FOAMEX L P, S-4, 1997-06-27

FOAMEX L P
S-4, 1997-06-27
PLASTICS FOAM PRODUCTS

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As filed with the Securities and Exchange Commission on June 27, 1997
Registration No. 333-
================================================================================

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

---------------

Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Foamex L.P.

Foamex Capital Corporation
General Felt Industries, Inc.
Foamex Fibers, Inc.
(Exact name of registrant as specified in its charter)

Delaware 3086 05-0475617
Delaware 9999 22-3182164
Delaware 2273 13-3476119
Delaware 2297 13-3819884
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
(Primary Standard Industrial
Classification Code Number)

---------------

1000 Columbia Avenue, Linwood, Pennsylvania 19061, (610) 859-3000
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices)

---------------

Philip N. Smith, Jr., Esq.
Foamex L.P.
1000 Columbia Avenue
Linwood, Pennsylvania 19061
(610) 859-3000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

---------------

with a copy to:
Laurence D. Weltman, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
(212) 821-8000

---------------

Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective.

If any of the securities being registered on this Form are to be offered
in connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [ ]

---------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
=======================================================================================================================
Title Of Each Class Proposed Maximum Amount of
Of Securities to Amount to be Proposed Maximum Aggregate Offering Registration
be Registered Registered Offering Price(1) Price Fee
- ------------------------------------------------- -------------- ------------------- -------------------- -------------
<S> <C> <C> <C> <C>
9 7/8% Senior Subordinated Notes Due 2007 ...... $150,000,000 100% $150,000,000 $45,454.55
- ------------------------------------------------- ------------- ----- ------------- -----------
Guarantees(2) ................................. (3) (3) (3) (2)
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee.

(2) General Felt Industries, Inc. and Foamex Fibers, Inc. are each registering
Guarantees of the payment of the principal of, premium, if any, and
interest on the Notes being registered hereby. Pursuant to Rule 457(n)
under the Securities Act of 1933, as amended, no registration fee is
required with respect to the Guarantees.

(3) Not applicable.

---------------

The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment that specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended, or until this
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
- --------------------------------------------------------------------------------
<PAGE>

SUBJECT TO COMPLETION, DATED JUNE 27, 1997

Offer for all Outstanding 9 7/8% Senior Subordinated Notes Due 2007
in Exchange for up to $150,000,000 principal amount of
9 7/8% Senior Subordinated Notes Due 2007
of

Foamex L.P. [Foamex logo]
Foamex Capital Corporation

The Exchange Offer
will expire at 5:00 p.m., New York City time on , 1997,
unless extended

--------------

Foamex L.P., a Delaware limited partnership ("Foamex") and Foamex Capital
Corporation, a Delaware corporation ("FCC" and together with Foamex, the
"Issuers"), hereby offer upon the terms and subject to the conditions set forth
in this Prospectus and the accompanying Letter of Transmittal (which together
constitute the "Exchange Offer"), to exchange $1,000 principal amount of the
Issuers' 9 7/8% Senior Subordinated Notes due 2007 (the "New Notes") for each
$1,000 principal amount of their issued and outstanding 9 7/8% Senior
Subordinated Notes due 2007 (the "Old Notes" and together with the New Notes,
the "Notes") from the holders (the "Holders") thereof. The terms of the New
Notes are identical in all material respects to the terms of the Old Notes,
except that the New Notes have been registered under the Securities Act of 1933,
as amended (the "Securities Act"), and, therefore, will not bear legends
restricting their transfer and will not contain certain terms providing for an
increase in the interest rate on the Old Notes under certain circumstances
relating to the Registration Rights Agreement (as defined). The New Notes
evidence the same debt as the Old Notes and will be issued pursuant to, and
entitled to the same benefits under the Indenture (as defined) governing the Old
Notes.

Interest on the Notes is payable semi-annually in cash on June 15 and
December 15 of each year, commencing December 15, 1997. The Notes will be
redeemable at the option of the Issuers, in whole or in part, at any time on or
after June 15, 2002 in cash at the redemption prices set forth herein, plus
accrued and unpaid interest and Liquidated Damages (as defined), if any,
thereon to the date of redemption. In addition, at any time prior to June 15,
2000, the Issuers may on any one or more occasions redeem up to 35% of the
initially outstanding aggregate principal amount of Notes at a redemption price
equal to 109.875% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the redemption date, with
the net proceeds of one or more Public Equity Offerings (as defined); provided
that, in each case, at least 65% of the initially outstanding aggregate
principal amount of Notes remains outstanding immediately after the occurrence
of any such redemption. See "Description of Notes--Optional Redemption." In
addition, upon the occurrence of a Change of Control (as defined), each holder
of Notes will have the right to require the Issuers to repurchase all or any
part of such holder's Notes at an offer price in cash equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date of purchase. See "Description
of Notes--Repurchase at the Option of Holders--Change of Control." There can be
no assurance that, in the event of a Change of Control, the Issuers would have
sufficient funds to purchase all Notes tendered. See "Risk Factors--Limitations
on Ability to Make Change of Control Payment."

The Notes are general unsecured obligations of the Issuers, rank
subordinate in right of payment to all Senior Debt (as defined), rank pari
passu in right of payment to all Pari Passu Debt (as defined) and rank senior
in right of payment to all existing and future subordinated indebtedness of the
Issuers. The Notes are unconditionally guaranteed (the "Note Guarantees") on a
senior subordinated basis by the Subsidiary Guarantors (as defined). The Note
Guarantees are general unsecured obligations of the Subsidiary Guarantors, rank
subordinate in right of payment to all Senior Debt of the Subsidiary
Guarantors, rank pari passu in right of payment to all Pari Passu Debt of the
Subsidiary Guarantors and rank senior in right of payment to all existing and
future subordinated indebtedness of the Subsidiary Guarantors. As of March 30,
1997, on a pro forma basis, after giving effect to the Refinancing Plan (as
defined), the Notes would have been subordinated to approximately $371.1
million of Senior Debt and pari passu with approximately $27.4 million of Pari
Passu Debt.

The New Notes will bear interest from and including their respective dates
of issuance. Holders whose Old Notes are accepted for exchange will receive
accrued interest thereon to, but not including, the date of issuance of the New
Notes, such interest to be payable with the first interest payment on the New
Notes, but will not receive any payment in respect of interest on the Old Notes
accrued after the issuance of the New Notes.

The Old Notes were originally issued and sold on June 12, 1997 in a
transaction not registered under the Securities Act, in reliance upon the
exemption provided in Section 4(2) of the Securities Act and Rule 144A of the
Securities Act (the "Initial Offering"). The Company is making the Exchange
Offer in reliance on the position of the staff of the Securities and Exchange
Commission (the "Commission") as set forth in certain no-action letters
addressed to other parties in other transactions. However, the Company has not
sought its own no-action letter and there can be no assurance that the staff of
the Commission would make a similar determination with respect to the Exchange
Offer as in such other circumstances. Based upon these interpretations by the
staff of the Commission, the

(Cover continued on next page)

--------------

See "Risk Factors" beginning on page 10 for a discussion of certain factors
that holders of the Old Notes should consider in connection with the Exchange
Offer and that prospective investors in the New Notes should consider in
connection with such investment.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
--------------

The date of this Prospectus is , 1997

<PAGE>

(Cover continued from previous page)

Issuers believe that New Notes issued pursuant to this Exchange Offer in
exchange for Old Notes may be offered for resale, resold and otherwise
transferred by a holder thereof other than (i) a broker-dealer who purchased
such Old Notes directly from the Issuers to resell pursuant to Rule 144A or any
other available exemption under the Securities Act or (ii) a person that is an
"affiliate" (as defined in Rule 405 of the Securities Act) of the Issuers
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that such New Notes are acquired in the ordinary
course of such holder's business and that such holder is not participating, and
has no arrangement or understanding with any person to participate, in the
distribution of such New Notes. Holders of Old Notes accepting the Exchange
Offer are required to represent to the Issuers in the Letter of Transmittal
that such conditions have been met. Any holder who participates in the Exchange
Offer for the purpose of participating in a distribution of the New Notes may
not rely on the position of the staff of the Commission as set forth in these
no-action letters and would have to comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any secondary
resale transaction. A secondary resale transaction in the United States by a
holder who is using the Exchange Offer to participate in the distribution of
New Notes must be covered by a registration statement containing the selling
securityholder information required by Item 507 of Regulation S-K of the
Securities Act.

Each broker-dealer (other than an "affiliate" of the Issuers) that
receives New Notes for its own account pursuant to the Exchange Offer must
acknowledge that it acquired the Old Notes as a result of market-making
activities or other trading activities and will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of New Notes
received in exchange for Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Issuers have agreed that, for a period of 120 days following
the consummation of the Exchange Offer, they will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution." Any broker-dealer who is an affiliate of the Issuers
may not rely on such no-action letters and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any secondary resale transaction. See "The Exchange Offer."

The New Notes are new securities for which there is currently no market.
The Issuers presently do not intend to apply for listing of the New Notes on
any securities exchange or for quotation through the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"). The Issuers have been
advised by the Initial Purchasers, Donaldson, Lufkin & Jenrette Securities
Corporation, Salomon Brothers Inc and Scotia Capital Markets (USA) Inc. that,
following completion of the Exchange Offer, they presently intend to make a
market in the New Notes; however, the Initial Purchasers are not obligated to
do so and any market-making activities with respect to the New Notes may be
discontinued at any time without notice. There can be no assurance that an
active public market for the New Notes will develop.

Any Old Notes not tendered and accepted in the Exchange Offer will remain
outstanding and will be entitled to all the rights and preferences and will be
subject to the limitations applicable thereto under the Indenture. Following
consummation of the Exchange Offer, the holders of Old Notes will continue to
be subject to the existing restrictions upon transfer thereof and the Issuers
will have no further obligation to such holders (other than the Initial
Purchasers) to provide for the registration under the Securities Act of the Old
Notes held by them. To the extent that Old Notes are tendered and accepted in
the Exchange Offer, a holder's ability to sell untendered Old Notes could be
adversely affected. It is not expected that an active market for the Old Notes
will develop while they are subject to restrictions on transfer.

The Issuers will accept for exchange any and all Old Notes that are
validly tendered and not withdrawn on or prior to 5:00 p.m., New York City
time, on the date the Exchange Offer expires, which will be
, 1997 (the "Expiration Date"), unless the Exchange Offer is
extended by the Issuers in their sole discretion, in which case the term
"Expiration Date" shall mean the latest date and time to which the Exchange
Offer is extended. Tenders of Old Notes may be withdrawn at any time prior to
5:00 p.m., New York City time, on the Expiration Date. The Exchange Offer is
not conditioned upon any minimum principal amount of Old Notes being tendered
for exchange. However, the Exchange Offer is subject to certain conditions
which may be waived by the Issuers and to the terms and provisions of the
Registration Rights Agreement (as defined). Old Notes may be tendered only in
denominations of $1,000 and integral multiples thereof. The Issuers have agreed
to pay all of the expenses incurred by them in connection with the Exchange
Offer. See "The Exchange Offer--Fees and Expenses."

This Prospectus, together with the Letter of Transmittal, is being sent to
all registered holders of Old Notes as of , 1997.

The Issuers will not receive any proceeds from this Exchange Offer. No
dealer-manager is being used in connection with this Exchange Offer. See "Use
of Proceeds" and "Plan of Distribution."
<PAGE>

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by Foamex and FCC with the Commission are
incorporated herein by reference:

1. The Issuers' Annual Reports on Form 10-K for the fiscal year ended
December 29, 1996, filed pursuant to Section 13(a) of the Securities Exchange
Act of 1934 (the "Exchange Act").

2. All other reports filed by Foamex pursuant to Section 13(a) or 15(d) of
the Exchange Act since December 29, 1996, consisting of the Issuers' Quarterly
Reports on Form 10-Q for the fiscal quarter ended March 30, 1997 and the
Issuers' Current Reports on Form 8-K dated May 28, 1997 and June 12, 1997,
respectively.

All documents filed by Foamex pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to
termination of this Exchange Offer shall be deemed to be incorporated by
reference into the Prospectus and to be a part hereof from the dates of filing
of such documents.

These documents are available upon request from Foamex, 1000 Columbia
Avenue, Linwood, Pennsylvania 19061 and its telephone number is (610) 859-3000.

AVAILABLE INFORMATION

The Issuers and the Subsidiary Guarantors have filed with the Commission a
Registration Statement on Form S-4 (the "Registration Statement," which term
shall include all amendments, exhibits, annexes and schedules thereto) pursuant
to the Securities Act, and the rules and regulations promulgated thereunder,
covering the New Notes being offered hereby. This Prospectus does not contain
all the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to in the Registration Statement
are not necessarily complete. With respect to each such contract, agreement or
other document filed as an exhibit to the Registration Statement, reference is
made to the exhibit for a more complete description of the matter involved, and
each such statement shall be deemed qualified in its entirety by such
reference.

Foamex and FCC are subject to the informational reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports and other information with the Commission.
Reports, proxy statements and other information concerning the Issuers can be
inspected without charge at the Public Reference Room maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington D.C. 20549. In
addition, upon request, such reports, proxy statements and other information
will be made available for inspection and copying at Seven World Trade Center,
13th Floor, New York, New York 10048. Copies of such material can be obtained
at prescribed rates upon request from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Such material may
also be accessed electronically at the Commission's site on the World Wide Web
located at http://www.sec.gov.

In the event that the Issuers cease to be subject to the informational
reporting requirements of the Exchange Act, the Issuers have agreed that,
whether or not they are required to do so by the rules and regulations of the
Commission, for so long as any of the Notes remain outstanding, they will
furnish to the holders of the Notes and file with the Commission (unless the
Commission will not accept such a filing) (i) all quarterly and annual
financial information that would be required to be contained in such a filing
with the Commission on Forms 10-Q and 10-K as if the Issuers were required to
file such forms, including a "Management's Discussion and Analysis of Results
of Operations and Financial Condition" and, with respect to the annual
information only, a report thereon by the Issuers' independent accountants and
(ii) all reports that would be required to be filed with the Commission on Form
8-K as if the Issuers were required to file such reports. In addition, for so
long as any of the Notes remain outstanding, the Issuers have agreed to make
available to any beneficial owner of the Old Notes in connection with any sale
thereof, the information required by Rule 144A(d)(4) under the Securities Act.

i
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial data,
including the notes thereto, appearing elsewhere in this Prospectus. Unless the
context requires otherwise, the term "Foamex" refers to Foamex L.P. and its
subsidiaries. Foamex L.P. is an indirect-majority owned subsidiary of Foamex
International Inc. ("Foamex International").

Overview

Foamex is the largest manufacturer and marketer of flexible polyurethane
and advanced polymer foam products in North America. Foamex's products are
utilized primarily in four end-markets: (i) carpet cushion and other carpet
products, (ii) cushioning foams for furniture, bedding and packaging, (iii)
automotive applications, including trim and accessories and (iv) specialty and
technical foams. Foamex is the largest North American producer of foams used
for carpet cushion, automotive applications and specialty and technical
products and is a leading North American producer of cushioning foams. As a
result of the 1995 Operational Reorganization discussed below, Foamex has
refocused on its flexible polyurethane and advanced polymer foam business and
believes it is now well positioned to pursue its growth strategy of developing
new products, improving profitability and expanding internationally.

Foamex distributes carpet cushion to major floor covering retailers such
as Sears, New York Carpet World and Carpetland USA. Foamex supplies cushioning
foams to major bedding and furniture manufacturers such as Sealy, Simmons and
Ethan Allen. Foamex's packaging foams are supplied to distributors and
manufacturers of computers and other electronic devices, including Seagate
Technology and CompUSA. Foamex distributes its automotive foam products to
original equipment manufacturers ("OEMs"), including Ford, General Motors and
Chrysler, and major tier one suppliers such as Lear Corporation, Johnson
Controls and Delphi Automotive Systems. Foamex's specialty and technical foams
consist of reticulated foams and other customized polyester and polyether foams
used for filtration, reservoiring and consumer products which are utilized
worldwide in a wide variety of applications by companies such as
Hewlett-Packard and Briggs & Stratton.

Foamex and its predecessors have been developing, manufacturing and
marketing polyurethane foam for more than 40 years. For the 52 weeks ended
March 30, 1997, Foamex had net sales of $936.3 million, EBDAIT (as defined) of
$121.8 million and income from continuing operations of $58.7 million. During
such period, the percentage of net sales generated by cushioning foams; carpet
cushion and other carpet products; automotive foams; and specialty and
technical foams was approximately 36%, 32%, 25% and 7%, respectively.

Competitive Strengths

Foamex believes that it possesses a number of competitive strengths that
have allowed it to become the largest manufacturer and marketer of flexible
polyurethane and advanced polymer foam products in North America, including:

Emphasis on New Product Development. Foamex believes it has one of the
leading research and development capabilities in the industry and, as a result,
has been awarded more than 100 foam-related patents worldwide. These
capabilities provide Foamex with a stream of new products, new applications for
existing products, and new processes for foam manufacturing. An example of
these capabilities is variable pressure foaming (VPF[TM]), an innovative
manufacturing process currently used in North America only by Foamex, which has
been used to create new products such as Reflex[TM] and Nexol[TM]. Reflex[TM]
is designed to replace fiberfill in certain cushioning products, and Nexol[TM]
is designed to replace rigid styrene foam in packaging. Foamex has also
recently introduced Plushlife[TM] for the carpet cushion market and
Powerthane[TM] for automotive applications. Another technology developed by
Foamex is Surface Modification Technology (SMT[TM]), which allows for high
volume precision contouring of foam surfaces, thereby improving Foamex's
existing products and creating new products such as sculpted bed mattresses.

1
<PAGE>

Foamex to deliver products cost effectively on a just-in-time basis. As a
result of these relationships, Foamex is able to work with customers during the
design phase for new products and new applications, thereby favorably
positioning Foamex to be the principal supplier for these products.

High Quality Products. Foamex is a pioneer in manufacturing and
distributing high quality flexible polyurethane and advanced polymer foam
products to satisfy the specific needs of customers. During 1996, Foamex
completed QS-9000 and ISO-9001 certification for its eight domestic facilities
that supply the automotive industry and is pursuing the appropriate
certifications for the remainder of its manufacturing facilities. Foamex was
one of the first flexible polyurethane foam manufacturers to be QS-9000
certified, demonstrating its commitment to producing the highest quality
products and meeting the needs of its customers.

Low Cost Manufacturing Position. Foamex strives to maintain
state-of-the-art manufacturing facilities which utilize recent manufacturing
improvements such as the proprietary VPF[TM] and patented SMT[TM] technologies,
as well as the latest carbon dioxide converting process. These technologies are
designed to, among other things, maximize the conversion efficiency of raw
materials into finished goods and to minimize labor costs. Furthermore, Foamex
has implemented a company-wide Continuous Improvement Process program designed
to continually increase productivity, reduce costs and improve product quality.
In addition, as the largest manufacturer of flexible polyurethane and advanced
polymer foam products in North America, management believes that Foamex is able
to realize economies of scale in its raw materials procurement, which represent
approximately 74% of Foamex's manufacturing costs, and recover costs from the
use of substantially all of its internally generated trim scrap, which is the
principal raw material in the production of bonded carpet cushion.

Growth Strategy

Foamex's strategy focuses on (i) developing new proprietary foam products,
(ii) introducing new uses for advanced foam products, (iii) expanding in
international markets and (iv) reducing costs through continued emphasis on
manufacturing improvements.

New Proprietary Foam Products. Foamex plans to continue to utilize its
industry-leading research and development capabilities to develop new products.
In recent years, Foamex has developed new proprietary technologies, such as
VPF[TM] and SMT[TM], which have been used to create higher margin, value-added
products designed to replace existing flexible polyurethane foam products.
SMT[TM] has allowed Foamex to develop sculpted mattress toppers, mattress pads
and bed pillows which are replacing traditional polyurethane foam products due
to their superior comfort, quality and value. In certain cases, such as
Plushlife[TM], a proprietary carpet cushion designed to replace traditional
bonded and prime carpet cushion, Foamex brands these products to create product
recognition and to generate higher margins.

New Uses for Foam. Foamex is actively developing new applications for its
advanced foam products to replace other materials. In the automotive industry,
the number of foam applications has increased from 8 per vehicle in 1984 to 20
per vehicle in 1997. For example, Foamex has introduced products such as foam
headliners which are replacing fiberglass headliners (the rigid material
between the fabric and the metal roof of a car). Reflex[TM] foams, which
include cushion wraps and cushion cores and are created using VPF[TM], are
advanced polymer cushioning products designed to improve comfort, quality and
durability in upholstered furniture and to replace standard fiberfill.
Nexol[TM] foams, also created using VPF[TM], expand Foamex's ability to meet
the special packaging requirements of sensitive and fragile products such as
electronic components, and replace standard rigid styrene foam. Foamex's
fastest growing business, specialty and technical foams, focuses on developing
customized foam applications for high-growth product markets such as inkjet
printer cartridges, nickel-metal hydride batteries and oxygenators for
cardio-pulmonary surgery.

International Expansion. Foamex has positioned itself to take advantage of
global opportunities. In Mexico, Foamex has built a new state-of-the-art
manufacturing facility, which is expected to meet increasing demand and allow
Foamex to increase market penetration. In Asia, which management believes
offers attractive growth opportunities, Foamex is actively exploring strategic
options to enter the foam market. Additionally, Foamex has created an alliance
with Recticel s.a. ("Recticel"), Europe's largest flexible polyurethane foam
manufacturer, which will allow Foamex to better meet the increasing global
needs of its automotive customers.

2
<PAGE>

Additional Operating Cost Savings. Foamex is continuing to build on the
1995 Operational Reorganization which was designed to reduce operating costs
and improve productivity. Foamex has identified additional operating cost
savings in 1997 that are expected to result from (i) improved productivity,
through-put and material yields in the manufacturing process, (ii) the full
year benefit of facilities closed during 1996, (iii) the planned closure of two
additional facilities during 1997 and (iv) the expansion of the Continuous
Improvement Process.

1995 Operational Reorganization

In November 1995, Foamex's parent, Foamex International, announced a plan
(the "1995 Operational Reorganization") to focus on its core flexible
polyurethane and advanced polymer foam business, enhance shareholder value and
maximize future profitability through a series of operational improvements,
asset sales and the reduction of long-term debt. In connection with the 1995
Operational Reorganization, Foamex International sold JPS Automotive L.P. ("JPS
Automotive," a sister subsidiary of Foamex), a manufacturer of automotive
fabric and carpet, and Foamex sold Perfect Fit Industries, Inc. ("Perfect
Fit"), a manufacturer of fabric-based home comfort products. Foamex is
continuing to explore the sale of non-core assets. Total debt net of cash and
restricted cash for Foamex International was reduced from approximately $726.2
million on December 31, 1995 to approximately $458.4 million on March 30, 1997
primarily as a result of these divestitures.

As part of the 1995 Operational Reorganization, Foamex implemented a plan
to improve its profitability through (i) the realignment of management to
correspond with product groups, (ii) the consolidation of foam production,
fabrication or branch locations resulting in the elimination of 12 facilities,
a reduction of approximately 300 employees representing approximately 7% of the
work force, and an improved utilization of its remaining production capacity,
(iii) the implementation of additional procedures to reduce manufacturing
costs, including process redesign to eliminate non-value added operations, (iv)
the reduction of selling, general and administrative expenses through cost
containment and (v) the reduction of inventory levels through improved
forecasting and the elimination of inventories associated with closed
facilities. As an example of the improved utilization of the remaining
facilities, Foamex increased the average output per pouring plant by 19% from
1995 to 1996, and by approximately 8% for the first quarter of 1997 as compared
to the first quarter of 1996.

The Refinancing Plan

The Initial Offering was part of a refinancing (the "Refinancing Plan") of
Foamex International's outstanding indebtedness that was designed to reduce
Foamex International's interest expense and increase its operating and
financial flexibility. After giving effect to the Refinancing Plan, Foamex
International's pro forma interest expense for the 52 weeks ended March 30,
1997 would have decreased $5.3 million and, after the retirement of long-term
debt with the net proceeds of the divestitures in 1996, Foamex International's
pro forma interest expense for the same period would have decreased an
additional $1.3 million. In addition, the Refinancing Plan eliminated the
$116.7 million principal amount of Senior Secured Discount Debentures due 2004
of Foamex-JPS Automotive L.P. ("FJPS") and Foamex-JPS Capital Corporation (the
"FJPS Discount Debentures") thereby eliminating approximately $1.8 million of
additional interest expense that would have been incurred by Foamex
International over the next 12 months as compared to the previous 12 months.

As part of the Refinancing Plan, Foamex used the net proceeds of the
Initial Offering, borrowings of $347.0 million drawn under a $480.0 million
credit facility (the "New Credit Facility") and cash on hand as of June 12, 1997
(i) to fund the cash tender offer and consent solicitation (the "Tender Offer")
pursuant to which Foamex purchased (a) $99.8 million of the $104.3 million
outstanding principal amount of the Issuers' 9 1/2% Senior Secured Notes due
2000 (the "Senior Secured Notes"), (b) $130.1 million of the $135.9 million
outstanding principal amount of the Issuers' 11 1/4% Senior Notes due 2002 (the
"Senior Notes"), (c) $105.5 million of the $125.8 million outstanding principal
amount of the Issuers' 11 7/8% Senior Subordinated Debentures due 2004 (the
"Senior Subordinated Debentures"), (d) substantially all of the $7.0 million
outstanding principal amount of the Issuers' 11 7/8% Senior Subordinated
Debentures purchased in the Tender Offer, Series B due 2004 (the "Series B
Debentures") and (e) all FJPS Discount Debentures (together with the Senior
Secured Notes, the Senior Notes, the Senior Subordinated Debentures and the
Series B Debentures purchased in the Tender Offer, the "Retired Notes"); (ii) to
repay borrowings under its existing credit facility (the "Existing Credit
Facility"); (iii) to pay fees and expenses; and (iv) for other general corporate
purposes. See "Description of Certain Debt Instruments--New Credit Facility."

----------

3
<PAGE>

The principal executive offices of Foamex are located at 1000 Columbia
Avenue, Linwood, Pennsylvania 19061 and its telephone number is (610) 859-3000.

The Exchange Offer

<TABLE>
<S> <C>
The Exchange Offer ...... The Issuers are offering to exchange (the "Exchange
Offer") up to $150,000,000 aggregate principal amount
of 9 7/8% Senior Subordinated Notes due 2007 (the
"New Notes") for up to $150,000,000 aggregate
principal amount of their outstanding 9 7/8% Senior
Subordinated Notes due 2007 (the "Old Notes") in
reliance upon an exemption from registration under the
Securities Act. Upon consummation of the Exchange
Offer, the terms of the New Notes will be substantially
identical in all respects (including principal amount,
interest rate, maturity and ranking) to the terms of the
Old Notes for which they may be exchanged pursuant
to the Exchange Offer, except that (i) the New Notes
will be freely transferable by holders thereof except as
provided herein (see "The Exchange Offer--Terms of
the Exchange" and "--Terms and Conditions of the
Letter of Transmittal") and (ii) the New Notes will be
issued without any covenant regarding registration
under the Securities Act.

New Notes issued pursuant to the Exchange Offer in
exchange for the Old Notes may be offered for resale,
resold and otherwise transferred by holders thereof
(other than any holder which is (i) an "affiliate" of the
Issuers within the meaning of Rule 405 under the
Securities Act, (ii) a broker-dealer who acquired Old
Notes directly from the Issuers or (iii) broker-dealers
who acquired Old Notes as a result of market making
or other trading activities) without compliance with the
registration and prospectus delivery provisions of the
Securities Act provided that such New Notes are
acquired in the ordinary course of such holders'
business and such holders are not engaged in, and do
not intend to engage in, and have no arrangement or
understanding with any person to participate in, a
distribution of such New Notes.

Minimum Condition ...... The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Old Notes
being tendered for exchange.

Expiration Date ......... The Exchange Offer will expire at 5:00 p.m., New York
City time, on , 1997, unless extended (the
"Expiration Date").

Exchange Date ............ The date of acceptance for exchange for the Old Notes
will be the first business day following the Expiration
Date.

4
<PAGE>

Conditions to the Exchange Offer ......... The obligation of the Issuers to consummate the
Exchange Offer is subject to certain conditions. See
"The Exchange Offer--Conditions." The Issuers
reserve the right to terminate or amend the Exchange
Offer at any time prior to the Expiration Date upon the
occurrence of any such condition.

Withdrawal Rights ........................ Tenders may be withdrawn at any time prior to the
Expiration Date. Any Old Notes not accepted for any
reason will be returned without expense to the
tendering holders thereof as promptly as practicable
after the expiration or termination of the Exchange
Offer.

Procedures for Tendering Old Notes ...... See "The Exchange Offer--Procedures for
Tendering."

Federal Income Tax Consequences ......... The exchange of Old Notes for New Notes by Holders
will not be a taxable exchange for federal income tax
purposes, and Holders should not recognize any
taxable gain or loss or any interest income as a result
of such exchange.

Effect on Holders of Old Notes ......... As a result of the making of this Exchange Offer, and
upon acceptance for exchange of all validly tendered
Old Notes pursuant to the terms of this Exchange Offer,
the Issuers will have fulfilled a covenant contained in
the Registration Rights Agreement (the "Registration
Rights Agreement") dated as of June 12, 1997 by and
among the Issuers, General Felt Industries, Inc.
("General Felt"), Foamex Fibers, Inc. ("Foamex
Fibers") and the Initial Purchasers, and, accordingly,
the holders of the Old Notes will have no further
registration or other rights under the Registration
Rights Agreement, except under certain limited
circumstances. Holders of the Old Notes who do not
tender their Old Notes in the Exchange Offer will
continue to hold such Old Notes and will be entitled to
all the rights and limitations applicable thereto under
the Indenture dated as of June 12, 1997, among the
Issuers, General Felt, Foamex Fibers and The Bank of
New York, as trustee (the "Trustee"), relating to the Old
Notes and the New Notes (the "Indenture"). All
untendered, and tendered but unaccepted, Old Notes
will continue to be subject to the restrictions on transfer
provided for in the Old Notes and the Indenture. To the
extent that Old Notes are tendered and accepted in the
Exchange Offer, the trading market, if any, for the Old
Notes could be adversely affected. See "Risk Factors--
Consequences of Failure to Exchange."
</TABLE>

5
<PAGE>

The New Notes

<TABLE>
<S> <C>
Issuers ..................... Foamex L.P., a Delaware limited partnership and
Foamex Capital Corporation, a Delaware corporation.

Maturity Date ............... June 15, 2007.

Interest Payment Dates ...... The New Notes bear interest at the rate of 9 7/8% per
annum, payable semi-annually in cash on June 15 and
December 15 of each year, commencing December 15,
1997.

Ranking ..................... The New Notes are general unsecured obligations of
the Issuers, rank subordinate in right of payment to all
Senior Debt, rank pari passu in right of payment to
all Pari Passu Debt and rank senior in right of payment
to all existing and future subordinated indebtedness of
the Issuers. The Note Guarantees are general unsecured
obligations of the Subsidiary Guarantors, rank
subordinate in right of payment to all Senior Debt of
the Subsidiary Guarantors, rank pari passu in right of
payment to all Pari Passu Debt of the Subsidiary
Guarantors and rank senior in right of payment to all
existing and future subordinated indebtedness of the
Subsidiary Guarantors. As of March 30, 1997, on a
pro forma basis after giving effect to the Refinancing
Plan, the New Notes would have been subordinated to
approximately $371.1 million of Senior Debt and
pari passu with approximately $27.4 million of Pari
Passu Debt.

Optional Redemption ......... The New Notes are redeemable at the option of the
Issuers, in whole or in part, at any time on or after June
15, 2002 in cash at the redemption prices set forth
herein, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of redemption. In
addition, at any time prior to June 15, 2000, the Issuers
may on any one or more occasions redeem up to 35%
of the initially outstanding aggregate principal amount
of New Notes at a redemption price equal to 109.875%
of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any,
thereon to the redemption date, with the net proceeds
of one or more Public Equity Offerings; provided that,
in each case, at least 65% of the initially outstanding
aggregate principal amount of New Notes remains
outstanding immediately after the occurrence of any
such redemption. See "Description of Notes--
Optional Redemption."

6
<PAGE>

Change of Control ...... Upon the occurrence of a Change of Control, each
holder of New Notes will have the right to require the
Issuers to repurchase all or any part of such holder's
New Notes at an offer price in cash equal to 101% of
the aggregate principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages, if any,
thereon to the date of purchase. See "Description of
Notes--Repurchase at the Option of Holders--Change
of Control." See "Risk Factors--Limitations on
Ability to Make Change of Control Payment."

Note Guarantees ......... The New Notes are unconditionally guaranteed on a
senior subordinated basis by each of General Felt,
Foamex Fibers, and all those Restricted Subsidiaries
(as defined) of the Issuers required to execute a Note
Guarantee pursuant to the provisions of the Indenture
described under "Description of the Notes--
Additional Guarantees" and any other Subsidiary that
executes a Note Guarantee (together, the "Subsidiary
Guarantors").

Certain Covenants ...... The Indenture contains certain covenants that limit,
among other things, the ability of the Issuers to: (i) pay
dividends, redeem capital stock or make certain other
restricted payments or investments, (ii) incur
additional indebtedness or issue preferred equity
interests, (iii) merge, consolidate or sell all or
substantially all of its assets, (iv) create liens on assets
and (v) enter into certain transactions with affiliates or
related persons. See "Description of Notes--Certain
Covenants."
</TABLE>

For a discussion of certain factors that should be considered by
prospective participants in connection with the Exchange Offer and the Notes,
see "Risk Factors."

7
<PAGE>

SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The following table presents summary historical and pro forma consolidated
financial information of Foamex, for the fiscal years ended January 3, 1993,
January 2, 1994, January 1, 1995, December 31, 1995 and December 29, 1996,
which have been derived from the audited consolidated financial statements of
Foamex, and for the fiscal quarters ended March 31, 1996 and March 30, 1997,
which have been derived from the unaudited condensed consolidated financial
statements of Foamex. The pro forma consolidated financial information gives
effect to the Refinancing Plan as if it had occurred on January 1, 1996 for
statements of operations data purposes and March 30, 1997 for balance sheet
data purposes. The pro forma financial information does not purport to
represent what Foamex's results would have actually been if the Refinancing
Plan had occurred at the dates indicated, nor does such information purport to
project the results of Foamex for any future period. The summary financial
information should be read in conjunction with the consolidated and the
condensed consolidated financial statements and related notes thereto of Foamex
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
Fiscal Year (1)(2)
---------------------------------------------------------------------
1992 1993(3) 1994(4) 1995(5) 1996
(In thousands, except ratios)
<S> <C> <C> <C> <C> <C>
Statements of Operations Data:
Net sales ........................ $501,751 $684,310 $833,660 $862,834 $926,351
Gross profit ..................... 69,887 93,704 142,395 100,749 153,232
Selling, general and
administrative
expenses ........................ 29,931 48,403 57,059 63,466 56,778
Restructuring and other
charges (credits) ............... -- 7,400 -- 39,249 (6,415)
Operating income (loss) ......... 39,956 37,901 85,336 (1,966) 102,869
Income (loss) from
continuing operations ............ 22,011 (7,926) 38,011 (48,126) 53,661
Other Data:
EBDAIT(6) ........................ $ 58,200 $ 66,773 $107,444 $ 77,593 $117,586
Gross profit margin ............... 13.9% 13.7% 17.1% 11.7% 16.5%
EBDAIT margin ..................... 11.6 9.8 12.9 9.0 12.7
Capital expenditures ............ $ 15,243 $ 21,270 $ 21,201 $ 19,726 $ 23,509
Pro Forma Data:
Cash interest expense(7) ......... $ 46,013
Ratio of EBDAIT to cash
interest expense ............... 2.56x
Ratio of net debt to LTM
EBDAIT(8) ........................
Balance Sheet Data (at period end):
Cash and cash
equivalents(9) ..................
Total assets .....................
Long-term debt(10) ...............

<CAPTION>
First Quarter (2)
-----------------------------
1996 1997
<S> <C> <C>
Statements of Operations Data:
Net sales ........................ $219,131 $229,120
Gross profit ..................... 36,031 42,797
Selling, general and
administrative
expenses ........................ 13,601 15,685
Restructuring and other
charges (credits) ............... -- --
Operating income (loss) ......... 22,430 27,112
Income (loss) from
continuing operations ............ 11,198 16,216
Other Data:
EBDAIT(6) ........................ $ 27,953 $ 32,167
Gross profit margin ............... 16.4% 18.7%
EBDAIT margin ..................... 12.8 14.0
Capital expenditures ............ $ 3,256 $ 7,405
Pro Forma Data:
Cash interest expense(7) ......... $ 11,426
Ratio of EBDAIT to cash
interest expense ............... 2.82x
Ratio of net debt to LTM
EBDAIT(8) ........................ 4.33x

<CAPTION>
As of March 30, 1997
--------------------
Actual Pro Forma
<S> <C> <C>
Balance Sheet Data (at period end):
Cash and cash
equivalents(9) .................. $ 32,657 $ 19,783
Total assets ..................... 610,127 594,942
Long-term debt(10) ............... 389,162 534,959
</TABLE>

(footnotes on following page)

8
<PAGE>

Notes to Summary Historical and Pro Forma Consolidated Financial Information

(1) Foamex has a 52-53 week fiscal year ending on the Sunday closest to the end
of the calendar year. Each fiscal year presented was 52 weeks with the
exception of 1992, which was 53 weeks.

(2) Fiscal years 1993 through 1995 and the first quarter of 1996 have been
restated for discontinued operations resulting from the sale of Perfect
Fit. In addition, fiscal years 1994 and 1995 and the first quarter of 1996
have been restated to reflect the contribution of Foamex Latin America,
Inc. and its subsidiaries ("Foamex Mexico") to Foamex from Foamex
International because the contribution was accounted for in a manner
similar to a pooling of interests because the entities were under common
control.

(3) Includes the results of operations of General Felt and Great Western Foam
Products Corporation and certain related entities and assets (collectively
"Great Western") from their respective dates of acquisition of March 23,
1993 and May 1, 1993, and thus may not be comparable to other periods.
Great Western was subsequently merged into Foamex.

(4) Includes the operations of Foamex Mexico from its date of acquisition of
March 31, 1994, and thus may not be comparable to other periods. See Note 2
above.

(5) Includes results of operations of Foamex Fibers from its date of
acquisition of April 13, 1995, and thus may not be comparable to other
periods.

(6) EBDAIT consists of earnings before depreciation, amortization, interest,
income taxes and other non-cash or non-recurring items. EBDAIT is not
intended to represent cash flow from operations as defined by generally
accepted accounting principles ("GAAP") and should not be considered as an
alternative to net income as an indicator of operating performance or to
cash flows as a measure of liquidity. In fiscal years 1992, 1993, 1995 and
1996, there were additional non-cash or non-recurring items of
approximately $3.3 million, $7.4 million, $56.7 million and $(6.4) million,
respectively.

(7) Includes interest on the Notes and the application of the net proceeds
thereof.

(8) Ratio of net debt to LTM EBDAIT is calculated by subtracting cash and cash
equivalents from total debt and dividing the result by EBDAIT for the prior
12 months.

(9) Pro forma cash and cash equivalents includes a reduction of $11.4 million
for an April 1997 cash interest payment, which was funded by operations, on
the Retired Notes and borrowings under the Existing Credit Agreement.

(10) The increase in long-term debt is associated with (i) the net proceeds from
the sale of the Old Notes and initial borrowings under the New Credit
Facility offset by (ii)(a) the net book value of the Retired Notes,
excluding the FJPS Discount Debentures which were not obligations of
Foamex, purchased in the Tender Offer and (b) the outstanding borrowings
under the Existing Credit Facility ($5.2 million) which were repaid upon
consummation of the Refinancing Plan.

9
<PAGE>

RISK FACTORS

In addition to the other information contained in this Prospectus, before
tendering their Old Notes for the New Notes offered hereby, holders of Old
Notes should consider carefully the following factors, which may be generally
applicable to the Old Notes as well as the New Notes.

Consequences of Failure to Exchange

Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act and applicable
state securities laws, or pursuant to an exemption therefrom. Except under
certain limited circumstances, the Issuers do not intend to register the Old
Notes under the Securities Act. In addition, any holder of Old Notes who
tenders in the Exchange Offer for the purpose of participating in a
distribution of the New Notes may be deemed to have received restricted
securities and, if so, will be required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. To the extent Old Notes are tendered and accepted in the
Exchange Offer, the trading market, if any, for the Old Notes not tendered
could be adversely affected. See "The Exchange Offer."

Substantial Leverage

As a result of the Refinancing Plan, Foamex's long-term debt, on a pro
forma basis, as of March 30, 1997 increased by $145.8 million, and Foamex's pro
forma interest expense for the 52 weeks ended March 30, 1997 would have
increased by $5.5 million. At March 30, 1997, Foamex had long-term debt of
$389.2 million, and partners' equity of $28.2 million. After giving effect to
the Refinancing Plan, Foamex would have had, on a pro forma basis at March 30,
1997, long-term debt of $535.0 million and partners' deficit of $123.3 million.
For 1996, Foamex's ratio of earnings to fixed charges was 2.31 to 1 and, on a
pro forma basis after giving effect to the Refinancing Plan, Foamex's ratio of
earnings to fixed charges would have been 2.07 to 1. For the 13-week period
ended March 30, 1997, Foamex's ratio of earnings to fixed charges was 2.47 to 1
and, on a pro forma basis after giving effect to the Refinancing Plan, Foamex's
ratio of earnings to fixed charges would have been 2.08 to 1. Foamex will
require substantial amounts of cash to fund scheduled payments of principal and
interest on its outstanding indebtedness as well as future capital expenditures
and any increased working capital requirements. Foamex's ability to generate
such cash flow in the future will depend on its financial and operating
performance, which, in turn, is subject to prevailing economic conditions and
to financial, business and other factors beyond its control. Also, the
Indenture and the New Credit Facility restrict, among other things, Foamex's
ability to incur additional indebtedness and grant liens on its properties. The
restrictions imposed by the Indenture and the New Credit Facility, together
with Foamex's leverage, could limit Foamex's ability to respond to changing
market and economic conditions, provide for capital expenditures and take
advantage of business opportunities. Foamex believes that it will have
sufficient cash flow from operations and available borrowings to meet its debt
service requirements. However, if Foamex's cash flow and capital resources are
insufficient to fund its debt service obligations, Foamex may be forced to
refinance all or a portion of its indebtedness or sell assets. There can be no
assurance that Foamex would be able to refinance its existing indebtedness or
sell assets on terms that are commercially reasonable or at all.

Partners' Deficit and Charge to Earnings

As of March 30, 1997, after giving effect to the Refinancing Plan, Foamex
would have a partners' deficit of approximately $123.3 million on a pro forma
basis primarily as a result of the purchase and distribution of the FJPS
Discount Debentures to FJPS and the estimated extraordinary loss of $44.4
million in connection with the Refinancing Plan. There can be no assurance as
to when or if such deficit will be eliminated. Foamex believes that neither
such deficit nor such loss will have a material adverse effect on its liquidity
and financial condition. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."

10
<PAGE>

Price and Availability of Raw Materials

In 1996, raw materials accounted for approximately 74% of the
manufacturing costs of Foamex. The two principal chemicals used in the
manufacture of flexible polyurethane foam, toulene diisocyanate ("TDI") and
polyol, accounted for approximately 50% of raw material costs. ARCO Chemical
Company, BASF Corporation and The Dow Chemical Company are among Foamex's
largest suppliers of raw materials. Foamex believes that it could find
alternative sources of supply should it cease doing business with any of its
major suppliers. The price of TDI and polyol is influenced by demand,
manufacturing capacity and oil and natural gas prices.

Historically, the price of raw materials has been cyclical and volatile,
and Foamex's principal suppliers of raw materials used in the manufacture of
flexible polyurethane foam have increased the price of raw materials several
times since September 1994. Significant increases in raw material prices could
have a material adverse effect on the financial condition or results of
operations of Foamex. Foamex attempts to offset raw material cost increases
through selling price increases; however, there can be no assurance that Foamex
will be successful in implementing selling price increases or that competitive
pricing pressure will not require Foamex to adjust selling prices. For example,
Foamex estimates that in 1995 the amount of net unrecovered raw material cost
increases was approximately $25 million. In addition, results of operations
have been and could be adversely affected by delays in implementing, or the
inability of Foamex to implement, selling price increases to offset raw
material cost increases. The principal suppliers to the foam industry announced
raw material price increases effective April 1997. Foamex is unable to predict
whether, or to what extent, the April 1997 increases or any future increases
will be sustained. Foamex believes that if any price increases are sustained in
the industry, Foamex will also be impacted by such increases to the extent any
such price increases are not offset through a selling price increase. There can
be no assurance that chemical suppliers will not increase raw material costs in
the future or that Foamex will be able to implement selling price increases to
offset any such raw material cost increases.

Subordination; Rights of Senior Lenders

The Notes are subordinated to all Senior Debt including the indebtedness
under the New Credit Facility. The Notes will also be structurally subordinated
to creditors (including trade creditors) of Foamex's subsidiaries that are not
guarantors of the Notes, including Foamex Canada Inc. and its subsidiaries
("Foamex Canada"), Foamex Mexico and Foamex Asia, Inc. and its subsidiaries
("Foamex Asia"). The incurrence of additional indebtedness by Foamex's
Restricted Subsidiaries (as defined) is restricted by the Indenture. See
"Description of Notes--Certain Covenants--Incurrence of Indebtedness and
Issuance of Preferred Stock." By reason of the subordination of the Notes, in
the event of insolvency, bankruptcy, liquidation, reorganization, dissolution
or other winding-up of the Issuers or upon certain defaults with respect to
Senior Debt, creditors who are holders of Senior Debt must be paid in full
before the holders of the Notes may be paid. After giving effect to the
Refinancing Plan, Foamex would have had on a pro forma basis at March 30, 1997
approximately $371.1 million of Senior Debt.

The assets of the Issuers may be insufficient to pay the amount due on the
Notes in the event of any insolvency, bankruptcy, or similar event of default.

Interest Rate Fluctuations

Variable rate debt comprises a larger percentage of the Company's overall
indebtedness than prior to the consummation of the Refinancing Plan, and, as a
result, future fluctuation in interest rates will have a greater impact on the
Company's interest expense than in the past. In addition, as a result of an
interest rate swap, the business of Foamex will be significantly more sensitive
to prevailing interest rates than under the terms of its fixed rate
indebtedness. There can be no assurance that the variable interest payments by
Foamex will not increase significantly in the future. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

Control of Foamex by Trace Holdings

FMXI, Inc. ("FMXI"), the managing general partner of Foamex and a
wholly-owned subsidiary of Foamex International, controls the management and
operations of Foamex. Trace International Holdings, Inc. ("Trace Holdings"),
directly and indirectly through Trace Foam Company, Inc. ("Trace Foam"), a
wholly-owned subsidiary, owns in excess of 40% of the outstanding common stock
of Foamex International. In addition, Trace Foam owns a 1% non-managing general
partnership interest in Foamex. Andrea Farace, Chairman and Chief Executive
Officer of Foamex, Foamex International and FMXI is also President of Trace
Holdings. Marshall S. Cogan, Vice Chairman

11
<PAGE>

of the Board of Foamex, Foamex International, FMXI and Chairman of Foamex
International's Executive Committee, owns or has voting control over a majority
of the capital stock of Trace Holdings. Foamex and Trace Foam have entered into
a management services agreement pursuant to which Trace Foam provides Foamex
with certain administrative and advisory services. As a result, Trace Holdings
is expected to have the ability to direct the activities of Foamex. See
"Management," "Security Ownership of Certain Beneficial Owners," "Certain
Relationships and Related Transactions" and "Description of the Partnership
Agreement."

Reliance on Major Customers

Foamex's five largest customers together accounted for approximately 24.3%
of Foamex's net sales in fiscal year 1996. The loss, or a substantial decrease
in the amount, of purchases by any of Foamex's major customers could adversely
affect Foamex's financial position and results of operations. See
"Business--Customers."

Environmental Liabilities and Regulations

The past and present business operations of Foamex and the past and
present ownership and operation of real property by Foamex are subject to
extensive and changing federal, state, local and foreign environmental laws and
regulations, including those relating to the use, handling, storage, discharge
and disposal of hazardous substances and the remediation of environmental
contamination. As a result, Foamex is involved from time to time in
administrative and judicial proceedings and inquiries relating to environmental
matters. Foamex is currently remediating soil and groundwater contamination in
excess of state standards at several of its current and former facilities, and
is either removing or conducting permanent in place closure of its underground
storage tanks ("USTs") pursuant to federal law. Further, Foamex has been
designated a Potentially Responsible Party by the United States Environmental
Protection Agency with respect to 13 sites. Based on information available at
this time with respect to potential liability involving these facilities and
sites, and in view of indemnification by Trace Holdings and Recticel Foam
Corporation ("RFC") associated with the partnership formation of Foamex, Foamex
believes that any such liability would not have a material adverse effect on
its financial position or results of operations. If management's assessment of
Foamex's liability with respect to these facilities and sites is incorrect,
such liabilities could have a material adverse effect on Foamex.

Foamex cannot predict what environmental legislation or regulations will
be enacted in the future, how existing or future laws or regulations will be
administered or interpreted or what environmental conditions may be found to
exist on its properties. Compliance with more stringent laws or regulations, as
well as more vigorous enforcement policies of the regulatory agencies or
stricter interpretation of existing laws, and discovery of new conditions may
require additional expenditures by Foamex, some of which may be material. See
"Business--Environmental Matters" and "Business--Legal Proceedings."

Litigation

During 1995, Foamex and Trace Holdings were granted summary judgments and
dismissed as defendants from all cases in the federal courts of the United
States and the state courts of California. Appeals for these decisions were
withdrawn and the decisions are final. In addition, two of the cases filed on
behalf of the 903 foreign plaintiffs were dismissed on the grounds that the
cases could not be brought in the United States courts. This decision is
subject to appeal. Foamex believes that the number of suits and claimants may
increase.

Although breast implants do not contain foam, certain silicone gel
implants were produced using a polyurethane foam covering fabricated by
independent distributors or fabricators from bulk foam purchased from Foamex or
Trace Holdings. Neither Foamex nor Trace Holdings recommended, authorized, or
approved the use of its foam for these purposes. While it is not feasible to
predict or determine the outcome of these actions, based on management's
present assessment of the merits of pending claims, after consultation with the
general counsel

12
<PAGE>

of Trace Holdings, and without taking into account potential indemnity from the
manufacturers of polyurethane foam covered breast implants, management believes
that the disposition of matters that are pending or that may reasonably be
anticipated to be asserted should not have a material adverse effect on either
Foamex's or Trace Holdings' consolidated financial position or results of
operations. In addition, Foamex is also indemnified by Trace Holdings for any
such liabilities relating to foam manufactured prior to October 1990. Although
Trace Holdings has paid Foamex's litigation expenses to date pursuant to such
indemnification and management believes Trace Holdings likely will be in a
position to continue to pay such expenses, there can be no absolute assurance
that Trace Holdings will be able to provide such indemnification. Based on
information available at this time with respect to the potential liability, and
without taking into account the indemnification provided by Trace Holdings and
the coverage provided by Trace Holdings' and Foamex's liability insurance,
Foamex believes that the proceedings should not ultimately result in any
liability that would have a material adverse effect on the financial position
or results of operations of Foamex. If management's assessment of Foamex's
liability with respect to these actions is incorrect, such actions could have a
material adverse effect on Foamex.

Foamex and its subsidiaries are involved in a number of litigation matters
which have arisen in the ordinary course of business. Foamex believes that the
outcome of these legal proceedings will not have a material adverse effect on
Foamex's financial condition or results of operations. See "Business--Legal
Proceedings."

Limitations on Ability to Make Change of Control Payment

The Indenture requires the Issuers, in the event of a Change of Control,
to make an offer to repurchase the Notes at 101% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages, if any, to
the date of repurchase. Certain events involving a Change of Control may be an
event of default under the New Credit Facility or other indebtedness of the
Issuers that may be incurred in the future. Moreover, the exercise by the
holders of the Notes of their right to require the Issuers to repurchase the
Notes may cause a default under the New Credit Facility or such other
indebtedness even if the Change of Control does not constitute an event of
default. Additionally, there can be no assurance that the Issuers will have the
financial resources necessary to repurchase the Notes upon a Change of Control.
See "Description of Notes--Repurchase at the Option of Holders--Change of
Control."

Competition

The flexible polyurethane foam market in which Foamex operates is highly
competitive. Some of Foamex's competitors are larger than Foamex and may have
greater financial and other resources available to them and there can be no
assurance that Foamex can compete successfully with such other companies. See
"Business--Competition."

Absence of Public Market for the New Notes

There is no public market for the New Notes, and the New Notes will not be
listed on a securities exchange and they may trade at a discount from their
principal amount, depending upon a number of factors, including the market for
similar securities, prevailing interest rates and the financial condition of
the Issuers. Accordingly, no assurance can be given that a holder of New Notes
will be able to sell such New Notes in the future or that any such sale will be
at a price equal to or higher than the price paid for such New Notes in the
initial resales by the Initial Purchasers. The Issuers have been advised by
each of the Initial Purchasers that they currently intend to make a market in
the New Notes; however, the Initial Purchasers are not obligated to do so and
may discontinue doing so without notice at any time. Accordingly, no assurance
can be given that a liquid trading market for the New Notes will develop or be
sustained. See "Plan of Distribution."

13
<PAGE>

REFINANCING PLAN

The Initial Offering was part of the Refinancing Plan of Foamex
International's outstanding indebtedness that was designed to reduce Foamex
International's interest expense and increase its operating and financial
flexibility. Foamex International reduced total debt net of cash and restricted
cash from $726.2 million at December 31, 1995 to $542.3 million at March 30,
1997. Also, after giving effect to the Refinancing Plan, Foamex International's
pro forma interest expense for the 52 weeks ended March 30, 1997 would have
decreased $5.3 million and, after the retirement of long-term debt with the net
proceeds of the divestitures in 1996, Foamex International's pro forma interest
expense for the same period would have decreased an additional $1.3 million. In
addition, the Refinancing Plan eliminated the FJPS Discount Debentures thereby
eliminating approximately $1.8 million of additional Foamex International
interest expense over the next 12 months as compared to the previous 12 months.

As part of the Refinancing Plan, Foamex used the net proceeds of the
Initial Offering (after deducting discounts and commissions and estimated
expenses of the Initial Offering), borrowings of $347.0 million drawn under the
New Credit Facility and cash on hand (i) to fund the Tender Offer; (ii) to
repay borrowings under the Existing Credit Facility; (iii) to pay fees and
expenses; and (iv) for other general corporate purposes.

Upon the closing of the Refinancing Plan, the Tender Offer was
consummated, Foamex purchased all Retired Notes tendered in the Tender Offer,
and the indentures pursuant to which such notes were issued were amended to
remove substantially all of the restrictive covenants. Notes which were not
purchased in the Tender Offer remain outstanding.

In connection with the consummation of the Tender Offer, FJPS and its
general partner FJGP Inc. were merged into Foamex International. As a result,
the partners of Foamex are Foamex International, with a 98% limited partnership
interest, FMXI, a wholly-owned subsidiary of Foamex International, with a 1%
managing general partnership interest, and Trace Foam, with a 1% non-managing
general partnership interest. In addition, two intercompany promissory notes
(one of Foamex International and one of FJPS) payable to Foamex were distributed
to Foamex's partners, the tax sharing agreement, the tax distribution advance
agreement and the management services agreement were amended and Trace Holding's
promissory note payable to Foamex was amended. See "Certain Relationships and
Related Transactions."

USE OF PROCEEDS

Foamex will not receive any cash proceeds from the issuance of the New
Notes offered hereby. In consideration for issuing the New Notes as described
in this Prospectus, Foamex will receive in exchange Old Notes in like principal
amount, the terms of which are identical in all material respects to those of
the New Notes, except that the New Notes have been registered under the
Securities Act and are issued free of any covenant regarding transfer
restrictions. The Old Notes surrendered in exchange for the New Notes will be
retired and cancelled and cannot be reissued. Accordingly, the issuance of the
New Notes will not result in any change in the indebtedness of Foamex.

14
<PAGE>

CAPITALIZATION

The following table sets forth the cash and cash equivalents and the
capitalization of Foamex as of March 30, 1997, and as adjusted to give pro
forma effect to the Refinancing Plan. This table should be read in conjunction
with the consolidated and the condensed consolidated financial statements and
related notes thereto of Foamex included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
As of March 30, 1997
-----------------------------
Historical Pro Forma
(In thousands)
<S> <C> <C>
Cash and cash equivalents(1) ....................................... $ 32,657 $ 19,783
========= =========
Short-term borrowings and current portion of long-term debt(2) ...... $ 12,769 $ 12,326
--------- ---------
Long-term debt
9 1/2% Senior Secured Notes ...................................... 104,293 4,523
11 1/4% Senior Notes ............................................... 135,910 5,825
11 7/8% Senior Subordinated Debentures(3) .......................... 125,072 20,221
11 7/8% Series B Debentures ......................................... 7,000 45
Existing Credit Facility .......................................... 3,467 --
New Credit Facility ................................................ -- 340,925
9 7/8% Senior Subordinated Notes .................................... -- 150,000
Other(4) ............................................................ 13,420 13,420
--------- ---------
Total long-term debt ............................................. 389,162 534,959
Partners' equity (deficit)(5) ....................................... 28,186 (123,312)
--------- ---------
Total capitalization ............................................. $430,117 $ 423,973
========= =========
</TABLE>

- ----------
(1) Pro forma cash and cash equivalents includes a reduction of $11.4 million
the for an April 1997 cash interest payment, which was funded by operations,
on the Retired Notes and borrowings under the Existing Credit Facility.

(2) The current portion of long-term debt includes approximately $1.7 million
of term loan borrowings under the Existing Credit Facility that was repaid
in connection with the Refinancing Plan.

(3) Net of unamortized debt discount of approximately $0.8 million and $0.1
million, respectively.

(4) Net of unamortized debt discount of approximately $1.1 million.

(5) The decrease in partners' equity (deficit) is primarily associated with the
purchase and distribution to FJPS of the FJPS Discount Debentures purchased
in the Tender Offer and the estimated extraordinary loss on the early
extinguishment of debt associated with the Tender Offer and certain related
transactions. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Effects of the Refinancing Plan."

