SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________ to __________
Commission file number 33-94154
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Foamex L.P. 401(k) Savings Plan
1000 Columbia Avenue
Linwood, Pennsylvania 19061
610-859-3000
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Foamex International Inc.
1000 Columbia Avenue
Linwood, Pennsylvania 19061
610-859-3000
Page 1 of 18 Pages
<PAGE>
REQUIRED INFORMATION
The following financial statements for the Foamex L.P. 401(k) Savings Plan are
being filed herewith:
Report of Independent Accountants 6
Financial Statements:
Statement of Net Assets Available for Benefits with Fund Information
as of December 31, 1997 7
Statement of Net Assets Available for Benefits with Fund Information
as of December 31, 1996 8
Statement of Changes in Net Assets Available for Benefits with Fund
Information for the year ended December 31, 1997 9
Statement of Changes in Net Assets Available for Benefits with Fund
Information for the year ended December 31, 1996 10
Notes to Financial Statements 11
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment Purposes as of
December 31, 1997 16
Item 27d - Schedule of Reportable Transactions for the year ended
December 31, 1997 17
The following exhibit is being filed herewith:
Exhibit No. Description
1 Consent of Independent Accountants 18
Page 2 of 18 Pages
<PAGE>
SIGNATURES
The Plan - Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
FOAMEX L.P. 401(k) SAVINGS PLAN
(Name of Plan)
Dated: June 29, 1998 By: /s/ R. Allen Baker
--------------------
R. Allen Baker
Vice President and Chief
Accounting Officer
Page 3 of 18 Pages
<PAGE>
FOAMEX L.P. 401(k) SAVINGS PLAN
REPORT ON AUDITS OF FINANCIAL STATEMENTS
for the years ended December 31, 1997 and 1996
AND SUPPLEMENTAL SCHEDULES
for the year ended December 31, 1997
Page 4 of 18 Pages
<PAGE>
FOAMEX L.P. 401(k) SAVINGS PLAN
TABLE OF CONTENTS
Page
Report of Independent Accountants 6
Financial Statements:
Statement of Net Assets Available for Benefits with Fund Information
as of December 31, 1997 7
Statement of Net Assets Available for Benefits with Fund Information
as of December 31, 1996 8
Statement of Changes in Net Assets Available for Benefits with Fund
Information for the year ended December 31, 1997 9
Statement of Changes in Net Assets Available for Benefits with Fund
Information for the year ended December 31, 1996 10
Notes to Financial Statements 11
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment Purposes as of
December 31, 1997 16
Item 27d - Schedule of Reportable Transactions for the year ended
December 31, 1997 17
Page 5 of 18 Pages
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Plan Administrator of the
Foamex L.P. 401(k) Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Foamex L.P. 401(k) Savings Plan (the "Plan") as of December 31, 1997 and
1996, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements and schedules are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1997 and 1996, and the changes in net assets available for benefits
for the years then ended in conformity with generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental schedules listed in the
accompanying table of contents, are presented for the purpose of additional
analysis and are not a required part of the basic financial statements, but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The fund information in the statements of net assets
available for benefits and the statements of changes in net assets available for
benefits is presented for purposes of additional analysis rather than to present
the net assets available for plan benefits and changes in net assets available
for plan benefits of each fund. The supplemental schedules and fund information
have been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
COOPERS & LYBRAND L.L.P.
