Linwood, PA,Mar.25, 2003--Foamex International announced its 2002 fourth quarter and full-year financial results.
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.
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oamex 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
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."
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."
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.
