SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 29, 1996
Commission file numbers 1-11432; 1-11436
FOAMEX L.P.
FOAMEX CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 05-0475617
Delaware 22-3182164
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1000 Columbia Avenue
Linwood, PA 19061
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (610) 859-3000
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) have been subject to such
filing requirements for the past 90 days.
YES X NO
Foamex Capital Corporation meets the conditions set forth in General Instruction
H (1) (a) and (b) of Form 10-Q and is therefore filing this form with the
reduced disclosure format.
The number of shares of Foamex Capital Corporation's common stock outstanding as
of November 1, 1996 was 1,000.
Page 1 of 26
Exhibit List on Page 19 of 26
<PAGE>
FOAMEX L.P.
FOAMEX CAPITAL CORPORATION
INDEX
Page
Part I. Financial Information:
Item 1. Financial Statements
Foamex L.P.
Condensed Consolidated Statements of Operations -
Thirteen Week and Thirty-Nine Week Periods Ended
September 29, 1996 and October 1, 1995 3
Condensed Consolidated Balance Sheets as of September
29, 1996 and December 31, 1995 4
Condensed Consolidated Statements of Cash Flows -
Thirty-Nine Week Periods Ended September 29, 1996 and
October 1, 1995 5
Notes to Condensed Consolidated Financial Statements 6
Foamex Capital Corporation
Balance Sheets as of September 29, 1996 and December
31, 1995 12
Notes to Balance Sheets 13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
Part II. Other Information 19
Exhibit List 19
Signatures 26
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FOAMEX L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
<TABLE>
<CAPTION>
13 Week Periods Ended 39 Week Periods Ended
September 29, October 1, September 29, October 1,
1996 1995 1996 1995
(thousands)
<S> <C> <C> <C> <C>
NET SALES $ 236,766 $ 217,036 $ 696,344 $ 651,928
COST OF GOODS SOLD 196,806 186,227 582,186 555,257
--------- --------- --------- ---------
GROSS PROFIT 39,960 30,809 114,158 96,671
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 15,057 13,897 42,184 41,095
--------- --------- --------- ---------
INCOME FROM OPERATIONS 24,903 16,912 71,974 55,576
INTEREST AND DEBT ISSUANCE EXPENSE 11,131 11,037 31,855 33,604
OTHER INCOME, NET 539 144 1,076 482
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS
BEFORE PROVISION FOR INCOME TAXES 14,311 6,019 41,195 22,454
PROVISION FOR INCOME TAXES 2,866 805 6,584 2,926
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS 11,445 5,214 34,611 19,528
--------- --------- --------- ---------
DISCONTINUED OPERATIONS:
OPERATING LOSS FROM DISCONTINUED
OPERATIONS, NET OF INCOME TAXES -- (142) (230) (640)
LOSS ON DISPOSAL OF DISCONTINUED
OPERATIONS, NET OF INCOME TAXES (1,989) -- (41,286) --
--------- --------- --------- ---------
LOSS FROM DISCONTINUED OPERATIONS (1,989) (142) (41,516) (640)
--------- --------- --------- ---------
INCOME (LOSS) BEFORE EXTRAORDINARY LOSS 9,456 5,072 (6,905) 18,888
EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT
OF DEBT (672) -- (672) --
--------- --------- --------- ---------
NET INCOME (LOSS) $ 8,784 $ 5,072 $ (7,577) $ 18,888
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
3
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
<TABLE>
<CAPTION>
September 29, December 31,
ASSETS 1996 1995
(thousands)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 47,488 $ 638
Accounts receivable, net 139,220 113,583
Inventories 90,089 89,952
Other current assets 26,501 22,101
--------- ---------
Total current assets 303,298 226,274
PROPERTY, PLANT AND EQUIPMENT, NET 173,237 169,111
COST IN EXCESS OF ASSETS ACQUIRED, NET 89,287 91,165
DEBT ISSUANCE COSTS, NET 16,139 18,703
NET ASSETS OF DISCONTINUED OPERATIONS -- 85,237
OTHER ASSETS 10,960 17,325
--------- ---------
TOTAL ASSETS $ 592,921 $ 607,815
========= =========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Short-term borrowings $ 5,169 $ 2,199
Current portion of long-term debt 15,467 8,511
Accounts payable 76,469 67,658
Accounts payable to related parties 9,575 11,731
Accrued interest 20,249 9,591
Accrued restructuring charges 9,381 18,732
Other accrued liabilities 47,801 41,434
--------- ---------
Total current liabilities 184,111 159,856
--------- ---------
LONG-TERM DEBT 409,006 433,956
--------- ---------
OTHER LIABILITIES 23,847 26,563
--------- ---------
COMMITMENTS AND CONTINGENCIES -- --
--------- ---------
PARTNERS' EQUITY (DEFICIT):
General partners 275 404
Limited partner 40,114 46,080
Note receivable from partner (51,854) (44,444)
Other (12,578) (14,600)
--------- ---------
Total partners' equity (deficit) (24,043) (12,560)
--------- ---------
TOTAL LIABILITIES AND PARTNERS' EQUITY (DEFICIT) $ 592,921 $ 607,815
========= =========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
4
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
<TABLE>
<CAPTION>
39 Week Periods Ended
September 29, October 1,
1996 1995
(thousands)
OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $ (7,577) $ 18,888
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 15,945 16,755
Amortization of debt issuance costs and debt discount 2,124 2,019
Extraordinary loss on early extinguishment of debt 672 --
Loss on disposition of discontinued operations 40,551 --
Changes in operating assets and liabilities (18,078) 2,812
Changes in discontinued operations 406 (9,576)
-------- --------
Net cash provided by operating activities 34,043 30,898
-------- --------
INVESTING ACTIVITIES:
Capital expenditures (14,536) (14,063)
Acquisition, net of cash acquired -- (7,272)
Proceeds from sale of discontinued operations 45,425 --
Other investing activities 1,745 (1,734)
Discontinued operations investing activities (919) (3,502)
-------- --------
Net cash provided by (used for) investing activities 31,715 (23,103)
-------- --------
FINANCING ACTIVITIES:
Net proceeds from short-term borrowings 2,970 312
Net repayments of revolving loans -- (3,000)
Repayment of long-term debt (18,392) (6,545)
Distributions to partners (3,478) (2,340)
Other financing activities (8) (584)
-------- --------
Net cash used for financing activities (18,908) (12,157)
-------- --------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 46,850 (4,362)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 638 19,974
-------- --------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 47,488 $ 15,612
======== ========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
5
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Foamex L.P.'s condensed consolidated balance sheet as of December 31, 1995
has been condensed from the audited consolidated balance sheet at that date and
restated for discontinued operations (see Note 2 below). The condensed
consolidated balance sheet as of September 29, 1996, the condensed consolidated
statements of operations for the thirteen and thirty-nine week periods ended
September 29, 1996 and October 1, 1995, and the condensed consolidated cash
flows for the thirty-nine week periods ended September 29, 1996 and October 1,
1995 have been prepared by Foamex L.P. and subsidiaries and have not been
audited by Foamex L.P.'s independent accountants. Also, the condensed
consolidated statements of operations for the thirteen and thirty-nine week
periods ended October 1, 1995 and the condensed consolidated statement of cash
flows for the thirty-nine week period ended October 1, 1995 have been restated
for discontinued operations (see Note 2 below). In the opinion of management,
all adjustments, consisting only of normal recurring adjustments, considered
necessary for a fair presentation of the consolidated financial position,
results of operations and cash flows have been included. In addition, the
condensed consolidated financial statements have been restated to reflect the
contribution of Foamex Latin America, Inc. ("Latin America") by Foamex
International Inc. ("Foamex International") as further discussed in Note 4.
On August 1, 1996, Foamex L.P. consummated the sale of the home comfort
products business of Perfect Fit Industries, Inc. ("Perfect Fit") (which
comprised the home comfort products segment of Foamex L.P. and substantially all
of the assets of Perfect Fit). Accordingly, the accompanying condensed
consolidated financial statements reflects the home comfort products business
segment as discontinued operations. See Note 2 below for further discussion.
Certain information and note disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted in accordance with the rules and regulations of
the Securities and Exchange Commission. These condensed consolidated financial
statements should be read in conjunction with Foamex L.P.'s 1995 consolidated
financial statements and notes thereto as set forth in Foamex L.P.'s Annual
Report on Form 10-K for the fiscal year ended December 31, 1995.
2. DISCONTINUED OPERATIONS
On August 1, 1996, Foamex L.P. completed the sale of the outstanding common
stock of Perfect Fit, a wholly-owned subsidiary, for an adjusted sale price of
approximately $45.4 million, subject to post-closing adjustments. In addition,
Perfect Fit made approximately $2.0 million of payments against its intercompany
loan with Foamex L.P. The sale included substantially all of the net assets of
the home comfort products segment with a net book value of approximately $81.9
million. Actual and estimated transaction expenses related to the sale totaled
approximately $2.0 million. Foamex L.P. has recorded a loss on disposal of
discontinued operations of approximately $41.3 million including an operating
loss of approximately $0.7 million during the phase-out period (net of income
tax benefits of $0.4 million) relating to the sale of Perfect Fit during the
thirty-nine week period ended September 29, 1996. A valuation allowance has been
provided for the capital loss relating to the sale of Perfect Fit since Foamex
L.P. expects that its future capital gain taxable income will more likely not be
sufficient to fully recognize the deferred tax asset relating to the capital
loss carryforward.
