**UNITED      STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-Q**

| þ | **QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|--------|------------------------------------------------------------------------------------------------------------------------------------------|

**For      the quarterly period ended March 31, 2007**

**OR**

| ** ̈** | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------|

**For      the transition period from ___________ to ____________**

**Commission      file number **
**333-124138**

**SIMMONS      COMPANY**

| Delaware                                                                                          |   | 20-0646221                                                |
|---------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|
|  (State                or other jurisdiction ofincorporation                or organization) |   |  (I.R.S.                Employer Identification No.) |
|                                                                                              |   |                                                      |
| One                Concourse Parkway, Suite 800, Atlanta, Georgia                                 |   | 30328-6188                                                |
|  (Address                of principal executive offices)                                     |   |  (Zip                Code)                           |

**DOCUMENTS      OR PARTS THEREOF INCORPORATED BY REFERENCE: None**

----

**PART      I — FINANCIAL INFORMATION**

**Item      1. Financial Statements**

**Simmons      Company and Subsidiaries**

**Unaudited      Condensed Consolidated Statements of Operations **

**and      Comprehensive Income **

| `                                                                                                                                   | **Quarters                  Ended** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------|------------|
| ** **                                                                                                                          | **March                  31,**      | ** ** | **April                  1,** | ** ** |
| ** **                                                                                                                          | **2007**                            | ** ** | **2006** |   |
|                                                                                                                                |                                |       |   |   |
| Net                  sales                                                                                                          | $                                   | 267,406    |   | $ | 235,867 |   |
| Cost                  of products sold                                                                                              |                                | 159,215    |   |   | 136,439 |   |
| Gross                  profit                                                                                                       |                                | 108,191    |   |   | 99,428 |   |
|                                                                                                                                |                                |       |   |   |   |   |
| Operating                  expenses:                                                                                                |                                |       |   |   |   |   |
| Selling,                  general and administrative expenses                                                                       |                                | 84,708     |   |   | 70,906 |   |
| Amortization                  of intangibles                                                                                        |                                | 1,479      |   |   | 1,417 |   |
| Licensing                  revenues                                                                                                 |                                | (3,193     | ) |   | (2,288 | ) |
|                                                                                                                                |                                | 82,994     |   |   | 70,035 |   |
|                                                                                                                                |                                |       |   |   |   |   |
| Operating                  income                                                                                                   |                                | 25,197     |   |   | 29,393 |   |
|                                                                                                                                |                                |       |   |   |   |   |
| Interest                  expense, net                                                                                              |                                | 18,389     |   |   | 19,176 |   |
| Income                  before income taxes                                                                                         |                                | 6,808      |   |   | 10,217 |   |
| Income                  tax expense                                                                                                 |                                | 2,395      |   |   | 3,784 |   |
| Net                  income                                                                                                         |                                | 4,413      |   |   | 6,433 |   |
|                                                                                                                                |                                |       |   |   |   |   |
| Other                  comprehensive income:                                                                                        |                                |       |   |   |   |   |
| Foreign                  currency translation adjustment                                                                            |                                | 1,254      |   |   | 44 |   |
| Comprehensive                  income                                                                                               | $                                   | 5,667      |   | $ | 6,477 |   |
|                                                                                                                                |                                |       |   |   |   |   |
| The                  accompanying notes are an integral part of these condensed consolidated                  financial statements. |

----

****Simmons          Company and Subsidiaries****

**Condensed            Consolidated Balance Sheets**

|                                                                                                                                                     | **March                  31,** | ** ** | **December                  30,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|------------|-----------------------------------|------------|
| ** **                                                                                                                                               | **2007**                       | ** ** | **2006***                         | ** ** |
| ** **                                                                                                                                               | **(Unaudited)**                | ** ** |                              |       |
|                                                                                                                                                     |                           |       |                              |       |
| **ASSETS**                                                                                                                                               |                           |       |                              |       |
| Current                  assets:                                                                                                                         |                           |       |                              |       |
| Cash                  and cash equivalents                                                                                                               | $                              | 10,973     |                              | $          | 20,784 |   |
| Accounts                  receivable, less allowances for doubtful receivables,                                                                          |                           |       |                              |       |   |   |
|  discounts                  and returns of $5,803 and $4,329                                                                                        |                           | 107,853    |                              |       | 92,035 |   |
| Inventories                                                                                                                                              |                           | 32,258     |                              |       | 26,718 |   |
| Deferred                  income taxes                                                                                                                   |                           | 4,234      |                              |       | 3,136 |   |
| Prepaid                  expenses                                                                                                                        |                           | 10,690     |                              |       | 10,426 |   |
| Other                  current assets                                                                                                                    |                           | 9,854      |                              |       | 8,997 |   |
|  Total                  current assets                                                                                                              |                           | 175,862    |                              |       | 162,096 |   |
|                                                                                                                                                     |                           |       |                              |       |   |   |
| Property,                  plant and equipment, net                                                                                                      |                           | 74,481     |                              |       | 73,185 |   |
| Goodwill                                                                                                                                                 |                           | 526,997    |                              |       | 512,818 |   |
| Intangible                  assets, net                                                                                                                  |                           | 591,979    |                              |       | 592,802 |   |
| Other                  assets                                                                                                                            |                           | 37,540     |                              |       | 32,753 |   |
|  Total                  assets                                                                                                                      | $                              | 1,406,859  |                              | $          | 1,373,654 |   |
|                                                                                                                                                     |                           |       |                              |       |   |   |
| *                  Derived from the Company's 2006 audited consolidated financial                  statements,                  but does not include all |
| disclosures                  required by accounting principles generally accepted in the United                  States                  of America      |
|                                                                                                                                                     |                           |       |                              |       |   |   |
| The                  accompanying notes are an integral part of these condensed consolidated                  financial statements.                      |

----

**Simmons      Company and Subsidiaries**

**Condensed      Consolidated Balance Sheets**

|                                                                                                                                                     | **March                  31,** | ** ** | **December                  30,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|------------|-----------------------------------|------------|
| ** **                                                                                                                                               | **2007**                       | ** ** | **2006***                         | ** ** |
| ** **                                                                                                                                               | **(Unaudited)**                | ** ** |                              |       |
|                                                                                                                                                     |                           |       |                              |       |
| **LIABILITIES                  AND STOCKHOLDER'S EQUITY**                                                                                                |                           |       |                              |       |
| Current                  liabilities:                                                                                                                    |                           |       |                              |       |
| Current                  maturities of long-term debt                                                                                                    | $                              | 778        |                              | $          | 778 |   |
| Accounts                  payable                                                                                                                        |                           | 75,244     |                              |       | 60,318 |   |
| Accrued                  liabilities                                                                                                                     |                           | 66,440     |                              |       | 74,594 |   |
| Total                  current liabilities                                                                                                               |                           | 142,462    |                              |       | 135,690 |   |
|                                                                                                                                                     |                           |       |                              |       |   |   |
| Non-current                  liabilities:                                                                                                                |                           |       |                              |       |   |   |
| Long-term                  debt                                                                                                                          |                           | 900,941    |                              |       | 896,001 |   |
| Deferred                  income taxes                                                                                                                   |                           | 181,238    |                              |       | 177,692 |   |
| Other                                                                                                                                                    |                           | 29,325     |                              |       | 14,410 |   |
| Total                  liabilities                                                                                                                       |                           | 1,253,966  |                              |       | 1,223,793 |   |
|                                                                                                                                                     |                           |       |                              |       |   |   |
| Commitments                  and contingencies                                                                                                           |                           |       |                              |       |   |   |
|                                                                                                                                                     |                           |       |                              |       |   |   |
| Stockholder's                  equity:                                                                                                                   |                           |       |                              |       |   |   |
| Common                  stock, $.01 par value: authorized - 1,000 shares; issued - 100                  shares                                           |                           | 1          |                              |       | 1 |   |
| Additional                  paid-in capital                                                                                                              |                           | 100,612    |                              |       | 102,843 |   |
| Retained                  earnings                                                                                                                       |                           | 53,621     |                              |       | 51,961 |   |
| Accumulated                  other comprehensive income                                                                                                  |                           | (1,341     | )                                 |       | (2,595 | ) |
| Treasury                  stock, at cost                                                                                                                 |                           | -          |                              |       | (2,349 | ) |
| Total                  stockholder's equity                                                                                                              |                           | 152,893    |                              |       | 149,861 |   |
| Total                  liabilities and stockholder's equity                                                                                              | $                              | 1,406,859  |                              | $          | 1,373,654 |   |
|                                                                                                                                                     |                           |       |                              |       |   |   |
| *                  Derived from the Company's 2006 audited consolidated financial                  statements,                  but does not include all |                           |       |                              |
| disclosures                  required by accounting principles generally accepted in the United                  States                  of America      |                           |       |                              |
|                                                                                                                                                     |                           |       |                              |       |   |   |
| The                  accompanying notes are an integral part of these condensed consolidated                  financial statements.                      |                           |       |                              |

