<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: August 1, 1996
Foamex International Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as specified in its Charter)
Delaware 0-22624 05-0473908
- ---------------------------- ------------------- --------------------
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of corporation) Identification No.)
1000 Columbia Avenue
Linwood, PA 19061
- --------------------- -------------------
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code:
(610) 859-3000
---------------------------------------------------
n/a
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On June 11, 1996, PFI Subsidiary, Inc. ("Newco"), PFI Acquisition Corp.
("PFI Acquisition"), Jody B. Vitale, Perfect Fit Industries, Inc., a
wholly-owned subsidiary of General Felt Industries, Inc. ("Perfect Fit"),
General Felt Industries, Inc., a wholly-owned subsidiary of Foamex L.P.
("General Felt"), and Foamex L.P. entered into an Agreement and Plan of Merger,
as amended, (the "Agreement") pursuant to which PFI Acquisition would acquire
all of the outstanding shares of capital stock of Perfect Fit through the
merger of Newco with and into Perfect Fit.
On August 1, 1996 (the "Closing Date"), Newco was merged into Perfect Fit
and PFI Acquisition acquired all of the outstanding stock of Perfect Fit. Also,
on or prior to the Closing Date, (1) Perfect Fit distributed certain assets to
General Felt and Foamex L.P. and General Felt assumed certain liabilities of
Perfect Fit and (2) Foamex L.P. contributed Perfect Fit's intercompany loan and
accrued interest thereon of approximately $75.4 million to General Felt which in
turn contributed the same to Perfect Fit.
In accordance with the Agreement, on the Closing Date, PFI Acquisition paid
General Felt $45.4 million ("Purchase Price") in cash consideration for the
merger. In addition, Perfect Fit made approximately $2.0 million of payments
against its intercompany loan with Foamex L.P. The Agreement provides that the
Purchase Price is subject to adjustment for changes in the net assets, as
defined, of Perfect Fit. Such adjustment to the Purchase Price will be
determined after completion of a closing balance sheet of Perfect Fit as of the
Closing Date, and pursuant to the Agreement, any unresolved dispute concerning
an adjustment to the Purchase Price will be subject to binding arbitration.
In the Agreement, Foamex L.P. and its subsidiaries ("Foamex") made various
representations and warranties as to Perfect Fit, and Foamex has agreed to
indemnify PFI Acquisition for any breaches thereof. Such indemnification
provisions cover, among other matters, breaches of agreements and covenants of
Foamex contained in the Agreement and certain other agreements and certain
liabilities arising from environmental and other matters. Pursuant to the
Agreement, Foamex International Inc. (the "Company") and its affiliates agreed
not to compete with Perfect Fit for a period of three years from the Closing
Date.
On the Closing Date, Foamex entered into an agreement relating to the
sale of products to Perfect Fit.
On the Closing Date, Foamex repaid $12.0 million of outstanding bank term
loan borrowings. Also, Foamex intends to use the remaining net proceeds to
offer to redeem the Foamex L.P. 9 1/2% Senior Secured Notes due 2000 (the
"Senior Secured Notes").
Item 5. Other Events
In addition to the pro forma financial statements required by Item 2, the
Company has included historical condensed consolidated statements of operations
restated for discontinued operations for the periods outlined under Item 7.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma and Restated Historical Financial Information
The following pro forma and restated historical condensed consolidated
financial statements filed with this report:
2
<PAGE>
Pro forma condensed consolidated balance sheet as of March 31, 1996 (1)
Historical condensed consolidated statements of operations
restated for discontinued operations:
o Year ended January 1, 1995
o Thirteen weeks ended October 1, 1995
o Year ended December 31, 1995 (1)
o Thirteen weeks ended March 31, 1996 (1)
(1) Represents the financial information required by
Item 2; the remaining condensed consolidated
statements of operations are presented in connection
with Item 5.
