Foamex International has reported mixed 2004 second quarter results. Net sales for the period were $314.1 million, down 7 percent from $337.6 million in the second quarter of 2003 due to lower volume in the Automotive segment. Gross profit in the second quarter of 2004 was $40.2 million, up 4 percent from $38.7 million in the second quarter of 2003.

Gross profit margin for the second quarter of 2004 was 12.8 percent, up from 11.5 percent from the year-earlier period. The gross margin improvement reflects lower operating costs and a better mix of value-added products, Foamex said.

Income from operations was $16.7 million for the second quarter of 2004, down 20 percent from $20.9 million in the second quarter of 2003 as the improved gross profit was more than offset by higher selling, general and administrative (SG&A) expenses. Results for the 2004 period also included restructuring charges of $1.7 million associated with the closing of the New York office and a realignment of the Automotive business. This compares to restructuring credits of $1.6 million recorded in the second quarter of 2003.

Selling, general and administrative expenses for the second quarter of 2004 were $21.8 million versus $19.3 million in the second quarter of 2003. The increase in SG&A expenses primarily relates to litigation costs and higher professional fees. Interest and debt issuance expense for the second quarter of 2004 was $18.6 million, a decrease from $19.4 million in the second quarter 2003 due to lower amortization of debt issuance costs.

Net loss for the second quarter of 2004 was $2.6 million, or 11 cents per diluted share, compared with net income of $3.4 million, or 13 cents per diluted share, in the second quarter of 2003. Net sales for the first half of 2004 were $627.8 million, down 6 percent from $665.8 million in the first half of 2003 as lower volumes in the Automotive segment were only partially offset by higher revenues in the Foam Products segment. Gross profit was $79.9 million, up 16 percent from $69.2 million in 2003, and gross profit as a percentage of sales increased to 12.7 percent in 2004 from 10.4 percent in 2003 due to a better mix of value-added products and lower operating costs.

Income from operations was $29.9 million for the first half of 2004, down 2 percent from $30.5 million in the 2003 period. The improvement in gross profit was offset by higher SG&A expenses, primarily due to a $3.7 million bad debt charge in the first quarter as a result of a customer bankruptcy and the litigation-related costs and professional fees in the second quarter. Also, results for the 2004 period included restructuring charges of $2.2 million associated with the closing of the New York office and a realignment of the Automotive business, compared to restructuring credits of $1.6 million during the six months of 2003.

Net loss for the first half of 2004 was $4.7 million, or 19 cents per diluted share, compared to a net loss of $7.0 million, or 29 cents per diluted share, in 2003.

For the first six months of 2004, Automotive Products net sales decreased 22 percent to $190.6 million from $244.7 million in the 2003 first half due to lower volumes from sourcing actions by major customers. Income from operations decreased 31 percent to $13 million, primarily due to lower sales volume.

Carpet Cushion Products net sales for the second quarter of 2004 were $53.6 million, down 1 percent from $54.1 million in the second quarter of 2003. Income from operations in the second quarter of 2004 was $3.4 million as compared to $1.6 million in the second quarter of 2003, primarily due to lower material and operating costs.

For the first six months of 2004, Carpet Cushion Products net sales decreased 3 percent to $99.7 million from $103.2 in the 2003 first half, primarily due to volume declines. Income from operations was $4.7 million in the first half of 2004 compared to $1.0 million during the same period in 2003, primarily due to lower material and operating costs.