----

**Simmons      Company and Subsidiaries**

**Unaudited      Condensed Consolidated Statements of Cash Flows**

|                                                                                                                                | **Quarters                  Ended** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------|------------|
| ** **                                                                                                                          | **March                  31,**      | ** ** | **April                  1,** | ** ** |
| ** **                                                                                                                          | **2007**                            | ** ** | **2006** |   |
| Cash                  flows from operating activities:                                                                              |                                |       |   |   |
| Net                  income                                                                                                         | $                                   | 4,413      |   | $ | 6,433 |   |
| Adjustments                  to reconcile net income to net cash                                                                    |                                |       |   |   |   |   |
| provided                  by (used in) operating activities:                                                                        |                                |       |   |   |   |   |
|  Depreciation                  and amortization                                                                                |                                | 7,348      |   |   | 7,281 |   |
|  Provision                  for bad debts, net                                                                                 |                                | 1,474      |   |   | 442 |   |
|  Provision                  for deferred income taxes                                                                          |                                | 1,934      |   |   | 3,322 |   |
|  Non-cash                  interest expense                                                                                    |                                | 5,556      |   |   | 5,569 |   |
|  Non-cash                  stock compensation expense                                                                          |                                | 119        |   |   | 2 |   |
| Net                  changes in operating assets and liabilities:                                                                   |                                |       |   |   |   |   |
|  Accounts                  receivable                                                                                          |                                | (17,040    | ) |   | (3,585 | ) |
|  Inventories                                                                                                                   |                                | (5,489     | ) |   | 4,019 |   |
|  Other                  current assets                                                                                         |                                | (1,110     | ) |   | (4,517 | ) |
|  Accounts                  payable                                                                                             |                                | 14,858     |   |   | 2,735 |   |
|  Accrued                  liabilities                                                                                          |                                | (8,300     | ) |   | (64 | ) |
|  Other,                  net                                                                                                   |                                | (9,157     | ) |   | (1,325 | ) |
| Net                  cash provided by (used in) operating activities                                                                |                                | (5,394     | ) |   | 20,312 |   |
|                                                                                                                                |                                |       |   |   |   |   |
| Cash                  flows from investing activities:                                                                              |                                |       |   |   |   |   |
|  Purchases                  of property, plant and equipment                                                                   |                                | (4,227     | ) |   | (3,309 | ) |
|  Other,                  net                                                                                                   |                                | (96        | ) |   | 15 |   |
| Net                  cash used in investing activities                                                                              |                                | (4,323     | ) |   | (3,294 | ) |
|                                                                                                                                |                                |       |   |   |   |   |
| Cash                  flows from financing activities:                                                                              |                                |       |   |   |   |   |
|  Payments                  of senior credit facility, net                                                                      |                                | -          |   |   | (19,933 | ) |
|  Payments                  of other debt                                                                                       |                                | (141       | ) |   | (54 | ) |
|  Proceeds                  from issuance of common stock                                                                       |                                | -          |   |   | 2 |   |
|  Purchase                  of common stock                                                                                     |                                | (1         | ) |   | (311 | ) |
| Net                  cash used in financing activities                                                                              |                                | (142       | ) |   | (20,296 | ) |
|                                                                                                                                |                                |       |   |   |   |   |
| Net                  effect of exchange rate changes on cash                                                                        |                                | 48         |   |   | 44 |   |
| Change                  in cash and cash equivalents                                                                                |                                | (9,811     | ) |   | (3,234 | ) |
| Cash                  and cash equivalents, beginning of period                                                                     |                                | 20,784     |   |   | 24,622 |   |
| Cash                  and cash equivalents, end of period                                                                           | $                                   | 10,973     |   | $ | 21,388 |   |
|                                                                                                                                |                                |       |   |   |   |   |
| The                  accompanying notes are an integral part of these condensed consolidated                  financial statements. |

----

**Simmons        Company and Subsidiaries **

**Condensed        Consolidated Statement of Changes in Stockholder's Equity**

|                                                                                                                            |       |   |           |   |        |   |         |    | **Accumulated**   |   | **Common**                 |   |              |   |
|---------------------------------------------------------------------------------------------------------------------------------|------------|--------|----------------|--------|-------------|--------|--------------|---------|-------------------|--------|----------------------------|--------|-------------------|--------|
|                                                                                                                            |       |   | **Additional** |   |        |   | **Other**    |    | **Stock**         |   | **Total**                  |   |
|                                                                                                                            | **Common** |   | **Common**     |   | **Paid-In** |   | **Retained** |    | **Comprehensive** |   | **Held                In** |   | **Stockholder's** |   |
|                                                                                                                            | **Shares** |   | **Stock**      |   | **Capital** |   | **Earnings** |    | **Income**        |   | **Treasury**               |   | **Equity**        |   |
|                                                                                                                            |       |   |           |   |        |   |         |    |              |   |                       |   |              |   |
| **December                30, 2006 (audited)***                                                                                 |       | 100    |           | $      | 1           |   | $            | 102,843 |              | $      | 51,961                     |   | $                 | (2,595 | ) | $ | (2,349 | ) | $ | 149,861 |   |
| Net                income                                                                                                       |       | -      |           |   | -           |   |         | -       |              |   | 4,413                      |   |              | -      |   |   | - |   |   | 4,413 |   |
| Other                comprehensive income:                                                                                      |       |   |           |   |        |   |         |    |              |   |                       |   |              |   |   |   |   |   |   |   |   |
| Change                in foreign currency translation                                                                           |       | -      |           |   | -           |   |         | -       |              |   | -                          |   |              | 1,254  |   |   | - |   |   | 1,254 |   |
| Comprehensive                income                                                                                             |       |   |           |   |        |   |         |    |              |   | 4,413                      |   |              | 1,254  |   |   | - |   |   | 5,667 |   |
| Effect                of FIN 48 adoption (see Note D)                                                                           |       | -      |           |   | -           |   |         | -       |              |   | (2,753                     | )      |              | -      |   |   | - |   |   | (2,753 | ) |
| Purchase                of treasury stock, at cost                                                                              |       | -      |           |   | -           |   |         | -       |              |   | -                          |   |              | -      |   |   | (1 | ) |   | (1 | ) |
| Non-cash                stock compensation expense                                                                              |       | -      |           |   | -           |   |         | 119     |              |   | -                          |   |              | -      |   |   | - |   |   | 119 |   |
| Retirement                of treasury stock                                                                                     |       | -      |           |   | -           |   |         | (2,350  | )                 |   | -                          |   |              | -      |   |   | 2,350 |   |   | - |   |
| **March                31, 2007 (unaudited)**                                                                                   |       | 100    |           | $      | 1           |   | $            | 100,612 |              | $      | 53,621                     |   | $                 | (1,341 | ) | $ | - |   | $ | 152,893 |   |
|                                                                                                                            |       |   |           |   |        |   |         |    |              |   |                       |   |              |   |   |   |   |   |   |   |   |
| *                Recast to give effect to the Merger (see Note B)                                                               |       |   |           |   |        |   |         |    |              |   |                       |   |              |   |   |   |   |   |   |   |   |
|                                                                                                                            |       |   |           |   |        |   |         |    |              |   |                       |   |              |   |   |   |   |   |   |   |   |
| The                accompanying notes are an integral part of these condensed consolidated                financial statements. |       |   |           |   |        |   |         |    |              |   |                       |

