FYTEK, S.A. DE C.V.
                      (a Mexican corporation)

                       FINANCIAL STATEMENTS
                    DECEMBER 31, 1999 AND 1998

                             CONTENTS

                                             Page

Report of independent auditors                 1

Financial statements:
Balance sheets                                 2
Statement of income                            3
Statement of changes in stockholders' equity   4
Statement of cash flows                        5

Notes to financial statements                6-12
                -----------------------------------

                 REPORT OF INDEPENDENT ACCOUNTANTS

Monterrey, N. L., February 29, 2000

To the Stockholders of Fytek, S. A. de C. V.

1.We have audited the  accompanying  balance sheets of Fytek,  S. A. de C. V. as
  of  December  31,  1999 and 1998,  and the related  statements  of income,  of
  changes in stockholders' equity and cash flows for the years then ended. These
  financial statements are the responsibility of the Company's  management.  Our
  responsibility is to express an opinion on these financial statements based on
  our audits.

2.We  conducted  our audits in  accordance  with  auditing  standards  generally
  accepted in the United States of America. Those standards require that we plan
  and  perform  the audit to  obtain  reasonable  assurance  about  whether  the
  financial  statements  are free of  material  misstatement  and that they were
  prepared in accordance with generally accepted accounting principles. An audit
  includes  examining,  on a test  basis,  evidence  supporting  the amounts and
  disclosures in the financial statements.  An audit also includes assessing the
  accounting  principles used and significant  estimates made by management,  as
  well as evaluating the overall financial  statement  presentation.  We believe
  that our audits provide a reasonable basis for our opinion.

3.As  more  fully  described  in  Note 1 to the  financial  statements,  through
  December  31,  1998,  Mexico  had a highly  inflationary  economy.  Accounting
  principles  generally  accepted in the United  States of America  require that
  financial  statements  of a company  denominated  in the currency of a country
  with a highly  inflationary  economy be remeasured into a more stable currency
  unit.  Effective  January  1,  1999,  Mexico  is no  longer  deemed  a  highly
  inflationary economy.  Consequently, for the year ended December 31, 1999, the
  company's functional currency is the Mexican peso.

<PAGE>

4.In our opinion,  the  aforementioned  financial  statements present fairly, in
  all material  respects,  the  financial  position of Fytek,  S. A. de C. V. at
  December 31, 1999 and 1998, and the results of its operations,  the changes in
  its  stockholders'  equity  and its cash flows for the years  then  ended,  in
  conformity with accounting  principles generally accepted in the United States
  of America.

PricewaterhouseCoopers

<PAGE>

                              FYTEK, S. A. DE C. V.

                          BALANCE SHEETS
                     Thousands of U.S. dollars

                                                    December 31,
                                                  1999      1998
Assets:
Cash and cash equivalents                        $600      $279
Accounts receivable                              2,505     1,841
Related parties receivable                         97
Inventories                                       974       965
                                                  ---       ---
Total current assets                             4,176     3,085
Machinery and equipment                           144        57
                                                  ---        --
Total assets                                     $4,320    $3,142
                                                 ======    ======

Liabilities:
Suppliers                                        $1,127    $1,064
Related parties payable                          1,963     1,239
Deferred income tax                                73       109
Sundry creditors and accrued expenses             223        87
                                                  ---        --
Total current assets                             3,386     2,499
                                                 -----     -----

Stockholders' equity:
Capital stock                                     307       307
Retained earnings                                 606       336
Cumulative translation adjustment                  21
                                                 -----     -----
Total stockholders' equity                        934       643
                                                 -----     -----
Total liabilities and stockholders' equity       $4,320    $3,142
                                                 ======    ======


The accompanying notes are an integral part of these financial statements.
<PAGE>

                       FYTEK, S. A. DE C. V.

                       STATEMENTS OF INCOME
                     Thousands of U.S. dollars

                                                   Years ended
                                                   December 31,
                                                  1999       1998

Net sales                                       $7,623     $7,134
Cost of sales                                   (6,361)    (6,173)
                                                ------     ------
Gross margin                                    1,262       961
Operating expenses                              (561)      (423)
                                                ----       ----
Operating income                                 701        538
                                                 ---        ---

Interest income                                    33       144
Interest expense                                 (15)       (8)
Exchange (loss) gain, net                        (24)       121
                                                 ---        ---
                                                  (6)       257
                                                  --        ---
                                                  695       795
Other income, net                                  14         5
                                                   --         -
Income before income tax                          709       800
Income taxes expense                             (439)     (514)
                                                 ----       ----
Net income                                      $ 270      $286
                                                =====      ====


The accompanying notes are an integral part of these financial statements.
<PAGE>

                       FYTEK, S. A. DE C. V.

           STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                     Thousands of U.S. dollars


                                            Cumulative         Cumulative
                         Capital  Retained  translation        comprehensive
                         stock    earnings  adj.        Total  income
                         -----    --------  ---------   -----  ------


Balances at December 31,
  1997                    $307     $50                   $357   $50

Net income                         $286                  $286
Comprehensive income                                            $286
                         -----    -----     ---------   -----   -----


Balances at December 31,
   1998                  $307      $336                  $643   $336

Net income                         $270                  $270
Effect of change in functional
currency (Note 1.e)                             ($3)     ($3)
Foreign currency translation
adjustment                                      $24      $24
Comprehensive income                                            $291
                         -----    -----     ---------   -----   -----

Balances at December 31,
   1999                  $307     $606          $21     $934    $627



The accompanying notes are an integral part of these financial statements.
<PAGE>

                       FYTEK, S. A. DE C. V.

                     STATEMENTS OF CASH FLOWS
                     Thousands of U.S. dollars


                                                  Years ended
                                                  December 31,
                                                 1999     1998

Net income                                      $270     $286
Items not affecting cash:
Allowance for doubtful accounts                  41        22
Deferred income taxes                           (43)       87


Changes in working capital:
Accounts receivable                             (636)    (1,129)
Inventories                                      27      (691)
Related parties, net                            580       156
Suppliers                                        23      1,090
Sundry creditors, accrued expenses and other    140        55
                                                ---        --

Net cash provided by (used in) operating
   activities                                   419       (110)
                                                ---       ----

Cash flow from investing activities
Acquisition of machinery and equipment          (85)     (58)
                                                ---      ---

Cash used in investing activities               (85)     (58)
                                                ---      ---

Effect of exchange rate changes on
     cash and cash equivalents                  (13)        2
                                                ---       ---
Increase (decrease) in cash
     and cash equivalents                        321     (166)

Cash and cash equivalents at
     beginning of the year                       279       445
                                                 ---       ---

Cash and cash equivalents at end of the year    $600      $279
                                                ====      ====


The accompanying notes are an integral part of these financial statements.
<PAGE>

                      FYTEK, S. A. DE C. V.

                   NOTES TO FINANCIAL STATEMENTS
              DECEMBER 31, 1999 COMPARATIVE WITH 1998

        (Thousands of U.S. dollars, except exchange rates)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The  main activity of Fytek, S. A. de C. V. (the "Company") is the
manufacture of chemical fibers.  To carry out these activities the
Company  leases machinery and equipment from related parties  (see
Note  8).   The  Company  has  no  employees  and  technical   and
administrative  services are provided to it by  a  related  party.
The  Company is owned 50.01% by Akra Teijin, S. A. de  C.  V.  and
49.99% by Burke Mills, Inc.

The  accompanying  financial  statements  have been prepared in accordance  with
accounting principles generally accepted in the United States of America.

Following is a summary of the most significant accounting policies:

a.   Functional currency and translation

  The Company's  functional  currency is the Mexican peso (Ps). Through December
  31, 1998 Mexico was  considered an  hyperinflationary  economy.  An economy is
  considered  to be  hyperinflationary  when the  cumulative  inflation  for the
  previous three years exceeds 100%.

  As required by SFAS No. 52, "Foreign Currency Translation" companies operating
  in  hyperinflationary  economies  and whose  functional  currency is the local
  currency must  remeasure  their  financial  statements in a manner  similar to
  companies whose functional currency is the U.S. dollar.

  Using the remeasurement method monetary assets and liabilities  denominated in
  pesos are  translated  into U.S.  dollars using current or period end exchange
  rates. The difference between the exchange rate at the date of the transaction
  and the  exchange  rate on the  settlement  date or balance  sheet date if not
  settled,  is included in the results of operations as a foreign  exchange gain
  or loss. Non-monetary assets or liabilities,  originally denominated in Ps are
  translated into U.S.  dollars using  historical  exchange rates at the date of
  the transactions. Capital stock transactions are also translated at historical
  exchange rates.

