FOAMEX INTERNATIONAL ANNOUNCES FOURTH
QUARTER
AND FULL-YEAR
2001 RESULTS
-
4Q01 Sales
up 4.8%, Gross Profit up 13.7% over 4Q00
-
Company Issues $300 Million of Senior Secured Notes; Strengthens
Balance Sheet and Increases Financial Flexibility
-
S&P Upgrades Foamex Credit Ratings;
Moody's Raises Outlook to Positive
_________________________________________________
LINWOOD, PA,
March 27, 2002 –
Foamex International Inc. (Nasdaq:
FMXI), the leading manufacturer of flexible polyurethane and advanced
polymer foam products in North America, today announced its 2001 fourth
quarter and full-year financial results.
Fourth Quarter 2001 Results
Sales
Net sales for the fourth quarter were $310.6 million, up 4.8% from $296.3
million in the fourth quarter of 2000. Gross profit increased 13.7%, to
$41.6 million in 2001 from $36.6 million in 2000. Gross profit as a
percentage of net sales increased to 13.4% in 2001 from 12.3% in 2000.
Earnings
Net loss for the quarter was $29.4 million, or $1.24 per diluted share,
compared with income of $3.5 million, or $0.14 per diluted share in the
fourth quarter of 2000. Loss from operations was $15.1 million for the
quarter, compared with income from operations of $21.5 million in the fourth
quarter of 2000. The fourth quarter results included restructuring,
impairment and other charges of $35.4 million ($18.4 million non-cash),
related to Foamex’s previously announced Project Transformation operational
restructuring. Excluding the charge, fourth quarter 2001 income from
operations and diluted EPS would have been $20.3 million and $0.23 per
share, respectively.
Selling, general and administrative
(SG&A) expense for the 2001 fourth quarter was $20.9 million, up 40.6% from
the fourth quarter of 2000. EBDAIT for the 2001 fourth quarter was $30.3
million, down 5.9% from the fourth quarter of 2000. The increase in SG&A
was primarily related to increased bad debt expense, higher
professional fees and higher employee and benefit costs. SG&A was 4% lower
in the fourth quarter compared to the third quarter.
Interest and debt issuance expense
for the quarter was $14.1 million, a decrease of 23.8% from the 2000
quarter, due to reduced debts levels and lower interest rates. The
Company’s consolidated debt at December 31, 2001 was $666.6 million, down
$45.3 million from a year earlier.
Commenting on the results, Marshall
Cogan, Chairman and founder of Foamex, said, “Recently, Foamex took three
critically important actions that will significantly improve the Company’s
future performance: installing an experienced and talented senior management
team; launching Project Transformation to increase efficiency and leverage
our proprietary VPF technology; and continuing to deleverage the balance
sheet.
“We are also very pleased to have
refinanced the Company earlier this month, strengthening our balance sheet
by reducing short-term obligations and increasing financial flexibility.
This is an important endorsement of Foamex’s business strategy and
management team, and will allow us to grow our business and generate
meaningful long-term shareholder value,” Cogan added.
Peter Johnson, Foamex’s President
and Chief Operating Officer, said, “Foamex delivered solid fourth quarter
results despite a difficult economic environment. Now, as we continue to
implement our operational improvements and invest in our promising pipeline
of new technical and consumer related products, we will continue to
concentrate on better execution and improved efficiencies in order to
enhance our profitability and provide a strong platform for growth in the
future.”
Outlook
Commenting on the Company’s outlook, Thomas Chorman, Executive Vice
President and Chief Financial Officer of Foamex said, “The market is
beginning to show moderate signs of recovery and the sales momentum that
began during the fourth quarter appears to have continued into the first
quarter of this year. However, we are planning for only modest growth and
remain cautious in our outlook for the year.”
Full-Year 2001 Results
Sales
Net sales were $1.253 billion for the full year of 2001, down 0.3% from
$1.258 billion in 2000. Gross profit in 2001 was $180.1 million, an
increase of 4.7% from $172.0 million in 2000. Gross profit as a percentage
of net sales increased to 14.4 % in 2001 from 13.7% in 2000.
Earnings
Net loss for 2001 was $5.6 million, or $0.24 per diluted share, compared
with net income of $17.0 million, or $0.67 per diluted share in 2000.
Income from operations for the full year 2001 was $63.5 million, down from
$96.5 million in 2000. The full year results included restructuring,
impairment and other charges of $36.1 million, largely due to the fourth
quarter restructuring charge of $35.4 million, which is related to Foamex’s
previously announced Project Transformation operational restructuring. In
2000, restructuring, impairment and other charges were $6.3 million,
principally for severance costs and plant consolidations. Excluding
Project Transformation charges in full year 2001 income from operations and
diluted EPS would have been $98.9 million and $1.17 per share, and
respectively.
SG&A expense was $80.5 million for
the full year, up 16.2% from 2000. The increase was primarily due to higher
professional fees, partially associated with a change in accountants,
increased bad debt expense and higher employee and benefits costs.
For the full year 2001, EBDAIT was
$135.2 million, down 4.0% from $141.0 million in 2000.
Interest and debt issuance expense
was $63.2 million for the year, down $12.0 million from 2000. The decrease
was primarily due to reduced debts levels and lower interest rates.
Business Segment Performance
Foam Products
Foam Products net sales for the fourth quarter were $117.8 million, down
3.7% from the fourth quarter of 2000, and $499.7 million for the full year
of 2001, down 3.8% from 2000. Income from operations for the fourth quarter
was $13.7 million, up 21.8% from the fourth quarter of 2000, and $66.3
million for the full year of 2001, up 20.6% from 2000.