The pro forma condensed consolidated balance sheet of the Company as of
March 31, 1996 reflects the financial position of the Company after
giving effect to the disposition of the net assets of Perfect Fit as
discussed in Item 2 and assumes the disposition took place on March 31,
1996. Such pro forma financial statements also include the effects of
the repayment of $12.0 million of bank term loan borrowings of Foamex
and the redemption of approximately $31.1 million of Senior Secured
Notes at a redemption price of 101% of face value. The historical
condensed consolidated statements of operations for the year ended
January 1, 1995, the thirteen weeks ended October 1, 1995, the year
ended December 31, 1995, and the thirteen weeks ended March 31, 1996
have been restated to reflect discontinued operations associated with
the sale of Perfect Fit. The unaudited pro forma financial statements
are presented for informational purposes only and do not purport to be
indicative of the Company's results of operations for the periods
presented that would have actually resulted had the transactions
occurred at the beginning of such periods, or the Company's results of
operations for any future period.
3
<PAGE>
FOAMEX INTERNATIONAL INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (unaudited)
as of March 31, 1996
<TABLE>
<CAPTION>
The Perfect Pro Forma
ASSETS Company (1) Fit (2) Adjustments Total
----------- ------- ----------- -----
<S> <C> <C> <C> <C>
CURRENT ASSETS: (thousands)
Cash and cash equivalents $ 11,368 $ - $ - $ 11,368
Accounts receivable, net 180,204 17,451 - 162,753
Inventories 131,355 18,230 - 113,125
Other current assets 44,431 778 596 (3) 44,249
---------- -------- -------- --------
Total current assets 367,358 36,459 596 331,495
PROPERTY, PLANT AND EQUIPMENT, NET 321,516 22,479 500 (4) 299,537
COST IN EXCESS OF ASSETS ACQUIRED, NET 289,754 40,080 - 249,674
DEBT ISSUANCE COSTS, NET 28,990 - (1,491)(5) 27,499
OTHER ASSETS 18,394 1,421 2,924 (6) 19,897
---------- -------- -------- --------
TOTAL ASSETS $1,026,012 $100,439 $ 2,529 $928,102
========== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Short-term borrowings $ 4,129 $ - $ - $ 4,129
Current portion of long-term debt 11,563 - (3,000)(7) 8,563
Accounts payable 100,216 8,800 - 91,416
Accrued interest 26,285 - - 26,285
Other accrued liabilities 78,618 3,320 (1,031)(8) 74,267
---------- -------- -------- --------
Total current liabilities 220,811 12,120 (4,031) 204,660
---------- -------- -------- --------
LONG-TERM DEBT 715,193 - (40,104)(9) 675,089
---------- -------- -------- --------
OTHER LIABILITIES 49,164 - - 49,164
---------- -------- -------- --------
MINORITY INTEREST 7,549 - - 7,549
---------- -------- -------- --------
COMMITMENTS AND CONTINGENCIES - - - -
---------- -------- -------- --------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred Stock, par value $1.00 per share:
Authorized 5,000,000 shares - none issued
Common Stock, par value $.01 per share:
Authorized 50,000,000 shares
Issued 26,738,348 shares;
Outstanding 25,457,148 shares 267 - - 267
Additional paid-in capital 84,180 - - 84,180
Retained earnings (accumulated deficit) (30,902) - (41,655)(10) (72,557)
Subsidiary equity - 88,319 88,319 (11) -
Other (10,625) - - (10,625)
---------- -------- -------- --------
42,920 88,319 46,664 1,265
Common stock held in treasury, at cost;
1,281,200 shares at March 31, 1996 (9,625) - - (9,625)
---------- -------- -------- --------
Total stockholders' equity (deficit) 33,295 88,319 46,664 (8,360)
---------- -------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $1,026,012 $100,439 $ 2,529 $928,102
========== ======== ======== ========
</TABLE>
See accompanying notes to Pro Forma Condensed Consolidated Balance Sheet
4
<PAGE>
FOAMEX INTERNATIONAL INC. AND SUBSIDIARIES
FOOTNOTES TO PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
(dollars in thousands)
(1) Represents the historical consolidated balance sheet of the Company
as of March 31, 1996.