<PAGE>

  Income  statement  components  are  generally  translated  at  average  rates;
  however,  depreciation  and  amortization  charges and costs of goods sold are
  translated  at  historical  rates  based  on  the  U.S.  dollar  basis  of the
  respective assets.

  Effective January 1, 1999, Mexico is no longer considered a  hyperinflationary
  economy.  Therefore,  the Company used the current  method to translate its Ps
  financial  statements  to  U.S.  dollars.  The  current  method  requires  the
  translation  of all assets and  liabilities  using the current  year  exchange
  rate.  Capital stock continues to be translated at historical  exchange rates.
  The effect of the  difference  between the exchange rates at the beginning and
  the end of the  reporting  periods is  reflected  as a separate  component  of
  stockholders'equity.

  Provided  below  is a  summary  of the  year end and  average  exchange  rates
  experienced during 1999 and 1998.


                                                  Ps per $
  At December 31, 1999              Year end      9.5222
  Year ended December 31, 1999      Average       9.5264
  At December 31, 1998              Year end      9.8780
  Year ended December 31, 1998      Average       9.0760

b.   Cash and cash equivalents

  Cash and cash  equivalents  are stated at cost,  which  approximates  the fair
  value.  The Company  considers all highly and temporary cash  investments with
  original maturities of three months or less to be cash equivalents.

c.   Inventories and cost of sales (Note 3)

  Inventories are stated at the lower of average cost or market.

d.   Machinery, equipment and depreciation (Note 4)

  Machinery and equipment are stated at acquisition cost.

  Depreciation  of  capitalized  assets will be calculated by the  straight-line
  method at an annual rate of 4%, beginning  January 1, 2000. This rate is based
  on the estimated useful lives of the assets as determined by the Company.
<PAGE>

e.   Income tax

  The Company accounts for income taxes under the liability method in accordance
  with Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting
  for Income Taxes".

  This  statement  requires  an  asset  and  liability  approach  for  financial
  accounting and reporting for income tax under the following basic  principles:
  (a) a current tax  liability or asset is recognized  for the  estimated  taxes
  payable or refundable on tax returns for the current year,  (b) a deferred tax
  liability  or  asset  is  recognized  for the  estimated  future  tax  effects
  attributable  to temporary  differences,  (c) the  measurement  of current and
  deferred tax  liabilities and assets is based on provisions of the enacted tax
  law  and  the  effects  of  future  changes  in tax  laws  or  rates  are  not
  anticipated,  and (d) the  measurement  of deferred tax assets is reduced,  if
  necessary,  by the amount of any tax  benefits  for which  available  evidence
  indicates  that it is more  likely  than not that they  will not be  realized.
  Under this method,  deferred tax is  recognized  with respect to all temporary
  differences.

  The  temporary  differences  under  FAS No.  109 are  determined  based on the
  difference  between the historical  tax-basis amount of the asset or liability
  and the related historical amount reported in the financial statements.

  An additional  deferred tax liability of $3 was recorded as of January 1, 1999
  to reflect the  temporary  difference  relating  to  machinery  and  equipment
  generated as a result of the change in the  methodology  used to translate the
  company's peso denominated financial  statements.  This effect was recorded as
  part of the cumulative translation adjustment in stockholders' equity.

f.   Revenue recognition

  The Company recognizes revenue when merchandise is delivered to customers. The
  allowance  for  returns  and  doubtful  accounts  is  sufficient  to cover any
  possible loss.

<PAGE>

g.   Use of estimates

  The preparation of financial  statements in conformity with generally accepted
  accounting  principles  requires  management to make estimates and assumptions
  that affect the amounts reported in the financial  statements.  Actual results
  could differ from those estimates.

h.   Comprehensive income

  Comprehensive income is the change in equity of a business enterprise during a
  period from  transactions  and other events and  circumstances  from  nonowner
  sources.  It  includes  all  changes in equity  during a period  except  those
  resulting from investments by owners and distributions to owners.

i.   Disclosure about concentration of credit risk

  The Company's  financial  statements do not include any financial  instruments
  that represent a significant concentration of credit risk.


