Burlington in Chapter 11
By Susan M. Andrews -- Furniture Today, November 18, 2001
GREENSBORO, N.C. — Burlington Inds. filed for Chapter 11 bankruptcy protection last week, becoming the latest U.S. textile company left reeling in the face of low-cost offshore competition, especially in apparel, and a slumping economy.
The company, which has been hampered by a heavy debt load, will receive $190 million of debtor-in-possession financing to supplement $60 million of cash on hand.
George Henderson III, chairman and chief executive officer, said the voluntary filing will allow Burlington to "control and guide our reorganization activities under the protection of the court to expedite the debt and operational restructuring that we have been pursuing, and at the same time ensure that our daily operations continue uninterrupted."
Burlington will concentrate on a new business model focusing on four components: Lees Carpets, Nano-Tex (fabric performance technology), Hong Kong-based Burlington WorldWide Limited (global sourcing and partnerships with Asian mills), and manufacturing improvements in the United States and Mexico.
Henderson said a key factor leading to the filing "is the U.S. government's history of using the textile industry as a bargaining chip in international relations.… Imports have been growing rapidly for many years, but since 1999, the volume of imported apparel has grown at five times the rate of consumption, squeezing out U.S.-made products to the point that four out of five garments sold in this country today are imported."
Burlington's list of its 50 largest unsecured creditors includes several industry suppliers — DuPont (owed $8.1 million), Unifi ($1.5 million), KoSa ($1.2 million), Carolina Mills ($693,512), Synthetic Inds. ($437,043) and Conso ($282,196).
In its filing, the company reported total assets of about $1.2 billion and total debt of about $1.1 billion.
Burlington also released its fiscal 2001 earnings last week. In the fourth quarter ended Sept. 29, the net loss was $76.7 million, compared with a net loss of $523.7 million in the same quarter last year. For the full year 2001, the company had a net loss of $91.1 million compared with a net loss of $527 million in 2000.
Net sales of $1.4 billion in fiscal 2001 were down 13.4% from the previous year. Nearly two-thirds of the sales decline was related to the sale or closing of low-margin businesses and those hampered by declining demand, the company said.
Burlington was ranked No. 7 on Furniture/Today's 2000 list of top fabric mills, with interior fabric (non-automotive) revenues estimated at $215 million, including the Burlington House upholstery fabric division and mattress ticking sales, and excluding carpet revenues.
| Burlington Inds. | |||
|---|---|---|---|
| Owns Burlington House Upholstery Fabrics and Burlington House Tickings | |||
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 9/29 | 2001 | 2000 | Change |
| Sales | $327,056,000 | $427,231,000 | (23.4%) |
| Operating income | (6,390,000) | (5,478,000) | — |
| Net income(a) | (76,704,000) | (523,700,000) | — |
| Earnings per share | (1.46) | (10.05) | — |
| Year ended 9/29 | 2001 | 2000 | Change |
| Sales | $1,403,905,000 | $1,620,247,000 | (13.4%) |
| Operating income | 12,539,000 | 46,655,000 | (73.1%) |
| Net income(a) | (91,101,000) | (526,972,000) | — |
| Earnings per share | (1.73) | (10.12) | — |
| (a) Includes pretax provisions for restructuring and impairments of $72.2 million in the 2001 quarter, $67.2 million in the 2000 quarter, $72.1 million in the 2001 year and $67 million in the 2000 year, and income tax benefits of $20.1 million in the 2001 quarter, $30.8 million in the 2000 quarter, $27.6 million in the 2001 year and $21.7 million in the 2000 year. The 2001 quarter also includes $99,000 in equity loss of joint ventures. The 2000 quarter includes $2.9 million in equity income of joint ventures, the 2001 year includes $626,000 in equity income of joint ventures and the 2000 year includes $10.3 million in equity income of joint ventures. | |||
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