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 March 30, 1997
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 May 12, 1997 was 1,000.
Page 1 of 28
Exhibit List on Page 21 of 28
<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 Periods Ended
March 30, 1997 and March 31, 1996 3
Condensed Consolidated Balance Sheets as of
March 30, 1997 and December 29, 1996 4
Condensed Consolidated Statements of Cash Flows -
Thirteen Week Periods Ended March 30, 1997
and March 31, 1996 5
Notes to Condensed Consolidated Financial Statements 6
Foamex Capital Corporation
Balance Sheets as of March 30, 1997 and December 29, 1996 13
Notes to Balance Sheets 14
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 16
Part II. Other Information 21
Exhibit List 21
Signatures 28
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
March 30, March 31,
1997 1996
(thousands)
<S> <C> <C>
NET SALES $ 229,120 $ 219,131
COST OF GOODS SOLD 186,323 183,100
--------- ---------
GROSS PROFIT 42,797 36,031
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 15,685 13,601
--------- ---------
INCOME FROM OPERATIONS 27,112 22,430
INTEREST AND DEBT ISSUANCE EXPENSE 10,704 10,413
OTHER INCOME, NET 650 200
--------- ---------
INCOME FROM CONTINUING OPERATIONS
BEFORE PROVISION FOR INCOME TAXES 17,058 12,217
PROVISION FOR INCOME TAXES 842 1,019
--------- ---------
INCOME FROM CONTINUING OPERATIONS 16,216 11,198
INCOME FROM DISCONTINUED OPERATIONS,
NET OF INCOME TAXES -- 637
--------- ---------
INCOME BEFORE EXTRAORDINARY LOSS 16,216 11,835
EXTRAORDINARY LOSS ON EARLY
EXTINGUISHMENT OF DEBT (679) --
--------- ---------
NET INCOME $ 15,537 $ 11,835
========= =========
</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>
March 30, December 29,
ASSETS 1997 1996
CURRENT ASSETS: (thousands)
<S> <C> <C>
Cash and cash equivalents $ 32,657 $ 20,968
Accounts receivable, net 130,166 125,847
Inventories 102,344 102,610
Other current assets 45,519 39,495
--------- ---------
Total current assets 310,686 288,920
PROPERTY, PLANT AND EQUIPMENT, NET 185,961 182,427
COST IN EXCESS OF ASSETS ACQUIRED, NET 83,320 83,991
DEBT ISSUANCE COSTS, NET 14,048 14,902
OTHER ASSETS 16,112 15,917
--------- ---------
TOTAL ASSETS $ 610,127 $ 586,157
========= =========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 3,985 $ 3,692
Current portion of long-term debt 8,784 13,735
Accounts payable 73,859 75,621
Accounts payable to related parties 11,576 8,803
Accrued interest 19,147 8,871
Other accrued liabilities 46,125 41,108
--------- ---------
Total current liabilities 163,476 151,830
--------- ---------
LONG-TERM DEBT 389,162 392,617
--------- ---------
OTHER LIABILITIES 29,303 28,878
--------- ---------
COMMITMENTS AND CONTINGENCIES -- --
--------- ---------
PARTNERS' EQUITY:
General partners 970 632
Limited partner 74,178 57,654
Note receivable from partner (34,504) (33,180)
Other (12,458) (12,274)
--------- ---------
Total partners' equity 28,186 12,832
--------- ---------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 610,127 $ 586,157
========= =========
</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>
13 Week Periods Ended
March 30, March 31,
1997 1996
(thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 15,537 $ 11,835
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 5,055 5,523
Amortization of debt issuance costs and debt discount 703 706
Income from discontinued operations -- (637)
Extraordinary loss on early extinguishment of debt 679 --
Other operating activities (83) 389
Changes in operating assets and liabilities, excluding
discontinued operations (2,416) (5,912)
-------- --------
Net cash provided by continuing operating activities 19,475 11,904
Net cash used for discontinued operations -- (3,576)
-------- --------
Net cash provided by operating activities 19,475 8,328
-------- --------
INVESTING ACTIVITIES:
Capital expenditures (7,363) (3,256)
Decrease in restricted cash 8,356 --
Other investing activities -- 981
Discontinued operations investing activities -- (292)
-------- --------
Net cash provided by (used for) investing activities 993 (2,567)
-------- --------
FINANCING ACTIVITIES:
Net proceeds from short-term borrowings 293 1,930
Proceeds from long-term debt 500 --
Repayment of long-term debt (9,038) (2,137)
Distributions to partners (124) --
Other financing activities (410) (32)
-------- --------
Net cash used for financing activities (8,779) (239)
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 11,689 5,522
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 20,968 638
-------- --------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 32,657 $ 6,160
======== ========
</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. ORGANIZATION AND BASIS OF PRESENTATION
Foamex L.P.'s condensed consolidated balance sheet as of December 29, 1996
has been condensed from the audited consolidated balance sheet at that date. The
condensed consolidated balance sheet as of March 30, 1997 and the condensed
consolidated statements of operations and the condensed consolidated statements
of cash flows for the thirteen week periods ended March 30, 1997 and March 31,
1996 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 statement of operations and the condensed consolidated statement of
cash flows for the thirteen week period ended March 31, 1996 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.
