SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 23, 1997
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 January 7, 1998, Foamex International Inc. ("Foamex International"),
Foamex L.P., and Foamex Capital Corporation filed a Form 8-K relating to an
event that occurred on December 23, 1997 (the "Original Form 8-K"). This Form
8-K/A amends Item 7 of the Original Form 8-K as follows:
Item 7. Financial Statements and Exhibits.
a) Financial Statements of Business Acquired:
Incorporated herein by reference to the periodic reports under the Exchange
Act of Crain Industries, Inc.
b) Pro Forma Financial Information
FOAMEX INTERNATIONAL INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following pro forma condensed combined financial statements for the
year ended December 29, 1996 and the nine months ended September 28, 1997, give
effect to the Crain Acquisition. Crain's acquisition of the Comfort Clinic
Division of Bio-Clinic Corporation in August 1996 and Crain's acquisition of
Simco Corporation in May 1997 as though each such transaction had occurred at
the beginning of the earliest period presented. The pro forma condensed combined
balance sheet as of September 28, 1997 has been prepared to give effect to the
Crain Acquisition as though such transaction occurred as of September 28, 1997.
The pro forma adjustments are based upon available information and certain
assumptions that Foamex International believes are reasonable.
The Crain Acquisition was accounted for using the purchase method of
accounting. Allocations of the purchase price for the Crain Acquisition have
been determined based upon preliminary estimates of fair value and are subject
to change. Differences between the amounts included herein and the final
allocations are not expected to have a material effect on the pro forma
financial information.
Upon consummation of the Crain Acquisition, Foamex International initiated
a restructuring/consolidation plan for the two entities. The related costs and
estimated savings associated with the restructuring/consolidation plan have not
been included in the pro forma condensed combined financial statements.
The pro forma condensed combined financial statements are presented for
illustrative purposes only, and therefore are not necessarily indicative of the
operating results that might have been achieved had such events occurred as of
an earlier date, nor are they indicative of the operating results which may
occur in the future.
The condensed consolidated historical balance sheet and statements of
operations of Foamex International are derived from the historical consolidated
financial statements of Foamex International. The condensed consolidated
historical balance sheet and statements of operations of Crain are derived from
the historical consolidated financial statements of Crain.
2
<PAGE>
PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of September 28, 1997
(dollars in thousands)
<TABLE>
<CAPTION>
Foamex
International Crain Adjustments Combined
CURRENT ASSETS:
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 1,916 $ 2,395 $ - $ 4,311
Accounts receivable, net 142,410 49,589 - 191,999
Inventories 94,301 37,468 - 131,769
Other current assets 53,476 3,237 - 56,713
-------- -------- ------- --------
Total current assets 292,103 92,689 - 384,792
PROPERTY, PLANT AND
EQUIPMENT, NET 207,676 52,184 (1,549) (1) 258,311
COST IN EXCESS OF ASSETS
ACQUIRED, NET 80,624 62,527 78,736 (2) 221,887
DEBT ISSUANCE COSTS, NET 17,771 10,303 (6,703) (3) 21,371
DEFERRED INCOME TAXES 24,111 - - 24,111
OTHER ASSETS 20,343 1,821 - 22,164
-------- -------- ------- --------
TOTAL ASSETS $642,628 $219,524 $70,484 $932,636
======== ======== ======= ========
LIABILITIES AND
STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 4,871 $ - $ - $ 4,871
Current portion of long-term debt 9,434 245 850 (4) 10,529
Accounts payable 87,339 29,768 - 117,107
Accrued interest 7,273 1,747 - 9,020
Other accrued liabilities 66,170 15,534 - 81,704
-------- -------- ------- --------
Total current liabilities 175,087 47,294 850 223,231
LONG-TERM DEBT 528,872 127,833 111,550 (5) 768,255
OTHER LIABILITIES 27,074 5,092 (2,611) (6) 29,555
STOCKHOLDER'S EQUITY (DEFICIT) (88,405) 39,305 (39,305) (7) (88,405)
-------- -------- ------- --------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $642,628 $219,524 $ 70,484 $932,636
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the pro forma condensed
combined financial statements.