Philadelphia, Pennsylvania
June 26, 1998
Page 6 of 18 Pages
<PAGE>
FOAMEX L.P. 401(k) SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
as of December 31, 1997
<TABLE>
<CAPTION>
Neuberger
Morely Fidelity Vanguard Berman Janus
Capital Puritan Windsor Guardian Worldwide
Fund Fund Fund Fund Fund
------------ ------------ ------------ ------------ ------------
Assets:
<S> <C> <C> <C> <C> <C>
Investments, at fair value $ 10,515,455 $ 4,441,304 $ 19,764,777 $ 5,196,113 $ 4,732,329
Participant loans receivable -- -- -- -- --
Employer contributions
receivable 29,669 15,259 49,450 16,963 16,517
Participant contributions
receivable 66,468 34,241 118,127 41,204 42,835
Interfund transfers receivable
(payable) -- 11,919 (27,505) (11,919) 16,503
Other net receivable 2,528 2,647 10,840 -- 2,324
------------ ------------ ------------ ------------ ------------
Total assets 10,614,120 4,505,370 19,915,689 5,242,361 4,810,508
------------ ------------ ------------ ------------ ------------
Liabilities:
Administrative expenses payable 2,431 2,891 14,054 3,834 3,528
Other net payable -- -- -- 28,472 --
------------ ------------ ------------ ------------ ------------
Total liabilities 2,431 2,891 14,054 32,306 3,528
------------ ------------ ------------ ------------ ------------
Net assets available for benefits $ 10,611,689 $ 4,502,479 $ 19,901,635 $ 5,210,055 $ 4,806,980
============ ============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Foamex Vanguard
International Index 500 Participant
Stock Fund Fund Loans Total
----------- ----------- ------------ ------------
Assets:
<S> <C> <C> <C> <C>
Investments, at fair value $ 3,391,430 $ 557,699 $ -- $48,599,107
Participant loans receivable -- -- 1,832,388 1,832,388
Employer contributions
receivable 66,260 2,711 -- 196,829
Participant contributions
receivable 64,270 4,541 -- 371,686
Interfund transfers receivable
(payable) -- 11,002 -- --
Other net receivable 8,975 -- -- 27,314
----------- ----------- ----------- -----------
Total assets 3,530,935 575,953 1,832,388 51,027,324
----------- ----------- ----------- -----------
Liabilities:
Administrative expenses payable 2,228 71 -- 29,037
Other net payable -- 6,689 -- 35,161
----------- ----------- ----------- -----------
Total liabilities 2,228 6,760 -- 64,198
----------- ----------- ----------- -----------
Net assets available for benefits $ 3,528,707 $ 569,193 $ 1,832,388 $50,963,126
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 7 of 18 Pages
<PAGE>
FOAMEX L.P. 401(k) SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
as of December 31, 1996
<TABLE>
<CAPTION>
Neuberger
Morely Fidelity Vanguard Berman Janus
Capital Puritan Windsor Guardian Worldwide
Fund Fund Fund Fund Fund
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Assets:
Investments, at fair value $10,971,244 $ 3,524,736 $16,549,188 $ 4,364,302 $ 3,582,437
Participant loans receivable
Employer contributions receivable 36,290 14,703 50,000 18,185 17,902
Participant contributions
receivable 11,930 9,186 46,652 9,433 38,123
Interfund transfers receivable
(payable) 29,658 (21,942) 84,343 (1,761) 15,687
Other net receivable 28,297 -- 2,068 -- --
----------- ----------- ----------- ----------- -----------
Total assets 11,077,419 3,526,683 16,732,251 4,390,159 3,654,149
----------- ----------- ----------- ----------- -----------
Liabilities:
Administrative expenses payable -- 5,095 24,067 6,626 5,097
----------- ----------- ----------- ----------- -----------
Total liabilities -- 5,095 24,067 6,626 5,097
----------- ----------- ----------- ----------- -----------
Net assets available for benefits $11,077,419 $ 3,521,588 $16,708,184 $ 4,383,533 $ 3,649,052
=========== =========== =========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Foamex
International Participant
Stock Fund Loans Total
----------- ----------- ----------
<S> <C> <C> <C>
Assets:
Investments, at fair value $ 3,433,238 $ -- $42,425,145