6
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
2. DISCONTINUED OPERATIONS (continued)
Summary operating results of Foamex L.P.'s discontinued operations were as
follows:
<TABLE>
<CAPTION>
13 Week Periods Ended 39 Week Periods Ended
September 29, October 1, September 29, October 1,
1996 1995 1996 1995
(thousands)
<S> <C> <C>
Sales $ -- $25,243 $ 50,097 $73,093
Gross profit -- 4,318 8,065 12,444
Income from operations -- 516 1,123 1,713
Interest and debt issuance expense -- 1,222 2,384 3,614
Loss before provision for income taxes -- (706) (1,609) (1,901)
Benefit for income taxes -- 564 1,379 1,261
Loss from discontinued operations,
net of income taxes -- (142) (230) (640)
</TABLE>
Foamex L.P.'s discontinued operations include the operations of Perfect Fit
through June 1996.
Net assets of Foamex L.P.'s discontinued operations (excluding intercompany
net assets) at December 31, 1995 are as follows:
December 31,
1995
(thousands)
Current assets $31,177
Property, plant and equipment, net 22,618
Cost in excess of assets acquired, net 40,333
Other assets 306
-------
Total assets 94,434
-------
Current liabilities 9,197
-------
Total liabilities 9,197
-------
Net assets $85,237
=======
7
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
3. INVENTORIES
The components of inventories consist of:
September 29, December 31,
1996 1995
(thousands)
Raw materials and supplies $49,774 $49,963
Work-in-process 13,727 14,451
Finished goods 26,588 25,538
------- -------
Total $90,089 $89,952
======= =======
4. RELATED PARTY TRANSACTIONS
In April 1996, Foamex International contributed the foam products operations
of Latin America to Foamex L.P. The contribution was accounted for in a manner
similar to a pooling of interest since the entities are under common control.
Accordingly, all periods presented have been restated to reflect the results of
operations and financial position of Latin America. Net sales and net income
(loss) of the separate companies for the periods preceding the contribution
were:
<TABLE>
<CAPTION>
Foamex L.P. Latin America Eliminations Combined
13 Week Period Ended October 1, 1995: (thousands)
<S> <C> <C> <C> <C>
Net sales $213,445 $4,233 $(642) $217,036
Net income 4,907 165 -- 5,072
39 Week Period Ended October 1, 1995:
Net sales 645,609 7,272 (953) 651,928
Net income (loss) 19,099 (211) -- 18,888
</TABLE>
Foamex L.P. has an $87.9 million principal amount note due 2006 from its 98%
limited partner, Foamex-JPS Automotive L.P. ("FJPS"), for $35.3 million (the
"FJPS Note"). The original issue discount of $52.6 million is being amortized
using the weighted average to maturity method over the life of the issue. No
cash interest is payable on the FJPS Note prior to July 2000; rather the FJPS
Note accretes on a daily basis and compounds semiannually at the rate of 15.50%
per annum through June 1996; 15.75% per annum thereafter through June 1997; and
16.00% per annum thereafter through June 2000. Interest will be due semiannually
in cash at 16.00% per annum from July 2000 through the maturity date. The FJPS
Note and related transactions have been classified in partners' equity (deficit)
since the companies are related. Also, the accretion of $5.4 million and $4.7
million for the thirty-nine week periods ended September 29, 1996 and October 1,
1995 have been reflected as a direct increase in the FJPS Note and the partners'
capital accounts, thereby excluded from the condensed consolidated statements of
operations.
8
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
4. RELATED PARTY TRANSACTIONS (continued)
Foamex L.P. has a supply agreement (the "Supply Agreement") with Foamex
International. Pursuant to the terms of the Supply Agreement, at the option of
Foamex L.P., Foamex International will purchase certain raw materials, which are
necessary for the manufacture of Foamex L.P.'s products, and resell such
materials to Foamex L.P. at a price equal to net cost plus reasonable out of
pocket expenses. Management believes that the terms of the Supply Agreement are
no less favorable than those which Foamex L.P. could have obtained from an
unaffiliated third party. During the thirteen week periods ended September 29,
1996 and October 1, 1995, Foamex L.P. purchased approximately $30.2 million and
$20.2 million, respectively, of raw materials under the Supply Agreement. During
the thirty-nine week periods ended September 29, 1996 and October 1, 1995,
Foamex L.P. purchased approximately $84.3 million and $69.3 million,
respectively, of raw materials under the Supply Agreement. As of September 29,
1996 and December 31, 1995, Foamex L.P. had accounts payable to Foamex
International of approximately $9.6 million and $11.7 million, respectively,
associated with the Supply Agreement.
In December 1995, Foamex L.P. entered into a $2.0 million promissory note
with Foamex International. The note bears interest at a rate per annum equal to
six months LIBOR plus 4.0% and is payable semiannually in June and December. The
note matures in December 1997. The note has been classified in the other
component of partners' equity (deficit).
On July 7, 1996, Trace International Holdings, Inc. ("Trace Holdings") issued
to Foamex L.P. a promissory note for $4.4 million in principal amount plus
accrued interest of $0.4 million, which is an extension of a promissory note of
Trace Holdings that was due in July 1996. The promissory note is due and payable
on demand or, if no demand is made, on July 7, 1997, and bears interest at 9.5%
payable quarterly in arrears commencing October 1, 1996. The promissory note is
included in the other component of partners' equity (deficit).
5. LONG-TERM DEBT
Foamex L.P. used approximately $12.0 million of the net proceeds from the
sale of Perfect Fit to repay bank term loan borrowings on August 1, 1996. In
addition, on September 23, 1996, Foamex L.P. offered to redeem approximately
$29.8 million of its public debt at 101% of the principal amount using available
proceeds from the Perfect Fit sale. As of October 31, 1996, the date the offer
expired, approximately $11.0 million of Foamex L.P. public debt was tendered for
redemption and has been classified as current in the condensed consolidated
balance sheet as of September 29, 1996. On November 8, 1996, Foamex L.P. issued
a supplemental offer to redeem up to an additional $18.8 million of its public
debt at 101% of the principal amount.
6. ENVIRONMENTAL MATTERS
Foamex L.P. has reported to appropriate state authorities that it has found
soil and groundwater contamination in excess of state standards at three
facilities and soil contamination in excess of state standards at four other
facilities. Foamex L.P. has begun remediation and is conducting further
investigations into the extent of the contamination at these facilities and,
accordingly, the extent of the remediation that may ultimately be required. As
of September 29, 1996, Foamex L.P. has environmental accruals of $1.2 million
for the remaining potential remediation costs for these facilities based on
engineering estimates.
Federal regulations require that by 1998 all underground storage tanks
("USTs") be removed or upgraded in most states to meet applicable standards.
Foamex L.P., like many other companies engaged in manufacturing, has USTs that
will require removal. Due to the age of many of Foamex L.P.'s approximately
twelve storage tanks, leakage has occurred from a few of these USTs resulting in
soil and possibly groundwater contamination. Foamex L.P. has accrued costs of
$0.5 million based on engineering estimates that the cost of removing the tanks
and remediation costs associated therewith ranges from approximately $0.4
million to $1.1 million. However, the full extent of contamination and,
accordingly, the actual cost of such remediation cannot be predicted with any
degree of certainty at this time. Foamex L.P. believes that its USTs do not pose
9
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
6. ENVIRONMENTAL MATTERS (continued)
a significant risk of environmental liability because of Foamex L.P.'s
monitoring practices for USTs and conditional approval for permanent in-place
closure for certain USTs. However, there can be no assurance that such USTs will
not result in significant environmental liability in the future. Foamex L.P. has
been designated as a Potentially Responsible Party ("PRP") by the United States
Environmental Protection Agency (the "EPA") with respect to eleven sites, with
an estimated total liability to Foamex L.P. for the eleven sites of less than
approximately $0.2 million. Estimates of total cleanup costs and fractional
allocations of liability are generally provided by the EPA or the committee of
PRP's with respect to the specified site. In each case, the participation of
Foamex L.P. is considered to be immaterial.
As of September 29, 1996, the recorded environmental liability amounts to
$5.1 million, $1.2 million of which is included in current liabilities. In
addition, Foamex L.P. has a receivable of $0.6 million, net of an allowance of
approximately $1.0 million relating to potential disagreements regarding the
scope of indemnification for environmental liabilities from former partners of
Foamex L.P., which is included in current assets. Foamex L.P. believes that
realization of the receivables established for indemnification is probable.
Although it is possible that new information or future developments could
require Foamex L.P. to reassess its potential exposure relating to all pending
environmental matters, management believes that, based upon all currently
available information, the resolution of such environmental matters will not
have a material adverse effect on Foamex L.P.'s operations, financial position,
capital expenditures or competitive position. The possibility exists, however,
that new environmental legislation and/or environmental regulations may be
adopted, or other environmental conditions may be found to exist, that may
require expenditures not currently anticipated and that may be material.
7. LITIGATION
As of November 11, 1996, Foamex L.P. and Trace Holdings were two of multiple
defendants in actions filed on behalf of approximately 4,800 persons in various
United States federal and state courts and one Canadian provincial court by
recipients of breast implants, some of which allege substantial damages, but
most of which allege unspecified damages for personal injuries of various types.
Five of these cases seek to allege claims on behalf of all breast implant
recipients or other allegedly affected parties, but no class has been approved
or certified by the court. In addition, three cases have been filed alleging
claims on behalf of approximately 2,600 residents of Australia, New Zealand,
England, and Ireland. During 1995, Foamex L.P. and Trace Holdings were granted
summary judgments and dismissed as defendants from all cases in the federal
courts of the United States and the state courts of California. Appeals for
these decisions were withdrawn and the decisions are final. In addition, two of
the cases filed on behalf of approximately 900 foreign plaintiffs were dismissed
on the grounds that the cases could not be brought in the United States courts.
This decision is subject to appeal. Foamex L.P. believes that the number of
suits and claimants may increase. Although breast implants do not contain foam,
certain silicone gel implants were produced using a polyurethane foam covering
fabricated by independent distributors or fabricators from bulk foam purchased
from Foamex L.P. or Trace Holdings. Neither Foamex L.P. nor Trace Holdings
recommended, authorized or approved the use of its foam for these purposes.
