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

Burlington Industries, Inc. and Subsidiary Companies

Overview

For fiscal year 2000,  net sales were $1,620.2  million,  compared with $1,651.7
million in fiscal  year 1999.  The net loss for the fiscal  year 2000 was $527.0
million, or $10.12 per share. As a result of an accounting change, the 2000 loss
includes a non-cash  charge of $463.2  million to  write-off  impaired  historic
enterprise  goodwill.  The results also include pre-tax charges of $82.2 million
related to restructuring and asset  write-downs and impairments,  of which $67.0
million is recorded as provision for  restructuring  and impairments,  and $15.2
million of  inventory  write-downs  and other  expenses  are recorded in cost of
sales. The Company reduced  inventory by $38.9 million,  to 61 days on hand from
71 days in the fourth  quarter  of fiscal  year 2000.  However,  this  penalized
operating results as production was temporarily curtailed and some slower moving
goods were aggressively sold.

The Company (and the U.S.  textile industry  generally) have been  significantly
impacted  during the last  decade by  changing  global  trade  patterns  and the
concentration  of retail buying power in the United States.  Although  partially
offset by the benefits of increased garment  manufacturing in Mexico and certain
Caribbean  Basin  countries,   import  penetration  from  non-U.S.  sources  has
significantly  increased,  and should do so again in 2005 when GATT/WTO mandated
quota elimination and tariff  reductions  further open North American markets to
off-shore products. Retail sourcing firms, coupled with global over-capacity and
the lingering impact of price  compression  from the Asian  "financial  crisis",
have driven profit margins down in key product areas where the Company competes.
Finally,  fashion shifts,  particularly the casual dressing trend, have hurt the
Company's  product  lines,  particularly  worsted wool,  which has served a more
formal, business-oriented apparel customer base.

All of the foregoing  trends have contributed to the reduction in profit margins
and cash flow experienced by the Company in the last two fiscal years, resulting
in the  Company's  current  depressed  stock price and the  increased  costs and
covenant  restrictions  evidenced  in the  Company's  recently  refinanced  bank
indebtedness.

The fiscal year 2000 restructuring, asset write-down and impairment charges were
part of a plan to improve  operating  results and reduce debt levels.  Excluding
these  charges,  the 2000 net loss would  have been  $10.6  million or $0.20 per
share.  The  Company  is  moving  quickly  with the  implementation  of the 2000
restructuring plan, which is designed to:

   *  Realign and reduce operating capacity to better match market demand and
      improve efficiency;
   *  Eliminate  unprofitable  businesses and improve return on assets;
   *  Reduce overhead and operating expenses; and
   *  Pay down debt to improve our financial flexibility.

The  Company's  number one  priority for the coming year is to improve cash flow
and pay down debt of at least $100 million  during the 2001 fiscal year. It will
take time to fully implement the restructuring  plan. The Company expects a near
break-even  profit and loss  result  for fiscal  2001,  after  incurring  $10-12
million of runout  costs  associated  with the plan.  With the majority of these
expenses  falling  in the first  half of the year,  losses  are  expected  to be
reported in the first two quarters of the 2001 fiscal year. The Company believes
that the  restructuring  plans  adopted  during the last two  fiscal  years will
permit it to generate  adequate  cash flows to satisfy  its working  capital and
limited capital expenditure needs, with significant balances remaining to reduce
outstanding indebtedness.

The Company intends to focus  principally on managing cash for these purposes in
the short run and has put in place management incentive plans designed to reward
cash generation and debt reduction. The Company also will put significant effort
into more  efficient  manufacturing  operations  and  assuring  that new  assets
brought on stream in Mexico maximize their potential.  In addition, it will seek
global partnering  opportunities,  using Nano-Tex  technology where appropriate,
and the  Company's  design and  marketing  skills,  to pair with asset owners in
lower cost countries to bring higher value-added  consumer products to customers
in North America and Europe.

PERFORMANCE BY SEGMENT:  The Company  conducts its operations in three principal
operating segments:  PerformanceWear,  CasualWear and Interior Furnishings.  The
Company  evaluates  performance and allocates  resources based on profit or loss
before  interest,  amortization  of  goodwill,  restructuring  charges,  certain
unallocated corporate expenses, and income taxes. The following table sets forth
certain  information  about the  segment  results  for the  fiscal  years  ended
September 30, 2000, October 2, 1999 and October 3, 1998 (in millions).

                                              2000     1999     1998
                                            -------- -------- --------
                                                              (53-week
                                                                year)
Net Sales
         PerformanceWear........            $  587.3 $  611.7 $  852.3
         CasualWear.............               242.5    257.1    342.1
         Interior Furnishings...               792.3    758.0    792.2
         Other..................                34.1     36.0     39.4
                                            -------- -------- --------
                                             1,656.2  1,662.8  2,026.0
         Less:
         Intersegment sales....                (36.0)   (11.1)   (15.6)
                                            -------- -------- --------
                                            $1,620.2 $1,651.7 $2,010.4
                                            ======== ======== ========
Income (Loss) before
  Income Taxes
         PerformanceWear........            $   13.9 $   18.4 $   90.0
         CasualWear.............                (8.3)    (2.9)    38.0
         Interior Furnishings...                63.3     78.0     88.0
         Other..................                (2.1)     1.9      2.5
                                            -------- -------- --------
           Total reportable
         segments............                   66.8     95.4    218.5
         Corporate expenses.....               (14.2)   (12.3)   (14.7)
         Goodwill amortization..               (16.7)   (17.8)   (18.1)
         Write-off of goodwill..              (463.2)       -        -
         Restructuring and
          impairment charges....               (67.0)   (62.1)       -
         Interest expense.......               (66.3)   (58.4)   (59.5)
         Other (expense)
           income - net.......                  12.0      7.9      3.8
                                            -------- -------- --------
                                            $ (548.6)$  (47.3)$  130.0
                                            ======== ======== ========

Results of Operations

Comparison of Fiscal Years ended September 30, 2000 and October 2, 1999

2000 Restructuring and Impairment

During the September quarter of 2000, the Company's Board of Directors  approved
a plan designed to strengthen the Company's future  profitability  and financial
flexibility.  This plan  addresses  performance  shortfalls as well as difficult
market dynamics including the continued growth of textile products imports,  the
casual  dressing  trend,  a drop in exports to Europe because of the weakness of
the Euro, price competition in denim and other products,  and retailers' efforts
to reduce their inventories of interior furnishings products. The major elements
of the plan include:

         (1) Realign  operating  capacity.  The Company will reduce  capacity to
better align its  operations  with current  market demand and to assure the most
efficient  use of  assets.  This  includes:  closing  a plant in  Johnson  City,
Tennessee  and  moving  a  portion  of its  production  to  other  underutilized
facilities in the December 2000 quarter; reducing operations at the Clarksville,
Virginia facilities of the PerformanceWear segment in the December 2000 quarter;
and reducing  the size of the  Company's  trucking  fleet and closing the Gaston
trucking  terminal  located in  Belmont,  North  Carolina in the  December  2000
quarter.

         (2) Eliminate unprofitable businesses. The PerformanceWear segment will
exit  its  garment-making   business,   to  include  offering  its  facility  in
Cuernavaca,  Mexico for sale, and will prune unprofitable  product lines that do
not meet  expectations.  Also,  the Company plans to exit its  Burlington  House
Floor  Accents  business by closing the tufted area rug business in  Monticello,
Arkansas as soon as  commitments  to customers can be completed and is currently
negotiating the sale of the remaining portion located in Low Moor, Virginia. Net
sales of the Burlington House Floor Accents business were $122.3 million for the
2000 fiscal year and net operating loss was $5.3 million for the same period.

         (3) Reduce overhead. The Company has analyzed  administrative and staff
positions  throughout the Company,  and identified a number of  opportunities to
consolidate  and reduce cost. This will result in job reductions in division and
corporate staff areas primarily during the December and March quarters of fiscal
year 2001.

         (4) Pay down  debt.  Company-wide  initiatives  to sell  non-performing
assets,  reduce working capital,  and decrease capital expenditures will free up
cash that will be used to reduce debt and  improve  financial  flexibility.  The
Company has completed the refinancing of its bank credit  facilities (see Note F
and Liquidity and Capital Resources).

The  closings  and  overhead  reductions  outlined  above  will  result  in  the
elimination  of  approximately  2,450 jobs in the United  States and 950 jobs in
Mexico,  with  severance  benefit  payments to be paid over  periods of up to 12
months from the termination date depending on the employee's  length of service.
The  Company  projects  that as a result  of its 2000  restructuring  plan,  the
Company will generate  approximately $100.0 million of free cash flow during the
2001 fiscal year to reduce debt,  and expects to generate  approximately  $100.0
million of additional free cash flow during the next two years to further reduce
debt.

This plan resulted in a pre-tax charge for restructuring,  asset write-downs and
impairment of $67.7 million.  The Company will also incur approximately $10.0 to
$12.0 million of runout charges related to this restructuring,  primarily in the
first two quarters of fiscal 2001. The components of the 2000  restructuring and
impairment  charge  included the  establishment  of a $19.7 million  reserve for
severance  benefit  payments,   write-downs  for  impairment  of  $38.0  million
(including  $12.7 million of goodwill)  related to long-lived  assets  resulting
from the  restructuring  and a  reserve  of $10.0  million  primarily  for lease
cancellation costs expected to be paid through December 2001.

Following  is a summary of activity in the related 2000  restructuring  reserves
(in millions):
                                                                 Lease
                                                             Cancellations
                                                 Severance     and Other
                                                 Benefits      Exit Costs
                                                 ---------   -------------
         September 2000 restructuring charge...   $ 19.7       $  10.0
         Payments..............................     (0.4)            -
                                                  ------       -------
         Balance at September 30, 2000.........   $ 19.3       $  10.0
                                                  ======       =======

Other  expenses  related  to  the  2000   restructuring   (including  losses  on
inventories of discontinued styles,  relocation of employees and equipment,  and
plant  carrying and other costs) are charged to operations as incurred.  Through
September 30, 2000, $8.1 million of such costs have been incurred and charged to
operations, consisting primarily of inventory losses.

Assets that have been sold,  or are held for sale at September  30, 2000 and are
no longer in use, were written down to their estimated fair values less costs of
sale.  Assets held for sale continue to be included in the Fixed Assets  caption
on the balance sheet in the amount of $36.4  million.  The Company,  through its
Real Estate and Purchasing departments,  is actively marketing the affected real
estate  and  equipment.  The  active  plan  to  sell  the  assets  includes  the
preparation of a detailed property  marketing package to be used in working with
real estate and used  equipment  brokers  and other  channels,  including  other
textile  companies,  the local Chamber of Commerce and Economic  Development and
the State Economic  Development  Department.  The Company  anticipates  that the
divestitures  of real estate and  equipment  will be completed  within 18 months
from the date of facility closing. However, the actual timing of the disposition
of these properties may vary due to their locations and market conditions.

In 2000,  the Company  changed its method of evaluating  the  recoverability  of
enterprise-level  goodwill from the undiscounted  cash flow method to the market
value  method.  Under the market  value  method,  impairment  is measured by the
excess of the  Company's  net book  value over its  market  capitalization.  The
Company  believes the market value method is preferable  because it results in a
more objective  measurement of  recoverability  and better reflects the value of
goodwill as perceived by  investors.  Since the excess of the Company's net book
value  over  its  market  capitalization  exceeded  the  carrying  value  of the
Company's  enterprise-level  goodwill,  the  change  in  method  resulted  in an
impairment charge to write-off the remaining carrying value of  enterprise-level
goodwill of $463.2  million,  or ($8.89) per share.  This  change  represents  a
change in method that is inseparable from a change in estimate and, accordingly,
the effect of the  change  has been  reflected  as an  impairment  charge in the
accompanying 2000 statement of operations.  The Company's bank credit agreements
have been amended to allow for this change in accounting for goodwill.  Prior to
the change,  goodwill was amortized using the straight-line method over not more
than 40 years.  At adoption  of the  change,  the  accumulated  amortization  of
goodwill was $234.4 million compared to $217.7 million at October 2, 1999.