Foamex-JPS Automotive L.P. ("FJPS") is a 98% limited partner of Foamex
L.P., FMXI, Inc. ("FMXI") is a 1% managing general partner of Foamex L.P. and
Trace Foam, Inc. ("Trace Foam") is a 1% non-managing general partner of Foamex
L.P. FJPS and FMXI are wholly-owned subsidiaries of Foamex International Inc.
("Foamex International").
On April 7, 1997, Foamex International announced that an evaluation of its
capital structure was initiated with the intention of refinancing certain
long-term indebtedness to reduce Foamex International's interest expense and
improve financing flexibility. On May 12, 1997, Foamex International announced a
$540.0 million refinancing plan that includes a $480.0 million credit facility
and $150.0 million of senior subordinated notes. As part of this refinancing
plan, Foamex L.P. commenced tender offers with concurrent consent solicitations
for $373.0 million of aggregate principal amount of its public debt and $116.7
million of aggregate principal amount of FJPS senior secured discount debentures
due 2004. The refinancing activities are expected to be completed by the end of
the second quarter of 1997. (See Note 5 below for further discussion).
Foamex International expects that as a result of its refinancing
activities, assuming no material changes in interest rates and the tendering of
substantially all of Foamex International's outstanding public debt, future
annualized interest expense will be reduced by between $8.0 million and $11.0
million as compared to the expense required by the existing indentures and
credit agreements. Foamex International expects that future interest expense,
and the ability to realize the savings in interest expense, will vary based on a
variety of factors, including fluctuation in interest rates in general; the
pricing of the credit agreement and the senior subordinated notes; and the
percentage of securities tendered in the tender offers. In addition, if the
refinancing is consummated, variable rate debt will comprise a larger percentage
of Foamex L.P.'s overall indebtedness than in the past, and as a result, future
fluctuations in interest rates will have a greater impact on Foamex L.P.'s
interest expense than in the past.
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 1996 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 29, 1996.
6
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
2. DISCONTINUED OPERATIONS
During 1996, Foamex L.P. sold the outstanding common stock of Perfect Fit
Industries, Inc. ("Perfect Fit"), a wholly-owned subsidiary, for an adjusted
sale price of approximately $44.2 million. The sale included substantially all
of the net assets of Foamex L.P.'s home comfort products business segment.
Accordingly, the accompanying condensed consolidated statement of operations and
the condensed consolidated statement of cash flows for the thirteen week period
ended March 31, 1996 reflects the home comfort products business segment as
discontinued operations.
Foamex L.P.'s condensed consolidated financial statements have been
restated to reflect the discontinuation of the home comfort products business
segment. A summary of the operating results for the discontinued operations is
as follows:
<TABLE>
<CAPTION>
13 Week Period Ended
March 31, 1996
(thousands)
<S> <C>
Net sales $ 25,162
Gross profit 4,250
Income from operations 1,224
Interest and debt issuance expense 1,194
Income from discontinued operations before (benefit) from income taxes 30
Benefit for income taxes (607)
Income from discontinued operations, net of income taxes 637
</TABLE>
3. INVENTORIES
Inventories consist of:
<TABLE>
<CAPTION>
March 30, December 29,
1997 1996
(thousands)
<S> <C> <C>
Raw materials and supplies $ 56,766 $ 61,559
Work-in-process 15,166 13,453
Finished goods 30,412 27,598
-------- --------
Total $102,344 $102,610
======== ========
</TABLE>
4. RELATED PARTY TRANSACTIONS
Foamex L.P. has a $56.2 million principal amount note, as amended, due 2006
(the "FJPS Note") from its 98% limited partner FJPS which is included in
partner's equity with an accreted value of $34.5 million as of March 30, 1997.
The original issue discount is being amortized using the weighted average to
maturity method over the life of the issue. The accretion of the original issue
discount of $1.3 million and $1.8 million for the thirteen week periods ended
March 30, 1997 and March 31, 1996, respectively, has been reflected as a direct
increase in the FJPS Note and the partners' capital accounts, and thereby
excluded from the condensed consolidated statements of operations.
7
<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 pursuant
to which, 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 March 30, 1997 and March 31, 1996, Foamex L.P. purchased approximately
$27.7 million and $24.1 million, respectively, of raw materials under the Supply
Agreement. As of March 30, 1997 and December 29, 1996, Foamex L.P. had accounts
payable to Foamex International of approximately $11.6 million and $8.8 million,
respectively, associated with the Supply Agreement.
Foamex L.P. chartered an aircraft (which is owned by a wholly-owned
subsidiary of Foamex International) through a third party and incurred costs of
approximately $0.4 million and $0.2 million during the thirteen week periods
ended March 30, 1997 and March 31, 1996, respectively.
5. LONG-TERM DEBT
Refinancing Plan
On May 12, 1997, Foamex International announced a refinancing plan designed
to improve its financial and operating flexibility and reduce interest expense.
