|
FOAMEX INTERNATIONAL
ANNOUNCES FOURTH QUARTER
AND FULL-YEAR 2002 RESULTS
_________________________________________________
LINWOOD, PA, March 25,
2003 – Foamex International Inc. (Nasdaq: FMXI), the leading
manufacturer of flexible polyurethane and advanced polymer foam products in
North America, today announced its 2002 fourth quarter and full-year
financial results.
Fourth Quarter 2002 Results
Sales
Net sales for the fourth quarter were $327.3 million, up 5% from $310.6
million in the fourth quarter of 2001 primarily due to increased Automotive
Products net sales partially offset by lower net sales in the Foam Products
segment. Gross profit was $27.7 million in 2002, compared to $41.6 million
in the fourth quarter of 2001. The decrease in gross profit primarily
reflects significant increases in the cost of raw materials that were not
fully recovered through selling price increases. Gross profit as a
percentage of sales in the quarter decreased to 8.5% from 13.4% in the 2001
quarter.
Earnings
Foamex had a net loss for the fourth quarter of $16.4 million, or $0.67
per diluted share, versus a net loss of $29.4 million, or $1.24 per diluted
share, in the fourth quarter of 2001.
The loss from operations
was $7.8 million for the 2002 fourth quarter, compared to a loss from
operations of $15.1 million in the fourth quarter of 2001. Operating
results in the quarter were negatively impacted by lower gross profit and
higher selling, general and administrative expenses as compared to the
fourth quarter of 2001. Restructuring, impairment and other charges were
$10.0 million in the 2002 quarter as compared to charges of $35.9 million in
the fourth quarter of 2001
Interest and debt issuance
expense for the 2002 quarter was $18.5 million, compared to $14.1 million
for the 2001 quarter. The Company was in compliance with its financial
covenants at year-end.
Profit Enhancement
Initiatives Update
During the fourth quarter the Company implemented several initiatives to
restore profitability, including customer price increases, a comprehensive
cost reduction program and the rationalization of unprofitable accounts.
The fourth quarter 2002 cost reduction program resulted in restructuring,
impairment and other charges of $10.0 million, which included a reduction of
its executive and management staff, the closure of six operations and a
non-cash impairment charge of $2.5 million.
Thomas Chorman, President
and Chief Executive Officer of Foamex said: “While we continue to face an
extremely challenging business environment, we have taken aggressive steps
to return the Company to profitability, including raising our selling prices
in response to continuing raw material cost increases, successfully
implementing on-going cost savings initiatives and improving operating
efficiencies. In addition, we continue to manage our liquidity by
controlling capital expenditures and working capital.”
Outlook
Chorman continued, “Our major
chemical suppliers have informed us that they are implementing additional
price increases of approximately 10% to 12%, effective April 1, 2003. As in
November, we are aggressively pursuing the necessary steps to recover any
costs associated with these increases. Therefore, we have notified our
customers that Foamex will be increasing its prices during April 2003.
Looking toward first quarter results, shipments have remained strong, and we
expect to be in compliance with our covenants for the quarter.”
2002 Results
Sales
Net sales for 2002 were $1.328 billion, up 6% from $1.253 billion in 2001 as
higher sales in Automotive and Technical Products segments were partially
offset by lower sales in the Foam Products segment. Gross profit was $141.4
million, or 10.6% of sales, compared to $180.1 million, or 14.4% of sales,
in 2001 due primarily to lower gross profit in the Foam Products segment,
driven essentially by the approximately 35% increase in chemical costs
initiated by our major suppliers in 2002.
Earnings
Income from operations was $41.9 million for 2002, compared to $63.5
million in 2001 due to lower gross margins attributable to the increase in
raw material costs and higher operating, selling, general and administrative
expenses. The current year included $4.8 million of restructuring,
impairment and other charges compared to $36.1 million of such charges in
2001.
Interest and debt issuance
expense for 2002 was $66.6 million, compared to $63.2 million in 2001. The
increase is primarily due to higher amortization of debt issuance costs.
Net loss for 2002 was $9.7
million, or $0.37 per diluted share, compared to a net loss of $5.6 million,
or $0.24 per diluted share, in 2001.
Business Segment Performance
Foam Products
Foam Products net sales for the fourth quarter of 2002 were $112.6
million, down 4% from the fourth quarter of 2001. Income from operations
for the fourth quarter of 2002 was $0.9 million, as compared to income from
operations of $13.7 million in the fourth quarter of 2001. This reduction
was principally due to lower net sales and increased chemical and operating
costs.
For the year 2002, Foam
Products sales were $471.0 million, down 6% from $499.7 million in 2001,
primarily as a result of a reduction in business from a major bedding
manufacturer. Income from operations decreased to $23.9 million in 2002
from $66.3 million in 2001 primarily as a result of the lower net sales and
increased chemical and operating costs.
Automotive Products
Automotive Products net sales for the fourth quarter of 2002 were
$118.4 million, up 22% from the same period a year ago on higher volumes.
Income from operations for the fourth quarter of 2002 was $3.7 million, flat
compared to the same period in 2001 as the contribution from incremental
sales was offset by higher raw material costs.
For the year 2002,
Automotive Products had net sales of $466.7 million, representing a 24%
increase from net sales of $377.8 million in 2001, reflecting a continued
high build rate for new cars. Income from operations in 2002 increased to
$25.3 million from $21.2 million in 2001.
Carpet
Cushion Products
Carpet Cushion Products net sales for the fourth quarter were
$59.7 million, up 2% from the fourth quarter of 2001. Loss from operations
was $3.6 million in the fourth quarter of 2002, compared to a loss from
operations of $1.5 million in the same period in 2001. The increase in loss
from operations is primarily due to higher raw material and operating costs,
partially offset by selling price increases.
For the year 2002, Carpet
Cushion Products sales were $234.0 million, as compared to $231.0 million in
2001, despite the loss of one large retail customer, which exited the carpet
business early in 2002. This segment had a loss from operations of $12.5
million in 2002, compared to a $6.8 million loss in 2001, as margins were
negatively impacted by higher raw material costs that were not fully
recovered by selling price increases.
Technical
Products
Net sales for Technical Products in the
fourth quarter were $29.2 million, compared to net sales of $29.4 million in
the fourth quarter of 2001. Despite higher raw material costs, income from
operations for the fourth quarter of 2002 was $4.1 million, compared to $4.4
million in the fourth quarter of 2001.
For the year 2002, net
sales for Technical Products increased 12% to $124.1 million from $111.0
million in 2001 due to increased volume and improved selling prices.
Income from operations in 2002 decreased to $20.3 million, from $22.9
million in 2001, as the improved selling prices were offset by higher raw
material costs and one-time charges related to the termination of an initial
public offering.
Amended Quarterly Filings
The Company is filing amended quarterly reports for the second
and third quarters of 2002. The amendments adjust the allocation of income
taxes between income from continuing operations and extraordinary items in
the second quarter by $1.6 million and increase the amount of the Company’s
goodwill accounting change by $3.8 million. These adjustments have no
impact on net income or earnings per share in either the second or third
quarter of 2002. For the three quarters ended September 29, 2002 the
goodwill adjustment reduced net income from $10.5 million ($0.40 per diluted
share) to $6.7 million ($0.25 per diluted share).
Annual Meeting
Foamex will hold its annual
meeting May 23, 2003.
Conference Call and Replay
Foamex management will host a conference call today, Tuesday,
March 25, 2003, at 10:00 a.m. EST to discuss the Company’s fourth quarter
and full year 2002 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.
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 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, 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.
Financial
Tables |
