN TRANSACTIONS
RELATIONSHIP WITH TEXMACO

Texmaco is a Hong Kong corporation under common control with P.T.
Polysindo Eka Perkasa and PT. Texmaco Jaya. Texmaco is a vertically integrated
polyester chemical and textile manufacturer based in Jakarta, Indonesia. The
mailing address and telephone number of the principal executive office of
Texmaco are Sentra Mulia Suite 1008, 10th Floor, JI. H.R. Resuna Said Kav. X-6
No. 8, Jakarta - 12540 Indonesia, 0-11-62-21-522-9390. Marimutu Sinivisan is a
controlling person of Texmaco.

On April 8, 1997, Texmaco acquired from certain shareholders of the
Company 3,000,000 shares or approximately 22.8% of the outstanding Common Stock.
In connection with such purchase, Texmaco stated its intention to acquire
additional shares of Common Stock so that it would own a majority of the Common
Stock prior to November 5, 1998. On November 5, 1998, Texmaco owned 3,000,000
shares of Common Stock. On April 8, 1997, the Company and Texmaco entered into
the Texmaco Agreement pursuant to which the Company and Texmaco made certain
agreements, including:

(i) If Texmaco and its affiliates do not own more than 50% of
the Company's outstanding Common Stock within 18 months following the
Closing Date, Texmaco and its affiliates shall be prohibited from
acquiring additional shares of Common Stock, except pursuant to certain
specified exceptions, such as Texmaco's exercise of its preemptive
right described below, and Texmaco's receipt of stock dividends from
the Company.

(ii) Texmaco shall have preemptive rights to acquire
additional shares of Common Stock in the event the Company proposes to
issue additional shares, except in certain specified events, such as
(i) stock dividends, stock splits, recapitalizations, or other
subdivisions of shares of Common Stock and (ii) issuances of shares of
Common Stock or related options to employees, officers, and directors
of, and consultants to, the Company pursuant to the Company's current
stock incentive plan.

(iii) Subject to certain limited exceptions set forth in the
Texmaco Agreement, Texmaco and its affiliates shall not sell or
otherwise transfer any shares of the Common Stock that they may own
without first offering to sell such shares to the Company.

(iv) Texmaco is entitled to designate three persons who are
senior executive officers of Texmaco to serve on the Company's Board of
Directors. However, if at any time Texmaco and its affiliates own less
than 20% but at least 15% of the outstanding Common Stock, Texmaco
shall be entitled to only two designees. If at any time Texmaco and its
affiliates own less than 15% but at least 10% of the outstanding Common
Stock, Texmaco shall be entitled to only one designee. If at any time
Texmaco and its affiliates own less than 10% of the outstanding Common
Stock, Texmaco shall not be entitled to any designees.

(v) Texmaco shall use its best efforts to ensure that the
Company's Board of Directors has at all times four disinterested
members, who shall be persons who are not affiliates of Texmaco and who
are not Texmaco's designees to the Board of Directors.

(vi) Any transaction between the Company and Texmaco or its
affiliates shall be on terms no less favorable than those that would be
obtained from unaffiliated parties in arms' length transactions, and
any such

8
11

transaction or series of related transactions that exceeds $1,000,000
must be approved by a committee comprised of the Company's
disinterested directors.

(vii) Texmaco shall have the right to request that the Company
effect registration under the Securities Act of 1933, as amended (the
"1933 Act"), of the shares owned by Texmaco and its affiliates, subject
to certain conditions including, without limitation, the Company shall
be obligated to effect no more than three such demand registrations
under a Registration Statement on Form S-3 and no more than two such
demand registrations under a Registration Statement on Form S-1. In the
event that the Company proposes to register shares of its Common Stock
under the 1933 Act, Texmaco shall have the right to request that shares
of the Common Stock owned by it be included in such registration,
subject to certain customary restrictions.

Pursuant to the Texmaco Agreement, Texmaco has designated P. Manohar,
Ravi Shankar, and Mickey Ganot as nominees to the Company's Board of Directors.
By virtue of its ownership in the Company and representation on the Company's
Board of Directors, Texmaco is in a position to exert substantial influence on
the business policies of the Company.

During fiscal 1998, the Company sold fabric in the approximate amount
of $80,000 to Texmaco, and purchased yarn in the approximate amount of $20,000
from Texmaco, in the ordinary course of business upon terms the Company believes
were no less favorable than could have been obtained from an unrelated third
party.