         NET SALES:  Net sales for the 2000 fiscal year were  $1,620.2  million,
1.9% lower than the $1,651.7 million recorded for the 1999 fiscal year.  Exports
totaled  $179  million  and $236  million  in the 2000  and 1999  fiscal  years,
respectively.
         PerformanceWear: Net sales for the PerformanceWear segment for the 2000
fiscal year were $587.3 million,  4.0% lower than the $611.7 million recorded in
the 1999 fiscal year.  Excluding $4.1 million sales reduction due to the sale of
the  Burlington   Madison  Yarn   division,   net  sales  of  products  for  the
PerformanceWear  segment were 3.3% lower than in the prior year.  This  decrease
was due primarily to 4.0% lower prices and product mix partially  offset by 0.7%
higher volume.  Export volume  decreased by $23.3,  in part due to the weak Euro
currency.
         CasualWear:  Net sales for the  CasualWear  segment for the 2000 fiscal
year were $242.5  million,  5.7% lower than the $257.1  million  recorded in the
1999 fiscal year.  Excluding  $16.0 million  sales  reduction due to exiting the
Sportswear business,  net sales of products for the CasualWear segment were 0.6%
higher than in the prior year.  This  increase was due primarily to 12.0% higher
volume offset by 11.4% lower prices and product mix.
         Interior  Furnishings:  Net sales of products for interior  furnishings
markets  for the 2000  fiscal  year were  $792.3  million,  4.5% higher than the
$758.0 million recorded in the 1999 fiscal year. This increase was primarily due
to 4.2% higher volume and 0.3% higher selling prices and mix.
         SEGMENT  INCOME:  Total  reportable  segment income for the 2000 fiscal
year was $66.8 million compared to $95.4 million for the 1999 fiscal year.
          PerformanceWear:  Income of the PerformanceWear  segment  for the 2000
fiscal year was $13.9 million  compared to $18.4  million  recorded for the 1999
fiscal year.  This  decrease was due  primarily  to $13.3  million  reduction in
margins  resulting from lower volume and  price/mix,  $1.9 million of higher raw
material costs and higher  start-up costs of $6.1 million,  partially  offset by
reduced  run-out costs charged to operations  associated with  restructuring  of
$10.5 million and $5.2 million resulting from cost reductions, restructuring and
improved net operating efficiencies. Segment results for 2000 also include $11.1
million equity in income of the Company's textured yarn joint venture,  compared
to $9.4 million for 1999.
         CasualWear:  Losses of the CasualWear  segment for the 2000 fiscal year
were $(8.3)  million  compared to $(2.9)  million  recorded  for the 1999 fiscal
year.  This  increased  loss was due  primarily to $25.7  million  lower margins
resulting from price/mix and manufacturing  inefficiencies,  partially offset by
the absence of Sportswear  losses of $4.8 million,  lower raw material  costs of
$1.6  million,  reduced  run-out costs  charged to  operations  associated  with
restructuring of $4.3 million and lower start-up costs of $7.0 million.  Segment
results  for 2000  include  losses  of $0.8  million  related  to joint  venture
activity, compared to joint venture losses of $3.0 million in 1999.
         Interior  Furnishings:  Income  of the  interior  furnishings  products
segment  for the 2000 fiscal year was $63.3  million  compared to $78.0  million
recorded for the 1999 fiscal  year.  This  decrease  was due  primarily to $16.7
million  lower  margins due to price/mix and  manufacturing  inefficiencies  and
higher raw material costs of $2.0 million,  partially offset by improved margins
from higher volume of $11.2 million.  Also, Interior Furnishings segment results
include  costs of $6.2 million  associated  with  restructuring  which have been
charged to cost of sales, primarily inventory losses on discontinued styles.
         Other:  Income  (loss) of other  segments  for the 2000 fiscal year was
$(2.1) million  compared to $1.9 million recorded for the 1999 fiscal year. This
resulted  primarily from lower earnings in the captive insurance company as well
as lower outside revenues from the trucking business.
         CORPORATE EXPENSES:  General corporate expenses not included in segment
results were $14.2 million for the 2000 fiscal year compared to $12.3 million in
the 1999 fiscal year.  The increase  from the prior year period is  attributable
mainly to higher  employee  benefit  costs,  tax  consulting  fees and executive
recruiting and relocation costs.
         OPERATING  INCOME BEFORE  INTEREST AND TAXES:  Before the 2000 goodwill
write-off and provisions for  restructuring  in both periods,  operating  income
before interest and taxes for the 2000 fiscal year would have been $25.6 million
compared to $58.9 million for the 1999 fiscal year. Amortization of goodwill was
$16.7 million and $17.8 million in the 2000 and 1999 fiscal years, respectively.
         INTEREST  EXPENSE:  Interest expense for the 2000 fiscal year was $66.3
million,  or 4.1% of net  sales,  compared  with $58.4  million,  or 3.5% of net
sales,  in the 1999 fiscal year.  The increase  was mainly  attributable  to the
effects of higher borrowing levels combined with higher interest rates.
         OTHER EXPENSE (INCOME): Other income for the 2000 fiscal year was $12.0
million  consisting  principally  of a  $5.5  million  translation  gain  on the
liquidation  of the  Company's  Canadian  subsidiary,  a gain on the disposal of
assets of $1.0 million and interest income of $5.5 million. Other income for the
1999 fiscal year was $7.9  million  consisting  principally  of $4.3  million in
gains on the disposal of assets and interest income of $3.5 million.
     INCOME TAX EXPENSE  (BENEFIT):  Income tax  benefit of $(21.7)  million was
recorded for the 2000 fiscal year in comparison  with $(15.9) million for fiscal
year  1999.  The 2000  period  includes  a $5.7  million  charge  related to the
liquidation  of the  Company's  Canadian  subsidiary  and U.S.  taxes on  income
previously considered permanently re-invested. Excluding the tax on the Canadian
liquidation,  total income tax  expense/benefit  is  different  from the amounts
obtained by applying  statutory  rates to the  income/loss  before  income taxes
primarily as a result of the write-off or amortization of nondeductible goodwill
and tax rate differences on foreign  transactions,  which is partially offset by
the favorable tax treatment of export sales through a foreign sales  corporation
("FSC").  The favorable tax benefit from the FSC was lower in the current period
compared to the 1999 period due to the reduction in export  sales.  The U.S. law
providing the FSC benefits has been found to be illegal under WTO provisions and
the U.S.  has agreed to  implement  complying  provisions.  The  Company  cannot
predict  the  impact on its  future use of the FSC  benefit  under the  ultimate
program put into place and its  acceptability  to the World  Trade  Organization
("WTO").
         NET  LOSS AND LOSS PER  SHARE:  Net loss for the 2000  fiscal  year was
$(527.0) million,  or $(10.12) per share, in comparison with $(31.5) million, or
$(0.57) per share,  for the 1999 fiscal year.  Net loss for the 2000 fiscal year
included a net charge of $(8.89) per share resulting from the accounting  change
in  measuring  impairment  of  goodwill  and a net charge of  $(1.02)  per share
resulting from the 2000 restructuring  provision and restructuring run-out costs
included  in cost of sales.  Net loss for the 1999  fiscal  year  included a net
charge of $(0.98) per share resulting from the 1999 restructuring  provision and
related run-out costs included in cost of sales.

Comparison of Fiscal Years ended October 2, 1999 and October 3, 1998

1999 Restructuring and Impairment

During the March  quarter  of 1999,  the  Company  implemented  a  comprehensive
reorganization  plan  primarily  related to its apparel  fabrics  business.  The
apparel  fabrics  operations had been running at less than full capacity  during
the  preceding  9-12 month  period,  anticipating  that the surge of  low-priced
garment  imports  from  Asia  might  only be the  temporary  result of the Asian
financial  crisis.  The Company  viewed this  situation to be more  permanent in
nature  and  therefore  decided  to  reduce  its  U.S.   manufacturing  capacity
accordingly and utilize only its most modern  facilities to be competitive.  The
major elements of the plan included:

         (1) The combination of two  businesses--Burlington  Klopman Fabrics and
Burlington Tailored Fashions--into Burlington PerformanceWear.  Also, Burlington
Global Denim and a portion of the former  Sportswear  division  were combined to
form Burlington CasualWear.

         (2) The reduction of U.S.  apparel fabrics capacity by approximately 25
percent and the  reorganization  of  manufacturing  assets,  including  overhead
reductions throughout the Company.  Seven plants have been closed or sold by the
dates  indicated:  one  department in Raeford,  North  Carolina and one plant in
Forest City, North Carolina were closed in the March 1999 quarter;  three plants
in North Carolina  located in Cramerton  (sold in July 1999),  Mooresville,  and
Statesville  were  closed  during  the  June  1999  quarter  and  one  plant  in
Hillsville,  Virginia  was sold in June 1999;  one plant in  Bishopville,  South
Carolina  and one plant  located in Oxford,  North  Carolina  (sold in September
2000) were closed in phases and closure was  completed  during the March quarter
2000.

         (3)  The  plan  resulted  in  the  reduction  of  approximately   2,800
employees,  with severance  benefit payments to be paid over periods of up to 12
months from the termination date depending on the employee's length of service.

The cost of the  reorganization  was reflected in a restructuring and impairment
charge,  before income taxes, of $61.4 million ($58.5 million  applicable to the
apparel fabrics  business)  recorded in the second fiscal quarter ended April 3,
1999, as adjusted by $3.2 million in the fourth quarter of 1999, $0.2 million in
the June quarter of 2000,  and $0.5 million in the September  2000 quarter.  The
components of the adjusted 1999 restructuring and impairment charge included the
establishment  of a  $17.6  million  reserve  for  severance  benefit  payments,
write-down  of pension  assets of $2.7 million for  curtailment  and  settlement
losses,  write-downs  for  impairment of $39.1  million  related to fixed assets
resulting  from the  restructuring  and a  reserve  of $2.0  million  for  lease
cancellations  and other exit costs expected to be paid through  September 2001.
Cash costs of the reorganization were substantially offset by cash receipts from
asset sales and lower working capital needs.

Following  is a summary of activity in the related 1999  restructuring  reserves
(in millions):


<PAGE>


                                                                 Lease
                                                              Cancellations
                                                 Severance      and Other
                                                  Benefits      Exit Costs
                                                 ---------    -------------
         March 1999 restructuring charge.......   $ 20.1         $ 2.2
         Payments..............................     (1.5)         (0.2)
                                                  ------         -----
         Balance at April 3, 1999..............     18.6           2.0
         Payments..............................     (5.7)         (0.2)
                                                  ------         -----
         Balance at July 3, 1999...............     12.9           1.8
         Payments..............................     (3.6)         (0.1)
         Adjustments...........................     (1.1)            -
                                                  ------         -----
         Balance at October 2, 1999............      8.2           1.7
         Payments..............................     (1.4)         (0.3)
                                                  ------         -----
         Balance at January 1, 2000............      6.8           1.4
         Payments..............................     (2.9)         (0.3)
                                                  ------         -----
         Balance at April 1, 2000..............      3.9           1.1
         Payments..............................     (1.3)         (0.1)
         Adjustments...........................     (1.1)            -
                                                  ------         -----
         Balance at July 1, 2000...............      1.5           1.0
         Payments..............................     (0.9)         (0.1)
         Adjustments...........................     (0.3)         (0.2)
                                                  ------         -----
         Balance at September 30, 2000.........   $  0.2         $ 0.7
                                                  ======         ======

Other  expenses  related  to  the  1999   restructuring   (including  losses  on
inventories of discontinued styles,  relocation of employees and equipment,  and
plant  carrying and other costs) are charged to operations as incurred.  Through
September  30, 2000,  $34.2 million of such costs have been incurred and charged
to  operations,  consisting  primarily  of inventory  losses and plant  carrying
costs,  in the amounts of $7.1  million and $27.1  million for the 2000 and 1999
fiscal years, respectively.

         NET SALES:  Net sales for the 1999 fiscal year were  $1,651.7  million,
17.8%  lower than the  $2,010.4  million  recorded  for the 1998  fiscal year (a
53-week  year).  Exports  totaled  $236 million and $237 million in the 1999 and
1998 fiscal years, respectively.
         PerformanceWear: Net sales for the PerformanceWear segment for the 1999
fiscal year were $611.7 million, 28.2% lower than the $852.3 million recorded in
the 1998 fiscal year.  Excluding $79.6 million sales reduction due to the exited
portion  of the  Burlington  Madison  Yarn  division,  which  has  been  sold or
transferred  to a joint venture,  net sales of products for the  PerformanceWear
segment were 21.0% lower than in the prior year. This decrease was due primarily
to 17.8% lower volume and 3.1% lower prices and product mix.
         CasualWear:  Net sales for the  CasualWear  segment for the 1999 fiscal
year were $257.1  million,  24.8% lower than the $342.1 million  recorded in the
1998  fiscal  year.   Excluding   $22.6  million  sales  reduction  due  to  the
sold/discontinued  portion of the Sportswear business, net sales of products for
the  CasualWear  segment were 20.6% lower than in the prior year.  This decrease
was due primarily to 19.1% lower volume and 1.4% lower prices and product mix.
         Interior  Furnishings:  Net sales of products for interior  furnishings
markets for the 1999 fiscal year were $758.0 million, 4.3% lower than the $792.2
million  recorded in the 1998 fiscal year.  This  reduction was due primarily to
the absence of Burlington  Madison Yarn division  sales of $20.7 million in this
segment,  lower volume of $25.2 million,  partially  offset by improved  selling
prices and mix of $11.7 million.
         SEGMENT  INCOME:  Total  reportable  segment income for the 1999 fiscal
year was $95.4 million compared to $218.5 million for the 1998 fiscal year.
         PerformanceWear:  Income of the  PerformanceWear  segment  for the 1999
fiscal year was $18.4 million  compared to $90.0  million  recorded for the 1998
fiscal year.  This  decrease was due  primarily to $40.3  million  lower margins
resulting  from  lower  volume and  inefficiencies  associated  with  production
levels,  $16.9  million  reduction due to price/mix,  increased  provisions  for
doubtful  accounts of $2.0 million,  and start-up costs of $11.0 million related
to the Company's new Mexican operations,  partially offset by lower raw material
costs of $14.9 million and lower selling, general and administrative expenses of
$3.9  million   resulting  from  personnel   reductions   related  to  the  1999
restructuring.  Also,  PerformanceWear  segment  results  include costs of $17.4
million  associated  with the apparel  restructuring  which have been charged to
operations,  including  inventory losses on discontinued  styles,  relocation of
employees and equipment and plant carrying and other costs.  Segment results for
1999 include $9.4 million equity in income of the Company's  textured yarn joint
venture,  compared to $11.3 million for 1998 which represents four months of the
joint venture activity and eight months of the Burlington  Madison Yarn textured
business as a separate division.
         CasualWear: Income (loss) of the CasualWear segment for the 1999 fiscal
year was $(2.9) million  compared to $38.0 million  recorded for the 1998 fiscal
year.  This decrease was due primarily to $22.7 million lower margins  resulting
from lower  volume and  inefficiencies  associated  with  production  levels and
start-up costs of $8.9 million related to the Company's new Mexican  operations,
partially offset by lower selling,  general and administrative  expenses of $0.9
million resulting from personnel  reductions related to the 1999  restructuring.
Also,  CasualWear  segment results include costs of $9.4 million associated with
the apparel  restructuring,  which have been  charged to  operations,  including
inventory losses on discontinued  styles,  relocation of employees and equipment
and plant carrying and other costs.  Segment  results for 1999 include losses of
$3.0 million related to joint venture activity, compared to joint venture losses
of $1.2 million in 1998.
         Interior  Furnishings:  Income  of the  interior  furnishings  products
segment  for the 1999 fiscal year was $78.0  million  compared to $88.0  million
recorded for the 1998 fiscal  year.  This  decrease  was due  primarily to lower
volume and inefficiencies  associated with lower production levels in the amount
of $18.2 million, increased provisions for doubtful accounts of $1.8 million and
increased  selling  expenses  of $2.6  million,  partially  offset  by lower raw
material costs of $13.0 million.
         CORPORATE EXPENSES:  General corporate expenses not included in segment
results were $12.3 million for the 1999 fiscal year compared to $14.7 million in
the 1998 fiscal year.  The decrease  from the prior year period is  attributable
mainly  to  lower  compensation  expense  resulting  from  cost  reductions  and
restructuring.
     OPERATING  INCOME BEFORE INTEREST AND TAXES:  Before the 1999 provision for
restructuring,  operating  income before  interest and taxes for the 1999 fiscal
year would have been  $58.9  million  compared  to $182.8  million  for the 1998
fiscal year. After the 1999 provision for  restructuring,  operating loss before
interest and taxes for the 1999 fiscal year was $3.2  million.  Amortization  of
goodwill was $17.8  million and $18.1 million in the 1999 and 1998 fiscal years,
respectively.
         INTEREST  EXPENSE:  Interest expense for the 1999 fiscal year was $58.4
million,  or 3.5% of net  sales,  compared  with $59.5  million,  or 3.0% of net
sales,  in the 1998 fiscal year. The effect of higher  borrowing  levels in 1999
were offset by lower  interest rates and the impact of the one extra week in the
1998 fiscal year.
         OTHER EXPENSE (INCOME):  Other income for the 1999 fiscal year was $7.9
million  consisting  principally  of $4.3  million in gains on the  disposal  of
assets and  interest  income of $3.5  million.  Other income for the 1998 fiscal
year was $3.8 million consisting  principally of interest income of $3.4 million
and $0.5 million in gains on disposal of assets.
     INCOME TAX EXPENSE  (BENEFIT):  Income tax  benefit of $(15.9)  million was
recorded for the 1999 fiscal year in comparison with income tax expense of $49.6
million for fiscal year 1998.  Total  income tax expense is  different  from the
amounts  obtained by applying  statutory rates to the income before income taxes
primarily  as a result  of  amortization  of  nondeductible  goodwill,  which is
partially  offset by the  favorable  tax  treatment  of export  sales  through a
foreign sales corporation.
         NET  INCOME AND  EARNINGS  PER  SHARE:  Net income  (loss) for the 1999
fiscal year was $(31.5) million,  or $(0.57) per share (diluted),  in comparison
with $80.5 million, or $1.32 per share (diluted),  for the 1998 fiscal year. Net
loss for the 1999  fiscal  year  included  a net  charge  of  $(0.98)  per share
resulting  from the 1999  restructuring  provision  and  related  run-out  costs
included in cost of sales.

