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FOAMEX INTERNATIONAL ANNOUNCES FOURTH QUARTER
AND
FULL-YEAR 2003 RESULTS
LINWOOD, PA, March 2, 2004 –
Foamex International Inc. (NASDAQ: FMXI), the leading manufacturer
of flexible polyurethane and advanced polymer foam products in North America,
today announced its 2003 fourth quarter and full-year financial results.
Fourth Quarter 2003 Results
Sales
Net sales for the fourth quarter were $315.2 million, down 4% from $327.3 million in the
fourth quarter of 2002 primarily due to lower sales in Automotive and Carpet Cushion products,
partially offset by stronger sales in Foam Products. Gross profit was $37.1 million in 2003,
compared to $28.3 million in the fourth quarter of 2002. The increase in gross profit is
primarily due to the effect over the year of customer price increases and cost savings initiatives
implemented in response to the chemical cost increases experienced in the second half of 2002.
Gross profit as a percentage of sales in the quarter increased to 11.8% from 8.6% in the 2002
quarter, and has grown sequentially in each quarter during 2003.
Earnings
Foamex had a net loss for the fourth quarter of $3.5 million, or $0.14 per diluted share,
compared to a net loss of $16.4 million, or $0.67 per diluted share, in the fourth quarter
of 2002.
Income from operations was $14.7 million for the 2003 fourth quarter, compared to
a loss from operations of $7.2 million in the fourth quarter of 2002, which included
restructuring, impairment and other charges of $10.0 million. The lower year over year sales
were more than offset by the impact of higher selling prices, lower manufacturing costs and
lower selling, general and administrative expenses as compared to the fourth quarter of 2002.
Interest and debt issuance expense for the 2003 quarter was $18.3 million,
compared to $18.5 million in the fourth quarter of 2002.
Commenting on the results and on the financial outlook for Foamex, Tom
Chorman, President and Chief Executive Officer, said, "Our results were in line with the
guidance we provided at the end of the third quarter, and we will continue to operate in a
challenging environment in the near term. While we have made progress in improving our gross
margin and reducing our overhead in response to the extraordinary increase in our chemical
costs in the second half of 2002, we need to address several key areas to keep this momentum
going."
Chorman continued, "Our strategic plan is focused on consistently
increasing Foamex's market share, improving our supply chain efficiency, and managing raw
material costs. We are also closely monitoring and reducing manufacturing and overhead costs,
developing new and more consumer-focused products, and prudently entering new markets that
offer increased profit potential. While we have a lot of work yet ahead of us, I expect Foamex
to show improved operating performance as the year progresses and we pursue our longer-term goals
of generating sufficient cash flow to pay down debt."
2003 Results
Sales
Net sales for 2003 were $1.305 billion, down 2% from $1.328 billion in 2002 due to volume reductions
as a result of plant closures and exiting unprofitable business and the loss of some business in
the automotive sector. Gross profit was $143.7 million in both periods, with margins improving
to 11.0% of sales, compared to 10.8% of sales in 2002 due to higher selling prices, partially offset
by lower volumes.
Earnings
Income from operations increased 42% to $62.9 million in 2003, compared
to $44.2 million in 2002, due to gross margin improvements and an almost 13% reduction in
selling, general and administrative expenses. The current year included $1.8 million of
restructuring, impairment and other credits compared to $4.8 million of charges in 2002.
Interest and debt issuance expense for 2003 was $88.4 million, compared to
$69.7 million in 2002. The increase is primarily due to the write-off of debt issuance costs,
higher average debt levels, higher effective interest rates and amortization of debt issuance
costs. The 2003 and 2002 periods include charges of $12.9 million and $4.9 million, respectively,
relating to the write-off of debt issuance costs as a result of early extinguishment of debt.
Net loss for 2003 was $21.5 million, or $0.88 per diluted share, compared
to a net loss of $9.7 million, or $0.37 per diluted share, in 2002.
Business Segment Performance
Foam Products
Foam Products net sales for the fourth quarter of 2003 were $129.2 million,
up 15% from the fourth quarter of 2002 on stronger unit volume. Income from operations for
the fourth quarter of 2003 was $11.5 million, compared to income from operations of $8.2
million in the fourth quarter of 2002.
