<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended: May 28, 2000
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from to
Commission File Number 1-8738
Sealy Corporation
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 36-3284147
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Sealy Drive One Office Parkway 27370
Trinity, North Carolina (Zip Code)
(Address of principal executive offices)*
</TABLE>
Registrant's telephone number, including area code (336) 861-3500
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
The number of shares of the registrant's common stock outstanding as of
July 12, 2000 was 31,484,951.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1 -- Financial Statements
SEALY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended
May 28, May 30,
2000 1999
--------------- --------------
<S> <C> <C>
Net sales -- Non Affiliates .................................. $ 227,753 $ 232,168
Net sales -- Affiliates ...................................... 36,302 --
---------- ---------
Total net sales ........................................... 264,055 232,168
Costs and expenses:
Cost of goods sold -- Non Affiliates ....................... 126,058 128,950
Cost of goods sold -- Affiliates ........................... 19,133 --
---------- ---------
Total cost of goods sold .................................. 145,191 128,950
Selling, general and administrative ........................ 85,974 77,584
Stock based compensation ................................... 990 --
Amortization of intangibles ................................ 3,194 3,297
---------- ---------
Income from operations ....................................... 28,706 22,337
Interest expense, net ...................................... 15,138 15,953
---------- ---------
Income before income tax expense ............................. 13,568 6,384
Income tax expense ........................................... 6,000 3,231
---------- ---------
Net income ................................................... 7,568 3,153
Liquidation preference for common L&M shares ............... 3,702 3,365
---------- ---------
Net income (loss) available to common shares ................. $ 3,866 $ (212)
========== =========
Earnings per share -- basic:
Net income ................................................. $ 0.24 $ 0.10
Liquidation preference for common L&M shares ............... ( 0.12) ( 0.11)
---------- ---------
Net income (loss) available to common shareholders ......... $ 0.12 $ (0.01)
========== =========
Earnings per share -- diluted:
Net income ................................................. $ 0.22 $ 0.10
Liquidation preference for common L&M shares ............... ( 0.11) ( 0.11)
---------- ---------
Net income (loss) available to common shareholders ......... $ 0.11 $ (0.01)
========== =========
Weighted average number of common shares outstanding:
Basic ..................................................... 31,485 31,485
Diluted ................................................... 34,270 31,717
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
SEALY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
May 28, May 30,
2000 1999
-------------- -------------
<S> <C> <C>
Net sales -- Non Affiliates .................................. $ 451,721 $ 454,494
Net sales -- Affiliates ...................................... 68,973 --
---------- ---------
Total net sales ........................................... 520,694 454,494
Costs and expenses:
Cost of goods sold -- Non Affiliates ....................... 250,245 251,525
Cost of goods sold -- Affiliates ........................... 36,373 --
---------- ---------
Total cost of goods sold .................................. 286,618 251,525
Selling, general and administrative ........................ 169,509 156,770
Stock based compensation ................................... 1,980 --
Amortization of intangibles ................................ 6,356 6,259
---------- ---------
Income from operations ....................................... 56,231 39,940
Interest expense, net ...................................... 32,372 32,474
---------- ---------
Income before income tax expense ............................. 23,859 7,466
Income tax expense ........................................... 10,734 3,900
---------- ---------
Net income ................................................... 13,125 3,566
Liquidation preference for common L&M shares ............... 7,404 6,730
---------- ---------
Net income (loss) available to common shareholders ........... $ 5,721 $ (3,164)
========== =========
Earnings per share -- basic:
Net income ................................................. $ 0.42 $ 0.11
Liquidation preference for common L&M shares ............... ( 0.24) ( 0.21)
---------- ---------
Net income (loss) available to common shareholders ......... $ 0.18 $ (0.10)
========== =========
Earnings per share -- diluted:
Net income ................................................. $ 0.38 $ 0.11
Liquidation preference for common L&M shares ............... ( 0.22) ( 0.21)
---------- ---------
Net income (loss) available to common shareholders ......... $ 0.16 $ (0.10)
========== =========
Weighted average number of common shares outstanding:
Basic ..................................................... 31,485 31,461
Diluted ................................................... 34,212 31,718
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
SEALY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
May 28,
2000 November 28,
(Unaudited) 1999*
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .......................... $ 38,576 $ 10,845
Accounts receivable -- Non-Affiliates, net ......... 103,215 105,200
Accounts receivable -- Affiliates .................. 19,339 14,275
Inventories ........................................ 47,145 44,681
Prepaid expenses and deferred taxes ................ 27,138 20,165
---------- ----------
235,413 195,166
Property, plant and equipment, at cost .............. 203,710 198,626
Less: accumulated depreciation ...................... (64,466) (60,525)
---------- ----------
139,244 138,101
Other assets:
Goodwill and other intangibles, net ................ 371,496 378,452
Investment in affiliates ........................... 30,182 30,004
Debt issuance costs, net, and other assets ......... 26,845 29,230
---------- ----------
428,523 437,686
---------- ----------
$ 803,180 $ 770,953
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term obligations ........... $ 29,055 $ 14,145
Accounts payable ................................... 60,474 43,153
Accrued interest ................................... 12,874 12,733
Accrued incentives and advertising ................. 42,407 32,301
Accrued compensation ............................... 15,737 23,173
Other accrued expenses ............................. 28,589 26,100
---------- ----------
189,136 151,605
Long-term obligations ............................... 662,548 676,197
Other noncurrent liabilities ........................ 40,612 41,185
Deferred income taxes ............................... 20,055 23,355
Stockholders' equity (deficit):
Common stock ....................................... 315 315
Additional paid-in capital ......................... 134,547 134,547
Retained deficit ................................... (232,887) (246,012)
Foreign currency translation adjustment ............ (11,061) (10,154)
Common stock held in treasury, at cost ............. (85) (85)
---------- ----------
(109,171) (121,389)
---------- ----------
$ 803,180 $ 770,953
========== ==========
</TABLE>
--------
* Condensed from audited financial statements.