----

**Simmons        Company and Subsidiaries **

**Notes        to the Unaudited Condensed Consolidated Financial        Statements**

**A.**
**Basis      of Presentation **

**B.**
**Merger      and Distribution to Stockholders**

----

**Simmons        Company and Subsidiaries **

**Notes        to the Unaudited Condensed Consolidated Financial        Statements**

**C.**
**Acquisition      and Disposition**

*2006      Purchase of Simmons Canada Inc. (“Simmons Canada”)*

----

**Simmons          Company and Subsidiaries **

**Notes          to the Unaudited Condensed Consolidated Financial          Statements**

|                                                 | **Purchase                  Price Allocation** |    |
|------------------------------------------------------|------------------------------------------------|---------|
|                                                 | **December                  30,**              |    |   |   | **March                  31,** |   |
|                                                 | **2006**                                       |    | **Adjustments** |   | **2007** |   |
| Current                  assets                      | $                                              | 27,279  |   | $ | - |   | $ | 27,279 |   |
| Property,                  plant and equipment       |                                           | 17,773  |   |   | - |   |   | 17,773 |   |
| Goodwill                                             |                                           | 32,828  |   |   | 910 |   |   | 33,738 |   |
| Other                  intangibles                   |                                           | 62,802  |   |   | - |   |   | 62,802 |   |
| Other                  assets                        |                                           | 800     |   |   | - |   |   | 800 |   |
| Total                  assets acquired               |                                           | 141,482 |   |   | 910 |   |   | 142,392 |   |
| Current                  liabilities                 |                                           | (15,941 | ) |   | (910 | ) |   | (16,851 | ) |
| Non-current                  liabilities             |                                           | (12,442 | ) |   | - |   |   | (12,442 | ) |
| Total                  liabilities assumed           |                                           | (28,383 | ) |   | (910 | ) |   | (29,293 | ) |
| Purchase                  price net of cash acquired | $                                              | 113,099 |   | $ | - |   | $ | 113,099 |   |
|                                                 |                                           |    |   |   |   |   |   |   |   |

*2006      Sale of SCUSA*

----

**Simmons        Company and Subsidiaries **

**Notes        to the Unaudited Condensed Consolidated Financial        Statements**

*Pro      Forma Financial Data*

**D.      **
**Adoption      of FIN 48**

    On      December      31, 2006 (the first day of fiscal year 2007), the Company adopted Financial      Accounting Standards Board (“FASB”) Interpretation 48, *Accounting      for Uncertainty in Income Taxes*      (“FIN      48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized      in a company’s financial statements in accordance with FASB Statement 109,*Accounting      for Income Taxes*.      FIN 48      provides a comprehensive model for how a company should recognize, measure,      present, and disclose in its financial statements uncertain tax positions that      a      company has taken or expects to take in a tax return. Under FIN 48, the      financial statements reflect expected future tax consequences of such positions      presuming the taxing authorities’ full knowledge of the position and all      relevant facts, but without considering time values. FIN 48 requires companies      to accrue interest on the difference between a tax position recognized under      FIN      48 and the amount previously taken or expected to be taken in a company’s tax      return. 

----

**Simmons        Company and Subsidiaries **

**Notes        to the Unaudited Condensed Consolidated Financial        Statements**

**E.      **
**Inventories      **

|                            | **March                  31,** | ** ** | **December                  30,** | ** ** |
|---------------------------------|--------------------------------|------------|-----------------------------------|------------|
| ** **                      | **2007**                       | ** ** | **2006**                          |       |
| Raw                  materials  | $                              | 21,322     |                              | $          | 17,566 |   |
| Work-in-progress                |                           | 1,124      |                              |       | 997 |   |
| Finished                  goods |                           | 9,812      |                              |       | 8,155 |   |
|                            | $                              | 32,258     |                              | $          | 26,718 |   |
|                            |                           |       |                              |       |   |   |

**F.**
**Goodwill      **

|                                                        | **Domestic** |    | **Canada** |   | **Consolidated** |   |
|-------------------------------------------------------------|--------------|---------|------------|--------|------------------|--------|
| Balance                  as of December 30, 2006            | $            | 480,790 |       | $      | 32,028           |   | $ | 512,818 |   |
| Adoption of                  FIN 48 (see Note D)       |         | 11,474  |       |   | 1,454            |   |   | 12,928 |   |
| Tax                  benefit allocated to reduce goodwill   |         | (4      | )          |   | -                |   |   | (4 | ) |
| Canada                  Acquisition adjustment (see Note C) |         | -       |       |   | 910              |   |   | 910 |   |
| Foreign                  currency translation adjustment    |         | -       |       |   | 345              |   |   | 345 |   |
| Balance                  as of March 31, 2007               | $            | 492,260 |       | $      | 34,737           |   | $ | 526,997 |   |
|                                                        |         |    |       |   |             |   |   |   |   |

**G.**
**Warranties**

|                                                                                                                 | **March                      31,** |   | **April                      1,** |   |
|----------------------------------------------------------------------------------------------------------------------|------------------------------------|--------|-----------------------------------|--------|
|                                                                                                                 | **2007**                           |   | **2006**                          |   |
| Balance                      at beginning of period                                                                  | $                                  | 3,668  |                              | $      | 3,009 |   |
| Additional                      warranties issued                                                                    |                               | 543    |                              |   | 624 |   |
| Warranty                      settlements                                                                            |                               | (443   | )                                 |   | (263 | ) |
| Accruals                      related to pre-existing warranties (including change in                      estimate) |                               | 85     |                              |   | (100 | ) |
| Balance                      at end of period                                                                        | $                                  | 3,853  |                              | $      | 3,270 |   |
|                                                                                                                 |                               |   |                              |   |   |   |

----

**Simmons        Company and Subsidiaries **

**Notes        to the Unaudited Condensed Consolidated Financial        Statements**

**H.**
**Long-Term      Debt **

|                                                                                                            | **March                  31,** |    | **December                  30,** |   |
|-----------------------------------------------------------------------------------------------------------------|--------------------------------|---------|-----------------------------------|--------|
|                                                                                                            | **2007**                       |    | **2006**                          |   |
| Senior                  credit facility:                                                                        |                           |    |                              |   |
| Revolving                  loan                                                                                 | $                              | -       |                              | $      | - |   |
| Tranche                  D term loan                                                                            |                           | 480,000 |                              |   | 480,000 |   |
|  Total                  senior credit facility                                                             |                           | 480,000 |                              |   | 480,000 |   |
| 7.875%                  senior subordinated notes due 2014                                                      |                           | 200,000 |                              |   | 200,000 |   |
| 10.0%                  senior discount notes, due 2014, net of discount of $62,303 and                  $67,378 |                           | 206,697 |                              |   | 201,622 |   |
| Other,                  including capital lease obligations                                                     |                           | 15,022  |                              |   | 15,157 |   |
|                                                                                                            |                           | 901,719 |                              |   | 896,779 |   |
| Less                  current portion                                                                           |                           | (778    | )                                 |   | (778 | ) |
|                                                                                                            | $                              | 900,941 |                              | $      | 896,001 |   |
|                                                                                                            |                           |    |                              |   |   |   |