As part of this refinancing plan, Foamex L.P., a 99% owned subsidiary of Foamex
International, commenced tender offers with concurrent consent solicitations for
a total of $373.0 million of its aggregate principal of public debt and $116.7
million principal amount of FJPS's public debt, including:
o $104.3 million of aggregate principal of its 9 1/2% Senior Secured Notes
due 2000 for an aggregate consideration of 104.193% of principal plus
accrued interest, comprised of a tender price of 102.193% and a consent fee
of 2%;
o $135.9 million of aggregate principal of its 11 1/4% Senior Notes due 2002
for an aggregate consideration of 105.709% of principal plus accrued
interest, comprised of a tender price of 103.709% and a consent fee of 2%;
o $125.8 million of aggregate principal of its 11 7/8% Senior Subordinated
Debentures due 2004 for an aggregate consideration of 107.586% of principal
plus accrued interest, comprised of a tender price of 105.586% and a
consent fee of 2%;
o $7.0 million of aggregate principal of its 11 7/8% Senior Subordinated
Debentures, Series B due 2004 for an aggregate consideration of 107.586% of
principal plus accrued interest, comprised of a tender price of 105.586%
and a consent fee of 2%; and
o $116.7 million principal amount of the Foamex-JPS Automotive L.P. Senior
Secured Discount Debentures due 2004 ("FJPS Discount Debentures") for an
aggregate consideration of 88% of principal amount, which represents
approximately 116.2% of the projected accreted value as of June 9, 1997,
comprised of a tender price of 86% of principal amount and a consent fee of
2%.
8
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
5. LONG-TERM DEBT (continued)
The consent solicitations will expire on May 23, 1997 and the tender offers
will expire on June 9, 1997. Holders who tender their securities in the tender
offers will be deemed to have submitted consents in the consent solicitations.
Holders may not deliver consents without tendering their securities. Holders
must tender their securities prior to May 23, 1997 in order to receive the
consent fee. Holders who tender their securities after such date and before the
expiration date of June 9, 1997 will receive the tender price for their
securities, but will not receive the consent fee. Upon the closing of the
refinancing plan, Foamex L.P. intends to distribute the purchased FJPS Discount
Debentures to its partners.
Foamex L.P. also plans to repay all borrowings under the terms of its
existing credit facility outstanding at the closing of the refinancing plan
which is estimated to be $5.2 million. Outstanding term loan borrowings as of
March 30, 1997 is approximately $10.0 million (see Extinguishment of Debt
discussed below).
Foamex L.P. expects to fund the repurchase with the proceeds of:
o A $480.0 million Foamex L.P. credit facility arranged by a bank lending
group including an estimated $150.0 million revolving credit line. Upon
completion of the refinancing transactions, it expects to have
approximately $100.0 million available under the revolving credit line.
o A $150.0 million offering of Foamex L.P. senior subordinated notes in the
Rule 144A market.
o Cash on hand.
Foamex L.P. expects to complete its refinancing activities by the end of
the second quarter of 1997 and record an extraordinary loss on the early
extinguishment of debt of between $46.0 million to $50.0 million in the second
quarter of 1997 related to the premiums paid to repurchase the debt, the
write-off of debt issuance costs and additional one-time charges related to the
other aspects of the refinancing plan.
Foamex L.P. 's future interest expense will increase and vary based on a
variety of factors, including fluctuation in interest rates in general; the
pricing of the credit agreement and the senior subordinated notes; and the
percentage of securities tendered in the tender offers. In addition, if the
refinancing is consummated, variable rate debt will comprise a larger percentage
of Foamex L.P.'s overall indebtedness than in the past, and as a result, future
fluctuations in interest rates will have a greater impact on Foamex L.P.'s
interest expense than in the past. Also, the amount of the expected
extraordinary loss on the early extinguishment of debt in the second quarter of
1997 will vary based on a variety of factors, including the percentage of
securities tendered in the tender offers and other factors beyond Foamex L.P.'s
control.
Consummation of the tender offers, the consent solicitations, the credit
facility and the senior subordinated notes offering are subject to conditions,
several of which are beyond Foamex L.P.'s control, and there can be no assurance
that such transactions will be consummated.
This Report shall not constitute an offer to sell or the solicitation of an
offer to buy the securities offered by Foamex L.P. in the private placement.
9
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
5. LONG-TERM DEBT (continued)
Extinguishment of Debt
During 1997, Foamex L.P. used approximately $8.4 million of the net
proceeds from the sale of Perfect Fit to repurchase outstanding indebtedness of
approximately $8.0 million. Also, during April 1997, Foamex L.P. used the
remaining net proceeds from the sale of Perfect Fit to reduce bank term loan
borrowings by approximately $3.8 million.
6. ENVIRONMENTAL MATTERS
As of March 30, 1997, Foamex L.P. has environmental accruals of
approximately $4.0 million for environmental matters. In addition, as of March
30, 1997, Foamex L.P. has net receivables of approximately $1.0 million relating
to indemnification for environmental liabilities, net of an allowance of
approximately $1.0 million relating to potential disagreements regarding the
scope of the indemnification. Foamex L.P. believes that realization of the net
receivable established for indemnification is probable.
On May 5, 1997, there was an accidental chemical spill at one of Foamex
L.P.'s manufacturing facilities that was contained on site. The remaining
clean-up of the site is expected to primarily consist of the disposal of
contaminated soil. Foamex L.P. has contacted the appropriate environmental
authorities but has received no notification from such authorities regarding the
accidental chemical spill including the method of disposal of the contaminated
soil. Foamex L.P. expects to take a charge of at least $0.6 million in the
second quarter of 1997 for the clean-up of the site including the disposal of
the contaminated soil. The actual cost and the timetable of the clean-up of the
site cannot be predicted with any degree of certainty at this time; therefore,
there can be no assurance that the clean-up of the site will not result in a
more significant environmental liability in the future.