15
<PAGE>

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

The following table presents selected historical consolidated financial
information of Foamex, for the fiscal years ended January 3, 1993, January 2,
1994, January 1, 1995, December 31, 1995 and December 29, 1996, which have been
derived from the audited consolidated financial statements of Foamex, and for
the fiscal quarters ended March 31, 1996 and March 30, 1997, which have been
derived from the unaudited condensed consolidated financial statements of
Foamex. The selected historical consolidated financial information should be
read in conjunction with the consolidated and the condensed consolidated
financial statements and related notes thereto of Foamex included elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
Fiscal Year (1)(2)
--------------------------------------------------------
1992 1993(3) 1994(4) 1995(5) 1996
(In thousands, except ratios)
<S> <C> <C> <C> <C> <C>
Statements of Operations Data:
Net sales ........................ $501,751 $684,310 $833,660 $862,834 $926,351
Gross profit ..................... 69,887 93,704 142,395 100,749 153,232
Selling, general and
administrative
expenses ........................ 29,931 48,403 57,059 63,466 56,778
Restructuring and other
charges (credits) ............... -- 7,400 -- 39,249 (6,415)
--------- --------- --------- ---------- ---------
Operating income (loss) ......... 39,956 37,901 85,336 (1,966) 102,869
Interest and debt issuance
expense ........................ 18,178 47,375 41,532 44,550 43,211
Other income (expense),
net .............................. 397 1,809 732 (205) 1,705
--------- --------- --------- ---------- ---------
Income (loss) from
continuing operations
before provision for
income taxes ..................... 22,175 (7,665) 44,536 (46,721) 61,363
Provision for income
taxes(6) ........................ 164 261 6,525 1,405 7,702
--------- --------- --------- ---------- ---------
Income (loss) from
continuing operations ............ 22,011 (7,926) 38,011 (48,126) 53,661
Income (loss) from
discontinued operations,
net .............................. -- 194 1,230 (5,117) (42,050)
Extraordinary loss ............... -- (9,921) -- -- (1,912)
--------- --------- --------- ---------- ---------
Net income (loss) .................. $ 22,011 $(17,653) $ 39,241 $(53,243) $ 9,699
========= ========= ========= ========== =========
Other Data:
EBDAIT(7) ........................ $ 58,200 $ 66,773 $107,444 $ 77,593 $ 117,586
Gross profit margin ............... 13.9% 13.7% 17.1% 11.7% 16.5%
EBDAIT margin ..................... 11.6 9.8 12.9 9.0 12.7
Capital expenditures ............... $ 15,243 $ 21,270 $ 21,201 $ 19,726 $ 23,509
Ratio of earnings to fixed
charges(8) ..................... 2.12x --(9) 1.94x --(9) 2.31x
Balance Sheet Data (at period end):
Cash and cash
equivalents ..................... $ 21,483 $ 3,978 $ 20,019 $ 638 $ 20,968
Total assets ..................... 340,900 575,528 654,176 605,892 586,157
Long-term debt ..................... 285,762 414,445 441,757 433,956 392,617
Partners' equity (deficit) ...... (39,061) 49,386 52,548 (12,604) 12,832

<CAPTION>
First Quarter(2)
---------------------------
1996 1997
<S> <C> <C>
Statements of Operations Data:
Net sales ........................ $219,131 $229,120
Gross profit ..................... 36,031 42,797
Selling, general and
administrative
expenses ........................ 13,601 15,685
Restructuring and other
charges (credits) ............... -- --
-------- ---------
Operating income (loss) ......... 22,430 27,112
Interest and debt issuance
expense ........................ 10,413 10,704
Other income (expense),
net .............................. 200 650
-------- ---------
Income (loss) from
continuing operations
before provision for
income taxes ..................... 12,217 17,058
Provision for income
taxes(6) ........................ 1,019 842
-------- ---------
Income (loss) from
continuing operations ............ 11,198 16,216
Income (loss) from
discontinued operations,
net .............................. 637 --
Extraordinary loss ............... -- (679)
-------- ---------
Net income (loss) .................. $ 11,835 $ 15,537
======== =========
Other Data:
EBDAIT(7) ........................ $ 27,953 $ 32,167
Gross profit margin ............... 16.4% 18.7%
EBDAIT margin ..................... 12.8 14.0
Capital expenditures ............... $ 3,256 $ 7,405
Ratio of earnings to fixed
charges(8) ..................... 2.07x 2.47x
Balance Sheet Data (at period end):
Cash and cash
equivalents ..................... $ 6,160 $ 32,657
Total assets ..................... 620,908 610,127
Long-term debt ..................... 431,899 389,162
Partners' equity (deficit) ...... (4,737) 28,186
</TABLE>

(footnotes on following page)

16
<PAGE>

Notes to Selected Historical Consolidated Financial Information

(1) Foamex has a 52-53 week fiscal year ending on the Sunday closest to the end
of the calendar year. Each fiscal year presented was 52 weeks with the
exception of 1992, which was 53 weeks.

(2) Fiscal years 1993 through 1995 and the first quarter of 1996 have been
restated for discontinued operations resulting from the sale of Perfect
Fit. In addition, fiscal years 1994 and 1995 and the first quarter of 1996
have been restated to reflect the contribution of Foamex Mexico to Foamex
from Foamex International because the contribution was accounted for in a
manner similar to a pooling of interests because the entities were under
common control.

(3) Includes the results of operations of General Felt and Great Western from
their respective dates of acquisition March 23, 1993 and May 1, 1993, and
thus may not be comparable to other periods. Great Western was
subsequently merged into Foamex.

(4) Includes the operations of Foamex Mexico from its date of acquisition of
March 31, 1994, and thus may not be comparable to other periods. See Note
2 above.

(5) Includes results of operations of Foamex Fibers from its date of
acquisition of April 13, 1995, and thus may not be comparable to other
periods.

(6) Foamex, as a partnership, is not subject to federal and certain state
income taxes. Provision for income taxes for all periods presented relates
to Canadian income tax and certain state income taxes of Foamex and
additionally subsequent to (i) 1992, the federal and state income taxes of
General Felt, (ii) 1993, Mexican income taxes and (iii) 1994, the state
income taxes of Foamex Fibers which files a consolidated federal tax
return with General Felt.

(7) EBDAIT consists of earnings before depreciation, amortization, interest,
income taxes and other non-cash or non-recurring items. EBDAIT is not
intended to represent cash flow from operations as defined by GAAP and
should not be considered as an alternative to net income as an indicator
of operating performance or to cash flows as a measure of liquidity. In
fiscal years 1992, 1993, 1995 and 1996, there were additional non-cash or
non-recurring items of approximately $3.3 million, $7.4 million, $56.7
million and $(6.4) million, respectively.

(8) For purposes of computing this ratio, earnings consist of income (loss)
before income taxes and extraordinary items and fixed charges, adjusted to
exclude capitalized interest. Fixed charges consist of interest expense,
including amounts capitalized, and the portion of operating lease rental
expense that is representative of the interest factor (deemed to be
one-third of operating lease rental expense).

(9) Earnings were insufficient to cover fixed charges by approximately $8.0
million in 1993 and approximately $47.0 million in 1995. Earnings before
fixed charges for the 1993 and 1995 fiscal years were reduced by non-cash
expenses consisting principally of depreciation and amortization of
approximately $21.7 million and $22.9 million, respectively.

17
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

Foamex is the largest manufacturer and marketer of flexible polyurethane
and advanced polymer foam products in North America. Foamex's products are
utilized primarily in four end-markets: (i) carpet cushion and other carpet
products, (ii) cushioning foams for furniture, bedding and packaging, (iii)
automotive applications, including trim and accessories and (iv) specialty and
technical foams. Foamex is the largest North American producer of foams used
for carpet cushion, automotive applications and specialty and technical
products and is a leading North American producer of cushioning foams. As a
result of the 1995 Operational Reorganization, Foamex has refocused on its
flexible polyurethane and advanced polymer foam business and believes it is now
well positioned to pursue its growth strategy of developing new products,
improving profitability and expanding internationally.

1995 Operational Reorganization

In November 1995, Foamex's parent, Foamex International, announced the
1995 Operational Reorganization to focus on its core flexible polyurethane and
advanced polymer foam business, enhance shareholder value and maximize future
profitability through a series of operational improvements, asset sales and the
reduction of long-term debt. In connection with the 1995 Operational
Reorganization, Foamex International sold JPS Automotive, a manufacturer of
automotive fabric and carpet, and Foamex sold Perfect Fit, a manufacturer of
fabric-based home comfort products. Foamex is continuing to explore the sale of
non-core assets. Total debt net of cash and restricted cash for Foamex
International was reduced from approximately $726.2 million on December 31,
1995 to approximately $458.4 million on March 30, 1997 primarily as a result of
these divestitures.

Price and Availability of Raw Materials

The principal suppliers to the foam industry announced raw material price
increases effective April 1997. Foamex is unable to predict whether, or to what
extent, the April 1997 increases or any future increases will be sustained.
Foamex believes that if any price increases are sustained in the industry,
Foamex will also be impacted by such increases to the extent any such price
increases are not offset through a selling price increase. Additionally, Foamex
believes that due to expected increases in capacity during the next two years
for TDI and polyol, it will be more difficult for Foamex's suppliers to raise
raw material prices in the future. There can be no assurance that chemical
suppliers will not increase raw material costs in the future or that Foamex
will be able to implement selling price increases to offset any such raw
material cost increases.

18
<PAGE>

Results of Operations

13 Week Period Ended March 30, 1997 Compared to 13 Week Period Ended March 31,
1996

Foamex's net sales for the first quarter of 1997 were $229.1 million as
compared to $219.1 million in the first quarter of 1996, an increase of $10.0
million, or 4.6%. Carpet cushion net sales for the first quarter of 1997
increased 6.9% to $67.9 million from $63.5 million in the first quarter of 1996
primarily due to the effect of increased selling prices that were initiated
late in the second quarter of 1996, as well as increased shipments of certain
carpet cushion products. Cushioning foam net sales for the first quarter of
1997 increased 1.8% to $84.0 million from $82.5 million in the first quarter of
1996 primarily due to an increase in net sales from both new and existing
customers of bedding related products. Automotive foam net sales for the first
quarter of 1997 increased 6.6% to $59.7 million from $56.0 million in the first
quarter of 1996 primarily due to a continued increase in net sales of
tri-laminates and composite headliners and increased selling prices initiated
during the first quarter of 1996. Specialty and technical foam net sales for
the first quarter of 1997 increased 2.3% to $17.5 million from $17.1 million in
the first quarter of 1996 primarily due to increased volume.

Gross profit as a percentage of net sales increased to 18.7% for the first
quarter of 1997 from 16.4% in the first quarter of 1996 primarily due to
selling price increases and improved material and production efficiencies,
which include (i) an increased favorable impact during the first quarter of
1997 as compared to the first quarter of 1996 for the selling prices initiated
in 1996 to offset previous raw material cost increases, (ii) favorable material
efficiencies and (iii) an increased favorable impact of the 1995 Operational
Reorganization in the first quarter of 1997 as compared to the first quarter of
1996.

Operating income increased to $27.1 million for the first quarter of 1997
from $22.4 million in the first quarter of 1996 primarily due to improved gross
profit margins as discussed above, offset by an increase of $2.1 million in
selling, general and administrative expenses for the first quarter of 1997. The
increase in selling, general and administrative expenses is primarily due to
increases in employee compensation and incentives and costs associated with the
launching of new products and international expansion.

Income from continuing operations increased to $16.2 million for the first
quarter of 1997 from $11.2 million in the first quarter of 1996 primarily due
to the reasons cited above. Interest and debt issuance expense of $10.7 million
for the first quarter of 1997 is fairly consistent with $10.4 million for the
first quarter of 1996.

Income from discontinued operations in the first quarter of 1996
represents the operating income of Perfect Fit which was sold during 1996. See
Note 2 to the condensed consolidated financial statements.

In the first quarter of 1997, the extraordinary loss on early
extinguishment of debt of $0.7 million relates to the write-off of debt
issuance costs and redemption premiums associated with the early extinguishment
of $8.0 million of long-term debt.

Year Ended December 29, 1996 Compared to Year Ended December 31, 1995

Net sales for 1996 were $926.4 million as compared to $862.8 million in
1995, an increase of $63.6 million or 7.4%. Carpet cushion net sales for 1996
increased 7.5% to $291.3 million from $271.0 million in 1995 primarily due to
increased selling prices initiated during the second quarter of 1996 as well as
increased volume of shipments due to improved carpet sales. Cushioning foam net
sales for 1996 increased 7.4% to $332.9 million from $310.0 million in 1995
primarily due to increased net sales volume from both new and existing
customers of bedding related products, increased selling prices initiated at
the beginning of 1996 and a full year of results for a company acquired in
April 1995 which manufactures cushioning products. Automotive foam net sales
for 1996 increased 5.5% to $231.9 million from $219.8 million in 1995 primarily
due to a continued increase in net sales of tri-laminates and composite
headliners and increased selling prices initiated at the beginning of 1996.
Specialty and technical foam net sales for 1996 increased 13.4% to $70.3
million from $62.0 million in 1995 primarily due to increased selling prices
and increased net sales volume.

Gross profit as a percentage of net sales increased to 16.5% for 1996 from
11.7% in 1995 primarily due to selling price increases and improved material
and production efficiencies, which include (i) selling price increases during
1996 to offset the adverse affect of the 1995 and 1994 raw material cost
increases, (ii) reductions in customer deductions for pricing disputes,
promotional programs and other matters and (iii) reductions in salaries and
other overhead costs associated with the implementation of the 1995 Operational
Reorganization.

19
<PAGE>

Operating income was $102.9 million for 1996 as compared to a loss from
operations of $2.0 million in 1995. The increase was primarily due to an
increase in gross profit margin as discussed above, a decrease in restructuring
and other charges (credits) of $45.7 million and a decrease in selling, general
and administrative expenses of $6.7 million for 1996 as compared to 1995. The
decrease in restructuring and other charges (credits) is comprised of the $39.2
million charge for restructuring and other charges in 1995 plus the net
restructuring credit of $6.4 million in 1996. The 1996 net restructuring credit
is comprised of an $11.3 million credit due to Foamex's decision not to close a
facility which was part of the 1995 Operational Reorganization and $1.7 million
of credits relating primarily to the favorable termination of lease agreements
and other matters relating to the 1995 Operational Reorganization, offset by
$6.6 million of restructuring charges relating to the planned closure of two
facilities during 1997. The decrease in selling, general and administrative
expenses is the result of reductions in the provision for uncollectible
accounts of approximately $3.9 million, salaries and employee costs of
approximately $3.7 million and a reduction of approximately $2.0 million in
environmental accruals offset by increases in selling expenses associated with
the increased net sales volume and management realignment in connection with
the 1995 Operational Reorganization.

Income from continuing operations before provision for income taxes was
$61.4 million for 1996 as compared to a loss from continuing operations before
provision for income taxes of $46.7 million in 1995. The increase is primarily
due to the reasons cited above and a decrease in interest and debt issuance
expense of $1.3 million. The decrease in interest and debt issuance expense is
primarily due to a $2.3 million increased benefit from interest rate swap
agreements offset by the amount of interest allocated to discontinued
operations in 1996 as compared to 1995. See Note 3 to the consolidated
financial statements for further discussion.

Foamex, as a limited partnership, is not subject to federal and certain
state income taxes. However, the consolidated financial statements include a
provision for income taxes which primarily relates to the federal and state
income taxes of corporate subsidiaries and subsidiaries located in foreign
jurisdictions that file separate income tax returns. See Note 10 to the
consolidated financial statements for further discussion.

The loss from discontinued operations of $42.1 million (net of $2.6
million income tax benefit) in 1996 relates to the net loss on the sale of the
home comfort products business segment which consisted primarily of the net
assets of Perfect Fit and the operating loss of Perfect Fit through the closing
date. See Note 3 to the consolidated financial statements for further
discussion.

The extraordinary loss on early extinguishment of debt of $1.9 million
primarily relates to the write-off of debt issuance costs and redemption
premiums associated with the early extinguishment of $30.6 million of long-
term debt. See Note 11 to the consolidated financial statements for further
discussion.

Year Ended December 31, 1995 Compared to Year Ended January 1, 1995

Net sales for 1995 were $862.8 million as compared to $833.7 million in
1994, an increase of $29.1 million or 3.5%. Carpet cushion net sales for 1995
decreased 7.4% to $271.0 million from $292.5 million in 1994 primarily due to
reduced net sales volume of certain carpet cushion products resulting from weak
carpet sales and a change in product mix to carpet cushion with lower selling
prices. In addition, carpet cushion selling prices were under pressure from an
excess supply of low priced scrap foam, the primary component of rebond carpet
cushion. Cushioning foam net sales for 1995 increased 7.2% to $310.0 million
from $289.2 million in 1994 primarily due to the April 1995 acquisition of a
company which manufactures cushioning products and increased selling prices
offset by a reduction in net sales volume due to competitive pricing pressures
and reduced demand for certain cushioning foam products. Automotive foam net
sales for 1995 increased 11.0% to $219.8 million from $198.0 million in 1994
primarily due to increased net sales volume of tri-laminates and composite
headliner products offset by a reduction in net sales volume of other
automotive foam products. Specialty and technical foam net sales for 1995
increased 14.8% to $62.0 million from $54.0 million in 1994 primarily due to
increased selling prices and increased net sales volume.

Gross profit as a percentage of net sales decreased to 11.7% for 1995 from
17.1% for 1994. This unfavorable relationship was primarily due to net
unrecovered raw material cost increases of approximately $25.0 million during
1995. In addition, the decrease in gross profit margin for 1995 as compared to
1994 was also associated with (i) approximately $7.7 million of increased
customer deductions for pricing disputes, promotion programs and other matters,
(ii) approximately $3.5 million of increased employee benefits accruals
associated with insurance and pension plans and other accruals, (iii)
approximately $1.5 million of inventory write-offs associated with scrap foam

20
<PAGE>

inventory and discontinued or slow moving product lines, (iv) an increase in
net sales of automotive tri-laminates, which have a lower-margin than other
foam products, (v) under-utilization of manufacturing capacities due to reduced
net sales volume of certain product lines and (vi) carpet cushion selling
prices remaining under pressure from an excess supply of low-priced scrap foam,
the primary component of rebond carpet cushion.

A loss from operations of $2.0 million was incurred for 1995 as compared
to operating income of $85.3 million for 1994. The decrease in operating income
was primarily due to (i) the reduction in gross profit margin as a percentage
of net sales as discussed above, (ii) an increase in selling, general and
administrative expenses of $6.4 million for 1995 as compared to 1994 including
an increase of $3.7 million in the provision for uncollectible accounts and
(iii) restructuring and other charges of $39.2 million (as discussed below).

In 1995, Foamex approved the 1995 Operational Reorganization to
consolidate 13 foam production, fabrication or branch locations to concentrate
resources as a result of industry conditions and better position itself to
achieve its strategic growth objectives. Foamex recorded restructuring and
other charges of $39.2 million which were comprised of charges of $35.6 million
associated with the consolidation of the foam production, fabrication or branch
locations, $2.2 million associated with the completion of the 1993
restructuring plan and $1.4 million associated with merger and acquisition
activities of Foamex. The components of the $35.6 million restructuring charge
include: $16.7 million for fixed asset writedowns, $15.1 million for plant
closure and operating lease obligations and $3.8 million for personnel
reductions. The $3.8 million cost for personnel reductions primarily represents
severance and employee benefit costs associated with the elimination of
manufacturing and administrative personnel. See Note 4 to the consolidated
financial statements for further discussion.

A net loss of $53.2 million was incurred for 1995 as compared to net
income of $39.2 million for 1994. The decrease is primarily due to (i) the
reasons cited above and (ii) an increase in interest and debt issuance expense
of $3.0 million. The increase in interest and debt issuance expense was
primarily associated with (i) a decrease of $1.6 million in the benefit
received from interest rate swap agreements in 1995 as compared to 1994 and
(ii) an increase in term loan interest expense due to a full year of borrowings
in 1995 as compared to 1994.

Liquidity and Capital Resources

Foamex's primary capital requirements consist principally of working
capital requirements, scheduled payments of principal and interest on
outstanding indebtedness and capital expenditures. Foamex believes that cash
flow from operating activities, cash on hand and periodic borrowings under the
New Credit Facility, if necessary, will be adequate to meet these capital
requirements.

Cash flow from operating activities was $19.5 million and $8.3 million in
the first quarter of 1997 and the first quarter of 1996, respectively. The
increase is primarily due to (i) improved results from continuing operations
and (ii) a decrease in the use of cash for operating assets and liabilities.
Cash flow from continuing operations was $36.7 million, $36.5 million and $50.6
million in 1996, 1995 and 1994, respectively. Cash flow from continuing
operations remained consistent for 1996 as compared to 1995 primarily as a
result of improved operating results from continuing operations offset by an
increased use of cash by the operating assets and liabilities. Cash flow from
continuing operations decreased in 1995 as compared to 1994 primarily as a
result of the reduction in operating results from continuing operations.

During the first quarter of 1997, Foamex spent approximately $7.4 million
on capital expenditures and expects to maintain or reduce spending for capital
expenditures for the foreseeable future since significant capital projects,
such as the new Mexico City facility, are expected to be completed during 1997.
Future capital expenditures are expected to focus primarily on the maintenance
of existing equipment and on the installation of the VPF[TM] manufacturing
process. From the beginning of 1994 through 1996, Foamex spent approximately
$63.9 million on capital improvements. The expenditures included: (i)
installation of new VPF[TM] technology in the Verona, Mississippi and Orange,
California facilities; (ii) initiation of the construction of a facility in
Mexico City, Mexico to improve manufacturing efficiencies and to meet the
growing demand for flexible polyurethane foam products;

21
<PAGE>

and (iii) installation of more efficient flexible polyurethane foam production
line systems and fabricating equipment in a number of manufacturing facilities.

During 1996, Foamex received net sale proceeds of approximately $42.7
million in connection with the sale of Perfect Fit which was finalized in 1996.
The net sale proceeds were used to repurchase long-term debt (see Note 11 to
the consolidated financial statements) and for the payment of certain retained
liabilities, with the remainder held as restricted cash as of December 29, 1996
for the repurchase of additional long-term debt during 1997. During the first
quarter of 1997, Foamex repurchased approximately $8.0 million of long-term
debt with restricted cash. Subsequent thereto, Foamex used the $3.8 million of
remaining net proceeds to repay term borrowings under the Existing Credit
Facility.

On June 28, 1994, Foamex purchased an $87.9 million principal amount note
due 2006 from its 98% limited partner FJPS for $35.3 million (the "FJPS Note").
During December 1996, Foamex received a partial repayment of the FJPS Note in
the amount of $18.4 million. The FJPS Note was cancelled as part of the
Refinancing Plan. See Note 13 to the consolidated financial statements.

In March 1994, Foamex International acquired Transformacion De Espumas Y
Fieltros, S.A. de C.V. ("TEFSA") for an aggregate purchase price of $4.5
million, including related fees and expenses of approximately $0.4 million, to
be paid over a three-year period with an initial cash payment of $1.7 million.
In April 1995, Foamex acquired certain assets and assumed certain liabilities
of manufacturers of synthetic fabrics for the carpet and furniture industries
for an aggregate consideration of approximately $8.0 million, including related
fees and expenses of approximately $0.3 million, with an initial cash payment
of $7.2 million. During 1996, Foamex International contributed its interest in
Foamex Mexico to Foamex. Also, during 1996 Foamex made a scheduled cash payment
of approximately $0.8 million in accordance with the purchase agreement. The
final payment of approximately $0.8 million was made in April 1997.

During the first quarter of 1997, Foamex used approximately $8.4 million
of restricted cash to repurchase outstanding indebtedness of approximately $8.0
million. As of March 30, 1997, Foamex had repurchased long-term debt of
approximately $38.6 million with the net proceeds from the sale of Perfect Fit.

As of March 30, 1997, there were no outstanding revolving credit
borrowings under the Existing Credit Facility with unused availability of
approximately $32.8 million. Borrowings by Foamex Canada as of March 30, 1997
were $4.0 million under a revolving credit agreement with unused availability
of approximately $0.3 million.

During 1996, Foamex Mexico borrowed $1.5 million under two promissory
notes that bear interest at LIBOR (5.69% at December 29, 1996) plus 3/8% and
mature on June 30, 1997.

Foamex made cash distributions to its partners, pursuant to the Tax
Sharing Agreement (as defined), of approximately $3.5 million, $2.4 million and
$3.3 million in 1996, 1995 and 1994, respectively. As of March 30, 1997, Foamex
had accrued and unpaid tax sharing obligation of approximately $6.3 million, of
which it has made subsequent payments of approximately $4.4 million.

Interest Rate Swap Agreements. Foamex enters into interest rate swaps to
lower funding costs and/or to manage interest costs and exposure to changing
interest rates. Foamex does not hold or issue financial instruments for trading
purposes.

In connection with the Refinancing Plan, Foamex amended its existing
interest rate swap agreements. As of June 12, 1997, Foamex has an interest rate
swap agreement with a notional amount of $150.0 million through June 2007. Under
this amended swap agreement Foamex is obligated to make payments at 5.75% per
annum for the six months ended in December 1997 and variable payments at the
rate of LIBOR for the remainder of the agreement, in exchange for fixed payments
by the swap partner at 6.44% per annum for the term of the agreement, payable
semi-annually in arrears. Foamex and the swap partner each have the right to
terminate the agreement on each anniversary date beginning in June 2002 at the
fair market value. Interest expense will be subject to fluctuations in LIBOR
during the term of the swap agreement except during 1997. Foamex is exposed to
credit loss in the event of nonperformance by the swap partner; however, the
occurrence of this event is not anticipated.

Prior to the amendment, Foamex had interest rate swap agreements with a
notional amount of $300.0 million through December 2001. Foamex was obligated to
make fixed payments at 5.30% per annum for the twelve months ended in December
1997 and variable payments at the rate of LIBOR for the remainder of the
agreement, in

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<PAGE>

exchange for fixed payments by the swap partner at 6.0% per annum for the
remaining term of the agreement, payable semi-annually in arrears. The effect
of the two interest rate swaps described above was a favorable adjustment to
interest expense of $0.9 million and $0.8 million for the first quarter of 1997
and the first quarter of 1996, respectively. The effect of the two interest
rate swaps described above was a favorable adjustment to interest expense of
$3.7 million, $1.4 million and $3.0 million for 1996, 1995 and 1994,
respectively. See "Risk Factors--Interest Rate Fluctuations."

Effects of the Refinancing Plan

The Refinancing Plan was consummated on June 12, 1997. Upon consummation
of the Refinancing Plan, Foamex purchased all Retired Notes validly tendered in
the Tender Offer and repaid the Existing Credit Facility. Foamex funded such
debt repayments with the net proceeds of the Initial Offering, borrowings of
$347.0 million drawn under the New Credit Facility and cash on hand.
Consummation of the Refinancing Plan increased the outstanding principal amount
of Foamex's long-term debt by $145.8 million from $389.2 million as of March
30, 1997 to $535.0 million on a pro forma basis. See "Risk Factors--Substantial
Leverage" and "--Partners' Deficit and Charge to Earnings." The New Credit
Facility provides approximately $150.0 million of revolving credit availability
of which $49.0 million was drawn as of the closing of the Refinancing Plan. The
ability to meet the operating cash requirements could be impaired if Foamex
fails to comply with any of the covenants contained in the New Credit Facility
and such noncompliance is not cured by Foamex or waived by the lenders. Foamex
expects to be in compliance with the covenants in the New Credit Facility for
the foreseeable future.

Additionally, upon consummation of the Refinancing Plan, variable rate
debt comprised a larger percentage of the Company's overall indebtedness than
in the past, and, as a result, future fluctuation in interest rates will have a
greater impact on the Company's interest expense than in the past.

In connection with the consummation of the Refinancing Plan, Foamex
distributed (i) to FJPS and FMXI, all FJPS Discount Debentures purchased in the
Tender Offer, the FJPS Note and the promissory note of Foamex International
payable to Foamex, and (ii) to Trace Foam, an amount in cash equal to 1/99th of
the distribution to FJPS and FMXI. As part of the Refinancing Plan (a) FMXI
dividended its distribution to Foamex International, (b) each of the FJPS
Discount Debentures distributed to FJPS, the Foamex International promissory
note, and the FJPS Note were canceled and (c) FJPS and its general partner,
FJGP Inc., were merged into Foamex International.

On July 7, 1996, Trace Holdings issued to Foamex a promissory note for
approximately $4.4 million plus accrued interest of approximately $0.4 million,
which is an extension of an earlier note. As part of the Refinancing Plan, the
Note was amended and restated, with accrued interest being added to principal,
the maturity was extended to July 7, 2001, and the interest rate was changed to
the sum of 2 3/8% plus Three Month LIBOR. In connection with the Refinancing
Plan, Foamex agreed to permit up to an additional $5.0 million of borrowings by
Trace International on terms and conditions substantially similar to the
existing promissory note, and the tax distribution advance agreement was amended
to increase the permitted advances to Foamex International from $17.0 million to
$25.0 million.

Inflation and Other Matters

There was no significant impact on Foamex's operations as a result of
inflation during the prior three year period. Effective in January 1997,
Foamex's operations in Mexico became subject to highly inflationary accounting
for financial reporting purposes. Translation adjustments resulting from
fluctuations in the exchange rate between the Mexican peso and the U.S. dollar
will be included in Foamex's consolidated statement of operations as compared
to partners' equity (deficit). Large fluctuations in the Mexican peso exchange
rate could have an adverse impact on Foamex's results of operations. In some
circumstances, market conditions or customer expectations may prevent Foamex
from increasing the price of its products to offset the inflationary pressures
that may increase its costs in the future. See "--Results of Operations--Year
Ended December 31, 1995 Compared to Year Ended January 1, 1995" and "Risk
Factors--Price and Availability of Raw Materials" for a discussion of the
impact of raw material price increases.

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<PAGE>

Business Cycle and Seasonality

Foamex's automotive foam customers are predominantly automotive OEMs or
other automotive suppliers. As such, the sales of these product lines are
directly related to the overall level of passenger car and light truck
production in North America. Also, Foamex's sales are sensitive to sales of new
and existing homes, changes in personal disposable income and seasonality.
Foamex typically experiences two seasonally slow periods during each year, in
early July and in late December, due to scheduled plant shutdowns and holidays.

Environmental Matters

Foamex is subject to extensive and changing environmental laws and
regulations. Expenditures to date in connection with Foamex's compliance with
such laws and regulations did not have a material adverse effect on operations,
financial position, capital expenditures or competitive position. The amount of
liabilities recorded by Foamex in connection with environmental matters as of
March 30, 1997 was $4.0 million. In addition, as of March 30, 1997 Foamex had
net receivables of $1.0 million for indemnification of environmental
liabilities from former owners, net of a $1.0 million allowance relating to
potential disagreements regarding the scope of such indemnification. On May 5,
1997, there was an accidental chemical spill at one of Foamex's manufacturing
facilities. Such spill was contained on site and the clean-up will consist of
on-site remediation and disposal of contaminated soil at an anticipated cost of
approximately $0.6 million. Although it is possible that new information or
future developments could require Foamex to reassess its potential exposure to
all pending environmental matters, including those described in the footnotes
to Foamex's consolidated financial statements, management believes that, based
upon all currently available information, the resolution of all such pending
environmental matters will not have a material adverse effect on Foamex's
operations, financial position, capital expenditures or competitive position.
See "Risk Factors--Environmental Liabilities and Regulations."

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<PAGE>

BUSINESS

Foamex's operations are conducted together with its wholly-owned
subsidiaries, General Felt, Foamex Fibers, Foamex Canada, Foamex Mexico and
Foamex Asia, and their respective operations. FCC is a wholly-owned special
purpose subsidiary of Foamex whose sole business is to act as a co-issuer of
certain indebtedness of Foamex.

Business Overview

Foamex is the largest manufacturer and marketer of flexible polyurethane
and advanced polymer foam products in North America. Foamex's products are
utilized primarily in four end-markets: (i) carpet cushion and other carpet
products, (ii) cushioning foams for furniture, bedding and packaging, (iii)
automotive applications, including trim and accessories and (iv) specialty and
technical foams. Foamex is the largest North American producer of foams used
for carpet cushion, automotive applications and specialty and technical
products and is a leading North American producer of cushioning foams. As a
result of the 1995 Operational Reorganization, Foamex has refocused on its
flexible polyurethane and advanced polymer foam business and believes it is now
well positioned to pursue its growth strategy of developing new products,
improving profitability and expanding internationally.

Foamex distributes carpet cushion to major floor covering retailers such
as Sears, New York Carpet World and Carpetland USA. Foamex supplies cushioning
foams to major bedding and furniture manufacturers such as Sealy, Simmons and
Ethan Allen. Foamex's packaging foams are supplied to distributors and
manufacturers of computers and other electronic devices, including Seagate
Technology and CompUSA. Foamex distributes its automotive foam products to
OEMs, including Ford, General Motors and Chrysler, and major tier one suppliers
such as Lear Corporation, Johnson Controls and Delphi Automotive Systems.
Foamex's specialty and technical foams consist of reticulated foams and other
customized polyester and polyether foams used for filtration, reservoiring and
consumer products which are utilized worldwide in a wide variety of
applications by companies such as Hewlett-Packard and Briggs & Stratton.

Foamex and its predecessors have been developing, manufacturing and
marketing polyurethane foam for more than 40 years. For the 52 weeks ended
March 30, 1997, Foamex had net sales of $936.3 million, EBDAIT of $121.8
million and income from continuing operations of $58.7 million. During such
period, the percentage of net sales generated by cushioning foams; carpet
cushion and other carpet products; automotive foams; and specialty and
technical foams was approximately 36%, 32%, 25% and 7%, respectively.

Competitive Strengths

Emphasis on New Product Development. Foamex believes it has one of the
leading research and development capabilities in the industry and, as a result,
has been awarded more than 100 foam-related patents worldwide. These
capabilities provide Foamex with a stream of new products, new applications for
existing products, and new processes for foam manufacturing. An example of
these capabilities is VPF[TM], an innovative manufacturing process currently
used in North America only by Foamex, which has been used to create new
products such as Reflex[TM] and Nexol[TM]. Reflex[TM] is designed to replace
fiberfill in certain cushioning products, and Nexol[TM] is designed to replace
rigid styrene foam in packaging. Foamex has also recently introduced
Plushlife[TM] for the carpet cushion market and Powerthane[TM] for automotive
applications. Another technology developed by Foamex is SMT[TM], which allows
for high volume precision contouring of foam surfaces, thereby improving
Foamex's existing products and creating new products such as sculpted bed
mattresses.

Alignment with Key Customers. Foamex has historically maintained a steady
revenue base by aligning itself with key customers, many of which have been
Foamex's customers for many years. These customer relationships are supported
by Foamex's extensive North American network of 59 strategically located
facilities, which allows Foamex to deliver products cost effectively on a
just-in-time basis. As a result of these relationships, Foamex is able to work
with customers during the design phase for new products and new applications,
thereby favorably positioning Foamex to be the principal supplier for these
products.

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<PAGE>

completed QS-9000 and ISO-9001 certification for its eight domestic facilities
that supply the automotive industry and is pursuing the appropriate
certifications for the remainder of its manufacturing facilities. Foamex was
one of the first flexible polyurethane foam manufacturers to be QS-9000
certified, demonstrating its commitment to producing the highest quality
products and meeting the needs of its customers.

Growth Strategy

International Expansion. Foamex has positioned itself to take advantage
of global opportunities. In Mexico, Foamex has built a new state-of-the-art
manufacturing facility, which is expected to meet increasing demand and allow
Foamex to increase market penetration. In Asia, which management believes
offers attractive growth opportunities, Foamex is actively exploring strategic
options to enter the foam market. Additionally, Foamex has created an alliance
with Recticel, Europe's largest flexible polyurethane foam manufacturer, which
will allow Foamex to better meet the increasing global needs of its automotive
customers.

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<PAGE>

Products

Foamex is a manufacturer and distributor of quality flexible polyurethane
and advanced polymer foam products designed to satisfy the specific needs of
customers. Foamex's 46 foam manufacturing and 13 distribution facilities enable
it to source production efficiently and meet the needs of its customers
throughout North America. Such facilities are also important for satisfying all
of the foam requirements of large national customers in a timely and cost
effective manner.

Foamex's products are utilized primarily in four end-markets: (i) carpet
cushion and other carpet products, (ii) cushioning foams for furniture, bedding
and packaging, (iii) automotive applications, including trim and accessories
and (iv) specialty and technical foams. The table below sets forth net sales of
Foamex by product category for the periods indicated:

<TABLE>
<CAPTION>
Fiscal Year First Quarter
------------------------------------------------------------------- -----------------------------------------
1994 1995 1996 1996 1997
------------------- ----------------------- ----------------------- ------------------- ---------------------
$ % $ % $ % $ % $ %
(Dollars in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Carpet cushion $292.5 35.1% $271.0 31.4% $291.3 31.5% $ 63.5 29.0% $ 67.9 29.6%
Cushioning
foams ......... 289.2 34.7 310.0 35.9 332.9 35.9 82.5 37.7 84.0 36.7
Automotive
foams ......... 198.0 23.7 219.8 25.5 231.9 25.0 56.0 25.5 59.7 26.1
Specialty and
technical
foams ......... 54.0 6.5 62.0 7.2 70.3 7.6 17.1 7.8 17.5 7.6
------- -------- ----------- -------- ----------- -------- ------- -------- --------- --------
Total ...... $833.7 100.0% $862.8 100.0% $926.4 100.0% $219.1 100.0% $229.1 100.0%
======= ======== =========== ======== =========== ======== ======= ======== ========= ========
</TABLE>

Carpet Cushion. Foamex is one of the largest manufacturers and
distributors of prime, bonded, sponge rubber and felt carpet cushion in North
America. Foamex also manufactures synthetic "grass" turf, primarily for the
residential market. Synthetic turf is tufted from polypropylene yarn in a
variety of colors, textures and qualities. In addition, Foamex manufactures a
variety of textured carpeting and wall coverings primarily using solution dyed
polypropylene staple fiber. Such needlepunch carpets have generally been used
as indoor/outdoor floor covering but, through the development of patterned
products and stylized color lines, have found increasing acceptance in both
residential and commercial applications. Foamex has also developed
Plushlife[TM], a proprietary bonded carpet cushion product, introduced in
February 1997, which Foamex believes to be one of the most significant
improvements in bonded carpet cushion products in many years. Plushlife[TM]
combines two cushions into a single structure one to absorb the energy of foot
traffic and the other to enhance comfort.

Foamex developed ComfortWear[Reg], a quality prime carpet cushion, which
was introduced in February 1994 in conjunction with significant consumer and
trade promotions. ComfortWear[Reg] currently is sold in retail outlets
throughout the United States. ComfortWear[Reg] is marketed through floor
covering retailers in the United States such as Sears, New York Carpet World
and Carpetland USA.

Cushioning Foams. Foamex is one of the largest manufacturers of cushioning
foams in North America. These foams are used by the bedding industry in quilts,
toppers, cores and border rolls for mattresses and by the furniture industry
for seating products. Cushioning foams are generally sold in large volumes on a
regional basis because of high shipping costs. Due to its size and the
strategic location of its production facilities, Foamex believes it will
continue to have an advantage over small regional producers in supplying large
national accounts with all of their foam requirements.

The development and introduction of value added products continues to be a
priority of Foamex and has included (i) Reflex[TM] and Nexol[TM] discussed
below, (ii) viscoelastic or "memory" foams for the bedding industry, which
maintain their resiliency better than other foams and materials and (iii) Latex
Plus[TM], a urethane-based replacement for latex, a material used in bedding
products. Foamex's most recent product introductions have included Reflex[TM]
and Nexol[TM] for the cushioning and packaging industries, respectively, which
were created using the VPF[TM] manufacturing process. Reflex[TM] materials,
which include cushion wraps and cushion cores, are advanced polymer cushioning
products designed to improve comfort, quality and durability in upholstered
furniture.

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<PAGE>

Nexol[TM] expands Foamex's capabilities in meeting the special packaging
requirements of sensitive and fragile products such as electronic components.

Foamex's cushioning foams for bedding products are sold to mattress
customers, such as Sealy, Simmons, Serta, and Spring Air Company, both directly
and through independent fabrication operators located across the United States.
Also, Foamex supplies cut-to-size seat cushions, backs and other pieces to the
furniture industry, including to Berkline, Action and Schnadig.

Automotive Foams. Foamex is one of the largest suppliers of the trim foam
requirements of the North American operations of American automotive
manufacturers. Depending on the automotive manufacturer and/or the application,
foam is supplied by Foamex either directly to the manufacturer or indirectly
through subsuppliers. Automotive foams are used for trim pads, door panel
parts, headliners, acoustical purposes, flame and adhesive laminates and rolls
for tri-lamination. Tri-laminated foam is applied to automotive fabrics to form
a foam/fabric composite that results in cost savings and aesthetic value for
the automotive manufacturer.

The domestic automotive manufacturers have narrowed their supply base
during recent years, increasing the percentage and dollar amount of components
that they purchase from outside suppliers. As a result, a smaller number of
companies are supplying an increasing percentage of these manufacturers' needs.
Foamex believes it has benefited from this trend, which favors suppliers with
quality facilities and products, cost efficient plants, long-standing
relationships, strong design, technical and product development support and
broad product lines. Management believes this outsourcing trend will continue,
particularly for components such as foam, trim and accessories that represent a
small portion of the overall cost of a vehicle. Automotive suppliers are
increasingly offering integrated systems which lower overall cost and improve
quality relative to previous sourcing methods in which individually sourced
components were assembled and installed by the OEMs.

During 1996, Foamex entered into a strategic alliance with Recticel to
design, manufacture and market polyurethane products for the automotive
industry in order to meet the worldwide requirements of the OEMs and the major
tier one suppliers such as Lear Corporation, Johnson Controls, Inc., and Delphi
Automotive Systems. Under this alliance, both companies will jointly supply the
automotive suppliers, with products manufactured in North America by Foamex and
in Europe by Recticel.

Foamex believes that the automotive manufacturers' just-in-time inventory
requirements will provide Foamex with a competitive advantage due to the
quality of Foamex's foam products, its flexible manufacturing capacity and its
46 strategically located manufacturing facilities and 13 distribution
facilities that enable Foamex to minimize shipping time and costs. In addition,
management expects foam usage per vehicle to continue to increase because
manufacturers have generally increased their investment in upgrading automobile
and light truck interiors to improve comfort, attractiveness, safety and noise
absorption capabilities. Foam is well suited to meet these requirements.

Foamex's new product development and flexible manufacturing capabilities
allow it to produce quality products to satisfy changing specifications.
Examples of Foamex's ability to react to changing industry requirements include
thermoformable headliners, tri-laminates, advanced cutting technology and
energy absorbing foams. For example, Foamex is one of the first suppliers to
introduce a thermoformable headliner, Customfit[TM], made from rigid
polyurethane foam. The use of foam headliners is expected to continue to grow
due to concerns for automotive workers' safety caused by fiberglass processing.
Foamex intends to continue manufacturing and supplying foam and fabric
components, such as tri-laminated material for automotive seating. The use of
tri-laminates has become increasingly prevalent due to significant cost savings
for manufacturers and improved aesthetics for consumers.

Automotive manufacturers are increasingly requiring the production
facilities of their suppliers to meet certain high quality standards. Foamex
has achieved the highest quality ratings awarded to foam suppliers by
automotive manufacturers. For instance, the Ford Motor Company has announced
that it will buy components only from plants which have achieved or are
currently being evaluated for the Ford Q-1 status. All Foamex plants which
supply parts to the Ford Motor Company are currently rated Q-1. In addition,
Foamex's facilities that supply the automotive industry have been highly rated
by the General Motors Corporation's "Target for Excellence" program, and a
majority of such facilities that supply the Chrysler Corporation have received
Chrysler's "Quality Excellence" award. Eventually, all tier one and tier two
automotive supplier facilities worldwide will be required to meet the QS-9000
quality manufacturing standards set by United States automotive manufacturers.
In 1996, Foamex completed QS-9000 and ISO-9001 certification for its eight
domestic facilities which supply the automotive

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<PAGE>

industry. Foamex was one of the first polyurethane manufacturers to be QS-9000
certified which demonstrates its commitment to producing the highest quality
products and meeting the needs of its customers.

Specialty and Technical Foams. Foamex believes that it is one of the foam
industry's prime innovators and producers of industrial, specialty, consumer
and safety foams (collectively, "specialty and technical foams"). Specialty and
technical foams consist of reticulated foams and other custom polyester and
polyether foams, which are sometimes combined with other materials to yield
specific properties. Reticulation is the thermal or chemical process used to
remove the membranes from the interconnecting cells within foam. This leaves a
porous, skeletal structure allowing for the free flow of gases and/or liquids.

Reticulated foams are well suited for filtration, reservoiring, sound
absorption and sound transmission. Industrial applications include carburetors,
computer cabinets, ink pad reservoirs, high speed inkjet printers and speaker
grills. Medical applications include oxygenators for cardiopulmonary surgery,
instrument holders for sterilization, pre-op scrubbers impregnated with
anti-microbial agents and EKG pads containing conductive gels. Other specialty
and technical foams have unique characteristics such as flame retardancy and
fluid absorption. In addition, felting and lamination with other foams or
materials give these composites specific properties. Additional products sold
within this group include foams for refrigerated supermarket produce counters,
mop heads, paint brushes, diapers and cosmetic applications.

Foamex utilizes advertising in trade journals and related media in order
to attract customers and, more generally, to create an awareness of its
capabilities for specialty and technical foams. In addition, due to the highly
specialized nature of most specialty and technical foams, Foamex's research
staff works with customers to design, develop and manufacture each product to
specification.

Marketing and Sales

Foamex has a marketing and sales force of approximately 190 employees.
Product business managers direct sales efforts toward each of the end-user
markets (i.e., carpet cushion, cushioning foams, automotive foams and specialty
and technical foams).

Foamex's carpet cushion marketing program includes the broad distribution
of products to both the retail and wholesale levels. Furthermore, promotions,
marketing and advertising expenditures are important in positioning Foamex's
carpet cushions as premium, trade branded products.

Bedding and furniture products are sold directly by Foamex to customers
and also through third party independent fabricators. The key strategic
elements supporting growth in these areas are a focus on marketing and sales
efforts, high quality, cost-competitive products and low freight costs through
optimal plant location. Plant locations are critical in this regionalized line
of business where the transportation cost typically comprises a significant
portion of product cost.

Foamex has been a leading supplier of automotive foam products to the
automotive industry for more than 30 years. Foamex is the primary supplier of
automotive foam products to certain tier one suppliers, including Lear
Corporation, Johnson Controls, Inc. and Delphi Automotive Systems. For its
other customers, Foamex competes for new business both at the beginning of the
development of new models and upon the redesign of existing models. Once a foam
producer has been designated to supply parts for a new program, the foam
producer usually produces parts for the life of the program. Competitive
factors in the market include product quality and reliability, cost and timely
service, technical expertise and development capability, new product innovation
and customer service.

Foamex markets most of its specialty and technical foams through a network
of independent fabrication and distribution companies in North America, the
United Kingdom and South Korea. Such fabricators or distributors often further
process or finish these products to meet the specific needs of the end user.
Foamex's specialty and technical foams service unique end user requirements and
are generally sold at relatively high margins. This line of business is
characterized by a diversity and complexity of both customers and applications.

International and Domestic Operations and Export Sales

International ventures initiated in 1996 illustrate Foamex's long-term
commitment to expanding outside North America. These international ventures
include Foamex's expansion of its international capabilities in Mexico and the
exploration of opportunities in Asia. The first international venture was
Foamex's expansion in Mexico to meet the steady growth in demand there over the
past year. Foamex has a total of three facilities in Mexico serving the

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automotive and cushioning industries. Two such facilities are located within
Mexican free trade zones close to the U.S. border and primarily service
automotive customers. The new state-of-the-art Mexico City facility services
both automotive and cushioning customers.

Foamex has created an alliance with Recticel, Europe's largest flexible
polyurethane foam manufacturer, which will allow Foamex to meet the global
needs of its automotive customers. In addition, the alliance will allow Foamex
and Recticel to jointly design, manufacture and market products for U.S. and
European automotive customers. The alliance facilitates supplying automotive
customers with polyurethane foam products in both North America and Europe.
Foamex has in the past exchanged technical information and expertise relating
to foam manufacturing with Recticel.

Foamex has been servicing the Asian market with technical products for
several years primarily through third party distributors. Foamex believes Asia
offers attractive growth opportunities and is exploring opportunities in Asia.

Net sales to customers in foreign markets in 1996, 1995 and 1994 were
$76.0 million (8.2% of net sales), $73.3 million (8.5% of net sales) and $66.6
million (8.0% of net sales), respectively.

Customers

During the past three fiscal years, no one customer accounted for more
than 10.0% of Foamex's net sales. However, 1996 net sales to the five largest
customers comprised $225.4 million or 24.3% of Foamex's net sales, including
net sales to Lear Corporation, Johnson Controls, Inc., and Sealy of
approximately $62.0 million, $57.7 million and $42.1 million or approximately
6.7%, 6.2% and 4.5% of net sales, respectively. See "Risk Factors--Reliance on
Major Customers."

Manufacturing and Raw Materials

Foamex produces bulk and fabricated flexible polyurethane foam at 46
manufacturing facilities in North America with a total of approximately 6.8
million square feet of floor space. Management believes that Foamex's
manufacturing facilities are well suited for their intended purposes and are in
good condition. See " --Properties." The manufacturing facilities are
strategically located to service their major customers because high freight
cost in relation to the cost of the foam product generally results in
distribution being most cost effective within 200 to 300 miles from each
facility.

In 1996, raw materials accounted for approximately 74% of the
manufacturing costs of Foamex. The two principal chemicals in polyurethane
foam, TDI and polyol, accounted for approximately 50% of raw material cost.
Among Foamex's largest suppliers of raw materials are ARCO Chemical Company,
BASF Corporation and The Dow Chemical Company. Foamex generally has alternative
chemical suppliers for each major raw material and Foamex believes that it
could find alternative sources of supply should it cease doing business with
any one of its major suppliers. The price of TDI and polyol is influenced by
demand, manufacturing capacity and oil and natural gas prices.

Foamex's principal suppliers of raw materials used in the manufacture of
flexible polyurethane foam increased the price of raw materials several times
since September 1994. In response, Foamex increased selling prices, where
possible, for cushioning, automotive and specialty and technical foam products.
The 1995 results of operations were adversely affected by the delays in
implementing, or the inability to implement, selling price increases to offset
these raw material cost increases. Foamex's principal suppliers of raw
materials unsuccessfully attempted to implement price increases in October 1996
and these suppliers have again announced price increases effective April 1997.
Foamex is unable to predict whether, or to what extent, the April 1997
increases or any future increases will be sustained. Foamex believes that if
any price increases are sustained in the industry, Foamex will also be impacted
by such increases. Significant increases in raw material costs could have a
material adverse effect on Foamex's financial condition or results of
operations. There can be no assurance that chemical suppliers will not increase
raw material costs in the future or that Foamex will be able to implement
selling price increases to offset any such raw material cost increases. See
"Risk Factors--Price and Availability of Raw Materials."

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Employees

As of March 30, 1997, Foamex employed approximately 4,500 persons, with
4,000 of such employees involved in manufacturing, 310 in administration and
190 involved in sales and marketing. Approximately 730 of these employees are
located outside the United States. Also, approximately 1,350 of these employees
are covered by collective bargaining agreements with labor unions, which
agreements expire on various dates from 1997 through 2001. Foamex considers
relations with its employees to be good.

Competition

The flexible polyurethane foam industry is highly competitive. With
respect to flexible polyurethane foam, competition is based primarily on price,
quality of products and service. Foamex's larger competitors in the
polyurethane foam industry include E. R. Carpenter Company, Crain Industries
Inc., Hickory Springs Manufacturing Company, Vitafoam, Inc., General Foam
Corporation, Flexible Foam Products, Inc. and Crest Foam Industries, Inc. None
of such competitors competes in all of the product categories in which Foamex
does business. See "Risk Factors--Competition."

Patents and Trademarks

Foamex owns various United States and foreign patents relating to the
manufacture and processing of foam. Patented technologies developed by Foamex
have included SMT[TM], reticulation and felting. Trademarks and servicemarks
include Foamex[Reg], General Felt Industries[Reg], ComfortWear[Reg],
Plushlife[TM], SMT[TM], Reflex[TM], Nexol[TM], Chamber Technology[SM] and
Berber-Mate[TM]. The registered processes and products were developed through
on-going research and development activities to improve quality, reduce costs
and expand markets through the development of new applications for flexible
polyurethane foam products. Foamex uses several additional trademarks and
tradenames for product identification, the majority of which are used in the
carpet cushion and specialty and technical foams product lines. See "--Research
and Development" below for a discussion of the VPF[TM] technology. Foamex
believes its business is not dependent upon any individual patent, trademark,
servicemark or tradename.

Research and Development

Foamex believes it has one of the industry-leading research and
development capabilities in the flexible polyurethane foam industry. These
capabilities give Foamex a significant advantage in the on-going development of
new products and new applications for existing products. Foamex has research
and development facilities located in Hayward, California; Dalton, Georgia; and
Eddystone, Pennsylvania employing approximately 28 full-time employees.
Expenditures for research and development amounted to $2.7 million, $3.2
million and $2.5 million for 1994, 1995 and 1996, respectively.

Foamex and Recticel, have exchanged know-how, trade secrets, engineering
and other data, designs, specifications, chemical formulations, technical
information, market information and drawings which are necessary or useful for
the manufacture, use or sale of foam products and it is anticipated that they
will continue to do so in the future. Foamex, Recticel and Beamech Group
Limited, an unaffiliated third party ("Beamech"), have an interest in a Swiss
corporation that develops new manufacturing technology for the production of
polyurethane foam including the VPF[TM] manufacturing process. VPF[TM] is a
manufacturing process that contains no chlorofluorocarbons and eliminates
volatile auxiliary blowing agents. Moreover, VPF[TM] produces polymers with a
wide range of properties, including previously unavailable low density,
ultrasoft products. Foamex believes that the VPF[TM] process will expand
applications for urethane-based products. Foamex, Recticel, and their
affiliates have a royalty-free license to use technology developed by the Swiss
corporation. The Swiss corporation, subject to certain limitations, is free to
license the VPF[TM] technology to third parties. Foamex currently
operates the
only two VPF[TM] units in North America.

Foamex recently developed SMT[TM] which allows for high volume precision
contouring of foam surfaces, including the pattern, the size of the pattern and
the depth of the cut, thereby improving Foamex's existing products and creating
new products such as sculpted bed mattresses that provide enhanced comfort.

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Properties

As of March 30, 1997, Foamex conducted its operations through 46
manufacturing and 13 distribution facilities. Of these 59 facilities, 18 are
owned and 41 are leased. Total floor space in use at the owned manufacturing
and distribution facilities is approximately 3.7 million square feet and total
floor space in use at the leased manufacturing and distribution facilities is
approximately 3.5 million square feet. Fifty-one of these facilities are
located in 36 cities in the United States, five facilities are located in two
cities in Canada and three facilities are located in three cities in Mexico.
The 1997 annual base rental with respect to such leased facilities is
approximately $7.4 million under leases expiring from 1997 to 2005. Foamex does
not anticipate any problem in renewing or replacing any of such leases expiring
in 1997. In addition, Foamex has approximately 1.1 million square feet of idle
space of which approximately 0.5 million is leased.

Foamex maintains administrative and sales offices in Linwood,
Pennsylvania; Hayward, California; Chicago, Illinois; Southfield, Michigan; and
New York, New York.

Environmental Matters

Foamex is subject to extensive and changing federal, state, local and
foreign environmental laws and regulations, including those relating to the
use, handling, storage, discharge and disposal of hazardous substances and the
remediation of environmental contamination, and as a result, is from time to
time involved in administrative and judicial proceedings and inquiries relating
to environmental matters. During 1996, expenditures in connection with Foamex's
compliance with federal, state, local and foreign environmental laws and
regulations did not have a material adverse effect on its operations, financial
position, capital expenditures or competitive position. As of March 30, 1997,
Foamex has environmental accruals of approximately $4.0 million for
environmental matters.

The Clean Air Act Amendments of 1990 (the "1990 CAA Amendments") provide
for the establishment of federal emission standards for hazardous air
pollutants including methylene chloride and TDI, principal raw materials used
in the manufacturing of foam. On December 27, 1996, the United States
Environmental Protection Agency (the "EPA") proposed regulations under the 1990
CAA Amendments that will require manufacturers of slab stock polyurethane foam
to reduce emissions of methylene chloride. Because these regulations are
subject to change prior to finalization, Foamex cannot accurately predict the
actual cost of their implementation. Foamex does not believe implementation of
the regulations will require it to make material expenditures, however, due to
Foamex's use of alternative technologies which do not utilize methylene
chloride and its ability to shift current production to the facilities which
use these alternative technologies. The 1990 CAA Amendments also may result in
the imposition of additional standards regulating air emissions from
polyurethane foam manufacturers, but these standards have not yet been proposed
or promulgated.

Foamex has reported to appropriate state authorities that it has found
soil contamination in excess of state standards at facilities in Orlando,
Florida; La Porte, Indiana; Conover, North Carolina; Cornelius, North Carolina;
Fort Wayne, Indiana; Philadelphia, Pennsylvania; and at a former facility in
Dallas, Texas and groundwater contamination in excess of state standards at the
Orlando, Conover, Philadelphia, and Cornelius facilities. Foamex has begun
remediation and is conducting further investigations into the extent of the
contamination at these facilities and, accordingly, the extent of the
remediation that may ultimately be required. The actual cost and the timetable
of any such remediation cannot be predicted with any degree of certainty at
this time. Foamex, based on engineering estimates of the remaining potential
remediation costs for these facilities, has accruals of $3.2 million for the
estimated cost of completing remediation and established a net receivable of
$1.0 million on the basis of indemnifications by Trace Holdings and RFC
associated with the partnership formation of Foamex. Foamex has completed
remediation of soil contamination at a former Trenton, New Jersey manufacturing
facility closed in October 1993 and is awaiting final closure approvals from
the New Jersey Department of Environmental Protection regarding the remediation
of soil contamination and monitoring of groundwater at the former Trenton
facility. Also, Foamex has completed remediation at its Mesquite, Texas
facility and is awaiting a certificate of completion under the Texas Voluntary
Clean Up program.

Federal regulations require that by the end of 1998 all USTs be removed or
upgraded in all states to meet applicable standards. Foamex has six USTs that
will require removal or permanent in-place closure by the end of 1998. Due to
the age of these tanks, leakage may have occurred resulting in soil and
possibly groundwater contamination. Foamex has accrued approximately $0.4
million for the estimated removal and remediation costs, if any, associated
with these USTs. However, the full extent of contamination, and accordingly,
the actual cost of such remediation cannot be predicted with any degree of
certainty at this time. Foamex believes that its USTs do

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not pose a significant risk of environmental liability because of its
monitoring practices for USTs and conditional approval for the permanent
in-place closure for certain USTs. However, there can be no assurance that such
USTs will not result in significant environmental liability in the future.

On April 10, 1997, the Occupational Health and Safety Administration
promulgated new standards governing employee exposure to methylene chloride,
which is used as a blowing agent in some of Foamex's manufacturing processes.
Foamex does not believe that it will be required to make any material
expenditures to comply with these new standards due to its use of alternative
technologies which do not use methylene chloride and its ability to shift
production to facilities which use these technologies.

Foamex has been designated as a Potentially Responsible Party ("PRP") by
the EPA with respect to 13 sites with an estimated total liability to Foamex
for the 13 sites of less than approximately $0.5 million. Estimates of total
cleanup costs and fractional allocations of liability are generally provided by
the EPA or the committee of PRPs with respect to the specified site. In each
case, the participation of Foamex is considered to be immaterial.

On May 5, 1997, there was an accidental chemical spill at one of Foamex's
manufacturing facilities. Such spill was contained on site and the clean-up
will consist of on-site remediation and disposal of contaminated soil at an
anticipated cost of approximately $0.6 million in the second quarter of 1997.
Although it is possible that new information or future developments could
require Foamex to reassess its potential exposure relating to all pending
environmental matters, including those described herein, management believes
that, based upon all currently available information, the resolution of such
environmental matters will not have a material adverse effect on Foamex's
operations, financial position, capital expenditures or competitive position.
The possibility exists, however, that new environmental legislation and/or
environmental regulations may be adopted, or other environmental conditions may
be found to exist, that may require expenditures not currently anticipated and
that may be material. See "Risk Factors--Environmental Liabilities and
Regulations."