INDEBTEDNESS OF MANAGEMENT

In connection with the relocation of certain of the Company's
management from Dyersburg, Tennessee to Charlotte, North Carolina, several of
the officers of the Company received interest-free loans from the Company,
including a loan to William S. Shropshire, Jr. in the amount of $80,000. All of
these loans were used for the purchase of new homes in Charlotte, North
Carolina, and all, including Mr. Shropshire's, have been repaid in full.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, the Company's executive officers, and persons
who beneficially own more than ten percent of the Common Stock to file reports
of ownership and changes in ownership with the SEC. Such directors, officers,
and greater than ten percent shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.

Based solely on the Company's review of the copies of such forms
furnished to the Company, or written representations from certain reporting
persons, the Company believes that during fiscal 1998 its officers, directors,
and greater than ten percent beneficial owners were in compliance with all
applicable filing requirements.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee of the Board of Directors of the Company is
currently comprised of L.R. Jalenak, Jr., Julius Lasnick and Marvin B. Crow.
None of the above mentioned persons has at any time been an officer or employee
of the Company or any of its subsidiaries. No executive officer of the Company
served during fiscal 1998 as a member of the compensation committee or as a
director of any entity of which any of the Company's directors serves as an
executive officer.

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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The compensation of the Company's executive officers and key managers
(collectively referred to in this report as "executives") is reviewed and
approved annually by the Compensation Committee of the Board of Directors,
currently comprised of three non-employee directors. In addition to reviewing
and approving executives' salary and bonus arrangements, the Compensation
Committee establishes policies and guidelines for other benefits and administers
the awards of stock and stock options pursuant to the Company's stock plans. The
Compensation Committee is assisted in making compensation decisions by the
Company's Chief Executive Officer (referred to in this report as the "CEO") and
independent professional compensation consultants.

COMPENSATION POLICIES AND PROCEDURES APPLICABLE TO EXECUTIVES FOR FISCAL 1998

General. Compensation of the Company's executives is intended to
attract, retain, and reward persons who are essential to the corporate
enterprise. The fundamental policy of the Company's executive compensation
program is to offer competitive compensation to executives that appropriately
rewards the individual executive's contribution to corporate performance. The
objective corporate performance measurement utilized by the Compensation
Committee in fiscal 1998 for establishing executive compensation was the
Company's earnings before taxes ("EBT"), which measurement the Compensation
Committee believes reflects shareholder value. Additionally, the Compensation
Committee utilizes subjective criteria for evaluating individual performance and
relies substantially on the key managers, principally the CEO, in doing so. The
Compensation Committee focuses on three primary components of the Company's
executive compensation program, each of which is intended to reflect individual
and corporate performance: base salary compensation, annual incentive
compensation, and long-term incentive compensation.

Base Salary Compensation. Executives' base salaries are determined
primarily by reference to compensation packages for similarly situated
executives of companies of similar size or in comparable lines of business, with
whom the Company expects to compete for executive talent. The Compensation
Committee also assesses subjective qualitative factors to discern a particular
executive's relative "value" to the corporate enterprise in establishing base
salaries. At the initial Compensation Committee meeting each fiscal year, the
Company's CEO proposes to the Compensation Committee a compensation package for
each of the Company's executives, excluding the CEO. The Compensation Committee
reviews the CEO's recommendations and determines the appropriate compensation
packages for each of the executives for the forthcoming fiscal year. It has been
the objective of the Compensation Committee, based on formal surveys conducted
by the Company's compensation consultants and informal surveys of other publicly
held companies in the textile industry or of similar market capitalization, that
base salaries for the Company's executives be targeted at the 50th percentile of
total cash compensation for comparable positions. The Compensation Committee
believes that the Company's principal competitors for executive talent are not
necessarily the same companies that would be included in a peer group compiled
for purposes of measuring shareholder returns. Consequently, the comparable
companies examined for compensation purposes are not the same as the companies
comprising the Media General Financial Services Industry Group 56 -- Textile
Manufacturing Index in the Performance Graph included in this Proxy Statement.