Foamex L.P. has reported to appropriate state authorities that it has found
soil and groundwater contamination in excess of state standards at four
additional facilities and soil contamination in excess of state standards at
three 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.
The actual cost and the timetable of any such remediation cannot be predicted
with any degree of certainty at this time. As of March 30, 1997, Foamex L.P. has
environmental accruals of approximately $3.1 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. has six USTs that will require removal or permanent in-place closure
by the end of 1998. Due to the age of these tanks, leakage may have occurred
resulting in soil and possibly groundwater contamination. Foamex L.P. has
accrued approximately $0.4 million for the estimated removal and remediation, if
any, associated with these USTs. 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
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.
10
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
6. ENVIRONMENTAL MATTERS (continued)
Foamex L.P. has been designated as a Potentially Responsible Party ("PRP")
by the United States Environmental Protection Agency (the "EPA") with respect to
thirteen sites, with an estimated total liability to Foamex L.P. for the
thirteen sites of less than approximately $0.5 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.
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 May 12, 1997, Foamex L.P. and Trace International Holdings, Inc.
("Trace Holdings") were two of multiple defendants in actions filed on behalf of
approximately 5,000 recipients of breast implants in various United States
federal and state courts and one Canadian provincial court, 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 700 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 903 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 potential
indemnity from the manufacturers of polyurethane covered breast implants,
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 October 1990. Although Trace Holdings has paid Foamex L.P.'s litigation
expenses to date pursuant to such indemnification and management believes Trace
Holdings likely will be in a position to continue to pay such expenses, there
can be no absolute assurance that Trace Holdings will be able to provide such
indemnification. Based on information available at this time with respect to the
potential liability, and without taking into account the indemnification
provided by Trace Holdings and the coverage provided by Trace Holdings' and
Foamex L.P.'s liability insurance, 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.
11
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
7. LITIGATION (continued)
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.
12
<PAGE>
FOAMEX CAPITAL CORPORATION
(A Wholly-Owned Subsidiary of Foamex L.P.)
BALANCE SHEETS (unaudited)
March 30, December 29,
ASSETS 1997 1996
(thousands)
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
====== =======
The accompanying notes are an integral part of the
balance sheets.
13
<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 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. 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 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 are collateralized by certain real property of Foamex L.P. 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 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 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.
14
<PAGE>
FOAMEX CAPITAL CORPORATION
(A Wholly-Owned Subsidiary of Foamex L.P.)
NOTES TO BALANCE SHEETS (unaudited)
2. COMMITMENTS AND CONTINGENCIES (continued)
Refinancing Plan
On May 12, 1997, Foamex International announced a refinancing plan designed
to improve its financing and operating flexibility and reduce interest expense.
As part of this refinancing plan, Foamex L.P., a 99% owned subsidiary of Foamex
International, commenced tender offers with concurrent consent solicitations for
a total of $373.0 million of its aggregate principal of public debt and $116.7
million principal amount of FJPS's public debt See Note 5 to Foamex L.P.'s
condensed consolidated financial statements for further discussion.
15
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Foamex L.P. operates in the flexible polyurethane and advanced polymer foam
products industry, together with its wholly-owned subsidiaries, General Felt
Industries, Inc., Foamex Fibers, Inc., Foamex Canada Inc., Foamex Latin America,
Inc., and Foamex Asia, 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 April 7, 1997, Foamex International announced that an evaluation of its
capital structure was initiated with the intention of refinancing certain
long-term indebtedness to reduce Foamex International's interest expense and
improve financing flexibility. On May 12, 1997, Foamex International announced a
refinancing plan designed to improve its financial and operating flexibility and
reduce interest expense. As part of this refinancing plan, Foamex L.P., a 99%
owned subsidiary of Foamex International, commenced tender offers with
concurrent consent solicitations for a total of $373.0 million of its aggregate
principal of public debt and $116.7 million principal amount of FJPS's public
debt. The refinancing plan, including the tender offers, are subject to
conditions, several of which are beyond the control of Foamex L.P., therefore,
there can be no assurance that such transactions will be consummated. (See Note
5 to the condensed consolidated financial statements for further discussion).
The principal suppliers to the foam industry announced raw material price
increases effective April 1997. Foamex L.P. is unable to predict whether, or to
what extent, the April 1997 increases or any future increase will be sustained.
Foamex L.P. believes that if any price increase is sustained in the industry, it
will also be impacted by such increase. There can be no assurance that chemical
suppliers will not increase raw material costs in the future or that Foamex L.P.
will be able to implement selling price increases to offset any such raw
material cost increases.
During 1996, Foamex L.P. sold Perfect Fit which comprised the home comfort
products business segment of Foamex L.P. Accordingly, the accompanying condensed
consolidated statement of operations and statement of cash flows for the
thirteen week period ended March 31, 1996 reflects the home comfort products
business segment as discontinued operations. See Note 2 to the condensed
consolidated financial statements for further discussion.
