Exhibit 13

MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

Burlington Industries, Inc. and Subsidiary Companies

Overview

        Although the Company's markets remained difficult in fiscal year 1996, a
number of objectives were  accomplished to prepare the Company for growth and to
set the stage for better  results in the  future.  During the year,  the balance
sheet was strengthened,  non-core,  noncontributing assets were disposed of, the
Knitted Fabrics division was closed and a new unit, Burlington  Sportswear,  was
established.

        Operational  results  for the year were  essentially  flat.  Sales  were
slightly lower and operating earnings before  non-recurring  items were slightly
higher than last year.  Sales were lower as a consequence  of lower unit volumes
being only  partially  offset by a better mix of products  and price.  Operating
earnings  were helped by a better mix of  products  and price,  stabilizing  raw
materials costs and reduced bad debt expenses.

        During  1996,  the  Company  announced  that it would  close the Knitted
Fabrics division, which had experienced difficulties for a number of years. This
resulted in a pre-tax  charge of $29.9  million and an inventory  write-down  of
$3.7 million  included in cost of sales for a total charge of $33.6 million,  or
$0.33 per share. (See Note B - Restructuring Activities.)

        Burlington  Sportswear,  a new business unit specializing in fine cotton
fabrics for casual shirts and pants, was formed in 1996. Its products will serve
the better men's sportswear and uniform markets.

        Also  during  the  year the  Company  announced  the  sale of  non-core,
noncontributing  assets as well as  provided  for legal  contingencies;  the net
effect of these actions was a $4.7 million ($0.07 per share) after-tax loss.

        During the year,  $193.1  million  in cash was  generated  by  operating
results and $8.8 million by asset sales. This money was primarily used to invest
$81.4  million in  capital  expenditures  and a joint  venture,  repurchase  3.4
million shares of stock for $45.0 million and to reduce debt by $73.5 million.

        The Company's operating  performance in the 1995 fiscal year was hurt by
significantly  higher raw material  prices which could not be offset  quickly by
higher selling prices or a richer mix of the Company's  products.  The resulting
squeeze on profit margins,  particularly in apparel products,  was the principal
source of the downturn in the Company's operating  performance during that year.
In  addition,  results  suffered  from  charges of $10.4  million  for  doubtful
accounts  incurred  during the year,  losses  incurred  by the  Knitted  Fabrics
division,  the  impact  of  operating  capacity  losses  and  severance  charges
resulting from employment reductions.

        PERFORMANCE  BY SEGMENT:  The Company  conducts  its  operations  in two
principal  industry  segments:  products  for apparel  markets and  products for
interior furnishings markets. The following table sets forth certain information
about the  segment  results  for the fiscal  years  ended  September  28,  1996,
September 30, 1995 and October 1, 1994.  Because of the existence of significant
non-cash  expenses,  such as  depreciation  of fixed assets and  amortization of
intangible  assets,  the Company believes that operating income before interest,
taxes, depreciation and amortization ("EBITDA"), which is set forth in the table
below with respect to each segment, contributes to a better understanding of the
Company's  ability to satisfy its debt obligations and to utilize cash for other
purposes.  EBITDA should not be considered in isolation  from or as a substitute
for  operating  income  before  interest  and  taxes,  cash flow from  operating
activities and other consolidated income or cash flow statement data prepared in
accordance with generally accepted accounting principles.

                                      Fiscal       Fiscal      Fiscal
(dollar amounts in millions)           1996         1995        1994
                                      ------       ------      ------

Net sales
  Apparel products                  $ 1,328.3    $ 1,347.1   $ 1,331.5
  Interior furnishings products         854.0        862.1       795.6
                                     --------     --------    --------

   Total                            $ 2,182.3    $ 2,209.2   $ 2,127.1
                                     ========     ========    ========


Operating income before interest and taxes
  Apparel products                   $  121.7    $   107.1   $   151.5
   As a percentage of net sales           9.2%         8.0%       11.4%
  Interior furnishings products      $   55.6    $    67.4   $    60.2
   As a percentage of net sales           6.5%         7.8%        7.6%
  Loss on closing of division        $  (29.9)   $       -   $       -
  Provision for restructuring        $      -    $       -   $    (7.5)
                                      -------     --------    --------

   Total                             $  147.4    $   174.5   $   204.2
    As a percentage of net sales          6.8%         7.9%        9.6%
                                      =======     ========    ========

Operating income before interest, taxes,
 depreciation and amortization (EBITDA)
  Apparel products                   $  174.0    $   160.5   $   204.1
   As a percentage of net sales          13.1%        11.9%       15.3%
  Interior furnishings products      $   90.6    $   101.0   $    90.2
   As a percentage of net sales          10.6%        11.7%       11.3%
                                      -------     --------    --------

EBITDA before loss on closing/
 restructuring                       $  264.6    $   261.5   $   294.3
   As a percentage of net sales          12.1%        11.8%       13.8%
Loss on closing of division          $  (29.9)   $       -   $       -
Provision for restructuring          $      -    $       -   $    (7.5)
                                      -------     --------    --------

EBITDA after loss on closing/
 restructuring                       $  234.7    $   261.5   $   286.8
                                      =======     ========    ========

Results of Operations

Comparison of Fiscal Years ended September 28, 1996 and September 30, 1995

NET SALES: Net sales for the 1996 fiscal year were $2,182.3 million,  a decrease
of 1.2% from the  $2,209.2  million  recorded in the 1995 fiscal  year.  Exports
totaled  $213  million  and $161  million  in the 1996  and 1995  fiscal  years,
respectively (an increase of 32.3%).
        Products for Apparel Markets:  Net sales of products for apparel markets
for the 1996 fiscal  year were  $1,328.3  million,  1.4% lower than net sales of
$1,347.1  million for the 1995 fiscal year. Lower unit volumes from the Menswear
and Knitted  Fabrics  divisions were only partially  offset by  improvements  in
selling price and product mix.
        Products for  Interior  Furnishings  Markets:  Net sales of products for
interior  furnishings  markets for the 1996 fiscal year were $854.0  million,  a
decrease of 0.9% from the $862.1 million recorded in the 1995 fiscal year. Lower
unit  volumes  resulting  from  a  Residential   Carpets  division  strategy  to
streamline its product line,  the difficult  business  environment  faced by the
rugs divisions and the sale of a non-core business were only partially offset by
enhancements to product mix and higher selling prices.

        OPERATING  INCOME  BEFORE  INTEREST AND TAXES:  Operating  income before
interest  and taxes for the 1996  fiscal  year was  $147.4  million.  Before the
charges for  closing  the Knitted  Fabrics  division,  operating  income  before
interest  and taxes for the 1996  fiscal year was $181.0  million in  comparison
with $174.5 million  recorded in the 1995 fiscal year.  Amortization of goodwill
was  $18.2  million  and  $18.1  million  in the  1996 and  1995  fiscal  years,
respectively.
        Products for Apparel Markets: Operating income before interest and taxes
for the  apparel  products  segment  before the  charges for closing the Knitted
Fabrics division for the 1996 fiscal year was $125.4 million,  up 17.1% from the
$107.1 million recorded for the 1995 fiscal year. The principal  factors leading
to this  increase were  improvements  in selling price and product mix and lower
bad debts,  offset by lower unit volume,  operating capacity  inefficiencies and
wage increases.  Better operating  earnings were achieved by the Denim,  Klopman
and Menswear divisions.
        Products for  Interior  Furnishings  Markets:  Operating  income  before
interest and taxes for the interior  furnishings  products  segment for the 1996
fiscal year was $55.6 million, down 17.5% from the $67.4 million recorded in the
1995 fiscal year. Manufacturing inefficiencies resulting from lower unit volume,
wage increases and severance costs associated with manpower reductions more than
offset the benefit of better product mix and higher selling prices. Good results
in the  Burlington  House and Lees  divisions  were  offset  by slower  business
activity in the area rugs divisions.
        Operating income before interest,  taxes,  depreciation and amortization
(EBITDA) was $234.7 million for the 1996 fiscal year. EBITDA, before the loss on
closing the Knitted Fabrics division and an associated  inventory  write-down of
$3.7 million,  was $268.3 million,  up 2.6% from EBITDA of $261.5 million in the
1995 fiscal year. As a percentage  of net sales,  EBITDA,  before  deducting the
Knitted Fabrics  division closing charges in fiscal 1996, was 12.3% for the 1996
fiscal year compared with 11.8% for the 1995 fiscal year.
        EBITDA for the apparel products segment,  before the loss on closing the
Knitted Fabrics division and an associated inventory write-down of $3.7 million,
was $177.7 million,  or 13.4% of sales,  in the 1996 fiscal year,  compared with
$160.5  million,  or 11.9% of sales,  in the 1995  fiscal  year.  EBITDA for the
interior  furnishings  segment was $90.6 million, or 10.6% of sales, in the 1996
fiscal year, in comparison with $101.0  million,  or 11.7% of sales, in the 1995
fiscal year.
        Selling,  administrative and general expenses totaled $166.3 million, or
7.6% of net sales,  in the 1996 fiscal year,  compared with $162.5  million,  or
7.4% of net sales, in the 1995 fiscal year. The increase was mainly attributable
to the new Bacova operation which was acquired during fiscal year 1995.
        The Company  recorded  provisions for doubtful  accounts of $6.5 million
and $10.4  million in the 1996 and 1995 fiscal  years,  respectively,  resulting
primarily from bankruptcies which occurred in those periods.
        INTEREST  EXPENSE:  Interest  expense for the 1996 fiscal year was $65.9
million, or 3.0% of net sales, compared with $56.3 million, or 2.5% of net sales
in the 1995 fiscal year.  The  increase in interest  expense was  primarily  the
result of  lengthening  maturities  and higher rates  partially  offset by lower
average debt.
        OTHER EXPENSE (INCOME):  Other expense for the 1996 fiscal year was $6.1
million  consisting  principally of $4.0 million for legal  contingencies,  $2.3
million loss on sale of a  non-operating  asset and $1.3 million loss on sale of
J.G. Furniture partially offset by interest income. Other income of $1.9 million
for fiscal year 1995 consisted primarily of interest income.
        INCOME TAX EXPENSE AND EXTRAORDINARY  ITEMS: Income tax expense of $33.7
million was recorded for the 1996 fiscal year in  comparison  with $51.7 million
for fiscal year 1995. The extraordinary loss of $0.7 million for the 1996 fiscal
year resulted from the early extinguishment of debt net of income tax benefit of
$0.5 million (principally the write-off of unamortized bank financing costs).
        NET INCOME AND NET INCOME PER SHARE: Net income for the 1996 fiscal year
was $40.9 million,  or $0.65 per share,  in comparison  with $68.4  million,  or
$1.05 per share,  for the 1995 fiscal year.  Net income for the 1996 fiscal year
included $25.0 million ($0.40 per share) of non-recurring  expenses,  consisting
of an after-tax charge of $20.3 million ($0.33 per share) for the closing of the
Knitted Fabrics  division and an after-tax  provision of $4.7 million ($0.07 per
share) for legal contingencies,  the sale of the J.G. Furniture division and the
sale of a non-operating  asset. In addition,  there was an extraordinary loss of
$0.01 per share for the early extinguishment of debt.