(2) To eliminate the assets and liabilities included in the
balance sheet of Perfect Fit as of March 31, 1996 after the
contribution of the intercompany loan and accrued interest thereon.
(3) Other current assets excluded from the sale of Perfect Fit
and retained by Foamex.
(4) Property, plant and equipment excluded from the
sale of Perfect Fit and retained by Foamex.
(5) The write-off of debt issuance costs associated with the
retirement of $12.0 million of Foamex bank term loan borrowings
and $31.1 million of Senior Secured Notes with the net proceeds
from the sale of Perfect Fit.
(6) Notes receivable excluded from the sale of Perfect Fit and
retained by Foamex $ 979
Cash received by Foamex from Perfect Fit for the period from
April 1, 1996 through June 30, 1996 1,945
------
Total $2,924
======
(7) Represents the current portion of Foamex bank term loan
borrowings retired with the net proceeds from the sale of
Perfect Fit.
(8) Accrued liabilities excluded from the sale of Perfect Fit
and retained by Foamex $ 747
Estimated income tax benefit for the estimated (i) operating
losses of Perfect Fit, (ii) write-off of debt issuance costs
(see Item 5) and (iii) premium paid on early retirement of
Senior Secured Notes (see Item 10) assuming a 41% effective
income tax rate (1,778)
------
Total $(1,031)
=======
(9) Long-term portion of Foamex bank term loan borrowings
retired with the net proceeds from the sale of Perfect Fit $ 9,000
Long-term portion of Senior Secured Notes expected to be
retired with the net proceeds from the sale of Perfect Fit 31,104
-------
Total $40,104
=======
(10) Estimated operating losses of Perfect Fit from April 1, 1996
until the date of disposal $ 2,524
Write-off of debt issuance costs (see Item 5) associated with
the retirement of the Foamex bank term loan borrowings and
the Senior Secured Notes 1,491
Premium paid on early retirement of the Senior Secured Notes 321
Loss on sale of Perfect Fit 39,097
Estimated income tax benefit (see Note 8) (1,778)
-------
Total $41,655
=======
(11) Represents the write-off of Perfect Fit's equity.
5
<PAGE>
FOAMEX INTERNATIONAL INC. AND SUBSIDIARIES
HISTORICAL CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Restated)
for the Year Ended January 1, 1995 (unaudited)
(thousands except per share amounts)
<TABLE>
<CAPTION>
The Perfect
Company (1) Fit (2) Adjustments Total
----------- ------- ----------- -----
<S> <C> <C> <C> <C>
Net sales $1,087,834 $ 95,381 $ 2,412 (3) $994,865
Cost of goods sold 894,962 77,181 2,412 (3) 820,193
---------- -------- -------- --------
Gross profit 192,872 18,200 - 174,672
Selling, general and administrative
expenses 88,696 14,030 - 74,666
---------- -------- -------- --------
Income from operations 104,176 4,170 - 100,006
Interest and debt issuance expense 61,594 4,359 688 (4) 57,923
Other income, net 1,020 - - 1,020
---------- -------- -------- --------
Income (loss) from continuing operations
before provision for income taxes 43,602 (189) (688) 43,103
Provision (benefit) for income taxes 17,472 403 (275) (5) 16,794
---------- -------- -------- --------
Income (loss) from continuing operations 26,130 (592) (413) 26,309
Operating loss from discontinued
operations, net of income taxes - 592 413 (179)
---------- -------- -------- --------
Net income $ 26,130 $ - $ - $ 26,130
========== ========= ========= =========
Earnings (loss) per share:
Income from continuing operations $ 0.98 $ 0.99
Loss from discontinued operations - (0.01)
---------- --------
Earnings per share $ 0.98 $ 0.98
========== =========
Weighted average number of
shares outstanding 26,684 26,684