----

**Simmons        Company and Subsidiaries **

**Notes        to the Unaudited Condensed Consolidated Financial        Statements**

**I.**
**Segment      Information**

----

**Simmons        Company and Subsidiaries **

**Notes        to the Unaudited Condensed Consolidated Financial        Statements**

|  **Quarter                Ended March 31, 2007**                                                                                   | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------|------------|
| ** **** ****(In                thousands)**                                                                                   |       |
|                                                                                                                                    |       |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                    |       |   |   | **Domestic** |   | **Canada** |   | **Eliminations** |   | **Totals** |   |
|                                                                                                                                    |       |   |   |   |   |   |   |   |   |   |   |
| Net                sales to external customers                                                                                          | $          | 238,002 |   | $ | 29,404 |   | $ | - |   | $ | 267,406 |   |
| Intersegment                net sales                                                                                                   |       | 225 |   |   | - |   |   | (225 | ) |   | - |   |
| Adjusted                EBITDA                                                                                                          |       | 33,064 |   |   | 3,037 |   |   | - |   |   | 36,101 |   |
| Depreciation                and amortization expense                                                                                    |       | 6,287 |   |   | 1,061 |   |   | - |   |   | 7,348 |   |
| Expenditures                for long-lived assets                                                                                       |       | 3,816 |   |   | 411 |   |   | - |   |   | 4,227 |   |
| Segment                assets                                                                                                           |       | 1,375,379 |   |   | 147,467 |   |   | (115,987 | ) |   | 1,406,859 |   |
|                                                                                                                                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reconciliation                of EBITDA and Adjusted                                                                                    |       |   |   |   |   |   |   |   |   |   |   |   |
| EBITDA                to net income (loss):                                                                                             |       |   |   |   |   |   |   |   |   |   |   |   |
| Net                income (loss)                                                                                                        |       |   |   |   | $ | 4,440 |   | $ | (27 | ) | $ | - |   | $ | 4,413 |   |
| Depreciation                and amortization                                                                                            |       |   |   |   |   | 6,287 |   |   | 1,061 |   |   | - |   |   | 7,348 |   |
| Income                taxes                                                                                                             |       |   |   |   |   | 2,429 |   |   | (34 | ) |   | - |   |   | 2,395 |   |
| Interest                expense, net                                                                                                    |       |   |   |   |   | 16,603 |   |   | 1,786 |   |   | - |   |   | 18,389 |   |
| Interest                income                                                                                                          |       |   |   |   |   | 334 |   |   | 33 |   |   | - |   |   | 367 |   |
| EBITDA                                                                                                                                  |       |   |   |   |   | 30,093 |   |   | 2,819 |   |   | - |   |   | 32,912 |   |
| Reorganization                expense including management severance                                                                    |       |   |   |   |   | 497 |   |   | 123 |   |   | - |   |   | 620 |   |
| Management                fees                                                                                                          |       |   |   |   |   | 465 |   |   | - |   |   | - |   |   | 465 |   |
| Transaction                related expenses                                                                                             |       |   |   |   |   | 585 |   |   | - |   |   | - |   |   | 585 |   |
|    Non-cash              stock compensation expense                                                                      |       |   |   |   |   | 119 |   |   | - |   |   | - |   |   | 119 |   |
|                  Conversion costs associated with meeting new flammability              standard     |       |   |   |   |   | 913 |   |   | - |   |   | - |   |   | 913 |   |
| State                taxes in lieu of income taxes                                                                                      |       |   |   |   |   | 130 |   |   | - |   |   | - |   |   | 130 |   |
| Other                                                                                                                                   |       |   |   |   |   | 262 |   |   | 95 |   |   | - |   |   | 357 |   |
| Adjusted                EBITDA                                                                                                          |       |   |   |   | $ | 33,064 |   | $ | 3,037 |   | $ | - |   | $ | 36,101 |   |
|                                                                                                                                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

**J.**
**Commitments      and Contingencies **

----

**Simmons        Company and Subsidiaries **

**Notes        to the Unaudited Condensed Consolidated Financial        Statements**

**K.**
**Accounting      Pronouncements **

*Fair      Value Measurements*

*Employers'      Accounting for Defined Benefit Pension and Other Postretirement Plans - An      Amendment of FASB Statements No. 87, 88, 106, and 132R*
*.      *

*The      Fair Value Option for Financial Assets and Financial Liabilities - Including      an      Amendment of FASB Statement No. 115 *
*Accounting      for Certain Investments in Debt and Equity Securities*

**L.      **
**Guarantor      / Non-Guarantor Statements**

----

**Simmons        Company and Subsidiaries **

**Notes        to the Unaudited Condensed Consolidated Financial        Statements**

**Supplemental      Consolidating Condensed Statements of Operations**

**For      the Quarter Ended March 31, 2007**

|                                                            |           | ** ** | **Issuer                    and Guarantors** | ** ** | ** **       | ** ** | ** **        | ** ** | ** **       | ** ** |
|-----------------------------------------------------------------|----------------|------------|----------------------------------------------|------------|------------------|------------|-------------------|------------|------------------|------------|
| ** **                                                      | ** **     | ** ** | **Simmons**                                  | ** ** | ** **       | ** ** | ** **        | ** ** | ** **       | ** ** | ** ** | ** ** |
| ** **                                                      | **Parent**     | ** ** | **Bedding**                                  | ** ** | **Guarantor**    | ** ** | **Non-Guarantor** | ** ** | ** **       | ** ** | ** ** | ** ** |
| ** **                                                      | **Guarantors** | ** ** | **Company**                                  | ** ** | **Subsidiaries** | ** ** | **Subsidiaries**  | ** ** | **Eliminations** | ** ** | **Consolidated** |   |
|                                                            |           |       |                                         |       |             |       |              |       |             |       |   |   |
| Net                    sales                                    | $              | -          |                                         | $          | (24,568          | )          | $                 | 260,222    |             | $          | 31,977 |   | $ | (225 | ) | $ | 267,406 |   |
| Cost                    of products sold                        |           | -          |                                         |       | 628              |       |              | 136,658    |             |       | 22,154 |   |   | (225 | ) |   | 159,215 |   |
| Gross                    profit                                 |           | -          |                                         |       | (25,196          | )          |              | 123,564    |             |       | 9,823 |   |   | - |   |   | 108,191 |   |
| Operating                    expenses:                          |           |       |                                         |       |             |       |              |       |             |       |   |   |   |   |   |   |   |   |
| Selling,                    general and administrative expenses |           | (10        | )                                            |       | 55,877           |       |              | 21,793     |             |       | 7,048 |   |   | - |   |   | 84,708 |   |
| Amortization                    of intangibles                  |           | -          |                                         |       | 739              |       |              | 526        |             |       | 214 |   |   | - |   |   | 1,479 |   |
| Intercompany                    fees                            |           | -          |                                         |       | (89,646          | )          |              | 88,886     |             |       | 760 |   |   | - |   |   | - |   |
| Licensing                    revenues                           |           | -          |                                         |       | (297             | )          |              | (2,731     | )                |       | (165 | ) |   | - |   |   | (3,193 | ) |
|                                                            |           | (10        | )                                            |       | (33,327          | )          |              | 108,474    |             |       | 7,857 |   |   | - |   |   | 82,994 |   |
|  Operating                    income                       |           | 10         |                                         |       | 8,131            |       |              | 15,090     |             |       | 1,966 |   |   | - |   |   | 25,197 |   |
| Interest                    expense, net                        |           | 5,141      |                                         |       | 11,535           |       |              | (97        | )                |       | 1,810 |   |   | - |   |   | 18,389 |   |
| Income                    from subsidiaries                     |           | 7,791      |                                         |       | 8,321            |       |              | -          |             |       | - |   |   | (16,112 | ) |   | - |   |
|  Income                    before income taxes             |           | 2,660      |                                         |       | 4,917            |       |              | 15,187     |             |       | 156 |   |   | (16,112 | ) |   | 6,808 |   |
| Income                    tax expense (benefit)                 |           | (1,753     | )                                            |       | (2,874           | )          |              | 7,029      |             |       | (7 | ) |   | - |   |   | 2,395 |   |
|  Net                    income                             | $              | 4,413      |                                         | $          | 7,791            |       | $                 | 8,158      |             | $          | 163 |   | $ | (16,112 | ) | $ | 4,413 |   |
|                                                            |           |       |                                         |       |             |       |              |       |             |       |   |   |   |   |   |   |   |   |

