SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A-3
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 1998
Commission file number 0-22624
FOAMEX INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
Delaware 05-0473908
(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 registrant (1) has 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) has been subject to such filing
requirements for the past 90 days. YES X NO __
The number of shares of the registrant's common stock outstanding as of May 11,
1998 was 25,003,475.
Page 1 of 26
Exhibit List on Page 20 of 26
<PAGE>
FOAMEX INTERNATIONAL INC.
<TABLE>
<CAPTION>
INDEX
Page
Part I. Financial Information:
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Statements of Operations - Thirteen Week Periods
Ended March 29, 1998 and March 30, 1997 3
Condensed Consolidated Balance Sheets as of March 29, 1998 and December 28, 1997 4
Condensed Consolidated Statements of Cash Flows - Thirteen Week Periods Ended
March 29, 1998 and March 30, 1997 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 15
Part II. Other Information 20
Exhibit List 20
Signatures 26
</TABLE>
The Company is filing this Form 10-Q/A-3 to reflect adjustments to
accounts receivable, inventory and other assets and liabilities during the
fourth quarter of 1998 related to prior periods including, but not limited to,
the first quarter of 1998. The Company has updated its Management's Discussion
and Analysis of Financial Condition and Results of Operations to reflect only
such adjustments, but has not updated such disclosure to reflect other
developments since the original filing. Reference is made to the Company's
subsequent reports under the Securities Exchange Act of 1934, as amended, which
have been filed with the Securities and Exchange Commission.
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FOAMEX INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
FOR THE THIRTEEN WEEK PERIOD ENDED MARCH 29, 1998
13 Week Periods Ended
March 29, March 30,
1998 1997
--------- ---------
(thousands)
NET SALES $ 312,290 $ 229,120
COST OF GOODS SOLD 262,720 186,323
--------- ---------
GROSS PROFIT 49,570 42,797
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 23,043 15,987
--------- ---------
INCOME FROM OPERATIONS 26,527 26,810
INTEREST AND DEBT ISSUANCE EXPENSE 17,527 13,968
OTHER INCOME (EXPENSE), NET (699) 638
--------- ---------
INCOME BEFORE PROVISION FOR INCOME TAXES 8,301 13,480
PROVISION FOR INCOME TAXES 3,318 5,344
--------- ---------
INCOME BEFORE EXTRAORDINARY LOSS 4,983 8,136
EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT
OF DEBT, NET OF INCOME TAXES (1,874) (410)
--------- ---------
NET INCOME $ 3,109 $ 7,726
========= =========
BASIC EARNINGS (LOSS) PER SHARE:
INCOME BEFORE EXTRAORDINARY LOSS $ 0.20 $ 0.32
EXTRAORDINARY LOSS (0.08) (0.02)
--------- ---------
EARNINGS PER SHARE $ 0.12 $ 0.30
========= =========
WEIGHTED AVERAGE NUMBER OF SHARES 24,942 25,311
========= =========
DILUTED EARNINGS (LOSS) PER SHARE:
INCOME BEFORE EXTRAORDINARY LOSS $ 0.19 $ 0.31
EXTRAORDINARY LOSS (0.07) (0.02)
--------- ---------
EARNINGS PER SHARE $ 0.12 $ 0.29
========= =========
WEIGHTED AVERAGE NUMBER OF SHARES 25,603 26,368
========= =========
The accompanying notes are an integral part of the condensed
consolidated financial statements.
3
<PAGE>
FOAMEX INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET DATA (unaudited)
<TABLE>
<CAPTION>
March 29, December 28,
ASSETS 1998 1997
CURRENT ASSETS: (thousands)
<S> <C> <C>
Cash and cash equivalents $ 16,919 $ 12,044
Accounts receivable, net 185,350 175,684
Inventories 121,409 120,299
Other current assets 75,586 62,901
----------- -----------
Total current assets 399,264 370,928
PROPERTY, PLANT AND EQUIPMENT, NET 230,911 233,435
COST IN EXCESS OF ASSETS ACQUIRED, NET 217,383 218,219
DEBT ISSUANCE COSTS, NET 16,456 18,889
DEFERRED INCOME TAXES 35,641 26,960
OTHER ASSETS 28,734 25,192
----------- -----------
TOTAL ASSETS $ 928,389 $ 893,623
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Short-term borrowings $ 5,882 $ 6,598
Current portion of long-term debt 4,779 12,931
Current portion of long-term debt - related party 7,020 --
Accounts payable 120,429 131,689
Accrued interest 8,954 10,716
Other accrued liabilities 69,888 70,513
----------- -----------
Total current liabilities 216,952 232,447
LONG-TERM DEBT 686,401 735,724
LONG-TERM DEBT - RELATED PARTY 97,180 --
OTHER LIABILITIES 39,074 38,871
----------- -----------
Total liabilities 1,039,607 1,007,042
----------- -----------
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 26,992,475 and 26,908,680 shares, respectively;
Outstanding 25,003,475 and 24,919,680 shares, respectively 270 269
Additional paid-in capital 86,662 86,025
Retained earnings (accumulated deficit) (162,782) (164,118)
Accumulated other comprehensive income (6,371) (6,598)
Shareholder note receivable (9,795) (9,795)
----------- -----------
(92,016) (94,217)
Common Stock held in treasury, at cost:
1,989,000 shares at March 29, 1998 and December 28, 1997 (19,202) (19,202)
----------- -----------
Total stockholders' equity (deficit) (111,218) (113,419)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 928,389 $ 893,623
=========== ===========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
4
<PAGE>
FOAMEX INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
<TABLE>
<CAPTION>
13 Week Periods Ended
March 29, March 30,
1998 1997
--------- ---------
(thousands)
OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 3,109 $ 7,726
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 7,817 5,361
Amortization of debt issuance costs, debt discount
and debt premium 261 3,766
Extraordinary loss on early extinguishment of debt 1,608 410
Other operating activities 5,114 (153)
Changes in operating assets and liabilities, net (37,757) 1,790
--------- ---------
Net cash provided by (used for) operating activities (19,848) 18,900
--------- ---------
INVESTING ACTIVITIES:
Capital expenditures (7,201) (7,426)
Acquisitions, net of cash acquired (3,321) --
Decrease in restricted cash -- 8,356
Deposit for defeasance of indebtedness (4,809) --
Other investing activities (460) --
--------- ---------
Net cash provided by (used for) investing activities (15,791) 930
--------- ---------
FINANCING ACTIVITIES:
Net proceeds from short-term borrowings (716) 293
Net proceeds from revolving loans 69,973 --
Proceeds from long-term debt 129,000 500
Repayment of long-term debt (127,083) (9,230)
Repayment of long-term debt - related party (4,800) --
Dividend paid (1,246) --
Transfer of General Felt (23,898) --
Debt issuance cost (1,149) --
Other financing activities 433 405
--------- ---------
Net cash provided by (used for) financing activities 40,514 (8,032)
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,875 11,798
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 12,044 22,203
--------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 16,919 $ 34,001
========= =========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
5
<PAGE>
FOAMEX INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Foamex International Inc.'s (the "Company") condensed consolidated
balance sheet as of December 28, 1997 has been condensed from the audited
consolidated balance sheet at that date. The condensed consolidated balance
sheet as of March 29, 1998, the condensed consolidated statements of operations
for the thirteen week periods ended March 29, 1998 and March 30, 1997 and the
condensed consolidated statements of cash flows for the thirteen week periods
ended March 29, 1998 and March 30, 1997 have been prepared by the Company and
have not been audited by the Company's independent accountants. In the opinion
of management, all adjustments, consisting only of normal recurring adjustments
considered necessary for a fair presentation of the financial position, results
of operations and cash flows have been included.
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 the
Company's 1997 consolidated financial statements and notes thereto as set forth
in the Company's Annual Report on Form 10-K/A-3 for the fiscal year ended
December 28, 1997.