For the year 2003, Foam Products net sales were $507.6 million, up 8%
from $471.0 million in 2002, primarily as a result of selling price increases and increased
volumes of consumer products. Income from operations was $44.0 million in 2003, compared to
$45.5 million in 2002 primarily as a result of increases in selling prices to customers
subsequent to the increase in chemical costs in the second half of 2002.
Automotive Products
Automotive Products net sales for the fourth quarter of 2003 were $101.8
million, down 14% from the same period a year ago primarily as a result of the previously
disclosed loss of business from a major customer. Income from operations for the fourth
quarter of 2003 was $7.0 million, compared to $6.2 million in 2002, primarily as a result of
improved gross margins and lower selling, general and administrative expenses.
For the year 2003, Automotive Products had net sales of $447.1 million,
compared to net sales of $466.7 million in 2002, primarily due to the reduction in business
from a major customer in the second half of 2003. Income from operations in 2003 was $33.4
million, compared to $34.1 million in 2002, primarily due to lower sales which were largely
offset by lower costs.
Carpet Cushion Products
Carpet Cushion Products net sales for the fourth quarter were $51.5 million,
down 14% from the fourth quarter of 2002. Profit from operations was $2.6 million in the
fourth quarter of 2003, compared to a profit from operations of $0.6 million in the same
period in 2002.
For the year 2003, Carpet Cushion Products sales were $208.9 million,
compared to $234.0 million in 2002, primarily due to a decline in volumes as the Company
closed several Carpet Cushion facilities to focus the business on more profitable markets.
Income from operations in 2003 was $5.4 million, compared to $1.2 million in 2002, primarily
due to cost containment from the streamlining of operations and higher selling prices.
Technical Products
Net sales for Technical Products in the fourth quarter were $28.6 million,
down 2% from $29.2 million in the fourth quarter of 2002. Income from operations for the
fourth quarter of 2003 was $7.2 million, compared to $8.2 million in the fourth quarter of
2002.
For the year 2003, net sales for Technical Products were $117.5 million,
compared to $124.1 million in 2002, primarily due to a decrease in volume partially offset
by an increase in average selling prices. Income from operations in 2003 decreased to $32.1
million, compared to $35.2 million in 2002, primarily due to higher raw material and overhead
costs.
Conference Call and Replay
Foamex management will host a conference call today, Tuesday, March 2,
2004, at 11:00 a.m. EST to discuss the Company's fourth quarter and full year 2003 results.
Investors can access the conference call in the U.S. by dialing 888-390-2576 (international
callers, dial 484-630-8116), asking to be connected to the Foamex investor call led by Thomas
Chorman. Participants will be asked to provide the following passcode for this conference
call: Foamex.
In addition, interested parties may listen to the conference
call over the Internet at www.foamex.com. To listen, go to the website 15 minutes early
to register and download and install any necessary audio software. For those unable to participate, a rebroadcast
will be made available at the Company’s web site that will be available shortly
after the call.
About Foamex International Inc.
Foamex, headquartered in Linwood,
PA, 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, defense, electronics and computer industries.
For more information visit the Foamex web
site at http://www.foamex.com.
Forward-Looking Statements
This press release contains, and oral statements made from time
to time by representatives of the Company may contain, forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without
limitation, those relating to completion of operational restructuring as currently contemplated
and the currently anticipated benefits of the restructuring, including those relating to the
work force reductions, cost savings and restructuring charges, the expected benefits of expanding
the use of VPF technology, the Company's ability to introduce new products, enhance sales growth
and margins and the outlook for the Company's financial performance. These forward-looking
statements are affected by risks, uncertainties and assumptions that the Company makes about,
among other things, its ability to implement customer selling price increases in response to
higher raw material costs, raw material price increases, general economic conditions, conditions
in the capital markets, the interest rate environment, the level of automotive production, carpet
production, furniture and bedding production and housing starts, the completion of various
restructuring/consolidation plans, the achievement of management's business plans, its capital
and debt structure (including financial covenants), litigation and changes in environmental
legislation and environmental conditions and other factors mentioned in the documents filed by
the Company with the Securities and Exchange Commission. While the Company believes that its
assumptions regarding the foregoing matters are reasonable, any of the assumptions could be
inaccurate, and therefore there can be no assurance that the Company's forward-looking statements
will prove to be accurate. Additional information that could cause actual results to vary
materially from the results anticipated may be found in the Company's most recent Form 10-K and
other reports filed with the Securities and Exchange Commission. Readers should be aware that
any forward-looking statement made in this press release or elsewhere by the Company speaks only
as of the date on which it is made, and the Company disclaims any obligation or intent to update
any of the factors listed above or forward-looking statements.