Legal Proceedings

As of May 12, 1997, Foamex and Trace Holdings were two of multiple
defendants in actions filed on behalf of approximately 5,000 recipients of
breast implants in various United States federal and state courts and one
Canadian provincial court. Some of these actions allege substantial damages,
but most of these actions allege unspecified damages for personal injuries of
various types. Five of these cases seek to allege claims on behalf of all
breast implant recipients or other allegedly affected parties, but no class has
been approved or certified by the court. In addition, three cases have been
filed alleging claims on behalf of approximately 700 residents of Australia,
New Zealand, England, and Ireland. During 1995, Foamex and Trace Holdings were
granted summary judgments and dismissed as defendants from all cases in the
federal courts of the United States and the state courts of California. Appeals
for these decisions were withdrawn and the decisions are final. In addition,
two of the cases filed on behalf of the 903 foreign plaintiffs were dismissed
on the grounds that the cases could not be brought in the United States courts.
This decision is subject to appeal. Foamex believes that the number of suits
and claimants may increase. Although breast implants do not contain foam,
certain silicone gel implants were produced using a polyurethane foam covering
fabricated by independent distributors or fabricators from bulk foam purchased
from Foamex or Trace Holdings. Neither Foamex nor Trace Holdings recommended,
authorized, or approved the use of its foam for these purposes. While it is not
feasible to predict or determine the outcome of these actions, based on
management's present assessment of the merits of pending claims, after
consultation with the general counsel of Trace Holdings, and without taking
into account potential indemnity from the manufacturers of polyurethane covered
breast implants, management believes that the disposition of matters that are
pending or that may reasonably be anticipated to be asserted should not have a
material adverse effect on either Foamex's or Trace Holdings' consolidated
financial position or results of operations. In addition, Foamex is also
indemnified by Trace Holdings for any such liabilities relating to foam
manufactured prior to October 1990. Although Trace Holdings has paid Foamex's
litigation expenses to date pursuant to such indemnification and management
believes Trace Holdings likely will be in a position to continue to pay such
expenses, there can be no absolute assurance that Trace Holdings will be able
to provide such indemnification. Based on information available at this time
with respect to the potential liability, and without taking into account the
indemnification provided by Trace Holdings and the coverage provided by Trace
Holdings' and Foamex's liability insurance, Foamex believes that the
proceedings should not ultimately result in any liability that would have a
material adverse effect on the financial position or results of operations of
Foamex. If management's assessment of Foamex's liability with respect to these
actions is incorrect, such actions could have a material adverse effect on
Foamex.

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Foamex is party to various other lawsuits, both as defendant and
plaintiff, arising in the normal course of business. It is the opinion of
management that the disposition of these lawsuits will not, individually or in
the aggregate, have a material adverse effect on the financial position or
results of operations of Foamex. If management's assessment of Foamex's
liability with respect to these actions is incorrect, such actions could have a
material adverse effect on Foamex's consolidated financial position. See "Risk
Factors--Litigation."

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THE EXCHANGE OFFER

Purpose and Effect of the Exchange Offer

The Old Notes were sold by the Issuers on June 12, 1997 to the Initial
Purchasers, who placed the Old Notes with certain institutional and accredited
investors. In connection therewith, the Issuers, the Subsidiary Guarantors and
the Initial Purchasers entered into the Registration Rights Agreement, pursuant
to which the Issuers and the Subsidiary Guarantors agreed, for the benefit of
the Holders of the Old Notes, that the Issuers and the Subsidiary Guarantors
would, at their sole cost, (i) within 45 days following the original issuance
of the Old Notes, file with the Commission the Exchange Offer Registration
Statement (of which this Prospectus is a part) under the Securities Act with
respect to an issue of a series of new notes of the Issuers identical in all
material respects to the series of Old Notes and (ii) use their reasonable best
efforts to cause such Exchange Offer Registration Statement to become effective
under the Securities Act at the earliest possible time, but in no event later
than 120 days following the original issuance of the Old Notes. Upon the
effectiveness of the Exchange Offer Registration Statement (of which this
Prospectus is a part), the Issuers will offer to the Holders of the Old Notes
the opportunity to exchange their Old Notes for a like principal amount of New
Notes, to be issued without a restrictive legend and which may, subject to
certain exceptions described below, be reoffered and resold by the Holder
without restrictions or limitations under the Securities Act. The term "Holder"
with respect to any Note means any person in whose name such Note is registered
on the books of Foamex.

Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties, the Issuers believe that New Notes
issued pursuant to the Exchange Offer in exchange for Old Notes may be offered
for resale, resold and otherwise transferred by any Holder of such New Notes
(other than any such Holder which is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary course of such Holder's
business and such Holder has no arrangement or understanding with any person to
participate in the distribution (within the meaning of the Securities Act) of
such New Notes and neither such Holder nor any other person is engaging or
intends to engage in a distribution of such New Notes. However, the Issuers
have not sought, and do not intend to seek, their own no-action letter, and
there can be no assurance that the staff of the Commission would make a similar
determination with respect to the New Notes. Any Holder who tenders in the
Exchange Offer for the purpose of participating in a distribution of the New
Notes must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction.

Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of New Notes
received in exchange for Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities (other than Old Notes acquired directly from the Issuers). The
Issuers have agreed that, for a period of 120 days following the consummation
of the Exchange Offer, they will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution." Each Holder of the Old Notes (other than certain specified
holders) who wishes to exchange Old Notes for New Notes in the Exchange Offer
is required to represent that (i) it is not an affiliate of the Issuers, (ii)
any New Notes to be received by it were acquired in the ordinary course of its
business and (iii) at the time of commencement of the Exchange Offer, it has no
arrangement with any person to participate in the distribution (within the
meaning of the Securities Act) of the New Notes and neither such Holder nor any
other person is engaging or intends to engage in a distribution of such New
Notes. In addition, in connection with any resales of New Notes, any
broker-dealer (an "Exchanging Dealer") who acquired the Old Notes for its own
account as a result of market-making activities or other trading activities
must deliver a prospectus meeting the requirements of the Securities Act. Based
on interpretations by the staff of the Commission set forth in no-action
letters issued to third parties, the Issuers believe that Exchanging Dealers
may fulfill their prospectus delivery requirements with respect to the New
Notes (other than a resale of an unsold allotment from the original sale of the
Old Notes) with the prospectus contained in the Exchange Offer Registration
Statement. Under the Registration Rights Agreement, the Issuers are required to
allow Exchanging Dealers and other persons, if any, subject to similar
prospectus delivery requirements to use the prospectus contained in the
Exchange Offer Registration Statement in connection with the resale of such New
Notes.

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<PAGE>

If (i) the Issuers are not required to file the Exchange Offer
Registration Statement or permitted to consummate the Exchange Offer because
the Exchange Offer is not permitted by applicable law or Commission policy or
(ii) any Holder of Transfer Restricted Securities (as defined) notifies the
Issuers 20 business days following the consummation of the Exchange Offer that
(A) such Holder is prohibited by law or Commission policy from participating in
the Exchange Offer or (B) such Holder may not resell the New Notes acquired by
it in the Exchange Offer to the public without delivering a prospectus and this
Prospectus is not appropriate or available for such resales or (C) such Holder
is a broker-dealer and owns Old Notes acquired directly from the Issuers or an
affiliate of the Issuers, then the Issuers are required under the Registration
Rights Agreement to file with the Commission a shelf registration statement
(the "Shelf Registration Statement") to cover resales of Transfer Restricted
Securities by the Holder thereof who satisfies certain conditions relating to
the provision of information in connection with the Shelf Registration
Statement. The Issuers are required under the Registration Rights Agreement to
use their reasonable best efforts to cause the Shelf Registration Statement to
be declared effective at the earliest possible time but in no event later than
120 days after the date on which the Issuers become obligated to file such
Shelf Registration Statement and, except under certain circumstances, keep
effective such Shelf Registration Statement until two years after its effective
date. For purposes of the foregoing, "Transfer Restricted Securities" means
each Note until the earliest to occur of (i) the date on which such Old Note
has been exchanged by a person other than a broker-dealer for a New Note in the
Exchange Offer, (ii) following the exchange by a broker-dealer in the Exchange
Offer of an Old Note for a New Note, the date on which such New Note is sold to
a purchaser who receives from such broker-dealer on or prior to the date of
such sale a copy of the prospectus contained in the Exchange Offer Registration
Statement, (iii) the date on which such Note has been effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iv) the date on which such Note is distributed to
the public pursuant to Rule 144 under the Securities Act. The Issuers will, in
the event of the filing of the Shelf Registration Statement, provide to each
Holder of Transfer Restricted Securities covered by the Shelf Registration
Statement copies of any Shelf Registration Statement or any prospectus which is
a part of the Shelf Registration Statement, notify each such Holder when the
Shelf Registration Statement has become effective and take certain other
actions as are required to permit unrestricted resales of Transfer Restricted
Securities. A Holder of Transfer Restricted Securities that sells such Transfer
Restricted Securities pursuant to the Shelf Registration Statement generally
will be required to be named as a selling security holder in the related
prospectus and to deliver a prospectus to the purchaser, will be subject to
certain of the civil liability provisions under the Securities Act in
connection with such sales and will be bound by the provisions of the
Registration Rights Agreement which are applicable to such Holder (including
certain indemnification obligations). In addition, Holders of Transfer
Restricted Securities will be required to deliver information to be used in
connection with the Shelf Registration Statement and to provide comments on the
Shelf Registration Statement within the time periods set forth in the
Registration Rights Agreement in order to have their Transfer Restricted
Securities included in the Shelf Registration Statement and benefit from the
provisions regarding Liquidated Damages, if any, set forth in the following
paragraph.

If the Issuers are required to file the Shelf Registration Statement and
(i) the Issuers fail to file the Shelf Registration Statement on or prior to 30
days after such filing obligation arises, (ii) the Shelf Registration Statement
is not declared effective by the Commission on or prior to 120 days after such
filing obligation arises or (iii) the Shelf Registration Statement is declared
effective but thereafter ceases to be effective or usable in connection with
resales of Transfer Restricted Securities during the period specified in the
Registration Rights Agreement (each such event referred to in clauses (i)
through (iii) above, a "Registration Default"), then the Issuers will pay
liquidated damages ("Liquidated Damages"), if any, to each Holder of Transfer
Restricted Securities, with respect to the first 90-day period immediately
following the occurrence of such Registration Default in an amount equal to
$.05 per week per $1,000 principal amount of Transfer Restricted Securities
held by such Holder for each week or portion thereof that the Registration
Default continues. The amount of Liquidated Damages, if any, will increase by
an additional $.05 per week per $1,000 principal amount of Transfer Restricted
Securities with respect to each subsequent 90-day period until all Registration
Defaults have been cured, up to a maximum amount of Liquidated Damages, if any,
of $.50 per week per $1,000 principal amount of Transfer Restricted Securities.
Following the cure of all Registration Defaults, the accrual of Liquidated
Damages, if any, shall cease.

Payment of Liquidated Damages is the sole remedy available to the Holders
of Transfer Restricted Securities in the event that the Issuers do not comply
with the deadlines set forth in the Registration Rights Agreement with respect
to the registration of Transfer Restricted Securities for resale under the
Shelf Registration Statement.

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Terms of the Exchange Offer

Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Issuers will accept any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Issuers will issue $1,000 principal amount of New
Notes in exchange for each $1,000 principal amount of outstanding Old Notes
accepted in the Exchange Offer. Holders may tender some or all of their Old
Notes pursuant to the Exchange Offer. However, Old Notes may be tendered only
in integral multiples of $1,000.

The form and terms of the New Notes will be identical in all material
respect to the form and terms of the Old Notes, except that (i) the New Notes
will have been registered under the Securities Act and hence will not bear
legends restricting the transfer thereof and (ii) the Holders of the New Notes
will not be entitled to certain rights under the Registration Rights Agreement,
including the terms providing for Liquidated Damages, all of which rights
(except as described under "--Purpose and Effect of the Exchange Offer") will
terminate when the Exchange Offer is consummated. The New Notes will evidence
the same debt as the Old Notes and will be entitled to the benefits of the
Indenture under which the Old Notes were, and the New Notes will be, issued.

As of the date of this Prospectus, $150.0 million aggregate principal
amount of the Old Notes is outstanding. The Issuers have fixed the close of
business on , 1997 as the record date for the Exchange Offer for purposes
of determining the persons to whom this Prospectus, together with the Letter of
Transmittal, will initially be sent. As of such date, there was one registered
Holder of the Old Notes.

Holders of the Old Notes do not have any appraisal or dissenters' rights
under law or the Indenture in connection with the Exchange Offer. The Issuers
intend to conduct the Exchange Offer in accordance with the applicable
requirements of the Exchange Act and the rules and regulations of the
Commission thereunder.

Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commission or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Issuers will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"--Fees and Expenses."

Expiration Date; Extensions; Amendments

The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1997, unless the Issuers, in their sole discretion, extend the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended.

In order to extend the Exchange Offer, the Issuers will notify the
Exchange Agent (as defined) of any extension by oral or written notice and will
make a public announcement thereof prior to 9:00 a.m., New York City time, on
the next business day after each previously scheduled Expiration Date, unless
otherwise required by applicable law or regulation.

The Issuers reserve the right, in their sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or, if any of the
conditions set forth below under the caption "--Conditions" shall not have been
satisfied, to terminate the Exchange Offer, by giving oral or written notice of
such delay, extension or termination to the Exchange Agent, or (ii) to amend
the terms of the Exchange Offer in any manner. Any such delay in acceptance,
extension, termination or amendment will be followed as promptly as practicable
by a public announcement thereof. If the Exchange Offer is amended in a manner
determined by the Issuers to constitute a material change, the Issuers will
promptly disclose such amendment by means of a prospectus supplement that will
be distributed to the registered Holders, and the Issuers will extend the
Exchange Offer for a period of five to ten business days, depending upon the
significance of the amendment and the manner of disclosure to the registered
Holders, if the Exchange Offer would otherwise expire during such five to ten
business day period.

Without limiting the manner in which the Issuers may choose to make a
public announcement of any delay, extension, termination or amendment of the
Exchange Offer, the Issuers shall have no obligation to publish, advertise or
otherwise communicate any such public announcement, other than by making a
timely release to the Dow Jones News Service.

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<PAGE>

Procedures for Tendering

Only a Holder of Old Notes may tender such Old Notes in the Exchange
Offer. A Holder who wishes to tender Old Notes for exchange pursuant to the
Exchange Offer must transmit a properly completed and duly executed Letter of
Transmittal, or a facsimile thereof, together with any required signature
guarantees, or, in the case of a book-entry transfer, Agent's Message (as
defined), and any other required documents, to the Exchange Agent prior to 5:00
p.m., New York City time, on the Expiration Date. In addition, either (i)
certificates for such Old Notes must be received by the Exchange Agent prior to
the Expiration Date along with the Letter of Transmittal, (ii) a timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Old
Notes into the Exchange Agent's account at The Depository Trust Company ("DTC"
or the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date or (iii) the Holder must comply with the guaranteed delivery
procedures described below. To be tendered effectively, the Old Notes, or
Book-Entry Confirmation, as the case may be, the Letter of Transmittal and
other required documents must be received by the Exchange Agent at the address
set forth below under "--Exchange Agent" prior to 5:00 p.m., New York City
time, on the Expiration Date. DELIVERY OF DOCUMENTS TO THE BOOK ENTRY TRANSFER
FACILITY IN ACCORDANCE WITH ITS PROCEDURE DOES NOT CONSTITUTE DELIVERY TO THE
EXCHANGE AGENT.

DTC has authorized DTC participants that hold Old Notes on behalf of
beneficial owners of Old Notes through DTC to tender their Old Notes as if they
were Holders. To effect a tender of Old Notes, DTC participants should either
(i) complete and sign the Letter of Transmittal (or a manually signed facsimile
thereof), have the signature thereon guaranteed if required by the Instructions
to the Letter of Transmittal, and mail or deliver the Letter of Transmittal (or
such manually signed facsimile) to the Exchange Agent pursuant to the procedure
set forth in "Procedures for Tendering" or (ii) transmit their acceptance to
DTC through the DTC Automated Tender Offer Program ("ATOP") for which the
transaction will be eligible and follow the procedure for book-entry transfer
set forth in "--Book-Entry Transfer."

The tender by a Holder will constitute an agreement between such Holder
and the Issuers in accordance with the terms and subject to the conditions set
forth herein and in the Letter of Transmittal.

The method of delivery of the Old Notes and the Letter of Transmittal and
all other required documents to the Exchange Agent is at the election and risk
of the Holder. Instead of delivery by mail, it is recommended that Holders use
an overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure delivery to the Exchange Agent before the Expiration Date. No
Letter of Transmittal or Old Notes, or Book-Entry Confirmation, as the case may
be, should be sent to the Issuers.

Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered Holder promptly and instruct such
registered Holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such beneficial owner's own behalf, such
owner must, prior to completing and executing the Letter of Transmittal and
delivering such beneficial owner's Old Notes, either make appropriate
arrangement to register ownership of the Old Notes in such owner's name or
obtain a properly completed bond power from the registered Holder. The transfer
of registered ownership may take considerable time.

If the Letter of Transmittal is signed by a person other than the
registered Holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by a properly completed bond power and signed by such
registered Holder as such registered Holder's name appears on such Old Notes.

If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Issuers,
evidence satisfactory to the Issuers of their authority to so act must be
submitted with the Letter of Transmittal.

Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Old Notes tendered pursuant thereto are tendered (i) by a registered
Holder who has not completed the box entitled "Special Issuance Instructions"
or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. In the event that signatures

38
<PAGE>

on a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States or an "eligible guarantor institution"
within the meaning of Rule 17AG-15 under the Exchange Act (an "Eligible
Institution").

All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Notes will be determined by
the Issuers in their sole discretion, which determination shall be final and
binding. The Issuers reserve the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes the Issuers' acceptance of which would,
in the opinion of counsel for the Issuers, be unlawful. The Issuers also
reserve the right to waive any defects, irregularities or conditions of tender
as to particular Old Notes. The Issuers' interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) shall be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Issuers shall determine. Neither the Issuers, the
Exchange Agent nor any other person shall incur any liability for failure to
give notice of any defect or irregularity with respect to any tender of Old
Notes. Tenders of Old Notes will not be deemed to have been made until such
defects or irregularities have been cured or waived. Any Old Notes received by
the Exchange Agent that are not properly tendered and as to which the defects
or irregularities have been cured or waived will not be deemed to have been
properly tendered. Any Old Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering
Holders, unless otherwise provided in the Letter of Transmittal, as soon as
practicable following the Expiration Date.

By tendering, each Holder will represent to the Issuers, among other
things, that (i) the New Notes to be acquired by the Holder and any beneficial
owners of Old Notes pursuant to the Exchange Offer are being obtained in the
ordinary course of business of the person receiving such New Notes, (ii) the
Holder and each such beneficial owner are not participating, do not intend to
participate and have no arrangement or understanding with any person to
participate in the distribution of such New Notes and (iii) neither the Holder
nor any such other person is an "affiliate," as defined under Rule 405 of the
Securities Act, of the Issuers. Each broker or dealer that receives New Notes
for its own account in exchange for Old Notes, where such Old Notes were
acquired by such broker or dealer as a result of market-making activities or
other trading activities (other than Old Notes acquired directly from the
Issuers), must acknowledge that it will deliver a prospectus in connection with
any resale of such New Notes. See "Plan of Distribution."

Acceptance of Old Notes for Exchange; Delivery of New Notes

For each Old Note accepted for exchange, the Holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. For purposes of the Exchange Offer, the Issuers shall be deemed to
have accepted properly tendered Old Notes for exchange when, as and if the
Issuers have given oral or written notice thereof to the Exchange Agent.

In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal or Agent's Message and all other required documents. If any
tendered Old Notes are not accepted for any reason set forth in the terms and
conditions of the Exchange Offer or if Old Notes are submitted for a greater
principal amount than the Holder desires to exchange, such unaccepted or
non-exchanged Old Notes will be returned without expense to the tendering
Holder thereof (or, in the case of Old Notes tendered by book-entry transfer
into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant
to the book-entry transfer procedures described below, such non-exchanged Old
Notes will be credited to an account maintained with such Book-Entry Transfer
Facility) as promptly as practicable after the Expiration Date.

Book-Entry Transfer

The Exchange Agent will establish a new account or utilize an existing
account with respect to the Old Notes at DTC promptly after the date of this
Prospectus, and any financial institution that is a participant in DTC and
whose name appears on a security position listing as the owner of Old Notes may
make a book-entry tender of

39
<PAGE>

Old Notes by causing DTC to transfer such Old Notes into the Exchange Agent's
account in accordance with DTC's procedures for such transfer. However,
although tender of Old Notes may be effected through book-entry transfer into
the Exchange Agent's account at DTC, the Letter of Transmittal (or a manually
signed facsimile thereof), properly completed and validly executed, with any
required signature guarantees or an Agent's Message (as defined) in lieu of the
Letter of Transmittal, and any other required documents, must, in any case, be
received by the Exchange Agent at one of its addresses set forth below under
the caption "Exchange Agent" on or prior to the Expiration Date, or the
guaranteed delivery procedures described below must be complied with. The
confirmation of a book-entry transfer of Old Notes into the Exchange Agent's
account at DTC as described above is referred to herein as a "Book-Entry
Confirmation." Delivery of documents to DTC in accordance with DTC's procedures
does not constitute delivery to the Exchange Agent.

The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Exchange Agent and forming a part of a Book-Entry
Confirmation, which states that DTC has received an express acknowledgment from
the participant in DTC tendering the Old Notes stating (i) the aggregate
principal amount of Old Notes which have been tendered by such participant,
(ii) that such participant has received and agrees to be bound by the term of
the Letter of Transmittal and (iii) that the Company may enforce such agreement
against the participant.

Guarantee Delivery Procedures

Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date or (iii) who cannot complete the procedure for book-entry
transfer on a timely basis, may effect a tender if:

(a) the tender is made through an Eligible Institution;

(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting
forth the name and address of the Holder, the certificate number(s) of such Old
Notes and the principal amount of Old Notes tendered, stating that the tender
is being made thereby and guaranteeing that, within three New York Stock
Exchange trading days after the Expiration Date, the Letter of Transmittal (or
facsimile thereof) or, in the case of a book-entry transfer, an Agent's
Message, together with the certificate(s) representing the Old Notes, or a
Book-Entry Confirmation, as the case may be, and any other documents required
by the Letter of Transmittal will be deposited by the Eligible Institution with
the Exchange Agent; and

(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof) or, in the case of a book-entry transfer, an Agent's
Message, as well as the certificate(s) representing all tendered Old Notes in
proper form for transfer, or a Book-Entry Confirmation, as the case may be, and
all other documents required by the Letter of Transmittal are received by the
Exchange Agent within three New York Stock Exchange trading days after the
Expiration Date.

Withdrawal of Tenders

Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.

To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time,
on the Expiration Date. Any such notice of withdrawal must (i) specify the name
of the person having deposited the Old Notes to be withdrawn (the "Depositor"),
(ii) identify the Old Notes to be withdrawn (including the certificate number
or numbers and principal amount of such Old Notes), (iii) be signed by the
Holder in the same manner as the original signature on the Letter of
Transmittal by which such Old Notes were tendered (including any required
signature guarantees) or be accompanied by documents of transfer sufficient to
have the Trustee with respect to the Old Notes register the transfer of such
Old Notes into the name of the person withdrawing the tender and (iv) specify
the name in which any such Old Notes are to be registered, if different from
that of the Depositor. If certificates for Old Notes have been delivered or
otherwise identified to the Exchange Agent, then, prior to the release of such
certificates, the withdrawing Holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such Holder is an
Eligible Institution. If Old Notes have been tendered pursuant to the procedure
for book-entry transfer

40
<PAGE>

described above, any notice of withdrawal must specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Old Notes and otherwise comply with the procedures of the Book Entry
Transfer Facility. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Issuers
in their sole discretion, which determination shall be final and binding on all
parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer and no New Notes will be issued
with respect thereto unless the Old Notes so withdrawn are validly retendered.
Properly withdrawn Old Notes may be retendered by following one of the
procedures described above under "--Procedures for Tendering" at any time prior
to the Expiration Date.

Any Old Notes which have been tendered but which are not accepted for
payment due to withdrawal, rejection of tender or termination of the Exchange
Offer will be returned as soon as practicable after withdrawal, rejection of
tender or termination of the Exchange Offer to the Holder thereof without cost
to such Holder (or, in the case of Old Notes tendered by book-entry transfer
into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant
to the book-entry transfer procedures described above, such Old Notes will be
credited to an account maintained with such Book-Entry Transfer Facility for
the Old Notes).

Conditions

Notwithstanding any other term of the Exchange Offer, the Issuers shall
not be required to accept for exchange, or exchange New Notes for, any Old
Notes, and may terminate the Exchange Offer as provided herein before the
acceptance of such Old Notes, if:

(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer which,
in the sole judgment of the Issuers, might materially impair the ability of the
Issuers to proceed with the Exchange Offer or materially impair the
contemplated benefits of the Exchange Offer to the Issuers, or any material
adverse development has occurred in any existing action or proceeding with
respect to the Issuers or any of their subsidiaries;

(b) any change, or any development involving a prospective change, in the
business or financial affairs of the Issuers or any of their subsidiaries has
occurred which, in the sole judgment of the Issuers, might materially impair
the ability of the Issuers to proceed with the Exchange Offer or materially
impair the contemplated benefits of the Exchange Offer to the Issuers;

(c) any law, statute, rule or regulation is proposed, adopted or enacted,
which, in the sole judgment of the Issuers, might materially impair the ability
of the Issuers to proceed with the Exchange Offer or materially impair the
contemplated benefits of the Exchange Offer to the Issuers; or

(d) any governmental approval has not been obtained, which approval the
Issuers shall, in their sole discretion, deem necessary for the consummation of
the Exchange Offer as contemplated hereby.

The foregoing conditions are for the sole benefit of the Issuers and may
be asserted by the Issuers regardless of the circumstances giving rise to any
such condition or may be waived by the Issuers in whole or in part at any time
and from time to time in their reasonable discretion. The failure by the
Issuers at any time to exercise any of the foregoing rights shall not be deemed
a waiver of such right and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time.

If the Issuers determine in their sole discretion that any of the
conditions are not satisfied, the Issuers may (i) refuse to accept any Old
Notes and return all tendered Old Notes to the tendering Holders, (ii) extend
the Exchange Offer and retain all Old Notes tendered prior to the expiration of
the Exchange Offer, subject, however, to the rights of Holders to withdraw such
Old Notes (see "--Withdrawal of Tenders" above) or (iii) waive such unsatisfied
conditions with respect to the Exchange Offer and accept all properly tendered
Old Notes which have not been withdrawn. If such waiver constitutes a material
change to the Exchange Offer, the Issuers will promptly disclose such waiver by
means of a prospectus supplement that will be distributed to the registered
Holders, and the Issuers will extend the Exchange Offer for a period of five to
ten business days, depending upon the significance of the waiver and the manner
of disclosure to the registered Holders, if the Exchange Offer would otherwise
expire during such five to ten business day period.

41
<PAGE>

Exchange Agent

The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Requests for additional copies of this Prospectus or of the Letter of
Transmittal should be directed to the Exchange Agent addressed as follows:

To: The Bank of New York
By Hand/Overnight Courier:
The Bank of New York
101 Barclay Street--7E
New York, New York 10286
Attn: Vincent Jhingoor
Facsimile Transmission:
(212) 815-6339
Confirm by Telephone: (212) 815-4146

Fees and Expenses

The expenses of soliciting tenders will be borne by the Issuers. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Issuers and their affiliates.

The Issuers have not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Issuers, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith.

The cash expenses to be incurred in connection with the Exchange Offer
will be paid by the Issuers. Such expenses include fees and expenses of the
Exchange Agent and Trustee, accounting and legal fees and printing costs, among
others.

The Issuers will pay all transfer taxes, if any, applicable to the
exchange of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered Holder of the Old Notes tendered, or
if tendered Old Notes are registered in the name of any person other than the
person signing the Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the exchange of Old Notes pursuant to the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on the registered
Holder or any other persons) will be payable by the tendering Holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes
will be billed directly to such tendering Holder.

Accounting Treatment

The New Notes will be recorded at the same carrying value as the Old
Notes, which is the principal amount as reflected in the Issuers' accounting
records on the date of the exchange. Accordingly, no gain or loss for
accounting purposes will be recognized. The expenses of the Exchange Offer and
the unamortized expenses related to the issuance of the Old Notes will be
amortized over the term of the New Notes.

Regulatory Approvals

The Issuers do not believe that the receipt of any material federal or
state regulatory approvals will be necessary in connection with the Exchange
Offer.

Other

Participation in the Exchange Offer is voluntary and Holders of Old Notes
should carefully consider whether to accept the terms and conditions thereof.
Holders of the Old Notes are urged to consult their financial and tax advisors
in making their own decisions on what action to take with respect to the
Exchange Offer.

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<PAGE>

Consequences of Failure to Properly Tender Old Notes in the Exchange Offer

Issuance of the New Notes in exchange for the Old Notes pursuant to the
Exchange Offer will be made only after timely receipt by the Exchange Agent of
such Old Notes, a properly completed and duly executed Letter of Transmittal
and all other required documents. Therefore, Holders of the Old Notes desiring
to tender such Old Notes in exchange for New Notes should allow sufficient time
to ensure timely delivery. The Issuers are under no duty to give notification
of defects or irregularities with respect to tenders of Old Notes for exchange.
Old Notes that are not tendered or that are tendered but not accepted by the
Issuers for exchange, will, following consummation of the Exchange Offer,
continue to be subject to the existing restrictions upon transfer thereof under
the Securities Act and, upon consummation of the Exchange Offer, certain
registration rights under the Registration Rights Agreement will terminate

In the event the Exchange Offer is consummated, the Issuers will not be
required to register the unexchanged Old Notes. Unexchanged Old Notes will
continue to be subject to the following restrictions on transfer: (i) the
unexchanged Old Notes may be resold only if registered pursuant to the
Securities Act, if any exemption from registration is available thereunder, or
if neither such registration nor such exemption is required by law, and (ii)
the unexchanged Old Notes will bear a legend restricting transfer in the
absence of registration or an exemption therefrom. The Issuers do not currently
anticipate that they will register the unexchanged Old Notes under the
Securities Act. To the extent that Old Notes are tendered and accepted in
connection with the Exchange Offer, any trading market for unexchanged Old
Notes could be adversely affected.

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<PAGE>

MANAGEMENT

Executive Officers of Foamex and FCC; Directors and Executive Officers of FMXI

Pursuant to the Partnership Agreement (as defined), Foamex is managed by
its managing general partner, FMXI. All of the directors and executive officers
of FMXI are employees of Foamex and/or Foamex International and are not
compensated by FMXI for their services as directors and executive officers of
FMXI. See "Description of the Partnership Agreement."

The following sets forth certain information with respect to the persons
who, as of the Offering, are executive officers of Foamex and FCC, or directors
and executive officers of FMXI.

<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Andrea Farace ............. 41 Chairman and Chief Executive Officer of
Foamex, FMXI and FCC
Marshall S. Cogan ......... 60 Vice Chairman of Foamex and FMXI
Robert J. Hay ............ 71 Chairman Emeritus of Foamex
Salvatore J. Bonanno ...... 56 President of Foamex and FMXI
Kenneth R. Fuette ......... 52 Senior Vice President of Finance, Chief
Financial Officer and Chief Accounting
Officer of Foamex and FCC; Senior Vice
President of Finance and a director of FMXI
William H. Bundy ......... 56 Senior Vice President of Foamex
Paul A. Haslanger ......... 50 Senior Vice President of Technical Products of
Foamex
Barry Zimmerman ............ 59 Executive Vice President of Productivity and
Quality of Foamex; Vice President of FMXI
Philip N. Smith, Jr. ...... 54 Vice President of Foamex; Vice President,
Secretary and General Counsel and a director of
FMXI; Vice President and Secretary of FCC
Theodore J. Kall ......... 56 President of General Felt
George L. Karpinski ...... 49 Vice President, Treasurer and Secretary of
Foamex; Vice President of FMXI and FCC
</TABLE>

Andrea Farace began serving as Chairman and Chief Executive Officer of
Foamex, Foamex International, FMXI, FCC and certain affiliated entities in May
1997. Mr. Farace has also served as a director of Foamex International since
February 1996, and has been President and a director of Trace Holdings since
December 1994 and December 1993, respectively. Prior to December 1993, Mr.
Farace held several executive positions within Trace Holdings beginning in
April 1991. Mr. Farace was Senior Executive of C.I.R. S.p.A. from May 1990 to
March 1991. Prior to that, Mr. Farace was a Managing Director at Shearson
Lehman Hutton, Inc. Mr. Farace is a director of Trace Foam and CHF Industries,
Inc., both of which are subsidiaries of Trace Holdings, as well as Atlantic
Auto Finance, Inc., an affiliate of Trace Holdings, and General Felt.
Additionally, Mr. Farace is a director of the Managed High Income Portfolio,
Inc. and a member of the Advisory Board of the Italy Fund, both of which are
NYSE-listed mutual funds.

Marshall S. Cogan began serving as Vice Chairman of Foamex International,
Foamex and FMXI in May 1997 and became the Chairman and Chief Executive Officer
of United Auto Group, Inc. ("UAG"), an affiliate of Trace Holdings in April
1997. Mr. Cogan served as the Chairman of the Board and Chief Executive Officer
of Foamex, FMXI and FCC from January 1994 to May 1997. Additionally, Mr. Cogan
served as Chairman of the Board and Chief Executive Officer of Foamex
International from its inception in September 1993 to May 1997. Mr. Cogan has
served as Chairman of the Executive Committee of Foamex International since
September 1993. Mr. Cogan has been a director of Trace Foam since December 1991
and the Chairman of the Board and President of Trace Foam and its wholly-owned
subsidiary Trace Foam Sub, Inc. ("Trace Foam Sub"), since January 1992 and
March 1995, respectively. Mr. Cogan also served as Vice Chairman of Foamex from
January 1993 until January 1994. Mr. Cogan has been the principal stockholder,
Chairman or Co-Chairman of the Board and Chief Executive Officer or Co-Chief
Executive Officer of Trace Holdings, since 1974. He has also been a member of
the Board of Directors of UAG since November 1990, and of Recticel since
February 1993. Additionally, Mr. Cogan serves on the Board of Directors of the
American Friends of the Israel Museum and the American Ballet Theater, the
Board of Trustees

44
<PAGE>

of The Museum of Modern Art, the Boston Latin School and New York University
Medical Center. Mr. Cogan also serves on several committees of Harvard
University.

Robert J. Hay has been Chairman Emeritus of Foamex since January 1994. Mr.
Hay was Chairman Emeritus and a director of FMXI from January 1994 to May 1997
and also served as Chairman Emeritus and a director of Foamex International
from 1993 to 1997. Mr. Hay was Chairman and Chief Executive Officer of Foamex
from January 1993 to January 1994. Mr. Hay was President of Foamex and its
predecessor from 1972 through 1992. Mr. Hay began his career as a chemist with
The Firestone Tire and Rubber Company, a predecessor of Foamex, in 1948.

Salvatore J. Bonanno has been President of Foamex since July 1995 and
began serving as President of Foamex International and FMXI in May 1997. Mr.
Bonanno has also served as Executive Vice President of Manufacturing, Corporate
Planning of Foamex International since July 1995, and a director since February
1996. Prior to joining Foamex International, Mr. Bonanno was employed with
Chrysler Corporation for thirty years, most recently serving as the General
Manager of International Manufacturing Operations. Mr. Bonanno currently serves
on the Industrial Advisory Board of Lawrence Livermore National Laboratories.

Kenneth R. Fuette has been Senior Vice President of Finance, Chief
Financial Officer and Chief Accounting Officer of Foamex and Foamex
International since January 1996, and Senior Vice President of Finance of FMXI
since January 1994. Mr. Fuette began serving as a director of FMXI and Senior
Vice President of Finance, Chief Financial Officer and Chief Accounting Officer
of FCC in May 1997. Mr. Fuette served as a Vice President of Foamex
International and its predecessors from 1983 to 1995 and as Controller of
Foamex International or its predecessors from 1977 to 1995. Mr. Fuette became a
director of General Felt in June 1997.

William H. Bundy has been a Senior Vice President of Foamex since January
1994 and a Senior Vice President of Foamex International since March 1994. Mr.
Bundy served as a Senior Vice President of FMXI from March 1994 to May 1997, a
director of Foamex International from September 1993 to May 1994, President and
Chief Operating Officer of Foamex International from September 1993 to January
1994 and President and Chief Operating Officer of Foamex from January 1993
until January 1994. Mr. Bundy was Senior Vice President of Manufacturing of
Foamex from 1984 through 1992. Mr. Bundy began his career as a production
manager for the predecessor to Foamex in 1967.

Paul A. Haslanger has been Senior Vice President of Technical Products of
Foamex International and Foamex since October 1995. Mr. Haslanger was Senior
Vice President of Manufacturing of FMXI from October 1993 through May 1997 and
Senior Vice President of Foamex International from September 1993 to January
1996. Mr. Haslanger was also Senior Vice President of Manufacturing of Foamex
from February 1993 to January 1996. Prior thereto, Mr. Haslanger was Vice
President of Manufacturing of Foamex and its predecessor from 1984 through
January 1993. He began his career with the predecessor to Foamex in 1969.

Barry Zimmerman has been Executive Vice President of Productivity and
Quality of Foamex since November 1996, Chairman, President and a director of
Foamex Mexico since September 1993 and Vice President of FMXI since April 1995.
Mr. Zimmerman has been a Senior Vice President of Foamex from October 1995 to
November 1996 and a Senior Vice President or Vice President and Managing
Director of Trace Holdings since October 1986. Prior to that, Mr. Zimmerman
held several executive positions within Trace Holdings beginning in August
1978. Mr. Zimmerman has been a director of Trace Foam since October 1990. Mr.
Zimmerman has served as director of General Felt since March 1993 and director
of FCC since July 1992.

Philip N. Smith, Jr. has been Vice President of Foamex and Vice President,
Secretary and General Counsel of FMXI since October 1993 and Vice President,
Secretary and General Counsel of Foamex International since its inception in
September 1993 and of UAG since June 1996. Since May 1997, Mr. Smith has served
as a director of FMXI and Vice President and Secretary of FCC. Mr. Smith has
been the Secretary of Trace Foam since its inception in October 1990 and a Vice
President of Trace Foam since December 1991. Mr. Smith has been a Vice
President or Senior Vice President and the Secretary and General Counsel of
Trace Holdings since January 1988 and has overseen and been actively involved
in transaction negotiations, litigation, stockholder and director relations and
other corporate legal matters. Prior to joining Trace Holdings, he was the sole
shareholder of a professional corporation which was a partner of Akin, Gump,
Strauss, Hauer & Feld, L.L.P.

Theodore J. Kall was appointed President of General Felt in April 1995.
Mr. Kall previously served as General Felt's National Accounts Manager since
July 1993. Mr. Kall has served in various sales, marketing and product

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management positions including Vice President of Sales and Marketing from 1980
to 1993. He began his career with General Felt in 1974.

George L. Karpinski has been Vice President, Treasurer and Secretary of
Foamex since May 1993 and has been Vice President and Treasurer of Foamex
International since May 1996. Mr. Karpinski was Treasurer of Foamex from March
1989 to May 1993 and was Assistant Treasurer of Foamex from November 1985 to
March 1989. Mr. Karpinski began serving as Vice President of FMXI and FCC in May
1997 and became a director of Foamex Mexico in June 1997. Mr. Karpinski began
his career with the predecessor to Foamex in 1969.

For information regarding executive compensation, see Foamex's 1996 Annual
Report on Form 10-K. See "Incorporation of Certain Documents by Reference."

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth, as of June 15, 1997, the beneficial
ownership of the partnership interests of Foamex by (i) each person who is
known to Foamex to own beneficially more than 5.0% of any class of Foamex's
partnership interests, (ii) each director of FMXI (the managing general partner
of Foamex) and FCC, (iii) each executive officer listed in the summary
compensation table of Foamex's 1996 Form 10-K and (iv) all executive officers
and directors of Foamex, FMXI and FCC as a group. FCC is a wholly-owned
subsidiary of Foamex.

Name and Address Type of % of % of
of Beneficial Owners Interest Profits Class

FMXI, Inc. (1)
1000 Columbia Avenue
Linwood, Pennsylvania 19061 ......... General Partner 1.0 50.0

Trace Foam Company, Inc. (2)
375 Park Avenue, 11th Floor
New York, New York 10152 ............ General Partner 1.0 50.0

Foamex International Inc. (1)
1000 Columbia Avenue
Linwood, Pennsylvania 19061 ......... Limited Partner 98.0 100.0

Marshall S. Cogan (2)
375 Park Avenue, 11th Floor
New York, New York 10152 ............ General Partner 1.0 50.0

All officers and directors as
a group (11 persons) (2), (3) ...... General Partner 1.0 50.0

- ----------
(1) FMXI is wholly owned by Foamex International.

(2) Trace Foam is a wholly-owned subsidiary of Trace Holdings. Marshall S.
Cogan, a director of FMXI, Foamex International and Trace Foam, is the
majority stockholder of Trace Holdings. Mr. Cogan disclaims beneficial
ownership of the partnership interest owned by Trace Foam. The disclosure
of Marshall S. Cogan's beneficial ownership does not include the
beneficially owned partnership interests of Foamex International. Trace
Holdings beneficially owns in excess of 40% of the common stock of Foamex
International.

(3) The disclosure of beneficial ownership of officers and directors does not
include any beneficial ownership arising solely by virtue of such person's
position with FMXI or Foamex International.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Foamex regularly enters into transactions with its affiliates on terms it
believes to be no less favorable to Foamex than those which Foamex could have
obtained from unaffiliated third parties. Payments to affiliates by Foamex and
its subsidiaries in connection with any such transactions are governed by the
provisions of the Indenture and the New Credit Facility, which generally
provide that such transactions be on terms comparable to those generally
available in equivalent transactions with third parties.

Airplane Lease

Foamex was party to a lease agreement for an airplane with Trace Aviation
Corp., a subsidiary of Trace Holdings ("Trace Aviation"). During 1995, Foamex
paid Trace Aviation $1.6 million, pursuant to the lease agreement. The lease
agreement also provided for the use of the airplane by Trace Holdings with
remuneration to Foamex based on actual usage of the airplane. During 1995,
Trace Holdings paid to Foamex $0.6 million pursuant to the lease agreement.
During August 1995, Foamex Aviation Inc. ("Aviation"), a wholly-owned
subsidiary of Foamex International, acquired the airplane from Trace Holdings
and the Foamex lease and other agreements were terminated. Foamex anticipates
that it will distribute approximately $2.0 million per year to Aviation to
enable Aviation to pay debt service and certain operating costs.

Tax Sharing Agreement

In 1992, Foamex and its partners entered into a tax sharing agreement, as
amended (the "Tax Sharing Agreement"), pursuant to which Foamex agreed to make
quarterly distributions to its partners which, in the aggregate, will equal the
tax liability that Foamex would have paid if it had been a Delaware corporation
filing separate tax returns rather than a Delaware partnership. In connection
with Foamex International's initial public offering in 1993 and the attendant
reallocation of partnership interests, the Foamex Tax Sharing Agreement was
amended to provide that 99% of the payments will be made to Foamex
International and its subsidiaries and 1% of the payments would be made to
Trace Foam. For the fiscal years ended January 1, 1995, December 31, 1995 and
December 29, 1996, Foamex made payments of approximately $3.3 million, $2.4
million and $3.5 million, respectively, pursuant to the terms of the Tax
Sharing Agreement to Foamex International and its subsidiaries. As of March 30,
1997, there were accrued, but unpaid, distributions under the Tax Sharing
Agreement of approximately $6.3 million, of which Foamex has made subsequent
payments of approximately $4.4 million.

Tax Distribution Advance Agreement

On December 11, 1996, Foamex and FJPS entered into a Tax Distribution
Advance Agreement pursuant to which FJPS has the right to obtain up to $17.0
million of advances against future distributions to the Tax Sharing Agreement.
Any such advances will bear interest at a rate equal to 13.25% per annum. All
advances must be repaid by December 31, 1999, and FJPS is obligated to use 50.0%
of any tax distribution to prepay the outstanding advances. As of March 30,
1997, there were no advances outstanding under this agreement. In connection
with the Refinancing Plan, the maximum amount of advances was increased to $25.0
million and FJPS's rights and obligations under the Tax Distribution Advance
Agreement were assumed by Foamex International.

Management Services Agreement

Foamex and Trace Foam entered into a management services agreement,
pursuant to which Trace Foam provides Foamex with general managerial services
of a financial, technical, legal, commercial, administrative and/or advisory
nature for an annual fee of $3.0 million and reimbursement of expenses
incurred. During the last three years the annual fee was $1.75 million.
Management believes that the agreement is no less favorable to Foamex than that
which Foamex could have obtained from unaffiliated third parties.

Indemnification Regarding Environmental Matters

Pursuant to the Asset Transfer Agreement, dated as of October 2, 1990, as
amended, between Trace Holdings and Foamex (the "Trace Holdings Asset Transfer
Agreement"), Foamex is indemnified by Trace Holdings for any liabilities
incurred by Foamex arising out of or resulting from, among other things, the
ownership or use of any of the assets transferred pursuant to the Trace
Holdings Asset Transfer Agreement or the conduct of the transferred business on
or prior to October 2, 1990, including, without limitation, any loss actually
arising out of or resulting from any events, occurrences, acts or activities
occurring after October 2, 1990, to the extent resulting from

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conditions existing on or prior to October 2, 1990, relating to (i) injuries to
or the contraction of any diseases by any person resulting from exposure to
Hazardous Substances (as defined in the Trace Holdings Asset Transfer
Agreement) without regard to when such injuries or diseases are first
manifested, (ii) the generation, processing, handling, storage or disposition
of or contamination by any waste or Hazardous Substance, whether on or off the
premises from which the transferred business has been conducted or (iii) any
pollution or other damage or injury to the environment, whether on or off the
premises from which the transferred business has been conducted. Foamex is also
indemnified by Trace Holdings for any liabilities arising under Environmental
Laws (as defined in the Trace Holdings Asset Transfer Agreement) relating to
current or former Trace Holdings assets and for any liability relating to
products of the transferred business shipped on or prior to October 2, 1990.

Certain Transactions Relating to the Acquisition of General Felt

In connection with Foamex's acquisition of General Felt in March 1993,
Trace Holdings and General Felt entered into a reimbursement agreement pursuant
to which Trace Holdings agreed to reimburse General Felt on a pro rata basis
reflecting the period of time each occupied a former General Felt facility for
costs relating to an environmental cleanup plan.

In 1994, General Felt leased two facilities from limited partnerships in
which directors and officers of Foamex International, Foamex and/or Trace Foam
have an interest. These partnerships purchased the properties from General Felt
in 1978. The rental terms under each lease were determined on the basis of
appraised values for comparable properties within each respective area. The
lessor under the first of these leases (the "East State Lease") was East State
Associates, the partners of which include Mr. Cogan. The East State Lease
related to a 100,000 square foot warehouse in Hamilton Township (Trenton), New
Jersey. In accordance with the terms of the East State Lease, the lessor
exercised its right to require General Felt to purchase the facility at the
appraised fair market value of $2,250,000, as agreed by both parties. General
Felt assigned the purchase contract for the property to an unaffiliated third
party who purchased the property on March 28, 1994.

The lessor under the second lease (the "West State Lease") was West State
Associates, the partners of which include Mr. Cogan. The West State Lease
related to a General Felt manufacturing facility in Pico Rivera, California. On
August 26, 1994, General Felt in mutual agreement with the lessor purchased the
facility at the appraised fair market value of $3,350,000.

Certain Transactions Relating to the Acquisition of Great Western

In connection with the acquisition of Great Western in May 1993, Foamex
entered into lease agreements dated May 1993, with John Rallis ("Rallis"),
individually, or an affiliate, relating to former Great Western manufacturing
facilities. Aggregate lease payments for each of the fiscal years ended January
1, 1995, December 31, 1995 and December 29, 1996 were $1.6 million, $1.6
million and $1.7 million, respectively. Foamex has the option to purchase each
of the properties at any time after April 2001 at a price equal to fair market
value.

Part of the aggregate consideration paid by Foamex for the assets of Great
Western was in the form of a subordinated promissory note payable to Rallis in
the principal amount of $7,014,864 that bears interest at a maximum rate of
6.0% per annum payable semi-annually.

FJPS Note

On June 28, 1994, Foamex purchased an $87.9 million principal amount note
due 2006 from its 98% limited partner FJPS for $35.3 million (the "FJPS Note").
In December 1996 in exchange for certain waivers and amendment of the FJPS
Note, FJPS repaid $18.4 million of the FJPS Note and a waiver payment of $0.2
million using a portion of the proceeds from the sale of its partnership
interest in JPS Automotive. The FJPS Note was classified in partners' equity
(deficit) and the accreted principal of $16.3 million for the period from June
28, 1994 to December 29, 1996 was included in the FJPS Note. In connection with
the Refinancing Plan, the FJPS Note was distributed by Foamex to its partners
and canceled.

Foamex International Supply Agreement

In June 1994, Foamex also entered into a supply agreement with Foamex
International (the "Supply Agreement"). Pursuant to the terms of the Supply
Agreement, at the option of Foamex, Foamex International will purchase certain
raw materials which are necessary for the manufacture of Foamex's products, and
resell such raw materials to Foamex

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at a price equal to net cost plus reasonable out-of-pocket expenses. Management
believes that the terms of the Supply Agreement are no less favorable than
those which Foamex could have obtained from an unaffiliated third party. For
the fiscal years ended January 1, 1995, December 31, 1995 and December 29,
1996, Foamex purchased $66.6 million, $105.1 million and $129.7 million,
respectively, in raw materials under the Supply Agreement.

Certain Transactions in Connection with the Refinancing Plan

In connection with the consummation of the Refinancing Plan, Foamex
distributed (i) to FJPS and FMXI, all FJPS Discount Debentures purchased in the
Tender Offer, the FJPS Note, and the promissory note of Foamex International
payable to Foamex and (ii) to Trace Foam, an amount in cash equal to 1/99th of
the distribution to FJPS and FMXI. The FJPS Discount Debentures, the Foamex
International promissory note, and the FJPS Note were canceled following such
distribution.

In connection with the Refinancing Plan, FJPS and its general partner FJGP
Inc. were merged into Foamex International. As a result, the partners of Foamex
are Foamex International, with a 98% limited partnership interest, FMXI, a
wholly owned subsidiary of Foamex International, with a 1% managing general
partnership interest, and Trace Foam, with a 1% non-managing general partnership
interest. In addition, Foamex's tax sharing agreement, tax distribution advance
agreement and management agreement were amended. In addition, on July 7, 1996,
Trace Holdings issued to Foamex a promissory note for $4.4 million plus accrued
interest of $0.4 million, which is an extension of an earlier note. As part of
the Refinancing Plan, the note was amended and restated with accrued interest
being added to principal, the maturity was extended to July 7, 2001, and the
interest was changed to the sum of 2-3/8% plus Three Month LIBOR. In connection
with the Refinancing Plan, Foamex agreed to permit up to an additional $5.0
million of borrowings by Trace Holdings on terms and conditions substantially
similar to the existing promissory note.

Other Transactions

For each of the fiscal years ended January 1, 1995, December 31, 1995 and
December 29, 1996, Foamex made charitable contributions to the Trace
International Holdings, Inc. Foundation (the "Foundation") in the amount of
$0.2 million. The Foundation is a Delaware tax-exempt private foundation.
Marshall S. Cogan, Vice Chairman of Foamex International and Foamex, is the
sole director of the Foundation.

In December 1995, Foamex entered into a $2.0 million promissory note with
Foamex International. The note bore interest at a rate per annum equal to six
month LIBOR plus 4.0% and was payable semi-annually in June and December. The
note was scheduled to mature in December 1997. The note was classified in the
other component of partners' equity (deficit). This note was distributed to
Foamex's partners and canceled in connection with the Refinancing Plan.

Trace Holdings rents approximately 5,900 square feet of general, executive
and administrative office space in New York, New York from Foamex on
substantially the same terms as Foamex leases such space from a third party
lessor. The lease commenced October 1, 1993 with the occupancy and rent
payments commencing on October 1, 1994. The lease provides for an initial term
of 11 years and expires on September 30, 2004. The lease provides for two
optional five-year renewal periods at the fair market rental value of the
property on the first day of such renewal term. The annual rental for the
period October 1, 1994 through September 30, 2004 is approximately $0.7
million. Under the lease, Foamex is required to pay certain excess real estate
taxes and operating expenses incurred by the lessor relating to the property
for which it will be proportionally reimbursed by Trace Holdings. The rental
terms were the result of arm-length negotiations between Foamex and the third
party lessor. Trace Holdings will reimburse, through increased rent, Foamex for
the cost of any leasehold improvements applicable to the space occupied for the
benefit of Trace Holdings.

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DESCRIPTION OF CERTAIN DEBT INSTRUMENTS

Set forth below is a summary of certain debt instruments to which Foamex
is a party. The summary does not purport to be complete and is qualified in its
entirety by reference to such agreements.

New Credit Facility

Foamex and General Felt have entered into a credit agreement with a group
of banks for which The Bank of Nova Scotia ("Scotiabank") and Citicorp USA,
Inc. act as administrative agents (the "Administrative Agents"). The New Credit
Facility provides for (i) $330 million of term loans, comprised of a $120
million term A sub-facility (the "Term A Loan"), a $110 million term B
sub-facility (the "Term B Loan") and a $100 million term C sub-facility (the
"Term C Loan") and (ii) a $150 million revolving credit facility (the
"Revolving Facility").

Any unused Term A Loan commitments will remain open until June 15, 1998
and can be drawn for the purpose of any future repurchase of notes not
repurchased in connection with the Refinancing Plan. In conjunction with the
Refinancing Plan, $88.0 million of Term A Loans, $110.0 million of Term B
Loans, $100.0 million of Term C Loans and $49.0 million of borrowings under the
Revolving Facility were drawn.

The Term A Loan, the Term B Loan and the Term C Loan are amortized each
year and will mature on the sixth, eighth and ninth anniversaries,
respectively, of the closing of the Refinancing Plan. The Revolving Facility
will terminate on the sixth anniversary of the closing of the Refinancing Plan.
Set forth below are the aggregate principal amounts of the term loans that are
amortized in each year following the Refinancing Plan assuming 100% of each
term loan is drawn and no excess cash flow or other prepayments are made.

Calendar Year Amount

1997 ......... $ 4,050,000
1998 ......... 11,100,000
1999 ......... 17,100,000
2000 ......... 23,100,000
2001 ......... 27,600,000
2002 ......... 32,100,000
2003 ......... 40,050,000
2004 ......... 68,700,000
2005 ......... 76,200,000
2006 ......... 30,000,000
-------------
Total ......... $330,000,000
=============

The maturity of borrowings under the New Credit Facility may be
accelerated upon the occurrence of certain events. In addition, Foamex and
General Felt are required, subject to certain exceptions, to prepay outstanding
borrowings from the net proceeds of certain asset sales, equity and debt
issuances and a percentage of annual excess cash flow (based on Foamex's then
current Leverage Ratio (as defined below)). Borrowings under the New Credit
Facility are secured by the accounts receivable, inventories, certain real and
personal property and certain intangible assets of Foamex and General Felt, the
partnership interests of Foamex and the capital stock of all the direct and
indirect subsidiaries of Foamex and General Felt.

Funds borrowed under the New Credit Facility bear interest at either (i)
Scotiabank's alternate base rate ("Base Rate") or (ii) LIBOR plus, in each
case, an applicable margin (the "Applicable Margin") based on Foamex's ratio
(the "Leverage Ratio") of (a) total funded indebtedness less cash to (b) its
trailing four quarter EBDAIT. Generally, for LIBOR borrowings, the Applicable
Margin ranges from 0.625% (corresponding to a Leverage Ratio less than 2.50) to
2.625% (corresponding to a Leverage Ratio greater than or equal to 4.50).
Generally, for Base Rate borrowings, the Applicable Margin ranges from 0.0%
(corresponding to a Leverage Ratio less than 3.00) to 1.625% (corresponding to
a Leverage Ratio greater than or equal to 4.50). Within these ranges, the
Applicable Margin varies depending on the maturity date of the borrowings.

The New Credit Facility restricts, among other things and subject to
certain exceptions, Foamex's and General Felt's ability: (i) to incur
additional indebtedness, except for extensions or refundings of certain
permitted indebtedness, (ii) to merge, consolidate, liquidate, dissolve, sell
or transfer all or substantially all of their assets or make other similar
fundamental changes, (iii) to sell assets outside the ordinary course of
business in excess

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of amounts set forth therein in any fiscal year, (iv) to guarantee or invest
in, or make loans or advances to, other persons or entities, (v) to declare or
pay dividends or make other distributions with respect to their equity
interests and (vi) to engage in certain transactions with affiliates and
holders of their equity interests. The New Credit Facility also requires Foamex
to maintain specified financial ratios.

Events of default under the New Credit Facility include, among other
things: (i) any failure by Foamex or General Felt to pay principal thereunder
when due, or to pay interest or any other amount due within five days after the
date due, (ii) the failure of Foamex or any of its subsidiaries to pay any
other indebtedness (including capitalized leases) when due in excess of amounts
set forth therein, or the occurrence of any breach, default or event of default
that would cause or permit the acceleration of indebtedness in excess of
amounts set forth therein, (iii) the breach by Foamex, General Felt, FMXI or
Trace Foam of certain covenants and agreements of the New Credit Facility, (iv)
the material inaccuracy of any representation or warranty given by Foamex,
General Felt, FMXI or Trace Foam in the New Credit Facility, (v) the
continuance of a default by Foamex, General Felt, FMXI or Trace Foam in the
performance of or compliance with other covenants and agreements in the New
Credit Facility for 30 days after the occurrence thereof and (vi) certain
changes of control and acts of bankruptcy, insolvency or dissolution. Under the
terms of the Indenture, an event of default under the New Credit Facility would
result in an Event of Default under the Indenture.

9 1/2% Senior Secured Notes due 2000

The Senior Secured Notes were issued on June 3, 1993 and bear interest at
the rate of 9 1/2% payable semi-annually on each June 1 and December 1. The
Senior Secured Notes mature on June 1, 2000. The Senior Secured Notes are
collateralized by a first-priority lien on substantially all of the assets of
Foamex except for receivables, real estate and fixtures. The Senior Secured
Notes may be redeemed at the option of Foamex, in whole or in part, at any time
on or after June 1, 1998, initially at 101.583% of their principal amount, plus
accrued interest, and declining to 100% on or after June 1, 1999. As part of
the Refinancing Plan, the indenture pursuant to which the Senior Secured Notes
were issued was amended to remove substantially all restrictive covenants.

11 1/4% Senior Notes due 2002

The Senior Notes bear interest at the rate of 11 1/4% payable semi-annually
on each April 1 and October 1. The Senior Notes mature on October 1, 2002. The
Senior Notes may be redeemed at the option of Foamex, in whole or in part, at
any time on or after October 1, 1997, initially at 104.219% of their principal
amount, plus accrued interest, and declining to 100% on or after October 1,
2000. In October 1994, Foamex provided certain real property as collateral for
the Senior Notes, with a net book value of $37.8 million at December 29, 1996.
As part of the Refinancing Plan, the indenture pursuant to which the Senior
Notes were issued was amended to remove substantially all restrictive
covenants.

11 7/8% Senior Subordinated Debentures due 2004

The Senior Subordinated Debentures bear interest at the rate of 11 7/8%
payable semi-annually on each April 1 and October 1. The Senior Subordinated
Debentures mature on October 1, 2004. The Senior Subordinated Debentures may be
redeemed at the option of Foamex, in whole or in part, at any time on or after
October 1, 1997, initially at 105.938% of their principal amount, plus accrued
interest, and declining to 100% on or after October 1, 2002. The Senior
Subordinated Debentures are subordinated in right of payment to all senior
indebtedness, including the Senior Secured Notes and the Senior Notes and will
be pari passu in right of payment with the Senior Subordinated Notes. As part
of the Refinancing Plan, the indenture pursuant to which the Senior
Subordinated Debentures were issued was amended to remove substantially all
restrictive covenants.