Liquidity and Capital Resources

During the 2000 fiscal year,  the Company  generated  $46.3 million of cash from
operating  activities,  $11.1 million from sales of assets and $7.8 million from
other investing activities,  and had net borrowings of long- and short-term debt
of  $17.7  million.  Cash  was  primarily  used  for  capital  expenditures  and
investment in joint  ventures  totaling  $74.1  million.  At September 30, 2000,
total debt of the Company  (consisting  of current and  non-current  portions of
long-term  debt and  short-term  borrowings)  was $899.9  million  compared with
$881.4 million at October 2, 1999.
         The  Company's  principal  uses of funds during the next several  years
will be for repayment and servicing of  indebtedness,  working capital needs and
capital investments  (including the participations in joint ventures and funding
of  acquisitions).  The Company intends to fund its financial needs  principally
from net cash provided by operating  activities,  asset sales and, to the extent
necessary,  from funds provided by the credit  facilities  described  below. The
Company  believes  that  these  sources of funds  will be  adequate  to meet the
Company's foregoing needs.
         During the 2000 fiscal year,  investment  in capital  expenditures  and
joint  ventures  totaled $74.1  million,  compared to $146.9 million in the 1999
fiscal year and $147.7 million in the 1998 fiscal year. The Company  anticipates
that  the  level of  capital  expenditures  for  fiscal  year  2001  will  total
approximately  $30 million,  and under its amended bank credit facility,  cannot
exceed $35 million.
     In August 1997, the Company issued $150.0 million principal amount of 7.25%
notes due August 1, 2027 ("Notes Due 2027"). Proceeds from the sale were used to
prepay  revolving  loans under its bank credit  agreement on the same date.  The
Notes Due 2027  will be  redeemable  as a whole or in part at the  option of the
Company at any time on or after August 2, 2007,  and will also be  redeemable at
the option of the holders  thereof on August 1, 2007 in amounts at 100% of their
principal amount. In September 1995, the Company issued $150.0 million principal
amount of 7.25% notes due September  15, 2005 ("Notes Due 2005").  The Notes Due
2005 are not redeemable prior to maturity.  The Notes Due 2027 and the Notes Due
2005 are unsecured and rank equally with all other unsecured and  unsubordinated
indebtedness of the Company.
     The Company has a $550.0 million  unsecured  revolving credit facility that
expires in March 2001 ("1995 Bank Credit Agreement").  At November 22, 2000, the
Company had approximately $246.2 million in unused capacity under this facility.
Overnight borrowing availability under bank lines of credit were terminated, and
are now available under the 2000 Bank Credit Agreement referred below.
         Loans under the 1995 Bank Credit  Agreement bear interest at either (i)
floating rates generally payable quarterly based on an adjusted  Eurodollar rate
plus 0.50% or (ii) Eurodollar rates or fixed rates that 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 0.25%.
         On November 23, 1998,  the Company  established a $105.0 million credit
facility with a group of banks. Loans under the facility were made directly to a
Mexican financing  subsidiary of the Company and were guaranteed by the Company.
Subsequent to September 30, 2000, all loans have been repaid,  and this facility
has been terminated.
         On December 5, 2000,  the Company  entered  into an amended bank credit
agreement  ("2000 Bank  Credit  Agreement")  which  extends the 1995 Bank Credit
Agreement for up to 30 months. The amended facility consists of a $600.0 million
revolving credit facility that provides for the issuance of letters of credit by
the fronting bank in an  outstanding  aggregate  face amount not to exceed $75.0
million,  and provides  short-term  overnight  borrowings  up to $30.0  million,
provided that at no time shall the aggregate principal amount of revolving loans
and  short-term  borrowings,  together  with the  aggregate  face amount of such
letters of credit  issued,  exceed $600.0  million.  Borrowings in the amount of
$315.0 million under the 1995 Bank Credit Agreement were classified as long-term
debt at September 30, 2000 and represents  the amount of borrowings  expected to
be maintained on a long-term basis under the amended facility.
         Loans under the 2000 Bank Credit  Agreement  bear  interest at floating
rates based on the Adjusted Eurodollar Rate plus 3.25%. In addition, the Company
pays an annual  commitment  fee of 0.50% on the unused  portion of the facility.
The facility  commitment  amount will be reduced to $525.0  million on September
30, 2001 and to $450.0 million on September 30, 2002.
         The 2000 Bank  Credit  Agreement  imposes  various  limitations  on the
liquidity and flexibility 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  amended  Agreement  contains  covenants
applicable to the Company and all material subsidiaries, limiting the incurrence
of additional  indebtedness  and guarantees  thereof,  the creation of liens and
other encumbrances on properties, the making of investments or acquisitions, the
sale or other disposition of property or assets,  the making of cash dividend or
other  restricted  payments,  the  entering  into of certain  lease and sale and
leaseback  transactions,  the  making of  capital  expenditures  beyond  certain
limits,  and entering into certain  transactions  with  affiliates or agreements
which are  materially  adverse to the bank lenders.  All  obligations  under the
amended facility are  unconditionally  guaranteed by each material  existing and
subsequently  acquired or organized  domestic  subsidiary  of the  Company.  The
facility is also  secured by  perfected  first-priority  security  interests  in
substantially all U.S. assets of the Company other than  receivables,  including
significant real  properties,  inventory and fixed assets and all of the capital
stock of the Company's existing and future subsidiaries,  limited in the case of
any foreign  subsidiary to 65.0% of their capital stock.  In addition,  proceeds
from  sales of  assets,  except for  certain  exclusions,  must be used to repay
borrowings under the facility.
         In December 1997, the Company  established a five-year,  $225.0 million
Trade Receivables Financing Agreement ("Receivables  Facility") with a bank. The
amount of borrowings  allowable under the Receivables  Facility at any time is a
function of the amount of then-outstanding eligible trade accounts receivable up
to $225.0  million.  Loans under the  Receivables  Facility bear interest,  with
terms up to 270 days, at the bank's commercial paper dealer rate plus 0.1875%. A
commitment  fee of 0.125% is charged on the  unused  portion of the  Receivables
Facility. At November 22, 2000, $176.3 million in borrowings under this facility
with remaining maturities of up to 35 days was outstanding.

Risk Management

Interest Rate Risk

         Because the Company's  obligations under the bank credit agreements and
the  receivables-backed  financing programs bear interest at floating rates, the
Company is sensitive to changes in prevailing  interest rates.  The Company uses
derivative  instruments  to manage its long-term  debt  interest rate  exposure,
rather than for trading purposes.  Interest rate movements also affect the value
and returns on the Company's investment  securities.  A 10% increase or decrease
in market interest rates that affect the Company's  financial  instruments would
not have a material  impact on  earnings  or cash flows  during the next  fiscal
year, and would not materially affect the fair value of the company's  financial
instruments.

Foreign Currency Risk

         In  order  to  reduce  the  risk  of  foreign  currency  exchange  rate
fluctuations,  the  Company  follows  a  policy  of  hedging  substantially  all
transactions  denominated  in a currency  other than the  functional  currencies
applicable to each of its various entities. The instruments used for hedging are
readily marketable  exchange-traded forward contracts with banks. The changes in
market value of such contracts  have a high  correlation to the price changes in
the  currency  of the  related  hedged  transactions.  The  potential  impact on
earnings, cash flows or fair value for such net currency position resulting from
a 10% increase or decrease in foreign currency exchange rates on each individual
currency would not be material.

Commodity Price Risk

         The Company uses many types of fiber, both natural and man-made, in the
manufacture  of its textile  products.  The Company  believes  that future price
levels for all fibers will depend  primarily upon supply and demand  conditions,
weather  conditions,   general  inflation,  domestic  and  foreign  governmental
regulations and  agricultural  programs,  and prices of underlying raw materials
such as  petroleum.  The Company  manages its  exposure to changes in  commodity
prices primarily through its procurement  practices  (foreign exchange contracts
are utilized to offset the impact of currency fluctuations on wool purchases).

         The Company enters into contracts to purchase cotton under the Southern
Mill Rules ratified and adopted by the American Textile Manufacturers Institute,
Inc. and American Cotton Shippers Association.  Under these contracts and rules,
nonperformance by either the buyer or seller may result in a net cash settlement
of the  difference  between the current  market price of cotton and the contract
price.  If the Company  decided to refuse  delivery of its open firm  commitment
cotton contracts at September 30, 2000, and market prices of cotton decreased by
10%,  the  Company  would  be  required  to pay a net  settlement  provision  of
approximately  $4.0  million.  However,  the Company has not  utilized  this net
settlement  provision  in the  past,  and  does not  anticipate  using it in the
future.

         In June 1998, the Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial  Accounting  Standards  (SFAS) No. 133,  "Accounting  for
Derivative Instruments and Hedging Activities," as amended, which is required to
be  adopted  in fiscal  years  beginning  after June 15,  2000.  The  Company is
required  to adopt  the new  statement  effective  October  1,  2000.  Under the
statement,  all  derivatives  will be required to be  recognized  on the balance
sheet at fair  value.  Derivatives  that are not hedges must be adjusted to fair
value through income.  If the derivative is a hedge,  depending on the nature of
the  hedge,  changes  in the fair  value of  derivatives  will  either be offset
against  the  change in fair value of the hedged  assets,  liabilities,  or firm
commitments through earnings or recognized in other  comprehensive  income until
the  hedged  item is  recognized  in  earnings.  The  ineffective  portion  of a
derivative's  change in fair value will be  immediately  recognized in earnings.
Based on the Company's  derivative  positions at September 30, 2000, the Company
estimates  that upon  adoption  it will report a net gain in  accumulated  other
comprehensive income (loss) of $1.4 million.

Legal and Environmental Contingencies

The Company and its  subsidiaries  have sundry claims and other lawsuits pending
against  them and also have  certain  guarantees  that were made in the ordinary
course of business. The Company makes 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.

         Also,  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  ("PRPs") at 19 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.  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 currently involved in remedial activities at
three of these sites under federal  laws.  It is also involved in  environmental
cleanups at 16 other sites under state laws.  The Company may also be liable for
environmental   contingencies   at  25  other  sites   pursuant  to  contractual
obligations  resulting from divested  property or with respect to  environmental
cleanups  that may be  identified  in the future.  The  Company has  established
reserves in its financial  statements for such environmental  liabilities in the
aggregate  amount of $3.2  million at September  30, 2000,  estimated to be paid
primarily over the next five years. 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.
         It is not possible with  certainty to determine the ultimate  liability
of  the  Company  with  respect  to  the  matters  described  in  the  preceding
paragraphs,  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.

Conversion to the Euro Currency

         Various  member  countries of the  European  Union in which the Company
conducts  its business  adopted the Euro as their single  currency on January 1,
1999.  National  currencies  will  continue  to exist as  legal  tender  and may
continue to be used in commercial transactions through January 1, 2002, at which
time Euro notes and coins will be issued. By July 2002, the respective  national
currencies will be withdrawn.  During this transition period, permanent rates of
exchange between the members' national currency and the Euro will be established
and banking,  finance and foreign exchange markets will convert to the Euro. The
Euro  conversion  has not impacted the Company,  and the Company does not expect
the conversion to have a material  adverse effect on its financial  condition or
results of operations.

Forward-Looking Statements

       With the exception of historical information, the statements contained in
Management's  Discussion  and Analysis of Results of  Operations  and  Financial
Condition  and in  other  parts  of this  report  include  statements  that  are
forward-looking  statements within the meaning of applicable  federal securities
laws and are based upon the  Company's  current  expectations  and  assumptions,
which are subject to a number of risks and uncertainties that could cause actual
results  to  differ   materially   from  those   anticipated.   Such  risks  and
uncertainties include, among other things, global economic activity, the success
of the Company's overall business strategy, the Company's relationships with its
principal  customers and suppliers,  the success of the Company's  operations in
other countries,  the demand for textile products,  the cost and availability of
raw  materials  and labor,  the  Company's  ability to refinance and service its
existing debt and to finance its capital expenditures and working capital needs,
the level of the  Company's  indebtedness  and the  exposure  to  interest  rate
fluctuations, governmental legislation and regulatory changes, and the long-term
implications  of  regional  trade  blocs and the effect of quota  phase-out  and
lowering  of  tariffs  under the WTO trade  regime  and of the  changes  in U.S.
apparel trade as a result of  recently-enacted  Caribbean  Basin and Sub-Saharan
African trade  legislation.  Other risks and uncertainties may also be described
from time to time in the Company's other reports and filings with the Securities
and Exchange Commission.


