Foamex International Inc., a manufacturer of flexible polyurethane and advanced polymer foam products in North America, announced that it would restate results for each of the first three quarters of 2003, due primarily to a calculation error in the carrying value of certain in-transit raw materials that overstated inventories at Sept. 28, 2003 by $2.4 million. In addition, the company has reclassified $83.4 million of revolving credit borrowings at Sept. 28, 2003 under Foamex L.P.'s Senior Secured Credit Facility from long-term to current to comply with an applicable accounting rule. There has been no change in the maturity of the credit facility, which remains April 30, 2007.

The company has instituted procedures intended to ensure that the value of the in-transit raw material inventory is more effectively monitored. When discovered, Foamex reported the inventory related error to its external auditors and its audit committee, and has restated its financial statements for each of the first three quarters of 2003 for this error and other adjustments that were not individually or in the aggregate material to the respective periods.

Commenting on the announcement, K. Douglas Ralph, Foamex's CFO said "This recently discovered inventory adjustment relates to a February 2003 systems conversion to an enterprise wide software package. The resulting restatements do not meaningfully impact the trend of our 2003 results, or affect compliance with the financial covenants under our Senior Secured Credit Facilities. The reclassification of the revolver loan has been done to comply with existing accounting pronouncements concerning such debt and does not affect either the maturity or the availability under the revolver."

The net, after tax, effect of the adjustments is to increase the net loss for the three quarters ended Sept. 28, 2003 from $16.5 million ($0.67 per diluted share) to $18 million ($0.74 per diluted share). The adjustments increase net loss for the first quarter from $8.1 million ($0.33 per diluted share) to $10.4 million ($0.43 per diluted share) and increase net income for the second quarter from $2.7 million ($0.10 per diluted share) to $3.4 million ($0.13 per diluted share). The third quarter is essentially unchanged from amounts previously reported.

The company expects to amend each of its quarterly reports on Form 10-Q for 2003, and to file the amended reports with the Securities and Exchange Commission. Foamex expects to report its fiscal 2003 earnings results in early March.