11 7/8% Senior Subordinated Debentures, Series B due 2004

The Series B Debentures were issued July 30, 1993, by Foamex in an
exchange offer to holders of senior subordinated debentures issued in
connection with the acquisition of General Felt on March 23, 1993. The Series B
Debentures have terms substantially similar to the Senior Subordinated
Debentures, except that holders of the Series B Debentures are entitled to
receive proceeds from an asset sale only if any proceeds remain after an offer
to repurchase has been made to the holders of the Senior Subordinated
Debentures. As part of the Refinancing Plan, the indenture pursuant to which
the Series B Debentures were issued was amended to remove substantially all
restrictive covenants.

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Industrial Revenue Bonds ("IRBs")

Two bond issues in the principal amount of $1.0 million and $6.0 million,
maturing in 2005 and 2013, respectively, are collateralized by certain
properties which have an approximate net carrying value of $11.3 million at
December 29, 1996 and letters of credit approximating $7.3 million. The IRBs
bear interest at a variable rate with options available to Foamex to convert to
a fixed rate. The interest rates on the IRBs were 4.85% and 4.0% at December
29, 1996 for the $6.0 million and $1.0 million bond issues, respectively. The
interest rate on the $6.0 million bond issue varies weekly based on an interest
rate that is indicative of current bidside yields on high quality short-term,
tax-exempt obligations, or if such interest rate is not available, 70.0% of the
interest rate for thirteen week United States Treasury Bills. The maximum
interest rate for either of the IRBs is 15.0% per annum. At the time of a
conversion to a fixed interest rate and upon appropriate notice, the IRBs are
redeemable at the option of the bondholders.

Subordinated Note Payable

This note payable was issued to the former Chief Operating Officer of
Foamex International, on May 6, 1993 by Foamex in connection with the
acquisition of Great Western. The note bears interest at a maximum rate of 6.0%
per annum and the principal amount is payable in three equal annual
installments beginning May 6, 1999. See "Certain Relationships and Related
Transactions--Certain Transactions Relating to the Acquisition of Great
Western."

Foamex Mexico Loan Agreement

In May 1997, Foamex Mexico entered into a loan agreement which provides
for (i) a $5.0 million term loan and (ii) a $2.0 million line of credit.
Borrowings under such loan agreement bear interest at a rate of LIBOR plus 4.5%
and are secured by certain assets of Foamex Mexico. The $5.0 million term loan
is amortized in equal quarterly payments after the first year and will mature
in 2002. The $2.0 million line of credit will be used for working capital
purposes and is renewable annually. Foamex Mexico plans to use the proceeds of
the term loan for expenditures associated with the construction of a new
manufacturing facility.

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DESCRIPTION OF NOTES

General

The Old Notes were issued and the New Notes are issued pursuant to an
indenture (the "Indenture") among Foamex and FCC, as joint and several
obligors, General Felt, Foamex Fibers and the Subsidiary Guarantors, and The
Bank of New York, as trustee (the "Trustee"). The terms of the New Notes are
identical in all material respects to the terms of the Old Notes except for
certain transfer restrictions and registration rights relating to the Old
Notes. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). The Notes are subject to all such terms,
and Holders of Notes are referred to the Indenture and the Trust Indenture Act
for a statement thereof. The following summary of the material provisions of
the Indenture does not purport to be complete and is qualified in its entirety
by reference to the Indenture, including the definitions therein of certain
terms used below. A copy of the Indenture and Registration Rights Agreement are
filed as exhibits to the Registration Statement of which this Prospectus is a
part. The definitions of certain terms used in the following summary are set
forth below under "--Certain Definitions." For purposes of this summary, the
term "Issuers" refers only to Foamex and FCC and not to any of their respective
Subsidiaries.

The Notes are general unsecured obligations of the Issuers, subordinated
in right of payment to all existing and future Senior Debt of the Issuers,
including Indebtedness pursuant to the New Credit Facility. The Issuers'
obligations under the Notes are guaranteed (the "Note Guarantees") on a senior
subordinated basis by the Subsidiary Guarantors. See "--Note Guarantees." As of
March 30, 1997, on a pro forma basis after giving effect to the Refinancing
Plan, the Issuers would have had approximately $371.1 million aggregate
principal amount of Senior Debt and approximately $27.4 million aggregate
principal amount of Pari Passu Debt. The Indenture permits the incurrence of
additional Senior Debt, Pari Passu Debt and Subordinated Indebtedness in the
future.

The operations of Foamex are conducted in part through its Subsidiaries,
and Foamex may, therefore, be dependent upon the cash flow of its Subsidiaries
to meet its debt obligations, including its obligations under the Notes. While
all of the existing domestic subsidiaries of the Issuers are, and certain
future domestic subsidiaries are expected to be, Subsidiary Guarantors, certain
other foreign Subsidiaries of Foamex are not guarantors and may be restricted
in their ability to pay dividends to Foamex pursuant to instruments governing
indebtedness of such Subsidiaries. Under certain circumstances, the Issuers
will be able to designate any Subsidiaries formed by the Issuers or acquired by
the Issuers after the original issuance of the Notes as Unrestricted
Subsidiaries. Unrestricted Subsidiaries are not Subsidiary Guarantors and are
not subject to any of the restrictive covenants set forth in the Indenture.

Principal, Maturity and Interest

The Notes are limited in aggregate principal amount to $150.0 million and
will mature on June 15, 2007. Interest on the Notes will accrue at the rate of 9
7/8% per annum and will be payable semi-annually in arrears on June 15 and
December 15 of each year, commencing on December 15, 1997, to Holders of record
on the immediately preceding June 1 and December 1. Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of original issuance. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.
Principal, interest, premium and Liquidated Damages on the Notes will be payable
at the office or agency of the Issuers maintained for such purpose within the
City and State of New York or, at the option of the Issuers, payment of interest
and Liquidated Damages, if any, may be made by check mailed to the Holders of
the Notes at their respective addresses set forth in the register of Holders of
Notes; provided that all payments of principal, interest, premium and Liquidated
Damages, if any, with respect to Notes, the Holders of which have given wire
transfer instructions to the Issuers, will be required to be made by wire
transfer of immediately available next day funds to the accounts specified by
the Holders thereof. Until otherwise designated by the Issuers, the Issuers'
office or agency in New York will be the office of the Trustee maintained for
such purpose. The Notes will be issued in denominations of $1,000 and integral
multiples thereof.

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Subordination

The payment of principal of, interest and premium and Liquidated Damages,
if any, on the Notes is subordinate in right of payment, as set forth in the
Indenture, to the prior payment in full of all Senior Debt, whether outstanding
on the date of the Indenture or thereafter created, incurred or assumed and all
permissible renewals, extensions, refundings or refinancings thereof.

The Indenture provides that, upon any payment or distribution of assets of
the Issuers of any kind or character, whether in cash, property or securities,
to creditors in any Insolvency or Liquidation Proceeding with respect to either
Issuer all amounts due or to become due under or with respect to all Senior
Debt will first be paid in full before any payment is made on account of the
Notes, except that the Holders of Notes may receive Reorganization Securities.
Upon any such Insolvency or Liquidation Proceeding, any payment or distribution
of assets of Foamex or FCC of any kind or character, whether in cash, property
or securities (other than Reorganization Securities), to which the Holders of
the Notes or the Trustee would be entitled will be paid by Foamex or FCC or by
any receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, or by the Holders of the Notes or by the
Trustee if received by them, directly to the holders of Senior Debt (pro rata
to such holders on the basis of the amounts of Senior Debt held by such
holders) or their Representative or Representatives, as their interests may
appear, for application to the payment of the Senior Debt remaining unpaid
until all such Senior Debt has been paid in full, after giving effect to any
concurrent payment, distribution or provision therefor to or for the holders of
Senior Debt.

The Indenture provides that (a) in the event of and during the
continuation of any default in the payment of principal of, interest or
premium, if any, on any Senior Debt, or any Obligation owing from time to time
under or in respect of Senior Debt, or in the event that any event of default
(other than a payment default) with respect to any Senior Debt will have
occurred and be continuing and will have resulted in such Senior Debt becoming
or being declared due and payable prior to the date on which it would otherwise
have become due and payable, or (b) if any event of default other than as
described in clause (a) above with respect to any Designated Senior Debt will
have occurred and be continuing permitting the holders of such Designated
Senior Debt (or their Representative or Representatives) to declare such
Designated Senior Debt due and payable prior to the date on which it would
otherwise have become due and payable, then no payment will be made by or on
behalf of Foamex or FCC on account of the Notes (other than payments in the
form of Reorganization Securities) (x) in case of any payment or nonpayment
default specified in (a), unless and until such default will have been cured or
waived in writing in accordance with the instruments governing such Senior Debt
or such acceleration will have been rescinded or annulled, or (y) in case of
any nonpayment event of default specified in (b), during the period (a "Payment
Blockage Period") commencing on the date the Issuers or the Trustee receive
written notice (a "Payment Notice") of such event of default (which notice will
be binding on the Trustee and the Holders of Notes as to the occurrence of such
a payment default or nonpayment event of default) from the Credit Agent (or
other holders of Designated Senior Debt or their Representative or
Representatives) and ending on the earliest of (A) 179 days after such date,
(B) the date, if any, on which such Designated Senior Debt to which such
default relates is paid in full or such default is cured or waived in writing
in accordance with the instruments governing such Designated Senior Debt by the
holders of such Designated Senior Debt and (C) the date on which the Trustee
receives written notice from the Credit Agent (or other holders of Designated
Senior Debt or their Representative or Representatives), as the case may be,
terminating the Payment Blockage Period. During any consecutive 360-day period,
the aggregate of all Payment Blockage Periods shall not exceed 179 days and
there shall be a period of at least 181 consecutive days in each consecutive
360-day period when no Payment Blockage Period is in effect. No event of
default which existed or was continuing with respect to the Senior Debt to
which notice commencing a Payment Blockage Period was given on the date such
Payment Blockage Period commenced shall be or be made the basis for the
commencement of any subsequent Payment Blockage Period unless such event of
default is cured or waived for a period of not less than 90 consecutive days.

As a result of the subordination provisions described above, in the event
of Foamex's or FCC's liquidation, dissolution, bankruptcy, reorganization,
insolvency, receivership or similar proceeding or in an assignment for the
benefit of the creditors or a marshalling of the assets and liabilities of
either of the Issuers, Holders of Notes may recover less ratably than creditors
of the Issuers who are holders of Senior Debt. See "Risk
Factors--Subordination." The Indenture will limit, subject to certain financial
tests, the amount of additional Indebtedness, including Senior Debt, that the
Issuers and their respective Restricted Subsidiaries can incur. See "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock."

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Note Guarantees

The Issuers' payment obligations under the Notes are jointly and severally
guaranteed by the Subsidiary Guarantors. The Note Guarantees will be
subordinated to the prior payment in full of all Senior Debt of each Subsidiary
Guarantor (including such Subsidiary Guarantor's guarantee of the New Credit
Agreement, if any) to the same extent that the Notes are subordinated to Senior
Debt of the Issuers. The obligations of any Subsidiary Guarantor under its Note
Guarantee will be limited so as not to constitute a fraudulent conveyance under
applicable law.

The Indenture provides that no Subsidiary Guarantor may consolidate with
or merge with or into (whether or not such Subsidiary Guarantor is the
surviving Person), another corporation, Person or entity whether or not
affiliated with such Subsidiary Guarantor unless, subject to the provisions of
the following paragraph, (i) the Person formed by or surviving any such
consolidation or merger (if other than such Subsidiary Guarantor) assumes all
the obligations of such Subsidiary Guarantor pursuant to a supplemental
indenture in form and substance reasonably satisfactory to the Trustee, under
the Notes and the Indenture; (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists; (iii) such Subsidiary
Guarantor, or any Person formed by or surviving any such consolidation or
merger, would have Consolidated Net Worth (immediately after giving effect to
such transaction), equal to or greater than the Consolidated Net Worth of such
Guarantor immediately preceding the transaction; and (iv) Foamex would be
permitted by virtue of Foamex's pro forma Fixed Charge Coverage Ratio,
immediately after giving effect to such transaction, to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the covenant described below under the caption "Incurrence of
Indebtedness and Issuance of Preferred Stock." The requirements of clauses
(iii) and (iv) of this paragraph will not apply in the case of a consolidation
with or merger with or into any other Person if the acquisition of all of the
Equity Interests in such Person would have complied with the provisions of the
covenants described below under the captions "--Restricted Payments" and
"--Incurrence of Indebtedness and Issuance of Preferred Stock."

The Indenture provides that (a) in the event of a sale or other
disposition of all of the assets of any Subsidiary Guarantor, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the
capital stock of any Subsidiary Guarantor, or (b) in the event that either of
the Issuers designates a Subsidiary Guarantor to be an Unrestricted Subsidiary,
or such Subsidiary Guarantor ceases to be a Subsidiary of the Issuers, then
such Subsidiary Guarantor (in the event of a sale or other disposition, by way
of such a merger, consolidation or otherwise, of all of the capital stock of
such Subsidiary Guarantor or any such designation) or the entity acquiring the
property (in the event of a sale or other disposition of all of the assets of
such Subsidiary Guarantor) will be released and relieved of any obligations
under its Note Guarantee; provided that the Net Proceeds of such sale or other
disposition are applied in accordance with the applicable provisions of the
Indenture. See "--Repurchase at the Option of Holders." In the case of a sale,
assignment, lease, transfer, conveyance or other disposition of all or
substantially all of the assets of a Subsidiary Guarantor, upon the assumption
provided for in clause (i) in the preceding paragraph, such Subsidiary
Guarantor shall be discharged from all further liability and obligation under
the Indenture.

Optional Redemption

The Notes will not be redeemable at the Issuers' option prior to June 15,
2002. Thereafter, the Notes will be redeemable at the option of the Issuers, in
whole or in part, at any time upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages, if
any, thereon, to the applicable redemption date, if redeemed during the
twelve-month period beginning on June 15 of the years indicated below:

Year Percentage
---- -----------
2002 ..................... 104.938%
2003 ..................... 103.292
2004 ..................... 101.646
2005 and thereafter ...... 100.000%

Notwithstanding the foregoing, at any time prior to June 15, 2000, the
Issuers may on any one or more occasions redeem up to 35% of the initially
outstanding aggregate principal amount of Notes at a redemption price equal to
109.875% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the redemption date, with the cash
proceeds of one or more Public Equity Offerings; provided that, in each case,

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at least 65% of the initially outstanding aggregate principal amount of Notes
remains outstanding immediately after the occurrence of such redemption; and
provided, further, that such redemption shall occur within 45 days of the date
of the closing of such Public Equity Offering.

Selection and Notice

If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
the Notes are listed, or, if the Notes are not so listed, on a pro rata basis,
by lot or by such method as the Trustee shall deem fair and appropriate;
provided that no Notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each Holder of Notes to be redeemed at its
registered address. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Note. Notes called for redemption become due
on the date fixed for redemption. On and after the redemption date, interest
ceases to accrue on Notes or portions of them called for redemption.

Mandatory Redemption

Except as set forth below under "--Repurchase at the Option of Holders,"
the Issuers are not required to make mandatory redemption or sinking fund
payments with respect to the Notes.

Repurchase at the Option of Holders

Change of Control

Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require the Issuers to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the date of purchase (the
"Change of Control Payment"). Within 30 days following any Change of Control,
the Issuers will mail a notice to each Holder describing the transaction or
transactions that constituted the Change of Control and offering to repurchase
Notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than the fifth Business Day preceding the last day of the
fiscal quarter of Foamex next following the Change of Control date (the "Change
of Control Payment Date"), pursuant to the procedures required by the Indenture
and described in such notice. The Issuers will comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the Notes as a result of a Change of Control.

On the Change of Control Payment Date, the Issuers will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof being purchased by
the Issuers. The Paying Agent will promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Indenture
provides that, prior to complying with the provisions of this covenant, but in
any event prior to the Change of Control Payment Date, the Issuers will either
repay all outstanding Senior Debt or obtain the requisite consents, if any,
under all agreements governing outstanding Senior Debt to permit the repurchase
of Notes required by this covenant. The Issuers will publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date. See "Risk Factors--Limitations on Ability to
Make Change of Control Payment."

The Change of Control provisions described above will be applicable
whether or not any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the Holders of the Notes to require that the
Issuers repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.

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The New Credit Facility restricts the Issuers from repurchasing any Notes
and also provides that certain asset sales and change of control events with
respect to the Issuers would constitute a default thereunder. Any future credit
agreements or other agreements relating to Senior Debt to which either of the
Issuers becomes a party may contain similar restrictions and provisions. In the
event a Change of Control occurs at a time when the Issuers are prohibited from
purchasing Notes, the Issuers could seek the consent of their respective
lenders to purchase the Notes or could attempt to refinance the borrowings that
contain such prohibition. If the Issuers do not obtain such consent or repay
such borrowings, the Issuers will remain prohibited from purchasing Notes. In
such case, the Issuers' failure to purchase tendered Notes would constitute an
Event of Default under the Indenture which would, in turn, constitute a default
under the New Credit Facility and would likely cause an event of default under
any other outstanding Senior Debt. In such circumstances, the subordination
provisions in the Indenture would likely restrict payments to the Holders of
Notes. See "Risk Factors--Subordination" and "Description of Certain Debt
Instruments."

The Issuers will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in the Indenture applicable to a Change of Control Offer made by the
Issuers and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.

The definition of Change of Control includes a phrase relating to the
sale, lease, transfer, conveyance or other disposition of "all or substantially
all" of the assets of each of the Issuers and each of their respective
Subsidiaries taken as a whole. Although there is a developing body of case law
interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
Holder of Notes to require the Issuers to repurchase such Notes as a result of
a sale, lease, transfer, conveyance or other disposition of less than all of
the assets of the Issuers and their respective Subsidiaries taken as a whole to
another Person or group may be uncertain.

Asset Sales

The Indenture provides that each of the Issuers will not, and will not
permit any of their respective Restricted Subsidiaries to, consummate an Asset
Sale unless (i) such Issuer (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the
fair market value (evidenced by an Officers' Certificate delivered to the
Trustee and a resolution of the Board of Directors) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 80% of the
consideration therefor received by such Issuer or such Restricted Subsidiary is
in the form of (A) cash, (B) assets useful in a Permitted Business not to
exceed $30.0 million in the aggregate over the life of the Notes, or (C) Equity
Interests representing a controlling interest in a Permitted Business not to
exceed $30.0 million in the aggregate over the life of the Notes (collectively,
the "Permitted Consideration"); provided that the amount of (x) any liabilities
(as shown on such Issuer's or such Restricted Subsidiary's most recent balance
sheet), of such Issuer or any Restricted Subsidiary (other than contingent
liabilities (except to the extent reflected (or reserved for) on a balance
sheet of the Issuers or any Restricted Subsidiary as of the date prior to the
date of consummation of such transaction) and liabilities that are by their
terms subordinated to the Notes or the Note Guarantees) that are assumed by the
transferee of any such assets and (y) any securities, notes or other
obligations received by such Issuer or any such Restricted Subsidiary from such
transferee that are converted within 90 days by such Issuer or such Restricted
Subsidiary into Permitted Consideration (to the extent so received), shall be
deemed to be Permitted Consideration for purposes of this provision; and
provided further, that the 80% limitation referred to above shall not apply to
any Asset Sale in which the Permitted Consideration portion of the
consideration received therefor is equal to or greater than what the net
after-tax proceeds would have been had such Asset Sale complied with the
aforementioned 80% limitation.

Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
the Issuers may apply such Net Proceeds, at their option, (a) to repay Senior
Debt, or (b) to the acquisition of assets to be used in a Permitted Business.
Pending the final application of any such Net Proceeds, the Issuers may
temporarily reduce the New Credit Facility or otherwise invest such Net
Proceeds in any manner that is not prohibited by the Indenture. Any Net
Proceeds from Asset Sales that are not applied or invested as provided in the
first sentence of this paragraph will be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $15.0 million,
the Issuers will be required to make an offer to all Holders of Notes (an
"Asset Sale Offer") to purchase the maximum principal amount of Notes that may
be purchased out of the Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
and Liquidated Damages, if any,

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thereon to the date of purchase, in accordance with the procedures set forth in
the Indenture. To the extent that the aggregate amount of Notes tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Issuers
may use any remaining Excess Proceeds for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased
on a pro rata basis; provided, however, that the Issuers shall not be obligated
to purchase Notes in denominations other than integral multiples of $1,000.
Upon completion of such offer to purchase, the amount of Excess Proceeds shall
be reset at zero.

Certain Covenants

Restricted Payments

The Indenture provides that each of the Issuers will not, and will not
permit any of their respective Restricted Subsidiaries to, directly or
indirectly: (i) declare or pay any dividend or make any other payment or
distribution on account of the Issuers' or any of their respective Restricted
Subsidiaries' Equity Interests (including, without limitation, any payment in
connection with any merger or consolidation involving the Issuers (other than
cash in lieu of fractional shares)) or to the direct or indirect holders of the
Issuers' or any of their respective Restricted Subsidiaries' Equity Interests
in their capacity as such (other than dividends or distributions payable (a) in
additional Equity Interests (other than Disqualified Stock) of the Issuers or
(in the case of a dividend, other payment or distribution on account of the
Equity Interest of a Restricted Subsidiary) of such Restricted Subsidiary or
(b) to the Issuers or their Restricted Subsidiaries); (ii) purchase, redeem or
otherwise acquire or retire for value (including without limitation, in
connection with any merger or consolidation involving the Issuers) any Equity
Interests of the Issuers or any direct or indirect parent of the Issuers; (iii)
make any Investment in any Unrestricted Subsidiary; (iv) make any payment on or
with respect to, or purchase, redeem, defease or otherwise acquire or retire
for value any Indebtedness (other than the Notes) that is pari passu with or
subordinated to the Notes or the Note Guarantees, except a payment of interest
or principal at Stated Maturity; or (v) make any Restricted Investment (all
such payments and other actions set forth in clauses (i) through (v) above
being collectively referred to as "Restricted Payments"), unless, at the time
of and after giving effect to such Restricted Payment:

(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and

(b) Foamex would, at the time of such Restricted Payment and after giving
pro forma effect thereto as if such Restricted Payment had been made at the
beginning of the applicable four-quarter period, have been permitted to incur
at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first paragraph of the covenant described below
under the caption "--Incurrence of Indebtedness and Issuance of Preferred
Stock"; and

(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Issuers and their respective Restricted
Subsidiaries after the date of the Indenture (excluding Restricted Payments
permitted by clauses (ii), (iii), (iv), (vi), (vii), (viii), (x), (xi), (xii),
(xiii), (xiv), (xv), (xvi) and (xvii) of the next succeeding paragraph), is
less than the sum of (i) 50% of the Consolidated Net Income of Foamex for the
preceding four-quarter period, plus (ii) 100% of the aggregate net cash
proceeds received by Foamex from the issue or sale since the date of the
Indenture of Equity Interests of Foamex (other than Disqualified Stock) or of
Disqualified Stock or debt securities of Foamex that have been converted into
such Equity Interests (other than Equity Interests (or Disqualified Stock or
convertible debt securities) sold to a Subsidiary of the Issuers and other than
Disqualified Stock or convertible debt securities that have been converted into
Disqualified Stock) or of capital contributions to the Issuers, plus (iii) to
the extent that any Restricted Investment that was made after the date of the
Indenture is sold for cash or otherwise liquidated or repaid for cash (less the
cost of disposition, if any), or the cash return, including, without
limitation, any cash dividends or distributions, with respect to such
Restricted Investment or from any Unrestricted Subsidiary.

The foregoing provisions will not prohibit (i) the payment of any dividend
or distribution within 60 days after the date of declaration thereof, if at
said date of declaration such payment would have complied with the provisions
of the Indenture; (ii) the redemption, repurchase, retirement, defeasance or
other acquisition of any Pari Passu Debt, or subordinated Indebtedness or
Equity Interests of the Issuers or any Restricted Subsidiary in exchange for,
or out of the net cash proceeds of the substantially concurrent sale or
issuance (other than to a Restricted Subsidiary

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of the Issuers) of, Equity Interests of the Issuers or any Restricted
Subsidiary (other than any Disqualified Stock); provided that the amount of any
such net cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause (c)
(ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase
or other acquisition of Pari Passu Debt or subordinated Indebtedness with the
net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;
(iv) the payment of any dividend or distribution by a Restricted Subsidiary of
the Issuers to the holders of its Equity Interests on a pro rata basis; (v) the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Issuers, any Restricted Subsidiary of the Issuers, or
any direct or indirect parent of the Issuers or their respective Restricted
Subsidiaries held by any member of the Issuers' (or any of its Restricted
Subsidiaries') management pursuant to any management equity subscription
agreement or stock option agreement either (a) in effect as of the date of the
Indenture; provided that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Equity Interests shall not exceed $2.5 million in
any twelve- month period and no Default or Event of Default shall have occurred
and be continuing immediately after such transaction or (b) upon the
termination of such person's employment; (vi) the advancement of payment or
payment of distributions pursuant to the Tax Sharing Agreement and the making
of up to $17.0 million of loans or advances pursuant to the Tax Advance
Agreement dated as of December 11, 1996 between FJPS and Foamex as amended to
the date of the Indenture; (vii) the payment by Foamex of a management fee
pursuant to the Management Services Agreement in an amount not to exceed $3.0
million per annum; (viii) distributions to Foamex International Inc. and its
Subsidiaries which are utilized to pay the debt service and other expenses of
Foamex Aviation Corp., the aggregate amount of which shall not exceed $2.0
million in any twelve-month period; (ix) additional payments in an aggregate
amount not to exceed $25.0 million; (x) Contributions to a Restricted
Subsidiary if such Subsidiary (a) executes and delivers to the Trustee a
supplemental indenture in form reasonably satisfactory to the Trustee pursuant
to which such Restricted Subsidiary shall guarantee all of the Obligations of
the Issuers with respect to the Indenture and the Notes and (b) delivers to the
Trustee an Opinion of Counsel reasonably satisfactory to the Trustee to the
effect that such supplemental indenture, has been duly executed and delivered
by such Restricted Subsidiary and is in compliance with the terms of the
Indenture; (xi) distributions, loans or advances to the holders of the Equity
Interests of the Issuers in an amount sufficient to pay all or a portion of the
principal of, interest or premium, if any, on the Foamex-JPS Automotive L.P.
Senior Secured Discount Debentures due 2004; (xii) distributions, loans or
advances to holders of the Equity Interests of the Issuers in an amount
sufficient to enable Foamex International Inc. to pay its reasonable, out of
pocket operating and administrative expenses, including without limitation,
directors fees, legal and audit expenses, SEC compliance expenses and corporate
franchise and other taxes; provided that no such expense payments shall be made
to an Affiliate (other than a director or officer of the Issuers whose status
as an Affiliate results solely from his position as a director or officer of
the Issuers) of Foamex International Inc.; (xiii) Investments received by the
Issuers or any of their Restricted Subsidiaries as non-cash consideration from
Asset Sales to the extent permitted by the covenant described under the caption
"--Repurchase at the Option of Holders--Asset Sales"; (xiv) the Closing Date
Transactions; (xv) payments made pursuant to the Great Western Note; (xvi)
payments made to purchase any Indebtedness subject to the Closing Date
Transactions that is not purchased pursuant to such Transaction; and (xvii) the
issuance or sale of Equity Interests of Foamex Latin America to key executives
of Foamex Latin America not to exceed 5% of the outstanding Equity Interests of
Foamex Latin America.

The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default; provided
that in no event shall the business currently operated by any Subsidiary
Guarantor be transferred to or held by an Unrestricted Subsidiary. For purposes
of making such determination, all outstanding Investments by either Issuer and
their respective Restricted Subsidiaries (except to the extent repaid in cash)
in the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will be included for purposes of calculating the
aggregate amount of Restricted Payments under clause (c) of first paragraph of
this covenant. All such outstanding Investments will be deemed to constitute
Investments in an amount equal to the fair market value of such Investments at
the time of such designation. Such designation will only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.

The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Issuers or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any individual or series of related non-cash
Restricted Payments (other than the Closing Date Transactions) shall be
determined by the Board of Directors whose resolution with respect thereto
shall be delivered to the Trustee, such determination to be based

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upon an opinion or appraisal issued by an accounting, appraisal or investment
banking firm of national standing, as applicable, if such fair market value
exceeds $1.0 million. In connection with each Restricted Payment, the Issuers
shall deliver to the Trustee, prior to or within 60 days of the making of such
Restricted Payment, an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by the covenant "Restricted Payments" were computed, together with a
copy of any fairness opinion or appraisal required by the Indenture.

Incurrence of Indebtedness and Issuance of Preferred Stock

The Indenture provides that the Issuers will not, and will not permit any
of their respective Subsidiaries to, directly or indirectly, create, incur,
issue, assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt) and that the Issuers and the Subsidiary
Guarantors will not issue any Disqualified Stock and the Issuers will not
permit any of their respective Subsidiaries which are not Subsidiary Guarantors
to issue any shares of preferred stock; provided, however, that the Issuers and
their Subsidiaries may incur Indebtedness (including Acquired Debt and
Indebtedness under the New Credit Facility) or issue shares of Disqualified
Stock or in the case of Subsidiaries which are not Subsidiary Guarantors, issue
preferred stock if: the Fixed Charge Coverage Ratio for Foamex's most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such additional Indebtedness
is incurred or such Disqualified Stock or preferred stock is issued would have
been at least 2.25 to 1, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the Disqualified Stock or preferred stock had been issued
and such net proceeds had been applied, as the case may be, at the beginning of
such four-quarter period.

The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):

(i) the incurrence by the Issuers or any of their respective Subsidiaries
of term Indebtedness under the New Credit Facility; provided that the aggregate
principal amount of all term Indebtedness outstanding under the New Credit
Facility after giving effect to such incurrence, including all term
Indebtedness incurred to refund, refinance or replace any other Indebtedness
incurred pursuant to this clause (i), does not exceed an amount equal to $330.0
million less the aggregate amount of all Net Proceeds of Asset Sales that have
been applied since the date of the Indenture to repay such term Indebtedness
under the New Credit Facility and resulting in a permanent reduction of the
related commitments pursuant to the covenant described above under the caption
"Asset Sales";

(ii) the incurrence by the Issuers or any of their Subsidiaries of
revolving credit Indebtedness and letters of credit (with letters of credit
being deemed to have a principal amount, without duplication, equal to the
maximum potential liability of the Issuers and their Subsidiaries thereunder)
under the New Credit Facility; provided that the aggregate principal amount of
all revolving credit Indebtedness outstanding under the New Credit Facility
after giving effect to such incurrence, including all Indebtedness incurred to
refund, refinance or replace any other revolving Indebtedness incurred pursuant
to this clause (ii), does not exceed an amount equal to $150.0 million, less
the aggregate amount of all Net Proceeds of Asset Sales applied to repay such
revolving Indebtedness and resulting in a permanent reduction of the related
commitments pursuant to the covenant described above under the caption "--Asset
Sales"; provided, however, that notwithstanding anything to the contrary
contained in the Indenture, in no event shall the amount of Indebtedness which
the Issuers and their Subsidiaries may incur in the aggregate pursuant to
clause (i) and this clause (ii) be less than $150.0 million;

(iii) the incurrence by the Issuers and their respective Subsidiaries of
the Existing Indebtedness;

(iv) the incurrence by the Issuers and the Subsidiary Guarantors of
Indebtedness represented by the Notes;

(v) the incurrence by the Issuers or any of their respective Subsidiaries
of Indebtedness represented by Capital Lease Obligations, mortgage financings
or purchase money obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of the Issuers
or such Subsidiary, in an aggregate principal amount not to exceed $25.0
million at any time outstanding;

(vi) the incurrence by the Issuers or any of their respective Subsidiaries
of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness that was permitted
by the Indenture to be incurred;

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(vii) the incurrence by the Issuers or any of their respective Restricted
Subsidiaries of intercompany Indebtedness between or among the Issuers and any
of their respective Restricted Subsidiaries; provided, however, that (i) if an
Issuer is the obligor on such Indebtedness and the payee is not a Subsidiary
Guarantor, such Indebtedness is expressly subordinated to the prior payment in
full in cash of all Obligations with respect to the Notes and (ii)(A) any
subsequent issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than an Issuer or a Restricted
Subsidiary and (B) any sale or other transfer of any such Indebtedness to a
Person that is not either an Issuer or a Restricted Subsidiary shall be deemed,
in each case, to constitute an incurrence of such Indebtedness by an Issuer or
such Restricted Subsidiary, as the case may be;

(viii) the incurrence by the Issuers or any of their respective
Subsidiaries of Hedging Obligations;

(ix) the Guarantee by the Issuers or any of their respective Subsidiaries
of Indebtedness of the Issuers or a Restricted Subsidiary of the Issuers that
was permitted to be incurred by another provision of this covenant;

(x) the incurrence by the Issuers' Unrestricted Subsidiaries of
Non-Recourse Debt and preferred stock, provided, however, that if any such
Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such
event shall be deemed to constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Issuers;

(xi) the incurrence by the Issuers or any of their respective Subsidiaries
of additional Indebtedness including, without limitation, pursuant to the New
Credit Facility, in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any other Indebtedness
incurred pursuant to this clause (xi), not to exceed $45.0 million;

(xii) Acquired Debt of a Subsidiary in existence at the time of the
acquisition of such Subsidiary, if such Acquired Debt was not incurred in
contemplation of such acquisition and such Acquired Debt is Non- Recourse Debt
(except with respect to such acquired Subsidiary and its Subsidiaries);

(xiii) Indebtedness of Foamex Canada, Inc. and its Subsidiaries (which is
Non-Recourse Debt, except with respect to such entities) in an amount, at any
time outstanding not to exceed CND$15.0 million;

(xiv) Indebtedness of Foamex Latin America (which is Non-Recourse Debt,
except with respect to such entities) in an amount, at any time outstanding not
to exceed $12.0 million;

(xv) Assets Sales in the form of Receivables Transactions; and

(xvi) Indebtedness of Foamex Asia, Inc. and its Subsidiaries (which is
Non-Recourse Debt, except with respect to such entities) in an amount, at any
time outstanding not to exceed $5.0 million.

For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xvi) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Issuers shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this covenant and such item of Indebtedness will
be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof. Neither the accrual of interest, nor
the accretion of accreted value will be deemed to be an incurrence of
Indebtedness for purposes of this covenant.

Liens

The Indenture provides that the Issuers will not and will not permit any
of their respective Restricted Subsidiaries to, directly or indirectly, create,
incur, assume or suffer to exist any Lien on any asset now owned or hereafter
acquired, or any income or profits therefrom or assign or convey any right to
receive income therefrom, except Permitted Liens.

Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

The Indenture provides that the Issuers will not, and will not permit any
of their respective Restricted Subsidiaries to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary which is not a
Subsidiary Guarantor to (i)(a) pay dividends or make any other distributions to
the Issuers or any of their respective Restricted Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness owed to the Issuers or
any of their respective Restricted Subsidiaries, (ii) make loans or

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advances to the Issuers or any of their respective Restricted Subsidiaries or
(iii) transfer any of its properties or assets to the Issuers or any of their
respective Restricted Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (a) Existing Indebtedness as in
effect on the date of the Indenture, (b) the New Credit Facility as in effect
as of the date of the Indenture, and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings thereof, provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacement or
refinancings are no more restrictive with respect to such dividend and other
payment restrictions than those contained in the New Credit Facility as in
effect on the date of the Indenture, (c) the Indenture and the Notes, (d)
applicable law, (e) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Issuers or any of their respective Restricted
Subsidiaries as in effect at the time of such acquisition (except to the extent
such Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person and its
Subsidiaries, or the property or assets of the Person and its Subsidiaries, so
acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of the Indenture to be incurred, (f) by reason of
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, (g) purchase money
obligations for property acquired that impose restrictions of the nature
described in clause (iii) above on the property so acquired, (h) Permitted
Refinancing Indebtedness, provided that the restrictions contained in the
agreements governing such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced, (i) any instrument or agreement governing Indebtedness
permitted to be incurred under the Indenture, which is secured by a Lien
permitted to be incurred under the Indenture, which encumbrance or restriction
is not applicable to any property or assets other than the property or assets
subject to such Lien, or (j) restrictions applicable to a Receivables
Subsidiary arising from a Receivables Transaction.

Merger, Consolidation, or Sale of Assets

The Indenture provides that the Issuers may not consolidate or merge with
or into (whether or not the Issuers are the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially
all of their properties or assets in one or more related transactions, to
another corporation, Person or entity unless (i) such Issuer is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than such Issuer) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is organized and existing under the laws of the United States, any state
thereof or the District of Columbia provided that FCC may not consolidate or
merge with or into any entity other than a corporation satisfying such
requirements for so long as Foamex remains a partnership; (ii) the entity or
Person formed by or surviving any such consolidation or merger (if other than
such Issuer) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of such Issuer under the Notes and the Indenture pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee; (iii)
immediately after such transaction no Default or Event of Default exists; and
(iv) except in the case of a merger of an Issuer with or into one of its Wholly
Owned Restricted Subsidiaries, the Issuer or the entity or Person formed by or
surviving any such consolidation or merger (if other than the Issuer), or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made (A) will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of such Issuer
immediately preceding the transaction and (B) will, at the time of such
transaction and after giving pro forma effect thereto as if such transaction
had occurred at the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of the
covenant described above under the caption "-- Incurrence of Indebtedness and
Issuance of Preferred Stock." In the case of a sale, assignment, lease,
transfer, conveyance or other disposition of all or substantially all of the
assets of an Issuer, upon the assumption provided for in clause (ii) above,
such Issuer shall be discharged from all further liability and obligation under
the Indenture.

Transactions with Affiliates

The Indenture provides that the Issuers will not, and will not permit any
of their respective Restricted Subsidiaries to, make any payment to, or sell,
lease, transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate (each of the foregoing, an
"Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms
that are no less favorable to the Issuers or the relevant Subsidiary than those
that would have been obtained in a comparable transaction by the Issuers or

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such Subsidiary with an unrelated Person and (ii) the Issuers deliver to the
Trustee (a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $1.0
million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (i)
above and that such Affiliate Transaction has been approved by a majority of
the members of the Board of Directors and (b) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $5.0 million, an opinion as to the fairness to the
Holders of such Affiliate Transaction from a financial point of view issued by
an accounting, appraisal or investment banking firm of national standing;
provided that (m) prepaid expenses and loans or advances to employees and
similar items in the ordinary course of business; (n) the advancement of
payment or payment of distributions pursuant to the Tax Sharing Agreement and
the making of loans or advances pursuant to the Tax Advance Agreement dated as
of December 11, 1996 between FJPS and Foamex, as amended to the date of the
Indenture; (o) the payment by Foamex of a management fee pursuant to the
Management Services Agreement in an amount not to exceed $3.0 million per
annum; (p) distributions to Foamex International Inc. and its Subsidiaries
which are utilized to pay the debt service and other expenses of Foamex
Aviation Corp., the aggregate amount of which shall not exceed $2.0 million in
any twelve-month period; (q) the issuance or sale of Equity Interests of Foamex
Latin America to key executives of Foamex Latin America, not to exceed 5% of
the outstanding Equity Interests of Foamex Latin America; (r) Investments in
the Trace Note not to exceed $5.0 million; (s) Investments in the Trace Global
Opportunity Fund not to exceed $5.0 million; (t) borrowings of up to $5.0
million by Trace Holdings from the Issuers and their respective Subsidiaries;
(u) the Closing Date Transactions; (v) transactions pursuant to the Supply
Agreement with Foamex International Inc., dated as of June 28, 1994; (w)
purchases (and sales) of inventory and services in the ordinary course of
business at a price not greater (less) than the price paid by (charged to)
purchasers of a similar quantity of inventory and services which are not
Affiliates of the Issuers, (x) any employment agreement entered into by the
Issuers or any of their respective Restricted Subsidiaries in the ordinary
course of business and consistent with the current market practice or the past
practice of the Issuers or such Restricted Subsidiary; (y) transactions between
or among the Issuers and/or its Restricted Subsidiaries; and (z) Restricted
Payments that are permitted by the provisions of the Indenture described above
under the caption "--Restricted Payments," in each case, shall not be deemed
Affiliate Transactions.

Anti-Layering

The Indenture provides that (i) the Issuers will not incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is both
(a) subordinate or junior in right of payment to any Senior Debt and (b) senior
in any respect in right of payment to the Notes and (ii) no Subsidiary
Guarantor will incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is both (a) subordinate or junior in right of
payment to its Senior Debt and (b) senior in right of payment to its Note
Guarantee.

Sale and Leaseback Transactions

The Indenture provides that the Issuers will not, and will not permit any
of their respective Restricted Subsidiaries to, enter into any sale and
leaseback transaction; provided that the Issuers may enter into a sale and
leaseback transaction if (i) the Issuers could have (a) incurred Indebtedness
in an amount equal to the Attributable Debt relating to such sale and leaseback
transaction pursuant to the covenant described above under the caption
"--Incurrence of Additional Indebtedness and Issuance of Preferred Stock" and
(b) incurred a Lien to secure such Indebtedness pursuant to the covenant
described above under the caption "--Liens" and (ii) the gross cash proceeds of
such sale and leaseback transaction are at least equal to the fair market value
(in the case of gross cash proceeds in excess of $5.0 million as determined in
good faith by the Board of Directors and set forth in an Officers' Certificate
delivered to the Trustee) of the property that is the subject of such sale and
leaseback transaction.

Limitation on Issuances and Sales of Capital Stock of Restricted
Subsidiaries

The Indenture provides that the Issuers (i) will not, and will not permit
any Restricted Subsidiary of the Issuers to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Restricted Subsidiary of the
Issuers to any Person (other than the Issuers or a Restricted Subsidiary of the
Issuers), unless (a) such transfer, conveyance, sale, lease or other
disposition is of all the Capital Stock of such Restricted Subsidiary and (b)
the cash Net Proceeds from such transfer, conveyance, sale, lease or other
disposition are applied in accordance with the covenant described above under
the caption "--Asset Sales," and (ii) will not permit any Restricted Subsidiary
of the Issuers to issue any of its Equity Interests (other than, if necessary,
shares of its Capital Stock constituting directors'

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qualifying shares) to any Person other than to the Issuers or a Restricted
Subsidiary of the Issuers; provided, however, the foregoing restrictions will
not apply to (A) Investments in the entities described under clause (o) of the
definition of Permitted Investments; (B) transfers, conveyances, sales, leases
or other dispositions (collectively "dispositions") of any Capital Stock of any
Restricted Subsidiary that have a fair market value at the time of such
disposition of less than $1.0 million; or (C) a public offering of Equity
Interests of Foamex Latin America which results in the net proceeds to Foamex
Latin America of at least $15.0 million.

Business Activities

The Issuers will not, and will not permit any of their respective
Restricted Subsidiaries to, engage in any business other than Permitted
Businesses, except to such extent as would not be material to the Issuers and
their respective Restricted Subsidiaries taken as a whole.

Payments for Consent

The Indenture provides that neither the Issuers nor any of their
respective Restricted Subsidiaries will, directly or indirectly, pay or cause
to be paid any consideration, whether by way of interest, fee or otherwise, to
any Holder of any Notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the Indenture or the Notes
unless such consideration is offered to be paid or is paid to all Holders of
the Notes that consent, waive or agree to amend in the time frame set forth in
the solicitation documents relating to such consent, waiver or agreement.

Additional Guarantees

The Indenture provides that (i) if the Issuers or any of their respective
Restricted Subsidiaries shall, after the date of the Indenture, transfer or
cause to be transferred, including by way of any Investment, in one or a series
of transactions (whether or not related), any assets, businesses, divisions,
real property or equipment having an aggregate fair market value (as determined
in good faith by the Board of Directors) in excess of $1.0 million to any
Restricted Subsidiary that is not a Subsidiary Guarantor or a Foreign
Subsidiary, (ii) if Foamex or any of its Restricted Subsidiaries shall acquire
another Restricted Subsidiary other than a Foreign Subsidiary having total
assets with a fair market value (as determined in good faith by the Board of
Directors) in excess of $1.0 million, or (iii) if any Restricted Subsidiary
other than a Foreign Subsidiary shall incur Acquired Debt in excess of $1.0
million, then the Issuers shall, at the time of such transfer, acquisition or
incurrence, (i) cause such transferee, acquired Restricted Subsidiary or
Restricted Subsidiary incurring Acquired Debt (if not then a Subsidiary
Guarantor) to execute a Note Guarantee of the Obligations of the Issuers under
the Notes in the form set forth in the Indenture and (ii) deliver to the
Trustee an Opinion of Counsel, in form reasonably satisfactory to the Trustee,
that such Note Guarantee is a valid, binding and enforceable obligation of such
transferee, acquired Restricted Subsidiary or Restricted Subsidiary incurring
Acquired Debt, subject to customary exceptions for bankruptcy, fraudulent
conveyance and equitable principles. Notwithstanding the foregoing, the Issuers
or any of their Restricted Subsidiaries may make a Restricted Investment in any
Wholly Owned Restricted Subsidiary of the Issuers without compliance with this
covenant provided that such Restricted Investment is permitted by the covenant
described under the caption, "Restricted Payments."

Reports

The Indenture provides that, whether or not required by the rules and
regulations of the Securities and Exchange Commission (the "Commission"), so
long as any Notes are outstanding, the Issuers will furnish to the Trustee and
the Holders of Notes (i) all quarterly and annual financial information that
would be required to be contained in a filing with the Commission on Forms 10-Q
and 10-K if the Issuers were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of operations of
the Issuers and their consolidated Subsidiaries and, with respect to the annual
information only, a report thereon by Foamex's certified independent
accountants and (ii) all current reports that would be required to be filed
with the Commission on Form 8-K if the Issuers were required to file such
reports. In addition, whether or not required by the rules and regulations of
the Commission, the Issuers will file a copy of all such information and
reports with the Commission for public availability (unless the Commission will
not accept such a filing) and make such information available to securities
analysts and prospective investors upon request. In addition, the Issuers have
agreed that, for so long as any Notes remain outstanding, they will furnish to
the Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.

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Events of Default and Remedies

The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes (whether or not prohibited by the
subordination provisions of the Indenture); (ii) default in payment when due of
the principal of or premium, if any, on the Notes (whether or not prohibited by
the subordination provisions of the Indenture); (iii) failure by the Issuers to
comply with the provisions described under the captions "--Change of Control,"
or to consummate a mandatory Offer to purchase pursuant to the covenant
described above under the caption "--Asset Sales," or "--Merger, Consolidation,
or Sale of Assets"; (iv) failure by the Issuers for 60 days after notice to
comply with any of its other agreements in the Indenture or the Notes; (v)
default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for money
borrowed by the Issuers or any of their respective Restricted Subsidiaries (or
the payment of which is Guaranteed by the Issuers or any of their respective
Restricted Subsidiaries) whether such Indebtedness or Guarantee now exists, or
is created after the date of the Indenture, which default (a) is caused by a
failure to pay principal of, interest or premium, if any, on such Indebtedness
prior to the expiration of the grace period provided in such Indebtedness on
the date of such default (a "Payment Default") or (b) results in the
acceleration of such Indebtedness prior to its Stated Maturity and, in each
case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the Stated Maturity of which has been so accelerated,
aggregates $20.0 million or more; (vi) failure by the Issuers or any of their
respective Restricted Subsidiaries to pay final judgments aggregating in excess
of $10.0 million, which judgments are not paid, discharged or stayed for a
period of 60 days after entry thereof; and (vii) certain events of bankruptcy
or insolvency with respect to the Issuers or any of their respective
Significant Subsidiaries (as defined in the Indenture).

If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately provided, however, that
if any Indebtedness or Obligation is outstanding pursuant to the New Credit
Facility, upon a declaration of acceleration by the holders of the Notes or the
Trustee, all principal and interest under the Indenture shall be due and
payable upon the earlier of (x) the day which five Business Days after the
provision to the Issuers, the Credit Agent and the Trustee of such written
notice of acceleration or (y) the date of acceleration of any Indebtedness
under the New Credit Facility; and provided, further, that in the event of an
acceleration based upon an Event of Default set forth in clause (v) above, such
declaration of acceleration shall be automatically annulled if the holders of
Indebtedness which is the subject of such failure to pay at maturity or
acceleration have rescinded their declaration of acceleration in respect of
such Indebtedness or such failure to pay at maturity shall have been cured or
waived within 30 days thereof and no other Event of Default has occurred during
such 30-day period which has not been cured, paid or waived. Notwithstanding
the foregoing, in the case of an Event of Default arising from certain events
of bankruptcy or insolvency, with respect to the Issuers or any of their
respective Restricted Subsidiaries all outstanding Notes will become due and
payable without further action or notice. Holders of the Notes may not enforce
the Indenture or the Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest.

In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of either of the
Issuers with the intention of avoiding payment of the premium that the Issuers
would have had to pay if the Issuers then had elected to redeem the Notes
pursuant to the optional redemption provisions of the Indenture, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Notes. If an Event of Default
occurs by reason of any willful action (or inaction) taken (or not taken) by or
on behalf of the Issuers with the intention of avoiding the prohibition on
redemption of the Notes prior to June 15, 2002, then the premium specified in
the Indenture shall also become immediately due and payable to the extent
permitted by law upon the acceleration of the Notes.

The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.

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The Issuers are required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Issuers are required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.

No Personal Liability of Directors, Officers, Employees, Partners and
Stockholders

No director, officer, employee, partner, incorporator or stockholder of
the Issuers or any of their Restricted Subsidiaries, as such, shall have any
liability for any obligations of the Issuers or any Subsidiary Guarantor under
the Notes, the Indenture, the Note Guarantees or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of
Notes by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the Notes. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the Commission that such a waiver is against public
policy.

Satisfaction and Discharge of the Indenture; Defeasance

The Indenture will provide that the Issuers may terminate their
Obligations under the Indenture and the Obligations of the Subsidiary
Guarantors under the Note Guarantees at any time by delivering all outstanding
Notes issued under the Indenture to the Trustee for cancellation and paying all
sums to be paid pursuant to the terms of the Indenture. In addition, the
Issuers will be permitted to terminate their Obligations under the Indenture
and the Obligations of the Subsidiary Guarantors under the Note Guarantees by
irrevocably depositing with the Trustee money or United States Government
Obligations sufficient to pay principal, interest and premium and Liquidated
Damages, if any, on the Notes to maturity or redemption, and all other sums
payable pursuant to the terms of the Indenture after complying with certain
other procedures set forth therein. Notwithstanding the foregoing, certain
Obligations of the Issuers and the Subsidiary Guarantors under the Indenture,
the Notes and the Note Guarantees shall survive until the Notes are no longer
outstanding.

Transfer and Exchange

A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Issuers may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Issuers are not required to transfer or exchange any Note
selected for redemption. Also, the Issuers are not required to transfer or
exchange any Note for a period of 15 days before a selection of Notes to be
redeemed.

The registered Holder of a Note will be treated as the owner of it for all
purposes.

Amendment, Supplement and Waiver

Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Notes), and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a tender
offer or exchange offer for Notes).

Without the consent of each Holder affected, an amendment or waiver may
not (with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or change the fixed maturity
of any Note or alter the provisions with respect to the redemption of the Notes
(other than provisions relating to the covenants described above under the
caption "--Repurchase at the Option of Holders"), (iii) reduce the rate of or
change the time for payment of interest on any Note, (iv) waive a Default or
Event of Default in the payment of principal of or premium or Liquidated
Damages, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal
amount of the Notes and a waiver of the payment default that resulted from such
acceleration), (v) make any Note payable in money other than that stated in the
Notes, (vi) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, if any, or interest on the Notes, (vii) waive a
redemption payment with respect to any Note (other than a payment required by
one of the covenants described above under the caption "--Repurchase at the
Option of Holders") or (viii) make any change in the foregoing amendment and
waiver

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provisions. In addition, any amendment to the provisions of Article 10 or
Article 12 of the Indenture (which relate to subordination) will require the
consent of the Holders of at least 75% in aggregate principal amount of the
Notes then outstanding if such amendment would adversely affect the rights of
Holders of Notes.

Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Issuers, the Subsidiary Guarantors and the Trustee may amend or supplement
the Indenture or the Notes to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption and discharge of the Issuers' and the
Subsidiary Guarantors' obligations to Holders of Notes in the case of a merger,
consolidation or sale of assets or Capital Stock, to make any change that would
provide any additional rights or benefits to the Holders of Notes or that does
not adversely affect the legal rights under the Indenture of any such Holder,
to comply with requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act or to allow
any Subsidiary to Guarantee the Notes.

Concerning the Trustee

The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Issuers or the Guarantor, to obtain payment
of claims in certain cases, or to realize on certain property received in
respect of any such claim as security or otherwise. The Trustee will be
permitted to engage in other transactions; however, if it acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the Commission for permission to continue or resign.

The Holders of a majority in principal amount of the then outstanding
Notes will have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any Holder of Notes, unless such Holder shall have offered to
the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.

Book-Entry, Delivery and Form

Except as set forth below, the New Notes will initially be issued in the
form of one or more registered notes in global form without coupons (each, a
"Global Note"). Upon issuance, each Global Note will be deposited with, or on
behalf of, The Depository Trust Company (the "Depositary") and registered in
the name of Cede & Co., as nominee of the Depositary.

If a holder tendering Old Notes so requests, such holder's New Notes will
be issued as described below under "Certificated Securities" in registered form
without coupons (the "Certificated Securities").

The Depositary has advised the Issuers that it is (i) a limited purpose
trust company organized under the laws of the State of New York, (ii) a member
of the Federal Reserve System, (iii) a "clearing corporation" within the
meaning of the Uniform Commercial Code, as amended, and (iv) a "Clearing
Agency" registered pursuant to Section 17A of the Exchange Act. The Depositary
was created to hold securities for its participants (collectively, the
"Participants") and facilitates the clearance and settlement of securities
transactions between Participants through electronic book-entry charges to the
accounts of its Participants, thereby eliminating the need for physical
transfer and delivery of certificates. The Depositary's Participants include
securities brokers and dealers (including the Initial Purchaser), banks and
trust companies, clearing corporations and certain other organizations. Access
to the Depositary's system is also available to other entities such as banks,
brokers, dealers and trust companies (collectively, the "Indirect
Participants") that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly.

The Issuers expect that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Notes, the Depositary will credit the
accounts of Participants who elect to exchange Old Notes with an interest in
the Global Note and (ii) ownership of the New Notes will be shown on, and the
transfer of ownership thereof will be effected only through, records maintained
by the Depositary (with respect to the interest of Participants), the
Participants and the Indirect Participants. The laws of some states require
that certain persons take physical delivery of definitive form of securities
that they own and that security interests in negotiable instruments can only be
perfected by delivery of certificates representing the instruments.

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So long as the Depositary or its nominee is the registered owner of a
Global Note, the Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the New Notes represented by the Global
Note for all purposes under the Indenture. Except as provided below, owners of
beneficial interests in a Global Note will not be entitled to have New Notes
represented by such Global Notes registered in their names, will not receive or
be entitled to receive physical delivery of Certificated Securities, and will
not be considered the owners or holders thereof under the Indenture for any
purpose, including with respect to the giving of any direction, instruction or
approval to the Trustee thereunder. As a result, the ability of a person having
a beneficial interest in New Notes represented by a Global Note to pledge such
interest to persons or entities that do not participate in the Depositary's
system, or to otherwise take action with respect to such interest, may be
affected by the lack of a physical certificate evidencing such interest.

The Issuers understand that under existing industry practice, in the event
the Issuers request any action of holders or an owner of a beneficial interest
in a Global Note desires to take any action that the Depositary, as the holder
of such Global Note, is entitled to take, the Depositary would authorize the
Participants to take such action and the Participant would authorize persons
owning through such participants to take such action or would otherwise act
upon the instruction of such persons. Neither the Issuers nor the Trustee will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of New Notes by the Depositary, or for maintaining,
supervising or reviewing any records of the Depositary relating to such New
Notes.

Payments with respect to the principal of, premium, if any, interest and
Liquidated Damages, if any, on any New Notes represented by a Global Note
registered in the name of the Depositary or its nominee on the applicable
record date will be payable by the Trustee to or at the direction of the
Depositary or its nominee in its capacity as the registered holder of the
Global Note representing such New Notes under the Indenture. Under the terms of
the Indenture, the Issuers and the Trustee may treat the persons in whose names
the New Notes, including the Global Notes, are registered as the owners thereof
for the purpose of receiving such payment and for any and all other purposes
whatsoever. Consequently, neither the Issuers nor the Trustee have or will have
any responsibility or liability for the payment of such amounts to beneficial
owners of New Notes (including principal, premium, if any, interest, and
Liquidated Damages, if any), or to immediately credit the accounts of the
relevant Participants with such payment, in amounts proportionate to their
respective holdings in principal amount of beneficial interest in the Global
Note as shown on the records of the Depositary. Payments by the Participants
and the Indirect Participants to the beneficial owners of New Notes will be
governed by standing instructions and customary practice and will be the
responsibility of the Participants or the Indirect Participants.

Certificated Securities

If (i) the Issuers notify the Trustee in writing that the Depositary is no
longer willing or able to act as a depositary and the Issuers are unable to
locate a qualified successor within 90 days or (ii) the Issuers, at their
option, notify the Trustee in writing that they elect to cause the issuance of
New Notes in definitive form under the Indenture, then, upon surrender by the
Depositary of its Global Notes, Certificated Securities will be issued to each
person that the Depositary identifies as the beneficial owner of the New Notes
represented by the Global Note. In addition, any person having a beneficial
interest in a Global Note or any holder of Old Notes whose Old Notes have been
accepted for exchange may, upon request to the Trustee or the Exchange Agent,
as the case may be, exchange such beneficial interest or Old Notes for
Certificated Securities. Upon any such issuance, the Trustee is required to
register such Certificated Securities in the name of such person or persons (or
the nominee of any thereof), and cause the same to be delivered thereto.

Neither the Issuers nor the Trustee shall be liable for any delay by the
Depositary or any Participant or Indirect Participant in identifying the
beneficial owners of the related New Notes and each such person may
conclusively rely on, and shall be protected in relying on, instructions from
the Depositary for all purposes (including with respect to the registration and
delivery, and the respective principal amounts, of the New Notes to be issued).

Certain Definitions

Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.

"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,

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without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person to the extent of the
fair market value of such asset where the Indebtedness so secured is not the
Indebtedness of such Person.

"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control. Notwithstanding the foregoing, as of the date of the
Indenture, Donaldson, Lufkin & Jenrette Securities Corporation will not be an
Affiliate of the Issuers.

"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets (excluding any sale and leaseback transaction, the granting of a
Permitted Lien, and the transfer of cash and Cash Equivalents) other than sales
of inventory, licensing of intellectual property or sales of services, in each
case in the ordinary course of business, but including a Receivables
Transaction (provided that the sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Issuers and their Restricted
Subsidiaries taken as a whole will be governed by the provisions of the
Indenture described above under the caption "--Change of Control" and/or the
provisions described above under the caption "--Merger, Consolidation or Sale
of Assets" and not by the provisions of the Asset Sale covenant), and (ii) the
issue or sale by the Issuers or any of their respective Restricted Subsidiaries
of Equity Interests of any of the Issuers' Restricted Subsidiaries, in the case
of either clause (i) or (ii), whether in a single transaction or a series of
related transactions (a) that have a fair market value in excess of $10.0
million or (b) for Net Proceeds in excess of $10.0 million. Notwithstanding the
foregoing: (i) a transfer of assets by either of the Issuers to a Restricted
Subsidiary or by a Restricted Subsidiary to either of the Issuers or to another
Restricted Subsidiary, (ii) an issuance of Equity Interests by a Restricted
Subsidiary to either of the Issuers or to another Restricted Subsidiary, (iii)
Hedging Obligations and (iv) a Restricted Payment that is permitted by the
covenant described above under the caption "--Restricted Payments" will not be
deemed to be Asset Sales.