Carpet Cushion Products
Carpet Cushion Products net sales for the fourth quarter were $58.6
million, down 8.8% from the fourth quarter of 2000, and $231.0 million for
the full year, down 9.9% from 2000. Loss from operations was $1.5 million
in the fourth quarter and $6.8 million for the full year 2001.
Automotive Products
Automotive Products net sales for the fourth quarter were $96.7
million, up 26.6% from the fourth quarter of 2000, and $377.8 million for
the full year, up 10.3% from 2000. Income from operations for the fourth
quarter was $3.7 million, down 2.9% from the same period one year ago, and
$21.2 million for the full year, down 4.7% from 2000.
Technical Products
Net sales for Technical Products in the fourth quarter were $29.4
million, up 12.9% from the fourth quarter of 2000, and $111.0 million for
the full year, up 4.1% from 2000. Income from operations for the fourth
quarter were $4.4 million, down 35.5% from the fourth quarter of 2000, and
$22.9 million for the full year, down 20.8% from 2000.
Foamex L.P. Results (Includes
Foamex Carpet Cushion LLC for all periods) Foamex L.P., a
wholly-owned subsidiary of Foamex International Inc, reported total sales of
$310.6 million for the fourth quarter of 2001, up 4.8% from the fourth
quarter in 2000, and $1.253 billion for the full year of 2001, down 0.3%
from $1.258 billion in 2000.
EBDAIT for the 2001 fourth quarter
was $30.7 million, down 5.0% from the fourth quarter of 2000. For the full
year 2001, EBDAIT was $136.5 million, down 3.8% from $141.9 million in 2000.
Interest and debt issuance expense
for the quarter was $14.1 million, a decrease of 24.2% from the 2000
quarter, due to reduced debts levels and lower interest rates. Foamex
L.P.’s consolidated debt at December 31, 2001 was $666.6 million, down $45.3
million from a year earlier.
Business Update
Refinancing
Foamex also announced that on March 25, 2002 it completed the
previously announced sale of senior secured notes and amendment of its
credit facilities. Foamex L.P. raised $300 million of senior secured
notes, increased from an expected $200 million, in a private placement under
rule 144A. These notes bear interest at the rate of 10 3/4% and are due
April 1, 2009. The net proceeds of the $300 million have been or will be
applied to repay indebtedness.
Of the net proceeds from the
offering (approximately $280 million), approximately $231.5 million was
applied to reduce the Company’s bank debt, and approximately $48.5 million
may be used to repurchase or redeem the Company’s existing senior
subordinated notes within a certain period of time. To the extent such
amount is not used for this purpose, it will be applied to further reduce
the Company’s bank term loan indebtedness.
Additionally, Foamex International
contributed all of its equity interest in Foamex Carpet Cushion LLC to
Foamex L.P., making Foamex Carpet Cushion LLC a wholly-owned subsidiary of
Foamex L.P. As part of this contribution, Foamex L.P. borrowed $31.6
million under a new Term E Loan and used the proceeds to retire all existing
indebtedness of Foamex Carpet Cushion LLC. The new Term E Loan bears
interest at a variable rate and matures on June 30, 2005.
Foamex L.P. also raised a new $100
million revolving credit facility. The new revolving credit facility bears
interest at a variable rate and matures on June 30, 2005. Foamex also
raised a new $25 million Term F Loan. The new Term F Loan bears interest at
a variable rate and matures on June 30, 2005. Proceeds of the Term F Loan
were used to repay indebtedness under the existing revolving credit
facility.
Rating Agencies Upgrades
In connection with the refinancing, Foamex L.P. and Foamex Capital
Corporation’s credit rating were reviewed by both Standard & Poor’s and
Moody’s. S&P raised its corporate credit rating on Foamex L.P. from B to
B+. Additionally, S&P raised its ratings on the Company’s senior credit
facilities from B+ to BB- and on the Company’s existing senior subordinated
notes from CCC+ to B-, while rating the senior secured notes B. Moody’s
changed its rating outlook to positive from stable.
“Project Transformation” Operational Restructuring Program
Also in December, Foamex announced
its comprehensive profit enhancement plan, Project Transformation,
leveraging Foamex’s VPF technology to reduce costs, spur revenue growth, and
drive increased long-term profitability and shareholder value. The Company
expects to realize pre-tax cost savings of approximately $20 million in 2002
and $30 million in 2003 as a result of this program.
Project Transformation is well
underway and as of today, 79 salaried positions, mostly in corporate and
support functions, have been eliminated. Additionally, as of today Foamex
has closed two rebond operations, one in California and one in Tennessee.
The Company has begun to centralize its purchasing functions and leverage
its scale to negotiate new national procurement contracts for supplies and
services.
Annual Meeting
Foamex will hold its annual meeting June 5, 2002.
Conference Call and Replay
Foamex management will host a conference call today, Wednesday,
March 27, 2002, at 10:00 a.m. EST to discuss the Company’s fourth quarter
and full year 2001 results. Investors can access the conference call in the
U.S. by dialing (888) 373-3590 (international callers, dial (712)
257-3170), asking to be connected to the Foamex investor call led by
Peter Johnson.
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 after the call. It 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 as well as filtration and acoustical
applications for the home. 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 the 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 from Project Transformation, 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 various 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.
Non-GAAP Measures
Information in this press release presents the effects of adjusted income
from operations before restructuring, impairment and other charges, EPS
excluding these charges, as well as EBDAIT as we believe the information is
useful given the significance of such items. We define EBDAIT as income from
operations plus depreciation and amortization, restructuring, impairment and
other charges and income from equity interest in joint ventures. These
non-GAAP measures should not be considered as any measure of performance or
liquidity under generally accepted accounting principles such as net income
and cash flows from operating activities and such measures may not be
comparable to similarly titled measures of other companies.
Financial Tables