Operating results for 1997 are expected to be influenced by various
internal and external factors. These factors include, among other things, (i)
continued implementation of the operational plan to improve Foamex L.P.'s
profitability, (ii) the potential recapitalization of Foamex L.P., (iii)
additional raw material price increases, if any, by Foamex L.P.'s chemical
suppliers and (iv) Foamex L.P.'s success in passing on to its customers selling
price increases to recover such raw material cost increases.1
13 Week Period Ended March 30, 1997 Compared to 13 Week Period Ended March 31,
1996
Results of Operations
Net sales for the first quarter of 1997 were $229.1 million as compared to
$219.1 million in the first quarter of 1996, an increase of $10.0 million or
4.6%. Carpet cushion net sales for the first quarter of 1997 increased 6.9% to
$67.9 million from $63.5 million in the first quarter of 1996 primarily due to
the effect of increased selling prices that were initiated late in the second
quarter of 1996, as well as increased shipments of certain carpet cushion
products. Cushioning foam net sales for the first quarter of 1997 increased 1.8%
to $84.0 million from $82.5 million in the first quarter of 1996 primarily due
to an increase in net sales from both new and existing customers of bedding
related products. Automotive foam net sales for the first quarter of 1997
increased 6.6% to $59.7 million from $56.0 million in the first quarter of 1996
primarily due to a continued increase in net sales of tri-laminates and
composite headliners and increased selling prices during the first quarter of
1996. Technical foam net sales for the first quarter of 1997 increased 2.3% to
$17.5 million from $17.1 million in the first quarter of 1996 primarily due to
increased volume.
- --------
1 This paragraph contains forward-looking statements and should be read in
conjunction with the discussion regarding forward-looking statements set
forth on Pages 3 and 4 of Foamex L.P.'s 1996 Annual Report on Form 10-K.
16
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Gross profit as a percentage of net sales increased to 18.7% for the first
quarter of 1997 from 16.4% in the first quarter of 1996 primarily due to selling
price increases and improved material and production efficiencies which includes
(i) an increased favorable impact during the first quarter of 1997 as compared
to the first quarter of 1996 for the selling prices initiated in 1996 to offset
previous raw material cost increases, (ii) favorable raw material efficiencies
and (iii) an increased favorable impact of the 1995 operational plan in the
first quarter of 1997 as compared to the first quarter of 1996.
Operating income increased to $27.1 million for the first quarter of 1997
from $22.4 million in the first quarter of 1996 primarily due to improved gross
profit margins as discussed above offset by an increase of $2.1 million in
selling, general and administrative expenses for the first quarter of 1997. The
increase in selling, general and administrative expenses is primarily due to
increases in employee compensation and incentives and costs associated with the
launching of new products and international expansion.
Income from continuing operations increased to $16.2 million for the first
quarter of 1997 from $11.2 million in the first quarter of 1996 primarily due to
the reasons cited above. Interest and debt issuance expense of $10.7 million for
the first quarter of 1997 is fairly consistent with $10.4 million for the first
quarter of 1996.
Income from discontinued operations in the first quarter of 1996 represents
the operating income of Perfect Fit which was sold during 1996. See Note 2 to
the 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 and redemption premiums
associated with the early extinguishment of $8.0 million of long-term debt.
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
Effects of the Refinancing Plan2
Upon consummation of the refinancing plan, Foamex L.P. will purchase all
securities validly tendered in the tender offers, and will repay its existing
credit facility. Foamex L.P. will fund such payments through the issuance of
$150.0 million principal amount of senior subordinated notes in a private
placement, a new credit facility for up to $480.0 million, of which
approximately $380.0 million is expected to be borrowed upon the closing of the
refinancing, and with cash on hand. Consummation of the refinancing plan is
expected to increase the outstanding principal amount of Foamex L.P.'s total
long-term debt by $152.5 million from $398.0 million as of March 30, 1997 to
$550.5 million on a pro forma basis (assuming all of the securities are tendered
in the tender offers).
Foamex L.P. expects to complete its refinancing activities by the end of
the second quarter of 1997 and take a one-time charge, of between $46.0 million
to $50.0 million in the second quarter of 1997 related to the early
extinguishment of debt, the write-off of debt issuance costs and additional
one-time charges related to the other aspects of the other refinancing plan.
- --------
2 This paragraph contains forward-looking statements and should be read in
conjunctions with the discussion regarding forward-looking statements set
forth on Pages 3 and 4 of Foamex L.P.'s 1996 Annual Report on Form 10-K.
17
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Foamex L.P.'s future interest expense will increase and vary based on a
variety of factors, including fluctuation in interest rates in general; the
pricing of the credit agreement and the senior subordinated notes; and the
percentage of securities tendered in the tender offers. In addition, if the
refinancing is consummated, variable rate debt will comprise a larger percentage
of Foamex L.P.'s overall indebtedness than in the past, and as a result, future
fluctuations in interest rates will have a greater impact on Foamex L.P.'s
interest expense than in the past. Foamex L.P. also noted that the size of the
expected one-time pre-tax charge in the second quarter of 1997 related to the
refinancing will vary based on a variety of factors, including the percentage of
securities tendered in the tender offers and other factors beyond Foamex L.P.'s
control.
