Net sales for the first quarter were $314.1 million, up 4 percent from $301.9 million in the first quarter of 2001. Net income for the quarter was $4.5 million, or 17 cents per diluted share, compared with net income of $5.9 million, or 24 cents per diluted share in the first quarter of 2001.
The company’s net income in 2002 was reduced by an extraordinary charge of $4.2 million for the write-off of debt issuance costs associated with the early extinguishment of debt in connection with the Foamex's previously announced debt refinancing.
Gross profit was $38.2 million in 2002, down 7.1 percent from $41.2 million in 2001. Gross profit as a percentage of sales in 2002 decreased to 12.2 percent from 13.6 percent in 2001.
Net income in 2002 was increased by the cumulative effect of a change in accounting principle of $1.3 million related to the write-off of negative goodwill. Income before the extraordinary charge and change in accounting principle was $7.3 million or $0.28 per diluted share in the 2002 first quarter.
In the company’s Carpet Cushion Products segment, net sales for the first quarter were $52.8 million, down 1.6 percent from the first quarter of 2001. Foamex said it continues to see positive results from the price increase initiated last year, however gains have been eroded by the increasing cost of scrap foam. Foamex also lost a major piece of profitable prime carpet cushion business when Sears announced their withdrawal from the carpet market. Loss from operations was $3.0 million in the first quarter.
“The business units' results for this quarter were mixed, reflecting continued economic and market instability, said Peter Johnson, Foamex president and COO. “We are working to reduce our costs and increase our profitability through our Project Transformation activities, the benefits of which are mainly loaded towards the second half of the year.
During the first quarter we focused on procurement, production site optimization and SG&A cost reduction and we have made significant improvements in those areas,” Johnson added.