<PAGE>

CONSOLIDATED STATEMENTS OF OPERATIONS
BURLINGTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

For the 52 weeks ended  September 30, 2000 and October 2, 1999, and the 53 weeks
 ended October 3, 1998
(Amounts in thousands, except for per share amounts)

                                            2000         1999          1998
                                         -----------  -----------   -----------

Net sales                              $  1,620,247 $  1,651,689 $   2,010,414
Cost of sales                             1,434,867    1,426,311     1,659,485
                                         -----------  -----------   -----------
Gross profit                                185,380      225,378       350,929
Selling, general and
 administrative expenses                    138,725      143,171       148,383
Provision for doubtful accounts               4,380        5,482         1,677
Provision for restructuring
 and impairments                             67,003       62,069             0
Amortization of goodwill                     16,715       17,810        18,100
Write-off of goodwill                       463,247            0             0
                                         -----------  -----------   -----------
Operating income (loss) before
 interest and taxes                        (504,690)      (3,154)      182,769
Interest expense                             66,264       58,420        59,544
Equity in income of joint ventures          (10,263)      (6,357)       (2,980)
Other expense (income) - net                (12,043)      (7,868)       (3,807)
                                         -----------  -----------   -----------
Income (loss) before income taxes          (548,648)     (47,349)      130,012
Income tax expense (benefit):
  Current                                    10,004        4,163        38,681
  Deferred                                  (31,680)     (20,018)       10,879
                                         -----------  -----------   -----------
    Total income tax
     expense (benefit)                      (21,676)     (15,855)       49,560
                                         -----------  -----------   -----------
Net income (loss)                      $   (526,972)$    (31,494)$      80,452
                                         ===========  ===========   ===========


Net income (loss) per common share:
  Basic earnings (loss) per share      $     (10.12)$      (0.57)$        1.33
  Diluted earnings (loss) per share    $     (10.12)$      (0.57)$        1.32







See notes to consolidated financial statements.

<PAGE>


CONSOLIDATED BALANCE SHEETS
BURLINGTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

As of September 30, 2000 and October 2, 1999
(Amounts in thousands)
                                                     2000             1999
                                                  -----------      -----------
ASSETS
Current assets:
Cash and cash equivalents                      $      26,172     $     17,402
Short-term investments                                13,167           18,307
Customer accounts receivable after deductions
  of $16,866 and $18,258 for the
  respective dates for doubtful accounts,
  discounts, returns and allowances                  269,209          251,781
Sundry notes and accounts receivable                  31,792           23,444
Inventories                                          287,969          317,554
Prepaid expenses                                       3,476            5,371
                                                  -----------      -----------
    Total current assets                             631,785          633,859
Fixed assets, at cost:
Land and land improvements                            30,761           31,807
Buildings                                            410,248          419,569
Machinery, fixtures and equipment                    658,597          644,765
                                                  -----------      -----------
                                                   1,099,606        1,096,141
Less accumulated depreciation and amortization       487,739          454,909
                                                  -----------      -----------
    Fixed assets - net                               611,867          641,232
Other assets:
Investments and receivables                           60,217           68,103
Intangibles and deferred charges                      47,731           40,452
Goodwill                                                   0          492,629
                                                  -----------      -----------
    Total other assets                               107,948          601,184
                                                  -----------      -----------
                                               $   1,351,600     $  1,876,275
                                                  ===========      ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings                          $       3,400     $          0
Long-term debt due currently                          30,470              470
Accounts payable - trade                              86,892           80,176
Sundry payables and accrued expenses                  97,552           79,612
Income taxes payable                                   2,024            1,166
Deferred income taxes                                 22,560           40,171
                                                  -----------      -----------
      Total current liabilities                      242,898          201,595
Long-term liabilities:
Long-term debt                                       865,980          880,957
Other                                                 58,288           57,657
                                                  -----------      -----------
     Total long-term liabilities                     924,268          938,614
Deferred income taxes                                 89,659          106,817
Shareholders' equity:
Common stock issued (Note H)                             689              684
Capital in excess of par value                       884,643          884,347
Accumulated deficit                                 (612,315)         (85,343)
Accumulated other comprehensive income (loss)        (22,452)         (14,658)
Cost of common stock held in treasury               (155,790)        (155,781)
                                                  -----------      -----------
     Total shareholders' equity                       94,775          629,249
                                                  -----------      -----------
                                                $  1,351,600     $  1,876,275
                                                  ===========      ===========

See notes to consolidated financial statements.

<PAGE>

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
BURLINGTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

For the 52 weeks ended  September 30, 2000 and October 2, 1999, and the 53 weeks
 ended October 3, 1998
(Amounts in thousands)
<TABLE>
<CAPTION>

                                                                               Accumulated
                                                Capital in                       other         Treasury
                                    Common      excess of      Accumulated    comprehensive     shares,
                                    Stock       par value       deficit       income (loss)     at cost       Total
                                  ----------   -----------   ------------   --------------   ------------  -----------
<S>                               <C>          <C>           <C>            <C>              <C>           <C>

Balance September 27, 1997        $    684     $ 882,837      $(134,301)    $    (10,211)    $ (108,283)   $ 630,726
Net income for the period                                        80,452                                       80,452
Translation adjustments                                                           (7,146)                     (7,146)
                                                                                                           ----------
Comprehensive income                                                                                          73,306
Purchase of treasury stock                                                                      (38,747)     (38,747)
Issuance of treasury stock                        (2,285)                                         2,436          151
Amortization of unearned
    compensation                                     125                                                         125
Exercise of stock options                         (1,254)                                        25,746       24,492
Conversion of note                                 1,199                                          4,906        6,105
Tax benefit on stock options                       4,063                                                       4,063
                                   --------   -----------   ------------   --------------   ------------  -----------
Balance October 3, 1998                684       884,685        (53,849)         (17,357)      (113,942)     700,221
Net loss for the period                                         (31,494)                                     (31,494)
Translation adjustments                                                            1,084                       1,084
Unrealized gains on securities
 (net of income taxes of $870)                                                     1,615                       1,615
                                                                                                          -----------
Comprehensive income (loss)                                                                                  (28,795)
Purchase of treasury stock                                                                      (41,994)     (41,994)
Issuance of treasury stock                          (378)                                           155         (223)
Amortization of unearned
    compensation                                      40                                                          40
                                   --------   -----------   ------------   --------------   ------------  -----------
Balance October 2, 1999                684       884,347        (85,343)         (14,658)      (155,781)     629,249
Net loss for the period                                        (526,972)                                    (526,972)
Translation adjustments                                                             (947)                       (947)
Less: reclassification adjustment
    for realized gain included in
    net loss                                                                      (5,507)                     (5,507)
Unrealized losses on securities
 (net of income taxes of $388)                                                      (721)                       (721)
Less: reclassification adjustment
    for realized gains included in
    net loss (net of income taxes
    of $333)                                                                        (619)                       (619)
                                                                                                          -----------
Comprehensive income (loss)                                                                                 (534,766)
Awards issued under
    Equity Incentive Plans               5           (26)                                            (9)         (30)
Amortization of unearned
    compensation                                     322                                                         322
                                   --------   -----------   ------------   --------------   ------------  -----------
Balance September 30, 2000        $    689    $  884,643    $  (612,315)   $     (22,452)   $  (155,790)  $   94,775
                                   ========   ===========   ============   ==============   ============  ===========
</TABLE>


See notes to consolidated financial statements.

<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
BURLINGTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

For the 52 weeks ended  September 30, 2000 and October 2, 1999, and the 53 weeks
 ended October 3, 1998
(Amounts in thousands)
                                               2000        1999        1998
                                             ----------  ----------  ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                          $  (526,972)$   (31,494)$   80,452
Adjustments to reconcile net income
 (loss) to net cash provided by
 operating activities:
   Depreciation and amortization of
   fixed assets                                 67,096      64,757     68,375
   Provision for doubtful accounts               4,380       5,482      1,677
   Amortization of intangibles and
    deferred debt expense                       17,602      18,170     18,455
   Write-off of goodwill                       463,247           0          0
   Equity in loss of joint ventures                837       3,052          0
   Deferred income taxes                       (31,680)    (20,018)    10,879
   Translation gain on liquidation
    of subsidiary                               (5,507)          0          0
   Gain on disposal of assets                     (990)     (4,328)      (512)
   Provision for restructuring
    and impairments                             67,003      62,069          0
   Changes in assets and liabilities:
      Customer accounts receivable - net       (21,808)     31,543     40,974
      Sundry notes and accounts receivable      (8,348)     (7,634)    (7,114)
      Inventories                               29,585      (5,560)   (14,877)
      Prepaid expenses                           1,895      (2,288)      (479)
      Accounts payable and accrued expenses     (3,407)    (29,174)   (39,577)
   Change in income taxes payable                  858         726     (5,903)
   Other                                        (7,466)    (18,577)   (14,969)
                                             ----------  ----------  ---------
        Total adjustments                      573,297      98,220     56,929
                                             ----------  ----------  ---------
Net cash provided by operating activities       46,325      66,726    137,381
                                             ----------  ----------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                         (73,773)   (141,539)  (140,333)
  Proceeds from sales of assets                 11,091      55,884     10,559
  Investment in joint ventures                    (446)     (5,366)    (7,375)
  Change in investments                          7,838        (451)      (233)
                                             ----------  ----------  ---------
Net cash used by investing activities          (55,290)    (91,472)  (137,382)
                                             ----------  ----------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Changes in short-term borrowings               3,400     (14,200)    14,200
  Repayments of long-term debt                 (11,665)    (36,880)  (217,606)
  Proceeds from issuance of long-term debt      26,000     119,000    216,021
  Proceeds from exercise of stock options            0           0     24,492
  Purchase of treasury stock                         0     (41,994)   (38,747)
                                             ----------  ----------  ---------
Net cash provided (used) by
 financing activities                           17,735      25,926     (1,640)
                                             ----------  ----------  ---------
Net change in cash and cash equivalents          8,770       1,180     (1,641)
Cash and cash equivalents at
 beginning of period                            17,402      16,222     17,863
                                             ----------  ----------  ---------
Cash and cash equivalents at end of period $    26,172 $    17,402 $   16,222
                                             ==========  ==========  =========


See notes to consolidated financial statements.

<PAGE>
Notes to Consolidated Financial Statements

Burlington Industries, Inc. and Subsidiary Companies

Note A - 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  generally  accounted
for using the  equity  method.  The  Company  has an  ownership  interest  in an
affiliated  limited  liability  company  of  approximately  15  percent  that is
accounted  for using the equity  method  because  the  Company  has  significant
influence over the operations of the entity,  including control of 40 percent of
the Board and certain  additional  rights that require  unanimous votes to pass.
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.

Investments:    The   Company    classifies   all   of   its    investments   as
available-for-sale.  Available-for-sale  securities  are  carried at fair value,
with the unrealized  gains and losses  reported as a component of  shareholders'
equity  in  comprehensive  income  (loss),  net  of  income  taxes.  Investments
available for current  operations  are  classified in the  consolidated  balance
sheet as current assets;  investments held for long-term purposes are classified
as  noncurrent  assets.  Interest  income  and  realized  gains  and  losses  on
securities  are included in "Other expense  (income) - net" in the  consolidated
statements of operations.  The cost of securities  sold is based on the specific
identification method.

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: 15 to 20 years for land improvements,  15 to 50 years for
buildings and 5 to 15 years for machinery, fixtures and equipment.

Impairment  of  long-lived  assets:  When  circumstances  indicate,  the Company
evaluates the  recoverability of its long-lived assets by comparing market value
or estimated future  undiscounted cash flows with the asset's carrying amount to
determine if a write-down to market value or discounted cash flow is required.

Excess of purchase  cost over net assets  acquired  (Goodwill):  The Company has
historically   amortized  goodwill  over  not  more  than  40  years  using  the
straight-line method, and has evaluated the recoverability of its carrying value
using projected undiscounted cash flows. In 2000, the Company changed the method
by which it evaluates the  recoverability  of  enterprise-level  goodwill to the
market  value  method.  As a result of this  change,  the  Company  recorded  an
impairment  charge  for the  remaining  carrying  value of its  enterprise-level
goodwill (see Note B).

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

Revenue recognition: Sales are recorded upon shipment or designation of specific
goods for later  shipment at  customers'  request with related risk of ownership
passing to such customers.

Research expenditures: Expenditures for research and development are expensed as
incurred.  Total  expenditures  for research and  development  aggregated  $11.8
million,  $12.1  million  and $14.9  million in the 2000,  1999 and 1998  fiscal
years, respectively.

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. The fiscal year ended
October 3, 1998 represents a 53-week period.

Other:  In June 1998,  the Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial  Accounting  Standards  (SFAS) No. 133,  "Accounting  for
Derivative Instruments and Hedging Activities," as amended, which is required to
be  adopted  in fiscal  years  beginning  after June 15,  2000.  The  Company is
required  to adopt  the new  statement  effective  October  1,  2000.  Under the
statement,  all  derivatives  will be required to be  recognized  on the balance
sheet at fair  value.  Derivatives  that are not hedges must be adjusted to fair
value through income.  If the derivative is a hedge,  depending on the nature of
the  hedge,  changes  in the fair  value of  derivatives  will  either be offset
against  the  change in fair  value of the hedged  assets,  liabilities  or firm
commitments through earnings or recognized in other  comprehensive  income until
the  hedged  item is  recognized  in  earnings.  The  ineffective  portion  of a
derivative's  change in fair value will be  immediately  recognized in earnings.
Based on the Company's  derivative  positions at September 30, 2000, the Company
estimates  that upon  adoption  it will report a net gain in  accumulated  other
comprehensive income (loss) of $1.4 million.

Note B - Restructuring and Impairment Charges

During the March  quarter  of 1999,  the  Company  implemented  a  comprehensive
reorganization  plan  primarily  related to its apparel  fabrics  business.  The
apparel  fabrics  operations had been running at less than full capacity  during
the  preceding  9-12 month  period,  anticipating  that the surge of  low-priced
garment  imports  from  Asia  might  only be the  temporary  result of the Asian
financial  crisis.  The Company  viewed this  situation to be more  permanent in
nature  and  therefore  decided  to  reduce  its  U.S.   manufacturing  capacity
accordingly and utilize only its most modern  facilities to be competitive.  The
major elements of the plan included:

         (1) The combination of two  businesses--Burlington  Klopman Fabrics and
Burlington Tailored Fashions--into Burlington PerformanceWear.  Also, Burlington
Global Denim and a portion of the former  Sportswear  division  were combined to
form Burlington CasualWear.

