Over the 1991-92 period, U.S. cotton production was dominated by specialized farms, farms with annual sales greater than $250,000, and farms located in the Delta/Southeast production region. Approximately two-thirds of cotton farms had positive net farm income in 1991 and 1992. Low yields, especially in the South Plains region, appeared to be a major factor explaining the negative net farm incomes. Despite the large number of cotton farms experiencing low incomes, a limited number of commercial farms were experiencing severe financial stress which was indicated by the combination of a debt/asset ratio greater than 0.40 and negative net farm income. The proportion of commercial cotton farms experiencing severe financial stress was greater than other major farm types.