2. RESTATEMENT OF FINANCIAL INFORMATION
The Company identified certain adjustments to accounts receivable,
inventory and other assets and liabilities during the fourth quarter of 1998
that related to prior periods including, but not limited to, the first quarter
of 1998. As a result, the Company has restated the accompanying 1998
consolidated financial statements to reflect adjustments that related to the
first quarter of 1998, as follows:
<TABLE>
<CAPTION>
As Previously
Reported Adjustments As Restated
Statement of Operations:
<S> <C> <C> <C>
Net Sales $ 313,790 $ (1,500) $ 312,290
Cost of Goods Sold 262,594 126 262,720
--------- --------- ---------
Gross Profit 51,196 (1,626) 49,570
Selling, General and Administrative 22,377 666 23,043
--------- --------- ---------
Income from Operations 28,819 (2,292) 26,527
Interest and Debt Issuance Expense 17,777 (250) 17,527
Other Income (Expense), net (699) -- (699)
--------- --------- ---------
Income before Provision for Income Taxes 10,343 (2,042) 8,301
Provision for Income Taxes 4,135 (817) 3,318
--------- --------- ---------
Income before Extraordinary Loss 6,208 (1,225) 4,983
Extraordinary Loss (1,874) -- (1,874)
--------- --------- ---------
Net Income $ 4,334 $ (1,225) $ 3,109
========= ========= =========
Basic earnings per share:
Income before extraordinary item $ 0.25 $ (0.05) $ 0.20
Extraordinary loss (0.08) -- (0.08)
--------- --------- ---------
Earnings per share $ 0.17 $ (0.05) $ 0.12
========= ========= =========
Diluted earnings per share:
Income before extraordinary item $ 0.24 $ (0.05) $ 0.19
Extraordinary loss (0.07) -- (0.07)
--------- --------- ---------
Earnings per share $ 0.17 $ (0.05) $ 0.12
========= ========= =========
</TABLE>
6
<PAGE>
2. RESTATEMENT OF FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
As Previously
Reported Adjustments As Restated
Balance Sheet:
<S> <C> <C> <C>
Current assets $401,390 $(2,126) $399,264
Total assets 929,765 (1,376) 928,389
Current liabilities 217,644 (692) 216,952
Total liabilities 1,039,758 (151) 1,039,607
Equity (109,993) (1,225) (111,218)
Cash Flows:
Net cash used for operating activities (19,307) (541) (19,848)
Net cash used for investing activities (16,332) 541 (15,791)
</TABLE>
3. ACQUISITION
On December 23, 1997, the Company acquired Crain Industries, Inc.
("Crain") pursuant to a merger agreement with Crain Holdings Corp. for a
purchase price of approximately $213.7 million, including the assumption of debt
with a face value of approximately $98.6 million (with an estimated fair value
of approximately $112.3 million) (the "Crain Acquisition"). In addition, fees
and expenses associated with the Crain Acquisition were approximately $13.2
million. The Crain Acquisition provided a fully integrated manufacturer,
fabricator and distributor of a broad range of flexible polyurethane foam and
foam products which are sold to a diverse customer base, principally in the
furniture, bedding and carpet cushion markets. The acquisition was funded by
$118.0 million in bank borrowings by Foamex L.P. under a credit facility. The
excess of the purchase price over the estimated fair value of the net assets
acquired was approximately $152.5 million.
The Crain Acquisition was accounted for as a purchase and the operations
of Crain are included in the consolidated statements of operations and cash
flows from the date of acquisition. The cost of the Crain Acquisition has been
allocated on the basis of the fair value of the assets acquired and the
liabilities assumed. The excess of the purchase price over the estimated fair
value of the net assets acquired is being amortized using the straight-line
method over forty years. The allocation of the purchase price for the Crain
Acquisition is based upon preliminary estimates and assumptions and is subject
to revision once appraisals, valuations and other studies of the fair value of
the acquired assets and liabilities have been completed. The pro forma results
listed below are unaudited and assume that the Crain Acquisition occurred at the
beginning of fiscal year 1997.
<TABLE>
<CAPTION>
13 Week Period Ended
March 30, 1997
(thousands, except per share data)
<S> <C>
Net sales $306,768
Income before extraordinary loss 5,828
Pro forma basic earnings (loss) per share 0.23
Pro forma diluted earnings (loss) per share 0.22
</TABLE>
The pro forma results are not necessarily indicative of what would have
occurred if the Crain Acquisition had been in effect for the entire periods
presented nor are they necessarily indicative of future consolidated results.
7
<PAGE>
4. INVENTORIES
Inventories consist of:
<TABLE>
<CAPTION>
March 29, December 28,
1998 1997
--------- ---------
(thousands)
<S> <C> <C>
Raw materials and supplies $ 76,146 $ 75,487
Work-in-process 16,736 15,620
Finished goods 28,527 29,192
--------- ---------
Total $121,409 $120,299
======== ========
</TABLE>
5. LONG-TERM DEBT AND LONG-TERM DEBT - RELATED PARTY
Long-term debt consists of:
<TABLE>
<CAPTION>
March 29, December 28,
1998 1997
-------- --------
<S> <C> <C>
Credit Facility: (thousands)
Term Loan A $ -- $ 76,700
Term Loan B 83,553 109,725
Term Loan C 75,958 99,750
Term Loan D 110,000 110,000
Revolving credit facility 124,901 54,928
9.875% Senior subordinated notes due 2007 150,000 150,000
13.5% Senior subordinated notes due 2005 (includes
$13,272 and $13,720 of unamortized debt premium) 111,272 111,720
9 1/2% Senior secured notes due 2000 4,523 4,523
Industrial revenue bonds 7,000 7,000
Subordinated note payable (net of unamortized
debt discount of $804 and $1,198) 6,211 6,129
Other 17,762 18,180
-------- --------
691,180 748,655
Less current portion 4,779 12,931
-------- --------
Long-term debt-unrelated parties $686,401 $735,724
======== ========
Long-term debt - related party consists of:
Foamex/GFI Note $ 34,000 $ --
Note payable to Trace Foam LLC 70,200 --
-------- --------
104,200 --
Less current portion 7,020 --
-------- --------
Long-term debt - related party $ 97,180 $ --
======== ========
</TABLE>
Refinancing Associated with Transfer of General Felt Common Stock
In connection with the transfer of General Felt Industries, Inc.
("General Felt") common stock and other related transactions designed to
simplify the Company's structure and provide future operating flexibility (the
"GFI Transaction") (see Note 9), Foamex L.P. amended its agreements with lenders
under the Credit Facility, which included additional borrowings of
8
<PAGE>
5. LONG-TERM DEBT AND LONG-TERM DEBT - RELATED PARTY (continued)
$129.0 million under new term loan agreements that were assumed by Trace Foam
LLC (as discussed in Note 9) and borrowings of $32.0 million under the existing
revolving credit facility. These funds were used to (i) repay approximately
$125.1 million of existing term loans and accrued interest thereon of
approximately $0.9 million, (ii) deposit $4.8 million into an escrow account in
order to defease the 9 1/2% senior secured notes, (iii) repay $4.8 million of
indebtedness owed to General Felt, (iv) fund the $20.0 million to acquire the
net assets of General Felt (see Note 9) and (v) pay fees and expenses of
approximately $5.4 million. Also, this amendment increased the availability
under the revolving credit facility from $150.0 million to $200.0 million;
however, $34.5 million of this increase is used for a letter of credit to
support the Foamex/GFI Note, as defined. (See Note 9.)
Foamex Carpet Revolving Credit
Upon consummation of the transaction contemplated by the asset purchase
agreement for the GFI Transaction (see Note 9), Foamex Carpet Cushion, Inc.
("Foamex Carpet") entered into a credit agreement with the institutions from
time to time party thereto, as issuing banks, and Citicorp USA, Inc. and The
Bank of Nova Scotia, as administrative agents, which provides for up to $20.0
million in revolving credit borrowings.
Foamex/GFI Note
In connection with the transfer of General Felt's common stock, Foamex
L.P. entered into the $34.0 million Foamex/GFI Note to settle an existing
intercompany note payable to General Felt. The Foamex/GFI Note matures in March
2000 with interest payable at LIBOR plus an applicable margin. The principal
amount is due upon maturity in March 2000.
During the thirteen week period ended March 29, 1998, the Company
incurred approximately $0.2 million to Trace Foam LLC for interest under the
Foamex/GFI Note.
Note Payable to Trace Foam LLC
In connection with the asset purchase agreement for the GFI Transaction
(see Note 9), the Company entered into a $70.2 million promissory note with
Trace Foam LLC. The note bears interest at a base rate plus 2.0% or at LIBOR
plus 3.0%. The note matures in February 2004.
During the thirteen week period ended March 29, 1998, the Company
incurred approximately $0.5 million to Trace Foam LLC for interest under this
note.
Principal Payments
Principal payments the Company's long-term debt and long-term debt -
related party for the remainder of 1998 and for the next five years are as
follows: 1998 - $9.8 million; 1999 - $17.7 million; 2000 - $56.8 million; 2001 -
$17.3 million; 2002 - $17.7 million; and thereafter - $663.6 million.
