<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: August 1, 1996
Foamex L.P.
Foamex Capital Corporation
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(Exact Name of Registrant as specified in its Charter)
Delaware 1-11432 05-0475617
Delaware 1-11436 22-3182164
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(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of corporation) Identification No.)
1000 Columbia Avenue
Linwood, PA 19061
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code:
(610) 859-3000
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n/a
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(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On June 11, 1996, PFI Subsidiary, Inc. ("Newco"), PFI Acquisition Corp.
("PFI Acquisition"), Jody B. Vitale, Perfect Fit Industries, Inc., a
wholly-owned subsidiary of General Felt Industries, Inc. ("Perfect Fit"),
General Felt Industries, Inc., a wholly-owned subsidiary of Foamex L.P.
("General Felt"), and Foamex L.P. entered into an Agreement and Plan of Merger,
as amended, (the "Agreement") pursuant to which PFI Acquisition would acquire
all of the outstanding shares of capital stock of Perfect Fit through the merger
of Newco with and into Perfect Fit.
On August 1, 1996 (the "Closing Date"), Newco was merged into Perfect Fit
and PFI Acquisition acquired all of the outstanding stock of Perfect Fit. Also,
on or prior to the Closing Date, (1) Perfect Fit distributed certain assets to
General Felt and Foamex L.P. and General Felt assumed certain liabilities of
Perfect Fit and (2) Foamex L.P. contributed Perfect Fit's intercompany loan and
accrued interest thereon of approximately $75.4 million to General Felt which in
turn contributed the same to Perfect Fit.
In accordance with the Agreement, on the Closing Date, PFI Acquisition paid
General Felt $45.4 million ("Purchase Price") in cash consideration for the
merger. In addition, Perfect Fit made approximately $2.0 million of payments
against its intercompany loan with Foamex L.P. The Agreement provides that the
Purchase Price is subject to adjustment for changes in the net assets, as
defined, of Perfect Fit. Such adjustment to the Purchase Price will be
determined after completion of a closing balance sheet of Perfect Fit as of the
Closing Date, and pursuant to the Agreement, any unresolved dispute concerning
an adjustment to the Purchase Price will be subject to binding arbitration.
In the Agreement, Foamex L.P. and certain of its subsidiaries ("Foamex")
made various representations and warranties as to Perfect Fit, and Foamex has
agreed to indemnify PFI Acquisition for any breaches thereof. Such
indemnification provisions cover, among other matters, breaches of agreements
and covenants of Foamex contained in the Agreement and certain other agreements
and certain liabilities arising from environmental and other matters. Pursuant
to the Agreement, Foamex International Inc. and its affiliates agreed not to
compete with Perfect Fit for a period of three years from the Closing Date.
On the Closing Date, Foamex entered into an agreement relating to the sale
of products to Perfect Fit.
On the Closing Date, Foamex repaid $12.0 million of outstanding bank term
loan borrowings. Also, Foamex intends to use the remaining net proceeds to
offer to redeem the Foamex L.P. 9 1/2% Senior Secured Notes due 2000 (the
"Senior Secured Notes").
Item 5. Other Events
In addition to the pro forma financial statements required by Item 2, Foamex
L.P. has included historical condensed consolidated statements of operations
restated for discontinued operations for the periods outlined under Item 7.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma and Restated Historical Financial Information
The following pro forma and restated historical condensed consolidated
financial statements filed with this report:
2
<PAGE>
Pro forma condensed consolidated balance sheet as of March 31,
1996 (1)
Historical condensed consolidated statements of operations
restated for discontinued operations:
o Year ended January 1, 1995
o Thirteen weeks ended October 1, 1995
o Year ended December 31, 1995 (1)
o Thirteen weeks ended March 31, 1996 (1)
(1) Represents the financial information required by Item
2; the remaining condensed consolidated statements of
operations is presented in connection with Item 5.
The pro forma condensed consolidated balance sheet of Foamex as of
March 31, 1996 reflects the financial position of Foamex after
giving effect to the disposition of the net assets of Perfect Fit as
discussed in Item 2 and assumes the disposition took place on March 31,
1996. Such pro forma financial statements also include the effects of
the repayment of $12.0 million of bank term loan borrowings of Foamex
and the redemption of approximately $31.1 million of Senior Secured
Notes at a redemption price of 101% of face value. The historical
condensed consolidated statements of operations for the year ended
January 1, 1995, the thirteen weeks ended October 1, 1995, the year
ended December 31, 1995, and the thirteen weeks ended March 31, 1996
have been restated to reflect discontinued operations associated
with the sale of Perfect Fit. The unaudited pro forma financial
statements are presented for informational purposes only and do not
purport to be indicative of Foamex's results of operations for the
periods presented that would have actually resulted had the
transactions occurred at the beginning of such periods, or Foamex's
results of operations for any future period.
