Foamex International Inc. Results for Q3 and Nine Months 1998
4 November 1998
Foamex International Inc. Reports Results for Third Quarter and Nine Months 1998
LINWOOD, Pa.--Nov. 3, 1998--Company Reports Third Quarter Net Income of $9.6 Million or
$0.37 Per Share on a Diluted Basis;
Achieves EBDAIT of $46.1 Million
Board of Directors Meeting Rescheduled from November 4 to
November 5 to Give Further Consideration
to Revised Buyout Proposal
Foamex International Inc. , North America's largest manufacturer of flexible polyurethane foam and advanced polymer foam products, today announced results for the third quarter and nine months ended September 30, 1998.
Net sales increased 42.5% to $332.7 million during the quarter, from $233.4 million in the prior year period. Gross profit increased to $56.7 million from $38.0 million in the prior year period, resulting in a gross profit margin of 17.1% for third quarter 1998 versus 16.3% in the prior year period. The results reflect the inclusion of results from the former Crain Industries, acquired by the Company in December 1997.
The Company noted that the quarter's results were impacted by certain developments, including:
-- The General Motors labor dispute, which reduced revenues by
approximately $10.0 million during the quarter and also resulted
in unabsorbed fixed overhead expense.
-- The above normal ramp-up period of production, following
settlement of the G. M. dispute, which resulted in certain
production inefficiencies and overtime.
-- Significant start-up production costs resulting from new
automotive lamination contracts.
-- The idling of the Company's Orlando, FL facility due to a fire in
April 1998. The facility recommenced operations in mid-September
1998.
Third quarter 1998 selling, general and administrative expenses were $19.8 million, or 6.0% of net sales, versus $15.8 million, or 6.8% of net sales, in the prior year period. The increase in total expenses versus the prior year period is primarily attributable to the addition of personnel and overhead resulting from the acquisition of Crain. The decrease in total expenses as a percentage of sales from 6.8% for the third quarter 1997 to 6.0% for the third quarter of 1998 resulted from continued consolidation activities.
Interest and debt issuance expense was $18.7 million for the third quarter of fiscal 1998 versus $12.1 million during the comparable period in 1997, reflecting the incurrence of debt in connection with the Crain acquisition.
The Company reported net income of $9.6 million or earnings per share of $0.37 on a diluted basis during the quarter versus net income of $6.5 million or earnings per share of $0.27 on a diluted basis in the prior year period.
Andrea Farace, Chairman and Chief Executive Officer, said "We are satisfied with results for the quarter and our continued progress with the Foamex-Crain consolidation plan."
The Company said that as of the end of the third quarter it had implemented operational changes and consolidation activities relating to the combination of Foamex and Crain at 17 sites. These on-going initiatives have resulted in the closure of five warehouses, four pouring plants, six fabrication operations and two rebond/fiber operations, and the consolidation of one packaging operation.
The Company added the following information pertaining to its results for the third quarter of 1998:
Foam Products. Net sales for Foam Products were $157.2 million in
the third quarter 1998 versus $89.8 million in the prior year
period and compared to $143.7 million in the second quarter 1998.
The increase is primarily the result of the acquisition of Crain,
together with strong bedding and consumer products sales.
Carpet Cushion Products. Net sales for Carpet Cushion Products
were $82.2 million in the third quarter 1998 versus $72.0 million
in the prior year period and compared to $72.5 million in the
second quarter of 1998. Sales growth was hampered by reduced
capacity for rebond products as a result of the idling of the
Orlando facility as well as the sale of the Foamex Dalton plant
in October 1997, which contributed approximately $10.7 million in
revenue in the third quarter of 1997. The business unit benefited
from price increases on rebond and prime products as well as
enhanced volume for higher margin rubber and felt products.
Automotive Products. Net sales for Automotive Products were $73.6
million in the third quarter 1998 versus $52.3 million in the
prior year period and compared to $62.2 million in the second
quarter. The results include new contracts for all products,
including lamination, but also reflect a loss in General
Motors-revenues, offset by an accelerated ramp-up period for G.M.
production following the settlement of the G.M. strike.
Technical Products. Net sales for Technical Products were $19.8
million in the third quarter 1998 versus $19.3 million in the
prior year period and compared to $20.2 million in the second
quarter 1998. Results include sales of new products, including
Acquazone(R) and Iso Guard(R).
For the nine months ended September 30, 1998, net sales rose to $945.0 million from $702.4 million for the comparable 1997 period, a 34.5% increase. Gross profit increased to $164.9 million from $125.6 million in the prior year period.
Selling, general and administrative expense for the first nine months of 1998 rose to $63.1 million from $47.9 million in the prior year period, while interest and debt expense for the first nine months was $54.0 million versus $39.5 million in the first nine months of 1997. The increases in 1998 were primarily attributable to the acquisition of Crain, which resulted in the addition of personnel and overhead, and the incurrence of additional debt.
Net income for the nine-month period ended September 30, 1998, was $24.4 million versus a net loss of $18.5 million for the comparable 1997 period. Diluted earnings per share were $0.94 for the nine-month period ended September 30, 1998 versus a diluted loss of $0.76 per share for the comparable 1997 period. During the nine month period ended September 30, 1998, net income included an extraordinary loss on early extinguishment of debt of approximately $1.9 million related to a transaction designed to simplify the Company's corporate structure, enabling the Company's operations to be conducted principally by two subsidiaries. Net income for the first nine months of 1997 included an extraordinary loss on early extinguishment of debt of $42.6 million.