Consummation of the tender offers, the consent solicitations, the credit
facility and the senior subordinated notes offering are subject to conditions,
several of which are beyond Foamex L.P.'s control, and there can be no assurance
that such transactions will be consummated. (See Note 5 to the condensed
consolidated financial statements).
Liquidity and Capital Resources
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
revolving credit agreements, if necessary, will be adequate to meet its
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 its credit agreements or indentures and such
noncompliance was not cured by Foamex L.P. or waived by the lenders or
bondholders. Foamex L.P. was in compliance with such covenants as of March 30,
1997 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 existing financing agreements.
Cash and cash equivalents increased $11.7 million during the first quarter
of 1997 to $32.7 million at March 30, 1997 from $21.0 million at December 29,
1996 primarily due to $19.5 million of net cash provided by operating activities
offset by $7.4 million of cash used for capital expenditures and $0.4 million
used for other financing activities. In addition, Foamex L.P. utilized
approximately $8.4 million of restricted cash to repurchase long-term debt with
a net book value of approximately $8.0 million. Cash flow from continuing
operating activities increased $7.6 million to $19.5 million for the first
quarter of 1997 as compared to $11.9 million for the first quarter of 1996. Cash
flow from continuing operating activities increased for 1997 as compared to 1996
primarily due to an increase of $3.7 million in net income and a $3.5 million
reduction in the use of cash for operating assets and liabilities.
Working capital increased $10.1 million for the first quarter of 1997 to
$147.2 million at March 30, 1997 from $137.1 million at December 29, 1996. The
increase in working capital is primarily due to improved operating results from
continuing operations. The net operating assets and liabilities (comprised of
accounts receivable, inventories and accounts payable) increased $3.1 million to
$147.1 million at March 30, 1997 from $144.0 million at December 29, 1996
primarily due to an increase in accounts receivable offset by an increase in
accounts payable. The increase in accounts receivable is primarily due to an
increase in net sales for March 1997 as compared to December 1996. The increase
in accounts payable is primarily due to the timing of payments. Inventories were
fairly consistent as compared to December 29, 1996.
During 1997, Foamex L.P. spent approximately $7.4 million on capital
expenditures and expects to maintain or reduce spending for capital expenditures
for the foreseeable future since significant capital projects (e.g. new Mexico
City facility) are expected to be completed during 1997.
As of March 30, 1997, there were no outstanding revolving credit borrowings
under Foamex L.P.'s existing credit facility with unused availability of
approximately $32.8 million. Borrowings by Foamex Canada
18
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Inc. as of March 30, 1997 were $4.0 million under a revolving credit agreement
with unused availability of approximately $0.3 million.
Interest Rate Swaps
Foamex L.P. has interest rate swap agreements with a notional amount of
$300.0 million through December 2001. Under the swap agreements, Foamex L.P. is
obligated to make fixed payments at 5.30% per annum for the twelve months ended
in December 1997 and variable payments based on LIBOR for the remainder of the
agreement, in exchange for fixed payments by the swap partner at 6.0% per annum
for the remainder of the agreement, payable semiannually in arrears. The swap
partner has the ability to terminate the swap agreement after the December 1997
payment if the LIBOR rate Foamex L.P. is to pay for any period thereafter is
equal to or less than 4.50% per annum. Interest expense will be subject to
fluctuations in LIBOR during the term of the swap agreement except during 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. The effect of
the two interest rate swaps described above was a favorable adjustment to
interest expense of $0.9 million and $0.8 million for the thirteen week periods
ended March 30, 1997 and March 31, 1996, respectively.
Environmental Matters
On May 5, 1997, there was an accidental chemical spill at one of Foamex
L.P.'s manufacturing facilities that was contained on site. The remaining
clean-up of the site is expected to primarily consist of the disposal of
contaminated soil. Foamex L.P. has contacted the appropriate environmental
authorities but has received no notification from such authorities regarding the
accidental chemical spill including the method of disposal of the contaminated
soil. Foamex L.P. expects to take a charge of at least $0.6 million in the
second quarter of 1997 for the clean-up of the site including the disposal of
the contaminated soil. The actual cost and the timetable of the clean-up of the
site cannot be predicted with any degree of certainty at this time; therefore,
there can be no assurance that the clean-up of the site will not result in a
more significant environmental liability in the future.
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 have not had a material adverse effect on its
operations, financial position, capital expenditures or competitive position.
The amount of liabilities recorded by Foamex L.P. in connection with
environmental matters as of March 30, 1997 was approximately $4.0 million. In
addition, as of March 30, 1997, Foamex L.P. has net receivables of approximately
$1.0 million for indemnification of environmental liabilities from former
owners, net of a $1.0 million allowance relating to potential disagreements
regarding the scope of the indemnification. 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.
19
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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. Effective in January 1997, Foamex L.P.'s operations in Mexico became
subject to highly inflationary accounting for financial reporting purposes.
Translation adjustments resulting from fluctuations in the exchange rate between
the Mexican Peso and the U.S. dollar will be included in Foamex L.P.'s
consolidated statement of operations as compared to partner's equity. Large
fluctuations in the Mexican Peso exchange rate could have an adverse impact on
Foamex L.P.'s results of operations.
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.
20
<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 29, 1996.