6. EARLY EXTINGUISHMENT OF DEBT
In connection with the GFI Transaction (see Note 9), the Company incurred
an extraordinary loss on the early extinguishment of debt of approximately $1.9
million (net of income tax benefits of $1.2 million). The extraordinary loss is
comprised of approximately $2.9 million for the write-off of debt issuance costs
and approximately $0.2 million of professional fees and other costs.
During 1997, the Company used approximately $8.4 million of restricted
cash to repurchase outstanding indebtedness of approximately $8.0 million, which
resulted in an extraordinary loss of approximately $0.4 million (net of income
taxes of $0.3 million).
9
<PAGE>
7. ENVIRONMENTAL MATTERS
The Company is subject to extensive and changing federal, state, local
and foreign environmental laws and regulations, including those relating to the
use, handling, storage, discharge and disposal of hazardous substances and the
remediation of environmental contamination, and as a result, is from time to
time involved in administrative and judicial proceedings and inquiries relating
to environmental matters. During the thirteen weeks ended March 29, 1998,
expenditures in connection with the Company's compliance with federal, state,
local and foreign environmental laws and regulations did not have a material
adverse effect on the Company's operations, financial position, capital
expenditures or competitive position. As of March 29, 1998, the Company has
accruals of approximately $4.9 million for environmental matters. In addition,
as of March 29, 1998, the Company has net receivables of approximately $1.1
million relating to indemnification for environmental liabilities.
The Clean Air Act Amendments of 1990 (the "1990 CAA Amendments") provide
for the establishment of federal emission standards for hazardous air pollutants
including methylene chloride, propylene oxide and TDI, materials used in the
manufacturing of foam. On December 27, 1996, the United States Environmental
Protection Agency (the "EPA") proposed regulations under the 1990 CAA Amendments
that will require manufacturers of slab stock polyurethane foam and foam
fabrication plants to reduce emissions of methylene chloride. Because these
regulations are subject to change prior to finalization, the Company cannot
accurately predict the actual cost of their implementation. The Company does not
believe implementation of the regulations will require it to make material
expenditures at facilities owned prior to December 23, 1997, due to the
Company's use of alternative technologies which do not utilize methylene
chloride and its ability to shift current production to the facilities, which
use these alternative technologies; however, material expenditures may be
required at the facilities formerly operated by Crain. The 1990 CAA Amendments
also may result in the imposition of additional standards regulating air
emissions from polyurethane foam manufacturers, but these standards have not yet
been proposed or promulgated.
The Company has reported to appropriate state authorities that it has
found soil and groundwater contamination in excess of state standards at four
facilities and soil contamination in excess of state standards at three other
facilities. The Company 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 29, 1998, the Company has
accruals of approximately $4.3 million for the remaining potential remediation
costs for these facilities based on engineering estimates.
Federal regulations require that by the end of 1998 all underground
storage tanks ("USTs") be removed or upgraded in all states to meet applicable
standards. The Company 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. The
Company has accrued $0.1 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. The Company believes that its USTs do not pose
a significant risk of environmental liability because of the Company's
monitoring practices for USTs and conditional approval for the 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.
The Company has been designated as a Potentially Responsible Party
("PRP") by the EPA with respect to thirteen sites with an estimated total
liability to the Company for the thirteen sites of less than approximately $0.5
million. Estimates of total clean-up 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 the Company is
considered to be immaterial.
Although it is possible that new information or future developments could
require the Company to reassess its potential exposure relating to all pending
environmental matters, including those described herein, management believes
that, based upon all currently available information, the resolution of such
environmental matters will not have a material adverse effect on the Company's
operations, financial position, capital expenditures or competitive
10
<PAGE>
7. ENVIRONMENTAL MATTERS (continued)
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.
8. LITIGATION
As of May 15, 1998, the Company 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. Three 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, the Company 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. The Company 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 the Company or Trace Holdings. Neither the Company nor Trace
Holdings recommended, authorized or approved the use of its foam for these
purposes. While it is not feasible to predict or determine the outcome of these
actions, based on management's present assessment of the merits of pending
claims, after consultation with the general counsel of Trace Holdings, and
without taking into account 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 the Company's or Trace
Holdings' consolidated financial position or results of operations. In addition,
the Company is also indemnified by Trace Holdings for any such liabilities
relating to foam manufactured prior to October 1990. Although Trace Holdings has
paid the Company'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 the Company's liability insurance, the Company 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 the Company. If management's assessment of the Company's liability
with respect to these actions is incorrect, such actions could have a material
adverse effect on the Company.
In November 1997, a complaint was filed in the United States District
Court for the Southern District of Texas alleging that various defendants,
including Crain through the use of the CARDIO(R) process licensed from a third
party, infringed on a patent held by plaintiff. The Company is negotiating with
the licensor of the process for the assumption of the defense of the action by
the licensor; however, the action is in the preliminary stages and there can be
no assurance as to the ultimate outcome of the action.
On or about March 17, 1998, five purported class action lawsuits were
filed in the Delaware Chancery Court, New Castle County, against the Company,
directors of the Company, Trace Holdings, and individual officers and directors
of Trace Holdings:
Brickell Partners v. Marshall S. Cogan, et al., No. 16260NC;
Mimona Capital v. Salvatore J. Bonanno, et al., No. 16259NC;
Daniel Cohen v. Foamex International Inc., No. 16263;
Eileen Karisinki v. Foamex International Inc., et al., No. 16261NC and
John E. Funky Trust v. Salvatore J. Bonanno, et al., No. 16267.
11
<PAGE>
8. LITIGATION (continued)
A sixth purported class action lawsuit, Barnett Stepak v. Foamex
International Inc., et al., No. 16277, was filed on or about March 23, 1998
against the same defendants. The complaints in the six actions allege, among
other things, that the defendants have violated fiduciary and other common law
duties purportedly owed to the Company's stockholders in connection with Trace
Holdings proposal to acquire all of the shares of the Company's common stock.
The complaints seek, among other things, class certification, a declaration that
the defendants have breached their fiduciary duties to the class, preliminary
and permanent injunctions barring implementation of the proposed transaction,
rescission of the transaction if consummated, unspecified compensatory damages,
and costs and attorneys' fees.
The Company 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 the Company. If management's assessment of the
Company's liability with respect to these actions is incorrect, such actions
could have a material adverse effect on the Company's consolidated financial
position.
9. GFI TRANSACTION
On February 27, 1998, the Company and certain of its affiliates completed
a series of transactions designed to simplify the Company's structure and to
provide future operational flexibility (collectively, the "GFI Transaction").
Prior to the consummation of these transactions, (i) Foamex L.P. and Foamex
L.P.'s wholly-owned subsidiary, General Felt, entered into a Supply Agreement
and an Administrative Services Agreement, (ii) Foamex L.P. repaid its
outstanding indebtedness to General Felt with $4.8 million in cash and a $34.0
million principal amount promissory note (the "Foamex/GFI Note") supported by a
$34.5 million letter of credit under the credit facility (the "Credit
Facility"), (iii) Foamex L.P. contributed to General Felt $9.4 million of
outstanding net intercompany payables and intercompany loans with General Felt
and (iv) Foamex L.P. defeased the $4.5 million outstanding principal amount of
its 9 1/2% senior secured notes due 2000. The initial transaction resulted in
the transfer from Foamex L.P. to Trace Foam LLC of all of the outstanding common
stock of General Felt, in exchange for (i) the assumption by Trace Foam LLC of
$129.0 million of Foamex L.P.'s indebtedness and (ii) the transfer by Trace Foam
LLC to Foamex L.P. of a 1% non-managing general partnership interest in Foamex
L.P. As a result, General Felt ceased being a subsidiary of Foamex L.P. and was
relieved from all obligations under Foamex L.P.'s 9 7/8% Senior Subordinated
Notes due 2007 and 13 1/2% Senior Subordinated Notes due 2005. Upon consummation
of the initial transaction, Foamex Carpet, a newly formed wholly-owned
subsidiary of the Company, the Company, Trace Foam LLC, and General Felt entered
into an Asset Purchase Agreement dated February 27, 1998, in which General Felt
sold substantially all of its assets (other than cash, the Foamex/GFI Note and
its operating facility in Pico Rivera, California) to Foamex Carpet in exchange
for (i) $20.0 million in cash and (ii) a promissory note issued by Foamex Carpet
to Trace Foam LLC in the amount of $70.2 million. The $20.0 million cash payment
was funded with a distribution by Foamex L.P to the Company. Upon consummation
of the transaction contemplated by the Asset Purchase Agreement, Foamex Carpet
entered into a credit agreement with the institutions from time to time party
thereto, as issuing banks, and Citicorp USA, Inc. and The Bank of Nova Scotia,
as administrative agents, which provides for up to $20.0 million in revolving
credit borrowings. Foamex Carpet will conduct the carpet cushion business
previously conducted by General Felt. Also, Trace Foam LLC has retained
ownership of one of General Felt's operating facilities which is being leased to
Foamex Carpet and the $34.0 million Foamex/GFI Note.
