SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 2, 2000
FOAMEX INTERNATIONAL INC.
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(Exact name of registrant as specified in charter)
Delaware 0-22624 05-0473908
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1000 Columbia Avenue, Linwood, PA 19061
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610) 859-3000
N/A
(Former name or former address, if changed since last report)
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Item 5. Other Events.
On March 2, 2000, Foamex International Inc. (the "Company") issued a press
release announcing its financial results for the year ended December 31, 1999.
The press release concerning this announcement is filed as an Exhibit hereto and
is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit Description
99 Press release of Foamex International Inc., dated March 2, 2000
2
<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.
Date: March 9, 2000
FOAMEX INTERNATIONAL INC.
/s/ John G. Johnson Jr.
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Name: John G. Johnson Jr.
Title: President and Chief Executive Officer
Press Release Contact: Martha A. Buckley
Foamex International Inc.
(610) 859-2952
FOR IMMEDIATE RELEASE
FOAMEX INTERNATIONAL INC. REPORTS RECORD RESULTS FOR 1999
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o Record Sales, Operating Income and EBDAIT Reported
o Operating Income Before Special Charges Rose 59%
o Debt Reduced by $55 million
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LINWOOD, PENNSYLVANIA, March 2, 2000 - Foamex International Inc. (Nasdaq:
FMXI), the leading manufacturer of flexible polyurethane and advanced
polymer foam products, today announced record results for the year ended
December 31, 1999.
"Nineteen ninety-nine was a year of significant progress and renewed
pride for Foamex," said John G. Johnson, Jr., President and Chief Executive
Officer of Foamex. "As a result of the initiatives undertaken this past
year, we increased sales, reduced expenses, produced record operating
income and EBDAIT, and generated significant cash from operations to pay
down debt."
Net sales for the year were $1,280.0 million, an increase of 2.7% over
1998 sales of $1,246.4 million. Gross profit rose 16.7% to $180.3 million
from $154.5 million in 1998. Gross profit as a percent of sales also
increased to 14.1% in 1999 from 12.4% in 1998.
SG&A expense for the year decreased by 14.5% to $76.2 million, compared
with $89.2 million in the prior year, primarily as a result of cost saving
initiatives implemented during the year.
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2
The combination of higher sales, increased gross profit and reduced
expenses resulted in a 59.3% increase in operating income for the year,
excluding restructuring charges and credits. Income from operations before
restructuring and other charges and credits rose to $104.1 million in 1999
from $65.3 million in 1998.
Foamex recorded restructuring and other charges of $10.5 million in
1999, principally for severance costs, plant consolidations and closure of
the company's New York office. In 1998, the company reported income from
restructuring and other charges of $9.7 million due to the reversal of
prior years' restructuring charges. Including these charges and credits,
1999 operating income rose to $93.6 million, a 24.7% increase over 1998
operating income of $75.0 million.
Interest and debt issuance expense for 1999 was $72.9 million compared
with $72.3 million in 1998. The slight increase was due to higher interest
rates and debt amortization costs, partially offset by the favorable impact
of $55 million of debt reduction.
Other income for 1999 was $1.5 million, consisting primarily of a $4.2
million gain on the sale of the company's aircraft partially offset by
losses on asset disposals and other costs. Other expense for 1998 was $14.3
million.
The 1999 effective tax rate was 11.1% and reflected the partial
reversal of the deferred income tax asset valuation allowance recognized in
1998.
Net income for 1999 was $19.7 million and diluted earnings per share
were $0.78, compared with a 1998 net loss of $71.8 million or a loss of
$2.87 per diluted share.
The company's EBDAIT reached $139.8 million for the year, compared with
$100.7 million in 1998.
Commenting on the company's performance for the year, Mr. Johnson
particularly emphasized the strong working capital improvement and the
significant cash generated from operations. "We worked very hard to manage
the assets employed in running our business. When combined with our strong
operating results, we decreased accounts payable and reduced debt by a
total of $117.8 million."
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3
Fourth Quarter Performance
Net sales for the fourth quarter were $317.2 million, an increase of
4.6% over the $303.1 million reported in the prior year period. Gross
profit was $44.1 million, or 13.9% of sales, compared with a loss of $1.4
million in the fourth quarter of 1998. Included in the fourth quarter of
1999 was $1.8 million in settlement of a business interruption claim, which
offset costs incurred in the first three-quarters of 1999 related to a 1998
fire in Orlando.
Fourth quarter 1999 SG&A expenses decreased to $19.5 million from $20.3
million in the prior year period. This was the result of cost reductions
implemented during the year, partially offset by increased employee
incentive compensation costs.
Operating income, including restructuring and other charges of $0.4
million, was $24.3 million. The company's loss from operations of $12.7
million in the fourth quarter of 1998 included a net credit of $9.0
million, primarily due to the reversal of prior years' restructuring
charges.
Interest and debt issuance expense for the quarter was $18.8 million,
versus $19.1 million during the comparable period in 1998, due to reduced
debt levels offset by higher interest rates and debt amortization costs.
Other expense was $1.1 million for the fourth quarter of 1999,
primarily due to losses on the disposal of fixed assets. Other expense was
$9.4 million in the fourth quarter of 1998.
Net income for the quarter was $4.4 million or $0.17 per diluted share,
compared with a 1998 net loss of $87.6 million or a loss of $3.50 per
diluted share.
Commenting on the company's results, Mr. Johnson said, "Our performance
reflects the positive impact of the initiatives we have taken throughout
1999 to increase sales and decrease expenses, and reinforces my confidence
in the long-term viability and growth potential of this company."