Comparison of Fiscal Years ended September 30, 1995 and October 1, 1994

NET SALES: Net sales for the 1995 fiscal year were $2,209.2 million, an increase
of 3.9% over the  $2,127.1  million  recorded in the 1994 fiscal  year.  Exports
totaled  $161  million  and $131  million  in the 1995  and 1994  fiscal  years,
respectively (an increase of 22.9%).
        Products for Apparel Markets:  Net sales of products for apparel markets
for the 1995 fiscal year were  $1,347.1  million,  1.2% higher than net sales of
$1,331.5  million for the 1994 fiscal year. A small reduction in the unit volume
of sales was more than offset by improvements in selling prices and product mix.
        Products for  Interior  Furnishings  Markets:  Net sales of products for
interior  furnishings  markets for the 1995 fiscal year were $862.1 million,  an
increase  of 8.4% from the $795.6  million  recorded  in the 1994  fiscal  year.
Higher  volume  and,  to a lesser  extent,  enhanced  product  mix were the main
factors contributing to the increase in sales in this segment.
        OPERATING  INCOME  BEFORE  INTEREST AND TAXES:  Operating  income before
interest  and taxes for the 1995  fiscal year was $174.5  million in  comparison
with $204.2 million  recorded in the 1994 fiscal year,  after deducting the 1994
provision for restructuring of $7.5 million.  Amortization of goodwill was $18.1
million and $17.5 million in the 1995 and 1994 fiscal years, respectively.
        Products for Apparel Markets: Operating income before interest and taxes
for the apparel  products  segment for the 1995 fiscal year was $107.1  million,
down 29.3% from the $151.5 million  recorded for the 1994 fiscal year before the
$7.5 million  Knitted Fabrics  restructuring  provision.  The principal  factors
causing  this  decrease  were a  significant  increase  in raw  material  prices
partially  offset by  improvements  in selling  prices and product mix and cost-
reduction  initiatives,  unusually  high  provisions  for doubtful  accounts and
operating capacity losses.
        Products for  Interior  Furnishings  Markets:  Operating  income  before
interest and taxes for the interior  furnishings  products  segment for the 1995
fiscal  year was $67.4  million,  up 12.0% over the $60.2  million  recorded  in
fiscal 1994.  Significant  improvement  in results of  operations  of the Carpet
division and strong  performance by the Burlington House division were the major
contributors  to the  results of this  segment.  Improvements  in  product  mix,
selling  prices and volume were  partially  offset by  increases in raw material
prices.
        Operating income before interest,  taxes,  depreciation and amortization
(EBITDA) was $261.5 million for the 1995 fiscal year,  down 11.1% from EBITDA of
$294.3 million before the $7.5 million  restructuring  provision recorded in the
1994 fiscal year. As a percentage  of net sales,  EBITDA,  before  deducting the
restructuring  provision  in fiscal  1994,  was 11.8% for the 1995  fiscal  year
compared with 13.8% for the 1994 fiscal year. After the restructuring provision,
EBITDA was $286.8 million for the 1994 fiscal year.
        EBITDA for the apparel products segment was $160.5 million,  or 11.9% of
sales, in the 1995 fiscal year, compared with $204.1 million, or 15.3% of sales,
in the 1994  fiscal  year  before the  restructuring  provision.  EBITDA for the
interior  furnishings segment was $101.0 million, or 11.7% of sales, in the 1995
fiscal year, in comparison  with $90.2 million,  or 11.3% of sales,  in the 1994
fiscal year.
        Selling,  administrative and general expenses totaled $162.5 million, or
7.4% of net sales,  in the 1995 fiscal year,  compared with $151.3  million,  or
7.1% of net sales, in the 1994 fiscal year. The increase was mainly attributable
to the  new  Bacova  operation,  abnormal  expenses  related  to  cost-reduction
programs and higher advertising expense.
        The Company recorded a provision for doubtful  accounts of $10.4 million
in the 1995 fiscal  year,  compared  with $1.6  million in the 1994 fiscal year.
Included in the fiscal 1995 amount were  charges of  approximately  $8.1 million
related to bankruptcies of two apparel customers.
        INTEREST  EXPENSE:  Interest  expense for the 1995 fiscal year was $56.3
million, or 2.5% of net sales, compared with $49.8 million, or 2.3% of net sales
in the 1994 fiscal year. The increase in interest expense was principally due to
higher interest rates.

        OTHER EXPENSE  (INCOME):  Other income for the 1995 fiscal year was $1.9
million,  consisting  principally of interest income.  Other income for the 1994
fiscal year was $14.9  million,  consisting  of:  $31.2  million gain on sale of
assets, a $12.1 million charge for legal and environmental contingencies, a $5.9
million charge for write-down of non-operating  assets, and interest income. The
gain on sale of  assets  was due  primarily  to the sale by the  Company  of its
Decorative Prints division on April 29, 1994 for $63.9 million in cash.
        INCOME TAX EXPENSE AND EXTRAORDINARY  ITEMS: Income tax expense of $51.7
million was recorded for the 1995 fiscal year in  comparison  with $70.0 million
for fiscal year 1994. The extraordinary loss of $4.3 million for the 1994 fiscal
year resulted from the early extinguishment of debt net of income tax benefit of
$2.8 million (principally the write-off of unamortized bank financing costs).
        NET INCOME AND NET INCOME PER SHARE: Net income for the 1995 fiscal year
was $68.4 million,  or $1.05 per share,  in comparison  with $95.0  million,  or
$1.40 per share,  for the 1994 fiscal year.  Net income for the 1994 fiscal year
included a net non-recurring gain of $5.9 million, or $0.08 per share,  stemming
from the sale of the  Decorative  Prints  division and other assets less charges
for legal and  environmental  contingencies,  provision  for  restructuring  and
write-down of non-operating  assets,  and an extraordinary loss of $4.3 million,
or $0.06 per share, resulting from the early extinguishment of debt.

Legal and Environmental Contingencies

        As  described  more  fully  in  Note  O to  the  consolidated  financial
statements,  various  claims  and  suits  have been  made or filed  against  the
Company.  The  Company  has made  provisions  in its  financial  statements  for
litigation  based on the Company's  assessment  of the possible  outcome of such
litigation,  including the possibility of settlement, and related legal fees and
costs. It is not possible with certainty to determine the ultimate liability, if
any, of the Company in any of these  matters,  but in the opinion of  management
their  outcome  should  have no  material  adverse  effect  upon  the  financial
condition or results of operations of the Company.
        The Company and  certain of its current and former  direct and  indirect
corporate  predecessors,  subsidiaries and divisions have been identified by the
United States Environmental  Protection Agency, by the environmental agencies in
several states and by private  parties as potentially  responsible  parties at a
number of hazardous waste disposal sites under the  Comprehensive  Environmental
Response  Compensation  and Liability Act of 1980  ("Superfund")  and comparable
state  laws  and,  as such,  may be  liable  for the cost of  cleanup  and other
remedial activities at these sites. The Company may also have liability for such
matters  pursuant to contractual  obligations  relating to divested  property or
with  respect to sites which may be  identified  in the future.  With respect to
certain of these sites,  other persons have also been  identified as potentially
responsible  parties,  and in such  circumstances the responsibility for cleanup
and other remedial activities is typically shared among such parties based on an
allocation  formula.  The Company is also  involved in  remedial  responses  and
voluntary  environmental  cleanups at other sites  which are not  currently  the
subject of proceedings of any kind under Superfund or comparable state laws. The
Company  has  established   reserves  in  its  financial   statements  for  such
environmental  liabilities,  including  related legal fees and other transaction
costs, in the aggregate amount of approximately $6.6 million.  The provision for
environmental  liabilities is based on the Company's  estimate of allocations of
liability  among  potentially   responsible   parties  (and  the  likelihood  of
contribution   by  such   parties),   information   concerning   the   scope  of
contamination,  estimated  remediation  costs,  estimated  transaction costs and
other  factors.  The  Company  has also  recorded  $1.3  million  for  estimated
recoveries under insurance  policies to the extent that coverage for such claims
has been acknowledged by the relevant insurer and for estimated  recoveries from
third parties.  No provision has been made for liabilities  that may be incurred
with respect to sites which may be identified in the future because insufficient
basis exists for making  informed  estimates  in such cases.  It is not possible
with  certainty to determine the ultimate  liability of the Company with respect
to these matters,  but in the opinion of management their outcome should have no
material  adverse effect on the financial  condition or results of operations of
the  Company,  generally  either  because  estimates  of the  maximum  potential
liability  at these sites are not material or because  liability  will be shared
with many other potentially responsible parties.