"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).

"Beneficial Owner" means "beneficial owner" as such terms is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act; provided, however, that (i) a
person shall not be deemed to have beneficial ownership of securities subject
to a stock purchase agreement, merger agreement, or similar agreement until the
consummation of the transactions contemplated by such agreement, and (ii) for
purposes of determining beneficial ownership of Voting Stock of Foamex,
stockholders of Foamex International Inc. shall be deemed to beneficially own a
percentage of Voting Stock of Foamex equal to their percentage beneficial
ownership of Voting Stock of Foamex International Inc. multiplied by Foamex
International Inc.'s beneficial ownership of Voting Stock of Foamex.

"Board of Directors" means the Board of Directors of the Managing General
Partner, on behalf of Foamex (or Foamex, if Foamex is a corporation), FCC, or
any Subsidiary Guarantor or any authorized committee of the Board of Directors.

"Business Day" means any day except a Saturday, Sunday or other day in the
City of New York, or in the city of the corporate trust office of the Trustee,
on which banks are authorized to close.

"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.

"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests

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(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.

"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States of America or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States of America is pledged in support thereof), (iii) time
deposits and certificates of deposit, including eurodollar time deposits, of
any commercial bank organized in the United States having capital and surplus
in excess of $100,000,000 or a commercial bank organized under the laws of any
other country that is a member of the OECD having total assets in excess of
$100,000,000 with a maturity date not more than one year from the date of
acquisition, (iv) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (i) and (ii)
above entered into with any bank meeting the qualifications specified in clause
(iii) above, (v) direct obligations issued by any state of the United States of
America or any political subdivision of any state or any public instrumentality
thereof maturing within 90 days after the date of acquisition thereof and, at
the time of acquisition, having one of the two highest ratings obtainable from
either Standard & Poor's Corporation nor Moody's Investors Service, Inc. (or,
if at any time neither Standard & Poor's Corporation nor Moody's Investors
Service, Inc. shall be rating such obligations, then from such other nationally
recognized rating service acceptable to the Trustee), (vi) commercial paper
issued by the parent corporation of any commercial bank organized in the United
States having capital and surplus in excess of $100,000,000 or a commercial
bank organized under the laws of any other country that is a member of the OECD
having total assets in excess of $100,000,000, and commercial paper issued by
others having one of the two highest ratings obtainable from either Standard &
Poor's Corporation or Moody's Investors Service, Inc. (or, if at any time
neither Standard & Poor's Corporation nor Moody's Investors Service, Inc. shall
be rating such obligations, then from such other nationally recognized rating
services acceptable to the Trustee) and in each case maturing within one year
after the date of acquisition, (vii) overnight bank deposits and bankers'
acceptances at any commercial bank organized in the United States having
capital and surplus in excess of $100,000,000 or a commercial bank organized
under the laws of any other country that is member of the OECD having total
assets in excess of $100,000,000, (viii) deposits available for withdrawal on
demand with commercial banks organized in the United States having capital and
surplus in excess of $50,000,000 or a commercial bank organized under the laws
of any other country that is a member of the OECD having total assets in excess
of $50,000,000 and (ix) investments in money market funds substantially all of
whose assets comprise securities of the types described in clauses (i) through
(viii).

"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of either of the Issuers and their respective
Restricted Subsidiaries taken as a whole to any "person" (as such term is used
in Section 13(d)(3) of the Exchange Act) other than the Principals or their
Related Parties (as defined below), (ii) the adoption of a plan relating to the
liquidation or dissolution of the Issuers, (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above), other than the
Principals and their Related Parties, becomes the Beneficial Owner of (A) more
than 25% of the Voting Stock of either of the Issuers (measured by voting power
rather than by number of shares) and (B) a greater percentage of the Voting
Stock than the Principals and their Related Parties or (iv) the first day on
which a majority of the members of the Board of Directors of either of the
Issuers are not Continuing Directors.

"Closing Date Transactions" means the following transactions to be entered
into by Foamex in connection with the issuance of the Notes: (i) the
distribution to Foamex- JPS Automotive L.P. ("FJPS") and FMXI, Inc. of: (a) all
of the FJPS and Foamex-JPS Capital Corporation Senior Secured Discount
Debentures due 2004 purchased by Foamex on or prior to the date of the
Indenture; (b) the promissory note of FJPS payable to Foamex, dated June 28,
1994 and (c) the promissory note of Foamex International Inc. payable to
Foamex, dated December 8, 1995; (ii) a cash distribution to Trace Foam Company,
Inc. in an amount equal to one-ninety ninth (1/99) of the distribution in (i)
above; (iii) the amendment of the promissory note of Trace International
Holdings, Inc. payable to Foamex, dated July 7, 1996, which extends the
maturity of such obligation to 2001; and (iv) the Tender Offer and the
incurrence of borrowings under the New Credit Facility in connection with the
Refinancing Plan.

"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with
an Asset Sale or discontinued operations (to the extent such losses were
deducted in computing

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such Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period (including, to the
extent applicable, payments made pursuant to any tax sharing agreements), to
the extent that such provision for taxes was included in computing such
Consolidated Net Income, plus (iii) consolidated interest expense of such
Person and its Subsidiaries for such period, whether paid or accrued and
whether or not capitalized (including, without limitation, amortization of debt
issuance costs and original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed interest
with respect to Attributable Debt, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings (whether or not accounted for by the Issuers and their respective
Subsidiaries as interest expense), and net payments (if any) pursuant to
Hedging Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income, plus (iv) depreciation, amortization
(including amortization of goodwill and other intangibles) and other non-cash
expenses of such Person and its Subsidiaries for such period to the extent that
such depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, minus (v) non-cash items increasing
such Consolidated Net Income for such period, in each case, on a consolidated
basis and determined in accordance with GAAP.

"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP (excluding, however, the effect of the Closing Date Transactions and
of any other extraordinary transaction in connection with the incurrence of the
Notes, and the consummation of the recapitalization of the Issuers in
connection therewith); provided that (i) the Net Income of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions with respect to current or prior years Net Income (if not
previously distributed or dividended) paid in cash to the referent Person or a
Restricted Subsidiary thereof; (ii) the Net Income of any Restricted Subsidiary
that is not a Subsidiary Guarantor shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Restricted
Subsidiary of that Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been obtained) or,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders; (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded; (iv) the
cumulative effect of a change in accounting principles shall be excluded; and
(v) the Net Income (but not loss) of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the Issuers or one of their respective
Subsidiaries except as set forth in (i).

"Consolidated Net Worth" means, (A) with respect to any partnership, the
common and preferred partnership equity of such partnership and its
consolidated subsidiaries, as determined on a consolidated basis in accordance
with GAAP, and (B) with respect to any other Person as of any date, the sum of
(i) the consolidated equity of the common equityholders of such Person and its
consolidated Subsidiaries as of such date plus (ii) the respective amounts
reported on such Person's balance sheet as of such date with respect to any
series of preferred equity (other than Disqualified Stock) that by its terms is
not entitled to the payment of dividends unless such dividends may be declared
and paid only out of net earnings in respect of the year of such declaration
and payment, but only to the extent of any cash received by such Person upon
issuance of such preferred stock, less (x) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of tangible assets
of a going concern business made within 12 months after the acquisition of such
business) subsequent to the date of the Indenture in the book value of any
asset owned by such Person or a consolidated Subsidiary of such Person, (y) all
investments as of such date in unconsolidated Subsidiaries and in Persons that
are not Subsidiaries (except, in each case, Permitted Investments), plus (z)
all unamortized debt discount and expense and unamortized deferred charges as
of such date, all of the foregoing determined in accordance with GAAP.

"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Issuers who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.

"Contributions" means any loans, cash advances, capital contributions,
investments or other transfers of assets for less than fair value by the
Issuers or any of their respective Restricted Subsidiaries to any Subsidiary or
other

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Affiliate of the Issuers or any of their respective Restricted Subsidiaries
other than a Subsidiary Guarantor, other than loans and cash advances to
officers and directors made in the ordinary course of business not to exceed
$5.0 million.

"Credit Agent" means any of The Bank of Nova Scotia or Citicorp USA, Inc.,
in their respective capacity as Administrative Agents for the lenders party to
the New Credit Facility, or any successor thereto or any person otherwise
appointed.

"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.

"Designated Senior Debt" means (i) any Indebtedness outstanding under the
New Credit Facility and (ii) any other Senior Debt the principal amount of
which is $25.0 million or more and that has been designated by the Issuers as
Designated Senior Debt.

"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the Holder thereof, in whole or in part, on or prior to the
date that is 91 days after the date on which the Notes mature.

"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

"Existing Indebtedness" means up to $14.1 million in aggregate principal
amount of Indebtedness of the Issuers and their respective Restricted
Subsidiaries (other than Indebtedness under the New Credit Facility plus
Indebtedness subject to the Closing Date Transactions that is not purchased
pursuant to such Transactions) in existence on the date of the Indenture,
including the Great Western Note, until all such amounts are repaid.

"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense of such Person
and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations, but excluding the amortization of deferred financing costs) and
(ii) the consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such period to the extent related to
Indebtedness, and (iii) any interest expense on Indebtedness of another Person
(other than such Person's Restricted Subsidiaries) that is Guaranteed by such
Person or one of its Restricted Subsidiaries or secured by a Lien on assets of
such Person or one of its Restricted Subsidiaries (whether or not such
Guarantee or Lien is called upon), but only to the extent of the interest
expense attributable to the lesser of (a) the principal amount of such
Indebtedness, or (b) the fair market value of such asset and (iv) the product
of (a) all dividend payments, whether or not in cash, on any series of
preferred stock of such Person or any of its Restricted Subsidiaries, other
than dividend payments to such Person or its Restricted Subsidiaries and
dividends on Equity Interests payable solely in Equity Interests of the
Issuers, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of such Person and its Restricted Subsidiaries,
expressed as a decimal, in each case, on a consolidated basis and in accordance
with GAAP.

"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Issuers or any of their respective Restricted Subsidiaries incurs, assumes,
Guarantees or redeems, repurchases or otherwise retires any Indebtedness (other
than revolving credit borrowings) or issues preferred stock subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but prior to the date on which the event for which the calculation
of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the
Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, Guarantee or redemption, repurchase or retirement of
Indebtedness, or such issuance or redemption of preferred stock, as if the same
had occurred at the beginning of the applicable four-quarter reference period.
In addition, for purposes of making the computation referred to above, (i)
acquisitions that have been made by the Issuers or any of their respective
Restricted Subsidiaries, including through mergers or consolidations and
including

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any related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the four-quarter
reference period and Consolidated Cash Flow for such reference period shall be
calculated without giving effect to clause (iii) of the proviso set forth in
the definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall
be excluded, and (iii) the Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, but only to the
extent that the obligations giving rise to such Fixed Charges will not be
obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date.

"Foamex Latin America" means Foamex Latin America, Inc. and its direct and
indirect Subsidiaries.

"Foreign Subsidiary" means any Subsidiary of the Issuers either (a) which
is organized outside of the United States of America, (b) whose principal
activities are conducted outside of the United States of America or (c) whose
only material assets are Equity Interests in Subsidiaries which are Foreign
Subsidiaries.

"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Indenture.

"Great Western Note" means the subordinated promissory note incurred in
connection with the acquisition of Great Western in the principal amount of
$7,014,864 that bears interest at a maximum rate of 6.0% per annum payable
semi-annually.

"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.

"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under (i) interest rate or currency swap agreements, interest
rate or currency cap agreements, interest rate or currency collar agreements
and (ii) other agreements or arrangements designed to protect such Person
against or expose such Person to fluctuations in interest rates and/or currency
exchange rates.

"Indebtedness" means, with respect to any Person, without duplication, any
indebtedness of such Person, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof) or banker's
acceptances or representing Capital Lease Obligations or the balance deferred
and unpaid of the purchase price of any property, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of
the foregoing indebtedness (other than letters of credit) would appear as a
liability upon a balance sheet of such Person prepared in accordance with GAAP,
as well as all Indebtedness of others secured by a Lien on any asset of such
Person (whether or not such Indebtedness is assumed by such Person) to the
extent of the fair market value of such asset where the Indebtedness so secured
is not the Indebtedness of such Person and, to the extent not otherwise
included, the Guarantee by such Person of any Indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be (i) the
accreted value thereof, to the extent such Indebtedness does not require
current payments of interest, and (ii) the principal amount thereof, together
with any interest thereon that is more than 30 days past due, in the case of
any other Indebtedness. Notwithstanding anything in the Indenture to the
contrary, Hedging Obligations shall not constitute Indebtedness, except to the
extent they appear on the balance sheet of Foamex.

"Insolvency or Liquidation Proceedings" means (i) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding, relative to Foamex or FCC or to the
creditors of Foamex or FCC, as such, or to the assets of Foamex or FCC, or (ii)
any liquidation, dissolution, reorganization or winding up of Foamex or FCC,
whether voluntary or involuntary and involving insolvency or bankruptcy, or
(iii) any assignment for the benefit of creditors or any other marshalling of
assets and liabilities of Foamex or FCC.

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"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities, together
with all items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP. If the Issuers or any Restricted
Subsidiary of the Issuers sells or otherwise disposes of any Equity Interests
of any direct or indirect Restricted Subsidiary of the Issuers such that, after
giving effect to any such sale or disposition, such Person is no longer a
Restricted Subsidiary of one of the Issuers, the Issuers shall be deemed to
have made an Investment on the date of any such sale or disposition equal to
the fair market value of the Equity Interests of such Subsidiary not sold or
disposed of in an amount determined as provided in the final paragraph of the
covenant described above under the caption "--Restricted Payments." A provision
in an agreement relating to the purchase or sale of any of the Issuers' or
their respective Restricted Subsidiaries' assets containing an "earn out" or
providing for an adjustment to the purchase or sale price based on a financial
statement relating to the assets purchased or sold shall not be deemed to be an
"Investment."

"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).

"Management Services Agreement" means that management services agreement,
by and between Foamex and Trace Foam Company, Inc. as in effect on the date of
the Indenture.

"Managing General Partner" means FMXI, Inc., a Delaware corporation and
its successors.

"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (or loss
in the case of (a)), together with any related provision for taxes (including
pursuant to the Tax Sharing Agreement) on such gain (or loss in the case of
(a)), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions and
losses) or (b) the disposition of any securities other than Cash Equivalents by
such Person or any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries and (ii) any
extraordinary or nonrecurring gain (or loss), together with any related
provision for taxes on such extraordinary or nonrecurring gain (or loss),
excluding charges related to hyper-inflationary accounting pursuant to FASB 52
and interpretations by the Commission thereof.

"Net Proceeds" means the aggregate cash proceeds received by the Issuers
or any of their respective Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, consent fees to facilitate such
Asset Sale and sales commissions) and any relocation expenses incurred as a
result thereof, taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.

"New Credit Facility" means that certain New Credit Facility, to be
entered into, by and among the Issuers and The Bank of Nova Scotia and Citicorp
USA, Inc., as Credit Agents, providing for up to $480.0 million of borrowings,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
modified, renewed, refunded, replaced or refinanced from time to time, and
after the Credit Agent has acknowledged in writing that the New Credit Facility
has been terminated and all then outstanding Indebtedness and obligations
thereunder with respect thereto have been repaid in full in cash and
discharged, any successors to or replacements of such New Credit Facility (as
designated by the Board of Directors as evidenced by a resolution), as such
successors or replacements may be amended, modified, renewed, refunded,
replaced or refinanced from time to time.

"Non-Recourse Debt" means Indebtedness (i) as to which neither of the
Issuers nor any of their respective Restricted Subsidiaries (a) provides credit
support of any kind (including any undertaking, agreement or instrument

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that would constitute Indebtedness), (b) is directly or indirectly liable (as a
guarantor or otherwise), or (c) constitutes the lender; (ii) no default with
respect to which (including any rights that the holders thereof may have to
take enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of either
of the Issuers or any of their respective Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which the
lenders, except for lenders under instruments governing Acquired Debt (a) have
acknowledged that they do not have recourse to the holder of the Equity
Interest of the debtor or (b) have been notified in writing that they will not
have any recourse to the stock or assets of either of the Issuers or any of
their respective Restricted Subsidiaries.

"Obligations" means any principal, interest, penalties, expenses, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

"Pari Passu Debt" means any Indebtedness or the Issuers or any of their
Restricted Subsidiaries which, by its terms is pari passu in right of payment
to the Notes.

"Payment in Full" (together with any correlative phrases e.g. "paid in
full" and "pay in full") means (i) with respect to any Senior Debt other than
Senior Debt under or in respect of the New Credit Facility, payment in full
thereof or due provision for payment thereof (x) in accordance with the terms
of the agreement or instrument pursuant to which such Senior Debt was issued or
is governed or (y) otherwise to the reasonable satisfaction of the holders of
such Senior Debt, which shall include, in any Insolvency or Liquidation
Proceeding, approval by such holders individually or as a class, of the
provision for payment thereof, and (ii) with respect to Senior Debt under or in
respect of the New Credit Facility, payment in full thereof in cash or Cash
Equivalents.

"Permitted Business" means (i) the manufacture and distribution of
polyurethane and advanced polymer foam and activities related thereto, and (ii)
other businesses engaged in by the Issuers and their respective Restricted
Subsidiaries on the date of the Indenture and similar lines of businesses to
those engaged in by the Issuers on the date of the Indenture, including, but
not limited to, the manufacture and distribution of plastics and related
products.

"Permitted Investments" means (a) any Investment in either of the Issuers
or in a Wholly Owned Restricted Subsidiary of either of the Issuers and that is
engaged in a Permitted Business; (b) any Investment in Cash Equivalents; (c)
any Investment by either of the Issuers or any Restricted Subsidiary of either
of the Issuers in a Person, if as a result of such Investment (i) such Person
becomes a Wholly Owned Restricted Subsidiary of the Issuers or such Restricted
Subsidiary is engaged in a Permitted Business or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, either of the Issuers or a
Restricted Subsidiary of either of the Issuers that is engaged in a Permitted
Business; (d) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made in compliance with the covenant
described above under the caption "--Repurchase at the Option of Holders--Asset
Sales"; (e) any Investment to the extent made in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Issuers or a Subsidiary
Guarantor; (f) other Investments in any Person having an aggregate fair market
value (measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all other
Investments made pursuant to this clause (f) that are at the time outstanding,
not to exceed the sum of (A) $15.0 million, and (B) the aggregate net cash
proceeds (or non-cash proceeds when converted into cash) received by Foamex and
its Restricted Subsidiaries from the sale or disposition of investments
existing as of the date of the Indenture or made pursuant to this clause (f);
(g) securities received in connection with any good faith settlement or
Insolvency or Liquidation Proceeding; (h) Hedging Obligations entered into in
the ordinary course of business in connection with the operation of the
business of the Issuers and their Restricted Subsidiaries or as required by any
Indebtedness issued in compliance with the Indenture; (i) prepaid expenses and
loans or advances to employees and similar items in the ordinary course of
business; (j) endorsements of negotiable instruments and other similar
negotiable documents; (k) transactions with Affiliates as permitted under the
Indenture; (l) Investments outstanding as of the date of the Indenture, (m)
Investments of up to $5.0 million in Trace Global Opportunities Fund, (n) loans
or advances of up to $5.0 million in Trace Holdings, and (o) Investments in,
including Contributions to, Foamex Latin America, Foamex Asia or one or more
Foreign Subsidiaries, provided that the maximum amount of such Investments
outstanding at any one time does not exceed $50.0 million, plus the cash
dividends and distributions received by the Issuer and its Restricted
Subsidiaries with respect to Investments pursuant to this clause (o).

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"Permitted Liens" means (i) Liens securing Indebtedness under the New
Credit Facility; (ii) Liens in favor of either of the Issuers or any Subsidiary
Guarantor; (iii) Liens on property of a Person existing at the time such Person
is merged into or consolidated with the Issuers or any Subsidiary of either of
the Issuers; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any assets
other than those of the Person merged into or consolidated with either of the
Issuers; (iv) Liens on property existing at the time of acquisition thereof by
the Issuers or any Subsidiary of the Issuers, provided that such Liens were in
existence prior to the contemplation of such acquisition; (v) Liens to secure
the performance of statutory obligations, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course of
business; (vi) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (v) of the second paragraph of the covenant
entitled "Incurrence of Indebtedness and Issuance of Preferred Stock" covering
only the assets acquired with such Indebtedness; (vii) Liens existing on the
date of the Indenture; (viii) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and diligently
concluded, provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor; (ix) Liens on
assets of Unrestricted Subsidiaries that secure Non-Recourse Debt of
Unrestricted Subsidiaries; (x) Liens incurred in the ordinary course of
business including, without limitation, judgment and attachment liens, of the
Issuers or any Subsidiary of the Issuers with respect to obligations that do
not exceed $25.0 million at any one time outstanding and that are not incurred
in connection with the borrowing of money or the obtaining of advances or
credit (other than trade credit in the ordinary course of business); (xi) Liens
in favor of the Trustee; (xii) Liens on Receivables in connection with
Receivables Transaction; (xiii) Liens incurred in connection with Permitted
Refinancing Indebtedness, but only if such Liens extend to no more assets than
the Liens securing the Indebtedness being refinanced; (xiv) Liens securing
Senior Debt; (xv) Liens for taxes, assessments, governmental charges or claims
which are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted and if a reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor; (xvi) statutory Liens of landlords and carriers',
warehousemen's, mechanics', suppliers', materialmen's, repairmen's, or other
like Liens (including contractual landlords liens) arising in the ordinary
course of business and with respect to amounts not yet delinquent or being
contested in good faith by appropriate proceedings, if a reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor; (xvii) Liens incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security; (xviii) Liens
incurred or deposits made to secure the performance of tenders, bids, leases,
statutory obligations, surety and appeal bonds, government contracts,
performance and return-of-money bonds and other obligations of a like nature
incurred in the ordinary course of business (exclusive of obligations for the
payment of borrowed money); (xix) Liens to secure Indebtedness of any
Restricted Subsidiary, that is a Foreign Subsidiary provided that such
Indebtedness is used by such Restricted Subsidiary to finance operations of
such Foreign Subsidiary outside the United States and Canada; (xx) easements,
rights- of-way, restrictions, minor defects or irregularities in title and
other similar charges or encumbrances not interfering in any material respect
with the business of Foamex or any of its Subsidiaries; and (xxi) Liens arising
from filing Uniform Commercial Code financing statements regarding leases
(other than true leases and true consignments).

"Permitted Refinancing Indebtedness" means any Indebtedness of the Issuers
or any of their respective Restricted Subsidiaries issued in exchange for, or
the net proceeds of which are used to extend, refinance, renew, replace,
defease or refund other Indebtedness of the Issuers or any of their respective
Restricted Subsidiaries; provided that: (i) the principal amount (or accreted
value, if applicable) of such Permitted Refinancing Indebtedness does not
exceed the principal amount of (or accreted value, if applicable), plus
prepayment premium and accrued interest on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final
maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the Notes, such Permitted
Refinancing Indebtedness has a final maturity date later than the final
maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either
by one of the

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Issuers or by the Restricted Subsidiary which is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.

"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.

"Post-Petition Interest" means all interest and expenses accrued or
accruing after the commencement of any Insolvency or Liquidation Proceeding in
accordance with and at the contract rate (including, without limitation, any
rate applicable upon default) specified in the agreement or instrument
creating, evidencing or governing any Senior Debt, whether or not, pursuant to
applicable law or otherwise, the claim for such interest is allowed as a claim
in such Insolvency or Liquidation Proceeding.

"Principals" means Trace International Holdings, Inc. and Marshall S.
Cogan.

"Public Equity Offering" means a public offering of Equity Interests
(other than Disqualified Stock) of (i) Foamex or FCC; or (ii) Foamex
International, Inc. to the extent the net proceeds thereof are contributed to
one of the Issuers as a capital contribution, that, in each case, results in
the net proceeds to either of the Issuers of at least $25.0 million.

"Receivables" means, with respect to any Person or entity, all of the
following property and interests in property of such Person or entity, whether
now existing or existing in the future or hereafter acquired or arising: (i)
accounts, (ii) accounts receivable incurred in the ordinary course of business,
including without limitation, all rights to payment created by or arising from
sales of goods, leases of goods or the rendition of services no matter how
evidenced, whether or not earned by performance, (iii) all rights to any goods
or merchandise represented by any of the foregoing after creation of the
foregoing, including, without limitation, returned or repossessed goods, (iv)
all reserves and credit balances with respect to any such accounts receivable
or account debtors, (v) all letters of credit, security, or guarantees for any
of the foregoing, (vi) all insurance policies or reports relating to any of the
foregoing, (vii) all collection or deposit accounts relating to any of the
foregoing, (viii) all proceeds of the foregoing and (ix) all books and records
relating to any of the foregoing.

"Receivables Subsidiary" means an Unrestricted Subsidiary exclusively
engaged in Receivables Transactions and activities related thereto; provided,
however, that at no time shall the Issuers and their respective Subsidiaries
have more than one Receivables Subsidiary.

"Receivables Transaction" means (i) the sale or other disposition to a
third party of Receivables or an interest therein, or (ii) the sale or other
disposition of Receivables or an interest therein to a Receivables Subsidiary
followed by a financing transaction in connection with such sale or disposition
of such Receivables (whether such financing transaction is effected by such
Receivables Subsidiary or by a third party to whom such Receivables Subsidiary
sells such Receivables or interests therein); provided that in each of the
foregoing, the Issuers or their Restricted Subsidiaries receive at least 80% of
the aggregate principal amount of any Receivables financed in such transaction.

"Related Party" with respect to any Principal means (A) any controlling
stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family
member (in the case of an individual) of such Principal or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A) and this clause (B).

"Reorganization Securities" means securities distributed to the Holders of
the Notes in an Insolvency or Liquidation Proceeding pursuant to a plan of
reorganization consented to by each class of the Senior Debt, but only if all
of the terms and conditions of such securities (including, without limitation,
term, tenor, interest, amortization, subordination, standstills, covenants and
defaults), are at least as favorable (and provide the same relative benefits)
to the holders of Senior Debt and to the holders of any security distributed in
such Insolvency or Liquidation Proceeding on account of any such Senior Debt as
the terms and conditions of the Notes and the Indenture are, and provide to the
holders of Senior Debt.

"Representative" means the trustee, agent or representative for any Senior
Debt.

"Restricted Investment" means an Investment other than a Permitted
Investment.

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"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.

"Senior Debt" means all Indebtedness and other Obligations specified below
payable directly or indirectly by either of the Issuers or any of their
respective Restricted Subsidiaries, whether outstanding on the date of the
Indenture or thereafter created, incurred or assumed by either of the Issuers
or any of their respective Restricted Subsidiaries: (i) the principal of,
interest on and all other Obligations related to the New Credit Facility
(including without limitation all loans, letters of credit and other extensions
of credit under the New Credit Facility, and all expenses, fees,
reimbursements, indemnities and other amounts owing pursuant to the New Credit
Facility); (ii) amounts payable in respect of any Hedging Obligations; (iii)
all Indebtedness not prohibited by the "Incurrence of Indebtedness and Issuance
of Preferred Stock" covenant that is not expressly pari passu with or
subordinated to the Notes, and (iv) all permitted renewals, extensions,
refundings or refinancings thereof. All Post-Petition Interest on Senior Debt
shall constitute Senior Debt. Notwithstanding anything to the contrary in the
foregoing, Senior Debt will not include (i) Indebtedness of either of the
Issuers or any of their respective Restricted Subsidiaries to any other
Restricted Subsidiaries which is not a Subsidiary Guarantor, (ii) Indebtedness
of FCC to Foamex, (iii) any Indebtedness which by the express terms of the
agreement or instrument creating, evidencing or governing the same is junior or
subordinate in right of payment to any item of Senior Debt, (iv) any trade
payable arising from the purchase of goods or materials or for services
obtained in the ordinary course of business, or (v) Indebtedness incurred in
violation of the Indenture. To the extent any payment of Senior Debt (whether
by or on behalf of the Issuers or any of their respective Restricted
Subsidiaries, as proceeds or security or enforcement of any right of setoff or
otherwise) is declared to be fraudulent or preferential, set aside, or required
to be paid to a trustee, receiver or other similar party under any bankruptcy,
insolvency, receivership or similar law, then if such payment is recovered by
or paid over to, such trustee, receiver or other similar party, the Senior Debt
or part thereof originally intended to be satisfied shall be deemed to be
reinstated and outstanding as if such payment had not occurred. All Senior Debt
shall be and remain Senior Debt for all purposes of the Indenture, whether or
not subordinated in a bankruptcy, receivership, insolvency or similar
proceeding.

"Stated Maturity" means, with respect to any installment of interest,
accreted value or principal on any series of Indebtedness, the date on which
such payment of interest or principal is due or is scheduled to be paid in the
original documentation governing such Indebtedness, and shall not include any
contingent obligations to repay, redeem or repurchase any such interest,
accreted value or principal prior to the date originally scheduled for the
payment or accretion thereof.

"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).

"Subsidiary Guarantors" means General Felt Industries, Inc., Foamex
Fibers, Inc. and those Restricted Subsidiaries required to execute a Note
Guarantee pursuant to the provisions of the Indenture described under the
caption "Additional Guarantees" and any other Subsidiary that executes a Note
Guarantee.

"Tax Sharing Agreement" means the tax sharing agreement, as of the date of
the Indenture, among Foamex, Trace Foam Company, Inc., FMXI, Inc. and Foamex
International Inc. as in effect on the date of the Indenture.

"Trace Note" means the promissory note of Trace International Holdings,
Inc. dated July 7, 1996 payable to Foamex, as amended and restated as part of
the Closing Date Transactions.

"United States Government Obligations" means direct obligations of the
United States of America, or any agency or instrumentality thereof the payment
of which the full faith and credit of the United States of America is pledged.

"Unrestricted Subsidiary" means (i) any Subsidiary that is designated by
the Board of Directors of either Issuer as an Unrestricted Subsidiary pursuant
to a Board Resolution; but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) on the date of such designation
is not party to any agreement,

78
<PAGE>

contract, arrangement or understanding with either of the Issuers or any
Restricted Subsidiary of either of the Issuers unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to such
Issuer or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of such Issuer; (c) is a Person with
respect to which neither of the Issuers nor any of their respective Restricted
Subsidiaries has any direct or indirect obligation (x) to subscribe for
additional Equity Interests or (y) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results; (d) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of either of the Issuers or any of
their respective Restricted Subsidiaries; and (e) has at least one director on
its board of directors that is not a director or executive officer of either of
the Issuers or any of their respective Restricted Subsidiaries and has at least
one executive officer that is not a director or executive officer of either of
the Issuers or any of their respective Restricted Subsidiaries. Any such
designation by the Board of Directors of either Issuer shall be evidenced to
the Trustee by filing with the Trustee a certified copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions and was permitted by
the covenant described above under the caption "Certain Covenants--Restricted
Payments." If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of the Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of such Issuer as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under the covenant described under the
caption "--Incurrence of Indebtedness and Issuance of Preferred Stock," the
Issuers shall be in default of such covenant). The Board of Directors of either
of the Issuers may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that such designation shall be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of such Issuer of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (i) such Indebtedness is permitted under the
covenant described under the caption "Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock," calculated on a pro forma basis
as if such designation had occurred at the beginning of the four-quarter
reference period, and (ii) no Default or Event of Default would be in existence
following such designation.

"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person.

"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.

"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.

79
<PAGE>

DESCRIPTION OF THE PARTNERSHIP AGREEMENT

Set forth below is a summary of certain material terms of the Fourth
Amended and Restated Agreement of Limited Partnership of Foamex dated as of
December 14, 1993 and amended as of June 28, 1994 and June 12, 1997 (the
"Partnership Agreement"). A complete copy of such agreement has been filed as
an exhibit to the Registration Statement of which this Prospectus is a part and
is available in the manner described in "Additional Information."

Organization and Duration

Foamex is a Delaware limited partnership. FMXI, a wholly-owned subsidiary
of Foamex International, serves as the managing general partner of Foamex and
has a 1.0% interest therein. Trace Foam is a non-managing general partner of
Foamex and has a 1.0% interest therein. Foamex International is a limited
partner of Foamex and has a 98.0% interest therein. Foamex will continue its
existence until December 14, 2033, unless terminated earlier in accordance with
the terms of the Partnership Agreement. See "--Dissolution" below.

Management

The business and affairs of Foamex are managed by FMXI as the managing
general partner. The Partnership Agreement authorizes FMXI to designate
officers of Foamex who are responsible for implementing the decisions of FMXI
and for conducting the ordinary and usual business and affairs of Foamex. See
"Management--Executive Officers of Foamex and FCC; Directors and Executive
Officers of FMXI."

Assignment of Partnership Interests

No partner of Foamex may sell or otherwise encumber or dispose of, whether
voluntarily or by operation of law (each, a "transfer"), any part or all of its
interest in Foamex without the written consent of the other partners and any
attempt to do so will be void.

A person or entity will not be admitted as a substitute general partner of
Foamex or a substitute limited partner of Foamex until such time as such person
or equity (i) executes a counterpart of the Partnership Agreement or an
amendment to the Partnership Agreement agreeing to be bound by the terms and
conditions of the Partnership Agreement and (ii) is listed as a general partner
or a limited partner, as the case may be, on the books and records of Foamex.
No partner may withdraw from Foamex or otherwise assign its partnership
interest other than pursuant to the Partnership Agreement.

Amendment of the Partnership Agreement

The Partnership Agreement may not be amended except by an instrument in
writing signed by partners holding more than 50% of the partnership interests
in Foamex at such time; provided, however, no amendment affecting the rights of
Trace Foam in respect of allocations, distributions, assignments,
indemnification or capital contributions shall be made without the approval of
Trace Foam.

Dissolution

The partnership existence of Foamex shall continue until December 14, 2033
and then dissolve unless extended by mutual written consent of all partners,
unless any of the following events occur which shall require a dissolution of
Foamex: (i) any event of withdrawal of a general partner that causes a general
partner to cease to be general partner of Foamex under the Delaware Revised
Uniform Limited Partnership Act (the "Partnership Act"), except that Foamex
shall not be dissolved if (a) at the time of such event all remaining general
partners agree to carry on the business of Foamex without dissolution upon such
an event or (b) within 90 days after such event all partners of Foamex agree in
writing to continue the business of Foamex and to the appointment, effective as
of the date of such event, of one or more general partners of Foamex or (ii)
the entry of a decree of judicial dissolution under the Partnership Act.

Notwithstanding the foregoing, except to the extent required by applicable
law, Foamex may not be dissolved until 90 days after Scotiabank, and Citicorp
USA, Inc. as Administrative Agents (or any successor agent as Administrative
Agent) of the New Credit Facility, shall have received written notice of such
impending or proposed dissolution. See "Description of Certain Debt
Instruments--New Credit Facility."

80
<PAGE>

Indemnification

The Partnership Agreement provides that, to the fullest extent permitted
by law, Foamex will indemnify the partners, their respective affiliates,
officers, directors, stockholders, employees and agents, and any employee,
agent and officer of Foamex, against all expenses actually and reasonably
incurred by it or them in connection with any threatened, pending or completed
action, suit or proceeding against it or them or by, against or in the right of
Foamex to which it or them is or was a party, or is threatened to be made a
party, involving an alleged cause of action for damages arising out of, or in
any way related to or connected with, the business or internal affairs of
Foamex, if, in the transaction giving rise to such action, suit, or proceeding,
such person acted in good faith, without gross negligence or willful misconduct
or the willful breach of the Partnership Agreement and in a manner such person
reasonably believed to be within the scope of its authority under the
Partnership Agreement.

81
<PAGE>

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The following discussion summarizes certain United States federal income
tax consequences of the acquisition, ownership and disposition of the Notes to
a U.S. Holder. For this purpose, a "U.S. Holder" is a person who is, for United
States federal income tax purposes, (i) a citizen or resident of the United
States; (ii) a corporation, partnership or other entity created or organized in
or under the laws of the United States or of any political subdivision thereof;
(iii) an estate the income of which is subject to United States federal income
taxation regardless of its source; or (iv) a trust if a court within the U.S.
is able to exercise primary supervision over the administration of the trust
and one or more U.S. fiduciaries have the authority to control all substantial
decisions of the trust. Although the following discussion does not purport to
describe all of the tax considerations that may be relevant to a prospective
purchaser of the Notes, such discussion summarizes the material United States
federal income tax consequences to a U.S. Holder that purchases the Notes
pursuant to their original issue and that holds the Notes as a capital asset
within the meaning of Section 1221 of the Internal Revenue Code of 1986, as
amended (the "Code").

The statements regarding United States tax laws and practices set forth
below are based on the Code, administrative pronouncements, judicial decisions
and existing and proposed Treasury regulations in force and as applied in
practice on the date of this Prospectus and are subject to changes to those
laws and practices, and any relevant judicial decisions, subsequent to the date
of this Prospectus, which changes may be retroactive.

This discussion does not deal with persons that are subject to special tax
rules, such as dealers in securities, financial institutions, life insurance
companies, tax-exempt entities, persons holding the Notes as a part of a
hedging or conversion transaction or a straddle or persons whose "functional
currency" is not the United States dollar.

PROSPECTIVE PURCHASERS OF SENIOR SUBORDINATED NOTES ARE ADVISED TO CONSULT
THEIR OWN TAX ADVISORS AS TO THE UNITED STATES TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE SENIOR SUBORDINATED NOTES, INCLUDING
THE EFFECT OF ANY STATE OR LOCAL TAX LAWS.

The Exchange Offer

The exchange of Old Notes for New Notes pursuant to the Exchange Offer
should be treated as a continuation of the corresponding Old Notes because the
terms of the New Notes are not materially different from the terms of the Old
Notes. Accordingly, such exchange should not constitute a taxable event to U.S.
Holders and, therefore, (i) no gain or loss should be realized by U.S. Holders
upon receipt of a New Note, (ii) the holding period of the New Note should
include the holding period of the Old Note exchanged therefor and (iii) the
adjusted tax basis of the New Note should be the same as the adjusted tax basis
of the Old Note exchanged therefor immediately before the exchange.

Stated Interest

Stated interest on a Note will be taxable to a U.S. Holder as ordinary
interest income at the time that such interest accrues or is received, in
accordance with the U.S. Holder's regular method of accounting for federal
income tax purposes. Foamex expects that the Notes will not be considered to be
issued with original issue discount ("OID") for federal income tax purposes.

Payments Upon Registration Default

The occurrence of a Registration Default as described under "Description
of Notes--Registration Rights; Liquidated Damages" will cause Liquidated
Damages to be payable to the holders of the Notes in the manner described
therein. The treatment of such feature of the Notes is not entirely clear.
However, Foamex intends to take the position that the mere possibility that
such Liquidated Damages may become payable on the Notes will not affect the
amount of interest income includible by a U.S. Holder of a Note and will not
cause the Notes to be issued with OID. If such Liquidated Damages in fact
become payable on the Notes, then such Liquidated Damages should be includible
in income by the U.S. Holders of Notes currently as paid or accrued, in
accordance with such U.S. Holder's regular method of accounting for tax
purposes.

Sale, Exchange or Retirement of the Notes

A U.S. Holder's tax basis in a Note generally will be its cost. A U.S.
Holder generally will recognize gain or loss on the sale, exchange or
retirement of a Note in an amount equal to the difference between the amount
realized on the sale, exchange or retirement and the tax basis of the Note.
Gain or loss recognized on the sale, exchange

82
<PAGE>

or retirement of a Note (excluding amounts received in respect of accrued
interest, which will be taxable as ordinary interest income) generally will be
capital gain or loss and will be long-term capital gain or loss if the Note was
held for more than one year.

Backup Withholding

Under certain circumstances a U.S. Holder of a Note may be subject to
"backup withholding" at a 31% rate with respect to payments of interest thereon
or the gross proceeds from the disposition thereof. This withholding generally
applies if the U.S. Holder fails to furnish his or her social security number
or other taxpayer identification number ("TIN") in the specified manner and in
certain other circumstances. Any amount withheld from a payment to a U.S.
Holder under the backup withholding rules is allowable as a credit against such
U.S. Holder's federal income tax liability, provided that the required
information is furnished to the Internal Revenue Service. Corporations and
certain other entities described in the Code and Treasury regulations are
exempt from backup withholding if their exempt status is properly established.

PLAN OF DISTRIBUTION

Based on interpretations by the Staff set forth in no-action letters
issued to third parties, the Issuers believe that New Notes issued pursuant to
the Exchange Offer in exchange for the Old Notes may be offered for resale,
resold and otherwise transferred by holders thereof (other than any holder
which is (i) an "affiliate" of the Issuers within the meaning of Rule 405 under
the Securities Act, (ii) a broker-dealer who acquired Old Notes directly from
the Issuer or (iii) broker-dealers who acquired Old Notes as a result of
market-making or other trading activities) without compliance with the
registration and prospectus delivery provisions of the Securities Act provided
that such New Notes are acquired in the ordinary course of such holders'
business, and such holders are not engaged in, and do not intend to engage in,
and have no arrangement or understanding with any person to participate in, a
distribution of such New Notes; provided that broker-dealers ("Participating
Broker-Dealers") receiving New Notes in the Exchange Offer will be subject to a
prospectus delivery requirement with respect to resales of such New Notes. To
date, the Staff has taken the position that Participating Broker-Dealers may
fulfill their prospectus delivery requirements with respect to transactions
involving an exchange of securities such as the exchange pursuant to the
Exchange Offer (other than a resale of an unsold allotment from the sale of the
Old Notes to the Initial Purchasers) with the prospectus contained in the
Exchange Offer Registration Statement. Pursuant to the Registration Rights
Agreement, the Issuers has agreed to permit Participating Broker-Dealers and
other persons, if any, subject to similar prospectus delivery requirements to
use this Prospectus in connection with the resale of such New Notes. The
Issuers have agreed that, for a period not to exceed 120 days after the
Exchange Date, they will make this Prospectus, and any amendment or supplement
to this Prospectus, available to any broker-dealer that requests such documents
in the Letter of Transmittal.

Each holder of the Old Notes who wishes to exchange its Old Notes for New
Notes in the Exchange Offer will be required to make certain representations to
the Issuers as set forth in "The Exchange Offer--Terms and Conditions of the
Letter of Transmittal." In addition, each holder who is a broker-dealer and who
receives New Notes for its own account in exchange for Old Notes that were
acquired by it as a result of market-making activities or other trading
activities, will be required to acknowledge that it will deliver a prospectus
in connection with any resale by it of such New Notes.

The Issuers will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or at negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer and/or the purchasers of any such New Notes. Any
broker-dealer that resells New Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.

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<PAGE>

The Issuers has agreed to pay all expenses incidental to the Exchange
Offer other than commissions and concessions of any brokers or dealers and will
indemnify holders of the Notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act, as set forth in
the Registration Rights Agreement.

LEGAL MATTERS

Certain legal matters in connection with the New Notes offered hereby will
be passed upon for the Issuers and Subsidiary Guarantors by Willkie Farr &
Gallagher, New York, New York.

EXPERTS

The (i) consolidated financial statements of Foamex as of December 31, 1995
and December 29, 1996 and for each of the three years in the period ended
December 31, 1996, (ii) balance sheets of Foamex Capital Corporation as of
December 31, 1995 and December 29, 1996 and (iii) consolidated financial
statements of General Felt Industries, Inc. as of December 31, 1995 and December
29, 1996 and for each of the three years in the period ended December 29, 1996
included in the Registration Statement have been included in reliance upon the
reports of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.

FORWARD-LOOKING STATEMENTS

In connection with certain forward-looking statements contained in this
Prospectus, Foamex notes that there are various factors that could cause actual
results to differ materially from those set forth in any such forward-looking
statements, such as raw material price increases, general economic conditions,
the implementation and estimated annualized savings of the operations plan and
changes in environmental legislation and environmental conditions. The
forward-looking statements contained in this Prospectus were prepared by
management and are qualified by, and subject to, significant business,
economic, competitive, regulatory and other uncertainties and contingencies,
all of which are difficult or impossible to predict and many of which are
beyond the control of Foamex. Accordingly, there can be no assurance that the
forward-looking statements contained in this Prospectus will be realized or
that actual results will not be significantly higher or lower. The
forward-looking statements have not been audited by, examined by, compiled by
or subjected to agreed-upon procedures by independent accountants, and no
third-party has independently verified or reviewed such statements. Readers of
this Prospectus should consider these facts in evaluating the information
contained herein. In addition, the business and operations of Foamex are
subject to substantial risks which increase the uncertainty inherent in the
forward-looking statements contained in this Prospectus. The inclusion of
forward-looking statements contained in this Prospectus should not be regarded
as a representation by Foamex or any other person that the forward-looking
statements contained herein will be achieved. In light of the foregoing,
readers of this Prospectus are cautioned not to place undue reliance on the
forward-looking statements contained herein.

84
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

Foamex L.P.

Report of Independent Accountants ...................................................... F-3

Consolidated Balance Sheets as of December 31, 1995 and December 29, 1996 ............... F-4

Consolidated Statements of Operations for the years ended 1994, 1995 and 1996 ............ F-6

Consolidated Statements of Cash Flows for the years ended 1994, 1995 and 1996 ............ F-7

Consolidated Statements of Partners' Equity (Deficit) for the years ended 1994, 1995 and F-8
1996

Notes to Consolidated Financial Statements ............................................. F-9

Condensed Consolidated Balance Sheets as of December 29, 1996 and March 30, 1997 F-28
(unaudited)

Condensed Consolidated Statements of Operations--Thirteen Week Periods Ended March 31,
1996 and March 30, 1997 (unaudited) ................................................... F-29

Condensed Consolidated Statements of Cash Flows--Thirteen Week Periods Ended March 31,
1996 and March 30, 1997 (unaudited) ................................................... F-30

Notes to Condensed Consolidated Financial Statements (unaudited) ........................ F-31

Foamex Capital Corporation

Report of Independent Accountants ...................................................... F-37

Balance Sheets as of December 31, 1995 and December 29, 1996 ........................... F-38

Notes to Balance Sheets ............................................................... F-39

Balance Sheets as of December 29, 1996 and March 30, 1997 (unaudited) .................. F-40

Notes to Balance Sheets (unaudited) ...................................................... F-41

General Felt Industries, Inc.

Report of Independent Accountants ...................................................... F-42

Consolidated Balance Sheets as of December 31, 1995 and December 29, 1996 ............... F-43

Consolidated Statements of Operations for the years ended 1994, 1995 and 1996 ............ F-45

Consolidated Statements of Cash Flows for the years ended 1994, 1995 and 1996 ............ F-46

Consolidated Statements of Stockholder's Equity for the years ended 1994, 1995 and 1996 F-47

Notes to Consolidated Financial Statements ............................................. F-48

Condensed Consolidated Balance Sheets as of December 29, 1996 and March 30, 1997 F-58
(unaudited)

Condensed Consolidated Statements of Operations--Thirteen Week Periods Ended March 31,
1996 and March 30, 1997 (unaudited) ................................................... F-59

Condensed Consolidated Statements of Cash Flows--Thirteen Week Periods Ended March 31,
1996 and March 30, 1997 (unaudited) ................................................... F-60

Notes to Condensed Consolidated Financial Statements (unaudited) ........................ F-61

F-1
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS--(Continued)

Page
-----

Foamex Fibers, Inc.

Balance Sheets as of December 31, 1995 and December 29, 1996 (unaudited) ............... F-63

Statements of Operations for the period from April 13, 1995 (date of acquisition) to
December 31, 1995 and for the year ended December 29, 1996 (unaudited) ................ F-64

Statements of Cash Flows for the period from April 13, 1995 (date of acquisition) to
December 31, 1995 and for the year ended December 29, 1996 (unaudited) ................ F-65

Statements of Stockholder's Equity for the period from April 13, 1995 (date of
acquisition) to December 31, 1995 and for the year ended December 29, 1996 (unaudited) . F-66

Notes to Financial Statements (unaudited) ................................................ F-67

Condensed Balance Sheets as of December 29, 1996 and
March 30, 1997 (unaudited) ............................................................ F-70

Condensed Statements of Operations--Thirteen Week Periods Ended March 31, 1996 and March
30, 1997 (unaudited) ................................................................... F-71

Condensed Statements of Cash Flows--Thirteen Week Periods Ended March 31, 1996 and March
30, 1997 (unaudited) .................................................................. F-72

Notes to Condensed Financial Statements (unaudited) .................................... F-73
</TABLE>

F-2
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of Foamex L.P.:

We have audited the accompanying consolidated balance sheets of Foamex L.P. and
subsidiaries ("Foamex L.P.") as of December 31, 1995 and December 29, 1996, and
the related consolidated statements of operations, cash flows and partners'
equity (deficit) for each of the three years in the period ended December 29,
1996. These financial statements are the responsibility of Foamex L.P.'s
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Foamex L.P. and
subsidiaries as of December 31, 1995 and December 29, 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 29, 1996 in conformity with generally
accepted accounting principles.

COOPERS & LYBRAND L.L.P.

2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 26, 1997

F-3
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(thousands)

<TABLE>
<CAPTION>
December 31, December 29,
1995 1996
-------------- -------------
<S> <C> <C>
ASSETS:

CURRENT ASSETS:
Cash and cash equivalents .................................... $ 638 $ 20,968
Restricted cash ............................................. -- 12,143
Accounts receivable, net of allowance for doubtful accounts of
$9,138 and $6,328............................................. 113,583 125,847
Inventories ................................................ 89,952 102,610
Deferred income taxes ....................................... -- 6,720
Due from related parties .................................... 1,569 1,791
Other current assets ....................................... 19,784 18,841
-------- ---------
Total current assets ....................................... 225,526 288,920
-------- ---------

PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements ................................. 4,632 9,674
Buildings and leasehold improvements ........................ 78,169 78,082
Machinery, equipment and furnishings ........................ 176,019 185,348
Construction in progress .................................... 7,985 20,784
-------- ---------
Total ...................................................... 266,805 293,888
Less accumulated depreciation and amortization ............... (97,739) (111,461)
-------- -----------
Property, plant and equipment, net ........................... 169,066 182,427

COST IN EXCESS OF ASSETS ACQUIRED, NET ........................ 91,165 83,991

DEBT ISSUANCE COSTS, NET ....................................... 18,703 14,902

NET ASSETS OF DISCONTINUED OPERATIONS ........................ 85,073 --

OTHER ASSETS ................................................... 16,359 15,917
-------- ---------
TOTAL ASSETS ................................................... $605,892 $ 586,157
======== =========
</TABLE>

The accompanying notes are an integral part
of the consolidated financial statements.

F-4
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS--(Continued)
(thousands)

<TABLE>
<CAPTION>
December 31, December 29,
1995 1996
-------------- ------------
<S> <C> <C>
LIABILITIES AND PARTNERS' EQUITY (DEFICIT):

CURRENT LIABILITIES:
Short-term borrowings .................................... $ 2,199 $ 3,692
Current portion of long-term debt--unrelated parties ...... 8,511 13,735
Accounts payable .......................................... 67,658 75,621
Accounts payable to related parties ........................ 11,731 8,803
Accrued employee compensation .............................. 8,116 7,302
Accrued interest .......................................... 9,591 8,871
Accrued restructuring charges .............................. 15,882 6,300
Other accrued liabilities ................................. 30,516 27,506
-------- --------
Total current liabilities ................................. 154,204 151,830

LONG-TERM DEBT--UNRELATED PARTIES ........................... 428,416 386,800

LONG-TERM DEBT--RELATED PARTIES .............................. 5,540 5,817

DEFERRED INCOME TAXES ....................................... 1,394 4,663

ACCRUED RESTRUCTURING CHARGES ................................. 3,773 4,043

OTHER LIABILITIES ............................................. 25,169 20,172
-------- --------
Total liabilities ....................................... 618,496 573,325
-------- --------
COMMITMENTS AND CONTINGENCIES .............................. -- --
-------- --------

PARTNERS' EQUITY (DEFICIT)
General partners .......................................... 404 632
Limited partners .......................................... 46,036 57,654
Note receivable from partner .............................. (44,444) (33,180)
Other ...................................................... (14,600) (12,274)
-------- --------
Total partners' equity (deficit) ........................ (12,604) 12,832
-------- --------
TOTAL LIABILITIES AND PARTNERS' EQUITY (DEFICIT) ............ $605,892 $586,157
======== ========
</TABLE>

The accompanying notes are an integral part
of the consolidated financial statements.

F-5
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended 1994, 1995 and 1996
(thousands)

<TABLE>
<CAPTION>
January 1, December 31, December 29,
1995 1995 1996
------------ -------------- -------------
<S> <C> <C> <C>
NET SALES .............................. $833,660 $862,834 $926,351

COST OF GOODS SOLD ..................... 691,265 762,085 773,119
--------- -------- --------

GROSS PROFIT ........................... 142,395 100,749 153,232

SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES .............................. 57,059 63,466 56,778

RESTRUCTURING AND OTHER CHARGES
(CREDITS) .............................. -- 39,249 (6,415)
--------- -------- --------
INCOME (LOSS) FROM OPERATIONS ............ 85,336 (1,966) 102,869

INTEREST AND DEBT ISSUANCE EXPENSE ...... 41,532 44,550 43,211

OTHER INCOME (EXPENSE), NET ............ 732 (205) 1,705
--------- -------- --------

INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE PROVISION FOR
INCOME TAXES ........................... 44,536 (46,721) 61,363

PROVISION FOR INCOME TAXES ............... 6,525 1,405 7,702
--------- -------- --------

INCOME (LOSS) FROM CONTINUING
OPERATIONS ........................... 38,011 (48,126) 53,661
--------- -------- --------

DISCONTINUED OPERATIONS:

INCOME (LOSS) FROM DISCONTINUED
OPERATIONS, NET OF INCOME TAXES ...... 1,230 (5,117) (230)

LOSS ON DISPOSAL OF DISCONTINUED
OPERATIONS, INCLUDING PROVISIONS
FOR OPERATING LOSSES DURING THE
PHASE-OUT PERIOD, NET OF INCOME
TAXES ................................. -- -- (41,820)
--------- -------- --------

INCOME (LOSS) FROM DISCONTINUED
OPERATIONS, NET OF INCOME TAXES ...... 1,230 (5,117) (42,050)
--------- -------- --------

INCOME (LOSS) BEFORE EXTRAORDINARY
LOSS ................................. 39,241 (53,243) 11,611

EXTRAORDINARY LOSS ON EARLY
EXTINGUISHMENT OF DEBT ............... -- -- (1,912)
--------- -------- --------

NET INCOME (LOSS) ........................ $ 39,241 $(53,243) $ 9,699
========= ======== ========
</TABLE>

The accompanying notes are an integral part
of the consolidated financial statements.

F-6
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended 1994, 1995 and 1996
(thousands)

<TABLE>
<CAPTION>
January 1, December 31, December 29,
1995 1995 1996
------------ -------------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) ............................................. $ 39,241 $(53,243) $ 9,699
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization ................................. 22,108 22,905 21,132
Amortization of debt issuance costs and debt discount ......... 2,116 2,729 2,919
Net loss on disposal of discontinued operations ............... -- -- 40,551
Net (income) loss from discontinued operations ............... (1,230) 5,117 1,499
Asset writedowns and other charges (credits) .................. -- 16,677 (7,364)
Extraordinary loss on early extinguishment of debt ............ -- -- 1,217
Provision for uncollectible accounts ........................... 878 4,627 704
Deferred income taxes .......................................... 5,520 659 6,010
Other, net ................................................... 6 (706) (5,804)
Changes in operating assets and liabilities, net of acquisitions
and discontinued operations:
Accounts receivable .......................................... (24,677) (1,472) (13,130)
Inventories ................................................... (21,790) 14,146 (13,078)
Accounts payable and accounts payable related parties ......... 28,491 823 5,035
Accrued restructuring charges ................................. (3,469) 16,834 (7,000)
Other assets and liabilities ................................. 3,414 7,415 (5,724)
--------- -------- --------
Net cash provided by continuing operations .................. 50,608 36,511 36,666
Net cash used for discontinued operations ..................... (323) (9,175) (486)
--------- -------- --------
Net cash provided by operating activities ..................... 50,285 27,336 36,180
--------- -------- --------

INVESTING ACTIVITIES:
Capital expenditures .......................................... (21,201) (19,348) (23,344)
Acquisitions, net of cash acquired .............................. -- (7,272) (841)
Proceeds from sale of discontinued operations .................. -- -- 42,650
Purchase of note from related party ........................... -- (2,000) --
Repayment of (purchase of) note from partner .................. (35,300) -- 18,623
Increase in restricted cash .................................... -- -- (12,143)
Capital expenditures for discontinued operations ............... (6,565) (4,429) (919)
Other investing activities .................................... (1,412) 2,495 (1,276)
--------- -------- --------
Net cash provided by (used for) investing activities ......... (64,478) (30,554) 22,750
--------- -------- --------

FINANCING ACTIVITIES:
Net proceeds from (repayments of) short-term borrowings ......... 537 (1,685) 1,493
Net proceeds from (repayments of) revolving loans ............... 3,000 (3,000) --
Proceeds from long-term debt--unrelated parties ............... 40,000 -- 1,500
Repayments of long-term debt--unrelated parties ............... (3,256) (9,099) (38,116)
Distributions and redemptions to partners ..................... (3,257) (2,379) (3,487)
Debt issuance costs ............................................. (4,816) -- --
Other financing activities .................................... (1,974) -- 10
--------- -------- --------
Net cash provided by (used for) financing activities ......... 30,234 (16,163) (38,600)
--------- -------- --------
Net increase (decrease) in cash and cash equivalents ............ 16,041 (19,381) 20,330
Cash and cash equivalents at beginning of period ............... 3,978 20,019 638
--------- -------- --------
Cash and cash equivalents at end of period ..................... $ 20,019 $ 638 $ 20,968
========= ======== ========
</TABLE>

The accompanying notes are an integral part
of the consolidated financial statements.

F-7
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For the Years Ended 1994, 1995 and 1996
(thousands)

<TABLE>
<CAPTION>
Note
General Limited Receivable
Partners Partners from Partner Other Total
----------- ----------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balances at January 2, 1994 ..................... $ 11,338 $ 45,199 $ -- $ (7,151) $ 49,386
Net income .................................... 1,377 37,864 -- -- 39,241
Distributions ................................. (117) (4,487) -- -- (4,604)
Note receivable from partner .................. -- -- (35,300) -- (35,300)
Accretion of note receivable from partner ...... 58 2,809 (2,867) -- --
Transfer of partnership interests ............... (11,208) 11,208 -- -- --
Contribution of Foamex Latin America, Inc. ...... -- 5,093 -- (453) 4,640
Additional pension liability .................. -- -- -- 168 168
Foreign currency translation adjustment ......... -- -- -- (983) (983)
--------- --------- -------- -------- --------
Balances at January 1, 1995 ..................... 1,448 97,686 (38,167) (8,419) 52,548

Net loss ....................................... (1,044) (52,199) -- -- (53,243)
Distributions ................................. (125) (5,603) -- -- (5,728)
Purchase of note receivable from
Foamex International ........................... -- -- -- (2,000) (2,000)
Increase in note receivable from Trace Holdings -- -- -- (1,373) (1,373)
Accretion of note receivable from partner ...... 125 6,152 (6,277) -- --
Additional pension liability .................. -- -- -- (3,290) (3,290)
Foreign currency translation adjustment ......... -- -- -- 482 482
--------- --------- -------- -------- --------
Balances at December 31, 1995 .................. 404 46,036 (44,444) (14,600) (12,604)

Net income .................................... 184 9,515 -- -- 9,699
Distributions ................................. (104) (5,108) -- -- (5,212)
Accretion of note receivable from partner ...... 144 7,031 (7,175) -- --
Repayment of note receivable from partner ...... -- -- 18,439 -- 18,439
Repayment premium on note receivable from partner 4 180 -- -- 184
Additional pension liability .................. -- -- -- 2,372 2,372
Foreign currency translation adjustment ......... -- -- -- (46) (46)
--------- --------- -------- -------- --------
Balances at December 29, 1996 .................. $ 632 $ 57,654 $(33,180) $(12,274) $ 12,832
========= ========= ======== ======== ========
</TABLE>

The accompanying notes are an integral part of
the consolidated financial statements.