No gain has been recognized on the General Felt net assets transferred to
Trace Foam LLC and repurchased by the Company. The Company will continue to
account for these net assets using the carryover basis of Foamex L.P. The $129.0
million of debt assumed by Trace Foam LLC in the GFI Transaction was accounted
for as an extinguishment of debt which resulted in an extraordinary loss of
approximately $2.0 million. The 1% non-managing general partnership interest
acquired in connection with the GFI Transaction was accounted for as a
redemption of equity. By virtue of the transfer of General Felt stock and the
subsequent merger of General Felt into Trace Foam LLC, the Pico Rivera facility
was transferred to Trace Foam LLC; no gain was recognized on the transfer since
the Company leased-back the facility. The net effect resulted in a charge to
stockholders' equity (deficit) of approximately $0.5 million.
12
<PAGE>
10. EARNINGS (LOSS) PER SHARE
The following table shows the amounts used in computing earnings per
share and the effect on income and the weighted average number of shares of
dilutive potential common stock.
<TABLE>
<CAPTION>
March 29, March 30,
1998 1997
------- -------
(thousands, except per share amounts)
Basic earnings per share:
<S> <C> <C>
Net income $ 3,109 $ 7,726
======= =======
Average common stock outstanding 24,942 25,311
======= =======
Basic earnings per share $ 0.12 $ 0.30
======= =======
Diluted earnings per share:
Net income available for common stock
and dilutive securities $ 3,109 $ 7,726
======= =======
Average common stock outstanding 24,942 25,311
Additional common shares resulting
from stock options 611 1,057
------- -------
Average common stock and dilutive
stock outstanding 25,603 26,368
======= =======
Diluted earnings per share $ 0.12 $ 0.29
======= =======
</TABLE>
Earnings (loss) per share attributable to income before extraordinary
loss and extraordinary loss on early extinguishment of debt are:
<TABLE>
<CAPTION>
March 29, March 30,
1998 1997
------- -------
Earnings (loss) per common share - basic:
<S> <C> <C>
Income before extraordinary loss $ 0.20 $ 0.32
Extraordinary loss (0.08) (0.02)
------- -------
Net income $ 0.12 $ 0.30
======= =======
Earnings (loss) per common share - assuming dilution:
Income before extraordinary loss $ 0.19 $ 0.31
Extraordinary loss (0.07) (0.02)
------- -------
Net income $ 0.12 $ 0.29
======= =======
</TABLE>
13
<PAGE>
11. COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
Income," which requires disclosure of comprehensive income, as defined,
including comprehensive disclosure in interim financial statements.
Comprehensive income for the thirteen week periods ended March 29, 1998 and
March 30, 1997 is comprised of the following:
<TABLE>
<CAPTION>
March 29, March 30,
1998 1997
------- -------
(thousands)
<S> <C> <C>
Net income $ 3,109 $ 7,726
Foreign currency translation adjustments 227 (184)
------- -------
Total comprehensive income $ 3,336 $ 7,542
======= =======
</TABLE>
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company operates primarily in the flexible polyurethane and advanced
polymer foam products industry. The following discussion should be read in
conjunction with the condensed consolidated financial statements and related
notes thereto of the Company included in this report. Certain information in
this report contains forward-looking statements and should be read in
conjunction with the discussion regarding forward-looking statements set forth
on pages 4 and 5 of the Company's 1997 Annual Report on Form 10-K/A-3.
During 1997, the Company's products were utilized primarily in five
end-markets; (i) carpet cushion and other carpet products, (ii) cushioning
foams, including bedding products, (iii) furniture products for furniture
manufacturers and distributors, (iv) automotive applications, including trim and
accessories, and (v) specialty and technical applications, including those for
filtration, gasketing and sealing. As a result of the Crain Acquisition, the
Company has added a sixth end market: consumer products.
On March 16, 1998, the Company announced that its Board of Directors
received an unsolicited buyout proposal from Trace Holdings, the Company's
principal stockholder. Trace Holdings proposed to acquire all of the outstanding
common stock of the Company not currently owned by Trace Holdings and its
subsidiaries for a cash price of $17.00 per share. Also, Trace Holdings informed
the Board of Directors that financing for the buyout transaction would be
arranged through Donaldson, Lufkin & Jenrette Securities Corporation and The
Bank of Nova Scotia/Scotia Capital Markets. As of March 16, 1998, Trace Holdings
and its subsidiaries beneficially owned approximately 11,475,000 shares or
approximately 46% of the outstanding common stock of the Company. In response to
Trace Holding's offer, the Company's Board of Directors has appointed a special
committee to determine the advisability and fairness of the proposed buyout to
the Company's stockholders other than Trace Holdings and its subsidiaries. Trace
Holding's proposed buyout is subject to a number of conditions, including the
negotiations of definitive documents (which are expected to contain customary
closing conditions); the filing of a disclosure statement and other documents
with the Securities and Exchange Commission; regulatory filings; and approval of
the transaction by a majority of the Company's stockholders. On June 25, 1998,
Trace Holdings increased the cash price to $18.75 per share.
On February 27, 1998, the Company and certain of its affiliates completed
a series of transactions designed to simplify the Company's structure and to
provide future operational flexibility (collectively, the "GFI Transaction").
Prior to the consummation of these transactions, the Company defeased the $4.5
million outstanding principal amount of its 9 1/2% senior secured notes due
2000. Foamex L.P. settled a $38.8 million intercompany note payable to General
Felt with $4.8 million in cash and a $34.0 million principal amount promissory
note supported by a $34.5 million letter of credit under the Foamex L.P. credit
facility (the "Foamex/GFI Note"). The initial transaction resulted in the
transfer from Foamex L.P. to Trace Foam LLC of all of the outstanding common
stock of General Felt, in exchange for (i) the assumption by Trace Foam LLC of
$129.0 million of Foamex L.P.'s indebtedness and (ii) the transfer by Trace Foam
LLC to Foamex L.P. of a 1% non-managing general partnership interest in Foamex
L.P. As a result, General Felt ceased being a subsidiary of Foamex L.P. and was
relieved from all obligations under Foamex L.P.'s 9 7/8% senior subordinated
notes due 2007 and 13 1/2% senior subordinated notes due 2005. Upon consummation
of the initial transaction, Foamex Carpet, a newly formed wholly-owned
subsidiary of the Company, the Company, Trace Foam LLC, and General Felt entered
into an Asset Purchase Agreement dated February 27, 1998, in which General Felt
sold substantially all of its assets (other than cash, the Foamex/GFI Note and
its operating facility in Pico Rivera, California) to Foamex Carpet in exchange
for (i) $20.0 million in cash and (ii) a promissory note issued by Foamex Carpet
to Trace Foam LLC in the amount of $70.2 million. The $20.0 million cash payment
was funded by a distribution by Foamex L.P. to the Company. Upon consummation of
the transaction contemplated by the Asset Purchase Agreement, Foamex Carpet
entered into a credit agreement with the institutions from time to time party
thereto, as issuing banks, and Citicorp USA, Inc. and The Bank of Nova Scotia,
as administrative agents, which provides for up to $20.0 million in revolving
credit borrowings. Foamex Carpet will conduct the carpet cushion business
previously conducted by General Felt. Also, Trace Foam LLC has retained
ownership of one of General Felt's operating facilities which is being leased to
Foamex Carpet and the $34.0 million Foamex/GFI Note.
On December 23, 1997, the Company acquired Crain pursuant to a merger
agreement with Crain Holdings Corp. for a purchase price of approximately $213.7
million, including the assumption of debt with a face value of approximately
$98.6 million (and an estimated fair value of approximately $112.3 million) (the
"Crain Acquisition"). In addition, fees and expenses associated with the Crain
Acquisition were approximately $13.2 million.
15
<PAGE>
On April 27, 1998, the Company's facility in Orlando, Florida was damaged
by a fire. The Company is in the process of repairing the damages to the
facility and supplying local customers from other facilities. Management
believes that the Company has adequate insurance coverage for business
interruption and damages to the facility associated with the fire. After
considering the Company's insurance coverage, the Company does not believe that
the fire will have a significant impact on the Company's financial position or
operations; however, there can be no assurance that the fire will not have a
significant impact on the Company's financial position or operations.