Liquidity and Capital Resources

        During  the  1995 and 1996  fiscal  years,  the  Company  took  steps to
strengthen  its capital  structure and enhance the  flexibility of its financial
resources going forward. During the last quarter of the 1995 fiscal year, a $400
million senior debt shelf registration statement was filed and became effective,
and the  Company  used $150  million of its  capacity  in a public  offering  of
10-year senior,  non-callable  notes on September 26, 1995. The proceeds of this
offering  were used to repay term loans  under the  Company's  1994 Bank  Credit
Agreement.  The notes  received  investment  grade  ratings from each of the two
major credit rating agencies, which underscored the continued improvement in the
Company's credit standing. In November 1995, the Company entered into a new $750
million bank credit facility which reduces  borrowing costs compared to the 1994
bank credit facility,  and further enhances the Company's financial flexibility.
At September  28,  1996,  total debt of the Company  (consisting  of current and
non-current  portions of long-term  debt and short-term  borrowings)  was $838.9
million compared with $913.0 million at September 30, 1995. The ratio of debt to
total capital  declined from 59.7% at the beginning of fiscal year 1996 to 57.7%
at fiscal year end.
        The  Company's  principal  uses for funds during the next several  years
will be for  capital  investments  (including  the funding of  acquisitions  and
participations  in joint  ventures),  repayment and  servicing of  indebtedness,
working capital needs and the repurchase of shares of Company common stock.  The
Company  intends  to fund  such  needs  principally  from net cash  provided  by
operating  activities and, to the extent  necessary,  from funds provided by the
credit  facilities  described in this section.  The Company  believes that these
sources of funds will be adequate to meet the Company's foregoing needs.
        The net cash generated by the Company from operating  activities  during
the 1996 fiscal year amounted to $193.1 million;  additionally  $8.8 million was
provided  from  sales of assets  and $3.8  million  from the  exercise  of stock
options.  Cash generated in this manner was primarily used for: $81.4 million of
capital  expenditures  and  investment in joint  venture,  $45.0 million for the
repurchase of Company  common stock and net  repayments of long- and  short-term
debt of $73.5 million.  Shares of Company common stock purchased during the 1996
fiscal year are expected to be used during the next several years principally to
satisfy  Company  obligations to contribute  stock under its employee  incentive
plans and will,  accordingly,  minimize  further  future cash  outlays for these
purposes.
        During the 1996 fiscal year,  investment in capital  expenditures  and a
joint venture  totaled  $81.4  million,  compared to $101.9  million in the 1995
fiscal year. The Company anticipates that the level of capital  expenditures for
fiscal year 1997 could total approximately $135 million,  principally for growth
and modernization of U.S. and Mexican plants.
        On September  26, 1995,  the Company  issued  $150.0  million  principal
amount of 7.25% Notes due September 15, 2005 (the "Notes") at a price of 99.926%
plus accrued  interest.  The Notes are unsecured and rank equally with all other
unsecured  and  unsubordinated  indebtedness  of the Company.  The Notes are not
redeemable  prior to maturity.  Proceeds from the sale of the Notes were used to
prepay  $150.0  million of  outstanding  term loans  under the 1994 Bank  Credit
Facility.
        On November 8, 1995, the Company entered a new $750.0 million  unsecured
Revolving Credit Facility ("1995 Bank Credit  Agreement")  which replaced in its
entirety the Term Loan and Revolving  Credit Facility under the 1994 Bank Credit
Agreement.  The new facility  maintains  the existing  maturity of all revolving
loans  and  letters  of  credit  at March  31,  2001,  thereby  eliminating  the
amortization  of term loans  required under the 1994 Bank Credit  Agreement.  On
November 20, 1995, the Company  borrowed  $510.0 million under the new Revolving
Credit  Facility and repaid all loans under the 1994 Bank Credit  Agreement.  At
November  8,  1996,  the  Company  had  approximately  $235.0  million in unused
capacity  under the new Revolving  Credit  Facility.  The Company also maintains
$27.0 million in additional overnight borrowing availability under bank lines of
credit.
        Loans under the 1995 Bank Credit  Agreement  bear interest at either (i)
floating rates generally payable quarterly based on the Adjusted Eurodollar Rate
plus 0.275% or (ii)  Eurodollar  rates or fixed rates which may be offered  from
time to time by a Lender pursuant to a competitive bid request  submitted by the
Company,  payable  up to 360  days.  In  addition,  the  Company  pays an annual
facility fee of 0.15%.  The interest  rate and the facility fee are based on the
Company's  current implied senior  unsecured debt ratings of BBB minus and Baa3.
In the event that the  Company's  Debt Ratings  improve,  the interest  rate and
facility fees would be reduced.  Conversely,  a  deterioration  in the Company's
Debt Ratings would increase the interest rate and facility fees.
        The 1995  Bank  Credit  Agreement  imposes  various  limitations  on the
liquidity of the Company. The Agreement requires the Company to maintain minimum
interest  coverage  and maximum  leverage  ratios and a  specified  level of net
worth. In addition,  the Agreement limits dividend payments,  stock repurchases,
leases, the incurrence of additional indebtedness by consolidated  subsidiaries,
the  creation  of  additional  liens and the making of  investments  in non-U.S.
persons  and  restricts  the  Company's  ability to enter into  certain  merger,
liquidation or asset sale or purchase transactions.
        The Company  also has in effect,  through its  wholly-owned  subsidiary,
B.I.  Funding,  Inc., a  receivables-backed  commercial  paper  program which is
supported by a multi-bank  liquidity facility.  The maximum amount of commercial
paper issuances or borrowings thereunder is $225.0 million. At November 8, 1996,
$150.5 million of commercial paper with original maturities of up to 70 days was
outstanding. There were no borrowings at such date under the liquidity facility.
        Because the Company's  obligations  under the 1995 Bank Credit Agreement
and  commercial  paper program bear interest at floating  rates,  the Company is
sensitive to changes in prevailing  interest rates.  The Company uses derivative
instruments  to manage its  interest  rate  exposure,  rather  than for  trading
purposes.







<PAGE>







              BURLINGTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
                    Consolidated Statements of Operations
                 For the fiscal years ended September 28, 1996,
                    September 30, 1995, and October 1, 1994
              (amounts in thousands, except for per share amounts)




                                            1996        1995          1994
                                        ----------   ----------    ----------

Net sales.............................  $2,182,347   $2,209,191    $2,127,067
Cost of sales.........................   1,814,160    1,843,752     1,744,880
                                        ----------   ----------    ----------
Gross profit..........................     368,187      365,439       382,187
Selling, administrative and
  general expenses....................     166,283      162,504       151,322
Provision for doubtful accounts.......       6,457       10,382         1,625
Amortization of goodwill..............      18,201       18,055        17,498
Loss on closing of division...........      29,856            -             -
Provision for restructuring...........           -            -         7,500
                                        ----------   ----------    ----------
Operating income before
  interest and taxes..................     147,390      174,498       204,242
Interest expense......................      65,936       56,294        49,841
Other expense (income) - net..........       6,104       (1,897)      (14,880)
                                        ----------   ----------    ----------
Income before income taxes............      75,350      120,101       169,281
Income tax expense:
  Current.............................     (36,822)     (31,706)      (46,697)
  Deferred............................       3,075      (20,001)      (23,285)
                                        ----------   ----------    ----------
    Total income tax expense..........     (33,747)     (51,707)      (69,982)
                                        ----------   ----------    ----------
Income before
  extraordinary item..................      41,603       68,394        99,299
Extraordinary item:
  Loss from early extinguishment
   of debt, net of income tax
   benefit of $454 in 1996 and
   $2,770 in 1994.....................        (697)           -        (4,261)
                                        ----------   ----------    ----------
Net income............................  $   40,906   $   68,394    $   95,038
                                        ==========   ==========    ==========

Average common shares
  outstanding.........................      63,231       65,273        67,974

Net income per common share:
  Income before
   extraordinary item.................  $     0.66   $     1.05    $     1.46
  Extraordinary item..................       (0.01)           -         (0.06)
                                        ----------   ----------    ----------
                                        $     0.65   $     1.05    $     1.40
                                        ==========   ==========    ==========

See notes to consolidated financial statements.



<PAGE>
              BURLINGTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
                         Consolidated Balance Sheets
                           (amounts in thousands)

                                                    September 28,  September 30,
                                                        1996           1995
                                                    -----------     -----------
ASSETS
Current assets:
Cash and cash equivalents.......................    $    15,392     $    10,507
Short-term investments..........................         22,755          22,821
Customer accounts receivable after deductions
  of $21,466 and $19,222 for the respective
  dates for doubtful accounts, discounts,
  returns and allowances........................        342,390         337,389
Sundry notes and accounts receivable............          6,608          17,245
Inventories.....................................        329,386         342,659
Prepaid expenses................................          2,839           2,216
                                                    -----------     -----------
     Total current assets.......................        719,370         732,837
Fixed assets, at cost:
Land and land improvements......................         34,332          34,499
Buildings.......................................        381,281         371,268
Machinery, fixtures and equipment...............        585,587         576,919
                                                    -----------     -----------
                                                      1,001,200         982,686
Less accumulated depreciation and amortization..        436,069         411,957
                                                    -----------     -----------
     Fixed assets - net.........................        565,131         570,729
Other assets:
Investments and receivables.....................         14,032          17,365
Intangibles and deferred charges................         25,875          31,910
Net assets held for sale........................          4,409           4,351
Excess of purchase cost over
 net assets acquired............................        557,125         574,539
                                                    -----------     -----------
     Total other assets.........................        601,441         628,165
                                                    -----------     -----------
                                                    $ 1,885,942     $ 1,931,731
                                                    ===========     ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings...........................    $         -     $       323
Long-term debt due currently....................          1,720          34,686
Accounts payable  - trade.......................         93,688         103,314
Sundry payables and accrued expenses............        102,895          76,714
Income taxes payable............................         20,674           9,403
Deferred income taxes...........................         46,375          47,957
                                                    -----------     -----------
     Total current liabilities..................        265,352         272,397
Long-term liabilities:
Long-term debt..................................        837,136         878,005
Other...........................................         57,360          54,222
                                                    -----------     -----------
     Total long-term liabilities................        894,496         932,227
Deferred income taxes...........................        110,174         111,667
Shareholders' equity:
Common stock issued (Note H)....................            684             684
Capital in excess of par value..................        885,485         893,439
Accumulated deficit.............................       (192,999)       (233,905)
Currency translation adjustments................         (9,263)         (5,822)
                                                    -----------     -----------
                                                        683,907         654,396
Less unearned compensation......................           (300)         (2,492)
Less cost of common stock held in treasury......        (67,687)        (36,464)
                                                    -----------     -----------
     Total shareholders' equity.................        615,920         615,440
                                                    -----------     -----------
                                                    $ 1,885,942     $ 1,931,731
                                                    ===========     ===========