While it is not feasible to predict or determine the outcome of these actions,
based on management's present assessment of the merits of pending claims, after
consultation with the general counsel of Trace Holdings, management believes
that the disposition of matters that are pending or that may reasonably be
anticipated to be asserted should not have a material adverse effect on either
Foamex L.P.'s or Trace Holdings' consolidated financial position or results of
operations. In addition, Foamex L.P. is also indemnified by Trace Holdings for
any such liabilities relating to foam manufactured prior to the capitalization
10
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
7. LITIGATION (continued)
of Foamex L.P. in October 1990. Although Trace Holdings has paid Foamex L.P.'s
litigation expenses, pursuant to such indemnification, and management believes
Trace Holdings will be in a position to continue to pay such expenses, there can
be no assurance that Trace Holdings will be able to continue to provide such
indemnification. Based on information available at this time with respect to the
potential liability, Foamex L.P. believes that the proceedings should not
ultimately result in any liability that would have a material adverse effect on
the financial position or results of operations of Foamex L.P. If management's
assessment of Foamex L.P.'s liability with respect to these actions is
incorrect, such actions could have a material adverse effect on Foamex L.P.
Foamex L.P. is one of multiple defendants in actions alleging bodily injury
and diminution in property value as a result of alleged violations of Tennessee
hazardous waste regulations at Foamex L.P.'s Morristown, Tennessee facilities.
Recticel Foam Corporation ("RFC") has indemnified Foamex L.P. with respect to
losses arising from certain events, such as this alleged violation, that had
occurred prior to October 2, 1990. Based on information available at this time
with respect to the potential liability, after consultation with the general
counsel of Trace Holdings, Foamex L.P. believes that the proceedings should not
ultimately result in any liability that would have a material adverse effect on
the financial position or results of operations of Foamex L.P. If management's
assessment of Foamex L.P.'s liability with respect to these actions is
incorrect, such actions could have a material adverse effect on Foamex L.P.
Foamex L.P. is party to various other lawsuits, both as defendant and
plaintiff, arising in the normal course of business. It is the opinion of
management that the disposition of these lawsuits will not individually or in
the aggregate, have a material adverse effect on the financial position or
results of operations of Foamex L.P. If management's assessment of Foamex L.P.'s
liability with respect to these actions is incorrect, such actions could have a
material adverse effect on Foamex L.P.'s consolidated financial position.
11
<PAGE>
FOAMEX CAPITAL CORPORATION
(A Wholly-Owned Subsidiary of Foamex L.P.)
BALANCE SHEETS (unaudited)
<TABLE>
<CAPTION>
September 29, December 31,
ASSETS 1996 1995
(thousands)
<S> <C> <C>
CASH $ 1 $ 1
====== ======
LIABILITIES AND STOCKHOLDER'S EQUITY
COMMITMENTS AND CONTINGENCIES $ -- $ --
------ ------
STOCKHOLDER'S EQUITY:
Common stock, par value $.01 per share;
1,000 shares authorized, issued and outstanding -- --
Additional paid-in capital 1 1
------ ------
TOTAL STOCKHOLDER'S EQUITY $ 1 $ 1
====== ======
</TABLE>
The accompanying notes are an integral part of the balance sheets.
12
<PAGE>
FOAMEX CAPITAL CORPORATION
(A Wholly-Owned Subsidiary of Foamex L.P.)
NOTES TO BALANCE SHEETS (unaudited)
1. ORGANIZATION
Foamex Capital Corporation ("FCC'), a wholly-owned subsidiary of Foamex
L.P., was formed for the sole purpose of obtaining financing from external
sources.
2. COMMITMENTS AND CONTINGENCIES
FCC is a joint obligor on the following borrowings of Foamex L.P.:
9 1/2% Senior Secured Notes due 2000 ("Senior Secured Notes")
The $116.7 million principal amount Senior Secured Notes were issued on
June 3, 1993 and bear interest at the rate of 9 1/2% payable semiannually on
each June 1 and December 1. The Senior Secured Notes mature on June 1, 2000. In
December 1993, in conjunction with Foamex International Inc's. ("Foamex
International") initial public offering, Foamex L.P. defeased $43.3 million of
Senior Secured Notes. The Senior Secured Notes are collateralized by a
first-priority lien on substantially all of the assets of Foamex L.P. except for
receivables, real estate and fixtures. The Senior Secured Notes may be redeemed
at the option of Foamex L.P., in whole or in part, at any time on or after June
1, 1998, initially at 101.583% of their principal amount, plus accrued interest,
and declining to 100% on or after June 1, 1999. The Senior Secured Notes have
been guaranteed, on a senior secured basis, by General Felt Industries, Inc.
("General Felt") and, on a senior unsecured basis, by Foamex International.
11 1/4% Senior Notes due 2002 ("Senior Notes")
The $150.0 million principal amount Senior Notes bear interest at the rate
of 11 1/4% payable semiannually on each April 1 and October 1. The Senior Notes
mature on October 1, 2002. The Senior Notes may be redeemed at the option of
Foamex L.P., in whole or in part, at any time on or after October 1, 1997,
initially at 104.219% of their principal amount, plus accrued interest, and
declining to 100% on or after October 1, 2000. The Senior Notes have been
guaranteed, on a senior basis, by General Felt and Foamex International.
11 7/8% Senior Subordinated Debentures due 2004 ("Subordinated Debentures")
The $126.0 million principal amount Subordinated Debentures bear interest
at the rate of 11 7/8% payable semiannually on each April 1 and October 1. The
Subordinated Debentures mature on October 1, 2004. The Subordinated Debentures
may be redeemed at the option of Foamex L.P., in whole or in part, at any time
on or after October 1, 1997, initially at 105.938% of their principal amount,
plus accrued interest, and declining to 100% on or after October 1, 2002. The
Subordinated Debentures are subordinated in right of payment to all senior
indebtedness, including the Senior Secured Notes and the Senior Notes. The
Subordinated Debentures have been guaranteed, on a senior subordinated basis, by
General Felt and Foamex International.
11 7/8% Senior Subordinated Debentures, Series B ("Series B Debentures")
The $7.0 million principal amount Series B Debentures were issued July 30,
1993 by Foamex L.P. in an exchange offer to holders of senior subordinated
debentures issued in connection with the acquisition of General Felt on March
23, 1993. The Series B Debentures have terms substantially similar to the
Subordinated Debentures, except that holders of the Series B Debentures are
entitled to receive proceeds from an asset sale only if any proceeds remain
after an offer to repurchase has been made to the holders of the Subordinated
Debentures. The Series B Debentures have been guaranteed on a senior
subordinated basis by General Felt.
13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Foamex L.P. operates in the polyurethane foam products business segment
with its wholly-owned subsidiaries, General Felt Industries, Inc., Foamex
Fibers, Inc., Foamex Canada Inc., and Foamex Latin America, Inc. The following
discussion should be read in conjunction with the condensed consolidated
financial statements and related notes thereto of Foamex L.P. included in this
report.
On August 1, 1996, Foamex L.P. consummated the sale of the home comfort
products business of Perfect Fit Industries, Inc. ("Perfect Fit") (which
comprised the home comfort products segment of Foamex L.P. and substantially all
of the assets of Perfect Fit). Accordingly, the accompanying condensed
consolidated financial statements reflects the home comfort products business
segment as discontinued operations. See Note 2 below for further discussion.
Foamex L.P.'s automotive foam customers are predominantly automotive
original equipment manufacturers or other automotive suppliers. As such, the
sales of these product lines are directly related to the overall level of
passenger car and light truck production in North America. Also, Foamex L.P.'s
sales are sensitive to sales of new and existing homes, changes in personal
disposable income and seasonality. Foamex L.P. typically experiences two
seasonally slow periods during each year, in early July and in late December,
due to scheduled plant shutdowns and holidays.
13 Week Period Ended September 29, 1996 Compared to 13 Week Period Ended
October 1, 1995
Results of Operations
Net sales for 1996 were $236.8 million as compared to $217.0 million in
1995, an increase of $19.8 million or 9.1%. Carpet cushion net sales for 1996
increased 13.4% to $77.0 million from $67.9 million in 1995 primarily due to
increased selling prices late in the second quarter of 1996, as well as
increased shipments of certain carpet cushion products. Cushioning foam net
sales for 1996 increased 4.5% to $86.0 million from $82.3 million in 1995
primarily due to an increase in net sales volume from both new and existing
customers of bedding related products, as well as increased selling prices
initiated at the beginning of 1996. Automotive foam net sales for 1996 increased
8.5% to $55.9 million from $51.5 million in 1995 primarily due to a continued
increase in net sales of tri-laminates and composite headliners and increased
selling prices initiated at the beginning of 1996. Technical foam net sales for
1996 increased 17.0% to $17.9 million from $15.3 million in 1995 primarily due
to increased selling prices and increased net sales volume.
Gross profit as a percentage of net sales increased to 16.9% for 1996 from
14.2% in 1995 primarily due to selling price increases and improved material and
production efficiencies.
Income from operations increased to $24.9 million for 1996 from $16.9
million in 1995 primarily due to improved gross profit margins as discussed
above offset by an increase of $1.2 million in selling, general and
administrative expenses for 1996. The increase in selling, general and
administrative expenses is primarily due to increases associated with management
realignment under the operational plan offset by reductions in salary,
professional and travel costs.
Income from continuing operations increased to $11.4 million for 1996 from
$5.2 million in 1995 primarily due to the reasons cited above. The increase in
interest and debt issuance expense is primarily due to (i) the inclusion in 1996
continuing operations of interest expense on the $29.8 million of public debt
that Foamex L.P. has offered to redeem (see Note 5 to the condensed consolidated
financial statements); whereas for the 1995 period, this interest expense was
allocated to discontinued operations (ii) offset by favorable results from
interest rate swap agreements.