3
<PAGE>
FOAMEX L.P.. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (unaudited)
as of March 31, 1996
<TABLE>
<CAPTION>
Perfect Pro Forma
Foamex (1) Fit (2) Adjustments Total
ASSETS ----------- ---------- ------------ ---------
CURRENT ASSETS: (thousands)
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 6,160 $ -- $ -- $ 6,160
Accounts receivable, net 142,258 17,451 -- 124,807
Inventories 106,532 18,230 -- 88,302
Other current assets 24,122 778 596 (3) 23,940
--------- --------- --------- ---------
Total current assets 279,072 36,459 596 243,209
PROPERTY, PLANT AND EQUIPMENT, NET 189,230 22,479 500 (4) 167,251
COST IN EXCESS OF ASSETS ACQUIRED, NET 130,667 40,080 -- 90,587
DEBT ISSUANCE COSTS, NET 18,071 -- (1,491)(5) 16,580
OTHER ASSETS 15,988 1,421 2,924 (6) 17,491
--------- --------- --------- ---------
TOTAL ASSETS $ 633,028 $ 100,439 $ 2,529 $ 535,118
========= ========= ========= =========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Short-term borrowings $ 4,129 $ -- $ -- $ 4,129
Current portion of long-term debt 8,496 -- (3,000)(7) 5,496
Accounts payable 73,182 8,800 -- 64,382
Accrued interest 20,372 -- -- 20,372
Other accrued liabilities 69,173 3,320 (288)(8) 65,565
--------- --------- --------- ---------
Total current liabilities 175,352 12,120 (3,288) 159,944
--------- --------- --------- ---------
LONG-TERM DEBT 431,899 -- (40,104)(9) 391,795
--------- --------- --------- ---------
OTHER LIABILITIES 30,514 -- -- 30,514
--------- --------- --------- ---------
MINORITY INTEREST -- -- -- --
--------- --------- --------- ---------
COMMITMENTS AND CONTINGENCIES -- -- -- --
--------- --------- --------- ---------
PARTNERS' EQUITY (DEFICIT):
General partner 587 -- (848)(10) (261)
Limited partner 55,434 -- (41,550)(10) 13,884
Other (12,531) -- -- (12,531)
Note receivable from partner (48,227) -- -- (48,227)
Subsidiary equity -- 88,319 88,319 (11) --
--------- --------- --------- ---------
Total Partners' equity (deficit) (4,737) 88,319 45,921 (47,135)
--------- --------- --------- ---------
TOTAL LIABILITIES AND PARTNERS' EQUITY
(DEFICIT) $ 633,028 $ 100,439 $ 2,529 $ 535,118
========= ========= ========= =========
</TABLE>
See accompanying notes to Pro Forma Condensed Consolidated Balance Sheet
4
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
FOOTNOTES TO PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
(dollars in thousands)
(1) Represents the historical consolidated balance sheet of Foamex
as of March 31, 1996.
(2) To eliminate the assets and liabilities included in the
balance sheet of Perfect Fit as of March 31, 1996 after the
contribution of the intercompany loan and accrued interest
thereon.
(3) Other current assets excluded from the sale of Perfect Fit and
retained by Foamex.
(4) Property, plant and equipment excluded from the sale of
Perfect Fit and retained by Foamex.
(5) The write-off of debt issuance costs associated with the
retirement of $12.0 million of Foamex bank term loan
borrowings and $31.1 million of Senior Secured Notes with the
net proceeds from the sale of Perfect Fit.
(6) Notes receivable excluded from the sale of Perfect Fit and
retained by Foamex. $ 979
Cash received by Foamex from Perfect Fit for the period
from April 1, 1996 through June 30, 1996 1,945
------
Total $2,924
======
(7) Represents the current portion of Foamex bank term loan
borrowings retired with the net proceeds from the sale of
Perfect Fit.