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
SEALY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
May 28, 2000 May 30, 1999
-------------- -------------
<S> <C> <C>
Net cash provided by operating activities ..................... $ 42,166 $ 19,594
Investing activities:
Purchase of property and equipment, net ...................... (8,742) (6,549)
-------- --------
Net cash used in investing activities ..................... (8,742) (6,549)
-------- --------
Financing activities:
Treasury stock repurchase, including direct expenses ......... -- (85)
Repayments of long-term obligations, net ..................... (5,693) (4,119)
Equity issuance .............................................. -- 17
-------- --------
Net cash used in financing activities ..................... (5,693) (4,187)
-------- --------
Change in cash and cash equivalents ........................... 27,731 8,858
Cash and cash equivalents:
Beginning of period .......................................... 10,845 11,234
-------- --------
End of period ................................................ $ 38,576 $ 20,092
======== ========
Selected noncash items:
Non-cash compensation ........................................ $ 1,980 $ --
Depreciation ................................................. 7,090 6,704
Non-cash interest expense associated with:
Junior Subordinated Notes .................................. 1,918 1,732
Debt issuance costs ........................................ 2,130 2,090
Discount on Senior Subordinated Notes ...................... 5,036 4,531
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
SEALY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Six months ended May 28, 2000
NOTE 1 -- BASIS OF PRESENTATION
This report covers Sealy Corporation and its subsidiaries (collectively,
"Sealy" or the "Company").
The accompanying unaudited condensed consolidated financial statements
should be read together with the Company's Annual Report on Form 10-K for the
year ended November 28, 1999.
The accompanying unaudited condensed consolidated financial statements
contain all adjustments which, in the opinion of management, are necessary to
present fairly the financial position of the Company at May 28, 2000, and its
results of operations and cash flows for the periods presented herein. All
adjustments in the periods presented herein are normal and recurring in nature.
Certain reclassifications of previously reported financial information
were made to conform to the 2000 presentation.
NOTE 2 -- INVENTORIES
The major components of inventories were as follows:
<TABLE>
<CAPTION>
May 28, November 28,
2000 1999
--------- -------------
(In thousands)
<S> <C> <C>
Raw materials ........... $28,146 $25,066
Work in process ......... 13,153 14,298
Finished goods .......... 5,846 5,317
------- -------
$47,145 $44,681
======= =======
</TABLE>
NOTE 3 -- NET INCOME PER COMMON SHARE
The following table sets forth the computation of basic and diluted
earnings per share (in thousands):
<TABLE>
<CAPTION>
Three months ended Six months ended
--------------------- ------------------------
May 28, May 30, May 28, May 30,
2000 1999 2000 1999
--------- --------- --------- ------------
<S> <C> <C> <C> <C>
Numerator:
Net income ..................................................... $ 7,568 $ 3,153 $13,125 $ 3,566
Liquidation preference for common L&M shares ................... 3,702 3,365 7,404 6,730
------- ------- ------- --------
Net income (loss) available to common shareholders ............. $ 3,866 $ (212) $ 5,721 $ (3,164)
======= ======= ======= ========
Denominator:
Denominator for basic earnings per share -- weighted average
shares ....................................................... 31,485 31,485 31,485 31,461
Effect of dilutive securities:
Stock options .................................................. 2,785 232 2,727 257
------- ------- ------- --------
Denominator for diluted earnings per share -- adjusted weighted-
average shares and assumed conversions ....................... 34,270 31,717 34,212 31,718
======= ======= ======= ========
</TABLE>
NOTE 4 -- COMPREHENSIVE INCOME
Total comprehensive income for the three and six months ended May 28, 2000
was $6.1 million and $12.2 million and for the three and six months ended May
30, 1999 was $3.7 million and $5.0 million, respectively.
6
<PAGE>
SEALY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
NOTE 4 -- COMPREHENSIVE INCOME -- (Continued)
Activity in Stockholders' Equity is as follows (dollar amounts in
thousands):
<TABLE>
<CAPTION>
Current Year Additional
Comprehensive Common Paid-in
Income Stock Capital
--------------- -------- ------------
<S> <C> <C> <C>
Balance at November 28, 1999 ......... $315 $134,547
Comprehensive Income:
Net income for the six months
ended May 28, 2000 .................. $13,125
Foreign currency translation
adjustment .......................... (907) -- --
------- ---- --------
Balance at May 28, 2000 .............. $12,218 $315 $134,547
======= ==== ========
<CAPTION>
Accumulated
Other
Retained Treasury Comprehensive
Deficit Stock Income Total
-------------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
Balance at November 28, 1999 ......... $ (246,012) $ (85) $ (10,154) $ (121,389)
Comprehensive Income:
Net income for the six months
ended May 28, 2000 .................. 13,125 13,125
Foreign currency translation
adjustment .......................... -- -- (907) (907)
---------- ----- --------- ----------
Balance at May 28, 2000 .............. $ (232,887) $ (85) $ (11,061) $ (109,171)
========== ===== ========= ==========
</TABLE>
NOTE 5 -- CONTINGENCIES
The Company is currently conducting an environmental cleanup at a formerly
owned facility in South Brunswick, New Jersey pursuant to the New Jersey
Industrial Site Recovery Act. The Company and one of its subsidiaries are
parties to an Administrative Consent Order issued by the New Jersey Department
of Environmental Protection. Pursuant to that order, the Company and its
subsidiary agreed to conduct soil and groundwater remediation at the property.
