NEW YORK — Cone Mills Corp. limited its bloodletting in the “worst quarter in recorded U.S. textile industry history” but wound up with a $36.5 million loss for the year.

The company reported a net loss of $2.5 million, or 14 cents a diluted share, for the quarter ended Dec. 30, 2001, as compared to a loss of $28 million, or $1.14, for the year-ago period. Contributing to the quarterly loss was a $1.4 million charge from discontinued operations as a result of the shuttering of Cone’s khaki and John Wolf businesses. The company took a $38.8 million pre-tax charge for restructuring and asset impairment in the year-ago period.

Net sales for the quarter plummeted 34.9 percent to $88.6 million from $136.1 million last year.

“We slightly exceeded operating earnings expectations, despite a weaker than expected market, because our people were focused, worked hard and performed well on product styling, efficiency, quality and cost control,” said chief executive John Bakane in a statement. “Our operating cash flow exceeded interest costs and each of our operations was profitable. I am pleased with the way our people have responded to what I believe was the worst quarter in recorded U.S. textile industry history.”

Looking forward to 2002, Bakane said on a conference call with analysts that Cone was positioned to return to profitability by midyear. “It appears to us that retail inventory liquidations have cleared up and we are poised for economic recovery,” he said. “Our balance sheet is clean and our inventories are low. Now that my management team is positioned to pick up market share from our fallen competitors, we may face capacity limitations and working capital constraints later this year.”

Cone’s yearend net loss was $36.5 million, or $1.59 a diluted share, compared to a loss of $25.3 million, or $1.14, in 2000. Pre-tax restructuring charges totaled $19.9 million in 2001 and $38.5 million in 2000. Sales for the year dropped 18.6 percent to $450 million compared with $552.6 million in 2000.

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