See notes to consolidated financial statements.
<PAGE>
        BURLINGTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
              Consolidated Statements of Cash Flows
           For the fiscal years ended September 28, 1996,
              September 30, 1995 and October 1, 1994
                     (amounts in thousands)

                                                   1996       1995       1994
                                                 --------  ---------   --------

Cash flows from operating activities:
Net income.....................................  $ 40,906  $  68,394   $ 95,038
Adjustments to reconcile net income to net
  cash provided by operating activities:
    Depreciation and amortization of
     fixed assets..............................    66,942     66,646     63,023
    Provision for doubtful accounts............     6,457     10,382      1,625
    Amortization of intangibles................    18,201     18,055     17,498
    Amortization of deferred debt expense......     3,852      2,678      1,906
    Deferred income taxes......................    (3,075)    20,001     23,285
    Non-cash compensation......................     2,248      2,255      2,084
    (Gain) loss on disposal of assets
     and other expense.........................     7,641          -    (10,848)
    Loss from early extinguishment of debt.....     1,151          -      7,031
    Loss on closing of division/restructuring..    29,856          -      7,500
    Changes in assets and liabilities:
        Customer accounts receivable - net.....   (16,165)     8,331    (38,734)
        Sundry notes and accounts receivable...    10,203     (7,511)    (1,322)
        Inventories............................     9,561    (12,645)   (27,618)
        Prepaid expenses.......................      (627)        51        801
        Accounts payable and accrued expenses..     3,694    (15,910)     2,757
    Payment of financing fees..................      (444)    (3,848)    (6,996)
    Change in interest payable.................     3,257     (1,222)     4,419
    Change in income taxes payable.............    11,273     (7,252)    12,525
    Other......................................    (1,806)     4,159      2,994
                                                 --------  ---------  ---------
         Total adjustments.....................   152,219     84,170     61,930
                                                 --------  ---------  ---------
Net cash provided by operating activities......   193,125    152,564    156,968
                                                 --------  ---------  ---------

Cash flows from investing activities:
Capital expenditures...........................   (79,174)  (101,876)   (98,869)
Payment for purchase of business,
  net of cash acquired.........................         -    (12,022)         -
Proceeds from sales of assets..................     8,785      6,472     67,454
Investment in joint venture....................    (2,200)         -          -
Change in investments..........................      (957)    (3,073)      (557)
                                                 --------  ---------  ---------
Net cash used by investing activities..........   (73,546)  (110,499)   (31,972)
                                                 --------  ---------  ---------

Cash flows from financing activities:
Net change in short-term borrowings............      (274)    (1,136)   (16,332)
Repayments of long-term debt...................  (600,708)  (211,966)  (837,029)
Proceeds from issuance of long-term debt.......   527,478    197,818    757,361
Proceeds from exercise of stock options........     3,848         73          -
Purchase of treasury stock.....................   (45,038)   (37,858)   (11,302)
                                                 --------  ---------  ---------
Net cash used by financing activities..........  (114,694)   (53,069)  (107,302)
                                                 --------  ---------  ---------

Net change in cash and cash equivalents........     4,885    (11,004)    17,694
Cash and cash equivalents at beginning
 of period.....................................    10,507     21,511      3,817
                                                 --------  ---------  ---------
Cash and cash equivalents at end of period.....  $ 15,392  $  10,507  $  21,511
                                                 ========  =========  =========

See notes to consolidated financial statements.
<PAGE>




Notes to Consolidated Financial Statements

Burlington Industries, Inc. and Subsidiary Companies



Note A - Organization

On February 3, 1994,  Burlington Industries Equity Inc. (Equity) merged with and
into its wholly-owned subsidiary, Burlington Industries, Inc. (Industries). As a
result  of  such  merger,   Equity's  subsidiaries  became  direct  wholly-owned
subsidiaries of Industries.  The consolidated  statements of operations and cash
flows for the 1994 period represent the  consolidated  results of operations and
cash flows of Equity and its subsidiaries through the date of merger on February
3, 1994 combined with the  consolidated  results of operations and cash flows of
Industries and its subsidiaries from the date thereafter.

Note B - Restructuring Activities

The Knitted Fabrics division experienced operating  difficulties for a number of
years. In the fourth quarter of 1994, a $7.5 million provision for restructuring
was taken to provide  for the costs of  facilities  closure  and  further  staff
reduction following similar efforts undertaken in 1993. The Company's efforts to
return the division to profitability  were not successful.  On June 5, 1996, the
Company  announced its plan to close the Knitted Fabrics division which resulted
in a $29.9 million  pre-tax charge in the third quarter of the 1996 fiscal year.
In addition,  the closing  resulted in an inventory  write-down  of $3.7 million
included in cost of sales.  Combining these charges, the closing of the division
resulted in a pre-tax charge of $33.6 million, $20.3 million after income taxes,
or $0.33 per share. Two of the division's  manufacturing  facilities were closed
and  offered  for sale.  Its  other  facility  will be  utilized  by  Burlington
Sportswear,  a new business unit serving the better men's sportswear and uniform
markets.  Production  of the  Knitted  Fabrics  division  was  phased out during
September and October, 1996, and it is anticipated that sales of the majority of
the division's assets will be completed within a two-year period. The components
of the 1996 charge  include  estimated  costs of $12.7 million for severance and
other  benefits  related to  approximately  1,150  employees,  $8.3  million for
divestitures of machinery and equipment,  $8.0 million for  divestitures of real
estate,  and $0.8  million  for  cancellation  of leases.  Costs of closing  the
division paid through September 28, 1996 were $7.8 million. Operating results of
the Knitted Fabrics  division  before any charges  related to the  restructuring
were as follows (in millions):

                                             1996         1995         1994
                                          ---------    ---------    ---------
     Net sales ........................   $  108.2     $  134.1     $  147.9
     Net operating loss before
       interest and taxes .............   $  (17.2)    $  (17.9)    $  (19.2)

Note C - Summary of Significant Accounting Policies

Consolidation: The consolidated financial statements include the accounts of the
Company and all its subsidiaries. The accounts of foreign subsidiaries have been
included on the basis of fiscal periods ended no more than three months prior to
the dates of the consolidated balance sheets. Investments in affiliates in which
the Company  owns 20 to 50 percent of the voting stock are  accounted  for using
the equity method. All significant  intercompany  accounts and transactions have
been eliminated.

Cash  equivalents:  Cash and cash  equivalents  include time  deposits and other
short-term investments with an original maturity of three months or less.

Inventories:  Inventories  are  valued at the lower of cost or  market.  Cost of
substantially  all  components  of textile  inventories  in the United States is
determined using the dollar value Last-in,  First-out  (LIFO) method.  All other
inventories are valued principally at average cost.

Fixed assets:  Depreciation  and amortization of fixed assets is calculated over
the  estimated  useful  lives  of  the  related  assets  principally  using  the
straight-line method.

Excess of purchase  cost over net assets  acquired:  The excess of purchase cost
over net assets acquired is amortized as goodwill using the straight-line method
over not more  than 40 years.  The  accumulated  amortization  of  goodwill  was
$163,586,000  and  $145,385,000  at September  28, 1996 and  September 30, 1995,
respectively.

Deferred debt expense:  Deferred debt expense is amortized over the lives of the
related debt as an adjustment to interest expense.

Revenue  recognition:  In general,  the Company recognizes revenues from product
sales when units are shipped.

Research expenditures: Expenditures for research and development are expensed as
incurred. Total expenditures for research and development aggregated $13,482,000
and  $17,082,000  and  $18,903,000  in the  1996,  1995 and 1994  fiscal  years,
respectively.

Income  per common  share:  Income per  common  share is  computed  based on the
weighted average number of common shares outstanding during each period.

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 and
accompanying notes. Actual results could differ from those estimates.

Reclassification: Certain prior period amounts have been reclassified to conform
to current presentations.

Fiscal year:  The Company uses a 52 - 53 week fiscal year.

Other: During 1995, the Financial  Accounting  Standards Board issued Statements
of Financial  Accounting  Standards No. 121,  "Accounting  for the Impairment of
Long-Lived  Assets and for  Long-Lived  Assets to Be  Disposed  Of" and No. 123,
"Accounting  for  Stock-Based  Compensation",  and in 1996  Statement  No.  125,
"Accounting for Transfers and Servicing of Financial Assets and  Extinguishments
of Liabilities".  The Company will adopt these accounting  standards in 1997 and
does not  expect  that  adoption  will have a material  impact on its  financial
statements.


Note D - Inventories

Inventories are summarized as follows (in thousands):
                                                            1996         1995
                                                          ---------    ---------
    Inventories at average cost:

        Raw materials................................     $  49,481    $  51,676
        Stock in process.............................        96,836      104,661
        Produced goods...............................       200,679      214,718
        Dyes, chemicals and supplies.................        23,100       22,059
                                                          ---------    ---------
                                                            370,096      393,114
        Less excess of average cost over LIFO........        40,710       50,455
                                                          ---------    ---------
            Total....................................     $ 329,386    $ 342,659
                                                          =========    =========

Inventories valued using the LIFO method comprised  approximately 90% and 88% of
consolidated   inventories  at  September  28,  1996  and  September  30,  1995,
respectively.

Note E - Sundry Payables and Accrued Expenses

Sundry payables and accrued expenses consist of the following (in thousands):

                                                             1996         1995
                                                          ---------    ---------
     Sundry accounts payable.........................     $   2,156    $   7,323
     Accrued expenses:
         Payroll and employee benefits...............        58,555       34,692
         Taxes, other than income taxes..............         9,597        9,472
         Interest....................................        12,464        8,816
         Other.......................................        20,123       16,411
                                                          ---------    ---------
             Total...................................     $ 102,895    $  76,714
                                                          =========    =========

Note F - Long-term Debt

Long-term debt consists of the following (in thousands):
                                                             1996         1995
                                                          ---------    ---------
  1995 Bank Credit Agreement...........................   $ 525,000    $       -
  1994 Bank Credit Agreement -
    Term Loan Facility.................................           -      305,000
    Revolving Credit Facility..........................           -      240,000
  Commercial Paper.....................................     144,221      193,032
  Senior Debt Securities...............................     149,900      149,889
  Other indebtedness with various rates and maturities.      19,735       24,770
                                                          ---------    ---------
                                                            838,856      912,691
  Less long-term debt due currently....................       1,720       34,686
                                                          ---------    ---------
    Total..............................................   $ 837,136    $ 878,005
                                                          =========    =========

Bank  Financing:  On November 8, 1995,  the Company  entered  into an  unsecured
credit agreement ("1995 Bank Credit Agreement"),  consisting of a $750.0 million
Revolving Credit Facility with a final maturity on March 31, 2001. The Agreement
provides  for the  issuance  of  letters  of credit by the  fronting  bank in an
outstanding aggregate face amount not to exceed $75.0 million,  provided that at
no time shall the aggregate  principal  amount of Revolving  Loans together with
the  aggregate  face  amount of such  letters of credit  issued,  exceed  $750.0
million.  At September  28, 1996,  letters of credit  outstanding  issued by the
fronting bank were  approximately  $0.2 million,  and the unused  portion of the
revolving  facility  commitment was  approximately  $224.8  million.  Additional
overnight  borrowings up to $27.0 million are also available under bank lines of
credit.