(8) Accrued liabilities excluded from the sale of Perfect Fit and
retained by Foamex $ 747
Estimated income tax benefit for the estimated operating
losses of Perfect Fit from April 1, 1996 until the date of
disposal (see Item 10) assuming a 41% effective income tax
rate (1,035)
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Total $ (288)
=======
(9) Long-term portion of Foamex bank term loan borrowings
retired with the net proceeds from the sale of Perfect Fit $ 9,000
Long-term portion of Senior Secured Notes expected to be
retired with the net proceeds from the sale of Perfect Fit 31,104
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Total $40,104
=======
(10) Estimated operating losses of Perfect Fit from April 1, 1996
until the date of disposal $ 2,524
Write-off of debt issuance costs (see Item 5) associated with
the retirement of the Foamex bank term loan borrowings and
Senior Secured Notes 1,491
Premium paid on early retirement of the Senior Secured Notes 321
Loss on sale of Perfect Fit 39,097
Estimated income tax benefit (see Note 8) (1,035)
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Total $42,398
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5
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FOAMEX L.P. AND SUBSIDIARIES
FOOTNOTES TO PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
(dollars in thousands)
(10) Continued:
Allocation of 2% of net loss to General Partners $ 848
Allocation of 98% of net loss to Limited Partner 41,550
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Total $42,398
=======
(11) Represents the write-off of Perfect Fit's equity.
6
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
HISTORICAL CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Restated)
for the Year Ended January 1, 1995 (unaudited)
(thousands)
<TABLE>
<CAPTION>
Perfect
Foamex (1) Fit (2) Adjustments Total
----------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Net sales $921,498 $ 95,381 $ 2,412 (3) $828,529
Cost of goods sold 761,558 77,181 2,412 (3) 686,789
-------- -------- -------- --------
Gross profit 159,940 18,200 - 141,740
Selling, general and administrative
expenses 70,426 14,030 - 56,396
-------- -------- --------- --------
Income from operations 89,514 4,170 - 85,344
Interest and debt issuance expense 45,099 4,359 688 (4) 41,428
Other income, net 786 - - 786
--------- ---------- --------- ---------
Income (loss) from continuing operations
before provision for income taxes 45,201 (189) (688) 44,702
Provision for income taxes 5,766 403 - (5) 5,363
--------- -------- ------- --------
Income (loss) from continuing operations 39,435 (592) (688) 39,339
Operating income from discontinued
operations, net of income taxes - 592 688 96
----------- -------- --------- ----------
Net income $ 39,435 $ - $ - $ 39,435
======== ========= ========== ========
</TABLE>
See accompanying notes to Historical Condensed Consolidated
Statements of Operations (Restated)
7
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
HISTORICAL CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Restated)
for the thirteen week period ended October 1, 1995 (unaudited)
(thousands)
<TABLE>
<CAPTION>
Perfect
Foamex (1) Fit (2) Adjustments Total
----------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Net sales $237,061 $ 25,243 $ 910 (3) $212,728
Cost of goods sold 202,813 20,925 910 (3) 182,798
-------- -------- ----- --------
Gross profit 34,248 4,318 - 29,930
Selling, general and administrative
expenses 17,017 3,802 - 13,215
-------- -------- ------ --------
Income from operations 17,231 516 - 16,715
Interest and debt issuance expense 12,256 1,760 659 (4) 11,155
Other income, net 168 - - 168
--------- --------- ------ --------
Income (loss) from continuing operations
before provision for income taxes 5,143 (1,244) (659) 5,728
Provision (benefit) for income taxes 236 - (72) (5) 164
--------- --------- ----- --------
Income (loss) from continuing operations 4,907 (1,244) (587) 5,564
Operating loss from discontinued
operations, net of income taxes - 1,244 587 (657)
---------- -------- ----- --------
Net income $ 4,907 $ - $ - $ 4,907
======== ========= ====== ========
</TABLE>
See accompanying notes to Historical Condensed Consolidated
Statements of Operations (Restated)
8
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
HISTORICAL CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Restated)
for the Year Ended December 31, 1995 (unaudited)
(thousands)
<TABLE>
<CAPTION>
Perfect
Foamex (1) Fit (2) Adjustments Total
----------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net sales $946,243 $ 98,464 $ 4,200 (3) $851,979
