LINWOOD, N.J. (Jan. 26)—A recently discovered inventory error has changed Foamex International Corp.'s financial results for the first three quarters of 2003.
The company will restate earnings for each of the periods, primarily because of a calculation error in the carrying value of some in-transit raw materials that overstated inventories by $2.4 million. The adjustments will increase the company's net loss for the nine-month period to $18 million from $16.5 million.
The inventory adjustment "relates to a February 2003 systems conversion to an enterprise-wide software package," said K. Douglas Ralph, the chief financial officer of Foamex. The firm said it has put procedures in place to insure the value of the in-transit raw material inventory is more effectively monitored in the future. The firm expects to report its fiscal 2003 earnings in early March, it said.
The company also has reclassified $83.4 million of revolving credit borrowings under Foamex L.P.'s senior secured credit facility from long term to current to comply with an accounting rule. "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," Ralph said.