Loans under the 1995 Bank Credit  Agreement bear interest at either (i) floating
rates generally  payable  quarterly  based on the Adjusted  Eurodollar Rate plus
0.275% or (ii) Eurodollar rates or fixed rates which may be offered from time to
time by a Lender pursuant to a competitive bid request submitted by the Company,
payable up to 360 days. In addition,  the Company pays an annual facility fee of
0.15%. The interest rate and the facility fee are based on the Company's current
senior  unsecured  debt  ratings  of BBB minus and Baa3.  In the event  that the
Company's  Debt Ratings  improve,  the interest  rate and facility fees would be
reduced.  Conversely,  a  deterioration  in the  Company's  Debt  Ratings  would
increase the interest rate and facility fees. At September 28, 1996, the average
bank financing  interest rate was 5.92%. See Note Q for information on financial
instruments utilized to manage interest rate exposure.

The 1995 Bank Credit Agreement  imposes various  limitations on the liquidity of
the Company.  The Agreement  requires the Company to maintain  minimum  interest
coverage  and maximum  leverage  ratios and a specified  level of net worth.  In
addition, the Agreement limits dividend payments, stock repurchases, leases, the
incurrence of additional indebtedness by domestic subsidiaries,  the creation of
additional liens and the making of investments in foreign entities and restricts
the Company's ability to enter into certain merger, liquidation or asset sale or
purchase transactions.

On November 20, 1995,  the Company  borrowed  $510.0 million under the 1995 Bank
Credit  Agreement to repay all $505.0  million  principal  amount of outstanding
indebtedness  under the 1994 Bank Credit Agreement and recorded a related charge
from early  extinguishment  of debt of $0.7 million (net of income taxes) during
the 1996 fiscal year. On May 18, 1994,  the Company  utilized  proceeds from the
1994 Bank  Credit  Agreement  to repay all $740.0  million  principal  amount of
outstanding indebtedness of Industries under its 1993 Bank Credit Agreement, and
on August 17, 1994, amended its commercial paper facility (described below), and
recorded  related  charges  from early  extinguishment  of debt  totalling  $4.3
million (net of income taxes) during the 1994 fiscal year.

Commercial Paper Facility:  B.I. Funding, Inc., a wholly-owned subsidiary of the
Company,  has  established  a $225.0  million  A-1/D-1  rated  commercial  paper
facility ("CP Facility") backed by a $225.0 million Receivables-Backed Liquidity
Facility ("Liquidity Facility") established with a group of banks. The Company's
commercial paper borrowings generally have original maturities of up to 75 days.
The  Company  has the  intent and  ability  to  maintain  the  commercial  paper
borrowings on a long-term basis with ongoing  liquidity  support provided by the
Liquidity   Facility.   Accordingly,   commercial  paper  borrowings  have  been
classified as long-term debt. There were no borrowings  outstanding at September
28, 1996,  September 30, 1995 or October 1, 1994 under the  Liquidity  Facility,
which expires on August 31, 1998. The amount of borrowings  allowable  under the
CP Facility and the  Liquidity  Facility at any time is a function of the amount
of then outstanding eligible trade accounts receivable of B.I. Funding,  Inc. up
to $225.0 million. A commitment fee of 0.20% is charged on the unused portion of
the Liquidity Facility.

Senior Debt Securities: On September 26, 1995, the Company sold through a public
offering  $150.0  million  principal  amount  of  7.25%  unsecured  senior  debt
securities   due  September  15,  2005  pursuant  to  a  $400.0   million  shelf
registration filed with the Securities and Exchange Commission.  The Senior Debt
Securities  were issued at a discount to yield 7.26%.  The net proceeds from the
sale were the principal  source of funds used to prepay  $150.0  million of term
loans under the 1994 Bank  Credit  Agreement  on the same date.  Interest on the
Senior Debt  Securities is payable  semi-annually  on March 15 and September 15.
The Senior Debt  Securities  are not  redeemable  prior to maturity  and are not
entitled to any  sinking  fund.  The  indenture  to the Senior  Debt  Securities
contains covenants limiting certain liens and sale and leaseback transactions.

Maturities:  As of September 28, 1996,  aggregate annual maturities of long-term
debt for the next five years are $1.7 million in 1997,  $145.9  million in 1998,
$1.7 million in 1999, $1.6 million in 2000 and $525.5 million in 2001.

Note G - Leases

Minimum  commitments  for rental  expenditures  under  noncancellable  operating
leases are as follows (in thousands):

          1997.............................................    $  15,029
          1998.............................................       11,736
          1999.............................................        8,894
          2000.............................................        6,770
          2001.............................................        5,444
          Later years......................................       26,083
                                                               ---------
                                                                  73,956
          Less sublease income.............................           25
                                                               ---------
               Total minimum lease payments................    $  73,931
                                                               =========

Approximately 38% of the operating leases pertain to real estate.  The remainder
covers  a  variety  of  machinery  and  equipment.   Certain  operating  leases,
principally for office  facilities,  contain escalation clauses for increases in
operating  costs,  property  taxes and  insurance.  For the 1996,  1995 and 1994
fiscal  years,   rental  expense  for  all  operating  leases  was  $20,023,000,
$18,542,000 and $16,079,000,  respectively.  Sublease income was not material in
any of these years.

Note H - Shareholders' Equity

Shares of the Company's  voting and nonvoting  common stock,  par value $.01 per
share,  authorized,  issued and  outstanding at September 28, 1996 and September
30, 1995, respectively, were as follows:

                                       Shares          Shares           Shares
   September 28, 1996                Authorized        Issued        Outstanding
   ------------------               -----------      ----------      -----------
   Common Stock..................   200,000,000      61,366,741       55,852,652
   Nonvoting Common Stock........    15,000,000       7,026,708        7,026,708
                                    -----------      ----------       ----------
                                    215,000,000      68,393,449       62,879,360
                                    ===========      ==========       ==========

                                       Shares          Shares           Shares
   September 30, 1995                Authorized        Issued        Outstanding
   ------------------               -----------      ----------      -----------
   Common Stock..................   200,000,000      53,406,782       50,119,029
   Nonvoting Common Stock........    15,000,000      14,986,667       14,986,667
                                    -----------      ----------       ----------
                                    215,000,000      68,393,449       65,105,696
                                    ===========      ==========       ==========


All shares have similar rights and privileges except for voting rights.  Holders
of  Nonvoting  Common Stock are  entitled,  subject to certain  limitations,  to
exchange such shares for Common Stock.

On September 28, 1996 and September 30, 1995, the Company had 30,000,000  shares
of  preferred  stock  authorized,  par value $.01 per share,  none of which were
issued and outstanding.

On December 19 and 20, 1995, the Company purchased 3,428,571 shares of Nonvoting
Common Stock from a  shareholder  group in a  privately-negotiated  transaction.
Immediately thereafter,  these shares were converted to voting Common Stock held
as treasury stock. During the 1996 fiscal year,  outstanding shares also changed
due to (i) the purchase of 3,047 additional  shares of treasury stock;  (ii) the
issuance  of  233,076  shares of  treasury  stock to the ESOP Plan (see Note N);
(iii) the  issuance of 581,393  shares of treasury  stock to settle  Performance
Unit Awards (see below);  (iv) the issuance of 337,813  shares of treasury stock
for exercise of stock  options;  and (v) the issuance of 53,000 shares for other
transactions.

Under the Company's various Equity Incentive Plans the following were issued and
are outstanding as of September 28, 1996: (i) 65,000  restricted shares and (ii)
6,203,293  options  with an exercise  price range of $8.397 to $21.930 and which
expire from March 19, 2002 to October 1, 2005 except for 210,538  options  which
expire on December 31, 1997. These restricted  shares and options are all vested
(with the exception of 2,195,142  options  which vest November 13, 2000,  unless
vesting  is  accelerated  to  November  13,  1998 under  three-year  performance
objectives).  Under these plans 1,185,763 shares of Common Stock are reserved to
settle  Performance  Unit Awards  currently  outstanding  and 464,965  shares to
settle  additional  future  awards  remain   available.   Unamortized   deferred
compensation  expense with respect to restricted  common shares granted is being
amortized over the vesting term of such restricted shares.