The Company does not believe that its manufacturing processes were the source
of contamination. The Company sold the property in 1997. The Company and its
subsidiary retained primary responsibility for the required remediation. The
Company has completed essentially all soil remediation with the New Jersey
Department of Environmental Protection approval and has concluded a pilot test
of a groundwater remediation system.
The Company is also remediating soil and groundwater contamination at an
inactive facility located in Oakville, Connecticut. Although the Company is
conducting the remediation voluntarily, it obtained Connecticut Department of
Environmental Protection approval of the remediation plan. The Company has
completed essentially all soil remediation under the remediation plan and is
currently monitoring groundwater at the site. The Company believes the
contamination is attributable to the manufacturing operations of previously
unaffiliated occupants of the facility. In 1994, the Company filed a cost
recovery action in U.S. District Court to require these entities to complete
the remediation and reimburse the Company for cleanup costs. Trial on this
matter has been bifurcated with only the issue of damages going to trial in May
1999. In February 2000, the trial court judge found that approximately $0.5
million expended by the Company up to trial and up to $2.4 million in
additional expenditures may be recoverable as reasonable remediation costs in
this matter. The issues of liability and apportionment between the parties will
be addressed in the second half of the trial. The Company is in settlement
discussions with the defendants in this case.
While the Company cannot predict the ultimate timing or costs to the South
Brunswick and Oakville remediation, based on facts currently known, the Company
believes that the accruals are adequate and does not believe the resolution of
these matters will have a material adverse effect on the financial position or
future operations of the Company.
The Company has been identified as a potential responsible party pursuant
to the Comprehensive Environmental Response Compensation and Liability Act with
regard to two other waste disposal sites and under analogous state legislation
with regard to a third site. Although liability under these statutes is
generally joint and several, as a practical matter, liability is usually
allocated among all financially responsible parties. Based on the nature and
quantity of our wastes, the Company believes that liability at each of these
sites is unlikely to be material.
7
<PAGE>
SEALY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
NOTE 6 -- RELATED PARTY TRANSACTIONS
As of May 28, 2000, the Company has made year-to-date sales of $64.1
million of finished mattress products pursuant to multi-year supply contracts
to affiliated and related parties of Bain Capital, Inc., the Company's largest
stockholder. The Company believes that the terms on which mattresses are
supplied to related parties are not materially less favorable than those that
might reasonably be obtained in a comparable transaction at an arm's-length
basis from a person that is not an affiliate or related party.
NOTE 7 -- SEGMENT INFORMATION
The Company operates predominately in one industry segment, that being the
manufacture and marketing of conventional bedding. No one customer represented
10% or more of total net sales. Sales outside the United States were less than
10% of total net sales. Also, long-lived assets (principally property, plant
and equipment, goodwill, patents and other investments) outside of the United
States were less than 10% of total long-lived assets.
NOTE 8 -- GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION
The Parent and each of the Guarantor Subsidiaries has fully and
unconditionally guaranteed, on a joint and several basis, the obligation to pay
principal and interest with respect to the Senior Subordinated and Senior
Subordinated Discount Notes (collectively, the "Notes") of Sealy Mattress
Company (the "Issuer"). Substantially all of the Issuer's operating income and
cash flow is generated by its subsidiaries. As a result, funds necessary to
meet the Issuer's debt service obligations are provided in part by
distributions or advances from its subsidiaries. Under certain circumstances,
contractual and legal restrictions, as well as the financial condition and
operating requirements of the Issuer's subsidiaries, could limit the Issuer's
ability to obtain cash from its subsidiaries for the purpose of meeting its
debt service obligations, including the payment of principal and interest on
the Notes. Although holders of the Notes will be direct creditors of the
Issuer's principal direct subsidiaries by virtue of the guarantees, the Issuer
has subsidiaries ("Non-Guarantor Subsidiaries") that are not included among the
Guarantor Subsidiaries, and such subsidiaries will not be obligated with
respect to the Notes. As a result, the claims of creditors of the Non-Guarantor
Subsidiaries will effectively have priority with respect to the assets and
earnings of such companies over the claims of creditors of the Issuer,
including the holders of the Notes.
The following supplemental consolidating condensed financial statements
present:
1. Consolidating condensed balance sheets as of May 28, 2000 and November
28, 1999 and consolidating condensed statements of operations and cash
flows for the six months ended May 28, 2000 and May 30, 1999 and the
consolidated condensed statements of operations for the three months
ended May 28, 2000 and May 30, 1999.
2. Sealy Corporation (the "Parent" and a "guarantor"), Sealy Mattress
Company (the "Issuer"), combined Guarantor Subsidiaries and combined
Non-Guarantor Subsidiaries with their investments in subsidiaries
accounted for using the equity method.
3. Elimination entries necessary to consolidate the Parent and all of its
subsidiaries.
Separate financial statements of each of the Guarantor Subsidiaries are
not presented because Management believes that these financial statements would
not be material to investors.