Cost of goods sold 831,912 83,518 4,200 (3) 752,594
-------- -------- ------- --------
Gross profit 114,331 14,946 - 99,385
Selling, general and administrative
expenses 77,250 15,303 - 61,947
Restructuring and other charges 41,950 2,701 - 39,249
-------- -------- ------- --------
Loss from operations (4,869) (3,058) - (1,811)
Interest and debt issuance expense 49,249 6,762 2,402 (4) 44,889
Other income, net 673 - - 673
-------- -------- ------- --------
Loss from continuing operations before
provision for income taxes (53,445) (9,820) (2,402) (46,027)
Provision (benefit) for income taxes (1,258) (1,261) - (5) 3
-------- -------- ------- --------
Loss from continuing operations (52,187) (8,559) (2,402) (46,030)
Operating loss from discontinued
operations, net of income taxes - 8,559 2,402 (6,157)
-------- --------- ------- --------
Net loss $(52,187) $ - $ - $(52,187)
======== ========= ======= ========
</TABLE>
See accompanying notes to Historical Condensed Consolidated
Statements of Operations (Restated)
9
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
HISTORICAL CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Restated)
for the thirteen weeks ended March 31, 1996 (unaudited)
(thousands)
<TABLE>
<CAPTION>
Perfect
Foamex (1) Fit (2) Adjustments Total
----------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
Net sales $243,599 $25,162 $ 694 (3) $219,131
Cost of goods sold 203,318 20,912 694 (3) 183,100
-------- -------- ----- ---------
Gross profit 40,281 4,250 - 36,031
Selling, general and administrative
expenses 16,627 3,026 - 13,601
-------- -------- ------ ---------
Income from operations 23,654 1,224 - 22,430
Interest and debt issuance expense 11,607 1,848 654 (4) 10,413
Other income, net 200 - - 200
-------- --------- ------ --------
Income (loss) from continuing operations
before provision for income taxes 12,247 (624) (654) 12,217
Provision for income taxes 412 - 307 (5) 719
-------- --------- ----- --------
Income (loss) from continuing operations 11,835 (624) (961) 11,498
Operating income from discontinued
operations, net of income taxes - 624 961 337
---------- ------- ----- ---------
Net income $ 11,835 $ - $ - $ 11,835
======== ======== ====== ========
</TABLE>
See accompanying notes to Historical Condensed Consolidated
Statements of Operations (Restated)
10
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
FOOTNOTES TO HISTORICAL CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Restated)
(1) Represents the historical condensed consolidated statements of operations
of Foamex for the period indicated.
(2) To eliminate the statements of operations of Perfect Fit for the period
indicated.
(3) Represents an adjustment for the elimination of intercompany sales with
Perfect Fit.
(4) Represents the net effect of eliminating Perfect Fit's intercompany
interest expense to Foamex L.P. offset by an allocation of corporate
expense based on the debt that Foamex intends to retire from the net
proceeds from the sale of Perfect Fit.
(5) Represents an allocation of income taxes in accordance with SFAS 109
"Accounting for Income Taxes."
Exhibits
2 Agreement and Plan of Merger, as amended, dated as of June 11, 1996,
by and among PFI Subsidiary, Inc., PFI Acquisition Corp., Jody B.
Vitale, Perfect Fit Industries, Inc., General Felt Industries, Inc.,
and Foamex L.P. Incorporated herein by reference from the Foamex
L.P. Form 8-K reporting an event which occurred on June 11, 1996.*
- --------
* Incorporated herein by reference to Form 8-K Current Report of Foamex L.P.
dated as of June 11, 1996, and filed with the Securities and Exchange
Commission on June 17, 1996.
11
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
FOAMEX L.P.
Date: August 12, 1996 By: /s/ Kenneth R. Fuette
------------------------
Name: Kenneth R. Fuette
Title: Chief Financial Officer and
Chief Accounting Officer
FOAMEX CAPITAL CORPORATION
Date: August 12, 1996 By: /s/ Kenneth R. Fuette
------------------------
Name: Kenneth R. Fuette
Title: Chief Financial Officer and
Chief Accounting Officer
12
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EXHIBIT INDEX
Exhibit Page
2 Agreement and Plan of Merger, as amended, dated as of June 11, 1996,
by and among PFI Subsidiary, Inc., PFI Acquisition Corp., Jody B.
Vitale, Perfect Fit Industries, Inc., General Felt Industries, Inc.,
and Foamex L.P. Incorporated herein by reference from the Foamex L.P.
Form 8-K reporting an event which occurred on June 11, 1996.*
- ----------
* Incorporated herein by reference to Form 8-K Current Report of Foamex L.P.
dated as of June 11, 1996, and filed with the Securities and Exchange
Commission on June 17, 1996.