The loss from discontinued operations totaling $2.0 million for 1996 is the
result of the sale of Perfect Fit which was completed on August 1, 1996. See
notes to condensed consolidated financial statements for further discussion.
14
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The extraordinary loss on early extinguishment of debt of $0.7 million
relates to the write-off of debt issuance costs associated with the early
extinguishment of $12.0 million of bank term loan borrowings.
Operating results for 1996 are expected to be influenced by various
internal and external factors. These factors include, among other things, (i)
the implementation of an operational plan to improve the profitability of the
foam products segment, (ii) the completion of the consolidation of thirteen foam
production, fabrication or branch locations, (iii) the potential reduction of
long-term debt with substantially all of the proceeds from the sale of the home
comfort products segment, (iv) additional raw material price increases, if any,
by Foamex L.P.'s chemical suppliers and (v) Foamex L.P.'s success in passing on
selling price increases to recover previous raw material cost increases.(1)
39 Week Period Ended September 29, 1996 Compared to 39 Week Period Ended
October 1, 1995
Results of Operations
Net sales for 1996 were $696.3 million as compared to $651.9 million in
1995, an increase of $44.4 million or 6.8%. Carpet cushion net sales for 1996
increased 4.7% to $217.2 million from $207.5 million in 1995 primarily due to
increased selling prices late in the second quarter of 1996 offset by a decrease
in net sales volume during the first quarter of 1996. Cushioning foam net sales
for 1996 increased 7.6% to $252.0 million from $234.2 million in 1995 primarily
due to increased net sales volume from both new and existing customers of
bedding related products, increased selling prices initiated at the beginning of
1996 and the April 1995 acquisition of a company which manufactures cushioning
products. Automotive foam net sales for 1996 increased 8.0% to $175.2 million
from $162.2 million in 1995 primarily due to a continued increase in net sales
of tri-laminates and composite headliners and increased selling prices initiated
at the beginning of 1996. Technical foam net sales for 1996 increased 8.1% to
$51.9 million from $48.0 million in 1995 primarily due to increased selling
prices and increased net sales volume.
Gross profit as a percentage of net sales increased to 16.4% for 1996 from
14.8% in 1995 primarily due to selling price increases and improved material and
production efficiencies.
Income from operations increased to $72.0 million for 1996 from $55.6
million in 1995 primarily due to improved gross profit margins as discussed
above offset by an increase of $1.1 in selling, general and administrative
expenses. The increase in selling, general and administrative expenses is
primarily due to increases associated with management realignment under the
operational plan offset by reductions in salary, professional and travel costs.
Income from continuing operations increased to $34.6 million for 1996 from
$19.5 million in 1995 primarily due to the reasons cited above and a decrease in
interest and debt issuance expense of $1.7 million. The decrease in interest and
debt issuance expense was primarily due to favorable results from interest rate
swap agreements offset by the inclusion in 1996 continuing operations of
interest expense on the $29.8 million of public debt that Foamex L.P. has
offered to redeem (see Note 5 to the condensed consolidated financial
statements); whereas for the 1995 period, this interest expense was allocated to
discontinued operations.
The loss from discontinued operations totaling $41.5 million for 1996 is
the result of the sale of Perfect Fit which was completed on August 1, 1996 and
the operating losses of Perfect Fit for the periods presented. See notes to
condensed consolidated financial statements for further discussion.
The extraordinary loss on early extinguishment of debt of $0.7 million
relates to the write-off of debt issuance costs associated with the early
extinguishment of $12.0 million of bank term loan borrowings.
(1) This paragraph contains forward-looking statements and should be read in
conjunction with the discussion regarding forward-looking statements set
forth on Page 5 of Foamex L.P.'s Annual Report on Form 10-K.
15
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Operating results for 1996 are expected to be influenced by various
internal and external factors. These factors include, among other things, (i)
the implementation of an operational plan to improve the profitability of the
foam products segment, (ii) the completion of the consolidation of thirteen foam
production, fabrication or branch locations, (iii) the potential reduction of
long-term debt with substantially all of the proceeds from the sale of the home
comfort products segment, (iv) additional raw material price increases, if any,
by Foamex L.P.'s chemical suppliers and (v) Foamex L.P.'s success in passing on
selling price increases to recover previous raw material cost increases.(1)
Foamex Capital Corporation ("FCC")
FCC is solely a co-issuer of certain indebtedness of Foamex L.P. and FCC
has no other material operations.
Liquidity and Capital Resources
Liquidity
Foamex L.P.'s operating cash requirements consist principally of working
capital requirements, scheduled payments of principal and interest on
outstanding indebtedness and capital expenditures. Foamex L.P. believes that
cash flow from operating activities, cash on hand and periodic borrowings under
its revolving credit agreement, if necessary, will be adequate to meet the
operating cash requirements. The ability to meet operating cash requirements
could be impaired if Foamex L.P. were to fail to comply with any of the
covenants contained in the Foamex L.P. credit facility (the "Foamex L.P. Credit
Facility") and such noncompliance was not cured by Foamex L.P. or waived by the
lenders. Foamex L.P. was in compliance with such covenants as of September 29,
1996 and expects to be in compliance with such covenants for the foreseeable
future. The ability of Foamex L.P. to make distributions to Foamex International
is restricted by the terms of its financing agreements.
Cash and cash equivalents increased $46.9 million during 1996 to $47.5
million at September 29, 1996 from $0.6 million at December 31, 1995 primarily
due to net proceeds received from the sale of Perfect Fit and improved operating
results for 1996 as compared to 1995. Working capital increased $52.8 million
for 1996 to $119.2 million at September 29, 1996 from $66.4 million at December
31, 1995. The increase in working capital is primarily due to the net proceeds
received on the sale of Perfect Fit and improved results from continuing
operations. The net operating assets and liabilities (comprised of accounts
receivable, inventories and accounts payable) increased $19.2 million to $143.3
million at September 29, 1996 from $124.1 million at December 31, 1995 primarily
due to an increase in accounts receivable offset by increased accounts payable.
The increase in accounts receivable and accounts payable were primarily due to
an increase in net sales for September 1996 as compared to December 1995.
Inventories were fairly consistent as compared to December 31, 1995.
Cash Flow from Operating Activities
Cash flow from operating activities was $34.0 million and $30.9 million in
1996 and 1995, respectively. Cash flow from operating activities increased for
1996 as compared to 1995 primarily due to improved results from continuing
operations and changes in the assets and liabilities of discontinued operations
offset by a use of operating assets and liabilities.
(1) This paragraph contains forward-looking statements and should be read in
conjunction with the discussion regarding forward-looking statements set
forth on Page 5 of Foamex L.P.'s Annual Report on Form 10-K.
16
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Cash Flow from Investing Activities
During 1996, Foamex L.P. spent approximately $14.5 million on capital
expenditures and expects to maintain spending for capital expenditures at this
level for the foreseeable future.
On August 1, 1996, Foamex L.P. consummated the Perfect Fit sale and
received approximately $45.4 million in cash proceeds, subject to post-closing
adjustments.
Cash Flow from Financing Activities
As of September 29, 1996, there were no outstanding revolving credit
borrowings under the Foamex L.P. Credit Facility with unused availability of
approximately $33.3 million.
Borrowings by Foamex Canada Inc. as of September 29, 1996 were $3.7
million under a revolving credit agreement with unused availability of
approximately $0.8 million.
During 1996, Foamex L.P. used approximately $12.0 million of the net
proceeds from the sale of Perfect Fit to repay bank term borrowings.
Interest Rate Swap Agreements
Foamex L.P. enters into interest rate swaps to lower funding costs and/or
to manage interest costs and exposure to changing interest rates. Foamex L.P.
does not hold or issue financial instruments for trading purposes. Foamex L.P.
has an interest rate swap agreement with a notional amount of $150.0 million
through June 2000. Under the swap agreement, Foamex L.P. is obligated to make
variable payments based on LIBOR in exchange for fixed payments at a rate of
5.81% per annum by the swap partner payable semiannually in arrears. Interest
expense will be subject to fluctuations in LIBOR. Foamex L.P. is exposed to
credit loss in the event of nonperformance by the swap partner; however, the
occurrence of this event is not anticipated.
Also, Foamex L.P. has an interest rate swap agreement, as amended, for a
notional amount of $150.0 million through December 1999. Under this agreement,
Foamex L.P. has made variable payments based on LIBOR with a cap of 5.5% and a
floor of 4.75% per annum for the six months ended in June 1995, variable
payments based on LIBOR with a floor of 4.75% per annum for the six months ended
in December 1995 and fixed payments at a rate of 5.81% per annum for the six
months ended in June 1996 and is obligated to make fixed payments at a rate of
5.81% per annum, for the remainder of the agreement, in exchange for variable
payments by the swap partner at the rate of LIBOR plus 0.80% per annum for the
six months ended in June 1995, LIBOR plus 0.72% per annum for the six months
ended in December 1995, LIBOR plus 2.45% per annum for the six months ended in
June 1996, LIBOR plus 2.39% per annum for the six months ended in December 1996,
the lower of 12.34% per annum less LIBOR or 7.34% per annum for the six months
ended in June 1997 and December 1997 and 12.34% per annum less LIBOR for the
remainder of the term of the agreement, payable semiannually in arrears. The
swap partner has the ability to terminate the swap agreement in December 1997.
Foamex L.P. is exposed to credit loss in the event of nonperformance by the swap
partner; however, the occurrence of this event is not anticipated. Interest
expense will be subject to fluctuations in LIBOR. The effect of the two interest
rate swaps described above was a favorable adjustment to interest expense of
$0.9 million and $0.2 million for the thirteen week periods and $2.8 million and
$0.9 million for the thirty-nine week periods ended September 29, 1996 and
October 1, 1995, respectively.