NOTE 2 - ACCOUNTS RECEIVABLE

At December 31 this caption comprised the following:

                                                1999        1998
Bermatex, Inc.                                 $ 431       $722
Fariel, S. A. de C. V.                           253        179
Other customers                                1,508        745
Other accounts receivable                        379        220
                                               2,571       1,866
Allowance for doubtful accounts                 (66)       (25)
                                               $2,505      $1,841

NOTE 3 - INVENTORIES

At December 31 this caption comprised the following:

                                                1999      1998
Finished products                               $431      $722
Work in process                                  253       179
Spare parts and others                           290        64
                                                $974      $965

<PAGE>

NOTE 4 - MACHINERY AND EQUIPMENT

At December 31 this caption comprised the following:

                                                1999      1998
Machinery and equipment                         $ 79      $-
Construction in progress                          65        57
                                                $144      $ 57


NOTE 5 - STOCKHOLDERS' EQUITY

The  capital  stock is  variable  with a fixed  minimum  of $6 and an  unlimited
maximum.  At December 31, 1999, the subscribed and paid-in nominal capital stock
of $307, was represented by 24,450 Series "A" common,  nominative  shares of one
hundred nominal pesos par value each.

Dividends paid from retained  earnings which have not previously  been taxed are
subject to an income tax payable by the Company.


NOTE 6 - INCOME TAX

The components of income tax expense  (benefit) for the years ended December 31,
are as follows:

                                                1999       1998
Current income tax                              $482      $427
Deferred income tax (benefit)                   (43)        87
                                                $439      $514
<PAGE>

The primary  components of the net deferred tax  liabilities at December 31, are
as follows:

                                                1999       1998
Short-term deferred income tax liabilities:
Inventory                                       ($274)    ($216)
Machinery and equipment                         (2)
                                                (276)      (216)
Short-term deferred income tax assets:
Allowance for doubtful accounts                  23          8
Accrued expenses                                180         99
                                                203        107
Net short-term income (liabilities)             ($73)     ($109)

The following is a reconciliation of the statutory income tax rate of the actual
effective income tax rate for the years ended December 31.

                                                1999       1998
Income tax computed at statutory tax
rate (35% in 1999 and 34% in 1998)                         $248  $
272
Non-deductible items                            130        235
Other permanent differences                      11          1
Provision to return difference                             34
Effect of change in statutory tax rate                           3
Inflationary components and
translation adjustments                          24          6
Income tax expense                              $439       $514



NOTE 7 - BALANCES AND TRANSACTIONS WITH RELATED PARTIES

Balances with related parties at December 31, are as follows:

                                                1999       1998
Accounts receivable:
Burke Mills, Inc.                              $ 97
                                               ====

Accounts payable:
Burke Mills, Inc.                              $-         $109
Nylon de Mxico, S. A. de C. V.                 190        402
Fibras Qumicas, S. A. de C. V.                1,773       728
                                              -----       ---
                                              $1,963     $1,239
                                              ======     ======
<PAGE>

The financial  statements  include the following  significant  transactions with
related parties for the years ended December 31:

                                                1999       1998
Sale of finished goods to Burke Mills, Inc.   $1,454     $1,510
Purchase of raw and other materials          (4,304)     (4,392)
Cost of administrative and technical services(1,016)     (543)
Rentals of property, machinery and equipment   (549)     (520)

Balances  with  related  parties  included in the  balance  sheet arise from the
above-mentioned transactions.


NOTE  8 - COMMITMENTS

Operating lease:

The Company leases buildings,  machinery and equipment from its stockholders and
an affiliated company, under non-cancellable operating lease agreements.  During
the years ended December 31, 1999 and 1998, the Company paid rentals of $549,454
and $520,130, under the terms of these agreements, respectively.

Future lease obligations for these leases at December 31, 1999, are as follows:

2000                                                $549,454
2001                                                 503,666
----                                                 -------
                                                    $1,053,120
                                                    ==========

Supply agreements:

In 1996,  the Company  entered  into a five years  supply  agreement  with Burke
Mills,  Inc. to supply  approximately  $1,800,000  annually of polyester twisted
yarn, beginning November 1997.

In 1996, the Company entered into a five years supply agreement
with Fibras Qumicas, S. A. de C. V. (affiliated company) to
purchase approximately $3,500,000 annually of polyester natural
yarn, beginning November 1997.