========== =========
</TABLE>
See accompanying notes to Historical Condensed
Consolidated Statements of Operations (Restated)
6
<PAGE>
FOAMEX INTERNATIONAL INC. AND SUBSIDIARIES
HISTORICAL CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Restated)
for the thirteen week period ended October 1, 1995 (unaudited)
(thousands except per share amounts)
<TABLE>
<CAPTION>
The Perfect
Company (1) Fit (2) Adjustments Total
----------- ------- ----------- -----
<S> <C> <C> <C> <C>
Net sales $310,931 $ 25,243 $ 910 (3) $286,598
Cost of goods sold 264,008 20,925 910 (3) 243,993
-------- -------- ----- --------
Gross profit 46,923 4,318 - 42,605
Selling, general and administrative
expenses 25,148 3,802 - 21,346
-------- -------- ----- --------
Income from operations 21,775 516 - 21,259
Interest and debt issuance expense 20,179 1,760 659 (4) 19,078
Other income, net 270 - - 270
-------- -------- ----- --------
Income (loss) from continuing operations
before provision for income taxes 1,866 (1,244) (659) 2,451
Provision (benefit) for income taxes 1,441 - (349) (5) 1,092
-------- -------- ----- --------
Income (loss) from continuing operations 425 (1,244) (310) 1,359
Operating loss from discontinued
operations, net of income taxes - 1,244 310 (934)
-------- -------- ----- --------
Net income $ 425 $ - $ - $ 425
======== ======== ===== ========
Earnings (loss) per share:
Income from continuing operations $ 0.02 $ 0.05
Loss from discontinued operations - (0.03)
-------- --------
Earnings per share $ 0.02 $ 0.02
======== ========
Weighted average number of
shares outstanding 26,461 26,461
======== ========
</TABLE>
See accompanying notes to Historical Condensed Consolidated
Statements of Operations (Restated)
7
<PAGE>
FOAMEX INTERNATIONAL INC. AND SUBSIDIARIES
HISTORICAL CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Restated)
for the Year Ended December 31, 1995 (unaudited)
(thousands except per share amounts)
<TABLE>
<CAPTION>
The Perfect
Company (1) Fit (2) Adjustments Total
----------- ------- ----------- -----
<S> <C> <C> <C> <C>
Net sales $1,268,560 $ 98,464 $ 4,200 (3) $1,174,296
Cost of goods sold 1,098,401 83,518 4,200 (3) 1,019,083
---------- -------- ------- ----------
Gross profit 170,159 14,946 - 155,213
Selling, general and administrative
expenses 108,338 15,303 - 93,035
Restructuring and other charges 44,393 2,701 - 41,692
---------- -------- ------- ----------
Income (loss) from operations 17,428 (3,058) - 20,486
Interest and debt issuance expense 81,453 6,762 2,402 (4) 77,093
Other income, net 348 - - 348
---------- -------- ------- ----------
Loss from continuing operations
before provision for income taxes (63,677) (9,820) (2,402) (56,259)
Benefit for income taxes (10,557) (1,261) (780) (5) (10,076)
---------- -------- ------- ----------
Loss from continuing operations (53,120) (8,559) (1,622) (46,183)
Operating loss from discontinued
operations, net of income taxes - 8,559 1,622 (6,937)
--------- -------- ------- ---------
Net loss $ (53,120) $ - $ - $ (53,120)
========= ======== ======== =========
Loss per share:
Loss from continuing operations $ (2.01) $ (1.75)
Loss from discontinued operations - (0.26)
--------- --------
Loss per share $ (2.01) $ (2.01)
========= =========
Weighted average number of
shares outstanding 26,472 26,472
========= =========
</TABLE>
See accompanying notes to Historical Condensed Consolidated
Statements of Operations (Restated)
8
<PAGE>
FOAMEX INTERNATIONAL INC. AND SUBSIDIARIES
HISTORICAL CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Restated)
for the thirteen weeks ended March 31, 1996 (unaudited)