17
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Environmental Matters
Foamex L.P. is subject to extensive and changing environmental laws and
regulations. Expenditures to date in connection with Foamex L.P.'s compliance
with such laws and regulations did not have a material adverse effect on
operations, financial position, capital expenditures or competitive position.
The amount of liabilities recorded by Foamex L.P. in connection with
environmental matters as of September 29, 1996 was $5.1 million. In addition, as
of September 29, 1996, Foamex L.P. has receivables of $0.6 million, net of $1.0
million allowance relating to potential disagreements regarding the scope of
indemnification for environmental liabilities from former partners. Although it
is possible that new information or future developments could require Foamex
L.P. to reassess its potential exposure to all pending environmental matters,
including those described in the footnotes to Foamex L.P.'s condensed
consolidated financial statements, management believes that, based upon all
currently available information, the resolution of all such pending
environmental matters will not have a material adverse effect on Foamex L.P.'s
operations, financial position, capital expenditures or competitive position.
The possibility exists, however, that new environmental legislation and/or
environmental regulations may be adopted, or other environmental conditions may
be found to exist, that may require expenditures not currently anticipated and
that may be material.
Inflation and Other Matters
There was no significant impact on Foamex L.P.'s operations as a result of
inflation for the periods presented. In some circumstances, market conditions or
customer expectations may prevent Foamex L.P. from increasing the price of its
products to offset the inflationary pressures that may increase its costs in the
future.
18
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Reference is made to the description of the legal proceedings
contained in the Foamex L.P. Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 and in Foamex L.P.'s Quarterly Reports
for the fiscal quarters ended March 31, 1996 and June 30, 1996.
The information from Notes 6 and 7 of the condensed consolidated
financial statements of Foamex L.P. and subsidiaries as of September
29, 1996 (unaudited) is incorporated herein by reference.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3.1(a) - Restated Certificate of Incorporation of Foamex International.
3.2(a) - By-laws of Foamex International.
3.3(a) - Fourth Amended and Restated Agreement of Limited Partnership of
Foamex L.P., dated as of December 14, 1993, by and among FMXI and
Trace Foam, as general partners, and Foamex International, as a
limited partner (the "Partnership Agreement").
3.4(n) - First Amendment to the Fourth Amendment and Restated Agreement of
Limited Partnership of Foamex L.P., dated June 28, 1994.
3.5(a) - Certificate of Incorporation of FMXI.
3.6(a) - By-laws of FMXI.
3.7(e) - Certificate of Incorporation of FCC.
3.8(e) - By-laws of FCC.
3.9(c) - Certificate of Incorporation of GFI Acquisition Corp.
3.10(c) - Certificate of Amendment to the Certificate of Incorporation of
GFI Acquisition Corp.
3.11(c) - Certificate of Amendment to the Certificate of Incorporation of
General Felt.
3.12(n) - Certificate of Incorporation of Perfect Fit.
3.13(n) - By-laws of Perfect Fit.
4.1(b) - Indenture, dated as of June 3, 1993, among Foamex L.P. and FCC, as
joint and several obligors, General Felt, as Guarantor, and Shawmut
Bank, National Association ("Shawmut"), as trustee, relating to
$160,000,000 principal amount of 9 1/2% Senior Secured Notes due
2000, including form of Senior Secured Note.
19
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4.2(a) - First Supplemental Indenture, dated as of November 18, 1993, among
Foamex International and FCC, as Issuers, General Felt and Perfect
Fit, as Guarantors and Shawmut, as trustee, relating to the Senior
Secured Notes.
4.3(a) - Second Supplemental Indenture, dated as of December 14, 1993,
among Foamex L.P. and FCC, as Issuers, Foamex International, General
Felt, and Perfect Fit, as Guarantors and Shawmut, as trustee,
relating to the Senior Secured Notes.
4.3.1 - Third Supplemental Indenture, dated as of August 1, 1996, by and
among Foamex L.P. and Foamex Capital Corporation, as Issuers, Foamex
International Inc., as parent guarantor, General Felt Industries,
Inc., as guarantor, Perfect Fit Industries, Inc., as withdrawing
guarantor, and Fleet National Bank, as Trustee, relating to the
Senior Secured Notes.
4.4(b) - Company Pledge Agreement, dated as of June 3, 1993, by Foamex L.P.
in favor of Shawmut, as trustee for the holders of the Senior
Secured Notes.
4.5(b) - Company Pledge Agreement, dated as of June 3, 1993, by FCC in
favor of Shawmut, as trustee for the holders of the Senior Secured
Notes.
4.6(b) - Subsidiary Pledge Agreement, dated as of June 3, 1993, by General
Felt in favor of Shawmut, as trustee for the holders of the Senior
Secured Notes.
4.7(b) - Company Security Agreement, dated as of June 3, 1993, by Foamex
L.P. and FCC in favor of Shawmut, as trustee for the holders of the
Senior Secured Notes.
4.8(a) - Foamex L.P. Pledge Agreement, dated November 18, 1993, in
connection with the Senior Secured Notes.
4.9(b) - Subsidiary Security Agreement, dated as of June 3, 1993, by
General Felt in favor of Shawmut, as trustee for the holders of the
Senior Secured Notes.
4.10(b) - Collateral Assignment of Patents and Trademarks, dated as of June
3, 1993, by Foamex L.P. in favor of Shawmut, as trustee for the
holders of the Senior Secured Notes.
4.11(b) - Collateral Assignment of Patents and Trademarks, dated as of June
3, 1993, by FCC in favor of Shawmut, as trustee for the holders of
the Senior Secured Notes.
4.12(b) - Collateral Assignment of Patents and Trademarks, dated as of June
3, 1993, by General Felt in favor of Shawmut, as trustee for the
holders of the Senior Secured Notes.
4.13(a) - Pledge Agreement of Perfect Fit, dated November 18, 1993, in
connection with the Senior Secured Notes.
4.14(c) - Indenture, dated as of October 13, 1992, among Foamex L.P., FCC,
and The Connecticut National Bank, as trustee, relating to
$150,000,000 principal amount of 11 1/4% Senior Notes due 2002,
including form of Senior Note.
4.15(d) - First Supplemental Indenture, dated as of March 23, 1993, among
Foamex L.P. and FCC, as joint and several obligors, General Felt, as
Guarantor, and Shawmut Bank Connecticut, National Association
(formerly The Connecticut National Bank) ("Shawmut Connecticut"), as
trustee, relating to the Senior Notes.
4.16(a) - Second Supplemental Indenture, dated as of November 18, 1993,
among Foamex L.P. and FCC, as Issuers, General Felt, and Perfect
Fit, as Guarantors and Shawmut Connecticut, as trustee, relating to
the Senior Notes.
4.17(a) - Third Supplemental Indenture, dated as of December 14, 1993, among
Foamex L.P. and FCC, as Issuers, Foamex International, General Felt,
and Perfect Fit, as Guarantors and Shawmut Connecticut, as trustee,
relating to the Senior Notes.
4.17.1 - Fifth Supplemental Indenture, dated as of August 1, 1996, by and
among Foamex L.P. and Foamex Capital Corporation, as Issuers, Foamex
International Inc., as parent guarantor, General Felt Industries,
Inc., as guarantor, Perfect Fit Industries, Inc., as withdrawing
guarantor, and Fleet National Bank, as Trustee, relating to the
Senior Notes.
4.18(m) - Fourth Supplemental Indenture, dated as of October 31, 1994, among
Foamex L.P. and FCC as Issuers, Foamex International as Parent
Guarantor, General Felt, and Perfect Fit as Guarantors and Shawmut
Connecticut, as Trustee, relating to the Senior Notes.
20
<PAGE>
4.19(c) - Indenture, dated as of October 13, 1992, among Foamex L.P., FCC,
and Shawmut Bank, ("Shawmut"), as trustee, relating to $126,000,000
principal amount of 117/8% Senior Subordinated Debentures due 2004,
including form of Senior Subordinated Debenture.
4.20(d) - First Supplemental Indenture, dated as of March 23, 1993, among
Foamex L.P. and FCC, as joint and several obligors, General Felt, as
Guarantor, and Shawmut, as trustee, relating to the Senior
Subordinated Debentures.
4.21(a) - Second Supplemental Indenture, dated as of November 18, 1993,
among Foamex L.P. and FCC, as Issuers, General Felt and Perfect Fit,
as Guarantors and Shawmut, as trustee, relating to the Senior
Subordinated Debentures.
4.21.1 - Fourth Supplemental Indenture, dated as of August 1, 1996, by and
among Foamex L.P. and Foamex Capital Corporation, as Issuers, Foamex
International Inc., as parent guarantor, General Felt Industries,
Inc., as guarantor, Perfect Fit Industries, Inc., as withdrawing
guarantor, and Fleet National Bank, as Trustee, relating to the
Subordinated Debentures.
4.22(b) - Third Supplemental Indenture, dated as of December 14, 1993, among
Foamex L.P. and FCC, as Issuers, Foamex International, General Felt,
and Perfect Fit, as Guarantors and Shawmut, as trustee, relating to
the Senior Subordinated Debentures.
4.23(i) - Indenture, dated as of June 28, 1994, among FJPS and FJCC, as
Issuers, Foamex International Inc., as guarantor, and Shawmut
Connecticut, as trustee, relating to $116,745,000 principal amount
of Senior Secured Discount Debentures due 2004, including form of
Senior Secured Discount Debenture.
4.24(m) - Pledge Agreement, dated as of June 28, 1994, made by FJPS in favor
of Shawmut, as collateral agent for the holders of the Senior
Secured Discount Debentures.
4.25(i) - Senior Note, dated June 28, 1994, in the aggregate principal
amount of $87,943,103.14 due July 1, 2006, executed by FJPS to
Foamex L.P.