On October 6, 1997, the Company sold substantially all of the net assets
of its needlepunch carpeting, tufted carpeting and artificial grass products
business located at its facilities in Dalton, Georgia ("Dalton"). Dalton's
revenues were $10.7 million for the thirteen week period ended March 30, 1997.
Operating results for 1998 are expected to be influenced by various
internal and external factors. These factors include, among other things, (i)
consolidation of the Crain Acquisition, (ii) continued implementation of the
continuous improvement program to improve the Company's profitability, (iii)
additional raw material cost increases, if any, by the Company's chemical
suppliers, (iv) the Company's success in passing on to its customers selling
price increases to recover such raw material cost increases and (v) fluctuations
in interest rates.
13 Week Period Ended March 29, 1998 Compared to 13 Week Period Ended March 30,
1997
Results of Operations
Net sales for the first quarter of 1998 were $312.3 million as compared
to $229.1 million in the first quarter of 1997, an increase of $83.2 million or
36.3%. Carpet cushion products net sales for the first quarter of 1998 increased
1.6% to $69.0 million from $67.9 million in the first quarter of 1997 primarily
due to net sales from the Crain operations offset by the sale of Dalton in
October which contributed net sales of $10.7 million in 1997 and reduction of
rebond selling prices as compared to 1997 and product mix. Rebond selling prices
were approximately 12.0% lower in the first quarter of 1998 versus 1997.
Cushioning products net sales for the first quarter of 1998 increased 86.3% to
$97.8 million from $52.5 million in the first quarter of 1997 primarily due to
net sales from the Crain operations and increased volume to our national bedding
customers and fabricators. Furniture products net sales for the first quarter of
1998 increased 36.8% to $43.1 million as compared to net sales of $31.5 million
for the first quarter of 1997 primarily due to net sales from the Crain
operations. Automotive products net sales for the first quarter of 1998
increased 10.0% to $65.7 million from $59.7 million in the first quarter of 1997
primarily due to increased volume. Technical products net sales for the first
quarter of 1998 increased 20.6% to $21.1 million from $17.5 million in the first
quarter of 1997 primarily due to increased net sales volume for felted,
gasketing, and sealing products. Consumer products net sales for the first
quarter of 1998 were $15.6 million. The consumer products category was acquired
pursuant to the Crain Acquisition in December 1997.
Gross profit as a percentage of net sales decreased to 15.9% for the
first quarter of 1998 from 18.7% in the first quarter of 1997 primarily due to
the shift in product mix for 1998 as a result of the Crain Acquisition. Crain's
principal product lines, bedding, furniture and carpet cushion, have inherently
lower gross profit margins than the Company's historical gross profit margins.
Also, the gross profit was lower in the first quarter of 1998 since the Company
carried the full individual operating costs of both organizations.
Income from operations increased slightly to $27.1 million for the first
quarter of 1998 from $26.8 million in the first quarter of 1997 primarily due an
increase in selling, general and administrative expenses primarily due to the
Crain Acquisition, offset in part by an increase in gross profit due primarily
to increased volume resulting from the Crain Acquisition.
Income before extraordinary loss decreased to $5.0 million for the first
quarter of 1998 as compared to $8.1 million for the first quarter of 1997. The
decrease is primarily due to an increase of approximately $3.6 million in
16
<PAGE>
interest and debt issuance expense, $0.8 million of costs associated with the
transfer of General Felt which is included in other income (expense), net. The
increase in interest and debt issuance expense is primarily due to the debt
incurred in connection with the Crain Acquisition offset by the favorable
effects of the June 1997 refinancing plan.
The extraordinary loss on early extinguishment of debt of approximately
$1.9 million (net of income taxes of $1.2 million) during the first quarter of
1998 primarily relates to the write-off of debt issuance costs with debt
extinguished in connection with the transfer of General Felt.
Liquidity and Capital Resources
Liquidity and Capital Resources
The Company is a holding company whose operations, as a result of the
February 27, 1998 transactions, are conducted through two wholly-owned
subsidiaries, Foamex L.P. and Foamex Carpet. The liquidity requirements of the
Company consist primarily of the operating cash requirements of its two
principal subsidiaries. Prior to February 27, 1998, substantially all of the
Company's operations were conducted through Foamex L.P., which at the time was a
99% owned subsidiary, hence the discussion of historical trends of liquidity and
capital resources related primarily to Foamex L.P.
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. The Company believes that
cash flow from Foamex L.P.'s operating activities, cash on hand and periodic
borrowings under the Credit Facility, if necessary, will be adequate to meet
Foamex L.P.'s liquidity requirements. The ability to meet such liquidity
requirements could be impaired if Foamex L.P. were to fail to comply with any
covenants contained in the Credit Facility and such noncompliance was not cured
by Foamex L.P. or waived by the lenders. Foamex L.P. was in compliance with the
covenants in the Credit Facility as of March 29, 1998 and the Company expects
Foamex L.P. to be in compliance with such covenants for the foreseeable future.
The ability of Foamex L.P. to make distributions to the Company is restricted by
the terms of its financing agreements; therefore, neither the Company nor Foamex
Carpet is expected to have access to the cash flow generated by Foamex L.P. for
the foreseeable future.
Foamex Carpet's operating cash requirements consist principally of
working capital requirements, scheduled payments of principal and interest on
outstanding indebtedness and capital expenditures. The Company believes that
cash flow from Foamex Carpet's operating activities, cash on hand and periodic
borrowings under Foamex Carpet's credit facility (the "Foamex Carpet Credit
Facility"), if necessary, will be adequate to meet Foamex Carpet's liquidity
requirements. The ability to meet such liquidity requirements could be impaired
if Foamex Carpet were to fail to comply with any covenants contained in the
Foamex Carpet Credit Facility and such noncompliance was not cured by Foamex
Carpet or waived by the lenders. The Company expects Foamex Carpet to be in
compliance with such covenants for the foreseeable future. The ability of Foamex
Carpet to make distributions to the Company is restricted by the terms of its
financing agreements; therefore, neither the Company nor Foamex L.P. is expected
to have access to the cash flow generated by Foamex Carpet for the foreseeable
future.
Cash and cash equivalents increased $4.9 million during 1998 to $16.9
million at March 29, 1998 from $12.0 million at December 28, 1997 primarily due
to increased borrowings offset by an increase of cash used by the operating
assets and liabilities. Working capital increased $43.8 million during 1998 to
$182.3 million at March 29, 1998 from $138.5 million at December 28, 1997
primarily due to the increase in operating net assets (as discussed below), a
decrease in current portion of long-term debt, a decrease in accrued interest,
and a net increase in other current assets and liabilities. The decrease in
current portion of long-term debt is primarily due to the assumption of
long-term debt by Trace Foam LLC in connection with the GFI Transaction. The
decrease in accrued interest and the net increase in other current assets and
liabilities is primarily associated with the timing of payments for interest and
prepaid expenses and the receipt of cash for other receivables. Net operating
assets and liabilities (comprised of accounts receivable, inventories and
accounts payable) increased $22.0 million during 1998 to $186.3 million at March
17
<PAGE>
29, 1998 from $164.3 million at December 28, 1997 primarily due to increases in
accounts receivable and inventories and a decrease in accounts payable. The
increase in accounts receivable is primarily due to an increase in net sales for
March 1998 as compared to December 1997. The increase in accounts payable and
the decrease in account payable related party is primarily due to the timing of
payments. The Company's restructuring/consolidation plan includes accruals of
approximately $26.9 million of cash charges of which $15.6 million is expected
to be paid during 1998.
As of March 29, 1998, there were $124.9 million of revolving credit
borrowings under the Credit Facility and approximately $49.5 million associated
with letters of credit outstanding which are supported by the Credit Facility
with unused availability of approximately $25.6 million. As of March 29, 1998,
Foamex Carpet Credit Facility had unused availability of approximately $19.0
million. Borrowings by Foamex Canada Inc. as of March 29, 1998 were $5.1 million
under Foamex Canada Inc.'s revolving credit agreement with unused availability
of approximately $0.9 million.
Cash flow used for operating activities was $19.8 million for the first
quarter of 1998 as compared to cash provided of $18.9 million for the first
quarter of 1997. This decrease is primarily due to (i) a reduction in operating
cash results, (ii) cash used for an increase in accounts receivable and other
receivables associated with the timing of receipts and (iii) a reduction in
accounts payable associated with the timing of payments.