----

**Simmons      Company and Subsidiaries **

**Notes      to the Unaudited Condensed Consolidated Financial      Statements**

**Supplemental      Consolidating Condensed Statements of Operations**

**For      the Quarter Ended April 1, 2006**

|                                                          |           | ** ** | **Issuer                  and Guarantors** | ** ** | ** **       | ** ** | ** **        | ** ** | ** **       | ** ** |
|---------------------------------------------------------------|----------------|------------|--------------------------------------------|------------|------------------|------------|-------------------|------------|------------------|------------|
| ** **                                                    | ** **     | ** ** | **Simmons**                                | ** ** | ** **       | ** ** | ** **        | ** ** | ** **       | ** ** | ** ** | ** ** |
| ** **                                                    | **Parent**     | ** ** | **Bedding**                                | ** ** | **Guarantor**    | ** ** | **Non-Guarantor** | ** ** | ** **       | ** ** | ** ** | ** ** |
| ** **                                                    | **Guarantors** | ** ** | **Company**                                | ** ** | **Subsidiaries** | ** ** | **Subsidiaries**  | ** ** | **Eliminations** | ** ** | **Consolidated** |   |
|                                                          |           |       |                                       |       |             |       |              |       |             |       |   |   |
| Net                  sales                                    | $              | -          |                                       | $          | (29,252          | )          | $                 | 263,294    |             | $          | 1,825 |   | $ | - |   | $ | 235,867 |   |
| Cost                  of products sold                        |           | -          |                                       |       | 815              |       |              | 134,297    |             |       | 1,327 |   |   | - |   |   | 136,439 |   |
| Gross                  profit                                 |           | -          |                                       |       | (30,067          | )          |              | 128,997    |             |       | 498 |   |   | - |   |   | 99,428 |   |
| Operating                  expenses:                          |           |       |                                       |       |             |       |              |       |             |       |   |   |   |   |   |   |   |   |
| Selling,                  general and administrative expenses |           | 24         |                                       |       | 42,624           |       |              | 27,845     |             |       | 413 |   |   | - |   |   | 70,906 |   |
| Amortization                  of intangibles                  |           | -          |                                       |       | 807              |       |              | 610        |             |       | - |   |   | - |   |   | 1,417 |   |
| Intercompany                  fees                            |           | -          |                                       |       | (78,176          | )          |              | 78,015     |             |       | 161 |   |   | - |   |   | - |   |
| Licensing                  revenues                           |           | -          |                                       |       | (278             | )          |              | (1,833     | )                |       | (177 | ) |   | - |   |   | (2,288 | ) |
|                                                          |           | 24         |                                       |       | (35,023          | )          |              | 104,637    |             |       | 397 |   |   | - |   |   | 70,035 |   |
|  Operating                  income (loss)                |           | (24        | )                                          |       | 4,956            |       |              | 24,360     |             |       | 101 |   |   | - |   |   | 29,393 |   |
| Interest                  expense, net                        |           | 4,658      |                                       |       | 14,279           |       |              | 212        |             |       | 27 |   |   | - |   |   | 19,176 |   |
| Income                  from subsidiaries                     |           | 9,372      |                                       |       | 15,805           |       |              | -          |             |       | - |   |   | (25,177 | ) |   | - |   |
|  Income                  before income taxes             |           | 4,690      |                                       |       | 6,482            |       |              | 24,148     |             |       | 74 |   |   | (25,177 | ) |   | 10,217 |   |
| Income                  tax expense (benefit)                 |           | (1,743     | )                                          |       | (2,890           | )          |              | 8,368      |             |       | 49 |   |   | - |   |   | 3,784 |   |
|  Net                  income                             | $              | 6,433      |                                       | $          | 9,372            |       | $                 | 15,780     |             | $          | 25 |   | $ | (25,177 | ) | $ | 6,433 |   |
|                                                          |           |       |                                       |       |             |       |              |       |             |       |   |   |   |   |   |   |   |   |

----

**Simmons          Company and Subsidiaries **

**Notes          to the Unaudited Condensed Consolidated Financial          Statements**

**Supplemental      Consolidating Condensed Balance Sheets**

**As      of March 31, 2007**

|                                                                   |           | ** ** | **Issuer                    and Guarantors** | ** ** | ** **       | ** ** | ** **        | ** ** | ** **       | ** ** |
|------------------------------------------------------------------------|----------------|------------|----------------------------------------------|------------|------------------|------------|-------------------|------------|------------------|------------|
| ** **                                                             | ** **     | ** ** | **Simmons**                                  | ** ** | ** **       | ** ** | ** **        | ** ** | ** **       | ** ** | ** ** | ** ** |
| ** **                                                             | **Parent**     | ** ** | **Bedding**                                  | ** ** | **Guarantor**    | ** ** | **Non-Guarantor** | ** ** | ** **       | ** ** | ** ** | ** ** |
| ** **                                                             | **Guarantors** | ** ** | **Company**                                  | ** ** | **Subsidiaries** | ** ** | **Subsidiaries**  | ** ** | **Eliminations** | ** ** | **Consolidated** |   |
| **ASSETS**                                                             |           |       |                                         |       |             |       |              |       |             |       |   |   |
| Current                    assets:                                     |           |       |                                         |       |             |       |              |       |             |       |   |   |
| Cash                    and cash equivalents                           | $              | -          |                                         | $          | 3,004            |       | $                 | 2,466      |             | $          | 5,503 |   | $ | - |   | $ | 10,973 |   |
| Accounts                    receivable                                 |           | -          |                                         |       | -                |       |              | 83,058     |             |       | 24,854 |   |   | (59 | ) |   | 107,853 |   |
| Inventories                                                            |           | -          |                                         |       | -                |       |              | 27,201     |             |       | 5,057 |   |   | - |   |   | 32,258 |   |
| Other                                                                  |           | -          |                                         |       | 10,947           |       |              | 11,142     |             |       | 2,689 |   |   | - |   |   | 24,778 |   |
|  Total                    current assets                          |           | -          |                                         |       | 13,951           |       |              | 123,867    |             |       | 38,103 |   |   | (59 | ) |   | 175,862 |   |
| Property,                    plant and equipment, net                  |           | -          |                                         |       | 16,713           |       |              | 36,029     |             |       | 21,739 |   |   | - |   |   | 74,481 |   |
| Goodwill                    and other intangibles, net                 |           | -          |                                         |       | 74,241           |       |              | 948,327    |             |       | 96,408 |   |   | - |   |   | 1,118,976 |   |
| Other                    assets                                        |           | 24,183     |                                         |       | 109,017          |       |              | 880        |             |       | 1,021 |   |   | (97,561 | ) |   | 37,540 |   |
| Net                    investment in and advances to (from) affiliates |           | 335,541    |                                         |       | 861,992          |       |              | 260,863    |             |       | (1,900 | ) |   | (1,456,496 | ) |   | - |   |
|  Total                    assets                                  | $              | 359,724    |                                         | $          | 1,075,914        |       | $                 | 1,369,966  |             | $          | 155,371 |   | $ | (1,554,116 | ) | $ | 1,406,859 |   |
|                                                                   |           |       |                                         |       |             |       |              |       |             |       |   |   |   |   |   |   |   |   |
| **LIABILITIES                    AND STOCKHOLDER'S EQUITY**            |           |       |                                         |       |             |       |              |       |             |       |   |   |   |   |   |   |   |   |
| Current                    liabilities:                                |           |       |                                         |       |             |       |              |       |             |       |   |   |   |   |   |   |   |   |
| Current                    maturities of long-term debt                | $              | -          |                                         | $          | -                |       | $                 | 200        |             | $          | 578 |   | $ | - |   | $ | 778 |   |
| Accounts                    payable and accrued liabilities            |           | 134        |                                         |       | 43,970           |       |              | 83,222     |             |       | 17,184 |   |   | (2,826 | ) |   | 141,684 |   |
|  Total                    current liabilities                     |           | 134        |                                         |       | 43,970           |       |              | 83,422     |             |       | 17,762 |   |   | (2,826 | ) |   | 142,462 |   |
| Long-term                    debt                                      |           | 206,697    |                                         |       | 680,000          |       |              | 12,900     |             |       | 75,073 |   |   | (73,729 | ) |   | 900,941 |   |
| Deferred                    income taxes                               |           | -          |                                         |       | 12,111           |       |              | 177,384    |             |       | 12,808 |   |   | (21,065 | ) |   | 181,238 |   |
| Other                    non-current liabilities                       |           | -          |                                         |       | 21,029           |       |              | 4,590      |             |       | 4,845 |   |   | (1,139 | ) |   | 29,325 |   |
|  Total                    liabilities                             |           | 206,831    |                                         |       | 757,110          |       |              | 278,296    |             |       | 110,488 |   |   | (98,759 | ) |   | 1,253,966 |   |
| Stockholder's                    equity                                |           | 152,893    |                                         |       | 318,804          |       |              | 1,091,670  |             |       | 44,883 |   |   | (1,455,357 | ) |   | 152,893 |   |
|  Total                    liabilities and stockholder's equity    | $              | 359,724    |                                         | $          | 1,075,914        |       | $                 | 1,369,966  |             | $          | 155,371 |   | $ | (1,554,116 | ) | $ | 1,406,859 |   |
|                                                                   |           |       |                                         |       |             |       |              |       |             |       |   |   |   |   |   |   |   |   |

