Washington, DC, June 24--Advanced Materials Group Inc. (ADMG) said Monday that it amended a manufacturing agreement in Singapore, effective Friday.
Advanced Materials amended the agreement to change the vendor of record from the company to Foamex Asia, a subsidiary of Foamex International Inc. (FMXI), according to a document filed with the Securities and Exchange Commission.
Although this change won't affect Advanced Materials' share of the profitability under the agreement, it will cause a significant reduction in its future reported revenue, the filing said.
In January 1998, Advanced Materials entered into a 10-year strategic manufacturing agreement in Singapore with Foamex Asia. The agreement, which allows a five-year renewal period, calls for the company to lease production equipment and provide technology to Foamex Asia.
In turn, Foamex provides manufacturing facilities and workers to fabricate foam products at its Singapore facility. The agreement has a profit-sharing provision that changes annually, the filing said.
Before the amendment, Advanced Materials recognized gross sales and cost of sales on its financials because it bought raw materials and billed the end customer, the filing said. The company will no longer buy the raw materials or bill the end customer, and it will only recognize its part of profit as revenue, according to the filing.
Advanced Materials makes specialty foams, foils, films and pressure-sensitive adhesive components.
