FOAMEX INTERNATIONAL ANNOUNCES SECOND QUARTER 2007 RESULTS

 

Net Debt Reduced $11 Million in Second Quarter;

Anticipates Continued Deleveraging During Second Half

 

LINWOOD, PA, August 10, 2007 – Foamex International Inc. (OTC: FMXL), a leading producer of polyurethane foam-based solutions and specialty comfort products, today announced its second quarter 2007 results. Net sales were $320.8 million, 7% below prior year sales of $344.9 million. Net income for the second quarter of 2007 was $7.6 million, or $0.32 per diluted share, compared to a net loss of $13.2 million, or $1.44 per diluted share in the second quarter of 2006. Per share amounts for both periods reflect adjustment for the rights offering in February 2007 and the reverse stock split, which was effective on April 30, 2007.

 

Commenting on the results, Chief Executive Officer John G. Johnson, Jr. said, “Despite the soft market demand, Foamex was able to reduce net debt by $11 million. We anticipate continued debt paydown going forward. In addition, we continue to focus on reducing costs while increasing operating efficiencies throughout the Company. To this end, we recently announced the combination of our Eddystone, PA and Fort Wayne, IN facilities, our second plant consolidation this year, which we estimate will generate savings in excess of $5 million annually.”

 

Johnson continued, “Finally, we recently announced the sale of our majority interest in Foamex Asia Co., Ltd. to our joint venture partner. The sale of this interest will enable Foamex to address strategic growth opportunities in Asia while deleveraging the balance sheet by approximately $22 million in the third quarter.”

 

Second Quarter 2007 Results

 

Sales and Gross Profit

Net sales for the second quarter of 2007 were $320.8 million, down 7% from $344.9 million in the second quarter of 2006, primarily due to lower volume in the Foam Products and Carpet Cushion Products segments partially offset by higher volumes in the Automotive Products segment.

 

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Gross profit for the quarter was $38.4 million, down from $47.4 million in the second quarter of 2006, primarily due to lower volume. The decrease in gross profit in the 2007 period was partially offset by lower selling, general and administrative expenses which were reduced by $2.4 million, or 13%, over the prior year period, due principally to lower professional fees. Gross margin was 12.0%, consistent with gross margin in the first quarter of 2007, but below the 13.7% gross margin in the second quarter of 2006.

 

Earnings

Income from operations was $19.8 million for the second quarter of 2007, compared to $28.2 million in the second quarter of 2006. Second quarter 2007 results include $2.4 million in restructuring charges primarily related to a reduction of administrative staffing, compared to $0.6 million in the 2006 quarter. The results in the 2007 period reflect lower volumes in the Foam Products and Carpet Cushion Products segments. Depreciation and amortization for the quarter was $4.5 million, versus $4.9 million during the prior year.

 

Net income for the second quarter of 2007 was $7.6 million, or $0.32 per diluted share, compared to a net loss of $13.2 million, or $1.44 per diluted share in the second quarter of 2006. Per share amounts for both periods reflect adjustment for the rights offering in February 2007 and the reverse stock split, which was effective on April 30, 2007.

 

Balance Sheet

Foamex made $2.9 million in capital expenditures during the second quarter of 2007, versus $2.3 million in 2006.

 

Net debt (total debt minus cash on hand) at the end of the second quarter of 2007 was $610 million, down from $621 million at the end of the first quarter. Revolving loan availability was $83 million.

 

Business Segment Performance

 

Foam Products

Foam Products net sales for the second quarter decreased 24% to $108.3 million from $143.0 million in the second quarter of 2006, due to a decrease in both volume and price. Income from operations was $11.9 million compared to $26.8 million in the prior year period, principally as a result of the reduced volumes and lower average selling prices.

 

Carpet Cushion Products

Carpet Cushion Products net sales for the second quarter decreased 33% to $34.8 million from $52.2 million in 2006, reflecting very soft market conditions and declines in volume and price. Income from operations was $2.8 million compared to $0.6 million in the second quarter of 2006, as lower average raw material costs more than offset lower net sales.

 

Automotive Products

Automotive Products net sales for the second quarter of 2007 increased 28% to $144.4 million from $112.8 million in the second quarter of 2006, primarily as a result of revenues from a new

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lamination contract. Income from operations increased $1.8 million to $9.1 million for the second quarter of 2007.

 

Technical Products

Technical Products net sales for the second quarter decreased 9% to $33.5 million from $36.7 million in the second quarter of 2006, primarily due to lower volumes. Income from operations was $7.9 million compared to $10.0 million in the comparable quarter of 2006, primarily as a result of the lower sales volume.

 

Outlook

 

The Company expects to conclude 2007 with approximately $560 million or less of net debt. Foamex also expects operating income for the full year of $85 million to $95 million, including restructuring costs of approximately $6 million and depreciation and amortization of approximately $20 million. The Company anticipates capital expenditures of approximately $13 to $16 million for full-year 2007.

 

Conference Call and Replay

 

Foamex management will host a conference call today, August 10, 2007, at 10:00 a.m. EST to discuss the Company’s second quarter 2007 results. Investors can access the conference call in the U.S. by dialing 888-566-5771 (international callers, dial 212-547-0361), asking to be connected to the Foamex investor call led by Jack Johnson. Participants will be asked to provide the following passcode for this conference call: Foam.

 

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 a leading producer of polyurethane foam-based solutions and specialty comfort products. The Company services the bedding, furniture, carpet cushion and automotive markets and 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, future operating results, operating efficiencies, future market prices and margins, future energy costs, future government and legislative action, future cost savings, future benefit costs, the Company’s liquidity and

 

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ability to finance its operations, and other statements that are not historical facts that involve certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties

materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. 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.

 

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Foamex International Inc. and Subsidiaries

 

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Foamex International Inc. and Subsidiaries

 

Selected Financial Data

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