Cash flow used for investing activities increased to $15.8 million for
the first quarter of 1998 from cash provided in the first quarter of 1997 of
$0.9 million for the first quarter of 1997 primarily due to (i) $3.3 million
paid in connection with the Crain Acquisition and (ii) $4.8 million deposit to
defease the senior secured notes offset by the use of $8.4 million of restricted
cash in 1997 to repaid long-term debt.
Cash flow provided by financing activities increased to $40.5 million for
the first quarter of 1998 as compared to cash used of $8.0 million for the first
quarter of 1997. This increase is primarily associated with borrowings under the
revolving loans to fund the operations of Crain during the first quarter of 1998
offset by the $23.9 million used to fund the GFI Transaction.
Interest Rate Swaps
The Company enters into interest rate swaps to lower funding costs and/or
to manage interest costs and exposure to changing interest rates. The Company
does not hold or issue financial instruments for trading purposes.
On January 8, 1998, the Company entered into an amended interest rate
swap agreement, which provides for an interest rate swap agreement with a
notional amount of $150.0 million through June 2002. Under this agreement, the
Company is obligated to make fixed payments of 5.78% per annum through December
1998 and variable payments based on LIBOR at the beginning of each six month
period for the remainder of the agreement, in exchange for fixed payments by the
swap partner at 6.44% per annum for the life of the agreement, payable
semiannually in arrears. The newly amended interest rate swap agreement can be
terminated by the swap partner at the end of each six month period commencing
December 1999.
The Company is exposed to credit loss in the event of a nonperformance by
the swap partner; however, the occurrence of this event is not anticipated. The
effect of the interest rate swap agreement was a favorable adjustment to
interest and debt issuance expense of $0.3 million and $0.9 million for the
thirteen week periods ended March 29, 1998 and March 30, 1997, respectively.
Environmental Matters
The Company is subject to extensive and changing environmental laws and
regulations. Expenditures to date in connection with the Company's compliance
with such laws and regulations did not have a material adverse effect on
operations, financial position, capital expenditures or competitive position.
The amount of liabilities recorded by the Company in connection with
environmental matters as of March 29, 1998 was $4.9 million. In addition, as of
March 29, 1998, the Company has net receivables of approximately $1.1 million
18
<PAGE>
for indemnification of environmental liabilities from former owners, net of
approximately $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 the Company to reassess its
potential exposure to all pending environmental matters, including those
described in the footnotes to the Company's 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 the Company's operations, financial position, capital
expenditures or competitive position.
Inflation and Other Matters
There was no significant impact on the Company's operations as a result
of inflation during the periods presented. See "Results of Operations" for a
discussion of the impact of raw material price increases. In some circumstances,
market conditions or customer expectations may prevent the Company from
increasing the price of its products to offset the inflationary pressures that
may increase its costs in the future.
The Company's automotive products 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, the Company's
sales are sensitive to sales of new and existing homes, changes in personal
disposable income and seasonality. The Company typically experiences two
seasonally slow periods during each year, in early July and in late December,
due to scheduled plant shutdowns and holidays.
Year 2000 Compliance
The Company has and will continue to make certain investments in its
software systems and applications to ensure the Company is Year 2000 compliant.
The Company plans to continue to make modifications to the identified software
during 1998 and test the changes during 1998. The financial impact to the
Company has not been and is not anticipated to be material to its financial
position or results of operations in any given year.
New Accounting Standards
Statement of Financial Accounting Standards No. 130 ("SFAS No. 130"),
"Reporting Comprehensive Income," was issued by the Financial Accounting
Standards Board in June 1997. This statement requires all items that must be
recognized under accounting standards as components of comprehensive income to
be reported in a financial statement that is displayed with the same prominence
as other financial statements. The Company adopted SFAS No.
130 during the first quarter of 1998 (see Note 10).
Statement of Financial Accounting Standards No. 131 ("SFAS No. 131"),
"Disclosures about Segments of an Enterprise and Restated Information," was
issued by the Financial Accounting Standards Board in June 1997. This statement
establishes standards for reporting information about operating segments in
annual financial statements and requires reporting of selected financial
information about operating segments in interim financial reports issued to
stockholders. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers. The Company will
adopt SFAS No. 131 for the year ended 1998 reporting. Management is evaluating
the impact, if any, the standard will have on the Company's present segment
reporting.
In February 1998 the Financial Accounting Standards Board issued SFAS No.
132, "Employers' Disclosures about Pension and Other Postretirement Benefits"
("SFAS No. 132"), which is effective for fiscal years beginning after December
15, 1997. SFAS No. 132 revised the required disclosures about pension and other
postretirement benefit plans. The Company plans to adopt SFAS No. 132 in the
fourth quarter of 1998.
19
<PAGE>
Part II - Other Information
Item 1. Legal Proceedings
Reference is made to the description of the legal proceedings
contained in the Company's Annual Report on Form 10-K/A-3 for the
fiscal year ended December 28, 1997.
The information from Notes 6 and 7 of the condensed consolidated
financial statements of the Company as of March 29, 1998 (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
2.1(x) - Transfer Agreement, dated as of February 27, 1998, by and between
Trace Foam LLC and Foamex L.P.
2.2(x) - Asset Purchase Agreement, dated as of February 27, 1998, by and
among Foamex Carpet Cushion, Inc. ("Foamex Carpet"), Foamex
International Inc. ("Foamex International"), Trace Foam LLC and
General Felt Industries, Inc. ("General Felt").
3.1(a) - Certificate of Limited Partnership of Foamex L.P.
3.2.1(a) - Fourth Amended and Restated Agreement of Limited Partnership of
Foamex L.P., dated as of December 14, 1993, by and among FMXI, Inc.
("FMXI") and Foam Funding Company, Inc. ("Foam Funding"), as general
partners, and Foamex International, as a limited partner (the
"Partnership Agreement").
3.2.2(b) - First Amendment to the Partnership Agreement, dated June 28, 1994.
3.2.3(c) - Second Amendment to the Partnership Agreement, dated June 12,
1997.
3.2.4(v) - Third Amendment to the Partnership Agreement, dated December 23,
1997.
3.2.5(x) - Fourth Amendment to the Partnership Agreement, dated February 27,
1998.
3.3(y) - Certificate of Incorporation of FMXI.
3.4(y) - By-laws of FMXI.
3.5(k) - Certificate of Incorporation of Foamex Capital Corporation
("FCC").
3.6(k) - By-laws of FCC.
3.7(a) - Certificate of Incorporation of Foamex International.
3.8(a) - By-laws of Foamex International.
4.1.1(d) - Indenture, dated as of June 12, 1997, by and among Foamex L.P.,
FCC, the Subsidiary Guarantors and The Bank of New York, as trustee,
relating to $150,000,000 principal amount of 9 7/8% Senior
Subordinated Notes due 2007 (the "9 7/8% Notes"), including the form
of Senior Subordinated Note and Subsidiary Guarantee.
20
<PAGE>
4.1.2(v) - First Supplemental Indenture, dated as of December 23, 1997,
between Foamex LLC ("FLLC") and The Bank of New York, as trustee,
relating to the 9 7/8% Notes.
4.1.3(x) - Second Supplemental Indenture, dated as of February 27, 1998,
among Foamex L.P. and FCC, as joint and several obligors, General
Felt, Foamex Fibers, Inc. (`Foamex Fibers"), and FLLC, as
withdrawing guarantors, and The Bank of New York, as trustee,
relating to the 9 7/8% Notes.
4.2.1(v) - Indenture, dated as of December 23, 1997, by and among Foamex
L.P., FCC, the Subsidiary Guarantors, Crain Holdings Corp., as
Intermediate obligator, and The Bank of New York, as trustee,
relating to $98,000,000 principal amount of 13 1/2% Senior
Subordinated Notes due 2005 (the "13 1/2% Notes"), including the
form of Senior Subordinated Note and Subsidiary Guarantee.
4.2.2(x) - First Supplemental Indenture, dated as of February 27, 1998, among
Foamex L.P. and FCC, as joint and several obligors, General Felt,
Foamex Fibers and FLLC, as withdrawing guarantors, Crain Industries,
Inc., as withdrawing intermediate obligor, and The Bank of New York,
as trustee, relating to the 13 1/2% Notes.
4.3(x) - Discharge of Indenture, dated as of February 27, 1998, by and
among Foamex L.P., General Felt, Foamex International and State
Street Bank and Trust Company, as trustee, relating to the 9 1/2%
Senior Secured Notes due 2000.
4.4.1(x) - Credit Agreement, dated as of June 12, 1997, as amended and
restated as of February 27, 1998, by and among Foamex L.P., and
FMXI, the institutions from time to time party thereto as lenders,
the institutions from time to time party thereto as issuing banks,
and Citicorp USA, Inc. and The Bank of Nova Scotia, as
Administrative Agents.
