Foamex International Inc. Reports Results for 2000
LINWOOD, PA--March 1, 2001--Foamex International Inc. , the leading manufacturer of flexible polyurethane and advanced polymer foam products in North America, today announced financial results for the year ended December 31, 2000."We generated solid results given the challenging economic environment during the second half of the year," commented John Televantos, President and Chief Executive Officer of Foamex. "Despite continuing cost and pricing pressures, we generated sufficient cash to stay on track with our debt reduction program." The company's consolidated debt at December 31, 2000 was $711.9 million, a reduction of $33.4 million from the prior year end, and $88.5 million below the December 1998 level.
Net sales for the year were $1.258 billion, a decrease of 2.8% from record 1999 sales of $1.295 billion. Gross profit in 2000 was $172.0 million, a decrease of 4.6% from $180.3 million in 1999. Gross profit as a percent of sales was 13.7% in 2000 compared with 13.9% in 1999.
SG&A expense for the year decreased by 9.7% to $69.3 million, compared with $76.8 million in the prior year. Televantos emphasized this strong performance, noting that SG&A expense as a percent of sales dropped to 5.5% in 2000, compared with 5.9% in the prior-year.
Operating income was $96.5 million, a 3.7% increase over $93.1 million in 1999. Excluding restructuring and other charges, operating income for 2000 was $102.7 million, a decrease of 0.8% from $103.5 million in 1999.
The company recorded restructuring and other charges of $6.3 million in 2000, principally for severance costs and plant consolidations. In 1999, restructuring and other charges were $10.5 million, primarily for severance costs, plant consolidations and closure of the company's New York office.
Interest and debt issuance expense for 2000 was $75.2 million, compared with $72.9 million in 1999. The increase was due to higher effective interest rates, partially offset by the favorable impact of continued debt reduction. Interest expense for 2001 is expected to be significantly lower than 2000 due to a combination of lower interest rates and reduced debt levels.
Other expense for 2000 was $3.0 million, consisting primarily of asset disposals and other costs. Foamex recorded other income of $1.5 million in 1999, consisting primarily of a gain on the sale of the company's aircraft, partially offset by losses on asset disposals and other costs.
The effective tax rate for 2000 was 14.3%, compared with 11.1% in 1999. The higher tax rate primarily reflects a greater percentage of income from foreign sources.
Net income for 2000 was $17.0 million, and diluted earnings per share were $0.67, compared with net income of $19.7 million, or $0.78 per diluted share in 1999.
Foamex reported EBDAIT of $141.0 million in 2000, an increase of 0.8% over the $139.8 million in 1999.
Fourth Quarter Performance
Net sales for the fourth quarter of 2000 were $296.3 million, down 7.6% from $320.6 million in the prior year period. Gross profit declined 17.1%, to $36.6 million in 2000 from $44.1 million in 1999. Gross profit as a percent of sales declined to 12.3% in 2000 from 13.8% in 1999.
SG&A expense for the quarter was $14.8 million, a decrease of 25.7% from $20.0 million in the prior year quarter. The SG&A expense reduction reflects the continuing benefits of the company's expense reduction program, lower incentive compensation costs and decreased selling expense.
Operating income was $21.5 million for the quarter, a decrease of 9.3% from $23.8 million in the fourth quarter of 1999. This performance includes restructuring and other charges of $0.2 million in the fourth quarter of 2000 compared with $0.4 million in the prior-year quarter.
Interest and debt issuance expense for the quarter was $18.6 million, a decrease of 1.2% from $18.8 million in the 1999 quarter.
Other expense was $0.6 million, compared with $1.1 million in the fourth quarter of 1999.
Net income for the quarter was $3.5 million, or $0.14 per diluted share, compared with $4.4 million, or $0.17 per diluted share in the fourth quarter of 1999.
EBDAIT for the fourth quarter of 2000 was $32.3 million compared with $34.6 million for the fourth quarter of 1999.
Former Union Carbide Executive Named CFO
In a separate release, Foamex also announced today the appointment of Lee C. Stewart as Chief Financial Officer, effective April 2, 2001. An acknowledged chemical industry banking expert, Stewart adds significant strength to the leadership team at Foamex. Stewart joins Foamex from his former position as Treasurer of Union Carbide Corporation.
Outlook
Commenting on the outlook for 2001, Foamex Chairman Marshall S. Cogan said, "We have greatly enhanced our management structure with significant new leadership. We continue to place great focus on cost reduction and on managing the assets employed in running our businesses, and at the same time, we are laying the foundation for prudent and profitable growth in the future."
Televantos noted, "The first half of 2001 will be challenging due to continued pressure from raw material and energy costs and softened demand in many of our business sectors, particularly automotive. We have redoubled our efforts in improving efficiency and in accelerating important new product introductions and new product sales. We have a strong management team, a dedicated and capable work force and a strong asset base. I'm confident that our actions, combined with the anticipated recovery in the second half of the year, will enable us to capitalize on those strengths to enhance our industry leadership position."
Foamex International Inc. and Subsidiaries
Consolidated Statements of Operations
($ Thousands, except EPS data)
Unaudited
4th Quarter Year Comparative
Comparative
2000 1999 2000 1999
---- ---- ---- ----
Net Sales (a) $296,272 $320,641 $1,257,778 $1,294,639
Gross Profit 36,587 44,121 172,025 180,308
Selling, General
& Administrative Expenses 14,836 19,981 69,286 76,759
Restructuring and
Other Charges 204 379 6,268 10,491
--- --- ----- ------
Income from Operations 21,547 23,761 96,471 93,058
Interest and Debt
Issuance Expense 18,574 18,797 75,229 72,908
Income from Equity
Interest in Joint Venture 638 512 1,652 512
Other Income (Expense), Net (575) (1,089) (3,042) 1,516
----- ------- ------- -----
Income Before
Provision (Benefit)
for Income Taxes 3,036 4,387 19,852 22,178
Provision (Benefit)
for Income Taxes (423) (11) 2,839 2,462
----- ---- ----- -----
Net Income $3,459 $4,398 $17,013 $19,716
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EBDAIT (b) $32,250 $34,630 $140,979 $139,811
======= ======= ======== ========
Earnings Per Share:
Basic Earnings
Per Share $0.14 $0.18 $0.69 $0.79
===== ===== ===== =====
Weighted Average
Shares Outstanding (c) 24,082 25,054 24,814 25,053
====== ====== ====== ======
Diluted Earnings Per Share $0.14 $0.17 $0.67 $0.78
===== ===== ===== =====
Weighted Average Shares
Outstanding (c) 25,091 25,338 25,208 25,256
====== ====== ====== ======
Notes appear on page 6.
Foamex L.P. and Subsidiaries
Selective Comparative Financial Data
($ Thousands)
Unaudited
4th Quarter
Comparative Year Comparative
2000 1999 2000 1999
---- ---- ---- ----
Net Sales $271,438 $295,754 $1,161,017 $1,190,679
Income from Operations 16,483 19,799 84,115 83,735
% of Sales 6.1% 6.7% 7.2% 7.0%
EBDAIT(b) $26,668 $30,401 $125,587 $127,658
% of Sales 9.8% 10.3% 10.8% 10.7%
Notes to Consolidated Statements of Operations and Selective Comparative Financial Data
(a) In response to a new accounting pronouncement, net sales for
all periods presented include the reclassification of certain
freight costs that were previously reported in cost of goods
sold.
(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.
(c) During the fourth quarter of 2000, the Company issued 15,000
shares of Series B Convertible Preferred Stock in exchange for
1,500,000 shares of the Company's common stock.