# # #
Foamex
International Inc. and Subsidiaries
Consolidated Statements of
Operations
($ Thousands, except EPS
data)
(Unaudited)
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|
Fourth Quarter Comparative
|
YTD Comparative
|
|
|
2003
|
2002
|
2003
|
2002
|
|
|
|
|
|
|
|
Net Sales
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$315,230
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$327,311
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$1,304,560
|
$1,328,094
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Cost of
Goods Sold
|
278,097
|
299,048
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1,160,870
|
1,184,392
|
|
Gross
Profit
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37,133
|
28,263
|
143,690
|
143,702
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|
Selling,
General & Administrative Expenses
|
22,980
|
25,491
|
82,588
|
94,744
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|
Restructuring,
Impairment and Other Charges (Credits)
|
(522)
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10,011
|
(1,759)
|
4,799
|
|
Income
from Operations
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14,675
|
(7,239)
|
62,861
|
44,159
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Interest
and Debt Issuance Expense
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18,335
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18,454
|
88,374
|
69,679
|
|
Income
from Equity Interest in Joint Venture
|
92
|
220
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1,466
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1,734
|
|
Other
Expense, Net
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(646)
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(642)
|
(3,446)
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(2,078)
|
|
Loss Before Benefit for Income Taxes
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(4,214)
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(26,115)
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(27,493)
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(25,864)
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|
Benefit for Income Taxes
|
(701)
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(9,727)
|
(6,004)
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(86,812)
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|
Income (Loss) Before
Cumulative Effect of
Accounting Changes
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(3,513)
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(16,388)
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(21,489)
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60,948
|
|
Cumulative
Effect of Accounting Changes
|
-
|
-
|
-
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(70,647)
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|
Net
Loss
|
$ (3,513)
|
$ (16,388)
|
$ (21,489)
|
$ (9,699)
|
|
|
|
|
|
|
|
Earnings
Per Share – Basic:
|
|
|
|
|
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Income (Loss) Before
Cumulative Effect of
Accounting Changes
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$(0.14)
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$(0.67)
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$(0.88)
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$2.51
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Cumulative
Effect of Accounting Changes
|
-
|
-
|
-
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(2.91)
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Net
Loss
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$(0.14)
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$(0.67)
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$(0.88)
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$(0.40)
|
|
Weighted
Average Shares Outstanding
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24,409
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24,351
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24,394
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24,275
|
|
|
|
|
|
|
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Earnings
Per Share – Diluted:
|
|
|
|
|
|
Income (Loss) Before
Cumulative Effect of
Accounting Changes
|
$(0.14)
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$(0.67)
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$(0.88)
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$2.32
|
|
Cumulative
Effect of Accounting Changes
|
-
|
-
|
-
|
(2.69)
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|
Net
(Loss)
|
$(0.14)
|
$(0.67)
|
$(0.88)
|
$(0.37)
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|
Weighted
Average Shares Outstanding
|
24,409
|
24,351
|
24,394
|
26,304
|
|
|
|
|
|
|
Foamex
International Inc. and Subsidiaries
Selected Financial Data
($ Millions)
(Unaudited)
|
|
December 28,
2003
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December
29, 2002
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Balance
Sheet:
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|
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Cash
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$6.6
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$4.5
|
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|
|
|
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Current Assets
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$326.6
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$337.6
|
|
|
|
|
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Total Assets
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$789.9
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$813.6
|
|
|
|
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Current Liabilities
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$295.4
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$200.9
|
|
|
|
|
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Long-Term Debt
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$640.6
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$738.5
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|
|
|
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Shareholders’ Deficit
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$(203.1)
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$(189.7)
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|
|
|
|
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Year Ended
December 28, 2003
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Year Ended
December 29, 2002
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Other:
|
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|
Depreciation
and Amortization
|
$26.0
|
$31.6
|
|
|
|
|
|
Capital
Expenditures
|
$6.5
|
$15.6
|
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