The information from Notes 6 and 7 of the condensed consolidated
financial statements of Foamex L.P. and subsidiaries as of March 30,
1997 (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.
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.
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.
21
<PAGE>
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(s) - Third Supplemental Indenture, dated as of August 1, 1996, by and
among Foamex L.P. and FCC, as Issuers, Foamex International, as
parent guarantor, General Felt, as guarantor, Perfect Fit, as
withdrawing guarantor, and Fleet National Bank ("Fleet"), 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(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.
4.9(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.
4.10(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.
4.11(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.
4.12(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.
4.13(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.
4.14(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.
4.15(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.
4.16(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.
4.17(t) - Fifth Supplemental Indenture, dated as of August 1, 1996, by and
among Foamex L.P. and FCC as guarantors, Perfect Fit as
withdrawing guarantor, and Fleet, as trustee relating to the
Senior Notes.
4.18(c) - Indenture, dated as of October 13, 1992, among Foamex L.P., FCC
and Shawmut, as trustee, relating to $126,000,000 principal amount
of 117/8% Senior Subordinated Debentures due 2004, including form
of Senior Subordinated Debenture.
4.19(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.
4.20(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.
22
<PAGE>
4.21(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.
4.22(t) - Fourth Supplemental Indenture, dated as of August 1, 1996, among
Foamex L.P. and FCC, as Issuers, Foamex International, as Parent
Guarantor, General Felt, as Guarantor, Perfect Fit, as withdrawing
guarantor, and Fleet, 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, 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(u) - Consent, Waiver and Amendment Agreement, dated December 11,
1996, between FJPS and Foamex L.P.
4.27(t) - Commitment letter, dated July 9, 1996, from The Bank of Nova
Scotia to Foamex Canada Inc.
4.28(t) - Third Amended and Restated Credit Agreement, dated as of July
30, 1996, among Foamex L.P., General Felt, Trace Foam Company,
Inc. ("Trace Foam"), FMXI, Inc. ("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").
4.29(t) - 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.
4.30(u) - Second Amendment to Third Amended and Restated Credit Agreement,
dated as of November 27, 1996, among Foamex L.P., General Felt,
Trace Foam, FMXI, Citibank, N.A., The Bank of Nova Scoria, 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.
4.31(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.
4.32(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.
4.33(u) - 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.
4.34(q) - 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.
4.35(q) - 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.
4.36(t) - Third Amendment to Amended and Restated Guaranty, dated November
27, 1996, executed by Foamex International in favor of Citibank,
N.A. as Collateral Agent, 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.
23
<PAGE>
4.38(u) - 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.
4.39(s) - Amendatory Agreement, dated as of July 30, 1996, among Foamex
L.P., General Felt, FCC, and Citibank, N.A., as collateral agent
under the Credit Agreement.
4.40(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.
4.41(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
John Rallis ("Rallis").
4.42(a) - Marely Loan Commitment Agreement, dated as of December 14, 1993,
by and between Foamex International and Marely s.a. ("Marely").
4.43(a) - DLJ Loan Commitment Agreement, dated as of December 14, 1993, by
and between Foamex International and DLJ Funding, Inc. ("DLJ
Funding").
4.44(s) - 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(u) - Revised Confirmation Letter Agreements, dated as of January 7,
1997, by and between Foamex L.P. and Citibank, N.A.
10.2(u) - Assignment Agreement, dated as of December 16, 1996, among
Foamex L.P., FCC, and Solomon Holdings, Inc. ("Solomon Holdings").
10.3(d) - Reimbursement Agreement, dated as of March 23, 1993, between
Trace Holdings and General Felt.
10.4(d) - Shareholder Agreement, dated December 31, 1992, among Recticel,
s.a. ("Recticel"), 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.
10.5(e) - Asset Transfer Agreement, dated as of October 2, 1990, between
Trace Holdings and Foamex L.P. (the "Trace Holdings Asset Transfer
Agreement").
10.6(e) - First Amendment, dated as of December 19, 1991, to the Trace
Holdings Asset Transfer Agreement.
10.7(e) - Amended and Restated Guaranty, dated as of December 19, 1991,
made by Trace Foam in favor of Foamex L.P.
10.8(e) - Asset Transfer Agreement, dated as of October 2, 1990, between
RFC and Foamex L.P. (the "RFC Asset Transfer Agreement").
10.9(e) - First Amendment, dated as of December 19, 1991, to the RFC Asset
Transfer Agreement.
10.10(e) - Schedule 5.03 to the RFC Asset Transfer Agreement (the "5.03
Protocol").
10.11(d) - The 5.03 Protocol Assumption Agreement, dated as of October 13,
1992, between RFC and Foamex L.P.
10.12(d) - Letter Agreement between Trace Holdings and Recticel regarding
the Recticel guaranty, dated as of July 22, 1992.
10.13(i) - Supply Agreement, dated June 28, 1994, between Foamex L.P. and
Foamex International.
10.14(i) - First Amended and Restated Tax Sharing Agreement, dated as of
December 14, 1993, among Foamex L.P., Trace Foam, FMXI and Foamex
International.
10.15(i) - Tax Sharing Agreement, dated as of June 28, 1994, among FJPS and
Foamex International. 10.16(u) - Tax Distribution Advance
Agreement, dated as of December 11, 1996, by and between Foamex
L.P. and FJPS.