Participant loans receivable 1,199,120 1,199,120
Employer contributions receivable 68,345 -- 205,425
Participant contributions
receivable 20,645 -- 135,969
Interfund transfers receivable
(payable) (105,985) -- --
Other net receivable 6,477 -- 36,842
----------- ----------- -----------
Total assets 3,422,720 1,199,120 44,002,501
----------- ----------- -----------
Liabilities:
Administrative expenses payable -- -- 40,885
----------- ----------- -----------
Total liabilities -- -- 40,885
----------- ----------- -----------
Net assets available for benefits $ 3,422,720 $ 1,199,120 $43,961,616
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 8 of 18 Pages
<PAGE>
FOAMEX L.P. 401(k) SAVINGS PLAN
STATEMENT OF NET CHANGES IN ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
for the year ended December 31, 1997
<TABLE>
<CAPTION>
Neuberger
Morely Fidelity Vanguard Berman Janus
Capital Puritan Windsor Guardian Worldwide
ADDITIONS Fund Fund Fund Fund Fund
------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Additions in net assets attributed to:
Interest and dividends $ 113,631 $ 458,703 $ 3,404,344 $ 725,071 $ 67
Net appreciation/(depreciation)
fair value of investments 500,178 326,041 260,375 51,838 763,618
Participant contributions 827,608 389,064 1,390,693 512,170 543,011
Employer contributions 132,549 58,513 199,125 72,023 73,272
Rollover contributions 39,629 38,551 166,351 59,079 156,359
------------ ------------ ------------ ------------ ------------
Total additions 1,613,595 1,270,872 5,420,888 1,420,181 1,536,327
------------ ------------ ------------ ------------ ------------
DEDUCTIONS
Deductions from net assets attributed to:
Benefits paid to participants 1,090,627 368,673 1,642,634 291,289 334,315
Administrative expenses 68,855 25,170 102,037 33,629 25,950
------------ ------------ ------------ ------------ ------------
Total deductions 1,159,482 393,843 1,744,671 324,918 360,265
------------ ------------ ------------ ------------ ------------
Interfund transfers (919,843) 103,862 (482,766) (268,741) (18,134)
------------ ------------ ------------ ------------ ------------
Net increase (decrease) (465,730) 980,891 3,193,451 826,522 1,157,928
Net assets available for benefits,
beginning of year 11,077,419 3,521,588 16,708,184 4,383,533 3,649,052
------------ ------------ ------------ ------------ ------------
Net assets available for benefits,
end of year $ 10,611,689 $ 4,502,479 $ 19,901,635 $ 5,210,055 $ 4,806,980
============ ============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Foamex Vanguard
International Index 500 Participant
ADDITIONS Stock Fund Fund Loans Total
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Additions in net assets attributed to:
Interest and dividends $ 479 $ 3,113 $ 129,774 $ 4,835,182
Net appreciation/(depreciation)
fair value of investments (1,211,705) (2,699) -- 687,646
Participant contributions 823,798 15,476 -- 4,501,820
Employer contributions 296,415 3,890 -- 835,787
Rollover contributions 36,015 26,291 -- 522,275
----------- ----------- ----------- -----------
Total additions (54,998) 46,071 129,774 11,382,710
----------- ----------- ----------- -----------
DEDUCTIONS
Deductions from net assets attributed to:
Benefits paid to participants 268,753 48 115,753 4,112,092
Administrative expenses 13,246 221 -- 269,108
----------- ----------- ----------- -----------
Total deductions 281,999 269 115,753 4,381,200
----------- ----------- ----------- -----------
Interfund transfers 442,984 523,391 619,247 --
----------- ----------- ----------- -----------
Net increase (decrease) 105,987 569,193 633,268 7,001,510
Net assets available for benefits,
beginning of year 3,422,720 -- 1,199,120 43,961,616
----------- ----------- ----------- -----------
Net assets available for benefits,
end of year $ 3,528,707 $ 569,193 $ 1,832,388 $50,963,126
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 9 of 18 Pages
<PAGE>
FOAMEX L.P. 401(k) SAVINGS PLAN