4.4.2(x) - Second Amended and Restated Foamex International Guaranty, dated
as of February 27, 1998, made by Foamex International in favor of
Citicorp USA, Inc., as Collateral Agent.
4.4.3(x) - Amended and Restated Partnership Guaranty, dated as of February
27, 1998, made by FMXI in favor of Citicorp USA, Inc., as Collateral
Agent.
4.4.4(p) - Foamex Guaranty, dated as of June 12, 1997, made by Foamex L.P. in
favor of Citicorp USA, Inc., as Collateral Agent.
4.4.5(p) - Subsidiary Guaranty, dated as of June 12, 1997, made by Foamex
Latin America, Inc. in favor of Citicorp USA, Inc., as Collateral
Agent.
4.4.6(p) - Subsidiary Guaranty, dated as of June 12, 1997, made by Foamex
Mexico, Inc. in favor of Citicorp USA, Inc., as Collateral Agent.
4.4.7(p) - Subsidiary Guaranty, dated as of June 12, 1997, made by FCC in
favor of Citicorp USA, Inc., as Collateral Agent.
4.4.8(p) - Subsidiary Guaranty, dated as of June 12, 1997, made by Foamex
Mexico II, Inc. in favor of Citicorp USA, Inc., as Collateral Agent.
4.4.9(p) - Subsidiary Guaranty, dated as of June 12, 1997, made by Foamex
Asia, Inc. in favor of Citicorp USA, Inc., as Collateral Agent.
4.4.10(p) - Subsidiary Pledge Agreement, dated as of June 12, 1997, made by
FCC in favor of Citicorp USA, Inc., as Collateral Agent.
4.4.11(p) - Subsidiary Pledge Agreement, dated as of June 12, 1997, made by
Foamex Latin America, Inc. in favor of Citicorp USA, Inc., as
Collateral Agent.
4.4.12(p) - Subsidiary Pledge Agreement, dated as of June 12, 1997, made by
Foamex Asia, Inc. in favor of Citicorp USA, Inc., as Collateral
Agent.
4.4.13(p) - Subsidiary Pledge Agreement, dated as of June 12, 1997, made by
Foamex Mexico, Inc. in favor of Citicorp USA, Inc., as Collateral
Agent.
4.4.14(p) - Subsidiary Pledge Agreement, dated as of June 12, 1997, made by
Foamex Mexico II, Inc. in favor of Citicorp USA, Inc., as Collateral
Agent.
4.4.15(p) - Foamex Security Agreement, dated as of June 12, 1997, made by
Foamex L.P. in favor of Citicorp USA, Inc., as Collateral Agent.
4.4.16(p) - Subsidiary Security Agreement, dated as of June 12, 1997, made by
Foamex Latin America, Inc. in favor of Citicorp USA, Inc., as
Collateral Agent.
4.4.17(p) - Subsidiary Security Agreement, dated as of June 12, 1997, made by
Foamex Mexico, Inc. in favor of Citicorp USA, Inc., as Collateral
Agent.
21
<PAGE>
4.4.18(p) - Subsidiary Security Agreement, dated as of June 12, 1997, made by
Foamex Mexico II, Inc. in favor of Citicorp USA, Inc., as Collateral
Agent.
4.4.19(p) - Subsidiary Security Agreement, dated as of June 12, 1997, made by
Foamex Asia, Inc. in favor of Citicorp USA, Inc., as Collateral
Agent.
4.4.20(p) - Subsidiary Security Agreement, dated as of June 12, 1997, made by
FCC in favor of Citicorp USA, Inc., as Collateral Agent.
4.4.21(r) - Foamex Pledge Agreement, dated as of June 12, 1997, made by Foamex
L.P. in favor of Citicorp USA, Inc., as Collateral Agent.
4.4.22(w) - First Amendment to Foamex Pledge Agreement, dated as of December
23, 1997, by Foamex L.P. in favor of Citicorp USA, Inc., as
Collateral Agent.
4.4.23(w) - First Amendment to Foamex Security Agreement, dated as of December
23, 1997, by Foamex L.P. in favor of Citicorp USA, Inc., as
Collateral Agent.
4.4.24(w) - First Amendment to Foamex Patent Agreement, dated as of December
23, 1997, by Foamex L.P. in favor of Citicorp USA, Inc., as
Collateral Agent.
4.4.25(w) - First Amendment to Trademark Security Agreement, dated as of
December 23, 1997, by Foamex L.P. in favor of Citicorp USA, Inc., as
Collateral Agent.
4.4.26(w) - Acknowledgment of Guaranty by each of the guarantors to a Guaranty
dated June 12, 1997 in favor of Citicorp USA, Inc.
4.4.27(w) - First Amendment to Pledge Agreement, dated as of December 23,
1997, by pledgors in favor of Citicorp USA, Inc.
4.4.28(w) - Crain Industries Guaranty, dated as of December 23, 1997, made by
Crain in favor of Citicorp USA, Inc.
4.4.29(x) - Partnership Pledge Agreement, dated as of February 27, 1998, made
by Foamex International and FMXI in favor of Citicorp USA, Inc., as
Collateral Agent.
4.5(u) - Commitment letter, dated July 17, 1997, from The Bank of Nova
Scotia to Foamex Canada Inc.
4.6(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").
4.7(a) - Marely Loan Commitment Agreement, dated as of December 14, 1993,
by and between Foamex L.P. and Marely s.a. ("Marely").
4.8(a) - DLJ Loan Commitment Agreement, dated as of December 14, 1993, by
and between Foamex L.P. and DLJ Funding, Inc. ("DLJ Funding").
4.9.1(p) - Promissory Note, dated June 12, 1997, in the aggregate principal
amount of $5,000,000, executed by Trace Holdings to Foamex L.P.
4.9.2(p) - Promissory Note, dated June 12, 1997, in the aggregate principal
amount of $4,794,828, executed by Trace Holdings to Foamex L.P.
4.10.1(x) - Credit Agreement, dated as of February 27, 1998, by and among
Foamex Carpet, the institutions from time to time party thereto as
lenders, the institutions from time to time party thereto as issuing
banks and Citicorp USA, Inc. and The Bank of Nova Scotia, as
administrative agents.
4.10.2(x) - Foamex International Guaranty, dated as of February 27, 1998, made
by Foamex International in favor of Citicorp USA, Inc., as
Collateral Agent.
4.10.3(x) - Foamex International Pledge Agreement, dated as of February 27,
1998, made by Foamex International in favor of Citicorp USA, Inc.,
as Collateral Agent.
4.10.4(x) - New GFI Security Agreement, dated as of February 27, 1998, made by
Foamex Carpet in favor of Citicorp USA, Inc., as Collateral Agent.
4.10.5(x) - New GFI Intercreditor Agreement, dated as of February 27, 1998, by
and among Foamex Carpet, The Bank of Nova Scotia, as Administrative
Agent, and Citicorp USA, Inc., as Administrative Agent and
Collateral Agent.
4.10.6(x) - FII Intercreditor Agreement, dated as of February 27, 1998, by and
between Foamex International and Citicorp USA, Inc., as Collateral
Agent.
4.11.1(x) - Promissory Note of Foamex L.P. in favor of Trace Foam LLC in the
principal amount of $34 million, dated February 27, 1998.
4.12.1(x) - Promissory Note of Foamex Carpet in favor of Trace Foam LLC in the
principal amount of $70.2 million, dated February 27, 1998.
22
<PAGE>
10.1.1(p) - Amendment to Master Agreement, dated as of June 5, 1997, between
Citibank, N.A. and Foamex L.P.
10.1.2(p) - Amended Confirmation, dated as of June 13, 1997, between Citibank,
N.A. and Foamex L.P.
10.1.3(w) - Amended Confirmation, dated as of February 2, 1998, between
Citibank, N.A. and Foamex L.P.
10.2(h) - Reimbursement Agreement, dated as of March 23, 1993, between Trace
Holdings and General Felt.
10.3(h) - 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 Blackwell, and Prefoam
AG relating to foam technology sharing arrangement.
10.4.1(k) - Asset Transfer Agreement, dated as of October 2, 1990, between
Trace Holdings and Foamex L.P. (the "Trace Holdings Asset Transfer
Agreement").
10.4.2(k) - First Amendment, dated as of December 19, 1991, to the Trace
Holdings Asset Transfer Agreement.
10.4.3(k) - Amended and Restated Guaranty, dated as of December 19, 1991, made
by Foam Funding in favor of Foamex L.P.