4.26(m) - Pledge Agreement, dated as of June 28, 1994, among FJPS in favor
of Foamex L.P. to secure its obligations under its Senior Note due
2006.
4.27(m) - Pledge Agreement, dated as of June 28, 1994, made by JPS
Automotive L.P. in favor of Foamex L.P. to secure FJPS's obligations
under its Senior Note due 2006.
4.28 - Commitment letter, dated July 9, 1996, from The Bank of Nova
Scotia to Foamex Canada.
4.29(d) - Agreement of Undertaking, dated as of December 31, 1991, between
Foamex L.P. and The Bank of Nova Scotia.
4.30 - Third Amended and Restated Credit Agreement, dated as of July 30,
1996, among Foamex L.P., General Felt, Trace Foam, FMXI, Citibank,
N.A., The Bank of Nova Scotia, the institutions from time to time
parties thereto as lenders, the institutions parties thereto as
issuing banks and Citibank, N.A. and The Bank of Nova Scotia, as
Administrative Agents (the "Credit Agreement").
4.31 - First Amendment to Third Amended and Restated Credit Agreement,
dated September 30, 1996, among Foamex L.P., General Felt, Trace
Foam, FMXI, Citibank, N.A., The Bank of Nova Scotia, the
institutions from time to time parties thereto as lenders, the
institutions parties thereto as issuing banks and Citibank, N.A. and
The Bank of Nova Scotia, as Administrative Agents.
4.32(a) - Guaranties, dated November 18, 1993, executed by each of Foamex
L.P., General Felt and Perfect Fit, as guarantor, respectively, in
favor of Citibank, N.A., as Administrative Agent, for the ratable
benefit of the lenders and the issuing banks, guaranteeing the
obligations of one another under the Credit Agreement.
4.33(a) - Guaranty, dated November 18, 1993, executed by FCC in favor of
Citibank, N.A., as Administrative Agent, for the ratable benefit of
the lenders and the issuing banks, guaranteeing the obligations of
Foamex L.P., General Felt and Perfect Fit under the Credit
Agreement.
4.34(i) - Amended and Restated Guaranty, dated as of June 28, 1994, executed
by Foamex International in favor of Citibank, N.A. and The Bank of
Nova Scotia, as Administrative Agents, for the ratable benefit of
the lenders and the issuing banks under the Credit Agreement.
4.35(p) - First Amendment to Amended and Restated Guaranty, dated June 30,
1995, executed by Foamex International in favor of Citibank, N.A.
and The Bank of Nova Scotia, as Administrative Agents, for the
ratable benefit of the lenders and the issuing banks under the
Credit Agreement.
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4.36(p) - Second Amendment to Amended and Restated Guaranty, dated February
27, 1996, executed by Foamex International in favor of Citibank,
N.A. and The Bank of Nova Scotia, as Administrative Agents, for the
ratable benefit of the lenders and the issuing banks under the
Credit Agreement.
4.37(a) - Security Agreements, dated November 18, 1993, executed by each of
Foamex L.P., General Felt, Perfect Fit, and FCC, respectively, and
Citibank N.A., as Administrative Agent for the lenders and the
issuing banks under the Credit Agreement.
4.38(i) - Amendatory Agreement, dated as of June 28, 1994, among Foamex
L.P., General Felt, Perfect Fit, FCC, and Citibank, N.A., as
collateral agent under the Credit Agreement.
4.38.1(r) - Form of Amendatory Agreement, dated as of July 30, 1996, among
Foamex L.P., General Felt Industries, Inc., Foamex Capital
Corporation, and Citibank N.A., as collateral agent under the Credit
Agreement.
4.39(a) - Intercreditor Agreement, dated as of November 18, 1993, by and
between Citibank, N.A., as Administrative Agent under the Credit
Agreement and Shawmut, as trustee under the Foamex L.P. Senior
Secured Note Indenture.
4.40(a) - Subordinated Promissory Note, dated as of May 6, 1993, in the
original principal amount of $7,014,864 executed by Foamex L.P. to
Rallis.
4.41(a) - Marely Loan Commitment Agreement, dated as of December 14, 1993,
by and between Foamex International and Marely.
4.42(a) - DLJ Loan Commitment Agreement, dated as of December 14, 1993, by
and between Foamex International and DLJ Funding.
4.43(r) - Promissory Note, dated July 7, 1996, in the aggregate principal
amount of $4,372,516, executed by Trace Holdings to Foamex L.P.
10.1(b) - Interest Rate and Currency Exchange Agreement, dated as of June
14, 1993, among Foamex L.P., FCC, and Salomon Brothers Holdings
Company Inc ("Salomon Holdings").
10.2(m) - Swap Agreement, dated as of March 31, 1994, and amended in
November 1994, by and between Foamex L.P. and Citibank, N.A.
10.3(p) - Amended Confirmation Letter Agreement, dated as of February 2,
1996, by and between Foamex L.P. and Citibank, N.A.
10.3.1(r) - Amended Confirmation Letter Agreement, dated as of May 29, 1996,
by and between Foamex L.P. and Citibank, N.A.
10.4(b) - Revised Swap Transaction Letter Agreement, dated as of June 10,
1993, among Foamex L.P., FCC and Salomon Holdings.
10.5(d) - Reimbursement Agreement, dated as of March 23, 1993, between Trace
Holdings and General Felt.
10.6(d) - Shareholder Agreement, dated December 31, 1992, among Recticel,
s.a., Recticel Holding Noord B.V., Foamex L.P., Beamech Group
Limited, LME-Beamech, Inc., James Brian Blackell, and Prefoam AG
relating to foam technology sharing arrangement.
10.7(e) - Asset Transfer Agreement, dated as of October 2, 1990, between
Trace Holdings and the Foamex L.P. (the "Trace Holdings Asset
Transfer Agreement").
10.8(e) - First Amendment, dated as of December 19, 1991, to the Trace
Holdings Asset Transfer Agreement.
10.9(e) - Amended and Restated Guaranty, dated as of December 19, 1991, made
by Trace Foam in favor of Foamex L.P.
10.10(e) - Asset Transfer Agreement, dated as of October 2, 1990, between RFC
and Foamex L.P. (the "RFC Asset Transfer Agreement").
10.11(e) - First Amendment, dated as of December 19, 1991, to the RFC Asset
Transfer Agreement.
10.12(e) - Schedule 5.03 to the RFC Asset Transfer Agreement (the "5.03
Protocol").
10.13(d) - The 5.03 Protocol Assumption Agreement, dated as of October 13,
1992, between RFC and Foamex L.P.
10.14(d) - Letter Agreement between Trace Holdings and Recticel regarding the
Recticel guaranty, dated as of July 22, 1992.
10.15(e) - Supply Agreement between Recticel s.a., formerly known as Gechem
s.a., and Foamex L.P., dated as of August 1, 1991.
22
<PAGE>
10.16(i) - Supply Agreement, dated June 28, 1994, between Foamex L.P. and
Foamex International.
10.17(i) - First Amended and Restated Tax Sharing Agreement, dated as of
December 14, 1993, among Foamex L.P., Trace Foam, FMXI, and Foamex
International.
10.18(i) - Tax Sharing Agreement, dated as of June 28, 1994, among FJPS and
Foamex International.
10.19(d) - Trace Foam Management Agreement between Foamex L.P. and Trace
Foam, dated as of October 13, 1992.
10.20(i) - Affirmation Agreement re: Management Agreement, dated as of
December 14, 1993 between Foamex L.P. and Trace Foam.
10.21(d) - Agreement and Plan of Merger, dated as of March 11, 1993, among
Foamex L.P., GFI Acquisition, Inc. and General Felt.
10.22(c) - Agreement and Plan of Merger, dated as of March 1, 1993, among
Great Western, Rallis, Foamex L.P. and Kyoto Merger, Inc.
10.23(e) - Salaried Incentive Plan of Foamex L.P. and Subsidiaries.
10.24(e) - Trace Holdings 1987 Nonqualified Stock Option Plan.
10.25(e) - Equity Growth Participation Program.
10.26(e) - Foamex L.P. Salaried Retirement Plan (formerly known as the Foamex
L.P. Products, Inc. Salaried Employee Retirement Plan), as amended,
effective July 1, 1984.
10.27(m) - General Felt Industries, Inc. Retirement Plan for Salaried
Employees, effective as of January 1, 1995.
10.28(e) - Foamex L.P. 401(k) Savings Plan dated January 1, 1989.
10.29(o) - Foamex/GFI 401(k) Savings Plan dated July 1, 1995.
10.30(a) - Foamex International's 1993 Stock Option Plan.
10.31(a) - Foamex International's Non-Employee Director Compensation Plan.
10.32(a) - Employment Agreement, dated as of May 6, 1993, by and between
Foamex L.P. and Rallis.
10.33(f) - Employment Agreement, dated as of February 1, 1994, by and between
Foamex L.P. and William H. Bundy.
10.34(p) - Employment Agreement, dated as of July 26, 1995, by and between
Foamex L.P. and Salvatore J. Bonanno.
10.35(a) - Stock Exchange Agreement, dated as of October 25, 1993, among
Perfect Fit, the stockholders which are parties thereto, Foamex
International and Foamex L.P. (the "Perfect Fit Stock Exchange
Agreement").
10.36(a) - Amendment No. 1 to the Perfect Fit Stock Exchange Agreement, dated
November 18, 1993.
10.37(a) - 1993 Recticel Master Agreement, dated as of November 4, 1993, by
and among Trace Holdings, Trace Foam, RFC, Foamex International,
Recticel s.a., MGM, FCD Sub and Foamex L.P.
10.38(a) - Exchange Agreement, dated as of December 14, 1993, by and between
Foamex International and RFC.
10.39(a) - Withdrawal Agreement, dated as of December 14, 1993, by and
between Foamex L.P. and RFC.