STATEMENT OF NET CHANGES IN ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
for the year ended December 31, 1996
<TABLE>
<CAPTION>
Neuberger
Morely Fidelity Vanguard Berman Janus
Capital Puritan Windsor Guardian Worldwide
ADDITIONS Fund Fund Fund Fund Fund
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Additions in net assets attributed to:
Interest and dividends $ -- $ 397,337 $ 1,581,489 $ 244,294 $ 6,844
Net appreciation/(depreciation) in
fair value of investments 667,706 35,582 1,832,991 380,961 508,790
Participant contributions 986,110 391,922 1,343,748 542,483 402,821
Employer contributions 157,264 58,907 198,852 73,204 70,842
Rollover contributions 10,274 94,299 241,756 13,477 46,713
------------ ------------ ------------ ------------ ------------
Total additions 1,821,354 978,047 5,198,836 1,254,419 1,036,010
------------ ------------ ------------ ------------ ------------
DEDUCTIONS
Deductions from net assets attributed to:
Benefits paid to participants 1,599,572 259,358 1,067,750 291,696 145,405
Administrative expenses 34,361 18,739 83,183 23,186 18,739
------------ ------------ ------------ ------------ ------------
Total deductions 1,633,933 278,097 1,150,933 314,882 164,144
------------ ------------ ------------ ------------ ------------
Interfund transfers (1,091,471) 87,807 (422,732) (101,838) 1,177,864
------------ ------------ ------------ ------------ ------------
Net increase (decrease) (904,050) 787,757 3,625,171 837,699 2,049,730
Net assets available for benefits,
beginning of year 11,981,469 2,733,831 13,083,013 3,545,834 1,599,322
------------ ------------ ------------ ------------ ------------
Net assets available for benefits,
end of year $ 11,077,419 $ 3,521,588 $ 16,708,184 $ 4,383,533 $ 3,649,052
============ ============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Foamex
International Participant
ADDITIONS Stock Fund Loans Total
------------ ------------ -----------
<S> <C> <C> <C>
Additions in net assets attributed to:
Interest and dividends $ -- $ 95,860 $ 2,325,824
Net appreciation/(depreciation) in
fair value of investments 1,560,456 -- 4,986,486
Participant contributions 679,449 -- 4,346,533
Employer contributions 261,330 -- 820,399
Rollover contributions 33,551 -- 440,070
----------- ----------- -----------
Total additions 2,534,786 95,860 12,919,312
----------- ----------- -----------
DEDUCTIONS
Deductions from net assets attributed to:
Benefits paid to participants 120,524 90,956 3,575,261
Administrative expenses -- -- 178,208
----------- ----------- -----------
Total deductions 120,524 90,956 3,753,469
----------- ----------- -----------
Interfund transfers (121,550) 471,920 --
----------- ----------- -----------
Net increase (decrease) 2,292,712 476,824 9,165,843
Net assets available for benefits,
beginning of year 1,130,008 722,296 34,795,773
----------- ----------- -----------
Net assets available for benefits,
end of year $ 3,422,720 $ 1,199,120 $43,961,616
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 10 of 18 Pages
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN
The following description of the Foamex L.P. 401(k) Savings Plan (the
"Plan") provides only general information. Participants should refer to the Plan
agreement for a more complete description of the Plan's provisions.
The Plan is a defined contribution plan and is available to eligible
employees of Foamex L.P., General Felt Industries, Inc. ("GFI"), Foamex Fibers,
Inc., and Foamex International Inc. (collectively the "Employer"). Eligible
employees may enter the Plan on the first of any month following thirty days
from their date of hire. The Plan sponsor is Foamex L.P., which is an indirect
majority-owned subsidiary of Foamex International Inc. The Plan is subject to
the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").
Participants may contribute from 0% to 20% of their compensation, as
defined, in the Plan subject to limitations of the Internal Revenue Code.
