Burlington Ind Sr Unsecd Debs Rated 'BBB-' by S&P.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 8/4/97 -- Standard & Poor's today has assigned its triple-'B'-minus rating to Burlington Industries Inc.'s $150 million shelf drawdown Drawdown The peak to trough decline during a specific record period of an investment or fund. It is usually quoted as the percentage between the peak to the trough. Notes: of senior unsecured debentures due 2027. The outlook is stable. Ratings are supported by the firm's leading and diversified textile manufacturing positions in the apparel and interior-furnishing markets. These factors are tempered by the company's still heavy debt burden, and very competitive and cyclical industry Cyclical Industry A term describing an industry that is sensitive to the business cycle and price changes. Many cyclical industries produce durable goods such as raw materials and heavy equipment. conditions. Financial measures have begun to improve in recent periods after bottoming in the March 1996 quarter, as the firm has taken steps to improve its operating performance by concentrating on its core businesses. Over the last year, Burlington has streamlined operations by closing its unprofitable knitted fabrics division, exiting the residential carpet product line, selling noncore businesses, and streamlining its yarn manufacturing, as well as focusing on other cost-reduction strategies. Apparel operating results have been impacted by the weakness in denim due to an industry oversupply o·ver·sup·ply n. pl. o·ver·sup·plies A supply in excess of what is appropriate or required. tr.v. o·ver·sup·plied, o·ver·sup·ply·ing, o·ver·sup·plies situation, which has dampened material prices. However, Standard & Poor's expects that conditions should improve in denim by the first half of calendar 1998, as excess inventory works through the system. Overall results are benefiting from more stable raw material prices, some new product introductions, and cost-reduction programs. Burlington recorded a $17 million pretax charge in June 1997 for the yarn manufacturing restructuring and the firm's exit from the residential carpet line. Pretax interest coverage for the nine months ended June 1997 of 2.7 times (x), earnings before interest, taxes, depreciation, and amortization Earnings before interest, taxes, depreciation, and amortization (EBITDA) A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) to interest coverage of 4.1x, and funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. to total debt of 20% are appropriate for the rating. The heavy capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. of recent years should continue as Burlington adds capacity and improves productivity. Internal cash generation is expected to fund these outlays and allow the company to continue its long-term focus on reducing debt levels. Further, Burlington has significant unused bank borrowing capacity. OUTLOOK: Stable. Ratings stability reflects the expectation that Burlington can maintain its strong market positions. Earnings and related cash flow also should continue to improve, allowing the company to reduce debt and strengthen its overall financial profile over the intermediate term. -- CreditWire CONTACT: Jayne M Ross, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of (1) 212-208-8942 |
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