Foamex International Inc. Reports Strong Second Quarter Performance
4 August 2000
EBDAIT Grows 14%; EPS Increases to $.32 Per Share Change of Control, Shareholder Lawsuits Resolved
LINWOOD, Pa. - Foamex International Inc. , the leading manufacturer of flexible polyurethane and advanced polymer foam products, today announced earnings before depreciation, amortization, interest and taxes of $38.1 million for its second quarter, which ended June 30, 2000.That performance represents a 13.9% increase over the $33.5 million EBDAIT reported in the second quarter of 1999.
Cost Management and Productivity Initiatives Drive Earnings
Net sales for the quarter were $319.1 million, an increase of 1.9% over the $313.0 million reported in the prior year period.
Gross profit was $47.4 million, an increase of 8.2% over $43.8 million in the second quarter of 1999. As a percent of revenues, gross profit was 14.8% in the second quarter of 2000 compared with 14.0% in the same quarter of 1999.
Second quarter 2000 SG&A expenses were $18.2 million, a 1.3% decrease from expenses of $18.5 million in the prior-year quarter.
Operating income was $29.1 million, an increase of 34.6% over the $21.6 million reported in the second quarter last year. Excluding restructuring charges of $3.7 million in last year's second quarter, operating income increased 15.1%.
Interest and debt issuance expense for the quarter was $18.8 million, a 6.2% increase over $17.7 million in the second quarter of last year, as the company's reduced debt levels continue to be offset by higher interest rates.
Provision for income taxes was $1.9 million, compared with $0.5 million in the second quarter of 1999.
Net income was $8.0 million or $0.32 per diluted share, compared with $3.2 million or $0.13 per diluted share for the second quarter of 1999.
John Televantos, Chief Operating Officer and President of the company's Foam Products Group, said, "Second quarter results reflect the benefits of our continued focus on cost reduction and productivity improvements. As we move into the second half of the year, we look forward to revenue enhancements as new products add to top-line growth."
Year-to-date performance
For the six-months ended June 30, 2000, net sales rose to $645.0 million, an increase of 1.4% over the $635.9 million reported in the prior year period.
Gross profit was $90.7 million, or 14.1% of sales, compared with $87.4 million, or 13.7% of sales, in the first half of 1999.
SG&A expenses for the period were $37.1 million, a decrease of 0.6% from $37.3 million in the same period last year.
Operating income was $50.4 million, an increase of 17.4% over the $43.0 million reported for the first six months of 1999. Excluding restructuring charges in both periods, operating income increased 7.1% in the first half of 2000.
Interest and debt issuance expense for the period was $37.4 million, compared with $35.4 million for the same period last year.
Provision for income taxes was $2.2 million, compared with $1.5 million for the first six months of 1999.
Net income for the period was $9.8 million or $0.39 per diluted share, compared with $9.2 million or $0.37 per diluted share for the first half of 1999.
EBDAIT for the first six months of 2000 was $71.7 million, a 7.1% increase over $66.9 million for the same period of 1999.
Change of Control and Shareholder Litigation Resolved
The Chairman of the Foamex Board of Directors, Marshall S. Cogan, announced earlier this week that the company had reached an agreement with The Bank of Nova Scotia providing for a transfer of Foamex shares pledged to the Bank which avoids triggering the "change of control" provisions in the Foamex subsidiaries' credit agreements and the indentures for their public debt. The agreement, which is subject to approval by the U.S. Bankruptcy Court for the Southern District of New York, is expected to be completed before the end of the year.
The company also announced that it had reached agreements in principle to settle all lawsuits brought by stockholders during the past two years, subject to court approvals. Payments resulting from the settlements will be made by Foamex's insurance carrier on behalf of the company.
Building Investor Confidence
Commenting on the company's results, President and Chief Executive Officer John G. Johnson, Jr. said, "We have now posted six consecutive quarters of credible performance for our shareholders, reducing our debt by a total of $73 million over that same period of time. In addition, we have reached agreements on both the change of control issue related to the Trace bankruptcy and the shareholder lawsuits. The fact that those issues are now behind us, combined with the consistent performance we have delivered, should instill even greater confidence in our ability to deliver long-term value for all of our constituents."
Foamex, headquartered in Linwood, Pennsylvania, is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The company also manufactures high-performance polymers for diverse applications in the industrial, aerospace, electronics and computer industries as well as filtration and acoustical applications for the home.
Foamex International Inc. and Subsidiaries
Consolidated Statement of Operations
($ Thousands, except EPS data)
2nd Quarter Year to Date
Comparative Comparative
2000 1999 2000 1999
---- ---- ---- ----
Net Sales $319,109 $313,029 $644,971 $635,892
Gross Profit 47,373 43,777 90,709 87,374
Selling, General &
Administrative Expenses 18,234 18,466 37,056 37,294
Restructuring and Other
Charges - 3,667 3,222 7,124
------ ----- ----- -----
Income from Operations 29,139 21,644 50,431 42,956
Interest and Debt
Issuance Expense 18,771 17,675 37,400 35,371
Income from Equity Interest
in Joint Venture 440 - 732 -
Other Income
(Expense), Net (874) (287) (1,805) 3,064
----- ----- ------- -----
Income Before Provision
for Income Taxes 9,934 3,682 11,958 10,649
Provision for Income Taxes 1,948 505 2,189 1,459
----- --- ----- -----
Net Income $7,986 $3,177 $9,769 $9,190
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EBDAIT (a) $38,134 $33,477 $71,656 $66,878
======= ======= ======= =======
Earnings Per Share:
Basic Earnings
Per Share $0.32 $0.13 $0.39 $0.37
===== ===== ===== =====
Weighted Average
Shares Outstanding 25,060 25,053 25,059 25,053
====== ====== ====== ======
Diluted Earnings
Per Share $0.32 $0.13 $0.39 $0.37
===== ===== ===== =====
Weighted Average
Shares Outstanding 25,092 25,083 25,274 25,173
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Note appears below
Foamex L.P. and Subsidiaries
Selective Comparative Financial Data
($ Thousands)
2nd Quarter Year to Date
Comparative Comparative
2000 1999 2000 1999
---- ---- ---- ----
Net Sales $297,688 $292,229 $603,208 $592,106
Income from Operations 26,319 21,140 45,759 40,911
% of Sales 8.8% 7.2% 7.6% 6.9%
EBDAIT(a) $34,604 $32,170 $65,157 $62,967
% of Sales 11.6% 11.0% 10.8% 10.6%
Notes to Consolidated Statements of Operations and Selective
Comparative Financial Data
(a) 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.