3
<PAGE>
PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
For the year ended December 29, 1996
(dollars in thousands)
<TABLE>
<CAPTION>
Comfort Pro Forma Pro Forma Foamex Pro Forma
Crain(8) Simco(8) Clinic(8) Adjustments(9) Crain International Adjustments(9) Combined
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $306,093 $16,805 $32,938 $(10,872) (10) $344,964 $926,351 $ - $1,271,315
Cost of goods sold 243,745 14,380 30,376 (10,872) (10) 277,629 773,119 17,370 (14) 1,068,118
-------- ------ ------- ------- ------- ------- -------- --------
Gross profit 62,348 2,425 2,562 - 67,335 153,232 (17,370) 203,197
Selling, general and
administrative
expenses 35,299 2,025 4,704 - 42,028 58,329 (6,934) (15) 93,423
Depreciation and
amortization 9,295 - 5,677 (4,704) (11) 10,268 - (10,268) (16) -
Restructuring and
other charges
(credits) - - - - - (6,541) - (6,541)
-------- ------ ------- ------- ------- ------- -------- --------
Income (loss) from
operations 17,754 400 (7,819) 4,704 15,039 101,444 (168) 116,315
Interest and debt
issuance expense 16,459 251 913 1,395 (12) 19,018 53,900 3,340 (17) 76,258
Other income
(expense), net (304) 11 - - (293) 1,617 - 1,324
-------- ------ ------- ------- ------- ------- -------- --------
Income (loss) from
continuing operations
before provision for
income taxes 991 160 (8,732) 3,309 (4,272) 49,161 (3,508) 41,381
Provision (benefit) for
income taxes 395 11 - (2,115) (13) (1,709) 16,669 (1,403) (18) 13,557
-------- ------ ------- ------- ------- ------- -------- --------
Income (loss) from
continuing operations $ 596 $ 149 $(8,732) $ 5,424 $(2,563) $32,492 $ (2,105) $ 27,824
======== ====== ======= ======= ======= ======= ======== ========
</TABLE>
The accompanying notes are an integral part of the pro forma condensed
combined financial statements.
4
<PAGE>
PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
For the nine months ended September 28, 1997
(dollars in thousands)
<TABLE>
<CAPTION>
Pro Forma Pro Forma Foamex Pro Forma
Crain(8) Simco(8) Adjustments(9) Crain International Adjustments(9) Combined
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $237,890 $6,596 $ - $244,486 $702,441 $ - $946,927
Cost of goods sold 186,663 5,301 - 191,964 576,825 14,732 (21) 783,521
------ ------ -------- -------- ------- --------- ---------
Gross profit 51,227 1,295 - 52,522 125,616 (14,732) 163,406
Selling, general and
administrative
expenses 30,207 565 - 30,772 47,853 (5,704) (22) 72,921
Depreciation and
amortization 8,661 180 61 (19) 8,902 - (8,902) (23) -
------ ------ -------- -------- ------- --------- ---------
Income (loss) from
operations 12,359 550 (61) 12,848 77,763 (126) 90,485
Interest and debt
issuance expense 13,063 132 462 (20) 13,657 39,522 3,111 (24) 56,290
Other income
(expense), net (120) 8 - (112) 1,410 - 1,298
------ ------ -------- -------- ------- --------- ---------
Income (loss) from
continuing operations
before provision for
income taxes (824) 426 (523) (921) 39,651 (3,237) 35,493
Provision (benefit) for
income taxes (313) - (55) (13) (368) 15,530 (1,295) (18) 13,867
------ ------ -------- -------- ------- --------- ---------
Income (loss) from
continuing operations $ (511) $ 426 $ (468) $ (553) $24,121 $ (1,942) $ 21,626
====== ====== ======== ======== ======= ========= =========
</TABLE>
The accompanying notes are an integral part of the pro forma condensed
combined financial statements.
5
<PAGE>
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(1) Reflects an adjustment for equipment excluded from the Crain acquisition.
For the remaining property, plant and equipment Foamex estimates that the
current book value approximates estimated fair market value.
<TABLE>
<CAPTION>
<S> <C>
(2) Elimination of Crain existing cost in excess of assets acquired $(61,798)
Estimated excess purchase price of the Crain acquisition over the estimated fair
value of the net assets acquired in the Crain acquisition 140,534
--------
$ 78,736
========
(3) Elimination of Crain existing deferred financing costs $(10,303)
Capitalization of deferred financing fees associated with the Crain acquisition 3,600
---------
$ (6,703)
========
(4) Represents current portion of borrowings used to financing the Crain
acquisition.
(5) Repayment of existing Crain revolving credit facility $(27,100)
Repayment of unexchanged notes (2,000)
Repayment of other existing indebtedness (480)
Reflects borrowings used to finance the Crain acquisition 126,430
Adjustment to reflect the fair market value of Crain's senior subordinated notes 14,700
---------
$111,550
========
</TABLE>
(6) Elimination of payable to Hicks, Muse, Tate & Furst.
(7) Elimination of Crain's stockholder's equity.
(8) Crain's statement of operations includes the results of Comfort Clinic
and Simco from their respective acquisition dates of August 1996 and May
1997. The statement of operations for Comfort Clinic and Simco include
their respective pre-acquisition results.