Participants may also contribute amounts representing distributions from other
qualified plans. The Employer makes a quarterly matching contribution equal to
25% of each participant's quarterly contributions to the Plan. The Employer, at
its discretion, may make an additional matching contribution not to exceed 25%
of each participant's contribution to the Plan. The Employer will also make an
additional quarterly contribution (the "Additional Contribution") equal to 25%
of each participant's quarterly contributions which are invested in Foamex
International Inc. common stock (the "Foamex International Stock Fund"). The
Additional Contribution is non-participant directed and will remain in the
Foamex International Stock Fund until the participant withdraws from the Plan.
Total non-participant directed assets were approximately $361,863 and $213,655
at December 31, 1997 and 1996, respectively. All Employer contributions are
applicable to the first 4% of compensation contributed by the participants and
are available to participants employed by the Employer on the last day of the
quarter.
Non-union participants are vested immediately in their contributions and
the Employer matching contributions plus actual earnings thereon. Participants
who are members of collective bargaining unions are vested immediately in their
contributions and are vested in the Employer matching contributions after five
years of service. Forfeitures are used to reduce future Employer matching
contributions. Forfeitures amounted to approximately $0 and $724 during 1997 and
1996, respectively.
Upon termination of employment, a participant (or their beneficiary) will
receive a lump-sum amount equal to the value of their account, if the value of
their account is less than $3,500. An election to defer the distribution until a
later date (but no later than age 70 1/2) can be made for those participants
whose account balance exceeds $3,500. Participants who were members of the
former GFI defined contribution plan may elect to receive their distributions in
equal monthly installments over a period of time not to exceed the life
expectancy of the participant or their beneficiary.
Under certain circumstances, participants may borrow from their accounts a
minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their
account balance. Loan transactions are treated as a transfer to(from) the
investment fund to(from) the loan fund. The loans mature from one to five years
or up to 15 years if used for the purchase of a primary residence. The loans are
collateralized by the balance in the participant's account and bear interest at
an annual rate of prime, as defined, plus 1% as determined quarterly.
Although it has not expressed any intention to do so, the Employer has the
right under the Plan to terminate the Plan subject to the provisions set forth
in ERISA. If the Plan is terminated, the plan assets shall be distributed to the
participants in the full amount standing to their credit on the date of such
termination, less the administrative expenses as though each participant had
terminated employment.
A separate account is maintained for each participant. Investment income of
each fund is allocated to a participant's account based on the ratio of the
participant's balance of the fund to all participating accounts of the fund.
Plan investments, directed by the participants, are maintained in the six funds
and participant loans described below:
Page 11 of 18 Pages
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN (continued)
MORLEY CAPITAL FUND - A fund designed to provide consistent and relatively
predictable rates of return over time while preserving capital and minimizing
risk. Investments in this fund include investment contracts issued by insurance
companies and other financial institutions.
FIDELITY PURITAN FUND - A fund that seeks income consistent with
preservation of capital. The fund invests in a diversified array of high
yielding securities such as common stocks, preferred stocks, and bonds and may
also purchase foreign securities, zero-coupon bonds and indexed securities. The
relative holdings vary in response to changing market conditions.
VANGUARD WINDSOR FUND - A fund that seeks long-term growth of capital and
income; current income is secondary. The fund invests primarily in equity
securities selected on the basis of fundamental value.
NEUBERGER & BERMAN GUARDIAN FUND - A fund that seeks capital appreciation
as its primary objective; current income is secondary. The fund invests mostly
in common stocks of well-established companies using a value oriented approach.
The fund may also invest in foreign securities and American Depository Receipts.
JANUS WORLDWIDE FUND - A fund that seeks long-term growth of capital
consistent with the preservation of capital. The fund invests nearly all of its
assets in the common stocks of foreign and domestic issuers. The fund usually
invests in about five countries, although it is permitted to invest in fewer
than five and may engage in futures and options strategies.
FOAMEX INTERNATIONAL STOCK FUND - A non-diversified stock fund that invests
solely in Foamex International Inc. common stock. All such shares are purchased
on the open market. In addition, the fund invests approximately 2% of its
balance in money market instruments that allows the fund to handle exchanges,
withdrawals, loans and disbursements.