8
<PAGE>
SEALY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended May 28, 2000
(In Thousands)
<TABLE>
<CAPTION>
Sealy Combined Combined
Sealy Mattress Guarantor Non-Guarantor
Corporation Company Subsidiaries Subsidiaries Eliminations Consolidated
------------- ------------ -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net sales -- Non-Affiliates ....... $ -- $ 11,115 $197,646 $22,574 $ (3,582) $227,753
Net sales -- Affiliates ........... -- -- 36,302 -- -- 36,302
-------- --------- -------- ------- --------- --------
Total net sales ................ -- 11,115 233,948 22,574 (3,582) 264,055
Costs and expenses:
Cost of goods sold --
Non-Affiliates ................. -- 6,971 108,962 13,707 (3,582) 126,058
Cost of goods
sold -- Affiliates ............. -- -- 19,133 -- -- 19,133
-------- --------- -------- ------- --------- --------
Total cost of goods sold ....... -- 6,971 128,095 13,707 (3,582) 145,191
Selling, general and
administrative ................ 31 3,241 76,232 6,470 -- 85,974
Stock based compensation ....... 990 -- -- -- -- 990
Amortization of intangibles -- 100 2,902 192 -- 3,194
Interest expense, net .......... 916 15,296 (979) (95) -- 15,138
Loss (income) from equity
investees ..................... (8,122) (9,390) -- -- 17,512 --
Loss (income) from
nonguarantor equity
investees ..................... -- 1,260 (2,418) -- 1,158 --
Capital charge and
intercompany interest
allocation .................... (947) (14,487) 15,205 229 -- --
-------- --------- -------- ------- --------- --------
Income (loss) before income
taxes ........................... 7,132 8,124 14,911 2,071 (18,670) 13,568
Income tax expense (benefit) ...... (436) 2 5,521 913 -- 6,000
-------- --------- -------- ------- --------- --------
Net income (loss) ................. $ 7,568 $ 8,122 $ 9,390 $ 1,158 $ (18,670) $ 7,568
======== ========= ======== ======= ========= ========
</TABLE>
9
<PAGE>
SEALY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended May 30, 1999
(In Thousands)
<TABLE>
<CAPTION>
Sealy Combined Combined
Sealy Mattress Guarantor Non-Guarantor
Corporation Company Subsidiaries Subsidiaries Eliminations Consolidated
------------- ------------ -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net sales ................................. $ -- $ 8,960 $204,224 $18,383 $ 601 $232,168
Costs and expenses:
Cost of goods sold ...................... -- 5,509 111,168 11,659 614 128,950
Selling, general and
administrative ......................... 22 2,452 70,479 4,644 (13) 77,584
Amortization of intangibles ............. -- 100 2,971 226 -- 3,297
Interest expense, net ................... 956 14,904 242 (149) -- 15,953
Loss (income) from equity
investees .............................. (3,717) (5,129) -- -- 8,846 --
Loss (income) from nonguarantor
equity investees ....................... -- 1,540 (2,425) -- 885 --
Capital charge and intercompany
interest allocation .................... -- (14,348) 14,044 304 -- --
-------- --------- -------- ------- -------- --------
Income (loss) before income taxes ......... 2,739 3,932 7,745 1,699 (9,731) 6,384
Income tax expense (benefit) .............. (414) 215 2,616 814 -- 3,231
-------- --------- -------- ------- -------- --------
Net income (loss) ......................... $ 3,153 $ 3,717 $ 5,129 $ 885 $ (9,731) $ 3,153
======== ========= ======== ======= ======== ========
</TABLE>
10
<PAGE>
SEALY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS
Six Months Ended May 28, 2000
(In Thousands)
<TABLE>
<CAPTION>
Sealy Combined Combined
Sealy Mattress Guarantor Non-Guarantor
Corporation Company Subsidiaries Subsidiaries Eliminations Consolidated
------------- ------------ -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net sales -- Non-Affiliates ............ $ -- $ 21,365 $394,056 $43,444 $ (7,144) $451,721
Net sales -- Affiliates ................ -- -- 68,973 -- -- 68,973
--------- --------- -------- ------- --------- --------
Total net sales ..................... -- 21,365 463,029 43,444 (7,144) 520,694
Costs and expenses:
Cost of goods sold --
Non-Affiliates ...................... -- 13,507 217,286 26,596 (7,144) 250,245
Cost of goods sold -- Affiliates ..... -- -- 36,373 -- -- 36,373
--------- --------- -------- ------- --------- --------
Total cost of goods sold ............ -- 13,507 253,659 26,596 (7,144) 286,618
Selling, general and
administrative ..................... 76 6,391 150,881 12,161 -- 169,509
Stock based compensation ............ 1,980 -- -- -- -- 1,980
Amortization of intangibles ......... -- 199 5,771 386 -- 6,356
Interest expense, net ............... 1,895 31,365 (705) (183) -- 32,372
Loss (income) from equity
investees .......................... (14,214) (16,877) -- -- 31,091 --
Loss (income) from
nonguarantor equity investees....... -- 2,445 (4,651) -- 2,206 --
Capital charge and intercompany
interest allocation ................ (1,971) (29,702) 31,200 473 -- --
--------- --------- -------- ------- --------- --------
Income (loss) before income taxes ...... 12,234 14,037 26,874 4,011 (33,297) 23,859
Income tax expense (benefit) ........... (891) (177) 9,997 1,805 -- 10,734
--------- --------- -------- ------- --------- --------
Net income (loss) ...................... $ 13,125 $ 14,214 $ 16,877 $ 2,206 $ (33,297) $ 13,125
========= ========= ======== ======= ========= ========
</TABLE>
11
<PAGE>
SEALY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS
Six Months Ended May 30, 1999
(In Thousands)
<TABLE>
<CAPTION>
Sealy Combined Combined
Sealy Mattress Guarantor Non-Guarantor
Corporation Company Subsidiaries Subsidiaries Eliminations Consolidated
------------- ------------ -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net sales ................................. $ -- $ 17,695 $405,684 $33,923 $ (2,808) $454,494
Costs and expenses:
Cost of goods sold ...................... -- 11,113 221,555 21,665 (2,808) 251,525
Selling, general and
administrative ......................... 75 5,274 142,394 9,027 -- 156,770
Amortization of intangibles ............. -- 199 5,609 451 -- 6,259
Interest expense, net ................... 1,905 30,357 489 (277) -- 32,474
Loss (income) from equity
investees .............................. (4,512) (6,081) -- -- 10,593 --
Loss (income) from nonguarantor
equity investees ....................... -- 1,555 (2,735) -- 1,180 --
Capital charge and Intercompany
interest allocation .................... -- (29,219) 28,635 584 -- --
-------- --------- -------- ------- --------- --------
Income (loss) before income taxes ......... 2,532 4,497 9,737 2,473 (11,773) 7,466
Income tax expense (benefit) .............. (1,034) (15) 3,656 1,293 -- 3,900
-------- --------- -------- ------- --------- --------
Net income (loss) ......................... $ 3,566 $ 4,512 $ 6,081 $ 1,180 $ (11,773) $ 3,566
======== ========= ======== ======= ========= ========
</TABLE>
12
<PAGE>
SEALY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
SUPPLEMENTAL CONSOLIDATING CONDENSED BALANCE SHEET
May 28, 2000
(In Thousands)
<TABLE>
<CAPTION>
Sealy Combined
Sealy Mattress Guarantor
Corporation Company Subsidiaries
------------- ------------ --------------
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents ................... $ -- $ 8 $ 34,034
Accounts receivable -- Non-Affiliates,
net ........................................ 10 3,518 82,784
Accounts receivable -- Affiliates ........... -- -- 19,339
Inventories ................................. -- 1,182 40,918
Prepaids and deferred taxes ................. 746 304 20,292
---------- --------- -----------
756 5,012 197,367
Property, plant and equipment, at cost ........ -- 4,603 186,391
Less: accumulated depreciation ................ -- (1,711) (59,383)
---------- --------- -----------
-- 2,892 127,008
Other assets:
Goodwill and other intangibles, net ......... -- 13,454 332,940
Net investment in and advances to
(from) subsidiaries and affiliates ......... (67,817) 523,385 (337,727)
Investment in affiliates ....................