10.40(a) - 1993 Agreement of Terms, dated as of November 4, 1993, by and
among Trace Holdings, Trace Foam, Foamex L.P., Foamex International,
and GBNY.
10.41(a) - 1993 Marely Master Agreement, dated as of November 4, 1993, by and
among Foamex International, Trace Holdings, Trace Foam, Foamex L.P.,
and Marely.
10.42(a) - Exchange Agreement, dated as of December 14, 1993, by and between
Foamex International and Marely.
10.43(a) - Warrant Exchange Agreement, dated as of December 14, 1993, by and
between Foamex International and Marely.
10.44(a) - Redemption and Withdrawal Agreement, dated as of December 14,
1993, by and between Foamex L.P. and Marely.
10.45(a) - 1993 DLJ Master Agreement, dated as of November 4, 1993, by and
among Foamex International, Trace Holdings, Trace Foam, DLJ Funding,
and Foamex L.P.
10.46(a) - Exchange Agreement, dated as of December 14, 1993, by and between
Foamex International and DLJ Funding.
23
<PAGE>
10.47(a) - Warrant Exchange Agreement, dated as of December 14, 1993, by and
between Foamex International and DLJ Funding.
10.48(a) - Redemption and Withdrawal Agreement, dated as of December 14,
1993, by and between Foamex L.P. and DLJ Funding.
10.49(a) - 1993 Rallis Master Agreement, dated as of November 4, 1993, by and
among Foamex International, Trace Holdings, Trace Foam, Rallis, and
Foamex L.P.
10.50(a) - Exchange Agreement, dated as of December 14, 1993, by and between
Foamex International and Rallis.
10.51(a) - Partial Redemption Agreement, dated as of December 14, 1993, by
and between Foamex L.P. and Rallis.
10.52(c) - Exchange Agreement Regarding Admission of Limited Partner and Put
Option, dated as of May 1, 1993, among Rallis, Pegasus Properties,
Foamex L.P., and Trace Holdings.
10.53(a) - Amended and Restated Put Option Agreement, dated as of December
14, 1993, by and between Trace Holdings and Rallis.
10.54(a) - Exchange Agreement, dated as of December 14, 1993, by and between
Foamex International and Trace Holdings.
10.55(a) - Redemption and Withdrawal Agreement, dated as of December 14,
1993, by and between Foamex L.P. and Trace Holdings.
10.56(a) - Exchange Agreement, dated as of December 14, 1993, by and between
Foamex International and Trace Foam.
10.57(a) - Withdrawal Agreement, dated as of December 14, 1993, by and
between Foamex L.P. and Trace Foam.
10.58(a) - Exchange Agreement, dated as of December 14, 1993, by and between
Foamex International and FCD Sub.
10.59(a) - Redemption and Withdrawal Agreement, dated as of December 14,
1993, by and between Foamex L.P. and FCD Sub.
10.60(a) - Release and Termination Agreement, dated as of December 14, 1993,
by and among Trace Holdings, Trace Foam, Foamex L.P., RFC, Marely,
DLJ, MGM, FCD Sub, Recticel s.a., SGB, GBNY, and Wilmington Trust
Company.
10.61(f) - Stock Purchase Agreement, dated as of December 23, 1993, by and
among Transformacion de Espumas y Fieltros, S. A., the stockholders
which are parties thereto, and Foamex L.P.
10.62(q) - 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, General Felt, and Foamex L.P.
- --------------------
(a) Incorporated herein by reference to the Exhibit to Foamex
International's Registration Statement on Form S-1, Registration No.
33-69606.
(b) Incorporated herein by reference to the Exhibit to the Registration
Statement of Foamex L.P. and FCC on Form S-4, Registration No.
33-65158.
(c) Incorporated herein by reference to the Exhibit to the Registration
Statement of Foamex L.P., FCC and General Felt on Form S-1,
Registration Nos. 33-60888, 33-60888-01, and 33-60888-02.
(d) Incorporated herein by reference to the Exhibit to the Form 10-K
Statement of Foamex L.P. and FCC for fiscal 1992.
(e) Incorporated herein by reference to the Exhibit to the Registration
Statement of Foamex L.P. and FCC on Form S-1, Registration Nos.
33-49976 and 33-49976-01.
24
<PAGE>
(f) Incorporated herein by reference to the Exhibit to the Form 10-K of
Foamex International for fiscal 1993.
(g) Incorporated herein by reference to the Exhibit to JPS Automotive
L.P.'s Registration Statement on Form S-1, Registration No.
33-75510.
(h) Incorporated by reference to the Exhibit to the Form 10-Q of Foamex
International for the quarterly period ended July 3, 1994.
(i) Incorporated herein by reference to the Exhibit to the Registration
Statement of FJPS, FJCC and Foamex International on Form S-4,
Registration No. 33-82028.
(j) Incorporated herein by reference to the Exhibit to the quarterly
report on Form 10-Q of JPS Automotive L.P. and JPS Automotive
Products Corp. for the fiscal quarter ended October 2, 1994.
(k) Incorporated herein by reference to the Exhibit to the quarterly
report on Form 10-Q of Foamex L.P. and Foamex L.P. Capital
Corporation, and General Felt Industries, Inc. for the fiscal
quarter ended October 2, 1994.
(l) Incorporated herein by reference to the Exhibit to the Registration
Statement on Form S-1 of Foamex International, Registration No.
33-85488.
(m) Incorporated herein by reference to the Exhibit to the Form 10-K of
Foamex International for fiscal 1994.
(n) Incorporated herein by reference to the Exhibit to the Form 10-K of
Foamex L.P. for fiscal 1994.
(o) Incorporated herein by reference to the Exhibit to the Form 10-Q of
Foamex L.P. for the quarterly period ended July 2, 1995.
(p) Incorporated herein by reference to the Exhibit to the Form 10-K of
Foamex L.P. for fiscal 1995.
(q) Incorporated herein by reference to the Exhibit to the Form 8-K of
Foamex L.P. dated June 11, 1996.
(r) Incorporated herein by reference to the Exhibit to the Form 10-Q of
Foamex L.P. for the quarterly period ended June 30, 1996.
Certain instruments defining the rights of security holders have
been excluded herefrom in accordance with Item 601(b)(4)(iii) of Regulation
S-K. The registrant hereby agrees to furnish a copy of any such instrument to
the Commission upon request.
(b) Foamex L.P. filed the following Current Reports on Form 8-K:
Form 8-K reporting an event that occurred on August 1, 1996 (sale of
Perfect Fit including pro forma financial information).
25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
FOAMEX L.P.
By: FMXI, INC.
General Partner
Date: November 11, 1996 By: /s/ Kenneth R. Fuette
----------------------
Kenneth R. Fuette
Chief Financial Officer and
Chief Accounting Officer
FOAMEX CAPITAL CORPORATION
Date: November 11, 1996 By: /s/ Kenneth R. Fuette
----------------------
Kenneth R. Fuette
Chief Financial Officer and
Chief Accounting Officer
26
EXECUTION COPY
FIRST AMENDMENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
This FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT,
dated as of September 30, 1996 (the "First Amendment"), amends in certain
respects the Third Amended and Restated Credit Agreement dated as of July 30,
1996 (as amended, the "Credit Agreement"), among Foamex L.P. ("Foamex"), General
Felt Industries, Inc. ("GFI"; and together with Foamex, the "Borrowers"), Trace
Foam Company, Inc. ("Trace Foam"), FMXI, Inc. ("FMXI"), the institutions from
time to time party thereto as Lenders, the institutions from time to time party
thereto as Issuing Banks and Citibank, N.A., as collateral and documentation
agent for the Lenders and the Issuing Banks (the "Collateral Agent") and The
Bank of Nova Scotia, as funding agent for the Lenders and the Issuing Banks (the
"Funding Agent"; together with the Collateral Agent, the "Administrative
Agents").
R E C I T A L S:
Pursuant to a letter dated September 19, 1996, a copy of which is
attached as Exhibit A hereto (the "Letter"), the Borrowers have requested the
undersigned, which constitute the Requisite Lenders, to amend the Credit
Agreement along the lines set forth in the Letter. The Lenders party hereto have
agreed to amend the Credit Agreement to accommodate the request of the Borrowers
contained in the Letter, subject to the terms set forth in this First Amendment.
NOW, THEREFORE, in consideration of the above recitals each of the
Borrowers, Trace Foam, FMXI, the Lenders party hereto and the Administrative
Agents agree as follows:
SECTION 1. Defined Terms. Terms defined in the Credit Agreement not
otherwise defined herein have the meanings given such terms in the Credit
Agreement.
SECTION 2. Amendments to the Credit Agreement. The Credit Agreement is
hereby amended as follows:
2.1 The definition of "Capital Expenditures" contained in Section 1.01
of the Credit Agreement is amended by deleting clause (ii) of the proviso to
such definition in its entirety and replacing it with the following:
(ii) Capital Expenditures shall exclude, whether or not such a designation
would be in conformity with GAAP, (A) expenditures made in connection with
the replacement or restoration of Property, to the extent reimbursed or
financed from insurance or condemnation proceeds which do
<PAGE>
not result in a permanent reduction in the Revolving Loan Commitments
pursuant to Section 3.01, (B) expenditures made during such period for the
construction of a new plant facility in Mexico City, Mexico by a member of
the Foamex Mexico Group, provided that the amount for all periods of such
expenditures does not exceed $8,000,000 in the aggregate and (C) any
portion of the purchase price accounted for as a Capital Expenditure paid
by GFI to Habitat International in consideration for the purchase by GFI of
the roll goods business of Habitat International.
2.2 The following definition is added to Section 1.01 of the Credit
Agreement immediately after the definition of "Foamex":
"Foamex Asia Group" means any direct or indirect wholly owned
Subsidiaries of Foamex created for the purpose of facilitating the Borrowers'
business in Asia.