<PAGE>

Changes in  shareholders'  equity of the Company for fiscal 1994,  1995 and 1996
are (dollar amounts in thousands):

<TABLE>
<CAPTION>
                                             Capital
                                               in                    Currency                  Treasury
                                    Common  excess of  Accumulated  translation    Unearned     shares,
                                    Stock   par value    deficit    adjustment   compensation   at cost     Total
                                    ------  ---------  -----------  -----------  ------------  ---------  --------
<S>                                 <C>     <C>         <C>           <C>          <C>         <C>        <C>
Balance October 2, 1993...........  $ 683   $ 881,357   $(397,337)    $ 6,488      $(6,725)    $   (251)  $484,215
Purchase of treasury stock........                                                              (11,302)   (11,302)
Issuance of treasury stock........                  2                                                65         67
Awards issued under
 Equity Incentive Plans...........              6,795                                                        6,795
Amortization of unearned
 compensation.....................                                                   2,084                   2,084
Forfeiture of restricted shares...                                                     325         (325)         -
Net income for the period.........                         95,038                                           95,038
Translation adjustment............                                     (2,533)                              (2,533)
                                    ------  ---------  -----------  -----------  ------------  ---------  --------
Balance October 1, 1994...........    683     888,154    (302,299)      3,955       (4,316)     (11,813)   574,364
Purchase of treasury stock........                                                              (37,858)   (37,858)
Issuance of treasury stock........             (1,163)                                           13,333     12,170
Awards issued under
 Equity Incentive Plans...........      1       6,375                                 (557)                  5,819
Amortization of unearned
 compensation.....................                                                   2,255                   2,255
Exercise of stock options.........                 73                                                           73
Forfeiture of restricted shares...                                                     126         (126)         -
Net income for the period.........                         68,394                                           68,394
Translation adjustment............                                     (9,777)                              (9,777)
                                    ------  ---------  -----------  -----------  ------------  ---------  --------
Balance September 30, 1995........    684     893,439    (233,905)     (5,822)      (2,492)     (36,464)   615,440
Purchase of treasury stock........                                                              (45,038)   (45,038)
Issuance of treasury stock........            (10,862)                                (116)       9,730     (1,248)
Awards issued under
 Equity Incentive Plans...........              3,205                                                        3,205
Amortization of unearned
 compensation.....................                                                   2,248                   2,248
Exercise of stock options.........               (297)                                            4,145      3,848
Forfeiture of restricted shares...                                                      60          (60)         -
Net income for the period.........                         40,906                                           40,906
Translation adjustment............                                     (3,441)                              (3,441)
                                    ------  ---------  -----------  -----------  ------------  ---------  --------
Balance September 28, 1996........ $   684  $ 885,485  $ (192,999)   $ (9,263)     $  (300)    $(67,687)  $615,920
                                    ======  =========  ===========  ===========  ============  =========  ========
</TABLE>


<PAGE>

Note I - Other Expense (Income) - Net

Other expense (income) - net consists of the following (in thousands):

                                             1996         1995         1994
                                           --------     --------     --------
    Loss (gain) on sale of assets - net..  $  3,651     $      -     $(31,192)
    Provision for legal and
      environmental contingencies........     3,990            -       12,113
    Provision for non-operating
      asset write-downs..................         -            -        5,856
    Interest income......................    (2,583)      (2,133)      (1,749)
    Other................................     1,046          236           92
                                           --------     --------     --------
         Total...........................  $  6,104     $ (1,897)    $(14,880)
                                           ========     ========     ========

On April 27,  1996,  the  Company  sold its J.G.  Furniture  operation  for $1.1
million in cash and $3.6  million in  securities.  J.G.  Furniture  had sales of
$17.4  million  and  $19.8  million  during  the  1995 and  1994  fiscal  years,
respectively.  Additionally,  the Company  recorded a charge for $2.3 million in
1996 on the sale of a  non-operating  asset. On April 29, 1994, the Company sold
its  Decorative  Prints  division for $63.9  million in cash for a gain of $30.0
million.  Additionally,  the Company recorded a gain of $1.5 million in the 1994
fiscal  year  related to the sale of assets  held for  investment.  The  Company
recorded  charges of $4.0 million and $12.1  million in the 1996 and 1994 fiscal
years, respectively, for legal and environmental contingencies (see Note O), and
$5.9  million  in 1994  for the  write-down  of  non-operating  assets  to their
expected net realizable value.

Note J - Income Taxes

Income tax expense consists of (in thousands):
                                                    1996       1995       1994
                                                  --------   --------   --------
  Current:
       United States..........................    $ 36,375   $ 31,418   $ 46,232
       Foreign................................         447        288        465
                                                  --------   --------   --------
            Total current                           36,822     31,706     46,697
  Deferred:
       United States..........................      (3,716)    18,582     22,753
       Foreign................................         641      1,419        532
                                                  --------   --------   --------
            Total deferred....................      (3,075)    20,001     23,285
                                                  --------   --------   --------
                                                  $ 33,747   $ 51,707   $ 69,982
                                                  ========   ========   ========

Income tax expense is  different  from the amount  computed by applying the U.S.
federal  income tax rate of 35% to income  before  income  taxes as follows  (in
thousands):
                                                   1996       1995       1994
                                                 --------   --------   --------
  U.S. tax at statutory rate..................   $ 26,373   $ 42,035   $ 59,248
  Goodwill amortization with no tax benefit...      6,212      6,166      6,157
  State income taxes, net of federal benefit..      1,465      3,622      6,544
  Other.......................................       (303)      (116)    (1,967)
                                                 --------   --------   --------
                                                 $ 33,747   $ 51,707   $ 69,982
                                                 ========   ========   ========

At September 28, 1996,  the Company had $40.4 million of deferred tax assets and
$196.9  million  of  deferred  tax  liabilities   which  have  been  netted  for
presentation  purposes.  At September 30, 1995, the Company had $37.2 million of
deferred tax assets and $196.8  million of deferred tax  liabilities  which have
been  netted  for   presentation   purposes.   Operating  loss  and  tax  credit
carryforwards  with  related tax  benefits of $2.7  million (net of $2.9 million
valuation  allowance)  at  September  28,  1996,  and $3.4  million (net of $2.9
million  valuation  allowance) at September 30, 1995,  expire from 1997 to 2008.
Deferred tax liabilities at September 28, 1996 and September 30, 1995 consist of
the following (in thousands):

                                         1996                     1995
                                 ---------------------    ---------------------
                                  Current   Noncurrent     Current   Noncurrent
                                 --------    ---------    --------    ---------
     Fixed assets..............  $      -    $ 104,187    $      -    $ 104,397
     Inventory valuation.......    60,142            -      60,142            -
     Accruals, allowances
       and other...............   (13,188)       8,142     (11,550)      10,066
     Operating loss and tax
       credit carryforwards....      (579)      (2,155)       (635)      (2,796)
                                 --------    ---------    --------    ---------
          Total................  $ 46,375    $ 110,174    $ 47,957    $ 111,667
                                 ========    =========    ========    =========


Note K - Supplemental Disclosures of Cash Flow Information

     (in thousands)                            1996         1995         1994
                                             --------     --------     --------

     Interest paid - net...................  $ 56,244     $ 52,705     $ 41,767
                                             ========     ========     ========

     Income taxes paid - net...............  $ 25,089     $ 38,973     $ 42,232
                                             ========     ========     ========

The Company's noncash investing and financing activities not disclosed elsewhere
included  the  issuance  of  convertible  notes in the  amount of $12.2  million
related to the acquisition of The Bacova Guild, Ltd. during the 1995 fiscal year
and exchange of  equipment  for notes  receivable  in the amount of $2.9 million
during the 1995 fiscal year.

Note L - Retirement Benefits

The Company's U.S. defined benefit pension plan provides benefits to most of its
U.S.  employees  and  certain  employees  in foreign  countries,  based on their
compensation over their working careers.  The funding policy for this plan is to
contribute annually the amount recommended by the plan's actuary. Employees also
contribute a percentage of their compensation.  Participants become fully vested
at the end of five years of service.

The following sets forth the funded status of the plan (in thousands):

                                                             1996        1995
                                                          ---------   ---------
  Actuarial present value of benefit obligations:
  Accumulated benefit obligation, including
   vested benefits of $(260,261) in 1996 and
   $(260,391) in 1995...................................  $(273,994)  $(276,339)
                                                          ---------   ---------
  Projected benefit obligation for service rendered
   to date..............................................   (310,992)   (314,079)
  Less plan assets at fair value, primarily listed
   stocks and bonds, short-term investment funds and
   insurance company contracts..........................    298,346     278,840
                                                          ---------   ---------
  Projected benefit obligation in excess of
   plan assets..........................................    (12,646)    (35,239)
  Unrecognized prior service cost.......................        625         823
  Unrecognized net loss.................................     34,652      58,216
                                                          ---------   ---------
  Pension asset recognized in the balance sheet.........  $  22,631   $  23,800
                                                          =========   =========

During the 1996 and 1994 fiscal  years,  the plan made cash lump sum payments to
the former member  employees of divested  divisions.  Curtailment and settlement
losses of $3.7  million  in 1996 and $2.2  million in 1994 were  recognized  and
offset against reserves established at the time of the divestitures.

Net pension cost included the following  components for the 1996,  1995 and 1994
fiscal years (in thousands):

                                                     1996      1995      1994
                                                   --------  --------  --------
Service cost - benefits earned during the
     period......................................  $  7,991  $  4,385  $  6,668
    Interest cost on projected benefit
     obligation..................................    24,093    24,148    22,304
    Return on assets, net of deferred (gain)
     loss of $(19,579) in 1996, $(20,361) in
     1995 and $7,923 in 1994.....................   (22,686)  (20,270)  (20,503)
    Amortization:
     Unrecognized prior service cost.............       163       541       550
     Unrecognized losses.........................     2,928     3,892     3,228
                                                   --------  --------  --------
    Net pension cost.............................  $ 12,489  $ 12,696  $ 12,247
                                                   ========  ========  ========

The following assumptions were used at each measurement date:
                                                     1996      1995      1994
                                                   --------  --------  --------
  Discount rate..................................    8.0 %     7.75%     8.0%
  Long-term rate of return on plan assets........    8.5%      8.5%      8.5%
  Long-term rate of increase in compensation.....    3.75%     3.75%     3.75%

Pension  cost for all  plans,  including  those  of  foreign  subsidiaries,  was
$12,940,000,  $13,112,000  and  $12,805,000  for the 1996,  1995 and 1994 fiscal
years, respectively.

Note M - Other Postretirement Benefit Plans

In addition to the Company's  pension plan, the Company has two defined  benefit
postretirement  medical plans available to most of its U.S.  employees who elect
participation  and  one  life  insurance  defined  benefit  postretirement  plan
covering  only certain  employees.  The medical plans include a health care plan
for  employees  electing  early  retirement  between the ages of 55 and 65 and a
Medicare  supplement  plan for retired  employees age 65 and older.  The medical
plans are  contributory,  with  retiree  contributions  adjusted  annually,  and
contain other  cost-sharing  features such as deductibles and  coinsurance.  The
life insurance plan is  non-contributory  and was closed to new members in 1973.
The  Company's  policy  is to fund the cost of the  medical  plans  and the life
insurance  plan as expenses are incurred.  The Company has adopted SFAS NO. 106,
"Employers' Accounting for Postretirement  Benefits Other Than Pensions",  which
requires that the cost of such benefits be accrued over the  employees'  service
lives. The Company's annual postretirement benefit costs are not significant.