VANGUARD INDEX 500 FUND - A fund that seeks long-term growth of capital and
income from dividends. The fund invests mostly in common stocks of well
established companies using an indexed approach.
PARTICIPANT LOANS - Consists of loans to participants.
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds, and other investment
securities. Investment securities are exposed to various risks, such as interest
rate, market and credit. Due to the level of risk associated with certain
investment securities and the level of uncertainty related to changes in the
value of investment securities, it is at least reasonably possible that changes
in risks in the near term would materially affect participants' account balances
and the amounts reported in the statement of net assets available for benefits
and the statement of changes in net assets available for benefits.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - The accompanying financial statements of the Plan
are presented on the accrual basis of accounting.
INVESTMENT VALUATION AND INCOME RECOGNITION - At December 31, 1997, the
Plan maintained a contract with The Wilmington Trust Company which provided for
investment of contributions, at the participants' direction, in various separate
investment mutual funds and the Foamex International Stock Fund. Participant
loans are valued at cost, which approximates fair value. The Plan's remaining
investments are stated at fair value as determined by published market quotes as
of the date of valuation.
Purchase and sales securities are recorded on the trade date. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
Page 12 of 18 Pages
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
ADMINISTRATIVE EXPENSES - Administrative expenses for 1997 and 1996 were
paid by the Plan.
NET APPRECIATION (DEPRECIATION) IN FAIR VALUE OF INVESTMENTS - Net
appreciation (depreciation) in fair value of investments consists of realized
gains and losses and the net unrealized appreciation (depreciation) of the
Plan's investments.
PAYMENT OF BENEFITS - Benefit payments are recorded when paid.
3. PLAN AMENDMENTS
During 1997, the Plan was amended to (i) change the interest rate on
participant loans made on or after October 1, 1997 from prime rate, as defined,
plus 2% to prime rate, as defined, plus 1%, and (ii) increase the maximum
participant contribution percentage from 15% of their compensation to 20% of
their compensation, subject to limitations of the Internal Revenue Code.
During 1996, the Plan was amended to change: (i) the Employer contributions
and the Additional Contribution to quarterly contributions from annual
contributions, (ii) the vesting date for the Employer contribution and the
Additional contribution to participants employed on the last day of each quarter
from participants employed on the last day of the year and (iii) the entry dates
for eligible employees to the first of the month following thirty days from
their date of hire from the first day of a quarter following their date of hire.
In addition, the Plan was also amended to have administrative expenses paid by
the Plan. The Employer paid all administrative expenses prior to 1996.
4. INVESTMENTS
The Plan's investments at December 31, 1997 and 1996 are as follows:
1997 1996
----------- -----------
Morely Capital Fund $10,515,455 (1) $10,971,244 (1)
Fidelity Puritan Fund 4,441,304 (1) 3,524,736 (1)
Vanguard/Windsor Fund 19,764,777 (1) 16,549,188 (1)
Neuberger Berman Guardian Fund 5,196,113 (1) 4,364,302 (1)
Janus Worldwide Fund 4,732,329 (1) 3,582,437 (1)
Foamex International Stock Fund* 3,391,430 (1) 3,433,238 (1)
Vanguard Index 500 Fund 557,699 -
Participants Loans 1,832,388 1,199,120
----------- -----------
Total $50,431,495 $43,624,265
=========== ===========
* Party-in-interest investment.
(1) Represents amounts in excess of 5% of net assets available for
benefits.