F-8
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

Foamex L.P., a Delaware limited partnership, is an indirect,
majority-owned subsidiary of Foamex International Inc. ("Foamex
International"). Foamex L.P. is a significant manufacturer and marketer of
flexible polyurethane foam and foam products in North America. Foamex L.P.'s
products include (i) foam for carpet cushion and other carpet products, (ii)
cushioning foams for furniture, bedding, packaging and health care, (iii) foams
for automotive trim and accessories and (iv) technical foams for filtration,
consumer products and packaging.

During 1996, Foamex L.P. sold Perfect Fit Industries, Inc. ("Perfect Fit")
which comprised the home comfort products segment of Foamex L.P. The
consolidated financial statements of Foamex L.P. have been restated for
discontinued operations and include a net loss of $41.8 million (net of $1.2
million income tax benefit) on the disposal of this business segment which
includes provisions for operating losses during the phase-out period. (See Note
3 for further discussion.) In addition, during April 1996 Foamex International
contributed the foam products operations of Foamex Latin America, Inc. ("Foamex
Mexico") to Foamex L.P. The contribution was accounted for in a manner similar
to a pooling of interests since the entities were under common control.
Accordingly, all prior periods presented have been restated to reflect the
results of operations and financial position of Foamex Mexico.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation

The consolidated financial statements include the accounts of Foamex L.P.
and all subsidiaries that Foamex L.P. directly or indirectly controls, either
through majority ownership or otherwise, other than the home comfort products
segment which is accounted for as discontinued operations. Intercompany
accounts and transactions for continuing operations have been eliminated in
consolidation.

The consolidated financial statements have been restated for discontinued
operations. The accompanying notes present amounts related only to continuing
operations.

Fiscal Year

Foamex L.P.'s fiscal year ends on the Sunday closest to the thirty-first
day of December. Fiscal years 1994, 1995 and 1996 were composed of fifty-two
weeks and ended on January 1, 1995, December 31, 1995 and December 29, 1996,
respectively.

Accounting Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reported period. Actual results could differ from those
estimates. (See Notes 4, 9, 10, 15, 16 and 17 and Cost in Excess of Net Assets
Acquired below.)

Cash and Cash Equivalents

Foamex L.P. considers all highly liquid investments with an original
maturity of three months or less when purchased to be cash equivalents. On
December 29, 1996, cash and cash equivalents included $18.4 million of
repurchase agreements collateralized by U.S. Government securities.

Restricted Cash

As of December 29, 1996, Foamex L.P. had restricted cash of approximately
$12.1 million. This cash was derived from the net sales proceeds relating to
the sale of Perfect Fit and is restricted by Foamex L.P.'s debt agreements. As
of February 26, 1997, Foamex L.P. has used approximately $8.4 million of the
restricted cash to repurchase approximately $8.0 million of outstanding
indebtedness.

Inventories

Inventories are stated at the lower of cost or market. The cost of the
inventories is determined on a first-in, first-out basis.

F-9
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Property, Plant and Equipment

Property, plant and equipment are stated at cost and are depreciated using
the straight-line method over the estimated useful lives of the assets. The
range of useful lives estimated for buildings is generally twenty to
thirty-five years and the range for machinery, equipment and furnishings is
five to twelve years. Leasehold improvements are amortized over the shorter of
the terms of the respective leases or the estimated useful lives of the
leasehold improvements. Depreciation expense for the years ended 1994, 1995 and
1996 was $16.8 million, $18.7 million and $17.9 million, respectively. For
income tax purposes, Foamex L.P. uses accelerated depreciation methods.

Debt Issuance Costs

Debt issuance costs consist of amounts incurred in obtaining long-term
financing. These costs are being amortized over the term of the related debt
using the interest method. Accumulated amortization as of December 31, 1995 and
December 29, 1996 was approximately $5.7 million and $7.5 million,
respectively.

Cost in Excess of Net Assets Acquired

The excess of the acquisition cost over the fair value of net assets
acquired in business combinations accounted for as purchases is amortized using
the straight-line method over a forty year period. At each balance sheet date
Foamex L.P. evaluates the recoverability of cost in excess of net assets
acquired using certain financial indicators such as historical and future
ability to generate income from operations based on a going concern basis.
Accumulated amortization as of December 31, 1995 and December 29, 1996 was
approximately $9.1 million and $11.6 million, respectively.

Environmental Matters

Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations, and which do not contribute to current or
future revenue generation, are expensed. Liabilities are recorded when
environmental assessments and/or remedial efforts are probable and the costs
can be reasonably estimated.

Postretirement and Postemployment Benefits

Foamex L.P. accrues postretirement benefits throughout the employees'
active service periods until they attain full eligibility for those benefits.
Also, Foamex L.P. accrues postemployment benefits when it becomes probable that
such benefits will be paid and when sufficient information exists to make
reasonable estimates of the amounts to be paid.

Foreign Currency Accounting

The financial statements of foreign subsidiaries, except in countries
treated as highly inflationary, have been translated into U.S. dollars by using
the year end exchange rates for assets and liabilities and average exchange
rates for the statements of operations. Currency translation adjustments are
included in other partners' equity (deficit) until the entity is substantially
sold or liquidated. For operations in countries treated as highly inflationary,
certain financial statement amounts are translated at historical exchange
rates, with all other assets and liabilities translated at year end exchange
rates. These translation adjustments are reflected in the results of operations
and are insignificant for all periods presented. Also, foreign currency
transaction gains and losses are insignificant for all periods presented. The
effect of foreign currency exchange rates on cash flows is not material.

Interest Rate Swap Agreement

The differential to be paid or received under an interest rate swap
agreement is recognized as an adjustment to interest and debt issuance expense
in the current period as interest rates change.

F-10
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income Taxes

Income taxes are accounted for under the liability method, in which
deferred income taxes are provided for temporary differences between the
financial reporting and income tax basis of assets and liabilities using the
income tax rates, under existing legislation, expected to be in effect at the
date such temporary differences are expected to reverse.

Foamex L.P., as a limited partnership, is not subject to federal income
taxes; therefore no current or deferred provision has been provided for such
taxes. However, Foamex L.P. has provided for the income taxes of certain states
in which it is subject to taxes and for certain subsidiaries which are subject
to federal and state income taxes. The partners will provide for their
respective shares of income or loss in their federal or applicable state income
tax returns. Foamex L.P. has a tax sharing agreement that provides for the
payment of distributions to the partners for amounts that would be required to
be paid if Foamex L.P. was a corporation filing separate tax returns. The
ability of Foamex L.P. to make such distributions is limited by the terms of
its credit agreements and indentures. (See Note 8).

Reclassifications

Certain amounts in the 1994 and 1995 consolidated financial statements
have been reclassified to conform with the current year's presentation.

3. DISCONTINUED OPERATIONS

During 1996, Foamex L.P. finalized the sale of the outstanding common
stock of Perfect Fit, a wholly-owned subsidiary, for an adjusted sale price of
approximately $44.2 million. The sale included substantially all of the net
assets of Foamex L.P.'s home comfort products segment. Actual and estimated
transaction expenses related to the sale totaled approximately $1.5 million.
Foamex L.P. has recorded a net loss on the sale of Perfect Fit of approximately
$41.8 million, which includes the loss on disposal and a net loss of $1.3
million (net of $1.2 million income tax benefit) relating to operating losses
during the phase-out period. Interest and debt issuance expense was allocated
to discontinued operations based on the estimated debt to be retired from the
net proceeds of the sale. A valuation allowance has been provided for the
capital loss relating to the sale of Perfect Fit since future capital gain
taxable income is not likely to be sufficient to recognize the deferred tax
asset relating to the capital loss carryforward.

Foamex L.P.'s financial statements have been restated to reflect the
discontinuation of the home comfort products segment. A summary of the
operating results for the discontinued operations is as follows:

<TABLE>
<CAPTION>
1994 1995 1996(1)
------------ ------------ ------------
(thousands)
<S> <C> <C> <C>
Net Sales ....................................... $95,381 $98,464 $50,097
Gross profit .................................... 18,200 14,946 8,065
Income (loss) from operations .................. 4,170 (3,058) 1,123
Interest and debt issuance expense ............ 3,671 4,699 2,384
Other expense ................................. -- -- 348
Income (loss) from discontinued operations before
income taxes ................................. 499 (7,757) (1,609)
Provision (benefit) for income taxes ............ (731) (2,640) (1,379)
Income (loss) from discontinued operations, net of
income taxes ................................. 1,230 (5,117) (230)
</TABLE>

(1)Foamex L.P.'s discontinued operations includes the operations of Perfect
Fit through June 1996.

F-11
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

3. DISCONTINUED OPERATIONS (continued)

Net assets of discontinued operations (excluding intercompany net assets)
at December 31, 1995 were as follows:

1995
------------
(thousands)
Current assets .............................. $31,925
Property, plant and equipment, net ......... 21,672
Cost in excess of assets acquired, net ...... 40,333
Other assets ................................. 2,219
--------
Total assets .............................. 96,149
--------
Current liabilities ........................ 11,076
--------
Total liabilities ........................... 11,076
--------
Net assets ................................. $85,073
========

4. RESTRUCTURING AND OTHER CHARGES (CREDITS)

In 1995, Foamex L.P. approved a restructuring plan (the "1995
restructuring plan") to consolidate thirteen foam production, fabrication or
branch locations, to concentrate resources as a result of industry conditions
and to better position itself to achieve its strategic growth objectives.
Foamex L.P. recorded restructuring and other charges of $39.2 million which was
comprised of $35.6 million associated with the consolidation of the foam
production, fabrication or branch locations, $2.2 million associated with the
completion of a 1993 restructuring plan and $1.4 million associated with merger
and acquisition activities of Foamex L.P. The components of the $35.6 million
restructuring charge include: $16.7 million for fixed asset writedowns (net of
estimated sale proceeds), $15.1 million for plant closure and operating lease
obligations and $3.8 million for personnel reductions. The $3.8 million cost
for personnel reductions primarily represents severance and employee benefit
costs associated with the elimination of manufacturing and administrative
personnel.

In 1996, Foamex L.P. determined to continue to operate one of the
facilities originally identified for closure in the 1995 restructuring plan
because of improved economics and the lack of synergy to be achieved from
relocating the manufacturing process. In addition, Foamex L.P. has approved a
plan to close two facilities that were not originally identified in the 1995
restructuring plan. As a result of these changes to the 1995 restructuring plan
and the favorable termination of certain lease agreements and other matters,
Foamex L.P. recorded a $6.4 million net restructuring credit which included a
restructuring credit of $11.3 million associated with Foamex L.P.'s decision
not to close the facility identified as part of the 1995 restructuring plan and
$1.7 million of restructuring credits relating primarily to the favorable
termination of certain lease agreements and other matters relating to the 1995
restructuring plan, offset by $6.6 million of restructuring charges relating to
the closure of the two facilities during 1997 (the "1996 restructuring plan").

Generally, the 1995 restructuring plan has been implemented as originally
contemplated. The following table sets forth the components of Foamex L.P.'s
restructuring and other charges:

<TABLE>
<CAPTION>
Asset Plant Closure Personnel
Total Writedowns and Leases Reductions Other
----------- ------------ --------------- ------------ ----------
(millions)
<S> <C> <C> <C> <C> <C>
1995 restructuring charge ......... $ 39.2 $ 16.7 $15.1 $ 3.8 $ 3.6
Asset writeoff/writedowns ......... (23.3) (20.9) -- -- (2.4)
Cash spending ..................... (0.4) -- (0.3) (0.1) --
------ ------ ----- ----- -----
Balances at December 31, 1995 ...... 15.5 (4.2) 14.8 3.7 1.2
Cash spending ..................... (9.7) -- (6.6) (2.0) (1.1)
Cash proceeds ..................... 1.0 1.0 -- -- --
1996 restructuring charge ......... 6.6 2.4 4.1 0.1 --
Restructuring credits ............... (13.0) (9.7) (2.8) (0.4) (0.1)
</TABLE>

F-12
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

4. RESTRUCTURING AND OTHER CHARGES (CREDITS) (continued)

<TABLE>
<CAPTION>
Asset Plant Closure Personnel
Total Writedowns and Leases Reductions Other
------- ------------ --------------- ------------ ------
(millions)
<S> <C> <C> <C> <C> <C>
Asset adjustment for restructuring credits ...... 8.1 8.7 (0.6) -- --
----- ----- ---- ---- ---
Balances at December 29, 1996 .................. $8.5 $(1.8) $8.9 $1.4 $--
===== ===== ==== ==== ===
</TABLE>

As indicated in the table above, the accrued restructuring balance at
December 29, 1996 will be used for payments relating to plant closure and
leases including rundown costs at the facilities. The $1.8 million of asset
writedowns relates to estimated proceeds and is included in noncurrent assets.
Foamex L.P. expects to incur approximately $6.3 million of charges during 1997
with the remaining $4.0 million to be incurred through 2001. As of December 29,
1996, Foamex L.P. has terminated approximately 270 employees and notified
approximately 40 employees in the manufacturing and administrative areas of
their impending termination in connection with the 1995 and 1996 restructuring
plans.

5. ACQUISITIONS

In April 1995, Foamex L.P. acquired certain assets and assumed certain
liabilities of manufacturers of synthetic fabrics for the carpet and furniture
industries for aggregate consideration of approximately $8.0 million, including
related fees and expenses of approximately $0.3 million, with an initial cash
payment of $7.2 million. The excess of the purchase price over the estimated
fair value of the net assets acquired was approximately $3.9 million. The
acquisition was accounted for as a purchase and the operations of the acquired
company are included in the consolidated statements of operations and cash
flows from the date of its acquisition. The excess of the purchase price over
the estimated fair value of the net assets acquired is being amortized using
the straight-line method over forty years.

6. INVENTORIES

Inventories consists of:

December 31, December 29,
1995 1996
-------------- -------------
(thousands)
Raw materials and supplies ...... $49,963 $ 61,559
Work in process .................. 14,451 13,453
Finished goods .................. 25,538 27,598
-------- ---------
Total ........................... $89,952 $102,610
======== =========

7. SHORT-TERM BORROWINGS

Short-term borrowings include borrowings outstanding under a line of
credit facility for Foamex Canada Inc. ("Foamex Canada") bearing interest at
the bank's prime rate (4.75% at December 29, 1996) plus 1/2%. The weighted
average interest rates on Foamex Canada's short-term borrowings outstanding for
1994, 1995 and 1996 were 7.3%, 8.0% and 5.9%, respectively. Borrowings under
Foamex Canada's credit facility are due on demand and are collateralized by
accounts receivable, property and inventories of Foamex Canada having an
approximate net carrying value of $17.1 million as of December 29, 1996. The
unused amount under this line of credit totaled $0.7 million as of December 29,
1996.

F-13
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

8. LONG-TERM DEBT

Long-term debt consists of:

<TABLE>
<CAPTION>
December 31, December 29,
1995 1996
-------------- -------------
(thousands)
<S> <C> <C>
Unrelated parties:
9 1/2% Senior secured notes due 2000 .............................. $116,667 $106,793
11 1/4% Senior notes due 2002 .................................... 150,000 141,400
11 7/8% Senior subordinated debentures due 2004 (net of unamortized
debt discount of $827 and $769) ................................. 125,173 125,056
11 7/8% Senior subordinated debentures due 2004, Series B ......... 7,000 7,000
Industrial revenue bonds .......................................... 7,000 7,000
Foamex L.P. term loan (8.54% interest rate as of December 29, 1996) 30,000 11,000
Other ............................................................ 1,087 2,286
--------- ---------
Total ............................................................ 436,927 400,535
Less current portion ............................................. 8,511 13,735
--------- ---------
Long-term debt--unrelated parties ................................. $428,416 $386,800
========= =========
Related parties:
Subordinated note payable (net of unamortized debt discount of
$1,475 and $1,198) ............................................. $ 5,540 $ 5,817
========= =========
</TABLE>

9 1/2% Senior Secured Notes due 2000 ("Senior Secured Notes")

The Senior Secured Notes were issued on June 3, 1993 and bear interest at
the rate of 9 1/2% payable semiannually on each June 1 and December 1. The
Senior Secured Notes mature on June 1, 2000. The Senior Secured Notes are
collateralized by a first-priority lien on substantially all of the assets of
Foamex L.P. except for receivables, real estate and fixtures. The Senior
Secured Notes may be redeemed at the option of Foamex L.P., in whole or in
part, at any time on or after June 1, 1998, initially at 101.583% of their
principal amount, plus accrued interest, and declining to 100% on or after June
1, 1999. The Senior Secured Notes have been guaranteed, on a senior secured
basis by General Felt Industries, Inc. ("General Felt") and on a senior
unsecured basis by Foamex International. During 1996, Foamex L.P. repurchased
$9.9 million of Senior Secured Notes with the net proceeds from the sale of
Perfect Fit (see Note 11).

11 1/4% Senior Notes due 2002 ("Senior Notes")

The Senior Notes bear interest at the rate of 11 1/4% payable semiannually
on each April 1 and October 1. The Senior Notes mature on October 1, 2002. The
Senior Notes may be redeemed at the option of Foamex L.P., in whole or in part,
at any time on or after October 1, 1997, initially at 104.219% of their
principal amount, plus accrued interest, and declining to 100% on or after
October 1, 2000. In October 1994, Foamex L.P. provided certain real property as
collateral for the Senior Notes, with a net book value of $37.8 million at
December 29, 1996. The Senior Notes have been guaranteed, on a senior basis, by
General Felt and Foamex International. During 1996, Foamex L.P. repurchased
$8.6 million of Senior Notes with the net proceeds from the sale of Perfect Fit
(see Note 11).

11 7/8% Senior Subordinated Debentures ("Subordinated Debentures")

The Subordinated Debentures bear interest at the rate of 11 7/8% payable
semiannually on each April 1 and October 1. The Subordinated Debentures mature
on October 1, 2004. The Subordinated Debentures may be redeemed at the option
of Foamex L.P., in whole or in part, at any time on or after October 1, 1997,
initially at 105.938% of their principal amount, plus accrued interest, and
declining to 100% on or after October 1, 2002. The Subordinated Debentures are
subordinated in right of payment to all senior indebtedness, including the
Senior Secured Notes and the Senior Notes. The Subordinated Debentures have
been guaranteed, on a senior subordinated

F-14
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

8. LONG-TERM DEBT (continued)

basis, by General Felt and Foamex International. During 1996, Foamex L.P.
repurchased $0.1 million of Subordinated Debentures with the net proceeds from
the sale of Perfect Fit (see Note 11).

11 7/8% Senior Subordinated Debentures, Series B ("Series B Debentures")

The Series B Debentures were issued July 30, 1993, by Foamex L.P. in an
exchange offer to holders of senior subordinated debentures issued in
connection with the acquisition of General Felt on March 23, 1993. The Series B
Debentures have terms substantially similar to the Subordinated Debentures,
except that holders of the Series B Debentures are entitled to receive proceeds
from an asset sale only if any proceeds remain after an offer to repurchase has
been made to the holders of the Subordinated Debentures. The Series B
Debentures have been guaranteed on a senior subordinated basis by General Felt.

Industrial Revenue Bonds ("IRBs")

Two bond issues in the principal amount of $1.0 million and $6.0 million,
maturing in 2005 and 2013, respectively, are collateralized by certain
properties which have an approximate net carrying value of $11.3 million at
December 29, 1996 and letters of credit approximating $7.3 million. The IRBs
bear interest at a variable rate with options available to Foamex L.P. to
convert to a fixed rate. The interest rates on the IRBs were 4.85% and 4.0% at
December 29, 1996 for the $6.0 million and $1.0 million bond issues,
respectively. The interest rate on the $6.0 million bond issue varies weekly
based on an interest rate that is indicative of current bidside yields on high
quality short-term, tax-exempt obligations, or if such interest rate is not
available, 70.0% of the interest rate for thirteen week United States Treasury
Bills. The maximum interest rate for either of the IRBs is 15.0% per annum. At
the time of a conversion to a fixed interest rate and upon appropriate notice,
the IRBs are redeemable at the option of the bondholders.

Term and Revolving Loans

Foamex L.P. has a credit agreement (the "Foamex L.P. Credit Facility")
with a group of banks that provide for loans of up to $85.0 million of which up
to $40.0 million was available as a term loan payable in twenty equal quarterly
installments commencing October 1994 and up to $45.0 million is available under
a revolving line of credit which expires in June 1999. In 1994, Foamex L.P. and
General Felt entered into a $40.0 million term loan under the Foamex L.P.
Credit Facility; no further term loan borrowings are available thereunder.
During 1996, Foamex L.P. and General Felt used $12.0 million of net proceeds
from the Perfect Fit sale to repay term loan borrowings. Borrowings under the
Foamex L.P. Credit Facility are collateralized by the accounts receivable of
Foamex L.P. and General Felt. Pursuant to the terms of the Foamex L.P. Credit
Facility, borrowed funds will bear interest at a floating rate equal to 1.0%
per annum plus the highest of (i) the base rate of The Bank of Nova Scotia, as
in effect from time to time, (ii) a rate that is, generally, 0.5% per annum
plus a fluctuating rate generally equal to the rate on three month certificates
of deposit, subject to certain adjustments, plus a fluctuating rate generally
equal to the annual assessment rate paid by The Bank of Nova Scotia to the
Federal Deposit Insurance Corporation or (iii) 0.5% per annum plus the federal
funds rate in effect from time to time. At the option of Foamex L.P., portions
of the outstanding loan under the Foamex L.P. Credit Facility will be
convertible into Eurodollar rate loans bearing interest at a rate generally
equal to 3.0% per annum above the average LIBOR rate of Citibank, N.A. and The
Bank of Nova Scotia. As of December 29, 1996, there was approximately $11.7
million in letters of credit outstanding under the Foamex L.P. Credit Facility.
As of December 29, 1996, there was unused availability of approximately $33.3
million under the Foamex L.P. Credit Facility.

Subordinated Note Payable

This note payable was issued to John Rallis ("Rallis"), the Chief
Operating Officer of Foamex International, on May 6, 1993 by Foamex L.P. in
connection with the acquisition of Great Western Foam Products Corporation and
certain related entities and assets (collectively, "Great Western"). The note
bears interest at a maximum rate of 6% per annum and the principal amount is
payable in three equal annual installments beginning May 6, 1999.

F-15
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

8. LONG-TERM DEBT (continued)

Other

As of December 29, 1996, other debt is comprised primarily of capital
lease obligations and borrowings by Foamex Mexico.

Interest Rate Swap Agreements

Foamex L.P. enters into interest rate swaps to lower funding costs and/or
to manage interest costs and exposure to changing interest rates. Foamex L.P.
does not hold or issue financial instruments for trading purposes. Foamex L.P.
has an interest rate swap agreement, as amended, with a notional amount of
$150.0 million through December 2001. Under the swap agreement, Foamex L.P. has
made variable payments based on LIBOR through December 1996 and is obligated to
make fixed payments at 5.30% per annum for the twelve months ended in December
1997 and variable payments based on LIBOR for the remainder of the agreement,
in exchange for fixed payments by the swap partner at 5.81% per annum through
December 1996, and 6.50% per annum for the remainder of the agreement, payable
semiannually in arrears. The swap partner has the ability to terminate the swap
agreement after the December 1997 payment if the LIBOR rate Foamex L.P. is to
pay for any period thereafter is equal to or less than 4.50% per annum.
Interest expense will be subject to fluctuations in LIBOR during the term of
the swap agreement except during 1997. Foamex L.P. is exposed to credit loss in
the event of nonperformance by the swap partner; however, the occurrence of
this event is not anticipated.

Also, Foamex L.P. has an interest rate swap agreement, as amended, for a
notional amount of $150.0 million through December 2001. Under this swap
agreement, Foamex L.P. has made variable payments based on LIBOR with a cap of
5.50% per annum and a floor of 4.75% per annum for the six months ended in June
1995, variable payments based on LIBOR with a floor of 4.75% per annum for the
six months ended in December 1995, fixed payments at a rate of 5.81% per annum
for the twelve months ended in December 1996 and is obligated to make fixed
payments at a rate of 5.30% per annum for the twelve months in December 1997
and variable payments based on LIBOR for the remainder of the agreement, in
exchange for variable payments by the swap partner at the rate of LIBOR plus
0.80% per annum for the six months ended in June 1995, LIBOR plus 0.72% per
annum for the six months ended in December 1995, LIBOR plus 2.45% per annum for
the six months ended in June 1996, LIBOR plus 2.39% per annum for the six
months ended in December 1996 and fixed payments at 6.50% per annum for the
remainder of the term of the agreement, payable semiannually in arrears. The
swap partner has the ability to terminate the swap agreement after the December
1997 payment if the LIBOR rate Foamex L.P. is to pay for any period thereafter
is equal to or less than 4.50% per annum. Foamex L.P. is exposed to credit loss
in the event of nonperformance by the swap partner; however, the occurrence of
this event is not anticipated. Interest expense will be subject to fluctuations
in LIBOR during the term of the swap agreement except during 1997. The effect
of the two interest rate swaps described above was a favorable adjustment to
interest expense of $3.0 million, $1.4 million and $3.7 million for 1994, 1995
and 1996, respectively.

Debt Restrictions and Covenants

The indentures, credit agreement and other indebtedness agreements contain
various covenants, including restrictions on payments of distributions by
Foamex L.P. to its partners, the incurrence of additional indebtedness, the
sale of assets, mergers and consolidations and transactions with affiliates. In
addition, certain agreements contain a provision that, in the event of a
defined change of control, the indebtedness must be repaid, in certain cases at
the option of the holder. Also, Foamex L.P. is required under certain of these
agreements to maintain specified financial ratios of which the most restrictive
is the maintenance of net worth and interest coverage ratios, as defined. Under
the most restrictive of the distribution restrictions, approximately $0.7
million was available to be paid by Foamex L.P. to its partners at December 29,
1996.

As of December 29, 1996, Foamex L.P. was in compliance with the covenants
of the indentures, credit agreements and other indebtedness agreements and
expects to be in compliance with these covenants for the foreseeable future.

F-16
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

8. LONG-TERM DEBT (continued)

Future Obligations on Long-Term Debt

Scheduled maturities of long-term debt are shown below:

Year Ended Long-Term Debt
---------- --------------
(thousands)

1997 ........................... $ 13,490
1998 ........................... 4,000
1999 ........................... 5,338
2000 ........................... 106,631
2001 ........................... 2,339
Thereafter ..................... 275,735
---------
Total ........................ 407,533
Less unamortized discount ...... 1,967
---------
Total ........................... $405,566
=========

In addition, Foamex L.P. has approximately $0.8 million of total capital
lease obligations that are payable in 1997 through 2000 in annual amounts of
approximately $0.2 million.

9. EMPLOYEE BENEFIT PLANS

Defined Benefit Pension Plans

Foamex L.P. maintains noncontributory defined benefit pension plans for
salaried and certain hourly employees. The salaried plan provides benefits that
are based principally on years of credited service and level of compensation.
The hourly plans provide benefits that are based principally on stated amounts
for each year of credited service.

Net periodic pension cost included the following components:

<TABLE>
<CAPTION>
1994 1995 1996
------------ ---------- --------
(thousands)
<S> <C> <C> <C>
Service cost ........................ $ 2,452 $ 2,087 $ 2,471
Interest cost ..................... 3,541 3,742 3,997
Actual return on plan assets ...... 624 (5,682) (8,841)
Net amortization and deferral ...... (4,649) 1,807 4,643
------- ------- -------
Total .............................. $ 1,968 $ 1,954 $ 2,270
======= ======= =======
</TABLE>

Foamex L.P.'s funding policy is to contribute annually an amount that both
satisfies the minimum funding requirements of the Employee Retirement Income
Security Act of 1974 and does not exceed the full funding limitations of the
Internal Revenue Code of 1986, as amended (the "Code"). Plan investments
consist primarily of corporate equity and debt securities, mutual life
insurance funds and cash equivalents. During 1996, the discount rate was
adjusted to 7.50%. The following table sets forth the funded status of Foamex
L.P.'s underfunded plans and the amounts recognized in the accompanying
consolidated balance sheets as of December 31, 1995 and December 29, 1996:

F-17
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

9. EMPLOYEE BENEFIT PLANS (continued)

<TABLE>
<CAPTION>
December 31, December 29,
1995 1996
------------- --------------
(thousands)
<S> <C> <C>
Actuarial present value of accumulated benefit obligations:
Vested benefits ............................................. $ 52,762 $ 55,336
Nonvested benefits .......................................... 1,916 2,137
--------- ---------
Accumulated benefit obligations .............................. $ 54,678 $ 57,473
========= =========
Total projected benefit obligations ........................ $ 55,810 $ 58,775
Fair value of plan assets .................................... 44,441 53,734
--------- ---------
Projected benefit obligations in excess of plan assets ...... (11,369) (5,041)
Unrecognized net loss from past experience difference from that
assumed and effect of changes in assumptions ............... 6,394 1,099
Additional minimum liability ................................. (5,265) (2,694)
--------- ---------
Accrued pension cost ....................................... $ (10,240) $ (6,636)
========= =========
</TABLE>

Significant assumptions used in determining the plans' funded status are
as follows:

<TABLE>
<CAPTION>
December 31, December 29,
1995 1996
-------------- -------------
<S> <C> <C>
Expected long-term rates of return on plan assets ............... 9.00% 9.50%
Discount rates on projected benefit obligations .................. 7.25% 7.50%
Rates of increase in compensation levels (where applicable) ...... 4.00% 4.00%
</TABLE>

Defined Contribution Plan

Foamex L.P. maintains a defined contribution plan which is qualified under
Section 401(k) of the Code and is available for eligible employees who elect to
participate in the plan. Employee contributions are voluntary and subject to
certain limitations as imposed by the Code. During 1995 and 1996, Foamex L.P.
provided contributions amounting to a 25% match of employees' contributions up
to 4% of eligible compensation. Foamex L.P. also provides an additional 25%
match of employees' contributions up to 4% of eligible compensation made to a
fund which invests in Foamex International common stock. In addition, Foamex
L.P. may make discretionary contributions amounting to a 25% match of
employees' contributions up to 4% of eligible compensation. Prior to 1995,
employer contributions were discretionary and provided a 50% match of
employees' contributions up to 3% of eligible compensation. The expense for
these contributions for 1994, 1995 and 1996 was approximately $0.4 million,
$0.7 million and $0.8 million, respectively.

Postretirement Benefits

In addition to providing pension benefits, Foamex L.P. provides
postretirement health care and life insurance for eligible employees. During
1995, changes were made to postretirement benefits offered to certain employees
which resulted in a curtailment loss of $0.6 million. During 1996, certain
employees accepted an early retirement program resulting in a special
termination loss of $0.6 million. These plans are unfunded and Foamex L.P.
retains the right, subject to existing agreements, to modify or eliminate these
benefits.

F-18
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

9. EMPLOYEE BENEFIT PLANS (continued)

The components of 1994, 1995 and 1996 expense for postretirement benefits
are as follows:

<TABLE>
<CAPTION>
1994 1995 1996
------ ------------ ---------
(thousands)
<S> <C> <C> <C>
Service costs for benefits earned ............ $172 $ 24 $ 12
Interest cost on liability ..................... 192 83 67
Net amortization and deferral .................. 134 (13) (53)
Special termination/curtailment loss ......... -- 619 576
----- ---- ----
Net periodic postretirement benefit cost ...... $498 $713 $602
===== ==== ====
</TABLE>

The accumulated postretirement benefit obligation at December 31, 1995 and
December 29, 1996 resulted in an unfunded obligation of $1.6 million and $2.1
million, respectively.

A 10% and 9% annual rate of increase in the per capita costs of covered
health care benefits was assumed for each of 1995 and 1996, respectively. This
rate was assumed to gradually decrease to 5% by the year 2000. Increasing the
weighted average assumed health care cost trend rates by one percentage point
would have an insignificant impact on the accumulated postretirement benefit
obligation and service and interest cost. The discount rate used was 7.25% and
7.50% as of December 31, 1995 and December 29, 1996, respectively.

Postemployment Benefits

Foamex L.P. provides certain postemployment benefits to former or inactive
employees and their dependents during the time period following employment but
before retirement. At December 31, 1995 and December 29, 1996, Foamex L.P.'s
liability for postemployment benefits was insignificant for each period.

Other

In December 1994, Foamex L.P. changed its method of compensating certain
employees for vacation which increased income from operations by $4.3 million
for 1994.

10. INCOME TAXES

Income (loss) from continuing operations before provision for income taxes
consists of the following:

<TABLE>
<CAPTION>
1994 1995 1996
--------- ------------ --------
(thousands)
<S> <C> <C> <C>
United States .............................. $42,610 $(45,738) $58,277
Foreign .................................... 1,926 (983) 3,086
-------- -------- --------
Income (loss) from continuing operations before
provision (benefit) for income taxes ...... $44,536 $(46,721) $61,363
======== ======== ========
</TABLE>

The components of the total consolidated provision (benefit) for income
taxes are summarized as follows:

<TABLE>
<CAPTION>
1994 1995 1996
----------- ------------ ------
(thousands)
<S> <C> <C> <C>
Continuing operations ........................... $6,525 $ 1,405 $ 7,702
Discontinued operations ........................ (731) (2,640) (2,606)
------ ------- -------
Total consolidated provision (benefit) for income
taxes ....................................... $5,794 $(1,235) $ 5,096
====== ======= =======
</TABLE>

F-19
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

10. INCOME TAXES (continued)

The total consolidated provision (benefit) for income taxes is summarized
as follows:

<TABLE>
<CAPTION>
1994 1995 1996
---------- ------------ -------
(thousands)
<S> <C> <C> <C>
Current:
Federal ....................................... $ -- $ -- $ 220
State .......................................... 172 266 686
Foreign ....................................... 833 480 786
------ ------- ------
Total current ................................. 1,005 746 1,692
------ ------- ------
Deferred:
Federal ....................................... 3,598 (1,424) 1,665
State .......................................... 1,212 (268) 1,248
Foreign ....................................... (21) (289) 491
------ ------- ------
Total deferred ................................. 4,789 (1,981) 3,404
------ ------- ------
Total consolidated provision (benefit) for income
taxes ....................................... $5,794 $(1,235) $5,096
====== ======= ======
</TABLE>

The tax effects of the temporary differences that give rise to significant
deferred tax assets and liabilities are:

<TABLE>
<CAPTION>
December 31, December 29,
1995 1996
-------------- ------------
(thousands)
<S> <C> <C>
Deferred tax assets:
Inventory basis differences ........................... $ 861 $ 415
Employee benefit accruals .............................. 976 714
Allowances and contingent liabilities .................. 2,427 2,548
Restructuring and plant closing accruals ............... 7,644 3,632
Other ................................................... 77 221
Net operating loss carryforwards ........................ 8,975 5,154
Capital loss carryforwards .............................. -- 14,193
Valuation allowance for deferred tax assets ............ 13,473) (15,988)
------- --------
Deferred tax assets .................................... 7,487 10,889
------- --------
Deferred tax liabilities:
Basis difference in property, plant and equipment ...... 8,507 7,644
Other ................................................... 374 1,188
------- --------
Deferred tax liabilities .............................. 8,881 8,832
------- --------
Net deferred tax assets (liabilities) .................. $(1,394) $ 2,057
======= ========
</TABLE>

Foamex L.P. has determined that taxable capital gains in the foreseeable
future for a subsidiary that files a separate federal income tax return will
likely not be sufficient to recognize the deferred tax asset associated with
the capital loss carryforward of that subsidiary. Accordingly, a valuation
allowance has been provided for the deferred tax asset associated with the
capital loss carryforward and certain other deferred tax assets. During 1996,
the valuation allowance for deferred tax assets increased by $2.5 million which
included a $14.2 million increase for the capital loss carryforward, offset by
$6.9 million decrease due to reversal of General Felt preacquisition temporary
differences and $4.8 million for reversal of General Felt postacquisition
temporary differences which is reflected in the consolidated statement of
operations. The $6.9 million reversal of preacquisition temporary differences
was used to reduce cost in excess of assets acquired. As of December 29, 1996,
approximately $1.8

F-20
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

10. INCOME TAXES (continued)

million of deferred tax assets are related to preacquisition activities and if
utilized will further reduce cost in excess of assets acquired. At December 29,
1996, General Felt has $14.7 million of regular tax net operating loss
carryforwards for federal income tax purposes expiring from 2003 to 2010 of
which $7.0 million was acquired in 1993 and is subject to limitations. In
addition, General Felt has $40.6 million of capital loss carryforwards that
expire in 2001.

A reconciliation of the statutory federal income tax rate to the effective
income tax rate on continuing operations is as follows:

<TABLE>
<CAPTION>
1994 1995 1996
------------- ------------ ----------
(thousands)
<S> <C> <C> <C>
Statutory income taxes .............................. $ 15,588 $(16,352) $ 21,477
State income taxes, net of federal .................. 900 266 1,288
Permanent difference on partnership income ......... (11,009) 12,233 (11,714)
Limitation on the utilization of tax benefits ...... -- 4,929 --
Valuation allowance ................................. (452) -- (4,823)
Cost in excess of assets acquired .................. 525 554 551
Other ............................................. 973 (225) 923
-------- -------- --------
Total ............................................. $ 6,525 $ 1,405 $ 7,702
======== ======== ========
</TABLE>

11. EXTRAORDINARY LOSS

During 1996, Foamex L.P. used $31.3 million of the net proceeds from the
sale of Perfect Fit to extinguish debt of $30.6 million and redemption premiums
of $0.6 million. Foamex L.P. wrote off $1.2 million of debt issuance costs
associated with the early extinguishment of debt and incurred transaction costs
of $0.1 million. The early extinguishment of debt resulted in an extraordinary
loss of $1.9 million.

12. COMMITMENTS AND CONTINGENCIES

Operating Leases

Foamex L.P. is obligated under various noncancelable lease agreements for
rental of facilities, vehicles and other equipment. Many of the leases contain
renewal options with varying terms and escalation clauses that provide for
increased rentals based upon increases in the Consumer Price Index, real estate
taxes and lessors' operating expenses. Total minimum rental commitments
(excluding commitments accrued as part of the 1995 and 1996 restructuring
plans) required under operating leases at December 29, 1996 are:

Third Party Related Party
Leases Leases
------------- --------------
(thousands)
1997 ............ $ 7,874 $ 1,767
1998 ............ 6,164 1,823
1999 ............ 4,866 1,823
2000 ............ 3,812 1,823
2001 ............ 2,883 2,265
Thereafter ...... 4,122 5,800
------- -------
Total ......... $29,721 $15,301
======= =======

Rental expense charged to operations under operating leases approximated
$9.7 million, $10.1 million and $9.6 million for 1994, 1995 and 1996,
respectively. Substantially all such rental expense represented the minimum

F-21
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

12. COMMITMENTS AND CONTINGENCIES (continued)

rental payments under operating leases. In addition, Foamex L.P. incurred
rental expense of approximately $3.9 million, $3.5 million and $1.7 million for
1994, 1995 and 1996, respectively, under leases with related parties.

13. RELATED PARTY TRANSACTIONS AND BALANCES

Foamex L.P. regularly enters into transactions with its affiliates in the
ordinary course of business.

During April 1996, Foamex International contributed the foam products
operations of Foamex Mexico to Foamex L.P. The contribution was accounted for
in a manner similar to a pooling of interests since the entities were under
common control. Accordingly, all prior periods presented have been restated to
reflect the results of operations and financial position of Foamex Mexico. The
restatement of prior periods was insignificant to the consolidated financial
statements.

During 1996, Foamex L.P. chartered an aircraft (which is owned by a
wholly-owned subsidiary of Foamex International) through a third party and
incurred costs of approximately $1.4 million.

In December 1995, Foamex L.P. entered into a $2.0 million promissory note
with Foamex International. The note bears interest at a rate per annum equal to
six months LIBOR plus 4.0% and is payable semiannually in June and December.
The note matures in December 1997. The note has been classified in the other
component of partners' equity (deficit).

On July 7, 1996, Trace International Holdings, Inc. ("Trace Holdings")
issued to Foamex L.P. a promissory note for $4.4 million in principal amount
plus accrued interest of $0.4 million, which is an extension of a promissory
note of Trace Holdings that was due in July 1996. The promissory note is due
and payable on demand or, if no demand is made, July 7, 1997, and bears
interest at 9.5%, payable quarterly in arrears commencing October 1, 1996. The
promissory note is included in other partners' equity (deficit).

In connection with the acquisition of Great Western, Foamex L.P. issued a
promissory note to Rallis (see Note 8) and entered into lease agreements (see
Note 12) with Rallis and an affiliate of Rallis, for the rental of former Great
Western manufacturing facilities located in Orange, Ontario and Hayward,
California and a warehouse facility in Tigard, Oregon. Foamex L.P. has the
option to purchase each of these properties from Rallis or such affiliate.

Foamex L.P. was party to a lease agreement for an airplane with Trace
Aviation Corp. ("Trace Aviation"), a subsidiary of Trace Holdings. During 1994
and 1995, Foamex L.P. paid Trace Aviation $2.7 million and $1.6 million,
respectively, pursuant to the lease agreement. The lease agreement also
provided for the use of the airplane by Trace Holdings with remuneration to
Foamex L.P. based on actual usage of the plane. During 1994 and 1995, Trace
Holdings paid to Foamex L.P. $0.5 million and $0.6 million, respectively,
pursuant to the agreement. During August 1995, Foamex Aviation Inc.
("Aviation"), a wholly-owned subsidiary of Foamex International, acquired the
aircraft from Trace Holdings for $3.0 million in cash and the assumption of
$11.7 million of related debt. In connection with the acquisition of the
aircraft, the Foamex L.P. lease and other agreements were terminated.

Foamex L.P. has a management service agreement with Trace Foam Company,
Inc. ("Trace Foam"), a wholly-owned subsidiary of Trace Holdings, pursuant to
which Trace Foam provides general managerial services of a financial,
technical, legal, commercial, administrative and/or advisory nature to Foamex
L.P. for an annual fee of $1.75 million and reimbursement of expenses incurred.
Trace Holdings rents approximately 5,900 square feet of general, executive, and
administrative office space in New York, New York from Foamex L.P. on
substantially the same terms as Foamex L.P. leases such space from a third
party lessor.

During 1994 and 1995, Foamex L.P. purchased approximately $11.9 million
and $2.5 million, respectively, of scrap material from Recticel Foam
Corporation ("RFC"), a former partner of Foamex L.P. and whose chairman is a
director of Foamex International, under a minimum annual volume agreement which
expired in June 1995.

F-22
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

13. RELATED PARTY TRANSACTIONS AND BALANCES (continued)

On June 28, 1994, Foamex L.P. purchased an $87.9 million principal amount
note due 2006 from its 98% limited partner Foamex-JPS Automotive L.P. ("FJPS")
for $35.3 million (the "FJPS Note"). The FJPS Note will not pay interest until
July 2000. Instead, principal will accrete (from the initial purchase price of
$35.3 million) on a daily basis and compound semiannually at the rate of 15.50%
per annum through June 1996; 15.75% per annum thereafter through June 1997; and
16.00% per annum thereafter through June 2000. Interest will be due
semiannually in cash at 16.00% per annum from July 2000 through the maturity
date. In December 1996 in exchange for certain waivers and amendment of the
FJPS Note, FJPS repaid $18.4 million of the FJPS Note and a waiver payment of
$0.2 million using a portion of the proceeds from the sale of its partnership
interest in JPS Automotive L.P. FJPS has the right to reborrow such amount,
subject to limitations in the Foamex L.P. Credit Facility, solely for the
purpose of funding a purchase price adjustment payment, if any, in connection
with the JPS Automotive L.P. sale. The FJPS Note has been classified in
partners' equity (deficit) and the accreted principal of $16.3 million for the
period from June 28, 1994 to December 29, 1996 has been included in the FJPS
Note. The FJPS Note may be redeemed at the option of FJPS, in whole or in part,
at any time at the redemption prices (expressed as percentages of the Accreted
Value (as defined) if on or prior to July 1, 2000, and thereafter, expressed as
percentages of the principal amount) initially equal to 108% for the
twelve-month period commencing July 1, 1994 declining to 100% on or after July
1, 2005. If FJPS does not repay the indebtedness with at least 85% of the net
proceeds of any Equity Offering (as defined), the rate at which the FJPS Note
accretes and the interest rate on the FJPS Note will increase.

In June 1994, Foamex L.P. also entered into a supply agreement with Foamex
International (the "Supply Agreement"). Pursuant to the terms of the Supply
Agreement, at the option of Foamex L.P., Foamex International will purchase
certain raw materials which are necessary for the manufacture of Foamex L.P.'s
products, and resell such materials to Foamex L.P. at a price equal to net cost
plus reasonable out of pocket expenses. Management believes that the terms of
the Supply Agreement are no less favorable than those which Foamex L.P. could
have obtained from an unaffiliated third party. During 1995 and 1996, Foamex
L.P. made $105.1 million and $129.7 million, respectively, of purchases
relating to the Supply Agreement.

As of December 31, 1995 and December 29, 1996, due to related parties
amounted to $11.7 million and $8.8 million, respectively, and represents the
net amounts payable to Foamex International and subsidiaries for purchases
under the Supply Agreement and other matters.

Foamex L.P. made charitable contributions to the Trace International
Holdings, Inc. Foundation of approximately $0.2 million in each of 1994, 1995
and 1996. On December 11, 1996, Foamex L.P. entered into a Tax Distribution
Advance Agreement with FJPS, pursuant to which FJPS is entitled to obtain
advances, in the aggregate not to exceed $17.0 million, against future
distributions under Foamex L.P.'s tax distribution agreement. As of December
29, 1996, there were no advances under this agreement.

14. PARTNERS' EQUITY (DEFICIT)

Foamex L.P. was formed as a Delaware limited partnership on September 5,
1990, and initially capitalized on October 2, 1990, in accordance with a
limited partnership agreement as amended through June 1994. In connection with
a June 1994 amendment, the ownership of Foamex L.P. changed as follows: (i)
FMXI, a wholly-owned subsidiary of Foamex International, bifurcated its 4%
managing general partnership interest into a 1% managing general partnership
interest and a 3% limited partnership interest and distributed the limited
partnership interest to Foamex International, (ii) Foamex International
contributed its 95% limited partnership interest and the 3% limited partnership
interest received from FMXI to FJPS and withdrew as a partner of Foamex L.P.
and (iii) FJPS was admitted as a partner of Foamex L.P. with a 98% limited
partnership interest. The partners also consented to the pledge by FJPS of a
43.44% limited partnership interest in Foamex L.P. to secure the repayment of
certain of FJPS's indebtedness incurred in connection with the acquisition of
JPS Automotive L.P. by Foamex International. As of December 31, 1995 and
December 29, 1996, the partnership interests of FMXI, Inc. ("FMXI"), Trace
Foam, and FJPS were 1.0%, 1.0% and 98.0%, respectively.

F-23
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

14. PARTNERS' EQUITY (DEFICIT) (continued)

Cash distributions for 1994, 1995 and 1996 were paid (received) as
follows:

1994 1995 1996
-------- -------- ------
(thousands)
FMXI ..................... $ 59 $ 12 $ (35)
Trace Foam ............... 29 -- 45
Foamex International ...... 653 -- --
FJPS ..................... 2,516 2,367 3,477
------- ------- ------
Total ..................... $3,257 $2,379 $3,487
======= ======= ======

Other

The other component of partners' equity (deficit) consists of the
following:

<TABLE>
<CAPTION>
January 1, December 31, December 29,
1995 1995 1996
------------ -------------- -----------
(thousands)
<S> <C> <C> <C>
Foreign currency translation adjustment ......... $3,930 $ 3,448 $ 3,494
Additional pension liability .................. 1,489 4,779 2,407
Note receivable from Trace Holdings ............ 3,000 4,373 4,373
Note receivable from Foamex International ...... -- 2,000 2,000
------ ------- -------
$8,419 $14,600 $12,274
====== ======= =======
</TABLE>

15. ENVIRONMENTAL MATTERS

Foamex L.P. is subject to extensive and changing federal, state, local and
foreign environmental laws and regulations, including those relating to the
use, handling, storage, discharge and disposal of hazardous substances and the
remediation of environmental contamination, and as a result, is from time to
time involved in administrative and judicial proceedings and inquiries relating
to environmental matters. During 1996, expenditures in connection with Foamex
L.P.'s compliance with federal, state, local and foreign environmental laws and
regulations did not have a material adverse effect on Foamex L.P.'s operations,
financial position, capital expenditures or competitive position. As of
December 29, 1996, Foamex L.P. has environmental accruals of approximately $4.1
million for environmental matters. In addition, as of December 29, 1996 Foamex
L.P. has net receivables of approximately $0.9 million relating to
indemnification for environmental liabilities, net of an allowance of
approximately $1.0 million relating to potential disagreements regarding the
scope of the indemnification. Foamex L.P. believes that realization of the net
receivables established for indemnification is probable.

Foamex L.P. has reported to appropriate state authorities that it has
found soil and groundwater contamination in excess of state standards at four
facilities and soil contamination in excess of state standards at three other
facilities. Foamex L.P. has begun remediation and is conducting further
investigations into the extent of the contamination at these facilities and,
accordingly, the extent of the remediation that may ultimately be required. The
actual cost and the timetable of any such remediation cannot be predicted with
any degree of certainty at this time. As of December 29, 1996, Foamex L.P. has
environmental accruals of approximately $3.2 million for the remaining
potential remediation costs for these facilities based on engineering
estimates.

F-24
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

15. ENVIRONMENTAL MATTERS (continued)

Federal regulations require that by the end of 1998 all underground
storage tanks ("USTs") be removed or upgraded in all states to meet applicable
standards. Foamex L.P. has six USTs that will require removal or permanent
in-place closure by the end of 1998. Due to the age of these tanks, leakage may
have occurred resulting in soil and possibly groundwater contamination. Foamex
L.P. has accrued $0.4 million for the estimated removal and remediation, if
any, associated with these USTs. However, the full extent of contamination and,
accordingly, the actual cost of such remediation cannot be predicted with any
degree of certainty at this time. Foamex L.P. believes that its USTs do not
pose a significant risk of environmental liability because of Foamex L.P.'s
monitoring practices for USTs and conditional approval for the permanent
in-place closure for certain USTs. However, there can be no assurance that such
USTs will not result in significant environmental liability in the future.

Foamex L.P. has been designated as a Potentially Responsible Party ("PRP")
by the United States Environmental Protection Agency (the "EPA") with respect
to thirteen sites, with an estimated total liability to Foamex L.P. for the
thirteen sites of less than approximately $0.5 million. Estimates of total
cleanup costs and fractional allocations of liability are generally provided by
the EPA or the committee of PRP's with respect to the specified site. In each
case, the participation of Foamex L.P. is considered to be immaterial.

Although it is possible that new information or future developments could
require Foamex L.P. to reassess its potential exposure relating to all pending
environmental matters, including those described herein, management believes
that, based upon all currently available information, the resolution of such
environmental matters will not have a material adverse effect on Foamex L.P.'s
operations, financial position, capital expenditures or competitive position.
The possibility exists, however, that new environmental legislation and/or
environmental regulations may be adopted, or other environmental conditions may
be found to exist, that may require expenditures not currently anticipated and
that may be material.

16. LITIGATION

As of February 26, 1997, Foamex L.P. and Trace Holdings were two of
multiple defendants in actions filed on behalf of approximately 5,000
recipients of breast implants in various United States federal and state courts
and one Canadian provincial court, some of which allege substantial damages,
but most of which allege unspecified damages for personal injuries of various
types. Five of these cases seek to allege claims on behalf of all breast
implant recipients or other allegedly affected parties, but no class has been
approved or certified by the court. In addition, three cases have been filed
alleging claims on behalf of approximately 700 residents of Australia, New
Zealand, England, and Ireland. During 1995, Foamex L.P. and Trace Holdings were
granted summary judgments and dismissed as defendants from all cases in the
federal courts of the United States and the state courts of California. Appeals
for these decisions were withdrawn and the decisions are final. In addition,
two of the cases filed on behalf of 903 foreign plaintiffs were dismissed on
the grounds that the cases could not be brought in the United States courts.
This decision is subject to appeal. Foamex L.P. believes that the number of
suits and claimants may increase. Although breast implants do not contain foam,
certain silicone gel implants were produced using a polyurethane foam covering
fabricated by independent distributors or fabricators from bulk foam purchased
from Foamex L.P. or Trace Holdings. Neither Foamex L.P. nor Trace Holdings
recommended, authorized or approved the use of its foam for these purposes.
While it is not feasible to predict or determine the outcome of these actions,
based on management's present assessment of the merits of pending claims, after
consultation with the general counsel of Trace Holdings, and without taking
into account potential indemnity from the manufacturers of polyurethane covered
breast implants, management believes that the disposition of matters that are
pending or that may reasonably be anticipated to be asserted should not have a
material adverse effect on either Foamex L.P.'s or Trace Holdings' consolidated
financial position or results of operations. In addition, Foamex L.P. is also
indemnified by Trace Holdings for any such liabilities relating to foam
manufactured prior to October 1990. Although Trace Holdings has paid Foamex
L.P.'s litigation expenses to date pursuant to such indemnification and
management believes Trace Holdings likely will be in a position to continue to
pay such expenses, there can be no absolute assurance that Trace

F-25
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

16. LITIGATION (continued)

Holdings will be able to provide such indemnification. Based on information
available at this time with respect to the potential liability, and without
taking into account the indemnification provided by Trace Holdings and the
coverage provided by Trace Holdings' and Foamex L.P.'s liability insurance,
Foamex L.P. believes that the proceedings should not ultimately result in any
liability that would have a material adverse effect on the financial position
or results of operations of Foamex L.P. If management's assessment of Foamex
L.P.'s liability with respect to these actions is incorrect, such actions could
have a material adverse effect on Foamex L.P.

Foamex L.P. is party to various other lawsuits, both as defendant and
plaintiff, arising in the normal course of business. It is the opinion of
management that the disposition of these lawsuits will not individually or in
the aggregate, have a material adverse effect on the financial position or
results of operations of Foamex L.P. If management's assessment of Foamex
L.P.'s liability with respect to these actions is incorrect, such actions could
have a material adverse effect on Foamex L.P.'s consolidated financial
position.

17. FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK

Interest Rate Swap Agreements

Foamex L.P. has two interest rate swap agreements involving the exchange
of fixed and floating interest payment obligations without the exchange of the
underlying principal amounts. At December 29, 1996, the total notional
principal amount of these interest rate swap agreements was $300.0 million. The
counterparty to these agreements is a large international financial
institution. The interest rate swap agreements subject Foamex L.P. to financial
risk that will vary during the life of these agreements in relation to market
interest rates.

Concentration of Credit Risk

Financial instruments which potentially subject Foamex L.P. to significant
concentrations of credit risk consist primarily of cash and cash equivalents
and trade accounts receivable. Foamex L.P. maintains cash and cash equivalents
and certain other financial instruments with various large financial
institutions. Foamex L.P.'s periodic evaluation of these financial institutions
is considered in Foamex L.P.'s investment strategy.

Foamex L.P. sells foam products to the automotive, carpet, cushioning and
other industries. Foamex L.P. performs ongoing credit evaluations of its
customers and generally does not require collateral. Foamex L.P. maintains
allowance accounts for potential credit losses and such losses have been within
management's expectations.

Disclosure about Fair Value of Financial Instruments

The following disclosures of the estimated fair value amounts have been
determined based on Foamex L.P.'s assessment of available market information
and appropriate valuation methodologies.

The estimated fair values of Foamex L.P.'s financial instruments as of
December 29, 1996 are as follows:

Carrying Amount Fair Value
----------------- -----------
(thousands)
Liabilities:
Long-term debt ......... $406,352 $427,862
======== ========
Interest rate swaps ...... $ -- $ 3,160
======== ========

Carrying amounts reported in the consolidated balance sheet for cash and
cash equivalents, accounts receivable, accounts payable, accrued liabilities
and short-term borrowings approximates fair value due to the short-term nature
of these instruments.

The fair value of long-term debt is estimated using quoted market prices,
where available, or discounted cash flows.

F-26
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

17. FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK (continued)

The fair value of interest rate swaps is based on the amount at which
Foamex L.P. would pay if the swaps were settled, as determined by estimates
obtained from dealers.

Fair value estimates are made at a specific point in time, based on
relevant market information about the financial instruments. These estimates
are subjective in nature and involve uncertainties and matters of significant
judgment and, therefore, cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.

18. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

1994 1995 1996
------- ---------- --------
(thousands)
Cash paid for interest ............ $42,734 $47,282 $43,378
======= ======= =======
Cash paid for income taxes ......... $ 1,757 $ 634 $ 1,533
======= ======= =======
Noncash capital expenditures ...... $ -- $ 378 $ 165
======= ======= =======

F-27
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(thousands)

December 29, March 30,
1996 1997
ASSETS: ------------ ---------

CURRENT ASSETS:
Cash and cash equivalents .................. $ 20,968 $ 32,657
Accounts receivable, net .................. 125,847 130,166
Inventories ................................. 102,610 102,344
Other current assets ........................ 39,495 45,519
-------- --------
Total current assets ..................... 288,920 310,686

PROPERTY, PLANT AND EQUIPMENT, NET ......... 182,427 185,961

COST IN EXCESS OF ASSETS ACQUIRED, NET ...... 83,991 83,320

DEBT ISSUANCE COSTS, NET ..................... 14,902 14,048

OTHER ASSETS ................................. 15,917 16,112
-------- --------

TOTAL ASSETS ................................. $586,157 $610,127
======== ========
LIABILITIES AND PARTNERS' EQUITY:

CURRENT LIABILITIES:
Short-term borrowings ..................... $ 3,692 $ 3,985
Current portion of long-term debt ......... 13,735 8,784
Accounts payable ........................... 75,621 73,859
Accounts payable to related parties ......... 8,803 11,576
Accrued interest ........................... 8,871 19,147
Other accrued liabilities .................. 41,108 46,125
-------- --------
Total current liabilities ............... 151,830 163,476
-------- --------

LONG-TERM DEBT .............................. 392,617 389,162
-------- --------

OTHER LIABILITIES ........................... 28,878 29,303
-------- --------

COMMITMENTS AND CONTINGENCIES ............... -- --
-------- --------

PARTNERS' EQUITY:
General partners ........................... 632 970
Limited partner ........................... 57,654 74,178
Note receivable from partner ............... (33,180) (34,504)
Other ....................................... (12,274) (12,458)
-------- --------

Total partners' equity .................. 12,832 28,186
-------- --------

TOTAL LIABILITIES AND PARTNERS' EQUITY ...... $586,157 $610,127
======== ========

The accompanying notes are an integral part of the
condensed consolidated financial statements.

F-28
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(thousands)

<TABLE>
<CAPTION>
13 Week Periods Ended
---------------------------
March 31, March 30,
1996 1997
----------- -------------
<S> <C> <C>
NET SALES .......................................... $219,131 $229,120

COST OF GOODS SOLD ................................. 183,100 186,323
--------- --------

GROSS PROFIT ....................................... 36,031 42,797

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ...... 13,601 15,685
--------- --------

INCOME FROM OPERATIONS ........................... 22,430 27,112

INTEREST AND DEBT ISSUANCE EXPENSE ............... 10,413 10,704

OTHER INCOME, NET ................................. 200 650
--------- --------

INCOME FROM CONTINUING OPERATIONS BEFORE
PROVISION FOR INCOME TAXES ..................... 12,217 17,058

PROVISION FOR INCOME TAXES ........................ 1,019 842
--------- --------

INCOME FROM CONTINUING OPERATIONS .................. 11,198 16,216
--------- --------
DISCONTINUED OPERATIONS:

INCOME FROM DISCONTINUED OPERATIONS, NET OF
INCOME TAXES .................................... 637 --
--------- --------

INCOME BEFORE EXTRAORDINARY LOSS .................. 11,835 16,216

EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT
OF DEBT .......................................... -- (679)
--------- --------

NET INCOME ....................................... $ 11,835 $ 15,537
========= ========
</TABLE>

The accompanying notes are an integral part of the
condensed consolidated financial statements.