         (2) The reduction of U.S.  apparel fabrics capacity by approximately 25
percent and the  reorganization  of  manufacturing  assets,  including  overhead
reductions throughout the Company.  Seven plants have been closed or sold by the
dates  indicated:  one  department in Raeford,  North  Carolina and one plant in
Forest City, North Carolina were closed in the March 1999 quarter;  three plants
in North Carolina  located in Cramerton  (sold in July 1999),  Mooresville,  and
Statesville  were  closed  during  the  June  1999  quarter  and  one  plant  in
Hillsville,  Virginia  was sold in June 1999;  one plant in  Bishopville,  South
Carolina  and one plant  located in Oxford,  North  Carolina  (sold in September
2000) were closed in phases and closure was  completed  during the March quarter
2000.

         (3)  The  plan  resulted  in  the  reduction  of  approximately   2,800
employees,  with severance  benefit payments to be paid over periods of up to 12
months from the termination date depending on the employee's length of service.

The cost of the  reorganization  was reflected in a restructuring and impairment
charge,  before income taxes, of $61.4 million ($58.5 million  applicable to the
apparel fabrics  business)  recorded in the second fiscal quarter ended April 3,
1999, as adjusted by $3.2 million in the fourth quarter of 1999, $0.2 million in
the June quarter of 2000,  and $0.5 million in the September  2000 quarter.  The
components of the adjusted 1999 restructuring and impairment charge included the
establishment  of a  $17.6  million  reserve  for  severance  benefit  payments,
write-down  of pension  assets of $2.7 million for  curtailment  and  settlement
losses,  write-downs  for  impairment of $39.1  million  related to fixed assets
resulting  from the  restructuring  and a  reserve  of $2.0  million  for  lease
cancellations  and other exit costs expected to be paid through  September 2001.
Cash costs of the reorganization were substantially offset by cash receipts from
asset sales and lower working capital needs.


<PAGE>


Following  is a summary of activity in the related 1999  restructuring  reserves
(in millions):
                                                                Lease
                                                             Cancellations
                                                Severance     and Other
                                                 Benefits     Exit Costs
                                                ---------    -------------
         March 1999 restructuring charge.......   $ 20.1         $ 2.2
         Payments..............................     (1.5)         (0.2)
                                                  ------         -----
         Balance at April 3, 1999..............     18.6           2.0
         Payments..............................     (5.7)         (0.2)
                                                  ------         -----
         Balance at July 3, 1999...............     12.9           1.8
         Payments..............................     (3.6)         (0.1)
         Adjustments...........................     (1.1)            -
                                                  ------         -----
         Balance at October 2, 1999............      8.2           1.7
         Payments..............................     (1.4)         (0.3)
                                                  ------         -----
         Balance at January 1, 2000............      6.8           1.4
         Payments..............................     (2.9)         (0.3)
                                                  ------         -----
         Balance at April 1, 2000..............      3.9           1.1
         Payments..............................     (1.3)         (0.1)
         Adjustments...........................     (1.1)            -
                                                  ------         -----
         Balance at July 1, 2000...............      1.5           1.0
         Payments..............................     (0.9)         (0.1)
         Adjustments...........................     (0.3)         (0.2)
                                                  ------         -----
         Balance at September 30, 2000.........   $  0.2         $ 0.7
                                                  ======         ======

Other  expenses  related  to  the  1999   restructuring   (including  losses  on
inventories of discontinued styles,  relocation of employees and equipment,  and
plant  carrying and other costs) are charged to operations as incurred.  Through
September  30, 2000,  $34.2 million of such costs have been incurred and charged
to  operations,  consisting  primarily  of inventory  losses and plant  carrying
costs,  in the amounts of $7.1  million and $27.1  million for the 2000 and 1999
fiscal years, respectively.

During the September quarter of 2000, the Company's Board of Directors  approved
a plan designed to strengthen the Company's future  profitability  and financial
flexibility.  This plan  addresses  performance  shortfalls as well as difficult
market dynamics including the continued growth of textile products imports,  the
casual  dressing  trend,  a drop in exports to Europe because of the weakness of
the Euro, price competition in denim and other products,  and retailers' efforts
to reduce their inventories of interior furnishings products. The major elements
of the plan include:

         (1) Realign  operating  capacity.  The Company will reduce  capacity to
better align its  operations  with current  market demand and to assure the most
efficient  use of  assets.  This  includes:  closing  a plant in  Johnson  City,
Tennessee  and  moving  a  portion  of its  production  to  other  underutilized
facilities  in the first half of fiscal year 2001;  reducing  operations  at the
Clarksville,  Virginia facilities of the PerformanceWear segment in the December
2000 quarter;  and reducing the size of the Company's trucking fleet and closing
the Gaston trucking terminal located in Belmont,  North Carolina in the December
2000 quarter.

         (2) Eliminate unprofitable businesses. The PerformanceWear segment will
exit  its  garment-making   business,   to  include  offering  its  facility  in
Cuernavaca,  Mexico for sale, and will prune unprofitable  product lines that do
not meet  expectations.  Also,  the Company plans to exit its  Burlington  House
Floor  Accents  business by closing the tufted area rug business in  Monticello,
Arkansas as soon as  commitments  to customers can be completed and is currently
negotiating  sale of the remaining  portion located in Low Moor,  Virginia.  Net
sales of the Burlington House Floor Accents business were $122.3 million for the
2000 fiscal year and net operating loss was $5.3 million for the same period.

         (3) Reduce overhead. The Company has analyzed  administrative and staff
positions  throughout the Company,  and identified a number of  opportunities to
consolidate  and reduce cost. This will result in job reductions in division and
corporate staff areas primarily during the December and March quarters of fiscal
year 2001.

         (4) Pay down  debt.  Company-wide  initiatives  to sell  non-performing
assets,  reduce working capital,  and decrease capital expenditures will free up
cash that will be used to reduce debt and  improve  financial  flexibility.  The
Company has initiated the  refinancing of its bank credit  facilities  (see Note
F).

The  closings  and  overhead  reductions  outlined  above  will  result  in  the
elimination  of  approximately  2,450 jobs in the United  States and 950 jobs in
Mexico,  with  severance  benefit  payments to be paid over  periods of up to 12
months from the termination date depending on the employee's length of service.

This plan resulted in a pre-tax charge for restructuring,  asset write-downs and
impairment of $67.7 million.  The Company will also incur approximately $10.0 to
$12.0 million of runout charges related to this restructuring,  primarily in the
first two quarters of fiscal 2001. The components of the 2000  restructuring and
impairment  charge  included the  establishment  of a $19.7 million  reserve for
severance  benefit  payments,   write-downs  for  impairment  of  $38.0  million
(including  $12.7 million of goodwill)  related to long-lived  assets  resulting
from the  restructuring  and a  reserve  of $10.0  million  primarily  for lease
cancellation costs expected to be paid through December 2001.

Following  is a summary of activity in the related 2000  restructuring  reserves
(in millions):
                                                                Lease
                                                            Cancellations
                                                Severance     and Other
                                                 Benefits     Exit Costs
                                                ---------   -------------
         September 2000 restructuring charge...   $ 19.7       $  10.0
         Payments..............................     (0.4)            -
                                                  ------       -------
         Balance at September 30, 2000.........   $ 19.3       $  10.0
                                                  ======       =======

Other  expenses  related  to  the  2000   restructuring   (including  losses  on
inventories of discontinued styles,  relocation of employees and equipment,  and
plant  carrying and other costs) are charged to operations as incurred.  Through
September 30, 2000, $8.1 million of such costs have been incurred and charged to
operations, consisting primarily of inventory losses.

Assets that have been sold,  or are held for sale at September  30, 2000 and are
no longer in use, were written down to their estimated fair values less costs of
sale.  Assets held for sale continue to be included in the Fixed Assets  caption
on the balance sheet in the amount of $36.4  million.  The Company,  through its
Real Estate and Purchasing departments,  is actively marketing the affected real
estate  and  equipment.  The  active  plan  to  sell  the  assets  includes  the
preparation of a detailed property  marketing package to be used in working with
real estate and used  equipment  brokers  and other  channels,  including  other
textile  companies,  the local Chamber of Commerce and Economic  Development and
the State Economic  Development  Department.  The Company  anticipates  that the
divestitures  of real estate and  equipment  will be completed  within 18 months
from the date of closing. However, the actual timing of the disposition of these
properties may vary due to their locations and market conditions.

In 2000,  the Company  changed its method of evaluating  the  recoverability  of
enterprise-level  goodwill from the undiscounted  cash flow method to the market
value  method.  Under the market  value  method,  impairment  is measured by the
excess of the  Company's  net book  value over its  market  capitalization.  The
Company  believes the market value method is preferable  because it results in a
more objective  measurement of  recoverability  and better reflects the value of
goodwill as perceived by  investors.  Since the excess of the Company's net book
value  over  its  market  capitalization  exceeded  the  carrying  value  of the
Company's  enterprise-level  goodwill,  the  change  in  method  resulted  in an
impairment charge to write-off the remaining carrying value of  enterprise-level
goodwill of $463.2  million,  or ($8.89) per share.  This  change  represents  a
change in method that is inseparable from a change in estimate and, accordingly,
the effect of the  change  has been  reflected  as an  impairment  charge in the
accompanying 2000 statement of operations.  The Company's bank credit agreements
have been amended to allow for this change in accounting for goodwill.  Prior to
the change,  goodwill was amortized using the straight-line method over not more
than 40 years.  At adoption  of the  change,  the  accumulated  amortization  of
goodwill was $234.4 million compared to $217.7 million at October 2, 1999.

Note C - Investments

The Company's  investments  in  marketable  securities at September 30, 2000 and
October 2, 1999 consisted of the following (in millions):

                                         Gross        Gross     Estimated
                           Amortized   Unrealized   Unrealized    Fair
                             Cost        Gain         Loss        Value
                           ---------   ----------   ----------  ---------
2000

U.S. municipal bonds
 (due after five years
  through ten years)       $  17.5      $  0.2        $ (0.4)      $ 17.3
Equity securities              5.4         0.9          (0.2)         6.1
Money market funds             4.7           -             -          4.7
                           -------      ------        ------       ------
                           $  27.6      $  1.1        $ (0.6)      $ 28.1
                           =======      ======        ======       ======

1999

U.S. municipal bonds
 (due after five years
  through ten years)       $  20.3      $    -        $ (0.3)      $ 20.0
International bond funds       3.7         0.5             -          4.2
Equity securities              4.4         2.1             -          6.5
Money market funds             8.3         0.2             -          8.5
                           -------      ------        ------       ------
                           $  36.7      $  2.8        $ (0.3)      $ 39.2
                           =======      ======        ======       ======

Proceeds  from sales of  available-for-sale  securities  were $31.8  million and
$19.8  million  during the 2000 and 1999 fiscal years,  respectively,  and gross
purchases  were $24.6 million and $20.7  million,  respectively.  Gross gains of
$1.2  million  ($1.8  million in 1999) and gross  losses of $0.3  million  ($0.1
million  in  1999)  were  realized  on  these  sales.  At  September  30,  2000,
approximately  $18.6  million  of  marketable  securities  are  required  to  be
maintained in conjunction with insurance programs,  compared to $23.3 million at
October 2, 1999.

The following is combined  summarized  unaudited  financial  information  of the
Company's  investments in affiliates that are accounted for on the equity method
(in millions):
                                                 2000         1999         1998
                                              --------     --------     --------

   Earnings data:
         Revenue.............................  $ 474.8      $ 453.5      $ 194.2
         Gross profit........................     37.1         27.6         13.1
         Net income..........................      1.3          0.9          3.5
   Balance sheet data:
         Current assets......................  $ 109.2      $ 102.2
         Noncurrent assets...................    206.7        221.0
         Current liabilities.................     53.6         38.2
         Noncurrent liabilities..............     61.5         37.2

The earnings data above includes the earnings recorded by the Company's textured
yarn joint venture  combined with the income (loss) of other  affiliates.  Under
the terms of the textured yarn joint venture agreement,  the Company is entitled
to receive the first $12.0 million of cash flow for each of the first five years
of  operations  which  began in the June  quarter  of 1998.  Subsequent  to this
five-year  period,  distributions  and  earnings  are to be  allocated  based on
ownership  percentages.  The Company  purchased  raw  materials in the amount of
$50.1 million and $42.1 million from these  affiliates  during the 2000 and 1999
fiscal years, respectively.


<PAGE>


Note D - Inventories

Inventories are summarized as follows (in thousands):
                                                            2000        1999
                                                          ---------  ---------
    Inventories at average cost:
        Raw materials................................     $  27,345  $  34,468
        Stock in process.............................        77,978     88,042
        Produced goods...............................       198,176    207,804
        Dyes, chemicals and supplies.................        22,618     21,269
                                                          ---------  ---------
                                                            326,117    351,583
        Less excess of average cost over LIFO........        38,148     34,029
                                                          ---------  ---------
            Total....................................     $ 287,969  $ 317,554
                                                          =========  =========

Inventories valued using the LIFO method comprised  approximately 89% and 90% of
consolidated   inventories   at   September   30,  2000  and  October  2,  1999,
respectively.  Liquidation of prior years' LIFO inventory layers in the 2000 and
1999 fiscal years did not materially affect cost of sales in those periods

Note E - Sundry Payables and Accrued Expenses

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

                                                             2000       1999
                                                          ---------  ---------
     Sundry accounts payable.........................     $   2,987  $   3,880
     Accrued expenses:
         Payroll and employee benefits...............        57,071     48,891
         Taxes, other than income taxes..............         6,690      8,735
         Interest....................................         8,116      4,413
         Other.......................................        22,688     13,693
                                                          ---------  ---------
             Total...................................     $  97,552  $  79,612
                                                          =========  =========

Note F - Long-term Debt

Long-term debt consisted of the following (in thousands):
                                                              2000        1999
                                                          ----------  ----------
  1995 Bank Credit Agreement...........................   $  345,000  $  319,000
  1998 Bank Credit Agreement...........................       83,000      94,000
  Receivables Facility.................................      165,550     165,157
  Senior Debentures due 2005...........................      149,943     149,931
  Senior Debentures due 2027...........................      149,387     149,299
  Other indebtedness with various rates and maturities.        3,570       4,040
                                                          ----------  ----------
                                                             896,450     881,427
  Less long-term debt due currently....................       30,470         470
                                                          ----------  ----------
    Total..............................................   $  865,980  $  880,957
                                                          ==========  ==========

Bank Financing: The Company has an unsecured credit agreement ("1995 Bank Credit
Agreement"),  consisting of a $550.0 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 $550.0  million.  At September 30, 2000,
letters of credit  outstanding  issued by the fronting  bank were  approximately
$10.5 million,  and the unused portion of the revolving facility  commitment was
approximately  $194.5  million.  At  September  30, 2000,  additional  overnight
borrowings up to $42.0 million were also  available  under bank lines of credit.
Overnight  borrowings  are now  available  under the 2000 Bank Credit  Agreement
described below.

