Foamex takes $110M charge

Linwood, Pa.— Foam supplier Foamex said sales for its third fiscal quarter were off 4.2% from the comparable 2003 quarter, to $310 million. Sales in the company's foam products division, however, rose 2% to $140 million.

The net loss for the quarter ended Sept. 26 was $114.5 million

compared with a loss of $11 million a year ago. The latest quarter included $110.2 million in income tax charges, measured against a $3.4 million income tax benefit in the third quarter of 2003. The charge in the 2004 quarter results from Foamex's decision to establish a valuation allowance against its deferred tax assets.

In a conference call with analysts, Foamex President and CEO Tom Chorman said the market environment "continues to remain difficult."

Chorman said the rising costs of chemicals negatively affected gross margins in the quarter, and that Foamex is aggressively pursuing price increases to recover its cost increases. The company's gross margin in the latest quarter was 10.7% compared with 11.5% a year ago.

For the first nine months of the year, Foamex's sales dipped 5.2% to $937.8 million, with foam products division sales up 6% to $400.5 million.

Foamex posted a net loss of $119.2 million, including the one-time income tax charge, for the first three quarters compared with a loss of $18 million in the 2003 period.

Quarter ended 9/26	2004	2003	Change
Sales	$309,993,000	$323,542,000	(4.2%)
Operating income	14,959,000	17,952,000	(16.7%)
Net income	(a)(114,501,000)	(b)(10,999,000)	—
Earnings per share	(4.68)	(0.45)	—
9 months ended 9/26	2004	2003	Change
Sales	$937,751,000	$989,330,000	(5.2%)
Operating income	47,107,000	46,949,000	0.3%
Net income	(a)(119,233,000)	(b)(17,976,000)	—
Earnings per share	(4.88)	(0.74)	—