The Company added that the Foamex Board of Directors has rescheduled a previously announced meeting from Wednesday, November 4 to Thursday, November 5. At that time the Board will give further consideration to the revised proposal of Trace International Holdings, Inc. to purchase all of the outstanding shares of Foamex not owned by Trace or its subsidiaries for $12.00 in cash.
Foamex manufactures and markets flexible polyurethane and advanced polymer foam products in North America. Foamex operates under four business units: Foam Products, which includes consumer, cushioning, furniture and bedding products; Carpet Cushion Products; Automotive Products; and Technical Products.
This press release does not constitute a solicitation of proxies with respect to the proposed merger, nor does it constitute an offer to sell or an offer to buy any securities in connection with the proposed merger or any other transaction.
This press release contains forward-looking information, and actual results may materially vary from those expressed or implied herein. Factors that could affect these results include those mentioned in the Company's Form 10-K/A-2 filed with the Securities and Exchange Commission.
For more information about Foamex, visit its web site at http:\\www.foamex.com.
Foamex International Inc. and Subsidiaries
Consolidated Statement of Operations (unaudited)
($ Thousands, except EPS data)
3rd Quarter Nine Months
Comparative Comparative
1998(a) 1997(b) 1998(a) 1997(b)
Net Sales $332,710 $233,434 $944,979 $702,441
Gross Profit 56,740 38,039 164,858 125,616
Selling, General &
Administrative Expenses 19,820 15,766 63,058 47,853
------ ------ ------ ------
Income from Operations 36,920 22,273 101,800 77,763
Interest and Debt Issuance
Expense 18,652 12,080 53,960 39,522
Other Income (Expense) (2,200) 324 (3,945) 1,410
------- --- ------- -----
Income Before Income Taxes 16,068 10,517 43,895 39,651
Provision for Income Taxes 6,428 4,002 17,556 15,530
----- ----- ------ ------
Income Before Extraordinary
Loss 9,640 6,515 26,339 24,121
Extraordinary Loss on
Early Extinguishment -- -- (1,917) (42,599)
of Debt, Net of Income Taxes
Net Income (Loss) $9,640 $6,515 $24,422 $(18,478)
EBDAIT (c) $46,128 $27,867 $128,486 $94,172
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Foamex International Inc. and Subsidiaries
Consolidated Statement of Operations (unaudited)
($ Thousands, except EPS data)
(Continued)
3rd Quarter Nine Months
Comparative Comparative Comparative
1998(a) 1997(b) 1998(a) 1997(b)
Basic Earnings
(Loss) Per Share (d):
Income Before Extraordinary
Loss $0.39 $0.26 $1.05 $0.96
Extraordinary Loss -- -- (0.07) (1.69)
Earnings (Loss) Per Share $0.39 $0.26 $0.98 $(0.73)
===== ===== ===== =======
Weighted Average Shares
Outstanding 25,015 24,959 24,989 25,189
====== ====== ====== ======
Diluted Earnings (Loss)
Per Share (d):
Income Before Extraordinary
Loss $0.37 $0.27 $1.01 $0.98
Extraordinary Loss -- -- (0.07) (1.74)
Earnings (Loss) Per Share $0.37 $0.27 $0.94 $(0.76)
===== ===== ===== =======
Weighted Average Shares
Outstanding 26,118 24,324 26,146 24,489
====== ====== ====== ======
Foamex International Inc. and Subsidiaries
Net Sales by Business Unit
($ Thousands)
3rd Quarter Nine Months
Comparative Comparative
1998(a) 1997(b) 1998(a) 1997(b)
Foam Products $157,166 $89,789 $458,723 $259,749
Carpet Cushion Products 82,158 72,007 225,938 214,903
Automotive Products 73,579 52,336 199,248 171,351
Technical Products 19,807 19,302 61,070 56,438
------ ------ ------ ------
Total $332,710 $233,434 $944,979 $702,441
======== ======== ======== ========
Foamex L.P.
Selective Comparative Financial Data
($ Thousands)
3rd Quarter Nine Months
Comparative Comparative
1998(a) 1997(b)(e) 1998(a) 1997(b)(e)
Net Sales $282,003 $195,807 $829,895 $589,432
Income from Operations 32,182 20,592 89,502 70,244
% of Sales 11.4% 10.5% 10.8% 11.9%
EBDAIT(c) $42,490 $24,728 $115,208 $82,438
% of Sales 15.1% 12.6% 13.9% 14.0%
Notes to Consolidated Statements of Operations,
Net Sales by Business Unit
and Selective Comparative Financial Data
a) Third quarter 1998 results reflect a change in the Company's
fiscal year to a calendar year; includes the post-acquisition
results of Crain Industries, Inc., which was acquired in December
1997.
b) Does not include results of Crain Industries, Inc., which was
acquired in December 1997; includes results of the Dalton
facility, prior to its sale in October 1997.
c) EBDAIT consists of earnings before depreciation, amortization,
interest, income taxes and other non-cash or non-recurring
expenses. EBDAIT is not intended to represent cash flow for the
period.
d) During the fourth quarter of 1997, the Company adopted Statement
of Financial Accounting Standards No. 128 relating to the method
of reporting earnings per share (EPS). The statement requires
that companies report two EPS amounts, basic and diluted and that
all prior periods presented be restated.
e) Has been restated to reflect the February 1998 transaction
designed to simplify the Company's corporate structure which
resulted in the carpet cushion business previously conducted by a
subsidiary of Foamex L.P. being conducted by Foamex Carpet
Cushion, Inc. a direct, wholly owned subsidiary of the Company.