Annual Incentive Compensation. At the initial Compensation Committee
meeting, the Compensation Committee also establishes the amounts available for
cash bonuses (in the aggregate and per executive) based on the achievement of
Company performance objectives approved by the full Board of Directors. The
policy of the Compensation Committee for fiscal 1998 was to provide for
potential bonuses based on corporate operating performance in amounts ranging
from 10% to 65% of the executives' base salaries. Based on the Company's 1998
EBT, an aggregate of 0% of the bonus pool was distributed

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to the senior executives as incentive compensation. Executives were not entitled
to any incentive compensation since EBT was less than 75% of the targeted
amount. The objective corporate performance portion of the bonus pool would have
been divided among the individual executives based upon sharing ratios
established at the beginning of the fiscal year. The sharing ratios were
determined on the basis of base salaries as well as the subjective, informal
evaluation by the CEO of an individual executive's performance and his or her
ability to affect the Company's operating performance.

Long-Term Incentive Compensation. It is the Compensation Committee's
philosophy that significant stock ownership by management creates a powerful
incentive for executives to build long-term shareholder value. Accordingly, the
Compensation Committee believes that an integral component of executive
compensation is the award of equity-based compensation, which is intended to
align executives' long-term interests with those of the Company's shareholders.
Awards of stock options to executives have historically been at then-current
market prices and, in keeping with the Company's objective to link pay with
corporate performance, generally vest over a period of one to five years
depending on the percentage increase in the Company's pre-tax earnings over the
prior fiscal year. In general, the amount of shares subject to option awards are
consistent with the relative pay levels of the executives.

CEO MCBRIDE'S COMPENSATION

In reviewing and approving Mr. McBride's fiscal 1998 compensation, the
Compensation Committee considered the same criteria detailed herein with respect
to executives in general. Mr. McBride's base salary for fiscal 1998 was
established at $311,929, a 10% increase over his fiscal 1997 base salary. Mr.
McBride's incentive bonus for fiscal 1998 was zero. Mr. McBride's targeted bonus
for 1998 was 65% of his base salary if the Company achieved its targeted EBT.
Had the Company achieved greater than 125% of its targeted EBT in fiscal 1998,
Mr. McBride would have been eligible to receive a bonus payout at 150% of his
targeted bonus or a bonus equivalent to 97.5% of his base salary. Such amount
and percentage is higher than that available to other executives. This is
consistent with the Compensation Committee's philosophy that, because the Chief
Executive Officer is in the greatest position to affect Company operating
performance, he should have the largest portion of his compensation "at risk."

COMPLIANCE WITH INTERNAL REVENUE CODE 162(M)

Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), enacted as part of the Omnibus Budget Reconciliation Act of 1993,
generally disallows a tax deduction to public companies for compensation over
$1,000,000 paid to Named Executive Officers. Under the regulations, certain
"performance based" compensation is not subject to the deduction limit. The 1992
Stock Plan contains certain per-participant limitations on grants pursuant to
the 1992 Stock Plan so that awards of stock options pursuant to such plan should
be considered "performance based." Because the Company does not believe it is
otherwise in any immediate danger of losing any deductions, no definitive
determinations have been made by the Compensation Committee as to whether it
will cause the $1,000,000 limit to be exceeded in the future.

L.R. JALENAK, JR., Chairman, JULIUS LASNICK and MARVIN B. CROW

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PERFORMANCE GRAPH

The following graph compares the cumulative returns of $100 invested in (a)
the Company, (b) the Media General New York Stock Exchange Index ("Media General
NYSE Index"), and (c) the Media General Financial Services Industry Group
628-Textile Manufacturing Index ("Media General Textile Mfg."), for the period
covering the Company's most recent five fiscal years, assuming reinvestment of
all dividends.

Measurement Period Dyersburg Media General Media General
(Fiscal Year Covered) Corporation NYSE Index Textile Mfg.

9/93 100 100 100
9/94 95 105 97
9/95 70 126 94
9/96 84 150 108
9/97 179 205 120
9/98 53 211 99

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PROPOSAL TWO - RATIFICATION OF APPOINTMENT OF AUDITORS

Upon recommendation of the Audit Committee, the Board of Directors has
appointed Ernst & Young LLP, independent auditors, to audit the accounts of the
Company for fiscal 1999 and recommends that shareholders vote to ratify such
selection. A representative of Ernst & Young LLP is expected to be present at
the Annual Meeting, will have an opportunity to make a statement if he or she so
desires, and is expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL TWO.