(9) Pro forma adjustments for "pro forma Crain" represent adjustments
relating to Crain's acquisition and related financings of Comfort Clinic
and Simco, pro forma adjustments for "pro forma combined" represent the
adjustments for the Crain acquisition.
(10) Reflects the elimination of intercompany sales and cost of sales
pertaining to purchase of mattress pads and pillows, as well as foam bun
purchases by Comfort Clinic in the amount of $10,872.
(11) Reflects the following:
(a) Reduction of Comfort Clinic's amortization expense for the goodwill
as if the acquisition had been consummated as of the beginning of the
period in the amount of $4,737.
(b) Estimated pro forma increase for the amortization of goodwill
associated with the Simco acquisition of $184.
(c) Adjustment of Comfort Clinic's depreciation expense reflecting a
decrease in historical depreciation expense compared to the step-up
in basis associated with the Comfort Clinic acquisition during the
period in the amount of $151.
6
<PAGE>
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(12) Represents the net impact on interest and debt issuance expenses associated
with financing the Comfort Clinic acquisition ($10) and the Simco
acquisition ($1,385).
(13) Reflects the effect of the pro forma adjustments and assumes an effective
income tax rate of 40%.
<TABLE>
<CAPTION>
<S> <C>
(14) Reclassification of depreciation expense to cost of goods sold $ 7,615
Reclassification of transportation costs from selling, general and administrative expenses 11,555
Estimated pro forma reduction in depreciation expense (1,800)
--------
$17,370
========
(15) Reclassification of amortization and depreciation expense to selling, general and
administrative expenses $ 2,653
Reclassification of transportation costs to cost of goods sold (11,555)
Estimated pro forma increase in goodwill amortization 1,968
--------
$ (6,934)
========
(16) Reclassification to cost of goods sold $ (7,615)
Reclassification of selling, general and administrative expenses (2,653)
--------
$(10,268)
========
(17) Elimination of historical Crain interest and debt issuance expenses $(19,018)
Interest and debt issuance amortization on related financing 22,358
--------
$ 3,340
========
</TABLE>
(18) Reflects the effect of the pro forma adjustments and assumes an effective
income tax rate of 40%.
(19) Estimated pro forma increase for the amortization of goodwill associated
with the Simco acquisition of $61.
(20) Estimated pro forma increase in interest and debt issuance expense
associated with the Simco acquisition of $462.
<TABLE>
<CAPTION>
<S> <C>
(21) Reclassification of depreciation expense to cost of goods sold $ 6,532
Reclassification of transportation costs from selling, general
and administrative expenses 9,550
Estimated pro forma reduction in depreciation expense (1,350)
---------
$14,732
=========
(22) Reclassification of amortization and depreciation expense to selling,
general and administrative expense $ 2,370
Reclassification of transportation costs to cost of goods sold (9,550)
Estimated pro forma increase in goodwill amortization 1,476
---------
$ (5,704)
=========
(23) Reclassification to cost of goods sold $ (6,532)
Reclassification to selling, general and administrative expenses (2,370)
---------
$(8,902)
=========
(24) Elimination of historical Crain interest and debt issuance expense $(13,657)
Interest and debt issuance amortization on related financings 16,768
---------
$ 3,111
=========
</TABLE>
7
<PAGE>
(c) Exhibits
2.1 Agreement and Plan of Merger, dated December 8, 1997, among Foamex
International, Sub and Crain Holdings Corp. and certain other parties
signatory thereto. *
3.2.4 Third Amendment to the Agreement of Limited Partnership of Foamex
L.P., dated December 23, 1997.*
4.1.3 First Amendment to Indenture, dated as of December 23, 1997, by and
among Foamex LLC and the Bank of New York, as trustee, relating to the
9 7/8% Senior Subordinated Notes due 2007. *
4.3.1 Indenture, dated as of December 23, 1997, by and among Foamex L.P. and
Foamex Capital Corporation, as issuers, Foamex Fibers, Inc., Foamex
LLC, and General Felt Industries, Inc., as guarantors, and The Bank of
New York, as trustee, relating to the 13 1/2% Senior Subordinated
Notes due 2005. *
23.1 Consent of Coopers & Lybrand, L.L.P., independent accountants. *
23.2 Consent of Arthur Andersen LLP, independent accountants. *
99.1 Press release of Foamex International, dated December 23, 1997. *
* Incorporated by reference to the Original Form 8-K.
8
<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: March 9, 1998 By: /s/ Kenneth R. Fuette
---------------------------------
Name: Kenneth R. Fuette
Title: Executive Vice President
Chief Financial Officer and Chief
Administrative Officer
