D
uring 1998, the economy continued to show resilience — the Dow Jones Industrial Average
gained 16.1 percent, and the S&P 500 advanced 26.7 percent. However, the Russell 2000 declined
3.5 percent and on average, each stock in the Bank of America Stock Watch lost 25.5 percent of its
value.

Among the factors contributing to this poor performance were the lingering Asian crisis,
leading to a surge in cheap imports; cautious buying from retailers with requests for shipping
delays; lower mill operating rates as longer holiday downtime is scheduled to prevent excessive
year-end inventory; flat to declining industry pricing reflecting import pressure; and unseasonably
warm weather that dampened the demand for fleece, outerwear and blankets.

In Textile News

On December 30, Worldtex completed its previously announced acquisition of the Lexington, S.C.,
narrow-elastic fabric manufacturing facility of Fruit of the Loom. Worldtex signed a long-term
supply agreement in connection with the purchase. According to a Fruit of the Loom spokesman, the
sale price was between $10 and 15 million.

Elsewhere, a unit of JPS Textile Group agreed to sell its home furnishings business to Belding
Hausman for $11.4 million.

Consolidation in the carpet industry continues with two recent transactions. On December 23,
Mohawk Industries announced an agreement to acquire Durkan Patterned Carpets, a leading supplier of
commercial carpet to the hospitality market. Durkan has annual sales of roughly $110 million.

On January 11, The Dixie Group completed its acquisition of the assets of Multitex
Corporation of America, a carpet and carpet yarn producer with annual sales of $85 million. The
purchase price was $30 million in cash plus certain future payments linked to revenue growth. Dixie
expects $600 million in floorcovering sales in 1999.

Information contained herein is based upon sources believed reliable, but is not guaranteed as
to accuracy or completeness. This report is not to be construed as an offer to buy or sell
security. Certain prices listed herein are indicaton quotes only and may not necessarily reflect
prices at which transactions were executed.

February 1999

William T. Kretzer, president and CEO of Unifi Inc., Greensboro, N.C., resigned and left the
company at the first of this month.Kretzer, who had been with Unifi since its founding in 1971 and
is well-respected in the industry, surprised many with his announcement. He was named president and
CEO in 1986.In an interview with ATI, G. Allen Mebane, chairman and founder of Unifi, made it clear
that Kretzer left of his own accord and said people have been trying to find hidden meaning in the
suddenness of the departure. Mebane has assumed Kretzers role as chief executive officer.Bill
stepped down, Mebane said. He just decided he wanted a change in career path. We will reorganize
the people we have here, and we will continue to do business just like we always have.Mebane had
nothing but praise for Kretzer, calling him a good friend, as well as one of the strengths and
drivers of the companys growth.Brian R. Parke will become Unifis new president and chief operating
officer. Parke was managing director of Unifis manufacturing operation in Letterkenny,
Ireland.Kretzer isnt the only head of a leading textile company to step down recently. Three months
ago, Pat Danahy, CEO of Cone Mills, also headquartered in Greensboro, retired suddenly. Mebane
insists there is no parallel between the two.Unifi has suffered some losses as of late at the hands
of cheaper imports from Asia. The companys stock price has fallen nearly 50 percent since the
beginning of 1998 and now hovers around the $20 mark. According to Mebane, Unifi will still post an
after-tax profit for 1998.Recently, however, the company reported a second-quarter loss compared to
the same period last year. Net sales and gross margin were $319 million and 15.8 percent
respectively, compared $343 million and 17.2 percent in 1998. Net income declined 31.9 percent to
$22.5 million.Unifi Inc. manufactures textured polyester and nylon yarns, covered yarn and
partially oriented yarn (P.O.Y.). The company has 19 manufacturing sites, including its texturing
and P.O.Y. plant in Ireland.
For more on Unifis operation, see Tops In Textured Yarn in this issue.

February 1999

Cone Mills Corp., Greensboro, N.C., announced that fourth quarter 1998 results will be lower than
analysts expectations as a result of reduced shipments of denim and yarn-dyed sportswear fabrics
and costs associated with a restructuring program.Slower than planned shipments were the result of
weaker retail sales associated with unseasonably warm weather and shifts from basic to
fashion-styled jeans, the company said.John L. Bakane, president and CEO, also announced a
comprehensive restructuring program to accelerate the earnings recovery of the company. Elements of
the program include: streamlining the product offering of the companys sportswear division,
including the closing of the Salisbury plant, which produces yarn-dyed shirting fabrics;
reorganizing and downsizing the corporate administrative staff with a mid-first-quarter 1999 target
implementation date; and reorganizing the apparel products group sales and administrative
organizations in order to reduce costs and more effectively service the changing global
marketplace.

February 1999

The Georgia Textile Manufacturers Association (GTMA) recently announced a change in the location of
its next annual meeting.The 1999 meeting that was previously planned for Rancho Mirage, Calif.,
will now be held at The Ritz-Carlton, Buckhead in Atlanta. The dates for the meeting remain the
same, May 5-9.GTMA President G.L. Roy Bowen III said that the decision was made to move the meeting
because of the organizations sensitivity to less favorable business conditions within broad sectors
of the industry and GTMAs desire to increase attendance at the annual meetings. Meeting details,
including registration information, were mailed out earlier this month.GTMAs 100th Anniversary
meeting will be held at The Cloister, Sea Island, Ga., from May 6-10, 2000; the annual meeting in
2001 will be held in coastal Georgia or South Carolina; in 2002 will be held at The Ritz-Carlton,
Rancho Mirage; and in 2003 will be held at The Ritz-Carlton, Buckhead.

February 1999