(thousands except per share amounts)
<TABLE>
<CAPTION>
The Perfect
Company (1) Fit (2) Adjustments Total
----------- ------- ----------- -----
<S> <C> <C> <C> <C>
Net sales $318,242 $25,162 $ 694 (3) $293,774
Cost of goods sold 265,472 20,912 694 (3) 245,254
-------- ------- ----- --------
Gross profit 52,770 4,250 - 48,520
Selling, general and administrative
expenses 22,363 3,026 - 19,337
-------- ------- ----- --------
Income from operations 30,407 1,224 - 29,183
Interest and debt issuance expense 19,866 1,848 654 (4) 18,672
Other expense, net (106) - - (106)
-------- ------- ----- --------
Income (loss) from continuing operations
before provision for income taxes 10,435 (624) (654) 10,405
Provision for income taxes 4,298 - 39 (5) 4,337
-------- ------- ----- --------
Income (loss) from continuing operations 6,137 (624) (693) 6,068
Operating income from discontinued
operations, net of income taxes - 624 693 69
-------- ------- ----- --------
Net income $ 6,137 $ - $ - $ 6,137
======== ======= ===== ========
Earnings per share:
Income from continuing operations $ 0.24 $ 0.23
Income from discontinued operations - 0.01
-------- --------
Earnings per share $ 0.24 $ 0.24
======== ========
Weighted average number of
shares outstanding 25,950 25,950
======== ========
</TABLE>
See accompanying notes to Historical Condensed Consolidated
Statements of Operations (Restated)
9
<PAGE>
FOAMEX INTERNATIONAL INC. AND SUBSIDIARIES
FOOTNOTES TO HISTORICAL CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Restated)
(1) Represents the historical condensed consolidated statements of operations
of the Company for the period indicated.
(2) To eliminate the statements of operations of Perfect Fit for the period
indicated.
(3) Represents an adjustment for the elimination of intercompany sales with
Perfect Fit.
(4) Represents the net effect of eliminating Perfect Fit's intercompany
interest expense to Foamex L.P. offset by an allocation of corporate
expense based on the debt that Foamex intends to retire from the net
proceeds from the sale of Perfect Fit.
(5) Represents an allocation of income taxes in accordance with SFAS 109
"Accounting for Income Taxes."
Exhibits
2 Agreement and Plan of Merger, as amended, dated as of June 11, 1996,
by and among PFI Subsidiary, Inc., PFI Acquisition Corp.,
Jody B. Vitale, Perfect Fit Industries, Inc., General Felt Industries,
Inc., and Foamex L.P. Incorporated herein by reference from the
Foamex International Inc. Form 8-K reporting an event which occurred
on June 11, 1996.*
- ----------------------
* Incorporated herein by reference to Form 8-K Current Report of Foamex
International Inc. dated as of June 11, 1996, and filed with the
Securities and Exchange Commission on June 17, 1996.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
FOAMEX INTERNATIONAL INC.
Date: August 12, 1996 By: /s/ Kenneth R. Fuette
----------------------------
Name: Kenneth R. Fuette
Title: Chief Financial Officer and
Chief Accounting Officer
11
<PAGE>
EXHIBIT INDEX
Exhibit Page
- ------- ----
2 Agreement and Plan of Merger, as amended, dated as of June 11, 1996, by and
among PFI Subsidiary, Inc., PFI Acquisition Corp., Jody B.
Vitale, Perfect Fit Industries, Inc., General Felt Industries,
Inc., and Foamex L.P. Incorporated herein by reference from the Foamex
International Inc. Form 8-K reporting an event which occurred on June 11,
1996.*
- --------
* Incorporated herein by reference to Form 8-K Current Report of
Foamex International Inc. dated as of June 11, 1996, and filed with the
Securities and Exchange Commission on June 17, 1996.