F-29
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(thousands)

<TABLE>
<CAPTION>
13 Week Periods Ended
-------------------------
March 31, March 30,
1996 1997
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ...................................................... $11,835 $15,537
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization ................................. 5,523 5,055
Amortization of debt issuance costs and debt discount ......... 706 703
Income from discontinued operations ........................... (637) --
Extraordinary loss on early extinguishment of debt ............ -- 679
Other operating activities .................................... 389 (83)
Changes in operating assets and liabilities, net of discontinued
operations ................................................... (5,912) (2,416)
-------- -------
Net cash provided by continuing operations .................. 11,904 19,475
Net cash used for discontinued operations ..................... (3,576) --
-------- -------
Net cash provided by operating activities ..................... 8,328 19,475
-------- -------
INVESTING ACTIVITIES:
Capital expenditures .......................................... (3,256) (7,363)
Decrease in restricted cash .................................... -- 8,356
Other investing activities .................................... 981 --
Discontinued operations investing activities .................. (292) --
-------- -------
Net cash provided by (used for) investing activities ......... (2,567) 993
-------- -------
FINANCING ACTIVITIES:
Net proceeds from short-term borrowings ........................ 1,930 293
Proceeds from long-term debt .................................... -- 500
Repayment of long-term debt .................................... (2,137) (9,038)
Distributions to partners ....................................... -- (124)
Other financing activities .................................... (32) (410)
-------- -------
Net cash used for financing activities ........................ (239) (8,779)
-------- -------
Net increase in cash and cash equivalents ..................... 5,522 11,689
Cash and cash equivalents at beginning of period ............... 638 20,968
-------- -------
Cash and cash equivalents at end of period ..................... $ 6,160 $32,657
======== =======
</TABLE>

The accompanying notes are an integral part of the
condensed consolidated financial statements.

F-30
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(unaudited)

1. ORGANIZATION AND BASIS OF PRESENTATION

Foamex L.P.'s condensed consolidated balance sheet as of December 29, 1996
has been condensed from the audited consolidated balance sheet at that date.
The condensed consolidated balance sheet as of March 30, 1997 and the condensed
consolidated statements of operations and the condensed consolidated statements
of cash flows for the thirteen week periods ended March 30, 1997 and March 31,
1996 have been prepared by Foamex L.P. and subsidiaries and have not been
audited by Foamex L.P.'s independent accountants. Also, the condensed
consolidated statement of operations and the condensed consolidated statement
of cash flows for the thirteen week period ended March 31, 1996 have been
restated for discontinued operations (see Note 2 below). In the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
considered necessary for a fair presentation of the consolidated financial
position, results of operations and cash flows have been included.

Foamex-JPS Automotive L.P. ("FJPS") is a 98% limited partner of Foamex
L.P., FMXI, Inc. ("FMXI") is a 1% managing general partner of Foamex L.P. and
Trace Foam, Inc. ("Trace Foam") is a 1% non-managing general partner of Foamex
L.P. FJPS and FMXI are wholly-owned subsidiaries of Foamex International Inc.
("Foamex International").

On April 7, 1997, Foamex International announced that an evaluation of its
capital structure was initiated with the intention of refinancing certain
long-term indebtedness to reduce Foamex International's interest expense and
improve financing flexibility. On May 12, 1997, Foamex International announced
a $540.0 million refinancing plan that includes a $480.0 million credit
facility and $150.0 million of senior subordinated notes. As part of this
refinancing plan, Foamex L.P. commenced tender offers with concurrent consent
solicitations for $373.0 million of aggregate principal amount of its public
debt and $116.7 million of aggregate principal amount of FJPS senior secured
discount debentures due 2004. The refinancing activities are expected to be
completed by the end of the second quarter of 1997. (See Note 5 below for
further discussion).

Foamex International expects that as a result of its refinancing
activities, assuming no material changes in interest rates and the tendering of
substantially all of Foamex International's outstanding public debt, future
annualized interest expense will be reduced by between $8.0 million and $11.0
million as compared to the expense required by the existing indentures and
credit agreements. Foamex International expects that future interest expense,
and the ability to realize the savings in interest expense, will vary based on
a variety of factors, including fluctuation in interest rates in general; the
pricing of the credit agreement and the senior subordinated notes; and the
percentage of securities tendered in the tender offers. In addition, if the
refinancing is consummated, variable rate debt will comprise a larger
percentage of Foamex L.P.'s overall indebtedness than in the past, and as a
result, future fluctuations in interest rates will have a greater impact on
Foamex L.P.'s interest expense than in the past.

Certain information and note disclosures normally included in the
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted in accordance with the rules and
regulations of the Securities and Exchange Commission. These condensed
consolidated financial statements should be read in conjunction with Foamex
L.P.'s 1996 consolidated financial statements and notes thereto as set forth in
Foamex L.P.'s Annual Report on Form 10-K for the fiscal year ended December 29,
1996.

2. DISCONTINUED OPERATIONS

During 1996, Foamex L.P. sold the outstanding common stock of Perfect Fit
Industries, Inc. ("Perfect Fit"), a wholly-owned subsidiary, for an adjusted
sale price of approximately $44.2 million. The sale included substantially all
of the net assets of Foamex L.P.'s home comfort products business segment.
Accordingly, the accompanying condensed consolidated statement of operations
and the condensed consolidated statement of cash flows for the thirteen week
period ended March 31, 1996 reflects the home comfort products business segment
as discontinued operations.

Foamex L.P.'s condensed consolidated financial statements have been
restated to reflect the discontinuation of the home comfort products business
segment. A summary of the operating results for the discontinued operations is
as follows:

F-31
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(unaudited)

2. DISCONTINUED OPERATIONS (continued)

<TABLE>
<CAPTION>
13 Week Period Ended
March 31, 1996
---------------------
(thousands)
<S> <C>
Net sales ............................................................ $25,162
Gross profit ......................................................... 4,250
Income from operations ................................................ 1,224
Interest and debt issuance expense .................................... 1,194
Income from discontinued operations before (benefit) from income taxes 30
Benefit for income taxes ............................................. (607)
Income from discontinued operations, net of income taxes ............ 637
</TABLE>

3. INVENTORIES

Inventories consist of:
December 29, March 30,
1996 1997
-------------- ----------
(thousands)
Raw materials and supplies ...... $ 61,559 $ 56,766
Work in process .................. 13,453 15,166
Finished goods .................. 27,598 30,412
--------- ---------
Total ........................ $102,610 $102,344
========= =========

4. RELATED PARTY TRANSACTIONS

Foamex L.P. has a $56.2 million principal amount note, as amended, due
2006 (the "FJPS Note") from its 98% limited partner FJPS which is included in
partner's equity with an accreted value of $34.5 million as of March 30, 1997.
The original issue discount is being amortized using the weighted average to
maturity method over the life of the issue. The accretion of the original issue
discount of $1.3 million and $1.8 million for the thirteen week periods ended
March 30, 1997 and March 31, 1996, respectively, has been reflected as a direct
increase in the FJPS Note and the partners' capital accounts, and thereby
excluded from the condensed consolidated statements of operations.

Foamex L.P. has a supply agreement (the "Supply Agreement") with pursuant
to which, at the option of Foamex L.P., Foamex International will purchase
certain raw materials, which are necessary for the manufacture of Foamex L.P.'s
products, and resell such materials to Foamex L.P. at a price equal to net cost
plus reasonable out of pocket expenses. Management believes that the terms of
the Supply Agreement are no less favorable than those which Foamex L.P. could
have obtained from an unaffiliated third party. During the thirteen week
periods ended March 30, 1997 and March 31, 1996, Foamex L.P. purchased
approximately $27.7 million and $24.1 million, respectively, of raw materials
under the Supply Agreement. As of March 30, 1997 and December 29, 1996, Foamex
L.P. had accounts payable to Foamex International of approximately $11.6
million and $8.8 million, respectively, associated with the Supply Agreement.

Foamex L.P. chartered an aircraft (which is owned by a wholly-owned
subsidiary of Foamex International) through a third party and incurred costs of
approximately $0.4 million and $0.2 million during the thirteen week periods
ended March 30, 1997 and March 31, 1996, respectively.

F-32
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(unaudited)

5. LONG-TERM DEBT

Refinancing Plan

On May 12, 1997, Foamex International announced a refinancing plan
designed to improve its financial and operating flexibility and reduce interest
expense. As part of this refinancing plan, Foamex L.P., a 99% owned subsidiary
of Foamex International, commenced tender offers with concurrent consent
solicitations for a total of $373.0 million of its aggregate principal of
public debt and $116.7 million principal amount of FJPS's public debt,
including:

[bullet] $104.3 million of aggregate principal of its 9 1/2% Senior Secured
Notes due 2000 for an aggregate consideration of 104.193% of
principal plus accrued interest, comprised of a tender price of
102.193% and a consent fee of 2%;

[bullet] $135.9 million of aggregate principal of its 11 1/4% Senior Notes
due 2002 for an aggregate consideration of 105.709% of principal
plus accrued interest, comprised of a tender price of 103.709% and
a consent fee of 2%;

[bullet] $125.8 million of aggregate principal of its 11 7/8% Senior
Subordinated Debentures due 2004 for an aggregate consideration of
107.586% of principal plus accrued interest, comprised of a tender
price of 105.586% and a consent fee of 2%;

[bullet] $7.0 million of aggregate principal of its 11 7/8% Senior
Subordinated Debentures, Series B due 2004 for an aggregate
consideration of 107.586% of principal plus accrued interest,
comprised of a tender price of 105.586% and a consent fee of 2%;
and

[bullet] $116.7 million principal amount of the Foamex-JPS Automotive L.P.
Senior Secured Discount Debentures due 2004 ("FJPS Discount
Debentures") for an aggregate consideration of 88% of principal
amount, which represents approximately 116.2% of the projected
accreted value as of June 9, 1997, comprised of a tender price of
86% of principal amount and a consent fee of 2%.

The consent solicitations will expire on May 23, 1997 and the tender
offers will expire on June 9, 1997. Holders who tender their securities in the
tender offers will be deemed to have submitted consents in the consent
solicitations. Holders may not deliver consents without tendering their
securities. Holders must tender their securities prior to May 23, 1997 in order
to receive the consent fee. Holders who tender their securities after such date
and before the expiration date of June 9, 1997 will receive the tender price
for their securities, but will not receive the consent fee. Upon the closing of
the refinancing plan, Foamex L.P. intends to distribute the purchased FJPS
Discount Debentures to its partners.

Foamex L.P. also plans to repay all borrowings under the terms of its
existing credit facility outstanding at the closing of the refinancing plan
which is estimated to be $5.2 million. Outstanding term loan borrowings as of
March 30, 1997 is approximately $10.0 million (see Extinguishment of Debt
discussed below).

Foamex L.P. expects to fund the repurchase with the proceeds of:

[bullet] A $480.0 million Foamex L.P. credit facility arranged by a bank
lending group including an estimated $150.0 million revolving
credit line. Upon completion of the refinancing transactions, it
expects to have approximately $100.0 million available under the
revolving credit line.

[bullet] A $150.0 million offering of Foamex L.P. senior subordinated notes
in the Rule 144A market.

[bullet] Cash on hand.

Foamex L.P. expects to complete its refinancing activities by the end of
the second quarter of 1997 and record an extraordinary loss on the early
extinguishment of debt of between $46.0 million to $50.0 million in the second

F-33
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(unaudited)

5. LONG-TERM DEBT (continued)

quarter of 1997 related to the premiums paid to repurchase the debt, the
write-off of debt issuance costs and additional one-time charges related to the
other aspects of the refinancing plan.

Foamex L.P.'s future interest expense will increase and vary based on a
variety of factors, including fluctuation in interest rates in general; the
pricing of the credit agreement and the senior subordinated notes; and the
percentage of securities tendered in the tender offers. In addition, if the
refinancing is consummated, variable rate debt will comprise a larger
percentage of Foamex L.P.'s overall indebtedness than in the past, and as a
result, future fluctuations in interest rates will have a greater impact on
Foamex L.P.'s interest expense than in the past. Also, the amount of the
expected extraordinary loss on the early extinguishment of debt in the second
quarter of 1997 will vary based on a variety of factors, including the
percentage of securities tendered in the tender offers and other factors beyond
Foamex L.P.'s control.

Consummation of the tender offers, the consent solicitations, the credit
facility and the senior subordinated notes offering are subject to conditions,
several of which are beyond Foamex L.P.'s control, and there can be no
assurance that such transactions will be consummated.

This Report shall not constitute an offer to sell or the solicitation of
an offer to buy the securities offered by Foamex L.P. in the private placement.

Extinguishment of Debt

During 1997, Foamex L.P. used approximately $8.4 million of the net
proceeds from the sale of Perfect Fit to repurchase outstanding indebtedness of
approximately $8.0 million. Also, during April 1997, Foamex L.P. used the
remaining net proceeds from the sale of Perfect Fit to reduce bank term loan
borrowings by approximately $3.8 million.

6. ENVIRONMENTAL MATTERS

As of March 30, 1997, Foamex L.P. has environmental accruals of
approximately $4.0 million for environmental matters. In addition, as of March
30, 1997, Foamex L.P. has net receivables of approximately $1.0 million
relating to indemnification for environmental liabilities, net of an allowance
of approximately $1.0 million relating to potential disagreements regarding the
scope of the indemnification. Foamex L.P. believes that realization of the net
receivable established for indemnification is probable.

On May 5, 1997, there was an accidental chemical spill at one of Foamex
L.P.'s manufacturing facilities that was contained on site. The remaining
clean-up of the site will consist of the disposal of contaminated soil. Foamex
L.P. has received approval from the appropriate environmental authorities for
remediation and disposal of the contaminated soil. Foamex L.P. expects to take
a charge of at least $0.6 million in the second quarter of 1997 for the
clean-up of the site. The actual cost and the timetable of the clean-up of the
site cannot be predicted with any degree of certainty at this time; therefore,
there can be no assurance that the clean-up of the site will not result in a
more significant environmental liability in the future.

Foamex L.P. has reported to appropriate state authorities that it has
found soil and groundwater contamination in excess of state standards at four
additional facilities and soil contamination in excess of state standards at
three other facilities. Foamex L.P. has begun remediation and is conducting
further investigations into the extent of the contamination at these facilities
and, accordingly, the extent of the remediation that may ultimately be
required. The actual cost and the timetable of any such remediation cannot be
predicted with any degree of certainty at this time. As of March 30, 1997,
Foamex L.P. has environmental accruals of approximately $3.1 million for the
remaining potential remediation costs for these facilities based on engineering
estimates.

Federal regulations require that by 1998 all underground storage tanks
("USTs") be removed or upgraded in most states to meet applicable standards.
Foamex L.P. has six USTs that will require removal or permanent in-place

F-34
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(unaudited)

6. ENVIRONMENTAL MATTERS (continued)

closure by the end of 1998. Due to the age of these tanks, leakage may have
occurred resulting in soil and possibly groundwater contamination. Foamex L.P.
has accrued approximately $0.4 million for the estimated removal and
remediation, if any, associated with these USTs. However, the full extent of
contamination and, accordingly, the actual cost of such remediation cannot be
predicted with any degree of certainty at this time. Foamex L.P. believes that
its USTs do not pose a significant risk of environmental liability because of
Foamex L.P.'s monitoring practices for USTs and conditional approval for
permanent in-place closure for certain USTs. However, there can be no assurance
that such USTs will not result in significant environmental liability in the
future.

Although it is possible that new information or future developments could
require Foamex L.P. to reassess its potential exposure relating to all pending
environmental matters, management believes that, based upon all currently
available information, the resolution of such environmental matters will not
have a material adverse effect on Foamex L.P.'s operations, financial position,
capital expenditures or competitive position. The possibility exists, however,
that new environmental legislation and/or environmental regulations may be
adopted, or other environmental conditions may be found to exist, that may
require expenditures not currently anticipated and that may be material.

7. LITIGATION

As of May 12, 1997, Foamex L.P. and Trace International Holdings, Inc.
("Trace Holdings") were two of multiple defendants in actions filed on behalf
of approximately 5,000 recipients of breast implants in various United States
federal and state courts and one Canadian provincial court, some of which
allege substantial damages, but most of which allege unspecified damages for
personal injuries of various types. Five of these cases seek to allege claims
on behalf of all breast implant recipients or other allegedly affected parties,
but no class has been approved or certified by the court. In addition, three
cases have been filed alleging claims on behalf of approximately 700 residents
of Australia, New Zealand, England, and Ireland. During 1995, Foamex L.P. and
Trace Holdings were granted summary judgments and dismissed as defendants from
all cases in the federal courts of the United States and the state courts of
California. Appeals for these decisions were withdrawn and the decisions are
final. In addition, two of the cases filed on behalf of 903 foreign plaintiffs
were dismissed on the grounds that the cases could not be brought in the United
States courts. This decision is subject to appeal. Foamex L.P. believes that
the number of suits and claimants may increase. Although breast implants do not
contain foam, certain silicone gel implants were produced using a polyurethane
foam covering fabricated by independent distributors or fabricators from bulk
foam purchased from Foamex L.P. or Trace Holdings. Neither Foamex L.P. nor
Trace Holdings recommended, authorized or approved the use of its foam for
these purposes. While it is not feasible to predict or determine the outcome of
these actions, based on management's present assessment of the merits potential
indemnity from the manufacturers of polyurethane covered breast implants,
management believes that the disposition of matters that are pending or that
may reasonably be anticipated to be asserted should not have a material adverse
effect on either Foamex L.P.'s or Trace Holdings' consolidated financial
position or results of operations. In addition, Foamex L.P. is also indemnified
by Trace Holdings for any such liabilities relating to foam manufactured prior
to October 1990. Although Trace Holdings has paid Foamex L.P.'s litigation
expenses to date pursuant to such indemnification and management believes Trace
Holdings likely will be in a position to continue to pay such expenses, there
can be no absolute assurance that Trace Holdings will be able to provide such
indemnification. Based on information available at this time with respect to
the potential liability, and without taking into account the indemnification
provided by Trace Holdings and the coverage provided by Trace Holdings' and
Foamex L.P.'s liability insurance,

F-35
<PAGE>

FOAMEX L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(unaudited)

7. LITIGATION (continued)

Foamex L.P. believes that the proceedings should not ultimately result in any
liability that would have a material adverse effect on the financial position
or results of operations of Foamex L.P. If management's assessment of Foamex
L.P.'s liability with respect to these actions is incorrect, such actions could
have a material adverse effect on Foamex L.P.

F-36
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors
Foamex Capital Corporation
Wilmington, Delaware

We have audited the accompanying balance sheets of Foamex Capital Corporation
("FCC") (a wholly-owned subsidiary of Foamex L.P.) as of December 31, 1995 and
December 29, 1996. These balance sheets are the responsibility of FCC's
management. Our responsibility is to express an opinion on these balance sheets
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheets are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the balance sheets referred to above present fairly, in all
material respects, the financial position of FCC at December 31, 1995 and
December 29, 1996, in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 26, 1997

F-37
<PAGE>

FOAMEX CAPITAL CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF FOAMEX L.P.)
BALANCE SHEETS

<TABLE>
<CAPTION>
December 31, December 29,
1995 1996
-------------- -------------
<S> <C> <C>
CASH ................................................ $1,000 $1,000
======= =======
COMMITMENTS AND CONTINGENCIES ........................ $ -- $ --
------- -------
STOCKHOLDER'S EQUITY:
Common stock, par value $.01 per share; 1,000 shares
authorized, issued and outstanding ............... 10 10
Additional paid-in capital ........................ 990 990
------- -------
TOTAL STOCKHOLDER'S EQUITY ........................ $1,000 $1,000
======= =======
</TABLE>

The accompanying notes are an integral part of the balance sheets.

F-38
<PAGE>

FOAMEX CAPITAL CORPORATION

NOTES TO BALANCE SHEETS

1. ORGANIZATION

Foamex Capital Corporation ("FCC"), a wholly-owned subsidiary of Foamex
L.P., was formed on July 20, 1992 and initially capitalized on July 23, 1992
for the purpose of obtaining financing from external sources.

2. COMMITMENTS AND CONTINGENCIES

FCC is a joint obligor on the following borrowings of Foamex L.P.:

9 1/2% Senior Secured Notes due 2000 ("Senior Secured Notes")

The Senior Secured Notes were issued on June 3, 1993 and bear interest at
the rate of 9 1/2% payable semiannually on each June 1 and December 1. The
Senior Secured Notes mature on June 1, 2000. The Senior Secured Notes are
collateralized by a first-priority lien on substantially all of the assets of
Foamex L.P. except for receivables, real estate and fixtures. The Senior
Secured Notes may be redeemed at the option of Foamex L.P., in whole or in
part, at any time on or after June 1, 1998, initially at 101.583% of their
principal amount, plus accrued interest, and declining to 100% on or after June
1, 1999. The Senior Secured Notes have been guaranteed, on a senior secured
basis by General Felt Industries, Inc. ("General Felt") and on a senior
unsecured basis by Foamex International Inc. ("Foamex International"). During
1996, Foamex L.P. repurchased $9.9 million of Senior Secured Notes.

11 1/4% Senior Notes due 2002 ("Senior Notes")

11 7/8% Senior Subordinated Debentures ("Subordinated Debentures")

11 7/8% Senior Subordinated Debentures, Series B ("Series B Debentures")

F-39
<PAGE>

FOAMEX CAPITAL CORPORATION
(A Wholly-Owned Subsidiary of Foamex L.P.)
BALANCE SHEETS (unaudited)

<TABLE>
<CAPTION>
December 29, March 30,
1996 1997
-------------- ----------
<S> <C> <C>
CASH ................................................... $1,000 $1,000
======= =======
COMMITMENTS AND CONTINGENCIES ........................... $ -- $ --
------- -------
STOCKHOLDER'S EQUITY:
Common stock, par value $.01 per share;
1,000 shares authorized, issued and outstanding ...... 10 10
------- -------
Additional paid-in capital .............................. 990 990
------- -------
TOTAL STOCKHOLDER'S EQUITY .............................. $1,000 $1,000
======= =======
</TABLE>

The accompanying notes are an integral part of the balance sheets.

F-40
<PAGE>

FOAMEX CAPITAL CORPORATION

NOTES TO BALANCE SHEETS--(unaudited)

1. ORGANIZATION

Foamex Capital Corporation ("FCC"), a wholly-owned subsidiary of Foamex
L.P., was formed for the sole purpose of obtaining financing from external
sources.

2. COMMITMENTS AND CONTINGENCIES

FCC is a joint obligor on the following borrowings of Foamex L.P.:

9 1/2% Senior Secured Notes due 2000 ("Senior Secured Notes")

The Senior Secured Notes were issued on June 3, 1993 and bear interest at
the rate of 9 1/2% payable semiannually on each June 1 and December 1. The
Senior Secured Notes mature on June 1, 2000. The Senior Secured Notes are
collateralized by a first-priority lien on substantially all of the assets of
Foamex L.P. except for receivables, real estate and fixtures. The Senior
Secured Notes may be redeemed at the option of Foamex L.P., in whole or in
part, at any time on or after June 1, 1998, initially at 101.583% of their
principal amount, plus accrued interest, and declining to 100% on or after June
1, 1999. The Senior Secured Notes have been guaranteed, on a senior secured
basis, by General Felt Industries, Inc. ("General Felt") and, on a senior
unsecured basis, by Foamex International Inc. ("Foamex International").

11 1/4% Senior Notes due 2002 ("Senior Notes")

The Senior Notes bear interest at a rate of 11 1/4% payable semiannually on
each April 1 and October 1. The Senior Notes mature on October 1, 2002. The
Senior Notes are collateralized by certain real property of Foamex L.P. The
Senior Notes may be redeemed at the option of Foamex L.P., in whole or in part,
at any time on or after October 1, 1997, initially at 104.219% of their
principal amount, plus accrued interest, and declining to 100% on or after
October 1, 2000. The Senior Notes have been guaranteed, on a senior basis, by
General Felt and Foamex International.

11 7/8% Senior Subordinated Debentures due 2004 ("Subordinated Debentures")

11 7/8% Senior Subordinated Debentures, Series B ("Series B Debentures")

The Series B Debentures were issued July 30, 1993 by Foamex L.P. in an
exchange offer to holders of senior subordinated debentures issued in
connection with the acquisition of General Felt on March 23, 1993. The Series B
Debentures have terms substantially similar to the Subordinated Debentures,
except that holders of the Series B Debentures are entitled to receive proceeds
from an asset sale only if any proceeds remain after an offer to repurchase has
been made to the holders of the Subordinated Debentures. The Series B
Debentures have been guaranteed on a senior subordinated basis by General Felt.

Refinancing Plan

On May 12, 1997, Foamex International announced a refinancing plan
designed to improve its financing and operating flexibility and reduce interest
expense. As part of this refinancing plan, Foamex L.P., a 99% owned subsidiary
of Foamex International, commenced tender offers with concurrent consent
solicitations for a total of $373.0 million of its aggregate principal of
public debt and $116.7 million principal amount of FJPS's public debt. See Note
5 to Foamex L.P.'s condensed consolidated financial statements for further
discussion.

F-41
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholder of
General Felt Industries, Inc.:

We have audited the accompanying consolidated balance sheets of General Felt
Industries, Inc. and subsidiaries ("General Felt") as of December 31, 1995 and
December 29, 1996, and the related consolidated statements of operations, cash
flows and stockholder's equity for each of the three years in the period ended
December 29, 1996. These financial statements are the responsibility of General
Felt's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of General Felt as
of December 31, 1995 and December 29, 1996, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 29, 1996, in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 26, 1997

F-42
<PAGE>

GENERAL FELT INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(thousands)

<TABLE>
<CAPTION>
December 31, December 29,
1995 1996
-------------- -------------
<S> <C> <C>
ASSETS:
CURRENT ASSETS:
Cash ................................................... $ 538 $ 336
Restricted cash .......................................... -- 12,143
Accounts receivable, net of allowance for doubtful accounts
of $5,986 and $4,453 .................................... 35,532 44,973
Inventories ............................................. 18,485 25,314
Deferred income taxes .................................... -- 6,342
Other current assets .................................... 3,574 3,093
-------- --------
Total current assets .................................... 58,129 92,201
-------- --------
PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements .............................. 600 3,491
Buildings and leasehold improvements ..................... 5,579 5,896
Machinery, equipment and furnishings ..................... 23,426 29,354
Construction in progress ................................. 803 1,957
-------- --------
Total ................................................... 30,408 40,698
Less accumulated depreciation and amortization ......... (5,322) (8,950)
-------- --------
Property, plant and equipment, net ........................ 25,086 31,748
COST IN EXCESS OF ASSETS ACQUIRED, NET ..................... 58,964 50,574
NET ASSETS OF DISCONTINUED OPERATIONS ..................... 11,689 --
OTHER ASSETS ................................................ 1,629 3,158
-------- --------
TOTAL ASSETS ................................................ $155,497 $177,681
======== ========
</TABLE>

The accompanying notes are an integral part of the
consolidated financial statements.

F-43
<PAGE>

GENERAL FELT INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS--(Continued)
(thousands)

<TABLE>
<CAPTION>
December 31, December 29,
1995 1996
-------------- -------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY:

CURRENT LIABILITIES:
Current portion of long-term debt--unrelated parties ...... $ 3,000 $ --
Current portion of long-term debt--related party ......... -- 12,143
Accounts payable .......................................... 10,697 13,719
Accounts payable to related party ........................ 13,000 17,987
Accrued employee compensation .............................. 2,133 1,434
Accrued restructuring charges .............................. 4,308 2,279
Other accrued liabilities ................................. 10,780 14,210
-------- --------
Total current liabilities ................................. 43,918 61,772

LONG-TERM DEBT--UNRELATED PARTIES ........................... 8,250 --

LONG-TERM DEBT--RELATED PARTY .............................. 48,306 9,260

DEFERRED INCOME TAXES ....................................... -- 3,273

ACCRUED RESTRUCTURING--NONCURRENT ........................... -- 2,308

OTHER LIABILITIES .......................................... 5,514 4,049
-------- --------
Total liabilities ....................................... 105,988 80,662
-------- --------

COMMITMENTS AND CONTINGENCIES .............................. -- --
-------- --------

STOCKHOLDER'S EQUITY:
Common stock, $.01 par value; authorized, issued and
outstanding 1,000 shares ................................. -- --
Additional paid-in capital ................................. 69,194 143,965
Retained earnings (accumulated deficit) .................. (19,685) (46,946)
-------- --------
Total stockholder's equity .............................. 49,509 97,019
-------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY .................. $155,497 $177,681
======== ========
</TABLE>

The accompanying notes are an integral part of the
consolidated financial statements.

F-44
<PAGE>

GENERAL FELT INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended 1994, 1995 and 1996
(thousands)

<TABLE>
<CAPTION>
January 1, December 31, December 29,
1995 1995 1996
------------ -------------- -------------
<S> <C> <C> <C>
NET SALES ................................. $290,577 $279,123 $302,648

COST OF GOODS SOLD ........................ 251,120 252,591 263,316
-------- -------- --------

GROSS PROFIT .............................. 39,457 26,532 39,332

SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES ................................. 24,392 22,312 18,819

RESTRUCTURING CHARGES (CREDITS) ......... -- 14,156 (5,460)
-------- -------- --------

INCOME (LOSS) FROM OPERATIONS ............ 15,065 (9,936) 25,973

INTEREST EXPENSE ........................ 1,178 1,164 2,179

OTHER INCOME, NET ........................ 90 52 1,015
-------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE PROVISION FOR INCOME TAXES ...... 13,977 (11,048) 24,809

PROVISION FOR INCOME TAXES ............... 5,587 962 6,344
-------- -------- --------

INCOME (LOSS) FROM CONTINUING OPERATIONS . 8,390 (12,010) 18,465
-------- -------- --------
DISCONTINUED OPERATIONS:

OPERATING LOSS FROM DISCONTINUED
OPERATIONS, NET OF INCOME TAXES ......... (2,293) (11,040) (3,389)

LOSS ON DISPOSAL OF DISCONTINUED
OPERATIONS INCLUDING PROVISION FOR
OPERATING LOSSES DURING THE PHASE-
OUT PERIOD, NET OF INCOME TAXES ......... -- -- (42,337)
-------- -------- --------

LOSS FROM DISCONTINUED OPERATIONS, NET OF
INCOME TAXES ........................... (2,293) (11,040) (45,726)
-------- -------- --------

NET INCOME (LOSS) ........................ $ 6,097 $(23,050) $(27,261)
======== ======== ========
</TABLE>

The accompanying notes are an integral part of the
consolidated financial statements.

F-45
<PAGE>

GENERAL FELT INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended 1994, 1995 and 1996
(thousands)

<TABLE>
<CAPTION>
January 1, December 31, December 29,
1995 1995 1996
------------ -------------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) .......................................... $ 6,097 $(23,050) $(27,261)
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Depreciation and amortization .............................. 4,054 4,476 4,564
Net loss on disposal of discontinued operations ............ -- -- 40,551
Net loss from discontinued operations ..................... 2,293 11,040 5,175
Asset writedowns and other charges (credits) ............... -- 8,505 (6,769)
Provision for uncollectible accounts ..................... 607 2,992 967
Deferred income taxes .................................... 5,541 962 5,519
Changes in operating assets and liabilities, net of
acquisitions and discontinued operations: ..................
Accounts receivable ....................................... (4,512) 721 (10,358)
Inventories ................................................ 254 157 (6,829)
Accounts payable and accounts payable to related party 6,039 (6,309) 8,009
Accrued restructuring charges .............................. (566) 3,424 280
Other assets and liabilities .............................. (7,961) (2,328) (1,813)
------- -------- --------
Net cash provided by continued operations .................. 11,846 590 12,035
Net cash used for discontinued operations .................. (969) (12,617) (524)
------- -------- --------
Net cash provided by (used for) operating activities ...... 10,877 (12,027) 11,511
------- -------- --------

INVESTING ACTIVITIES:
Capital expenditures ....................................... (3,391) (1,604) (2,442)
Proceeds from sale of subsidiary ........................... -- -- 42,650
Acquisition, net of cash acquired ........................ -- (7,272) --
Increase in restricted cash .............................. -- --- (12,143)
Capital expenditures for discontinued operations ......... (6,565) (4,429) (919)
Other investing activities ................................. 1,016 10 (2,149)
------- -------- --------
Net cash provided by (used for) investing activities ...... (8,940) (13,295) 24,997
------- -------- --------

FINANCING ACTIVITIES:
Net proceeds from (repayments of) revolving loans ......... 3,000 (3,000) --
Net proceeds from (repayments of) Foamex L.P. notes
payable ................................................... 26,734) 14,742 (26,903)
Proceeds from long-term debt--unrelated party ............ 15,000 -- --
Payments on long-term debt--unrelated party ............... (750) (3,000) (11,250)
Net financing activities of discontinued operations ...... 7,534 17,046 1,443
------- -------- --------
Net cash provided by (used for) financing activities ...... (1,950) 25,788 (36,710)
------- -------- --------
Net increase (decrease) in cash .............................. (13) 466 (202)
Cash at beginning of period ................................. 85 72 538
------- -------- --------
Cash at end of period ....................................... $ 72 $ 538 $ 336
======= ======== ========
</TABLE>

The accompanying notes are an integral part of the
consolidated financial statements.

F-46
<PAGE>

GENERAL FELT INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
For the Years Ended 1994, 1995 and 1996
(thousands)

<TABLE>
<CAPTION>
Retained
Common Stock Additional Earnings
--------------------- Paid-In (Accumulated
Shares Amount Capital Deficit)
--------- --------- ------------ -------------
<S> <C> <C> <C> <C>
Balances at January 2, 1994 ............... 1 -- $ 67,036 $ (2,732)
Net income ................................. -- -- -- 6,097
-------- -------- --------- --------
Balances at January 1, 1995 ............... 1 -- 67,036 3,365
Assumption of pension liability by
Foamex L.P. .............................. -- -- 2,158 --
Net loss .................................... -- -- -- (23,050)
-------- -------- --------- --------
Balances at December 31, 1995 ............... 1 -- 69,194 (19,685)
Net loss .................................... -- -- -- (27,261)
Contribution by Foamex L.P. of
intercompany notes in connection with
sale of Perfect Fit Industries, Inc. ...... -- -- 74,771 --
-------- -------- --------- --------
Balances at December 29, 1996 ............... 1 -- $143,965 $(46,946)
======== ======== ========= ========
</TABLE>

The accompanying notes are an integral part of the
consolidated financial statements.

F-47
<PAGE>

GENERAL FELT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

General Felt Industries, Inc. and subsidiaries ("General Felt") is one of
the largest distributors and manufacturers of carpet cushion in North America.
In addition, Foamex Fibers, Inc. ("Foamex Fibers"), a wholly-owned subsidiary,
manufactures various nonwoven textile fiber products used primarily for carpet
padding and in the furniture industry.

General Felt is a wholly-owned subsidiary of Foamex L.P. which in turn is
a 99% owned subsidiary of Foamex International Inc. ("Foamex International").

During 1996, General Felt sold Perfect Fit Industries, Inc. ("Perfect
Fit") which comprised the home comfort products segment of General Felt. The
consolidated financial statements of General Felt have been restated for
discontinued operations and include a net loss of $42.3 million, which includes
the loss on disposal and a net loss of $1.8 million (net of $1.2 million income
tax benefit) relating to operating losses during the phase-out period.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation

The consolidated financial statements include the accounts of General
Felt, other than the home comfort products segment, which is accounted for as
discontinued operations. Intercompany accounts and transactions for continuing
operations have been eliminated in consolidation.

The consolidated financial statements have been restated for discontinued
operations. The accompanying notes present amounts related only to continuing
operations.

Fiscal Year

General Felt's fiscal year ends on the Sunday closest to the thirty-first
day of December. Fiscal years 1994, 1995 and 1996 were composed of fifty-two
weeks and ended on January 1, 1995, December 31, 1995 and December 29, 1996,
respectively.

Accounting Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and reported amounts of revenues and expenses
during the reported period. Actual results could differ from those estimates.
(See Notes 4, 10, 11 and 14 and Cost in Excess of Net Assets Acquired below).

Cash Management

General Felt's cash management system operates such that checks processed
by General Felt but not yet presented to the bank are not considered reductions
of cash or accounts payable. Checks presented to the bank for payment are
provided for by a draw on the revolving notes with Foamex L.P. Cash receipts
are used to reduce the outstanding borrowings under the Foamex L.P. revolving
notes. As of December 31, 1995 and December 29, 1996, $0.4 million and $0.4
million, respectively, of processed checks have not been presented to the bank
and are included in accounts payable.

Restricted Cash

As of December 29, 1996, General Felt had restricted cash of approximately
$12.1 million. This cash was derived from the net sales proceeds relating to
the sale of Perfect Fit and is restricted by Foamex L.P.'s debt agreements.
This restricted cash will be used to reduce long-term debt--related party with
Foamex L.P. during 1997; accordingly, a corresponding amount of long-term
debt--related party has been classified as current in the accompanying
consolidated balance sheets.

Inventories

Inventories are stated at the lower of cost or market. The cost of
inventories is determined on a first-in, first-out basis.

F-48
<PAGE>

GENERAL FELT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Property, Plant and Equipment

Property, plant and equipment are stated at cost and are depreciated using
the straight-line method over the estimated useful lives of the assets. The
range of useful lives estimated for buildings and building improvements is
generally ten to forty years and the range for machinery, equipment and
furnishings is five to twelve years. Leasehold improvements are amortized over
the shorter of the terms of the respective lease or the estimated useful life
of the improvement, whichever is shorter. Depreciation expense for the years
ended 1994, 1995 and 1996 was $2.6 million, $2.8 million and $3.0 million,
respectively. For income tax purposes, General Felt uses accelerated
depreciation methods.

Cost of maintenance and repairs is charged to expense as incurred.
Renewals and improvements are capitalized. Upon retirement or other disposition
of items of plant and equipment, the cost and related accumulated depreciation
are removed from the accounts and any gain or loss is included in operations.
During 1994, General Felt sold equipment with a net book value of approximately
$1.0 million to a related party. There was no gain or loss on the sale.

Cost in Excess of Net Assets Acquired

The excess of the acquisition cost over the fair value of net assets
acquired in business combinations accounted for by the purchase method is
amortized using the straight-line method over a forty year period. At each
balance sheet date General Felt evaluates the recoverability of cost in excess
of net assets acquired using certain financial indicators such as historical
and future ability to generate income from operations based on a going concern
basis. Accumulated amortization as of December 31, 1995 and December 29, 1996
is approximately $4.3 million and $5.9 million, respectively.

Environmental Matters

Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations, which do not contribute to current or
future revenue generation, are expensed. Liabilities are recorded when
environmental assessments and/or remedial efforts are probable, and the cost
can be reasonably estimated.

Income Taxes

Income taxes are accounted for under the liability method in which
deferred income taxes are provided for temporary differences between the
financial reporting and income tax basis of assets and liabilities using the
income tax rates, under existing legislation, expected to be in effect at the
date such temporary differences are expected to reverse.

Reclassifications

Certain amounts in the 1994 and 1995 consolidated financial statements
have been reclassified to conform with the current year's presentation.

3. DISCONTINUED OPERATIONS

During 1996, General Felt finalized the sale of the outstanding common
stock of Perfect Fit, a wholly-owned subsidiary, for an adjusted sale price of
approximately $44.2 million. The sale included substantially all of the net
assets of the home comfort products segment with an adjusted net book value of
approximately $84.5 million after Foamex L.P. contributed Perfect Fit's
intercompany notes receivable and accrued interest thereon with Foamex L.P. to
General Felt. Actual and estimated transaction expenses related to the sale
totaled approximately $1.5 million. General Felt has recorded a loss for
discontinued operations of approximately $42.3 million, which includes the loss
on disposal and a net loss of $1.8 million (net of $1.2 million income tax
benefit) relating to operating losses

F-49
<PAGE>

GENERAL FELT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

3. DISCONTINUED OPERATIONS (continued)

during the phase-out period. A valuation allowance has been provided for the
capital loss relating to the sale of Perfect Fit since General Felt has
determined that capital gain taxable income is not likely to be sufficient to
recognize the deferred tax asset relating to the capital loss carryforward.

Summary operating results of General Felt's discontinued operations were
as follows:

<TABLE>
<CAPTION>
1994 1995 1996(1)
------------ ------------ ------------
(thousands)
<S> <C> <C> <C>
Net Sales .................................... $95,381 $ 98,464 $50,097
Gross profit ................................. 18,200 14,946 8,065
Income (loss) from operations ............... 4,170 (3,058) 1,123
Interest and debt issuance expense ............ (7,194) 10,636 5,543
Other expense ................................. -- -- 348
Loss from discontinued operations before income
taxes ....................................... (3,024) (13,694) (4,768)
Provision (benefit) for income taxes ......... (731) (2,654) (1,379)
------- -------- -------
Loss from discontinued operations, net of income
taxes ....................................... $(2,293) $(11,040) $(3,389)
======= ======== =======
</TABLE>

(1) General Felt's discontinued operations includes the operations of Perfect
Fit through June 1996.

Net assets of General Felt's discontinued operations (excluding
intercompany net assets) at December 31, 1995 is as follows:

1995
------------
(thousands)
Current assets .............................. $31,925
Property, plant and equipment, net ......... 21,672
Cost in excess of assets acquired, net ...... 40,333
Other assets ................................. 2,219
--------
Total assets .............................. 96,149
--------
Current liabilities ........................ 11,076
Long-term debt due to Foamex L.P. ............ 73,384
--------
Total liabilities ........................... 84,460
--------
Net assets ................................. $11,689
========

4. RESTRUCTURING CHARGES

In 1995, General Felt approved a restructuring plan (the "1995
restructuring plan") to consolidate two foam production, fabrication or branch
locations to concentrate resources as a result of industry conditions and
better position itself to achieve its strategic growth objectives. General Felt
recorded restructuring charges of $14.2 million which was comprised of $13.1
million charge associated with the consolidation of the two foam production,
fabrication or branch locations and a $1.1 million charge associated with the
completion of a 1993 restructuring plan. The components of the $13.1 million
restructuring charge include: $8.5 million for fixed asset writedowns (net of
estimated sale proceeds), $3.8 million for plant closure and operating lease
obligations and $0.8 million for personnel reductions. The $0.8 million cost
for personnel reductions primarily represents severance and employee benefit
costs associated with the elimination of manufacturing and administrative
personnel.

In 1996, General Felt determined to continue to operate one of the
facilities originally identified for closure in the 1995 restructuring plan
because of improved economics and the lack of synergy to be achieved from
relocating

F-50
<PAGE>

GENERAL FELT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

4. RESTRUCTURING CHARGES (continued)

the manufacturing process. In addition, General Felt has approved a plan to
close a facility that was not originally identified in the 1995 restructuring
plan. As a result of these changes to the 1995 restructuring plan, General Felt
recorded a $5.5 million net restructuring credit which included a restructuring
credit of $11.3 million associated with General Felt's decision not to close
the facility identified as part of the 1995 restructuring plan offset by $5.8
million of restructuring charges relating to the closure of a facility during
1997 (the "1996 restructuring plan").

Generally, the 1995 restructuring plan has been implemented as originally
contemplated. The following table sets forth the components of General Felt's
restructuring and other charges:

<TABLE>
<CAPTION>
Asset Plant Closure Personnel
Total Writedowns and Leases Reductions Other
----------- ------------ --------------- ------------ ----------
(millions)
<S> <C> <C> <C> <C> <C>
1995 restructuring charge ........................ $ 14.2 $ 8.5 $ 3.8 $ 0.8 $ 1.1
Asset writeoff/writedowns ........................ (11.3) (9.9) (0.3) -- (1.1)
------ ----- ----- ----- -----
Balances at December 31, 1995 ..................... 2.9 (1.4) 3.5 0.8 --
Cash spending .................................... (1.0) -- (0.5) (0.5) --
1996 restructuring charge ........................ 5.8 1.6 3.9 0.3 --
Restructuring credits ........................... (11.3) (8.4) (2.7) (0.2) --
Asset adjustments for restructuring credits ...... 8.2 8.2 -- -- --
------ ----- ----- ----- -----
Balances at December 29, 1996 ..................... $ 4.6 $ -- $ 4.2 $ 0.4 $ --
====== ===== ===== ===== =====
</TABLE>

As indicated in the table above, the accrued restructuring balance at
December 29, 1996, will be used for plant closure and leases including rundown
costs at the facilities. General Felt expects to incur approximately $2.3
million of charges during 1997 with the remaining $2.3 million to be incurred
through 2001. General Felt has terminated or notified 61 employees in the
manufacturing and administrative areas of their impending termination.

5. ACQUISITIONS

In April 1995, Foamex Fibers acquired certain assets and assumed certain
liabilities of GS Industries, Inc. and Pontotoc Fibers, Inc., manufacturers of
various nonwoven textile fiber products used primarily for carpet padding and
in the furniture industry for aggregate consideration of approximately $8.0
million, including related fees and expenses of approximately $0.3 million,
with an initial cash payment of $7.2 million. The excess of the purchase price
over the estimated fair value of the net assets acquired was approximately $3.9
million. The acquisition was accounted for as a purchase and the operations of
the acquired companies are included in the consolidated statements of
operations and cash flows from the date of acquisition. The cost of the
acquisition has been allocated on the basis of the fair value of the assets
acquired and the liabilities assumed. The excess of the purchase price over the
estimated fair value of the net assets acquired is being amortized using the
straight-line method over forty years.

6. INVENTORIES

Inventories consist of:

December 31, December 29,
1995 1996
-------------- -------------
(thousands)
Raw material and supplies ...... $ 7,277 $12,795
Work in process ............... 917 1,120
Finished goods .................. 10,291 11,399
-------- --------
Total ........................ $18,485 $25,314
======== ========

F-51
<PAGE>

GENERAL FELT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

7. LONG-TERM DEBT--RELATED PARTY

General Felt has two revolving promissory notes with Foamex L.P. to borrow
up to a maximum of $64.0 million. During 1996, General Felt used approximately
$22.5 million of the net proceeds from the sale of Perfect Fit to reduce these
promissory notes with Foamex L.P. The notes are due on demand, however, the
remaining net proceeds of $12.1 million from the sale of Perfect Fit will be
used to paydown the notes with Foamex L.P. during 1997 and is classified as a
current liability in the accompanying balance sheets. Foamex L.P. has indicated
that it does not intend to demand payment on the remaining balance of the notes
during 1997. Accordingly, the balance of the notes of $9.3 million is
classified as long-term in the accompanying balance sheets. Interest is payable
quarterly at the prime rate (8.25% at December 29, 1996). General Felt's cash
receipts reduce the outstanding balance and the cash requirements increase the
outstanding balance on a daily basis.

8. LONG-TERM DEBT--UNRELATED PARTY

Long-term debt--unrelated parties consists of:

December 31,
1995
-------------
(thousands)
Term loan .................. $11,250
Revolving loan ............ --
--------
11,250
Less current portion ...... 3,000
--------
Total ..................... $ 8,250
========

Term and Revolving Loans

On June 28, 1994, Foamex L.P. and General Felt entered into an amended
credit agreement (the "Foamex L.P. Credit Facility"). The Foamex L.P. Credit
Facility provides for loans of up to $85.0 million of which up to $40.0 million
was available as a term loan payable in 20 equal quarterly installments
commencing October 1994 and up to $45.0 million is available under a revolving
line of credit which expires in June 1999. On June 28, 1994, Foamex L.P. and
General Felt entered into a $40.0 million term loan under the Foamex L.P.
Credit Facility of which $15.0 million was borrowed by General Felt; no further
term loan borrowings are available thereunder. Borrowings under the Foamex L.P.
Credit Facility are collateralized by the accounts receivable of Foamex L.P.
and General Felt. During 1996, General Felt used $9.0 million of net proceeds
from the sale of Perfect Fit to repay its outstanding term loan borrowings.
Pursuant to the terms of the Foamex L.P. Credit Facility, borrowed funds will
bear interest at a floating rate equal to 1.0% per annum plus the higher of (I)
the base rate of The Bank of Nova Scotia, as in effect from time to time, (ii)
a rate that is, generally, 0.5% per annum plus a fluctuating rate generally
equal to the rate on three-month certificates of deposit, subject to certain
adjustments, plus a fluctuating rate generally equal to the annual assessment
rate paid by The Bank of Nova Scotia to the Federal Deposit Insurance
Corporation or (iii) 0.5% per annum plus the federal funds rate in effect from
time to time. At the option of either borrower, portions of outstanding loans
under the Foamex L.P. Credit Facility will be convertible into Eurodollar rate
loans bearing interest at a rate generally equal to 3.0% per annum above the
average LIBOR rate of Citibank, N.A. and The Bank of Nova Scotia. As of
December 29, 1996, no revolving credit borrowings were outstanding under the
Foamex L.P. Credit Facility with unused availability of $33.3 million. In
addition, there were $11.7 million in letters of credit outstanding under the
Foamex L.P. Credit Facility.

Debt Restrictions and Covenants

The Foamex L.P. indentures, credit agreement and other indebtedness
agreements contain various covenants, including restrictions on payments of
distributions by Foamex L.P. to its partners, the incurrence of additional
indebtedness, the sale of assets, mergers and consolidations and transactions
with affiliates. In addition, certain agreements contain a provision that, in
the event of a defined change of control, the indebtedness must be repaid, in
certain cases at the option of the holder. Also, Foamex L.P. is required under
certain of these agreements to

F-52
<PAGE>

GENERAL FELT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

8. LONG-TERM DEBT--UNRELATED PARTY (continued)

maintain specified financial ratios of which the most restrictive is the
maintenance of net worth and interest coverage ratios, as defined. Under the
most restrictive of the distribution restrictions, approximately $0.7 million
was available to be paid by Foamex L.P. to its partners at December 29, 1996.
Also, General Felt is required to maintain $41.0 million net worth, as defined.

As of December 29, 1996, Foamex L.P. and General Felt were in compliance
with the covenants of the Foamex L.P. Credit Facility and expect to be in
compliance with the covenants for the foreseeable future.

9. EMPLOYEE BENEFIT PLANS

Prior to December 31, 1996, General Felt had noncontributory defined
benefit pension plans (the "Plans") for eligible salaried employees (the
"Salaried Plan") and certain hourly employees at the Trenton and Pico Rivera
manufacturing facilities (the "Trenton Plan" and the "Pico Plan"). The Plans
provided benefits based principally on years of credited service and the
highest level of compensation earned during a specified period before
retirement for the Salaried Plan and stated amounts for each year of credited
service for the Trenton Plan and the Pico Plan. General Felt accounted for such
pension plans pursuant to SFAS No. 87, "Employer's Accounting for Pensions".

General Felt's funding policy was to make no less than the minimum annual
contributions required based upon actuarial methods allowable by applicable
governmental regulations. Effective January 1, 1995, General Felt merged the
Salaried Plan and the Trenton Plan with the defined benefit salaried pension
plan of Foamex L.P. During 1995, General Felt merged the Pico Plan with the
defined benefit hourly pension plan of Foamex L.P. Consequently, the aggregate
pension liability of approximately $2.2 million as of December 31, 1995
relating to these plans has been included in additional paid-in capital since
Foamex L.P. has assumed all future obligations under the plans. General Felt
will incur pension expense for future periods to the extent it provides funding
to the plans. During 1996, General Felt funded approximately $0.1 million to
the plans.

Net periodic pension cost includes the following components:

1994
------------
(thousands)
Service cost-benefits earned during the period ...... $ 419
Interest cost on projected benefit obligation ...... 1,077
Actual return on plan assets ........................ 84
Net amortization and deferral ........................ (1,195)
-------
Net periodic pension cost ........................... $ 385
=======

The assumptions used to determine net periodic pension cost and related
pension obligations were as follows:

1994
------
Discount rate .................................... 8.25%
Rate of increase in compensation levels ......... 4.00
Expected long-term rate of return on assets ...... 9.75

In addition, certain employees of General Felt are covered by
union-sponsored collectively bargained, multi-employer pension plans. General
Felt contributed and charged to expense $0.1 million related to these plans for
each of the years 1994, 1995 and 1996.

During 1995, General Felt merged its defined contribution plan with Foamex
L.P. Foamex L.P. is the plan sponsor; however, General Felt incurs a
contribution expense for its employees. The plan is qualified under Section
401(k) of the Internal Revenue Code (the "Code") and covers eligible employees
who elect to participate in the plan. Employee contributions are voluntary and
subject to certain limitations as imposed by the Code. During 1995,

F-53
<PAGE>

GENERAL FELT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

9. EMPLOYEE BENEFIT PLANS (continued)

General Felt provided contributions amounting to a 25% match of employees'
contributions up to 4% of eligible compensation. General Felt also provides an
additional 25% match of employees' contributions up to 4% of eligible
compensation made to a fund which invests in Foamex International common stock.
In addition, General Felt may make discretionary contributions amounting to a
25% match of employees' contributions up to 4% of eligible compensation. Prior
to 1995, contributions were provided only to employees who were members of
collective bargaining agreements. The expense for these contributions was $0.1
million for each of the years 1995 and 1996.

10. INCOME TAXES

The components of the total consolidated provision (benefit) for income
taxes are summarized as follows:

<TABLE>
<CAPTION>
1994 1995 1996
------------ ------------ ------------
(thousands)
<S> <C> <C> <C>
Continuing operations ................................. $5,587 $ 962 $ 6,344
Discontinued operations .............................. (731) (2,654) (2,558)
------ ------- -------
Total consolidated provision (benefit) for income taxes $4,856 $(1,692) $ 3,786
====== ======= =======
Current:
Federal ............................................. $ -- $ -- $ 220
State ................................................ 46 -- 605
------ ------- -------
Total current ....................................... 46 -- 825
------ ------- -------
Deferred:
Federal ............................................. 3,598 (1,424) 1,666
State ................................................ 1,212 (268) 1,295
------ ------- -------
Total deferred .................................... 4,810 (1,692) 2,961
------ ------- -------
Total consolidated provision (benefit) for income
taxes ............................................. $4,856 $(1,692) $ 3,786
====== ======= =======
</TABLE>

The components of the temporary differences that give rise to significant
deferred tax assets and liabilities are:

<TABLE>
<CAPTION>
December 31, December 29,
1995 1996
-------------- -------------
(thousands)
<S> <C> <C>
Deferred tax assets:
Inventory basis differences ........................ $ 861 $ 415
Employee benefit accruals ........................ 1,004 714
Allowances and contingent liabilities ............ 2,427 2,548
Restructuring and plant closing accruals ......... 7,498 3,632
Other ............................................. 77 139
Net operating loss carryforward .................. 8,975 5,154
Capital loss carryforwards ........................ -- 14,193
Valuation allowance .............................. (13,473) (15,988)
-------- --------
Deferred tax assets .............................. 7,369 10,807
-------- --------
Deferred tax liabilities:
Difference between book and tax depreciation ...... 7,009 6,722
Other ............................................. 360 1,016
-------- --------
Deferred tax liabilities ........................ 7,369 7,738
-------- --------
Net deferred tax asset (liabilities) ............... $ -- $ 3,069
======== ========
</TABLE>

F-54
<PAGE>

GENERAL FELT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

10. INCOME TAXES (continued)

A reconciliation of the statutory federal income tax rate to the effective
income tax rate on continuing opera-
tions is as follows:

<TABLE>
<CAPTION>
1994 1995 1996
------------ --------------- ------------
(thousands)
<S> <C> <C> <C>
Statutory income taxes ........................ $4,892 $(3,867) $ 8,683
State income taxes, net of federal ............ 839 (648) 1,235
Limitation on utilization of tax benefits ...... -- 4,929 --
Amortization of excess cost ..................... 525 554 517
Valuation allowance ........................... (452) -- (4,823)
Other .......................................... (217) (6) 732
------ -------- -------
Tax provision ................................. $5,587 $ 962 $ 6,344
====== ======== =======
</TABLE>

General Felt has determined that taxable capital gains in the foreseeable
future will likely not be sufficient to recognize the deferred tax asset
associated with the capital loss carryforward. Accordingly, a valuation
allowance has been provided for the deferred tax asset associated with the
capital loss carryforward and certain other deferred tax assets. During 1996,
the valuation allowance for deferred tax assets increased by $2.5 million which
included a $14.2 million increase for the capital loss carryforward, offset by
$6.9 million decrease due to reversal of preacquisition temporary differences
and $4.8 million for reversal of postacquisition temporary differences which is
reflected in the consolidated statement of operations. The $6.9 million
reversal of preacquisition temporary differences was used to reduce cost in
excess of assets acquired. As of December 29, 1996, approximately $1.8 million
of deferred tax assets are related to preacquisition activities and if utilized
will further reduce cost in excess of assets acquired. At December 29, 1996,
General Felt has $14.7 million of regular tax net operating loss carryforwards
for federal income tax purposes expiring from 2003 to 2010 of which $7.0
million was acquired in 1993 and is subject to limitations. In addition,
General Felt has $40.6 million of capital loss carryforwards that expire in
2001.

11. ENVIRONMENTAL MATTERS

During 1996, expenditures in connection with General Felt's compliance
with federal, state, and local environmental laws and regulations did not have
a material adverse effect on General Felt's operations, financial position,
capital expenditures or competitive position. As of December 29, 1996, General
Felt had environmental accruals of approximately $1.5 million for environmental
matters.

General Felt has reported to appropriate state authorities that it has
found soil and groundwater contamination in excess of state standards at a
facility located in Philadelphia. General Felt has begun remediation and is
conducting further investigations into the extent of the contamination at this
facility and, accordingly, the extent of the remediation that may ultimately be
required. The actual cost and the timetable of any such remediation cannot be
predicted with any degree of certainty at this time. As of December 29, 1996,
General Felt had environmental accruals of approximately $1.2 million for the
remaining potential remediation costs for these facilities based on engineering
estimates.

Federal regulations require that by the end of 1998 all underground
storage tanks ("USTs") be removed or upgraded in all states to meet applicable
standards. General Felt has six USTs that will require removal or permanent
in-place closure by the end of 1998. Due to the age of these tanks, leakage may
have occurred resulting in soil and possibly groundwater contamination. General
Felt has accrued $0.3 million for the estimated removal and remediation, if
any, associated with these USTs. However, the full extent of contamination and,
accordingly, the actual cost of such remediation cannot be predicted with any
degree of certainty at this time. General Felt believes that its USTs do not
pose a significant risk of environmental liability because of General Felt's
monitoring practices

F-55
<PAGE>

GENERAL FELT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

11. ENVIRONMENTAL MATTERS (continued)

for USTs and conditional approval for the permanent in-place closure for
certain USTs. However, there can be no assurance that such USTs will not result
in significant environmental liability in the future.

Although it is possible that new information or future developments could
require General Felt to reassess its potential exposure relating to all pending
environmental matters, including those described herein, management believes
that, based upon all currently available information, the resolution of such
environmental matters will not have a material adverse effect on General Felt's
operations, financial position, capital expenditures or competitive position.
The possibility exists, however, that new environmental legislation and/or
environmental regulations may be adopted, or other environmental conditions may
be found to exist, that may require expenditures not currently anticipated and
that may be material.