----

**Simmons        Company and Subsidiaries **

**Notes        to the Unaudited Condensed Consolidated Financial        Statements**

**Supplemental      Consolidating Condensed Balance Sheets**

**As      of December 30, 2006**

|                                                                 |   |           |    | **Issuer                  and Guarantors** |   | ** **     |   | ** **        |      | ** **       |   |
|----------------------------------------------------------------------|--------|----------------|---------|--------------------------------------------|--------|----------------|--------|-------------------|-----------|------------------|--------|
| ** **                                                           |   | ** **     |    | **Simmons**                                |   | ** **     |   | ** **        |      | ** **       |   | ** ** |   |
| ** **                                                           |   | **Parent**     |    | **Bedding**                                |   | **Subsidiary** |   | **Non-Guarantor** |      | ** **       |   | ** ** |   |
| ** **                                                           |   | **Guarantors** |    | **Company**                                |   | **Guarantors** |   | **Subsidiaries**  |      | **Eliminations** |   | **Consolidated** |   |
| **ASSETS**                                                           |   |           |    |                                       |   |           |   |              |      |             |   |   |   |
| Current                  assets:                                     |   |           |    |                                       |   |           |   |              |      |             |   |   |   |
| Cash                  and cash equivalents                           |   | $              | -       |                                       | $      | 9,841          |   | $                 | 5,606     |             | $      | 5,337 |   | $ | - |   | $ | 20,784 |   |
| Accounts                  receivable                                 |   |           | -       |                                       |   | -              |   |              | 70,415    |             |   | 21,666 |   |   | (46 | ) |   | 92,035 |   |
| Inventories                                                          |   |           | -       |                                       |   | -              |   |              | 22,375    |             |   | 4,343 |   |   | - |   |   | 26,718 |   |
| Other                                                                |   |           | -       |                                       |   | 9,834          |   |              | 9,537     |             |   | 3,188 |   |   | - |   |   | 22,559 |   |
|  Total                  current assets                          |   |           | -       |                                       |   | 19,675         |   |              | 107,933   |             |   | 34,534 |   |   | (46 | ) |   | 162,096 |   |
| Property,                  plant and equipment, net                  |   |           | -       |                                       |   | 14,599         |   |              | 36,687    |             |   | 21,899 |   |   | - |   |   | 73,185 |   |
| Goodwill                  and other intangibles, net                 |   |           | -       |                                       |   | 63,899         |   |              | 948,464   |             |   | 93,257 |   |   | - |   |   | 1,105,620 |   |
| Other                  assets                                        |   |           | 3,183   |                                       |   | 101,074        |   |              | 1,220     |             |   | 1,134 |   |   | (73,858 | ) |   | 32,753 |   |
| Net                  investment in and advances to (from) affiliates |   |           | 329,182 |                                       |   | 894,615        |   |              | 231,935   |             |   | (1,487 | ) |   | (1,454,245 | ) |   | - |   |
|                                                                 |   | $              | 332,365 |                                       | $      | 1,093,862      |   | $                 | 1,326,239 |             | $      | 149,337 |   | $ | (1,528,149 | ) | $ | 1,373,654 |   |
|                                                                 |   |           |    |                                       |   |           |   |              |      |             |   |   |   |   |   |   |   |   |   |
| **LIABILITIES                  AND STOCKHOLDER'S EQUITY**            |   |           |    |                                       |   |           |   |              |      |             |   |   |   |   |   |
| Current                  liabilities:                                |   |           |    |                                       |   |           |   |              |      |             |   |   |   |   |   |   |   |   |   |
| Current                  maturities of long-term debt                |   | $              | -       |                                       | $      | -              |   | $                 | 200       |             | $      | 578 |   | $ | - |   | $ | 778 |   |
| Accounts                  payable and accrued liabilities            |   |           | 194     |                                       |   | 54,621         |   |              | 66,156    |             |   | 14,906 |   |   | (965 | ) |   | 134,912 |   |
|  Total                  current liabilities                     |   |           | 194     |                                       |   | 54,621         |   |              | 66,356    |             |   | 15,484 |   |   | (965 | ) |   | 135,690 |   |
| Long-term                  debt                                      |   |           | 201,622 |                                       |   | 680,000        |   |              | 12,900    |             |   | 74,418 |   |   | (72,939 | ) |   | 896,001 |   |
| Deferred                  income taxes                               |   |           | (19,312 | )                                          |   | 13,779         |   |              | 170,562   |             |   | 12,663 |   |   | - |   |   | 177,692 |   |
| Other                  non-current liabilities                       |   |           | -       |                                       |   | 9,312          |   |              | 2,613     |             |   | 2,485 |   |   | - |   |   | 14,410 |   |
|  Total                  liabilities                             |   |           | 182,504 |                                       |   | 757,712        |   |              | 252,431   |             |   | 105,050 |   |   | (73,904 | ) |   | 1,223,793 |   |
| Stockholder's                  equity                                |   |           | 149,861 |                                       |   | 336,150        |   |              | 1,073,808 |             |   | 44,287 |   |   | (1,454,245 | ) |   | 149,861 |   |
|                                                                 |   | $              | 332,365 |                                       | $      | 1,093,862      |   | $                 | 1,326,239 |             | $      | 149,337 |   | $ | (1,528,149 | ) | $ | 1,373,654 |   |
|                                                                 |   |           |    |                                       |   |           |   |              |      |             |   |   |   |   |   |   |   |   |   |

----

**Simmons      Company and Subsidiaries **

**Notes      to the Unaudited Condensed Consolidated Financial      Statements**

**Supplemental      Consolidating Condensed Statements of Cash Flows**

**For      the Quarter Ended March 31, 2007**

|                                                                   |           | ** ** | **Issuer                    and Guarantors** | ** ** | ** **       | ** ** | ** **        | ** ** | ** **       | ** ** |
|------------------------------------------------------------------------|----------------|------------|----------------------------------------------|------------|------------------|------------|-------------------|------------|------------------|------------|
| ** **                                                             | ** **     | ** ** | **Simmons**                                  | ** ** | ** **       | ** ** | ** **        | ** ** | ** **       | ** ** | ** ** | ** ** |
| ** **                                                             | **Parent**     | ** ** | **Bedding**                                  | ** ** | **Guarantor**    | ** ** | **Non-Guarantor** | ** ** | ** **       | ** ** | ** ** | ** ** |
| ** **                                                             | **Guarantors** | ** ** | **Company**                                  | ** ** | **Subsidiaries** | ** ** | **Subsidiaries**  | ** ** | **Eliminations** | ** ** | **Consolidated** |   |
|                                                                   |           |       |                                         |       |             |       |              |       |             |       |   |   |
| Net                    cash provided by (used in) operating activities | $              | 68         |                                         | $          | (21,737          | )          | $                 | 15,805     |             | $          | 470 |   | $ | - |   | $ | (5,394 | ) |
| Cash                    flows from investing activities:               |           |       |                                         |       |             |       |              |       |             |       |   |   |   |   |   |   |   |   |
| Purchase                    of property, plant and equipment, net      |           | -          |                                         |       | (2,970           | )          |              | (729       | )                |       | (528 | ) |   | - |   |   | (4,227 | ) |
| Other,                    net                                          |           | -          |                                         |       | -                |       |              | -          |             |       | (96 | ) |   | - |   |   | (96 | ) |
| Net                    cash used in investing activities               |           | -          |                                         |       | (2,970           | )          |              | (729       | )                |       | (624 | ) |   | - |   |   | (4,323 | ) |
| Cash                    flows from financing activities:               |           |       |                                         |       |             |       |              |       |             |       |   |   |   |   |   |   |   |   |
| Payment                    of other long-term obligations              |           | -          |                                         |       | -                |       |              | -          |             |       | (141 | ) |   | - |   |   | (141 | ) |
| Purchase                    of treasury stock                          |           | (1         | )                                            |       | -                |       |              | -          |             |       | - |   |   | - |   |   | (1 | ) |
| Receipt                    from (distribution to) affiliates           |           | (67        | )                                            |       | 17,870           |       |              | (18,216    | )                |       | 413 |   |   | - |   |   | - |   |
| Net                    cash provided by (used in) financing activities |           | (68        | )                                            |       | 17,870           |       |              | (18,216    | )                |       | 272 |   |   | - |   |   | (142 | ) |
| Net                    effect of exchange rate changes                 |           | -          |                                         |       | -                |       |              | -          |             |       | 48 |   |   | - |   |   | 48 |   |
| Change                    in cash and cash equivalents                 |           | -          |                                         |       | (6,837           | )          |              | (3,140     | )                |       | 166 |   |   | - |   |   | (9,811 | ) |
| Cash                    and cash equivalents:                          |           |       |                                         |       |             |       |              |       |             |       |   |   |   |   |   |   |   |   |
|  Beginning                    of period                           |           | -          |                                         |       | 9,841            |       |              | 5,606      |             |       | 5,337 |   |   | - |   |   | 20,784 |   |
|  End                    of period                                 | $              | -          |                                         | $          | 3,004            |       | $                 | 2,466      |             | $          | 5,503 |   | $ | - |   | $ | 10,973 |   |
|                                                                   |           |       |                                         |       |             |       |              |       |             |       |   |   |   |   |   |   |   |   |

