GREENSBORO, N.C. – Burlington Industries Inc. filed for Chapter 11 bankruptcy protection Thursday, struggling with heavy debt, competition from cheap imported textiles and a slowdown in consumer spending.
The huge textile maker said it will reorganize to concentrate on its Lees Carpets business, expand global business through a Hong Kong subsidiary and accelerate manufacturing improvements in its North American operations.
The filing, which included 24 Burlington subsidiaries, was made in the U.S. Bankruptcy Court in Wilmington, Del. It came one day after apparel maker VF Corp., also based in Greensboro, said it was slashing 13,000 jobs.
"This decision was not made lightly and we believe it is in the best interest of the long-term viability of the company," said George W. Henderson III, chairman and chief executive.
Henderson said the bankruptcy protection of the court would allow the company to speed up restructuring of its debt and operations and allow daily operations to continue.
Henderson said the filing was a result of excess debt, which prevented Burlington "from making the changes we deem necessary to our future success."
Also Thursday, Burlington reported a net loss of $76.7 million, or $1.46 per share, for the fourth quarter, compared to a net loss of $523.7 million, or $10.05 per share, in the same quarter last year.
Net sales for the fourth quarter were $327 million, compared with $427 million in the same period a year ago. About $57 million of the sales reduction relates to businesses sold or closed during the fiscal year, the company said.
For the year, there was a net loss of $91.1 million, or $1.73 per share, compared with a net loss of $527.0 million, or $10.12 per share, in 2000.
Burlington employs about 15,000 people at plants in the United States, Mexico and India.
It has been in a restructuring program the past 2 years that resulted in plant closings and layoffs, but the changes weren't enough, Henderson said.
"We made tough decisions and streamlined many of our businesses," Henderson said. "While we have met the goals set in these plans, outside factors, including a continuing flood of low-cost and often subsidized foreign imports and a slowdown in consumer spending have hit the textile industry hard. ... four out of five garments sold in this country today are imported."
He also blamed the U.S. government, saying it used the textile industry as a bargaining chip in international relations.
The company's losses have mounted in the past four years. An $80 million profit in 1998 reversed in 1999 to a $31 million loss, leading to a decision to cut 15 percent of its work force and close seven U.S. plants.