Debt issuance costs, net and other
assets ..................................... -- 22,306 4,473
---------- --------- -----------
(67,817) 559,145 (314)
---------- --------- -----------
Total assets ............................... $ (67,061) $ 567,049 $ 324,061
========== ========= ===========
Liabilities and Stockholders' Equity
(Deficit)
Current liabilities:
Current portion -- long-term
obligation ................................. $ -- $ 28,750 $ 305
Accounts payable ............................ -- 167 54,062
Accrued interest ............................ -- 575 12,201
Accrued incentives and advertising .......... -- 1,193 38,392
Accrued compensation ........................ -- 383 14,407
Other accrued expenses ...................... 481 478 27,919
---------- --------- -----------
481 31,546 147,286
Long-term debt ................................ 33,415 615,339 13,794
Other noncurrent liabilities .................. 13,470 -- 26,086
Deferred income taxes ......................... (5,256) 736 21,285
Stockholders' equity (deficit) ................ (109,171) (80,572) 115,610
---------- --------- -----------
Total liabilities and stockholders'
equity (deficit) .......................... $ (67,061) $ 567,049 $ 324,061
========== ========= ===========
<CAPTION>
Combined
Non-Guarantor
Subsidiaries Eliminations Consolidated
-------------- -------------- -------------
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents ................... $ 4,534 $ -- $ 38,576
Accounts receivable -- Non-Affiliates,
net ........................................ 16,903 -- 103,215
Accounts receivable -- Affiliates ........... -- -- 19,339
Inventories ................................. 5,045 -- 47,145
Prepaids and deferred taxes ................. 5,796 -- 27,138
---------- --------- -----------
32,278 -- 235,413
Property, plant and equipment, at cost ........ 12,716 -- 203,710
Less: accumulated depreciation ................ (3,372) -- (64,466)
---------- --------- -----------
9,344 -- 139,244
Other assets:
Goodwill and other intangibles, net ......... 25,102 -- 371,496
Net investment in and advances to
(from) subsidiaries and affiliates ......... (59,193) (58,648) --
Investment in affiliates .................... 30,182 30,182
Debt issuance costs, net and other
assets ..................................... 66 -- 26,845
---------- --------- -----------
(3,843) (58,648) 428,523
---------- --------- -----------
Total assets ............................... $ 37,779 $ (58,648) $ 803,180
========== ========= ===========
Liabilities and Stockholders' Equity
(Deficit)
Current liabilities:
Current portion -- long-term
obligation ................................. $ -- $ -- $ 29,055
Accounts payable ............................ 6,245 -- 60,474
Accrued interest ............................ 98 -- 12,874
Accrued incentives and advertising .......... 2,822 -- 42,407
Accrued compensation ........................ 947 -- 15,737
Other accrued expenses ...................... (289) -- 28,589
---------- --------- -----------
9,823 -- 189,136
Long-term debt ................................ -- -- 662,548
Other noncurrent liabilities .................. 1,056 -- 40,612
Deferred income taxes ......................... 3,290 -- 20,055
Stockholders' equity (deficit) ................ 23,610 (58,648) (109,171)
---------- --------- -----------
Total liabilities and stockholders'
equity (deficit) .......................... $ 37,779 $ (58,648) $ 803,180
========== ========= ===========
</TABLE>
13
<PAGE>
SEALY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
SUPPLEMENTAL CONSOLIDATING CONDENSED BALANCE SHEET
November 28, 1999
(In Thousands)
<TABLE>
<CAPTION>
Sealy Combined
Sealy Mattress Guarantor
Corporation Company Subsidiaries
------------- ------------ --------------
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents ...................... $ -- $ 13 $ 6,220
Accounts receivable -- Non-Affiliate,
net .......................................... 27 3,941 84,365
Accounts receivable -- Affiliate ............... -- -- 14,275
Inventories .................................... -- 1,297 38,673
Prepaid expenses and deferred taxes ............ 3,412 314 12,799
---------- --------- -----------
3,439 5,565 156,332
Property, plant and equipment, at cost .......... -- 4,584 181,881
Less: accumulated depreciation .................. -- (1,571) (55,709)
---------- --------- -----------
-- 3,013 126,172
Other assets:
Goodwill and other intangibles, net ............ -- 13,653 338,711
Net investment in and advances to
(from) subsidiaries and affiliates ........... (84,313) 507,742 (338,993)
Investment in affiliates ....................... -- -- --
Debt issuance costs, net and other
assets ....................................... 813 24,422 3,904
---------- --------- -----------
(83,500) 545,817 3,622
---------- --------- -----------
Total assets .................................... $ (80,061) $ 554,395 $ 286,126
========== ========= ===========
Liabilities and Stockholders' (Deficit)
Equity
Current liabilities:
Current portion -- long-term
obligations .................................. $ -- $ 13,854 $ 291
Accounts payable ............................... -- 318 36,493
Accrued interest ............................... -- 671 11,967
Accrued incentives and advertising ............. -- 1,200 28,507
Accrued compensation ........................... -- 417 21,646
Other accrued expenses ......................... 534 313 24,342
---------- --------- -----------
534 16,773 123,246
Long-term obligations ........................... 31,497 630,749 13,951
Other noncurrent liabilities .................... 11,491 -- 27,629