----

**Simmons        Company and Subsidiaries **

**Notes        to the Unaudited Condensed Consolidated Financial        Statements**

**Supplemental      Consolidating Condensed Statements of Cash Flows**

**For      the Quarter Ended April 1, 2006**

| ** **                                                           | ** ** | ** ** | **Issuer                  and Guarantors** | ** ** | ** **    | ** ** | ** **        | ** ** | ** **   | ** ** |
|----------------------------------------------------------------------|------------|------------|--------------------------------------------|------------|---------------|------------|-------------------|------------|--------------|------------|
| ** **                                                           | ** ** | ** ** | **Simmons**                                | ** ** | ** **    | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** |
| ** **                                                           | **Parent** | ** ** | **Bedding**                                | ** ** | **Guarantor** | ** ** | **Non-Guarantor** | ** ** | ** **   | ** ** | ** ** | ** ** |
| ** **                                                           | Guarantors |       | Company                                    |       | Subsidiaries  |       | Subsidiaries      |       | Eliminations |       | Consolidated |   |
|                                                                 |       |       |                                       |       |          |       |              |       |         |       |   |   |
| Net                  cash provided by (used in) operating activities | $          | (31        | )                                          | $          | (32,268       | )          | $                 | 52,767     |         | $          | (156 | ) |   | - |   | $ | 20,312 |   |
| Cash                  flows from investing activities:               |       |       |                                       |       |          |       |              |       |         |       |   |   |   |   |   |   |   |   |
| Purchase                  of property, plant and equipment, net      |       | -          |                                       |       | (2,366        | )          |              | (943       | )            |       | - |   |   |   |   |   | (3,309 | ) |
| Other                                                                |       | -          |                                       |       | -             |       |              | 15         |         |       | - |   |   | - |   |   | 15 |   |
| Net                  cash used in investing activities               |       | -          |                                       |       | (2,366        | )          |              | (928       | )            |       | - |   |   | - |   |   | (3,294 | ) |
| Cash                  flows from financing activities:               |       |       |                                       |       |          |       |              |       |         |       |   |   |   |   |   |   |   |   |
| Proceeds                  from issuance of common stock              |       | 2          |                                       |       | -             |       |              | -          |         |       | - |   |   | - |   |   | 2 |   |
| Repayment                  of long-term obligations                  |       | -          |                                       |       | (19,933       | )          |              | -          |         |       | (54 | ) |   | - |   |   | (19,987 | ) |
| Purchase                  of treasury stock                          |       | (311       | )                                          |       | -             |       |              | -          |         |       | - |   |   | - |   |   | (311 | ) |
| Receipt                  from (distribution to) affiliates           |       | 340        |                                       |       | 52,497        |       |              | (52,300    | )            |       | (537 | ) |   | - |   |   | - |   |
| Net                  cash provided by (used in) financing activities |       | 31         |                                       |       | 32,564        |       |              | (52,300    | )            |       | (591 | ) |   | - |   |   | (20,296 | ) |
| Net                  effect of exchange rate changes                 |       | -          |                                       |       | -             |       |              | -          |         |       | 44 |   |   | - |   |   | 44 |   |
| Change                  in cash and cash equivalents                 |       | -          |                                       |       | (2,070        | )          |              | (461       | )            |       | (703 | ) |   | - |   |   | (3,234 | ) |
| Cash                  and cash equivalents:                          |       |       |                                       |       |          |       |              |       |         |       |   |   |   |   |   |   |   |   |
|  Beginning                  of period                           |       | -          |                                       |       | 19,823        |       |              | 1,429      |         |       | 3,370 |   |   | - |   |   | 24,622 |   |
|  End                  of period                                 | $          | -          |                                       | $          | 17,753        |       | $                 | 968        |         | $          | 2,667 |   | $ | - |   | $ | 21,388 |   |
|                                                                 |       |       |                                       |       |          |       |              |       |         |       |   |   |   |   |   |   |   |   |

----

|  **Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Recent      Events**

**Results      of Operations **

|                                                          | **Quarters                  Ended** | ** ** |
|---------------------------------------------------------------|-------------------------------------|------------|
| ** **                                                    | **March                  31,**      | ** ** | ** April                  1,** | ** ** |
| ** **                                                    | **2007**                            | ** ** | ** 2006** |   |
|                                                          |                                |       |    |   |
| Net                  sales                                    |                                | 100.0      | % |   | 100.0 | % |
| Cost                  of products sold                        |                                | 59.5       | % |   | 57.8 | % |
|  Gross                  margin                           |                                | 40.5       | % |   | 42.2 | % |
|                                                          |                                |       |   |   |   |   |
| Operating                  expenses:                          |                                |       |   |   |   |   |
| Selling,                  general and administrative expenses |                                | 31.7       | % |   | 30.1 | % |
| Amortization                  of intangibles                  |                                | 0.6        | % |   | 0.6 | % |
| Licensing                  revenues                           |                                | -1.2       | % |   | -1.0 | % |
|                                                          |                                | 31.1       | % |   | 29.7 | % |
|                                                          |                                |       |   |   |   |   |
|  Operating                  income                       |                                | 9.4        | % |   | 12.5 | % |
|                                                          |                                |       |   |   |   |   |
| Interest                  expense, net                        |                                | 6.9        | % |   | 8.1 | % |
|  Income                  before income taxes             |                                | 2.5        | % |   | 4.4 | % |
| Income                  tax expense                           |                                | 0.9        | % |   | 1.6 | % |
|  Net                  income                             |                                | 1.6        | % |   | 2.8 | % |
|                                                          |                                |       |   |   |   |   |

----

**Quarter      Ended March 31, 2007 as Compared to the Quarter Ended April 1,      2006**

*Net      Sales*

*    Gross      Margin*

----

*    Selling,      General and Administrative Expenses (“SG&A”)*

*Amortization      of Intangibles. *

*Licensing      Revenues.*

*Interest      Expense, Net.*

*Income      Taxes.  *

**Liquidity      and Capital Resources **

----

|                                                     |   |    |   | **Quarters                    Ended** |   |
|----------------------------------------------------------|--------|--------------|--------|---------------------------------------|--------|
|                                                     |   |    |   | **March                    31,**      |   | **April                    1,** |   |
|                                                     |   |    |   | **2007**                              |   | **2006** |   |
| Statement                    of Cash Flow Data:          |   |         |   |                                  |   |
|  Cash                  flows provided by (used in): |   |         |   |                                  |   |   |   |
|  Operating                    activities            |   |         |   |                                  | $      | (5.4 | ) | $ | 20.3 |   |
|  Investing                    activities            |   |         |   |                                  |   | (4.3 | ) |   | (3.3 | ) |
|  Financing                    activities            |   |         |   |                                  |   | (0.1 | ) |   | (20.3 | ) |
| Decrease                    in cash and cash equivalents |   |         |   |                                  |   | (9.8 | ) |   | (3.2 | ) |
| Cash                    and cash equivalents:            |   |         |   |                                  |   |   |   |   |   |   |
|  Beginning                    of period             |   |         |   |                                  |   | 20.8 |   |   | 24.6 |   |
|  End                    of period                   |   |         |   |                                  | $      | 11.0 |   | $ | 21.4 |   |
|                                                     |   |         |   |                                  |   |   |   |   |   |   |

**Quarter      Ended March 31, 2007 as Compared to Quarter Ended April 1,      2006**

*Cash      flows provided by (used in) Operating Activities*

*Cash      flows used in Investing Activities.*

*Cash      flows used in Financing Activities.*

----

**Debt**

*Senior      Credit Facility*

|                                 |   | **Eurodollar** |   | **Base** |   |
|--------------------------------------|--------|----------------|--------|----------|--------|
|                                 |   | **Rate**       |   | **Rate** |   |
| Revolving                  loan      |   |           | 2.25   | %        |   | 1.25 | % |
| Tranche                  D term loan |   |           | 2.00   | %        |   | 1.00 | % |

----

| 1)   | A                minimum cash interest coverage ratio, with compliance levels ranging                from                cash interest coverage of no less than 2.00:1.00 for March 31, 2007;                2.15:1.00 from June 30, 2007 through September 30, 2007; and 2.25:1.00                for                December 31, 2007; 2.75:1.00 from March 31, 2008 through December                31,                2008; and 3.00:1.00 from March 31, 2009 through each fiscal quarter                thereafter. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2)   | A                maximum leverage ratio, with compliance levels ranging from total                leverage                of no greater than 5.60:1.00 for March 31, 2007; 5.25:1.00 for June                30,                2007; 5.00:1.00 from September 30, 2007 through December 31, 2007;                4.50:1.00 from March 31, 2008 through December 31, 2008; and 4.00:1.00                from March 31, 2009 through each fiscal quarter ending                thereafter. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Senior      Subordinated Notes*