10.17(d) - Trace Foam Management Agreement between Foamex L.P. and Trace
Foam, dated as of October 13, 1992.
10.18(i) - Affirmation Agreement re: Management Agreement, dated as of
December 14, 1993 between Foamex L.P. and Trace Foam.
10.19(e)(p) - Salaried Incentive Plan of Foamex L.P. and Subsidiaries.
10.20(e)(p) - Trace Holdings 1987 Nonqualified Stock Option Plan.
10.21(e)(p) - Equity Growth Participation Program.
24
<PAGE>
10.22(j)(o) - General Felt Industries, Inc. Retirement Plan for Salaried
Employees, effective as of January 1, 1995.
10.23(e)(o) - 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.
10.24(e)(p) - Foamex L.P. 401(k) Savings Plan dated January 1, 1989.
10.25(o) - Foamex/GFI 401(k) Savings Plan dated July 1, 1995.
10.26(a)(p) - Foamex International's 1993 Stock Option Plan.
10.27(a)(p) - Foamex International's Non-Employee Director Compensation Plan.
10.28(a)(p) - Employment Agreement, dated as of May 6, 1993, by and between
Foamex L.P. and Rallis.
10.29(f)(p) - Employment Agreement, dated as of February 1, 1994, by and
between Foamex L.P. and William H. Bundy.
10.30(p) - Employment Agreement, dated as of July 26, 1995, by and between
Foamex L.P. and Salvatore J. Bonanno.
10.31(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.
10.32(a) - Exchange Agreement, dated as of December 14, 1993, by and
between Foamex International and RFC.
10.33(a) - Withdrawal Agreement, dated as of December 14, 1993, by and
between Foamex L.P. and RFC.
10.34(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.
10.35(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.
10.36(a) - Exchange Agreement, dated as of December 14, 1993, by and
between Foamex International and Marely.
10.37(a) - Warrant Exchange Agreement, dated as of December 14, 1993, by
and between Foamex International and Marely.
10.38(a) - Redemption and Withdrawal Agreement, dated as of December 14,
1993, by and between Foamex L.P. and Marely.
10.39(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.
10.40(a) - Exchange Agreement, dated as of December 14, 1993, by and
between Foamex International and DLJ Funding.
10.41(a) - Warrant Exchange Agreement, dated as of December 14, 1993, by
and between Foamex International and DLJ Funding.
10.42(a) - Redemption and Withdrawal Agreement, dated as of December 14,
1993, by and between Foamex L.P. and DLJ Funding.
10.43(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.
10.44(a) - Exchange Agreement, dated as of December 14, 1993, by and
between Foamex International and Rallis.
10.45(a) - Partial Redemption Agreement, dated as of December 14, 1993, by
and between Foamex L.P. and Rallis.
10.46(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.
10.47(a) - Amended and Restated Put Option Agreement, dated as of December
14, 1993, by and between Trace Holdings and Rallis.
10.48(a) - Exchange Agreement, dated as of December 14, 1993, by and
between Foamex International and Trace Holdings.
10.49(a) - Redemption and Withdrawal Agreement, dated as of December 14,
1993, by and between Foamex L.P. and Trace Holdings.
10.50(a) - Exchange Agreement, dated as of December 14, 1993, by and
between Foamex International and Trace Foam.
10.51(a) - Withdrawal Agreement, dated as of December 14, 1993, by and
between Foamex L.P. and Trace Foam.
25
<PAGE>
10.52(a) - Exchange Agreement, dated as of December 14, 1993, by and
between Foamex International and FCD Sub.
10.53(a) - Redemption and Withdrawal Agreement, dated as of December 14,
1993, by and between Foamex L.P. and FCD Sub.
10.54(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.
10.55(f) - Stock Purchase Agreement, dated as of December 23, 1993, by and
between Transformacion de Espumas y Fieltros, S. A., the
stockholders which are parties thereto, and Foamex L.P.
10.56(r) - 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.
27 - Financial Data Schedule.
(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.
(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'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.
26
<PAGE>
(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) A management contract or compensatory plan or arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this report.
(q) Incorporated herein by reference to the Exhibit to the Form 10-K of Foamex
L.P. for fiscal 1995.
(r) Incorporated herein by reference to the Exhibit to the Form 8-K of Foamex
L.P. dated June 11, 1996.
(s) Incorporated herein by reference to the Exhibit to the Form 10-Q of Foamex
L.P. for the quarterly period ended June 30, 1996.
(t) Incorporated herein by reference to the Exhibits to the Form 10-Q of Foamex
L.P. for the quarterly period ended September 30, 1996.
(u) Incorporated herein by reference to the Exhibits to the Form 10-K of Foamex
L.P. for the year ended December 29, 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:
None.
27
<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: May 15, 1997 By: /s/ Kenneth R. Fuette
----------------------
Kenneth R. Fuette
Chief Financial Officer and
Chief Accounting Officer
FOAMEX CAPITAL CORPORATION
Date: May 15, 1997 By: /s/ Kenneth R. Fuette
----------------------
Kenneth R. Fuette
Chief Financial Officer and
Chief Accounting Officer
28
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0
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