Loans under the 1995 Bank Credit  Agreement bear interest at either (i) floating
rates generally  payable  quarterly  based on the Adjusted  Eurodollar Rate plus
0.50% or (ii)  Eurodollar  rates or fixed rates that 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
0.25%. At September 30, 2000, the average interest rate under this agreement was
7.24%.

In November, 1998, the Company established a $105 million credit facility with a
group of banks  ("1998 Bank Credit  Agreement").  At  September  30,  2000,  the
average  interest rate under this  agreement was 7.66% and the unused portion of
the  facility  commitment  was $22.0  million.  Loans under the 1998 Bank Credit
Agreement  were made directly to a Mexican  financing  subsidiary of the Company
and were guaranteed by the Company.  Subsequent to September 30, 2000, all loans
have been repaid and this facility has been terminated.

On December 5, 2000, the Company  entered into an amended bank credit  agreement
("2000 Bank Credit  Agreement") which extends the 1995 Bank Credit Agreement for
up to 30 months.  The amended  facility  consists of a $600.0 million  revolving
credit  facility  that  provides  for the  issuance  of letters of credit by the
fronting  bank in an  outstanding  aggregate  face  amount  not to exceed  $75.0
million,  and provides  short-term  overnight  borrowings  up to $30.0  million,
provided that at no time shall the aggregate principal amount of revolving loans
and  short-term  borrowings,  together  with the  aggregate  face amount of such
letters of credit  issued,  exceed $600.0  million.  Borrowings in the amount of
$315.0 million under the 1995 Bank Credit Agreement were classified as long-term
debt at September 30, 2000 and represents  the amount of borrowings  expected to
be maintained on a long-term basis under the amended facility.

Loans under the 2000 Bank Credit Agreement bear interest at floating rates based
on the Adjusted  Eurodollar  Rate plus 3.25%.  In addition,  the Company pays an
annual  commitment  fee of 0.50% on the  unused  portion  of the  facility.  The
facility  commitment  amount will be reduced to $525.0  million on September 30,
2001 and to $450.0 million on September 30, 2002.

The 2000 Bank Credit Agreement imposes various  limitations on the liquidity and
flexibility  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 amended Agreement contains covenants  applicable to
the Company and all material subsidiaries, limiting the incurrence of additional
indebtedness   and  guarantees   thereof,   the  creation  of  liens  and  other
encumbrances on properties, the making of investments or acquisitions,  the sale
or other disposition of property or assets, the making of cash dividend or other
restricted  payments,  the entering into of certain lease and sale and leaseback
transactions,  the making of capital  expenditures  beyond certain  limits,  and
entering into certain  transactions  with  affiliates  or  agreements  which are
materially  adverse  to the bank  lenders.  All  obligations  under the  amended
facility  are   unconditionally   guaranteed  by  each  material   existing  and
subsequently  acquired or organized  domestic  subsidiary  of the  Company.  The
facility is also  secured by  perfected  first-priority  security  interests  in
substantially all U.S. assets of the Company other than  receivables,  including
significant real  properties,  inventory and fixed assets and all of the capital
stock of the Company's existing and future subsidiaries,  limited in the case of
any foreign  subsidiary to 65.0% of their capital stock.  In addition,  proceeds
from  sales of  assets,  except for  certain  exclusions,  must be used to repay
borrowings under the facility.

Receivables-Backed  Financing:  In  December  1997,  the Company  established  a
five-year,  $225.0 million Trade Receivables  Financing Agreement  ("Receivables
Facility") with a bank. The amount of borrowings allowable under the Receivables
Facility  at any time is a function of the amount of then  outstanding  eligible
trade  accounts  receivable up to $225.0  million.  Loans under the  Receivables
Facility  bear  interest,  with terms up to 270 days,  at the bank's  commercial
paper dealer rate plus  0.1875%.  A  commitment  fee of 0.125% is charged on the
unused  portion of the  Receivables  Facility.  The  Company  has the intent and
ability to maintain  the  receivables-backed  borrowings  on a long-term  basis.
Accordingly,  receivables-backed  borrowings  have been  classified as long-term
debt.

Senior  Debentures:  In  August  1997,  the  Company  issued,  through  a public
offering,  $150.0 million  principal amount of 7.25% unsecured senior debentures
due August 1, 2027 ("Senior  Debentures Due 2027").  The securities  were issued
under an indenture (the "Indenture") dated as of September 1, 1995 pursuant to a
shelf  registration  filed with the  Securities and Exchange  Commission,  under
which  $100.0  million of debt  securities  may still be issued.  The  Indenture
contains covenants  limiting certain liens and sale and leaseback  transactions.
The  Senior  Debentures  Due 2027 were  issued at a  discount  to yield  7.335%.
Interest on the Senior Debentures Due 2027 is payable semiannually on February 1
and August 1. The Senior Debentures Due 2027 will be redeemable as a whole or in
part at the option of the  Company  at any time on or after  August 2, 2007 at a
price equal to the greater of 100% of the principal  amount  redeemed or the sum
of the present  values of the  remaining  scheduled  payments of  principal  and
interest thereon.  The Senior Debentures Due 2027 will also be redeemable at the
option of the  holders  thereof  on August 1, 2007 in  amounts  at 100% of their
principal amount.

The  Company  also has  outstanding  $150.0  million  principal  amount of 7.25%
unsecured  senior  debentures  due September 15, 2005  ("Senior  Debentures  Due
2005")  under the  Indenture.  The Senior  Debentures  Due 2005 were issued at a
discount to yield 7.26%.  Interest on the Senior  Debentures Due 2005 is payable
semiannually on March 15 and September 15, and the debentures are not redeemable
prior to maturity and are not entitled to any sinking fund.

Maturities:  As of September 30, 2000,  aggregate annual maturities of long-term
debt for the next five years are $30.5  million in 2001,  $0.0  million in 2002,
$480.6 million in 2003, $83.0 million in 2004 and $149.9 million in 2005.

See Note P for information on financial  instruments utilized to manage interest
rate exposure.

Note G - Leases

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

          2001.............................................    $  15,899
          2002.............................................       11,701
          2003.............................................        7,360
          2004.............................................        3,904
          2005.............................................        2,027
          Later years......................................        4,721
                                                               ----------
                Total minimum lease payments...............    $  45,612
                                                               ==========

Approximately 23% 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 2000,  1999 and 1998
fiscal years,  rental expense for all operating leases was $22.4 million,  $22.0
million and $20.4 million, 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 30, 2000 and October 2,
1999, respectively, were as follows:

                                       Shares          Shares           Shares
   September 30, 2000                Authorized        Issued        Outstanding
   ------------------               -----------      ----------      -----------
   Common Stock..................   200,000,000      68,410,248      52,080,719
   Nonvoting Common Stock........    15,000,000         454,301         454,301
                                    -----------      ----------      ----------
                                    215,000,000      68,864,549      52,535,020
                                    ===========      ==========      ==========

                                       Shares          Shares           Shares
   October 2, 1999                   Authorized        Issued        Outstanding
   ---------------                  -----------      ----------      -----------
   Common Stock..................   200,000,000      67,939,148      51,611,431
   Nonvoting Common Stock........    15,000,000         454,301         454,301
                                    -----------      ----------      ----------
                                    215,000,000      68,393,449      52,065,732
                                    ===========      ==========      ==========

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 30, 2000 and October 2, 1999, 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 3, 1997,  the Board of  Directors  of the Company
approved the adoption of a Stockholder Rights Plan. Under the Stockholder Rights
Plan, Preferred Stock Purchase Rights were distributed as a dividend at the rate
of one Right for each share of Common  Stock held as of the close of business on
December 15, 1997. Each Right will entitle a stockholder to a Unit consisting of
a portion of a newly issued share of Junior Participating Preferred Stock of the
Company,  at an exercise  price of $50.00 per Unit,  subject to adjustment  from
time to time to prevent dilution.  The Rights will not initially be exercisable.
The Rights will become  exercisable  only if another person acquires  beneficial
ownership  of 15  percent  or more  of the  Company's  voting  Common  Stock  or
commences a tender offer that would result in such person beneficially owning 15
percent or more of the Company's  voting Common Stock. If any person becomes the
beneficial  owner of 15 percent or more of the Company's voting Common Stock, or
if a holder of 15 percent or more of the  Company's  voting Common Stock engages
in certain other  acquisition  transactions,  then each outstanding Right (other
than Rights  owned by such 15 percent  stockholder)  will  entitle its holder to
purchase,  at the Right's  then-current  exercise price,  units of the Company's
Junior  Participating  Preferred  Stock having a market value equal to twice the
then-current  exercise  price.  The Rights  expire on December  4, 2007,  unless
earlier redeemed.  The Company may generally redeem the Rights at $.01 per right
at any time until the tenth day following public  announcement that a person has
acquired 15 percent or more of the Company's voting Common Stock.

During the 2000 fiscal year,  outstanding shares changed due to (i) the issuance
of 11,834 shares to settle Performance Unit awards, (ii) the issuance of 458,910
new shares of  restricted  nonvested  stock,  principally  in  exchange  for the
surrender  of  1,384,943  vested  stock  options  (see  Note Q),  and  (iii) the
forfeiture of 1,795 shares of restricted nonvested stock.


<PAGE>



The components of accumulated other comprehensive  income (loss), net of related
tax, at September 30, 2000 and October 2, 1999 are as follows (in thousands):

                                                         2000        1999
                                                       --------   ---------
  Foreign currency translation adjustments........     $(22,727)  $(16,273)
  Unrealized gains (losses) on securities.........          275      1,615
                                                       --------   ---------
                                                       $(22,452)  $(14,658)
                                                       ========   ======== =

Note I - Other Expense (Income) - Net

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

                                              2000         1999         1998
                                            --------     --------     --------
    Gain on sale of assets - net.........   $ (  990)    $ (4,328)    $   (512)
    Translation gain on liquidation of
     Canadian subsidiary.................     (5,507)           -            -
    Interest income......................     (5,527)      (3,523)      (3,408)
    Other................................        (19)         (17)         113
                                            ---------    ---------    --------
         Total...........................   $(12,043)    $ (7,868)    $ (3,807)
                                            ========     ========     ========

In  November  1998,  the Company  sold the  remaining  assets of the  Burlington
Madison Yarn division,  including manufacturing  facilities located in Ranlo and
St. Pauls, North Carolina, for a pre-tax gain of $2.7 million. Net sales of this
division  were $58.4  million  during the 1998 fiscal  year,  and net  operating
income before  interest and taxes was $1.3 million during the same period.  Also
during fiscal year 1999, the Company sold two idle plant facilities and recorded
pre-tax gains on the sales of $1.6 million.

Note J - Income Taxes

The sources of income (loss) before income taxes were as follows (in thousands):

                                                     2000      1999       1998
                                                  ---------  --------   --------

  United States...............................    $(544,560) $(48,168)  $125,764
  Foreign.....................................       (4,088)      819      4,248
                                                  ---------  --------   --------
       Total                                      $(548,648) $(47,349)  $130,012
                                                  ---------- =========  ========

Income tax expense (benefit) consisted of (in thousands):
                                                  2000       1999        1998
                                                --------   --------   --------
  Current:
       United States..........................  $  7,708      3,923   $ 39,228
       Foreign................................     2,296        240       (547)
                                                --------   --------   --------
            Total current                         10,004      4,163     38,681
  Deferred:
       United States..........................   (29,798)   (20,149)    10,174
       Foreign................................    (1,882)       131        705
                                                ---------  --------   --------
            Total deferred....................   (31,680)   (20,018)    10,879
                                                --------   ---------  --------
                                                $(21,676)  $(15,855)  $ 49,560
                                                ========   ========   ========


<PAGE>


Income tax expense  (benefit) is different from the amount  computed by applying
the U.S.  federal income tax rate of 35% to income (loss) before income taxes as
follows (in thousands):
                                                    2000       1999       1998
                                                 ---------   --------   --------
  U.S. tax at statutory rate..................   $(192,027) $(16,572)  $ 45,504
  Goodwill charges with no tax benefits.......     167,771     7,318      6,119
  State income taxes, net of federal effect...      (6,010)   (3,349)     1,888
  Taxes on liquidation of Canadian
   subsidiary previously considered
   permanently reinvested.....................       5,784         -          -
  Foreign Sales Corporation...................        (733)   (3,166)    (3,581)
  Other foreign tax items.....................       2,420    (1,597)    (1,405)
  Other.......................................       1,119     1,511      1,035
                                                 ---------- --------   --------
                                                 $ (21,676) $(15,855)  $ 49,560
                                                 ========== ========   ========

At September 30, 2000,  the Company had $58.4 million of deferred tax assets and
$170.6  million  of  deferred  tax   liabilities   that  have  been  netted  for
presentation  purposes.  At October 2, 1999,  the Company  had $39.7  million of
deferred  tax assets and $186.7  million of deferred tax  liabilities  that have
been  netted  for   presentation   purposes.   Operating  loss  and  tax  credit
carryforwards  with  related tax  benefits of $6.0  million (net of $5.1 million
valuation  allowance)  at  September  30,  2000,  and $2.4  million (net of $4.0
million  valuation  allowance) at October 2, 1999, expire from 2003 to 2015. Net
deferred tax  liabilities at September 30, 2000 and October 2, 1999 consisted of
the following (in thousands):

                                       2000                   1999
                               --------------------   --------------------
                                Current  Noncurrent    Current  Noncurrent
                               --------  ---------    --------  ---------
   Fixed assets..............  $      -  $  83,026    $      -  $  92,881
   Inventory valuation.......    52,044          -      60,142          -
   Accruals, allowances
     and other...............   (25,003)     8,166     (17,564)    13,936
   Tax credit and
     operating loss
     carryforwards...........    (4,481)    (1,533)     (2,407)         -
                               --------  ---------    --------  ---------
        Total................  $ 22,560  $  89,659    $ 40,171  $ 106,817
                               ========  =========    ========  =========

Note K - Supplemental Disclosures of Cash Flow Information
     (in thousands)                            2000         1999          1998
                                             --------     --------     --------

     Interest paid - net...................  $ 55,675     $ 57,835     $ 56,118
                                             ========     ========     ========

     Income taxes paid - net...............  $  7,259     $  2,811     $ 45,131
                                             ========     ========     ========

On May 30,  1998,  the  Company  formed a joint  venture  with  Unifi,  Inc.  of
Greensboro,  North Carolina, to manufacture and market textured polyester yarns.
Each of the partners  transferred its textured yarn manufacturing  assets into a
newly-formed  limited  liability  company.  Under the  agreement,  Unifi  owns a
majority ownership  interest and manages the business,  while the Company owns a
minority interest.  The noncash transfer of assets from the Company's Burlington
Madison Yarn division  included  $24.6  million of  inventory,  fixed assets and
excess of purchase cost over net assets acquired for an equity investment.