*Senior      Discount Notes*

----

*Debt      Covenants*

----

| Calculation                of minimum cash interest coverage ratio:   |   |   |
|-----------------------------------------------------------------------|--------|--------|
| Simmons                Bedding twelve months ended adjusted EBITDA(1) | $      | 157.9  |   |
| Simmons                Bedding cash interest expense(2)               | $      | 53.6   |   |
| Actual                interest coverage ratio(3)                      |   | 2.94x  |   |
| Minimum                permitted interest coverage ratio              |   | 2.00x  |   |
|                                                                  |   |   |   |
| Calculation                of maximum leverage ratio:                 |   |   |   |
| Simmons                Company indebtedness                           | $      | 901.7  |   |
| Less:                10% senior discount notes                        |   | 206.7  |   |
| Simmons                Bedding indebtedness                           |   | 695.0  |   |
| Less:                Simmons Bedding cash and cash equivalents        |   | 11.0   |   |
| Simmons                Bedding net debt                               | $      | 684.0  |   |
| Simmons                Bedding twelve months ended adjusted EBITDA(1) | $      | 157.9  |   |
| Actual                leverage ratio(4)                               |   | 4.33x  |   |
| Maximum                permitted leverage ratio                       |   | 5.60x  |   |

----

| Net                  income                                                         | $      | 45.6   |   |
|-------------------------------------------------------------------------------------|--------|--------|--------|
| Depreciation                  and amortization                                      |   | 28.8   |   |
| Income                  taxes                                                       |   | 23.0   |   |
| Interest                  expense, net                                              |   | 79.1   |   |
| Interest                  income                                                    |   | 1.6    |   |
| EBITDA                                                                              | $      | 178.1  |   |
|                                                                                |   |   |   |
| Proforma                  effect of SCUSA Disposition(a)                            |   | (44.9  | )      |
| Proforma                  effect of Canada Acquisition(b)                           |   | 12.8   |   |
| Reorganization                  expenses including management severance             |   | 3.9    |   |
| Management                  fees                                                    |   | 1.7    |   |
| Transaction                  related expenses                                       |   | 2.3    |   |
| Non-cash                  stock compensation expense                                |   | 0.9    |   |
| Conversion                  costs associated with meeting new flammability standard |   | 1.6    |   |
| State                  taxes in lieu of income taxes                                |   | 0.6    |   |
| Other,                  including expenses at Holdings                              |   | 0.9    |   |
|                                                                                | $      | 157.9  |   |
|                                                                                |   |   |   |

| (a)   | This                adjustment removes the EBITDA of SCUSA that is included in our                consolidated EBITDA prior to our disposition of the entity and the                $43.3                million gain recognized on the disposition; and includes the last                twelve                months effect of savings generated from a new dealer agreement                executed in connection with the sale of  SCUSA. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | This                adjustment includes the EBITDA of Canada, not already reflected in                our                consolidated EBITDA, for the twelve months ended March 31, 2007 as                though                we purchased the entity as of the beginning of the fiscal year and                also                includes $3.8 million of unrealized synergies that management anticipates                will be achieved as a result of the Canada Acquisition. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Simmons                  Company interest expense, net           | $      | 79.1   |   |
|------------------------------------------------------------------|--------|--------|--------|
| Less:                  Simmons Company non-cash interest expense |   | (19.5  | )      |
| Simmons                  Bedding interest expense, net           |   | 59.6   |   |
| Add:                  Simmons Bedding interest income            |   | 1.6    |   |
| Less:                  Call premium included in interest expense |   | (0.7   | )      |
| Simmons                  Bedding gross interest expense          |   | 60.4   |   |
| Less:                  Simmons Bedding non-cash interest expense |   | (6.8   | )      |
|                                                             | $      | 53.6   |   |
|                                                             |   |   |   |

----

| (3)   | Represents                ratio of Adjusted EBITDA to consolidated cash interest                expense. |
|-----------------|----------------------------------------------------------------------------------------------------------|

| (4)   | Represents                ratio of consolidated indebtedness less cash and cash equivalents                to                Adjusted                EBITDA. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Seasonality/Other      **

**Accounting      Pronouncements **

*Fair      Value Measurements*

*Employers'      Accounting for Defined Benefit Pension and Other Postretirement Plans - An      Amendment of FASB Statements No. 87, 88, 106, and 132R*
*.      *

*The      Fair Value Option for Financial Assets and Financial Liabilities - Including      an      Amendment of FASB Statement No. 115 *
*Accounting      for Certain Investments in Debt and Equity Securities*

----

**Forward      Looking Statements **

*“Safe      Harbor” statement under the Private Securities Litigation Reform Act of 1995.*

| ·   | competitive                pricing pressures in the bedding industry; |
|--------------------|-----------------------------------------------------------------------|

| ·   | legal                and regulatory requirements; |
|--------------------|---------------------------------------------------|

| ·   | the                success of our new products and the future costs to roll out such                products; |
|--------------------|---------------------------------------------------------------------------------------------------------------|

| ·   | our                relationships with and viability of our major suppliers; |
|--------------------|-----------------------------------------------------------------------------|

| ·   | fluctuations                in costs of our raw materials; |
|--------------------|------------------------------------------------------------|

| ·   | our                relationship with significant customers and licensees; |
|--------------------|---------------------------------------------------------------------------|

| ·   | our                ability to increase prices on our products and the effect of these                price                increases on our unit sales; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an                increase in our return rates and warranty                claims; |
|--------------------|------------------------------------------------------------------------------------|

| ·   | our                labor relations; |
|--------------------|-------------------------------------|

| ·   | departure                of our key personnel; |
|--------------------|------------------------------------------------|

| ·   | encroachments                on our intellectual property; |
|--------------------|------------------------------------------------------------|

| ·   | our                product liability claims; |
|--------------------|----------------------------------------------|

| ·   | our                level of indebtedness; |
|--------------------|-------------------------------------------|

| ·   | interest                rate risks; |
|--------------------|-------------------------------------|

----

| ·   | compliance                with covenants in our debt                agreements; |
|--------------------|---------------------------------------------------------------------------------|

| ·   | our                future acquisitions; |
|--------------------|-----------------------------------------|

| ·   | our                ability to successfully integrate Simmons Canada into our                operations; |
|--------------------|---------------------------------------------------------------------------------------------------------|

| ·   | our                ability to achieve the expected benefits from any personnel realignments;                and |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

| ·   | other                risks and factors identified from time to time in our reports filed                with                the Securities and Exchange Commission                (“SEC”). |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Item      3.**
**Quantitative      and Qualitative Disclosures About Market Risk **

**Market      Risk**

**Foreign      Currency Exposures**

----

**Interest      Rate Risk**

**Commodity      Price Risk**

**Item      4.**
**Internal      Controls and Procedures **

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PART                II -**  **OTHER                INFORMATION**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **Item                1.** **Legal Proceedings**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|     See                paragraph 1 of Note J to the Condensed Consolidated Financial Statements,                Part 1, Item 1 included herein.                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **Item                1A. Risk Factors**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|     There                were no material changes to the Company’s risk factors outlined in its                annual report filed with the Commission on form 10-K on March 23,                2007.                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **Item                2.** **Unregistered Sales of Equity Securities and Use of                Proceeds**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|     None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **Item                3. Defaults Upon Senior Securities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|     None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **Item                4.** **Submission of Matters to a Vote of Security                Holders**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                   By written consent of our stockholders on February 9, 2007, the                stockholders of Simmons Company approved the merger                with Simmons Merger Company, a wholly-owned subsidiary of Simmons                Holdco                with Simmons Company being the surviving entity and a wholly-owned                subsidiary of Simmons Holdco.                The Company had 4,392,443 shares voted, of which 4,392,206 votes                approved                the Merger, 237 votes against or withheld, and 113,137 abstentions. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **Item                5.** **Other Information**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|     None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **Item                6.** **Exhibits**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

| 31.1   | Chief                Executive Officer Certification of the Type Described in Rule 13a                - 14(a)                and Rule 15d - 14(a) |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
| 31.2   | Chief                Financial Officer Certification of the Type Described in Rule 13a                - 14(a)                and Rule 15d - 14(a) |
|   |
| 32.1   | Certification                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 (furnished                herewith)                    |
|   |
| 32.2   | Certification                of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (furnished                herewith)                    |

----

| By:    | /s/                William S. Creekmuir                               |   |
|--------|-----------------------------------------------------------------------|--------|
|   | William                S. Creekmuir                                   |
|   | Executive                Vice President & Chief Financial Officer |
| Date:  | May                15, 2007                                           |