PROPOSALS OF SHAREHOLDERS

Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, shareholders may present proper proposals for inclusion in the
Company's proxy statement and for consideration at the next annual meeting of
its shareholders by submitting their proposals to the Company in a timely
manner. In order to be so included for the next annual meeting, shareholder
proposals must be received by the Company no later than August 18, 1999, and
must otherwise comply with the requirements of Rule 14a-8. In addition, the
Company's Bylaws establish an advance notice procedure with regard to certain
matters, including shareholder proposals not included in the Company's proxy
statement, to be brought before an annual meeting of shareholders. In general,
notice must be received by the Secretary of the Company not less than 120 days
prior to the date the Company's proxy statement was released to shareholders in
connection with the previous year's annual meeting and must contain specified
information concerning the matters to be brought before such meeting and
concerning the shareholder proposing such matters.

OTHER MATTERS

The Board of Directors is not aware of any matter to be presented for
action at the meeting other than the matters set forth herein. Should any other
matter requiring a vote of shareholders arise, the proxies in the enclosed form
confer upon the person or persons entitled to vote the shares represented by
such proxies discretionary authority to vote the same in accordance with their
best judgment in the interest of the Company.

METHOD OF COUNTING VOTES

Unless a contrary choice is indicated, all duly executed proxies will
be voted in accordance with the instructions set forth on the back side of the
proxy card. Abstentions and broker non-votes will be counted as present for
purposes of determining a quorum. Abstentions and broker non-votes are treated
as votes against the proposals presented to the shareholders other than the
election of directors and the verification of the appointment of the Company's
accountants. Because directors are elected by a plurality of the votes cast,
abstentions are not considered in the election. A broker non-vote occurs when a
broker holding shares registered in a street name is permitted to vote, in the
broker's discretion, on routine matters without receiving instructions from the
client, but is not permitted to vote without instructions on non-routine
matters, and the broker returns a proxy card with no vote (the "non-vote") on
the non-routine matter.

FINANCIAL STATEMENTS AVAILABLE

A copy of the Company's 1998 Annual Report containing audited financial
statements accompanies this Proxy Statement. The Annual Report does not
constitute a part of the proxy solicitation material.

UPON WRITTEN REQUEST TO WILLIAM S. SHROPSHIRE, JR., SECRETARY,
DYERSBURG CORPORATION, 15720 JOHN J. DELANEY DRIVE, SUITE 445, CHARLOTTE, NORTH
CAROLINA 28277, THE COMPANY WILL PROVIDE, WITHOUT CHARGE, COPIES OF THE
COMPANY'S ANNUAL REPORT TO THE SEC ON FORM 10-K.

BY ORDER OF THE BOARD OF DIRECTORS,

/s/ WILLIAM S. SHROPSHIRE, JR.
SECRETARY

December 29, 1998

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Appendix A

PROXY
DYERSBURG CORPORATION

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
SHAREHOLDERS OF DYERSBURG CORPORATION (THE "COMPANY") TO BE HELD JANUARY 27,
1999.

The undersigned hereby appoints T. Eugene McBride and William S. Shropshire,
Jr., and each of them, as proxies, with full power of substitution, to vote all
shares of the undersigned as shown hereon on this proxy at the Annual Meeting of
Shareholders of the Company to be held at the Ballantyne Country Club, 11120
Ballantyne Crossing, Charlotte, North Carolina 28277, on Wednesday, January 27,
1999, at 9:00 a.m. E.S.T. and any adjournment thereof.

(1) ELECTION OF DIRECTORS:

FOR all nominees listed to the WITHHOLD AUTHORITY to vote for Class I director nominees: P. Manohar, Mickey
right (except as marked to the all nominees listed to the Ganot, Julius Lasnick, and Donna Randall.
contrary) [ ] right [ ]

(INSTRUCTION: To withhold authority to vote for any individual nominee, print
that nominee's name in the space provided below.)

- - ------------------------------------------------------------------------------

(2) Ratification of Appointment of Ernst & Young LLP as the Independent
Auditors:

[ ] FOR [ ] AGAINST [ ] ABSTAIN

(3) In their discretion on any other matter that may properly come before said
meeting or any adjournment thereof.

(Please date and sign this proxy on the reverse side.)

Your shares will be voted in accordance with your instructions. If no choice
is specified, shares will be voted FOR the election of all four nominees and FOR
ratification of appointment of auditors.

PLEASE SIGN HERE AND RETURN
PROMPTLY

-------------------------------

Date: , 199
------------------- ---

Please sign exactly as your
name appears on your stock
certificate. If registered in
the names of two or more
persons, each should sign.
Executors, administrators,
trustees, guardians, attorneys,
and corporate officers should
show their full titles.

------------------------------------------------------------------------

If you have changed your address, please PRINT your new address on this line.