He also praised the dedication and loyalty demonstrated by Foamex
employees. "I am extremely proud of the 5,900 people who responded to the
challenges of the past year," Mr. Johnson said. "Together, we have
established a strong foundation, and we expect our positive momentum to
continue into fiscal 2000 and beyond, as we execute our growth strategy and
achieve our vision of becoming the premier global company in our industry.
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4
Foamex also announced today the appointment of David J. Prilutski, 46,
as Acting Chief Financial Officer. Mr. Prilutski succeeds William R. Lewis,
who has served as Interim CFO on a consulting basis since October 1999. Mr.
Prilutski joined Foamex earlier this year in the newly-created position of
Senior Vice President, Planning. He will continue in that role in addition
to his responsibilities as Acting CFO. "Our search for a Chief Financial
Officer has been slowed by the uncertainty associated with the potential
change in ownership of the company," Mr. Johnson noted. "However, we have
identified several excellent candidates and believe we will have a strong
executive in the role within the next several months." In announcing Lewis'
departure, Mr. Johnson said, "Bill has made an important and valuable
contribution to our company over the past four months, and we wish him well
in his future endeavors."
Foamex, headquartered in Linwood, Pennsylvania, is the world's leading
producer of comfort cushioning for bedding, furniture, carpet cushion and
automotive markets. The company also manufactures high-performance polymers
for diverse applications in the industrial, aerospace, electronics and
computer industries as well as filtration and acoustical applications for
the home. For more information visit the Foamex web site at
http://www.foamex.com.
This press release contains forward-looking information, and actual
results may materially vary from those expressed or implied herein. Factors
that could affect these results include those mentioned in the Company's
10-K and 10-Qs filed with the Securities and Exchange Commission.
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5
Foamex International Inc. and Subsidiaries
Consolidated Statement of Operations
($ Thousands)
<TABLE>
<CAPTION>
4th Quarter
Comparative Year Comparative
1999 1998(a) 1999 1998
<S> <C> <C> <C> <C>
Net Sales $317,152 $303,117 $1,279,993 $1,246,396
Gross Profit 44,121 (1,350) 180,308 154,505
Selling, General & Administrative Expenses 19,469 20,316 76,247 89,171
Restructuring and Other Charges (Credits) 379 (8,998) 10,491 (9,698)
------- -------- -------- --------
Income (Loss) from Operations 24,273 (12,668) 93,570 75,032
Interest and Debt Issuance Expense 18,797 19,085 72,908 72,295
Other Income (Expense) (1,089) (9,403) 1,516 (14,348)
------- -------- -------- --------
Income (Loss) from Continuing Operations 4,387 (41,156) 22,178 (11,611)
Before Income Taxes
Provision (Benefit) for Income Taxes (11) 46,426 2,462 58,242
------- -------- -------- --------
Income (Loss) from Continuing Operations 4,398 (87,582) 19,716 (69,853)
Extraordinary Loss on Early Extinguishment -- -- -- (1,917)
------- -------- -------- --------
Net Income (Loss) $4,398 $(87,582) $19,716 $(71,770)
======= ========= ======== ========
EBDAIT (b) $34,630 $(11,905) $139,811 $100,719
======= ========= ======== ========
</TABLE>
Notes appear on page 7.
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6
Foamex International Inc. and Subsidiaries
Consolidated Statement of Operations
($ Thousands, except EPS data)
(Continued)
<TABLE>
<CAPTION>
4th Quarter
Comparative Year Comparative
1999 1998(a) 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Basic Earnings (Loss) Per Share:
Income (Loss) from Continuing Operations $0.18 $(3.50) $0.79 $(2.79)
Extraordinary Loss on Extinguishment of -- -- -- (0.08)
------ ------ ------ ------
Debt, Net of Income Taxes
Earnings (Loss) Per Share $0.18 $(3.50) $0.79 $(2.87)
====== ====== ====== ======
Weighted Average Shares Outstanding 25,054 25,015 25,053 24,996
====== ====== ====== ======
Diluted Earnings (Loss) Per Share:
Income (Loss) from Continuing Operations $0.17 $(3.50) $0.78 $(2.79)
Extraordinary Loss on Extinguishment of -- -- -- (0.08)
------ ------ ------ ------
Debt, Net of Income Taxes
Earnings (Loss) Per Share $0.17 $(3.50) $0.78 $(2.87)
===== ======= ===== =======
Weighted Average Shares Outstanding 25,338 25,015 25,256 24,996
===== ======= ===== =======
</TABLE>
Notes appear on page 7.
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7
Foamex L.P.
Selective Comparative Financial Data
($ Thousands)
<TABLE>
<CAPTION>
4th Quarter
Comparative Year Comparative
1999 1998(a) 1999 1998
<S> <C> <C> <C> <C>
Net Sales $295,754 $284,354 $1,190,679 $1,155,918
Income (Loss) from Operations 20,311 (13,518) 84,247 65,508
% of Sales 6.9% -- 7.1% 5.7%
EBDAIT(b) $30,401 ($14,431) $127,658 $87,041
% of Sales 10.3% -- 10.7% 7.5%
</TABLE>
Notes to Consolidated Statements of Operations and Selective Comparative
Financial Data
a) 1998 results have been restated to conform to the amended Form 10-Q filings
for Foamex International Inc. and Foamex L.P.
b) EBDAIT consists of earnings before depreciation, amortization, interest,
income taxes, restructuring and other charges and non-operating income and
expense. EBDAIT is not intended to represent cash flow for the period.
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