<PAGE>


Note L - Retirement and Other Postretirement 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 an amount based on the recommendation of the plan's actuary.
Employees  also  contribute a  percentage  of their  compensation.  Participants
become fully vested at the end of five years of service.

In addition,  the Company has 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.  These plans are  available to most of the
Company's U.S.  employees who elect  participation.  The Company also has a life
insurance plan that 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  cost  of  postretirement  benefits  are  accrued  over  the
employees' service lives.

                                                              Postretirement
                                        Pension Benefits          Benefits
                                      -------------------  ---------------------
                                        2000      1999        2000       1999
                                      --------- ---------  ----------  ---------
                                                      (in thousands)
Change in benefit obligations:
  Balance at beginning of year....... $(284,167)$(354,986) $ (16,754)  $(14,323)
  Service cost.......................    (6,254)   (7,832)      (311)      (379)
  Interest cost......................   (21,560)  (21,238)    (1,298)    (1,305)
  Contributions by plan participants.    (9,479)  (10,727)    (6,635)    (5,983)
  Benefits paid......................    31,052    37,233      9,691      8,146
  Actuarial gains (losses)...........    (3,359)   29,227     (1,261)    (3,935)
  Curtailment gains (losses).........    (4,946)   (4,995)       937      1,025
  Settlements........................    10,443    49,151          -          -
                                      --------- ---------  ---------   --------
  Balance at end of year.............  (288,270) (284,167)   (15,631)   (16,754)
                                      --------- ---------  ---------   --------

Change in fair value of plan assets:
  Balance at beginning of year.......   318,900   327,754      2,175      2,843
  Actual return on plan assets, net
   of plan expenses..................    34,744    58,803       (501)      (468)
  Contributions by employer..........     5,000     8,000      3,298      1,963
  Contributions by plan participants.     9,479    10,727      6,635      5,983
  Benefits paid......................   (31,052)  (37,233)    (9,691)    (8,146)
  Settlements........................   (10,443)  (49,151)         -          -
                                      --------- ---------  ---------   --------
  Balance at end of year.............   326,628   318,900      1,916      2,175
                                      --------- ---------  ---------   --------

Funded status........................    38,358    34,733    (13,715)   (14,579)
Unrecognized prior service cost......         -       125          -          -
Unrecognized net (gain) loss.........    (2,078)   (2,185)     9,208      9,598
                                      ---------  --------  ---------   --------
Net amount recognized in the
  consolidated balance sheet......... $  36,280 $  32,673  $  (4,507)  $ (4,981)
                                      ========= =========  =========   ========

Pension plan assets consist  primarily of listed stocks and bonds and short-term
investment funds. Postretirement benefit plan assets consist primarily of bonds.

The  fiscal  year 2000  pension  plan  curtailment  loss was not  recognized  in
earnings but rather reduced the unrecognized net gain in that plan in accordance
with SFAS No. 88,  "Employers'  Accounting for Settlements  and  Curtailments of
Defined  Benefit  Pension Plans and for  Termination  Benefits." The fiscal year
1999 pension plan  curtailment  losses were recognized as components of the 1999
restructuring  provision or the gain on disposition  of the  Burlington  Madison
Yarn  division  in  accordance  with SFAS No. 88. The  curtailment  gains in the
postretirement  benefit  plans  resulting  from the 2000 and 1999  restructuring
plans were not  recognized in earnings but rather reduced the  unrecognized  net
losses in that plan in accordance with SFAS No. 106, "Employers'  Accounting for
Postretirement  Benefits Other Than Pensions." Components of net benefit expense
and assumptions at the fiscal year end  measurement  dates for the plans were as
follows for the 2000, 1999 and 1998 fiscal years:

                                                            Postretirement
                               Pension Benefits                Benefits
                           ------------------------  --------------------------
                             2000     1999    1998     2000     1999      1998
                           -------- ------- -------  -------- -------- ---------
                                      (dollar amounts in thousands)

  Service cost............ $  6,254 $ 7,832 $ 7,520  $   311  $   379  $   248
  Interest cost...........   21,560  21,238  24,722    1,298    1,305    1,045
  Expected return on plan
   assets, net of plan
   expenses...............  (26,108)(26,399)(28,069)     614      413      549
  Amortization:
   Unrecognized prior
    service cost..........      125     138     156        -        -        -
   Unrecognized losses....        -      99       -      681      763      328
                           -------- ------- -------  -------  -------  -------
  Net expense............. $  1,831 $ 2,908 $ 4,329  $ 2,904  $ 2,860  $ 2,170
                           ======== ======= =======  =======  =======  =======

  Discount rate...........    8.0%    7.75%   6.75%     8.0%    7.75%    6.75%
  Long-term rate of return
   on plan assets.........    8.5%     8.5%    8.5%     8.5%     8.5%     8.5%
  Long-term rate of
   compensation increase..   3.75%    3.75%   3.75%     N/A      N/A      N/A

For the  postretirement  benefit  plans,  the assumed annual rate of increase in
health care  expenses  was 6% in the 2000 and 1999 fiscal  years.  This rate was
assumed to remain at 6% after fiscal year 2000. A one percentage  point increase
in the assumed health care cost trend rate would have increased the  Accumulated
Projected  Benefit  Obligation  (APBO) by $0.8 million at September 30, 2000 and
increased the aggregate  service and interest cost components of  postretirement
benefit  expense for fiscal year 2000 by $0.1 million.  A one  percentage  point
decrease in the assumed  health  care cost trend rate would have  decreased  the
APBO by $0.8 million at September 30, 2000 and  decreased the aggregate  service
and interest cost components of  postretirement  benefit expense for fiscal year
2000 by $0.1 million.

Note M - Defined Contribution Plans

Effective January 1, 1999, the Company  instituted a 401(k) Savings Plan for all
U.S.  employees (and certain  employees in foreign  countries)  with one or more
years of service.  The Company discontinued making contributions to its Employee
Stock  Ownership Plan ("ESOP") after the 1998 plan year, and the ESOP was merged
into the 401(k)  Savings  Plan.  The 401(k)  Savings  Plan  provides for Company
contributions  of cash and/or Common Stock on a sliding scale based on the level
of the  employee's  contribution.  During the 2000 and 1999 fiscal  years,  cash
contributions of $9.2 million and $9.3 million,  respectively,  were made to the
401(k) Savings Plan and charged to operations.  Pursuant to a  Board-established
formula linked to the Company's annual operating results,  cash contributions of
$5.3  million  were made to the ESOP and charged to  operations  for fiscal year
1998.

Note N - Contingencies

The Company and its  subsidiaries  have sundry claims and other lawsuits pending
against  them and also have  certain  guarantees  that were made in the ordinary
course of business. The Company makes 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.

Also,  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
("PRPs")  at  19  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.  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   currently   involved  in  a  remedial
investigation at three of these sites under federal laws. It is also involved in
environmental  cleanups at 16 other sites under state laws. The Company may also
be  liable  for  environmental  contingencies  at 25  other  sites  pursuant  to
contractual  obligations  resulting  from  divested  property or with respect to
environmental cleanups that may be identified in the future.

The Company has  established the following  aggregate  reserves in its financial
statements for such  environmental  liabilities,  estimated to be paid primarily
over the next five years. 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.
                                               (In millions)

         Balance at October 3, 1998............   $   4.7
         Payments..............................      (1.2)
                                                  -------
         Balance at October 2, 1999............       3.5
         Adjustments...........................       0.2
         Payments..............................      (0.5)
                                                  -------
         Balance at September 30, 2000.........   $   3.2
                                                  =======

It is not possible to determine  with  certainty  the ultimate  liability of the
Company  in these  matters,  if any,  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.


<PAGE>


Note O - Segment and Other Information

The Company is one of the largest and most diversified manufacturers of softgood
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  has  three  reportable  segments  that are  based on its  internal
organizational structure: PerformanceWear,  CasualWear and Interior Furnishings.
The  PerformanceWear  segment  includes  woven  synthetic  fabrics,  worsted and
worsted  wool  blend  fabrics  and  apparel,  and yarn  operations  that  supply
PerformanceWear  products.  The CasualWear  segment  consists of denim and woven
cotton and cotton blend fabrics and apparel.  Products  included in the Interior
Furnishings  segment are  fabrics  for  upholstery,  window  coverings,  bedroom
ensembles,  and  mattress  ticking;  bath,  area and  accent  rugs;  and  tufted
synthetic  carpet and carpet tiles for  commercial  uses.  The "Other"  category
includes transportation and miscellaneous ancillary operations.

Sales,  income  (loss)  before  income taxes and total assets for the  Company's
reportable  segments are presented  below (in millions).  The Company  evaluates
performance  and allocates  resources  based on profit or loss before  interest,
amortization of goodwill,  restructuring charges,  certain unallocated corporate
expenses,  and income taxes. The accounting  policies of the reportable segments
are the  same as  those  described  in the  summary  of  significant  accounting
policies.  Intersegment  sales  and  transfers  are  recorded  at  cost  and are
primarily related to transportation operations included in the "Other" category.

                                              2000     1999     1998
                                            -------- -------- --------
                                                              (53-week
                                                                 year)
Net Sales
         PerformanceWear........            $  587.3 $  611.7 $  852.3
         CasualWear.............               242.5    257.1    342.1
         Interior Furnishings...               792.3    758.0    792.2
         Other..................                34.1     36.0     39.4
                                            -------- -------- --------
                                             1,656.2  1,662.8  2,026.0
         Less:
          Intersegment sales....               (36.0)   (11.1)   (15.6)
                                            -------- -------- --------
                                            $1,620.2 $1,651.7 $2,010.4
                                            ======== ======== ========

<PAGE>



Income (Loss) before
  Income Taxes
         PerformanceWear........            $   13.9 $   18.4 $   90.0
         CasualWear.............                (8.3)    (2.9)    38.0
         Interior Furnishings...                63.3     78.0     88.0
         Other..................                (2.1)     1.9      2.5
                                            -------- -------- --------
           Total reportable
         segments............                   66.8     95.4    218.5
         Corporate expenses.....               (14.2)   (12.3)   (14.7)
         Goodwill amortization..               (16.7)   (17.8)   (18.1)
         Write-off of goodwill..              (463.2)       -        -
         Restructuring charges..               (67.0)   (62.1)       -
         Interest expense.......               (66.3)   (58.4)   (59.5)
         Other (expense)
           income - net.......                  12.0      7.9      3.8
                                            -------- -------- --------
                                            $ (548.6)$  (47.3)$  130.0
                                            ======== ======== ========

Total Assets
         PerformanceWear........            $  528.2 $  542.6 $  584.9
         CasualWear.............               303.8    301.3    282.1
         Interior Furnishings...               428.2    440.4    437.9
         Other..................                54.6     66.9     60.7
         Corporate (including
          goodwill).............                36.8    525.1    547.3
                                            -------- -------- --------
                                            $1,351.6 $1,876.3 $1,912.9
                                            ======== ======== ========

The following items are included in income (loss) before income taxes:

                                              2000     1999     1998
                                            -------- -------- --------
   Equity in Income (Loss) of
    Equity Method Investees
      PerformanceWear........               $   11.1 $    9.4 $    4.2
         CasualWear.............            $   (0.8)$   (3.0)$   (1.2)

   Depreciation and Amortization
         PerformanceWear........            $   28.1 $   25.7 $   29.8
         CasualWear.............                13.5     12.7     11.9
         Interior Furnishings...                23.4     23.5     24.3
         Other..................                 0.4      0.5      0.6
         Corporate..............                 1.7      2.4      1.7
                                            -------- -------- --------
                                            $   67.1 $   64.8 $   68.3
                                            ======== ======== ========


<PAGE>



The following items are included in the determination of total assets:

                                              2000     1999     1998
                                            -------- -------- --------
   Investments in Equity
    Method Investees
      PerformanceWear........               $   11.6 $   10.9 $   12.4
         CasualWear.............            $    7.0 $   16.4 $   11.1

   Capital Expenditures
         PerformanceWear........            $   42.9 $   67.3 $   61.6
         CasualWear.............                11.7     57.3     55.7
         Interior Furnishings...                17.8     16.3     20.5
         Other..................                   -        -        -
         Corporate..............                 1.4      0.6      2.5
                                            -------- -------- --------
                                            $   73.8 $  141.5 $  140.3
                                            ======== ======== ========

The Company primarily  markets its products to approximately  8,000 customers in
the United States. The Company also markets its products to customers in Canada,
Mexico,  Central  and  South  America,  Europe,  Africa,  Australia,  and  Asian
countries.  For the 2000 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  26% of net sales.  The following  table  presents  sales and
long-lived  asset  information by geographic  area as of and for the fiscal year
ended  2000,  1999 and 1998 (in  millions).  The  geographic  sales  dollars are
determined generally based on the ultimate destination of the product.

