Despite posting an increase in its first quarter 2003 net income, Cone Mills Corporation today said the figures underperformed its plan and that it now intends to expand its low-cost denim capacity. The company needs more financing to support this move, and has announced a delay to its annual meeting until it can submit a new financing plan for shareholder consideration.

Cone, the world's largest producer of denim fabrics, reported a net income of $1.8 million for the first quarter of 2003, up from $1.4 million or $.02 per share for the first quarter of 2002.

Net sales for the Greensboro, NC headquartered business in the first quarter of 2003 were down by 3.4 per cent to $102.3 million from $105.8 million on lower sales volume in both the commission finishing and decorative fabrics segments.

Denim sales for the first quarter of 2003 were $84.3 million, an increase of 2.7 per cent over the comparable 2002 quarter. The increase in denim sales was a result of a more value-added product mix since unit volume was up only marginally on a quarter-over-quarter comparison the company said.

Operating income for the denim segment was $7.7 million in the first quarter of 2003, as compared to $5.8 million in the first quarter of 2002.

According to John L Bakane, CEO: "Following five quarters of solid performance, we now see structural weaknesses in the US economy weighing more heavily upon our outlook. Despite the deteriorating economic outlook and continued apprehension in textile credit markets, opportunities are evolving that may better fit our needs for expansion of regional low-cost denim capacity."