Page 13 of 18 Pages
<PAGE>
FOAMEX L.P. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
5. RECONCILIATION OF FINANCIAL STATEMENT TO FORM 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to the Form 5500:
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Net assets available for benefits per
the financial statements $ 50,963,126 $ 43,961,616
Less: Amounts allocated to withdrawing participants -- (288,502)
------------ ------------
Net assets available for benefits per the Form 5500 $ 50,963,126 $ 43,673,114
============ ============
</TABLE>
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Benefits paid to participants per the financial statements $ 4,112,092 $ 3,575,261
Add: Amounts allocated to withdrawing participants - current year -- 288,502
Less: Amounts allocated to withdrawing participants - prior year (288,502) (726,133)
----------- -----------
Benefits paid to participants per the Form 5500 $ 3,823,590 $ 3,137,630
=========== ===========
</TABLE>
6. INCOME TAX STATUS
On April 23, 1996, the Internal Revenue Service issued a determination
letter that the Plan meets the requirements of Section 401 of the Internal
Revenue Code (the "Code") and is exempt from federal income taxes under Section
501(a) of the Code. The Plan has been amended (see Note 3) since receiving the
determination letter. However, the Plan administrator believes that the Plan is
designed and is currently being operated in compliance with the Code.
7. SUBSEQUENT EVENT
On March 16, 1998, Foamex International Inc. ("Foamex International")
received a proposal from Trace International Holdings, Inc.("Trace Holdings") to
acquire all outstanding shares of common stock of Foamex International not
currently owned by Trace Holdings and its subsidiaries for a cash price of $17
per share. On June 25, 1998, Trace Holdings increased the cash price to $18.75
per share. There can be no assurance as to whether such a transaction will be
consummated, or if consummated the terms of such a transaction and its effect on
Foamex L.P.
Page 14 of 18 Pages
<PAGE>
SUPPLEMENTAL SCHEDULES
Page 15 of 18 Pages
<PAGE>
ITEM 27a
FOAMEX L.P. 401(k) SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
as of December 31, 1997
<TABLE>
<CAPTION>
Party-in Fair
Interest Description of Investment Cost Value
- -------- ------------------------- ----------- -----------
<S> <C> <C> <C>
N/A Morely Capital Fund $10,465,614 $10,515,455
N/A Fidelity Puritan Fund 4,415,923 4,441,304
N/A Vanguard Windsor Fund 21,889,486 19,764,777
N/A Neuberger Berman Guardian Fund 5,821,603 5,196,113
N/A Janus Worldwide Fund 4,972,482 4,732,329
* Foamex International Stock Fund 3,955,819 3,391,430
N/A Vanguard Index 500 Fund 557,822 557,699
N/A Participant loans, maturing through 2012 at an annual
interest rate of prime plus 2% or prime plus 1% 1,832,388 1,832,388
------------ ------------
Total investments $53,911,137 $50,431,495
=========== ===========
<FN>
* Party-in interest investment
</FN>
</TABLE>
Page 16 of 18 Pages
<PAGE>
ITEM 27d
FOAMEX L.P. 401(k) SAVINGS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
for the year ended December 31, 1997
<TABLE>
<CAPTION>
Fair Value
of Assets on Realized
Purchase Selling Cost of Transaction Gain or
Description of Transaction Price Price Asset Date (Loss)
-------------------------- -------- ------- ------- ------------ --------
<S> <C> <C> <C> <C> <C>
Purchase of Vanguard Windsor Fund $5,635,913 N/A N/A $5,635,913 N/A
Purchase of EB Short-Term Money
Market Fund 4,197,612 N/A N/A 4,197,612 N/A
Sales of Morely Capital Fund N/A $2,844,070 $2,555,530 2,844,070 $ 288,540
Sales of Vanguard Windsor Fund N/A 2,852,375 2,298,185 2,852,375 554,191
Sales of EB Short-Term Money
Market Fund N/A 4,197,612 4,197,612 4,197,612 --
</TABLE>
Note:This schedule presents series of transactions involving securities of the
same issue where the aggregate amount exceeds 5% of the beginning Plan
value.
Page 17 of 18 Pages
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Foamex International Inc. on Form S-8 (File No. 33-94154) of our report dated
June 26, 1998 on our audits of the financial statements and schedules of the
Foamex/GFI 401(k) Savings Plan as of December 31, 1997 and December 31, 1996 and
for the years ended, which report is in this Annual Report on Form 11-K.
COOPERS & LYBRAND L.L.P.
Philadelphia, Pennsylvania
June 30, 1998