2.3 The following definition is added to Section 1.01 of the Credit
Agreement immediately after the definition of "Governmental Authority":
"Habitat International" means Habitat International, Inc., a Georgia
corporation.
2.4 Section 9.01 of the Credit Agreement is amended by deleting the
word "and" at the end of clause (xii) thereof, by replacing the period at the
end of clause (xiii) thereof with a semicolon followed by the word "and" and by
adding the following new clause (xiv) at the end of such section:
(xiv) Indebtedness incurred by Foamex Asia Group owing to the
Borrowers not in excess of a principal amount of $5,000,000.
2.5 Clause (x) of Section 9.04 of the Credit Agreement is amended in
its entirety to read as follows:
(x) Investments in cash, loans and contributions of Equipment and in
the Equity Interests of Foamex Latin America, Inc. by Foamex; provided that
the aggregate purchase price paid to Foamex International for such Equity
Interests plus any additional Investments of cash, loans or Equipment
(valued at Fair Market Value) made by Foamex in the Foamex Mexico Group
shall in no event exceed $11,000,000 in an aggregate;
2.6 Section 9.04 of the Credit Agreement is further amended by
deleting the word "and" at the end of clause (xvi) thereof, by replacing the
period at the end of clause (xvii) thereof with a semicolon followed by the word
"and" and by adding the following new clause (xviii) at the end of such section:
-2-
<PAGE>
(xviii) Investments by either Borrower in the form of loans and/or
capital contributions made to members of the Foamex Asia Group by the
Borrowers up to an aggregate amount for both Borrowers not in excess of
$5,000,000 at any time outstanding.
2.7 Section 9.08 of the Credit Agreement is amended by adding the
words ", Section 9.04(x)" immediately after the words "Section 9.04(ix)" in
clause (i) of such section.
2.8 Section 9.09 of the Credit Agreement is amended by deleting the
last sentence thereof in its entirety and replacing it with the following:
None of the Borrowers, the Borrowers' Subsidiaries or the General Partners
shall create any Subsidiary, except Subsidiaries constituting the Foamex
Asia Group.
2.9 Section 9.13 of the Credit Agreement is amended in its entirety to
read as follows:
9.13. Issuance of Equity Interests. None of the Borrowers nor any
of the Borrowers' Subsidiaries shall issue any Equity Interests, except (i)
Foamex may issue Equity Interests to FMXI, New Partners or Trace Foam in
connection with a cash capital contribution from FMXI, New Partners or
Trace Foam, as the case may be, (ii) Foamex may issue Equity Interests
pursuant to the Acquisition Transactions as contemplated in the Acquisition
Transaction Documents and (iii) any member of the Foamex Asia Group may
issue Equity Interests to the Borrowers or other members of the Foamex Asia
Group in connection with the creation of the Foamex Asia Group but only if
the Investment made by the Borrowers in exchange for such Equity interests
is permitted under Section 9.04 (xviii).
SECTION 3. Consent of the Requisite Lenders. The Requisite Lenders
hereby consent, pursuant to Section 9.01, 9.04 and 9.16 of the Credit Agreement,
to the purchase by GFI of all or substantially all of the assets of Habitat
International's roll goods business, including without limitation the relevant
customer list and the roll goods Inventory of Habitat International for a
purchase price not in excess of $4,000,000; provided, however, the purchase
price for such Investment (i) may be paid in installments over a period of four
years and (ii) may be paid all or in part either in cash or by setting off the
amount of each installment of the purchase price against receivables owing by
Habitat International to GFI at the time such installment becomes due and
payable.
SECTION 4. Conditions to Effectiveness. This First Amendment shall be
effective as of the date hereof, provided that the following conditions
precedent shall have been satisfied:
-3-
<PAGE>
4.1 Execution by Requisite Lenders. The Collateral Agent shall have
received this First Amendment duly executed by the Borrowers and the Requisite
Lenders.
4.2 No Default. After giving effect to this First Amendment, no Event
of Default or Potential Event of Default shall have occurred and be continuing
or shall result from the transactions contemplated in this First Amendment.
4.3 Representations and Warranties. All of the representations and
warranties contained in Section 6.01 of the Credit Agreement and in any of the
other Loan Documents (in each case after giving effect to this First Amendment)
shall be true and correct in all material respects on and as of the date hereof
(except for those representations and warranties which expressly speak as of a
different date).
SECTION 5. Representations and Warranties. The Borrowers and the
General Partners hereby represent and warrant to the Lenders party hereto that
(i) the execution, delivery and performance of this First Amendment by each
Borrower and the General Partners are within their respective partnership and
corporate powers and have been duly authorized by all necessary partnership and
corporate action, and (ii) this First Amendment constitutes the legal, valid and
binding obligation of each Borrower and each General Partner, enforceable
against each of them, respectively, in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other laws relating to or limiting creditors' rights generally or by
equitable principles generally.
SECTION 6. Reference to and Effect on the Loan Documents.
6.1 Upon the effectiveness of this First Amendment, on and after the
date hereof each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import, and each reference
in the other Loan Documents to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as amended hereby.
6.2 Except as specifically amended above, all of the terms of the
Credit Agreement and all other Loan Documents shall remain unchanged and in
full force and effect.
6.3 The execution, delivery and effectiveness of this First Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of any Lender or either Administrative Agent under
the Credit Agreement or any of the Loan Documents, nor constitute a waiver
of any provision of the Credit Agreement or any of the Loan Documents.
-4-
<PAGE>
SECTION 7. Execution in Counterparts. This First Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall
be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
SECTION 8. Governing Law. This First Amendment shall be governed by,
and shall be construed and enforced in accordance with, the law of the
State of New York.
SECTION 9. Guarantor Consent. By its signature below, each of Foamex
and GFI consents to this First Amendment in its separate capacity as a
guarantor under the Foamex Guaranty and the GFI Guaranty, respectively, and
each hereby affirms its obligations under such guaranties.
SECTION 10. Headings. Section headings in this First Amendment are
included herein for convenience of reference only and shall not constitute
a part of this First Amendment or be given any substantive effect.
IN WITNESS WHEREOF, this First Amendment has been duly executed as of
the date first above written.
FOAMEX L.P.
By: FMXI, Inc.
Its Managing General Partner
By: ____________________________
Title:
GENERAL FELT INDUSTRIES, INC.
By: ____________________________
Title:
TRACE FOAM COMPANY, INC.
By: ____________________________
Title:
FMXI, INC.
By: ____________________________
Title:
-5-
<PAGE>
CITIBANK, N.A., as Collateral
Agent and individually as a Lender
By: ____________________________
Title:
THE BANK OF NOVA SCOTIA, as Funding
Agent and individually as a Lender
By: ____________________________
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION, as a Lender
By: ____________________________
Title:
HELLER FINANCIAL, INC.,
as a Lender
By: ____________________________
Title:
CREDIT LYONNAIS, New York Branch,
as a Lender
By: ____________________________
Title:
CREDIT LYONNAIS, Cayman Island
Branch, as a Lender
By: ____________________________
Title:
FLEET NATIONAL BANK,
as a Lender
By: ____________________________
Title:
NATIONSBANK OF GEORGIA, N.A.
as a Lender
By: ____________________________
Title:
-6-
<PAGE>
ACKNOWLEDGMENT
Reference is hereby made to that certain Amended and Restated Guaranty
dated as of June 28, 1994, as amended (the "Guaranty"), executed by the
undersigned, FOAMEX INTERNATIONAL INC., a Delaware corporation ("Foamex
International"), in favor of the Administrative Agents, the Lenders and the
Issuing Banks. Foamex International hereby consents to the terms of the
foregoing First Amendment to Third Amended and Restated Credit Agreement and
agrees that, except as provided in such First Amendment, the terms thereof shall
not affect in any way its obligations and liabilities under the Guaranty or any
other Loan Document to which its is a party, all of which obligations and
liabilities shall remain in full force and effect and each of which are hereby
reaffirmed.
FOAMEX INTERNATIONAL INC.
By: ____________________________
Title:
Dated as of September __, 1996
-7-
<PAGE>
ACKNOWLEDGMENT
Reference is hereby made to that certain Guaranty dated as of November 18,
1993, as amended (the "Guaranty"), executed by the undersigned, FOAMEX CAPITAL
CORPORATION, a Delaware corporation ("FCC"), in favor of the Administrative
Agents, the Lenders and the Issuing Banks. FCC hereby consents to the terms of
the foregoing First Amendment to Third Amended and Restated Credit Agreement and
agrees that, except as provided in such First Amendment, the terms thereof shall
not affect in any way its obligations and liabilities under the Guaranty or any
other Loan Document to which its is a party, all of which obligations and
liabilities shall remain in full force and effect and each of which are hereby
reaffirmed.
FOAMEX CAPITAL CORPORATION
By: ____________________________
Title:
Dated as of September __, 1996
-8-
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<CIK> 0000890080
<NAME> FOAMEX L.P.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-29-1996
<EXCHANGE-RATE> 1
<CASH> 47,488
<SECURITIES> 0
<RECEIVABLES> 139,220
<ALLOWANCES> 0
<INVENTORY> 90,089
<CURRENT-ASSETS> 303,298
<PP&E> 173,237
<DEPRECIATION> 0
<TOTAL-ASSETS> 592,921
<CURRENT-LIABILITIES> 184,111
<BONDS> 409,006
0
0
<COMMON> 0
<OTHER-SE> (24,043)
<TOTAL-LIABILITY-AND-EQUITY> 592,921
<SALES> 236,766
<TOTAL-REVENUES> 236,766
<CGS> 196,806
<TOTAL-COSTS> 196,806
<OTHER-EXPENSES> 15,057
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,131
<INCOME-PRETAX> 14,311
<INCOME-TAX> 2,866
<INCOME-CONTINUING> 11,445
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,784
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