The following  table shows the three plans'  combined  funded status  reconciled
with the amounts  recognized in the Company's balance sheets as of September 28,
1996 and September 30, 1995 (in thousands) and assumptions:
                                                1996                1995
                                          ------------------  ------------------
                                                    Life                Life
                                          Medical Insurance   Medical Insurance
                                           Plans     Plan      Plans     Plan
                                          --------  --------  --------  --------
 Accumulated postretirement benefit
  obligation:
   Retirees............................. $   (955) $ (5,028) $   (126) $ (5,276)
   Fully eligible active plan
    participants........................   (2,241)        -    (1,872)        -
   Other active plan participants.......   (2,530)        -    (2,050)        -
                                         --------  --------  --------  --------
                                           (5,726)   (5,028)   (4,048)   (5,276)
  Plan assets at fair value, primarily
   bonds................................      249     2,399       265     2,510
                                         --------  --------  --------  --------
  Accumulated postretirement benefit
   obligation in excess of plan assets..   (5,477)   (2,629)   (3,783)   (2,766)
  Unrecognized net (gain) loss..........    3,266      (551)      559      (485)
                                         --------  --------  --------  --------
  Accrued postretirement benefit cost... $ (2,211) $ (3,180) $ (3,224) $ (3,251)
                                         ========  ========  ========  ========
  Discount rate.........................    8.0%      8.0%      7.75%     7.75%
  Long-term rate of return on plan
   assets...............................    8.5%      8.5%       8.5%      8.5%

The annual rate of increase in health care  expenses was 7% in the 1996 and 1995
fiscal  years.  This rate was  assumed to be 7% for the 1997  fiscal year and to
decrease gradually to 6% in 2004 and remain at that level thereafter.

Note N - Employee Stock Ownership Plan

The Company's  Employee Stock Ownership Plan ("ESOP") is an individual  account,
defined contribution plan designed to be qualified under the relevant provisions
of the Internal  Revenue  Code of 1986,  as amended  (the  "Code").  The ESOP is
designed to invest  primarily  in the  Company's  stock.  The  Internal  Revenue
Service  has  issued a  favorable  determination  letter  stating  that the ESOP
qualifies under the Code and that the ESOP Trust is exempt from tax.

All salaried and hourly employees of Industries and participating affiliates who
complete a minimum  period of service are eligible to  participate  in the ESOP.
The ESOP Plan also  provides  for 100% vesting  after one year of  participating
service and for distributions of shares allocated to participant accounts at the
time of termination of employment with the Company.

Pursuant to a Board-established formula linked to the Company's annual operating
results, a contribution of 922,052 shares of Common Stock valued at $9.3 million
was made to the ESOP for fiscal year 1994, a  contribution  of 483,076 shares of
Common  Stock  valued at $5.7 million was made to the ESOP for fiscal year 1995,
and a  contribution  of Common  Stock valued at $5.2 million will be made to the
ESOP for fiscal year 1996.  Such amounts have been charged to  operations in the
1994, 1995 and 1996 fiscal years, respectively.

Note O - Contingencies

In June 1992, a class action  entitled  Atwood et al. v.  Burlington  Industries
Equity Inc. et al. (Civ.  Act. No.  2:92CV00716)  was commenced on behalf of all
participants in the ESOP. The defendants included the Company and certain of its
officers,  directors and employees,  Morgan  Stanley & Co., and the  independent
trustee of the ESOP. The complaint  alleged  certain causes of action for breach
of  fiduciary  duties  under the  Employee  Retirement  Income  Security Act and
violation of the securities  laws and state common law principally in connection
with the 1989 sale of Company stock to the ESOP. On October 28, 1996, all claims
in  the  lawsuit  were  settled  pursuant  to a  court-approved  agreement.  The
Company's portion of the settlement is adequately covered by reserves, including
the provision made in 1996 (See Note I) and insurance proceeds.

The Company and certain of its current and former direct and indirect  corporate
predecessors,  subsidiaries  and  divisions  have been  identified by the United
States Environmental Protection Agency, by the environmental agencies in several
states and by private parties as potentially  responsible parties at a number of
hazardous waste disposal sites under the  Comprehensive  Environmental  Response
Compensation and Liability Act of 1980  ("Superfund")  and comparable state laws
and,  as  such,  may be  liable  for the  cost of  cleanup  and  other  remedial
activities at these sites.  The Company may also have liability for such matters
pursuant  to  contractual  obligations  relating  to  divested  property or with
respect to sites which may be identified in the future.  With respect to certain
of  these  sites,  other  persons  have  also  been  identified  as  potentially
responsible  parties,  and in such  circumstances the responsibility for cleanup
and other remedial activities is typically shared among such parties based on an
allocation  formula.  The Company is also  involved in  remedial  responses  and
voluntary  environmental  cleanups at other sites  which are not  currently  the
subject of proceedings of any kind under Superfund or comparable state laws. The
Company  has  established   reserves  in  its  financial   statements  for  such
environmental  liabilities,  including  related legal fees and other transaction
costs, in the aggregate amount of $6.6 million.  The provision for environmental
liabilities is based on the Company's estimate of allocations of liability among
potentially  responsible  parties (and the  likelihood of  contribution  by such
parties),   information   concerning  the  scope  of  contamination,   estimated
remediation costs,  estimated  transaction costs and other factors.  The Company
has also recorded $1.3 million for estimated recoveries under insurance policies
to the  extent  that  coverage  for such  claims  has been  acknowledged  by the
relevant insurer and for estimated recoveries from third parties.

The Company and its  subsidiaries  also have  sundry  claims and other  lawsuits
pending  against  them and also have certain  guarantees  which were made in the
ordinary course of business.  It is not possible to determine with certainty the
ultimate liability,  if any, of the Company in any of the matters referred to in
this Note O, but in the  opinion of  management,  their  outcome  should have no
material adverse effect upon the financial condition or results of operations of
the Company.

Note P - Segment and Other Information

The Company is one of the largest and most diversified  manufacturers of textile
products in the world. It is a leading  developer,  marketer and manufacturer of
fabrics and other  textile  products  utilized in a wide  variety of apparel and
interior  furnishings end uses. The Company operates in two areas:  products for
apparel markets and products for interior furnishings markets.  Sales, operating
income,   identifiable   assets,   depreciation  and  amortization  and  capital
expenditures for these segments are as follows:
                                                  1996       1995        1994
                                                --------   --------    --------
                                                    (dollars in millions)
    Net sales
      Apparel................................   $1,328.3   $1,347.1    $1,331.5
      Interior furnishings...................      854.0      862.1       795.6
                                                --------   --------    --------
             Total...........................   $2,182.3   $2,209.2    $2,127.1
                                                ========   ========    ========

    Operating income
      Apparel................................   $  121.7   $  107.1    $  151.5
      Interior furnishings...................       55.6       67.4        60.2
      Loss on closing of division............      (29.9)         -           -
      Provision for restructuring............          -          -        (7.5)
                                                --------   --------    --------
             Total...........................      147.4      174.5       204.2

    Interest expense.........................       65.9       56.3        49.8
    Other expense (income) - net.............        6.1       (1.9)      (14.9)
                                                --------   --------    --------
    Income before income taxes...............   $   75.4   $  120.1    $  169.3
                                                ========   ========    ========

    Operating margin
      Apparel................................        9.2%       8.0%       11.4%
      Interior furnishings...................        6.5        7.8         7.6
                                                    ----       ----        ----
             Total...........................        6.8%       7.9%        9.6%
                                                    ====       ====        ====

    Identifiable assets
      Apparel................................   $1,091.8   $1,130.4    $1,178.1
      Interior furnishings...................      734.2      748.8       667.0
      Corporate..............................       55.5       48.2        56.9
      Assets held for sale...................        4.4        4.3         5.1
                                                --------   --------    --------
             Total...........................   $1,885.9   $1,931.7    $1,907.1
                                                ========   ========    ========

    Depreciation and amortization
      Apparel................................   $   52.3   $   53.4    $   52.6
      Interior furnishings...................       35.0       33.6        30.0
                                                --------   --------    --------
             Total...........................   $   87.3   $   87.0    $   82.6
                                                ========   ========    ========

    Capital expenditures
      Apparel................................   $   48.6   $   55.4    $   67.7
      Interior furnishings...................       30.6       46.5        31.2
                                                --------   --------    --------
             Total...........................   $   79.2   $  101.9    $   98.9
                                                ========   ========    ========

The Company primarily markets its products to approximately  13,800 customers in
the United States. The Company also markets its products to customers in Canada,
Mexico, Latin America, Europe and the Pacific Rim countries. For the 1996 fiscal
year, no single customer  represented  more than 10% of the Company's net sales,
and the Company's 10 largest  customers  accounted for  approximately 27% of net
sales.

Note Q - Financial Instruments

The Company utilizes interest rate agreements and foreign exchange  contracts to
manage interest rate and foreign currency exposures.  The principal objective of
such contracts is to minimize the risks and/or costs  associated  with financial
and  global  operating  activities.  The  Company  does  not  utilize  financial
instruments for trading or other  speculative  purposes.  The  counterparties to
these   contractual   arrangements  are  a  diverse  group  of  major  financial
institutions with which the Company also has other financial relationships.  The
Company  is  exposed  to  credit  loss in the event of  nonperformance  by these
counterparties.  However, the Company does not anticipate  nonperformance by the
other parties, and no material loss would be expected from their nonperformance.

INTEREST RATE  INSTRUMENTS:  The Company  enters into  interest rate swap,  cap,
floor and collar agreements to reduce the impact of changes in interest rates on
its floating rate debt. The swap  agreements are contracts to exchange  floating
rate for fixed interest  payments  periodically  over the life of the agreements
without the exchange of the underlying notional amounts. The notional amounts of
interest rate agreements are used to measure interest to be paid or received and
do not  represent  the amount of  exposure to credit  loss.  For  interest  rate
instruments that effectively hedge interest rate exposures, the net cash amounts
paid or received on the  agreements  are accrued and recognized as an adjustment
to interest expense.  If an arrangement is replaced by another instrument and no
longer qualifies as a hedge instrument,  then it is marked to market and carried
on the balance sheet at fair value.