12. COMMITMENTS AND CONTINGENCIES

Operating Leases

General Felt is obligated, under various noncancellable lease agreements,
for rental of facilities and machinery and equipment. Many of the leases
contain renewal options with varying terms and escalation clauses that provide
for increased rentals based upon increases in the Consumer Price Index, real
estate taxes and the lessors' operating expenses. Total minimum rental
commitment (excluding commitments accrued as part of the 1995 and 1996
restructuring plans) required under operating leases at December 29, 1996 was:

1997 .............................. $1,070
1998 .............................. 809
1999 .............................. 446
2000 .............................. 367
2001 .............................. 340
Thereafter ........................ 1,061
-------
Total minimum lease payments ...... $4,093
=======

Total rent expense for all operating leases for the years ended 1994, 1995
and 1996 was approximately $3.5 million, $2.8 million and $2.1 million,
respectively.

Guarantor

General Felt has pledged its stock as collateral for certain debt of
Foamex L.P. and is a co-guarantor of the borrowings outstanding under the
Foamex L.P. Credit Facility and Foamex L.P. bond indentures, which as of
December 29, 1996, had amounts outstanding of approximately $11.0 million and
$380.2 million, respectively.

13. RELATED PARTY TRANSACTIONS AND BALANCES

General Felt purchased $149.0 million, $141.2 million and $154.0 million
of carpet cushion foam from Foamex L.P. during 1994, 1995 and 1996,
respectively.

In connection with the consolidation of General Felt's administrative
functions with those of Foamex L.P., General Felt paid approximately $2.3
million and $1.4 million to Foamex L.P. in 1995 and 1996, respectively, for
direct costs incurred by Foamex L.P. on General Felt's behalf and for an
allocation of shared services and facilities.

During 1993, General Felt leased two facilities from limited partnerships
in which certain directors and officers of related parties have an interest.
The lessor under the first of these leases (the "East State Lease") is East
State Associates. The lease related to a warehouse at General Felt's Trenton,
New Jersey facility. In accordance with the terms of the lease, the lessor
exercised its right to require General Felt to purchase the facility at the
appraised fair market value of approximately $2.3 million. General Felt
assigned the purchase contract for the property to an unaffiliated third party
who purchased the property on March 28, 1994. General Felt no longer leases the
facility.

F-56
<PAGE>

GENERAL FELT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

13. RELATED PARTY TRANSACTIONS AND BALANCES (continued)

The lessor under the second lease (the "West State Lease") is West State
Associates. The lease relates to General Felt's manufacturing facility in Pico
Rivera, California. During 1994, General Felt purchased the facility in Pico
Rivera, California from the lessor at the appraised fair market value of $3.4
million. Rental payments for these leases for the year ended January 1, 1995
were $0.3 million.

14. FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK

Concentration of Credit Risk

General Felt's financial instruments subject to credit risk are primarily
trade accounts receivable. Accounts receivable are concentrated with large
retail customers. General Felt performs ongoing credit evaluations of its
customers' financial conditions and, generally, requires no collateral. General
Felt maintains allowance accounts for potential credit losses and such losses
have been within management's expectations. Additionally, General Felt's ten
largest customers accounted for approximately 32.6% and 30.8% of accounts
receivable at December 31, 1995 and December 29, 1996, respectively.

Disclosure about Fair Value of Financial Instruments

The following disclosures of the estimated fair value amounts have been
determined based on General Felt's assessment of available market information
and appropriate valuation methodologies.

Carrying amounts reported in the consolidated balance sheet for cash and
cash equivalents, accounts receivable, accounts payable, accrued liabilities
and short term borrowings approximates fair value due to the short-term nature
of these instruments.

The carrying value of long-term debt approximates fair value based on the
borrowing rate available to General Felt for bank loans with similar terms and
maturities.

15. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Supplemental disclosures of cash flow information:

1994 1995 1996
-------- ------------ -------
(thousands)
Interest paid ............... $3,609 $5,300 $4,434
======= ======= =======
Income taxes paid, net ...... $ 316 $ 183 596
======= ======= =======

F-57
<PAGE>

GENERAL FELT INDUSTRIES, INC. SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(thousands)

<TABLE>
<CAPTION>
December 29, March 30,
1996 1997
-------------- -------------
<S> <C> <C>
ASSETS

CURRENT ASSETS:

Cash ................................................... $ 336 $ 165
Restricted cash ....................................... 12,143 3,787
Accounts receivable, net .............................. 44,973 42,285
Inventories ............................................. 25,314 27,664
Other current assets ................................. 9,435 9,958
-------- --------
Total current assets ................................. 92,201 83,859

PROPERTY, PLANT AND EQUIPMENT, NET ..................... 31,748 31,523

COST IN EXCESS OF ASSETS ACQUIRED, NET .................. 50,574 50,232

OTHER ASSETS .......................................... 3,158 3,139
-------- --------
TOTAL ASSETS .......................................... $177,681 $168,753
======== ========

LIABILITIES AND STOCKHOLDER'S EQUITY

CURRENT LIABILITIES:

Current portion of long-term debt--related party ...... $ 12,143 $ 3,787
Accounts payable ....................................... 13,719 11,115
Accounts payable to related party ..................... 17,987 17,427
Other accrued liabilities .............................. 17,923 16,592
-------- --------
Total current liabilities ........................... 61,772 48,921
-------- --------

LONG-TERM DEBT--RELATED PARTY ........................... 9,260 12,377
-------- --------

OTHER LIABILITIES ....................................... 9,630 9,725
-------- --------

COMMITMENTS AND CONTINGENCIES ........................... -- --
-------- --------

STOCKHOLDER'S EQUITY:

Common stock, $.01 par value; authorized, issued and
outstanding 1,000 shares .............................. -- --
Additional paid-in capital ........................... 143,965 143,965
Retained earnings (accumulated deficit) ............... (46,946) (46,235)
-------- --------
Total stockholder's equity ........................... 97,019 97,730
-------- --------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY ............ $177,681 $168,753
======== ========
</TABLE>

The accompanying notes are an integral part of the
condensed consolidated financial statements.

F-58
<PAGE>

GENERAL FELT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(thousands)

13 Week Periods Ended
------------------------
March 31, March 30,
1996 1997
----------- ----------
NET SALES .............................. $65,695 $71,281

COST OF GOODS SOLD ........................ 58,500 65,325
------- --------

GROSS PROFIT ........................... 7,195 5,956

SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES ............... 4,878 4,562
------- --------

INCOME FROM OPERATIONS .................. 2,317 1,394

INTEREST AND DEBT ISSUANCE EXPENSE ...... 353 323

OTHER INCOME, NET ........................ 56 114
------- --------

INCOME FROM CONTINUING OPERATIONS BEFORE
PROVISION FOR INCOME TAXES ............ 2,020 1,185

PROVISION FOR INCOME TAXES ............... 784 474
------- --------

INCOME FROM CONTINUING OPERATIONS ...... 1,236 711

LOSS FROM DISCONTINUED OPERATIONS, NET OF
INCOME TAXES ........................... (927) --
------- --------

NET INCOME .............................. $ 309 $ 711
======== ========

The accompanying notes are an integral part of the condensed consolidated
financial statements.

F-59
<PAGE>

GENERAL FELT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(thousands)

<TABLE>
<CAPTION>
13 Week Periods Ended
------------------------
March 31, March 30,
1996 1997
----------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ...................................................... $ 309 $ 711
Adjustments to reconcile net income to net cash provided by
operating activities: ..........................................
Depreciation and amortization ................................. 1,237 1,147
Loss from discontinued operations .............................. 927 --
Other operating activities .................................... 140 (310)
Changes in operating assets and liabilities, excluding
discontinued operations ....................................... (2,492) (4,290)
-------- --------
Net cash provided by continuing operations ..................... 121 (2,742)
Net cash used for discontinued operations ..................... (4,503) --
-------- --------
Net cash used for operating activities ........................ (4,382) (2,742)
-------- --------

INVESTING ACTIVITIES:
Capital expenditures ............................................. (1,054) (546)
Decrease in restricted cash .................................... -- 8,356
Discontinued operations investing activities ..................... (292) --
-------- --------
Net cash provided by (used for) investing activities ......... (1,346) 7,810
-------- --------

FINANCING ACTIVITIES:
Net proceeds from (repayments of) Foamex L.P. Notes payable ...... 2,837 (5,239)
Repayment of long-term debt .................................... (750) --
Discontinued operation financing activities ..................... 3,868 --
-------- --------
Net cash provided by (used for) financing activities ......... 5,955 (5,239)
-------- --------

Net increase (decrease) in cash ................................. 227 (171)

Cash at beginning of period .................................... 538 336
-------- --------

Cash at end of period .......................................... $ 765 $ 165
======== ========
</TABLE>

The accompanying notes are an integral part of the
condensed consolidated financial statements.

F-60
<PAGE>

GENERAL FELT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1. ORGANIZATION AND BASIS OF PRESENTATION

General Felt Industries, Inc. and subsidiaries ("General Felt") condensed
consolidated balance sheet as of December 29, 1996 has been condensed from the
audited consolidated balance sheet at that date. The condensed consolidated
balance sheet as of March 30, 1997 and the condensed consolidated statements of
operations and the condensed consolidated statements of cash flows for the
thirteen week periods ended March 30, 1997 and March 31, 1996 have been
prepared by General Felt and have not been audited by General Felt's
independent accountants. Also, the condensed consolidated statement of
operations and the condensed consolidated statement of cash flows for the
thirteen week period ended March 31, 1996 have been restated for discontinued
operations (see Note 2 below). In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, considered necessary for a
fair presentation of the consolidated financial position, results of operations
and cash flows have been included.

Certain information and note disclosures normally included in the
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted in accordance with the rules and
regulations of the Securities and Exchange Commission. These condensed
consolidated financial statements should be read in conjunction with General
Felt's 1996 consolidated financial statements and notes thereto as set forth in
Foamex L.P.'s Annual Report on Form 10-K for the fiscal year ended December 29,
1996.

2. DISCONTINUED OPERATIONS

During 1996, General Felt sold the outstanding common stock of Perfect Fit
Industries, Inc. ("Perfect Fit"), a wholly-owned subsidiary, for an adjusted
sale price of approximately $44.2 million. The sale included substantially all
of the net assets of General Felt's home comfort products business segment.
Accordingly, the accompanying condensed consolidated statement of operations
and the condensed consolidated statement of cash flows for the thirteen week
period ended March 31, 1996 reflects the home comfort products business segment
as discontinued operations.

General Felt's condensed consolidated financial statements have been
restated to reflect the discontinuation of the home comfort products business
segment. A summary of the operating results for the discontinued operations is
as follows:

<TABLE>
<CAPTION>
13 Week Period Ended
March 31, 1996
---------------------
(thousands)
<S> <C>
Net sales ......................................................... $25,162
Gross profit ...................................................... 4,250
Income from operations ............................................. 1,224
Interest and debt issuance expense ................................. 2,758
Loss from discontinued operations before (benefit) from income taxes (1,534)
Benefit for income taxes .......................................... (607)
Loss from discontinued operations, net of income taxes ............ (927)
</TABLE>

F-61
<PAGE>

GENERAL FELT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

3. INVENTORIES

Inventories consist of:

December 29, March 30,
1996 1997
-------------- ----------
(thousands)
Raw materials and supplies ...... $12,795 $13,990
Work in process .................. 1,120 1,434
Finished goods .................. 11,399 12,240
-------- --------
Total ........................... $25,314 $27,664
======== ========

4. RELATED PARTY TRANSACTIONS

General Felt purchased approximately $34.7 million and $38.9 million of
carpet cushion foam from Foamex L.P. during the thirteen week periods ended
March 31, 1996 and March 30, 1997, respectively.

5. ENVIRONMENTAL MATTERS

As of March 30, 1997, General Felt had environmental accruals of
approximately $1.5 million for environmental matters.

General Felt has reported to appropriate state authorities that it has
found soil and groundwater contamination in excess of state standards at a
facility located in Philadelphia, Pennsylvania. General Felt has begun
remediation and is conducting further investigations into the extent of the
contamination at this facility and, accordingly, the extent of the remediation
that may ultimately be required. The actual cost and the timetable of any such
remediation cannot be predicted with any degree of certainty at this time. As
of March 30, 1997, General Felt had environmental accruals of approximately
$1.2 million for the remaining potential remediation costs for these facilities
based on engineering estimates.

F-62
<PAGE>

FOAMEX FIBERS, INC.

BALANCE SHEETS (unaudited)
(thousands)

<TABLE>
<CAPTION>
December 31, December 29,
1995 1996
-------------- -------------
<S> <C> <C>
ASSETS
CURRENTS ASSETS:
Cash ................................................ $ 469 $ 156
Accounts receivable, net ........................... 884 707
Accounts receivable from General Felt ............... 1,389 5,092
Inventories .......................................... 1,282 972
Other current assets ................................. 61 181
------ -------
Total current assets .............................. 4,085 7,108
PLANT AND EQUIPMENT:
Machinery, equipment and furnishings .................. 2,002 2,666
Less accumulated depreciation and amortization ...... (131) (340)
------ -------
Plant and equipment, net .............................. 1,871 2,326
COST IN EXCESS OF ASSETS ACQUIRED, NET ............... 3,938 3,880
------ -------
TOTAL ASSETS .......................................... $9,894 $13,314
====== =======
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable .................................... $ 849 $ 736
Other accrued liabilities ........................... 660 996
------ -------
Total current liabilities ........................... 1,509 1,732
INCOME TAXES DUE TO GENERAL FELT ..................... 410 1,536
------ -------
Total liabilities ................................. 1,919 3,268
------ -------
COMMITMENTS AND CONTINGENCIES ........................ -- --
------ -------
STOCKHOLDER'S EQUITY:
Common stock, $.01 par value; authorized, issued and
outstanding 1,000 shares ........................... -- --
Additional paid-in capital ........................... 7,272 7,272
Retained earnings .................................... 703 2,774
------ -------
Total stockholder's equity ........................ 7,975 10,046
------ -------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY ............ $9,894 $13,314
====== =======
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-63
<PAGE>

FOAMEX FIBERS, INC.

STATEMENTS OF OPERATIONS (unaudited)
for the period from April 13, 1995
(date of acquisition) to December 31, 1995 and
for the year ended December 29, 1996
(thousands)

<TABLE>
<CAPTION>
April 13, 1995 Year Ended
to December 29,
December 31, 1995 1996
------------------- -------------
<S> <C> <C>
NET SALES .......................................... $14,112 $21,410
COST OF GOODS SOLD ................................. 11,948 16,843
-------- --------
GROSS PROFIT ....................................... 2,164 4,567
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ...... 980 1,257
-------- --------
INCOME FROM OPERATIONS ........................... 1,184 3,310
OTHER EXPENSE, NET ................................. 12 7
-------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES ......... 1,172 3,303
PROVISION FOR INCOME TAXES ........................ 469 1,232
-------- --------
NET INCOME ....................................... $ 703 $ 2,071
======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-64
<PAGE>

FOAMEX FIBERS, INC.

STATEMENTS OF CASH FLOWS (unaudited)
for the period from April 13, 1995
(date of acquisition) to December 31, 1995 and
for the year ended December 29, 1996
(thousands)

<TABLE>
<CAPTION>
April 13, 1995
to Year Ended
December 31, December 29,
1995 1996
---------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ....................................... $ 703 $ 2,071
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization .................. 195 314
Income taxes due to General Felt ............... 410 1,156
Changes in operating assets and liabilities, net of
acquisitions and discontinued operations:
Accounts receivable .............................. 573 178
Accounts receivable from General Felt ............ (837) (3,703)
Inventories .................................... (117) 310
Other assets and liabilities ..................... (267) 30
------- -------
Net cash provided by operating activities ...... 660 356
------- -------
INVESTING ACTIVITIES:
Capital expenditures ........................... (191) (669)
Acquisition, net of cash acquired ............... (7,272) --
------- -------
Net cash used for investing activities ......... (7,463) (669)
------- -------
FINANCING ACTIVITIES:
Capital contributions ........................... 7,272 --
------- -------
Net cash provided by financing activities ...... 7,272 --
------- -------
Net increase (decrease) in cash .................. 469 (313)
Cash at beginning of period ..................... -- 469
------- -------
Cash at end of period .............................. $ 469 $ 156
======= =======
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-65
<PAGE>

FOAMEX FIBERS, INC.

STATEMENTS OF STOCKHOLDER'S EQUITY (unaudited)
for the period from April 13, 1995 (date of acquisition)
to December 31, 1995 and for the year ended December 29, 1996
(thousands)

<TABLE>
<CAPTION>
Common Stock Additional
------------------- Paid-In Retained
Shares Amount Capital Earnings
-------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Capital Contribution by General Felt ...... 1 $ -- $7,272 $ --
Net income for the period from
April 13, 1995 (date of acquisition) to
December 31, 1995 ........................ -- -- -- 703
------ ------- ------- -------
Balances at December 31, 1995 ............ 1 -- 7,272 703
Net income ................................. -- -- -- 2,071
------ ------- ------- -------
Balances at December 29, 1996 ............ 1 $ -- $7,272 $2,774
====== ======= ======= =======
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-66
<PAGE>

FOAMEX FIBERS, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

Foamex Fibers, Inc. ("Foamex Fibers") manufactures various nonwoven
textile fiber products used primarily for carpet padding and in the furniture
industry.

Foamex Fibers is a wholly-owned subsidiary of General Felt Industries,
Inc. ("General Felt") which in turn is a wholly-owned subsidiary of Foamex L.P.
Foamex L.P. is a 99% owned subsidiary of Foamex International Inc. ("Foamex
International").

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fiscal Year

Foamex Fibers' fiscal year ends on the Sunday closest to the thirty-first
day of December. Fiscal year 1996 was composed of fifty-two weeks and ended on
December 29, 1996.

Accounting Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and reported amounts of revenues and expenses
during the reported period. Actual results could differ from those estimates.

Inventories

Inventories are stated at the lower of cost or market. The cost of
inventories is determined on a first-in, first-out basis.

Plant and Equipment

Plant and equipment are stated at cost and are depreciated using the
straight-line method over the estimated useful lives of the assets. The range
of useful lives estimated for machinery, equipment and furnishings is five to
twelve years. Leasehold improvements are amortized over the shorter of the
terms of the respective lease or the estimated useful life of the improvement,
whichever is shorter. Depreciation expense for the period from April 13, 1995
(date of acquisition) to December 31, 1995 and the year ended 1996 was $0.1
million and $0.2 million, respectively. For income tax purposes, Foamex Fibers
uses accelerated depreciation methods.

Cost in Excess of Net Assets Acquired

The excess of the acquisition cost over the fair value of net assets
acquired in business combinations accounted for by the purchase method is
amortized using the straight-line method over a forty year period. At each
balance sheet date Foamex Fibers evaluates the recoverability of cost in excess
of net assets acquired using certain financial indicators such as historical
and future ability to generate income from operations based on a going concern
basis. Accumulated amortization as of December 31, 1995 and December 29, 1996
is approximately $0.1 million and $0.2 million, respectively.

Environmental Matters

Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations, which do not contribute to current or
future revenue generation, are expensed. Liabilities are recorded when
environmental assessments and/or remedial efforts are probable, and the cost
can be reasonably estimated.

Income Taxes

F-67
<PAGE>

FOAMEX FIBERS, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

tax rates, under existing legislation, expected to be in effect at the date
such temporary differences are expected to reverse.

Foamex Fibers joins with General Felt in the filing of a consolidated U.S.
Federal income tax return. Foamex Fiber's policy is to provide for Federal and
state income taxes on a separate return basis. As of December 29, 1996, Foamex
Fibers does not have a tax sharing agreement with General Felt, therefore
current and deferred Federal income taxes payable are classified as noncurrent
and are included in Income Taxes Due to General Felt. Net deferred income tax
liabilities amounting to approximately $0.3 million at December 29, 1996 are
included to Income Taxes Due to General Felt and consist primarily of
accelerated depreciation for plant and equipment and accelerated amortization
for costs in excess of assets acquired for income tax purposes offset by
deferred tax assets relating to allowance accounts and accrued liabilities not
deductible for income tax purposes.

3. ACQUISITIONS

In April 1995, Foamex Fibers acquired certain assets and assumed certain
liabilities of GS Industries, Inc. and Pontotoc Fibers, Inc., manufacturers of
various nonwoven textile fiber products used primarily for carpet padding and in
the furniture industry, for aggregate consideration of approximately $8.0
million, including related fees and expenses of approximately $0.3 million, with
an initial cash payment of $7.2 million. The purchase price was funded by
General Felt in the form of a capital contribution. The excess of the purchase
price over the estimated fair value of the net assets acquired was approximately
$3.9 million. The acquisition was accounted for as a purchase and the operations
of the acquired companies are included in the statements of operations and cash
flows from the date of acquisition. The cost of the acquisition has been
allocated on the basis of the fair value of the assets acquired and the
liabilities assumed. The excess of the purchase price over the estimated fair
value of the net assets acquired is being amortized using the straight-line
method over forty years. Unaudited pro forma net sales and pro forma net income
would have been approximately $19.7 million and $1.0 million for the year ended
December 31, 1995.

4. INVENTORIES

Inventories consist of:

December 31, December 29,
1995 1996
-------------- -------------
(thousands)
Raw material and supplies ...... $ 846 $700
Finished goods .................. 436 272
------- -----
Total ........................ $1,282 $972
======= =====

5. INCOME TAXES

The components of the provision for income taxes are summarized as
follows:

<TABLE>
<CAPTION>
Period from April 13, 1995
(date of acquisition) to Year Ended
December 31, 1995 December 29, 1996
---------------------------- ------------------
(thousands)
<S> <C> <C>
Federal ................................. $410 $1,156
State ................................. 59 76
----- -------
Total provision for income taxes ...... $469 $1,232
===== =======
</TABLE>

F-68
<PAGE>

FOAMEX FIBERS, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

5. INCOME TAXES (continued)

A reconciliation of the statutory federal income tax rate to the effective
income tax rate is as follows:

<TABLE>
<CAPTION>
April 13, 1995 to Year Ended
December 31, 1995 December 29, 1996
------------------- ------------------
(thousands)
<S> <C> <C>
Statutory income taxes .................. $410 $1,156
State income taxes, net of federal ...... 59 76
----- -------
Tax provision ........................... $469 $1,232
===== =======
</TABLE>

6. COMMITMENTS AND CONTINGENCIES

Operating Leases

Foamex Fibers is obligated, under various noncancellable lease agreements,
for rental of facilities and machinery and equipment. Many of the leases
contain renewal options with varying terms and escalation clauses that provide
for increased rentals based upon increases in the Consumer Price Index, real
estate taxes and the lessors' operating expenses. Total minimum rental
commitment required under operating leases at December 29, 1996 (thousands)
was:

1997 .............................. $ 478
1998 .............................. 488
1999 .............................. 489
2000 .............................. 425
2001 .............................. 410
Thereafter ........................ 1,341
-------
Total minimum lease payments ...... $3,631
=======

Total rent expense for all operating leases for the period from April 13,
1995 (date of acquisition) to December 31, 1995 and the year ended December 29,
1996 was approximately $0.2 million and $0.3 million, respectively.

7. RELATED PARTY TRANSACTIONS AND BALANCES

General Felt purchased $6.4 million and $10.1 million of carpet cushion
from Foamex Fibers during the period from April 13, 1995 (date of acquisition)
to December 31, 1995 and for the year ended December 29, 1996, respectively. As
of December 31, 1995 and December 29, 1996, Foamex Fibers had accounts
receivable from General Felt of approximately $1.3 million and $5.1 million,
respectively.

Foamex Fibers leases five facilities from an officer of Foamex Fibers. The
rental expense for the period from April 13, 1995 (date of acquisition) to
December 31, 1995 and the year ended December 29, 1996 was $0.2 million and
$0.3 million, respectively.

F-69
<PAGE>

FOAMEX FIBERS, INC.

CONDENSED BALANCE SHEETS (unaudited)
(thousands)

<TABLE>
<CAPTION>
December 29, March 30,
1996 1997
-------------- ----------
<S> <C> <C>
ASSETS

CURRENT ASSETS:

Cash .......................................... $ 156 $ 97
Accounts receivable, net ..................... 707 1,024
Accounts receivable from General Felt ......... 5,092 5,849
Inventories .................................... 972 1,048
Other current assets ........................... 181 201
-------- --------
Total current assets ........................ 7,108 8,219

PLANT AND EQUIPMENT, NET ........................ 2,326 2,527

COST IN EXCESS OF ASSETS ACQUIRED, NET ......... 3,880 3,855
-------- --------

TOTAL ASSETS .................................... $13,314 $14,601
======== ========

LIABILITIES AND STOCKHOLDER'S EQUITY

CURRENT LIABILITIES:

Accounts payable .............................. $ 736 $ 1,006
Other accrued liabilities ..................... 496 468
-------- --------
Total current liabilities ..................... 1,232 1,474
-------- --------

INCOME TAXES DUE TO GENERAL FELT ............... 1,536 1,909
-------- --------

OTHER LIABILITIES .............................. 500 500
-------- --------

COMMITMENTS AND CONTINGENCIES .................. -- --
-------- --------

STOCKHOLDER'S EQUITY:
Common Stock ................................. -- --
Additional paid-in capital ..................... 7,272 7,272
Retained Earnings .............................. 2,774 3,446
-------- --------
Total stockholder's equity .................. 10,046 10,718
-------- --------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY ...... $13,314 $14,601
======== ========
</TABLE>

The accompanying notes are an integral part of the
condensed financial statements.

F-70
<PAGE>

FOAMEX FIBERS, INC.

CONDENSED STATEMENTS OF OPERATIONS (unaudited)
(thousands)

13 Week Periods Ended
---------------------------
March 31, March 30,
1996 1997
----------- -------------
NET SALES ........................ $4,822 $6,032

COST OF GOODS SOLD ............... 3,945 4,643
------- -------

GROSS PROFIT ..................... 877 1,389

SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES ...... 234 322
------- -------

INCOME FROM OPERATIONS ......... 643 1,067

OTHER EXPENSE, NET ............... (6) (1)
------- -------

INCOME FROM BEFORE PROVISION FOR
INCOME TAXES .................. 637 1,066

PROVISION FOR INCOME TAXES ...... 242 394
------- -------

NET INCOME ..................... $ 395 $ 672
======= =======

The accompanying notes are an integral part of the
condensed financial statements.

F-71
<PAGE>

FOAMEX FIBERS, INC.

CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
(thousands)

<TABLE>
<CAPTION>
13 Week Periods Ended
------------------------
March 31, March 30,
1996 1997
----------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ............................................. $ 395 $ 672
Adjustments to reconcile net income to net cash provided by
operating activities: .................................
Depreciation and amortization ........................... 70 92
Changes in operating assets and liabilities ............ (106) (554)
----- -----
Net cash provided by operating activities ............ 359 210
----- -----
INVESTING ACTIVITIES:
Capital expenditures .................................... (137) (269)
----- -----
Net cash used for investing activities ............... (137) (269)
----- -----
Net increase (decrease) in cash ........................... 222 (59)
Cash at beginning of period .............................. 469 156
----- -----
Cash at end of period .................................... $ 691 $ 97
===== =====
</TABLE>

The accompanying notes are an integral part of the
condensed financial statements.

F-72
<PAGE>

FOAMEX FIBERS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)

1. ORGANIZATION AND BASIS OF PRESENTATION

Foamex Fibers, Inc.'s ("Foamex Fibers") condensed balance sheet as of
December 29, 1996 has been condensed from the unaudited consolidated balance
sheet at that date. The condensed balance sheet as of March 30, 1997 and the
condensed statements of operations and the condensed statements of cash flows
for the thirteen week periods ended March 30, 1997 and March 31, 1996 have been
prepared by Foamex Fibers and have not been audited by Foamex Fibers's
independent accountants. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, considered necessary for a
fair presentation of the consolidated financial position, results of operations
and cash flows have been included.

Certain information and note disclosures normally included in the
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted in accordance with the rules and
regulations of the Securities and Exchange Commission. These condensed
financial statements should be read in conjunction with Foamex Fibers 1996
financial statements and notes thereto as set forth in this Offering
Memorandum.

2. INVENTORIES

Inventories consist of:

December 29, March 30,
1996 1997
-------------- ----------
(thousands)
Raw materials and supplies ...... $700 $ 724
Finished goods .................. 272 324
----- -------
Total ........................... $972 $1,048
===== =======

3. RELATED PARTY TRANSACTIONS

General Felt purchased approximately $2.1 million and $3.0 million of
carpet cushion from Foamex Fibers during the thirteen week periods ended March
31, 1996 and March 30, 1997, respectively.

F-73

<PAGE>

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE EXCHANGE OFFER COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE ISSUERS OR THE SUBSIDIARY GUARANTORS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE NEW NOTES
IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATIONS THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE ISSUERS OR THE SUBSIDIARY GUARANTORS SINCE THE DATE HEREOF.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
Incorporation of Certain Documents by Reference ...................................... i
Available Information ............................................................... i
Prospectus Summary .................................................................. 1
Risk Factors ........................................................................ 10
Refinancing Plan ..................................................................... 14
Use of Proceeds ..................................................................... 14
Capitalization ..................................................................... 15
Selected Historical Consolidated Financial Information ............................... 16
Management's Discussion and Analysis of Financial Condition and Results of Operations 18
Business ........................................................................... 25
The Exchange Offer .................................................................. 35
Management ........................................................................... 44
Security Ownership of Certain Beneficial Owners .................................... 46
Certain Relationships and Related Transactions ....................................... 47
Description of Certain Debt Instruments ............................................. 50
Description of Notes ............................................................... 53
Description of the Partnership Agreement ............................................. 80
Certain Federal Income Tax Considerations .......................................... 82
Plan of Distribution ............................................................... 83
Legal Matters ........................................................................ 84
Experts .............................................................................. 84
Forward-Looking Statements ............................................................ 84
Index to Financial Statements ...................................................... F-1
</TABLE>

UNTIL , 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE NEW NOTES OFFERED HEREBY, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

[Foamex logo]

$150,000,000

Foamex L.P.
Foamex Capital Corporation

9 7/8% Senior Notes
due 2007

================

PROSPECTUS

================

, 1997

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers.

The Foamex Fourth Amended and Restated Agreement of Limited Partnership
(the "Partnership Agreement") generally provides that, to the fullest extent
permitted by law, Foamex will indemnify the partners, their respective
affiliates, officers, directors, stockholders, employees and agents, and any
employee, agent and officer of Foamex, against all expenses actually and
reasonably incurred by it or them in connection with any threatened, pending or
completed action, suit or proceeding against it or them or by, against or in
the right of Foamex to which it or them is or was a party, or is threatened to
be made a party, involving an alleged cause of action for damages arising out
of, or in any way related to or connected with, the business or internal
affairs of Foamex, if, in the transaction giving rise to such action, suit, or
proceeding, such person acted in good faith, without gross negligence or
willful misconduct or the willful breach of the Partnership Agreement and in a
manner such person reasonably believed to be within the scope of its authority
under the Partnership Agreement.

The Certificate of Incorporation and Bylaws of FCC, General Felt and Foamex
Fibers provide that each such corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (other than an action by or in the right of
such corporation), by reason of the fact that he is or was a director, officer,
employee or agent of such corporation, or is or was serving at the request of
such corporation as a director, officer, employee or agent of another
corporation, partnership or other enterprise, against expenses actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of such corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.

The Bylaws of FCC, General Felt and Foamex Fibers further provide that for
actions by or in the right of each of such corporation, similar indemnification
exists, except that no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to
such corporation unless and only to the extent that the court in which such
action or suit was brought shall determine that such person is fairly and
reasonably entitled to indemnity for such expenses which such court shall deem
proper.

The Certificates of Incorporation of FCC, General Felt and Foamex Fibers
also provide that a director of any such corporation shall not be personally
liable to such corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (1) for any breach of the
director's duty of loyalty to the corporation or its stockholders; (2) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (3) under Section 174 of the General Corporation Law
of the State of Delaware; or (4) for any transaction from which the director
derived an improper personal benefit. Additionally, the Certificates of
Incorporation of FCC, General Felt and Foamex Fibers provide that to the fullest
extent permitted by Delaware Law, a director of such corporation shall not be
liable to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director.

The directors and officers of Foamex International and its subsidiaries
are covered in their capacities as such under a Directors and Officers
insurance policy.

Item 21. Exhibits and Financial Statement Schedules.

(a) Exhibits

<TABLE>
<S> <C>
*3.1 --Certificate of Limited Partnership of Foamex L.P.
3.2.1(a) --Fourth Amended and Restated Agreement of Limited Partnership of Foamex L.P., dated as
of December 14, 1993, by and among FMXI and Trace Foam, as general partners, and
Foamex International, as a limited partner (the "Partnership Agreement").
3.2.2(n) --First Amendment to the Fourth Amendment and Restated Agreement of Limited
Partnership of Foamex L.P., dated June 28, 1994.
3.2.3(v) --Second Amendment to the Fourth Amendment and Restated Agreement of Limited
Partnership of Foamex L.P., dated June 12, 1997.
3.3(a) --Certificate of Incorporation of FMXI.
</TABLE>

II-1
<PAGE>

<TABLE>
<S> <C>
3.4(a) --By-laws of FMXI.
3.5* --Certificate of Incorporation of Foamex Capital Corporation.
3.6* --By-laws of Foamex Capital Corporation.
3.7* Certificate of Incorporation of General Felt Industries, Inc.
3.8* --By-laws of General Felt Industries, Inc.
3.9* --Certificate of Incorporation of Foamex Fibers, Inc.
3.10* --By-laws of Foamex Fibers, Inc.
4.1.1(u) --Indenture, dated as of June 12, 1997, by and among Foamex L.P., FCC, the Subsidiary
Guarantors and The Bank of New York, as Trustee, relating to $150,000,000 principal
amount of 97/8% Senior Subordinated Notes due 2007, including form of Senior
Subordinated Note and Subsidiary Guarantee.
4.1.2(u) --Registration Rights Agreement, dated as of June 12, 1997, by and among Foamex L.P.,
Foamex Capital Corporation, General Felt Industries, Inc., Foamex Fibers, Inc. and all
future direct or indirect domestic subsidiaries of Foamex L.P. or Foamex Capital
Corporation, and Donaldson, Lufkin & Jenrette Securities Corporation, Salomon Brothers
Inc. and Scotia Capital Markets, as Initial Purchasers.
4.2.1(b) --Indenture, dated as of June 3, 1993, among Foamex L.P. and FCC, as joint and several
obligors, General Felt, as Guarantor, and Shawmut Bank, National Association
("Shawmut"), as trustee, relating to $160,000,000 principal amount of 91/2% Senior
Secured Notes due 2000, including form of Senior Secured Note.
4.2.2(a) --First Supplemental Indenture, dated as of November 18, 1993, among Foamex
International and FCC, as Issuers, General Felt and Perfect Fit, as Guarantors and
Shawmut, as trustee, relating to the Senior Secured Notes.
4.2.3(a) --Second Supplemental Indenture, dated as of December 14, 1993, among Foamex L.P. and
FCC, as Issuers, Foamex International, General Felt and Perfect Fit, as Guarantors and
Shawmut, as trustee, relating to the Senior Secured Notes.
4.2.4(s) --Third Supplemental Indenture, dated as of August 1, 1996, by and among Foamex L.P.
and FCC, as Issuers, Foamex International, as parent guarantor, General Felt, as
guarantor, Perfect Fit, as withdrawing guarantor, and Fleet National Bank ("Fleet"), as
trustee relating to the Senior Secured Notes.
4.2.5(v) --Fourth Supplemental Indenture, dated as of May 28, 1997, by and among Foamex and
FCC, as Issuers, FII, as Parent Guarantor, General Felt, as Guarantor, and Fleet National
Bank ("Fleet"), as Trustee.
4.2.6(b) --Company Pledge Agreement, dated as of June 3, 1993, by Foamex L.P. in favor of
Shawmut, as trustee for the holders of the Senior Secured Notes.
4.2.7* --Amendment No. 1 to Company (Foamex L.P.) Pledge Agreement, dated June 12, 1997.
4.2.8(b) --Company Pledge Agreement, dated as of June 3, 1993, by FCC in favor of Shawmut, as
trustee for the holders of the Senior Secured Notes.
4.2.9* --Amendment No. 1 to Company (FCC) Pledge Agreement, dated June 12, 1997.
4.2.10(b) --Subsidiary Pledge Agreement, dated as of June 3, 1993, by General Felt in favor of
Shawmut, as trustee for the holders of the Senior Secured Notes.
4.2.11* --Amendment No. 1 to Subsidiary (GFI) Pledge Agreement, dated June 12, 1997.
4.2.12(b) --Company Security Agreement, dated as of June 3, 1993, by Foamex L.P. and FCC in
favor of Shawmut, as trustee for the holders of the Senior Secured Notes.
4.2.13* --Amendment No. 1 to Company Security Agreement, dated June 12, 1997 (Foamex L.P.
and FCC).
4.2.14(b) --Subsidiary Security Agreement, dated as of June 3, 1993, by General Felt in favor of
Shawmut, as trustee for the holders of the Senior Secured Notes.
4.2.15* --Amendment No. 1 to Subsidiary Security Agreement, dated June 12, 1997 (General Felt).
4.2.16(b) --Collateral Assignment of Patents and Trademarks, dated as of June 3, 1993, by Foamex
L.P. in favor of Shawmut, as trustee for the holders of the Senior Secured Notes.
4.2.17* --Amendment No. 1 to Collateral Assignment of Patents and Trademarks (Foamex L.P.),
dated June 12, 1997.
4.2.18(b) --Collateral Assignment of Patents and Trademarks, dated as of June 3, 1993, by FCC in
favor of Shawmut, as trustee for the holders of the Senior Secured Notes.
</TABLE>

II-2
<PAGE>

<TABLE>
<S> <C>
4.2.19* --Amendment No. 1 to Collateral Assignment of Patents and Trademarks (FCC), dated
June 12, 1997.
4.2.20(b) --Collateral Assignment of Patents and Trademarks, dated as of June 3, 1993, by General
Felt in favor of Shawmut, as trustee for the holders of the Senior Secured Notes.
4.2.21* --Amendment No. 1 to Collateral Assignment of Patents and Trademarks (GFI), dated
June 12, 1997.
4.2.22* --Amended and Restated Receivables Security Agreement, by and among, Fleet National
Bank, Citicorp USA, Inc. and The Bank of Nova Scotia, dated as of June 12, 1997.
4.2.23* --Intercreditor Agreement, by and among, Fleet National Bank, Citicorp USA, Inc. and The
Bank of Nova Scotia, dated as of June 12, 1997.
4.3.1(c) --Indenture, dated as of October 13, 1992, among Foamex L.P., FCC and The Connecticut
National Bank, as trustee, relating to $150,000,000 principal amount of 111/4% Senior
Notes due 2002, including form of Senior Note.
4.3.2(d) --First Supplemental Indenture, dated as of March 23, 1993, among Foamex L.P. and FCC,
as joint and several obligors, General Felt, as Guarantor, and Shawmut Bank Connecticut,
National Association (formerly The Connecticut National Bank ("Shawmut
Connecticut")), as trustee, relating to the Senior Notes.
4.3.3(a) --Second Supplemental Indenture, dated as of November 18, 1993, among Foamex L.P. and
FCC, as Issuers, General Felt and Perfect Fit, as Guarantors and Shawmut Connecticut, as
trustee, relating to the Senior Notes.
4.3.4(a) --Third Supplemental Indenture, dated as of December 14, 1993, among Foamex L.P. and
FCC, as Issuers, Foamex International, General Felt and Perfect Fit, as Guarantors, and
Shawmut Connecticut, as trustee, relating to the Senior Notes.
4.3.5(m) --Fourth Supplemental Indenture, dated as of October 31, 1994, among Foamex L.P. and
FCC as Issuers, Foamex International as Parent Guarantor, General Felt and Perfect Fit,
as Guarantors and Shawmut Connecticut, as Trustee, relating to the Senior Notes.
4.3.6(t) --Fifth Supplemental Indenture, dated as of August 1, 1996, by and among Foamex L.P.
and FCC as guarantors, Perfect Fit, as withdrawing guarantor, and Fleet, as trustee
relating to the Senior Notes.
4.3.7(v) --Sixth Supplemental Indenture, dated as of May 28, 1997, by and among Foamex and
FCC, as Issuers, FII, as Parent Guarantor, GFI, as Guarantor, and Fleet, as Trustee.
4.3.8* --Intercreditor Agreement, by and among, Fleet National Bank, Citicorp USA, Inc. and The
Bank of Nova Scotia, dated as of June 12, 1997.
4.4.1(c) --Indenture, dated as of October 13, 1992, among Foamex L.P., FCC and Shawmut, as
trustee, relating to $126,000,000 principal amount of 117/8% Senior Subordinated
Debentures due 2004, including form of Senior Subordinated Debenture.
4.4.2(d) --First Supplemental Indenture, dated as of March 23, 1993, among Foamex L.P. and FCC,
as joint and several obligors, General Felt, as Guarantor, and Shawmut, as trustee,
relating to the Senior Subordinated Debentures.
4.4.3(a) --Second Supplemental Indenture, dated as of November 18, 1993, among Foamex L.P. and
FCC, as Issuers, General Felt and Perfect Fit, as Guarantors, and Shawmut, as trustee,
relating to the Senior Subordinated Debentures.
4.4.4(b) --Third Supplemental Indenture, dated as of December 14, 1993, among Foamex L.P. and
FCC, as Issuers, Foamex International, General Felt and Perfect Fit, as Guarantors, and
Shawmut, as trustee, relating to the Senior Subordinated Debentures.
4.4.5(t) --Fourth Supplemental Indenture, dated as of August 1, 1996, among Foamex L.P. and
FCC, as Issuers, Foamex International, as Parent Guarantor, General Felt, as Guarantor,
Perfect Fit, as withdrawing guarantor, and Fleet, as trustee, relating to the Senior
Subordinated Debentures.
4.4.6(v) --Fifth Supplemental Indenture, dated as of May 28, 1997, by and among Foamex and
FCC, as Issuers, FII, as Parent Guarantor, GFI, as Guarantor, and Fleet, as Trustee.
4.5(u) --Credit Agreement, dated as of June 12, 1997, by and among Foamex L.P., General Felt
Industries, Inc., Trace Foam Company, Inc., FMXI, Inc., the institutions from time to time
party thereto as lenders, the institutions from time to time party thereto as issuing
banks, and Citicorp USA, Inc. and The Bank of Nova Scotia, as Administrative Agents.
</TABLE>

II-3
<PAGE>

<TABLE>
<S> <C>
4.6(t) --Commitment Letter, dated July 9, 1996, from The Bank of Nova Scotia to Foamex
Canada Inc.
4.7(a) --Subordinated Promissory Note, dated as of May 6, 1993, in the original principal amount
of $7,014,864 executed by Foamex L.P. to John Rallis ("Rallis").
4.8(a) --Marely Loan Commitment Agreement, dated as of December 14, 1993, by and between
Foamex International and Marely s.a. ("Marely").
4.9(a) --DLJ Loan Commitment Agreement, dated as of December 14, 1993, by and between
Foamex International and DLJ Funding, Inc. ("DLJ Funding").
4.10* --Promissory Note, dated July 12, 1997, in the aggregate principal amount of $ ,
executed by Trace Holdings to Foamex L.P.
5* --Opinion of Willkie Farr & Gallagher.
10.1* --Swap Agreement.
10.2(d) --Reimbursement Agreement, dated as of March 23, 1993, between Trace Holdings and
General Felt.
10.3(d) --Shareholder Agreement, dated December 31, 1992, among Recticel, s.a. ("Recticel"),
Recticel Holding Noord B.V., Foamex L.P., Beamech Group Limited, LME-Beamech,
Inc., James Brian Blackell and Prefoam AG relating to foam technology sharing
arrangement.
10.4.1(e) --Asset Transfer Agreement, dated as of October 2, 1990, between Trace Holdings and
Foamex L.P. (the "Trace Holdings Asset Transfer Agreement").
10.4.2(e) --First Amendment, dated as of December 19, 1991, to the Trace Holdings Asset Transfer
Agreement.
10.4.3(e) --Amended and Restated Guaranty, dated as of December 19, 1991, made by Trace Foam
in favor of Foamex L.P.
10.5.1(e) --Asset Transfer Agreement, dated as of October 2, 1990, between RFC and Foamex L.P.
(the "RFC Asset Transfer Agreement").
10.5.2(e) --First Amendment, dated as of December 19, 1991, to the RFC Asset Transfer Agreement.
10.5.3(e) --Schedule 5.03 to the RFC Asset Transfer Agreement (the "5.03 Protocol").
10.5.4(d) --The 5.03 Protocol Assumption Agreement, dated as of October 13, 1992, between RFC
and Foamex L.P.
10.5.5(d) --Letter Agreement between Trace Holdings and Recticel regarding the Recticel Guaranty,
dated as of July 22, 1992.
10.6(i) --Supply Agreement, dated June 28, 1994, between Foamex L.P. and Foamex International.
10.7.1(i) --First Amended and Restated Tax Sharing Agreement, dated as of December 14, 1993,
among Foamex L.P., Trace Foam, FMXI and Foamex International.
10.7.2(u) --First Amendment to Amended and Restated Tax Sharing Agreement of Foamex L.P.,
dated as of June 12, 1997, by and among Foamex L.P., Foamex International Inc., FMXI,
Inc. and Trace Foam Company, Inc.
10.8.1(w) --Tax Distribution Advance Agreement, dated as of December 11, 1996, by and between
Foamex L.P. and FJPS.
10.8.2(u) --Amendment No. 1 to Tax Distribution Advance Agreement, dated as of June 12, 1997, by
and between Foamex International Inc. and Foamex L.P.
10.9.1(d) --Trace Foam Management Agreement between Foamex L.P. and Trace Foam, dated as of
October 13, 1992.
10.9.2(i) --Affirmation Agreement re: Management Agreement, dated as of December 14, 1993,
between Foamex L.P. and Trace Foam.
10.9.3(u) --First Amendment to Management Agreement, dated as of June 12, 1997, by and between
Foamex L.P. and Trace Foam Company, Inc.
10.10.1(e)(p) --Salaried Incentive Plan of Foamex L.P. and Subsidiaries.
</TABLE>

II-4
<PAGE>

<TABLE>
<S> <C>
10.10.2(e)(p) --Trace Holdings 1987 Nonqualified Stock Option Plan.
10.10.3(e)(p) --Equity Growth Participation Program.
10.10.4(j)(o) --General Felt Industries, Inc. Retirement Plan for Salaried Employees, effective as of
January 1, 1995.
10.10.5(e)(o) --Foamex L.P. Salaried Retirement Plan (formerly known as the Foamex L.P. Products, Inc.
Salaried Employee Retirement Plan), as amended, effective July 1, 1984.
10.10.6(o) --Foamex/GFI 401(k) Savings Plan dated July 1, 1995.
10.10.7(a)(p) --Foamex International's 1993 Stock Option Plan.
10.10.8(a)(p) --Foamex International's Non-Employee Director Compensation Plan.
10.11.1(f)(p) --Employment Agreement, dated as of February 1, 1994, by and between Foamex L.P. and
William H. Bundy.
10.11.2(p) --Employment Agreement, dated as of July 26, 1995, by and between Foamex L.P. and
Salvatore J. Bonanno.
10.12(a) --Warrant Exchange Agreement, dated as of December 14, 1993, by and between Foamex
International and Marely.
10.13(a) --Warrant Exchange Agreement, dated as of December 14, 1993, by and between Foamex
International and DLJ Funding.
10.14(f) --Stock Purchase Agreement, dated as of December 23, 1993, by and between
Transformacion de Espumas y Fieltros, S.A., the stockholders which are parties thereto,
and Foamex L.P.
12** --Computation of Ratios of Earnings to Fixed Charges.
21* --Subsidiaries of the Registrant.
23.1** --Consent of Coopers & Lybrand, L.L.P. independent accountants, to Foamex L.P.
23.2** Consent of Coopers & Lybrand, L.L.P. independent accountants, to General Felt Industries, Inc.
23.3** Consent of Coopers & Lybrand, L.L.P. independent accountants, to Foamex Fibers, Inc.
23.4* --Consent of Willkie Farr & Gallagher included in Exhibit 5.
25* --Statement of Eligibility of Trustee.
27* --Financial Data Schedule.
</TABLE>

- --------

<TABLE>
<S> <C>
* To be filed by amendment.
** Filed herewith.
(a) Incorporated herein by reference to the Exhibit to Foamex International's Registration Statement on
Form S-1, Registration No. 33-69606.
(b) Incorporated herein by reference to the Exhibit to the Registration Statement of Foamex L.P. and FCC
on Form S-4, Registration No. 33-65158.
(c) Incorporated herein by reference to the Exhibit to the Registration Statement of Foamex L.P., FCC and
General Felt on Form S-1, Registration Nos. 33-60888, 33-60888-01, and 33-60888-02.
(d) Incorporated herein by reference to the Exhibit to the Form 10-K Statement of Foamex L.P. and FCC
for fiscal 1992.
(e) Incorporated herein by reference to the Exhibit to the Registration Statement of Foamex L.P. and FCC
on Form S-1, Registration Nos. 33-49976 and 33-49976-01.
(f) Incorporated herein by reference to the Exhibit to the Form 10-K of Foamex International for fiscal
1993.
(i) Incorporated herein by reference to the Exhibit to the Registration Statement of FJPS, FJCC and
Foamex International on Form S-4, Registration No. 33-82028.
(j) Incorporated herein by reference to the Exhibit to the quarterly report on Form 10-Q of JPS Automotive
L.P. and JPS Automotive Products Corp. for the fiscal quarter ended October 2, 1994.
</TABLE>

II-5
<PAGE>

<TABLE>
<S> <C>
(m) Incorporated herein by reference to the Exhibit to the Form 10-K of Foamex International for fiscal
1994.
(n) Incorporated herein by reference to the Exhibit to the Form 10-K of Foamex L.P. for fiscal 1994.
(o) Incorporated herein by reference to the Exhibit to the Form 10-Q of Foamex L.P. for the quarterly
period ended July 2, 1995.
(p) A management contract or compensatory plan or arrangement required to be filed as an Exhibit pursuant
to Item 14(c) of this report.
(s) Incorporated herein by reference to the Exhibit to the Form 10-Q of Foamex L.P. for the quarterly
period ended June 30, 1996.
(t) Incorporated herein by reference to the Exhibit to the Form 10-Q of Foamex L.P. for the quarterly
period ended September 30, 1996.
(u) Incorporated herein by reference to the Exhibit to the Current Report on Form 8-K of Foamex L.P.
reporting an event that occurred June 12, 1997.
(v) Incorporated herein by reference to the Exhibit to the Current Report on Form 8-K of Foamex L.P.
reporting an event that occurred May 28, 1997.
(w) Incorporated herein by reference to the Exhibit to the Annual Report on Form 10-K of Foamex L.P. for
the fiscal year ended December 29, 1996.

</TABLE>

Certain instruments defining the rights of security holders have been excluded
herefrom in accordance with Item 601(b)(4)(iii) of Regulation S-K. The
Registrant hereby agrees to furnish a copy of any such instrument to the
Commission upon request.

(d) Schedules

None.

Item 22. Undertakings.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
Registrants pursuant to the provisions described under Item 20 above, or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrants of expenses incurred or paid by a director,
officer or controlling person of the Registrants in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrants will, unless in the opinion of their counsel the matter has been
settled by controlling precedent, submit to court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

The undersigned Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of responding to the request.

The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
Issuers being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.

The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrants' annual reports pursuant to section 13(a) or section 15(d) of

II-6
<PAGE>

the Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

The undersigned registrants hereby undertake as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuers undertake that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.

II-7
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of New York,
State of New York, on the 26th day of June, 1997.

FOAMEX L.P.
By: FMXI, Inc.,
Its Managing General Partner

By: /s/ Andrea Farace
-----------------------------------
Name: Andrea Farace
Title: Chairman and Chief Executive
Officer of FMXI, Inc. and
Foamex L.P.

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Philip
N. Smith, Jr. as his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this
Registration Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and
necessary fully to all intents and purposes as he might or could do in person
thereby ratifying and confirming all that said attorney-in-fact and agent, or
his substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, each thereunto duly authorized in the City of New
York, State of New York, on the 26th day of June, 1997.

<TABLE>
<CAPTION>
Signature Title
- ------------------------------------------- --------------------------------------------------
<S> <C>
/s/ Andrea Farace Chairman and Chief Executive Officer of
- ---------------------------------------- FMXI, Inc. and Foamex L.P.
Andrea Farace (principal executive officer)

/s/ Salvatore J. Bonanno President of Foamex L.P. and FMXI, Inc.
- ---------------------------------------- (principal executive officer)
Salvatore J. Bonanno

/s/ Kenneth R. Fuette Senior Vice President of Finance, Chief Financial
- ---------------------------------------- Officer and Chief Accounting Officer of
Kenneth R. Fuette Foamex L.P. and Senior Vice President of
Finance and a director of FMXI, Inc.
(principal financial and accounting officer)

/s/ Marshall S. Cogan Vice Chairman of Foamex L.P. and FMXI, Inc.
- ----------------------------------------
Marshall S. Cogan

/s/ Salvatore J. Bonanno Director of FMXI, Inc.
- ----------------------------------------
Salvatore J. Bonanno

/s/ Andrea Farace Director of FMXI, Inc.
- ----------------------------------------
Andrea Farace

/s/ Kenneth R. Fuette Director of FMXI, Inc.
- ----------------------------------------
Kenneth R. Fuette

</TABLE>

II-8
<PAGE>

SIGNATURES

FOAMEX CAPITAL CORPORATION

By: /s/ Andrea Farace
-------------------------------------------
Name: Andrea Farace
Title: Chairman and Chief Executive Officer

POWER OF ATTORNEY

<TABLE>
<CAPTION>
Signature Title
- ------------------------------------------- --------------------------------------------------
<S> <C>
/s/ Andrea Farace Chairman and Chief Executive Officer
- ---------------------------------------- (principal executive officer)
Andrea Farace

/s/ Robert H. Nelson Vice President
- ---------------------------------------- (principal executive officer)
Robert H. Nelson

/s/ Kenneth R. Fuette Senior Vice President of Finance, Chief Financial
- ---------------------------------------- Officer and Chief Accounting Officer
Kenneth R. Fuette (principal financial and accounting officer)

/s/ Marshall S. Cogan Director
- ----------------------------------------
Marshall S. Cogan

/s/ Andrea Farace Director
- ----------------------------------------
Andrea Farace

/s/ Kenneth R. Fuette Director
- ----------------------------------------
Kenneth R. Fuette

/s/ Robert H. Nelson Director
- ----------------------------------------
Robert H. Nelson
</TABLE>

II-9
<PAGE>

SIGNATURES

GENERAL FELT INDUSTRIES, INC.

By: /s/ Theodore J. Kall
------------------------------------
Name: Theodore J. Kall
Title: President

POWER OF ATTORNEY

<TABLE>
<CAPTION>
Signature Title
- ------------------------------------------- ---------------------------------------------
<S> <C>
/s/ Theodore J. Kall President and a director
- ---------------------------------------- (principal executive officer)
Theodore J. Kall

/s/ Robert H. Nelson Vice President
- ---------------------------------------- (principal executive officer)
Robert H. Nelson

/s/ Kenneth R. Fuette Chief Financial Officer
- ---------------------------------------- (principal financial and accounting officer)
Kenneth R. Fuette

/s/ Andrea Farace Director
- ----------------------------------------
Andrea Farace

/s/ Marshall S. Cogan Director
- ----------------------------------------
Marshall S. Cogan

/s/ Kenneth R. Fuette Director
- ----------------------------------------
Kenneth R. Fuette

/s/ Barry Zimmerman Director
- ----------------------------------------
Barry Zimmerman
</TABLE>

II-10
<PAGE>

SIGNATURES

FOAMEX FIBERS, INC.

By: /s/ Andrea Farace
-------------------------------------------
Name: Andrea Farace
Title: Chairman and Chief Executive Officer

POWER OF ATTORNEY

<TABLE>
<CAPTION>
Signature Title
- ------------------------------------------- ---------------------------------------------
<S> <C>
/s/ Andrea Farace Chairman and Chief Executive Officer
- ---------------------------------------- (principal executive officer)
Andrea Farace

/s/ Robert H. Nelson Vice President
- ---------------------------------------- (principal executive officer)
Robert H. Nelson

/s/ Kenneth R. Fuette Treasurer
- ---------------------------------------- (principal financial and accounting officer)
Kenneth R. Fuette

/s/ Salvatore J. Bonanno Director
- ----------------------------------------
Salvatore J. Bonanno

/s/ Marshall S. Cogan Director
- ----------------------------------------
Marshall S. Cogan

/s/ Andrea Farace Director
- ----------------------------------------
Andrea Farace
</TABLE>

II-11

EXHIBIT 12.1--Statement Regarding Computation of Ratio of Earnings to Fixed
Charges

<TABLE>
<CAPTION>
Year ended First Quarter
---------------------------------------------------------------- ---------------
1992 1993 1994 1995 1996 1996 1997
--------- ------------- --------- ----------- ---------- ------ ------
(Dollars in thousands, except ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges
Consolidated pretax income from
continuing operations .................. $22,175 $ (7,665) $44,536 $(46,721) $ 61,363 12,217 17,058
Interest ................................. 18,178 47,375 41,532 44,550 43,211 10,413 10,704
Interest portion of rental expense ...... 1,467 3,867 4,533 4,533 3,767 1033 933
Amortization of Capitalized Interest ...... 47 67 108 152 171 43 43
-------- --------- -------- -------- -------- ------- -------
Earnings ................................. $41,867 $ 43,644 $90,709 $ 2,514 $108,512 $23,706 $28,738
======== ========= ======== ======== ======== ======= =======
Interest ................................. $18,178 $ 47,375 $41,532 $ 44,550 $ 43,211 10,413 10,704
Interest portion of rental expense ...... 1,467 3,867 4,533 4,533 3,767 1,033 933
Capitalized Interest .................... 64 425 576 468 -- -- --
-------- --------- -------- -------- -------- ------- -------
Fixed charges ........................... $19,709 $ 51,667 $46,641 $ 49,551 $ 46,978 $11,446 $11,637
-------- --------- -------- -------- -------- ------- -------
Ratio of earnings to fixed charges ...... 2.12 1.94 2.31 2.07 2.47
-------- --------- -------- -------- ------- -------
Deficiency .............................. $ 8,023 $ 47,037
--------- --------
<CAPTION>
Pro Forma
------------------------
Fiscal yr.
1996 1Q 97
--------- ------------
<S> <C> <C>
Ratio of earnings to fixed charges
Consolidated pretax income from
continuing operations .................. $55,873 $14,858
Interest ................................. 48,701 12,904
Interest portion of rental expense ...... 3,767 933
Amortization of Capitalized Interest ...... 171 43
-------- -------
Earnings ................................. $108,512 $28,738
======== =======
Interest ................................. 48,701 12,904
Interest portion of rental expense ...... 3,767 933
Capitalized Interest .................... -- --
-------- -------
Fixed charges ........................... $ 52,468 $13,837
-------- -------
Ratio of earnings to fixed charges ...... 2.07 2.08
-------- -------
Deficiency ..............................

</TABLE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-4
(File No. 333- ) of our report dated February 26, 1997, on our audits of the
consolidated financial statements of Foamex L.P. and subsidiaries. We also
consent to the reference to our firm under the caption "Experts".

Philadelphia, Pennsylvania
June 26, 1997

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-4
(File No. 333- ) of our report dated February 26, 1997, on our audits of the
consolidated financial statements of General Felt Industries, Inc. and
subsidiaries. We also consent to the reference to our firm under the caption
"Experts".

Philadelphia, Pennsylvania
June 26, 1997

EXHIBIT 23.3

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-4
(File No. 333- ) of our report dated February 26, 1997, on our audits of the
financial statements of Foamex Capital Corporation. We also consent to the
reference to our firm under the caption "Experts".

Philadelphia, Pennsylvania
June 26, 1997