                                         2000        1999        1998
                                     ----------- ----------- -----------
   Net Sales:
      United States.........         $  1,441.1  $  1,415.6  $  1,773.5
      Foreign...............         $    179.1  $    236.1  $    236.9
   Long-lived Assets:
      United States.........         $    516.7  $    548.3  $    585.8
      Foreign...............         $     95.2  $     92.9  $     56.9

Note P - 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.
These counterparties  expose the Company to the risk of credit loss in the event
of nonperformance.  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 agreements
to reduce the impact of  changes  in  interest  rates on all or a portion of its
floating rate debt. The swap agreements are contracts to exchange  variable 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.  The net cash amounts
paid or received on swap  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  30,  2000 and  October 2, 1999,  the  Company had the
following interest rate swap instruments in effect (the variable rates are based
on three-month LIBOR):

                           Notional
                            Amount    Fixed
                          (millions)   Rate      Period
                          ----------  -----   -----------
                             $200      7.37%  10/95-10/00
                               50      6.10%  11/97-11/02
                               50      5.72%  01/98-01/02

         In March 2000, the Company entered into a three-year  interest rate cap
agreement  with a notional  amount of $100.0  million  and a fixed rate of 6.02%
(the variable rate is based on three-month  LIBOR).  The cap agreement is with a
bank that is a counterparty to both of the $50.0 million notional  interest rate
swap agreements,  and these swap agreements were modified at the same time under
terms that  required  no premium  payment  for the cap  instrument.  These terms
changed the maturity  date of the  Company's  6.10%,  $50 million  notional swap
instrument  from  November  2004 to November  2002 and the maturity  date of its
5.72%, $50 million notional swap instrument from January 2005 to January 2002.

    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 that have forward exchange contracts are recorded in U.S. dollars at
the applicable  forward rate.  The foreign  exchange  contracts on  receivables,
$10.7  million at September  30, 2000,  require the Company to exchange  British
pounds,  Canadian dollar and Euro currencies for U.S.  dollars and mature in one
to seven months. The foreign exchange contracts on receivables, $17.4 million at
October 2, 1999,  required the Company to exchange British pounds,  Italian lira
and Euro currencies for U.S.  dollars and matured in one to ten 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 30, 2000,  the Company had $0.2 million of forward  currency  exchange
contracts  maturing in one to four months  related to  purchases of fixed assets
denominated  in the Euro  currency,  compared to $6.2 million at October 2, 1999
related to purchases of wool and fixed assets denominated in Australian dollars,
Italian lira and Euro  currencies.  At  September  30, 2000 and October 2, 1999,
deferred gains and losses on foreign exchange  contracts are not material to the
consolidated financial statements.

FAIR VALUE OF FINANCIAL INSTRUMENTS:  It is estimated that the carrying value of
the Company's  financial  instruments  approximated  fair value at September 30,
2000 and  October 2, 1999,  unless  indicated  otherwise  below.  The  following
methods and  assumptions  were used in  estimating  the 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 by obtaining  quotes
from brokers or based on current  rates  offered for similar  debt. At September
30,  2000,  long-term  debt  with a  carrying  value of  $896.5  million  had an
estimated fair value of $760.3 million. At October 2, 1999,  long-term debt with
a  carrying  value of  $881.4  million  had an  estimated  fair  value of $795.5
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  creditworthiness  of
the  counterparties.  At  September  30, 2000 and October 2, 1999,  the carrying
amounts of these  instruments were a $0.01 million  liability and a $0.9 million
liability,  respectively. At September 30, 2000 and October 2, 1999, the Company
estimates it would have received $2.4 million and paid $1.6 million to terminate
the agreements, respectively.

Foreign Currency Contracts:  The fair values of foreign currency contracts (used
for hedging  purposes)  are  estimated  by  obtaining  quotes from  brokers.  At
September  30, 2000 and  October 2, 1999,  carrying  amounts  related to foreign
currency  contracts in the  consolidated  balance  sheets were not material.  At
September  30,  2000,  foreign  currency  contracts  to pay $0.2  million had an
estimated fair value of $0.2 million,  and foreign currency contracts to receive
$10.7 million had an estimated fair value of $10.3 million.  At October 2, 1999,
foreign  currency  contracts to pay $6.2 million had an estimated  fair value of
$6.1  million,  and foreign  currency  contracts to receive $17.4 million had an
estimated fair value of $17.6 million.

Note Q - Stock-Based Compensation

Under the Company's various Equity Incentive Plans, the Company is authorized to
award  restricted  nonvested  shares of the Company's  common stock,  options to
purchase common stock, or Performance  Unit/Share awards that are dependent upon
achievement of specified  performance  goals and are payable in common stock and
cash.  Stock options  granted  generally have a maximum term of 10 years.  Under
these plans at September 30, 2000,  300,534  shares of common stock are reserved
to settle  Performance  Unit/Share  awards  currently  outstanding and 1,486,562
shares to settle additional future awards remain available.


<PAGE>



A summary  of the  Company's  stock  option  activity  and  related  information
follows:

                               2000               1999                1998
                         -----------------  -----------------  -----------------
                                 Weighted-          Weighted-          Weighted-
                                  Average            Average            Average
                         Options Exercise   Options Exercise   Options Exercise
                          (000)    Price     (000)    Price     (000)    Price
                         ------- ---------  ------- ---------  ------- ---------
Outstanding at
 beginning of year.....   4,508   $11.21     3,689   $11.79     5,754   $11.58
Granted................   1,821     3.78     1,093     9.15       253    14.78
Exercised..............       -        -         -        -    (2,136)   11.46
Forfeited/exchanged....  (1,797)   11.40      (274)   10.83      (182)   13.07
                         ------             ------             ------
Outstanding at
 end of year...........   4,532   $ 8.15     4,508   $11.21     3,689   $11.79
                         ======             ======             ======

Exercisable at end
 of year...............   2,183   $11.01     3,313   $11.58     3,447   $ 8.40

Per share weighted-average
 fair value of options
 granted during the year..    $2.74              $5.47              $6.66

The following table summarizes  information  about stock options  outstanding at
September 30, 2000:

                           Options Outstanding            Options Exercisable
                 -------------------------------------   ----------------------
                                            Weighted-               Weighted-
  Range of               Weighted-Average    Average                 Average
  Exercise        Number     Remaining      Exercise       Number   Exercise
   Prices         (000)   Contractual Life    Price        (000)      Price
---------------  -------- ----------------  ---------     --------  --------

$ 3.75 to  5.38    1,743        9.1          $ 3.78            51    $ 3.77
$ 7.19 to 11.00    1,301        6.5          $ 9.38           732    $ 9.57
$11.63 to 21.93    1,488        4.0          $12.19         1,400    $12.02
                  ------                                   ------
                   4,532        6.7          $ 8.15         2,183    $11.01
                  ======                                   ======

The Company has elected to follow Accounting  Principles Board (APB) Opinion No.
25,  "Accounting  for Stock Issued to Employees."  Under APB 25, no compensation
expense is recognized  for the  Company's  employee  stock  options  because the
exercise price of the options equals the market price of the underlying stock on
the date of grant.  On June 5,  2000,  1,384,943  employee  stock  options  were
exchanged for 409,266  shares of nonvested  stock with a fair value of $3.94 per
share. Total compensation cost charged (credited) to income related to nonvested
restricted share and Performance Unit awards was $0.2 million,  $0.0 million and
$(0.8) million for the 2000, 1999 and 1998 fiscal years, respectively.

The following pro forma  information  regarding net income (loss) and net income
(loss)  per  share  is  required  when APB 25  accounting  is  elected,  and was
determined as if the Company had accounted for its employee  stock options under
the  fair  value   method  of  SFAS  No.  123,   "Accounting   for   Stock-Based
Compensation."  The fair values for these options were  estimated at the date of
grant  using  a   Black-Scholes   option   pricing   model  with  the  following
weighted-average assumptions: risk-free interest rates of 6.11%, 4.82% and 5.84%
for fiscal year 2000,  1999 and 1998,  respectively;  volatility  factors of the
expected  market price of the Company's  common stock of 0.57 for 2000, 0.49 for
1999 and 0.35 for 1998;  dividend yields of 0%; and a weighted-average  expected
life of the  options of eight  years for 2000 and 1999,  and six years for 1998.
For purposes of pro forma disclosures,  the estimated fair values of the options
are amortized to expense over the option's  vesting periods (in thousands except
for per share information):

                                              2000       1999        1998
                                           ---------   --------    --------

Net income (loss):
  As reported.........................     $(526,972)  $(31,494)   $ 80,452
  Pro forma...........................     $(529,098)  $(33,543)   $ 78,212

Diluted earnings (loss) per share:
  As reported.........................      $(10.12)    $(0.57)     $ 1.32
  Pro forma...........................      $(10.16)    $(0.61)     $ 1.28

During the initial phase-in  period,  as required by SFAS No. 123, the pro forma
amounts were  determined  based on stock  options  granted after the 1995 fiscal
year only.  Therefore,  the pro forma amounts for  compensation  cost may not be
indicative  of the  effects on pro forma net income and pro forma net income per
share for future years.

Note R - Earnings Per Share

The following  table sets forth the  computation  of basic and diluted  earnings
(loss) per share (in thousands):

                                              2000       1999       1998
                                           ---------   --------   ---------
Numerator:
  Net income (loss)...................     $(526,972)  $(31,494)  $ 80,452
  Effect of dilutive securities:
   Convertible note...................             -          -        116
                                           ---------   --------   --------
    Numerator for diluted earnings
     per share........................     $(526,972)  $(31,494)  $ 80,568
                                           =========   ========   ========

Denominator:
  Denominator for basic earnings per
   share..............................        52,080     54,978     60,428
  Effect of dilutive securities:
   Stock options......................             -          -        524
   Convertible note...................             -          -        183
   Contingent Performance Unit awards.             -          -          4
                                            --------   --------   --------
  Denominator for diluted earnings
     per share........................        52,080     54,978     61,139
                                            ========   ========   ========

For  the  2000  and  1999  fiscal  years,  113,660  shares  and  34,877  shares,
respectively,  that could  potentially  dilute  basic  earnings per share in the
future were not included in the diluted earnings per share  computation  because
they would have been antidilutive.


<PAGE>



Note S - Quarterly Results of Operations (unaudited)

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

Fiscal 2000 Quarters (a)
                                        December   March      June   September
                                        --------  --------  -------- ---------
Net sales.............................. $371,048  $402,147  $419,821 $ 427,231
Cost of sales..........................  327,337   348,331   362,429   396,770
Income tax (expense) benefit...........   (4,519)   (1,351)   (3,300)   30,846
Net income (loss)...................... $ (5,320) $    554  $  1,494 $(523,700)

Basic earnings (loss) per share........ $  (0.10) $   0.01  $   0.03 $  (10.05)
Diluted earnings (loss) per share...... $  (0.10) $   0.01  $   0.03 $  (10.05)

Common stock prices
  High.................................   5.1875    5.2500    4.5000    2.6250
  Low..................................   3.5000    2.5625    1.6875    1.2500

Fiscal 1999 Quarters (b)
                                        December   March      June   September
                                        --------  --------  -------- ---------
Net sales.............................. $407,182  $403,905  $434,634  $405,968
Cost of sales..........................  342,362   360,731   374,246   348,972
Income tax (expense) benefit...........   (6,190)   29,777    (3,833)   (3,899)
Net income (loss)...................... $  7,969  $(47,883) $  4,746  $  3,674

Basic earnings (loss) per share........ $   0.14  $  (0.86) $   0.09  $   0.07
Diluted earnings (loss) per share...... $   0.14  $  (0.86) $   0.09  $   0.07

Common stock prices
  High.................................  11.1250   11.0000   10.2500    9.3750
  Low..................................   7.5000    5.1250    6.5625    4.3750


(a) September  quarter 2000 includes an accounting  change resulting in a $463.2
million write-off of goodwill,  and a $43.6 million charge for restructuring and
impairments (net of income taxes).

(b) March  quarter  1999  includes a $39.5  million  charge  for  restructuring,
adjusted  (reduced) by $1.9 million in the September  1999 quarter,  each net of
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 30, 2000 and October
2, 1999, and the related  consolidated  statements of operations,  shareholders'
equity and cash flows for each of the three years in the period ended  September
30, 2000.  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 auditing standards generally accepted
in the United States. 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 30, 2000 and
October 2, 1999, and the consolidated results of their operations and their cash
flows,  for each of the three years in the period ended  September  30, 2000, in
conformity with accounting principles generally accepted in the United States.

As discussed in Note A to the  consolidated  financial  statements,  in 2000 the
Company changed its method for measuring impairment of goodwill.

/s/ ERNST & YOUNG

Greensboro, North Carolina
October 26, 2000,
  except for Note F, as to which the date is December 5, 2000


<PAGE>


STATISTICAL REVIEW

Burlington Industries, Inc. and Subsidiary Companies

(Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                     2000       1999      1998(a)     1997       1996
                                  ---------- ---------- ---------- ---------- ----------
<S>                               <C>        <C>        <C>        <C>        <C>
   SUMMARY OF OPERATIONS
   Net sales..................... $1,620,247 $1,651,689 $2,010,414 $2,090,683 $2,182,347
   Operating income (loss)
    before interest and taxes(b).   (504,690)    (3,154)   182,769    143,643    147,390
   Interest expense..............     66,264     58,420     59,544     60,062     65,936
   Income tax expense (benefit)..    (21,676)   (15,855)    49,560     37,673     33,747
   Income (loss) before
    extraordinary item (b).......   (526,972)   (31,494)    80,452     58,698     41,603

   Per share of common stock:
    Income (loss) before
     extraordinary item (basic)..     (10.12)     (0.57)      1.33       0.96       0.66
    Income (loss) before
     extraordinary item
     (diluted)...................     (10.12)     (0.57)      1.32       0.95       0.65
    Dividends....................          -          -          -          -          -


   FINANCIAL POSITION AT YEAR END
   Current assets................ $  631,785    633,859 $  659,313 $  697,627 $  719,370
   Fixed assets - net............    611,867    641,232    642,756    584,647    569,540
   Total assets..................  1,351,600  1,876,275  1,912,887  1,873,692  1,885,942
   Current liabilities...........    242,898    201,595    227,680    263,595    265,352
   Long-term liabilities.........    924,268    938,614    860,538    865,008    894,496
   Shareholders' equity..........     94,775    629,249    700,221    630,726    615,920

   OTHER DATA
   Capital expenditures.......... $   73,773 $  141,539 $  140,333 $   96,500 $   79,174
   Number of employees at
    year end.....................     17,900     18,500     18,900     20,100     21,000



(a)      Fiscal year 1998 represents a 53-week period.
(b)       Includes  restructuring  provisions  of $43.6  million in 2000,  $37.6
          million in 1999 and $7.3  million in 1997,  each net of income  taxes,
          and $463.2  million  write-off  of goodwill in 2000 (see Note B of the
          notes to consolidated financial statements).

</TABLE>