        As of September  28, 1996 and  September  30, 1995,  the Company had the
following interest rate instruments in effect (notional amounts in millions; the
cap, swap, floor and collar rates are based on 3-month LIBOR):

                                           1996
                          ------------------------------------------
                          Notional         Strike
                           Amount           Rate            Period
                          --------        -------        -----------
    Interest rate caps     $100             9.50%        04/96-04/97
                            300             7.00         10/96-10/97
                            300             9.50         10/96-10/97
                            200            10.00         10/96-10/97

    Interest rate swaps    $200             7.37%        10/95-10/00

    Interest rate collars  $ 50             4.75%        10/96-10/97
                                            7.00
                             50             5.03         10/96-10/97
                                            7.00

    Interest rate floors   $100             5.50%        01/96-10/96
                            250             5.25         01/96-10/96
                            300(a)          5.60         10/96-10/97

    (a)  Entered into on October 3, 1996.

                                            1995
                          ------------------------------------------
                          Notional         Strike
                           Amount           Rate            Period
                          --------        -------        -----------
    Interest rate caps     $300             5.50%        10/94-10/95
                            500             4.50         10/94-10/95
                            350             6.00         10/95-10/96
                            150             9.50         10/95-10/96
                            100             9.50         04/96-04/97
                            300             9.50         10/96-10/97
                            200            10.00         10/96-10/97

    Interest rate swaps    $200             7.37%        10/95-10/00
                             25             5.92         10/95-10/96

    Interest rate collars  $100             5.42%        10/95-10/96
                                            6.00
                             50             4.75         10/96-10/97
                                            7.00

FOREIGN EXCHANGE INSTRUMENTS:  The Company enters into forward currency exchange
contracts  in the  regular  course of business  to manage its  exposure  against
foreign  currency  fluctuations on sales,  raw material and fixed asset purchase
transactions  denominated in foreign  currencies.  Foreign currency  receivables
which have  forward  exchange  contracts  are  recorded  in U.S.  dollars at the
applicable  forward rate. The foreign exchange  contracts on receivables  ($19.8
million  and $10.4  million  at  September  28,  1996 and  September  30,  1995,
respectively)  require the Company to exchange  British  pounds,  German  marks,
French francs,  Canadian dollars and Italian lira for U.S. dollars and generally
mature within three months.  Forward exchange  contracts related to raw material
and fixed asset purchase transactions are recognized as adjustments to the bases
of the underlying assets. At September 28, 1996, the Company had $4.8 million of
forward currency exchange  contracts maturing in one to six months which related
to purchases of wool and machinery  denominated  in Australian  dollars,  German
marks and French  francs,  compared to $8.2  million at September  30, 1995.  At
September 28, 1996 and September 30, 1995,  deferred gains and losses on foreign
exchange contracts are not material to the consolidated financial statements.


FAIR VALUE OF FINANCIAL INSTRUMENTS:  The following methods and assumptions were
used in estimating the indicated fair values of financial instruments:

Cash and Cash Equivalents:  The carrying amount  approximates fair value because
of the short maturity of those instruments.

Short-term  Investments:  The fair values are  estimated  based on quoted market
prices for these or similar instruments.

Long-term  Investments and  Receivables:  The fair values are estimated based on
one of the following methods:  (i) quoted market prices;  (ii) current rates for
similar issues;  (iii) recent  transactions for similar issues;  or (iv) present
value of expected cash flows.

Short-term  and  Long-term  Debt:  The fair value is estimated  based on current
rates offered for similar debt.  At September  28, 1996,  long-term  debt with a
carrying value of $838.9 million had an estimated fair value of $834.9 million.

Interest Rate  Instruments:  The fair values are the estimated  amounts that the
Company would receive or pay to terminate the agreements at the reporting  date,
taking into account current interest rates and the current credit  worthiness of
the  counterparties.  At September 28, 1996 and September 30, 1995, the carrying
amounts of these  instruments  were a $0.2 million  liability and a $5.7 million
asset, respectively.  At September 28, 1996, the Company estimates it would have
paid $7.2  million and at  September  30,  1995 would have paid $7.7  million to
terminate the agreements.

Foreign Currency Contracts:  The fair values of foreign currency contracts (used
for hedging  purposes)  are  estimated  by  obtaining  quotes from  brokers.  At
September  28, 1996 and  September  30,  1995,  there were no  carrying  amounts
related  to foreign  currency  contracts  in the  consolidated  balance  sheets.
Foreign currency  contracts to receive $15.1 million had an estimated fair value
to receive $15  million at  September  28,  1996,  compared to foreign  currency
contracts to receive  $2.2 million with an estimated  fair value to receive $2.4
million at September 30, 1995.

It is  estimated  that the  carrying  value  of the  Company's  other  financial
instruments  approximated  fair value at September  28, 1996 and  September  30,
1995.

Note R - Quarterly Results of Operations (unaudited)

The Company's  unaudited quarterly results of operations are presented below (in
thousands, except for per share data).

Fiscal 1996 Quarters
                                        December    March      June   September
                                        ---------  --------  -------- ---------
Net sales.............................. $512,694  $572,081  $574,571  $523,001
Cost of sales..........................  434,689   471,760   471,697   436,014
Income tax expense.....................   (7,438)  (14,884)   (2,256)   (9,169)
Income before extraordinary item (a)...    8,473    20,701       570    11,859
Extraordinary item.....................     (697)        -         -         -
Net income............................. $  7,776  $ 20,701  $    570  $ 11,859


PER SHARE DATA
Income before extraordinary item (a)... $   0.13  $   0.33  $   0.01   $  0.19
Extraordinary item.....................    (0.01)        -         -         -
                                        ---------  --------  --------  -------
Net income............................. $   0.12  $   0.33  $   0.01   $  0.19


COMMON STOCK PRICES
  High.................................   14 1/4    13 1/4    14 7/8    14 1/2
  Low..................................   11        11 3/8    11 1/4     9 7/8

Fiscal 1995 Quarters
                                        December    March      June   September
                                        ---------  --------  -------- ---------
Net sales.............................. $514,836  $583,423  $581,983   $528,949
Cost of sales..........................  432,026   480,614   483,694    447,418
Income tax expense.....................  (11,589)  (16,265)  (13,963)    (9,890)
Net income............................. $ 12,846  $ 22,180  $ 19,496   $ 13,872

NET INCOME PER SHARE................... $   0.19  $   0.34  $   0.30   $   0.21

COMMON STOCK PRICES
  High.................................   10 5/8    12        11 7/8     13 5/8
  Low..................................    9 1/4     9 5/8    10 1/8     11 1/4


(a) June  quarter  1996  includes a $20.3  million  loss on closing  the Knitted
    Fabrics division and $4.7 million for certain other  non-recurring  charges,
    each net of income taxes.






<PAGE>



STATISTICAL REVIEW

Burlington Industries, Inc. and Subsidiary Companies

(dollar amounts in thousands, except per share data and ratios)

<TABLE>
<CAPTION>
                                   1996       1995        1994       1993(c)    1992(b)(c)
                                ---------- ---------- ----------- -----------   ----------
<S>                             <C>        <C>        <C>         <C>           <C>
SUMMARY OF OPERATIONS
Net sales.....................  $2,182,347 $2,209,191 $2,127,067  $2,057,943    $2,065,908
Operating income before
 interest and taxes...........     147,390    174,498    204,242     214,141       198,495
Interest expense..............      65,936     56,294     49,841      93,389       160,217
Income tax expense (benefit)..      33,747     51,707     69,982      58,514       (33,816)
Income (loss) from continuing
 operations...................      41,603     68,394     99,299      68,445       (68,005)
Income (loss) per common share
 from continuing operations...        0.66       1.05       1.46        1.00         (1.88)
Dividends per common share....           -          -          -           -             -


FINANCIAL POSITION AT YEAR END
Current assets................  $  719,370 $  732,837 $  733,538  $  664,552    $  471,585
Fixed assets - net............     565,131    570,729    544,800     529,310       530,008
Total assets..................   1,885,942  1,931,731  1,907,148   1,854,320     1,741,864
Current liabilities...........     265,352    272,397    315,468     314,265       284,595
Long-term liabilities.........     894,496    932,227    915,884     948,960       924,977
Shareholders' equity..........     615,920    615,440    574,364     484,215       448,212
Current ratio.................         2.7        2.7        2.3         2.1           1.7
Total debt as % of
 capitalization...............        57.7%      59.7%      61.3%       67.5%         68.2%

OTHER DATA
EBITDA (a)..................... $  264,637 $  261,454 $  294,347  $  323,964    $  316,174
EBITDA margin(a)...............       12.1%      11.8%      13.8%       15.7%         15.3%
Capital expenditures........... $   79,174  $ 101,876 $   98,869  $   80,590    $   62,423
Number of employees at
 year end......................     21,000     22,500     23,800      23,600        23,400
Cash interest coverage
 ratio.........................        4.3        4.9        6.1         4.0           2.5
</TABLE>

(a) EBITDA:   Operating   income  before  interest,   taxes,   depreciation  and
    amortization  (excluding  loss on  closing  of  division  and  restructuring
    provisions).  EBITDA  should not be  considered  in  isolation  from or as a
    substitute for operating  income before  interest and taxes,  cash flow from
    operating  activities and other  consolidated  income or cash flow statement
    data prepared in accordance with generally accepted accounting principles.

(b) Fiscal  year  1992  represents  a 53-week  period.  All other  fiscal  years
    presented represent a 52-week period.

(c) Restated for the adoption of SFAS No. 109, "Accounting for Income Taxes".

<PAGE>


                         Report of Independent Auditors



Shareholders and Board of Directors
Burlington Industries, Inc.

We have  audited the  accompanying  consolidated  balance  sheets of  Burlington
Industries, Inc. and Subsidiary Companies as of September 28, 1996 and September
30, 1995, and the related  consolidated  statements of operations and cash flows
for each of the three  years in the  period  ended  September  28,  1996.  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.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  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.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Burlington  Industries,  Inc. and Subsidiary Companies at September 28, 1996 and
September 30, 1995, and the  consolidated  results of their operations and their
cash flows,  for each of the three years in the period ended September 28, 1996,
in conformity with generally accepted accounting principles.

/s/Ernst & Young LLP

Greensboro, North Carolina
November 1, 1996