Deferred income taxes ........................... (2,194) 736 21,644
Stockholders' (deficit) equity .................. (121,389) (93,863) 99,656
---------- --------- -----------
Total liabilities and stockholders' (deficit)
equity ......................................... $ (80,061) $ 554,395 $ 286,126
========== ========= ===========
<CAPTION>
Combined
Non-Guarantor
Subsidiaries Eliminations Consolidated
-------------- -------------- -------------
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents ...................... $ 4,612 $ -- $ 10,845
Accounts receivable -- Non-Affiliate,
net .......................................... 16,867 -- 105,200
Accounts receivable -- Affiliate ............... -- -- 14,275
Inventories .................................... 4,711 -- 44,681
Prepaid expenses and deferred taxes ............ 3,640 -- 20,165
---------- --------- -----------
29,830 -- 195,166
Property, plant and equipment, at cost .......... 12,161 -- 198,626
Less: accumulated depreciation .................. (3,245) -- (60,525)
---------- --------- -----------
8,916 -- 138,101
Other assets:
Goodwill and other intangibles, net ............ 26,088 -- 378,452
Net investment in and advances to
(from) subsidiaries and affiliates ........... (56,359) (28,077) --
Investment in affiliates ....................... 30,004 -- 30,004
Debt issuance costs, net and other
assets ....................................... 91 -- 29,230
---------- --------- -----------
(176) (28,077) 437,686
---------- --------- -----------
Total assets .................................... $ 38,570 $ (28,077) $ 770,953
========== ========= ===========
Liabilities and Stockholders' (Deficit)
Equity
Current liabilities:
Current portion -- long-term
obligations .................................. $ -- $ -- $ 14,145
Accounts payable ............................... 6,342 -- 43,153
Accrued interest ............................... 95 -- 12,733
Accrued incentives and advertising ............. 2,594 -- 32,301
Accrued compensation ........................... 1,110 -- 23,173
Other accrued expenses ......................... 911 -- 26,100
---------- --------- -----------
11,052 -- 151,605
Long-term obligations ........................... -- -- 676,197
Other noncurrent liabilities .................... 2,065 -- 41,185
Deferred income taxes ........................... 3,169 -- 23,355
Stockholders' (deficit) equity .................. 22,284 (28,077) (121,389)
---------- --------- -----------
Total liabilities and stockholders' (deficit)
equity ......................................... $ 38,570 $ (28,077) $ 770,953
========== ========= ===========
</TABLE>
14
<PAGE>
SEALY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended May 28, 2000
(In Thousands)
<TABLE>
<CAPTION>
Sealy Combined
Sealy Mattress Guarantor
Corporation Company Subsidiaries
------------- ------------- --------------
<S> <C> <C> <C>
Net cash provided by (used in) operating
activities ............................... $-- $ 962 $ 44,113
--- -------- ----------
Cash flows from investing activities:
Purchase of property and equipment,
net ..................................... -- (27) (7,465)
Net activity in investment in and
advances to (from) subsidiaries and
affiliates .............................. -- 4,610 (8,691)
--- -------- ----------
Net proceeds provided by (used in)
investing activities ...................... -- 4,583 (16,156)
Cash flows from financing activities:
Proceeds from repayment of long-term
obligations, net ........................ -- (5,550) (143)
Net equity activity with Parent ........... -- -- --
--- -------- ----------
Net cash provided by (used in)
financing activities ................... -- (5,550) (143)
--- -------- ----------
Change in cash and cash equivalents ........ -- (5) 27,814
Cash and cash equivalents:
Beginning of period ....................... -- 13 6,220
--- ---------- ----------
End of period ............................. $-- $ 8 $ 34,034
=== ========== ==========
<CAPTION>
Combined
Non-
Guarantor
Subsidiaries Eliminations Consolidated
-------------- -------------- -------------
<S> <C> <C> <C>
Net cash provided by (used in) operating
activities ............................... $ (2,909) $-- $ 42,166
-------- --- --------
Cash flows from investing activities:
Purchase of property and equipment,
net ..................................... (1,250) -- (8,742)
Net activity in investment in and
advances to (from) subsidiaries and
affiliates .............................. 4,081 -- --
-------- --- --------
Net proceeds provided by (used in)
investing activities ...................... 2,831 -- (8,742)
Cash flows from financing activities:
Proceeds from repayment of long-term
obligations, net ........................ -- -- (5,693)
Net equity activity with Parent ........... -- -- --
-------- --- --------
Net cash provided by (used in)
financing activities ................... -- -- (5,693)
-------- --- --------
Change in cash and cash equivalents ........ (78) -- 27,731
Cash and cash equivalents:
Beginning of period ....................... 4,612 -- 10,845
-------- --- --------
End of period ............................. $ 4,534 $-- $ 38,576
======== === ========
</TABLE>
15
<PAGE>
SEALY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended May 30, 1999
(In Thousands)
<TABLE>
<CAPTION>
Combined
Sealy Combined Non-
Sealy Mattress Guarantor Guarantor
Corporation Company Subsidiaries Subsidiaries Eliminations Consolidated
------------- ---------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating
activities ............................... $ (1,095) $ 2,155 $ 18,421 $ 113 $-- $ 19,594
-------- -------- --------- ------ --- --------