10.5.1(k) - Asset Transfer Agreement, dated as of October 2, 1990, between
Recticel Foam Corporation ("RFC") and Foamex L.P. (the "RFC Asset
Transfer Agreement").
10.5.2(k) - First Amendment, dated as of December 19, 1991, to the RFC Asset
Transfer Agreement.
10.5.3(k) - Schedule 5.03 to the RFC Asset Transfer Agreement (the "5.03
Protocol").
10.5.4(h) - The 5.03 Protocol Assumption Agreement, dated as of October 13,
1992, between RFC and Foamex L.P.
10.5.5(h) - Letter Agreement between Trace Holdings and Recticel regarding the
Recticel Guaranty, dated as of July 22, 1992.
10.6(l) - Supply Agreement, dated June 28, 1994, between Foamex L.P. and
Foamex International.
10.7.1(l) - First Amended and Restated Tax Sharing Agreement, dated as of
December 14, 1993, among Foamex L.P., Foam Funding, FMXI and Foamex
International.
10.7.2(d) - First Amendment to Amended and Restated Tax Sharing Agreement of
Foamex L.P., dated as of June 12, 1997, by and among Foamex L.P.,
Foamex International, FMXI and Foam Funding.
10.7.3(w) - Second Amendment to Amended and Restated Tax Sharing Agreement of
Foamex L.P., dated as of December 23, 1997, by and among Foamex
L.P., Foamex International, FMXI, and Foam Funding.
10.7.4(y) - Third Amendment to Amended and Restated Tax Sharing Agreement of
Foamex L.P., dated as of February 27, 1998, by and between Foamex
L.P., Foamex International and FMXI.
10.8.1(m) - Tax Distribution Advance Agreement, dated as of December 11, 1996,
by and between Foamex L.P. and Foamex-JPS Automotive.
10.8.2(d) - Amendment No. 1 to Tax Distribution Advance Agreement, dated as of
June 12, 1997, by and between Foamex L.P. and Foamex International.
10.9.1(h) - Foam Funding Management Agreement between Foamex L.P. and Foam
Funding, dated as of October 13, 1992.
10.9.2(l) - Affirmation Agreement re: Management Agreement, dated as of
December 14, 1993, between Foamex L.P. and Foam Funding.
10.9.3(d) - First Amendment to Management Agreement, dated as of June 12,
1997, by and between Foamex L.P. and Foam Funding.
10.10.1(k) - Salaried Incentive Plan of Foamex L.P. and Subsidiaries.
10.10.2(k) - Trace Holdings 1987 Nonqualified Stock Option Plan.
10.10.3(k) - Equity Growth Participation Program.
10.10.4(o) - The Foamex L.P. Salaried Pension Plan (formerly the General Felt
Industries, Inc. Retirement Plan for Salaried Employees), effective
as of January 1, 1995.
10.10.5(u) - The Foamex L.P. Hourly Pension Plan (formerly "The Foamex Products
Inc. Hourly Employee Retirement Plan), as amended December 31, 1995.
10.10.6(u) - Foamex L.P. 401(k) Savings Plan effective October 1, 1997.
23
<PAGE>
10.10.7(a) - Foamex L.P.'s 1993 Stock Option Plan.
10.10.8(a) - Foamex L.P.'s Non-Employee Director Compensation Plan.
10.11.1(o) - Employment Agreement, dated as of February 1, 1994, by and between
Foamex L.P. and William H. Bundy.
10.12.1(a) - Warrant Exchange Agreement, dated as of December 14, 1993, by and
between Foamex L.P. and Marely.
10.12.2(a) - Warrant Exchange Agreement, dated as of December 14, 1993, by and
between Foamex L.P. and DLJ Funding.
10.13(t) - Warrant Agreement, dated as of June 28, 1994, by and between
Foamex International and Shawmut Bank.
10.14(o) - Stock Purchase Agreement, dated as of December 23, 1993, by and
between Transformacion de Espumas u Fieltros, S.A., the stockholders
which are parties thereto, and Foamex L.P.
10.15.1(r) - Asset Purchase Agreement, dated as of August 29, 1997, by and
among General Felt, Foamex L.P., Bretlin, Inc. and The Dixie Group.
10.15.2(s) - Addendum to Asset Purchase Agreement, dated as of October 1, 1997,
by and among General Felt, Foamex L.P., Bretlin, Inc. and The Dixie
Group.
10.16.1(x) - Supply Agreement, dated as of February 27, 1998, by and between
Foamex L.P. and General Felt (as assigned to Foamex Carpet).
10.16.2(x) - Administrative Services Agreement, dated as of February 27, 1998,
by and between Foamex L.P. and General Felt (as assigned to Foamex
Carpet).
10.17(y) - Tax Sharing Agreement, dated as of February 27, 1998, between
Foamex International and Foamex Carpet.
10.18.1(w) - Joint Venture Agreement between Hua Kee Company Limited and Foamex
Asia, Inc., dated as of July 8, 1997.
10.18.2(w) - Loan Agreement between Hua Kee Company Limited and Foamex Asia,
Inc., dated as of July 8, 1997.
27 - Amended Financial Data Schedule for the period ended March 29,
1998.
- ----------------------------
(a) Incorporated herein by reference to the Exhibit to Foamex L.P.'s
Registration Statement on Form S-1, Registration No. 33-69606.
(b) Incorporated herein by reference to the Exhibit to the Form 10-K of Foamex
for the fiscal year ended January 1, 1995.
(c) Incorporated herein by reference to the Exhibit to the Current Report on
Form 8-K of Foamex reporting an event that occurred May 28, 1997.
(d) Incorporated herein by reference to the Exhibit to the Current Report on
Form 8-K of Foamex reporting an event that occurred June 12, 1997.
(e) Intentionally omitted.
(f) Intentionally omitted.
(g) Intentionally omitted.
(h) Incorporated herein by reference to the Exhibit to the Form 10-K Statement
of Foamex and FCC for fiscal 1992.
(i) Intentionally omitted.
(j) Intentionally omitted.
(k) Incorporated herein by reference to the Exhibit to the Registration
Statement of Foamex and FCC on Form S-1, Registration Nos. 33-49976 and
33-49976-01.
24
<PAGE>
(l) Incorporated herein by reference to the Exhibit to the Registration
Statement of FJPS, FJCC and Foamex L.P. on Form S-4, Registration No.
33-82028.
(m) Incorporated herein by reference to the Exhibit to the Annual Report on
Form 10-K of Foamex for the fiscal year ended December 29, 1996.
(n) Intentionally omitted.
(o) Incorporated herein by reference to the Exhibit to the Form 10-K of Foamex
L.P. for fiscal 1993.
(p) Incorporated herein by reference to the Exhibit in the Registration
Statement of Foamex on Form S-4, Registration No. 333-30291.
(q) Intentionally omitted.
(r) Incorporated herein by reference to the Current Report on Form 8-K of
Foamex L.P. reporting an event that occurred on August 29, 1997.
(s) Incorporated herein by reference to the Current Report on Form 8-K of
Foamex L.P. reporting an event that occurred on October 6, 1997.
(t) Incorporated by reference to the Exhibit to the Form 10-Q of Foamex
International for the quarterly period ended July 3, 1994.
(u) Incorporated by reference to the Exhibit to the Form 10-Q of Foamex L.P.
for the quarterly period ended September 28, 1997.
(v) Incorporated herein by reference to the Exhibit to the Current Report on
Form 8-K of Foamex L.P., Foamex Capital Corporation and Foamex
International reporting an event that occurred December 23, 1997.
(w) Incorporated herein by reference to the Exhibit in the Registration
Statement of Foamex L.P. and FCC on Form S-4, Registration No. 333-45733.
(x) Incorporated herein by reference to the Current Report on Form 8-K of
Foamex International reporting an event that occurred on February 27, 1998.
(y) Incorporated herein by reference to the Exhibit to the Form 10-K of Foamex
International for the fiscal year ended December 28, 1997.
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) The Company filed the following Current Reports on Form 8-K:
Form 8-K/A, dated March 9, 1998, providing pro forma financial
information relating to the acquisition of Crain Industries, Inc.
Form 8-K, dated February 28, 1998, reporting the General Felt
Transaction.
Form 8-K/A, dated May 12, 1998, reporting the restated financial
statements of Foamex L.P. relating to the General Felt
transaction.
25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FOAMEX INTERNATIONAL INC.
Date: May 14, 1999 By: /s/ John A. Feenan
-------------------------------
John A. Feenan
Executive Vice President and
and Chief Financial Officer
26
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