Cash flows from investing activities:
Purchase of property and equipment,
net ..................................... -- (246) (6,668) 365 -- (6,549)
Net activity in investment in and
advances to (from) subsidiaries and
affiliates .............................. 1,163 3,918 (10,192) 5,111 -- --
-------- -------- --------- ------ --- --------
Net proceeds provided by (used in)
investing activities ...................... 1,163 3,672 (16,860) 5,476 -- (6,549)
Cash flows from financing activities:
Treasury stock repurchase costs, net of
direct expenses ......................... (85) -- -- -- -- (85)
Proceeds from repayment of long-term
obligations, net ........................ -- (5,841) 1,722 -- -- (4,119)
Equity issuance ........................... 17 -- -- -- -- 17
-------- -------- --------- ------ --- --------
Net cash provided by (used in)
financing activities ................... (68) (5,841) 1,722 -- -- (4,187)
-------- -------- --------- ------ --- --------
Change in cash and cash equivalents ........ -- (14) 3,283 5,589 -- 8,858
Cash and cash equivalents:
Beginning of period ....................... -- 22 9,162 2,050 -- 11,234
-------- -------- --------- ------ --- --------
End of period ............................. $ -- $ 8 $ 12,445 $7,639 $-- $ 20,092
======== ======== ========= ====== === ========
</TABLE>
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 2 -- Quarter Ended May 28, 2000 compared with Quarter Ended May 30, 1999
Net Sales. Net sales increased $31.9 million, or 13.7% for the quarter
ended May 28, 2000, when compared to the quarter ended May 30, 1999. The
increase is attributable to a 1.2% increase in average unit selling price and a
12.5% increase in unit volume. Volume growth was attributable to increases
throughout the product offerings. Average unit selling price growth was
realized through continued strong increases in Stearns & Foster and
Posturepedic brands.
Cost of Goods Sold. Cost of goods sold for the quarter, as a percentage of
net sales, decreased 0.5 percentage points to 55.0%. The reduction in cost of
sales is primarily attributable to increased absorption of fixed costs through
higher sales volume and improved sales mix of higher margin products, which
were partially offset by close-out pricing on selected discontinued products.
Selling, General, and Administrative. Selling, general, and administrative
expenses increased $8.4 million. This increase is primarily due to increased
marketing expenses of $5.6 million associated with increased sales volume.
Employment costs increased $1.9 million due to restoring normal staffing levels
after the relocation of the corporate headquarters, increased information
technology and increased sales employment as a result of increased business
activity. Delivery expense increased $1.8 million due to an overall increase in
sales volume and higher fuel costs. These increases were partially offset by
decreases in relocation expense of $0.6 million as the Company incurred
additional costs associated with the move of the Corporate Headquarters to High
Point, North Carolina during the second quarter of 1999 and decreases in
various other expenses of $0.3 million.
Stock Based Compensation. The Company has an obligation to repurchase
certain securities of the Company held by an officer at the greater of
estimated fair market value or original cost. The Company recorded a $1.0
million charge during the second quarter ended May 28, 2000 to revalue this
obligation to reflect an increase in the fair market value of the securities.
Interest Expense. Interest expense, net of interest income, decreased $0.8
million primarily due to the receipt of $1.2 million of interest on a tax
refund associated with a favorable conclusion of an IRS examination, partially
offset by an increase in interest rates associated with the Company's floating
rate debt.
Income Tax. The Company's effective income tax rates in 2000 and 1999
differ from the Federal statutory rate principally because of the application
of purchase accounting and state and local income taxes. The Company's
effective tax rate for 2000 is approximately 44.2% compared to 50.6% for 1999.
The lower effective tax rate for 2000 is due to higher projected pretax income
for the year compared to 1999.
Net Income. For the reasons set forth above, the Company recorded net
income of $7.6 million for the quarter ended May 28, 2000 versus $3.2 million
for the quarter ended May 30, 1999.
Six Months Ended May 28, 2000 compared with Six Months Ended May 30, 1999
Net Sales. Net sales increased $66.2 million, or 14.6% for the six months
ended May 28, 2000, when compared to the six months ended May 30, 1999. The
increase is attributable to a 1.6% increase in average unit selling price and a
13.0% increase in unit volume. Volume growth was attributable to increases
throughout the product offerings. Average unit selling price growth was
realized through continued strong increases in Stearns & Foster and
Posturepedic brands.
Cost of Goods Sold. Cost of goods sold for the six months, as a percentage
of net sales, decreased 0.3 percentage points to 55.0%. The reduction in cost
of sales is primarily attributable to increased absorption of fixed costs
through higher sales volume and improved sales mix of higher margin products,
which were partially offset by close-out pricing on selected discontinued
products.
Selling, General, and Administrative. Selling, general, and administrative
expenses increased $12.7 million. This increase is primarily due to increased
marketing expenses, of $9.0 million, associated with increased sales volume.
Employment costs increased $3.8 million due to restoring normal staffing levels
after the relocation of
17
<PAGE>
the corporate headquarters, increased information technology and increased
sales employment as a result of increased business activity. Delivery expense
increased $3.2 million due to an overall increase in sales volume and higher
fuel costs. In addition, other administrative expenses increased over 1999 by
$0.2 million due to general increase in business activities. These increases
were partially offset by decreases in relocation expense of $2.0 million as the
Company incurred additional costs associated with the move of Corporate
Headquarters to High Point, North Carolina during the first two quarters of
1999. In addition, foreign currency losses decreased from 1999 by $1.5 million
mainly due to the devaluation of the Brazilian Real in the first quarter of
1999.
Stock Based Compensation. The Company has an obligation to repurchase
certain securities of the Company held by an officer at the greater of
estimated fair market value or original cost. The Company recorded a $2.0
million charge during the first half of 2000 to revalue this obligation to
reflect an increase in the fair market value of the securities.
Interest Expense. Interest expense, net of interest income, decreased $0.1
million primarily due to the receipt of $1.2 million of interest on a tax
refund associated with a favorable conclusion of an IRS examination, partially
offset by an increase in interest rates associated with the Company's floating
rate debt.
Income Tax. The Company's effective income tax rates in 2000 and 1999
differ from the Federal statutory rate principally because of the application
of purchase accounting and state and local income taxes. The Company's
effective tax rate for 2000 is approximately 45.0% compared to 52.2% for 1999.
The lower effective tax rate for 2000 is due to higher projected pretax income
for the year compared to 1999.
Net Income (Loss). For the reasons set forth above, the Company recorded
net income of $13.1 million for the six months ended May 28, 2000 versus $3.6
million for the six months ended May 30, 1999.
Liquidity and Capital Resources
The Company's principal sources of funds are cash flows from operations
and borrowings under its Revolving Credit Facility. The Company's principal use
of funds consists of payments of principal and interest on its Senior Credit
Agreements, capital expenditures and interest payments on its outstanding
Notes. Capital expenditures totaled $8.7 million for the six months ended May
28, 2000. We expect fiscal 2000 capital expenditures to be approximately $29.0
million. Management believes that annual capital expenditure limitations in its
current debt agreements will not significantly inhibit the Company from meeting
its ongoing capital needs. At May 28, 2000, the Company had approximately $93.3
million available under its Revolving Credit Facility with Letters of Credit
issued totaling approximately $6.7 million outstanding. The weighted average
effective interest rate on the Company's debt for the six months ended May 28,
2000 was 9.7%. The Revolving Credit Facility expires in fiscal 2002. The
Company expects it will have the ability to renew the existing revolving credit
facility or have the ability to find new financing with comparable terms. If
the Company is unable to renew its existing arrangement or obtain new
financing, this could have an adverse affect on the Company's ability to fund
its operations.
From time to time the Company makes investments in debt, preferred stock,
or other securities of manufacturers, retailers, and distributors of bedding
and related products both domestically and internationally to enhance business
relationships and build incremental sales. As of May 28, 2000, the Company had
$30.2 million in such investments.
Management believes that the Company will have the necessary liquidity
through cash flow from operations, and availability under the Revolving Credit
Facility for the next several years to fund its expected capital expenditures,
obligations under its credit agreement and subordinated note indentures,
environmental liabilities, and other needs required to manage and operate its
business.
Year 2000 Issue
To date, the Company has not experienced any significant business
disruptions related to the Year 2000 Issue. The Company incurred approximately
$3.3 million addressing the issue and funded the expenditures through cash
flows from operations. Although the Company believes that it successfully
avoided any significant disruption from the Year 2000 Issue, it will continue
to monitor all critical systems for the appearance of delayed complications or
disruptions, problems encountered through suppliers, customers and other third
parties with whom the Company deals.
18
<PAGE>
Forward Looking Statements
This document contains forward-looking statements within the meaning of
the safe harbor provisions of the Private Securities Litigation Report Act of
1995. Although the Company believes its plans are based upon reasonable
assumptions as of the current date, it can give no assurances that such
expectations can be attained. Factors that could cause actual results to differ
materially from the Company's expectations include: general business and
economic conditions, competitive factors, raw materials pricing, and
fluctuations in demand.
Item 3 -- Quantitative and Qualitative Disclosures About Market Risk
Information relative to the Company's market risk sensitive instruments by
major category at November 28, 1999 is presented under Item 7a of the
registrant's Annual Report on Form 10-K for the fiscal year ended November 28,
1999.
Foreign Currency Exposures
The Company's earnings are affected by fluctuations in the value of its
subsidiaries' functional currency as compared to the currencies of its foreign
denominated purchases. Foreign currency forward contracts are used to hedge
against the earnings effects of such fluctuations. The result of a uniform 10%
change in the value of the U.S. dollar relative to currencies of countries in
which the Company manufactures or sells its products would not be material to
earnings or financial position. This calculation assumes that each exchange
rate would change in the same direction relative to the U.S. dollar.
Interest Rate Risk
Because the Company's obligations under the bank credit agreement bear
interest at floating rates, the Company is sensitive to changes in prevailing
interest rates. The Company uses derivative instruments to manage its long-term
debt interest rate exposure, rather than for trading purposes. A 10% increase
or decrease in market interest rates that affect the Company's interest rate
derivative instruments would not have a material impact on earnings during the
next fiscal year.
19
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See Note 5 to the Condensed Consolidated Financial Statements, Part I, Item 1
included herein.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
None
20
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Sealy Corporation has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SEALY CORPORATION
By: /S/ RONALD L. JONES
------------------------------------
Ronald L. Jones
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
By: /S/ LEE WYATT
------------------------------------
E. Lee Wyatt
Corporate Vice President -- Administration
and Chief Financial Officer
(Principal Accounting Officer)
Date: July 12, 2000
21
